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SB 88: "An Act relating to new defined benefit tiers in the public employees' retirement system and the teachers' retirement system; providing certain employees an opportunity to choose between the defined benefit and defined contribution plans of the public employees' retirement system and the teachers' retirement system; and providing for an effective date."

00                             SENATE BILL NO. 88                                                                          
01 "An Act relating to new defined benefit tiers in the public employees' retirement system                                
02 and the teachers' retirement system; providing certain employees an opportunity to                                      
03 choose between the defined benefit and defined contribution plans of the public                                         
04 employees' retirement system and the teachers' retirement system; and providing for an                                  
05 effective date."                                                                                                        
06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
07    * Section 1. AS 14.25.009 is repealed and reenacted to read:                                                       
08            Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. (a) The provisions                            
09       of AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the                               
10       teachers' retirement system under AS 14.25.009 - 14.25.220 and are not members of                                 
11       the defined contribution retirement plan under AS 14.25.310 - 14.25.590.                                          
12            (b)  An employer that participates in the plan shall also participate in the                                 
13       defined contribution retirement plan under AS 14.25.310 - 14.25.590.                                              
01    * Sec. 2. AS 14.25.040(a) is amended to read:                                                                      
02            (a)  Unless a teacher or member participates in a university retirement program                              
03       under AS 14.40.661 - 14.40.799 or has elected under AS 14.25.330 or former                                    
04       AS 14.25.540 to participate in the plan established in AS 14.25.310 - 14.25.590, a                                
05       teacher or member contracting for service with a participating employer is subject to                             
06       AS 14.25.009 - 14.25.220.                                                                                         
07    * Sec. 3. AS 14.25.050(a) is amended to read:                                                                      
08            (a)  Except as provided in (c) and (e) of this section, beginning January 1,                             
09       1991, each member shall contribute to the plan an amount equal to 8.65 percent of the                             
10       member's base salary accrued from July 1 to the following June 30. [THE                                           
11       EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S                                                          
12       SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE                                                                 
13       CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER                                                          
14       CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED                                                         
15       FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF                                                              
16       APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER                                                         
17       CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE                                                    
18       THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH                                                       
19       INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE                                                               
20       EMPLOYER.]                                                                                                        
21    * Sec. 4. AS 14.25.050 is amended by adding new subsections to read:                                               
22            (e)  Except as provided in (a) and (c) of this section, a member who first                                   
23       participates in the plan after June 30, 2006, shall contribute to the plan an amount                              
24       equal to eight percent of the employee's base salary accrued from July 1 to the                                   
25       following June 30.                                                                                                
26            (f)  The employer shall deduct the contributions under (a) and (e) of this                                   
27       section from the member's salary at the end of each payroll period, and the                                       
28       contributions shall be credited by the plan to the member contribution account. The                               
29       contributions shall be deducted from employee compensation before the computation                                 
30       of applicable federal taxes and shall be treated as employer contributions under 26                               
31       U.S.C. 414(h)(2). A member may not have the option of making the payroll deduction                                
01       directly in cash instead of having the contribution picked up by the employer.                                    
02    * Sec. 5. AS 14.25.130(c) is amended to read:                                                                      
03            (c)  Once each year during the first five years following appointment to                                     
04       disability under this section, and once every three-year period thereafter, the                                   
05       administrator may require a disabled member who first became a member before                                  
06       July 1, 2006, and who has not attained eligibility for normal retirement to undergo a                         
07       medical or mental examination by a competent physician. The administrator shall                                   
08       suspend any disability benefit for a disabled member who refuses to undergo a                                     
09       physical or mental examination when requested under this section.                                                 
10    * Sec. 6. AS 14.25.130 is amended by adding new subsections to read:                                               
11            (g)  A person who first becomes a member after June 30, 2006, and who is                                     
12       receiving a benefit under this section shall undergo a medical examination as often as                            
13       the administrator considers advisable, but not more frequently than once each year.                               
