S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         5311
                              2015-2016 Regular Sessions
                                 I N  A S S E M B L Y
                                   February 17, 2015
                                      ___________
       Introduced  by M. of A. ABBATE, LENTOL, DenDEKKER, HIKIND -- Multi-Spon-
         sored by -- M. of A.  ARROYO, BENEDETTO, BROOK-KRASNY,  COLTON,  COOK,
         CRESPO,  CYMBROWITZ,  GOLDFEDER,  GUNTHER, HEVESI, MILLER, SIMANOWITZ,
         SIMON, SKOUFIS -- read once and referred to the Committee  on  Govern-
         mental Employees
       AN  ACT to amend the administrative code of the city of New York and the
         retirement and social security law,  in  relation  to  the  disability
         benefits of members of the New York city fire department pension fund
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Subdivisions a and b of section 13-357 of  the  administra-
    2  tive  code  of the city of New York, subdivision a as amended by chapter
    3  438 of the laws of 1986, are amended to read as follows:
    4    a. Once each year the board may, and upon his or her  own  application
    5  shall,  require  any  disability pensioner, under the minimum period for
    6  service retirement elected by him or her, and who at the time of his  or
    7  her  retirement  for disability was an improved benefits plan member, OR
    8  ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
    9  FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW, AND WHO IS
   10  UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
   11  RETIREMENT AND SOCIAL SECURITY LAW FOR POLICE/FIRE  MEMBERS  to  undergo
   12  medical  examination.  Such  examination  shall  be made at the place of
   13  residence of such beneficiary or other place mutually agreed upon.  Upon
   14  the  completion  of  such examination the medical board shall report and
   15  certify to the board whether such beneficiary is or is  not  totally  or
   16  partially  incapacitated physically or mentally and whether he or she is
   17  or is not engaged in or able to engage in a gainful occupation.  If  the
   18  board  concur  in a report by the medical board that such beneficiary is
   19  able to engage in a gainful occupation, it shall  certify  the  name  of
   20  such  beneficiary  to the appropriate civil service commission, state or
   21  municipal, and such  commission  shall  place  his  or  her  name  as  a
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD05874-03-5
       A. 5311                             2
    1  preferred  eligible  on  such  appropriate  lists  of  candidates as are
    2  prepared for appointment to positions for which he or she is  stated  to
    3  be  qualified.  Should  such beneficiary be engaged in a gainful occupa-
    4  tion,  or  should  he  or she be offered city-service as a result of the
    5  placing of his or her name on a civil service  list,  such  board  shall
    6  reduce  the  amount  of  his  or  her  disability pension and his or her
    7  pension-providing-for-increased-take-home-pay,  if  any,  to  an  amount
    8  which,  when added to that then earned by him or her, or earnable by him
    9  or her in city-service so offered him  or  her,  shall  not  exceed  the
   10  current  maximum  salary for the title next higher than that held by him
   11  or her when he or she was retired. Should the earning capacity  of  such
   12  beneficiary  be further altered, such board may further alter his or her
   13  pension and his or her pension-providing-for-increased-take-home-pay, if
   14  any, to an amount which shall not exceed the rate of pension and his  or
   15  her pension-providing-for-increased-take-home-pay, if any, upon which he
   16  or  she  was  originally  retired but which, subject to such limitation,
   17  shall equal, when added to that earnable by  him  or  her,  the  current
   18  maximum  salary  for  the title next higher than that held by him or her
   19  when he or she was retired. The provisions  of  this  section  shall  be
   20  executed,  any  provision  of  the  charter  or the code to the contrary
   21  notwithstanding.
   22    b. Should any disability  pensioner,  under  the  minimum  period  for
   23  service  retirement elected by him or her, and who was an improved bene-
   24  fits plan member at the time of his or her retirement for disability, OR
   25  ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
   26  FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW AND WHO  IS
   27  UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
   28  RETIREMENT  AND  SOCIAL  SECURITY LAW FOR POLICE/FIRE MEMBERS, refuse to
   29  submit to one medical examination in any year by a physician  or  physi-
   30  cians designated by the medical board, his or her pension and his or her
   31  pension-providing-for-increased-take-home-pay, if any, may be discontin-
   32  ued  until  his  or  her withdrawal of such refusal. Should such refusal
   33  continue for one year, all his or her rights in and to such pension  and
   34  his or her pension-providing-for-increased-take-home-pay, if any, may be
   35  revoked by such board.
