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A06932 Summary:

BILL NOA06932
 
SAME ASNo Same As
 
SPONSORFitzpatrick (MS)
 
COSPNSR
 
MLTSPNSRBlankenbush, DiPietro, Friend, Hawley, Tague
 
Add Art 22-A §§1250 - 1255, R & SS L
 
Relates to establishing a defined contribution program for which elected officials are deemed mandatory members.
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A06932 Actions:

BILL NOA06932
 
03/18/2025referred to governmental employees
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A06932 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6932
 
SPONSOR: Fitzpatrick (MS)
  TITLE OF BILL: An act to amend the retirement and social security law, in relation to establishing a defined contribution program for which elected officials are deemed mandatory members   PURPOSE OR GENERAL IDEA OF BILL: This bill creates a defined contribution plan for employees hired on or after April 1, 2025. This plan would be optional for all employees; with the exception that newly elected officials would be deemed mandatory members.   SUMMARY OF PROVISIONS: Section 1. Creates the defined contribution plan for all public retire- ment systems of the State and New York City and requires the administra- tor of each retirement system to adopt rules and regulations regarding the standards and requirements of the plan. Establishes that employers will be required to contribute four percent of member's salary into the defined contribution plan. An employee elects to contribute into the defined contribution plan, an employer would be responsible for matching the employee contribution, with a maximum match of an additional three percent. Establishes that an employee is allowed to contribute an amount up to the maximum allowable amount under Federal Law. Requires elected officials to join the defined contribution plan and makes the defined contribution plan optional for all other public employees. Establishes a death benefit equal to the member's salary upon his or her completion of one year of service. Two year's salary upon completion of two years of service and three years of salary upon completion of three years of service. The death benefit payment shall be in lieu of the payment of the basic employer contribution and matching contribution, and the value of the employee contributions shall be payable in addition to the death benefit.. Section 2. Provides the effective date.   JUSTIFICATION: This legislation seeks to provide savings to the State and local govern- ments by creating a defined contribution plan that is optional for all newly hired public employees, with the exception that newly elected officials would be required to join the plan. In recent years, the costs of maintaining the State's defined benefit plans have risen to unsus- tainable levels and offering the defined contribution plan as an option will help to reduce these costs. Also, there is a conflict of interest that exists when elected officials are receiving benefits from a pension system that they have the power to enhance - at any time. By requiring elected officials to join the defined contribution plan, the possibility of enhancing their own retirement benefit through the defined benefit plan would be eliminated.   PRIOR LEGISLATIVE HISTORY: 2024-A8443A- Referred to Governmental Employees Committee 2023-A8443- Referred to Governmental Employees Committee 2022-A9577- Referred to Governmental Employees Committee 2018-A6278- Held in Governmental Employees Committee 2016-A4957- Held in Governmental Employees Committee 2014-A5206- Held in Governmental Employees Committee   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: See fiscal note in bill.   EFFECTIVE DATE: April 1, 2026.
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A06932 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6932
 
                               2025-2026 Regular Sessions
 
                   IN ASSEMBLY
 
                                     March 18, 2025
                                       ___________
 
        Introduced  by  M.  of  A. FITZPATRICK -- Multi-Sponsored by -- M. of A.
          BLANKENBUSH, DiPIETRO, FRIEND, HAWLEY, TAGUE -- 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 program for which elected offi-
          cials are deemed mandatory members
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.    The  retirement  and  social security law is amended by
     2  adding a new article 22-A to read as follows:
     3                                ARTICLE 22-A
     4                        DEFINED CONTRIBUTION PROGRAM
     5  Section 1250. Definitions.
     6          1251. Defined contribution programs established.
     7          1252. Rates of contribution.
     8          1253. Enrollment.
     9          1254. Death benefit.
    10          1255. Inconsistent provisions of other acts superseded.
    11    § 1250. Definitions. Wherever used in this article the following terms
    12  shall have the following meanings:
    13    a. The term "public retirement system of the state" shall mean the New
    14  York state and local employees' retirement system, the  New  York  state
    15  teachers'  retirement  system,  the  New York state and local police and
    16  fire retirement system, the New York city employees' retirement  system,
    17  the  New  York city teachers' retirement system, the New York city board
    18  of education retirement system, the New York city police  pension  fund,
    19  and the New York city fire pension fund.
    20    b.  The  terms  "optional  member"  and  "optional members" mean those
    21  employees who are members of a public retirement system of the state who
    22  first became members of such systems on or after April first, two  thou-
    23  sand  twenty-six  and  make an election to join the defined contribution
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08996-02-5

