HB 179: "An Act relating to insurance for public employees, teachers, and certain retired public employees and teachers and to supplemental employee benefits; relating to teachers' and public employees' defined benefit retirement plans, to teachers' and public employees' defined contribution retirement plans, to employee and employer contributions to the teachers' retirement system and the public employees' retirement system, and to the administration of the Public Employees' Retirement System of Alaska and the deferred compensation program for state employees; establishing in the Department of Revenue the teachers' retirement system past service cost liability account and the public employees' retirement system past service cost liability account; relating to benefits of, references to federal law in, and investments in the teachers' retirement system and the public employees' retirement system; modifying the jurisdiction of the independent office of administrative hearings as related to retirement and related personnel benefits; and providing for an effective date."
00 HOUSE BILL NO. 179 01 "An Act relating to insurance for public employees, teachers, and certain retired public 02 employees and teachers and to supplemental employee benefits; relating to teachers' and 03 public employees' defined benefit retirement plans, to teachers' and public employees' 04 defined contribution retirement plans, to employee and employer contributions to the 05 teachers' retirement system and the public employees' retirement system, and to the 06 administration of the Public Employees' Retirement System of Alaska and the deferred 07 compensation program for state employees; establishing in the Department of Revenue 08 the teachers' retirement system past service cost liability account and the public 09 employees' retirement system past service cost liability account; relating to benefits of, 10 references to federal law in, and investments in the teachers' retirement system and the 11 public employees' retirement system; modifying the jurisdiction of the independent 12 office of administrative hearings as related to retirement and related personnel benefits;
01 and providing for an effective date." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 14.25.050 is amended by adding a new subsection to read: 04 (e) Beginning with the payroll for the first pay period in July 2007, a member 05 shall contribute to the plan, in addition to the amount calculated in (a) of this section, 06 an amount equal to five percent of the member's base salary. 07 * Sec. 2. AS 14.25.070(a) is amended to read: 08 (a) An employer shall make contributions to the plan in accordance with this 09 section and as certified by the board in an amount sufficient, after subtracting 10 member contributions, to provide the benefits of AS 14.25.009 - 14.25.220. The 11 amount shall be calculated by applying the employer normal cost rate to the sum 12 total of the base salaries paid to members in the plan and by applying the past 13 service rate to the sum total of the base salaries paid to members in the system 14 [AN EMPLOYER CONTRIBUTION RATE, CERTIFIED BY THE BOARD, 15 AGAINST THE SUM TOTAL OF THE BASE SALARIES PAID TO MEMBERS], 16 including any adjustments to contributions required by AS 14.25.173(a). The 17 employer shall remit this amount to the administrator in accordance with 18 AS 14.25.065. 19 * Sec. 3. AS 14.25.070 is amended by adding new subsections to read: 20 (d) In (a) of this section, "employer normal cost rate" means the percentage of 21 compensation of all active members in the plan that, when combined with the member 22 contribution rate of active members in the plan, is sufficient to provide the benefits 23 that are expected to be credited with respect to service during the year beginning after 24 the last valuation date. This percentage is uniformly determined for all employers and 25 is applicable to each employer. 26 (e) In (a) of this section, "past service rate" means the percentage of 27 compensation of all active members in the system necessary to provide the annual 28 amount required to amortize the unfunded obligations of the employers for benefits 29 earned by members in the plan before the date of the last actuarial valuation over a 30 period not to exceed the maximum period allowed by generally accepted accounting
01 principles of the Governmental Accounting Standards Board. This percentage is 02 uniformly determined for all employers and is applicable to each employer. 03 * Sec. 4. AS 14.25.125(c) is amended to read: 04 (c) Membership service for which contributions were refunded is not 05 creditable under this section [UNLESS THE REFUNDED CONTRIBUTIONS HAVE 06 BEEN REPAID. FOR PURPOSES OF THIS SECTION, A MEMBER OR FORMER 07 MEMBER DOES NOT HAVE TO BE REEMPLOYED UNDER THIS PLAN IN 08 ORDER TO REPAY REFUNDED CONTRIBUTIONS. COMPOUND INTEREST 09 AT THE RATE PRESCRIBED BY REGULATION MUST BE ADDED TO THE 10 REINSTATEMENT INDEBTEDNESS FROM THE DATE OF THE REFUND TO 11 THE DATE OF REPAYMENT]. 12 * Sec. 5. AS 14.25.310 is amended to read: 13 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 14 AS 14.25.310 - 14.25.590 apply only to teachers who first become members on or 15 after July 1, 2006, to members who are employed by employers that do not 16 participate in the retirement benefit plan established under AS 14.25.009 - 17 14.25.220, to former members as that term is defined under AS 14.25.220, or to 18 members who transfer into the defined contribution plan under AS 14.25.540. 19 * Sec. 6. AS 14.25.320(c) is amended to read: 20 (c) The defined contribution retirement plan is intended to qualify under 26 21 U.S.C. 401(a), [AND] 414(d), and 414(k) (Internal Revenue Code) as a qualified 22 retirement plan established and maintained by the state for its employees and for the 23 employees of school districts and regional educational attendance areas in the state. 24 * Sec. 7. AS 14.25.350 is amended by adding a new subsection to read: 25 (e) An employer shall make annual contributions to a trust account in the plan, 26 applied as a percentage of each member's compensation from July 1 to the following 27 June 30, in an amount determined by the board to be actuarially required to fully fund 28 the cost of providing occupational disability and occupational death benefits under 29 AS 14.25.310 - 14.25.590. 30 * Sec. 8. AS 14.25.380 is amended to read: 31 Sec. 14.25.380. Limitations on contributions and benefits. Notwithstanding
01 any other provisions of this plan, the annual additions to each member's individual 02 account under this plan and under all defined contribution plans of the employer 03 required to be aggregated with the contributions from this plan under the provisions of 04 26 U.S.C. 415 may not exceed, for any limitation year, the amount permitted under 26 05 U.S.C. 415(c) at any time. If the amount of a member's individual account 06 [DEFINED CONTRIBUTION PLAN] contributions exceeds the limitation of 26 07 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary 08 remedial action to correct an excess contribution. A fixed benefit provided under 09 this plan may not exceed, for or during a limitation year, the amount permitted 10 under 26 U.S.C. 415(b). If a fixed benefit provided under this plan exceeds, for or 11 during a limitation year, the amount permitted under 26 U.S.C. 415(b), the 12 administrator shall take remedial action necessary to comply with the limits on 13 the benefit amount in 26 U.S.C. 415(b). The provisions of 26 U.S.C. 415, and the 14 regulations adopted under that statute, as applied to qualified [DEFINED 15 CONTRIBUTION] plans of governmental employees are incorporated as part of the 16 terms and conditions of the plan. 17 * Sec. 9. AS 14.25.400(b) is amended to read: 18 (b) A participant may direct investment of plan funds held in an individual 19 account among available investment funds in accordance with rules established by the 20 board. 21 * Sec. 10. AS 14.25.485(b) is amended to read: 22 (b) The occupational disability benefits accrue beginning the first day of the 23 month following termination of employment as a result of the disability and are 24 payable the last day of the month. If a final determination granting the benefit is not 25 made in time to pay the benefit when due, a retroactive payment shall be made to 26 cover the period of deferment. The last payment shall be for the first month in which 27 the disabled member 28 (1) dies; 29 (2) recovers from the disability; 30 (3) fails to meet the requirements under (f), (h), or (j) [(h)] of this 31 section; or
