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H0730..........................................................by EDUCATION PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law to reduce the number of months used to calculate the base period and increase the rate for computation of service retirement in the Public Employee Retirement System and to provide a factory for computation of early retirement allowances. 02/16 House intro - 1st rdg - to printing 02/17 Rpt prt - to HuRes
H0730|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 730 BY EDUCATION COMMITTEE 1 AN ACT 2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1302, 3 IDAHO CODE, TO ADOPT AN ADJUSTMENT IN THE COMPUTATION OF CALENDAR MONTHS 4 FOR BASE PERIOD; AMENDING SECTION 59-1342, IDAHO CODE, TO ADOPT A RATE 5 ADJUSTMENT IN THE COMPUTATION OF SERVICE RETIREMENT ALLOWANCES AND TO MAKE 6 TECHNICAL CORRECTIONS; AND AMENDING SECTION 59-1346, IDAHO CODE, TO PRO- 7 VIDE THE FACTOR FOR COMPUTATION OF EARLY RETIREMENT ALLOWANCES. 8 Be It Enacted by the Legislature of the State of Idaho: 9 SECTION 1. That Section 59-1302, Idaho Code, be, and the same is hereby 10 amended to read as follows: 11 59-1302. DEFINITIONS. (1) As used in this chapter, each of the terms 12 defined in this section shall have the meaning given in this section unless a 13 different meaning is clearly required by the context. 14 (2) "Active member" means any employee who is not establishing the right 15 to receive benefits through his or her employer's participation in any other 16 retirement system established for Idaho public employees, if such participa- 17 tion is mandated by applicable Idaho statutes other than this chapter. In no 18 case will an employee be entitled to any benefit under this chapter for public 19 service if such employee is establishing retirement benefit entitlements by 20 other Idaho statutes or federal statutes other than military service or social 21 security for that same service. 22 (3) "Accumulated contributions" means the sum of amounts contributed by a 23 member of the system, together with regular interest credit thereon. 24 (4) "Actuarial equivalent" means a benefit equal in value to another ben- 25 efit, when computed upon the basis of the actuarial tables in use by the sys- 26 tem. 27 (5) "Actuarial tables" means such tables as shall have been adopted by 28 the board in accordance with recommendations of the actuary. 29 (5A) "Average monthly salary" means the member's average salary during 30 the base period as calculated pursuant to rules adopted by the retirement 31 board. 32 (5B) (a) "Base period" means the period of fifty-four (54) consecutive 33 calendar months during which the member earned: 34 (i) The highest average salary; and 35 (ii) Membership service of at least one-half (1/2) the number of 36 months in the period, excluding months of service attributable to: 37 A. Military service; 38 B. Service qualifying as minimum benefit pursuant to section 39 59-1342(5), Idaho Code; and 40 C. Worker's compensation income benefits. 41 (b) Effective October 1, 1993, the consecutive calendar months shall be 42 forty-eight (48). Effective October 1, 1994, the consecutive calendar 43 months shall be forty-two (42). Effective August 1, 1998, the con- 2 1 secutive calendar months shall be thirty-six (36). 2 (c) Entitlement to a base period shall not vest until the effective date 3 of that base period. The retirement benefits shall be calculated on the 4 amounts, terms and conditions in effect at the date of the final contribu- 5 tion by the member. 6 (d) If no base period exists for a member, the member's average monthly 7 salary shall be determined by the board, using standards not inconsistent 8 with those established in this subsection. 9 (e) To assure equitable treatment for all members, salary increments 10 inconsistent with usual compensation patterns may be disallowed by the 11 board in determining average monthly salary and base period. 12 (6) "Beneficiary" means the person who is nominated by the written desig- 13 nation of a member, duly executed and filed with the board, to receive the 14 death benefit. 15 (7) "Calendar year" means twelve (12) calendar months commencing on the 16 first day of January. 17 (8) "Credited service" means the aggregate of membership service, prior 18 service and disabled service. 19 (9) "Date of establishment" means July 1, 1965, or a later date estab- 20 lished by the board or statute. 21 (10) "Death benefit" means the amount, if any, payable upon the death of a 22 member. 