S T A T E O F N E W Y O R K
________________________________________________________________________
9389
I N S E N A T E
May 23, 2022
___________
Introduced by Sen. JACKSON -- 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, the education
law and the administrative code of the city of New York, in relation
to providing cost-of-living adjustments
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivision c of section 78-a of the retirement and social
security law, as added by chapter 125 of the laws of 2000, is amended to
read as follows:
c. Said cost-of-living adjustment shall be computed on a base benefit
amount [not to exceed] OF eighteen thousand dollars of the annual
retirement allowance defined in subdivision b of this section, PROVIDED,
HOWEVER, SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY REFER-
ENCE TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S. CITY
AVERAGE, ALL ITEMS, 1982-84=100), PUBLISHED BY THE UNITED STATES
BUREAU OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR BEGINNING
ON SEPTEMBER FIRST, TWO THOUSAND TWENTY-TWO. THE ANNUAL PERCENTAGE
INCREASE TO THE BASE AMOUNT SHALL EQUAL FIFTY PERCENT OF THE ANNUAL
INFLATION, AS DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX
IN THE ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR TO THE
COST-OF-LIVING ADJUSTMENT EFFECTIVE ON THE ENSUING SEPTEMBER FIRST.
SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
ONE PERCENT AND SHALL NOT EXCEED THREE PERCENT NOR BE LESS THAN ONE
PERCENT.
§ 2. Subdivision c of section 378-a of the retirement and social secu-
rity law, as added by chapter 125 of the laws of 2000, is amended to
read as follows:
c. Said cost-of-living adjustment shall be computed on a base benefit
amount [not to exceed] OF eighteen thousand dollars of the annual
retirement allowance defined in subdivision b of this section, PROVIDED,
HOWEVER, SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY REFER-
ENCE TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S. CITY
AVERAGE, ALL ITEMS, 1982-84=100), PUBLISHED BY THE UNITED STATES
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD14047-03-2
S. 9389 2
BUREAU OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR BEGINNING
ON SEPTEMBER FIRST, TWO THOUSAND TWENTY-TWO. THE ANNUAL PERCENTAGE
INCREASE TO THE BASE AMOUNT SHALL EQUAL FIFTY PERCENT OF THE ANNUAL
INFLATION, AS DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX
IN THE ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR TO THE
COST-OF-LIVING ADJUSTMENT EFFECTIVE ON THE ENSUING SEPTEMBER FIRST.
SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
ONE PERCENT AND SHALL NOT EXCEED THREE PERCENT NOR BE LESS THAN ONE
PERCENT.
§ 3. Subdivision c of section 532-a of the education law, as added by
chapter 125 of the laws of 2000, is amended to read as follows:
c. Said cost-of-living adjustment shall be computed on a base benefit
amount [not to exceed] OF eighteen thousand dollars of the annual
retirement allowance defined in subdivision b of this section, PROVIDED,
HOWEVER, SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY REFER-
ENCE TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S. CITY
AVERAGE, ALL ITEMS, 1982-84=100), PUBLISHED BY THE UNITED STATES
BUREAU OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR BEGINNING
ON SEPTEMBER FIRST, TWO THOUSAND TWENTY-TWO. THE ANNUAL PERCENTAGE
INCREASE TO THE BASE AMOUNT SHALL EQUAL FIFTY PERCENT OF THE ANNUAL
INFLATION, AS DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX
IN THE ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR TO THE
COST-OF-LIVING ADJUSTMENT EFFECTIVE ON THE ENSUING SEPTEMBER FIRST.
SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
ONE PERCENT AND SHALL NOT EXCEED THREE PERCENT NOR BE LESS THAN ONE
PERCENT.