   36    S  2. Section 506 of the retirement and social security law is amended
   37  by adding a new subdivision e to read as follows:
   38    E. 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER  OR  OF  ANY
   39  GENERAL,  SPECIAL  OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
   40  REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF  THIS  SECTION
   41  SHALL  NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND
   42  WHO ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK  FIRE  DEPART-
   43  MENT PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGI-
   44  BLE  FOR  ORDINARY  DISABILITY  RETIREMENT  PURSUANT TO SECTIONS 13-316,
   45  13-352 AND 13-357 OF THE ADMINISTRATIVE CODE OF THE CITY  OF  NEW  YORK,
   46  AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
   47    (I)  AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
   48  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
   49  AND
   50    (II)  A  PENSION  WHICH   IS   THE   ACTUARIAL   EQUIVALENT   OF   THE
   51  RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
   52  TLED, IF ANY, AND
   53    (III)  A  PENSION,  WHICH  TOGETHER  WITH  HIS  OR HER ANNUITY AND THE
   54  PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
   55  A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
   56  SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
       A. 5311                             3
    1  OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
    2  RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
    3  OR (2) ONE-THIRD OF HIS OR HER FINAL AVERAGE SALARY,  IF  THE  YEARS  OF
    4  CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
    5    2.  THE  PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION FIVE HUNDRED
    6  SEVEN OF THIS ARTICLE SHALL APPLY  TO  DISABILITY  BENEFITS  UNDER  THIS
    7  SUBDIVISION.
    8    S  3. Section 507 of the retirement and social security law is amended
    9  by adding a new subdivision j to read as follows:
   10    J. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR ANY GENERAL,
   11  SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR REGULATION
   12  TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E, AND F OF THIS SECTION SHALL
   13  NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT  PENSION  FUND  WHO
   14  ARE  SUBJECT  TO  THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPARTMENT
   15  PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL  INSTEAD  BE  ELIGIBLE
   16  FOR  ACCIDENTAL  DISABILITY  RETIREMENT  PURSUANT  TO  SECTIONS  13-316,
   17  13-353, 13-354, 13-357 OF THE ADMINISTRATIVE CODE OF  THE  CITY  OF  NEW
   18  YORK  AND  ANY  ACCIDENTAL  DISABILITY  RETIREMENT BENEFITS FOUND IN THE
   19  GENERAL MUNICIPAL LAW AND SHALL RECEIVE  A  RETIREMENT  ALLOWANCE  WHICH
   20  SHALL CONSIST OF:
   21    1.  AN  ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
   22  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
   23  AND
   24    2. A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE  RESERVE-FOR-IN-
   25  CREASED-TAKE-HOME-PAY  TO  WHICH HE OR SHE MAY THEN BE ENTITLED, IF ANY;
   26  AND
   27    3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
   28  ADDITION TO THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS  ONE  AND
   29  TWO OF THIS SUBDIVISION.
   30    S  4. Section 510 of the retirement and social security law is amended
   31  by adding a new subdivision i to read as follows:
   32    I. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS ARTICLE OR THE  ADMIN-
   33  ISTRATIVE  CODE  OF THE CITY OF NEW YORK, THE ANNUAL ESCALATION PROVIDED
   34  IN THIS SECTION SHALL NOT APPLY TO THE ORDINARY OR ACCIDENTAL DISABILITY
   35  RETIREMENT BENEFIT OF MEMBERS OF THE NEW YORK  FIRE  DEPARTMENT  PENSION
   36  FUND  WHO  RETIRE  PURSUANT  TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED
   37  SEVEN OF THIS ARTICLE. THE ORDINARY OR ACCIDENTAL DISABILITY  RETIREMENT
   38  BENEFIT  OF  MEMBERS  OF  THE  NEW YORK FIRE DEPARTMENT PENSION FUND WHO
   39  RETIRE PURSUANT TO SECTION FIVE HUNDRED SIX OR  FIVE  HUNDRED  SEVEN  OF
   40  THIS  ARTICLE  SHALL  BE  ADJUSTED  FOR  COST-OF-LIVING  PURSUANT TO THE
   41  PROVISIONS OF SECTION 13-696 OF THE ADMINISTRATIVE CODE OF THE  CITY  OF
   42  NEW YORK.
   43    S 5. Subdivision f of section 511 of the retirement and social securi-
   44  ty law, as amended by chapter 18 of the laws of 2012, is amended to read
   45  as follows:
   46    f.  This  section  shall not apply to general members in the uniformed
   47  correction force of the New York city department  of  correction  or  to
   48  uniformed  personnel  in  institutions  under  the  jurisdiction  of the
   49  department of corrections and community supervision and security  hospi-
   50  tal treatment assistants, as those terms are defined in subdivision i of
   51  section  eighty-nine  of  this  chapter,  provided,  however,  that  the
   52  provisions of this section shall apply to  a  New  York  city  uniformed
   53  correction/sanitation  revised  plan member, AND THIS SECTION SHALL ALSO
   54  NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT  PENSION  FUND  WHO
   55  ARE  SUBJECT  TO THIS ARTICLE WHO RETIRE ON ORDINARY OR ACCIDENTAL DISA-
       A. 5311                             4
    1  BILITY RETIREMENT PURSUANT TO SECTION FIVE HUNDRED SIX OR  FIVE  HUNDRED
    2  SEVEN OF THIS ARTICLE.
    3    S  6. Section 512 of the retirement and social security law is amended
    4  by adding a new subdivision e to read as follow:
    5    E. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
    6  ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF  THE
    7  NEW  YORK  FIRE  DEPARTMENT PENSION FUND WHO RETIRE PURSUANT TO SECTIONS
    8  FIVE HUNDRED SIX AND FIVE HUNDRED SEVEN OF THIS ARTICLE A MEMBER'S FINAL
    9  AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH  MEMBER  DURING  THE
   10  ONE-YEAR  PERIOD  IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY FORM
   11  OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
   12  OF RETIREMENT), OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION,  SICK
   13  LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
   14  WORKED  (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHOR-
   15  IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
   16  DURING THE ONE YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS  THAT
   17  OF  THE  PREVIOUS  ONE-YEAR  PERIOD  BY  MORE THAN TWENTY PER CENTUM THE
   18  AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE  COMPU-
   19  TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
   20  MONTH  OR  MONTHS  (NOT  IN  EXCESS  OF  THREE) WHICH WOULD OTHERWISE BE
   21  INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH  THE  MEMBER
   22  WAS  ON  AUTHORIZED  LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
   23  THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
   24  OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
   25  THEREOF.
   26    S 7. This act shall take effect on the sixtieth  day  after  it  shall
   27  have become a law.
         FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
         PROVISIONS  OF  PROPOSED  LEGISLATION: This proposed legislation would
       amend Retirement and Social Security Law  ("RSSL")  Sections  506,  507,
       510,  511  and 512 and amend Administrative Code of the City of New York
       ("ACNY") Section 13-357 to change, for members  of  the  New  York  Fire
       Department  Pension Fund ("FIRE") subject to Article 14 of the RSSL, the
       eligibility for and the calculation of  Ordinary  Disability  Retirement
       ("ODR") benefits and Accidental Disability Retirement ("ADR") benefits.
         Unless otherwise noted, for purposes of this Fiscal Note the term Tier
       III  FIRE  members  refers  to  members  of the New York Fire Department
       Pension Fund ("FIRE") who have a date of membership on or after July  1,
       2009.  Note:  Although referred to herein as Tier III members, it should
       be noted that members who join FIRE on or after April 1, 2012 are  often
       referred  to as Tier VI members or Revised Tier III members.  Also Note:
       There is only one Tier III member of FIRE who has a date  of  membership
       on or after July 1, 2009 and prior to April 1, 2012.
