View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
H0510.......................................by COMMERCE AND HUMAN RESOURCES PUBLIC EMPLOYEE RETIREMENT SYSTEM - Adds to and amends existing law to provide for the allocation of extraordinary gains of the retirement fund to retirees, active members and employers; to define "extraordinary gains"; to provide for allocations between retirees, active members and employers; to provide the manner and timing of the allocations; to provide for allocations to active members and eligibility to receive allocations; to provide the formula for and timing of allocations to active members; to provide for allocations to employers as a credit against future contributions; to provide the formula for employer credit against future contributions; to provide the formula for employer allocations and application of credits; to provide for carryover of unused credits; to provide for supplemental benefit plan accounts for active members eligible to receive extraordinary gains transfers; and to provide for members' additional voluntary contributions to their accounts. 02/04 House intro - 1st rdg - to printing 02/07 Rpt prt - to Com/HuRes 02/10 Rpt out - rec d/p - to 2nd rdg 02/11 2nd rdg - to 3rd rdg 02/15 3rd rdg - PASSED - 69-0-1 AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe, Bruneel, Callister, Campbell, Chase, Cheirrett, Clark, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley, Hammond, Hansen(23), Hansen(29), Henbest, Jaquet, Jones, Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Linford, Loertscher, Mader, Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman, Trail(Miller), Wheeler, Wood, Zimmermann, Mr Speaker NAYS -- None Absent and excused -- Hornbeck Floor Sponsor - Lake Title apvd - to Senate 02/16 Senate intro - 1st rdg - to Com/HuRes 03/08 Rpt out - rec d/p - to 2nd rdg 03/09 2nd rdg - to 3rd rdg 03/28 3rd rdg - PASSED - 35-0-0 AYES -- Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron, Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh, Parry, Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth, Williams NAYS -- None Absent and excused -- None Floor Sponsor - Cameron Title apvd - to House 03/29 To enrol 03/30 Rpt enrol - Sp signed - Pres signed 03/31 To Governor 04/05 Governor signed Session Law Chapter 208 Effective: 04/05/00 with delayed implementation under specified circumstances at discretion of Retirement Board
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 510 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1308, 3 IDAHO CODE, TO PROVIDE FOR ONE OR MORE SUPPLEMENTAL BENEFIT PLANS TO BE 4 USED FOR ALLOCATION OF EXTRAORDINARY GAINS OF THE RETIREMENT FUND AND VOL- 5 UNTARY CONTRIBUTIONS OF ACTIVE MEMBERS, TO PROVIDE FOR ESTABLISHMENT OF 6 TAX-DEFERRED PLANS AND FOR STAFF AND CONSULTANTS TO ADMINISTER SUCH PLANS, 7 TO PROVIDE FOR INVESTMENT OPTIONS, TO PROVIDE FOR EDUCATIONAL OPPORTUNI- 8 TIES RELATED TO SUPPLEMENTAL BENEFIT PLANS AND RETIREMENT SAVINGS, TO PRO- 9 VIDE FOR ACTIVE MEMBER ACCOUNTS FOR EXTRAORDINARY GAINS TRANSFERS AND VOL- 10 UNTARY CONTRIBUTIONS, TO PROVIDE FOR COORDINATION OF CONTRIBUTIONS BETWEEN 11 MULTIPLE PLANS, TO PROVIDE DUTIES OF THE EMPLOYER, TO EXEMPT INVESTMENT 12 RELATED EXPENSES FROM APPROPRIATION, TO PROVIDE FOR DISTRIBUTION OF FUNDS 13 HELD IN SUPPLEMENTAL BENEFIT PLAN ACCOUNTS, TO PROVIDE THAT FUNDS ACCRUED 14 IN A SUPPLEMENTAL BENEFIT PLAN ACCOUNT SHALL NOT BE CONSIDERED IN DETER- 15 MINING ANY OTHER RETIREMENT BENEFITS, TO PROVIDE FOR CONFIDENTIALITY AND 16 INALIENABILITY OF SUPPLEMENTAL BENEFIT PLANS, TO PROVIDE THAT A COURT-OR- 17 DERED ASSIGNMENT OF ALL OR PART OF A SUPPLEMENTAL BENEFIT PLAN ACCOUNT TO 18 A PARTICIPANT'S SPOUSE OR FORMER SPOUSE SHALL BE DISTINCT FROM AN APPROVED 19 DOMESTIC RETIREMENT ORDER AND TO MAKE TECHNICAL CORRECTIONS; AMENDING 20 CHAPTER 13, TITLE 59, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 21 59-1309, IDAHO CODE, TO PROVIDE FOR ALLOCATION OF EXTRAORDINARY GAINS TO 22 RETIREES, ACTIVE MEMBERS AND EMPLOYERS, TO DEFINE EXTRAORDINARY GAINS, TO 23 PROVIDE FOR ALLOCATIONS BETWEEN RETIREES, ACTIVE MEMBERS AND EMPLOYERS, TO 24 PROVIDE THE MANNER AND TIMING OF ALLOCATIONS TO RETIREES, TO DEFINE 25 RETIREES, TO PROVIDE THE FORMULA FOR THE RETIREE ALLOCATION, TO PROVIDE 26 FOR ALLOCATIONS TO ACTIVE MEMBERS AND ELIGIBILITY TO RECEIVE ALLOCATIONS, 27 TO PROVIDE THE FORMULA FOR AND TIMING OF ALLOCATIONS TO ACTIVE MEMBERS, TO 28 PROVIDE FOR ALLOCATIONS TO EMPLOYERS AS A CREDIT AGAINST FUTURE CONTRIBU- 29 TIONS, TO PROVIDE THE FORMULA FOR EMPLOYER ALLOCATIONS AND APPLICATION OF 30 CREDITS AND TO PROVIDE FOR CARRY OVER OF UNUSED CREDITS; DECLARING AN 31 EMERGENCY AND PROVIDING FOR DELAYED IMPLEMENTATION UNDER SPECIFIED CIRCUM- 32 STANCES. 