Bill Text: NY S08486 | 2017-2018 | General Assembly | Amended
Bill Title: Relates to the equalization of retirement benefits for police officers across New York state.
Spectrum: Slight Partisan Bill (Democrat 5-3)
Status: (Introduced - Dead) 2018-06-20 - COMMITTED TO RULES [S08486 Detail]
Download: New_York-2017-S08486-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 8486--A Cal. No. 1395 IN SENATE May 9, 2018 ___________ Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- reported favorably from said committee, ordered to first and second report, amended on second report, ordered to a third reading, and to be reprinted as amended, retaining its place in the order of third reading AN ACT to amend the retirement and social security law, in relation to the equalization of retirement benefits for police officers across New York state The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision c of section 500 of the retirement and social 2 security law, as amended by section 9-a of part A of chapter 504 of the 3 laws of 2009, is amended to read as follows: 4 c. If the comptroller certifies that the contribution rate under this 5 article for any participating employer who is participating on the 6 effective date hereof would be at least one percent higher than the rate 7 which would be applicable to such employer for an employee who is 8 subject to article eleven of this chapter and who was hired prior to 9 July first, nineteen hundred seventy-six, the provisions of this article 10 shall not apply with respect to such participating employer, provided, 11 however that members who first join the New York state and local police 12 and fire retirement system on or after January first, two thousand ten 13 and police/fire members, as that term is defined in section five hundred 14 one of this article, who have made an election to be subject to the 15 provisions of article twenty-two of this chapter pursuant to subdivision 16 b or c of section twelve hundred five of this chapter, shall not be 17 subject to the provisions of this article. In such event, the provisions 18 of article eleven and article twenty-two of this chapter shall continue 19 to be applicable to such participating employer and its employees, as 20 provided in section four hundred fifty-one of this chapter. If, as a 21 result of actuarial experience, such employer's contribution rate should 22 increase to the extent that it is not at least one percent lower than 23 the contribution rate under this article, then, upon certification of EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD15632-04-8S. 8486--A 2 1 such fact by the comptroller, the provisions of this subdivision shall 2 no longer apply with respect to the employees of such employer who ther- 3 eafter first join or rejoin a public retirement system. 4 § 2. Section 1200 of the retirement and social security law, as added 5 by section 1 of part A of chapter 504 of the laws of 2009, is amended to 6 read as follows: 7 § 1200. Definitions. For purposes of this article the terms: 8 a. "Member" shall mean a person who is employed as a police officer or 9 firefighter by any employer other than the city of New York who first 10 joins [the] a retirement system on or after January first, two thousand 11 ten or a police/fire member, as that term is defined in section five 12 hundred one of this chapter, who has made an election, pursuant to 13 subdivision b or c of section twelve hundred five of this article, to be 14 subject to the provisions of this article. 15 b. "Retirement system" shall mean the New York state and local police 16 and fire retirement system, the New York city police pension fund, or 17 the New York city fire department pension fund. 18 § 3. Section 1201 of the retirement and social security law, as added 19 by section 1 of part A of chapter 504 of the laws of 2009, is amended to 20 read as follows: 21 § 1201. Applicability. Notwithstanding any provision of law to the 22 contrary, the provisions of this article shall be applicable to all 23 [employees in the retirement system who first joined such system on or24after January first, two thousand ten] members of a retirement system as 25 those terms are defined in section twelve hundred of this article. 26 § 4. Section 1202 of the retirement and social security law is 27 amended by adding a new subdivision d to read as follows: 28 d. Notwithstanding anything to the contrary in any other law, the 29 amount of the vested retirement benefit for any member who has made an 30 election to be subject to the provisions of this article pursuant to 31 subdivision b or c of section twelve hundred five of this article, shall 32 be equal to one-sixtieth of the member's final average salary on the 33 date of his or her discontinuance of service, multiplied by a number 34 equal to the number of years of service credited to the member on the 35 date of such discontinuance. 