Increase Retiree COLA Benefits

Section 1. Subdivision c of section 78-a of the retirement and social security law, as added by chapter 125 of the laws of 2000, is amended to read as follows:

c. Said cost-of-living adjustment shall be computed on a base benefit amount not to exceed eighteen thousand dollars of the annual retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty-one, the cost-of-living adjustment shall be computed on a base benefit amount not to exceed twenty-one thousand dollars of the annual retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty-two, and annually thereafter, the base benefit amount shall be increased annually by a percentage as determined annually by reference to the consumer price index (all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100), published by the United States bureau of labor statistics, for each applicable calendar year. Said percentage increase shall equal fifty percent of the annual inflation, as determined from the increase in the consumer price index in the one year period ending on the March thirty-first prior to the base benefit amount increase effective on the ensuing September first. Said percentage shall then be rounded up to the next higher one-tenth of one percent and shall not exceed three percent nor be less than one percent.

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

[ ] is old law to be omitted.

LBD09712-02-9

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§ 2. Subdivision c of section 378-a of the retirement and social security law, as added by chapter 125 of the laws of 2000, is amended to read as follows:

c. Said cost-of-living adjustment shall be computed on a base benefit amount not to exceed eighteen thousand dollars of the annual retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty-one, the cost-of-living adjustment shall be computed on a base benefit amount not to exceed twenty-one thousand dollars of the annual retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty-two, and annually thereafter, the base benefit amount shall be increased annually by a percentage as determined annually by reference to the consumer price index (all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100), published by the United States bureau of labor statistics, for each applicable calendar year. Said percentage increase shall equal fifty percent of the annual inflation, as determined from the increase in the consumer price index in the one year period ending on the March thirty-first prior to the base benefit amount increase effective on the ensuing September first. Said percentage shall then be rounded up to the next higher one-tenth of one percent and shall not exceed three percent nor be less than one percent.

§ 3. Subdivision c of section 532-a of the education law, as added by chapter 125 of the laws of 2000, is amended to read as follows:

c. Said cost-of-living adjustment shall be computed on a base benefit amount not to exceed eighteen thousand dollars of the annual retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty-one, the cost-of-living adjustment shall be computed on a base benefit amount not to exceed twenty-one thousand dollars of the annual retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty-two, and annually thereafter, the base benefit amount shall be increased annually by a percentage as determined annually by reference to the consumer price index (all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100), published by the United States bureau of labor statistics, for each applicable calendar year. Said percentage increase shall equal fifty percent of the annual inflation, as determined from the increase in the consumer price index in the one year period ending on the March thirty-first prior to the base benefit amount increase effective on the ensuing September first. Said percentage shall then be rounded up to the next higher one-tenth of one percent and shall not exceed three percent nor be less than one percent.

§ 4. This act shall take effect immediately.

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

This bill would provide an increase in the defined benefit cost-of-

living adjustment (COLA) for New York public retirement systems. Start-

ing with the payment in September 2021, the annual cost of living

adjustment will be computed on a base benefit amount not to exceed

$21,000. Starting with the payment in September 2022, the base benefit

will be increased annually by 50% of the annual consumer price index

rate of inflation not to exceed 3% or be less than 1%.

Insofar as this bill affects the New York State and Local Employees'

Retirement System, pursuant to Section 25 of the Retirement and Social

Security Law, the increased costs would be borne entirely by the State

of New York and would require an itemized appropriation sufficient to

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pay the cost of the provision. If this bill were enacted, the increase

in the present value of benefits would be approximately $1.82 billion.

Insofar as this bill affects the New York State and Local Police and

Fire Retirement System (PFRS), the increased costs would be shared by

the State of New York and the participating employers in the PFRS. If

this bill were enacted, the increase in the present value of benefits

would be approximately $251 million. The estimated first year cost would

be approximately $6.1 million to the State of New York and approximately

$24.0 million to the participating employers in the PFRS.

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, 2018 actuarial valu-

ation. Distributions and other statistics can be found in the 2018

Report of the Actuary and the 2018 Comprehensive Annual Financial

Report.

The actuarial assumptions and methods used are described in the 2015,

2016, 2017 and 2018 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, 2018

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 21, 2019, and intended for use only

during the 2019 Legislative Session, is Fiscal Note No. 2019-72,

prepared by the Actuary for the New York State and Local Retirement

System.