STATE OF NEW YORK
________________________________________________________________________
6174--D
2023-2024 Regular Sessions
IN SENATE
March 31, 2023
___________
Introduced by Sens. GOUNARDES, SANDERS -- read twice and ordered print-
ed, 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 -- 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 committee
AN ACT to amend the retirement and social security law, in relation to
calculating certain pensions
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision a of section 504 of the retirement and social
2 security law, as amended by chapter 18 of the laws of 2012, is amended
3 to read as follows:
4 a. The service retirement benefit for general members at normal
5 retirement age with twenty or more years of credited service shall be a
6 pension equal to one-fiftieth of final average salary times years of
7 credited service, not in excess of thirty years, less fifty percent of
8 the primary social security retirement benefit as provided in section
9 five hundred eleven of this article. The service retirement benefit for
10 general members at normal retirement age with twenty or more years of
11 service who first become members of the New York state and local employ-
12 ees' retirement system on or after April first, two thousand twelve at
13 normal retirement age shall be a pension equal to the sum of [thirty-
14 five] forty per centum and one-fiftieth of final average salary for each
15 year of service in excess of twenty, but not in excess of thirty, times
16 final average salary times years of credited service.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06271-10-4
S. 6174--D 2
1 § 2. Subdivisions a, b and b-1 of section 604 of the retirement and
2 social security law, subdivision a as amended and subdivision b-1 as
3 added by chapter 18 of the laws of 2012, subdivision b as amended by
4 chapter 266 of the laws of 1998 and the opening paragraph of subdivision
5 b as amended by section 8-b of part B of chapter 504 of the laws of
6 2009, are amended to read as follows:
7 a. The service retirement benefit at normal retirement age for a
8 member with less than twenty years of credited service[, or less than
9 twenty-five years credited service for a member who joins the New York
10 state teachers' retirement system on or after January first, two thou-
11 sand ten,] shall be a retirement allowance equal to one-sixtieth of
12 final average salary times years of credited service. Normal retirement
13 age for members who first become members of a public retirement system
14 of the state on or after April first, two thousand twelve shall be age
15 sixty-three.
16 b. The service retirement benefit at normal retirement age for a
17 member with twenty years or more of credited service[, or with twenty-
18 five or more years credited service for a member who first joins the New
19 York state teachers' retirement system on or after January first, two
20 thousand ten,] shall be a retirement allowance equal to one-fiftieth of
21 final average salary times years of credited service not in excess of
22 thirty years.
23 Credited service in excess of thirty years shall provide an additional
24 retirement allowance equal to three-two hundredths of the final average
25 salary for each year of credited service in excess of thirty years.
26 b-1. Notwithstanding any other provision of law to the contrary, the
27 service retirement benefit for members with twenty or more years of
28 credit service who first become a member of a public retirement system
29 of the state on or after April first, two thousand twelve at age sixty-
30 three shall be a pension equal to the sum of [thirty-five] forty per
31 centum and one-fiftieth of final average salary for each year of service
32 in excess of twenty times final average salary times years of credited
33 service. In no event shall any retirement benefit payable without
34 optional modification be less than the actuarially equivalent annuitized
35 value of the member's contributions accumulated with interest at five
36 percent per annum compounded annually to the date of retirement.
37 § 3. Section 1312 of the retirement and social security law, as added
38 by chapter 18 of the laws of 2012, is amended to read as follows:
39 § 1312. Benefit enhancements. Notwithstanding any other law to the
40 contrary, eligible employees shall be permitted to retire, without
41 penalty, upon reaching age fifty-seven and completing at least thirty
42 years of credited service. Employees retiring pursuant to this section
43 shall receive a pension allowance equal to the sum of [thirty-five]
44 forty per centum and one-fiftieth of final average salary for each year
45 of service in excess of twenty times final average salary times years of
46 credited service.
47 § 4. Notwithstanding any other provision of law to the contrary, none
48 of the provisions of this act shall be subject to section 25 of the
49 retirement and social security law.
50 § 5. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would change the benefit fraction for a Tier 6 Article 15
member for service greater than 20 years to 40% of FAS plus 2% per year
of service greater than 20. Currently the benefit for service greater
than 20 years is 35% of FAS plus 2% per year of service greater than 20.
S. 6174--D 3
Insofar as this bill affects the New York State and Local Employees'
Retirement System (NYSLERS), the increased costs would be shared by the
State of New York and the local participating employers in the NYSLERS.
