LBD13852-07-4
S. 8490 2
excluded from the computation of final average salary.] In determining
final average salary pursuant to any provision of this subdivision,
where the period used to determine final average salary is the period
which immediately precedes the date of retirement, any month or months
(not in excess of twelve) which would otherwise be included in computing
final average salary but during which the member was on authorized leave
of absence at partial pay or without pay shall be excluded from the
computation of final average salary and the month or an equal number of
months immediately preceding such period shall be substituted in lieu
thereof.
b. Notwithstanding the provisions of subdivision a of this section,
with respect to members of the New York state employees' retirement
system [who first become members of the New York state and local employ-
ees' retirement system before April first, two thousand twelve], the New
York state and local police and fire retirement system and the New York
city teachers' retirement system, a member's final average salary shall
be equal to one-third of the highest total wages earned during any
continuous period of employment for which the member was credited with
three years of service credit; provided, however, if the wages earned
during any year of credited service included the period used to deter-
mine final average salary exceeds the average of the wages of the previ-
ous two years of credited service by more than ten percent, the amount
in excess of ten percent shall be excluded from the computation of final
average salary. [For members who first become a member of the New York
state and local employees' retirement system on or after April first,
two thousand twelve, with respect to members of the New York state and
local employees' retirement system, a member's final average salary
shall be equal to one-fifth of the highest total wages earned during any
continuous period of employment for which the member was credited with
five years of service credit; provided, however, if the wages earned
during any year of credited service included the period used to deter-
mine final average salary exceeds the average of the wages of the previ-
ous four years of credited service by more than ten percent, the amount
in excess of ten percent shall be excluded from the computation of final
average salary.]
§ 2. Subdivisions a and b of section 608 of the retirement and social
security law, as amended by chapter 18 of the laws of 2012, are amended
to read as follows:
a. [For members who first become members of a public retirement system
of the state before April first, two thousand twelve, a] A member's
final average salary shall be the average wages earned by such a member
during any three consecutive years which provide the highest average
wage; provided, however, if the wages earned during any year included in
the period used to determine final average salary exceeds that of the
average of the previous two years by more than ten percent, the amount
in excess of ten percent shall be excluded from the computation of final
average salary. [For members who first become members of the New York
state and local employees' retirement system or the New York state
teachers' retirement system on or after April first, two thousand
twelve, a member's final average salary shall be the average wages
earned by such member during any five consecutive years which provide
the highest average wage; provided, however, if the wages earned during
any year included in the period used to determine final average salary
exceeds that of the average of the previous four years by more than ten
percent, the amount in excess of ten percent shall be excluded from the
computation of final average salary.] Where the period used to determine
S. 8490 3
final average salary is the period which immediately precedes the date
of retirement, any month or months (not in excess of twelve) which would
otherwise be included in computing final average salary but during which
the member was on authorized leave of absence at partial pay or without
pay shall be excluded from the computation of final average salary and
the month or an equal number of months immediately preceding such period
shall be substituted in lieu thereof.
b. Notwithstanding the provisions of subdivision a of this section,
with respect to members [who first became members] of the New York state
and local employees' retirement system and the New York city teachers'
retirement system [before April first, two thousand twelve], a member's
final average salary shall be equal to one-third of the highest total
wages earned by such member during any continuous period of employment
for which the member was credited with three years of service credit;
provided, however, if the wages earned during any year of credited
service included in the period used to determine final average salary
exceeds the average of the wages of the previous two years of credited
service by more than ten percent, the amount in excess of ten percent
shall be excluded from the computation of final average salary. [With
respect to members who first become members of the New York state and
local employees' retirement system and the New York city teachers'
retirement system on or after April first, two thousand twelve, a
member's final average salary shall be equal to one-fifth of the highest
total wages earned by such member during any continuous period of
employment for which the member was credited with five years of service
credit; provided, however, if the wages earned during any year of cred-
ited service included in the period used to determine final average
salary exceeds the average of the wages of the previous four years of
credited service by more than ten percent, the amount in excess of ten
percent shall be excluded from the computation of final average salary.]
§ 3. Subparagraph (ii) of paragraph 14 of subdivision e of section
13-638.4 of the administrative code of the city of New York, as amended
by chapter 18 of the laws of 2012, is amended to read as follows:
(ii) Subject to the provisions of subdivision f of this section where
those provisions are applicable, and notwithstanding the provisions of
subdivisions a and c of section six hundred eight of the RSSL, for a
tier IV member of NYCERS who is a New York city revised plan member (as
defined in subdivision m of section six hundred one of the RSSL) or a
tier IV member of BERS who is a New York city revised plan member, the
term "final average salary", as used in article fifteen of the RSSL,
shall be equal to [one-fifth] ONE-THIRD of the highest total wages
earned by such member during any continuous period of employment for
which the member was credited with [five] THREE years of service credit;
provided that if the wages earned during any year of credited service
included in the period used to determine final average salary exceeds
the average of the wages of the previous four years of credited service
by more than ten percent, the amount in excess of ten percent shall be
excluded from the computation of final average salary, provided further
that "wages", as used in this paragraph, shall mean the applicable
provisions and limitations of the term "wages", as defined in subdivi-
sion l of section six hundred one of the RSSL.
