Senate Bill S9394

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9394
 
                             I N  S E N A T E
 
                               May 24, 2022
                                ___________
 
 Introduced  by  Sen. SKOUFIS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN ACT in relation to granting retroactive tier IV membership in the New
   York city employees' retirement system to Ryan D. O'Connor
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Notwithstanding any other provision of law to the contrary,
 Ryan D. O'Connor, an employee of the New York city transit authority and
 a  member  of  the  New  York city employees' retirement system, who was
 employed with the New York city transit authority on January  19,  2012,
 who for reasons not ascribable to his own negligence, failed to become a
 member  of  such  retirement  system during such employment with the New
 York city transit authority until September 10, 2012, shall be deemed to
 have joined the New York city employees' retirement  system  on  January
 19,  2012 and shall be granted Tier IV status in such retirement system,
 if, within one year of the effective date of this act, he shall  file  a
 written request with the New York city employees' retirement system.
   §  2. No contributions made to the New York city employees' retirement
 system by Ryan D. O'Connor shall be returned or refunded to him pursuant
 to this act.
   § 3. All past service costs of implementing the provisions of this act
 shall be borne by the city of New York.
   § 4. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL:  This  proposed  legislation  would  permit  Ryan  D.
 O'Connor,  an  active  Tier  6  member  of  the New York City Employees'
 Retirement System (NYCERS), to elect,  by  filing  an  application  with
 NYCERS  within  one year of the effective date, membership in the Tier 4
 NYCERS 57/5 Plan.
   Effective Date: Upon enactment.
   BACKGROUND: Mr. O'Connor commenced employment with the New  York  City
 Transit  Authority  (NYCTA)  on January 19, 2012 and subsequently joined
 NYCERS in September 2012. In the nine-month period between the commence-
 ment of his employment and the date on which he joined  NYCERS,  Chapter
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD15063-04-2
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 18 of the Laws of 2012, or Tier 6, was enacted. Therefore, Mr.  O'Connor
 joined NYCERS as a Tier 6 member.
   The  proposed  legislation  would  allow  Mr.  O'Connor to apply for a
 retroactive NYCERS membership date of  January  19,  2012,  which  would
 entitle  him  to  Tier  4  membership,  without  a refund of past Tier 6
 contributions, in the NYCERS 57/5 Plan. A change from Tier 6 to  Tier  4
 would result in an earlier date of retirement eligibility, lower overall
 prospective  employee contribution rates, a larger benefit, and a three-
 year (as opposed to a five-year) final average salary.
   While the past service costs for this member would normally  be  borne
 by the NYCTA, the proposed legislation assigns such costs to City of New
 York.
   FINANCIAL  IMPACT  - PRESENT VALUES: The estimated financial impact of
 this proposed legislation has been calculated based  on  the  difference
 between  (1) the present value of benefits Mr. O'Connor would receive if
 the Tier 4 57/5 Plan were elected and (2) the present value of the bene-
 fits Mr.  O'Connor would receive under the Tier 6 63/10 Plan.
   Based on the actuarial assumptions and methods described  herein,  and
 assuming  that  Mr.  O'Connor  timely  elects  the Tier 4 57/5 Plan, the
 enactment of this proposed legislation would increase the Present  Value
 of  Future  Benefits  (PVFB)  by  approximately $37,300 and decrease the
 Present Value of member contributions by approximately $59,900,  result-
 ing in an increase in the Present Value of future employer contributions
 of approximately $97,200.
   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 $43,400 and an increase in the
 Present Value of future employer Normal Cost of approximately $53,800.
   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 are generally amortized over the
 remaining working lifetime of those impacted by the benefit changes.  As
 of June 30, 2021, the remaining working lifetime  for  Mr.  O'Connor  is
 approximately 21 years.
   For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
 tized over a 21-year period (20 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 $8,000 each year.
   CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
 assumed that the  changes  in  the  Present  Value  of  future  employer
 contributions  and  annual employer contributions would be reflected for
 the first time in the Preliminary June 30, 2022 actuarial  valuation  of
 NYCERS.  In accordance with the OYLM used to determine employer contrib-
 utions, the increase in employer contributions would first be  reflected
 in Fiscal Year 2024.
   CENSUS  DATA:  As of June 30, 2021, Mr. O'Connor was approximately age
 35, had approximately nine years of service, and a  salary  of  approxi-
 mately $93,900.
   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 Preliminary June 30, 2021 (Lag)  actuarial
 valuations  used  to determine the Preliminary Fiscal Year 2023 employer
 contributions of NYCERS.
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   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.
     * 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  2022-60  dated  May  23,
 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.