| SB 0308 | Changes various retirement systems |
| Sponsor: | Scott | |||
| LR Number: | S1074.13T | Fiscal Note: | 1074-13 | |
| Committee: | Pensions and General Laws | |||
| Last Action: | 06/10/99 - Signed by Governor (w/EC) | Journal page: | ||
| Title: | CCS HS HCS SCS SBs 308 & 314 | |||
| Effective Date: | 8/28/99 (EC certain sections) | |||
CCS/HS/HCS/SCS/SBs 308 & 314 - This act makes significant changes and revisions to the following public employee retirement systems: Missouri State Employees Retirement System, County Employees Retirement System, St. Louis Police Retirement System, St. Louis Fire Retirement System, Public School Retirement System and Nonteacher Retirement System.
MISSOURI STATE EMPLOYEES RETIREMENT SYSTEM (MOSERS) - A new plan, the "Year 2000 Plan", is phased in and applies to all new employees after July 1, 2000, and to current employees and retirees who opt into the plan. Any member of MOSERS employed by the State prior to July 1, 2000, will stay in the current plan unless the member chooses to opt into the new Year 2000 Plan. Such current employees and retirees will receive a comparison of benefits from MOSERS to help assist them in deciding whether to opt into the new plan.
THE FOLLOWING MAJOR CHANGES ARE MADE TO THE CURRENT STATE EMPLOYEE RETIREMENT PLAN:
(1) UNREDUCED JOINT AND 50% SURVIVOR OPTION - Several categories of survivors, former deferred vested members, and members who retired and then became reemployed, who were not made eligible for the unreduced joint and 50% survivor option in 1997, are now eligible for that benefit. In some instances, a lump-sum payment is also provided;
(2) PURCHASE OF SERVICE - All members may purchase up to 4 years of nonfederal public service;
(3) OTHER PROVISIONS - Certain retirees may elect a survivor option if they were married for at least a year before they make the election and make such election within 6 months of circumstances detailed in the act; and
(4) JUDGES AND ADMINISTRATIVE LAW JUDGES - Additonal provisions regarding normal administrative law judge retirement eligibility begins at age 62 with 12 years service and at age 60 with 15 years service and includes former administrative hearing commissioners. Normal retirement for judges may begin at age 55 with 20 years of service.
THE FOLLOWING IS A SUMMARY OF THE NEW "YEAR 2000 PLAN", WHICH WILL APPLY TO ALL NEW EMPLOYEES HIRED ON OR AFTER JULY 1, 2000, AND OTHER ELIGIBLE PERSONS WHO OPT INTO THE NEW PLAN.
YEAR 2000 PLAN - The year 2000 plan will apply to new employees who begin work on or after July 1, 2000; persons currently covered by MOSERS and the Transportation Department and Highway Patrol Retirement System (HEHPRS), both active employees and those already retired, will be given comparison information about the existing and new plans and will be allowed to choose the Year 2000 Plan if they wish. The major provisions of this new plan are:
(1) Eligibility when age plus years of service equals 80, or age 62 with 5 years of service, as opposed to age 65 with 5 years of service under the current plan;
(2) A multiplier of 1.7% of final average pay times years of service, as opposed to the current 1.6%;
(3) A temporary annuity multiplier of 0.8% for persons retiring under "80 and out" that raises benefits until early Social Security benefits are available (age 62);
(4) Eligibility for early retirement at age 57 with 5 years of service, as opposed to the current age 55 with 10 years of service;
(5) Four survivor benefit options that reduce the annuity during the retiree's lifetime: 50% benefits to the surviving spouse; 100% benefits to the surviving spouse; 120 monthly payments to a beneficiary; 180 monthly payments to a beneficiary;
(6) Cost-of-living increases of 80% of the increase in the consumer price index, a maximum of 5% (no minimum percentage, which is the same as for the current plan for members hired after August 28, 1997);
(7) For members of the General Assembly at age 55 having at least 4 years of service, benefits of 1/24 (4.17%) of monthly pay times years of credited service. For all members, a cap of 100% of pay is placed on the retirement benefit, and benefits under the current and new plans are not payable to any member serving on or after August 28, 1999, based on services after that date, who is convicted a felony while in the performance of duty. The elected officials benefit formula and age and service requirements are the same as the General Assembly with a 12 year limitation; and (8) Members with 10 or more years of service may receive credit for any public service and will forfeit their rights to benefits under the former plan when transferred.
