What's happening
This bill increases the maximum base benefit for cost-of-living adjustments for New York public retirees from $18,000 to $21,000, effective September 2020.
Why it matters
Direct financial impact on retirees. By raising the cap on the retirement benefit used to calculate cost-of-living adjustments (COLA), the bill allows eligible retirees to receive larger annual COLA increases, helping their pensions keep up better with inflation and potentially improving financial security for many retired public employees.
Substantial fiscal implications for governments. The bill is projected to increase costs for state and local governments, including school districts and municipalities, by hundreds of millions of dollars annually. For example, employer contributions for New York City pension funds alone are expected to rise by over $800 million in the first year.
Broader reach and equity among retirees. This adjustment applies across several major public retirement systems—including state, local, and New York City-specific funds—affecting a wide range of retired teachers, police, firefighters, and other public workers. It may help address concerns that COLA caps have eroded retiree purchasing power over time, especially for those with pensions above the previous $18,000 threshold.
Potential long-term budgetary risks. The increased pension obligations may pose budgetary challenges for governments, especially if economic or demographic assumptions used in cost estimates prove inaccurate. This could influence future public service funding, taxes, or even the sustainability of retirement systems if not carefully managed.
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Who cares
Headline styles
Raise Retiree COLA Cap
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to civil service and pensions
- Referred to civil service and pensions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Raise Retirees' COLA Cap
In Assembly Committee · Governmental Employees · Sponsor Phil Steck
Full text
5 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5835
2019-2020 Regular Sessions
IN SENATE
May 15, 2019
Introduced by Sen. BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions
AN ACT to amend the retirement and social security law, the education law and the administrative code of the city of New York, in relation to providing cost-of-living adjustments
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
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, said 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.
§ 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, said 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.
§ 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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03565-02-9
S. 5835 2
allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty, said 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.
§ 4. Subdivision c of section 13-696 of the administrative code of the city of New York, 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 fixed retirement allowance defined in subdivision b of this section. Effective on the first day of September, two thousand twenty, said cost-ofliving 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.
§ 5. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend subdivision c of Section 532-a of the Education
Law to prospectively apply the cost-of-living adjustment (COLA) percent-
age to a base benefit amount not to exceed $21,000 of the annual retire-
ment allowance. The current cap on the annual base benefit amount is
$18,000. This benefit improvement would be effective in September 2020.
The annual cost to the employers of members of the New York State
Teachers' Retirement System for this benefit is estimated to be $85.8
million or .50% of payroll if this bill is enacted.
Member data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Comprehensive Annual Financial Report (CAFR). System assets are as
reported in the System's financial statements, and can also be found in
the CAFR. Actuarial assumptions and methods are provided in the System's
Actuarial Valuation Report.
The source of this estimate is Fiscal Note 2019-13 dated January 24,
2019 prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2019 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
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 a payment in September 2020 the annual cost of living adjust-
ment will be computed on a base benefit amount not to exceed $21,000.
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
pay the cost of the provision. If this bill were enacted, the increase
in the present value of benefits would be approximately $1.07 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 $143 million. The estimated first year cost would
S. 5835 3
be approximately $3.5 million to the State of New York and approximately
$13.7 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 January 9, 2019, and intended for use only during
the 2019 Legislative Session, is Fiscal Note No. 2019-10, prepared by
the Actuary for the New York State and Local Retirement System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend the City of New
York's (City) Cost of Living Adjustment (COLA) provision in 13-696(c) to
raise the base retirement allowance benefit cap amount, used for the
COLA calculation, from $18,000 to $21,000.
This proposed legislation would impact the New York City Employees'
Retirement System (NYCERS), the New York City Teachers' Retirement
System (NYCTRS), the New York City Board of Education Retirement System
(BERS), the New York City Police Pension Fund (POLICE), and the New York
City Fire Pension Fund (FIRE), collectively known as the New York City
Pension Funds and Retirement Systems (NYCRS).
Effective Date: Upon enactment and applicable to the September 2020
COLA.
IMPACT ON BENEFITS: Certain NYCRS retirees and beneficiaries are
eligible to receive a COLA pursuant to the Administrative Code of the
City of New York (ACCNY) Section 13-696(a) (i.e. age 62 and retired for
years; age 55 and retired for 10 years; disabled retirees who are
retired for 5 years; and accidental death benefit recipients who have
been receiving the benefit for 5 years).
Currently, COLA is 50% of the Consumer Price Index, rounded to the
next higher 0.1%, but not to exceed 3% and not less then 1%, applied to
the first $18,000 of the maximum retirement allowance as adjusted with
prior COLAs.
Spouses paid under a lifetime optional benefit receive 50% of the COLA
that would have been payable to the retiree.
