Session Review: Nebraska Retirement Systems
Senators approved several measures this session that make changes to various retirement systems.
LB645, introduced by Sen. Beau Ballard of Lincoln at the request of Gov. Jim Pillen, requires different contribution levels to the School Employees Retirement System from school plan participants, employers and the state, contingent on the funded ratio of the actuarial value of assets in the previous year.
Beginning July 1, 2025, state contribution rates will be set at three different funding levels. If the plan is:
• less than 96% actuarially funded, the state’s contribution rate will drop to an amount equal to 2% of the compensation of all members of the retirement system;
• between 96% and 100% actuarially funded, the state’s contribution will be 0.7% of total compensation; and
• 100% or greater actuarially funded, the state will cease making contributions.
The employee contribution rate also will be set at different funding levels. If the plan is:
• less than 96% actuarially funded, the rate will be 9.75% of employee compensation;
• between 96% and 98% funded, the contribution rate will drop to 8.75%;
• between 98% and 100% funded, the contribution rate will be 8%; and
• 100% or greater actuarially funded, the rate will be set at 7.25%.
Employer contributions will continue to be coupled with employee contributions, which currently is 101% of employee contributions.
The measure also includes provisions of Lincoln Sen. Eliot Bostar’s LB76, which makes changes to the Nebraska State Patrol Retirement System. Beginning July 1, 2027, the provisions will increase survivor benefits under the plan from 75% of a plan member’s benefit to 100% of a plan member’s benefit.
LB645 passed on a 45-2 vote and took effect immediately.
Lawmakers also approved a measure intended to refine changes made last session to the retirement contribution rates for certain Nebraska firefighters.
Nebraska law classifies cities based on population. First class cities are those with a population between 5,001 and 100,000.
LB108, sponsored by Sen. Mike Jacobson of North Platte, corrects a provision in a bill passed last session that changed contribution rates for firefighters and municipalities in first class cities.
Under the bill, beginning March 1, 2025, firefighters in an absolute coverage group — those who contribute to both the firefighter retirement system and Social Security — contribute 6.5% of their salary if they are employed by a city with more than 60,000 residents that is located in a county with a population of more than 100,000.
A qualifying city contributes a sum equal to 13% of such firefighter’s salary to the retirement system. LB108 passed on a vote of 48-0 and took effect immediately.
Retirement contribution rates for certain Nebraska police officers will change under a bill passed this session.
Under LB179, introduced by Kearney Sen. Stan Clouse, the retirement contribution rate for police officers in first class cities will increase from the current 7% of their monthly salary to 9%, beginning Oct. 1.
The bill will result in a corresponding increase from 7% to 9% in the contribution rate that first class cities pay into the plan.
Included in the measure are provisions of Omaha Sen. Margo Juarez’s LB461. Those provisions allow firefighters in first class cities the option of receiving the value of their retirement benefits in one or more partial payments in any amount and frequency of their choosing, beginning Oct. 1.
Lawmakers passed LB179 on a 47-0 vote.
The Nebraska Retirement Systems Committee introduced a measure that makes a number of changes to the state’s various retirement systems.
Among other changes, LB295 provides a process for the Public Employees Retirement Board to waive repayment of retirement benefits if the board determines that those benefits were the result of an inadvertent overpayment and repayment would cause a significant hardship. The bill also:
• updates eligible types of identification documents under the retirement systems statutes;
• includes the Class V School Employees Retirement System in the definition of statewide public retirement system under the Spousal Pension Rights Act;
• includes leave of absence pay in the definition of compensation under the School Employees Retirement Act;
• provides that lump-sum payments to multiple beneficiaries under the School Employees Retirement Act can be made independently of each other;
• clarifies the definition of early retirement under the Class V School Employees Retirement Act;
• provides that employees deemed full-time under the Class V School Employees Retirement Act remain full-time employees once they are deemed as such;
• extends from 60 days to 90 days the deadline for beneficiaries to elect a lump-sum distribution under the Class V School Employees Retirement Act; and
• ensures that school employees who are members of the retirement system under the Class V School Employees Retirement Act receive leave with pay to attend preretirement planning programs sponsored by the PERB.
The measure, which passed 46-0 and took effect immediately, includes provisions of LB420, also sponsored by the committee. Those provisions strike existing language in state law requiring that state contributions to the judges’ retirement fund be done by administrative transfer to the state treasurer.
