Establishes a defined contribution plan

Summary of provisions

Section 1. Creates the defined contribution plan and allows the comptroller to adopt rules and regulations regarding the standards and requirements of the plan.

Applies the defined contribution plans to all elected officials and non-civil service appointees in the State of New York. Allows the Comptroller to enter into written agreements with financial organizations to administer the defined contribution plan, and establish standards for the selection of financial organizations.

Allows a public employer to provide a, defined contribution plan for its employees in accordance with the rules and regulations determined by the Comptroller.

Establishes that employers will be required to contribute three percent of an elected officials and non-civil-service appointee's salary. All elected officials and non-civil service appointees as of the effective date of the legislation.

Section 2. Provides the effective date.

Justification

This legislation seeks to provide savings to the State and Local Governments by creating a Defined Contribution Plan for all elected officials and non-civil service appointees in New York State. In recent months, the costs of administering Defined Benefit Plans have increased dramatically, and elected officials and non-civil service appointees should lead by example by freezing their current retirement plans, and contributing towards a new Defined Contribution Plan. Going forward, a Defined Contribution Plan for elected officials and non-civil service appointees will unify the interests of public servants and the private sector taxpayer.

Prior legislative history

2010- A. 6932 - Held in Governmental Employees

Local fiscal implications

To be Determined

Fiscal implications

This bill would require a change in the retirement plan overage for current and future elected officials and non-civil service appointees who are employed by the State of New York or any public employer which participants in the New York State and Local Employee' Retirement System (NYS&LERS). 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.

"This legislation would freeze the benefit accruals of current elected officials and non-civil service appointees as of the effective date. If this becomes a law, this bill is likely to face a constitutional challenge based upon the guarantee that a member's benefits may not diminished.

" The state and participating employers will incur costs to modify their payroll systems and procedures in order to collect employee contributions and remit them along with mandatory employer contributions shortly after each payroll. Remittance of employer contributions on a payroll schedule, rather than annually under the defined benefit plan, will affect employers' cash management. Further, the bill contains no appropriation to support the additional payroll administrative expense to the Office of the State Comptroller or the implementation and ongoing expenses of NYSLRS related to the new plan.

"In addition, employees will incur management and investment expenses for their defined contribution accounts estimated to average 0.5% of the account balance annually.

"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' 2013 actuarial valuation. Distributions and other statistics can be found in the 2013 Report of the Actuary and the 2013 Comprehensive Annual Financial Report.

"The actuarial assumptions and methods used are described in the 2010, 2011, 2012, and 2013 Annual Report to the Comptroller on Actuarial Assumptions, and Coded Rules and Regulations to the State of New York; Audit and Control.

"The Market Assets and GASB Disclosures are found in the March 31st, 2013 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 Qualification Standards to render the actuarial opinion contained herein.

"This estimate, dated January 27th, 2014, and intended for use only during the 2014 Legislative Session, is Fiscal Note No. 2014-64 prepared by the Actuary for the New York State and Local Employees' Retirement System."

Effective date

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 immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized and directed to be made and completed on or before such effective date.