S T A T E   O F   N E W   Y O R K
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                                   5393
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 11, 2019
                                ___________
 
 Introduced  by M. of A. FITZPATRICK, HAWLEY, LALOR, BLANKENBUSH, FRIEND,
   RAIA, DiPIETRO, TAGUE, BYRNES, SALKA -- Multi-Sponsored by -- M. of A.
   CROUCH, JOHNS, LAWRENCE, MANKTELOW, PAULIN, SMULLEN, STEC -- 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:
 
   Section 1. The retirement and social security law is amended by adding
 a new section 618 to read as follows:
   § 618. DEFINED CONTRIBUTION PLAN. 1. THE DEFINED CONTRIBUTION PLAN  IS
 HEREBY  ESTABLISHED.  THE  COMPTROLLER SHALL ADOPT RULES AND REGULATIONS
 REGARDING THE STANDARDS AND REQUIREMENTS  OF  THE  DEFINED  CONTRIBUTION
 PLAN ESTABLISHED PURSUANT TO THIS SECTION, INCLUDING SELECTION OF FINAN-
 CIAL ORGANIZATIONS FOR INVESTMENT PURPOSES.
   2.  A.    NOTWITHSTANDING  ANY  OTHER  PROVISION  OF  LAW, THE DEFINED
 CONTRIBUTION  PLAN  SHALL  BE  ESTABLISHED  FOR  ALL  NON-CIVIL  SERVICE
 APPOINTED  EMPLOYEES  AND ELECTED OFFICIALS EMPLOYED BY THE STATE OF NEW
 YORK OR ANY PUBLIC EMPLOYER WHICH HAS ELECTED TO PARTICIPATE IN THE  NEW
 YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM.
   B.  THE  COMPTROLLER  SHALL  ENTER INTO WRITTEN AGREEMENTS WITH ONE OR
 MORE FINANCIAL ORGANIZATIONS TO ADMINISTER THE DEFINED CONTRIBUTION PLAN
 FOR MEMBERS AND TO INVEST FUNDS HELD PURSUANT TO SUCH PLAN.
   C. THE RULES AND REGULATIONS  PROMULGATED  BY  THE  COMPTROLLER  SHALL
 ESTABLISH  STANDARDS  FOR  THE  SELECTION  OF  FINANCIAL  ORGANIZATIONS,
 AUTHORIZED TO DO BUSINESS IN THIS STATE, TO PARTICIPATE IN  SUCH  PLANS,
 INCLUDING,  BUT  NOT  LIMITED  TO,  THE FOLLOWING CRITERIA: (I) RATES OF
 COMMISSION,  BROKERAGE  AND  OTHER  FEES,  ADMINISTRATIVE  EXPENSES  AND
 RELATED  SERVICE  CHARGES  IMPOSED  BY  THE FINANCIAL ORGANIZATION; (II)
 VARIETY OF TYPES OF INVESTMENT OPPORTUNITIES OFFERED  BY  THE  FINANCIAL
 ORGANIZATION  AND/OR  AMONG THE FINANCIAL ORGANIZATIONS SELECTED AND THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD05727-02-9

