S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9550
 
                           I N  A S S E M B L Y
 
                              March 16, 2022
                                ___________
 
 Introduced  by  M.  of  A.  FITZPATRICK,  BLANKENBUSH, BYRNES, DiPIETRO,
   HAWLEY, LALOR, SALKA, TAGUE -- Multi-Sponsored by -- M. of A.  MANKTE-
   LOW,  MORINELLO,  PAULIN,  SMULLEN  --  read  once and referred to the
   Committee on Governmental Employees
 
 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
 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-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD08107-04-2
 A. 9550                             2
 
 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 TWENTY 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 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  (ERS).  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.
 Pursuant  to  Chapter 18 of the Laws of 2012, participation is currently
 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 affected
 members in the ERS as of the effective date. If enacted into  law,  this
 bill is likely to face a constitutional challenge based upon the guaran-
 tee that a member's benefits may not be diminished.
 A. 9550                             3
 
   In addition, if enacted there will be an administrative cost to imple-
 ment the provisions of this legislation.
   Summary of relevant resources:
   Membership  data as of March 31, 2021 was used in measuring the impact
 of the proposed change, the same data used in the April 1, 2021 actuari-
 al valuation.  Distributions and other statistics can be  found  in  the
 2021  Report  of the Actuary and the 2021 Comprehensive Annual Financial
 Report.
   The actuarial assumptions and methods used are described in  the  2020
 and  2021 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, 2021
 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 fiscal note does not constitute a legal opinion on the  viability
 of  the  proposed change nor is it intended to serve as a substitute for
 the professional judgment of an attorney.
   This estimate, dated March 4, 2022, and intended for use  only  during
 the  2022  Legislative  Session, is Fiscal Note No. 2022-92, prepared by
 the Actuary for the New York State and Local Retirement System.