CSSB 88(FIN): "An Act relating to the Public Employees' Retirement System of Alaska and the teachers' retirement system; providing certain employees an opportunity to choose between the defined benefit and defined contribution plans of the Public Employees' Retirement System of Alaska and the teachers' retirement system; and providing for an effective date."
00 CS FOR SENATE BILL NO. 88(FIN) 01 "An Act relating to the Public Employees' Retirement System of Alaska and the 02 teachers' retirement system; providing certain employees an opportunity to choose 03 between the defined benefit and defined contribution plans of the Public Employees' 04 Retirement System of Alaska and the teachers' retirement system; and providing for an 05 effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 14.25.009 is repealed and reenacted to read: 08 Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 09 AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 10 defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 11 of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 12 * Sec. 2. AS 14.25.040(a) is amended to read: 13 (a) A teacher or member contracting for service with a participating
01 employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 02 member 03 (1) participates in a university retirement program under AS 14.40.661 04 - 14.40.799; 05 (2) became a member after June 30, 2006, and before July 1, 2024, 06 is eligible to participate in the defined contribution retirement plan under 07 AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit 08 retirement plan under AS 14.25.009 - 14.25.220; or 09 (3) has elected under former AS 14.25.540 to participate in the plan 10 established in AS 14.25.310 - 14.25.590 and does not elect to participate in the 11 defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 12 OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 13 EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 14 * Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 15 (f) An active member of this plan who is also employed in a position in the 16 public employees' retirement plan under AS 39.35.095 - 39.35.680 may elect to 17 participate solely in this plan if 18 (1) the member directs the public employees' retirement plan employer 19 in writing to 20 (A) pay into this plan the employer contributions required for a 21 member under AS 14.25.009 - 14.25.220; and 22 (B) deduct from the member's salary and pay into this plan 23 (i) the employee contributions required for a member 24 under AS 14.25.009 - 14.25.220; and 25 (ii) an amount equal to the difference between the total 26 employer and state contributions required for a member under 27 AS 14.25.009 - 14.25.220 and the employer contributions that would be 28 required under AS 39.35.095 - 39.35.680 if the member participated in 29 that plan; and 30 (2) the member provides written notice to the administrator. 31 (g) An active member of this plan who elects to participate solely in this plan
01 under (f) of this section may not, while participating solely in this plan, receive 02 credited service for benefit eligibility for service performed in a position in the public 03 employees' retirement plan. 04 (h) A teacher who became a member of the system after June 30, 2006, and 05 before July 1, 2024, or who has elected under former AS 14.25.540 to participate in 06 the defined contribution retirement plan under AS 14.25.310 - 14.25.590, is subject to 07 AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 08 retirement plan established in AS 14.25.310 - 14.25.590 if the teacher 09 (1) is not employed by an employer on July 1, 2024; 10 (2) is reemployed by an employer after July 1, 2024; and 11 (3) has, before the date of reemployment, received 12 (A) a distribution, other than a rollover distribution, of the 13 entire balance in the teacher's individual account in the defined contribution 14 retirement plan; or 15 (B) a rollover distribution of the entire balance in the teacher's 16 individual account in the defined contribution retirement plan under 17 AS 14.25.310 - 14.25.590 and has not within 180 days of reemployment had 18 all or part of a direct rollover distribution from an eligible retirement plan 19 owned by the teacher paid directly into the teacher's individual account under 20 AS 14.25.310 - 14.25.590. 21 * Sec. 4. AS 14.25 is amended by adding a new section to read: 22 Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 23 teachers. (a) A teacher may make a one-time election to participate in the defined 24 benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 25 (1) became a member of the defined contribution retirement plan under 26 AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2024; 27 (2) is not employed by an employer on July 1, 2024; 28 (3) is reemployed by an employer after July 1, 2024; and 29 (4) before the date of reemployment, 30 (A) has not received a distribution of the entire balance in the 31 teacher's individual account under the defined contribution retirement plan
01 under AS 14.25.310 - 14.25.590; or 02 (B) has received a rollover distribution of the entire balance in 03 the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 04 and has within 180 days of reemployment had all or part of a direct rollover 05 distribution from an eligible retirement plan owned by the teacher paid directly 06 into the teacher's individual account under AS 14.25.310 - 14.25.590. 07 (b) An election under (a) of this section may be made not more than 180 days 08 after the date of reemployment. A reemployed teacher electing to participate under (a) 09 of this section shall use the balance of the member's individual account in the plan 10 under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 11 credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 12 (a) of this section must be made in writing in the manner prescribed by the 13 administrator. An election made by a teacher who is married is not effective unless the 14 election is signed by the teacher's spouse. The administrator shall provide a teacher 15 who is eligible to make an election under (a) of this section with information about the 16 potential consequences of the teacher's election, including calculations to illustrate the 17 effect of moving the teacher's retirement plan from a defined contribution retirement 18 plan to a defined benefit retirement plan. 19 (c) An election made under (a) of this section to participate in the plan under 20 AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 21 teacher shall be enrolled as a member of the plan, and the teacher's participation in the 22 plan shall be governed by the applicable provisions of the plan. The teacher's 23 enrollment in the plan is retroactive to the date of hire. 24 (d) When a teacher makes an election under this section, the administrator 25 shall cause the total amount of the teacher's member and employer contributions to the 26 plan under AS 14.25.310 - 14.25.590, with investment earnings and losses through the 27 day of the teacher's election to participate as a member in the plan under AS 14.25.009 28 - 14.25.220, to be actuarially calculated and, subject to (f) of this section, transferred 29 to the retirement fund in the plan under AS 14.25.009 - 14.25.220. On the effective 30 date of the teacher's participation in the plan under AS 14.25.009 - 14.25.220, the 31 teacher shall be credited with service in the plan. The board shall determine the cost of
01 the teacher's actual service time based on the teacher's accrued actuarial liability of 02 pension benefits in the plan, and credit the teacher with service time equal to the value 03 actuarially calculated and transferred to the retirement fund in the plan under 04 AS 14.25.009 - 14.25.220. The board shall adopt regulations establishing transfer 05 procedures. The transfer may not occur later than 60 days after the date the 06 administrator receives the teacher's election, unless the major financial markets for 07 securities available for a transfer are seriously disrupted by an unforeseen event that 08 also causes the suspension of trading on any national securities exchange in the 09 country where the securities were issued. In that event, the 60-day period may be 10 extended by a resolution of the board. A transfer is not commissionable or subject to 11 other fees and may be in the form of cash or a security as determined by the board. A 12 security shall be valued on the date of receipt in the teacher's account. 13 (e) When making a transfer under (d) of this section or a transfer for a 14 reemployed teacher subject to the plan under AS 14.25.040(h), the administrator shall 15 transfer 16 (1) an amount equal to the decrease in the accrued actuarial liability of 17 the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 18 resulting from the transfer as of the date of transfer, based on the most recent actuarial 19 valuation of the death and disability trust, from the death and disability trust in the 20 plan established under AS 14.25.310 - 14.25.590 to the retirement fund in the plan 21 established under AS 14.25.009 - 14.25.220; and 22 (2) an amount equal to the increase in the accrued actuarial liability of 23 the health care trust in the plan established under AS 14.25.009 - 14.25.220 resulting 24 from the transfer as of the date of transfer, based on the actuarial assumptions set out 25 in (g) of this section, from the trust established under AS 39.30.097(b) for the 26 prefunding of medical benefits provided by AS 14.25.480 to the trust established 27 under AS 39.30.097(a) for the prefunding of medical benefits provided by 28 AS 14.25.171. 29 (f) If the value actuarially calculated under (d) of this section is insufficient to 30 pay for service credit equal to the teacher's actual service time, the administrator shall 31 allow the teacher the option of purchasing service credit in an amount up to the
01 amount needed to eliminate the insufficiency; however, if that value exceeds the 02 amount needed to pay for service credit equal to the teacher's actual service, the 03 administrator shall cause the excess to be paid to the employee as a rollover transfer to 04 either an individual employee annuity account in the Department of Administration 05 under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 06 Plan) or, if the member's employer does not participate in the State of Alaska 07 Supplemental Annuity Plan, to an eligible retirement plan as defined in 08 AS 14.25.360(d). An excess may not be used to purchase additional service credit in 09 the plan under AS 14.25.009 - 14.25.220. When a reemployed teacher enters the plan 10 under AS 14.25.040(h), the administrator shall allow the teacher to pay for a period of 11 service credit up to the teacher's actual service. When a teacher elects to purchase 12 service credit under this section and does not immediately pay for the service credit 13 purchased, an indebtedness is established. Interest as prescribed by regulation accrues 14 on a teacher's indebtedness. Indebtedness that exists at the time the teacher is 15 appointed to retirement necessitates an actuarial adjustment to the benefits payable due 16 to service in the defined contribution retirement plan. 17 (g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 18 must be based on the most recent actuarial valuation of the plan, except that the 19 retirement rates are computed at 25 percent of the retirement rates used in the most 20 recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 21 used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 22 (h) The provisions of this section are subject to the requirements of the 23 Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 24 14.25.320(c) and (d), and 14.25.490. 25 * Sec. 5. AS 14.25.048(b) is amended to read: 26 (b) An employee or former employee who first became a member of the 27 plan before July 1, 2006, may receive credit for retroactive membership service for 28 employment before June 5, 1988, if the employee or former employee met the 29 requirements listed in (a) of this section at the time of the employment. To receive 30 credit for the retroactive membership service, the employee or former employee shall 31 claim the service and pay the retroactive contributions required under former