33 Be It Enacted by the Legislature of the State of Idaho: 34 SECTION 1. That Section 59-1308, Idaho Code, be, and the same is hereby 35 amended to read as follows: 36 59-1308. SUPPLEMENTAL BENEFIT PLAN ESTABLISHED AND FUND CREATED-- CON- 37 TRIBUTIONS AND EXPENSES OF THE SUPPLEMENTAL BENEFIT PLAN -- INDEMNIFICATION. 38 (1) As of January 1, 1995, tThe state shall sponsor and the board shall admin- 39 ister aone (1) or more supplemental benefit plans to be used for allocation 40 of extraordinary gains as provided in section 59-1309, Idaho Code, and for 41 voluntary contributions of active members. The supplemental plans may be 42 established under the qualified requirements of section 401(a) of the Internal 43 Revenue Service Code and with the qualified cash or deferred arrangements 2 1 under section 401(k) of the Internal Revenue Service Code or any other tax- 2 deferred plan permitted by law, as determined by the retirement board. The 3 board is authorized to secure such qualified staff and consultants as it 4 determines necessary to establish and administer such plans. Employee and 5 employer contributions shall be permitted according to the provisions of this6 these plans as established by the board. For purposes of this section 7 "employee" shall mean a participant as defined in the supplemental benefit 8 plan documents or board rules. 9 (2) The board is authorized, but not required, to establish aseparate 10 trust funds to hold the assets of the supplemental benefit plans created under 11 this section. The investment options available under supplemental benefit 12 plans shall be determined by the board, and may include, but are not limited 13 to, investment in all or part of the public employee retirement fund and use 14 of private vendor options. 15 (3) The sSupplemental benefit plans shall be available to employeesall 16 active members and shall be in addition to any other retirement or tax 17 deferred compensation system established by the employer. The board may pro- 18 vide educational opportunities related to supplemental benefit plans and 19 retirement savings, as determined by the board. 20 (4) An employee may participate in the supplemental benefit planAccounts 21 shall be established in supplemental benefit plans for all active members eli- 22 gible for an extraordinary gains transfer under section 59-1309, Idaho Code. 23 After receiving an extraordinary gains transfer, an active member may make 24 additional voluntary contributions to his/her account, subject to applicable 25 limitations, by authorizing his/her employer to contribute an amount by pay- 26 roll deduction to the supplemental benefit plan in lieu of receiving such 27 amount as salary. The amount of such contributions shall be subject to any 28 limitations established by the board, state or federal law. The employer shall 29 provide coordination of contributions between multiple plans to assure that 30 contribution limits are not exceeded. Should aggregate contributions to multi- 31 ple plans exceed applicable limits, excess contributions shall be deemed to 32 apply exclusively to plans not created by this chapter. In the event a preex- 33 isting plan is used as a supplemental plan, voluntary contributions may con- 34 tinue to be made to that plan despite the absence of extraordinary gains 35 transfers. 36 (5) For thepurposes of this section the employer is authorized to make 37 such deductions from salary for any employee who has authorized such deduc- 38 tions in writing. The employer shall forward all contributions under this sec- 39 tion to the trustee of the supplemental benefit planboard by the fifth work- 40 ing day after each payroll, in addition to reports as directed by the board. 41 Any costs incurred by the board, whether direct or indirect, due to an 42 employer's failure to properly withhold, transfer, limit and report contribu- 43 tions, shall be the responsibility of the employer and shall be immediately 44 due and payable upon notice from the board. This includes, but is not limited 45 to, costs associated with plan corrections. Such costs shall be treated as 46 delinquent contributions under section 59-1325, Idaho Code. 47 (6) The board may enter into agreements with employers or require partic- 48 ipation to implement athe supplemental benefit plans and the board may desig- 49 nate administrative agents to execute all necessary agreements pertaining to 50 the supplemental benefit plans. 51 (7) All contributions received from participants in the supplemental ben- 52 efit plans shall be deposited with a trustee designated by the board. All such 53 funds are hereby perpetually appropriated to the board, shall not be included 54 in the department's budget, and may be invested or used to pay for investment 55 and administrative expenses of the supplemental benefit plans. Inactive mem- 3 1 bers may be required to transfer supplemental benefit plan account balances as 2 determined by the board. 