new york city retirement systems...new york city retirement systems experience study report march...

New York City Retirement Systems

Experience Study Report

March 12, 2018

Submitted by:

Colin England, FSA, EA, MAAA Kevin Binder, FSA, EA, MAAA (443) 703-2512 (443) [email protected] [email protected]

36 S. Charles Street, Suite 1000 Baltimore, MD 21201

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Table of Contents

Page

Transmittal Letter ..................................................................................................................................... 1

Section I Background and Summary of Results ........................................................................... 2

Section II Experience Study – Background of the Study ............................................................... 7 Process of preparing data and combining with GRS ...............................................7

a. Nature of Data Received ................................................................................. 7 i. GRS Data .................................................................................................. 7

ii. OA Data .................................................................................................... 8 b. Merging the Data ............................................................................................ 9

i. New Records ......................................................................................... 9 ii. Other Duplicate Records ..................................................................... 10

iii. Assigning a Status Code ..................................................................... 10 c. Updating the Data ......................................................................................... 11

i. Leave of Absence ................................................................................... 11 ii. Disability Retiree reclassification .......................................................... 11

iii. Processing the Data ............................................................................... 14 iv. Dividing the Database into Years .......................................................... 14 v. Creating Traces ...................................................................................... 14

d. Creating Experience Tables .......................................................................... 15 i. General Information for NYCRS ....................................................... 15 i. Mortality Lives Versus Amounts ....................................................... 15

ii. Retiree Mortality ................................................................................. 16 iii. Disability Mortality ............................................................................ 16 iv. Employee Mortality ............................................................................ 16 v. Retirement ............................................................................................ 16

vi. Withdrawal .......................................................................................... 17 vii. Disability Incidence ............................................................................. 17

viii. Total Salary Increases ......................................................................... 17 ix. Merit Salary Increases ......................................................................... 17 x. Overtime Experience ........................................................................... 17

e. Plan Specific Method ....................................................................................... 18 i. NYCERS – Specific Information ....................................................... 18

ii. TRS – Specific Information ................................................................ 25 iii. BERS – Specific Information ............................................................. 26

Bolton Partners, Inc.

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iv. POLICE – Specific Information ......................................................... 27 v. FIRE – Specific Information ............................................................... 27

Quality Control ............................................................................................................. 28 Difference in Method Between the GRS and Bolton .................................................. 29

Section III Experience Study – Detailed Results Economic Assumptions ................................................................................................ 32

a. Inflation Assumption .................................................................................... 32 b. Investment Return Assumption .................................................................... 37

Results, including confidence intervals, for NYCERS a. NYCERS Experience Analysis .................................................................... 47 b. Issues unique to the groups ........................................................................... 47 c. Mandated and Elected Retirement ............................................................... 48 d. NYCERS – GENERAL Members ............................................................... 49 e. NYCERS – TRANSIT Members ................................................................ 77 f. NYCERS – SANITATION ........................................................................ 109 g. NYCERS – CORRECTIONS Members ................................................... 132 h. NYCERS – TBTA Members ..................................................................... 154

Results, including confidence intervals for TRS a. TRS Experience Analysis ........................................................................... 179 b. Issues unique to TRS .................................................................................. 179 c. TRS .............................................................................................................. 179

Results, including confidence intervals, for BERS a. BERS Experience Analysis ........................................................................ 224 b. Issues unique to BERS ............................................................................... 224 c. BERS Members .......................................................................................... 224

Results, including confidence intervals, for POLICE a. POLICE Experience Analysis .................................................................... 266 b. Issues unique to POLICE ........................................................................... 266 c. POLICE Members ...................................................................................... 266

Results, including confidence intervals, for FIRE a. FIRE Experience Analysis ......................................................................... 294 b. Issues unique to FIRE ................................................................................. 294 c. FIRE Members ............................................................................................ 294

Recommended Changes ............................................................................................. 313

Section IV Impact of Proposed Revisions .................................................................................... 316


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Section V Actuarial Certification ................................................................................................ 317

Appendix Acknowledgements..................................................................................................... 318 Reconciliation of Participant Counts Between GRS and BP .................................... 319 Hypothesis Testing ..................................................................................................... 406 Experience Table Results ........................................................................................... 409 NYCERS ..................................................................................................................... 410 TRS .............................................................................................................................. 900 BERS ......................................................................................................................... 1013 POLICE ..................................................................................................................... 1126 FIRE .......................................................................................................................... 1218


Bolton Partners, Inc. 36 S. Charles Street Suite 1000 Baltimore, Maryland 21201 (410) 547-0500 (800) 394-0263 • Fax (410) 685-1924

Employee Benefits and Investment Consulting

March 12, 2018

The Honorable Scott M. Stringer New York City Comptroller Office of the New York City Comptroller One Centre Street New York, NY 10007

Re: New York City Retirement Systems – Experience Study

Dear Comptroller Stringer:

Bolton Partners, Inc. is pleased to present this Experience Study Report, which is a key deliverable under our first biennial engagement to serve as Independent Actuary under Section 96 of the New York City Charter.

This report summarizes the results of our review, which covered: Comparison of the NYCERS experience with Assumptions; Comparison of the TRS experience with Assumptions; Comparison of the BERS experience with Assumptions; Comparison of the POLICE experience with Assumptions; Comparison of the FIRE experience with Assumptions;

Overall, we found that the assumptions chosen by the Office of the Actuary (OA) reasonably model NYCRS’ experience. No significant assumptions are far enough from recent experience to currently require revision. However, we are likely to suggest that certain assumptions be revised as part of the next experience study, including the retirement assumptions (for Elected, Mandated and Early retirement), and the employee mortality and disability assumptions, along with other assumptions for certain groups.

We are available to answer any questions on the material in this report or to provide explanations or further details as appropriate. We are not aware of any direct or material indirect financial interest or relationship, including investments or other services that could create a conflict of interest, which would impair the objectivity of our work.

Respectfully submitted,

BOLTON PARTNERS, INC.

Colin England, FSA, EA, MAAA

Kevin Binder, FSA, EA, MAAA

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Section I: Background and Summary of Results

2 Bolton Partners, Inc.


Background

Bolton Partners, Inc. was retained by the New York City Comptroller’s Office to serve as Independent Actuary under Section 96 of the New York City Charter. The engagement relates to the five pension funds that collectively comprise the New York City Retirement Systems (NYCRS), which are:

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).

This engagement consists of the following projects:

Biennial Contribution Audits; Biennial Experience Studies; Two Administrative Reviews; Two Independent Actuary’s Statements.

This report summarizes our first Experience Study. The areas covered in the Experience Study include:

Comparison of the NYCERS experience with Assumptions; Comparison of the TRS experience with Assumptions; Comparison of the BERS experience with Assumptions; Comparison of the POLICE experience with Assumptions; Comparison of the FIRE experience with Assumptions.

We received a great deal of assistance from the staffs at the Office of the Actuary (OA) and the Office of the Comptroller. We could not have completed our work without drawing upon their expertise, and the additional information that shed light on certain anomalies in the demographic and economic experience. We are most appreciative of the time and effort spent by these staff members to provide information regarding issues affecting the experience of various groups. The names of those who assisted us are listed in Appendix A.



Summary of Results

NYC Summary of Experience Study Results

In our opinion, the observed experience does not require any immediate assumption changes. The experience of the assumptions that have a large impact on liability (service mortality, retirement, withdrawal, salary increases, overtime) were generally consistent with the current assumptions. However, in some cases, the experience varied significantly from the current assumptions, and it is very possible that we will recommend a change in assumptions if the 2016 and 2017 data shows similar experience. Other assumptions, such as employee mortality and accidental disability were very different than anticipated, but as these assumptions have little liability impact, we recommend that NYC wait for changes to be made to the other assumptions instead of making changes in a piece meal fashion.

Overall changes

We made some minor revisions in the measurement of the experience, to better match the measurement of the experience with the application of the assumption in the valuation:

We determined the overtime percentage based on the average of the beginning and end ofthe year salary, since this is the salary to which the overtime percentage would apply.

We determined the average overtime for all those employees who did not retire (Service orDisability) in the succeeding year.

We also added confidence interval graphs to indicate the significance of variation between experience and assumptions. We used a 95% confidence interval, meaning that the likelihood of the assumptions accurately representing the experience is less than 5% if the experience is outside of the confidence interval.

Service Mortality

The service and disability mortality experience for most of the groups was close to that expected by the current assumption. The exception was BERS which showed fewer deaths than expected. We intend, in the next experience study, to study the impact of weighting the mortality experience by benefit amounts rather than just lives and this change is expected to show lower observed mortality rates.

Employee Mortality

The number of deaths in service for virtually every group were significantly lower than the expected number of deaths. However, since this assumption has very little liability impact we currently recommend no change to this assumption.

Retirement

The number of normal retirements (that is, retirement with an unreduced benefit) for many groups was lower than anticipated. We have experienced this with many of our clients since the 2007 to 2008 Great Recession. This was particularly true for the Mandated retirement assumption for groups with both Mandated and Elected retirement. We anticipate that this is because those who were most interested in retirement were much more likely to elect to pay the additional employee



contribution to receive either the earlier or larger retirement benefit. The NYCERS Corrections group experienced lower than anticipated retirements for both Mandated and Elected employees. The number of BERS and FIRE retirements was also lower than anticipated.

Early Retirement

The number of retirements with reduced retirement benefits, which we refer to as Early Retirements, for virtually all groups was higher than anticipated. This assumption is expected to have little impact on the liabilities, so we are not currently suggesting any changes.

Withdrawal

The withdrawal (that is, employee departures other than for retirement, death or disability) experience for the NYCERS Correction and TBTA groups, as well as BERS was higher than anticipated. The withdrawal experience for the POLICE and FIRE was lower than the already low assumed withdrawal rates. The FIRE experience is not likely reliable, in the most important years, the years prior to vesting, due to the hiring freeze.

Ordinary Disability

The number of ordinary disabilities were generally less than the expected number of ordinary disabilities. This assumption has little liability impact, so we currently recommend no change to this assumption.

Accidental Disability

The number of accidental disabilities were less than half the expected number of accidental disabilities for nearly all groups. This assumption has very little liability impact, except for POLICE and FIRE. POLICE experienced less accidental disabilities than anticipated for both the WTC and Non-WTC eligible groups. FIRE experienced many more accidental disabilities than anticipated for both the WTC eligible and Non-WTC eligible groups. However, the incidence of disability for all other groups is relatively low, so we do not currently recommend any change.

Salary Increases

In general, the ten-year experience was in line with the expected rate of salary increases but salary increases over the four-year period were lower than anticipated. The NYCERS TBTA group had higher than anticipated salary increases. However, salary improvement was not sufficiently different from assumed, particularly when reflecting the most recent union contracts adopted, to warrant a current change to the assumptions.

Overtime

The Overtime experience was higher than anticipated for NYCERS General and Corrections employees and POLICE and FIRE. It is likely that the high FIRE Overtime experience was due to a hiring freeze rather than experience that is likely to recur over the long term. It is also likely that the Corrections experience is due to review and revisions of policies at Riker’s Island, which is not likely to reoccur. The Overtime experience was lower than anticipated for NYCERS Transit and TBTA groups.


Economic Assumptions

Inflation has been lower than the current long-term inflation assumption and continues to be

expected to remain below the current inflation assumption. Expected future investment experience

is consistent with the investment assumption. While we are not currently suggesting a change in

either assumption, it is likely that we will recommend a 25 to 50 basis point decrease in the

inflation and long-term rate of return on assumptions.

The following tables, 1) NYCERS and 2) NYCRS sans NYCERS summarize the assumptions that

we are likely (L) to suggest change, may (M) suggest a change and are unlikely (U) to suggest a

change. The final column provides the approximate impact of each change (Insignificant,

Significant or Very Significant.) The (L) in red are changes that would increase the liability, (L)

in black are changes that would decrease the liability.

The NYCERS groups are abbreviated as GEN (General), TRA (Transit), COR (Corrections), SAN

(Sanitation) and TBTA (Triborough Bridge and Tunnel Authority.

In addition to the suggested changes in the demographic assumptions, we are likely to suggest a

reduction to the long-term inflation and rate of return assumptions. A decrease in the long-term

inflation assumption would reduce costs, but not as much as a similar decrease in the rate of return

assumption would increase costs.

NYCERS

Experience Study Summary of Findings

Likely (L), May (M) or Unlikely (U) to Recommend Changes

Assumption GEN TRA SAN COR TBTA Impact

Service Retirement Mortality U U U L U Significant

Disability Retirement

Mortality

U U U L M Insignificant

Employee Ordinary Mortality L L L L M Insignificant

Unreduced Retirement L L L L M Very Significant

Reduced Retirement L N/A N/A N/A L Insignificant

Withdrawal U M U L L Significant

Ordinary Disability L U U L U Insignificant

Accidental Disability L M U M M Insignificant

Salary Increase M M L M L Very Significant

Overtime L L L L L Significant

Dual Overtime Retirement L L U L L Very Significant

Dual Overtime Disability L L L L L Significant



NYCRS Sans NYCERS

Experience Study Summary of Findings

Likely (L), May (M) or Unlikely (U) to Recommend Changes

Assumption TRS BERS POLICE FIRE Impact

Service Retirement Mortality U L U U Significant

Disability Retirement Mortality U L U U Insignificant

Employee Ordinary Mortality U L U L Insignificant

Unreduced Retirement U L U L Very Significant

Reduced Retirement L L N/A N/A Insignificant

Withdrawal U U L M Significant

Ordinary Disability U U L L Insignificant

Accidental Disability U U L U Insignificant1

Salary Increase U U U U Very Significant

Overtime N/A N/A L M Significant

Dual Overtime Retirement N/A N/A L M Very Significant

Dual Overtime Disability N/A N/A L M Significant

1 The accidental disability incidence is very low for all groups other than Police and Fire. Thus, any change to this

assumption has an insignificant effect, except for FIRE where the effect is significant, and for POLICE where the

effect is significant, but not as significant as for FIRE.


Section II: Experience Study – Background of the Study



Process of preparing data and combining with GRS

a. Nature of Data

We received the following for the demographic analysis.

Summary historical participant data prepared by the prior independent actuary, GabrielRoeder Smith & Company (GRS). We will refer to this as the Historical Data.

2014 and 2015 participant data from the OA that was initially provided to Conduent HRConsulting (Buck), for purposes of preparing the June 30, 2014 and June 30, 2015 actuarialvaluations.

2014 and 2015 Transmittal letters from the OA to Buck.

Historical Data

The Historical Data was not the original data that was provided to GRS or Buck. Rather it was a subset of the original data that had been prepared by GRS, for purposes of their experience study. We received separate files for the 5 retirement systems, NYCERS, TRS, BERS, POLICE and FIRE. These files included the following fields for the fiscal years ending in 2001 to 2013:

SSN Member number Pension Number Date of Birth Date of Birth of Beneficiary Date of Hire Date of Termination Date of Retirement Annual Base2 Pay Annual Overtime Annual Status Code Annual Tier Annual Service Field Annual WTC Status (FIRE and POLICE) Annual Group (NYCERS only) Annual Plan (NYCERS, TRS, BERS) Physically Taxing Employment Annual Code (NYCERS Only) Improved Plan Code (NYCERS Only)

The Historical Data does not include pension amounts and thus cannot be used to study retiree mortality experience by benefit amount.

The status codes (Annual Status Code and Annual WTC Status Code) had been adjusted by GRS to reflect information from later years. For example, if a participant had initially been reported as

2 Base pay included estimated OT for some groups.



a service retiree in the 2009 data, but reported as a disability retiree in 2010, the 2009 status code was changed from service retiree to disability retiree. Another common adjustment was the treatment of employees who were on leave of absence. If the employee on leave of absence later left, their status was retroactively changed to termination, while if they returned to service their status was changed to employee. There is detailed documentation of the status codes adjustment in the GRS Report3.

2014 and 2015 Data

We received more than one participant data file for each system from the OA. For NYCERS and TRS we received 3 files.

Actives, Active/Inactives and Terminated Vesteds Retirees Designated Annuitants

The BERS data included only the Active and Retirees files, and did not include a separate Designated Annuitants file.

For each of POLICE and FIRE we received 4 files:

Actives, Active/Inactives Terminated Vesteds Retirees Sub Chapter 1 Retirees Sub Chapter 2

The data was complete, and included certain fields that are not needed for the study (e.g. OPEB code). The documentation provided with the transmittal letter by the OA to Buck4 included the following:

Appendix A containing a record layout, which provides a key to some of the codes (e.g.MSTATC, is the current status and a description of each number that populated that field,e.g. 10 for Active).

Appendix B containing flowcharts showing the process followed in the development ofeach set of files.

Appendix C contains metrics for each Employee Group. Appendix D reconciles each Employee Group from the prior year to the current year. Appendix E lists data issues researched by the OA and explains the actions taken by the

OA to prepare the data for the valuation.

In processing the data, we noted that there were duplicate Social Security Numbers (SSNs) particularly for records included in both the active and retiree files. In general, we noted that these

3 New York City Retirement Systems Actuarial Audit and Related Review Services Independent Actuary’s Statement prepared by GRS and dated October 2015. We will refer to this as the GRS Report. 4 As noted above, Buck, now known as Conduent, assists the OA with the preparation of the annual actuarial valuations.



duplicate records were for participants who had retired and should be reflected as retirees and we only considered the retiree record.

When retirees die, and are replaced by a beneficiary, the SSN used is generally the beneficiary’s, and not the participant’s. However, in many cases the participant’s (retiree’s) Pension ID is not present in the beneficiary information, thus we are unable to easily associate beneficiaries with prior retirees. Other characteristics of the data will be noted as we discuss the preparation of the experience tables.

b. Merging the Data

Process to Merge New Year Data to Historical Data Base

The general process is as follows:

First, we updated the Historical Data records that match with the 2014 or 2015 data to append the new information. The new information that was updated includes the following:

Annual Base Pay Annual Overtime Pay Annual Status Code Annual Tier Annual Service Field Annual WTC Status (FIRE and POLICE Only) Annual Group (NYCERS only) Annual Plan (NYCERS, TRS, BERS) Physically Taxing Employment Annual Code (NYCERS Only) Improved Plan Code

(NYCERS Only) We added pension amounts for annuitants so that amount based mortality experience can

be studied in the future.

Most of the GRS records that were not found in the new data, were employees who died several years ago. For example, there are 26,611 records in the (POLICE) Historical Data that do not appear in the 2014 data. The status for those records in 2013 are as follows:

1. Death (D, D1, or D2) 19,443 records 2. Accidental Disability 1 record 3. Retirement 2 records 4. Termination 396 records 5. No Status (Blank) 6,769 records

New Records

Employees that were not found in the historical data were added to the database. In some cases, there were two new records for the same employee. This generally occurred when there were separate records in the Active and Inactive file. When this occurred, we retained the active record and did not include the inactive record.



Other Duplicate Records

There were a handful of duplicate records, other than those mentioned above. For example,

consider the case of two retirees married to each other included in the data in year x. During year

x, retiree 2 dies. Retiree 1, in addition to receiving their retirement benefit, is the beneficiary of

retiree 2. The member number of retiree 2 was changed to the member number of retiree 1 (the

surviving spouse.) However, while the member number changes when a beneficiary receives the

benefit instead of the retiree, the employee number does follow the retiree even after he or she

dies. In these cases, we could use the employee number to determine that retiree 2 had died and

that retiree 1 was receiving two checks, one as a retiree and one as a beneficiary of his or her

spouse. In such cases we discarded the beneficiary record (in this case of retiree 2) and kept the

retiree record (of retiree 1.) There was also a handful of other duplicate records but it was not

material to the results.

Assigning a Status Code

There were multiple OA status codes that we did not need for the analysis. For example, there are

4 OA retiree codes in the data, (1) early retirement, (2) retired in the first year of eligibility, (3)

retired in the second year of eligibility and (4) retired after the second year of eligibility. We

assigned a smaller number of codes for our analysis. The following table maps the OA codes to

the codes used for our analysis.

Mapping of Status Codes

End of Year

OA Codes Study Codes Comments

10 A Active

20 C Leave of Absence – See discussion

below

60 D1 Ordinary Death

61 D2 Accidental Death

70 I Ordinary Disability

71 J Accidental Disability

80 T Terminated

81 V Terminated Vested

90 R Retired

91 R Retired

92 R Retired

93 R Retired



c. Updating the Data

Data Adjustments

We performed two data adjustments, one for leave of absence employees and a second for

disability retirees, as described below.

Leave of Absence

There are two possible outcomes for each employee on a leave of absence.

• The employee could return to active employee status

• The employee could not return, due to retirement, termination, disability or death.

Consistent with the GRS Report, if an employee was on a leave of absence status for more than

two years we assumed that the employee would not return, and treated them as having withdrawn

from the plan.

Employees on a leave of absence are initially assigned a status of C. If the employee returns to

active status the C code is changed to a B, retroactive to when the leave of absence started. For

example, if an employee was active in 2012, on a leave of absence in 2013 and active in 2014, the

2013 code was changed from C to B. Employees with the B code in their record are not counted

as a termination and are included as an employee exposure for the withdrawal decrement.

If the employee becomes a terminated or terminated vested employee in the year following the

leave of absence or if the employee remains in the Leave of Absence code for more than 2 years,

then the C code is changed to an F retroactive to the commencement of the leave of absence.

Employees with an F code are treated as terminations.

In the last two years of the employee data included in the study, when it is not clear whether the

employee in leave of absence will return or not return the employee’s status code remains a C

code. Employees with a C code are counted as exposures for withdrawal, but not as having

terminated.

Disability Retirement

A retired employee could be approved for disability retirement benefits one or more years after the

initial service retirement. In these cases, these participants are initially reported as one of the

retirement codes, 90-93. However, in subsequent years they are reported as a disability retirement.

Consider the following example,

Year Status Code Updated Code

2009 A – Active A – Active

2010 R – Retired J – Accidental Disability

2011 R – Retired J – Accidental Disability

2012 J – Accidental Disability J – Accidental Disability



In this case, the participant’s status in 2010 appeared to be a service retirement. However, by 2012

the retirement was reclassified as an Accidental Disability. Thus, we edited the 2010 status so that

the retirement is treated as an accidental disability instead of a service retirement.

The flowchart summarizes the steps taken to merge and adjust the FIRE data. The process was

similar for the other groups.

12Bolton Partners, Inc.


Updating Historical Data with New Experience Data (FIRE)

Data is complete.

Start with GRS

Historical Data.

Add 2014 data

for active

members in the

GRS table.

Add records

and 2014 data

for active

members not in

GRS table.

Add 2014 data

for pension

members in the

GRS table.

Add records

and 2014 data

for pension

members not in

GRS table.

Remove less

relevant

duplicates from

table.

Remove

duplicates from

2014 Sub‐

Chapter 1

Add 2014

experience

for Sub‐

chapter 1.

Add 2014

experience

for term ‐

vested.

Add 2015 data

for active

members in the

GRS table.

Add records

and 2015 data

for active

members not in

GRS table.

Add 2015 data

for pension

members in the

GRS table.

Add records

and 2015 data

for pension

members not in

GRS table.

Create list of

2015 pension

duplicates.

Remove

duplicates from

2015 pension

records in GRS.

Add 2015

experience

for Sub‐

chapter 1.

Add 2015

experience

for term ‐

vested.

Add dates and

genders for

new records.

Make a table

for new SSNs

with all field.

Add GRS

status codes.

Add fields to Sub

– Chapter 1 to

determine status.

Add GRS status

codes to Sub –

Chapter 1.

Pick most

relevant status (if

more than one).

Add the 2014 &

2015 GRS fields

to the historical

data.

Add pension

amounts to

GRS data.

Manually

update vested

status when

necessary.

Add WTC_Elig

for vested

members to

GRS data.

Ensure data is

in correct

format.

Update LOA codes.

Change Status

“R” to “J” when

applicable.

Update inconsistent

status.



Processing the Data

After we merged and updated the participant data, we processed the data to prepare the experience analysis. Our guiding principal in deciding on how to process the participant data and prepare tables comparing assumptions to actual experience was to ensure that the methods used to process the data to determine the experience for that decrement are consistent with how the decrement assumption was used in the valuation programming, whether for decrements, salary improvement or overtime assumptions.

Dividing the Database into Years

The initial database we prepared includes the status for each participant from 2003 to 2015. Where applicable the database also includes pay, overtime and other relevant information. The first step of the data processing is to create separate records for each exposure year. For example, consider an employee born in 1970 hired in 2005 and who terminated in 2009. Our software created the following 5 records from the one summary record.

Year Age Service Status at Beginning of Year

Status at End of Year

2005 35 0 Active Active2006 36 1 Active Active2007 37 2 Active Active2008 38 3 Active Active2009 39 4 Active Terminated

Consistent with the valuation coding the age assigned was age nearest birthday on the valuation date, and the service assigned was similarly service nearest year on the valuation date. For example, if a member was age 34 and 10 months, with 5 months of service on the valuation date, they would be categorized as age 35 with 0 years of service.

Creating Traces

A Trace is the term we use for a date reconciliation. Once the original source records were divided into separate records by year, all of the records extracted for a given year (e.g. the 2012 records that included the 2012 and 2013 statuses), were collated based on status as of the beginning of the year and status as of the end of the year. The Traces for the most recent two years were compared to the data reconciliations prepared by the OA. This provided an important check of our coding.



d. Creating Experience Tables General Information for NYCRS The experience tables created varied by plan, generally because of differences in the assumptions between plans based on the differences in plan provisions, as determined by the OA in choosing assumptions. The following table summarizes the tables created, by plan. NYCERS TRS BERS POLICE FIRE Retiree Mortality x x x x x Disability Mortality x x x x x Ordinary Employee Mortality x x x x x Accidental Employee Mortality x x x x x Retirement First Year of Elig. x x x x x Retirement Second Year of Elig. x x x x x Retirement After Second Year of Elig. x x x x x

Early Retirement x x x Withdrawal x x x x x Ordinary Disability x x x x x Accidental Disability x x x x x Total Salary Increases x x x x x Real Salary Increases x x x x x Overtime x x x Dual Overtime Retirement x x x Dual Overtime Disability x x x

We created early retirement experience tables for all groups except POLICE and FIRE because these plans do not provide early retirement benefits. We did not analyze overtime experience for TRS and BERS because these plans do not include overtime in the average pay computation used to determine the retirement or other benefits. In this section, we document the general method we used to create these experience tables. Plan specific information will be provided later in the report. Mortality Lives Versus Amounts We determined the mortality experience by lives, rather than weighted by benefit amounts. We believe that mortality experience studies should be weighted on benefit amounts, not simply lives, because pension plan liabilities are determined using the benefit amount (typically the benefit amount the retired participant is currently receiving.) However, the retirees’ benefit amounts were not included in the Historical Data, so we do not yet have the benefit amount data to study mortality experience by benefit amounts. However, we added the retiree annuity amounts to the database for the most recent two years and for the next study will compare the amounts based experience to the lives based experience for the 4 available years. Based on our experience, typically amount-based mortality rates are 5 to 15 percent lower than lives-based mortality rates.



Retiree Mortality: The exposures are the number of retirees, and the deaths include retirees who change to a beneficiary status in addition to those who change to a deceased status. Note that we did not study Beneficiary mortality, because we cannot easily tell retired participants from beneficiaries, as noted above. Disability Mortality: The exposures are the accidental or ordinary disability retirees; the deaths include those who became beneficiaries in addition to those who change to a deceased status. Employee Mortality: All employees were eligible for accidental death benefits. Accordingly, all employees were included in exposures for accidental deaths, the deaths included those who had the OA code 61 or D2 in the Historical Data. Some of the plans had service requirements to receive ordinary death benefits. In this case, we generally included only those with sufficient years of service to be eligible for the ordinary death benefits in our analysis. However, we had the same issues with rounding and data irregularities that we had with the number of retirements discussed in the Retirement decrement below, and addressed this problem in the same fashion as we did for the Retirement decrement. Retirement: The use of the age nearest or service nearest convention has implications for determining the exposures for eligibility for retirement. For example, suppose employees are eligible for retirement with 20 years of service. Employees with 18.50 to 19.49 years of service are treated as having 19.0 years of service. Employees with 18.5 to 18.99 years of service would not be eligible to retire within the year. However, employees with 19.0 to 19.49 would become eligible to retire within the year. We included in the number of exposed employees only those employees who met the age and service criteria as eligible to retire. In the example above we included those with 20 years of service as eligible to retire. There were employees who retired who did not appear to meet the retirement eligibility requirements. We reviewed samples and determined that most of these retirees could have met the age and or service requirement but due to the rounding convention (nearest on the valuation date) used in the pension valuation had their service rounded down (e.g. an employee with 19.2 years of service with a 20-year service retirement requirement would have been eligible to retire at the end of the year, but could not be separated in the valuation program from an employee with 18.6 years of service who was also rounded to 19 years of service at the beginning of the year) to an age or service which would not be retirement eligible. Thus, we added these employees to the other employees eligible to retire based on their age and years of service as both exposures and retirements. There were also some new retirees, who based on the data available should not have been eligible to retire. We assumed that there was additional information in the plan’s records that corrected the data present in the database for these participants. The new retirees who did not appear to meet the age and service requirements were added to both the exposures and the retirements. For example, if there were 1,000 employees who appeared eligible to retire and 100 of the 1,000 employees retired, and there were an additional 18 employees who retired but who did not appear



to meet the eligibility requirements due to rounding of either age or service and there were 2 new retirees who appeared to have had more complete data available to the plan than was in the Historical Database, then our experience tables showed (i) 100 plus 18 plus 2 (or 120) retirements, and (ii) 1,000 plus 18 plus 2 employees eligible to retire (or 1,020 exposures.)

Withdrawal: Employees who were not eligible to retire were included in withdrawal exposures. We included leave of absence employees with a B (returned to work) or C (not yet determined if they will return to work) as exposures.

Participants with a with an OA Status code of 80 (terminated) or 81 (vested) as well as those with a F code (leave of absence employees who never returned to work) were treated as withdrawals.