36 § 5. Section 1204 of the retirement and social security law, as 37 amended by chapter 18 of the laws of 2012, is amended to read as 38 follows: 39 § 1204. Member contributions. Members who are subject to the 40 provisions of this article shall contribute three percent of annual 41 wages to the retirement system in which they have membership, except 42 that beginning April first, two thousand thirteen for members who first 43 become members of the New York state and local police and fire retire- 44 ment system on or after April first, two thousand twelve; for members 45 who have made an election to be subject to the provisions of this arti- 46 cle pursuant to subdivision b of section twelve hundred five of this 47 article, beginning on the date that such election is filed with the 48 administrative head of the retirement system; and for members who have 49 made an election to be subject to the provisions of this article pursu- 50 ant to subdivision c of section twelve hundred five of this article, 51 beginning on the date that the member joins the retirement system, the 52 rate at which each such member shall contribute in any current plan year 53 (April first to March thirty-first) shall be determined by reference to 54 the wages of such member in the second plan year (April first to March 55 thirty-first) preceding such current plan year as follows:S. 8486--A 3 1 a. members with wages of forty-five thousand dollars per annum or less 2 shall contribute three per centum of annual wages; 3 b. members with wages greater than forty-five thousand per annum, but 4 not more than fifty-five thousand per annum shall contribute three and 5 one-half per centum of annual wages; 6 c. members with wages greater than fifty-five thousand per annum, but 7 not more than seventy-five thousand per annum shall contribute four and 8 one-half per centum of annual wages; 9 d. members with wages greater than seventy-five thousand per annum but 10 not more than one hundred thousand per annum shall contribute five and 11 three-quarters per centum of annual wages; and 12 e. members with wages greater than one hundred thousand per annum 13 shall contribute six per centum of annual wages. 14 Notwithstanding the foregoing, during each of the first three plan 15 years (April first to March thirty-first) in which such member has 16 established membership in [the New York state and local police and fire] 17 a retirement system, such member shall contribute a percentage of annual 18 wages in accordance with the preceding schedule based upon a projection 19 of annual wages provided by the employer. Effective April first, two 20 thousand twelve, all members subject to the provisions of this article 21 shall not be required to make member contributions on annual wages 22 excluded from the calculation of final average salary pursuant to 23 section [1203] twelve hundred three of this article. Nothing in this 24 section, however, shall be construed or deemed to allow members to 25 receive a refund of any member contributions on such wages paid prior to 26 April first, two thousand twelve. 27 Members who are enrolled in a retirement plan that limits the amount 28 of creditable service a member can accrue shall not be required to make 29 contributions pursuant to this section after accruing the maximum amount 30 of service credit allowed by the retirement plan in which they are 31 enrolled. The state comptroller, or for the New York city police pension 32 fund and the New York city fire department pension fund, the board of 33 trustees, shall promulgate such regulations as may be necessary and 34 appropriate with respect to the deduction of such contribution from 35 members' wages and for the maintenance of any special fund or funds with 36 respect to amounts so contributed. In no way shall the member contrib- 37 utions made pursuant to this section be used to provide for pension 38 increases or annuities of any kind. 39 § 6. Section 1205 of the retirement and social security law, as added 40 by section 1 of part A of chapter 504 of the laws of 2009, is amended to 41 read as follows: 42 § 1205. Recalculation of benefits. a. Notwithstanding any other 43 provision of law, any member who has joined the New York state and local 44 police and fire retirement system pursuant to the provisions of article 45 fourteen of this chapter on or after July first, two thousand nine may 46 elect to have his or her retirement benefits calculated pursuant to this 47 article by filing within one hundred twenty days of the effective date 48 of [this section] the chapter of the laws of two thousand eighteen that 49 amended this subdivision a request for such calculation with the retire- 50 ment system in the form and manner prescribed by the state comptroller. 