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Assembly Actions -
Lowercase Senate Actions - UPPERCASE |
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|---|---|
| Jan 06, 2016 |
referred to cities |
| Jun 25, 2015 |
committed to rules |
| Apr 27, 2015 |
advanced to third reading |
| Apr 23, 2015 |
2nd report cal. |
| Apr 22, 2015 |
1st report cal.419 |
| Mar 11, 2015 |
referred to cities |
Senate Bill S4269
2015-2016 Legislative Session
Relates to the disability benefits of members of the New York police and fire pension funds
download bill text pdfSponsored By
(R, C, IP) Senate District
Archive: Last Bill Status - In Senate Committee Cities Committee
- Introduced
-
- In Committee Assembly
- In Committee Senate
-
- On Floor Calendar Assembly
- On Floor Calendar Senate
-
- Passed Assembly
- Passed Senate
- Delivered to Governor
- Signed By Governor
Actions
Votes
co-Sponsors
(D) 15th Senate District
(D) Senate District
(D) Senate District
(D, WF) Senate District
(D, WF) Senate District
(D) Senate District
(R, C, IP, RFM) 24th Senate District
(D, WF) 21st Senate District
(D, IP) Senate District
2015-S4269 (ACTIVE) - Details
- See Assembly Version of this Bill:
- A6046
- Current Committee:
- Senate Cities
- Law Section:
- New York City Administrative Code
- Laws Affected:
- Amd §§13-357 & 13-353.1, NYC Ad Cd; amd §§506, 507, 510, 511 & 512, R & SS L; amd §§207-k, 207-kk, 207-p & 207-q, Gen Muni L
2015-S4269 (ACTIVE) - Sponsor Memo
BILL NUMBER:S4269
TITLE OF BILL: An act to amend the administrative code of the city of
New York, the retirement and social security law, and the general
municipal law, in relation to the disability benefits of members of
the New York city police and fire pension funds
PURPOSE: To provide equal disability benefits to all police and fire
pension members in New York City.
SUMMARY OF PROVISIONS:
Section one of this bill amends sections 13-357(a) and 13-357(b) of
the Administrative Code of New York City, subdivision (a) as amended
by the Laws of 1986, to include disability pensioners who have retired
pursuant to Section 506 and Section 507 of the Retirement and Social
Security Law.
Section two of this bill adds subdivisions (e) and (f) to Section 506
of the Retirement and Social Security Law. Subdivisions (e) and (f)
respectively allow New York City fire and police pension fund members
to be eligible for ordinary disability retirement benefits pursuant to
sections 13-216, 13-251, 13-252, 13-254, 13-316 or 13-357 of the New
York City Administrative Code, as applicable to the retiring member. A
member who retires under any of these Administrative Code provisions
shall receive an annuity equal to his or her accumulated
contributions, a pension equal to the
reserve-for-increased-takehome-pay for him or her, and a pension equal
to one-fortieth of his or her final average salary multiplied by the
number of years of city-service credited to him or her but not less
than half of his or her Final Average Salary ("FAS") if his or her
credited years are ten or more, or one-third of his or her FAS if his
or her credited years are less than ten.
Section three of this bill adds subdivisions (j) and (k) to Section
507 of the Retirement and Social Security Law. Subdivisions (j) and
(k) respectively allow New York City fire and police pension fund
members to be eligible for accidental disability retirement pursuant
to sections 13-215, 13-252, 13-254, 13-316, 13-353- 13-354, or 13-357
of the New York City Administrative Code. These new subdivisions
provide that a retiree shall receive an annuity equal to his or her
accumulated contributions, a pension equal to the
reserve-for-increased-take-home-pay for him or her, and a pension
equal to 75 percent of his or her FAS.
Section four of this bill adds subdivision (i) to Section 510 of the
Retirement and Social Security Law. Subdivision (i) provides that
annual escalation shall not apply to the ordinary or accidental
disability retirement benefits for those who retire pursuant to
Sections 506 and 507 of the Retirement and Social Security Law.
Instead, their benefits shall be adjusted for cost-of-living pursuant
to Section 13-696 of the New York City Administrative Code.
Section five of this bill amends Section 511(f) of the Retirement and
Social Security Law to provide that this section shall not apply to
New York City police and fire pension members who are subject to
Article 14 of the Retirement and Social Security Law.
Section six of this bill adds subdivisions (e) and (f) to Section 512
of the Retirement and Social Security Law. Subdivisions (e) and (f)
respectively provide that New York City fire and police pension
members FAS shall mean the salary earned the year prior to retirement,
unless that salary is 20 percent more than the year prior to that, in
which case that excess 20 percent is excluded from the FAS
computation. Authorized leaves of absence shall be excluded from the
FAS computation as well.
Section seven of this bill reletters paragraph (b) of Section
13-353.1(1) of the New York City Administrative Code to (c) and adds a
new paragraph (b). New paragraph (b) states that in order to be
eligible for the World Trade Center presumption provided by paragraph
(a) of this subdivision, a member must have passed a physical exam for
entry into public service that failed to disclose evidence of the
qualifying condition that is the basis for the disability, or have
authorized for the release of medical records if he or she did not
have a physical exam for entry into public service and there is no
evidence in those records that the qualifying condition that serves as
the basis for the disability existed before September 11, 2001.
Section eight of this bill amends section 207-k of the General
Municipal Law to extend the current presumption for diseases of the
heart and strokes to medical officers employed by the New York City
fire department.
Section nine of this bill amends section 207-kk of the General
Municipal Law to extend the current presumption for certain cancers to
medical officers employed by the New York City fire department.
Section ten of this bill amends section 207-p of the General Municipal
Law to extend the current presumption for HIV to medical officers
employed by the New York City fire department.
Section eleven of this bill amends section 207-q of the General
Municipal Law to extend the current presumption for lung diseases to
medical officers employed by the New York City fire department.
Section twelve of this bill provides that this act shall take effect
on the sixtieth day after it shall become a law; provided, however,
that amendments to sections 207-k, 207-kk and 207-q of the general
municipal law made by sections eight, nine and eleven of this act
shall not affect the expiration of such sections, as provided in
section 480 of the retirement and social security law.
JUSTIFICATION: In 2009, Governor Paterson vetoed a Tier 2 extension
bill for all New York State Police and Fire pension members. In Veto
Memorandum 5, Governor Paterson stated that due to the "recession and
fiscal crisis," as well as the Comptroller's announcement that the
"New York State Pension Fund lost 26% of its value in the most recent
fiscal year," led to his decision not to "ignore the present reality,
and simply re-enact the same provisions that have contributed to New
York's financial straits, without accompanying reform." This reform,
which was Tier V, was approved on December 10, 2009 as Chapter 504 of
the Laws of 2009.
Shortly after Governor Paterson issued Veto Memorandum 5, most of the
State Police and Fire unions negotiated with management and agreed to
a Tier V benefit plan. The Mayor of New York City would not agree to
the same benefits, resulting in no new pension plan agreement covering
New York City Police and Fire members. With no new pension plan, New
York City Police and Fire members defaulted into the original Article
14 Tier III pension plan. Tier III provides very limited disability
benefits, which are only 50% of the member's final average salary,
which is reduced by 50% of the primary social security benefit
received. Tier II members receive an accidental disability benefit
equaling 75% of the member's final average salary with no reduction
for primary social security benefits received by the member.
An example in the difference in these benefits is illustrated by the
potential accidental disability benefits that would be provided to
Police Officer Kenneth Healey. On October 23, 2014, by a man wielding
an 18 inch hatchet struck Officer Healey in the head while he was
standing on a sidewalk with three other police officers in Jamaica,
Queens. As a result of the attack Officer Healy was hospitalized for
five days and has underwent two surgeries on his skull. If Officer
Healy received an accidental disability pension due to his injuries,
the amount of the pension would be approximately $21,000 per year,
with a reduction in an amount equaling 50% of any primary social
security benefits that he may receive. If Officer Healy was eligible
to receive Tier II accidental disability benefits, he would receive
approximately $31,500 per year without any reduction for social
security benefits.
Another example of this inequity is illustrated by the potential
accidental disability benefits that would be paid to Police Officer
Rosa Rodriguez. Officer Rodriguez was injured when she and her partner
responded to an apartment fire in Coney Island that was set by a
teenager. She and her partner, Police Officer Dennis Guerra, were
overcome by smoke in the burning building. They were both rushed to
the hospital in critical condition. Officer Guerra died four days
later as a result of his injuries. Officer Rodriguez was in a coma for
six days and has been released from the hospital with an uncertain
future because the doctors have said that she may never fully recover
from her injuries. Officer Rodriguez would be entitled to an
accidental disability pension of $22,000 per year, with a reduction in
an amount equaling 50% of any primary social security benefits that
she may receive. If Officer Rodriguez was eligible to receive Tier II
accidental disability benefits, she would receive approximately
$31,500 per year without any reduction for social security benefits.
