STATE OF NEW YORK ________________________________________________________________________ 7220 2023-2024 Regular Sessions IN ASSEMBLY May 15, 2023 ___________ Introduced by M. of A. PHEFFER AMATO -- read once and referred to the Committee on Governmental Employees AN ACT to amend the retirement and social security law, in relation to the calculation of past service credit for police officers employed by the division of law enforcement in the department of environmental protection in the city of New York transferring between the New York city employees' retirement system to the New York state and local police and fire retirement system The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 343 of the retirement and social security law is 2 amended by adding a new subdivision i to read as follows: 3 i. 1. Notwithstanding any other law, rule or regulation to the contra- 4 ry, for any police officer employed by the division of law enforcement 5 in the department of environmental protection in the city of New York 6 transferring from the New York city employees' retirement system to the 7 New York state and local police and fire retirement system after the 8 effective date of this subdivision and any police officer formerly 9 employed by the division of law enforcement in the department of envi- 10 ronmental protection in the city of New York having made such transfer, 11 such police officer's division of law enforcement in the department of 12 environmental protection in the city of New York service credit shall be 13 deemed creditable service, in such police officer's twenty year or twen- 14 ty-five year retirement plan, if such police officer has served for at 15 least two years in such employment and if, within one year of the date 16 on which he or she first became a member of the New York state and local 17 police and fire retirement system or within one year of the effective 18 date of this subdivision, such member elects to do so. 19 2. The amount of such service credited to the member in the New York 20 state and local police and fire retirement system plan shall not exceed EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD03776-02-3
A. 7220 2 1 the amount of service credited to the member in the New York city 2 employees' retirement system plan. 3 3. If the member subsequently retires on an age-based retirement plan 4 in the New York state and local police and fire retirement system 5 instead of a twenty year or twenty-five year plan, the full amount of 6 service credit earned, as a police officer employed by the division of 7 law enforcement in the department of environmental protection in the 8 city of New York shall be granted. 9 4. In no event shall the division of law enforcement in the department 10 of environmental protection in the city of New York service credited to 11 a member of the New York state and local police and fire retirement 12 system pursuant to this subdivision exceed a total of ten years. 13 5. Notwithstanding any other provision of law in this section to the 14 contrary, the reserve on such member's benefits shall be transferred 15 from the New York city employees' retirement system to the New York 16 state and local police and fire retirement system in accordance with 17 subdivisions c and d of this section. 18 6. No member who receives service credit pursuant to this subdivision 19 shall be eligible to receive additional service credit pursuant to 20 subdivision b of section three hundred eighty-four-e of this article if 21 his or her employer has elected to provide such service credit. 22 § 2. This act shall take effect on the sixtieth day after it shall 23 have become a law. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would expand the definition of service creditable under 20-year and 25-year plans in the New York State and Local Police and Fire Retirement System (NYSLPFRS) to include service transferred by any police officer employed or formerly employed by the Division of Law Enforcement in the Department of Environmental Protection in the City of New York, provided that such police officer has at least two years of such employment. The member must elect to obtain the service credit within one year of the date on which they first became a member of the NYSLPFRS or within one year of the effective date of this bill, whichev- er occurs later. The amount of service credit received in the NYSLPFRS shall not exceed the minimum of the amount of service credited to the member in the New York City Employees' Retirement System (NYCERS) plan or 10 years. If this bill is enacted during the 2023 legislative session, it is estimated that the past service cost will average approximately 25% of an affected member's salary for each year of additional service that is credited on a 20-year or 25- year plan. This cost will be offset by any reserves transferred from the NYCERS. The remaining cost will be shared by the State of New York and the participating employers in the NYSLPFRS. The exact number of current members as well as future members who could be affected by this legislation cannot be readily determined. Summary of relevant resources: Membership data as of March 31, 2022 was used in measuring the impact of the proposed change, the same data used in the April 1, 2022 actuari- al valuation. Distributions and other statistics can be found in the 2022 Report of the Actuary and the 2022 Annual Comprehensive Financial Report. The actuarial assumptions and methods used are described in the 2020, 2021, and 2022 Annual Report to the Comptroller on Actuarial Assump- tions, and the Codes, Rules and Regulations of the State of New York: Audit and Control.