01 (4) reaches normal retirement age. 02 * Sec. 11. AS 14.25.485(d) is amended to read: 03 (d) The monthly amount of an occupational disability benefit is 40 percent of 04 the disabled member's gross monthly compensation at the time of termination due to 05 disability. Notwithstanding AS 14.25.390(b), at the time a member is appointed to 06 disability, the member becomes fully vested in the employer contributions made 07 under AS 14.25.350(a). A disabled member is fully vested in the contributions to 08 the member's individual account made under this subsection. A member is not 09 entitled to elect distributions from the member's individual account under 10 AS 14.25.410 while the member is receiving disability benefits under this section. 11 While a member is receiving disability benefits, based on the disabled member's gross 12 monthly compensation at the time of termination due to disability, the employer shall 13 make contributions to the 14 (1) member's individual account under AS 14.25.340 on behalf of the 15 member, without deduction from the member's disability payments; and 16 (2) appropriate accounts and funds on behalf of the member under 17 AS 14.25.350. 18 * Sec. 12. AS 14.25.485(g) is amended to read: 19 (g) A disabled member's occupational disability benefit terminates the last 20 day of the month in which [WHEN] the disabled member first qualifies [ATTAINS 21 ELIGIBILITY] for normal retirement. At that time, the member's retirement benefit 22 shall be determined under the provisions of AS 14.25.420 - 14.25.440, 14.25.470, and 23 14.25.480. A member whose occupational disability benefit terminates under this 24 subsection [RECEIVING DISABILITY BENEFITS UP UNTIL ELIGIBILITY FOR 25 RETIREMENT] shall be considered to have retired directly from the plan. 26 * Sec. 13. AS 14.25.485(i) is amended to read: 27 (i) Upon the death of a disabled member who is receiving or is entitled to 28 receive an occupational disability benefit, the administrator shall pay the surviving 29 spouse a surviving spouse's pension, equal to 40 percent of the member's monthly 30 compensation at the termination of employment because of occupational disability. If 31 there is no surviving spouse, the administrator shall pay the survivor's pension in equal
01 parts to the dependent children of the member. While the monthly survivor's 02 pension is being paid, the survivor is not entitled to elect distributions from the 03 employee's individual contribution account under AS 14.25.410. The first payment 04 of the surviving spouse's pension or of a dependent child's pension shall accrue from 05 the first day of the month following the member's death and is payable the last day of 06 the month. The last payment shall be made the last day of [FOR] the last month in 07 which there is an eligible surviving spouse or dependent child, or the last day of the 08 month in which date the member would have first qualified for normal 09 retirement if the member had survived, whichever day comes sooner. A 10 retirement benefit shall be determined under the provisions of AS 14.25.420 - 11 14.25.440, 14.25.470, and 14.25.480 based on [. ON] the date the member would 12 have first qualified for normal retirement [OF THE MEMBER WOULD HAVE 13 OCCURRED] if the member had survived. In addition to the payment of the 14 member's individual account, the surviving spouse or, if there is no surviving 15 spouse, the surviving dependent children of the member, shall receive an 16 additional benefit in an amount equal to the accumulated contributions that 17 would have been made to the deceased member's individual account under 18 AS 14.25.340(a) and 14.25.350(a), based on the deceased member's gross monthly 19 compensation at the time of occupational disability, from the time of the 20 member's death to the date the member would have first qualified for normal 21 retirement if the member had survived. Earnings shall be allocated to the 22 additional benefit calculated under this subsection based on the actual rate of 23 return, net of expenses, of the trust account established under AS 14.25.350(e) 24 over the period that the contributions would have been made. This additional 25 amount shall be paid in the same manner as determined for the member's 26 individual account under AS 14.25.420 - 14.25.460. For the purpose of 27 determining eligibility of a survivor who is receiving a benefit under this 28 subsection for medical benefits under AS 14.25.470 - 14.25.480, a [LIVED, THE 29 RETIREMENT BENEFIT SHALL BE DETERMINED UNDER THE PROVISIONS 30 OF AS 14.25.420 - 14.25.440, 14.25.470, AND 14.25.480. A] member who died 31 while receiving disability benefits shall be considered to have retired directly from the
01 plan on the date the member would have first qualified for normal retirement [OF 02 THE MEMBER WOULD HAVE OCCURRED] if the member had survived. The 03 period during which the member was eligible for a disability benefit and the 04 period during which a survivor's pension is paid to a survivor under this 05 subsection each constitute membership service for the purposes of determining 06 vesting in employer contributions under AS 14.25.390(b) and eligibility for 07 retirement and medical benefits under this chapter and AS 39.30.300 - 39.30.495 08 [LIVED]. 09 * Sec. 14. AS 14.25.485(j) is repealed and reenacted to read: 10 (j) For the purposes of this section, a condition qualifies as an occupational 11 disability if 12 (1) the condition is a physical or mental condition that the 13 administrator determines presumably permanently prevents an employee from 14 satisfactorily performing the employee's usual duties or the duties of another 15 comparable position or job available to the employee and for which the employee is 16 qualified by training or education; and 17 (2) the proximate cause of the condition is a bodily injury sustained, or 18 a hazard undergone, while in the performance and within the scope of the employee's 19 duties and is not the proximate result of the wilful negligence of the employee. 20 * Sec. 15. AS 14.25 is amended by adding a new section to read: 21 Sec. 14.25.486. Disability benefit adjustment. (a) Once each year, the 22 administrator shall increase disability benefits. The amount of the increase is a 23 percentage of the current disability benefit equal to the lesser of 75 percent of the 24 increase in the cost of living in the preceding calendar year or nine percent. 25 (b) If a disabled member was not receiving a benefit during the entire 26 preceding calendar year, the increase in the benefit under this section shall be adjusted 27 by multiplying it by a fraction, the numerator of which is the number of months for 28 which the benefit was received in the preceding calendar year and the denominator of 29 which is 12. 30 (c) An increase in benefit payments under this section is effective July 1 of 31 each year and is based on the percentage increase in the Consumer Price Index for
01 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 02 calendar year, as determined by the United States Department of Labor, Bureau of 03 Labor Statistics. 04 (d) Benefit adjustments under this section shall terminate the last day of the 05 month following the date on which a disabled member is no longer receiving a 06 disability benefit under AS 14.25.485. 07 * Sec. 16. AS 14.25.487(b) is amended to read: 08 (b) The first payment of the surviving spouse's pension or of a dependent 09 child's pension shall be made for the month following the month in which the member 10 dies. Payments [, AND PAYMENT] shall cease on the last day of the month in 11 which there is no longer an eligible spouse or eligible dependent child, or the last 12 day of the month following the earliest date [TO BE MADE BEGINNING WITH 13 THE MONTH IN WHICH] the member would have first qualified for normal 14 retirement if the member had survived, whichever day is earlier. 15 * Sec. 17. AS 14.25.487(c) is amended to read: 16 (c) The monthly survivor's pension in (b) of this section for survivors of 17 members is 40 percent of the member's monthly compensation in the month in which 18 the member dies. While the monthly survivor's pension is being paid, the survivor 19 is not entitled to elect distributions from the member's individual contribution 20 account under AS 14.25.410, except as required by AS 14.25.440. While the 21 monthly survivor's pension is being paid, the employer shall make contributions on 22 behalf of the member's surviving spouse and member's surviving dependent 23 children [BENEFICIARIES BASED ON THE DECEASED MEMBER'S GROSS 24 MONTHLY COMPENSATION AT THE TIME OF OCCUPATIONAL DEATH 25 (1) TO THE MEMBER'S INDIVIDUAL ACCOUNT UNDER 26 AS 14.25.340, WITHOUT DEDUCTION FROM THE SURVIVOR'S PENSION; 27 AND 28 (2)] to the appropriate accounts and funds [ON BEHALF OF THE 29 MEMBER] under AS 14.25.350(b) - (e). 30 * Sec. 18. AS 14.25.487(e) is amended to read: 31 (e) On the date the member would have first qualified for normal retirement
01 [OF THE MEMBER WOULD HAVE OCCURRED] if the member had survived 02 [LIVED], the retirement benefit shall be determined under the provisions of 03 AS 14.25.420 - 14.25.440, 14.25.470, and 14.25.480. In addition to payment of the 04 member's individual account, the surviving spouse or, if there is no surviving 05 spouse, the surviving dependent children of the member, shall receive an 06 additional benefit in an amount equal to the accumulated contributions that 07 would have been made to the deceased member's individual account under 08 AS 14.25.340(a) and 14.25.350(a), based on the deceased member's gross monthly 09 compensation at the time of the member's occupational death, from the time of 10 the member's death to the date the member would have first qualified for normal 11 retirement if the member had survived. Earnings shall be allocated to the 12 additional benefit calculated under this subsection based on the actual rate of 13 return, net of expenses, of the trust account established under AS 14.25.350(e) 14 over the period that the contributions would have been made. This additional 15 amount shall be paid in the same manner as determined for the member's 16 individual account under AS 14.25.420 - 14.25.460. A member who died and whose 17 survivors receive occupational death benefits under this section shall be considered to 18 have retired directly from the plan on the date the [NORMAL RETIREMENT OF 19 THE] member would have first qualified for normal retirement [OCCURRED] if 20 the member had survived. The period of time during which a survivor's pension is 21 paid under this section constitutes membership service for the purposes of 22 determining vesting in employer contributions under AS 14.25.390(b) and 23 eligibility for retirement and medical benefits under this chapter and 24 AS 39.30.300 - 39.30.495 [LIVED]. 25 * Sec. 19. AS 14.25 is amended by adding new sections to read: 26 Sec. 14.25.488. Survivor's pension adjustment. (a) Once each year, the 27 administrator shall increase payments to a person 60 years of age or older receiving a 28 survivor's pension under AS 14.25.485(i) or 14.25.487(c), and to a person who has 29 received a survivor's pension under AS 14.25.485(i) or 14.25.487(c) for at least eight 30 years if the person is not otherwise eligible for an increase under this section. 31 (b) The amount of the increase is a percentage of the current survivor's
