SB 406 Modifies multiple provisions regarding several employee benefit plans
Sponsor: Crowell
LR Number: 1648S.08T Fiscal Note: 1648-06
Committee: Pensions, Veterans' Affairs and General Laws
Last Action: 7/13/2007 - Signed by Governor Journal Page:
Title: CCS#2 HCS#2 SB 406 Calendar Position:
Effective Date: August 28, 2007
House Handler: Wallace

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CCS#2/HCS#2/SB 406 - This act modifies multiple provisions regarding several employee benefit plans. The act:

Allows disbursements from a County Employees' Retirement System defined contribution account if a member's account balance is one thousand dollars or less upon separation from employment, rather than if the balance is five thousand dollars or less, as is provided in current law. Section 50.1250.

Currently, members who retire from the Police Retirement System of Kansas City and the Civilian Employees' Retirement System of the Police Department of Kansas City are entitled to a supplemental retirement benefit of $50 per month in addition to the base benefit and cost-of-living increases. This bill specifies that any member who retires due to completing at least 25 years of service, reaching mandatory retirement age, or sustaining a permanent disability forcing him or her to retire prior to August 28, 2001, will receive a monthly equalizing supplemental compensation of $10. The supplemental compensation may be adjusted by cost-of-living increases annually, but the aggregate of both cannot exceed 25% of the member's base pension. The term "member" includes the surviving spouse of a member who qualifies under this provision. Sections 86.1230 and 86.1600.

Provides that any condition of cancer which affects certain bodily systems, as well as any condition of cancer which may result from exposure to heat or radiation or to a known or suspected carcinogen, as determined by the International Agency for Research on Cancer, shall be presumed to be suffered in the line of duty for the purposes of computing retirement benefits for firefighters, unless the contrary is shown by competent evidence and it can be proven to a reasonable degree of medical certainty that the condition did not result nor was contributed to by the voluntary use of tobacco. Section 87.006.

Authorizes the governing body of the city of Springfield to impose a sales tax, not to exceed one percent, for the purpose of providing revenues for the operation of public safety departments, including police and fire departments, and for pension programs and health care for employees and retirees of such departments. This tax shall not be effective unless submitted to and approved by voters within the city. If the tax is not approved by voters, the city shall have an additional year beyond the five-year period described in section 105.683, RSMo, in order to make its required contribution before the penalties in said section shall apply. The Director of the Department of Revenue shall be responsible for the collection, administration, enforcement, and operation of the tax. Revenues from the tax shall be deposited into the "Public Safety Protection Sales Tax Fund", as established for the purposes provided herein, except for one percent of the revenue for the cost of collection, which shall be deposited into the state's general revenue fund. The governing body of any city that has adopted such a tax may submit the question of repeal of the tax to the voters on any date available for elections for the city, but shall submit this question no less than every five years from the date of inception of the tax. Residents of the city may also call for an election to repeal a tax created under this amendment by delivering a petition signed by no less than two percent of the registered voters in the city to the city's governing body. Section 94.579.

Provides that the board of the Missouri Consolidated Health Care Plan (MCHCP) is required to offer all qualified state employees and retirees, in addition to the plans currently offered including but not limited to health maintenance organization plans, preferred provider organization plans, and copay plans, the option of receiving health care through a high deductible health plan and the establishment of a health savings account, in conformation to guidelines established by the Internal Revenue Service. In order for qualified individuals to obtain a high deductible health plan through MCHCP, the individual must present evidence to the board that he or she has established a health savings account in compliance with federal law. Section 103.080.

Provides that qualifying dependents of members of the MCHCP may elect to continue medical coverage, as long as the individuals to be covered have been continuously covered within 60 days of a loss of group coverage, and such coverage was in place for at least 12 months prior to the loss, and the loss was due to the dependent's termination of employment or termination of group coverage by the employer. Also corrects numerical statutory references. Section 103.085(4).

Adds language that would allow the board of trustees of the Missouri Department of Transportation and Highway Patrol Employees' Retirement System (MPERS) to promulgate rules necessary to accommodate any change in the state payroll system as it relates to how final average compensation is calculated for purposes of determining a retirement benefit. Section 104.010(7).

