S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7335
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 5, 2021
                                ___________
 
 Introduced by M. of A. ABBATE -- read once and referred to the Committee
   on Governmental Employees
 
 AN  ACT to amend the retirement and social security law and the adminis-
   trative code of the city of New York, in relation  to  death  benefits
   for  members of the uniformed force of the New York city department of
   sanitation and members of the uniformed 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 b of section 448 of the retirement  and  social
 security law is amended by adding a new paragraph 3 to read as follows:
   3. PROVIDED FURTHER, NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTI-
 CLE TO THE CONTRARY, WHERE A MEMBER IS IN THE UNIFORMED FORCE OF THE NEW
 YORK  CITY  DEPARTMENT  OF  SANITATION OR THE UNIFORMED FORCE OF THE NEW
 YORK CITY DEPARTMENT OF CORRECTION, AND WOULD HAVE BEEN  ENTITLED  TO  A
 SERVICE RETIREMENT BENEFIT AT THE TIME OF HIS OR HER DEATH AND WHERE HIS
 OR HER DEATH OCCURS ON OR AFTER JULY FIRST, TWO THOUSAND TWENTY-ONE, THE
 BENEFICIARY  OR  BENEFICIARIES  MAY  ELECT TO RECEIVE, IN A LUMP SUM, AN
 AMOUNT PAYABLE WHICH SHALL BE EQUAL TO THE PENSION  RESERVE  THAT  WOULD
 HAVE  BEEN  ESTABLISHED HAD THE MEMBER RETIRED ON THE DATE OF HIS OR HER
 DEATH, OR THE VALUE OF THE DEATH BENEFIT AND THE  RESERVE-FOR-INCREASED-
 TAKE-HOME-PAY, IF ANY, WHICHEVER IS GREATER.
   § 2. Subdivision b of section 508 of the retirement and social securi-
 ty  law,  as  amended  by chapter 476 of the laws of 2018, is amended to
 read as follows:
   b. A member of a retirement system subject to the provisions  of  this
 article who is a police officer, firefighter, correction officer, inves-
 tigator  revised plan member or sanitation worker and is in a plan which
 permits immediate retirement upon completion of a  specified  period  of
 service  without  regard  to  age or who is subject to the provisions of
 section five hundred four or five hundred five of  this  article,  shall
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06268-02-1