01 pension equal to the lesser of 50 percent of the increase in the cost of living in the 02 preceding calendar year or six percent. 03 (c) If a survivor was not receiving a pension during the entire preceding 04 calendar year, the increase in the survivor's pension under this section shall be 05 adjusted by multiplying it by a fraction, the numerator of which is the number of 06 months for which the pension was received in the preceding calendar year and the 07 denominator of which is 12. 08 (d) The administrator shall increase the initial survivor's pension paid to a 09 survivor of a member who died while receiving disability benefits by a percentage 10 equal to the total cumulative percentage that has been applied to the member's 11 disability benefit under AS 14.25.486. 12 (e) An increase in benefit payments under this section is effective July 1 of 13 each year and is based on the percentage increase in the Consumer Price Index for 14 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 15 calendar year, as determined by the United States Department of Labor, Bureau of 16 Labor Statistics. 17 (f) Pension adjustments under this section shall terminate the last day of the 18 month following the date on which a survivor is no longer receiving a survivor's 19 pension under AS 14.25.485(i) or 14.25.487(c). 20 Sec. 14.25.489. Premiums for retiree major medical insurance coverage 21 upon termination of disability benefits or survivor's pension. The premium for 22 retiree major medical insurance coverage payable by a member whose disability 23 benefit is terminated under AS 14.25.485(g) or by an eligible survivor whose survivor 24 pension is terminated under AS 14.25.485(i) or 14.25.487(e) when the member would 25 have been eligible for normal retirement if the member had survived shall be 26 determined under AS 14.25.480(g)(2) as if the member or survivor were eligible for 27 Medicare. 28 * Sec. 20. AS 14.25.510 is amended to read: 29 Sec. 14.25.510. Nonguarantee of returns, rates, or benefit amounts. The 30 plan created by AS 14.25.310 - 14.25.590 is, with respect to individual accounts, 31 treated as a defined contribution plan and [PLAN,] not as a defined benefit plan. The
01 amount of money in the individual account of a participant depends on the amount of 02 contributions and the rate of return from investments of the account that varies over 03 time. If benefits are paid in the form of an annuity, the benefit amount payable is 04 dependent on the amount of money in the account and the interest rates applied and 05 service fees charged by the annuity payor at the time the annuity is purchased from 06 the carrier and benefits are first paid. Nothing in this plan guarantees a participant 07 (1) a rate of return or interest rate other than that actually earned by the 08 account of the participant, less applicable administrative expenses; or 09 (2) an annuity based on interest rates or service charges other than 10 interest rates available from and service charges by the annuity payor in effect at the 11 time the annuity is paid. 12 * Sec. 21. AS 14.25.540(c) is amended to read: 13 (c) Each eligible member who elects to participate in the defined contribution 14 retirement plan shall have transferred to a new individual account the member 15 contribution account balance held in trust for the member under the defined benefit 16 retirement plan of the teachers' retirement system. A matching employer contribution 17 shall be made on behalf of that employee to the new account. The employer shall 18 make the matching contribution from funds other than the trust funds of the defined 19 benefit retirement plan. The amount of the matching employer contribution shall 20 be subject to, and may not exceed, the limitation of 26 U.S.C. 415(c) during the 21 applicable limitation year in which the contribution is made. 22 * Sec. 22. AS 14.25.540(d) is amended to read: 23 (d) Upon a transfer, all membership service previously earned under the 24 defined benefit retirement plan shall be nullified for purposes of entitlement to a future 25 benefit under the defined benefit retirement plan but shall be credited for purposes of 26 determining vesting in employer contributions under AS 14.25.390(b) and 27 eligibility to elect medical benefits under AS 14.25.470. Membership service allowed 28 for credit toward medical benefits does not include any service credit purchased under 29 AS 14.25.075 for employment by an employer who is not a participating employer in 30 this chapter. 31 * Sec. 23. AS 14.25.540(h) is amended to read:
01 (h) A member who is eligible to elect transfer to the defined contribution 02 plan must make the election not later than 12 months after the first day of the 03 month following the administrator's receipt of notification that the member's 04 employer consents to transfers of its members under (i) of this section. The 05 election to participate in the defined contribution retirement plan must be made in 06 writing on forms and in the manner prescribed by the administrator. Before accepting 07 an election to participate in the defined contribution retirement plan, the administrator 08 must provide the employee planning on making an election to participate in the 09 defined contribution retirement plan with information, including calculations to 10 illustrate the effect of moving the employee's retirement plan from the defined benefit 11 retirement plan to the defined contribution retirement plan as well as other information 12 to clearly inform the employee of the potential consequences of the employee's 13 election. An election made under this subsection to participate in the defined 14 contribution retirement plan is irrevocable. Upon making the election, the participant 15 shall be enrolled as a member of the defined contribution retirement plan, the 16 member's participation in the plan shall be governed by the provisions of 17 AS 14.25.310 - 14.25.590, and the member's participation in the defined benefit 18 retirement plan under AS 14.25.009 - 14.25.220 shall terminate. The participant's 19 enrollment in the defined contribution retirement plan shall be effective the first day of 20 the month after the administrator receives the completed enrollment forms. An 21 election made by an eligible member who is married is not effective unless the 22 election is signed by the individual's spouse. 23 * Sec. 24. AS 14.25.590(7) is amended to read: 24 (7) "compensation" 25 (A) means 26 (i) the total remuneration earned by an employee for 27 personal services rendered, including cost-of-living differentials, as 28 reported on the employee's Federal Income Tax Withholding Statement 29 (Form W-2) from the employer for the calendar year; 30 (ii) the member contribution to the teachers' retirement 31 system under AS 14.25.340;
01 (B) does not include retirement benefits, severance pay or other 02 separation bonuses, welfare benefits, per diem, expense allowances, workers' 03 compensation payments, payments for leave not used whether those leave 04 payments are scheduled payments, lump-sum payments, donations, or cash-ins, 05 any remuneration contributed by the employer for or on account of the 06 employee under this plan or under any other qualified or nonqualified 07 employee benefit plan, or any remuneration not specifically included above 08 that would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue 09 Code) if the employer had remained in the Federal Social Security System [, 10 OR ANY REMUNERATION PAID BY THE EMPLOYER IN EXCESS OF 11 THE SOCIAL SECURITY TAXABLE WAGE BASE FOR THE 12 CALENDAR YEAR]; 13 (C) notwithstanding (B) of this paragraph, includes any amount 14 that is contributed by the employer under a salary reduction agreement and that 15 is not includible in the gross income of the employee under 26 U.S.C. 125, 16 132(f)(4), 402(e)(3), 402(h)(1)(B), or 403(b) (Internal Revenue Code); the 17 annual compensation limitation for the member, which is so taken into account 18 for those purposes, may not exceed $200,000, as adjusted for the cost of living 19 in accordance with 26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the 20 limitation for a fiscal year being the limitation in effect for the calendar year 21 within which the fiscal year begins; 22 * Sec. 25. AS 37.10 is amended by adding new sections to read 23 Article 4A. Teachers' and Public Employees' Retirement System Past Service 24 Cost Liability Accounts. 25 Sec. 37.10.200. Teachers' retirement system past service cost 26 liability account. (a) There is established in the Department of Revenue the 27 teachers' retirement system past service cost liability account, consisting of 28 appropriations to the account. The commissioner of revenue shall develop and adopt 29 regulations necessary to accomplish the requirements of this section and shall manage 30 the account according to the requirements of AS 37.10.071. 31 (b) At the end of each fiscal year, after all distributions under (c) of