Disability Incidence: All employees were eligible for accidental disability benefits. Accordingly, all employees were included in exposures, the disabilities included those who had the OA status code 71 or J in the historical data.

Some of the plans had service requirements to receive ordinary death benefits. In this case, we generally included only those with sufficient years of service to be eligible for the ordinary death benefits in our analysis. However, we had the same issues with rounding and data irregularities that we had with the number of retirements discussed in the Retirement decrement above, and adjusted the results in the same fashion.

Total Salary Increases: For all plans, other than TRS and BERS, the pay used in determining benefits includes assumed overtime. For NYCERS, POLICE and FIRE the “base salary” field provided by the OA is the sum of the actual base salary as of the last pay period and the expected amount of overtime. To obtain the “adjusted base salary” we divided the “base salary” by one plus the expected overtime percentage. The adjusted base salary was used to determine salary increases.

Merit Salary Increases: The Merit Salary Increases are equal to the Total Salary Increases divided by the recent inflation rate. Based on recent CPI increases, recent inflation was assumed to be 1.5 percent per annum over the last four years.

Overtime Experience

There are three types of overtime table (OT) 1) Dual Retirement – the OT in the year prior to retirement2) Dual Disability - the OT in the year prior to disability3) All Other OT experience5

The adjusted base salary is as of the last pay period, that is the beginning last day of the plan year (i.e., the 2015 pay is the pay rate as of June 30, 2015.) Because overtime is paid throughout the year we determined overtime as a percentage of pay by dividing overtime pay by the average of the prior year’s and current year’s adjusted base pay.

5 Note that in the 2015 participant data we do not yet know who will retire (either service retirement or disability retirement) so we have included all employees in the All Other OT experience.



We considered only employees with overtime in the experience study. There are a relatively small number of POLICE and FIRE employees who are not eligible for overtime. We assumed that all POLICE and FIRE employees with zero overtime were not eligible for overtime, and excluded them from determining the average overtime increase. Some NYCERS employees are not eligible for OT. The OA supplied us with a file of 31 CBA codes used for employees who are not eligible for OT. In preparing the data for Buck, the OA loads the base pay by the OT assumption for the OT eligible employees but does not apply the OT percentage load to the employees not eligible for OT. The 2015 NYCERS file included 13,692 employees with those codes. We note that 693 of these employees did in fact receive OT in 2015, leaving 12,999 employees with zero OT who we understood to not be eligible for OT. However, there were an additional 50,370 OT eligible employees who received no OT in 2015. In 2015, there were 132,278 employees in NYCERS general. Since less than 15 percent of the employees were not eligible for OT, and we were not clear on the employees who should have been excluded from the OT calculations, we included all employees in the employee exposures to determine the OT experience.

We only considered employees who had a complete year of service. In other words, we only considered employees who had an adjusted base pay and a prior year adjusted base pay. For the Dual Retirement and Dual Disability tables this would be based on the OT in the year prior to retirement. For example, for an employee who had a retirement code for the first time in 2015, we looked at the OT pay in 2014. The Dual Overtime experience was equal to the 2014 OT pay divided by the average of the 2013 and 2014 adjusted base pays. Thus, the Dual OT experience is for the 4-year and 10-year periods ending June 30, 2014. Dual Retirement and Dual Disability employees were not considered in the general OT experience.

e. Plan Specific Method NYCERS – Specific Information NYCERS has separate assumptions for 5 groups of employees.

General Transit Sanitation Correction Triborough Bridge and Tunnel Authority (TBTA)

Accordingly, we studied each group separately, and it was necessary to divide the data into 5 separate groups.



Assigning Participants by Groups

However, in the Historical Data the Group codes varied from year to year. The following table provides the Group codes provided by year.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 COF COF COF COF COF COF COR COR DAI COR Cor Cor Cor Cor CAP CAP DAI EMT Gen DAI Gen Gen Gen Gen Cor Cor EMT GEN SDA GEN San San Tra San OTH OTH FAD SAN TRA TRN SPO SPO San Tra SPO SPO GEN SDA TRN SAN Tra Tra SPO SPO SAN SAN SAN TBT COR TRA

AUT AUT AUT AUT TOP TOP SDA TRN EMT SDA DAI DAI DAI DAI PCT PCT TRN DAI TBT TBT EMT TBT TBT TBT AUT AUT CAP FAD SAN EMT HPT6 EMT EMT EMT Gen Gen TOP CAP FAD FAD OTH OTH OTH OTH DAI DAI COF TOP HPTP HPTP TBT HPT TOP TOP DSH DSH SPO COF TBTA TBTA FAD TOP HPT HPT EMT EMT TBT SPO TOP FAD FAD FAD FAD FAD OTH OTH

TBT TBT PCT PCT Tra Tra Tra Tra COP HPT AUT AUT HPT COP DSH DSH

HPT HPT COP COP

6 HPT and HPTP were excluded from the experience study analysis, so they were not mapped to any other group.



In general, we used the mapping shown in the following table to assign the participants by NYCERS group. Data Base Group Code

Bolton Code

Group Comments

AUT Gen General Auto Mechanics DAI Gen General District Attorney Investigators DSH Gen General Deputy Sheriffs EMT Gen General Emergency Medical Technicians FAD Gen General Fire Alarm Dispatchers Gen Gen General OTH Gen General Others from tbt and gen PCT Gen General Police Communication Technicians

SDA Gen General Special Officers, Auto Mechanics, Deputy Sheriffs and Police Communication Technicians

SPO Gen General Special Officers COP TRA Transit Capital Project-Operating TOP TRA Transit Transit Operating Tra TRA Transit TRN TRA Transit Transit Authority San SAN Sanitation Sanitation CAP Cor Correction Correction Captains COF COR Correction Correction Officers Cor Cor Correction Corrections TBT TBT TBTA TBTA TBT TBTA

Most participants with an OTH code were placed in the General group. However, we noticed that there were a substantial decrease in TBTA employees in 2009 and 2010 and determined that the missing TBTA employees were assigned an OTH Code. There were 722 Participants with a TBTA code in 2009 and an OTH code in 2010, and there were 660 participants with an OTH code in 2011 and a TBTA code in 2012. Thus, we switched the OTH codes to TBTA for these participants. All other OTH participants were assigned to the General plan. Participants with a blank code were also put in the General group.



The following table summarizes the number of participants with a blank Group code by status and year. NYCERS Participants with No Group Code by Year and Status 2010 2011 2012 2013 Active 8,576 16,431 - - Leave of Absence - 155 - - Ordinary Disability - - 8,786 9,038 Accidental Disability - - 4,281 4,267 Retired - - 99,276 110,680 Beneficiary - - 3,292 3,701

Transfers Between Groups A small number of participants transferred between groups. For example, the following table shows the number of Active Employees who transferred between 2014 and 2015 as well as the total number of employees. Number of NYCER Employees Who Transferred between 2014 and 2015 Group Number of Transfers Total Number of Employees General 242 132,455 Transit 60 35,222 Sanitation 1 7,043 Correction 24 8,612 TBTA 1 1,433

No adjustments were made for transfers. For example, an employee who transferred from Sanitation to General in 2010, would be a Sanitation employee exposure in years prior to 2010 and a General employee exposure after 2009. Because of the relatively small numbers of transfers, the impact of transfers in not material to the results of this study.



Plan Codes

Within each group there are tiers of employees and there can be more than one Retirement Plan within the Tiers and Groups. The Retirement Plans have different service retirement eligibility provisions and different ordinary disability eligibility provisions. The following tables summarizes NYCRS provisions by Group, Tier and the retirement and ordinary disability age and service requirements.

NYCERS Plan Codes Retirement Eligibility Unreduced Unreduced Reduced

Ordinary Disability

Plan Description in Data Key CAFR description Age Svc Age Svc Age Svc

A CPP (Plan “A”) 55 25 10 B ISF (Plan “B”) 55 0 10

C

Modified CPP (Plan “C”)

MODIFIED CAREER PENSION PLAN (PLAN C)

62 25 55 25 10

D

Modified ISF (Plan “D”)

MODIFIED INCREASED SERVICE FRACTION PLAN (PLAN D)

62 5 55 5 10

E Original Tier 3 Plan

RETIREMENT PLAN FOR GENERAL MEMBERS

62 5 55 5 5

F Basic 62/5 BASIC 62/5 PLAN 62 5 55 5 10

G

Fire Alarm Dispatchers

DISPATCHER 25-YEAR RETIREMENT PLAN (DIS-25)

0 25 10

H

Correction Capt. – Imp Plan

CORRECTION CAPTAIN 20-YEAR RETIREMENT PLAN (CC-20)

0 20 5

I 57/5 Plan

57/5 PLAN – CHAPTER 96 OF THE LAWS OF 1995

57 5 10

J

Emergency Medical Technicians

EMERGENCY MEDICAL TECHNICIAN 25-YEAR RETIREMENT PLAN (EMT-25)

0 25 10

K

DA Investigators - 25 Year Plan

25-YEAR RETIREMENTPLAN FOR DISTRICTATTORNEYINVESTIGATORS(25IDA)

0 25 10



NYCERS Plan Codes

Retirement Eligibility Unreduced Unreduced Reduced

Ordinary Disability


L Special Officer

SPECIAL OFFICER 25-YEAR RETIREMENT PLAN (SPO-25)

0 25 10

M

Sanitation - Improved Plan

UNIFORMED SANITATION 20-YEAR RETIREMENT PLAN (SA-20)

0 20 10

N 55/25 Plan

55/25 PLAN – CHAPTER 96 OF THE LAWS OF 1995

55 25 62 5 10

O POLICE 0 0 10

P

Correction Off. – 25 Year Plan

UNIFORMED CORRECTION FORCE 25-YEAR PLAN

0 25 62 5 5

Q

Correction Off. – Imp Plan

UNIFORMED CORRECTION OFFICER 20-YEAR RETIREMENT PLAN (CO-20)

0 20 5

R

TBTA - 50/20 Plan

TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY 20-YEAR / AGE-50 RETIREMENT PLAN (TBTA-20/50)

50 20 10

S Deputy Sheriffs

NYC DEPUTY SHERIFFS 25-YEAR RETIREMENT PLAN (DSH-25)

0 25 10

T

Auto Workers

AUTOMOTIVE SERVICE WORKERS 25-YEAR / AGE-50 RETIREMENT PLAN (AUT-25)

50 25 10

U

Transit - Improved Plan

TRANSIT 25-YEAR / AGE-55 RETIREMENT PLAN (T2555)

55 25 62 5 10

V

Police Communications Techs

POLICE COMMUNICATIONS (911) TECHNICIANS 25-YEAR RETIREMENT PLAN (PCT-25)

0 25 10



NYCERS Plan Codes

Retirement Eligibility Unreduced Unreduced Reduced

Ordinary Disability


W

DA Investigators - 20 Year Plan

20-YEAR RETIREMENT PLAN FOR DISTRICT ATTORNEY INVESTIGATORS (20IDA)

0 20 10

X

Correction - 20 Year Plan

UNIFORMED CORRECTION FORCE 20-YEAR RETIREMENT PLAN (CF-20)

0 20 5

Y 63/10 Plan 63 10 10

Z Assumed 62/5 or 57/5 Plan for

57 5 10

Chapter 96 of the laws of 1995, gave employees the option of selecting to join potentially more valuable retirement plans in return for higher employee contributions. For purposes of valuing plan liabilities, different retirement assumptions apply to the employees that elected the improved retirement benefits than those who stayed in the old Plans. The NYCERS data field “Improved Plan Code” was used to distinguish between employees who did not elect the new plans (Mandated) and those who elected the new plans (Elected). Employees hired after 1995 were not given a choice of plans and receive Mandated retirement benefits. The terms Mandated and Elected are used throughout our report to distinguish between these two groups of employees. For the Transit, Sanitation, Corrections and TBTA both the Mandated and Elected have the same retirement eligibility. NYCERS General employees have different retirement eligibility for Mandated and Elected retirement. Mandated and Elective retirement was studied separately. The NYCERS data field “Improved Plan Code” was used to distinguish between Mandated and Elected retirement. Some NYCERS employee are not eligible for Overtime (OT). The OA supplied us with a file of 31 CBA codes used for employees who are not eligible for OT. In preparing the data for Buck, the OA loads the base pay by the OT assumption for the OT eligible employees but does not apply the OT percentage load to the employees not eligible for OT. The 2015 NYCERS file included 13,692 employees with those codes. However, there were an additional 50,370 OT eligible employees who received no OT in 2015. (693 of these employees did in fact receive OT in 2015), leaving 12,999 employees with zero OT who were not eligible for OT). In 2015, there were 132,278 employees in NYCERS general. Since less than 15% of the employees were not eligible for OT, we included all the employees in the denominators used to determine the OT experience.



TRS – Specific Information As with NYCERS, TRS has several groups with different retirement eligibility provisions. We studied the retirement experience separately for Mandated7 and Elected groups. Unlike NYCERS, the determination of who is eligible for Mandated retirement is on a group by group basis. We included all groups in the Mandated experience except group G. The following table summarizes the Group Codes and their retirement eligibility. TRS Summary of Retirement Eligibility by Plan

Plan Name Mandated Unreduced Retirement

Unreduced Retirement

Reduced Retirement

Age Svc Age Svc Age Svc A CPP Yes 55 5

B ISF Yes 55 5

C Modified CPP

Yes 62 25 55 30 55 5

D Modified ISF Yes 62 5 55 5

F Tier IV Yes 62 5 55 30 55 5

G Ch19/08 55/25 Plan

No 62 5 55 25 55 5

H Ch19/08 55/27 Plan

Yes 62 5 55 27 55 5

I8 Ch504/09 55/27 Plan

Yes 62 10 55 27 55 5

J Ch18/12 (Tier 6)

Yes 63 10 55 10

O Other Yes 62 5

7 Mandated and Elected Retirement are two categories of benefits provided as an option to employees as part of a significant change in benefits as part of Chapter 96 of the law in 1995. This is explained in Section III Experience Study – Detailed Results, under Results for NYCERS 8 We assumed all members in Plan I are UFT members with 10 years of service required for vesting.



BERS – Specific Information As with NYCERS and TRS, we studied the retirement experience separately for “Mandated” and “Elected” Retirement groups. As with TRS, the determination of Mandated or Elected Retirement is on a Plan by Plan basis. BERS has several groups with different retirement eligibility provisions. The following table summarizes the Group Codes and their retirement eligibility. The Mandated column indicates whether we applied the Mandated or Elected categories in the retirement experience. BERS Summary of Retirement Eligibility By Group

Plan Name Mandated Unreduced Retirement

Unreduced Retirement

Reduced Retirement

Age Svc Age Svc Age Svc A CPP Yes 55 25 B ISF Yes 55 25

C Modified CPP Yes 62 5 55 25

D Modified ISF yes 62 5

F Tier IV yes 62 5 55 5 55 5

G Ch96 – Tier II no 62 5 55 25

H Ch96 – Tier IV no 62 5 55 25 - -

I 57/10 yes 62 5 57 5 57 5

J Tier II Ch19/08 55/25

no 62 5 55 25 57 5

K Tier IV Ch19/08 55/25

no 62 5 55 25 - -

M Chapter 96 Tier IV yes 62 5 57 5 57 5

P Chapter 19/08 yes 62 5 55 27 - -

Q Chapter 504/09 yes 62 10 55 27 - -

R Chapter 18/2012 (Tier 6)

yes 63 10 55 10

T Special Officers yes - 25 25 - -



POLICE - Specific Information The POLICE data included a WTC code. The accidental disability incidence was studied separately for those with and without a WTC code. The WTC code included the following values:

WT – WTC Disability/Death Benefit Application was filed TC – WTC Disability Benefit was approved by the Board of Trustees. TD – WTC Death Benefit was approved by the Board of Trustees.

The only WTC code found in the employee data was the WT code. The TC and TD codes were only found in the retiree data. The analysis included those who had applied for the designation but who may or may not be approved for the benefit. In the 2015 retiree data there were 515 participants with either the TC or TD code indicating that they had been approved for the WTC benefit and 16,061 with the WT code who have applied and have not yet been approved for the WTC benefit. FIRE - Specific Information The FIRE data also included a WTC code and we studied the accidental disability incidence separately for those with and without a WTC code.

WTA – WTC Disability/Death Benefit Application was filed WTB – WTC Disability/Death Benefit Application was verified TC – WTC Disability Benefit was approved by the Board of Trustees. TD – WTC Death Benefit was approved by the Board of Trustees.

In the 2015 data 444 employees had a WTA code and 4,605 had a WTB code. Only employees with a WTB code were included in the WTC analysis. The TC and TD code were not found in the active or inactive data. In comparing the WTC codes over the years, we noticed there were employees who had the WTC code in earlier years but not in later years. The WTC code was removed for employees who had the WTC code in earlier years but not later years. Conversely employees who did not have a WTC code in earlier years but had a WTC code in later years were changed to WTC eligible for all years.



Quality Control The experience study involved 5 plans, and the NYCERS plan was further divided in 5 groups for a total of 9 sets of data. Within each group we studied the experience shown in the table below. For each group we looked at 4, 10 and year-by-year experience. For all but FIRE and NYCERS Sanitation, we looked at male and female experience separately. For NYCERS, TRS and BERS, we studied Mandated and Elected retirement experience separately. For POLICE and FIRE, we studied WTC and Non-WTC disability separately. The following table summarized the number of tables generated, by decrement and plan. Decrement NYCERS TRS BERS POLICE FIRE Retirement Mortality 31 7 7 7 3 Disability Mortality 31 7 7 7 3 Employee Mortality- Ordinary 31 7 7 7 3 Employee Mortality - Accidental

12 3 3

Retirement in First Year 54 18 18 6 2 Retirement in Second Year 54 18 18 6 2 Retirement after Second Year 59 19 19 7 3 Reduced “Early” Retirement 15 7 7 Withdrawal 31 7 7 7 3 Ordinary Disability 31 7 7 7 3 Accidental Disability 31 7 7 13 5 Salary Growth 25 5 5 5 5 Real Salary Growth 20 4 4 4 4 Overtime 25 5 5 Dual Overtime (Retirement) 20 4 4 Dual Overtime (Disability) 20 4 4

The table shows a total of 860 tables. These tables are included in Appendix 4, separated by plan. The table does not include the graphs and confidence intervals that we generated to more clearly show results of the experience study. Ensuring quality control for so many tables and graphs, is a difficult task. We used the following approaches to ensure quality control.

While the templates were gradually improved and modified we started with the same Access queries, and macros, so the coding was as similar as possible.

Access coding was exported to excel using a standard format. For each plan, there were 3 excel work books, one for assumptions that were set based on age (e.g. mortality) one for assumptions that were set based on service (e.g. turnover) and one for salary increases and overtime queries.

The excel formats were the same. Each tab of the workbook was designed to have as few inputs as possible to minimize errors, for example, there were cells, to select gender and number of years to keep tables from being duplicated or mislabeled.



Each time an access query was run, a macro assigned a time stamp that was included in the name of the output tables. Thus, each file used to generate the tables, had included in its name the time it was generated, to minimize the possibility that previously corrected tables could inadvertently be used.

Before the tables were generated we generated a reconciliation between the 2013 and 2014 and 2014 and 2015 data. These reconciliations were compared to reconciliations supplied by the OA in the 2014 and 2015 data that was provided to Buck who generated the NYC results.

We used the Historical Data provided by GRS before data adjustments were made and tried

to duplicate the results from the prior report. If we were able to match the results, this was a verification our coding was working as designed. If our results did not align with the prior results we rechecked our coding. If we believed our coding was correct, we attempted to duplicate the results by changing our method. In this way, we identified some differences in our method and GRS’ method. The results of this analysis is shown in Appendix 2.

Difference in Methods between GRS and Bolton The following is a list of the differences between our approach to the experience study and that used by the prior independent actuary, GRS. 1. Measuring Increases in Salary: The “base pay” provided by the OA included expected overtime. We used adjusted base pay, that is base pay divided by expected overtime. This change is fairly minor because in many cases the expected overtime assumption does not change from year 1 to year 2. Thus, the salary increase results would be the same. 2. Determining OT for NYCERS General We included all employees as exposures including employees with no OT in the year. It appears that GRS included only employees with OT in determining the OT experience. Our approach included about 13,000 employees who we understand were not eligible for overtime. GRS’ approach excluded about 50,000 employees, only some of whom were not eligible for overtime. Thus, our approach should provide a better, but slightly low, estimate of the actual overtime. We anticipate getting more detailed information on the employees who should be excluded as not eligible for overtime in the next study, and excluding only those employees from the OT exposures. 3. Treatment of NYCERS Employees with Zero OT: Approximately half of the NYCERS general employees had zero overtime. As documented above less than 15% of NYCERS general employees were identified as not OT eligible. We included all employees in determining the average OT experience. It appears that GRS excluded these employees in the averages resulting in higher average OT.



4. Determining OT rates: GRS determined the OT percentage by dividing the OT provided by the base pay provided by the OA. The base pay provided by the OA was equal to the rate of pay as of the last pay period with expected overtime. For example, if expected OT was equal to 15 percent of pay, and the rate of base pay as of the end of year was $100,000 per annum, then the base pay provided by the OA was $115,000. We divided OT by the average of the prior year adjusted base pay and the current year adjusted base pay. Adjusted base pay is equal to the base pay excluding expected overtime. Continuing the example above, if the pay as of the beginning of the period (we used the prior year data for this) was $95,000, then we divided by the average of $95,000 and $100,000 or $97,500 while GRS divided by $115,000 to measure the overtime experience. This change increases the OT percentage by dividing by a smaller denominator. 5. Studying OT (prior to retirement). In studying OT Bolton included each employee in no more than one OT experience table. We did not include employees that retired or were disabled in the following year in the general overtime experience, since these employees were already included in the dual overtime experience. This is because the valuation coding only applies the dual overtime rates in the years prior to retirement (either service or disability.) This impacts the level of employee contributions but only to the extent that the dual overtime experience is materially higher than general overtime experience. 6. Including Leave of Absence Participants in the Withdrawal exposures. Bolton included employees with a status of B (LOA employees who returned to work) and C (not yet determined) in the denominators of the withdrawal experience probability determination (i.e., we treated these employees as part of the exposures.) The valuation coding applies withdrawal decrements to employees on a leave of absence so we included these participants in determining the actual rate of termination from either employment or leave of absence status. 7. Including Last Two Years in Withdrawal Experience. We included the last two years of experience in the withdrawal experience. GRS did not include the last two years as it was unclear if the participants on leave of absence would return. Appendix 2 compares the participant count results generated by GRS, to our results generated from the data prior to adjustments (such as the maturing of the leave of absence data) and our final results. 8. Differences in Participant Counts between GRS and BP Appendix 2 includes tables showing the differences in participant counts between the analysis done by the prior independent actuary, GRS, and BP. Some of the differences are explained and others are explained in the appendix.



However, we concluded that we can come close to replicating the GRS participant counts used in GRS’ analysis. 9. Confidence Intervals Another significant difference in our analysis, when compared to GRS’, was the addition of confidence intervals to the analysis of whether the experience is at least 95% certain to be different from the assumption. Appendix 3 discusses the hypothesis testing we did to create the confidence intervals. Our intent was to identify assumptions where the likelihood that the assumption and the experience were based on the same distribution was less than 5%, to help identify the assumptions that require revision.


Section III: Experience Study - Detailed Results


This portion of our report is divided into sections for the economic assumptions and, for the demographic assumptions, by plan. At the end of this portion of our report we summarize the suggested changes in assumptions, including discussions of assumptions that we may suggest be revised in the following study, including the 2016 and 2017 participant data.


Economic Assumptions



Inflation Assumption

The inflation assumption is at the heart of the economic assumptions, as it is used as a starting point for all of the other economic assumptions, including the Cost-of-Living Adjustment (COLA), salary improvement and investment return assumptions. Thus, our experience analysis starts with the inflation assumption.

Unlike demographic assumptions where past experience is often a good predictor of future experience, economic assumptions, and particularly investment return and inflation assumptions typically reflect future expectations more than past experience. So, we analyzed the inflation assumption from three perspectives:

Past experience – based on the Consumer Price Index for all Urban Consumers (CPI) over the last 5, 10, 15, 20 and 25 years

Current expectations of future experience – based on investment advisors’ analysis of future expected inflation

Current, market based expectations of future inflation – based on the difference between the treasury bond nominal yield curve and the Treasury Inflation Protected Securities (TIPS) yield curve. This curve is known as the Treasury Break-even Inflation yield curve (TBI).

NYCRS offers some additional issues in considering the appropriate inflation rate assumption. First, COLAs are granted to different groups of retirees reflecting CPI increases in the year ending on either March 31, or June 30. Retirees receiving “auto” COLAs, in Tiers I, II, IV or VI of the NYCERS, TRS, BERS, POLICE and FIRE (NYCRS) receive a COLA based on ½ of the CPI, but not less than 1% or more than 3%. This COLA is paid based on the CPI increase through March 31. The COLA is paid on the lesser of the maximum payment option (regardless of the option elected) or $18,000. The $18,000 and 3% caps lessen the impact and volatility of the COLA. Employees of the NYCRS who retire from Tier III receive a COLA based on the CPI increase for the year ended June 309. The increase (or decrease, if the CPI is negative) is the lesser of the CPI and 3%. This larger COLA is known as Full Escalation.

Different COLA Effective Dates

Our analysis shows very little difference, at least in the past, between inflation ending on March 31 or June 30. For example, comparing the graphs below, shows a maximum difference in the CPI of 0.09% (or 9 basis points) in the five-year average CPIs over the last 30 years, and a more typical difference of about 0.02% (2 BP). Thus, we concluded that using a single inflation assumption for all purposes would simplify the assumptions while not adding any significant variance between the assumption and actual experience and would not result in any material distortion in the ultimate valuation results.

9 This includes uniformed employees in Tier VI, which is also known as Tier 3, Tier 3 Modified and Tier 3 Revised.



Past Experience

We first considered prior experience in developing our recommendation for the inflation assumption. We considered the five-year average experience (as shown in the tables above), as well as longer term trends (as shown immediately below.)

We note that the inflation rate for the last five years has been historically low, although not as low as in the late 1950s and early 1960s or during the 1920s and 1930s (see graph below). Because of the low recent inflation, we believe that the use of a series of five-year averages (as shown in the tables above) is more useful in developing our expectations of future inflation. If we based our recommendation only on the historic inflation experience, we would suggest continuing to use an assumed 2.5% inflation rate.

4.41%

2.89%2.51% 2.55%

2.27%

1.28%

ENDING MARCH 31

Average Annual InflationCPI‐U, Five‐Year Averages

1987‐1991 1992‐1996 1997‐2001 2002‐2006 2007‐2011 2012‐2016

4.43%

2.87%2.58% 2.66%

2.18%

1.32%

ENDING JUNE 30

Average Annual InflationCPI‐U, Five‐Year Averages

1987‐1991 1992‐1996 1997‐2001 2002‐2006 2007‐2011 2012‐2016



The following table shows the swings in the inflation rate from the spectacular highs of the early 20th century to the significant lows of the early 1920s and 1930s and the 1970s “stagflation”. Please note that there were also significant numbers of years of deflation in the late 1800s, before this table. While of interest, we do not believe that this long-term historical information is of much use in helping determine the appropriate inflation assumption.

Inflation Rate by Year

2.68%

2.32%2.19%

2.05%

1.75%

1.32%

ENDING JUNE 30

Average Annual Increase in CPI‐U

Last 30 years Last 25 years Last 20 years

Last 15 years Last 10 years Last 5 years

‐20%

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

25%

30%

1913

1916

1919

1922

1925

1928

1931

1934

1937

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

Inflation Rate CPI‐U Ending June 30



Investment Experts Inflation Assumptions

Next, we considered the inflation assumption built into the investment return assumptions from investment managers (mentioned below) we used to analyze investment return assumptions. Five managers had clearly expressed investment return assumptions, with all assuming between 1.95% and 2.25% future inflation. These inflation assumptions are based on 10- and 20-year time horizons.

Of particular interest is the forecast of the Philadelphia branch of the Federal Reserve Bank, which in 2017 projected inflation to run at 2.3%, slightly higher than the investment managers’.

TBI Return

Finally, we considered the inflation expectations built into the difference between the nominal treasury yields and the TIPS yields. The following table shows the TBI yields as of the present.

We note that there are some practical limitations of the TBI yields (principally the depth of the TIPS markets, and the limited duration of both the TIPS and Treasury bonds.) However, we believe that the TBI does provide a reasonable, independent and market related method of considering long-term inflation rate expectations. Comparison of Implicit Inflation Rates, in Percent, and Period in Years

We note that the TBI yield curve graphs for 2016 and 2011 are significantly different than those for the other four years, which are clustered between 2.25% and 2.5%, except for very short durations. We note that the duration of the liabilities for POLICE and FIRE are between 14.5 and

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0.5

3.5

6.5

9.5

12.5

15.5

18.5

21.5

24.5

27.5

30.5

33.5

36.5

39.5

42.5

45.5

48.5

51.5

54.5

57.5

60.5

63.5

66.5

69.5

72.5

75.5

78.5

81.5

84.5

87.5

90.5

93.5

96.5

99.5

TBI ending June 30

2011 2012 2013 2014 2015 2016



15.010. We anticipate that the duration of the liability for the other plans would be slightly lower, because of the higher age at retirement in those plans.

Practical Issues

Typically, the most powerful effect on liabilities of the inflation assumptions is on the COLAs. COLAs in NYCRS are limited to 3%, and generally apply to only a portion of the benefit. However, the inflation assumption also affects the future salary improvement assumption and the investment rate assumption. The COLA assumption for the Auto COLA is currently 1.5%, 1% lower than the inflation assumption11. The COLA assumption for the Escalation is 2.5%, the same as the inflation assumption.

