Increase Tier 6 Pension Percentage

Section 1. Subdivision a of section 504 of the retirement and social security law, as amended by chapter 18 of the laws of 2012, is amended to read as follows:

a. The service retirement benefit for general members at normal retirement age with twenty or more years of credited service shall be a pension equal to one-fiftieth of final average salary times years of credited service, not in excess of thirty years, less fifty percent of the primary social security retirement benefit as provided in section five hundred eleven of this article. The service retirement benefit for general members at normal retirement age with twenty or more years of service who first become members of the New York state and local employees' retirement system on or after April first, two thousand twelve at normal retirement age shall be a pension equal to the sum of [thirtyfive] forty per centum and one-fiftieth of final average salary for each year of service in excess of twenty, but not in excess of thirty, times final average salary times years of credited service.

§ 2. Subdivision b-1 of section 604 of the retirement and social security law, as added by chapter 18 of the laws of 2012, is amended to read as follows:

b-1. Notwithstanding any other provision of law to the contrary, the service retirement benefit for members with twenty or more years of credit service who first become a member of a public retirement system of the state on or after April first, two thousand twelve at age sixtythree shall be a pension equal to the sum of [thirty-five] forty per centum and one-fiftieth of final average salary for each year of service

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

[ ] is old law to be omitted.

LBD06130-03-9

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in excess of twenty times final average salary times years of credited service. In no event shall any retirement benefit payable without optional modification be less than the actuarially equivalent annuitized value of the member's contributions accumulated with interest at five percent per annum compounded annually to the date of retirement.

§ 3. Subdivision d of section 516 of the retirement and social security law, as amended by chapter 18 of the laws of 2012, is amended to read as follows:

d. The deferred vested benefit of general members in the uniformed correction force of the New York city department of correction, who are not entitled to a deferred vested benefit under subdivision d of section five hundred four-a of this article or under subdivision d of section five hundred four-b of this article or under subdivision d of section five hundred four-d of this article, or of general members in the uniformed personnel in institutions under the jurisdiction of the department of corrections and community supervision, as defined in subdivision i of section eighty-nine of this chapter, with twenty or more years of credited service shall be a pension commencing at normal retirement age equal to one-fiftieth of final average salary times years of credited service, not in excess of thirty years, or for members who first become members of the New York state and local employees' retirement system on or after April first, two thousand twelve, a pension equal to the sum of [thirty-five] forty per centum and one-fiftieth of final average salary for each year of service in excess of twenty, but not in excess of thirty, times final average salary times years of credited service. The deferred vested benefit of general members in the uniformed correction force of the New York city department of correction, who are not entitled to a deferred vested benefit under subdivision d of section five hundred four-a of this article or under subdivision d of section five hundred four-b of this article or under subdivision d of section five hundred four-d of this article, or of general members in the uniformed personnel in institutions under jurisdiction of the department of corrections and community supervision, as defined in subdivision i of section eighty-nine of this chapter, with less than twenty years of credited service shall be a pension commencing at normal retirement age equal to one-sixtieth of final average salary times years of credited service. Such deferred vested benefit may be paid in the form of an early service retirement benefit, or may be postponed until after normal retirement age, in which event the benefit will be subject to reduction or escalation as provided in subdivision c of section five hundred four of this article.

§ 4. Section 1312 of the retirement and social security law, as added by chapter 18 of the laws of 2012, is amended to read as follows:

§ 1312. Benefit enhancements. Notwithstanding any other law to the contrary, eligible employees shall be permitted to retire, without penalty, upon reaching age fifty-seven and completing at least thirty years of credited service. Employees retiring pursuant to this section shall receive a pension allowance equal to the sum of [thirty-five] forty per centum and one-fiftieth of final average salary for each year of service in excess of twenty times final average salary times years of credited service.

§ 5. Notwithstanding any other provision of law to the contrary, none of the provisions of this act shall be subject to section 25 of the retirement and social security law.

§ 6. This act shall take effect April 1, 2019.

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

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This bill will change the benefit fraction for a Tier 6 Article 15

plan member for the service greater than 20 years to 40% of FAS plus 2%

per year of service greater than 20. Currently the benefit for service

greater than 20 years is 35% of FAS plus 2% per year of service greater

than 20.

Insofar as this bill affects the New York State and Local Employees'

Retirement System (NYSLERS), if this legislation is enacted during the

2019 legislative session, we anticipate that there will be an increase

in the annual contributions of the state of New York and all participat-

ing employers in the NYSLERS approximately 0.8% of the compensation of

each affected Tier 6 member.

In addition to the annual contributions discussed above, there will be

a past service cost of approximately $149 million which would be shared

by the State of New York and all of the participating employers in the

NYSLERS. The estimated first year cost would be approximately $8.03

million to the State of New York and approximately $11.4 million to the

participating employers in the NYSLERS.

Summary of relevant resources:

The membership data used in measuring the impact of the proposed

change was the same as that used in the March 31, 2018 actuarial valu-

ation. Distributions and other statistics can be found in the 2018

Report of the Actuary and the 2018 Comprehensive Annual Financial

Report.

The actuarial assumptions and methods used are described in the 2015,

2016, 2017 and 2018 Annual Report to the Comptroller on Actuarial

Assumptions, and the Codes Rules and Regulations of the State of New

York: Audit and Control.

The Market Assets and GASB Disclosures are found in the March 31, 2018

New York State and Local Retirement System Financial Statements and

Supplementary Information.

I am a member of the American Academy of Actuaries and meet the Quali-

fication Standards to render the actuarial opinion contained herein.

This fiscal note does not constitute a legal opinion on the viability

of the proposed change nor is it intended to serve as a substitute for

the professional judgment of an attorney.

This estimate, dated February 26, 2019, and intended for use only

during the 2019 Legislative Session, is Fiscal Note No. 2019-28,

prepared by the Actuary for the New York State and Local Retirement

System.