New York State Assembly

 
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AB3213 Summary:

AB3213 Actions:

AB3213 Committee Votes:

Committee:GOVERNMENTAL EMPLOYEES   Chair:Abbate      
DATE:05/04/2021AYE/NAY:14/0  Action: Favorable         
Abbate
Aye
DeStefano
Aye
Aubry
Aye
Reilly
Aye
Colton
Aye
Giglio
Aye
Cusick
Aye
Tannousis
Aye
Zebrowski
Aye
Santabarbara
Aye
Pheffer Amato
Aye
Griffin
Aye
Eichenstein
Aye
Fall
Aye

AB3213 Floor Votes:

AB3213 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
 submitted in accordance with Assembly Rule III, Sec 1(f)



 
BILL NUMBER: A3213A
 
SPONSOR: Rodriguez

 
TITLE OF BILL:
 
An act to amend the general business law, in relation to the secure
choice savings program
 
 
PURPOSE OR GENERAL IDEA OF BILL:
 
The purpose of this bill is to create a self-sufficient retirement
savings program in the form of an automatic enrollment payroll deduction
IRA, and establish an administrative board responsible for promoting
greater retirement savings for private sector employees in a convenient,
low-cost, and transferable manner.
 
 
SUMMARY OF PROVISIONS:

Section one of the bill would amend section 1301 of the general business
law to make enrollment into the New York state secure choice savings
program automatic.
 
Section two of the bill would amend section 1304 of the general business
law to allow employees to opt out of the secure choice savings program.
 
Section three of the bill would amend section 1309 of the general busi-
ness law to require employee informational materials to include an
explanation of how employees can opt out of the program after being
enrolled and a foul. for an employee to note his or her decision to opt
out of program participation, and to allow new employees to opt out of
the program.
 
Section four of the bill would amend section 1313 of the general busi-
ness law to provide that an employer is not liable for an employee's
decision to opt out of the program.
 
Section five of the bill would amend section 1310 of the general busi-
ness law to require participating employers to have payroll deposit
savings arrangements to allow each employee to participate in the
program. This section would also require participating employers to
automatically enroll in the program each of their employees who has not
opted out of participation in the program using the form described in
this bill and to provide payroll deduction retirement savings arrange-
ments for such employees and deposit, on behalf of such employees, these
funds into the program. Additionally, this section would provide that
the deduction of contributions from an employee's wages shall not begin
until the thirtieth day after an employee has been enrolled in the
program. Finally, this section would prohibit employers who offer
retirement plans to employees from terminating such plans for the
purposes of participating in the program.
 
Section six of the bill would amend section 1300 of the general business
law to modify the definition of "employer" to mean a person or entity
that (i) has at all times during the previous calendar year employed at
least ten employees in the state, (ii) has been in business at least two
years, and (iii) has not offered a qualified retirement plan in the
preceding two years.
 
Section seven of the bill would provide the effective date.
 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
 
This bill would amend the original bill to add language which provides
that the deduction of contributions from an employee's wages shall not
begin until the thirtieth day after an employee has been enrolled in the
program. This bill would also add language to prohibit employers who
offer retirement plans to employees from terminating such plans for the
purposes of participating in the program.
 
 
JUSTIFICATION:
 
The New York Secure Choice Savings Program was passed in the FY 2018/19
state budget. This program creates a state administered retirement
savings plan for employees working for companies who do not offer
retirement plans. Today, nearly 53% of U.S. households are at risk of
not having enough money on hand for their retirement, according to a
2012 report from Boston College. The Secure Choice Savings plan will
bring new savings plans to workers that ordinarily would not have access
to them in the workplace, at little to no cost to their employer. This
bill aims to increase access and participation rates in the program by
establishing automatic enrollment. Employees would automatically be
enrolled in the retirement savings program and must elect to opt out.
Automatic enrollment has been shown to boost participation in 401(k)
plans. A 2012 Aon Hewitt study found that firms that have adopted auto-
matic enrollment have savings plan participation rates of approximately
83 percent, a full 18 percentage points higher than in firms that have
not adopted automatic enrollment. Participation rates amongst young
people, low income workers and minority groups are traditionally lower
than other employees. Automatic enrollment has shown to increase partic-
ipation among these groups so that participation is closer to their
counterparts.
 
