CSHB 78(FIN): "An Act relating to the public employees' retirement system and the teachers' retirement system; providing certain employees an opportunity to choose between the defined benefit and defined contribution plans of the public employees' retirement system and the teachers' retirement system; and providing for an effective date."
00 CS FOR HOUSE BILL NO. 78(FIN) 01 "An Act relating to the public employees' retirement system and the teachers' 02 retirement system; providing certain employees an opportunity to choose between the 03 defined benefit and defined contribution plans of the public employees' retirement 04 system and the teachers' retirement system; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 14.25.009 is repealed and reenacted to read: 07 Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 08 AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 09 defined benefit retirement plan under AS 14.25.009 - 14.25.220 and are not members 10 of the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 11 * Sec. 2. AS 14.25.040(a) is amended to read: 12 (a) A teacher or member contracting for service with a participating 13 employer is subject to AS 14.25.009 - 14.25.220 unless the [UNLESS A] teacher or 14 member
01 (1) participates in a university retirement program under AS 14.40.661 02 - 14.40.799; 03 (2) became a member after June 30, 2006, and before July 1, 2025, 04 is eligible to participate in the defined contribution retirement plan under 05 AS 14.25.310 - 14.25.590, and does not elect to participate in the defined benefit 06 retirement plan under AS 14.25.009 - 14.25.220; or 07 (3) has elected under AS 14.25.540 to participate in the plan 08 established in AS 14.25.310 - 14.25.590 and does not elect to participate in the 09 defined benefit retirement plan under AS 14.25.009 - 14.25.220 [, A TEACHER 10 OR MEMBER CONTRACTING FOR SERVICE WITH A PARTICIPATING 11 EMPLOYER IS SUBJECT TO AS 14.25.009 - 14.25.220]. 12 * Sec. 3. AS 14.25.040 is amended by adding new subsections to read: 13 (f) An active member of this plan who is also employed in a position in the 14 public employees' retirement plan under AS 39.35.095 - 39.35.680 may elect to 15 participate solely in this plan if 16 (1) the member directs the public employees' retirement plan employer 17 in writing to 18 (A) pay into this plan the employer contributions required for a 19 member under AS 14.25.009 - 14.25.220; and 20 (B) deduct from the member's salary and pay into this plan 21 (i) the employee contributions required for a member 22 under AS 14.25.009 - 14.25.220; and 23 (ii) an amount equal to the difference between the total 24 employer and state contributions required for a member under 25 AS 14.25.009 - 14.25.220 and the employer contributions that would be 26 required under AS 39.35.095 - 39.35.680 if the member participated in 27 that plan; and 28 (2) the member provides written notice to the administrator. 29 (g) An active member of this plan who elects to participate solely in this plan 30 under (f) of this section may not, while participating solely in this plan, receive 31 credited service for benefit eligibility for service performed in a position in the public
01 employees' retirement plan. 02 (h) A teacher who became a member of the system after June 30, 2006, and 03 before July 1, 2025, or who has elected under AS 14.25.540 to participate in the 04 defined contribution retirement plan under AS 14.25.310 - 14.25.590, is subject to 05 AS 14.25.009 - 14.25.220 and is not eligible to participate in the defined contribution 06 retirement plan established in AS 14.25.310 - 14.25.590 if the teacher 07 (1) is not employed by an employer on July 1, 2025; 08 (2) is reemployed by an employer after July 1, 2025; and 09 (3) has, before the date of reemployment, received 10 (A) a distribution, other than a rollover distribution, of the 11 entire balance in the teacher's individual account in the defined contribution 12 retirement plan; or 13 (B) a rollover distribution of the entire balance in the teacher's 14 individual account in the defined contribution retirement plan under 15 AS 14.25.310 - 14.25.590 and has not within 180 days of reemployment had 16 all or part of a direct rollover distribution from an eligible retirement plan 17 owned by the teacher paid directly into the teacher's individual account under 18 AS 14.25.310 - 14.25.590. 19 * Sec. 4. AS 14.25 is amended by adding a new section to read: 20 Sec. 14.25.044. Election of defined benefit retirement plan by reemployed 21 teachers. (a) A teacher may make a one-time election to participate in the defined 22 benefit retirement plan under AS 14.25.009 - 14.25.220 if the teacher 23 (1) became a member of the defined contribution retirement plan under 24 AS 14.25.310 - 14.25.590 after June 30, 2006, and before July 1, 2025; 25 (2) is not employed by an employer on July 1, 2025; 26 (3) is reemployed by an employer after July 1, 2025; and 27 (4) before the date of reemployment, 28 (A) has not received a distribution of the entire balance in the 29 teacher's individual account under the defined contribution retirement plan 30 under AS 14.25.310 - 14.25.590; or 31 (B) has received a rollover distribution of the entire balance in
01 the teacher's individual account in the plan under AS 14.25.310 - 14.25.590 02 and has within 180 days of reemployment had all or part of a direct rollover 03 distribution from an eligible retirement plan owned by the teacher paid directly 04 into the teacher's individual account under AS 14.25.310 - 14.25.590. 05 (b) An election under (a) of this section may be made not more than 180 days 06 after the date of reemployment. A reemployed teacher electing to participate under (a) 07 of this section shall use the balance of the teacher's individual account in the plan 08 under AS 14.25.310 - 14.25.590, including any rollover contributions, to purchase 09 credited service in the plan under AS 14.25.009 - 14.25.220. An election made under 10 (a) of this section must be made in writing in the manner prescribed by the 11 administrator. An election made by a teacher who is married is not effective unless the 12 election is signed by the teacher's spouse. The administrator shall provide a teacher 13 who is eligible to make an election under (a) of this section with information about the 14 potential consequences of the teacher's election, including calculations to illustrate the 15 effect of moving the teacher's retirement plan from a defined contribution retirement 16 plan to a defined benefit retirement plan. 17 (c) An election made under (a) of this section to participate in the plan under 18 AS 14.25.009 - 14.25.220 is irrevocable. On the effective date of the election, the 19 teacher shall be enrolled as a member of the plan, and the teacher's participation in the 20 plan shall be governed by the applicable provisions of the plan. The teacher's 21 enrollment in the plan is retroactive to the date of hire. 22 (d) When a teacher makes an election under this section to participate in the 23 plan under AS 14.25.009 - 14.25.220, the administrator shall cause the total amount of 24 the teacher's member and employer contributions to the plan under AS 14.25.310 - 25 14.25.590, with investment earnings and losses through the day of the teacher's 26 election to participate as a member in the plan under AS 14.25.009 - 14.25.220, to be 27 actuarially calculated and, subject to (f) of this section, transferred to the retirement 28 fund in the plan under AS 14.25.009 - 14.25.220. On the effective date of the teacher's 29 participation in the plan under AS 14.25.009 - 14.25.220, the teacher shall be credited 30 with service in the plan. The board shall determine the cost of the teacher's actual 31 service time based on the teacher's accrued actuarial liability of pension benefits in the