This bill would reverse the inequities inherent in Tier III
illustrated by Officer Healy and Officer Rodriguez
This bill would further recognize that the medical officers employed
by the New York City Fire Department frequently respond to fires, and
thus, should be afforded the same presumptions for medical impairments
that can lead to disability or death as firefighters. Dr. Kerry Kelly
and Dr. David Prezant were medical officers with the New York City
Fire Department on September 11, 2001 when they responded to the need
for medical assistance at the World trade Center. This bill would
afford them World Trade Center presumption for qualifying conditions
should they become disabled or die from a qualifying condition. These
medical officers respond to help those who are injured when a fire
breaks out. They are right there on the front lines, and thus, should
be afforded the same presumptions for medical impairments that are
currently granted to firefighters.
LEGISLATIVE HISTORY: This is a new bill.
FISCAL IMPLICATIONS: See the bill.
EFFECTIVE DATE: This act shall take effect on the sixtieth day after
it shall become a law; provided, however, that amendments to sections
207-k, 207-kk and 207-q of the general municipal law made by sections
eight, nine and eleven of this act shall not affect the expiration of
such sections, as provided in section 480 of the retirement and social
security law.
2015-S4269 (ACTIVE) - Bill Text download pdf
S T A T E O F N E W Y O R K
________________________________________________________________________
4269
2015-2016 Regular Sessions
I N S E N A T E
March 11, 2015
___________
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when
printed to be committed to the Committee on Cities
AN ACT to amend the administrative code of the city of New York, the
retirement and social security law, and the general municipal law, in
relation to the disability benefits of members of the New York city
police and fire pension funds
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivisions a and b of section 13-357 of the administra-
tive code of the city of New York, subdivision a as amended by chapter
438 of the laws of 1986, are amended to read as follows:
a. Once each year the board may, and upon his or her own application
shall, require any disability pensioner, under the minimum period for
service retirement elected by him or her, and who at the time of his or
her retirement for disability was an improved benefits plan member, OR
ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW, AND WHO IS
UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
RETIREMENT AND SOCIAL SECURITY LAW FOR POLICE/FIRE MEMBERS to undergo
medical examination. Such examination shall be made at the place of
residence of such beneficiary or other place mutually agreed upon. Upon
the completion of such examination the medical board shall report and
certify to the board whether such beneficiary is or is not totally or
partially incapacitated physically or mentally and whether he or she is
or is not engaged in or able to engage in a gainful occupation. If the
board concur in a report by the medical board that such beneficiary is
able to engage in a gainful occupation, it shall certify the name of
such beneficiary to the appropriate civil service commission, state or
municipal, and such commission shall place his or her name as a
preferred eligible on such appropriate lists of candidates as are
prepared for appointment to positions for which he or she is stated to
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09763-01-5
S. 4269 2
be qualified. Should such beneficiary be engaged in a gainful occupa-
tion, or should he or she be offered city-service as a result of the
placing of his or her name on a civil service list, such board shall
reduce the amount of his or her disability pension and his or her
pension-providing-for-increased-take-home-pay, if any, to an amount
which, when added to that then earned by him or her, or earnable by him
or her in city-service so offered him or her, shall not exceed the
current maximum salary for the title next higher than that held by him
or her when he or she was retired. Should the earning capacity of such
beneficiary be further altered, such board may further alter his or her
pension and his or her pension-providing-for-increased-take-home-pay, if
any, to an amount which shall not exceed the rate of pension and his or
her pension-providing-for-increased-take-home-pay, if any, upon which he
or she was originally retired but which, subject to such limitation,
shall equal, when added to that earnable by him or her, the current
maximum salary for the title next higher than that held by him or her
when he or she was retired. The provisions of this section shall be
executed, any provision of the charter or the code to the contrary
notwithstanding.
b. Should any disability pensioner, under the minimum period for
service retirement elected by him or her, and who was an improved bene-
fits plan member at the time of his or her retirement for disability, OR
ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW AND WHO IS
UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
RETIREMENT AND SOCIAL SECURITY LAW FOR POLICE/FIRE MEMBERS, refuse to
submit to one medical examination in any year by a physician or physi-
cians designated by the medical board, his or her pension and his or her
pension-providing-for-increased-take-home-pay, if any, may be discontin-
ued until his or her withdrawal of such refusal. Should such refusal
continue for one year, all his or her rights in and to such pension and
his or her pension-providing-for-increased-take-home-pay, if any, may be
revoked by such board.
S 2. Section 506 of the retirement and social security law is amended
by adding two new subdivisions e and f to read as follows:
E. 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND WHO
ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK CITY POLICE
PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE
FOR ORDINARY DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-251 AND
13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, AND SHALL
RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
(I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
(II) A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE
RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
TLED, IF ANY; AND
(III) A PENSION, WHICH, TOGETHER WITH HIS OR HER ANNUITY AND THE
PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
S. 4269 3
OR (2) ONE-THIRD OF HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
2. THE PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION FIVE HUNDRED
SEVEN OF THIS ARTICLE SHALL APPLY TO DISABILITY BENEFITS UNDER THIS
SUBDIVISION.
F. 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
SHALL NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND
WHO ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPART-
MENT PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGI-
BLE FOR ORDINARY DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-352 AND
13-357 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, AND SHALL
RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
(I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
AND
(II) A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE
RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
TLED, IF ANY, AND
(III) A PENSION, WHICH TOGETHER WITH HIS OR HER ANNUITY AND THE
PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
OR (2) ONE-THIRD OF HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
2. THE PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION FIVE HUNDRED
SEVEN OF THIS ARTICLE SHALL APPLY TO DISABILITY BENEFITS UNDER THIS
SUBDIVISION.
S 3. Section 507 of the retirement and social security law is amended
by adding two new subdivisions j and k to read as follows:
J. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR ANY GENERAL,
SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR REGULATION
TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E, AND F OF THIS SECTION SHALL
NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND WHO
ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPARTMENT
PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE
FOR ACCIDENTAL DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-353,
13-354, AND 13-357 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK
AND ANY ACCIDENTAL DISABILITY RETIREMENT BENEFITS FOUND IN THE GENERAL
MUNICIPAL LAW AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL
CONSIST OF:
1. AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
AND
2. A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE RESERVE-FOR-IN-
CREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTITLED, IF ANY;
AND
3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
ADDITION TO THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS ONE AND
TWO OF THIS SUBDIVISION.
K. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E AND F OF THIS
S. 4269 4
SECTION SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION
FUND WHO ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK CITY
POLICE PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE
ELIGIBLE FOR ACCIDENTAL DISABILITY RETIREMENT PURSUANT TO SECTIONS
13-215, 13-252 AND 13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW
YORK, AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
1. AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIRE-
MENT;
2. A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE RESERVE-FOR-IN-
CREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTITLED, IF ANY;
AND
3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
ADDITION TO THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS ONE AND
TWO OF THIS SUBDIVISION.
S 4. Section 510 of the retirement and social security law is amended
by adding a new subdivision i to read as follows:
I. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS ARTICLE OR THE ADMIN-
ISTRATIVE CODE OF THE CITY OF NEW YORK, THE ANNUAL ESCALATION PROVIDED
IN THIS SECTION SHALL NOT APPLY TO THE ORDINARY OR ACCIDENTAL DISABILITY
RETIREMENT BENEFIT OF MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND
OR MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND WHO RETIRE
PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTI-
CLE. THE ORDINARY OR ACCIDENTAL DISABILITY RETIREMENT BENEFIT OF MEMBERS
OF THE NEW YORK FIRE DEPARTMENT PENSION FUND WHO RETIRE PURSUANT TO
SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTICLE SHALL BE
ADJUSTED FOR COST-OF-LIVING PURSUANT TO THE PROVISIONS OF SECTION 13-696
OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
S 5. Subdivision f of section 511 of the retirement and social securi-
ty law, as amended by chapter 18 of the laws of 2012, is amended to read
as follows:
f. This section shall not apply to general members in the uniformed
correction force of the New York city department of correction or to
uniformed personnel in institutions under the jurisdiction of the
department of corrections and community supervision and security hospi-
tal treatment assistants, as those terms are defined in subdivision i of
section eighty-nine of this chapter, provided, however, that the
provisions of this section shall apply to a New York city uniformed
correction/sanitation revised plan member, AND THIS SECTION SHALL ALSO
NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND OR THE NEW
YORK FIRE DEPARTMENT PENSION FUND WHO ARE SUBJECT TO THIS ARTICLE WHO
RETIRE ON ORDINARY OR ACCIDENTAL DISABILITY RETIREMENT PURSUANT TO
SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTICLE.