51 b. Notwithstanding any provision of law to the contrary, any 52 police/fire member, as that term is defined in section five hundred one 53 of this chapter who joined the New York state and local police and fire 54 retirement system between July first, two thousand nine and December 55 thirty-first, two thousand ten, or who joined the New York city police 56 pension fund or the New York city fire department pension fund betweenS. 8486--A 4 1 July first, two thousand nine and the effective date of this subdivision 2 may make an irrevocable election that shall be duly executed and filed 3 with the administrative head of the retirement system no later than one 4 hundred twenty days after the effective date of this subdivision to be 5 subject to the provisions of this article and have his or her retirement 6 benefits calculated pursuant to this article. Nothing in this subdivi- 7 sion, however, shall be construed or deemed to allow a police/fire 8 member who makes an irrevocable election pursuant to this subdivision to 9 receive a refund of any member contributions for credited service that 10 occurred before the date that such election is filed by a police/fire 11 member with the New York city police pension fund or New York city fire 12 department pension fund, as applicable to such member. 13 c. Notwithstanding any provision to the contrary, any police/fire 14 member, as that term is defined in section five hundred one of this 15 chapter, who first becomes a member of the New York city police pension 16 fund or the New York city fire department pension fund after the effec- 17 tive date of this subdivision may make an irrevocable election that 18 shall be duly executed and filed with the administrative head of the 19 retirement system no later than thirty days after joining the retirement 20 system to be subject to the provisions of this article and have his or 21 her retirement benefits calculated pursuant to this article. 22 § 7. Section 1206 of the retirement and social security law, as added 23 by section 1 of part A of chapter 504 of the laws of 2009, is amended to 24 read as follows: 25 § 1206. Conflicting provisions. Except as otherwise provided in this 26 article, or in conflict therewith, the provisions of article eleven of 27 this chapter and title thirteen of the administrative code of the city 28 of New York, including any plan that has been elected by the employer or 29 is otherwise applicable under article eight of this chapter or title 30 thirteen of the administrative code of the city of New York shall govern 31 the retirement benefits provided under this article. In the event of any 32 conflict between the provisions of this article and any other provision 33 of law, this article shall govern. 34 § 8. Paragraph 2 of subdivision a of section 1207 of the retirement 35 and social security law, as added by chapter 303 of the laws of 2017, is 36 amended to read as follows: 37 2. A member who first joins such system on or after January first, two 38 thousand eighteen in active service who has credit for at least one year 39 of member service may borrow, no more than once during each twelve month 40 period, an amount, not less than one thousand dollars and which would 41 not cause the balance owed pursuant to this section, including any 42 amounts borrowed then outstanding, to exceed (i) fifty percent of the 43 member's total contributions made pursuant to section [five hundred44seventeen of this chapter] twelve hundred four of this article or any 45 other article of this chapter (including interest credited at the rate 46 set forth in subdivision c of [such] section five hundred seventeen of 47 this chapter compounded annually); or (ii) fifty thousand dollars, 48 whichever is less. 49 § 9. Section 1209 of the retirement and social security law, as added 50 by chapter 18 of the laws of 2012, is amended to read as follows: 51 § 1209. Final average salary. For members who first become members of 52 the New York state and local police and fire retirement system on or 53 after April first, two thousand twelve, and members who have made an 54 election to be subject to the provisions of this article pursuant to 55 subdivision b or c of section twelve hundred five of this article, a 56 member's final average salary shall be equal to one-fifth of the highestS. 8486--A 5 1 total wages earned by such member during any continuous period of 2 employment for which the member was credited with five years of service 3 credit; provided, however, if the wages earned during any year of cred- 4 ited service included in the period used to determine final average 5 salary exceeds the average of the wages of the previous four years of 6 credited service by more than ten percent, the amount in excess of ten 7 percent shall be excluded from the computation of final average salary. 