Currently the investment return, or discount rate, assumption is 7.0%, which is effectively a 2.5% inflation assumption and a 4.5% “real” investment return (i.e., net of inflation.) The salary improvement assumption consists of a General Wage Increase assumption of 3.0% (0.5% higher than the inflation assumption) and an increase assumption for merit, productivity and longevity. We address issues related to these assumptions with the related analysis.

Recommended Inflation Assumption

Based on the review of the historical, investment advisors’ expectations and market-based expectations, we believe that NYC should, for the present, continue to assume that CPI will increase 2.5% annually. However, we may suggest that NYC revise the inflation assumption downward with a general revision of the assumptions, after the experience study for 2017, particularly if there isn’t a significant increase in the inflation rate, and expectations of future inflation, by June 30, 2018. This is also consistent with the Horizon survey mentioned later which has an expected inflation assumption of 2.31%.

We do not recommend changing the COLA assumptions derived from the inflation assumption, so are recommending that the Auto COLA remain at 1.5% while the Escalation remain at 2.5%.

We also do not recommend making any adjustments to when the COLA is expected to be paid. In our valuation replication, we assumed that all COLAs are paid on the valuation date, and believe that is a reasonable method for approximating the value of the COLAs, even though some COLAs are made in September and others in March.

10 Calculated using the Macaulay Duration formula 11 We considered the use of 60% of the inflation assumption as a proxy for the Auto COLA, and concluded that this assumption is likely to slightly overestimate the Auto COLA if the CPI remains at 2.5%, and slightly underestimate the Auto COLA if the CPI is consistently above 3.5%. However, as the Auto COLA only applies to the first $18,000 of the annual retirement benefit, we believe the current approach reasonably reflects the likely Auto COLA.



Investment Return Assumption

The single assumption that has the largest effect on the determination of plan liabilities, funding levels and contributions is the investment return assumption. Our belief is that historic investment experience, while interesting, is of little value in accessing the validity of an investment return assumption. We also note that the only certainty about future investment returns is that any assumption is most likely wrong, both in the short-term and in the long-term. While we typically suggest an investment return assumption based on the best estimate of the future investment return, reflecting investment advisors’ investment return expectations and the plan’s investment mix, we also recognize the value of choosing conservative investment return assumptions, trying not to assume the market expectations but to choose a return more likely to be exceeded than to not be met.

However, our understanding is that OA currently wishes to use an investment return assumption that reflects the arithmetic average of expected returns. Thus, our analysis reflects both investment managers long-term expected investment returns and the asset mixes of NYCRS.



NYCRS’ Investment Mix

First, the following table shows the target investment mix for each of the plans12.

NYCERS TRS BERS POLICE FIRE PUBLIC EQUITY U.S. 29.00% 29.00% 30.00% 31.00% 31.00% Developed Ex-U.S. Equity 13.00% 12.00% 13.00% 9.00% 9.00% Emerging Markets 7.00% 9.00% 7.00% 6.00% 6.00% REITS 0.00% 0.00% 0.00% 0.00% 0.00% PUBLIC FIXED INCOME Core +5 Securities 0.00% 0.00% 0.00% 0.00% 0.00% U.S. Treasuries – All Maturities 0.00% 0.00% 0.00% 0.00% 0.00% U.S. Treasuries - Longer Than Five Years 10.00% 10.00% 9.00% 8.00% 8.00%Core Mortgage-Backed Securities 1.50% 1.50% 1.50% 0.50% 0.50% ETI 2.00% 2.00% 2.00% 2.00% 2.00% Credit - Investment Grade Corporates 3.50% 3.50% 3.50% 2.50% 2.50% Corporate - High Yield Securities 5.00% 5.00% 6.00% 7.00% 7.00% Corporate - Bank Loans 2.00% 2.00% 2.00% 2.00% 2.00% Treasury Inflation-Protected Securities 4.00% 4.00% 4.00% 4.00% 4.00% Convertible Securities 0.00% 0.00% 0.00% 0.00% 0.00% Emerging Market Debt 0.00% 0.00% 0.00% 0.00% 0.00% Cash 0.00% 0.00% 0.00% 0.00% 0.00% ALTERNATIVE ASSETS Private Equity 7.00% 6.00% 9.00% 7.00% 7.00% Private Real Estate - Core 5.00% 5.00% 5.00% 4.00% 4.00% Private Real Estate - Opportunistic 4.00% 4.00% 4.00% 4.00% 4.00% Private Infrastructure 2.00% 2.00% 4.00% 2.00% 2.00% Opportunistic Fixed Income 5.00% 5.00% 0.00% 5.00% 5.00% Hedge Funds 0.00% 0.00% 0.00% 6.00% 6.00%

100.00% 100.00% 100.00% 100.00% 100.00%

We discovered a significant difference between the target investment mix shown above, and the investment mix present in the June 30, 2016 investment reports. For example, the weighted average target for U.S. Equity is just under 30%, while the actual percent of the June 30, 2016 assets is 39%. We assumed that this represents intentional, significant changes in the investment targets used in 2016, and reflected the current target investment mix in our analysis.

Next, some of the categories are not categories often tracked by investment advisors. Economically Targeted Investments (ETI) is a recently developed investment category, with

12 This information came from a series of memos from the Investment Committee of the Office of the Comptroller – Bureau of Asset Management (BAM) regarding a recent change in investment targets, by plan, and dated January18, 2017.



limited coverage. Because the purpose of these investments is primarily public good, and the targeted investment percentage was only 2%, we decided to set the expected real investment return to 0% for ETI. Other categories that were difficult to find in other investment advisor’s mix are the various fixed income categories (Credit – Investment Grade Corporates, Corporate – High Yield Securities, Corporate – Bank Loans, Convertible Securities and Opportunistic Fixed Income.) We noted that NYCRS’ investment advisors typically categorized them as fixed income, so we did as well.

Because the OA has historically used the same investment return assumption for each of the valuations, and the difference in the investment mix targets are relatively small (no more than a 4% difference in any category), we chose to consider a single, asset weighted mix representing the five portfolios. We used the asset values based on the assets held for investments as of June 30, 2016, from the relevant CAFR13. We chose to use this value as this excludes cash, receivables and payables. Using this value for weighting, we obtained the following average asset mix, which we used for determining the expected investment return.

Average of all 5 Plans PUBLIC EQUITY U.S. 29.57% Developed Ex-U.S. Equity 11.53% Emerging Markets 7.53% REITS 0.00% PUBLIC FIXED INCOME Core +5 Securities 0.00% U.S. Treasuries – All Maturities 0.00% U.S. Treasuries - Longer Than Five Years 9.43% Core Mortgage-Backed Securities 1.23% ETI 2.00% Credit - Investment Grade Corporates 3.23% Corporate - High Yield Securities 5.57% Corporate - Bank Loans 2.00% Treasury Inflation-Protected Securities 4.00% Convertible Securities 0.00% Emerging Market Debt 0.00% Cash 0.00% ALTERNATIVE ASSETS Private Equity 6.66% Private Real Estate – Core 4.73% Private Real Estate – Opportunistic 4.00% Private Infrastructure 2.06% Opportunistic Fixed Income 4.85% Hedge Funds 1.61%

100.00%

13 For example, the NYCERS CAFR, page 102. While page 72 of the CAFR shows an asset value of $55.9 billion, this includes only $54.8 billion in assets held for investment, as is also shown as the total of investments, on page 132



While there are small differences between the investment mixes among the plans, the differences are not significant in the aggregate. We also understand that using a slightly different investment return assumption for each of the plans in NYCRS would require difficult explanations, and could result in gamesmanship among the plans’ trustees. Thus, as noted above, we decided that the best approach would be to take a weighted average of the investment mixes and use that mix to approximate the investment return of each of NYCRS. The logical weighting is the asset values of the various plans, and we chose to use the asset values as of June 30, 2016, obtained from the investment reports. Total asset values and weights we used are shown below.

Total NYCRS Assets

Plan Total Assets Share of Total Assets NYCERS 54,756,585 30.26% TRS 72,352,841 39.99% BERS 5,430,014 3.00% POLICE 35,677,344 19.72% FIRE 12,725,259 7.03% Total 180,942,043 100.00%

Published Investment Advisors

We considered the expected investment returns from a group of investment advisors, including:

Long term returnso PFMo Principalo Blackrock

10-year returnso Voyao PCAo JP Morgano Sellwood

The greatest difficulty in preparing an analysis of expected investment returns, is matching the categories that the different investment managers use. For example, U.S. Equity is often shown broken into Large Cap, Mid Cap, Small Cap or Mid/Small Cap. However, NYC’s investment advisors simply use Domestic Equity. So, for example, we chose to compare Domestic Equity with U.S. Equity - Large Cap.

We also had issues with whether returns were determined on an arithmetic or geometric basis. Of the three investment advisors with long-term capital market returns, one provided only geometric returns, one only arithmetic returns and the third provided both14. We chose to use the arithmetic returns for two of the advisors, and treat the geometric returns provided by the third as arithmetic.

14 We understand that the PFM returns reflected a geometric basis. We understand that the Principal returns reflected both a geometric basis and an arithmetic basis. We understand that the Blackrock returns reflected an arithmetic basis.



Also, only one of the long-term capital market return studies clearly identified the inflation assumption implicit in their return expectations (2.0%), so we used an average of the nominal returns and did not adjust for any differences based on differences in the underlying inflation assumption.

Finally, not all categories of assets were included in each of the studies. Where possible, we used a similar category. Otherwise, we simply took averages of the two expected returns (and in one case, private infrastructure, a single expected return), rather than all three.

Weighted by assets

Average of Replacement

Investment Return -Three Investment Advisors Target asset mix

3 Long Term

Expected Return Category

PUBLIC EQUITY U.S. 29.57% 7.58% 2.24%Developed Ex-U.S. Equity 11.53% 8.07% 0.93%Emerging Markets 7.53% 8.07% 0.61% Developed REITS 0.00% 7.18% 0.00%PUBLIC FIXED INCOME Core +5 Securities 0.00% 5.05% 0.00% Core Bond U.S. Treasuries – All Maturities 0.00% 3.05% 0.00% U.S. Treasuries - Longer Than Five Years 9.43% 4.45% 0.42% Core Mortgage-Backed Securities 1.23% 5.05% 0.06% Core Bond ETI 2.00%Credit - Investment Grade Corporates 3.23% 5.38% 0.17% Corporate - High Yield Securities 5.57% 6.20% 0.35% Corporate - Bank Loans 2.00% 4.55% 0.09% Treasury Inflation-Protected Securities 4.00% 2.98% 0.12% Convertible Securities 0.00% Emerging Market Debt 0.00% 6.30% Cash 0.00% 2.28%ALTERNATIVE ASSETS Private Equity 6.66% 9.70% 0.65%Private Real Estate - Core 4.73% 6.20% 0.29% Private Real Estate - Opportunistic 4.00% 7.18% 0.29% REIT

Private Infrastructure 2.06% 8.90% 0.18% Opportunistic Fixed Income 4.85% 5.05% 0.24% Core Bond Hedge Funds 1.61% 5.60% 0.09% Total 100.00% 6.74%

As shown in the table above, the expected nominal return would be about 6.74%. However, this return understates the expected return. As noted above, one of the three sets of investment return assumptions are a geometric set of assumptions, so the average returns would be higher for that study if we had the arithmetic return assumptions. Second, we were unable to adjust for any



differences in the inflation, because we had the inflation assumption for only one of these three studies.

Horizon

We also compared expected investment returns to the study of multiemployer plan investment advisors prepared by the consulting firm Horizon Actuarial Services, LLC (Horizon), and the expectations of NYCRS’s own advisors, as reflected in spreadsheets provided by the OA.

Horizon prepares an annual study of capital market assumptions for multiemployer plans. While many of the intended audience for this study are substantially smaller than NYCRS, because of the breadth of asset classes, and the number of investment advisors included (12 reflecting long term return expectations), we feel that this investment study provides useful information for our analysis. We used the information from the 2016 version, coincident with the capital market data we used for this study.

The Horizon survey shows returns on a geometric basis. Because we used arithmetic returns for the information from the other advisors, and we lacked the information necessary to convert geometric rates of return to arithmetic rates of return, we chose to treat the geometric returns as if they were arithmetic returns. We note that the difference in returns for the whole portfolio is likely to be about 0.50%, between geometric and arithmetic returns.

As shown in the table below, reflecting the Target Asset Mix, weighted by total asset values as of June 30, 2016, and adjusted for differences in the inflation assumption, the information available from the Horizon survey also fairly closely matches NYC’s assumption of a 7.0% investment return.

Please note that we assumed that the U.S. Corporate Bonds – Core was a reasonable proxy for the more specialized bond funds shown in the Target Asset Mix (e.g., Corporate Bank Loans, Credit Investment Grade Corporates, Core Mortgage-Backed Securities). We also assumed that the return on U.S. Treasuries would match the Treasury Bill returns, despite the significant difference in duration.



Weighted by assets

Investment Return - Horizon Survey Target asset mix Horizon

Expected Return15

Replacement Category

PUBLIC EQUITY U.S. 29.57% 7.89% 2.33% US Large Cap Developed Ex-U.S. Equity 11.53% 8.02% 0.92%Emerging Markets 7.53% 9.11% 0.69% REITS 0.00%PUBLIC FIXED INCOME Core +5 Securities 0.00% 4.58% 0.00% U.S. Treasuries – All Maturities 0.00% 3.15% 0.00% U.S. Treasuries - Longer Than Five Years 9.43% 4.58% 0.43% Core Bond Core Mortgage-Backed Securities 1.23% 4.58% 0.06% Core Bond ETI 2.00%Credit - Investment Grade Corporates 3.23% 4.58% 0.15% Core Bond Corporate - High Yield Securities 5.57% 6.81% 0.38% Corporate - Bank Loans 2.00% 4.58% 0.09% Core Bond Treasury Inflation-Protected Securities 4.00% 3.94% 0.16%Convertible Securities 0.00% Emerging Market Debt 0.00% Cash 0.00%ALTERNATIVE ASSETS Private Equity 6.66% 10.33% 0.69%Private Real Estate – Core 4.73% 6.75% 0.32% Real EstatePrivate Real Estate - Opportunistic 4.00% 6.75% 0.27% Real Estate Private Infrastructure 2.06% 7.12% 0.15% Opportunistic Fixed Income 4.85% 4.58% 0.22% Core Bond Hedge Funds 1.61% 6.16% 0.10% Total 100.00% 6.95%

Horizon Inflation Assumption 2.31% NYC Inflation Assumption 2.50% Total Return Revised for Inflation Assumption 7.14%

NYCRS’ Investment Advisors

15 Please note that the returns shown are geometric returns, but we have treated them as arithmetic in this analysis, for comparison purposes. The total expected return is likely to be somewhat higher, if these returns were combined as arithmetic returns rather than geometric.



We reviewed the long-term, expected returns from the spreadsheets we received from the OA for the TRS, BERS, POLICE and FIRE16. Our understanding is that this information was provided by the investment advisors for these plans, and that similar information was not available for the NYCERS plan. we concluded that the expected real investment return expectations, whether weighted by assets or not, are above, but reasonably close to the current investment return assumption of 7.0%. We understand that the expected return information we received consists of arithmetic assumptions, except for TRS. Reflecting a 2.5% assumed inflation, the nominal returns would be expected to be around 7.51% (unweighted average of nominal returns), 7.63% (non-weighted average of real returns, plus 2.5% assumed inflation) or 7.22% (weighted average of real returns, plus 2.5% assumed inflation.)

Returns by plan

Real Return

Weighted by asset size

Assumed Inflation

Nominal Return

TRS 4.46% 2.56% 2.25% 6.71% BERS 5.94% 0.26% 2.30% 8.24% POLICE 4.90% 1.39% 2.50% 7.40% FIRE 5.21% 0.53% 2.50% 7.71% Average 5.13% 4.72% 7.51%

Please note that there was not an investment advisor’s inflation expectation for either the POLICE or FIRE. Therefore, we assumed that the inflation assumption would be the same as used for the 2016 valuation.

NASRA

Finally, we also considered the National Association of State Retirement Systems’ (NASRA) annual Public Pension Plan Investment Return Assumptions (dated February 2017) reflecting 2016 investment return assumptions used by states (and some large cities). These returns reflect a continued pattern of decreasing investment return assumptions, with an expectation that the current average of slightly more than 7.5% will continue to decline over the next two years. While we would not suggest setting investment return assumptions based on this survey, in part since the trend line is strongly downward, we believe it is useful to know that the 7% assumption currently being used already puts NYCRS in the lowest quartile (i.e. most conservative) of investment return assumptions used by states.

16 We understand the expected investment returns provided by the investment advisors for BERS, POLICE and FIRE are arithmetic assumptions, while the returns provided by the investment advisors for NYCERS and TRS are geometric. However, we were unable to obtain the NYCERS’ investment advisor’s expected investment returns. Please note that the NYCERS plan includes about 30% of the total assets of NYCRS.



Practical Issues

Typically, the most powerful effect on liabilities is the investment return assumption. Investment returns are the source of nearly two-thirds of public pension plan assets 17 , so accurately anticipating the investment experience is a critical assumption. Too high of an assumed return, and the required annual employer contributions (effectively paid by future tax payers) increase over time, potentially making the plan unaffordable. Too low, and current tax payers pay more now and less in later years for benefits earned well in the future. Yet, given the size and maturity of NYCS there is a lot of risk18 and the amount of risk certainly is a factor in both setting the investment mix and the discount rate assumption.

As noted above, one issue is whether the investment return assumption should vary by Plan, based on each of the Plans’ investment mix. As we also note above, the investment mixes are not very different between the Plans. Because of the minor variance among plans, and the difficulty in explaining the differences to readers of the actuarial valuations and the CAFRs, we agree that a single rate for all of NYCRS is the best choice.

Recommended Investment Return Assumption

17 NASRA 2017 Public Pension Plan Investment Return Assumptions, page 1. 18 We define risk as the volatility of the contribution as a percentage of payroll, rather than simply the volatility of the investment return. We defined maturity as the portion of total liabilities due to inactive participants, and typically consider any plan with 50% or more of the liabilities a mature plan. Because the Plans have a significant portion of their liabilities from inactive participants (between 48% for BERS to 64% for Police), the volatility of the contribution is higher than other plans which are not as mature.



Currently the investment return, or discount rate, assumption is 7.0%, which is effectively a 2.5% inflation assumption and a 4.5% “real” investment return (i.e., net of inflation.)

Based on the review of the investment advisors’ market-based investment return expectations, we believe that the OA should, for the present, continue to assume that current assets and future contributions will earn 7.0% annually. We note that a lower investment return assumption would not be unreasonable, if much of the investment return information we relied upon is based on arithmetic calculations, and if the goal of the use of assumptions is, over the long term, achieving the assumption 50% of the time, implying the use of a geometric average. However, we may suggest that the OA revise the investment return assumption downward with a general revision of the assumptions, after the experience study for 2017 as part of our second biennial study, particularly if we recommend a decrease in the inflation rate assumption.

While not suggesting any revision in the investment return assumption we do suggest some changes to obtaining investment return expectations from the current investment advisors. We suggest that the five different investment advisors be requested to try to provide OA with more comparable data on returns and asset classes. The advisors can continue to provide the trustees with expected return projections based on their preferred time horizons and asset class names. However, we believe it would benefit the OA (for setting the discount rate for both funding and accounting) if they provided the following in a consistent format:

1. Common asset class names and target allocation by class2. Expected rates of return by asset class using a consistent time horizon. That time horizon

could be 20-30 years, as defined by OA)3. Information on standard deviation by asset class and whether return information is

arithmetic or geometric

OA, as we did in this report, needed to try to recharacterize information from the investment advisors, complicating the task of choosing the appropriate investment return assumption.


Results, including confidence intervals, for NYCERS



NYCERS Experience Analysis

New York City Employees’ Retirement System (NYCERS) is the largest of the New York City retirement plans (NYCRS), and the most complex due to the 11 contributing employers, with different provisions that result in the division of the members into five separate groups for purposes of the application of actuarial assumptions. NYCERS is a cost-sharing, multiple employer plan providing benefits to 185,000 employees. NYCERS includes all NYC employees who are not in one of the other four plans: TRS, BERS, POLICE and FIRE. We have divided the experience analysis into the five groups with different actuarial assumptions used in the OA’s annual valuation:

General members Corrections members Sanitation members Triborough Bridge and Tunnel Authority (TBTA) members Transit members.

Please note that we did not do any experience analysis for the Housing Police Transit Police (HP TP). HP TP employees were transferred to POLICE in 1994, and the remaining group of retirees and beneficiaries is relatively small.

We anticipate revising the analysis of the mortality experience in the next experience study, to reflect not just the number of retirees who died, but to weight that experience by the amount of the member’s benefits. We anticipate that this will lower the ratio of actual mortality to expected mortality, and may result in our recommending changes to the mortality tables.

The results for each group are shown in the sections below.

Issues Unique to the Groups

An issue affecting all groups is the delay in adoption of union contracts affecting pay increases during the prior 10-year period, resulting in delayed pay increases and anomalous pay increase patterns. For example:

Corrections officers contract was adopted January 6, 2017, retroactively effective toNovember 1, 2011

Uniformed Sanitationmen’s contract was adopted March 3, 2017, retroactively effective toSeptember 21, 2011.

The toll road, bridge and tunnel business is undergoing a massive change as EZPass and similar transponders linked computer systems collect tolls instead of individuals working at toll booths. This has led to massive changes in employment for those working in the toll business. TBTA has been similarly affected, with retirement and withdrawal experience much higher than expected over the last decade.



Transit workers also had some unusual events in 2007 and 2013 that resulted in substantial drops in the overtime paid in those years. Hurricane Sandy was in early fiscal year 2013, there was a transit strike in December 2005 (fiscal year 2006) and a contract settlement in April 2014 (fiscal 2015.)

Corrections overtime was significantly affected by a series of changes in policies at Riker’s Island, leading to a nearly 50% overtime increase in 2014 and 2015 from overtime in 2010 to 2013.

Corrections, Transit and Sanitation members all have overtime included in their average pay calculations. However, not all members are eligible for overtime. Unfortunately, we did not have an easy method of telling those who were eligible for overtime from those who were not, particularly in the data provided by the prior auditor, GRS. Thus, we calculated the overtime experience over all employees in these groups, whether eligible or not for overtime.

Some General employee are not eligible for Overtime (OT). The OA supplied us with a file of 31 CBA codes used for employees who are not eligible for OT. In preparing the data for Buck, we believe that the OA loads the base pay by the OT assumption for the OT eligible employees but does not apply the OT percentage load to the employees not eligible for OT. The 2015 NYCERS file included 13,692 employees with those codes. Of the 13,692 employees who were believed to not be eligible for overtime, 693 did in fact receive OT in 2015, leaving 12,999 employees with zero OT who were not eligible for OT. However, there were an additional 50,370 employees believed to be OT eligible who received no OT in 2015. In 2015, there were 132,278 employees in NYCERS General. Since less than 15 percent of the employees were not eligible for OT, and it was not entirely clear which employees should be overtime eligible, we included all employees in the exposures used to determine the OT experience.

Mandated and Elected Retirement

Chapter 96 of the laws of 1995, gave employees the option of selecting to join potentially more valuable retirement plans in return for higher employee contributions. For purposes of valuing plan liabilities, different retirement assumptions apply to the employees that elected the improved retirement benefits than those who stayed in the old Plans. The NYCERS data field “Improved Plan Code” was used to distinguish between employees who did not elect the new plans (Mandated) and those who elected the new plans (Elected). Employees hired after 1995 were not given a choice of plans and receive Mandated retirement benefits. The terms Mandated and Elected are used throughout our report to distinguish between these two groups of employees.



NYCERS - GENERAL Members

The assumptions used to determine the liabilities for the General members are largely consistent with recent experience. Retiree mortality and employee withdrawal experience are relatively close to assumed experience. Recent salary improvement has been lower than expected, while ten-year experience is slightly higher than expected. Retirement experience follows the pattern of the other plans, where recent unreduced retirement has come at later ages than expected, while the incidence of early retirement is much higher than assumed. Finally, employee mortality and disability experience has been significantly lower than assumed, although these are relatively minor assumptions.

1. Mortality – men and women – service and disability retirees

The following graphs and tables show the incidence of mortality for service retirees and disabled retirees, for the most recent four or ten years, ending June 30, 2015. Overall, actual mortality experience was very close to 100% of assumed for service retirees and a little greater than 100% (107% for 4 years and 104% for 10 years) for disabled retirees. The exhibits show that the assumptions continue to reflect the actual experience.

Experience Compared to Current Assumptions Ratio of actual to expected deaths

4-year experience 10-year experience

Service retirees – men 100.35% 100.90% Service retirees – women 100.51% 100.27% Combined Service Retirees 100.43% 100.58% Disability retirees – men 105.90% 100.11% Disability retires – women 107.70% 109.76% Combined Disability Retirees 106.61% 103.80%

Differences between actual and expected experience are all within the 95% confidence interval, implying that the retiree mortality assumptions for NYCERS - GENERAL are likely to accurately model the experience.

Therefore, we are not currently recommending any revision to the assumptions. If we were to recommend increasing the disabled life mortality assumption, this would slightly decrease the liabilities and required contribution.

2. Mortality – men and women employees – ordinary19

Mortality experience for employees is substantially lower than expected for women and men. Moreover, there has been a steady decline in the number of employee deaths in this group.

Ratio of actual to expected deaths 4-year experience 10-year experienceOrdinary mortality – men 34.83% 68.22% Ordinary mortality – women 32.41% 70.92% Combined 33.76% 69.40%

19 Throughout this report we refer to death and disability benefits as either accidental, meaning benefits for those injured or killed in the line-of-duty, or ordinary, meaning not accidental. We also apply this naming convention to the relevant assumption.



The confidence interval graph shows that the mortality rates at nearly every age are outside the 95% confidence interval of the current assumption.

Because of the relatively low incidence of both ordinary mortality among active NYCERS - GENERAL, and the relatively minor effect on plan liabilities, we do not currently recommend any change in either of these assumptions. In addition, the recent dramatic decrease in employee mortality suggests that this may be an anomaly.

However, if we were to suggest revisions to reduce the assumed mortality for men and women, we would expect that this would slightly increase the liabilities and required contributions.

3. Retirement – men and women – 1st year, 2nd year and after 2nd year, Mandated and Elected

There is a significant difference between the retirement experience for those eligible to retire with unreduced retirement benefits and those currently eligible only for retirement benefits reduced for early payment (that is, for payment prior to the normal or unreduced retirement age.) The unreduced (that is, eligible for unreduced retirement) retirement experience is much lower than assumed, while early retirement (that is, for those not eligible for unreduced retirement, but eligible to retire) experience is much higher than assumed. This is especially so for those with Mandated retirement and less so for those with Elected retirement. For those with elected retirement there are more than expected retirements for those in the first year of eligibility.

Mandated and Elected Retirement Ratio of actual to expected retirements


First year of eligibility – Combined

74.21% 77.16%

Second year of eligibility – Combined

62.20% 68.45%

Each succeeding year – Combined

55.38% 55.68%

Elected Ratio of actual to expected retirements



112.36% 113.83%


80.95% 83.98%


96.96% 94.65%



MandatedRatio of actual to expected retirements –



64.43% 67.06%


59.71% 66.26%


52.59% 53.46%

We do not currently recommend a change in the Elected retirement assumptions, since the rates are relatively close to the assumed rates. We also do not currently recommend a change in the Mandated retirement assumptions, even though the experience suggests reducing the retirement rates for the Mandated group.

If the current experience continues, we will likely recommend revising the assumption in the next experience study. This change would decrease liabilities and required contributions.

Retirement prior to eligibility for unreduced retirement benefits (Early Retirees)

Early retirement experience has been much higher than assumed, as shown in the table below.

Ratio of actual to expected retirements – Early Retirement


Combined 175.95% 164.20% While the experience is much higher than assumed, the percentage of eligible employees electing early retirement is less than 5% of all GENERAL employees, while the percentage of those eligible for unreduced retirement electing in their first year of eligibility is about 21%, based on the last four years’ experience. The last four years’ experience is further away from the assumption than the prior years. We note that the early retirement experience is generally not within a 95% confidence interval of the assumed early retirements.

However, we are not currently recommending a revision in this assumption. If the experience continues, we will likely recommend a revision in the next study. If the early retirement assumption was increased, the likely effect on plan liabilities would be a very small increase, resulting in a very small increase in the required contribution.

4. Withdrawal – men and women

Withdrawal experience over the last four years is somewhat higher than assumed, although the ratios are closer to 100 percent for the 4 -year period than for the 10-year period. There has been a substantial decline in the number of withdrawals over the last two years.

Ratio of actual to expected employee terminations


Men 107.39% 122.39% Women 101.12% 125.25% Combined 103.82% 124.03%



We do not currently recommend any change in this assumption, in part because recent experience has been much closer to the assumption than experience in the last 10 years.

However, if we were to suggest revisions to reduce the assumed withdrawal rate for men and women, we expect this would slightly increase retirement liabilities and required contributions.

5. Disability – men and women – Ordinary and Accidental

The Ordinary disability experience is significantly lower than assumed, over both 4 and 10 year periods. Accidental disability experience is even lower than expected (compared to Ordinary) over the 4-year period but similar to the Ordinary experience over the 10-year period.

Ratio of actual to expected disabilities 4-year experience 10-year experience

Ordinary – Men 64.54% 73.42% Ordinary – Women 63.81% 73.83% Ordinary – Combined 64.16% 73.62%Accidental – Men 43.81% 72.81% Accidental – Women 40.48% 71.31% Accidental – Combined 42.52% 72.23%

The incidence of ordinary disability is small (2,837 disabled out of 671,472 eligible, over the last 10 years), and while the experience has been lower than expected, we are not yet prepared to recommend a change in the assumption. The incidence of accidental disability is much smaller than ordinary disability (271 disabled out of 1,299,028 over the last 10 years.) Thus, very minor differences in the number of disabled significantly changes the ratio of actual to assumed. Thus, we see no reason currently to revise the accidental disability assumption.