S 6. Section 512 of the retirement and social security law is amended
by adding two new subdivisions e and f to read as follows:
E. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF THE
NEW YORK FIRE DEPARTMENT PENSION FUND WHO RETIRE PURSUANT TO SECTIONS
FIVE HUNDRED SIX AND FIVE HUNDRED SEVEN OF THIS ARTICLE A MEMBER'S FINAL
AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH MEMBER DURING THE
ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY FORM
OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
OF RETIREMENT), OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION, SICK
LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
WORKED (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHOR-
IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
S. 4269 5
DURING THE ONE YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS THAT
OF THE PREVIOUS ONE-YEAR PERIOD BY MORE THAN TWENTY PER CENTUM THE
AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE COMPU-
TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
MONTH OR MONTHS (NOT IN EXCESS OF THREE) WHICH WOULD OTHERWISE BE
INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH THE MEMBER
WAS ON AUTHORIZED LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
THEREOF.
F. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF THE
NEW YORK CITY POLICE PENSION FUND WHO RETIRE PURSUANT TO SECTIONS FIVE
HUNDRED SIX AND FIVE HUNDRED SEVEN OF THIS ARTICLE A MEMBER'S FINAL
AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH MEMBER DURING THE
ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY FORM
OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
OF RETIREMENT) OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION, SICK
LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
WORKED (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHOR-
IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
DURING THE ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS THAT
OF THE PREVIOUS ONE-YEAR PERIOD BY MORE THAN TWENTY PER CENTUM, THE
AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE COMPU-
TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
MONTH OR MONTHS (NOT IN EXCESS OF THREE) WHICH WOULD OTHERWISE BE
INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH THE MEMBER
WAS ON AUTHORIZED LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
THEREOF.
S 7. Paragraph (b) of subdivision 1 of section 13-353.1 of the admin-
istrative code of the city of New York is relettered paragraph (c) and a
new paragraph (b) is added to read as follows:
(B) IN ORDER TO BE ELIGIBLE FOR THE PRESUMPTION PROVIDED UNDER PARA-
GRAPH (A) OF THIS SUBDIVISION, A MEMBER MUST HAVE (I) SUCCESSFULLY
PASSED A PHYSICAL EXAMINATION FOR ENTRY INTO PUBLIC SERVICE WHICH FAILED
TO DISCLOSE EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH
THAT FORMED THE BASIS FOR THE DISABILITY, OR (II) AUTHORIZED RELEASE OF
ALL RELEVANT MEDICAL RECORDS, IF THE MEMBER DID NOT UNDERGO A PHYSICAL
EXAMINATION FOR ENTRY INTO PUBLIC SERVICE, AND THERE IS NO EVIDENCE OF
THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED THE BASIS
FOR THE DISABILITY IN SUCH MEDICAL RECORDS PRIOR TO SEPTEMBER 11, 2001.
S 8. Section 207-k of the general municipal law, as amended by chapter
1046 of the laws of 1973, subdivision a as amended by chapter 654 of the
laws of 2006, is amended to read as follows:
S 207-k. Disabilities of policemen and firemen in certain cities. a.
Notwithstanding the provisions of any general, special or local law or
administrative code to the contrary, but except for the purposes of
sections two hundred seven-a and two hundred seven-c of this article,
the workers' compensation law and the labor law, any condition of
impairment of health caused by diseases of the heart, or by a stroke,
resulting in total or partial disability or death to a paid member of
the uniformed force of a paid police department or fire department,
where such paid policemen or firemen are drawn from competitive civil
service lists, who successfully passed a physical examination on entry
S. 4269 6
into the service of such respective department, which examination failed
to reveal any evidence of such condition, shall be presumptive evidence
that it was incurred in the performance and discharge of duty, unless
the contrary be proved by competent evidence.
b. The provisions of this section shall remain in full force and
effect to and including the thirtieth day of June, nineteen hundred
seventy-four.
C. IN ADDITION, ANY CONDITION OF IMPAIRMENT OF HEALTH CAUSED BY
DISEASES OF THE HEART, OR BY A STROKE, RESULTING IN TOTAL OR PARTIAL
DISABILITY OR DEATH TO A MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE
CITY OF NEW YORK, SHALL BE PRESUMPTIVE EVIDENCE THAT IT WAS INCURRED IN
THE PERFORMANCE AND DISCHARGE OF DUTY, PROVIDED THAT SUCH MEDICAL OFFI-
CER AUTHORIZED RELEASE OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO
EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED
THE BASIS FOR THE DISABILITY OR DEATH IN SUCH MEDICAL RECORDS UNLESS THE
CONTRARY BE PROVED BY COMPETENT EVIDENCE.
S 9. Section 207-kk of the general municipal law, as amended by chap-
ter 531 of the laws of 2003, is amended to read as follows:
S 207-kk. Disabilities of firefighters in certain cities caused by
cancer. A. Notwithstanding any other provisions of this chapter to the
contrary, any condition of impairment of health caused by (i) any condi-
tion of cancer affecting the lymphatic, digestive, hematological,
urinary, neurological, breast, reproductive, or prostate systems or (ii)
melanoma resulting in total or partial disability or death to a paid
member of a fire department in a city with a population of one million
or more, who successfully passed a physical examination on entry into
the service of such department, which examination failed to reveal any
evidence of such condition, shall be presumptive evidence that it was
incurred in the performance and discharge of duty unless the contrary be
proved by competent evidence. The provisions of this section shall
remain in full force and effect to and including the thirtieth day of
June, two thousand five.
B. IN ADDITION, ANY CONDITION OF IMPAIRMENT OF HEALTH CAUSED BY (I)
ANY CONDITION OF CANCER AFFECTING THE LYMPHATIC, DIGESTIVE, HEMATOLOGI-
CAL, URINARY, NEUROLOGICAL, BREAST, REPRODUCTIVE, OR PROSTATE SYSTEMS OR
(II) MELANOMA RESULTING IN TOTAL OR PARTIAL DISABILITY OR DEATH TO A
MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE CITY OF NEW YORK, SHALL BE
PRESUMPTIVE EVIDENCE THAT IT WAS INCURRED IN THE PERFORMANCE AND
DISCHARGE OF DUTY, PROVIDED THAT SUCH MEDICAL OFFICER AUTHORIZED RELEASE
OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO EVIDENCE OF THE QUALI-
FYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED THE BASIS FOR THE
DISABILITY OR DEATH IN SUCH MEDICAL RECORDS UNLESS THE CONTRARY BE
PROVED BY COMPETENT EVIDENCE.
S 10. Section 207-p of the general municipal law, as added by chapter
641 of the laws of 1999, is amended to read as follows:
S 207-p. Performance of duty disability retirement; police and fire
department. A. Notwithstanding any other provision of this chapter or
administrative code to the contrary, any paid member of a fire depart-
ment and/or a paid police department, in a city with a population of one
million or more who successfully passed a physical examination upon
entry into the service of such department who contracts HIV (where the
employee may have been exposed to a bodily fluid of a person under his
or her care or treatment, or while the employee examined, transported,
rescued or otherwise had contact with such person, in the performance of
his or her duties), tuberculosis or hepatitis, will be presumed to have
contracted such disease as a natural or proximate result of an acci-
S. 4269 7
dental injury received in the performance and discharge of his or her
duties and not as a result of his or her willful negligence, unless the
contrary be provided by competent evidence.
B. IN ADDITION, ANY MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE CITY
OF NEW YORK WHO CONTRACTS HIV (WHERE THE MEDICAL OFFICER HAS BEEN
EXPOSED TO A BODILY FLUID OF A PERSON UNDER HIS OR HER CARE OR TREAT-
MENT, OR WHILE THE MEDICAL OFFICER EXAMINED, TRANSPORTED, RESCUED OR
OTHERWISE HAD CONTACT WITH SUCH PERSON, IN THE PERFORMANCE OF HIS OR HER
DUTIES), TUBERCULOSIS OR HEPATITIS, WILL BE PRESUMED TO HAVE CONTRACTED
SUCH DISEASE AS A NATURAL OR PROXIMATE RESULT OF AN ACCIDENTAL INJURY
RECEIVED IN THE PERFORMANCE OF HIS OR HER DUTIES AND NOT AS A RESULT OF
HIS OR HER WILLFUL NEGLIGENCE, PROVIDED THAT SUCH MEDICAL OFFICER
AUTHORIZED RELEASE OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO
EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED
THE BASIS FOR THE DISABILITY IN SUCH MEDICAL RECORDS, UNLESS THE CONTRA-
RY BE PROVED BY COMPETENT EVIDENCE.
S 11. Section 207-q of the general municipal law, as amended by chap-
ter 103 of the laws of 2006, is amended to read as follows:
S 207-q. Firefighters; presumption in certain diseases. A. Notwith-
standing any provision of this chapter or of any general, special or
local law to the contrary, and for the purposes of this chapter, any
condition of impairment of health caused by diseases of the lung,
resulting in total or partial disability or death to a uniformed member
of a paid fire department, where such member successfully passed a phys-
ical examination on entry into such service or subsequent thereto, which
examination failed to reveal any evidence of such conditions, shall be
presumptive evidence that such disability or death (1) was caused by the
natural and proximate result of an accident, not caused by such fire-
fighter's own negligence and (2) was incurred in the performance and
discharge of duty, unless the contrary be proven by competent evidence.
