May 10, 2008
Senate File 2424 passed the House and Senate April 25 with one House amendment that affected the IPERS portion of the bill. The amendment affects a member who, prior to January 1, 1998, has received a refund of contributions, later returns to covered employment and makes a purchase of permissive service credit for qualified service. The member will now receive credit for the actuarial cost of the employer’s share not refunded.
The bill passed the House with 55 ayes and 44 nays. It passed the Senate with 34 ayes and 7 nays. The bill is waiting for the governor’s signature.
The bill is available on the legislature’s website in final enrolled form.
April 17, 2008
The Senate passed a revised version of the public employee pension bill today. The new bill number is SF 2424. Several changes were made in the Senate appropriations committee to the state troopers and judges sections of the bill. No changes were made in the IPERS portion of the bill. A copy of the bill is available at http://www.legis.state.ia.us/
A new general item was added for the establishment of IRS section 403(b) tax sheltered investment programs by the department of administrative services. Participation would be offered to eligible public employers in the state. This provision will be of interest to public school employees.
Watch for action on this bill in the House and voice your support to your representatives.
March 10, 2008
The Senate State Government Committee voted out SF 2373 March 6. This is the combination pension bill covering proposed changes to the Public Safety Peace Officer’s Retirement System, the Iowa Public Employee Retirement System, the Statewide Fire and Police Retirement System and the Judicial Retirement System. A copy of SF 2373 is available at http://www.legis.state.ia.us.
Our concern is with the Iowa Public Employee Retirement System. Following is the explanation of proposed changes to our retirement plan. Many of the changes are technical to meet IRS requirements. The change that will help our system meet future benefit needs is the proposal to allow the contribution rate for general IPERS members to be set actuarially the same as the rates for protective occupations and sheriffs and deputies, a much needed change. Items of special interest are in bold. Now is the time to let your legislators know that you support SF 2373 as voted out of committee.
Code 45 27 section 97B.1A(20), concerning the definition of service, is amended to provide that service includes a period of military service from which the IPERS member does not return to IPERS covered service due to injury or disease resulting in death. Currently, a member must return to covered employment from military service in order to receive service credit for the period of military service.
Code section 97B.1A(26), concerning the definition of wages, is amended to exclude bonuses and allowances, except allowances included as wages for members of the general assembly, from the definition of wages.
Code section 97B.4(2), concerning the authority of the system in administering IPERS, is amended to provide that IPERS is not a participating agency for purposes of information technology services under the department of administrative services
Code section 97B.7(3), concerning the payment of investment management expenses from the retirement fund, is amended to eliminate the cap on the amount authorized to be expended to pay investment management expenses during a fiscal year. The current cap is four tenths of one percent of the market value of the retirement fund.
Code section 97B.9 is amended to set the fee for late contributions at the greater of $20 per occurrence or interest at the combined interest and dividend rate required under Code section 97B.70. Currently, an employer is charged the greater of $10 per occurrence or interest at the combined interest and dividend rate required under Code section 97B.70. The Code section is also amended to make civil actions to collect unpaid contributions from employers permissive.
Code section 97B.10, concerning the crediting of erroneous contributions, is amended to eliminate a provision awarding interest on a credit for contributions paid prior to an individual’s decision to elect out of IPERS coverage.
Code section 97B.11, concerning contributions to the system by employers and employees, is amended. Beginning July 1, 2011, IPERS will determine a required contribution rate for each membership group, including members in regular service, which is the contribution rate the system actuarially determines is the rate required by the system to discharge its liabilities as to that membership group as a percentage of the covered wages of members in that membership category. However, the bill provides that the required contribution rate for each membership group in a fiscal year shall not vary by more than one-half percentage point from the required contribution rate for the previous year. The bill then provides that, for members in regular service under IPERS, the employers shall pay 60 percent of the rate and members shall pay 40 percent of the rate. While current law provides for an actuarial determination of the rates for members in each of the special service categories, the contribution rate for members in regular service is fixed. As a result of this change, Code sections 97B.49B(3) and 97B.49C(3) are amended, effective July 1, 2011, by repealing that portion of each Code section that sets contribution rates for special service members to reflect that the establishment of those rates is done by the bill through amendment to Code section 97B.11 as47 14 of July 1, 2011.
Code section 97B.14 is amended by eliminating an exception that permitted small employers with total monthly contributions of $100 or less to pay those contributions quarterly rather than monthly. The bill requires all employers to pay contributions monthly, regardless of the amount of the contributions.
Code section 97B.33, concerning payments made to an individual arising out of a decision by the system or a court, is amended to provide that the system may make the payment without certifying to the director of the department of administrative services that the person is entitled to the payment.
