The Office of General Counsel issued the following informal opinion on November 22, 2004, representing the position of the New York State Insurance Department.
Re: Amendment to N.Y. Ins. Law § 4223(b)(2) - Group Annuity Contracts
In light of the recent amendment to N.Y. Ins. Law § 4223(b)(2) (Ch. 596 of the Laws of 2004), the inquirer asked the Department to review Office of General Counsel Opinion 04-06-01, which was issued on June 2, 2004. The facts underlying that opinion were as follows:
A governmental entity had established a tax-advantaged plan for its employees to defer a percentage of their income through voluntary contributions. As part of the plan, the governmental entity became the contract holder under multiple Group Annuity Contracts it had purchased from an insurer that is licensed to transact an annuity business in New York. The employer/contract holder became dissatisfied with the level of service being provided by the current insurer and desired to transfer all or a portion of the assets to another insurer.
The issue presented was whether the employer/contract holder was obligated to obtain consent from the plan participants before it could move plan assets from one insurer to another. The subject opinion concluded that such consent was required pursuant to N.Y. Ins. Law § 4223(b)(2) (McKinney 2000 & Supp. 2004).
On October 19, 2004, the Governor signed S.6208/A.10283 into law (Ch. 596 of the Laws of 2004). Section 2 of that Chapter amends N.Y. Ins. Law § 4223(b)(2) to now read in pertinent part:
This section shall apply to any certificate issued, or issued for delivery under a group annuity contract (other than a group annuity contract issued to an employee benefit plan within the meaning of the federal Employee Retirement Security Act of 1974, 29 U.S.C. § 1001 et seq.) . . . . (Italics added).
The June 2, 2004 opinion found that the plan in question was an employee benefit plan within the meaning of the Employment Retirement Income Security Act. Accordingly, in light of the recent amendment to N.Y. Ins. Law § 4223(b)(2), which excludes group annuity contracts issued to an employee benefit plan within the meaning of the federal Employee Retirement Security Act of 1974, 29 U.S.C. § 1001 et seq., from the purview of N.Y. Ins. Law § 4223(b)(2), the Department now concludes that consent of the plan participants before assets are moved from one insurer to another would not be required for such a contract, provided that it was issued after the effective date of the amendment.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.