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S09373 Text:

                STATE OF NEW YORK
                    IN SENATE
                                      May 14, 2024
        Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
          printed to be committed to the Committee on Civil Service and Pensions
        AN  ACT  to amend the retirement and social security law, in relation to
          the definition of overtime ceiling
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Subdivision l of section 601 of the retirement and social
     2  security law, as amended by chapter 368 of the laws of 2017, is  amended
     3  to read as follows:
     4    l. (a) "Wages" shall mean regular compensation earned by and paid to a
     5  member  by a public employer, except that for members who first join the
     6  New York state and local employees' retirement system or  the  New  York
     7  state  teachers'  retirement system on or after January first, two thou-
     8  sand ten, overtime compensation paid in any year in excess of the  over-
     9  time  ceiling,  as defined by this subdivision, shall not be included in
    10  the definition of wages.
    11    (b) "Overtime compensation" shall mean, for purposes of this  section,
    12  compensation paid under any law or policy under which employees are paid
    13  at  a  rate greater than their standard rate for additional hours worked
    14  beyond those required, including compensation  paid  under  section  one
    15  hundred  thirty-four  of the civil service law and section ninety of the
    16  general municipal law.
    17    (c) The "overtime ceiling" shall mean  fifteen  thousand  dollars  per
    18  annum  on  January  first,  two  thousand ten, and shall be increased by
    19  three per cent each year thereafter, provided, however, that:
    20    (i) for members who first become members of a public retirement system
    21  of the state on or after April first, two thousand twelve, other than  a
    22  pension  authorized  under  section  six hundred four-b of this article,
    23  "overtime ceiling" shall mean fifteen  thousand  dollars  per  annum  on
    24  April first, two thousand twelve, and shall be increased each year ther-
    25  eafter  by  a  percentage  to be determined annually by reference to the
    26  consumer price index (all urban consumers, CPI-U, U.S. city average, all
    27  items, 1982-84=100), published by the  United  States  bureau  of  labor
    28  statistics,  for  each  applicable  calendar year. Said percentage shall
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 9373                             2
     1  equal the annual inflation  as  determined  from  the  increase  in  the
     2  consumer price index in the one year period ending on the December thir-
     3  ty-first  preceding  the  overtime  ceiling  adjustment effective on the
     4  ensuing April first.
     5    (ii)  Commencing  January  first, two thousand eighteen, and each year
     6  thereafter, the overtime ceiling percentage shall  be  increased  by  an
     7  amount  equal to the annual inflation as determined from the increase in
     8  the consumer price index in the one year period ending on the  September
     9  thirtieth  prior  to  the  overtime  ceiling adjustment effective on the
    10  ensuing January first.
    11    (d) For members who first join a public retirement system of the state
    12  on or after April first, two thousand twelve, the following items  shall
    13  not  be  included  in the definition of wages: 1. wages in excess of the
    14  annual salary paid to the governor pursuant to section three of  article
    15  four  of  the  state  constitution,  2.  lump  sum payments for deferred
    16  compensation, sick leave, accumulated vacation or other credits for time
    17  not worked, 3. any form of termination pay, 4.  any  additional  compen-
    18  sation paid in anticipation of retirement, and 5. in the case of employ-
    19  ees  who  receive  wages  from three or more employers in a twelve month
    20  period, the wages paid by the third and each additional employer.
    21    § 2. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY: This proposed legislation would remove the  Overtime  Ceiling
        for  Tier  6  New York City Transit Authority (NYCTA) members subject to
        the 25-Year and Age 55 Retirement Program (the  55/25  NYCTA  Plan)  for
        wages used to calculate member contributions and pension benefits.
                  by Fiscal Year for the first 25 years ($ in Millions)
                                    Year  NYCERS
                                    2025  15.1
                                    2026  15.9
                                    2027  16.7
                                    2028  17.6
                                    2029  18.5
                                    2030  19.4
                                    2031  20.3
                                    2032  21.2
                                    2033  22.1
                                    2034  23.1
                                    2035  24.1
                                    2036  25.0
                                    2037  26.0
                                    2038  27.0
                                    2039  28.0
                                    2040  29.1
                                    2041  22.2
                                    2042  23.2
                                    2043  24.2
                                    2044  25.1
                                    2045  26.1
                                    2046  27.1
                                    2047  28.1
                                    2048  29.1
                                    2049  30.0

        S. 9373                             3
           Employer Contribution impact beyond Fiscal Year 2049 is not shown.
         Projected contributions include future new hires that may be impacted.
          The  increase  in  employer contributions will be allocated to the NYC
        Transit Authority.
                           as of June 30, 2023 ($ in Millions)
                  Present Value (PV)                 NYCERS
                  PV of Benefits:                    237.5
                  PV of Employee Contributions:      71.2
                  PV of Employer Contributions:      166.3
                  Unfunded Accrued Liabilities:      71.9

                  Number of Payments:                16
                  Fiscal Year of Last Payment:       2040
                  Amortization Payment:              7.9 M
          Unfunded Accrued Liability increases were amortized over the  expected
        remaining  working  lifetime  of  those  impacted by the benefit changes
        using level dollar payments.
          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.
                  Active Members
                  - Number Count:                    19,953
                  - Average Age:                     42.9
                  - Average Service:                 5.0
                  - Average Salary:                  82,600

          IMPACT ON MEMBER BENEFITS AND CONTRIBUTIONS: Under the proposed legis-
        lation, the Overtime Ceiling would become inapplicable  to  participants
        in the Tier 6 55/25 NYCTA Plan. As a result, overtime earnings exceeding
        the  Overtime  Ceiling  would be included in determining member contrib-
        ution rates and annual contributions to be paid by the  member.  Partic-
        ipants  may be entitled to a higher annual pension benefit if such earn-
        ings increase their Final Average Salary.
          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:
        * Future overtime earnings exceeding the Overtime Ceiling  were  assumed
        to  remain  level  based  on reported overtime for the last three fiscal

        * New entrants were assumed to replace exiting  members  so  that  total
        payroll  increases  by 3% each year for NYC Transit members. New entrant

        S. 9373                             4
        demographics were developed based on data for recent new hires and actu-
        arial 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 2024-39  dated  April  1,
        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.
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