Changes the required hours for benefit eligibility under the definition of "employee" from 1000 to 1040 hours to be consistent with the personnel advisory board rules. Section 104.010.1(20)(a).

Provides that a retiree is not an employee, changes the required hours for benefit eligibility from 1000 to 1040 hours, and further requires that legislative employees who are employed on or after August 28, 2007, be treated like all other state employees with regards to retirement eligibility. Section 104.010.1(20)(b).

Changes the "Highways and Transportation and Highway Patrol Employees' Retirement System" to the "Missouri Department of Transportation and Highway Patrol Employees' Retirement System" (MPERS) in order to reflect the most recent name change, and modifies the definition of a member for MPERS and the Missouri State Employees' Retirement System (MOSERS) to mean an employee, retiree, or former employee entitled to a deferred annuity covered by the plan. Section 104.010(27).

Changes the "Highways and Transportation and Highway Patrol Employees' Retirement System" to the "Missouri Department of Transportation and Highway Patrol Employees' Retirement System" in order to reflect the most recent name change. Section 104.010(36).

Adds language to allow MOSERS to pay benefits under a benefit plan subject to limitations under Section 415(m) of the Internal Revenue Code, regarding qualified governmental excess benefit arrangements. Section 104.010.2.

Current law allows uniformed members of the highway patrol to purchase, prior to retirement, up to four years of creditable service for any time such person served as a non-federal full-time public employee in this state prior to becoming a member of the system. This act extends the aforementioned provision to every member of MPERS, which includes each employee of the highways and transportation commission, each uniformed member of the highway patrol, and each civilian or non-uniformed employee of the state highway patrol. Further, the act removes a provision requiring the filing of an affidavit stating that the member is not receiving credits or benefits from any other public plan for the service to be purchased. Section 104.040.6.

Provides that all such creditable service payments by MPERS members must be completed prior to retirement or termination of employment. If a member who purchased creditable service dies prior to retirement, the surviving spouse may, upon written request, receive a refund of the amount contributed for such purchase of such creditable service, provided that the surviving spouse is not entitled to receive survivorship benefits as described in section 104.110, RSMo. Also, a member who is entitled to a deferred annuity under section 104.035 shall be ineligible to purchase service under this act. Section 104.040.6.

Provides that there shall be two retirees on the board of trustees for the MPERS retirement system, rather than one, in addition to board members provided in current law. One retiree shall be elected by the retired employees of the transportation department and the other shall be elected by the retired employees of the civilian or uniformed highway patrol. The retiree serving on the board on August 28, 2007, shall continue to serve on the board as a representative of the retired employees of the transportation department until June 30, 2010. An election shall be held before January 1, 2008 for the retiree to be elected by the retired employees of the civilian or uniformed highway patrol; such term shall begin January 1, 2008, and expire on June 30, 2010. All terms of elected retired employees shall be for four years after June 30, 2010. Section 104.160.

Provides that the monthly amount to be paid pursuant to an order for division of benefits under MOSERS shall be adjusted proportionately if the member's annuity has been reduced due to certain annuity options available under Section 104.395, 104.090, or 104.1027, in which the member named the alternate payee as a beneficiary prior to the dissolution of marriage. Sections 104.312.1(3) and 104.1051.1(3).

Current law provides that the amount paid to an alternate payee under a division of benefits order shall be based on the amount the member would have received if he or she elected coverage under the MOSERS' closed plan. This act provides that such amount shall be based on the plan the member was in on the date of the dissolution of marriage. Section 104.312.4.

Provides that any member of the MOSERS' closed plan who elected the year 2000 plan and later becomes divorced and subject to a division of benefits order will have such order calculated pursuant to the provisions of the year 2000 plan. Section 104.1051.4.

