Bill Text: NY A07958 | 2021-2022 | General Assembly | Introduced
Bill Title: Relates to the rate of interest used in the actuarial valuation of liabilities for the purpose of calculating contributions to the New York city employees' retirement system, the New York city teachers' retirement system, the police pension fund, subchapter two, the fire department pension fund, subchapter two and the board of education retirement system of such city by public employers and other obligors required to make employer contributions to such retirement systems, the crediting of special interest and additional interest and additional interest to members of such retirement systems, and the allowance of supplementary interest on the funds of such retirement systems; extends such provisions until June 30, 2023.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2021-06-09 - substituted by s7159 [A07958 Detail]
Download: New_York-2021-A07958-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7958 2021-2022 Regular Sessions IN ASSEMBLY June 3, 2021 ___________ Introduced by M. of A. ABBATE -- read once and referred to the Committee on Governmental Employees AN ACT to amend the administrative code of the city of New York, in relation to the rate of interest used in the actuarial valuation of liabilities for the purpose of calculating contributions to the New York city employees' retirement system, the New York city teachers' retirement system, the police pension fund, subchapter two, the fire department pension fund, subchapter two and the board of education retirement system of such city by public employers and other obligors required to make employer contributions to such retirement systems, the crediting of special interest and additional interest to members of such retirement systems, and the allowance of supplementary inter- est on the funds of such retirement systems The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph 2 of subdivision b of section 13-638.2 of the 2 administrative code of the city of New York, as amended by chapter 76 of 3 the laws of 2019, is amended to read as follows: 4 (2) With respect to each retirement system, such rate of interest 5 shall be as hereinafter set forth in this paragraph: 6 First day and 7 last day of 8 Rate of interest fiscal year or 9 per centum per series of fiscal 10 Retirement annum, compounded years for which 11 System annually rate is effective 12 ________________________________________________________________________ 13 NYCERS 7% July 1, 2011 to 14 June 30, [2021] 2023 15 NYCTRS 7% July 1, 2011 to EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11756-01-1A. 7958 2 1 June 30, [2021] 2023 2 PPF 7% July 1, 2011 to 3 June 30, [2021] 2023 4 FPF 7% July 1, 2011 to 5 June 30, [2021] 2023 6 BERS 7% July 1, 2011 to 7 June 30, [2021] 2023 8 § 2. Paragraph 2 of subdivision f of section 13-638.2 of the adminis- 9 trative code of the city of New York, as amended by chapter 76 of the 10 laws of 2019, is amended to read as follows: 11 (2) Such special interest shall be allowed at the rates and for the 12 periods set forth below in this paragraph: 13 First day and 14 last day of 15 Rate of interest fiscal year or 16 per centum per series of fiscal 17 Retirement annum, compounded years for which 18 System annually rate is effective 19 ________________________________________________________________________ 20 NYCERS 1 1/4% July 1, 2011 to 21 June 30, [2021] 2023 22 NYCTRS 1 1/4% July 1, 2011 to 23 June 30, [2021] 2023 24 PPF 1 1/4% July 1, 2011 to 25 June 30, [2021] 2023 26 FPF 1 1/4% July 1, 2011 to 27 June 30, [2021] 2023 28 BERS 1 1/4% July 1, 2011 to 29 June 30, [2021] 2023 30 § 3. Paragraph 2 of subdivision g of section 13-638.2 of the adminis- 31 trative code of the city of New York, as amended by chapter 76 of the 32 laws of 2019, is amended to read as follows: 33 (2) Such additional interest shall be included at the rates and for 34 the periods set forth below in this paragraph: 35 First day and 36 last day of 37 Rate of interest fiscal year or 38 per centum per series of fiscal 39 Retirement annum, compounded years for which 40 System annually rate is effective 41 ________________________________________________________________________ 42 NYCERS 1 1/4% July 1, 2011 to 43 June 30, [2021] 2023 44 NYCTRS 1 1/4% July 1, 2011 to 45 June 30, [2021] 2023 46 PPF 1 1/4% July 1, 2011 to 47 June 30, [2021] 2023 48 FPF 1 1/4% July 1, 2011 to 49 