Senate Bill S7370A

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7370--A

                            I N  S E N A T E

                              April 1, 2010
                               ___________

Introduced  by  Sen.  LANZA  -- 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
  refunding contributions made to the twenty-five year early  retirement
  program  and  the  age fifty-seven retirement program by New York city
  transit authority members

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision d of section 604-c of the retirement and social
security  law, as added by chapter 96 of the laws of 1995, is amended by
adding a new paragraph 15 to read as follows:
  15. AN ELIGIBLE FORMER PARTICIPANT,  AS  DEFINED  IN  THIS  PARAGRAPH,
SHALL  BE  ENTITLED  TO  A  REFUND OF THE EMPLOYEE PORTION OF HIS OR HER
ADDITIONAL MEMBER CONTRIBUTIONS MADE PURSUANT TO THIS SUBDIVISION  WHICH
SHALL  INCLUDE  ANY AND ALL INTEREST THEREON AT THE RATE OF FIVE PERCENT
PER ANNUM, COMPOUNDED ANNUALLY AND SUCH REFUND SHALL  BE  PAYABLE,  UPON
SUCH  PARTICIPANT'S  APPLICATION  PURSUANT  TO PROCEDURES PROMULGATED IN
REGULATIONS OF THE BOARD OF TRUSTEES OF THE RETIREMENT SYSTEM. AN ELIGI-
BLE FORMER PARTICIPANT SHALL BE A CURRENT NEW YORK CITY TRANSIT AUTHORI-
TY MEMBER, AS DEFINED IN SUBDIVISION A OF SECTION SIX HUNDRED FOUR-B  OF
THIS  ARTICLE,  WHO  WAS  A  PARTICIPANT  IN  THE TWENTY-FIVE YEAR EARLY
RETIREMENT PROGRAM PRIOR TO THE STARTING  DATE  OF  THE  ELIMINATION  OF
ADDITIONAL  MEMBER CONTRIBUTIONS, AS SUCH DATE IS DEFINED IN AN ELECTION
MADE PURSUANT TO PARAGRAPH TEN OF SUBDIVISION E OF SECTION  SIX  HUNDRED
FOUR-B OF THIS ARTICLE.
  S 2. Subdivision f of section 604-d of the retirement and social secu-
rity law is amended by adding a new paragraph 15 to read as follows:
  15.  AN  ELIGIBLE  FORMER  PARTICIPANT,  AS DEFINED IN THIS PARAGRAPH,
SHALL BE ENTITLED TO A REFUND OF THE EMPLOYEE  PORTION  OF  HIS  OR  HER
ADDITIONAL  CONTRIBUTIONS  MADE PURSUANT TO THIS SUBDIVISION WHICH SHALL
INCLUDE ANY AND ALL INTEREST  THEREON  PAID  TO  THE  RETIREMENT  SYSTEM
TOGETHER  WITH  INTEREST  THEREON AT THE RATE OF FIVE PERCENT PER ANNUM,

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

                                                           LBD07396-04-0

S. 7370--A                          2

COMPOUNDED ANNUALLY AND SUCH REFUND SHALL BE PAYABLE, UPON SUCH  PARTIC-
IPANT'S APPLICATION PURSUANT TO PROCEDURES PROMULGATED IN REGULATIONS OF
THE  BOARD  OF  TRUSTEES  OF  THE  RETIREMENT SYSTEM. AN ELIGIBLE FORMER
PARTICIPANT  SHALL  BE A CURRENT NEW YORK CITY TRANSIT AUTHORITY MEMBER,
AS DEFINED IN SUBDIVISION A OF SECTION SIX HUNDRED FOUR-B OF THIS  ARTI-
CLE,  WHO  WAS  A  PARTICIPANT IN THE AGE FIFTY-SEVEN RETIREMENT PROGRAM
PRIOR TO THE STARTING DATE  OF  THE  ELIMINATION  OF  ADDITIONAL  MEMBER
CONTRIBUTIONS,  AS  SUCH DATE IS DEFINED IN AN ELECTION MADE PURSUANT TO
PARAGRAPH TEN OF SUBDIVISION E OF SECTION SIX  HUNDRED  FOUR-B  OF  THIS
ARTICLE.
  S 3. This act shall take effect immediately.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  PROVISIONS  OF  PROPOSED  LEGISLATION: This proposed legislation would
amend New  York  State  Retirement  and  Social  Security  Law  ("RSSL")
Sections  604-c  and  604-d  to provide to certain New York City Transit
Authority ("NYCTA") members of the New York City  Employees'  Retirement
System  ("NYCERS")  a  refund of Additional Member Contributions ("AMC")
that were paid while participants of one of the Chapter 96 of  the  Laws
of 1995 ("Chapter 96/95") Retirement Programs.
  The  Effective  Date  of the proposed legislation would be the date of
enactment.
  This Fiscal Note assumes that the proposed legislation is intended  to
refund  interest on AMC in accordance with NYCERS procedures for credit-
ing interest on member contributions.
  IMPACT ON PLAN PROVISIONS -  ADDITIONAL  MEMBER  CONTRIBUTIONS:  Under
Chapter  96/95,  AMC  were  required  under each of the Early Retirement
Programs:
  * The Twenty-Five-Year Early Retirement Program ("55/25 Program") and
  * The Age-Fifty-Seven Retirement Program ("57/5 Program").
  Those NYCERS members who participated in either of such Programs  paid
AMC of:
  4.35% of salary for service on and after January 1, 1995 until January
1, 1998,
  2.85%  of salary for service on and after January 1, 1998 until Decem-
ber 2, 2001, and
  1.85% of salary for service on and after December 2, 2001.
  In addition, if such member's job title was considered Physically-Tax-
ing ("PT"), an additional PTAMC of 1.98% of salary was required for  all
service on and after January 1, 1995.
  As  a result of Chapter 10 of the Laws of 2000, many of the NYCTA Tier
IV members of NYCERS who participated in the  Chapter  96/95  Retirement
Program  were  transferred  into  the  Transit  Twenty-Five-Year and Age
Fifty-Five Retirement Program ("Transit 55/25 Program") effective Decem-
ber 15, 2000. For these members, the AMC and PTAMC that had been payable
under the Chapter 96/95 Retirement  Programs  were  no  longer  required
after  January  3,  2001  (i.e.,  the effective implementation date, the
first payroll period following the transfer date).
  This proposed legislation would refund, on  and  after  the  Effective
Date, to certain Transit 55/25 Program participants with initial Program
participation dates on or before December 15, 2000, the employee portion
of  the  AMC  and  PTAMC,  if any, paid for participation in the Chapter
96/95 Retirement Programs, including accrued interest at 5.0% per annum.
  Note, under the Chapter 96/95 Retirement Programs, 50% of the AMC  and
PTAMC  paid  into  such  Programs is considered an employer contribution
while the other 50% is considered to be the  employee  portion.  If  the
proposed  legislation were enacted, those impacted Transit 55/25 Program

