Bill Text: NY A07668 | 2023-2024 | General Assembly | Introduced
Bill Title: Updates certain death benefit provisions of the New York city employees' retirement system, the New York city teachers' retirement system, and the board of education retirement system of New York city to ensure continued compliance with the federal older workers' benefit protection act.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2023-06-10 - substituted by s7509 [A07668 Detail]
Download: New_York-2023-A07668-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7668 2023-2024 Regular Sessions IN ASSEMBLY June 1, 2023 ___________ Introduced by M. of A. PHEFFER AMATO -- read once and referred to the Committee on Governmental Employees AN ACT to amend the retirement and social security law, in relation to updating certain death benefit provisions of the New York city employ- ees' retirement system, the New York city teachers' retirement system, and the board of education retirement system of New York city to ensure continued compliance with the federal older workers' benefit protection act The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The closing paragraph of paragraph 2 of subdivision a of 2 section 448 of the retirement and social security law, as amended by 3 chapter 720 of the laws of 2022, is amended to read as follows: 4 In the case of a member of the New York state teachers' retirement 5 system, commencing upon attainment of age sixty-two if such member's 6 date of membership is prior to April first, two thousand twelve or 7 attainment of age sixty-three if such member's date of membership is on 8 or after April first, two thousand twelve, the benefit otherwise 9 provided pursuant to this paragraph shall be reduced while the member is 10 in service to ninety-six per centum of the benefit otherwise payable and 11 each year thereafter the benefit payable shall be reduced by an amount 12 equal to four per centum per year of the original benefit otherwise 13 payable, but not below sixty per centum of the original benefit other- 14 wise payable. In the case of a member of the New York city employees' 15 retirement system, the New York city board of education retirement 16 system or the New York city teachers' retirement system, commencing upon 17 attainment of age sixty-one, the benefit otherwise provided pursuant to 18 this paragraph shall be reduced while the member is in service to [nine-19ty-five] ninety-seven per centum of the benefit otherwise payable and 20 each year thereafter the benefit payable shall be reduced by an amount 21 equal to [five] three per centum per year of the original benefit other- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11700-01-3A. 7668 2 1 wise payable, but not below [fifty] seventy per centum of the original 2 benefit otherwise payable. In the case of any member of the New York 3 state and local employees' retirement system who is permitted to retire 4 without regard to age or a member of the New York state and local police 5 and fire retirement system, commencing upon attainment of age sixty-two 6 if such member's date of membership is prior to April first, two thou- 7 sand twelve or attainment of age sixty-three if such member's date of 8 membership is on or after April first, two thousand twelve, the benefit 9 otherwise provided pursuant to this paragraph shall be reduced while the 10 member is in service to ninety-seven per centum of the benefit otherwise 11 payable, and each year thereafter the benefit payable shall be reduced 12 by an amount equal to three per centum per year of the original benefit 13 otherwise payable, but not below seventy per centum of the original 14 benefit otherwise payable. In the case of any other member of the New 15 York state and local employees' retirement system, commencing upon 16 attainment of age sixty-two if such member's date of membership is prior 17 to April first, two thousand twelve or attainment of age sixty-three if 18 such member's date of membership is on or after April first, two thou- 19 sand twelve, the benefit otherwise provided pursuant to this paragraph 20 shall be reduced while the member is in service to ninety-six per centum 21 of the benefit otherwise payable, and each year thereafter the benefit 22 payable shall be reduced by an amount equal to four per centum per year 23 of the original benefit otherwise payable, but not below sixty per 24 centum of the original benefit otherwise payable. Upon retirement from 25 any retirement system, the benefit in force shall be reduced by fifty 26 per centum; upon completion of the first year of retirement, the benefit 27 in force at the time of retirement shall be reduced by an additional 28 twenty-five per centum, and upon commencement of the third year of 29 retirement, the benefit shall be ten per centum of the benefit in force 30 at age sixty, if any, or at the time of retirement if retirement 31 preceded such age; provided, however, the benefit in retirement shall 32 not be reduced below ten per centum of the benefit in force at age 33 sixty, if any, or at the time of retirement if retirement preceded such 34 age. Notwithstanding any other provision of this paragraph to the 35 contrary, the benefit for a retiree from the New York state and local 36 employees' retirement system [and], the New York state teachers' retire- 37 ment system, the New York city employees' retirement system, the New 38 York city board of education retirement system or the New York city 39 teachers' retirement system shall not be reduced below ten per centum of 40 the benefit in force at the time of retirement. 