NY State Senate Bill 2015-S1092B

Archive: Last Bill Status - In Senate Committee Insurance 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

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to insurance
Jun 11, 2015	print number 1092b
Jun 11, 2015	amend and recommit to insurance
Mar 11, 2015	print number 1092a
Mar 11, 2015	amend (t) and recommit to insurance
Jan 08, 2015	referred to insurance

Bill Amendments

Original

B (Active)

co-Sponsors

2015-S1092 - Details

See Assembly Version of this Bill:: A6796
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §3219-a, Ins L; amd §5205, CPLR
Versions Introduced in Other Legislative Sessions:: 2013-2014: S6150
2017-2018: S1358, A7071
2019-2020: S4864, A5818
2021-2022: S2885, A6099
2023-2024: S274, A7150

2015-S1092 - Summary

Provides protection to certain retirees from de-risking pension transactions.

2015-S1092 - Sponsor Memo

                                BILL NUMBER:S1092

TITLE OF BILL:  An act to amend the insurance law, in relation to
providing protection to certain retirees from pension de-risking
transactions

PURPOSE OR GENERAL IDEA OF BILL:

The purpose of the bill is to provide necessary protection to retirees
whose pension plans are entirely divested of all ERISA protections as
a result of a group annuity purchase from a life insurance company.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill amends the insurance law by adding a new section
3219-a relating to pension de-risking transactions with an annuity.

The new section requires that an annuity issued by an insurance
company licensed to do business in New York State which sells an
annuity intended to provide pension benefits to retirees of any
company, corporation, limited liability company or association shall
include:

1) mandatory disclosures, regulatory approval and an opportunity to
challenge or opt out of any pension de-risking transaction that
attempts to transfer retiree benefits from a federal Employee

Retirement Income Security Act ("ERISA") protected plan to a
substitute benefit provider not covered under ERISA;

2) supplemental protections in the form of a third party guarantee or
reinsurance contract so as to equal the scope of coverage offered by
the Pension Benefit Guaranty Corporation ("PBGC") after an annuity
provider insolvency and subsequent determination of any shortfalls
that might arise after New York Life and Health Insurance Guaranty
Association ("NYLHIGA") contributions are determined so select
retirees within a plan are not unfairly discriminated against;

3) provision of additional protections including mandatory disclosures
by the transferring entity and the substitute pension benefit
provider, uniform fiduciary standards and disclosures, uniform and
equivalent protection from creditors and bankruptcy trustees;

4) allowing retirees receiving pension benefits the option to request
a lump sum cash out option subject to certain mandatory disclosures
regarding the tax consequences and dissipation risks associated with
lump sum distributions and independent legal or financial advisor
oversight;

5) all de-risking transactions must be vetted and approved by an
independent third party created by and with the approval of the
superintendent; and

6) all subsequent transfers of group annuity contracts must be vetted
and approved by an independent third party created by and with the
approval of the superintendent.


Section 2 sets forth an effective date one hundred and twenty days
after it shall have become law and shall apply to all policies and
contracts issued, renewed, altered, or amended on or after such date.

JUSTIFICATION:

In recent years pension plan sponsors have utilized "annuity buy-outs"
in the process of either completely terminating a pension plan or as a
"de-risking" strategy which allows the plan sponsor to reduce the
plan's liability by amending the plan and transferring certain
employee pension plans into allocated group annuity contracts.

As a result of the annuity buy-out, the plan sponsor no longer pays a
premium to the Pension Benefit Guaranty Association ("PBGC") and the
monthly payments to retirees are no longer backed by the PBGC. In
addition, ERISA fiduciary standards do not apply and ERISA no longer
governs the benefits. These changes leave affected retirees with
virtually none of the long standing federal pension protection
mechanisms provided by ERISA and the PBGC that apply to employee
benefit plans including mandatory disclosures in transfers between
benefit providers, uniform fiduciary standards and disclosures,
uniform and equivalent protection from creditors and bankruptcy
trustees.

Arguments stating that ERISA protections remain are simply false and
disingenuous. Therefore, it is necessary for the state to put in place
pension protection mechanisms that ERISA and the PBGC had provided
before the pension plans were transferred into allocated group annuity
contracts.

PRIOR LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

None to the state.

EFFECTIVE DATE:

This act shall take one hundred and twenty days after it shall have
become law and shall apply to all policies and contracts issued,
renewed, altered, or amended on or after such date.

