Refund Extra Carpenter Pension Fees

Section 1. Paragraph 1 of subdivision f of section 604-d of the retirement and social security law is amended by adding a new subparagraph (iv) to read as follows:

(iv) notwithstanding the provisions of subparagraph (ii) of this paragraph, a participant holding the title of carpenter, supervisor carpenter, ship carpenter, supervisor ship carpenter, rigger, dockbuilder, supervisor dockbuilder and general supervisor dockbuilder who is a participant in the age fifty-seven retirement program and whose age and allowable service are such that he or she could not possibly be able to accumulate at least twenty-five years of service by the time he or she reaches age fifty-seven, shall not be required to make the additional member contribution pursuant to subparagraph (ii) of this paragraph. Any participant in the titles listed in this subparagraph who has made additional member contributions pursuant to subparagraph (ii) of this paragraph prior to the effective date of the chapter of the laws of two thousand nineteen that added this subparagraph shall receive a refund of the employee portion of such contributions plus interest provided that their age and allowable service are such that he or she could not possibly be able to accumulate at least twenty-five years of service by the time he or she reaches age fifty-seven.

§ 2. This act shall take effect immediately.

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

[ ] is old law to be omitted.

LBD06637-04-0

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

SUMMARY OF BILL: This proposed legislation would amend New York

Retirement and Social Security Law (RSSL) Section 604-d to exempt from

the physically taxing provisions certain Tier 4 carpenter titles, who

are participants in the New York City Employees' Retirement System

(NYCERS) or the Board of Education Retirement System of the City of New

York (BERS) Age 57 Retirement Program (57/5 Plan), and who would not

benefit from the early retirement provisions for such physically taxing

titles.

The proposed legislation would affect 57/5 Plan participants in the

physically taxing titles of carpenter, supervisor carpenter, ship

carpenter, supervisor ship carpenter, rigger, dockbuilder, supervisor

dockbuilder, and general supervisor dockbuilder (Eligible Carpenter

Title) who would be unable to reach the requisite 25 years of credited

service in a physically taxing title by age 57, and would therefore be

ineligible to take advantage of the early retirement provisions of the

physically taxing title, which permits retirement at age 50 (with 25

years of credited service).

Under the proposed legislation, Eligible Carpenter Titles who started

in the 57/5 Plan but will not reach 25 years of credited service in a

physically taxing title by age 57 would no longer pay physically taxing

Additional Member Contributions (AMCs) and would receive an immediate

refund of the employee portion (i.e. 50%) of their physically taxing

AMCs plus interest. Such Titles would remain responsible for applicable

basic member contributions and applicable non-physically taxing AMCs for

continued 57/5 Plan participation.

Effective Date: Upon enactment.

FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and actu-

arial assumptions and methods described herein, the enactment of this

proposed legislation would result in an increase in the present value of

future employer contributions for NYCERS and BERS of approximately $5.6

million.

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

contributions to NYCERS and BERS, there would be an increase in the

Unfunded Accrued Liability (UAL) of approximately $2.3 million and an

increase in the present value of future employer Normal Cost of $3.3

million. These results are summarized in the table below:

Change in: NYCERS BERS Total

Actuarial Value of $(5,018) $(121) $(5,139)

Assets (AVA)

Accrued Liability (AL) $(2,826) $ (61) $(2,887)

Unfunded Accrued Liability $ 2,192 $ 60 $ 2,252

(AL-AVA)

Present Value of Future $ 3,262 $ 43 $ 3,305

Employer Normal Cost

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 the members in Eligible

Carpenter Titles is approximately eight years for NYCERS and five years

for BERS.

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

tized over an eight-year period (seven payments) for NYCERS and over a

five-year period (four payments) for BERS under the One-Year Lag Method-

ology (OYLM) using level dollar payments. When added to the change in

Employer Normal Cost, the estimated increase in annual employer contrib-

utions is approximately $855,000 for NYCERS and $26,000 for BERS.

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

assumed that the changes in the Present Value of future employer

contributions and annual employer contributions would be reflected for

the first time in the June 30, 2020 actuarial valuation of NYCERS and

BERS. In accordance with the OYLM used to determine employer contrib-

utions, the increase in employer contributions would first be reflected

in Fiscal Year 2022.

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

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

NYCERS and BERS to determine Preliminary Fiscal Year 2021 employer

contributions. The following table summarizes the data for the affected

participants:

NYCERS BERS NYCERS & BERS

Count 268 6 274

Average Age 56.0 years 60.2 years 56.1 years

Average Service 13.2 years 15.6 years 13.3 years

Average Salary $95,600 $64,700 $94,900

ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the UAL, Present

Value of future employer contributions, and annual employer contrib-

utions presented herein have been calculated based on the same 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 and BERS.

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 BERS and other exoge-

nous factors such as investment, contribution, and other risks. If actu-

al 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, BERS, 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

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.

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FISCAL NOTE IDENTIFICATION: This Fiscal Note 2020-28 dated April 17,

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

Retirement System and the Board of Education Retirement System of the

City of New York. This estimate is intended for use only during the 2020

Legislative Session.