Assembly Bill A7558A

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

                                 7558--A

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                              May 10, 2011
                               ___________

Introduced by M. of A. ABBATE -- read once and referred to the Committee
  on  Governmental  Employees -- recommitted to the Committee on Govern-
  mental Employees in accordance with Assembly Rule 3, sec. 2 -- commit-
  tee discharged, bill amended, ordered reprinted as amended and  recom-
  mitted to said committee

AN  ACT  to amend the retirement and social security law and chapter 511
  of the laws of 1988 amending the retirement and  social  security  law
  relating  to  a  reduction  in  retirement age for certain members, in
  relation to extending the application of such provisions

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

  Section  1.  Paragraph  (ii)  of  subdivision  a of section 651 of the
retirement and social security law, as amended by  chapter  225  of  the
laws of 2006, is amended to read as follows:
  (ii) For each full year of covered employment occurring prior to Janu-
ary  first,  two  thousand [nine] TWELVE which is subsequent to December
thirty-first, nineteen hundred seventy, his or her normal retirement age
shall be reduced by four months.
  S 2. Section 2 of chapter 511  of  the  laws  of  1988,  amending  the
retirement and social security law relating to a reduction in retirement
age  for certain members, as amended by chapter 225 of the laws of 2006,
is amended to read as follows:
  S 2. This act shall take effect immediately, and shall apply  only  to
covered employment performed on or before December 31, [2008] 2011.
  S  3.  This  act  shall take effect immediately and shall be deemed to
have been in full force and effect on and after December 31, 2008.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  PROVISIONS OF PROPOSED LEGISLATION:  This proposed  legislation  would
amend  Retirement  and Social Security Law ("RSSL") Section 651.a(ii) to
extend special unreduced early retirement provisions for certain members
of the New York City Employees' Retirement System ("NYCERS").

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11366-02-2
              

A. 7558--A                          2

  The Effective Date of the proposed legislation would be  the  date  of
enactment.
  MEMBERS  IMPACTED  BY  THE PROPOSED LEGISLATION:   The proposed legis-
lation would cover those members of NYCERS ("Covered Members")  who  are
employed  at  the Triborough Bridge and Tunnel Authority ("TBTA") in the
following job titles:
  * Bridge and Tunnel Officer,
  * Bridge and Tunnel Sergeant,
  * Bridge and Tunnel Lieutenant,
  * Assistant Bridge and Tunnel Maintainer,
  * Bridge and Tunnel Maintainer,
  * Senior Bridge and Tunnel Maintainer, and
  * Bridge and Tunnel Laborer.
  IMPACT ON BENEFITS PAYABLE: Under the provisions of Article 16 of  the
RSSL,  Covered  Members  are  entitled  to retire without a reduction in
Retirement Allowance  prior  to  attainment  of  Normal  Retirement  Age
("NRA") defined as:
  * Age 55 - for Tier I members.
  * Age 62 - for Tier II, Tier III and Tier IV members.
  Under  this  current  law,  the  Period  Without  Reduction Before NRA
("PWRBN") is determined in accordance with a  schedule  which  is  based
upon  years  of  employment  in  one  of  the above job titles ("Covered
Employment"):
  * For Covered Employment before January 1, 1971, six months  per  year
of service.
  *  For  Covered  Employment  between  January 1, 1971 and December 31,
2008, four months per year of service.
  Nothing in these provisions shall permit a Tier I  member  to  retire,
other  than  for  disability, prior to age 50, or a Tier II, Tier III or
Tier IV member to retire, other than for disability, prior to age 55.
  In addition, such Covered Member  must  meet  the  applicable  service
requirements  for  retirement of the NYCERS Plan or Program in which the
member participates.
  For example, under current provisions in the Tier  IV  Basic  Plan,  a
Covered  Member  with 18 years of credited service in Covered Employment
as of December 31, 2008 would have a PWRBN period of 6.00  years  (i.e.,
18  years  times 4 months per year equals 72 months divided by 12 equals
6.00 years). Based on the existing Normal Retirement Age of  62  in  the
Tier  IV  Basic  Plan, the earliest Unreduced Retirement Age ("URA") for
this Covered Member would equal age 56 (i.e., the earliest age at  which
benefits are paid without actuarial reduction).
  The  proposed legislation would extend the PWRBN provisions to include
credited service for Covered Employment to December 31, 2013.
  Thus, using the earlier example of a Covered Member with 18  years  of
credited service as of December 31, 2008, under the proposed legislation
if  that  Covered  Member reaches 23 years of service as of December 31,
2013, the earliest URA would equal age 55.
  FINANCIAL IMPACT - ACTUARIAL PRESENT  VALUES  ("APV"):  Based  on  the
census  data and the actuarial assumptions and methods noted herein, the
enactment of the proposed legislation would increase the APV of Benefits
("APVB") to NYCERS by approximately $550,000.
  Since the proposed legislation would allow earlier  unreduced  service
retirement,  there  would  be  a  reduction  in the APV of future salary
("APVSAL") of approximately $3.1 million.
  FINANCIAL IMPACT -  ADDITIONAL  ANNUAL  EMPLOYER  COSTS  AND  EMPLOYER
CONTRIBUTIONS: The ultimate cost of a Retirement Program is the benefits