01 plan, and credit the teacher with service time equal to the value actuarially calculated 02 and transferred to the retirement fund in the plan under AS 14.25.009 - 14.25.220. The 03 board shall adopt regulations establishing transfer procedures. The transfer may not 04 occur later than 60 days after the date the administrator receives the teacher's election, 05 unless the major financial markets for securities available for a transfer are seriously 06 disrupted by an unforeseen event that also causes the suspension of trading on a 07 national securities exchange in the country where the securities were issued; in that 08 event, the 60-day period may be extended by a resolution of the board. A transfer is 09 not commissionable or subject to a fee and may be in the form of cash or a security as 10 determined by the board. The value of a security shall be assessed on the date the 11 security is received in the teacher's account. 12 (e) When making a transfer under (d) of this section or a transfer for a 13 reemployed teacher subject to the plan under AS 14.25.040(h), the administrator shall 14 transfer 15 (1) an amount equal to the decrease in the accrued actuarial liability of 16 the death and disability trust in the plan established under AS 14.25.310 - 14.25.590 17 resulting from the transfer as of the date of transfer, based on the most recent actuarial 18 valuation of the death and disability trust, from the death and disability trust in the 19 plan established under AS 14.25.310 - 14.25.590 to the retirement fund in the plan 20 established under AS 14.25.009 - 14.25.220; and 21 (2) an amount equal to the increase in the accrued actuarial liability of 22 the health care trust in the plan established under AS 14.25.009 - 14.25.220 resulting 23 from the transfer as of the date of transfer, based on the actuarial assumptions set out 24 in (g) of this section, from the trust established under AS 39.30.097(b) for the 25 prefunding of medical benefits provided by AS 14.25.480 to the trust established 26 under AS 39.30.097(a) for the prefunding of medical benefits provided by 27 AS 14.25.171. 28 (f) If the value actuarially calculated under (d) of this section is insufficient to 29 pay for service credit equal to the teacher's actual service time, the administrator shall 30 allow the teacher the option of purchasing service credit in an amount up to the 31 amount needed to eliminate the insufficiency; however, if that value exceeds the
01 amount needed to pay for service credit equal to the teacher's actual service, the 02 administrator shall cause the excess to be paid to the employee as a rollover transfer 03 either to an individual employee annuity account in the Department of Administration 04 under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 05 Plan) or, if the member's employer does not participate in the State of Alaska 06 Supplemental Annuity Plan, to an eligible retirement plan as defined in 07 AS 14.25.360(d). An excess may not be used to purchase additional service credit in 08 the plan under AS 14.25.009 - 14.25.220. When a reemployed teacher enters the plan 09 under AS 14.25.040(h), the administrator shall allow the teacher to pay for a period of 10 service credit up to the teacher's actual service. When a teacher elects to purchase 11 service credit under this section and does not immediately pay for the service credit 12 purchased, an indebtedness is established. Interest as prescribed by regulation accrues 13 on a teacher's indebtedness. If the indebtedness exists when the teacher is appointed to 14 retirement, the administrator shall make a corresponding actuarial adjustment to the 15 benefit payable to the teacher for service in the defined contribution retirement plan. 16 (g) Actuarial assumptions about the plan under AS 14.25.009 - 14.25.220 17 must be based on the most recent actuarial valuation of the plan, except that the 18 retirement rates are computed at 25 percent of the retirement rates used in the most 19 recent actuarial valuation of the retirement fund plus 75 percent of the retirement rates 20 used in the most recent actuarial valuation of the plan under AS 14.25.310 - 14.25.590. 21 (h) The provisions of this section are subject to the requirements of the 22 Internal Revenue Code and the limitations under AS 14.25.010, 14.25.181, 23 14.25.320(c) and (d), and 14.25.490. 24 * Sec. 5. AS 14.25.048(b) is amended to read: 25 (b) An employee or former employee who first became a member of the 26 plan before July 1, 2006, may receive credit for retroactive membership service for 27 employment before June 5, 1988, if the employee or former employee met the 28 requirements listed in (a) of this section at the time of the employment. To receive 29 credit for the retroactive membership service, the employee or former employee shall 30 claim the service and pay the retroactive contributions required under former 31 AS 14.25.061. However, an employee or former employee may not receive retroactive
01 credit under this subsection if the employee received credited service under AS 39.35 02 for the employment. 03 * Sec. 6. AS 14.25.048(c) is amended to read: 04 (c) An employee or former employee who first became a member of the 05 plan before July 1, 2006, and who received credit under AS 39.35 for service that 06 qualifies under (a) of this section may elect to transfer those periods of employment to 07 the plan. To receive credit for retroactive membership service under this subsection, 08 the employee or former employee shall claim the service and pay the retroactive 09 contributions required under former AS 14.25.061. 10 * Sec. 7. AS 14.25.050(a) is amended to read: 11 (a) Except as provided in (c) and (e) of this section, beginning January 1, 12 1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 13 member's base salary accrued from July 1 to the following June 30. [THE 14 EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 15 SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 16 CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 17 CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 18 FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 19 APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 20 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 21 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 22 INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 23 EMPLOYER.] 24 * Sec. 8. AS 14.25.050 is amended by adding new subsections to read: 25 (e) A member who first participates in the plan after June 30, 2006, shall 26 contribute to the plan an amount equal to eight percent of the member's base salary 27 accrued from July 1 to the following June 30. The board may, from time to time, 28 adjust the contribution under this subsection to an amount that, 29 (1) if decreased, is not less than eight percent of the member's base 30 salary; and 31 (2) if increased, is not more than 12 percent of the member's base
