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A07873 Summary:

BILL NOA07873A
 
SAME ASSAME AS S06985-B
 
SPONSORAbbate
 
COSPNSRPheffer Amato, Colton
 
MLTSPNSR
 
Amd §604-g, R & SS L
 
Relates to automotive members of the New York city employees' retirement system.
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A07873 Actions:

BILL NOA07873A
 
05/28/2021referred to governmental employees
01/05/2022referred to governmental employees
03/15/2022amend and recommit to governmental employees
03/15/2022print number 7873a
05/25/2022reported referred to ways and means
06/01/2022reported referred to rules
06/03/2022reported
06/03/2022rules report cal.695
06/03/2022substituted by s6985b
 S06985 AMEND=B GOUNARDES
 05/20/2021REFERRED TO CIVIL SERVICE AND PENSIONS
 05/25/2021AMEND AND RECOMMIT TO CIVIL SERVICE AND PENSIONS
 05/25/2021PRINT NUMBER 6985A
 01/05/2022REFERRED TO CIVIL SERVICE AND PENSIONS
 03/15/2022AMEND AND RECOMMIT TO CIVIL SERVICE AND PENSIONS
 03/15/2022PRINT NUMBER 6985B
 05/24/2022COMMITTEE DISCHARGED AND COMMITTED TO RULES
 05/24/2022ORDERED TO THIRD READING CAL.1508
 05/24/2022HOME RULE REQUEST
 05/24/2022PASSED SENATE
 05/24/2022DELIVERED TO ASSEMBLY
 05/24/2022referred to governmental employees
 06/03/2022substituted for a7873a
 06/03/2022ordered to third reading rules cal.695
 06/03/2022home rule request
 06/03/2022passed assembly
 06/03/2022returned to senate
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A07873 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7873A
 
SPONSOR: Abbate
  TITLE OF BILL: An act to amend the retirement and social security law, in relation to automotive members of the New York city employees' retirement system   PURPOSE OR GENERAL IDEA OF BILL: This legislation provides automotive members of the New York City Employees' Retirement System who begin their careers later in life with the ability to receive a vested retirement benefit.   SUMMARY OF PROVISIONS: Section one of the bill amends Retirement and Social Security Law section 604-g(d) (2) (ii). Section two of the bill amends Retirement and Social Security Law, section 604-g(e) by adding a new paragraph 13. Section three of the bill provides that this act shall take effect imme- diately.   JUSTIFICATION: Currently, automotive members who begin their careers later in life and are not included in the revised plan may never become eligible to receive a vested retirement due to the age and service requirements. This bill adjusts those requirements to afford those employees with a greater ability to receive a vested retirement.   PRIOR LEGISLATIVE HISTORY: 2021:A.7873- referred to Governmental Employees Committee 2020:A7663A- referred to Governmental Employees Committee 2019:A7663 - referred to Governmental Employees Committee   FISCAL IMPLICATIONS: See bill.   EFFECTIVE DATE: This act shall take effect immediately.
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A07873 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         7873--A
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                      May 28, 2021
                                       ___________
 
        Introduced by M. of A. ABBATE -- read once and referred to the Committee
          on  Governmental  Employees -- recommitted to the Committee on Govern-
          mental Employees in accordance with Assembly Rule 3, sec. 2 -- commit-
          tee discharged, bill amended, ordered reprinted as amended and  recom-
          mitted to said committee

