HCS CSSB 141(FIN) am H: "An Act relating to the teachers' and public employees' retirement systems and creating defined contribution and health reimbursement plans for members of the teachers' retirement system and the public employees' retirement system who are first hired after July 1, 2005; relating to university retirement programs; establishing the Alaska Retirement Management Board to replace the Alaska State Pension Investment Board, the Alaska Teachers' Retirement Board, and the Public Employees' Retirement Board; adding appeals of the decisions of the administrator of the teachers' and public employees' retirement systems to the jurisdiction of the office of administrative hearings; providing for nonvested members of the teachers' retirement system defined benefit plans to transfer into the teachers' retirement system defined contribution plan and for nonvested members of the public employees' retirement system defined benefit plans to transfer into the public employees' retirement system defined contribution plan; providing for political subdivisions and public organizations to request to participate in the public employees' defined contribution retirement plan; and providing for an effective date."
00 HOUSE CS FOR CS FOR SENATE BILL NO. 141(FIN) am H 01 "An Act relating to the teachers' and public employees' retirement systems and creating 02 defined contribution and health reimbursement plans for members of the teachers' 03 retirement system and the public employees' retirement system who are first hired after 04 July 1, 2005; relating to university retirement programs; establishing the Alaska 05 Retirement Management Board to replace the Alaska State Pension Investment Board, 06 the Alaska Teachers' Retirement Board, and the Public Employees' Retirement Board; 07 adding appeals of the decisions of the administrator of the teachers' and public 08 employees' retirement systems to the jurisdiction of the office of administrative 09 hearings; providing for nonvested members of the teachers' retirement system defined 10 benefit plans to transfer into the teachers' retirement system defined contribution plan 11 and for nonvested members of the public employees' retirement system defined benefit 12 plans to transfer into the public employees' retirement system defined contribution
01 plan; providing for political subdivisions and public organizations to request to 02 participate in the public employees' defined contribution retirement plan; and providing 03 for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 14.25 is amended by adding new sections to read: 06 Article 1. Administration of the Teachers' Retirement System. 07 Sec. 14.25.001. Purpose. The purpose of this chapter is to encourage 08 qualified teachers to enter and remain in service with participating employers by 09 establishing plans for the payment of retirement and death benefits to or on behalf of 10 the members. 11 Sec. 14.25.002. Attorney general. The attorney general of the state is the 12 legal counsel for the system and shall advise the administrator and represent the 13 system in a legal proceeding. 14 Sec. 14.25.003. Administrator. (a) The commissioner of administration or 15 the commissioner's designee is the administrator of the system. 16 (b) The commissioner of administration shall adopt regulations to govern the 17 operation of the system. 18 Sec. 14.25.004. Powers and duties of the administrator. (a) The 19 administrator shall 20 (1) establish and maintain an adequate system of accounts; 21 (2) transmit the funds deposited in the system to the retirement fund 22 established and maintained by the Alaska Retirement Management Board; 23 (3) approve or disapprove claims for retirement benefits; 24 (4) make payments for the various purposes specified; 25 (5) submit periodic reports or statements of account that are needed; 26 (6) issue a statement of account to an employee not less than once each 27 year showing the amount of the employee's contributions to the applicable plan in the 28 system; 29 (7) formulate and recommend to the commissioner of administration 30 regulations to govern the operation of the system;
01 (8) as soon as possible after the close of each fiscal year, and not later 02 than six months after the close of each fiscal year, send to the governor and the 03 legislature an annual statement on the operations of each of the plans in the system 04 containing 05 (A) a balance sheet; 06 (B) a statement of income and expenditures for the previous 07 fiscal year; 08 (C) a report on valuation of trust fund assets; 09 (D) a summary of assets held in the trust fund listed by the 10 categories of investment, as provided by the Alaska Retirement Management 11 Board; 12 (E) other statistical financial data that are necessary for proper 13 understanding of the financial condition of the system as a whole and each plan 14 in the system and the result of its operations; 15 (9) engage an independent certified public accountant to conduct an 16 annual audit of each plan's accounts and the annual report of the system's financial 17 condition and activity; 18 (10) report to the Legislative Budget and Audit Committee concerning 19 the condition and administration of each plan and distribute the report to the members 20 of each plan in the system; 21 (11) publish an information handbook for each plan in the system at 22 intervals that the administrator considers appropriate; 23 (12) meet at least annually with the board to review the condition and 24 management of the retirement systems and to review significant changes to policies, 25 regulations, or benefits; and 26 (13) do whatever else may be necessary to carry out the purposes of 27 each plan in the system. 28 (b) The administrator is authorized to charge fees necessary to members' 29 accounts to cover the ongoing cost of operating each plan in the system. 30 (c) The administrator is authorized to contract with public and private entities 31 to provide record keeping, benefits payments, and other functions necessary for the
01 administration of each plan in the system. 02 Sec. 14.25.005. Regulations. (a) Regulations adopted by the commissioner 03 of administration under this chapter relate to the internal management of a state 04 agency, and the adoption of the regulations is not subject to AS 44.62 (Administrative 05 Procedure Act). 06 (b) Notwithstanding (a) of this section, a regulation adopted under this chapter 07 shall be published in the Alaska Administrative Register and Code for informational 08 purposes. 09 (c) Each regulation adopted under this chapter must conform to the style and 10 format requirements of the drafting manual for administrative regulations that is 11 published under AS 44.62.050. 12 (d) At least 30 days before the adoption, amendment, or repeal of a regulation 13 under this chapter, the commissioner of administration shall provide notice of the 14 action that is being considered. The notice shall be 15 (1) posted in public buildings throughout the state; 16 (2) published in one or more newspapers of general circulation in each 17 judicial district of the state; 18 (3) mailed to each person or group that has filed a request for notice of 19 proposed action with the commissioner of administration; and 20 (4) furnished to each member of the legislature and to the Legislative 21 Affairs Agency. 22 (e) Failure to mail notice to a person as required under (d)(3) of this section 23 does not invalidate an action taken by the commissioner of administration. 24 (f) The commissioner of administration may hold a hearing on a proposed 25 regulation. 26 (g) A regulation adopted under this chapter takes effect 30 days after adoption 27 by the commissioner of administration. 28 (h) Notwithstanding the other provisions of this section, a regulation may be 29 adopted, amended, or repealed, effective immediately, as an emergency regulation by 30 the commissioner of administration. For an emergency regulation to be effective the 31 commissioner must find that the adoption, amendment, or repeal of the regulation is
01 necessary for the immediate preservation of the orderly operation of the system. The 02 commissioner shall, within 10 days after adoption of an emergency regulation, give 03 notice of the adoption under (d) of this section. 04 (i) In this section, "regulation" has the meaning given in AS 44.62.640(a). 05 Sec. 14.25.006. Appeals. An employer, member, annuitant, or beneficiary 06 may appeal a decision made by the administrator to the office of administrative 07 hearings established under AS 44.64. An aggrieved party may appeal a final decision 08 to the superior court. 09 Sec. 14.25.007. Investment management of retirement system funds. The 10 Alaska Retirement Management Board established under AS 37.10.210 is the 11 fiduciary of the system funds. 12 Sec. 14.25.008. Definitions. In AS 14.25.001 - 14.24.008, 13 (1) "plan" means the retirement plan established in AS 14.25.009 - 14 14.25.220 or the retirement plan established in AS 14.25.310 - 14.25.590; 15 (2) "system" means all retirement plans established under the teachers' 16 retirement system. 17 Article 2. Teachers' Defined Benefit Retirement Plan. 18 Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 19 AS 14.25.009 - 14.25.220 apply only to members first hired before July 1, 2005 or 20 members first hired on or after July 1, 2005, who choose under AS 14.25.315 to 21 participate in the defined benefit plan. 22 * Sec. 2. AS 14.25.010 is amended to read: 23 Sec. 14.25.010. Retirement plan [SYSTEM] established; federal 24 qualification requirements. (a) A joint-contributory retirement plan [SYSTEM] for 25 teachers of the state is created. 26 (b) The retirement plan [SYSTEM] established by AS 14.25.009 - 14.25.220 27 [THIS CHAPTER] is intended to qualify under 26 U.S.C. 401(a) and 414(d) (Internal 28 Revenue Code) as a qualified retirement plan established and maintained by the state 29 for its employees, for the employees of school districts and regional educational 30 attendance areas in the state, and for the employees of other employers whose 31 participation is authorized by AS 14.25.009 - 14.25.220 [THIS CHAPTER] and who
01 participate in this plan [SYSTEM]. 02 (c) An amendment to AS 14.25.009 - 14.25.220 [THIS CHAPTER] does not 03 provide a person with a vested right to a benefit if the Internal Revenue Service 04 determines that the amendment will result in disqualification of the plan under the 05 Internal Revenue Code. 06 * Sec. 3. AS 14.25.012(b) is amended to read: 07 (b) The plan [SYSTEM] created in AS 14.25.009 - 14.25.220 became 08 effective as of July 1, 1955, at which time contributions by the participating employers 09 and members began. 10 * Sec. 4. AS 14.25.012 is amended by adding a new subsection to read: 11 (c) Employees first hired after June 30, 2005, are not eligible to participate in 12 the plan established in AS 14.25.009 - 14.25.220 unless they choose to do so under 13 AS 14.25.315. 14 * Sec. 5. AS 14.25.040(a) is amended to read: 15 (a) Unless a teacher or member participates in a [HAS ELECTED TO 16 PARTICIPATE IN THE OPTIONAL] university retirement program under 17 AS 14.40.661 - 14.40.799, [OR] has filed an election under AS 14.25.043(b), or has 18 elected to participate in the plan established in AS 14.25.310 - 14.25.590, a teacher 19 or member contracting for service with a participating employer is subject to 20 AS 14.25.009 - 14.25.220 [THIS CHAPTER]. 21 * Sec. 6. AS 14.25.040(d) is amended to read: 22 (d) A person who is employed at least half-time in the plan [SYSTEM] during 23 the same period that the person is employed at least half-time in a position in the 24 public employees' retirement plan [SYSTEM] under AS 39.35.095 - 39.35.680 25 [AS 39.35] shall receive credited service under each plan [SYSTEM] for half-time 26 employment. However, the amount of credited service a person receives under the 27 public employees' retirement plan [SYSTEM] during a school year may not exceed 28 the amount necessary, when added to the amount of credited service earned during the 29 school year under the plan [SYSTEM], to equal one year of credited service. A 30 person who was employed at least half-time in a position in the public employees' 31 retirement plan [SYSTEM] under AS 39.35.095 - 39.35.680 [AS 39.35] in the same
01 period that the person was employed at least half-time in a position in this plan 02 [SYSTEM] may claim credited service in both plans [SYSTEMS] for employment 03 before May 31, 1989. To obtain this credited service, the person shall claim the 04 service and verify the period of half-time employment. When eligibility for half-time 05 service credit has been established, an indebtedness shall be determined to the 06 retirement plan [SYSTEM] in which the person did not participate. The amount of 07 the indebtedness is the full actuarial cost of providing benefits for the credited service 08 claimed. Interest as prescribed by regulation accrues on that indebtedness beginning 09 on the later of July 1, 1989, or the date on which the member is first eligible to claim 10 the service. Any outstanding indebtedness existing at the time the person retires will 11 require an actuarial adjustment to the benefits payable based on that service. 12 * Sec. 7. AS 14.25.070 is amended to read: 13 Sec. 14.25.070. Contributions by employer. An employer shall contribute to 14 the plan [SYSTEM] an amount equal to the percentage, as certified by the board 15 [ADMINISTRATOR], of the sum total of the base salaries of all members that is 16 required in addition to member contributions to provide the benefits of AS 14.25.009 - 17 14.25.220 [THIS CHAPTER] times the sum total of the base salaries paid to members, 18 including any adjustments to contributions required by AS 14.25.173(a), by the 19 employer. 20 * Sec. 8. AS 14.25.070 is amended by adding a new subsection to read: 21 (b) When added to the member contribution determined under AS 14.25.050, 22 the employer contribution may not result in an amount less than the amount required 23 as actuarially calculated to fully fund the future liabilities of active members nor may 24 the employer contribution percentage under (a) of this section be set at less than 11 25 percent. 26 * Sec. 9. AS 14.25.075(a) is amended to read: 27 (a) An employee who is eligible to purchase credited service under 28 AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 29 under AS 14.25.048, 14.25.050, 14.25.060, 14.25.061, [14.25.062,] 14.25.100, or 30 14.25.107, or a teacher who is eligible to purchase credited service under 31 AS 14.20.345, AS 14.25.050, [14.25.062,] or 14.25.105, in lieu of making payments
01 directly to the plan, may elect to have the member's employer make payments as 02 provided in this section. 03 * Sec. 10. AS 14.25.075(b) is amended to read: 04 (b) A member may elect to have the employer make payments for all or any 05 portion of the amounts payable for the member's purchase of credited service through 06 a salary reduction program as follows: 07 (1) the amounts paid under a salary reduction program are in lieu of 08 contributions by the member making the election; the electing member's salary or 09 other compensation shall be reduced by the amount paid by the employer under this 10 subsection; 11 (2) the member shall make an irrevocable election under this 12 subsection to purchase credited service as permitted in AS 14.20.345, AS 14.25.047, 13 14.25.048, 14.25.050, 14.25.060, 14.25.061, [14.25.062,] 14.25.100, 14.25.105, or 14 14.25.107 before the member's termination of employment; the irrevocable election 15 must specify the number of payroll periods that deductions will be made from the 16 member's compensation and the dollar amount of deductions for each payroll period 17 during the specified number of payroll periods; the deductions made under this 18 paragraph cease upon the earlier of the member's termination of employment with the 19 employer or the member's death; amounts paid by an employer under (f) of this 20 section may not be applied toward the payment of the dollar amount of the deductions 21 representing the portion of the credited service that is being purchased by the member 22 through payroll deduction in accordance with the member's irrevocable election under 23 this paragraph; 24 (3) amounts paid by an employer under this subsection shall be treated 25 as employer contributions for the purpose of determining tax treatment under 26 26 U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 27 may not be included in the member's gross income for income tax purposes until those 28 amounts are distributed by refund or retirement benefit payments. 29 * Sec. 11. AS 14.25.075(e) is amended to read: 30 (e) Contributions to the plan [SYSTEM] to purchase credited service under 31 this section do not qualify for treatment under this section if recognition of that service
01 would cause a member to receive a retirement benefit for the same service from the 02 plan [SYSTEM] and from one or more other retirement plans or systems of the state. 03 * Sec. 12. AS 14.25.075(f) is amended to read: 04 (f) The administrator may accept rollover contributions from a member [, 05 AND DIRECT TRANSFERS AS DESCRIBED IN THIS SUBSECTION, FOR THE 06 PURCHASE, IN WHOLE OR IN PART, OF FORFEITED CREDITED SERVICE 07 UNDER THIS SECTION FOR THE REINSTATEMENT, IN WHOLE OR IN PART, 08 OF FORFEITED CREDITED SERVICE UNDER AS 14.25.062]. Contributions 09 made under this subsection may not be applied to purchase service being paid under 10 (b) of this section. A rollover contribution [OR TRANSFER] as described in this 11 subsection shall be treated as employer contributions for the purpose of determining 12 tax treatment under the Internal Revenue Code and may be made by any one or a 13 combination of the following methods: 14 (1) subject to the limitations prescribed in 26 U.S.C. 402(c), accepting 15 eligible rollover distributions directly from one or more retirement programs of 16 another employer that are qualified under 26 U.S.C. 401(a) or accepting rollovers 17 directly from a member; 18 (2) subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii), 19 accepting from a member conduit rollover contributions that are received by the 20 member from one or more conduit rollover individual retirement accounts previously 21 established by the member; 22 (3) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 23 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 24 member, on or after January 1, 2002, from a tax sheltered annuity described in 26 25 U.S.C. 403(b); 26 (4) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 27 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 28 member, on or after January 1, 2002, from an eligible deferred compensation plan of a 29 tax-exempt organization or a state or local government described in 26 U.S.C. 457(b); 30 (5) accepting direct trustee-to-trustee transfer from an account 31 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska
01 Supplemental Annuity Plan). 02 * Sec. 13. AS 14.25.075(i) is amended to read: 03 (i) On satisfaction of the eligibility requirements of AS 14.20.345, 04 AS 14.25.047, 14.25.048, 14.25.050, 14.25.060, 14.25.061, [14.25.062,] 14.25.100, 05 14.25.105, or 14.25.107, the requirements of this section, and the administrative filing 06 requirements specified by the administrator, the plan shall adjust the member's 07 credited service history and add any additional service credits acquired. 08 * Sec. 14. AS 14.25.115(a) is amended to read: 09 (a) A teacher in membership service on or after July 1, 1977, who is appointed 10 to retirement on or after July 1, 1978, may elect to apply unused sick leave credit in 11 computing the total number of years of credited service under AS 14.25.110(d) except 12 for sick leave earned while participating in a [THE OPTIONAL] university retirement 13 program under AS 14.40.661 - 14.40.799. To obtain service credit for unused sick 14 leave, a teacher must apply to the administrator not [NO] later than one year after 15 appointment to retirement. Unused sick leave shall be credited on a day-for-day basis 16 in accordance with the table for service after July 1, 1969, contained in 17 AS 14.25.220(45). Teacher contributions may not be required for credited unused sick 18 leave. 19 * Sec. 15. AS 14.25.143(a), as that subsection read following amendment by sec. 3, ch. 20 146, SLA 1980, until amended by sec. 12, ch. 106, SLA 1988, is amended to read: 21 (a) When the administrator determines that the cost of living has increased and 22 that the financial condition of the retirement fund permits, the administrator shall 23 increase benefit payments to persons receiving benefits under this plan. For 24 purposes of this subsection, the financial condition of the fund would only permit 25 an increase in benefits when the ratio of total fund assets to the accrued liability 26 meets or exceeds 105 percent. In this subsection, "accrued liability" means the 27 present value of all member benefits accrued by member service in this plan 28 [SYSTEM]. 29 * Sec. 16. AS 14.25.143(a), as that subsection read following amendment by sec. 12, ch. 30 106, SLA 1988, until amended by sec. 12, ch. 97, SLA 1990, is amended to read: 31 (a) When the administrator determines that the cost of living has increased and
01 that the financial condition of the retirement fund [SYSTEM] permits, the 02 administrator shall increase benefit payments to persons receiving benefits under this 03 plan. For purposes of this subsection, the financial condition of the fund would 04 only permit an increase in benefits when the ratio of total fund assets to the 05 accrued liability meets or exceeds 105 percent. In this subsection, "accrued 06 liability" means the present value of all member benefits accrued by member 07 service in this plan [SYSTEM]. 08 * Sec. 17. AS 14.25.145 is amended to read: 09 Sec. 14.25.145. Interest on individual accounts. Interest shall be credited to 10 each teacher's account at the end of each school year at the rate prescribed by the 11 board [REGULATION] for that year. 12 * Sec. 18. AS 14.25.150 is amended by adding a new subsection to read: 13 (c) A member who has received a refund of contributions in accordance with 14 this section forfeits corresponding credited service under AS 14.25.009 - 14.25.220. 15 * Sec. 19. AS 14.25.168(a) is repealed and reenacted to read: 16 (a) Except as provided in (c) of this section, the following persons are entitled 17 to major medical insurance coverage under this section: 18 (1) for teachers first hired before July 1, 1990, 19 (A) a teacher who is receiving a monthly benefit from the plan 20 and who has elected coverage; 21 (B) the spouse and dependent children of the teacher described 22 in (A) of this paragraph; 23 (C) the surviving spouse of a deceased teacher who is receiving 24 a monthly benefit from the plan and who has elected coverage; 25 (D) the dependent children of a deceased teacher who are 26 dependent on the surviving spouse described in (C) of this paragraph; 27 (2) for teachers first hired on or after July 1, 1990, 28 (A) a teacher who is receiving a monthly benefit from the plan 29 and who has elected coverage for the teacher; 30 (B) the spouse of the teacher described in (A) of this paragraph 31 if the teacher elected coverage for the spouse;
01 (C) the dependent children of the teacher described in (A) of 02 this paragraph if the teacher elected coverage for the dependent children; 03 (D) the surviving spouse of a deceased teacher who is receiving 04 a monthly benefit from the plan and who has elected coverage; 05 (E) the dependent children of a deceased teacher who are 06 dependent on the surviving spouse described in (D) of this paragraph if the 07 surviving spouse has elected coverage for the dependent children. 08 * Sec. 20. AS 14.25.173(c) is amended to read: 09 (c) At least quarterly, [AT EACH REGULARLY SCHEDULED MEETING 10 OF THE TEACHERS' RETIREMENT BOARD,] the administrator shall report to the 11 commissioner of administration [BOARD] on all situations since the administrator's 12 last report in which an adjustment has been prohibited under (b) of this section. If the 13 commissioner of administration [BOARD] finds that there is reason to believe that 14 one or more of the conditions set out in (b) of this section have not been met, the 15 administrator shall notify the member or beneficiary that an adjustment will be made 16 to recover the overpayment. A member or beneficiary who receives notice of 17 adjustment under this subsection may file a request with the commissioner of 18 administration [APPEAL TO THE BOARD] for a waiver of the adjustment under 19 AS 14.25.175. An adjustment that requires the repayment of benefits may not be 20 required while the waiver request [APPEAL] is pending. 21 * Sec. 21. AS 14.25.175(a) is amended to read: 22 (a) Upon request [APPEAL] by an affected member or beneficiary under (b) 23 of this section, the commissioner of administration [BOARD] may waive an 24 adjustment or a portion of an adjustment made under AS 14.25.173 if, in the opinion 25 of the commissioner of administration [BOARD], 26 (1) the adjustment or portion of the adjustment will cause undue 27 hardship to the member or beneficiary; 28 (2) the adjustment was not the result of erroneous information supplied 29 by the member or beneficiary; 30 (3) before the adjustment was made, the member or beneficiary 31 received confirmation from the administrator that the member's or beneficiary's
01 records were correct; and 02 (4) the member or beneficiary had no reasonable grounds to believe 03 the records were incorrect before the adjustment was made. 04 * Sec. 22. AS 14.25.175(b) is amended to read: 05 (b) In order to obtain consideration of a waiver under this section, the affected 06 member or beneficiary shall file a request with [MUST APPEAL TO] the 07 commissioner of administration [BOARD] in writing within 30 days after receipt of 08 notice that the records have been adjusted. The ruling of the commissioner of 09 administration [BOARD] shall be in writing. 10 * Sec. 23. AS 14.25.175(c) is repealed and reenacted to read: 11 (c) A ruling of the commissioner of administration to deny a waiver under (b) 12 of this section may be appealed to the office of administrative hearings. 13 * Sec. 24. AS 14.25.175(d) is amended to read: 14 (d) The office of administrative hearings [BOARD] may reverse the 15 commissioner of administration's decision to deny a waiver and may impose 16 conditions on granting a waiver that it considers equitable. These conditions may 17 include requiring the member or beneficiary to make additional contributions to the 18 plan [SYSTEM]. 19 * Sec. 25. AS 14.25.210(a) is amended to read: 20 (a) A person who knowingly makes a false statement, or falsifies or permits to 21 be falsified any record of this plan [SYSTEM], in an attempt to defraud this plan 22 [SYSTEM], is guilty of a class A misdemeanor [AND FORFEITS ALL RIGHTS 23 UNDER THIS CHAPTER]. 24 * Sec. 26. AS 14.25.220(2) is amended to read: 25 (2) "actuarial adjustment" means the adjustment necessary to obtain 26 equality in value of the aggregate expected payments under two different forms of 27 pension payments, considering expected mortality and interest earnings on the basis of 28 assumptions, factors, and methods specified in regulations issued under the plan 29 [SYSTEM] that are formally adopted [UNDER AS 14.25.022] by the board and that 30 clearly preclude employer discretion in the determination of the amount of any 31 member's benefit;
01 * Sec. 27. AS 14.25.220(3) is amended to read: 02 (3) "administrator" means the [PERSON APPOINTED BY THE] 03 commissioner of administration or the commissioner's designee under AS 14.25.003 04 [AS 14.25.015]; 05 * Sec. 28. AS 14.25.220(9) is amended to read: 06 (9) "board" means the Alaska Retirement Management [ALASKA 07 TEACHERS' RETIREMENT] Board established under AS 37.10.210 [AS 14.25.035]; 08 * Sec. 29. AS 14.25.220(40) is amended to read: 09 (40) "supplemental contribution account" means the account 10 maintained by the plan [SYSTEM] to record the supplemental contributions of each 11 member, including interest and adjustments to the account [IN ACCORDANCE 12 WITH AS 14.25.170]; 13 * Sec. 30. AS 14.25.220(42) is amended to read: 14 (42) "teacher" and "member" are used interchangeably under this 15 chapter and mean a person eligible to participate in the system and who is covered by 16 the system, limited to 17 (A) a certificated full-time or part-time elementary or 18 secondary teacher, a certificated school nurse, or a certificated person in a 19 position requiring a teaching certificate as a condition of employment in a 20 public school of the state, the Department of Education and Early 21 Development, or the Department of Labor and Workforce Development; 22 (B) a full-time or part-time teacher of the University of Alaska 23 or a person occupying a full-time administrative position at the University of 24 Alaska that requires academic standing; the approval of the administrator must 25 be obtained before an administrative position qualifies for membership in the 26 system; however, a teacher or administrative person at the university who is 27 participating in a [THE OPTIONAL] university retirement program under 28 AS 14.40.661 - 14.40.799 is not a member under this system; 29 (C) a state legislator who elects membership under 30 AS 14.25.040(b); 31 (D) A full-time or part-time instructor of the Department of
01 Labor and Workforce Development who has a teaching certificate 02 regardless of whether the position as instructor requires a teaching 03 certificate as a condition of employment and who has earlier credited 04 service in the plan; 05 * Sec. 31. AS 14.25.220 is amended by adding a new paragraph to read: 06 (46) "plan" means the retirement benefit plan established under 07 AS 14.25.009 - 14.25.220. 08 * Sec. 32. AS 14.25 is amended by adding new sections to read: 09 Article 3. Teachers First Hired on or after July 1, 2005. 10 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 11 AS 14.25.310 - 14.25.590 apply only to teachers who first become members on or 12 after July 1, 2005, who fail to choose under AS 14.25.315 to participate in the defined 13 benefit plan or to members who transfer into the defined contribution plan under 14 AS 14.25.540. 15 Sec. 14.25.315. Retirement plan choice. (a) A teacher who is first hired on 16 or after July 1, 2005, may participate either in the defined benefits plan established in 17 AS 14.25.009 - 14.25.220 or the defined contribution plan established in AS 14.25.310 18 - 14.25.590. The teacher may make a choice between the available retirement plans 19 within 30 days after the date of employment, on a form provided by the administrator. 20 If the teacher fails to make a timely choice under this section, the provisions of 21 AS 14.25.310 - 14.25.590 shall apply to the teacher during the period of employment. 22 (b) After the 31st day of employment, the teacher may not change from one 23 retirement plan to another. The retirement plan determined to apply on the 31st day of 24 employment shall be considered to apply beginning on the first day the teacher is 25 employed and the day the retirement plan is determined. 26 (c) A teacher who terminates employment and is later rehired by an employer 27 may again exercise the option provided in this section only if, on the date of 28 reemployment, the option in this section is available to all teachers first hired at the 29 time the teacher is rehired. 30 (d) The administrator shall notify the employer of a teacher as soon as 31 possible regarding the retirement plan applicable to that teacher, and the employer
01 shall make the appropriate teacher and employer contributions required by the 02 applicable retirement plan for that teacher. 03 Sec. 14.25.320. Defined contribution retirement plan established. (a) A 04 defined contribution retirement plan for teachers of the state is created. 05 (b) The defined contribution retirement plan includes a plan in which savings 06 are accumulated in an individual account for the exclusive benefit of the member or 07 beneficiaries. The plan is established effective July 1, 2005, at which time 08 contributions by employers and members begin. 09 (c) The defined contribution retirement plan is intended to qualify under 26 10 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement plan 11 established and maintained by the state for its employees and for the employees of 12 school districts and regional educational attendance areas in the state. 13 (d) An amendment to the defined contribution retirement plan does not 14 provide a person with a vested right to a benefit if the Internal Revenue Service 15 determines that the amendment will result in disqualification of the plan under the 16 Internal Revenue Code. 17 Sec. 14.25.330. Membership. (a) A teacher who first becomes a member on 18 or after July 1, 2005, and fails under AS 14.25.315 to choose to participate in the 19 defined benefit retirement plan shall participate in the plan as a member of the defined 20 contribution retirement plan. 21 (b) A teacher who is participating in a university retirement program under 22 AS 14.40.661 - 14.40.799 may not participate as a member of the defined contribution 23 retirement plan. 24 Sec. 14.25.340. Contributions by members. (a) Each member shall 25 contribute to the member's individual account an amount equal to eight percent of the 26 member's compensation from July 1 to the following June 30. 27 (b) Subject to the limitations on contributions under AS 14.25.380, a member 28 may elect to make additional contributions to the member's individual account. 29 (c) The employer shall deduct the contribution from the member's 30 compensation at the end of each payroll period, and the contribution shall be credited 31 by the administrator to the member's individual account. The contributions shall be
01 deducted from member's compensation before the computation of applicable federal 02 taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 03 member may not have the option of making the payroll deduction directly in cash 04 instead of having the contribution picked up by the employer. 05 Sec. 14.25.345. Employment contributions mandatory. (a) Contributions 06 of members shall be made by payroll deductions. Each member shall be considered to 07 consent to payroll deductions. It is of no consequence that a payroll deduction may 08 cause the compensation paid in cash to a member to be reduced below the minimum 09 required by law. 10 (b) Payment of a member's compensation, less payroll deductions, is a full and 11 complete discharge and satisfaction of all claims and demands by the member relating 12 to remuneration of services during the period covered by the payment, except with 13 respect to the benefits provided under the plan. 14 Sec. 14.25.350. Contributions by employers. (a) An employer shall 15 contribute to each member's individual account an amount equal to five percent of the 16 member's compensation from July 1 to the following June 30. 17 (b) An employer shall also contribute an amount equal to 2.5 percent of each 18 member's compensation from July 1 to the following June 30 to pay for retiree major 19 medical insurance. This contribution shall be paid into the group health and life 20 benefits fund established by the commissioner of administration under AS 39.30.095 21 and shall be accounted for in accordance with regulations established by the 22 commissioner. 23 (c) An employer shall also make contributions to the health reimbursement 24 arrangement plan under AS 39.30.300. 25 Sec. 14.25.360. Rollover contributions and distributions. (a) A teacher 26 entering the plan may elect, at the time and in the manner prescribed by the 27 administrator, to have all or part of a direct rollover distribution from an eligible 28 retirement plan owned by the member paid directly into the member's individual 29 account. 30 (b) Rollover contributions do not count as a purchase of membership service 31 for the purpose of determining years of service.
