S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8021--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 25, 2017
                                ___________
 
 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, 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 AND ENDING ON THE DECEMBER THIRTY-FIRST NEXT  SUCCEED-
 ING  THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND EIGH-
 TEEN THAT AMENDED THIS PARAGRAPH 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  thir-
 ty-first commencing with the January first next succeeding the effective
 date  of  [the]  chapter  FIVE  HUNDRED  TEN of the laws of two thousand
 fifteen that amended this paragraph) shall be determined by reference to
 the wages of such member in the second plan year (April first  to  March
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06931-09-8

 A. 8021--A                          2
 
 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 FIVE HUNDRED TEN  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;
   (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] chap-
 ter FIVE HUNDRED TEN 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.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY  OF BILL: This proposed legislation would amend paragraph 2 of
 subdivision a of Section 613 of the Retirement and Social  Security  Law
 (RSSL)  to  prospectively modify the member contribution rate for Tier 6
 New York City Transit Authority (NYCTA) members who participate  in  the
 New  York City Employees' Retirement System (NYCERS) Transit 25-Year/Age
 55 Retirement Plan from the current graded schedule of 3% to 6%  of  the
 members' wages to a flat 2% of wages after the December 31st of the year
 in which the law is enacted.
   Effective Date: Upon enactment.
   FINANCIAL  IMPACT  -  ACTUARIAL PRESENT VALUES: With respect to NYCERS
 and based on the  actuarial  assumptions  and  methods  herein,  if  the
 proposed  legislation were enacted, the Actuarial Present Value (APV) of
 Benefits (APVB) would decrease due to  a  reduction  in  the  amount  of
 refunds  of  member  contributions  upon  termination  of employment and
 decrease the Actuarial Present Value of member contributions.
   Under the Entry Age Normal (EAN) cost method used to determine employ-
 er contributions to NYCERS, there would be an increase in the  Actuarial
 Present  Value  of  Future  Employer  Normal Cost and an increase in the
 Unfunded Accrued Liability (UAL).
   FINANCIAL IMPACT - CHANGES IN PROJECTED  ACTUARIAL  PRESENT  VALUE  OF
 FUTURE  EMPLOYER  CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: In
 accordance with ACCNY Section 13.638.2(k-2),  new  UAL  attributable  to
 benefit  changes  are  to  be amortized as determined by the Actuary but
 generally over the remaining working lifetime of those impacted  by  the
 benefit  changes.  As  of June 30, 2017, if this proposed legislation is
 enacted, the remaining working lifetime of the Tier 6 25/55  NYCTA  Plan
 participant is approximately 18 years.

 A. 8021--A                          3
 
   For  this proposed legislation the change in UAL was amortized over an
 18-year period (17 payments under the One-Year  Lag  Methodology)  using
 level dollar payments.
   The following Table 1 presents an estimate of the increases in the APV
 of future employer contributions and in employer contributions to NYCERS
 for  Fiscal  Years  2019 through 2023 due to the reduction of the member
 contribution rate for Tier 6 members  who  participate  in  the  Transit
 25-Year/Age 55 retirement plan based on the applicable actuarial assump-
 tions and methods noted herein:
                                  TABLE 1
             INCREASE IN APV OF FUTURE EMPLOYER CONTRIBUTIONS
                        AND EMPLOYER CONTRIBUTIONS
                               ($ Millions)

      Fiscal Year           Increase in APV of       Increase in Employer
                            Future Employer          Contributions
                            Contributions
 
          2019                   $320.5                   $25.2
          2020                    425.0                    32.7
          2021                    509.5                    39.6
          2022                    590.0                    46.5
          2023                    665.1                    53.3
 
   CONTRIBUTION  TIMING:  For purposes of this Fiscal Note, it is assumed
 that the changes in the APVB, APV of member contributions, UAL  and  APV
 of  future  employer contributions would be reflected for the first time
 in the June 30, 2017 actuarial valuation of  NYCERS.  In  th  accordance
 with  the  One-year  Lag  Methodology  (OYLM) used to determine employer
 contributions, the increase in employer  contributions  would  first  be
 reflected in Fiscal Year 2019.
   CENSUS DATA: Census data used for the calculations presented herein is
 as  of  June  30,  2017, including 9,822 Tier 6 25/55 NYCTA members with
 cumulative salaries of approximately $678.6 million.
   OTHER COSTS: Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of NYCERS to  implement
 the proposed legislation.
   *  The  impact  of  this  proposed legislation on Other Postemployment
 Benefit (OPEB) costs.
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in APVB, APV of  member
 contributions,  UAL,  APV  of future employer contributions and employer
 contributions presented herein have been calculated based  on  the  same
 actuarial  assumptions and methods in effect for the June 30, 2017 (Lag)
 actuarial valuations used to determine the Preliminary Fiscal Year  2019
 employer  contributions  of  NYCERS.  Please  note these assumptions and
 methods are subject to change as this valuation is not considered  final
 until the end of the Fiscal Year 2019.
   New  entrants  were projected to replace the members expected to leave
 the active population  to    maintain  a  steady-state  population.  New
 entrant  ages, salaries, and future salary increases are consistent with
 those used in projections for the New York City Office of Management and
 Budget in April 2018.
   The following Table 2 presents the total number of active Tier 6 25/55
 NYCTA Plan participant used in the projections, assuming  a  level  work
 force,  and  the  cumulative  number  (i.e.  net of withdrawals) of such
 participants as of each June 30 from 2017 through 2021.

 A. 8021--A                          4
 
                                  TABLE 2
           June 30      Tier 1, 2 & 4    Tier 6       Total
             2017          26,747         9,822       36,569
             2018          24,191        12,378       36,569
             2019          22,152        14,417       36,569
             2020          20,266        16,303       36,569
             2021          18,551        18,018       36,569
 
 STATEMENT  OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actuary
 for, and independent of,  the  New  York  City  Retirement  Systems  and
 Pension  Funds.  I  am a Fellow of the Society of Actuaries, an Enrolled
 Actuary under the Employee Retirement Income and Security  Act  of  1974
 (ERISA),  a Member of the American Academy of Actuaries, and a Fellow of
 the Conference of Consulting Actuaries. I meet the Qualification  Stand-
 ards  of the American Academy of Actuaries to render the actuarial opin-
 ion contained herein. To the best of my knowledge, the results contained
 herein have been prepared in accordance with generally accepted actuari-
 al principles and procedures and with the Actuarial Standards  of  Prac-
 tice issued by the Actuarial Standards Board.
   FISCAL  NOTE  IDENTIFICATION: This Fiscal Note 2018-18 dated April 24,
 2018, was prepared by the Chief Actuary for the New York City Employees'
 Retirement System. This estimate is intended for  use  only  during  the
 2018 Legislative Session.