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A08385 Summary:

BILL NOA08385
 
SAME ASSAME AS S06431-A
 
SPONSORAbbate
 
COSPNSR
 
MLTSPNSR
 
Amd 110 & 410, R & SS L; amd 340, Bank L
 
Restricts use of pension assignments and which persons can engage in the business of offering consideration for pensions.
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A08385 Actions:

BILL NOA08385
 
06/12/2017referred to governmental employees
01/03/2018referred to governmental employees
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A08385 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8385
 
SPONSOR: Abbate
  TITLE OF BILL: An act to amend the retirement and social security law and the banking law, in relation to pension assignments   PURPOSE OR GENERAL IDEA OF BILL: Amends the retirement and social security law and the banking law, in relation to pension assignments   SUMMARY OF PROVISIONS: Section 1 of the bill amends section 110 of the retirement and social security law to prohibit any person or entity from trying to evade provisions of the law that prohibit the execution, garnishment, attach- ment, or assignment of pension monies, except as specifically provided in this chapter. Also establishes that any contracts made in violation of this section shall be void and that any money collected in violation of this section shall be returned. Section 2 of the bill amends section 410 of the retirement and social security law to prohibit any person or entity from trying to evade provisions of the law that prohibit the execution, garnishment, attach- ment, or assignment of pension monies, except as specifically provided in this chapter. Also establishes that any contracts made in violation of this section shall be void and that any money collected in violation of this section shall be returned. Section 3 of the bill amends section 340 of the banking law to clarify that pension advances or agreements of their kind, are deemed to be in the business of making loans and therefore subject to the licensing and oversight of the Department of Financial Services. Section 4 of the bill provides for the effective date.   JUSTIFICATION: Pension advances, or financial transactions by which a company gives a retiree payment in return for some or all of the retiree's future pension payments have been shown to be increasingly risky and predatory in nature across the country. Consumer fraud alerts have been issued from the Financial Industry Regulatory Authority/the Securities Exchange Commission (May 2013), Federal Trade Commission, the Consumer Financial Protection Bureau, and states including Arkansas, California, Indiana, Michigan, and others. In 2014, Missouri and Vermont became the first states to address these types of instruments with legislation that prohibited the assignment of pension benefits payable to public employ- ees and regulated the sales and oversight of these securities, respec- tively. The concern regarding these types of arrangements is warranted. A 2013 review by the New York Times showed that of the two dozen contracts for pension advances examined, the interest rates ranged from 27 to 106 percent, and were not disclosed in any of the information given to applicants. To that end, in 2014, the Government Accountability Office issued a report cautioning consumers about the practices of pension advance companies that were specifically targeting government retirees and vulnerable seniors. As part of their report, the GAO identified 38 companies that had offered these types of products, and 30 of the 38 were affiliated in some way with each other or a parent company. Unfortunately, the deceptive practices of these companies have also been felt in New York State. In 2015, the Consumer Financial Protection Bureau and the New York State Department of Financial Services filed a lawsuit against two California-based companies, Pension Funding, LLC, and Pension Income, LLC for using deceptive practices to prey on seniors. Included in the complaint were allegations that the companies misrepresented their products as a sale and not a loan, and also that they failed to disclose and/or misrepresented the interest rates for their products. In May 2017, it was announced that Future Income Payments would be repaying more than $500,000 in refunds to New York pensioners and fines for making loans without a license as well as charging usurious rates of interest. While this case has been resolved in a way that has protected New York retirees, it is imperative that statutory amendments be made to continue to protect pensioners and bolster the State's oversight authority. Many companies, like those at issue in New York, classify their products as advances or sales, rather than loans, in order to circumvent state usury laws that cap interest rates and provide for oversight by state enti- ties. This legislation will specify that any type of arrangement where a business offers consideration for an interest in all or part of pension proceeds is considered to be a loan. To that end, the legislation will prohibit the schemes and devices commonly used by these companies, including deposits in joint accounts or authorizations through a power of attorney, to avoid assignment provisions regarding public pension benefits. According to a 2013 New York Times article, the combined debt of Ameri- cans from the ages of 65 to 74 is rising faster than that of any other age group. Seniors who are on fixed incomes are consistently facing increased costs regarding their housing, healthcare, and long term plan- ning. As a result, pension advances seemingly offer quick relief to some of the most vulnerable and desperate. Nevertheless, because of the financial vulnerability of many applicants, as well as the significant long-term implications of these types of loans, it is more important that the State be equipped with as much oversight and regulatory author- ity to combat predatory practices and lending.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: This act shall take effect immediately.
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A08385 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          8385
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                      June 12, 2017
                                       ___________
 
        Introduced by M. of A. ABBATE -- read once and referred to the Committee
          on Governmental Employees
 
