Amd §§613, 603, 517 & 1204, rpld §613 sub g, R & SS L; amd §182, Ed L
Relates to providing reforms to employee pension contributions; provides that members of Tier 6 shall contribute three percent of annual wages to their retirement system.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5487
SPONSOR: Pheffer Amato PURPOSE OR GENERAL IDEA OF BILL:
This bill would amend various sections of the retirement and social
security law to provide three percent employee contributions for all
Tier 6 members, regardless of earnings.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends subdivision a of section 613 of the retire-
ment and social security law.
Section 2 of the bill repeals subdivision g of section 613 of the
retirement and social security law.
Section 3 of the bill amends subdivision t of section 603 of the retire-
ment and social security law.
Section 4 of the bill amends subdivision a of section 517 of the
retire-. Ment and social security law.
Section 5 of the bill amends section 1204 of:the retirement and social
security law. Section 6 of the bill amends subdivision 2 of section 182
of the education law.
Section 7 of the bill amends subdivision f of section 613 of the retire-
ment and social security law.
Section 8 of the bill provides that employees will not be refunded any
contributions they have made or that have been collected.
Section 9 of the bill provides that this act shall be subject to section
25 of the retirement and social security law.
Section 10 of the bill provides for an effective date of 60 days after
enactment.
JUSTIFICATION:
Reforming the state's pension system is critical foT the state, local
governments, school districts, and transportation systems to recruit and
retain public employees. Over recent years, our public work force has
steadily declined to the point where many state agencies, local govern-
ments and school districts are finding it difficult to carry out their
critical public missions. While the enacted 2022-23 State Budget reduced
the vesting time for tier 6 members to five years and temporarily does
not count overtime compensation to be used in determining their pension
contribution rate, more needs to be done. Historically, one of the
greatest attractions for people to enter public service has been the
ability to earn a good public pension. Unfortunately, notwithstanding
modest pension reforms passed in this year's state budget, this is no
longer the case. Further reforms to our public pension system are
warranted and needed to make public service more attractive and compet-
itive with the private sector.
This legislation would provide three percent employee contributions for
all Tier 6 members, regardless of earnings. Tier 6 employees pay
anywhere from three percent to six percent of their salary for their
pension, while nearly all other pension tiers pay a maximum of Three
percent. For many Tier 6 employees, one annual pay raise moves them to a
higher contribution bracket, effectively erasing any raise they
received. Creating a standardized three percent contribution for all
Tier 6 members is a matter of equity and fairness. It would also help
ameliorate the current public employment recruitment and retention
issues the state and local governments are now experiencing.
PRIOR LEGISLATIVE HISTORY:
A10335- Referred to Governmental Employees
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
See fiscal note.
EFFECTIVE DATE:
Sixty days after enactment.
STATE OF NEW YORK
________________________________________________________________________
5487
2023-2024 Regular Sessions
IN ASSEMBLY
March 13, 2023
___________
Introduced by M. of A. PHEFFER AMATO -- read once and referred to the
Committee on Governmental Employees
AN ACT to amend the retirement and social security law and the education
law, in relation to providing reforms to employee pension contrib-
utions; and repealing certain provisions of the retirement and social
security law relating thereto
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision a of section 613 of the retirement and social
2 security law, as amended by chapter 10 of the laws of 2000, paragraphs 1
3 and 2 as amended by chapter 510 of the laws of 2015, the second undesig-
4 nated paragraphs of paragraphs 1 and 2 as amended by section 2 of part
5 SS of chapter 56 of the laws of 2022, is amended to read as follows:
6 a. 1. [Except as provided by paragraph two of this subdivision,
7 members] Members shall contribute three percent of annual wages to the
8 retirement system in which they have membership[, except that beginning