        AN  ACT  to amend the retirement and social security law, in relation to
          automotive members of the New York city employees' retirement system
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Subparagraph  (ii)  of  paragraph  2  of subdivision d of
     2  section 604-g of the retirement and social security law, as  amended  by
     3  chapter 18 of the laws of 2012, is amended to read as follows:
     4    (ii)  In  the case of a participant who is not a New York city revised
     5  plan member, such vested benefit shall become payable [on  the  earliest
     6  date on which such discontinued member could have retired for service if
     7  such discontinuance had not occurred] as follows:
     8    (A) at the later of age sixty-two or the age at discontinuance, if the
     9  member had completed at least ten years of credited service; or
    10    (B)  at  the later of age sixty-three or the age at discontinuance, if
    11  the member had completed at least eight, but fewer  than  ten  years  of
    12  credited service; or
    13    (C)  at  the  later of age sixty-four or the age of discontinuance, if
    14  the member had completed at least six, but fewer  than  eight  years  of
    15  credited service; or
    16    (D)  at  the  later of age sixty-five or the age of discontinuance, if
    17  the member had completed at least five, but  fewer  than  six  years  of
    18  credited service;
    19    or,  in  the case of a participant who is a New York city revised plan
    20  member, such vested benefit shall become payable at age sixty-three.
    21    § 2. Subdivision e of section 604-g of the retirement and social secu-
    22  rity law is amended by adding a new paragraph 13 to read as follows:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06287-04-2

        A. 7873--A                          2
 
     1    13. In addition to the deferred vested benefit calculated pursuant  to
     2  subdivision  d  of  this section, a participant who is eligible for such
     3  benefit shall receive a life annuity (calculated in accordance with  the
     4  method  set  forth in subdivision i of section six hundred thirteen-b of
     5  this  article) which is actuarially equivalent to the difference between
     6  (i) the contributions required by paragraph one of this subdivision  and
     7  (ii)  the  additional  member contributions required by subdivision d of
     8  section six hundred four-c of this article, as added by chapter  ninety-
     9  six  of  the  laws  of  nineteen ninety-five, together with the interest
    10  credited on such contributions.
    11    § 3. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY OF BILL: This proposed legislation would amend  Section  604-g
        of  the Retirement and Social Security Law (RSSL) to provide early paya-
        bility, and an annuity based on the accumulation of  certain  Additional
        Members  Contributions (AMCs), to certain vested members in the New York
        City Employees' Retirement System  (NYCERS)  Automotive  25-Year/Age  50
        Plan (Auto 25-Year Plan).
          Effective Date: Upon enactment.
          IMPACT  ON  PAYABILITY:  Currently,  Tier 4 vested members in the Auto
        25-Year Plan can begin collecting their pension:
          * At the later of age 50 or what would have been their  25th  year  of
        credited service
          The proposed legislation would instead enable Tier 4 Auto 25-Year Plan
        vested members to begin collecting their pension as follows:
          * At age 62 with at least 10 years of credited service
          * At age 63 with at least eight years of credited service
          * At age 64 with at least six years of credited service
          * At age 65 or older with at least five years of credited service
          Tier  6  Auto  25-Year Plan members would remain eligible for a vested
        benefit:
          * At age 63 or older with at least 10 years of credited service.
          IMPACT ON BENEFITS: The proposed legislation would further provide  to
        both Tier 4 and 6 Auto 25-Year Plan vested members an annuity benefit at
        payability equal to the difference between the following:
          * AMCs required in the Auto 25-Year Plan (4.83% of salary), and
          *  AMCs  required  in  the  Tier 4 55/25 Retirement Plan (ranging from
        1.85% to 4.35% of salary depending on dates of the service rendered).
          The difference in the AMC balances above are to be annuitized pursuant
        to the method set out in  loan  provisions  contained  in  RSSL  Section
        613-b(i)  (i.e.,  the actuarially equivalent of a life annuity using the
        interest rate on 30-year US treasury bonds as of January  first  of  the
        calendar year of retirement and the mortality tables for payment options
        under RSSL Section 610).
          Note:
          *  This  annuity  would only be available to vested members and not to
        Auto-25 Year Plan service retirees (i.e., retirees with 25 or more years
        of credited service).
          * For the purposes of determining the costs enumerated in this  Fiscal
        Note, it has been assumed that Tier 4 vested members who would have been
        eligible  for  earlier  payability (i.e., at the later of age 50 or what
        would have been 25 years of service) under current  provisions  of  law,
        would  still  be  eligible  for such earlier payability, given Constitu-
        tional protections, notwithstanding the bill's omission of  such  eligi-
        bility.