If we were to suggest decreasing the disability assumptions to better match experience, the effect would be to very slightly increase the liability and required contributions.

6. Total and merit salary increase – men and women combined

Pay increases over the last 4 years have been lower than anticipated. However, pay increases over the last 10 years are very close to the anticipated level. Please note that Total pay is the sum of Merit increases and inflation. Merit pay has been reduced for actual inflation, of 1.5%, over the 4- and 10-year periods.

Ratio of actual to expected salary 4-year experience 10-year experienceTotal 71.46% 105.37%Merit 49.08% 107.81%



The year by year results show that the experience seems highly cyclical. This suggests that the 10 year results are a better measure to assess the necessity of an assumption change.

Year Actual Increase Expected Increase 2006 1.84% 3.49%2007 8.41% 3.47%2008 5.50% 3.49%2009 6.47% 3.50%2010 2.95% 3.51%2011 2.67% 3.48%2012 0.59% 3.44%2013 1.93% 3.55%2014 4.28% 3.49%2015 3.10% 3.43%

Reducing the total salary improvement assumption to reflect the lower than expected increases in the last 4 years would decrease the accrued liability and the annual required contribution.

Increasing the pay improvement assumptions slightly to reflect the slightly higher than expected merit pay increases in the last 10 years would have the opposite effect.

7. Overtime Experience – men and women combined

The table below compares the OT experience to the assumption. The experience is higher than expected for all years. However, the experience in the year prior to retirement will drive the liabilities more than overtime in other years, and the experience is closest to the assumption in the year before retirement.

Overtime as a Percent of Base Pay - Actual to Expected 4 Year 10 Year

All Overtime 162.03% 152.07% Year Before Retirement 109.81% 109.62% Year Before Disability Retirement 123.00% 115.96%

An increase in the overtime assumptions would increase both liabilities, and the required contribution.


4-Year Period Ending 2015

New York City Employees' Retirement System - General

Service Retirees' Mortality Assumption and Experience

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

180.00%

55 60 65 70 75 80 85 90 95 100+Age

Actual/Expected Rates for Service Retirees, Men

Actual 100%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

180.00%

55 60 65 70 75 80 85 90 95 100+Age

Actual/Expected Rates for Service Retirees, Women

Actual 100%

0%

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40%

60%

80%

100%

120%

140%

160%

55 60 65 70 75 80 85 90 95 100+Age

Actual/Expected Rates for Service Retirees, Men and Women

Actual 100%


0.95 Confidence Interval




Men

Women

0

50

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300

55 60 65 70 75 80 85 90 95

Act

ual

Dea

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Actual Upper Bound Expected Lower Bound

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Gen_Age_07-25-2017_14-41-46 - With Tables CI_SER_RET_M&W_MOR_4YR55 Bolton Partners, Inc.


Retirees' Mortality Assumptions and Experience


90%92%94%96%98%

100%102%104%106%108%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Service Retirees

Actual/Expected 100%

0%

20%

40%

60%

80%

100%

120%

140%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Disability Retirees


Gen_Age_07-25-2017_14-41-46 - With Tables Mortality Graphs - 10yr56 Bolton Partners, Inc.



Disability Retirees' Mortality Assumption and Experience

0%

50%

100%

150%

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300%

350%

50 55 60 65 70 75 80 85 90 95 100+Age

Actual/Expected Rates for Disability Retirees, Men

Actual 100%

0%

50%

100%

150%

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250%

50 55 60 65 70 75 80 85 90 95 100+Age

Actual/Expected Rates for Disability Retirees, Women

Actual 100%

0%20%40%60%80%

100%120%140%160%180%200%

50 55 60 65 70 75 80 85 90 95 100+Age

Actual/Expected Rates for Disability Retirees, Men and Women

Actual 100%

Gen_Age_07-25-2017_14-41-46 - With Tables Mortality Graphs - Dis 4yr57 Bolton Partners, Inc.





Women

Men

0

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50 55 60 65 70 75 80 85 90 95

Act

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Dea

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Act

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Gen_Age_07-25-2017_14-41-46 - With Tables CI_DIS_RET_M_MOR_4YR58 Bolton Partners, Inc.


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Active Mortality Assumptions and Experience

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

0.45%

25 30 35 40 45 50 55 60 65Age

Ordinary Mortality, Men and Women

Actual Current Proposed

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

25 30 35 40 45 50 55 60 65Age

Accidental Mortality, Men and Women


Gen_Age_07-25-2017_14-41-46 - With Tables Ordinary Mortality Graphs59 Bolton Partners, Inc.

Men

Women


Active Ordinary Mortality Assumption and Experience



0

5

10

15

20

25

30

35

40

25 30 35 40 45 50 55 60 65

Act

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Dea

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Age


0

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35

25 30 35 40 45 50 55 60 65

Act

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Dea

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Age


Gen_Age_07-25-2017_14-41-46 - With Tables CI_ORD_MOR_M&W_4YR60 Bolton Partners, Inc.

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Rat

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Retirement Experience of those in First Year of Eligibility


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

55 56 57 58 59 60 61 62 63 64 65Age

First Year of Retirement Eligibility, Elected Plan, Men and Women


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

57 58 59 60 61 62 63 64 65Age

First Year of Retirement Eligibility, Mandated Plan, Men and Women


Gen_Age_07-25-2017_14-41-46 - With Tables Retirement Graphs - 1st yr61 Bolton Partners, Inc.

Mandated - Men and Women

Elected- Men and Women





Mandated and Elected - Men and Women

0

500

1000

1500

2000

2500

55 56 57 58 59 60 61 62 63 64 65

Act

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Ret

irem

ents

Age


0

50

100

150

200

250

300

350

400

55 56 57 58 59 60 61 62 63 64 65

Act

ual

Ret

irem

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Age


0

500

1000

1500

2000

2500

57 58 59 60 61 62 63 64 65

Act

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Ret

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Age



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Retirement Experience of those in Second Year of Eligibility


0

0.1

0.2

0.3

0.4

0.5

0.6

56 57 58 59 60 61 62 63 64 65Age

Second Year of Retirement Eligibility, Elected Plan, Men and Women


0

0.05

0.1

0.15

0.2

0.25

0.3

58 59 60 61 62 63 64 65Age

Second Year of Retirement Eligibility, Mandated Plan, Men and Women



Mandated- Men and Women

Mandated and Elected- Men and Women






0

200

400

600

800

1000

56 57 58 59 60 61 62 63 64 65

Act

ual

Ret

irem

ents

Age


0

5

10

15

20

25

30

35

40

58 59 60 61 62 63 64 65

Act

ual

Ret

irem

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Age


0

100

200

300

400

500

600

700

800

900

58 59 60 61 62 63 64 65 66

Act

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Ret

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Age



Rat

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Retirement Experience of those after Second Year of Eligibility


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

56 57 58 59 60 61 62 63 64 65Age

After Second Year of Retirement Eligibility, Elected Plan, Men and Women


0

0.05

0.1

0.15

0.2

0.25

58 59 60 61 62 63 64 65Age

After Second Year of Retirement Eligibility, Mandated Plan, Men and Women




Mandated- Men and Women





Mandated and Elected- Men and Women

0

200

400

600

800

1000

1200

1400

56 57 58 59 60 61 62 63 64 65 66 67 68

Act

ual

Ret

irem

ents

Age


0

20

40

60

80

100

120

56 57 58 59 60 61 62 63 64 65 66 67 68

Act

ual

Ret

irem

ents

Age


0

200

400

600

800

1000

1200

58 59 60 61 62 63 64 65 66 67 68

Act

ual

Ret

irem

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Age




Early Retirement Experience of Active Members


Rat

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eti

rem

ent

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

55 56 57 58 59 60 61Age

Early Retirement of Active Members, Men and Women







Men and Women

0

200

400

600

800

1000

1200

55 56 57 58 59 60 61

Act

ual

Ret

irem

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Age



Wit

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ate


Withdrawal Experience of Active Members


Wit

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Wit

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al R

ate

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Men


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Women


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Men and Women



Men and Women

Men

Women




0

100

200

300

400

500

600

700

800

900

0 1 2 3 4 5 6 7 8 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

+

Act

ual

Wit

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raw

als

Years of Service


0

200

400

600

800

1000

1200

0 1 2 3 4 5 6 7 8 91

01

11

21

31

41

51

61

71

81

92

02

12

22

32

42

52

62

72

82

93

03

1+

Act

ual

Wit

hd

raw

als

Years of Service


0

200

400

600

800

1000

1200

1400

1600

1800

2000

0 1 2 3 4 5 6 7 8 91

01

11

21

3

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

+

Act

ual

Wit

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raw

als

Years of Service



Rat

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Dis

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ate

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Ord

inar

y D

isab

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Rat

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Dis

abili

ty


Ordinary Disability Experience of Active Members


0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

35 40 45 50 55 60 65Age

Men


0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

35 40 45 50 55 60 65Age

Women


0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

35 40 45 50 55 60 65Age

Men and Women



Men

Women





0

10

20

30

40

50

60

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67

Act

ual

Dis

abili

ties

Age


0

10

20

30

40

50

60

70

80

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67

Act

ual

Dis

abili

ties

Age



Rat

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f A

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tyR

ate

of

Acc

iden

tal D

isab

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Rat

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abili

ty


Accidental Disability Experience of Active Members


0

0.0001

0.0002

0.0003

0.0004

0.0005

0.0006

0.0007

35 40 45 50 55 60 65Age

Men


0

0.00005

0.0001

0.00015

0.0002

0.00025

0.0003

0.00035

0.0004

0.00045

35 40 45 50 55 60 65Age

Women


0

0.00005

0.0001

0.00015

0.0002

0.00025

0.0003

0.00035

0.0004

0.00045

35 40 45 50 55 60 65Age

Men and Women




Salary Assumptions and Experience

For the Four-Year Period ending in 2015

0%

20%

40%

60%

80%

100%

120%

0 5 10 15 20 25 30+Service

Annual Total Salary to Expected Salary, Men and Women

Actual 100%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

0 5 10 15 20 25 30+

Service

Annual Merit Salary to Expected Salary, Men and Women

Actual 100%





0%

50%

100%

150%

200%

250%

0 5 10 15 20 25Service

Annual Overtime Pay to Expected Overtime Pay,Men and Women

Actual 100%

0%

50%

100%

150%

200%

0 5 10 15 20 25Service

Annual Overtime Pay to Expected Overtime Pay before Retirement, Men and Women

Actual 100%

0%

50%

100%

150%

200%

250%

300%

0 5 10 15 20 25Service

Annual Overtime Pay to Expected Overtime Pay before Disability, Men and Women

Actual 100%


#REF!

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Overtime Pay Experience for All Years

10-Year Period Ending 2015 By Year

0%20%40%60%80%

100%120%140%160%180%200%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%



NYCERS - TRANSIT Members

Transit members experience has been reasonably close to assumed. Retiree mortality experience fairly closely matches assumed, while withdrawal experience has, over the last four years, become lower than assumed. Retirement (higher for Elected, and much lower for Mandated) and ordinary disability (much higher for women, although there are few) experience has been somewhat lower than assumed. Only employee mortality and accidental disability have been significantly lower than expected, and these assumptions have a very minor effect on liabilities. While salary improvement has been higher than expected, as well as regular overtime, salary improvement has been trending downward, and the more important overtime experience is that for employees in the year of retirement, which has been lower than assumed.


The following graphs and tables show the incidence of mortality for service retirees and disabled retirees for the most recent four or ten years, ending June 30, 2015. Overall, actual mortality experience was 103% of assumed for service retirees and 94% (98% over 10 years) for disabled retirees. The exhibits show that the assumptions continue to reflect the actual experience.




Differences between actual and expected experience for all but a small number of ages are within the 95% confidence interval, implying that the retiree mortality assumptions for NYCERS - TRANSIT are likely to accurately model the experience.

Thus, we do not currently suggest a revision to the retiree mortality assumptions. However, if we were to recommend a slight increase in the mortality assumption for service retirees, this would slightly decrease the TRANSIT liabilities and required contributions. Similarly, if we were to suggest a slight decrease in the mortality assumption for disability retirees, this would very slightly increase the TRANSIT liabilities and required contributions.



2. Mortality – active men and women – ordinary and accidental

Mortality experience for employees is substantially lower than expected for women and men, for both ordinary mortality and accidental mortality. Moreover, there has been a steady decline in the number of employee deaths in this group.

Ordinary Employee Mortality ExperienceRatio of actual to expected deaths


Men 24.25% 63.67% women 46.35% 93.53% Combined 26.23% 66.32%

Accidental Employee Mortality ExperienceRatio of actual to expected deaths


Combined 7.21% 8.39% The confidence interval graph shows that the mortality rates at nearly every age are outside the 95% confidence interval of the current assumption.

Because of the relatively low incidence of both ordinary mortality and accidental mortality among active NYCERS - TRANSIT, and the relatively minor effect on plan liabilities, we do not currently recommend any change in either of these assumptions. In addition, the recent dramatic decrease in employee ordinary mortality suggests that this experience may be an anomaly.



There is a significant difference between the retirement experience for those eligible to retire with unreduced retirement benefits and those currently eligible only for retirement benefits reduced for early payment. The unreduced (that is, eligible for unreduced retirement) retirement experience is much lower than assumed, while early retirement (that is, for those not eligible for unreduced retirement, but eligible to retire) experience is much higher than assumed. This is especially so for those with Mandated retirement and less so for those with Elected retirement. For those with Elected retirement there are more retirements than expected.

Mandated and Elected RetirementRatio of actual to expected retirements



71.35% 74.25%


68.70% 67.96%


58.84% 61.34%






114.94% 116.84%


120.54% 112.15%


104.49% 103.47%

Mandated Ratio of actual to expected retirements –



46.30% 50.65%


43.67% 48.15%


44.53% 51.29%

We do not currently suggest a change in the Elected retirement assumptions. The experience suggests reducing the retirement rates for the Mandated group, but we also do not currently suggest making a change. Increasing the assumed retirement rate for Elected retirement would increase the liabilities and required contributions. Reducing the assumed retirement rate for Mandated retirement would reduce liabilities and the required contributions.


Most of the Transit employees are in plans with no early retirement provisions. The data shows only 213 exposures over the 10-year period. The experience is higher than expected however given the materiality of this assumption we are not recommending a change in this assumption.


Withdrawal experience over the last 10 years has been slightly higher than assumed, but the more recent experience, over the last 4 years, is lower than assumed. This is because there has been a substantial decline in the number of withdrawals over the last two years.



Men 72.87% 95.49%Women 122.69% 148.08%Combined 80.60% 103.83%

We do not currently recommend any change in this assumption, due to the significant change in the most recent experience.

However, if we were to suggest revisions to reduce the assumed withdrawal rate for men and women, we expect this would slightly increase retirement liabilities and required contributions.




The Ordinary disability experience is lower than assumed, over both 4- and 10-year periods, although only slightly lower over the last 10 years. However, Ordinary disability experience is much higher than assumed for women. Accidental disability experience is much lower than expected over both 4- and 10-year periods, although for women, the accidental disability experience is not as much lower over the 10-year period than for men.

Ratio of actual to expected disabilities


Ordinary – Men 68.18% 82.52% Ordinary – Women 186.48% 209.73% Ordinary – Combined 84.35% 99.67%Accidental – Men 4.23% 21.35% Accidental – Women - 66.23% Accidental – Combined 3.60% 27.98%

The incidence of ordinary disability is small (1,146 disabled out of 213,610 eligible, over the last 10 years), and while the experience has been lower than expected over the last 4 years, it is similar to the ordinary disability assumption over the last 10 years. Any suggested change to the Ordinary disability experience would most likely raise the rate for women and lower the rate for men. The incidence of accidental disability is much smaller than ordinary disability (20 disabled out of 357,361 over the last 10 years.) Thus, very minor differences in the number of actually disabled significantly changes the ratio of actual to assumed. Thus, we see no reason to revise the accidental disability assumption.



Pay increases over the last 4 years have been slightly higher than anticipated. However, pay increases over the last 10 years are much higher than the anticipated level.

Ratio of actual to expected salary


Total 108.94% 141.39%Merit 117.53% 185.47%

Since there has been a significant decrease in the pay improvement rate in the last four years when compared to the last 10 years, we anticipate reviewing this difference in the next study before suggesting any changes to the assumptions.

Increasing the total salary improvement assumption to reflect the higher than expected increases in the last four years would increase the accrued liability and the annual required contribution.




The table below compares the OT experience to the assumption. The regular OT experience is higher than expected for all years, with the four-year experience higher than the 10-year experience. However, the more important OT prior to retirement or disability has been consistently lower than anticipated. The experience in the year prior to retirement will have a much larger effect on liabilities than overtime in other years. Accordingly, the assumption may be slightly conservative. Thus, a revision to increase the regular OT assumption would increase the contribution, while reducing the dual OT assumptions would likely reduce the plan liabilities and decrease the required contribution.



Thus, we are not currently suggesting a revision in the OT assumptions.


New York City Employees' Retirement System - Transit


Mortality Experience of Service Retirees

0%

20%

40%

60%

80%

100%

120%

140%

55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

350%

55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

55 60 65 70 75 80 85 90 95 100+Age


Actual 100%


Men

Women





0

20

40

60

80

100

120

140

160

55 60 65 70 75 80 85 90 95

Act

ual

Dea

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Age


0

2

4

6

8

10

12

14

16

18

55 60 65 70 75 80 85 90 95

Act

ual

Dea

ths

Age






80%

85%

90%

95%

100%

105%

110%

115%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year






Mortality Experience of Disability Retirees

0%

50%

100%

150%

200%

250%

300%

350%

50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

50%

100%

150%

200%

250%

50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

350%

50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%


Men





0

2

4

6

8

10

12

14

16

18

20

50 55 60 65 70 75 80 85 90 95

Act

ual

Dea

ths

Age






0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year




0.95 Confidence IntervalOrdinary Mortality Experience of Active Members


Ordinary Mortality Experience of Active Members


Ord

inar

y M

ort

alit

y R

ates

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

25 30 35 40 45 50 55 60 65Age



0

5

10

15

20

25

30

25 30 35 40 45 50 55 60 65

Act

ual

Dea

ths

Age




Accidental Mortality Experience of Active Members


Acc

iden

tal M

ort

alit

y R

ates

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%

25 30 35 40 45 50 55 60 65Age




Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated and Elected Plan, Men


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated and Elected Plan, Women


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated and Elected Plan, Men and Women



Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age




Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age



0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age




First Year Eligibility for Retirement - Men and Women

Second Year Eligibility for Retirement - Men and Women

After Second Year Eligibility for Retirement - Men and Women


Mandated and Elected Benefits


Retirement Experience of Active Members


0

200

400

600

800

1000

1200

55 56 57 58 59 60 61 62 63 64 65

Act

ual

Ret

irem

ents

Age


0

100

200

300

400

500

600

56 57 58 59 60 61 62 63 64 65

Act

ual

Ret

irem

ents

Age


0

100

200

300

400

500

600

700

57 58 59 60 61 62 63 64 65

Act

ual

Ret

irem

ents

Age



Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Men


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Women


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Men and Women



Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Men


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Women


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age




Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Men


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Women


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age




Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

10%

20%

30%

40%

50%

60%

70%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated Plan, Men


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated Plan, Women


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated Plan, Men and Women



Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated Plan, Men


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age




Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age

Mandated Plan, Men


0%

10%

20%

30%

40%

50%

60%

55 56 57 58 59 60 61 62 63 64 65Age



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

55 56 57 58 59 60 61 62 63 64 65Age





Reduced Retirement

Men and Women (Four Year Experience)

95% Confidence Level

0

0.5

1

1.5

2

55 56 57 58 59 60 61

Act

ual

Ret

irem

ents

Age



Wit

hd

raw

al R

ates




Wit

hd

raw

al R

ates

Wit

hd

raw

al R

ates

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Men


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Women


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Withdrawal, Men and Women






Men and Women

Women

Men

0

50

100

150

200

250

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Act

ual

Wit

hd

raw

als

Years of Service


0

5

10

15

20

25

30

35

40

45

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Act

ual

Wit

hd

raw

als

Years of Service


0

50

100

150

200

250

300

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Act

ual

Wit

hd

raw

als

Years of Service



Ord

inar

y D

isab

ility

Rat

esO

rdin

ary

Dis

abili

ty R

ates

Ord

inar

y D

isab

ility

Rat

esNew York City Employees' Retirement System - Transit



0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

35 40 45 50 55 60 65Age

Men


0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

35 40 45 50 55 60 65Age

Women


0.00%0.10%0.20%0.30%0.40%0.50%0.60%0.70%0.80%0.90%

35 40 45 50 55 60 65Age

Men and Women






Ordinary Disability Experience of Active Members, Men and Women

0

10

20

30

40

50

60

70

80

90

35 40 45 50 55 60 65

Act

ual

Dis

abili

ties

Age



Acc

iden

tal D

isab

ility

Rat

esA

ccid

enta

l Dis

abili

ty R

ates

Acc

iden

tal D

isab

ility

Rat

es




0.00%

0.01%

0.01%

0.02%

0.02%

0.03%

0.03%

0.04%

0.04%

35 40 45 50 55 60 65Age

Men


0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

35 40 45 50 55 60 65Age

Women


0.00%

0.01%

0.01%

0.02%

0.02%

0.03%

0.03%

0.04%

35 40 45 50 55 60 65Age

Men and Women






0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

0 5 10 15 20 25 30+Service


Actual 100%

0%

50%

100%

150%

200%

250%

300%

0 5 10 15 20 25 30+Service


Actual 100%





0%20%40%60%80%

100%120%140%160%180%200%

0 5 10 15 20 25Service


Actual 100%

0%

50%

100%

150%

0 5 10 15 20 25Service


Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

0 5 10 15 20 25Service


Actual 100%





0%

50%

100%

150%

200%

250%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%



NYCERS - SANITATION Members

Sanitation workers are nearly all men, so we have not divided experience by gender. Experience

with the most critical assumptions, retiree mortality, employee withdrawal, unreduced retirement,

salary improvement and retirement overtime, as well as the less significant accidental disability,

has generally been consistent with assumptions. The only significant differences have been with

salary improvement and retirement. There is significantly more difference between the

assumptions and experience for the minor assumptions (employee mortality, ordinary disability,

regular overtime and disability overtime), although the overall cost impact for changes to these

assumptions would be relatively minor.


The following graphs and tables show the incidence of mortality for service retirees and disabled

retirees, for the most recent four or ten years, ending June 30, 2015. Overall, actual mortality

experience was 102% of assumed for service retirees and 95% (96% for 10 years) for disabled

retirees. The exhibits show that the assumptions continue to reflect the actual experience.

Experience Compared to Current Assumptions

Ratio of actual to expected

deaths


Service Combined 102.42% 102.21%

Disabled Combined 94.92% 96.36%

Differences between actual and expected experience are all within the 95% confidence interval,

implying that the retiree mortality assumptions for NYCERS - SANITATION are likely to

accurately model the experience.

2. Mortality – active men and women – ordinary

Mortality experience for employees is substantially lower than expected for women and men.

Moreover, there has been a steady decline in the number of employee deaths in this group.

Ratio of actual to expected deaths 4-year experience 10-year experience

Ordinary Combined 31.90% 77.67%

Accidental Combined 0.00% 54.57%

The number of expected deaths (97 ordinary and 7 accidental deaths over 10 years) are too small

to study with confidence intervals and the experience has little credibility, particularly for

accidental deaths.

Because of the relatively low incidence of both ordinary and accidental mortality among active

NYCERS - Sanitation, and the relatively minor effect on plan liabilities, we do not currently

recommend any change in either of these assumptions.

However, if we were to suggest revisions to reduce the assumed mortality for men and women, we

would expect that this would slightly increase the liabilities and required contributions.




The unreduced (that is, eligible for unreduced retirement) retirement experience is much lower

than assumed. This is especially so for those with Mandated retirement and less so for those with

Elected retirement.

Mandated and Elected Retirement


retirements


First year of eligibility –

Combined

78.66% 72.44%

Second year of eligibility –

Combined

58.44% 64.86%

Each succeeding year –

Combined

88.73% 86.75%

Elected


retirements



Combined

38.46% 73.72%


Combined

68.70% 70.15%


Combined

100.35% 94.78%

Mandated


retirements –



Combined

79.19% 67.79%


Combined

52.20% 48.92%


Combined

40.15% 45.82%

We do not currently recommend a change in the Elected or Mandated retirement assumptions. The

experience suggests reducing the retirement rates for both groups, although we consider any

revision premature. If we did suggest reducing the retirement rates, the change would reduce

liabilities and the contribution rate.


Most of the Sanitation employees are in plans with no early retirement provisions. The data shows

only 307 exposures over the 10-year period. The experience is higher than expected however

given the materiality of this assumption and the paucity of eligible employees we are not

recommending a change in this assumption.




While withdrawal experience over the last four years is very close to expected and somewhat higher than expected over 10 years, it is within the 95 percent confidence interval. The ratios are closer to 100 percent for the 4-year period than for the 10-year period. There is a been a substantial decline in the number of withdrawals over the last two years.



Combined 95.84% 114.51% Thus, we do not currently recommend any change in this assumption.

However, if we were to suggest revisions to slightly reduce the assumed withdrawal rate for men and women, we expect this would slightly increase retirement liabilities and required contributions.


The Ordinary disability experience is significantly lower than assumed, over both 4- and 10-year periods. Accidental disability experience is slightly lower than expected over the 4-year period, but substantially higher over the 10-year period. Ratio of actual to expected disabilities


Ordinary – Combined 78.82% 70.83% Accidental – Combined 95.23% 128.80%

The incidence of ordinary disability is small (153 disabled out of 39,362 eligible, over the last 10 years), and while the experience has been lower than expected, we are not yet prepared to recommend a change in the assumption. The incidence of accidental disability is slightly higher than ordinary disability (358 disabled out of 73,305 over the last 10 years.) This means that very minor differences in the number of disabled significantly change the ratio of actual to assumed. Thus, we see no reason to revise the accidental disability assumption.

If we were to suggest decreasing the ordinary disability assumptions to better match experience, the effect would be to very slightly increase the liability and required contributions.


Pay increases over the last 4 years have been significantly lower than anticipated. Pay increases over the last 10 years are close to the anticipated level.



Total 68.43% 94.22% Merit 52.55% 90.76%



The year by year results show that the experience seems highly cyclical. This suggests that the 10 year results are a better measure to assess the necessity of an assumption change.

Year Actual Increase Expected Increase2006 6.11% 6.73%2007 11.14% 4.65%2008 6.52% 4.69%2009 3.79% 7.00%2010 8.53% 8.30%2011 5.37% 6.54%2012 2.93% 5.51%2013 3.79% 4.69%2014 3.76% 4.06%2015 2.25% 4.31%

Thus, we do not currently recommend revising these assumptions, because of the recent contract revisions and how cyclical the pay increases have been over the last 10 years.

Reducing the total salary and merit improvement assumptions to reflect the lower than expected increases in the last 4 years would decrease the accrued liability and the annual required contribution.


The table below compares the experience to the assumption. The regular OT experience is higher than expected for all years, but the OT experience is lower than anticipated for the years prior to service or disability retirement. The experience in the year prior to retirement will drive the liabilities much more than overtime in other years. Accordingly, the assumption may be slightly conservative.

Overtime as a Percent of Base Pay -Actual to Expected 4 Year 10 Year

All Overtime 138.48% 115.35%Year Before Retirement 98.31% 77.34%Year Before Disability Retirement 78.56% 60.96%

Therefore, we do not currently recommend any changes to the overtime assumptions.


New York City Employees' Retirement System - Sanitation



0%

20%

40%

60%

80%

100%

120%

140%

160%

55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%



Mortality of Service Retirees - Four Year Experience

Men


0

10

20

30

40

50

60

70

55 60 65 70 75 80 85 90 95

Act

ual

Dea

ths

Age




Mortality Assumptions and Experience

For the Ten-Year Period ending in 2015

0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%

0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%


New York City Employees' Retirement System - SanitationMortality of Disability Retirees - Four Year Experience

Men 95% Confidence Level

0

2

4

6

8

10

12

14

16

18

50 55 60 65 70 75 80 85 90 95

Act

ual

Dea

ths

Age




Ord

inar

y M

ort

alit

yA

ccid

enta

l Mo

rtal

ity


Active Mortality Assumptions and Experience

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

20 25 30 35 40 45 50 55 60 65Age



0.00%

0.00%

0.00%

0.01%

0.01%

0.01%

0.01%

25 30 35 40 45 50 55 60 65Age




Ret

irem

ent

Rat

esR

etir

emen

t R

ates

Ret

irem

ent

Rat

es




0

0.2

0.4

0.6

0.8

1

1.2

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.2

0.4

0.6

0.8

1

1.2

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.2

0.4

0.6

0.8

1

1.2

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age






Elected - Men and Women





0

5

10

15

20

25

45 50 55 60 65

Act

ual

Ret

irem

ents

Age


0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

45 50 55 60 65

Act

ual

Ret

irem

ents

Age


0

5

10

15

20

25

45 50 55 60 65

Act

ual

Ret

irem

ents

Age



Ret

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ent

Rat

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t R

ates

Ret

irem

ent

Rat

es




0

0.1

0.2

0.3

0.4

0.5

0.6

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age











0

2

4

6

8

10

12

14

16

18

20

45 50 55 60 65

Act

ual

Ret

irem

ents

Age


0

2

4

6

8

10

45 50 55 60 65

Act

ual

Ret

irem

ents

Age


0

2

4

6

8

10

12

14

16

45 50 55 60 65

Act

ual

Ret

irem

ents

Age



Ret

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Rat

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Ret

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Rat

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0

0.1

0.2

0.3

0.4

0.5

0.6

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age











0

10

20

30

40

50

60

45 50 55 60 65

Act

ual

Ret

irem

ents

Age


0

10

20

30

40

50

60

45 50 55 60 65

Act

ual

Ret

irem

ents

Age


02468

101214161820

45 50 55 60 65

Act

ual

Ret

irem

ents

Age



Ret

irem

ent

Rat

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ates



0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

55 56 57 58 59 60 61Age

Early Retirement Experience of Active Members 4 Year Period


0

0.05

0.1

0.15

0.2

0.25

55 56 57 58 59 60 61Age

Early Retirement Experience of Active Members 10 Year Period




Reduced Retirement

Men and Women (Four Year Experience)


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

55 56 57 58 59 60 61

Act

ual

Ret

irem

ents

Age






Wit

hd

raw

al R

ate

0.95 Confidence Interval, Men and Women

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0 2 4 6 8 10 12 14 16 18 20 22 24Years of Service



0

5

10

15

20

25

30

35

40

0 2 4 6 8 10 12 14 16 18 20 22 24

Act

ual

Wit

hd

raw

als

Years of Service






Ord

inar

y D

isab

ility

Rat

es

0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

0.018

0.02

35 40 45 50 55 60 65Age

Ordinary Disability, Men and Women



Acc

iden

tal D

isab

ility

Rat

esA

ccid

enta

l Dis

abili

ty R

ates

Acc

iden

tal D

isab

ility

Rat

es




0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

0.018

0.02

35 40 45 50 55 60 65Age

Accidental Disability, Men


0

0.02

0.04

0.06

0.08

0.1

0.12

35 40 45 50 55 60 65Age

Accidental Disability, Women


0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

0.018

35 40 45 50 55 60 65Age

Accidental Disability, Men and Women






0%

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0 5 10 15 20 25 30+Service


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-150%

-100%

-50%

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0 5 10 15 20 25 30+

Service


Actual 100%





0%20%40%60%80%

100%120%140%160%180%

0 5 10 15 20 25Service


Actual 100%

0%

20%

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80%

100%

120%

140%

0 5 10 15 20 25Service


Actual 100%

0%

20%40%

60%80%

100%

120%

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160%

180%

0 5 10 15 20 25Service


Actual 100%





0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%



NYCERS - CORRECTIONS Members

The overall experience for Corrections members differed more from assumed than any other NYCERS group, except for TBTA. Mortality experience was substantially lower than expected, particularly for employees, while withdrawals were substantially higher than expected. Salary improvement was reasonably close to assumed, but unreduced retirement was substantially later than assumed. Finally, ordinary disability experience was substantially lower than assumed while accidental disability experience was substantially higher than expected.


