NY State Senate Bill 2021-S2945

Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to civil service and pensions
Jan 26, 2021	referred to civil service and pensions

2021-S2945 (ACTIVE) - Details

Current Committee:: Senate Civil Service And Pensions
Law Section:: Retirement and Social Security Law
Laws Affected:: Amd §§110 & 410, R & SS L; amd §340, Bank L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S6431
2019-2020: S1240

2021-S2945 (ACTIVE) - Summary

Restricts use of pension assignments and which persons can engage in the business of offering consideration for pensions.

2021-S2945 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S2945

SPONSOR: SERINO
 
TITLE OF BILL:

An act to amend the retirement and social security law and the banking
law, in relation to pension assignments

 
PURPOSE:

Amends the retirement and social security law and the banking law, in
relation to pension assignments

 
SUMMARY OF PROVISIONS:

Section 1 of the bill amends section 110 of the retirement and social
security law to prohibit any person or entity from trying to evade
provisions of the law that prohibit the execution, garnishment, attach-
ment, or assignment of pension monies, except as specifically provided
in this chapter. Also establishes that any contracts made in violation
of this section shall be void and that any money collected in violation
of this section shall be returned.

Section 2 of the bill amends section 410 of the retirement and social
security law to prohibit any person or entity from trying to evade
provisions of the law that prohibit the execution, garnishment, attach-
ment, or assignment of pension monies, except as specifically provided
in this chapter. Also establishes that any contracts made in violation
of this section shall be void and that any money collected in violation
of this section shall be returned.

Section 3 of the bill amends section 340 of the banking law to clarify
that pension advances or agreements of their kind, are deemed to be in
the business of making loans and therefore subject to the licensing and
oversight of the Department of Financial Services.

Section 4 of the bill provides for the effective date.

 
JUSTIFICATION:

Pension advances, or financial transactions by which a company gives a
retiree payment in return for some or all of the retiree's future
pension payments have been shown to be increasingly risky and predatory
in nature across the country. Consumer fraud alerts have been issued
from the Financial Industry Regulatory Authority/the Securities Exchange
Commission (May 2013), Federal Trade Commission, the Consumer Financial
Protection Bureau, and states including Arkansas, California, Indiana,
Michigan, and others. In 2014, Missouri and Vermont became the first
states to address these types of instruments with legislation that
prohibited the assignment of pension benefits payable to public employ-
ees and regulated the sales and oversight of these securities, respec-
tively.

The concern regarding these types of arrangements is warranted. A 2013
review by the New York Times showed that of the two dozen contracts for
pension advances examined, the interest rates ranged from 27 to 106
percent, and were not disclosed in any of the information given to
applicants. To that end, in 2014, the Government Accountability Office
issued a report cautioning consumers about the practices of pension
advance companies that were specifically targeting government retirees
and vulnerable seniors. As part of their report, the GAO identified 38
companies that had offered these types of products, and 30 of the 38
were affiliated in some way with each other or a parent company.

Unfortunately, the deceptive practices of these companies have also been
felt in New York State. In 2015, the Consumer Financial Protection
Bureau and the New York State Department of Financial Services filed a
lawsuit against two California-based companies, Pension Funding, LLC,
and Pension Income, LLC for using deceptive practices to prey on
seniors. Included in the complaint were allegations that the companies
misrepresented their products as a sale and not a loan, and also that
they failed to disclose and/or misrepresented the interest rates for
their products. In May 2017, it was announced that Future Income
Payments would be repaying more than $500,000 in refunds to New York
pensioners and fines for making loans without a license as well as
charging usurious rates of interest.

While this case has been resolved in a way that has protected New York
retirees, it is imperative that statutory amendments be made to continue
to protect pensioners and bolster the State's oversight authority. Many
companies, like those at issue in New York, classify their products as
advances or sales, rather than loans, in order to circumvent state usury
laws that cap interest rates and provide for oversight by state enti-
ties. This legislation will specify that any type of arrangement where a
business offers consideration for an interest in all or part of pension
proceeds is considered to be a loan. To that end, the legislation will
prohibit the schemes and devices commonly used by these companies,
including deposits in joint accounts or authorizations through a power
of attorney, to avoid assignment provisions regarding public pension
benefits.

According to a 2013 New York Times article, the combined debt of Ameri-
cans from the ages of 65 to 74 is rising faster than that of any other
age group. Seniors who are on fixed incomes are consistently facing
increased costs regarding their housing, healthcare, and long term plan-
ning.