3 (8) The board may establish rules to implement and administer this sec-4 tionsupplemental benefit plans. Costs of administration shall be appropriated 5 by the legislature and may be paid from the interest earnings of the funds 6 accrued as a result of the deposits or as an assessment against each account, 7 to be decided by the board. Investment related expenses are exempt from appro- 8 priation. 9 (9) Contributions and investment earnings under the supplemental benefit 10 plans in addition to investment earnings,shall be exempt from federal and 11 state income taxes until the ultimate distribution of such contributions. Dis- 12 tributions of funds held in supplemental benefit plan accounts are subject to 13 federal law limitations. The board may provide for retirement disbursement 14 options other than lump sum payments. 15 (10) All additional contributions made by the employee under this section 16 shall continue to be included as regular compensation for the purpose of com- 17 puting the employer and employee retirement contributions and pension benefits 18 earned by an employee under this chapter, but such sum shall not be included 19 in the computation of any income taxes withheld on behalf of any employee. 20 However, funds accrued in a supplemental benefit plan account shall not be 21 considered in determining any other benefits under this chapter. 22 (11) The provisions of sections 59-1316 and 59-1317(1), (2) and (5), Idaho 23 Code, shall also apply to the supplemental benefit plans created under this 24 section. Should a court order that an assignment be made to a participant's 25 spouse or former spouse of all or part of an account created under this sec- 26 tion, the assignment shall be separate and distinct from any approved domestic 27 retirement order required by section 59-1317(4), Idaho Code. Requirements for 28 assignments of supplemental accounts may be set forth in rule or other plan 29 documents. 30 (1 12) Members of the retirement board or retirement system staff, jointly 31 or individually, shall be indemnified from all claims, demands, judgments, 32 costs, charges and expenses, including court costs and attorney's fees, and 33 against all liability losses and damages of any nature whatsoever that the 34 retirement board or retirement system staff shall or may at any time sustain 35 by reason of any decision made in the scope or performance of their duties 36 pursuant to the provisions of this section, except as may result from their 37 willful and intentional malfeasance. The venue of all actions in which the 38 retirement board or retirement staff is a party shall be in Ada county, Idaho. 39 SECTION 2. That Chapter 13, Title 59, Idaho Code, be, and the same is 40 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 41 ignated as Section 59-1309, Idaho Code, and to read as follows: 42 59-1309. ALLOCATION OF EXTRAORDINARY GAINS. (1) At the close of each fis- 43 cal year, the board shall determine whether the fund has experienced extraor- 44 dinary gains. If extraordinary gains exist the board may allocate all or part 45 of them as set forth in this section. In determining whether extraordinary 46 gains should be allocated, the board shall exercise its fiduciary discretion. 47 (2) Extraordinary gains are defined as the excess, if any, at the close 48 of the fiscal year of plan assets over the plan's accrued actuarially deter- 49 mined liabilities plus a sum necessary to absorb a one (1) standard deviation 50 market event without increasing contribution rates, as determined by the 51 board. 52 (3) If the board determines that extraordinary gains should be allocated, 53 the gains shall be allocated to retirees, to active members, and to employers 4 1 in such proportion as determined by the board. The board shall determine no 2 later than the first day of December following the close of the fiscal year 3 the amount of extraordinary gains to be allocated, if any. 4 (4) Retirees shall receive their allocation in the form of a one-time 5 payment made in addition to their regular monthly benefit payments. For pur- 6 poses of this section, "retirees" include retired members, members receiving a 7 disability retirement allowance, contingent annuitants, and surviving spouses 8 who elected the annuity option under section 59-1361(5), Idaho Code. To par- 9 ticipate in the retiree allocation, a retiree must be receiving a regular 10 monthly allowance at the close of the fiscal year and on the date of distribu- 11 tion. The retiree allocation shall be distributed proportionally based on the 12 final monthly retirement allowance of the fiscal year divided by the total of 13 all monthly retirement allowances paid for the same month. The date of dis- 14 tribution shall be no later than the first day of February following the close 15 of the fiscal year. 16 (5) Active members shall receive their allocation as a transfer of funds 17 to a supplemental retirement account established by the