The following graphs and tables show the incidence of mortality for service retirees and disabled retirees, for the most recent four or ten years, ending June 30, 2015. Overall, actual mortality experience was 82% (85% over 10 years) of assumed for service retirees and 67% (74% for 10 years) for disabled retirees. The number of deaths being lower than anticipated may lead us to consider suggesting an adjustment to this assumption when the next two years of data are available. Over the 10-year period there were 731 service retirement deaths and 210 disability retirement deaths so the data is not fully credible.




While both service and disability retirees’ mortality experience is lower than expected, because of the relatively small size of NYCERS - Corrections and the planned change to liability weighting mortality experience in the next study, we do not currently suggest revising the service and disability retiree mortality assumptions. If we were to reduce the assumed mortality for both groups, the effect would be to increase both the liability and the required contribution.


Mortality experience for employees is substantially lower than expected for women and men. Moreover, there has been a steady decline in the number of employee deaths in this group.

Ordinary Employee Mortality Experience Ratio of actual to expected deaths



There were no accidental mortality deaths over the 10-year period.

Due to the small number of deaths we do not show the confidence intervals. 132 Bolton Partners, Inc.


Because of the relatively low incidence of both Ordinary and Accidental mortality among active NYCERS - Corrections, and the relatively minor effect on plan liabilities, we do not currently suggest any change in either of these assumptions. In addition, the recent dramatic decrease in employee mortality suggests that the current experience may be an anomaly. If we were to suggest decreasing the mortality assumption, the plan liabilities would increase slightly as would the required contribution.


The retirement experience is lower than assumed. This is more so for those eligible for Mandated retirement and less so for those with Elected retirement.

Mandated and Elected Retirement Ratio of actual to expected retirements



53.22% 71.23%


83.61% 84.75%


71.20% 69.32%




31.75% 74.29%


86.80% 90.27%


76.54% 74.47%




56.11% 60.30%


80.04% 70.93%


54.81% 52.62%

The experience suggests reducing the retirement rates, although we are not currently suggesting a decrease in the assumed retirement rates. A decrease in the retirement assumption would reduce liabilities and required contributions.



Early retirement

There was only one exposure per year over the 10-year period for reduced retirement; thus, the experience is not credible and we did not attempt to analyze it.


Withdrawal experience over the last four years is higher than assumed. The ratios are closer to 100 percent for the 4-year period than for the 10-year period. There is a been a substantial decline in the number of withdrawals over the last two years.




The number of withdrawals is substantially higher than anticipated (although falling in the last four years) suggesting that we may suggest an increase to the withdrawal assumption when the next two years of data are available.

If we were to suggest an increase in the assumed withdrawal rate for men and women, we expect this would decrease retirement liabilities and required contributions.


The Ordinary disability experience is significantly lower than assumed, over both 4- and 10-year periods. Accidental disability experience is much higher than expected for men over both 4-and 10-year periods, but for women, the accidental disability experience is lower over the 4-year period and 10-year periods.

Ratio of actual to expected disabilities 4-year experience 10-year experience

Ordinary – Men 38.09% 36.76% Ordinary – Women 62.16% 65.95% Ordinary – Combined 48.64% 49.30% Accidental – Men 184.77% 154.32% Accidental – Women 80.04% 52.60% Accidental – Combined 138.54% 109.77%

The incidence of Ordinary and Accidental disability is small (127 ordinary disabled out of 69,630 eligible for ordinary disability and 405 disabled out of 88,003 eligible for accidental disability, over the last 10 years), and the experience has been lower than expected for ordinary disability and higher than expected for accidental disability. However, we do not currently suggest revising the disability assumptions.

A decrease in the ordinary disability assumption would increase liabilities, and an in increase in the accidental disability assumption would decrease liabilities. Each change would be very small.




Pay increases over the last 4 years have been lower than anticipated. However, pay increases over the last 10 years are closer to, but slightly higher than, the anticipated level.



Total 80.01% 112.26% Merit 70.75% 115.35%

The pay increases are lower than anticipated over the 4-year period and higher than anticipated over the 10-year period. Because of the cyclical nature of pay increases we believe that the 10-year experience is more indicative of future experience than the 4-year experience. But the 10year experience is not high enough for us to currently suggest a change in the assumption.

Increasing the total salary improvement assumption to reflect the higher than expected increases in the last 10 years would increase the accrued liability and the annual required contribution.


The table below compares the OT experience to the assumption. The regular and retirement OT experience is higher than expected for all years, but lower than anticipated for the years prior to disability retirement. The experience in the year prior to retirement will drive the liabilities much more than overtime in other years. Furthermore, the OT experience has increased over the last 4-year period.



While we are not currently suggesting a change in the overtime assumptions, in part due to the recent acceleration of the experience, we anticipate doing so in the next study unless there is a significant change in the experience.

A higher overtime assumption, particularly for the year prior to retirement, would increase liabilities and required contributions.



New York City Employees' Retirement System - Corrections


0%

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55 60 65 70 75 80 85 90 95 100+Age


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55 60 65 70 75 80 85 90 95 100+Age


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55 60 65 70 75 80 85 90 95 100+Age


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AgeActual Upper Bound Expected Lower Bound

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55 60 65 70 75 80 85 90 95

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year



0.00%

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60.00%

80.00%

100.00%

120.00%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year







0.00%

50.00%

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50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0.00%

50.00%

100.00%

150.00%

200.00%

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300.00%

350.00%

50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

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50 55 60 65 70 75 80 85 90 95 100+Age


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tyNew York City Employees' Retirement System - Corrections


Active Accidental Mortality Assumption and Experience


Disabiliy Experience of Active MembersR

ate

of

Ord

inar

y D

isab

ility

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

35 40 45 50 55 60 65Age

Men and Women


0.00%

0.00%

0.00%

0.01%

0.01%

0.01%

0.01%

35 40 45 50 55 60 65Age

Men and Women



Rat

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ent

0

0.2

0.4

0.6

0.8

1

1.2

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.2

0.4

0.6

0.8

1

1.2

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

0.2

0.4

0.6

0.8

1

1.2

45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age

Total, Men and Women



Elected Benefits - Men and Women

Mandated Benefits - Men and Women



Mandated and Elected Benefits (Four Year Experience)


Mandated and Elected Benefits - Men and Women

0

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45 50 55 60 65

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46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



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1

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46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



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1

1.2

46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age











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35

46 51 56 61

Act

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46 51 56 61

Act

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46 51 56 61

Act

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tR

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Rat

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0

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1

1.2

47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

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1

1.2

47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0

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1

1.2

47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age











0

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120

47 52 57 62

Act

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47 52 57 62

Act

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47 52 57 62

Act

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Rat

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0%

1%

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4%

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6%

0 2 4 6 8 10 12 14 16 18 20 22 24Service

Withdrawal, Men


0%

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3%

4%

5%

6%

0 2 4 6 8 10 12 14 16 18 20 22 24Service

Withdrawal, Women


0%

1%

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3%

4%

5%

6%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24Service








Women

Men

Men and Women

0

10

20

30

40

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70

0 2 4 6 8 10 12 14 16 18 20 22 24

Act

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Wit

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raw

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0

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15

20

25

30

35

40

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Act

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raw

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0

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0 2 4 6 8 10 12 14 16 18 20 22 24

Act

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isab

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abili

ty




0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

35 40 45 50 55 60 65Age

Ordinary Disability, Men


0

0.002

0.004

0.006

0.008

0.01

0.012

0.014

0.016

35 40 45 50 55 60 65Age

Ordinary Disability, Women


00.0010.0020.0030.0040.0050.0060.0070.0080.0090.01

35 40 45 50 55 60 65Age




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0

0.01

0.02

0.03

0.04

0.05

0.06

35 40 45 50 55 60 65Age



00.010.020.030.040.050.060.070.080.09

0.1

35 40 45 50 55 60 65Age



0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

35 40 45 50 55 60 65Age







0%

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0 5 10 15 20 25 30+Service


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Service


Actual 100%





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0 5 10 15 20 25Service


Actual 100%

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0 5 10 15 20 25Service


Actual 100%

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0 5 10 15 20 25Service


Actual 100%





0%

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%



NYCERS - TBTA Members

Triborough Bridge and Tunnel Authority (TBTA) is the smallest of the groups included in NYCERS, with less than 1,500 employees earning benefits in the Plan. Also, we note that throughout the country, workers collecting tolls have been replaced by EZ Pass and other electronic toll collection, and suspect that this experience is being felt here as well, in both retirement and withdrawal experience. Thus, we are not surprised that the experience for TBTA members is somewhat different from the other groups, and note that the experience is generally much less credible than that of the other, larger, groups and maybe only temporary.


The following graphs and tables show the incidence of mortality for service retirees and disabled retirees, for the most recent four or ten years, ending June 30, 2015. Overall, actual mortality experience is approximately 95% of assumed for service retirees and 98% (132% for 4 years) for disabled retirees. However, there are only 41 disabled retirees who died in the 10-year period so the disability mortality experience is not very credible. The exhibits show that the assumptions continue to be consistent with the experience.




Because of the relatively small amount of experience for disabled participants, the graphs show that the actual to expected (A/E) ratios vary significantly between ages, and confidence interval analysis would be of limited use.

Because the A/E ratios are based on the number of lives, and are not liability weighted we believe that a 95 percent A/E life ratio for service retirees is close to 100 percent on an amounts weighted basis and accordingly would not currently recommend an assumption change.

Because of the relatively small amount of experience for disability retired participants (particularly the miniscule amount experience available for women), we make no recommendations regarding changes in the disabled retiree mortality assumption.

If we were to recommend decreasing the mortality assumption for service retirees, it would slightly increase liabilities and required contributions. Increasing the mortality assumption for disabled retirees would have an even smaller effect on liabilities and required contributions, although the effect would be to slightly decrease liabilities and required contributions.




Mortality experience for employees is substantially lower than expected for women and men. Please note that we expected 0.59 Accidental deaths (that is, work related deaths) over the 4-year period and 1.6 over the 10-year period, so it is not surprising that there were no Accidental deaths over that period.

Ordinary Employee Mortality Experience Ratio of actual to expected deaths


Men 36.94% 39.41% Women - 60.54% Combined 31.87% 42.37%

Accidental Employee Morality Experience Ratio of actual to expected deaths


Men - - Women - - Combined - -

There were 10 Ordinary deaths out of 16,019 exposures over the 10-year period, and 0 Accidental deaths out of 16,019 exposures. Thus, any differences between the experience and assumptions is not credible.

Because of the relatively low incidence of both Ordinary and Accidental mortality among active NYCERS - TBTA, and the relatively minor effect on plan liabilities, we do not currently recommend any change in either of these assumptions.



Recent retirement experience across nearly all of NYCRS has been lower than expected, except for the early retirement experience. However, the TBTA experience is higher than expected in the first year of retirement, and, for those who elected higher employee contributions to obtain an earlier unreduced retirement, in the second year. There is a significant difference between the retirement experience for those eligible to retire with unreduced retirement benefits and those currently eligible only for retirement benefits reduced for early payment. The unreduced (that is, eligible for unreduced retirement) retirement experience is in total 72.73% of assumed over the 10-year period, while early retirement (that is, for those not eligible for unreduced retirement, but eligible to retire) experience is much higher than assumed. The lower than expected unreduced retirement experience is especially true for those with Mandated retirement benefits and less so for those with Elected retirement benefits. For those who elected retirement there are more than expected retirements for those in the first year of eligibility.

Because of the small number of exposures, we show only combined experience (that is, men and women, combined.)



Mandated and Elected Retirement Men and Women

Ratio of actual to expected retirements



117.35% 95.87%


59.29% 68.49%


49.26% 54.21%




115.74% 111.37%


120.69% 112.07%


78.85% 82.62%




118.28% 78.88%


41.03% 44.71%


41.00% 41.95%

We do not currently suggest a change in the retirement assumptions, in part because of the changes in the toll collection process. The experience suggests that we may suggest reducing the retirement rates for Mandated retirement in the next study. This change would reduce liabilities and the required contributions.

Retirement prior to eligibility for unreduced retirement benefits (Early Retirement)

Early retirement experience has been much higher than assumed, as shown in the table below. Ratio of actual to expected retirements – Early Retirement


Combined 338.66% 218.17% While the experience is much higher than assumed, the percentage of eligible employees electing early retirement is around 8%, while the percentage of those eligible for unreduced retirement electing in their first year of eligibility is about 48%, based on the last four years’ experience.



Despite the recent higher early retirement experience, because of the relatively low number of employees who elect early retirement, we are not currently suggesting any change to this assumption. However, if we were to suggest increasing the early retirement assumption, the effect on liabilities and contributions would be quite minor.


Withdrawal experience over the last four and ten years is substantially higher than assumed, perhaps because of economic changes affecting the bridge and tunnel services.



Men 188.12% 163.21%Women 365.59% 350.88%Combined 221.33% 200.28%

There were only 289 withdrawals out of 13,637 exposures so this data is not fully credible. Also, as noted above, many employers of toll collectors have sharply reduced the number of employees involved in the toll collection process, because of the advent of electronic methods of toll collection. Thus, we are not currently recommending a change in the withdrawal assumption.

However, if we were to suggest revisions to increase the assumed withdrawal rate for men and women, we expect this would decrease retirement liabilities and required contributions.


The Ordinary disability experience is relatively close to the assumption, over both 4- and 10-year periods. Accidental disability experience is lower than expected for men over the 10-year period, and non-existent over the 4-year period. However, we expected only 1.9 men and 0.48 women to become accidently disabled over the 4-year period, so the experience is not credible.



Ordinary - Men 99.85% 82.71% Ordinary - Women 125.00% 119.26% Ordinary - Combined 105.51% 90.65%Accidental - Men - 39.70% Accidental - Women - 72.99% Accidental -Combined - 46.82%

The incidence of Ordinary disability is small (28 disabled out of 7,722 eligible, over the last 10 years), and while the experience has been slightly higher than expected, we are not currently suggesting a change in the assumption. The incidence of Accidental disability is much smaller than Ordinary disability (3 disabled out of 16,019 over the last 10 years.) Thus, very minor differences in the number of disabled would significantly change the ratio of actual to assumed disability experience. Thus, we see no reason to revise the accidental disability assumption.



If we were to suggest increasing the Ordinary disability assumption and decreasing the Accidental disability assumptions to better match experience, the effect would be to very slightly increase the liability and required contributions.


A look at the 4- and 10-year history, suggests that pay increases have been much higher than assumed, but irregular. The large increases in 2014 particularly affect the 4-year averages. Our expectation is that these large differences are temporary, and due to revisions in collective bargaining agreements, with retroactive pay increases.



Total 189.83% 162.41%Merit 300.33% 217.10%

The year by year results show that the experience seems highly cyclical. Suggesting that the 10 year results are a better measure to assess the necessity of an assumption change.

Year Actual Increase Expected Increase 2006 3.07% 3.91%2007 8.68% 3.70%2008 2.64% 3.48%2009 7.88% 3.41%2010 0.41% 3.17%2011 7.87% 2.96%2012 1.60% 2.77%2013 1.18% 2.64%2014 15.51% 2.60%2015 2.60% 2.67%

Increasing the total salary improvement assumption to reflect the higher than expected increases in the last 10 years would increase the accrued liability and the annual required contribution. Before we would recommend any change in assumption, we would like to better understand the reason for the large increases in some years (we understand that the large increase in 2014 was due to a revised contract, and includes back-payments for the prior two years) and whether (and when) these conditions could be expected to recur.

While we are not currently recommending any change in this assumption, if we did recommend increasing the salary improvement assumption, this would increase both the liabilities and the annual contribution.


The table below compares the OT experience to the assumption. The experience is lower than expected for all three of regular, service retirement and disability retirement OT. The experience in the year prior to retirement will drive the liabilities much more than overtime in other years. Accordingly, the current assumption may be somewhat conservative. If we were to reduce this assumption the impact would be to lower liabilities and the actuarially determined contribution.



Overtime Experience Ratios of actual over time to expected overtime 4 Year 10 Year All Overtime 80.54% 96.28% Year Before Retirement 49.61% 83.50% Year Before Disability Retirement 56.00% 62.15%

We note that the overtime experience in the last 5 years has been substantially lower than in the 5 earlier years, covered by the study, perhaps due to temporary economic changes. While we do not currently suggest revising this assumption, if we did suggest reducing the overtime assumptions, this would reduce both the retirement liabilities and the required contribution.



New York City Employees' Retirement System - TBTA


0%

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TBT_Age_07-25-2017_15-22-08 - With Tables Mortality Graphs - Dis 4yr161 Bolton Partners, Inc.


Mortality Assumptions and Experience


0%

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0%20%40%60%80%

100%120%140%160%180%

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TBT_Age_07-25-2017_15-22-08 - With Tables Mortality Graphs - 10yr162 Bolton Partners, Inc.


Rat

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35 40 45 50 55 60 65Age



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TBT_Age_07-25-2017_15-22-08 - With Tables Ordinary Mortality Graphs163 Bolton Partners, Inc.

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TBT_Age_07-25-2017_15-22-08 - With Tables Retirement Graphs - 1st yr164 Bolton Partners, Inc.








0

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TBT_Age_07-25-2017_15-22-08 - With Tables CI_1ST_TOT_M&W_4YR165 Bolton Partners, Inc.

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ate

of

Ret

irem

ent

Rat

e o

f R

etir

emen

t




0%

20%

40%

60%

80%

100%

120%

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0%

10%

20%

30%

40%

50%

60%

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0%

10%

20%

30%

40%

50%

60%

70%

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65Age











0

2

4

6

8

10

12

14

16

18

51 56 61

Act

ual

Ret

irem

ents

Age


0

1

2

3

4

5

6

7

51 56 61

Act

ual

Ret

irem

ents

Age


0

2

4

6

8

10

12

14

16

18

51 56 61

Act

ual

Ret

irem

ents

Age



Rat

e o

f R

etir

emen

tR

ate

of

Ret

irem

ent

Rat

e o

f R

etir

emen

t




0%

20%

40%

60%

80%

100%

120%

52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0%

20%

40%

60%

80%

100%

120%

52 53 54 55 56 57 58 59 60 61 62 63 64 65Age



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

52 53 54 55 56 57 58 59 60 61 62 63 64 65Age











0

5

10

15

20

25

52 57 62

Act

ual

Ret

irem

ents

Age


0

1

2

3

4

5

6

7

8

52 57 62

Act

ual

Ret

irem

ents

Age


0

5

10

15

20

25

52 57 62

Act

ual

Ret

irem

ents

Age






Rat

e o

f R

etir

emen

t

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

55 56 57 58 59 60 61 62Age








-2

0

2

4

6

8

10

12

14

55 56 57 58 59 60 61

Act

ual

Ret

irem

ents

Age



Wit

hd

raw

al R

ate

Wit

hd

raw

al R

ate

Wit

hd

raw

al R

ate




0%

1%

2%

3%

4%

5%

6%

7%

8%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service



0%

1%

2%

3%

4%

5%

6%

7%

8%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Withdrawal, Men


0%

5%

10%

15%

20%

25%

30%

35%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Withdrawal, Women



Women

Men





Men and Women

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

+

Act

ual

Wit

hd

raw

als

Years of Service


0

1

2

3

4

5

6

7

8

9

10

0 1 2 3 4 5 6 7 8 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

+

Act

ual

Wit

hd

raw

als

Years of Service


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

0 1 2 3 4 5 6 7 8 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

+

Act

ual

Wit

hd

raw

als

Years of Service



Rat

e o

f O

rdin

ary

Dis

abili

tyR

ate

of

Ord

inar

y D

isab

ility

Rat

e o

f O

rdin

ary

Dis

abili

ty




0

0.005

0.01

0.015

0.02

0.025

35 40 45 50 55 60 65 70Age



0

0.01

0.02

0.03

0.04

0.05

0.06

35 40 45 50 55 60 65 70Age



0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

35 40 45 50 55 60 65 70Age




Rat

e o

f A

ccid

enta

l Dis

abili

tyR

ate

of

Acc

iden

tal D

isab

ility

Rat

e o

f A

ccid

enta

l Dis

abili

ty




0

0.0005

0.001

0.0015

0.002

0.0025

35 40 45 50 55 60 65 70Age



0

0.002

0.004

0.006

0.008

0.01

0.012

35 40 45 50 55 60 65 70Age



0

0.0005

0.001

0.0015

0.002

0.0025

35 40 45 50 55 60 65 70Age







0%50%

100%150%200%250%300%350%400%450%500%

0 5 10 15 20 25 30+Service


Actual 100%

-200%

0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

0 5 10 15 20 25 30+

Service


Actual 100%





0%

20%

40%

60%

80%

100%

120%

0 5 10 15 20 25Service


Actual 100%

0%

50%

100%

150%

0 5 10 15 20 25Service


Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

160%

0 5 10 15 20 25Service


Actual 100%





0%

20%

40%

60%

80%

100%

120%

140%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%


Results, including confidence intervals, for TRS



TRS Experience Analysis

The following sections discuss the differences between TRS and the other plans, and the TRS demographic experience.

Issues Unique to TRS

Please note that analysis was done both for male and female groups even though the number of women is significantly higher than the number of men, because the number of men is still high enough to provide for credible results. Over the last 4 years, the total male employee life exposures were about 82,000, while the female employee life exposure were about 204,000. Large service retiree life exposures were also available.

TRS limits the variance in pay in the averaging period; thus, no assumption is made regarding overtime. TRS also provides normal retirement benefits at age 62 (63 for Tier VI) and unreduced retirement benefits at age 55 with 25 years of service (Elected Retirement) or 27 years of service (Mandated Retirement.) Early retirement benefits are provided at age 55 with at least 5 years of service (10 years, if Tier VI.) Ordinary disability and accidental disability benefits are provided, as well as ordinary and accidental death benefits, although no accidental deaths are assumed. Thus, we did not analyze either overtime or accidental death experience

While retiree mortality is reasonably close to assumptions, TRS is the only group for which employee mortality is higher than expected, although the rate decreased from the 10-year experience to the 4-year experience. Withdrawal experience has also decreased from the 10-year experience to the 4-year experience, as has Early Retirement, which, while higher than the assumption is among the lowest of any of NYCRS. Normal retirement experience has been relatively consistent over the 4- and 10-year periods, and is higher than assumed in the earlier years and lower than assumed after two years of eligibility for unreduced retirement. Ordinary disability experience has been higher than expected, while Accidental disability experience has dropped from higher than expected over the 10-year period to lower than expected over the four-year period. Finally, total salary increases have been lower than expected, largely due to lower inflation than assumed.

TRS Members

1. Mortality – male and female – service and disability retirees

The following graphs and tables show the incidence of mortality for service retirees and disabled retirees, for the most recent four or ten years, ending June 30, 2015. Overall, actual mortality experience for service retirees was lower than expected over both 4-year and 10-year periods (9.09% and 3.40%, respectively.)

Retiree exposures for disability retirees is but a small fraction of service retirees (combined over 10 years, 28,358 versus 656,280, with 906 deaths compared to 15,796 deaths). This is particularly clear for males, where the total exposures are only 3,000 over the last four years and 7,000 over the last 10 years. Overall disability retiree mortality experience was only 0.60% higher than expected over the last 10 years, with lower experience for men offset by higher experience for women.



Ratio of actual to expected deaths


Service retirees – men 83.67% 87.23% Service retirees – women 95.04% 101.92% Combined 90.91% 96.60% Disability retirees – men 74.47% 88.47% Disability retires – women 109.65% 105.55% Combined 99.38% 100.60%

The differences between actual and expected experience are not large enough to currently warrant revision to the mortality assumptions for either the service or disability retirees. Service retirees’ mortality experience is generally within the 95% confidence interval, as is the disability retiree’s mortality.

However, if we were to suggest revisions to lower the mortality assumption for service retirees, this would increase the TRS liabilities, and increase the required contributions. Decreasing assumed disability mortality for men, and increasing it for women would increase the TRS liabilities very slightly (ignoring the 10-year experience, and adjusting only for the experience in the last 4 years), thereby increasing the required contributions very slightly. The combined effect of these two changes would be to increase liabilities and costs.


Mortality experience for active TRS members is substantially higher than expected for women and men (over the last 10 years) but lower than expected for men over the last four years, as shown in the following graphs. The table immediately below shows that the recent experience is closer to the assumption than earlier experience, although actual deaths (and assumed) are relatively low.



Ordinary mortality – men 93.24% 108.85% Ordinary mortality – women 128.43% 137.10% Combined 115.28% 128.44%

The confidence interval graphs show that the mortality rates for both men and women are, at nearly every age, within the 95% confidence interval of the current assumption. Because of the smaller number of men, the 95% confidence interval is substantially larger than for women.

Because of the relatively low incidence of ordinary mortality among active teachers, and the relatively minor effect on plan liabilities, we do not currently suggest any change to either of these assumptions.

However, if we were to suggest revisions to increase the assumed mortality for women and decrease it for men, we expect this would slightly decrease the liabilities and required contributions.




Retirement assumptions are divided by normal or unreduced retirement and retirement prior to eligibility for unreduced retirement. The impact on plan liabilities of earlier retirement than assumed is much greater for unreduced retirement than for retirement prior to eligibility for unreduced retirement, so these assumptions have a more significant impact on plan costs.

Unreduced retirement

Retirement in TRS is complicated by the change in 2008, which allowed employees in Tiers II and IV to elect retirement with an unreduced benefit upon completion of 25 years of service and attainment of age 55 or older (instead of age 62). This is referred to as Elected retirement. Those who are hired after February 27, 2008 are eligible to retire with an unreduced benefit upon the completion of 27 years of service and attainment of age 57. This is referred to as Mandated retirement. Also, employees with less than the requisite years of service for an unreduced retirement benefit may elect early retirement after reaching age 55 and before age 62, and receive a benefit reduced for early payment before age 62.

At first glance, the retirement experience for those with unreduced benefits appears to be closely in line with assumptions, except for those who work past the second year of retirement eligibility, as shown in the table below.

Only the actual experience for the first year of eligibility retirement assumption is consistently outside of the 95% confidence interval.

Ratio of actual to expected retirements – Total Experience


First year of eligibility – Men 106.59% 102.40% First year of eligibility – Women

104.16% 96.05%


105.77% 98.50%

Second year of eligibility – Men

105.19% 107.76%

Second year of eligibility – Women

113.08% 112.49%


111.29% 111.39%

Each succeeding year – Men 72.89% 72.25% Each succeeding year – Women

86.42% 81.51%


82.94% 79.18%

Once the experience is further divided into Mandated and Elected retirement experience, it appears that there is significant differences. However, the experience for Mandated retirement after the second year of eligibility for unreduced retirement, is actually, somewhat misleading as



it consists of higher retirement than expected between 57 and 69 (in the most recent 4 years), but much lower experience than expected on or after age 70, because of the 100% retirement assumption at age 70 (see tables on pages 961 and 964) .

Ratio of actual to expected retirements – Elected Plan



129.75% 115.90%


132.87% 118.77%


117.30% 116.85%


129.64% 119.44%


127.17% 118.92%


129.55% 127.22%


127.41% 125.94%

Ratio of actual to expected retirements – Mandated Plan



89.05% 88.61%


88.08% 89.53%


98.48% 104.73%


101.25% 109.52%


100.57% 108.35%


76.83% 76.35%


73.74% 74.19%

A significant majority of actual to expected ratios at different ages are near to or within the 95% confidence intervals, which, because of the high probabilities combined with the large size of the eligible groups, are relatively narrow.




Early retirement experience has been much higher than assumed, as shown in the table below.




