S T A T E O F N E W Y O R K
________________________________________________________________________
6563
2015-2016 Regular Sessions
I N A S S E M B L Y
March 27, 2015
___________
Introduced by M. of A. ABBATE, GOLDFEDER -- read once and referred to
the Committee on Governmental Employees
AN ACT to amend the retirement and social security law, in relation to
refunding contributions made to the twenty-five year early retirement
program and the age fifty-seven retirement program by New York city
transit authority members in the title transit manager
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Paragraph 15 of subdivision d of section 604-c of the
2 retirement and social security law, as added by chapter 522 of the laws
3 of 2013, is amended to read as follows:
4 15. An eligible former participant, as defined in this paragraph,
5 shall be entitled to a refund of the employee portion of his or her
6 additional member contributions made pursuant to this subdivision which
7 shall include any and all interest thereon at the rate of five percent
8 per annum, compounded annually and such refund shall be payable, upon
9 such participant's application pursuant to procedures promulgated in
10 regulations of the board of trustees of the retirement system. An eligi-
11 ble former participant shall be a participant who is or was employed in
12 the title supervisor (stations) in assignment level II in the New York
13 city transit authority's stations department OR THE TITLE TRANSIT MANAG-
14 ER, and who, on October first, two thousand six, was employed by the New
15 York city transit authority in such title and who was a participant in
16 the twenty-five year early retirement program prior to the starting date
17 of the elimination of additional member contributions, as such date is
18 defined in an election made pursuant to paragraph ten of subdivision e
19 of section six hundred four-b of this article.
20 S 2. Paragraph 15 of subdivision f of section 604-d of the retirement
21 and social security law, as added by chapter 522 of the laws of 2013, is
22 amended to read as follows:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10181-01-5
A. 6563 2
1 15. An eligible former participant, as defined in this paragraph,
2 shall be entitled to a refund of the employee portion of his or her
3 additional member contributions made pursuant to this subdivision which
4 shall include any and all interest thereon at the rate of five percent
5 per annum, compounded annually and such refund shall be payable, upon
6 such participant's application pursuant to procedures promulgated in
7 regulations of the board of trustees of the retirement system. An eligi-
8 ble former participant shall be a participant who is or was employed in
9 the title supervisor (stations) in assignment level II in the New York
10 city transit authority's stations department OR THE TITLE TRANSIT MANAG-
11 ER, and who, on October first, two thousand six, was employed by the New
12 York city transit authority in such title and who was a participant in
13 the age fifty-seven retirement program prior to the starting date of the
14 elimination of additional member contributions, as such date is defined
15 in an election made pursuant to paragraph ten of subdivision e of
16 section six hundred four-b of this article.
17 S 3. This act shall take effect immediately.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend New York State Retirement and Social Security Law ("RSSL")
Sections 604-c and 604-d to provide to certain New York City Transit
Authority ("NYCTA") members of the New York City Employees' Retirement
System ("NYCERS") a refund of Additional Member Contributions ("AMC")
that were paid while participants of one of the Chapter 96 of the Laws
of 1995 ("Chapter 96/95") Retirement Programs.
The Effective Date of the proposed legislation would be the date of
enactment.
This Fiscal Note assumes that the proposed legislation is intended to
refund interest on AMC in accordance with NYCERS procedures for credit-
ing interest on member contributions.
IMPACT ON PLAN PROVISIONS - ADDITIONAL MEMBER CONTRIBUTIONS: Under
Chapter 96/95, AMC were required under each of the Early Retirement
Programs:
* The Twenty-Five-Year Early Retirement Program ("55/25 Program") and
* The Age Fifty-Seven Retirement Program ("57/5 Program").
Those NYCERS members who participated in either of such Programs paid
AMC of:
* 4.35% of salary for service on and after January 1, 1995 until Janu-
ary 1, 1998,
* 2.85% of salary for service on and after January 1, 1998 until
December 2, 2001, and
* 1.85% of salary for service on and after December 2, 2001.
In addition, if such member's job title was considered Physically-Tax-
ing ("PT"), an additional Physically-Taxing AMC ("PTAMC") of 1.98% of
salary was required for all service on and after January 1, 1995.
As a result of Chapter 10 of the Laws of 2000, many of the NYCTA Tier
IV members of NYCERS who participated in the Chapter 96/95 Retirement
Programs were transferred into the Transit Twenty-Five-Year and Age
Fifty-Five Retirement Program ("Transit 55/25 Program") effective Decem-
ber 15, 2000. For these members, the AMC and PTAMC that had been payable
under the Chapter 96/95 Retirement Programs were no longer required
after January 3, 2001 (i.e., the effective implementation date, the
first payroll period following the transfer date).
This proposed legislation would refund, on and after the Effective
Date, to certain Transit 55/25 Program participants with Initial Program
participation dates on or before December 15, 2000 who were employed by
A. 6563 3
the Transit Authority as Transit Managers as of October 1, 2006, includ-
ing those who are currently retired, the employee portion of the AMC and
PTAMC, if any, paid for participation in the Chapter 96/95 Retirement
Programs, including accrued interest at 5.0% per annum. For those who
are currently retired, interest would accrue until retirement date.
Note: Under the Chapter 96/95 Retirement Programs, 50% of the AMC and
PTAMC paid into such Programs is considered an employer contribution
while the other 50% is considered to be the employee portion. The
employee portion of the AMC and PTAMC is refunded to members who decease
prior to retirement or who retire at age 62 or later. If the proposed
legislation were enacted, those impacted Transit 55/25 Program partic-
ipants would receive the balance of the accumulated employee portion of
AMC and PTAMC.
To receive such refund, those eligible participants would be required
to complete a form and follow procedures to be established by the NYCERS
Board of Trustees.