8 Wages in excess of the annual salary paid to the governor pursuant to 9 section three of article four of the state constitution shall be 10 excluded from the computation of final average salary for members who 11 first become members of the New York state and local police and fire 12 retirement system on or after April first, two thousand twelve. 13 § 10. Section 1210 of the retirement and social security law, as added 14 by chapter 18 of the laws of 2012, is amended to read as follows: 15 § 1210. Wages. For members who first become members of the New York 16 state and local police and fire retirement system on or after April 17 first, two thousand twelve, and members who have made an election to be 18 subject to the provisions of this article pursuant to subdivision b or c 19 of section twelve hundred five of this article, the following items 20 shall not be included in the definition of wages: a. wages in excess of 21 the annual salary paid to the governor pursuant to section three of 22 article four of the state constitution, b. lump sum payments for 23 deferred compensation, sick leave, accumulated vacation or other credits 24 for time not worked, c. any form of termination pay, d. any additional 25 compensation paid in anticipation of retirement, and e. in the case of 26 employees who receive wages from three or more employers in a twelve 27 month period, the wages paid by the third and each successive employer. 28 § 11. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would allow certain police and fire employees who are members of certain public retirement systems to become covered under the provisions of Article 22 of the Retirement and Social Security Law. Insofar as this bill affects the New York State and Local Police and Fire Retirement System (PFRS), an individual who became a PFRS member on or after July 1, 2009 and before January 9, 2010 to elect to be covered by the provisions of Article 22 of the Retirement and Social Security Law. Any member who becomes covered under a non-contributory plan would no longer be required to make member contributions. Affected members shall not receive a refund of their member contributions. If this bill is enacted, there would not be any cost to the State of New York and the participating employers in the New York State and Local Police and Fire Retirement System. 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, 2017 actuarial valu- ation. Distributions and other statistics can be found in the 2017 Report of the Actuary and the 2017 Comprehensive Annual Financial Report. The actuarial assumptions and methods used are described in the 2015, 2016, and 2017 Annual Report to the Comptroller on Actuarial Assump- tions, 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, 2017 New York State and Local Retirement System Financial Statements and Supplementary Information.S. 8486--A 6 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 March 13, 2018, and intended for use only during the 2018 Legislative Session, is Fiscal Note No. 2018-74, prepared by the Actuary for the New York State and Local Retirement System. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: The proposed legislation would amend Article 22 of the Retirement and Social Security Law (RSSL) to permit existing and incoming New York City Police Pension Fund (POLICE) and New York City Fire Department Pension Fund (FIRE) members subject to Article 14 of the RSSL (the Article 14 or Current Plans) to voluntarily elect, within certain time periods, a new retirement plan. The proposed legislation would provide these members with benefits, subject to RSSL Article 22 restrictions, pursuant to relevant Tier 2 provisions in Title 13 of the Administrative Code of the City of New York (ACCNY) as limited by RSSL Article 11 (the Article 22 or Proposed Plan). The new Article 22 Plan would provide similar service, death, and disability benefits, including applicable statutory presumptions for Accident Disability Retirement (ADR), ADR benefit calculations, and Ordinary Disability Retirement (ODR) benefit calculations, as those provided to Tier 2 POLICE and FIRE members. However, all benefits and obligations would be subject to Article 22 provisions, including restrictions on pensionable wages and Final Average Salary (FAS), as well as member contribution rates enacted by Chapter 18 of the laws of 2012. The Article 22 Plan would provide neither annuity nor increased-take- home-pay (ITHP) benefits, would not apply Article 14 social security offsets, and would apply, or continue to apply where applicable, cost- of-living adjustments under Chapter 125 of the laws of 2000 (COLA) rath- er than any