Requires refunds to be issued to certain participants having made additional member contributions prior to any election by the New York transit authority to eliminate such contributions; expands scope of eligible participants.
STATE OF NEW YORK
________________________________________________________________________
7694
IN SENATE
May 29, 2014
___________
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
twenty-five-year and age fifty-five retirement program for New York
city transit authority members
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 e of section 604-b of the
2 retirement and social security law, as amended by chapter 10 of the laws
3 of 2000, is amended to read as follows:
4 1. In addition to the member contributions required by section six
5 hundred thirteen of this article, each participant in the twenty-five-
6 year and age fifty-five retirement program shall contribute to the
7 retirement system of which he or she is a member (subject to the appli-
8 cable provisions of section 13-125.1 of the administrative code) an
9 additional two and thirty-hundredths percent of his or her compensation
10 earned from all allowable service in the transit authority rendered on
11 and after the starting date of the twenty-five-year and age fifty-five
12 retirement program. A participant in the twenty-five-year and age
13 fifty-five retirement program shall contribute additional member
14 contributions only until he or she has thirty years of allowable service
15 in the transit authority. In the event that the New York city transit
16 authority elects to eliminate additional member contributions pursuant
17 to paragraph ten of this subdivision, a participant in the twenty-five-
18 year and age fifty-five retirement program who becomes a participant
19 pursuant to the provisions of paragraph four-a of subdivision b of this
20 section shall not be required to make any additional member contrib-
21 utions pursuant to this subdivision. Any additional member contrib-
22 utions made pursuant to this subdivision prior to any election by the
23 New York city transit authority to eliminate such contributions pursuant
24 to paragraph ten of this subdivision, shall be refunded to a participant
25 in the twenty-five-year and age fifty-five retirement program, to
26 include a previous participant who has successfully retired under such
27 program together with interest thereon at the rate of five percent per
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15378-01-4
S. 7694 2
1 annum, compounded annually and such refund shall be payable upon such
2 previous participant's application, as permitted under paragraph ten of
3 this subdivision, and pursuant to procedures promulgated in regulations
4 of the board of trustees of the retirement system.
5 § 2. Paragraph 10 of subdivision e of section 604-b of the retirement
6 and social security law, as amended by chapter 379 of the laws of 2007,
7 is amended to read as follows:
8 10. The New York city transit authority, by the adoption of a resol-
9 ution or resolutions, may make an election or elections to eliminate the
10 additional member contributions required to be made pursuant to para-
11 graph one of this subdivision. Such election or elections may be made
12 applicable to all employees of the transit authority, to employees who
13 are represented by a specific collective bargaining organization, recog-
14 nized or certified pursuant to article fourteen of the civil service
15 law, and/or to employees who are not represented for the purposes of
16 collective bargaining. Such election or elections shall define the
17 starting date of the elimination of additional member contributions,
18 except as set forth below, which shall in no event be earlier than the
19 first payroll period following December fifteenth, two thousand. An
20 election made pursuant to this paragraph shall be irrevocable. A demand
21 for an elimination of additional member contributions shall not be
22 subject to the provisions of subdivision five of section two hundred
23 nine of the civil service law. The New York city transit authority shall
24 notify the head of the New York city employees' retirement system of any
25 election or elections made pursuant to this paragraph. Notwithstanding
26 the aforementioned starting date of the elimination of additional member
27 contributions or any other provision of this section, an eligible
28 participant, as defined below, shall be entitled to a refund of all of
29 his or her accumulated additional member contributions made pursuant to
30 this subdivision which shall include any and all interest thereon paid
31 to the retirement system, together with interest thereon at the rate of
32 five percent per annum, compounded annually, and such refund shall be
33 payable, upon such participant's application, pursuant to procedures
34 promulgated in regulations of the board of trustees of the retirement
35 system. An eligible participant shall be a participant (i) who is or was
36 employed in a title represented for purposes of collective bargaining by
37 an employee organization representing a majority of non-supervisory
38 employees in the New York city transit authority's Queens Bus and/or
39 Staten Island Bus Divisions, recognized or certified pursuant to article
40 fourteen of the civil service law, and who, on December twenty-eight,
41 two thousand five, had an accumulated balance of additional member
42 contributions at the retirement system; [or] (ii) who is or was employed
43 in a title represented for purposes of collective bargaining by the
44 employee organization representing the majority of non-supervisory
45 employees in the New York city transit authority in other than the
46 Queens Bus and/or Staten Island Bus Divisions, recognized or certified
47 pursuant to article fourteen of the civil service law, and who, on
48 December sixteenth, two thousand five, had an accumulated balance of
49 additional member contributions at the retirement system[.]; or (iii)
50 who was employed in a title represented for purposes of collective
51 bargaining by the employee organization representing the majority of
52 non-supervisory employees in the New York city transit authority in
53 other than the Queens bus and/or Staten Island bus divisions, recognized
54 or certified pursuant to article fourteen of the civil service law, and
55 who, by reason of retirement prior to December sixteenth, two thousand
56 five, was not eligible for a refund under (ii) of this paragraph, but
S. 7694 3
1 had or would have had an accumulated balance of additional member
2 contributions at the retirement system if the impact of the election by
3 such transit authority to eliminate additional employee contributions
4 under this paragraph is taken into account and applied to their previous
5 employee contributions as of the day or date of their retirement. No
6 interest authorized by this provision shall accrue after the day or date
7 of the retirement of the applicant.
