Relates to the form of payment of retirement benefits for certain public retirees and beneficiaries

Summary of provisions

Section 1 of this bill would amend Section 100 of the Retirement and Social Security Law so retirement benefits shall be paid to retirees and beneficiaries of the New York State and Local Employees' Retirement System by direct deposit or debit card. The comptroller shall determine when the provisions of this bill shall take effect but it will be no sooner than January 1, 2016 for all current and future retirees and beneficiaries of the New York State and Local Employees' Retirement System. Additionally, this section allows a retiree or beneficiary of the New York State and Local Employees' Retirement System to submit a request for exemption from this requirement from such System.

Section 2 of this bill would amend Section 400 of the Retirement and Social Security Law so retirement benefits shall be paid to retirees and beneficiaries of the New York State and Local Police and Fire Retirement System by direct deposit or debit card. The comptroller shall determine when the provisions of this bill shall take effect but it will be no sooner than January 1, 2016 for all current and future retirees and beneficiaries of the New York State and Local Police and Fire Retirement System. Additionally, this section allows a retiree or beneficiary of the New York State and Local Police and Fire Retirement System to submit a request for exemption from this requirement from such System.

Prior legislative history

New bill.

Justification

As of May 1, 2011, the United States Department of the Treasury requires recipients of federal nontax payments, including social security payments, to receive payment by electronic funds transfer (EFT). Additionally, many states, including Florida and Ohio, already require the payment of retirement benefits by EFT. EFT benefits recipients by eliminating the risks of theft, non-delivery, or loss of checks. EFT funds are securely transferred with no risk of delay or loss.

The New York State and Local Retirement System has heard from numerous retirees and beneficiaries about the hardships they faced when a retirement check has been lost or misdirected through the mail. The most recent examples came in the aftermath of Hurricane Sandy, when

many checks were lost. These payment-related problems for check recipients would have been avoided had such recipients received their retirement benefits by EFT. Additionally, there are extra costs to the New York State and Local Retirement System associated with payments to retirees and beneficiaries by paper check.

For persons who may not have access to a bank account, this legislation authorizes payment of benefits by means of a debit card. The benefit recipient would be able to access their funds through an automatic teller machine or other device that accepts debit cards.

Because of the financial advantages and added convenience, most New York State and Local Retirement System members already use direct deposit. In recognition of the fact that there may be certain situations where a paper check is warranted, this legislation allows a retiree or beneficiary of the New York State and Local Retirement System to submit a request to such System for a waiver from the requirement to be paid by EFT.

The State Comptroller urges the passage of this proposed legislation.

Fiscal implications for state

This bill would result in a modest financial savings to the New York State and Local Retirement System.

Effective date

This act shall take effect on the one hundred eightieth day after it shall, have become a law.