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  • Acts
  • 2002
  • Chapter 340 AN ACT RELATIVE TO BANK AND CREDIT UNION EMPLOYEES RETIREMENT ASSOCIATIONS.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is forthwith to expand the eligibility for membership in the Savings Banks Employees Retirement Association, the Cooperative Banks Employees Retirement Association and the Credit Union Employees Retirement Association in order to enhance the ability of members to avail themselves of a variety of retirement plan providers, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. Chapter 168 of the General Laws is hereby amended by striking out section 39, as appearing in the 2000 Official Edition, and inserting in place thereof the following section:-

Section 39. Fifteen or more savings banks may form the Savings Banks Employees Retirement Association in this section, and in sections 40 and 41, called the association for the purpose of providing retirement benefits services through retirement plans that are qualified under section 401 of the federal Internal Revenue Code, to members of the association and their customers, as hereinafter provided. The association, in its name and by or through its authorized officers, may (a) make agreements and investments subject to limitations as from time to time may be prescribed by law or the by-laws of the association, (b) sue and be sued, plead and be impleaded, (c) enforce liens and other obligations and foreclose mortgages held by the association on or with respect to real or personal property situated in the commonwealth or in any state or territory of the United States, (d) adopt an official seal and alter the same at pleasure, and (e) do other acts and things necessary to carry out the powers conferred upon it by law and its by-laws.

Any bank or credit union chartered by the commonwealth, any such bank or credit union which has converted to federal charter and has its main office located in the commonwealth, any bank or credit union chartered by the federal government, by a state of the United States other than the commonwealth or by the District of Columbia and which has its main office or a branch office located in the commonwealth, the Massachusetts Bankers Association and its successors and any bank which is a voting member thereof, the Savings Banks Employees Retirement Association, the Depositors Insurance Fund, and other banking institutions with their main office or any branch office located in the commonwealth, as may from time to time be provided for in the by-laws of the association, and the respective employees of each of the foregoing, shall be eligible for membership in the association; but, no bank that was eligible to be a member of the association before January 1, 2004, shall be eligible to become a member of the Cooperative Banks Employees Retirement Association or the Credit Union Employees Retirement Association unless and until the Cooperative Banks Employees Retirement Association and the Credit Union Employees Retirement Association permits a member to transfer from any or all of the qualified plans provided by said association, assets and liabilities, attributed to the member's employees, to 1 or more qualified plans not provided by said association. For the purposes of this section and sections 40 and 41, a reference to "bank" or "banks" shall, unless the context otherwise requires, mean any or all of the organizations named or referred to in this paragraph, a reference to "trustees" of a bank shall, unless the context otherwise requires, mean the governing body of any such organization, including, if applicable, the board of directors; and a reference to "customer" shall mean any person or business who has established a contractual relationship for banking business purposes with any banking institution located in the commonwealth which is a member of the association.

Eligible employees may contribute a portion of their salaries or wages, to be deducted by the employing banks and paid to the plans or the retirement association. A participating bank may contribute to or under plans of the retirement association for its employees to the extent determined by its board of trustees. Contributions and benefits under the plans of the retirement association shall not exceed the limits, if any, imposed on such plans by the Internal Revenue Code and the Employees Retirement Income Security Act of 1974, in this section called the Code and ERISA, respectively.

If the commissioner finds that the continuation of contributions by a participating bank subject to his authority may affect its safety and soundness, including reducing its risk-based capital ratio below any prescribed regulatory level, said commissioner may order the bank to (a) freeze its benefits and cease further funding for future benefit accruals under any plans qualified under section 401 of the federal Internal Revenue Code; (b) revise its benefits for future service under any such plans so that contributions on account of any employee will be limited to an appropriate percentage of compensation; or (c) terminate its participation in any such plans.

The funds contributed by participating banks and their employees shall be held or used by the trustees of the association for the purchase of annuities or payment of retirement benefits to eligible employees, for payments to beneficiaries or representatives of any member employee of the participating bank dying before reaching the age of retirement, and for the payment to any employee retiring from service before becoming entitled to a pension or annuity. Funds held under any of the said plans shall be held or used by the retirement association to the extent required by the Code and ERISA for the exclusive purpose of providing plan benefits to participating members; but, to the extent permitted by law, funds of the plans may be used to defray reasonable expenses of administering the retirement association and the plans, and expenses of investing the assets of the plans may be charged against the funds of the plans. To the extent that expenses of the retirement association or said plans are not otherwise paid, they shall be paid by participating banks on a proportionate basis, as provided in the by-laws of the retirement association. The association shall annually provide to each member a report of assets and liabilities attributable to its participants in any or all qualified plans adopted by a member.

