S T A T E O F N E W Y O R K
________________________________________________________________________
8950
I N S E N A T E
May 2, 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 general municipal law, in relation to allowing
certain members of the New York city fire department pension fund to
receive a membership date in the New York city fire department pension
fund attributable to service in the titles of police cadet program or
police cadet program II in the New York city police department cadet
program
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 209-fff of the general municipal law, as added by
chapter 431 of the laws of 2019, is amended to read as follows:
§ 209-fff. Provisions relating to a membership date in the New York
city police pension fund OR THE FIRE DEPARTMENT PENSION FUND attribut-
able to service in the titles of police cadet program and police cadet
program II in the New York city police department cadet program. 1.
Notwithstanding any provision of law to the contrary, upon election, any
member of the New York city police pension fund OR THE NEW YORK CITY
FIRE DEPARTMENT PENSION FUND who is subject to article fourteen of the
retirement and social security law, and who served in the New York city
police department cadet program in the title of police cadet program or
police cadet program II prior to April first, two thousand twelve, but
did not join the New York city employees' retirement system while serv-
ing in either such title, may purchase credit for the period of service
in such titles in the New York city police department cadet program by
paying into the New York city police pension fund OR THE NEW YORK CITY
FIRE DEPARTMENT PENSION FUND all member contributions plus interest, at
a rate of five percent per annum, which would have been payable to the
New York city employees' retirement system under any provision of law
had such member joined the New York city employees' retirement system on
the earliest date that he or she was appointed to the title of police
cadet program or police cadet program II in the New York city police
department cadet program, provided such payment is made within five
years after the effective date of this section.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD14051-02-2
S. 8950 2
2. Any member of the New York city police pension fund OR THE NEW YORK
CITY FIRE DEPARTMENT PENSION FUND who acquires service credit pursuant
to this section shall be entitled to all rights, benefits and privileges
to which he or she would have been entitled had his or her membership in
the New York city police pension fund OR THE NEW YORK CITY FIRE DEPART-
MENT PENSION FUND begun upon the earliest date that he or she was
appointed to the title of police cadet program or police cadet program
II in the New York city police department cadet program, but in no event
shall the service credit acquired pursuant to this section be deemed to
be: (A) service in the police force or any other type of service counted
or creditable as service in the police force under section 13-218 of the
administrative code of the city of New York[,]; (B) SERVICE IN THE FIRE
DEPARTMENT OF THE CITY OF NEW YORK OR ANY OTHER TYPE OF SERVICE COUNTED
OR CREDIBLE AS SERVICE IN SUCH FIRE DEPARTMENT UNDER SECTION 13-318 OF
THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK; OR (C) SERVICE UNDER
section five hundred thirteen of the retirement and social security law
or any other provision of law for purposes of eligibility for benefits
and to determine the amount of benefits under the New York city police
pension fund OR THE NEW YORK CITY FIRE DEPARTMENT PENSION FUND.
§ 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend Section 209-fff
of the General Municipal Law (GML) to allow New York City Fire Pension
Fund (FIRE) members subject to Article 14 of the Retirement and Social
Security Law (RSSL) (Tier 3, Tier 3 Modified, and Tier 3 Enhanced) to
purchase prior service as a cadet in the New York Police Department
(NYPD) and use the appointment date as a cadet to determine the initial
date of FIRE membership for plan or tier eligibility provided such
purchase of service is made within five years of October 29, 2019.
Effective Date: Upon enactment.
BACKGROUND: Currently, the purchase of prior NYPD cadet service
performed while not a member of the New York City Employees' Retirement
System (NYCERS) does not provide a retroactive date of membership in
FIRE, nor would it provide additional service retirement benefits for
members subject to Article 14 of the RSSL.
IMPACT ON BENEFITS: Under the proposed legislation, if enacted,
purchased NYPD cadet service performed while not a member of NYCERS
would entitle such member with a cadet service date before July 1, 2009
to be deemed a Tier 2 member with all the rights and privileges of such
Tier, and such service would be included in the calculation of benefits
as non-qualifying service credit.
Also, under the proposed legislation, if enacted, purchased NYPD cadet
service would entitle members with cadet service between July 1, 2009
and April 1, 2012 who joined FIRE after April 1, 2012 as a Tier 3 Modi-
fied or Enhanced member to be deemed an original Tier 3 member with all
the rights and privileges of a member who joined such Tier prior to
April 1, 2012.
IMPACT ON PAYABILITY: Since eligibility for FIRE benefits are based on
tier or plan, including cadet service towards tier or plan, eligibility
would increase and/or accelerate the payability date of benefits in
accordance with applicable earlier tiers or plans.
ADDITIONAL MEMBER CONTRIBUTIONS: For cadets who did not join NYCERS,
the member would have to pay member contributions that would have been
payable to NYCERS had they joined on their initial cadet appointment
date, plus 5.0% annual interest.
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Member contributions for FIRE are determined by tier and plan as
follows:
* Tier 2 - contribution rates are based on entry age.
* Tier 3 and Tier 3 Modified - Basic Member Contributions (BMC) of
3.0%.
