Refund Extra Carpenter Contributions

Section 1. Paragraph 1 of subdivision f of section 604-d of the retirement and social security law is amended by adding a new subparagraph (iv) to read as follows:

(iv) notwithstanding the provisions of subparagraph (ii) of this paragraph, a participant holding the title of carpenter, supervisor carpenter, ship carpenter, supervisor ship carpenter, rigger, dockbuilder, supervisor dockbuilder and general supervisor dockbuilder who is a participant in the age fifty-seven retirement program and whose age and allowable service are such that he or she could not possibly be able to accumulate at least twenty-five years of service by the time he or she reaches age fifty-seven, shall not be required to make the additional member contribution pursuant to subparagraph (ii) of this paragraph. Any participant in the titles listed in this subparagraph who has made additional member contributions pursuant to subparagraph (ii) of this paragraph prior to the effective date of the chapter of the laws of two thousand seventeen that added this subparagraph shall receive a refund of the employee portion of such contributions plus interest provided that their age and allowable service are such that he or she could not possibly be able to accumulate at least twenty-five years of service by the time he or she reaches age fifty-seven.

§ 2. This act shall take effect immediately.

FISCAL NOTE.--Pursuant to Legislative Law, Section 50:

SUMMARY OF BILL: This proposed legislation would amend New York

Retirement and Social Security Law (RSSL) Section 604-d to exempt from

the physically taxing provisions certain Tier 4 carpenter titles, who

are participants in the New York City Employees' Retirement System

(NYCERS) or the Board of Education Retirement System of the City of New

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD11976-04-8

A. 11066 2

York (BERS) Age 57 Retirement Program (57/5 Plan), and who would not

benefit from the early retirement provisions for such physically taxing

titles.

The proposed legislation would affect 57/5 Plan participants in the

physically taxing titles of carpenter, supervisor carpenter, ship

carpenter, supervisor ship carpenter, rigger, dockbuilder, supervisor

dockbuilder, and general supervisor dockbuilder (Eligible Carpenter

Title) who would be unable to reach the requisite 25 years of credited

service in a physically taxing title by age 57, and would therefore be

ineligible to take advantage of the early retirement provisions of the

physically taxing title, which permits retirement at age 50 (with 25

years of credited service).

Under the proposed legislation, Eligible Carpenter Titles who started

in the 57/5 Plan but will not reach 25 years of credited service in a

physically taxing title by age 57 would no longer pay physically taxing

Additional Member Contributions (AMCs) and would receive an immediate

refund of the employee portion (i.e. 50%) of their physically taxing

AMCs plus interest. Such Titles would remain responsible for applicable

basic member contributions and applicable non-physically taxing AMCs for

continued 57/5 Plan participation.

Effective Date: Upon enactment.

FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the census date

and actuarial assumptions and methods described herein, the enactment of

this proposed legislation would decrease the Actuarial Present Value

(APV) of Benefits (APVB) by approximately $2.1 million, decrease the APV

of future member contributions by approximately $3.5 million and

decrease the Actuarial Asset Value (APV) by approximately $2.0 million

for NYCERS and BERS. The net result is an increase in the APV of future

employer contributions of approximately $3.4 million.

Under the Entry Age Normal cost method used to determine the employer

contributions to NYCERS and BERS, there would be an increase in the

Unfunded Accrued Liability (UAL) of approximately $0.5 million and an

increase in the APV future employer Normal Cost of $2.9 million.

FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with

the Administrative Code of the City of New York (ACCNY) Section

13-638.2(k-2), new UAL attributable to benefit changes are to amortized

as determined by the Actuary but generally over the remaining working

lifetime of those impacted by the benefit changes. As of June 30, 2017,

the remaining working lifetime of the members in Eligible Carpenter

Titles is approximately eight years for NYCERS and seven years for BERS.

For the purposes of this Fiscal Note, the increase in UAL was amor-

tized over an eight-year period (seven payments under the One-Year Lag

Methodology) for NYCERS and a seven-year period (six payments under the

One-Year Lag Methodology) for BERS using level dollar payments. This

payment plus the increase in the Normal Cost results in an increase in

annual employer contributions of approximately $526,000 ($514,000 for

NYCERS and $12,000 for BERS).

ESTIMATED FINANCIAL IMPACT ON NYCERS AND BERS IF CERTAIN CARPENTERS

WITHDRAW PHYSICALLY TAXING AMCs FROM THE TIER 4 57/5 PLAN AND CEASE

MAKING SUCH FUTURE AMCs

($000s)

NYCERS BERS Total

Actuarial Asset Value (AAV) $(1,975) $(45) $(2,020)

Actuarial Accrued Liability

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(AAL) $(1,481) $(43) $(1,524)

Unfunded Accrued Liability

(AAL-AAV) $ 494 $ 2 $ 496

Actuarial Present Value of

Future Employer Normal Cost $ 2,832 $ 77 $ 2,909

Employer Contributions $ 514 $ 12 $ 526

OTHER COSTS: Not measured in this Fiscal Note are the following:

* The initial, additional administrative costs of NYCERS, BERS, and

other New York City agencies to implement the proposed legislation.

* The impact of this proposed legislation on Other Postemployment

Benefit (OPEB) costs.

CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is

assumed that the changed in the APV of the future employer contributions

and annual employer contributions would be reflected for the first time

in the June 30, 2018 actuarial valuation of NYCERS and BERS. In accord-

ance with the One-Year Lag Methodology (OYLM) used to determine employer

contributions, the increase in employer contributions would be first

reflected in the Fiscal Year 2020

CENSUS DATA: The estimates presented herein are based on census data

used in the Preliminary June 30, 2017 (Lag) actuarial valuation of

NYCERS and BERS to determine Preliminary Fiscal Year 2019 employer

contributions. The following table summarizes the data for the affected

participants:

NYCERS BERS Total

Count 259 7 266

Average Age 54.4 years 54.4 years 54.4 years

Average Service 12.2 years 14.9 years 12.3 years

Average Salary $102,300 $98,900 $102,200

ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the UAL, APV of

future employer contributions, and annual employer contributions

presented herein have been calculated based on the same actuarial

assumptions and methods in effect for the June 30, 2017 (Lag) actuarial

valuations used to determine the Preliminary Fiscal Year 2019 employer

contributions of NYCERS and BERS. Please note these assumptions and

methods are subject to change as this valuation is not considered final

until the end of Fiscal Year 2019.

STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-

ary for, and independent of, the New York City Retirement Systems and

Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled

Actuary under the Employee Retirement Income and Security Act of 1974

(ERISA), a Member of the American Academy of Actuaries, and a Fellow of

the Conference of Consulting Actuaries. I meet the Qualification Stand-

ards of the American Academy of Actuaries to render the actuarial opin-

ion contained herein. To the best of my knowledge, the results contained

herein have been prepared in accordance with generally accepted actuari-

al principles and procedures and with the Actuarial Standards of Prac-

tice issued by the Actuarial Standards Board.

FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-30 dated May 23,

2018, was prepared by the Chief Actuary for the New York City Employees'

Retirement System and Board of Education Retirement System of the City

of New York. This estimate is intended for use only during the 2018

Legislative Session.