23 (11) "Disability retirement allowance" means the periodic payment becoming 24 payable upon an active member's ceasing to be an employee while eligible for 25 disability retirement. 26 (12) "Disabled" means: 27 (a) That the member is prevented from engaging in any occupation or 28 employment for remuneration or profit as a result of bodily injury or dis- 29 ease, either occupational or nonoccupational in cause, but excluding dis- 30 abilities resulting from service in the armed forces of any country, or 31 from an intentionally self-inflicted injury; and 32 (b) That the member will likely remain so disabled permanently and con- 33 tinuously during the remainder of the member's life. 34 It is not necessary that a person be absolutely helpless or entirely unable to 35 do anything worthy of compensation to be considered disabled. If the person is 36 so disabled that substantially all the avenues of employment are reasonably 37 closed to the person, that condition is within the meaning of "disabled." In 38 evaluating whether a person is disabled, medical factors and nonmedical fac- 39 tors including, but not limited to, education, economic and social environ- 40 ment, training and usable skills may be considered. 41 Refusal to submit to a medical examination ordered by the board before the 42 commencement of a disability retirement allowance or at any reasonable time 43 thereafter shall constitute proof that the member is not disabled. The board 44 shall be empowered to select for such medical examination one (1) or more phy- 45 sicians or surgeons who are licensed to practice medicine and perform surgery. 46 The fees and expenses of such examination shall be paid from the administra- 47 tion account of the fund. No member shall be required to undergo such examina- 48 tion more often than once each year after he has received a disability retire- 49 ment allowance continuously for two (2) years. 50 (12A) "Disabled service" means the total number of months elapsing from 51 the first day of the month next succeeding the final contribution of a member 52 prior to receiving a disability retirement allowance to the first day of the 53 month following the date of termination of such disability retirement allow- 54 ance. During such period, the member shall remain classified in the membership 55 category held during the month of final contribution. The total number of 3 1 months of disabled service credited for a person first becoming disabled after 2 the effective date of this chapter shall not exceed the excess, if any, of 3 three hundred sixty (360) over the total number of months of prior service and 4 membership service. 5 (13) "Early retirement allowance" means the periodic payment becoming pay- 6 able upon an active member's ceasing to be an employee while eligible for 7 early retirement. 8 (14) (A) "Employee" means: 9 (a) Any person who normally works twenty (20) hours or more per week for 10 an employer or a school teacher who works half-time or more for an 11 employer and who receives salary for services rendered for such employer; 12 or 13 (b) Elected officials or appointed officials of an employer who receive a 14 salary; or 15 (c) A person who is separated from service with less than five (5) con- 16 secutive months of employment and who is reemployed or reinstated by the 17 same employer within thirty (30) days. 18 (B) "Employee" does not include employment as: 19 (a) A person rendering service to an employer in the capacity of an inde- 20 pendent business, trade or profession; or 21 (b) A person whose employment with any employer does not total five (5) 22 consecutive months; or 23 (c) A person provided sheltered employment or made-work by a public 24 employer in an employment or industries program maintained for the benefit 25 of such person; or 26 (d) An inmate of a state institution, whether or not receiving compensa- 27 tion for services performed for the institution; or 28 (e) A student enrolled in an undergraduate, graduate, or vocational- 29 technical program at and employed by a state college, university, commu- 30 nity college or vocational-technical center when such employment is predi- 31 cated on student status; or 32 (f) A person making contributions to the United States civil service com- 33 mission under the United States Civil Service System Retirement Act except 34 that a person who receives separate remuneration for work currently per- 35 formed for an employer and the United States government may elect to be a 36 member of the retirement system in accordance with rules of the board; or 37 (g) A person occupying a position that does not exceed eight (8) consecu- 38 tive months in a calendar year with a city or county when the city or 39 county has certified, in writing to the system, the position is (i) sea- 40 sonal or casual; and (ii) affected by weather and the growing season, 41 including parks and golf course positions. 