Relates to contributions required of members for the twenty-year/age fifty program for Triborough bridge and tunnel members.
TITLE OF BILL: An act to amend the retirement and social security law, in relation to members of the twenty-year/age fifty retirement program for Triborough bridge and tunnel members
SUMMARY OF PROVISIONS:
Section 1- requires that a member that returns to a position that makes them eligible to participate in a 20 year/age 50 program repay the Additional Member Contributions that would have been collected during the period the member was in the managerial position.
Section 2 - Immediate Effective Date
PURPOSE: This bill would require a member who spends a portion of his or her career in a non-participating managerial position and then returns to a TBTA Eligible position to contribute the additional member contributions (AMC) required for the enhanced 20 year/age 50 retirement plan.
JUSTIFICATION: This bill will correct problem in the TBTA 20 year/age 50 plan within the New York City Employees Retirement System (NYCERS). It addresses the members that leave the 20 year/age 50 plan to take a managerial position. Those members stop making the AMCs which can range from 5.5% - 6% depending on their rank prior to taking the managerial position. The member can at a later date return to the 20 year/age 50 plan and retire taking advantage of using the time as a manager toward the 20 years required to retire. In many cases it has been as much as 10 years without making any Additional Member contributions toward their pension.
This legislation would correct the funding imbalance caused by this anomaly and maintain parity for plan members who do not receive managerial positions
LEGISLATIVE HISTORY: New Bill
FISCAL IMPLICATIONS: The estimated total savings to the plan would be approximately $1,200,000 for the current group of managerial employees.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 7439 IN SENATE May 15, 2014 ___________Introduced by Sen. SAVINO -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions AN ACT to amend the retirement and social security law, in relation to members of the twenty-year/age fifty retirement program for Triborough bridge and tunnel members THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 1 of subdivision e of section 604-c of the retirement and social security law, as amended by chapter 661 of the laws of 2002, is amended to read as follows: 1. In addition to the member contributions required by section six hundred thirteen of this article, each participant in the twenty- year/age fifty retirement program in the rank of bridge and tunnel offi- cer shall contribute to the retirement system of which he or she is a member (subject to the applicable provisions of subdivision d of section six hundred thirteen of this article) an additional five and fifty one- hundredths percent of his or her compensation and each participant in the twenty-year/age fifty retirement program in the rank of sergeant or lieutenant shall contribute to the retirement system an additional six percent of his or her compensation earned
[from]FOR (A) all allowable service as a Triborough bridge and tunnel member rendered on and after the date which is one hundred eighty days prior to the starting date of the twenty-year/age fifty retirement program, AND (B) ALL CREDITED SERVICE AFTER SUCH PERSON CEASES TO BE A PARTICIPANT BUT BEFORE HE OR SHE AGAIN BECOMES A PARTICIPANT PURSUANT TO PARAGRAPH SIX OF SUBDIVISION B OF THIS SECTION. A participant in the twenty-year/age fifty retirement program shall contribute additional member contributions until the later of (i) the date as of which he or she has twenty years of credited service as a bridge and tunnel officer, or (ii) the third anniversary of the date that he or she last became a participant in the twenty-year/age fifty retirement program. S 2. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50:EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13878-02-4 S. 7439 2 PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation, revised as described below, would amend Retirement and Social Security Law ("RSSL") Section 604-c.e(1) to require Additional Member Contributions ("AMC") for a period of non-participation be made by a member of the Triborough Bridge and Tunnel Authority ("TBTA") 20-Year/Age 50 Retire- ment Plan ("TBTA 20/50 Plan") who ceases to be a participant and later again becomes a participant. The Actuary has a concern that the impact of this proposed legislation may be reduced due to Constitutional Protection under Article V, Section 7 of the New York State Constitution. Note: The analysis presented in the Fiscal Note presumes that the proposed legislation could be administered as written. The effective date of the proposed legislation would be the date of enactment. BACKGROUND: Members in the New York City Employees' Retirement System ("NYCERS") TBTA 20/50 Plan must be employed in a TBTA Eligible Position to be eligible to participate. A TBTA Eligible Position is a position held by a Tier 4 member who is employed as a TBTA Bridge and Tunnel Officer, Sergeant or Lieutenant in a non-managerial position. To partic- ipate in the TBTA 20/50 Plan, in addition to Basic Member Contributions, AMC must be made at the rate of 5.5% of gross wages for Officers and 6.0% of gross wages for Sergeants and Lieutenants until the later of (1) 20 years of Credited Service in a TBTA Eligible Position, or (2) the third anniversary of participation in the TBTA 20/50 Plan. If a TBTA 20/50 Plan member gets promoted to a managerial position, he or she is no longer eligible to participate in that Plan. Subsequently, if the member is reassigned to a non-managerial position, making the member once again eligible to participate in the TBTA 20/50 Plan, the member is then able to retire with full TBTA 20/50 Plan benefits despite not having contributed AMC during the period the member spent in the managerial position. This proposed legislation, if enacted, would require a member who spends a portion of his or her career in a non-participating managerial position and then returns to a TBTA Eligible Position to contribute AMC for the period of time that the member was in that managerial position. For purposes of developing the analysis herein, the Actuary has assumed that the required AMC rate for this period of time will be deemed to be equal to the AMC rate last paid by the member while a participant in the TBTA 20/50 Plan. FINANCIAL IMPACT - ACTUARIAL PRESENT VALUE OF BENEFITS: Enactment of this legislation would result in a reduction in the Actuarial Present Value of Benefits ("APVB") and employer contributions to NYCERS and would be based on the number of members affected, the number of years that they were in non-participating positions and their gross wages during those periods. Based on the assumptions herein, the savings in the APVB, if this legislation is enacted, would be approximately $60,000 per member at the date of retirement. Although the exact number of affected members cannot be known with certainty, there are approximately 20 members who are currently in mana- gerial positions who could potentially be reassigned to non-managerial positions just prior to retirement, and therefore, avoid the requirement to contribute AMC for a portion of their career. If all 20 members were to be affected by this proposed legislation, the total savings would be approximately $1,200,000 for this current group of managerial employees if the legislation were to be enacted. S. 7439 3 FINANCIAL IMPACT - EMPLOYER COSTS: Enactment of this proposed legis- lation could decrease employer costs, where such amounts would depend on the number of members affected, upon the number of years that they were in non-participating positions and their gross wages during those years and would equal the value of the additional AMC paid. The increase in the assets of NYCERS as a result of the additional AMC paid in any year would be treated as an actuarial gain and be amortized over 15 years. Based on the assumptions herein, should 20 members repay $1,200,000 at the same time, the cost savings would be approximately $140,000 per year. FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: Decreases in employer contributions would ultimately be comparable to the decreases in employ- er costs. ACTUARIAL ASSUMPTIONS AND METHODS: The approximate savings per member in the APVB has been estimated assuming that: * The member has been in a managerial position for 10 years * The member's gross wages at the end of the 10-year period was $100,000 * The member had received increases in gross wages of 4.0% per year during the 10-year period * The AMC rate was 6.0% of gross wages, and * AMC are accumulated at the rate of 5.0% per year. 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. 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 2014 Legislative Session. It is Fiscal Note 2014-15, dated April 18, 2014 prepared by the Chief Actuary of the New York City Employees' Retirement System.