board. Funds trans- 18 ferred to or held in supplemental retirement accounts shall be accounted for 19 separately and shall not be considered in determining any other benefits under 20 this chapter. To participate in the active member allocation, the member must 21 have been an active member on the last day of the fiscal year and have accrued 22 at least twelve (12) months of service on that date. Any member who has with- 23 drawn contributions from the fund prior to the date of transfer is not eligi- 24 ble to receive a transfer under this section. The active member allocation 25 shall be distributed proportionally based on accumulated contributions at the 26 close of the fiscal year divided by the total accumulated contributions of all 27 active members at the close of the fiscal year, not to exceed the amount that 28 would result by applying the limits imposed by rule or by section 415(c)(1) of 29 the Internal Revenue Code to compensation earned during the fiscal year. The 30 transfer of funds shall occur in the following calendar year but shall be sub- 31 ject to reduction and forfeiture, based on the application of limits imposed 32 by rule or by section 415 of the Internal Revenue Code for that year. 33 (6) Employers shall receive their allocation as a credit against future 34 contributions required by section 59-1325, Idaho Code. Credits are not avail- 35 able to any employer who has withdrawn from participation in the fund prior to 36 the transfer date. The employer allocation shall be credited proportionally 37 based on employer contribution liability accrued during the fiscal year as 38 provided in section 59-1322, Idaho Code, divided by the total employer contri- 39 bution liability for the fiscal year. The credits shall be established no 40 later than the first day of February following the close of the fiscal year. 41 The credits shall be applied thereafter in the same manner as provided in sec- 42 tion 59-1325, Idaho Code, until exhausted. If, after twelve (12) months of 43 remittances, an employer's credits have not been exhausted, and the employer 44 has not withdrawn from participation in the fund, the value of the remaining 45 credits shall carry over to the next year, together with an interest payment 46 equal to regular interest on the remaining credits. 47 SECTION 3. An emergency existing therefor, which emergency is hereby 48 declared to exist, this act shall be in full force and effect on and after its 49 passage and approval; provided however, that the retirement board may delay 50 implementation of any or all of these provisions to obtain assurances concern- 51 ing federal income tax treatment of contributions and distributions or to com- 52 plete system changes necessary to accurate and complete implementation of this 53 act.
STATEMENT OF PURPOSE RS 09759C1 This bill enacts two of the recommendations of the legislative interim committee charged with reviewing retirement benefits of state and other public employees. First, it provides for the distribution of extraordinary investment gains earned by the Public Employee Retirement System Fund that are not required to fund the accrued actuarial liability of the system's defined benefit plan plus a rate stabilization reserve. It authorizes the Public Employee Retirement System to distribute extraordinary gains to three groups: employers, retirees and active members. Second, the bill is intended to establish and administer one or more defined contribution plans within the PERSI plan, providing a vehicle for active members to receive their share of the extraordinary investment gains and to make voluntary contributions to supplement their retirement savings. This bill provides distribution of excess investment gains to active members by a supplemental Defined Contribution (DC) retirement plan to be administered within the existing PERSI organization for the more than 60,000 active members of PERSI. The distributions of excess gains also involves 22,000 retirees and more than 600 employer units. The distributions to the DC plan from the gains sharing program (without considering interest and employee voluntary contributions) could reach over $1 billion in ten years. FISCAL IMPACT There is no fiscal impact to the general fund. The costs to PERSI of implementing this bill are projected to be: FY 2000 Supplemental $96,200 FY 2001 $1,658,400 FY 2002 $1,279,500 FY 2003 $1,195,100 On-going $1,189,900 The first year, which is the most expensive, is projected to equate to 0.75% of assets with the third year projected to be 0.23% of assets. The State Controllers Office estimates an additional impact of $200,00 in FY 2001 for one-time programming costs for the EIS modifications. The portfolio expenses will be paid from the total PERSI funds like all PERSI portfolio expenses. Contact Name: Representative Dennis Lake Phone: 332-1165 STATEMENT OF PURPOSE/FISCAL NOTE H 510