Expand Disability Benefits Eligibility

Section 1. The general municipal law is amended by adding a new section 209-ff to read as follows:

§ 209-ff. Provisions relating to certain accidental disability benefits. 1. Notwithstanding the provisions of subdivisions a and b of section five hundred seven of the retirement and social security law, a police/fire member in active service, a New York city uniformed correction/sanitation revised plan member in active service or an investigator revised plan member in active service shall be eligible for the accidental disability benefit provided in such section five hundred seven, regardless of whether he or she is eligible for a normal service retirement benefit. For the purposes of this section, the terms "police/fire member" and "active service" shall have the same meanings as defined in section five hundred one of the retirement and social security law.

2. Notwithstanding the provision of any general, special or local law, charter or administrative code to the contrary, subdivision d of section five hundred seven of the retirement and social security law shall not apply to retired police/fire members, retired New York city uniformed correction/sanitation revised plan members and retired investigator revised plan members who receive accidental disability retirement allowances. Such retirees shall be subject to post retirement medical examinations, and where applicable, modification of retirement allowance, following such examinations, in the same manner and under the same

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

[ ] is old law to be omitted.

LBD11535-05-7

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conditions prescribed by law immediately prior to the first of April, two thousand twelve for retired New York city uniformed correction/sanitation revised plan members, and prior to the first of July, two thousand nine for retired police/fire members and retired investigator revised plan members.

§ 2. Section 81 of chapter 18 of the laws of 2012 shall not apply to this act.

§ 3. This act shall take effect immediately.

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

This bill will allow certain uniformed members of public retirement

systems who are subject to the provisions of Article 14 of the Retire-

ment and Social Security Law to be eligible to file for an accidental

disability benefit regardless of whether he or she is eligible for a

normal service retirement benefit. The bill would also allow retirees

who are receiving an accidental disability pension to continue to do so

despite being disapproved from receiving a federal social security disa-

bility pension.

If this bill is enacted, insofar as it affects the New York State and

Local Police and Fire Retirement System (PFRS), there are fewer than 100

Tier 3 members that are subject to the provisions of Article 14 who

could possibly be affected.

It is estimated that there will be few, if any, accidental disability

retirees affected, thus we anticipate that the cost to state of New York

and the participating in the PFRS would be negligible.

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, 2016 actuarial valu-

ation. Distributions and other statistics can be found in the 2016

Report of the Actuary and the 2016 Comprehensive Annual Financial

Report.

The actuarial assumptions and methods used are described in the 2015

and 2016 Annual Report to the Comptroller on Actuarial Assumptions, 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, 2016

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 May 26, 2017, and intended for use only during

the 2017 Legislative Session, is Fiscal Note No. 2017-98, prepared by

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

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

PROVISIONS OF PROPOSED LEGISLATION: With respect to the New York City

Police Pension Fund (POLICE), the New York City Employees' Retirement

System (NYCERS), the proposed legislation would add Section 209-ff to

the General Municipal Law (GML) to permit POLICE, FIRE and NYCERS

Members who are subject to Retirement and Social Security Law (RSSL)

Article 14 (Eligible Members) and who would be ineligible for disability

retirement benefits solely on account of being eligible for a normal

service retirement benefit to be eligible for disability benefits.

The proposed legislation would also relax the safeguards provisions

regarding restrictions on post-retirement employment for Eligible

Members who are awarded Accident Disability Retirement (ADR), and would

also make the process for reducing or eliminating an ADR benefit based

on post-retirement earnings more onerous.

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Currently, Eligible Members receiving ADR benefits are subject to the

safeguards provision contained in RSSL section 507(d). RSSL section

507(d) restricts ADR recipients who have not reached age 65 from engag-

ing in employment or business activity that would render them ineligible

for social security disability benefits. It is the understanding of the

Actuary that ceasing to be disabled or earning above a threshold amount

determined by the Social Security Administration, set at $13,560 per

year in 2016 for non-blind individuals, would result in an automatic

cessation of ADR benefits.

Where applicable, Eligible Members who would have been deemed ineligi-

ble for social security disability may be permitted to receive ADR bene-

fits while being placed on a preferred eligible list for purposes of

reemployment at a salary grade not to exceed that from which the indi-

vidual retired. Once an offer of employment is made, ADR benefits would

cease.

Under the proposed legislation, RSSL section 507(d) safeguards would

become inapplicable to Eligible Members, and a medical examination,

followed by the conditions prescribed by safeguards provisions in effect

for the relevant POLICE, FIRE and NYCERS titles who became members prior

to the application or RSSL Article 14 would be required before an ADR

benefit reduction or suspension could occur.

Although subject to varying applicable safeguards provisions, relevant

POLICE, FIRE and NYCERS titles that joined prior to the application of

RSSL Article 14 are generally subject to two alternative safeguards

processes. Where an ADR recipient has not yet reached the minimum age of

service retirement and the sum of ADR retirement benefits and post-re-

tirement earnings exceed the salary of the title next higher than that

held at the time of retirement, the ADR pension is automatically reduced

by the amount exceeding such salary rate. The second alternative

involves a medical examination to determine disability level, the Board

of Trustee review and approval, to reduce the ADR amount based on an

ability of the retiree to perform gainful employment, or based on an

offer of employment after being placed on a preferred eligible list. It

is the understanding of the Actuary, that the second alternative is

rarely utilized.

