Provides an option for beneficiaries of NYC transit authority members to receive a lump sum equal to the pension reserve where a member who is eligible for a service retirement dies prior to filing for retirement.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7563B
SPONSOR: Pheffer Amato TITLE OF BILL:
An act to amend the retirement and social security law, in relation to
death benefits for active New York city transit authority members
PURPOSE OR GENERAL IDEA OF BILL:
To increase the in-service death benefit for New York City Transit
Authority employees in the 25-Year/Age 55 Retirement Plan in Tiers 4 and
6 to be the value of the pension reserve (assuming single life allow-
ance) as if the member had retired on the date of their death.
SUMMARY OF PROVISIONS:
Section one of this bill amends section 604-b of the Retirement and
Social Security Law, which is the section of law creating the Transit
Operating Force 25-Year/Age 55 Retirement Plan, to add a new subdivision
f to provide that the beneficiary of a member who dies before filing for
retirement may elect a payable amount equal to the value of the member's
pension reserve that would have been established had the member retired
on the date of their death.
Section two provides that this act shall not be subject to the appro-
priations requirements of section 25 of the Retirement and Social Secu-
rity Law section three sets the effective date.
JUSTIFICATION:
Once MTA employees such as the New York City Transit Authority (NYC TA)
members in the 25-Year/Age 55 Retirement Plan become eligible to retire,
they face a conundrum: they can retire, start drawing a pension, and
complete an option election form, which allows the retiree to choose
between a maximum retirement allowance, paying the full amount of the
member's pension but ceasing upon their death, or a reduced payout which
allows for a continuing benefit to the member's beneficiaries upon the
member's death; or stay on the job and continue earning a full salary-
but then risk leaving only an ordinary death benefit, worth at most
three times the member's salary, to their families should they pass away
before they have the opportunity to file for retirement.
This bill would provide parity between NYC TA employees and other types
of public servants like earlier tier members of the New York State
Teachers Retirement System (TRS), the New York State and Local Employees
Retirement System (NYSLRS), and the New York State and Local Police and
Fire Retirement System (PFRS) (Ch. 554 of 2000), Nassau County
correction officers (Ch. 534 of 2021), Suffolk County correction offi-
cers (Ch. 535 of 2021), and other uniformed services who all enjoy a
death gamble benefit, in which an employee's family is able to receive
the full value of the employee's pension benefit, as if they had retired
on the date of their death, in the event that the employee decides to
continue working past retirement age.
Extending the death gamble benefit to the dedicated civil servants who
run New York City's trains and buses will remove a disincentive to
continuing service for seasoned public employees who may otherwise wish
to keep working but for the reduced benefits their families would
receive upon their in-service death.
PRIOR LEGISLATIVE HISTORY:
None
FISCAL IMPLICATIONS:
Please see bill.
EFFECTIVE DATE:
Immediate.
STATE OF NEW YORK
________________________________________________________________________
7563--B
2023-2024 Regular Sessions
IN ASSEMBLY
May 25, 2023
___________
Introduced by M. of A. PHEFFER AMATO, SHIMSKY, SILLITTI, DURSO, JONES,
ARDILA, WEPRIN, HEVESI, COLTON, AUBRY, REILLY, DeSTEFANO, SIMON,
BICHOTTE HERMELYN, KIM, BERGER, SIMONE, DAVILA, SEPTIMO, TAYLOR --
read once and referred to the Committee on Governmental Employees --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee -- recommitted to the Committee on
Governmental Employees in accordance with Assembly Rule 3, sec. 2 --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
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:
1 Section 1. Section 604-b of the retirement and social security law is
2 amended by adding a new subdivision f to read as follows:
3 f. Death benefits. Notwithstanding any provision of law to the contra-
4 ry, where a New York city transit authority member would have been enti-
5 tled to a service retirement benefit at the time of their death but had
6 not yet filed for such service retirement pursuant to subparagraph (iv)
7 of paragraph one of subdivision c of this section, and where such death
8 occurs on or after the effective date of this subdivision, the benefici-
9 ary or beneficiaries of such member may elect to receive, in a lump sum
10 or on an annuitized basis, an amount payable which shall be equal to the
11 pension reserve that would have been established had such member retired
12 on the date of their death.
13 § 2. Notwithstanding any other provision of law to the contrary, none
14 of the provisions of this act shall be subject to section 25 of the
15 retirement and social security law.
16 § 3. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10259-06-4
A. 7563--B 2
SUMMARY: This proposed legislation would provide an alternative death
benefit for Transit Tier 4 and Tier 6 Special Plan members of NYCERS.
EXPECTED INCREASE (DECREASE) IN EMPLOYER CONTRIBUTIONS
by Fiscal Year for the first 25 years ($ in Millions)
Year NYCERS
2025 4.1
2026 4.1
2027 4.1
2028 4.1
2029 4.1
2030 4.1
2031 4.1
2032 4.1
2033 4.1
2034 4.1
2035 4.1
2036 4.1
2037 0.9
2038 0.9
2039 0.9
2040 0.9
2041 0.9
2042 0.9
2043 0.9
2044 0.9
2045 0.9
2046 0.9
2047 1.0
2048 1.0
2049 1.0
Employer Contribution impact beyond Fiscal Year 2049 is not shown.
Projected contributions include future new hires that may be impacted.
The increase in employer contributions will be allocated to the New
York City Transit Authority.
INITIAL INCREASE (DECREASE) IN ACTUARIAL LIABILITIES
as of June 30, 2023 ($ in Millions)
Present Value (PV) NYCERS
PV of Benefits: 32.6
PV of Employee Contributions: 0.0
PV of Employer Contributions: 32.6
Unfunded Accrued Liabilities: 24.4
AMORTIZATION OF UNFUNDED ACCRUED LIABILITY
NYCERS
Number of Payments: 12
Fiscal Year of Last Payment: 2036
Amortization Payment: 3.2 M
Unfunded Accrued Liability increases were amortized over the expected
remaining working lifetime of those impacted by the benefit changes
using level dollar payments.
A. 7563--B 3
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
Active Members
- Number Count: 36,819
- Average Age: 48.3
- Average Service: 11.6
- Average Salary: 90,200
IMPACT ON MEMBER 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 eligible to receive a service retirement benefit 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 actuarial
present value of all pension payments expected to be made had the member
retired for service. This type of lump sum pension reserve death bene-
fit is sometimes referred to as a Death Gamble, and is afforded, in a
similar form, to Tier 1 NYCERS members.
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 NYC Transit members. New entrant
demographics were developed based on data for recent new hires and actu-
arial 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 2024-45 dated April 19,
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.