        AN  ACT  to amend the retirement and social security law and the banking
          law, in relation to pension assignments
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Section 110 of the retirement and social security law, as
     2  amended by chapter 291 of the laws  of  1999,  is  amended  to  read  as
     3  follows:
     4    §  110.  Exemption  from  taxes  and  legal process. a. The right of a
     5  person to a pension, a pension-providing-for-increased-take-home-pay, an
     6  annuity or a retirement allowance, to the return of  contributions,  the
     7  pension,  the pension-providing-for-increased-take-home-pay, annuity, or
     8  retirement allowance itself, any optional benefit, including any benefit
     9  or monies accruing under an  optional  retirement  program  pursuant  to
    10  article  eight-B  or one hundred twenty-five-A of the education law, any
    11  other right accrued or accruing to any person under  the  provisions  of
    12  this  chapter  and  the monies in the various funds continued under this
    13  chapter:
    14    1. Are hereby exempt from any  state  or  municipal  tax,  except  the
    15  estate tax, and
    16    2.  Shall not be subject to execution, garnishment, attachment, or any
    17  other process whatsoever, and
    18    3. Shall be unassignable,  except  as  in  this  chapter  specifically
    19  provided.
    20    b. Except as specifically provided in this chapter, a person or entity
    21  shall  not  use  any device, scheme, transfer or other artifice to evade
    22  the applicability and prohibition or paragraphs two and three of  subdi-
    23  vision  a  of  this  section,  including the deposit of such benefits or
    24  funds into a joint account with the person or  entity  or  the  authori-
    25  zation  to a person or entity under a power of attorney or other instru-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11808-04-7

        A. 8385                             2
 
     1  ment or document to access an account or otherwise obtain funds from  an
     2  account to which benefits or funds have been deposited.
     3    c.  Any  contract or agreement made in violation of this section shall
     4  be void. All sums paid  to  or  collected  by  a  person  or  entity  in
     5  violation  of  this section shall be returned by the person or entity to
     6  the benefit recipient or his or her heirs or beneficiaries  as  restitu-
     7  tion.
     8    d.  Any benefit recipient, his or her guardian or conservator, or heir
     9  or beneficiary may bring an action to enforce  the  restitution  author-
    10  ized.
    11    § 2. Section 410 of the retirement and social security law, as amended
    12  by chapter 549 of the laws of 1983, is amended to read as follows:
    13    §  410.  Exemption  from  taxes  and  legal process. a. The right of a
    14  person to a pension, a pension-providing-for-increased-take-home-pay, an
    15  annuity or a retirement allowance, to the return of  contributions,  the
    16  pensions, the pension-providing-for-increased-take-home-pay, annuity, or
    17  retirement  allowance  itself,  any  optional  benefit,  any other right
    18  accrued or accruing to any person under the provisions of  this  chapter
    19  and the monies in the various funds continued under this chapter:
    20    1.  Are  hereby  exempt  from  any  state or municipal tax, except the
    21  estate tax, and
    22    2. Shall not be subject to execution, garnishment, attachment, or  any
    23  other process whatsoever, and
    24    3.  Shall  be  unassignable,  except  as  in this chapter specifically
    25  provided.
    26    b. Except as specifically provided in this chapter, a person or entity
    27  shall not use any device, scheme, transfer or other  artifice  to  evade
    28  the  applicability and prohibition or paragraphs two and three of subdi-
    29  vision a of this section, including the  deposit  of  such  benefits  or
    30  funds  into  a  joint  account with the person or entity or the authori-
    31  zation to a person or entity under a power of attorney or other  instru-
    32  ment  or document to access an account or otherwise obtain funds from an
    33  account to which benefits or funds have been deposited.
    34    c. Any contract or agreement made in violation of this  section  shall
    35  be  void.  All  sums  paid  to  or  collected  by  a person or entity in
    36  violation of this section shall be returned by the person or  entity  to
    37  the  benefit  recipient or his or her heirs or beneficiaries as restitu-
    38  tion.
    39    d. Any benefit recipient, his or her guardian or conservator, or  heir
    40  or  beneficiary  may  bring an action to enforce the restitution author-
    41  ized.
    42    § 3. Section 340 of the banking law, as amended by chapter 22  of  the
    43  laws of 1990, is amended to read as follows:
    44    § 340.  Doing  business  without  license prohibited. (a) No person or
    45  other entity shall engage in the business of making loans in the princi-
    46  pal amount of twenty-five thousand dollars or less for any  loan  to  an
    47  individual  for  personal, family, household, or investment purposes and
    48  in a principal amount of fifty thousand dollars or less for business and
    49  commercial loans, and charge, contract for, or receive a greater rate of
    50  interest than the lender would be permitted by law to charge if he  were
    51  not  a licensee hereunder except as authorized by this article and with-
    52  out first obtaining a license from the superintendent.
    53    (b) For the purposes of this section, a  person  or  entity  shall  be
    54  considered  as engaging in the business of making loans in New York, and
    55  subject to the licensing and other requirements of this article,  if  it
    56  solicits  loans  in  the  amounts prescribed by this section within this

        A. 8385                             3

     1  state and, in connection with such solicitation, makes loans to individ-
     2  uals then resident in this state, except that no person or entity  shall
     3  be  considered as engaging in the business of making loans in this state
     4  on  the  basis  of isolated, incidental or occasional transactions which
     5  otherwise meet the requirements of this section.
     6    (c) Nothing in this article shall apply to  licensed  collateral  loan
     7  brokers.
     8    (d)  Any  person who engages in the business of offering consideration
     9  in exchange for a secured interest in all or part of pension proceeds in
    10  the possession of a participant, beneficiary, or  member  of  a  pension
    11  plan,  program,  or system shall be deemed to be engaged in the business
    12  of making loans and shall be subject to the licensing and other require-
    13  ments of this article.
    14    § 4. This act shall take effect immediately.
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