The provisions of this section shall remain in full force and effect to
and including the thirtieth day of June, two thousand eight.
B. IN ADDITION, ANY CONDITION OF IMPAIRMENT OF HEALTH CAUSED BY
DISEASES OF THE LUNG, RESULTING IN TOTAL OR PARTIAL DISABILITY OR DEATH
TO A MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE CITY OF NEW YORK,
SHALL BE PRESUMPTIVE EVIDENCE THAT SUCH DISABILITY OR DEATH (1) WAS
CAUSED BY THE NATURAL AND PROXIMATE RESULT OF AN ACCIDENT, NOT CAUSED BY
SUCH MEDICAL OFFICER'S OWN NEGLIGENCE AND (2) WAS INCURRED IN THE
PERFORMANCE AND DISCHARGE OF DUTY, PROVIDED THAT SUCH MEDICAL OFFICER
AUTHORIZED RELEASE OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO
EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED
THE BASIS FOR THE DISABILITY IN SUCH MEDICAL RECORDS, UNLESS THE CONTRA-
RY BE PROVED BY COMPETENT EVIDENCE.
S 12. This act shall take effect on the sixtieth day after it shall
have become a law; provided, however, that the amendments to sections
207-k, 207-kk and 207-q of the general municipal law made by sections
eight, nine and eleven of this act shall not affect the expiration of
such sections, as provided in section 480 of the retirement and social
security law.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
* In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
S. 4269 8
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
For purposes of this letter, all members of the New York City Police
Pension Fund ("POLICE") subject to Article 14 of the Retirement and
Social Security Law ("RSSL") will be referred to as "Tier III POLICE
Members." Of those Tier III POLICE Members who have a date of membership
prior to April 1, 2012, they will be referred to as "Original Tier III
POLICE Members." Of those Tier III POLICE Members who have a date of
membership on or after April 1, 2012, they will be referred to as
"Revised Tier III POLICE Members."
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILITY
RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier I and Tier II
The proposed legislation, if enacted, would revise the ODR and ADR
benefit formulas for Tier III POLICE Members.
It appears that the proposed Tier III ODR benefit formula is intended
to be the same as the ODR benefit available to Tier I and Tier II POLICE
Members (i.e., 1/40 of Final Average Salary ("FAS") multiplied by the
years of service, but not less than (1) one-half of FAS if the years of
service are 10 or more or (2) one-third of FAS if the years of service
are less than 10) where the FAS for Tier III POLICE Members would be
based on a one-year FAS, the same as for Tier II and similar to the rate
of pay for Tier I.
Similarly, it also appears that the proposed ADR benefit formula for
Tier III POLICE Members is intended to be the same as the ADR benefit
available to Tier I and Tier II POLICE Members (i.e., 75% of Final Aver-
age Salary ("FAS")), where the FAS for Tier III POLICE Members would be
based on a one-year FAS, the same as for Tier II and similar to the rate
of pay for Tier I.
Note: Tier I and Tier II POLICE Members are also entitled to an addi-
tional 1/60 of total earnings after their 20th anniversary. Given the
proposed statutory references, it is the understanding of the Actuary
that the Tier III POLICE Members impacted by the proposed legislation
would not receive this additional 1/60 of total earnings after 20 years
of service.
POLICE Tier I and Tier II ODR and ADR benefits are subject to Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the
first $18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier III POLICE
Members would be entitled to the COLA described in the preceding para-
graph, but would NOT be subject to an annual Tier III Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Reference to ITHP
The proposed legislation, in defining the revised ODR and ADR bene-
fits, uses the term Increased-Take-Home-Pay ("ITHP").
ITHP is a special benefit provided to Tier I and Tier II members and
is not defined for Tier III members.
Given the history that no Tier III Members have ever received ITHP
benefits, the Actuary has assumed that if the proposed legislation were
enacted, Tier III POLICE Members would not be entitled to ITHP.
* Annuitization of Member Contributions
S. 4269 9
The proposed legislation would include in the ODR and ADR benefit
formulas for Tier III POLICE Members, a benefit in the form of an annui-
ty equal to the actuarial equivalent of the accumulated Tier III member
contributions at retirement.
Annuitized benefits based directly on member contributions are avail-
able to Tier I and Tier II POLICE Members. However, it is the under-
standing of the Actuary that no current Tier III Member has any benefit
which is defined as an annuitization of accumulated member contrib-
utions.
* General Plan Design: From an administrative and design viewpoint,
the Actuary would suggest that consideration be given to incorporating
enhanced ODR and ADR benefit eligibilities and benefit formulas within
RSSL Article 14, using only Article 14 terminology and structure to
achieve the desired ODR and ADR benefit eligibilities and benefit
levels.
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier III POLICE Members the ability to be
eligible for and to utilize the presumptive conditions that qualify for
ADR that are available to Tier I and Tier II POLICE Members.
The reasoning behind this understanding is that in the proposed legis-
lation, eligibility conditions for Tier III POLICE members for ODR would
be determined pursuant to the Administrative Code of the City of New
York ("ACNY") Sections 13-216, 13-251 and 13-254 (i.e., those that apply
to Tier I and Tier II POLICE Members), notwithstanding anything to the
contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier III POLICE Members for ADR would be determined pursuant to ACNY
Sections 13-216, 13-252 and 13-254 (i.e., those that apply to Tier I and
Tier II POLICE Members), notwithstanding anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier III POLICE Members, Tier III POLICE
Members would not be required to waive RSSL Section 507.e in order to be
eligible for ODR or ADR benefits. Consequently, the statutory presump-
tions would apply since that have not been waived.
In accordance with the above reasoning, since current Tier III POLICE
Members are required to waive the presumptions pursuant to RSSL Section
507.e, it is the understanding of the Actuary that Tier III POLICE
Members are currently not entitled to presumptive conditions for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of POLICE but not
members of the New York Fire Department Pension Fund ("FIRE") or any
other uniformed groups. Given the historical consistency in benefits
amongst certain uniformed groups, this proposed legislation would likely
lead to demands for similar legislation for at least some other
uniformed groups.
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend Retirement and Social Security Law ("RSSL") Sections 506, 507,
510, 511 and 512 and amend Administrative Code of the City of New York
("ACNY") Section 13-254 to change, for members of the New York City
Police Pension Fund ("POLICE") subject to Article 14 of the RSSL, the
S. 4269 10
eligibility for and the calculation of Ordinary Disability Retirement
("ODR") benefits and Accidental Disability Retirement ("ADR") benefits.
For purposes of this Fiscal Note, all POLICE members subject to Arti-
cle 14 of the RSSL will be referred to as "Tier III POLICE Members." Of
those Tier III POLICE Members who have a date of membership prior to
April 1, 2012, they will be referred to as "Original Tier III POLICE
Members." Of those Tier III POLICE Members who have a date of membership
on or after April 1, 2012, they will be referred to as "Revised Tier III
POLICE Members."
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier III POLICE Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such ODR benefits are equal to the greater of:
* 33 1/3% of Three-Year Final Average Salary ("FAS3") for Original
Tier III POLICE Members or Five-Year Final Average Salary ("FAS5") for
Revised Tier III POLICE Members, or
* 2% of FAS3 (FAS5 For Revised Tier III POLICE Members) multiplied by
years of credited service (not in excess of 22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that POLICE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for the Tier III POLICE Members would be revised to be the same
as those provided in ACNY Sections 13-216, 13-251 and 13-254 (i.e., the
provisions applicable to Tier I and Tier II POLICE members).
In particular, completing five or more years of service would not be
required in order to be eligible for ODR benefits. In other words, there
would not any requirement for any minimum length of service to be
completed in order to be eligible for ODR benefits.
Under the proposed legislation, if enacted, the ODR benefit for Tier
III POLICE Members would be an allowance consisting of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* A pension, which together with the annuity, equal to 1/40 of One-
Year Final Average Salary ("FAS1") multiplied by years of credited
service, but not less than:
* 1/2 of FAS1, if years of credited service are greater than or equal
to 10 years, or
* 1/3 of FAS1, if years of credited service are less than 10 year.
Note: The proposed legislation also states that one component of the
ODR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier III POLICE
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
S. 4269 11
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions
for ADR benefits for Tier III POLICE Members are based on satisfying
either:
* Being eligible for Social Security Disability retirement benefits
and having become disabled due to an accident sustained in the line of
duty, or
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the appropriate
administrative authority assigned by POLICE.
As a consequence of RSSL Section 507.e, a Tier III POLICE Member would
not be eligible for ADR unless the member waived the benefits of any
statutory presumptions (e.g., certain heart diseases).
Such ADR benefits are calculated using a formula of 50% multiplied by
FAS3 for Original Tier III POLICE Members or FAS5 for Revised Tier III
POLICE Members less 50% of Primary Social Security disability benefit
(determined under RSSL Section 511) and less 100% of Worker's Compen-
sation benefits (if any).
Note: It is the understanding of the Actuary that POLICE Members are
not covered by Worker's Compensation.
