Bill Text: NY A08021 | 2017-2018 | General Assembly | Amended
Bill Title: Relates to member contributions to the New York city employees' retirement system.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-05-22 - print number 8021a [A08021 Detail]
Download: New_York-2017-A08021-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 8021--A 2017-2018 Regular Sessions IN ASSEMBLY May 25, 2017 ___________ Introduced by M. of A. ABBATE -- read once and referred to the Committee on Governmental Employees -- recommitted to the Committee on Govern- mental Employees in accordance with Assembly Rule 3, sec. 2 -- commit- tee discharged, bill amended, ordered reprinted as amended and recom- mitted to said committee AN ACT to amend the retirement and social security law, in relation to member contributions to the New York city employees' retirement system The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph 2 of subdivision a of section 613 of the retire- 2 ment and social security law, as amended by chapter 510 of the laws of 3 2015, is amended to read as follows: 4 2. A member of the New York city employees' retirement system who is 5 eligible to be a participant in the twenty-five-year and age fifty-five 6 retirement program, as defined by paragraph five of subdivision a of 7 section six hundred four-b of this article shall contribute two percent 8 of annual wages to such system effective on the starting date of the 9 elimination of additional member contributions, as defined in an 10 election made pursuant to paragraph ten of subdivision e of section six 11 hundred four-b of this article, except [that] beginning April first, two 12 thousand thirteen and ending on the December thirty-first next succeed- 13 ing the effective date of the chapter of the laws of two thousand eigh- 14 teen that amended this paragraph for members who first become members of 15 the New York city employees' retirement system on or after April first, 16 two thousand twelve, the rate at which each such member shall contribute 17 in any current plan year (April first to March thirty-first, provided, 18 however, that plan year shall mean January first through December thir- 19 ty-first commencing with the January first next succeeding the effective 20 date of [the] chapter five hundred ten of the laws of two thousand 21 fifteen that amended this paragraph) shall be determined by reference to 22 the wages of such member in the second plan year (April first to March EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06931-09-8A. 8021--A 2 1 thirty-first, provided, however, that plan year shall mean January first 2 through December thirty-first commencing with the January first next 3 succeeding the effective date of [the] chapter five hundred ten of the 4 laws of two thousand fifteen that amended this paragraph) preceding such 5 current plan year as follows: 6 (i) members with wages of forty-five thousand dollars per annum or 7 less shall contribute three per centum of annual wages; 8 (ii) members with wages greater than forty-five thousand per annum, 9 but not more than fifty-five thousand per annum shall contribute three 10 and one-half per centum of annual wages; 11 (iii) members with wages greater than fifty-five thousand per annum, 12 but not more than seventy-five thousand per annum shall contribute four 13 and one-half per centum of annual wages; 14 (iv) members with wages greater than seventy-five thousand per annum 15 but not more than one hundred thousand per annum shall contribute five 16 and three-quarters per centum of annual wages; and 17 (v) members with wages greater than one hundred thousand per annum 18 shall contribute six per centum of annual wages. 19 Notwithstanding the foregoing, during each of the first three plan 20 years (April first to March thirty-first, provided, however, that plan 21 year shall mean January first through December thirty-first commencing 22 with the January first next succeeding the effective date of [the] chap- 23 ter five hundred ten of the laws of two thousand fifteen that amended 24 this paragraph) in which such member has established membership in the 25 New York city employees' retirement system, such member shall contribute 26 a percentage of annual wages in accordance with the preceding schedule 27 based upon a projection of annual wages provided by the employer. 28 § 2. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: This proposed legislation would amend paragraph 2 of subdivision a of Section 613 of the Retirement and Social Security Law (RSSL) to prospectively modify the member contribution rate for Tier 6 New York City Transit Authority (NYCTA) members who participate in the New York City Employees' Retirement System (NYCERS) Transit 25-Year/Age 55 Retirement Plan from the current graded schedule of 3% to 6% of the members' wages to a flat 2% of wages after the December 31st of the year in which the law is enacted. Effective Date: Upon enactment. FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to NYCERS and based on the actuarial assumptions and methods herein, if the proposed legislation were enacted, the Actuarial Present Value (APV) of Benefits (APVB) would decrease due to a reduction in the amount of refunds of member contributions upon termination of employment and decrease the Actuarial Present Value of member contributions. Under the Entry Age Normal (EAN) cost method used to determine employ- er contributions to NYCERS, there would be an increase in the Actuarial Present Value of Future Employer Normal Cost and an increase in the Unfunded Accrued Liability (UAL). FINANCIAL IMPACT - CHANGES IN PROJECTED ACTUARIAL PRESENT VALUE OF FUTURE EMPLOYER CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: In accordance with ACCNY Section 13.638.2(k-2), new UAL attributable to benefit changes are to be amortized as determined by the Actuary but generally over the remaining working lifetime of those impacted by the benefit changes. As of June 30, 2017, if this proposed legislation is enacted, the remaining working lifetime of the Tier 6 25/55 NYCTA Plan participant is approximately 18 years.A. 8021--A 3 For this proposed legislation the change in UAL was amortized over an 18-year period (17 payments under the One-Year Lag Methodology) using level dollar payments. The following Table 1 presents an estimate of the increases in the APV of future employer contributions and in employer contributions to NYCERS for Fiscal Years 2019 through 2023 due to the reduction of the member contribution rate for Tier 6 members who participate in the Transit 25-Year/Age 55 retirement plan based on the applicable actuarial assump- tions and methods noted herein: TABLE 1 INCREASE IN APV OF FUTURE EMPLOYER CONTRIBUTIONS AND EMPLOYER CONTRIBUTIONS ($ Millions) Fiscal Year Increase in APV of Increase in Employer Future Employer Contributions Contributions 2019 $320.5 $25.2 2020 425.0 32.7 2021 509.5 39.6 2022 590.0 46.5 2023 665.1 53.3 CONTRIBUTION TIMING: For purposes of this Fiscal Note, it is assumed that the changes in the APVB, APV of member contributions, UAL and APV of future employer contributions would be reflected for the first time in the June 30, 2017 actuarial valuation of NYCERS. In th accordance with the One-year Lag Methodology (OYLM) used to determine employer contributions, the increase in employer contributions would first be reflected in Fiscal Year 2019. CENSUS DATA: Census data used for the calculations presented herein is as of June 30, 2017, including 9,822 Tier 6 25/55 NYCTA members with cumulative salaries of approximately $678.6 million. OTHER COSTS: Not measured in this Fiscal Note are the following: * The initial, additional administrative costs of NYCERS to implement the proposed legislation. * The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. ACTUARIAL ASSUMPTIONS AND METHODS: The changes in APVB, APV of member contributions, UAL, APV of future employer contributions and employer contributions presented herein have been calculated based on the same actuarial assumptions and methods in effect for the June 30, 2017 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year 2019 employer contributions of NYCERS. Please note these assumptions and methods are subject to change as this valuation is not considered final until the end of the Fiscal Year 2019. New entrants were projected to replace the members expected to leave the active population to maintain a steady-state population. New entrant ages, salaries, and future salary increases are consistent with those used in projections for the New York City Office of Management and Budget in April 2018. The following Table 2 presents the total number of active Tier 6 25/55 NYCTA Plan participant used in the projections, assuming a level work force, and the cumulative number (i.e. net of withdrawals) of such participants as of each June 30 from 2017 through 2021.A. 8021--A 4 TABLE 2 June 30 Tier 1, 2 & 4 Tier 6 Total 2017 26,747 9,822 36,569 2018 24,191 12,378 36,569 2019 22,152 14,417 36,569 2020 20,266 16,303 36,569 2021 18,551 18,018 36,569 STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actuary for, and independent of, the New York City Retirement Systems and Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled Actuary under the Employee Retirement Income and Security Act of 1974 (ERISA), a Member of the American Academy of Actuaries, and a Fellow of the Conference of Consulting Actuaries. I meet the Qualification Stand- ards of the American Academy of Actuaries to render the actuarial opin- ion contained herein. To the best of my knowledge, the results contained herein have been prepared in accordance with generally accepted actuari- al principles and procedures and with the Actuarial Standards of Prac- tice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-18 dated April 24, 2018, was prepared by the Chief Actuary for the New York City Employees' Retirement System. This estimate is intended for use only during the 2018 Legislative Session.