Relates to certain members who re-enter public service; extends tier reinstatement provisions to a retiree of a public retirement system who was an active member of a public retirement system on or after January 1, 1989.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7490
SPONSOR: Gunther (MS) TITLE OF BILL: An act to amend the retirement and social security
law, in relation to certain members who re-enter public service
PURPOSE:
This bill seeks to reinstate the remaining public employees who lost
their tier membership due to family care giving responsibilities. By
moving the effective date of Chapter 640 to January 1, 1989, this bill
will reinstate the remainder of the retirement system members who were
deprived of their membership in superior pension plans due to the break
in the service rules.
SUMMARY OF PROVISIONS:
This bill amends subdivisions 2 and 4 of section 645 of the retirement
and social security law.
JUSTIFICATION:
This bill gives New York State the opportunity to correct a long-stand-
ing inequity at a moderate cost. In 1998, the Governor signed a law
reinstating New York State and City active teachers to their original
pension system tier membership. In 1999, the Governor signed a law
expanding the reinstatement to all active public employees. In the
Governor's press release, he affirmed the importance of righting the
inequity done to thousands of public employees who were forced out of
their jobs and pension plan due to pregnancy and family care giving
responsibilities. Each member who was reinstated forfeited any claim to
a return of the contributions they had made to the retirement systems
while they were members of lesser tiers.
However, reinstated members were refunded the amounts that they had paid
to the retirements systems for prior service credit purchases. This
bill pertains to a very limited and definable number of retirement
system members. Public employees before 1973 were assured by pension
system representatives that they could leave and return to work without
effect on their benefits. For example, a New York State teacher who left
teaching, generally for reasons related to the female work pattern i.e.
childbirth and attending to small children, stayed out beyond the "break
in service" period, and returned to find themselves in a lesser pension
plan. Had they been properly informed, they could have taught as little
as twenty days in anyone year within the five year period and remained
in Tier 1 when they returned to full time teaching. The average teacher
lost between $9,000 and $11,000 per year in pension benefits and the
right to retire at age 55 instead of 52 without penalty. It is unlikely
that any members of the police and fire pension systems will be eligible
because so few women were members in the 1960s and early 70s. As to the
New York City Teachers pension plan, the vast majority of teachers that
left for care giving responsibilities were protected by the generous New
York City maternity rules.
LEGISLATIVE HISTORY:
2011/12 A7703 Died Gov't Employees, S7135 Died Civil Service 2009/10
A7219 Died Gov't Employees, S3634 Died Civil Service 2007/08 A9524 Died
Gov't Employees, S4447 Passed Senate 2005/06 A5131 Died Gov't Employees,
S3518 Passed Senate 2003/04 A5392 Died Gov't Employees, S3039 Died Rules
2001/02 A2903 Died Gov't Employees, S2172 Died Civil Service & Pensions
1999/00 A10911 Died Gov't Employees, S6127 Died Civil Service & Pensions
FISCAL IMPLICATIONS:
FISCAL NOTE - PURSUANT TO LEGISLATIVE LAW, SECTION 50:
"This bill would allow certain living retirees of New York public
retirement systems who retired prior to December 16, 1999 and who previ-
ously were members of a New York public retirement system to be deemed
to have become members of the systems from which they retired as of the
original date of such previous ceased membership. Tier 3 and 4 retirees
of the New York State and Local. Employees' Retirement System or the New
York State Teachers' Retirement System who become Tier 1 or 2 retirees
and who have already purchased their previous service would receive a
refund of these contributions. No benefits will be deemed to have
accrued prior to the effective date of this act.
In addition, this bill would also affect retirees who had a previous
ceased membership with a public employee retirement system other than
the NYS&LERS or the NYS&LPFRS.
If this bill is enacted, insofar as this bill affects the New York State
and Local Employees' Retirement System (ERS), approximately 1,434 reti-
rees of the ERS will be affected. The estimated past service cost would
be approximately $15.1 million.
Pursuant to section 25 of the Retirement and Social Security Law, this
ERS past service cost would be borne by the State of New York and would
require an itemized appropriation by the State of New York sufficient to
pay the cost of the provision. The State may amortize this past service
cost over a period of 5 years. The first year cost, including interest
would be approximately $3.5 million.
Insofar as this bill would affect employers in the New York State and
Local Police and Fire Retirement System (PFRS), the estimated additional
costs would be negligible. These costs would be shared by the State of
New York and the participating employers in the PERS.
Summary of relevant resources: Data: March 31, 2012 Actuarial Year End
File with distributions of membership and other statistics displayed in
the 2012 Report of the Actuary and 2012 Comprehensive Annual Financial
Report.
Assumptions and Methods: 2010, 2011 and 2012 Annual Report of the Comp-
troller on Actuarial Assumptions, Codes Rules and Regulations of the
State of New York: Audit and Control.
Market Assets and GASH Disclosures: March 31, 2012 New York State and
Local Retirement System Financial Statements and Supplementary Informa-
tion.
Valuations of Benefit Liabilities and Actuarial Assets: summarized in
the 2012 Actuarial Valuations report.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This estimate, dated January 29, 2013 and intended for use only during
the 2013 Legislative Session, is Fiscal Note No. 2013-53, prepared by
the Actuary for the New York State and Local Employees! Retirement
System and the New York State and Local police and Fire Retirement
System."
FISCAL NOTE - PURSUANT TO LEGISLATIVE LAW, SECTION 50:
"This bill would amend subdivisions 2 and 4 of Section 645 of the
Retirement and Social Security Law to extend the tier reinstatement
provisions to any retiree of a public retirement system. The retiree
must be alive as of the effective date of the bill in order to be eligi-
ble. This bill only applies to payments made on or after the effective
date of this act.
The annual cost to the employers of members of the New York State Teach-
ers' Retirement System for this benefit is estimated to be $6.0 million
or .04% of payroll if this bill is enacted.
The source of this estimate is Fiscal Note 2013-30 dated May 9, 2013
prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2013 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member o the American Academy of Actuaries and
I meet the Qualification Standards of the American Academy of Actuaries
to render the actuarial opinion contained herein."
EFFECTIVE DATE:
This act shall take effect immediately but shall only apply to persons
alive as of the effective date of this act and shall apply to payments
made on or after the effective date of this act; and provided further,
that any retirees qualifying under this act shall have their retirement
allowance recalculated from July 1, 2013 or the date of reinstatement,
whichever is later.
