Bill Text: NY A08200 | 2011-2012 | General Assembly | Introduced
Bill Title: Authorizes refunding of certain member contributions made by members of the transit managerial benevolent association.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-01-04 - referred to governmental employees [A08200 Detail]
Download: New_York-2011-A08200-Introduced.html
S T A T E O F N E W Y O R K ________________________________________________________________________ 8200 2011-2012 Regular Sessions I N A S S E M B L Y June 6, 2011 ___________ Introduced by M. of A. ABBATE -- read once and referred to the Committee on Governmental Employees AN ACT to amend the retirement and social security law, in relation to refunding contributions made to the twenty-five year early retirement program and the age fifty-seven retirement program by New York city transit authority members THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Subdivision d of section 604-c of the retirement and social 2 security law, as added by chapter 96 of the laws of 1995, is amended by 3 adding a new paragraph 15 to read as follows: 4 15. AN ELIGIBLE FORMER PARTICIPANT, AS DEFINED IN THIS PARAGRAPH, 5 SHALL BE ENTITLED TO A REFUND OF THE EMPLOYEE PORTION OF HIS OR HER 6 ADDITIONAL MEMBER CONTRIBUTIONS MADE PURSUANT TO THIS SUBDIVISION WHICH 7 SHALL INCLUDE ANY AND ALL INTEREST THEREON AT THE RATE OF FIVE PERCENT 8 PER ANNUM, COMPOUNDED ANNUALLY AND SUCH REFUND SHALL BE PAYABLE, UPON 9 SUCH PARTICIPANT'S APPLICATION PURSUANT TO PROCEDURES PROMULGATED IN 10 REGULATIONS OF THE BOARD OF TRUSTEES OF THE RETIREMENT SYSTEM. AN ELIGI- 11 BLE FORMER PARTICIPANT SHALL BE A CURRENT NEW YORK CITY TRANSIT AUTHORI- 12 TY MEMBER, AS DEFINED IN SUBDIVISION A OF SECTION SIX HUNDRED FOUR-B OF 13 THIS ARTICLE, WHO WAS A PARTICIPANT IN THE TWENTY-FIVE YEAR EARLY 14 RETIREMENT PROGRAM PRIOR TO THE STARTING DATE OF THE ELIMINATION OF 15 ADDITIONAL MEMBER CONTRIBUTIONS, AS SUCH DATE IS DEFINED IN AN ELECTION 16 MADE PURSUANT TO PARAGRAPH TEN OF SUBDIVISION E OF SECTION SIX HUNDRED 17 FOUR-B OF THIS ARTICLE. 18 S 2. Subdivision f of section 604-d of the retirement and social secu- 19 rity law is amended by adding a new paragraph 15 to read as follows: 20 15. AN ELIGIBLE FORMER PARTICIPANT, AS DEFINED IN THIS PARAGRAPH, 21 SHALL BE ENTITLED TO A REFUND OF THE EMPLOYEE PORTION OF HIS OR HER 22 ADDITIONAL CONTRIBUTIONS MADE PURSUANT TO THIS SUBDIVISION WHICH SHALL 23 INCLUDE ANY AND ALL INTEREST THEREON PAID TO THE RETIREMENT SYSTEM EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04787-02-1 A. 8200 2 1 TOGETHER WITH INTEREST THEREON AT THE RATE OF FIVE PERCENT PER ANNUM, 2 COMPOUNDED ANNUALLY AND SUCH REFUND SHALL BE PAYABLE, UPON SUCH PARTIC- 3 IPANT'S APPLICATION PURSUANT TO PROCEDURES PROMULGATED IN REGULATIONS OF 4 THE BOARD OF TRUSTEES OF THE RETIREMENT SYSTEM. AN ELIGIBLE FORMER 5 PARTICIPANT SHALL BE A CURRENT NEW YORK CITY TRANSIT AUTHORITY MEMBER, 6 AS DEFINED IN SUBDIVISION A OF SECTION SIX HUNDRED FOUR-B OF THIS ARTI- 7 CLE, WHO WAS A PARTICIPANT IN THE AGE FIFTY-SEVEN RETIREMENT PROGRAM 8 PRIOR TO THE STARTING DATE OF THE ELIMINATION OF ADDITIONAL MEMBER 9 CONTRIBUTIONS, AS SUCH DATE IS DEFINED IN AN ELECTION MADE PURSUANT TO 10 PARAGRAPH TEN OF SUBDIVISION E OF SECTION SIX HUNDRED FOUR-B OF THIS 11 ARTICLE. 12 S 3. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would amend New York State Retirement and Social Security Law ("RSSL") Sections 604-c and 604-d to provide to certain New York City Transit Authority ("NYCTA") members of the New York City Employees' Retirement System ("NYCERS") a refund of Additional Member Contributions ("AMC") that were paid while participants of one of the Chapter 96 of the Laws of 1995 ("Chapter 96/95") Retirement Programs. The Effective Date of the proposed legislation would be the date of enactment. This Fiscal Note assumes that the proposed legislation is intended to refund interest on AMC in accordance with NYCERS procedures for credit- ing interest on member contributions. IMPACT ON PLAN PROVISIONS - ADDITIONAL MEMBER CONTRIBUTIONS: Under Chapter 96/95, AMC were required under each of the Early Retirement Programs: * The Twenty-Five-Year Early Retirement Program ("55/25 Program") and * The Age-Fifty-Seven Retirement Program ("57/5 Program"). Those NYCERS members who participated in either of such Programs paid AMC of: 4.35% of salary for service