S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6371
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                              April 26, 2021
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN  ACT  to amend the retirement and social security law, in relation to
   service retirement benefits for certain members of the New  York  city
   employees' retirement system

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 505 of the retirement and social security  law,  as
 amended  by  chapter  18  of  the  laws  of  2012, is amended to read as
 follows:
   § 505. Service retirement benefits; police/fire members, New York city
 uniformed correction/sanitation revised plan  members  and  investigator
 revised  plan  members.  a.  The  normal  service retirement benefit for
 police/fire  members,  New  York  city  uniformed  correction/sanitation
 revised  plan  members  and  investigator revised plan members at normal
 retirement age shall be a pension equal to fifty percent of final  aver-
 age salary, less fifty percent of the primary social security retirement
 benefit commencing at age sixty-two, as provided in section five hundred
 eleven  of  this  article,  EXCEPT  THAT  FOR  NEW  YORK  CITY UNIFORMED
 CORRECTION/SANITATION REVISED PLAN MEMBERS OF THE NEW YORK CITY  EMPLOY-
 EES'  RETIREMENT SYSTEM, THE NORMAL SERVICE RETIREMENT BENEFIT SHALL NOT
 BE REDUCED BY THE PRIMARY SOCIAL SECURITY RETIREMENT BENEFIT  COMMENCING
 AT  AGE  SIXTY-TWO  AS  PROVIDED  IN SECTION FIVE HUNDRED ELEVEN OF THIS
 ARTICLE.
   b. The early service retirement benefit for police/fire  members,  New
 York  city  uniformed  correction/sanitation  revised  plan  members and
 investigator revised plan members shall be a pension equal  to  two  and
 one-tenths  percent  of  final  average  salary  times years of credited
 service at the completion of twenty years of service or upon  attainment
 of age sixty-two, increased by one-third of one percent of final average
 salary  for  each month of service in excess of twenty years, but not in
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD09882-03-1

 S. 6371                             2
 
 excess of fifty percent of final average salary, less fifty  percent  of
 the  primary social security retirement benefit commencing at age sixty-
 two as  provided  in  section  five  hundred  eleven  of  this  article,
 provided,  however, that New York city police/fire revised plan members,
 New York city uniformed correction/sanitation revised plan  members  and
 investigator  revised  plan  members shall not be eligible to retire for
 service prior to the attainment of twenty years of credited service, AND
 PROVIDED FURTHER THAT FOR NEW YORK CITY UNIFORMED  CORRECTION/SANITATION
 REVISED  PLAN MEMBERS OF THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM,
 THE EARLY SERVICE RETIREMENT BENEFIT SHALL NOT BE REDUCED BY THE PRIMARY
 SOCIAL SECURITY  RETIREMENT  BENEFIT  COMMENCING  AT  AGE  SIXTY-TWO  AS
 PROVIDED IN SECTION FIVE HUNDRED ELEVEN OF THIS ARTICLE.
   c.    A    police/fire    member,    a   New   York   city   uniformed
 correction/sanitation revised plan member  or  an  investigator  revised
 plan  member  who  retires  with twenty-two years of credited service or
 less may become eligible for annual escalation of the service retirement
 benefit if he elects to have the payment of his benefit commence on  the
 date  he  would have completed twenty-two years and one month or more of
 service. In such event, the service retirement benefit shall  equal  two
 percent  of final average salary for each year of credited service, less
 fifty percent of the primary social security retirement benefit commenc-
 ing at age sixty-two as provided in section five hundred eleven of  this
 article,  EXCEPT  THAT FOR NEW YORK CITY UNIFORMED CORRECTION/SANITATION
 REVISED PLAN MEMBERS OF THE NEW YORK CITY EMPLOYEES' RETIREMENT  SYSTEM,
 THE  SERVICE  RETIREMENT  BENEFIT  SHALL  NOT  BE REDUCED BY THE PRIMARY
 SOCIAL SECURITY  RETIREMENT  BENEFIT  COMMENCING  AT  AGE  SIXTY-TWO  AS
 PROVIDED IN SECTION FIVE HUNDRED ELEVEN OF THIS ARTICLE.
   §  2. Section 511 of the retirement and social security law is amended
 by adding a new subdivision h to read as follows:
   H.  THIS  SECTION  SHALL  NOT  APPLY  TO  NEW  YORK   CITY   UNIFORMED
 CORRECTION/SANITATION  REVISED PLAN MEMBERS OF THE NEW YORK CITY EMPLOY-
 EES' RETIREMENT SYSTEM WHO RECEIVE A SERVICE RETIREMENT BENEFIT PURSUANT
 TO SECTION FIVE HUNDRED FIVE OF THIS ARTICLE OR A DEFERRED VESTED  BENE-
 FIT PURSUANT TO SECTION FIVE HUNDRED SIXTEEN OF THIS ARTICLE.
   § 3. Subdivision c of section 516 of the retirement and social securi-
 ty law, as amended by chapter 18 of the laws of 2012, is amended to read
 as follows:
   c.  The  deferred vested benefit of police/fire members, New York city
 police/fire   revised   plan   members,   New   York   city    uniformed
 correction/sanitation  revised plan members or investigator revised plan
 members shall be a pension commencing at early retirement age  equal  to
 two  and one-tenths percent of final average salary times years of cred-
 ited service, less fifty percent of the primary social security  retire-
 ment  benefit  commencing  at age sixty-two, as provided in section five
 hundred eleven of this article, EXCEPT THAT FOR NEW YORK CITY  UNIFORMED
 CORRECTION/SANITATION  REVISED PLAN MEMBERS OF THE NEW YORK CITY EMPLOY-
 EES' RETIREMENT SYSTEM, THE SERVICE  RETIREMENT  BENEFIT  SHALL  NOT  BE
 REDUCED  BY THE PRIMARY SOCIAL SECURITY RETIREMENT BENEFIT COMMENCING AT
 AGE SIXTY-TWO AS  PROVIDED  IN  SECTION  FIVE  HUNDRED  ELEVEN  OF  THIS
 ARTICLE.  A police/fire member, a New York city police/fire revised plan
 member, a New York city  uniformed  correction/sanitation  revised  plan
 member  or  investigator  revised  plan  member may elect to receive his
 vested benefit commencing at early retirement age or age fifty-five.  If
 the  vested  benefit  commences before early retirement age, the benefit
 shall be reduced by one-fifteenth  for  each  year,  if  any,  that  the
 member's  early  retirement  age  is in excess of age sixty, and by one-