01 (c) A distributee may elect, at the time and in the manner prescribed by the 02 administrator, to have all or part of a direct rollover distribution paid directly to an 03 eligible retirement plan specified by the distributee in the direct rollover. 04 (d) In this section, 05 (1) "direct rollover" means the payment of an eligible rollover 06 distribution by the plan to an eligible retirement plan specified by a distributee who is 07 eligible to elect a direct rollover; 08 (2) "distributee" means a member, or a beneficiary who is the 09 surviving spouse of the member, or an alternate payee; 10 (3) "eligible retirement plan" means 11 (A) a conduit individual retirement account described in 26 12 U.S.C. 408(d)(3)(A); 13 (B) an annuity plan described in 26 U.S.C. 403(a); 14 (C) a qualified trust described in 26 U.S.C. 401(a); 15 (D) an annuity plan described in 26 U.S.C. 403(b); or 16 (E) a governmental plan described in 26 U.S.C. 457(b); 17 (4) "eligible rollover distribution" means a distribution of all or part of 18 a total account to a distributee, except for 19 (A) a distribution that is one of a series of substantially equal 20 installments payable not less frequently than annually over the life expectancy 21 of the distributee or the joint and last survivor life expectancy of the distributee 22 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 23 (B) a distribution that is one of a series of substantially equal 24 installments payable not less frequently than annually over a specified period 25 of 10 years or more; 26 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 27 (D) the portion of any distribution that is not includable in 28 gross income; 29 (E) a distribution that is on account of hardship; and 30 (F) other distributions that are reasonably expected to total less 31 than $200 during a year.
01 Sec. 14.25.370. Transmittal of contributions. All contributions deducted in 02 accordance with AS 14.25.310 - 14.25.590 shall be transmitted to the plan for deposit 03 in the trust fund as soon as administratively feasible, but in no event later than 15 days 04 following the close of the payroll period. 05 Sec. 14.25.380. Limitations on contributions. Notwithstanding any other 06 provisions of this plan, the annual additions to each member's individual account 07 under this plan and under all defined contribution plans of the employer required to be 08 aggregated with the contributions from this plan under the provisions of 26 U.S.C. 415 09 may not exceed, for any limitation year, the amount permitted under 26 U.S.C. 415 at 10 any time. If the amount of a member's defined contribution plan contributions exceeds 11 the limitation of 26 U.S.C. 415(c) for any limitation year, the administrator shall take 12 any necessary remedial action to correct an excess contribution. The provisions of 26 13 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 14 defined contribution plans of governmental employees are incorporated as part of the 15 terms and conditions of the plan. 16 Sec. 14.25.390. Vesting. (a) A participating member is immediately and 17 fully vested in that member's contributions and related earnings. 18 (b) A member is fully vested in the employer contributions made on that 19 member's behalf, and related earnings, after five years of service. A member is 20 partially vested in the employer contributions made on that member's behalf, and the 21 related earnings, in the ratio of 22 (1) 25 percent with two years of service; 23 (2) 50 percent with three years of service; and 24 (3) 75 percent with four years of service. 25 Sec. 14.25.400. Investment of individual accounts. (a) The board shall 26 provide a range of investment options and permit a participant to exercise investment 27 control over the participant's assets in the member's individual account as provided in 28 this section. If a participant exercises control over the assets in the individual account, 29 the participant is not considered a fiduciary for any reason on the basis of exercising 30 that control. 31 (b) A participant may direct investment of plan funds held in an account
01 among available investment funds in accordance with rules established by the board. 02 (c) A participant may elect to change or transfer all or a portion of the 03 participant's existing account balance among available investment funds not more 04 often than once each day in accordance with the rules established by the administrator. 05 Only the last election received by the administrator before the transmittal of 06 contributions to the trust fund for allocation to the individual account will be used to 07 direct the investment of the contributions received. 08 (d) Except to the extent clearly set out in the terms of the investment plans 09 offered by the employer to the employee, the employer is not liable to the participant 10 for investment losses if the prudent investment standard has been met. 11 (e) The employer, administrator, state, board, or a person or entity who is 12 otherwise a fiduciary is not liable by reason for any participant's investment loss that 13 results from the participant's directing the investment of plan assets allocated to the 14 participant's account. 15 (f) To the extent that a member's individual account has been divided as 16 provided in a qualified domestic relations order between participants, each participant 17 shall be treated as the holder of a separate individual account for purposes of 18 investment yields, decisions, transfers, and time limitations imposed by this section. 19 Sec. 14.25.410. Distribution election at termination. (a) A member is 20 eligible to elect distribution of the member's account in accordance with this section 21 60 days after termination of employment. 22 (b) Notwithstanding (a) of this section, distribution of all or a portion of the 23 individual account of a member may take place before the 60th day after the 24 termination of employment with the approval of the administrator if the member 25 makes a written request for a distribution under this subsection. The member's spouse 26 must consent to the request in writing if the member is married. Distribution of an 27 individual account may only be made on account of an immediate and heavy financial 28 need of the member for the following reasons and in the amount the need is 29 demonstrated for 30 (1) medical care described in 26 U.S.C. 213(d) incurred by the 31 member, the member's spouse, or the member's dependent, or necessary to obtain that
01 medical care; 02 (2) the purchase of a principal residence for the member; 03 (3) postsecondary education tuition and related educational fees for the 04 next 12-month period for the member, the member's spouse, or a dependent of the 05 member; in this paragraph, "dependent" has the meaning given in 26 U.S.C. 152; 06 (4) prevention of the eviction of the member from the member's 07 principal residence or foreclosure on the mortgage of the member's principal 08 residence; or 09 (5) any need prescribed by the United States Department of the 10 Treasury, Internal Revenue Service, in a revenue ruling, notice, or other document of 11 general applicability that satisfies the safe harbor definition of hardship under 12 regulations adopted under 26 U.S.C. 401(k). 13 (c) If a member dies before benefits commence, the member's beneficiary is 14 immediately eligible to elect distribution of the member's share of the member's 15 individual account. 16 (d) Distributions are payable to an alternate payee in accordance with the 17 terms and conditions of a qualified domestic relations order that is received and 18 approved by the administrator as specified in AS 14.25.460. 19 (e) Distributions that are being paid to a member may not be affected by the 20 member's subsequent reemployment with the employer. Upon reemployment, a new 21 individual account shall be established for the member to which any future 22 contributions shall be allocated. Upon subsequent termination of employment, the 23 member's new individual account shall be distributed in accordance with this section. 24 Sec. 14.25.420. Forms of distribution. (a) A participant may elect to receive 25 distribution of the participant's share of the individual account in a 26 (1) lump sum payment, which is a single payment of the entire balance 27 in the account; 28 (2) periodic lump sum payment, which is a payment of a portion of the 29 balance in the account, not more than twice each year; 30 (3) period certain annuity payment, which is an annuity payable in a 31 fixed number of monthly installments for a duration of 60, 120, or 180 months;
01 (4) life annuity with a period certain payment, which is an annuity 02 payable until the later of the first day of the month in which the annuitant's death 03 occurs, or the date on which the payment of a fixed number of monthly installments is 04 completed; the period certain for installments is 120 or 180 months; 05 (5) single life annuity payment, which is an annuity payable monthly 06 until the first of the month in which the annuitant's death occurs; or 07 (6) joint and survivor annuity payment, which is an annuity payable 08 monthly to the member until the first of the month in which the member's death 09 occurs; after the member's death, a survivor annuity equal to 50 percent or 100 percent 10 of the member's benefit, as previously elected by the member, shall be paid monthly to 11 the joint annuitant for the remainder of the survivor's lifetime. 12 (b) Upon the death of an annuitant whose payments have commenced, an 13 annuitant's beneficiary shall receive further payments only to the extent provided in 14 accordance with the form of payment that was being made to the annuitant. The 15 remaining portion of the interest shall continue to be distributed at least as rapidly as 16 under the method of distribution being used before the annuitant's death. 17 (c) If a participant dies before the distribution commencement date, 18 distribution of the participant's entire interest to a beneficiary shall be payable in any 19 form other than a joint and survivor annuity. 20 (d) If an unmarried member or other participant fails to elect a form of 21 payment before the distribution commencement date, the account shall be paid to a 22 beneficiary in the form of a lump sum to the extent required by the minimum 23 distribution requirements set out in the Internal Revenue Code. If a married member 24 fails to elect a form of payment before the distribution commencement date, the 25 account shall be paid in the form of a 50 percent joint and survivor annuity, with the 26 member's spouse as the joint annuitant. 27 Sec. 14.25.430. Manner of electing distributions. (a) Any election or any 28 alteration or revocation of a prior election by a participant for any purpose under this 29 plan shall be on forms or made in a manner prescribed for that purpose by the plan 30 administrator. To be effective, the forms required or the required action for any 31 purpose under this plan must be completed and received in accordance with
01 regulations adopted by the commissioner of administration. 02 (b) At any time, but not less than seven days before the distribution 03 commencement date, a member, alternate payee, or beneficiary may change 04 (1) the form of payment election; 05 (2) an election to commence benefits; or 06 (3) the joint annuitant designation. 07 (c) Changes in elections are not allowed on or after seven days before the 08 distribution commencement date. 09 Sec. 14.25.440. Distribution requirements. (a) Payments to a participant 10 shall commence as soon as administratively feasible following the distribution 11 commencement date. The distribution commencement date is the first date on which 12 one of the following occurs: 13 (1) a member meets the requirements of AS 14.25.410 and has made a 14 complete application for payment under AS 14.25.430; 15 (2) a participant has elected to defer receipt of the account to a date 16 specified, the date has been attained, and the participant has made a complete 17 application for payment; 18 (3) a member attains normal retirement age and has not made an 19 application for payment or elected to defer receipt of the account to a date later than 20 normal retirement age; 21 (4) a member's beneficiary does not make an application for benefits 22 and five years have elapsed since the member's death; 23 (5) notwithstanding (a) of this section, a participant whose account has 24 a balance of $1,000 or less meets the requirements of AS 14.25.410, at which time the 25 participant must take payment of the participant's account. 26 (b) The entire interest of a participant must be distributed or must begin to be 27 distributed not later than the member's required beginning date. 28 (c) If a member dies after the distribution of the member's interest has begun 29 but before the distribution has been completed, the remaining portion of the interest 30 shall continue to be distributed at least as rapidly as under the method of distribution 31 being used before the member's death.
01 (d) If a member has made a distribution election and dies before the 02 distribution of the member's interest begins, distribution of the member's entire interest 03 shall be completed by December 31 of the calendar year containing the fifth 04 anniversary of the member's death. However, if any portion of the member's interest 05 is payable to a designated beneficiary, distributions may be made over the life of the 06 designated beneficiary or over a period certain not greater than the life expectancy of 07 the designated beneficiary, commencing on or before December 31 of the calendar 08 year immediately following the calendar year in which the member died, and, if the 09 designated beneficiary is the member's surviving spouse, the date distributions are 10 required to begin may not be earlier than the later of December 31 of the calendar year 11 (1) immediately following the calendar year in which the member died, or (2) in which 12 the member would have attained 70 1/2 years of age, whichever is earlier. If the 13 surviving spouse dies after the member but before payments to the spouse have begun, 14 the provisions of this subsection apply as if the surviving spouse were the member. 15 An amount paid to a child of the member shall be treated as if it were paid to the 16 surviving spouse if the amount becomes payable to the surviving spouse when the 17 child reaches the age of majority. 18 (e) If a member has not made a distribution election before the member's 19 death, the member's designated beneficiary must elect the method of distribution not 20 later than December 31 of the calendar year (1) in which distributions would be 21 required to begin under this section, or (2) that contains the fifth anniversary of the 22 date of death of the member, whichever is earlier. If the member does not have a 23 designated beneficiary or if the designated beneficiary does not elect a method of 24 distribution, distribution of the member's entire interest must be completed by 25 December 31 of the calendar year containing the fifth anniversary of the member's 26 death. 27 (f) For purposes of (b) of this section, distribution of a member's interest is 28 considered to begin (1) on the member's required beginning date, or (2) if the 29 designated beneficiary is the member's surviving spouse and the surviving spouse dies 30 after the member but before payments to the spouse have begun, on the date 31 distribution is required to begin to the surviving spouse. If distribution in the form of
01 an annuity irrevocably commences to the member before the required beginning date, 02 the date distribution is considered to begin is the date that the distribution actually 03 commences. 04 (g) Notwithstanding any contrary provisions of AS 14.25.310 - 14.25.590, the 05 requirements of this section apply to all distributions of a member's interest and take 06 precedence over any inconsistent provisions of AS 14.25.310 - 14.25.590. 07 (h) All distributions required under this section are determined and made in 08 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 09 including any minimum distribution incidental benefit requirement. 10 (i) In this section, 11 (1) "designated beneficiary" means the individual who is designated as 12 the beneficiary under the plan in accordance with 26 U.S.C. 401(a)(9) and regulations 13 adopted under that statute; 14 (2) "required beginning date" means the first day of April of the 15 calendar year following the calendar year in which the member either attains 70 1/2 16 years of age or actually terminates employment, whichever is later. 17 Sec. 14.25.450. Designation of beneficiary. (a) Each participant shall have 18 the right to designate a beneficiary and shall have the right, at any time, to revoke the 19 designation or to substitute another beneficiary, subject to the following limitation: if 20 a married member elects a nonspouse beneficiary, the value of the benefit payable to 21 the beneficiary may not exceed 50 percent of the member's portion of the account 22 balance, and the member's spouse shall automatically be considered the beneficiary for 23 the remaining 50 percent of the account balance, unless the spouse consents to the 24 beneficiary designation in a writing that is notarized or witnessed by the administrator. 25 If the spouse consents in this manner, a married member may designate a nonspouse 26 beneficiary for the entire benefit or any portion of the benefit as part of an available 27 form of payment contained in this plan, 28 (1) except to the extent a qualified domestic relations order filed with 29 the administrator provides for payment to a former spouse or other dependent of the 30 member; or 31 (2) unless the member filed a revocation of beneficiary accompanied
01 by a written consent to the revocation from the present spouse and each person entitled 02 under the order; however, consent of the present spouse is not required if the member 03 and the present spouse had been married for less than one year on the date of the 04 member's death and if the member established when filing the revocation that the 05 member and the present spouse were not cohabiting. 06 (b) Except as provided in (a) of this section, the member may change or 07 revoke the designation without notice to the beneficiary or beneficiaries at any time. 08 If a member designates more than one beneficiary, each shares equally unless the 09 member specifies a different allocation or preference. The designation of a 10 beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a 11 beneficiary shall be made on a form provided by the administrator and is not effective 12 until filed with the administrator. 13 (c) If a member fails to designate a beneficiary, or if no designated beneficiary 14 survives the member, the death benefit shall be paid 15 (1) to the surviving spouse or, if there is none surviving; 16 (2) to the surviving children of the member in equal parts or, if there 17 are none surviving; 18 (3) to the surviving parents in equal parts or, if there are none 19 surviving; 20 (4) to the estate. 21 (d) A person claiming entitlement to benefits payable under AS 14.25.310 - 22 14.25.590 as a consequence of a member's death shall provide the administrator with a 23 marriage certificate, divorce or dissolution judgment, or other evidence of entitlement. 24 Documents establishing entitlement may be filed with the administrator immediately 25 after a change in the member's marital status. If the administrator does not receive 26 notification of a claim before the date 10 days after the member's death, the person 27 claiming entitlement is not entitled to receive from the division of retirement and 28 benefits any benefit already paid by the administrator. 29 Sec. 14.25.460. Rights under qualified domestic relations order. (a) 30 Notwithstanding the nonalienation provisions in AS 14.25.500(a), the administrator 31 may direct that benefits be paid to someone other than a member or beneficiary under
01 a valid qualified domestic relations order that is executed by the judge of a competent 02 court in accordance with applicable state law and that has been accepted by the 03 administrator. 04 (b) The administrator shall determine whether an order meets the requirements 05 of this section within a reasonable period after receiving an order. The administrator 06 shall notify the member and any alternate payee that an order has been received and 07 indicate to the member and any alternate payee when the order is accepted. A separate 08 account for the alternate payee portion shall be established as soon as administratively 09 feasible after the order has been accepted by the administrator. 10 Sec. 14.25.470. Retirement. (a) In order to obtain medical benefits under 11 AS 14.25.480 a member must retire directly from the plan. A member is eligible to 12 retire from the plan if the member has been an active member for at least 12 months 13 before application for retirement and 14 (1) the member has at least 30 years of service; or 15 (2) the member reaches the normal retirement age and has at least 10 16 years of service. 17 (b) The normal retirement age is 60 months less than the age set for Medicare 18 eligibility at the time the member retires. 19 (c) A member must apply to the administrator for appointment to retirement. 20 Application shall be made on forms and in the manner prescribed by the administrator. 21 (d) A member who continues in the employ of the employer after reaching 22 normal retirement age shall continue to participate in the plan and to have 23 contributions allocated to the member's account. 24 Sec. 14.25.480. Medical benefits. (a) The medical benefits available to 25 eligible persons are access to the retiree major medical plan. Access to the retiree 26 major medical plan means that an eligible person may not be denied medical coverage 27 except for failure to pay the required premium. 28 (b) The following persons are eligible for the retiree major medical plan 29 provided under this section and may elect coverage under it: 30 (1) a member with at least 30 years of service and who retires directly 31 from the plan;
01 (2) the surviving spouse of a member who elected coverage under (1) 02 of this subsection; 03 (3) a member who reaches the normal retirement age as provided in 04 AS 14.25.470, has at least 10 years of service, and retires directly from the plan; 05 (4) the surviving spouse of a member who elected coverage under (3) 06 of this subsection. 07 (c) Retiree major medical plan coverage elected by an eligible member under 08 this section covers the eligible member, the spouse of the eligible member, and the 09 dependent children of the eligible member. 10 (d) Retiree major medical plan coverage elected by the surviving spouse of an 11 eligible member under this section covers the surviving spouse and the dependent 12 children of the eligible member who are dependent on the surviving spouse. 13 (e) Major medical coverage takes effect on the first day of the month 14 following the date of the election and stops when the person who elects coverage 15 under (b) of this section dies or fails to make a required premium payment. 16 (f) The coverage for persons who are eligible for Medicare is the same as that 17 available for persons who are not yet eligible for Medicare. The benefits payable to 18 those Medicare eligible persons supplement any benefits provided under the Medicare 19 program. 20 (g) The medical and optional insurance premiums owed by the person who 21 elects coverage under (b) of this section shall be deducted from the health 22 reimbursement arrangement. If the amount of the health reimbursement arrangement 23 becomes insufficient to pay the premiums, the person who elects coverage under (b) of 24 this section shall pay the premiums directly. 25 (h) The administrator shall set on an annual basis separate retiree health 26 coverage premiums for participants who are Medicare eligible and for participants 27 who are not yet Medicare eligible. A participant's share of the applicable premium 28 shall be determined according to (i), (j), and (m) of this section. 29 (i) Participants who have not attained normal retirement age are required to 30 pay the full amount of the applicable medical health coverage premium. 31 (j) Participants who have attained normal retirement age are eligible for a
01 subsidy applicable to the cost of the applicable premium. The subsidy percentage 02 applicable to the cost of premiums payable by the participant is 30 percent if the 03 member had 10 years of service; for each additional year of service after the member's 04 10th year of service, the discount increases by three percentage points; however, the 05 maximum discount is 90 percent if the member has 30 or more years of service. The 06 applicable subsidy percentage shall be applied to the subsidy base to determine the 07 dollar amount of the subsidy which is applied against the cost of the premium. 08 (k) Participants who are eligible for Medicare are eligible for benefits as 09 provided in (m) of this section. Participants who are not yet eligible for Medicare 10 shall use the subsidy base for non-Medicare eligible premiums. 11 (l) The subsidy base for non-Medicare eligible participants shall be the same 12 as the premium amount for non-Medicare eligible participants in the first year of this 13 plan. The subsidy base shall increase five percent each year or the rate at which the 14 actual premium amount increases for the corresponding aged participants, whichever 15 is less. 16 (m) The cost of premiums for a participant who is eligible for Medicare is the 17 following percentage of the premium amount: 18 (1) 30 percent if the member has 10 or more, but less than 15 years of 19 service; 20 (2) 25 percent if the member has 15 or more, but less than 20 years of 21 service; 22 (3) 20 percent if the member has 20 or more, but less than 30 years of 23 service; 24 (4) 10 percent if the member has 30 or more years of service. 25 (n) The eligibility for retiree major medical coverage for an alternate payee 26 under a qualified domestic relations order shall be determined based on the eligibility 27 of the member to elect coverage. The alternate payee shall pay the full monthly 28 premium for retiree major medical coverage. 29 (o) The administrator shall establish monthly group premiums for retiree 30 major medical coverage. Nothing in AS 14.25.310 - 14.25.590 guarantees a person 31 who elects coverage under (b) of this section a monthly group premium rate for retiree
01 major medical coverage other than the premium in effect for the month in which the 02 premium is due for coverage for that month. 03 (p) A member is eligible to apply for reimbursement from the health 04 reimbursement arrangement plan after a minimum of 10 years of service and does not 05 have to retire directly from the system. 06 (q) In this section, 07 (1) "health reimbursement arrangement" means the plan established in 08 AS 39.30.300; 09 (2) "retires directly from the plan" means that the member has been an 10 active member for at least 12 consecutive months immediately before the time that the 11 member applies to the administrator for appointment to retirement and that the 12 member continues as an active member up through the day before the day the member 13 is appointed to retirement. 14 Sec. 14.25.485. Cost-saving measures in retiree health care system. The 15 division of retirement and benefits shall implement by regulation cost-saving measures 16 appropriate to the retirees health care system. This includes using manufacturer's 17 rebates, copay levels, and multi-tiered copayment structures; mandating the use of 18 generic drugs; determining the type of drug classes in a formulary; dispensing fees; 19 mandating or providing incentives for mail order pharmaceuticals; using a reduction in 20 the average wholesale price; providing case management services for certain users of 21 pharmaceuticals; capping the number of prescriptions filled each month; and 22 restricting the number of refills that users can have at one time. 23 Sec. 14.25.490. Amendment and termination of plan. (a) The state has the 24 right to amend the plan at any time and from time to time, in whole or in part, 25 including the right to make retroactive amendments referred to in 26 U.S.C. 401(b). 26 (b) The plan administrator may not modify or amend the plan retroactively in 27 such a manner as to reduce the benefits of any member accrued to date under the plan 28 by reason of contributions made before the modification or amendment except to the 29 extent that the reduction is permitted by the Internal Revenue Code. 30 (c) The state may, in its discretion, terminate the plan in whole or part at any 31 time without liability for the termination. If the plan is terminated, all investments
