Senate Bill S7232

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

                                  7232

                            I N  S E N A T E

                              April 8, 2016
                               ___________

Introduced by Sen. ESPAILLAT -- 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, in relation to
  member contributions to the New York city employees' retirement system

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

  Section  1. Paragraph 2 of subdivision a of section 613 of the retire-
ment and social security law, as amended by chapter 510 of the  laws  of
2015, is amended to read as follows:
  2.  A  member of the New York city employees' retirement system who is
eligible to be a participant in the twenty-five-year and age  fifty-five
retirement  program,  as  defined  by paragraph five of subdivision a of
section six hundred four-b of this article shall contribute two  percent
of  annual  wages  to  such system effective on the starting date of the
elimination  of  additional  member  contributions,  as  defined  in  an
election  made pursuant to paragraph ten of subdivision e of section six
hundred four-b of this article[, except that beginning April first,  two
thousand  thirteen  for members who first become members of the New York
city employees' retirement system on or after April first, two  thousand
twelve,  the  rate  at  which  each  such member shall contribute in any
current plan year (April first to March thirty-first, provided, however,
that plan year shall mean January first  through  December  thirty-first
commencing  with the January first next succeeding the effective date of
the chapter of the laws of two thousand fifteen that amended this  para-
graph)  shall  be determined by reference to the wages of such member in
the second plan year  (April  first  to  March  thirty-first,  provided,
however,  that plan year shall mean January first through December thir-
ty-first commencing with the January first next succeeding the effective
date of the chapter of the laws of two  thousand  fifteen  that  amended
this paragraph) preceding such current plan year as follows:
  (i)  members  with  wages  of forty-five thousand dollars per annum or
less shall contribute three per centum of annual wages;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13104-03-6

              

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  (ii) members with wages greater than forty-five  thousand  per  annum,
but  not  more than fifty-five thousand per annum shall contribute three
and one-half per centum of annual wages;
  (iii)  members  with wages greater than fifty-five thousand per annum,
but not more than seventy-five thousand per annum shall contribute  four
and one-half per centum of annual wages;
  (iv)  members  with wages greater than seventy-five thousand per annum
but not more than one hundred thousand per annum shall  contribute  five
and three-quarters per centum of annual wages; and
  (v)  members  with  wages  greater than one hundred thousand per annum
shall contribute six per centum of annual wages.
  Notwithstanding the foregoing, during each of  the  first  three  plan
years  (April  first to March thirty-first, provided, however, that plan
year shall mean January first through December  thirty-first  commencing
with the January first next succeeding the effective date of the chapter
of  the  laws  of  two  thousand fifteen that amended this paragraph) in
which such member has  established  membership  in  the  New  York  city
employees'  retirement system, such member shall contribute a percentage
of annual wages in accordance with the preceding schedule based  upon  a
projection of annual wages provided by the employer].
  S 2. This act shall take effect immediately.
  FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
  FISCAL  NOTE.  --  PROVISIONS  OF  PROPOSED LEGISLATION: This proposed
legislation would amend paragraph 2 of subdivision a of Section  613  of
the  Retirement  and  Social  Security  Law  (RSSL) to modify the member
contribution rate for Tier 6 Transit Authority members  who  participate
in  the  Transit  25-Year/Age 55 Retirement Plan from the current graded
schedule of 3% to 6% based on the members' wages to a flat 2% of wages.
  The Effective Date of the proposed legislation would be  the  date  of
enactment.
  FINANCIAL  IMPACT  -  ACTUARIAL PRESENT VALUES: Based on the actuarial
assumptions and methods herein, the enactment of  this  proposed  legis-
lation would decrease the Actuarial Present Value of Benefits (APVB) for
NYCERS by approximately $10.3 million and decrease the Actuarial Present
Value of member contributions by approximately $190.7 million as of June
30, 2015.
  Under  the  Entry  Age Actuarial Cost Method (EAACM) used to determine
employer contributions to NYCERS, there would  be  an  increase  in  the
Actuarial Present Value of Future Employer Normal Cost of $173.1 million
and  an  increase  in the Unfunded Actuarial Accrued Liability (UAAL) of
approximately $7.3 million.
  FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In  accordance  with
section 13.638.2(k-2) of the Administrative Code of the City of New York
(ACNY),  new UAAL attributable to benefit changes are to be amortized as
determined by the Actuary but generally over the remaining working life-
time of those impacted by the benefit changes, which has been  estimated
to  be  approximately  18.2  years.  Recognizing  that  this period will
decrease over time as the group of Tier VI Members matures, the  Actuary
would  likely  choose  to  amortize  the  new  UAAL attributable to this
proposed legislation over a 15-year period.
  With respect to NYCERS, based on the Actuary's  actuarial  assumptions
and  methods  used  in  the  Preliminary June 30, 2015 valuations of the
NYCERS and those described later in this Fiscal Note, the  enactment  of
this  proposed  legislation would increase annual employer contributions
by approximately $21.1 million per year.

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  This increase in employer contributions has  been  estimated  assuming
that  the  increase  in UAAL would be financed over a 15-year period (14
payments under One-Year Lag Methodology) using level dollar payments.
  If  enacted  into  law  during the 2016 Legislative Session, increased
employer costs would be determined for Fiscal Year 2017.
  CENSUS DATA: Estimates  of  increases  in  APVB,  employer  costs  and
employer  contributions are based on the active census data used for the
Preliminary June 30, 2015 actuarial valuation of NYCERS, including 5,902
Tier 6 Transit members with salaries of approximately $366.4 million.
  ACTUARIAL ASSUMPTIONS AND METHODS:  Additional APVB, UAAL and employer
costs presented herein have been calculated based on the Actuary's actu-
arial assumptions and methods in effect for  the  June  30,  2015  (Lag)
actuarial  valuations  used  to  determine  Preliminary Fiscal Year 2017
employer contributions of NYCERS.
  STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am an Associate  of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
  FISCAL  NOTE  IDENTIFICATION:  This  estimate is intended for use only
during the 2016 Legislative Session. It is Fiscal  Note  2016-05,  dated
March 1, 2016.