SB 223 – This act makes changes to the Public School Retirement System of Kansas City.
MEMBERSHIP: This act modifies the qualifications for system membership. A person will cease to be a member of the retirement system if he or she has a break in service before he or she has earned vested retirement benefits or if the person withdraws his or her accumulated contributions from the system. (Section 169.270)
MINIMUM NORMAL RETIREMENT AGE: Currently, the minimum normal retirement age is the age of sixty or the date when a member has at least seventy-five credits. This act limits this minimum normal retirement age to members who retire before January 1, 2014, or individuals who were members of the system on December 31, 2013 ,and remain members continuously to retirement. For any person who becomes a member on or after January 1, 2014, minimum normal retirement age will be age sixty-two or the date when the member has at least eighty credits, whichever is earlier. (Section 169.270)
CONTRIBUTION RATES: Currently, statute sets the employer contribution rate at 7.5% and the member contribution rate at 7.5%. Beginning in calendar year 2014 and for each subsequent year, the employer contribution rate will be determined by the system's actuary and certified by the board of trustees at least six months prior to the contribution rate's effective date. In addition, the member contribution rate will be determined by the system's actuary.
Beginning in 2013, and annually thereafter, the system's actuary must calculate the contribution rates for 2014 and each subsequent calendar year based on an actuarial valuation of the retirement system as of the first day of the prior calendar year. The actuary must use the actuarial cost method and actuarial assumptions adopted by the board of trustees, as described in the act. The target employer and member contribution rates will be the amount actuarially required to cover the normal cost and amortize any unfunded actuarial accrued liability over a period not to exceed thirty years.
The target combined contribution rate will be allocated equally between the employer and member contribution rate except that the contribution rate must not be less than 7.5% and not exceed 9%. The contribution rate cannot increase more than one-half percent from one year to the next. (Sections 169.291 & 169.350)
BENEFIT FORMULA: This act modifies the benefit formula used to calculate the annual service retirement allowance.
The current benefit formula uses a multiplier of two when calculating the annual service retirement allowance. This act limits the use of this multiplier of two to individuals who retire before January 1, 2014, or who were members of the system on December 31, 2013. For individuals who become members on or after January 1, 2014, the annual service retirement allowance will be calculated using a multiplier of one and three-fourths.
COLA: The board of trustees may only award a cost-of-living-adjustment if it does not require an adjustment of the then applicable employer and member contribution rates. (Section 169.324)
These provisions are also contained in CCS#2/HCS/SCS/SB 17 (2013), HB 861 (2013), CCS/HCS/SB 23 (2013).