         The  Effective  Date of the proposed legislation would be the 60th day
       after the date of enactment.
         IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
       ODR benefits for Tier III FIRE Members are based on:
         * Completing five or more years of service, and
         * Becoming eligible for Primary Social Security Disability  retirement
       benefits.
         Such ODR benefits are equal to the greater of:
         * 33 1/3% of Five-Year Final Average Salary ("FAS"), or
         *  2% of FAS multiplied by years of credited service (not in excess of
       22 years),
         * Reduced by 50% of the Primary Social  Security  Disability  benefits
       (determined under RSSL Section 511), and
       A. 5311                             5
         * Reduced by 100% of Workers' Compensation benefits (if any).
         It  is  the  understanding  of  the  Actuary that FIRE Members are not
       covered by Workers' Compensation.
         Under the proposed legislation the eligibility  requirements  for  ODR
       benefits  for  Tier  III FIRE Members would be revised to be the same as
       those provided in ACNY Sections 13-316, 13-352  and  13-357  (i.e.,  the
       provisions applicable to Tier I and Tier II FIRE members).
         In  particular,  completing five or more years of service would not be
       required in order to be eligible for ODR benefits. In other words, there
       would not any requirement for  any  minimum  length  of  service  to  be
       completed in order to be eligible for ODR benefits.
         Under  the  proposed legislation, if enacted, the ODR benefit for Tier
       III FIRE Members would be an allowance consisting of:
         * An actuarial equivalent annuity of accumulated member contributions,
       plus
         * A pension, which together with the annuity, equal to  1/40  of  One-
       Year  Final  Average  Salary  ("FAS1")  multiplied  by years of credited
       service, but not less than:
         ** 1/2 of FAS1, if years of credited service are greater than or equal
       to 10 years, or
         ** 1/3 of FAS1, if years of credited service are less than 10 years.
         Note: The proposed legislation also states that one component  of  the
       ODR  benefit  would  be the actuarial equivalent annuity of an Increased
       Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
       in this Fiscal Note analysis since it is the understanding of the  Actu-
       ary  that ITHP is not available to Tier III members generally and is not
       specifically defined in the proposed legislation.
         In addition, the proposed legislation would not apply  the  Escalation
       available  under  RSSL  Section  510  to  ODR benefits for Tier III FIRE
       Members. However, such ODR benefits would still be eligible for Cost-of-
       Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
         IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions for
       ADR benefits for Tier III FIRE Members are based on satisfying either:
         * Being eligible for Social Security  Disability  retirement  benefits
       and  having  become disabled due to an accident sustained in the line of
       duty, or
         * Being physically or mentally incapacitated as a result of  an  acci-
       dent  sustained  in  the  line  of duty as determined by the appropriate
       administrative authority assigned by FIRE.
         As a consequence of RSSL Section 507.e, a Tier III FIRE  Member  would
       not  be  eligible  for  ADR unless the member waived the benefits of any
       statutory presumptions (e.g., certain heart diseases).
         Such ADR benefits are calculated using a formula of 50% multiplied  by
       FAS  less  50% of Primary Social Security disability benefit (determined
       under RSSL Section 511) and less 100% of Workers' Compensation  benefits
       (if any).
         Note: It is the understanding of the Actuary that FIRE Members are not
       covered by Workers' Compensation.
         Under  the  proposed  legislation the eligibility requirements for ADR
       benefits for Tier III FIRE Members would be revised to be  the  same  as
       those  provided  in  ACNY  Sections 13-316, 13-353 and 13-357 (i.e., the
       provisions applicable to Tier I and Tier II FIRE Members).
         In addition, it is the understanding of the Actuary that the  proposed
       legislation,  if enacted, would provide that Tier III FIRE Members could
       be eligible for and utilize the statutory  presumptions  (e.g.,  certain
       A. 5311                             6
       heart diseases) that qualify certain Tier I and Tier II FIRE Members for
       ADR.
         Under  the  proposed legislation, if enacted, the ADR benefit for Tier
       III FIRE Members would be revised to equal a retirement allowance  equal
       to the sum of:
         * An actuarial equivalent annuity of accumulated member contributions,
       plus
         * 75% multiplied by FAS1.