applicable Article 14 escalation. Article 22 POLICE and FIRE members would remain eligible to receive Variable Supplements Fund (VSF) benefits, would also become eligible, subject to certain restrictions, to take loans on member contributions, would be subject to a lower vest- ed benefit calculation, and would be entitled to earlier service and vested retirement payability. Effective Date: Upon enactment. For purposes of this Fiscal Note, POLICE, and FIRE members subject to Article 14 of the RSSL, which include New York City Police/Fire, Revised Plan and Enhanced Plan Members, as defined in RSSL Section 501, will be collectively referred to as Article 14 POLICE and FIRE Members. All Article 14 POLICE and FIRE Members who elect the Article 22 Plan will be referred to as Article 22 POLICE and FIRE Members. IMPACT ON ELIGIBILITY FOR BENEFITS: Existing Article 14 POLICE and FIRE Members would have 120 days from the enactment of the proposed legislation to elect to participate in the Article 22 Plan. Incoming Article 14 POLICE and FIRE Members would have 30 days from appointment to elect to participate in the Article 22 Plan. The changes in eligibil- ity requirements to receive benefits between the Article 14 Plans and the Article 22 Plan are summarized below. Contributions: * The Current Plans, depending on title and plan, require contribution rates equal to 3% of salary, plus up to an additional 3% of salary for Enhanced Plan participation, until the earlier of separation or 25 years of service.S. 8486--A 7 * The Proposed Plan requires contribution rates for all pensionable service and salary that are based on historical salary, or projected salary, bands as follows: Annual Wages During Plan Year Contribution Rate Up to $45,000 3.00% $45,001 to $55,000 3.50% $55,001 to $75,000 4.50% $75,001 to $100,000 5.75% Greater than $100,000 6.00% Allowable Service Credit: * Current Plans restrict service credit to City and State uniformed Police and Fire service, which includes certain military service. * Under the Proposed Plan, Article 22 POLICE and FIRE Members would, in addition to City and State uniformed Police and Fire service, be permitted to use certain prior uniformed or peace officer service with the New York City Employees' Retirement System or the State retirement systems, along with certain Child Care Leave purchased pursuant to Chap- ter 594 of the Laws of 2000, as allowable service credit. Minimum Service Credit Requirements: * The Current Plans require 20 years of service for an early service retirement, 22 years for a normal service retirement, and 25 years of service, or deferral of payability to such point in time, for a service retirement with full escalation. * The Proposed Plan would reduce the minimum requirement for a service retirement for Article 22 POLICE and FIRE Members to 20 years of service. Vesting: * In the Current Plans, members are required to complete five years of service before becoming eligible to receive, upon payability, a vested benefit. * In the Proposed Plan, members are required to complete 10 years of service before becoming eligible to receive, upon payability, a vested benefit. ODR: * The Current Plans require five years of service to be eligible to apply for ODR. * The Proposed Plan permits an application for ODR regardless of years of service. ADR: * In the Current Plans, non-Enhanced Plan Members must waive applica- ble statutory presumptions to apply for disability retirement. Enhanced Plan Members are eligible to utilize applicable presumptions for purposes of ADR. * Under the Proposed Plan, all Article 22 POLICE and FIRE Members would be eligible for applicable statutory presumptions for purposes of ADR benefits upon becoming Article 22 Plan Members. Death Benefits: * Eligibility for Ordinary Death Benefits (ODB) and Accidental Death Benefits (ADB) would remain unchanged. IMPACT ON BENEFITS PAYABLE: Under the proposed legislation, the bene- fits provided would neither include an annuity component nor a benefit due to ITHP currently available to Tier 2 POLICE and FIRE Members, would not be subject to any applicable social security offset applied toS. 8486--A 8 certain Article 14 Plan benefits, and would apply, or continue to apply where applicable, COLA rather than escalation (for those currently eligible to receive escalation). The remaining significant changes in benefit calculations between the Article 14 Plans and the Article 22 Plan are summarized below. Pensionable Wages: * In the Current Plans, wages are generally not limited, except as described below, for purposes of calculating the FAS. * The Proposed Plan limits wages to the Governor's annual salary for purposes of determining member contributions and the FAS, and limits from the FAS any overtime earnings that exceed 15% of annual