What's happening
This bill requires greater disclosure and protections for retirees affected by pension de-risking transactions, including exempting transferred annuity proceeds from creditor claims.
Why it matters
Retirees whose pensions are transferred to insurance companies in "de-risking" transactions will receive clearer, more comprehensive annual disclosures. including information about funding levels, investment performance, contract expenses, and changes in actuarial assumptions—giving them better visibility into the security and management of their retirement benefits.
The bill mandates explicit notification that ERISA and PBGC federal protections will no longer apply. once benefits are transferred, which matters because retirees may lose critical safeguards and would need to understand their new protections under state insurance law.
Transferred annuity proceeds are explicitly protected from creditors under New York law. , ensuring retirees’ income remains secure from most debt collection efforts, which is especially important for those on fixed incomes.
Any further transfer of these annuity contracts to another insurer requires state regulatory approval based on strict financial strength criteria. , reducing the risk that a less stable company could endanger retirees' benefits in the future.
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Who cares
Retirees whose pensions are transferred to insurers
They would receive disclosures about lost federal protections and annual financial information, while their annuity proceeds would be protected from money judgments.
Insurers issuing pension replacement annuities
They would face disclosure requirements and could not transfer covered contracts to another insurer without the superintendent’s confirmation of that insurer’s financial strength.
State insurance superintendent
The bill would require disclosure regulations and review of subsequent insurer transfers using a specified risk-based capital standard.
Creditors seeking to collect from retirees
They could not use covered pension replacement annuity proceeds to satisfy money judgments.
Headline styles
Protect Retirees' Pensions
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Retirees’ Pension Payments
In Assembly Committee · Insurance · Sponsor Peter Abbate
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1358
2017-2018 Regular Sessions
IN SENATE
January 9, 2017
Introduced by Sens. AVELLA, ADDABBO, COMRIE, HOYLMAN, KRUEGER, 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; 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 Assembly, do enact as follows:
Section 1. The insurance law is amended by adding a new section 3219-a to read as follows:
§ 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 Benefit Guaranty Corporation ("PBGC") shall provide the following information to the retirees pursuant to regulations adopted by the superintendent:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00811-01-7
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(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 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
(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 Corporation may be further transferred or assumed by 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. 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.
§ 2. Paragraph 2 of subdivision (l) of section 5205 of the civil practice 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 disability benefits, supplemental security income or child support payments; veterans administration benefits; public assistance; workers' compensation; 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
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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.
§ 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.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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.
Read the full memo (780 words)
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 ERISA 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 sponsors 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
S.1092-B/A.6796-A (Abbate)
Fiscal implications
None to the state.
Effective date
This act shall take effect on the one hundred twentieth day after it shall have become law and shall apply to all policies and contracts issued, renewed, altered, or amended on or after such date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.