Under the proposed legislation, if enacted, the COLA percentage would
be applied to the first $21,000 of the maximum retirement allowance.
FINANCIAL IMPACT: The estimated financial impact of increasing the
base retirement allowance benefit cap amount, used for the COLA calcu-
lation as described above is an increase in the Present Value of Future
Benefits (PVFB) of $1.2 billion and an increase in the annual employer
contributions of $839.6 million. A breakdown of the financial impact by
NYCRS is shown in the table below.
S. 5835 4
Additional Estimated First Year
System/Fund Present Value of Future Annual Employer
Benefits($ Millions) Contributions ($Millions)
NYCERS $489.1 $399.0
NYCTRS 343.2 237.3
BERS 25.9 14.1
POLICE 229.5 189.3
FIRE 75.8 59.9
Total $1,163.5 $839.6
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 life-
time of those impacted by the benefit changes. For purposes of this
Fiscal Note it has been assumed that increases in the UAL attributable
to current retirees would be recognized immediately and that increases
in the UAL attributable to active members would be amortized over peri-
ods ranging from 12 to 15 years depending on the System (11 to 14
payments under the One-Year Lag Methodology (OYLM)).
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of NYCRS and other New
York City agencies to implement the proposed legislation.
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the Present Value of future employer
contributions and annual employer contributions would be reflected for
the first time in the June 30, 2018 actuarial valuations of NYCRS. In
accordance with the OYLM used to determine employer contributions, the
increase in employer contributions would first be reflected in Fiscal
Year 2020.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2018 (Lag) actuarial valuations of
NYCRS to determine the Preliminary Fiscal Year 2020 employer contrib-
utions.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
future employer contributions 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 contrib-
utions of NYCRS.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions and methods used and are subject to
change based on the realization of potential investment, demographic,
contribution, and other risks. If actual experience deviates from actu-
arial 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.
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
S. 5835 5
and procedures and with the Actuarial Standards of Practice issued by
the Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2019-10 dated April 23,
2019 was prepared by the Chief Actuary for the New York City Employees'
Retirement System, the New York City Teachers' Retirement System, the
New York City Board of Education Retirement System, the New York City
Police Pension Fund, and the New York City Fire Pension Fund. This esti-
mate is intended for use only during the 2019 Legislative Session.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the retirement and social security law, the education law and the administrative code of the city of New York, in relation to providing cost-of-living adjustments
Purpose
To provide a cost-of-living adjustment for members of retirement systems by increasing the base benefit amount for computation to $21,000.
Summary of provisions
Section 1 amends § 78-a(c) of the Retirement and Social Security Law to provide that beginning September 1, 2018, the cost of living adjustment shall be computed on a base benefit amount not to exceed $21,000 of the annual retirement allowance.
Read the full memo (2,298 words)
Section 2 amends § 378-a(c) of the Retirement and Social Security Law to provide that beginning September 1, 2018, the cost of living adjustment shall be computed on a base benefit amount not to exceed $21,000 of the annual retirement allowance.
Section 3 amends § 532-a(c) of the Education Law to provide that begin- ning September 1, 2018, the cost of living adjustment shall be computed on a base benefit amount not to exceed $21,000 of the annual retirement allowance.
Section 4 amends § 13-696(c) of the Administrative Code of the City of New York to provide that provide that beginning September 1, 2020, the cost of living adjustment shall be computed on a base benefit amount not to exceed $21,000 of the annual retirement allowance.
Section 5 provides the fiscal notes.
Section 6 provides the effective date.
Existing law
Section 78-a of the Retirement and Social Security Law relates to the cost-of-living adjustment for retirement plans applicable to members of the New York State Employees' Retirement System generally. Pursuant to this title, a cost-of-living adjustment is payable to all pensioners who have attained age 62 and have been retired for five years, all pension- ers who have attained age 55 and have been retired for ten years, all disability pensioners regardless of age who have been retired for five years; and all recipients of an accidental death benefit regardless of age who have been receiving such benefit for five years.
Subdivision (c) provides the cost-of-living adjustment shall be computed on a base benefit amount to exceed $18,000 of the annual retirement allowance defined in subdivision (b) of this section.
Subdivision (b) provides the cost-of-living adjustment shall be a percentage of the annual retirement allowance otherwise payable, computed without optional modification, but including any benefit derived from subdivision (f) of this section and any prior year's cost-
of-living adjustment derived from this section. Said percentage is set forth is subdivision (d) of this section.
