S T A T E O F N E W Y O R K
________________________________________________________________________
4546
2015-2016 Regular Sessions
I N S E N A T E
March 26, 2015
___________
Introduced by Sen. CROCI -- read twice and ordered printed, and when
printed to be committed to the Committee on Veterans, Homeland Securi-
ty and Military Affairs
AN ACT to amend the retirement and social security law, in relation to
providing credit to members of public retirement systems of the state
for certain military service
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph (d) of subdivision 2 of section 1000 of the
retirement and social security law, as added by chapter 548 of the laws
of 2000, is amended to read as follows:
(d) hostilities participated in by the military forces of the United
States, from the second day of August, nineteen hundred ninety, to the
end of such hostilities in case of a veteran who served in the theater
of operations including Iraq, Kuwait, Saudi Arabia, AFGHANISTAN,
Bahrain, Qatar, the United Arab Emirates, Oman, the Gulf of Aden, the
Gulf of Oman, the Persian Gulf, the Red Sea, and the airspace above
these locations.
S 2. Notwithstanding any other provision of law to the contrary, none
of the provisions of this act shall be subject to section 25 of the
retirement and social security law.
S 3. This act shall take effect immediately and shall be deemed to
have been in full force and effect on and after December 21, 1998.
FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: With respect to the New York City
Retirement Systems ("NYCRS"), the proposed legislation would amend New
York State Retirement and Social Security Law ("RSSL") Section 1000 to
provide members of the New York City Employees' Retirement System
("NYCERS"), the New York City Teachers' Retirement System ("NYCTRS"),
the New York City Board of Education Retirement System ("BERS"), the New
York City Police Pension Fund ("POLICE") and the New York Fire Depart-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01759-02-5
S. 4546 2
ment Pension Fund ("FIRE") the opportunity to obtain additional retire-
ment service credits, up to three years (inclusive of any prior
purchases of military service credit), for military service in Afghanis-
tan from August 2, 1990 to the end of such hostilities, provided certain
conditions are met.
In order to purchase such military service, a member would be required
to:
* Receive an honorable discharge from military service,
* Make an application for these additional service credits prior to
the date of retirement, but after completing five years of credited
service (exclusive of the service credit that could be purchased under
this proposed legislation), and
* Pay the appropriate NYCRS, for each year of military service
purchased, a sum equal to 3.0% (6.0% for members who first join on or
after April 1, 2012) of such member's compensation earned during the
twelve months of credited service immediately preceding the date that
the member makes application for military service credit.
The Effective Date of the proposed legislation would be the date of
enactment and shall be deemed to have been in full force and effect on
and after December 21, 1998.
The Actuary has presumed that retirees as of the enactment of this
proposed legislation would not be eligible to purchase additional mili-
tary service provided by this proposed legislation.
IMPACT ON BENEFITS: For purposes of the respective NYCRS, each year of
military service credit purchased would apply toward providing the
member with a year of benefit accrual under the particular benefit
formula covering the member.
In certain circumstances, the member also may be entitled to utilize
such military service as qualifying service for benefit eligibility
purposes.
For purposes of this Fiscal Note, it has been assumed that members who
purchase military service in accordance with this proposed legislation
would generally be entitled to count such service for benefit accrual
purposes and for the purpose of qualifying for benefits.
MEMBERS IMPACTED: Insofar as this proposed legislation relates to the
NYCRS, the number of members who could potentially benefit from this
proposed legislation cannot be readily determined.
For illustrative purposes only, a table is included presenting the
estimated financial impact if 100 members in each of the NYCRS are
eligible and each member purchases 2.5 years of service.
FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost of this proposed legislation would depend on the
member's length of service not including the military service being
purchased, the years of military service being purchased, age, salary
history and Plan in which the member participates.
With respect to employers participating in the NYCRS, the ultimate
employer cost of this proposed legislation would be determined by the
increase in benefits to be paid, the impact of certain benefits commenc-
ing earlier, shorter working lifetimes and the reduction in certain
future member contributions.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to the NYCRS
and based on the census data and assumptions herein, the enactment of
this proposed legislation would increase the Actuarial Present Value
("APV") of benefits ("APVB") by approximately $14,600 for NYCERS,
$14,300 For NYCTRS, $8,800 for BERS, $25,000 for POLICE and $29,100 for
FIRE per year of service credit purchased as of June 30, 2015.
