Senate Bill S7546

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

                                  7546

                            I N  S E N A T E

                              June 1, 2012
                               ___________

Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Civil Service and Pensions

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").
  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:

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

                                                           LBD11366-03-2

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  * 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
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.

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  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 for 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.
  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.

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  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.