Relates to the rate of interest used in the actuarial valuation of liabilities for the purpose of calculating contributions to the New York city employees' retirement system, the New York city teachers' retirement system, the police pension fund, subchapter two, the fire department pension fund, subchapter two and the board of education retirement system of such city by public employers and other obligors required to make employer contributions to such retirement systems, the crediting of special interest and additional interest and additional interest to members of such retirement systems, and the allowance of supplementary interest on the funds of such retirement systems; extends such provisions until June 30, 2023.
STATE OF NEW YORK
________________________________________________________________________
7958
2021-2022 Regular Sessions
IN ASSEMBLY
June 3, 2021
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees
AN ACT to amend the administrative code of the city of New York, in
relation to the rate of interest used in the actuarial valuation of
liabilities for the purpose of calculating contributions to the New
York city employees' retirement system, the New York city teachers'
retirement system, the police pension fund, subchapter two, the fire
department pension fund, subchapter two and the board of education
retirement system of such city by public employers and other obligors
required to make employer contributions to such retirement systems,
the crediting of special interest and additional interest to members
of such retirement systems, and the allowance of supplementary inter-
est on the funds of such retirement systems
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 2 of subdivision b of section 13-638.2 of the
2 administrative code of the city of New York, as amended by chapter 76 of
3 the laws of 2019, is amended to read as follows:
4 (2) With respect to each retirement system, such rate of interest
5 shall be as hereinafter set forth in this paragraph:
6 First day and
7 last day of
8 Rate of interest fiscal year or
9 per centum per series of fiscal
10 Retirement annum, compounded years for which
11 System annually rate is effective
12 ________________________________________________________________________
13 NYCERS 7% July 1, 2011 to
14 June 30, [2021] 2023
15 NYCTRS 7% July 1, 2011 to
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11756-01-1
A. 7958 2
1 June 30, [2021] 2023
2 PPF 7% July 1, 2011 to
3 June 30, [2021] 2023
4 FPF 7% July 1, 2011 to
5 June 30, [2021] 2023
6 BERS 7% July 1, 2011 to
7 June 30, [2021] 2023
8 § 2. Paragraph 2 of subdivision f of section 13-638.2 of the adminis-
9 trative code of the city of New York, as amended by chapter 76 of the
10 laws of 2019, is amended to read as follows:
11 (2) Such special interest shall be allowed at the rates and for the
12 periods set forth below in this paragraph:
13 First day and
14 last day of
15 Rate of interest fiscal year or
16 per centum per series of fiscal
17 Retirement annum, compounded years for which
18 System annually rate is effective
19 ________________________________________________________________________
20 NYCERS 1 1/4% July 1, 2011 to
21 June 30, [2021] 2023
22 NYCTRS 1 1/4% July 1, 2011 to
23 June 30, [2021] 2023
24 PPF 1 1/4% July 1, 2011 to
25 June 30, [2021] 2023
26 FPF 1 1/4% July 1, 2011 to
27 June 30, [2021] 2023
28 BERS 1 1/4% July 1, 2011 to
29 June 30, [2021] 2023
30 § 3. Paragraph 2 of subdivision g of section 13-638.2 of the adminis-
31 trative code of the city of New York, as amended by chapter 76 of the
32 laws of 2019, is amended to read as follows:
33 (2) Such additional interest shall be included at the rates and for
34 the periods set forth below in this paragraph:
35 First day and
36 last day of
37 Rate of interest fiscal year or
38 per centum per series of fiscal
39 Retirement annum, compounded years for which
40 System annually rate is effective
41 ________________________________________________________________________
42 NYCERS 1 1/4% July 1, 2011 to
43 June 30, [2021] 2023
44 NYCTRS 1 1/4% July 1, 2011 to
45 June 30, [2021] 2023
46 PPF 1 1/4% July 1, 2011 to
47 June 30, [2021] 2023
48 FPF 1 1/4% July 1, 2011 to
49 June 30, [2021] 2023
50 BERS 1 1/4% July 1, 2011 to
51 June 30, [2021] 2023
A. 7958 3
1 § 4. Paragraph 2 of subdivision i of section 13-638.2 of the adminis-
2 trative code of the city of New York, as amended by chapter 76 of the
3 laws of 2019, is amended to read as follows:
4 (2) Such supplementary interest shall be allowed at the rates and for
5 the periods set forth below in this paragraph:
