Bill Text: NY A07193 | 2017-2018 | General Assembly | Amended


Bill Title: Relates to employer's duties regarding optional public retirement systems; provides for the automatic enrollment for employees whose right to membership has been made optional by the head of the public retirement system involved.

Spectrum: Partisan Bill (Democrat 22-0)

Status: (Vetoed) 2017-11-29 - tabled [A07193 Detail]

Download: New_York-2017-A07193-Amended.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                         7193--C
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                     April 12, 2017
                                       ___________
        Introduced  by  M.  of  A.  PERRY,  SIMON, COOK, D'URSO, BLAKE, DICKENS,
          JONES, CRESPO, RODRIGUEZ, ORTIZ, COLTON, HYNDMAN, JEAN-PIERRE, WALKER,
          SEPULVEDA, VANEL -- Multi-Sponsored by -- M. of A. LENTOL -- read once
          and referred to the Committee on Governmental Employees  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to  said  committee  -- again reported from said committee with amend-
          ments, ordered reprinted as amended and recommitted to said  committee
          --  again  reported  from  said  committee  with  amendments,  ordered
          reprinted as amended and recommitted to said committee
        AN ACT to amend the retirement and social security law, in  relation  to
          providing  for  the  automatic enrollment for employees whose right to
          membership has been made optional by the head of the public retirement
          system involved
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Section  45 of the retirement and social security law, as
     2  added by chapter 878 of the laws of 1986, is amended to read as follows:
     3    § 45. Right to membership.   a. Upon the employment  of  any  employee
     4  whose  right  to  membership in a public retirement system of the state,
     5  which for purposes of this section shall include any  public  retirement
     6  system  other  than  the New York state teachers' retirement system, has
     7  been made optional by the head of the retirement  system  involved,  the
     8  employer  shall  inform the employee in writing of the right to join the
     9  system. Each such employee shall acknowledge the receipt of such  notice
    10  by  signing  a  copy thereof and filing it with such employer; provided,
    11  however, the failure to inform such employee shall not  in  any  way  be
    12  construed  to waive the requirement that membership for such an employee
    13  commences only when an application for  membership  is  filed  with  the
    14  system,  nor  shall  it  be  construed  to  waive any of the eligibility
    15  requirements for previous service credit.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10847-09-7

        A. 7193--C                          2
     1    b. 1. Notwithstanding the provisions of subdivision a of this section,
     2  upon the employment of any employee whose right  to  membership  in  the
     3  board  of education retirement system has been made optional by the head
     4  of the retirement  system  involved,  the  employer  shall  provide  the
     5  respective  automatic  contribution arrangement for the employee to join
     6  the retirement system ninety days after the commencement of  employment,
     7  with membership in the retirement  system commencing on the ninety-first
     8  day  after  commencement  of  employment, provided that, if the employee
     9  files with the system an application to opt  out  of  membership  within
    10  ninety days after commencement of employment, the employer shall refrain
    11  from  enrolling  the  employee in the retirement system unless and until
    12  such employee subsequently files an application for membership with  the
    13  system.  The  automatic enrollment of optional employees as provided for
    14  in this section shall not be construed to modify the right  of  eligible
    15  employees  to join the retirement system as of the first date of covered
    16  employment by filing an application for membership with the system.  The
    17  employer  shall  further  inform the employee in writing of the right to
    18  join the system as well as the fact that the employee shall be  enrolled
    19  in  the  retirement system after the ninetieth day after commencement of
    20  employment, unless such employee files with the system an application to
    21  opt out of the system prior to such  date.  Any  eligible  employee  who
    22  elects  to  opt  out  of  membership in the retirement system within the
    23  ninety day period shall retain the right to join such system  by  subse-
    24  quently  filing  an  application for membership so long as such employee
    25  remains in covered employment.
    26    2.  Each employer shall enroll in the retirement system every  current
    27  employee  eligible  for,  but not enrolled in, the retirement system, on
    28  October first, two thousand eighteen,  unless  such  employee  files  an
    29  application  with  the  system  to  opt  out of the retirement system by
    30  September thirtieth, two thousand eighteen. Automatic enrollment in  the
    31  retirement system shall not be construed to waive any of the eligibility
    32  requirements for previous service credit.
    33    3.  The  automatic enrollment of optional employees as provided for in
    34  this section shall not be construed to modify the rights and obligations
    35  of any employee who is a mandated member of a public  retirement  system
    36  under  any  applicable law, and such mandated members may not opt out of
    37  membership.
    38    § 2. This act shall take effect July 1, 2018.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          In response to your request, this letter presents the estimated finan-
        cial impact if participation is made mandatory for the Board  of  Educa-
        tion Retirement System of the City of New York (BERS).
          The  ultimate  employer cost for this change will be determined by the
        number, ages, years of service, and salary of those employees that would
        otherwise not have elected to become member of BERS.
          In order to prepare this analysis, we were supplied a file  of  12,287
        individuals  who  are  not currently members of BERS but could voluntary
        elect to participate. This group consisted of 11,292 part-time  and  995
        full-time  employees  that  was approximately 73% female with an average
        age of 34.9, average salary of approximately $25,500, and  average  past
        service  of 2.4 years. We are also told, for calendar year 2016, employ-
        ees in Payroll Codes 745, 744 and 056  are  part-time  and  earned  0.80
        years,  0.44  years  and 0.72 years of service on average, respectively.
        Employees in Payroll Code 740 are generally full-time employees.  Final-
        ly, we were told 72% of eligible employees eventually join BERS.

        A. 7193--C                          3
          Based  on  this  data and these statistics, we have estimated that the
        additional annual employer contribution will  be  $11.0  million  if  no
        prior  years  of  service  are  purchased by these individuals and $18.1
        million  if  all  years  of  prior  service  eligible  for  buyback  are
        purchased.  These  estimates assume that the fractional years of service
        earned in 2016 as described above remains unchanged in the future. These
        estimates also assume a level workforce (i.e., the  number  and  salary,
        age  and service characteristics of the added group remain approximately
        the same in future years.) Finally,  for  purposes  of  determining  the
        portion  of the annual employer contribution attributable to the buyback
        of prior service, we have assumed an amortization period of 15 years (14
        payments under the Lag methodology used in the actuarial valuation.) All
        other actuarial assumptions and methods are the same as  those  used  in
        the June 30, 2016 (Lag) actuarial valuation to determine the Preliminary
        Fiscal Year 2018 employer contributions for BERS.
          If  the  change  to  mandatory  participation is made prior to July 1,
        2017, these new additional members  would  likely  be  included  in  the
        census  data  as  of  June  30,  2017 and if so the increase in employer
        contributions to BERS would first be reflected in Fiscal Year 2019.
          STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
        ary for, and independent of, the New York City Pension Funds and Retire-
        ment Systems. I am a Fellow of the Society of Actuaries, a Fellow of the
        Conference  of Consulting Actuaries and a Member of the American Academy
        of Actuaries. I meet the Qualification Standards of the American Academy
        of Actuaries to render the actuarial opinion contained  herein.  To  the
        best of my knowledge, the results contained herein have been prepared in
        accordance  with the Actuarial Standards of Practice issued by the Actu-
        arial Standards Board.
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