S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6139--A
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               May 11, 2017
                                ___________
 
 Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
   -- recommitted to the Committee  on  Civil  Service  and  Pensions  in
   accordance  with  Senate  Rule 6, sec. 8 -- committee discharged, bill
   amended, ordered reprinted as amended and recommitted to said  commit-
   tee
 
 AN  ACT  to amend the retirement and social security law, in relation to
   the return of member contributions
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subparagraph  (ii)  of  paragraph  7  of subdivision d of
 section 445-a of the retirement and social security law, as  amended  by
 chapter 631 of the laws of 1993, is amended to read as follows:
   (ii)  Except as otherwise provided in subparagraph (iii) of this para-
 graph, should a participant in the twenty-year improved benefit  retire-
 ment  program[,  who  has  rendered  less than fifteen years of credited
 service] cease to hold the position of New York city correction  officer
 below  the  rank of captain for any reason whatsoever OTHER THAN SERVICE
 RETIREMENT OR RESIGNATION WITH A VESTED RIGHT TO A BENEFIT, his  or  her
 accumulated additional member contributions made pursuant to this subdi-
 vision  (together  with  any  interest  thereon  paid  to the retirement
 system) may be withdrawn by him or her pursuant to procedures promulgat-
 ed in regulations of the board of trustees  of  the  retirement  system,
 together  with  interest  thereon equal to eight and one-quarter percent
 per annum, compounded annually.
   § 2. Paragraph 6 of subdivision d of section 445-c of  the  retirement
 and social security law, as added by chapter 631 of the laws of 1993, is
 amended to read as follows:
   6.  Where  a person [who] became or becomes a participant in the twen-
 ty-year improved benefit retirement program for captains and above  [has
 rendered  less  than fifteen years of credited service as of the date he

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

                                                            LBD11668-03-8

 S. 6139--A                          2

 or she became or becomes a New York city correction member of  the  rank
 of  captain or above], the amount of the contribution deficiency charged
 to such a participant pursuant to paragraph five  of  this  subdivision,
 consisting  of retroactive additional member contributions plus interest
 on such amounts, shall be reduced by an amount equal to  the  additional
 member  contributions  which such participant made pursuant to paragraph
 one of subdivision d of section four hundred forty-five-a of this  arti-
 cle  as  a  participant  in  the twenty-year improved benefit retirement
 program for correction officers below the rank of captain (together with
 any interest thereon) which are on deposit  in  the  contingent  reserve
 fund  of the retirement system on the date such person became or becomes
 a participant in the twenty-year improved benefit retirement program for
 captains and above.
   § 3. Clause (A) of subparagraph (ii) of paragraph 11 of subdivision  d
 of  section 445-c of the retirement and social security law, as added by
 chapter 631 of the laws of 1993, is amended to read as follows:
   (A) Should a participant in the twenty-year improved  benefit  retire-
 ment  program for captains and above [who has rendered less than fifteen
 years of credited service] cease to hold the position of New  York  city
 correction  officer of the rank of captain or above for any reason what-
 soever, OTHER THAN SERVICE RETIREMENT OR RESIGNATION WITH A VESTED RIGHT
 TO A BENEFIT, his or her  accumulated  additional  member  contributions
 made  pursuant  to  this subdivision (together with any interest thereon
 paid to the retirement system) may be withdrawn by him or  her  pursuant
 to procedures promulgated in regulations of the board of trustees of the
 retirement  system,  together with interest thereon at the rate of eight
 and one-quarter percent per annum, compounded annually.
   § 4. Clause (A) of subparagraph (ii) of paragraph 8 of  subdivision  e
 of  section  504-a of the retirement and social security law, as amended
 by chapter 622 of the laws of 2004, is amended to read as follows:
   (A) Except as otherwise provided in subparagraph (iii) of  this  para-
 graph,  should  a participant in the twenty-year retirement program [who
 has rendered less than fifteen years of credited service] cease to  hold
 the  position  of  New  York  city  correction officer below the rank of
 captain for any reason  whatsoever  OTHER  THAN  SERVICE  RETIREMENT  OR
 RESIGNATION  WITH A VESTED RIGHT TO A BENEFIT UNDER THIS SECTION, his or
 her accumulated additional member contributions made  pursuant  to  this
 subdivision  (together  with any interest thereon paid to the retirement
 system) may be withdrawn by him or her pursuant to procedures promulgat-
 ed in regulations of the board of trustees  of  the  retirement  system,
 together  with  interest  thereon at the rate of five percent per annum,
 compounded annually.
   § 5. Paragraph 6 of subdivision e of section 504-b of  the  retirement
 and  social security law, as amended by chapter 622 of the laws of 2004,
 is amended to read as follows:
   6. Where a person [who] became or becomes a participant in  the  twen-
 ty-year  retirement  program  for  captains and above [has rendered less
 than fifteen years of credited service as of the date he or  she  became
 or  becomes  a New York city correction member of the rank of captain or
 above], the amount of the contribution  deficiency  charged  to  such  a
 participant  pursuant  to paragraph five of this subdivision, consisting
 of retroactive additional member contributions  plus  interest  on  such
 amounts,  shall  be  reduced by an amount equal to the additional member
 contributions which such participant made pursuant to paragraph  one  of
 subdivision  e  of  section  five  hundred  four-a  of this article as a
 participant in the twenty-year retirement program for  correction  offi-