2015-S1092 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1092

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 8, 2015
                               ___________

Introduced  by Sens. AVELLA, HOYLMAN, KRUEGER, MARCHIONE, SAVINO -- read
  twice and ordered printed, and when printed to  be  committed  to  the
  Committee on Insurance

AN  ACT  to amend the insurance law, in relation to providing protection
  to certain retirees from pension de-risking transactions

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The insurance law is amended by adding a new section 3219-a
to read as follows:
  S  3219-A.  PENSION  DE-RISKING  TRANSACTIONS WITH AN ANNUITY. (A) ANY
ANNUITY ISSUED BY AN INSURANCE COMPANY LICENSED TO DO BUSINESS  IN  THIS
STATE  WHICH  SELLS  AN  ANNUITY INTENDED TO PROVIDE PENSION BENEFITS TO
RETIREES OF ANY COMPANY, CORPORATION, LIMITED LIABILITY COMPANY OR ASSO-
CIATION SHALL INCLUDE THE FOLLOWING PROVISIONS, INCLUDING BUT NOT LIMIT-
ED TO:
  (1) MANDATORY DISCLOSURES, REGULATORY APPROVAL AND AN  OPPORTUNITY  TO
CHALLENGE OR OPT OUT OF ANY PENSION DE-RISKING TRANSACTION THAT ATTEMPTS
TO  TRANSFER  RETIREE BENEFITS FROM A FEDERAL EMPLOYEE RETIREMENT INCOME
SECURITY ACT ("ERISA") PROTECTED PLAN TO A SUBSTITUTE  BENEFIT  PROVIDER
NOT COVERED UNDER ERISA;
  (2) SUPPLEMENTAL PROTECTIONS IN THE FORM OF A THIRD PARTY GUARANTEE OR
REINSURANCE CONTRACT SO AS TO EQUAL THE SCOPE OF COVERAGE OFFERED BY THE
PENSION  BENEFIT GUARANTY CORPORATION ("PBGC") AFTER AN ANNUITY PROVIDER
INSOLVENCY AND SUBSEQUENT DETERMINATION OF  ANY  SHORTFALLS  THAT  MIGHT
ARISE  AFTER  NEW  YORK  LIFE  AND HEALTH INSURANCE GUARANTY ASSOCIATION
("NYLHIGA") CONTRIBUTIONS ARE DETERMINED SO  SELECT  RETIREES  WITHIN  A
PLAN ARE NOT UNFAIRLY DISCRIMINATED AGAINST;
  (3) THE PROVISION OF ADDITIONAL PROTECTIONS INCLUDING, BUT NOT LIMITED
TO,  MANDATORY DISCLOSURES BY THE TRANSFERRING ENTITY AND THE SUBSTITUTE
PENSION BENEFIT PROVIDER, UNIFORM FIDUCIARY STANDARDS  AND  DISCLOSURES,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02147-01-5

S. 1092                             2

UNIFORM  AND  EQUIVALENT  PROTECTION FROM CREDITORS AND BANKRUPTCY TRUS-
TEES;
  (4) ALLOWING RETIREES RECEIVING PENSION BENEFITS THE OPTION TO REQUEST
A  LUMP  SUM  CASH  OUT  OPTION SUBJECT TO CERTAIN MANDATORY DISCLOSURES
REGARDING THE TAX CONSEQUENCES AND  DISSIPATION  RISKS  ASSOCIATED  WITH
LUMP  SUM DISTRIBUTIONS AND INDEPENDENT LEGAL OR FINANCIAL ADVISOR OVER-
SIGHT;
  (5) THAT ALL DE-RISKING TRANSACTIONS BE  VETTED  AND  APPROVED  BY  AN
INDEPENDENT  THIRD  PARTY CREATED BY AND WITH THE APPROVAL OF THE SUPER-
INTENDENT; AND
  (6) THAT ALL SUBSEQUENT TRANSFERS OF GROUP ANNUITY CONTRACTS BE VETTED
AND APPROVED BY AN INDEPENDENT THIRD  PARTY  CREATED  BY  AND  WITH  THE
APPROVAL OF THE SUPERINTENDENT.
  (B)  THE  SUPERINTENDENT SHALL PROMULGATE ANY NECESSARY RULES OR REGU-
LATIONS NECESSARY FOR THE IMPLEMENTATION OF THIS SECTION.
  S 2. This act shall take effect on the one hundred twentieth day after
it shall have become a law and shall apply to all policies and contracts
issued, renewed, modified, altered, or amended on or after such date.

co-Sponsors

View additional co-sponsors

2015-S1092A - Details

See Assembly Version of this Bill:: A6796
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §3219-a, Ins L; amd §5205, CPLR
Versions Introduced in Other Legislative Sessions:: 2013-2014: S6150
2017-2018: S1358, A7071
2019-2020: S4864, A5818
2021-2022: S2885, A6099
2023-2024: S274, A7150

2015-S1092A - Summary

Provides protection to certain retirees from de-risking pension transactions.