01 this section are completed, money appropriated for use in that fiscal year 02 reverts to the general fund and all income earned on the money shall be 03 paid to the general fund. 04 (c) During each fiscal year, the commissioner of revenue shall 05 distribute from the account established in (a) of this section, to each 06 employer other than the state that is a member of the Teachers' 07 Retirement System of Alaska, a payment that the employer shall pay to the 08 state for that fiscal year toward eliminating the employer's past service 09 cost liability to the Teachers' Retirement System of Alaska. 10 (d) A payment to an employer under (c) of this section must be 11 based on 80 percent of the payroll on which employer contributions to the 12 Teachers' Retirement System of Alaska were required and that the 13 employer reported to the Department of Administration for the fiscal year 14 preceding by three fiscal years the fiscal year for which a distribution is 15 made under this section, and the past service cost rate of the system for 16 the fiscal year preceding by three fiscal years the fiscal year for which a 17 distribution is made under this section. 18 (e) For any fiscal year that the money available for distribution 19 from the account is insufficient to pay every eligible employer the amount 20 due under this section, the amount distributed in that fiscal year to every 21 eligible employer shall be decreased pro rata. 22 (f) An employer who receives an overpayment in excess of a 23 distribution authorized by this section or in excess of the employer's past 24 service cost liability shall immediately return the overpayment to the 25 commissioner of revenue, who shall cause it to be returned to the account. 26 Sec. 37.10.202. Public employees' retirement system past 27 service cost liability account. (a) There is established in the Department of 28 Revenue the public employees' retirement system past service cost liability 29 account, consisting of appropriations to the account. The commissioner of revenue 30 shall develop and adopt regulations necessary to accomplish the requirements of this
01 section and shall manage the account according to the requirements of AS 37.10.071. 02 (b) At the end of each fiscal year, after all distributions under (c) 03 and (d) of this section are completed, money appropriated for use in that 04 fiscal year reverts to the general fund and all income earned on the money 05 shall be paid to the general fund. 06 (c) During each fiscal year, the commissioner of revenue shall 07 distribute from the account established in (a) of this section, to each 08 municipal employer or school district employer member of the Public 09 Employees' Retirement System of Alaska, a payment that the employer shall 10 pay to the state for that fiscal year toward eliminating the employer's past 11 service cost liability to the Public Employees' Retirement System of 12 Alaska. 13 (d) A payment to an employer under (c) of this section must be 14 based on the payroll on which employer contributions to the Public 15 Employees' Retirement System of Alaska were required and that the 16 employer reported to the Department of Administration for the fiscal year 17 preceding by three fiscal years the fiscal year for which a distribution is 18 made under (c) of this section and 80 percent of the employer's past service 19 cost rate during the fiscal year that precedes the distribution fiscal year 20 under (c) of this section by three fiscal years. 21 (e) In addition to the distribution under (c) of this section, an 22 employer that paid to the Public Employees' Retirement System of Alaska 23 in excess of the amount the employer was required to pay for the fiscal 24 year preceding by three fiscal years the fiscal year that a distribution is 25 made under this section shall receive, in unrestricted funds, an incentive 26 distribution from the account in an amount equal to 50 percent of the 27 excess. 28 (f) For any fiscal year that the money available for distribution from 29 the account is insufficient to pay every eligible employer the amount due 30 under this section, the amount distributed in that fiscal year to every
01 eligible employer shall be decreased pro rata. 02 (g) An employer who receives an overpayment in excess of a 03 distribution or incentive distribution authorized by this section shall 04 immediately return the overpayment to the commissioner of revenue, who 05 shall cause it to be returned to the account. 06 Sec. 37.10.204. Definition. In AS 37.10.200 - AS 37.10.204, "past 07 service cost rate" means the annual payment required to eliminate an employer's 08 unfunded liability over the amortization period, divided by the payroll for which 09 employer contributions are required and that is reported by the employer to the 10 Department of Administration for the fiscal year preceding by three fiscal years the 11 fiscal year that a distribution is made under AS 37.10.200 or 37.10.202. 12 * Sec. 26. AS 39.30 is amended by adding a new section to read: 13 Sec. 39.30.097. Regulations. The administrator may adopt regulations to 14 administer AS 39.30.090 - 39.30.095. Regulations adopted under this section relate to 15 the internal management of a state agency and are not subject to AS 44.62 16 (Administrative Procedure Act). 17 * Sec. 27. AS 39.30.154 is amended to read: 18 Sec. 39.30.154. Powers and duties of the administrator. The administrator 19 has the same powers and duties with regard to the plan as those set out in 20 AS 14.25.003 and 14.25.004 [AS 14.25.004]. 21 * Sec. 28. AS 39.30.160(a) is amended to read: 22 (a) The Department of Administration shall, in accordance with policies 23 prescribed by regulations adopted by the commissioner [OF THE ALASKA 24 RETIREMENT MANAGEMENT BOARD], provide to employees for whom special 25 individual employee benefit accounts are established under AS 39.30.150(c) the 26 following benefit options: 27 (1) supplemental health benefits; 28 (2) supplemental death benefits; 29 (3) supplemental disability benefits; and 30 (4) supplemental dependent care benefits. 31 * Sec. 29. AS 39.30.160(e) is amended to read:
01 (e) Regulations adopted by the commissioner [BOARD] implementing 02 AS 39.30.150 and this section are not subject to AS 44.62 (Administrative Procedure 03 Act). 04 * Sec. 30. AS 39.30 is amended by adding a new section to read: 05 Sec. 39.30.165. Appeals. A final decision made under AS 39.30.150 - 06 39.30.180 is subject to appeal under AS 44.64. 07 * Sec. 31. AS 39.30 is amended by adding a new section to read: 08 Sec. 39.30.335. Appeals. A final decision made under AS 39.30.300 - 09 39.30.495 is subject to appeal under AS 44.64. 10 * Sec. 32. AS 39.30.340 is amended to read: 11 Sec. 39.30.340. Powers and duties of the administrator. The administrator 12 shall establish a teachers' and public employees' retiree health reimbursement 13 arrangement plan trust fund in which the assets of the plan shall be deposited and held. 14 The administrator has the same powers and duties with regard to the plan and the trust 15 fund as provided in AS 14.25.003 and 14.25.004 [AS 14.25.004]. 16 * Sec. 33. AS 39.30.370 is amended to read: 17 Sec. 39.30.370. Contributions by employers. For each member of the plan, 18 an employer shall contribute to the teachers' and public employees' retiree health 19 reimbursement arrangement plan trust fund an amount equal to three percent of the 20 average annual compensation of all employees of employers in the plan 21 [EMPLOYER'S AVERAGE ANNUAL EMPLOYEE COMPENSATION]. The 22 administrator shall maintain a record for each member to account for employer 23 contributions on behalf of that member. The board shall establish by regulation the 24 rate of interest to be applied annually to the amount in a member's individual account. 25 * Sec. 34. AS 39.35.160 is amended by adding a new subsection to read: 26 (e) Beginning with the payroll for the first pay period in July 2007, a member 27 shall contribute to the plan, in addition to the amount calculated in (a) of this section, 28 an amount equal to five percent of the member's base salary. 29 * Sec. 35. AS 39.35.250 is amended to read: 30 Sec. 39.35.250. Calculation of employer's contribution rate. (a) An 31 employer shall make contributions to the plan in amounts determined in accordance