01 salary. 02 (f) The employer shall deduct a contribution under this section from the 03 member's salary at the end of each payroll period, and the contribution shall be 04 credited by the plan to the member contribution account. The contributions shall be 05 deducted from member compensation before the computation of applicable federal 06 taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 07 member may not have the option of making the payroll deduction directly in cash 08 instead of having the contribution picked up by the employer. 09 (g) The board shall increase the member contribution under (e) of this section 10 if the board determines that, unless the contribution is increased, the portion of the 11 liability of the plan that is attributable to all members who first became members of 12 the plan after June 30, 2006, will be funded below 90 percent. The board may not 13 increase the member contribution unless the board increases the employer contribution 14 under AS 14.25.070(a)(2) by an equal amount. The board may decrease the 15 contribution under (e) of this section if the board determines that, after the 16 contribution is decreased, the portion of the liability of the plan that is attributable to 17 all members who first became members of the plan after June 30, 2006, will be funded 18 above 90 percent. The board may not decrease the member contribution unless the 19 board decreases the employer contribution under AS 14.25.070(a)(2) by an equal 20 amount. 21 * Sec. 9. AS 14.25.065(b) is amended to read: 22 (b) The contributions of employers under AS 14.25.070 must be transmitted to 23 the plan for deposit in the retirement fund and the Alaska retiree health care trust at the 24 close of each pay period. If the contributions are not submitted within the prescribed 25 time limit, interest must be assessed on the outstanding contributions at [ONE AND 26 ONE-HALF TIMES] the most recent actuarially determined rate of earnings for the 27 plan from the date that contributions were originally due. Amounts due from an 28 employer and interest as prescribed in this section may be claimed by the 29 administrator from any agency of the state or political subdivision that has in its 30 possession funds of the employer or that is authorized to disburse funds to the 31 employer that are not restricted by statute or appropriation to a specific purpose. The
01 amount claimed shall be certified by the administrator as sufficient to pay the 02 contributions and interest due from the employer. The amount claimed shall be 03 submitted to the administrator for deposit in the retirement fund and the Alaska retiree 04 health care trust. 05 * Sec. 10. AS 14.25.070(a) is amended to read: 06 (a) Each employer shall contribute to the system every payroll period the 07 lesser of 08 (1) an amount calculated by applying a rate of 12.56 percent to the 09 total of all base salaries paid by the employer to active members of the system and to 10 members who are retired from the plan and reemployed under AS 14.20.136, 11 including any adjustments to contributions required by AS 14.25.173(a); or 12 (2) an amount calculated by applying a rate established by the 13 board under AS 37.10.220 to the total of all base salaries paid by the employer to 14 active members of the system and to members who are retired from the plan and 15 reemployed under AS 14.20.136, including any adjustments to contributions 16 required by AS 14.25.173(a); the rate must be at least 12 percent and be sufficient 17 to pay the actuarially determined employer normal cost, all contributions 18 required under AS 14.25.350 and AS 39.30.370, and past service cost for 19 members of the system. 20 * Sec. 11. AS 14.25.070 is amended by adding a new subsection to read: 21 (i) If the legislature appropriates funds for the purpose of decreasing an 22 employer's contribution, the employer's contribution under (a) of this section shall 23 decrease by that amount. 24 * Sec. 12. AS 14.25.075(a) is amended to read: 25 (a) An employee who is eligible to purchase credited service under 26 AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 27 under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 28 [14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 29 service under AS 14.20.345, AS 14.25.044, 14.25.050 [AS 14.25.050], or 14.25.105, 30 in lieu of making payments directly to the plan, may elect to have the member's 31 employer make payments as provided in this section.
01 * Sec. 13. AS 14.25.075(b) is amended to read: 02 (b) A member may elect to have the employer make payments for all or any 03 portion of the amounts payable for the member's purchase of credited service through 04 a salary reduction program as follows: 05 (1) the amounts paid under a salary reduction program are in lieu of 06 contributions by the member making the election; the electing member's salary or 07 other compensation shall be reduced by the amount paid by the employer under this 08 subsection; 09 (2) the member shall make an irrevocable election under this 10 subsection to purchase credited service as permitted in former AS 14.25.061 or in 11 AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 12 14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107 before the member's 13 termination of employment; the irrevocable election must specify the number of 14 payroll periods that deductions will be made from the member's compensation and the 15 dollar amount of deductions for each payroll period during the specified number of 16 payroll periods; the deductions made under this paragraph cease upon the earlier of the 17 member's termination of employment with the employer or the member's death; 18 amounts paid by an employer under (f) of this section may not be applied toward the 19 payment of the dollar amount of the deductions representing the portion of the credited 20 service that is being purchased by the member through payroll deduction in 21 accordance with the member's irrevocable election under this paragraph; 22 (3) amounts paid by an employer under this subsection shall be treated 23 as employer contributions for the purpose of determining tax treatment under 26 24 U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 25 may not be included in the member's gross income for income tax purposes until those 26 amounts are distributed by refund or retirement benefit payments. 27 * Sec. 14. AS 14.25.075(i) is amended to read: 28 (i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 29 of AS 14.20.345, AS 14.25.044, 14.25.047 [AS 14.25.047], 14.25.048, 14.25.050, 30 14.25.060, [14.25.061,] 14.25.100, 14.25.105, or 14.25.107, the requirements of this 31 section, and the administrative filing requirements specified by the administrator, the
