00 SENATE CS FOR CS FOR HOUSE BILL NO. 475(CRA)(efd fld S) 01 "An Act relating to the supplemental employee benefit program; relating to teachers' 02 and public employees' defined benefit retirement plans; relating to teachers' and public 03 employees' defined contribution retirement plans; relating to the health reimbursement 04 arrangement plan for certain teachers and public employees; clarifying eligibility for 05 membership in the health reimbursement arrangement plan; relating to waiver of 06 adjustments under the teachers' defined benefit retirement plan and the public 07 employees' defined benefit retirement plan; relating to the administrator of the Public 08 Employees' Retirement System of Alaska; relating to employer contributions for 09 occupational disability and death benefits; repealing participation in the teachers' 10 defined contribution and defined benefit retirement plans by certain employees of the 11 National Education Association of Alaska; relating to requirements for employer 12 minimum contributions to the teachers' and the public employees' defined benefit 01 retirement systems; and relating to the public employees' defined benefit deferred 02 compensation program." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 14.25.070(a) is amended to read: 05 (a) An employer shall make contributions to the plan in accordance with this 06 section and as certified by the board in an amount sufficient, after subtracting 07 member contributions, to provide the benefits of AS 14.25.009 - 14.25.220. The 08 amount shall be calculated by applying the employer normal cost rate to the sum 09 total of the base salaries paid to members in the plan and by applying the past 10 service rate to the sum total of the base salaries paid to members in the system 11 [AN EMPLOYER CONTRIBUTION RATE, CERTIFIED BY THE BOARD, 12 AGAINST THE SUM TOTAL OF THE BASE SALARIES PAID TO MEMBERS], 13 including any adjustments to contributions required by AS 14.25.173(a). The 14 employer shall remit this amount to the administrator in accordance with 15 AS 14.25.065. 16 * Sec. 2. AS 14.25.070 is amended by adding new subsections to read: 17 (d) In (a) of this section, "employer normal cost rate" means the percentage of 18 compensation of all active members in the plan that, when combined with the member 19 contribution rate of active members in the plan, is sufficient to provide the benefits 20 that are expected to be credited with respect to service during the year beginning after 21 the last valuation date. This percentage is uniformly determined for all employers and 22 is applicable to each employer. 23 (e) In (a) of this section, "past service rate" means the percentage of 24 compensation of all active members in the system necessary to provide the annual 25 amount required to amortize the unfunded obligations of the employers for benefits 26 earned by members in the plan before the date of the last actuarial valuation over a 27 period not to exceed the maximum period allowed by generally accepted accounting 28 principles of the Governmental Accounting Standards Board. This percentage is 29 uniformly determined for all employers and is applicable to each employer. 30 * Sec. 3. AS 14.25.070 is amended by adding a new subsection to read: 01 (f) The employer contribution rate may not be less than the rate required, after 02 subtracting the member contribution rate, to fully fund the actuarially calculated 03 benefits expected to be earned by active members during the fiscal year. 04 * Sec. 4. AS 14.25.125(c) is amended to read: 05 (c) Membership service for which contributions were refunded is not 06 creditable under this section [UNLESS THE REFUNDED CONTRIBUTIONS HAVE 07 BEEN REPAID. FOR PURPOSES OF THIS SECTION, A MEMBER OR FORMER 08 MEMBER DOES NOT HAVE TO BE REEMPLOYED UNDER THIS PLAN IN 09 ORDER TO REPAY REFUNDED CONTRIBUTIONS. COMPOUND INTEREST 10 AT THE RATE PRESCRIBED BY REGULATION MUST BE ADDED TO THE 11 REINSTATEMENT INDEBTEDNESS FROM THE DATE OF THE REFUND TO 12 THE DATE OF REPAYMENT]. 13 * Sec. 5. AS 14.25.320(b), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 14 (b) The defined contribution retirement plan includes a plan in which savings 15 are accumulated in an individual account for the exclusive benefit of the member or 16 beneficiaries, and certain fixed occupational death and disability benefits are 17 paid. The plan is established effective July 1, 2006, at which time contributions by 18 employers and members begin. 19 * Sec. 6. AS 14.25.320(c), as enacted by sec. 35, ch. 9, FSSLA 2005, 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 14.25.340(c), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 25 (c) The employer shall deduct the contribution from the member's 26 compensation at the end of each payroll period, and the contribution shall be credited 27 by the administrator to the member's individual account. To the extent permitted by 28 federal law, the [THE] contributions shall be deducted from the member's 29 compensation before the computation of applicable federal taxes and shall be treated 30 as employer contributions under 26 U.S.C. 414(h)(2). A member may not have the 31 option of making the payroll deduction directly in cash instead of having the 01 contribution picked up by the employer. 02 * Sec. 8. AS 14.25.350(e), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended by adding 03 a new subsection to read: 04 (e) An employer shall make annual contributions to a trust account in the plan, 05 applied as a percentage of each member's compensation from July 1 to the following 06 June 30, in an amount determined by the board to be actuarially required to fully fund 07 the cost of providing occupational disability and occupational death benefits under 08 AS 14.25.310 - 14.25.590. 09 * Sec. 9. AS 14.25.380, as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 10 Sec. 14.25.380. Limitations on contributions and benefits. Notwithstanding 11 any other provisions of this plan, the annual additions to each member's individual 12 account under this plan and under all defined contribution plans of the employer 13 required to be aggregated with the contributions from this plan under the provisions of 14 26 U.S.C. 415 may not exceed, for any limitation year, the amount permitted under 26 15 U.S.C. 415(c) at any time. If the amount of a member's individual account 16 [DEFINED CONTRIBUTION PLAN] contributions exceeds the limitation of 26 17 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary 18 remedial action to correct an excess contribution. A fixed benefit provided under 19 this plan may not exceed, for or during a limitation year, the amount permitted 20 under 26 U.S.C. 415(b). If a fixed benefit provided under this plan exceeds, for or 21 during a limitation year, the amount permitted under 26 U.S.C. 415(b), the 22 administrator shall take remedial action necessary to comply with the limits on 23 the benefit amount in 26 U.S.C. 415(b). The provisions of 26 U.S.C. 415, and the 24 regulations adopted under that statute, as applied to qualified [DEFINED 25 CONTRIBUTION] plans of governmental employees are incorporated as part of the 26 terms and conditions of the plan. 27 * Sec. 10. AS 14.25.400(b), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 28 (b) A participant may direct investment of plan funds held in an individual 29 account among available investment funds in accordance with rules established by the 30 board. 31 * Sec. 11. AS 14.25.470(g), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 01 (g) An eligible person shall make the irrevocable election to participate or not 02 participate in the retiree major medical insurance plan by reaching 70 1/2 years of age, 03 or upon application for retirement and medical benefits, whichever is later. The 04 administrator may require an eligible person who deferred participation in the 05 retiree major medical insurance plan at the time the person applied for 06 retirement to show evidence of insurability or provide a letter of coverage when 07 the person later applies to participate in the retiree major medical insurance 08 plan. If the person does not establish insurability or provide a letter of coverage, 09 the administrator may deny participation by the person in the retiree major 10 medical insurance plan. 11 * Sec. 12. AS 14.25.485(b), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 12 (b) The occupational disability benefits accrue beginning the first day of the 13 month following termination of employment as a result of the disability and are 14 payable the last day of the month. If a final determination granting the benefit is not 15 made in time to pay the benefit when due, a retroactive payment shall be made to 16 cover the period of deferment. The last payment shall be for the first month in which 17 the disabled member 18 (1) dies; 19 (2) recovers from the disability; 20 (3) fails to meet the requirements under (f), (h), or (j) [(h)] of this 21 section; or 22 (4) reaches normal retirement age. 23 * Sec. 13. AS 14.25.485(c), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 24 (c) If the disabled member becomes ineligible to receive occupational 25 disability benefits before the normal retirement date, the disabled member shall then 26 be entitled to receive retirement benefits if the member would have been eligible for 27 the benefit had employment continued during the period of disability. The period of 28 disability constitutes membership service for the purposes of [IN REGARD TO] 29 determining eligibility for retirement and medical benefits under this chapter and 30 AS 39.30.300 - 39.30.495. 