 S. 6139--A                          3
 
 cers  below  the  rank  of  captain (together with any interest thereon)
 which are on deposit in the contingent reserve fund  of  the  retirement
 system  on  the  date such person became or becomes a participant in the
 twenty-year  retirement program for captains and above, provided, howev-
 er, that for persons who elect to become a participant  in  the  twenty-
 year  retirement program for captains and above pursuant to subparagraph
 (ii) of paragraph one of subdivision b of this section  or  subparagraph
 (ii)  of  paragraph two of subdivision b of this section, such reduction
 pursuant to this paragraph in the amount of such contribution deficiency
 shall be by the amount of  such  additional  member  contributions  made
 pursuant to subdivision e of section five hundred four-a OF THIS ARTICLE
 (together  with  any  interest  thereon)  which  are  on deposit in such
 contingent reserve fund at the time such member files such  election  to
 become  such a participant, and such participant shall not thereafter be
 permitted to withdraw any portion of  such  additional  member  contrib-
 utions  made pursuant to subdivision e of section five hundred four-a OF
 THIS ARTICLE at any time while he or she is a participant in  the  twen-
 ty-year  retirement program for captains and above, and provided further
 that the provisions of this paragraph shall apply to any person who is a
 participant in the twenty-year retirement program for captains and above
 on or after the revised contribution date, even where  such  person  has
 rendered  fifteen or more years of credited service as of the date he or
 she became a New York city correction member of the rank of  captain  or
 above.
   §  6. Clause (A) of subparagraph (ii) of paragraph 12 of subdivision e
 of section 504-b of the retirement and social security law, as added  by
 chapter 631 of the laws of 1993, is amended to read as follows:
   (A)  Should  a  participant  in the twenty-year retirement program for
 captains and above [who has rendered less than fifteen years of credited
 service] cease to hold the position of New York city correction  officer
 of  the  rank  of  captain or above for any reason whatsoever OTHER THAN
 SERVICE RETIREMENT OR RESIGNATION WITH A VESTED RIGHT TO A BENEFIT UNDER
 THIS SECTION, his or her  accumulated  additional  member  contributions
 made  pursuant  to  this subdivision (together with any interest thereon
 paid to the retirement system) may be withdrawn by him or  her  pursuant
 to  procedures  promulgated in regulations of the head of the retirement
 system, together with interest thereon at the rate of five  percent  per
 annum, compounded annually.
   § 7. This act shall take effect immediately.
   FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
   SUMMARY  OF  BILL: This proposed legislation would amend provisions of
 Article 11 and 14 of the Retirement and Social Security  Law  to  permit
 certain  correction  officer  members  of  the  New York City Employees'
 Retirement System (NYCERS), who are participants in the Tiers  2  and  3
 Twenty-Year  Improved  Benefit  Program  for  correction officers (CO-20
 Plans) and such plans for ranks of correction captains and above  (CC-20
 Plans),  and  who  cease  to hold the title of correction officer, other
 than by retirement or separation with a vested benefit, on and after  15
 years  of  credited  service,  to  withdraw their accumulated additional
 member contributions (AMCs) with interest (Applicable Members). However,
 since there are currently no Tier 2 CO-20  or  CC-20  Plan  members  who
 would  be  affected by this proposed legislation, the analysis contained
 herein is limited to Tier 3 CO-20 and CC-20 Plan members.
   Effective Date: Upon enactment.
   BACKGROUND: Currently, Applicable Members with less than 15  years  of
 credited  service  who cease to hold the title of correction officer and