01 with this section. For the purposes of this section and AS 39.35.270, the [PAST 02 SERVICE DATE FOR EACH EMPLOYER IS THE ENTRY DATE OF THE 03 EMPLOYER OR DECEMBER 31, 1972, WHICHEVER IS LATER. AFTER 04 DECEMBER 31, 1972, IF AMENDMENTS TO AS 39.35.095 - 39.35.680 ARE 05 ENACTED THAT SUBSTANTIALLY AFFECT BENEFITS ACCRUED BEFORE 06 THE EFFECTIVE DATE OF THE AMENDMENT, THE PAST SERVICE DATE 07 WILL BE CHANGED TO DECEMBER 31 OF THE YEAR IMMEDIATELY 08 PRECEDING THAT IN WHICH THE AMENDMENT IS ENACTED. THE] 09 contribution rate is the sum of the consolidated employer normal cost rate and the 10 past service rate as certified by the board. 11 (b) In (a) of this section, "consolidated employer normal cost rate" means the 12 percentage of compensation of all active members [EMPLOYEES] in the plan which, 13 [IF PAID OVER THE PERIOD OF THEIR CREDITED SERVICE AFTER THEIR 14 PAST SERVICE DATE AND] when combined with all employee contributions to the 15 plan, is sufficient to provide the benefits earned during the year beginning after the 16 last valuation date [AFTER SUCH PAST SERVICE DATES]. This percentage is 17 [UNIFORMLY] determined at the plan level for all employers and is applicable to 18 each employer. 19 (c) In (a) of this section, "past service rate" means the percentage of 20 compensation of all active members [EMPLOYEES] in the system [PLAN] 21 necessary to provide the annual amount required to amortize the unfunded obligations 22 of the plan [EMPLOYER] for benefits earned by members in the plan before the 23 date of the last actuarial valuation [EMPLOYER'S PAST SERVICE DATE] over a 24 period not to exceed the maximum allowed by generally accepted accounting 25 principles of the Governmental Accounting Standards Board [40 YEARS. THE 26 PERIOD OF AMORTIZATION BEGINS AT THE PAST SERVICE DATE OF 27 EACH EMPLOYER. THE PERCENTAGE IS SEPARATELY DETERMINED FOR 28 EACH EMPLOYER.] 29 * Sec. 36. AS 39.35.270(a) is amended to read: 30 (a) The amount of each employer's contributions shall be determined by 31 applying the consolidated employer normal cost [EMPLOYER'S
01 CONTRIBUTION] rate [, AS CERTIFIED BY THE BOARD,] to the total 02 compensation paid to the employer's active members [EMPLOYEES] of the plan 03 and by applying the employer's past service rate to the total compensation paid 04 to the employer's active members in the system [EMPLOYER] for each payroll 05 period, [AND BY] including any adjustments to contributions required by 06 AS 39.35.520(a). This amount shall be remitted by the employer to the administrator 07 in accordance with AS 39.35.610. 08 * Sec. 37. AS 39.35.375(a) is amended to read: 09 (a) An active or inactive member who has never been vested in this plan or in 10 the teachers' retirement plan under AS 14.25.009 - 14.25.220, who has at least two 11 years of credited service in this plan, and who has membership service in the teachers' 12 retirement system may claim credited service in this plan in an amount equal to the 13 membership service the member has in the teachers' retirement system. The claimed 14 credited service may be added to service earned under AS 39.35.095 - 39.35.680 to 15 enable the member to qualify for a public service benefit under this section. The 16 member may not claim credited service for membership service for which the member 17 has received a refund under AS 14.25.150 [UNLESS THE MEMBER FULLY PAYS 18 THE INDEBTEDNESS AS ESTABLISHED UNDER AS 14.25.063]. The member 19 may not claim credited service in this plan based on unused sick leave under 20 AS 14.25.115. 21 * Sec. 38. AS 39.35.385(c) is amended to read: 22 (c) Credited service for which contributions were refunded is not creditable 23 under this section [UNLESS THE REFUNDED CONTRIBUTIONS HAVE BEEN 24 REPAID. FOR PURPOSES OF (a) AND (b) OF THIS SECTION, A MEMBER OR 25 FORMER MEMBER DOES NOT HAVE TO BE REEMPLOYED UNDER THIS 26 PLAN IN ORDER TO PAY REFUNDED CONTRIBUTIONS. COMPOUND 27 INTEREST AT THE RATE PRESCRIBED BY REGULATION SHALL BE ADDED 28 TO THE REINSTATEMENT INDEBTEDNESS FROM THE DATE OF THE 29 REFUND TO THE DATE OF REPAYMENT]. 30 * Sec. 39. AS 39.35.522(d) is amended to read: 31 (d) A ruling of the [THE] commissioner of administration denying a waiver
01 under this section may be appealed under AS 44.64. The administrative law 02 judge may reverse the ruling of the commissioner and may impose conditions on 03 the granting of a waiver that the administrative law judge [WHICH IT] considers 04 equitable. These conditions may include requiring the member or beneficiary to make 05 additional contributions to the plan. 06 * Sec. 40. AS 39.35.680(3) is amended to read: 07 (3) "administrator" means [THE PERSON APPOINTED BY] the 08 commissioner of administration or the commissioner's designee appointed under 09 AS 39.35.003 [AS 39.35.050]; 10 * Sec. 41. AS 39.35.700 is amended to read: 11 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 12 AS 39.35.700 - 39.35.990 apply only to members first hired on or after July 1, 2006, 13 to members who are employed by employers that do not participate in the 14 retirement benefit plan established under AS 39.35.095 - 39.35.680, to former 15 members as that term is defined under AS 39.35.680, or to members who transfer 16 into the defined contribution plan under AS 39.35.940. 17 * Sec. 42. AS 39.35.710(c) is amended to read: 18 (c) The retirement plan established by AS 39.35.700 - 39.35.990 is intended to 19 qualify under 26 U.S.C. 401(a), [AND] 414(d), and 414(k) (Internal Revenue Code) 20 as a qualified retirement plan established and maintained by the state for its 21 employees, for the employees of political subdivisions, public corporations, and public 22 organizations of the state, and for the employees of other employers whose 23 participation is authorized by AS 39.35.700 - 39.35.990 and who participate in the 24 plan set out in AS 39.35.700 - 39.35.990. 25 * Sec. 43. AS 39.35.750(e) is amended to read: 26 (e) An employer shall make annual contributions to a trust account in the 27 plan, applied as a percentage of each member's compensation from July 1 to the 28 following June 30, in an amount determined by the board to be actuarially required to 29 fully fund the cost of providing occupational disability and occupational death benefits 30 under AS 39.35.700 - 39.35.990 and retirement benefits elected by disabled peace 31 officers and fire fighters under AS 39.35.890(h)(2) [AS 39.35.890 AND 39.35.892].
01 The contribution required under this subsection for peace officers and fire fighters and 02 the contribution required under this subsection for other employees shall be separately 03 calculated based on the actuarially calculated costs for each group of employees. 04 * Sec. 44. AS 39.35.780 is amended to read: 05 Sec. 39.35.780. Limitations on contributions and benefits. Notwithstanding 06 any other provisions of this plan, the annual additions to each member's individual 07 account under this plan and under all defined contribution plans of the employer 08 required to be aggregated with the contributions from this plan under the provisions of 09 26 U.S.C. 415 may not exceed, for any limitation year, the amount permitted under 26 10 U.S.C. 415(c) at any time. If the amount of a member's individual account 11 [DEFINED CONTRIBUTION PLAN] contributions exceeds the limitation of 26 12 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary 13 remedial action to correct an excess contribution. A fixed benefit provided under 14 this plan may not exceed, for or during a limitation year, the amount permitted 15 under 26 U.S.C. 415(b). If a fixed benefit provided under this plan exceeds, for or 16 during a limitation year, the amount permitted under 26 U.S.C. 415(b), the 17 administrator shall take remedial action necessary to comply with the limits on 18 the benefit amount in 26 U.S.C. 415(b). The provisions of 26 U.S.C. 415, and the 19 regulations adopted under that statute, as applied to qualified [DEFINED 20 CONTRIBUTION] plans of governmental employees are incorporated as part of the 21 terms and conditions of the plan. 22 * Sec. 45. AS 39.35.890(b) is amended to read: 23 (b) The occupational disability benefits accrue beginning the first day of the 24 month following termination of employment as a result of the disability and are 25 payable the last day of the month. If a final determination granting the benefit is not 26 made in time to pay the benefit when due, a retroactive payment shall be made to 27 cover the period of deferment. The last payment shall be for the first month in which 28 the disabled employee 29 (1) dies; 30 (2) recovers from the disability; 31 (3) fails to meet the requirements under (f), (j), or (l) [(j)] of this
01 section; or 02 (4) reaches normal retirement age. 03 * Sec. 46. AS 39.35.890(d) is amended to read: 04 (d) The monthly amount of an occupational disability benefit is 40 percent of 05 the disabled employee's gross monthly compensation at the time of termination due to 06 disability. Notwithstanding AS 39.35.790(b), at the time a member is appointed to 07 disability, the member becomes fully vested in the employer contributions made 08 under AS 39.35.750(a). A disabled member is fully vested in the contributions to 09 the member's individual account made under this subsection. An employee is not 10 entitled to elect distributions from the employee's individual account under 11 AS 39.35.810 while the employee is receiving disability benefits under this section. 12 While an employee is receiving disability benefits, based on the disabled employee's 13 gross monthly compensation at the time of termination due to disability, the employer 14 shall make contributions 15 (1) to the employee's individual account under AS 39.35.730 on behalf 16 of the employee, without deduction from the employee's disability payments; and 17 (2) on behalf of the employee under AS 39.35.750. 18 * Sec. 47. AS 39.35.890(g) is amended to read: 19 (g) A disabled employee's occupational disability benefit terminates the last 20 day of the month in which [WHEN] the disabled employee first qualifies 21 [ATTAINS ELIGIBILITY] for normal retirement. At that time, the employee's 22 retirement benefit shall be determined under the provisions of AS 39.35.820 - 23 39.35.840, 39.35.870, and 39.35.880. An employee whose occupational disability 24 benefit terminates under this subsection [RECEIVING DISABILITY BENEFITS 25 UP UNTIL ELIGIBILITY FOR RETIREMENT] shall be considered to have retired 26 directly from the plan. 27 * Sec. 48. AS 39.35.890(h) is amended to read: 28 (h) Notwithstanding (g) of this section, at the time a peace officer or fire 29 fighter receiving occupational disability benefits under this section first attains 30 eligibility for normal retirement, the employee shall irrevocably elect to receive 31 retirement benefits in the amount calculated as the