6 First day and
7 last day of
8 Rate of interest fiscal year or
9 per centum per series of fiscal
10 Retirement annum, compounded years for which
11 System annually rate is effective
12 ________________________________________________________________________
13 NYCERS 0% July 1, 2011 to
14 June 30, [2021] 2023
15 NYCTRS 0% July 1, 2011 to
16 June 30, [2021] 2023
17 PPF 0% July 1, 2011 to
18 June 30, [2021] 2023
19 FPF 0% July 1, 2011 to
20 June 30, [2021] 2023
21 BERS 0% July 1, 2011 to
22 June 30, [2021] 2023
23 § 5. This act shall take effect July 1, 2021, except that if it shall
24 have become a law subsequent to such date, this act shall take effect
25 immediately and be deemed to have been in full force and effect on and
26 after July 1, 2021.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: The enactment of this proposed legislation (see
Appendix) would amend Administrative Code of the City of New York
(ACCNY) Section 13-638.2 to continue for Fiscal Years 2022 and 2023 the
following rates of interest that expire on July 1, 2021 for the five
actuarially-funded New York City Retirement Systems and Pension Funds
(NYCRS):
* The 8.25% per annum rate used to credit interest on Tier 1 and
Tier 2 member account balances (the sum of the 7.00% regular interest
rate and the 1.25% special interest rate) and Increased-Take-Home-Pay
(ITHP) Reserves (the sum of the 7.00% regular interest rate and the
1.25% additional interest rate), and
* The 7.00% per annum Actuarial Interest Rate (AIR) assumption used
to compute employer contributions.
Effective Date: July 1, 2021.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: The Actuary has
proposed a set of changes, including changes to the AIR, for use in the
June 30, 2019 (Lag) actuarial valuations of the NYCRS to determine the
Final Fiscal Year 2021 Employer Contributions (2021 A&M) and future
employer contribution estimates. This proposed Interest Rate Extender
Legislation does not conform to the Actuary's recommendations regarding
actuarial updates and therefore the costs presented in this Fiscal Note
represent the difference between the Actuary's determination of the
Fiscal Year 2021 employer contributions which use the 2021 A&M including
the updated AIR rates, and Fiscal Year 2021 employer contributions with
a continuation of the current AIR in the proposed Interest Rate Extender
Legislation without other 2021 A&M changes.
A. 7958 4
The 2021 A&M changes are part of a comprehensive package of updated
actuarial assumptions and methods, which were presented to each of the
Boards of Trustees of the NYCRS in January of 2021 and represent the
Actuary's current recommendation. The package was based on the Actuary's
periodic review of actuarial experience of the NYCRS, historical data
related to economic trends and forecasts of the NYCRS' investment advis-
ers, and includes updates in expected future mortality improvements and
other changes to appropriately fund the NYCRS from an actuarial stand-
point.
The New York City Office of Management and Budget (OMB) has imple-
mented the 2021 A&M and altered the contributions to the NYCRS, and
therefore the continuation of the AIR assumption of 7.00% per annum,
without the other 2021 A&M changes, would result in an increase in the
current schedule of employer contributions as shown in the table below,
both in total for the NYCRS and for New York City only:
Fiscal Year NYCRS New York City
2021 $503.1 million $430.0 million
2022 $383.4 million $303.5 million
2023 $111.1 million $ 65.1 million
The continuation for Fiscal Years 2022 and 2023 of the same 8.25% per
annum rate that was used for Fiscal Year 2021 to credit interest on Tier
1 and Tier 2 member contributions and ITHP Reserves would not change the
amount or timing of expected employer contributions.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions and methods used and are subject to
change based on the realization of potential investment, demographic,
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.
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
ary for, and independent of, the New York City Retirement Systems and
Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled
Actuary under the Employee Retirement Income and Security Act of 1974, a
Member of the American Academy of Actuaries, and a Fellow of the Confer-
ence of Consulting 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 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 2021-36 dated May 27,
2021 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 2021 Legislative Session.
