S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5435--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 1, 2019
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
   --  recommitted  to  the  Committee  on  Civil Service and Pensions in
   accordance with Senate Rule 6, sec. 8 --  committee  discharged,  bill
   amended,  ordered reprinted as amended and recommitted to said commit-
   tee
 
 AN ACT to amend the retirement and social security law, in  relation  to
   retirement  benefits  for  general members in the uniformed correction
   force of the New York city department of correction
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subdivision d of section 504 of the retirement and social
 security law, as amended by chapter 18 of the laws of 2012,  is  amended
 to read as follows:
   d.  The  early  service  retirement benefit for general members in the
 uniformed  correction  force  of  the  New  York  city   department   of
 correction,  who are not entitled to an early service retirement benefit
 pursuant to subdivision c of section five hundred four-a of this article
 or subdivision c of section five  hundred  four-b  of  this  article  or
 subdivision  c  of  section  five hundred four-d of this article, or for
 general members in the uniformed personnel  in  institutions  under  the
 jurisdiction of the department of corrections and community supervision,
 as  defined  in  subdivision  i  of section eighty-nine of this chapter,
 shall be a pension equal to one-fiftieth of final average  salary  times
 years  of  credited  service  at  the completion of twenty-five years of
 service, [but not in excess of fifty percent of  final  average  salary]
 PLUS  ONE-SIXTIETH  OF  FINAL  AVERAGE  SALARY  TIMES  YEARS OF CREDITED
 SERVICE IN EXCESS OF TWENTY-FIVE, provided, however, that the provisions
 of  this  section  shall  not  apply  to  a  New  York  city   uniformed
 correction/sanitation revised plan member.
   § 2. This act shall take effect immediately.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04299-06-0

 S. 5435--A                          2
 
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY  OF BILL: This proposed legislation would amend Retirement and
 Social Security Law (RSSL) Section 504 by modifying the service  retire-
 ment benefit calculation formula for uniformed employees of the New York
 City  Department  of  Correction (Correction) who are members of the New
 York City Employees' Retirement System (NYCERS) and are subject  to  the
 Early  Service  Retirement  Benefit Plan for General Members pursuant to
 RSSL Section 504 (CO-25 Plan). The CO-25  Plan  is  limited  to  Tier  3
 Correction  members  who joined NYCERS prior to December 19, 1990 (CO-25
 Plan Members).
   Effective Date: Upon enactment.
   IMPACT ON BENEFITS: Currently, upon reaching 25 or more years of cred-
 ited service, CO-25 Plan Members are entitled to  a  service  retirement
 pension benefit equal to:
   * 50% of Final Average Salary (FAS).
   Under  the  proposed  legislation,  if enacted, the service retirement
 benefit for CO-25 Plan Members who retire for service under RSSL Section
 504(d) after the effective date of the proposed legislation with  25  or
 more years of credited service would be equal to:
   * 50% of FAS for the first 25 years of credited service, plus
   * 1/60th of FAS for each additional year of credited service, or frac-
 tion thereof, exceeding 25 years (if any).
   FINANCIAL  IMPACT - PRESENT VALUES: Based on the census data and actu-
 arial assumptions and methods herein, the  enactment  of  this  proposed
 legislation  would  increase the Present Value of Future Benefits (PVFB)
 by approximately $7.3 million.
   Under the Entry Age Normal cost method used to determine the  employer
 contributions  to  NYCERS,  there  would  be an increase in the Unfunded
 Accrued Liability (UAL) of approximately $7.2 million and an increase in
 the Present Value of future employer Normal Cost of $0.1 million.
   FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In  accordance  with
 Section 13-638.2(k-2) of the Administrative Code of the City of New York
 (ACCNY),  new UAL attributable to benefit changes are to be amortized as
 determined by the Actuary, but are generally amortized over the  remain-
 ing  working  lifetime  of  those impacted by the benefit changes. As of
 June 30, 2019, the remaining working lifetime of the CO-25 Plan  Members
 is approximately 3 years.
   For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
 tized over a 3-year period (2 payments under the One-Year Lag  Methodol-
 ogy (OYLM)) using level dollar payments.  This payment plus the increase
 in  the  Normal  Cost results in an increase in annual employer contrib-
 utions of approximately $4.1 million each year.
   CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
 assumed  that  the changes in the PVFB and annual employer contributions
 would be reflected for the first time in the  June  30,  2019  actuarial
 valuation  of  NYCERS.  In  accordance  with  the OYLM used to determine
 employer contributions, the increase  in  employer  contributions  would
 first be reflected in Fiscal Year 2021.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2019 (Lag) actuarial valuation  of
 NYCERS  to  determine the Preliminary Fiscal Year 2021 employer contrib-
 utions.
   The 55 NYCERS CO-25 Plan Members as of June 30, 2019  had  an  average
 age  of  approximately 56.7 years, average service of approximately 29.8
 years, and an average salary of approximately $139,900.

 S. 5435--A                          3
 
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and  annual
 employer  contributions  presented  herein have been calculated based on
 the actuarial assumptions and methods in effect for the  June  30,  2019
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2021  employer  contributions of NYCERS with the exception of the proba-
 bility of a CO-25 Plan Member working beyond 25 years of service,  which
 was  increased  to  recognize  the  impact  the proposed legislation, if
 enacted, would have on retirement behavior.
   RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
 highly  on the realization of the actuarial assumptions used, as well as
 certain  demographic  characteristics  of  NYCERS  and  other  exogenous
 factors  such  as  investment,  contribution, and other risks. If actual
 experience deviates from actuarial assumptions, the actual  costs  could
 differ  from  those  presented  herein.  Costs are also dependent on the
 actuarial methods used, and therefore different actuarial methods  could
 produce  different results.  Quantifying these risks is beyond the scope
 of this Fiscal Note.
   Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of NYCERS and other New
 York City agencies to implement the proposed legislation.
   * The impact of this  proposed  legislation  on  Other  Postemployment
 Benefit (OPEB) costs.
   STATEMENT  OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
 ary for, and independent of, the New York City  Retirement  Systems  and
 Pension  Funds.  I  am a Fellow of the Society of Actuaries, an Enrolled
 Actuary under the Employee Retirement Income and Security Act of 1974, a
 Member of the American Academy of Actuaries, and a Fellow of the Confer-
 ence of Consulting Actuaries. I meet the Qualification Standards of  the
 American  Academy of Actuaries to render the actuarial opinion contained
 herein.  To the best of my knowledge, the results contained herein  have
 been prepared in accordance with generally accepted actuarial principles
 and  procedures  and  with the Actuarial Standards of Practice issued by
 the Actuarial Standards Board.
   FISCAL NOTE IDENTIFICATION: This Fiscal Note 2020-22  dated  April  1,
 2020  was prepared by the Chief Actuary for the New York City Employees'
 Retirement System. This estimate is intended for  use  only  during  the
 2020 Legislative Session.