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier III POLICE Members would be revised to be the same as
those provided in ACNY Sections 13-216, 13-252 and 13-254 (i.e., the
provisions applicable to Tier I and Tier II POLICE Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide Tier III POLICE Members the abil-
ity to be eligible for and to utilize the statutory presumptions (e.g.,
certain heart diseases) that qualify certain Tier I and Tier II POLICE
Members for ADR.
Under the proposed legislation, if enacted, the ADR benefit for Tier
III POLICE Members would be revised to equal a retirement allowance
equal to the sum of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* 75% multiplied by FAS1.
Note: The proposed legislation also states that one component of the
ADR benefit would be the actuarial equivalent annuity of the Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
Also note, it is the understanding of the Actuary that the Tier III
POLICE Members impacted by the proposed legislation would not receive
any additional 1/60 of annual earnings after 20 years of service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier III POLICE
Members. However, such ADR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES.
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Actuarial Accrued Liability
("UAAL") and APV of future employer contributions as of June 30, 2013
for Tier III POLICE Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
S. 4269 12
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuation of
POLICE.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier III POLICE Members could impact employer
contributions to POLICE would be Fiscal Year 2015.
In accordance with ACNY Section 13.638.2(k-2), new UAAL attributable
to benefit changes are to be amortized as determined by the Actuary but
generally over the remaining working lifetime of those impacted by the
benefit changes. As of June 30, 2013, the remaining working lifetime of
the Tier III POLICE Members is approximately 18 years. Recognizing that
this period will decrease over time as the group of Tier III Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year period (14
payments under the OYLM Methodology).
The following Table one presents an estimate of the increases due to
the changes in ODR and ADR provisions for Tier III POLICE Members in the
APV of future employer contributions and in employer contributions to
POLICE for Fiscal Years 2015 through 2019 that would occur based on the
applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on POLICE
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier III POLICE Members*
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Contributions Contributions
2015 $272.3 $35.7
2016 378.7 47.2
2017 469.6 56.9
2018 552.8 65.5
2019 622.9 72.2
* Based on actuarial assumptions and methods set forth in the Actuarial
Assumptions and Method Section. Also, based on the projection assump-
tions as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510).
The estimated increases in employer contributions shown in Table 1 are
based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
nary Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
S. 4269 13
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs, employer costs and
employer contributions.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each member who enters POLICE, there is a theoretical net annual
employer cost to be paid for such member while such member remains
actively employed (i.e., the Employer Entry Age Normal Cost (referred to
hereafter as "EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate (referred to hereafter as "EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier III POLICE Members would be
greater than the EEANC and EEANR for comparable Tier III POLICE Members
entering at the same attained age and gender under the current POLICE
provisions.
Table 2A shows a summary of the change in EEANC for Original Tier III
POLICE Members for entry ages 25, 30 and 35 determined as of the most
recent date of published EEANR calculations:
Table 2A
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Original Tier III POLICE Members
Under Proposed Legislation
and Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
POLICE 23.91% 24.74% 25.15% 26.14% 27.27% 28.46%
EEANR Under Current Law
POLICE 20.92% 21.75% 20.73% 21.71% 20.50% 21.63%
Increase in EEANR Due to Proposed Legislation
POLICE 2.99% 2.99% 4.42% 4.43% 6.77% 6.83%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
S. 4269 14
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted here-
in including changes in assumptions for ADR. ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
Table 2B shows a summary of the change in EEANC for Revised Tier III
POLICE Members for entry ages 25, 30 and 35 determined as of the most
recent date of published EEANR calculations:
Table 2B
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Revised Tier III POLICE Members
Under Proposed Legislation
and Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
POLICE 23.36% 24.17% 24.68% 25.64% 26.90% 28.07%
EEANR Under Current Law
POLICE 19.91% 20.71% 19.66% 20.59% 19.38% 20.46%
Increase in EEANR Due to Proposed Legislation
POLICE 3.45% 3.46% 5.02% 5.05% 7.52% 7.61%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted here-
in including changes in assumptions for ADR, ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
OTHER COSTS: 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.
* The potential impact if this proposed legislation were to be
extended to other public safety employees (e.g., firefighters).
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data used for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of POLICE used under the OYLM to
determine the Updated Preliminary Fiscal Year 2015 employer contrib-
utions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
S. 4269 15
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of POLICE.
The 3,601 Original Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 28, average service of approximately 2.2
years and an average salary of approximately $63,000.
The 1,916 Revised Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 27, average service of approximately 0.6
years and an average salary of approximately $55,000.
Overall, the 5,517 Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 28, average service of approximately 1.7
years, and an average salary of approximately $60,000.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer contrib-
utions presented herein have been calculated based on the actuarial
assumptions and methods in effect for the June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of POLICE and adjusted for revised ADR eligibil-
ity provisions.
The probabilities of accidental disability used for Tier III POLICE
Members in the event statutory presumptions were to apply equal those
currently used for Tier I and Tier II POLICE Members.
The actuarial valuation methodology does not include a calculation of
the value of an offset for Workers' Compensation benefits as it is the
understanding of the Actuary that POLICE Members are not covered by such
benefits.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier III POLICE Members to be reclas-
sified from Ordinary Disability to Accidental Disability Retirement, or
to the extent that Tier III POLICE Members who would not otherwise ever
choose to apply and then receive an Ordinary Disability Retirement bene-
fit or an Accidental Disability Retirement benefit, then the additional
APVB and employer contributions shown herein would be greater (lesser).
Employer contributions under current methodology have been estimated
assuming the additional APVB would be financed through future normal
contributions including an amortization of the new UAAL attributable to
this proposed legislation over a 15-year period (14 payments under the
OYLM Methodology).
New entrants into Tier III POLICE Members were projected to replace
the POLICE members expected to leave the active population to maintain a
steady-state population.
The following Table 3 presents the total number of active employees of
POLICE used in the projections, assuming a level work force, and the
cumulative number (i.e., net of withdrawals) of Revised Tier III Members
as of each June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Revised Tier III POLICE Members from 2013
Used in the Projections*
Original Revised
June 30 Tier I&II Tier III Tier III Total
2013 29,258 3,601 1,916 34,775
2014 26,784 3,500 4,491 34,775
2015 24,565 3,406 6,804 34,775
S. 4269 16
2016 22,571 3,314 8,890 34,775
2017 20,937 3,225 10,613 34,775
* Total active members included in the projections assume a level
work force based on the June 30, 2013 (Lag) actuarial valuation census
data. Assumes presumptions apply to Tier III POLICE members.
For purposes of estimating the impact of the Tier III Escalation for
retired Tier III POLICE Members, consistent with an underlying Consumer
Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
of 2.5% per year has been assumed.
This compares with the current Chapter 125 of the Laws of 2000 COLA
assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize 1.0%
minimum and 3.0% maximum) on the first $18,000 of benefit.
For Variable Supplements Fund ("VSF") benefits, it has been assumed
that retroactive lump sum payments of VSF ("DROP payments") would be
payable from the completion of 20 years of service.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to POLICE.
However, the economic assumptions (current and proposed) that are used
for determining employer contributions do not develop risk-adjusted,
economic values of benefits. Such risk-adjusted, economic values of
benefits would likely differ significantly from those developed by the
budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
Chief Actuary for the New York City Retirement Systems. I am a Fellow of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-02, dated
January 30, 2015 prepared by the Acting Chief Actuary of the New York
City Retirement Systems.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
In response to your request received by the Office of the Actuary
("OA") on January 15, 2015, enclosed is a Fiscal Note presenting the
estimated financial impact if proposed legislation similar to
A9975/S7736 which was introduced during the 2014 Legislative Session is
enacted into law during the 2015 Legislative Session.
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
Unless otherwise noted, for purposes of this letter the term Tier III
FIRE Members refers to members of the New York Fire Department Pension
Fund ("FIRE") who have a date of membership on or after April 1, 2012
and the one Tier III member of FIRE who has a date of membership on or
after July 1, 2009 and prior to April 1, 2012.
S. 4269 17
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILI-
TY RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier II: The proposed legislation, if enacted,
would revise the ODR and ADR benefit formulas for Tier III FIRE Members.
It appears that the proposed Tier III ODR benefit formula is intended
to be the same as the ODR benefit available to Tier II FIRE Members
(i.e., 1/40 of Final Average Salary ("FAS") multiplied by the years of
service, but not less than (1) one-half of FAS if the years of service
are 10 or more or (2) one-third of FAS if the years of service are less
than 10) where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Similarly, it also appears that the proposed ADR benefit formula for
Tier III FIRE Members is intended to be the same as the ADR benefit
available to Tier II FIRE Members (i.e., 75% of Final Average Salary
("FAS")), where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Note: Tier II FIRE Members are also entitled to an additional 1/60 of
total earnings after their 20th anniversary. Given the proposed statuto-
ry references it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive this
additional 1/60 of total earnings after 20 years of service.
