Veteran Pension Bill Passes NY Assembly
Thanks to Jim Maisano for sending this along He called me today and urged all veterans in New York to Call their State Senator and tell them to urge Senate majority leader Joseph L. Bruno to vote on this before the Summer recess.
Here is the Assembly Bill that passed yesterday.
The Case for a Veterans Pension Bill
As proof of my point that passing the Veteran Pension Bill today does
not cost any real money in the coming years, here is an example:
- Currently, most veterans that served in military up to 1975 get the
buy-back. This change in the law benefits those that served in military
after May 7, 1975, but did not serve in actual combat.
- So, let's pick a guy who joined the military in 1978 at age 18 (born
in 1960).
- He served in the military for 3 years, 1978 to 1981.
- He leaves the military and starts a government job in 1982.
- He hits 20 years as a government worker in 2002, but is only 42 years
old. He cannot start taking his pension - he is too young. Most
probably, he keeps working in his government job.
- He turns 55 in 2015 and can finally take his pension, but at a
discount.
- Maybe he decides to wait until he is 62 in 2022 to start taking his
pension so that he gets the full amount.
- But either way, this guy's pension does not cost the government any
money until at some point between 2015 and 2022.
- And this guy served in one of the earliest years that this change in
law would impact. The vast majority of people that could benefit from
the buy-back served after him in the military and start taking pensions
in much later years.
- So the actual costs associated with this change in law are at least a
decade away and will increase slowly over time as more vets qualify for
a pension.
- By the way, it is not even clear that this guy would even utilize this
buy-back option, because if he worked for about 30 years in that
government job, he probably does not need the extra years and it is not
worth paying into the buy-back program.
- You can see why the fiscal note is so flawed (for this and several
other reasons).
Thanks,
Jim
James Maisano, Esq.
Crowell & Moring LLP
153 East 53rd Street, 31st Floor
New York, NY 10022
jmaisano@crowell.com
Introduced by M. of A. PAULIN, PHEFFER, BOYLAND, COLTON, FIELDS, MAISEL,
SCHIMMINGER, SCHROEDER, SPANO, HYER-SPENCER -- Multi-Sponsored by --
M. of A. CARROZZA, CHRISTENSEN, CONTE, DelMONTE, GOTTFRIED, HOOPER,
KELLNER, MAYERSOHN, MILLER, J. RIVERA, ROSENTHAL, SEMINERIO, SWEENEY,
WEISENBERG, WRIGHT -- read once and referred to the Committee on
Governmental Employees -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- recommitted
to the Committee on Governmental Employees in accordance with Assembly
Rule 3, sec. 2 -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee -- again
reported from said committee with amendments, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the retirement and social security law, in relation to
providing credit to members of public retirement systems of the state
for military service
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 1000 of the retirement and social security law, as
2 added by chapter 548 of the laws of 2000 and subdivision 9 as added by
3 chapter 547 of the laws of 2002, is amended to read as follows:
4 S 1000. Military service credit. Notwithstanding any law to the
5 contrary, a member of a public retirement system of the state, as
6 defined in subdivision twenty-three of section five hundred one of this
7 chapter, shall be eligible for credit for military service as hereinaft-
8 er provided:
9 1. A member, upon application to such retirement system, may obtain a
10 total not to exceed three years of service credit for up to three years
11 of military duty, as defined in section two hundred forty-three of the
12 military law, if the member was honorably discharged from the military
13 {and all or part of such military service was rendered during the
14 following periods: (a) commencing December seventh, nineteen hundred
15 forty-one and terminating December thirty-first, nineteen hundred
16 forty-six; (b) commencing June twenty-seventh, nineteen hundred fifty
17 and terminating January thirty-first, nineteen hundred fifty-five; or
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
{ } is old law to be omitted.
