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S05359 Summary:

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S05359 Committee Votes:

S05359 Floor Votes:

S05359 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         5359--A
 
                               2015-2016 Regular Sessions
 
                    IN SENATE
 
                                      May 13, 2015
                                       ___________
 
        Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
          printed to be committed to the Committee on Civil Service and Pensions
          -- recommitted to the Committee  on  Civil  Service  and  Pensions  in
          accordance  with  Senate  Rule 6, sec. 8 -- committee discharged, bill
          amended, ordered reprinted as amended and recommitted to said  commit-
          tee
 
        AN  ACT  to amend the retirement and social security law, in relation to
          refunding contributions made to the twenty-five year early  retirement
          program  and  the  age fifty-seven retirement program by New York city
          transit authority members in the title transit manager
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Paragraph  15  of  subdivision  d of section 604-c of the
     2  retirement and social security law, as added by chapter 522 of the  laws
     3  of 2013, is amended to read as follows:
     4    15.  An  eligible  former  participant,  as defined in this paragraph,
     5  shall be entitled to a refund of the employee  portion  of  his  or  her
     6  additional  member contributions made pursuant to this subdivision which
     7  shall include any and all interest thereon at the rate of  five  percent
     8  per  annum,  compounded  annually and such refund shall be payable, upon
     9  such participant's application pursuant  to  procedures  promulgated  in
    10  regulations of the board of trustees of the retirement system. An eligi-
    11  ble  former participant shall be a participant who is or was employed in
    12  the title supervisor (stations) in assignment level II in the  New  York
    13  city transit authority's stations department or the title transit manag-
    14  er, and who, on October first, two thousand six, was employed by the New
    15  York  city  transit authority in such title and who was a participant in
    16  the twenty-five year early retirement program prior to the starting date
    17  of the elimination of additional member contributions, as such  date  is
    18  defined  in  an election made pursuant to paragraph ten of subdivision e
    19  of section six hundred four-b of this article.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10181-03-6
        S. 5359--A                          2
 
     1    § 2. Paragraph 15 of subdivision f of section 604-d of the  retirement
     2  and social security law, as added by chapter 522 of the laws of 2013, is
     3  amended to read as follows:
     4    15.  An  eligible  former  participant,  as defined in this paragraph,
     5  shall be entitled to a refund of the employee  portion  of  his  or  her
     6  additional  member contributions made pursuant to this subdivision which
     7  shall include any and all interest thereon at the rate of  five  percent
     8  per  annum,  compounded  annually and such refund shall be payable, upon
     9  such participant's application pursuant  to  procedures  promulgated  in
    10  regulations of the board of trustees of the retirement system. An eligi-
    11  ble  former participant shall be a participant who is or was employed in
    12  the title supervisor (stations) in assignment level II in the  New  York
    13  city transit authority's stations department or the title transit manag-
    14  er, and who, on October first, two thousand six, was employed by the New
    15  York  city  transit authority in such title and who was a participant in
    16  the age fifty-seven retirement program prior to the starting date of the
    17  elimination of additional member contributions, as such date is  defined
    18  in  an  election  made  pursuant  to  paragraph  ten of subdivision e of
    19  section six hundred four-b of this article.
    20    § 3. This act shall take effect immediately.
          FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
          PROVISIONS OF PROPOSED LEGISLATION: This  proposed  legislation  would
        amend  New York State Retirement and Social Security Law (RSSL) Sections
        604-c and 604-d to provide to certain New York  City  Transit  Authority
        (NYCTA)  members  of  the  New  York  City  Employees' Retirement System
        (NYCERS) a refund of Additional Member  Contributions  (AMC)  that  were
        paid  while  participants  of  one of the Chapter 96 of the Laws of 1995
        (Chapter 96/95) Retirement Programs.
          The Effective Date of the proposed legislation would be  the  date  of
        enactment.
          This  Fiscal Note assumes that the proposed legislation is intended to
        refund interest on AMC in accordance with NYCERS procedures for  credit-
        ing interest on member contributions.
          IMPACT  ON  PLAN  PROVISIONS  - ADDITIONAL MEMBER CONTRIBUTIONS: Under
        Chapter 96/95, AMC were required under  each  of  the  Early  Retirement
        Programs:
          * The Twenty-Five-Year Early Retirement Program (55/25 Program) and
          * The Age Fifty-Seven Retirement Program (57/5 Program).
          Those  NYCERS members who participated in either of such Programs paid
        AMC of:
          * 4.35% of salary for service on and after January 1, 1995 until Janu-
        ary 1, 1998,
          * 2.85% of salary for service on  and  after  January  1,  1998  until
        December 2, 2001, and
          * 1.85% of salary for service on and after December 2, 2001.
          In addition, if such member's job title was considered Physically-Tax-
        ing (PT), an additional Physically-Taxing AMC (PTAMC) of 1.98% of salary
        was required for all service on and after January 1, 1995.
          As  a result of Chapter 10 of the Laws of 2000, many of the NYCTA Tier
        IV members of NYCERS who participated in the  Chapter  96/95  Retirement
        Programs  were  transferred  into  the  Transit Twenty-Five-Year and Age
        Fifty-Five Retirement Program (Transit 55/25 Program) effective December
        15, 2000. For these members, the AMC and PTAMC  that  had  been  payable
        under  the  Chapter  96/95  Retirement  Programs were no longer required
        after January 3, 2001 (i.e.,  the  effective  implementation  date,  the
        first payroll period following the transfer date).
        S. 5359--A                          3
 