01 remain in force until all individual accounts have been completely distributed under 02 the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer. 03 (d) Any contribution made by an employer to the plan because of a mistake of 04 fact must be returned to the employer by the administrator within one year after the 05 contribution or discovery, whichever is later. 06 Sec. 14.25.500. Exclusive benefit. (a) The corpus or income of the assets 07 held in trust as required by the plan may not be diverted or used for other than the 08 exclusive benefit of the participants. 09 (b) If plan benefits are provided through the distribution of annuity or 10 insurance contracts, any refunds or credits in excess of plan benefits due to dividends, 11 earnings, or other experience rating credits, or surrender or cancellation credits, shall 12 be paid to the trust fund. 13 (c) The assets of the plan may not be used to pay premiums or contributions of 14 the employer under another plan maintained by the employer. 15 Sec. 14.25.510. Nonguarantee of returns, rates, or benefit amounts. The 16 plan created by AS 14.25.310 - 14.25.590 is a defined contribution plan, not a defined 17 benefit plan. The amount of money in the account of a participant depends on the 18 amount of contributions and the rate of return from investments of the account that 19 varies over time. If benefits are paid in the form of an annuity, the benefit amount 20 payable is dependent on the amount of money in the account and the interest rates 21 applied and service fees charged by the annuity payor at the time benefits are first 22 paid. Nothing in this plan guarantees a participant 23 (1) a rate of return or interest rate other than that actually earned by the 24 account of the participant, less applicable administrative expenses; or 25 (2) an annuity based on interest rates or service charges other than 26 interest rates available from and service charges by the annuity payor in effect at the 27 time the annuity is paid. 28 Sec. 14.25.520. Nonguarantee of employment. The provisions of 29 AS 14.25.310 - 14.25.590 are not a contract of employment between an employer and 30 an employee, nor do they confer a right of an employee to be continued in the 31 employment of an employer, nor are they a limitation of the right of an employer to
01 discharge an employee with or without cause. 02 Sec. 14.25.530. Fraud. (a) A person who knowingly makes a false statement 03 or falsifies or permits to be falsified a record of this plan in an attempt to defraud the 04 plan is guilty of a class A misdemeanor. 05 (b) In this section, "knowingly" has the meaning given in AS 11.81.900(a). 06 Sec. 14.25.540. Transfer into defined contribution retirement plan by 07 nonvested members of defined benefit retirement plan. (a) Subject to (g) of this 08 section, an active member of the defined benefit retirement plan of the teachers' 09 retirement system is eligible to participate in the defined contribution retirement plan 10 established under AS 14.25.310 - 14.25.590 if that member has not vested. 11 Participation in the defined contribution retirement plan is in lieu of participation in 12 the defined benefit retirement plan established under AS 14.25.009 - 14.25.220. 13 (b) A member who has vested in a defined benefit retirement plan is not 14 eligible to transfer under this section. 15 (c) Each eligible member who elects to participate in the defined contribution 16 retirement plan shall have transferred to a new account the present value of the 17 member contribution account balance held in trust for the member under the defined 18 benefit retirement plan of the teachers' retirement system. A matching employer 19 contribution shall be made on behalf of that employee to the new account. Upon a 20 transfer, all service credit previously earned under the defined benefit retirement plan 21 shall be nullified for purposes of entitlement to a future benefit under the defined 22 benefit retirement plan but shall be credited for purposes of eligibility to elect medical 23 benefits under AS 14.25.470. An eligible member whose accounts are subject to a 24 qualified domestic relations order may not make an election to participate in the 25 defined contribution retirement plan under this subsection unless the qualified 26 domestic relations order is amended or vacated and court-certified copies of the order 27 are received by the administrator. 28 (d) As directed by the participant, the board shall transfer or cause to be 29 transferred the appropriate amounts to the designated account. The board shall 30 establish transfer procedures by regulation, but the actual transfer may not be later 31 than 30 days after the effective date of the member's participation in the defined
01 contribution retirement plan unless the major financial markets for securities available 02 for a transfer are seriously disrupted by an unforeseen event that also causes the 03 suspension of trading on any national securities exchange in the country where the 04 securities were issued. In that event, the 30-day period of time may be extended by a 05 resolution of the board of trustees. Transfers are not commissionable or subject to 06 other fees and may be in the form of securities or cash as determined by the board. 07 Securities shall be valued as of the date of receipt in the participant's account. 08 (e) If the board or the administrator receives notification from the United 09 States Department of the Treasury, Internal Revenue Service, that this section or a 10 portion of this section will cause the retirement system under this chapter, or a portion 11 of the retirement system under this chapter, to be disqualified for tax purposes under 12 the Internal Revenue Code, the portion that will cause the disqualification does not 13 apply, and the board and the administrator shall notify the presiding officers of the 14 legislature. 15 (f) The election to participate in the defined contribution retirement plan must 16 be made in writing on forms and in the manner prescribed by the administrator. 17 Before accepting an election to participate in the defined contribution retirement plan, 18 the administrator must provide the employee planning on making an election to 19 participate in the defined contribution retirement plan with information, including 20 calculations to illustrate the effect of moving the employee's retirement plan from the 21 defined benefit retirement plan to the defined contribution retirement plan as well as 22 other information to clearly inform the employee of the potential consequences of the 23 employee's election. An election made under this subsection to participate in the 24 defined contribution retirement plan is irrevocable. Upon making the election, the 25 participant shall be enrolled as a member of the defined contribution retirement plan, 26 the member's participation in the plan shall be governed by the provisions of 27 AS 14.25.310 - 14.25.590, and the member's participation in the defined benefit 28 retirement plan under AS 14.25.009 - 14.25.220 shall terminate. The participant's 29 enrollment in the defined contribution retirement plan shall be effective the first day of 30 the month after the administrator receives the completed enrollment forms. An 31 election made by an eligible member who is married is not effective unless the
01 election is signed by the individual's spouse. 02 (g) A member may make an election under this section only if the member's 03 employer participates in both the defined benefits retirement plan and the defined 04 contribution retirement plan and consents to transfers under this section. The 05 employer shall notify the administrator if the employer consents to allowing the 06 employer's members to choose to transfer from the defined benefits retirement plan to 07 the defined contribution retirement plan under this section. An employer's notice to 08 allow transfers is irrevocable and applicable to all eligible employees of the employer. 09 (h) In this section, 10 (1) "defined benefit retirement plan" means the retirement plan 11 established in AS 14.25.009 - 14.25.220; 12 (2) "defined contribution retirement plan" means the retirement plan 13 established in AS 14.25.310 - 14.25.590. 14 Sec. 14.25.550. Membership in teachers' and public employees' 15 retirement systems. A person who is employed at least half-time in the public 16 employees' defined contribution retirement plan (AS 39.35.700 - 39.35.990) during the 17 same period that the person is employed at least half-time in a position in the teachers' 18 defined contribution retirement plan (AS 14.25.310 - 14.25.590) shall receive credited 19 service under each plan for half-time employment. However, the amount of credited 20 service a person receives under the public employees' defined contribution retirement 21 plan during a school year may not exceed the amount necessary, when added to the 22 amount of credited service earned during the school year under the teachers' defined 23 contribution retirement plan, to equal one year of credited service. 24 Sec. 14.25.560. Legislators who have been teachers. (a) A state legislator 25 who was an active member of the defined contribution plan under other sections of 26 AS 14.25.310 - 14.25.590 within the 12 months immediately preceding election to 27 office may, subject to the requirements of (b) of this section, elect to be an active 28 member of the teachers' defined contribution retirement plan for as long as the state 29 legislator serves continuously as a state legislator if, within 90 days after taking the 30 oath of office, 31 (1) the state legislator directs the employer in writing to
01 (A) pay into this plan the employer contributions required for a 02 member under AS 14.25.310 - 14.25.590; and 03 (B) deduct from the state legislator's salary and pay into this 04 plan 05 (i) the employee contributions required for a member 06 under AS 14.25.310 - 14.25.590; and 07 (ii) an amount equal to the difference between the total 08 employer and state contributions required for a member under 09 AS 14.25.310 - 14.25.590 and the employer contributions that would be 10 required under the public employees' defined contribution retirement 11 plan (AS 39.35.700 - 39.35.990) if the legislator were covered under 12 that plan; and 13 (2) notice is given the administrator in writing. 14 (b) A state legislator is not entitled to elect membership under (a) of this 15 section if the state legislator is covered for the same period of service under the public 16 employees' defined contribution retirement plan (AS 39.35.700 - 39.35.990). An 17 election of membership under (a) of this section is retroactive to the date the state 18 legislator took the oath of office. A state legislator may not receive membership credit 19 under (a) of this section for legislative service performed before the legislative session 20 during which the state legislator elected membership under (a) of this section. In order 21 to continue in membership service under (a) of this section, the state legislator must 22 earn at least 0.3 years of membership service under other sections of AS 14.25.310 - 23 14.25.590 during each five-year period. 24 Sec. 14.25.570. Participation by National Education Association 25 employees. An employee or former employee of the National Education Association 26 of Alaska may participate in the teachers' defined contribution retirement plan under 27 AS 14.25.310 - 14.25.590 if the employee or former employee possesses or is eligible 28 to possess a teacher certificate under AS 14.20.020. 29 Sec. 14.25.580. Participation by Special Education Service Agency 30 employees. An employee of the Special Education Service Agency may participate in 31 the system under this chapter if the employee possesses or is eligible to possess a
01 teacher certificate under AS 14.20.020. 02 Sec. 14.25.590. Definitions. In AS 14.25.310 - 14.25.590, unless the context 03 requires otherwise, 04 (1) "administrator" has the meaning given in AS 14.25.220; 05 (2) "alternate payee" means a person entitled to a portion of the 06 distribution from an individual account under a qualified domestic relations order; 07 (3) "annuitant" means a member, beneficiary or alternate payee who is 08 receiving a benefit under this plan; 09 (4) "beneficiary" means the person or persons entitled to receive 10 benefits that may be due from the plan upon the death of the member or alternate 11 payee; 12 (5) "board" has the meaning given in AS 14.25.220; 13 (6) "calendar year" has the meaning given in AS 39.35.680; 14 (7) "compensation" 15 (A) means 16 (i) the total remuneration earned by an employee for 17 personal services rendered, including cost-of-living differentials, as 18 reported on the employee's Federal Income Tax Withholding Statement 19 (Form W-2) from the employer for the calendar year; 20 (ii) the member contribution to the teachers' retirement 21 system under AS 14.25.340; 22 (B) does not include retirement benefits, severance pay or other 23 separation bonuses, welfare benefits, per diem, expense allowances, workers' 24 compensation payments, payments for leave not used whether those leave 25 payments are scheduled payments, lump-sum payments, donations, or cash-ins, 26 any remuneration contributed by the employer for or on account of the 27 employee under this plan or under any other qualified or nonqualified 28 employee benefit plan, any remuneration not specifically included above 29 which would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue 30 Code) if the employer had remained in the Federal Social Security System, or 31 any remuneration paid by the employer in excess of the Social Security
01 Taxable Wage Base for the calendar year; 02 (C) notwithstanding (B) of this paragraph, includes any amount 03 that is contributed by the employer under a salary reduction agreement and that 04 is not includible in the gross income of the employee under 26 U.S.C. 125, 05 132(f)(4), 402(e)(3), 402(h)(1)(B) or 403(b) (Internal Revenue Code); the 06 annual compensation limitation for the member, which is so taken into account 07 for those purposes, may not exceed $200,000, as adjusted for the cost of living 08 in accordance with 26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the 09 limitation for a fiscal year being the limitation in effect for the calendar year 10 within which the fiscal year begins; 11 (8) "dependent child" has the meaning given in AS 14.25.220; 12 (9) "distribution commencement date" has the meaning given in 13 AS 14.25.440(a); 14 (10) "employer" means a public school district, the Board of Regents 15 of the University of Alaska, the Department of Education and Early Development, or 16 the regional resource centers; 17 (11) "fund" means the assets of the plan; 18 (12) "individual account" means the total maintained by the plan in an 19 investment account within the trust fund, established for each member for the purposes 20 of allocation of the member's contributions, employer contributions on behalf of the 21 member, and earnings credited to each of those contributions, investment gains and 22 losses, and expenses, as well as reporting of the member's benefit under the plan; 23 (13) "Internal Revenue Code" has the meaning given in AS 14.25.220; 24 (14) "investment funds" means those separate funds that are provided 25 within and that make up the trust fund and that are established for the purpose of 26 directing investment through the exercise of the sole control of a member, beneficiary, 27 or alternate payee under the terms of the plan and trust agreement; 28 (15) "limitation year" means the year for which contributions are made 29 to a member's individual account as reported to the Internal Revenue Service under the 30 limits described in 26 U.S.C. 415(c); 31 (16) "member" means an employee of an employer or a former
01 employee of an employer who retains a right to benefits under the plan; 02 (17) "membership service" means full-time or part-time employment 03 with an employer in the plan; 04 (18) "normal retirement age" means 60 months less than the age set for 05 Medicare eligibility at the time the member retires; 06 (19) "participant" means the person who has a vested right to an 07 individual account, such as a member, an alternate payee if the account is subject to a 08 qualified domestic relations order, the member's beneficiary if the member is 09 deceased, or an alternate payee's beneficiary if the alternate payee is deceased; 10 (20) "plan" means the retirement benefit plan established under 11 AS 14.25.310 - 14.25.590; 12 (21) "prudent investment standard" means the degree of care, skill, 13 prudence, and diligence under the circumstances then prevailing that a prudent person 14 acting in a like capacity and familiar with such matters would use in the conduct of an 15 enterprise of a like character and with like aims; 16 (22) "qualified domestic relations order" means a divorce or 17 dissolution judgment under AS 25.24, including an order approving a property 18 settlement, that 19 (A) creates or recognizes the existence of an alternate payee's 20 right to, or assigns to an alternate payee the right to, receive all or a portion of 21 the individual account, or the benefits payable with respect to a member; 22 (B) sets out the name and last known mailing address, if any, of 23 the member and of each alternate payee covered by the order; 24 (C) sets out the amount or percentage of the member's benefit, 25 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 26 manner in which that amount or percentage is to be determined; 27 (D) sets out the number of payments or period to which the 28 order applies; 29 (E) sets out the retirement plan to which the order applies; 30 (F) does not require any type or form of benefit or any option 31 not otherwise provided by AS 14.25.310 - 14.25.590;
01 (G) does not require an increase of benefits in excess of the 02 amount provided by AS 14.25.310 - 14.25.590; and 03 (H) does not require the payment, to an alternate payee, of 04 benefits that are required to be paid to another alternate payee under another 05 order previously determined to be a qualified domestic relations order; 06 (23) "retiree" means an eligible person who has elected to receive the 07 medical benefits under AS 14.25.480; 08 (24) "retirement fund" or "fund" means the fund in which the assets of 09 the plan, including income and interest derived from the investment of money, are 10 deposited and held; 11 (25) "school year" has the meaning given in AS 14.25.220; 12 (26) "system" has the meaning given in AS 14.25.220; 13 (27) "teacher" and "member" are used interchangeably under 14 AS 14.25.310 - 14.25.590 and mean a person eligible to participate in the plan and 15 who is covered by the plan, limited to 16 (A) a certificated full-time or part-time elementary or 17 secondary teacher, a certificated school nurse, or a certificated person in a 18 position requiring a teaching certificate as a condition of employment in a 19 public school of the state, the Department of Education and Early 20 Development, or the Department of Labor and Workforce Development; 21 (B) a full-time or part-time teacher of the University of Alaska 22 or a person occupying a full-time administrative position at the University of 23 Alaska that requires academic standing; the approval of the administrator must 24 be obtained before an administrative position qualifies for membership in the 25 plan; however, a teacher or administrative person at the university who is 26 participating in a university retirement program under AS 14.40.661 - 27 14.40.799 is not a member under this plan; 28 (C) a full-time or part-time instructor of the Department of 29 Labor and Workforce Development who has 30 (i) a teaching certificate regardless of whether the 31 position as instructor requires a teaching certificate as a condition of
01 employment; and 02 (ii) earlier credited service in the plan; 03 (28) "year of service" means service during the dates set for the school 04 year; partial-year service credit is given for membership service as follows: 05 (A) during any school year, 06 (i) less than nine days, no credit; 07 (ii) nine days or more but less than 27 days, 0.1 years; 08 (iii) 27 days or more but less than 45 days, 0.2 years; 09 (iv) 45 days or more but less than 63 days, 0.3 years; 10 (v) 63 days or more but less than 81 days, 0.4 years; 11 (vi) 81 days or more but less than 100 days, 0.5 years; 12 (vii) 100 days or more but less than 118 days, 0.6 years; 13 (viii) 118 days or more but less than 136 days, 0.7 14 years; 15 (ix) 136 days or more but less than 154 days, 0.8 years; 16 (x) 154 days or more but less than 172 days, 0.9 years; 17 (xi) 172 days or more, 1.0 years; 18 (B) service performed on a part-time basis of half time or more 19 shall be credited in proportion to the amount of credit that would have been 20 received for service performed on a full-time basis. 21 * Sec. 33. AS 14.40.280(c) is amended to read: 22 (c) Except as provided by (b) of this section, the monetary gifts, bequests, or 23 endowments that are made to the University of Alaska shall be managed and invested 24 by the Board of Regents. In carrying out its management and investment 25 responsibilities under this subsection, the Board of Regents has the same power and 26 obligations to carry out duties with respect to the endowments of the University of 27 Alaska as are provided to and required of the Alaska Retirement Management 28 [STATE PENSION INVESTMENT] Board under AS 37.10.210 [AS 14.25.180]. 29 * Sec. 34. AS 14.40.400(b) is amended to read: 30 (b) The Board of Regents is the fiduciary of the fund. The Board of Regents 31 shall account for and invest the fund. In carrying out its investment responsibilities
01 under this subsection, the Board of Regents has the same powers and duties with 02 respect to the fund as are provided to and required of the Alaska Retirement 03 Management [STATE PENSION INVESTMENT] Board under AS 37.10.210 04 [AS 14.25.180]. 05 * Sec. 35. AS 14.40.661 is amended to read: 06 Sec. 14.40.661. Authority of board. (a) The board may establish and 07 maintain [AN OPTIONAL] university retirement programs [PROGRAM] for 08 eligible employees in which retirement, health, and death benefits are provided 09 through the purchase of annuity contracts, either fixed, variable, or a combination of 10 fixed and variable. Participation in a university retirement [THE] program is in 11 place of participation in a state retirement system. The university may establish 12 retirement programs for new employees in a participating position at any time. 13 Retirement programs must be optional. 14 (b) The board shall 15 (1) provide for the administration of the retirement programs 16 [PROGRAM], including procedures for resolving complaints from participating 17 employees; 18 (2) designate the company or companies to which payment of the 19 contributions required under AS 14.40.691 may be made, after considering the 20 (A) nature and extent of the rights and benefits that the 21 contracts will provide to employees who elect to participate and to their 22 beneficiaries; 23 (B) relation of the contractual rights and benefits to the 24 contributions to be made under AS 14.40.661 - 14.40.799; 25 (C) suitability of the contractual rights and benefits to the needs 26 and interests of employees who [ELECTING TO] participate and to the 27 interest of the university in the employment and retention of employees; 28 (D) ability of the designated company or companies to provide 29 rights and benefits under the contracts; and 30 (E) efficacy of the contracts in the recruitment and retention of 31 faculty and administrators;
01 (3) take other actions required to ensure that the retirement programs 02 comply with applicable provisions of 26 U.S.C. 401 - 417 [PROGRAM 03 QUALIFIES AS A QUALIFIED TRUST UNDER 26 U.S.C. 401(a)] (Internal 04 Revenue Code). 05 * Sec. 36. AS 14.40.671(a) is amended to read: 06 (a) An employee in a participating position may elect to participate in a [THE 07 OPTIONAL] university retirement program or to participate in the appropriate state 08 retirement system. Eligibility to participate in a [THE] program begins on an 09 employee's appointment to a participating position. 10 * Sec. 37. AS 14.40.671(b) is amended to read: 11 (b) An election under (a) of this section to participate in a university 12 retirement [THE] program is irrevocable. The election shall be made in writing on a 13 form provided by the board and approved for the state by the commissioner of 14 administration. The form must be filed with the university not [BOARD NO] later 15 than 30 days after the date on which the employee is notified by the university that 16 the employee is [FIRST BECOMES] eligible to participate in the program. A copy of 17 the form shall be delivered to the appropriate state retirement system. The election 18 becomes irrevocable on the date it is received by the board. 19 * Sec. 38. AS 14.40.671(c) is amended to read: 20 (c) Participation in a university retirement [THE ELECTION TO 21 PARTICIPATE IN THE] program constitutes a waiver of all rights and benefits under 22 the state retirement systems earned on or after the effective date of the election while 23 the employee is participating in a university retirement [THE] program. 24 * Sec. 39. AS 14.40.671(d) is amended to read: 25 (d) Except as provided in (e) of this section, if a nonvested member of a state 26 retirement system participates [ELECTS TO PARTICIPATE] in a university 27 retirement [THE] program, the employee may choose to transfer the amount in the 28 employee's contribution account to a university retirement [THE] program. If the 29 employee chooses to transfer the account, the appropriate state retirement system shall 30 pay to the university on behalf of the employee an amount equal to the balance in the 31 account. The payment must be made within 45 days after notice of the employee's
01 decision to transfer the employee's contribution account to a university 02 retirement program [THE ELECTION] is received by the state retirement system. 03 The financial officer of the university shall immediately pay the amount received to 04 the designated company or companies for the benefit of the employee. An employee 05 who transfers assets under this subsection may not reclaim the corresponding service 06 in the state retirement system if the employee is reemployed under the state retirement 07 system. 08 * Sec. 40. AS 14.40.671(e) is amended to read: 09 (e) An employee whose rights to transfer assets out of a state retirement 10 system are subject to a qualified domestic relations order is entitled to transfer assets 11 from the state retirement system to a university retirement [THE] program only if 12 the requirements for receiving a refund under AS 14.25.150(b), 14.25.360, [OR] 13 AS 39.35.200(c), or 39.35.760, as appropriate, are met. 14 * Sec. 41. AS 14.40.671(f) is amended to read: 15 (f) If a vested member of a state retirement system elects to participate in a 16 university retirement [THE] program, the employee ceases to be an active member 17 of the state retirement system on the effective date of the participation in a university 18 retirement [THE] program. The employee retains all benefits accrued in the state 19 retirement system. 20 * Sec. 42. AS 14.40.671(g) is amended to read: 21 (g) An employee who does not [ELECT TO] participate in a university 22 retirement [THE] program under this section becomes or remains a member of the 23 appropriate state retirement system. 24 * Sec. 43. AS 14.40.681 is amended to read: 25 Sec. 14.40.681. Retirement system membership. An [ELIGIBLE] employee 26 participating [ELECTING TO PARTICIPATE] in a university retirement [THE] 27 program may not participate in a state retirement system during the time the employee 28 is employed in a participating position. If the employee is later employed in a position 29 covered by a state retirement system that is not a participating position, the employee 30 may not continue to participate in a university retirement [THE] program and shall 31 begin to participate in the state retirement system.