2015-S1092A - Sponsor Memo

                                BILL NUMBER:S1092A

TITLE OF BILL:  An act to amend the insurance law, in relation to
providing protection to certain retirees from pension de-risking
transactions; and to amend the civil practice law and rules, in
relation to statutorily exempt payments

PURPOSE OR GENERAL IDEA OF BILL:

The purpose of the bill is to provide necessary protection to retirees
whose pension plans are entirely divested of all ERISA and PBGC
protections as a result of a group annuity purchase from a life
insurance company.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill amends the insurance law by adding a new section
3219-a relating to pension de-risking transactions with an annuity.

The new section requires that an annuity issued by an insurance
company licensed to do business in New York State which sells an
annuity intended to provide pension benefits to retirees of any
company, corporation, limited liability company or association shall
include the following provisions:

(a) (1) a clear statement that payments to annuitants under an annuity

contract issued pursuant to this section are exempt from the claims of
creditors;

(a)(2) a statement that the retirees will no longer have protection
under ERISA and the PBGC;

(a)(3) the identity and contact information for the New York Life and
Health Insurance Guaranty Association, or any substitute or
replacement guaranty association that provides coverage to annuitants
residing in New York in the event of the insurer's financial
impairment or insolvency, as set forth on a publicly available website
such as the website maintained by the Life Insurance Company Guaranty
Corporation of New York (www.nylifega.org); and

(a)(4) mandatory annual disclosures to all retires whose benefits are
transferred to an insurance company or alternative benefit provider
for the purpose of providing retirement benefits, of the following:
funding levels of all assets relative to expected liabilities under
the assumed pension benefit schedules, investment performance summary
by asset class, investment performance detail by asset class, expenses
associated with any group annuity contract, changes in actuarial
assumptions, if any.

(b) prohibits transfer or assumption to another insurer without
confirmation by the superintendent that the insurer assuming the
obligations of such allocated or unallocated group annuity contract
has the financial strength to fulfill its obligations under such
contract.


(c) the proceeds of any such allocated or unallocated group annuity
contract issued shall be exempt from application to the satisfaction
of money judgments under section fifty-two hundred give of the CPLR.

(d) for purposes of this section: (1) "Employer" means any person
engaged in business in this state who has two or more employees, but
does not include the state or any political subdivision thereof; and

(2) "Employee pension benefit plan" means an "employee pension benefit
plan", as defined in 29 USC 1002(2)(A).

Section 2 of the bill amends paragraph 2 of subdivision (1) of section
5205 of the CPLR, as amended by chapter 24 of the laws of 2009, by
adding that "Statutorily exempt payments" shall specifically include
any annuity proceeds whose benefits are transferred to an insurance
company or alternative benefit provider for the purpose of providing
retirement benefits pursuant to section three thousand two hundred
nineteen-a of the insurance law in a pension de-risking transfer.

Section 3 sets forth an effective date one hundred and twenty days
after it shall have become law and shall apply to all policies and
contracts issued, renewed, altered, or amended on or after such date.

JUSTIFICATION:

In recent years pension plan sponsors have utilized "annuity buy-outs"
in the process of either completely terminating a pension plan or as a
"de-risking" strategy which allows the plan sponsor to reduce the
plan's liability by amending the plan and transferring certain
employee pension plans into allocated group annuity contracts.

As a result of the annuity buy-out, the plan sponsor no longer pays a
premium to the Pension Benefit Guaranty Association ("PBGC") and the
monthly payments to retirees are no longer backed by the PBGC. In
addition, ERISA fiduciary standards do not apply and ERISA no longer
governs the benefits. These changes leave affected retirees with
virtually none of the long standing federal pension protection
mechanisms provided by ERISA and the PBGC that apply to employee
benefit plans including mandatory disclosures in transfers between
benefit providers, uniform fiduciary standards and disclosures,
uniform and equivalent protection from creditors and bankruptcy
trustees.

Arguments stating that ERISA protections remain are simply false and
disingenuous. Therefore, it is necessary for the state to put in place
pension protection mechanisms that ERISA and the PBGC had provided
before the pension plans were transferred into allocated group annuity
contracts.

PRIOR LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

None to the state.


EFFECTIVE DATE:

This act shall take effect one hundred and twenty days after it shall
have become law and shall apply to all policies and contracts issued,
renewed, altered, or amended on or after such date.