 S. 6371                             3
 
 thirtieth for each additional year by which the vested benefit commences
 prior to early retirement age. If such vested benefit is deferred  until
 after such member's normal retirement age, the benefit shall be computed
 and  subject  to annual escalation in the same manner as provided for an
 early retirement benefit pursuant  to  subdivision  c  of  section  five
 hundred five of this article.
   §  4.  This  act  shall take effect on the sixtieth day after it shall
 have become a law.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend  Sections  505,
 511,  and 516 of the Retirement and Social Security Law (RSSL) to elimi-
 nate the offset equal to 50% of the primary social security  benefit  in
 the  service,  early  service, and vested retirement benefits for Tier 3
 Sanitation and Correction members in the original, revised, and enhanced
 plans (i.e. the 22-Year Plans) of the New York City  Employees'  Retire-
 ment System (NYCERS) who are subject to Article 14 of the RSSL.
   Effective Date: Sixty days after enactment.
   IMPACT  ON  BENEFITS:  Currently,  the  RSSL Article 14 normal service
 retirement, early service retirement, and vested retirement benefits for
 Sanitation and Correction members in 22-Year Plans  are  subject  to  an
 offset equal to 50% of the primary social security benefit as defined in
 RSSL Section 511 beginning at age 62.
   Under  the proposed legislation, if enacted, the offset for such bene-
 fits would be eliminated resulting in an increase in benefits.
   FINANCIAL IMPACT - SUMMARY: The financial impact will increase as  the
 impacted  populations  of  Tier  3  Sanitation and Correction members of
 NYCERS increases over time. The estimated financial impact  of  removing
 the  social security offset as described above results in an increase in
 Present Value of Future Benefits (PVFB) and an increase  in  the  annual
 employer  contributions  of  NYCERS. The estimate of these increases for
 Fiscal Years 2022 through 2026 based on the applicable actuarial assump-
 tions and methods noted herein, are shown in the table below.
 
     Fiscal              Increase in                     Increase in
     Year       Present Value of Future Benefits   Employer Contributions
                         ($ Millions)                    ($ Millions)
     2022                   $246.0                           $18.8
     2023                   $288.3                           $21.1
     2024                   $330.2                           $23.2
     2025                   $376.1                           $25.2
     2026                   $423.2                           $27.0
 
   In accordance with Section 13-638.2(k-2) of the Administrative Code of
 the City of New York  (ACCNY),  new  Unfunded  Accrued  Liability  (UAL)
 attributable to benefit changes are to be amortized as determined by the
 Actuary, but are generally amortized over the remaining working lifetime
 of  those  impacted  by  the  benefit  changes. As of June 30, 2020, the
 remaining working lifetime of Sanitation and Correction members  subject
 to the Article 14 22-Year Plans is approximately 18 years.
   For  the  purposes  of  this  Fiscal Note, the increase in the UAL for
 NYCERS was amortized over an 18-year period (17 payments under the  One-
 Year Lag Methodology (OYLM)) using level dollar payments.
   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, 2020 actuarial
 valuation of NYCERS. In accordance with  the  One-Year  Lag  Methodology

 S. 6371                             4
 
 (OYLM) used to determine employer contributions, the increase in employ-
 er 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 7,338 active NYCERS  Tier  3  Sanitation  and  Correction  members
 subject  to  Article 14 22-Year Plans as of June 30, 2020 had an average
 age of approximately 36.2 years, average service  of  approximately  4.8
 years, and an average salary of approximately $78,100.
   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.
   New entrants were projected to replace the members expected  to  leave
 the active population to maintain a steady-state population. New entrant
 demographics  and future salary increases are consistent with those used
 in projections for the New York City Office of Management and Budget  in
 April 2020 (Preliminary Projections).
   The  Actuary  is proposing a set of changes for use beginning with 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.
   * Pension costs for  future  members  of  NYCERS  hired  on  or  after
 7/1/2024.
   *  The  impact  of  this  proposed legislation on Other Postemployment
 Benefit (OPEB) costs.
   * Cost analyses relating  to  provisions  contained  in  RSSL  Section
 500(c).
   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.

 S. 6371                             5

   FISCAL NOTE IDENTIFICATION: This Fiscal Note 2021-15  dated  April  2,
 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.