8 § 3. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend New York State Retirement and Social Security Law ("RSSL")
Sections 604-b.e(1) and 604-b.e(10) to provide to certain New York City
Transit Authority ("NYCTA") retired members of the New York City Employ-
ees' Retirement System ("NYCERS") a refund of Additional Member Contrib-
utions ("AMC") that were paid by these members while they were partic-
ipants of the Transit 25 Year/Age 55 Retirement Program ("Transit 55/25
Program").
The Effective Date of the proposed legislation would be the date of
enactment.
This Fiscal Note assumes that the proposed legislation is intended to
refund interest on AMC in accordance with NYCERS procedures for credit-
ing interest on member contributions including an assumption that no
interest would be paid past a member's retirement date.
IMPACT ON PLAN PROVISIONS - ADDITIONAL MEMBER CONTRIBUTIONS: Those
NYCERS members who participated in the Transit 55/25 Program paid AMC of
2.3% of gross wages for service rendered between August 28, 1994 and
December 15, 2000.
This proposed legislation would refund AMC to retired Transit 55/25
Program participants who are former members of the Transit Workers Union
Local 100 ("Local 100") and who retired prior to December 16, 2005 with
initial Program participation dates on or before December 15, 2000,
including interest at 5.0% per annum accrued through the retired
member's retirement date.
To receive such refund, those eligible retirees would be required to
file an application pursuant to procedures to be established by the
NYCERS Board of Trustees.
FINANCIAL IMPACT - OVERVIEW: If enacted into the law, the ultimate
employer cost of the proposed legislation would be determined by the
reduction in fund assets due to the refund of AMC.
FINANCIAL IMPACT - UNFUNDED ACTUARIAL ACCRUED LIABILITY: With respect
to NYCERS and based on the census data and actuarial assumptions and
methods described herein, the enactment of this proposed legislation
would result in a decrease in the Actuarial Asset Value as of June 30,
2014 and an increase in the Unfunded Actuarial Accrued Liability
("UAAL") of approximately $2,761,000.
FINANCIAL IMPACT - ADDITIONAL ANNUAL EMPLOYER COSTS AND CONTRIBUTIONS:
With respect to NYCERS, the enactment of this proposed legislation would
increase annual employer costs by approximately $843,000 per year for
four years.
Increases in employer contributions would be comparable to the esti-
mated increases in employer costs.
As the impact is generally measurable and RSSL Section 430 expresses
the idea that benefit improvements are not to be implemented in a fiscal
year prior to the commencement of financing, enactment of the proposed
legislation on or before June 30, 2015 would result in increased employ-
er contributions to NYCERS beginning Fiscal Year 2015.
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CENSUS DATA: The census data used for estimates of the expected refund
of AMC and change in employer contributions presented herein are the 264
retired Local 100 members of NYCERS who participated in the Transit
55/25 Program, retired prior to December 16, 2005 and are alive as of
April 2, 2014.
ACTUARIAL ASSUMPTIONS AND METHODS: Estimates of changes in AAL, UAAL
and employer costs have been calculated using the actuarial assumptions
and methods adopted by the NYCERS Board of Trustees during Fiscal Year
2012 and enacted as Chapter 3 of the Laws of 2013 ("2012 A&M") for
determining employer contributions for fiscal years beginning on and
after July 1, 2011 (i.e., Fiscal Years 2012 and after).
In accordance with Section 13.638.2 (k-2) of the Administrative Code
of the City of New York ("ACNY") as enacted by Chapter 3/13, as one
component of the 2012 A&M, new UAAL attributable to benefit changes are
to be amortized as determined by the Actuary but generally over the
remaining working lifetimes of those impacted by these benefit changes.
For this proposed legislation, the average remaining working lifetime
is zero years because all those that would be impacted have already
retired.
Legislation with similar structures were enacted for Transit Operating
non-supervisory employees as Chapter 734 of the Laws of 2006 ("Chapter
734/06") and as Chapter 379 of the Laws of 2007 ("Chapter 379/07") and
the additional UAAL was amortized for each legislation under the actuar-
ial assumptions and methods then in effect (i.e., amortized implicitly
over the average remaining working lifetimes of all NYCERS active
members).
Similar legislation to the proposed legislation was enacted for
certain Station Supervisors Level 2 as Chapter 522 of the Laws of 2013
("Chapter 522/13"). The additional UAAL for that legislation is expected
to be amortized over five years using four payments beginning one year
after the establishment of the UAAL in accordance with One-Year Lag
Methodology ("OYLM") that is used for the actuarial valuations of
NYCERS.
The Actuary believes that the appropriate financing period for this
proposed legislation would be the average remaining working lifetime of
the entire group impacted.
However, given the history of the financing of similar legislations
(e.g., Chapter 734/06, Chapter 379/07 and Chapter 522/13), the Actuary
is inclined to amortize the proposed legislation over five years.
Essentially, this is a compromise between the remaining average working
lifetime of the entire group impacted and the average remaining lifetime
of all NYCERS members.
For this particular legislation, as with Chapter 522/13, the Actuary
would likely treat the five years of amortization with the payment peri-
od beginning one year after the establishment of the UAAL. This approach
is consistent with OYLM, where the UAAL is considered to be amortized
over five years with four years of payments beginning in the second
year.
Also note that, historically, other legislation impacting primarily
retired or soon-to-be-retired members was often amortized over five
years (Retirement Incentive Programs) or 10 years (Supplemental
Programs).
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North Jr., am the Chief
Actuary for the New York City Retirement Systems. I am a Fellow of the
Society of Actuaries and a Member of the American Academy of Actuaries.
S. 7694 5
I meet the Qualification Standards of the American Academy of Actuaries
to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2014 Legislative Session. It is Fiscal Note 2014-23, dated
May 20, 2014, prepared by the Chief Actuary for the New York City
Employees' Retirement System.
