Today, August 20, 2021, Governor Cuomo signed bill S1091a / A2239a into law.

Chapter 400 of the Laws of 2021 extend the maximum years of service credit that can be earned in a volunteer firefighter LOSAP from 40 years to 50 years.

The bill amends both Section 218 (defined contribution plans) and Section 219 (defined benefit plans) to include the same language, which is as follows:

The governing board of a political subdivision may extend the maximum number of years of service for which a participant may receive a contribution for up  to  an  additional  ten years,  to a maximum of fifty years, and such increases in the number of years may be added in multiple increments or in a single action,  pursuant  to  the  adoption  of the required resolution or resolutions of the governing board, receiving  the  affirmative  vote  of  at  least  sixty percent  of  the  governing  board of the political subdivision, and the approval of any mandatory referendum or referenda authorizing the extension of benefits under the program by eligible voters within such  political subdivision.

Interestingly, the language states that a political subdivision can extend the maximum years of service for which a participant may receive a contribution an additional ten years. That wording is more applicable to a defined contribution plan, where a participant receives a contribution into an account for each year of 50 points earned, rather than a defined benefit plan where a participant earns a monthly benefit instead.

However, the intention seems clear - that a LOSAP can be amended to extend the maximum years of service credit from 40 to 50 years, and that such extension requires voter approval at a mandatory referendum.

An article which ran on CNBC.com on Wednesday May 8th had the following  key points:

• One of the biggest investment opportunities over the next decade will be in companies working to delay human death, a market expected to be worth at least $600 billion by 2025, according to Bank of America analysts.
• The analysts say companies such as Illumina and Alphabet are on the cusp of “bringing unprecedented increases to the quality and length of human lifespans.”
• The Bank of America team highlights five key sub-themes, as well as several stocks with exposure to the trend.

You can read the entire article here: www.cnbc.com/2019/05/08/techs-next-big-disruption-could-be-delaying-death.html


The intention of this article was to alert investors to an opportunity. If this becomes a reality, it isn't just the stock prices of these companies that will be increasing, but the contributions of all sponsors of defined benefit plans! The longer people live to collect their pensions, the more sponsors will have to contribute to fund for them. So this article is great news for us as humans, but potentially not so great for DB plan sponsors. (Another concern though is for those without DB plans, living to 100 could result in outliving the amounts saved in a 401(k), IRA or similar arrangement.)

Many of you will have heard me say this before - we as a society are spending a lot of time and money to prolong our life expectancy. Not just with amazing new drugs to treat disease and other illness, but also things like knee and hip replacement technology. A friend who just recently had a pace-maker inserted, and it was considered minimally invasive and he is expected to be released from the hospital one day after the surgery, and be back at work two days after that! The advances we have to not only prolong, but improve, our lives is hard to believe sometimes.

What this means for sponsors of defined benefit LOSAPs is that if predictions like this come true, costs will continue to rise. Here in New York State, it is time that the State Law is amended to increase the defined contribution plan benefits to be competitive with the DB plans. This would allow sponsors to move away from DB plans with these types of risks.

There is a lot of very good information available from the State of New York regarding government spending. Financial data for each type of government is available for download and review. 

The LOSAP expenditure falls under the group heading of Employee Benefits. The specific category is labeled LOSAP/Miscellaneous, and I am unsure what type of expense falls under Miscellaneous. The data for towns is suspect, as many towns that I know sponsor a LOSAP are not reporting a LOSAP expense. This is likely because they group that expense into Fire Protection, so it is not being separately identified. Villages and cities appear to have well populated data, but I also haven't spent a lot of time analyzing it. But villages have many expenses other than fire protection, and I'd have to really dig into the numbers to try and isolate how the LOSAP expenditure compares to the overall cost of fire protection. 

So to start I'm going to focus on fire districts, since they only provide fire protection. 

There are 397 fire districts that report a LOSAP/Miscellaneous expense. As a percentage of total expenditures, the average is about 11% of total expenditures. The median is about 10%. As a percentage of revenue, the average LOSAP expense is about 10.5%, with the median still around 10%. 

So on average, a fire district is spending about 10% to 11% of the total budget on LOSAP. More digging will have to be done to try and get more detailed with these numbers, as we'll need to pull together information from various sources. It would be interesting to see additional breakout of DB vs DC plans, and perhaps by county.