LBD06860-12-8
A. 6318--C 2
1 (c) commencing February twenty-eighth, nineteen hundred sixty-one and
2 terminating May seventh, nineteen hundred seventy-five;
3 2. A member, upon application to such retirement system, may obtain a
4 total not to exceed three years of service credit for up to three years
5 of military duty, as defined in section two hundred forty-three of the
6 military law, if honorably discharged therefrom, if all or part of such
7 services was rendered in the military conflicts referenced below, as
8 follows:
9 (a) hostilities participated in by the military forces of the United
10 States in Lebanon, from the first day of June, nineteen hundred eighty-
11 three to the first day of December, nineteen hundred eighty-seven, as
12 established by receipt of the armed forces expeditionary medal, the navy
13 expeditionary medal, or the marine corps expeditionary medal;
14 (b) hostilities participated in by the military forces of the United
15 States in Grenada, from the twenty-third day of October, nineteen
16 hundred eighty-three to the twenty-first day of November, nineteen
17 hundred eighty-three, as established by receipt of the armed forces
18 expeditionary medal, the navy expeditionary medal, or the marine corps
19 expeditionary medal;
20 (c) hostilities participated in by the military forces of the United
21 States in Panama, from the twentieth day of December, nineteen hundred
22 eighty-nine to the thirty-first day of January, nineteen hundred ninety,
23 as established by receipt of the armed forces expeditionary medal, the
24 navy expeditionary medal, or the marine corps expeditionary medal; or
25 (d) hostilities participated in by the military forces of the United
26 States, from the second day of August, nineteen hundred ninety, to the
27 end of such hostilities in case of a veteran who served in the theater
28 of operations including Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the
29 United Arab Emirates, Oman, the Gulf of Aden, the Gulf of Oman, the
30 Persian Gulf, the Red Sea, and the airspace above these locations}.
31 {3} 2. A member must have at least five years of credited service (not
32 including service granted hereunder) to be eligible to receive credit
33 under this section.
34 {4} 3. To obtain such credit, a member shall pay such retirement
35 system, for deposit in the fund used to accumulate employer contrib-
36 utions, a sum equal to the product of the number of years of military
37 service being claimed and three percent of such member`s compensation
38 earned during the twelve months of credited service immediately preced-
39 ing the date that the member made application for credit pursuant to
40 this section. If permitted by rule or regulation of the applicable
41 retirement system, the member may pay such member costs by payroll
42 deduction for a period which shall not exceed the time period of mili-
43 tary service to be credited pursuant to this section. In the event the
44 member leaves the employer payroll prior to completion of payment, he or
45 she shall forward all remaining required payments to the appropriate
46 retirement system prior to the effective date of retirement. If the full
47 amount of such member costs is not paid to the appropriate retirement
48 system prior to the member`s retirement, the amount of service credited
49 shall be proportional to the total amount of the payments made prior to
50 retirement.
51 {5} 4. In no event shall the credit granted pursuant to this section,
52 when added to credit granted for military service with any retirement
53 system of this state pursuant to this or any other provision of law,
54 exceed a total of three years.
55 {6} 5. To be eligible to receive credit for military service under
56 this section, a member must make application for such credit before the
A. 6318--C 3
1 effective date of retirement. {Notwithstanding the foregoing provisions
2 of this subdivision, an individual who retired on or after December
3 twenty-first, nineteen hundred ninety-eight and before the effective
4 date of this section may make application for credit pursuant to this
5 section within one year following the effective date of this section, in
6 which event, the cost to the retiree would be based on the twelve month
7 period immediately preceding retirement.}
8 {7} 6. All costs for service credited to a member pursuant to this
9 section, other than the member costs set forth in subdivision {three}
10 TWO of this section, shall be paid by the state and all employers which
11 participate in the retirement system in which such member is granted
12 credit.
13 {8} 7. A member who has purchased military service credit pursuant to
14 section two hundred forty-four-a of the military law shall be entitled
15 to a refund of the difference between the amount paid by the member for
16 such purchase and the amount that would be payable if service had been
17 purchased pursuant to this section.
18 {9} 8. Notwithstanding any other provision of law, in the event of
19 death prior to retirement, amounts paid by the member for the purchase
20 of military service credit pursuant to this section shall be refunded,
21 with interest, to the extent the military service purchased with such
22 amounts does not produce a greater death benefit than would have been
23 payable had the member not purchased such credit.
24 Notwithstanding any other provision of law, in the event of retire-
25 ment, amounts paid by the member for the purchase of military service
26 credit pursuant to this section shall be refunded, with interest, to the
27 extent the military service purchased with such amounts does not produce
28 a greater retirement allowance than would have been payable had the
29 member not purchased such credit.