01 (1) employee's retirement benefit calculated under the provisions of 02 AS 39.35.820 - 39.35.840; or 03 (2) employee's retirement benefit calculated as if the provisions of 04 AS 39.35.370(c) were to apply; however, retirement benefits paid under this paragraph 05 must be paid first from the peace officer's or fire fighter's individual account, 06 and the remaining benefits must be paid from the trust account established under 07 AS 39.35.750(e); the peace officer or fire fighter may not elect other distributions 08 from the peace officer's or fire fighter's individual account under AS 39.35.810 09 while receiving retirement benefits under this paragraph [MAY NOT BE MADE 10 FROM THE TRUST FUND OF THE PUBLIC EMPLOYEES' DEFINED BENEFIT 11 RETIREMENT PLAN]. 12 * Sec. 49. AS 39.35.890(k) is amended to read: 13 (k) Upon the death of a disabled employee who is receiving or is entitled to 14 receive an occupational disability benefit, the administrator shall pay the surviving 15 spouse a surviving spouse's pension, equal to 40 percent of the employee's monthly 16 compensation at the termination of employment because of occupational disability. If 17 there is no surviving spouse, the administrator shall pay the survivor's pension in equal 18 parts to the dependent children of the employee. While the monthly survivor's 19 pension is being paid, the survivor is not entitled to elect distributions from the 20 employee's individual account under AS 39.35.810. The first payment of the 21 surviving spouse's pension or of a dependent child's pension shall accrue from the first 22 day of the month following the employee's death and is payable the last day of the 23 month. The last payment shall be made the last day of [FOR] the last month in which 24 there is an eligible surviving spouse or dependent child, or the last day of the month 25 in which the employee would have first qualified for normal retirement if the 26 employee had survived, whichever day comes sooner. A retirement benefit shall 27 be determined under the provisions of AS 39.35.820 - 39.35.840, 39.35.870, and 28 39.35.880 based on [. ON] the date the employee would have first qualified for 29 normal retirement [OF THE EMPLOYEE WOULD HAVE OCCURRED] if the 30 employee had survived. In addition to payment of the member's individual 31 account, the surviving spouse or, if there is no surviving spouse, the surviving
01 dependent children of the member, shall receive an additional benefit in an 02 amount equal to the accumulated contributions that would have been made to the 03 deceased member's individual account under AS 39.35.730(a) and 39.35.750(a), 04 based on the deceased member's gross monthly compensation at the time of 05 occupational disability, from the time of the member's death to the date the 06 member would have first qualified for normal retirement if the member had 07 survived. Earnings shall be allocated to the additional benefit calculated under 08 this subsection based on the actual rate of return, net of expenses, of the trust 09 account established under AS 39.35.750(e) over the period that the contributions 10 would have been made. This additional amount shall be paid in the same manner 11 as determined for the member's individual account under AS 39.35.820 - 12 39.35.860. For the purpose of determining eligibility of an employee's survivor 13 who is receiving a benefit under this subsection for medical benefits under 14 AS 39.35.870 - 39.35.880, an employee [LIVED, THE RETIREMENT BENEFIT 15 SHALL BE DETERMINED UNDER THE PROVISIONS OF AS 39.35.820 - 16 39.35.840, 39.35.870, AND 39.35.880. AN EMPLOYEE] who died while receiving 17 disability benefits shall be considered to have retired directly from the plan on the date 18 the employee would have first qualified for normal retirement if the employee 19 had survived. The period during which the employee was eligible for a disability 20 benefit and the period during which a survivor's pension is paid to a survivor 21 under this subsection each constitute membership service for the purposes of 22 determining vesting in employer contributions under AS 39.35.790(b) and 23 eligibility for retirement and medical benefits under this chapter and 24 AS 39.30.300 - 39.30.495 [NORMAL RETIREMENT OF THE EMPLOYEE 25 WOULD HAVE OCCURRED IF THE EMPLOYEE HAD LIVED]. 26 * Sec. 50. AS 39.35.890(l) is repealed and reenacted to read: 27 (l) For the purposes of this section, a condition qualifies an occupational 28 disability if 29 (1) the condition is a physical or mental condition that the 30 administrator determines presumably permanently prevents an employee from 31 satisfactorily performing the employee's usual duties or the duties of another
01 comparable position or job available to the employee and for which the employee is 02 qualified by training or education; and 03 (2) the proximate cause of the condition is a bodily injury sustained, or 04 a hazard undergone, while in the performance and within the scope of the employee's 05 duties and not the proximate result of the wilful negligence of the employee. 06 * Sec. 51. AS 39.35 is amended by adding a new section to read: 07 Sec. 39.35.891. Disability benefit and disabled peace officer or fire fighter 08 retirement benefit adjustment. (a) Once each year, the administrator shall increase 09 disability benefits and retirement benefits elected by disabled peace officers or fire 10 fighters under AS 39.35.890(h)(2). The amount of the increase is a percentage of the 11 current disability benefit or retirement benefit equal to the lesser of 75 percent of the 12 increase in the cost of living in the preceding calendar year or nine percent. 13 (b) If a disabled member was not receiving a benefit during the entire 14 preceding calendar year, the increase in the benefit under this section shall be adjusted 15 by multiplying it by a fraction, the numerator of which is the number of months for 16 which the benefit was received in the preceding calendar year and the denominator of 17 which is 12. 18 (c) If a disabled peace officer or fire fighter elects to receive a retirement 19 benefit in the amount calculated under AS 39.35.890(h)(2), the administrator shall, at 20 the time the disabled peace officer or fire fighter is appointed to retirement, increase 21 the retirement benefit by a percentage equal to the total cumulative percentage that has 22 been applied to the disabled peace officer's or fire fighter's disability benefit under this 23 section. 24 (d) An increase in benefit payments under this section is effective July 1 of 25 each year and is based on the percentage increase in the Consumer Price Index for 26 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 27 calendar year, as determined by the United States Department of Labor, Bureau of 28 Labor Statistics. 29 (e) Benefit adjustments under this section shall terminate the last day of the 30 month following the date on which a disabled member is no longer receiving a 31 disability benefit under AS 39.35.890, unless the member is a disabled peace officer or
01 fire fighter and has chosen a retirement benefit under AS 39.35.890(h)(2). 02 * Sec. 52. AS 39.35.892(b) is amended to read: 03 (b) The first payment of the surviving spouse's pension or of a dependent 04 child's pension shall be made for the month following the month in which the 05 employee dies. Payments [, AND PAYMENT] shall cease on the last day of the 06 month in which there is no longer an eligible spouse or eligible dependent child, 07 or the last day of the month following the earliest date [TO BE MADE 08 BEGINNING WITH THE MONTH IN WHICH] the employee would have first 09 qualified for normal retirement if the employee had survived, whichever day is 10 earlier. 11 * Sec. 53. AS 39.35.892(c) is amended to read: 12 (c) The monthly survivor's pension in (b) of this section for survivors of 13 employees who were not peace officers or fire fighters is 40 percent of the employee's 14 monthly compensation in the month in which the employee dies. The monthly 15 survivor's pension in (b) of this section for survivors of employees who were peace 16 officers or fire fighters is 50 percent of the monthly compensation in the month in 17 which the employee dies. While the monthly survivor's pension is being paid, the 18 survivor is not entitled to elect distributions from the employee's individual 19 contribution account under AS 39.35.810, except as required by AS 39.35.840. 20 While the monthly survivor's pension is being paid, the employer shall make 21 contributions on behalf of the employee's surviving spouse and employee's 22 surviving dependent children [BENEFICIARIES BASED ON THE DECEASED 23 EMPLOYEE'S GROSS MONTHLY COMPENSATION AT THE TIME OF 24 OCCUPATIONAL DEATH 25 (1) TO THE EMPLOYEE'S INDIVIDUAL ACCOUNT UNDER 26 AS 39.35.730, WITHOUT DEDUCTION FROM THE SURVIVOR'S PENSION; 27 AND 28 (2)] to the appropriate accounts and funds under AS 39.35.750(b) - (e). 29 * Sec. 54. AS 39.35.892(e) is amended to read: 30 (e) On the date the employee would have first qualified for normal 31 retirement [OF THE EMPLOYEE WOULD HAVE OCCURRED] if the employee
