§ 613-B — Loans to members of certain retirement systems

§ 613-b. Loans to members of certain retirement systems. a. For the\npurposes of this section, the term "retirement board" or "board" shall\nmean the head of the retirement system as defined in subdivision f of\nsection six hundred one of this article.\n b. 1. A member of the New York state and local employees' retirement\nsystem, the New York city employees' retirement system or the New York\ncity board of education retirement system in active service who has\ncredit for at least one year of member service may borrow, no more than\nonce during each twelve month period, an amount not exceeding\nseventy-five percent of the total contributions made pursuant to section\nsix hundred thirteen (including interest credited at the rate set forth\nin subdivision c of such section six hundred thirteen compounded\nannually) and not less than one thousand dollars.\n 2. A member of the New York state and local employees' retirement\nsystem who first joins such system on or after January first, two\nthousand eighteen in active service who has credit for at least one year\nof member service may borrow, no more than once during each twelve month\nperiod, an amount, not less than one thousand dollars and which would\nnot cause the balance owed pursuant to this section, including any\namounts borrowed then outstanding, to exceed (i) fifty percent of the\nmember's total contributions made pursuant to section six hundred\nthirteen of this article (including interest credited at the rate set\nforth in subdivision c of such section six hundred thirteen compounded\nannually); or (ii) fifty thousand dollars, whichever is less.\n c. An amount so borrowed, together with interest on any unpaid balance\nthereof, shall be repaid in equal installments which shall be made by\nthe borrower directly to the retirement board or through regular payroll\ndeduction. Such installments shall be in such amount as the retirement\nboard shall approve; however, they shall be at least (a) two percent of\nthe member's contract salary, and (b) sufficient to repay the amount\nborrowed, together with interest on unpaid balances thereof within a\nperiod not in excess of five years. In the event of default, such\nretirement board shall be authorized to collect such payments due from\nthe employer of such member through payroll deduction and such member\nshall forfeit all future entitlement to borrow from the retirement\nsystem until the unpaid balance of the loan outstanding at the time of\ndefault is fully paid. Such retirement board, at any time, may accept\npayments on account of any loan in addition to the installments fixed\nfor repayment thereof. All payments of principal and interest at the\nlower of the rates set forth in either subdivision c of section six\nhundred thirteen of this article or subdivision d of this section made\nby the member shall be credited to his or her account as principal or\ninterest. Any additional interest paid by the member shall be credited\nto the appropriate fund of the retirement system.\n d. The rate of interest payable upon loans made pursuant to this\nsection shall: (1) for members of the New York state and local\nemployees' retirement syatem, be one percent less than the valuation\nrate of interest adopted for such system, however, in no event shall the\nrate be less than the rate set forth in subdivision c of section six\nhundred thirteen of this article; (2) for members of the New York city\nemployees' retirement system, be one percent less than the regular\ninterest rate established pursuant to subdivision (c) of section\n13-101.12 of the administrative code of the city of New York for such\nsystem, however, in no event shall the rate be less than the rate set\nforth in subdivision c of section six hundred thirteen of this article;\nand (3) for members of the New York city board of education retirement\nsystem, be one percent less than the regular interest rate established\npursuant to subparagraph four of paragraph (b) of subdivision sixteen of\nsection twenty-five hundred seventy-five of the education law for such\nsystem, however, in no event shall the rate be less than the rate set\nforth in subdivision c of section six hundred thirteen of this article.\nWhenever there is a change in the interest rate, it shall be applicable\nor loans made or renegotiated after the date of such change in the\ninterest rate.\n e. A service charge payable upon loans made pursuant to this section\nshall be set by the retirement board in an amount sufficient to cover\nthe cost to the retirement system of administering the loans. Such\ncharge shall be paid to the retirement system when the loan is made or\nin equal installments over the period the loan is outstanding. The\namount of the service charge shall be credited to the fund from which\nadministrative expenses are paid.\n f. Each loan made pursuant to this section shall be insured against\nthe death of the member in an amount equal to the amount of the loan\noutstanding at any given time; with the exception that until thirty days\nhave elapsed after the making thereof, no part of the loans shall be\ninsured. Such insurance shall be provided by the retirement board\nthrough the retirement system. Upon the death of the member, the amount\nof insurance so payable shall be credited to his or her account. The\npremium payable by the member for such insurance shall be set by the\nretirement board at a rate not to exceed one percent of the amount\nloaned.\n Such premium shall be prorated to July first next, or such other date\nfixed by the retirement board as is appropriate, and shall be paid to\nthe retirement system in equal installments over the period of the loan.\nThereafter, a premium not to exceed one percent per annum of the present\nvalue of the outstanding loan as of July first, or such other\nappropriate date, shall be paid in the same manner each succeeding year\nuntil such loan is repaid or the member is retired.\n The retirement board shall, at least annually, review such premium\nrate, and may, in its discretion, increase or reduce the premium, modify\nthe terms or conditions of coverage, or discontinue the insurance of\nloans. In no event shall this subdivision impose any obligation upon\nthe retirement board to continue to insure loans of members upon the\nterms and conditions herein provided or upon any other terms or\nconditions.\n g. Such a retirement board is authorized to establish such special\nfunds as may be necessary to carry out the provisions of subdivisions e\nand f of this section.\n h. Whenever a member of such a retirement system, for whom a loan is\noutstanding, becomes entitled to the return of his or her contributions\nbecause of withdrawal from such system or because of death, the amount\nof any loan outstanding on such date, including accrued interest as\nprovided in subdivision d of this section, shall be construed to already\nhave been returned to such member and the refund of contributions to\nwhich he shall then be entitled shall be the net amount of such\ncontributions together with interest thereon pursuant to subdivision c\nof section six hundred thirteen of this article.\n i. Notwithstanding the provisions of subdivision b of section six\nhundred twelve of this article, whenever a member of such a retirement\nsystem, for whom a loan is outstanding, retires, the retirement\nallowance payable without optional modification shall be reduced by a\nlife annuity which is actuarially equivalent to the amount of the\noutstanding loan (all outstanding loans shall continue to accrue\ninterest charges until retirement), such life annuity being calculated\nutilizing the interest rate on thirty year United States treasury bonds\nas of January first of the calendar year of the effective date of\nretirement and the mortality tables for options available under section\nsix hundred ten of this article. A retiree of the New York city\nemployees' retirement system, board of education retirement system of\nthe city of New York, or the New York state and local employees'\nretirement system whose benefit has been so reduced may repay the\noutstanding balance of the loan at any time. Benefits payable after the\nrepayment of the loan shall not be subject to the actuarial reduction\nrequired by this subdivision.\n j. Such a retirement board is authorized to adopt such rules and\nregulations as it finds to be necessary in administering the provisions\nof this section.\n k. Such a retirement board shall discharge any evidence of a loan to a\nmember pursuant to this section upon the satisfaction of the obligation\nof the member thereunder.\n l. The retirement board shall have no right to bring suit in any court\nagainst any member to enforce the amount due under this section, and the\nretirement system's sole remedy upon death, retirement or withdrawal\nshall be to offset the amount outstanding including interest from the\nmember's account or other benefits payable to or on behalf of the member\nas provided in this section.\n