N.Y. RSS Law § 517-C — New York Code / Act RSS / Article 14 / Section 517-C
Loans to members of certain retirement systems
Status: in_force

§ 517-c. 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\nthirteen of section five hundred one of this article.\n  b. 1. A member of the New York state and local employees' retirement\nsystem, the New York state and local police and fire retirement system,\nthe New York city employees' retirement system, the New York city board\nof education retirement system or the New York city police pension fund\nin active service who has credit for at least one year of member service\nmay borrow, no more than once during each twelve month period, an amount\nnot exceeding seventy-five percent of the total contributions made\npursuant to section five hundred seventeen of this article (including\ninterest credited at the rate set forth in subdivision c of such section\nfive hundred seventeen compounded annually) and not less than one\nthousand dollars, provided, however, that the provisions of this section\nshall not apply to a New York city uniformed correction/sanitation\nrevised plan member or an investigator revised plan member.\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, or a member of the New York city police pension fund\nwho first joins such system on or after January first, two thousand\neighteen in active service who has credit for at least one year of\nmember 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 five hundred\nseventeen of this article (including interest credited at the rate set\nforth in subdivision c of such section five hundred seventeen 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 five\nhundred seventeen 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 system, 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 five\nhundred seventeen 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 paragraph (c) of subdivision\ntwelve of section 13-101 of the administrative code of the city of New\nYork for such system, however, in no event shall the rate be less than\nthe rate set forth in subdivision c of section five hundred seventeen of\nthis article; (3) for members of the New York city board of education\nretirement system, be one percent less than the regular interest rate\nestablished pursuant to subparagraph four of paragraph (b) of\nsubdivision sixteen of section twenty-five hundred seventy-five of the\neducation law for such system, however, in no event shall the rate be\nless than the rate set forth in subdivision c of section five hundred\nseventeen of this article; and (4) for members of the New York city\npolice pension fund, be the regular interest rate established pursuant\nto subdivision b of section 13-638.2 of the administrative code of the\ncity of New York for such system, however, in no event shall the rate be\nless than the rate set forth in subdivision c of section five hundred\nseventeen of this article. Whenever there is a change in the interest\nrate, it shall be applicable to loans made or renegotiated after the\ndate of such change in the interest 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 five hundred seventeen of this article.\n  i. Notwithstanding the provisions of section five hundred sixteen of\nthis article, whenever a member of such a retirement system, for whom a\nloan is outstanding, retires, the retirement allowance payable without\noptional modification shall be reduced by a life annuity which is\nactuarially equivalent to the amount of the outstanding loan (all\noutstanding loans shall continue to accrue interest charges until\nretirement), such life annuity being calculated utilizing the interest\nrate on thirty year United States treasury bonds as of January first of\nthe calendar year of the effective date of retirement and the mortality\ntables for options available under section five hundred fourteen of this\narticle. A retiree of the New York city employees' retirement system,\nboard of education retirement system of the city of New York, the New\nYork state and local employees' retirement system, or the New York city\npolice pension fund 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