2015-S1092A - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1092--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 8, 2015
                               ___________

Introduced  by Sens. AVELLA, HOYLMAN, KRUEGER, MARCHIONE, SAVINO -- read
  twice and ordered printed, and when printed to  be  committed  to  the
  Committee  on Insurance -- committee discharged, bill amended, ordered
  reprinted as amended and recommitted to said committee

AN ACT to amend the insurance law, in relation to  providing  protection
  to certain retirees from pension de-risking transactions; and to amend
  the  civil  practice  law and rules, in relation to statutorily exempt
  payments

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The insurance law is amended by adding a new section 3219-a
to read as follows:
  S  3219-A.  PENSION  DE-RISKING  TRANSACTIONS WITH AN ANNUITY. (A) ANY
INSURER ISSUING AN ALLOCATED OR UNALLOCATED GROUP ANNUITY CONTRACT TO AN
EMPLOYER OR AN EMPLOYEE DEFINED PENSION BENEFIT PLAN  ON  BEHALF  OF  AN
EMPLOYER,  FOR THE PURPOSE OF PROVIDING RETIREMENT BENEFITS TO EMPLOYEES
OR FORMER EMPLOYEES ("RETIREES") OF THE EMPLOYER, WHICH ANNUITY BENEFITS
WILL NO LONGER BE PROTECTED UNDER THE FEDERAL EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974 ("ERISA") AND THE FEDERAL PENSION BENEFIT  GUARANTY
CORPORATION  ("PBGC")  SHALL  PROVIDE  THE  FOLLOWING INFORMATION TO THE
RETIREES PURSUANT TO REGULATIONS ADOPTED BY THE SUPERINTENDENT:
  (1) A CLEAR STATEMENT THAT PAYMENTS TO  ANNUITANTS  UNDER  AN  ANNUITY
CONTRACT  ISSUED  PURSUANT TO THIS SECTION ARE EXEMPT FROM THE CLAIMS OF
CREDITORS;
  (2) A STATEMENT THAT THE RETIREES WILL NO LONGER HAVE PROTECTION UNDER
ERISA AND THE PBGC;
  (3) THE IDENTITY AND CONTACT INFORMATION FOR THE  NEW  YORK  LIFE  AND
HEALTH  INSURANCE GUARANTY ASSOCIATION, OR ANY SUBSTITUTE OR REPLACEMENT
GUARANTY ASSOCIATION THAT PROVIDES COVERAGE TO  ANNUITANTS  RESIDING  IN
NEW YORK IN THE EVENT OF THE INSURER'S FINANCIAL IMPAIRMENT OR INSOLVEN-
CY,  AS  SET  FORTH  ON A PUBLICLY AVAILABLE WEBSITE SUCH AS THE WEBSITE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02147-03-5

