New York City Retirement Systems Part I Experience Study Report – NYCERS

November 29, 2023

Table of Contents

    Executive Summary

    This report summarizes the Part I Experience Study performed by Milliman of the five New York City Retirement Systems (“NYCRS”):

    • Section I – New York City Employees’ Retirement System (NYCERS)
    • Section II – Teachers’ Retirement System of the City of New York (TRS)
    • Section III – Board of Education Retirement System of the City of New York (BERS)
    • Section IV – New York City Police Pension Fund (POLICE)
    • Section V – New York City Fire Pension Fund (FIRE)

    This report includes Section I for NYCERS and is separated into five different subsections:

    • General Employees
    • Correction Officers
    • Sanitation Employees
    • Bridges and Tunnels (TBTA) and Transit Employees
    • Postretirement Mortality

    For General employees, withdrawal and retirement experience is reviewed separately for Basic Plan group members and Specialty Plan group members.  These groupings are explained in the General Plan Code Groupings.

    The postretirement mortality experience is combined for all NYCERS’ groups.

    The primary purposes of the Part I Experience Study Report are to provide high-level observations of the experience for the indicated systems:

    • This report provides information on key preretirement demographic assumptions – withdrawal, retirement, and disability – used in the actuarial valuations performed by the OA.
    • This report provides information on the pre-retirement and postretirement mortality assumptions used in the actuarial valuations performed by the OA.

    Part II Experience Study report will incorporate recommendations for changes to the actuarial assumptions reviewed.

    The experience study includes information for the 10-year period ending June 30, 2021 as provided by the OA.  This includes data from 2012 – 2017 contained in the historical database along with updates for the 4-year period ending June 30, 2021 completed by Milliman.

    General

    The following is a summary of our observations regarding the experience of General employees.

    Summary of General Observations
    Decrement Observation Potential Impact
    Withdrawal

    Basic Plan Group

    		 Fewer withdrawals than expected at service between 6 and 29 years. Older members exhibited lower rates than younger members for same service periods.  Male members exhibited lower rates than female members. Decreasing withdrawal rates generally results in higher liabilities.
    Withdrawal

    Specialty Plan Group

    		 Specialty Plan group members exhibited greater rates than Basic Plan group members, but experience was less than expected at service between 6 and 24 years. Decreasing withdrawal rates generally results in higher liabilities.
    Retirement

    Basic Plan Group

    		 Change in benefit formula at 20 years of service has a significant impact on rates of retirement.  Fewer than expected if less than 20 years and greater than expected at 20 more years of service. While increasing the number of members anticipated to receive the 2% formula benefit generally results in higher liabilities, the impact on accrued liabilities and normal cost may vary.
    Retirement

    Specialty Plan Group

    		 Fewer retirements occurred than expected at first eligibility. More retirements occurred if eligible for early retirement from the Basic Plan where OA applies the withdrawal assumption. Fewer retirements occurred than expected at ages 62 and older and fewer than 25 years of service. Decreasing rates of retirement generally result in lower liabilities.  Applying early retirement rates rather than termination rates may not have a significant impact on liabilities, but impact on accrued liabilities and normal cost may vary.
    Ordinary Disability Eligibility for retirement and change in benefit formula at 20 years of service has a significant impact on rates of disability; nearly none occurred for members with at least 20 years of service and 62 and older, but greater than expected for those with less than 20 years. Modifying rates of disability based on eligibility for retirement and benefit formula generally results in higher liabilities.
    Accidental Disability Rates of actual accidental disability retirements vary by age and were greater for Specialty Plan group members than Basic Plan group members. Increasing accidental disability rates generally results in higher liabilities but reducing rates at younger ages would offset the impact.
    Ordinary Death Slightly greater number of deaths than expected, but there were significant variations in the experience over time. Increases in rates of mortality generally result in lower liabilities but we don’t know what generated these anomalous results and if the data is reliable.

     

    Corrections

    The following is a summary of our observations regarding the experience of Correction officers.

    Summary of Corrections Observations
    Decrement Observation Potential Impact
    Withdrawal More withdrawals than expected. Increasing withdrawal rates generally results in lower liabilities.
    Retirement Greater number of retirements than expected, except at first eligibility.