FINANCIAL IMPACT - OVERVIEW: If enacted into the law, the ultimate
employer cost of this proposed legislation would be determined by the
reduction in Fund assets due to the current refund of AMC, offset by the
reduction in expected benefits paid (due to there no longer being a
requirement to refund AMC on a future withdrawal).
FINANCIAL IMPACT - UNFUNDED ACTUARIAL ACCRUED LIABILITY: With respect
to NYCERS and based on the census data and actuarial assumptions and
methods described herein, the enactment of this proposed legislation
would result in a reduction in Actuarial Asset Value as of June 30, 2014
to reflect the expected refund of the employee portion of accumulated
Chapter 96/95 Retirement Program AMC and PTAMC, if any, for those
impacted Transit 55/25 Program participants of approximately $1,455,000.
In addition, there would be a decrease in the Actuarial Accrued
Liability ("AAL") of approximately $120,000 as of June 30, 2014.
Together, the enactment of the proposed legislation would result in a
net increase in the Unfunded Actuarial Accrued Liability ("UAAL") to
NYCERS of approximately $1,335,000 as of June 30, 2014.
FINANCIAL IMPACT - ADDITIONAL ANNUAL EMPLOYER COSTS AND CONTRIBUTIONS:
With respect to NYCERS, the enactment of this proposed legislation would
increase annual employer costs by approximately $340,000 per year for 5
years.
Increases in employer contributions would be comparable to the esti-
mated increases in employer costs.
If enacted on or before June 30, 2015, increased employer contrib-
utions to NYCERS would begin Fiscal Year 2017.
If enacted after June 30, 2015 and on or before June 30, 2016,
increased employer contributions to NYCERS would begin Fiscal Year 2018.
OTHER COSTS: Not measured in this Fiscal Note are any additional
administrative costs or the impact of this proposed legislation on the
Manhattan and Bronx Surface Transit Operating Authority ("MaBSTOA").
CENSUS DATA: The census data used for estimates of AAL, UAAL and
employer contributions presented herein are the 841 Tier IV active
members of NYCERS who participate in the Transit 55/25 Program and who
were employed by the Transit Authority as Transit Managers as of June
30, 2006.
Of these 841 Tier IV members of NYCERS who participate in the Transit
55/25 Program and who were employed by the Transit Authority as Transit
Managers as of June 30, 2006, 230 members had AMC (and, in certain
cases, PTAMC) account balances from contributions made under the Chapter
A. 6563 4
96/95 Retirement Programs as of June 30, 2013. The remaining 611 of
these members do not have such AMC or PTAMC account balances.
Of the 230 members eligible for a refund as of June 30, 2013, 91 were
active members and 115 retired before age 62. In addition, 11 members
deceased before retirement and 13 members retired after age 62 and these
24 members were already refunded the employee portion of their AMC and
PTAMC.
This census data was then rolled forward to June 30, 2014 by crediting
interest of 5.0% on active members account balances and assuming that no
member retired or died during the period.
ACTUARIAL ASSUMPTIONS AND METHODS: Estimates of changes in AAL, UAAL
and employer costs have been calculated using the actuarial assumptions
and methods adopted by the NYCERS Board of Trustees during Fiscal Year
2012 and enacted as Chapter 3 of the Laws of 2013 ("2012 A&M") for
determining employer contributions for fiscal years beginning on and
after July 1, 2011 (i.e., Fiscal Years 2012 and after).
In accordance with Section 13.638.2 (k-2) of the Administrative Code
of the City of New York ("ACNY") as enacted by Chapter 3/13, as one
component of the 2012 A&M, new UAAL attributable to benefit changes are
to be amortized as determined by the Actuary but generally over the
remaining working lifetimes of those impacted by these benefit changes.
For this proposed legislation, the average remaining working lifetime
is estimated to equal approximately two years from June 30, 2015 for the
entire group impacted and approximately five years for just those esti-
mated to still be active members as of June 30, 2015.
Similar legislations for Transit Operating non-supervisory employees
were enacted as Chapter 734 of the Laws of 2006 ("Chapter 734/06") and
as Chapter 379 of the Laws of 2007 ("Chapter 379/07") and the additional
UAAL was amortized for each legislation under the actuarial assumptions
and methods then in effect, implicitly over the average remaining work-
ing lifetimes of all NYCERS active members.
Similar legislation was also enacted as Chapter 522 of the Laws of
2013 ("Chapter 522/13") and an additional UAAL was amortized for this
legislation for cost purposes over a five year period.
The Actuary believes that the ideal financing period for this proposed
legislation would be the average remaining working lifetime of the
entire group impacted.
However, given the history of the financing of similar legislations
(e.g., Chapter 734/06, Chapter 379/07 and Chapter 522/13), the Actuary
is inclined to amortize the proposed legislation over five years that
approximates the current average remaining working lifetime of the
active members impacted. Essentially, this is a compromise between the
remaining average working lifetime of the entire group impacted and the
average remaining lifetime of all NYCERS members.
For this particular legislation, the Actuary would likely treat the
five years of amortization as the payment period beginning one year
after the establishment of the UAAL. This approach is consistent with
the One-Year Lag Methodology ("OYLM") where the UAAL is considered to be
amortized over six years with five years of payments beginning in the
second year.
Also note that, historically, other legislation impacting primarily
retired or soon-to-be-retired members was often amortized over five
years (Retirement Incentive Programs) or 10 years (Supplemental
Programs).
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr. am the Chief
Actuary for the New York City Retirement Systems. I am a Fellow of the
A. 6563 5
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.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-13, dated
March 10, 2015, prepared by the Chief Actuary for the New York City
Employees' Retirement System.