01 * Sec. 44. AS 14.40.701 is amended to read: 02 Sec. 14.40.701. Benefits. Payment of benefits to participants of the program 03 is the responsibility of the company or companies designated by the board and is not 04 the responsibility of the board, the university, or the state. The benefits are payable to 05 participants or their beneficiaries in accordance with the terms of the applicable 06 retirement plan document [ANNUITY CONTRACT OR CONTRACTS. 07 HOWEVER, RETIREMENT BENEFITS MUST BE PAID IN THE FORM OF A 08 LIFETIME INCOME. EXCEPT FOR DEATH BENEFITS, A SINGLE-SUM CASH 09 PAYMENT IS NOT PERMITTED UNDER THIS SECTION]. 10 * Sec. 45. AS 14.40.799(3) is amended to read: 11 (3) "contribution account" means the member contribution account 12 under AS 14.25.009 - 14.25.220, the individual account under AS 14.25.310 - 13 14.25.590, [AS 14.25 OR] the employee contribution account under AS 39.35.095 - 14 39.35.680, or the individual account under AS 39.35.700 - 39.35.990 [AS 39.35], 15 whichever is appropriate; 16 * Sec. 46. AS 14.40.799(5) is amended to read: 17 (5) "participating position" means a position that is a permanent 18 position that is at least a .5 full-time appointment and is included in the applicable 19 retirement plan document [AS 20 (A) A FACULTY APPOINTMENT; OR 21 (B) AN ADMINISTRATOR AND THE POSITION HAS 22 BEEN DESIGNATED BY THE BOARD FOR INCLUSION IN THE 23 PROGRAM]; 24 * Sec. 47. AS 14.40.799(6) is amended to read: 25 (6) "program" means a [THE OPTIONAL] university retirement 26 program; 27 * Sec. 48. AS 14.40.799 is amended by adding a new paragraph to read: 28 (8) "university" means the University of Alaska. 29 * Sec. 49. AS 22.25.048(c) is amended to read: 30 (c) The Alaska Retirement Management [STATE PENSION 31 INVESTMENT] Board is the fiduciary of the fund and has the same powers and
01 duties under this section in regard to the judicial retirement trust fund as are provided 02 in AS 37.10.210 [AS 14.25.180]. 03 * Sec. 50. AS 22.25.900(1) is amended to read: 04 (1) "actuarial equivalent" means the adjustment necessary to obtain 05 equality in value of the aggregate expected payments under two different forms of 06 pension payments, considering expected mortality and interest earnings on the basis of 07 assumptions, factors, and methods specified in regulations issued under the system 08 that are formally adopted [UNDER AS 22.25.027] by the Alaska Retirement 09 Management Board [COMMISSIONER OF ADMINISTRATION] that clearly 10 preclude employer discretion in the determination of the amount of any justice's, 11 judge's, or member's benefit; 12 * Sec. 51. AS 26.05.226(a) is amended to read: 13 (a) The Department of Military and Veterans' Affairs shall contribute to the 14 Alaska National Guard and Alaska Naval Militia retirement system the amounts 15 determined by the Alaska Retirement Management Board [COMMISSIONER OF 16 ADMINISTRATION] as necessary to 17 (1) fund the system based on the actuarial requirements of the system 18 as established by the Alaska Retirement Management Board [COMMISSIONER 19 OF ADMINISTRATION]; and 20 (2) administer the system. 21 * Sec. 52. AS 26.05.228(c) is amended to read: 22 (c) The Alaska Retirement Management [STATE PENSION 23 INVESTMENT] Board is the fiduciary of the fund and has the same powers and 24 duties under this section in regard to the fund as are provided under AS 37.10.220 25 [AS 14.25.180]. 26 * Sec. 53. AS 36.30.015(f) is amended to read: 27 (f) The board of directors of the Alaska Housing Finance Corporation, 28 notwithstanding AS 18.56.088, and the board of directors of the Knik Arm Bridge and 29 Toll Authority under AS 19.75.111, shall adopt regulations under AS 44.62 30 (Administrative Procedure Act) and the board of trustees of the Alaska Retirement 31 Management [STATE PENSION INVESTMENT] Board shall adopt regulations
01 under AS 37.10.240 to govern the procurement of supplies, services, professional 02 services, and construction for the respective public corporation and board. The 03 regulations must reflect competitive bidding principles and provide vendors 04 reasonable and equitable opportunities to participate in the procurement process and 05 must include procurement methods to meet emergency and extraordinary 06 circumstances. Notwithstanding the other provisions of this subsection, the Alaska 07 Housing Finance Corporation, the Knik Arm Bridge and Toll Authority, and the 08 Alaska Retirement Management [STATE PENSION INVESTMENT] Board shall 09 comply with AS 36.30.170(b). 10 * Sec. 54. AS 36.30.990(1) is amended to read: 11 (1) "agency" 12 (A) means a department, institution, board, commission, 13 division, authority, public corporation, the Alaska Pioneers' Home, the Alaska 14 Veterans' Home, or other administrative unit of the executive branch of state 15 government; 16 (B) does not include 17 (i) the University of Alaska; 18 (ii) the Alaska Railroad Corporation; 19 (iii) the Alaska Housing Finance Corporation; 20 (iv) a regional Native housing authority created under 21 AS 18.55.996 or a regional electrical authority created under 22 AS 18.57.020; 23 (v) the Department of Transportation and Public 24 Facilities, in regard to the repair, maintenance, and reconstruction of 25 vessels, docking facilities, and passenger and vehicle transfer facilities 26 of the Alaska marine highway system; 27 (vi) the Alaska Aerospace Development Corporation; 28 (vii) the Alaska Retirement Management [STATE 29 PENSION INVESTMENT] Board; 30 (viii) the Alaska Seafood Marketing Institute; 31 * Sec. 55. AS 37.10.071(d) is amended to read:
01 (d) In exercising investment, custodial, or depository powers or duties under 02 this section, the fiduciary or the fiduciary's designee is liable for a breach of a duty 03 that is assigned or delegated under this section, or under [AS 14.25.180,] 04 AS 14.40.255, 14.40.280(c), 14.40.400(b), AS 37.10.070, AS 37.14.110(c), 37.14.160, 05 or 37.14.170 [, OR AS 39.35.080]. However, the fiduciary or the designee is not 06 liable for a breach of a duty that has been delegated to another person if the delegation 07 is prudent under the applicable standard of prudence set out in statute or if the duty is 08 assigned by law to another person, except to the extent that the fiduciary or designee 09 (1) knowingly participates in, or knowingly undertakes to conceal, an 10 act or omission of another person knowing that the act or omission is a breach of that 11 person's duties under this chapter; 12 (2) by failure to comply with this section in the administration of 13 specific responsibilities, enables another person to commit a breach of duty; or 14 (3) has knowledge of a breach of duty by another person, unless the 15 fiduciary or designee makes reasonable efforts under the circumstances to remedy the 16 breach. 17 * Sec. 56. AS 37.10.071(f) is amended to read: 18 (f) In this section, "fiduciary of a state fund" or "fiduciary" means 19 (1) the commissioner of revenue for investments under AS 37.10.070; 20 or 21 (2) with respect to the Alaska Retirement Management [STATE 22 PENSION INVESTMENT] Board, for investments of the collective funds that it 23 manages and administers [UNDER OR SUBJECT TO AS 14.25.180], 24 (A) each trustee who serves on the board of trustees; and 25 (B) any other person who exercises control or authority with 26 respect to management or disposition of assets for which the board is 27 responsible or who gives investment advice to the board; or 28 (3) the person or body provided by law to manage the investments for 29 investments not subject to [AS 14.25.180 OR] AS 37.10.070. 30 * Sec. 57. AS 37.10.210 is repealed and reenacted to read: 31 Sec. 37.10.210. Alaska Retirement Management Board. (a) The Alaska
01 Retirement Management Board is established in the Department of Revenue. The 02 board's primary mission is to serve as the trustee of the assets of the state's retirement 03 systems, the State of Alaska Supplemental Annuity Plan, and the deferred 04 compensation program for state employees. Consistent with standards of prudence, 05 the board has the fiduciary obligation to manage and invest these assets in a manner 06 that is sufficient to meet the liabilities and pension obligations of the systems, plan, 07 and program. The board may, with the approval of the commissioner of revenue and 08 upon agreement with the responsible fiduciary, manage and invest other state funds so 09 long as the activity does not interfere with the board's primary mission. In making 10 investments, the board shall exercise the powers and duties of a fiduciary of a state 11 fund under AS 37.10.071. 12 (b) The Alaska Retirement Management Board consists of nine trustees, as 13 follows: 14 (1) two members, consisting of the commissioner of administration 15 and the commissioner of revenue; 16 (2) seven trustees appointed by the governor who meet the eligibility 17 requirements for an Alaska permanent fund dividend and who are professionally 18 credentialed or have recognized competence in investment management, finance, 19 banking, economics, accounting, pension administration, or actuarial analysis as 20 follows: 21 (A) one trustee who is a member of the general public; the 22 trustee appointed under this subparagraph may not hold another state office, 23 position, or employment and may not be a member or beneficiary of a 24 retirement system managed by the board; 25 (B) one trustee who is employed as a finance officer for a 26 political subdivision participating in the public employees' retirement system; 27 (C) one trustee who is employed as a finance officer for a 28 political subdivision participating in the teachers' retirement system; 29 (D) two trustees who are members of the public employees' 30 retirement system, selected from a list of three nominees submitted by public 31 employees' retirement system bargaining units;
01 (E) two trustees who are members of the teachers' retirement 02 system selected from a list of three nominees submitted by teachers' retirement 03 system bargaining units. 04 (c) The trustees, other than the two commissioners, shall serve for staggered 05 terms of six years and may be reappointed to the board for a total of two consecutive 06 terms. A person who has served two consecutive terms may not be reappointed to the 07 board for at least one year. 08 (d) The governor may, by written notice to the trustee, remove an appointed 09 trustee for cause. After an appointed trustee receives written notice of removal, the 10 trustee may not participate in board business and may not be counted for purposes of 11 establishing a quorum. 12 (e) A vacancy on the board of trustees shall be promptly filled. A person 13 filling a vacancy holds office for the balance of the unexpired term of the person's 14 predecessor, and the balance of the unexpired term served is not included in the three- 15 term limitation under (c) of this section. A vacancy on the board does not impair the 16 authority of a quorum of the board to exercise all the powers and perform all the duties 17 of the board. 18 (f) Five trustees constitute a quorum for the transaction of business and the 19 exercise of the powers and duties of the board. 20 (g) A trustee may not designate another person to serve on the board in the 21 absence of the trustee. 22 (h) The board shall provide annual training to its members on the duties and 23 powers of a fiduciary of a state fund and other training as necessary to keep the 24 members of the board educated about pension management and investment. 25 (i) The board shall elect a trustee to serve as chair and a trustee to serve as 26 vice-chair for one-year terms. A trustee may be reelected to serve additional terms as 27 chair or vice-chair. 28 * Sec. 58. AS 37.10 is amended by adding a new section to read: 29 Sec. 37.10.215. Attorney general. The attorney general is the legal counsel 30 for the board and shall advise the board and represent it in a legal proceeding. 31 * Sec. 59. AS 37.10.220 is repealed and reenacted to read:
01 Sec. 37.10.220. Powers and duties of the board. (a) The board shall 02 (1) hold regular and special meetings at the call of the chair or of at 03 least five members; meetings are open to the public, and the board shall keep a full 04 record of all its proceedings; 05 (2) after reviewing recommendations from the Department of 06 Revenue, adopt investment policies for each of the funds entrusted to the board; 07 (3) determine the appropriate investment objectives for the defined 08 benefit plans established under the teachers' retirement system under AS 14.25 and the 09 public employees' retirement system under AS 39.35; 10 (4) assist in prescribing the policies for the proper operation of the 11 systems and take other actions necessary to carry out the intent and purpose of the 12 systems in accordance with AS 37.10.210 - 37.10.390; 13 (5) provide a range of investment options and establish the rules by 14 which participants can direct their investments among those options with respect to 15 accounts established under 16 (A) AS 14.25.340 and 14.25.350 (teachers' retirement system 17 defined contribution individual accounts); 18 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 19 Annuity Plan); 20 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 21 system defined contribution individual accounts); and 22 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 23 compensation program); 24 (6) establish the rate of interest that shall be annually credited to each 25 member's individual contribution account in accordance with AS 14.25.145 and 26 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 27 account in the health reimbursement arrangement plan under AS 39.30.300 - 28 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 29 rate of interest on a long-term basis, and the rate may be changed from time to time; 30 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 31 (8) coordinate with the retirement system administrator to have an
01 annual actuarial valuation of each retirement system prepared to determine system 02 assets, accrued liabilities, and funding ratios and to certify to the appropriate 03 budgetary authority of each employer in the system 04 (A) an appropriate contribution rate for normal costs; and 05 (B) an appropriate contribution rate for liquidating any past 06 service liability; 07 (9) annually review the status of the retiree health insurance fund 08 established for members of the defined contribution plans under AS 14.25.310 - 09 14.25.590 and AS 39.35.700 - 39.35.990 to ensure that the medical cost rate 10 established for employers under AS 14.25.350(b) and AS 39.35.750(b) is sufficient to 11 fully fund the employers' required share of the premiums established for the retiree 12 major medical insurance plan; the board shall notify the legislature immediately if the 13 board determines the rates established by statute are insufficient and make 14 recommendations on rates that are sufficient; 15 (10) review actuarial assumptions prepared and certified by a member 16 of the American Academy of Actuaries and conduct experience analyses of the 17 retirement systems not less than once every four years, except for health cost 18 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 19 prepared under this paragraph shall be reviewed and certified by a second member of 20 the American Academy of Actuaries before presentation to the board; 21 (11) contract for an independent audit of the state's actuary not less 22 than once every four years; 23 (12) contract for an independent audit of the state's performance 24 consultant not less than once every four years; 25 (13) obtain an external performance review to evaluate the investment 26 policies of each fund entrusted to the board and report the results of the review to the 27 appropriate fund fiduciary; 28 (14) by the first day of each regular legislative session, report to the 29 governor, the legislature, and the individual employers participating in the state's 30 retirement systems on the financial condition of the systems in regard to 31 (A) the valuation of trust fund assets and liabilities;
01 (B) current investment policies adopted by the board; 02 (C) a summary of assets held in trust listed by the categories of 03 investment; 04 (D) the income and expenditures for the previous fiscal year; 05 (E) the return projections for the next calendar year; 06 (F) one-year, three-year, five-year, and 10-year investment 07 performance for each of the funds entrusted to the board; and 08 (G) other statistical data necessary for a proper understanding 09 of the financial status of the systems; 10 (15) submit quarterly updates of the investment performance reports to 11 the Legislative Budget and Audit Committee; and 12 (16) develop an annual operating budget. 13 (b) The board may 14 (1) employ outside investment advisors to review investment policies; 15 (2) enter into an agreement with the fiduciary of another state fund in 16 order to assume the management and investment of those assets; 17 (3) contract for other services necessary to execute the board's powers 18 and duties; 19 (4) enter into confidentiality agreements that would exempt records 20 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 21 the value of investment by the board or that could impair the ability of the board to 22 acquire, maintain, or dispose of investments. 23 (c) Expenses for the board and the operations of the board shall be paid from 24 the retirement fund. 25 * Sec. 60. AS 37.10.250 is amended to read: 26 Sec. 37.10.250. Compensation of trustees. Trustees, other than trustees who 27 are employees of the state, [OR] a political subdivision of the state, or a school 28 district or regional educational attendance area in the state, receive an honorarium 29 of $400 [$150] for each day spent at a meeting of the board or at a meeting of a 30 subcommittee of the board or at a public meeting as a representative of the board, 31 including a day in which a trustee travels to or from a meeting. Trustees who are
01 state employees are entitled to administrative leave for service as a trustee. Trustees 02 who are employees of a political subdivision of the state or a school district or 03 regional educational attendance area in the state are entitled to leave benefits 04 provided by their employers comparable to those provided to state employees for 05 service as a trustee. Trustees are entitled to per diem and travel expenses authorized 06 for boards and commissions under AS 39.20.180. 07 * Sec. 61. AS 37.10.270(a) is amended to read: 08 (a) The board may [SHALL] appoint an investment advisory council 09 composed of at least three and not more than five members. Members of the council 10 shall possess experience and expertise in financial investments and management of 11 investment portfolios for public, corporate, or union pension benefit funds, 12 foundations, or endowments. 13 * Sec. 62. AS 37.10.390 is amended to read: 14 Sec. 37.10.390. Definitions. In AS 37.10.210 - 37.10.390, unless the context 15 otherwise requires, 16 (1) "board" means the board of trustees of the Alaska Retirement 17 Management [STATE PENSION INVESTMENT] Board; 18 (2) "fund" means the fund or funds composed of the assets of each 19 of the retirement systems administered and managed by the board; 20 (3) "recognized competence" means a minimum of 10 years' 21 professional experience working or teaching in the field of investment 22 management, finance, banking, economics, accounting, pension administration, 23 or actuarial analysis; 24 (4) "retirement systems" or "systems" means the teachers' retirement 25 system, the judicial retirement system, the Alaska National Guard and Alaska Naval 26 Militia retirement system, [AND] the public employees' retirement system, the State 27 of Alaska teachers' and public employees' retiree health reimbursement 28 arrangement plan, and the elected public officers' retirement system under 29 former AS 39.37. 30 * Sec. 63. AS 37.14.160 is amended to read: 31 Sec. 37.14.160. Duties of the commissioner of revenue. The commissioner
01 of revenue is the treasurer of the trust fund created in AS 37.14.110 and shall 02 (1) in carrying out investment duties under this section, exercise the 03 same powers and duties established for the Alaska Retirement Management [STATE 04 PENSION INVESTMENT] Board in AS 37.10.210 [AS 14.25.180(c)]; 05 (2) deposit the principal and income from investments in separate 06 principal and income accounts for the fund; 07 (3) invest and maintain accounting records that distinguish between the 08 principal and income of the fund; 09 (4) provide reports to the board established under AS 37.14.120 on the 10 condition and investment performance of the fund. 11 * Sec. 64. AS 37.14.210(4) is amended to read: 12 (4) invest and reinvest the assets of the trust as provided in this section 13 and as provided for the investment of funds under [AS 14.25.180(c) AND] 14 AS 37.14.170; 15 * Sec. 65. AS 37.14.520(4) is amended to read: 16 (4) invest and reinvest the assets of the fund as provided in this section 17 and as provided for the investment of funds under [AS 14.25.180(c) AND] 18 AS 37.14.170; 19 * Sec. 66. AS 37.14.610 is amended to read: 20 Sec. 37.14.610. Duties of the commissioner. The commissioner of revenue 21 has the power and duty to 22 (1) act as official custodian of the cash and investments belonging to 23 the Arctic Winter Games Team Alaska trust by securing adequate and safe custodial 24 facilities; 25 (2) exercise the same powers and duties as those established for the 26 Alaska Retirement Management [STATE PENSION INVESTMENT] Board in 27 AS 37.10.210 [AS 14.25.180(b) AND (c)]; 28 (3) invest the assets of the trust in a manner likely to yield at least five 29 percent real rate of return over time; 30 (4) maintain accounting records of the trust in accordance with 31 investment accounting principles;
01 (5) enter into and enforce contracts or agreements considered 02 necessary for the investment purposes of the trust; 03 (6) report annually to the board of directors of the Arctic Winter 04 Games Team Alaska the condition and performance of the trust; 05 (7) monitor use of trust money by the Arctic Winter Games Team 06 Alaska; and 07 (8) do all acts that the commissioner of revenue considers necessary or 08 proper in administering the assets of the trust. 09 * Sec. 67. AS 39.30.090(a) is amended to read: 10 (a) The Department of Administration may obtain a policy or policies of group 11 insurance covering state employees, persons entitled to coverage under AS 14.25.168, 12 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.880, or former AS 39.37.145, 13 employees of other participating governmental units, or persons entitled to coverage 14 under AS 23.15.136, subject to the following conditions: 15 (1) A group insurance policy shall provide one or more of the 16 following benefits: life insurance, accidental death and dismemberment insurance, 17 weekly indemnity insurance, hospital expense insurance, surgical expense insurance, 18 dental expense insurance, audiovisual insurance, or other medical care insurance. 19 (2) Each eligible employee of the state, the spouse and the unmarried 20 children chiefly dependent on the eligible employee for support, and each eligible 21 employee of another participating governmental unit shall be covered by the group 22 policy, unless exempt under regulations adopted by the commissioner of 23 administration. 24 (3) A governmental unit may participate under a group policy if 25 (A) its governing body adopts a resolution authorizing 26 participation, and payment of required premiums; 27 (B) a certified copy of the resolution is filed with the 28 Department of Administration; and 29 (C) the commissioner of administration approves the 30 participation in writing. 31 (4) In procuring a policy of group health or group life insurance as
01 provided under this section or excess loss insurance as provided in AS 39.30.091, the 02 Department of Administration shall comply with the dual choice requirements of 03 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 04 transact business in the state under AS 21.09, a hospital or medical service corporation 05 authorized to transact business in this state under AS 21.87, or a health maintenance 06 organization authorized to operate in this state under AS 21.86. An excess loss 07 insurance policy may be obtained from a life or health insurer authorized to transact 08 business in this state under AS 21.09 or from a hospital or medical service corporation 09 authorized to transact business in this state under AS 21.87. 10 (5) The Department of Administration shall make available bid 11 specifications for desired insurance benefits or for administration of benefit claims and 12 payments to (A) all insurance carriers authorized to transact business in this state 13 under AS 21.09 and all hospital or medical service corporations authorized to transact 14 business under AS 21.87 who are qualified to provide the desired benefits; and (B) to 15 insurance carriers authorized to transact business in this state under AS 21.09, hospital 16 or medical service corporations authorized to transact business under AS 21.87, and 17 third-party administrators licensed to transact business in this state and qualified to 18 provide administrative services. The specifications shall be made available at least 19 once every five years. The lowest responsible bid submitted by an insurance carrier, 20 hospital or medical service corporation, or third-party administrator with adequate 21 servicing facilities shall govern selection of a carrier, hospital or medical service 22 corporation, or third-party administrator under this section or the selection of an 23 insurance carrier or a hospital or medical service corporation to provide excess loss 24 insurance as provided in AS 39.30.091. 25 (6) If the aggregate of dividends payable under the group insurance 26 policy exceeds the governmental unit's share of the premium, the excess shall be 27 applied by the governmental unit for the sole benefit of the employees. 28 (7) A person receiving benefits under AS 14.25.110, AS 22.25, 29 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 30 effect under this section at the time of termination of employment with the state or 31 participating governmental unit.
01 (8) A person electing to have insurance under (7) of this subsection 02 shall pay the cost of this insurance. 03 (9) For each permanent part-time employee electing coverage under 04 this section, the state shall contribute one-half the state contribution rate for permanent 05 full-time state employees, and the permanent part-time employee shall contribute the 06 other one-half. 07 (10) A person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 08 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 09 and eligible dependents under this section. The level of coverage for persons over 65 10 shall be the same as that available before reaching age 65 except that the benefits 11 payable shall be supplemental to any benefits provided under the federal old age, 12 survivors, and disability insurance program. A person electing to have insurance 13 under this paragraph shall pay the cost of the insurance. The commissioner of 14 administration shall adopt regulations implementing this paragraph. 15 (11) A person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 16 or former AS 39.37 may obtain long-term care insurance for that person and eligible 17 dependents under this section. A person who elects insurance under this paragraph 18 shall pay the cost of the insurance premium. The commissioner of administration 19 shall adopt regulations to implement this paragraph. 20 (12) Each licensee holding a current operating agreement for a vending 21 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 22 applies to governmental units other than the state. 23 * Sec. 68. AS 39.30.090 is amended by adding a new subsection to read: 24 (c) The Department of Administration shall implement by regulation cost- 25 saving measures appropriate applicable to group insurance obtained under (a) of this 26 section. This includes using manufacturer's rebates, copay levels, and multi-tiered 27 copayment structures; mandating the use of generic drugs; determining the type of 28 drug classes in a formulary; dispensing fees; mandating or providing incentives for 29 mail order pharmaceuticals; using a reduction in the average wholesale price; 30 providing case management services for certain users of pharmaceuticals; capping the 31 number of prescriptions filled each month; and restricting the number of refills that
01 users may have at one time. 02 * Sec. 69. AS 39.30.095(d) is amended to read: 03 (d) If the commissioner of administration determines that there is more money 04 in the fund than the amount needed to pay premiums, benefits, and administrative 05 costs for the current fiscal year, the surplus, or so much of it as the commissioner of 06 administration considers advisable, may be invested by the commissioner of revenue 07 in the same manner as retirement funds are invested under AS 37.10.210 and 08 37.10.220 [AS 14.25.180]. 09 * Sec. 70. AS 39.30.150(b) is amended to read: 10 (b) Employees of the division of marine transportation included in 11 AS 39.35.095 - 39.35.680 [THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM] 12 through the process of collective bargaining under AS 39.35.680(21)(D) may, under 13 the terms of a collective bargaining agreement, utilize contributions made under (a) of 14 this section on their behalf to offset the costs of inclusion in the public employees' 15 retirement system; however, 16 (1) the state is placed under no obligation to continue making 17 contributions under this section if the state resumes participation in the federal social 18 security system; 19 (2) the bargaining agreement must provide a mechanism for satisfying 20 any residual liabilities that might exist if the state resumes participation in the federal 21 social security system; and 22 (3) funds contributed under (a) of this section on behalf of employees 23 who are not covered by maritime union contracts may not be obligated or expended to 24 pay any costs associated with the inclusion of marine transportation employees in 25 AS 39.35.095 - 39.35.680 [THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM]. 26 * Sec. 71. AS 39.30 is amended by adding a new section to read: 27 Sec. 39.30.151. Administrator. The commissioner of administration or the 28 commissioner's designee is the administrator of the system. 29 * Sec. 72. AS 39.30 is amended by adding a new section to read: 30 Sec. 39.30.154. Powers and duties of the administrator. The administrator 31 has the same powers and duties with regard to the plan as those set out in
01 AS 14.25.004. 02 * Sec. 73. AS 39.30.155 is repealed and reenacted to read: 03 Sec. 39.30.155. Management and investment of fund. The Alaska 04 Retirement Management Board is the fiduciary of the fund and has the same powers 05 and duties under this section in regard to the fund as are provided under AS 37.10.210. 06 * Sec. 74. AS 39.30.160(a) is amended to read: 07 (a) The Department of Administration shall, in accordance with policies 08 prescribed by regulations of the Alaska Retirement Management [PUBLIC 09 EMPLOYEES RETIREMENT] Board, provide to employees for whom special 10 individual employee benefit accounts are established under AS 39.30.150(c) 11 [AS 39.30.150] the following benefit options: 12 (1) supplemental health benefits; [,] 13 (2) supplemental death benefits; [,] 14 (3) supplemental disability benefits; [,] and 15 (4) supplemental dependent care benefits. 16 * Sec. 75. AS 39.30.160(b) is amended to read: 17 (b) An employee may select the types and amounts of supplemental benefits to 18 be purchased with the money deposited in the employee's special individual employee 19 benefit accounts under AS 39.30.150. The selection for employees described in 20 AS 39.30.150(a) must be from the benefit options listed in (a) of this section. 21 * Sec. 76. AS 39.30.160(e) is amended to read: 22 (e) Regulations adopted by the board [PUBLIC EMPLOYEES 23 RETIREMENT BOARD] implementing AS 39.30.150 and this section are not subject 24 to AS 44.62 (Administrative Procedure Act). 25 * Sec. 77. AS 39.30.175(a) is amended to read: 26 (a) The board [ALASKA STATE PENSION INVESTMENT BOARD] is the 27 fiduciary of the mandatory receipts, under AS 39.30.150(a), of the employee benefits 28 program established under AS 39.30.150 - 39.30.180 and has the same powers and 29 duties concerning the management and investment in regard to those receipts as are 30 provided under AS 37.10.210 [AS 14.25.180]. 31 * Sec. 78. AS 39.30.180 is amended by adding a new paragraph to read:
01 (3) "board" means the board of trustees of the Alaska Retirement 02 Management Board established under AS 37.10.210. 03 * Sec. 79. AS 39.30 is amended by adding new sections to read: 04 Article 5. State of Alaska Teachers' and Public Employees' Retiree Health 05 Reimbursement Arrangement Plan. 06 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 07 Health Reimbursement Arrangement Plan established. The State of Alaska 08 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 09 established for teachers who first become members of the defined contribution plan of 10 the teachers' retirement system under AS 14.25.310 - 14.25.590 on or after July 1, 11 2005, and employees of the state, political subdivisions of the state, and public 12 organizations of the state who first become members of the defined contribution plan 13 of the public employees' retirement system under AS 39.35.700 - 39.35.990 on or after 14 July 1, 2005. 15 Sec. 39.30.310. Purpose and effective date. (a) The purpose of the plan is to 16 allow medical care expenses to be reimbursed from individual savings accounts 17 established for eligible persons. 18 (b) The plan becomes effective July 1, 2005, at which time contributions by 19 employers begin. 20 Sec. 39.30.320. Attorney general. The attorney general of the state is the 21 legal counsel for the plan and shall advise the administrator and represent the plan in a 22 legal proceeding. 23 Sec. 39.30.330. Administrator. The commissioner of administration or the 24 commissioner's designee is the administrator of the plan. 25 Sec. 39.30.340. Powers and duties of the administrator. The administrator 26 shall establish a teachers' and public employees' retiree health reimbursement 27 arrangement plan trust fund in which the assets of the plan shall be deposited and held. 28 The administrator has the same powers and duties with regard to the plan and the trust 29 fund as provided in AS 14.25.004. 30 Sec. 39.30.350. Employer contribution fund. The fund established under 31 AS 39.30.340 is an employer contribution fund. The value of the fund reflects
01 employer contributions, expenses, and investment gains and losses. Employee 02 contributions to the fund are not permitted. 03 Sec. 39.30.360. Management and investment of the fund. The Alaska 04 Retirement Management Board is the fiduciary of the fund and has the same powers 05 and duties under this section in regard to the fund as are provided under AS 37.10.220. 06 Sec. 39.30.370. Contributions by employers. For each member of the plan, 07 an employer shall contribute to the teachers' and public employees' retiree health 08 reimbursement arrangement plan trust fund an amount equal to 2.5 percent of the 09 employer's average annual employee compensation. The administrator shall maintain 10 a record for each member to account for employer contributions on behalf of that 11 member. The board shall establish by regulation the rate of interest to be applied 12 annually to the amount in a member's individual account. 13 Sec. 39.30.380. Termination of employment. A person who terminates 14 employment before meeting the eligibility requirements of AS 14.25.470 or 15 AS 39.35.870 loses any right to the contributions made on behalf of the person to the 16 teachers' and public employees' retiree health reimbursement arrangement trust fund. 17 If a person returns to employment with a participating employer, the person's account 18 balance shall be restored in the amount recorded on the date of termination from the 19 trust, with interest. The earlier period of employment with a participating employer 20 shall be credited towards eligibility for medical benefits. 21 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 22 eligibility requirements of AS 14.25.470 and AS 39.35.870 are eligible for 23 reimbursements from the individual account established for a member under the plan, 24 except members do not have to retire directly from the system. A person who is the 25 dependent child of an eligible member is eligible for reimbursements if the eligible 26 member and surviving spouse have both died so long as the person meets the 27 definition of dependent child. 28 Sec. 39.30.400. Benefits payable from the individual account. (a) The 29 administrator may deduct the cost of monthly premiums from the individual account 30 for retiree major medical insurance on behalf of an eligible person who elected retiree 31 major medical insurance under AS 14.25.480 or AS 39.35.880.