31 * Sec. 14. AS 14.25.485(d), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 01 (d) The monthly amount of an occupational disability benefit is 40 percent of 02 the disabled member's gross monthly compensation at the time of termination due to 03 disability. Notwithstanding AS 14.25.390(b), at the time a member is appointed to 04 disability, the member becomes fully vested in the employer contributions made 05 under AS 14.25.350(a). A disabled member is fully vested in the contributions to 06 the member's individual account made under this subsection. A member is not 07 entitled to elect distributions from the member's individual contribution account 08 under AS 14.25.410 while the member is receiving disability benefits under this 09 section. While a member is receiving disability benefits, based on the disabled 10 member's gross monthly compensation at the time of termination due to disability, the 11 employer shall make contributions to the 12 (1) member's individual account under AS 14.25.340 on behalf of the 13 member, without deduction from the member's disability payments; and 14 (2) appropriate accounts and funds on behalf of the member under 15 AS 14.25.350. 16 * Sec. 15. AS 14.25.485(g), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 17 (g) A disabled member's occupational disability benefit terminates the last 18 day of the month following the date [WHEN] the disabled member first qualifies 19 [ATTAINS ELIGIBILITY] for normal retirement. At that time, the member's 20 retirement benefit shall be determined under the provisions of AS 14.25.420 - 21 14.25.440, 14.25.470, and 14.25.480. A member whose occupational disability 22 benefit terminates under this subsection [RECEIVING DISABILITY BENEFITS 23 UP UNTIL ELIGIBILITY FOR RETIREMENT] shall be considered to have retired 24 directly from the plan. 25 * Sec. 16. AS 14.25.485(i), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 26 (i) Upon the death of a disabled member who is receiving or is entitled to 27 receive an occupational disability benefit, the administrator shall pay the surviving 28 spouse a surviving spouse's pension, equal to 40 percent of the member's monthly 29 compensation at the termination of employment because of occupational disability. If 30 there is no surviving spouse, the administrator shall pay the survivor's pension in equal 31 parts to the dependent children of the member. While the monthly survivor's 01 pension is being paid, the survivor is not entitled to elect distributions from the 02 employee's individual contribution account under AS 14.25.410. The first payment 03 of the surviving spouse's pension or of a dependent child's pension shall accrue from 04 the first day of the month following the member's death and is payable the last day of 05 the month. The last payment shall be made the last day of [FOR] the last month in 06 which there is an eligible surviving spouse or dependent child, or the last day of the 07 month following the earliest date the member would have first qualified for 08 normal retirement if the member had survived, whichever day comes sooner. A 09 retirement benefit shall be determined under the provisions of AS 14.25.420 - 10 14.25.440, 14.25.470, and 14.25.480 based on [. ON] the date the member would 11 have first qualified for normal retirement [OF THE MEMBER WOULD HAVE 12 OCCURRED] if the member had survived. In addition to the payment of the 13 member's individual account, the surviving spouse or, if there is no surviving 14 spouse, the surviving dependent children of the member, shall receive an 15 additional benefit in an amount equal to the accumulated contributions that 16 would have been made to the deceased member's individual account under 17 AS 14.25.340(a) and 14.25.350(a), based on the deceased member's gross monthly 18 compensation at the time of occupational disability, from the time of the 19 member's death to the date the member would have first qualified for normal 20 retirement if the member had survived. Earnings shall be allocated to the 21 additional benefit calculated under this subsection based on the actual rate of 22 return, net of expenses, of the trust account established under AS 14.25.350(e) 23 over the period that the contributions would have been made. This additional 24 amount shall be paid in the same manner as determined for the member's 25 individual account under AS 14.25.420 - 14.25.460. For the purpose of 26 determining eligibility of a survivor who is receiving a benefit under this 27 subsection for medical benefits under AS 14.25.470 - 14.25.480, a [LIVED, THE 28 RETIREMENT BENEFIT SHALL BE DETERMINED UNDER THE PROVISIONS 29 OF AS 14.25.420 - 14.25.440, 14.25.470, AND 14.25.480. A] member who died 30 while receiving disability benefits shall be considered to have retired directly from the 31 plan on the date the member would have first qualified for normal retirement [OF 01 THE MEMBER WOULD HAVE OCCURRED] if the member had survived. The 02 period during which the member was eligible for a disability benefit and the 03 period during which a survivor's pension is paid to a survivor under this 04 subsection each constitute membership service for the purposes of determining 05 vesting in employer contributions under AS 14.25.390(b) and eligibility for 06 retirement and medical benefits under this chapter and AS 39.30.300 - 39.30.495 07 [LIVED]. 08 * Sec. 17. AS 14.25.485(j), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 09 (j) In this section, "occupational disability" means a physical or mental 10 condition that the administrator determines presumably permanently prevents 11 an employee from satisfactorily performing the employee's usual duties or the 12 duties of another comparable position or job available to the employee and for 13 which the employee is qualified by training or education; however, the proximate 14 cause of the condition must be a bodily injury sustained, or a hazard undergone, 15 while in the performance and within the scope of the employee's duties and not 16 the proximate result of the wilful negligence of the employee [HAS THE 17 MEANING GIVEN IN AS 39.35.680]. 18 * Sec. 18. AS 14.25 is amended by adding a new section to read: 19 Sec. 14.25.486. Disability benefit adjustment. (a) Once each year, the 20 administrator shall increase disability benefits. The amount of the increase is a 21 percentage of the current disability benefit equal to the lesser of 75 percent of the 22 increase in the cost of living in the preceding calendar year or nine percent. 23 (b) If a disabled member was not receiving a benefit during the entire 24 preceding calendar year, the increase in the benefit under this section shall be adjusted 25 by multiplying it by a fraction, the numerator of which is the number of months for 26 which the benefit was received in the preceding calendar year and the denominator of 27 which is 12. 28 (c) An increase in benefit payments under this section is effective July 1 of 29 each year and is based on the percentage increase in the Consumer Price Index for 30 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 31 calendar year, as determined by the United States Department of Labor, Bureau of 01 Labor Statistics. 02 (d) Benefit adjustments under this section shall terminate the last day of the 03 month following the date on which a disabled member is no longer receiving a 04 disability benefit under AS 14.25.485. 05 * Sec. 19. AS 14.25.487(b), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 06 (b) The first payment of the surviving spouse's pension or of a dependent 07 child's pension shall be made for the month following the month in which the member 08 dies. Payments [, AND PAYMENT] shall cease on the last day of the month in 09 which there is no longer an eligible spouse or eligible dependent child, or the last 10 day of the month following the earliest date [TO BE MADE BEGINNING WITH 11 THE MONTH IN WHICH] the member would have first qualified for normal 12 retirement if the member had survived, whichever day is sooner. 13 * Sec. 20. AS 14.25.487(c), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 14 (c) The monthly survivor's pension in (b) of this section for survivors of 15 members is 40 percent of the member's monthly compensation in the month in which 16 the member dies. While the monthly survivor's pension is being paid, the survivor 17 is not entitled to elect distributions from the member's individual contribution 18 account under AS 14.25.410, except as required by AS 14.25.440. While the 19 monthly survivor's pension is being paid, the employer shall make contributions on 20 behalf of the member's surviving spouse and member's surviving dependent 21 children [BENEFICIARIES BASED ON THE DECEASED MEMBER'S GROSS 22 MONTHLY COMPENSATION AT THE TIME OF OCCUPATIONAL DEATH 23 (1) TO THE MEMBER'S INDIVIDUAL ACCOUNT UNDER 24 AS 14.25.340, WITHOUT DEDUCTION FROM THE SURVIVOR'S PENSION; 25 AND 26 (2)] to the appropriate accounts and funds [ON BEHALF OF THE 27 MEMBER] under AS 14.25.350(b) - (e). 