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Contribution Stabilization Program

How the Program Works

  1. We determine an employer’s normal annual contribution using the rates established according to our usual procedures. The Contribution Stabilization Program does not change these procedures or the method for determining the normal annual contribution. The normal annual contribution is the total bill, excluding payments for deficiency, group life, previous amortizations, incentive costs and prior year’s adjustments.
  2. We establish graded rates using the methods established by the Contribution Stabilization Program.
  3. We determine an employer’s graded contribution.
  4. The maximum amount an employer can amortize is the difference between the normal and graded contribution. Employers may choose to amortize less than the maximum amount.
  5. Employers will pay interest on the amortized amount, which will be determined by the Comptroller and be comparable to taxable fixed income investments of a similar duration. The interest rate will be set annually.
  6. The interest rate on an amount amortized in a given year will be the interest rate for that year and will be fixed for the duration of that ten-year payment period. Amounts amortized in other years will be at the interest rate set for the year of the amortization.

The graded rate always moves towards the system average rate by up to 1 percent per year. When the System average rate is more than 1 percent greater than the graded rate, then use of the program reduces the portion of the normal contribution that is payable immediately. The balance of the normal contribution is amortized. When the System’s average rate is more than 1 percent lower than the graded rate, then program participants will be required to pay the graded rate. Any additional contributions you make will first be used to pay off existing amortizations. If all amortizations have been paid, any excess will be deposited into a reserve account and will be used to offset future increases in contribution rates.