01 AS 14.25.061. However, an employee or former employee may not receive retroactive 02 credit under this subsection if the employee received credited service under AS 39.35 03 for the employment. 04 * Sec. 6. AS 14.25.048(c) is amended to read: 05 (c) An employee or former employee who first became a member of the 06 plan before July 1, 2006, and who received credit under AS 39.35 for service that 07 qualifies under (a) of this section may elect to transfer those periods of employment to 08 the plan. To receive credit for retroactive membership service under this subsection, 09 the employee or former employee shall claim the service and pay the retroactive 10 contributions required under former AS 14.25.061. 11 * Sec. 7. AS 14.25.050(a) is amended to read: 12 (a) Except as provided in (c) and (e) of this section, beginning January 1, 13 1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 14 member's base salary accrued from July 1 to the following June 30. [THE 15 EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 16 SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 17 CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 18 CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 19 FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 20 APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 21 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 22 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 23 INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 24 EMPLOYER.] 25 * Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 26 (e) A member who first participates in the plan after June 30, 2006, shall 27 contribute to the plan an amount equal to eight percent of the member's base salary 28 accrued from July 1 to the following June 30. The board may, from time to time, 29 adjust the contribution under this subsection to an amount that, 30 (1) if decreased, is not less than eight percent of the member's base 31 salary; and
01 (2) if increased, is not more than 12 percent of the member's base 02 salary. 03 (f) The employer shall deduct a contribution under this section from the 04 member's salary at the end of each payroll period, and the contribution shall be 05 credited by the plan to the member contribution account. The contributions shall be 06 deducted from member compensation before the computation of applicable federal 07 taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 08 member may not have the option of making the payroll deduction directly in cash 09 instead of having the contribution picked up by the employer. 10 (g) The board shall increase the member contribution under (e) of this section 11 if the board determines that, unless the contribution is increased, the portion of the 12 liability of the plan that is attributable to all members who first became members of 13 the plan after June 30, 2006, will be funded below 90 percent. The board may not 14 increase the member contribution unless the board increases the employer contribution 15 under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 16 contribution under (e) of this section if the board determines that, after the 17 contribution is decreased, the portion of the liability of the plan that is attributable to 18 all members who first became members of the plan after June 30, 2006, will be funded 19 above 90 percent. The board may not decrease the member contribution unless the 20 board decreases the employer contribution under AS 14.25.070(a)(2) by an equal 21 amount. 22 * Sec. 9. AS 14.25.065(b) is amended to read: 23 (b) The contributions of employers under AS 14.25.070 must be transmitted to 24 the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 25 close of each pay period. If the contributions are not submitted within the prescribed 26 time limit, interest must be assessed on the outstanding contributions at [ONE AND 27 ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 28 plan from the date that contributions were originally due. Amounts due from an 29 employer and interest as prescribed in this section may be claimed by the 30 administrator from any agency of the state or political subdivision that has in its 31 possession funds of the employer or that is authorized to disburse funds to the
01 employer that are not restricted by statute or appropriation to a specific purpose. The 02 amount claimed shall be certified by the administrator as sufficient to pay the 03 contributions and interest due from the employer. The amount claimed shall be 04 submitted to the administrator for deposit in the retirement fund and the Alaska retiree 05 health care trust. 06 * Sec. 10. AS 14.25.070(a) is amended to read: 07 (a) Each employer shall contribute to the system every payroll period the 08 lesser of 09 (1) an amount calculated by applying a rate of 12.56 percent to the 10 total of all base salaries paid by the employer to active members of the system and to 11 members who are retired from the plan and reemployed under AS 14.20.136, 12 including any adjustments to contributions required by AS 14.25.173(a); or 13 (2) an amount calculated by applying a rate established by the 14 board under AS 37.10.220 to the total of all base salaries paid by the employer to 15 active members of the system and to members who are retired from the plan and 16 reemployed under AS 14.20.136, including any adjustments to contributions 17 required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 18 to pay the actuarially determined employer normal cost, all contributions 19 required under AS 14.25.350 and AS 39.30.370, and past service cost for 20 members of the system. 21 * Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 22 (i) If the legislature appropriates funds for the purpose of decreasing an 23 employer's contribution, the employer's contribution under (a) of this section shall 24 decrease by that amount. 25 * Sec. 12. AS 14.25.075(a) is amended to read: 26 (a) An employee who is eligible to purchase credited service under 27 AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 28 under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 29 [14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 30 service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 31 in lieu of making payments directly to the plan, may elect to have the member's
01 employer make payments as provided in this section. 02 * Sec. 13. AS 14.25.075(b) is amended to read: 03 (b) A member may elect to have the employer make payments for all or any 04 portion of the amounts payable for the member's purchase of credited service through 05 a salary reduction program as follows: 06 (1) the amounts paid under a salary reduction program are in lieu of 07 contributions by the member making the election; the electing member's salary or 08 other compensation shall be reduced by the amount paid by the employer under this 09 subsection; 10 (2) the member shall make an irrevocable election under this 11 subsection to purchase credited service as permitted in former AS 14.25.061 or in 12 AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 13 14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 14 termination of employment; the irrevocable election must specify the number of 15 payroll periods that deductions will be made from the member's compensation and the 16 dollar amount of deductions for each payroll period during the specified number of 17 payroll periods; the deductions made under this paragraph cease upon the earlier of the 18 member's termination of employment with the employer or the member's death; 19 amounts paid by an employer under (f) of this section may not be applied toward the 20 payment of the dollar amount of the deductions representing the portion of the credited 21 service that is being purchased by the member through payroll deduction in 22 accordance with the member's irrevocable election under this paragraph; 23 (3) amounts paid by an employer under this subsection shall be treated 24 as employer contributions for the purpose of determining tax treatment under 26 25 U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 26 may not be included in the member's gross income for income tax purposes until those 27 amounts are distributed by refund or retirement benefit payments. 28 * Sec. 14. AS 14.25.075(i) is amended to read: 29 (i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 30 of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 31 14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this
01 section, and the administrative filing requirements specified by the administrator, the 02 plan shall adjust the member's credited service history and add any additional service 03 credits acquired. 04 * Sec. 15. AS 14.25 is amended by adding a new section to read: 05 Sec. 14.25.086. Sub-trust for members who first became members after 06 June 30, 2006. The administrator shall deposit a portion of employer contributions 07 under AS 14.25.070 and 14.25.085 in a sub-trust of the retirement fund established by 08 the board for members who first became members after June 30, 2006. The amount 09 deposited, when combined with the amount separately computed for medical benefits 10 under AS 14.25.087, must be sufficient to pay the actuarially determined employer 11 normal cost and past service cost for members of the system who first became 12 members after June 30, 2006. When the amount sufficient to pay the actuarially 13 determined employer normal cost, all contributions required under AS 14.25.350 and 14 AS 39.30.370, and past service cost for members of the system is less than 12 percent 15 of all base salaries paid to active members of the system and to members who are 16 retired from the plan and reemployed under AS 14.20.136, including any adjustments 17 to contributions required by AS 14.25.173(a), the administrator shall deposit the 18 difference in the sub-trust established under this section. 19 * Sec. 16. AS 14.25.087 is amended to read: 20 Sec. 14.25.087. Contributions for medical benefits. Contributions made by 21 an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 22 computed for benefits provided by AS 14.25.168 and retiree major medical 23 insurance plan benefits provided under AS 14.25.171, and must [SHALL] be 24 deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 25 * Sec. 17. AS 14.25.110(a) is amended to read: 26 (a) Subject to AS 14.25.167, 27 (1) a member who first became a member of the plan before July 1, 28 2006, is eligible for a normal retirement benefit if the member 29 (A) [(1)] was first hired before July 1, 1975, has attained the 30 age of 55 years, and has at least 15 years of credited service, the last five of 31 which have been membership service, or is otherwise vested in the plan;
01 (B) [(2)] has attained the age of 60 years and has at least eight 02 years of membership service; 03 (C) [(3)] has attained the age of 60 years, has at least five years 04 of membership service, and has Alaska BIA service which, when added to the 05 membership service, will equal at least eight years; 06 (D) [(4)] has at least 25 years of credited service, the last five 07 of which have been membership service; 08 (E) [(5)] has at least 20 years of membership service; 09 (F) [(6)] has at least 20 years of combined membership service 10 and Alaska BIA service, the last five of which have been membership service; 11 or 12 (G) [(7)] has, for each of 20 school years, 13 (i) [(A)] at least one-half year of membership service as 14 a part-time teacher; 15 (ii) [(B)] one full year of membership service as a full- 16 time teacher; or 17 (iii) [(C)] any combination of service qualified under 18 this subparagraph; 19 (2) a member who first became a member of the plan after 20 June 30, 2006, is eligible for a normal retirement benefit if the member 21 (A) has attained the age of 60 years and has at least five 22 years of membership service; or 23 (B) has at least 30 years of membership service 24 [PARAGRAPH]. 25 * Sec. 18. AS 14.25.110(b) is amended to read: 26 (b) Subject to AS 14.25.167, a member is eligible for an early retirement 27 benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 28 and attaining the age of 50 years or upon completing the service requirements in 29 (a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 30 * Sec. 19. AS 14.25.110(d) is amended to read: 31 (d) The monthly amount of a retirement benefit
01 (1) for a member who first became a member of the plan before 02 July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 03 the member's average base salary during any three school years of membership service 04 multiplied by 05 (A) [(1)] two percent of the years of credited service earned 06 before June 30, 1990, including credited fractional years, and the years of 07 credited service through a total of 20 years; plus 08 (B) [(2)] two and one-half percent of the years of credited 09 service earned after June 30, 1990, that are more than 20 years of total credited 10 service; 11 (2) for a member who first became a member of the plan after 12 June 30, 2006, and who has paid the full amount of any indebtedness is one- 13 twelfth of the member's average base salary during any five school years of 14 membership service multiplied by 15 (A) two percent of the years of credited service through a 16 total of 10 years; plus 17 (B) two and one-quarter percent of the years over 10 years 18 of total credited service through 20 years; plus 19 (C) two and one-half percent of the years of credited service 20 that are more than 20 years of total credited service. 21 * Sec. 20. AS 14.25.142(a) is amended to read: 22 (a) While residing in the state, a person who first became a member of the 23 plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 24 and who is at least 65 years of age or a person who first became a member of the 25 plan before July 1, 2006, and who is receiving a disability benefit under 26 AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 27 addition to the basic benefit. The amount of this allowance is 10 percent of the basic 28 benefit. 29 * Sec. 21. AS 14.25.143(a) is amended to read: 30 (a) Once each year, the administrator shall increase benefit payments to 31 eligible disabled members, to persons age 60 or older receiving benefits under this
