Automatic Public Retirement Enrollment

Section 1. Section 45 of the retirement and social security law, as added by chapter 878 of the laws of 1986, is amended to read as follows:

§ 45. Right to membership. a. Upon the employment of any employee whose right to membership in a public retirement system of the state, which for purposes of this section shall include any public retirement system other than the New York state teachers' retirement system, has been made optional by the head of the retirement system involved, the employer shall inform the employee in writing of the right to join the system. Each such employee shall acknowledge the receipt of such notice by signing a copy thereof and filing it with such employer; provided, however, the failure to inform such employee shall not in any way be construed to waive the requirement that membership for such an employee commences only when an application for membership is filed with the system, nor shall it be construed to waive any of the eligibility requirements for previous service credit.

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

[ ] is old law to be omitted.

LBD10847-09-7

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b. 1. Notwithstanding the provisions of subdivision a of this section, upon the employment of any employee whose right to membership in the board of education retirement system has been made optional by the head of the retirement system involved, the employer shall provide the respective automatic contribution arrangement for the employee to join the retirement system ninety days after the commencement of employment, with membership in the retirement system commencing on the ninety-first day after commencement of employment, provided that, if the employee files with the system an application to opt out of membership within ninety days after commencement of employment, the employer shall refrain from enrolling the employee in the retirement system unless and until such employee subsequently files an application for membership with the system. The automatic enrollment of optional employees as provided for in this section shall not be construed to modify the right of eligible employees to join the retirement system as of the first date of covered employment by filing an application for membership with the system. The employer shall further inform the employee in writing of the right to join the system as well as the fact that the employee shall be enrolled in the retirement system after the ninetieth day after commencement of employment, unless such employee files with the system an application to opt out of the system prior to such date. Any eligible employee who elects to opt out of membership in the retirement system within the ninety day period shall retain the right to join such system by subsequently filing an application for membership so long as such employee remains in covered employment.

2. Each employer shall enroll in the retirement system every current employee eligible for, but not enrolled in, the retirement system, on October first, two thousand eighteen, unless such employee files an application with the system to opt out of the retirement system by September thirtieth, two thousand eighteen. Automatic enrollment in the retirement system shall not be construed to waive any of the eligibility requirements for previous service credit.

3. The automatic enrollment of optional employees as provided for in this section shall not be construed to modify the rights and obligations of any employee who is a mandated member of a public retirement system under any applicable law, and such mandated members may not opt out of membership.

§ 2. This act shall take effect July 1, 2018.

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

In response to your request, this letter presents the estimated finan-

cial impact if participation is made mandatory for the Board of Educa-

tion Retirement System of the City of New York (BERS).

The ultimate employer cost for this change will be determined by the

number, ages, years of service, and salary of those employees that would

otherwise not have elected to become member of BERS.

In order to prepare this analysis, we were supplied a file of 12,287

individuals who are not currently members of BERS but could voluntary

elect to participate. This group consisted of 11,292 part-time and 995

full-time employees that was approximately 73% female with an average

age of 34.9, average salary of approximately $25,500, and average past

service of 2.4 years. We are also told, for calendar year 2016, employ-

ees in Payroll Codes 745, 744 and 056 are part-time and earned 0.80

years, 0.44 years and 0.72 years of service on average, respectively.

Employees in Payroll Code 740 are generally full-time employees. Final-

ly, we were told 72% of eligible employees eventually join BERS.

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Based on this data and these statistics, we have estimated that the

additional annual employer contribution will be $11.0 million if no

prior years of service are purchased by these individuals and $18.1

million if all years of prior service eligible for buyback are

purchased. These estimates assume that the fractional years of service

earned in 2016 as described above remains unchanged in the future. These

estimates also assume a level workforce (i.e., the number and salary,

age and service characteristics of the added group remain approximately

the same in future years.) Finally, for purposes of determining the

portion of the annual employer contribution attributable to the buyback

of prior service, we have assumed an amortization period of 15 years (14

payments under the Lag methodology used in the actuarial valuation.) All

other actuarial assumptions and methods are the same as those used in

the June 30, 2016 (Lag) actuarial valuation to determine the Preliminary

Fiscal Year 2018 employer contributions for BERS.

If the change to mandatory participation is made prior to July 1,

2017, these new additional members would likely be included in the

census data as of June 30, 2017 and if so the increase in employer

contributions to BERS would first be reflected in Fiscal Year 2019.

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

ary for, and independent of, the New York City Pension Funds and Retire-

ment Systems. I am a Fellow of the Society of Actuaries, a Fellow of the

Conference of Consulting 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 the Actuarial Standards of Practice issued by the Actu-

arial Standards Board.