While the experience is much higher than assumed, the percentage of eligible employees electing early retirement is only about 5%, while the percentage of those eligible for unreduced retirement electing in their first year of eligibility is over 30%, based on the last 4 years’ experience. The last 4 years’ experience is also closer to the assumption than the prior years. We note that the early retirement experience is not within a 95% confidence interval of the assumed early retirements.

Recommended changes

While we are not currently recommending changes to these assumptions, we anticipate recommending revisions in the next experience study unless there is a significant change in the experience.

Because there would be increases and decreases in the retirement assumptions necessary to more closely match plan experience, and because the effect on unreduced retirement is much more powerful than on early retirement, it is difficult to estimate the effect on the accrued liabilities and the cost of the retirement benefit.


The withdrawal experience of TRS members is substantially lower than expected for the first 2 to 3 years for both men and women. We combined the experience, since the same withdrawal table is used for both men and women. Overall experience is much closer to the assumption over the last 10 years. Experience for 2014 and 2015 has dropped substantially (62% of assumed), leaving us concerned about the next 2 years of experience.

This experience may have been partially influenced by the 2014 labor contract between the United Federation of Teachers and the City. As part of the agreement, the City agreed to compensate teachers for the wage increases that were granted in the previous round of collective bargaining to other City employees. The wage increases are being integrated into salary bases over 4 annual installments beginning May 1, 2015. Additionally, the cumulative lump sums for accrued wages are being paid over five installments to active members and members who retired during that period. Lump sum payments were made to members in October 2015 and 2017. The remaining payments will be made in October 2018, 2019, and 2020.



Ratio of actual to expected withdrawals


Withdrawal – men 92.62% 118.68% Withdrawal – women 81.85% 104.90% Combined 84.47% 108.20%

Other than the first few years, during which the experience is much lower than assumed, the actual experience is within the 95% confidence interval of the assumed experience.

Thus, we believe that there is currently no reason to change this assumption. However, with two more years of experience we may suggest revising the withdrawal assumption, particularly for the first few years of TRS members’ careers.

If the withdrawal assumption were reduced to match recent experience (last 4 years), the accrued liability would be slightly increased, along with the required contribution.


The experience of Ordinary disability appears to be substantially higher than assumed, with very minor differences between recent and 10-year experience. Please note that most of the variance occurs at older assumed ages (starting in late 40s for men and around age 45 for women.)

However, Accidental disability experience has been quite different, perhaps because of the low assumed rates and the relatively rare incidence. Experience over the last 10 years was well above assumed, while the experience in the last 4 years is well below.

There appears to have been a significant change in the experience in 2015, when the actual to assumed ratio dropped from 159% to 68%.



Ordinary - Men 146.16% 149.08% Ordinary - Women 135.18% 137.02% Ordinary – Combined 137.25% 139.27% Accidental - Men 75.29% 130.26% Accidental - Women 85.11% 141.02% Accidental – Combined 82.64% 132.32%

Even though the Ordinary disability experience is substantially higher than the assumed experience, we do not currently recommend a revision to this assumption. The probability of Accidental disability is much lower than for Ordinary disability, and the actual experience has been significantly lower in the last three years than in prior years. Thus, we are also not recommending any revision to this assumption, but expect to review the experience in 2016 and 2017.

The effect of any revision in either the Ordinary or Accidental disability assumption would be slight, although increases in the Ordinary disability assumptions would decrease liabilities and required contribution, while decreases in the Accidental disability assumptions would increase the liability and required contributions. Because the Ordinary disability assumption is much higher



than the Accidental disability assumption, we anticipate that the impact of an increase in the Ordinary disability assumption would have a much larger effect (although still relatively small) than would the decrease in the Accidental disability assumption.

6. Total and merit salary increases – men and women combined

Merit salary improvement experience for TRS members has been, in total, almost exactly what was expected, although it has varied significantly at times at some service levels. While the total pay increases have been lower than expected, this has been due to lower-than-expected inflation, which has increased about 1.5% when the CPI assumption was 2.5%, resulting in an increase of about 80% of expected for total payroll. However, merit pay improvement (that is salary improvement over inflation) has been close to the assumed increase. We analyzed the experience for men and women combined, because the salary improvement assumption was the same for all members.

We used the 4-year average CPI and the 10-year average CPI to reduce the total salary increase to obtain the merit salary increase.



Total 77.74% 80.59% Merit 101.21% 105.17%

We are not currently suggesting any changes to the merit pay assumption, because of the similarity between the total experience and the assumed experience over the last 4 years. We may suggest revisions in the rates at different ages, if warranted by the experience, in our next study.

Reducing the total salary improvement assumption to reflect the lower-than-expected increases in the last 4 years would decrease the accrued liability and the annual required contribution. Increasing these assumptions slightly to reflect the slightly higher-than-expected merit pay increases in the last 4 years would have the opposite effect.



Teachers' Retirement System of the City of New YorkService Retirees' Mortality Assumption and Experience

0%20%40%60%80%

100%120%140%160%180%200%

56 61 66 71 76 81 86 91 96Age

Actual/Expected Rates for Men

Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

160%

56 61 66 71 76 81 86 91 96Age

Actual/Expected Rates for Women

Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

56 61 66 71 76 81 86 91 96Age

Actual/Expected Rates for Men and Women

Actual 100%




0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%

0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%

0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%



4-Year Period Ending 20150.95 Confidence Interval

Men

Women

0

20

40

60

80

100

120

140

56 61 66 71 76 81 86 91 96

Actual Deaths

Age


0

50

100

150

200

250

56 61 66 71 76 81 86 91 96

Actual Deaths

Age




Teachers' Retirement System of the City of New YorkDisability Retirees' Mortality Assumption and Experience

0%

50%

100%

150%

200%

250%

300%

350%

41 46 51 56 61 66 71 76 81 86 91 96Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

350%

41 46 51 56 61 66 71 76 81 86 91 96Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

41 46 51 56 61 66 71 76 81 86 91 96Age


Actual 100%


Teachers' Retirement System of the City of New YorkDisability Retirees' Mortality Assumption and Experience


0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%


Teachers' Retirement System of the City of New York

Men

Mortality of Disability Retirees - Four Year Experience 4-Year Period Ending 2015


Women

0

1

2

3

4

5

6

7

8

9

10

40 45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age


0

2

4

6

8

10

12

14

16

40 45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age



Ordinary Mortality Rates



Teachers' Retirement System of the City of New YorkMortality Experience of Active Members


0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

20 25 30 35 40 45 50 55Age

Ordinary Mortality, Men


0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

20 25 30 35 40 45 50 55Age

Ordinary Mortality, Women


0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

0.16%

0.18%

20 25 30 35 40 45 50 55Age




Women

Men and Women

Men

Teachers' Retirement System of the City of New YorkActive Ordinary Mortality Assumption and Experience


0

5

10

15

20

25

30

35

40

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Actual Deaths

Age


0

2

4

6

8

10

12

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Actual Deaths

Age


0

2

4

6

8

10

12

14

16

18

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Actual Deaths

Age



Retirement Rates

Retirement Rates

Retirement Rates

Teachers' Retirement System of the City of New YorkRetirement Experience of those in First Year of Eligibility


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

56 57 58 59 60 61 62Age

Elected and Mandated Plan, Men


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

56 57 58 59 60 61 62Age

Elected and Mandated Plan,Women


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

56 57 58 59 60 61 62Age

Elected and Mandated Plan, Men and Women



Mandated and Elected ‐ Women



Mandated and Elected ‐ Men and Women

Mandated and Elected ‐ Men

0

50

100

150

200

250

300

350

400

450

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

200

400

600

800

1000

1200

1400

1600

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

200

400

600

800

1000

1200

1400

1600

1800

2000

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age



Retirement Rates

Retirement Rates

Retirement Rates



0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

56 57 58 59 60 61 62Age

Elected Plan, Men


0

0.1

0.2

0.3

0.4

0.5

0.6

56 57 58 59 60 61 62Age

Elected Plan,Women


0

0.1

0.2

0.3

0.4

0.5

0.6

56 57 58 59 60 61 62Age




Elected ‐ Women



Elected ‐ Men and Women

Elected ‐ Men

0

20

40

60

80

100

120

140

160

180

200

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

100

200

300

400

500

600

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

100

200

300

400

500

600

700

800

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age



Retirement Rates

Retirement Rates

Retirement Rates



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Mandated Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Mandated ‐ Women



Mandated ‐ Men and Women

Mandated ‐ Men

0

50

100

150

200

250

300

350

400

450

55 56 57 58 59 60 61 62 63 64 65 66 68 69

Actual Retirem

ents

Age


0

200

400

600

800

1000

1200

1400

1600

55 56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

200

400

600

800

1000

1200

1400

1600

1800

2000

55 56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age



Retirement Rates

Retirement Rates

Retirement Rates

Teachers' Retirement System of the City of New YorkRetirement Experience of those in Second Year of Eligibility


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

56 57 58 59 60 61 62Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62Age




Elected and Mandated ‐ Men

Elected and Mandated ‐ Women

Elected and Mandated ‐ Men and Women



0

100

200

300

400

500

600

700

800

900

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

20

40

60

80

100

120

140

160

180

200

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

100

200

300

400

500

600

700

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age



Retirement Rates

Retirement Rates

Retirement Rates



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62 63 64Age

Elected Plan, Men


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62 63 64Age

Elected Plan,Women


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62 63 64Age




Elected ‐ Women




Elected ‐ Men

0

50

100

150

200

250

300

350

56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

10

20

30

40

50

60

70

80

56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

50

100

150

200

250

300

56 57 58 59 60 61 62 63

Actual Retirem

ents

Age



Retirement Rates

Retirement Rates

Retirement Rates



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Mandated Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Mandated ‐ Women




Mandated ‐ Men

0

100

200

300

400

500

600

700

800

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirements

Age


0

20

40

60

80

100

120

140

160

180

200

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirements

Age


0

100

200

300

400

500

600

700

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirements

Age



Retirement Rates

Retirement Rates

Retirement Rates

Teachers' Retirement System of the City of New YorkRetirement Experience of those after Second Year of Eligibility


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

56 57 58 59 60 61 62Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

56 57 58 59 60 61 62Age



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

56 57 58 59 60 61 62Age




Elected and Mandated ‐ Women



Elected and Mandated ‐ Men and Women

Elected and Mandated ‐ Men

0

100

200

300

400

500

600

700

800

900

1000

57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

50

100

150

200

250

57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

100

200

300

400

500

600

700

800

57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age



Retirem

ent Rates

Retirem

ent Rates

Retirem

ent Rates



0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62 63 64 65 66Age

Elected Plan, Men


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62 63 64 65 66Age

Elected Plan,Women


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

56 57 58 59 60 61 62 63 64 65 66Age




Elected ‐ Women




Elected ‐ Men

0

50

100

150

200

250

300

57 58 59 60 61 62 63 64 65 66 67 68

Actual Retirem

ents

Age


0

10

20

30

40

50

60

70

57 58 59 60 61 62 63 64 65 66 67 68

Actual Retirem

ents

Age


0

50

100

150

200

250

57 58 59 60 61 62 63 64 65 66 67 68

Actual Retirem

ents

Age



Retirem

ent Rates

Retirem

ent Rates

Retirem

ent Rates



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Mandated Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Mandated ‐ Women




Mandated ‐ Men

0

100

200

300

400

500

600

700

800

900

1000

58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirements

Age


0

50

100

150

200

250

58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirements

Age


0

100

200

300

400

500

600

700

800

58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirements

Age



Teachers' Retirement System of the City of New YorkEarly Retirement Experience of Active Members


0%

50%

100%

150%

200%

250%

55 60Age


Actual 100%

0%20%40%60%80%

100%120%140%160%180%

55 60Age


Actual 100%

0%20%40%60%80%

100%120%140%160%180%200%

55 60Age


Actual 100%


Women



Men and Women

Men

0

50

100

150

200

250

300

350

400

55 56 57 58 59 60

Actual Retirements

Age


0

10

20

30

40

50

60

70

80

90

100

55 56 57 58 59 60

Actual Retirements

Age


0

50

100

150

200

250

300

350

400

55 56 57 58 59 60 61

Actual Retirements

Age





0%

50%

100%

150%

200%

250%

300%

350%

55 60Age


Actual 100%

0%

50%

100%

150%

200%

250%

55 60Age


Actual 100%

0%

50%

100%

150%

200%

250%

55 60Age

Actual/Expected Rates Men and Women

Actual 100%




0%

50%

100%

150%

200%

250%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Early Retirement Experience of Active Members

Actual 100%


Withdrawal Rates

Withdrawal Rates

Withdrawal Rates

Teachers' Retirement System of the City of New YorkWithdrawal Experience of Active Members


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service



0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Withdrawal, Men


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Withdrawal, Women



Women

Men and Women

Men

Teachers' Retirement System of the City of New YorkWithdrawal Experience of Active Members


0

500

1000

1500

2000

2500

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Actual W

ithdrawals

Years of Service


0

100

200

300

400

500

600

700

800

900

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Actual W

ithdrawals

Years of Service


0

200

400

600

800

1000

1200

1400

1600

1800

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Actual W

ithdrawals

Years of Service



Ordinary Disability Rates



Teachers' Retirement System of the City of New YorkOrdinary Disability Experience of Active Members


0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

35 40 45 50 55 60 65 70Age



0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

0.004

0.0045

35 40 45 50 55 60 65 70Age



0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

0.004

0.0045

35 40 45 50 55 60 65 70Age







Teachers' Retirement System of the City of New YorkOrdinary Disability Assumptions and Experience


0

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

0.009

35 40 45 50 55 60 65 70Age



0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

0.004

0.0045

35 40 45 50 55 60 65 70Age



0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

0.004

0.0045

35 40 45 50 55 60 65 70Age




Women

Men and Women

Men

Teachers' Retirement System of the City of New YorkOrdinary Disability Experience of Active Members


0

5

10

15

20

25

30

35

31 36 41 46 51 56 61 66 71

Actual Disabilities

Age


0

1

2

3

4

5

6

7

8

31 36 41 46 51 56 61 66 71

Actual Disabilities

Age


0

5

10

15

20

25

30

31 36 41 46 51 56 61 66 71

Actual Disabilities

Age



Acciden

tal D

isability Rates

Acciden

tal D

isability Rates

Acciden

tal D

isability Rates

Teachers' Retirement System of the City of New YorkAccidental Disability Experience of Active Members


0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

0.004

35 40 45 50 55 60 65 70Age



0

0.0002

0.0004

0.0006

0.0008

0.001

0.0012

35 40 45 50 55 60 65 70Age



0

0.0002

0.0004

0.0006

0.0008

0.001

0.0012

0.0014

0.0016

0.0018

35 40 45 50 55 60 65 70Age




Acciden

tal D

isability Rates

Acciden

tal D

isability Rates

Acciden

tal D

isability Rates

Teachers' Retirement System of the City of New YorkAccidental Disability Experience of Active Members


0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

35 40 45 50 55 60 65 70Age



0

0.0005

0.001

0.0015

0.002

0.0025

35 40 45 50 55 60 65 70Age



0

0.0002

0.0004

0.0006

0.0008

0.001

0.0012

0.0014

0.0016

0.0018

0.002

35 40 45 50 55 60 65 70Age




Teachers' Retirement System of the City of New YorkSalary Assumptions and Experience


0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

0 5 10 15 20 25 30+Service


Actual 100%

0.00%50.00%

100.00%150.00%200.00%250.00%300.00%350.00%400.00%450.00%500.00%

0 5 10 15 20 25 30+Service


Actual 100%


Results, including confidence intervals, for BERS



BERS Experience Analysis

The following sections discuss the differences between BERS and the other plans, and the BERS demographic experience. Please note that the differences between experience and assumptions is largest for BERS among all of the plans and subplans.

Issues Unique to BERS

BERS has the fewest employees of all of the NYCRS plans, and many of the assumptions used for the BERS valuation appear to have been derived from other plans’ experience. BERS has also been undergoing an extensive review and update of member data as part of the implementation of a new system to track and provide member data to the OA. The new system was used to provide the June 30, 2017 data to the OA. These two factors cause us to take the results of the initial experience study with a grain of salt.

The BERS employee group is different from all others, because the spread in salaries is the widest of any other group.

BERS limits the increase in pay during the salary averaging period to 10%; hence, since overtime pay cannot have a significant effect on average pay, there is no overtime assumption to be reviewed. Ordinary and accidental disability and death benefits are provided, although no probability of accidental death is assumed. Thus, we did not analyze the accidental death experience.

BERS Members

The difference between the assumptions used for BERS and actual BERS experience is the greatest difference in NYCRS. However, two issues mitigate the need for any current changes. First, BERS has recently undertaken a significant review of the member data, and the newly improved data is expected to be used for the June 30, 2017 valuation, and will be included in the next experience study. Second, because of the lack of information regarding which employees are full-time and which are part-time, the OA has determined the liability for all employees as if they were full-time. We believe that the experience of part-time and full-time employees is likely different, and expect to study that once we receive the member data for 2017 with the next study.


The following graphs and tables show the incidence of mortality for service retirees and disabled retirees, for the most recent 4 or 10 years, ending June 30, 2015. Overall, actual mortality experience was 50% to 70% of assumed for service retirees and 60% to 80% for disabled retirees. Overall experience over the 10-year period is 68% of assumed for service retirees and 82% of assumed for disability retirees.



However, the number of life-years included in the experience study for service retirees is only about 10,000 for men and 43,000 for women (4-year experience) and 1,000 for male and 2,700 for female disabled retirees. Because of the relatively low number of members, our understanding is that either the NYCERS or TRS experience has been used in the past to determine the BERS mortality assumption.



Service retirees – men 43.42% 58.95% Service retirees – women 51.82% 71.19% Combined 49.84% 67.84% Disability retirees – men 75.47% 87.42% Disability retires – women 54.22% 79.55% Combined 61.10% 82.29%

The prior experience study also encountered substantially lower-than-expected mortality experience among service retirees, but not among disabled retirees. The experience GRS encountered was not as low as the current experience, as shown in the table below (derived from the GRS Report).

Ratio of actual to expected deaths – GRS Study


Service retirees – men 76% 82% Service retirees – women 73% 84% Combined N/A 93% Disability retirees – men 107% 100% Disability retires – women 99% 101% Combined N/A 116%

Differences between actual and expected experience are mostly outside of the 95% confidence interval, implying that the retiree mortality assumptions for BERS are unlikely to accurately model the experience. Please note that there are not sufficient disability retirees to create a confidence interval around the mortality assumption. We are not currently recommending changes because of the expected member data improvement.

However, if we were to suggest revisions to lower the mortality assumption for service retirees, this would significantly increase the BERS liabilities, and increase the required contributions. Decreasing assumed disability mortality for men and women would similarly increase the BERS liabilities, and further increase the required contributions. Because the number of service retirees is much greater than the number of disabled retirees, and the difference from the assumed experience is greater, the effect of a decrease in the assumed mortality for service retirees would be substantially larger than for disabled retirees.


Mortality experience for BERS employees is substantially lower than expected over both the 4- and 10-year periods, as shown in the following graphs and tables. The table immediately below



shows that the recent experience is closer to the assumption than earlier experience, although actual and assumed deaths are relatively low.



Ordinary mortality – men 57.65% 63.90% Ordinary mortality – women 53.91% 64.57% Combined 55.02% 64.38%

We note that GRS encountered similar experience in the prior study, considering only the most recent 4-year experience, as shown in the table below. We note that GRS found experience was significantly closer to assumptions for the 10-year period, although still lower than assumed.

Ratio of actual to expected deaths – GRS Study


Ordinary mortality – men 59% 82% Ordinary mortality – women 41% 66% Combined N/A 77%

The confidence interval graph shows that the mortality rates for women and men are, at nearly every age, within the 95% confidence interval of the current assumption. This is due to the relatively low probability of mortality for employees, the low number of employees and the consequent wide confidence intervals.

Because of the relatively low incidence of ordinary mortality among active BERS members, and the relatively minor effect on plan liabilities, we do not currently recommend any change in either of these assumptions.



As with TRS, there is a significant difference between the retirement experience for those eligible to retire with unreduced retirement benefits and those currently eligible only for retirement benefits reduced for early payment. Unlike TRS, the experience of those eligible for unreduced retirement is much lower than assumed, while experience for those not eligible for unreduced retirement, but eligible to retire is much higher than assumed.

We used a different method for determining whether the retiree retired in the first year, second year or subsequent to the second year than did GRS. While we understand that GRS relied on codes in the retiree data that identified whether the retiree retired in the first year, second year or subsequent to the second year they were eligible for retirement, those codes were not provided in the data supplied by GRS, so those codes were only available in the 2014 and 2015 data. Since we did not have those codes for all years, and because our understanding of the use of the actuarial assumptions is that they are used in valuation calculations prepared in ProVal, we instead applied the same criteria that ProVal would apply to determine which employees were in the first, second or subsequent years of retirement eligibility.



Ratio of actual to expected retirements – Total Experience



63.99% 68.60%


64.96% 68.22%


53.89% 64.98%


49.11% 55.05%


50.12% 56.97%

Each succeeding year – Men 44.12% 43.30% Each succeeding year - Women

51.26% 47.56%


49.96% 46.81%

GRS encountered even lower ratios of experience to assumption for employees in their first year of eligibility (38%) and substantially higher ratios in the second year (74%) and subsequently (90%.)

Employees eligible for the Elected retirement provisions are retiring at a somewhat higher rate than the Mandated group, although still at a much lower rate than assumed.

Ratio of actual to expected retirements – Elected Plan



64.29% 64.76%


71.13% 67.15%


78.43% 71.77%


42.78% 55.05%


58.82% 63.23%


79.30% 81.77%


78.25% 83.37%



Ratio of actual to expected retirements – Mandated Plan



63.96% 68.73%


64.92% 69.10%


52.23% 64.37%


49.27% 55.08%


49.87% 56.78%


50.98% 47.28%


49.52% 46.32%

Retirement prior to eligibility for unreduced retirement benefits (Early Retirees) Early retirement experience has been much higher than assumed, as shown in the table below.



Men and Women 175.97% 206.12% While the experience is much higher than assumed, the percentage of eligible employees electing early retirement is less than 5%, while the percentage of those eligible for unreduced retirement electing in their first year of eligibility is about 30%, based on the last 4 years’ experience. The last 4 years’ experience is, in fact, closer to the assumption than the prior years. We note that the early retirement experience is generally not within a 95% confidence interval of the assumed early retirements.

Recommended changes

Because of the pending availability of better data to analyze employee retirement, we do not currently recommend any change in this assumption.

However, if we were to suggest revisions to reduce the assumed retirement rates for unreduced retirement, for men and women, we expect this would decrease retirement liabilities and required contributions. If we were to suggest revisions to increase the assumed retirement rates for Early Retirement, we expect this would very slightly increase the liabilities and required contributions.




Withdrawal experience over the last 4 years is higher than assumed, although largely within the 95% confidence interval. However, the withdrawal rates have decreased sharply over the last 10 years, when experience was substantially higher than assumed. The withdrawal assumption should also reflect whether an employee is full-time or part-time. However, our understanding is that information was not previously available, but is becoming available due to improvements to the BERS data tracking systems.




Because of the pending availability of both better and more useful data to analyze employee terminations, and the significant change in experience in the last 4 years, we do not currently recommend any change in this assumption.

However, if we were to suggest revisions to increase the assumed withdrawal rate for men and women, we expect this would slightly decrease retirement liabilities and required contributions.


The ordinary disability experience is significantly lower than assumed, over both 4- and 10-year periods. Accidental disability experience is lower over the 4-year period and higher over the 10-year period. However, accidental disability experience is lower than expected for men over both 4- and 10-year periods, but for women, the accidental disability experience is higher over both the 4-year and 10-year periods.



Ordinary – Men 79.92% 68.67% Ordinary – Women 80.61% 71.04% Ordinary – Combined 80.45% 70.47% Accidental – Men 51.18% 68.40% Accidental – Women 111.33% 131.08% Accidental – Combined 87.86% 107.60%

The incidence of ordinary disability is small (447 disabled out of 104,107 eligible, over the last 10 years), and while the experience has been lower than expected, we are not yet prepared to recommend a change in the assumption. The incidence of accidental disability is also small (63 disabled out of 238,463 eligible, over the last 10 years). Thus, very minor differences in the number of disabled significantly change the ratio of actual to assumed. Also, in the aggregate over the last 10 years, the accidental disability experience is 107.60% of expected. Thus, we see no reason to revise the accidental disability assumption.





Interestingly, total salary experience (i.e., including the effect of inflation), relative to assumed, has been roughly constant over the last 4- and 10-year periods, at around 80% of the assumed pay increase, implying that the difference is because of the difference between actual and assumed inflation. The merit salary experience (i.e., net of actual or assumed inflation) has dropped from the 10-year experience to the 4-year, although both were over the assumed merit pay increases.



Total 75.88% 80.13% Merit 108.92% 119.93%

We are not currently recommending changing the merit or total pay assumptions, because the experience brackets the assumptions over the last 4 years. We may suggest revisions in the rates at different ages, if warranted, in the next study.

Reducing the total salary improvement assumption to reflect the lower-than-expected increases in the last 4 years would decrease the accrued liability and the annual required contribution. Increasing these assumptions slightly to reflect the slightly higher-than-expected merit pay increases in the last 4 years would have the opposite effect.


Board of Education Retirement System of the City of New York



0%

20%

40%

60%

80%

100%

120%

140%

160%

56 61 66 71 76 81 86 91 96Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

350%

56 61 66 71 76 81 86 91 96Age


Actual 100%

0%

20%

40%

60%

80%

100%

120%

140%

160%

56 61 66 71 76 81 86 91 96Age


Current 100%




4-Year Period Ending 2015Service Retirees' Mortality Assumption and Experience

Women

Men

0

5

10

15

20

25

55 60 65 70 75 80 85 90 95

Actual Deaths

Age


0

20

40

60

80

100

120

55 60 65 70 75 80 85 90 95

Actual Deaths

Age








0%

20%

40%

60%

80%

100%

120%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Males and Females


0%

20%

40%

60%

80%

100%

120%

140%

160%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Males and Females






0%

50%

100%

150%

200%

250%

300%

350%

48 53 58 62 68 73 78 83 88Age


Actual 100%

0%

500%

1000%

1500%

2000%

2500%

48 53 58 62 68 73 78 83 88Age


Actual 100%

0%

100%

200%

300%

400%

500%

600%

48 53 58 62 68 73 78 83 88Age


Actual 100%


Rate of Ordinary Mortality



Board of Education Retirement System of the City of New York Active Ordinary Mortality Assumption and Experience


0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

20 25 30 35 40 45 50 55Age



0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

20 25 30 35 40 45 50 55Age



0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

20 25 30 35 40 45 50 55Age




Board of Education Retirement System of the City of New York Active Ordinary Mortality Assumption and Experience


0%

20%

40%

60%

80%

100%

120%

140%

160%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Active, Combined



Women

Men and Women

Men


0.95 Confidence Interval4-Year Period Ending 2015


0

5

10

15

20

25

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Actual Deaths

Age


0

1

2

3

4

5

6

7

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Actual Deaths

Age


0

2

4

6

8

10

12

14

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Actual Deaths

Age



Rate of Retirement

Rate of Retirement




Rate of Retirement

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

56 57 58 59 60 61 62Age



0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

56 57 58 59 60 61 62Age



0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

56 57 58 59 60 61 62Age




Women‐ Mandated and Elected


Retirement Experience of those in First Year of Eligibility4-Year Period Ending 2015


Men and Women‐ Mandated and Elected

Men‐ Mandated and Elected

0

50

100

150

200

250

300

350

400

450

54 55 56 57 58 59 60 61 62 63 64 65

Actual Retirements

Age


0

20

40

60

80

100

54 55 56 57 58 59 60 61 62 63 64 65

Actual Retirements

Age


0

50

100

150

200

250

300

350

54 55 56 57 58 59 60 61 62 63 64 65

Actual Retirements

Age



Rate of Retirement

Rate of Retirement

Rate of Retirement




0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62Age

Elected Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62Age

Elected Plan,Women


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62Age




Women‐ Elected

Men‐ Elected

Men and Women‐ Elected





0

5

10

15

20

25

30

35

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

5

10

15

20

25

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age


0

2

4

6

8

10

12

14

16

18

55 56 57 58 59 60 61 62 63

Actual Retirem

ents

Age



Rate of Retirement

Rate of Retirement

Rate of Retirement




0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Mandated Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Women‐ Mandated

Men ‐ Mandated

Men and Women ‐ Mandated





0

50

100

150

200

250

300

350

400

450

55 56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age


0

10

20

30

40

50

60

70

80

90

100

55 56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age


0

50

100

150

200

250

300

350

55 56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age



Rate of Retirement

Rate of Retirement




Rate of Retirement

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

56 57 58 59 60 61 62Age



0

0.05

0.1

0.15

0.2

0.25

0.3

56 57 58 59 60 61 62Age



0

0.05

0.1

0.15

0.2

0.25

0.3

56 57 58 59 60 61 62Age





Men and Women ‐ Mandated and Elected

Men‐ Mandated and Elected





0

50

100

150

200

250

300

56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age


0

5

10

15

20

25

30

35

40

45

50

56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age


0

50

100

150

200

250

56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age



Board of Education Retirement System of the City of New York Retirement Experience of those in Second Year of Eligibility


Rate of Retirem

ent

Rate of Retirem

ent

Rate of Retirem

ent

0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65Age

Elected Plan, Men


0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

56 57 58 59 60 61 62 63 64 65Age

Elected Plan,Women


0

0.1

0.2

0.3

0.4

0.5

0.6

56 57 58 59 60 61 62 63 64 65Age




Women‐ Elected

Men‐ Elected

Men and Women ‐ Elected





02468

10121416

56 57 58 59 60 61 62 63

Actual Retirements

Age


0

1

2

3

4

5

6

7

8

9

10

56 57 58 59 60 61 62 63

Actual Retirements

Age


0

1

2

3

4

5

6

7

8

9

56 57 58 59 60 61 62 63

Actual Retirements

Age



Rate of Retirem

ent

Rate of Retirem

ent

Rate of Retirem

ent

Board of Education Retirement System of the City of New York Retirement Experience of those in Second Year of Eligibility