01 plan in the preceding calendar year, and to persons who have received benefits under 02 this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 03 under this section. 04 * Sec. 22. AS 14.25.143(b) is amended to read: 05 (b) Subject to (g) and (h) of this section, the [THE] increase in benefit 06 payments applies to total benefit payments except for the cost-of-living allowance 07 under AS 14.25.142. The amount of the increase is a percentage of the current benefit 08 equal to 09 (1) the lesser of 75 percent of the increase in the cost of living in the 10 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 11 years old and for members receiving disability benefits; and 12 (2) the lesser of 50 percent of the increase in the cost of living in the 13 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 14 less than 65 years old or for recipients who on July 1 are less than 60 years old but 15 who have received benefits from the plan for at least five [EIGHT] years. 16 * Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 17 (g) Subject to (h) of this section, the amount of an increase for members who 18 first became members of the plan after June 30, 2006, and do not meet the eligibility 19 requirements for a permanent fund dividend in effect on July 1, 2024, under 20 AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 21 section. 22 (h) If the board determines that the portion of the liability of the plan that is 23 attributable to all members who first became members of the plan after June 30, 2006, 24 is funded below 90 percent, the board may reduce the amount of the increase 25 determined under (b) or (g) of this section that is payable to a member who first 26 became a member after June 30, 2006. At any time, the board may terminate a 27 reduction made under this subsection. 28 * Sec. 24. AS 14.25.168(a) is amended to read: 29 (a) Except as provided in AS 14.25.171 and (c) of this section, the following 30 persons are entitled to major medical insurance coverage under this section: 31 (1) for teachers first hired before July 1, 1990,
01 (A) a teacher who is receiving a monthly benefit from the plan 02 and who has elected coverage; 03 (B) the spouse and dependent children of the teacher described 04 in (A) of this paragraph; 05 (C) the surviving spouse of a deceased teacher who is receiving 06 a monthly benefit from the plan and who has elected coverage; 07 (D) the dependent children of a deceased teacher who are 08 dependent on the surviving spouse described in (C) of this paragraph; 09 (2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 10 (A) a teacher who is receiving a monthly benefit from the plan 11 and who has elected coverage for the teacher; 12 (B) the spouse of the teacher described in (A) of this paragraph 13 if the teacher elected coverage for the spouse; 14 (C) the dependent children of the teacher described in (A) of 15 this paragraph if the teacher elected coverage for the dependent children; 16 (D) the surviving spouse of a deceased teacher who is receiving 17 a monthly benefit from the plan and who has elected coverage; 18 (E) the dependent children of a deceased teacher who are 19 dependent on the surviving spouse described in (D) of this paragraph if the 20 surviving spouse has elected coverage for the dependent children. 21 * Sec. 25. AS 14.25 is amended by adding a new section to read: 22 Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 23 June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 24 member of the plan after June 30, 2006, receives a monthly benefit from the plan, 25 retired directly from the plan, and has elected benefits under this section is entitled to 26 medical benefits under this section. A member who applies for medical benefits under 27 this section shall apply on the forms and in the manner prescribed by the 28 administrator. A member is eligible to retire from the plan if the member has been an 29 active member for at least 12 months before application for retirement and the member 30 (1) has at least 30 years of service; or 31 (2) reaches the age set for Medicare eligibility and has at least 10 years
01 of service. 02 (b) The member's surviving spouse is eligible to elect medical benefits if the 03 member had retired or was eligible for retirement and medical benefits at the time of 04 the member's death. 05 (c) The medical benefits available to eligible persons are access to the retiree 06 major medical insurance plan and access to the health reimbursement arrangement 07 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 08 that an eligible person may not be denied insurance coverage except for failure to pay 09 the required premium. 10 (d) Retiree major medical insurance plan coverage elected by an eligible 11 member under this section covers the eligible member, the spouse of the eligible 12 member, and the dependent children of the eligible member. 13 (e) Retiree major medical insurance plan coverage elected by a surviving 14 spouse of an eligible member under this section covers the surviving spouse and the 15 dependent children of the eligible member who are dependent on the surviving spouse. 16 (f) Participation in the retiree major medical insurance plan is not required in 17 order to participate in the health reimbursement arrangement plan. 18 (g) A person eligible for medical benefits under this section is not required to 19 participate in the health reimbursement arrangement plan in order to participate in the 20 retiree major medical insurance plan. 21 (h) A person who is eligible for medical benefits under this section must make 22 the irrevocable election to participate or not participate in the retiree major medical 23 insurance plan on or before the date the person reaches 70 1/2 years of age or when the 24 person applies for retirement and medical benefits, whichever is later. 25 (i) Major medical insurance coverage takes effect on the first day of the month 26 following the date of the administrator's approval of the election and stops when the 27 person who elects coverage dies or fails to make a required premium payment. 28 (j) The coverage for persons 65 years of age or older is the same as that 29 available for persons under 65 years of age. The benefits payable to those persons 65 30 years of age or older supplement any benefits provided under the federal old age, 31 survivors, and disability insurance program.
01 (k) The medical and optional insurance premiums owed by the person who 02 elects coverage may be deducted from the health reimbursement arrangement plan. If 03 the amount of the health reimbursement arrangement plan becomes insufficient to pay 04 the premiums, the person who elects coverage under (a) of this section shall pay the 05 premiums directly. 06 (l) The cost of premiums for retiree major medical insurance coverage under 07 this section for an eligible member or surviving spouse who is 08 (1) not eligible for Medicare is an amount equal to the full monthly 09 group premiums for retiree major medical insurance coverage; 10 (2) eligible for Medicare is the following percentage of the premium 11 amounts established for retirees who are eligible for Medicare: 12 (A) 30 percent if the member had 10 or more, but less than 15, 13 years of service; 14 (B) 25 percent if the member had 15 or more, but less than 20, 15 years of service; 16 (C) 20 percent if the member had 20 or more, but less than 25, 17 years of service; 18 (D) 15 percent if the member had 25 or more, but less than 30, 19 years of service; 20 (E) 10 percent if the member had 30 or more years of service. 21 (m) The eligibility for retiree major medical insurance coverage for an 22 alternate payee under a qualified domestic relations order shall be determined based 23 on the eligibility of the member to elect coverage. The alternate payee shall pay the 24 full monthly premium for retiree major medical insurance coverage. 25 (n) The administrator shall 26 (1) inform a person entitled to retiree major medical insurance 27 coverage under this section in writing 28 (A) that the health insurance coverage available to retired 29 members may be different from the health insurance coverage provided to 30 employees; 31 (B) of time limits for selecting optional health insurance
01 coverage; and 02 (C) whether the election is irrevocable; and 03 (2) require that a person entitled to retiree major medical insurance 04 coverage under this section indicate in writing on a form provided by the administrator 05 whether the person has chosen to receive optional health insurance coverage. 06 (o) The monthly group premiums for retiree major medical insurance coverage 07 under this section are established by the administrator in accordance with 08 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 09 (a) of this section a monthly group premium rate for retiree major medical insurance 10 coverage other than the premium in effect for the month in which the premium is due 11 for coverage for that month. 12 (p) In this section, "health reimbursement arrangement plan" means the State 13 of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 14 Arrangement Plan established in AS 39.30.300. 15 * Sec. 26. AS 14.25.220(5) is amended to read: 16 (5) "average base salary" means, 17 (A) for a teacher who first became a member before July 1, 18 2006, the result obtained by dividing the sum of the member's three highest 19 years' base salary by three, or if a member does not have three years base 20 salary, then by dividing the sum of all base salaries by the number of years of 21 base salary; the base salary for a year in which credit is granted for disability 22 totaling more than one-third of a year may not be used in the computation of 23 the average base salary; the base salary in a school year for which the member 24 receives compensation for less than two-thirds of a year may not be used in the 25 computation of the average base salary; if compensation is received for more 26 than two-thirds of a year, the full base salary for that school year shall be used 27 in the computation of the average base salary; 28 (B) for a teacher who first became a member after June 30, 29 2006, the result obtained by dividing the sum of the member's five highest 30 years' base salary by five, or if a member does not have five years' base 31 salary, then by dividing the sum of all base salaries by the number of
01 years of base salary; the base salary for a year in which credit is granted 02 for disability totaling more than one-third of a year may not be used in the 03 computation of the average base salary; the base salary in a school year 04 for which the member receives compensation for less than two-thirds of a 05 year may not be used in the computation of the average base salary; if 06 compensation is received for more than two-thirds of a year, the full base 07 salary for that school year shall be used in the computation of the average 08 base salary; 09 * Sec. 27. AS 14.25.220(6) is amended to read: 10 (6) "base salary" 11 (A) means the total remuneration payable under contract for a 12 full year of membership service, including addenda to the contract and, for a 13 member who elects to participate solely in this plan under AS 14.25.040(f), 14 remuneration paid by the public employees' retirement plan employer, 15 but, for a member first hired on or after July 1, 1996, does not include 16 remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 17 (B) has the same meaning as "compensation" under 18 AS 39.35.680(9) when applied to a state legislator who elects membership 19 under AS 14.25.040(b); 20 * Sec. 28. AS 14.25.220(46) is amended to read: 21 (46) "vested member" or "vested teacher" means an active member 22 who [HAS COMPLETED EITHER] 23 (A) first became a member before July 1, 2006, and has 24 completed 25 (i) 15 years of service, the last five of which have been 26 membership service, for a member first hired before July 1, 1975; 27 (ii) [(B)] eight years of membership service; 28 (iii) [(C)] five years of membership and three years of 29 BIA service; or 30 (iv) [(D)] 12 school years of part-time membership 31 service or 12 school years in each of which the member earned either
