S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10448
 
                           I N  A S S E M B L Y
 
                               May 24, 2024
                                ___________
 
 Introduced   by   COMMITTEE  ON  RULES  --  (at  request  of  M.  of  A.
   Pheffer Amato) -- read once and referred to the Committee  on  Govern-
   mental Employees
 
 AN  ACT to amend the administrative code of the city of New York and the
   retirement and social security law, in relation to permitting  certain
   New  York  city  correction  members  to borrow from their accumulated
   member contributions; and to repeal certain provisions of the  retire-
   ment and social security law relating thereto
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph 8 of  subdivision  d  of  section  445-a  of  the
 retirement  and  social security law is REPEALED and paragraphs 9 and 10
 are renumbered paragraphs 8 and 9.
   § 2. Paragraph 12 of subdivision d of section 445-c of the  retirement
 and  social  security  law  is REPEALED and paragraphs 13, 14 and 15 are
 renumbered paragraphs 12, 13 and 14.
   § 3. Paragraph 9 of subdivision e of section 504-a of  the  retirement
 and social security law is REPEALED.
   §  4. Paragraph 13 of subdivision e of section 504-b of the retirement
 and social security law is REPEALED.
   § 5. Subdivision a of section 13-140 of the administrative code of the
 city of New York, as amended by chapter 642 of  the  laws  of  1985,  is
 amended to read as follows:
   a. Any member in city service who shall have been a member continuous-
 ly  at  least  three years, may borrow from the contingent reserve fund,
 subject to such rules and regulations as may be approved by such  board,
 an  amount  not  exceeding THE SUM OF (I) seventy-five per centum of the
 amount in [his or her] SUCH MEMBER'S  account  in  the  annuity  savings
 fund, (II) ALL ADDITIONAL CONTRIBUTIONS, TOGETHER WITH INTEREST THEREON,
 MADE BY SUCH MEMBER PURSUANT TO SECTION FOUR HUNDRED FORTY-FIVE-A OF THE
 RETIREMENT  AND  SOCIAL  SECURITY LAW, AND (III) ALL ADDITIONAL CONTRIB-
 UTIONS, TOGETHER WITH INTEREST THEREON, MADE BY SUCH MEMBER PURSUANT  TO
 SECTION  FOUR HUNDRED FORTY-FIVE-C OF THE RETIREMENT AND SOCIAL SECURITY
 LAW.  The rate of interest payable on any loan made under  this  section
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD08662-04-4
 A. 10448                            2
 
 shall be two per centum higher than the rate of regular interest credit-
 able to the account of the member. The amount so borrowed, together with
 interest on any unpaid balance thereof shall be repaid to the retirement
 system  in  equal installments by deduction from the compensation of the
 member at the time the compensation is paid, but such installments shall
 be at least five per centum of the member's earnable  compensation.  All
 payments of principal and interest made by such member shall be credited
 to the contingent reserve fund.
   §  6.  Paragraph 1 of subdivision b of section 517-c of the retirement
 and social security law, as amended by section 1 of part JJ  of  chapter
 55 of the laws of 2023, is amended to read as follows:
   1.  A  member  of  the  New York state and local employees' retirement
 system, the New York state and local police and fire retirement  system,
 the  New York city employees' retirement system, the New York city board
 of education retirement system or the New York city police pension  fund
 in active service who has credit for at least one year of member service
 may borrow, no more than once during each twelve month period, an amount
 not  exceeding  seventy-five  percent  of  the  total contributions made
 pursuant to section FIVE HUNDRED FOUR-A (INCLUDING INTEREST CREDITED  AT
 THE  RATE  SET FORTH IN SUBPARAGRAPH (II) OF PARAGRAPH EIGHT OF SUBDIVI-
 SION E OF SUCH SECTION FIVE  HUNDRED  FOUR-A  COMPOUNDED  ANNUALLY),  OR
 SECTION FIVE HUNDRED FOUR-B (INCLUDING INTEREST CREDITED AT THE RATE SET
 FORTH  IN SUBPARAGRAPH (II) OF PARAGRAPH TWELVE OF SUBDIVISION E OF SUCH
 SECTION FIVE HUNDRED FOUR-B COMPOUNDED ANNUALLY) OR SECTION five hundred
 seventeen of this article (including interest credited at the  rate  set
 forth in subdivision c of such section five hundred seventeen compounded
 annually)  and  not  less than one thousand dollars[, provided, however,
 that the provisions of this section shall not apply to a New  York  city
 uniformed  correction/sanitation  revised plan member or an investigator
 revised plan member].
   § 7. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY: This proposed legislation would permit NYCERS Tier 2 and Tier
 3 members participating in  the  Correction  Officers  20-Year  Improved
 Benefit  Program  (CO-20  Plans)  and  for  similar plans for Correction
 Captains and above (CC-20 Plans), to take loans  against  their  accumu-
 lated Additional Member Contributions (AMC) with interest.
 
          EXPECTED INCREASE (DECREASE) IN EMPLOYER CONTRIBUTIONS
           by Fiscal Year for the first 25 years ($ in Millions)
                     Year      NYCERS
                     2025        3.5
                     2026        3.5
                     2027        0.1
                     2028        0.1
                     2029        0.1
                     2030        0.1
                     2031        0.0
                     2032        0.0
                     2033        0.0
                     2034        0.0
                     2035        0.0
                     2036        0.0
                     2037        0.0
                     2038        0.0
                     2039        0.0
 A. 10448                            3
 
                     2040        0.0
                     2041        0.0
                     2042        0.0
                     2043        0.0
                     2044        0.0
                     2045        0.0
                     2046        0.0
                     2047        0.0
                     2048        0.0
                     2049        0.0
      The potential costs related to lost investment earnings are not
                              included above.
 
   The  increase  in employer contributions will be allocated to New York
 City.
 
           INITIAL INCREASE (DECREASE) IN ACTUARIAL LIABILITIES
                    as of June 30, 2023 ($ in Millions)
              Present Value (PV)                 NYCERS
              PV of Benefits:                    6.4
              PV of Employee Contributions:      0.0
              PV of Employer Contributions:      6.4
              Unfunded Accrued Liabilities:      5.7
 
                AMORTIZATION OF UNFUNDED ACCRUED LIABILITY
                                                 NYCERS
              Number of Payments:                2
              Fiscal Year of Last Payment:       2026
              Amortization Payment:              3.3 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.
 
                                                 NYCERS
              Active Members
              - Number Count:                    489
              - Average Age:                     52.6
              - Average Service:                 22.4
              - Average Salary:                  149,300

   IMPACT ON MEMBER  BENEFITS:  The  proposed  legislation  would  permit
 NYCERS  members who are participants in the Tier 2 CO-20 and CC-20 Plans
 to borrow 100% of their AMC, and permit Tier  3  CO-20  and  CC-20  Plan
 participants to borrow up to 75% of their AMC.
   The loans on the AMC would be in addition to the currently permissible
 loans on Basic Member Contributions for such Plans.
   Employer  contributions will increase if a member takes a loan and the
 assets earn more than the rate of interest charged for the loan,  or  if
 there is an outstanding loan balance at retirement.
   Currently,  member contributions are invested with other NYCERS assets
 which are expected to earn 7.0% per annum. When an active member borrows
 member contributions from NYCERS, the loan is repaid  with  interest  at
 A. 10448                            4

 6.0%  per annum prior to retirement. The potential costs related to lost
 investment earnings are not included  in  the  costs  measured  in  this
 fiscal note.
   In  the  event  an  outstanding loan balance exists at retirement, the
 balance of the unpaid loan is converted to an annuity based on the yield
 on 30-year U.S. Treasury securities and deducted from the annual retire-
 ment allowance otherwise payable. This conversion is made on an actuari-
 al basis that is different than the basis used to determine the employer
 contributions to NYCERS, and unpaid loans therefore result in  costs  to
 employers.
   ASSUMPTIONS  AND  METHODS:  The  estimates  presented herein have been
 calculated based on the Revised 2021 Actuarial Assumptions  and  Methods
 of the impacted retirement systems.
   For  purposes  of this Fiscal Note, it has been assumed that the yield
 on 30-year U.S.  Treasury securities would equal 3.5% per year and  that
 50%  of  member  AMC  balances available for borrowing would be taken as
 loans.
   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 2024-50 dated May 8, 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.