    		 Increasing rates of retirement, generally results in higher liabilities.
    Ordinary Disability Eligibility for retirement impacts rates of disability; very few occurred for members with at least 20 years of service. But still less than expected for those with less than 20 years. Decreasing rates of disability generally results in lower liabilities.
    Accidental Disability More accidental disability retirements than expected. Increasing accidental disability rates generally results in higher liabilities.
    Ordinary Death Less deaths than expected but not enough data for experience to be considered fully credible. Decrease in rates of mortality generally results in higher liabilities.
    Accidental Death Excluding 2020 – 2021, there were no accidental deaths during the study period. Reductions in rates of accidental death would generally result in lower liabilities.

    Sanitation

    The following is a summary of our observations regarding the experience of Sanitation employees.

    Summary of Sanitation Observations
    Decrement Observation Potential Impact
    Withdrawal Experience was fairly consistent with the assumption. Little impact anticipated.
    Retirement Greater number of retirements than expected, especially at older ages but less than expected at younger ages.

    		 Impact will depend on relative change of increasing retirements but delaying retirement to older ages. Increasing rates of retirement, generally results in higher liabilities
    Ordinary Disability Eligibility for retirement impacts rates of disability;  very few occurred for members with at least 20 years of service. But still less than expected for those with less than 20 years. Decreasing rates of disability generally results in lower liabilities.
    Accidental Disability More accidental disability retirements than expected. Increasing accidental disability rates generally results in higher liabilities.
    Ordinary Death Less deaths than expected but not enough data for experience to be considered fully credible. Decrease in rates of mortality generally results in higher liabilities.
    Accidental Death Excluding 2020 – 2021, there was only one accidental death during the study period. Reductions in rates of accidental death would generally result in lower liabilities.

    TBTA / Transit

    The following is a summary of our observations regarding the experience of TBTA and Transit members.

    Summary of TBTA/Transit Observations
    Decrement Observation Potential Impact
    Withdrawal

    TBTA

    		 More withdrawals than expected. Increasing withdrawal rates generally results in lower liabilities.
    Withdrawal

    Transit

    		 Up to 25 years of service, actual experience for males was relatively similar to the assumption, but more withdrawals occurred than expected for females. Beginning at 25 years of service, more withdrawals occurred than expected. Increasing withdrawal rates generally results in lower liabilities.
    Retirement Overall, actual experience was relatively similar to the expected for TBTA and Transit but experience for certain age / service / plan combinations may be more or less than expected. For instance, less retirements occurred at age 62 to 69 for members with less than 20 years of service. Without additional analysis, it is difficult to determine the impact at this time.
    Ordinary Disability Eligibility for retirement and change in benefit formula at 20 years of service has a significant impact on rates of disability; much fewer than expected for members with at least 20 years of service and 62 and older, but greater than expected for those with less than 20 years. Also, higher rates among females versus males. Modifying rates of disability based on eligibility for retirement and benefit formula generally results in higher liabilities.
    Accidental Disability Fewer accidental disability retirements than expected and experience varies by age. Decreasing accidental disability rates generally results in lower liabilities.
    Ordinary Death Slightly less deaths than expected but not enough data for experience to be considered fully credible. Decrease in rates of mortality generally results in higher liabilities.
    Accidental Death Excluding 2020 – 2021, there were only four accidental deaths during the study period. Reductions in rates of accidental death would generally result in lower liabilities.

    Postretirement Mortality

    The following is a summary of our observations regarding the postretirement mortality experience of all groups combined.

    Summary of Postretirement Mortality Observations
    Decrement Observation Potential Impact
    Service Retirees Overall, actual number of deaths was generally within 3% of expectations excluding 2020 – 2021, but greater differences exist by group. Further review required to compare experience to the most recent published mortality tables but increases in rates of mortality generally results in lower liabilities.
    Disabled Retirees Actual number of deaths was similar to expected but differences exist by gender and group.
    Contingent Beneficiaries Actual number of deaths was greater than expected, especially for male beneficiaries.

    $242 billion
    Aug
    2022