Increase Retirement Lump Sums

Section 1. Paragraph e of subdivision 2 of section 1100 of the retirement and social security law, as added by chapter 523 of the laws of 2013, is amended to read as follows:

e. Any member who files for retirement after being eligible to retire for five years may elect to receive a [twenty-five] thirty-five percent lump sum payment of the actuarial equivalent of his or her retirement allowance at the time of retirement.

§ 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.

§ 3. This act shall take effect immediately.

FISCAL NOTE.--Pursuant to Legislative Law, section 50:

This bill would allow larger lump sum payments to be made under the

Partial Lump Sum (PLS) program for certain members of the New York State

and Local Police and Fire Retirement System and the New York State and

Local Employees' Retirement System. Currently, members who are eligible

for the PLS program and who file for service retirement after being

eligible to retire for 5 or more years may elect to receive a partial

lump sum payment of up to 25% of the present value of their actuarially

determined retirement allowance (their "reserve") at retirement, and a

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD11770-07-8

A. 8109--B 2

smaller annual retirement allowance thereafter. This proposal would

allow a member who files for service retirement after being eligible to

retire for 5 or more years to be eligible to receive a partial lump sum

of up to 35% of their reserve in exchange for a reduction in their annu-

al retirement allowance of up to 35% thereafter. For example, a new

retiree with an initial annual pension of $100,000 could have a reserve

of approximately $1.2 million, and could receive a PLS payment of

$420,000 and a reduced annual pension of $65,000.

If this bill is enacted, there would be administrative costs associ-

ated with redesigned estimate and option forms. There would not be costs

associated with the lump sum payment options since payments would be

determined on an actuarially equivalent basis.

However, the ratcheting upward of the maximum lump sum benefit is

eroding the original intent of the pension plan, first presented in the

March 30, 1920 Report of the Commission on Pensions, namely, that "a

satisfactory pension plan must provide as a minimum, a superannuation

benefit", which is defined as a lifetime monthly payment made to someone

who is retired from work.

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.

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 4, 2018, and intended for use only during

the 2018 Legislative Session, is Fiscal Note No. 2018-27, prepared by

the Actuary for the New York State and Local Retirement System.