Boost Detective Pension Benefits

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. (1) When a detective of the third grade shall have served in the rank of detective of the third grade for a period of fifteen years, he or she shall have the same rights in respect to the police pension fund as a detective of the third grade detailed to act as detective of the second grade.

(2) When a detective of the second grade shall have served in the rank of detective of the second grade for a period of ten years, he or she shall have the same rights in respect to the police pension fund as a detective of the second grade detailed to act as detective of the first grade.

§ 2. This act shall take effect immediately.

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

SUMMARY OF BILL: This proposed legislation would amend Administrative

Code of the City of New York (ACCNY) Section 14-114 to allow for a

Detective 3rd grade of the New York City Police Department (NYPD), who

has been a Detective 3rd grade for at least 15 years, to have the same

rights in respect to the New York City Police Pension Fund (POLICE) as a

Detective 3rd grade detailed to act as a Detective 2nd grade and to

allow for a Detective 2nd grade of the New York City Police Department,

who has been a Detective 2nd grade for a least 10 years, to have the

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

[ ] is old law to be omitted.

LBD07971-03-0

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same rights in respect to POLICE as a Detective 2nd grade detailed to

act as a Detective 1st grade.

Effective Date: Upon enactment.

IMPACT ON BENEFITS: The proposed legislation would permit Detectives

of the 3rd and 2nd grade, who have met certain service requirements, to

have their pension calculations based on a higher-grade salary.

A Detective 3rd grade who would benefit under this proposed legis-

lation, if enacted, would receive an increase in their annual pension

benefit of approximately $7,800 per year and a Detective 2nd grade who

would benefit under this proposed legislation, if enacted, would receive

an increase in their annual pension benefit of approximately $10,500 per

year, due to the assumed higher salary grade and overtime, and assuming

a service retirement benefit with 20 years of service.

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 $1.1 million per year.

With respect to an individual member, the impact on benefits due to

this proposed legislation could vary greatly depending on the member's

age, years of service, retirement cause, and Tier.

FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial assumptions

and methods described herein, the enactment of this proposed legislation

would increase the Present Value of Future Benefits (PVFB) by approxi-

mately $14.0 million every year.

FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with

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 Detectives 3rd

grade that will retire with 15 or more years in rank or Detectives 2nd

grade that will retire with 10 or more years in rank cannot be known in

advance with credibility, the PVFB due to this legislation has been

treated as an actuarial loss at the affected members' retirement.

For the purposes of this Fiscal Note, the increase in UAL was amor-

tized over a 15-year period (14 payments under the One-Year Lag Method-

ology) using level dollar payments. This results in an increase in annu-

al employer contributions of approximately $1.7 million each year.

The costs above represent the estimated impact for retirees in the

first year the bill is enacted. Future years' costs in addition to the

aforementioned cost would depend on the number of retirees that benefit

under the legislation amongst other factors.

CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is

assumed that the changes in the PVFB and annual employer contributions

would be reflected for the first time in the June 30, 2020 actuarial

valuation of POLICE. In accordance with the One-Year Lag Methodology

(OYLM) used to determine employer contributions, the increase in employ-

er contributions would first be reflected in Fiscal Year 2022.

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

Detectives' Endowment Association which was not audited but was checked

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

* Salary (excluding overtime and outstanding wage contract increases)

* Detective 3rd grade - $114,999

* Detective 2nd grade - $128,034

* Detective 1st grade - $145,548

* Detectives 3rd grade who retired with 15+ years in rank - 386

retired over the past 16 years.

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* Detectives 2nd grade who retired with 10+ years in rank - 1,451

retired over the past 17 years.

ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual

employer contributions presented herein have been calculated based on

the actuarial assumptions and methods in effect for the June 30, 2018

(Lag) actuarial valuations used to determine the Preliminary Fiscal Year

2020 employer contributions of POLICE.

Due to the outstanding wage contract for Detectives as of the date

this Fiscal Note was released, the salaries provided for this analysis

have been adjusted to reflect the assumption of pattern bargaining based

on the 1st year of the recently settled Captains Endowment Association

contract of 2.25%.

RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend

highly on the realization of the actuarial assumptions used, as well as

certain demographic characteristics of POLICE and other exogenous

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 of POLICE and other New

York City agencies to implement the proposed legislation.

* The impact of this proposed legislation on Other Postemployment

Benefit (OPEB) costs.

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, a

Member of the American Academy of Actuaries, and a Fellow of the Confer-

ence of Consulting Actuaries. I meet the Qualification 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: This Fiscal Note 2020-06 dated February

24, 2020 was prepared by the Chief Actuary for the New York City Police

Pension Fund. This estimate is intended for use only during the 2020

Legislative Session.