Institutional Federal Compliance Report 2021

____________________________________________________________________________________________ STATE OF NEW YORK • 107

Discount Rate The discount rate used to measure the ERS and PFRS total pension liabilities as of March 31, 2017 was 7 percent, unchanged from the discount rate of 7 percent for the March 31, 2016 measurement date. The pro- jection of cash flows used to determine the discount rate assumes that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based upon these assumptions, the ERS and PFRS fiduciary net positions were projected to be available to make all pro- jected future benefit payments of current plan members.

Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The following presents the current period net pension liability of the State governmental activities, SUNY and Lottery calculated using the current period discount rate assumption of 7 percent, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is 1 percentage point lower (6 percent) or 1 percentage point higher (8 percent) than the current assumption (amounts in millions):

1%

Current

1%

Decrease

Assumption

Increase

(6%)

(7%)

(8%)

Governmental activities ERS net pension liability (asset) . . . . . . . . . . . . . . . . . . . . . . $ Governmental activities PFRS net pension liability (asset) . . . . . . . . . . . . . . . . . . . . . $ SUNY—ERS net pension liability (asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ SUNY—PFRS net pension liability (asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Lottery net pension liability (asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

12,077 $ 1,177 $ 1,630 $

3,781 $ 415 $ 510 $ 22 $

(3,233) (224) (436)

62 $ 15 $

(12) (4)

5 $

Voluntary Defined Contribution Plan The Voluntary Defined Contribution Plan (VDCP) is offered though the Teachers Insurance and Annuity Association (TIAA, formerly known as TIAA-CREF). TIAA is an Optional Retirement Program (ORP) and provides retirement and death benefits through annuity contracts to those employees who elected to participate in the ORP. The VDCP is a defined con- tribution pension plan. The SUNY ORP is the admin- istrator of the VDCP. Prior to March 16, 2012, a limited number of employees, most notably employees of SUNY and CUNY Senior Colleges, had the option of enrolling in this plan. Legislation signed into law on March 16, 2012, made the existing VDCP available to all eligible State employees who choose the plan as their retire- ment selection. The VDCP is available to unrepresented employees of New York State public employers who were hired on or after July 1, 2013 and who earn $75,000 or more on an annual basis. The VDCP includes a 366-day vesting period, after which a par- ticipant has full and immediate vesting in all retire- ment benefits provided by the annuities purchased through the employee and employer contributions. The employer and employee contributions are not deposited into accounts until the completion of the 366-day vesting period. Until that time, the funds are held in escrow by the Office of the State Comptroller. A participant who does not complete the vesting period is entitled to a refund of contributions, plus interest, upon request. The VDCP is the employee’s personal retirement account, and is supported by employer and employee contributions plus any applicable earnings.

A participant’s income in retirement will be determined by the account balance. The employee has the oppor- tunity for higher or lower retirement income based on his or her investment decisions and the performance of the investment options selected by the employee. The retirement income benefit will depend on several factors including salary, duration of contributions, investment earnings and age at retirement. Income is not guaranteed. Contribution rates are established by legislation passed by the State. Currently, the employer contri- bution of 8 percent of compensable salary is made to participants’ accounts while enrolled in this plan. For the first three years of membership, the employee contribution rate is based on the reported annual wage. After the first three years of membership, the employee contribution will be based on actual wages earned during the prior two years. Legislation signed into law on March 16, 2012 established the contribu- tion rates. Employee contributions increase in a pro- gressive fashion based on salary:

Employee Contribution

Annual Wage

Rate

$45,000 or less . . . . . . . . . . . . . . . . . . . . . . . $45,000 to $55,000 . . . . . . . . . . . . . . . . . . . . $55,000 to $75,000 . . . . . . . . . . . . . . . . . . . . $75,000 to $100,000 . . . . . . . . . . . . . . . . . . . More than $100,000 . . . . . . . . . . . . . . . . . . .

3.00% 3.50% 4.50% 5.75% 6.00%

Employer and employee contributions for gov- ernmental activities to the VDCP were $2.5 million and $1.9 million, respectively, for March 31, 2018.