01 (b) Upon application of an eligible person, the administrator shall reimburse to 02 the eligible person the costs for medical care expenses as defined in 26 U.S.C. 213(d). 03 Reimbursement is limited to the medical expenses of 04 (1) an eligible member, the spouse of an eligible member, and the 05 dependent children of an eligible member; or 06 (2) a surviving spouse and the dependent children of an eligible 07 member dependent on the surviving spouse. 08 (c) When the member's individual account balance is exhausted, the insurance 09 premium deductions under (a) of this section and the reimbursement of medical care 10 expenses under (b) of this section end. 11 (d) If all eligible persons die before exhausting the member's individual 12 account, the account balance shall revert to the plan. 13 Sec. 39.30.410. Exemption from taxation and process. (a) Contributions 14 and other amounts held in the plan on behalf of a member or other person who is or 15 may become eligible for benefits under the plan may be used only to reimburse 16 eligible medical expenses, are exempt from Alaska state and municipal taxes and 17 federal taxes to the extent allowed under the Internal Revenue Code, and are not 18 subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or 19 charge of any kind, either voluntary or involuntary, before they are received by the 20 person entitled to the amount under the terms of the plan. Any attempt to anticipate, 21 alienate, sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of any 22 right to amounts accrued in the plan is void. However, a member's right to receive 23 benefits may be assigned 24 (1) under a qualified domestic relations order; or 25 (2) to a trust or similar legal device that meets the requirements for a 26 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4). 27 (b) Notwithstanding AS 09.38.065, contributions and other amounts held in 28 the plan and benefits payable under this plan are exempt from garnishment, execution, 29 or levy. 30 Sec. 39.30.420. Amendment and termination of plan. (a) The state has the 31 right to amend the plan at any time and from time to time, in whole or in part,
01 including the right to make retroactive amendments referred to in 26 U.S.C. 401(b). 02 (b) The plan administrator may not modify or amend the plan retroactively in 03 such a manner as to reduce the benefits of any member accrued to date under the plan 04 by reason of contributions made before the modification or amendment except to the 05 extent that the reduction is permitted by the Internal Revenue Code. 06 (c) The state may, in its discretion, terminate the plan in whole or part at any 07 time without liability for the termination. If the plan is terminated, all investments 08 remain in force until all individual accounts have been completely distributed under 09 the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer. 10 (d) Any contribution made by an employer to the plan because of a mistake of 11 fact must be returned to the employer by the administrator within one year after the 12 contribution or discovery, whichever is later. 13 Sec. 39.30.430. Exclusive benefit. (a) The corpus or income of the assets 14 held in trust as required by the plan may not be diverted or used for other than the 15 exclusive benefit of the participants. 16 (b) The assets of the plan may not be used to pay premiums or contributions of 17 the employer under another plan maintained by the employer. 18 Sec. 39.30.495. Definitions. Unless the context requires otherwise, in 19 AS 39.30.300 - 39.30.495 20 (1) "administrator" means the commissioner of administration or the 21 commissioner's designee; 22 (2) "board" means the Alaska Retirement Management Board 23 established under AS 37.10.210; 24 (3) "compensation" has the meaning given in AS 14.25.590; 25 (4) "eligible person" means a person who meets the eligibility 26 requirements of AS 14.25.470 or AS 39.35.870; 27 (5) "dependent child" has the meaning given in AS 39.35.680; 28 (6) "employer" has the meaning given in AS 14.25.590 for employers 29 of teachers in the defined contribution plan established in AS 14.25.310 - 14.25.590 30 and has the meaning given in AS 39.35.990 for employers of public employees in the 31 defined contribution plan established in AS 39.35.700 - 39.35.990;
01 (7) "fund" means the assets of the teachers' and public employees' 02 retiree health reimbursement arrangement plan trust fund; 03 (8) "individual account" means the record established by the 04 administrator for individual employees under the teachers' and public employees' 05 retiree health reimbursement arrangement plan; 06 (9) "member" means a member of the defined contribution plan of the 07 teachers' retirement system in AS 14.25.310 - 14.25.590 or a member of the public 08 employees' retirement system in AS 39.35.700 - 39.35.990; 09 (10) "plan" means the State of Alaska Teachers' and Public Employees' 10 Retiree Health Reimbursement Arrangement Plan established in AS 39.30.300; 11 (11) "qualified domestic relations order" has the meaning given in 12 AS 14.25.220. 13 * Sec. 80. AS 39.35 is amended by adding new sections to read: 14 Article 1. Administration of the Public Employees' Retirement System of Alaska. 15 Sec. 39.35.001. Purpose. The purpose of this chapter is to encourage 16 qualified personnel to enter and remain in service with participating employers by 17 establishing plans for the payment of retirement, disability, and death benefits to or on 18 behalf of the members. 19 Sec. 39.35.002. Attorney general. The attorney general of the state is the 20 legal counsel for the system and shall advise the administrator and represent the 21 system in a legal proceeding. 22 Sec. 39.35.003. Administrator. (a) The commissioner of administration or 23 the commissioner's designee is the administrator of the system. 24 (b) The commissioner of administration shall adopt regulations to govern the 25 operation of the system. 26 Sec. 39.35.004. Powers and duties of the administrator. (a) The 27 administrator shall 28 (1) establish and maintain an adequate system of accounts; 29 (2) transmit the funds deposited in the system to the retirement fund 30 established and maintained by the Alaska Retirement Management Board; 31 (3) approve or disapprove claims for retirement benefits;
01 (4) make payments for the various purposes specified; 02 (5) submit periodic reports or statements of account that are needed; 03 (6) issue a statement of account to an employee not less than once each 04 year showing the amount of the employee's contributions to the applicable plan in the 05 system; 06 (7) formulate and recommend to the commissioner of administration 07 regulations to govern the operation of the system; 08 (8) as soon as possible after the close of each fiscal year, and not later 09 than six months after the close of each fiscal year, send to the governor and the 10 legislature an annual statement on the operations of each of the plans in the system 11 containing 12 (A) a balance sheet; 13 (B) a statement of income and expenditures for the year; 14 (C) a report on valuation of trust fund assets; 15 (D) a summary of assets held in the trust fund listed by the 16 categories of investment, as provided by the Alaska Retirement Management 17 Board; 18 (E) other statistical financial data that are necessary for proper 19 understanding of the financial condition of the system as a whole and each plan 20 in the system and the result of its operations; 21 (9) engage an independent certified public accountant to conduct an 22 annual audit of each plan's accounts and the annual report of the system's financial 23 condition and activity; 24 (10) report to the Legislative Budget and Audit Committee concerning 25 the condition and administration of each plan and distribute the report to the members 26 of each plan in the system; 27 (11) publish an information handbook for each plan in the system at 28 intervals that the administrator considers appropriate; 29 (12) meet at least annually with the board to review the condition and 30 management of the retirement systems and to review significant changes to policies, 31 regulations or benefits; and
01 (13) do whatever else may be necessary to carry out the purposes of 02 each plan in the system. 03 (b) The administrator is authorized to charge uniform fees to members' 04 accounts to cover the ongoing cost of operating each plan in the system. 05 (c) The administrator is authorized to contract with public and private entities 06 to provide record keeping, benefits payments, and other functions necessary for the 07 administration of each plan in the system. 08 Sec. 39.35.005. Regulations. (a) Regulations adopted by the commissioner 09 of administration under this chapter relate to the internal management of state 10 agencies, and the adoption of these regulations is not subject to AS 44.62 11 (Administrative Procedure Act). 12 (b) Notwithstanding (a) of this section, a regulation adopted under this chapter 13 shall be published in the Alaska Administrative Register and Code for informational 14 purposes. 15 (c) Each regulation adopted under this chapter must conform to the style and 16 format requirements of the drafting manual for administrative regulations that is 17 published under AS 44.62.050. 18 (d) At least 30 days before the adoption, amendment, or repeal of a regulation 19 under this chapter, the commissioner shall provide notice of the action that is being 20 considered. The notice shall be 21 (1) posted in public buildings throughout the state; 22 (2) published in one or more newspapers of general circulation in each 23 judicial district of the state; 24 (3) mailed to each person or group that has filed a request for notice of 25 proposed action with the commissioner; and 26 (4) furnished to each member of the legislature and to the Legislative 27 Affairs Agency. 28 (e) Failure to mail notice to a person as required under (d)(3) of this section 29 does not invalidate an action taken by the commissioner. 30 (f) The commissioner may hold a public hearing on a proposed regulation. 31 (g) A regulation adopted under this chapter takes effect 30 days after adoption
01 by the commissioner. 02 (h) Notwithstanding the other provisions of this section, a regulation may be 03 adopted, amended, or repealed, effective immediately, as an emergency regulation by 04 the commissioner. For an emergency regulation to be effective the commissioner 05 must find that the adoption, amendment, or repeal of the regulation is necessary for the 06 immediate preservation of the orderly operation of the system. The commissioner 07 shall, within 10 days after adoption of an emergency regulation, give notice of the 08 adoption under (d) of this section. 09 (i) In this section, "regulation" has the meaning given in AS 44.62.640(a). 10 Sec. 39.35.006. Appeals. An employer, member, annuitant, or beneficiary 11 may appeal a decision made by the administrator to the office of administrative 12 hearings established under AS 44.64. An aggrieved party may appeal a final decision 13 to the superior court. 14 Sec. 39.35.007. Investment management of retirement system funds. The 15 Alaska Retirement Management Board established under 37.10.210 is the fiduciary of 16 the system funds. 17 Sec. 39.35.008. Definitions. In AS 39.35.001 - 39.35.008, 18 (1) "commissioner" means the commissioner of administration; 19 (2) "plan" means the retirement plan established in AS 39.35.095 - 20 39.35.680 or the retirement plan established in AS 39.35.700 - 39.35.990; 21 (3) "system" means all retirement plans established under the public 22 employees' retirement system. 23 * Sec. 81. AS 39.35 is amended by adding a new section to read: 24 Article 2. Public Employees' Defined Benefit Retirement Plan. 25 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The following 26 provisions of this chapter apply only to members first hired before July 1, 2005 or 27 members first hired on or after July 1, 2005, who choose under AS 39.35.705 to 28 participate in the defined benefit plan: AS 39.35.095 - 39.35.680. 29 * Sec. 82. AS 39.35.100 is amended to read: 30 Sec. 39.35.100. Accounting. (a) The commissioner of administration shall 31 establish and maintain an adequate system of accounts and records for the plan
01 [SYSTEM]. The accounts and records shall be integrated with the accounts, records, 02 and procedures of the employers to the end that they operate most effectively and at 03 minimum expense, and that duplication of records and accounts is avoided. 04 (b) All income of the pension fund and all disbursements made by the fund 05 shall be credited or charged, whichever is appropriate, to the following accounts: 06 (1) An individual account shall be maintained for each employee to 07 record the amount of the employee's mandatory contributions collected under 08 AS 39.35.160(a). As of the last day of each calendar year and each fiscal year 09 beginning with June 30, 1969, this account shall be credited with interest, by applying 10 [ONE HALF OF] the prescribed rate of interest as determined by the board to the 11 balance in the account as of that date. Within one year following retirement, the 12 amount actuarially determined as necessary to fully fund the benefits to be received 13 shall be transferred first from the employee contribution account and, after the 14 employee contribution account has been exhausted, then from the employer 15 contribution account into the retirement reserve account. 16 (2) An individual account shall be maintained for each employee to 17 record the amount of the employee's voluntary contributions. As of the last day of 18 each calendar year and each fiscal year beginning with June 30, 1969, this account 19 shall be credited with interest, by applying [ONE HALF OF] the prescribed rate of 20 interest as determined by the board to the balance in the account as of that date. 21 Amounts that, before termination of employment, are withdrawn by an employee from 22 the employee's savings account shall be charged to that account. Upon retirement, the 23 amount actuarially determined as necessary to fully fund the benefits to be received 24 shall be transferred first from the employee savings account and, after the employee 25 savings account has been exhausted, then from the employer contribution account into 26 the retirement reserve account. 27 (3) A separate account for each employer shall be maintained. The 28 account shall be credited with contributions of the employer. This account shall be 29 charged with the employer's actuarial charge for pension, death benefits, and other 30 benefits paid under this plan [SYSTEM] to or on behalf of the employee of the 31 employer. After an allowance for interest credited to employee contribution accounts
01 and employee savings accounts, the investment income of the pension fund shall be 02 allocated to the retirement reserve account and to each employer asset share account 03 according to the ratio that the average of the assets in the account as of the beginning 04 and as of the end of the fiscal year bears to the total of the average balance of the 05 retirement reserve account and all employer accounts. 06 (4) An expense account shall be maintained for the plan [SYSTEM]. 07 This account shall be charged with all disbursements representing administrative 08 expenses incurred by the plan [SYSTEM]. At the end of the year the expense account 09 shall be allocated to each employer in accordance with (3) of this subsection. 10 Expenditures from this account shall be included in the governor's budget for each 11 fiscal year and are subject to approval by the legislature. 12 * Sec. 83. AS 39.35 is amended by adding a new section to article 1 to read: 13 Sec. 39.35.115. Defined benefit retirement plan. (a) A defined benefit 14 retirement plan for employees of the state, political subdivisions, and public 15 organizations is created. The plan becomes effective January 1, 1961, at which time 16 contributions by the employers and members begin. 17 (b) The retirement plan established by AS 39.35.095 - 39.35.680 is intended to 18 qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified 19 retirement plan established and maintained by the state for its employees and for the 20 employees of political subdivisions, public corporations, and public organizations of 21 the state, and for the employees of other employers whose participation is authorized 22 by AS 39.35.095 - 39.35.680 and who participate in this plan. 23 (c) An amendment to AS 39.35.095 - 39.35.680 does not provide a person 24 with a vested right to a benefit if the Internal Revenue Service determines that the 25 amendment will result in disqualification of the plan under the Internal Revenue Code. 26 * Sec. 84. AS 39.35.120 is amended to read: 27 Sec. 39.35.120. Commencement of participation. (a) An employee of the 28 state shall be included in this system upon commencement of employment with the 29 state, or on January 1, 1961, whichever is later. Unless an employee participates in a 30 [HAS ELECTED TO PARTICIPATE IN THE OPTIONAL] university retirement 31 program under AS 14.40.661 - 14.40.799, an employee of a political subdivision or
01 public organization that becomes an employer shall be included in the system on the 02 effective date of the employer's participation or the date of the employee's 03 commencement of employment with the employer, whichever is later. 04 (b) Inclusion in the system is a condition of employment for an employee 05 except as otherwise provided for 06 (1) an elected official; 07 (2) an employee making an election under AS 39.35.150(b); and 08 (3) an employee of the university who participates in a [HAS 09 ELECTED TO PARTICIPATE IN THE OPTIONAL] university retirement program 10 under AS 14.40.661 - 14.40.799. 11 * Sec. 85. AS 39.35.131 is amended to read: 12 Sec. 39.35.131. Membership in teachers' and public employees' 13 retirement systems. (a) A person who is employed at least half-time in the plan 14 [SYSTEM] during the same period that the person is employed at least half-time in a 15 position in the teachers' retirement plan [SYSTEM] under AS 14.25.009 - 14.25.220 16 [AS 14.25] shall receive credited service under each plan [SYSTEM] for half-time 17 employment. However, the amount of credited service a person receives under the 18 plan [SYSTEM] during a school year may not exceed the amount necessary, when 19 added to the amount of credited service earned during the school year under the 20 teachers' retirement system, to equal one year of credited service. 21 (b) A person who was employed at least half-time in a position in the teachers' 22 retirement plan [SYSTEM] under AS 14.25.009 - 14.25.220 [AS 14.25] in the same 23 period that the person was employed at least half-time in a position in this plan 24 [SYSTEM] may claim credited service in both plan [SYSTEMS] for employment 25 before May 31, 1989. To obtain this credited service, the person shall claim the 26 service and verify the period of half-time employment. When eligibility for half-time 27 service credit has been established, an indebtedness shall be determined to the 28 retirement plan [SYSTEM] in which the person did not participate. The amount of 29 the indebtedness is the full actuarial cost of providing benefits for the credited service 30 claimed. Interest as prescribed by regulation accrues on that indebtedness beginning 31 on the later of July 1, 1989, or the date on which the member is first eligible to claim
01 the service. Any outstanding indebtedness existing at the time the person retires will 02 require an actuarial adjustment to the benefits payable based on that service. 03 * Sec. 86. AS 39.35.158 is amended to read: 04 Sec. 39.35.158. Administrative director of courts. An administrative 05 director of the Alaska court system who withdraws from the judicial retirement system 06 under AS 22.25.012 is eligible for membership in the plan [SYSTEM] and shall 07 receive credited service in the plan [SYSTEM] for service rendered as administrative 08 director. To be eligible for membership in the plan [SYSTEM] under this subsection, 09 the administrative director must contribute to the plan [SYSTEM] 10 (1) the amount the director would have contributed if the director had 11 been a member during the director's period of membership in the judicial retirement 12 system; and 13 (2) any contributions for services as administrative director refunded 14 by the plan [SYSTEM] at the time the director became a member of the judicial 15 retirement system. 16 * Sec. 87. AS 39.35.165(a) is amended to read: 17 (a) An employee who is eligible to purchase credited service under 18 AS 39.35.310, 39.35.330, 39.35.340, 39.35.342, 39.35.345, [39.35.350,] 39.35.360, or 19 39.35.370, a member who is eligible to purchase credited service under AS 39.35.375, 20 or an elected public official who is eligible to purchase credited service under 21 AS 39.35.381 is an employee for purposes of this section. An employee may, in lieu 22 of making payments directly to the plan, elect to have the employee's employer make 23 payments as provided in this section. 24 * Sec. 88. AS 39.35.165(b) is amended to read: 25 (b) An employee may elect to have the employer make payments for all or any 26 portion of the amounts payable for the employee's purchase of credited service 27 through a salary reduction program as follows: 28 (1) the amounts paid under a salary reduction program are in lieu of 29 contributions by the employee making the election; the electing employee's salary or 30 other compensation shall be reduced by the amount paid by the employer under this 31 subsection;
01 (2) the employee shall make an irrevocable election under this section 02 to purchase credited service as permitted in AS 39.35.310, 39.35.330, 39.35.340, 03 39.35.342, 39.35.345, [39.35.350,] 39.35.360, 39.35.370, 39.35.375, or 39.35.381 and 04 before the employee's termination of employment; the irrevocable election must 05 specify the number of payroll periods that deductions will be made from the 06 employee's compensation and the dollar amount of deductions for each payroll period 07 during the specified number of payroll periods; the deductions made under this 08 paragraph cease upon the earlier of the member's termination of employment with the 09 employer or the member's death; amounts paid by an employer under (f) of this 10 section may not be applied toward the payment of the dollar amount of the deductions 11 representing the portion of the credited service that is being purchased by the member 12 through payroll deduction in accordance with the member's irrevocable election under 13 this subsection; 14 (3) amounts paid by an employer under this subsection shall be treated 15 as employer contributions for the purpose of determining tax treatment under the 16 Internal Revenue Code; the amounts paid by the employer under this section may not 17 be included in the member's gross income for income tax purposes until those amounts 18 are distributed by refund or retirement benefit payments. 19 * Sec. 89. AS 39.35.165(f) is amended to read: 20 (f) The commissioner may accept rollover contributions from a member [AND 21 DIRECT TRANSFERS, AS DESCRIBED IN THIS SUBSECTION, FOR THE 22 PURCHASE, IN WHOLE OR IN PART, OF CREDITED SERVICE FOR THE 23 REINSTATEMENT, IN WHOLE OR IN PART, OF FORFEITED CREDITED 24 SERVICE UNDER AS 39.35.350]. A rollover contribution [OR TRANSFER] as 25 described in this subsection shall also be treated as employer contributions for the 26 purpose of determining tax treatment under the Internal Revenue Code and may be 27 made by any one or a combination of the following methods: 28 (1) subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26 29 U.S.C. 402(c), accepting eligible rollover distributions directly from one or more 30 retirement programs of another employer that are qualified under 26 U.S.C. 401(a) or 31 accepting rollovers directly from a member;
01 (2) subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii), 02 accepting from a member conduit rollover contributions that are received by the 03 employee from one or more conduit rollover individual retirement accounts previously 04 established by the member; 05 (3) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 06 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 07 member, on or after January 1, 2002, from a tax sheltered annuity described in 26 08 U.S.C. 403(b); 09 (4) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 10 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 11 member, on or after January 1, 2002, from an eligible deferred compensation plan of a 12 tax-exempt organization or a state or local government described in 26 U.S.C. 457(b); 13 (5) accepting direct trustee-to-trustee transfer from an account 14 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 15 Supplemental Annuity Plan). 16 * Sec. 90. AS 39.35.165(g) is amended to read: 17 (g) Payments made under this section shall be applied to reduce the 18 employee's outstanding indebtedness described in AS 39.35.310, 39.35.330, 19 39.35.340, 39.35.342, 39.35.345, [39.35.350,] 39.35.360, 39.35.370, 39.35.375, or 20 39.35.381 at the time that the contributions are received by the plan. 21 * Sec. 91. AS 39.35.165(i) is amended to read: 22 (i) On satisfaction of the eligibility requirements of AS 39.35.310, 39.35.330, 23 39.35.340, 39.35.341, 39.35.345, [39.35.350,] 39.35.360, 39.35.370, 39.35.375, or 24 39.35.381, the requirements of this section, and the administrative filing requirements 25 specified by the commissioner, the plan shall adjust the employee's credited service 26 history and add any additional service credits acquired. 27 * Sec. 92. AS 39.35.200 is amended by adding a new subsection to read: 28 (d) An employee who receives a refund of contributions in accordance with 29 this section forfeits corresponding credited service under AS 39.35.095 - 39.35.680. 30 * Sec. 93. AS 39.35.270 is amended to read: 31 Sec. 39.35.270. Amount of employer's contributions. The amount of each
01 employer's contributions shall be determined by applying the employer's contribution 02 rate, as certified by the board, to the total compensation paid to the active employees 03 of the employer for each payroll period and by including any adjustments to 04 contributions required by AS 39.35.520(a). This amount shall be remitted by the 05 employer to the administrator in accordance with AS 39.35.610. 06 * Sec. 94. AS 39.35.270 is amended by adding a new subsection to read: 07 (b) When added to the member contribution determined under AS 39.35.250, 08 the employer contribution may not result in an amount less than the amount required, 09 as actuarially calculated, to fully fund the future liabilities of active members nor may 10 the employer contribution percentage under (a) of this section be set at less than 10 11 percent. 12 * Sec. 95. AS 39.35.340(f) is amended to read: 13 (f) An employee may not [CANNOT] be credited with a period of active 14 military service in the armed forces of the United States under this section if credit for 15 that military service was granted under AS 14.25.009 - 14.25.220 [AS 14.25]. 16 * Sec. 96. AS 39.35.340(h) is amended to read: 17 (h) The combined period of military service claimed under this section and 18 under AS 14.25.009 - 14.25.220 [AS 14.25] may not exceed five years. 19 * Sec. 97. AS 39.35.360(i) is amended to read: 20 (i) An employee who completes three years of credited service with an 21 employer, for which the employee makes contributions required by AS 39.35.095 - 22 39.35.680 [THIS CHAPTER], is entitled to credited service on a year-for-year basis 23 for service credited in the Civil Service Retirement System, rendered as an employee 24 of an Alaska Bureau of Indian Affairs (BIA) school, other than service as a teacher. 25 When eligibility for retroactive credited service under this subsection has been 26 established, an indebtedness of the employee to the plan [SYSTEM] shall be 27 determined as follows: (1) the employee's actual annual compensation, or the 28 calculated annual compensation for an employee who works fewer than 12 months, for 29 the most recent calendar year in which service is rendered to an employer before the 30 calendar year in which the employee first becomes eligible to claim service under this 31 subsection, multiplied by (2) the number of years of service in Alaska BIA schools
01 that is credited under this subsection, and this product multiplied by (3) six percent for 02 employees first eligible to claim this service before January 1, 1987, or eight and one- 03 half percent for employees first eligible to claim this service on or after January 1, 04 1987. Interest as prescribed by regulation accrues on the indebtedness beginning on 05 the date the employee may first claim the retroactive credited service. Any 06 outstanding indebtedness that exists at the time the employee retires requires an 07 actuarial adjustment to the benefits that are based on retroactive credited service under 08 this subsection. A retirement benefit payable under this subsection for Alaska BIA 09 service shall be reduced by an amount equal to the retirement benefits paid to the 10 member by the United States government for the same service. 11 * Sec. 98. AS 39.35.360(l) is amended to read: 12 (l) An administrative director of the Alaska Court System who withdraws 13 from the judicial retirement system under AS 22.25.012(b) is eligible for membership 14 in the plan [PUBLIC EMPLOYEES' RETIREMENT SYSTEM] and shall receive 15 credited service in this plan [SYSTEM] for service rendered as administrative 16 director. To be eligible for membership in this plan [SYSTEM] under this subsection, 17 the administrative director must contribute to the plan [SYSTEM] 18 (1) the amount that would have been contributed if the administrative 19 director had been a member during the period of the membership in the judicial 20 retirement system; and 21 (2) any contributions for service as administrative director refunded 22 from the plan [PUBLIC EMPLOYEES' RETIREMENT SYSTEM] at the time the 23 administrative director became a member of the judicial retirement system. 24 * Sec. 99. AS 39.35.370(g) is amended to read: 25 (g) When an employee who was employed as a dispatcher in a state trooper 26 office or in a police or fire department in the plan [PUBLIC EMPLOYEES' 27 RETIREMENT SYSTEM] applies for appointment to retirement, the employee may 28 convert the credited service for that position to credited service as a peace officer by 29 claiming the service as peace officer service. An employee who has converted 30 credited service to peace officer service under this subsection shall be treated as a 31 peace officer for purposes of AS 39.35.095 - 39.35.680 [THIS CHAPTER]. When the
01 member claims this credited service as peace officer service, an indebtedness of the 02 member to the plan [SYSTEM] shall be established. The indebtedness is equal to the 03 full actuarial cost of the conversion of the credited service to treatment as peace 04 officer service. Any outstanding indebtedness that exists at the time the member is 05 appointed to retirement shall [WILL] require an actuarial adjustment to the benefits 06 payable based upon the conversion of the credited service. 07 * Sec. 100. AS 39.35.375(a) is amended to read: 08 (a) An active or inactive member who has never been vested in this plan 09 [SYSTEM] or in the teachers' retirement plan [SYSTEM] under AS 14.25.009 - 10 14.25.220 [AS 14.25], who has at least two years of credited service in this plan 11 [SYSTEM], and who has membership service in the teachers' retirement system may 12 claim credited service in this plan [SYSTEM] in an amount equal to the membership 13 service the member has in the teachers' retirement system. The claimed credited 14 service may be added to service earned under AS 39.35.095 - 39.35.680 [THIS 15 CHAPTER] to enable the member to qualify for a public service benefit under this 16 section. The member may not claim credited service for membership service for 17 which the member has received a refund under AS 14.25.150 unless the member fully 18 pays the indebtedness as established under AS 14.25.063. The member may not claim 19 credited service in this plan [SYSTEM] based on unused sick leave under 20 AS 14.25.115. 21 * Sec. 101. AS 39.35.375(b) is amended to read: 22 (b) To claim credited service under this section, the member shall file a 23 written request with the administrator when the member applies to retire. The 24 administrator shall determine the full actuarial cost of benefits based on the member's 25 total credited service and shall transfer from the teachers' retirement system to this 26 plan [SYSTEM] an amount equal to the sum of the member contributions and any 27 indebtedness payments to the teachers' retirement system and the employer 28 contributions to the teachers' retirement system made on behalf of the employee 29 together with interest earned on those contributions and indebtedness payments. If the 30 amount to be transferred, when combined with the amount of employee contributions 31 and indebtedness payments to this plan [SYSTEM] and the amount of employer
01 contributions on behalf of the employee in this plan [SYSTEM], and interest earned 02 on contributions and indebtedness payments for the employee, is less than the full 03 actuarial cost computed under this subsection, an indebtedness to the plan [SYSTEM] 04 equal to the amount of the difference is established. Interest as prescribed by 05 regulation accrues on the indebtedness. The member must pay any outstanding 06 indebtedness existing at the time the member applies for retirement in full before the 07 member is appointed to retirement under this section. 08 * Sec. 102. AS 39.35.375(c) is amended to read: 09 (c) A member is entitled to receive a public service benefit under this section 10 if the member has at least a total of five years credited service under AS 39.35.095 - 11 39.35.680 [THIS CHAPTER] and credited service from the teachers' retirement plan 12 under AS 14.25.009 - 14.25.220 [SYSTEM] claimed under this section. A public 13 service benefit shall be calculated using the higher of the average monthly 14 compensation for service in this plan [SYSTEM] or the average base salary for 15 service in the teachers' retirement plan under AS 14.25.009 - 14.25.220 [SYSTEM]. 16 The amount of the benefit shall be calculated in accordance with AS 39.35.370(c). 17 * Sec. 103. AS 39.35.375(d) is amended to read: 18 (d) Credited service earned under either this plan [SYSTEM] or the teachers' 19 retirement system that has been claimed for a public service benefit under this section 20 may not be used for any other purpose. A member who claims credited service under 21 this section loses all rights to benefits under AS 14.25 based on the claimed credited 22 service. A member may not claim credited service under this section unless the 23 member claims all of the membership service the member has in the teachers' 24 retirement system. A public service benefit does not constitute a normal or early 25 retirement benefit for purposes of qualifying for a conditional service retirement 26 benefit under AS 14.25.125 or AS 39.35.385. 27 * Sec. 104. AS 39.35.375(f) is amended to read: 28 (f) Notwithstanding AS 14.25.063 and AS 39.35.350, a former member of the 29 teachers' retirement system who is an active member or inactive member of this plan 30 [SYSTEM] may reinstate, under this section, membership service earned under 31 AS 14.25 for which the member received a refund of contributions.
