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H0174.......................................by COMMERCE AND HUMAN RESOURCES PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law relating to the Public Employee Retirement System to provide an increase in the percentage of the average monthly salary used to compute retirement allowances. 02/04 House intro - 1st rdg - to printing 02/05 Rpt prt - to Com/HuRes
H0174|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 174 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1342, 3 IDAHO CODE, TO PROVIDE AN ADJUSTMENT IN THE PERCENTAGE OF AVERAGE MONTHLY 4 SALARY TO BE USED IN THE COMPUTATION OF SERVICE RETIREMENT ALLOWANCES AND 5 TO MAKE TECHNICAL CORRECTIONS. 6 Be It Enacted by the Legislature of the State of Idaho: 7 SECTION 1. That Section 59-1342, Idaho Code, be, and the same is hereby 8 amended to read as follows: 9 59-1342. COMPUTATION OF SERVICE RETIREMENT ALLOWANCES -- MINIMUM BENE- 10 FITS. (1) The annual amount of accrued retirement allowance for each month of 11 credited service for which a member was not classified as a police member or 12 firefighter shall equal one and two-thirdsper centpercent 13 (1 2/3%) of the member's average monthly salary. Effective October 1, 14 1992, the annual amount of accrued retirement allowance for all service for 15 which a member was not classified as a police member or firefighter shall 16 equal one and seventy-five hundredthsper centpercent 17 (1.75%) of the member's average monthly salary; effective October 1, 18 1993, the annual amount of accrued retirement allowance shall equal one and 19 eight hundred thirty-three thousandthsper centpercent 20 (1.833%) of the member's average monthly salary;and21 effective October 1, 1994, the annual amount of accrued retirement allowance 22 shall equal one and nine hundred seventeen thousandthsper cent23 percent (1.917%) ; and effective September 30, 1999, the 24 annual amount of accrued retirement allowance shall equal two percent (2%) 25 of the member's average monthly salary. Entitlement to an annual amount 26 of accrued retirement allowance shall not vest until the effective date of 27 that annual amount of accrued retirement allowance. The retirement benefits 28 shall be calculated on the amounts, terms and conditions in effect on the date 29 of the final contribution by the member. The annual amount of initial service 30 retirement allowance of such a member shall equal (a) or (b), whichever is 31 greater: 32 (a)tT he member's accrued retirement allowance; 33 or 34 (b)fF ive dollars ($5.00) multiplied by the 35 number of months of credited service and by the bridging factor, as pro- 36 vided in section 59-1355, Idaho Code, between July 1, 1974 and the first 37 of the month following the member's final contribution. 38 (2) The annual amount of accrued retirement allowance for each month of 39 credited service for which a member was classified as a police member or fire- 40 fighter shall equal twoper centpercent (2%) of the 41 member's average monthly salary. Effective October 1, 1992, the annual amount 42 of accrued retirement allowance for all service for which a member was classi- 43 fied as a police member or firefighter shall equal two and seventy-five thou- 2 1 sandthsper centpercent (2.075%) of the member's 2 average monthly salary; effective October 1, 1993, the annual amount of 3 accrued retirement allowance shall equal two and fifteen hundredthsper4centpercent (2.15%) of the member's average monthly sal- 5 ary;andeffective October 1, 1994, the annual amount of accrued 6 retirement allowance shall equal two and two hundred twenty-five thousandths 7per centpercent (2.225%) ; and effective Sep- 8 tember 30, 1999, the annual amount of accrued retirement allowance shall equal 9 two and three-tenths percent (2.3%) of the member's average monthly 10 salary. Entitlement to an annual amount of accrued retirement allowance shall 11 not vest until the effective date of that annual amount of accrued retirement 12 allowance. The retirement benefits shall be calculated on the amounts, terms 13 and conditions in effect on the date of the final contribution by the member. 14 The annual amount of initial service retirement allowance of such a member 15 shall equal (a) or (b), whichever is greater: 16 (a)tT he member's accrued retirement allowance; 17 or 18 (b)sS ix dollars ($6.00) multiplied by the num- 19 ber of months of credited service and by the bridging factor, as provided 20 in section 59-1355, Idaho Code, between July 1, 1974 and the first of the 21 month following the member's final contribution. 22 (3) Provisions of this section shall be applicable to members and contin- 23 gent annuitants of the retirement system and to members, annuitants and bene- 24 ficiaries of the teachers and city systems. In any recomputation of an initial 25 retirement allowance for a person not making a final contribution subsequent 26 to 1974, the bridging factor referred to in subsections (1) and (2) shall be 27 1.000. Any recomputed retirement allowance shall be payable only prospectively 28 from July 1, 1974. 29 (4) Benefits payable to a person who became a member prior to July 1, 30 1974, or to the member's beneficiaries shall never be less than they would 31 have received under this chapter as in effect on June 30, 1974; provided, how- 32 ever, that the member shall have accrued the amount of accumulated contribu- 33 tions required thereby prior to payment of an initial retirement allowance. 34 (5) If the majority of a member's credited service is as an elected offi- 35 cial or as an appointed official, except as a member of the Idaho legislature, 36 and that official was normally in the administrative offices of the employer 37 less than twenty (20) hours per week during the term of office, or was nor- 38 mally not required to be present at any particular work station for the 39 employer twenty (20) hours per week or more during the term of office, and 40 that member's initial service retirement allowance for service credited only 41 during that period would be computed under subsection (1)(b) and/or (2)(b) of 42 this section, without consideration of any other credited service, then it 43 will be so computed for that period of service. If that member has credited 44 service from any other employment, the accrued service retirement allowance 45 for the credited service from such other employment shall be computed from an 46 average monthly salary for salary received during the period of such other 47 employment. The initial service retirement allowance of members of the Idaho 48 legislature will be computed under subsection (1) and/or (2) of this section, 49 on the basis of their total months of credited service. 