§ 4. Subdivision c of section 13-696 of the administrative code of the
city of New York, as added by chapter 125 of the laws of 2000, is
amended to read as follows:
c. Said cost-of-living adjustment shall be computed on a base benefit
amount [not to exceed] OF eighteen thousand dollars of the annual fixed
retirement allowance defined in subdivision b of this section, PROVIDED,
HOWEVER, SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY REFER-
ENCE TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S. CITY
AVERAGE, ALL ITEMS, 1982-84=100), PUBLISHED BY THE UNITED STATES
BUREAU OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR BEGINNING
ON SEPTEMBER FIRST, TWO THOUSAND TWENTY-TWO. THE ANNUAL PERCENTAGE
INCREASE TO THE BASE AMOUNT SHALL EQUAL FIFTY PERCENT OF THE ANNUAL
INFLATION, AS DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX
IN THE ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR TO THE
COST-OF-LIVING ADJUSTMENT EFFECTIVE ON THE ENSUING SEPTEMBER FIRST.
SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
ONE PERCENT AND SHALL NOT EXCEED THREE PERCENT NOR BE LESS THAN ONE
PERCENT.
§ 5. Notwithstanding any other provision of law to the contrary, none
of the provisions of this act shall be subject to section 25 of the
retirement and social security law.
§ 6. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would provide an increase in the defined benefit cost-of-
living adjustment (COLA) for New York public retirement systems. Start-
ing with the payment in September 2022, the base benefit for computation
of the annual COLA will be increased annually by 50% of the annual
inflation not to exceed 3% or be less than 1%.
Insofar as this bill affects the New York State and Local Employees'
Retirement System (ERS), the increased costs would be shared by the
S. 9389 3
State of New York and the participating employers in the ERS. If this
bill were enacted during the 2022 legislative session, the increase in
the present value of benefits would be approximately $1.03 billion. The
estimated first year cost would be approximately $47 million to the
State of New York and approximately $67 million to the participating
employers in the ERS.
Insofar as this bill affects the New York State and Local Police and
Fire Retirement System (PFRS), the increased costs would be shared by
the State of New York and the participating employers in the PFRS. If
this bill were enacted during the 2022 legislative session, the increase
in the present value of benefits would be approximately $148 million.
The estimated first year cost would be approximately $3 million to the
State of New York and approximately $12 million to the participating
employers in the PFRS.
Summary of relevant resources:
Membership data as of March 31, 2021 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2021 actuari-
al valuation. Distributions and other statistics can be found in the
2021 Report of the Actuary and the 2021 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2020
and 2021 Annual Report to the Comptroller on Actuarial Assumptions, and
the Codes, Rules and Regulations of the State of New York: Audit and
Control.
The Market Assets and GASB Disclosures are found in the March 31, 2021
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated February 9, 2022, and intended for use only
during the 2022 Legislative Session, is Fiscal Note No. 2022-37,
prepared by the Actuary for the New York State and Local Retirement
System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill (legislative bill draft 14047-01-1) would amend subdivision
c of Section 532-a of the Education Law to annually increase the current
cost-of-living adjustment (COLA) base benefit amount, currently at
$18,000, by fifty percent of annual inflation. Currently the base bene-
fit amount to which the COLA percentage is applied is fixed at $18,000
annually. The annual percentage increase shall be determined from the
increase in the Consumer Price Index, published by the United States
Bureau of Labor Statistics, in the one-year period ending on the March
thirty-first prior to the COLA effective on the ensuing September first.
The annual percentage increase shall not exceed three percent nor be
less than one percent. This COLA base benefit adjustment would be effec-
tive in September 2022.
The annual cost to the employers of members of the New York State
Teachers' Retirement System for this benefit is estimated to be $92.9
million or .53% of payroll if this bill is enacted.
Member data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Annual Report. System assets are as reported in the System's financial
S. 9389 4
statements and can also be found in the System's Annual Report. Actuar-
ial assumptions and methods are provided in the System's Actuarial Valu-
ation Report and the 2021 Actuarial Assumptions Report.
The source of this estimate is Fiscal Note 2022-10 dated February 10,
2022 prepared by the Office of the Actuary of the New York State Teach-
ers' Retirement System and is intended for use only during the 2022
Legislative Session. I, Richard A. Young, am the Chief Actuary for the
New York State Teachers' Retirement System. I am a member of the Ameri-
can Academy of Actuaries and I meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained
herein.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation, as it relates to the New
York City Retirement Systems and Pension Funds (NYCRS), would amend
Section 13-696 of the Administrative Code of the City of New York
(ACCNY) to increase the Cost-of-Living Adjustment (COLA) base limit of
$18,000 by 50% of CPI each year, starting on September 1, 2022, for the
New York City Employees' Retirement System (NYCERS), the New York City
Teachers' Retirement System (NYCTRS), the New York City Board of Educa-
tion Retirement System (BERS), the New York City Police Pension Fund
(POLICE), and the New York City Fire Pension Fund (FIRE).