§ 4. Subdivision a of section 1209 of the retirement and social secu-
rity law, as amended by chapter 705 of the laws of 2023, is amended to
read as follows:
a. For members who first become members of the New York state and
local police and fire retirement system on or after April first, two
S. 8490 4
thousand twelve, a member's final average salary shall be equal to one-
fifth of the highest total wages earned by such member during any
continuous period of employment for which the member was credited with
five years of service credit; provided, however, if the wages earned
during any year of credited service included in the period used to
determine final average salary exceeds the average of the wages of the
previous four years of credited service by more than ten percent, the
amount in excess of ten percent shall be excluded from the computation
of final average salary. PROVIDED, HOWEVER, BEGINNING ON OR AFTER APRIL
FIRST, TWO THOUSAND TWENTY-FOUR, A MEMBER'S FINAL AVERAGE SALARY SHALL
BE EQUAL TO ONE-THIRD OF THE HIGHEST TOTAL WAGES EARNED BY SUCH MEMBER
DURING ANY CONTINUOUS PERIOD OF EMPLOYMENT FOR WHICH THE MEMBER WAS
CREDITED WITH THREE YEARS OF SERVICE CREDIT; PROVIDED, HOWEVER, IF THE
WAGES EARNED DURING ANY YEAR OF CREDITED SERVICE INCLUDED IN THE PERIOD
USED TO DETERMINE FINAL AVERAGE SALARY EXCEEDS THE AVERAGE OF THE WAGES
OF THE PREVIOUS TWO YEARS OF CREDITED SERVICE BY MORE THAN TEN PERCENT,
THE AMOUNT IN EXCESS OF TEN PERCENT SHALL BE EXCLUDED FROM THE COMPUTA-
TION OF FINAL AVERAGE SALARY. Wages in excess of the annual salary paid
to the governor pursuant to section three of article four of the state
constitution shall be excluded from the computation of final average
salary for members who first become members of the New York state and
local police and fire retirement system on or after April first, two
thousand twelve.
§ 5. 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.
§ 6. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would provide Tier 6 members in the New York State and Local
Retirement System a final average salary based on their highest salary
earned over three consecutive years, where the salary earned in any year
cannot exceed the average of the previous two years by more than 10%.
Currently, final average salary for these members is based on their
highest salary earned over five consecutive years, where the salary
earned in any year cannot exceed the average of the previous four years
by more than 10%. The provisions of Section 25 of the Retirement and
Social Security Law shall not apply.
Insofar as this bill affects the New York State and Local Employees'
Retirement System (NYSLERS), the increased costs would be shared by the
State of New York and the local participating employers in the NYSLERS.
If this bill were enacted during the 2024 Legislative Session, the
increase in the present value of benefits would be approximately $1.17
billion.
NYSLERS Increase in present Increase in required
value benefits contributions
Tiers 1 - 5 $0 $220 million
Tier 6 $1.17 billion $950 million
Total $1.17 billion $1.17 billion
In the NYSLERS, this benefit improvement will be funded by increasing
the billing rates charged annually to cover both retrospective and
prospective benefit increases. The annual contribution required of all
participating employers in NYSLERS is 0.4% of billable salary, or
approximately $51 million to the State of New York and approximately $76
million to the local participating employers. THIS PERMANENT ANNUAL COST
S. 8490 5
WILL INCREASE as Tier 6 salary grows and will vary by employer based
upon the plan coverage and salary reported in Tier 6.
Insofar as this bill affects the New York State and Local Police and
Fire Retirement System (NYSLPFRS), the increased costs would be shared
by the State of New York and the local participating employers in the
NYSLPFRS. If this bill were enacted during the 2024 Legislative Session,
the increase in the present value of benefits would be approximately
$341 million.
NYSLPFRS Increase in present Increase in required
value benefits contributions
Tiers 1 - 5 $0 $33 million
Tier 6 $341 million $308 million
Total $341 million $341 million
In the NYSLPFRS, this benefit improvement will be funded by increasing
the billing rates charged annually to cover both retrospective and
prospective benefit increases. The annual contribution required of all
participating employers in the NYSLPFRS is 0.70% of billable salary, or
approximately $6.0 million to the State of New York and approximately
$25 million to the local participating employers. THE PERMANENT ANNUAL
COST WILL INCREASE as Tier 6 salary grows and will vary by employer
based upon the plan coverage and salary reported in Tier 6.