28 * Sec. 21. AS 14.25.487(e), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 29 (e) On the date the member would have first qualified for normal retirement 30 [OF THE MEMBER WOULD HAVE OCCURRED] if the member had survived 31 [LIVED], the retirement benefit shall be determined under the provisions of 01 AS 14.25.420 - 14.25.440, 14.25.470, and 14.25.480. In addition to payment of the 02 member's individual account, the surviving spouse or, if there is no surviving 03 spouse, the surviving dependent children of the member, shall receive an 04 additional benefit in an amount equal to the accumulated contributions that 05 would have been made to the deceased member's individual account under 06 AS 14.25.340(a) and 14.25.350(a), based on the deceased member's gross monthly 07 compensation at the time of the member's occupational death, from the time of 08 the member's death to the date the member would have first qualified for normal 09 retirement if the member had survived. Earnings shall be allocated to the 10 additional benefit calculated under this subsection based on the actual rate of 11 return, net of expenses, of the trust account established under AS 14.25.350(e) 12 over the period that the contributions would have been made. This additional 13 amount shall be paid in the same manner as determined for the member's 14 individual account under AS 14.25.420 - 14.25.460. A member who died and whose 15 survivors receive occupational death benefits under this section shall be considered to 16 have retired directly from the plan on the date the [NORMAL RETIREMENT OF 17 THE] member would have first qualified for normal retirement [OCCURRED] if 18 the member had survived. The period of time during which a survivor's pension is 19 paid under this section constitutes membership service for the purposes of 20 determining vesting in employer contributions under AS 14.25.390(b) and 21 eligibility for retirement and medical benefits under this chapter and 22 AS 39.30.300 - 39.30.495 [LIVED]. 23 * Sec. 22. AS 14.25 is amended by adding new sections to read: 24 Sec. 14.25.488. Survivor's pension adjustment. (a) Once each year, the 25 administrator shall increase payments to a person 60 years of age or older receiving a 26 survivor's pension under AS 14.25.485(i) or 14.25.487(c) and to a person who has 27 received a survivor's pension under AS 14.25.485(i) or 14.25.487(c) for at least eight 28 years, who is not otherwise eligible for an increase under this section. 29 (b) The amount of the increase is a percentage of the current survivor's 30 pension equal to the lesser of 50 percent of the increase in the cost of living in the 31 preceding calendar year or six percent. 01 (c) If a survivor was not receiving a pension during the entire preceding 02 calendar year, the increase in the survivor's pension under this section shall be 03 adjusted by multiplying it by a fraction, the numerator of which is the number of 04 months for which the pension was received in the preceding calendar year and the 05 denominator of which is 12. 06 (d) The administrator shall increase the initial survivor's pension paid to a 07 survivor of a member who died while receiving disability benefits by a percentage 08 equal to the total cumulative percentage that has been applied to the member's 09 disability benefit under AS 14.25.486. 10 (e) An increase in benefit payments under this section is effective July 1 of 11 each year and is based on the percentage increase in the Consumer Price Index for 12 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 13 calendar year, as determined by the United States Department of Labor, Bureau of 14 Labor Statistics. 15 (f) Pension adjustments under this section shall terminate the last day of the 16 month following the date on which a survivor is no longer receiving a survivor's 17 pension under AS 14.25.485(i) or 14.25.487(c). 18 Sec. 14.25.489. Premiums for retiree major medical insurance coverage 19 upon termination of disability benefits or survivor's pension. The premium for 20 retiree major medical insurance coverage payable by a member whose disability 21 benefit is terminated under AS 14.25.485(g) or by an eligible survivor whose survivor 22 pension is terminated under AS 14.25.485(i) or 14.25.487(e) when the member would 23 have been eligible for normal retirement if the member had survived shall be 24 determined under AS 14.25.480(g)(2) as if the member or survivor were eligible for 25 Medicare. 26 * Sec. 23. AS 14.25.510, as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 27 Sec. 14.25.510. Nonguarantee of returns, rates, or benefit amounts. The 28 plan created by AS 14.25.310 - 14.25.590 is, with respect to individual accounts, 29 treated as a defined contribution plan and [PLAN,] not a defined benefit plan. The 30 amount of money in the individual account of a participant depends on the amount of 31 contributions and the rate of return from investments of the account that varies over 01 time. If benefits are paid in the form of an annuity, the benefit amount payable is 02 dependent on the amount of money in the account and the interest rates applied and 03 service fees charged by the annuity payor at the time the annuity is purchased from 04 the carrier and benefits are first paid. Nothing in this plan guarantees a participant 05 (1) a rate of return or interest rate other than that actually earned by the 06 account of the participant, less applicable administrative expenses; or 07 (2) an annuity based on interest rates or service charges other than 08 interest rates available from and service charges by the annuity payor in effect at the 09 time the annuity is paid. 10 * Sec. 24. AS 14.25.540(c), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 11 (c) Each eligible member who elects to participate in the defined contribution 12 retirement plan shall have transferred to a new account the member contribution 13 account balance held in trust for the member under the defined benefit retirement plan 14 of the teachers' retirement system. A matching employer contribution shall be made on 15 behalf of that employee to the new account. The employer shall make the matching 16 contribution from funds other than the trust funds of the defined benefit retirement 17 plan. The amount of the matching employer contribution shall be subject to, and 18 may not exceed, the limitation of 26 U.S.C. 415(c) during the applicable limitation 19 year in which the contribution is made. 20 * Sec. 25. AS 14.25.540(d), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 21 (d) Upon a transfer, all membership service previously earned under the 22 defined benefit retirement plan shall be nullified for purposes of entitlement to a future 23 benefit under the defined benefit retirement plan but shall be credited for purposes of 24 determining vesting in employer contributions under AS 14.25.390(b) and 25 eligibility to elect medical benefits under AS 14.25.470. Membership service allowed 26 for credit toward medical benefits does not include any service credit purchased under 27 AS 14.25.075 for employment by an employer who is not a participating employer in 28 this chapter. 29 * Sec. 26. AS 14.25.540(h), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 30 (h) A member who is eligible to elect transfer to the defined contribution 31 plan must make the election not later than 12 months after the member's 01 employer notifies the administrator that the member's employer consents to 02 transfers of its members under (i) of this section. The election to participate in the 03 defined contribution retirement plan must be made in writing on forms and in the 04 manner prescribed by the administrator. Before accepting an election to participate in 05 the defined contribution retirement plan, the administrator must provide the employee 06 planning on making an election to participate in the defined contribution retirement 07 plan with information, including calculations to illustrate the effect of moving the 08 employee's retirement plan from the defined benefit retirement plan to the defined 09 contribution retirement plan as well as other information to clearly inform the 10 employee of the potential consequences of the employee's election. An election made 11 under this subsection to participate in the defined contribution retirement plan is 12 irrevocable. Upon making the election, the participant shall be enrolled as a member 13 of the defined contribution retirement plan, the member's participation in the plan shall 14 be governed by the provisions of AS 14.25.310 - 14.25.590, and the member's 15 participation in the defined benefit retirement plan under AS 14.25.009 - 14.25.220 16 shall terminate. The participant's enrollment in the defined contribution retirement 17 plan shall be effective the first day of the month after the administrator receives the 18 completed enrollment forms. An election made by an eligible member who is married 19 is not effective unless the election is signed by the individual's spouse. 