on and after January 1, 1995 until January 1, 1998, 2.85% of salary for service on and after January 1, 1998 until Decem- ber 2, 2001, and 1.85% of salary for service on and after December 2, 2001. In addition, if such member's job title was considered Physically-Tax- ing ("PT"), an additional Physically-Taxing AMC ("PTAMC") of 1.98% of salary was required for all service on and after January 1, 1995. As a result of Chapter 10 of the Laws of 2000, many of the NYCTA Tier IV members of NYCERS who participated in the Chapter 96/95 Retirement Program were transferred into the Transit Twenty-Five-Year and Age Fifty-Five Retirement Program ("Transit 55/25 Program") effective Decem- ber 15, 2000. For these members, the AMC and PTAMC that had been payable under the Chapter 96/95 Retirement Programs were no longer required after January 3, 2001 (i.e., the effective implementation date, the first payroll period following the transfer date). This proposed legislation would refund, on and after the Effective Date, to certain Transit 55/25 Program participants with initial Program participation dates on or before December 15, 2000, the employee portion of the AMC and PTAMC, if any, paid for participation in the Chapter 96/95 Retirement Programs, including accrued interest at 5.0% per annum. Note, under the Chapter 96/95 Retirement Programs, 50% of the AMC and PTAMC paid into such Programs is considered an employer contribution while the other 50% is considered to be the employee portion. If the A. 8200 3 proposed Legislation were enacted, those impacted Transit 55/25 Program participants would receive the balance of the accumulated employee portion of AMC and PTAMC. To receive such refund, those eligible participants would be required to complete a form and follow procedures to be established by the NYCERS Board of Trustees. FINANCIAL IMPACT - OVERVIEW: If enacted into the law, the ultimate employer cost of this proposed legislation will be determined by the reduction in expected benefits paid, (due to there no longer being a requirement to refund AMC on a future withdrawal), offset by the reduction in Fund assets due to the current refund of AMC. FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to NYCERS and based on the census data and actuarial assumptions and methods described herein, the enactment of this proposed legislation would result in a decrease in the Actuarial Present Value ("APV") of Benefits ("APVB") of approximately $0.1 million as of June 30, 2010. In addition, there would be a reduction in Actuarial Asset Value as of June 30, 2010 to reflect the expected refund of the employee portion of accumulated Chapter 96/95 Retirement Program AMC and PTAMC, if any, for those impacted Transit 55/25 Program participants of approximately $1.7 million. Together, the enactment of the proposed legislation would result in a net increase in the APV of Future Employer Normal Costs to NYCERS of approximately $1.6 million as of June 30, 2010. FINANCIAL IMPACT - ADDITIONAL ANNUAL EMPLOYER COSTS AND CONTRIBUTIONS: With respect to NYCERS, the enactment of this proposed legislation would increase annual employer costs by approximately $210,000 per year. Increases in employer contributions would be comparable to the esti- mated increases in employer costs. If enacted during the 2011 Legislative Session on or before June 30, 2011, then increased employer contributions to NYCERS would begin Fiscal Year 2011. If enacted during the 2011 Legislative Session after June 30, 2011, then increased employer contributions to NYCERS would begin Fiscal Year 2012. FINANCIAL IMPACT - POTENTIAL CHANGES IN ACTUARIAL ASSUMPTIONS AND METHODS: The impact of enactment of the proposed legislation provided in this Fiscal Note has been based on the continued use of certain current actuarial assumptions. However, this set of actuarial assumptions and methods do not repre- sent the only possible approach for funding the New York City Retirement Systems ("NYCRS"). Historically, actuarial assumptions and methods have been reviewed on average every five years in connection with an actuarial experience study mandated by New York City Charter Section 96. Following this review, the Actuary generally proposes changes in actu- arial assumptions and methods that he believes are appropriate and reasonably related to such experience period and future expectations. The next such