50 (6) In no case, however, will a member's initial service retirement bene- 51 fit be equal to more than the member's accrued benefit as of May 1, 1990, or 52 one hundredper centpercent (100%) of the member's 53 average compensation for the three (3) consecutive years of employment which 54 produce the greatest aggregate compensation, whichever is greater. If the ben- 55 efit is calculated to exceed one hundredper centpercent 3 1 (100%) of the member's average compensation, the member shall be eligi- 2 ble for and may choose either: 3 (a)aA n annual service retirement allowance 4 equal to the member's average annual compensation for the three (3) con- 5 secutive years of employment which produced the greatest aggregate compen- 6 sation; or 7 (b)aA separation benefit. 8 (7) The annual amount of initial service retirement allowance of a member 9 who is over age seventy (70) on the effective date of the member's retirement 10 shall be a percentage of the member's initial service retirement allowance. 11 Such percentage shall be one hundredper centpercent 12 (100%) increased as determined by the board to compensate for each 13 month that the member's retirement is deferred beyond age seventy (70). 14 (8) A member's accrued retirement allowance, as otherwise provided in 15 subsections (1), (2), (3), (4) and (5) of this section, shall not be less than 16 the minimum accrued retirement allowance provided in this subsection. The 17 determination of the initial service retirement allowance provided in subsec- 18 tions (1) and (2) of this section, and the application of the provisions in 19 subsections (6) and (7) of this section, will be made after the determination 20 of the minimum accrued retirement allowance provided in this subsection. 21 This subsection shall apply to members who have at least two (2) separate 22 periods of employment covered under this chapter where each separate period of 23 employment would otherwise be eligible for a separation benefit described in 24 section 59-1359, Idaho Code. For purposes of this subsection, if a separation 25 of employment occurs that does not exceed sixty (60) consecutive calendar 26 months then the member's period of employment shall be considered a continuous 27 period of employment. For purposes of this subsection, date of last contribu- 28 tion is the date of final contribution for each period or periods of employ- 29 ment. 30 For each separate period of employment considered under this subsection, 31 the member must not have received a separation benefit for that period, or if 32 he has received such a separation benefit under section 59-1359, Idaho Code, 33 he must have completed reinstatement of all previous credited service associ- 34 ated with all separation benefits for all periods of employment as permitted 35 under section 59-1360, Idaho Code. 36 The minimum accrued retirement allowance shall be equal to the largest 37 accrued retirement allowance calculated at each date of last contribution 38 based upon the benefit and eligibility provisions in effect as of the date of 39 the last contribution made during such separate period of employment. For pur- 40 poses of determining the accrued retirement allowance for each date of last 41 contribution: 42 (a)tT he member must have at least sixty (60) 43 months of credited service at the date of last contribution; 44 (b)tT he member's months of credited service 45 and average monthly salary are determined basedsoley46 solely on all periods of employment up to that date of last contri- 47 bution, ignoring later periods of employment; and 48 (c)tT he accrued retirement allowance computed 49 for each period is multiplied by the bridging factor as provided in sec- 50 tion 59-1355(3), Idaho Code, between the date of the last contribution 51 made during that separate period of employment and the date of the 52 member's final contribution made during the last period of employment 53 prior to retirement.
STATEMENT OF PURPOSE
RS 08816
This legislation will change one component in the formula used
by the Public Employee Retirement System of Idaho (PERSI) to
determine the monthly benefit paid to retiring employees. It
amends Idaho Code 59-1342 by increasing the multiplier for
service retirement allowance from the current 1.917% to 2.0% for
general employees and from 2.225% to 2.3% for police members and
firefighters.
FISCAL NOTE
This bill would increase the normal cost of the PERSI system by
.55% of pay, which increases the total temporary contribution
rate from 15.78% to 16.33%. of this increase, .34% will be the
responsibility of the employers, .21% the responsibility of
general employees, and .24% the responsibility of police members
and firefighters. As of July 1, 1998, PERSI's actuaries reported
that the systems's unfunded liability has been completely
eliminated; and , in fact, the funding ratio stood at 108.6%.
The actuaries also estimated that, had the change proposed in
this legislation been in effect, that ratio would have been
reduced to 105.6%(a reduction of $142.1 million, leaving $292.6
million more in assets than liabilities). The proposed
improvements can be implemented without increasing the total
employer and employee contribution rate above the current
permanent rates of 17.78% that has been established by the PERSI
Board and which should have been budgeted for by employer units.
The total contribution rate is assumed to go to the permanent
rate on November 1, 1999, if the Board takes no action to extend
the temporary period. RS 08816 Page 2
CONTACTS:
Representative Tom Trail (For all contacts:208/332-2100)
Representative Bert Marley
Senator John Andreason
OTHER CO-SPONSORS:
Representative Max Black Senator Cecil Ingram
Representative Wendy Jaquet Senator Shawn Keough
Representative Doug Jones Senator Marguerite McLaughlin
Representative Shirley Ringo Senator Gary Schroeder
Representative Tim Ridinger Senator Sheila Sorensen
Representative Ruby Stone Senator Betsy Dunklin
STATEMENT OF PURPOSE/ FISCAL NOTE Bill No. H 174