01 had survived [LIVED], the retirement benefit shall be determined under the 02 provisions of AS 39.35.820 - 39.35.840, 39.35.870, and 39.35.880. In addition to 03 payment of the member's individual account, the surviving spouse or, if there is 04 no surviving spouse, the surviving dependent children of the member, shall 05 receive an additional benefit in an amount equal to the accumulated 06 contributions that would have been made to the deceased member's individual 07 account under AS 39.35.730(a) and 39.35.750(a), based on the deceased member's 08 gross monthly compensation at the time of occupational death, from the time of 09 the member's death to the date the member would have first qualified for normal 10 retirement if the member had survived. Earnings shall be allocated to the 11 additional benefit calculated under this subsection based on the actual rate of 12 return, net of expenses, of the trust account established under AS 39.35.750(e) 13 over the period that such contributions would have been made. This additional 14 amount shall be paid in the same manner as determined for the member's 15 individual account under AS 39.35.820 - 39.35.860. An employee who died and 16 whose survivors receive occupational death benefits under this section shall be 17 considered to have retired directly from the plan on the date the [NORMAL 18 RETIREMENT OF THE] employee would have first qualified for normal 19 retirement [OCCURRED] if the employee had survived. The period of time during 20 which a survivor's pension is paid under this section constitutes membership 21 service for the purposes of determining vesting in employer contributions under 22 AS 39.35.790(b) and eligibility for retirement and medical benefits under this 23 chapter and AS 39.30.300 - 39.30.495 [LIVED]. 24 * Sec. 55. AS 39.35 is amended by adding new sections to read: 25 Sec. 39.35.893. Survivor's pension adjustment. (a) Once each year, the 26 administrator shall increase payments to a person 60 years of age or older receiving a 27 survivor's pension under AS 39.35.890(k) or 39.35.892(c), and to a person who has 28 received a survivor's pension under AS 39.35.890(k) or 39.35.892(c) for at least five 29 years if the person who is not otherwise eligible for an increase under this section. 30 (b) The amount of the increase is a percentage of the current survivor's 31 pension equal to the lesser of 50 percent of the increase in the cost of living in the
01 preceding calendar year or six percent. 02 (c) If a survivor was not receiving a pension during the entire preceding 03 calendar year, the increase in the survivor's pension under this section shall be 04 adjusted by multiplying it by a fraction, the numerator of which is the number of 05 months for which the pension was received in the preceding calendar year and the 06 denominator of which is 12. 07 (d) The administrator shall increase the initial survivor's pension paid to a 08 survivor of a member who died while receiving disability benefits by a percentage 09 equal to the total cumulative percentage that has been applied to the member's 10 disability benefit under AS 39.35.891. 11 (e) An increase in benefit payments under this section is effective July 1 of 12 each year and is based on the percentage increase in the Consumer Price Index for 13 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 14 calendar year, as determined by the United States Department of Labor, Bureau of 15 Labor Statistics. 16 (f) Pension adjustments under this section shall terminate the last day of the 17 month following the date on which a survivor is no longer receiving a survivor's 18 pension under AS 39.35.890(k) or 39.35.892(c). 19 Sec. 39.35.894. Premiums for retiree major medical insurance coverage 20 upon termination of disability benefits or survivor's pension. The premium for 21 retiree major medical insurance coverage payable by an employee or survivor shall be 22 determined under AS 39.35.880(g)(2) as if the employee or survivor were eligible for 23 Medicare 24 (1) if the employee's disability benefit is terminated under 25 AS 39.35.890(g); 26 (2) if the survivor pension paid to an eligible survivor under 27 AS 39.35.892(e) is terminated; 28 (3) if the survivor pension paid to an eligible survivor is terminated 29 under AS 39.35.890(k). 30 * Sec. 56. AS 39.35.910 is amended to read: 31 Sec. 39.35.910. Nonguarantee of returns, rates, or benefit amounts. The
01 plan created by AS 39.35.700 - 39.35.990 is, with respect to individual accounts, 02 treated as a defined contribution plan and [PLAN,] not a defined benefit plan. The 03 amount of money in the individual account of a participant depends on the amount of 04 contributions and the rate of return from investments of the account that varies over 05 time. If benefits are paid in the form of an annuity, the benefit amount payable is 06 dependent on the amount of money in the account and the interest rates applied and 07 service fees charged by the annuity payor at the time the annuity is purchased from 08 the carrier and benefits are first paid. Nothing in this plan guarantees a participant 09 (1) a rate of return or interest rate other than that actually earned by the 10 account of the participant, less applicable administrative expenses; or 11 (2) an annuity based on interest rates or service charges other than 12 interest rates available from and service charges by the annuity payor in effect at the 13 time the annuity is paid. 14 * Sec. 57. AS 39.35.940(c) is amended to read: 15 (c) Each eligible member who elects to participate in the defined contribution 16 retirement plan shall have transferred to a new account the employee contribution 17 account balance held in trust for the member under the defined benefit retirement plan 18 of the public employees' retirement system. A matching employer contribution shall 19 be made on behalf of that employee to the new account. The employer shall make the 20 matching contribution from funds other than the trust funds of the defined benefit 21 retirement plan established under AS 39.35.095 - 39.35.680. The amount of the 22 matching employer contribution shall be subject to, and may not exceed, the 23 limitation of 26 U.S.C. 415(c) during the applicable limitation year. 24 * Sec. 58. AS 39.35.940(d) is amended to read: 25 (d) Upon a transfer, all membership service previously earned under the 26 defined benefit retirement plan shall be nullified for purposes of entitlement to a future 27 benefit under the defined benefit retirement plan but shall be credited for purposes of 28 determining vesting in employer contributions under AS 39.35.790(b) and 29 eligibility to elect medical benefits under AS 39.35.870. Membership service allowed 30 for credit toward medical benefits does not include any service credit purchased for 31 employment by an employer who is not a participating employer in this chapter.
01 * Sec. 59. AS 39.35.940(h) is amended to read: 02 (h) An employee who is eligible to elect transfer to the defined 03 contribution plan must make the election not later than 12 months after the first 04 day of the month that follows the administrators receipt of the notification that 05 the employee's employer consents to transfers of its employees under (i) of this 06 section. The election to participate in the defined contribution retirement plan must be 07 made in writing on forms and in the manner prescribed by the administrator. Before 08 accepting an election to participate in the defined contribution retirement plan, the 09 administrator must provide the employee planning on making an election to participate 10 in the defined contribution retirement plan with information, including calculations to 11 illustrate the effect of moving the employee's retirement plan from the defined benefit 12 retirement plan to the defined contribution retirement plan as well as other information 13 to clearly inform the employee of the potential consequences of the employee's 14 election. An election made under this subsection to participate in the defined 15 contribution retirement plan is irrevocable. Upon making the election, the participant 16 shall be enrolled as a member of the defined contribution retirement plan, the 17 member's participation in the plan shall be governed by the provisions of 18 AS 39.35.700 - 39.35.990, and the member's participation in the defined benefit 19 retirement plan under AS 39.35.115 shall terminate. The participant's enrollment in the 20 defined contribution retirement plan shall be effective the first day of the month after 21 the administrator receives the completed enrollment forms. An election made by an 22 eligible member who is married is not effective unless the election is signed by the 23 individual's spouse. 24 * Sec. 60. AS 39.35 is amended by adding new sections to read: 25 Sec. 39.35.957. Designation of eligible employees, agreement to contribute, 26 and amendment of participation. (a) A political subdivision or public organization 27 participating in the defined contribution retirement plan under AS 39.35.700 - 28 39.35.990 shall designate the departments, groups, or other classifications of 29 employees eligible to participate in the plan and, by participating, shall legally be 30 presumed to have agreed to make contributions each year in the amounts required for 31 members of the plan under AS 39.35.750.