S. 4546 3
In addition, with respect to the NYCRS, the APV of future member
contributions (primarily attributable to the payments of 3.0% of salary
by members who first joined prior to April 1, 2012 and 6.0% of salary
for members who first join on or after April 1, 2012 per year of mili-
tary service purchased) would increase by approximately $2,300 for
NYCERS, $2,500 for NYCTRS, $1,400 for BERS, $3,500 for POLICE and $3,800
for FIRE per year of service credit purchased as of June 30, 2015.
Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by approximately $12,300 for NYCERS,
$11,800 for NYCTRS, $7,400 for BERS, $21,500 for POLICE and $25,300 for
FIRE per year of service credit purchased as of June 30, 2015.
FINANCIAL IMPACT - ADDITIONAL EMPLOYER COSTS: Enactment of this
proposed legislation would increase employer costs, where such amounts
depend on the number of members affected and upon the amount of military
service being credited as well as other characteristics including the
age, salary history and Plan in which the member participates.
With respect to the NYCRS, based on the Actuary's actuarial assump-
tions and methods in effect as of June 30, 2013, the enactment of this
proposed legislation is estimated to increase annual employer costs by
approximately $1,500 for NYCERS, $1,400 for NYCTRS, $900 for BERS,
$2,500 for POLICE and $3,000 for FIRE per year of service credit
purchased as of June 30, 2015.
FINANCIAL IMPACT - ADDITIONAL EMPLOYER CONTRIBUTIONS: With respect to
the NYCRS, increases in employer contributions would depend upon when
the members purchase the military service permitted by the proposed
legislation and such service is credited to their records, but would
ultimately be comparable to the increases in employer costs.
FINANCIAL IMPACT - SUMMARY: The following table summarizes the esti-
mated financial impact of this proposed legislation on the NYCRS assum-
ing 100 members in each System are eligible and each purchases 2.5 years
of service:
Estimated Financial Impact to Allow Members of the NYCRS
To Purchase Certain Years of Military Service Credit
as of June 30, 2015
(Assumes 100 Members in Each System
Purchase 2.5 Years of Service Each)
($ Millions)
Retirement Additional Additional Estimated
System APV of APV of Future Additional
Benefits Employer Annual Employer
Contributions{1} Costs{2}
NYCERS $ 3.66 $ 3.08 $ 0.36
NYCTRS 3.57 2.95 0.35
BERS 2.19 1.84 0.22
POLICE 6.26 5.37 0.64
FIRE 7.29 6.34 0.75
1. Equals Increase in APVB minus increase in APV of future member
contributions.
2. Estimated Additional Annual Employer Costs are determined without
regard to the funded status of the Retirement Systems and represent the
S. 4546 4
best estimates of the ultimate annual financial burden of the proposed
legislation and assume that any additional APV of Future Employer
Contributions, as they arise, are amortized as actuarial losses over 15
years (14 payments). Estimated Additional Annual Employer Contributions
would ultimately approximate estimated Additional Annual Employer Costs.
ADDITIONAL EMPLOYER COSTS - GENERAL: In general, the real cost of the
enactment of this proposed legislation would be the additional benefits
paid.
OTHER COSTS: The enactment of this proposed legislation would result
in some administrative expenses for the NYCRS and costs for Other Post-
Employment Benefits ("OPEB").
CENSUS DATA: The census data used for estimates of APV of benefits and
employer contributions presented herein are the active members included
in the June 30, 2013 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE and FIRE used to determine the Preliminary Fiscal Year 2015
employer contributions.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional APV of benefits and
employer contributions presented herein have been estimated as of June
30, 2015 on a hypothetical basis with each eligible member purchasing an
average of 2.5 years of military service.
A more robust analysis would also use various approximating techniques
and assumptions by the Actuary, including, but not limited to:
* A certain percentage of veterans being honorably discharged.
* A certain percentage of honorably discharged veterans being disa-
bled.
* Varying percentages of members of each of the NYCRS with prior mili-
tary service.
As benefiting from the provisions of this proposed legislation is
dependent upon actions by Plan members and the timing and amounts of
military service to be purchased are unknown, the financial impact would
likely be realized upon receipt by the Actuary of updated service credit
information.
Consequently, changes in employer contributions have been estimated
assuming the increase in the APV of Future Employer Contributions would
be financed over a time period comparable to that used for actuarial
losses under the Entry Age Actuarial Cost Method. Using this approach,
the Additional APV of Future Employer Contributions would be amortized
over a closed 15-year period (14 payments under One-Year Lag Methodol-
ogy) using level dollar payments.
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 the NYCRS.