 A. 7335                             2
 
 upon  completion  of  ninety  days  of  service be covered for financial
 protection in the event of death in service pursuant  to  this  subdivi-
 sion.
   1. Such death benefit shall be equal to three times the member's sala-
 ry  raised  to the next highest multiple of one thousand dollars, but in
 no event shall it exceed three times the  maximum  salary  specified  in
 section one hundred thirty of the civil service law or, in the case of a
 member  of  a  retirement system other than the New York city employees'
 retirement system, or in the case of a  member  of  the  New  York  city
 employees'   retirement   system  who  is  a  New  York  city  uniformed
 correction/sanitation revised plan member  or  an  investigator  revised
 plan member, the specific limitations specified for age of entrance into
 service  contained  in subparagraphs (b), (c), (d), (e) and (f) of para-
 graph two of subdivision a of this section.
   2. PROVIDED FURTHER, NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTI-
 CLE TO THE CONTRARY, WHERE A MEMBER IS IN THE UNIFORMED FORCE OF THE NEW
 YORK CITY DEPARTMENT OF SANITATION OR THE UNIFORMED  FORCE  OF  THE  NEW
 YORK  CITY  DEPARTMENT  OF CORRECTION, AND WOULD HAVE BEEN ENTITLED TO A
 SERVICE RETIREMENT BENEFIT AT THE TIME OF HIS OR HER DEATH AND WHERE HIS
 OR HER DEATH OCCURS ON OR AFTER JULY FIRST, TWO THOUSAND TWENTY-ONE, THE
 BENEFICIARY OR BENEFICIARIES MAY ELECT TO RECEIVE, IN  A  LUMP  SUM,  AN
 AMOUNT  PAYABLE  WHICH  SHALL BE EQUAL TO THE PENSION RESERVE THAT WOULD
 HAVE BEEN ESTABLISHED HAD THE MEMBER RETIRED ON THE DATE OF HIS  OR  HER
 DEATH,  OR THE VALUE OF THE DEATH BENEFIT AND THE RESERVE-FOR-INCREASED-
 TAKE-HOME-PAY, IF ANY, WHICHEVER IS GREATER.
   § 3. Subdivision b of section 606 of the retirement and social securi-
 ty law, as amended by chapter 476 of the laws of  2018,  is  amended  to
 read as follows:
   b.  A  member of a retirement system subject to the provisions of this
 article who is a police  officer,  firefighter,  correction  officer  or
 sanitation  worker  and  is in a plan which permits immediate retirement
 upon completion of a specified period of service without regard  to  age
 or  who is subject to the provisions of section six hundred four of this
 article, shall upon completion of ninety days of service be covered  for
 financial  protection  in the event of death in service pursuant to this
 subdivision.
   1. Such death benefit shall be equal to three times the member's sala-
 ry raised to the next highest multiple of one thousand dollars,  but  in
 no  event  shall  it  exceed three times the maximum salary specified in
 section one hundred thirty of the civil service law or, in the case of a
 member of a retirement system other than the New  York  city  employees'
 retirement  system,  the  specific  limitations  specified  for  age  of
 entrance into service contained in subparagraphs (b), (c), (d), (e)  and
 (f) of paragraph two of subdivision a of this section.
   2. PROVIDED FURTHER, NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTI-
 CLE TO THE CONTRARY, WHERE A MEMBER IS IN THE UNIFORMED FORCE OF THE NEW
 YORK  CITY  DEPARTMENT  OF  SANITATION OR THE UNIFORMED FORCE OF THE NEW
 YORK CITY DEPARTMENT OF CORRECTION, AND WOULD HAVE BEEN  ENTITLED  TO  A
 SERVICE RETIREMENT BENEFIT AT THE TIME OF HIS OR HER DEATH AND WHERE HIS
 OR HER DEATH OCCURS ON OR AFTER JULY FIRST, TWO THOUSAND TWENTY-ONE, THE
 BENEFICIARY  OR  BENEFICIARIES  MAY  ELECT TO RECEIVE, IN A LUMP SUM, AN
 AMOUNT PAYABLE WHICH SHALL BE EQUAL TO THE PENSION  RESERVE  THAT  WOULD
 HAVE  BEEN  ESTABLISHED HAD THE MEMBER RETIRED ON THE DATE OF HIS OR HER
 DEATH, OR THE VALUE OF THE DEATH BENEFIT AND THE  RESERVE-FOR-INCREASED-
 TAKE-HOME-PAY, IF ANY, WHICHEVER IS GREATER.