* Tier 3 Enhanced - BMC of 3.0% plus Additional Member Contrib-
utions currently equal to 2.1%. The additional contribution rate of
2.1% can be raised to 3.0% based on a financial analysis performed
by the Actuary every three years. At no time can the total contrib-
ution rate exceed 6.0%.
FINANCIAL IMPACT - OVERVIEW: There is no data available to estimate
the number of FIRE members who have prior service as a cadet and would
potentially benefit from this proposed legislation. Therefore, the esti-
mated financial impact has been calculated on a per event basis for an
average FIRE member who is either currently a Tier 3 member and could
benefit from the enactment of this proposed legislation by being deemed
a Tier 2 member, or is currently a Tier 3 Modified or Enhanced member
who could benefit by being deemed an original Tier 3 member.
With respect to an individual member, the additional cost of this
proposed legislation could vary greatly depending on the member's length
of service, age, and salary history.
FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and the
actuarial assumptions and methods described herein, the enactment of
this proposed legislation would increase the Present Value of Future
Benefits (PVFB) by an amount which would depend on the Tier granted by
the purchase of prior cadet service.
For a Tier 3 member who purchases cadet service and is deemed a Tier 2
member, the enactment of this proposed legislation would increase the
PVFB by approximately $315,900, on average, for each member. The
proposed legislation would also decrease the Present Value of member
contributions by approximately $46,500, on average, after taking into
account the cost of the buyback, for a net result of an average increase
in the Present Value of future employer contributions of approximately
$362,400.
Under the Entry Age Normal cost method used to determine the employer
contributions to FIRE, there would be an average increase in the
Unfunded Accrued Liability (UAL) of approximately $59,800 and an average
increase in the Present Value of future employer Normal Cost of
$302,600.
For a Tier 3 Modified or Enhanced member who purchases cadet service
and is deemed an original Tier 3 member, the enactment of this proposed
legislation would increase the PVFB by approximately $12,600, on aver-
age, for each member. The proposed legislation would also increase the
Present Value of member contributions by approximately $1,500, on aver-
age, after taking into account the cost of the buyback, for a net result
of an average increase in the Present Value of future employer contrib-
utions of approximately $11,100.
Under the Entry Age Normal cost method used to determine the employer
contributions to FIRE, there would be an average increase in the UAL of
approximately $700 and an average increase in the Present Value of
future employer Normal Cost of $10,400.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this
proposed legislation would increase employer contributions, where such
amount would depend on the number of members affected as well as other
characteristics including the age, years of service, and salary history
of the member.
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As there is no data currently available to estimate the number of
members who might benefit from the proposed legislation, the financial
impact would be recognized at the time of event. Consequently, changes
in employer contributions have been estimated assuming that the increase
in the UAL will be financed over the same time period used for actuarial
losses in accordance with Section 13-638.2(k-2) of the Administrative
Code of the City of New York. Using this approach, the additional UAL
would be amortized over a closed 15-year period (14 payments under the
One-Year Lag Methodology) using level dollar payments.
For the purposes of this Fiscal Note, the UAL payment plus the
increase in the Normal Cost results in an increase in annual employer
contributions of approximately $25,700, on average, for each member who
is deemed a Tier 2 member, and of approximately $700, on average, for
each member who is deemed an original Tier 3 member.
With respect to the timing, increases in employer contributions would
depend upon when members purchase their prior cadet service but, gener-
ally, increased employer contributions will first occur the second
fiscal year following the processing of the member's buyback applica-
tion.
CENSUS DATA: The estimates presented herein are based on the census
data used in the June 30, 2021 (Lag) actuarial valuation of FIRE to
determine the Preliminary Fiscal Year 2023 employer contributions.
There are 2,849 active FIRE members as of June 30, 2021 who are
currently in Tier 3, Tier 3 Modified, or Tier 3 Enhanced and could
potentially benefit from the proposed legislation by being deemed a Tier
2 member (i.e., age 30 and older). These active members had an average
age of approximately 34.1 years, average service of approximately 5.5
years, and an average salary of approximately $107,000.
There are 3,325 active FIRE members as of June 30, 2021 who are
currently in Tier 3 Modified or Tier 3 Enhanced and could potentially
benefit from the proposed legislation by being deemed an original Tier 3
member (i.e., age 27 and older). These active members had an average age
of approximately 32.7 years, average service of approximately 4.8 years,
and an average salary of approximately $99,000.
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 Preliminary June 30, 2021 (Lag) actuarial
valuations used to determine the Preliminary Fiscal Year 2023 employer
contributions of FIRE. Additionally, 1.2 years of cadet service was
assumed based on the amount of cadet service previously purchased by
members of the New York City Police Pension Fund.
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 FIRE 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 meth-
ods 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:
* Future purchases of non-qualifying service by members who would
be deemed Tier 2 were this bill to pass.
* The initial, additional administrative costs of FIRE and other
New York City agencies to implement the proposed legislation.
S. 8950 5
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
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 2022-39 dated April 29,
2022 was prepared by the Interim Chief Actuary for the New York City
Fire Pension Fund. This estimate is intended for use only during the
2022 Legislative Session.