14       The administrator shall determine the place of the examination and engage the                                     
15       physician or physicians. If the administrator determines that the examination indicates                           
16       that the disabled member is no longer incapacitated because of a total and apparently                             
17       permanent occupational disability, the administrator may not issue further disability                             
18       benefits to the member.                                                                                           
19            (h)  A person who first becomes a member after June 30, 2006, and who is                                     
20       appointed to disability benefits shall apply to the division of vocational rehabilitation                         
21       in the Department of Labor and Workforce Development within 30 days after the date                                
22       disability benefits commence. The member shall be enrolled in a rehabilitation                                    
23       program if the member meets the eligibility requirements of the division of vocational                            
24       rehabilitation. Unless the member demonstrates cause, benefits shall terminate at the                             
25       end of the first month in which a disabled member                                                                 
26                 (1)  fails to report to the division of vocational rehabilitation;                                      
27                 (2)  is certified by the division of vocational rehabilitation as failing to                            
28       cooperate in a vocational rehabilitation program;                                                                 
29                 (3)  fails to interview for a job; or                                                                   
30                 (4)  fails to accept a position offered.                                                                
31    * Sec. 7. AS 14.25.168(d) is amended to read:                                                                      
01            (d)  A benefit recipient who first became a member before July 1, 2006, or                               
02       the benefit recipient's surviving spouse may elect major medical insurance coverage                           
03       in accordance with regulations and under the following conditions:                                                
04                 (1)  a benefit recipient [PERSON] who has less than 25 years of                                     
05       membership service and who is younger than 60 years of age must pay an amount                                     
06       equal to the full monthly group premium for retiree major medical insurance coverage;                             
07                 (2)  a disabled member, a disabled member who is appointed to normal                                    
08       retirement, a person 60 years of age or older, or a person who has at least 25 years of                           
09       membership service is not required to make premium payments.                                                      
10    * Sec. 8. AS 14.25.168 is amended by adding new subsections to read:                                               
11            (g)  A benefit recipient, or the surviving spouse of a benefit recipient, who first                          
12       becomes a member after June 30, 2006, may elect major medical insurance coverage                                  
13       in accordance with regulations and under the following conditions:                                                
14                 (1)  if the participating member or surviving spouse is not eligible for                                
15       Medicare, the cost of a monthly premium for retiree major medical insurance coverage                              
16       elected under this section is equal to the full monthly group premium for retiree major                           
17       medical insurance coverage;                                                                                       
18                 (2)  if the participating member or surviving spouse is eligible for                                    
19       Medicare, the cost of a monthly premium for retiree major medical insurance coverage                              
20       is a percentage of the full monthly group premium, as follows:                                                    
21                      (A)  30 percent if the member had 10 or more, but less than 15,                                    
22            years of service;                                                                                            
23                      (B)  25 percent if the member had 15 or more, but less than 20,                                    
24            years of service;                                                                                            
25                      (C)  20 percent if the member had 20 or more, but less than 25,                                    
26            years of service;                                                                                            
27                 (3)  the cost of a monthly premium paid by the member or the                                            
28       member's surviving spouse for retiree major medical insurance coverage is                                         
29                      (A)  15 percent of the full monthly group premium if the                                           
30            participating member has 25 or more, but less than 30, years of service;                                     
31                      (B)  10 percent of the full monthly group premium if the                                           
01            participating member has 30 or more years of service;                                                        
02                 (4)  a disabled member or a disabled member who is appointed to                                         
03       normal retirement is not required to make premium payments.                                                       
04            (h)  On or after July 1, 2021, and every five years thereafter, the administrator                            
05       shall adjust the percentages under (g)(2) and (3) of this section as needed to maintain,                          
06       but not to exceed, over the succeeding five years, an employer normal cost rate for the                           
07       members and survivors who first become members after June 30, 2006, that does not                                 
08       exceed the combined total of the rates under AS 14.25.350(a), (b), (d), and (e) minus                             
09       the employer normal cost rate attributable to the members who first become members                                
10       after June 30, 2006, for benefits under AS 14.25.009 - 14.25.167. An adjustment made                              
11       under this subsection shall remain in effect for five years. In making an adjustment                              
12       under this subsection, the administrator shall maintain the five percent differences                              
13       between the percentages in (g)(2)(A), (B), and (C) of this section and the five percent                           
14       differences between the percentages in (g)(3)(A) and (B) of this section.                                         
15            (i)  When a member is appointed to retirement, the member obtains a vested                                   
16       right to the applicable percentage under (g)(2) or (3) of this section, as adjusted under                         
17       (h) of this section, that is in effect when the member is appointed to retirement. A                              
18       member does not obtain a vested right to a percentage under (g)(2) or (3) of this                                 
19       section, as adjusted under (h) of this section, before the member is appointed to                                 
20       retirement.                                                                                                       
21    * Sec. 9. AS 14.25.310 is amended to read:                                                                         
22            Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of                               
23       AS 14.25.310 - 14.25.590 apply only to                                                                            
24                 (1)  teachers who first become members on or after July 1, 2006, and                            
25       before the effective date of this section who do not transfer to a defined benefit                            
26       retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680;                                   
27                 (2)  teachers described in AS 14.25.330 who elect under that section                                
28       to become [TO MEMBERS WHO ARE EMPLOYED BY EMPLOYERS THAT DO                                                   
