New York introduces legislation to provide retirees protections when their pensions are sold out or transferred
New legislation in the New York State Senate and Assembly (S1092/A6796) would provide protections to retirees whose pensions are sold-out or transferred by their former employers, a strategy commonly referred to as pension de-risking.
Senator Tony Avella (D-11) has introduced S.1092 and Assembly Member Peter Abbate introduced Assembly bill 6796.
The bills would require that companies, who convert pensions to annuities, provide proper disclosures related to the transaction for all impacted retirees. It also prohibits the subsequent transfer of the retirees’ pension benefits without the confirmation of the New York State Superintendent of Financial Services that the insurer acquiring the group annuity contract has the financial strength to fulfill its long-term obligations to all retirees.
In January 2013 New York based Verizon spun-off 41,000 retirees’ pensions to Prudential, converting what were federal ERISA law protected pensions to a group annuity, which is governed at the state level.
The new state legislation proposes to provide retirees with protections from creditor claims comparable to what they had under retirement plans. It also requires that the individuals that are transferred from pension plans to annuity contracts receive a statement that they are no longer protected under the federal Employee Retirement Income Security Act (ERISA) and entitled to coverage by the federal Pension Benefit Guaranty Corporation (PBGC).
Affected individuals would receive financial statements of the insurers’ assets and be entitled to the identity and contact information for the New York life and health insurance guaranty association or any other substitute or replacement that provides coverage to annuitants residing in the state of New York, in case of default.
Senator sponsor Tony Avella stated, “Retirees depend on their hard earned pensions and when companies go through the process of pension de-risking, they are playing a risky game with a retirees’ pension. By leaving affected retirees with virtually none of the long standing federal pension protection mechanisms provided by ERISA and the PBGC, companies are shifting the burden of risk onto pensioners. That is why Assembly Member Abbate and I are joining forces in sponsoring this important legislation that will provide protections to retirees whose pension plans have gone through pension de-risking and will ensure that these hard earned investments maintain the protections they had before their pension plans were transferred.”
Senator Diane J. Savino (D-23), co-sponsor of the bill added, “Pensions are deferred wages and employers should be forced to maintain their part of the bargain. This bill will shed some sunlight on how companies are getting out from under their pension obligations and putting their retirees’ hard-earned pensions and retirement security in jeopardy. Hopefully, the scrutiny provided for by this legislation will put a stop to these risky financial maneuvers. These companies make all taxpayers responsible for their obligations when these companies play games with their retirees’ income security, forcing the government to step in a replace pensions with expensive tax-funded social programs and services.”
Assembly Member Peter Abbate said, “When people retire they should have the peace of mind that their pension benefits will not be stripped. By putting pension plans into annuity contracts, they strip the retirees of any of the protections that they currently have. I am proud to sponsor legislation that would put into law the necessary precautions that would help those who are subject to de-risking, ensuring retirees still have the important pension protection mechanisms they deserve.”
James Casey, President of the Washington, D.C. based non-profit ProtectSeniors.Org (www.ProtectSeniors.Org) said, “Retirees across New York and America are in the dark regarding the rather new phenomena of pension de-risking. This important legislation at the state level simply provides retirees with full disclosure related to their pension assets and rights should their defined benefit pension assets be transferred.” ProtectSeniors.Org has over 8,200 retiree members in New York.
Jack Cohen, Chairman of the 130,000 member Association of BellTel Retirees, and who was one of the 41,000 retirees with pensions transferred by Verizon said, “Never in a million years did any of us think we had to worry about our pension being sold out from under us. This legislation replaces some of the uniform protections we came to expect under ERISA and creates some transparency for retirees regarding the financial status of the insurer holding our retirement assets.” The BellTel Retirees have 50,000 members residing in New York State, all retired from Verizon and its predecessors.
The Senate legislation is co-sponsored by lSenators Joseph Addabbo, Brad Hoylman, Liz Krueger, Kathleen Marchione and Diane Savino. The Assembly bill is co-sponsored by Assembly Member Phillip Goldfeder, James Skoufis, Andrew Hevesi, Sandra Galef, Alec Brook-Krasny and Brian Curran.
Links to the legislation can be found at: