In October 1990 the Federal Older Workers' Benefit Protection Act (hereinafter “OWBPA”) was signed into law. OWBPA essentially requires the elimination of certain aged-based discriminatory distinctions in death benefits provided by employers. OWBPA applies to death benefits payable by the Retirement System on account of all deaths which occurred on or after October 16, 1992 and all disability retirement benefits which became effective on or after such date.

OWBPA does not mandate specific death or disability benefit calculation formulas. Rather it provides conceptual guidelines under which such calculation formulas must comply. Accordingly, in order to bring the Retirement Systems' death benefit calculation structures into compliance with OWBPA, it was first necessary to review and analyze the several death and disability benefit provisions of the Retirement and Social Security Law and the provisions of OWBPA. This was necessary in order to assess the extent and manner in which the Retirement and Social Security Law benefit provisions were violative of OWBPA and the manners in which the benefit formulas/structures could be changed in a manner which would satisfy the requirements of OWBPA and fulfill the Comptroller's fiduciary responsibilities as Trustee of CRF.

In furtherance of the Comptroller's intention to bring the Retirement Systems' death benefit structure into compliance with OWBPA, the Comptroller, in 1992, commissioned Buck Consultants, Inc. (hereinafter “Buck”) to analyze such death benefit structure to determine whether and to what extent such structure violated OWBPA. Under this engagement, Buck was also asked to recommend the best approaches to amending the benefit structure to comply with OWBPA in a manner consistent with the Comptroller’s fiduciary responsibilities as Trustee of CRF. The results of Buck’s efforts were summarized in a document entitled “Report on the Impact of the Older Workers' Benefit Protection Act on the New York State and Local Employees’ and Fire Retirement Systems” (hereinafter the “Buck Report”) issued on January 18, 1993. The Buck Report contained a recommendation as to how the Retirement System's death benefit structure should be revised so as to comply with OWBPA.

Under article 5, section 7 of the New York State Constitution, members’ rights in the Retirement System must be considered contractual rights of employment which may not be diminished or impaired. Accordingly, the death benefit formulas could not have been restructured so as to not be age discriminatory by reducing the benefits payable on account of the deaths of younger members, without violating the State Constitution. Rather, in order to comply with both OWBPA and the New York State Constitution, the death benefit structure had to be revised in a manner which increased benefits payable on account of the deaths of older members (without decreasing amounts payable on account of younger members).

There are two ways under which an employer may provide employee disability and death benefit plans which comply with OWBPA. The first of the two — the “equal benefits” approach is to provide benefits under which the calculations and eligibility requirements do not contain age-based distinctions. The second means of compliance is commonly referred to as the “equal costs” method, under which the costs of providing benefits to different aged individuals are equal. To use the more common terminology, a benefit plan with age-based distinctions may comply with OWBPA if the age-based distinctions can be “cost-justified.”

In view of the State Constitution’s mandate that the Retirement System bring its death and disability benefit structure in compliance with OWBPA without reducing the benefits payable to or on account of the death of younger members, it was less costly for the Retirement Systems to adopt and implement “cost-justified” death and disability retirement benefit structures than it would have been to implement “equal benefits” structures. However, minimizing the cost of complying with OWBPA, while important, is not the only reason that a cost-justified approach was utilized by the Retirement Systems. The Comptroller had a fiduciary obligation to accomplish compliance in a manner which followed the existing state statutory benefit structure as closely as possible. Accordingly, the fact that the existing provisions of the RSSL make aged-based distinctions in benefit calculations required adoption of a “cost-justified” benefit structure.

The Comptroller has directed the Retirement Systems to commence paying disability and death benefits under calculation formulas that have been restructured, pursuant to the recommendations in the Buck Report, to comply with OWBPA in the manner that is both the least costly means of compliance and which adheres most closely to the formulas provided in the Retirement and Social Security Law. The Retirement Systems have been paying all new death and disability benefits under such OWBPA-complying formulas and are approaching completion of paying additional recalculated benefits to all death benefit beneficiaries and disability pensioners who originally were paid non-complying amounts since the October 1992 compliance date.

This Part is promulgated for the purposes of publishing the disability and death benefit formulas that have been restructured as required by OWBPA.