STATE OF NEW YORK
________________________________________________________________________
9592
IN SENATE
May 16, 2024
___________
Introduced by Sen. JACKSON -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
AN ACT to amend the administrative code of the city of New York and the
retirement and social security law, in relation to permitting certain
New York city correction members to borrow from their accumulated
member contributions; and to repeal certain provisions of the retire-
ment and social security law relating thereto
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 8 of subdivision d of section 445-a of the
2 retirement and social security law is REPEALED and paragraphs 9 and 10
3 are renumbered paragraphs 8 and 9.
4 § 2. Paragraph 12 of subdivision d of section 445-c of the retirement
5 and social security law is REPEALED and paragraphs 13, 14 and 15 are
6 renumbered paragraphs 12, 13 and 14.
7 § 3. Paragraph 9 of subdivision e of section 504-a of the retirement
8 and social security law is REPEALED.
9 § 4. Paragraph 13 of subdivision e of section 504-b of the retirement
10 and social security law is REPEALED.
11 § 5. Subdivision a of section 13-140 of the administrative code of the
12 city of New York, as amended by chapter 642 of the laws of 1985, is
13 amended to read as follows:
14 a. Any member in city service who shall have been a member continuous-
15 ly at least three years, may borrow from the contingent reserve fund,
16 subject to such rules and regulations as may be approved by such board,
17 an amount not exceeding the sum of (i) seventy-five per centum of the
18 amount in [his or her] such member's account in the annuity savings
19 fund, (ii) all additional contributions, together with interest thereon,
20 made by such member pursuant to section four hundred forty-five-a of the
21 retirement and social security law, and (iii) all additional contrib-
22 utions, together with interest thereon, made by such member pursuant to
23 section four hundred forty-five-c of the retirement and social security
24 law. The rate of interest payable on any loan made under this section
25 shall be two per centum higher than the rate of regular interest credit-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08662-04-4
S. 9592 2
1 able to the account of the member. The amount so borrowed, together with
2 interest on any unpaid balance thereof shall be repaid to the retirement
3 system in equal installments by deduction from the compensation of the
4 member at the time the compensation is paid, but such installments shall
5 be at least five per centum of the member's earnable compensation. All
6 payments of principal and interest made by such member shall be credited
7 to the contingent reserve fund.
8 § 6. Paragraph 1 of subdivision b of section 517-c of the retirement
9 and social security law, as amended by section 1 of part JJ of chapter
10 55 of the laws of 2023, is amended to read as follows:
11 1. A member of the New York state and local employees' retirement
12 system, the New York state and local police and fire retirement system,
13 the New York city employees' retirement system, the New York city board
14 of education retirement system or the New York city police pension fund
15 in active service who has credit for at least one year of member service
16 may borrow, no more than once during each twelve month period, an amount
17 not exceeding seventy-five percent of the total contributions made
18 pursuant to section five hundred four-a (including interest credited at
19 the rate set forth in subparagraph (ii) of paragraph eight of subdivi-
20 sion e of such section five hundred four-a compounded annually), or
21 section five hundred four-b (including interest credited at the rate set
22 forth in subparagraph (ii) of paragraph twelve of subdivision e of such
23 section five hundred four-b compounded annually) or section five hundred
24 seventeen of this article (including interest credited at the rate set
25 forth in subdivision c of such section five hundred seventeen compounded
26 annually) and not less than one thousand dollars[, provided, however,
27 that the provisions of this section shall not apply to a New York city
28 uniformed correction/sanitation revised plan member or an investigator
29 revised plan member].
30 § 7. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY: This proposed legislation would permit NYCERS Tier 2 and Tier
3 members participating in the Correction Officers 20-Year Improved
Benefit Program (CO-20 Plans) and for similar plans for Correction
Captains and above (CC-20 Plans), to take loans against their accumu-
lated Additional Member Contributions (AMC) with interest.