01 part-time or full-time membership service; 02 (B) first became a member after June 30, 2006, and has 03 completed five years of membership service; 04 * Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 05 (48) "first became a member after June 30, 2006" and "first became a 06 member of the plan after June 30, 2006" include a member who elected under former 07 AS 14.25.540 to participate in the defined contribution retirement plan under 08 AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit 09 retirement plan under AS 14.25.009 - 14.25.220. 10 * Sec. 30. AS 14.25.310 is amended to read: 11 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 12 AS 14.25.310 - 14.25.590 apply only to 13 (1) teachers who first become members [ON OR] after June 30, 2006, 14 and before July 1, 2024, and who are eligible but do not elect to participate in a 15 defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 16 39.35.680; and 17 (2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 18 EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 19 DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 20 - 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBERS] 21 who transferred [TRANSFER] into the defined contribution retirement plan under 22 former AS 14.25.540 and do not elect to participate in the defined benefit 23 retirement plan under AS 14.25.009 - 14.25.220. 24 * Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 25 (b) An employer that participates in the plan shall also participate in the 26 defined benefit retirement plan under AS 14.25.009 - 14.25.220. 27 * Sec. 32. AS 14.25.330(a) is amended to read: 28 (a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 29 before July 1, 2024, and who does not participate in a defined benefit retirement 30 plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 31 SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution
01 retirement plan. 02 * Sec. 33. AS 14.25.490(a) is amended to read: 03 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 04 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 05 time, in whole or in part, including the right to make retroactive amendments referred 06 to in 26 U.S.C. 401(b). 07 * Sec. 34. AS 14.25.490(b) is amended to read: 08 (b) The plan administrator may not modify or amend the plan retroactively [IN 09 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 10 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 11 MADE] before the modification or amendment except to the extent that the reduction 12 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 13 Revenue Code. 14 * Sec. 35. AS 14.25.490(c) is amended to read: 15 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 16 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 17 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 18 is terminated, all investments at the time of termination remain in force until all 19 individual accounts have been completely distributed under the plan. After [, AND, 20 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 21 employer. 22 * Sec. 36. AS 14.25.490(d) is repealed and reenacted to read: 23 (d) Within one year after determining that a contribution to the plan by an 24 employer was the result of a mistake of fact, the administrator shall return the 25 contribution to the employer. 26 * Sec. 37. AS 37.10.220(a) is amended to read: 27 (a) The board shall 28 (1) hold regular and special meetings at the call of the chair or of at 29 least five members; meetings are open to the public, and the board shall keep a full 30 record of all its proceedings; 31 (2) after reviewing recommendations from the Department of
01 Revenue, adopt investment policies for each of the funds entrusted to the board; 02 (3) determine the appropriate investment objectives for the defined 03 benefit plans established under the teachers' retirement system under AS 14.25 and the 04 public employees' retirement system under AS 39.35; 05 (4) assist in prescribing the policies for the proper operation of the 06 systems and take other actions necessary to carry out the intent and purpose of the 07 systems in accordance with AS 37.10.210 - 37.10.390; 08 (5) provide a range of investment options and establish the rules by 09 which participants can direct their investments among those options with respect to 10 accounts established under 11 (A) AS 14.25.340 - 14.25.350 (teachers' retirement system 12 defined contribution individual accounts); 13 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 14 Annuity Plan); 15 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 16 system defined contribution individual accounts); and 17 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 18 compensation program); 19 (6) establish the rate of interest that shall be annually credited to each 20 member's individual contribution account in accordance with AS 14.25.145 and 21 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 22 account in the health reimbursement arrangement plan under AS 39.30.300 - 23 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 24 rate of interest on a long-term basis, and the rate may be changed from time to time; 25 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 26 (8) coordinate with the retirement system administrator to have an 27 annual actuarial valuation of each retirement system prepared to determine system 28 assets, accrued liabilities, and funding ratios and to certify to the appropriate 29 budgetary authority of each employer in the system 30 (A) an appropriate contribution rate for normal costs; [AND] 31 (B) an appropriate contribution rate for liquidating any past
01 service liability; in this subparagraph, the appropriate contribution rate for 02 liquidating the past service liability of the defined benefit retirement plan under 03 AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 04 retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 05 percent of pay method based on amortization of the past service liability for a 06 closed term of 25 years; 07 (C) an appropriate monthly employer contribution under 08 AS 14.25.070 and AS 39.35.255; and 09 (D) appropriate adjustments, if any, under AS 14.25.050(e) 10 and AS 39.35.160(e); 11 (9) review actuarial assumptions prepared and certified by a member 12 of the American Academy of Actuaries and conduct experience analyses of the 13 retirement systems not less than once every four years, except for health cost 14 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 15 prepared under this paragraph shall be reviewed and certified by a second member of 16 the American Academy of Actuaries before presentation to the board; 17 (10) contract for an independent audit of the state's actuary not less 18 than once every four years; 19 (11) contract for an independent audit of the state's performance 20 consultant not less than once every four years; 21 (12) obtain an external performance review to evaluate the investment 22 policies of each fund entrusted to the board and report the results of the review to the 23 appropriate fund fiduciary; 24 (13) by the first day of each regular legislative session, report to the 25 governor, the legislature, and the individual employers participating in the state's 26 retirement systems on the financial condition of the systems in regard to 27 (A) the valuation of trust fund assets and liabilities; 28 (B) current investment policies adopted by the board; 29 (C) a summary of assets held in trust listed by the categories of 30 investment; 31 (D) the income and expenditures for the previous fiscal year;
01 (E) the return projections for the next calendar year; 02 (F) one-year, three-year, five-year, and 10-year investment 03 performance for each of the funds entrusted to the board; and 04 (G) other statistical data necessary for a proper understanding 05 of the financial status of the systems; 06 (14) submit quarterly updates of the investment performance reports to 07 the Legislative Budget and Audit Committee; 08 (15) develop an annual operating budget; [AND] 09 (16) administer pension forfeitures required under AS 37.10.310 using 10 the procedures of AS 44.62 (Administrative Procedure Act); 11 (17) establish one or more sub-trusts of the pension fund to hold 12 employer contributions deposited under AS 14.25.086 and AS 39.35.281, 13 employee contributions, assets, and earnings attributable to members of the 14 defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the defined 15 benefit retirement plan under AS 39.35.095 - 39.35.680 who first became 16 members of the respective plan after June 30, 2006; and 17 (18) account for and track employer contributions, employee 18 contributions, assets, and earnings in each trust fund or sub-trust attributable to 19 members who first became members after June 30, 2006, of the defined benefit 20 retirement plan under AS 14.25.009 - 14.25.220 and members who first became 21 members after June 30, 2006, of the defined benefit retirement plan under 22 AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to 23 members who first became members after June 30, 2006, of the defined benefit 24 retirement plan under AS 14.25.009 - 14.25.220 and members who first became 25 members after June 30, 2006, of the defined benefit retirement plan under 26 AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts 27 with liability allocated toward employer normal costs for members who became 28 members of the respective defined benefit retirement plan before July 1, 2024, 29 past service costs, the State of Alaska Teachers' and Public Employees' Retiree 30 Health Reimbursement Arrangement Plan under AS 39.30.300 - 39.30.495, and 31 employer contributions under AS 14.25.350 and AS 39.35.750.
01 * Sec. 38. AS 37.10.220(b) is amended to read: 02 (b) The board may 03 (1) employ outside investment advisors to review investment policies; 04 (2) enter into an agreement with the fiduciary of another state fund in 05 order to assume the management and investment of those assets; 06 (3) contract for other services necessary to execute the board's powers 07 and duties; 08 (4) enter into confidentiality agreements that would exempt records 09 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 10 the value of investment by the board or that could impair the ability of the board to 11 acquire, maintain, or dispose of investments; 12 (5) adjust the amount of the increase in benefits payable to a 13 member who first became a member after June 30, 2006, as provided under 14 AS 14.25.143 and AS 39.35.475; 15 (6) adjust contributions under AS 14.25.050(e) and 16 AS 39.35.160(e). 17 * Sec. 39. AS 39.30.090(a) is amended to read: 18 (a) The Department of Administration may obtain a policy or policies of group 19 insurance covering state employees, persons entitled to coverage under AS 14.25.168, 20 14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 21 AS 39.37.145, employees of other participating governmental units, or persons 22 entitled to coverage under AS 23.15.136, subject to the following conditions: 23 (1) a group insurance policy shall provide one or more of the following 24 benefits: life insurance, accidental death and dismemberment insurance, weekly 25 indemnity insurance, hospital expense insurance, surgical expense insurance, dental 26 expense insurance, audiovisual insurance, or other medical care insurance; 27 (2) each eligible employee of the state, the spouse and the unmarried 28 children chiefly dependent on the eligible employee for support, and each eligible 29 employee of another participating governmental unit shall be covered by the group 30 policy, unless exempt under regulations adopted by the commissioner of 31 administration;
01 (3) a governmental unit may participate under a group policy if 02 (A) its governing body adopts a resolution authorizing 03 participation and payment of required premiums; 04 (B) a certified copy of the resolution is filed with the 05 Department of Administration; and 06 (C) the commissioner of administration approves the 07 participation in writing; 08 (4) in procuring a policy of group health or group life insurance as 09 provided under this section or excess loss insurance as provided in AS 39.30.091, the 10 Department of Administration shall comply with the dual choice requirements of 11 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 12 transact business in the state under AS 21.09, a hospital or medical service corporation 13 authorized to transact business in this state under AS 21.87, or a health maintenance 14 organization authorized to operate in this state under AS 21.86; an excess loss 15 insurance policy may be obtained from a life or health insurer authorized to transact 16 business in this state under AS 21.09 or from a hospital or medical service corporation 17 authorized to transact business in this state under AS 21.87; 18 (5) the Department of Administration shall make available bid 19 specifications for desired insurance benefits or for administration of benefit claims and 20 payments to (A) all insurance carriers authorized to transact business in this state 21 under AS 21.09 and all hospital or medical service corporations authorized to transact 22 business under AS 21.87 who are qualified to provide the desired benefits; and (B) 23 insurance carriers authorized to transact business in this state under AS 21.09, hospital 24 or medical service corporations authorized to transact business under AS 21.87, and 25 third-party administrators licensed to transact business in this state and qualified to 26 provide administrative services; the specifications shall be made available at least once 27 every five years; the lowest responsible bid submitted by an insurance carrier, hospital 28 or medical service corporation, or third-party administrator with adequate servicing 29 facilities shall govern selection of a carrier, hospital or medical service corporation, or 30 third-party administrator under this section or the selection of an insurance carrier or a 31 hospital or medical service corporation to provide excess loss insurance as provided in
