N.Y. RSS Law § 1207 — New York Code / Act RSS / Article 22 / Section 1207
Loans to members
Status: in_force

§ 1207. Loans to members. a. 1. Notwithstanding any general, special\nor local law to the contrary, a member in active service who has credit\nfor at least one year of member service may borrow, no more than once\nwithin each twelve month period, an amount not exceeding seventy-five\npercent of the total contributions made pursuant to section twelve\nhundred four of this article or any other article of this chapter and\nnot less than one thousand dollars.\n  2. A member 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 twelve hundred\nfour of this article (including interest credited at the rate set forth\nin subdivision c of this section compounded annually); or (ii) fifty\nthousand dollars, whichever is less.\n  b. 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 system or through regular\npayroll deduction. Such installments shall be in such amount as the\nretirement system shall approve; however, they shall be at least (a) two\npercent of the member's contract salary, and (b) sufficient to repay the\namount borrowed, together with interest on unpaid balances thereof,\nwithin a period not in excess of five years. In the event of default,\nthe retirement system shall be authorized to collect such payments due\nfrom the employer of such member through payroll deduction and such\nmember shall forfeit all future entitlement to borrow from the\nretirement system until the unpaid balance of the loan outstanding at\nthe time of default is fully paid. The retirement system, at any time,\nmay accept payments on account of any loan in addition to the\ninstallments fixed for repayment thereof. All payments of principal and\ninterest at the rates set forth in subdivision c of this section made by\nthe 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  c. The rate of interest payable upon loans made pursuant to this\nsection shall be one percent less than the valuation rate of interest\nadopted for such system. 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  d. A service charge payable upon loans made pursuant to this section\nshall be set by the retirement system 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  e. 1. 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 loan shall be\ninsured. Such insurance shall be provided by the retirement system. Upon\nthe death of the member, the amount of insurance so payable shall be\ncredited to his or her account. The premium payable by the member for\nsuch insurance shall be set by the retirement system at a rate not to\nexceed one percent of the amount loaned.\n  2. Such premium shall be prorated to July first next, or such other\ndate fixed by the retirement system as is appropriate, and shall be paid\nto the retirement system in equal installments over the period of the\nloan.  Thereafter, a premium not to exceed one percent per annum of the\npresent value 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  3. The retirement system 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 the\nretirement system to continue to insure loans of members upon the terms\nand conditions herein provided or upon any other terms or conditions.\n  f. The retirement system is authorized to establish such special funds\nas may be necessary to carry out the provisions of subdivisions d and e\nof this section.\n  g. 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.\n  h. Notwithstanding any general or special law to the contrary,\nwhenever a member of the retirement system, for whom a loan is\noutstanding, retires, the retirement allowance payable without optional\nmodification shall be reduced by a life annuity which is actuarially\nequivalent to the amount of the outstanding loan (all outstanding loans\nshall continue to accrue interest charges until retirement), such life\nannuity being calculated utilizing the interest rate on thirty year\nUnited States treasury bonds as of January first of the calendar year of\nthe effective date of retirement and the mortality tables for options\navailable under section five hundred fourteen of this chapter.\n  i. The retirement system shall adopt such rules and regulations as it\nfinds to be necessary in administering the provisions of this section.\n  j. The retirement system 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  k. The retirement system shall have no right to bring suit in any\ncourt against any member to enforce the amount due under this section,\nand the retirement system's sole remedy upon death, retirement or\nwithdrawal shall be to offset the amount outstanding including interest\nfrom the member's account or other benefits payable to or on behalf of\nthe member as provided in this section.\n