NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7389
SPONSOR: Pheffer Amato TITLE OF BILL:
An act to amend the retirement and social security law, in relation to
the eligibility of New York city transit authority employees for
performance of duty disability retirement
PURPOSE OR GENERAL IDEA OF BILL:
Relates to extending the benefits of the variable supplements fund for
transit police members of the New York City employees' retirement
system.
SUMMARY OF PROVISIONS:
Amends paragraph c of subdivision 1 of section 13-191 of the administra-
tive code of the city of New York to provide for the payment of Transit
Police Officers' and Transit Police Superior Officers' Variable Supple-
ments Funds (VSF) benefits to former New York City Employees' Retirement
System (NYCERS) members who are retired for service from the New York
City Transit Police (TP) between October 1, 1968 and June 30, 1987
(Prior Retirees) with 20 or more years of service.
These benefits would be paid from the following VSFs: Transit Police
Officers' Variable Supplements Fund (TPOVSF), and Transit Police Superi-
or Officers' Variable Supplements Fund (TPSOVSF).
The amount of VSF benefits paid is currently $12,000 per Calendar Year.
These VSF benefits are payable on an annual basis around December 15th
to eligible former NYCERS members for their lifetimes. There are no
optional forms of payment. Upon the death of the NYCERS retiree, VSF
payments cease.
JUSTIFICATION:
Former members of the NYC Transit Police that retired for service after
June 30, 1987 presently receive a supplemental benefit from the Variable
Supplements Fund ("VSF"). The VSF was enacted into law because of a fact
finders award in 1970 and was granted to members of the NYC Police and
Fire pension funds who retired for service after October 1, 1968.
In the mid-1960s, members of the Transit Police were granted and given
pay and retirement benefit parity. However, the VSF was not bestowed
upon similarly situated members of the department until legislation was
enacted effective after July 1, 1987. As a result, members were in pari-
ty until unjustly removed on July 24, 1992, as beneficiaries. As a
matter of equity and fairness, the VSF should be granted to all members
of the Transit Police who retired from service subsequent to October 1,
1968.
PRIOR LEGISLATIVE HISTORY:
2022 Session - Amended and Recommit to Civil Service and Pensions
2020 Session - S8306 - referred to Civil Service and Pensions S.6823-A
by Senator Lanza
2017-18 Session - referred to Civil Service and Pensions Committee
required home rule from the NYC Council, which was not provided.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
IMPACT ON BENEFITS: Currently, the WTC disability benefit for eligible
NYCTA WTC retirees is generally equal to a lifetime payment of the
greatest of 1/3 of FAS, 1/60th of FAS for each year of service, or the
service retirement benefit, if eligible. Under the proposed legislation,
the WTC disability benefit for eligible NYCTA WTC retirees would be
revised to equal a retirement allowance of 75% of FAS, less any applica-
ble Workers' Compensation benefit. FINANCIAL IMPACT - OVERVIEW: The
bill, if enacted, would provide increased benefits for 46 pensioners who
have been approved for WTC benefits. The bill also potentially provides
for increased benefits for an unknown number of future pensioners, who
have submitted a qualified WTC Notice of Participation. Although there
are currently approximately 1,300 active and retired NYCTA members who
have submitted a qualified WTC Notice of Participation Form, the number
of members from this group who could potentially benefit from this
proposed legislation in the future cannot be readily determined. The
additional estimated financial impact for the unknown number of future
pensioners who could benefit has been calculated on a per event basis
equal to the increase in the present value of future e mployer 05/15/23
4 08375-02-3 contributions for an average member who could be approved
for WTC benefits and who is assumed to benefit from the proposed legis-
lation. In determining the increase in the present value for the future
members who are assumed to benefit from the proposed legislation, it has
been assumed that 50% of the members would have retired under the
current Accidental Disability Retirement benefit and that the remaining
50% would have continued working if the proposed legislation were not
passed. 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 meth-
ods described herein, the enactment of this proposed legislation would
increase the Present Value of Future Benefits for 46 pensioners who have
been approved for WTC benefits by approximately $9.5 million. In addi-
tion, the enactment of this proposed legislation would also increase the
present value of future employer contributions by approximately
$262,600, on average, for each additional approval of WTC benefits for
members who are assumed to benefit from the proposed legislation. FINAN-
CIAL 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 charac-
teristics including the age, years of service, and salary history of
each member. The 46 pensioners have no remaining working lifetime, and
therefore the entire increase in Unfunded Accrued Liability would be
recognized 05/15/23 5 08375-02-3 immediately. The enactment of this
proposed legislation would therefore result in an increase in Fiscal
Year 2024 employer contributions of approximately $10.5 million. Based
on the actuarial assumptions and methods described herein, the enactment
of this proposed legislation is estimated to increase annual employer
contributions by approximately $31,100, on average for each new WTC
benefit provided under this proposed legislation. Since there is insuf-
ficient data currently available to estimate the number of members who
might be approved for WTC benefits, the financial impact would be recog-
nized at the time of event. Consequently, changes in employer contrib-
utions for those NYCTA members not yet approved for WTC benefits have
been estimated assumi ng that the increase in the present value of
future employer contributions would be amortized over a closed 15-year
period (14 payments under the One-Year Lag Methodology) using level
dollar payments. CENSUS DATA: The estimates presented herein are based
on the census data used in the June 30, 2022 actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2024-employer contrib-
utions. The 46 NYCERS pensioners subject to Article 15 who are current-
ly in receipt of WTC disability benefits had an average age of approxi-
mately 64.3 years and an average maximum retirement allowance of
approximately $38,700. The approximate 1,300 active members who have
submitted WTC Notice of Participation Forms are a subset of the 9,219
NYCTA employees who are active members in NYCERS as of June 30, 2022
whose date of appointment is prior to September 11, 2001, and who are
not currently entitled to a WTC benefit equal to 75% of FAS and, there-
fore, could potentially benefit from the proposed legislation. These
9,219 active members had an 05/15/23 6 08375-02-3 average age of approx-
imately 57.0 years, average service of approximately 23.9 years, and an
average salary of approximately $99,600. ACTUARIAL ASSUMPTIONS AND METH-
ODS: 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 the purposes of this Fiscal
Note, it is assumed that the changes would be reflected for the first ti
me in the June 30, 2022 actuarial valuation of NYCERS used to determine
employer contributions for Fiscal Year 2024. RISK AND UNCERTAINTY: The
costs presented in this Fiscal Note depend highly on the realization of
the actuarial assumptions used, demographics of the impacted population,
and other factors such as investment, contribution, and other risks. If
actual experience deviates from actuarial 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. Not measured in this Fiscal Note are the
following: * the initial additional administrative costs to implement
the proposed legislation. * The impact of this proposed legisl ation on
Other Postemployment Benefit costs. 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 05/15/23 7 08375-02-3 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: the Chief Actuary
for the New York City Employees' Retirement System prepared this Fiscal
Note 2023-47 dated May 12, 2023.
This estimate is intended for use only during the 2023 Legislative
Session.
EFFECTIVE DATE:
This act shall take effect immediately.