01 AS 39.30.091; 02 (6) if the aggregate of dividends payable under the group insurance 03 policy exceeds the governmental unit's share of the premium, the excess shall be 04 applied by the governmental unit for the sole benefit of the employees; 05 (7) a person receiving benefits under AS 14.25.110, AS 22.25, 06 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 07 effect under this section at the time of termination of employment with the state or 08 participating governmental unit; 09 (8) a person electing to have insurance under (7) of this subsection 10 shall pay the cost of this insurance; 11 (9) for each permanent part-time employee electing coverage under 12 this section, the state shall contribute one-half the state contribution rate for permanent 13 full-time state employees, and the permanent part-time employee shall contribute the 14 other one-half; 15 (10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 16 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 17 and eligible dependents under this section; the level of coverage for persons over 65 18 shall be the same as that available before reaching age 65 except that the benefits 19 payable shall be supplemental to any benefits provided under the federal old age, 20 survivors, and disability insurance program; a person electing to have insurance under 21 this paragraph shall pay the cost of the insurance; the commissioner of administration 22 shall adopt regulations implementing this paragraph; 23 (11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 24 or former AS 39.37 may obtain long-term care insurance for that person and eligible 25 dependents under this section; a person who elects insurance under this paragraph 26 shall pay the cost of the insurance premium; the commissioner of administration shall 27 adopt regulations to implement this paragraph; 28 (12) each licensee holding a current operating agreement for a vending 29 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 30 applies to governmental units other than the state. 31 * Sec. 40. AS 39.30.097(a) is amended to read:
01 (a) The commissioner of administration is authorized to prefund medical 02 benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535, 03 and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 04 tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 05 and actuarial requirements of the Governmental Accounting Standards Board. 06 * Sec. 41. AS 39.30.097(b) is amended to read: 07 (b) The commissioner of administration is authorized to prefund medical 08 benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by 09 establishing an irrevocable trust that is exempt from federal income tax under 26 10 U.S.C. 115 and subject to the applicable financial reporting, disclosure, and actuarial 11 requirements of the Governmental Accounting Standards Board. 12 * Sec. 42. AS 39.30.097 is amended by adding a new subsection to read: 13 (f) The commissioner of administration is authorized to prefund medical 14 benefits provided by AS 39.30.300 by establishing an irrevocable trust that is exempt 15 from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 16 reporting, disclosure, and actuarial requirements of the Governmental Accounting 17 Standards Board. 18 * Sec. 43. AS 39.30.300 is amended to read: 19 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 20 Health Reimbursement Arrangement Plan established. The State of Alaska 21 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 22 established for 23 (1) teachers who first become members of the [DEFINED 24 CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 - 25 14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 26 and teachers who elected under former AS 14.25.540 to participate in the plan 27 under AS 14.25.310 - 14.25.590; and 28 (2) employees of the state, political subdivisions of the state, and 29 public organizations of the state who first become members [OF THE DEFINED 30 CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 31 (AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER
01 AS 39.35.700 - 39.35.990 ON OR] after June 30, 2006, and employees of the state, 02 political subdivisions of the state, and public organizations of the state who 03 elected under former AS 39.35.940 to participate in the plan established under 04 AS 39.35.700 - 39.35.990 [JULY 1, 2006]. 05 * Sec. 44. AS 39.30.340 is amended to read: 06 Sec. 39.30.340. Powers and duties of the administrator. The administrator 07 shall establish a teachers' and public employees' retiree health reimbursement 08 arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 09 shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 10 ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 11 ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 12 AS 39.30.097(b).] The administrator has the same powers and duties with regard to 13 the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 14 * Sec. 45. AS 39.30.380 is amended to read: 15 Sec. 39.30.380. Termination of employment. A person who terminates 16 employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 17 AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 18 contributions made on behalf of the person to the teachers' and public employees' 19 retiree health reimbursement arrangement trust fund. If a person returns to 20 employment with a participating employer by December 31 of the year in which the 21 person reaches 65 years of age, the person's account balance shall be restored in the 22 amount recorded on the date of termination from the trust, adjusted for inflation at the 23 rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 24 employment with a participating employer shall be credited toward eligibility for 25 medical benefits. 26 * Sec. 46. AS 39.30.390 is amended to read: 27 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 28 eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 29 [AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 30 individual account established for a member under the plan, except members do not 31 have to retire directly from the system. A person who is the dependent child of an
01 eligible member is eligible for reimbursements if the eligible member and surviving 02 spouse have both died so long as the person meets the definition of dependent child. 03 * Sec. 47. AS 39.30.400(a) is amended to read: 04 (a) The administrator may deduct the cost of monthly premiums from the 05 individual account for retiree major medical insurance on behalf of an eligible person 06 who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 07 AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 08 * Sec. 48. AS 39.30.420(a) is amended to read: 09 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 10 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 11 time, in whole or in part, including the right to make retroactive amendments referred 12 to in 26 U.S.C. 401(b). 13 * Sec. 49. AS 39.30.420(b) is amended to read: 14 (b) The plan administrator may not modify or amend the plan retroactively [IN 15 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 16 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 17 MADE] before the modification or amendment except to the extent that the reduction 18 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 19 Revenue Code. 20 * Sec. 50. AS 39.30.420(c) is amended to read: 21 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 22 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 23 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 24 is terminated, all investments at the time of termination remain in force until all 25 individual accounts have been completely distributed under the plan. After [, AND, 26 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 27 employer. 28 * Sec. 51. AS 39.30.420(d) is repealed and reenacted to read: 29 (d) Within one year after determining that a contribution to the plan by an 30 employer was the result of a mistake of fact, the administrator shall return the 31 contribution to the employer.
01 * Sec. 52. AS 39.30.495(5) is amended to read: 02 (5) "eligible person" means a person who meets the eligibility 03 requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 04 OR AS 39.35.870]; 05 * Sec. 53. AS 39.30.495(6) is amended to read: 06 (6) "employer" has the meaning given in AS 14.25.220 for employers 07 of teachers in the defined benefit retirement plan established in AS 14.25.009 - 08 14.25.220, has the meaning given in AS 14.25.590 for employers of teachers in the 09 defined contribution plan established in AS 14.25.310 - 14.25.590, has the meaning 10 given in AS 39.35.680 for employers of public employees in the defined benefit 11 retirement plan established in AS 39.35.095 - 39.35.680, and has the meaning given 12 in AS 39.35.990 for employers of public employees in the defined contribution plan 13 established in AS 39.35.700 - 39.35.990; 14 * Sec. 54. AS 39.30.495(9) is amended to read: 15 (9) "member" means a member of the State of Alaska Teachers' and 16 Public Employees' Retiree Health Reimbursement Arrangement Plan established 17 in AS 39.30.300 - 39.30.495 [DEFINED CONTRIBUTION PLAN OF THE 18 TEACHERS' RETIREMENT SYSTEM IN AS 14.25.310 - 14.25.590 OR A 19 MEMBER OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM IN 20 AS 39.35.700 - 39.35.990]; 21 * Sec. 55. AS 39.35.095 is amended to read: 22 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 23 [FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 24 only to members first hired 25 (1) before July 1, 2006, who have 26 (A) not elected under former AS 39.35.940 to participate in 27 the defined contribution retirement plan under AS 39.35.700 - 39.35.990; 28 or 29 (B) elected under former AS 39.35.940 to participate in the 30 defined contribution retirement plan under AS 39.35.700 - 39.35.990 and 31 are former members of the defined contribution retirement plan under
01 AS 39.35.700 - 39.35.990; 02 (2) after June 30, 2006, and before July 1, 2024, who are former 03 members of the defined contribution retirement plan under AS 39.35.700 - 04 39.35.990; or 05 (3) on or after July 1, 2024 [: AS 39.35.095 - 39.35.680]. 06 * Sec. 56. AS 39.35.095 is amended by adding a new subsection to read: 07 (b) An employee who became a member of the system after June 30, 2006, 08 and before July 1, 2024, or who has elected under former AS 39.35.940 to participate 09 in the defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject 10 to AS 39.35.095 - 39.35.680 if the employee 11 (1) is not employed by an employer on July 1, 2024; 12 (2) is reemployed by an employer after July 1, 2024; and 13 (3) has, before the date of reemployment, received 14 (A) a distribution, other than a rollover distribution, of the 15 entire balance in the member's individual account in the defined contribution 16 retirement plan; or 17 (B) a rollover distribution of the entire balance in the member's 18 individual account in the defined contribution retirement plan and has not 19 within 180 days of reemployment had all or part of a direct rollover 20 distribution from an eligible retirement plan owned by the member paid 21 directly into the member's individual account. 22 * Sec. 57. AS 39.35.100(b) is amended to read: 23 (b) An individual account shall be maintained for each employee to record the 24 amount of the employee's mandatory contributions collected under AS 39.35.160 25 [AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 26 account shall be credited with interest by applying the prescribed rate of interest, as 27 determined by the board, to the balance in the account as of that date. When the 28 employee is appointed to retirement, the amount held in the individual account shall 29 be used first to fully finance the benefits paid. Once this account has been exhausted, 30 the plan shall fully finance the benefits paid that were not financed by the employee's 31 individual account.
