Senate Bill S8141

                                 
BILL NUMBER: S8141

SPONSOR: JACKSON
 
TITLE OF BILL:

An act to amend the retirement and social security law, in relation to
the definition of additional member contributions and basic member
contributions for certain New York city employees' retirement system
members who are subject to the twenty-five year retirement program for
fire protection inspector members under Article 15 of the retirement and
social security law, to allow such additional member contributions to be
used to offset a deficit of basic member contributions, or to allow an
excess of basic member contributions to offset a deficit of additional
member contributions

 
PURPOSE:

To allow such additional member contributions to be used to offset a
deficit of basic member contributions, or to allow an excess of basic
member contributions to offset a deficit of additional member contrib-
utions.

 
              

SUMMARY OF PROVISIONS:

This bill amends Retirement and Social Security Law ("RSSL") § 604-
j(e)(10)(1)) (as added by Chapter 55 of the Laws of 2024 (Part EE)) (the
Fire Protection Inspector Plan or the "FPI Plan") and § 613(h) (as added
by Chapter 467 of the Laws of 2017) to allow New York City Employees'
Retirement System ("NYCERS") members who are subject to the FPI Plan
under Article 15 of the RSSL and required to pay additional member
contributions, to use a surplus of additional member contributions paid
into the retirement system to offset a deficit in the member's basic
member contributions account, and vice versa.

 
JUSTIFICATION:

The proposed legislation expands the definition of additional member
contributions and basic member contributions by allowing a participant
of the FPI Plan to use a surplus in his or her additional member
contributions account to offset a deficit in his or her basic member
contributions account, and, likewise, to use a surplus in his or her
basic member contributions account to offset a deficit in his or her
additional member contributions account at any point during membership.

For other so-called "Special Plans", under the amendment to the law
enacted under Chapter 467' of the Laws of 2017, a surplus in either the
Member Contribution Accumulation Fund (MCAF) or Retirement Reserve Fund
(RRF) can be used to offset a deficit in the other account, but only at
retirement. After a further amendment in the law enacted under Chapter
448 of the Laws of 2018, this was expanded to allow members in these
Special Plans to offset deficits at any time, which saved such members
interest and alleviated an administrative burden on NYCERS. The language
allowing this offset should also apply to the FPI Plan legislation,
because the FPI Plan is also a Special Plan, and its members should be
treated the same as those in other Special Plans.

It should be noted that the existence of deficits at retirement is espe-
cially harmful to members of the FPI Plan, because the FPI Plan, like
certain other Special Plans, requires that all additional member
contributions plus interest be paid prior to retirement, or such members
must retire with an actuarial deduction. By settling the deficit through
a surplus in the other account, the member will owe NYCERS less since
the rapid ability to settle accounts will prevent greater interest from
accruing for the member. In addition, by addressing a deficit before
retirement, the retirement process will be much smoother for both the
retirement system and the member.

This bill eliminates the need for separate and time-consuming processing
steps by expanding the definition and use of additional member contrib-
utions and basic member contributions for the sole purpose of remedying
a deficit. This bill does not change the use of additional member
contributions and basic member contributions for any other purpose. By
allowing the retirement system to use a surplus of additional member
contributions to remedy a deficit in the member's basic member contrib-
utions, and vice versa, at any point during membership, this legislation
aids in the administrative efficiency of the retirement system and elim-
inates some burdens on FPI Plan participants. As noted, this will also
grant FPI Plan participants the same treatment provided to other Special
Plan participants and will correct a drafting error inherent in the FPI
Plan legislation.

 
LEGISLATIVE HISTORY:

New bill

 
STATE AND LOCAL FISCAL IMPLICATIONS:

See fiscal note.

 
EFFECTIVE DATE:
This act shall take effect immediately.