Permits wages earned through shared services agreements to be included in the computation of final average salaries regardless if such earnings make the final average salary exceed that of the previous two years by more than ten percent; provides any additional costs shall be borne by the participating members of the shared services agreement, not the state.
STATE OF NEW YORK
________________________________________________________________________
8461
IN SENATE
March 3, 2022
___________
Introduced by Sen. RITCHIE -- 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
permitting wages earned through shared services agreements to be
included in the computation of final average salaries
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivisions a and b of section 512 of the retirement and
2 social security law, subdivision a as amended by chapter 298 of the laws
3 of 2016 and subdivision b as amended by chapter 18 of the laws of 2012,
4 are amended and a new subdivision e is added to read as follows:
5 a. A member's final average salary shall be the average wages earned
6 by such a member during any three consecutive years which provide the
7 highest average wage; provided, however, if the wages earned during any
8 year included in the period used to determine final average salary
9 exceeds that of the average of the previous two years by more than ten
10 percent, the amount in excess of ten percent shall be excluded from the
11 computation of final average salary; provided however if the amount in
12 excess of ten percent was earned while working under a shared services
13 agreement, such excess shall be included in the computation of the final
14 average salary. Notwithstanding the preceding provisions of this subdi-
15 vision to the contrary, for a member who first becomes a member of the
16 New York state and local employees' retirement system on or after April
17 first, two thousand twelve, or for a New York city police/fire revised
18 plan member, a New York city enhanced plan member who receives the ordi-
19 nary disability benefit provided for in subdivision c-1 of section five
20 hundred six of this article or the accidental disability benefit
21 provided for in paragraph three of subdivision c of section five hundred
22 seven of this article, a New York city uniformed correction/sanitation
23 revised plan member or an investigator revised plan member, a member's
24 final average salary shall be the average wages earned by such a member
25 during any five consecutive years which provide the highest average
26 wage; provided, however, if the wages earned during any year included in
27 the period used to determine final average salary exceeds that of the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14387-03-2
S. 8461 2
1 average of the previous four years by more than ten percent, the amount
2 in excess of ten percent shall be excluded from the computation of final
3 average salary. In determining final average salary pursuant to any
4 provision of this subdivision, where the period used to determine final
5 average salary is the period which immediately precedes the date of
6 retirement, any month or months (not in excess of twelve) which would
7 otherwise be included in computing final average salary but during which
8 the member was on authorized leave of absence at partial pay or without
9 pay shall be excluded from the computation of final average salary and
10 the month or an equal number of months immediately preceding such period
11 shall be substituted in lieu thereof.
12 b. Notwithstanding the provisions of subdivision a of this section,
13 with respect to members of the New York state employees' retirement
14 system who first become members of the New York state and local employ-
15 ees' retirement system before April first, two thousand twelve, the New
16 York state and local police and fire retirement system and the New York
17 city teachers' retirement system, a member's final average salary shall
18 be equal to one-third of the highest total wages earned during any
19 continuous period of employment for which the member was credited with
20 three years of service credit; provided, however, if the wages earned
21 during any year of credited service included the period used to deter-
22 mine final average salary exceeds the average of the wages of the previ-
23 ous two years of credited service by more than ten percent, the amount
24 in excess of ten percent shall be excluded from the computation of final
25 average salary; provided however if the amount in excess of ten percent
26 was earned while working under a shared services agreement, such
27 excess shall be included in the computation of the final average salary.
28 For members who first become a member of the New York state and local
29 employees' retirement system on or after April first, two thousand
30 twelve, with respect to members of the New York state and local employ-
31 ees' retirement system, a member's final average salary shall be equal
32 to one-fifth of the highest total wages earned during any continuous
33 period of employment for which the member was credited with five years
34 of service credit; provided, however, if the wages earned during any
35 year of credited service included the period used to determine final
36 average salary exceeds the average of the wages of the previous four
37 years of credited service by more than ten percent, the amount in excess
38 of ten percent shall be excluded from the computation of final average
39 salary; provided however if the amount in excess of ten percent was
40 earned while working under a shared services agreement, such excess
41 shall be included in the computation of the final average salary.
42 e. For the purposes of this section "shared services agreement" shall
43 mean an agreement entered into between two or more municipalities,
44 libraries, or public or quasi-public organizations participating in the
45 retirement system, whereby such participating entities agree to share
46 services described in such agreement.
47 § 2. Subdivisions a and b of section 608 of the retirement and social
48 security law, as amended by chapter 18 of the laws of 2012, are amended
49 and a new subdivision f is added to read as follows:
50 a. For members who first become members of a public retirement system
51 of the state before April first, two thousand twelve, a member's final
52 average salary shall be the average wages earned by such a member during
53 any three consecutive years which provide the highest average wage;
54 provided, however, if the wages earned during any year included in the
55 period used to determine final average salary exceeds that of the aver-
56 age of the previous two years by more than ten percent, the amount in
S. 8461 3
1 excess of ten percent shall be excluded from the computation of final
2 average salary; provided however if the amount in excess of ten percent
3 was earned while working under a shared services agreement, such
4 excess shall be included in the computation of the final average salary.
5 For members who first become members of the New York state and local
6 employees' retirement system or the New York state teachers' retirement
7 system on or after April first, two thousand twelve, a member's final
8 average salary shall be the average wages earned by such member during
9 any five consecutive years which provide the highest average wage;
10 provided, however, if the wages earned during any year included in the
11 period used to determine final average salary exceeds that of the aver-
12 age of the previous four years by more than ten percent, the amount in
13 excess of ten percent shall be excluded from the computation of final
14 average salary; provided however if the amount in excess of ten percent
15 was earned while working under a shared services agreement, such
16 excess shall be included in the computation of the final average salary.