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Mandated Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Women‐ Mandated


Men‐ Mandated





0

50

100

150

200

250

300

56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age


0

5

10

15

20

25

30

35

40

45

50

56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age


0

50

100

150

200

250

56 57 58 59 60 61 62 63 64 65

Actual Retirem

ents

Age



Rate of Retirement

Rate of Retirement




Rate of Retirement

0

0.05

0.1

0.15

0.2

0.25

56 57 58 59 60 61 62Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62Age



0

0.1

0.2

0.3

0.4

0.5

0.6

56 57 58 59 60 61 62Age





Men ‐ Mandated and Elected

Men and Women ‐ Mandated and Elected





0

50

100

150

200

250

300

350

57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

10

20

30

40

50

60

57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

50

100

150

200

250

300

57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age






Rate of Retirem

ent

Rate of Retirem

ent

Rate of Retirem

ent

0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Elected Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Elected Plan,Women


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Women ‐ Elected

Men and Women ‐ Elected

Men ‐ Elected





0

2

4

6

8

10

12

14

16

56 57 58 59 60 61 62 63 64 65 66 67

Actual Retirem

ents


0

2

4

6

8

10

56 57 58 59 60 61 62 63 64 65 66 67

Actual Retirem

ents

Age


0

2

4

6

8

10

56 57 58 59 60 61 62 63 64 65 66 67

Actual Retirem

ents

Age



Rate of Retirem

ent

Rate of Retirem

ent

Rate of Retirem

ent




0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age

Mandated Plan, Men


0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age



0

0.2

0.4

0.6

0.8

1

1.2

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70Age




Women ‐ Mandated

Men ‐ Mandated






0

50

100

150

200

250

300

350

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

10

20

30

40

50

60

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age


0

50

100

150

200

250

300

56 57 58 59 60 61 62 63 64 65 66 67 68 69

Actual Retirem

ents

Age



Rate of Retirem

ent

Rate of Retirem

ent

Rate of Retirem

ent




0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

56 57 58 59 60 61Age

Men and Women


0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

56 57 58 59 60 61Age

Men


0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

56 57 58 59 60 61Age

Women



Women

Men and Women

Men





0

50

100

150

200

55 56 57 58 59 60 61

Actual Retirem

ents

Age


0

5

10

15

20

25

30

35

40

55 56 57 58 59 60 61

Actual Retirem

ents

Age


0

20

40

60

80

100

120

140

55 56 57 58 59 60 61

Actual Retirem

ents

Age



Rate of Withdrawal




Rate of Withdrawal

Rate of Withdrawal

0%

2%

4%

6%

8%

10%

12%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Men


0%

2%

4%

6%

8%

10%

12%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Women


0%

2%

4%

6%

8%

10%

12%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30Service

Men and Women



Board of Education Retirement System of the City of New York Withdrawal Experience of Active Members


0%

50%

100%

150%

200%

250%

300%

350%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected Rates for Active, Men and Women



Women

Men



4-Year Period Ending 2015Withdrawal Experience of Active Members

Men and Women

0

100

200

300

400

500

600

700

800

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Actual W

ithdrawals

Years of Service


0

50

100

150

200

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Actual W

ithdrawals

Years of Service


0

100

200

300

400

500

600

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Actual W

ithdrawals

Years of Service



Rate of Ordinary Disability



Board of Education Retirement System of the City of New York Ordinary Disability Experience of Active Members


0

0.002

0.004

0.006

0.008

0.01

0.012

35 40 45 50 55 60 65 70Age



0

0.005

0.01

0.015

0.02

0.025

35 40 45 50 55 60 65 70Age



0

0.002

0.004

0.006

0.008

0.01

0.012

35 40 45 50 55 60 65 70Age




Women

Men

Men and Women





0

5

10

15

20

25

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75

Actual Disab

ilities

Age


0

2

4

6

8

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75

Actual Disab

ilities

Age


0

5

10

15

20

25

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75

Actual Disab

ilities

Age



Rate of Acciden

tal D

isability

Rate of Acciden

tal D

isability

Rate of Acciden

tal D

isability

Board of Education Retirement System of the City of New York Accidental Disability Experience of Active Members


0

0.0002

0.0004

0.0006

0.0008

0.001

0.0012

35 40 45 50 55 60 65 70Age



0

0.0002

0.0004

0.0006

0.0008

0.001

0.0012

35 40 45 50 55 60 65 70Age



0

0.0002

0.0004

0.0006

0.0008

0.001

0.0012

0.0014

35 40 45 50 55 60 65 70Age




Women





Men and Women

Men

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

49 51 53 55 57 59 61 63 65 67 69

Actual Disab

ilities

Age


0

2

4

48 50 52 54 56 58 60 62 64 66 68

Actual Disab

ilities

Age


0

1

2

3

4

5

49 51 53 55 57 59 61 63 65 67 69

Actual Disab

ilities

Age



Board of Education Retirement System of the City of New York Salary Experience of Active Members


0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

0 5 10 15 20 25 30+Service


Actual 100%

-50.00%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

0 5 10 15 20 25 30+

Service


Actual 100%


Results, including confidence intervals, for POLICE



POLICE Experience Analysis

The following sections discuss the differences between POLICE and the other plans, and the POLICE demographic experience.

Issues Unique to Police

The number of POLICE members is substantially higher than the number of FIRE members (see the next section, Results, including confidence intervals, for FIRE, for details), so the POLICE experience is more credible than the FIRE experience. However, the number of women members and particularly retired women is substantially lower than men, so the differences between expected and actual results are significantly more credible for men than for women.

POLICE provides for early retirement only for those with 20 but less than 22 years of service (Tier 2 and 3 Revised). However, while the OA assumes a probability of early retirement for POLICE members, the first Tier 3 member to be eligible for early retirement will be eligible in 2029. Hence, there is no early retirement experience to analyze. Ordinary and accidental disability and death benefits are provided, with accidental benefits differing for those participating in the World Trade Center (WTC) rescue, recovery or clean up. The number of officers eligible for WTC benefits is declining over time, from nearly 50% to about 30% in 2015, as shown in the table in the FIRE section, immediately following this section.

The overtime assumption is quite significant for POLICE, and separate assumptions are made in the year prior to retirement or disability. Our analysis excluded members in the year prior to retirement (either service or disability) from the determination of normal overtime experience.

POLICE members

Please note that we organized this section for POLICE and FIRE slightly differently than we did for the other plans. We include six items below, combining Salary and Overtime into a single section, because of the much greater impact of overtime in the determination of benefits for POLICE and FIRE.


The mortality experience for men and women, who retired either under service or disability retirement or are survivor beneficiaries, are reflected in the table below. While we did analyze women’s mortality experience for disability retirements, because of the relatively small number of disabled women (5,696 life years in the 4-year data and 12,101 in the 10-year data) included in the retiree data and the low number of deaths (40 over 4 years, 89 over 10), these results are not credible. Please note that the number of male life years included in the service retiree mortality experience (108,0000 for 4 years and 258,000 for 10 years) is between 8 and 11 times the female life years (13,000 and 26,000, respectively), so the men’s experience is much more credible than the women’s experience. This pattern is true throughout the POLICE experience data.





Service retirement - Men 103.58% 102.41% Service retirement - Women 80.15% 90.11% Service retirement - Combined

102.97% 102.14%

Disability retirement - Men 98.23% 94.57% Disability retirement - Women

117.99% 120.76%

Disability retirement - Combined

98.73% 95.17%

Because the mortality experience is relatively close to the assumption, and well within the 95% confidence interval, we are not currently suggesting any revisions in the mortality assumptions for service and disability retirees.

Revising the mortality assumption to reflect the slightly higher-than-expected male service retiree mortality experience and the slightly lower-than-expected male disability mortality experience would slightly reduce the accrued liability and annual required contribution. Reducing the female mortality assumption to reflect lower-than-expected mortality would cause a very slight increase in the accrued liability and annual required contribution.


The following graphs and tables show the incidence of mortality for POLICE members due to ordinary and accidental causes, for both men and women. Please note that the total life exposures are roughly five times higher for men than for women (114,000 over 4 years and 289,000 over 10 years for men, as compared to 23,000 over 4 years and 59,000 over 10 years for women.) Thus, the credibility of the results for men is significantly higher than the credibility of the results for women. Furthermore, the rates of active mortality are relatively low (0.04% to 0.2% for men, lower for women, in the ages with significant exposures) and the rates of accidental mortality are even lower (0.01% to 0.03% for both men and women, in the relevant ages).



Ordinary - Men 83.16% 91.01% Ordinary - Women 103.09% 95.90% Ordinary - Combined 85.59% 91.63%Accidental - Men 82.17% 79.10% Accidental - Women 0% 10.06% Accidental - Combined 69.13% 67.76%

Ordinary mortality experience for men was about 17% below expected in the last 4 years, and 9% less than expected over the last 10 years. For women, ordinary mortality experience was 3% higher than expected (11 instead of the 10.67 assumed deaths), but the difference wasn’t credible. Similarly, women’s ordinary mortality experience was lower than expected over 10 years, but also not credible (25 vs. 26.07).

We note that while the assumption of accidental deaths is the same for men and women, of the 17 accidental deaths in the last 4 years, all were men; in the last 10 years, only 1 of the 41 accidental



deaths was of a woman. Because of the substantial growth in the number of female POLICE members in recent years, we believe that there is no reason to revise the assumption at this time, but that this variance should be reviewed in the next several experience studies, as the number and concentration of women members increases.

Thus, we are not currently suggesting any revisions to the ordinary and accidental mortality assumptions for actively employed POLICE members. The overall effect of decreasing the assumed ordinary and accidental mortality tables would be a very slight increase in the liabilities and required contribution.

3. Retirement – men and women – 1st year, 2nd year and after 2nd year

POLICE retirement experience has been, as with FIRE, substantially lower than expected in the last 10 years, including the last 4 years. However, this difference has been primarily in the first year of eligibility for retirement.

POLICE members appear to be retiring slightly later than assumed. Recent experience and 10-year experience has been consistent at actual experience being about 90% of assumed for the second and succeeding years of retirement eligibility. Experience in the first year of eligibility has been a lower percentage of assumed, and has decreased in the most recent years. However, only the actual experience for the first year of eligibility retirement assumption is consistently outside of the 95% confidence interval.

Also, while women’s experience is much less credible, women are retiring at a much faster rate than men. The differential between the rate of men retiring and women retiring bears watching as the percentage of women in the workforce increases.



Ratio of actual to expected retirements, men and women


First year of eligibility - Men 67.00% 80.60% First year of eligibility - Women

90.97% 102.25%

First year of eligibility - Combined

71.11% 84.26%

Second year of eligibility - Men

90.86% 91.46%

Second year of eligibility - Women

135.12% 126.58%

Second year of eligibility - Combined

97.13% 96.07%

Each succeeding year - Men 92.32% 80.12% Each succeeding year - Women

104.95% 105.84%

Each succeeding year - Combined

93.62% 82.55%

Thus, we are not currently suggesting revising the retirement assumptions. However, we may suggest revising the first year of eligibility retirement assumption for men if the experience does not change in the next two years.

The overall effect of reducing the retirement assumption would be to slightly increase the length of POLICE members’ careers and their average age at retirement and slightly reduce the accrued liabilities and annual required contribution.


While the withdrawal assumption is the same for men and women, we analyzed differences between men and women, to determine whether separate assumptions should be used.

Withdrawal experience has changed substantially over the last decade. Looking at just the most recent 4 years’ experience, actual withdrawals have been much lower than expected.



Men 49.26% 89.88%Women 33.21% 72.54% Combined 46.46% 86.74%

However, the 10-year experience is significantly higher, with the actual to expected ratio between about 150% and 200% between 2006 and 2009, before dropping significantly in 2009 and continuing at the lower level to the present. Thus, we do not suggest revising this assumption until we see experience from the next two years. We may also suggest different withdrawal assumptions for men and women, if the experience continues to be significantly different.

The overall effect of reducing the withdrawal assumption would be to increase retirement liabilities and annual required contributions.



5. Disability – men and women – ordinary, accidental WTC eligible and ineligible

The experience of ordinary disability appears to be very different between men and women, although the number of men included in the experience study is about 5 times higher than the number of women. While men are becoming disabled at a rate substantially below that assumed, women are becoming disabled at a rate above what has been assumed. Both groups have seen a drop in the rate in the last 4 years, as compared to the last 10 years.

Accidental disability experience, both for those eligible for WTC benefits and those not eligible, is substantially lower than expected over both 4 and 10 year periods, with smaller differences between men’s and women’s experience than for ordinary disability.



Ordinary – Men 55.74% 68.55% Ordinary – Women 113.28% 170.47% Ordinary - Combined 64.09% 83.61%Accidental, WTC Eligible – Men

46.34% 52.52%

Accidental, WTC Eligible – Women

39.23% 42.23%

Accidental, WTC Eligible - Combined

45.32% 51.01%

Accidental, not WTC Eligible – Men

64.03% 83.77%

Accidental, not WTC Eligible – Women

50.23% 68.20%

Accidental, not WTC Eligible - Combined

61.44% 80.92%

Because the probability of ordinary disability is low and the experience is significantly different between men and women, we are not currently suggesting a revision in the assumption. While the difference between accidental disability experience and assumptions is greater, and not within the 95% confidence interval, because of the decrease in the rate in the last 4 years, we are currently not suggesting a revision, but may reconsider after the next 2 years of experience is available.

As noted above, the percentage of POLICE members who are eligible for WTC accidental disability has been declining, so the importance of this assumption is declining.

The effect of any revision in the ordinary disability assumption would be to slightly increase the accrued liability and the annual required contribution. The effect of any decrease in the overall accidental disability assumption would be to very slightly increase the accrued liability and annual required contribution.

6. Salary increase – men and women – base, merit, regular overtime, retirement overtime anddisability overtime

The salary improvement assumptions include a variety of assumptions, including:

The inflation assumption (addressed in the economic assumptions) The annual salary improvement assumption



The annual merit improvement assumption The annual regular overtime assumption The overtime assumption in the year of retirement The overtime assumption in the year of disability.

The last two assumptions are referred to as the Dual Overtime assumption.

Ratio of actual to expected salary/overtime experience


Salary Improvement 74.96% 125.50% Merit Improvement 63.84% 132.59% Regular Overtime 126.43% 124.47% Retirement Overtime 119.12% 131.04% Disability Overtime 113.37% 126.37%

The annual salary improvement and the annual merit improvement assumption are related, because the difference between the two is the inflation assumption. We used the average inflation experience over the last 4 or 10 years, of 1.5% or 2.0%, to adjust the salary improvement to the merit improvement experience. Interestingly, the 10-year merit salary experience is significantly higher than 4-year experience for both.

Because of the large difference between the 4-year and 10-year experience, we are not currently suggesting revising the salary and merit improvement assumptions.

Overtime experience is consistently higher than expected, as shown in the table above. As previously noted, we changed the way that the overtime pay rate was determined by GRS, by dividing the overtime amount by the average of the beginning and end of year pay, instead of dividing just by the beginning of year pay. We believe that this better reflects the overtime experience because overtime is tied to current pay, which increases over the year. Thus, using an average pay more likely reflects the actual salary being earned when the overtime was worked.

The ratio of actual overtime to expected overtime has varied between 110% and 134% during the last 10 years. Interestingly, the dual overtime experience has decreased recently, with the ratio of actual to expected overtime decreasing from 7%-17% from the last 10 years to the most recent 4 years. However, it is unclear whether this pattern requires adjustment or whether this is just a normal variance. Thus, we are not currently suggesting revising the overtime assumptions.

Revising the salary improvement or merit improvement assumptions to reflect the lower-than-expected increases in the last 4 years would decrease the accrued liability and the annual required contribution. Increasing these assumptions to reflect the last 10-year experience would have the opposite effect.

Revising the overtime assumptions to reflect experience in the last 4 or 10 years would increase the accrued liabilities and the annual required contribution.



New York City Police Pension FundService Retirees' Mortality Assumption and Experience

0%20%40%60%80%

100%120%140%160%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%20%40%60%80%

100%120%140%160%180%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

50%

100%

150%

200%

250%

300%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%


New York City Police Pension Fund

Service Retirees' Mortality Assumption and Experience4-Year Period Ending 2015


Women

Men

0

20

40

60

80

100

120

45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age


0

1

2

3

4

5

6

45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age



New York City Police Pension FundDisability Retirees' Mortality Assumption and Experience


0%

50%

100%

150%

200%

250%

300%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

50%

100%

150%

200%

250%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0%

100%

200%

300%

400%

500%

600%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%



Disability Retirees' Mortality Assumption and Experience4-Year Period Ending 2015


Women

Men

0

10

20

30

40

50

60

70

80

45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age


0

0.5

1

1.5

2

2.5

3

3.5

45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age



New York City Police Pension FundRetirees' Mortality Assumptions and Experience


80%

85%

90%

95%

100%

105%

110%

115%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%

75%

80%

85%

90%

95%

100%

105%

110%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%


Mortality Rates

Mortality Rates


Mortality Rates

New York City Police Pension FundOrdinary Mortality Experience of Active Members

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

25 30 35 40 45 50 55Age



0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

25 30 35 40 45 50 55Age



0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

25 30 35 40 45 50 55Age





New York City Police Pension FundAccidental Mortality Experience of Active Members

Mortality Rates

Mortality Rates

Mortality Rates

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

0.16%

25 30 35 40 45 50 55Age



0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

0.16%

0.18%

25 30 35 40 45 50 55Age

Accidental Mortality, Men


0.00%

0.01%

0.01%

0.02%

0.02%

0.03%

0.03%

0.04%

25 30 35 40 45 50 55Age

Accidental Mortality, Women



Retiremen

t Rates

Retiremen

t Rates4-Year Period Ending 2015

New York City Police Pension FundRetirement Assumptions and Experience

Retiremen

t Rates

0%

10%

20%

30%

40%

50%

60%

70%

80%

40 45 50 55Age

First Year of Retirement Eligibility, Men


0%

5%

10%

15%

20%

25%

30%

35%

40 45 50 55

Age

Second year of Retirement Eligibility, Men


0%

2%

4%

6%

8%

10%

12%

14%

16%

40 45 50 55Age

After Second Year of Retirement Eligibility, Men



Retirem

ent Rates

Retirem

ent Rates


New York City Police Pension FundRetirement Assumptions and Experience

Retirem

ent Rates

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

40 45 50 55Age

First Year of Retirement Eligibility, Women


0%

20%

40%

60%

80%

100%

120%

40 45 50 55

Age

Second year of Retirement Eligibility, Women


0%

5%

10%

15%

20%

25%

40 45 50 55Age

After Second Year of Retirement Eligibility, Women



Second Year of Eligibility, Men and Women

After Second Year of Eligibility, Men and Women


Retirement Experience of Active Members4-Year Period Ending 2015


First Year of Eligibility, Men and Women

0

100

200

300

400

500

600

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Actual Retirem

ents

Age


0

20

40

60

80

100

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Actual Retirem

ents

Age


0

50

100

150

200

250

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Actual Retirem

ents

Age



Withdrawal Rate

New York City Police Pension FundWithdrawal Experience of Active Members


Withdrawal Rate

Withdrawal Rate

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0 5 10 15Service



0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0 5 10 15Service

Withdrawal, Men


0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0 5 10 15Service

Withdrawal, Women



New York City Police Pension FundWithdrawal Experience of Active Members By Year


0%

50%

100%

150%

200%

250%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year



Men

Women




Men and Women

0

50

100

150

200

250

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Actual W

ithdrawals

Years of Service


0

50

100

150

200

250

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Actual W

ithdrawals

Years of Service


0

5

10

15

20

25

30

35

40

45

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Actual W

ithdrawals

Years of Service



4-Year Period Ending 2015Ordinary Disability Rates


New York City Police Pension FundOrdinary Disability Experience of Active Members

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

25 30 35 40 45 50 55Age



0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

25 30 35 40 45 50 55Age




Women

Men


Ordinary Disability Experience of Active Members4-Year Period Ending 2015


0

5

10

15

25 30 35 40 45 50 55

Actual Disabilities

Age


0

1

2

3

4

5

6

25 30 35 40 45 50 55

Actual Disabilities

Age



New York City Police Pension FundAccidental Disability Experience of Active Members

Acciden

tal D

isability Rates


Acciden

tal D

isability Rates

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

25 30 35 40 45 50 55Age

Disability Experience, Men, WTC - Eligible


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

25 30 35 40 45 50 55Age

Disability Experience, Women, WTC - Eligible



WTC Eligible Men

WTC Eligible Women


Accidental Disability Experience of Active Members4-Year Period Ending 2015


0

20

40

60

80

100

120

25 30 35 40 45 50 55

Actual Disabilities

Age


0

5

10

15

20

25

25 30 35 40 45 50 55

Actual Disabilities

Age



New York City Police Pension FundAccidental Disability Experience of Active Members

Acciden

tal D

isability Rates


Acciden

tal D

isability Rates

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

25 30 35 40 45 50 55Age

Disability Experience, Men, WTC - Ineligible


0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

25 30 35 40 45 50 55Age

Disability Experience, Women, WTC - Ineligible



Non ‐ WTC Eligible Men

Non ‐ WTC Eligible Women


Accidental Disability Experience of Active Members4-Year Period Ending 2015


0

10

20

30

40

50

25 30 35 40 45 50 55

Actual Disabilities

Age


0

2

4

6

8

10

12

14

16

25 30 35 40 45 50 55

Actual Disabilities

Age






0%

50%

100%

150%

200%

250%

300%

1 6 11 16 21 26Service


Actual 100%

-200%

-100%

0%

100%

200%

300%

400%

500%

1 6 11 16 21 26

Service


Actual 100%





0%

50%

100%

150%

200%

250%

300%

350%

0 5 10 15 20 25Service


Actual 100%

0%

50%

100%

150%

200%

0 5 10 15 20 25Service


Actual 100%

0%

50%

100%

150%

200%

250%

300%

350%

0 5 10 15 20 25Service


Actual 100%





0%

20%

40%

60%

80%

100%

120%

140%

160%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%


Results, including confidence intervals, for FIRE



FIRE Experience Analysis

The following sections discuss the differences between FIRE and the other plans, and the FIRE demographic experience.

Issues Unique to FIRE

Please note that analysis was done only for men or for combined male and female groups, because of the paucity of female firefighters (less than 60) and the unreliability of survivor data. Of the approximately 10,300 firefighters only 56 were shown as women in the June 30, 2014 valuation. Thus, any demographic analysis for women alone would not have sufficient members to provide for credible results.

FIRE, like POLICE provides for early retirement only for those with 20 but less than 22 years of service (Tier 2 and Tier 3 Revised.) However, while the OA assumes a probability of early retirement for FIRE members, the first Tier 3 member to be eligible for early retirement will be eligible in 2029. Hence, there is no early retirement experience to analyze. Ordinary and accidental disability and death benefits are provided, with accidental benefits differing for those participating in the World Trade Center (WTC) rescue, recovery or clean up. The number of firefighters eligible for WTC benefits is declining over time, as shown in the table below, although still significantly higher than for POLICE. FIRE has had much higher accidental, including WTC, disability experience than has POLICE.

The overtime assumption is also quite significant for FIRE, and separate assumptions are made in the year prior to retirement or disability. Our analysis excluded members in the year prior to retirement (either service or disability) from the determination of normal overtime experience.

FIRE also experienced a hiring freeze over much of the five years prior to 2015. This results in the low credibility of the withdrawal experience for those with less than five years of service, particularly in the most recent 4-year experience.

FIRE members

1. Mortality – men – service and disability retirees

The following graphs and tables show the incidence of mortality for service retirees and disabled retirees, for the most recent 4 or 10 years, ending June 30, 2015. Please note that the results of the analysis for service retirees below age 55 and disabled retirees below age 45 is entirely unreliable due to the paucity of retirees in those age groups. See table 1A for the 4-year period which shows, for service retirees, total exposures of less than 200 at each age prior to age 52, and an expected number of deaths of only 2.3 at age 55. Even at older ages, the number of retiree exposures are never more than 896 (although the expected deaths peak at age 86 with more than 30 expected at that age), so significant variance between actual and expected mortality experience is to be expected. Overall, actual mortality experience was 5.4% higher than expected. Experience over a 10-year period is slightly further from the mortality assumption at 5.8% higher.

Exposures for disability retirees are substantially higher than for service retirees (over 4 years, 39,662 versus 22,012, with 869 deaths compared to 737 deaths), although, because of the younger average age of disability retirees the average mortality rate is lower. Overall experience was only 2.5% lower than expected over the last 4 years and 0.04% higher than expected over the last 10 years.



Ratio of actual to expected deaths - Men


Service retirement 105.38% 105.82% Disability retirement 97.49% 100.04%

The differences between actual and expected experience are not large enough to currently warrant revision to the mortality assumptions for either the service or disabled retirees. However, if we were to suggest revisions to increase the mortality assumption for service retirees, this would slightly decrease the FIRE liabilities, and decrease the required contributions. Decreasing assumed disabled mortality would very slightly increase the FIRE liabilities (ignoring the 10-year experience, and adjusting only for the experience in the last 4 years), and increase the required contributions. Because the number of disabled retirees is substantially larger than the number of service retirees, the primary effect would be to very slightly decrease liabilities and required contributions.


Mortality experience for active firefighters is substantially lower than expected for both ordinary and accidental mortality, as shown in the following graphs and tables. The table immediately below shows that the recent experience is even farther away from the assumption than earlier experience, although the numbers of assumed and actual deaths is relatively low.



Ordinary mortality 44.94% 66.81%Accidental mortality 42.35% 56.79%

However, because of the relatively low incidence of both ordinary and accidental mortality (45 and 31 deaths, respectively, over the last 10 years, with over 110,000 exposures) among members, and the relatively minor effect on plan liabilities, we do not currently recommend any change in either of these assumptions.

If we were to suggest decreasing the pre-retirement mortality assumption, the effect would be to very slightly increase plan liabilities and required contribution.

3. Retirement – men and women – 1st year, 2nd year and after 2nd year

Retirement experience has been substantially lower than expected in the last 10 years, including the last 4 years. Firefighters appear to be retiring later than assumed. Recent experience and 10-year experience has been consistent at actual experience being about 60% of assumed for the second and succeeding years of retirement eligibility. Experience in the first year of eligibility has been a lower percent of assumed, and has decreased sharply in the most recent years. However, only the actual experience for the first and second year of eligibility retirement assumption is consistently outside of the 95% confidence interval.

Ratio of actual to expected retirements


First year of eligibility 29.84% 45.53%Second year of eligibility 60.10% 65.20%Each succeeding year 61.24% 56.67%



While we are not currently suggesting a revision to this assumption, we anticipate suggesting revisions in the next experience study unless there is a significant change in the experience.

Revising the retirement assumption to more closely match experience would increase the average age at retirement and reduce the liabilities and required contributions.


FIRE withdrawal experience is substantially lower than expected (66.16% of expected), in large part because there have been few new hires in the last five years, resulting in very few employees subject to the highest termination rates. Of the 31,495 total exposures over the last 4 years, only 2,199, or 7%, came from employees with less than 5 years of service. Also, the withdrawal rates are relatively low (less than 0.4% for members with more than 6 years of service), so the expected number of active members withdrawing is relatively low, leading to the actual experience being within the 95% confidence interval of the withdrawal assumption. Looking back to the last 10 years, actual experience is much closer to assumed experience, with the ratio being 93.71%.

Thus, we believe that there is currently no reason to change this assumption. However, as new members are hired in significant numbers, we suggest that this assumption be reviewed. This may not occur within the next two years; thus, any suggested revisions to the withdrawal assumption may not be addressed in our next experience study.

If the withdrawal assumption were reduced to match recent experience (last 4 years), the accrued liability would be slightly increased, along with the required contribution.

5. Disability – men and women – ordinary, accidental WTC eligible, and accidental WTCineligible

The experience of ordinary disability appears to be very different from what has been assumed, as 5 members have qualified over the last 4 years while 168 were assumed to qualify (roughly ½ of the experience over the last 10 years of 22 actual ordinary disabilities compared to 339 assumed). Over the last 10 years the ratio of actual ordinary disabilities to expected was 10% to 15% during 2006 to 2009, before dropping to 2%-3% (except for 2012, when it was 8% and 2013 when it was 0%).

However, accidental disability, whether for those eligible for WTC benefits or those not eligible, is an entirely different story. The accidental disability assumption, which in total is substantially higher than the ordinary disability assumption, appears to reasonably approximate accidental disabilities over the last 4 years (96.95% actual to expected accidental disabilities.) Over time, as the number of firefighters hired after 2001 surpasses the number of those hired before, there may be an increase in the number of ordinary disabilities and a decrease in the number of accidental disabilities.



Ordinary Disability 2.98% 6.49%Accidental – WTC Eligible 96.95% 126.95%Accidental – not WTC Eligible

118.61% 103.66%


As is shown in the table above, the significance of the WTC disability assumption is decreasing as the number of eligible POLICE and FIRE members declines over time.

Because the probability of ordinary disability is low (less than 1% under age 55), and the combined accidental disability liability experience is only slightly below 100% (93.14%, including all eligible members) of assumed, we are not currently suggesting revisions to any of the disability assumptions. However, we expect to suggest reducing the ordinary disability assumption in the next experience study, although not as low as current experience.

The effect of any revision in the ordinary disability assumption would be to very slightly increase the accrued liability and the annual required contribution. The effect of any increase in the overall accidental disability assumption would be to slightly decrease the accrued liability and annual required contribution.

6. Salary increase – men and women – base, merit, regular overtime, retirement overtime anddisability overtime

The salary improvement assumptions include a variety of assumptions, including:

The inflation assumption (addressed in the economic assumptions) The annual salary improvement assumption The annual merit improvement assumption The annual regular overtime assumption The overtime assumption in the year of retirement The overtime assumption in the year of disability.