FIRE Tier II ODR and ADR benefits are subject to Cost-of-Living
Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the first
$18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier III FIRE
Members would be entitled to the COLA described in the preceding para-
graph, but would NOT be subject to an annual Tier III Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Reference to ITHP: The proposed legislation, in defining the revised
ODR and ADR benefits, uses the term Increased-Take-Home-Pay ("ITHP").
ITHP is a special benefit provided to Tier I and Tier II members and
is not defined for Tier III members.
Given the history that no Tier III Members have ever received ITHP
benefits, the Actuary has assumed that if the proposed legislation were
enacted, Tier III FIRE Members would not be entitled to ITHP.
* Annuitization of Member Contributions: The proposed legislation
would include in the ODR and ADR benefit formulas for Tier III FIRE
Members, a benefit in the form of an annuity equal to the actuarial
equivalent of the accumulated Tier III member contributions at retire-
ment.
Annuitized benefits based directly on member contributions are avail-
able to Tier II FIRE Members. However, it is the understanding of the
Actuary that no current Tier III Member has any benefit which is defined
as an annuitization of accumulated member contributions.
* General Plan Design: From an administrative and design viewpoint,
the Actuary would suggest that consideration be given to incorporating
enhanced ODR and ADR benefit eligibilities and benefit formulas within
Retirement and Social Security Law ("RSSL") Article 14, using only Arti-
cle 14 terminology and structure to achieve the desired ODR and ADR
benefit eligibilities and benefit levels.
* Name: The official name of the Pension Fund is the New York Fire
Department Pension Fund.
* Presumptive Conditions for ADR
S. 4269 18
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier III FIRE Members the ability to be eligi-
ble for and to utilize the presumptive conditions that qualify for ADR
that are available to Tier I and Tier II FIRE Members.
The reasoning behind this understanding is that in the proposed legis-
lation eligibility conditions for Tier III FIRE members for ODR would be
determined pursuant to the Administrative Code of the City of New York
("ACNY") Sections 13-316, 13-352 and 13-357 (i.e., those that apply to
Tier I and Tier II FIRE Members), notwithstanding anything to the
contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier III FIRE Members for ADR would be determined pursuant to the ACNY
Sections 13-316, 13-353 and 13-357 (i.e., those that apply to Tier I and
Tier II FIRE Members), notwithstanding anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier III FIRE Members, Tier III FIRE Members
would not be required to waive RSSL Section 507.e in order to be eligi-
ble for ODR or ADR benefits. Consequently, the statutory presumptions
would apply since they have not been waived.
In accordance with the above reasoning, since current Tier III FIRE
Members are required to waive the presumptions pursuant to RSSL Section
507.e, it is the understanding of the Actuary that Tier III FIRE Members
are currently not entitled to presumptive conditions for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of FIRE but not members
of the New York City Police Pension Fund ("POLICE") or any other
uniformed groups. Given the historical consistency in benefits amongst
certain uniformed groups, this proposed legislation would likely lead to
demands for similar legislation for at least some other uniformed
groups.
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend Retirement and Social Security Law ("RSSL") Sections 506, 507,
510, 511 and 512 and amend Administrative Code of the City of New York
("ACNY") Section 13-357 to change, for members of the New York Fire
Department Pension Fund ("FIRE") subject to Article 14 of the RSSL, the
eligibility for and the calculation of Ordinary Disability Retirement
("ODR") benefits and Accidental Disability Retirement ("ADR") benefits.
Unless otherwise noted, for purposes of this Fiscal Note the term Tier
III FIRE members refers to members of the New York Fire Department
Pension Fund ("FIRE") who have a date of membership on or after July 1,
2009. Note: Although referred to herein as Tier III members, it should
be noted that members who join FIRE on or after April 1, 2012 are often
referred to as Tier VI members or Revised Tier III members. Also Note:
There is only one Tier III member of FIRE who has a date of membership
on or after July 1, 2009 and prior to April 1, 2012.
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier III FIRE Members are based on:
* Completing five or more years of service, and
S. 4269 19
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such ODR benefits are equal to the greater of:
* 33 1/3% of Five-Year Final Average Salary ("FAS"), or
* 2% of FAS multiplied by years of credited service (not in excess of
22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-352 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE members).
In particular, completing five or more years of service would not be
required in order to be eligible for ODR benefits. In other words, there
would not be any requirement for any minimum length of service to be
completed in order to be eligible for ODR benefits.
Under the proposed legislation, if enacted, the ODR benefit for Tier
III FIRE Members would be an allowance consisting of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* A pension, which together with the annuity, equal to 1/40 of One-
Year Final Average Salary ("FAS1") multiplied by years of credited
service, but not less than:
** 1/2 of FAS1, if years of credited service are greater than or equal
to 10 years, or
** 1/3 of FAS1, if years of credited service are less than 10 years.
Note: The proposed legislation also states that one component of the
ODR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier III FIRE
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions for
ADR benefits for Tier III FIRE Members are based on satisfying either:
* Being eligible for Social Security Disability retirement benefits
and having become disabled due to an accident sustained in the line of
duty, or
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the appropriate
administrative authority assigned by FIRE.
As a consequence of RSSL Section 507.e, a Tier III FIRE Member would
not be eligible for ADR unless the member waived the benefits of any
statutory presumptions (e.g., certain heart diseases).
Such ADR benefits are calculated using a formula of 50% multiplied by
FAS less 50% of Primary Social Security disability benefit (determined
under RSSL Section 511) and less 100% of Workers' Compensation benefits
(if any).
Note: It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
S. 4269 20
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-353 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide that Tier III FIRE Members could
be eligible for and utilize the statutory presumptions (e.g., certain
heart diseases) that qualify certain Tier I and Tier II Fire Members for
ADR.
Under the proposed legislation, if enacted, the ADR benefit for Tier
III FIRE Members would be revised to equal a retirement allowance equal
to the sum of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* 75% multiplied by FAS1.
Note: The proposed legislation also states that one component of the
ADR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
Also note, it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive any
additional 1/60 of annual earnings after 20 years of service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier III FIRE
Members. However, such ADR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES.
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Actuarial Accrued Liability
("UAAL") and APV of future employer contributions as of June 30, 2013
for Tier III FIRE Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuation of
FIRE.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier III FIRE Members could impact employer
contributions to FIRE would be Fiscal Year 2015.
In accordance with ACNY Section 13.638.2(k-2), new UAAL attributable
to benefit changes are to be amortized as determined by the Actuary but
generally over the remaining working lifetime of those impacted by the
benefit changes. As of June 30, 2013, the remaining working lifetime of
the Tier III FIRE Members is approximately 24 years. Recognizing that
this period will decrease over time as the group of Tier III Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year to 20-year
period (between 14 and 19 payments under the OYLM Methodology). However,
since virtually all of the Tier III FIRE members that would be impacted
by the benefit changes are new entrants, the resulting UAAL would be de
S. 4269 21
minimis and therefore the amortization period used for the UAAL has very
little impact on the final results.
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for Tier III FIRE Members in the APV
of future employer contributions and in employer contributions to FIRE
for Fiscal Years 2015 through 2019 that would occur based on the appli-
cable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on FIRE
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier III FIRE Members*
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Contributions Contributions
2015 $15.7 $1.9
2016 67.7 8.0
2017 119.6 13.4
2018 172.7 18.3
2019 227.0 23.0
* Based on actuarial assumptions and methods set forth in the Actuarial
Assumptions and Method section. Also, based on the projection assumptions
as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510).
The estimated increases in employer contributions shown in Table 1 are
based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Preliminary
Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs, employer costs and
employer contributions.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each member who enters FIRE, there is a theoretical net annual
employer cost to be paid for such member while such member remains
actively employed (i.e., the Employer Entry Age Normal Cost ("EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate ("EEANR").
S. 4269 22
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier III Fire Members would be
greater than the EEANC and EEANR for comparable Tier III FIRE Members
entering at the same attained age and gender under the current FIRE
provisions.
Table 2 shows a summary of the change in EEANR for Tier III FIRE
Members who have a date of membership on or after April 1, 2012 for
entry ages 25, 30 and 35 with a starting salary of $45,000, determined
as of the most recent date of published EEANR calculations:
Table 2
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Tier III FIRE Members with a Membership Date on or After April 1, 2012
Under Proposed Legislation
and
Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
FIRE 21.92% 22.50% 27.31% 28.01% 34.55% 35.31%
EEANR Under Current Law
FIRE 15.94% 16.51% 18.99% 19.68% 21.78% 22.51%
Increase In EEANR Due to Proposed Legislation
FIRE 5.98% 5.99% 8.32% 8.33% 12.77% 12.80%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted herein
including changes in assumptions for ADR, ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of FIRE and other New
York City agencies to implement the proposed legislation.
* The potential impact if this proposed legislation were to be
extended to other public safety employees.
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data use for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of FIRE used to determine the
Updated Preliminary Fiscal Year 2015 employer contributions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
S. 4269 23
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of FIRE.
