S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8664
 
                             I N  S E N A T E
 
                              March 28, 2022
                                ___________
 
 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 members of the New  York  city  police
   pension fund
 
   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 MEMBERS OF THE NEW YORK CITY
 POLICE PENSION FUND, 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
 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,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD14388-02-2
 S. 8664                             2
 
 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 MEMBERS OF THE NEW YORK CITY POLICE PENSION
 FUND, 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 MEMBERS OF THE NEW  YORK  CITY  POLICE  PENSION
 FUND, 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 MEMBERS OF THE NEW YORK CITY POLICE
 PENSION  FUND  WHO  RECEIVE  A  SERVICE  RETIREMENT  BENEFIT PURSUANT TO
 SECTION FIVE HUNDRED FIVE OF THIS ARTICLE OR A DEFERRED  VESTED  BENEFIT
 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 MEMBERS OF THE NEW  YORK
 CITY  POLICE  PENSION  FUND, 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-
 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.
 S. 8664                             3
 
   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
 original, revised, and enhanced plan members of the New York City Police
 Pension Fund (POLICE).
   Effective Date: Sixty days after enactment.
   IMPACT  ON  BENEFITS: Currently, the Tier 3 normal service retirement,
 early service retirement, and vested retirement benefits 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 members of POLICE 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  Bene-
 fits  (PVFB)  and  an  increase  in the annual employer contributions of
 POLICE. The estimate of these increases for Fiscal  Years  2023  through
 2027  based  on  the  applicable actuarial assumptions and methods noted
 herein, are shown in the table below.
 
       Fiscal               Increase in                 Increase in
        Year          Present Value of Future     Employer Contributions
                       Benefits ($ Millions)           ($ Millions)
        2023                  $548.6                       $40.1
        2024                  $622.4                       $43.8
        2025                  $706.5                       $47.6
        2026                  $793.6                       $51.5
        2027                  $894.1                       $55.8
 
   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,  2021,  the
 remaining  working  lifetime  of POLICE members subject to Article 14 is
 approximately 18 years.
   For the purposes of this Fiscal Note, the  increase  in  the  UAL  for
 POLICE  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 Final June 30, 2021 actuar-
 ial valuation of POLICE. In accordance with the OYLM used  to  determine
 employer  contributions,  the  increase  in employer contributions would
 first be reflected in Fiscal Year 2023.
   CENSUS DATA: The estimates presented herein are based  on  the  census
 data  used in the Preliminary June 30, 2021 (Lag) actuarial valuation of
 POLICE to determine the Preliminary Fiscal Year 2023  employer  contrib-
 utions.
   The  17,963  active  POLICE  Tier 3 members as of June 30, 2021 had an
 average age of approximately 31.8 years, average service of approximate-
 ly 5.3 years, and an average salary of approximately $97,600.
 S. 8664                             4
 
   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,  2021
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2023 employer contributions of POLICE.
   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  that
 will  be  used in projections for the New York City Office of Management
 and Budget in April 2022 (Preliminary Projections).
   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  POLICE  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 POLICE and other New
 York City agencies to implement the proposed legislation.
   * Pension costs for  future  members  of  POLICE  hired  on  or  after
 7/1/2025.
   *  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, Michael J. Samet, am the Interim
 Chief Actuary for, and independent of,  the  New  York  City  Retirement
 Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
 a  Member of the American Academy of 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 2022-06 dated  March  24,
 2022  was  prepared  by  the Interim Chief Actuary for the New York City
 Police Pension Fund. This estimate is intended for use only  during  the
 2022 Legislative Session.