9 April first, two thousand thirteen for members who first become members
10 of a public retirement system of the state on or after April first, two
11 thousand twelve, the rate at which each such member shall contribute in
12 any current plan year (April first to March thirty-first, except for
13 members of the New York city employees' retirement system, New York city
14 teachers' retirement system and New York city board of education retire-
15 ment system, plan year shall mean January first through December thir-
16 ty-first commencing with the January first next succeeding the effective
17 date of the chapter of the laws of two thousand fifteen that amended
18 this paragraph) shall be determined by reference to the wages of such
19 member in the second plan year (April first to March thirty-first,
20 except for members of the New York city employees' retirement system,
21 New York city teachers' retirement system and New York city board of
22 education retirement system, plan year shall mean January first through
23 December thirty-first commencing with the January first next succeeding
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08569-02-3
A. 5487 2
1 the effective date of the chapter of the laws of two thousand fifteen
2 that amended this paragraph) preceding such current plan year as
3 follows:
4 (i) members with wages of forty-five thousand dollars per annum or
5 less shall contribute three per centum of annual wages;
6 (ii) members with wages greater than forty-five thousand per annum,
7 but not more than fifty-five thousand per annum shall contribute three
8 and one-half per centum of annual wages;
9 (iii) members with wages greater than fifty-five thousand per annum,
10 but not more than seventy-five thousand per annum shall contribute four
11 and one-half per centum of annual wages;
12 (iv) members with wages greater than seventy-five thousand per annum
13 but not more than one hundred thousand per annum shall contribute five
14 and three-quarters per centum of annual wages; and
15 (v) members with wages greater than one hundred thousand per annum
16 shall contribute six per centum of annual wages].
17 Notwithstanding the foregoing, during each of the first three plan
18 years (April first to March thirty-first, except for members of New York
19 city employees' retirement system, New York city teachers' retirement
20 system and New York city board of education retirement system, plan year
21 shall mean January first through December thirty-first commencing with
22 the January first next succeeding the effective date of chapter five
23 hundred ten of the laws of two thousand fifteen) in which such member
24 has established membership in a public retirement system of the state,
25 such member shall contribute a percentage of annual wages in accordance
26 with the preceding schedule based upon a projection of annual wages
27 provided by the employer. Notwithstanding the foregoing, when determin-
28 ing the rate at which each such member who became a member of the New
29 York state and local employees' retirement system, New York city employ-
30 ees' retirement system, New York city teachers' retirement system and
31 New York city board of education retirement system, on or after April
32 first, two thousand twelve shall contribute for any plan year (April
33 first to March thirty-first, except for members of the New York city
34 employees' retirement system, New York city teachers' retirement system
35 and New York city board of education retirement system, plan year shall
36 mean January first through December thirty-first commencing with January
37 first next succeeding the effective date of chapter five hundred ten of
38 the laws of two thousand fifteen) between April first, two thousand
39 twenty-two and April first, two thousand twenty-four, such rate shall be
40 determined by reference to employees annual base wages of such member in
41 the second plan year (April first to March thirty-first) preceding such
42 current plan year. Base wages shall include regular pay, shift differen-
43 tial pay, location pay, and any increased hiring rate pay, but shall not
44 include any overtime payments or compensation earned for extracurricular
45 programs or any other pensionable earnings paid in addition to the annu-
46 al base wages.
47 The head of each retirement system shall promulgate such regulations
48 as may be necessary and appropriate with respect to the deduction of
49 such contribution from members' wages and for the maintenance of any
50 special fund or funds with respect to amounts so contributed.