S. 7370--A                          3

participants would receive  the  balance  of  the  accumulated  employee
portion of AMC and PTAMC.
  To  receive such refund, those eligible participants would be required
to complete a form and follow procedures to be established by the NYCERS
Board of Trustees.
  FINANCIAL IMPACT - OVERVIEW: If enacted into  the  law,  the  ultimate
employer  cost  of  this  proposed legislation will be determined by the
reduction in expected benefits paid (due to  there  no  longer  being  a
requirement  to  refund  AMC  on  a  future  withdrawal),  offset by the
reduction in Fund assets due to the current refund of AMC.
  FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With  respect  to  NYCERS
and  based  on  the  census  data  and actuarial assumptions and methods
described herein, the  enactment  of  this  proposed  legislation  would
result  in a decrease in the Actuarial Present Value ("APV") of Benefits
("APVB") of approximately $0.2 million as of June 30, 2008.
  In addition, there would be a reduction in Actuarial Asset Value as of
June 30, 2008 to reflect the expected refund of the employee portion  of
accumulated  Chapter 96/95 Retirement Program AMC and PTAMC, if any, for
those impacted Transit 55/25 Program participants of approximately  $1.9
million.
  Together,  the enactment of the proposed legislation would result in a
net increase in the APV of Future Employer Normal  Costs  to  NYCERS  of
approximately $1.7 million as of June 30, 2008.
  FINANCIAL IMPACT - ADDITIONAL ANNUAL EMPLOYER COSTS AND CONTRIBUTIONS:
With respect to NYCERS, the enactment of this proposed legislation would
increase annual employer costs by approximately $230,000 per year.
  If  enacted  during the 2010 Legislative Session before June 30, 2010,
then employer contributions to NYCERS would begin Fiscal Year 2010.
  If enacted during the 2010 Legislative Session after June 30, 2010 and
before June 30, 2011, then increased employer  contributions  to  NYCERS
would begin Fiscal Year 2011.
  Increases  in  employer contributions would be comparable to the esti-
mated increases in employer costs.
  OTHER COSTS: Not measured in  this  Fiscal  Note  are  any  additional
administrative  costs  or the impact of this proposed legislation on the
Manhattan and Bronx Surface Transit Operating Authority ("MaBSTOA").
  CENSUS DATA: The census data used for estimates of APVB, APV of Future
Employer Normal Costs and employer contributions  presented  herein  are
the 36,715 Tier IV active members of NYCERS who participate in the Tran-
sit 55/25 Program with annual salaries of approximately $2,426.9 million
included in the June 30, 2008 actuarial valuation of NYCERS.
  Of these 36,715 Tier IV members of NYCERS who participate in the Tran-
sit  55/25 Program as of June 30, 2008, 778 members with annual salaries
of approximately $57.4 million have AMC balances from contributions made
under the Chapter  96/95  Retirement  Programs  while  35,937  of  these
members do not have such AMC balances.
  Of such 778 NYCERS members, 540 members with salaries of approximately
$44.8  million  became  participants  of the Transit 55/25 Program on or
before December 15, 2000 while 238 of  such  members  with  salaries  of
approximately  $12.5 million have Chapter 96/95 AMC balances but are not
eligible for a refund.
  Those former participants of the Transit 55/25  Program  who  withdrew
and  their  length  of absence has exceeded five years, or withdrew with
deferred vested benefits or who have retired, do not meet the definition
of active participant and were therefore excluded.

S. 7370--A                          4

  ACTUARIAL ASSUMPTIONS AND METHODS:  Additional  APVB,  APV  of  Future
Employer  Normal Costs and employer costs have been calculated using the
actuarial assumptions and methods in effect for the June 30, 2008  (Lag)
actuarial  valuation  of  NYCERS to determine employer contributions for
Fiscal Year 2010.
  The  development  of the APVB and the expected refund of Chapter 96/95
AMC and PTAMC assume that all impacted  Transit  55/25  Program  partic-
ipants would still be active participants in that Program.
  Additional  annual  employer  costs  have  been estimated assuming the
additional APV of Future Normal Costs would be financed  through  future
normal contributions.
  STATEMENT  OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Chief
Actuary for the New York City Retirement Systems. 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.
  FISCAL  NOTE  IDENTIFICATION:  This  estimate is intended for use only
during the 2010 Legislative Session. It is Fiscal  Note  2010-04,  dated
February  10,  2010, prepared by the Chief Actuary for the New York City
Employees' Retirement System.