S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8655--A
 
                             I N  S E N A T E
 
                               May 10, 2018
                                ___________
 
 Introduced  by  Sen.  GOLDEN -- 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
 
 AN  ACT  to amend the retirement and social security law, in relation to
   automotive members of the New York city employees' retirement system

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subparagraph  (ii)  of  paragraph  2  of subdivision d of
 section 604-g of the retirement and social security law, as  amended  by
 chapter 18 of the laws of 2012, is amended to read as follows:
   (ii)  In  the case of a participant who is not a New York city revised
 plan member, such vested benefit shall become payable [on  the  earliest
 date on which such discontinued member could have retired for service if
 such discontinuance had not occurred] AS FOLLOWS:
   (A) AT THE LATER OF AGE SIXTY-TWO OR THE AGE AT DISCONTINUANCE, IF THE
 MEMBER HAD COMPLETED AT LEAST TEN YEARS OF CREDITED SERVICE; OR
   (B)  AT  THE LATER OF AGE SIXTY-THREE OR THE AGE AT DISCONTINUANCE, IF
 THE MEMBER HAD COMPLETED AT LEAST EIGHT, BUT FEWER  THAN  TEN  YEARS  OF
 CREDITED SERVICE; OR
   (C)  AT  THE  LATER OF AGE SIXTY-FOUR OR THE AGE OF DISCONTINUANCE, IF
 THE MEMBER HAD COMPLETED AT LEAST SIX, BUT FEWER  THAN  EIGHT  YEARS  OF
 CREDITED SERVICE; OR
   (D)  AT  THE  LATER OF AGE SIXTY-FIVE OR THE AGE OF DISCONTINUANCE, IF
 THE MEMBER HAD COMPLETED AT LEAST FIVE, BUT  FEWER  THAN  SIX  YEARS  OF
 CREDITED SERVICE;
   or,  in  the case of a participant who is a New York city revised plan
 member, such vested benefit shall become payable at age sixty-three.
   § 2. Subdivision e of section 604-g of the retirement and social secu-
 rity law is amended by adding a new paragraph 13 to read as follows:
   13. IN ADDITION TO THE DEFERRED VESTED BENEFIT CALCULATED PURSUANT  TO
 SUBDIVISION  D  OF  THIS SECTION, A PARTICIPANT WHO IS ELIGIBLE FOR SUCH
 BENEFIT SHALL RECEIVE A LIFE ANNUITY (CALCULATED IN ACCORDANCE WITH  THE
 METHOD  SET  FORTH IN SUBDIVISION I OF SECTION SIX HUNDRED THIRTEEN-B OF
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD15234-03-8