review is anticipated during Fiscal Year 2012 at which time the Actuary is likely to propose new packages of actuarial assump- tions and methods to be effective for use in determining employer contributions beginning Fiscal Year 2012. It is anticipated that whatever new actuarial assumptions are recom- mended by the Actuary are likely to result in increased APVB and employ- er costs as the current actuarial assumptions no longer represent the Actuary's best estimates. A. 8200 4 Note: The Actuary has not yet committed to any particular actuarial assumptions or methodology for determining employer costs and employer contributions in connection with the upcoming, experience review of actuarial assumptions and methods. OTHER COSTS: Not measured in this Fiscal Note are any additional administrative costs or the impact of this proposed legislation on the Manhattan and Bronx Surface Transit Operating Authority ("MaBSTOA"). CENSUS DATA: The census data used for estimates of APVB, APV of Future Employer Normal Costs and employer contributions presented herein are the 35,300 Tier IV active members of NYCERS who participate in the Tran- sit 55/25 Program with annual salaries of approximately $2,490.0 million included in the June 30, 2010 actuarial valuation of NYCERS. Of these 35,300 Tier IV members of NYCERS who participate in the Tran- sit 55/25 Program as of June 30, 2010, 746 members with annual salaries of approximately $57.7 million have AMC (and, in certain cases, PTAMC) account balances from contributions made under the Chapter 96/95 Retire- ment Programs while 34,554 of these members do not have such AMC (and, in certain cases, PTAMC) account balances. Of such 746 NYCERS members, 467 members with salaries of approximately $40.2 million became participants of the Transit 55/25 Program on or before December 15, 2000 while 279 of such members with salaries of approximately $17.6 million have Chapter 96/95 AMC (and, in certain cases, PTAMC) account balances, but are not eligible for a refund. Those former participants of the Transit 55/25 Program who do not meet the definition of active participant because they withdrew and their length of absence has exceeded five years, or withdrew with deferred vested benefits or who have retired, were therefore excluded. ACTUARIAL ASSUMPTIONS AND METHODS: Additional APVB, APV of Future Employer Normal Costs and employer costs have been calculated using the actuarial assumptions and methods in effect for the June 30, 2010 (Lag) actuarial valuation of NYCERS to determine employer contributions for Fiscal Year 2012. The development of the APVB and the expected refund of Chapter 96/95 AMC and PTAMC assume that all impacted Transit 55/25 Program partic- ipants would still be active participants in that Program. Additional annual employer costs have been estimated assuming the additional APV of Future Normal Costs would be financed through future normal contributions. As stated earlier, the Actuary is likely to propose new packages of actuarial assumptions and methods to be effective for use in determining employer contributions beginning Fiscal Year 2012. As such, not all assumptions employed in determining the results contained in this letter for Fiscal Years 2012 and later represent the Actuary's current best estimate of future experience. However, most of the assumptions and methods used to determine the results contained herein are generally those adopted by the NYCRS Boards of Trustees and enacted by the State Legislature and Governor, and provide consistency with the employer contributions currently being presented. Finally, the actuarial assumptions currently employed for determining employer contributions do not represent risk-adjusted, economic evalu- ations. Such risk-adjusted, economic evaluations could, for certain components of the proposed Legislation, produce results that differ significantly from the results shown herein. STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Chief Actuary for the New York City Retirement Systems. I am a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. A. 8200 5 I meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. FISCAL NOTE IDENTIFICATION: This estimate is intended for use only during the 2011 Legislative Session. It is Fiscal Note 2011-19, dated May 18, 2011, prepared by the Chief Actuary for the New York City Employees' Retirement System.