 
PRIOR LEGISLATIVE HISTORY:
 
None.
 
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
 
None.
 
 
EFFECTIVE DATE:
Immediately

AB3213 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         3213--A
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 22, 2021
                                       ___________
 
        Introduced by M. of A. RODRIGUEZ, MONTESANO, FAHY, PEOPLES-STOKES, WOER-
          NER,   WEPRIN,  BARRON,  GOTTFRIED,  PALMESANO,  SANTABARBARA,  RAMOS,
          PICHARDO, JOYNER, EPSTEIN,  AUBRY,  DeSTEFANO,  CRUZ,  LAVINE,  GLICK,
          SIMON,  CARROLL, FERNANDEZ, JACOBSON, GALEF, McDONALD, DICKENS -- read
          once and referred  to  the  Committee  on  Governmental  Employees  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee
 
        AN ACT to amend the general business law,  in  relation  to  the  secure
          choice savings program
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 1301 of the  general  business  law,  as  added  by
     2  section  2  of  part  X of chapter 55 of the laws of 2018, is amended to
     3  read as follows:
     4    § 1301. Program established. There is hereby established a  retirement
     5  savings  program  in  the  form  of  [a] an automatic enrollment payroll
     6  deduction IRA, known  as  the  New  York  state  secure  choice  savings
     7  program.  The  general  administration and responsibility for the proper
     8  operation of the program shall be administered  by  the  board  for  the
     9  purpose  of  promoting  greater  retirement  savings  for private-sector
    10  employees in a convenient, low-cost, and portable manner. The board  may
    11  delegate  such  authority  and  responsibility  for  the development and
    12  implementation of the program to the department of taxation and  finance
    13  as the board deems proper.
    14    § 2. Subdivisions 7 and 9 of section 1304 of the general business law,
    15  as  added  by section 2 of part X of chapter 55 of the laws of 2018, are
    16  amended to read as follows:
    17    7. Evaluate and establish or authorize the process for:
    18    (a) an enrollee to contribute a portion of his or  her  wages  to  the
    19  program via payroll deduction; and
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD03146-02-1
        A. 3213--A                          2
 
     1    (b)  the  [voluntary]  enrollment  of  participating  employers in the
     2  program.
     3    9.  Evaluate  and  establish  or  authorize the process for enrollment
     4  including the process by which an employee may opt not to participate in
     5  the program, select a contribution level, select an  investment  option,
     6  and terminate participation in the program.
     7    §  3.  Subdivisions 3, 4 and 5 of section 1309 of the general business
     8  law, as added by section 2 of part X of chapter 55 of the laws of  2018,
     9  are amended to read as follows:
    10    3.  The  employee  informational  materials shall include a disclosure
    11  form.  The disclosure form shall explain, but not be limited to, all  of
    12  the following:
    13    (a) the benefits and risks associated with making contributions to the
    14  program;
    15    (b) the process for making contributions to the program;
    16    (c) how to [cease participation in] opt out of the program;
    17    (d)  the  process  by which an employee can participate in the program
    18  with a level of employee contributions other than three percent;
    19    (e) that they are not required to participate or contribute more  than
    20  three percent;
    21    (f) the process for withdrawal of retirement savings;
    22    (g)  the  process  for  selecting  beneficiaries  of  their retirement
    23  savings;
    24    (h) how to obtain additional information about the program;
    25    (i) that employees seeking financial advice should  contact  financial
    26  advisors,  that participating employers are not in a position to provide
    27  financial advice, and that participating employers are  not  liable  for
    28  decisions employees make pursuant to this article;
    29    (j)  information  on  how  to  access any available financial literacy
    30  programs; [and]
    31    (k) that the program fund is not guaranteed by the state; and
    32    (l) that they can opt out after they have been enrolled.
    33    4. The employee informational materials shall also include a form  for
    34  an  employee  to  note  his  or  her  decision [regarding] to opt out of
    35  participation in the program or [election] elect to participate  with  a
    36  level of employee contributions other than three percent.
    37    5.  Participating  employers  shall  supply the employee informational
    38  materials to existing employees at least one month prior to the  partic-
    39  ipating employers' facilitation of access to the program.  Participating
    40  employers  shall  supply  the  employee  informational  materials to new
    41  employees at the time of hiring and new employees may opt out of partic-
    42  ipation in the program.
    43    § 4. Subdivision 1 of section 1313 of the  general  business  law,  as
    44  added  by  section  2  of  part  X of chapter 55 of the laws of 2018, is
    45  amended to read as follows:
    46    1. Participating employers shall not have any liability for an employ-
    47  ee's decision regarding whether to participate in, or opt  out  of,  the
    48  program or for the investment decisions of the board or of any enrollee.
    49    §  5.  Subdivisions 1, 2, 4 and 5 of section 1310 of the general busi-
    50  ness law, as added by section 2 of part X of chapter 55 of the  laws  of
    51  2018, are amended and a new subdivision 9 is added to read as follows:
    52    1.  [No  employer  shall  be  required  to participate in or otherwise
    53  implement the program.] (a) Each participating  employer  shall  have  a
    54  payroll deposit retirement savings arrangement to allow each employee to
    55  participate in the program at most nine months after the board opens the
    56  program for enrollment.
        A. 3213--A                          3
 
