Assembly Bill A5141A

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5141--A

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            February 14, 2011
                               ___________

Introduced  by  M. of A. FITZPATRICK, KELLNER, AMEDORE, SAYWARD, JORDAN,
  BOYLE,  MURRAY,  LATIMER,  CALHOUN,  CERETTO,  RAIA,  FRIEND,  TENNEY,
  D. MILLER,  TEDISCO,  OAKS  --  Multi-Sponsored  by -- M. of A. CONTE,
  CORWIN, CROUCH, McLAUGHLIN, PAULIN, WALTER -- read once  and  referred
  to  the  Committee  on  Governmental  Employees  -- recommitted to the
  Committee on Governmental Employees in accordance with  Assembly  Rule
  3,  sec. 2 -- committee discharged, bill amended, ordered reprinted as
  amended and recommitted to said committee

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03499-04-2
              

A. 5141--A                          2

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
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  STATE  INSUR-
ANCE  DEPARTMENT;  (II)  IS  LICENSED  OR CHARTERED BY THE STATE BANKING
DEPARTMENT; (III) IS CHARTERED BY AN AGENCY OF THE  FEDERAL  GOVERNMENT;
(IV) IS SUBJECT TO THE JURISDICTION AND REGULATION OF THE SECURITIES AND
EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT; OR (V) IS ANY OTHER ENTI-
TY  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 change the retirement plan coverage for existing and
future elected  officials  and  non-civil  service  appointees  who  are
employed  by  the State of New York or any public employer which partic-
ipates 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 contribution plan. The

A. 5141--A                          3

Comptroller shall select one or more financial organizations to adminis-
ter the plan and to invest the funds held pursuant to such plan.
  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
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
the NYS&LERS.
  Summary of relevant resources:
  Data:  March  31,  2011  Actuarial Year End File with distributions of
membership and other statistics displayed in  the  2011  Report  of  the
Actuary and 2011 Comprehensive Annual Financial Report.
  Assumptions  and  Methods:  2010  and  2011 Annual Report to the Comp-
troller on Actuarial Assumptions, Codes Rules  and  Regulations  of  the
State of New York: Audit and Control.
  Market  Assets and GASB Disclosures: March 31, 2011 New York State and
Local Retirement System Financial Statements and Supplementary  Informa-
tion.
  Valuations  of Benefit Liabilities and Actuarial Assets: summarized in
the 2011 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 27, 2012,  and  intended  for  use  only
during  the  2012  Legislative  Session,  is  Fiscal  Note  No. 2012-100
prepared by the Actuary for the New  York  State  and  Local  Employees'
Retirement System.