51 2. A member of the New York city employees' retirement system who is
52 eligible to be a participant in the twenty-five-year and age fifty-five
53 retirement program, as defined by paragraph five of subdivision a of
54 section six hundred four-b of this article shall contribute two percent
55 of annual wages to such system effective on the starting date of the
56 elimination of additional member contributions, as defined in an
A. 5487 3
1 election made pursuant to paragraph ten of subdivision e of section six
2 hundred four-b of this article[, except that beginning April first, two
3 thousand thirteen for members who first become members of the New York
4 city employees' retirement system on or after April first, two thousand
5 twelve, the rate at which each such member shall contribute in any
6 current plan year (April first to March thirty-first, provided, however,
7 that plan year shall mean January first through December thirty-first
8 commencing with the January first next succeeding the effective date of
9 the chapter of the laws of two thousand fifteen that amended this para-
10 graph) shall be determined by reference to the wages of such member in
11 the second plan year (April first to March thirty-first, provided,
12 however, that plan year shall mean January first through December thir-
13 ty-first commencing with the January first next succeeding the effective
14 date of the chapter of the laws of two thousand fifteen that amended
15 this paragraph) preceding such current plan year as follows:
16 (i) members with wages of forty-five thousand dollars per annum or
17 less shall contribute three per centum of annual wages;
18 (ii) members with wages greater than forty-five thousand per annum,
19 but not more than fifty-five thousand per annum shall contribute three
20 and one-half per centum of annual wages;
21 (iii) members with wages greater than fifty-five thousand per annum,
22 but not more than seventy-five thousand per annum shall contribute four
23 and one-half per centum of annual wages;
24 (iv) members with wages greater than seventy-five thousand per annum
25 but not more than one hundred thousand per annum shall contribute five
26 and three-quarters per centum of annual wages; and
27 (v) members with wages greater than one hundred thousand per annum
28 shall contribute six per centum of annual wages].
29 Notwithstanding the foregoing, during each of the first three plan
30 years (April first to March thirty-first, provided, however, that plan
31 year shall mean January first through December thirty-first commencing
32 with the January first next succeeding the effective date of chapter
33 five hundred ten of the laws of two thousand fifteen) in which such
34 member has established membership in the New York city employees'
35 retirement system, such member shall contribute a percentage of annual
36 wages in accordance with the preceding schedule based upon a projection
37 of annual wages provided by the employer. Notwithstanding the foregoing,
38 when determining the rate at which each such member who became a member
39 of, New York city employees' retirement system, on or after April first,
40 two thousand twelve shall contribute for any plan year (April first to
41 March thirty-first, provided, however, that plan year shall mean January
42 first through December thirty-first commencing with the January first
43 next succeeding the effective date of chapter five hundred ten of the
44 laws of two thousand fifteen) between April first, two thousand twenty-
45 two and April first, two thousand twenty-four, such rate shall be deter-
46 mined by reference to employees annual base wages of such member in the
47 second plan year (April first to March thirty-first) preceding such
48 current plan year. Base wages shall include regular pay, shift differen-
49 tial pay, location pay, and any increased hiring rate pay, but shall not
50 include any overtime payments.
51 § 2. Subdivision g of section 613 of the retirement and social securi-
52 ty law is REPEALED.
53 § 3. Subdivision t of section 603 of the retirement and social securi-
54 ty law, as amended by chapter 18 of the laws of 2012, is amended to read
55 as follows:
A. 5487 4
1 t. Members who join the New York state teachers' retirement system on
2 or after January first, two thousand ten, shall be eligible to retire
3 without reduction of his or her retirement benefit upon attainment of at
4 least fifty-seven years of age and completion of thirty or more years of
5 service. [Members who retire pursuant to the provisions of this subdivi-
6 sion shall be required to make the member contributions required by
7 subdivision g of section six hundred thirteen of this article for all
8 years of credited and creditable service.] The provisions of this subdi-
9 vision shall not apply to members who first become a member of the New
10 York state teachers' retirement system on or after April first, two
11 thousand twelve.
12 § 4. Subdivision a of section 517 of the retirement and social securi-
13 ty law, as amended by chapter 18 of the laws of 2012, the second undes-
14 ignated paragraph as amended by section 1 of part SS of chapter 56 of
15 the laws of 2022, is amended to read as follows:
16 a. Members shall contribute three percent of annual wages to the
17 retirement system in which they have membership, provided that such
18 contributions shall not be required for more than thirty years, for
19 general members, or twenty-five years, for police/fire members[, except
20 that beginning April first, two thousand thirteen for members who first
21 become members of the New York state and local employees' retirement
22 system on or after April first, two thousand twelve, the rate at which
23 each such member shall contribute in any current plan year (April first
24 to March thirty-first) shall be determined by reference to the wages of
25 such member in the second plan year (April first to March thirty-first)
26 preceding such current plan year as follows:
27 1. members with wages of forty-five thousand dollars per annum or less
28 shall contribute three per centum of annual wages;
29 2. members with wages greater than forty-five thousand per annum, but
30 not more than fifty-five thousand per annum shall contribute three and
31 one-half per centum of annual wages;
32 3. members with wages greater than fifty-five thousand per annum, but
33 not more than seventy-five thousand per annum shall contribute four and
34 one-half per centum of annual wages;
35 4. members with wages greater than seventy-five thousand per annum but
36 not more than one hundred thousand per annum shall contribute five and
37 three-quarters per centum of annual wages; and
38 5. members with wages greater than one hundred thousand per annum
39 shall contribute six per centum of annual wages].