wages. FAS Calculation: * In the Current Plans, the FAS, depending on Plan and type of retire- ment, is either a three-year average (FAS3) or a five-year average (FAS5), and if the wages earned in one year of the FAS exceed the aver- age of the previous two or four years, respectively, by more than 10%, the amount exceeding 10% is excluded from the FAS. * In the Proposal Plan, all members are subject to a FAS5 for all retirement benefits, and if the wages earned in one year of the FAS exceed the average of the previous four years by more 10%, the amount exceeding 10% is excluded from the FAS. Service Retirement Benefit Calculation: * Current Plans limit service credit to City and State Uniformed Police and Fire service, and cap the service retirement benefit at 50% of the FAS at 22 years of service (with full escalation at 25 years of service or deferred payability until such time). * The Proposed Plan would permit Article 22 POLICE and FIRE Members to retire at 50% of FAS5 after 20 years of service, and provide an addi- tional benefit of 1/60th of total earnings after their respective 20th anniversary of allowable service credit plus 75% times 1/60th of FAS5 for all prior non-uniform City and State service. ADR Benefit Calculation: * Current Plans provide ADR benefits ranging from 50% to 75% of either a FAS3 or FAS5. * The Proposed Plan would provide Article 22 POLICE and Fire Members with an ADR benefit of 75% of FAS5, plus 1/60th of total earnings after their respective 20th anniversary of allowable service credit. ODR Benefit Calculation: * Current Plans provide ODR benefits of 33-1/3% of either a FAS3 or FAS5. * The Proposed Plan would provide Article 22 POLICE and FIRE Members with less than 10 years service with an ODR benefit of 33-1/3% of FAS5, with 10 or more years of service with an ODR benefit of 50% of FAS5, and with 20 or more years of service an ODR benefit of 1/40th of FAS5 multi- plied by years of service. Vested Retirement Benefit Calculation: * Current Plans provide vested retirement benefits, after 5 years of service, of 2.1% of FAS3 or FAS5 times years of service, payable without escalation at what would have been the member's 20th anniversary of allowable service credit, or payable with partial or full escalation, respectively, on the 22nd or 25th anniversary. * The Proposed Plan would permit Article 22 POLICE and FIRE Members to receive vested benefits, after 10 years of service, of 1/60th of FAS5 multiplied by years of service, plus 75% of 1/60th of FAS5 for all prior non-uniform City and State service, at what would have been the member's 20th anniversary of allowable service credit. However, in no event shallS. 8486--A 9 a vested benefit be less than the actuarial equivalent of accumulated member contributions with 5% interest compounded annually. ODB Calculation: * Current Plans provide an ODB of three times salary rounded up to the nearest $1,000. * The Proposed Plan would provide Article 22 POLICE and FIRE Members with less than 20 years of service an ODB of three times salary rounded up to the nearest $1,000, and a death gamble for those with 20 or more years of service. A death gamble is a lump sum present value equivalent of a presumed lifetime service retirement benefit of the deceased member. ADB Calculation: * The ADB calculation, aside from the FAS applied, is essentially the same in the Current and Proposed Plans comprised of 50% of salary and the Special Accidental Death Benefit (SADB), which, when combined with the ADB, is approximately 100% of a determined salary. FINANCIAL IMPACT - CHANGES IN PROJECTED EMPLOYER CONTRIBUTIONS: In accordance with ACCNY Section 13-638.2(k-2), new Unfunded Accrued Liability (UAL) attributable to benefit changes are to be amortized as determined by the Actuary but generally over the remaining working life- time of those impacted by the benefit changes. As of June 30, 2017, if this proposed legislation is enacted, the remaining working lifetime of Article 14 POLICE and FIRE members, assuming Article 22 Plan partic- ipation, is approximately 15 years and 21 years, respectively. For this proposed legislation the change in UAL was amortized over a 15-year period (14 payments under the OYLM) for POLICE and over a 21-year period (20 payments under the OYLM) for FIRE using level dollar payments. Since it cannot be precisely determined how many Article 14 POLICE and FIRE Members will elect to participate in the Article 22 Plan, results are shown assuming that all existing and incoming Article 14 POLICE and FIRE Members will elect to participate in the Article 22 Plan. The following Table 1 presents an estimate of the increases in the employer contributions to POLICE and FIRE for Fiscal Years 2019 through 2023 due to the changes in provisions for Article 22 POLICE and FIRE Members based on the applicable actuarial assumptions and methods noted herein: TABLE 1 Fiscal Year Increase in Employer Contributions* ($ Millions) 2019 $19.1 2020 24.1 2021 29.3 2022 34.5 2023 39.8 * The increase in employer contributions is, in part, due to the shorter expected working lifetime of Article 22 POLICE and FIRE members which decreases the period over which the costs are spread. CONTRIBUTION TIMING: For purposes of this Fiscal Note, it is assumed that the changes in the employer contributions would be reflected for the first time in the June 30, 2017 actuarial valuations of POLICE and FIRE. Under the One-Year Lag Methodology (OYLM), the first fiscal yearS. 