The 169 Tier III FIRE Members as of June 30, 2013 (including the one
Tier III member who has a date of membership prior to April 1, 2012) had
an average age of approximately 27, average service of approximately 0.5
years and an average salary of approximately $48,200.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer contrib-
utions presented herein have been calculated based on the actuarial
assumptions and methods in effect for the June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of FIRE and adjusted for revised ADR eligibility
provisions.
The probabilities of accidental disability used for Tier III FIRE
Members in the event statutory presumptions were to apply equal those
currently used for Tier I and Tier II FIRE Members.
The actuarial valuation methodology does not include a calculation of
the value of an offset for Workers' Compensation benefits as it is the
understanding of the Actuary that FIRE members are not covered by such
benefits.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier III FIRE Members to be reclassi-
fied from Ordinary Disability to Accidental Disability Retirement, or to
the extent that Tier III FIRE Members who would not otherwise ever
choose to apply and then receive an Ordinary Disability Retirement bene-
fit or an Accidental Disability Retirement benefit, then the additional
APVB and employer contributions shown herein would be greater (lesser).
Employer contributions under current methodology have been estimated
assuming the additional APVB would be financed through future normal
contributions including an amortization of the new UAAL attributable to
this proposed legislation over a 15-year period (14 payments under the
OYLM Methodology).
New entrants into Tier III FIRE Members were projected to replace the
FIRE members expected to leave the active population to maintain a
steady-state population.
The following Table 3 presents the total number of active employees of
FIRE used in the projections, assuming a level work force, and the cumu-
lative number (i.e., net of withdrawals) of Tier III Members as of each
June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier III FIRE Members from 2013
Used in the Projections*
June 30 Tier I & II Tier III Total
2013 10,013 169 10,182
2014 9,486 696 10,182
2015 8,988 1,194 10,182
2016 8,509 1,673 10,182
2017 8,055 2,127 10,182
S. 4269 24
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
Assumes presumptions apply to Tier III FIRE members.
For purposes of estimating the impact of the Tier III Escalation for
retired Tier III FIRE Members, consistent with an underlying Consumer
Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
of 2.5% per year has been assumed.
This compares with the current Chapter 125 of the Laws of 2000 COLA
assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize 1.0%
minimum and 3.0% maximum) on the first $18,000 of benefit.
For Variable Supplements Fund ("VSF") benefits, it has been assumed
that retroactive lump sum payments of VSF ("DROP payments") would be
payable from the completion of 20 years of service.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to FIRE.
However, the economic assumptions (current and proposed) that are used
for determining employer contributions do not develop risk-adjusted,
economic values of benefits. Such risk-adjusted, economic values of
benefits would likely differ significantly from those developed be the
budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North Jr., am the Acting
Chief Actuary for the New York City Retirement Systems. I am a Fellow of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-03, dated
January 30, 2015 prepared by the Acting Chief Actuary of the New York
Fire Department Pension Fund.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
Unless otherwise noted, for purposes of this letter the term Tier III
FIRE Members refers to members of the New York Fire Department Pension
Fund ("FIRE") who have a date of membership on or after April 1, 2012
and the one Tier III member of FIRE who has a date of membership on or
after July 1, 2009 and prior to April 1, 2012.
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILITY
RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier II: The proposed legislation, if enacted,
would revise the ODR and ADR benefit formulas for Tier III FIRE Members.
It appears that the proposed Tier III ODR benefit formula is intended
to be the same as the ODR benefit available to Tier II FIRE Members
(i.e., 1/40 of Final Average Salary ("FAS") multiplied by the years of
service, but not less than (1) one-half of FAS if the years of service
S. 4269 25
are 10 or more or (2) one-third of FAS if the years of service are less
than 10) where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Similarly, it also appears that the proposed ADR benefit formula for
Tier III FIRE Members is intended to be the same as the ADR benefit
available to Tier II FIRE Members (i.e., 75% of Final Average Salary
("FAS")), where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Note: Tier II FIRE Members are also entitled to an additional 1/60 of
total earnings after their 20th anniversary. Given the proposed statuto-
ry references it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive this
additional 1/60 of total earnings after 20 years of service.
FIRE Tier II ODR and ADR benefits are subject to Cost-of-Living
Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the first
$18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier III FIRE
Members would be entitled to the COLA described in the preceding para-
graph, but would NOT be subject to an annual Tier III Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Reference to ITHP: The proposed legislation, in defining the revised
ODR and ADR benefits, uses the term Increased-Take-Home-Pay ("ITHP").
ITHP is a special benefit provided to Tier I and Tier II members and
is not defined for Tier III members.
Given the history that no Tier III Members have ever received ITHP
benefits, the Actuary has assumed that if the proposed legislation were
enacted, Tier III FIRE Members would not be entitled to ITHP.
* Annuitization of Member Contributions: The proposed legislation
would include in the ODR and ADR benefit formulas for Tier III FIRE
Members, a benefit in the form of an annuity equal to the actuarial
equivalent of the accumulated Tier III member contributions at retire-
ment.
Annuitized benefits based directly on member contributions are avail-
able to Tier II FIRE Members. However, it is the understanding of the
Actuary that no current Tier III Member has any benefit which is defined
as an annuitization of accumulated member contributions.
* General Plan Design: From an administrative and design viewpoint,
the Actuary would suggest that consideration be given to incorporating
enhanced ODR and ADR benefit eligibilities and benefit formulas within
Retirement and Social Security Law ("RSSL") Article 14, using only Arti-
cle 14 terminology and structure to achieve the desired ODR and ADR
benefit eligibilities and benefit levels.
* Name: The official name of the Pension Fund is the New York Fire
Department Pension Fund.
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier III FIRE Members the ability to be eligi-
ble for and to utilize the presumptive conditions that qualify for ADR
that are available to Tier I and Tier II FIRE Members.
The reasoning behind this understanding is that in the proposed legis-
lation, eligibility conditions for Tier III FIRE members for ODR would
be determined pursuant to the Administrative Code of the City of New
York ("ACNY") Sections 13-316, 13-352 and 13-357 (i.e., those that apply
S. 4269 26
to Tier I and Tier II FIRE Members), notwithstanding anything to the
contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier III FIRE Members for ADR would be determined pursuant to the Admin-
istrative Code of the City of New York ("ACNY") Sections 13-316, 13-353
and 13-357 (i.e., those that apply to Tier I and Tier II FIRE Members),
notwithstanding anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier III FIRE Members, Tier III FIRE Members
would not be required to waive RSSL Section 507.e in order to be eligi-
ble for ODR or ADR benefits. Consequently, the statutory presumptions
would apply since they have not been waived.
In accordance with the above reasoning, since current Tier III FIRE
Members are required to waive the presumptions pursuant to RSSL Section
507.e, it is the understanding of the Actuary that Tier III FIRE Members
are currently not entitled to presumptive conditions for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of FIRE but not members
of the New York City Police Pension Fund ("POLICE") or any other
uniformed groups. Given the historical consistency in benefits amongst
certain uniformed groups, this proposed legislation would likely lead to
demands for similar legislation for at least some other uniformed
groups.
FISCAL NOTE: PROVISIONS OF PROPOSED LEGISLATION: This proposed legis-
lation would amend Retirement and Social Security Law ("RSSL") Sections
506, 507, 510, 511 and 512 and amend Administrative Code of the City of
New York ("ACNY") Section 13-357 to change, for members of the New York
Fire Department Pension Fund ("FIRE") subject to Article 14 of the RSSL,
the eligibility for and the calculation of Ordinary Disability Retire-
ment ("ODR") benefits and Accidental Disability Retirement ("ADR") bene-
fits.
The proposed legislation would also amend ACNY Section 13-353.1 and
General Municipal Law ("GML") Sections 207-k, 207-kk, 207-p and 207-q to
change the eligibility requirements for Medical Officers of FIRE to
utilize the statutory presumptions that qualify FIRE members for ADR.
Unless otherwise noted, for purposes of this Fiscal Note the term Tier
III FIRE members refers to members of the New York Fire Department
Pension Fund ("FIRE") who have a date of membership on or after July 1,
2009. Note: Although referred to herein as Tier III members, it should
be noted that members who join FIRE on or after April 1, 2012 are often
referred to as Tier VI members or Revised Tier III members. Also Note:
There is only one Tier III member of FIRE who has a date of membership
on or after July 1, 2009 and prior to April 1, 2012.
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier III FIRE Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such ODR benefits are equal to the greater of:
S. 4269 27
* 33 1/3% of Five-Year Final Average Salary ("FAS"), or
* 2% of FAS multiplied by years of credited service (not in excess of
22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-352 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE members).
In particular, completing five or more years of service would not be
required in order to be eligible for ODR benefits. In other words, there
would not any requirement for any minimum length of service to be
completed in order to be eligible for ODR benefits.
