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A07668 Summary:

BILL NOA07668
 
SAME ASSAME AS S07509
 
SPONSORPheffer Amato
 
COSPNSR
 
MLTSPNSR
 
Amd 488, 508 & 606, R & SS L
 
Updates certain death benefit provisions of the New York city employees' retirement system, the New York city teachers' retirement system, and the board of education retirement system of New York city to ensure continued compliance with the federal older workers' benefit protection act.
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A07668 Actions:

BILL NOA07668
 
06/01/2023referred to governmental employees
06/01/2023reference changed to ways and means
06/09/2023reported referred to rules
06/10/2023reported
06/10/2023rules report cal.844
06/10/2023substituted by s7509
 S07509 AMEND= JACKSON
 06/02/2023REFERRED TO RULES
 06/05/2023ORDERED TO THIRD READING CAL.1603
 06/09/2023HOME RULE REQUEST
 06/09/2023PASSED SENATE
 06/09/2023DELIVERED TO ASSEMBLY
 06/09/2023referred to ways and means
 06/10/2023substituted for a7668
 06/10/2023ordered to third reading rules cal.844
 06/10/2023home rule request
 06/10/2023passed assembly
 06/10/2023returned to senate
 11/29/2023DELIVERED TO GOVERNOR
 12/08/2023SIGNED CHAP.716
 06/02/2023REFERRED TO RULES
 06/05/2023ORDERED TO THIRD READING CAL.1603
 06/09/2023HOME RULE REQUEST
 06/09/2023PASSED SENATE
 06/09/2023DELIVERED TO ASSEMBLY
 06/09/2023referred to ways and means
 06/10/2023substituted for a7668
 06/10/2023ordered to third reading rules cal.844
 06/10/2023home rule request
 06/10/2023passed assembly
 06/10/2023returned to senate
 11/29/2023DELIVERED TO GOVERNOR
 12/08/2023SIGNED CHAP.716
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A07668 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7668
 
SPONSOR: Pheffer Amato
  TITLE OF BILL: An act to amend the retirement and social security law, in relation to updating certain death benefit provisions of the New York city employ- ees' retirement system, the New York city teachers' retirement system, and the board of education retirement system of New York city to ensure continued compliance with the federal older workers' benefit protection act   SUMMARY OF PROVISIONS: This bill would amend certain death benefit provisions to ensure contin- ued compliance with the requirements of the Federal Older Workers' Bene- fit Protection Act, Public Law 101-433 ("OWBPA"). In general, with respect to New York City Employees' Retirement System ("NYCERS"), Teachers' Retirement System ("TRS"), Board of Education Retirement System ("BERS"), the bill would amend the tier 2, 3 and 4/6 pre-retirement and post-retirement ordinary death benefit provisions set forth in Retirement and Social Security Law ("RSSL") Articles 11, 14 and 15, respectively, to ensure that, on an actuarial basis, the costs of providing such benefits to older members are no less than the costs of providing such benefits to younger members.   REASONS FOR SUPPORT: This bill provides for updates to certain ordinary death benefit provisions to ensure continued compliance with OWBPA. The Boards of Trustees of NYCERS, TRS and BERS, upon recommendation by the City's Chief Actuary, unanimously support enactment of these statutory updates. In response to the initial enactment of OWBPA, which amended the Age Discrimination in Employment Act ("ADEA") and prohibits employers from discriminating on the basis of age in providing benefits to their employees, the City supported enactment of Chapter 601 of the Laws of 1997. OWBPA and the regulations issued by the Equal Employment Opportu- nity Commission pursuant to the ADEA require employers to provide equal benefits to older and younger workers, or to provide benefits to older workers which cost no less, on an actuarial basis, than benefits provided to younger workers. While the majority of benefit changes enacted by Chapter 601 remain sound, there are several ordinary death benefit provisions in the RSSL which need to be updated, primarily due to recent changes to mortality assumptions, to ensure continued compliance with the requirements of OWBPA. The proposed benefit changes lower the age-based reduction for certain death benefits for older workers. The changes are similar to changes enacted on behalf of the New York State Teachers' Retirement System pursuant to Chapter 559 of the Laws of 2005 and Chapter 376 of the Laws of 2021, and on behalf of the New York State and Local Retirement System pursuant to Chapter 513 of the Laws of 2010, while also reflecting particular concerns, including actuarial analysis specific to the City systems and uniformity of administration. Accordingly, the Mayor urges the earliest possible favorable consider- ation of this proposal by the Legislature. Respectfully submitted, CHRISTOPHER G. ELLIS, Jr. Director
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A07668 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7668
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                      June 1, 2023
                                       ___________
 
