BILL NUMBER: S8160
SPONSOR: JACKSON
 
TITLE OF BILL:
An act to amend the retirement and social security law and the education
law, in relation to increasing the base benefit amount for computation
of pension 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. The
bill also eliminates the 50% of the allowed rate of inflation require-
ment for prior cost-of-living payments, while maintaining the overall 3%
inflation cap.
 
SUMMARY OF PROVISIONS:
Section 1 amends subdivisions c and d of Section 78-A of the Retirement
and Social Security Law to provide that the cost-of-living adjustment
shall be computed on a base benefit amount not to exceed $21,000 of the
annual retirement allowance. Additionally, the cost-ofliving adjustment
for years 2001 through 2021 shall equal 100% of the rate of inflation,
as determined from the CPI increase in the one-year period ending on the
prior March 31st, rather than 50% of the rate, not to exceed 3%.
Section 2 amends subdivisions c and d of Section 378-A of the Retirement
and Social Security Law to provide that the cost-of-living adjustment
shall be computed on a base benefit amount not to exceed $21,000 of the
annual retirement allowance. Additionally, the cost-ofliving adjustment
for years 2001 through 2021 shall equal 100% of the rate of inflation,
as determined from the CPI increase in the one-year period ending on the
prior March 31st, rather than 50% of the rate, not to exceed 3%.
Section 3 amends subdivisions c and d of Section 532-A of the Education
Law to provide that the cost of living adjustment shall be computed on a
base benefit amount not to exceed $21,000 of the annual retirement
allowance. Additionally, the cost of living adjustment for years 2001
through 2021 shall equal 100% of the rate of inflation, as determined
from the CPI increase in;thei p'ne year period ending on the prior March
31st, rather than 50% of the rate, not to exceed 3%.
Section 4 states that none of the provisions of this act shall be
subject to Section 25 of the Retirement and Social Security Law.
Section 5 is the effective date.
 
JUSTIFICATION:
Various provisions of the Retirement and Social Security Law and Educa-
tion Law provide for a cost-of-living adjustment for retirement plans
applicable to members of public retirement systems. A cost-ofliving
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 recipi-
ents of an accidental death benefit regardless of age who have been
receiving such benefit for five years. The cost-of-living adjustment is
currently computed on a base benefit amount not to exceed $18,000 of the
annual retirement allowance. This legislation would increase the base
benefit amount to $21,000 from the current annual retirement allowance
of $18,000.
When the pension Cost of Living Adjustment (COLA) was enacted 24 years
ago, it was never a true COLA. The legislation authorized only a 50%
COLA, never to be less than 1%, nor higher than 3%. As inflation rose by
more than 50% over the past two decades, the purchasing power of the
COLA fell further and further behind. Only one time in 24 years did the
COLA actually reach 3%. That was just last year, when the rate of
inflation rose to 9%. Now is the time to address this inequity.
This bill raises the maximum pension amount the COLA is applied against,
going from $18,000 to $21,000 for current and future retirees. This is a
modest increase to the amount that was authorized 23 years ago ($18,000
in 2000 is the equivalent of nearly $32,000 today). It was never envi-
sioned when the COLA was enacted, that the dollar threshold cited in the
bill would remain in perpetuity. The 50% of the rate of inflation factor
remains in effect going forward, to further safeguard the financial
well-being of the respective funds.
Additionally, the bill includes a one-time "catch up" payment (the
difference between 50% COLA and the 3% cap) to current COLA eligible
retirees to better reflect the actual rate of inflation since the enact-
ment of the COLA. The 3% annual cap and the five-year waiting period
remain in place, in order to protect the integrity of the respective
funds. The "catch up" applies to prior years only. The major benefici-
aries of this bill would be older retirees with smaller pensions, due to
the fact that salaries were much lower 20 -30 years ago. It is important
to note that 24% of retirees in the State and Local Retirement System
receive a pension under $10,000, and 43% have a pension under $20,000.
The enactment of this legislation will provide a modest increase to
current and future retirees. The rigid parameters of the current COLA
formula prevents retirees, especially older retirees with smaller
pensions, from attaining the financial stability needed in the current
economic environment. Twenty-three years is a long time to wait for a
raise. That time has come.
 
LEGISLATIVE HISTORY:
2023-2024: S.6307-A - Amend and Recommit to Civil Service and
Pensions/A.7023-A - Amend and Recommit to Governmental Employees
2021-2022: S.6835-C - Amend and Recommit to Civil Service and Pensions
 
STATE AND LOCAL FISCAL IMPLICATIONS:
See fiscal note.
 
EFFECTIVE DATE:
This act shall take effect immediately.