STATE OF NEW YORK ________________________________________________________________________

5231

2023-2024 Regular Sessions

IN ASSEMBLY

March 7, 2023 ___________

Introduced by M. of A. PHEFFER AMATO -- read once and referred to the Committee on Governmental Employees

AN ACT to amend the retirement and social security law, in relation to the calculation of past service credit for members in the title of deputy sheriff transferring between the New York state and local employees' retirement system to the New York state and local police and fire retirement system

The People of the State of New York, represented in Senate and Assem- bly, do enact as follows:

1 Section 1. Section 43 of the retirement and social security law is 2 amended by adding a new subdivision m to read as follows: 3 m. 1. Notwithstanding any other law, rule or regulation to the contra- 4 ry, any member in the title of deputy sheriff transferring from the New 5 York state and local employees' retirement system to the New York state 6 and local police and fire retirement system after the effective date of 7 this subdivision and any member previously in the title of deputy sher- 8 iff having made such transfer shall be entitled to a determination of 9 the amount of service credit that is eligible on a twenty year or twen- 10 ty-five year retirement plan if, within one year of the date on which he 11 or she first became a member of the New York state and local police and 12 fire retirement system or within one year of the effective date of this 13 subdivision, such member elects to do so. If the member subsequently 14 transfers back to the New York state and local employees' retirement 15 system, the full amount of service credit earned while in the title of 16 deputy sheriff shall be transferred back to the New York state and local 17 employees' retirement system. 18 2. The calculation of the amount of such service credit for a member 19 will be determined by multiplying the eligible service credited in the 20 New York state and local employees' retirement system plan by a salary 21 multiplier, reflecting the rate of salary in the New York state and 22 local employees' retirement system plan relative to the rate of salary

EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD07037-02-3

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1 in the New York state and local police and fire retirement system plan, 2 and a billing rate multiplier, reflecting the actuarial long-term aver- 3 age billing rate in the New York state and local employees' retirement 4 system plan relative to the actuarial long-term average billing rate in 5 the New York state and local police and fire retirement system plan. The 6 determination of the salary multiplier and billing rate multiplier will 7 be determined by the actuary of the New York state and local employees' 8 retirement system and the New York state and local police and fire 9 retirement system. The amount of such service credited to the member in 10 the New York state and local police and fire retirement system plan 11 shall not exceed the amount of service credited to the member in the New 12 York state and local employees' retirement system plan. 13 § 2. Section 343 of the retirement and social security law is amended 14 by adding a new subdivision i to read as follows: 15 i. 1. Notwithstanding any other law, rule or regulation to the contra- 16 ry, any member in the title of deputy sheriff transferring from the New 17 York state and local employees' retirement system to the New York state 18 and local police and fire retirement system after the effective date of 19 this subdivision and any member previously in the title of deputy sher- 20 iff having made such transfer shall be entitled to a determination of 21 the amount of service credit that is eligible on a twenty year or twen- 22 ty-five year retirement plan if, within one year of the date on which he 23 or she first became a member of the New York state and local police and 24 fire retirement system or within one year of the effective date of this 25 subdivision, such member elects to do so. If the member subsequently 26 transfers back to the New York state and local employees' retirement 27 system, the full amount of service credit earned while in the title of 28 deputy sheriff shall be transferred back to New York state and local 29 employees' retirement system. 30 2. The calculation of the amount of such service credit for a member 31 will be determined by multiplying the eligible service credited in the 32 New York state and local employees' retirement system plan by a salary 33 multiplier, reflecting the rate of salary in the New York state and 34 local employees' retirement system plan relative to the rate of salary 35 in the New York state and local police and fire retirement system plan, 36 and a billing rate multiplier, reflecting the actuarial long-term aver- 37 age billing rate in the New York state and local employees' retirement 38 system plan relative to the actuarial long-term average billing rate in 39 the New York state and local police and fire retirement system plan. The 40 determination of the salary multiplier and billing rate multiplier will 41 be determined by the actuary of the New York state and local employees' 42 retirement system and the New York state and local police and fire 43 retirement system. The amount of such service credited to the member in 44 the New York state and local police and fire retirement system plan 45 shall not exceed the amount of service credited to the member in the New 46 York state and local employees' retirement system plan. 47 3. If the member subsequently retires on an age based retirement plan 48 in the New York state and local police and fire retirement system 49 instead of a twenty year or twenty-five year plan, the full amount of 50 service credit earned while in the title of deputy sheriff shall be 51 granted. 52 4. No member who receives service credit pursuant to this subdivision 53 shall be eligible to receive additional service credit pursuant to 54 subdivision b of section three hundred eighty four-e of this article if 55 his or her employer has elected to provide such service credit.