A. 7558--A                          3

it  pays.  The  financing  of that ultimate cost is provided by contrib-
utions and investment income.
  Based  on the Actuary's actuarial assumptions and methods in effect as
of June 30, 2010, the  enactment  of  this  proposed  legislation  would
increase  annual  employer costs to NYCERS by approximately $150,000 per
year.
  If enacted on or before June 30, 2012, this proposed legislation would
be expected to  increase  employer  contributions  to  NYCERS  beginning
Fiscal Year 2012.
  If enacted during the 2012 Legislative Session after June 30, 2012 but
on or before December 31, 2012, this proposed Legislation would increase
employer contributions to NYCERS beginning Fiscal Year 2013.
  OTHER  COSTS: The enactment of this proposed legislation would also be
expected to result in modest increases  in  administrative  expenses  of
NYCERS, the employer and certain New York City agencies.
  CENSUS  DATA:  The  calculation  of estimated changes in APVB, APVSAL,
employer costs and employer contributions presented herein is based upon
the census data fro active members included in the June 30,  2010  (Lag)
actuarial valuation of NYCERS.
  For  TBTA  overall,  census  data consisted of 1,649 active members of
NYCERS with annual salaries of approximately $123.5 million. There  were
1,195 Covered Members with annual salaries of $85.1 million.
  The  subset  of  Covered  Members  who are potentially affected by the
proposed legislation consisted of 257 Tier IV members with  salaries  of
approximately  $20.4 million whose average age and average service as of
June 30, 2010 were 49.4 years and 16.6 years, respectively.
  The Covered Members who are actually affected by the  proposed  legis-
lation  consisted  of 117 Tier IV members with salaries of approximately
$9.0 million whose average age and average service as of June  30,  2010
were 43.1 years and 13.6 years, respectively.
  ACTUARIAL  ASSUMPTIONS  AND METHODS: Additional APVB, APVSAL, employer
costs and employer contributions have been computed based on the actuar-
ial assumptions and methods currently in effect for the  June  30,  2010
(Lag)  actuarial valuation of NYCERS to determine employer contributions
for Fiscal Year 2012.
  Additional annual employer costs and employer contributions have  been
estimated  assuming the additional APVB would be financed through future
normal contributions.
  To determine the impact of the proposed legislation, a subgroup of the
Covered Members was developed on the basis of who would benefit actuari-
ally.
  For each member, the net APV of future employer costs (i.e., the  APVB
less  the  APV  of  future member contributions) was developed under the
current PWRBN provisions and the proposed PWRBN provisions. If such  net
APV  measured for the proposed PWRBN provisions was greater than the net
APV under the current PWRBN provisions, the member was deemed to benefit
actuarially.
  POTENTIAL CHANGES IN ACTUARIAL ASSUMPTIONS AND METHODS: The impact  of
enactment  of  the proposed legislation provided in this Fiscal Note has
been based on the continued use of the current actuarial assumptions and
methods.
  However, the Actuary has proposed a new package of  actuarial  assump-
tions  and  methods  for  use  in  determining employer contributions to
NYCERS for Fiscal Year 2012 and after, as the current actuarial  assump-
tions no longer represent the Actuary's best estimates.

A. 7558--A                          4

  It  is  anticipated that the proposed new package of actuarial assump-
tions and methods would likely result in a greater increase in APVB than
the amount determined under the current actuarial assumptions and  meth-
ods.    Annual employer costs and contributions would increase similarly
assuming that the prior service obligation associated with this increase
in  APVB  were amortized over a period comparable to that required under
the current actuarial methodology.
  Hence, the estimated financial impact of proposed legislation incorpo-
rating the new package of actuarial assumptions and methods is  expected
to differ from the financial impact computed using the actuarial assump-
tions and methods continued from Fiscal Year 2011.
  ECONOMIC  VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in  this
Fiscal  Note  are those appropriate for budgetary models and determining
annual employer contributions to NYCERS.
  However, the economic assumptions (current and proposed) that are used
for determining employer contributions  do  not  develop  risk-adjusted,
economic  values  of  benefits.  Such  risk-adjusted, economic values of
benefits would likely differ significantly from those developed  by  the
budgetary models.
  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 2012 Legislative Session. It is Fiscal  Note  2012-06,  dated
March  7,  2012,  prepared  by  the  Chief Actuary for the New York City
Employees' Retirement System.