STATE OF NEW YORK
________________________________________________________________________
8021--A
2017-2018 Regular Sessions
IN ASSEMBLY
May 25, 2017
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees -- recommitted to the Committee on Govern-
mental Employees in accordance with Assembly Rule 3, sec. 2 -- commit-
tee discharged, bill amended, ordered reprinted as amended and recom-
mitted to said committee
AN ACT to amend the retirement and social security law, in relation to
member contributions to the New York city employees' retirement system
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 a of section 613 of the retire-
2 ment and social security law, as amended by chapter 510 of the laws of
3 2015, is amended to read as follows:
4 2. A member of the New York city employees' retirement system who is
5 eligible to be a participant in the twenty-five-year and age fifty-five
6 retirement program, as defined by paragraph five of subdivision a of
7 section six hundred four-b of this article shall contribute two percent
8 of annual wages to such system effective on the starting date of the
9 elimination of additional member contributions, as defined in an
10 election made pursuant to paragraph ten of subdivision e of section six
11 hundred four-b of this article, except [that] beginning April first, two
12 thousand thirteen and ending on the December thirty-first next succeed-
13 ing the effective date of the chapter of the laws of two thousand eigh-
14 teen that amended this paragraph for members who first become members of
15 the New York city employees' retirement system on or after April first,
16 two thousand twelve, the rate at which each such member shall contribute
17 in any current plan year (April first to March thirty-first, provided,
18 however, that plan year shall mean January first through December thir-
19 ty-first commencing with the January first next succeeding the effective
20 date of [the] chapter five hundred ten of the laws of two thousand
21 fifteen that amended this paragraph) shall be determined by reference to
22 the wages of such member in the second plan year (April first to March
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06931-09-8
A. 8021--A 2
1 thirty-first, provided, however, that plan year shall mean January first
2 through December thirty-first commencing with the January first next
3 succeeding the effective date of [the] chapter five hundred ten of the
4 laws of two thousand fifteen that amended this paragraph) preceding such
5 current plan year as follows:
6 (i) members with wages of forty-five thousand dollars per annum or
7 less shall contribute three per centum of annual wages;
8 (ii) members with wages greater than forty-five thousand per annum,
9 but not more than fifty-five thousand per annum shall contribute three
10 and one-half per centum of annual wages;
11 (iii) members with wages greater than fifty-five thousand per annum,
12 but not more than seventy-five thousand per annum shall contribute four
13 and one-half per centum of annual wages;
14 (iv) members with wages greater than seventy-five thousand per annum
15 but not more than one hundred thousand per annum shall contribute five
16 and three-quarters per centum of annual wages; and
17 (v) members with wages greater than one hundred thousand per annum
18 shall contribute six per centum of annual wages.
19 Notwithstanding the foregoing, during each of the first three plan
20 years (April first to March thirty-first, provided, however, that plan
21 year shall mean January first through December thirty-first commencing
22 with the January first next succeeding the effective date of [the] chap-
23 ter five hundred ten of the laws of two thousand fifteen that amended
24 this paragraph) in which such member has established membership in the
25 New York city employees' retirement system, such member shall contribute
26 a percentage of annual wages in accordance with the preceding schedule
27 based upon a projection of annual wages provided by the employer.
28 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend paragraph 2 of
subdivision a of Section 613 of the Retirement and Social Security Law
(RSSL) to prospectively modify the member contribution rate for Tier 6
New York City Transit Authority (NYCTA) members who participate in the
New York City Employees' Retirement System (NYCERS) Transit 25-Year/Age
55 Retirement Plan from the current graded schedule of 3% to 6% of the
members' wages to a flat 2% of wages after the December 31st of the year
in which the law is enacted.
Effective Date: Upon enactment.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to NYCERS
and based on the actuarial assumptions and methods herein, if the
proposed legislation were enacted, the Actuarial Present Value (APV) of
Benefits (APVB) would decrease due to a reduction in the amount of
refunds of member contributions upon termination of employment and
decrease the Actuarial Present Value of member contributions.