01 plan shall adjust the member's credited service history and add any additional service 02 credits acquired. 03 * Sec. 15. AS 14.25 is amended by adding a new section to read: 04 Sec. 14.25.086. Sub-trust for members who first became members after 05 June 30, 2006. The administrator shall deposit a portion of employer contributions 06 under AS 14.25.070 and 14.25.085 in a sub-trust of the retirement fund established by 07 the board for members who first became members after June 30, 2006. The amount 08 deposited, when combined with the amount separately computed for medical benefits 09 under AS 14.25.087, must be sufficient to pay the actuarially determined employer 10 normal cost and past service cost for members of the system who first became 11 members after June 30, 2006. When the amount sufficient to pay the actuarially 12 determined employer normal cost, all contributions required under AS 14.25.350 and 13 AS 39.30.370, and past service cost for members of the system is less than 12 percent 14 of all base salaries paid to active members of the system and to members who are 15 retired from the plan and reemployed under AS 14.20.136, including any adjustments 16 to contributions required by AS 14.25.173(a), the administrator shall deposit the 17 difference in the sub-trust established under this section. 18 * Sec. 16. AS 14.25.087 is amended to read: 19 Sec. 14.25.087. Contributions for medical benefits. Contributions made by 20 an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 21 computed for benefits provided by AS 14.25.168 and retiree major medical 22 insurance plan benefits provided under AS 14.25.171, and must [SHALL] be 23 deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 24 * Sec. 17. AS 14.25.110(a) is amended to read: 25 (a) Subject to AS 14.25.167, 26 (1) a member who first became a member of the plan before July 1, 27 2006, is eligible for a normal retirement benefit if the member 28 (A) [(1)] was first hired before July 1, 1975, has attained the 29 age of 55 years, and has at least 15 years of credited service, the last five of 30 which have been membership service, or is otherwise vested in the plan; 31 (B) [(2)] has attained the age of 60 years and has at least eight
01 years of membership service; 02 (C) [(3)] has attained the age of 60 years, has at least five years 03 of membership service, and has Alaska BIA service which, when added to the 04 membership service, will equal at least eight years; 05 (D) [(4)] has at least 25 years of credited service, the last five 06 of which have been membership service; 07 (E) [(5)] has at least 20 years of membership service; 08 (F) [(6)] has at least 20 years of combined membership service 09 and Alaska BIA service, the last five of which have been membership service; 10 or 11 (G) [(7)] has, for each of 20 school years, 12 (i) [(A)] at least one-half year of membership service as 13 a part-time teacher; 14 (ii) [(B)] one full year of membership service as a full- 15 time teacher; or 16 (iii) [(C)] any combination of service qualified under 17 this subparagraph; 18 (2) a member who first became a member of the plan after 19 June 30, 2006, is eligible for a normal retirement benefit if the member 20 (A) has attained the age of 60 years and has at least five 21 years of membership service; or 22 (B) has at least 30 years of membership service 23 [PARAGRAPH]. 24 * Sec. 18. AS 14.25.110(b) is amended to read: 25 (b) Subject to AS 14.25.167, a member is eligible for an early retirement 26 benefit upon completing the service requirements in (a)(1)(A) [(a)(1)] of this section 27 and attaining the age of 50 years or upon completing the service requirements in 28 (a)(1)(B) or (C) [(a)(2) OR (3)] of this section and attaining the age of 55 years. 29 * Sec. 19. AS 14.25.110(d) is amended to read: 30 (d) The monthly amount of a retirement benefit 31 (1) for a member who first became a member of the plan before
01 July 1, 2006, and who has paid the full amount of any indebtedness is one-twelfth of 02 the member's average base salary during any three school years of membership service 03 multiplied by 04 (A) [(1)] two percent of the years of credited service earned 05 before June 30, 1990, including credited fractional years, and the years of 06 credited service through a total of 20 years; plus 07 (B) [(2)] two and one-half percent of the years of credited 08 service earned after June 30, 1990, that are more than 20 years of total credited 09 service; 10 (2) for a member who first became a member of the plan after 11 June 30, 2006, and who has paid the full amount of any indebtedness is one- 12 twelfth of the member's average base salary during any five school years of 13 membership service multiplied by 14 (A) two percent of the years of credited service through a 15 total of 10 years; plus 16 (B) two and one-quarter percent of the years over 10 years 17 of total credited service through 20 years; plus 18 (C) two and one-half percent of the years of credited service 19 that are more than 20 years of total credited service. 20 * Sec. 20. AS 14.25.142(a) is amended to read: 21 (a) While residing in the state, a person who first became a member of the 22 plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 23 and who is at least 65 years of age or a person who first became a member of the 24 plan before July 1, 2006, and who is receiving a disability benefit under 25 AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 26 addition to the basic benefit. The amount of this allowance is 10 percent of the basic 27 benefit. 28 * Sec. 21. AS 14.25.143(a) is amended to read: 29 (a) Once each year, the administrator shall increase benefit payments to 30 eligible disabled members, to persons age 60 or older receiving benefits under this 31 plan in the preceding calendar year, and to persons who have received benefits under
01 this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 02 under this section. 03 * Sec. 22. AS 14.25.143(b) is amended to read: 04 (b) Subject to (g) and (h) of this section, the [THE] increase in benefit 05 payments applies to total benefit payments except for the cost-of-living allowance 06 under AS 14.25.142. The amount of the increase is a percentage of the current benefit 07 equal to 08 (1) the lesser of 75 percent of the increase in the cost of living in the 09 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 10 years old and for members receiving disability benefits; and 11 (2) the lesser of 50 percent of the increase in the cost of living in the 12 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 13 less than 65 years old or for recipients who on July 1 are less than 60 years old but 14 who have received benefits from the plan for at least five [EIGHT] years. 15 * Sec. 23. AS 14.25.143 is amended by adding new subsections to read: 16 (g) Subject to (h) of this section, the amount of an increase for members who 17 first became members of the plan after June 30, 2006, and do not meet the eligibility 18 requirements for a permanent fund dividend under AS 43.23.005(a) in effect on July 1, 19 2025, is equal to one-half of the applicable percentage under (b) of this section. 20 (h) If the board determines that the portion of the liability of the plan that is 21 attributable to all members who first became members of the plan after June 30, 2006, 22 is funded below 90 percent, the board may reduce the amount of the increase 23 determined under (b) or (g) of this section that is payable to a member who first 24 became a member after June 30, 2006. At any time, the board may terminate a 25 reduction made under this subsection. 26 * Sec. 24. AS 14.25.168(a) is amended to read: 27 (a) Except as provided in AS 14.25.171 and (c) of this section, the following 28 persons are entitled to major medical insurance coverage under this section: 29 (1) for teachers first hired before July 1, 1990, 30 (A) a teacher who is receiving a monthly benefit from the plan 31 and who has elected coverage;
