S T A T E O F N E W Y O R K
________________________________________________________________________
7873--A
2021-2022 Regular Sessions
I N A S S E M B L Y
May 28, 2021
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees -- recommitted to the Committee on Govern-
mental Employees in accordance with Assembly Rule 3, sec. 2 -- commit-
tee discharged, bill amended, ordered reprinted as amended and recom-
mitted 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:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06287-04-2
A. 7873--A 2
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
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.
IMPACT ON PAYABILITY: Currently, Tier 4 vested members in the Auto
25-Year Plan can begin collecting their pension:
* At the later of age 50 or what would have been their 25th year of
credited service
The proposed legislation would instead enable Tier 4 Auto 25-Year Plan
vested members to begin collecting their pension as follows:
* At age 62 with at least 10 years of credited service
* At age 63 with at least eight years of credited service
* At age 64 with at least six years of credited service
* At age 65 or older with at least five years of credited service
Tier 6 Auto 25-Year Plan members would remain eligible for a vested
benefit:
* At age 63 or older with at least 10 years of credited service.
IMPACT ON BENEFITS: The proposed legislation would further provide to
both Tier 4 and 6 Auto 25-Year Plan vested members an annuity benefit at
payability equal to the difference between the following:
* AMCs required in the Auto 25-Year Plan (4.83% of salary), and
* AMCs required in the Tier 4 55/25 Retirement Plan (ranging from
1.85% to 4.35% of salary depending on dates of the service rendered).
The difference in the AMC balances above are to be annuitized pursuant
to the method set out in loan provisions contained in RSSL Section
613-b(i) (i.e., the actuarially equivalent of a life annuity 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).
Note:
* This annuity would only be available to vested members and not to
Auto-25 Year Plan service retirees (i.e., retirees with 25 or more years
of credited service).
* For the purposes of determining the costs enumerated in this Fiscal
Note, it has been assumed that Tier 4 vested members who would have been
eligible for earlier payability (i.e., at the later of age 50 or what
would have been 25 years of service) under current provisions of law,
would still be eligible for such earlier payability, given Constitu-
tional protections, notwithstanding the bill's omission of such eligi-
bility.
A. 7873--A 3
FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial assumptions
and methods described herein, the enactment of this proposed legislation
would increase the Present Value of Future Benefits (PVFB) by approxi-
mately $31.0 million. The increase in PVFB is estimated to be $25.5
million for New York City and $5.5 million for the other obligors of
NYCERS.
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 $18.0 million and an increase
in the Present Value of future employer Normal Cost of $13.0 million.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
Section 13-638.2(k-2) of the Administrative Code of the City of New York
(ACCNY), new UAL attributable to benefit changes are to be amortized as
determined by the Actuary, but are generally amortized over the remain-
ing working lifetime of those impacted by the benefit changes. As of
June 30, 2021, the remaining working lifetime of Auto 25-Year Plan
members is approximately 14 years.
For the purposes of this Fiscal Note, the increase in UAL was amor-
tized over a 14-year period (13 payments under the One-Year Lag Method-
ology (OYLM)) using level dollar payments. This payment plus the
increase in the Normal Cost results in an increase in annual employer
contributions of approximately $3.9 million each year. The increase in
annual employer contributions is estimated to be $3.2 million for New
York City and $0.7 million for the other obligors of NYCERS.
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the PVFB and annual employer contributions
would be reflected for the first time in the June 30, 2021 actuarial
valuation of NYCERS. In accordance with the OYLM used to determine
employer contributions, the increase in employer contributions would
first be reflected in Fiscal Year 2023.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2021 (Lag) actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2023 employer contrib-
utions.
The 1,712 NYCERS Auto 25-Year Plan members as of June 30, 2021 include
1,675 active members and 37 non-active members. The active members had
an average age of approximately 45.4 years, average service of approxi-
mately 9.3 years, and an average salary of approximately $113,100.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value 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, 2021 (Lag) actuarial valuations
used to determine the Preliminary Fiscal Year 2023 employer contrib-
utions of NYCERS.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the realization of the actuarial assumptions used, as well as
certain demographic characteristics of NYCERS and other exogenous
factors such as investment, contribution, and other risks. If actual
experience deviates from actuarial assumptions, the actual costs could
differ from those presented herein. Costs are also dependent on the
actuarial methods used, and therefore different actuarial methods could
produce different results. Quantifying these risks is beyond the scope
of this Fiscal Note.
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.
A. 7873--A 4
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet, am the Interim
Chief Actuary for, and independent of, the New York City Retirement
Systems and Pension Funds. 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. To the best of my 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 2022-02 dated March 14,
2022 was prepared by the Interim Chief Actuary for the New York City
Employees' Retirement System. This estimate is intended for use only
during the 2022 Legislative Session.