Establishes a defined contribution plan for all non-civil service appointees and elected officials of the New York state and local employees' retirement system who are not yet vested in a state retirement system or who are hired after the effective date of this section; authorizes elected officials to join such defined contribution plan; defines terms; provides for contributions to such defined contribution plan; authorizes the promulgation of any necessary rules and regulations.
STATE OF NEW YORK
________________________________________________________________________
9550
IN ASSEMBLY
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:
1 Section 1. The retirement and social security law is amended by adding
2 a new section 618 to read as follows:
3 § 618. Defined contribution plan. 1. The defined contribution plan is
4 hereby established. The comptroller shall adopt rules and regulations
5 regarding the standards and requirements of the defined contribution
6 plan established pursuant to this section, including selection of finan-
7 cial organizations for investment purposes.
8 2. a. Notwithstanding any other provision of law, the defined
9 contribution plan shall be established for all non-civil service
10 appointed employees and elected officials employed by the state of New
11 York or any public employer which has elected to participate in the New
12 York state and local employees' retirement system.
13 b. The comptroller shall enter into written agreements with one or
14 more financial organizations to administer the defined contribution plan
15 for members and to invest funds held pursuant to such plan.
16 c. The rules and regulations promulgated by the comptroller shall
17 establish standards for the selection of financial organizations,
18 authorized to do business in this state, to participate in such plans,
19 including, but not limited to, the following criteria: (i) rates of
20 commission, brokerage and other fees, administrative expenses and
21 related service charges imposed by the financial organization; (ii)
22 variety of types of investment opportunities offered by the financial
23 organization and/or among the financial organizations selected and the
24 ability to transfer among such opportunities; (iii) the stability of the
25 financial organization as evidenced by experience, reputation, assets
26 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
1 ty to comply with reporting requirements to the comptroller and to
2 participants in such a plan; and (v) such other factors which would be
3 considered by a prudent investor in such a plan.
4 d. The president of the state civil service commission, subject to the
5 rules and regulations of the comptroller, shall provide assistance to
6 any public employer as is appropriate to the provisions of this section.
7 3. A public employer shall contribute three percent of such affected
8 employee's annual salary towards such defined contribution plan. All
9 non-civil service appointed employees and elected officials are required
10 to contribute three percent of their salary towards the defined contrib-
11 ution plan. Such employees may contribute up to one hundred percent,
12 not to exceed twenty thousand five hundred dollars of his or her salary
13 towards the defined contribution plan.
14 4. The term "financial organization" shall mean an organization
15 authorized to do business in the state of New York and (a) which is an
16 authorized fiduciary to act as a trustee pursuant to the provisions of
17 an act of congress entitled "Employee Retirement Income Security Act of
18 1974" as such provisions may be amended from time to time, or an insur-
19 ance company; and (b) (i) is licensed or chartered by the department of
20 financial services; (ii) is chartered by an agency of the federal
21 government; (iii) is subject to the jurisdiction and regulation of the
22 securities and exchange commission of the federal government; or (iv) is
23 any other entity otherwise authorized to act in this state as a trustee
24 pursuant to the provisions of an act of congress entitled "Employee
25 Retirement Income Security Act of 1974" as such provisions may be
26 amended from time to time.
27 5. The current retirement plans for non-civil service appointed
28 employees and elected officials shall be frozen as of the effective date
29 of this section. Non-civil service appointed employees and elected offi-
30 cials shall no longer contribute to their current retirement plan,
31 however, such persons shall receive the benefits they have accrued up to
32 the effective date of this section upon retirement. The membership of a
33 non-civil service appointed employee or elected official in any state
34 retirement system shall remain open if he or she becomes a member of the
35 defined contribution plan.
36 § 2. This act shall take effect on the first of the fiscal year next
37 succeeding the date on which it shall have become a law. Effective imme-
38 diately, the addition, amendment and/or repeal of any rule or regulation
39 necessary for the implementation of this act on its effective date are
40 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.