01 (B) the spouse and dependent children of the teacher described 02 in (A) of this paragraph; 03 (C) the surviving spouse of a deceased teacher who is receiving 04 a monthly benefit from the plan and who has elected coverage; 05 (D) the dependent children of a deceased teacher who are 06 dependent on the surviving spouse described in (C) of this paragraph; 07 (2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 08 (A) a teacher who is receiving a monthly benefit from the plan 09 and who has elected coverage for the teacher; 10 (B) the spouse of the teacher described in (A) of this paragraph 11 if the teacher elected coverage for the spouse; 12 (C) the dependent children of the teacher described in (A) of 13 this paragraph if the teacher elected coverage for the dependent children; 14 (D) the surviving spouse of a deceased teacher who is receiving 15 a monthly benefit from the plan and who has elected coverage; 16 (E) the dependent children of a deceased teacher who are 17 dependent on the surviving spouse described in (D) of this paragraph if the 18 surviving spouse has elected coverage for the dependent children. 19 * Sec. 25. AS 14.25 is amended by adding a new section to read: 20 Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 21 June 30, 2006; surviving spouses and dependents. (a) A teacher who first became a 22 member of the plan after June 30, 2006, receives a monthly benefit from the plan, 23 retired from the plan, and has elected benefits under this section is entitled to medical 24 benefits under this section. A member who applies for medical benefits under this 25 section shall apply on the forms and in the manner prescribed by the administrator. A 26 member is eligible to retire from the plan if the member 27 (1) has at least 30 years of service; or 28 (2) reaches the age set for Medicare eligibility and has at least 10 years 29 of service. 30 (b) The member's surviving spouse is eligible to elect medical benefits if the 31 member had retired or was eligible for retirement and medical benefits at the time of
01 the member's death. 02 (c) The medical benefits available to eligible persons are access to the retiree 03 major medical insurance plan and access to the health reimbursement arrangement 04 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 05 that an eligible person may not be denied insurance coverage except for failure to pay 06 the required premium. 07 (d) Retiree major medical insurance plan coverage elected by an eligible 08 member under this section covers the eligible member, the spouse of the eligible 09 member, and the dependent children of the eligible member. 10 (e) Retiree major medical insurance plan coverage elected by a surviving 11 spouse of an eligible member under this section covers the surviving spouse and the 12 dependent children of the eligible member who are dependent on the surviving spouse. 13 (f) Participation in the retiree major medical insurance plan is not required in 14 order to participate in the health reimbursement arrangement plan. 15 (g) A person eligible for medical benefits under this section is not required to 16 participate in the health reimbursement arrangement plan in order to participate in the 17 retiree major medical insurance plan. 18 (h) A person who is eligible for medical benefits under this section must make 19 the irrevocable election to participate or not participate in the retiree major medical 20 insurance plan on or before the date the person reaches 70 1/2 years of age or when the 21 person applies for retirement and medical benefits, whichever is later. 22 (i) Major medical insurance coverage takes effect on the first day of the month 23 following the date of the administrator's approval of the election and stops when the 24 person who elects coverage dies or fails to make a required premium payment. 25 (j) The coverage for persons 65 years of age or older is the same as that 26 available for persons under 65 years of age. The benefits payable to those persons 65 27 years of age or older supplement any benefits provided under the federal old age, 28 survivors, and disability insurance program. 29 (k) The medical and optional insurance premiums owed by the person who 30 elects coverage may be deducted from the health reimbursement arrangement plan. If 31 the amount of the health reimbursement arrangement plan becomes insufficient to pay
01 the premiums, the person who elects coverage under (a) of this section shall pay the 02 premiums directly. 03 (l) The cost of premiums for retiree major medical insurance coverage under 04 this section for an eligible member or surviving spouse who is 05 (1) not eligible for Medicare is an amount equal to the full monthly 06 group premiums for retiree major medical insurance coverage; 07 (2) eligible for Medicare is the following percentage of the premium 08 amounts established for retirees who are eligible for Medicare: 09 (A) 30 percent if the member had 10 or more, but less than 15, 10 years of service; 11 (B) 25 percent if the member had 15 or more, but less than 20, 12 years of service; 13 (C) 20 percent if the member had 20 or more, but less than 25, 14 years of service; 15 (D) 15 percent if the member had 25 or more, but less than 30, 16 years of service; 17 (E) 10 percent if the member had 30 or more years of service. 18 (m) The eligibility for retiree major medical insurance coverage for an 19 alternate payee under a qualified domestic relations order shall be determined based 20 on the eligibility of the member to elect coverage. The alternate payee shall pay the 21 full monthly premium for retiree major medical insurance coverage. 22 (n) The administrator shall 23 (1) inform a person entitled to retiree major medical insurance 24 coverage under this section in writing 25 (A) that the health insurance coverage available to retired 26 members may be different from the health insurance coverage provided to 27 employees; 28 (B) of time limits for selecting optional health insurance 29 coverage; and 30 (C) whether the election is irrevocable; and 31 (2) require that a person entitled to retiree major medical insurance
01 coverage under this section indicate in writing on a form provided by the administrator 02 whether the person has chosen to receive optional health insurance coverage. 03 (o) The monthly group premiums for retiree major medical insurance coverage 04 under this section are established by the administrator in accordance with 05 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 06 (a) of this section a monthly group premium rate for retiree major medical insurance 07 coverage other than the premium in effect for the month in which the premium is due 08 for coverage for that month. 09 (p) In this section, "health reimbursement arrangement plan" means the State 10 of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 11 Arrangement Plan established in AS 39.30.300. 12 * Sec. 26. AS 14.25.220(5) is amended to read: 13 (5) "average base salary" means, 14 (A) for a teacher who first became a member before July 1, 15 2006, the result obtained by dividing the sum of the member's three highest 16 years' base salary by three, or if a member does not have three years base 17 salary, then by dividing the sum of all base salaries by the number of years of 18 base salary; the base salary for a year in which credit is granted for disability 19 totaling more than one-third of a year may not be used in the computation of 20 the average base salary; the base salary in a school year for which the member 21 receives compensation for less than two-thirds of a year may not be used in the 22 computation of the average base salary; if compensation is received for more 23 than two-thirds of a year, the full base salary for that school year shall be used 24 in the computation of the average base salary; 25 (B) for a teacher who first became a member after June 30, 26 2006, the result obtained by dividing the sum of the member's five highest 27 years' base salary by five, or if a member does not have five years' base 28 salary, then by dividing the sum of all base salaries by the number of 29 years of base salary; the base salary for a year in which credit is granted 30 for disability totaling more than one-third of a year may not be used in the 31 computation of the average base salary; the base salary in a school year
