Session Review: Retirement Systems
Senators made several changes to the state’s retirement systems this session.
LB916, introduced by the Nebraska Retirement System Committee, makes Internal Revenue Code compliance updates for county, judge, state patrol, school and state employee retirement provisions.
The bill:
• removes per diems as compensation for purposes of retirement;
• allows terminated or retired plan members to rollover funds into a Roth IRA;
• allows a lump sum direct transfer of a death benefit into a qualified retirement plan;
• requires employers to notify the Public Employees Retirement Board upon termination of an employee member;
• allows a non-spousal beneficiary to make a direct transfer or rollover of the member’s death benefit into a qualified retirement plan; and
• allows a member’s beneficiary to be entitled to an additional death benefit that he or she would be entitled to had the member been employed during the period of qualified military service when the death occurred.
Included in the measure are provisions of two additional bills:
• LB1036, introduced by Omaha Sen. Jeremy Nordquist, which provides an additional opportunity for active county and state defined contribution plan members to opt in to the cash balance plans between Sept. 1 and Oct. 31, 2012; and
• LB973, introduced by Lincoln Sen. Colby Coash, which allows a judge to order civil payment from a portion of a convict’s benefits and annuities plan if he or she is a member of a specified public pension plan who is convicted of or pleads guilty to felony assault, sexual assault, kidnapping, child abuse, false imprisonment or theft by embezzlement and is found civilly liable for resulting damages.
Benefits and annuities necessary for support of the employee or appointee or his or her beneficiaries would be exempt from payment. The provisions of LB973 operate retroactively and apply to individuals convicted of a felony or who plead no contest and are found liable for civil damages prior to, on or after the bill’s effective date.
LB916 takes effect immediately and passed on a 46-0 vote.
Senators also approved a bill allowing counties with a population between 200,000 and 300,000 to reduce the employer’s contribution to the employees retirement plan.
LB867, introduced by Wilber Sen. Russ Karpisek, affects only Lancaster County and reduces the employer contribution rate to least 100 percent of the employee’s contribution for those hired after July 1, 2012. The current contribution rate is 150 percent of an employee’s contribution. Current employees will continue to receive the 150 percent county contribution match.
The bill passed 46-0.
Finally, LB1082, also introduced by Karpisek, increases retirement contribution rates for police officers and first class cities.
The bill increased the minimum contribution rates for police officers and first class cities to 6.5 percent of an officer’s salary beginning Oct. 1, 2013. Rates will increase to 7 percent on Oct. 1, 2015.
The bill also changes the vesting schedule for officers in first class cities to the following:
• 40 percent after two years of service;
• 60 percent after four years of service;
• 80 percent after five years of service; and
• 100 percent after seven years of service.
All officers will be 100 percent vested upon reaching age 60.
LB1082 passed on a 48-0 vote and takes effect immediately.
