NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5055
SPONSOR: Abbate TITLE OF BILL: An act to amend the retirement and social security
law, in relation to the form of payment of retirement benefits for
certain public retirees and beneficiaries
PURPOSE:
To require the payment of retirement benefits by the New York State and
Local Retirement System by direct deposit or debit card, with the tran-
sition to the new method of payment being made incrementally.
SUMMARY OF PROVISIONS:
Section 1 of this bill would amend Section 100 of the Retirement and
Social Security Law so retirement benefits shall be paid to retirees and
beneficiaries of the New York State and Local Employees' Retirement
System by direct deposit or debit card. The comptroller shall determine
when the provisions of this bill shall take effect but it will be no
sooner than January 1, 2017 for all current and future retirees and
beneficiaries of the New York State and Local Employees' Retirement
System. Additionally, this section allows a retiree or beneficiary of
the New York State . and Local Employees' Retirement System to submit a
request for exemption from this requirement from such System.
Section 2 of this bill would amend Section 400 of the Retirement and
Social Security Law so retirement benefits shall be paid to retirees and
beneficiaries of the New York State and Local Police and Fire Retirement
System by direct deposit or debit card. The comptroller shall determine
when the provisions of this bill shall take effect but it will be no
sooner than January 1, 2017 for all current and future retirees and
beneficiaries of the New York State and Local Police and Fire Retirement
System. Additionally, this section allows a retiree or beneficiary of
the New York State and Local Police and Fire Retirement System to submit
a request for exemption from this requirement from such System.
PRIOR LEGISLATIVE HISTORY:
S.5608-A and A.7784-A of 2013-2014
JUSTIFICATION:
As of May 1, 2011, the United States Department of the Treasury requires
recipients of federal nontax payments, including social security
payments, to receive payment by electronic funds transfer (EFT). Addi-
tionally, many states, including Florida and Ohio, already require the
payment of retirement benefits by EFT. EFT benefits recipients by elimi-
nating the risks of theft, non-delivery, or loss of checks. EFT funds
are securely transferred with no risk of delay or loss.
The New York State and Local Retirement System has heard from numerous
retirees and beneficiaries about the hardships they faced when a retire-
ment check has been lost or misdirected through the mail. The most
recent examples came in the aftermath of Hurricane Sandy, when many
checks were lost. These payment-related problems for check recipients
would have been avoided had such recipients received their retirement
benefits by EFT. Additionally, there are extra costs to the New York
State and Local Retirement System associated with payments to retirees
and beneficiaries by paper check.
For persons who may not have access to a bank account, this legislation
authorizes payment of benefits by means of a debit card. The benefit
recipient would be able to access their funds through an automatic
teller machine or other device that accepts debit cards.
Because of the financial advantages and added convenience, most New York
State and Local Retirement System members already use direct deposit.
In. recognition of the fact that there may be certain situations where a
paper check is warranted, this legislation allows a retiree or benefici-
ary of the New York State and Local Retirement System to submit a
request to such System for a waiver from the requirement to be paid by
EFT.
The State Comptroller urges the passage of this proposed legislation.
FISCAL IMPLICATIONS FOR STATE:
This bill would result in a modest financial savings to the New York
State and Local Retirement System.
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.
