STATE OF NEW YORK ________________________________________________________________________ 6981--B 2021-2022 Regular Sessions IN SENATE May 20, 2021 ___________ Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- recommitted to the Committee on Civil Service and Pensions in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the retirement and social security law, in relation to additional member contributions for certain members under the age fifty-seven retirement program The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph 1 of subdivision f of section 604-d of the 2 retirement and social security law is amended by adding a new subpara- 3 graph (iv) to read as follows: 4 (iv) notwithstanding the provisions of subparagraph (ii) of this para- 5 graph, a participant holding the title of carpenter, supervisor carpen- 6 ter, ship carpenter, supervisor ship carpenter, rigger, dockbuilder, 7 supervisor dockbuilder and general supervisor dockbuilder who is a 8 participant in the age fifty-seven retirement program and whose age and 9 allowable service are such that he or she could not possibly be able to 10 accumulate at least twenty-five years of service by the time he or she 11 reaches age fifty-seven, shall not be required to make the additional 12 member contribution pursuant to subparagraph (ii) of this paragraph. 13 Any participant in the titles listed in this subparagraph who has made 14 additional member contributions pursuant to subparagraph (ii) of this 15 paragraph prior to the effective date of the chapter of the laws of two 16 thousand twenty-two that added this subparagraph shall receive a refund 17 of the employee portion of such contributions plus interest provided 18 that their age and allowable service are such that he or she could not EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06522-07-2S. 6981--B 2 1 possibly be able to accumulate at least twenty-five years of service by 2 the time he or she reaches age fifty-seven. 3 § 2. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: This proposed legislation would amend New York Retirement and Social Security Law (RSSL) Section 604-d to exempt from the physically taxing provisions certain Tier 4 carpenter titles, who are participants in the New York City Employees' Retirement System (NYCERS) or the Board of Education Retirement System of the City of New York (BERS) Age 57 Retirement Program (57/5 Plan), and who would not benefit from the early retirement provisions for such physically taxing titles. The proposed legislation would affect 57/5 Plan participants in the physically taxing titles of carpenter, supervisor carpenter, ship carpenter, supervisor ship carpenter, rigger, dockbuilder, supervisor dockbuilder, and general supervisor dockbuilder (Eligible Carpenter Title) who would be unable to reach the requisite 25 years of credited service in a physically taxing title by age 57, and would therefore be ineligible to take advantage of the early retirement provisions of the physically taxing title, which permits retirement at age 50 (with 25 years of credited service). Under the proposed legislation, Eligible Carpenter Titles who started in the 57/5 Plan but will not reach 25 years of credited service in a physically taxing title by age 57 would no longer pay physically taxing Additional Member Contributions (AMCs) and would receive an immediate refund of the employee portion (i.e., 50%) of their physically taxing AMCs plus interest. Such Titles would remain responsible for applicable basic member contributions and applicable non-physically taxing AMCs for continued 57/5 Plan participation. Effective Date: Upon enactment. FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and actu- arial assumptions and methods described herein, the enactment of this proposed legislation would result in an increase in the present value of future employer contributions for NYCERS and BERS of approximately $5.2 million. Under the Entry Age Normal cost method used to determine the employer contributions to NYCERS and BERS, there would be an increase in the Unfunded Accrued Liability (UAL) of approximately $2.3 million and an increase in the present value of future employer Normal Cost of $2.9 million. These results are summarized in the table below: Change in ($ Thousands): NYCERS BERS Total Actuarial Value of Assets $(5,308) $ (79) $(5,387) (AVA) Accrued Liability (AL) $(3,053) $ (65) $(3,118) Unfunded Accrued $ 2,255 $ 14 $ 2,269 Liability (AL-AVA) Present Value of Future $ 2,815 $ 55 $ 2,870 Employer Normal Cost FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with Section 13-638.2(k-2) of the Administrative Code of the City of New York (ACCNY), new UAL attributable to benefit changes are to be amortized as determined by the Actuary but are generally amortized over the remaining working lifetime of those impacted by the benefit changes. As of June 30, 2021, the remaining working lifetime of the members in EligibleS. 6981--B 3 Carpenter Titles is approximately seven years for NYCERS and nine years for BERS. For the purposes of this Fiscal Note, the increase in UAL was amor- tized over a seven-year period (six payments) for NYCERS and over a nine-year period (eight payments) for BERS under the One-Year Lag Meth- odology (OYLM) using level dollar payments. When added to the change in Employer Normal Cost, the estimated increase in annual employer contrib- utions is approximately $917,000 for NYCERS and $14,000 for BERS. The increase in the employer contributions is estimated to be $389,000 for New York City and $542,000 for the other obligors of NYCRS. CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is assumed that the changes in the Present Value of future employer contributions and annual employer contributions would be reflected for the first time in the Final June 30, 2021 actuarial valuation of NYCERS and BERS. In accordance with the OYLM used to determine employer contributions, the increase in employer contributions would first be reflected in Fiscal Year 2023. CENSUS DATA: The estimates presented herein are based on the census data used in the Preliminary June 30, 2021 (Lag) actuarial valuation of NYCERS and BERS to determine the Preliminary Fiscal Year 2023 employer contributions. NYCERS BERS NYCERS & BERS Count 225 5 230 Average Age 57.2 years 57.4 years 57.2 years Average Service 15.2 years 14.0 years 15.2 years Average Salary $106,000 $98,700 $105,800 ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the UAL, Present Value of future employer contributions, and annual employer contributions presented herein have been calculated based on the same actuarial assumptions and methods in effect for the June 30, 2021 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year 2023 employer contributions of NYCERS and BERS. RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend highly on the realization of the actuarial assumptions used, as well as certain demographic characteristics of NYCERS and BERS and other exoge- nous factors such as investment, contribution, and other risks. If actu- al experience deviates from actuarial 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: o The initial, additional administrative costs of NYCERS, BERS, and other New York City agencies to implement the proposed legislation. o The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet, am the Interim Chief Actuary for, and independent of, the New York City Retirement Systems and Pension Funds. I am a Fellow of the Society of 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 generallyS. 6981--B 4 accepted actuarial principles and procedures and with the Actuarial Standards of Practice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2022-27 dated April 19, 2022 was prepared by the Interim Chief Actuary for the New York City Employees' Retirement System and the Board of Education Retirement System of the City of New York. This estimate is intended for use only during the 2022 Legislative Session.