20 * Sec. 27. AS 14.25.540(i), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended to read: 21 (i) A member may make an election under this section only if the member's 22 employer participates in both the defined benefit retirement plan and the defined 23 contribution retirement plan and consents to transfers under this section. The employer 24 shall notify the administrator if the employer consents to allowing the employer's 25 members to choose to transfer from the defined benefit retirement plan to the defined 26 contribution retirement plan under this section. The initial period during which the 27 employer's members may choose to transfer commences on the first day of the 28 month following the administrator's receipt of notice under this subsection and 29 continues for 12 months. An employer may consent to a second period of 12 30 months during which the employer's members may choose to transfer from the 31 defined benefit retirement plan to the defined contribution retirement plan under 01 this section. The second period commences on the first day of the month 02 following the administrator's receipt of notice under this subsection and 03 continues for 12 months. An employer's initial notice to allow transfers is 04 irrevocable and applicable to all eligible employees of the employer. An employer's 05 second notice to allow transfers under this section is irrevocable and applicable 06 only to those eligible employees to whom the initial period of transfer was not 07 available. 08 * Sec. 28. AS 14.25.540(j), as enacted by sec. 35, ch. 9, FSSLA 2005, is amended by adding 09 a new paragraph to read: 10 (3) "membership service" has the meaning given in AS 14.25.220 and 11 does not include any service for which reinstatement indebtedness has not been fully 12 paid. 13 * Sec. 29. AS 39.30.160(a) is amended to read: 14 (a) The Department of Administration shall, in accordance with policies 15 prescribed by regulations adopted by the commissioner [OF THE ALASKA 16 RETIREMENT MANAGEMENT BOARD], provide to employees for whom special 17 individual employee benefit accounts are established under AS 39.30.150(c) the 18 following benefit options: 19 (1) supplemental health benefits; 20 (2) supplemental death benefits; 21 (3) supplemental disability benefits; and 22 (4) supplemental dependent care benefits. 23 * Sec. 30. AS 39.30.160(e) is amended to read: 24 (e) Regulations adopted by the commissioner [BOARD] implementing 25 AS 39.30.150 and this section are not subject to AS 44.62 (Administrative Procedure 26 Act). 27 * Sec. 31. AS 39.30 is amended by adding a new section to read: 28 Sec. 39.30.165. Appeals. A final decision made under AS 39.30.150 - 29 39.30.180 is subject to appeal under AS 44.64. 30 * Sec. 32. AS 39.30 is amended by adding a new section to read: 31 Sec. 39.30.335. Appeals. A final decision made under AS 39.30.300 - 01 39.30.495 is subject to appeal under AS 44.64. 02 * Sec. 33. AS 39.30.370, as enacted by sec. 80, ch. 9, FSSLA 2005, is amended to read: 03 Sec. 39.30.370. Contributions by employers. For each member of the plan, 04 an employer shall contribute to the teachers' and public employees' retiree health 05 reimbursement arrangement plan trust fund an amount equal to three percent of the 06 average annual compensation of all employees of employers in the plan 07 [EMPLOYER'S AVERAGE ANNUAL EMPLOYEE COMPENSATION]. The 08 administrator shall maintain a record for each member to account for employer 09 contributions on behalf of that member. The board shall establish by regulation the 10 rate of interest to be applied annually to the amount in a member's individual account. 11 * Sec. 34. AS 39.30.380, as enacted by sec. 80, ch. 9, FSSLA 2005, is amended to read: 12 Sec. 39.30.380. Termination of employment. A person who terminates 13 employment before meeting the eligibility requirements of AS 39.30.390 14 [AS 14.25.470 OR AS 39.35.870] loses any right to the contributions made on behalf 15 of the person to the teachers' and public employees' retiree health reimbursement 16 arrangement trust fund. If a person returns to employment with a participating 17 employer by December 31 of the year in which the person reaches 65 years of age, the 18 person's account balance shall be restored in the amount recorded on the date of 19 termination from the trust, adjusted for inflation at the rate of the Consumer Price 20 Index for Anchorage, Alaska. The earlier period of employment with a participating 21 employer shall be credited toward eligibility for medical benefits. 22 * Sec. 35. AS 39.30.390, as enacted by sec. 80, ch. 9, FSSLA 2005, is amended to read: 23 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 24 eligibility requirements of AS 14.25.470 or [AND] AS 39.35.870 are eligible for 25 reimbursements from the individual account established for a member under the plan, 26 except members do not have to retire directly from the system. A person who is the 27 dependent child of an eligible member is eligible for reimbursements if the eligible 28 member and surviving spouse have both died so long as the person meets the 29 definition of dependent child. 30 * Sec. 36. AS 39.35.250 is amended to read: 31 Sec. 39.35.250. Calculation of employer's contribution rate. (a) An 01 employer shall make contributions to the plan in amounts determined in accordance 02 with this section. For the purposes of this section and AS 39.35.270, the [PAST 03 SERVICE DATE FOR EACH EMPLOYER IS THE ENTRY DATE OF THE 04 EMPLOYER OR DECEMBER 31, 1972, WHICHEVER IS LATER. AFTER 05 DECEMBER 31, 1972, IF AMENDMENTS TO AS 39.35.095 - 39.35.680 ARE 06 ENACTED THAT SUBSTANTIALLY AFFECT BENEFITS ACCRUED BEFORE 07 THE EFFECTIVE DATE OF THE AMENDMENT, THE PAST SERVICE DATE 08 WILL BE CHANGED TO DECEMBER 31 OF THE YEAR IMMEDIATELY 09 PRECEDING THAT IN WHICH THE AMENDMENT IS ENACTED. THE] 10 contribution rate is the sum of the consolidated employer normal cost rate and the 11 past service rate as certified by the board. 12 (b) In (a) of this section, "consolidated employer normal cost rate" means the 13 percentage of compensation of all active employees in the plan which, [IF PAID 14 OVER THE PERIOD OF THEIR CREDITED SERVICE AFTER THEIR PAST 15 SERVICE DATE AND] when combined with all employee contributions to the plan, 16 is sufficient to provide the benefits earned during the year beginning after the last 17 valuation date [AFTER SUCH PAST SERVICE DATES]. This percentage is 18 [UNIFORMLY] determined at the plan level for all employers and is applicable to 19 each employer. 20 (c) In (a) of this section, "past service rate" means the percentage of 21 compensation of all active employees in the system [PLAN] necessary to provide the 22 annual amount required to amortize the unfunded obligations of the employer for 23 benefits earned by the employer's members in the plan before the date of the last 24 actuarial valuation [EMPLOYER'S PAST SERVICE DATE] over a period not to 25 exceed the maximum allowed by generally accepted accounting principles of the 26 Governmental Accounting Standards Board [40 YEARS. THE PERIOD OF 27 AMORTIZATION BEGINS AT THE PAST SERVICE DATE OF EACH 28 EMPLOYER]. The percentage is separately determined for each employer. 29 * Sec. 37. 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 employees of the plan and by applying 03 the employer's past service rate to the total compensation paid to the employer's 04 active employees in the system [EMPLOYER] for each payroll period, [AND BY] 05 including any adjustments to contributions required by AS 39.35.520(a). This amount 06 shall be remitted by the employer to the administrator in accordance with 07 AS 39.35.610. 08 * Sec. 38. AS 39.35.270 is amended by adding a new subsection to read: 09 (d) The employer contribution rate may not be less than the rate required, after 10 subtracting the member contribution rate, to fully fund the actuarially calculated 11 benefits expected to be earned by active members during a fiscal year. 12 * Sec. 39. AS 39.35.375(a) is amended to read: 13 (a) An active or inactive member who has never been vested in this plan or in 14 the teachers' retirement plan under AS 14.25.009 - 14.25.220, who has at least two 15 years of credited service in this plan, and who has membership service in the teachers' 16 retirement system may claim credited service in this plan in an amount equal to the 17 membership service the member has in the teachers' retirement system. The claimed 18 credited service may be added to service earned under AS 39.35.095 - 39.35.680 to 19 enable the member to qualify for a public service benefit under this section. The 20 member may not claim credited service for membership service for which the member 21 has received a refund under AS 14.25.150 [UNLESS THE MEMBER FULLY PAYS 22 THE INDEBTEDNESS AS ESTABLISHED UNDER AS 14.25.063]. The member 23 may not claim credited service in this plan based on unused sick leave under 24 AS 14.25.115. 