Relates to allowable service credit for participants in the twenty-five year and age fifty-five retirement program for New York city transit authority members.
STATE OF NEW YORK
________________________________________________________________________
6140--B
2017-2018 Regular Sessions
IN SENATE
May 11, 2017
___________
Introduced by Sens. GOLDEN, BAILEY, SANDERS -- 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 -- 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 committee
AN ACT to amend the retirement and social security law, in relation to
allowable service credit for participants in the twenty-five year and
age fifty-five retirement program for New York city transit authority
members
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 6 of subdivision a of section 604-b of the
2 retirement and social security law, as added by chapter 529 of the laws
3 of 1994, is amended to read as follows:
4 6. (i) "Allowable service in the transit authority" shall mean credit-
5 ed service which was rendered as a member of the New York city transit
6 authority[.]; and
7 (ii) "Allowable service" shall mean credited service which was
8 rendered as a member of the New York city transit authority and all
9 service rendered prior to service in the New York city transit authority
10 which qualifies as "city-service" as that term is defined in section
11 13-101 of the administrative code of the city of New York.
12 § 2. Paragraph 7 of subdivision a of section 604-b of the retirement
13 and social security law, as added by chapter 529 of the laws of 1994, is
14 amended to read as follows:
15 7. "Minimum period" shall mean the minimum period of twenty-five years
16 of allowable service [in the transit authority] that is required in
17 order for a participant in the twenty-five-year and age fifty-five
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10372-04-8
S. 6140--B 2
1 retirement program to be eligible for early service retirement pursuant
2 to paragraph one of subdivision c of this section.
3 § 3. Subparagraph (i) of paragraph 1 of subdivision c of section 604-b
4 of the retirement and social security law, as added by chapter 529 of
5 the laws of 1994, is amended to read as follows:
6 (i) who has completed twenty-five or more years of allowable service
7 [in the transit authority]; and
8 § 4. Subparagraph (ii) of paragraph 1 of subdivision d of section
9 604-b of the retirement and social security law, as amended by chapter
10 18 of the laws of 2012, is amended to read as follows:
11 (ii) in the case of a participant who is not a New York city revised
12 plan member, prior to such discontinuance, completed five but less than
13 twenty-five years of allowable service [in the transit authority] or, in
14 the case of a participant who is a New York city revised plan member,
15 has completed ten but less than twenty-five years of allowable service
16 [in the transit authority] prior to such discontinuance; and
17 § 5. Subparagraph (ii) of paragraph 2 of subdivision d of section
18 604-b of the retirement and social security law, as added by chapter 352
19 of the laws of 1997, is amended to read as follows:
20 (ii) prior to such discontinuance completed twenty-five years of
21 allowable service [in the transit authority]; and
22 § 6. Clause (A) of subparagraph (ii) of paragraph 8 of subdivision e
23 of section 604-b of the retirement and social security law, as added by
24 chapter 529 of the laws of 1994, is amended to read as follows:
25 (A) Should a participant in the twenty-five-year and age fifty-five
26 retirement program who has rendered less than twenty-five-years of
27 allowable service [in the transit authority] cease to hold a position as
28 a New York city transit authority member for any reason whatsoever, his
29 or her accumulated additional member contributions made pursuant to this
30 subdivision (together with any interest thereon paid to the retirement
31 system) [maybe] may be withdrawn by him or her pursuant to procedures
32 promulgated in regulations of the board of trustees of the retirement
33 system, together with interest thereon at the rate of five percent per
34 annum, compounded annually.
35 § 7. This act shall take effect immediately.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: The proposed legislation would amend provisions of
Retirement and Social Security Law (RSSL) Section 604-b to expand the
definition of Allowable Service in the Transit Authority (Allowable
Service) for certain employees of the New York City Transit Authority
(NYCTA) who are members of the New York City Employees' Retirement
System (NYCERS) and participate in the Tier 4 and 6 Transit Twenty-Five-
Year and Age Fifty-Five Retirement Program (Transit 55/25 Program) to
include eligible City-Service rendered prior to employment with the
NYCTA.
Effective Date: Upon enactment.
IMPACT ON BENEFITS: Currently, Allowable Service, which is used in the
Transit 55/25 Program to determine eligibility for and calculation of
benefits, only includes qualifying service while employed by the NYCTA
(i.e. Allowable Service in the Transit Authority). The proposed legis-
lation would expand the definition of Allowable Service to include prior
City-Service as defined in Administrative Code of the City of New York
(ACCNY) Section 13-101, which includes eligible City or State service or
any service with any agency or court thereof. The expanded Allowable
Service definition would apply to the minimum period needed to receive
an unreduced service retirement, the service retirement benefit calcu-
S. 6140--B 3
lation, the service requirement for vesting, and the service provisions
affecting withdrawal from the Transit 55/25 Program.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the actuarial
assumptions and methods described herein, the enactment of this proposed
legislation would increase the Actuarial Present Value (APV) of Benefits
(APVB) by approximately $136.4 million and decrease the APV of future
member contributions by approximately $2.1 million. The net result is an
increase in the APV of future employer contributions of approximately
$138.5 million.
Under the Entry Age Normal cost method used to determine the employer
contributions to NYCERS, there would be an increase in the Unfunded
Accrued Liability (UAL) of approximately $164.0 million and a decrease
in the APV of future employer Normal Cost of $25.5 million.
FINANCIAL IMPACT - ANNUAL 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 July 30, 2017, the remaining working lifetime of the NYCTA members
that would be impacted by the proposed legislation is approximately 11
years.
For the purposes of this Fiscal Note, the increase in UAL was amor-
tized over an 11-year period (10 payments under the One-Year Lag Method-
ology) using level dollar payments. This payment offset by the decrease
in the Normal Cost results in an increase in annual employer contrib-
utions of approximately $22.3 million.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of NYCERS and other New
York City agencies to implement the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the APV of future employer contributions and
annual employer contributions would be reflected for the first time in
the June 30, 2018 actuarial valuation of NYCERS. In accordance with the
One-Year Lag Methodology (OYLM) used to determine employer contrib-
utions, the increase in employer contributions would first be reflected
in Fiscal Year 2020.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2017 (Lag) actuarial valuation of
NYCERS used to determine the Preliminary Fiscal Year 2019 employer
contributions.
This data was supplemented by additional service data provided by
NYCERS for NYCTA employees who would benefit under the proposed legis-
lation. These 2,778 members had an average age of approximately 49.9
years, average service of approximately 13.0 years, and an average sala-
ry of approximately $84,700. The average increase in service due to the
proposed legislation was approximately 3.9 years. Note that the census
data does not include current NYCTA employees who are former members of
other pension systems, if any, who have not yet transferred their cred-
ited service to NYCERS.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the UAL, APV of
future employer contributions, and annual employer contributions
presented herein have been calculated based on the actuarial assumptions
and methods in effect for the June 30, 2017 (Lag) actuarial valuations
used to determine the Preliminary Fiscal Year 2019 employer contrib-
utions of NYCERS. Please note that these assumptions and methods are
S. 6140--B 4
subject to change as this valuation is not considered final until the
end of Fiscal Year 2019.
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
(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 2018-40 dated June 14,
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.