42 (15) "Employer" means the state of Idaho, or any political subdivision or 43 governmental entity, provided such subdivision or entity has elected to come 44 into the system. Governmental entity means any organization composed of units 45 of government of Idaho or organizations funded only by government or employee 46 contributions or organizations who discharge governmental responsibilities or 47 proprietary responsibilities that would otherwise be performed by government. 48 All governmental entities are deemed to be political subdivisions for the pur- 49 pose of this chapter. 50 (15A) "Final contribution" means the final contribution made by a member 51 pursuant to sections 59-1331 through 59-1334, Idaho Code. 52 (16) "Firefighter" means an employee, including paid firefighters hired on 53 or after October 1, 1980, whose primary occupation is that of preventing and 54 extinguishing fires as determined by the rules of the board. 55 (17) "Fiscal year" means the period beginning on July 1 in any year and 4 1 ending on June 30 of the next succeeding year. 2 (18) "Fund" means the public employee retirement fund established by this 3 chapter. 4 (19) "Funding agent" means any bank or banks, trust company or trust com- 5 panies, legal reserve life insurance company or legal reserve life insurance 6 companies, or combinations thereof, any thrift institution or credit union or 7 any investment management firm or individual investment manager selected by 8 the board to hold and/or invest the employers' and members' contributions and 9 pay certain benefits granted under this chapter. 10 (20) "Inactive member" means a former active member who is not an employee 11 and is not receiving any form of retirement allowance, but for whom a separa- 12 tion benefit has not become payable. 13 (21) "Member" means an active member, inactive member or a retired member. 14 (22) "Membership service" means service with respect to which contribu- 15 tions are payable under sections 59-1331 through 59-1334, Idaho Code, and mil- 16 itary service which occurs after the commencement of such contributions. 17 (23) "Military service" means active duty service in the armed forces of 18 the United States including the national guard and reserves, under the provi- 19 sions of title 10, title 32, and title 37, United States code. Provided, how- 20 ever, for the purposes of this chapter, military service SHALL NOT include: 21 (a) Any period ended by dishonorable discharge or during which termina- 22 tion of such service is available but not accepted; 23 (b) Any period which commences more than ninety (90) days after the per- 24 son ceases to be an employee or ends more than ninety (90) days before the 25 person again becomes an employee unless such ninety (90) day requirements 26 are waived by the board due to circumstances beyond the employee's con- 27 trol; or 28 (c) Any active duty service in excess of five (5) years if at the conve- 29 nience of the United States government, or in excess of four (4) years if 30 not at the convenience of the United States government. 31 (24) (a) "Police officer" for retirement purposes shall be as defined in 32 section 59-1303, Idaho Code. 33 (b) "POST" means the Idaho peace officer standards and training council 34 established in chapter 51, title 19, Idaho Code. 35 (25) "Prior service" means any period prior to July 1, 1965, of military 36 service or of employment for the state of Idaho or any political subdivision 37 or other employer of each employee who is an active member or in military ser- 38 vice or on leave of absence on the date of establishment, provided, however, 39 an employee who was not an active member or in military service or on leave of 40 absence on the date of establishment shall receive credit for the member's 41 service prior to July 1, 1965, on the basis of recognizing two (2) months of 42 such service for each month of membership service. For the purpose of comput- 43 ing such service, no deduction shall be made for any continuous period of 44 absence from service or military service of six (6) months or less. 45 (26) "Regular interest" means interest at the rate set from time to time 46 by the board. 47 (27) "Retired member" means a former active member receiving a retirement 48 allowance. 