After a meeting with stakeholders and the Governor yesterday, we are told the bill will be part of a special legislative session in November.  As it is permissive, all stakeholders are in agreement with the language.

The League is in a position to support the bill and work for its passage as a first step for change.  As we understand, this may not be beneficial for every plan in the state.  Each city will need to have your numbers ran by an actuary to determine this.  Working from the premise of a new 40 year amortization is not enough to determine the facts for your decision.  Actuaries must look at the total picture of new plans for new hires, longevity, etc to make an accurate determination.

Since it is permissive, there will be no need to make quick decisions or knee jerk reactions before the bill passes.  From what we are hearing from members who have had the numbers crunched by actuaries, some plans benefit others do better under the current method.

Our approach is to ask for the authority to allow cities to make the decision.

1.  Voluntary Participation, requires election by majority vote of municipality’s governing body.

2.  Close existing municipal plans to new hires in those participating municipalities, and place new hires in a new retirement plan under the CPRB,

3.  For those participating municipalities now on an “alternative financing method”, existing unfunded liabilities would be amortized over a period not to exceed 40 years. Those 10 cities presently on a “standard financing schedule”, to end in 2031, will remain on that schedule. (This may need to be clarified in the bill.)

4.  Oversight board would be established to monitor and assist existing local boards of trustees.

5.  Present allocation of premium taxes to the Teachers Retirement System, existing municipal police and firefighter pensions and volunteer firefighters would be unchanged.  The bill would impose no additional tax.

6.  New plan benefits will be similar but not same as those for Emergency Medical personnel.

7.  The Plan becomes effective January 1, 2010. (Cities should make selection earlier.)

8.  No member of the new plan may retire until January 1, 2013.  Cities would be required to buy disability and death benefit coverage under private insurance to cover employee claims arising before January 1, 2013.

9.  Credited service includes years of service, active military duty and disability service.

10. Normal Retirement age is:
Age 50 with 20 years of active service, excluding military, disability, sick and annual leave; or
While in covered employment, age at least 50 and years of service equal 70; or
While in covered employment, age at least 60 and 10 years of contributory service; or
Age 62 and 5 years of service.

11.  Early Retirement Age is age 45 with 20 years of service.  Pension is actuarially reduced.  REMOVED FROM DRAFT

12.  Retirement pays  2 .6% of final average salary for 20 years of service
2  % for years 21 through 25, and
1  % for years 26 through 30.
- Various annuity options for survivors are available at retirement.

13.  Total disability means unable to engage in substantial gainful employment.  Duty-related total   disability pays 90% of salary until age 65, then regular retirement.  

14.  Total disability - not duty-related - pays 66 2/3 of average salary till age 60, then regular retirement benefits.

15.  To maintain disability status, recertification may require medical examination or tax return.

16.  Social Security coverage is to be decided by referendum by members of new plan (Federal law).

17.  Military service: Two years free service credit for full-time active duty.  May purchase a third year of credit for full-time active military duty.  No restriction on dates of service.

18.  Surviving spouse when member’s death is duty-related, receives the greater of 2/3 of member’s prior year’s salary or joint annuity amount.

19.  Surviving spouse when 10-year-member’s death is non-duty related, receives greater of half of member’s prior year’s salary or joint annuity amount.

20.  Additional death benefits of $100 monthly to each dependent child; Scholarships of $6,000 annually to each dependent child.

21.  Burial benefit: $5,000 for death due to any service-related illness or injury.

22.  Employee contributions would be 8.5% initially.   May increase to 10 ½% temporarily if  funding level falls below 70%.    New plan starts with no unfunded liability.   Employer contributions, set by the Board, but not to exceed 10 ½ % of payroll.

23.  New plan has 5-year vesting.

24.  Proposal includes for existing plans, investment policies consistent with Investment Management Board.

25.  Persons newly hired in June or thereafter in anticipation of a new pension system may be transferred to the new system with no loss of service credit, if they have not collected benefits under the old retirement funds, and they had agreed to transfer at time of hiring..

26.  Bill continues to count new employees, in whatever plan, to determine allocation of premium tax revenue to existing plans with unfunded liabilities.

27.  Oversight Board to study Deferred Retirement Option Programs and report to Legislature.

28.  The new plan will have one representative on the CPRB, rotating between Police and FF’s.