June 30, [2021] 2023 50 BERS 1 1/4% July 1, 2011 to 51 June 30, [2021] 2023A. 7958 3 1 § 4. Paragraph 2 of subdivision i of section 13-638.2 of the adminis- 2 trative code of the city of New York, as amended by chapter 76 of the 3 laws of 2019, is amended to read as follows: 4 (2) Such supplementary interest shall be allowed at the rates and for 5 the periods set forth below in this paragraph: 6 First day and 7 last day of 8 Rate of interest fiscal year or 9 per centum per series of fiscal 10 Retirement annum, compounded years for which 11 System annually rate is effective 12 ________________________________________________________________________ 13 NYCERS 0% July 1, 2011 to 14 June 30, [2021] 2023 15 NYCTRS 0% July 1, 2011 to 16 June 30, [2021] 2023 17 PPF 0% July 1, 2011 to 18 June 30, [2021] 2023 19 FPF 0% July 1, 2011 to 20 June 30, [2021] 2023 21 BERS 0% July 1, 2011 to 22 June 30, [2021] 2023 23 § 5. This act shall take effect July 1, 2021, except that if it shall 24 have become a law subsequent to such date, this act shall take effect 25 immediately and be deemed to have been in full force and effect on and 26 after July 1, 2021. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: The enactment of this proposed legislation (see Appendix) would amend Administrative Code of the City of New York (ACCNY) Section 13-638.2 to continue for Fiscal Years 2022 and 2023 the following rates of interest that expire on July 1, 2021 for the five actuarially-funded New York City Retirement Systems and Pension Funds (NYCRS): * The 8.25% per annum rate used to credit interest on Tier 1 and Tier 2 member account balances (the sum of the 7.00% regular interest rate and the 1.25% special interest rate) and Increased-Take-Home-Pay (ITHP) Reserves (the sum of the 7.00% regular interest rate and the 1.25% additional interest rate), and * The 7.00% per annum Actuarial Interest Rate (AIR) assumption used to compute employer contributions. Effective Date: July 1, 2021. FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: The Actuary has proposed a set of changes, including changes to the AIR, for use in the June 30, 2019 (Lag) actuarial valuations of the NYCRS to determine the Final Fiscal Year 2021 Employer Contributions (2021 A&M) and future employer contribution estimates. This proposed Interest Rate Extender Legislation does not conform to the Actuary's recommendations regarding actuarial updates and therefore the costs presented in this Fiscal Note represent the difference between the Actuary's determination of the Fiscal Year 2021 employer contributions which use the 2021 A&M including the updated AIR rates, and Fiscal Year 2021 employer contributions with a continuation of the current AIR in the proposed Interest Rate Extender Legislation without other 2021 A&M changes.A. 7958 4 The 2021 A&M changes are part of a comprehensive package of updated actuarial assumptions and methods, which were presented to each of the Boards of Trustees of the NYCRS in January of 2021 and represent the Actuary's current recommendation. The package was based on the Actuary's periodic review of actuarial experience of the NYCRS, historical data related to economic trends and forecasts of the NYCRS' investment advis- ers, and includes updates in expected future mortality improvements and other changes to appropriately fund the NYCRS from an actuarial stand- point. The New York City Office of Management and Budget (OMB) has imple- mented the 2021 A&M and altered the contributions to the NYCRS, and therefore the continuation of the AIR assumption of 7.00% per annum, without the other 2021 A&M changes, would result in an increase in the current schedule of employer contributions as shown in the table below, both in total for the NYCRS and for New York City only: Fiscal Year NYCRS New York City 2021 $503.1 million $430.0 million 2022 $383.4 million $303.5 million 2023 $111.1 million $ 65.1 million The continuation for Fiscal Years 2022 and 2023 of the same 8.25% per annum rate that was used for Fiscal Year 2021 to credit interest on Tier 1 and Tier 2 member contributions and ITHP Reserves would not change the amount or timing of expected employer contributions. 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 2021-36 dated May 27, 2021 was prepared by the Chief Actuary for the New York City Retirement Systems and Pension Funds. This estimate is intended for use only during the 2021 Legislative Session.