01 * Sec. 105. AS 39.35.375(f) is amended to read: 02 (f) Notwithstanding AS 14.25.063 [AND AS 39.35.350], a former member of 03 the teachers' retirement system who is an active member or inactive member of this 04 plan may reinstate, under this section, membership service earned under AS 14.25 for 05 which the member received a refund of contributions. 06 * Sec. 106. AS 39.35.375(g) is amended to read: 07 (g) If a member retires under this section and subsequently returns to work for 08 an employer under this plan [SYSTEM] or the teachers' retirement system, benefits 09 under this section shall cease during the period of reemployment and shall 10 recommence when the reemployment is ended. The credited service earned during the 11 period of reemployment may not be added to the credited service claimed for a public 12 service benefit under this section. If a member vests and meets the other eligibility 13 requirements under this system or the teachers' retirement system during the 14 reemployment, the member is entitled to a benefit under AS 14.25.009 - 14.25.220 15 [AS 14.25] or 39.35.095 - 39.35.680 [AS 39.35], as appropriate. 16 * Sec. 107. AS 39.35.375 is amended by adding a new subsection to read: 17 (h) In this section, 18 (1) "teachers' retirement system" and "teachers' retirement system 19 under AS 14.25" means the teachers' retirement plan established in AS 14.25.009 - 20 14.25.220; 21 (2) "membership service earned under AS 14.25" means membership 22 service earned under AS 14.25.009 - 14.25.220. 23 * Sec. 108. AS 39.35.381(a) is amended to read: 24 (a) An elected public officer is eligible for a public officer benefit if the officer 25 is retired under AS 14.25.009 - 14.25.220 [AS 14.25 (TEACHERS' RETIREMENT 26 SYSTEM)]. Only fully paid credited service as an elected public officer of a 27 municipality or other political subdivision, earned while the municipality or political 28 subdivision was an employer under this plan [SYSTEM] and while the person was 29 employed full-time under AS 14.25.009 - 14.25.220 [AS 14.25], may be counted 30 under this section. 31 * Sec. 109. AS 39.35.410(f) is amended to read:
01 (f) An employee is not entitled to an occupational disability benefit unless the 02 employee files an application for it with the administrator within 90 days of the date of 03 terminating employment. If the employee is unable to meet a filing requirement of 04 this subsection, it may be waived by the commissioner [PUBLIC EMPLOYEES' 05 RETIREMENT BOARD] if there are extraordinary circumstances that resulted in the 06 employee's inability to meet the filing requirement. [THE BOARD MAY 07 DELEGATE THE AUTHORITY TO WAIVE A FILING DEADLINE UNDER THIS 08 SUBSECTION TO THE ADMINISTRATOR.] 09 * Sec. 110. AS 39.35.475(a), as that subsection read following amendment by sec. 34, ch. 10 146, SLA 1980, until amended by sec. 41, ch. 82, SLA 1986, is amended to read: 11 (a) When the administrator determines that the cost of living has increased and 12 that the financial condition of the retirement fund permits, the administrator [HE] 13 shall increase benefit payments to persons receiving benefits under this plan. For 14 purposes of this subsection, the financial condition of the fund would only permit 15 an increase in benefits when the ratio of total fund assets to the accrued liability 16 meets or exceeds 105 percent. In this subsection, "accrued liability" means the 17 present value of all member benefits accrued by member service in this plan 18 [SYSTEM]. 19 * Sec. 111. AS 39.35.485(a) is amended to read: 20 (a) An employee who is eligible for a benefit calculated in accordance with 21 AS 39.35.370(c) is entitled to a benefit of at least $25 a month for each year of 22 credited service, not including adjustments made under AS 39.35.340 for military 23 service, [AS 39.35.350 FOR REINSTATEMENT OF CREDITED SERVICE,] 24 AS 39.35.360 for credit for earlier service, AS 39.35.370(c) for early retirement, 25 AS 39.35.420 for nonoccupational death benefits, AS 39.35.450 for the survivor's 26 option, former AS 39.35.460 for the level income option, AS 39.35.475 for the post- 27 retirement pension adjustment, and AS 39.35.480 for the cost of living. 28 * Sec. 112. AS 39.35.520(c) is amended to read: 29 (c) At least quarterly, [AT EACH REGULARLY SCHEDULED MEETING 30 OF THE PUBLIC EMPLOYEES' RETIREMENT BOARD,] the administrator shall 31 report to the commissioner of administration [BOARD] on all situations since the
01 administrator's last report in which an adjustment has been prohibited under (b) of this 02 section. If the commissioner of administration [BOARD] finds that there is reason 03 to believe that one or more of the conditions set out in (b) of this section have not been 04 met, the administrator shall notify the member or beneficiary that an adjustment will 05 be made to recover the overpayment. A member or beneficiary who receives notice of 06 adjustment under this subsection may file a request with the commissioner of 07 administration [APPEAL TO THE BOARD] for a waiver of the adjustment under 08 AS 39.35.522. An adjustment may not be required while the waiver request 09 [APPEAL] is pending. 10 * Sec. 113. AS 39.35.522(a) is amended to read: 11 (a) Upon request [APPEAL] by an affected member or beneficiary under (b) 12 of this section, the commissioner of administration [BOARD] may waive an 13 adjustment or any portion of an adjustment made under AS 39.35.520 if, in the 14 opinion of the commissioner of administration [BOARD], 15 (1) the adjustment or portion of the adjustment will cause undue 16 hardship to the member or beneficiary; 17 (2) [REPEALED 18 (3) REPEALED 19 (4)] the adjustment was not the result of erroneous information 20 supplied by the member or beneficiary; 21 (3) [(5)] before the adjustment was made, the member or beneficiary 22 received confirmation from the administrator that the employee's or beneficiary's 23 records were correct; and 24 (4) [(6)] the member or beneficiary had no reasonable grounds to 25 believe the employee's or beneficiary's records were incorrect before the adjustment 26 was made. 27 * Sec. 114. AS 39.35.535(a) is repealed and reenacted to read: 28 (a) Except as provided in (d) of this section, the following persons are entitled 29 to major medical insurance coverage under this section: 30 (1) for employees first hired before July 1, 1986, 31 (A) an employee who is receiving a monthly benefit from the
01 plan and who has elected coverage; 02 (B) the spouse and dependent children of the employee 03 described in (A) of this paragraph; 04 (C) the surviving spouse of a deceased employee who is 05 receiving a monthly benefit from the plan and who has elected coverage; 06 (D) the dependent children of a deceased employee who are 07 dependent on the surviving spouse described in (C) of this paragraph; 08 (2) for members first hired on or after July 1, 1986, 09 (A) an employee who is receiving a monthly benefit from the 10 plan and who has elected coverage for the employee; 11 (B) the spouse of the employee described in (A) of this 12 paragraph if the employee elected coverage for the spouse; 13 (C) the dependent children of the employee described in (A) of 14 this paragraph if the employee elected coverage for the dependent children; 15 (D) the surviving spouse of a deceased employee who is 16 receiving a monthly benefit from the plan and who has elected coverage; 17 (E) the dependent children of a deceased employee who are 18 dependent on the surviving spouse described in (D) of this paragraph if the 19 surviving spouse has elected coverage for the dependent children. 20 * Sec. 115. AS 39.35.680(2) is amended to read: 21 (2) "actuarial adjustment" means the adjustment necessary to obtain 22 equality in value of the aggregate expected payments under two different forms of 23 pension payments, considering expected mortality and interest earnings on the basis of 24 assumptions, factors, and methods specified in regulations issued under this plan 25 [SYSTEM] that are formally adopted [UNDER AS 39.35.042] by the board that 26 clearly preclude employer discretion in the determination of the amount of any 27 member's benefit; 28 * Sec. 116. AS 39.35.680(6) is amended to read: 29 (6) "board" means the Alaska Retirement Management [PUBLIC 30 EMPLOYEES RETIREMENT] Board; 31 * Sec. 117. AS 39.35.680(21) is amended to read:
01 (21) "member" or "employee" 02 (A) means a person eligible to participate in the system and 03 who is covered by the system; 04 (B) includes 05 (i) an active member; 06 (ii) an inactive member; 07 (iii) a vested member; 08 (iv) a deferred vested member; 09 (v) a nonvested member; 10 (vi) a disabled member; 11 (vii) a retired member; 12 (viii) an elected public officer under AS 39.35.381; 13 (C) does not include 14 (i) former members; 15 (ii) persons compensated on a contractual or fee basis; 16 (iii) casual or emergency workers or nonpermanent 17 employees as defined in AS 39.25.200; 18 (iv) persons covered by the Alaska Teachers' 19 Retirement System except as provided under AS 39.35.131 and 20 39.35.381, or persons covered by a [THE OPTIONAL] university 21 retirement program; 22 (v) employees of the division of marine transportation 23 engaged in operating the state ferry system who are covered by a union 24 or group retirement system to which the state makes contributions; 25 (vi) justices of the supreme court or judges of the court 26 of appeals or of the superior or district courts of Alaska; 27 (vii) the administrative director of courts appointed 28 under art. IV, sec. 16 of the state constitution unless the director 29 becomes a member under AS 39.35.158; 30 (viii) members of the elected public officers' retirement 31 system (former AS 39.37); and
01 (ix) contractual employees of the legislative branch of 02 state government under AS 24.10.060(f); 03 (x) full-time or part-time instructors of the 04 Department of Labor and Workforce Development who have a 05 teaching certificate, regardless of whether the position as instructor 06 requires a teaching certificate as a condition of employment and 07 have earlier credited service under AS 14.25.009 - 14.25.220; 08 (D) may include employees of the division of marine 09 transportation excluded under (C)(v) of this paragraph provided that 10 (i) the State of Alaska formally agrees to their inclusion 11 through the process of collective bargaining; and 12 (ii) no collective bargaining agreement has the effect of 13 obligating contributions made by the state under AS 39.30.150 in the 14 event the state resumes participation in the federal social security 15 system; 16 * Sec. 118. AS 39.35.680(34) is amended to read: 17 (34) "qualified domestic relations order" means a divorce or 18 dissolution judgment under AS 25.24, including an order approving a property 19 settlement, that 20 (A) creates or recognizes the existence of an alternate payee's 21 right to, or assigns to an alternate payee the right to, receive all or a portion of 22 employee contribution account or the benefits payable with respect to an 23 employee; 24 (B) sets out the name and last known mailing address, if any, of 25 the employee and of each alternate payee covered by the order; 26 (C) sets out the amount or percentage of the employee's benefit, 27 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 28 manner in which that amount or percentage is to be determined; 29 (D) sets out the number of payments or period to which the 30 order applies; 31 (E) sets out the retirement plan [SYSTEM] to which the order
01 applies; 02 (F) does not require any type or form of benefit or any option 03 not otherwise provided by AS 39.35.095 - 39.35.680 [THIS CHAPTER]; 04 (G) does not require an increase of benefits in excess of the 05 amount provided by AS 39.35.095 - 39.35.680 [THIS CHAPTER], determined 06 on the basis of actuarial value; and 07 (H) does not require the payment to an alternate payee of 08 benefits that are required to be paid to another alternate payee under another 09 order previously determined to be a qualified domestic relations order; 10 * Sec. 119. AS 39.35.680 is amended by adding new paragraphs to read: 11 (41) "commissioner" means the commissioner of administration; 12 (42) "plan" means the retirement plan established in AS 39.35.095 - 13 39.35.680. 14 * Sec. 120. AS 39.35 is amended by adding new sections to read: 15 Article 9. Employees First Hired on or after July 1, 2005. 16 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 17 AS 39.35.700 - 39.35.990 apply only to members first hired on or after July 1, 2005, 18 who fail to choose to participate in the defined benefit plan under AS 39.35.705 or to 19 members who transfer into the defined contribution plan under AS 39.35.940. 20 Sec. 39.35.705. Retirement plan choice. (a) An employee who is first hired 21 on or after July 1, 2005, may choose to participate either in the defined benefits plan 22 established in AS 39.35.095 - 39.35.680 or the defined contribution plan established in 23 AS 39.35.700 - 39.35.990. The employee may make a choice between the available 24 retirement plans within 30 days after the date of employment, on a form provided by 25 the administrator. If the employee fails to make a timely choice under this section, the 26 provisions of AS 39.35.700 - 39.35.990 shall apply to the employee during the period 27 of employment. 28 (b) After the 31st day of employment, the employee may not change from one 29 retirement plan to another. The retirement plan determined to apply on the 31st day of 30 employment shall be considered to apply beginning on the first day the employee is 31 employed and the day the retirement plan is determined.
01 (c) A employee who terminates employment and is later rehired may again 02 exercise the option provided in this section only if, at the time of rehire, the option in 03 this section is available to all employees first hired at the time the employee is rehired. 04 (d) The administrator shall notify the employer of a employee as soon as 05 possible regarding the retirement plan applicable to that employee, and the employer 06 shall make the appropriate employee and employer contributions required by the 07 applicable retirement plan for that employee. 08 Sec. 39.35.710. Defined contribution retirement plan established; federal 09 qualification requirements. (a) A defined contribution retirement plan is established 10 for employees of the state or a political subdivision or public organization of the state. 11 (b) The defined contribution retirement plan is a plan in which savings are 12 accumulated in an individual retirement account for the exclusive benefit of the 13 member or beneficiaries. The plan is established effective July 1, 2005, at which time 14 contributions by employers and members begin. 15 (c) The retirement plan established by AS 39.35.700 - 39.35.990 is intended to 16 qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified 17 retirement plan established and maintained by the state for its employees, for the 18 employees of political subdivisions, public corporations, and public organizations of 19 the state, and for the employees of other employers whose participation is authorized 20 by AS 39.35.700 - 39.35.990 and who participate in the plan set out in AS 39.35.700 - 21 39.35.990. 22 (d) An amendment to AS 39.35.700 - 39.35.990 does not provide a person 23 with a vested right to a benefit if the Internal Revenue Service determines that the 24 amendment will result in disqualification of the plan under the Internal Revenue Code. 25 Sec. 39.35.720. Membership. An employee who becomes a member on or 26 after July 1, 2005, and fails under AS 39.35.705 to choose to participate in the defined 27 benefit retirement plan shall participate in the plan set out in AS 39.35.700 - 28 39.35.990. 29 Sec. 39.35.730. Contributions by members. (a) Each member shall 30 contribute to the member's individual account an amount equal to eight percent of the 31 member's compensation from July 1 to the following June 30.
01 (b) Subject to the limitations on contributions under AS 39.35.780, a member 02 may elect to make additional contributions to the member's individual account. 03 (c) The employer shall deduct the contribution from the member's 04 compensation at the end of each payroll period, and the contribution shall be credited 05 by the plan to the member's individual account. The contributions shall be deducted 06 from member's compensation before the computation of applicable federal taxes and 07 shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A member may 08 not have the option of making the payroll deduction directly in cash instead of having 09 the contribution picked up by the employer. 10 Sec. 39.35.740. Employment contributions mandatory. Contributions of 11 employees shall be made by payroll deductions. Every included employee shall be 12 considered to consent to payroll deductions. It is of no consequence that a payroll 13 deduction may cause the compensation paid in cash to an employee to be reduced 14 below the minimum required by law. Payment of an employee's compensation, less 15 payroll deductions, is a full and complete discharge and satisfaction of all claims and 16 demands by the employee relating to remuneration of services during the period 17 covered by the payment, except with respect to the benefits provided under the plan. 18 Sec. 39.35.750. Contributions by employers. (a) An employer shall 19 contribute to each member's individual account an amount equal to five percent of the 20 member's compensation from July 1 to the following June 30. 21 (b) An employer shall also contribute an amount equal to 2.5 percent of each 22 member's compensation from July 1 to the following June 30 to pay for retiree major 23 medical insurance. This contribution shall be paid into the group health and life 24 benefits fund established by the commissioner of administration under AS 39.30.095 25 and shall be accounted for in accordance with regulations established by the 26 commissioner. 27 (c) An employer shall also make contributions to the health reimbursement 28 arrangement plan under AS 39.30.300. 29 (d) An employer shall make annual contributions to the plan in an amount 30 determined by the board to be actuarially required to fully fund the cost of providing 31 occupational disability and occupational death benefits under AS 39.35.890 and
01 39.35.892. 02 Sec. 39.35.760. Rollover contributions and distributions. (a) An employee 03 entering the plan may elect, at the time and in the manner prescribed by the 04 administrator, to have all or part of a direct rollover distribution from an eligible 05 retirement plan owned by the member paid directly into the member's individual 06 account. 07 (b) Rollover contributions do not count as a purchase of membership service 08 for the purpose of determining years of service. 09 (c) A distributee may elect, at the time and in the manner prescribed by the 10 administrator, to have all or part of an eligible rollover distribution paid directly to an 11 eligible retirement plan specified by the distributee in the direct rollover. 12 (d) In this section, 13 (1) "direct rollover" means the payment of an eligible rollover 14 distribution by the plan to an eligible retirement plan specified by a distributee who is 15 eligible to elect a direct rollover; 16 (2) "distributee" means a member, or a beneficiary who is the 17 surviving spouse of the member, or an alternate payee; 18 (3) "eligible retirement plan" means 19 (A) a conduit individual retirement account described in 26 20 U.S.C. 408(d)(3)(A); 21 (B) an annuity plan described in 26 U.S.C. 403(a); 22 (C) a qualified trust described in 26 U.S.C. 401(a); 23 (D) an annuity plan described in 26 U.S.C. 403(b); or 24 (E) a governmental plan described in 26 U.S.C. 457(b); 25 (4) "eligible rollover distribution" means a distribution of all or part of 26 a total account to a distributee, except for 27 (A) a distribution that is one of a series of substantially equal 28 installments payable not less frequently than annually over the life expectancy 29 of the distributee or the joint and last survivor life expectancy of the distributee 30 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 31 (B) a distribution that is one of a series of substantially equal
01 installments payable not less frequently than annually over a specified period 02 of 10 years or more; 03 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 04 (D) the portion of any distribution that is not includable in 05 gross income; 06 (E) a distribution that is on account of hardship; and 07 (F) other distributions that are reasonably expected to total less 08 than $200 during a year. 09 Sec. 39.35.770. Transmittal of contributions. All contributions deducted in 10 accordance with AS 39.35.700 - 39.35.990 shall be transmitted to the plan for deposit 11 in the trust fund as soon as administratively feasible, but in no event later than 15 days 12 following the close of the payroll period. 13 Sec. 39.35.780. Limitations on contributions. Notwithstanding any other 14 provisions of this plan, the annual additions to each member's individual account 15 under this plan and under all defined contribution plans of the employer required to be 16 aggregated with the contributions from this plan under the provisions of 26 U.S.C. 415 17 may not exceed, for any limitation year, the amount permitted under 26 U.S.C. 415 at 18 any time. If the amount of a member's defined contribution plan contributions exceeds 19 the limitation of 26 U.S.C. 415(c) for any limitation year, the administrator shall take 20 any necessary remedial action to correct an excess contribution. The provisions of 26 21 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 22 defined contribution plans of governmental employees are incorporated as part of the 23 terms and conditions of the plan. 24 Sec. 39.35.790. Vesting. (a) A participating member is immediately and 25 fully vested in that member's contributions and related earnings. 26 (b) A member shall be fully vested in the employer contributions made on that 27 member's behalf, and related earnings, after five years of service. A member is 28 partially vested in the employer contributions made on that member's behalf, and the 29 related earnings, in the ratio of 30 (1) 25 percent with two years of service; 31 (2) 50 percent with three years of service; and
01 (3) 75 percent with four years of service. 02 Sec. 39.35.800. Investment of individual accounts. (a) The board shall 03 provide a range of investment options and permit a participant to exercise investment 04 control over the participant's assets in the member's individual account as provided in 05 this section. If a participant exercises control over the assets in the individual account, 06 the participant is not considered a fiduciary for any reason on the basis of exercising 07 that control. 08 (b) A participant may direct investment of plan funds held in an account 09 among available investment funds in accordance with rules established by the board. 10 (c) A participant may elect to change or transfer all or a portion of the 11 participant's existing account balance among available investment funds not more 12 often than once each day in accordance with the rules established by the administrator. 13 Only the last election received by the administrator before the transmittal of 14 contributions to the trust fund for allocation to the individual account shall be used to 15 direct the investment of the contributions received. 16 (d) Except to the extent clearly set out in the terms of the investment plans 17 offered by the employer to the employee, the employer is not liable to the participant 18 for investment losses if the prudent investment standard has been met. 19 (e) The employer, administrator, state, board, or a person or entity who is 20 otherwise a fiduciary is not liable by reason for any participant's investment loss that 21 results from the participant's directing the investment of plan assets allocated to the 22 participant's account. 23 (f) To the extent that a member's individual account has been divided as 24 provided in a qualified domestic relations order between participants, each participant 25 shall be treated as the holder of a separate individual account for purposes of 26 investment yields, decisions, transfers, and time limitations imposed by this section. 27 Sec. 39.35.810. Distribution election at termination. (a) A member is 28 eligible to elect distribution of the member's account in accordance with this section 29 60 days after termination of employment. 30 (b) Notwithstanding (a) of this section, distribution of all or a portion of the 31 individual account of a member may take place before the 60th day after the
01 termination of employment with the approval of the administrator if the member 02 makes a written request for a distribution under this subsection. The member's spouse 03 must consent to the request in writing if the member is married. Distribution of an 04 individual account may only be made on account of an immediate and heavy financial 05 need of the member for the following reasons and in the amount the need is 06 demonstrated for 07 (1) medical care described in 26 U.S.C. 213(d) incurred by the 08 member, the member's spouse, or the member's dependent, or necessary to obtain that 09 medical care; 10 (2) the purchase of a principal residence for the member; 11 (3) postsecondary education tuition and related educational fees for the 12 next 12-month period for the member, the member's spouse, or a dependent of the 13 member; in this paragraph, "dependent" has the meaning given in 26 U.S.C. 152; 14 (4) prevention of the eviction of the member from the member's 15 principal residence or foreclosure on the mortgage of the member's principal 16 residence; or 17 (5) any need prescribed by the United States Department of the 18 Treasury, Internal Revenue Service, in a revenue ruling, notice, or other document of 19 general applicability that satisfies the safe harbor definition of hardship under 20 regulations adopted under 26 U.S.C. 401(k). 21 (c) If a member dies before benefits commence, the member's beneficiary is 22 immediately eligible to elect distribution of the member's share of the member's 23 individual account. 24 (d) Distributions are payable to an alternate payee in accordance with the 25 terms and conditions of a qualified domestic relations order that is received and 26 approved by the administrator as specified in AS 39.35.860. 27 (e) Distributions that are being paid to a member may not be affected by the 28 member's subsequent reemployment with the employer. Upon reemployment, a new 29 individual account shall be established for the member to which any future 30 contributions shall be allocated. Upon subsequent termination of employment, the 31 member's new individual account shall be distributed in accordance with this section.
