Relates to certain members who re-enter public service

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-standing 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 plans 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 lower tiers. However, reinstated members were refunded the amounts that they had paid to the retirement 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 affecting 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), who stayed out beyond the "break in service" period would find herself in a higher pension tier upon returning to work. Had they been properly informed, they could have taught for as few as twenty days in any one year within the five year period and remained in Tier 1 upon returning to teaching full-time. 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 generous New York City maternity rules.

Legislative history

2013-2014: A7490 Died Gov't Employees, S5165 Died Civil Service & Pensions 2011-2012: A7703 Died Gov't Employees, S7135 Died Civil Service & Pensions 2009-2010: A7219 Died Gov't Employees, 53634 Died Civil Service & Pensions 2007-2008: A9524 Died Gov't Employees, S4447 Passed Senate 2005-2006: A5131 Died Gov't Employees, S3518 Passed Senate 2003-2004: A5392 Died Gov't Employees, S3039 Died Rules 2001-2002: A2903 Died Gov't Employees, S2172 Died Civil Service & Pensions 1999-2000: A10911 Died Gov't Employees, S6127 Died Civil Service & Pensions

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 previously 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 1,320 retirees of the ERS will be affected. The estimated past service cost would be approximately $13.9 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 $3.2 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: The membership data used in measuring the impact of the proposed change was the same as that used in the March 31, 2014 actuarial valuation. Distributions and other statistics can be found in the 2014 Report of the Actuary and the 2014 Comprehensive Annual Financial Report.

The actuarial assumptions and methods used are described in the 2010, 2011, 2012, 2013 and 2014 Annual Report to the Comptroller on Actuarial Assumptions, and the Codes and Rules and Regulations of the State of New York: Audit and Control. The Market Assets and GASB Disclosures are found in the March 31, 2014 New York State and Local Retirement System Financial Statements and Supplementary Information.

I am a member of the American Academy of Actuaries and meet the Qualification Standards to render the actuarial opinion contained herein. This estimate, dated January 20, 2015 and intended for use only during the 2015 Legislative Session, is Fiscal Note No. 2015-31, 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 eligible. 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 Teachers' Retirement System for this benefit is estimated to be $5.9 million or .04% of payroll if this bill is enacted.

Employee data is from the System's most recent actuarial valuation files, consisting of data provided by the employers to the Retirement System. Data distributions and statistics can be found in the System's Comprehensive Annual Financial Report (CAFR). System assets are as reported in the System's financial statements, and can also be found in the CAFR. Actuarial assumptions and methods are provided in the System's Actuarial Report.

The source of this estimate is Fiscal Note 2015-8 dated February 24, 2015 prepared by the actuary of the New York State Teachers' Retirement System and is intended for use only during the 2015 Legislative Session. I, Richard A. Young, am the Actuary for the New York State Teachers' Retirement System. I am a member of 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 January 1, 2015 or the date of reinstatement, whichever is later.