 A. 5393                             2
 
 ABILITY TO TRANSFER AMONG SUCH OPPORTUNITIES; (III) THE STABILITY OF THE
 FINANCIAL ORGANIZATION AS EVIDENCED BY  EXPERIENCE,  REPUTATION,  ASSETS
 AND HOLDINGS, ABILITY TO GUARANTEE SPECIFIC RATES OF RETURN; (IV) ABILI-
 TY  TO  COMPLY  WITH  REPORTING  REQUIREMENTS  TO THE COMPTROLLER AND TO
 PARTICIPANTS IN SUCH A PLAN; AND (V) SUCH OTHER FACTORS WHICH  WOULD  BE
 CONSIDERED BY A PRUDENT INVESTOR IN SUCH A PLAN.
   D. THE PRESIDENT OF THE STATE CIVIL SERVICE COMMISSION, SUBJECT TO THE
 RULES  AND  REGULATIONS  OF THE COMPTROLLER, SHALL PROVIDE ASSISTANCE TO
 ANY PUBLIC EMPLOYER AS IS APPROPRIATE TO THE PROVISIONS OF THIS SECTION.
   3. A PUBLIC EMPLOYER SHALL CONTRIBUTE THREE PERCENT OF  SUCH  AFFECTED
 EMPLOYEE'S  ANNUAL  SALARY  TOWARDS  SUCH DEFINED CONTRIBUTION PLAN. ALL
 NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFICIALS ARE REQUIRED
 TO CONTRIBUTE THREE PERCENT OF THEIR SALARY TOWARDS THE DEFINED CONTRIB-
 UTION PLAN.  SUCH EMPLOYEES MAY CONTRIBUTE UP TO  ONE  HUNDRED  PERCENT,
 NOT TO EXCEED SIXTEEN THOUSAND FIVE HUNDRED DOLLARS OF HIS OR HER SALARY
 TOWARDS THE DEFINED CONTRIBUTION PLAN.
   4.  THE  TERM  "FINANCIAL  ORGANIZATION"  SHALL  MEAN  AN ORGANIZATION
 AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW YORK AND (A) WHICH  IS  AN
 AUTHORIZED  FIDUCIARY  TO ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF
 AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT  OF
 1974"  AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR AN INSUR-
 ANCE COMPANY; AND (B) (I) IS LICENSED OR CHARTERED BY THE DEPARTMENT  OF
 FINANCIAL  SERVICES;  (II)  IS  CHARTERED  BY  AN  AGENCY OF THE FEDERAL
 GOVERNMENT; (III) IS SUBJECT TO THE JURISDICTION AND REGULATION  OF  THE
 SECURITIES AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT; OR (IV) IS
 ANY  OTHER ENTITY OTHERWISE AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE
 PURSUANT TO THE PROVISIONS OF AN  ACT  OF  CONGRESS  ENTITLED  "EMPLOYEE
 RETIREMENT  INCOME  SECURITY  ACT  OF  1974"  AS  SUCH PROVISIONS MAY BE
 AMENDED FROM TIME TO TIME.
   5. THE  CURRENT  RETIREMENT  PLANS  FOR  NON-CIVIL  SERVICE  APPOINTED
 EMPLOYEES AND ELECTED OFFICIALS SHALL BE FROZEN AS OF THE EFFECTIVE DATE
 OF THIS SECTION. NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFI-
 CIALS  SHALL  NO  LONGER  CONTRIBUTE  TO  THEIR CURRENT RETIREMENT PLAN,
 HOWEVER, SUCH PERSONS SHALL RECEIVE THE BENEFITS THEY HAVE ACCRUED UP TO
 THE EFFECTIVE DATE OF THIS SECTION UPON RETIREMENT.  THE MEMBERSHIP OF A
 NON-CIVIL SERVICE APPOINTED EMPLOYEE OR ELECTED OFFICIAL  IN  ANY  STATE
 RETIREMENT SYSTEM SHALL REMAIN OPEN IF HE OR SHE BECOMES A MEMBER OF THE
 DEFINED CONTRIBUTION PLAN.
   §  2.  This act shall take effect on the first of the fiscal year next
 succeeding the date on which it shall have become a law. Effective imme-
 diately, the addition, amendment and/or repeal of any rule or regulation
 necessary for the implementation of this act on its effective  date  are
 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 (NYS&LERS). Affected  employees  and  their  employers  would  be
 required  to  contribute 3% of annual compensation to a defined contrib-
 ution plan. The Comptroller shall select one or more financial organiza-
 tions 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  employ-
 ees hired on or after July 1, 2013 whose salary is $75,000 or higher.

 A. 5393                             3
 
   This legislation would freeze the benefit accruals of current affected
 members  in  the NYS&LERS as of the effective date. If this becomes law,
 this bill is likely to face a constitutional challenge  based  upon  the
 guarantee that a member's benefits may not be diminished or impaired.
   If this bill is enacted, relatively few members would be affected, and
 there would be a small administrative cost to the System.
   Summary of relevant resources:
   The  membership  data  used  in  measuring  the impact of the proposed
 change was the same as that used in the March 31, 2018  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2018
 Report of the  Actuary  and  the  2018  Comprehensive  Annual  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2015,
 2016, 2017 and 2018  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, 2018
 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 January 10,  2019,  and  intended  for  use  only
 during  the  2019  Legislative  Session,  is  Fiscal Note No. 2019-2222,
 prepared by the Actuary for the New  York  State  and  Local  Retirement
 System.