17 Where the period used to determine final average salary is the period
18 which immediately precedes the date of retirement, any month or months
19 (not in excess of twelve) which would otherwise be included in computing
20 final average salary but during which the member was on authorized leave
21 of absence at partial pay or without pay shall be excluded from the
22 computation of final average salary and the month or an equal number of
23 months immediately preceding such period shall be substituted in lieu
24 thereof.
25 b. Notwithstanding the provisions of subdivision a of this section,
26 with respect to members who first became members of the New York state
27 and local employees' retirement system and the New York city teachers'
28 retirement system before April first, two thousand twelve, a member's
29 final average salary shall be equal to one-third of the highest total
30 wages earned by such member during any continuous period of employment
31 for which the member was credited with three years of service credit;
32 provided, however, if the wages earned during any year of credited
33 service included in the period used to determine final average salary
34 exceeds the average of the wages of the previous two years of credited
35 service by more than ten percent, the amount in excess of ten percent
36 shall be excluded from the computation of final average salary; provided
37 however if the amount in excess of ten percent was earned while working
38 under a shared services agreement, such excess shall be included in
39 the computation of the final average salary. With respect to members who
40 first become members of the New York state and local employees' retire-
41 ment system and the New York city teachers' retirement system on or
42 after April first, two thousand twelve, a member's final average salary
43 shall be equal to one-fifth of the highest total wages earned by such
44 member during any continuous period of employment for which the member
45 was credited with five years of service credit; provided, however, if
46 the wages earned during any year of credited service included in the
47 period used to determine final average salary exceeds the average of the
48 wages of the previous four years of credited service by more than ten
49 percent, the amount in excess of ten percent shall be excluded from the
50 computation of final average salary; provided however if the amount in
51 excess of ten percent was earned while working under a shared services
52 agreement, such excess shall be included in the computation of the final
53 average salary.
54 f. For the purposes of this section "shared services agreement" shall
55 mean an agreement entered into between two or more municipalities,
56 libraries, or public or quasi-public organizations participating in the
S. 8461 4
1 retirement system, whereby such participating entities agree to share
2 services described in such agreement.
3 § 3. Section 1209 of the retirement and social security law, as added
4 by chapter 18 of the laws of 2012, is amended to read as follows:
5 § 1209. Final average salary. a. For members who first become members
6 of the New York state and local police and fire retirement system on or
7 after April first, two thousand twelve, a member's final average salary
8 shall be equal to one-fifth of the highest total wages earned by such
9 member during any continuous period of employment for which the member
10 was credited with five years of service credit; provided, however, if
11 the wages earned during any year of credited service included in the
12 period used to determine final average salary exceeds the average of the
13 wages of the previous four years of credited service by more than ten
14 percent, the amount in excess of ten percent shall be excluded from the
15 computation of final average salary; provided however if the amount in
16 excess of ten percent was earned while working under a shared services
17 agreement, such excess shall be included in the computation of the final
18 average salary. Wages in excess of the annual salary paid to the gover-
19 nor pursuant to section three of article four of the state constitution
20 shall be excluded from the computation of final average salary for
21 members who first become members of the New York state and local police
22 and fire retirement system on or after April first, two thousand twelve.
23 b. For the purposes of this section "shared services agreement" shall
24 mean an agreement entered into between two or more municipalities,
25 libraries, or public or quasi-public organizations participating in the
26 retirement system, whereby such participating entities agree to share
27 services described in such agreement.
28 § 4. All costs associated with implementing the provisions of this act
29 shall be borne by the entities involved in such shared services agree-
30 ments and shall not be subject to the provisions of section twenty-five
31 of the retirement and social security law.
32 § 5. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would allow earnings while working under a shared services
agreement in excess of the ten percent limitation to be included in the
computation of final average salary for tiers 3 through 6. Currently,
earnings in any year used in computation of the final average salary
cannot exceed the average of the previous two years (four years for tier
6) by more than ten percent. A shared services agreement is an agreement
between two municipalities, libraries or public or quasi-public organ-
izations participating in the retirement system which agree to share
services.
The exact number of current members as well as future members who
could be affected by this legislation cannot be readily determined. In
all likelihood, very few members would be affected. However, if a large
number of members earn salary under these shared services agreements
there could be significant additional annual costs.
If this bill is enacted, insofar as this proposal affects the New York
State and Local Employees' Retirement System (NYSLERS), any costs aris-
ing from this legislation would be shared by the State of New York and
the participating employers in the NYSLERS.
Insofar as this proposal affects the New York State and Local Police
and Fire Retirement System (NYSLPFRS), any costs arising from this
legislation would be shared by the State of New York and the participat-
ing employers in the NYSLPFRS.
Summary of relevant resources:
S. 8461 5
Membership data as of March 31, 2021 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2021 actuari-
al valuation. Distributions and other statistics can be found in the
2021 Report of the Actuary and the 2021 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2020
and 2021 Annual Report to the Comptroller on Actuarial Assumptions, and
the Codes, Rules and Regulations of the State of New York: Audit and
Control.
The Market Assets and GASB Disclosures are found in the March 31, 2021
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated February 18, 2022, and intended for use only
during the 2022 Legislative Session, is Fiscal Note No. 2022-66,
prepared by the Actuary for the New York State and Local Retirement
System.