These estimated costs are based on 265,533 Tier 6 members in the
NYSLERS and 16,599 Tier 6 members in the NYSLPFRS, with annual salary of
approximately $12 billion and $1.5 billion, respectively, as of March
31, 2023.
Summary of relevant resources:
Membership data as of March 31, 2023 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2023 actuari-
al valuation. Distributions and other statistics can be found in the
2023 Report of the Actuary and the 2023 Annual Comprehensive Financial
Report.
The actuarial assumptions and methods used are described in the 2023
Annual Report to the Comptroller on Actuarial Assumptions, and the
Codes, Rules and Regulations of the State of New York: Audit and
Control.
The Market Assets and GASB Disclosures are found in the March 31, 2023
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated February 2, 2024, and intended for use only
during the 2024 Legislative Session, is Fiscal Note No. 2024-118,
prepared by the Actuary for the New York State and Local Retirement
System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
As it relates to the New York State Teacher's Retirement System, this
bill would amend subdivisions a and b of Section 608 of the Retirement
and Social Security Law to change the definition of final average salary
for Tier 6 members to be the same as that for Tier 3, 4 and 5 members.
The final average salary for Tier 6 members would be based on any three
consecutive years which produce the highest average salary. Currently,
the final average salary for Tier 6 members is based on the salaries
S. 8490 6
earned during any five consecutive years which provide the highest aver-
age salary. Additionally, under the bill, as in Tier 3, 4 and 5, if the
salary for any year used in the period exceeds that of the average of
the prior two years by more than 10%, the amount in excess of 10% shall
be excluded from the computation. Currently, under Tier 6, if the salary
for any year used in the period exceeds that of the average of the prior
four years by more than 10%, the amount in excess of 10% is excluded
from the computation.
The annual cost to the employers of members of the New York State
Teachers' Retirement System for this benefit is estimated to be $23.1
million or 0.12% of payroll if this bill is enacted.
The System's "new entrant rate", a hypothetical employer contribution
rate that would occur if we started a new Retirement System without any
assets, is equal to 5.31% of pay under the current Tier 6 benefit struc-
ture. This can be thought of as the long-term expected employer cost of
Tier 6, based on current actuarial assumptions. For the proposed change
to the Tier 6 benefit structure under this bill, this new entrant rate
is estimated to increase to 5.55% of pay, an increase of 0.24% of pay.
Member data is from the System's most recent actuarial valuation files
as of June 30, 2023, consisting of data provided by the employers to the
Retirement System. The most recent data distributions and statistics
can be found in the System's Annual Report for fiscal year ended June
30, 2023. System assets are as reported in the System's financial state-
ments and can also be found in the System's Annual Report. Actuarial
assumptions and methods are provided in the System's Actuarial Valuation
Report as of June 30, 2023.
The source of this estimate is Fiscal Note 2024-17 dated February 2,
2024 prepared by the Office of the Actuary of the New York State Teach-
ers' Retirement System and is intended for use only during the 2024
Legislative Session. I, Richard A. Young, am the Chief Actuary for the
New York State Teachers' Retirement System. I am a member of the Ameri-
can Academy of Actuaries and I meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained
herein.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY: This proposed legislation, as it relates to the New York City
Retirement Systems and Pension Funds (NYCRS), would increase the Final
Average Salary used to calculate pension benefits for certain Tier 3 and
Tier 6 members of NYCRS by reducing the number of years included in the
average from five years to three years.
EXPECTED INCREASE (DECREASE) IN EMPLOYER CONTRIBUTIONS
by Fiscal Year for the first 25 years ($ in Millions)
Year NYCERS TRS BERS POLICE FIRE TOTAL
2025 67.2 56.2 5.7 47.8 19.4 196.3
2026 63.9 54.9 5.9 44.2 21.3 190.2
2027 68.0 57.8 6.2 49.2 23.3 204.5
2028 72.2 60.9 6.5 54.8 25.5 219.9
2029 76.5 64.2 6.9 60.2 27.8 235.6
2030 80.8 67.7 7.2 66.0 30.2 251.9
2031 85.2 71.4 7.6 71.4 32.7 268.3
2032 89.5 75.4 7.9 76.0 35.3 284.1
2033 93.9 79.6 8.3 80.5 38.0 300.3
2034 98.5 84.1 8.7 85.0 40.8 317.1
2035 103.0 88.9 9.0 89.4 43.7 334.0
S. 8490 7
2036 107.6 93.9 9.4 93.8 46.7 351.4
2037 112.2 99.2 9.8 98.4 49.8 369.4
2038 116.9 104.8 8.0 103.4 53.1 386.2
2039 121.7 110.8 8.5 108.5 56.3 405.8
2040 103.5 116.9 8.9 113.4 59.6 402.3
2041 108.2 123.3 9.3 107.4 63.0 411.2
2042 113.0 129.7 9.7 112.3 66.4 431.1
2043 117.8 136.1 10.2 117.3 64.2 445.6
2044 122.7 123.8 10.6 122.3 67.6 447.0
2045 127.6 130.1 11.1 127.4 70.9 467.1
2046 132.6 136.4 11.5 132.5 74.2 487.2
2047 137.7 142.5 12.0 137.6 77.4 507.2
2048 142.9 148.6 12.5 142.9 80.7 527.6
2049 148.1 154.8 13.0 148.4 83.9 548.2
Employer Contribution impact beyond Fiscal Year 2049 is not shown.
