Bill Text: NY A06635 | 2023-2024 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relates to calculating certain pensions; increases pension calculation from thirty-five to forty per centum of final average salary.

Spectrum: Strong Partisan Bill (Democrat 22-2)

Status: (Introduced) 2024-01-29 - print number 6635b [A06635 Detail]

Download: New_York-2023-A06635-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         6635--A

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                     April 25, 2023
                                       ___________

        Introduced  by  M.  of A. PHEFFER AMATO -- read once and referred to the
          Committee on Governmental  Employees  --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee

        AN ACT to amend the retirement and social security law, in  relation  to
          calculating certain pensions

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

     1    Section 1. Subdivision a of section 504 of the retirement  and  social
     2  security  law,  as amended by chapter 18 of the laws of 2012, is amended
     3  to read as follows:
     4    a. The service  retirement  benefit  for  general  members  at  normal
     5  retirement  age with twenty or more years of credited service shall be a
     6  pension equal to one-fiftieth of final average  salary  times  years  of
     7  credited  service,  not in excess of thirty years, less fifty percent of
     8  the primary social security retirement benefit as  provided  in  section
     9  five  hundred eleven of this article. The service retirement benefit for
    10  general members at normal retirement age with twenty or  more  years  of
    11  service who first become members of the New York state and local employ-
    12  ees'  retirement  system on or after April first, two thousand twelve at
    13  normal retirement age shall be a pension equal to the  sum  of  [thirty-
    14  five] forty per centum and one-fiftieth of final average salary for each
    15  year  of service in excess of twenty, but not in excess of thirty, times
    16  final average salary times years of credited service.
    17    § 2. Subdivisions a, b and b-1 of section 604 of  the  retirement  and
    18  social  security  law,  subdivision  a as amended and subdivision b-1 as
    19  added by chapter 18 of the laws of 2012, subdivision  b  as  amended  by
    20  chapter 266 of the laws of 1998 and the opening paragraph of subdivision
    21  b  as  amended  by  section  8-b of part B of chapter 504 of the laws of
    22  2009, are amended to read as follows:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06271-05-3
        A. 6635--A                          2

     1    a. The service retirement benefit  at  normal  retirement  age  for  a
     2  member  with  less  than twenty years of credited service[, or less than
     3  twenty-five years credited service for a member who joins the  New  York
     4  state  teachers'  retirement system on or after January first, two thou-
     5  sand  ten,]  shall  be  a  retirement allowance equal to one-sixtieth of
     6  final average salary times years of credited service. Normal  retirement
     7  age  for  members who first become members of a public retirement system
     8  of the state on or after April first, two thousand twelve shall  be  age
     9  sixty-three.
    10    b.  The  service  retirement  benefit  at  normal retirement age for a
    11  member with twenty years or more of credited service[, or  with  twenty-
    12  five or more years credited service for a member who first joins the New
    13  York  state  teachers'  retirement system on or after January first, two
    14  thousand ten,] shall be a retirement allowance equal to one-fiftieth  of
    15  final  average  salary  times years of credited service not in excess of
    16  thirty years.
    17    Credited service in excess of thirty years shall provide an additional
    18  retirement allowance equal to three-two hundredths of the final  average
    19  salary for each year of credited service in excess of thirty years.
    20    b-1.  Notwithstanding  any other provision of law to the contrary, the
    21  service retirement benefit for members with  twenty  or  more  years  of
    22  credit  service  who first become a member of a public retirement system
    23  of the state on or after April first, two thousand twelve at age  sixty-
    24  three  shall  be  a  pension equal to the sum of [thirty-five] forty per
    25  centum and one-fiftieth of final average salary for each year of service
    26  in excess of twenty times final average salary times years  of  credited
    27  service.  In  no  event  shall  any  retirement  benefit payable without
    28  optional modification be less than the actuarially equivalent annuitized
    29  value of the member's contributions accumulated with  interest  at  five
    30  percent per annum compounded annually to the date of retirement.
    31    §  3. Section 1312 of the retirement and social security law, as added
    32  by chapter 18 of the laws of 2012, is amended to read as follows:
    33    § 1312. Benefit enhancements. Notwithstanding any  other  law  to  the
    34  contrary,  eligible  employees  shall  be  permitted  to retire, without
    35  penalty, upon reaching age fifty-seven and completing  at  least  thirty
    36  years  of  credited service. Employees retiring pursuant to this section
    37  shall receive a pension allowance equal  to  the  sum  of  [thirty-five]
    38  forty  per centum and one-fiftieth of final average salary for each year
    39  of service in excess of twenty times final average salary times years of
    40  credited service.
    41    § 4. Notwithstanding any other provision of law to the contrary,  none
    42  of  the  provisions  of  this  act shall be subject to section 25 of the
    43  retirement and social security law.
    44    § 5. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This bill would change the benefit fraction for a Tier  6  Article  15
        member  for service greater than 20 years to 40% of FAS plus 2% per year
        of service greater than 20. Currently the benefit  for  service  greater
        than 20 years is 35% of FAS plus 2% per year of service greater than 20.
          Insofar  as  this bill affects the New York State and Local Employees'
        Retirement System (NYSLERS), increased costs  would  be  shared  by  the
        State  of  New  York  and all participating employers in the NYSLERS. If
        this bill is enacted during the 2023 legislative session, there will  be
        an  increase in the present value of future costs of approximately $1.41
        billion.
        A. 6635--A                          3