Under the proposed legislation, if enacted, the ODR benefit for Tier
III FIRE Members would be an allowance consisting of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* A pension, which together with the annuity, equal to 1/40 of One-
Year Final Average Salary ("FAS1") multiplied by years of credited
service, but not less than:
* * 1/2 of FAS1, if years of credited service are greater than or
equal to 10 years, or
* * 1/3 of FAS1, if years of credited service are less than 10 years.
Note: The proposed legislation also states that one component of the
ODR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier III FIRE
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions for
ADR benefits for Tier III FIRE Members are based on satisfying either:
* Being eligible for Social Security Disability retirement benefits
and having become disabled due to an accident sustained in the line of
duty, or
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the appropriate
administrative authority assigned by FIRE.
As a consequence of RSSL Section 507.e, a Tier III FIRE Member would
not be eligible for ADR unless the member waived the benefits of any
statutory presumptions (e.g., certain heart diseases).
Such ADR benefits are calculated using a formula of 50% multiplied by
FAS less 50% of Primary Social Security disability benefit (determined
under RSSL Section 511) and less 100% of Workers' Compensation benefits
(if any).
Note: It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier III FIRE Members would be revised to be the same as
S. 4269 28
those provided in ACNY Sections 13-316, 13-353 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide that Tier III FIRE Members could
be eligible for and utilize the statutory presumptions (e.g., certain
heart diseases) that qualify certain Tier I and Tier II FIRE Members for
ADR.
The current eligibility to utilize the statutory presumptions requires
that the member must have successfully passed a physical examination for
entry into public service which failed to disclose evidence of the qual-
ifying condition or impairment of health that formed the basis for the
disability.
Under the proposed legislation, Medical Officers may satisfy the
eligibility to utilize the statutory presumptions provided the Medical
Officer authorized release of all relevant medical records, and there is
no evidence of the qualifying condition or impairment that formed the
basis for the disability in such medical records unless the contrary is
proved by competent evidence.
Under the proposed legislation, if enacted, the ADR benefit for Tier
III FIRE Members would be revised to equal a retirement allowance equal
to the sum of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* 75% multiplied by FAS1.
Note: The proposed legislation also states that one component of the
ADR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
Also note, it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive any
additional 1/60 of annual earnings after 20 years of service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier III FIRE
Members. However, such ADR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES:
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Acturial Accrued Liability
("UAAL") and APV of future employer costs as of June 30, 2013 for Tier
III FIRE Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER COSTS
AND PROJECTED EMPLOYER COSTS: For purposes of this Fiscal Note, it is
assumed that the changes in APVB, APV of future member contributions,
UAAL and APV of future employer costs would be reflected for the first
time in the June 30, 2013 actuarial valuation of FIRE.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier III FIRE Members could impact employer
costs to FIRE would be Fiscal Year 2015.
In accordance with ACNY Section 13.638.2(k-2), new UAAL attributable
to benefit changes are to be amortized as determined by the Actuary but
generally over the remaining working lifetime of those impacted by the
benefit changes. As of June 30, 2013, the remaining working lifetime of
S. 4269 29
the Tier III FIRE Members is approximately 24 years. Recognizing that
this period will decrease over time as the group of Tier III Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year to 20-year
period (between 14 and 19 payments under the OYLM Methodology). However,
since virtually all of the Tier III FIRE members that would be impacted
by the benefit changes are new entrants, the resulting UAAL would be de
minimis and therefore the amortization period used for the UAAL has very
little impact on the final results.
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for Tier III FIRE Members and the
changes in eligibility requirements for presumptions for FIRE Medical
Officers in the APV of future employer costs and in employer costs to
FIRE for Fiscal Years 2015 through 2019 that would occur based on the
applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on FIRE
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier III FIRE Members and to Presumption
Eligibility Requirements for Medical Officers *
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Costs Costs
2015 $16.3 $2.1
2016 68.3 8.2
2017 120.1 13.5
2018 173.1 18.4
2019 227.3 23.1
* Based on actuarial assumptions and methods set forth in the Actuarial
Assumptions and Method section. Also, based on the projection assumptions
as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510).
The estimated increases in employer costs shown in Table 1 are based
upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
nary Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs employer costs and employ-
er contributions.
S. 4269 30
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: Since the assump-
tions used in the actuarial valuation of FIRE do not distinguish between
Medical Officers and other FIRE members and those assumptions for Tier
II members already incorporate some or all of the presumptions available
under law, the increase in employer contributions and in the APV of
future employer contributions would be slightly less than those shown in
Table 1.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each member who enters FIRE, there is a theoretical net annual
employer cost to be paid for such member while such member remains
actively employed (i.e., the Employer Entry Age Normal Cost ("EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate ("EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier III FIRE Members would be
greater than the EEANC and EEANR for comparable Tier III FIRE Members
entering at the same attained age and gender under the current FIRE
provisions.
Table 2 shows a summary of the change in EEANR for Tier III FIRE
Members who have a date of membership on or after April 1, 2012 for
entry ages 25, 30 and 35 with a starting salary of $45,000, determined
as of the most recent date of published EEANR calculations:
Table 2
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Tier III FIRE Members with a Membership Date on or After April 1, 2012
Under Proposed Legislation
and
Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
FIRE 21.92% 22.50% 27.31% 28.01% 34.55% 35.31%
EEANR Under Current Law
FIRE 15.94% 16.51% 18.99% 19.68% 21.78% 22.51%
Increase in EEANR Due to Proposed Legislation
FIRE 5.98% 5.99% 8.32% 8.33% 12.77% 12.80%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
S. 4269 31
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted herein
including changes in assumptions for ADR. ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of FIRE and other New
York City agencies to implement the proposed legislation.
* The potential impact if this proposed legislation were to be
extended to other public safety employees.
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data used for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of FIRE used to determine the
Updated Preliminary Fiscal Year 2015 employer contributions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of FIRE.
The 169 Tier III FIRE Members as of June 30, 2013 (including the one
Tier III member who has a date of membership prior to April 1, 2012) had
an average age of approximately 27, average service of approximately 0.5
years and an average salary of approximately $48,200.
There were 21 Medical Officers in FIRE as of June 30, 2013. Of the 21,
7 are currently eligible to utilize the statutory presumptions. In addi-
tion, 7 of the 14 Medical Officers who are not currently eligible to
utilize the statutory presumptions became members after September 11,
2001 and, therefore, are unlikely to be eligible for World Trade Center
presumptive benefits but, if the proposed legislation is enacted, could
become eligible for other presumptive benefits.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer contrib-
utions presented herein have been calculated based on the actuarial
assumptions and methods in effect for the June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of FIRE and adjusted for revised ADR eligibility
provisions.
The probabilities of accidental disability used for Tier III FIRE
Members in the event statutory presumptions were to apply equal those
currently used for Tier I and Tier II FIRE Members.
The actuarial valuation methodology does not include a calculation of
the value of an offset for Workers' Compensation benefits as it is the
understanding of the Actuary that FIRE Members are not covered by such
benefits.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier III FIRE Members to be reclassi-
fied from Ordinary Disability to Accidental Disability Retirement, or to
the extent that Tier III FIRE Members who would not otherwise ever
choose to apply and then receive an Ordinary Disability Retirement bene-
fit or an Accidental Disability Retirement benefit, then the additional
APVB and employer contributions shown herein would be greater (lesser).
Employer contributions under current methodology have been estimated
assuming the additional APVB would be financed through future normal
contributions including an amortization of the new UAAL attributable to
this proposed legislation over a 15-year period (14 payments under the
OYLM Methodology).
S. 4269 32
New entrants into Tier III FIRE Members were projected to replace the
FIRE members expected to leave the active population to maintain a
steady-state population.
The following Table 3 presents the total number of active employees of
FIRE used in the projections, assuming a level work force, and the cumu-
lative number (i.e., net of withdrawals) of Tier III Members as of each
June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier III FIRE Members from 2013
Used in the Projections*
June 30 Tier I&II Tier III Total
2013 10,013 169 10,182
2014 9,486 696 10,182
2015 8,988 1,194 10,182
2016 8,509 1,673 10,182
2017 8,055 2,127 10,182
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
Assumes presumptions apply to Tier III FIRE members.
For purposes of estimating the impact of the Tier III Escalation for
retired Tier III FIRE Members, consistent with an underlying Consumer
Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
of 2.5% per year has been assumed.
This compares with the current Chapter 125 of the Laws of 2000 COLA
assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize 1.0%
minimum and 3.0% maximum) on the first $18,000 of benefit.
For Variable Supplements Fund ("VSF") benefits, it has been assumed
that retroactive lump sum payments of VSF ("DROP payments") would be
payable from the completion of 20 years of service.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to FIRE.
However, the economic assumptions (current and proposed) that are used
for determining employer contributions do not develop risk-adjusted,
economic values of benefits. Such risk-adjusted, economic values of
benefits would likely differ significantly from those developed by the
budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
Chief Actuary for the New York City Retirement Systems. I am a Fellow of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-07, dated
February 27, 2015 prepared by the Acting Chief Actuary of the New York
Fire Department Pension Fund.
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