Allows the board of trustees for MOSERS to provide services related to medical benefit funds for state employees, retirees, and their dependents who participate in a state medical plan administered by the Missouri consolidated health plan or other medical benefit plans established or maintained by the state for such persons. Services shall be provided under a trust agreement between the board and the state medical plan. Section 104.320.2

The MOSERS board shall set up and maintain a separate employee and retiree medical benefit trust for each state medical plan that the system contracts with, in which shall be placed contributions made by the state to fund medical plan benefits, employee contributions and premiums, and other payments or income from any source, to satisfy obligations of the state entity to provide benefits to its employees, retirees, and dependents under such state medical plan. The board may establish trust instruments that set forth applicable terms and conditions for the investment and disbursement of assets of a medical benefit trust, which may be irrevocable. The board may also consolidate retiree assets of one or more medical benefit trusts or commingle assets of trusts with assets of the system for investment purposes, but must maintain separate accounting for the assets of each trust. The board is authorized to enter into written contracts and may employ third-party advisors to The board shall make payments from a medical benefit trust to or for the benefit of participants in a state medical plan, or their dependents, as may be specified in directives by the administrator of the medical plan. The board shall be without liability for any payments made under the direction of the plan administrator, or as provided in a medical benefit trust instrument, and shall have no responsibility or liability for any payment made under such direction. The board may also authorize the executive director to assist with procedures relating to state payroll, or any other state employee benefits, as requested by the office of administration or other state agency. Section 104.320.3, .4, .5 & .6.

Removes language that allowed members of MOSERS and MPERS to purchase prior creditable service for full-time compensated contract service. The act also changes the service purchase provisions in order to be consistent with current practice for purchases of military service, by providing that the salary and contribution rates are determined when a member is initially covered by MPERS or MOSERS. The act also adds language to prohibit receiving duplicate credit for purchased service in more than one retirement system for the same period of service. Section 104.344.

Within MOSERS, eliminates provisions that allowed for prior service credit for part-time legislative service that did not qualify for retirement eligibility. Section 104.352.1.

Corrects numerical statutory references. Sections 104.352.2, 104.352.3, and 104.354.

Current law provides that a retired member of MOSERS who is elected or appointed to any state office, or is employed in certain departmental positions, shall cease to receive an annuity and shall be considered a new employee with no prior creditable service who must begin accruing creditable service anew in order to be eligible for an annuity. This act provides that such member must accrue creditable service continuously for at least one year before becoming eligible for an annuity. Sections 104.380 and 104.1039.

Current law provides that if a member of MOSERS elects certain annuity options prior to retirement and dies prior to receiving the total annuity payments under the option with no designated beneficiary, the remainder of such payments shall be made to the member's estate. Also, if a designated beneficiary dies prior to receiving the total remainder of a deceased member's payments, the payments shall be made to the beneficiary's estate. This act provides that, in such events, the remainder of such payments shall be paid to the member or the beneficiary's surviving spouse, children, parents, or siblings, or their respective descendants, as described in Sections 104.620 and 104.1054, RSMo. Sections 104.395.1 and 104.1027.1.

Current law provides that if certain members elect a joint and survivor annuity option and the spouse or former spouse precedes the member in death, the annuity shall revert to a normal annuity, including any increases the member would have received since the date of retirement. This act provides that if a member dies before notifying the system of the spouse's death, the benefit will not revert to a normal annuity, and no retroactive payments will be made. Section 104.395.3 and 104.1027.3.

Current law provides that certain retired members who elected a joint and survivor annuity option and whose spouse or former spouse precedes them in death may, upon application, be appointed by the board of trustees of MOSERS as a special consultant, and in exchange, the member's reduced annuity shall revert to a normal annuity. This act provides that the benefit of reversion to a normal annuity shall only be received if the member cancels his or her original joint and survivor annuity option election. Section 104.395.4 and 104.1027.4.

Provides that a member may change any election for such annuity options at any time before the first annuity payment is mailed or electronically transferred. Section 104.395.8.

Adds language providing that members must apply and complete service purchases under Chapters 104 and 105 prior to applying for retirement. Section 104.606.

Provides that employees earning creditable or credited service in the closed or year 2000 plan of MOSERS who are transferred to the department of transportation prior to January 1, 2003, may elect to transfer membership and creditable service to MPERS within 60 (rather than 90) days of August 28, 2007. Also changes the "Highways and Transportation and Highway Patrol Employees' Retirement System" to the "Missouri Department of Transportation and Highway Patrol Employees' Retirement System" (MPERS) in order to reflect the most recent name change. Section 104.805.

Amends the definition of "employee" in the MOSERS year 2000 plan to include part-time legislative employees employed on or after July 1, 2000, but prior to August 28, 2007. Section 104.1003(13)(e).