             NYSLERS        Increase in present        Increase in future
                              value benefits             contributions
        Tiers 1 - 5                  $0                     $280 million
             Tier 6              $1.41 billion              $1.13 billion
              Total              $1.41 billion              $1.41 billion

          In  the NYSLERS, this benefit improvement will be funded by increasing
        the billing rates charged annually. The annual contribution required  of
        all  participating  employers  in  the  NYSLERS is approximately 0.5% of
        billable salary, or approximately $61 million to the State of  New  York
        and  $89 million to the local participating employers in the fiscal year
        ending March 31, 2025. This permanent annual cost will  vary  in  subse-
        quent  billing cycles with changes in the billing rate and salary of the
        affected members.
          Summary of relevant resources:
          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 March 31, 2023, and intended for use only during
        the 2023 Legislative Session, is Fiscal Note No.  2023-42,  prepared  by
        the Actuary for the New York State and Local Retirement System.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This bill would amend Section 604 of the Retirement and Social Securi-
        ty  Law  to  improve  the  retirement  benefit formula for Tiers 5 and 6
        members of the New York State Teachers' Retirement System.  The  Tier  5
        benefit  formula would match the Tier 4 formula with eligibility for the
        2.0% multiplier at 20 years of service instead of  25  years  as  it  is
        currently.  The retirement benefit formula for Tier 6 members with 20 or
        more  years  of service would be 40% of final average salary plus 2% for
        each year of service in excess  of  20  years.  Currently,  the  benefit
        formula  for  Tier  6 members with 20 or more years of service is 35% of
        final average salary plus 2% for each year of service in  excess  of  20
        years.
          The  annual  cost  to  the  employers of members of the New York State
        Teachers' Retirement System for this benefit is estimated  to  be  $60.3
        million or 0.33% of payroll if this bill is enacted.
          The  System's "new entrant rate", a hypothetical employer contribution
        rate that would occur if we started a new Retirement System without  any
        assets, is equal to 5.15% of pay under the current Tier 6 benefit struc-
        ture.  This can be thought of as the long-term expected employer cost of
        Tier 6, based on the current actuarial  assumptions.  For  the  proposed
        change to the Tier 6 benefit structure under this bill, this new entrant
        A. 6635--A                          4

        rate  is  estimated to increase to 5.84% of pay, an increase of 0.69% of
        pay.
          Member  data  is  from  the  System's  most recent actuarial valuation
        files, consisting of data provided by the employers  to  the  Retirement
        System.   Data distributions and statistics can be found in the System's
        Annual Report. System assets are as reported in the  System's  financial
        statements and can also be found in the System's Annual Report. Actuari-
        al  assumptions and methods are provided in the System's Actuarial Valu-
        ation Report.
          The source of this estimate is Fiscal Note 2023-31 dated May 17,  2023
        prepared  by  the  Office of the Actuary of the New York State Teachers'
        Retirement System and is intended for use only during the 2023  Legisla-
        tive Session. I, Richard A. Young, am the Chief Actuary for the New York
        State Teachers' Retirement System. I am a member of the American Academy
        of  Actuaries  and  I  meet  the Qualification Standards of the American
        Academy of Actuaries to render the actuarial opinion contained herein.