Subdivision (f) provides that all retired members who have retired prior to 1997 and meet the eligibility criteria listed above, shall be paid an adjusted benefit in monthly installments. The adjusted benefit shall be equal to a percentage of the change in Consumer Price Index, published by the United States Bureau of Labor Statistics, measured from the year of retirement according to the following schedule:
Year of retirement Percentage
1968 through 1996 50% 1966 and 1967 55% 1965 60% 1964 65% 1936 70% 1962 80% 1961 90% Prior to 1961 100%
The adjusted benefit shall be computed on a base benefit amount not to exceed $18,000 of the retirement allowance otherwise payable, computed without modification. Any benefit received pursuant to this subdivision shall be in lieu of any benefit received pursuant to § 78 of the Retire- ment and Social Security Law.
Subdivision (d) provides that the percentage shall be determined annual- ly by reference to the Consumer Price Index, published by the United States Bureau of Labor Statistics, for year applicable calendar year. The percentage shall equal 50% of the annual inflation, as determined from the increase in the Consumer Price Index in the one year period ending on the March 31 prior to the cost-of-living adjustment effecting on the ensuing September 1st. The percentage is rounded up to the next higher one-tenth of one percent and shall not exceed 3% not be less than 1%.
Section 378-a of the Retirement and Social Security Law relates to the cost of living adjustment for retirement plans applicable to members of the New York State Policemen's and Firemen's Retirement System general- ly. Pursuant to this section, a cost-of-living adjustment shall be paya- ble to all pensioners who have attained age 62 and have been retired for five years, all pensioners who have attained age 55 and have been retired for ten years, and all disability pensioners regardless of age who have been retired for five years.
Subdivision (c) currently provides, the cost-of-living adjustment shall be computed on a base benefit amount to exceed $18,000 of the annual retirement allowance defined in subdivision (b) of this section.
Subdivision (b) provides the cost-of-living adjustment shall be a percentage of the annual retirement allowance otherwise payable, computed without optional modification, but including any benefit derived from subdivision (f) of this section and any prior year's cost- of-living adjustment derived from this section. Said percentage is set forth is subdivision (d) of this section.
Subdivision (f) provides that all retired members who have retired prior to 1997 and meet the eligibility criteria shall be paid an adjusted benefit in monthly installments. The adjusted benefit shall be equal to a percentage of the change in Consumer Price Index, published by the United States Bureau of Labor Statistics, measured from the year of retirement according to the following schedule:
Year of retirement Percentage
1968 through 1996 50% 1966 and 1967 55% 1965 60% 1964 65% 1936 70% 1962 80% 1961 90% Prior to 1961 100%
The adjusted benefit shall be computed on a base benefit amount not to exceed $18,000 of the retirement allowance otherwise payable, computed without modification. Any benefit received pursuant to this subdivision shall be in lieu of any benefit received pursuant to § 378 of the Retirement and Social Security Law.
Subdivision (d) provides that the percentage shall be determined annual- ly by reference to the Consumer Price Index, published by the United States Bureau of Labor Statistics, for year applicable calendar year. The percentage shall equal 50% of the annual inflation, as determined from the increase in the Consumer Price Index in the one year period ending on the March 31 prior to the cost-of-living adjustment effecting on the ensuing September 1st. The percentage is rounded up to the next higher one-tenth of one percent and shall not exceed 3% not be less than 1%.
Section 532-a of the Education Law pertains to the cost-of-living adjustment for retirement plans applicable to members of the State Teachers' Retirement System for Public School Teachers. Pursuant to this title, a cost-of-living adjustment is payable to all pensioners who have attained age 62 and have been retired for five years, all pensioners who have attained age 55 and have been retired for ten years, all disability pensioners regardless of age who have been retired for five years; and all recipients of an accidental death benefit regardless of age who have been receiving such benefit for five years.
Subdivision (c) provides the cost-of-living adjustment shall be computed on a base benefit amount to exceed $18,000 of the annual retirement allowance defined in subdivision (b) of this section.
Subdivision (b) provides the cost-of-living adjustment shall be a percentage of the annual retirement allowance otherwise payable, computed without optional modification, excluding any annuity derived from voluntary contributions made by members, except those made pursuant to elections under § 511-a(1) or § 516(3)(c) of this article, but including any benefit derived from subdivision (f) of this section. The percentage is set for in subdivision (d) of this section.
Subdivision (f) provides that all retired members who have retired prior to 1997 and meet the eligibility criteria shall be paid an adjusted benefit in monthly installments. The adjusted benefit shall be equal to a percentage of the change in Consumer Price Index, published by the United States Bureau of Labor Statistics, measured from the year of retirement according to the following schedule:
Year of retirement Percentage
1968 through 1996 50% 1966 and 1967 55% 1965 60% 1964 65% 1936 70% 1962 80% 1961 90% Prior to 1961 100%
The adjusted benefit is computed on a base benefit amount not to exceed $18,000 of the retirement allowance otherwise payable, computed without optional modification excluding any annuity derived from voluntary contributions made by members, except those made pursuant to elections under § 511-a(1) or § 516(3)(c) of this article. Any benefits received pursuant to § 532 of this Article, unless such benefits are in excess of those provided by this section, in which case such benefits shall be paid by the retirement system pursuant to such provision.