BOTH STATE EMPLOYEE PLANS - At the present time state employees are entitled to $15,000 of life insurance. This life insurance shall provide for triple indemnity in the event that an employee's death is the result of a personal injury or disease arising out of and in the course of actual performance of duty as a state employee. A duty-related death benefit of 50% of final average pay is established.
COUNTY EMPLOYEE RETIREMENT SYSTEM (CERF) - THIS ACT MAKES SIGNIFICANT REVISIONS TO THE COUNTY EMPLOYEE RETIREMENT SYSTEM (CERF), EFFECTIVE JANUARY 1, 2000. THESE PROVISIONS ARE THE SAME AS SS/SCS/SB 467 AND HCS/HB 911 (1999).
(1) CERF BOARD - The number of Board members is changed from 9 to 11, with the two additional directors appointed by the Governor with the advice and consent of the Senate;
(2) CURRENT LAW - Current CERF (County Employee Retirement System) provisions in effect before the effective date shall apply to any county employee whose employment terminates prior to that date (1/1/2000). This act as amended applies to any county employee who terminates after the effective date;
(3) MEMBERSHIP - On or after January 1, 2000, all new employees shall become members of the System. Non-LAGERS members have a payroll deduction of 2% as their contribution to the Plan. No member after the effective date may opt out of the System. Current employees prior to January 1, 2000, who have opted out of the System must wait 3 years to opt back in, as provided in this act;
(4) NORMAL ANNUITY - For a member not in LAGERS (Local Government Employees Retirement System), the monthly benefit would be the greater of $24 times years of creditable service, up to 25 years, or an amount based on a formula using the target replacement ratio (TRR) of the member multiplied by average final compensation (AFC) minus the member's monthly primary Social Security amount (PSSA), and all of that times years of creditable service (CS, up to 25 years), divided by 25. In short, the formula for the second provision is: ((TRR x AFC) - PSSA) x (CS divided by 25). For members who are also in LAGERS, the normal annuity would be 66.67% of the normal annuity calculation for non-LAGERS members. The normal annuity of a retired member shall not be less than the annuity the member had earned under the current system;
(5) Any member who terminates service with 8 or more years creditable service is entitled to an annuity from the Fund. The member may elect to defer the annuity until age 62, or may begin receiving a reduced annuity at age 55. This act modifies a provision regarding former members with forfeited service;
(6) COST-OF-LIVING - The cost-of-living increase shall not exceed 1% in any year (current law says no more than 2%). The Board may grant additional cost-of-living increases if actuarially feasible;
(7) CREDITABLE PRIOR SERVICE - A member receives creditable service for the entire period of service as a county employee, unless otherwise provided. Absences for sickness or injury for less than 12 months shall count as creditable service. This act authorizes the refund of voluntary early buyback contributions made to purchase prior service, since prior service will now be included in creditable service, instead of requiring prior service to be purchased as is currently done;
(8) SURVIVOR OPTIONS - Three survivor options are offered, that would be the actuarial equivalent of the member's normal annuity with a reduced monthly payment for life, with 100%, 75%, or 50% of the reduced normal annuity paid to member's beneficiary. Once a member has begun receiving benefits, the member cannot change the form of benefit elected or the beneficiary designated, even if the beneficiary dies before the member. If a member dies with at least 8 years of creditable service, the surviving spouse is entitled to survivor benefits under the 50% annuity option. The two-year marriage requirement is removed; and
(9) DEFERRED COMPENSATION - The Board may develop a deferred compensation plan to benefit all county employees eligible for membership in the System. The Board also may make deferred compensation matching contributions.
ST. LOUIS POLICE RETIREMENT SYSTEM -
(1) The widow or eligible child of a member who dies in a duty- related death and who participates in the Deferred Retirement Option Plan (DROP) may elect to have the member's DROP account paid as a monthly survivor annuity, if the election is made within 30 days of the member's death.
(2) An additional 5% is added onto the service retirement allowance for members with 30 years of service. The maximum service retirement allowance is increased from 70% to 75% of the average final compensation. The minimum retirement benefit for retirees and surviving spouses is increased from $550 to $650 per month.
(3) For present and future widows, an additional monthly amount is added of ten times the number of years the widow is past age 60.