30 S 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would allow up to three (3) years of service credit for
military duty by removing all existing requirements that such military
service be performed during certain war periods, during certain hostil-
ities while in the theater of operations or upon the receipt of an
expeditionary medal. However, the total service credit granted for
active and peacetime military service shall not exceed three (3) years.
The member would be required to make a payment of three percent of
current compensation per year of additional service credit granted by
this bill. Members must have at least five (5) years of credit service
(not including military service).
Insofar as this bill affects the New York State and Local Employees`
Retirement System and the New York State and Local Police and Fire
Retirement System, if this bill were enacted there would be an estimated
first year cost of approximately $2.5 million to the State of New York,
$3 million to participating employers in the New York State and Local
Employees` Retirement System and $1.5 million to the participating
employers in the New York State and Local Police and Fire Retirement
System.
In addition to the above costs, there would be additional costs for
future members of the Retirement System`s who have such military
service.
This estimate, dated March 11, 2008 and intended for use only during
the 2008 Legislative Session, is Fiscal Note No. 2008-19, prepared by
the Actuary for the New York State and Local Employees` Retirement
A. 6318--C 4
System and the New York State and Local Police and Fire Retirement
System.
FISCAL NOTE.--PROVISIONS OF PROPOSED LEGISLATION: With respect to
certain New York City Retirement Systems ("NYCRS"), this proposed legis-
lation would amend New York State Retirement and Social Security Law
("RSSL") Section 1000 to provide certain members of 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") the opportu-
nity to obtain additional retirement service credits for certain Mili-
tary Service.
This proposed legislation would permit any NYCRS member, prior to the
effective date of retirement, to make application for these additional
service credits.
To obtain such Military Service credits, members would be required to
pay to the appropriate NYCRS, for each year of Military Service
purchased, a sum equal to 3% of the annual rate of salary at date of
application.
MEMBERS IMPACTED: Insofar as this proposed legislation relates to the
NYCRS, the number of members who could potentially benefit from this
proposed legislation cannot be readily determined.
IMPACT ON BENEFITS: With respect to the NYCRS, a member who served in
the U.S. military and received an honorable discharge would be permit-
ted, after completing five years of credited service (exclusive of the
service credit that could be purchased under this proposed legislation),
to purchase a maximum of three years of Military Service (inclusive of
any prior purchases of Military Service credit).
In order to purchase the Military Service credits provided in this
proposed legislation, a member must have been honorably discharged
following a period of "military duty" as defined in New York State Mili-
tary Law Section 243.
If a member`s Military Service meets these conditions, then that
member would be permitted to purchase a maximum of three years of Mili-
tary Service (inclusive of any previously-received Military Service
Credit) attributable to any period of the member`s military career.
For purposes of the respective NYCRS, each year of Military Service
credit purchased would apply toward providing the member with a year of
benefit accrual under the particular benefit formula covering the
member.
In certain circumstances, the member also may be entitled to utilize
such Military Service as qualifying service for benefit eligibility
purposes.
For purposes of the Fiscal Note, it has been assumed that members who
purchase Military Service in accordance with this proposed legislation
would generally be entitled to count such service for benefit accrual
purposes and for the purpose of qualifying for benefits.
FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost of this proposed legislation would depend on the length
of all New York city service, age, salary history and Plan in which the
member participates, as well as the number of years of service credit
purchased.
With respect to employers participating in the NYCRS, the ultimate
employer cost of this proposed legislation would be determined by the
increase in benefits to be paid, the impact of certain benefits commenc-
A. 6318--C 5
ing earlier, a shorter working lifetime, and the reduction in certain
future member contributions.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to the NYCRS
and based on the census data and assumptions herein, the enactment of
this proposed legislation would increase the APV of benefits by approxi-
mately $148.1 million as of June 30, 2006.
In addition, with respect to the NYCRS, the APV of future member
contributions (primarily attributable to the payments by members of 3%
of salary per year of Military Service purchased) would increase by
approximately $25.8 million when measured as of June 30, 2006.
Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by approximately $122.3 million as of
June 30, 2006.
FINANCIAL IMPACT - ANNUAL EMPLOYER COSTS: With respect to the NYCRS,
based on the Actuary`s actuarial assumptions and methods in effect as of
June 30, 2006, the enactment of this proposed legislation would increase
annual employer costs by approximately $18.4 million per year.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: With respect to the NYCRS,
based on the Actuary`s actuarial assumptions in effect as of June 30,
2006, the enactment of this proposed legislation would ultimately
increase employer contributions by approximately the estimated addi-
tional annual employer costs.