        Introduced  by  M.  of A. PHEFFER AMATO -- read once and referred to the
          Committee on Governmental Employees
 
        AN ACT to amend the retirement and social security law, in  relation  to
          updating certain death benefit provisions of the New York city employ-
          ees' retirement system, the New York city teachers' retirement system,
          and  the  board  of  education  retirement  system of New York city to
          ensure continued compliance with the federal  older  workers'  benefit
          protection act
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The closing paragraph of paragraph 2 of  subdivision  a  of
     2  section  448  of  the  retirement and social security law, as amended by
     3  chapter 720 of the laws of 2022, is amended to read as follows:
     4    In the case of a member of the New  York  state  teachers'  retirement
     5  system,  commencing  upon  attainment  of age sixty-two if such member's
     6  date of membership is prior to  April  first,  two  thousand  twelve  or
     7  attainment  of age sixty-three if such member's date of membership is on
     8  or after  April  first,  two  thousand  twelve,  the  benefit  otherwise
     9  provided pursuant to this paragraph shall be reduced while the member is
    10  in service to ninety-six per centum of the benefit otherwise payable and
    11  each  year  thereafter the benefit payable shall be reduced by an amount
    12  equal to four per centum per year  of  the  original  benefit  otherwise
    13  payable,  but  not below sixty per centum of the original benefit other-
    14  wise payable. In the case of a member of the New  York  city  employees'
    15  retirement  system,  the  New  York  city  board of education retirement
    16  system or the New York city teachers' retirement system, commencing upon
    17  attainment of age sixty-one, the benefit otherwise provided pursuant  to
    18  this paragraph shall be reduced while the member is in service to [nine-
    19  ty-five]  ninety-seven  per  centum of the benefit otherwise payable and
    20  each year thereafter the benefit payable shall be reduced by  an  amount
    21  equal to [five] three per centum per year of the original benefit other-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11700-01-3

        A. 7668                             2
 
     1  wise  payable,  but not below [fifty] seventy per centum of the original
     2  benefit otherwise payable. In the case of any member  of  the  New  York
     3  state  and local employees' retirement system who is permitted to retire
     4  without regard to age or a member of the New York state and local police
     5  and  fire retirement system, commencing upon attainment of age sixty-two
     6  if such member's date of membership is prior to April first,  two  thou-
     7  sand  twelve  or  attainment of age sixty-three if such member's date of
     8  membership is on or after April first, two thousand twelve, the  benefit
     9  otherwise provided pursuant to this paragraph shall be reduced while the
    10  member is in service to ninety-seven per centum of the benefit otherwise
    11  payable,  and  each year thereafter the benefit payable shall be reduced
    12  by an amount equal to three per centum per year of the original  benefit
    13  otherwise  payable,  but  not  below  seventy per centum of the original
    14  benefit otherwise payable. In the case of any other member  of  the  New
    15  York  state  and  local  employees'  retirement  system, commencing upon
    16  attainment of age sixty-two if such member's date of membership is prior
    17  to April first, two thousand twelve or attainment of age sixty-three  if
    18  such  member's  date of membership is on or after April first, two thou-
    19  sand twelve, the benefit otherwise provided pursuant to  this  paragraph
    20  shall be reduced while the member is in service to ninety-six per centum
    21  of  the  benefit otherwise payable, and each year thereafter the benefit
    22  payable shall be reduced by an amount equal to four per centum per  year
    23  of  the  original  benefit  otherwise  payable,  but not below sixty per
    24  centum of the original benefit otherwise payable.  Upon retirement  from
    25  any  retirement  system,  the benefit in force shall be reduced by fifty
    26  per centum; upon completion of the first year of retirement, the benefit
    27  in force at the time of retirement shall be  reduced  by  an  additional
    28  twenty-five  per  centum,  and  upon  commencement  of the third year of
    29  retirement, the benefit shall be ten per centum of the benefit in  force
    30  at  age  sixty,  if  any,  or  at  the  time of retirement if retirement
    31  preceded such age; provided, however, the benefit  in  retirement  shall
    32  not  be  reduced  below  ten  per  centum of the benefit in force at age
    33  sixty, if any, or at the time of retirement if retirement preceded  such
    34  age.  Notwithstanding  any  other  provision  of  this  paragraph to the
    35  contrary, the benefit for a retiree from the New York  state  and  local
    36  employees' retirement system [and], the New York state teachers' retire-
    37  ment  system,  the  New  York city employees' retirement system, the New
    38  York city board of education retirement system  or  the  New  York  city
    39  teachers' retirement system shall not be reduced below ten per centum of
    40  the benefit in force at the time of retirement.
    41    §  2. The closing paragraph of paragraph 2 of subdivision a of section
    42  508 of the retirement and social security law, as amended by chapter 720
    43  of the laws of 2022, is amended to read as follows:
    44    Notwithstanding any other provision of this paragraph, in the case  of
    45  a  member  of the New York state teachers' retirement system, commencing
    46  upon attainment of age sixty-two if such member's date of membership  is
    47  prior  to  April  first, two thousand twelve or attainment of age sixty-
    48  three if such member's date of membership is on or  after  April  first,
    49  two  thousand  twelve,  the  benefit otherwise provided pursuant to this
    50  paragraph shall be reduced while the member is in service to  ninety-six
    51  per  centum  of  the benefit otherwise payable, and each year thereafter
    52  the benefit payable shall be reduced by an  amount  equal  to  four  per
    53  centum per year of the original benefit otherwise payable, but not below
    54  sixty  per centum of the original benefit otherwise payable. In the case
    55  of a member of the New York city employees' retirement system,  the  New
    56  York  city  board  of  education  retirement system or the New York city