         Note:  The  proposed legislation also states that one component of the
       ADR benefit would be the actuarial equivalent annuity of  an  Increased-
       Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
       in  this Fiscal Note analysis since it is the understanding of the Actu-
       ary that ITHP is not available to Tier III members generally and is  not
       specifically defined in the proposed legislation.
         Also  note,  it  is the understanding of the Actuary that the Tier III
       FIRE Members impacted by the proposed legislation would not receive  any
       additional 1/60 of annual earnings after 20 years of service.
         In  addition,  the proposed legislation would not apply the Escalation
       available under RSSL Section 510 to  ADR  benefits  for  Tier  III  FIRE
       Members. However, such ADR benefits would still be eligible for Cost-of-
       Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
         FINANCIAL  IMPACT  -  CHANGES  IN BENEFITS - ACTUARIAL PRESENT VALUES.
       Based on the census data and the actuarial assumptions and methods noted
       herein, if the Effective Date is on or before June 30, 2015,  then  this
       would  change  the Actuarial Present Value ("APV") of benefits ("APVB"),
       APV of member contributions, the Unfunded  Actuarial  Accrued  Liability
       ("UAAL")  and  APV  of future employer contributions as of June 30, 2013
       for Tier III FIRE Members.
         FINANCIAL IMPACT  -  CHANGES  IN  PROJECTED  APV  OF  FUTURE  EMPLOYER
       CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
       Fiscal  Note,  it  is  assumed  that  the changes in APVB, APV of member
       contributions, UAAL and APV of future employer  contributions  would  be
       reflected for the first time in the June 30, 2013 actuarial valuation of
       FIRE.
         Under  the  One-Year  Lag  Methodology  ("OYLM"),  the first year that
       changes in benefits for Tier III  FIRE  Members  could  impact  employer
       contributions to FIRE would be Fiscal Year 2015.
         In  accordance  with ACNY Section 13.638.2(k-2), new UAAL 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. As of June 30, 2013, the remaining working lifetime  of
       the  Tier  III FIRE Members is approximately 24 years.  Recognizing that
       this period will decrease over time as the group  of  Tier  III  Members
       matures,  the  Actuary  would  likely  choose  to  amortize the new UAAL
       attributable to this proposed legislation  over  a  15-year  to  20-year
       period (between 14 and 19 payments under the OYLM Methodology). However,
       since  virtually all of the Tier III FIRE members that would be impacted
       by the benefit changes are new entrants, the resulting UAAL would be  de
       minimis and therefore the amortization period used for the UAAL has very
       little impact on the final results.
         The following Table 1 presents an estimate of the increases due to the
       changes  in  ODR and ADR provisions for Tier III FIRE Members in the APV
       of future employer contributions and in employer contributions  to  FIRE
       for  Fiscal Years 2015 through 2019 that would occur based on the appli-
       cable actuarial assumptions and methods noted herein:
       A. 5311                             7
                                        Table 1
                          Estimated Financial Impact on FIRE
                           If Certain Revisions are Made to
                          Provisions for ODR and ADR Benefits
                              for Tier III FIRE Members*
                                     ($ Millions)
                              Increase in APV of        Increase In Employer
          Fiscal Year   Future Employer Contributions      Contributions
             2015                   $15.7                       $1.9
             2016                    67.7                        8.0
             2017                   119.6                       13.4
             2018                   172.7                       18.3
             2019                   227.0                       23.0
         * Based on actuarial assumptions and methods set forth in the Actuari-
       al Assumptions and Method section. Also, based on the projection assump-
       tions as described herein.
         ODR  and  ADR  benefits  are  not subject to Tier III Escalation (RSSL
       Section 510).
         The estimated increases in employer contributions shown in Table 1 are
       based upon the following projection assumptions:
         * Level workforce (i.e., new employees are hired to replace those  who
       leave active status).
         * Projected salary increases consistent with those used in projections
       presented  to  the  New  York  City  Office  of  Management  and  Budget
       ("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
       nary Projections").