A. 7220 3 The Market Assets and GASB Disclosures are found in the March 31, 2022 New York State and Local Retirement System Financial Statements and Supplementary Information. I am a member of the American Academy of Actuaries and meet the Quali- fication Standards to render the actuarial opinion contained herein. This fiscal note does not constitute a legal opinion on the viability of the proposed change nor is it intended to serve as a substitute for the professional judgment of an attorney. This estimate, dated February 28, 2023, and intended for use only during the 2023 Legislative Session, is Fiscal Note No. 2023-87, prepared by the Actuary for the New York State and Local Retirement System. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: This proposed legislation would amend Section 343 of the Retirement and Social Security Law (RSSL) to allow current or former New York City Employees' Retirement System (NYCERS) members employed as New York City Department of Environmental Protection (DEP) police offi- cers to transfer, within specified timeframes, to the New York State and Local Police and Fire Retirement System (PFRS) and receive up to 10 years of credit in the 20-year and 25-year Plans for such equal DEP service, or full credit exceeding 10 years in an underlying age-based State retirement plan. Employer paid pension reserves would also be transferred from NYCERS to PFRS for each such transfer. Effective Date: Sixty days after enactment. BACKGROUND: Currently, NYCERS members employed as DEP police officers who subsequently become employed by the State are eligible to transfer their NYCERS membership to PFRS but generally do not receive service credit in the 20-year and 25-year PFRS Plans. Upon successful applica- tion for transfers between NYCERS and PFRS, member accumulated contrib- utions (with accrued interest) are generally transferred but additional employer paid reserves are not. Under the proposed legislation, if enacted, DEP police officers who served in such title for a minimum of two years and then transfer their NYCERS membership to PFRS within one year of becoming a PFRS member (or one year of the effective date, if later) would receive up to 10 years of credit in the 20-year and 25-year PFRS Plans for such equal DEP service, or full credit exceeding 10 years in an underlying age-based State retirement plan. This service would be included in the benefit calculation payable by PFRS. Additionally, NYCERS would be required to calculate and pay such member's pension reserve, net of any accumulated salary deductions otherwise transferred, to PFRS. It should be noted that the proposed legislation does not provide a reciprocal transfer of reserves should a member transfer from PFRS to NYCERS. FINANCIAL IMPACT - OVERVIEW: There is no data available to estimate the number of NYCERS members who would potentially take advantage of this proposed legislation. Therefore, the estimated financial impact has been calculated on a per event basis equal to the increase in Unfunded Accrued Liability (UAL) for an average NYCERS member who is employed as a DEP police officer and transfers to PFRS. This increase in UAL consists of the required amount to be transferred to PFRS, plus Additional Member Contributions (AMC) to be refunded to the member, if any, offset by the reduction in Accrued Liability since the member, assuming all service credit is transferred, would no longer be entitled to future NYCERS benefits.
A. 7220 4 With respect to an individual member, the additional cost of this proposed legislation could vary greatly depending on the member's length of service, age, and salary history. FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and the actuarial assumptions and methods described herein, the enactment of this proposed legislation would increase the UAL by approximately $43,100, on average, for each eligible member who transfers to PFRS. FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this proposed legislation would increase employer contributions, where such amount would depend on the number of members affected as well as other characteristics including the age, years of service, and salary history of the member. Based on the actuarial assumptions and methods described below, the enactment of this proposed legislation is estimated to increase annual employer contributions by approximately $5,100, on average, for each eligible member who transfers to PFRS. As there is no data currently available to estimate the number of members who may transfer to PFRS, the financial impact would be recog- nized at the time of the event. Consequently, changes in employer contributions have been estimated assuming that the increase in the UAL will be recognized as an actuarial loss and financed over a closed 15-year period (14 payments under the One-Year Lag Methodology) using level dollar payments. With respect to the timing, increases in employer contributions would depend upon when eligible members file their application to transfer their NYCERS membership to PFRS but, generally, increased employer contributions will first occur the second fiscal year following the transfer of reserves to PFRS. CENSUS DATA: The estimates presented herein are based on the census data used in the June 30, 2022 actuarial valuation of NYCERS to deter- mine the Preliminary Fiscal Year 2024 employer contributions. There are 190 active DEP police officers who participate in NYCERS and have at least two years of service as of June 30, 2022. Of these, 96 active members have 15 or fewer years of service and are therefore assumed to potentially benefit from the proposed legislation. These 96 active members have an average age of approximately 34.7 years, average service of approximately 7.8 years, and an average salary of approxi- mately $74,700. There are also 56 former DEP police officers who have separated from service with between two and 15 years of service. ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have been calculated based on the actuarial assumptions and methods used for the Preliminary Fiscal Year 2024 employer contributions of NYCERS. For purposes of this Fiscal Note, it has been assumed that the impacted NYCERS members would generally not have transferred their membership to PFRS absent this proposed legislation. It has been further assumed that members with more than 15 years of service would not trans- fer their membership even under the proposed legislation. RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend highly on the realization of the actuarial assumptions used, demograph- ics of the impacted population and other factors such as investment, contribution, and other risks. If actual experience deviates from actu- arial assumptions, the actual costs could differ from those presented herein. Costs are also dependent on the actuarial methods used, and therefore different actuarial methods could produce different results. Quantifying these risks is beyond the scope of this Fiscal Note.
A. 7220 5 Not measured in this Fiscal Note are the following: * The initial additional administrative costs to implement the proposed legislation. STATEMENT OF ACTUARIAL OPINION: I, Marek Tyszkiewicz, am the Chief Actuary for, and independent of, the New York City Retirement Systems and Pension Funds. I am an Associate of the Society of Actuaries and a Member of the American Academy of Actuaries. I am a member of NYCERS but do not believe it impairs my objectivity and I meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. To the best of my knowledge, the results contained herein have been prepared in accordance with generally accepted actuarial principles and procedures and with the Actuarial Standards of Practice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2023-27 dated April 12, 2023 was prepared by the Chief Actuary for the New York City Employees' Retirement System. This estimate is intended for use only during the 2023 Legislative Session.