01 * Sec. 58. AS 39.35 is amended by adding a new section to article 3 to read: 02 Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 03 employees. (a) An employee may make a one-time election to participate in the plan 04 under AS 39.35.095 - 39.35.680 if the employee 05 (1) became a member of the defined contribution retirement plan under 06 AS 39.35.700 - 39.35.990 after June 30, 2006, and before July 1, 2024; 07 (2) is not employed by an employer on July 1, 2024; 08 (3) is reemployed by an employer after July 1, 2024; and 09 (4) before the date of reemployment, 10 (A) has not received a distribution of the entire balance in the 11 employee's individual account under the defined contribution retirement plan 12 established in AS 39.35.700 - 39.35.990; or 13 (B) has received a rollover distribution of the entire balance in 14 the member's individual account in the defined contribution retirement plan 15 and has within 180 days of reemployment had all or part of a direct rollover 16 distribution from an eligible retirement plan owned by the member paid 17 directly into the member's individual account. 18 (b) An election under (a) of this section may be made not more than 180 days 19 after the date of reemployment. A reemployed employee electing to participate under 20 (a) of this section shall use the balance of the employee's individual account in the 21 plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 22 purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 23 made under (a) of this section must be made in writing in the manner prescribed by the 24 administrator. An election made by an employee who is married is not effective unless 25 the election is signed by the employee's spouse. The administrator shall provide an 26 employee who is eligible to make an election under (a) of this section with 27 information about the potential consequences of the employee's election, including 28 calculations to illustrate the effect of moving the employee's retirement plan from a 29 defined contribution retirement plan to a defined benefit retirement plan. 30 (c) An election made under (a) of this section to participate in the plan under 31 AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an
01 eligible employee shall be enrolled as a member of the plan, and the employee's 02 participation in the plan shall be governed by the applicable provisions of the plan. 03 The employee's enrollment in the plan is retroactive to the date of hire. 04 (d) When an eligible employee makes an election under this section, the 05 administrator shall cause the total amount of the employee's employee and employer 06 contributions to the plan under AS 39.35.700 - 39.35.990, with investment earnings 07 and losses through the day of the employee's election to participate as a member in the 08 plan under AS 39.35.095 - 39.35.680, to be actuarially calculated and, subject to (f) of 09 this section, transferred to the pension fund in the plan under AS 39.35.095 - 10 39.35.680. On the effective date of the employee's participation in the plan under 11 AS 39.35.095 - 39.35.680, the employee shall be credited with service in the plan. The 12 board shall determine the cost of the employee's actual service time based on the 13 employee's accrued actuarial liability of pension benefits in the plan, and credit the 14 employee with service time equal to the value actuarially calculated and transferred to 15 the pension fund in the plan under AS 39.35.095 - 39.35.680. The board shall adopt 16 regulations establishing transfer procedures. The transfer may not occur later than 60 17 days after the date the administrator receives the employee's election, unless the major 18 financial markets for securities available for a transfer are seriously disrupted by an 19 unforeseen event that also causes the suspension of trading on any national securities 20 exchange in the country where the securities were issued. In that event, the 60-day 21 period may be extended by a resolution of the board. A transfer is not commissionable 22 or subject to other fees and may be in the form of cash or a security as determined by 23 the board. A security shall be valued on the date of receipt in the employee's account. 24 (e) When making a transfer under (d) of this section or a transfer for a 25 reemployed employee subject to the plan under AS 39.35.095(b), the administrator 26 shall transfer 27 (1) an amount equal to the decrease in the accrued actuarial liability of 28 the death and disability trust in the plan under AS 39.35.700 - 39.35.990 resulting 29 from the transfer as of the date of transfer, based on the most recent actuarial valuation 30 of the death and disability trust, from the death and disability trust in the plan under 31 AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 -
01 39.35.680; and 02 (2) an amount equal to the increase in the accrued actuarial liability of 03 the health care trust in the plan under AS 39.35.095 - 39.35.680 resulting from the 04 transfer as of the date of transfer, based on the actuarial assumptions set out in (g) of 05 this section, from the trust established under AS 39.30.097(b) for the prefunding of 06 medical benefits provided by AS 39.35.880 to the trust established under 07 AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537. 08 (f) If the value actuarially calculated under (d) of this section is insufficient to 09 pay for service credit equal to the employee's actual service, the administrator shall 10 allow the employee the option of purchasing service credit in an amount up to the 11 amount needed to eliminate the insufficiency; however, if that value exceeds the 12 amount needed to pay for service credit equal to the employee's actual service, the 13 administrator shall cause the excess to be paid to the employee as a rollover transfer to 14 either an individual employee annuity account in the Department of Administration 15 under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 16 Plan) or, if the member's employer does not participate in the State of Alaska 17 Supplemental Annuity Plan, to an eligible retirement plan as defined in 18 AS 39.35.760(d). An excess may not be used to purchase additional service credit in 19 the plan under AS 39.35.095 - 39.35.680. When a reemployed employee enters the 20 plan under AS 39.35.095(b), the administrator shall allow the employee to pay for a 21 period of service credit up to the employee's actual service. When an employee elects 22 to purchase service credit under this section and does not immediately pay for the 23 service credit purchased, an indebtedness is established. Interest as prescribed by 24 regulation accrues on an employee's indebtedness. Indebtedness that exists at the time 25 the employee is appointed to retirement necessitates an actuarial adjustment to the 26 benefits payable due to service in the defined contribution retirement plan. 27 (g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 28 must be based on the most recent actuarial valuation of the plan, except that the 29 retirement rates are computed at 25 percent of the retirement rates used in the most 30 recent actuarial valuation of the pension fund for the plan plus 75 percent of the 31 retirement rates used in the most recent actuarial valuation of the plan under
01 AS 39.35.700 - 39.35.990. 02 (h) The provisions of this section are subject to the requirements of the 03 Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 04 39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has 05 the meaning given in AS 39.35.990. 06 * Sec. 59. AS 39.35.160(a) is amended to read: 07 (a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 08 each peace officer or firefighter shall contribute to the plan an amount equal to seven 09 and one-half percent of the peace officer's or firefighter's compensation, and, except [. 10 EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 11 each other employee shall contribute to the plan an amount equal to six and three- 12 quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 13 BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 14 PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 15 COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 16 TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 17 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 18 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 19 OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 20 * Sec. 60. AS 39.35.160 is amended by adding new subsections to read: 21 (e) An employee who first participates in the plan after June 30, 2006, shall 22 contribute to the plan an amount equal to eight percent of the employee's 23 compensation. The board may, from time to time, adjust the employee contribution 24 under this subsection to an amount that, 25 (1) if decreased, is not less than eight percent of the employee's 26 compensation; and 27 (2) if increased, is not more than 12 percent of the employee's 28 compensation. 29 (f) Contributions under (a) and (e) of this section shall be deducted by the 30 employer at the end of each payroll period. The contributions shall be deducted from 31 employee compensation before computation of applicable federal taxes, and the
01 contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 02 member may not have the option of making the payroll deduction directly instead of 03 having the contribution picked up by the employer. 04 (g) The board shall increase the employee contribution under (e) of this 05 section if the board determines that, unless the contribution is increased, the portion of 06 the liability of the plan that is attributable to employees who first participate in the 07 plan after June 30, 2006, will be funded below 90 percent. The board may not increase 08 the employee contribution unless the board increases the employer contribution under 09 AS 39.35.255(a)(2) by an equal amount. The board may decrease the contribution 10 under (e) of this section if the board determines that, after the contribution is 11 decreased, the portion of the liability of the plan that is attributable to all members 12 who first became members of the plan after June 30, 2006, will be funded above 90 13 percent. The board may not decrease the employee contribution unless the board 14 decreases the employer contribution under AS 39.35.255(a)(2) by an equal amount. 15 * Sec. 61. AS 39.35.165(a) is amended to read: 16 (a) An employee who is eligible to purchase credited service under 17 AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 18 39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 19 AS 39.35.375, or an elected public official who is eligible to purchase credited service 20 under AS 39.35.381 is an employee for purposes of this section. An employee may, in 21 lieu of making payments directly to the plan, elect to have the employee's employer 22 make payments as provided in this section. 23 * Sec. 62. AS 39.35.165(b) is amended to read: 24 (b) An employee may elect to have the employer make payments for all or any 25 portion of the amounts payable for the employee's purchase of credited service 26 through a salary reduction program as follows: 27 (1) the amounts paid under a salary reduction program are in lieu of 28 contributions by the employee making the election; the electing employee's salary or 29 other compensation shall be reduced by the amount paid by the employer under this 30 subsection; 31 (2) the employee shall make an irrevocable election under this section
01 to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 02 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 03 39.35.381 and before the employee's termination of employment; the irrevocable 04 election must specify the number of payroll periods that deductions will be made from 05 the employee's compensation and the dollar amount of deductions for each payroll 06 period during the specified number of payroll periods; the deductions made under this 07 paragraph cease upon the earlier of the member's termination of employment with the 08 employer or the member's death; amounts paid by an employer under (f) of this 09 section may not be applied toward the payment of the dollar amount of the deductions 10 representing the portion of the credited service that is being purchased by the member 11 through payroll deduction in accordance with the member's irrevocable election under 12 this subsection; 13 (3) amounts paid by an employer under this subsection shall be treated 14 as employer contributions for the purpose of determining tax treatment under the 15 Internal Revenue Code; the amounts paid by the employer under this section may not 16 be included in the member's gross income for income tax purposes until those amounts 17 are distributed by refund or retirement benefit payments. 18 * Sec. 63. AS 39.35.165(g) is amended to read: 19 (g) Payments made under this section shall be applied to reduce the 20 employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 21 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 22 39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 23 * Sec. 64. AS 39.35.165(i) is amended to read: 24 (i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 25 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 26 39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 27 requirements specified by the commissioner, the plan shall adjust the employee's 28 credited service history and add any additional service credits acquired. 29 * Sec. 65. AS 39.35.255(a) is amended to read: 30 (a) Each employer, except as provided in (h) of this section, shall contribute to 31 the system every payroll period the lesser of