Subdivision (d) provides that the percentage shall be determined annual- ly by reference to the Consumer Price Index, published by the United States Bureau of Labor Statistics, for year applicable calendar year. The percentage shall equal 50% of the annual inflation, as determined from the increase in the Consumer Price Index in the one year period ending on the March 31 prior to the cost-of-living adjustment effecting on the ensuing September 1st. The percentage is rounded up to the next higher one-tenth of one percent and shall not exceed 3% not be less than 1%.
Section 511-a of the Education Law refers to a special service retire- ment allowance.
Section 516 Education Law refers to the annuity savings fund, including contributions and payments. Subdivision (3)(c) provides that any member by written notice duly acknowledged and filed with the retirement board before July 1, 1967 or within two years after he last became a member, whichever is later, may elect to contribute to the annuity savings fund in order to qualify for an increased pension for total service in excess of 25 years.
Section 532 of the Education Law refers to the supplemental retirement allowance. A supplemental retirement allowance shall be paid to pension- ers who have retired from the retirement system prior to the calendar year 1994.
Section 13-696 of the Administrative Code of the City of New York pertains to the cost-of-living adjustment for members of the New York City Employees' Retirement System, the New York City Police Pension fund, the New York City Fire Department Pension Fund, the New York City Board of Education retirement system, and the Relief and Pension Fund of the Department of Street Cleaning.
Subdivision (c) provides the cost-of-living adjustment shall be computed on a base benefit amount to exceed $18,000 of the annual retirement allowance defined in subdivision b of this section.
Subdivision (b) provides the cost-of-living adjustment shall be a percentage of the annual retirement allowance otherwise payable, computed without optional modification, but including any benefit derived from subdivision (f) of this section and any prior year's cost- of-living adjustment derived from this section. The percentage is set for in subdivision (d) of this section.
Subdivision (f) provides that all retired members who have retired prior to 1997 and meet the eligibility criteria shall be paid an adjusted benefit in monthly installments. The adjusted benefit shall be equal to a percentage of the change in Consumer Price Index, published by the United States Bureau of Labor Statistics, measured from the year of retirement according to the following schedule:
Year of retirement Percentage
1968 through 1996 50% 1966 and 1967 55% 1965 60% 1964 65% 1936 70% 1962 80% 1961 90% Prior to 1961 100%
The adjusted benefit is computed on a base benefit amount not to exceed $18,000 of the retirement allowance otherwise payable, computed without optional modification excluding any annuity derived from voluntary contributions made by members, except those made pursuant to elections under § 511-a(1) or § 516(3)(c) of this article. Any benefits received pursuant to § 532 of this Article, unless such benefits are in excess of those provided by this section, in which case such benefits shall be paid by the retirement system pursuant to such provision.
Subdivision (d) provides that the percentage shall be determined annual- ly by reference to the Consumer Price Index, published by the United States Bureau of Labor Statistics, for year applicable calendar year. The percentage shall equal 50% of the annual inflation, as determined from the increase in the Consumer Price Index in the one year period ending on the March 31 prior to the cost-of-living adjustment effecting on the ensuing September 1st. The percentage is rounded up to the next higher one-tenth of one percent and shall not exceed 3% not be less than 1%.
Justification
This legislation provides a cost-of-living adjustment for members of the New York State Employees' Retirement System, New York State Policemen's and Firemen's Retirement System, New York State Policemen's and Fire- men's Retirement System, the New York City Employees' Retirement System, the New York City Police Pension fund, the New York City Fire Department Pension Fund, the New York City Board of Education retirement system, and the Relief and Pension Fund of the Department of Street Cleaning, by
increasing the base benefit amount to $21,000 from the current annual retirement allowance of $18,000.
As incomes of active employees continue to rise to meet cost-of-living concerns, the caps placed on COLA covered benefits further erodes retirement income of those affected retirees. In particular, as noted above, medical costs including co-payments, premiums, and medication, have been rising at a rate far in excess of the CPR. Recent federal amendments to the Medicaid law, especially the prescription drug cover- age, are likely to cause a significant increase in retired public employee health care costs. By increasing the annual retirement allow- ance this bill will help ensure public retirees achieve a dignified and secure retirement and allowing them to continue to contribute more effectively to the long-term health of our economy.
Legislative history
2015/16 2017/18
Fiscal implications
Fiscal note attached.
Effective date
This act shall take effect immediately.
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