If this bill were enacted during the 2024 Legislative Session, the
increase in the present value of benefits would be approximately $1.74
billion.
NYSLERS Increase in present Increase in required
value benefits contributions
Tiers 1 - 5 $0 $332 million
Tier 6 $1.74 billion $1.41 billion
Total $1.74 billion $1.74 billion
In the NYSLERS, this benefit improvement will be funded by increasing
the billing rates charged annually to cover both retrospective and
prospective benefit increases. The annual contribution required of all
participating employers in NYSLERS is 0.6% of billable salary, or
approximately $76 million to the State of New York and approximately
$110 million to the local participating employers. This permanent annualcost will increase as Tier 6 salary grows and will vary by employer
based upon the plan coverage and salary reported in Tier 6.
Summary of relevant resources:
Membership data as of March 31, 2023 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2023 actuari-
al valuation. Distributions and other statistics can be found in the
2023 Report of the Actuary and the 2023 Annual Comprehensive Financial
Report.
The actuarial assumptions and methods used are described in the 2023
Annual Report to the Comptroller on Actuarial Assumptions, and the
Codes, Rules and Regulations of the State of New York: Audit and
Control.
The Market Assets and GASB Disclosures are found in the March 31, 2023
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated January 25, 2024, and intended for use only
during the 2024 Legislative Session, is Fiscal Note No. 2024-43,
prepared by the Actuary for the New York State and Local Retirement
System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend Section 604 of the Retirement and Social Securi-
ty Law to improve the retirement benefit formula for Tiers 5 and 6
members of the New York State Teachers' Retirement System. The Tier 5
benefit formula would match the Tier 4 formula with eligibility for the
2.0% multiplier at 20 years of service instead of 25 years as it is
currently. The retirement benefit formula for Tier 6 members with 20 or
more years of service would be 40% of final average salary plus 2% for
each year of service in excess of 20 years. Currently, the benefit
formula for Tier 6 members with 20 or more years of service is 35% of
final average salary plus 2% for each year of service in excess of 20
years.
S. 6174--D 4
The annual cost to the employers of members of the New York State
Teachers' Retirement System for this benefit is estimated to be $75.3
million or 0.39% of payroll if this bill is enacted.
The System's "new entrant rate", a hypothetical employer contribution
rate that would occur if we started a new Retirement System without any
assets, is equal to 5.31% of pay under the current Tier 6 benefit struc-
ture. This can be thought of as the long-term expected employer cost of
Tier 6, based on the current actuarial assumptions. For the proposed
change to the Tier 6 benefit structure under this bill, this new entrant
rate is estimated to increase to 5.99% of pay, an increase of 0.68% of
pay.
Member data is from the System's most recent actuarial valuation files
as of June 30, 2023, consisting of data provided by the employers to the
Retirement System. The most recent data distributions and statistics can
be found in the System's Annual Report for fiscal year ended June 30,
2023. System assets are as reported in the System's financial statements
and can also be found in the System's Annual Report. Actuarial assump-
tions and methods are provided in the System's Actuarial Valuation
Report as of June 30, 2023.
The source of this estimate is Fiscal Note 2024-6 dated February 2,
2024 prepared by the Office of the Actuary of the New York State Teach-
ers' Retirement System and is intended for use only during the 2024
Legislative Session. I, Richard A. Young, am the Chief Actuary for the
New York State Teachers' Retirement System. I am a member of the Ameri-
can Academy of Actuaries and I meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained
herein.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY: This proposed legislation, as it relates to the New York City
Retirement Systems and Pension Funds (NYCRS) would increase the percent-
age of Final Average Salary payable to Tier 6 NYCERS, TRS, and BERS
members who retire with 20 or more years of Credited Service.
