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S07509 Summary:

BILL NOS07509
 
SAME ASSAME AS A07668
 
SPONSORJACKSON
 
COSPNSR
 
MLTSPNSR
 
Amd 488, 508 & 606, R & SS L
 
Updates certain death benefit provisions of the New York city employees' retirement system, the New York city teachers' retirement system, and the board of education retirement system of New York city to ensure continued compliance with the federal older workers' benefit protection act.
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S07509 Actions:

BILL NOS07509
 
06/02/2023REFERRED TO RULES
06/05/2023ORDERED TO THIRD READING CAL.1603
06/09/2023HOME RULE REQUEST
06/09/2023PASSED SENATE
06/09/2023DELIVERED TO ASSEMBLY
06/09/2023referred to ways and means
06/10/2023substituted for a7668
06/10/2023ordered to third reading rules cal.844
06/10/2023home rule request
06/10/2023passed assembly
06/10/2023returned to senate
11/29/2023DELIVERED TO GOVERNOR
12/08/2023SIGNED CHAP.716
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S07509 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7509
 
                               2023-2024 Regular Sessions
 
                    IN SENATE
 
                                      June 2, 2023
                                       ___________
 
        Introduced  by  Sen.  JACKSON -- (at request of the NYC Actuary) -- read
          twice and ordered printed, and when printed to  be  committed  to  the
          Committee on Rules
 
        AN  ACT  to amend the retirement and social security law, in relation to
          updating certain death benefit provisions of the New York city employ-
          ees' retirement system, the New York city teachers' retirement system,
          and the board of education retirement  system  of  New  York  city  to
          ensure  continued  compliance  with the federal older workers' benefit
          protection act
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  The  closing paragraph of paragraph 2 of subdivision a of
     2  section 448 of the retirement and social security  law,  as  amended  by
     3  chapter 720 of the laws of 2022, is amended to read as follows:
     4    In  the  case  of  a member of the New York state teachers' retirement
     5  system, commencing upon attainment of age  sixty-two  if  such  member's
     6  date  of  membership  is  prior  to  April first, two thousand twelve or
     7  attainment of age sixty-three if such member's date of membership is  on
     8  or  after  April  first,  two  thousand  twelve,  the  benefit otherwise
     9  provided pursuant to this paragraph shall be reduced while the member is
    10  in service to ninety-six per centum of the benefit otherwise payable and
    11  each year thereafter the benefit payable shall be reduced by  an  amount
    12  equal  to  four  per  centum  per year of the original benefit otherwise
    13  payable, but not below sixty per centum of the original  benefit  other-
    14  wise  payable.  In  the case of a member of the New York city employees'
    15  retirement system, the New  York  city  board  of  education  retirement
    16  system or the New York city teachers' retirement system, commencing upon
    17  attainment  of age sixty-one, the benefit otherwise provided pursuant to
    18  this paragraph shall be reduced while the member is in service to [nine-
    19  ty-five] ninety-seven per centum of the benefit  otherwise  payable  and
    20  each  year  thereafter the benefit payable shall be reduced by an amount
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11700-01-3