(4) Effective October 1, 1999, the ordinary disability retirement allowance is increased from 10% to 15% of the member's average final compensation for up to 3 eligible children of the disabled member. The widow's pension is increased from 25% to 40% of the deceased member's average final compensation for both current and future widows, and the compensation for the benefit of eligible children is increased from 10% to 15%. Additionally, the combined benefit limit of 55% is increased to 70% of the average final compensation. Benefits for any widow of a member who died due to an on-the-job accident are increased from 50% to 75% of the deceased member's average final compensation, with an increase from 10% to 15% in the additional compensation for up to 3 eligible children. Any disabled member, widow or eligible child receiving benefits prior to October 1, 1999, shall receive an additional monthly payment equal to the greater of $100 or 5% of the member's average final compensation for up to 3 eligible children of the member, which shall be adjusted for cost-of- living increases.
ST. LOUIS CITY FIREMEN'S RETIREMENT SYSTEM - This act allows any member of the St. Louis City Firemen's Retirement System who is participating in the Deferred Retirement Option Plan (DROP) program to elect to have the equivalent of his sick leave hours placed in his DROP account. This portion of the act has an emergency clause.
THIS ACT REVISES BENEFITS TO THE PUBLIC SCHOOL RETIREMENT SYSTEM (PSRS) AND THE NON-TEACHERS RETIREMENT SYSTEM (NTRS) AND IS THE SAME AS HCS/HBS 736, 515 & 508.
PUBLIC SCHOOL RETIREMENT SYSTEM (PSRS): (1) Minimum benefits are raised from $400 to $575 and maximums are raised from $600 to $860. The additional payment for each dependent child under age 18 (now one-half of the survivor's base payment) shall be at least $300 per month, but the total payment to spouse including payments for dependents shall not exceed $2160;
(2) Survivor and dependent child benefits shall continue until the child is age 24 years if still in college. Currently, such benefits end at age 22 years;
(3) The act expands the option for a beneficiary, other than a spouse, to select Option 2 survivor benefits if the member dies prior to retirement;
(4) Added is an increase of $2 times years of creditable service to monthly payments for beneficiaries of deceased retirees and, as of September 1, 1999, for beneficiaries of deceased members;
(5) The current minimum retiree benefits applies to the beneficiaries of deceased retirees;
(6) A $5,000 single-sum, death benefit is added for retired members;
(7) Final average salary is determined on final three years rather than final five years of service;
(8) A "Rule of 80" clause is added to allow full retirement when a member's age plus creditable service equals 80 years or more;
(9) An additional $5 times years of creditable service is added to the monthly benefit for those retiring by the effective date of this act and the beneficiaries of retired members who die prior to the effective date of this act; and
(10) A retired teacher may earn up to 50% of the annual compensation payable under the district's salary schedule for the position filled by the retiree and also provides means for determining salary for a position not on the schedule, for newly created positions, and for retirees filling multiple positions. This portion of the act is similar to SB 331.
NON-TEACHERS RETIREMENT SYSTEM (NTRS) - The new provisions in the act include:
(1) An increase of the formula factor from 1.35% to 1.45%;
(2) An increase of the formula factor of 0.1% for those electing to take the "25 and out" option;
(3) A one-time increase for current retirees of 7.4% which will not be subject to the cost of living adjustment (COLA) cap;
(4) Expanding the option for a beneficiary to select option 2 benefits if the member dies prior to retirement. Currently, this option is only available for the member's spouse (if named as the beneficiary); and
(5) Changing NTRS requirements for certain members who were certified as vocational-technical teachers by making the basis for certification a degree or work experience instead of a degree and work experience, which is identical to the PSRS requirements. This portion of the act is similar to SB 180.
BOTH PUBLIC SCHOOL AND NONTEACHER SYSTEMS. Retired members of both systems, except those retired on disability, may establish a second or subsequent membership in the system after a one-year vesting period. Such members will not draw a benefit from their first membership while in covered employment.
EFFECTIVE DATES AND EMERGENCY CLAUSE - The act contains an emergency clause for teachers and firemen and a January 1, 2000, effective date for the County Employees Retirement Sections. The effective date for the MOSERS NEW PLAN is July 1, 2000. August 28, 1999, is the effective date for the remainder of the bill. TOM MORTON/MARGARET J. TOALSON