        A. 7668                             3
 
     1  teachers' retirement system, commencing upon attainment  of  age  sixty-
     2  one,  the benefit otherwise provided pursuant to this paragraph shall be
     3  reduced while the member is in service to [ninety-five] ninety-seven per
     4  centum  of  the  benefit  otherwise payable and each year thereafter the
     5  benefit payable shall be reduced by an amount equal to [five] three  per
     6  centum per year of the original benefit otherwise payable, but not below
     7  [fifty] seventy per centum of the original benefit otherwise payable. In
     8  the  case  of  any  member  of  the  New York state and local employees'
     9  retirement system who is permitted to  retire  without  regard  to  age,
    10  commencing  upon  attainment  of  age sixty-two if such member's date of
    11  membership is prior to April first, two thousand twelve or attainment of
    12  age sixty-three if such member's date of membership is on or after April
    13  first, two thousand twelve, the benefit otherwise provided  pursuant  to
    14  this  paragraph shall be reduced while the member is in service to nine-
    15  ty-seven per centum of the benefit  otherwise  payable,  and  each  year
    16  thereafter  the  benefit  payable shall be reduced by an amount equal to
    17  three per centum per year of the original benefit otherwise payable, but
    18  not below seventy per centum of the original benefit otherwise  payable.
    19  In  the case of any other member of the New York state and local employ-
    20  ees' retirement system, commencing upon attainment of age  sixty-two  if
    21  such  member's  date of membership is prior to April first, two thousand
    22  twelve or attainment of age sixty-three if such member's date of member-
    23  ship is on or after April first, two thousand twelve, the benefit other-
    24  wise provided pursuant to this paragraph  shall  be  reduced  while  the
    25  member  is  in service to ninety-six per centum of the benefit otherwise
    26  payable, and each year thereafter the benefit payable shall  be  reduced
    27  by  an  amount equal to four per centum per year of the original benefit
    28  otherwise payable, but not below sixty per centum of the original  bene-
    29  fit  otherwise  payable. Upon retirement from any retirement system, the
    30  benefit in force shall be reduced by fifty per centum;  upon  completion
    31  of  the  first  year  of retirement, the benefit in force at the time of
    32  retirement shall be reduced by an additional twenty-five per centum, and
    33  upon commencement of the third year of retirement, the benefit shall  be
    34  ten  per  centum of the benefit in force at age sixty, if any, or at the
    35  time of retirement if retirement preceded such age;  provided,  however,
    36  the  benefit  in retirement shall not be reduced below ten per centum of
    37  the benefit in force at age sixty, if any, or at the time of  retirement
    38  if  retirement preceded such age. Notwithstanding any other provision of
    39  this paragraph to the contrary, the benefit for a retiree from  the  New
    40  York  state  and  local employees' retirement system [and], the New York
    41  state teachers' retirement system, the New York city employees'  retire-
    42  ment  system,  the New York city board of education retirement system or
    43  the New York city teachers' retirement system shall not be reduced below
    44  ten per centum of the benefit in force at the time of retirement.
    45    § 3. The closing paragraph of paragraph 2 of subdivision a of  section
    46  606 of the retirement and social security law, as amended by chapter 720
    47  of the laws of 2022, is amended to read as follows:
    48    In  the  case  of  a member of the New York state teachers' retirement
    49  system, commencing upon attainment of age  sixty-two  if  such  member's
    50  date  of  membership  is  prior  to  April first, two thousand twelve or
    51  attainment of age sixty-three if such member's date of membership is  on
    52  or  after  April  first,  two  thousand  twelve,  the  benefit otherwise
    53  provided pursuant to this paragraph shall be reduced while the member is
    54  in service to ninety-six per centum of the  benefit  otherwise  payable,
    55  and  each  year  thereafter  the  benefit payable shall be reduced by an
    56  amount equal to four per centum per year of the original benefit  other-