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 2015-16, dated
S. 4546 5
March 16, 2015, prepared by the Acting Chief Actuary for the New York
City Employees' Retirement System, the New York City Teachers' Retire-
ment System, the New York City Board of Education Retirement System, the
New York City Police Pension Fund and the New York Fire Department
Pension Fund.
FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
This bill would amend subdivision 2 of section 1000 of the Retirement
and Social Security Law and add Afghanistan to the list of theaters of
operations in which a member of a public retirement system of New York
State may claim service credit. A member may claim service credit for up
to three years of military service performed during hostilities partic-
ipated in by the military forces of the United States, from the second
day of August, nineteen hundred ninety, to the end of such hostilities.
A member must have at least five years of credited service to be eligi-
ble and make application for such credit before the effective date of
retirement. To obtain such credit, a member must make payments as
required by section 1000 of the Retirement and Social Security Law.
Tier 1, 2, 3, 4 and 5 members are required to pay three percent of sala-
ry earned during the twelve months of credited service immediately
preceding the year in which a claim is made for each year of military
service. Tier 6 members are required to pay six percent of salary
earned during the twelve months of credited service immediately preced-
ing the year in which a claim is made for each year of military service.
This act shall take effect immediately and shall be deemed to have been
in full force and effect on and after December 21, 1998.
It is not possible to determine the total annual cost to the employers
of members of the New York State Teachers' Retirement System since the
total amount of service credit which would be claimed under this bill
cannot be estimated. However, the cost to the employers of members of
the New York State Teachers' Retirement System is estimated to be
$21,700 per year of service credited for Tier 1 and 2 members, $21,000
per year of service credited for Tier 3 and 4 members, $20,900 per year
of service credited for Tier 5 members and $15,800 per year of service
credited for Tier 6 members if this bill is enacted. These costs would
be offset by member payments required under Section 1000 of the Retire-
ment and Social Security Law. The cost is estimated to be, on average,
approximately $85,000 for each retired member claiming service credit
under this bill if enacted, including payments retroactive to their date
of retirement.
Employee data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Comprehensive Annual Financial Report (CAFR). System assets are as
reported in the System's financial statements, and can also be found in
the CAFR. Actuarial assumptions and methods are provided in the System's
Actuarial Valuation Report.
The source of this estimate is Fiscal Note 2015-16 dated March 20,
2015 prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2015 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
This bill would extend the benefits of Chapter 548, Laws of 2000 to
members and retirees of public retirement systems in New York State who
S. 4546 6
rendered any military service during the period of conflict in Afghanis-
tan and were assigned to the theater of operations. The total service
credit granted for any military service shall not exceed three (3)
years. Members must have at least five years of credited service (not
including military service). Tier 1-5 members and retirees would be
required to make a payment of three percent of their most recent compen-
sation per year of additional service credit granted by this bill. Tier
6 members and retirees would be required to make a payment of six
percent of their most recent compensation per year of additional service
credit.
If this bill is enacted, insofar as this proposal affects the New York
State and Local Employee's Retirement System (ERS), it is estimated that
the past service cost will average approximately 12% (9% for Tier 6) of
an affected members' compensation for each year of additional service
credit that is purchased. For members who retired on or after December
21, 1998 there would be additional costs for payments which will be paid
retroactive to their date of retirement.
Insofar as this proposal affects the New York State and Local Police
and Fire Retirement System (PFRS), it is estimated that the past service
cost will average approximately 17% (14% for Tier 6) of an affected
members' compensation for each year of additional service that is
purchased. For members who retired on or after December 21, 1998 there
would be additional costs for payments which will be paid retroactive to
their date of retirement.
The exact number of current members as well as future members who
could be affected by this legislation cannot be readily determined.
As this legislation states "None of the provisions of this act shall
be subject to Section 25 of the Retirement and Social Security Law",
these past service costs would be shared by the State of New York and
the participating employers in the ERS and the PFERS.
Summary of relevant resources:
The membership data used in measuring the impact of the proposed
change was the same as that used in the March 31, 2014 actuarial valu-
ation. Distributions and other statistics can be found in the 2014
Report of the Actuary and the 2014 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2010,
2011, 2012, 2013 and 2014 Annual Report to the Comptroller on Actuarial
Assumptions, and the Codes Rules and Regulations of the State of New
York: Audit and Control.
The Market Assets and GASB Disclosures are found in the March 31, 2014
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This estimate, dated January 12, 2015 and intended for use only during
the 2015 Legislative Session, is Fiscal Note No. 2015-21, prepared by
the Actuary for the New York State and Local Employees' Retirement
System and the New York State and Local Police and Fire Retirement
System.