        S. 7509                             2
 
     1  equal to [five] three per centum per year of the original benefit other-
     2  wise payable, but not below [fifty] seventy per centum of  the  original
     3  benefit  otherwise  payable.  In  the case of any member of the New York
     4  state  and local employees' retirement system who is permitted to retire
     5  without regard to age or a member of the New York state and local police
     6  and fire retirement system, commencing upon attainment of age  sixty-two
     7  if  such  member's date of membership is prior to April first, two thou-
     8  sand twelve or attainment of age sixty-three if such  member's  date  of
     9  membership  is on or after April first, two thousand twelve, the benefit
    10  otherwise provided pursuant to this paragraph shall be reduced while the
    11  member is in service to ninety-seven per centum of the benefit otherwise
    12  payable, and each year thereafter the benefit payable shall  be  reduced
    13  by  an amount equal to three per centum per year of the original benefit
    14  otherwise payable, but not below seventy  per  centum  of  the  original
    15  benefit  otherwise  payable.  In the case of any other member of the New
    16  York state and  local  employees'  retirement  system,  commencing  upon
    17  attainment of age sixty-two if such member's date of membership is prior
    18  to  April first, two thousand twelve or attainment of age sixty-three if
    19  such member's date of membership is on or after April first,  two  thou-
    20  sand  twelve,  the benefit otherwise provided pursuant to this paragraph
    21  shall be reduced while the member is in service to ninety-six per centum
    22  of the benefit otherwise payable, and each year thereafter  the  benefit
    23  payable  shall be reduced by an amount equal to four per centum per year
    24  of the original benefit otherwise  payable,  but  not  below  sixty  per
    25  centum  of the original benefit otherwise payable.  Upon retirement from
    26  any retirement system, the benefit in force shall be  reduced  by  fifty
    27  per centum; upon completion of the first year of retirement, the benefit
    28  in  force  at  the  time of retirement shall be reduced by an additional
    29  twenty-five per centum, and upon  commencement  of  the  third  year  of
    30  retirement,  the benefit shall be ten per centum of the benefit in force
    31  at age sixty, if any,  or  at  the  time  of  retirement  if  retirement
    32  preceded  such  age;  provided, however, the benefit in retirement shall
    33  not be reduced below ten per centum of  the  benefit  in  force  at  age
    34  sixty,  if any, or at the time of retirement if retirement preceded such
    35  age. Notwithstanding any  other  provision  of  this  paragraph  to  the
    36  contrary,  the  benefit  for a retiree from the New York state and local
    37  employees' retirement system [and], the New York state teachers' retire-
    38  ment system, the New York city employees'  retirement  system,  the  New
    39  York  city  board  of  education  retirement system or the New York city
    40  teachers' retirement system shall not be reduced below ten per centum of
    41  the benefit in force at the time of retirement.
    42    § 2. The closing paragraph of paragraph 2 of subdivision a of  section
    43  508 of the retirement and social security law, as amended by chapter 720
    44  of the laws of 2022, is amended to read as follows:
    45    Notwithstanding  any other provision of this paragraph, in the case of
    46  a member of the New York state teachers' retirement  system,  commencing
    47  upon  attainment of age sixty-two if such member's date of membership is
    48  prior to April first, two thousand twelve or attainment  of  age  sixty-
    49  three  if  such  member's date of membership is on or after April first,
    50  two thousand twelve, the benefit otherwise  provided  pursuant  to  this
    51  paragraph  shall be reduced while the member is in service to ninety-six
    52  per centum of the benefit otherwise payable, and  each  year  thereafter
    53  the  benefit  payable  shall  be  reduced by an amount equal to four per
    54  centum per year of the original benefit otherwise payable, but not below
    55  sixty per centum of the original benefit otherwise payable. In the  case
    56  of  a  member of the New York city employees' retirement system, the New

