N.Y. Retirement & Social Security Law § 517-c: Loans to members of certain retirement systems

§ 517-c. Loans to members of certain retirement systems. a. For the

purposes of this section, the term "retirement board" or "board" shall

mean the head of the retirement system as defined in subdivision

thirteen of section five hundred one of this article.

b. 1. A member of the New York state and local employees' retirement

system, the New York state and local police and fire retirement system,

the New York city employees' retirement system, the New York city board

of education retirement system or the New York city police pension fund

in active service who has credit for at least one year of member service

may borrow, no more than once during each twelve month period, an amount

not exceeding seventy-five percent of the total contributions made

pursuant to section five hundred seventeen of this article (including

interest credited at the rate set forth in subdivision c of such section

five hundred seventeen compounded annually) and not less than one

thousand dollars, provided, however, that the provisions of this section

shall not apply to a New York city uniformed correction/sanitation

revised plan member or an investigator revised plan member.

2. A member of the New York state and local employees' retirement

system who first joins such system on or after January first, two

thousand eighteen, or a member of the New York city police pension fund

who first joins such system on or after January first, two thousand

eighteen in active service who has credit for at least one year of

member service may borrow, no more than once during each twelve month

period, an amount, not less than one thousand dollars and which would

not cause the balance owed pursuant to this section, including any

amounts borrowed then outstanding, to exceed (i) fifty percent of the

member's total contributions made pursuant to section five hundred

seventeen of this article (including interest credited at the rate set

forth in subdivision c of such section five hundred seventeen compounded

annually); or (ii) fifty thousand dollars, whichever is less.

c. An amount so borrowed, together with interest on any unpaid balance

thereof, shall be repaid in equal installments which shall be made by

the borrower directly to the retirement board or through regular payroll

deduction. Such installments shall be in such amount as the retirement

board shall approve; however, they shall be at least (a) two percent of

the member's contract salary, and (b) sufficient to repay the amount

borrowed, together with interest on unpaid balances thereof within a

period not in excess of five years. In the event of default, such

retirement board shall be authorized to collect such payments due from

the employer of such member through payroll deduction and such member

shall forfeit all future entitlement to borrow from the retirement

system until the unpaid balance of the loan outstanding at the time of

default is fully paid. Such retirement board, at any time, may accept

payments on account of any loan in addition to the installments fixed

for repayment thereof. All payments of principal and interest at the

lower of the rates set forth in either subdivision c of section five

hundred seventeen of this article or subdivision d of this section made

by the member shall be credited to his or her account as principal or

interest. Any additional interest paid by the member shall be credited

to the appropriate fund of the retirement system.

d. The rate of interest payable upon loans made pursuant to this

section shall: (1) for members of the New York state and local

employees' retirement system, be one percent less than the valuation

rate of interest adopted for such system, however, in no event shall the

rate be less than the rate set forth in subdivision c of section five

hundred seventeen of this article; (2) for members of the New York city

employees' retirement system, be one percent less than the regular

interest rate established pursuant to paragraph (c) of subdivision

twelve of section 13-101 of the administrative code of the city of New

York for such system, however, in no event shall the rate be less than

the rate set forth in subdivision c of section five hundred seventeen of

this article; (3) for members of the New York city board of education

retirement system, be one percent less than the regular interest rate

established pursuant to subparagraph four of paragraph (b) of

subdivision sixteen of section twenty-five hundred seventy-five of the

education law for such system, however, in no event shall the rate be

less than the rate set forth in subdivision c of section five hundred

seventeen of this article; and (4) for members of the New York city

police pension fund, be the regular interest rate established pursuant

to subdivision b of section 13-638.2 of the administrative code of the

city of New York for such system, however, in no event shall the rate be

less than the rate set forth in subdivision c of section five hundred

seventeen of this article. Whenever there is a change in the interest

rate, it shall be applicable to loans made or renegotiated after the

date of such change in the interest rate.

e. A service charge payable upon loans made pursuant to this section

shall be set by the retirement board in an amount sufficient to cover

the cost to the retirement system of administering the loans. Such

charge shall be paid to the retirement system when the loan is made or

in equal installments over the period the loan is outstanding. The

amount of the service charge shall be credited to the fund from which

administrative expenses are paid.

f. Each loan made pursuant to this section shall be insured against

the death of the member in an amount equal to the amount of the loan

outstanding at any given time; with the exception that until thirty days

have elapsed after the making thereof, no part of the loans shall be

insured. Such insurance shall be provided by the retirement board

through the retirement system. Upon the death of the member, the amount

of insurance so payable shall be credited to his or her account. The

premium payable by the member for such insurance shall be set by the

retirement board at a rate not to exceed one percent of the amount

loaned.

Such premium shall be prorated to July first next, or such other date

fixed by the retirement board as is appropriate, and shall be paid to

the retirement system in equal installments over the period of the loan.

Thereafter, a premium not to exceed one percent per annum of the present

value of the outstanding loan as of July first, or such other

appropriate date, shall be paid in the same manner each succeeding year

until such loan is repaid or the member is retired.

The retirement board shall, at least annually, review such premium

rate, and may, in its discretion, increase or reduce the premium, modify

the terms or conditions of coverage, or discontinue the insurance of

loans. In no event shall this subdivision impose any obligation upon

the retirement board to continue to insure loans of members upon the

terms and conditions herein provided or upon any other terms or

conditions.

g. Such a retirement board is authorized to establish such special

funds as may be necessary to carry out the provisions of subdivisions e

and f of this section.

h. Whenever a member of such a retirement system, for whom a loan is

outstanding, becomes entitled to the return of his or her contributions

because of withdrawal from such system or because of death, the amount

of any loan outstanding on such date, including accrued interest as

provided in subdivision d of this section, shall be construed to already

have been returned to such member and the refund of contributions to

which he shall then be entitled shall be the net amount of such

contributions together with interest thereon pursuant to subdivision c

of section five hundred seventeen of this article.

i. Notwithstanding the provisions of section five hundred sixteen of

this article, whenever a member of such a retirement system, for whom a

loan is outstanding, retires, the retirement allowance payable without

optional modification shall be reduced by a life annuity which is

actuarially equivalent to the amount of the outstanding loan (all

outstanding loans shall continue to accrue interest charges until

retirement), such life annuity being calculated utilizing the interest

rate on thirty year United States treasury bonds as of January first of

the calendar year of the effective date of retirement and the mortality

tables for options available under section five hundred fourteen of this

article. A retiree of the New York city employees' retirement system,

board of education retirement system of the city of New York, the New

York state and local employees' retirement system, or the New York city

police pension fund whose benefit has been so reduced may repay the

outstanding balance of the loan at any time. Benefits payable after the

repayment of the loan shall not be subject to the actuarial reduction

required by this subdivision.

j. Such a retirement board is authorized to adopt such rules and

regulations as it finds to be necessary in administering the provisions

of this section.

k. Such a retirement board shall discharge any evidence of a loan to a

member pursuant to this section upon the satisfaction of the obligation

of the member thereunder.

l. The retirement board shall have no right to bring suit in any court

against any member to enforce the amount due under this section, and the

retirement system's sole remedy upon death, retirement or withdrawal

shall be to offset the amount outstanding including interest from the

member's account or other benefits payable to or on behalf of the member

as provided in this section.