New York City Retirement Systems Independent Actuary Statement for Office of the Comptroller

Executive Summary

This report summarizes the Independent Actuary Statement performed by Milliman of the five New York City Retirement Systems (“NYCRS”):

• New York City Employees’ Retirement System (NYCERS)
• Teachers’ Retirement System of the City of New York (TRS)
• Board of Education Retirement System of the City of New York (BERS)
• New York City Police Pension Fund (POLICE)
• New York City Fire Pension Fund (FIRE)

The primary purposes of the Independent Actuary Statement are to:

• Perform an independent review of the economic assumptions, specifically the investment return assumption
• Perform a broad-based review of the funding policy parameters
• Review the actuarial reports for compliance with Actuarial Standards of Practice (ASOPs)

We reviewed the June 30, 2019 lag actuarial valuation report for Fiscal Year 2021, as supplemented by the June 30, 2020 report, for each system and referenced earlier reports for comparative purposes as needed.  The following sections detail our overall findings in the areas of economic assumptions, actuarial methods, and the valuation reports.  We are currently conducting data processing that will be the basis for the recommended demographic assumptions that will be included in the experience study report to be issued later.

Overall Assessment

Regarding economic assumptions discussed in Section I, we believe the current assumptions are reasonable. The assumptions reviewed include the inflation assumption, investment return assumption, cost-of-living assumption and general wage inflation assumption component of the amortization method for the initial unfunded liability.  Due to recent increases in capital market assumptions since January 1, 2022, we do not recommend any changes at this time to these economic assumptions.

Regarding the various funding policy elements used to develop the actuarially determined contribution discussed in Section II, we believe the current methods are reasonable for their purposes and are in compliance with actuarial standards of practice and guidance within the actuarial community, specifically a white paper titled Actuarial Funding Policies and Practices for Public Pension Plans issued by the Conference of Consulting Actuaries.  The specific items we reviewed consist of the asset valuation method, actuarial cost method, amortization method, one-year lag methodology and the overall parameters of the funding policy.

In Section III, we discuss some possible enhancements to the disclosures contained in the valuation reports, as well as if the disclosures are in compliance with actuarial standards of practice.

We have found that the OA has employed generally accepted actuarial practices and principles in selecting the various cost allocation methods, determining employer contribution rates, and presenting the results of their work.