S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5754
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 23, 2023
                                ___________
 
 Introduced  by  M.  of A. PHEFFER AMATO -- read once and referred to the
   Committee on Governmental Employees
 
 AN ACT to amend the retirement and social security law, in  relation  to
   providing Tier 5 and 6 members of the New York state teachers' retire-
   ment system with the same service retirement pension factor as Tier 4

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision a of section 504 of the retirement  and  social
 security  law,  as amended by chapter 18 of the laws of 2012, is amended
 to read as follows:
   a. The service  retirement  benefit  for  general  members  at  normal
 retirement  age with twenty or more years of credited service shall be a
 pension equal to one-fiftieth of final average  salary  times  years  of
 credited  service,  not in excess of thirty years, less fifty percent of
 the primary social security retirement benefit as  provided  in  section
 five  hundred eleven of this article. The service retirement benefit for
 general members at normal retirement age with twenty or  more  years  of
 service who first become members of the New York state and local employ-
 ees'  retirement  system on or after April first, two thousand twelve at
 normal retirement age shall be a pension equal to the  sum  of  [thirty-
 five] FORTY per centum and one-fiftieth of final average salary for each
 year  of service in excess of twenty, but not in excess of thirty, times
 final average salary times years of credited service.
   § 2. Subdivisions a, b and b-1 of section 604 of  the  retirement  and
 social  security  law,  subdivision  a as amended and subdivision b-1 as
 added by chapter 18 of the laws of 2012, subdivision  b  as  amended  by
 chapter  266  of the laws of 1998, and the opening paragraph of subdivi-
 sion b as amended by section 8-b of part B of chapter 504 of the laws of
 2009, are amended to read as follows:
   a. The service retirement benefit  at  normal  retirement  age  for  a
 member  with  less  than twenty years of credited service[, or less than

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10094-01-3
              

 A. 5754                             2

 twenty-five years credited service for a member who joins the  New  York
 state  teachers'  retirement system on or after January first, two thou-
 sand ten,] shall be a retirement  allowance  equal  to  one-sixtieth  of
 final  average salary times years of credited service. Normal retirement
 age for members who first become members of a public  retirement  system
 of  the  state on or after April first, two thousand twelve shall be age
 sixty-three.
   b. The service retirement benefit  at  normal  retirement  age  for  a
 member  with  twenty years or more of credited service[, or with twenty-
 five or more years credited service for a member who first joins the New
 York state teachers' retirement system on or after  January  first,  two
 thousand  ten,] shall be a retirement allowance equal to one-fiftieth of
 final average salary times years of credited service not  in  excess  of
 thirty years.
   Credited service in excess of thirty years shall provide an additional
 retirement  allowance equal to three-two hundredths of the final average
 salary for each year of credited service in excess of thirty years.
   b-1. Notwithstanding any other provision of law to the  contrary,  the
 service retirement benefit for members with [twenty] FORTY or more years
 of  credit  service  who  first  become  a member of a public retirement
 system of the state on or after April first, two thousand twelve at  age
 sixty-three  shall be a pension equal to the sum of [thirty-five] SEVEN-
 TY-FIVE per centum and one-fiftieth of final  average  salary  for  each
 year  of  service in excess of [twenty] FORTY times final average salary
 times years of credited service. In no event shall any retirement  bene-
 fit  payable  without optional modification be less than the actuarially
 equivalent annuitized value of the  member's  contributions  accumulated
 with  interest at five percent per annum compounded annually to the date
 of retirement.
   § 3. Section 1312 of the retirement and social security law, as  added
 by chapter 18 of the laws of 2012, is amended to read as follows:
   §  1312.  Benefit  enhancements.  Notwithstanding any other law to the
 contrary, eligible employees  shall  be  permitted  to  retire,  without
 penalty,  upon  reaching  age fifty-seven and completing at least thirty
 years of credited service. Employees retiring pursuant to  this  section
 shall  receive  a  pension  allowance  equal to the sum of [thirty-five]
 FORTY per centum and one-fiftieth of final average salary for each  year
 of service in excess of twenty times final average salary times years of
 credited service.
   §  4. Notwithstanding any other provision of law to the contrary, none
 of the provisions of this act shall be subject  to  section  25  of  the
 retirement and social security law.
   § 5. This act shall take effect immediately.
   FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
   This  bill would amend subdivisions a, b and b-1 of Section 604 of the
 Retirement and Social Security Law to provide Tier 5 and 6  members  the
 same  service  retirement  pension  factor as Tier 4. The Tier 4 service
 retirement pension factor for members with less than 20 years of service
 is equal to one-sixtieth of final average salary times years of service;
 for members with 20 or more years of service it is equal to  2.0%  times
 all  years  of service up to 30 years, plus 1.5% for each year above 30,
 times final average salary. The current Tier 5  pension  factor  is  the
 same as that of Tier 4, with the breakpoint being at 25 years of service
 instead  of 20. The current Tier 6 pension formula for members with less
 than 20 years of service is equal to one-sixtieth of final average sala-
 ry times years of service; for members with 20 or more years of  service
 A. 5754                             3
 
 it is equal to 35.0% plus 2.0% for each year above 20, times final aver-
 age  salary.  For  Tier 6 members with more than 40 years of service the
 current Tier 6 pension formula is better than that of Tier 4  and  would
 remain in place.
   The  annual  cost  to  the  employers of members of the New York State
 Teachers' Retirement System for this benefit is estimated  to  be  $50.8
 million or 0.28% of payroll if this bill is enacted.
   The  System's "new entrant rate", a hypothetical employer contribution
 rate that would occur if we started a new Retirement System without  any
 assets, is equal to 5.15% of pay under the current Tier 6 benefit struc-
 ture.  This can be thought of as the long-term expected employer cost of
 Tier 6, based on current actuarial assumptions. For the proposed  change
 to  the  Tier 6 benefit structure under this bill, this new entrant rate
 would increase to 5.74% of pay, an increase of 0.59% of pay.
   Member data is from  the  System's  most  recent  actuarial  valuation
 files,  consisting  of  data provided by the employers to the Retirement
 System.  Data distributions and statistics can be found in the  System's
 Annual  Report.  System assets are as reported in the System's financial
 statements and can also be found in the System's Annual Report. Actuari-
 al assumptions and methods are provided in the System's Actuarial  Valu-
 ation Report.
   The  source  of this estimate is Fiscal Note 2023-2 dated February 22,
 2023 prepared by the Office of the Actuary of the New York State  Teach-
 ers'  Retirement  System  and  is  intended for use only during the 2023
 Legislative Session. I, Richard A. Young, am the Chief Actuary  for  the
 New  York State Teachers' Retirement System. I am a member of the Ameri-
 can Academy of Actuaries and I meet the Qualification Standards  of  the
 American  Academy of Actuaries to render the actuarial opinion contained
 herein.