Relates to the definition of additional member contributions and basic member contributions for certain retirement system members to allow such contributions…

◆ The sponsor's argument

Why Robert Jackson says this is needed

The proposed legislation expands the definition of additional member contributions and basic member contributions by allowing a participant of the FPI Plan to use a surplus in his or her additional member contributions account to offset a deficit in his or her basic member contributions account, and, likewise, to use a surplus in his or her basic member contributions account to offset a deficit in his or her additional member contributions account at any point during membership. For other so-called "Special Plans", under the amendment to the law enacted under Chapter 467' of the Laws of 2017, a surplus in either the Member Contribution Accumulation Fund (MCAF) or Retirement Reserve Fund (RRF) can be used to offset a deficit in the other account, but only at retirement. After a further amendment in the law enacted under Chapter 448 of the Laws of 2018, this was expanded to allow members in these Special Plans to offset deficits at any time, which saved such members interest and alleviated an administrative burden on NYCERS. The language allowing this offset should also apply to the FPI Plan legislation, because the FPI Plan is also a Special Plan, and its members should be treated the same as those in other Special Plans. It should be noted that the existence of deficits at retirement is espe- cially harmful to members of the FPI Plan, because the FPI Plan, like certain other Special Plans, requires that all additional member contributions plus interest be paid prior to retirement, or such members must retire with an actuarial deduction. By settling the deficit through a surplus in the other account, the member will owe NYCERS less since the rapid ability to settle accounts will prevent greater interest from accruing for the member. In addition, by addressing a deficit before retirement, the retirement process will be much smoother for both the retirement system and the member. This bill eliminates the need for separate and time-consuming processing steps by expanding the definition and use of additional member contrib- utions and basic member contributions for the sole purpose of remedying a deficit. This bill does not change the use of additional member contributions and basic member contributions for any other purpose. By allowing the retirement system to use a surplus of additional member contributions to remedy a deficit in the member's basic member contrib- utions, and vice versa, at any point during membership, this legislation aids in the administrative efficiency of the retirement system and elim- inates some burdens on FPI Plan participants. As noted, this will also grant FPI Plan participants the same treatment provided to other Special Plan participants and will correct a drafting error inherent in the FPI Plan legislation.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.