As a result, pension advances seemingly offer quick relief to some of
the most vulnerable and desperate. Nevertheless, because of the finan-
cial vulnerability of many applicants, as well as the significant long-
term implications of these types of loans, it is more important that the
State be equipped with as much oversight and regulatory authority to
combat predatory practices and lending.

 
LEGISLATIVE HISTORY:

2019-20: S.1240 Referred to Civil Service and Pensions

2017-18: S.6431A Passed Senate

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2021-S2945 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2945
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 26, 2021
                                ___________
 
 Introduced  by  Sen.  SERINO -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN ACT to amend the retirement and social security law and  the  banking
   law, in relation to pension assignments
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 110 of the retirement and social security  law,  as
 amended  by  chapter  291  of  the  laws  of 1999, is amended to read as
 follows:
   § 110. Exemption from taxes and legal  process.  A.  The  right  of  a
 person to a pension, a pension-providing-for-increased-take-home-pay, an
 annuity  or  a retirement allowance, to the return of contributions, the
 pension, the pension-providing-for-increased-take-home-pay, annuity,  or
 retirement allowance itself, any optional benefit, including any benefit
 or  monies  accruing  under  an  optional retirement program pursuant to
 article eight-B or one hundred twenty-five-A of the education  law,  any
 other  right  accrued  or accruing to any person under the provisions of
 this chapter and the monies in the various funds  continued  under  this
 chapter:
   1.  Are  hereby  exempt  from  any  state or municipal tax, except the
 estate tax, and
   2. Shall not be subject to execution, garnishment, attachment, or  any
 other process whatsoever, and
   3.  Shall  be  unassignable,  except  as  in this chapter specifically
 provided.
   B. EXCEPT AS SPECIFICALLY PROVIDED IN THIS CHAPTER, A PERSON OR ENTITY
 SHALL NOT USE ANY DEVICE, SCHEME, TRANSFER OR OTHER  ARTIFICE  TO  EVADE
 THE  APPLICABILITY AND PROHIBITION OR PARAGRAPHS TWO AND THREE OF SUBDI-
 VISION A OF THIS SECTION, INCLUDING THE  DEPOSIT  OF  SUCH  BENEFITS  OR
 FUNDS  INTO  A  JOINT  ACCOUNT WITH THE PERSON OR ENTITY OR THE AUTHORI-
 ZATION TO A PERSON OR ENTITY UNDER A POWER OF ATTORNEY OR OTHER  INSTRU-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD07257-01-1

