New York City Retirement Systems Part II Experience Study Report – POLICE and FIRE

January 29, 2025

Table of Contents

    Executive Summary

    This report summarizes the Part II Experience Study performed by Milliman of the five New York City Retirement Systems (“NYCRS”):

    • Section I – New York City Employees’ Retirement System (NYCERS)
    • Section II – Teachers’ Retirement System of the City of New York (TRS)
    • Section III – Board of Education Retirement System of the City of New York (BERS)
    • Section IV – New York City Police Pension Fund (POLICE)
    • Section V – New York City Fire Pension Fund (FIRE)

    This report includes Sections IV and V for POLICE and FIRE.

    The primary purpose of the Part II Experience Study Report is to provide proposed actuarial assumptions based on the experience for the indicated systems:

    • This report provides information on key pre-retirement demographic assumptions – withdrawal, retirement and disability – used in the actuarial valuations performed by the
    • This report provides information on key salary-related actuarial assumptions – rates of salary increase and overtime.
    • This report provides information on the pre-retirement and postretirement mortality assumptions used in the actuarial valuations performed by the OA.
    • This report is supplemented by Excel files containing full age service tables detailing the proposed assumptions.

    The experience study includes information for the 10-year period ending June 30, 2021 as provided by the OA. This includes data from 2012 – 2017 contained in the historical database along with updates for the 4-year period ending June 30, 2021 completed by Milliman.

    The following is a summary of the proposed assumptions and the potential impact on plan liabilities for POLICE and FIRE. Milliman was not engaged to perform a replication nor determine the cost impact of the proposed assumptions. Therefore, the comments reflect our thoughts on the potential impact, but will ultimately depend on the current active membership based on analysis to be conducted by OA.

    POLICE

    Summary of Police Proposed Assumptions
    Decrement Proposed Assumption Potential Impact
    Salary Lower salary increases. Reducing salary increases will result in lower plan liabilities.
    Overtime Higher overtime percentages, especially for retirement eligible members. Higher overtime will result in higher plan liabilities.
    Withdrawal Lower rates of terminations for longer service members. Reducing withdrawal rates results in higher plan liabilities.
    Retirement Higher rates of retirement. Higher rates of retirement result in higher plan liabilities.
    Ordinary Disability Higher ordinary disability rates under 20 years of service and elimination of the assumption for retirement eligible members. Higher rates of ordinary disability result in higher plan liabilities plus eliminating retirement eligible members will result in higher plan

    liabilities.
    Accidental Disability Reduction in accidental disability retirements for those eligible for WTC benefits and those not eligible. Reducing rates of accidental disability would result in lower plan liabilities.
    Ordinary Death Higher mortality rates. Increasing rates of mortality results in lower plan liabilities.
    Accidental Death Lower mortality rates. Reducing rates of accidental mortality results in lower plan

    liabilities.
    Post Retirement Mortality
    Service Retirees Proposed assumption consistent with industry standards adjusted for experience. Higher projected annuity factors for ages until early 60s and lower for older ages. Anticipating higher liability for active members but potentially lower liability for retirees.

    Actual impact to be

    determined by OA.
    Disabled Retirees Proposed assumption consistent with industry

    standards, increasing projected life expectancy.

    		 Higher life expectancies are

    anticipated to increase plan liabilities.
    Contingent Beneficiaries Proposed assumption consistent with industry standards, decreasing projected life expectancy. Lower life expectancies are anticipated to decrease plan liabilities.

    Overall, we believe the changes in overtime, withdrawal, retirement, ordinary disability and postretirement mortality that are anticipated to increase plan liabilities will exceed the impact of the changes in rates of salary increase, accidental disability, accidental death, ordinary death and postretirement mortality for retirees that are anticipated to decrease plan liabilities. The net effect is likely an increase in plan liabilities.

    FIRE

    The following is a summary of our observations regarding the experience of FIRE.

    Summary of Fire Proposed Assumptions
    Decrement Proposed Assumption Potential Impact
    Salary Lower salary increases Reducing salary increases will result in lower plan liabilities.
    Overtime Higher overtime percentages, especially for retirement eligible members. Higher overtime will result in higher plan liabilities.
    Withdrawal Nearly no change in assumption. Would have an insignificant impact on plan liabilities.
    Retirement No change in the assumption. No impact on plan liabilities.
    Ordinary Disability No change in the assumption other than to have it not apply for retirement eligible members. Eliminating retirement eligible members will result in higher plan liabilities.
    Accidental Disability Reduction in accidental disability retirements for those eligible for WTC benefits and those

    not eligible.

    		 Reducing rates of accidental disability would result in lower

    plan liabilities.
    Ordinary Death No change in the assumption. No impact on plan liabilities.
    Accidental Death No change in the assumption. No impact on plan liabilities.
    Post Retirement Mortality
    Service Retirees Proposed assumption consistent with industry standards adjusted for experience. Higher projected annuity factors for ages until early 60s and lower for older ages. Anticipating higher liability for active members but potentially lower liability for retirees.

    Actual impact to be determined by OA.
    Disabled Retirees Proposed assumption consistent with industry standards adjusted for experience. Higher projected annuity factors for ages until early 60s and lower for older ages. Anticipating higher liability for active members but potentially lower liability for retirees.

    Actual impact to be determined by OA.
    Contingent Beneficiaries Proposed assumption consistent with industry standards, decreasing projected life

    expectancy.

    		 Lower life expectancies are anticipated to decrease plan

    liabilities.

    The changes in overtime, ordinary disability and postretirement mortality are anticipated to increase plan liabilities. The changes in rates of salary increase, accidental disability and postretirement mortality for retirees are anticipated to decrease plan liabilities. The actual implementation by OA will need to determine if the net effect is an increase or decrease in plan liabilities.

    $286.39 billion
    Nov
    2024