        A. 7873--A                          3
 
          FINANCIAL  IMPACT - PRESENT VALUES: Based on the actuarial assumptions
        and methods described herein, the enactment of this proposed legislation
        would increase the Present Value of Future Benefits (PVFB)  by  approxi-
        mately  $31.0  million.  The  increase  in PVFB is estimated to be $25.5
        million  for  New  York  City and $5.5 million for the other obligors of
        NYCERS.
          Under the Entry Age Normal cost method used to determine the  employer
        contributions  to  NYCERS,  there  would  be an increase in the Unfunded
        Accrued Liability (UAL) of approximately $18.0 million and  an  increase
        in the Present Value of future employer Normal Cost of $13.0 million.
          FINANCIAL  IMPACT  - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
        Section 13-638.2(k-2) of the Administrative Code of the City of New York
        (ACCNY), new UAL attributable to benefit changes are to be amortized  as
        determined  by the Actuary, but are generally amortized over the remain-
        ing working lifetime of those impacted by the  benefit  changes.  As  of
        June  30,  2021,  the  remaining  working  lifetime of Auto 25-Year Plan
        members is approximately 14 years.
          For the purposes of this Fiscal Note, the increase in  UAL  was  amor-
        tized  over a 14-year period (13 payments under the One-Year Lag Method-
        ology (OYLM))  using  level  dollar  payments.  This  payment  plus  the
        increase  in  the  Normal Cost results in an increase in annual employer
        contributions of approximately $3.9 million each year. The  increase  in
        annual  employer  contributions  is estimated to be $3.2 million for New
        York City and $0.7 million for the other obligors of NYCERS.
          CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
        assumed  that  the changes in the PVFB and annual employer contributions
        would be reflected for the first time in the  June  30,  2021  actuarial
        valuation  of  NYCERS.  In  accordance  with  the OYLM used to determine
        employer contributions, the increase  in  employer  contributions  would
        first be reflected in Fiscal Year 2023.
          CENSUS  DATA:  The  estimates presented herein are based on the census
        data used in the Preliminary June 30, 2021 (Lag) actuarial valuation  of
        NYCERS  to  determine the Preliminary Fiscal Year 2023 employer contrib-
        utions.
          The 1,712 NYCERS Auto 25-Year Plan members as of June 30, 2021 include
        1,675 active members and 37 non-active members. The active  members  had
        an  average age of approximately 45.4 years, average service of approxi-
        mately 9.3 years, and an average salary of approximately $113,100.
          ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
        future  employer  contributions  and   annual   employer   contributions
        presented herein have been calculated based on the actuarial assumptions
        and  methods  in effect for the June 30, 2021 (Lag) actuarial valuations
        used to determine the Preliminary Fiscal  Year  2023  employer  contrib-
        utions of NYCERS.
          RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
        highly on the realization of the actuarial assumptions used, as well  as
        certain  demographic  characteristics  of  NYCERS  and  other  exogenous
        factors such as investment, contribution, and  other  risks.  If  actual
        experience  deviates  from actuarial 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 of NYCERS and other New
        York City agencies to implement the proposed legislation.

        A. 7873--A                          4
 
          *  The  impact  of  this  proposed legislation on Other Postemployment
        Benefit (OPEB) costs.
          STATEMENT  OF  ACTUARIAL  OPINION: I, Michael J. Samet, am the Interim
        Chief Actuary for, and independent of,  the  New  York  City  Retirement
        Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
        a  Member of the American Academy of Actuaries. 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 2022-02 dated  March  14,
        2022  was  prepared  by  the Interim Chief Actuary for the New York City
        Employees' Retirement System. This estimate is  intended  for  use  only
        during the 2022 Legislative Session.
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