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   § 4. Section 13-148 of the administrative code of the city of New York
 is amended by adding a new subdivision d to read as follows:
   D.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE TO THE CONTRA-
 RY, WHERE A MEMBER IS IN THE UNIFORMED FORCE OF THE DEPARTMENT OF  SANI-
 TATION OR THE UNIFORMED FORCE OF THE DEPARTMENT OF CORRECTION, AND WOULD
 HAVE BEEN ENTITLED TO A SERVICE RETIREMENT BENEFIT AT THE TIME OF HIS OR
 HER  DEATH AND WHERE HIS OR HER DEATH OCCURS ON OR AFTER JULY FIRST, TWO
 THOUSAND TWENTY-ONE, THE  BENEFICIARY  OR  BENEFICIARIES  MAY  ELECT  TO
 RECEIVE,  IN  A  LUMP SUM, AN AMOUNT PAYABLE WHICH SHALL BE EQUAL TO THE
 PENSION RESERVE THAT WOULD HAVE BEEN ESTABLISHED HAD THE MEMBER  RETIRED
 ON  THE  DATE OF HIS OR HER DEATH, OR THE VALUE OF THE DEATH BENEFIT AND
 THE RESERVE-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, WHICHEVER IS GREATER.
   § 5. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend  Sections  448,
 508,  and  606  of  the  Retirement  and  Social Security Law (RSSL) and
 Section 13-148 of the Administrative  Code  of  the  City  of  New  York
 (ACCNY) to provide an alternative death benefit for Correction and Sani-
 tation  members  in  all Tiers and Plans of the New York City Employees'
 Retirement System (NYCERS).
   Effective Date: Upon enactment.
   IMPACT  ON  BENEFITS:  Currently,  NYCERS  Correction  and  Sanitation
 members  are  generally  entitled  to  a lump sum ordinary death benefit
 equal to a multiple of salary plus  the  return  of  member  accumulated
 contributions  and  increased-take-home-pay  (ITHP), if any. These death
 benefits are generally calculated as three times the final year's salary
 raised to the next highest multiple of $1,000. Some of these death bene-
 fits are subject to salary caps and other reductions.
   Under the proposed legislation, if enacted, the ordinary death benefit
 for members who are otherwise eligible to receive a  service  retirement
 benefit would be the greater of their current death benefit or the value
 of the pension reserve that would have been established had they retired
 on  the date of their death. The pension reserve is the present value of
 all payments expected to be made on account of any pension,  or  benefit
 in  lieu  of  any  pension, granted under provisions of law and computed
 upon the basis of adopted mortality tables with regular interest (inclu-
 sive of accumulated member contributions and ITHP, if any). This type of
 lump sum pension reserve death benefit is sometimes  referred  to  as  a
 Death  Gamble,  and  is  afforded,  in  a similar form, to Tier 1 NYCERS
 members.
   FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial  assumptions
 and methods described herein, the enactment of this proposed legislation
 would  increase  the Present Value of Future Benefits (PVFB) by approxi-
 mately $18.2 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 $10.9 million and  an  increase
 in the Present Value of future employer Normal Cost of $7.3 million.
   FINANCIAL  IMPACT  - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
 ACCNY Section 13-638.2(k-2), new UAL attributable to benefit changes are
 to be amortized as determined by the Actuary, but  are  generally  amor-
 tized over the remaining working lifetime of those impacted by the bene-
 fit  changes. As of June 30, 2020, the remaining working lifetime of the
 impacted NYCERS groups is approximately 12 years.
   For the purposes of this Fiscal Note, the increase in  UAL  was  amor-
 tized  over a 12-year period (11 payments under the One-Year Lag Method-

 A. 7335                             4
 
 ology (OYLM))  using  level  dollar  payments.  This  payment  plus  the
 increase  in  the  Normal Cost results in an increase in annual employer
 contributions of approximately $2.2 million each year.
   CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
 assumed that the  changes  in  the  Present  Value  of  future  employer
 contributions  and  annual employer contributions would be reflected for
 the first time in the June 30, 2020 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 2022.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2020 (Lag) actuarial valuation  of
 NYCERS  to  determine the Preliminary Fiscal Year 2022 employer contrib-
 utions.
   The 8,985 NYCERS Correction members as of June 30, 2020 had an average
 age of approximately 40.2 years, average service  of  approximately  9.9
 years, and an average salary of approximately $98,700.
   The 7,651 NYCERS Sanitation members as of June 30, 2020 had an average
 age  of  approximately 43.1 years, average service of approximately 12.2
 years, and an average salary of approximately $98,500.
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
 future  employer  contributions  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  contrib-
 utions of NYCERS.
   The Actuary is proposing a set of changes for use in the June 30, 2019
 (Lag)  actuarial valuations of NYCERS to determine the Final Fiscal Year
 2021 Employer Contributions (2021 A&M). If the 2021 A&M is enacted it is
 estimated that it would produce PVFB and annual  employer  contributions
 results that are not materially different than the results shown above.
   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.

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   FISCAL NOTE IDENTIFICATION: This Fiscal Note 2021-22 dated  April  23,
 2021  was prepared by the Chief Actuary for the New York City Employees'
 Retirement System. This estimate is intended for  use  only  during  the
 2021 Legislative Session.