S T A T E   O F   N E W   Y O R K
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                                  4523--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 2, 2017
                                ___________
 
 Introduced  by  M. of A. FITZPATRICK, RAIA, FRIEND, OAKS, HAWLEY, LALOR,
   BLANKENBUSH, 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:
   §  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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00923-03-8

 A. 4523--A                          2
 
 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.
   § 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 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  organ-
 izations to administer the plan and to invest the funds held pursuant to

 A. 4523--A                          3
 
 such plan.  Pursuant to Chapter 18 of the Laws of 2012, participation is
 currently  optional in a defined contribution plan for non-union employ-
 ees hired on or after July 1, 2013 whose salary is $75,000 or higher.
   This legislation would freeze the benefit accruals of current affected
 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, and
 there would be a small administrative cost to the System.
   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, 2017  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2017
 Report of the  Actuary  and  the  2017  Comprehensive  Annual  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2015,
 2016, and 2017 Annual Report to the  Comptroller  on  Actuarial  Assump-
 tions,  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, 2017
 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 March 5, 2018, and intended for use only during
 the 2018 Legislative Session, is Fiscal Note No.  2018-69,  prepared  by
 the Actuary for the New York State and Local Retirement System.