§ 517 — Annuity reserve fund; pension accumulation fund

§ 517. Annuity reserve fund; pension accumulation fund. 1. The annuity\nreserve fund shall be the fund from which shall be paid all annuities\nand all benefits in lieu of annuities.\n 2. The pension accumulation fund shall be the fund in which shall be\naccumulated all reserves for the payment of all benefits with the\nexception of the annuities provided by the accumulated contributions of\nmembers, and with the exception of supplemental retirement allowances\npayable in accordance with section five hundred thirty-two of this\nchapter. Contributions to and payments from the pension accumulation\nfund shall be made as follows:\n a. On account of each teacher who is a member of the retirement system\nthere shall be paid annually into the pension accumulation fund by\nemployers, a certain percentage of the earnable compensation of each of\nsuch members of the retirement system to be known as the "normal\ncontribution" and a further percentage known as the "deficiency\ncontribution." The rates per centum of such contributions shall be fixed\non the basis of the liabilities of the retirement system as shown by\nactuarial valuations.\n b. On the basis of regular interest and of such mortality and other\ntables as shall be adopted by the retirement board, the actuary engaged\nby the retirement board to make each valuation required by this article\nduring the period over which the deficiency contribution is payable,\nimmediately after making such valuation, shall determine the uniform and\nconstant percentage of the earnable compensation of the average new\nentrant, who is a contributor, which if contributed on the basis of the\ncompensation of such contributor throughout his entire period of active\nservice, would be sufficient to provide for the payment of a death\nbenefit payable on his account and to provide at the time of his\nretirement the total amount of his pension reserve. The rate per centum\nso determined shall be known as the "normal contribution" rate. After\nthe deficiency contribution has ceased to be payable, the normal\ncontribution shall be the rate per centum of the earnable salary of all\ncontributors obtained by deducting from the total liabilities of the\npension fund the amount of the funds in hand to the credit of that fund\nand dividing the remainder by one per centum of the present value of the\nprospective future salaries of all contributors as computed on the basis\nof the mortality and service tables adopted by the retirement board and\non the basis of regular interest. The normal rate of contribution shall\nbe determined by the actuary after each valuation and shall continue in\nforce until a new valuation and certification.\n c. The actuary engaged by the retirement board shall compute the rate\nper centum of the total compensation of all contributors during the\npreceding school year which is equivalent to four per centum of the\namount of the total pension liability on account of all contributors and\nbeneficiaries not dischargeable by the aforesaid normal contribution\nmade on account of such contributors during the remainder of their\nactive service. The contribution derived by deductions at the rate per\ncentum, so determined or at a rate increased therefrom as hereinafter\nprovided shall be known as the "deficiency contribution." On the basis\nof the actuarial valuation as of the thirtieth day of June, nineteen\nhundred fifty-seven, the actuary shall determine the amount of the\npension liability which is not dischargeable by the funds in hand and\nthe present value of the normal and deficiency contributions otherwise\npayable. Such pension liability shall be known as the special\ndeficiency. The actuary shall determine the annual payment which if made\nin each fiscal year commencing with the year beginning the first day of\nJuly, nineteen hundred fifty-eight, for a period of thirty years will\nprovide for such special deficiency and the per centum of the total\ncompensation of all contributors during the preceding school year which\nis equivalent to such annual payment shall be known as the special\ndeficiency contribution rate. Notwithstanding anything to the contrary\nin this chapter, the special deficiency contribution rate for use in\ndetermining the annual payments to be made in each fiscal year\ncommencing with the year beginning with the first day of July, nineteen\nhundred sixty, shall be increased to liquidate the total unfunded\nspecial deficiency adjusted to include the prospective deficit in the\nannuity reserve fund as shown by the valuation as of the thirtieth day\nof June, nineteen hundred fifty-nine in the period originally set, and\nuntil the special deficiency so increased has been liquidated an annual\ncontribution at the increased special deficiency rate but not less than\nthe annual payment determined on the basis of the valuation as of the\nthirtieth day of June, nineteen hundred fifty-nine, shall be made by\nemployers in addition to the regular normal and deficiency\ncontributions.