STATE OF NEW YORK
________________________________________________________________________
6446
2017-2018 Regular Sessions
IN SENATE
May 22, 2017
___________
Introduced by Sen. SAVINO -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
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 seven-
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
23 thirty-first, provided, however, that plan year shall mean January first
24 through December thirty-first commencing with the January first next
25 succeeding the effective date of [the] chapter five hundred ten of the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06931-04-7
S. 6446 2
1 laws of two thousand fifteen that amended this paragraph) preceding such
2 current plan year as follows:
3 (i) members with wages of forty-five thousand dollars per annum or
4 less shall contribute three per centum of annual wages;
5 (ii) members with wages greater than forty-five thousand per annum,
6 but not more than fifty-five thousand per annum shall contribute three
7 and one-half per centum of annual wages;
8 (iii) members with wages greater than fifty-five thousand per annum,
9 but not more than seventy-five thousand per annum shall contribute four
10 and one-half per centum of annual wages;
11 (iv) members with wages greater than seventy-five thousand per annum
12 but not more than one hundred thousand per annum shall contribute five
13 and three-quarters per centum of annual wages; and
14 (v) members with wages greater than one hundred thousand per annum
15 shall contribute six per centum of annual wages.
16 Notwithstanding the foregoing, during each of the first three plan
17 years (April first to March thirty-first, provided, however, that plan
18 year shall mean January first through December thirty-first commencing
19 with the January first next succeeding the effective date of [the] chap-
20 ter five hundred ten of the laws of two thousand fifteen that amended
21 this paragraph) in which such member has established membership in the
22 New York city employees' retirement system, such member shall contribute
23 a percentage of annual wages in accordance with the preceding schedule
24 based upon a projection of annual wages provided by the employer.
25 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend paragraph 2 of subdivision a of Section 613 of the Retirement and
Social Security Law (RSSL) to modify the member contribution rate on a
prospective basis for Tier 6 Transit Authority members who participate
in the Transit 25-Year/Age 55 Retirement Plan from the current graded
schedule of 3% to 6% based on the members' wages to a flat 2% of wages.
The Effective Date of the proposed legislation would be the date of
enactment.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the actuarial
assumptions and methods herein, the enactment of this proposed legis-
lation would decrease the Actuarial Present Value of Benefits (APVB) for
NYCERS by approximately $13.5 million (as a result of a reduction in the
amount of refunds of member contributions upon termination of employ-
ment) and decrease the Actuarial Present Value of member contributions
by approximately $255.4 million as of June 30, 2016.
Under the Entry Age Actuarial Cost Method (EAACM) used to determine
employer contributions to NYCERS, there would be an increase in the
Actuarial Present Value of Future Employer Normal Cost of $228.3 million
and an increase in the Unfunded Actuarial Accrued Liability (UAAL) of
approximately $13.6 million.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
Section 13.638.2(k-2) of the Administrative Code of the City of New York
(ACNY), new UAAL attributable to benefit changes are to be amortized as
determined by the Actuary but generally over the remaining working life-
time of those impacted by the benefit changes, which has been estimated
to be approximately 17.9 years. Recognizing that this period will
decrease over time as the group of Tier VI Members matures, the Actuary
would likely choose to amortize the new UAAL attributable to this
proposed legislation over a 15-year period.
S. 6446 3
With respect to NYCERS, based on the Actuary's actuarial assumptions
and methods used in the Preliminary June 30, 2016 valuations of the
NYCERS and those described later in this Fiscal Note, the enactment of
this proposed legislation would increase annual employer contributions
by approximately $28.1 million per year.
This increase in employer contributions has been estimated assuming
that the increase in UAAL would be financed over a 15-year period (14
payments under One-Year Lag Methodology) using level dollar payments.
If enacted into law during the 2017 Legislative Session, increased
employer costs would be determined for Fiscal Year 2018.
CENSUS DATA: Estimates of increases in APVB, employer costs and
employer contributions are based on the active census data used for the
Preliminary June 30, 2016 actuarial valuations of NYCERS, including
7,684 Tier 6 25/55 NYCTA members with salaries of approximately $507.2
million.
ACTUARIAL ASSUMPTIONS AND METHODS: Additional APVB, UAAL and employer
costs presented herein have been calculated based on the Actuary's actu-
arial assumptions and methods in effect for the Preliminary June 30,
2016 (Lag) actuarial valuations used to determine the Preliminary Fiscal
Year 2018 employer contributions of NYCERS.
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.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2017-16 Dated May 12,
2017, was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2017 Legislative Session.