A participating bank, by vote of its board of directors, and a customer may adopt 1 or more of the plans of the retirement association for the benefit of its employees. Any such bank which has adopted a plan of the retirement association for its employees may, if it is otherwise eligible, also establish an employee stock ownership plan.

In any calendar year, the association or bank by vote of its governing board, may directly supplement the retirement benefits being paid to retired employees or their beneficiaries on account of service; but, no supplement of a retirement benefit shall exceed the retirement benefit multiplied by the increase in the cost of living since the retirement began. The increase in the cost of living is the percentage by which the national monthly consumer price index for all urban consumers issued by the bureau of labor statistics of the United States Department of Labor for the last November before the year in which payment is made is greater than the beginning index figure. The beginning index figure is the average of such monthly consumer price index figures for the year in which a retirement benefit was first paid to or with respect to a former employee. No bank may become obligated to pay in future years any supplement authorized by this paragraph.

Membership in the association is voluntary and any bank may establish or provide qualified retirement plans for its employees independent of the association; but, nothing contained herein shall be construed so as to require any bank to provide qualified retirement plans to its employees.

SECTION 2. Chapter 170 of the General Laws is hereby amended by striking out section 30, as so appearing, and inserting in place thereof the following section:-

Section 30. Fifteen or more cooperative banks may form the Cooperative Banks Employees Retirement Association, in this section and in sections 31 and 32 called the retirement association, for the purpose of providing retirement benefits services through retirement plans which are qualified under Section 401 of the Internal Revenue Code, in this section called plans, to employees and customers of members of the association, as hereinafter provided. The retirement association, in its name and by and through its authorized officers, may (a) establish plans and related trusts for its members, (b) make agreements and investments subject to such limitations as from time to time may be prescribed by law or the by-laws of the retirement association, (c) establish divisions, departments and other operating units within the retirement association, and provide the same with appropriate names or other identifications, to assist the retirement association in carrying out the powers conferred upon it by law and its by-laws, (d) sue and be sued, plead and be impleaded, (e) enforce liens and other obligations and foreclose mortgages held by the retirement association on or with respect to real or personal property situated in the commonwealth or in any state or territory of the United States, (f) adopt an official seal and alter the same at pleasure, and (g) do such other acts and things as may be necessary to carry out the powers conferred upon it by law and its by-laws.

Any cooperative bank, trust company or credit union chartered by the commonwealth, any such bank, trust company or credit union which has converted to federal charter and has its main office located in the commonwealth, any bank or credit union chartered by the federal government, by a state of the United States other than the commonwealth or by the District of Columbia and which has its main office or a branch office located in the commonwealth, the Massachusetts Bankers Association and its successors and any bank which is a voting member thereof, the Cooperative Banks Employees Retirement Association, the Cooperative Central Bank, such other cooperative bank, credit union or trust company organizations as may from time to time be provided for in the by-laws of the retirement association, and the respective employees of each of the foregoing, shall be eligible for membership in the retirement association. For the purposes of this section, and sections 31 and 32, a reference to "bank" or "banks" shall, unless the context otherwise requires, mean and include any or all of the organizations named or referred to in this paragraph, reference to "board of directors" of a bank shall also, unless the context otherwise requires, mean and include the governing body of such organizations, and reference to "customer" shall mean any person or business who has established a contractual relationship for banking business purposes with any banking institution located in the commonwealth which is a member of the association.

Eligible employees may contribute a portion of their salaries and wages to or under plans established by the retirement association, to be deducted by the employing banks and paid to the plans or the retirement association. A participating bank may contribute to or under plans of the retirement association to the extent determined by its board of trustees. Contributions and benefits under the plans of the retirement association shall not exceed the limits, if any, imposed on such plans by the Internal Revenue Code of 1954 and the Employees Retirement Income Security Act of 1974, in this section called the Code and ERISA, respectively.

If the commissioner finds that the continuation of contributions by a participating bank subject to his authority may affect its safety and soundness, including reducing its risk-based capital ratio below any prescribed regulatory level, said commissioner may order the bank to (a) freeze its benefits and cease further funding for future benefit accruals under any plans qualified under section 401 of the federal Internal Revenue Code; (b) revise its benefits for future service under any such plans so that contributions on account of any employee will be limited to an appropriate percentage of compensation; or (c) terminate its participation in any such plans.