Projected contributions include future new hires that may be impacted.
The initial increase in employer contributions of $196.3 million is
estimated to be $163.2 million for New York City and $33.1 million for
the other obligors of NYCRS.
INITIAL INCREASE (DECREASE) IN ACTUARIAL LIABILITIES
as of June 30, 2023 ($ in Millions)
Present Value (PV) NYCERS TRS BERS POLICE FIRE
PV of Benefits: 633.8 666.9 53.3 570.7 279.6
PV of Employee Contributions: 0.0 0.0 0.0 0.0 0.0
PV of Employer Contributions: 633.8 666.9 53.3 570.7 279.6
Unfunded Accrued Liabilities: 207.9 189.6 17.8 105.3 53.8
AMORTIZATION OF UNFUNDED ACCRUED LIABILITY
NYCERS TRS BERS POLICE FIRE
Number of Payments: 15 19 13 16 18
Fiscal Year of Last Payment: 2039 2043 2037 2040 2042
Amortization Payment: 22.9 M 18.6 M 2.2 M 10.8 M 5.5 M
Additional One-time Payment: 7.0 M 4.0 M 0.0 M 7.5 M 0.0 M
Unfunded Accrued Liability (UAL) increases for active members were
amortized over the expected remaining working lifetime of those impacted
by the benefit changes using level dollar payments. UAL attributable to
terminated vested members was recognized in the first year.
CENSUS DATA: The estimates presented herein are based on preliminary
census data collected as of June 30, 2023. The census data for the
impacted population is summarized below.
NYCERS TRS BERS POLICE FIRE
Active Members
- Number Count: 92,737 60,663 12,932 20,089 5,030
- Average Age: 42.1 38.1 46.9 32.7 33.5
- Average Service: 4.6 5.0 4.0 6.1 5.5
- Average Salary: 80,600 80,000 56,200 107,400 112,400
Term. Vested Members
S. 8490 8
- Number Count: 4,274 3,999 397 887 9
- Average Age: 41.5 37.9 44.6 34.6 37.6
IMPACT ON MEMBER BENEFITS: Currently, Final Average Salary (FAS) is
based on a five-year average, with each year's salary limited to 110% of
the average of the prior four year's salaries for the following groups:
* Tier 3 and Tier 6 members who joined NYCRS on or after April 1,
2012, and
* Tier 3 enhanced members of POLICE and FIRE who retire for disabili-
ty.
Under the proposed legislation, the FAS for such members would be
based on a three-year average, with each year's salary limited to 110%
of the average of the prior two year's salaries (prior four year's sala-
ries for NYCERS and BERS).
The five-year FAS for enhanced disability benefits for Corrections and
Sanitation members of NYCERS is provided as part of an agreement under
Retirement and Social Security Law Article 25 and is assumed to remain
unchanged by this proposed legislation.
ASSUMPTIONS AND METHODS: The estimates presented herein have been
calculated based on the Revised 2021 Actuarial Assumptions and Methods
of the impacted retirement systems. In addition:
* New entrants were assumed to replace exiting members so that total
payroll increases by 3% each year for impacted groups. New entrant demo-
graphics were developed based on data for recent new hires and actuarial
judgement.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions, methods, and models used, demo-
graphics of the impacted population, and other factors such as invest-
ment, contribution, and other risks. If actual experience deviates from
actuarial assumptions, the actual costs could differ from those
presented herein. Quantifying these risks is beyond the scope of this
Fiscal Note.
This Fiscal Note is intended to measure pension-related impacts and
does not include other potential costs (e.g., administrative and Other
Postemployment Benefits).
STATEMENT OF ACTUARIAL OPINION: Marek Tyszkiewicz and Gregory Zelikov-
sky are members of the Society of Actuaries and the American Academy of
Actuaries. We are members of NYCERS but do not believe it impairs our
objectivity and we meet the Qualification Standards of the American
Academy of Actuaries to render the actuarial opinion contained herein.
To the best of our 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 2024-10 dated February 2,
2024 was prepared by the Chief Actuary for the New York City Retirement
Systems and Pension Funds. This estimate is intended for use only during
the 2024 Legislative Session.