S. 1092--A                          2

MAINTAINED BY THE LIFE INSURANCE COMPANY  GUARANTY  CORPORATION  OF  NEW
YORK (WWW.NYLIFEGA.ORG); AND
  (4)  MANDATORY  ANNUAL  DISCLOSURES TO ALL RETIREES WHOSE BENEFITS ARE
TRANSFERRED TO AN INSURANCE COMPANY OR ALTERNATIVE BENEFIT PROVIDER  FOR
THE  PURPOSE OF PROVIDING RETIREMENT BENEFITS, OF THE FOLLOWING: FUNDING
LEVELS OF ALL ASSETS RELATIVE TO EXPECTED LIABILITIES UNDER THE  ASSUMED
PENSION  BENEFIT  SCHEDULES,  INVESTMENT  PERFORMANCE  SUMMARY  BY ASSET
CLASS, INVESTMENT PERFORMANCE DETAIL BY ASSET CLASS, EXPENSES ASSOCIATED
WITH ANY GROUP ANNUITY CONTRACT, CHANGES IN  ACTUARIAL  ASSUMPTIONS,  IF
ANY.
  (B)  NO  ALLOCATED  OR UNALLOCATED GROUP ANNUITY CONTRACT ISSUED BY AN
INSURER TO AN EMPLOYER OR AN EMPLOYEE DEFINED PENSION  BENEFIT  PLAN  ON
BEHALF  OF AN EMPLOYER, FOR THE PURPOSE OF PROVIDING RETIREMENT BENEFITS
TO EMPLOYEES OR FORMER EMPLOYEES OF THE EMPLOYER, WHICH ANNUITY BENEFITS
WILL NO LONGER BE PROTECTED UNDER THE FEDERAL EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974 AND THE FEDERAL  PENSION  BENEFIT  GUARANTY  CORPO-
RATION  MAY BE FURTHER TRANSFERRED OR ASSUMED BY ANOTHER INSURER WITHOUT
CONFIRMATION BY THE SUPERINTENDENT THAT THE INSURER ASSUMING  THE  OBLI-
GATIONS  OF SUCH ALLOCATED OR UNALLOCATED GROUP ANNUITY CONTRACT HAS THE
FINANCIAL STRENGTH TO FULFILL ITS OBLIGATIONS UNDER SUCH CONTRACT.
  (C) THE  PROCEEDS  OF  ANY  ALLOCATED  OR  UNALLOCATED  GROUP  ANNUITY
CONTRACT  ISSUED  BY  AN  INSURER  TO AN EMPLOYER OR AN EMPLOYEE DEFINED
PENSION BENEFIT PLAN ON BEHALF  OF  AN  EMPLOYER,  FOR  THE  PURPOSE  OF
PROVIDING RETIREMENT BENEFITS TO RETIREES OF THE EMPLOYER, WHICH ANNUITY
BENEFITS  WILL  NO  LONGER BE PROTECTED UNDER ERISA AND THE FEDERAL PBGC
SHALL BE EXEMPT FROM APPLICATION TO THE SATISFACTION OF MONEY  JUDGMENTS
UNDER  SECTION  FIFTY-TWO  HUNDRED  FIVE  OF  THE CIVIL PRACTICE LAW AND
RULES.
  (D) FOR PURPOSES OF THIS SECTION:  (1)  "EMPLOYER"  MEANS  ANY  PERSON
ENGAGED  IN  BUSINESS  IN  THIS STATE WHO HAS TWO OR MORE EMPLOYEES, BUT
DOES NOT INCLUDE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF; AND
  (2) "EMPLOYEE PENSION BENEFIT PLAN" MEANS AN "EMPLOYEE PENSION BENEFIT
PLAN", AS DEFINED IN 29 USC 1002(2)(A).
  S 2. Paragraph 2 of subdivision (l) of section 5205 of the civil prac-
tice law and rules, as amended by chapter 24 of the  laws  of  2009,  is
amended to read as follows:
  2.  For  purposes of this article, "statutorily exempt payments" means
any personal property exempt from application to the satisfaction  of  a
money  judgment  under  any provision of state or federal law. Such term
shall include, but not be limited to, payments from any of the following
sources: social security, including retirement, survivors' and disabili-
ty benefits, supplemental security income  or  child  support  payments;
veterans  administration  benefits;  public assistance; workers' compen-
sation; unemployment insurance; public  or  private  pensions;  railroad
retirement;  and  black  lung  benefits.   "STATUTORILY EXEMPT PAYMENTS"
SHALL SPECIFICALLY INCLUDE  ANY  ANNUITY  PROCEEDS  WHOSE  BENEFITS  ARE
TRANSFERRED  TO AN INSURANCE COMPANY OR ALTERNATIVE BENEFIT PROVIDER FOR
THE PURPOSE OF PROVIDING RETIREMENT BENEFITS PURSUANT TO  SECTION  THREE
THOUSAND  TWO  HUNDRED  NINETEEN-A  OF  THE  INSURANCE  LAW IN A PENSION
DE-RISKING TRANSFER.
  S 3. This act shall take effect on the one hundred twentieth day after
it shall have become a law and shall apply to all policies and contracts
issued, renewed, modified, altered, or amended on or after such date.

co-Sponsors

View additional co-sponsors

2015-S1092B (ACTIVE) - Details

See Assembly Version of this Bill:: A6796
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §3219-a, Ins L; amd §5205, CPLR
Versions Introduced in Other Legislative Sessions:: 2013-2014: S6150
2017-2018: S1358, A7071
2019-2020: S4864, A5818
2021-2022: S2885, A6099
2023-2024: S274, A7150

2015-S1092B (ACTIVE) - Summary

Provides protection to certain retirees from de-risking pension transactions.

2015-S1092B (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S1092B

TITLE OF BILL:  An act to amend the insurance law, in relation to
providing protection to certain retirees from pension de-risking
transactions; and to amend the civil practice law and rules, in
relation to statutorily exempt payments

PURPOSE OR GENERAL IDEA OF BILL: The purpose of the bill is to provide
necessary protection to retirees whose pension plans are entirely
divested of all ERISA and PBGC protections as a result of a group
annuity purchase from a life insurance company.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill amends the insurance law by adding a new section
3219-a relating to pension de-risking transactions with an annuity.

Section (a) of the bill sets forth definitions of "employer",
"employee pension benefit plan" and "pension de-risking transaction".