     1    (b)  Participating employers shall automatically enroll in the program
     2  each of their employees who has not opted out of  participation  in  the
     3  program  using  the  form  described  in  this article and shall provide
     4  payroll deduction retirement savings arrangements for such employees and
     5  deposit, on behalf of such employees, these funds into the program.
     6    2.  Enrollees  shall  have  the ability to select a contribution level
     7  into the program. This level may be expressed as a percentage  of  wages
     8  or  as  a  dollar  amount up to the deductible amount for the enrollee's
     9  taxable year under section 219(b)(1)(A) of the  Internal  Revenue  Code.
    10  Enrollees  may  change  their contribution level at any time, subject to
    11  rules promulgated by the  board.  If  an  enrollee  fails  to  select  a
    12  contribution  level using the form described in this article, then he or
    13  she shall contribute three percent of his or her wages to  the  program,
    14  provided  that  such  contributions shall not cause the enrollee's total
    15  contributions to IRAs for the year to exceed the deductible  amount  for
    16  the  enrollee's  taxable year under section 219(b)(1)(A) of the Internal
    17  Revenue Code. The deduction of contributions from  an  employee's  wages
    18  shall  not  begin  until  the thirtieth day after such employee has been
    19  enrolled in the program.
    20    4. Following initial implementation of the program  pursuant  to  this
    21  section,  at  least once every year, the program shall designate an open
    22  enrollment period during which employees who previously opted out of the
    23  program may enroll in the program.
    24    5. An employee who [chooses not to participate in]  opts  out  of  the
    25  program and who subsequently wants to participate may only enroll during
    26  the  program's  designated open enrollment period or if permitted by the
    27  program at an earlier time.
    28    9. A person or entity engaged in  a  business,  industry,  profession,
    29  trade,  or other enterprise in New York state, whether for profit or not
    30  for profit, that offers a qualified retirement plan, including, but  not
    31  limited  to,  a  plan  qualified  under sections 401(a), 401(k), 403(a),
    32  403(b), 408(k), 408(p) or 457(b) of the Internal Revenue  Code  of  1986
    33  shall  not  terminate such plan for the purposes of participating in the
    34  program.
    35    § 6. Subdivisions 4 and 8 of section 1300 of the general business law,
    36  as added by section 2 of part X of chapter 55 of the laws of  2018,  are
    37  amended to read as follows:
    38    4.  "Employer"  shall  mean  a person or entity engaged in a business,
    39  industry, profession, trade, or other  enterprise  in  New  York  state,
    40  whether  for  profit or not for profit, that (i) has at all times during
    41  the previous calendar year employed at least ten employees in the state,
    42  (ii) has been in business at least two years, and (iii) has not  offered
    43  a qualified retirement plan, including, but not limited to, a plan qual-
    44  ified  under  sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or
    45  457(b) of the Internal Revenue Code of 1986 in the preceding two years.
    46    8. "Participating employer" shall mean an  employer  that  [elects  to
    47  facilitate] facilitates access to the program's payroll deduction IRA as
    48  provided  for by this article for its employees who are enrollees in the
    49  program.
    50    § 7. This act shall take effect immediately.