Under the Entry Age Normal (EAN) cost method used to determine employ-
er contributions to NYCERS, there would be an increase in the Actuarial
Present Value of Future Employer Normal Cost and an increase in the
Unfunded Accrued Liability (UAL).
FINANCIAL IMPACT - CHANGES IN PROJECTED ACTUARIAL PRESENT VALUE OF
FUTURE EMPLOYER CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: In
accordance with ACCNY Section 13.638.2(k-2), new UAL attributable to
benefit changes are to be amortized as determined by the Actuary but
generally over the remaining working lifetime of those impacted by the
benefit changes. As of June 30, 2017, if this proposed legislation is
enacted, the remaining working lifetime of the Tier 6 25/55 NYCTA Plan
participant is approximately 18 years.
A. 8021--A 3
For this proposed legislation the change in UAL was amortized over an
18-year period (17 payments under the One-Year Lag Methodology) using
level dollar payments.
The following Table 1 presents an estimate of the increases in the APV
of future employer contributions and in employer contributions to NYCERS
for Fiscal Years 2019 through 2023 due to the reduction of the member
contribution rate for Tier 6 members who participate in the Transit
25-Year/Age 55 retirement plan based on the applicable actuarial assump-
tions and methods noted herein:
TABLE 1
INCREASE IN APV OF FUTURE EMPLOYER CONTRIBUTIONS
AND EMPLOYER CONTRIBUTIONS
($ Millions)
Fiscal Year Increase in APV of Increase in Employer
Future Employer Contributions
Contributions
2019 $320.5 $25.2
2020 425.0 32.7
2021 509.5 39.6
2022 590.0 46.5
2023 665.1 53.3
CONTRIBUTION TIMING: For purposes of this Fiscal Note, it is assumed
that the changes in the APVB, APV of member contributions, UAL and APV
of future employer contributions would be reflected for the first time
in the June 30, 2017 actuarial valuation of NYCERS. In th accordance
with the One-year Lag Methodology (OYLM) used to determine employer
contributions, the increase in employer contributions would first be
reflected in Fiscal Year 2019.
CENSUS DATA: Census data used for the calculations presented herein is
as of June 30, 2017, including 9,822 Tier 6 25/55 NYCTA members with
cumulative salaries of approximately $678.6 million.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of NYCERS to implement
the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in APVB, APV of member
contributions, UAL, APV of future employer contributions and employer
contributions presented herein have been calculated based on the same
actuarial assumptions and methods in effect for the June 30, 2017 (Lag)
actuarial valuations used to determine the Preliminary Fiscal Year 2019
employer contributions of NYCERS. Please note these assumptions and
methods are subject to change as this valuation is not considered final
until the end of the Fiscal Year 2019.
New entrants were projected to replace the members expected to leave
the active population to maintain a steady-state population. New
entrant ages, salaries, and future salary increases are consistent with
those used in projections for the New York City Office of Management and
Budget in April 2018.
The following Table 2 presents the total number of active Tier 6 25/55
NYCTA Plan participant used in the projections, assuming a level work
force, and the cumulative number (i.e. net of withdrawals) of such
participants as of each June 30 from 2017 through 2021.
A. 8021--A 4
TABLE 2
June 30 Tier 1, 2 & 4 Tier 6 Total
2017 26,747 9,822 36,569
2018 24,191 12,378 36,569
2019 22,152 14,417 36,569
2020 20,266 16,303 36,569
2021 18,551 18,018 36,569
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actuary
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
(ERISA), a Member of the American Academy of Actuaries, and a Fellow of
the Conference of Consulting Actuaries. I meet the Qualification Stand-
ards of the American Academy of Actuaries to render the actuarial opin-
ion contained herein. To the best of my knowledge, the results contained
herein have been prepared in accordance with generally accepted actuari-
al principles and procedures and with the Actuarial Standards of Prac-
tice issued by the Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-18 dated April 24,
2018, was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2018 Legislative Session.