Adds language that would allow the MOSERS board to promulgate rules necessary to accommodate any change in the state payroll system as it relates to how final average compensation is calculated for purposes of determining a retirement benefit. Section 104.1003(16).

Adds language providing that pay does not include any amounts for which contributions have not been made. Section 104.1003(21)(e).

Changes the "Highways and Transportation and Highway Patrol Employees' Retirement System" to the "Missouri Department of Transportation and Highway Patrol Employees' Retirement System" to reflect the most recent name change. Section 104.1003(24).

Adds language to allow MOSERS to pay benefits under a benefit plan subject to limitations under Section 415(m) of the Internal Revenue Code, regarding qualified governmental excess benefit arrangements. Section 104.1003.2.

The act also provides that if the board of trustees of MOSERS chooses to provide employees or members under either the closed plan or year 2000 plan with retirement-related education or advice, the board will not be liable for decisions made by such persons, so long as the board acts with the same care, skill, prudence, and diligence as a prudent person acting in a similar capacity would use. Section 104.1012.3.

The act also provides that a member may change their election to be covered by MOSERS closed plan or the year 2000 plan at any time before the first annuity payment is mailed or electronically transferred. Section 104.1015.9.

Corrects a numerical statutory reference, and changes the legislative service requirement for purchasing service from two to three biennial assemblies, to be consistent with the legislative vesting requirements. Section 104.1021.11.

Provides that a member of MOSERS who retires under the year 2000 plan shall receive an annuity on the last working day of each month, as long as all required documentation needed to calculate payment of benefits is received by the board. Section 104.1024.1.

Current law states that if a temporary annuity is being paid under Section 104.1024, such payment shall cease at the earlier of the date of the member's death, or the date the member reaches the age of eligibility for Social Security. This act specifies that in no event shall the annuity continue past age 62. Section 104.1024.4. Additionally, this act specifies that in no event shall optional life insurance obtained by certain eligible retired members, as described by Section 104.1024, be retained past age 62. Sections 104.1024.2(4) and 104.1072.2(4).

Within the MOSERS year 2000 plan, removes limitations on the maximum adjustment to a retiree's annuity when the retiree elects to reduce his or her life annuity in order to designate a beneficiary to receive a portion of the reduced annuity upon the retiree's death. Section 104.1027.

Corrects a numerical statutory reference. Section 104.1087.1.

Adds language to require agreements between retirement plans for transfer of service credit. Section 104.1090(15).

Provides additional definitions related to provisions within this act. Section 105.660.

Reduces the amortization period associated with plan unfunded accrued liabilities to a maximum of 30 years, rather than the current maximum of 40 years, in order to meet recommendations of the Governmental Accounting Standards Board. Section 105.665.

Requires each plan to create education and continuing education programs for board members, which shall include education on topics enumerated in this act. Also, each retirement plan, upon request, shall provide a pension benefit statement to a participant in written or electronic form, written in a manner calculated to be understood by the average plan participant. Such statement shall include accrued participant contributions, total accrued benefits, date first eligible for a normal retirement benefit, and projected normal retirement benefit. Any plan failing to comply shall submit reasons in writing to the joint committee on public employee retirement. Section 105.666.1 and 105.666.2.

Prohibits any appointing authority, board member, or employee from receiving any gains or profit from any funds or transactions of the plan, and provides that any such person who accepts political contributions or compensation to influence his or her action with respect to the system shall forfeit his or her office and be subject to penalties for bribery. Also, any trustee, employee, or participant of a plan who is convicted of a plan-related felony after August 28, 2007, shall forfeit any retirement benefits from such plan. Section 105.667.

Provides that any plan whose actuary determines has a funded ratio below 60 percent, other than the Public School Retirement System and the Public Education Employee Retirement System of Missouri, and the political subdivision has failed to make 100 percent of the actuarially-required contribution for five successive plan years shall be deemed delinquent in contribution payments, which shall constitute a first lien on the funds of the subdivision. The board is authorized to compel payment by writ, and the state treasurer shall withhold 25 percent of the contribution deficiency from the total moneys due the subdivision until the delinquency is satisfied. Section 105.683.

