Changes to school retirement plans approved

Lawmakers passed a bill April 10 that makes changes to the state’s school retirement plans.

LB1042, introduced by Omaha Sen. Jeremy Nordquist, changes the cost for repurchase of relinquished creditable service in the School Employees Retirement Plan.

Current plan members who rejoined the school system prior to the effective date of the bill and file an application for repurchase of creditable service prior to July 1, 2016, will be charged the current lower cost for service credits.

All other members who rejoin the system after the effective date of the bill, and members who already have rejoined the system but choose not to file an application prior to July 1, 2016, will be charged the actuarial cost to the retirement system to repurchase relinquished creditable service.

Under the bill, returning employees must complete repurchase of credits within six years. A member must pay to the retirement system an amount equal to the previously withdrawn contributions for the credible service to be restored, plus an amount equal to the actuarial assumed rate of return on such amount to the date of repayment—currently 8 percent.

The bill also includes provisions of LB1041, introduced by Nordquist, which changes the length of service required for new employees of the School Employees Retirement Plan and the Class V (Omaha) School Employees Retirement Plan to be eligible to purchase additional service credit.

Beginning July 1, 2014, new employees of the two plans will not be eligible to purchase service credit – also known as “air time” – until they have acquired 10 years of creditable service. Employees hired before the deadline still will be eligible to purchase air time after acquiring five years of creditable service.

LB1042 passed on a 48-0 vote.