The new section requires that an annuity issued by an insurance
company licensed to do business in New York State which sells an
annuity intended to provide pension benefits to retirees of any
company, corporation, limited liability company or association shall
include the following provisions:

(b) (1) a clear statement that payments to annuitants under an annuity
contract issued pursuant to this section are exempt from the claims of
creditors;

(b)(2) a statement that the retirees will no longer have protection
under ER1SA and the PBGC;

(b)(3) the identity and contact information for the New York Life and
Health Insurance Guaranty Association, or any substitute or
replacement guaranty association that provides coverage to annuitants
residing in New York in the event of the insurer's financial
impairment or insolvency, as set forth on a publicly available website
such as the website maintained by the Life Insurance Company Guaranty
Corporation of New York (www.nylifega.org); and

(b)(4) mandatory annual disclosures to all retires whose benefits are
transferred to an insurance company or alternative benefit provider
for the purpose of providing retirement benefits, of the following:
funding levels of all assets relative to expected liabilities under
the assumed pension benefit schedules, investment performance summary
by asset class, investment performance detail by asset class, expenses
associated with any group annuity contract, changes in actuarial
assumptions, if any.

(c) prohibits transfer or assumption to another insurer without
confirmation by the superintendent that the insurer assuming the
obligations of such allocated or unallocated group annuity contract
has the financial strength to fulfill its obligations under such
contract.


(d) the proceeds of any such allocated or unallocated group annuity
contract issued shall be exempt from application to the satisfaction
of money judgments under section fifty-two hundred give of the CPLR.

Section 2 of the bill amends paragraph 2 of subdivision (1) of section
5205 of the CPLR, as amended by chapter 24 of the laws of 2009, by
adding that "Statutorily exempt payments" shall specifically include
any annuity proceeds whose benefits are transferred to an insurance
company or alternative benefit provider for the purpose of providing
retirement benefits pursuant to section three thousand two hundred
nineteen-a of the insurance law in a pension de-risking transfer.

Section 3 sets forth an effective date one hundred and twenty days
after it shall have become law and shall apply to all policies and
contracts issued, renewed, altered, or amended on or after such date.

JUSTIFICATION:  In recent years pension plan sponsors have utilized
"annuity buy-outs" in the process of either completely terminating a
pension plan or as a "de-risking" strategy which allows the plan
sponsor to reduce the plan's liability by amending the plan and
transferring certain employee pension plans into allocated group
annuity contracts.

As a result of the annuity buy-out, the plan sponsor no longer pays a
premium to the Pension Benefit Guaranty Association ("PBGC") and the
monthly payments to retirees are no longer backed by the PBGC. In
addition, ERISA fiduciary standards do not apply and ERISA no longer
governs the benefits. These changes leave affected retirees with
virtually none of the long standing federal pension protection
mechanisms provided by ERISA and the PBGC that apply to employee
benefit plans including mandatory disclosures in transfers between
benefit providers, uniform fiduciary standards and disclosures,
uniform and equivalent protection from creditors and bankruptcy
trustees.

Arguments stating that ERISA protections remain are simply false and
disingenuous. Therefore, it is necessary for the state to put in place
pension protection mechanisms that ERISA and the PBGC had provided
before the pension plans were transferred into allocated group annuity
contracts.

PRIOR LEGISLATIVE HISTORY: None.

FISCAL IMPLICATIONS:  None to the state.

EFFECTIVE DATE:  This act shall take effect one hundred and twenty
days after it shall have become law and shall apply to all policies
and contracts issued, renewed, altered, or amended on or after such
date.

2015-S1092B (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1092--B

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 8, 2015
                               ___________

Introduced by Sens. AVELLA, ADDABBO, HOYLMAN, KRUEGER, MARCHIONE, SAVINO
  -- read twice and ordered printed, and when printed to be committed to
  the  Committee  on  Insurance  --  committee discharged, bill amended,
  ordered reprinted as amended and  recommitted  to  said  committee  --
  committee  discharged,  bill amended, ordered reprinted as amended and
  recommitted to said committee

AN ACT to amend the insurance law, in relation to  providing  protection
  to certain retirees from pension de-risking transactions; and to amend
  the  civil  practice  law and rules, in relation to statutorily exempt
  payments

