2013 New York Consolidated Laws
RSS - Retirement & Social Security
Article 22 - (1200 - 1210) POLICE AND FIRE RETIREMENT PROVISIONS
1207 - Loans to members.

 
    §  1207.  Loans to members. a. Notwithstanding any general, special or
  local law to the contrary, a member in active service who has credit for
  at least one year of member service may borrow, no more than once within
  each twelve month period, an amount not exceeding  seventy-five  percent
  of  the total contributions made pursuant to section twelve hundred four
  of this article or any other article of this chapter and not  less  than
  one thousand dollars.
    b. 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  system  or  through  regular
  payroll  deduction.  Such  installments  shall  be in such amount as the
  retirement system 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,
  the retirement system 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. The retirement system, 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 rates set forth in subdivision c 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.
    c.  The  rate  of  interest  payable  upon loans made pursuant to this
  section shall be one percent less than the valuation  rate  of  interest
  adopted  for  such  system.  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.
    d.  A  service charge payable upon loans made pursuant to this section
  shall be set by the retirement system 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.
    e. 1. 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  loan  shall  be
  insured. Such insurance shall be provided by 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 system at a rate not to
  exceed one percent of the amount loaned.
    2. Such premium shall be prorated to July first next,  or  such  other
  date fixed by the retirement system 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.
    3. The retirement system 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 system to continue to insure loans of members upon the  terms
  and conditions herein provided or upon any other terms or conditions.
    f. The retirement system is authorized to establish such special funds
  as  may be necessary to carry out the provisions of subdivisions d and e
  of this section.
    g. 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.
    h. Notwithstanding  any  general  or  special  law  to  the  contrary,
  whenever  a  member  of  the  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 chapter.
    i. The retirement system shall adopt such rules and regulations as  it
  finds to be necessary in administering the provisions of this section.
    j.  The  retirement system shall discharge any evidence of a loan to a
  member pursuant to this section upon the satisfaction of the  obligation
  of the member thereunder.
    k.  The  retirement  system  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.