         * New entrant salaries consistent  with  those  used  in  the  Updated
       Preliminary Projections.
         These  "open group" projections include future new entrants introduced
       into the census data models to project the future workforces.
         As of each future actuarial valuation date, the current "closed group"
       actuarial assumptions and valuation methodology are used.
         Under this methodology only Plan participants  as  of  each  actuarial
       valuation  date  are  utilized  to  determine  APVs,  employer costs and
       employer contributions.
         FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS:    Employer  Entry
       Age  Normal  Costs  can  provide  a useful basis to compare the value of
       alternative benefit programs.
         For each member who enters FIRE, there is  a  theoretical  net  annual
       employer  cost  to  be  paid  for  such member while such member remains
       actively employed (i.e., the Employer Entry Age Normal Cost ("EEANC")).
         In addition, such EEANC may be expressed as  a  percentage  of  salary
       earned over a working lifetime and referred to as the Employer Entry Age
       Normal Rate ("EEANR").
         Under  the proposed legislation and based on the actuarial assumptions
       noted herein, the EEANC and EEANR of Tier  III  FIRE  Members  would  be
       greater  than  the  EEANC and EEANR for comparable Tier III FIRE Members
       entering at the same attained age and  gender  under  the  current  FIRE
       provisions.
         Table  2  shows  a  summary  of  the change in EEANR for Tier III FIRE
       Members who have a date of membership on or  after  April  1,  2012  for
       A. 5311                             8
       entry  ages  25, 30 and 35 with a starting salary of $45,000, determined
       as of the most recent date of published EEANR calculations:
                                        Table 2
                     Comparison of Employer Entry Age Normal Rates
                            Determined as of June 30, 2012*
                    To Implement Certain ODR and ADR Provisions for
        Tier III FIRE Members with a Membership Date on or After April 1, 2012
                              Under Proposed Legislation
                                          and
                                   Under Current Law
                          EEANR Under Proposed Legislation**
                        Entry Age 25          Entry Age 30       Entry Age 35
       Retirement
         System       Male     Female      Male     Female      Male    Female
       FIRE          21.92%    22.50%     27.31%    28.01%     34.55%   35.31%
                                EEANR Under Current Law
       FIRE          15.94%    16.51%     18.99%    19.68%     21.78%   22.51%
                     Increase In EEANR Due to Proposed Legislation
       FIRE           5.98%     5.99%      8.32%     8.33%     12.77%   12.80%
         *  Based  on  salaries paid over entire working lifetime. EEANR do not
       vary significantly over time, absent benefit and/or actuarial assumption
       changes.
         ** EEANR determined under the terms of the revised ODR and ADR benefit
       provisions based on the Actuarial Assumptions and Methods as noted here-
       in including changes in assumptions for ADR.  ODR and ADR  benefits  are
       not subject to Tier III Escalation (RSSL Section 510).
         OTHER COSTS: Not measured in this Fiscal Note are the following:
         *  The  initial, additional administrative costs of FIRE and other New
       York City agencies to implement the proposed legislation.
         * The potential  impact  if  this  proposed  legislation  were  to  be
       extended to other public safety employees.
         *  The  impact  of  this  proposed legislation on Other Postemployment
       Benefit ("OPEB") costs.
         CENSUS DATA: The  starting  census  data  used  for  the  calculations
       presented  herein  are  the  census data used in the Updated Preliminary
       June 30, 2013 (Lag) actuarial valuation of FIRE used  to  determine  the
       Updated Preliminary Fiscal Year 2015 employer contributions.
         The census data used for the estimates of additional employer contrib-
       utions  presented  herein  are based on average salaries of new entrants
       utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial  valu-
       ations  used  to determine Updated Preliminary Fiscal Year 2015 employer
       contributions of FIRE.
         The 169 Tier III FIRE Members as of June 30, 2013 (including  the  one
       Tier III member who has a date of membership prior to April 1, 2012) had
       an average age of approximately 27, average service of approximately 0.5
       years and an average salary of approximately $48,200.
