S T A T E O F N E W Y O R K
________________________________________________________________________
10744
I N A S S E M B L Y
April 19, 2010
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees
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,
COMPOUNDED ANNUALLY AND SUCH REFUND SHALL BE PAYABLE, UPON SUCH PARTIC-
IPANT'S APPLICATION PURSUANT TO PROCEDURES PROMULGATED IN REGULATIONS OF
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16637-01-0
A. 10744 2
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
participants would receive the balance of the accumulated employee
portion of AMC and PTAMC.
A. 10744 3
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.
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)
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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.