Boost Auto Worker Pensions

Section 1. Subparagraph (ii) of paragraph 2 of subdivision d of section 604-g of the retirement and social security law, as amended by chapter 18 of the laws of 2012, is amended to read as follows:

(ii) In the case of a participant who is not a New York city revised plan member, such vested benefit shall become payable [on the earliest date on which such discontinued member could have retired for service if such discontinuance had not occurred] as follows:

(A) at the later of age sixty-two or the age at discontinuance, if the member had completed at least ten years of credited service; or

(B) at the later of age sixty-three or the age at discontinuance, if the member had completed at least eight, but fewer than ten years of credited service; or

(C) at the later of age sixty-four or the age of discontinuance, if the member had completed at least six, but fewer than eight years of credited service; or

(D) at the later of age sixty-five or the age of discontinuance, if the member had completed at least five, but fewer than six years of credited service;

or, in the case of a participant who is a New York city revised plan member, such vested benefit shall become payable at age sixty-three.

§ 2. Subdivision e of section 604-g of the retirement and social security law is amended by adding a new paragraph 13 to read as follows:

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

[ ] is old law to be omitted.

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13. In addition to the deferred vested benefit calculated pursuant to subdivision d of this section, a participant who is eligible for such benefit shall receive a life annuity (calculated in accordance with the method set forth in subdivision i of section six hundred thirteen-b of this article) which is actuarially equivalent to the difference between (i) the contributions required by paragraph one of this subdivision and (ii) the additional member contributions required by subdivision d of section six hundred four-c of this article, as added by chapter ninetysix of the laws of nineteen ninety-five, together with the interest credited on such contributions.

§ 3. This act shall take effect immediately.

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

SUMMARY OF BILL: This proposed legislation would amend Section 604-g

of the Retirement and Social Security Law (RSSL) to provide early paya-

bility, and an annuity based on the accumulation of certain Additional

Members Contributions (AMCs), to certain vested members in the New York

City Employees' Retirement System (NYCERS) Automotive 25-Year/Age 50

Plan (Auto 25-Year Plan).

Effective Date: Upon enactment.

IMPACT ON PAYABILITY: Currently, Tier 4 vested members in the Auto

25-Year Plan can begin collecting their pension:

* At the later of age 50 or what would have been their 25th year of

credited service

The proposed legislation would instead enable Tier 4 Auto 25-Year Plan

vested members to begin collecting their pension as follows:

* At age 62 with at least 10 years of credited service

* At age 63 with at least eight years of credited service

* At age 64 with at least six years of credited service

* At age 65 or older with at least five years of credited service

Tier 6 Auto 25-Year Plan members would remain eligible for a vested

benefit:

* At age 63 or older with at least 10 years of credited service.

IMPACT ON BENEFITS: The proposed legislation would further provide to

both Tier 4 and 6 Auto 25-Year Plan vested members an annuity benefit at

payability equal to the difference between the following:

* AMCs required in the Auto 25-Year Plan (4.83% of salary), and

* AMCs required in the Tier 4 55/25 Retirement Plan (ranging from

1.85% to 4.35% of salary depending on dates of the service rendered).

The difference in the AMC balances above are to be annuitized pursuant

to the method set out in loan provisions contained in RSSL Section

613-b(i) (i.e. the actuarially equivalent of a life annuity using the

interest rate on 30-year US treasury bonds as of January first of the

calendar year of retirement and the mortality tables for payment options

under RSSL Section 610).

Note:

* This annuity would only be available to vested members and not to

Auto-25 Year Plan service retirees (i.e. retirees with 25 or more years

of credited service).

* For the purposes of determining the costs enumerated in this Fiscal

Note, it has been assumed that Tier 4 vested members who would have been

eligible for earlier payability (i.e. at the later of age 50 or what

would have been 25 years of service) under current provisions of law,

would still be eligible for such earlier payability, given Constitu-

tional protections, notwithstanding the bill's omission of such eligi-

bility.

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FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial assumptions

and methods described herein, the enactment of this proposed legislation

would increase the Present Value of Future Benefits (PVFB) by approxi-

mately $29.1 million.

Under the Entry Age Normal cost method used to determine the employer

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

Accrued Liability (UAL) of approximately $17.2 million and an increase

in the Present Value of future employer Normal Cost of $11.9 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

(ACCNY), new UAL attributable to benefit changes are to be amortized as

determined by the Actuary, but are generally amortized over the remain-

ing working lifetime of those impacted by the benefit changes. As of

June 30, 2019, the remaining working lifetime of Auto 25-Year Plan

members is approximately 14 years.

For the purposes of this Fiscal Note, the increase in UAL was amor-

tized over a 14-year period (13 payments under the One-Year Lag Method-

ology (OYLM)) using level dollar payments. This payment plus the

increase in the Normal Cost results in an increase in annual employer

contributions of approximately $3.8 million each year.

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 NYCERS. In accordance with the OYLM used to determine

employer contributions, the increase in employer contributions would

first be reflected in Fiscal Year 2021.

CENSUS DATA: The estimates presented herein are based on the census

data used in the Preliminary June 30, 2019 (Lag) actuarial valuation of

NYCERS to determine the Preliminary Fiscal Year 2021 employer contrib-

utions.

The 1,693 NYCERS Auto 25-Year Plan members as of June 30, 2019 include

1,563 active members and 130 non-active members. The active members had

an average age of approximately 45.2 years, average service of approxi-

mately 8.9 years, and an average salary of approximately $106,100.

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, 2019

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

2021 employer contributions of NYCERS.

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

highly on the realization of the actuarial assumptions used, as well as

certain demographic characteristics of NYCERS and other exogenous

factors such as investment, contribution, and other risks. If actual

experience deviates from actuarial 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.

Not measured in this Fiscal Note are the following:

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

York City agencies to implement the proposed legislation.

* The impact of this proposed legislation on Other Postemployment

Benefit (OPEB) costs.

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

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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 2020-18 dated March 25,

2020 was prepared by the Chief Actuary for the New York City Employees'

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

2020 Legislative Session.