         ACTUARIAL  ASSUMPTIONS  AND  METHODS: The additional employer contrib-
       utions presented herein have been  calculated  based  on  the  actuarial
       assumptions  and methods in effect for the June 30, 2013 (Lag) actuarial
       valuations used  to  determine  Updated  Preliminary  Fiscal  Year  2015
       A. 5311                             9
       employer  contributions of FIRE and adjusted for revised ADR eligibility
       provisions.
         The  probabilities  of  accidental  disability  used for Tier III FIRE
       Members in the event statutory presumptions were to  apply  equal  those
       currently used for Tier I and Tier II FIRE Members.
         The  actuarial valuation methodology does not include a calculation of
       the value of an offset for Workers' Compensation benefits as it  is  the
       understanding  of  the Actuary that FIRE Members are not covered by such
       benefits.
         To the extent that the enactment of this  proposed  legislation  would
       cause a greater (lesser) number of Tier III FIRE Members to be reclassi-
       fied from Ordinary Disability to Accidental Disability Retirement, or to
       the  extent  that  Tier  III  FIRE  Members who would not otherwise ever
       choose to apply and then receive an Ordinary Disability Retirement bene-
       fit or an Accidental Disability Retirement benefit, then the  additional
       APVB and employer contributions shown herein would be greater (lesser).
         Employer  contributions  under current methodology have been estimated
       assuming the additional APVB would be  financed  through  future  normal
       contributions  including an amortization of the new UAAL attributable to
       this proposed legislation over a 15-year period (14 payments  under  the
       OYLM Methodology).
         New  entrants into Tier III FIRE Members were projected to replace the
       FIRE members expected to leave  the  active  population  to  maintain  a
       steady-state population.
         The following Table 3 presents the total number of active employees of
       FIRE used in the projections, assuming a level work force, and the cumu-
       lative  number (i.e., net of withdrawals) of Tier III Members as of each
       June 30 from 2013 through 2017.
                                        Table 3
                    Surviving Actives from Census on June 30, 2013
                                          and
                    Cumulative New Tier III FIRE Members from 2013
                               Used in the Projections*
                    June 30        Tier I&II        Tier III         Total
                     2013            10,013             169         10,182
                     2014             9,486             696         10,182
                     2015             8,988           1,194         10,182
                     2016             8,509           1,673         10,182
                     2017             8,055           2,127         10,182
         * Total active members included in the projections assume a level work
       force based on the June 30, 2013 (Lag) actuarial valuation census  data.
       Assumes presumptions apply to Tier III FIRE members.
         For  purposes  of estimating the impact of the Tier III Escalation for
       retired Tier III FIRE Members, consistent with  an  underlying  Consumer
       Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
       of 2.5% per year has been assumed.
         This  compares  with  the current Chapter 125 of the Laws of 2000 COLA
       assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize 1.0%
       minimum and 3.0% maximum) on the first $18,000 of benefit.
       A. 5311                            10
         For Variable Supplements Fund ("VSF") benefits, it  has  been  assumed
       that  retroactive  lump  sum  payments of VSF ("DROP payments") would be
       payable from the completion of 20 years of service.
         ECONOMIC  VALUES OF BENEFITS: The actuarial assumptions used to deter-
       mine the financial impact of the proposed legislation discussed in  this
       Fiscal  Note  are those appropriate for budgetary models and determining
       annual employer contributions to FIRE.
         However, the economic assumptions (current and proposed) that are used
       for determining employer contributions  do  not  develop  risk-adjusted,
       economic  values  of  benefits.  Such  risk-adjusted, economic values of
       benefits would likely differ significantly from those developed  by  the
       budgetary models.
         STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
       Chief Actuary for the New York City Retirement Systems. I am a Fellow of
       the Society of Actuaries and a Member of the American Academy of Actuar-
       ies. I meet the Qualification Standards of the American Academy of Actu-
       aries to render the actuarial opinion contained herein.
         FISCAL  NOTE  IDENTIFICATION:  This  estimate is intended for use only
       during the 2015 Legislative Session. It is Fiscal  Note  2015-03,  dated
       January  30,  2015  prepared by the Acting Chief Actuary of the New York
       Fire Department Pension Fund.