Boost Pensions for Senior 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: This proposed legislation would amend Administrative

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

tenant of the New York City Police Department (NYPD), 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 Lieutenant detailed

to act as a Lieutenant Commander Detective Squad or Lieutenant Special

Assignment.

Effective Date: Upon enactment.

IMPACT ON BENEFITS: 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 salary.

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-

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

[ ] is old law to be omitted.

LBD07972-05-0

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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 $162,000 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 $2.1 million.

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 Lieutenants who

will retire with 15 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 $248,000 each year.

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. 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 (excluding overtime)

o Lieutenant - $125,530

o Lieutenant Commander of Detective Squad and Lieutenant Special

Assignment - $138,089

* Lieutenants who retired with 15+ years in rank - 44 retired from

January 1, 2018 through January 1, 2020.

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.

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 the Plan 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

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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 2020-05 dated February

10, 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.