Boost Pensions for Veteran Lieutenants

Section 1. Section 14-114 of the administrative code of the city of New York is amended by adding a new subdivision d to read as follows:

d. When a lieutenant shall have served in the rank of lieutenant for a period of fifteen years, he or she shall have the same rights in respect to the police pension fund as a lieutenant detailed to act as lieutenant commander detective squad or lieutenant special assignment.

§ 2. This act shall take effect immediately.

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

SUMMARY OF BILL: The enactment of this proposed legislation would

amend Administrative Code of the City of New York (ACCNY) Section 14-114

to allow for a Lieutenant of the New York City Police Department, who

has been a Lieutenant for at least 15 years, to have the same rights in

respect to the New York City Police Pension Fund (POLICE) as a Lieuten-

ant detailed to act as a lieutenant commander detective squad or lieu-

tenant special assignment.

IMPACT ON BENEFITS PAYABLE: The proposed legislation would permit

Lieutenants, who have served in the rank of Lieutenant for at least 15

years, to have their pension calculations based on a higher-grade sala-

ry.

A Lieutenant, assuming a service retirement benefit with 20 years of

service (15 of which was in the title of a Lieutenant), who would bene-

fit under this proposed legislation, if enacted, would receive an

increase in their annual pension benefit, due to the assumed higher

salary grade and overtime, of approximately $7,000 per year.

Based on this increase and an estimate of the number of POLICE members

that are expected to be impacted by this change, it is estimated that if

this proposed legislation is enacted, the annual increase in POLICE

pension benefits paid will be approximately $115,000 per year.

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

[ ] is old law to be omitted.

LBD06507-03-8

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Effective Date for this proposed legislation: Upon enactment.

FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES (APV): With respect to the

Lieutenants who would be impacted by this proposed legislation, the

enactment of this proposed legislation would increase the APV of Bene-

fits (APVB) by approximately $1.5 million.

FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: In accordance with the

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 lifetime of those

impacted by the benefit changes. Since the number of Lieutenants that

will retire with 15 or more years in rank cannot be known in advance

with credibility, the APVB due to this legislation has been treated as

an actuarial loss at the affected members' retirement. These actuarial

losses were amortized over a 15-year period (14 payments under the One-

Year Lag Methodology) using level dollar payments for the purpose of

this Fiscal Note.

Based on the assumption that the first full group of retirees impacted

by this legislation would occur during Fiscal Year 2019 and the esti-

mated increase in APVB of $1.5 million, the estimated increase in

employer contributions would be approximately $175,000 beginning in

Fiscal Year 2021. Future years' costs in addition to the aforementioned

cost would depend on the number of retirees that benefit under the

legislation amongst other factors.

CENSUS DATA: These estimates are based on data provided by the NYPD

Lieutenants Benevolent Association which was not audited but was checked

for reasonableness. Below is a summary of the data provided:

Salary

Lieutenant Commander of Detective Squad and Lieutenant Special Assign-

ment - $134,067

Lieutenant - $121,874

Lieutenants who retired with 15+ years in rank - 33 retired from Janu-

ary 1, 2016 through January 3, 2018.

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, 2016 (Lag) actuarial

valuations used to determine the Preliminary Fiscal Year 2018 employer

contributions of POLICE. Please note these assumptions and methods are

subject to change as this valuation is not considered final until the

end of the Fiscal Year 2018.

For purposes of analyzing the impact of the proposed legislation, it

was assumed that the benefit impacted by the increase in salary would be

a service benefit based on 20 years of service. The ultimate employer

cost for this proposed legislation would be based on the number, ages,

years of service, and salary of those Lieutenants, who retire after

serving in the rank of Lieutenant for at least 15 years.

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.

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FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-03 dated January 31,

2018, was prepared by the Chief Actuary for the New York City Police

Pension Fund. This estimate is intended for use only during the 2018

Legislative Session.