EXPECTED INCREASE (DECREASE) IN EMPLOYER CONTRIBUTIONS
by Fiscal Year for the first 25 years ($ in Millions)
Year NYCERS TRS BERS TOTAL
2025 51.3 62.8 7.3 121.4
2026 54.7 66.1 7.7 128.5
2027 58.5 69.8 8.1 136.4
2028 62.4 73.7 8.6 144.7
2029 66.5 78.0 9.0 153.5
2030 70.6 82.5 9.5 162.6
2031 74.9 87.4 10.0 172.3
2032 79.1 92.7 10.6 182.4
2033 83.4 98.3 11.1 192.8
2034 87.8 104.2 11.7 203.7
2035 92.2 110.6 12.2 215.0
2036 96.6 117.2 12.8 226.6
2037 101.1 124.2 13.4 238.7
2038 105.5 131.5 11.0 248.0
2039 109.9 139.2 11.6 260.7
2040 95.3 147.1 12.2 254.6
2041 99.7 155.1 12.7 267.5
2042 104.2 163.2 13.3 280.7
2043 108.7 171.2 13.9 293.8
2044 113.2 155.7 14.5 283.4
S. 6174--D 5
2045 117.8 163.4 15.0 296.2
2046 122.5 170.8 15.6 308.9
2047 127.1 178.0 16.2 321.3
2048 131.9 185.0 16.8 333.7
2049 136.8 191.8 17.3 345.9
Employer Contribution impact beyond Fiscal Year 2049 is not shown.
Projected contributions include future new hires that may be impacted.
The initial increase in employer contributions of $121.4 million is
estimated to be $94.4 million for New York City and $27.0 million for
the other obligors of NYCRS.
INITIAL INCREASE (DECREASE) IN ACTUARIAL LIABILITIES
as of June 30, 2023 ($ in Millions)
Present Value (PV) NYCERS TRS BERS
PV of Benefits: 551.1 868.1 74.2
PV of Employee Contributions: 0.0 0.0 0.0
PV of Employer Contributions: 551.1 868.1 74.2
Unfunded Accrued Liabilities: 168.2 232.6 23.8
AMORTIZATION OF UNFUNDED ACCRUED LIABILITY
NYCERS TRS BERS
Number of Payments: 15 19 13
Fiscal Year of Last Payment: 2039 2043 2037
Amortization Payment: 19.1 M 23.3 M 2.9 M
Additional One-time Payment: 0.2 M 0.1 M 0.0 M
Unfunded Accrued Liability (UAL) increases for active members were
amortized over the expected remaining working lifetime of those impacted
by the benefit changes using level dollar payments. UAL attributable to
terminated vested members was recognized in the first year.
CENSUS DATA: The estimates presented herein are based on preliminary
census data collected as of June 30, 2023. The census data for the
impacted population is summarized below.
NYCERS TRS BERS
Active Members
- Number Count: 85,203 60,663 12,932
- Average Age: 42.4 38.1 46.9
- Average Service: 4.4 5.0 4.0
- Average Salary: 78,900 80,000 56,200
Term. Vested Members
- Number Count: 3,665 3,999 397
- Average Age: 42.0 37.9 44.6
IMPACT ON MEMBER BENEFITS: Currently, the service retirement benefit
for Tier 6 basic plan members of NYCERS, TRS, and BERS who have 20 or
more years of Credited Service is equal to 35% of Final Average Salary
(FAS) plus 2% of FAS for each year of Credited Service in excess of 20.
Under the proposed legislation, the service retirement benefit for
Tier 6 basic plan members of NYCERS, TRS, and BERS who have 20 or more
years of Credited Service would be equal to 40% of FAS plus 2% of FAS
for each year of Credited Service in excess of 20.
ASSUMPTIONS AND METHODS: The estimates presented herein have been
calculated based on the Revised 2021 Actuarial Assumptions and Methods
of the impacted retirement systems. In addition:
S. 6174--D 6
* New entrants were assumed to replace exiting members so that total
payroll increases by 3% each year for impacted groups. New entrant demo-
graphics were developed based on data for recent new hires and actuarial
judgement.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions, methods, and models used, demo-
graphics of the impacted population, and other factors such as invest-
ment, contribution, and other risks. If actual experience deviates from
actuarial assumptions, the actual costs could differ from those
presented herein. Quantifying these risks is beyond the scope of this
Fiscal Note.
This Fiscal Note is intended to measure pension-related impacts and
does not include other potential costs (e.g., administrative and Other
Postemployment Benefits).
STATEMENT OF ACTUARIAL OPINION: Marek Tyszkiewicz and Gregory Zelikov-
sky are members of the Society of Actuaries and the American Academy of
Actuaries. We are members of NYCERS but do not believe it impairs our
objectivity and we meet the Qualification Standards of the American
Academy of Actuaries to render the actuarial opinion contained herein.
To the best of our 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 2024-34 dated March 22,
2024 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 2024 Legislative Session.