01 (b) If the employer does not participate in the defined benefit retirement plan 02 under AS 39.35.095 - 39.35.680, an employee who is eligible under (a) of this section 03 and who is a member of the defined benefit retirement plan under AS 39.35.095 - 04 39.35.680 does not accrue credited service or make contributions under that defined 05 benefit retirement plan, but shall be a member of the defined contribution retirement 06 plan under AS 39.35.700 - 39.35.990 and make contributions under that plan. 07 (c) An employer may request to amend its participation in the plan to add or 08 exclude departments, groups, or other classifications of employees by filing a 09 resolution as provided by AS 39.35.950 or 39.35.955 with the administrator. 10 Sec. 39.35.958. Termination of participation in the plan. (a) A political 11 subdivision or public organization may request that its participation in the plan be 12 terminated. The request may be made only after adoption of a resolution by the 13 legislative body of the political subdivision and approval of the resolution by the 14 person required by law to approve the resolution, or, in the case of a public 15 organization, after adoption of a resolution by the governing body of that public 16 organization. A certified copy of the resolution shall be filed with the administrator. 17 (b) If contributions are not transmitted to the plan within the prescribed time 18 limit, the commissioner of administration may grant an extension and shall assess 19 interest on the outstanding contributions at the rate established under AS 39.35.610. If 20 the political subdivision or public organization is in default at the end of the extension, 21 participation in the plan is terminated, and it shall be sent notice of termination. 22 (c) When an employer's participation in the plan is terminated, or when an 23 employer terminates coverage of a department, group, or other classification of 24 employees under AS 39.35.957(c), the administrator shall assess the employer an 25 amount that the administrator determines is actuarially required to fully fund the costs 26 to the plan for employees whose coverage is terminated, including the cost of 27 providing the employer's share of retiree health benefits under AS 39.35.880, 28 occupational disability and occupational death benefits under AS 39.35.890 and 29 39.35.892, and retirement benefits elected under AS 39.35.890(h)(2). 30 (d) An employee whose coverage under the plan is terminated as a result of 31 termination of an employer's participation under this section or amendment of the
01 employer's agreement under AS 39.35.957(c) shall be considered fully vested in 02 employer contributions under AS 39.35.790(b) and in the individual account 03 established for the employee under AS 39.30.370. If the employee is later employed 04 with a participating employer, the employee's membership service earned under the 05 plan during employment with a terminated employer shall be credited for purposes of 06 determining vesting in employer contributions under AS 39.35.790(b) and eligibility 07 for retirement and medical benefits under this chapter and AS 39.30.300 - 39.30.495. 08 * Sec. 61. AS 39.35.990(7) is amended to read: 09 (7) "compensation" 10 (A) means 11 (i) the total remuneration earned by an employee for 12 personal services rendered, including cost-of-living differentials, as 13 reported on the employee's Federal Income Tax Withholding Statement 14 (Form W-2) from the employer for the calendar year; 15 (ii) the member contribution to the public employees' 16 retirement system under AS 39.35.730, employee deferrals under 17 AS 39.45.010, the wage reduction amount contributed to the Alaska 18 Supplemental Annuity Plan under AS 39.30.150(a), and the wage 19 reduction amount contributed to the Alaska Supplemental Benefit Plan 20 under AS 39.30.150(c), as those statutes may be amended from time to 21 time; 22 (B) does not include retirement benefits, severance pay or other 23 separation bonuses, welfare benefits, per diem, expense allowances, workers' 24 compensation payments, payments for leave not used whether those leave 25 payments are scheduled payments, lump-sum payments, donations, or cash-ins, 26 any remuneration contributed by the employer for or on account of the 27 employee under this plan or under any other qualified or nonqualified 28 employee benefit plan, or any remuneration not specifically included above 29 which would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue 30 Code) if the employer had remained in the Federal Social Security System [, 31 OR ANY REMUNERATION PAID BY THE EMPLOYER IN EXCESS OF
01 THE SOCIAL SECURITY TAXABLE WAGE BASE FOR THE 02 CALENDAR YEAR]; 03 (C) notwithstanding (B) of this paragraph, includes any amount 04 that is contributed by the employer under a salary reduction agreement and that 05 is not includible in the gross income of the employee under 26 U.S.C. 125, 06 132(f)(4), 402(e)(3), 402(h)(1)(B), or 403(b) (Internal Revenue Code); the 07 annual compensation limitation for the member, which is so taken into account 08 for those purposes, may not exceed $200,000, as adjusted for the cost of living 09 in accordance with 26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the 10 limitation for a fiscal year being the limitation in effect for the calendar year 11 within which the fiscal year begins; 12 * Sec. 62. AS 39.35.990(16) is amended to read: 13 (16) "member" or "employee" means a person who is eligible to 14 participate in the plan and who is covered by [AN EMPLOYEE OF AN 15 EMPLOYER OR FORMER EMPLOYEE OF AN EMPLOYER WHO RETAINS A 16 RIGHT TO BENEFITS UNDER] the plan, including the governor, the lieutenant 17 governor, or a member of the legislature, but does not include full-time or part-time 18 instructors of the Department of Labor and Workforce Development and the 19 Department of Education and Early Development in positions that require a 20 teaching certificate; 21 * Sec. 63. AS 39.35.990(20) is amended to read: 22 (20) "peace officer" or "fire fighter" means an employee occupying a 23 position as a peace officer, chief of police, regional public safety officer, 24 correctional officer, correctional superintendent, fire fighter, fire chief, or 25 probation officer, but does not include a village public safety officer employed by 26 a village public safety officer program established under AS 18.65.670 [HAS THE 27 MEANING GIVEN IN AS 39.35.680]; 28 * Sec. 64. AS 39.45.020(a) is amended to read: 29 (a) The administration of the deferred compensation program for state 30 employees is under the direction of the Department of Administration, and the 31 administrator has the same powers and duties with regard to the plan and the
01 program as those set out in AS 14.25.003. A political subdivision coming under the 02 provisions of this chapter shall designate the office or official to manage 03 [ADMINISTER] its program. 04 * Sec. 65. AS 39.45.020(c) is amended to read: 05 (c) The manager [ADMINISTRATOR] of a deferred compensation program 06 may contract with a private person for providing consolidated billing and other 07 administrative services [. THE ADMINISTRATOR] may contract with an insurance 08 carrier to reimburse the state or political subdivision of the state for the cost of 09 administering the [DEFERRED COMPENSATION] program. 10 * Sec. 66. AS 39.45 is amended by adding a new section to read: 11 Sec. 39.45.055. Appeals. A final decision made under AS 39.45.010 - 12 39.45.060 is subject to appeal under AS 44.64. 13 * Sec. 67. AS 44.64.030(a) is amended by adding new paragraphs to read: 14 (35) AS 14.25.175 (waiver of adjustments under teachers' defined 15 benefit plan); 16 (36) AS 39.30.165 (supplemental benefits system); 17 (37) AS 39.30.335 (teachers' and public employees' health 18 reimbursement arrangement plan); 19 (38) AS 39.35.522 (waiver of adjustments under public employees' 20 defined benefit plan); 21 (39) AS 39.45.055 (public employees' deferred compensation 22 program). 23 * Sec. 68. AS 14.25.045, 14.25.340(b), 14.25.570; AS 39.35.050(a), 39.35.375(f), and 24 39.35.730(b) are repealed. 25 * Sec. 69. Section 107, ch. 9, FSSLA 2005, is repealed. 26 * Sec. 70. Sections 4, 37, and 38 of this Act take effect July 1, 2010. 27 * Sec. 71. Except as provided in sec. 70 of this Act, this Act takes effect July 1, 2007.