        A. 7668                             4
 
     1  wise  payable,  but  not  below sixty per centum of the original benefit
     2  otherwise payable. In the case of a member of the New York city  employ-
     3  ees'  retirement system, the New York city board of education retirement
     4  system or the New York city teachers' retirement system, commencing upon
     5  attainment  of age sixty-one, the benefit otherwise provided pursuant to
     6  this paragraph shall be reduced while the member is in service to [nine-
     7  ty-five] ninety-seven per centum of the benefit  otherwise  payable  and
     8  each  year  thereafter the benefit payable shall be reduced by an amount
     9  equal to [five] three per centum per year of the original benefit other-
    10  wise payable, but not below [fifty] seventy per centum of  the  original
    11  benefit  otherwise  payable.  In  the case of any member of the New York
    12  state and local employees' retirement system who is permitted to  retire
    13  without  regard  to  age, commencing upon attainment of age sixty-two if
    14  such member's date of membership is prior to April first,  two  thousand
    15  twelve or attainment of age sixty-three if such member's date of member-
    16  ship is on or after April first, two thousand twelve, the benefit other-
    17  wise  provided  pursuant  to  this  paragraph shall be reduced while the
    18  member is in service to ninety-seven per centum of the benefit otherwise
    19  payable, and each year thereafter the benefit payable shall  be  reduced
    20  by  an amount equal to three per centum per year of the original benefit
    21  otherwise payable, but not below seventy  per  centum  of  the  original
    22  benefit  otherwise  payable.  In the case of any other member of the New
    23  York state and  local  employees'  retirement  system,  commencing  upon
    24  attainment of age sixty-two if such member's date of membership is prior
    25  to  April first, two thousand twelve or attainment of age sixty-three if
    26  such member's date of membership is on or after April first,  two  thou-
    27  sand  twelve,  the benefit otherwise provided pursuant to this paragraph
    28  shall be reduced while the member is in service to ninety-six per centum
    29  of the benefit otherwise payable, and each year thereafter  the  benefit
    30  payable  shall be reduced by an amount equal to four per centum per year
    31  of the original benefit otherwise  payable,  but  not  below  sixty  per
    32  centum  of the original benefit otherwise payable. Upon retirement, from
    33  any retirement system, the benefit in force shall be  reduced  by  fifty
    34  per centum; upon completion of the first year of retirement, the benefit
    35  in  force  at  the  time of retirement shall be reduced by an additional
    36  twenty-five per centum, and upon  commencement  of  the  third  year  of
    37  retirement,  the benefit shall be ten per centum of the benefit in force
    38  at age sixty, if any,  or  at  the  time  of  retirement  if  retirement
    39  preceded  such  age;  provided, however, the benefit in retirement shall
    40  not be reduced below ten per centum of  the  benefit  in  force  at  age
    41  sixty,  if any, or at the time of retirement if retirement preceded such
    42  age. Notwithstanding any  other  provision  of  this  paragraph  to  the
    43  contrary,  the  benefit  for a retiree from the New York state and local
    44  employees' retirement system [and], the New York state teachers' retire-
    45  ment system, the New York city employees'  retirement  system,  the  New
    46  York  city  board  of  education  retirement system or the New York city
    47  teachers' retirement system shall not be reduced below ten per centum of
    48  the benefit in force at the time of retirement.
    49    § 4. This act shall take effect immediately and  shall  be  deemed  to
    50  have  been  in full force and effect on and after July 1, 2021, provided
    51  that this act shall not apply to the payment of any death benefit  based
    52  upon a member's death which occurred prior to July 1, 2021.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY  OF BILL: This proposed legislation (see Appendix) would amend
        certain death benefit provisions to ensure continued compliance with the
        requirements of the  Federal  Older  Workers'  Benefit  Protection  Act,

