Restore Tier I Pension Status

Section 1. Notwithstanding any inconsistent provision of law, Cynthia Falletta, a member of the Teachers' Retirement System of the City of New York (TRSNYC) with Tier IV status, who was employed by the City University of New York from June 1, 1972 until April 8, 1976 and from June 22, 1976 to October 28, 1976, and was a member of the Board of Education Retirement System from December 12, 1990 until February 28, 1994 at which point she became a member of the Teachers' Retirement System of the City of New York, and who for reasons not ascribable to her own negligence was retroactively enrolled as a Tier IV member, shall, upon submission of an application filed with the Board of Trustees of TRSNYC on or before the thirty-first day of December next succeeding the date on which this act shall have become a law, be reclassified as a Tier I member with June 1, 1972 as her date of membership and shall be entitled to every right, benefit and privilege which would have been available to her in accordance with Tier I status, and the City of New York shall be responsible for all costs to provide the Tier I benefit to Cynthia Falletta, provided, however that Cynthia Falletta shall be responsible for contributing the required member contributions for Tier I membership.

§ 2. This act shall take effect immediately.

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

SUMMARY OF BILL: This proposed legislation would permit Cynthia

Falletta, a retired Tier 4 member of the New York City Teachers' Retire-

ment System (TRS), to elect, by filing an application with the Board of

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

[ ] is old law to be omitted.

LBD02534-02-9

A. 7229 2

Trustees of TRS within the end of the calendar year in which the

proposed legislation is passed, to be reclassified as a Tier 1 member

and have her retirement allowance recalculated and paid under Tier 1

(Plan A) benefit calculation provisions.

Effective Date: Upon enactment.

BACKGROUND: Ms. Falletta retired as a Tier 4 TRS member on October 18,

2012. She currently receives an annual retirement allowance of $48,459.

If the proposed legislation is passed, Ms. Falletta would be reclassi-

fied as Tier 1 retired member and her retirement allowance would be

recalculated as if she had joined a public retirement system within the

state upon her commencement of part-time employment as a college assist-

ant with the City University of New York in 1972. The additional cost,

less any required member contributions paid by Ms. Falletta, to fund

the increased retirement allowance associated with the proposed legis-

lation would fall upon the City of New York.

Because Tier 1 TRS members are generally permitted to take an actuari-

al reduction of their retirement allowance to account for deficits in

member contributions, for purposes of this fiscal note, it is assumed

that Ms. Falletta would not pay any owed member contributions resulting

from the reclassification. Based on this assumption and application of

other Tier 1 benefit calculation provisions, it is estimated that Ms.

Falletta's annual retirement allowance would increase to $65,038. This

annual increase would apply prospectively as well as retroactively,

adjusted for any COLA, less any payments previously made, as of Ms.

Falletta's October 18, 2012 date of retirement.

FINANCIAL IMPACT - PRESENT VALUES: The estimated financial impact of

this proposal has been calculated based on the difference between the

present value of (1) the Tier 1 benefits Ms. Falletta would receive if

this proposed legislation were enacted (retroactive to her October 18,

2012 retirement date) and (2) the Tier 4 benefits that are currently and

have been paid to Ms. Falletta.

Based on the actuarial assumptions and methods described herein, the

enactment of this proposed legislation would increase the Present Value

of Future Benefits (PVFB) and the Unfunded Accrued Liability (UAL) by

approximately $300,000.

FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with

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

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

tized as determined by the Actuary but generally over the remaining

working lifetime of those impacted by the benefit changes.

For purposes of this Fiscal Note, since Ms. Falletta is retired and

collecting a pension, and therefore has no remaining working lifetime,

the entire increase in UAL (or PVFB) would be recognized immediately.

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

* The initial, additional administrative costs of TRS and other New

York City agencies to implement the proposed legislation.

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

assumed that the changes in the PVFB and annual employer contributions

would be reflected for the first time in the June 30, 2019 actuarial

valuation of TRS. In accordance with the One-Year Lag Methodology (OYLM)

used to determine employer contributions, the increase in employer

contributions would first be reflected in Fiscal Year 2021.

CENSUS DATA: As of June 30, 2018, Ms. Falletta was approximately age

69, and receiving a pension of $48,459 per year under the maximum

payment option.

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ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual

employer contributions presented herein have been calculated based on

the actuarial assumptions and methods in effect for the June 30, 2018

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

2020 employer contributions of TRS.

RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend

highly on the actuarial assumptions and methods used and are subject to

change based on the realization of potential investment, demographic,

contribution, and other risks. If actual experience deviates from actu-

arial assumptions, the actual costs could differ from those presented

herein. Costs are also dependent on the actuarial methods used, and

therefore different actuarial methods could produce different results.

Quantifying these risks is beyond the scope of this Fiscal Note.

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, a

Member of the American Academy of Actuaries, and a Fellow of the Confer-

ence of Consulting 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 generally accepted actuarial principles

and procedures and with the Actuarial Standards of Practice issued by

the Actuarial Standards Board.

FISCAL NOTE IDENTIFICATION: This Fiscal Note 2019-05 dated April 11,

2019 was prepared by the Chief Actuary for the New York City Teachers'

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

2019 Legislative Session.