29       NOT PARTICIPATE IN THE DEFINED BENEFIT RETIREMENT PLAN                                                            
30       ESTABLISHED UNDER AS 14.25.009 - 14.25.220, TO FORMER MEMBERS                                                     
31       UNDER AS 14.25.220, OR TO] members; and                                                                       
01                 (3)  teachers who transferred [TRANSFER] into the defined                                       
02       contribution retirement plan under former AS 14.25.540.                                                       
03    * Sec. 10. AS 14.25.310 is amended by adding a new subsection to read:                                             
04            (b)  An employer that participates in the plan shall also participate in the                                 
05       defined benefit retirement plan under AS 14.25.009 - 14.25.220.                                                   
06    * Sec. 11. AS 14.25.330 is repealed and reenacted to read:                                                         
07            Sec. 14.25.330. Retirement plan election option. (a) A teacher who is first                                
08       hired on or after the effective date of this section may make a one-time election to                              
09       participate in the defined contribution retirement plan under AS 14.25.310 - 14.25.590                            
10       retroactive to the date of hire and may transfer to that plan employee contributions, if                          
11       any, and employer contributions, if any, that have been made to the defined benefit                               
12       retirement plan under AS 14.25.009 - 14.25.220. Before employer contributions are                                 
13       transferred under this subsection, the administrator shall recalculate them under                                 
14       AS 14.25.070.                                                                                                     
15            (b)  The election to participate in the defined contribution retirement plan                                 
16       under (a) of this section must be made within 90 days after the date of hire and be                               
17       made in writing on a form and in the manner prescribed by the administrator. Before                               
18       accepting an election to participate in the defined contribution retirement plan, the                             
19       administrator shall, within 20 days after the administrator receives notification of the                          
20       teacher's date of hire, provide the teacher eligible to make an election to participate in                        
21       the defined contribution retirement plan under AS 14.25.310 - 14.25.590 with                                      
22                 (1)  information, including calculations to illustrate the effect of                                    
23       moving the teacher's retirement plan from the defined benefit retirement plan to the                              
24       defined contribution retirement plan; and                                                                         
25                 (2)  other information clearly to inform the teacher of the potential                                   
26       consequences of the teacher's election.                                                                           
27            (c)  An election made under (a) of this section to participate in the defined                                
28       contribution retirement plan is irrevocable. Retroactive to the date of hire, the teacher                         
29       shall be enrolled in the defined contribution retirement plan under AS 14.25.310 -                                
30       14.25.590, the teacher's participation in the plan shall be governed by the provisions                            
31       for the defined contribution retirement plan, and the teacher's participation in the                              
01       defined benefit retirement plan under AS 14.25.009 - 14.25.220 shall terminate. An                                
02       election made by an eligible teacher who is married is not effective unless the election                          
03       is signed by the teacher's spouse.                                                                                
04            (d)  When an eligible teacher makes an election under (a) of this section, the                               
05       administrator shall cause the total amount of the teacher's employee and employer                                 
06       contributions, with investment earnings and losses through the final day of the                                   
07       teacher's participation in the defined benefit retirement plan, to be actuarially                                 
08       calculated and transferred to the teacher's designated account in the defined                                     
09       contribution retirement plan. The administrator shall establish transfer procedures by                            
10       regulation, but the actual transfer may not be later than 30 days after the date the                              
11       administrator receives the teacher's completed election form under (b) of this section,                           
12       unless the major financial markets for securities available for a transfer are seriously                          
13       disrupted by an unforeseen event that also causes the suspension of trading on any                                
14       national securities exchange in the country where the securities were issued. In that                             
15       event, the 30-day period may be extended by a resolution of the board. Transfers are                              
16       not commissionable or subject to other fees and may be in the form of securities or                               
17       cash as determined by the board. Securities shall be valued on the date of receipt in the                         
18       teacher's account.                                                                                                
19            (e)  An election under (a) of this section made by an eligible teacher who is                                
20       married is not effective unless the election is signed by the teacher's spouse. An                                
21       eligible teacher whose accounts are subject to a qualified domestic relations order may                           
22       not make an election to participate in the defined contribution retirement plan under                             
23       this section unless the qualified domestic relations order is amended or vacated and                              
24       court-certified copies of the order are received by the administrator.                                            
25    * Sec. 12. AS 39.35.095 is repealed and reenacted to read:                                                     
26            Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. (a) The provisions                            
27       of AS 39.35.095 - 39.35.680 apply to public employees who are eligible to be                                      
28       members of the public employees' retirement system under AS 39.35.095 - 39.35.680                                 
29       and are not members of the defined contribution retirement plan under AS 39.35.700 -                              
30       39.35.990.                                                                                                        
31            (b)  A public organization or a municipality or other political subdivision of the                           
01       state that participates in the plan shall also participate in the defined contribution                            
02       retirement plan under AS 39.35.700 - 39.35.990.                                                                   
03    * Sec. 13. AS 39.35 is amended by adding a new section to read:                                                    
04            Sec. 39.35.128. Participation of elected officials of political subdivisions. (a)                          
05       A person who is an elected official of a political subdivision of the state and who has                           
06       not participated in the plan or waived participation in the plan before July 1, 2016, is a                        
07       member of the plan if                                                                                             
08                 (1)  the political subdivision has elected under AS 39.35.600 -                                         
09       39.35.650 to designate elected officials in the classifications of employees entitled to                          
10       participate in the plan; and                                                                                      
11                 (2)  the elected official receives compensation from the political                                      
12       subdivision for services as an elected official in the amount of at least $2,001 a month.                         