25 * Sec. 40. AS 39.35.385(c) is amended to read: 26 (c) Credited service for which contributions were refunded is not creditable 27 under this section [UNLESS THE REFUNDED CONTRIBUTIONS HAVE BEEN 28 REPAID. FOR PURPOSES OF (a) AND (b) OF THIS SECTION, A MEMBER OR 29 FORMER MEMBER DOES NOT HAVE TO BE REEMPLOYED UNDER THIS 30 PLAN IN ORDER TO PAY REFUNDED CONTRIBUTIONS. COMPOUND 31 INTEREST AT THE RATE PRESCRIBED BY REGULATION SHALL BE ADDED 01 TO THE REINSTATEMENT INDEBTEDNESS FROM THE DATE OF THE 02 REFUND TO THE DATE OF REPAYMENT]. 03 * Sec. 41. AS 39.35.522(d) is amended to read: 04 (d) A ruling of the [THE] commissioner of administration denying a waiver 05 under this section may be appealed under AS 44.64. The administrative law 06 judge may reverse the ruling of the commissioner and may impose equitable 07 conditions on the granting of a waiver [WHICH IT CONSIDERS EQUITABLE]. 08 These conditions may include requiring the member or beneficiary to make additional 09 contributions to the plan. 10 * Sec. 42. AS 39.35.680(3) is amended to read: 11 (3) "administrator" means [THE PERSON APPOINTED BY] the 12 commissioner of administration or the commissioner's designee appointed under 13 AS 39.35.003 [AS 39.35.050]; 14 * Sec. 43. AS 39.35.710(b), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 15 (b) The defined contribution retirement plan includes [IS] a plan in which 16 savings are accumulated in an individual retirement account for the exclusive benefit 17 of the member or beneficiaries, certain fixed occupational death and disability 18 benefits are paid, and certain fixed retirement and survivor benefits for peace 19 officers and fire fighters are paid. The plan is established effective July 1, 2006, at 20 which time contributions by employers and members begin. 21 * Sec. 44. AS 39.35.710(c), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 22 (c) The retirement plan established by AS 39.35.700 - 39.35.990 is intended to 23 qualify under 26 U.S.C. 401(a), [AND] 414(d), and 414(k) (Internal Revenue Code) 24 as a qualified retirement plan established and maintained by the state for its 25 employees, for the employees of political subdivisions, public corporations, and public 26 organizations of the state, and for the employees of other employers whose 27 participation is authorized by AS 39.35.700 - 39.35.990 and who participate in the 28 plan set out in AS 39.35.700 - 39.35.990. 29 * Sec. 45. AS 39.35.730(c), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 30 (c) The employer shall deduct the contribution from the member's 31 compensation at the end of each payroll period, and the contribution shall be credited 01 by the plan to the member's individual account. To the extent permitted by federal 02 law, the [THE] contributions shall be deducted from the member's compensation 03 before the computation of applicable federal taxes and shall be treated as employer 04 contributions under 26 U.S.C. 414(h)(2). A member may not have the option of 05 making the payroll deduction directly in cash instead of having the contribution picked 06 up by the employer. 07 * Sec. 46. AS 39.35.750(e), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 08 (e) An employer shall make annual contributions to a trust account in the 09 plan, applied as a percentage of each member's compensation from July 1 to the 10 following June 30, in an amount determined by the board to be actuarially required to 11 fully fund the cost of providing occupational disability and occupational death benefits 12 under AS 39.35.700 - 39.35.990 and retirement benefits elected by disabled peace 13 officers and fire fighters under AS 39.35.890(h)(2) [AS 39.35.890 AND 39.35.892]. 14 The contribution required under this subsection for peace officers and fire fighters and 15 the contribution required under this subsection for other employees shall be separately 16 calculated based on the actuarially calculated costs for each group of employees. 17 * Sec. 47. AS 39.35.780, as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 18 Sec. 39.35.780. Limitations on contributions and benefits. Notwithstanding 19 any other provisions of this plan, the annual additions to each member's individual 20 account under this plan and under all defined contribution plans of the employer 21 required to be aggregated with the contributions from this plan under the provisions of 22 26 U.S.C. 415 may not exceed, for any limitation year, the amount permitted under 26 23 U.S.C. 415(c) at any time. If the amount of a member's individual account 24 [DEFINED CONTRIBUTION PLAN] contributions exceeds the limitation of 26 25 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary 26 remedial action to correct an excess contribution. A fixed benefit provided under 27 this plan may not exceed, for or during a limitation year, the amount permitted 28 under 26 U.S.C. 415(b). If a fixed benefit provided under this plan exceeds, for or 29 during a limitation year, the amount permitted under 26 U.S.C. 415(b), the 30 administrator shall take remedial action necessary to comply with the limits on 31 the benefit amount in 26 U.S.C. 415(b). The provisions of 26 U.S.C. 415, and the 01 regulations adopted under that statute, as applied to qualified [DEFINED 02 CONTRIBUTION] plans of governmental employees are incorporated as part of the 03 terms and conditions of the plan. 04 * Sec. 48. AS 39.35.800(b), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 05 (b) A participant may direct investment of plan funds held in an individual 06 account among available investment funds in accordance with rules established by the 07 board. 08 * Sec. 49. AS 39.35.870(g), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 09 (g) An eligible person must make the irrevocable election to participate or not 10 participate in the retiree major medical insurance plan by reaching 70 1/2 years of age, 11 or upon application for retirement and medical benefits, whichever is later. The 12 administrator may require an eligible person who deferred participation in the 13 retiree major medical insurance plan at the time the person applied for 14 retirement to show evidence of insurability or provide a letter of coverage when 15 the person later applies to participate in the retiree major medical insurance 16 plan. If the person does not establish insurability or provide a letter of coverage, 17 the administrator may prohibit participation by the person in the retiree major 18 medical insurance plan. 19 * Sec. 50. AS 39.35.890(b), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 20 (b) The occupational disability benefits accrue beginning the first day of the 21 month following termination of employment as a result of the disability and are 22 payable the last day of the month. If a final determination granting the benefit is not 23 made in time to pay the benefit when due, a retroactive payment shall be made to 24 cover the period of deferment. The last payment shall be for the first month in which 25 the disabled employee 26 (1) dies; 27 (2) recovers from the disability; 28 (3) fails to meet the requirements under (f), (j), or (l) [(j)] of this 29 section; or 30 (4) reaches normal retirement age. 31 * Sec. 51. AS 39.35.890(c), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 01 (c) If the disabled employee becomes ineligible to receive occupational 02 disability benefits before the normal retirement date, the disabled employee shall then 03 be entitled to receive retirement benefits if the employee would have been eligible for 04 the benefit had employment continued during the period of disability. The period of 05 disability constitutes membership service for the purposes of [IN REGARD TO] 06 determining eligibility for retirement and medical benefits under this chapter and 07 AS 39.30.300 - 39.30.495. 08 * Sec. 52. AS 39.35.890(d), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 09 (d) The monthly amount of an occupational disability benefit is 40 percent of 10 the disabled employee's gross monthly compensation at the time of termination due to 11 disability. Notwithstanding AS 39.35.790(b), at the time a member is appointed to 12 disability, the member becomes fully vested in the employer contributions made 13 under AS 39.35.750(a). A disabled member is fully vested in the contributions to 14 the member's individual account made under this subsection. An employee is not 15 entitled to elect distributions from the employee's individual contribution 16 account under AS 39.35.810 while the employee is receiving disability benefits 17 under this section. While an employee is receiving disability benefits, based on the 18 disabled employee's gross monthly compensation at the time of termination due to 19 disability, the employer shall make contributions 20 (1) to the employee's individual account under AS 39.35.730 on behalf 21 of the employee, without deduction from the employee's disability payments; and 22 (2) on behalf of the employee under AS 39.35.750. 