S T A T E   O F   N E W   Y O R K
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                                   7873
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 28, 2021
                                ___________
 
 Introduced by M. of A. ABBATE -- read once and referred to the Committee
   on Governmental Employees
 
 AN  ACT  to amend the retirement and social security law, in relation to
   automotive members of 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.  Subparagraph  (ii)  of  paragraph  2  of subdivision d of
 section 604-g of the retirement and social security law, as  amended  by
 chapter 18 of the laws of 2012, is amended to read as follows:
   (ii)  In  the case of a participant who is not a New York city revised
 plan member, such vested benefit shall become payable [on  the  earliest
 date on which such discontinued member could have retired for service if
 such discontinuance had not occurred] AS FOLLOWS:
   (A) AT THE LATER OF AGE SIXTY-TWO OR THE AGE AT DISCONTINUANCE, IF THE
 MEMBER HAD COMPLETED AT LEAST TEN YEARS OF CREDITED SERVICE; OR
   (B)  AT  THE LATER OF AGE SIXTY-THREE OR THE AGE AT DISCONTINUANCE, IF
 THE MEMBER HAD COMPLETED AT LEAST EIGHT, BUT FEWER  THAN  TEN  YEARS  OF
 CREDITED SERVICE; OR
   (C)  AT  THE  LATER OF AGE SIXTY-FOUR OR THE AGE OF DISCONTINUANCE, IF
 THE MEMBER HAD COMPLETED AT LEAST SIX, BUT FEWER  THAN  EIGHT  YEARS  OF
 CREDITED SERVICE; OR
   (D)  AT  THE  LATER OF AGE SIXTY-FIVE OR THE AGE OF DISCONTINUANCE, IF
 THE MEMBER HAD COMPLETED AT LEAST FIVE, BUT  FEWER  THAN  SIX  YEARS  OF
 CREDITED SERVICE;
   or,  in  the case of a participant who is a New York city revised plan
 member, such vested benefit shall become payable at age sixty-three.
   § 2. Subdivision e of section 604-g of the retirement and social secu-
 rity law is amended by adding a new paragraph 13 to read as follows:
   13. IN ADDITION TO THE DEFERRED VESTED BENEFIT CALCULATED PURSUANT  TO
 SUBDIVISION  D  OF  THIS SECTION, A PARTICIPANT WHO IS ELIGIBLE FOR SUCH
 BENEFIT SHALL RECEIVE A LIFE ANNUITY (CALCULATED IN ACCORDANCE WITH  THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06287-03-1

 A. 7873                             2
 
 METHOD  SET  FORTH IN SUBDIVISION I OF SECTION SIX HUNDRED THIRTEEN-B OF
 THIS ARTICLE) WHICH IS ACTUARIALLY EQUIVALENT TO THE DIFFERENCE  BETWEEN
 (I)  THE CONTRIBUTIONS REQUIRED BY PARAGRAPH ONE OF THIS SUBDIVISION AND
 (II)  THE  ADDITIONAL  MEMBER CONTRIBUTIONS REQUIRED BY SUBDIVISION D OF
 SECTION SIX HUNDRED FOUR-C OF THIS ARTICLE, AS ADDED BY CHAPTER  NINETY-
 SIX  OF  THE  LAWS  OF  NINETEEN NINETY-FIVE, TOGETHER WITH THE INTEREST
 CREDITED ON SUCH CONTRIBUTIONS.
   § 3. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend  Section  604-g
 of  the Retirement and Social Security Law (RSSL) to provide early paya-
 bility, and an annuity based on the accumulation of  certain  Additional
 Members  Contributions (AMCs), to certain vested members in the New York
 City Employees' Retirement System  (NYCERS)  Automotive  25-Year/Age  50
 Plan (Auto 25-Year Plan).
   Effective Date: Upon enactment.
   IMPACT  ON  PAYABILITY:  Currently,  Tier 4 vested members in the Auto
 25-Year Plan can begin collecting their pension:
       * At the later of age 50 or what would have been their  25th  year
 of credited service.
   The proposed legislation would instead enable Tier 4 Auto 25-Year Plan
 vested members to begin collecting their pension as follows:
       * At age 62 with at least 10 years of credited service
       * At age 63 with at least eight years of credited service
       * At age 64 with at least six years of credited service
       * At age 65 or older with at least five years of credited service
   Tier  6  Auto  25-Year Plan members would remain eligible for a vested
 benefit:
       * At age 63 or older with at least 10 years of credited service.
   IMPACT ON BENEFITS: The proposed legislation would further provide  to
 both Tier 4 and 6 Auto 25-Year Plan vested members an annuity benefit at
 payability equal to the difference between the following:
       * AMCs required in the Auto 25-Year Plan (4.83% of salary), and
       *  AMCs required in the Tier 4 55/25 Retirement Plan (ranging from
 1.85% to 4.35% of salary depending on dates of the service rendered).
   The difference in the AMC balances above are to be annuitized pursuant
 to the method set out in  loan  provisions  contained  in  RSSL  Section
 613-b(i)  (i.e.  the  actuarially equivalent of a life annuity using the
 interest rate on 30-year US treasury bonds as of January  first  of  the
 calendar year of retirement and the mortality tables for payment options
 under RSSL Section 610).
   Note:
       *  This  annuity would only be available to vested members and not
 to Auto-25 Year Plan service retirees (i.e. retirees  with  25  or  more
 years of credited service).
       *  For  the  purposes  of determining the costs enumerated in this
 Fiscal Note, it has been assumed that Tier 4 vested  members  who  would
 have  been  eligible for earlier payability (i.e. at the later of age 50
 or what would have been 25 years of service) under current provisions of
 law, would still be eligible for such earlier payability, given  Consti-
 tutional protections, notwithstanding the bill's omission of such eligi-
 bility.
   FINANCIAL  IMPACT - PRESENT VALUES: Based on the actuarial assumptions
 and methods described herein, the enactment of this proposed legislation
 would increase the Present Value of Future Benefits (PVFB)  by  approxi-
 mately $30.1 million.