        S. 7509                             3
 
     1  York city board of education retirement system  or  the  New  York  city
     2  teachers'  retirement  system,  commencing upon attainment of age sixty-
     3  one, the benefit otherwise provided pursuant to this paragraph shall  be
     4  reduced while the member is in service to [ninety-five] ninety-seven per
     5  centum  of  the  benefit  otherwise payable and each year thereafter the
     6  benefit payable shall be reduced by an amount equal to [five] three  per
     7  centum per year of the original benefit otherwise payable, but not below
     8  [fifty] seventy per centum of the original benefit otherwise payable. In
     9  the  case  of  any  member  of  the  New York state and local employees'
    10  retirement system who is permitted to  retire  without  regard  to  age,
    11  commencing  upon  attainment  of  age sixty-two if such member's date of
    12  membership is prior to April first, two thousand twelve or attainment of
    13  age sixty-three if such member's date of membership is on or after April
    14  first, two thousand twelve, the benefit otherwise provided  pursuant  to
    15  this  paragraph shall be reduced while the member is in service to nine-
    16  ty-seven per centum of the benefit  otherwise  payable,  and  each  year
    17  thereafter  the  benefit  payable shall be reduced by an amount equal to
    18  three per centum per year of the original benefit otherwise payable, but
    19  not below seventy per centum of the original benefit otherwise  payable.
    20  In  the case of any other member of the New York state and local employ-
    21  ees' retirement system, commencing upon attainment of age  sixty-two  if
    22  such  member's  date of membership is prior to April first, two thousand
    23  twelve or attainment of age sixty-three if such member's date of member-
    24  ship is on or after April first, two thousand twelve, the benefit other-
    25  wise provided pursuant to this paragraph  shall  be  reduced  while  the
    26  member  is  in service to ninety-six per centum of the benefit otherwise
    27  payable, and each year thereafter the benefit payable shall  be  reduced
    28  by  an  amount equal to four per centum per year of the original benefit
    29  otherwise payable, but not below sixty per centum of the original  bene-
    30  fit  otherwise  payable. Upon retirement from any retirement system, the
    31  benefit in force shall be reduced by fifty per centum;  upon  completion
    32  of  the  first  year  of retirement, the benefit in force at the time of
    33  retirement shall be reduced by an additional twenty-five per centum, and
    34  upon commencement of the third year of retirement, the benefit shall  be
    35  ten  per  centum of the benefit in force at age sixty, if any, or at the
    36  time of retirement if retirement preceded such age;  provided,  however,
    37  the  benefit  in retirement shall not be reduced below ten per centum of
    38  the benefit in force at age sixty, if any, or at the time of  retirement
    39  if  retirement preceded such age. Notwithstanding any other provision of
    40  this paragraph to the contrary, the benefit for a retiree from  the  New
    41  York  state  and  local employees' retirement system [and], the New York
    42  state teachers' retirement system, the New York city employees'  retire-
    43  ment  system,  the New York city board of education retirement system or
    44  the New York city teachers' retirement system shall not be reduced below
    45  ten per centum of the benefit in force at the time of retirement.
    46    § 3. The closing paragraph of paragraph 2 of subdivision a of  section
    47  606 of the retirement and social security law, as amended by chapter 720
    48  of the laws of 2022, is amended to read as follows:
    49    In  the  case  of  a member of the New York state teachers' retirement
    50  system, commencing upon attainment of age  sixty-two  if  such  member's
    51  date  of  membership  is  prior  to  April first, two thousand twelve or
    52  attainment of age sixty-three if such member's date of membership is  on
    53  or  after  April  first,  two  thousand  twelve,  the  benefit otherwise
    54  provided pursuant to this paragraph shall be reduced while the member is
    55  in service to ninety-six per centum of the  benefit  otherwise  payable,
    56  and  each  year  thereafter  the  benefit payable shall be reduced by an