13            (b)  An elected official entitled to participate under this section, and who either                          
14       has no previous service under the system with the political subdivision or is retired                             
15       under the system, may file a waiver of participation in the plan with the administrator                           
16       within 30 days after the later of July 1, 2016, or the date that the elected official's term                      
17       of office begins. A waiver is irrevocable for the remainder of the elected official's                             
18       service as an elected official or employee of the political subdivision.                                          
19    * Sec. 14. AS 39.35.160(a) is amended to read:                                                                     
20            (a)  Subject to (e) of this section, beginning [BEGINNING] January 1, 1987,                              
21       each peace officer or firefighter shall contribute to the plan an amount equal to seven                           
22       and one-half percent of the peace officer's or firefighter's compensation. Except as                              
23       provided in (d) and (e) of this section, beginning January 1, 1987, each other                                
24       employee shall contribute to the plan an amount equal to six and three-quarters percent                           
25       of the employee's compensation. [THE CONTRIBUTIONS SHALL BE DEDUCTED                                              
26       BY THE EMPLOYER AT THE END OF EACH PAYROLL PERIOD. THE                                                            
27       CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE                                                                     
28       COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL                                                             
29       TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER                                                         
30       CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE                                                    
31       THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD                                                       
01       OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.]                                                            
02    * Sec. 15. AS 39.35.160 is amended by adding new subsections to read:                                              
03            (e)  Except as provided in (a) and (d) of this section, an employee, including a                             
04       peace officer or firefighter, who first participates in the plan after June 30, 2006, shall                       
05       contribute to the plan an amount equal to eight percent of the employee's                                         
06       compensation.                                                                                                     
07            (f)  Contributions under (a) and (e) of this section shall be deducted by the                                
08       employer at the end of each payroll period. The contributions shall be deducted from                              
09       employee compensation before computation of applicable federal taxes, and the                                     
10       contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A                             
11       member may not have the option of making the payroll deduction directly instead of                                
12       having the contribution picked up by the employer.                                                                
13    * Sec. 16. AS 39.35.410(g) is amended to read:                                                                     
14            (g)  A disabled employee who first became a member before July 1, 2006,                                  
15       and who is receiving an occupational disability benefit shall undergo a medical                               
16       examination as often as the administrator considers advisable but not more frequently                             
17       than once each year. The administrator shall determine the place of the examination                               
18       and engage the physician or physicians. If, in the judgment of the administrator, the                             
19       examination indicates that the retired employee is no longer incapacitated because of a                           
20       total and apparently permanent occupational disability, the administrator may not issue                           
21       further disability benefits to the employee.                                                                      
22    * Sec. 17. AS 39.35.410 is amended by adding a new subsection to read:                                             
23            (k)  A person who first becomes a member after June 30, 2006, and who is                                     
24       appointed to disability benefits shall apply to the division of vocational rehabilitation                         
25       within 30 days after the date disability benefits commence. The employee shall be                                 
26       enrolled in a rehabilitation program if the employee meets the eligibility requirements                           
27       of the division of vocational rehabilitation. Unless the employee demonstrates cause,                             
28       benefits shall terminate at the end of the first month in which a disabled employee                               
29                 (1)  fails to report to the division of vocational rehabilitation;                                      
30                 (2)  is certified by the division of vocational rehabilitation as failing to                            
31       cooperate in a vocational rehabilitation program;                                                                 
01                 (3)  fails to interview for a job; or                                                                   
02                 (4)  fails to accept a position offered.                                                                
03    * Sec. 18. AS 39.35.535(c) is amended to read:                                                                     
04            (c)  A benefit recipient may elect major medical insurance coverage in                                       
05       accordance with regulations and under the following conditions:                                                   
06                 (1)  a person who first became a member before July 1, 2006, or the                                 
07       surviving spouse of the person, other than a disabled member or a disabled member                             
08       who is appointed to normal retirement, must pay an amount equal to the full monthly                               
09       group premium for retiree major medical insurance coverage if the person is                                       
10                      (A)  younger than 60 years of age and has less than                                                
11                           (i)  25 years of credited service as a peace officer under                                    
