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Summary For:

HB 204/ SB 123 - PUBLIC EMP./TEACHERS/JUDGES EMP. BENEFITS

An Act relating to the public employees' and teachers' defined benefit retirement plans; relating to the public employees' and teachers' defined contribution retirement plans; relating to the judicial retirement system; relating to the health reimbursement arrangement plan for certain teachers and public employees; relating to the supplemental employee benefit program; relating to the public employees' deferred compensation program; relating to group insurance for public employees and retirees; making conforming amendments; and providing for an effective date.

Summary: This bill includes clarifications to SB 141, passed in 2005, including clarifying how benefits will be provided under the new retirement plans, and interpreting the statutes in a manner that secures determinations from the IRS that the plans are qualified under the Internal Revenue Code. According to the governor’s transmittal letter, the bill would also:

  1. "provide statutory authority for funding of the new Teachers' Retirement System (TRS) plan's occupational disability and death benefits;
  2. clarify statutory authority for funding of the new Public Employees' Retirement System (PERS) plan's optional monthly pension benefits upon the retirement of disabled peace officers and fire fighters and clarify that employer contributions for defined benefits in the new PERS and TRS plans (occupational disability; occupational death; disabled peace officer/fire fighter optional pension benefit) will be deposited to separate trust accounts;
  3. add annual cost-of-living increases to disability benefits, survivor pensions, and optional pension benefits upon the retirement of disabled peace officers and fire fighters provided by the new PERS and Teachers' Retirement System (TRS) plans;
  4. add employer cost sharing of medical premiums for persons younger than Medicare age whose disability or survivor benefits are terminated due to eligibility for normal retirement;
  5. clarify that a member or survivor is not entitled to elect distributions from the member's individual account while receiving disability benefits or a survivor's pension;
  6. provide that elected officials of the state are eligible to participate in the new PERS defined contribution retirement plan;
  7. clarify that continuing employer contributions are made on behalf of the surviving spouse and member's dependent children rather than "beneficiaries";
  8. add guidelines for employer participation and termination from the PERS defined contribution retirement plan, including employee designations for participation and rights upon termination;
  9. remove residual provisions that allow former defined benefit plan members to reinstate refunded service, effective in 2010;
  10. provide authority for the Commissioner of Administration to adopt regulations for the supplemental employee benefits system, health reimbursement arrangement plan, deferred compensation plan, and group health insurance plans;
  11. provide a clear definition of "peace officer" and "fire fighter" under the defined contribution retirement plan;
  12. allow TRS or PERS defined benefit plan members to participate in the TRS or PERS defined contribution retirement plan if hired by an employer that only participates in the defined contribution plan;
  13. allow TRS and PERS defined benefit plan former (refunded) members to become members of the TRS or PERS defined contribution retirement plan if rehired on or after July 1, 2010;
  14. revise the method for funding the retirement benefit for survivors of members who are disabled or die from occupational causes, to conform to the IRC;
  15. clarify that the new retirement plans established by SB 141 are hybrid plans that fall under IRC sec. 414(k);
  16. limit the option of non-vested PERS and TRS employees to transfer to the defined contribution plans to one 12-month window, to conform to the IRC;
  17. update rollover provisions of the PERS and TRS plans and the judicial retirement system, to conform to the IRC.

The bill includes a delayed effective date of July 1, 2010, for specific sections. These include provisions that remove the opportunity for defined benefit plan members to reinstate refunded service and that allow such members to become members of the defined contribution retirement plans if they are rehired. The remainder of the bill has an immediate effective date.”
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