FINANCIAL IMPACT - SUMMARY: The following table summarizes the esti-
mated financial impact of this proposed legislation on the NYCRS.
______________________________________________________________________
Estimated Financial Impact to Allow Members of the NYCRS To Purchase
up to Three Years of Military Service Credit*
________________________________________________________________________
($ Millions)
______________________________________________________________________
Estimated
Additional First Year
APV of Future Additional
Retirement Additional Employer Employer
System APVB Contributions** Costs***
________________________________________________________________________
NYCERS $ 48.6 $ 39.8 $ 6.2
NYCTRS 20.0 15.9 1.9
BERS 5.0 4.1 0.6
POLICE 60.6 50.8 8.1
FIRE 13.9 11.7 1.6
TOTAL $148.1 $122.3 $18.4
________________________________________________________________________
* Based on the Actuary`s actuarial assumptions and methods in effect
as of June 30, 2006, exclusive of One-Year Lag methodology.
** Equals change in APVB minus increase in APV of future member contrib-
utions.
*** Estimated Additional Employer Costs are determined without regard to
the funded status of the Retirement Systems and represent the best esti-
mates of the ultimate annual financial burden of the proposed legis-
lation. Estimated Additional Employer Contributions would ultimately
approximate Estimated Additional Employer Costs.
ADDITIONAL EMPLOYER COSTS - GENERAL: In general, the real cost of the
enactment of this proposed legislation would be the additional benefits
paid.
A. 6318--C 6
FINANCIAL IMPACT - ADDITIONAL EMPLOYER CONTRIBUTIONS - FISCAL YEARS
2008 AND LATER: If this proposed legislation were enacted during the
2008 Legislative Session prior to June 30, 2008, then increased employer
costs would be determined for Fiscal Year 2008.
OTHER COSTS: Not measured in this Fiscal Note is the impact of this
proposed legislation on the Manhattan and Bronx surface Transit Operat-
ing Authority ("MaBSTOA") or on State or Local employers with respect to
their participation in the New York state and Local Retirement Systems
("NYSLRS") or the New York State Teachers` Retirement System ("NYSTRS").
Also, this Fiscal Note does not include analyses of the impact of this
proposed legislation on the expected increases in administrative costs
or costs for Other Post-Employment Benefits ("OPEB").
CENSUS DATA: The census data used for estimates of APV of benefits and
employer contributions presented herein are the active members included
in the June 30, 2006 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE and FIRE.
ACTUARIAL ASSUMPTIONS AND METHODS: Additional APV of benefits, member
contributions and employer contributions have been estimated as of June
30, 2006 using various approximating techniques and assumptions by the
Actuary, including, but not limited to:
* A certain percentage of Veterans being honorably discharged.
* A certain percentage of honorably discharged Veterans being disa-
bled.
* Different percentages of members by NYCRS would have prior Military
Service.
* Each eligible member would purchase an average of 2.5 years of the
Military Service.
Employer costs have been estimated assuming the additional APV of
benefits and reductions in APV of member contributions would be financed
through future normal contributions.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2008 Legislative Session. It is Fiscal Note 2008-04, dated
February 28, 2008, 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.
FISCAL NOTE.--This bill would amend Article 20 of the Retirement and
Social Security Law to allow active members of public retirement systems
of New York State to claim service credit for up to three years of mili-
tary service, regardless of when it was performed. Currently active
members can receive service credit for military service performed during
specified periods of war. A member must have at least five years of
credited service to be eligible and make application for such credit
before the effective date of retirement. To obtain such credit, a member
must deposit in the pension accumulation fund three percent of his or
her current annual full-time rate of compensation per year of military
service claimed.
The annual cost to the employers of members of the New York State
Teachers` Retirement System for this benefit is estimated to be $5.9
million or .04% of payroll if this bill is enacted.
The source of this estimate is Revised Fiscal Note 2008-14 dated April
21, 2008 prepared by the Actuary of the New York State Teachers` Retire-
ment System and is intended for use only during the 2008 Legislative
Session.
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