12                 AS 39.35.360 and 39.35.370; or                                                                          
13                           (ii)  30 years of credited service under AS 39.35.360 and                                     
14                 39.35.370 that is not service as a peace officer; or                                                    
15                      (B)  of any age and has less than 10 years of credited service;                                    
16                 (2)  a person who first became a member before July 1, 2006, or the                                 
17       surviving spouse of the person is not required to make premium payments for retiree                           
18       major medical coverage if the person                                                                              
19                      (A)  is a disabled member;                                                                         
20                      (B)  is a disabled member who is appointed to normal                                               
21            retirement;                                                                                                  
22                      (C)  is 60 years of age or older and has at least 10 years of                                      
23            credited service; or                                                                                         
24                      (D)  has at least                                                                                  
25                           (i)  25 years of credited service as a peace officer under                                    
26                 AS 39.35.360 and 39.35.370; or                                                                          
27                           (ii)  30 years of credited service under AS 39.35.360 and                                     
28                 39.35.370 not as a peace officer;                                                                   
29                 (3)  a benefit recipient who first becomes a member after June 30,                                  
30       2006, or a benefit recipient who is the surviving spouse of a person who first                                
31       becomes a member after June 30, 2006, except as provided in (4) and (5) of this                               
01       subsection, shall pay an amount equal to the full monthly group premium for                                   
02       retiree major medical insurance coverage; however, except as provided in (4) and                              
03       (5) of this subsection, if the benefit recipient is eligible for Medicare, the cost of a                      
04       monthly premium is a percentage of the full monthly group premium, as follows:                                
05                      (A)  30 percent if the member has 10 or more, but less than                                    
06            15, years of service;                                                                                    
07                      (B)  25 percent if the member has 15 or more, but less than                                    
08            20, years of service;                                                                                    
09                      (C)  20 percent if the member has 20 or more, but less than                                    
10            25, years of service;                                                                                    
11                      (D)  15 percent if the member has 25 or more, but less than                                    
12            30, years of service not as a peace officer;                                                             
13                 (4)  except as provided in (5) of this subsection, a benefit recipient                              
14       who first becomes a member after June 30, 2006, or a benefit recipient who is the                             
15       surviving spouse of a person who first becomes a member after June 30, 2006,                                  
16       shall pay a monthly premium that is                                                                           
17                      (A)  15 percent of the cost of a full monthly group premium                                    
18            if the member has 25 or more, but less than 30, years of service as a peace                              
19            officer; or                                                                                              
20                      (B)  10 percent of the cost of a full monthly group premium                                    
21            if the member has 30 or more years of service;                                                           
22                 (5)  a benefit recipient who first becomes a member after June 30,                                  
23       2006, is not required to make premium payments for retiree major medical                                      
24       coverage if the recipient                                                                                     
25                      (A)  is a disabled member; or                                                                  
26                      (B)  is a disabled member who is appointed to normal                                           
27            retirement;                                                                                              
28                 (6)  on or after July 1, 2021, and every five years thereafter, the                                 
29       administrator shall adjust the percentages under (3) and (4) of this subsection as                            
30       needed to maintain, but not to exceed, over the succeeding five years, an                                     
31       employer normal cost rate for the members and survivors who first became                                      
01       members after June 30, 2006, that does not exceed the combined total of the rates                             
02       under AS 39.35.750(a), (b), (d), and (e) minus the employer normal cost rate                                  
03       attributable to the members who first become members after June 30, 2006, for                                 
04       benefits under AS 39.35.095 - 39.35.530; an adjustment made under this                                        
05       paragraph shall remain in effect for five years; in making an adjustment under                                
06       this paragraph, the administrator shall maintain the five percent differences                                 
07       between the percentages in (3)(A), (B), (C), and (D) of this subsection and the five                          
08       percent differences between the percentages in (4)(A) and (B) of this subsection;                             
09                 (7)  when a member is appointed to retirement, the member                                           
10       obtains a vested right to the applicable percentage under (3) or (4) of this                                  
