Relates to employer's duties regarding optional public retirement systems; provides for the automatic enrollment for employees whose right to membership has been made optional by the head of the public retirement system involved.
STATE OF NEW YORK
________________________________________________________________________
5634--B
2017-2018 Regular Sessions
IN SENATE
April 21, 2017
___________
Introduced by Sen. SAVINO -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee -- 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
providing for the automatic enrollment for employees whose right to
membership has been made optional by the head of the public retirement
system involved
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 45 of the retirement and social security law, as
2 added by chapter 878 of the laws of 1986, is amended to read as follows:
3 § 45. Right to membership. a. Upon the employment of any employee
4 whose right to membership in a public retirement system of the state,
5 which for purposes of this section shall include any public retirement
6 system other than the New York state teachers' retirement system, has
7 been made optional by the head of the retirement system involved, the
8 employer shall inform the employee in writing of the right to join the
9 system. Each such employee shall acknowledge the receipt of such notice
10 by signing a copy thereof and filing it with such employer; provided,
11 however, the failure to inform such employee shall not in any way be
12 construed to waive the requirement that membership for such an employee
13 commences only when an application for membership is filed with the
14 system, nor shall it be construed to waive any of the eligibility
15 requirements for previous service credit.
16 b. 1. Notwithstanding the provisions of subdivision a of this section,
17 upon the employment of any employee whose right to membership in the
18 board of education retirement system has been made optional by the head
19 of the retirement system involved, the employer shall provide the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10847-10-7
S. 5634--B 2
1 respective automatic contribution arrangement for the employee to join
2 the retirement system ninety days after the commencement of employment,
3 with membership in the retirement system commencing on the ninety-first
4 day after commencement of employment, provided that, if the employee
5 files with the system an application to opt out of membership within
6 ninety days after commencement of employment, the employer shall refrain
7 from enrolling the employee in the retirement system unless and until
8 such employee subsequently files an application for membership with the
9 system. The automatic enrollment of optional employees as provided for
10 in this section shall not be construed to modify the right of eligible
11 employees to join the retirement system as of the first date of covered
12 employment by filing an application for membership with the system. The
13 employer shall further inform the employee in writing of the right to
14 join the system as well as the fact that the employee shall be enrolled
15 in the retirement system after the ninetieth day after commencement of
16 employment, unless such employee files with the system an application to
17 opt out of the system prior to such date. Any eligible employee who
18 elects to opt out of membership in the retirement system within the
19 ninety day period shall retain the right to join such system by subse-
20 quently filing an application for membership so long as such employee
21 remains in covered employment.
22 2. Each employer shall enroll in the retirement system every current
23 employee eligible for, but not enrolled in, the retirement system, on
24 October first, two thousand eighteen, unless such employee files an
25 application with the system to opt out of the retirement system by
26 September thirtieth, two thousand eighteen. Automatic enrollment in the
27 retirement system shall not be construed to waive any of the eligibility
28 requirements for previous service credit.
29 3. The automatic enrollment of optional employees as provided for in
30 this section shall not be construed to modify the rights and obligations
31 of any employee who is a mandated member of a public retirement system
32 under any applicable law, and such mandated members may not opt out of
33 membership.
34 § 2. This act shall take effect July 1, 2018.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
In response to your request, this letter presents the estimated finan-
cial impact if participation is made mandatory for the Board of Educa-
tion Retirement System of the City of New York (BERS).
The ultimate employer cost for this change will be determined by the
number, ages, years of service, and salary of those employees that would
otherwise not have elected to become member of BERS.
In order to prepare this analysis, we were supplied a file of 12,287
individuals who are not currently members of BERS but could voluntary
elect to participate. This group consisted of 11,292 part-time and 995
full-time employees that was approximately 73% female with an average
age of 34.9, average salary of approximately $25,500, and average past
service of 2.4 years. We are also told, for calendar year 2016, employ-
ees in Payroll Codes 745, 744 and 056 are part-time and earned 0.80
years, 0.44 years and 0.72 years of service on average, respectively.
Employees in Payroll Code 740 are generally full-time employees. Final-
ly, we were told 72% of eligible employees eventually join BERS.
Based on this data and these statistics, we have estimated that the
additional annual employer contribution will be $11.0 million if no
prior years of service are purchased by these individuals and $18.1
million if all years of prior service eligible for buyback are
purchased. These estimates assume that the fractional years of service
S. 5634--B 3
earned in 2016 as described above remains unchanged in the future. These
estimates also assume a level workforce (i.e., the number and salary,
age and service characteristics of the added group remain approximately
the same in future years.) Finally, for purposes of determining the
portion of the annual employer contribution attributable to the buyback
of prior service, we have assumed an amortization period of 15 years (14
payments under the Lag methodology used in the actuarial valuation.) All
other actuarial assumptions and methods are the same as those used in
the June 30, 2016 (Lag) actuarial valuation to determine the Preliminary
Fiscal Year 2018 employer contributions for BERS.
If the change to mandatory participation is made prior to July 1,
2017, these new additional members would likely be included in the
census data as of June 30, 2017 and if so the increase in employer
contributions to BERS would first be reflected in Fiscal Year 2019.
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
ary for, and independent of, the New York City Pension Funds and Retire-
ment Systems. I am a Fellow of the Society of Actuaries, a Fellow of the
Conference of Consulting Actuaries 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. To the
best of my knowledge, the results contained herein have been prepared in
accordance with the Actuarial Standards of Practice issued by the Actu-
arial Standards Board.