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1 § 3. This act shall take effect on the sixtieth day after an internal 2 revenue service ruling stating that the transfer and crediting of deputy 3 sheriff service credit from the New York state and local employees' 4 retirement system into the New York state and local police and fire 5 retirement system special retirement plan by this act is allowable and 6 does not jeopardize such retirement system's tax-qualified status, and 7 shall remain in full force and effect only as long as such transfer is 8 authorized pursuant to the provisions of the internal revenue code; 9 provided, that the state comptroller shall notify the legislative bill 10 drafting commission upon the occurrence of such ruling and upon any 11 change in the provisions of the internal revenue code affecting the 12 provisions of this act in order that the commission may maintain an 13 accurate and timely effective data base of the official text of the laws 14 of the state of New York in furtherance of effecting the provisions of 15 section 44 of the legislative law and section 70-b of the public offi- 16 cers law. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would expand the definition of creditable service under 20-year and 25-year plans (special plans) in the New York State and Local Police and Fire Retirement System (PFRS) to include service credit earned in the New York State and Local Employees' Retirement System (ERS) for those individuals previously employed in the title of Deputy Sheriff. To be eligible for the service credit, an individual must be a member of the PFRS and elect to transfer the ERS service credit to the PFRS plan within 12 months of first joining the PFRS, or within 12 months of the effective date of the bill, whichever is later. The amount of service credit granted in the PFRS special plan will be calculated by the Actuary of the New York State and Local Retirement System (NYLSRS), not to exceed the service credited under the ERS plan. Insofar as this bill affects the PFRS, if this legislation is enacted during the 2023 legislative session it is estimated that the past service cost will average approximately 21 percent of an affected member's compensation for each year of additional service that is grant- ed. Internal Revenue Service (IRS) plan qualification issues: granting service credit towards retirement in a 20-year plan in the PFRS for employment that was not rendered in the PFRS could jeopardize the Retirement System's governmental plan status and its exemption from the Employees Retirement Income Security Act (ERISA). This development could result in the loss of qualified status, which would mean the loss of tax benefits. This result would substantially impair the Retirement System's value to our more than one million participants. This legislation will not become effective until the NYLSRS obtains a favorable ruling from the IRS stating that these provisions would not harm the qualification status of the Retirement System. Further, the provisions of this legislation will only continue in full force and effect while so authorized by the IRS. It is estimated that the costs to obtain an initial ruling would be $38,000 for the services of the IRS, and $1,000 per hour for legal consultants. In addition to the costs to obtain a ruling from the IRS stated above, if this bill is enacted, there will be an administrative cost to imple- ment the provisions of this legislation. All costs will be shared by the State of New York and all local participating employers in the PFRS. Summary of relevant resources:

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Membership data as of March 31, 2022 was used in measuring the impact of the proposed change, the same data used in the April 1, 2022 actuari- al valuation. Distributions and other statistics can be found in the 2022 Report of the Actuary and the 2022 Annual Comprehensive Financial Report. The actuarial assumptions and methods used are described in the 2020, 2021, and 2022 Annual Report to the Comptroller on Actuarial Assump- tions, 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, 2022 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 February 27, 2023, and intended for use only during the 2023 Legislative Session, is Fiscal Note No. 2023-74, prepared by the Actuary for the New York State and Local Retirement System.