40 Notwithstanding the foregoing, during each of the first three plan
41 years (April first to March thirty-first) in which such member has
42 established membership in the New York state and local employees'
43 retirement system, such member shall contribute a percentage of annual
44 wages in accordance with the preceding schedule based upon a projection
45 of annual wages provided by the employer. Notwithstanding the foregoing,
46 when determining the rate at which each such member who became a member
47 of the New York state and local employees' retirement system on or after
48 April first, two thousand twelve shall contribute for any plan year
49 (April first to March thirty-first) between April first, two thousand
50 twenty-two and April first, two thousand twenty-four, such rate shall be
51 determined by reference to employees annual base wages of such member in
52 the second plan year (April first to March thirty-first) preceding such
53 current plan year. Base wages shall include regular pay, shift differen-
54 tial pay, location pay, and any increased hiring rate pay, but shall not
55 include any overtime payments.
A. 5487 5
1 The head of each retirement system shall promulgate such regulations
2 as may be necessary and appropriate with respect to the deduction of
3 such contribution from members' wages and for the maintenance of any
4 special fund or funds with respect to amounts so contributed.
5 § 5. Section 1204 of the retirement and social security law, as
6 amended by chapter 18 of the laws of 2012, the second undesignated para-
7 graph as amended by section 3 of part SS of chapter 56 of the laws of
8 2022, is amended to read as follows:
9 § 1204. Member contributions. Members who are subject to the
10 provisions of this article shall contribute three percent of annual
11 wages to the retirement system in which they have membership[, except
12 that beginning April first, two thousand thirteen for members who first
13 become members of the New York state and local police and fire retire-
14 ment system on or after April first, two thousand twelve, the rate at
15 which each such member shall contribute in any current plan year (April
16 first to March thirty-first) shall be determined by reference to the
17 wages of such member in the second plan year (April first to March thir-
18 ty-first) preceding such current plan year as follows:
19 a. members with wages of forty-five thousand dollars per annum or less
20 shall contribute three per centum of annual wages;
21 b. members with wages greater than forty-five thousand per annum, but
22 not more than fifty-five thousand per annum shall contribute three and
23 one-half per centum of annual wages;
24 c. members with wages greater than fifty-five thousand per annum, but
25 not more than seventy-five thousand per annum shall contribute four and
26 one-half per centum of annual wages;
27 d. members with wages greater than seventy-five thousand per annum but
28 not more than one hundred thousand per annum shall contribute five and
29 three-quarters per centum of annual wages; and
30 e. members with wages greater than one hundred thousand per annum
31 shall contribute six per centum of annual wages].
32 Notwithstanding the foregoing, during each of the first three plan
33 years (April first to March thirty-first) in which such member has
34 established membership in the New York state and local police and fire
35 retirement system, such member shall contribute a percentage of annual
36 wages in accordance with the preceding schedule based upon a projection
37 of annual wages provided by the employer. Notwithstanding the foregoing,
38 when determining the rate at which each such member who became a member
39 of the New York state and local police and fire retirement system on or
40 after April first, two thousand twelve shall contribute for any plan
41 year (April first to March thirty-first) between April first, two thou-
42 sand twenty-two and April first, two thousand twenty-four, such rate
43 shall be determined by reference to employees annual base wages of such
44 member in the second plan year (April first to March thirty-first)
45 preceding such current plan year. Base wages shall include regular pay,
46 shift differential pay, location pay, and any increased hiring rate pay,
47 but shall not include any overtime payments. Effective April first, two
48 thousand twelve, all members subject to the provisions of this article
49 shall not be required to make member contributions on annual wages
50 excluded from the calculation of final average salary pursuant to
51 section twelve hundred three of this article. Nothing in this section,
52 however, shall be construed or deemed to allow members to receive a
53 refund of any member contributions on such wages paid prior to April
54 first, two thousand twelve.