23 * Sec. 53. AS 39.35.890(g), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 24 (g) A disabled employee's occupational disability benefit terminates the last 25 day of the month [WHEN] the disabled employee first qualifies [ATTAINS 26 ELIGIBILITY] for normal retirement. At that time, the employee's retirement benefit 27 shall be determined under the provisions of AS 39.35.820 - 39.35.840, 39.35.870, and 28 39.35.880. An employee whose occupational disability benefit terminates under 29 this subsection [RECEIVING DISABILITY BENEFITS UP UNTIL ELIGIBILITY 30 FOR RETIREMENT] shall be considered to have retired directly from the plan. 31 * Sec. 54. AS 39.35.890(h), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 01 (h) Notwithstanding (g) of this section, at the time a peace officer or fire 02 fighter receiving occupational disability benefits under this section first attains 03 eligibility for normal retirement, the employee shall irrevocably elect to receive 04 retirement benefits in the amount calculated as the 05 (1) employee's retirement benefit calculated under the provisions of 06 AS 39.35.820 - 39.35.840; or 07 (2) employee's retirement benefit calculated as if the provisions of 08 AS 39.35.370(c) were to apply; however, retirement benefits paid under this paragraph 09 must be paid first from the peace officer's or fire fighter's individual contribution 10 account, and the remaining benefits must be paid from the trust account 11 established under AS 39.35.750(e); the peace officer or fire fighter may not elect 12 other distributions from the peace officer's or fire fighter's individual 13 contribution account under AS 39.35.810 while receiving retirement benefits 14 under this paragraph [MAY NOT BE MADE FROM THE TRUST FUND OF THE 15 PUBLIC EMPLOYEES' DEFINED BENEFIT RETIREMENT PLAN]. 16 * Sec. 55. AS 39.35.890(k), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 17 (k) Upon the death of a disabled employee who is receiving or is entitled to 18 receive an occupational disability benefit, the administrator shall pay the surviving 19 spouse a surviving spouse's pension, equal to 40 percent of the employee's monthly 20 compensation at the termination of employment because of occupational disability. If 21 there is no surviving spouse, the administrator shall pay the survivor's pension in equal 22 parts to the dependent children of the employee. While the monthly survivor's 23 pension is being paid, the survivor is not entitled to elect distributions from the 24 employee's individual contribution account under AS 39.35.810. The first payment 25 of the surviving spouse's pension or of a dependent child's pension shall accrue from 26 the first day of the month following the employee's death and is payable the last day of 27 the month. The last payment shall be made the last day of [FOR] the last month in 28 which there is an eligible surviving spouse or dependent child, or the last day of the 29 month following the earliest date the employee would have first qualified for 30 normal retirement if the employee had survived, whichever day comes sooner. A 31 retirement benefit shall be determined under the provisions of AS 39.35.820 - 01 39.35.840, 39.35.870, and 39.35.880 based on [. ON] the date the employee would 02 have first qualified for normal retirement [OF THE EMPLOYEE WOULD HAVE 03 OCCURRED] if the employee had survived. 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 39.35.730(a) and 39.35.750(a), based on the deceased member's gross monthly 09 compensation at the time of occupational disability, from the time of the 10 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 39.35.750(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 39.35.820 - 39.35.860. For the purpose of 17 determining eligibility of an employee's survivor who is receiving a benefit under 18 this subsection for medical benefits under AS 39.35.870 - 39.35.880, an employee 19 [LIVED, THE RETIREMENT BENEFIT SHALL BE DETERMINED UNDER THE 20 PROVISIONS OF AS 39.35.820 - 39.35.840, 39.35.870, AND 39.35.880. AN 21 EMPLOYEE] who died while receiving disability benefits shall be considered to have 22 retired directly from the plan on the date the employee would have first qualified for 23 normal retirement if the employee had survived. The period during which the 24 employee was eligible for a disability benefit and the period during which a 25 survivor's pension is paid to a survivor under this subsection each constitute 26 membership service for the purposes of determining vesting in employer 27 contributions under AS 39.35.790(b) and eligibility for retirement and medical 28 benefits under this chapter and AS 39.30.300 - 39.30.495 [NORMAL 29 RETIREMENT OF THE EMPLOYEE WOULD HAVE OCCURRED IF THE 30 EMPLOYEE HAD LIVED]. 31 * Sec. 56. AS 39.35.890(l), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 01 (l) In this section, "occupational disability" means a physical or mental 02 condition that the administrator determines presumably permanently prevents 03 an employee from satisfactorily performing the employee's usual duties or the 04 duties of another comparable position or job available to the employee and for 05 which the employee is qualified by training or education; however, the proximate 06 cause of the condition must be a bodily injury sustained, or a hazard undergone, 07 while in the performance and within the scope of the employee's duties and not 08 the proximate result of the wilful negligence of the employee [HAS THE 09 MEANING GIVEN IN AS 39.35.680]. 10 * Sec. 57. AS 39.35 is amended by adding a new section to read: 11 Sec. 39.35.891. Disability benefit and disabled peace officer or fire fighter 12 retirement benefit adjustment. (a) Once each year, the administrator shall increase 13 disability benefits and retirement benefits elected by disabled peace officers or fire 14 fighters under AS 39.35.890(h)(2). The amount of the increase is a percentage of the 15 current disability benefit or retirement benefit equal to the lesser of 75 percent of the 16 increase in the cost of living in the preceding calendar year or nine percent. 17 (b) If a disabled member was not receiving a benefit during the entire 18 preceding calendar year, the increase in the benefit under this section shall be adjusted 19 by multiplying it by a fraction, the numerator of which is the number of months for 20 which the benefit was received in the preceding calendar year and the denominator of 21 which is 12. 22 (c) If a disabled peace officer or fire fighter elects to receive a retirement 23 benefit in the amount calculated under AS 39.35.890(h)(2), the administrator shall, at 24 the time the disabled peace officer or fire fighter is appointed to retirement, increase 25 the retirement benefit by a percentage equal to the total cumulative percentage that has 26 been applied to the disabled peace officer's or fire fighter's disability benefit under this 27 section. 28 (d) An increase in benefit payments under this section is effective July 1 of 29 each year and is based on the percentage increase in the Consumer Price Index for 30 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 31 calendar year, as determined by the United States Department of Labor, Bureau of 01 Labor Statistics. 02 (e) Benefit adjustments under this section shall terminate the last day of the 03 month following the date on which a disabled member is no longer receiving a 04 disability benefit under AS 39.35.890, unless the member is a disabled peace officer or 05 fire fighter and has chosen a retirement benefit under AS 39.35.890(h)(2). 06 * Sec. 58. AS 39.35.892(b), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 07 (b) The first payment of the surviving spouse's pension or of a dependent 08 child's pension shall be made for the month following the month in which the 09 employee dies. Payments [, AND PAYMENT] shall cease on the last day of the 10 month in which there is no longer an eligible spouse or eligible dependent child, 11 or the last day of the month following the earliest date [TO BE MADE 12 BEGINNING WITH THE MONTH IN WHICH] the employee would have first 13 qualified for normal retirement if the employee had survived, whichever day is 14 sooner. 15 * Sec. 59. AS 39.35.892(c), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 16 (c) The monthly survivor's pension in (b) of this section for survivors of 17 employees who were not peace officers or fire fighters is 40 percent of the employee's 18 monthly compensation in the month in which the employee dies. The monthly 19 survivor's pension in (b) of this section for survivors of employees who were peace 20 officers or fire fighters is 50 percent of the monthly compensation in the month in 21 which the employee dies. While the monthly survivor's pension is being paid, the 22 survivor is not entitled to elect distributions from the employee's individual 23 contribution account under AS 39.35.810, except as required by AS 39.35.840. 24 While the monthly survivor's pension is being paid, the employer shall make 25 contributions on behalf of the employee's surviving spouse and employee's 26 surviving dependent children [BENEFICIARIES BASED ON THE DECEASED 27 EMPLOYEE'S GROSS MONTHLY COMPENSATION AT THE TIME OF 28 OCCUPATIONAL DEATH 29 (1) TO THE EMPLOYEE'S INDIVIDUAL ACCOUNT UNDER 30 AS 39.35.730, WITHOUT DEDUCTION FROM THE SURVIVOR'S PENSION; 31 AND 01 (2)] to the appropriate accounts and funds under AS 39.35.750(b) - (e). 