01 (1) an amount calculated by applying a rate of 22 percent of the greater 02 of the total of all base salaries 03 (A) [(1)] paid by the employer to employees who are active 04 members of the system, including any adjustments to contributions required by 05 AS 39.35.520; or 06 (B) [(2)] paid by the employer to employees who were active 07 members of the system during the corresponding payroll period for the fiscal 08 year ending 09 (i) [(A)] June 30, 2008; or 10 (ii) [(B)] June 30, 2012, if that total is less than the total 11 under (i) of this subparagraph [(A) OF THIS PARAGRAPH], and the 12 employer is a municipality in which the population decreased by more 13 than 25 percent between 2000 and 2010, according to the decennial 14 census conducted by the United States Bureau of the Census; or 15 (2) an amount calculated by applying a rate established by the 16 board under AS 37.10.220 to the total of all base salaries paid by the employer to 17 active members of the system; the rate must be at least 12 percent and be 18 sufficient to pay the actuarially determined employer normal cost, all 19 contributions required under AS 39.30.370 and AS 39.35.750, and past service 20 cost for members of the system. 21 * Sec. 66. AS 39.35.255 is amended by adding a new subsection to read: 22 (j) If the legislature appropriates funds for the purpose of decreasing an 23 employer's contribution, the employer's contribution under (a) of this section shall 24 decrease by that amount. 25 * Sec. 67. AS 39.35 is amended by adding a new section to read: 26 Sec. 39.35.281. Sub-trust for members who first became members after 27 June 30, 2006. The administrator shall deposit a portion of employer contributions 28 under AS 39.35.255 and 39.35.280 in a sub-trust of the retirement fund established by 29 the board for members who first became members after June 30, 2006. The amount 30 deposited, when combined with the amount separately computed for medical benefits 31 under AS 39.35.282, must be sufficient to pay the actuarially determined employer
01 normal cost and past service cost for members of the system who first became 02 members after June 30, 2006. When the amount sufficient to pay the actuarially 03 determined employer normal cost, all contributions required under AS 39.30.370 and 04 AS 39.35.750, and past service cost for members of the system is less than 12 percent 05 of all base salaries paid to active members of the system, the administrator shall 06 deposit the difference in the sub-trust established under this section. 07 * Sec. 68. AS 39.35.282 is amended to read: 08 Sec. 39.35.282. Contributions for medical benefits. Contributions made by 09 an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 10 computed for benefits provided by AS 39.35.535 and retiree major medical 11 insurance plan benefits provided under AS 39.35.537, and must [SHALL] be 12 deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 13 * Sec. 69. AS 39.35.340(i) is amended to read: 14 (i) Notwithstanding (d) of this section, a member who retires as a peace officer 15 or firefighter may elect to use five or fewer years of credited service granted under this 16 section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 17 When eligibility for credited service for military service has been established and an 18 election under this subsection has been made, an indebtedness in addition to the 19 indebtedness determined under (b) of this section shall be determined for each year of 20 military service used under this subsection, in an amount based on the increase, if any, 21 in the present value of future benefits for that year as determined by the department. 22 * Sec. 70. AS 39.35.345(d) is amended to read: 23 (d) An employee may choose whether the credited service granted under this 24 section is used to satisfy the credited service requirements for normal retirement under 25 AS 39.35.370(a)(1)(B) or (C), 39.35.370(a)(2)(B), (C), or (D), [AS 39.35.370(a)(2) 26 OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 27 under this subsection is irrevocable and applies to all temporary credited service that 28 the employee has accrued when the employee retires. An election under this 29 subsection does not change the date that an employee is considered to have 30 commenced participation in the plan under AS 39.35.120. 31 * Sec. 71. AS 39.35.370(a) is amended to read:
01 (a) Subject to AS 39.35.450, a terminated employee 02 (1) who first became a member before July 1, 2006, is eligible for a 03 normal retirement benefit 04 (A) [(1)] at age 60 with at least five years of credited service; 05 (B) [(2)] with at least 20 years of credited service as a peace 06 officer or firefighter; or 07 (C) [(3)] with at least 30 years of credited service; 08 (2) who first became a member after June 30, 2006, is eligible for a 09 normal retirement benefit 10 (A) at age 60 with at least five years of credited service; 11 (B) at age 55 with at least 20 years of credited service as a 12 peace officer or firefighter; 13 (C) at age 50 with at least 25 years of credited service as a 14 peace officer or firefighter; or 15 (D) with at least 30 years of credited service [FOR ALL 16 OTHER EMPLOYEES]. 17 * Sec. 72. AS 39.35.381(e) is amended to read: 18 (e) A person who retires under this section is not entitled to disability or death 19 benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 20 to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 21 section may not be used for vesting under AS 39.35.095 - 39.35.680. 22 * Sec. 73. AS 39.35.475(b) is amended to read: 23 (b) Subject to (g) and (h) of this section, the [THE] increase in benefit 24 payments applies to total benefit payments except for the cost-of-living allowance 25 under AS 39.35.480. The amount of the increase is a percentage of the current benefit 26 equal to 27 (1) the lesser of 75 percent of the increase in the cost of living in the 28 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 29 years old and for members receiving disability benefits; and 30 (2) the lesser of 50 percent of the increase in the cost of living in the 31 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but
01 less than 65 years old or for recipients who are less than 60 years old on July 1 but 02 who have received benefits from the plan for at least five years. 03 * Sec. 74. AS 39.35.475 is amended by adding new subsections to read: 04 (g) Subject to (h) of this section, the amount of an increase for members who 05 first became members of the plan after June 30, 2006, and do not meet the eligibility 06 requirements for a permanent fund dividend in effect on July 1, 2024, under 07 AS 43.23.005(a) is equal to one-half of the applicable percentage under (b) of this 08 section. 09 (h) If the board determines that the portion of the liability of the plan that is 10 attributable to all members who first became members of the plan after June 30, 2006, 11 is funded below 90 percent, the board may reduce the amount of the increase 12 determined under (b) or (g) of this section that is payable to a member who first 13 became a member after June 30, 2006. At any time, the board may terminate a 14 reduction made under this subsection. 15 * Sec. 75. AS 39.35.480(a) is amended to read: 16 (a) While residing in the state, a person who first became a member of the 17 plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 18 and who is 65 years of age or older or a person who first became a member of the 19 plan before July 1, 2006, and who is receiving a disability benefit is entitled to 20 receive a monthly cost-of-living allowance in addition to the basic benefit. The 21 amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 22 greater. 23 * Sec. 76. AS 39.35.535(a) is amended to read: 24 (a) Except as provided in (d) and (g) of this section, the following persons are 25 entitled to major medical insurance coverage under this section: 26 (1) for employees first hired before July 1, 1986, 27 (A) an employee who is receiving a monthly benefit from the 28 plan and who has elected coverage; 29 (B) the spouse and dependent children of the employee 30 described in (A) of this paragraph; 31 (C) the surviving spouse of a deceased employee who is
01 receiving a monthly benefit from the plan and who has elected coverage; 02 (D) the dependent children of a deceased employee who are 03 dependent on the surviving spouse described in (C) of this paragraph; 04 (2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 05 (A) an employee who is receiving a monthly benefit from the 06 plan and who has elected coverage for the employee; 07 (B) the spouse of the employee described in (A) of this 08 paragraph if the employee elected coverage for the spouse; 09 (C) the dependent children of the employee described in (A) of 10 this paragraph if the employee elected coverage for the dependent children; 11 (D) the surviving spouse of a deceased employee who is 12 receiving a monthly benefit from the plan and who has elected coverage; 13 (E) the dependent children of a deceased employee who are 14 dependent on the surviving spouse described in (D) of this paragraph if the 15 surviving spouse has elected coverage for the dependent children. 16 * Sec. 77. AS 39.35.535(c) is amended to read: 17 (c) A benefit recipient who became a member before July 1, 2006, or the 18 surviving spouse of the member may elect major medical insurance coverage in 19 accordance with regulations and under the following conditions: 20 (1) a person, other than a disabled member or a disabled member who 21 is appointed to normal retirement, shall [MUST] pay an amount equal to the full 22 monthly group premium for retiree major medical insurance coverage if the person is 23 (A) younger than 60 years of age and has less than 24 (i) 25 years of credited service as a peace officer under 25 AS 39.35.360 and 39.35.370; or 26 (ii) 30 years of credited service under AS 39.35.360 and 27 39.35.370 that is not service as a peace officer; or 28 (B) of any age and has less than 10 years of credited service; 29 (2) a person is not required to make premium payments for retiree 30 major medical coverage if the person 31 (A) is a disabled member;
01 (B) is a disabled member who is appointed to normal 02 retirement; 03 (C) is 60 years of age or older and has at least 10 years of 04 credited service; or 05 (D) has at least 06 (i) 25 years of credited service as a peace officer under 07 AS 39.35.360 and 39.35.370; or 08 (ii) 30 years of credited service under AS 39.35.360 and 09 39.35.370 not as a peace officer. 10 * Sec. 78. AS 39.35.535 is amended by adding a new subsection to read: 11 (g) A benefit recipient who first became a member after June 30, 2006, or a 12 surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 13 under this section but may elect medical benefits under AS 39.35.537. 14 * Sec. 79. AS 39.35 is amended by adding a new section to read: 15 Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 16 June 30, 2006; surviving spouses and dependents. (a) An employee who first 17 became a member of the plan after June 30, 2006, receives a monthly benefit from the 18 plan, retired directly from the plan, and has elected benefits under this section is 19 entitled to medical benefits under this section. A member who applies for medical 20 benefits under this section shall apply on the forms and in the manner prescribed by 21 the administrator. A member is eligible to retire from the plan if the member has been 22 an active member for at least 12 months before application for retirement and the 23 member 24 (1) is at least 25 (A) 50 years of age and has at least 25 years of membership 26 service as a peace officer or firefighter; 27 (B) 55 years of age and has at least 20 years of membership 28 service as a peace officer or firefighter; 29 (2) has at least 30 years of membership; or 30 (3) reaches the age set for Medicare eligibility and has at least 10 years 31 of membership service.
