LBD15480-01-4
S. 7736 2
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 a new subdivision e 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 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 13-316,
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.
S. 7736 3
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 a new subdivision j 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 13-316,
13-353, 13-354, 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.
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 FIRE DEPARTMENT PENSION
FUND WHO RETIRE PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED
SEVEN OF THIS ARTICLE. 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 FIRE DEPARTMENT PENSION FUND WHO
ARE SUBJECT TO THIS ARTICLE WHO RETIRE ON ORDINARY OR ACCIDENTAL DISA-
BILITY 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 a new subdivision e to read as follow:
S. 7736 4
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
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. This act shall take effect on the sixtieth day after it shall
have become a law.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
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
* 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 are not covered by
Workers' Compensation.
S. 7736 5
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 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
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.
S. 7736 6
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 OLYM 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 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
S. 7736 7
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 $15.3 $1.9
2016 67.4 8.0
2017 119.3 13.3
2018 171.1 18.0
2019 225.2 22.7
* 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 February 2014 Financial Plan ("Preliminary
Projections").
* New entrant salaries consistent with those used in the 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 determined 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").
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 Tire 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:
S. 7736 8
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:
* Any potential impact should ITHP Reserves be deemed to apply to Tier
III FIRE members.
* 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 Preliminary June 30,
2013 (Lag) actuarial valuation of FIRE used to determine the 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 Preliminary June 30, 2013 (Lag) actuarial valuations
used to determine Preliminary Fiscal Year 2015 employer contributions of
FIRE.
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 aver-
age age of approximately 27, average service of approximately 0.5 years
and an average salary of approximately $47,300.
S. 7736 9
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 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
* 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.
S. 7736 10
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 year $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 Chief
Actuary of the New York City Retirement Systems. I am a Fellow of the
Society of Actuaries and a Member of the American Academy of Actuaries.
I meet the Qualification Standards of the American Academy of Actuaries
to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2014 Legislative Session. It is Fiscal Note 2014-25, dated
May 30, 2014 prepared by the Chief Actuary of the New York Fire Depart-
ment Pension Fund.