55 Members who are enrolled in a retirement plan that limits the amount
56 of creditable service a member can accrue shall not be required to make
A. 5487 6
1 contributions pursuant to this section after accruing the maximum amount
2 of service credit allowed by the retirement plan in which they are
3 enrolled. The state comptroller shall promulgate such regulations as may
4 be necessary and appropriate with respect to the deduction of such
5 contribution from members' wages and for the maintenance of any special
6 fund or funds with respect to amounts so contributed. In no way shall
7 the member contributions made pursuant to this section be used to
8 provide for pension increases or annuities of any kind.
9 § 6. Subdivision 2 of section 182 of the education law, as amended by
10 chapter 18 of the laws of 2012, is amended to read as follows:
11 2. Employee contributions. In the case of any electing employee,
12 contributions at the rate of three per centum of his state salary shall
13 be deducted by the state comptroller as the employee contribution,
14 provided however, that such employee contribution shall be made by the
15 state in accordance with subdivision one of this section during such
16 period as (a) either section seventy-a of the retirement and social
17 security law or section five hundred twenty-eight of this title provides
18 that the contribution of each member of the New York state employees'
19 retirement system or the New York state teachers' retirement system in
20 the employ of the state shall be reduced by at least eight per centum of
21 his compensation, or (b) employee contributions to either such system
22 are no longer required by reason of such system becoming noncontributory
23 for state employees.
24 [Notwithstanding any other law to the contrary, beginning April first,
25 two thousand thirteen any electing employee appointed on or after April
26 first, two thousand twelve, the rate at which each such employee shall
27 contribute in any current plan year (January first to December thirty-
28 first) shall be determined by reference to the wages of such member in
29 the second plan year (January first to December thirty-first) preceding
30 such current plan year as follows:
31 (a) members with wages of forty-five thousand dollars per annum or
32 less shall contribute three per centum of annual wages;
33 (b) members with wages greater than forty-five thousand per annum, but
34 not more than fifty-five thousand per annum shall contribute three and
35 one-half per centum of annual wages;
36 (c) members with wages greater than fifty-five thousand per annum, but
37 not more than seventy-five thousand per annum shall contribute four and
38 one-half per centum of annual wages;
39 (d) members with wages greater than seventy-five thousand per annum
40 but not more than one hundred thousand per annum shall contribute five
41 and three-quarters per centum of annual wages; and
42 (e) members with wages greater than one hundred thousand per annum
43 shall contribute six per centum of annual wages.
44 Notwithstanding the foregoing, during each of the first three plan
45 years (January first to December thirty-first) in which such member has
46 established membership in the Education Department Optional Retirement
47 Program, such employee shall contribute a percent of annual wages in
48 accordance with the preceding schedule based upon a projection of annual
49 wages provided by the employer.]