All plans maintained by the retirement association shall conform to the Code and ERISA and funds held under any such plans shall be invested in a manner as the retirement association shall determine. Copies of all plans shall be filed with the commissioner. Funds held under any of said plans shall be held by or used by the retirement association to the extent required by the Code and ERISA for the exclusive purpose of providing plan benefits to participating members; but, to the extent permitted by law, funds of the plans may be used to defray reasonable expenses of administering the retirement association and the plans, and expenses of investing the assets of the plans may be charged against the funds of the plans. To the extent that expenses necessary for the administration of the retirement association or the said plans are not paid from the plans, they shall be paid by participating banks on a proportionate basis, as provided in the by-laws of the retirement association. The association shall annually provide to each member a report of assets and liabilities attributable to its participants in any or all qualified plans adopted by a member.

A participating bank, by vote of its board of directors, and a customer may adopt 1 or more of the plans of the retirement association for the benefit of its employees. Any bank which has adopted a plan of the retirement association for its employees may, if it is otherwise eligible, also establish an employee stock ownership plan.

A bank, by vote of its board of directors, may directly or indirectly by means of a contribution to 1 or more of the trust funds held by the trustees of the retirement association supplement the retirement benefits being paid to its former employees or their beneficiaries on account of bank service; but, no supplement of a retirement benefit shall exceed the retirement benefit multiplied by the increase in the cost of living since the retirement began. The increase in the cost of living is the percentage by which the national monthly consumer price index for all urban consumers issued by the bureau of labor statistics of the United States Department of Labor for the last November before the year in which payment is made is greater than the beginning index figure. The beginning index figure is the average of such monthly consumer price index figures for the year in which a retirement benefit was first paid to or with respect to a former employee. Except with respect to supplements first voted by a financial institution's governing board on or after January 1, 1981, and which are paid through 1 or more of the trust funds held by the trustees of the retirement association, no employing unit may become obligated to pay in future years any supplement authorized by this paragraph.

Membership in the association is voluntary and any bank may establish or provide qualified retirement plans for its employees independent of the association; but, nothing contained herein shall be construed as requiring any bank to provide qualified retirement plans to its employees.

SECTION 3. The second paragraph of said section 30 of said chapter 170 of the General Laws, as amended by section 2 of this act, is hereby further amended by striking out the first sentence and inserting in place thereof the following sentence:- Any bank or credit union chartered by the commonwealth, any such bank or credit union which has converted to federal charter and has its main office located in the commonwealth, any bank or credit union chartered by the federal government, by a state of the United States other than the commonwealth or by the District of Columbia and which has its main office or a branch office located in the commonwealth, the Massachusetts Bankers Association and its successors and any bank which is a voting member thereof, the Cooperative Banks Employees Retirement Association, the Cooperative Central Bank, and such other banking institutions with their main office or any branch office located in the commonwealth, as may from time to time be provided for in the by-laws of the association, and the respective employees of each of the foregoing, shall be eligible for membership in the association; but, no bank that was eligible to be a member of the association before January 1, 2004, shall be eligible to become a member of the Savings Banks Employees Retirement Association or the Credit Union Employees Retirement Association, unless and until the Savings Banks Employees Retirement Association and the Credit Union Employees Retirement Association permits a member to transfer from any or all of the qualified plans provided by said association, assets and liabilities, attributed to the member's employees, to 1 or more qualified plans not provided by said association.

SECTION 4. Said chapter 170 is hereby further amended by striking out section 31, as appearing in the 2000 Official Edition, and inserting in place thereof the following section:-

Section 31. The by-laws of the retirement association, and any amendments thereto, shall be submitted to the commissioner and shall prescribe the manner in which, and the officers and agents by whom, the retirement association may be conducted and the manner in which its funds may be invested and paid out. Such retirement association shall be formed when its by-laws have been approved and agreed to by a majority of the trustees of each of 15 or more cooperative banks and have been approved by the commissioner. The association shall annually, on or before August 1 report to the commissioner such statements of its membership and financial transactions for the year ending on the preceding December 31st as the commissioner may consider necessary to show its business and standing. The commissioner may verify such statement by an examination of the books and papers of the retirement association. The retirement association shall not be subject to chapter 32 or chapter 175 or other laws as relate to insurance companies or other retirement associations.