\n d. The total amount payable annually by all employers into the pension\naccumulation fund shall be certified by the retirement board to the\ncommissioner of education and such amount shall equal the sum of the\nrates per centum known as the normal contribution rate and the\ndeficiency contribution rate of the total compensation earnable by all\ncontributors during the preceding school year, provided that the amount\nof each annual deficiency contribution shall be at least three per\ncentum greater than the preceding annual payment. The aggregate of all\nsuch payments by employers shall be sufficient, when combined with the\namounts in the pension accumulation fund, to provide the pensions\npayable out of the fund during the year then current, and if not, the\nadditional amount so required shall be collected by means of an\nincreased contribution which shall continue in force for the period of\none year, anything to the contrary notwithstanding.\n e. The deficiency contribution shall be discontinued as soon as the\naccumulated reserve in the pension accumulation fund shall equal the\npresent value, as actuarially computed and approved by the retirement\nboard, of the total liability of such fund less the present value,\ncomputed on the basis of the normal contribution rate then in force, of\nthe normal contributions to be received on account of teachers who are\nat that time contributors.\n f. Any other provision of law to the contrary notwithstanding,\nbeginning with the valuation for the fiscal year ending June thirtieth,\nnineteen hundred seventy, the actuarial valuation of the liabilities,\nrequired by subdivision five of section five hundred eight of this\narticle, shall be made on the following basis:\n 1. On the basis of the valuation rate of interest and of such\nmortality and other tables as have been adopted by the retirement board,\nthe actuary shall determine, as of June thirtieth, nineteen hundred\nseventy, the additional accrued liability which exists as of that date,\non account of service rendered prior to that date, by reason of\nlegislation enacted during the years nineteen hundred sixty-eight,\nnineteen hundred sixty-nine and nineteen hundred seventy, affecting\narticle eleven of the education law. The actuary shall then determine a\nschedule of annual contributions which will amortize such additional\naccrued liability and interest thereon over a period of twenty-five\nyears. Such interest shall be at the rate of four and one-half per cent\nduring the first ten years beginning July first, nineteen hundred\nseventy and at the rate of four per cent thereafter, compounded\nannually. Each contribution after the first shall equal one hundred four\nper cent of the preceding contribution. Each year, the actuary shall\ndetermine a rate of contribution which is equivalent to the amount of\nthe contribution next due in accordance with the aforesaid schedule.\nHowever, in no event shall such rate of contribution be less than the\nrate of contribution determined in the first year in accordance with the\nprovisions of this subdivision. The amount of the contribution produced\nby such rate which is in excess of the amount required according to the\naforesaid schedule shall be added to the contingency reserve. Such\ncontingency reserve shall be maintained in the pension accumulation fund\nfor the purpose of providing for such future strengthening of the\nretirement system's reserve basis as the retirement board, upon the\nrecommendation of its actuary, deems appropriate.\n 2. On the basis of the valuation rate of interest and of such\nmortality and other tables as have been adopted by the retirement board,\nthe actuary shall compute the rate of normal contribution in the\nfollowing manner. From the total actuarial liabilities as of each\nvaluation date, there shall be deducted the sum of the funds in hand and\nthe present value of the remaining contributions still to be paid under\nthe provisions of sub-paragraph one of this paragraph. The remainder\nshall be divided by one per cent of the present value of the prospective\nfuture salaries of all members of the system, to obtain the rate of\nnormal contribution.\n 3. Notwithstanding any other provision of law to the contrary, for\ncontributions determined on the basis of the June thirtieth, nineteen\nhundred sixty-eight valuation and subsequent annual valuations, the\npayment of employer contributions pursuant to section five hundred nine\nof this article shall be discontinued and the lump sum actuarial cost\nattributable to the purchase of prior service, as authorized therein,\nshall be included in the actuarial liabilities used for the\ndetermination of the rate of normal contribution.\n 4. The retirement board is hereby empowered to re-establish employer\ncontribution rates based upon the annual valuation as of June thirtieth,\nnineteen hundred sixty-eight.\n g. All pensions with the exception of those payable to new entrants\nshall be paid from the pension accumulation fund and benefits provided\nunder section five hundred twelve, subdivision b, paragraph two and\nsection five hundred fourteen shall be paid from the pension\naccumulation fund.\n h. Upon the retirement of a new entrant, an amount equal to his\npension reserve shall be transferred from the pension accumulation fund\nto the pension reserve fund.\n i. The retirement board from time to time shall transfer from the\npension accumulation fund to the annuity reserve fund such amounts as\nare necessary under this article.\n