01 for which the member receives compensation for less than two-thirds of a 02 year may not be used in the computation of the average base salary; if 03 compensation is received for more than two-thirds of a year, the full base 04 salary for that school year shall be used in the computation of the average 05 base salary; 06 * Sec. 27. AS 14.25.220(6) is amended to read: 07 (6) "base salary" 08 (A) means the total remuneration payable under contract for a 09 full year of membership service, including addenda to the contract and, for a 10 member who elects to participate solely in this plan under AS 14.25.040(f), 11 remuneration paid by the public employees' retirement plan employer, 12 but, for a member first hired on or after July 1, 1996, does not include 13 remuneration in excess of the limitations set out in 26 U.S.C. 401(a)(17); 14 (B) has the same meaning as "compensation" under 15 AS 39.35.680(9) when applied to a state legislator who elects membership 16 under AS 14.25.040(b); 17 * Sec. 28. AS 14.25.220(46) is amended to read: 18 (46) "vested member" or "vested teacher" means an active member 19 who [HAS COMPLETED EITHER] 20 (A) first became a member before July 1, 2006, and has 21 completed 22 (i) 15 years of service, the last five of which have been 23 membership service, for a member first hired before July 1, 1975; 24 (ii) [(B)] eight years of membership service; 25 (iii) [(C)] five years of membership and three years of 26 BIA service; or 27 (iv) [(D)] 12 school years of part-time membership 28 service or 12 school years in each of which the member earned either 29 part-time or full-time membership service; 30 (B) first became a member after June 30, 2006, and has 31 completed five years of membership service;
01 * Sec. 29. AS 14.25.220 is amended by adding a new paragraph to read: 02 (48) "first became a member after June 30, 2006" and "first became a 03 member of the plan after June 30, 2006" include a member who elected under 04 AS 14.25.540 to participate in the defined contribution retirement plan under 05 AS 14.25.310 - 14.25.590 and who elects to participate in the defined benefit 06 retirement plan under AS 14.25.009 - 14.25.220. 07 * Sec. 30. AS 14.25.310 is amended to read: 08 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 09 AS 14.25.310 - 14.25.590 apply only to 10 (1) teachers who first become members [ON OR] after June 30, 2006, 11 and before July 1, 2025, and who are eligible but do not elect to participate in a 12 defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 13 39.35.680; and 14 (2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 15 EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 16 DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 17 - 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBERS] 18 who transferred [TRANSFER] into the defined contribution retirement plan under 19 AS 14.25.540 and do not elect to participate in the defined benefit retirement plan 20 under AS 14.25.009 - 14.25.220. 21 * Sec. 31. AS 14.25.310 is amended by adding a new subsection to read: 22 (b) An employer that participates in the plan shall also participate in the 23 defined benefit retirement plan under AS 14.25.009 - 14.25.220. 24 * Sec. 32. AS 14.25.330(a) is amended to read: 25 (a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 26 before July 1, 2025, and who does not participate in a defined benefit retirement 27 plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680 is [JULY 1, 2006, 28 SHALL PARTICIPATE IN THE PLAN AS] a member of the defined contribution 29 retirement plan. 30 * Sec. 33. AS 14.25.470(a) is amended to read: 31 (a) In order to obtain medical benefits under AS 14.25.480, a member must
01 retire [DIRECTLY] from the plan. A member is eligible to retire from the plan if 02 [THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 03 MONTHS BEFORE APPLICATION FOR RETIREMENT AND] 04 (1) the member has at least 25 [30] years of service; or 05 (2) the member reaches the normal retirement age and has at least 10 06 years of service. 07 * Sec. 34. AS 14.25.490(a) is amended to read: 08 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 09 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 10 time, in whole or in part, including the right to make retroactive amendments referred 11 to in 26 U.S.C. 401(b). 12 * Sec. 35. AS 14.25.490(b) is amended to read: 13 (b) The plan administrator may not modify or amend the plan retroactively [IN 14 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 15 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 16 MADE] before the modification or amendment except to the extent that the reduction 17 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 18 Revenue Code. 19 * Sec. 36. AS 14.25.490(c) is amended to read: 20 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 21 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 22 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 23 is terminated, all investments at the time of termination remain in force until all 24 individual accounts have been completely distributed under the plan. After [, AND, 25 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 26 employer. 27 * Sec. 37. AS 14.25.490(d) is repealed and reenacted to read: 28 (d) Within one year after determining that a contribution to the plan by an 29 employer was the result of a mistake of fact, the administrator shall return the 30 contribution to the employer. 31 * Sec. 38. AS 37.10.220(a) is amended to read:
01 (a) The board shall 02 (1) hold regular and special meetings at the call of the chair or of at 03 least five members; meetings are open to the public, and the board shall keep a full 04 record of all its proceedings; 05 (2) after reviewing recommendations from the Department of 06 Revenue, adopt investment policies for each of the funds entrusted to the board, 07 including a policy to prevent each fund from having an unfunded liability greater 08 than 10 percent; 09 (3) determine the appropriate investment objectives for the defined 10 benefit plans established under the teachers' retirement system under AS 14.25 and the 11 public employees' retirement system under AS 39.35; 12 (4) assist in prescribing the policies for the proper operation of the 13 systems and take other actions necessary to carry out the intent and purpose of the 14 systems in accordance with AS 37.10.210 - 37.10.390; 15 (5) provide a range of investment options and establish the rules by 16 which participants can direct their investments among those options with respect to 17 accounts established under 18 (A) AS 14.25.340 - 14.25.350 (teachers' retirement system 19 defined contribution individual accounts); 20 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 21 Annuity Plan); 22 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 23 system defined contribution individual accounts); and 24 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 25 compensation program); 26 (6) establish the rate of interest that shall be annually credited to each 27 member's individual contribution account in accordance with AS 14.25.145 and 28 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 29 account in the health reimbursement arrangement plan under AS 39.30.300 - 30 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 31 rate of interest on a long-term basis, and the rate may be changed from time to time;