 S. 6139--A                          4
 
 withdraw from their respective CO-20 or CC-20 Plan are  eligible  for  a
 refund of AMCs. Applicable Members who have rendered 15 or more years of
 credited  service  and cease to hold the title of correction officer and
 withdraw from their respective CO-20 or CC-20 Plan forfeit AMCs.
   AMCs  are  generally required for the first 20 years of credit service
 in the CO-20 or CC-20  Plans.  For  Tier  3  CO-20  Plan  members  first
 employed  as a correction officer after June 30, 1988, AMCs are 3.61% of
 salary.   AMCs for Tier  3  CC-20  Plan  members  first  employed  as  a
 correction officer after October 31, 1992 are 7.46% of salary.
   The  proposed  legislation  would permit Applicable Members with 15 or
 more years of credited service to withdraw from  their  respective  Plan
 and receive a refund of AMCs, with interest, upon the cessation of hold-
 ing  a  correction  officer  title. Applicable Members who withdraw from
 their respective Plan and receive a refund of AMCs would  no  longer  be
 eligible  to  receive  a  CO-20  or CC-20 Plan benefit, but may still be
 entitled to a benefit in an applicable underlying basic plan.
   FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the census  data
 and actuarial assumptions and methods described herein, the enactment of
 this  proposed  legislation  would  increase the Actuarial Present Value
 (APV) of Benefits (APVB) and APV of  future  employer  contributions  by
 approximately $15.5 million.
   Under  the Entry Age Normal cost method used to determine the employer
 contributions to NYCERS, there would be  an  increase  in  the  Unfunded
 Accrued Liability (UAL) of approximately $7.6 million and an increase in
 the APV of future employer Normal Cost of $7.9 million.
   FINANCIAL  IMPACT  - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
 the Administrative  Code  of  the  City  of  New  York  (ACCNY)  Section
 13-638.2(k-2),  new  UAL attributable to benefit changes are to be amor-
 tized as determined by the Actuary  but  generally  over  the  remaining
 working  lifetime  of  those impacted by the benefit changes. As of June
 30, 2017, the remaining working lifetime of the  members  in  CO-20  and
 CC-20 Plans is approximately eight years.
   For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
 tized over an eight-year period (seven payments under the  One-Year  Lag
 Methodology) using level dollar payments. This payment plus the increase
 in  the  Normal  Cost results in an increase in annual employer contrib-
 utions of approximately $2.5 million.
   OTHER COSTS: Not measured in  this  Fiscal  Note  are  the  additional
 administrative  costs  of  NYCERS  and  other  New York City agencies to
 implement the proposed legislation.
   CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
 assumed that the changes in the APV of future employer contributions and
 annual  employer  contributions would be reflected for the first time in
 the June 30, 2017 actuarial valuation of NYCERS. In accordance with  the
 One-Year  Lag  Methodology  (OYLM)  used  to determine employer contrib-
 utions, the increase in employer contributions would first be  reflected
 in Fiscal Year 2019.
   CENSUS  DATA:  The estimates presented herein are based on census data
 used in the Preliminary June  30,  2017  (Lag)  actuarial  valuation  of
 NYCERS to determine Preliminary Fiscal Year 2019 employer contributions.
   ACTUARIAL  ASSUMPTIONS  AND  METHODS: The changes in the APV of future
 employer contributions,  and  annual  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

 S. 6139--A                          5
 
 as  this  valuation is not considered final until the end of Fiscal Year
 2019.
   STATEMENT  OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
 ary 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 2018-45 dated July 10,
 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.