        S. 7509                             4
 
     1  amount equal to four per centum per year of the original benefit  other-
     2  wise  payable,  but  not  below sixty per centum of the original benefit
     3  otherwise payable. In the case of a member of the New York city  employ-
     4  ees'  retirement system, the New York city board of education retirement
     5  system or the New York city teachers' retirement system, commencing upon
     6  attainment of age sixty-one, the benefit otherwise provided pursuant  to
     7  this paragraph shall be reduced while the member is in service to [nine-
     8  ty-five]  ninety-seven  per  centum of the benefit otherwise payable and
     9  each year thereafter the benefit payable shall be reduced by  an  amount
    10  equal to [five] three per centum per year of the original benefit other-
    11  wise  payable,  but not below [fifty] seventy per centum of the original
    12  benefit otherwise payable. In the case of any member  of  the  New  York
    13  state  and local employees' retirement system who is permitted to retire
    14  without regard to age, commencing upon attainment of  age  sixty-two  if
    15  such  member's  date of membership is prior to April first, two thousand
    16  twelve or attainment of age sixty-three if such member's date of member-
    17  ship is on or after April first, two thousand twelve, the benefit other-
    18  wise provided pursuant to this paragraph  shall  be  reduced  while  the
    19  member is in service to ninety-seven per centum of the benefit otherwise
    20  payable,  and  each year thereafter the benefit payable shall be reduced
    21  by an amount equal to three per centum per year of the original  benefit
    22  otherwise  payable,  but  not  below  seventy per centum of the original
    23  benefit otherwise payable. In the case of any other member  of  the  New
    24  York  state  and  local  employees'  retirement  system, commencing upon
    25  attainment of age sixty-two if such member's date of membership is prior
    26  to April first, two thousand twelve or attainment of age sixty-three  if
    27  such  member's  date of membership is on or after April first, two thou-
    28  sand twelve, the benefit otherwise provided pursuant to  this  paragraph
    29  shall be reduced while the member is in service to ninety-six per centum
    30  of  the  benefit otherwise payable, and each year thereafter the benefit
    31  payable shall be reduced by an amount equal to four per centum per  year
    32  of  the  original  benefit  otherwise  payable,  but not below sixty per
    33  centum of the original benefit otherwise payable. Upon retirement,  from
    34  any  retirement  system,  the benefit in force shall be reduced by fifty
    35  per centum; upon completion of the first year of retirement, the benefit
    36  in force at the time of retirement shall be  reduced  by  an  additional
    37  twenty-five  per  centum,  and  upon  commencement  of the third year of
    38  retirement, the benefit shall be ten per centum of the benefit in  force
    39  at  age  sixty,  if  any,  or  at  the  time of retirement if retirement
    40  preceded such age; provided, however, the benefit  in  retirement  shall
    41  not  be  reduced  below  ten  per  centum of the benefit in force at age
    42  sixty, if any, or at the time of retirement if retirement preceded  such
    43  age.  Notwithstanding  any  other  provision  of  this  paragraph to the
    44  contrary, the benefit for a retiree from the New York  state  and  local
    45  employees' retirement system [and], the New York state teachers' retire-
    46  ment  system,  the  New  York city employees' retirement system, the New
    47  York city board of education retirement system  or  the  New  York  city
    48  teachers' retirement system shall not be reduced below ten per centum of
    49  the benefit in force at the time of retirement.
    50    §  4.  This  act  shall take effect immediately and shall be deemed to
    51  have been in full force and effect on and after July 1,  2021,  provided
    52  that  this act shall not apply to the payment of any death benefit based
    53  upon a member's death which occurred prior to July 1, 2021.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY OF BILL: This proposed legislation (see Appendix) would  amend
        certain death benefit provisions to ensure continued compliance with the