11       subsection, as adjusted under (6) of this subsection, that is in effect when the                              
12       member is appointed to retirement; a member does not obtain a vested right to a                               
13       percentage under (3) or (4) of this subsection, as adjusted under (6) of this                                 
14       subsection, before appointment to retirement.                                                                 
15    * Sec. 19. AS 39.35.620(k) is amended to read:                                                                     
16            (k)  Termination of an employer's participation in the plan does not bar future                              
17       participation in the system by that employer if the employer is current with payments                             
18       on amounts due under AS 39.35.625. [IF A PREVIOUSLY TERMINATED                                                    
19       EMPLOYER RETURNS TO THE SYSTEM, THE EMPLOYER MAY ONLY                                                             
20       PARTICIPATE IN THE PLAN ESTABLISHED UNDER AS 39.35.700 - 39.35.990.                                               
21       EMPLOYEES MAY BE CREDITED UNDER AS 39.35.700 - 39.35.990 ONLY                                                     
22       WITH SERVICE SUBSEQUENT TO THE DATE OF RETURN.]                                                                   
23    * Sec. 20. AS 39.35.680(18) is amended to read:                                                                    
24                 (18)  "employer" means                                                                                  
25                      (A)  the State of Alaska;                                                                          
26                      (B)  a political subdivision or public organization of the state                                   
27            that participates in the plan based on a resolution to participate in the plan that                          
28            was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or                                            
29                      (C)  a political subdivision or public organization of the state                                   
30            that, as a result of consolidation or reorganization [THAT OCCURS ON OR                                      
31            AFTER JULY 1, 2006], assumes liability under the plan of a political                                         
01            subdivision or public organization described in (B) of this paragraph;                                       
02    * Sec. 21. AS 39.35.700 is amended to read:                                                                        
03            Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of                               
04       AS 39.35.700 - 39.35.990 apply only to                                                                            
05                 (1)  members first hired on or after July 1, 2006, and before the                               
06       effective date of this section who do not transfer to a defined benefit retirement                            
07       plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680;                                              
08                 (2)  public employees described in AS 39.35.720 who elect under                                     
09       that section to become [TO MEMBERS WHO ARE EMPLOYED BY                                                        
10       EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT                                                          
11       RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO                                                    
12       FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO] members; and                                                
13                 (3)  members who transferred [TRANSFER] into the defined                                        
14       contribution retirement plan under former AS 39.35.940.                                                       
15    * Sec. 22. AS 39.35.700 is amended by adding a new subsection to read:                                             
16            (b)  A public organization as defined in AS 39.35.680 or a municipality or                                   
17       other political subdivision of the state that participates in the plan shall also participate                     
18       in the defined benefit retirement plan under AS 39.35.095 - 39.35.680.                                            
19    * Sec. 23. AS 39.35.720 is repealed and reenacted to read:                                                         
20            Sec. 39.35.720. Retirement plan election option. (a) A public employee who                                 
21       is first hired on or after the effective date of this section may make a one-time election                        
22       to participate in the defined contribution retirement plan under AS 39.35.700 -                                   
23       39.35.990 retroactive to the date of hire and may transfer to that plan employee                                  
24       contributions, if any, and employer contributions, if any, that have been made to the                             
25       defined benefit retirement plan under AS 39.35.095 - 39.35.680. Before employer                                   
26       contributions are transferred under this subsection, the administrator shall recalculate                          
27       them under AS 39.35.255.                                                                                          
28            (b)  The election to participate in the defined contribution retirement plan                                 
29       under (a) of this section must be made within 90 days after the date of hire and be                               
30       made in writing on a form and in the manner prescribed by the administrator. Before                               
31       accepting an election to participate in the defined contribution retirement plan under                            
01       AS 39.35.700 - 39.35.990, the administrator shall, within 20 days after the                                       
02       administrator receives notice of the public employee's date of hire, provide the                                  
03       employee eligible to make an election to participate in the defined contribution                                  
04       retirement plan with                                                                                              
05                 (1)  information, including calculations to illustrate the effect of                                    
06       moving the employee's retirement plan from the defined benefit retirement plan to the                             
07       defined contribution retirement plan; and                                                                         
08                 (2)  other information clearly to inform the employee of the potential                                  
09       consequences of the employee's election.                                                                          
10            (c)  An election made under (a) of this section to participate in the defined                                