49 (28) "Retirement" means the acceptance of a retirement allowance under 50 this chapter upon termination of employment. 51 (29) "Retirement board" or "board" means the board provided for in sec- 52 tions 59-1304 and 59-1305, Idaho Code, to administer the retirement system. 53 (30) "Retirement system" or "system" means the public employee retirement 54 system of Idaho. 55 (31) (A) "Salary" means: 5 1 (a) The total salary or wages paid to a person who meets the definition 2 of employee by an employer for personal services performed and reported 3 by the employer for income tax purposes, including the cash value of all 4 remuneration in any medium other than cash. 5 (b) The total amount of any voluntary reduction in salary agreed to by 6 the member and employer where the reduction is used as an alternative form 7 of remuneration to the member. 8 (B) Salary in excess of the compensation limitations set forth in section 9 401(a)(17) of the Internal Revenue Code shall be disregarded for any person 10 who becomes a member of the system on or after July 1, 1996. The system had no 11 limitations on compensation in effect on July 1, 1993. The compensation limi- 12 tations set forth in section 401(1)(17) of the Internal Revenue Code shall not 13 apply for an "eligible employee." For purposes of this subsection, "eligible 14 employee" is an individual who was a member of the system before July 1, 1996. 15 (C) "Salary" does not include: 16 (a) Contributions by employers to employee held medical savings accounts, 17 as those accounts are defined in section 63-3022K, Idaho Code. 18 (b) Lump sum payments inconsistent with usual compensation patterns made 19 by the employer to the employee only upon termination from service includ- 20 ing, but not limited to, vacation payoffs, sick leave payoffs, early 21 retirement incentive payments and bonuses. 22 (32) "Separation benefit" means the amount, if any, payable upon or subse- 23 quent to separation from service. 24 (33) "Service" means being shown on an employer's payroll as an employee 25 receiving a salary. Service of fifteen (15) days or more during any calendar 26 month shall be credited as one (1) month of service. Service of fourteen (14) 27 days or less during any calendar month shall not be credited. No more than one 28 (1) month of service shall be credited for all service in any month. 29 (34) "Service retirement allowance" means the periodic payment becoming 30 payable upon an active member's ceasing to be an employee while eligible for 31 service retirement. 32 (35) "State" means the state of Idaho. 33 (36) "Vested retirement allowance" means the periodic payment becoming 34 payable upon an inactive member's becoming eligible for vested retirement. 35 (37) The masculine pronoun, wherever used, shall include the feminine pro- 36 noun. 37 SECTION 2. That Section 59-1342, Idaho Code, be, and the same is hereby 38 amended to read as follows: 39 59-1342. COMPUTATION OF SERVICE RETIREMENT ALLOWANCES -- MINIMUM BENE- 40 FITS. (1) The annual amount of accrued retirement allowance for each month of 41 credited service for which a member was not classified as a police member or 42 firefighter shall equal one and two-thirdsper centpercent 43 (1 2/3%) of the member's average monthly salary. Effective October 1, 44 1992, the annual amount of accrued retirement allowance for all service for 45 which a member was not classified as a police member or firefighter shall 46 equal one and seventy-five hundredthsper centpercent 47 (1.75%) of the member's average monthly salary; effective October 1, 48 1993, the annual amount of accrued retirement allowance shall equal one and 49 eight hundred thirty-three thousandthsper centpercent 50 (1.833%) of the member's average monthly salary;and51 effective October 1, 1994, the annual amount of accrued retirement allowance 52 shall equal one and nine hundred seventeen thousandthsper cent53 percent (1.917%) of the member's average monthly salary ; 6 1 and effective August 1, 1998, the annual amount of accrued retirement allow- 2 ance shall equal two percent (2%) of the member's average monthly salary 3 . Entitlement to an annual amount of accrued retirement allowance shall 4 not vest until the effective date of that annual amount of accrued retirement 5 allowance. The retirement benefits shall be calculated on the amounts, terms 6 and conditions in effect on the date of the final contribution by the member. 