50 § 7. Subdivision f of section 613 of the retirement and social securi-
51 ty law, as amended by chapter 18 of the laws of 2012, the second undes-
52 ignated paragraph as amended by section 2 of part SS of chapter 56 of
53 the laws of 2022, is amended to read as follows:
54 f. Anything in subdivision a of this section to the contrary notwith-
55 standing a member employed as a uniformed court officer or peace officer
56 in the unified court system who first joins the New York state and local
A. 5487 7
1 employees' retirement system on or after January first, two thousand ten
2 shall contribute four percent of annual wages to the New York state and
3 local employees' retirement system[, except that beginning April first,
4 two thousand thirteen for members who first become members of the New
5 York state and local employees' retirement system on or after April
6 first, two thousand twelve, the rate at which each such member shall
7 contribute in any current plan year (April first to March thirty-first)
8 shall be determined by reference to the wages of such member in the
9 second plan year (April first to March thirty-first) preceding such
10 current plan year as follows:
11 1. members with wages of forty-five thousand dollars per annum or less
12 shall contribute three per centum of annual wages;
13 2. members with wages greater than forty-five thousand per annum, but
14 not more than fifty-five thousand per annum shall contribute three and
15 one-half per centum of annual wages;
16 3. members with wages greater than fifty-five thousand per annum, but
17 not more than seventy-five thousand per annum shall contribute four and
18 one-half per centum of annual wages;
19 4. members with wages greater than seventy-five thousand per annum but
20 not more than one hundred thousand per annum shall contribute five and
21 three-quarters per centum of annual wages; and
22 5. members with wages greater than one hundred thousand per annum
23 shall contribute six per centum of annual wages].
24 Notwithstanding the foregoing, during each of the first three plan
25 years (April first to March thirty-first) in which such member has
26 established membership in the New York state and local employees'
27 retirement system, such member shall contribute a percentage of annual
28 wages in accordance with the preceding schedule based upon a projection
29 of annual wages provided by the employer. Notwithstanding the foregoing,
30 when determining the rate at which each such member who became a member
31 of the New York state and local employees' retirement system on or after
32 April first, two thousand twelve shall contribute for any plan year
33 (April first to March thirty-first) between April first, two thousand
34 twenty-two and April first, two thousand twenty-four, such rate shall be
35 determined by reference to employees annual base wages of such member in
36 the second plan year (April first to March thirty-first) preceding such
37 current plan year. Base wages shall include regular pay, shift differen-
38 tial pay, location pay, and any increased hiring rate pay, but shall not
39 include any overtime payments.
40 The head of the New York state and local employees' retirement system
41 shall promulgate such regulations as may be necessary and appropriate
42 with respect to the deduction of such contribution from members' wages
43 and for the maintenance of any special fund or funds with respect to
44 amounts so contributed.
45 § 8. Nothing in this act shall be construed or deemed to allow members
46 to receive a refund of any member contributions made or collected prior
47 to the effective date of this act.
48 § 9. Notwithstanding any other provision of law to the contrary, none
49 of the provisions of this act shall be subject to section 25 of the
50 retirement and social security law.
51 § 10. This act shall take effect on the sixtieth day after it shall
52 have become a law.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
As it relates to the New York State Teachers' Retirement System, this
bill would amend Section 613 of the Retirement and Social Security Law
to reduce the required employee contribution rate for Tier 5 and 6
A. 5487 8
members to a flat 3.0% of salary, payable over their career. Currently,
Tier 5 members are required to contribute at a rate of 3.5% of salary,
and Tier 6 members are required to contribute between 3.0% and 6.0% of
salary, according to a salary-based schedule. No contributions made or
collected before the effective date of this bill would be refunded.
The annual cost to the employers of members of the New York State
Teachers' Retirement System for this benefit is estimated to be $136.5
million or 0.74% of payroll if this bill is enacted.
The System's "new entrant rate", a hypothetical employer contribution
rate that would occur if we started a new Retirement System without any
assets, is equal to 5.15% of pay under the current Tier 6 benefit struc-
ture. This can be thought of as the long-term expected employer cost of
Tier 6, based on current actuarial assumptions. For the reduction to the
Tier 6 employee contribution rate proposed under this bill, this new
entrant rate would increase to 6.72% of pay, an increase of 1.57% of
pay.
Member data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Annual Report. System assets are as reported in the System's financial
statements and can also be found in the System's Annual Report. Actuari-
al assumptions and methods are provided in the System's Actuarial Valu-
ation Report.
The source of this estimate is Fiscal Note 2023-03 dated February 22,
2023 prepared by the Office of the Actuary of the New York State Teach-
ers' Retirement System and is intended for use only during the 2023
Legislative Session. I, Richard A. Young, am the Chief Actuary for the
New York State Teachers' Retirement System. I am a member of the Ameri-
can Academy of Actuaries and I meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained
herein.