02 * Sec. 60. AS 39.35.892(e), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 03 (e) On the date the employee would have first qualified for normal 04 retirement [OF THE EMPLOYEE WOULD HAVE OCCURRED] if the employee 05 had survived [LIVED], the retirement benefit shall be determined under the 06 provisions of AS 39.35.820 - 39.35.840, 39.35.870, and 39.35.880. In addition to 07 payment of the member's individual account, the surviving spouse or, if there is 08 no surviving spouse, the surviving dependent children of the member, shall 09 receive an additional benefit in an amount equal to the accumulated 10 contributions that would have been made to the deceased member's individual 11 account under AS 39.35.730(a) and 39.35.750(a), based on the deceased member's 12 gross monthly compensation at the time of occupational death, from the time of 13 the member's death to the date the member would have first qualified for normal 14 retirement if the member had survived. Earnings shall be allocated to the 15 additional benefit calculated under this subsection based on the actual rate of 16 return, net of expenses, of the trust account established under AS 39.35.750(e) 17 over the period that such contributions would have been made. This additional 18 amount shall be paid in the same manner as determined for the member's 19 individual account under AS 39.35.820 - 39.35.860. An employee who died and 20 whose survivors receive occupational death benefits under this section shall be 21 considered to have retired directly from the plan on the date the [NORMAL 22 RETIREMENT OF THE] employee would have first qualified for normal 23 retirement [OCCURRED] if the employee had survived. The period of time during 24 which a survivor's pension is paid under this section constitutes membership 25 service for the purposes of determining vesting in employer contributions under 26 AS 39.35.790(b) and eligibility for retirement and medical benefits under this 27 chapter and AS 39.30.300 - 39.30.495 [LIVED]. 28 * Sec. 61. AS 39.35 is amended by adding new sections to read: 29 Sec. 39.35.893. Survivor's pension adjustment. (a) Once each year, the 30 administrator shall increase payments to a person 60 years of age or older receiving a 31 survivor's pension under AS 39.35.890(k) or 39.35.892(c) and to a person who has 01 received a survivor's pension under AS 39.35.890(k) or 39.35.892(c) for at least five 02 years, who is not otherwise eligible for an increase under this section. 03 (b) The amount of the increase is a percentage of the current survivor's 04 pension equal to the lesser of 50 percent of the increase in the cost of living in the 05 preceding calendar year or six percent. 06 (c) If a survivor was not receiving a pension during the entire preceding 07 calendar year, the increase in the survivor's pension under this section shall be 08 adjusted by multiplying it by a fraction, the numerator of which is the number of 09 months for which the pension was received in the preceding calendar year and the 10 denominator of which is 12. 11 (d) The administrator shall increase the initial survivor's pension paid to a 12 survivor of a member who died while receiving disability benefits by a percentage 13 equal to the total cumulative percentage that has been applied to the member's 14 disability benefit under AS 39.35.891. 15 (e) An increase in benefit payments under this section is effective July 1 of 16 each year and is based on the percentage increase in the Consumer Price Index for 17 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 18 calendar year, as determined by the United States Department of Labor, Bureau of 19 Labor Statistics. 20 (f) Pension adjustments under this section shall terminate the last day of the 21 month following the date on which a survivor is no longer receiving a survivor's 22 pension under AS 39.35.890(k) or 39.35.892(c). 23 Sec. 39.35.894. Premiums for retiree major medical insurance coverage 24 upon termination of disability benefits or survivor's pension. The premium for 25 retiree major medical insurance coverage payable by an employee whose disability 26 benefit is terminated under AS 39.35.890(g) or by an eligible survivor whose survivor 27 pension is terminated under AS 39.35.890(k) or 39.35.892(e) when the employee 28 would have been eligible for normal retirement if the employee had survived shall be 29 determined under AS 39.35.880(g)(2) as if the employee or survivor were eligible for 30 Medicare. 31 * Sec. 62. AS 39.35.910, as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 01 Sec. 39.35.910. Nonguarantee of returns, rates, or benefit amounts. The 02 plan created by AS 39.35.700 - 39.35.990 is, with respect to individual accounts, 03 treated as a defined contribution plan and [PLAN,] not a defined benefit plan. The 04 amount of money in the individual account of a participant depends on the amount of 05 contributions and the rate of return from investments of the account that varies over 06 time. If benefits are paid in the form of an annuity, the benefit amount payable is 07 dependent on the amount of money in the account and the interest rates applied and 08 service fees charged by the annuity payor at the time the annuity is purchased from 09 the carrier and benefits are first paid. Nothing in this plan guarantees a participant 10 (1) a rate of return or interest rate other than that actually earned by the 11 account of the participant, less applicable administrative expenses; or 12 (2) an annuity based on interest rates or service charges other than 13 interest rates available from and service charges by the annuity payor in effect at the 14 time the annuity is paid. 15 * Sec. 63. AS 39.35.940(c), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 16 (c) Each eligible member who elects to participate in the defined contribution 17 retirement plan shall have transferred to a new account the employee contribution 18 account balance held in trust for the member under the defined benefit retirement plan 19 of the public employees' retirement system. A matching employer contribution shall 20 be made on behalf of that employee to the new account. The employer shall make the 21 matching contribution from funds other than the trust funds of the defined benefit 22 retirement plan established under AS 39.35.095 - 39.35.680. The amount of the 23 matching employer contribution shall be subject to, and may not exceed, the 24 limitation of 26 U.S.C. 415(c) during the applicable limitation year in which the 25 contribution is made. 26 * Sec. 64. AS 39.35.940(d), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 27 (d) Upon a transfer, all membership service previously earned under the 28 defined benefit retirement plan shall be nullified for purposes of entitlement to a future 29 benefit under the defined benefit retirement plan but shall be credited for purposes of 30 determining vesting in employer contributions under AS 39.35.790(b) and 31 eligibility to elect medical benefits under AS 39.35.870. Membership service allowed 01 for credit toward medical benefits does not include any service credit purchased for 02 employment by an employer who is not a participating employer in this chapter. 03 * Sec. 65. AS 39.35.940(h), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 04 (h) An employee who is eligible to elect transfer to the defined 05 contribution plan must make the election not later than 12 months after the 06 employee's employer notifies the administrator that the employee's employer 07 consents to transfers of its employees under (i) of this section. The election to 08 participate in the defined contribution retirement plan must be made in writing on 09 forms and in the manner prescribed by the administrator. Before accepting an election 10 to participate in the defined contribution retirement plan, the administrator must 11 provide the employee planning on making an election to participate in the defined 12 contribution retirement plan with information, including calculations to illustrate the 13 effect of moving the employee's retirement plan from the defined benefit retirement 14 plan to the defined contribution retirement plan as well as other information to clearly 15 inform the employee of the potential consequences of the employee's election. An 16 election made under this subsection to participate in the defined contribution 17 retirement plan is irrevocable. Upon making the election, the participant shall be 18 enrolled as a member of the defined contribution retirement plan, the member's 19 participation in the plan shall be governed by the provisions of AS 39.35.700 - 20 39.35.990, and the member's participation in the defined benefit retirement plan under 21 AS 39.35.115 shall terminate. The participant's enrollment in the defined contribution 22 retirement plan shall be effective the first day of the month after the administrator 23 receives the completed enrollment forms. An election made by an eligible member 24 who is married is not effective unless the election is signed by the individual's spouse. 