7 The annual amount of initial service retirement allowance of such a member 8 shall equal (a) or (b), whichever is greater: 9 (a) the member's accrued retirement allowance; or 10 (b) five dollars ($5.00) multiplied by the number of months of credited 11 service and by the bridging factor, as provided in section 59-1355, Idaho 12 Code, between July 1, 1974 and the first of the month following the 13 member's final contribution. 14 (2) The annual amount of accrued retirement allowance for each month of 15 credited service for which a member was classified as a police member or fire- 16 fighter shall equal twoper centpercent (2%) of the 17 member's average monthly salary. Effective October 1, 1992, the annual amount 18 of accrued retirement allowance for all service for which a member was classi- 19 fied as a police member or firefighter shall equal two and seventy-five thou- 20 sandthsper centpercent (2.075%) of the member's 21 average monthly salary; effective October 1, 1993, the annual amount of 22 accrued retirement allowance shall equal two and fifteen hundredthsper23centpercent (2.15%) of the member's average monthly sal- 24 ary;andeffective October 1, 1994, the annual amount of accrued 25 retirement allowance shall equal two and two hundred twenty-five thousandths 26per centpercent (2.225%) of the member's average 27 monthly salary ; and effective August 1, 1998, the annual amount of 28 accrued retirement allowance shall equal two and three-tenths percent (2.3%) 29 of the member's average monthly salary . Entitlement to an annual amount 30 of accrued retirement allowance shall not vest until the effective date of 31 that annual amount of accrued retirement allowance. The retirement benefits 32 shall be calculated on the amounts, terms and conditions in effect on the date 33 of the final contribution by the member. The annual amount of initial service 34 retirement allowance of such a member shall equal (a) or (b), whichever is 35 greater: 36 (a) the member's accrued retirement allowance; or 37 (b) six dollars ($6.00) multiplied by the number of months of credited 38 service and by the bridging factor, as provided in section 59-1355, Idaho 39 Code, between July 1, 1974 and the first of the month following the 40 member's final contribution. 41 (3) Provisions of this section shall be applicable to members and contin- 42 gent annuitants of the retirement system and to members, annuitants and bene- 43 ficiaries of the teachers and city systems. In any recomputation of an initial 44 retirement allowance for a person not making a final contribution subsequent 45 to 1974, the bridging factor referred to in subsections (1) and (2) shall be 46 1.000. Any recomputed retirement allowance shall be payable only prospectively 47 from July 1, 1974. 48 (4) Benefits payable to a person who became a member prior to July 1, 49 1974, or to the member's beneficiaries shall never be less than they would 50 have received under this chapter as in effect on June 30, 1974; provided, how- 51 ever, that the member shall have accrued the amount of accumulated contribu- 52 tions required thereby prior to payment of an initial retirement allowance. 53 (5) If the majority of a member's credited service is as an elected offi- 54 cial or as an appointed official, except as a member of the Idaho legislature, 55 and that official was normally in the administrative offices of the employer 7 1 less than twenty (20) hours per week during the term of office, or was nor- 2 mally not required to be present at any particular work station for the 3 employer twenty (20) hours per week or more during the term of office, and 4 that member's initial service retirement allowance for service credited only 5 during that period would be computed under subsection (1)(b) and/or (2)(b) of 6 this section, without consideration of any other credited service, then it 7 will be so computed for that period of service. If that member has credited 8 service from any other employment, the accrued service retirement allowance 9 for the credited service from such other employment shall be computed from an 10 average monthly salary for salary received during the period of such other 11 employment. The initial service retirement allowance of members of the Idaho 12 legislature will be computed under subsection (1) and/or (2) of this section, 13 on the basis of their total months of credited service. 