What's happening
This bill expands permissible group annuity contracts in New York to include certain plans and groups, subject to regulatory approval.
Why it matters
Expands retirement and benefit plan options. By allowing group annuity contracts for a wide range of employee benefit plans (including ERISA plans, IRAs, government and church plans, and nonqualified deferred compensation arrangements), the bill could make it easier for employers and organizations to offer secure, pooled retirement or welfare benefits to their members or employees.
Provides regulatory safeguards and flexibility. The bill gives the superintendent of insurance authority to approve additional groups based on criteria like common interest, reasonable premiums, and public interest. This means new types of organizations could access group annuity contracts, but only if they meet standards that protect consumers and ensure soundness.
Potential for cost savings and broader access. By allowing more groups to participate in group annuity contracts, the measure may foster economies of scale, lower administrative costs, and extend access to annuity-based products to organizations and populations that previously might not have qualified under existing law.
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Expand Group Annuity Authority
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
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.
Expand Group Annuity Options
In Assembly Committee · Insurance · Sponsor Kevin Cahill
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
707
2017-2018 Regular Sessions
IN SENATE
January 4, 2017
Introduced by Sen. SEWARD -- 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 permissible group annuity contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (b) of section 4238 of the insurance law is amended by adding a new paragraph 12 to read as follows:
(12) A contract issued to an insurer on behalf of such insurer's separate account, established:
(A) to hold the assets relating to, and to fund obligations under life insurance policies issued by, such insurer to banks or corporations; or
(B) for the benefits of:
(i) any employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA); or
(ii) a plan described in Internal Revenue Code Sections 401(a), 401(k), 403(b), 408(k) or 408(p); or
(iii) a government or church plan defined in 26 U.S.C. § 414, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under 26 U.S.C. § 457; or
(iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor; or
(v) any other group approved by the superintendent upon a finding that: (I) there is a common enterprise or economic or social affinity or relationship; (II) the premiums charged are reasonable in relation to the benefits provided; and (III) the issuance of the policy would result in economies of acquisition or administration, would be actuarially sound, and would not be contrary to the best interest of the public. The superintendent shall promulgate regulations setting forth any such groups that have been qualified pursuant to this item.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01656-01-7
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 permissible group annuity contracts
Purpose
This bill would amend § 4238 of the insurance law to permit life insurers to issue an additional type of group annuity contract.
Summary of provisions
This bill would amend subsection (b) of § 4238 of the insurance law by adding a new paragraph (12) to permit the issuance of a synthetic group annuity contract to another insurer's separate account.
Justification
The amendments to this bill will permit the issuance of a group annuity contract to another insurer's separate account, as an alternative to the use of a funding agreement. Separate accounts are often used by insurers in connection with corporate owned (COLI) and bank owned (BOLI) life insurance policies, as well as for the benefit of ERISA plans, employee benefit plans and deferred compensation arrangements, and other analogous structures. The provisions of this bill would allow a New York insurer to obtain and implement synthetic stable value mechanics related to: (i) COLI and BOLI insurance policies issued by such insurer and supported by assets held by such insurer in a separate account, as well as (ii) separate accounts established by such New York insurer for the benefit of ERISA plans, employee benefit plans, or deferred compensation or analogous structures, through the purchase of a synthetic group annuity contract from another insurer.
Synthetic group annuity contracts do not clearly fit within any of the current eligible categories for the group annuity contracts identified in § 4238(b) of New York Insurance Law. Adding an additional eligible category to the law that expressly permits the use of a synthetic group annuity contract would give New York insurers engaged in the business of providing stable value wraps greater flexibility in offering these products when addressing the needs of a prospective New York customer (generally, a stable value wrap is a contract issued by an insurer that provides for a specified rate of return for a specific period of time, provides book value accounting, and may make payments in the event of certain qualifying redemptions).
Business clients often prefer synthetic group annuity contracts for various reasons, which include (i) greater flexibility and the potential for lower asset management fees, (ii) reduced asset risk because the assets are not transferred to the wrap provider, (iii) reduced credit exposure and (iv) greater ability to replace the asset manager given that they will not maintain the assets. According to the Stable Value Investment Association, as of December 31, 2012, approximately 40% of all stable value investments in the U.S. were in synthetic investment contracts.
The proposal would bring New York law in line with the prevailing use of synthetic group annuity contracts in the 401(k) plan and would facilitate compliance with tax diversification requirements applicable to funds or divisions underlying variable products which have stable value wraps associated with them.
Legislative history
S.6562 of 2016.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.