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The insurance law is amended by adding a new section 3219-a
to read as follows:
  S  3219-A.  PENSION  DE-RISKING  TRANSACTIONS WITH AN ANNUITY. (A) FOR
PURPOSES OF THIS SECTION: (1) "EMPLOYER" MEANS  ANY  PERSON  ENGAGED  IN
BUSINESS  IN  THIS  STATE  WHO  HAS  TWO OR MORE EMPLOYEES, BUT DOES NOT
INCLUDE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF;
  (2) "EMPLOYEE PENSION BENEFIT PLAN" MEANS AN "EMPLOYEE PENSION BENEFIT
PLAN", AS DEFINED IN 29 USC 1002(2)(A); AND
  (3)  "PENSION  DE-RISKING  TRANSACTION"  MEANS  ANY  TRANSACTION  THAT
INVOLVES  THE  TRANSFER  OF  PENSION BENEFITS (NOT INCLUDING HEALTH CARE
BENEFITS) FROM A PENSION PLAN PROTECTED UNDER  THE  EMPLOYEE  RETIREMENT
INCOME  SECURITY  ACT ("ERISA") TO A SUBSTITUTE PENSION BENEFIT PROVIDER
SUCH AS AN INSURANCE COMPANY LICENSED AND REGULATED UNDER STATE LAW.
  (B) ANY INSURER ISSUING AN  ALLOCATED  OR  UNALLOCATED  GROUP  ANNUITY
CONTRACT  TO  AN EMPLOYER OR AN EMPLOYEE DEFINED PENSION BENEFIT PLAN ON
BEHALF OF AN EMPLOYER, FOR THE PURPOSE OF PROVIDING RETIREMENT  BENEFITS
TO  EMPLOYEES  OR  FORMER  EMPLOYEES ("RETIREES") OF THE EMPLOYER, WHICH
ANNUITY BENEFITS WILL NO LONGER BE PROTECTED UNDER THE FEDERAL  EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974 ("ERISA") AND THE FEDERAL PENSION

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02147-05-5

S. 1092--B                          2

BENEFIT GUARANTY CORPORATION ("PBGC") SHALL PROVIDE THE FOLLOWING INFOR-
MATION  TO  THE  RETIREES  PURSUANT TO REGULATIONS ADOPTED BY THE SUPER-
INTENDENT:
  (1)  A  CLEAR  STATEMENT  THAT PAYMENTS TO ANNUITANTS UNDER AN ANNUITY
CONTRACT ISSUED PURSUANT TO THIS SECTION ARE EXEMPT FROM THE  CLAIMS  OF
CREDITORS;
  (2) A STATEMENT THAT THE RETIREES WILL NO LONGER HAVE PROTECTION UNDER
ERISA AND THE PBGC;
  (3)  THE  IDENTITY  AND  CONTACT INFORMATION FOR THE NEW YORK LIFE AND
HEALTH INSURANCE GUARANTY ASSOCIATION, OR ANY SUBSTITUTE OR  REPLACEMENT
GUARANTY  ASSOCIATION  THAT  PROVIDES COVERAGE TO ANNUITANTS RESIDING IN
NEW YORK IN THE EVENT OF THE INSURER'S FINANCIAL IMPAIRMENT OR INSOLVEN-
CY, AS SET FORTH ON A PUBLICLY AVAILABLE WEBSITE  SUCH  AS  THE  WEBSITE
MAINTAINED  BY  THE  LIFE  INSURANCE COMPANY GUARANTY CORPORATION OF NEW
YORK (WWW.NYLIFEGA.ORG); AND
  (4) MANDATORY ANNUAL DISCLOSURES TO ALL RETIREES  WHOSE  BENEFITS  ARE
TRANSFERRED  TO AN INSURANCE COMPANY OR ALTERNATIVE BENEFIT PROVIDER FOR
THE PURPOSE OF PROVIDING RETIREMENT BENEFITS, OF THE FOLLOWING:  FUNDING
LEVELS  OF ALL ASSETS RELATIVE TO EXPECTED LIABILITIES UNDER THE ASSUMED
PENSION BENEFIT  SCHEDULES,  INVESTMENT  PERFORMANCE  SUMMARY  BY  ASSET
CLASS, INVESTMENT PERFORMANCE DETAIL BY ASSET CLASS, EXPENSES ASSOCIATED
WITH  ANY  GROUP  ANNUITY CONTRACT, CHANGES IN ACTUARIAL ASSUMPTIONS, IF
ANY.
  (C) NO ALLOCATED OR UNALLOCATED GROUP ANNUITY CONTRACT  ISSUED  BY  AN
INSURER  TO  AN  EMPLOYER OR AN EMPLOYEE DEFINED PENSION BENEFIT PLAN ON
BEHALF OF AN EMPLOYER, FOR THE PURPOSE OF PROVIDING RETIREMENT  BENEFITS
TO EMPLOYEES OR FORMER EMPLOYEES OF THE EMPLOYER, WHICH ANNUITY BENEFITS
WILL NO LONGER BE PROTECTED UNDER THE FEDERAL EMPLOYEE RETIREMENT INCOME
SECURITY  ACT  OF  1974  AND THE FEDERAL PENSION BENEFIT GUARANTY CORPO-
RATION MAY BE FURTHER TRANSFERRED OR ASSUMED BY ANOTHER INSURER  WITHOUT
CONFIRMATION  BY  THE SUPERINTENDENT THAT THE INSURER ASSUMING THE OBLI-
GATIONS OF SUCH ALLOCATED OR UNALLOCATED GROUP ANNUITY CONTRACT HAS  THE
FINANCIAL  STRENGTH TO FULFILL ITS OBLIGATIONS UNDER SUCH CONTRACT.  THE
APPROPRIATE STANDARD TO BE APPLIED BY THE SUPERINTENDENT SHALL  BE  400%
OF  COMPANY  ACTION  LEVEL  RISK BASED CAPITAL WITH NO NEGATIVE TREND AS
DEFINED BY THE 2012 NAIC RISK-BASED CAPITAL  (RBC)  FOR  INSURERS  MODEL
ACT.
  (D)  THE  PROCEEDS  OF  ANY  ALLOCATED  OR  UNALLOCATED  GROUP ANNUITY
CONTRACT ISSUED BY AN INSURER TO AN  EMPLOYER  OR  AN  EMPLOYEE  DEFINED
PENSION  BENEFIT  PLAN  ON  BEHALF  OF  AN  EMPLOYER, FOR THE PURPOSE OF
PROVIDING RETIREMENT BENEFITS TO RETIREES OF THE EMPLOYER, WHICH ANNUITY
BENEFITS WILL NO LONGER BE PROTECTED UNDER ERISA AND  THE  FEDERAL  PBGC
SHALL  BE EXEMPT FROM APPLICATION TO THE SATISFACTION OF MONEY JUDGMENTS
UNDER SECTION FIFTY-TWO HUNDRED FIVE  OF  THE  CIVIL  PRACTICE  LAW  AND
RULES.
  S 2. Paragraph 2 of subdivision (l) of section 5205 of the civil prac-
tice  law  and  rules,  as amended by chapter 24 of the laws of 2009, is
amended to read as follows:
  2. For purposes of this article, "statutorily exempt  payments"  means
any  personal  property exempt from application to the satisfaction of a
money judgment under any provision of state or federal  law.  Such  term
shall include, but not be limited to, payments from any of the following
sources: social security, including retirement, survivors' and disabili-
ty  benefits,  supplemental  security  income or child support payments;
veterans administration benefits; public  assistance;  workers'  compen-
sation;  unemployment  insurance;  public  or private pensions; railroad