01 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 02 (8) coordinate with the retirement system administrator to have an 03 annual actuarial valuation of each retirement system prepared to determine system 04 assets, accrued liabilities, and funding ratios and to certify to the appropriate 05 budgetary authority of each employer in the system 06 (A) an appropriate contribution rate for normal costs; [AND] 07 (B) an appropriate contribution rate for liquidating any past 08 service liability; in this subparagraph, the appropriate contribution rate for 09 liquidating the past service liability of the defined benefit retirement plan under 10 AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 11 retirement plan under AS 39.35.095 - 39.35.680 must be [DETERMINED BY 12 A LEVEL PERCENT OF PAY METHOD] based on amortization of the past 13 service liability for a closed term of 25 years; 14 (C) an appropriate monthly employer contribution under 15 AS 14.25.070 and AS 39.35.255; and 16 (D) appropriate adjustments, if any, under AS 14.25.050(e) 17 and AS 39.35.160(e); 18 (9) review actuarial assumptions prepared and certified by a member 19 of the American Academy of Actuaries and conduct experience analyses of the 20 retirement systems not less than once every four years, except for health cost 21 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 22 prepared under this paragraph shall be reviewed and certified by a second member of 23 the American Academy of Actuaries before presentation to the board; 24 (10) contract for an independent audit of the state's actuary not less 25 than once every four years; 26 (11) contract for an independent audit of the state's performance 27 consultant not less than once every four years; 28 (12) obtain an external performance review to evaluate the investment 29 policies of each fund entrusted to the board and report the results of the review to the 30 appropriate fund fiduciary; 31 (13) by the first day of each regular legislative session, report to the
01 governor, the legislature, and the individual employers participating in the state's 02 retirement systems on the financial condition of the systems in regard to 03 (A) the valuation of trust fund assets and liabilities; 04 (B) current investment policies adopted by the board; 05 (C) a summary of assets held in trust listed by the categories of 06 investment; 07 (D) the income and expenditures for the previous fiscal year; 08 (E) the return projections for the next calendar year; 09 (F) one-year, three-year, five-year, and 10-year investment 10 performance for each of the funds entrusted to the board; and 11 (G) other statistical data necessary for a proper understanding 12 of the financial status of the systems; 13 (14) submit quarterly updates of the investment performance reports to 14 the Legislative Budget and Audit Committee; 15 (15) develop an annual operating budget; [AND] 16 (16) administer pension forfeitures required under AS 37.10.310 using 17 the procedures of AS 44.62 (Administrative Procedure Act); 18 (17) establish one or more sub-trusts of the pension fund to hold 19 employer contributions deposited under AS 14.25.086 and AS 39.35.281, 20 employee contributions, assets, and earnings attributable to members of the 21 defined benefit retirement plan under AS 14.25.009 - 14.25.220 or the defined 22 benefit retirement plan under AS 39.35.095 - 39.35.680 who first became 23 members of the respective plan after June 30, 2006; and 24 (18) account for and track employer contributions, employee 25 contributions, assets, and earnings in each trust fund or sub-trust attributable to 26 members who first became members after June 30, 2006, of the defined benefit 27 retirement plan under AS 14.25.009 - 14.25.220 and members who first became 28 members after June 30, 2006, of the defined benefit retirement plan under 29 AS 39.35.095 - 39.35.680; employer contributions that exceed those assigned to 30 members who first became members after June 30, 2006, of the defined benefit 31 retirement plan under AS 14.25.009 - 14.25.220 and members who first became
01 members after June 30, 2006, of the defined benefit retirement plan under 02 AS 39.35.095 - 39.35.680 shall be transferred or retained in trusts or sub-trusts 03 with liability allocated toward employer normal costs for members who became 04 members of the respective defined benefit retirement plan before July 1, 2025, 05 past service costs, the health reimbursement arrangement plan under 06 AS 39.30.300 - 39.30.495, and employer contributions under AS 14.25.350 and 07 AS 39.35.750. 08 * Sec. 39. AS 37.10.220(b) is amended to read: 09 (b) The board may 10 (1) employ outside investment advisors to review investment policies; 11 (2) enter into an agreement with the fiduciary of another state fund in 12 order to assume the management and investment of those assets; 13 (3) contract for other services necessary to execute the board's powers 14 and duties; 15 (4) enter into confidentiality agreements that would exempt records 16 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 17 the value of investment by the board or that could impair the ability of the board to 18 acquire, maintain, or dispose of investments; 19 (5) adjust the amount of the increase in benefits payable to a 20 member who first became a member after June 30, 2006, as provided under 21 AS 14.25.143 and AS 39.35.475; 22 (6) adjust contributions under AS 14.25.050(e) and 23 AS 39.35.160(e). 24 * Sec. 40. AS 39.30.090(a) is amended to read: 25 (a) The Department of Administration may obtain a policy or policies of group 26 insurance covering state employees, persons entitled to coverage under AS 14.25.168, 27 14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 28 AS 39.37.145, employees of other participating governmental units, or persons 29 entitled to coverage under AS 23.15.136, subject to the following conditions: 30 (1) a group insurance policy shall provide one or more of the following 31 benefits: life insurance, accidental death and dismemberment insurance, weekly