11       contribution retirement plan is irrevocable. Retroactive to the date of hire, the                                 
12       employee shall be enrolled in the defined contribution retirement plan under                                      
13       AS 39.35.700 - 39.35.990, the employee's participation in the plan shall be governed                              
14       by the provisions for the defined contribution retirement plan, and the employee's                                
15       participation in the defined benefit retirement plan under AS 39.35.095 - 39.35.680                               
16       shall terminate. An election made by an eligible employee who is married is not                                   
17       effective unless the election is signed by the employee's spouse.                                                 
18            (d)  When an employee makes an election under (a) of this section, the                                       
19       administrator shall cause the total amount of the employee's employee and employer                                
20       contributions, with investment earnings and losses through the final day of the                                   
21       employee's participation in the defined benefit retirement plan, to be actuarially                                
22       calculated and transferred to the employee's designated account in the defined                                    
23       contribution retirement plan. The administrator shall establish transfer procedures by                            
24       regulation, but the actual transfer may not be later than 30 days after the date the                              
25       administrator receives the employee's completed election form under (b) of this                                   
26       section, unless the major financial markets for securities available for a transfer are                           
27       seriously disrupted by an unforeseen event that also causes the suspension of trading                             
28       on any national securities exchange in the country where the securities were issued. In                           
29       that event, the 30-day period may be extended by a resolution of the board. Transfers                             
30       are not commissionable or subject to other fees and may be in the form of securities or                           
31       cash as determined by the board. Securities shall be valued on the date of receipt in the                         
01       employee's account.                                                                                               
02            (e)  An election made by an eligible employee who is married is not effective                                
03       unless the election is signed by the employee's spouse. An eligible employee whose                                
04       accounts are subject to a qualified domestic relations order may not make an election                             
05       to participate in the defined contribution retirement plan under this section unless the                          
06       qualified domestic relations order is amended or vacated and court-certified copies of                            
07       the order are received by the administrator.                                                                      
08    * Sec. 24. AS 14.25.012(c), 14.25.540; AS 39.35.940, and 39.35.957(b) are repealed.                                
09    * Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to                         
10 read:                                                                                                                   
11       RETIREMENT PLAN ELECTION CHOICE. (a) A teacher who was first hired after                                          
12 June 30, 2006, and before the effective date of this section and who is a member of the                                 
13 defined contribution plan of the teachers' retirement system under AS 14.25.310 - 14.25.590                             
14 may make a one-time election, within 90 days after the effective date of this section, to                               
15 participate in the defined benefit retirement plan under AS 14.25.009 - 14.25.220 and to                                
16 transfer all contributions, including employer contributions, that have been made or should be                          
17 made to the defined contribution retirement plan for service the member completes before the                            
18 effective date of the member's participation in the defined benefit retirement plan.                                    
19       (b)  A public employee who was first hired after June 30, 2006, and before the                                    
20 effective date of this section and who is a member of the defined contribution plan of the                              
21 public employees' retirement system under AS 39.35.700 - 39.35.990 may make a one-time                                  
22 election, within 90 days after the effective date of this section, to participate in the defined                        
23 benefit retirement plan under AS 39.35.095 - 39.35.680 and to transfer all contributions,                               
24 including employer contributions, that have been made or should be made to the defined                                  
25 contribution retirement plan for any service the member completes before the effective date of                          
26 the member's participation in the defined benefit retirement plan.                                                      
27    * Sec. 26. The uncodified law of the State of Alaska is amended by adding a new section to                         
28 read:                                                                                                                   
29       RETIREMENT PLAN ELECTION PROCEDURE; REGULATIONS REQUIRED.                                                         
30 (a) The election to participate in the defined benefit retirement plan under sec. 25 of this Act                        
31 must be made in writing on forms and in the manner prescribed by the administrator. Before                              
01 accepting an election to participate in the defined benefit retirement plan, the administrator                          
02 shall provide the employee planning on making an election to participate in the defined                                 
03 benefit retirement plan with information, including calculations to illustrate the effect of                            
04 moving the employee's retirement plan from the defined contribution retirement plan to the                              
05 defined benefit retirement plan as well as other information clearly to inform the employee of                          
06 the potential consequences of the employee's election.                                                                  
07       (b)  An election made under sec. 25 of this Act to participate in the defined benefit                             
08 retirement plan is irrevocable. On the effective date of the election, an eligible employee who                         