EXPECTED INCREASE (DECREASE) IN EMPLOYER CONTRIBUTIONS
by Fiscal Year for the first 25 years ($ in Millions)
Year NYCERS
2025 3.5
2026 3.5
2027 0.1
2028 0.1
2029 0.1
2030 0.1
2031 0.0
2032 0.0
2033 0.0
2034 0.0
2035 0.0
2036 0.0
2037 0.0
2038 0.0
2039 0.0
2040 0.0
S. 9592 3
2041 0.0
2042 0.0
2043 0.0
2044 0.0
2045 0.0
2046 0.0
2047 0.0
2048 0.0
2049 0.0
The potential costs related to lost investment earnings are not
included above.
The increase in employer contributions will be allocated to New York
City.
INITIAL INCREASE (DECREASE) IN ACTUARIAL LIABILITIES
as of June 30, 2023 ($ in Millions)
Present Value (PV) NYCERS
PV of Benefits: 6.4
PV of Employee Contributions: 0.0
PV of Employer Contributions: 6.4
Unfunded Accrued Liabilities: 5.7
AMORTIZATION OF UNFUNDED ACCRUED LIABILITY
NYCERS
Number of Payments: 2
Fiscal Year of Last Payment: 2026
Amortization Payment: 3.3 M
Unfunded Accrued Liability increases were amortized over the expected
remaining working lifetime of those impacted by the benefit changes
using level dollar payments.
CENSUS DATA: The estimates presented herein are based on preliminary
census data collected as of June 30, 2023. The census data for the
impacted population is summarized below.
NYCERS
Active Members
- Number Count: 489
- Average Age: 52.6
- Average Service: 22.4
- Average Salary: 149,300
IMPACT ON MEMBER BENEFITS: The proposed legislation would permit
NYCERS members who are participants in the Tier 2 CO-20 and CC-20 Plans
to borrow 100% of their AMC, and permit Tier 3 CO-20 and CC-20 Plan
participants to borrow up to 75% of their AMC.
The loans on the AMC would be in addition to the currently permissible
loans on Basic Member Contributions for such Plans.
Employer contributions will increase if a member takes a loan and the
assets earn more than the rate of interest charged for the loan, or if
there is an outstanding loan balance at retirement.
Currently, member contributions are invested with other NYCERS assets
which are expected to earn 7.0% per annum. When an active member borrows
member contributions from NYCERS, the loan is repaid with interest at
6.0% per annum prior to retirement. The potential costs related to lost
S. 9592 4
investment earnings are not included in the costs measured in this
fiscal note.
In the event an outstanding loan balance exists at retirement, the
balance of the unpaid loan is converted to an annuity based on the yield
on 30-year U.S. Treasury securities and deducted from the annual retire-
ment allowance otherwise payable. This conversion is made on an actuari-
al basis that is different than the basis used to determine the employer
contributions to NYCERS, and unpaid loans therefore result in costs to
employers.
ASSUMPTIONS AND METHODS: The estimates presented herein have been
calculated based on the Revised 2021 Actuarial Assumptions and Methods
of the impacted retirement systems.
For purposes of this Fiscal Note, it has been assumed that the yield
on 30-year U.S. Treasury securities would equal 3.5% per year and that
50% of member AMC balances available for borrowing would be taken as
loans.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions, methods, and models used, demo-
graphics of the impacted population and other factors such as invest-
ment, contribution, and other risks. If actual experience deviates from
actuarial assumptions, the actual costs could differ from those
presented herein. Quantifying these risks is beyond the scope of this
Fiscal Note.
This Fiscal Note is intended to measure pension-related impacts and
does not include other potential costs (e.g., administrative and Other
Postemployment Benefits).
STATEMENT OF ACTUARIAL OPINION: Marek Tyszkiewicz and Gregory Zelikov-
sky are members of the Society of Actuaries and the American Academy of
Actuaries. We are members of NYCERS but do not believe it impairs our
objectivity and we meet the Qualification Standards of the American
Academy of Actuaries to render the actuarial opinion contained herein.
To the best of our knowledge, the results contained herein have been
prepared in accordance with generally accepted actuarial principles and
procedures and with the Actuarial Standards of Practice issued by the
Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2024-50 dated May 8, 2024
was prepared by the Chief Actuary for the New York City Retirement
Systems and Pension Funds. This estimate is intended for use only during
the 2024 Legislative Session.