 A. 7873                             3
 
   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 $17.9 million and an increase
 in the Present Value of future employer Normal Cost of $12.2 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
 (ACCNY), new UAL attributable to benefit changes are to be amortized  as
 determined by the Actuary but are generally amortized over the remaining
 working  lifetime  of  those impacted by the benefit changes. As of June
 30, 2020, the remaining working lifetime of Auto 25-Year Plan members is
 approximately 14 years.
   For the purposes of this Fiscal Note, the increase in  UAL  was  amor-
 tized  over a 14-year period (13 payments under the One-Year Lag Method-
 ology (OYLM))  using  level  dollar  payments.  This  payment  plus  the
 increase  in  the  Normal Cost results in an increase in annual employer
 contributions of approximately $3.8 million each year.
   CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
 assumed  that  the changes in the PVFB and annual employer contributions
 would be reflected for the first time in the  June  30,  2020  actuarial
 valuation  of  NYCERS.  In  accordance  with  the OYLM used to determine
 employer contributions, the increase  in  employer  contributions  would
 first be reflected in Fiscal Year 2022.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the June 30, 2020 (Lag) actuarial valuation  of  NYCERS  to
 determine the Preliminary Fiscal Year 2022 employer contributions.
   The 1,720 NYCERS Auto 25-Year Plan members as of June 30, 2020 include
 1,676  active  members and 44 non-active members. The active members had
 an average age of approximately 45.1 years, average service of  approxi-
 mately 8.8 years, and an average salary of approximately $105,800.
   ACTUARIAL  ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
 employer contributions presented herein have been  calculated  based  on
 the  actuarial  assumptions  and methods in effect for the June 30, 2019
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2021 employer contributions of NYCERS.
   The Actuary is proposing a set of changes for use beginning  with  the
 June  30,  2019  (Lag)  actuarial  valuations of NYCERS to determine the
 Final Fiscal Year 2021 Employer Contributions (2021 A&M).  If  the  2021
 A&M  is  enacted, it is estimated that it would produce increases in the
 PVFB that is approximately 2% larger than the results  shown  above  and
 annual  employer contributions that are approximately 1% larger than the
 results shown above.
   RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
 highly  on the realization of the actuarial assumptions used, as well as
 certain  demographic  characteristics  of  NYCERS  and  other  exogenous
 factors  such  as  investment,  contribution, and other risks. If actual
 experience deviates from actuarial assumptions, the actual  costs  could
 differ  from  those  presented  herein.  Costs are also dependent on the
 actuarial methods used, and therefore different actuarial methods  could
 produce  different  results. Quantifying these risks is beyond the scope
 of this Fiscal Note.
   Not measured in this Fiscal Note are the following:
       * The initial, additional administrative costs of NYCERS and other
 New York City agencies to implement the proposed legislation.
       * The impact of this proposed legislation on Other  Postemployment
 Benefit (OPEB) costs.

 A. 7873                             4
 
   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, a
 Member of the American Academy of Actuaries, and a Fellow of the Confer-
 ence  of Consulting Actuaries. I meet the Qualification Standards of the
 American Academy of Actuaries to render the actuarial opinion  contained
 herein.   To the best of my knowledge, the results contained herein have
 been prepared in accordance with generally accepted actuarial principles
 and procedures and with the Actuarial Standards of  Practice  issued  by
 the Actuarial Standards Board.
   FISCAL  NOTE  IDENTIFICATION:  This  Fiscal Note 2021-30 dated May 21,
 2021 was prepared by the Chief Actuary for the New York City  Employees'
 Retirement  System.  This  estimate  is intended for use only during the
 2021 Legislative Session.