|SB 0467||Revisions to the County Employee Retirement System|
|LR Number:||S2041.03T||Fiscal Note:||2041-03|
|Committee:||Pensions and General Laws|
|Last Action:||06/10/99 - Signed by Governor||Journal page:|
|Title:||SS SCS SB 467|
|Effective Date:||January 1, 2000|
SS/SCS/SB 467 - This act makes significant revisions to the County Employee Retirement System (CERF), effective January 1, 2000.
ANNUAL REVIEW AND BOARD AUTHORITY - This act specifies that the Board shall conduct an annual review, to determine whether the following are actuarially feasible:
-Adjustment to the normal annuity formula; -Adjustment in the flat dollar pension benefit credit; -Cost-of-living increase; -Adjustment in the matching contribution; -Adjustment in the 25-year service cap on creditable service; and -Adjustment to the target replacement ratio (percentages based on set salary ranges).
The Board may make recommendations to the General Assembly on any of the above changes.
PAYROLL DEDUCTIONS - On or after January 1, 2000, all new employees shall become members of the System. Non-LAGERS members have a payroll deduction of 2% as their contribution to the Plan. No member after the effective date may opt out of the System. Current employees prior to January 1, 2000, who have opted out of the System must wait 3 years to opt back in. When such employee opts in, he has a payroll deduction of 2%, or 1% if he is also in LAGERS, of the compensation received when he opted out, plus interest to purchase all or part of the period as creditable service. An employee may opt back in without purchasing the earlier creditable service.
NORMAL ANNUITY - For a member not in LAGERS (Local Government Employees Retirement System), the monthly benefit would be the greater of $24 times years of creditable service, up to 25 years, or an amount based on a formula using the target replacement ratio (TRR) of the member multiplied by average final compensation (AFC) minus the member's monthly primary Social Security amount (PSSA), and all of that times years of creditable service (CS, up to 25 years), divided by 25. In short, the formula for the second provision is: ((TRR x AFC) - PSSA) x (CS divided by 25).
For members who are also in LAGERS, the normal annuity would be 66.67% of the normal annuity calculation for non-LAGERS members.
The normal annuity of a retired member shall not be less than the annuity the member had earned under the current system.
Any member who terminates service with 8 or more years creditable service is entitled to an annuity from the Fund. The member may elect to defer the annuity until age 62, or may begin receiving a reduced annuity at age 55. This act modifies a provision regarding former members with forfeited service.
COST-OF-LIVING - The cost-of-living increase shall not exceed 1% in any year (current law says no more than 2%). The Board may grant additional cost-of-living increases if actuarially feasible.
CREDITABLE PRIOR SERVICE - A member receives creditable service for the entire period of service as a county employee, unless otherwise provided. Absences for sickness or injury for less than 12 months shall count as creditable service. Members who rejoin after opting out must purchase their creditable service. This act removes a provision requiring the System to be responsible for verifying members' records in accordance with the Internal Revenue Code.
This act authorizes the refund of voluntary early buyback contributions made to purchase prior service, since prior service will now be included in creditable service, instead of requiring prior service to be purchased as is currently done.
SURVIVOR OPTIONS - Three survivor options are offered, that would be the actuarial equivalent of the member's normal annuity with a reduced monthly payment for life, with 100%, 75%, or 50% of the reduced normal annuity paid to member's beneficiary. Once a member has begun receiving benefits, the member cannot change the form of benefit elected or the beneficiary designated, even if the beneficiary dies before the member. If a member dies with at least 8 years of creditable service, the surviving spouse is entitled to survivor benefits under the 50% annuity option. The two-year marriage requirement is removed. Assumptions for "actuarial equivalence" are established.
CURRENT LAW - Current CERF (County Employee Retirement System) provisions in effect before the amendment date shall apply to any county employee whose employment terminates prior to that date (1/1/2000). This act as amended applies to any county employee who terminates after the amendment date.
EFFECT ON LAGERS - Benefits under CERF in no way affect eligibility under LAGERS (Local Government Employees Retirement System).
FORFEITURE OF CONTRIBUTIONS - If a member has less than 5 years creditable service upon termination, the member forfeits the employer matching contributions. The member is entitled to his own contributions as soon as administratively feasible following termination of employment, or may leave the balance in and receive it at a later time. The member's beneficiary receives the account balance if the member dies before receiving it.
DISTRIBUTIONS - A distributee may have his eligible rollover distribution paid directly to an eligible retirement plan (such as an IRA, qualified trust, or qualified annuity plan). A distributee includes a member, surviving spouse, or former spouse if an alternate payee.
DEFERRED COMPENSATION - This act authorizes the Board to develop a deferred compensation plan to benefit all county employees eligible for membership in the System. The Board also may make deferred compensation matching contributions.
BOARD - This act changes the number of Board members from 9 to 11, with the two additional directors appointed by the Governor with the advice and consent of the Senate.
This act is the same as HCS/HB 911 (1999). A portion of
act is contained in CCS/HS/HCS/SCS/SBs 308 & 314.