•  Summary 
  •  
  •  Actions 
  •  
  •  Committee Votes 
  •  
  •  Floor Votes 
  •  
  •  Memo 
  •  
  •  Text 
  •  
  •  LFIN 
  •  
  •  Chamber Video/Transcript 

A07071 Summary:

BILL NOA07071
 
SAME ASSAME AS S01358
 
SPONSORAbbate
 
COSPNSR
 
MLTSPNSR
 
Add 3219-a, Ins L; amd 5205, CPLR
 
Provides protection to certain retirees from de-risking pension transactions.
Go to top    

A07071 Actions:

BILL NOA07071
 
04/04/2017referred to insurance
01/03/2018referred to insurance
Go to top

A07071 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7071
 
SPONSOR: Abbate
  TITLE OF BILL: An act to amend the insurance law, in relation to providing protection to certain retirees from pension de-risking trans- actions; 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 insur- ance 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. 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, limit- ed 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 insolven- cy, 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 confir- mation by the superintendent that the insurer assuming the obligations of such allocated or unallocated group annuity contract has the finan- cial 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 addi- tion, 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 manda- tory disclosures in transfers between benefit providers, uniform fiduci- ary 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.   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.
Go to top

A07071 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7071
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                      April 4, 2017
                                       ___________
 
        Introduced by M. of A. ABBATE -- read once and referred 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 Assem-
        bly, do enact as follows:
 
     1    Section 1. The insurance law is amended by adding a new section 3219-a
     2  to read as follows:
     3    § 3219-a. Pension de-risking transactions with  an  annuity.  (a)  For
     4  purposes  of  this  section:  (1) "Employer" means any person engaged in
     5  business in this state who has two  or  more  employees,  but  does  not
     6  include the state or any political subdivision thereof;
     7    (2) "Employee pension benefit plan" means an "employee pension benefit
     8  plan", as defined in 29 USC 1002(2)(A); and
     9    (3)  "Pension  de-risking  transaction"  means  any  transaction  that
    10  involves the transfer of pension benefits  (not  including  health  care
    11  benefits)  from  a  pension plan protected under the Employee Retirement
    12  Income Security Act ("ERISA") to a substitute pension  benefit  provider
    13  such as an insurance company licensed and regulated under state law.
    14    (b)  Any  insurer  issuing  an  allocated or unallocated group annuity
    15  contract to an employer or an employee defined pension benefit  plan  on
    16  behalf  of an employer, for the purpose of providing retirement benefits
    17  to employees or former employees ("retirees")  of  the  employer,  which
    18  annuity  benefits will no longer be protected under the federal Employee
    19  Retirement Income Security Act of 1974 ("ERISA") and the federal Pension
    20  Benefit Guaranty Corporation ("PBGC") shall provide the following infor-
    21  mation to the retirees pursuant to regulations  adopted  by  the  super-
    22  intendent:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00811-01-7

        A. 7071                             2
 
     1    (1)  a  clear  statement  that payments to annuitants under an annuity
     2  contract issued pursuant to this section are exempt from the  claims  of
     3  creditors;
     4    (2) a statement that the retirees will no longer have protection under
     5  ERISA and the PBGC;
     6    (3)  the  identity  and  contact information for the New York Life and
     7  Health Insurance Guaranty Association, or any substitute or  replacement
     8  guaranty  association  that  provides coverage to annuitants residing in
     9  New York in the event of the insurer's financial impairment or insolven-
    10  cy, as set forth on a publicly available website  such  as  the  website
    11  maintained  by  the  Life  Insurance Company Guaranty Corporation of New
    12  York (www.nylifega.org); and
    13    (4) mandatory annual disclosures to all retirees  whose  benefits  are
    14  transferred  to an insurance company or alternative benefit provider for
    15  the purpose of providing retirement benefits, of the following:  funding
    16  levels  of all assets relative to expected liabilities under the assumed
    17  pension benefit  schedules,  investment  performance  summary  by  asset
    18  class, investment performance detail by asset class, expenses associated
    19  with  any  group  annuity contract, changes in actuarial assumptions, if
    20  any.
    21    (c) No allocated or unallocated group annuity contract  issued  by  an
    22  insurer  to  an  employer or an employee defined pension benefit plan on
    23  behalf of an employer, for the purpose of providing retirement  benefits
    24  to employees or former employees of the employer, which annuity benefits
    25  will no longer be protected under the federal Employee Retirement Income
    26  Security  Act  of  1974  and the federal Pension Benefit Guaranty Corpo-
    27  ration may be further transferred or assumed by another insurer  without
    28  confirmation  by  the superintendent that the insurer assuming the obli-
    29  gations of such allocated or unallocated group annuity contract has  the
    30  financial  strength to fulfill its obligations under such contract.  The
    31  appropriate standard to be applied by the superintendent shall  be  400%
    32  of  company  action  level  risk based capital with no negative trend as
    33  defined by the 2012 NAIC risk-based capital  (RBC)  for  insurers  model
    34  act.
    35    (d)  The  proceeds  of  any  allocated  or  unallocated  group annuity
    36  contract issued by an insurer to an  employer  or  an  employee  defined
    37  pension  benefit  plan  on  behalf  of  an  employer, for the purpose of
    38  providing retirement benefits to retirees of the employer, which annuity
    39  benefits will no longer be protected under ERISA and  the  federal  PBGC
    40  shall  be exempt from application to the satisfaction of money judgments
    41  under section fifty-two hundred five  of  the  civil  practice  law  and
    42  rules.
    43    § 2. Paragraph 2 of subdivision (l) of section 5205 of the civil prac-
    44  tice  law  and  rules,  as amended by chapter 24 of the laws of 2009, is
    45  amended to read as follows:
    46    2. For purposes of this article, "statutorily exempt  payments"  means
    47  any  personal  property exempt from application to the satisfaction of a
    48  money judgment under any provision of state or federal  law.  Such  term
    49  shall include, but not be limited to, payments from any of the following
    50  sources: social security, including retirement, survivors' and disabili-
    51  ty  benefits,  supplemental  security  income or child support payments;
    52  veterans administration benefits; public  assistance;  workers'  compen-
    53  sation;  unemployment  insurance;  public  or private pensions; railroad
    54  retirement; and black lung  benefits.    "Statutorily  exempt  payments"
    55  shall  specifically  include  any  annuity  proceeds  whose benefits are
    56  transferred to an insurance company or alternative benefit provider  for

        A. 7071                             3
 
     1  the  purpose  of providing retirement benefits pursuant to section three
     2  thousand two hundred nineteen-a  of  the  insurance  law  in  a  pension
     3  de-risking transfer.
     4    § 3. This act shall take effect on the one hundred twentieth day after
     5  it shall have become a law and shall apply to all policies and contracts
     6  issued, renewed, modified, altered, or amended on or after such date.
Go to top