09 makes the election shall be enrolled as a member of the defined benefit retirement plan, the                            
10 employee's participation in the plan shall be governed by the provisions for the defined                                
11 benefit retirement plan, and the employee's participation in the defined contribution retirement                        
12 plan shall terminate. The employee's enrollment in the defined benefit retirement plan shall be                         
13 effective retroactive to the date of hire. An election made by an eligible employee who is                              
14 married is not effective unless the election is signed by the employee's spouse.                                        
15       (c)  When an eligible employee makes a one-time election under sec. 25 of this Act,                               
16 the administrator shall cause the total amount of the employee's employee and employer                                  
17 contributions, with investment earnings and losses through the final day of the employee's                              
18 participation as a member in the defined contribution retirement plan, to be actuarially                                
19 calculated and, subject to (d) of this section, transferred to the pension fund in the defined                          
20 benefit retirement plan. On the effective date of the employee's participation in the defined                           
21 benefit retirement plan, the employee shall be credited with service in the defined benefit                             
22 retirement plan that is equal to the employee's service in years, including fractional years,                           
23 recognized for computing benefits that may be due from the defined contribution retirement                              
24 plan. The board shall establish transfer procedures by regulation, but the actual transfer may                          
25 not be later than 30 days after the date the administrator receives the employee's completed                            
26 election forms under (a) of this section, unless the major financial markets for securities                             
27 available for a transfer are seriously disrupted by an unforeseen event that also causes the                            
28 suspension of trading on any national securities exchange in the country where the securities                           
29 were issued. In that event, the 30-day period may be extended by a resolution of the board.                             
30 Transfers are not commissionable or subject to other fees and may be in the form of securities                          
31 or cash as determined by the board. Securities shall be valued on the date of receipt in the                            
01 employee's account.                                                                                                     
02       (d)  If the value actuarially calculated under (c) of this section is insufficient to pay for                     
03 a service credit equal to the employee's actual service, the administrator shall allow the                              
04 employee to create an indebtedness up to the amount needed to eliminate the insufficiency;                              
05 however, if that value exceeds the amount needed to pay for a service credit equal to the                               
06 employee's actual service, the administrator shall cause the excess to be paid to the employee                          
07 as a rollover transfer to either an individual employee annuity account in the Department of                            
08 Administration under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental                                
09 Annuity Plan) or, if the employee's employer does not participate in the State of Alaska                                
10 Supplemental Annuity Plan, to an eligible retirement plan as defined in AS 14.25.360(d) or                              
11 AS 39.35.760(d). An excess under this subsection may not be used to purchase service credit                             
12 in a retirement plan administered under AS 14.25 or AS 39.35.                                                           
13       (e)  The provisions of this section are subject to the requirements of the Internal                               
14 Revenue Code and the limitations under AS 14.25.010, 14.25.320(c) and (d), 14.25.490,                                   
15 AS 39.35.115, 39.35.678, 39.35.710(c) and (d), and 39.35.895.                                                           
16       (f)  In this section,                                                                                             
17            (1)  "administrator" means the commissioner of administration or the person                                  
18 designated by the commissioner of administration under AS 39.35.003 for a public                                        
19 employees' retirement plan and under AS 14.25.003 for a teachers' retirement plan;                                      
20            (2)  "board" means the Alaska Retirement Management Board established                                        
21 under AS 37.10.210;                                                                                                     
22            (3)  "defined benefit retirement plan" means the retirement plan established                                 
23 under                                                                                                                   
24                 (A)  AS 14.25.009 - 14.25.220 for a teacher; or                                                         
25                 (B)  AS 39.35.095 - 39.35.680 for a public employee;                                                    
26            (4)  "defined contribution retirement plan" means the retirement plan                                        
27 established under                                                                                                       
28                 (A)  AS 14.25.310 - 14.25.590 for a teacher; or                                                         
29                 (B)  AS 39.35.700 - 39.35.990 for a public employee;                                                    
30            (5)  "Internal Revenue Code" has the meaning given in AS 39.35.990.                                          
31    * Sec. 27. The uncodified law of the State of Alaska is amended by adding a new section to                         
01 read:                                                                                                                   
02       ADOPTION OF REGULATIONS. The commissioner of administration shall adopt                                           
03 regulations necessary to implement the changes made by this Act. The regulations take effect                            
04 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law                             
05 implemented by the regulation.                                                                                          
06    * Sec. 28. Sections 26 and 27 of this Act take effect immediately under AS 01.10.070(c).                           
07    * Sec. 29. Except as provided in sec. 28 of this Act, this Act takes effect July 1, 2016.