Enrolled Bill Summary

House Bill 3033	House Author:  Naishtat et al.
Effective:  6-17-11	Senate Sponsor:  Watson

            House Bill 3033 amends the law previously applicable to the retirement system in a municipality having a population within a specified population bracket, maintaining the law's applicability to that municipality's retirement system by updating the population bracket to specify a population of more than 760,000 and less than 860,000. The bill revises definitions relating to compensation to maintain compliance with provisions of the Internal Revenue Code of 1986 regarding an employee's election to participate in certain tax-qualified retirement plans.

House Bill 3033 establishes a new benefits tier for municipal employees hired on or after January 1, 2012, and enrolled in the retirement system as members of Group B; employees who are members of the system on or before December 31, 2011, or who return to full-time employment on or after January 1, 2012, and reinstate all of their prior membership credits, become enrollees as members of Group A. The bill sets the multiplier used to compute a member's retirement annuity at 3.0 percent for Group A members and at 2.7 for Group B members. The bill maintains the current normal retirement age for Group A members; sets the normal retirement age for Group B members at 62 years of age with 30 years of creditable service or 65 years of age with five years of creditable service; and makes a Group B member eligible for early retirement with a reduced benefit at 55 years of age with at least 10 years of creditable service. The bill provides for the assignment of a member who returns to work on a full-time basis to the group for which the member is qualified.

House Bill 3033 amends provisions relating to the reinstatement of membership service and the purchase of qualified military service under certain conditions and establishes procedures and conditions for the conversion of accrued sick leave to creditable service at retirement and restrictions on the purchase of nonqualified permissive creditable service.  Members who retired before October 1, 2011, and beneficiaries of members who died before that date continue to receive the same benefits to which they were entitled before that date together with any benefit increase authorized by statute.

            House Bill 3033 authorizes a member selecting Option VI, when choosing from among the various life annuities available to a retiree, to elect to receive a lump-sum payment and either a reduced life annuity or one of several optional actuarially equivalent annuities available under Options I through V, with the annuity actuarially reduced as a result of the lump-sum payment. The bill also entitles the beneficiaries of a member, if a member dies while performing qualified military service, to specified additional benefits.

            House Bill 3033 sets out provisions relating to the mandatory cost of living increases in maximum allowable annual benefits, the application of this increase to members who have terminated employment, and the continued eligibility for a retirement allowance of a member who retires after reaching normal retirement age and who continues or resumes employment in a position that requires participation in another retirement system of the municipality.  The bill sets out provisions relating to the required suspension of the retirement allowance of retirees who resume employment under certain conditions and the reinstatement of the retirement allowance.

            House Bill 3033 increases the rate of both member and employer contributions to the retirement system to eight percent of the member's base compensation, pay, or salary.  The bill provides for a higher employer contribution agreed to by the employer and requires, rather than authorizes, each employer other than the city that contributes to the system to increase the contributions for the employer's respective employees by the same percentage, if applicable.  The bill makes changes as to what an eligible rollover distribution does not include.