Assembly Bill A4285A

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

                                 4285--A

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 30, 2015
                               ___________

Introduced  by  M.  of  A.  FITZPATRICK,  CERETTO, RAIA, FRIEND, TENNEY,
  TEDISCO, OAKS, McLAUGHLIN, CORWIN, LALOR, BLANKENBUSH,  HAWLEY,  KATZ,
  DiPIETRO  --  Multi-Sponsored  by -- M. of A. CROUCH, JOHNS, LAWRENCE,
  PAULIN, STEC, 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.
                                                           LBD03899-06-6
              

A. 4285--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 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-

A. 4285--A                          3

tions 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 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, 2015 actuarial valu-
ation.  Distributions and other statistics can  be  found  in  the  2015
Report  of  the  Actuary  and  the  2015  Comprehensive Annual Financial
Report.
  The actuarial assumptions and methods used are described in  the  2015
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, 2015
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 26,  2016,  and  intended  for  use  only
during the 2016 Legislative Session is Fiscal Note No. 2016-40, prepared
by the Actuary for the New York State and Local Retirement System.