01 Sec. 39.35.820. Forms of distribution. (a) A participant may elect to receive 02 the participant's share of the individual account in a 03 (1) lump sum payment, which is a single payment of the entire balance 04 in the account; 05 (2) periodic lump sum payment, which is a payment of a portion of the 06 balance in the account, not more than twice each year; 07 (3) period certain annuity payment, which is an annuity payable in a 08 fixed number of monthly installments for a duration of 60, 120, or 180 months; 09 (4) life annuity with a period certain payment, which is an annuity 10 payable until the later of the first day of the month in which the annuitant's death 11 occurs, or the date on which the payment of a fixed number of monthly installments is 12 completed; the period certain for installments is 120 or 180 months; 13 (5) single life annuity payment, which is an annuity payable monthly 14 until the first of the month in which the annuitant's death occurs; or 15 (6) joint and survivor annuity payment, which is an annuity payable 16 monthly to the member until the first of the month in which the member's death 17 occurs; after the member's death, a survivor annuity equal to 50 percent or 100 percent 18 of the member's benefit, as previously elected by the member, shall be paid monthly to 19 the joint annuitant for the remainder of the survivor's lifetime. 20 (b) Upon the death of an annuitant whose payments have commenced, an 21 annuitant's beneficiary shall receive further payments only to the extent provided in 22 accordance with the form of payment that was being made to the annuitant. The 23 remaining portion of the interest shall continue to be distributed at least as rapidly as 24 under the method of distribution being used before the annuitant's death. 25 (c) If a participant dies before the distribution commencement date, 26 distribution of the participant's entire interest to a beneficiary shall be payable in any 27 form other than a joint and survivor annuity. 28 (d) If an unmarried member or other participant fails to elect a form of 29 payment before the distribution commencement date, the account shall be paid to a 30 beneficiary in the form of a lump sum to the extent required by the minimum 31 distribution requirements set out in the Internal Revenue Code. If a married member
01 fails to elect a form of payment before the distribution commencement date, the 02 account shall be paid in the form of a 50 percent joint and survivor annuity, with the 03 member's spouse as the joint annuitant. 04 Sec. 39.35.830. Manner of electing distributions. (a) Any election or any 05 alteration or revocation of a prior election by a participant for any purpose under this 06 plan shall be on forms or made in a manner prescribed for that purpose by the plan 07 administrator. To be effective, the forms required or the required action for any 08 purpose under this plan must be completed and received in accordance with 09 regulations adopted by the commissioner of administration. 10 (b) At any time, but not less than seven days before the benefit 11 commencement date, a member, alternate payee, or beneficiary may change 12 (1) the form of payment election; 13 (2) an election to commence benefits; or 14 (3) the joint annuitant designation. 15 (c) Changes in elections are not allowed on or after seven days before the 16 benefit commencement date. 17 Sec. 39.35.840. Distribution requirements. (a) Payments to a participant 18 shall commence as soon as administratively feasible following the distribution 19 commencement date. The distribution commencement date is the first date on which 20 one of the following occurs: 21 (1) a member meets the requirements of AS 39.35.810 and has made a 22 complete application for payment under AS 39.35.830; 23 (2) a participant has elected to defer receipt of the account to a date 24 specified, the date has been attained, and the participant has made a complete 25 application for payment; 26 (3) a member attains normal retirement age and has not made an 27 application for payment or elected to defer receipt of the account to a date later than 28 normal retirement age; 29 (4) a member's beneficiary does not make an application for benefits 30 and five years have elapsed since the member's death; 31 (5) notwithstanding (a) of this section, a participant whose account has
01 a balance of $1,000 or less meets the requirements of AS 39.35.810, at which time the 02 participant must take payment of the participant's account. 03 (b) The entire interest of a member must be distributed or must begin to be 04 distributed not later than the member's required beginning date. 05 (c) If a member dies after the distribution of the member's interest has begun 06 but before the distribution has been completed, the remaining portion of the interest 07 shall continue to be distributed at least as rapidly as under the method of distribution 08 being used before the member's death. 09 (d) If a member has made a distribution election and dies before the 10 distribution of the member's interest begins, distribution of the member's entire interest 11 shall be completed by December 31 of the calendar year containing the fifth 12 anniversary of the member's death. However, if any portion of the member's interest 13 is payable to a designated beneficiary, distributions may be made over the life of the 14 designated beneficiary or over a period certain not greater than the life expectancy of 15 the designated beneficiary, commencing on or before December 31 of the calendar 16 year immediately following the calendar year in which the member died, and, if the 17 designated beneficiary is the member's surviving spouse, the date distributions are 18 required to begin may not be earlier than the later of December 31 of the calendar year 19 (1) immediately following the calendar year in which the member died, or (2) in which 20 the member would have attained 70 1/2 years of age, whichever is earlier. If the 21 surviving spouse dies after the member but before payments to the spouse have begun, 22 the provisions of this subsection apply as if the surviving spouse were the member. 23 An amount paid to a child of the member shall be treated as if it were paid to the 24 surviving spouse if the amount becomes payable to the surviving spouse when the 25 child reaches the age of majority. 26 (e) If a member has not made a distribution election before the member's 27 death, the member's designated beneficiary must elect the method of distribution not 28 later than December 31 of the calendar year (1) in which distributions would be 29 required to begin under this section, or (2) that contains the fifth anniversary of the 30 date of death of the member, whichever is earlier. If the member does not have a 31 designated beneficiary or if the designated beneficiary does not elect a method of
01 distribution, distribution of the member's entire interest must be completed by 02 December 31 of the calendar year containing the fifth anniversary of the member's 03 death. 04 (f) For purposes of (b) of this section, distribution of a member's interest is 05 considered to begin (1) on the member's required beginning date, or (2) if the 06 designated beneficiary is the member's surviving spouse and the surviving spouse dies 07 after the member but before payments to the spouse have begun, on the date 08 distribution is required to begin to the surviving spouse. If distribution in the form of 09 an annuity irrevocably commences to the member before the required beginning date, 10 the date distribution is considered to begin is the date that the distribution actually 11 commences. 12 (g) Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.990, the 13 requirements of this section apply to all distributions of a member's interest and take 14 precedence over any inconsistent provisions of AS 39.35.700 - 39.35.990. 15 (h) All distributions required under this section are determined and made in 16 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 17 including any minimum distribution incidental benefit requirement. 18 (i) In this section, 19 (1) "designated beneficiary" means the individual who is designated as 20 the beneficiary under the plan in accordance with 26 U.S.C. 401(a)(9) and regulations 21 adopted under that statute; 22 (2) "required beginning date" means the first day of April of the 23 calendar year following the calendar year in which the member either attains 70 1/2 24 years of age or actually terminates employment, whichever is later. 25 Sec. 39.35.850. Designation of beneficiary. (a) Each participant shall have 26 the right to designate a beneficiary and shall have the right, at any time, to revoke the 27 designation or to substitute another beneficiary, subject to the following limitation: if a 28 married member elects a nonspouse beneficiary, the value of the benefit payable to the 29 beneficiary may not exceed 50 percent of the member's portion of the account balance, 30 and the member's spouse shall automatically be considered the beneficiary for the 31 remaining 50 percent of the account balance, unless the spouse consents to the
01 beneficiary designation in a writing that is notarized or witnessed by the administrator. 02 If the spouse consents in this manner, a married member may designate a nonspouse 03 beneficiary for the entire benefit or any portion the benefit as part of an available form 04 of payment contained in this plan, 05 (1) except to the extent a qualified domestic relations order filed with 06 the administrator provides for payment to a former spouse or other dependent of the 07 member; or 08 (2) unless the member filed a revocation of beneficiary accompanied 09 by a written consent to the revocation from the present spouse and each person entitled 10 under the order; however, consent of the present spouse is not required if the member 11 and the present spouse had been married for less than one year on the date of the 12 member's death and if the member established when filing the revocation that the 13 member and the present spouse were not cohabiting. 14 (b) Except as provided in (a) of this section, the member may change or 15 revoke the designation without notice to the beneficiary or beneficiaries at any time. 16 If a member designates more than one beneficiary, each shares equally unless the 17 member specifies a different allocation or preference. The designation of a 18 beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a 19 beneficiary shall be made on a form provided by the administrator and is not effective 20 until filed with the administrator. 21 (c) If a member fails to designate a beneficiary, or if no designated beneficiary 22 survives the member, the death benefit shall be paid 23 (1) to the surviving spouse or, if there is none surviving; 24 (2) to the surviving children of the member in equal parts or, if there 25 are none surviving; 26 (3) to the surviving parents in equal parts or, if there are none 27 surviving; 28 (4) to the estate. 29 (d) A person claiming entitlement to benefits payable under AS 39.35.700 - 30 39.35.990 as a consequence of a member's death shall provide the administrator with a 31 marriage certificate, divorce or dissolution judgment, or other evidence of entitlement.
01 Documents establishing entitlement may be filed with the administrator immediately 02 after a change in the member's marital status. If the administrator does not receive 03 notification of a claim before the date 10 days after the member's death, the person 04 claiming entitlement is not entitled to receive from the division of retirement and 05 benefits any benefit already paid by the administrator. 06 Sec. 39.35.860. Rights under qualified domestic relations order. (a) 07 Notwithstanding the nonalienation provisions in AS 39.35.900(a), the plan 08 administrator may direct that benefits be paid to someone other than a member or 09 beneficiary under a valid qualified domestic relations order that is executed by the 10 judge of a competent court in accordance with applicable state law and that has been 11 accepted by the administrator. 12 (b) The administrator shall determine whether an order meets the requirements 13 of this section within a reasonable period after receiving an order. The administrator 14 shall notify the member and any alternate payee that an order has been received and 15 indicate to the member and any alternate payee when the order is accepted. A separate 16 account for the alternate payee portion shall be established as soon as administratively 17 feasible after the order has been accepted by the administrator. 18 Sec. 39.35.870. Retirement. (a) In order to obtain medical benefits under 19 AS 39.35.880 an active member must retire directly from the plan. A member is 20 eligible to retire from the plan if the member has been an active member for at least 12 21 months before application for retirement and 22 (1) the member has at least 25 years of membership service as a peace 23 officer or fire fighter or at least 30 years of membership service for all other 24 employees; or 25 (2) the member reaches the normal retirement age and has at least 10 26 years of membership service. 27 (b) The normal retirement age is 60 months less than the age set for Medicare 28 eligibility at the time the member retires. 29 (c) A member must apply to the administrator for appointment to retirement. 30 Application shall be made on forms and in the manner prescribed by the administrator. 31 (d) A member who continues in the employ of the employer after reaching
01 normal retirement age shall continue to participate in the plan and to have 02 contributions allocated to the member's account. 03 Sec. 39.35.880. Medical benefits. (a) The medical benefits available to 04 eligible persons are access to the retiree major medical plan. Access to the retiree 05 major medical plan means that an eligible person may not be denied medical coverage 06 except for failure to pay the required premium. 07 (b) The following persons are eligible for the retiree major medical insurance 08 plan provided under this section and may elect coverage under it: 09 (1) a member with at least 25 years of membership service as a peace 10 officer or fire fighter or at least 30 years of membership service for all other 11 employees and who retires directly from the plan; 12 (2) the surviving spouse of a member who elected coverage under (1) 13 of this subsection; 14 (3) a member who reaches the normal retirement age as provided in 15 AS 39.35.860, has at least 10 years of service, and retires directly from the plan; 16 (4) the surviving spouse of a member who elected coverage under (3) 17 of this subsection. 18 (c) Retiree major medical plan coverage elected by an eligible member under 19 this section covers the eligible member, the spouse of the eligible member, and the 20 dependent children of the qualified member. 21 (d) Retiree major medical plan coverage elected by the surviving spouse of an 22 eligible member under this section covers the surviving spouse and the dependent 23 children of the eligible member who are dependent on the surviving spouse. 24 (e) A person other than an eligible member is not eligible for coverage if, 25 during the time the eligible member was an active member, the person was 26 (1) not married to the member; or 27 (2) not a dependent child of the member. 28 (f) Major medical coverage takes effect on the first day of the month 29 following the date of the election and stops when the person who elects coverage 30 under (b) of this section dies or fails to make a required premium payment. 31 (g) The coverage for persons who are eligible for Medicare is the same as that
01 available for persons who are not yet eligible for Medicare. The benefits payable to 02 those Medicare eligible persons supplement any benefits provided under the Medicare 03 program. 04 (h) The medical and optional insurance premiums owed by the person who 05 elects coverage under (b) of this section shall be deducted from the health 06 reimbursement arrangement. If the amount of the health reimbursement arrangement 07 becomes insufficient to pay the premiums, the person who elects coverage under (b) of 08 this section shall pay the premiums directly. 09 (i) The administrator shall set on an annual basis separate retiree health 10 coverage premiums for participants who are Medicare eligible and for participants 11 who are not yet Medicare eligible. A participant's share of the applicable premium 12 shall be determined according to (j), (k), and (n) of this section. 13 (j) Participants who have not attained normal retirement age are required to 14 pay the full amount of the applicable medical health coverage premium. 15 (k) Participants who have attained normal retirement age are eligible for a 16 subsidy applicable to the cost of the applicable premium. The subsidy percentage 17 applicable to the cost of premiums payable by the participant is 30 percent if the 18 member had 10 years of service; for each additional year of service after the member's 19 10th year of service, the discount increases by three percentage points; however, the 20 maximum discount is 90 percent if the member has 30 or more years of service. The 21 applicable subsidy percentage shall be applied to the subsidy base to determine the 22 dollar amount of the subsidy that is applied against the cost of the premium. 23 (l) Participants who are eligible for Medicare are eligible for benefits as 24 provided in (n) of this section. Participants who are not yet eligible for Medicare shall 25 use the subsidy base for non-Medicare eligible premiums. 26 (m) The subsidy base for non-Medicare eligible participants shall be the same 27 as the premium amount for non-Medicare-eligible participants in the first year of this 28 plan. The subsidy base shall increase five percent each year or the rate at which the 29 actual premium amount increases for the corresponding aged participants, whichever 30 is less. 31 (n) The cost of premiums for a participant who is eligible for Medicare is the
01 following percentage of the premium amount: 02 (1) 30 percent if the member has 10 or more, but less than 15 years of 03 service; 04 (2) 25 percent if the member has 15 or more, but less than 20 years of 05 service; 06 (3) 20 percent if the member has 20 or more, but less than 30 years of 07 service; 08 (4) 10 percent if the member has 30 or more years of service. 09 (o) The eligibility for retiree major medical coverage for an alternate payee 10 under a qualified domestic relations order shall be determined based on the eligibility 11 of the member to elect coverage. The alternate payee shall pay the full monthly 12 premium for retiree major medical coverage. 13 (p) The administrator shall establish the monthly group premiums for retiree 14 major medical coverage. Nothing in AS 39.35.700 - 39.35.895 guarantees a person 15 who elects coverage under (b) of this section a monthly group premium rate for retiree 16 major medical coverage other than the premium in effect for the month in which the 17 premium is due for coverage for that month. 18 (q) A member is eligible to apply for reimbursement from the health 19 reimbursement arrangement plan after a minimum of 10 years of service and does not 20 have to retire directly from the system. 21 (r) In this section, 22 (1) "health reimbursement arrangement" means the plan established in 23 AS 39.30.300; 24 (2) "retires directly from the plan" means that the member has been an 25 active member for at least 12 consecutive months immediately before the time that the 26 member applies to the administrator for appointment to retirement and that the 27 member continues as an active member up through the day before the day the member 28 is appointed to retirement. 29 Sec. 39.35.885. Cost-saving measures in retiree health care system. The 30 division of retirement and benefits shall implement by regulation cost-saving measures 31 appropriate to the retirees health care system. This includes using manufacturer's
01 rebates, copay levels, and multi-tiered copayment structures; mandating the use of 02 generic drugs; determining the type of drug classes in a formulary; dispensing fees; 03 mandating or providing incentives for mail order pharmaceuticals; using a reduction in 04 the average wholesale price; providing case management services for certain users of 05 pharmaceuticals; capping the number of prescriptions filled each month; and 06 restricting the number of refills that users can have at one time. 07 Sec. 39.35.890. Occupational disability benefits and reemployment of 08 disabled employees. (a) An employee is eligible for an occupational disability 09 benefit if employment is terminated because of a total and apparently permanent 10 occupational disability before the employee's normal retirement date. 11 (b) The occupational disability benefits accrue beginning the first day of the 12 month following termination of employment as a result of the disability and are 13 payable the last day of the month. If a final determination granting the benefit is not 14 made in time to pay the benefit when due, a retroactive payment shall be made to 15 cover the period of deferment. The last payment shall be for the first month in which 16 the disabled employee 17 (1) dies; 18 (2) recovers from the disability; 19 (3) fails to meet the requirements under (f) or (j) of this section; or 20 (4) reaches normal retirement age. 21 (c) If the disabled employee becomes ineligible to receive occupational 22 disability benefits before the normal retirement date, the disabled employee shall then 23 be entitled to receive retirement benefits if the employee would have been eligible for 24 the benefit had employment continued during the period of disability. The period of 25 disability constitutes membership service in regard to determining eligibility for 26 retirement. 27 (d) The monthly amount of an occupational disability benefit is 40 percent of 28 the disabled employee's gross monthly compensation at the time of termination due to 29 disability. While an employee is receiving disability benefits, based on the disabled 30 employee's gross monthly compensation at the time of termination due to disability, 31 the employer shall make contributions
01 (1) to the employee's individual account under AS 39.35.730 on behalf 02 of the employee, without deduction from the employee's disability payments; and 03 (2) on behalf of the employee under AS 39.35.750. 04 (e) An employee is not entitled to an occupational disability benefit unless the 05 employee files an application for an occupational disability benefit with the 06 administrator within 90 days after the date of terminating employment. If the 07 employee is unable to meet a filing requirement of this subsection, the filing 08 requirement may be waived by the administrator if there are extraordinary 09 circumstances that resulted in the employee's inability to meet the filing requirement. 10 (f) A disabled employee receiving an occupational disability benefit shall 11 undergo a medical examination as often as the administrator considers advisable, but 12 not more frequently than once each year. The administrator shall determine the place 13 of the examination and engage the physician or physicians. If, in the judgment of the 14 administrator, the examination indicates that the retired employee is no longer 15 incapacitated because of a total and apparently permanent occupational disability, the 16 administrator may not issue further disability benefits to the employee. 17 (g) A disabled employee's occupational disability benefit terminates when the 18 disabled employee first attains eligibility for normal retirement. At that time, the 19 employee's retirement benefit shall be determined under the provisions of 20 AS 39.35.840 and 39.35.870. An employee receiving disability benefits up until 21 eligibility for retirement shall be considered to have retired directly from the plan. 22 (h) Notwithstanding (g) of this section, at the time a peace officer or fire 23 fighter receiving occupational disability benefits under this section first attains 24 eligibility for normal retirement, the employee shall irrevocably elect to receive 25 retirement benefits in the amount calculated as the 26 (1) monthly occupational disability benefit calculated under (d) of this 27 section; or 28 (2) employee's retirement benefit calculated under the provisions of 29 AS 39.35.370(c). 30 (i) Notwithstanding (b)(3) of this section, a peace officer or fire fighter who 31 retires under (h) of this section is not subject to the requirements of (f) or (j) of this
01 section during retirement. 02 (j) An employee appointed to disability benefits shall apply to the division of 03 vocational rehabilitation within 30 days after the date disability benefits commence. 04 The employee shall be enrolled in a rehabilitation program if the employee meets the 05 eligibility requirements of the division of vocational rehabilitation. Unless the 06 employee demonstrates cause, benefits shall terminate at the end of the first month in 07 which a disabled employee 08 (1) fails to report to the division of vocational rehabilitation; 09 (2) is certified by the division of vocational rehabilitation as failing to 10 cooperate in a vocational rehabilitation program; 11 (3) fails to interview for a job; or 12 (4) fails to accept a position offered. 13 (k) Upon the death of a disabled employee who is receiving or is entitled to 14 receive an occupational disability benefit, the administrator shall pay the surviving 15 spouse a surviving spouse's pension, equal to 40 percent of the employee's monthly 16 compensation at the termination of employment because of occupational disability. If 17 there is no surviving spouse, the administrator shall pay the survivor's pension in equal 18 parts to the dependent children of the employee. The first payment of the surviving 19 spouse's pension or of a dependent child's pension shall accrue from the first day of 20 the month following the employee's death and is payable the last day of the month. 21 The last payment shall be made for the last month in which there is an eligible 22 surviving spouse or child. On the date the normal retirement of the employee would 23 have occurred if the employee had lived, the retirement benefit shall be determined 24 under the provisions of AS 39.35.840 and 39.35.870. An employee who died while 25 receiving disability benefits shall be considered to have retired directly from the plan 26 on the date the normal retirement of the employee would have occurred if the 27 employee had lived. 28 (l) In this section, "occupational disability" has the meaning given in 29 AS 39.35.680. 30 Sec. 39.35.892. Occupational death benefit. (a) If (1) the death of an 31 employee occurs before the employee's retirement and before the employee's normal
01 retirement date, (2) the proximate cause of death is a bodily injury sustained or a 02 hazard undergone while in the performance and within the scope of the employee's 03 duties, and (3) the injury or hazard is not the proximate result of wilful negligence of 04 the employee, a monthly survivor's pension shall be paid to the surviving spouse. If 05 there is no surviving spouse or if the spouse later dies, the monthly survivor's pension 06 shall be paid in equal parts to the dependent children of the employee. 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, and payment shall cease to be made beginning with the month in 10 which the employee would have first qualified for retirement. 11 (c) The monthly survivor's pension in (b) of this section for survivors of 12 employees who were not peace officers or fire fighters is 40 percent of the employee's 13 monthly compensation in the month in which the employee dies. The monthly 14 survivor's pension in (b) of this section for survivors of employees who were peace 15 officers or fire fighters is 50 percent of the monthly compensation in the month in 16 which the employee dies. While the monthly survivor's pension is being paid, the 17 employer shall make contributions on behalf of the employee's beneficiaries based on 18 the deceased employee's gross monthly compensation at the time of occupational 19 death 20 (1) to the employee's individual account under AS 39.35.730, without 21 deduction from the survivor's pension; and 22 (2) to the appropriate accounts and funds under AS 39.35.750. 23 (d) If an employee's death is caused by an act of assault, assassination, or 24 terrorism directly related to the person's status as an employee, whether the act occurs 25 on or off the employee's job site, the death shall be considered to have occurred in the 26 performance of and within the scope of the employee's duties for purposes of (a)(2) of 27 this section. If the expressed or apparent motive and intent of the perpetrator of the 28 harm inflicted upon the employee was due to the performance of the employee's job 29 duties or employment, the death shall be considered to be directly related to the 30 employee's status as an employee. An employee's job duties are those performed 31 within the course and scope of the person's employment with an employer.
01 (e) On the date the normal retirement of the employee would have occurred if 02 the employee had lived, the retirement benefit shall be determined under the 03 provisions of AS 39.35.840 and 39.35.870. An employee who died and whose 04 survivors receive occupational death benefits under this section shall be considered to 05 have retired directly from the plan on the date the normal retirement of the employee 06 would have occurred if the employee had lived. 07 Sec. 39.35.895. Amendment and termination of plan. (a) The state has the 08 right to amend the plan at any time and from time to time, in whole or in part, 09 including the right to make retroactive amendments referred to in 26 U.S.C. 401(b). 10 (b) The plan administrator may not modify or amend the plan retroactively in 11 such a manner as to reduce the benefits of any member accrued to date under the plan 12 by reason of contributions made before the modification or amendment except to the 13 extent that the reduction is permitted by the Internal Revenue Code. 14 (c) The state may, in its discretion, terminate the plan in whole or part at any 15 time without liability for the termination. If the plan is terminated, all investments 16 remain in force until all individual accounts have been completely distributed under 17 the plan, and, after all plan liabilities are satisfied, excess assets revert to the employer. 18 (d) Any contribution made by an employer to the plan because of a mistake of 19 fact must be returned to the employer by the administrator within one year after the 20 contribution or discovery, whichever is later. 21 Sec. 39.35.900. Exclusive benefit. (a) The corpus or income of the assets 22 held in trust as required by the plan may not be diverted or used for other than the 23 exclusive benefit of the participants. 24 (b) If plan benefits are provided through the distribution of annuity or 25 insurance contracts, any refunds or credits in excess of plan benefits due to dividends, 26 earnings, or other experience rating credits, or surrender or cancellation credits, shall 27 be paid to the trust fund. 28 (c) The assets of the plan may not be used to pay premiums or contributions of 29 the employer under another plan maintained by the employer. 30 Sec. 39.35.910. Nonguarantee of returns, rates, or benefit amounts. The 31 plan created by AS 39.35.700 - 39.35.990 is a defined contribution plan, not a defined
01 benefit plan. The amount of money in the account of a participant depends on the 02 amount of contributions and the rate of return from investments of the account that 03 varies over time. If benefits are paid in the form of an annuity, the benefit amount 04 payable is dependent on the amount of money in the account and the interest rates 05 applied and service fees charged by the annuity payor at the time benefits are first 06 paid. Nothing in this plan guarantees a participant 07 (1) a rate of return or interest rate other than that actually earned by the 08 account of the participant, less applicable administrative expenses; or 09 (2) an annuity based on interest rates or service charges other than 10 interest rates available from and service charges by the annuity payor in effect at the 11 time the annuity is paid. 12 Sec. 39.35.920. Nonguarantee of employment. The provisions of 13 AS 39.35.700 - 39.35.990 are not a contract of employment between an employer and 14 an employee, nor do they confer a right of an employee to be continued in the 15 employment of an employer, nor are they a limitation of the right of an employer to 16 discharge an employee with or without cause. 17 Sec. 39.35.930. Fraud. (a) A person who knowingly makes a false statement 18 or falsifies or permits to be falsified a record of this plan in an attempt to defraud the 19 plan is guilty of a class A misdemeanor. 20 (b) In this section, "knowingly" has the meaning given in AS 11.81.900(a). 21 Sec. 39.35.940. Transfer into defined contribution plan by nonvested 22 members of defined benefit plan. (a) Subject to (g) of this section, an active 23 member of the defined benefit retirement plan of the public employees' retirement 24 system is eligible to participate in the defined contribution retirement plan established 25 under AS 39.35.700 - 39.35.990, if that member has not vested. Participation in the 26 defined contribution retirement plan is in lieu of participation in the defined benefit 27 retirement plan established under AS 39.35.095 - 39.35.680. 28 (b) A member who has vested in a defined benefit retirement plan is not 29 eligible to transfer under this section. 30 (c) Each eligible member who elects to participate in the defined contribution 31 retirement plan shall have transferred to a new account the present value of the
01 member contribution account balance held in trust for the member under the defined 02 benefit retirement plan of the public employees' retirement system. A matching 03 employer contribution shall be made on behalf of that employee to the new account. 04 Upon a transfer, all service credit previously earned under the defined benefit 05 retirement plan shall be nullified for purposes of entitlement to a future benefit under 06 the defined benefit retirement plan but shall be credited for purposes of eligibility to 07 elect medical benefits under AS 39.35.870. An eligible member whose accounts are 08 subject to a qualified domestic relations order may not make an election to participate 09 in the defined contribution retirement plan under this subsection unless the qualified 10 domestic relations order is amended or vacated and court-certified copies of the order 11 are received by the administrator. 12 (d) As directed by the participant, the board shall transfer or cause to be 13 transferred the appropriate amounts to the designated account. The board shall 14 establish transfer procedures by regulation, but the actual transfer may not be later 15 than 30 days after the effective date of the member's participation in the defined 16 contribution retirement plan unless the major financial markets for securities available 17 for a transfer are seriously disrupted by an unforeseen event that also causes the 18 suspension of trading on any national securities exchange in the country where the 19 securities were issued. In that event, the 30-day period of time may be extended by a 20 resolution of the board of trustees. Transfers are not commissionable or subject to 21 other fees and may be in the form of securities or cash as determined by the board. 22 Securities shall be valued as of the date of receipt in the participant's account. 23 (e) If the board or the administrator receives notification from the United 24 States Department of the Treasury, Internal Revenue Service, that this section or a 25 portion of this section will cause the retirement system under this chapter, or a portion 26 of the retirement system under this chapter, to be disqualified for tax purposes under 27 the Internal Revenue Code, the portion that will cause the disqualification does not 28 apply, and the board and the administrator shall notify the presiding officers of the 29 legislature. 30 (f) The election to participate in the defined contribution retirement plan must 31 be made in writing on forms and in the manner prescribed by the administrator.