25 * Sec. 66. AS 39.35.940(i), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to read: 26 (i) A member may make an election under this section only if the member's 27 employer participates in both the defined benefit retirement plan and the defined 28 contribution retirement plan and consents to transfers under this section. The employer 29 shall notify the administrator if the employer consents to allowing the employer's 30 members to choose to transfer from the defined benefit retirement plan to the defined 31 contribution retirement plan under this section. The initial period during which the 01 employer's members may choose to transfer commences on the first day of the 02 month following the administrator's receipt of notice under this subsection and 03 continues for 12 months. An employer may consent to a second period of 12 04 months during which the employer's members may choose to transfer from the 05 defined benefit retirement plan to the defined contribution retirement plan under 06 this section. The second period commences on the first day of the month 07 following the administrator's receipt of notice under this subsection and 08 continues for 12 months. An employer's initial notice to allow transfers is 09 irrevocable and applicable to all eligible employees of the employer. An employer's 10 second notice to allow transfers under this section is irrevocable and applicable 11 only to those eligible employees to whom the initial period of transfer was not 12 available. 13 * Sec. 67. AS 39.35.940(j), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended by 14 adding a new paragraph to read: 15 (3) "membership service" means service with a participating employer 16 under AS 39.35.095 - 39.35.680 for which contributions have been paid and does not 17 include any service for which reinstatement indebtedness has not been fully paid. 18 * Sec. 68. AS 39.35 is amended by adding new sections to read: 19 Sec. 39.35.957. Designation of eligible employees, agreement to contribute, 20 and amendment of participation. (a) A political subdivision or public organization 21 participating in the defined contribution retirement plan under AS 39.35.700 - 22 39.35.990 shall designate the departments, groups, or other classifications of 23 employees eligible to participate in the plan and, by participating, shall legally be 24 presumed to have agreed to make contributions each year in the amounts required for 25 members of the plan under AS 39.35.750. 26 (b) If the employer does not participate in the defined benefit retirement plan 27 under AS 39.35.095 - 39.35.680, an employee who is eligible under (a) of this section 28 and who is a member of the defined benefit retirement plan under AS 39.35.095 - 29 39.35.680 does not accrue credited service or make contributions under that defined 30 benefit retirement plan, but shall be a member of the defined contribution retirement 31 plan under AS 39.35.700 - 39.35.990 and make contributions under that plan. 01 (c) An employer may request to amend its participation in the plan to add or 02 exclude departments, groups, or other classifications of employees by filing a 03 resolution as provided by AS 39.35.950 or 39.35.955 with the administrator. 04 Sec. 39.35.958. Termination of participation in the plan. (a) A political 05 subdivision or public organization may request that its participation in the plan be 06 terminated. The request may be made only after adoption of a resolution by the 07 legislative body of the political subdivision and approval of the resolution by the 08 person required by law to approve the resolution, or, in the case of a public 09 organization, after adoption of a resolution by the governing body of that public 10 organization. A certified copy of the resolution shall be filed with the administrator. 11 (b) If contributions are not transmitted to the plan within the prescribed time 12 limit, the commissioner of administration may grant an extension and shall assess 13 interest on the outstanding contributions at the rate established under AS 39.35.610. If 14 the political subdivision or public organization is in default at the end of the extension, 15 participation in the plan is terminated, and it shall be sent notice of termination. 16 (c) When an employer's participation in the plan is terminated, or when an 17 employer terminates coverage of a department, group, or other classification of 18 employees under AS 39.35.957(c), the administrator shall assess the employer an 19 amount that the administrator determines is actuarially required to fully fund the costs 20 to the plan for employees whose coverage is terminated, including the cost of 21 providing the employer's share of retiree health benefits under AS 39.35.880, 22 occupational disability and occupational death benefits under AS 39.35.890 and 23 39.35.892, and retirement benefits elected under AS 39.35.890(h)(2). 24 (d) An employee whose coverage under the plan is terminated as a result of 25 termination of an employer's participation under this section or amendment of the 26 employer's agreement under AS 39.35.957(c) shall be considered fully vested in 27 employer contributions under AS 39.35.790(b) and in the individual account 28 established for the employee under AS 39.30.370. If the employee is later employed 29 with a participating employer, the employee's membership service earned under the 30 plan during employment with a terminated employer shall be credited for purposes of 31 determining vesting in employer contributions under AS 39.35.790(b) and eligibility 01 for retirement and medical benefits under this chapter and AS 39.30.300 - 39.30.495. 02 * Sec. 69. AS 39.35.990(16), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to 03 read: 04 (16) "member" or "employee" means a person who is eligible to 05 participate in the plan and who is covered by [AN EMPLOYEE OF AN 06 EMPLOYER OR FORMER EMPLOYEE OF AN EMPLOYER WHO RETAINS A 07 RIGHT TO BENEFITS UNDER] the plan, but does not include full-time or part-time 08 instructors of the Department of Labor and Workforce Development and the 09 Department of Education and Early Development in positions that require a 10 teaching certificate; 11 * Sec. 70. AS 39.35.990(20), as enacted by sec. 122, ch. 9, FSSLA 2005, is amended to 12 read: 13 (20) "peace officer" or "fire fighter" means an employee occupying a 14 position as a peace officer, chief of police, regional public safety officer, 15 correctional officer, correctional superintendent, fire fighter, fire chief, or 16 probation officer, but does not include a village public safety officer employed by 17 a village public safety officer program established under AS 18.65.670 [HAS THE 18 MEANING GIVEN IN AS 39.35.680]; 19 * Sec. 71. AS 39.45 is amended by adding a new section to read: 20 Sec. 39.45.055. Appeals. A final decision made under AS 39.45.010 - 21 39.45.060 is subject to appeal under AS 44.64. 22 * Sec. 72. AS 44.64.030(a) is amended by adding new paragraphs to read: 23 (36) AS 14.25.175 (waiver of adjustments under teachers' defined 24 benefit plan); 25 (37) AS 39.30.165 (supplemental benefits system); 26 (38) AS 39.30.335 (teachers' and public employees' health 27 reimbursement arrangement plan); 28 (39) AS 39.35.522 (waiver of adjustments under public employees' 29 defined benefit plan); 30 (40) AS 39.45.055 (public employees' deferred compensation 31 program). 01 * Sec. 73. The uncodified law of the State of Alaska enacted in sec. 134, ch. 9, FSSLA 02 2005, is amended to read: 03 Sec. 134. EMPLOYER CONTRIBUTIONS FOR OCCUPATIONAL 04 DISABILITY AND DEATH BENEFITS IN THE PUBLIC EMPLOYEES' DEFINED 05 CONTRIBUTION RETIREMENT PLAN FOR THE FIRST FISCAL YEAR THE 06 PLAN IS IN EFFECT. Notwithstanding AS 39.35.750(e), added by sec. 122, ch. 9, 07 FSSLA 2005 [OF THIS ACT], for the first fiscal year in which the public employees' 08 defined contribution retirement plan is in effect, the employer contribution to fully 09 fund the cost of providing occupational disability and occupational death benefits 10 under AS 39.35.890 and 39.35.892 shall be equal to 11 (1) 0.73 [0.4] percent of the compensation for peace officers and fire 12 fighters who are members in the plan; and 13 (2) 0.37 [0.3] percent of the compensation for all other employees who 14 are members in the plan. 15 * Sec. 74. AS 14.25.045, 14.25.570; and AS 39.35.050(a) are repealed. 16 * Sec. 75. AS 14.25.070(b) and AS 39.35.270(b) are repealed. 17 * Sec. 76. AS 39.35.375(f) is repealed July 1, 2010. 18 * Sec. 77. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 EMPLOYER CONTRIBUTIONS FOR OCCUPATIONAL DISABILITY AND 21 OCCUPATIONAL DEATH BENEFITS IN THE TEACHERS' DEFINED CONTRIBUTION 22 RETIREMENT PLAN FOR THE FIRST FISCAL YEAR THE PLAN IS IN EFFECT. 23 Notwithstanding AS 14.25.350(e), added by sec. 8 of this Act, for the first fiscal year in which 24 the teachers' defined contribution retirement plan is in effect, the employer contribution to 25 fully fund the cost of providing occupational disability and occupational death benefits under 26 AS 14.25.485 and 14.25.487 shall be equal to 0.26 percent of the amount of compensation 27 paid to all teachers who work for the employer in that year and are members of the plan. 28 * Sec. 78. The uncodified law of the State of Alaska is amended by adding a new section to 29 read: 30 RETROACTIVITY. Section 75 of this Act is retroactive to July 1, 2005.