 S. 2945                             2
 
 MENT  OR DOCUMENT TO ACCESS AN ACCOUNT OR OTHERWISE OBTAIN FUNDS FROM AN
 ACCOUNT TO WHICH BENEFITS OR FUNDS HAVE BEEN DEPOSITED.
   C.  ANY  CONTRACT OR AGREEMENT MADE IN VIOLATION OF THIS SECTION SHALL
 BE VOID. ALL SUMS PAID  TO  OR  COLLECTED  BY  A  PERSON  OR  ENTITY  IN
 VIOLATION  OF  THIS SECTION SHALL BE RETURNED BY THE PERSON OR ENTITY TO
 THE BENEFIT RECIPIENT OR HIS OR HER HEIRS OR BENEFICIARIES  AS  RESTITU-
 TION.
   D.  ANY BENEFIT RECIPIENT, HIS OR HER GUARDIAN OR CONSERVATOR, OR HEIR
 OR BENEFICIARY MAY BRING AN ACTION TO ENFORCE  THE  RESTITUTION  AUTHOR-
 IZED.
   § 2. Section 410 of the retirement and social security law, as amended
 by chapter 549 of the laws of 1983, is amended to read as follows:
   §  410.  Exemption  from  taxes  and  legal process. A. The right of a
 person to a pension, a pension-providing-for-increased-take-home-pay, an
 annuity or a retirement allowance, to the return of  contributions,  the
 pensions, the pension-providing-for-increased-take-home-pay, annuity, or
 retirement  allowance  itself,  any  optional  benefit,  any other right
 accrued or accruing to any person under the provisions of  this  chapter
 and the monies in the various funds continued under this chapter:
   1.  Are  hereby  exempt  from  any  state or municipal tax, except the
 estate tax, and
   2. Shall not be subject to execution, garnishment, attachment, or  any
 other process whatsoever, and
   3.  Shall  be  unassignable,  except  as  in this chapter specifically
 provided.
   B. EXCEPT AS SPECIFICALLY PROVIDED IN THIS CHAPTER, A PERSON OR ENTITY
 SHALL NOT USE ANY DEVICE, SCHEME, TRANSFER OR OTHER  ARTIFICE  TO  EVADE
 THE  APPLICABILITY AND PROHIBITION OR PARAGRAPHS TWO AND THREE OF SUBDI-
 VISION A OF THIS SECTION, INCLUDING THE  DEPOSIT  OF  SUCH  BENEFITS  OR
 FUNDS  INTO  A  JOINT  ACCOUNT WITH THE PERSON OR ENTITY OR THE AUTHORI-
 ZATION TO A PERSON OR ENTITY UNDER A POWER OF ATTORNEY OR OTHER  INSTRU-
 MENT  OR DOCUMENT TO ACCESS AN ACCOUNT OR OTHERWISE OBTAIN FUNDS FROM AN
 ACCOUNT TO WHICH BENEFITS OR FUNDS HAVE BEEN DEPOSITED.
   C. ANY CONTRACT OR AGREEMENT MADE IN VIOLATION OF THIS  SECTION  SHALL
 BE  VOID.  ALL  SUMS  PAID  TO  OR  COLLECTED  BY  A PERSON OR ENTITY IN
 VIOLATION OF THIS SECTION SHALL BE RETURNED BY THE PERSON OR  ENTITY  TO
 THE  BENEFIT  RECIPIENT OR HIS OR HER HEIRS OR BENEFICIARIES AS RESTITU-
 TION.
   D. ANY BENEFIT RECIPIENT, HIS OR HER GUARDIAN OR CONSERVATOR, OR  HEIR
 OR  BENEFICIARY  MAY  BRING AN ACTION TO ENFORCE THE RESTITUTION AUTHOR-
 IZED.
   § 3. Section 340 of the banking law, as amended by chapter 22  of  the
 laws of 1990, is amended to read as follows:
   § 340.  Doing  business  without  license prohibited. (A) No person or
 other entity shall engage in the business of making loans in the princi-
 pal amount of twenty-five thousand dollars or less for any  loan  to  an
 individual  for  personal, family, household, or investment purposes and
 in a principal amount of fifty thousand dollars or less for business and
 commercial loans, and charge, contract for, or receive a greater rate of
 interest than the lender would be permitted by law to charge if he  were
 not  a licensee hereunder except as authorized by this article and with-
 out first obtaining a license from the superintendent.
   (B) For the purposes of this section, a  person  or  entity  shall  be
 considered  as engaging in the business of making loans in New York, and
 subject to the licensing and other requirements of this article,  if  it
 solicits  loans  in  the  amounts prescribed by this section within this

 S. 2945                             3

 state and, in connection with such solicitation, makes loans to individ-
 uals then resident in this state, except that no person or entity  shall
 be  considered as engaging in the business of making loans in this state
 on  the  basis  of isolated, incidental or occasional transactions which
 otherwise meet the requirements of this section.
   (C) Nothing in this article shall apply to  licensed  collateral  loan
 brokers.
   (D)  ANY  PERSON WHO ENGAGES IN THE BUSINESS OF OFFERING CONSIDERATION
 IN EXCHANGE FOR A SECURED INTEREST IN ALL OR PART OF PENSION PROCEEDS IN
 THE POSSESSION OF A PARTICIPANT, BENEFICIARY, OR  MEMBER  OF  A  PENSION
 PLAN,  PROGRAM,  OR SYSTEM SHALL BE DEEMED TO BE ENGAGED IN THE BUSINESS
 OF MAKING LOANS AND SHALL BE SUBJECT TO THE LICENSING AND OTHER REQUIRE-
 MENTS OF THIS ARTICLE.
   § 4. This act shall take effect immediately.

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Senate Bill S2945

Sponsored By

Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

Actions

2021-S2945 (ACTIVE) - Details

2021-S2945 (ACTIVE) - Summary

2021-S2945 (ACTIVE) - Sponsor Memo

2021-S2945 (ACTIVE) - Bill Text download pdf

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Sponsored By

Susan Serino

Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

Actions

2021-S2945 (ACTIVE) - Details

2021-S2945 (ACTIVE) - Summary

2021-S2945 (ACTIVE) - Sponsor Memo

2021-S2945 (ACTIVE) - Bill Text download pdf

Comments