S. 1092--B                          3

retirement; and black lung  benefits.    "STATUTORILY  EXEMPT  PAYMENTS"
SHALL  SPECIFICALLY  INCLUDE  ANY  ANNUITY  PROCEEDS  WHOSE BENEFITS ARE
TRANSFERRED TO AN INSURANCE COMPANY OR ALTERNATIVE BENEFIT PROVIDER  FOR
THE  PURPOSE  OF PROVIDING RETIREMENT BENEFITS PURSUANT TO SECTION THREE
THOUSAND TWO HUNDRED NINETEEN-A  OF  THE  INSURANCE  LAW  IN  A  PENSION
DE-RISKING TRANSFER.
  S 3. This act shall take effect on the one hundred twentieth day after
it shall have become a law and shall apply to all policies and contracts
issued, renewed, modified, altered, or amended on or after such date.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Senate Bill S1092B

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

Bill Amendments

co-Sponsors

2015-S1092 - Details

2015-S1092 - Summary

2015-S1092 - Sponsor Memo

2015-S1092 - Bill Text download pdf

co-Sponsors

2015-S1092A - Details

2015-S1092A - Summary

2015-S1092A - Sponsor Memo

2015-S1092A - Bill Text download pdf

co-Sponsors

2015-S1092B (ACTIVE) - Details

2015-S1092B (ACTIVE) - Summary

2015-S1092B (ACTIVE) - Sponsor Memo

2015-S1092B (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S1092B

Share this bill

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

Bill Amendments

co-Sponsors

2015-S1092 - Details

2015-S1092 - Summary

2015-S1092 - Sponsor Memo

2015-S1092 - Bill Text download pdf

co-Sponsors

2015-S1092A - Details

2015-S1092A - Summary

2015-S1092A - Sponsor Memo

2015-S1092A - Bill Text download pdf

co-Sponsors

2015-S1092B (ACTIVE) - Details

2015-S1092B (ACTIVE) - Summary

2015-S1092B (ACTIVE) - Sponsor Memo

2015-S1092B (ACTIVE) - Bill Text download pdf

Comments