The last two assumptions are referred to as the Dual Overtime Assumption.

Ratio of actual to expected salary/overtime experience


Salary Improvement 93.14% 136.46% Merit Improvement 87.22% 150.19% Regular Overtime 201.50% 160.21% Retirement Overtime 216.69% 185.23%

Employees WTC Eligible


297

Disability Overtime 172.21% 162.46%



The annual salary improvement and the annual merit improvement assumption are related, because the difference between the two is the inflation assumption. We used the average inflation experience over the last 4 or 10 years, of 1.5% or 2.0%, to adjust the salary improvement to the merit improvement experience. The experience for members with five or more years of service, for both assumptions, is relatively close to the assumption. However, there were significant differences for members in the first five years of employment. Since the number of employees hired in the last five years is substantially lower than usual, due to a hiring freeze, we do not anticipate that this experience is representative of what would be expected in the future after a return to normal hiring patterns. Thus, we are not currently suggesting revisions to the salary and merit improvement assumptions.

Overtime experience is consistently higher than expected, as shown in the table above. We changed the way that the overtime pay rate was determined by GRS by dividing the overtime amount by the average of the beginning and end of year pay, instead of dividing just by the beginning of year pay. We believe that this better reflects the overtime experience because overtime is tied to current pay, which increases over the year. Thus, using an average pay more likely reflects the actual salary being earned when the overtime was worked.

The ratio of overtime to total pay has increased substantially from 2009 to 2015, perhaps at least in part due to the hiring freeze. Thus, we are not currently suggesting revising the overtime assumption.

Revising the salary improvement or merit improvement assumptions to reflect the lower-than-expected increases in the last 4 years would decrease the accrued liability and the annual required contribution. Increasing these assumptions to reflect the last 10-year experience would have the opposite effect.

Revising the overtime assumptions to reflect experience in either the last 4 or 10 years would substantially increase the accrued liabilities and the annual required contribution.


New York Fire Department Pension FundMortality of Service Retirees - Four Year Experience Men


New York Fire Department Pension FundService Retirees' Mortality Assumption and Experience


0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0

5

10

15

20

25

30

35

40

45

55 60 65 70 75 80 85 90 95

Actual Deaths

Age



95% Confidence LevelMortality of Disability Retirees - Four Year Experience Men

New York Fire Department Pension Fund

New York Fire Department Pension FundService Retirees' Mortality Assumption and Experience


0%

50%

100%

150%

200%

250%

300%

45 50 55 60 65 70 75 80 85 90 95 100+Age


Actual 100%

0

10

20

30

40

50

60

45 50 55 60 65 70 75 80 85 90 95

Actual Deaths

Age



New York Fire Department Pension FundMortality Assumptions and Experience

For the Ten-Year Period ending in 2015 By Year

0%

20%

40%

60%

80%

100%

120%

140%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year



0%

20%

40%

60%

80%

100%

120%

140%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year




4-Year Period Ending 2015Rate of Ordinary Mortality

Rate of Acciden

tal M

ortality

New York Fire Department Pension FundMortality Experience of Active Members

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

25 30 35 40 45 50 55Age



0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

25 30 35 40 45 50 55Age




Rate of Retiremen

tRate of Retiremen

t


New York Fire Department Pension FundRetirement Experience of Active Members

Rate of Retiremen

t

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

40 45 50 55Age

First Year of Retirement Eligibility, Men and Women


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

40 45 50 55

Age

Second year of Retirement Eligibility, Men and Women


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

40 45 50 55Age

After Second Year of Retirement Eligibility, Men and Women





New York Fire Department Pension FundMen and Women



0

5

10

15

20

25

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Actual Retirem

ents

Age


0

1

2

3

4

5

6

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Actual Retirem

ents

Age


0

10

20

30

40

50

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Actual Retirem

ents

Age



New York Fire Department Pension FundWithdrawal Experience of Active Members


Rate of Withdrawal



Men and Women

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19Service



0

2

4

6

8

10

12

14

16

18

20

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Actual W

ithdrawals

Years of Service





0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Actual/Expected

Actual/Expected


New York Fire Department Pension FundOrdinary Disability Experience of Active Members


Men and Women



New York Fire Department Pension FundOrdinary Disability Experience of Active Members

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

25 30 35 40 45 50 55Age

Men and Women


0

5

10

15

20

25

25 30 35 40 45 50 55 60 65 70 75

Actual Disabilities

Age



4-Year Period Ending 2015Rate of Acciden

tal D

isability

Rate of Acciden

tal D

isability

New York Fire Department Pension FundAccidental Disability of Active Members

0%

2%

4%

6%

8%

10%

12%

25 30 35 40 45 50 55Age

Disability Experience, Men and Women, WTC - Ineligible


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

25 30 35 40 45 50 55Age

Disability Experience, Men and Women, WTC - Eligible



WTC Eligible

Non ‐ WTC Eligible

New York Fire Department Pension FundAccidental Disability Experience of Active Members


0

10

20

30

40

50

60

70

80

30 35 40 45 50 55 60 65

Actual Disabilities

Age


0

5

10

15

20

25

25 30 35 40 45 50 55 60 65

Actual Disabilities

Age



New York Fire Department Pension FundSalary Assumptions and Experience


0%100%200%300%400%500%600%700%800%900%

1000%

0 5 10 15 20 25 30+Service


Actual 100%

0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

1800%

0 5 10 15 20 25 30+Service


Actual 100%


New York Fire Department Pension FundSalary Assumptions and Experience


0%

50%

100%

150%

200%

250%

300%

350%

400%

0 5 10 15 20 25Service


Actual 100%

0%

50%

100%

150%

200%

250%

300%

0 5 10 15 20 25Service


Actual 100%

0%

50%

100%

150%

200%

250%

300%

350%

0 5 10 15 20 25Service


Actual 100%





-

0.50

1.00

1.50

2.00

2.50

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year


Actual 100%


Recommended Changes



Recommended Changes

We are not currently suggesting any changes to the assumptions reviewed in this experience study, because we do not find that the variances between the assumptions and current experience are, for the most significant assumptions, sufficient to require immediate revision. We anticipate suggesting revisions to assumptions in the next experience study, reflecting the additional experience in the fiscal years ended in 2016 and 2017. Thus, we are suggesting areas for further review of the assumptions in the next experience study, including:

Changes that Affect all Plans o We anticipate using not just lives to determine exposure, but weighting those lives

by the amounts of the members’ benefits, to better reflect the effect of mortality on NYCRS’ accrued liability. Because of the typical relationship between income and longevity, we anticipate that this will reduce the ratio of actual experience to assumed, by 5% or more.

Inflation assumption o We are not currently suggesting any change in the inflation assumption, although

we note that the current assumption is relatively high compared to recent experience.

o We also note that the current inflation assumption is slightly higher than the typical investment advisor’s or economist’s expectation, although it is consistent with the market expectation, as reflected in the TBI.

Investment Return Assumption o We are not currently suggesting any change in the investment return assumption.

We note that the assumption appears to be slightly conservative relative to the long-term expectations of the three groups of investment advisors included in our analysis.

o We note that if we were to suggest revising the inflation assumption, we would also likely suggest revising the investment return assumption in tandem.

o We expect to consider any additional changes in the investment markets and the investment mix, and may suggest revising the investment return assumption.

NYCERS o We anticipate suggesting revisions to the service retirees’ mortality tables for

Corrections. Based on liability weighting of the mortality experience, we may also suggest changes to the other groups as well.

o We anticipate suggesting revisions to the mortality tables for employees in all five groups.

o We anticipate suggesting revisions to the withdrawal assumption for Corrections and TBTA and may suggest revisions for Transit.

o We anticipate suggesting revisions to the retirement assumptions for all groups, particularly for the Early Retirement assumption.

o We anticipate suggesting revisions to the ordinary disability assumption for General and Corrections, and may suggest revisions to the accidental disability assumption for Transit and TBTA.

o We anticipate suggesting revisions to the pay improvement and overtime assumptions, based on the additional information for FY 2016 and 2017 experience, as both overtime and pay improvement appear to vary significantly based on extraneous events such contract cycles or revision in work practices.



TRSo While retiree mortality experience varies between men and women, and between

disabled and service retirees, we expect to suggest revisions to the mortalityassumptions for each of these groups.

o Employee mortality has been much higher than assumed in the last 10 years. If thattrend continues, we expect to suggest changes to the assumed employee mortality.

o Employee withdrawal experience, for employees with only a few years of service,has been lower than expected, and has dropped significantly in the last 2 years. Ifthat trend continues we expect to recommend revising the assumptions.

o Retirement experience has been both higher and lower than expected. We expect tosuggest revisions, both to increase and decrease the assumptions, depending onwhether the current patterns continue in the next two years.

o While ordinary disability experience has been close to the assumed experience,accidental disability (while very low) has been trending downward. If this patterncontinues we may suggest revising the accidental disability assumption.

BERSo The improved member data that we receive for 2017 may lead to very different

results than we have observed in the current data.o Based on the current experience, we are likely to suggest changes to employee and

retiree mortality, and to the retirement assumption.o We recommend considering whether certain assumptions should vary based on

part-time or full-time status, which should become available with the revised data,particularly for withdrawal and salary improvement.

POLICEo While the exposure of female officers is still relatively low, the accidental mortality

experience has been nearly 0%. We expect to suggest a separate accidentalmortality table for women.

o Recent withdrawal experience has been substantially lower than assumed. If thistrend continues in the next two years, we anticipate suggesting a revision in thewithdrawal rates.

o Disability experience has been substantially lower than assumed, except for femaleordinary disability. We anticipate suggesting revisions to these disabilityassumptions.

o Interestingly, recent salary improvement experience has been significantly lowerthan expected, while overtime experience (other than dual overtime – disability)has been higher than expected. We expect to consider revising salary and overtimeassumptions, based on experience in the next two years.



FIRE o Employee mortality has been substantially lower than assumed, and we expect to

suggest changes to the mortality table, using an adjustment factor from the blue-collar retiree mortality table

o We expect to consider the withdrawal experience, particularly in the most recent two years, as part of the next experience study, before deciding whether to suggest a change, since the number of recent hires has been very low.

o We expect to suggest revising all three of the retirement assumptions (1st eligible, 2nd year eligible and after 2nd year eligible), if the most recent experience does not reflect much higher retirement experience.

o We anticipate suggesting a substantial revision to the ordinary disability assumption.

o We may suggest revisions to the overtime assumptions, because the OT experience is much greater than anticipated. However, we do not yet know how much of this experience is due to the hiring freeze, and anticipate using the 2016 and 2017 data to better inform us of this effect.


Section IV Impact of Proposed Revisions



Impact of Proposed Revisions

We are not currently proposing any revisions to the assumptions currently being used. Therefore, we have not analyzed the effect on NYCRS’ liability of any assumption changes.

We have noted throughout the sections discussing the results of the experience study by plan, whether the potential change to that individual assumption would increase or decrease the plan’s liability and annual contribution.


Section V Actuarial Certification



Actuarial Certification

We completed tables for all key decrements for each of the NYCRS pension plans and all material participant groups. This is the first of two biennial projects. We are not currently suggesting any assumption changes. We are likely to suggest changes to the assumptions after we complete our second and final biennial study.

Overall, we found that the assumptions chosen by the Office of the Actuary (OA) reasonably model the plans’ experience. We divided assumptions into significant and minor assumptions. Significant assumptions are those which significantly affect the determination of plan liabilities. This includes the inflation and discount rates, retiree mortality, employee retirement and termination assumptions and salary increase and overtime assumptions. No significant assumptions are far enough from recent experience to currently require revision, when considering exogenous factors that affected experience including the Fire Department hiring freeze, revisions in data collection procedures and the timing of new union contracts. However, certain assumptions are likely to require revision as part of the next experience study, including the retirement assumptions (for Elected, Mandated and early retirement), the employee mortality and disability assumptions.

BERS (the smallest of the five plans) experience showed the greatest deviations between plan experience and assumptions. This may be due to data issues that may be corrected by the next biennial study. We will pay close attention to the experience that deviates the most from the assumption.

Overall, we concluded that the assumptions used in the 2014 Actuarial Valuations were reasonable.

We are available to answer any questions on the material in this report or to provide explanations or further details as appropriate. Colin and Kevin meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained in this report. We are not aware of any direct or material indirect financial interest or relationship, including investments or other services that could create a conflict of interest, which would impair the objectivity of our work or not make our work independent.

Colin England, FSA, EA, MAAA

Kevin Binder, FSA, EA, MAAA


Appendices

1 Acknowledgements

2 Reconciliation of Participant Counts Between GRS and BP

3 Hypothesis Testing

4 Tabular Experience Results



Appendix 1 – Acknowledgements

Our work would not have been possible without extensive assistance with an understanding of the NYCRS plans, recent labor issues, other issues in recent experience affecting employees’ in NYCRS behavior, provision of participant data, provision of economic data, including investment policies and anticipated inflation and investment returns.

We express our sincere thanks to the individuals listed below. We are grateful for their assistance and support during the course of the Administrative Review.

Office of the Comptroller

Preston Niblack Scott Evans Miles Draycott David Jeter Alexander Dotov John Dorsa Eng-Kai Tan Rosa Charles Michael Hecht

Office of the Actuary

Sherry Chan Michael J. Samet Anderson Huynh Ting Chen Savi Ramsook-Heera

Office of Management and Budget

Ken Godiner Syed Omair Hassan Neha Mahajan Edward Lin Bilal Waheed

Mayor’s Office

John Adler Cynthia Collins

Municipal Labor Committee

Allen Brawer



319

New York City Employees' Retirement System – General

Adjustments to Data

Normal Retirement Experience

Retirement Exposures Year GRS Bolton

Before Adjustment After Adjustment 2010 19,226 16,555 16,5552011 20,311 17,933 17,9332012 21,004 18,228 18,2502013 21,872 19,564 19,636

Retirements Year GRS Bolton




320


Service Retirees’ Mortality

Death Exposures Year GRS Bolton


Deaths Year GRS Bolton

Before Adjustment After Adjustment 2010 2,575 2,572 2,5722011 2,529 2,528 2,5282012 2,210 2,462 2,4622013 2,915 5501 2,637

1 This number is so low because we the GRS data provide to us was missing groups for many retirees in 2013



321


Disability Retirees’ Mortality


Before Adjustment After Adjustment 2010 5,960 5,996 5,996 2011 6,027 6,130 6,130 2012 6,043 6,298 6,298 2013 6,258 6,249 6,471


Before Adjustment After Adjustment 2010 198 200 200 2011 199 200 200 2012 195 220 220 2013 285 832 255




322



Withdrawal Exposures Year GRS Bolton


Withdrawal Year GRS Bolton

Before Adjustment After Adjustment 2010 3,241 3,336 3,336 2011 3,675 3,877 3,877 2012 737 785 3,069 2013 2,116 2,223 5,314



323



Ordinary Disability Exposures Year GRS Bolton


Ordinary Disabilities Year GRS Bolton




324



Accidental Disability Exposures Year GRS Bolton


Accidental Disabilities Year GRS Bolton




325


Active Ordinary Mortality

Ordinary Mortality Exposures Year GRS Bolton


Ordinary Mortalities Year GRS Bolton




326


Total Salary Experience of Active Members

Salary Exposures Year GRS Bolton


Salaries EOY Year GRS Bolton

Before Adjustment After Adjustment 2010 7,615,073,942 7,636,016,377 7,342,034,8432011 7,690,745,485 7,707,281,923 7,410,749,9352012 7,664,054,094 7,674,843,976 7,379,482,0032013 7,855,205,475 7,856,980,324 7,554,613,107



327



Overtime Pay Exposures Year GRS Bolton


Overtime Pays Year GRS Bolton

Before Adjustment After Adjustment 2010 392,120,647 414,400,484 401,967,680 2011 397,987,078 405,987,907 397,148,543 2012 398,896,690 418,789,038 407,371,287 2013 405,643,459 466,025,281 453,112,132



328

New York City Employees' Retirement System – Transit

Adjustments to Data





Before Adjustment After Adjustment 2010 915 896 8962011 1,101 1,092 1,0922012 1,080 1,068 1,0792013 1,062 1,053 1,105



329


Service Retirees’ Mortality




Before Adjustment After Adjustment 2010 834 835 8362011 955 954 9542012 766 879 8792013 981 2273 902

3 This number is so low because we the GRS data provide to us was missing groups for many retirees in 2013.



330




Before Adjustment After Adjustment 2010 2,155 2,160 2,160 2011 2,157 2,206 2,206 2012 2,152 2,304 2,304 2013 2,245 22944 2,376






331


Withdrawal







332






Before Adjustment5 After Adjustment 2010 139 120 120 2011 181 173 173 2012 112 105 134 2013 51 50 121

5 Does not include about 10-20 ordinary disability retirement who did not meet the service requirements for this benefit.



333









334









335


Active Accidental Mortality

Accidental Mortality Exposures Year GRS Bolton


Accidental Mortalities Year GRS Bolton




336






Before Adjustment After Adjustment 2010 2,454,448,062 2,452,399,868 2,270,651,546 2011 2,491,079,850 2,489,369,251 2,304,882,456 2012 2,459,715,086 2,459,798,560 2,277,502,187 2013 2,431,542,334 2,434,430,733 2,254,013,703



337







6 This seems incorrect, but is directly from the data received from GRS. Perhaps, GRS had used the prior year OT for the current year study (i.e. 2012 OT is listed in 2013).



338

New York City Employees' Retirement System – Sanitation

Adjustments to Data

Retirements


Before Adjustment After Adjustment 2010 1,967 1467 1467 2011 1,675 1638 1638 2012 1,410 1365 1365 2013 1,600 1167 1202





339


Service Retiree’s Mortality








340










341


Withdrawal







342









343









344









345









346






Before Adjustment After Adjustment 2010 627,789,553 626,510,765 559,384,612 2011 621,014,976 620,116,014 553,675,0122012 611,718,767 611,110,136 545,634,050 2013 613,631,952 613,923,923 548,146,360



347




Before Adjustment After Adjustment 2010 7,169 7,140 6,863 2011 6,789 6,769 6,5542012 6,577 6,563 6,284 2013 6,543 6,548 6,256


Before Adjustment9 After Adjustment2010 43,294,030 67,328,327 64,911,9732011 64,101,072 105,232,437 102,044,7192012 101,230,828 48,780,958 46,678,8732013 46,801,147 93,863,647 89,438,938




348

New York City Employees' Retirement System – Corrections

Adjustments to Data

Retirements


Before Adjustment After Adjustment 2010 2,438 1,576 1576 2011 2,444 2,089 2089 2012 2,126 1,939 1939 2013 1,825 1,706 1716





349


Service Retiree’s Mortality


Before Adjustment After Adjustment 2010 6,745 6737 67372011 7,088 7084 70842012 7,642 7643 76432013 8,045 7963 8035






350




Before Adjustment After Adjustment 2010 1,690 1692 16922011 1,690 1694 16942012 1,700 1720 17202013 1,754 1746 1773






351


Withdrawal







352









353









354









355









356









357




Before Adjustment After Adjustment 2010 8,616 8,363 7,910 2011 8,143 7,960 7,5832012 7,807 7,694 7,389 2013 7,725 7,727 7,413


Before Adjustment After Adjustment 2010 84,880,168 86,816,484 81,871,7672011 81,791,573 103,615,65912 98,345,4712012 97,632,265 126,980,497 121,633,7232013 121,261,770 132,443,990 126,115,152




358


Adjustments to Data








359


Inactive (Retiree) Death



Death Year13 GRS Bolton


13 These were incorrectly labeled 2008-2011 instead of 2010-2013 in the GRS report on page V-16.. 14 This number is so low because we the GRS data provide to us was missing groups for many retirees in 2013



360



Death Exposures Year15 GRS Bolton


Deaths Year15 GRS Bolton


15 These were incorrectly labeled 2008-2011 instead of 2010-2013 in the GRS report on page V-29. 16 This number is low because we the GRS data provide to us was missing groups for many retirees in 2013



361









362









363









364









365



Active Accidental Mortality Exposures Year GRS Bolton


Active Accidental Mortalities Year GRS Bolton




366









367









368

Teachers’ Retirement System of the City of New York

Retirements of Active Members with Unreduced Benefit

Retirements Exposures Year GRS Bolton






369


Early Retirement of Active Members

Early Retirement Exposures Year GRS Bolton






370


Mortality of Service Retirees







371


Mortality of Disability Retirees







372









373









374









375









376





Salaries Year GRS Bolton




377


Adjustments to Data








378


Early Retirement of Active Members



Exposures Year GRS Bolton




379


Death (Retirement)







380









381






Before Adjustment After Adjustment 2010 729 708 708 2011 666 641 641 2012 95 82 551 2013 441 442 1,340



382





Ordinary Disability Year GRS Bolton




383









384



Active Ordinary Exposures Year GRS Bolton


Active Ordinary Year GRS Bolton




385





Salary Year GRS Bolton




386

New York Police Pension Fund

Retirements


Before Adjustment After Adjustment 2010 4,077 3,913 4,088 2011 5,468 4,.991 5,474 2012 5,209 4,624 5,209 2013 5,164 5,089 5,169


Before Adjustment After Adjustment 2010 817 815 799 2011 1,532 1,532 1,513 2012 1,354 1,350 1,335 2013 832 833 822



387









388









389









390









391









392


Active Ordinary Mortality of Active Members



Active Ordinary Mortalities Year GRS Bolton




393









394









395





Overtime Pay Year GRS17 Bolton

Before Adjustment After Adjustment 2010 407,000,355 450,612,399.00 418,111,3042011 418,628,636 450,966,722.00 423,108,9392012 423,841,369 495,568,918.00 475,656,6332013 477,942,873 526,828,597 489,999,504

17 These pre-adjustment exposures include those eligible for dual overtime. In the post adjustment Overtime pay, it is possible that GRS reported the OT in year N, as year N+1. For example, in 2011 GRS disclosed 418,628,636 of OT which is very close to the 2010 OT of 418,111,304. Other years are also consistent with This pattern.



396


Retirements







397









398









399









400









401









402









403


Active Accidental Mortality of Active Members



Active Accidental Mortalities Year GRS Bolton




404






Before Adjustment After Adjustment 2010 1,110,985,559 1,110,985,559 971,109,187 2011 1,124,268,241 1,124,268,241 983,218,159 2012 1,105,143,815 1,105,262,906 967,366,619 2013 1,085,109,298 1,085,229,348 950,294,069



405






Before Adjustment18 After Adjustment 2010 113,073,078 142,791,306 142,791,306 2011 142,716,271 181,311,931 181,311,931 2012 181,116,947 212,943,412 212,943,412 2013 212,723,761 262,102,834 262,102,834

18 It is possible that GRS reported the OT in year N, as year N+1. For example, in 2011 GRS disclosed 142,716,271 of OT which is very close to the 2010 OT of 142,791,306. Other years are also consistent with This pattern.



Appendix 3 – Hypothesis Testing

Hypothesis Testing This section explains the process of constructing confidence intervals for the testing of hypothesis that experience is different from assumption. This procedure requires the application of binomial distribution and normal approximation. Applying the Binomial Distribution The binomial distribution is a family of probability distributions that has known mean and variance. Applying the binomial distribution to study retirement, withdrawal, disability or mortality experience can simplify analysis and permit easier comparison of results. The binomial distribution has several important characteristics. First, the total sample size is known and fixed. Second, each event has exactly two possible outcomes, which are denoted as success and failure. Lastly, each successive event must be independent of the previous one, and the probability of success needs to remain the same for all events. Decrements analyzed under the experience study, such as retirement and withdrawal, closely resemble the traits of a binomial distribution. For example, each retirement event has two outcomes, either the employee retires from the job or continues working. For a given age, the probability of retirement is fixed, therefore the probability of retirement remains the same for employees of a specific age. The sample size is known and is fixed since the number of employees working at any given time is a known quantity. The one criterion that requires careful consideration is that each event must be independent. In normal circumstances, each employee makes his or her independent judgement on the appropriate time to retire. From this perspective, the independence requirement is met. However, this is not always true. In times of economic recession, retirement experiences may not be independent due to organizational policies and incentives. For this analysis, it is assumed that successive retirement events are independent of each other. After the assumptions are made, the retirement experience becomes a collection of binomial distributions with different parameters. An example will illustrate this concept. For age Y, there is a known number of exposures, or sample size, n. There is also a probability for retirement for employees of age Y, denoted as p. The probability is the same for every employee of age Y. In addition, each employee’s decision for retirement is expected to be independent of other employees. The number of employees that will retire is a random number that could be any integer value ranged from 0 to n. This random process can be described by a binomial distribution with parameters (n,p). This binomial distribution has mean equal to n*p, and variance equal to n*p* 1 p . In other words, it is expected that n *p number of employees will retire, and the dispersion of the estimate is measured by the standard deviation, which is n ∗ p ∗ 1 p . The next age, age Z, will have a different binomial distribution since the sample size and retirement probability will be different. Therefore, the retirement experience of each age is a binomial distribution with its own mean and variance. With a known distribution in place, confidence intervals can be constructed to test whether the actual experience provides sufficient evidence to support or reject that the assumed probability for retirement, p, is the true parameter that correctly describes the population under study.



Constructing Confidence Intervals Using Normal Approximation If the sample size of a binomial distribution is sufficiently large, the binomial distribution approximates a normal distribution with the same mean and variance. Ideally, for the normal approximation to be effective, n*p should be greater than or equal to five, and n* 1 p should also be greater than or equal to five. One consequence of this general standard is that if p is very small or very large, then a large sample size n is required for normal approximation. For this study, p is relatively small for mortality probability in younger ages and withdrawal probability for employees with longer years of service. Therefore, caution should be exercised in applying the normal approximation. In these situations, if the sample size is not sufficiently large, then the binomial distribution will not be approximately normal. Instead, it will be positively or negatively skewed depending on the parameter p. The advantage of normal approximation is that it simplifies calculations in constructing the confidence interval for the mean. Before a confidence interval can be constructed, a confidence level must be selected. The confidence level determines the width of the confidence interval. For this study, the confidence level is uniformly set at 95% for all confidence intervals constructed. In a normal distribution, by symmetrical characteristic, 95% of all possible outcomes are captured in the range between 1.96 standard deviation to left of the mean and 1.96 standard deviation to the right of the mean. Normal approximation enables a binomial distribution to be treated as if it is a normal distribution. Therefore, a 95% confidence interval for a binomial distribution with parameters (n,p) has an upper bound of n*p 1.96 n ∗ p ∗ 1 p and a lower bound of n*p 1.96 n ∗ p ∗ 1 p .

Comparison of the actual experience against the confidence interval plotted can reveal important insights. Given that the binomial probability p is true, the confidence interval should capture the actual experience approximately 95% of the time in long run proportion. Because the actual experience is a random quantity, there is a 2.5% probability that it would exceed the upper bound of the confidence interval and another 2.5% probability that it would fall below the lower bound. However, a 5% probability is relatively small, and therefore the actual experience would fall within the confidence interval most of the time (95%). This assumption forms the basis for conducting hypothesis testing. The purpose of hypothesis testing is to test whether an assumed parameter is true given a set of data collected. In this case, the mean n*pis being tested. The null hypothesis is that mean equals to n*p, and the alternative hypothesis is that the mean does not equal to n*p. The confidence interval forms the boundary in determining whether to reject or fail to reject the null hypothesis. If the actual experience falls within the confidence interval, then there is no sufficient evidence to reject the null hypothesis. On the other hand, if the actual experience falls outside the confidence interval, then the null hypothesis is rejected with a 95% confidence level. In other words, there is a 5% probability of committing a Type I Error, whereby a true null hypothesis is incorrectly rejected. We assumed that a 5% probability for error in choosing to revise the assumption, when it was in fact correct, is acceptable. If the null hypothesis is rejected, this means that there is evidence to show that the assumed mean is not true and therefore the assumed binomial probability p is also not true. When the confidence interval and actual experience of all ages or service years are plotted, then the regions above the



upper bound of the confidence interval and below the lower bound of the confidence interval form the critical rejection area. If the actual experience consistently trends in the critical rejection area, the reasonableness of the assumed probabilities should be further evaluated.

Mortality Improvement

When considering mortality probabilities, mortality improvement and gender difference need to be taken into account. Males and females of a specific age have different mortality probability; therefore, the two groups need to be separated. Another complication is mortality improvement. Each year, the mortality probability for a given age decreases by a small amount, thus creating the problem where successive events have slightly different binomial probabilities. To simplify calculations, the mortality probabilities for a given age in several successive years are averaged. This average, ̅ , is used as the binomial probability. In effect, this simplification creates one distribution for one specific age instead of several binomial distributions with slightly different binomial probabilities. The resulting distribution is continued to be treated as a binomial distribution with parameters (N, ̅ ), where N is the sum of all exposures in each age across the several years under study. This simplification has two advantages. First, it increases the sample size, which makes normal approximation more accurate. The second advantage is that there is only one probability to analyze instead of several. After simplification, the steps taken to construct confidence intervals and conduct hypothesis testing remain the same.

One consequence of the simplification is that the estimate of the variance becomes biased, meaning that it is expected to create results slightly more variable than they should be, resulting in a slightly higher variance than would be calculated if we used different mortality rates for each year rather than their average. While ∗ ̅ ∗ 1 ̅ is still a close estimate of the variance, the exact variance is ∗ ̅ ∗ 1 ̅ ∗ , where s is the standard deviation of the several binomial probabilities that are being averaged to produce ̅. Therefore, when the estimated variance is used in constructing confidence interval, the width of the confidence interval is slightly wider than what it should be. Given that mortality improvements are relatively small, we deemed that the resulting difference from using ̅ is negligible and would not lead to significant change to the confidence level.



Appendix 4 – Tabular Experience Results

The results of our experience study are shown in tables below, organized by:

a. NYCERSi. General

ii. Transitiii. Sanitationiv. Correctionsv. TBTA

b. TRSc. BERSd. POLICEe. FIRE


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