 S. 8655--A                          2
 
 THIS ARTICLE) WHICH IS ACTUARIALLY EQUIVALENT TO THE DIFFERENCE  BETWEEN
 (I)  THE CONTRIBUTIONS REQUIRED BY PARAGRAPH ONE OF THIS SUBDIVISION AND
 (II) THE ADDITIONAL MEMBER CONTRIBUTIONS REQUIRED BY  SUBDIVISION  D  OF
 SECTION  SIX HUNDRED FOUR-C OF THIS ARTICLE, AS ADDED BY CHAPTER NINETY-
 SIX OF THE LAWS OF NINETEEN  NINETY-FIVE,  TOGETHER  WITH  THE  INTEREST
 CREDITED ON SUCH CONTRIBUTIONS.
   § 3. This act shall take effect immediately.
   FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
   SUMMARY  OF  BILL: This proposed legislation would amend Section 604-g
 of the Retirement and Social Security Law (RSSL) to provide early  paya-
 bility,  and  an annuity based on the accumulation of certain Additional
 Members Contributions (AMCs), to certain vested members in the New  York
 City  Employees'  Retirement  System  (NYCERS) Automotive 25-Year/Age 50
 Plan (Auto 25-Year Plan).
   Effective Date: Upon enactment.
   BACKGROUND: Currently, Tier 4 and Tier 6 vested members  in  the  Auto
 25-Year  Plan  receive  at  payability  a benefit of 2% of Final Average
 Salary (FAS) multiplied by the number of years of credited service. Tier
 4 members' FAS is based on a three-year average salary (FAS3), and  Tier
 6  members'  FAS  is  based on a five-year average salary (FAS5). Tier 4
 vested Plan members reach payability at what would have been  the  later
 of  reaching their 25th year of credited service or age 50, while Tier 6
 vested Plan members reach payability at age 63. The proposed legislation
 would enable Tier 4 Auto 25-Year Plan members to retire  with  a  vested
 benefit  earlier  and  at  given ages and set years of credited service.
 Tier 6 Auto 25-Year Plan members would  remain  eligible  for  a  vested
 benefit, with 10 years of service credit, at age 63.
   The  proposed  legislation  would further provide to both Tier 4 and 6
 Auto 25-Year Plan vested members an additional annuity benefit equal  to
 the  difference  between  the  4.83%  of salary AMCs payable in the Auto
 25-Year Plan, and the AMCs required in the Tier 4 55/25 Retirement  Plan
 (generally 1.85% of salary for service rendered after December 2, 2001).
   IMPACT ON PAYABILITY: For Tier 4 Auto 25-Year Plan members, the vested
 benefit  would,  rather  than  be payable at the later of age 50 or what
 would have been their 25th year of credited service, become  payable  as
 follows:
   *  At  later of age 62 or age of discontinuance with at least 10 years
 of credited service
   * At later of age 63 or age of discontinuance with 8 but less than  10
 years of credited service
   *  At  later of age 64 or age of discontinuance with 6 but less than 8
 years of credited service
   * At later of age 65 or age of discontinuance with 5 but less  than  6
 years of credited service
   Tier  6 vested payability remains at age 63 (with 10 years of credited
 service).
   ADDITIONAL MEMBER CONTRIBUTIONS: Current members of the  Auto  25-Year
 Plan  are  required  to make, in addition to the applicable Tier 4 Basic
 Member Contributions (BMCs) of 3% of salary and the Tier 6 BMCs  ranging
 from  3%  to 6% of salary depending on defined salary ranges, AMCs equal
 to 4.83% of compensation for all service as a Plan  participant  on  and
 after  the starting date of the Plan until 30 years of credited service.
 AMCs are currently not refundable unless a Plan member  ceases  to  hold
 the title of an eligible automotive members and has less than five years
 of credited service.

 S. 8655--A                          3
 
   The  proposed legislation would provide a life annuity to Tier 4 and 6
 vested Plan members based on the difference between  the  AMCs  paid  by
 Auto-25  Year  Plan  Members  (4.83%  of salary) and those in the Tier 4
 55/25 Plan (ranging from 1.85% to 4.35% of salary depending on dates  of
 the service rendered), calculated pursuant to the method set out in loan
 provisions in 613-b(i) (i.e. the actuarially equivalent of a life annui-
 ty  using  the  interest rate on 30-year US treasury bonds as of January
 first of the calendar year of retirement and the  mortality  tables  for
 payment options under RSSL section 610). The annuity would not be avail-
 able to Auto-25 Year Plan service retirees.
   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 $23.1 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 $12.7 million and  an  increase
 in the APV of future employer Normal Cost of $10.4 million.
   FINANCIAL  IMPACT  - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
 Administrative  Code  of  the  City  of   New   York   (ACCNY)   Section
 13-638.2(k-2),  new  UAL attributable to benefit changes are to be amor-
 tized as determined by the Actuary  but  generally  over  the  remaining
 working  lifetime  of  those impacted by the benefit changes. As of June
 30, 2017, the remaining working lifetime of Auto 25-Year Plan members is
 approximately 13 years.
   For the purposes of this Fiscal Note, the increase in  UAL  was  amor-
 tized  over a 13-year period (12 payments under the One-Year Lag Method-
 ology) using level dollar payments. This payment plus  the  increase  in
 the  Normal Cost results in an increase in annual employer contributions
 of approximately $3.0 million each year.
   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 APVB and annual  employer  contributions
 would  be  reflected  for  the first time in the June 30, 2017 actuarial
 valuation of NYCERS. In accordance with  the  One-Year  Lag  Methodology
 (OYLM) used to determine employer contributions, the increase in employ-
 er contributions would first be reflected in Fiscal Year 2019.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2017 (Lag) actuarial valuation  of
 NYCERS  to  determine the Preliminary Fiscal Year 2019 employer contrib-
 utions.
   The 1,414 NYCERS Auto 25-Year Plan members as of June 30, 2017 had  an
 average age of approximately 45.2 years, average service of approximate-
 ly 8.7 years, and an average salary of approximately $97,100.
   ACTUARIAL  ASSUMPTIONS  AND METHODS: The changes in the UAL, APVB, 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  contributions of NYCERS. Please note these
 assumptions and methods are subject to change as this valuation  is  not
 considered final until the end of Fiscal Year 2019.

 S. 8655--A                          4
 
   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 2018-43 dated June 20,
 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.