Note: To the extent that the implementation of the proposed legis-
lation deviates from the calculation method discussed herein, the costs
for the proposed legislation may be as much as 70% higher than the costs
disclosed in the table below.
Effective Date: Upon enactment and first applicable to the September
2022 COLA.
IMPACT ON BENEFITS: Certain NYCRS retirees and beneficiaries are
eligible to receive a COLA pursuant to the ACCNY Section 13-696(a)
(i.e., age 62 and retired for five years; age 55 and retired for 10
years; disabled retirees who are retired for five years; and accidental
death benefit recipients who have been receiving the benefit for five
years). Spouses paid under a lifetime optional benefit generally receive
50% of the COLA that would have been payable to the retiree.
The COLA is equal to 50% of the increase in the consumer price index
(CPI) in the one-year period ending on the March 31 prior to the COLA
effective on the ensuing September 1. The percentage is rounded to the
next higher one-tenth of one percent and shall not be less than 1% nor
more than 3%.
The COLA currently provides for an annual increase equal to a percent-
age of the annual retirement allowance otherwise payable, computed with-
out optional modification, but limited to the first $18,000 of retire-
ment allowance.
The costs in the table below are based on providing for an annual
increase equal to a percentage of the annual retirement allowance other-
wise payable, but limited to the $18,000 limit, increased on September
1, 2022 and each year thereafter by the COLA.
The alternate cost disclosed below uses the increasing $18,000 as the
base for calculating COLA rather than as the limit of the retirement
allowance subject to the COLA increase.
FINANCIAL IMPACT - SUMMARY: The estimated financial impact to NYCRS of
increasing the $18,000 limit as described above is an increase in Pres-
ent Value of Future Benefits (PVFB) of $1.5 billion and an increase in
the first year annual employer contributions of $800.5 million. The
increase in first year annual employer contributions of $800.5 million
is estimated to be $658.9 million for New York City and $141.6 million
S. 9389 5
for the other obligors of NYCRS. A breakdown of the financial impact by
System is shown in the table below.
NYCRS Additional Estimated First Year
Present Value of Annual Employer
Future Benefits Contributions*
($ Millions) ($ Millions)
NYCERS $626.1 $ 325.1
NYCTRS 476.3 202.0
BERS 44.1 15.3
POLICE 278.1 203.7
FIRE 86.8 54.4
Total $1,511.4 $ 800.5
* Employer contributions after the first year are estimated to be
approximately $100 million per year.
As noted above, to the extent that the implementation of this proposed
legislation, for purposes of calculating individual COLA amounts, uses
the increasing $18,000 base for all retirees, the increase in PVFB is
estimated to be approximately $2.5 billion.
In accordance with ACCNY Section 13-638.2(k-2), 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.
For purposes of this Fiscal Note, it has been assumed that increases
in UAL attributable to current retirees would be recognized immediately
and that increases in UAL attributable to active members would be amor-
tized over periods ranging from 12 to 15 years depending on the System
(11 to 14 payments under the One-Year Lag Methodology (OYLM)).
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 valuations of NYCRS. 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 valuations of
NYCRS to determine the Preliminary Fiscal Year 2023 employer contrib-
utions.
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 Preliminary June
30, 2021 (Lag) actuarial valuations used to determine the Preliminary
Fiscal Year 2023 employer contributions of each respective NYCRS.
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 NYCRS 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:
* The initial, additional administrative costs to each of the
retirement systems and other New York City agencies to implement the
proposed legislation.
S. 9389 6
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 2022-50 dated May 12,
2022 was prepared by the Interim Chief Actuary for the New York City
Retirement Systems and Pension Funds. This estimate is intended for use
only during the 2022 Legislative Session.
