S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7563--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 25, 2023
                                ___________
 
 Introduced  by  M.  of A. PHEFFER AMATO -- read once and referred to the
   Committee on Governmental  Employees  --  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
   death benefits for active New York city transit authority members
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 604-b of the retirement and social security law  is
 amended by adding a new subdivision f to read as follows:
   F. DEATH BENEFITS. NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRA-
 RY, WHERE A NEW YORK CITY TRANSIT AUTHORITY MEMBER WOULD HAVE BEEN ENTI-
 TLED  TO A SERVICE RETIREMENT BENEFIT AT THE TIME OF THEIR DEATH BUT HAD
 NOT YET FILED FOR SUCH SERVICE RETIREMENT PURSUANT TO SUBPARAGRAPH  (IV)
 OF  PARAGRAPH ONE OF SUBDIVISION C OF THIS SECTION, AND WHERE SUCH DEATH
 OCCURS ON OR AFTER THE EFFECTIVE DATE OF THIS SUBDIVISION, THE BENEFICI-
 ARY OR BENEFICIARIES OF SUCH MEMBER MAY ELECT TO RECEIVE, IN A LUMP  SUM
 OR ON AN ANNUITIZED BASIS, AN AMOUNT PAYABLE WHICH SHALL BE EQUAL TO THE
 PENSION RESERVE THAT WOULD HAVE BEEN ESTABLISHED HAD SUCH MEMBER RETIRED
 ON THE DATE OF THEIR DEATH.
   §  2. Notwithstanding any other provision of law to the contrary, none
 of the provisions of this act shall be subject  to  section  25  of  the
 retirement and social security law.
   § 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-b
 of the Retirement and Social Security  Law  to  provide  an  alternative
 death  benefit for Transit Tier 4 and Tier 6 Special Plan members of the
 New York City Employees' Retirement System (NYCERS).
   Effective Date: Upon enactment.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10259-04-3
 A. 7563--A                          2
              

 
   IMPACT ON BENEFITS: Currently, NYCERS Transit  members  are  generally
 entitled  to  a  lump  sum ordinary death benefit equal to a multiple of
 salary plus the return of  member  accumulated  contributions,  if  any.
 These  death  benefits are generally calculated as three times the final
 year's salary, and may be subject to salary caps and other reductions.
   Under the proposed legislation, the ordinary death benefit for members
 who are otherwise eligible to receive a service retirement benefit based
 on  the provisions of a Transit Special Plan and die prior to retirement
 would be the greater of their current death benefit or the value of  the
 pension reserve that would have been established had they retired on the
 date  of  their  death.  The pension reserve is the present value of all
 payments expected to be made on account of any  pension  or  benefit  in
 lieu  of  any  pension granted under provisions of law and computed upon
 the basis of adopted mortality tables with regular  interest  (inclusive
 of  accumulated  member  contributions,  if  any). This type of lump sum
 pension reserve death benefit  is  sometimes  referred  to  as  a  Death
 Gamble, and is afforded, in a similar form, to Tier 1 NYCERS members.
   FINANCIAL  IMPACT  -  PRESENT VALUES: Based on the census data and the
 actuarial assumptions and methods described  herein,  the  enactment  of
 this  proposed  legislation  would  result in an increase in the Present
 Value of Future Benefits  and  the  present  value  of  future  employer
 contributions of approximately $32.7 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 $24.5 million and an increase
 in the present value of future employer  Normal  Cost  of  approximately
 $8.2 million.
   FINANCIAL  IMPACT  -  ANNUAL  EMPLOYER CONTRIBUTIONS: The enactment of
 this proposed legislation would result in an initial increase in  annual
 employer contributions of approximately $4.1 million which is the result
 of an increase in the Normal Cost in addition to the UAL payment.
   New  UAL  attributable to benefit changes are generally amortized over
 the remaining working lifetime of those impacted by the benefit changes.
 The remaining working lifetime for this group is approximately 13  years
 and  the  increase  in UAL was therefore amortized over a 13-year period
 (12 payments under the One-Year  Lag  Methodology)  using  level  dollar
 payments.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the June 30, 2022 actuarial valuation of NYCERS  to  deter-
 mine the Preliminary Fiscal Year 2024 employer contributions.
   The 35,623 NYCERS Transit Tier 4 and Tier 6 Special Plan members as of
 June  30,  2022  had an average age of approximately 48.7 years, average
 service of approximately 12.1 years, and an average salary  of  approxi-
 mately $88,300.
   ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
 been  calculated based on the actuarial assumptions and methods used for
 the Preliminary Fiscal Year 2024 employer contributions of NYCERS.
   For the purposes of this Fiscal Note, it is assumed that  the  changes
 would  be  reflected  for  the first time in the June 30, 2022 actuarial
 valuation of NYCERS used to determine employer contributions for  Fiscal
 Year 2024.
   RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
 highly on the realization of the actuarial assumptions used,  demograph-
 ics  of  the  impacted population, and other factors such as investment,
 contribution, and other risks. If actual experience deviates from  actu-
 A. 7563--A                          3
 
 arial  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  to  implement  the
 proposed legislation.
   STATEMENT  OF  ACTUARIAL  OPINION:  I, Marek Tyszkiewicz, am the Chief
 Actuary for, and independent of, the New York  City  Retirement  Systems
 and  Pension  Funds. I am an Associate of the Society of Actuaries and a
 Member of the American Academy of Actuaries. I am a member of NYCERS but
 do not believe it impairs my objectivity and 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 2023-59 dated May 26,
 2023 was prepared by the Chief Actuary for the New York City  Employees'
 Retirement  System.  This  estimate  is intended for use only during the
 2023 Legislative Session.