        A. 6932                             2
 
     1  program established pursuant to this article pursuant to the  provisions
     2  of section twelve hundred fifty-three of this article.
     3    c.    The  terms "mandatory member" and "mandatory members" mean those
     4  elected officials who are members of a public retirement system  of  the
     5  state  who first became members of such systems on or after April first,
     6  two thousand twenty-six pursuant to the  provisions  of  section  twelve
     7  hundred fifty-three of this article.
     8    d.  The  terms  "program  participant" and "program participants" mean
     9  those employees electing to  participate  in  the  defined  contribution
    10  program.
    11    e.  The  term  "defined  contribution  program"  means  the retirement
    12  program established pursuant to this article.
    13    f. The term "wages" shall mean regular compensation earned by and paid
    14  to a member by a public employer, except that the following items  shall
    15  not  be  included  in the definition of wages: (i) overtime compensation
    16  paid under any law or policy under which employees are paid  at  a  rate
    17  greater  than  their  standard  rate  for  additional  hours beyond that
    18  required, including section one hundred thirty-four of the civil service
    19  law and section ninety of the  general  municipal  law,  (ii)  wages  in
    20  excess  of  the  annual  salary paid to the governor pursuant to section
    21  three of article four of the state constitution, (iii) lump sum payments
    22  for deferred compensation, sick leave,  accumulated  vacation  or  other
    23  credits  for  time not worked, (iv) any form of termination pay, and (v)
    24  any additional compensation paid in anticipation of retirement.
    25    § 1251. Defined contribution programs  established.  There  is  hereby
    26  established a defined contribution program within each public retirement
    27  system  of  the state which shall provide for retirement benefits for or
    28  on behalf of program participants.  Under such program  the  state,  the
    29  city  of  New  York and other participating employers and such employees
    30  shall contribute, to the extent authorized or required, to such  defined
    31  contribution accounts. The programs shall be administered by the retire-
    32  ment  system  in which the program participant is a member.  Each public
    33  retirement system of the state is  authorized  to  promulgate  all  such
    34  rules  and  regulations as may be necessary or required to implement the
    35  defined contribution programs  established  pursuant  to  this  article,
    36  including  such rules and regulations as may be necessary to comply with
    37  the applicable provisions of title twenty-six of the United States  Code
    38  relating to defined contribution plans and their qualification and oper-
    39  ation and all such rules and regulations as may be necessary or required
    40  regarding  the  collection of employer and member contributions, invest-
    41  ment of contributions, withdrawals and distribution of member  accounts,
    42  nomination  of beneficiaries, the assessment and collection from employ-
    43  ers of costs and expenses incurred in the establishment and operation of
    44  the plan, and all other matters pertaining thereto. Each public  retire-
    45  ment  system  of  the  state is authorized to enter into such agreements
    46  with qualified providers as  may  be  necessary  or  desirable  for  the
    47  investment  of  member  accounts  and  the general administration of the
    48  plan.
    49    § 1252. Rates of  contribution.  a.  1.  The  employer  shall  make  a
    50  contribution  equal to four percent of each program participant's wages.
    51  Such contributions shall be known as "basic employer contributions".
    52    2. The employer shall contribute an amount equal to  the  contribution
    53  made by each program participant, provided however, that such additional
    54  contributions  shall  not  exceed  three percent of each program partic-
    55  ipant's wages. Such contributions shall be known as  "matching  employer
    56  contributions".

