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
H0510
|||| 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 a one (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 this
6 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 a separate
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 employees all
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 plan Accounts
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 the purposes 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 plan board 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 a the 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 tion supplemental 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 (112) 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