01 (b) The member's surviving spouse is eligible to elect medical benefits if the 02 member had retired or was eligible for retirement and medical benefits at the time of 03 the member's death. 04 (c) The medical benefits available to eligible persons are access to the retiree 05 major medical insurance plan and access to the health reimbursement arrangement 06 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 07 that an eligible person may not be denied insurance coverage except for failure to pay 08 the required premium. 09 (d) Retiree major medical insurance plan coverage elected by an eligible 10 member under this section covers the eligible member, the spouse of the eligible 11 member, and the dependent children of the eligible member. 12 (e) Retiree major medical insurance plan coverage elected by a surviving 13 spouse of an eligible member under this section covers the surviving spouse and the 14 dependent children of the eligible member who are dependent on the surviving spouse. 15 (f) Participation in the retiree major medical insurance plan is not required in 16 order to participate in the health reimbursement arrangement plan. 17 (g) A person eligible for medical benefits under this section is not required to 18 participate in the health reimbursement arrangement plan in order to participate in the 19 retiree major medical insurance plan. 20 (h) A person who is eligible for medical benefits under this section must make 21 the irrevocable election to participate or not participate in the retiree major medical 22 insurance plan on or before the date the person reaches 70 1/2 years of age or when the 23 person applies for retirement and medical benefits, whichever is later. 24 (i) Major medical insurance coverage takes effect on the first day of the month 25 following the date of the administrator's approval of the election and stops when the 26 person who elects coverage dies or fails to make a required premium payment. 27 (j) The coverage for persons 65 years of age or older is the same as that 28 available for persons under 65 years of age. The benefits payable to those persons 65 29 years of age or older supplement any benefits provided under the federal old age, 30 survivors, and disability insurance program. 31 (k) The medical and optional insurance premiums owed by the person who
01 elects coverage may be deducted from the health reimbursement arrangement plan. If 02 the amount of the health reimbursement arrangement plan becomes insufficient to pay 03 the premiums, the person who elects coverage under (a) of this section shall pay the 04 premiums directly. 05 (l) The cost of premiums for retiree major medical insurance coverage under 06 this section for an eligible member or surviving spouse who is 07 (1) not eligible for Medicare is an amount equal to the full monthly 08 group premiums for retiree major medical insurance coverage; 09 (2) eligible for Medicare is the following percentage of the premium 10 amounts established for retirees who are eligible for Medicare: 11 (A) 30 percent if the member had 10 or more, but less than 15, 12 years of service; 13 (B) 25 percent if the member had 15 or more, but less than 20, 14 years of service; 15 (C) 20 percent if the member had 20 or more, but less than 25, 16 years of service; 17 (D) 15 percent if the member had 25 or more, but less than 30, 18 years of service; 19 (E) 10 percent if the member had 30 or more years of service. 20 (m) The eligibility for retiree major medical insurance coverage for an 21 alternate payee under a qualified domestic relations order shall be determined based 22 on the eligibility of the member to elect coverage. The alternate payee shall pay the 23 full monthly premium for retiree major medical insurance coverage. 24 (n) The administrator shall 25 (1) inform a person entitled to retiree major medical insurance 26 coverage under this section in writing 27 (A) that the health insurance coverage available to retired 28 members may be different from the health insurance coverage provided to 29 employees; 30 (B) of time limits for selecting optional health insurance 31 coverage; and
01 (C) whether the election is irrevocable; and 02 (2) require that a person entitled to retiree major medical insurance 03 coverage under this section indicate in writing on a form provided by the administrator 04 whether the person has chosen to receive optional health insurance coverage. 05 (o) The monthly group premiums for retiree major medical insurance coverage 06 under this section are established by the administrator in accordance with 07 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 08 (a) of this section a monthly group premium rate for retiree major medical insurance 09 coverage other than the premium in effect for the month in which the premium is due 10 for coverage for that month. 11 (p) In this section, "health reimbursement arrangement plan" means the State 12 of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 13 Arrangement Plan established in AS 39.30.300. 14 * Sec. 80. AS 39.35.610(a) is amended to read: 15 (a) The contributions of an employer and the contributions of its employees 16 shall be transmitted to the administrator as soon as practicable after the close of the 17 payroll period for which the contributions are made. Subject to (c) of this section, if an 18 employer is delinquent in transferring the contributions for more than 15 days, interest 19 shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 20 the most recent actuarially determined rate of earnings for the retirement plan from the 21 date that the contributions were originally due. 22 * Sec. 81. AS 39.35.680(4) is amended to read: 23 (4) "average monthly compensation" means the result obtained by 24 dividing the compensation earned by an employee during a considered period by the 25 number of months, including fractional months, for which compensation was earned; 26 an employee must have at least 115 days of credited service in the last payroll year in 27 order for that year to be used as part of the consecutive payroll years; the considered 28 period consists of 29 (A) for employees first hired before July 1, 1996, the three 30 consecutive payroll years during the period of credited service that yield the 31 highest average;
01 (B) for employees first hired [ON OR] after June 30 [JULY 1], 02 1996, the five consecutive payroll years during the period of credited service 03 that yield the highest average; 04 (C) if the employee does not have the number of consecutive 05 payroll years required by (A) or (B) of this paragraph, the actual number of 06 months, including fractional months, that the employee worked; 07 (D) for an employee who has made an election under 08 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 09 fractional months, that the employee worked; 10 (E) for a peace officer or firefighter hired before July 1, 2006 11 [AT ANY TIME], the three consecutive payroll years during the period of 12 credited service that yield the highest average; 13 * Sec. 82. AS 39.35.680(18) is amended to read: 14 (18) "employer" means 15 (A) the State of Alaska; 16 (B) a political subdivision or public organization of the state 17 that participates in the plan based on a resolution to participate in the plan that 18 was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 19 (C) a political subdivision or public organization of the state 20 that, as a result of consolidation or reorganization [THAT OCCURS ON OR 21 AFTER JULY 1, 2006], assumes liability under the plan of a political 22 subdivision or public organization described in (B) of this paragraph; 23 * Sec. 83. AS 39.35.680 is amended by adding a new paragraph to read: 24 (44) "first became a member after June 30, 2006" and "first became a 25 member of the plan after June 30, 2006" include a member who elected under former 26 AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who 27 elects to participate in the defined benefit retirement plan under AS 39.35.095 - 28 39.35.680. 29 * Sec. 84. AS 39.35.700 is amended to read: 30 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 31 AS 39.35.700 - 39.35.990 apply only to
01 (1) members first hired [ON OR] after June 30, 2006, and before 02 July 1, 2024, who do not participate in a defined benefit retirement plan under 03 AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; and 04 (2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 05 EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 06 RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 07 FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 08 transferred [TRANSFER] into the defined contribution retirement plan under former 09 AS 39.35.940 and do not elect to participate in the defined benefit retirement plan 10 under AS 39.35.095 - 39.35.680. 11 * Sec. 85. AS 39.35.700 is amended by adding a new subsection to read: 12 (b) A public organization as defined in AS 39.35.680 or a municipality or 13 other political subdivision of the state that participates in the plan shall also participate 14 in the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 15 * Sec. 86. AS 39.35.720 is amended to read: 16 Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 17 after June 30, 2006, and before July 1, 2024, who does not participate in a defined 18 benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 19 39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 20 39.35.990. 21 * Sec. 87. AS 39.35.895(a) is amended to read: 22 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 23 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 24 time, in whole or in part, including the right to make retroactive amendments referred 25 to in 26 U.S.C. 401(b). 26 * Sec. 88. AS 39.35.895(b) is amended to read: 27 (b) The plan administrator may not modify or amend the plan retroactively [IN 28 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 29 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 30 MADE] before the modification or amendment except to the extent that the reduction 31 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal
01 Revenue Code. 02 * Sec. 89. AS 39.35.895(c) is amended to read: 03 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 04 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 05 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 06 is terminated, all investments at the time of termination remain in force until all 07 individual accounts have been completely distributed under the plan. After [, AND, 08 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 09 employer. 10 * Sec. 90. AS 39.35.895(d) is repealed and reenacted to read: 11 (d) Within one year after determining that a contribution to the plan by an 12 employer was the result of a mistake of fact, the administrator shall return the 13 contribution to the employer. 14 * Sec. 91. AS 14.25.012(c), 14.25.061, 14.25.540; and AS 39.35.940 are repealed. 15 * Sec. 92. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 18 member of the defined contribution retirement plan of the teachers' retirement system after 19 June 30, 2006, and before July 1, 2024, and who, on July 1, 2024, is a member employed by 20 an employer in the defined contribution retirement plan of the teachers' retirement system 21 may, before January 1, 2025, make a one-time election to participate in the defined benefit 22 retirement plan and to transfer all contributions that have been made or should be made to the 23 defined contribution retirement plan for service the member completes before the effective 24 date of the member's participation in the defined benefit retirement plan. The transferred 25 contributions shall be used to purchase credited service in the defined benefit retirement plan 26 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 27 established under AS 37.10.210. The provisions of AS 14.25.044 apply to an election made 28 under this subsection. 29 (b) An employee who became a member of the defined contribution retirement plan 30 of the public employees' retirement system after June 30, 2006, and before July 1, 2024, and 31 who, on July 1, 2024, is a member employed by an employer in the defined contribution
01 retirement plan of the public employees' retirement system may, before January 1, 2025, make 02 a one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 03 39.35.680 and to transfer all contributions that have been made or should be made to the 04 defined contribution retirement plan for service the member completes before the effective 05 date of the member's participation in the defined benefit retirement plan. The transferred 06 contributions shall be used to purchase credited service in the defined benefit retirement plan 07 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 08 established under AS 37.10.210. The provisions of AS 39.35.159 apply to an election made 09 under this subsection. 10 * Sec. 93. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 13 may adopt regulations necessary to implement secs. 37 and 38 of this Act. Regulations 14 adopted by the Alaska Retirement Management Board under this Act relate to the internal 15 management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 16 under AS 37.10.240. 17 (b) The commissioner of administration may adopt regulations necessary to 18 implement secs. 1 - 36 and 39 - 92 of this Act. Regulations adopted by the commissioner of 19 administration under this Act relate to the internal management of a state agency and are not 20 subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 21 AS 39.35.005. 22 (c) Regulations adopted under this section may not take effect before the effective 23 date of the law being implemented by the regulation. 24 * Sec. 94. Section 93 of this Act takes effect immediately under AS 01.10.070(c). 25 * Sec. 95. Except as provided in sec. 94 of this Act, this Act takes effect July 1, 2024.