Section 517-C. Loans to members of certain retirement systems

a. For the
  purposes of this section, the term "retirement board" or  "board"  shall
  mean  the  head  of  the  retirement  system  as  defined in subdivision
  thirteen of section five hundred one of this article.
    b. A member of the New York  state  and  local  employees'  retirement
  system,  the  New York city employees' retirement system or the New York
  city board of education retirement system  in  active  service  who  has
  credit  for at least one year of member service may borrow, no more than
  once  during  each  twelve  month  period,  an  amount   not   exceeding
  seventy-five percent of the total contributions made pursuant to section
  five  hundred  seventeen  (including  interest  credited at the rate set
  forth in subdivision c of such section five hundred seventeen compounded
  annually) and not less than one thousand dollars.
    c. 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 board or through regular payroll
  deduction.  Such  installments shall be in such amount as the retirement
  board 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, such
  retirement board 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. Such retirement board, 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
  lower  of  the  rates  set forth in either subdivision c of section five
  hundred seventeen of this article or subdivision d 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.
    d.  The  rate  of  interest  payable  upon loans made pursuant to this
  section shall:  (1)  for  members  of  the  New  York  state  and  local
  employees'  retirement  system,  be  one percent less than the valuation
  rate of interest adopted for such system, however, in no event shall the
  rate be less than the rate set forth in subdivision c  of  section  five
  hundred  seventeen of this article; (2) for members of the New York city
  employees' retirement system, be  one  percent  less  than  the  regular
  interest  rate  established  pursuant  to  subdivision  (c)  of  section
  13-101.12 of the administrative code of the city of New  York  for  such
  system,  however,  in  no event shall the rate be less than the rate set
  forth in subdivision  c  of  section  five  hundred  seventeen  of  this
  article;  and  (3)  for  members of the New York city board of education
  retirement system, be one percent less than the  regular  interest  rate
  established   pursuant   to   subparagraph  four  of  paragraph  (b)  of
  subdivision sixteen of section twenty-five hundred seventy-five  of  the
  education  law  for  such system, however, in no event shall the rate be
  less than the rate set forth in subdivision c of  section  five  hundred
  seventeen  of  this  article. 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.
    e.  A  service charge payable upon loans made pursuant to this section
  shall be set by the retirement board 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.
    f.  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 loans shall be
  insured. Such insurance  shall  be  provided  by  the  retirement  board
  through  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 board at a rate not to  exceed  one  percent  of  the  amount
  loaned.
    Such  premium shall be prorated to July first next, or such other date
  fixed by the retirement board 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.
    The  retirement  board  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 board to continue to insure loans  of  members  upon  the
  terms  and  conditions  herein  provided  or  upon  any  other  terms or
  conditions.
    g. Such a retirement board is authorized  to  establish  such  special
  funds  as may be necessary to carry out the provisions of subdivisions e
  and f of this section.
    h. 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 pursuant to  subdivision  c
  of section five hundred seventeen of this article.
    i.  Notwithstanding  the provisions of section five hundred sixteen of
  this article, whenever a member of such a 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
  article. A retiree of the New York city employees' retirement system  or
  board  of  education  retirement  system  of  the city of New York whose
  benefit has been so reduced may repay the  outstanding  balance  of  the
  loan at any time. Benefits payable after the repayment of the loan shall
  not be subject to the actuarial reduction required by this subdivision.
    j.  Such  a  retirement  board  is  authorized to adopt such rules and
  regulations as it finds to be necessary in administering the  provisions
  of this section.

    k. Such a retirement board shall discharge any evidence of a loan to a
  member  pursuant to this section upon the satisfaction of the obligation
  of the member thereunder.
    l. The retirement board 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.
    * NB Expires June 30, 2011