SECTION 5. Chapter 171 of the General Laws is hereby amended by striking out section 82, as so appearing, and inserting in place thereof the following section:-

Section 82. Fifteen or more credit unions, each having assets of $50,000 or more, may form the Credit Union Employees Retirement Association, in this section and in sections 83 and 84 called the association, for the purpose of providing retirement benefits services through retirement plans that are qualified under section 401 of the federal Internal Revenue Code to employees of credit unions established under the laws of the commonwealth and which are members of the association and to their customers. Any bank or credit union chartered by the commonwealth, any such bank or credit union which has converted to federal charter and has its main office located in the commonwealth, any bank or credit union chartered by the federal government, by a state of the United States other than the commonwealth or by the District of Columbia and which has its main office or a branch office located in the commonwealth, the Massachusetts Credit Union League, Inc., and its successors, the Massachusetts Credit Union Share Insurance Corporation, and other banking or credit union institutions with their main office or any branch office located in the commonwealth, as may from time to time be provided for in the by-laws of the association, and the respective employees of each of the foregoing, shall be eligible for membership in the association; provided, however, that no bank that was eligible to be a member of the association before January 1, 2004, shall be eligible to become a member of the Cooperative Banks Employees Retirement Association or the Savings Banks Employees Retirement Association unless and until the Cooperative Banks Employees Retirement Association and the Savings Banks Employees Retirement Association permits a member to transfer from any or all of the qualified plans provided by said association, assets and liabilities, attributed to the member's employees, to 1 or more qualified plans not provided by said association. For the purpose of this section and sections 83 and 84, a reference to "credit union" or "credit unions" shall, unless the context otherwise requires, mean and include any or all of the organizations named or referred to in this paragraph, a reference to "directors of a credit union" shall, unless the context otherwise requires, mean and include the governing body of each member organization, and reference to "customer" shall mean any person or business who has established a contractual relationship for banking business purposes with any credit union located in the commonwealth which is a member of the association.

Eligible employees may contribute a portion of their salaries or wages, to be deducted by credit unions and employers and paid to the association. A credit union may contribute to the funds of the association to the extent determined by its governing body; provided, however, that contributions by a credit union for current services, as defined in its by-laws, on account of any employee shall not exceed 15 per cent of his compensation.

The funds contributed by participating credit unions and their employees shall be held or used by the trustees of the association for the purchase of annuities or payment of pensions to eligible employees upon their retirement from service, for the payments to beneficiaries or representatives of any member employee dying before reaching the age of retirement, and for the payment to any such employee retiring from service before becoming entitled to a pension or annuity. Expenses necessary for the administration of the association shall be paid by participating members on a proportionate basis, as provided in the by-laws of the association. The association shall annually provide to each member a report of assets and liabilities attributable to its participants in any or all qualified plans adopted by a member.

In the event that any employee who has been continuously in the employ of a credit union for 10 years or more becomes incapacitated for further service by reason of physical or mental disability before age 65, the employing credit union may pay him a pension in an amount not to exceed 2 per cent of his average salary for the 3 years preceding the date of retirement for each year, not exceeding 30 years of continuous service with any and all credit unions as defined in the second paragraph of this section. Any pension paid on account of disability may be discontinued at any time by the governing board of the employing credit union, and shall be discontinued when the pensioner substantially recovers his earning capacity or attains age 65 or the date the employee elects to have his pension or annuity commence.

A credit union providing retirement benefits to its employees through a plan offered by a provider of plans other than the association, which shall be a qualified plan under 26 U.S.C. section 401, shall file with the commissioner a copy of the plan, any amendments or revisions thereto, and a copy of the annual statement of the provider relative to the plan.

In any calendar year, the association or an employer, by vote of its governing board, may directly supplement the retirement benefits being paid to retired employees or their beneficiaries on account of service; provided, however, that no supplement of a retirement benefit shall exceed the retirement benefit multiplied by the increase in the cost of living since the retirement began. The increase in the cost of living is the percentage by which the national monthly consumer price index for all urban consumers issued by the bureau of labor statistics of the United States Department of Labor for the last November before the year in which payment is made is greater than the beginning index figure. The beginning index figure is the average of such monthly consumer price index figures for the year in which a retirement benefit was first paid to or with respect to a former employee. No credit union may become obligated to pay in future years any supplement authorized by this paragraph.

SECTION 6. Sections 1, 3 and 5 of this act shall take effect on January 1, 2004; but, at least 6 months before that date, the Savings Banks Employees Retirement Association, the Cooperative Banks Employees Retirement Association and the Credit Union Employees Retirement Association shall have provided to the commissioner a plan of operation satisfactory to the commissioner to effect the purposes of said sections 1, 3 and 5.

Approved October 6, 2002.