senate Bill S4706A

Establishes a defined contribution plan

download pdf

Sponsor

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
view actions

actions

  • 18 / Apr / 2013
    • REFERRED TO CIVIL SERVICE AND PENSIONS
  • 08 / Jan / 2014
    • REFERRED TO CIVIL SERVICE AND PENSIONS
  • 06 / Feb / 2014
    • AMEND AND RECOMMIT TO CIVIL SERVICE AND PENSIONS
  • 06 / Feb / 2014
    • PRINT NUMBER 4706A

Summary

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.

do you support this bill?

Bill Details

See Assembly Version of this Bill:
A5105A
Versions:
S4706
S4706A
Legislative Cycle:
2013-2014
Current Committee:
Senate Civil Service And Pensions
Law Section:
Retirement and Social Security Law
Laws Affected:
Add ยง618, R & SS L

Sponsor Memo

BILL NUMBER:S4706A

TITLE OF BILL: An act to amend the retirement and social security
law, in relation to establishing a defined contribution plan

PURPOSE:

This bill freezes the current retirement tier of all elected officials
and non-civil service appointed employees in New York State, and
creates a new Defined Contribution Plan for all elected officials and
non-civil service appointees in New York State.

SUMMARY OF PROVISIONS:

Section 1. Creates the defined contribution plan and allows the
comptroller to adopt rules and regulations regarding the standards and
requirements of the plan.

Applies the defined contribution plans to all elected officials and
non-civil service appointees in the State of New York. Allows the
Comptroller to enter into written agreements with financial
organizations to administer the defined contribution plan, and
establish standards for the selection of financial organizations.

Allows a public employer to provide a, defined contribution plan for
its employees in accordance with the rules and regulations determined
by the Comptroller.

Establishes that employers will be required to contribute three
percent of an elected officials and non-civil-service appointee's
salary. All elected officials and non-civil service appointees as of
the effective date of the legislation.

Section 2. Provides the effective date.

JUSTIFICATION:

This legislation seeks to provide savings to the State and Local
Governments by creating a Defined Contribution Plan for all elected
officials and non-civil service appointees in New York State. In
recent months, the costs of administering Defined Benefit Plans have
increased dramatically, and elected officials and non-civil service
appointees should lead by example by freezing their current retirement
plans, and contributing towards a new Defined Contribution Plan. Going
forward, a Defined Contribution Plan for elected officials and
non-civil service appointees will unify the interests of public
servants and the private sector taxpayer.

PRIOR LEGISLATIVE HISTORY:

2010- A. 6932 - Held in Governmental Employees

LOCAL FISCAL IMPLICATIONS:

To be Determined

FISCAL IMPLICATIONS:


This bill would require a change in the retirement plan overage 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
participants in the New York State and Local Employee' Retirement
System (NYS&LERS). Affected employees and their employers would be
required to contribute 3% of annual compensation to a defined
contribution plan. The Comptroller shall select one or more financial
organizations to administer the plan and to invest the funds held
pursuant to such plan.

"This legislation would freeze the benefit accruals of current elected
officials and non-civil service appointees as of the effective date.
If this becomes a law, this bill is likely to face a constitutional
challenge based upon the guarantee that a member's benefits may not
diminished.

" The state and participating employers will incur costs to modify
their payroll systems and procedures in order to collect employee
contributions and remit them along with mandatory employer
contributions shortly 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 appropriation 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
valuation. 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 Coded Rules and Regulations to the State of New York;
Audit and Control.

"The Market Assets and GASB Disclosures are found in the March 31st,
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
Qualification Standards to render the actuarial opinion contained
herein.

"This estimate, dated January 27th, 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."


EFFECTIVE DATE:

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
immediately, 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 effective date.

view bill text
                    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:

  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)

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06086-06-4

S. 4706--A                          2

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
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
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.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.