S T A T E O F N E W Y O R K
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
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:
Section 1. The retirement and social security law is amended by adding
a new section 618 to read as follows:
S 618. DEFINED CONTRIBUTION PLAN. 1. THE DEFINED CONTRIBUTION PLAN IS
HEREBY ESTABLISHED. THE COMPTROLLER SHALL ADOPT RULES AND REGULATIONS
REGARDING THE STANDARDS AND REQUIREMENTS OF THE DEFINED CONTRIBUTION
PLAN ESTABLISHED PURSUANT TO THIS SECTION, INCLUDING SELECTION OF FINAN-
CIAL ORGANIZATIONS FOR INVESTMENT PURPOSES.
2. A. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE DEFINED
CONTRIBUTION PLAN SHALL BE ESTABLISHED FOR ALL NON-CIVIL SERVICE
APPOINTED EMPLOYEES AND ELECTED OFFICIALS EMPLOYED BY THE STATE OF NEW
YORK OR ANY PUBLIC EMPLOYER WHICH HAS ELECTED TO PARTICIPATE IN THE NEW
YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM.
B. THE COMPTROLLER SHALL ENTER INTO WRITTEN AGREEMENTS WITH ONE OR
MORE FINANCIAL ORGANIZATIONS TO ADMINISTER THE DEFINED CONTRIBUTION PLAN
FOR MEMBERS AND TO INVEST FUNDS HELD PURSUANT TO SUCH PLAN.
C. THE RULES AND REGULATIONS PROMULGATED BY THE COMPTROLLER SHALL
ESTABLISH STANDARDS FOR THE SELECTION OF FINANCIAL ORGANIZATIONS,
AUTHORIZED TO DO BUSINESS IN THIS STATE, TO PARTICIPATE IN SUCH PLANS,
INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CRITERIA: (I) RATES OF
COMMISSION, BROKERAGE AND OTHER FEES, ADMINISTRATIVE EXPENSES AND
RELATED SERVICE CHARGES IMPOSED BY THE FINANCIAL ORGANIZATION; (II)
VARIETY OF TYPES OF INVESTMENT OPPORTUNITIES OFFERED BY THE FINANCIAL
ORGANIZATION AND/OR AMONG THE FINANCIAL ORGANIZATIONS SELECTED AND THE
ABILITY TO TRANSFER AMONG SUCH OPPORTUNITIES; (III) THE STABILITY OF THE
FINANCIAL ORGANIZATION AS EVIDENCED BY EXPERIENCE, REPUTATION, ASSETS
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
S. 4706 2
AND HOLDINGS, ABILITY TO GUARANTEE SPECIFIC RATES OF RETURN; (IV) ABILI-
TY TO COMPLY WITH REPORTING REQUIREMENTS TO THE COMPTROLLER AND TO
PARTICIPANTS IN SUCH A PLAN; AND (V) SUCH OTHER FACTORS WHICH WOULD BE
CONSIDERED BY A PRUDENT INVESTOR IN SUCH A PLAN.
D. THE PRESIDENT OF THE STATE CIVIL SERVICE COMMISSION, SUBJECT TO THE
RULES AND REGULATIONS OF THE COMPTROLLER, SHALL PROVIDE ASSISTANCE TO
ANY PUBLIC EMPLOYER AS IS APPROPRIATE TO THE PROVISIONS OF THIS SECTION.
3. A PUBLIC EMPLOYER SHALL CONTRIBUTE THREE PERCENT OF SUCH AFFECTED
EMPLOYEE'S ANNUAL SALARY TOWARDS SUCH DEFINED CONTRIBUTION PLAN. ALL
NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFICIALS ARE REQUIRED
TO CONTRIBUTE THREE PERCENT OF THEIR SALARY TOWARDS THE DEFINED CONTRIB-
UTION PLAN. SUCH EMPLOYEES MAY CONTRIBUTE UP TO ONE HUNDRED PERCENT,
NOT TO EXCEED SIXTEEN THOUSAND FIVE HUNDRED DOLLARS OF HIS OR HER SALARY
TOWARDS THE DEFINED CONTRIBUTION PLAN.
4. THE TERM "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION
AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW YORK AND (A) WHICH IS AN
AUTHORIZED FIDUCIARY TO ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF
AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR AN INSUR-
ANCE COMPANY; AND (B) (I) IS LICENSED OR CHARTERED BY THE DEPARTMENT OF
FINANCIAL SERVICES; (II) IS CHARTERED BY AN AGENCY OF THE FEDERAL
GOVERNMENT; (III) IS SUBJECT TO THE JURISDICTION AND REGULATION OF THE
SECURITIES AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT; OR (IV) IS
ANY OTHER ENTITY OTHERWISE AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE
PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS ENTITLED "EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE
AMENDED FROM TIME TO TIME.
5. THE CURRENT RETIREMENT PLANS FOR NON-CIVIL SERVICE APPOINTED
EMPLOYEES AND ELECTED OFFICIALS SHALL BE FROZEN AS OF THE EFFECTIVE DATE
OF THIS SECTION. NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFI-
CIALS SHALL NO LONGER CONTRIBUTE TO THEIR CURRENT RETIREMENT PLAN,
HOWEVER, SUCH PERSONS SHALL RECEIVE THE BENEFITS THEY HAVE ACCRUED UP TO
THE EFFECTIVE DATE OF THIS SECTION UPON RETIREMENT. THE MEMBERSHIP OF A
NON-CIVIL SERVICE APPOINTED EMPLOYEE OR ELECTED OFFICIAL IN ANY STATE
RETIREMENT SYSTEM SHALL REMAIN OPEN IF HE OR SHE BECOMES A MEMBER OF THE
DEFINED CONTRIBUTION PLAN.
S 2. This act shall take effect on the first of the fiscal year next
succeeding the date on which it shall have become a law. Effective imme-
diately, the addition, amendment and/or repeal of any rule or regulation
necessary for the implementation of this act on its effective date are
authorized and directed to be made and completed on or before such
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would change the retirement plan coverage for certain exist-
ing 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. Pursuant to Chapter 18 of the Laws of 2012, participation is
OPTIONAL in a defined contribution plan for non-union employees hired on
or after July 1, 2013 whose salary is $75,000 or higher.
This legislation would freeze the benefit accruals of current members
in the NYS&LERS as of the effective date. If this becomes law, this bill
S. 4706 3
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.
There will not be a cost to the State or the participating employers in
Summary of relevant resources:
Data: March 31, 2012 Actuarial Year End File with distributions of
membership and other statistics displayed in the 2012 Report of the
Actuary and 2012 Comprehensive Annual Financial Report.
Assumptions and Methods: 2010, 2011 and 2012 Annual Report to the
Comptroller on Actuarial Assumptions, Codes Rules and Regulations of the
State of New York: Audit and Control.
Market Assets and GASB Disclosures: March 31, 2012 New York State and
Local Retirement System Financial Statements and Supplementary Informa-
Valuations of Benefit Liabilities and Actuarial Assets: summarized in
the 2012 Actuarial Valuations report.
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 February 1, 2013 and intended for use only during
the 2013 Legislative Session, is Fiscal Note No. 2013-76, prepared by
the Actuary for the New York State and Local Police and Fire Retirement