Bill Text: NY S04706 | 2013-2014 | General Assembly | Amended
Bill Title: Establishes a defined contribution plan for all non-civil service appointees and elected officials of the New York state and local employees' retirement system who are not yet vested in a state retirement system or who are hired after the effective date of this section; authorizes elected officials to join such defined contribution plan; defines terms; provides for contributions to such defined contribution plan; authorizes the promulgation of any necessary rules and regulations.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2014-02-06 - PRINT NUMBER 4706A [S04706 Detail]
Download: New_York-2013-S04706-Amended.html
S T A T E O F N E W Y O R K
________________________________________________________________________
4706--A
2013-2014 Regular Sessions
I N S E N A T E
April 18, 2013
___________
Introduced by Sen. LATIMER -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
-- recommitted to the Committee on Civil Service and Pensions in
accordance with Senate Rule 6, sec. 8 -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee
AN ACT to amend the retirement and social security law, in relation to
establishing a defined contribution plan
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. The retirement and social security law is amended by adding
2 a new section 618 to read as follows:
3 S 618. DEFINED CONTRIBUTION PLAN. 1. THE DEFINED CONTRIBUTION PLAN IS
4 HEREBY ESTABLISHED. THE COMPTROLLER SHALL ADOPT RULES AND REGULATIONS
5 REGARDING THE STANDARDS AND REQUIREMENTS OF THE DEFINED CONTRIBUTION
6 PLAN ESTABLISHED PURSUANT TO THIS SECTION, INCLUDING SELECTION OF FINAN-
7 CIAL ORGANIZATIONS FOR INVESTMENT PURPOSES.
8 2. A. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE DEFINED
9 CONTRIBUTION PLAN SHALL BE ESTABLISHED FOR ALL NON-CIVIL SERVICE
10 APPOINTED EMPLOYEES AND ELECTED OFFICIALS EMPLOYED BY THE STATE OF NEW
11 YORK OR ANY PUBLIC EMPLOYER WHICH HAS ELECTED TO PARTICIPATE IN THE NEW
12 YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM.
13 B. THE COMPTROLLER SHALL ENTER INTO WRITTEN AGREEMENTS WITH ONE OR
14 MORE FINANCIAL ORGANIZATIONS TO ADMINISTER THE DEFINED CONTRIBUTION PLAN
15 FOR MEMBERS AND TO INVEST FUNDS HELD PURSUANT TO SUCH PLAN.
16 C. THE RULES AND REGULATIONS PROMULGATED BY THE COMPTROLLER SHALL
17 ESTABLISH STANDARDS FOR THE SELECTION OF FINANCIAL ORGANIZATIONS,
18 AUTHORIZED TO DO BUSINESS IN THIS STATE, TO PARTICIPATE IN SUCH PLANS,
19 INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CRITERIA: (I) RATES OF
20 COMMISSION, BROKERAGE AND OTHER FEES, ADMINISTRATIVE EXPENSES AND
21 RELATED SERVICE CHARGES IMPOSED BY THE FINANCIAL ORGANIZATION; (II)
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06086-06-4
S. 4706--A 2
1 VARIETY OF TYPES OF INVESTMENT OPPORTUNITIES OFFERED BY THE FINANCIAL
2 ORGANIZATION AND/OR AMONG THE FINANCIAL ORGANIZATIONS SELECTED AND THE
3 ABILITY TO TRANSFER AMONG SUCH OPPORTUNITIES; (III) THE STABILITY OF THE
4 FINANCIAL ORGANIZATION AS EVIDENCED BY EXPERIENCE, REPUTATION, ASSETS
5 AND HOLDINGS, ABILITY TO GUARANTEE SPECIFIC RATES OF RETURN; (IV) ABILI-
6 TY TO COMPLY WITH REPORTING REQUIREMENTS TO THE COMPTROLLER AND TO
7 PARTICIPANTS IN SUCH A PLAN; AND (V) SUCH OTHER FACTORS WHICH WOULD BE
8 CONSIDERED BY A PRUDENT INVESTOR IN SUCH A PLAN.
9 D. THE PRESIDENT OF THE STATE CIVIL SERVICE COMMISSION, SUBJECT TO THE
10 RULES AND REGULATIONS OF THE COMPTROLLER, SHALL PROVIDE ASSISTANCE TO
11 ANY PUBLIC EMPLOYER AS IS APPROPRIATE TO THE PROVISIONS OF THIS SECTION.
12 3. A PUBLIC EMPLOYER SHALL CONTRIBUTE THREE PERCENT OF SUCH AFFECTED
13 EMPLOYEE'S ANNUAL SALARY TOWARDS SUCH DEFINED CONTRIBUTION PLAN. ALL
14 NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFICIALS ARE REQUIRED
15 TO CONTRIBUTE THREE PERCENT OF THEIR SALARY TOWARDS THE DEFINED CONTRIB-
16 UTION PLAN. SUCH EMPLOYEES MAY CONTRIBUTE UP TO ONE HUNDRED PERCENT,
17 NOT TO EXCEED SIXTEEN THOUSAND FIVE HUNDRED DOLLARS OF HIS OR HER SALARY
18 TOWARDS THE DEFINED CONTRIBUTION PLAN.
19 4. THE TERM "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION
20 AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW YORK AND (A) WHICH IS AN
21 AUTHORIZED FIDUCIARY TO ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF
22 AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
23 1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR AN INSUR-
24 ANCE COMPANY; AND (B) (I) IS LICENSED OR CHARTERED BY THE DEPARTMENT OF
25 FINANCIAL SERVICES; (II) IS CHARTERED BY AN AGENCY OF THE FEDERAL
26 GOVERNMENT; (III) IS SUBJECT TO THE JURISDICTION AND REGULATION OF THE
27 SECURITIES AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT; OR (IV) IS
28 ANY OTHER ENTITY OTHERWISE AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE
29 PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS ENTITLED "EMPLOYEE
30 RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE
31 AMENDED FROM TIME TO TIME.
32 5. THE CURRENT RETIREMENT PLANS FOR NON-CIVIL SERVICE APPOINTED
33 EMPLOYEES AND ELECTED OFFICIALS SHALL BE FROZEN AS OF THE EFFECTIVE DATE
34 OF THIS SECTION. NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFI-
35 CIALS SHALL NO LONGER CONTRIBUTE TO THEIR CURRENT RETIREMENT PLAN,
36 HOWEVER, SUCH PERSONS SHALL RECEIVE THE BENEFITS THEY HAVE ACCRUED UP TO
37 THE EFFECTIVE DATE OF THIS SECTION UPON RETIREMENT. THE MEMBERSHIP OF A
38 NON-CIVIL SERVICE APPOINTED EMPLOYEE OR ELECTED OFFICIAL IN ANY STATE
39 RETIREMENT SYSTEM SHALL REMAIN OPEN IF HE OR SHE BECOMES A MEMBER OF THE
40 DEFINED CONTRIBUTION PLAN.
41 S 2. This act shall take effect on the first of the fiscal year next
42 succeeding the date on which it shall have become a law. Effective imme-
43 diately, the addition, amendment and/or repeal of any rule or regulation
44 necessary for the implementation of this act on its effective date are
45 authorized and directed to be made and completed on or before such
46 effective date.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would require a change in the retirement plan coverage for
current and future elected officials and non-civil service appointees
who are employed by the State of New York or any public employer which
participates in the New York State and Local Employees' Retirement
System (NYS&LERS). Affected employees and their employers would be
required to contribute 3% of annual compensation to a defined contrib-
ution plan. The Comptroller shall select one or more financial organiza-
tions to administer the plan and to invest the funds held pursuant to
such plan.
S. 4706--A 3
This legislation would freeze the benefit accruals of current elected
officials and non-civil service appointees as of the effective date. If
this becomes law, this bill is likely to face a constitutional challenge
based upon the guarantee that a member's benefits may not be diminished.
If this bill is enacted, relatively few members would be affected.
The state and participating employers will incur costs to modify their
payroll systems and procedures in order to collect employee contrib-
utions and remit them along with mandatory employer contributions short-
ly after each payroll. Remittance of employer contributions on a payroll
schedule, rather than annually under the defined benefit plan, will
affect employers' cash management. Further, the bill contains no appro-
priation to support the additional payroll administrative expense to the
Office of the State Comptroller or the implementation and ongoing
expenses of NYSLRS related to the new plan.
In addition, employees will incur management and investment expenses
for their defined contribution accounts estimated to average 0.5% of the
account balance annually.
Summary of relevant resources:
The membership data used in measuring the impact of the proposed
change was the same as that used in the March 31, 2013 actuarial valu-
ation. Distributions and other statistics can be found in the 2013
Report of the Actuary and the 2013 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2010,
2011, 2012 and 2013 Annual Report to the Comptroller on Actuarial
Assumptions, and the Codes Rules and Regulations of the State of New
York: Audit and Control.
The Market Assets and GASB Disclosures are found in the March 31, 2013
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This estimate, dated January 27, 2014, and intended for use only
during the 2014 Legislative Session, is Fiscal Note No. 2014-64 prepared
by the Actuary for the New York State and Local Employees' Retirement
System.