        A. 6932                             3
 
     1    b. In the case of any program participants, employees shall be allowed
     2  to contribute an amount up to the maximum allowable amount, inclusive of
     3  basic  and  matching employer contributions, permitted by federal law in
     4  26 U.S.C. 401 et seq. and the rules and regulations of the United States
     5  department of the treasury promulgated thereunder.
     6    c. No contributions pursuant to subdivision a of this section shall be
     7  made by the employer until the program participant completes one year of
     8  service  and  continues  in  service thereafter. At the end of a program
     9  participant's initial year of  service,  a  single  contribution  in  an
    10  amount determined pursuant to subdivision a of this section, with inter-
    11  est  at  the  rate  of  four  per centum per annum, shall be made by the
    12  employer, on behalf of such program participant continued in service.
    13    § 1253. Enrollment.  a. Employees who first become members of a public
    14  retirement system of the state on or after  April  first,  two  thousand
    15  twenty-six,  within  thirty days of their entry into service, shall have
    16  the ability to elect the defined contribution program established pursu-
    17  ant to this article. Such election shall be in writing,  shall  be  duly
    18  executed and filed with the retirement system of which they are a member
    19  and  shall be irrevocable as long as such person is a member of a public
    20  retirement system of the state. All eligible  employees  who  elect  the
    21  defined  contribution  program shall not accrue credited service for any
    22  purpose under any other article of this chapter or any other  applicable
    23  law.
    24    b.  All  program  participants  enrolled  in  the defined contribution
    25  program shall not accrue credited service to be  used  for  any  purpose
    26  under any other article of this chapter or any other applicable law.
    27    c.  Any elected official or elected officials who first become members
    28  of a public retirement system of the state on or after April first,  two
    29  thousand  twenty-six,  shall be a mandatory member or mandatory members,
    30  required to participate in the defined contribution program  established
    31  pursuant  to  this  article.  For all such elected officials the defined
    32  contribution program shall not accrue credited service for  any  purpose
    33  under any other article of this chapter or any other applicable law.
    34    §  1254.  Death  benefit.  a.  Program  participants shall receive the
    35  following financial protection in the event of death in service: a bene-
    36  fit upon the death of a member in service equal to the  member's  salary
    37  upon  their  completion  of  one year of service, two years' salary upon
    38  completion of two  years  of  service,  and  three  years'  salary  upon
    39  completion of three years of service.
    40    b. For the purposes of this section:
    41    1.  the  death  benefit payable shall be in lieu of the payment of the
    42  basic employer contributions and matching  employer  contributions  made
    43  pursuant  to  this article, but shall not be less than the value of such
    44  contributions and
    45    2. the value of the employee contributions shall be payable  in  addi-
    46  tion to the death benefit payable pursuant to this section.
    47    §  1255.  Inconsistent provisions of other acts superseded. Insofar as
    48  the provisions of this article are inconsistent with the  provisions  of
    49  any  other act, general or special, the provisions of this article shall
    50  be controlling.
    51    § 2. This act shall take effect April 1, 2026.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This bill would provide new members who first join  public  retirement
        systems  in  New  York  State  on  or  after April 1, 2026 the option of
        defined contribution plan membership in lieu  of  defined  benefit  plan
        membership.  Defined contribution plan membership would be mandatory for

        A. 6932                             4
 
        elected officials. Pursuant to Chapter 18 of the Laws of 2012, non-union
        employees  hired  on  or  after  July  1,  2013 whose salary is at least
        $75,000 currently have the option to participate in a  defined  contrib-
        ution plan.
          Insofar  as  this bill affects the New York State and Local Employees'
        Retirement System and the New York  State  and  Local  Police  and  Fire
        Retirement  System,  the  significant design features of the new defined
        contribution plan  (the  plan)  include  the  following:  (1)  mandatory
        employer  contributions  of 4 percent of wages, with additional matching
        contributions up to 3 percent of wages, subject to limitations in feder-
        al law, (2) a benefit payable upon death equal to the accumulated  value
        of  all  member  contributions  plus either the accumulated value of all
        employer contributions, or up to three times salary, whichever is great-
        er, (3) no benefit payable upon disability, (4) irrevocable membership.
          The long-term expected  annual  employer  contribution  rate  for  all
        members  who  choose  the  plan  would  be  approximately 7.7 percent of
        payroll.
          The administrative expense to NYSLRS to establish the plan is current-
        ly estimated at $5 to $10 million. This does not  include  the  cost  to
        participating employers related to the modification of the state payroll
        system,  currently  estimated  at  $1 million. In addition, members will
        incur management and investment expenses for their plan  accounts  esti-
        mated to average 0.5 percent of the account balance annually.
          Summary of relevant resources:
          Membership  data as of March 31, 2024 was used in measuring the impact
        of the proposed change, the same data used in the April 1, 2024 actuari-
        al valuation. Distributions and other statistics can  be  found  in  the
        2024  Report  of the Actuary and the 2024 Annual Comprehensive Financial
        Report.  The actuarial assumptions and methods used are described in the
        2024 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, 2024 New York State and Local Retirement System Financial Statements
        and Supplementary Information.
          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 March 7, 2025, and intended for use only during
        the 2025 Legislative Session, is Fiscal Note No. 2025-85. As Chief Actu-
        ary of the New York State and Local Retirement System, I, Aaron Schottin
        Young, hereby certify that this analysis complies with applicable  Actu-
        arial  Standards of Practice as well as the Code of Professional Conduct
        and Qualification Standards for Actuaries Issuing Statements of Actuari-
        al Opinion of the American Academy of Actuaries, of which I am a member.
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