41 § 2. The closing paragraph of paragraph 2 of subdivision a of section 42 508 of the retirement and social security law, as amended by chapter 720 43 of the laws of 2022, is amended to read as follows: 44 Notwithstanding any other provision of this paragraph, in the case of 45 a member of the New York state teachers' retirement system, commencing 46 upon attainment of age sixty-two if such member's date of membership is 47 prior to April first, two thousand twelve or attainment of age sixty- 48 three if such member's date of membership is on or after April first, 49 two thousand twelve, the benefit otherwise provided pursuant to this 50 paragraph shall be reduced while the member is in service to ninety-six 51 per centum of the benefit otherwise payable, and each year thereafter 52 the benefit payable shall be reduced by an amount equal to four per 53 centum per year of the original benefit otherwise payable, but not below 54 sixty per centum of the original benefit otherwise payable. In the case 55 of a member of the New York city employees' retirement system, the New 56 York city board of education retirement system or the New York cityA. 7668 3 1 teachers' retirement system, commencing upon attainment of age sixty- 2 one, the benefit otherwise provided pursuant to this paragraph shall be 3 reduced while the member is in service to [ninety-five] ninety-seven per 4 centum of the benefit otherwise payable and each year thereafter the 5 benefit payable shall be reduced by an amount equal to [five] three per 6 centum per year of the original benefit otherwise payable, but not below 7 [fifty] seventy per centum of the original benefit otherwise payable. In 8 the case of any member of the New York state and local employees' 9 retirement system who is permitted to retire without regard to age, 10 commencing upon attainment of age sixty-two if such member's date of 11 membership is prior to April first, two thousand twelve or attainment of 12 age sixty-three if such member's date of membership is on or after April 13 first, two thousand twelve, the benefit otherwise provided pursuant to 14 this paragraph shall be reduced while the member is in service to nine- 15 ty-seven per centum of the benefit otherwise payable, and each year 16 thereafter the benefit payable shall be reduced by an amount equal to 17 three per centum per year of the original benefit otherwise payable, but 18 not below seventy per centum of the original benefit otherwise payable. 19 In the case of any other member of the New York state and local employ- 20 ees' retirement system, commencing upon attainment of age sixty-two if 21 such member's date of membership is prior to April first, two thousand 22 twelve or attainment of age sixty-three if such member's date of member- 23 ship is on or after April first, two thousand twelve, the benefit other- 24 wise provided pursuant to this paragraph shall be reduced while the 25 member is in service to ninety-six per centum of the benefit otherwise 26 payable, and each year thereafter the benefit payable shall be reduced 27 by an amount equal to four per centum per year of the original benefit 28 otherwise payable, but not below sixty per centum of the original bene- 29 fit otherwise payable. Upon retirement from any retirement system, the 30 benefit in force shall be reduced by fifty per centum; upon completion 31 of the first year of retirement, the benefit in force at the time of 32 retirement shall be reduced by an additional twenty-five per centum, and 33 upon commencement of the third year of retirement, the benefit shall be 34 ten per centum of the benefit in force at age sixty, if any, or at the 35 time of retirement if retirement preceded such age; provided, however, 36 the benefit in retirement shall not be reduced below ten per centum of 37 the benefit in force at age sixty, if any, or at the time of retirement 38 if retirement preceded such age. Notwithstanding any other provision of 39 this paragraph to the contrary, the benefit for a retiree from the New 40 York state and local employees' retirement system [and], the New York 41 state teachers' retirement system, the New York city employees' retire- 42 ment system, the New York city board of education retirement system or 43 the New York city teachers' retirement system shall not be reduced below 44 ten per centum of the benefit in force at the time of retirement. 