(Passed NY Legislature June 24, 2001 and signed into law by Governor Pataki on November 1, 2001).
New York State Senate Bill #3770 was filed in the NY State Senate on 03/22/2001 and passed the New York State legislature about June 24, 2001. It was sent to Governor Pataki shortly thereafter and was signed into law and became effective November 1, 2001. NY now takes the same approach as MD.
The Bill changes the INVESTMENT RESTRICTIONS for Gift Annuity Reserves found in Section 1, Subsections (b) and (c) of section 1110 of the NY Insurance law . . . to be invested ... from a very restrictive list of acceptable investments (mostly U.S. Treasuries) to those investments made ...
". . . in accordance with the prudent investor standard as defined in section 11-2.3 of the estates, powers and trusts law and shall not be subject to the investment limitations set forth in this chapter. Such assets shall be segregated as separate and distinct funds, independent of all other funds of such corporation or association, and shall not be applied to pay its debts and obligations or for any purpose except the aforesaid annuity benefits."
(c) No such corporation or association organized under the laws of another state shall be permitted to make such annuity agreements in this state unless it complies will all requirements of this section imposed upon like domestic corporations or associations, except that it may invest its reserve and surplus funds in securities permitted by the laws of the state where it was organized.
Subsection (f) of Section 1110 of the NY Insurance Law is repealed.
This act shall take effect immediately (effective November 1, 2001).
NOTE: The following is part of the "memo of explanation" sent to the legislature by the Bill's sponsor, Senator James L. Seward:
"Justification: A charitable gift annuity is a contract under which a charity, in return for a transfer of cash or other property, agrees to pay a fixed sum of money for the life of the donor and upon the death of the donor, the charity would use the remainder of the gift for its charitable purposes. Currently, New York's laws governing the investment of reserves by charities issuing charitable gift annuities are the strictest in the nation. For example, among other restrictions, under current New York law, investments in stocks or equity based mutual funds are limited to ten percent of the charity's admitted assets. These overly restrictive investment requirements cause charities operating in New York to have lower returns than charities operating in other states, leaving less money available for charitable purposes. These requirements also put New York State charitable organizations at a competitive disadvantage to organizations in other states.
This bill would subject charities issuing charitable gift annuities to the prudent investor standard, thereby protecting their assets while ensuring that charities in New York State are able to realize a reasonable return on their investments so that more money is available to further the organization's charitable purposes."
