What's happening
This bill establishes automatic retirement system enrollment for eligible New York City Board of Education employees, unless they opt out.
Why it matters
Promotes retirement savings for more employees. By automatically enrolling eligible Board of Education employees (unless they actively opt out), this bill aims to increase retirement security, especially for part-time and lower-wage workers who historically may not enroll on their own.
Addresses gaps in retirement plan participation. The move targets the estimated 12,287 eligible employees who have not joined the retirement system, potentially covering workers who are disproportionately younger, female, and/or part-time, helping close the coverage gap.
Employers face new administrative and financial responsibilities. The bill will increase the employer’s annual retirement contribution by an estimated $11–18 million, depending on whether employees buy back prior service credits, which may impact budgeting for the New York City Board of Education.
Provides flexibility and safeguards for employees. Employees retain the right to opt out within 90 days or join later if they initially decline, ensuring personal choice while nudging more people toward long-term financial planning. The act does not alter the rules or obligations for employees who are already mandated to participate.
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Who cares
Headline styles
Auto-Enroll Public Workers' Retirement
Plain English, a few words. Used as the page title.
Sponsors
History
- Substituted by A7193C
- Advanced to third reading
- 2nd report cal.
- 1st report cal.1338
- Print number 5634b
- Amend and recommit to civil service and pensions
- Print number 5634a
- Amend and recommit to civil service and pensions
- Referred to civil service and pensions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Automatic Public Retirement Enrollment
Vetoed · Sponsor N. Nick Perry
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5634--B
2017-2018 Regular Sessions
IN SENATE
April 21, 2017
Introduced by Sen. SAVINO -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the retirement and social security law, in relation to providing for the automatic enrollment for employees whose right to membership has been made optional by the head of the public retirement system involved
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
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.
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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10847-10-7
S. 5634--B 2
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.
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
S. 5634--B 3
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.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the retirement and social security law, in relation to providing for the automatic enrollment for employees whose right to membership has been made optional by the head of the public retirement system involved
Purpose
To provide for automatic enrollment to all pension eligible employees.
Summary of provisions
Section one of the bill amends § 45 of the retirement and social security law to require employers who hire eligible employees with an optional right to membership in the Board of Education retirement system to, after 90 days of employment, automatically enroll eligible employees who neither affirmatively elect to join nor affirmatively elect to opt-out of the public retirement system. The employer would be required to provide written notice to new eligible employees that states, in addition to their right to membership in the Board of Education retirement system, that they will be automatically enrolled after 90 days unless the employee opts out.
Read the full memo (782 words)
This section would not modify the right of eligible employees to join a public retirement system as of the first date of covered employment, but rather it creates a 90-day window for an eligible employee to opt-out before he or she is automatically enrolled in the system. Eligible employees who opt-out during this period would retain the right to join at a later date. Employees who are mandated members of a public retirement system are not affected by this bill, and cannot opt-out.
This section also requires that all current eligible employees who are not yet enrolled in a public retirement system be enrolled by employers on October 1, 2018, unless any such current eligible employees affirmatively opt-out of the public retirement system by September 30, 2018. Automatic enrollment in a public retirement system would not waive any of the eligibility requirements for previous service credit.
Section two of the bill provides the effective date.
Justification
Currently, part-time, temporary, or those employees not required to take a civil service exam (even though eligible for membership in the Board of Education retirement system) are maintained in a category of workers only allowed optional enrollment. Although the law requires employers to notify them of their optional eligibility at the time of employment, these workers often continue to work for many years without affirmatively enrolling in the system, thereby missing years' worth of benefits and the financial security those benefits should have provided in retirement.
Under the current optional enrollment rules, only 72% of eligible employees eventually join BERS. Of those who have not elected to enroll in the system, approximately 73% are female with an average age of 34.9 years old, an average salary of approximately $25,500, and an average of 2.4 years of past service where retirement benefits were not accruing.
It is not unusual to learn the story of many employees who each day provide vital public services alongside co-workers who are covered by a full pension only to discover, after many years on the job, that they missed their opportunity to enroll and end up losing time earned pension benefits when they register many years after entering the system. This class of public employees loses valuable pension benefits with some of them never knowing that they were entitled to a pension plan that could have provided economic assistance which often leaves them impoverished when they can no longer work.
It is unjust that due to a lack of awareness, benefits deriving from years of public service are stolen away from employees that have dedicated their lives to the state and local governments. By allowing for automatic enrollment unless a worker affirmatively opts out, all workers who are eligible will be provided the opportunity to benefit from their retirement plan as intended, and that this class of workers are not left pension-less due to an innocent error at the onset of their service.
This bill does not create a new class of retirement system member; rather it adjusts the timetable for enrollment. Once a new employee is hired they would automatically be enrolled in the pension system 90 days after commencement of employment. This change would eliminate the need for any refunds, and the employee would still have the right to join the pension system immediately upon employment. This is an efficient implementation of automatic pension enrollment.
Prior legislative history
New bill.
Fiscal implications
The New York City Office of the Actuary has estimated that the additional annual employer contribution will be $11.0 million if no prior years of services are purchased back by employees and $18.1 million if all years of prior service eligible for buyback are purchased.
Effective date
July 1, 2018.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.