Print Friendly SENATE BILL NO. 1453 – PERSI member, purchase service
SENATE BILL NO. 1453
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S1453......................................................by STATE AFFAIRS
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends and adds to existing law to
provide that an active member who is vested may purchase up to forty-eight
months of membership service that does not qualify as past public service;
to provide that an active member who is vested may purchase past service
earned as a public employee in another state; to provide for proof of
service; to provide for cost of the purchase and to provide method of
payment; and to provide that if the purchase has not completed purchase at
the time of retirement, the first benefits from the Public Employee
Retirement System shall be applied to pay the amount due.
02/14 Senate intro - 1st rdg - to printing
02/15 Rpt prt - to Com/HuRes
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE SENATE
SENATE BILL NO. 1453
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1363,
3 IDAHO CODE, TO PROVIDE THAT AN ACTIVE MEMBER WHO IS VESTED MAY PURCHASE UP
4 TO FORTY-EIGHT MONTHS OF MEMBERSHIP SERVICE THAT DOES NOT OTHERWISE QUAL-
5 IFY AS PAST PUBLIC EMPLOYEE SERVICE; AMENDING CHAPTER 13, TITLE 59, IDAHO
6 CODE, BY THE ADDITION OF A NEW SECTION 59-1364, IDAHO CODE, TO PROVIDE
7 THAT AN ACTIVE MEMBER WHO IS VESTED MAY PURCHASE PAST SERVICE EARNED AS A
8 PUBLIC EMPLOYEE IN ANOTHER STATE, TO PROVIDE FOR PROOF OF SERVICE, TO PRO-
9 VIDE FOR COST OF PURCHASES, TO PROVIDE HOW PURCHASE OF PAST SERVICE MAY BE
10 MADE AND TO PROVIDE IF THE PURCHASER HAS NOT COMPLETED PURCHASE AT THE
11 TIME OF RETIREMENT, THE FIRST BENEFITS FROM THE PUBLIC EMPLOYEE RETIREMENT
12 SYSTEM SHALL BE APPLIED TO PAY THE AMOUNT DUE.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Section 59-1363, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 59-1363. PURCHASE OF MEMBERSHIP SERVICE OTHER THAN PAST PUBLIC EMPLOYEE
17 SERVICE. (1) Notwithstanding any other provision of this chapter, an active
18 member who is vested may purchase up to forty-eight (48) months of membership
19 service that does not otherwise qualify as past public employee service as
20 specified in section 59-1364, Idaho Code.
21 (2) The cost of purchases under this section shall be the full actuarial
22 costs of the service as determined by the board. The board may provide for
23 payment options, including periodic payments, but no service shall be credited
24 until payment has been made in full. The member shall be solely responsible
25 for the costs of such purchased service, except that an employer may partici-
26 pate in the costs at its option.
27 (3) In no event shall any member be allowed to purchase in the aggregate
28 more than forty-eight (48) months of membership service whether purchased
29 under this section or any other provision authorizing purchase of membership
31 SECTION 2. That Chapter 13, Title 59, Idaho Code, be, and the same is
32 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
33 ignated as Section 59-1364, Idaho Code, and to read as follows:
34 59-1364. PURCHASE OF PAST PUBLIC EMPLOYEE MEMBERSHIP SERVICE. (1) Not-
35 withstanding any other provision of this chapter, an active member who is
36 vested may purchase past service earned as a public employee in another state.
37 Proof of such service shall be in accordance with the requirements established
38 by the board.
39 (2) The cost of purchases under this section shall be calculated as fol-
40 lows: for each year of purchase, the actual salary of the employee in the
41 final year of employment in the other state times the combined Idaho contribu-
1 tion rate for the employer and employee at the time past service is purchased
2 plus compound interest at the rate of five percent (5%) per annum.
3 (3) Purchase of past service under this section may be made in cash, in
4 the form of a deduction from salary to be transmitted to the board in accor-
5 dance with section 59-1325, Idaho Code, or the board may accept a transfer of
6 funds from a plan qualified under section 401(a), 403(b), 401(k), or other
7 similar sections of the Internal Revenue Code in full or partial payment of
8 the amount required to purchase the credited service.
9 (4) If the purchaser has not completed such payment at time of retirement,
10 the first benefits from the public employee retirement system shall be applied
11 to pay the balance of the amount due; and thereafter the full benefits shall
12 be payable.
STATEMENT OF PURPOSE
This measure provides the opportunity for active public employees
who are vested in the Public Employee Retirement System of Idaho
(PERSI) to purchase years of public service earned as an employee
in another state. Proof of such service will be in accordance
with requirements established by the PERSI Board. A formula for
determining the cost of each year of service to be purchased is
provided, as are payment options. Finally, if the full cost of
such a purchase has not been completely met by the time of
retirement, the first benefits from PERSI received by the
employee will be applied to the balance due.
This bill may or may not create a fiscal impact upon the PERSI
fund. It is not possible to determine a total fiscal impact for
two reasons. First, we do not know how many people have service
in another state who potentially will take advantage of this
purchase opportunity. Second, the particular demographics of each
individual (age, service, salary, time from the other service,
etc.) may or may not create a situation that would increase the
PERSI liabilities. In a particular scenario, the actuary
estimates the employee would pay from 23 percent up to 157
percent of the true actuarial cost. In this case, depending upon
certain factors, the PERSI system would most likely sustain a
loss; however, it could obtain a gain, depending upon the
circumstances. The funding of this benefit would be a gain or
loss to the unfunded liability each year, rather than funded
explicitly through the contribution rate.
Name: Jim Shackelford, Idaho Education Association
STATEMENT OF PURPOSE/FISCAL NOTE S 1453