The proposed legislation would therefore eliminate the automatic bene-

fit reduction and termination alternative under safeguards, reduce the

amount of time safeguards may be applied to a retiree, increase the

amount of post-retirement earnings an ADR recipient may earn before a

reduction or elimination of an ADR benefit can be applied, and modify

the safeguards provision in effect for Eligible Member titles who became

members prior to application of Article 14 to require a medical examina-

tion and Board of Trustee review and approval to reduce or terminate and

ADR benefit even in situations where the retiree is gainfully employed

and earning above the applicable post-retirement earnings threshold.

The Effective Date of the proposed legislation would be the date of

enactment.

IMPACT ON ADR BENEFITS PAYABLE: Under the proposed legislation the

eligibility requirements for disability benefits would be revised to

allow for benefits after a member is eligible for normal service retire-

ment benefits and the safeguards provisions would be relaxed as

explained above.

FINANCIAL IMPACT - CHANGES IN PROJECTED ACTUARIAL PRESENT VALUE OF

BENEFITS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this

Fiscal Note, it is assumed that the changes in the Actuarial Present

Value (APV) of benefits (APVB), APV of member contributions, the

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Unfunded Actuarial Accrued Liability (UAAL) and APV of future employer

contributions would be reflected for the first time in the June 30, 2016

actuarial valuation of POLICE, FIRE and NYCERS. Under the One-Year Lag

Methodology (OYLM), the first year in which changes in benefits for

Eligible Members would impact employer contributions to POLICE, FIRE and

NYCERS would be Fiscal Year 2018.

The additional member contributions expressed as percentages of annual

wages provided in section 18 of Chapter 298 of the Laws of 2016 and

section 4, Part SSS of Chapter 59 of the Laws of 2017 for purposes of

maintaining no additional employer contributions for implementation of

the Enhanced Plan for applicable members included the cost for changes

to eligibility requirements for disability retirement contained in the

proposed legislation, corresponding to the APVB in Table 1 below.

Table 1 presents an estimate of the increases in the APV of benefits

and in employer contributions to POLICE, FIRE and NYCERS for Fiscal

Years 2018 through 2022 due to the changes in disability eligibility

based on the applicable actuarial assumptions and methods noted herein:

Table 1

Estimated Financial Impact if Certain Revisions are Made to

Eligibility for Disability Benefits for Eligible Members

($ Millions)

Increase in APV of Increase in Employer

Fiscal Year Benefits Contributions*

2018

* POLICE $76.5 8.9

* FIRE 45.4 0

* Sanitation 6.9 0

* Correction 4.6 0

* Total $133.4 $8.9

2019

* POLICE $95.8 9.9

* FIRE 61.6 0

* Sanitation 9.0 0

* Correction 6.2 0

* Total $172.6 $9.9

2020

* POLICE $116.2 11.0

* FIRE 77.1 0

* Sanitation 11.5 0

* Correction 9.7 0

* Total $212.9 $11.0

2021

* POLICE $136.9 11.7

* FIRE 93.1 0

* Sanitation 13.9 0

* Correction 9.7 0

* Total $253.6 $11.7

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2022

* POLICE $158.8 12.5

* FIRE 111.4 0

* Sanitation 17.1 0

* Correction 11.5 0

* Total $298.8 $12.5

* The cost for this change has already been accounted for in the

Preliminary June 30, 2016 actuarial valuation of FIRE and NYCERS.

The estimated increases in APVB in Table 1 are based upon the follow-

ing projection assumptions:

* Level workforce (i.e., new employees are hired to replace those who

leave active status).

* Salary increases consistent with those used in projections presented

to the New York City Office of Management and Budget in April 2017

(Preliminary Projections).

* New entrant salaries consistent with those used in the Preliminary

Projections.

OTHER COSTS: Not measured in this Fiscal Note are the following:

* The initial, additional administrative costs of POLICE, FIRE and

NYCERS 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 and shown in Table 2 below are the census data used in

the Preliminary June 30, 2016 (Lag) actuarial valuation of POLICE, FIRE,

and NYCERS to determine the Preliminary Fiscal Year 2018 employer

contributions.

Table 2

Census Data as of June 30, 2016

Average Average Average

Group Count Age Service Salary

Police

Tier 3 3,211 31.3 5.2 $87,300

Revised

Tier 3 7,998 28.5 1.8 $58,400

Fire

Tier 3 336 29.9 3.0 $60,500

Revised

Tier 3 1,638 29.0 1.3 $53,000

Sanitation 1,563 36.5 2.4 $55,800

Correction 2,302 33.1 1.9 $52,200

ACTUARIAL ASSUMPTIONS AND METHODS: The change in the APVB presented

herein has been calculated based on the actuarial assumptions and meth-

ods in effect for the Preliminary June 30, 2016 (Lag) actuarial valu-

ations used to determine the Preliminary Fiscal Year 2018 employer

contributions of POLICE, FIRE and NYCERS.

It has been further assumed that all Tier 3 POLICE, FIRE and NYCERS

members who became members prior to the effective date of the proposed

legislation will choose new disability provisions.

New entrants were projected to replace the members expected to leave

the active population to maintain a steady-state population.

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STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-

ary for, and independent of, the New York City Pension Funds and Retire-

ment Systems. I am a Fellow of the Society of Actuaries, a Fellow of the

Conference of Consulting Actuaries and a Member of the American Academy

of Actuaries. I meet the Qualification Standards of the American Academy

of Actuaries to render the actuarial opinion contained herein.

FISCAL NOTE IDENTIFICATION: This Fiscal Note 2017-23 dated May 30,

2017 was prepared by the Chief Actuary for the New York City Employees'

Retirement System, the New York City Police Pension Fund, and the New

York Fire Department Pension Fund. This estimate is intended for use

only during the 2017 Legislative Session.