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A09550 Summary:

SPONSORFitzpatrick (MS)
COSPNSRBlankenbush, Byrnes, DiPietro, Hawley, Lalor, Salka, Tague
MLTSPNSRManktelow, Morinello, Paulin, Smullen
Add §618, R & SS L
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.
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A09550 Text:

                STATE OF NEW YORK
                   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.

        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
          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
          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.
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