Lower NYC Worker Pension Contributions

Section 1. Paragraph 2 of subdivision a of section 613 of the retirement and social security law, as amended by chapter 510 of the laws of 2015, is amended to read as follows:

2. A member of the New York city employees' retirement system who is eligible to be a participant in the twenty-five-year and age fifty-five retirement program, as defined by paragraph five of subdivision a of section six hundred four-b of this article shall contribute two percent of annual wages to such system effective on the starting date of the elimination of additional member contributions, as defined in an election made pursuant to paragraph ten of subdivision e of section six hundred four-b of this article, except [that] beginning April first, two thousand thirteen and ending on the December thirty-first next succeeding the effective date of the chapter of the laws of two thousand seventeen that amended this paragraph for members who first become members of the New York city employees' retirement system on or after April first, two thousand twelve, the rate at which each such member shall contribute in any current plan year (April first to March thirty-first, provided, however, that plan year shall mean January first through December thirty-first commencing with the January first next succeeding the effective date of [the] chapter five hundred ten of the laws of two thousand fifteen that amended this paragraph) shall be determined by reference to the wages of such member in the second plan year (April first to March thirty-first, provided, however, that plan year shall mean January first through December thirty-first commencing with the January first next succeeding the effective date of [the] chapter five hundred ten of the

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

[ ] is old law to be omitted.

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laws of two thousand fifteen that amended this paragraph) preceding such current plan year as follows:

(i) members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages;

(ii) members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages;

(iii) members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages;

(iv) members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages; and

(v) members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages.

Notwithstanding the foregoing, during each of the first three plan years (April first to March thirty-first, provided, however, that plan year shall mean January first through December thirty-first commencing with the January first next succeeding the effective date of [the] chapter five hundred ten of the laws of two thousand fifteen that amended this paragraph) in which such member has established membership in the New York city employees' retirement system, such member shall contribute a percentage of annual wages in accordance with the preceding schedule based upon a projection of annual wages provided by the employer.

§ 2. This act shall take effect immediately.

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

PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would

amend paragraph 2 of subdivision a of Section 613 of the Retirement and

Social Security Law (RSSL) to modify the member contribution rate on a

prospective basis for Tier 6 Transit Authority members who participate

in the Transit 25-Year/Age 55 Retirement Plan from the current graded

schedule of 3% to 6% based on the members' wages to a flat 2% of wages.

The Effective Date of the proposed legislation would be the date of

enactment.

FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the actuarial

assumptions and methods herein, the enactment of this proposed legis-

lation would decrease the Actuarial Present Value of Benefits (APVB) for

NYCERS by approximately $13.5 million (as a result of a reduction in the

amount of refunds of member contributions upon termination of employ-

ment) and decrease the Actuarial Present Value of member contributions

by approximately $255.4 million as of June 30, 2016.

Under the Entry Age Actuarial Cost Method (EAACM) used to determine

employer contributions to NYCERS, there would be an increase in the

Actuarial Present Value of Future Employer Normal Cost of $228.3 million

and an increase in the Unfunded Actuarial Accrued Liability (UAAL) of

approximately $13.6 million.

FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with

Section 13.638.2(k-2) of the Administrative Code of the City of New York

(ACNY), new UAAL attributable to benefit changes are to be amortized as

determined by the Actuary but generally over the remaining working life-

time of those impacted by the benefit changes, which has been estimated

to be approximately 17.9 years. Recognizing that this period will

decrease over time as the group of Tier VI Members matures, the Actuary

would likely choose to amortize the new UAAL attributable to this

proposed legislation over a 15-year period.

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With respect to NYCERS, based on the Actuary's actuarial assumptions

and methods used in the Preliminary June 30, 2016 valuations of the

NYCERS and those described later in this Fiscal Note, the enactment of

this proposed legislation would increase annual employer contributions

by approximately $28.1 million per year.

This increase in employer contributions has been estimated assuming

that the increase in UAAL would be financed over a 15-year period (14

payments under One-Year Lag Methodology) using level dollar payments.

If enacted into law during the 2017 Legislative Session, increased

employer costs would be determined for Fiscal Year 2018.

CENSUS DATA: Estimates of increases in APVB, employer costs and

employer contributions are based on the active census data used for the

Preliminary June 30, 2016 actuarial valuations of NYCERS, including

7,684 Tier 6 25/55 NYCTA members with salaries of approximately $507.2

million.

ACTUARIAL ASSUMPTIONS AND METHODS: Additional APVB, UAAL and employer

costs presented herein have been calculated based on the Actuary's actu-

arial assumptions and methods in effect for the Preliminary June 30,

2016 (Lag) actuarial valuations used to determine the Preliminary Fiscal

Year 2018 employer contributions of NYCERS.

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.

FISCAL NOTE IDENTIFICATION: This Fiscal Note 2017-16 Dated May 12,

2017, was prepared by the Chief Actuary for the New York City Employees'

Retirement System. This estimate is intended for use only during the

2017 Legislative Session.