8486--A 10 in which these changes in benefits would impact employer contributions would be Fiscal Year 2019. OTHER COSTS: Not measured in this Fiscal Note are the following: * The initial, additional administrative costs of POLICE and FIRE to implement the proposed legislation. * The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. CENSUS DATA: The starting census data used for the calculations presented herein is the census data used in the Preliminary June 30, 2017 (Lag) actuarial valuations of POLICE and FIRE to determine the Preliminary Fiscal Year 2019 employer contributions. The Article 14 POLICE Members had an average age of approximately 29.7 years, average service of approximately 3.3 years, and an average salary of approximately $75,000 as of June 30, 2017. The Article 14 FIRE Members had an average age of approximately 30.0 years, average service of approximately 2.2 years, and an average salary of approximately $59,000 as of June 30, 2017. ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer contrib- utions presented herein have been calculated based on the same actuarial assumptions and methods in effect for the June 30, 2017 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year 2019 employer contributions of POLICE and FIRE. Please note these assumptions and methods are subject to change as this valuation is not considered final until the end of the Fiscal Year 2019. In determining the change in employer contributions, the probabilities of accidental disability used to value the Proposed Plan equal those currently used for Tier 2 POLICE and FIRE members who are not eligible for World Trade Center benefits. For purposes of estimating the impact of substituting COLA for esca- lation for certain Article 22 POLICE and FIRE Members, an assumption of 2.5% was used for escalation, which is consistent with the underlying Consumer Price Inflation (CPI) assumption of 2.5% per year. This compares with the current COLA assumption of 1.5% per year (i.e. 50% of CPI adjusted to recognize a 1.0% minimum and 3.0% maximum) on the first $18,000 of benefit. New entrants were projected to replace the members expected to leave the active population to maintain a steady-state population. New entrant salaries and future salary increases are consistent with those to be used in projections for the New York City Office of Management and Budg- et in April 2018 (Preliminary Projections). The following Table 2a 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 Article 14 POLICE Members as of each June 30 from 2017 through 2021. TABLE 2a June 30 Tier 1 & 2 Tier 3 Total 2017 23,334 12,831 36,165 2018 21,227 14,938 36,165 2019 19,345 16,820 36,165 2020 17,799 18,366 36,165 2021 16,017 20,148 36,165 The following Table 2b presents the total number of active employees of FIRE used in the projections, assuming a level work force, and the cumulative number (i.e. net of withdrawals) of Article 14 FIRE Members as of each June 30 from 2017 through 2021.S. 8486--A 11 TABLE 2b June 30 Tier 1 & 2 Tier 3 Total 2017 8,581 2,510 11,091 2018 7,995 3,096 11,091 2019 7,485 3,606 11,091 2020 7,001 4,090 11,091 2021 6,557 4,534 11,091 STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu- ary for, and independent of, the New York City Retirement Systems and Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled Actuary under the Employee Retirement Income and Security Act of 1974 (ERISA), a Member of the American Academy of Actuaries, and a Fellow of the Conference of Consulting Actuaries. I meet the Qualification Stand- ards of the American Academy of Actuaries to render the actuarial opin- ion contained herein. To the best of my knowledge, the results contained herein have been prepared in accordance with generally accepted actuari- al principles and procedures and with the Actuarial Standards of Prac- tice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-31 dated May 30, 2018, was prepared by the Chief Actuary for the New York City Police Pension Fund and the New York City Fire Pension Fund. This estimate is intended for use only during the 2018 Legislative Session.
