Session Review: Retirement
Published June 6, 2011
Senators made several changes to the state’s retirement systems this session.
Among the changes were increases in retirement plan contribution rates for school employees, Class V school employees and state patrol.
Under the bill, the employee contribution rate for the State Patrol Retirement System will increase 3 percent to 19 percent of an employee’s monthly compensation on July 1, 2011. The state’s contribution rate also will increase to 19 percent. On July 1, 2013, contribution rates for both employees and the state will decrease to 16 percent.
Beginning Sept. 1, 2011, the member contribution rate in the School Employees Retirement System will increase 0.6 percent to 8.88 percent. The rate then will increase to 9.78 percent on Sept. 1, 2012 and remain in effect through August 31, 2017, when the contribution rate will be reduced to 7.28 percent.
In addition, the bill extends to fiscal year 2016-17 the 1 percent state contribution rate in the school employee plan and the Omaha Class V School Employee Retirement System, currently scheduled to sunset in FY2013-14. The rate will return to 0.7 percent on July 1, 2017.
State funding for the purchasing power cost-of-living allowance in the Class V school plan will sunset in FY2013-14.
Finally, the bill incorporates provisions of LB510, introduced by the Retirement Systems Committee, which will increase the contribution rate for members of the Class V school plan by 1 percent to 9.3 percent beginning Sept. 1, 2011.
LB382 passed on a 43-0 vote.
Senators also passed the Nebraska Retirement Systems Committee’s omnibus bill.
Introduced by the committee on behalf of the Nebraska Public Employees Retirement System, LB509 makes several changes to the county, state and Class V school retirement plans and the duties of the Public Employees Retirement Board and the Nebraska Investment Council.
Among other changes, the bill:
- creates the County Employees Retirement Fund for deposit of county late filing penalties;
- allows permanent and part-time county and state employees to participate in retirement plans at age 18;
- changes the deadline from March 15 to March 31 for the Nebraska Investment Council to provide its annual report to the Nebraska Retirement Systems Committee;
- requires the Class V School Retirement Plan board to provide comprehensive preretirement planning programs to plan members;
- removes requirements for the Class V Retirement System to file annual plan summaries;
- requires the Class V Retirement System to file an actuarial report annually rather than every four years;
- clarifies transfer language regarding direct rollover benefit distribution into an employee’s deferred compensation plan;
- removes a requirement that the retirement board provide notification if a political subdivision fails to file annual pension reports; and
- allows a terminated state or county employee to receive a distribution of up to $25,000 or the balance of his or her portion of the account, whichever is less, after a grievance is filed. Following reinstatement, an employee will be required to repay any amount received.
The bill also incorporates provisions from the following three bills.
LB246, introduced by Wilber Sen. Russ Karpisek, allows continuation of benefits to a surviving spouse of a deceased state patrol member if the surviving spouse remarries.
LB532, also introduced by Karpisek, allows transfer of state Department of Labor independent retirement plan members to the State Employee Retirement System if the independent retirement plan is terminated. For vesting purposes, members will be credited for their years of service in the independent retirement plan.
LB486, introduced by Ellsworth Sen. LeRoy Louden, increases from 7 to 9 percent the salary cap in the School Employees Retirement Plan beginning July 1, 2012, and eliminates current salary cap exemptions for purposes of calculating benefits on annual compensation during the last five years of employment prior to actual retirement. The cap will be reduced to 8 percent beginning July 1, 2013.
The bill passed on a 44-0 vote.
Finally, lawmakers approved a bill that eliminates restrictions on investments in Northern Ireland by the state of Nebraska.
LB303, sponsored by Omaha Sen. Beau McCoy, repeals requirements that the Nebraska Investment Council:
- compile an annual list of corporations doing business in Northern Ireland in which the state investment officer has invested state funds;
- determine whether each corporation on the list has, during the preceding year, taken affirmative action to eliminate religious or ethnic discrimination in Northern Ireland; and
- invest in a way that encourages corporations that pursue a policy of affirmative action in Northern Ireland.
The bill passed on a 45-0 vote.