45 § 3. The closing paragraph of paragraph 2 of subdivision a of section 46 606 of the retirement and social security law, as amended by chapter 720 47 of the laws of 2022, is amended to read as follows: 48 In the case of a member of the New York state teachers' retirement 49 system, commencing upon attainment of age sixty-two if such member's 50 date of membership is prior to April first, two thousand twelve or 51 attainment of age sixty-three if such member's date of membership is on 52 or after April first, two thousand twelve, the benefit otherwise 53 provided pursuant to this paragraph shall be reduced while the member is 54 in service to ninety-six per centum of the benefit otherwise payable, 55 and each year thereafter the benefit payable shall be reduced by an 56 amount equal to four per centum per year of the original benefit other-A. 7668 4 1 wise payable, but not below sixty per centum of the original benefit 2 otherwise payable. In the case of a member of the New York city employ- 3 ees' retirement system, the New York city board of education retirement 4 system or the New York city teachers' retirement system, commencing upon 5 attainment of age sixty-one, the benefit otherwise provided pursuant to 6 this paragraph shall be reduced while the member is in service to [nine-7ty-five] ninety-seven per centum of the benefit otherwise payable and 8 each year thereafter the benefit payable shall be reduced by an amount 9 equal to [five] three per centum per year of the original benefit other- 10 wise payable, but not below [fifty] seventy per centum of the original 11 benefit otherwise payable. In the case of any member of the New York 12 state and local employees' retirement system who is permitted to retire 13 without regard to age, commencing upon attainment of age sixty-two if 14 such member's date of membership is prior to April first, two thousand 15 twelve or attainment of age sixty-three if such member's date of member- 16 ship is on or after April first, two thousand twelve, the benefit other- 17 wise provided pursuant to this paragraph shall be reduced while the 18 member is in service to ninety-seven per centum of the benefit otherwise 19 payable, and each year thereafter the benefit payable shall be reduced 20 by an amount equal to three per centum per year of the original benefit 21 otherwise payable, but not below seventy per centum of the original 22 benefit otherwise payable. In the case of any other member of the New 23 York state and local employees' retirement system, commencing upon 24 attainment of age sixty-two if such member's date of membership is prior 25 to April first, two thousand twelve or attainment of age sixty-three if 26 such member's date of membership is on or after April first, two thou- 27 sand twelve, the benefit otherwise provided pursuant to this paragraph 28 shall be reduced while the member is in service to ninety-six per centum 29 of the benefit otherwise payable, and each year thereafter the benefit 30 payable shall be reduced by an amount equal to four per centum per year 31 of the original benefit otherwise payable, but not below sixty per 32 centum of the original benefit otherwise payable. Upon retirement, from 33 any retirement system, the benefit in force shall be reduced by fifty 34 per centum; upon completion of the first year of retirement, the benefit 35 in force at the time of retirement shall be reduced by an additional 36 twenty-five per centum, and upon commencement of the third year of 37 retirement, the benefit shall be ten per centum of the benefit in force 38 at age sixty, if any, or at the time of retirement if retirement 39 preceded such age; provided, however, the benefit in retirement shall 40 not be reduced below ten per centum of the benefit in force at age 41 sixty, if any, or at the time of retirement if retirement preceded such 42 age. Notwithstanding any other provision of this paragraph to the 43 contrary, the benefit for a retiree from the New York state and local 44 employees' retirement system [and], the New York state teachers' retire- 45 ment system, the New York city employees' retirement system, the New 46 York city board of education retirement system or the New York city 47 teachers' retirement system shall not be reduced below ten per centum of 48 the benefit in force at the time of retirement. 49 § 4. This act shall take effect immediately and shall be deemed to 50 have been in full force and effect on and after July 1, 2021, provided 51 that this act shall not apply to the payment of any death benefit based 52 upon a member's death which occurred prior to July 1, 2021. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: This proposed legislation (see Appendix) would amend certain death benefit provisions to ensure continued compliance with the requirements of the Federal Older Workers' Benefit Protection Act,A. 7668 5 Public Law 101-433 (OWBPA). In general, with respect to the New York City Employees' Retirement System (NYCERS), the New York City Teachers' Retirement System (NYCTRS), and the New York City Board of Education Retirement System (BERS), the bill would amend the Tier 2, 3, and 4/6 ordinary death benefit provisions set forth in Retirement and Social Security Law (RSSL) Articles 11, 14, and 15, respectively, to ensure that, on an actuarial basis, the costs of providing such benefits to older members are no less than the costs of providing such benefits to