Relates to the transfer of the members, assets and liabilities of the board of education retirement system of the city of New York to certain other retirement systems

Reasons for support

This legislation would save the City of New York approximately millions of dollars annually in administrative costs and would not, in any way, diminish or impair the pension benefits of any New York City employee or retiree.

BERS, which was established in 1921, is one of the five actuarially funded retirement systems maintained by the City of New York. The membership of BERS is comprised mainly of employees of the New York City Department of Education who are not eligible for membership in TRS, employees of the School Construction Authority and school crossing guards who are employed by the New York City Police Department. In general, non-pedagogical Department of Education employees are members of BERS, and regularly appointed teachers, as well as Department of Education employees in certain other pedagogical titles, are members of TRS. However, substitute teachers, substitute paraprofessionals and substitute and non-annualized Department of Education employees in a limited number of other titles who have pedagogical duties are currently ineligible for TRS membership and, therefore, are members of BERS.

As of June 30, 2010, BERS has approximately 23,300 members, 14,000 retirees, and net assets of $1.786 billion. BERS has an administrative staff of approximately 88 employees, and an administrative budget of approximately $10.0 million for fiscal year 2010-11.

The bill would transfer the members, assets and liabilities of BERS to NYCERS and TRS, and would dissolve BERS. A substantial majority of the BERS titles would be transferred to NYCERS. A limited number of pedagogical titles, including substitute teachers and most substitute paraprofessionals, and all titles eligible for the age 55/25-year and age 55/27-year plans enacted in 2008 (i.e., certain nurses, physical therapists, adult education teachers, etc.) would be transferred to TRS. Section six of the bill sets forth the list of

titles which would become TRS-eligible titles, Members of BERS who discontinued service with vested rights from any of the proposed TRS-eligible titles would become members of TRS with vested rights. Retirees of BERS, regardless of the title from which they retired, would become retirees of NYCERS.

Under the bill, the Chief Actuary of BERS would determine the division of the BERS assets and liabilities between NYCERS and TRS. In general, the portion of the total BERS assets and liabilities attributable to the BERS members and retirees who are moved to NYCERS would be transferred to NYCERS, and the portion of the total BERS assets and liabilities attributable to BERS members who are moved to TRS would be transferred to TRS. The Board of Trustees of NYCERS would take over the administration of the BERS tax deferred annuity and variable annuity programs for those NYCERS members who are eligible to participate in such programs under applicable provisions of law or the BERS Rules and Regulations.

It is expected that the enactment of this bill would result in significant cost savings to the City of New York by reducing in future years the amounts the City would be required to reimburse the City retirement systems for expenditures incurred in administering the systems. Moving the non-pedagogical BERS members to NYCERS would result in significant administrative cost savings because the benefit structures of BERS and NYCERS are nearly identical in all tiers, and NYCERS already has in place the expertise and technology systems to administer such benefits. For example, BERS members who participate in the BERS age 55/25-year and age 57/5-year plans enacted by Chapter 96 of the Laws of 1995 would be absorbed seamlessly into the identical NYCERS Chapter 96 special plans. The merger of the systems proposed in this legislation would end the costly duplication of having an entirely separate Board of Trustees, administrative staff, office space and technology systems in BERS to administer the same retirement benefits as are being administrated by NYCERS.

The bill provides that no BERS member who is transferred to NYCERS or TRS would have his or her pension benefits diminished or impaired in any way as the result of the enactment of this legislation (see subparagraphs two and three of paragraph b of subdivision 26 of Education Law section 2575, as proposed in section one of the bill). Finally, section six of the bill, which would convert certain BERS-eligible titles to TRS-eligible titles, provides that persons holding such titles would be entitled to the same retirement benefits from TRS that they would have received if they had retired as members of BERS. Thus, the enactment of the bill would not generate any additional costs for the City of New York on account of benefits.