          This  proposed  legislation  would  refund, on and after the Effective
        Date, to certain Transit 55/25 Program participants with initial Program
        participation dates on or before December 15, 2000 who were employed  by
        the Transit Authority as Transit Managers as of October 1, 2006, includ-
        ing those who are currently retired, the employee portion of the AMC and
        PTAMC,  if  any,  paid for participation in the Chapter 96/95 Retirement
        Programs, including accrued interest at 5.0% per annum.  For  those  who
        are currently retired, interest would accrue until retirement date.
          Under  the Chapter 96/95 Retirement Programs, 50% of the AMC and PTAMC
        paid into such Programs is considered an employer contribution while the
        other 50% is considered to be the employee portion. The employee portion
        of the AMC and PTAMC is refunded to members who decease prior to retire-
        ment or who retire at age 62 or later.
          If the proposed legislation were enacted, those impacted Transit 55/25
        Program participants would receive the employee portion of their AMC and
        PTAMC account balance.  To receive such refund, those  eligible  partic-
        ipants  would be required to complete a form and follow procedures to be
        established by the NYCERS Board of Trustees.
          FINANCIAL IMPACT - OVERVIEW: If enacted into  the  law,  the  ultimate
        employer  cost  of  this proposed legislation would be determined by the
        reduction in Fund assets due to the current refund of AMC, offset by the
        reduction in expected benefits paid (due to  there  no  longer  being  a
        requirement to refund AMC on a future withdrawal).
          FINANCIAL  IMPACT - UNFUNDED ACTUARIAL ACCRUED LIABILITY: With respect
        to NYCERS and based on the census data  and  actuarial  assumptions  and
        methods  described  herein,  the  enactment of this proposed legislation
        would result in a reduction in the Actuarial Asset Value as of June  30,
        2015  to  reflect the expected refund of the employee portion of accumu-
        lated Chapter 96/95 Retirement Program AMC and PTAMC, if any, for  those
        impacted Transit 55/25 Program participants of approximately $1,440,000.
          In  addition,  there  would  be  a  decrease  in the Actuarial Accrued
        Liability (AAL) of approximately $185,000 as of June 30, 2015.
          Together, the enactment of the proposed legislation would result in  a
        net  increase  in  the  Unfunded  Actuarial  Accrued Liability (UAAL) to
        NYCERS of approximately $1,255,000 as of June 30, 2015.
          FINANCIAL IMPACT - ADDITIONAL ANNUAL  EMPLOYER  CONTRIBUTIONS:    With
        respect  to  NYCERS,  the  enactment  of this proposed legislation would
        increase annual employer contributions  by  approximately  $320,000  per
        year for 5 years.
          If  enacted  on  or  before June 30, 2016, increased employer contrib-
        utions to NYCERS would begin Fiscal Year 2018.
          If enacted after June 30,  2016  and  on  or  before  June  30,  2017,
        increased employer contributions to NYCERS would begin Fiscal Year 2019.
          OTHER  COSTS:  Not  measured  in  this  Fiscal Note are any additional
        administrative costs.
          CENSUS DATA: The census data used  for  estimates  of  AAL,  UAAL  and
        employer  contributions  presented  herein  are  the  841 Tier IV active
        members of NYCERS who participate in the Transit 55/25 Program  and  who
        were  employed  by  the Transit Authority as Transit Managers as of June
        30, 2006.
          Of these 841 Tier IV members of NYCERS who participate in the  Transit
        55/25  Program and who were employed by the Transit Authority as Transit
        Managers as of June 30, 2006, 230  members  had  AMC  (and,  in  certain
        cases, PTAMC) account balances from contributions made under the Chapter
        96/95  Retirement  Programs  as  of June 30, 2015.  The remaining 611 of
        these members did not have such AMC or PTAMC account balances.
        S. 5359--A                          4
 
          Of those 230 members eligible for a refund as of  June  30,  2015,  71
        were  active  members  and  129  retired  before age 62. In addition, 12
        members deceased before retirement and 18 members retired after  age  62
        so  these 30 members were already refunded the employee portion of their
        AMC and PTAMC.
          ACTUARIAL  ASSUMPTIONS  AND METHODS: Estimates of changes in AAL, UAAL
        and employer costs have been calculated using the actuarial  assumptions
        and  methods  in  effect for the June 30, 2015 (Lag) actuarial valuation
        used to determine Preliminary Fiscal Year  2017  employer  contributions
        for NYCERS.
          In  accordance  with Section 13.638.2 (k-2) of the Administrative Code
        of the City of New York (ACNY) as enacted  by  Chapter  3/13,  new  UAAL
        attributable to benefit changes are to be amortized as determined by the
        Actuary  but  generally  over  the  remaining working lifetimes of those
        impacted by these benefit changes.
          For this proposed legislation, the average remaining working  lifetime
        for  the entire group impacted is approximately two years as of June 30,
        2015 and approximately five years for the subset of active members.
          For this particular legislation, the Actuary would  likely  choose  to
        amortize the proposed legislation over five years with the payment peri-
        od beginning one year after the establishment of the UAAL. This approach
        is consistent with the One-Year Lag Methodology (OYLM) where the UAAL is
        considered  to  be  amortized over six years with five years of payments
        beginning in the second year.
          STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
        ary  for  the New York City Retirement Systems. I am an Associate of the
        Society of Actuaries, a Fellow of the Conference of  Consulting  Actuar-
        ies,  and  a  Member  of  the American Academy of Actuaries.  I meet the
        Qualification Standards of the American Academy of Actuaries  to  render
        the actuarial opinion contained herein.
          FISCAL  NOTE  IDENTIFICATION:  This  estimate is intended for use only
        during the 2016 Legislative Session. It is Fiscal  Note  2016-08,  dated
        March  10,  2016,  prepared  by  the Chief Actuary for the New York City
        Employees' Retirement System.