        A. 7668                             5
 
        Public  Law  101-433  (OWBPA).  In general, with respect to the New York
        City Employees' Retirement System (NYCERS), the New York City  Teachers'
        Retirement  System  (NYCTRS),  and  the New York City Board of Education
        Retirement  System  (BERS),  the bill would amend the Tier 2, 3, and 4/6
        ordinary death benefit provisions set forth  in  Retirement  and  Social
        Security  Law  (RSSL)  Articles  11, 14, and 15, respectively, to ensure
        that, on an actuarial basis, the costs of  providing  such  benefits  to
        older  members  are no less than the costs of providing such benefits to
        younger members.
          Effective Date: This bill would be effective immediately and be deemed
        to have been in force since July 1, 2021.
          IMPACT ON BENEFITS: Under the proposed legislation,  if  enacted,  the
        Pre-retirement  Ordinary  Death  Benefit  for Active and Deferred Vested
        Members, and the Post-retirement Death Benefit for Tier 2,  3,  and  4/6
        NYCERS, NYCTRS, and BERS members, would be updated.
          Pre-retirement Ordinary Death Benefit
          The  Tier  2, 3 and 4/6 Ordinary Death Benefit (for all members except
        police officers, firefighters, correction officers, or sanitation  work-
        ers)  is a lump sum payment equal to current pay multiplied by completed
        years of service (up to three years) and further reduced by a percentage
        based on age at date of death.
          Currently, the reduction is 0% for ages 60 and younger, and  increases
        by  5% for every age over 60, up to the ultimate rate of 50% for ages 70
        and older.
          Under the proposed legislation the reduction would remain 0% for  ages
        60  and  younger, and increase by 3% for every age over age 60 up to the
        ultimate reduction of 30% for ages 70 and older.
          Post-retirement death benefit
          The changes to the reductions described above would also apply to  the
        calculation of the post-retirement death benefit. In addition, the post-
        retirement  death benefit in the third year of retirement and thereafter
        would be changed as follows:
          Current provision: 10% of the Pre-retirement death benefit that  would
        have  been  payable  had  the  member died on the earlier of (1) the day
        before they retired and (2) age 60.
          Proposed provision: Greater of the benefit payable under  the  current
        provision  and  10% of the death benefit payable had the member died the
        day before they retired.
          FINANCIAL IMPACT: The increase in annual employer contributions  asso-
        ciated  with  this  proposed  legislation has already been accounted for
        beginning with the June 30, 2020 actuarial valuations used to  determine
        the Final Fiscal Year 2022 employer contributions of NYCERS, NYCTRS, and
        BERS.
          The  estimated financial impact of updating ordinary death benefits to
        maintain compliance with OWBPA as described  above  is  an  increase  in
        Present Value of Future Benefits of approximately $223.7 million, and an
        initial increase in the FY 2022 annual employer contributions of approx-
        imately $40.0 million ($26.8 million for New York City and $13.2 million
        for  the other obligors). A breakdown of the FY 2022 annual contribution
        impact by System is shown in the table below.
                                      Impact on FY 2022
                       System         Annual Employer Contributions
                       ______
                                      ($ Millions)
                                      _____________________________
                       NYCERS         $ 22.9

        A. 7668                             6
 
                       NYCTRS         12.5
                       BERS           4.6
                                      Total     $ 40.0
          Long-term annual costs (after the initial increase in unfunded accrued
        liability  is  fully amortized in seven to eight years) are estimated to
        be less than $10 million for all three Systems combined.
          New Unfunded Accrued Liability (UAL) attributable to  benefit  changes
        are  generally  amortized  over  the remaining working lifetime of those
        impacted by the benefit changes. For purposes of this  Fiscal  Note,  it
        had  been  assumed that increases in UAL would be amortized over periods
        ranging from seven to eight years depending on the System (six to  seven
        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, 2020 actuarial valuations of NYCERS, NYCTRS,
        and BERS to determine the Fiscal Year 2022 employer contributions.
          ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
        been calculated based on the actuarial assumptions and methods used  for
        the Fiscal Year 2022 employer contributions of NYCERS, NYCTRS, and BERS.
          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-
        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  2023-55  dated  May  22,
        2023  was prepared by the Chief Actuary for the New York City Employees'
        Retirement System, the New York City Teachers'  Retirement  System,  and
        the New York City Board of Education Retirement System. This estimate is
        intended for use only during the 2023 Legislative Session.
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