younger members. Effective Date: This bill would be effective immediately and be deemed to have been in force since July 1, 2021. IMPACT ON BENEFITS: Under the proposed legislation, if enacted, the Pre-retirement Ordinary Death Benefit for Active and Deferred Vested Members, and the Post-retirement Death Benefit for Tier 2, 3, and 4/6 NYCERS, NYCTRS, and BERS members, would be updated. Pre-retirement Ordinary Death Benefit The Tier 2, 3 and 4/6 Ordinary Death Benefit (for all members except police officers, firefighters, correction officers, or sanitation work- ers) is a lump sum payment equal to current pay multiplied by completed years of service (up to three years) and further reduced by a percentage based on age at date of death. Currently, the reduction is 0% for ages 60 and younger, and increases by 5% for every age over 60, up to the ultimate rate of 50% for ages 70 and older. Under the proposed legislation the reduction would remain 0% for ages 60 and younger, and increase by 3% for every age over age 60 up to the ultimate reduction of 30% for ages 70 and older. Post-retirement death benefit The changes to the reductions described above would also apply to the calculation of the post-retirement death benefit. In addition, the post- retirement death benefit in the third year of retirement and thereafter would be changed as follows: Current provision: 10% of the Pre-retirement death benefit that would have been payable had the member died on the earlier of (1) the day before they retired and (2) age 60. Proposed provision: Greater of the benefit payable under the current provision and 10% of the death benefit payable had the member died the day before they retired. FINANCIAL IMPACT: The increase in annual employer contributions asso- ciated with this proposed legislation has already been accounted for beginning with the June 30, 2020 actuarial valuations used to determine the Final Fiscal Year 2022 employer contributions of NYCERS, NYCTRS, and BERS. The estimated financial impact of updating ordinary death benefits to maintain compliance with OWBPA as described above is an increase in Present Value of Future Benefits of approximately $223.7 million, and an initial increase in the FY 2022 annual employer contributions of approx- imately $40.0 million ($26.8 million for New York City and $13.2 million for the other obligors). A breakdown of the FY 2022 annual contribution impact by System is shown in the table below. Impact on FY 2022 System Annual Employer Contributions ______ ($ Millions) _____________________________ NYCERS $ 22.9A. 7668 6 NYCTRS 12.5 BERS 4.6 Total $ 40.0 Long-term annual costs (after the initial increase in unfunded accrued liability is fully amortized in seven to eight years) are estimated to be less than $10 million for all three Systems combined. New Unfunded Accrued Liability (UAL) attributable to benefit changes are generally amortized over the remaining working lifetime of those impacted by the benefit changes. For purposes of this Fiscal Note, it had been assumed that increases in UAL would be amortized over periods ranging from seven to eight years depending on the System (six to seven payments under the One-Year Lag Methodology) using level dollar payments. CENSUS DATA: The estimates presented herein are based on the census data used in the June 30, 2020 actuarial valuations of NYCERS, NYCTRS, and BERS to determine the Fiscal Year 2022 employer contributions. ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have been calculated based on the actuarial assumptions and methods used for the Fiscal Year 2022 employer contributions of NYCERS, NYCTRS, and BERS. RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend highly on the realization of the actuarial assumptions used, demograph- ics of the impacted population, and other factors such as investment, contribution, and other risks. If actual experience deviates from actu- arial assumptions, the actual costs could differ from those presented herein. Costs are also dependent on the actuarial methods used, and therefore different actuarial methods could produce different results. Quantifying these risks is beyond the scope of this Fiscal Note. Not measured in this Fiscal Note are the following: * The initial additional administrative costs to implement the proposed legislation. STATEMENT OF ACTUARIAL OPINION: I, Marek Tyszkiewicz, am the Chief Actuary for, and independent of, the New York City Retirement Systems and Pension Funds. I am an Associate of the Society of Actuaries and a Member of the American Academy of Actuaries. I am a member of NYCERS but do not believe it impairs my objectivity and 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 generally accepted actuarial principles and procedures and with the Actuarial Standards of Practice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2023-55 dated May 22, 2023 was prepared by the Chief Actuary for the New York City Employees' Retirement System, the New York City Teachers' Retirement System, and the New York City Board of Education Retirement System. This estimate is intended for use only during the 2023 Legislative Session.