S T A T E O F N E W Y O R K
________________________________________________________________________
8012
2011-2012 Regular Sessions
I N A S S E M B L Y
May 26, 2011
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees
AN ACT to amend the administrative code of the city of New York, in
relation to the rate of regular interest used in the actuarial valu-
ation of liabilities for the purpose of calculating contributions to
the New York city employees' retirement system, the New York city
teachers' retirement system, the police pension fund, subchapter two,
the fire department pension fund, subchapter two and the board of
education retirement system of such city by public employers and other
obligors required to make employer contributions to such retirement
systems, the crediting of special interest and additional interest to
members of such retirement systems, and the allowance of supplementary
interest on the funds of such retirement systems
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph 2 of subdivision b of section 13-638.2 of the
administrative code of the city of New York, as amended by chapter 265
of the laws of 2010, is amended to read as follows:
(2) With respect to each retirement system, such rate of interest
shall be as hereinafter set forth in this paragraph:
First day and
last day of
Rate of interest fiscal year or
per centum per series of fiscal
Retirement annum, compounded years for which
System annually rate is effective
________________________________________________________________________
NYCERS 8% July 1, 2004 to
June 30, [2011] 2012
NYCTRS 8% July 1, 2004 to
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11552-02-1
A. 8012 2
June 30, [2011] 2012
PPF 8% July 1, 2004 to
June 30, [2011] 2012
FPF 8% July 1, 2004 to
June 30, [2011] 2012
BERS 8% July 1, 2004 to
June 30, [2011] 2012
S 2. Paragraph 2 of subdivision f of section 13-638.2 of the adminis-
trative code of the city of New York, as amended by chapter 265 of the
laws of 2010, is amended to read as follows:
(2) Such special interest shall be allowed at the rates and for the
periods set forth below in this paragraph:
First day and
last day of
Rate of interest fiscal year or
per centum per series of fiscal
Retirement annum, compounded years for which
System annually rate is effective
________________________________________________________________________
NYCERS 1 1/4% July 1, 2004 to
June 30, [2011] 2012
NYCTRS 1 1/4% July 1, 2004 to
June 30, [2011] 2012
PPF 1 1/4% July 1, 2004 to
June 30, [2011] 2012
FPF 1 1/4% July 1, 2004 to
June 30, [2011] 2012
BERS 1 1/4% July 1, 2004 to
June 30, [2011] 2012
S 3. Paragraph 2 of subdivision g of section 13-638.2 of the adminis-
trative code of the city of New York, as amended by chapter 265 of the
laws of 2010, is amended to read as follows:
(2) Such additional interest shall be included at the rates and for
the periods set forth below in this paragraph:
First day and
last day of
Rate of interest fiscal year or
per centum per series of fiscal
Retirement annum, compounded years for which
System annually rate is effective
________________________________________________________________________
NYCERS 1 1/4% July 1, 2004 to
June 30, [2011] 2012
NYCTRS 1 1/4% July 1, 2004 to
June 30, [2011] 2012
PPF 1 1/4% July 1, 2004 to
June 30, [2011] 2012
FPF 1 1/4% July 1, 2004 to
June 30, [2011] 2012
BERS 1 1/4% July 1, 2004 to
June 30, [2011] 2012
A. 8012 3
S 4. Paragraph 2 of subdivision i of section 13-638.2 of the adminis-
trative code of the city of New York, as amended by chapter 265 of the
laws of 2010, is amended to read as follows:
(2) Such supplementary interest shall be allowed at the rates and for
the periods set forth below in this paragraph:
First day and
last day of
Rate of interest fiscal year or
per centum per series of fiscal
Retirement annum, compounded years for which
System annually rate is effective
________________________________________________________________________
NYCERS 1% July 1, 2004 to
June 30, [2011] 2012
NYCTRS 1% July 1, 2004 to
June 30, [2011] 2012
PPF 1% July 1, 2004 to
June 30, [2011] 2012
FPF 1% July 1, 2004 to
June 30, [2011] 2012
BERS 1% July 1, 2004 to
June 30, [2011] 2012
S 5. This act shall take effect July 1, 2011; provided, however, if
this act shall become a law after such date, it shall take effect imme-
diately and shall be deemed to have been in full force and effect on and
after July 1, 2011.
FISCAL NOTE. - Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION -- OVERVIEW: The enactment of this
proposed legislation (referred to hereafter as "Interest Rate Extender
Legislation") would amend Administrative Code of the City of New York
("ACNY") Section 13-638.2 to continue for Fiscal Year 2012 for the five
actuarially-funded New York City Retirement Systems ("NYCRS") the
following rates that expire on June 30, 2011:
* The 8.25% per annum rate used to credit interest on Tier I and Tier
II member account balances and Increased-Take-Home-Pay ("ITHP")
Reserves, and
* The 8.0% per annum Actuarial Interest Rate ("AIR") assumption used
to compute employer contributions.
The Effective Date for this proposed Interest Rate Extender Legis-
lation would be July 1, 2011.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: The continuation for Fiscal
Year 2012 of the same 8.25% per annum rate that was used for Fiscal Year
2011 to credit interest on Tier I and Tier II member contributions and
ITHP Reserves would not change the amount or timing of expected employer
contributions.
The continuation for Fiscal Year 2012 of the AIR assumption of 8.0%
per annum that was used to determine employer contributions to the NYCRS
for Fiscal Year 2011 would not change the expected amount or timing of
employer contributions.
FINANCIAL IMPACT - POTENTIAL CHANGES IN ACTUARIAL ASSUMPTIONS AND
METHODS: The impact of enactment of the proposed legislation provided in
this Fiscal Note has been based on the continued use of the current
actuarial assumptions and methods.
A. 8012 4
However, this set of actuarial assumptions and methods do not repre-
sent the only possible approach for funding the NYCRS.
Historically, actuarial assumptions and methods have been reviewed on
average every five years in connection with an actuarial experience
study mandated by New York City Charter Section 96.
Following this review, the Actuary generally proposes changes in actu-
arial assumptions and methods that he believes appropriate and reason-
ably related to such experience period and future expectations.
The next such review is anticipated during Fiscal Year 2012 at which
time the Actuary is likely to propose new packages of actuarial assump-
tions and methods to be effective for use in determining employer
contributions beginning Fiscal Year 2012.
It is anticipated that whatever new actuarial assumptions are recom-
mended by the Actuary are likely to result in increased Actuarial Pres-
ent Values of Benefits ("APVB") and employer costs as the current actu-
arial assumptions no longer represent the Actuary's best estimates.
Note: The Actuary has not yet committed to any particular actuarial
assumptions or methodology for determining employer costs and employer
contributions in connection with the upcoming review of the actuarial
assumptions and methods.
OTHER COSTS: Enactment of this proposed legislation would not be
expected to produce any additional costs.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Chief
Actuary for the New York City Retirement Systems. I am a Fellow of the
Society of 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.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2011 Legislative Session. It is Fiscal Note 2011-10, dated
April 7, 2011, prepared by the Chief Actuary for the New York City
Retirement System.