14 (6) In no case, however, will a member's initial service retirement bene- 15 fit be equal to more than the member's accrued benefit as of May 1, 1990, or 16 one hundredper centpercent (100%) of the member's 17 average compensation for the three (3) consecutive years of employment which 18 produce the greatest aggregate compensation, whichever is greater. If the ben- 19 efit is calculated to exceed one hundredper centpercent 20 (100%) of the member's average compensation, the member shall be eligi- 21 ble for and may choose either: 22 (a) an annual service retirement allowance equal to the member's average 23 annual compensation for the three (3) consecutive years of employment 24 which produced the greatest aggregate compensation; or 25 (b) a separation benefit. 26 (7) The annual amount of initial service retirement allowance of a member 27 who is over age seventy (70) on the effective date of the member's retirement 28 shall be a percentage of the member's initial service retirement allowance. 29 Such percentage shall be one hundredper centpercent 30 (100%) increased as determined by the board to compensate for each 31 month that the member's retirement is deferred beyond age seventy (70). 32 (8) A member's accrued retirement allowance, as otherwise provided in 33 subsections (1), (2), (3), (4) and (5) of this section, shall not be less than 34 the minimum accrued retirement allowance provided in this subsection. The 35 determination of the initial service retirement allowance provided in subsec- 36 tions (1) and (2) of this section, and the application of the provisions in 37 subsections (6) and (7) of this section, will be made after the determination 38 of the minimum accrued retirement allowance provided in this subsection. 39 This subsection shall apply to members who have at least two (2) separate 40 periods of employment covered under this chapter where each separate period of 41 employment would otherwise be eligible for a separation benefit described in 42 section 59-1359, Idaho Code. For purposes of this subsection, if a separation 43 of employment occurs that does not exceed sixty (60) consecutive calendar 44 months then the member's period of employment shall be considered a continuous 45 period of employment. For purposes of this subsection, date of last contribu- 46 tion is the date of final contribution for each period or periods of employ- 47 ment. 48 For each separate period of employment considered under this subsection, 49 the member must not have received a separation benefit for that period, or if 50 he has received such a separation benefit under section 59-1359, Idaho Code, 51 he must have completed reinstatement of all previous credited service associ- 52 ated with all separation benefits for all periods of employment as permitted 53 under section 59-1360, Idaho Code. 54 The minimum accrued retirement allowance shall be equal to the largest 55 accrued retirement allowance calculated at each date of last contribution 8 1 based upon the benefit and eligibility provisions in effect as of the date of 2 the last contribution made during such separate period of employment. For pur- 3 poses of determining the accrued retirement allowance for each date of last 4 contribution: 5 (a) the member must have at least sixty (60) months of credited service 6 at the date of last contribution; 7 (b) the member's months of credited service and average monthly salary 8 are determined basedsoleysolely on all periods 9 of employment up to that date of last contribution, ignoring later periods 10 of employment; and 11 (c) the accrued retirement allowance computed for each period is multi- 12 plied by the bridging factor as provided in section 59-1355(3), Idaho 13 Code, between the date of the last contribution made during that separate 14 period of employment and the date of the member's final contribution made 15 during the last period of employment prior to retirement. 16 SECTION 3. That Section 59-1346, Idaho Code, be, and the same is hereby 17 amended to read as follows: 18 59-1346. COMPUTATION OF EARLY RETIREMENT ALLOWANCES. (1) The annual 19 amount of initial early retirement allowance of a member shall be a percentage 20 of the member's accrued retirement allowance. Such percentage shall be one 21 hundred percent (100%) if the sum of the number of years and months of cred- 22 ited service and the age in years and months is equal to or greater than the 23 sum indicated below. Otherwise, such percentage shall be one hundred percent 24 (100%) reduced by one-fourth of one percent (.25%) for each month up to sixty 25 (60) months that the member's retirement precedes the date the member would be 26 eligible to receive full accrued benefit without additional credited service, 27 and further reduced by two-thirds of one percent (.6667%) for each additional 28 month. Effective October 1, 1992, the further reduction for