        S. 7509                             5
 
        requirements  of  the  Federal  Older  Workers'  Benefit Protection Act,
        Public Law 101-433 (OWBPA). In general, with respect  to  the  New  York
        City  Employees' Retirement System (NYCERS), the New York City Teachers'
        Retirement  System  (NYCTRS),  and  the New York City Board of Education
        Retirement System (BERS), the bill would amend the Tier 2,  3,  and  4/6
        ordinary  death  benefit  provisions  set forth in Retirement and Social
        Security Law (RSSL) Articles 11, 14, and  15,  respectively,  to  ensure
        that,  on  an  actuarial  basis, the costs of providing such benefits to
        older members are no less than the costs of providing such  benefits  to
        younger members.
          Effective Date: This bill would be effective immediately and be deemed
        to have been in force since July 1, 2021.
          IMPACT  ON  BENEFITS:  Under the proposed legislation, if enacted, the
        Pre-retirement Ordinary Death Benefit for  Active  and  Deferred  Vested
        Members,  and  the  Post-retirement Death Benefit for Tier 2, 3, and 4/6
        NYCERS, NYCTRS, and BERS members, would be updated.
          Pre-retirement Ordinary Death Benefit
          The Tier 2, 3 and 4/6 Ordinary Death Benefit (for all  members  except
        police  officers, firefighters, correction officers, or sanitation work-
        ers) is a lump sum payment equal to current pay multiplied by  completed
        years of service (up to three years) and further reduced by a percentage
        based on age at date of death.
          Currently,  the reduction is 0% for ages 60 and younger, and increases
        by 5% for every age over 60, up to the ultimate rate of 50% for ages  70
        and older.
          Under  the proposed legislation the reduction would remain 0% for ages
        60 and younger, and increase by 3% for every age over age 60 up  to  the
        ultimate reduction of 30% for ages 70 and older.
          Post-retirement death benefit
          The  changes to the reductions described above would also apply to the
        calculation of the post-retirement death benefit. In addition, the post-
        retirement death benefit in the third year of retirement and  thereafter
        would be changed as follows:
          Current  provision: 10% of the Pre-retirement death benefit that would
        have been payable had the member died on the  earlier  of  (1)  the  day
        before they retired and (2) age 60.
          Proposed  provision:  Greater of the benefit payable under the current
        provision and 10% of the death benefit payable had the member  died  the
        day before they retired.
          FINANCIAL  IMPACT: The increase in annual employer contributions asso-
        ciated with this proposed legislation has  already  been  accounted  for
        beginning  with the June 30, 2020 actuarial valuations used to determine
        the Final Fiscal Year 2022 employer contributions of NYCERS, NYCTRS, and
        BERS.
          The estimated financial impact of updating ordinary death benefits  to
        maintain  compliance  with  OWBPA  as  described above is an increase in
        Present Value of Future Benefits of approximately $223.7 million, and an
        initial increase in the FY 2022 annual employer contributions of approx-
        imately $40.0 million ($26.8 million for New York City and $13.2 million
        for the other obligors). A breakdown of the FY 2022 annual  contribution
        impact by System is shown in the table below.
                                      Impact on FY 2022
                       System         Annual Employer Contributions
                       ______
                                      ($ Millions)
                                      _____________________________

        S. 7509                             6
 
                       NYCERS         $ 22.9
                       NYCTRS         12.5
                       BERS           4.6
                                      Total     $ 40.0
          Long-term annual costs (after the initial increase in unfunded accrued
        liability  is  fully amortized in seven to eight years) are estimated to
        be less than $10 million for all three Systems combined.
          New Unfunded Accrued Liability (UAL) attributable to  benefit  changes
        are  generally  amortized  over  the remaining working lifetime of those
        impacted by the benefit changes. For purposes of this  Fiscal  Note,  it
        had  been  assumed that increases in UAL would be amortized over periods
        ranging from seven to eight years depending on the System (six to  seven
        payments   under  the  One-Year  Lag  Methodology)  using  level  dollar
        payments.
          CENSUS DATA: The estimates presented herein are based  on  the  census
        data  used  in the June 30, 2020 actuarial valuations of NYCERS, NYCTRS,
        and BERS to determine the Fiscal Year 2022 employer contributions.
          ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
        been calculated based on the actuarial assumptions and methods used  for
        the Fiscal Year 2022 employer contributions of NYCERS, NYCTRS, and BERS.
          RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
        highly on the realization of the actuarial assumptions used,  demograph-
        ics  of  the  impacted population, and other factors such as investment,
        contribution, and other risks. If actual experience deviates from  actu-
        arial  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:
          *  The  initial  additional  administrative  costs  to  implement  the
        proposed legislation.
          STATEMENT OF ACTUARIAL OPINION: I, Marek  Tyszkiewicz,  am  the  Chief
        Actuary  for,  and  independent of, the New York City Retirement Systems
        and Pension Funds. I am an Associate of the Society of Actuaries  and  a
        Member of the American Academy of Actuaries. I am a member of NYCERS but
        do  not  believe  it impairs my objectivity and 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  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  2023-55  dated  May  22,
        2023  was prepared by the Chief Actuary for the New York City Employees'
        Retirement System, the New York City Teachers'  Retirement  System,  and
        the New York City Board of Education Retirement System. This estimate is
        intended for use only during the 2023 Legislative Session.
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