S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6446
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               May 22, 2017
                                ___________
 
 Introduced  by  Sen.  SAVINO -- 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 AND ENDING ON THE DECEMBER THIRTY-FIRST NEXT SUCCEED-
 ING THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND SEVEN-
 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
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06931-04-7

 S. 6446                             2
 
 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:
   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 on a
 prospective basis 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 $13.5 million (as a result of a reduction in the
 amount  of  refunds  of member contributions upon termination of employ-
 ment) and decrease the Actuarial Present Value of  member  contributions
 by approximately $255.4 million as of June 30, 2016.
   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 $228.3 million
 and  an  increase  in the Unfunded Actuarial Accrued Liability (UAAL) of
 approximately $13.6 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  17.9  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.

 S. 6446                             3
 
   With respect to NYCERS, based on the Actuary's  actuarial  assumptions
 and  methods  used  in  the  Preliminary June 30, 2016 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 $28.1 million per year.
   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 2017 Legislative Session, increased
 employer costs would be determined for Fiscal Year 2018.
   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, 2016  actuarial  valuations  of  NYCERS,  including
 7,684  Tier  6 25/55 NYCTA members with salaries of approximately $507.2
 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 Preliminary June 30,
 2016 (Lag) actuarial valuations used to determine the Preliminary Fiscal
 Year 2018 employer contributions of NYCERS.
   STATEMENT OF ACTUARIAL OPINION: I. Sherry S. Chan, am the Chief  Actu-
 ary for, and independent of, the New York City Pension Funds and Retire-
 ment Systems. I Am a Fellow of the Society of Actuaries, a Fellow of the
 Conference  of Consulting 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 Fiscal Note  2017-16  Dated  May  12,
 2017, was prepared by the Chief Actuary for the New York City Employees'
 Retirement  System.  This  estimate  is intended for use only during the
 2017 Legislative Session.