each additional 29 month shall equal six thousand and forty-two ten-thousandths of one percent 30 (.6042%) of the member's average monthly salary; effective October 1, 1993, 31 the further reduction for each additional month shall equal five thousand four 32 hundred and seventeen ten-thousandths of one percent (.5417%) of the member's 33 average monthly salary;andeffective October 1, 1994, the fur- 34 ther reduction for each additional month shall equal four thousand seven hun- 35 dred and ninety-two ten-thousandths of one percent (.4792%) of the member's 36 average monthly salary ; and effective August 1, 1998, the further reduc- 37 tion for each additional month shall equal four thousand one hundred and 38 sixty-seven ten-thousandths of one percent (.4167%) of the member's average 39 monthly salary . Entitlement to an annual amount of accrued retirement 40 allowance shall not vest until the effective date of that annual amount of 41 accrued retirement allowance. The retirement benefits shall be calculated on 42 the amounts, terms and conditions in effect at the date of the final contribu- 43 tion by the member. 44 If a member's service retire- Then the sum of the member's 45 ment ratio as defined by section credited service and age must be 46 59-1341, Idaho Code, is: equal to or greater than: 47 0.000 to 0.050 90 48 0.051 to 0.150 89 49 0.151 to 0.250 88 50 0.251 to 0.350 87 51 0.351 to 0.450 86 52 0.451 to 0.550 85 53 0.551 to 0.650 84 9 1 0.651 to 0.750 83 2 0.751 to 0.850 82 3 0.851 to 0.950 81 4 0.951 to 1.000 80. 5 (2) If the majority of a member's credited service is as an elected offi- 6 cial or as an appointed official, except as a member of the Idaho legislature, 7 and that official was normally in the administrative offices of the employer 8 less than twenty (20) hours per week during the term of office, or was nor- 9 mally not required to be present at any particular work station for the 10 employer twenty (20) hours per week or more during the term of office, that 11 member's accrued retirement allowance for service credited only during that 12 period shall be computed from an average monthly salary for salary received 13 during that period of such employment only. The initial service retirement 14 allowance of members of the Idaho legislature will be computed under the pro- 15 visions of this section, on the basis of their total months of credited ser- 16 vice. 17 (3) If that member has credited service from any other employment, the 18 accrued retirement allowance for the credited service from such other employ- 19 ment shall be computed from an average monthly salary for salary received dur- 20 ing the period of such other employment.
STATEMENT OF PURPOSE
RS 07944C2
This legislation provides a benefit enhancement in the Idaho
Public Employee Retirement System (PEPSI) to bring the system's
retirement equity close to the average of other western states. To
do so it amends Section 59-1302, Idaho Code, to adopt an
adjustment in computation of calendar months for base period;
modifies early retirement reductions in Idaho Code 59-1346; and
amends Section 59-1342, to adopt a rate adjustment in computation
of service retirement allowance. These modifications are
appropriate at this time as the basic amortization of unfunded
liability is now 2 years, with 96% fully funded. This is a
significant reduction from the acturarial determination of 22
years of unfunded liability in 1994 and so represents optimal
conditions for the legislative intent of this bill.
With COLA increases for retirees and the present rebate included,
the amortization of unfunded liability increases from 2 to 3.4
years. The intent is that the employee and employer's contribution
rates not be increased above their normal rates. The effective
date will be August 1, 1998, which will affect those who retire on
or after September 1, 1998.
FISCAL NOTE
This bill would increase the normal cost of the PERSI system by
.82% pay, from 14.95% to 15.77%. In addition, the unfunded
acturarial liability (UAL) would increase by $211.9 million, to
$423.2 million. To pay for this increase it is intended that the
contribution rates of public employees and the employer rate not
be increased above their normal rates.
The effect is an increase in amortization of the unfunded
liability by 6.3 years--that is, from 3.4 years to 9.7 years.
These numbers are based on June 30, 1997, valuations, which
could impact positively or negatively, based on fiscal year 1998
investment performance.CONTACT: Representative Maynard Miller
Senator John Andreason
208-332-1000
H 730