01 Before accepting an election to participate in the defined contribution retirement plan, 02 the administrator must provide the employee planning on making an election to 03 participate in the defined contribution retirement plan with information, including 04 calculations to illustrate the effect of moving the employee's retirement plan from the 05 defined benefit retirement plan to the defined contribution retirement plan as well as 06 other information to clearly inform the employee of the potential consequences of the 07 employee's election. An election made under this subsection to participate in the 08 defined contribution retirement plan is irrevocable. Upon making the election, the 09 participant shall be enrolled as a member of the defined contribution retirement plan, 10 the member's participation in the plan shall be governed by the provisions of 11 AS 39.35.700 - 39.35.990, and the member's participation in the defined benefit 12 retirement plan under AS 39.35.115 shall terminate. The participant's enrollment in 13 the defined contribution retirement plan shall be effective the first day of the month 14 after the administrator receives the completed enrollment forms. An election made by 15 an eligible member who is married is not effective unless the election is signed by the 16 individual's spouse. 17 (g) A member may make an election under this section only if the member's 18 employer participates in both the defined benefits retirement plan and the defined 19 contribution retirement plan and consents to transfers under this section. The 20 employer shall notify the administrator if the employer consents to allowing the 21 employer's members to choose to transfer from the defined benefits retirement plan to 22 the defined contribution retirement plan under this section. An employer's notice to 23 allow transfers is irrevocable and applicable to all eligible employees of the employer. 24 (h) In this section, 25 (1) "defined benefit retirement plan" means the retirement plan 26 established in AS 39.35.095 - 39.35.680; 27 (2) "defined contribution retirement plan" means the retirement plan 28 established in AS 39.35.700 - 39.35.990. 29 Sec. 39.35.950. Request by political subdivision to participate and 30 adoption of resolution. A municipality or other political subdivision of the state may 31 request to become an employer in this plan. The request shall be made after adoption
01 of a resolution by the legislative body of the political subdivision and after approval of 02 the resolution by the person required by law to approve the resolution. A certified 03 copy of the resolution shall be filed with the administrator. If the administrator 04 approves the request for participation, the political subdivision is an employer of the 05 plan. 06 Sec. 39.35.955. Request by public organization to participate and 07 adoption of resolution. A public organization may request to become an employer in 08 this plan. The request shall be made after adoption of a resolution by the governing 09 body of the public organization. A certified copy of the resolution shall be filed with 10 the administrator. If the administrator approves the request for participation, the 11 public organization is an employer of the plan. 12 Sec. 39.35.960. Membership in teachers' and public employees' 13 retirement systems. A person who is employed at least half-time in the public 14 employees' defined contribution retirement plan (AS 39.35.700 - 39.35.990) during the 15 same period that the person is employed at least half-time in a position in the teachers' 16 defined contribution retirement plan (AS 14.25.310 - 14.25.590) shall receive credited 17 service under each plan for half-time employment. However, the amount of credited 18 service a person receives under the public employees' defined contribution retirement 19 plan during a school year may not exceed the amount necessary, when added to the 20 amount of credited service earned during the school year under the teachers' defined 21 contribution retirement plan, to equal one year of credited service. 22 Sec. 39.35.965. Army and air national guard employees. A regular full- 23 time civilian employee of the Alaska Army National Guard and Air National Guard 24 whose entire salary is paid from allotted federal funds is included in the public 25 employees' defined contribution retirement plan (AS 39.35.700 - 39.35.990) if the 26 federal or state government pays the employer's contributions. If the amount that the 27 federal government may legally contribute to the plan is lower than the required 28 employer's contribution, the state government shall contribute the difference. If the 29 employer's contributions are not paid when due, service credit for the period of 30 delinquency may not be granted until the contributions are paid. 31 Sec. 39.35.970. North Pacific Fishery Management Council employees.
01 An employee of the North Pacific Fishery Management Council appointed under 16 02 U.S.C. 1852(f)(1) (Sec. 302(f)(1) of P.L. 94-265) whose compensation is paid from 03 allotted federal funds is included in the public employees' defined contribution 04 retirement plan (AS 39.35.700 - 39.35.990) if the council pays the employer's 05 contributions. If the employer's contributions are not paid when due, credited service 06 for the period of delinquency may not be granted until the contributions are paid. 07 Sec. 39.35.990. Definitions. In AS 39.35.700 - 39.35.990, unless the context 08 requires otherwise, 09 (1) "administrator" means the commissioner of administration or the 10 commissioner's designee; 11 (2) "alternate payee" means the person for whom an amount has been 12 separated into an account under a qualified domestic relations order; 13 (3) "annuitant" means a member, beneficiary, or alternate payee who is 14 receiving a benefit under this plan; 15 (4) "beneficiary" means the person or persons entitled under the 16 provisions of this plan to receive benefits after the death of a member or alternate 17 payee; 18 (5) "board" has the meaning given in AS 39.35.680; 19 (6) "calendar year" has the meaning given in AS 39.35.680; 20 (7) "compensation" 21 (A) means 22 (i) the total remuneration earned by an employee for 23 personal services rendered, including cost-of-living differentials, as 24 reported on the employee's Federal Income Tax Withholding Statement 25 (Form W-2) from the employer for the calendar year; 26 (ii) the member contribution to the public employees' 27 retirement system under AS 39.35.730, employee deferrals under 28 AS 39.45.010, the wage reduction amount contributed to the Alaska 29 Supplemental Annuity Plan under AS 39.30.150(a), and the wage 30 reduction amount contributed to the Alaska Supplemental Benefit Plan 31 under AS 39.30.150(c), as those statutes may be amended from time to
01 time; 02 (B) does not include retirement benefits, severance pay or other 03 separation bonuses, welfare benefits, per diem, expense allowances, workers' 04 compensation payments, payments for leave not used whether those leave 05 payments are scheduled payments, lump-sum payments, donations, or cash-ins, 06 any remuneration contributed by the employer for or on account of the 07 employee under this plan or under any other qualified or nonqualified 08 employee benefit plan, any remuneration not specifically included above 09 which would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue 10 Code) if the employer had remained in the Federal Social Security System, or 11 any remuneration paid by the employer in excess of the Social Security 12 Taxable Wage Base for the calendar year; 13 (C) notwithstanding (B) of this paragraph, includes any amount 14 that is contributed by the employer under a salary reduction agreement and that 15 is not includible in the gross income of the employee under 26 U.S.C. 125, 16 132(f)(4), 402(e)(3), 402(h)(1)(B) or 403(b) (Internal Revenue Code); the 17 annual compensation limitation for the member, which is so taken into account 18 for those purposes, may not exceed $200,000, as adjusted for the cost of living 19 in accordance with 26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the 20 limitation for a fiscal year being the limitation in effect for the calendar year 21 within which the fiscal year begins; 22 (8) "dependent child" has the meaning given in AS 39.35.680; 23 (9) "distribution commencement date" has the meaning given in 24 AS 39.35.840(a); 25 (10) "employer" means 26 (A) the State of Alaska; or 27 (B) a political subdivision or public organization of the state 28 that participates in the plan; 29 (11) "fund" means the assets of the plan; 30 (12) "individual account" means the total maintained by the plan in an 31 investment account within the trust fund, established for each member for the purposes
01 of allocation of the member's contributions, the employer's contributions on behalf of 02 the member, and earnings credited to each of those contributions, investment gains 03 and losses, and expenses; as well as reporting of the member's benefit under the plan; 04 (13) "Internal Revenue Code" means the Internal Revenue Code of 05 1986, as amended; 06 (14) "investment funds" means those separate funds that are provided 07 within and that make up the trust fund and that are established for the purpose of 08 directing investment through the exercise of the sole control of a member, beneficiary, 09 or alternate payee under the terms of the plan and trust agreement; 10 (15) "limitation year" means the year for which contributions are made 11 to a member's individual account as reported to the Internal Revenue Service and as 12 meets the limits described in 26 U.S.C. 415(c); 13 (16) "member" means an employee of an employer or former 14 employee of an employer who retains a right to benefits under the plan, but does not 15 include full-time or part-time instructors of the Department of Labor and Workforce 16 Development who have a teaching certificate, regardless of whether the position as 17 instructor requires a teaching certificate as a condition of employment and who have 18 earlier credited service under AS 14.25.310 - 14.25.590; 19 (17) "membership service" means full-time or part-time employment 20 with an employer in the plan; 21 (18) "normal retirement age" means 60 months less than the age set for 22 Medicare eligibility at the time the member retires; 23 (19) "participant" means the person who has a vested right to an 24 individual account, such as a member, an alternate payee if the account is subject to a 25 qualified domestic relations order, the member's beneficiary if the member is 26 deceased, or an alternate payee's beneficiary if the alternate payee is deceased; 27 (20) "peace officer" or "fire fighter" has the meaning given in 28 AS 39.35.680; 29 (21) "plan" means the retirement plan established in AS 39.35.700 - 30 39.35.990; 31 (22) "prudent investment standard" means the degree of care, skill,
01 prudence, and diligence under the circumstances then prevailing that a prudent person 02 acting in a like capacity and familiar with such matters would use in the conduct of an 03 enterprise of a like character and with like aims; 04 (23) "qualified domestic relations order" means a divorce or 05 dissolution judgment under AS 25.24, including an order approving a property 06 settlement, that 07 (A) creates or recognizes the existence of an alternate payee's 08 right to, or assigns to an alternate payee the right to, receive all or a portion of 09 an individual account or the benefits payable with respect to a member; 10 (B) sets out the name and last known mailing address, if any, of 11 the member and of each alternate payee covered by the order; 12 (C) sets out the amount or percentage of the member's benefit, 13 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 14 manner in which that amount or percentage is to be determined; 15 (D) sets out the number of payments or period to which the 16 order applies; 17 (E) sets out the retirement plan to which the order applies; 18 (F) does not require any type or form of benefit or any option 19 not otherwise provided by AS 39.35.700 - 39.35.990; 20 (G) does not require an increase of benefits in excess of the 21 amount provided by AS 39.35.700 - 39.35.990; and 22 (H) does not require the payment to an alternate payee of 23 benefits that are required to be paid to another alternate payee under another 24 order previously determined to be a qualified domestic relations order; 25 (24) "retiree" means an eligible person who has elected to receive 26 medical benefits under AS 39.35.880; 27 (25) "surviving spouse" means the spouse of an employee who has 28 been married to the employee for at least one year at the time of the employee's death; 29 (26) "system" has the meaning given in AS 39.35.680; 30 (27) "year of service" means the equivalent of 52 weeks of permanent 31 full-time employment, which may consist of a combination of permanent full-time or
01 permanent part-time membership service; in this paragraph, "permanent full-time" and 02 "permanent part-time" have the meanings given in AS 39.35.680. 03 * Sec. 121. AS 39.45.030(a) is amended to read: 04 (a) The Alaska Retirement Management [STATE PENSION 05 INVESTMENT] Board is authorized, subject to contracts with individual employees, 06 to invest the funds held under a deferred compensation program. The board has the 07 same powers and duties concerning the management and investment in regard to those 08 funds as are provided under AS 37.10.220 [AS 14.25.180]. 09 * Sec. 122. AS 39.45.030(g) is amended to read: 10 (g) In this section, "board" means the Alaska Retirement Management 11 [STATE PENSION INVESTMENT] Board. 12 * Sec. 123. AS 39.45.060 is amended by adding a new paragraph to read: 13 (2) "board" means the trustees of the Alaska Retirement Management 14 Board established under AS 37.10.210. 15 * Sec. 124. AS 39.50.200(a)(9) is amended to read: 16 (9) "public official" means 17 (A) a judicial officer; 18 (B) the governor or the lieutenant governor; 19 (C) a person hired or appointed in a department in the 20 executive branch as 21 (i) the head or deputy head of the department; 22 (ii) the director or deputy director of a division; 23 (iii) a special assistant to the head of the department; 24 (iv) a person serving as the legislative liaison for the 25 department; 26 (D) an assistant to the governor or the lieutenant governor; 27 (E) the chair or a member of a state commission or board 28 [OTHER THAN PHYSICIAN MEMBERS OR ALTERNATES OF THE 29 ALASKA TEACHERS' RETIREMENT BOARD APPOINTED UNDER 30 AS 14.25.035(a)(2) OR OF THE PUBLIC EMPLOYEES' RETIREMENT 31 BOARD APPOINTED UNDER AS 39.35.030(d);]
01 (F) state investment officers and the state comptroller in the 02 Department of Revenue; 03 (G) [REPEALED 04 (H)] the chief procurement officer appointed under 05 AS 36.30.010; 06 (H) [(I)] the executive director of the Alaska Workforce 07 Investment Board; and 08 (I) [(J)] each appointed or elected municipal officer; 09 * Sec. 125. AS 39.50.200(b)(54) is amended to read: 10 (54) Alaska Retirement Management [STATE PENSION 11 INVESTMENT] Board (AS 37.10.210); 12 * Sec. 126. AS 44.25.020(2) is amended to read: 13 (2) collect, account for, have custody of, invest, and manage all state 14 funds and all revenues of the state except revenues incidental to a program of licensing 15 and regulation carried on by another state department, funds managed and invested by 16 the Alaska Retirement Management [STATE PENSION INVESTMENT] Board, 17 and as otherwise provided by law; 18 * Sec. 127. AS 44.25.028(a) is amended to read: 19 (a) The commissioner of revenue may designate employees of the Department 20 of Revenue who are subject to the provisions of AS 39.50 because of their 21 responsibility for participating in the management or investment of the funds for 22 which the Alaska Retirement Management [STATE PENSION INVESTMENT] 23 Board is responsible. 24 * Sec. 128. AS 44.25.028(b) is amended to read: 25 (b) If an officer or employee of the Department of Revenue with responsibility 26 for funds for which the Alaska Retirement Management [STATE PENSION 27 INVESTMENT] Board is responsible acquires, owns, or controls an interest, direct or 28 indirect, in an entity or project in which assets under the control of the board are 29 invested, the officer or employee shall immediately disclose the interest to the board. 30 The disclosure is a matter of public record and shall be included in the minutes of the 31 board meeting next following the disclosure. The commissioner shall adopt
01 regulations to restrict officers and employees of the department from having a 02 substantial interest in an entity or project in which assets under the control of the board 03 are invested. 04 * Sec. 129. AS 44.64.030(a) is amended by adding new paragraphs to read: 05 (36) AS 14.25.006 (teachers' retirement system); 06 (37) AS 39.35.006 (public employees' retirement system). 07 * Sec. 130. AS 14.25.012(a), 14.25.015, 14.25.020, 14.25.022, 14.25.030, 14.25.035, 08 14.25.037, 14.25.170, 14.25.175(e), 14.25.180, 14.25.190, 14.25.220(41); AS 39.30.175(f); 09 AS 39.35.010, 39.35.011, 39.35.020, 39.35.030, 39.35.040, 39.35.042, 39.35.047, 39.35.060, 10 39.35.080, 39.35.090, 39.35.520(c), 39.35.522(c), 39.35.522(e); AS 39.45.025; 11 AS 39.50.200(b)(23), and 39.50.200(b)(29) are repealed. 12 * Sec. 131. AS 14.25.061(c), 14.25.062; and AS 39.35.350 are repealed. 13 * Sec. 132. (a) AS 14.25.310 - 14.25.590; AS 39.30.300 - 39.30.495; and AS 39.35.700 - 14 39.35.990 are repealed June 1, 2006. 15 (b) The revisor of statutes shall submit to the Alaska Legislative Council at its first 16 meeting of the Second Regular Session of the Twenty-Fourth Alaska State Legislature a bill 17 amending the Alaska Statutes to conform to (a) of this section. 18 (c) The legislature shall consider repealing (a) of this section if a long-term solution 19 has addressed the unfunded liability of the teachers' retirement system and public employees' 20 retirement system. The unfunded liability endangers the security of current and retired 21 employees in those systems and the long-term viability of the systems themselves. A long- 22 term solution to the unfunded liability issue must include implementing employer 23 contributions, bonding, refined actuarial analyses, and contributions from other state sources. 24 * Sec. 133. The uncodified law of the State of Alaska is amended by adding a new section 25 to read: 26 CONDITIONAL EFFECT OF SEC. 132(a). Section 132(a) of this Act, which repeals 27 AS 14.25.310 - 14.25.590; AS 39.30.300 - 39.30.495; and AS 39.35.700 - 39.35.990 on 28 June 1, 2006, is effective only if no bill is enacted before September 30, 2006, that amends 29 AS 14.25 or AS 39.35. 30 * Sec. 134. The uncodified law of the State of Alaska is amended by adding a new section 31 to read:
01 TRANSITION: INITIAL STAGGERED TERMS OF TRUSTEES OF THE 02 ALASKA RETIREMENT MANAGEMENT BOARD. Notwithstanding AS 37.10.210(c), as 03 repealed and reenacted by sec. 57 of this Act, the terms of the initially appointed trustees of 04 the Alaska Retirement Management Board who are not commissioners shall be set by the 05 governor to achieve staggered terms in the manner provided for nine-member boards by 06 AS 39.05.055(7). Notwithstanding AS 39.05.055(7), the terms of the two finance officers 07 appointed under AS 37.10.210(b)(2)(B) and 37.10.210(b)(2)(C), as repealed and reenacted by 08 sec. 57 of this Act, shall be set so that the term of one of the finance officers expires three 09 years apart from the term of the other finance officer, and the terms of each of the two 10 members of the two retirement systems appointed under AS 37.10.210(b)(2)(D) and 11 37.10.210(b)(2)(E), as repealed and reenacted by sec. 57 of this Act, shall be set so that the 12 term of one of each of the members in each system expires three years apart from the term of 13 the other member representing that system. 14 * Sec. 135. The uncodified law of the State of Alaska is amended by adding a new section 15 to read: 16 TERMS OF MEMBERS OF THE ALASKA TEACHERS' RETIREMENT BOARD, 17 AND THE PUBLIC EMPLOYEES' RETIREMENT BOARD. The terms of all board 18 members appointed to the Alaska Teachers' Retirement Board, and the Public Employees' 19 Retirement Board expire on the effective date of this section. 20 * Sec. 136. The uncodified law of the State of Alaska is amended by adding a new section 21 to read: 22 TERMS OF MEMBERS OF THE ALASKA STATE PENSION INVESTMENT 23 BOARD. The terms of all board members appointed to the Alaska State Pension Investment 24 Board expire on September 30, 2005. 25 * Sec. 137. The uncodified law of the State of Alaska is amended by adding a new section 26 to read: 27 TRANSITION OF DUTIES BETWEEN ALASKA STATE PENSION 28 INVESTMENT BOARD AND THE ALASKA RETIREMENT MANAGEMENT BOARD. 29 (a) After the effective date of this section and until September 30, 2005, the Alaska State 30 Pension Investment Board shall continue to exercise the powers and duties assigned in this 31 Act to the Alaska Retirement Management Board. The Alaska State Pension Investment
01 Board shall take actions to facilitate the transition of duties formerly assigned to the Alaska 02 State Pension Investment Board to the duties assigned in this Act to the Alaska Retirement 03 Management Board. A member of the Alaska Retirement Management Board appointed to 04 serve as a trustee before September 30, 2005, shall be invited to observe and train with the 05 Alaska State Pension Investment Board. 06 (b) The Alaska Retirement Management Board may not assume the duties and 07 responsibilities assigned to the Alaska Retirement Management Board in this Act until 08 October 1, 2005. 09 * Sec. 138. The uncodified law of the State of Alaska is amended by adding a new section 10 to read: 11 TRANSITION. Hearings and other proceedings pending under a law amended or 12 repealed by this Act or in connection with functions transferred by this Act continue in effect 13 and may be continued and completed notwithstanding a transfer or amendment or repeal 14 provided for in this Act. Orders and regulations issued or adopted under authority of a law 15 amended or repealed by this Act remain in effect for the term issued, or until revoked, 16 vacated, or otherwise modified under the provisions of this Act. Contracts, rights, liabilities, 17 and obligations created by or under a law amended or repealed by this Act, and in effect on 18 the effective date of this section, remain in effect notwithstanding this Act's taking effect. 19 Records, equipment, appropriations, funds, and other property of boards or agencies of the 20 state whose functions are transferred under this Act shall be transferred to implement the 21 provisions of this Act. 22 * Sec. 139. The uncodified law of the State of Alaska is amended by adding a new section 23 to read: 24 TRANSITION: REGULATIONS. (a) The Department of Administration and the 25 Department of Revenue may proceed to develop and adopt regulations required to implement 26 this Act. 27 (b) Regulations adopted by the Department of Administration and the Department of 28 Revenue under this Act relate to the internal management of a state agency, and the adoption 29 of the regulations is not subject to AS 44.62 (Administrative Procedure Act). 30 * Sec. 140. The uncodified law of the State of Alaska is amended by adding a new section 31 to read:
01 REPORT TO THE LEGISLATURE BY ALASKA RETIREMENT MANAGEMENT 02 BOARD. It is the intent of the legislature that there will be a moratorium after the effective 03 date of this Act on legislation affecting all public employees' retirement plans until the Alaska 04 Retirement Management Board can present a report to the legislature containing the board's 05 assessment and recommendations as provided in this section. The Alaska Retirement 06 Management Board shall report to the legislature 120 days after all members are appointed to 07 the board, or 15 days after the first day of the first regular legislative session following the 08 effective date of this section, whichever is first. The report must include the board's 09 (1) preliminary assessment of the financial health of all public employees' 10 retirement plans and all teachers' retirement plans; 11 (2) assessment of the actuarial services purchased by the board; 12 (3) recommendations for additional legislative or administrative policy to 13 improve the financial health of the retirement plans; 14 (4) short-term and long-term recommendations for addressing the unfunded 15 liability of the retirement plans; and 16 (5) recommendations for legislative procedures regarding fiscal notes for new 17 legislation affecting the retirement plans. 18 * Sec. 141. The uncodified law of the State of Alaska is amended by adding a new section 19 to read: 20 REPORT TO THE LEGISLATURE ON HEALTH CARE COST-SAVING 21 MEASURES. The division of retirement and benefits will provide an annual report to the 22 legislature regarding the cost-saving measures it has implemented by regulation as described 23 in AS 14.25.485, enacted by sec. 32 of this Act, and AS 39.35.885, enacted by sec. 120 of this 24 Act. The Department of Administration will provide an annual report to the legislature 25 regarding the cost-saving measures it has implemented by regulation as described in 26 AS 39.30.090(c), enacted by sec. 68 of this Act. 27 * Sec. 142. The uncodified law of the State of Alaska is amended by adding a new section 28 to read: 29 INSTRUCTION REGARDING ALASKA TEACHERS' RETIREMENT SYSTEM 30 BOARD, ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM BOARD, AND 31 ALASKA STATE PENSION INVESTMENT BOARD. Wherever in the Alaska Statutes and
01 the Alaska Administrative Code the terms "Alaska Teachers' Retirement System Board," 02 "Alaska Public Employees' Retirement System Board," or "Alaska State Pension Investment 03 Board" are used, they shall be read as "Alaska Retirement Management Board" when to do so 04 would be consistent with the changes made by this Act. 05 * Sec. 143. The uncodified law of the State of Alaska is amended by adding a new section 06 to read: 07 SPECIFIC INSTRUCTIONS TO REVISOR OF STATUTES CONCERNING 08 SPECIFIC REFERENCES. (a) The revisor of statutes shall change references to "this 09 chapter" to "AS 14.25.009 - 14.25.220" in the following statutes: AS 14.25.040(b), 10 14.25.040(c), 14.25.045(a), 14.25.047, 14.25.061(a), 14.25.062, 14.25.063(a), 14.25.075(c), 11 14.25.105, 14.25.107, 14.25.110(k), 14.25.142, 14.25.150(b), 14.25.153, 14.25.160(h), 12 14.25.165(f), 14.25.166, 14.25.177, 14.25.195, 14.25.200(b), 14.25.205, and 14.25.210, and 13 in 14.25.220 in each place that the phrase appears. 14 (b) The revisor of statutes shall change the reference to "board" to "administrator" in 15 the following statutes: AS 14.25.075 and 14.25.130(f). 16 (c) The revisor of statutes shall change the reference to "system" to "plan" in the 17 following statutes: AS 14.25.040(b), 14.25.040(c), 14.25.045, 14.25.047, 14.25.050(a), 18 14.25.055, 14.25.060, 14.25.061(a), 14.25.062, 14.25.063(a), 14.25.065, 14.25.070, 19 14.25.075(c), 14.25.075(d), 14.25.075(g), 14.25.075(h), 14.25.075(i), 14.25.100(a), 20 14.25.105(c), 14.25.107, 14.25.110, 14.25.125(c), 14.25.143, 14.25.163, 14.25.165(i), 21 14.25.167(g), 14.25.168, 14.25.169, 14.25.173(a), 14.25.173(d), 14.25.181, 14.25.200, 22 14.25.210, 14.25.220(1), 14.25.220(4), 14.25.220(7), 14.25.220(14), 14.25.220(20), 23 14.25.220(22), 14.25.220(23), 14.25.220(31), 14.25.220(34), 14.25.220(36), 14.25.220(37), 24 14.25.220(42); AS 39.35.120, 39.35.125, 39.35.160, 39.35.165(a), 39.35.165(c), 25 39.35.165(d), 39.35.165(e), 39.35.165(g), 39.35.165(h), 39.35.165(i), 39.35.170, 39.35.180, 26 39.35.195(b), 39.35.195(c), 39.35.250, 39.35.280, 39.35.300(c), 39.35.310(a), 39.35.310(c), 27 39.35.340(a), 39.35.342(a), 39.35.342(d), 39.35.345(a), 39.35.345(d), 39.35.360(a), 28 39.35.360(g), 39.35.360(h), 39.35.360(k), 39.35.370(f), 39.35.370(h), 39.35.370(i), 29 39.35.370(j), 39.35.370(k), 39.35.371(i), 39.35.381(b), 39.35.381(g), 39.35.385(c), 30 39.35.400(e), 39.35.450(g), 39.35.475(a), 39.35.475(b), 39.35.475(d), 39.35.500(a), 31 39.35.505, 39.35.520(a), 39.35.520(d), 39.35.522(d), 39.35.527(a), 39.35.527(b), 39.35.530,
01 39.35.535(a), 39.35.535(d), 39.35.550, 39.35.560, 39.35.570, 39.35.580, 39.35.590, 02 39.35.600, 39.35.610, 39.35.620(a), 39.35.620(h), 39.35.650, 39.35.670, 39.35.675(a), 03 39.35.680(1), 39.35.680(5), 39.35.680(9), 39.35.680(12), 39.35.680(15), 39.35.680(16), 04 39.35.680(17), 39.35.680(20), 39.35.680(21)(A), 39.35.680(29), 39.35.680(32), 05 39.35.680(33), and 39.35.680(35). 06 (d) The revisor of statutes shall change the reference to "board" to "commissioner" in 07 the following statutes: AS 39.35.290, 39.35.522(a), 39.35.522(b), and 39.35.522(d). 08 (e) The revisor of statutes shall change references to "this chapter" to "AS 39.35.095 - 09 39.35.680" in the following statutes: AS 39.35.165, 39.35.200, 39.35.250, 39.35.300, 10 39.35.340, 39.35.350, 39.35.360, 39.35.370, 39.35.371, 39.35.375, 39.35.381, 39.35.480, 11 39.35.490, 39.35.495, 39.35.505, 39.35.530, 39.35.546, 39.35.547, 39.35.615(c), 12 39.35.620(e), 39.35.660, 39.35.675(b), 39.35.677, and 39.35.680. 13 (f) The revisor of statutes shall renumber AS 39.35.690 to follow AS 39.35.990. 14 * Sec. 144. The uncodified law of the State of Alaska is amended by adding a new section 15 to read: 16 IMPLEMENTATION OF SECTIONS 142 AND 143 OF THIS ACT. Under 17 AS 01.05.031, the revisor of statutes shall implement secs. 142 and 143 of this Act in the 18 Alaska Statutes, and, under AS 44.62.125(b)(6), the regulations attorney shall implement secs. 19 142 and 143 of this Act in the administrative code. 20 * Sec. 145. The uncodified law of the State of Alaska is amended by adding a new section 21 to read: 22 CONDITIONAL RETROACTIVITY. If secs. 1 - 8, 11, 14 - 17, 20 - 86, 93 - 104, 23 106 - 110, 112, 113, and 115 - 130 of this Act take effect after July 1, 2005, secs. 1 - 8, 11, 14 24 - 17, 20 - 86, 93 - 104, 106 - 110, 112, 113, and 115 - 130 of this Act are retroactive to July 1, 25 2005. 26 * Sec. 146. Sections 19 and 115 of this Act take effect January 1, 2006. 27 * Sec. 147. Sections 9, 10, 12, 13, 18, 87 - 92, 105, 111 and 131 of this Act take effect 28 June 30, 2010. 29 * Sec. 148. Section 144 of this Act takes effect immediately under AS 01.10.070(c). 30 * Sec. 149. Except as provided in secs. 146, 147, and 148 of this Act, this Act takes effect 31 July 1, 2005.