Code section 97B.34A, concerning payment to minors, is amended to provide that if the sum to be paid is less than the greater of $25,000 or the amount authorized in section 565B.7, subsection 3 (currently $25,000), the funds may be paid to an adult as custodian for the minor. Payments in excess of this amount are to be paid to a court established conservator. Current law sets the maximum amount that can be paid to an adult custodian at $10,000.
Code section 97B.38, concerning fees for services, is amended to allow the system to charge fees to anyone for the costs incurred by the system in performing its duties. Currently, members, beneficiaries, and the general public, but not employers, may be charged fees.
Code section 97B.49B(1), concerning protection occupations, is amended to add county jailers and detention officers, Iowa national guard installation security officers, emergency medical services providers, and county attorney investigators, as members in a protection occupation for purposes of IPERS benefits.
Code section 97B.49F, concerning the determination of the cost of living dividend, is amended. Current law provides that the dividend increases by a percentage that is the lesser of 3 percent, the percentage increase in the consumer price index, and the percentage certified by the system’s actuary that the system can absorb. The bill amends the determination of the percentage calculated by the system’s actuary to provide that the determination be made by comparing the actuarial required contribution rate for the system and the statutory contribution rate. If the actuarial required rate exceeds that statutory rate, the bill provides that the percentage certified by the actuary shall be zero. Code section 97B.49H, concerning active member supplemental accounts, is amended to provide that no payments to the accounts be made unless the system remains fully funded following the payment to the supplemental accounts. Current law allows payment only if the payment can be absorbed without significantly impacting the funded status of the system.
Code section 97B.50, concerning early retirement due to disability, is amended to provide that a member who qualifies for IPERS regular disability benefits by becoming eligible for federal disability benefits must demonstrate their continued qualification for federal disability benefits to receive IPERS benefits. Current law does not require a determination that the member remains eligible for federal disability benefits once initial eligibility is established. The change does not affect the ability of the member to qualify for retirement benefits based on criteria other than disability.
Code section 97B.52, concerning payment of a lump sum death benefit, is amended to eliminate a provision requiring a determination of what the lump sum payment would have been if the person had died on June 30, 1984, and a provision that the method of payment to a beneficiary selected by a member does not apply.
Code section 97B.53B, concerning rollovers of members’ accounts from IPERS to another eligible retirement plan, is amended to reflect Internal Revenue Code changes. The bill provides that non-spouse beneficiaries of a member that are designated as beneficiaries pursuant to federal law are allowed to elect to have IPERS pay all or a portion of an eligible distribution to certain eligible retirement plans. The bill also provides that, beginning January 1, 2008, Roth individual retirement accounts and annuities are eligible retirement plans for a member, a member’s surviving spouse, or a qualified payee under a qualified domestic relations order. The provision of the bill amending Code section 97B.53B takes effect upon enactment and is retroactively applicable to January 1, 2007.
Code section 97B.65, concerning limitation on increases in benefits, is amended to provide that an increase in benefits shall not be implemented unless the system is fully funded and the increase in benefits can be absorbed into existing contribution rates for the membership group affected. Current law only requires that the system be fully funded prior to implementing the increase in benefits. This change also provides that the increase in benefits can be implemented even if the system is not fully funded or existing contribution rates are insufficient if the statutory change providing for the increased benefit is accompanied by a change in the required contribution rate necessary to support the increased benefit. This provision takes effect July 1, 2011.
Code section 97B.73B, concerning the purchase of service for patient advocates, is repealed by the bill. Code section 97B.80C(1) and (2), concerning purchases of permissive service credit, is amended. The bill provides that any period of time when there was not performance of services is considered nonqualified service eligible for a purchase of service. The bill also provides that a member may convert existing regular service credit to special service credit upon paying the actuarial cost of that enhanced benefit. The bill provides that if the existing service was nonqualified service, then the purchase of special service credit for that service shall be made pursuant to the requirements governing the purchase of nonqualified service. Alternatively, if the existing service was qualified service, then the purchase of special service credit for that service shall be made pursuant to the requirements governing the purchase of qualified service. Code section 97B.82, concerning the purchase of service credit from a direct rollover of moneys from another retirement plan to IPERS, is amended to reflect Internal Revenue Code changes. The provisions of the bill amending Code section 97B.82 take effect upon enactment and are retroactively applicable to January 1, 2007. The bill also provides that notwithstanding any provision of Code section 97B.65 to the contrary, the provisions in this division of the bill shall be implemented upon the effective dates applicable for those provisions.