Prohibits any new benefit increases for plans that are less than 80 percent funded, but plans funded at 80 percent or more may adopt increases as long as the funded ratio remains above 75 percent; unfunded actuarial accrued liabilities associated with benefit changes shall be amortized over a twenty-year period. Also, any plan with a funded ratio less than 60 percent shall have the actuary prepare an accelerated contribution schedule. The provisions of this section do not apply to the Missouri local government employees’ retirement system under chapter 70, RSMo, or the judicial retirement plan under chapter 47, RSMo. Section 105.684.

Provides that the Missouri state public employees deferred compensation commission shall transfer administration of the deferred compensation fund to the board of trustees of MOSERS on August 28, 2007, and that the board shall assume sole control over the fund the first day of the following month. The commission shall provide for the orderly transfer of all fund records, and shall take any other action necessary for the board to assume its duties. The commission shall be dissolved upon transfer, but one commissioner who is a member of the House selected by the Speaker of the House shall serve as an ex officio member of the board, and such person's service shall end December 31, 2009, and the current chairmen of the commission shall also serve as an ex officio board member, and such person's service shall end December 31, 2008. Sections 105.910.3 and 105.915.1.

The act also provides that participation in the deferred compensation plan is subject to any limitations under federal law. Assets of the deferred compensation fund may be comingled with the MOSERS trust for investment purposes, and administrative costs may be paid out of funds assets, which may reduce amounts due to participants. Section 105.915.2 and 105.915.3.

The act also provides that the MOSERS board and employees are immune from suit and shall not be liable for any decisions made by the deferred compensation commission prior to transfer by the board, and the board and employees shall not be liable for investment decisions of employees if the board acts with the same skill, prudence and diligence as a prudent person acting in similar circumstances. Also, the MOSERS system is immune from suit and shall not be liable for any claim associated with administration of the fund by the board and employees. Section 105.915.5, .6 & .7.

Repeals section 104.920, which provided that the financial liability of the state or political subdivision shall be limited to the value of the fixed or variable life insurance or annuity contract, mutual funds or other such investment options purchased on the behalf of any employee.

Within the Teacher and School Employee Retirement Systems, provides that the maximum percentage of increase in the annual compensation in the final average salary period shall not exceed ten percent. This limit will not apply to increases due to changes in position or employer, that are required by state statute, or that are due to district-wide salary schedule adjustments for previously unrecognized education related service. Section 169.010.

Currently, certain alternative retirement allowance provisions, commonly referred to as "25 and out" and the "31st year factor" of the Teacher and School Employee Retirement Systems, terminate on July 1, 2008. This act extends the termination dates to July 1, 2013. Section 169.070.

Replaces the term "pension" with the phrase "retirement benefit" throughout sections 169.466 and 169.471, RSMo. The act also provides that the board of trustees for the public school retirement system in districts of 700,000 or over is authorized to increase retirement benefits for the system and to adopt additional retirement benefits for persons who have retired, including cost-of-living adjustments, as long as the board of trustees finds that the additional benefit will not require an increase in the contribution rate required by members or the board of education and is actuarially sound. If the board authorizes such an increase in benefits, it shall certify in writing to the board of education the findings upon which the board determines no increase in contributions. Sections 169.466 and 169.471.

Allows juvenile officers in single county circuits to receive creditable prior service in MOSERS for service as a juvenile court employee before July 1, 1999, if the service is not credited in a county retirement plan. Also redefines "juvenile court employee" to include juvenile court personnel who were paid by a grant, allowing this service to be creditable for retirement purposes. Section 211.393.

Provides that any board of directors of a fire protection district's pension plan shall administer the plan by a separate five-member pension board of trustees. The board of trustees shall consist of the three-member board of directors of the pension plan and two other participants, who shall be selected by the board of directors from a list of three potential participants elected by plan members. Section 321.800.

Provisions within this act are similar to provisions within HB 202, HB 257, HB 375, HB 626, HB 661, HB 950, HB 1006, HCS/SB 127, SB 401, SB 402, SB 403, SB 404, SB 476, HCS/SB 244, SB 293, SB 492, SB 517, and SB 623 (all from the 2007 legislative session).

ALEXA PEARSON