01 indemnity insurance, hospital expense insurance, surgical expense insurance, dental 02 expense insurance, audiovisual insurance, or other medical care insurance; 03 (2) each eligible employee of the state, the spouse and the unmarried 04 children chiefly dependent on the eligible employee for support, and each eligible 05 employee of another participating governmental unit shall be covered by the group 06 policy, unless exempt under regulations adopted by the commissioner of 07 administration; 08 (3) a governmental unit may participate under a group policy if 09 (A) its governing body adopts a resolution authorizing 10 participation and payment of required premiums; 11 (B) a certified copy of the resolution is filed with the 12 Department of Administration; and 13 (C) the commissioner of administration approves the 14 participation in writing; 15 (4) in procuring a policy of group health or group life insurance as 16 provided under this section or excess loss insurance as provided in AS 39.30.091, the 17 Department of Administration shall comply with the dual choice requirements of 18 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 19 transact business in the state under AS 21.09, a hospital or medical service corporation 20 authorized to transact business in this state under AS 21.87, or a health maintenance 21 organization authorized to operate in this state under AS 21.86; an excess loss 22 insurance policy may be obtained from a life or health insurer authorized to transact 23 business in this state under AS 21.09 or from a hospital or medical service corporation 24 authorized to transact business in this state under AS 21.87; 25 (5) the Department of Administration shall make available bid 26 specifications for desired insurance benefits or for administration of benefit claims and 27 payments to (A) all insurance carriers authorized to transact business in this state 28 under AS 21.09 and all hospital or medical service corporations authorized to transact 29 business under AS 21.87 who are qualified to provide the desired benefits; and (B) 30 insurance carriers authorized to transact business in this state under AS 21.09, hospital 31 or medical service corporations authorized to transact business under AS 21.87, and
01 third-party administrators licensed to transact business in this state and qualified to 02 provide administrative services; the specifications shall be made available at least once 03 every five years; the lowest responsible bid submitted by an insurance carrier, hospital 04 or medical service corporation, or third-party administrator with adequate servicing 05 facilities shall govern selection of a carrier, hospital or medical service corporation, or 06 third-party administrator under this section or the selection of an insurance carrier or a 07 hospital or medical service corporation to provide excess loss insurance as provided in 08 AS 39.30.091; 09 (6) if the aggregate of dividends payable under the group insurance 10 policy exceeds the governmental unit's share of the premium, the excess shall be 11 applied by the governmental unit for the sole benefit of the employees; 12 (7) a person receiving benefits under AS 14.25.110, AS 22.25, 13 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 14 effect under this section at the time of termination of employment with the state or 15 participating governmental unit; 16 (8) a person electing to have insurance under (7) of this subsection 17 shall pay the cost of this insurance; 18 (9) for each permanent part-time employee electing coverage under 19 this section, the state shall contribute one-half the state contribution rate for permanent 20 full-time state employees, and the permanent part-time employee shall contribute the 21 other one-half; 22 (10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 23 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 24 and eligible dependents under this section; the level of coverage for persons over 65 25 shall be the same as that available before reaching age 65 except that the benefits 26 payable shall be supplemental to any benefits provided under the federal old age, 27 survivors, and disability insurance program; a person electing to have insurance under 28 this paragraph shall pay the cost of the insurance; the commissioner of administration 29 shall adopt regulations implementing this paragraph; 30 (11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 31 or former AS 39.37 may obtain long-term care insurance for that person and eligible
01 dependents under this section; a person who elects insurance under this paragraph 02 shall pay the cost of the insurance premium; the commissioner of administration shall 03 adopt regulations to implement this paragraph; 04 (12) each licensee holding a current operating agreement for a vending 05 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 06 applies to governmental units other than the state. 07 * Sec. 41. AS 39.30.097(a) is amended to read: 08 (a) The commissioner of administration is authorized to prefund medical 09 benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535, 10 and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 11 tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 12 and actuarial requirements of the Governmental Accounting Standards Board. 13 * Sec. 42. AS 39.30.097(b) is amended to read: 14 (b) The commissioner of administration is authorized to prefund medical 15 benefits provided by AS 14.25.480 [, AS 39.30.300,] and AS 39.35.880 by 16 establishing an irrevocable trust that is exempt from federal income tax under 26 17 U.S.C. 115 and subject to the applicable financial reporting, disclosure, and actuarial 18 requirements of the Governmental Accounting Standards Board. 19 * Sec. 43. AS 39.30.097 is amended by adding a new subsection to read: 20 (f) The commissioner of administration is authorized to prefund medical 21 benefits provided by AS 39.30.300 by establishing an irrevocable trust that is exempt 22 from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 23 reporting, disclosure, and actuarial requirements of the Governmental Accounting 24 Standards Board. 25 * Sec. 44. AS 39.30.300 is amended to read: 26 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 27 Health Reimbursement Arrangement Plan established. The State of Alaska 28 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 29 established for 30 (1) teachers who first become members of the [DEFINED 31 CONTRIBUTION PLAN OF THE] teachers' retirement system under AS 14.25.009 -
01 14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30, 2006 [JULY 1, 2006], 02 and teachers who elected under AS 14.25.540 to participate in the plan under 03 AS 14.25.310 - 14.25.590; and 04 (2) employees of the state, political subdivisions of the state, and 05 public organizations of the state who first become members [OF THE DEFINED 06 CONTRIBUTION PLAN] of the public employees' retirement system (AS 39.35) 07 [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER AS 39.35.700 - 08 39.35.990 ON OR] after June 30, 2006, and employees of the state, political 09 subdivisions of the state, and public organizations of the state who elected under 10 AS 39.35.940 to participate in the plan established under AS 39.35.700 - 39.35.990 11 [JULY 1, 2006]. 12 * Sec. 45. AS 39.30.340 is amended to read: 13 Sec. 39.30.340. Powers and duties of the administrator. The administrator 14 shall establish a teachers' and public employees' retiree health reimbursement 15 arrangement plan trust fund under AS 39.30.097(f) in which the assets of the plan 16 shall be deposited and held. [THE RETIREE HEALTH REIMBURSEMENT 17 ARRANGEMENT PLAN TRUST FUND MAY BE A SUB-TRUST OF THE 18 ALASKA RETIREE HEALTH CARE TRUST ESTABLISHED UNDER 19 AS 39.30.097(b).] The administrator has the same powers and duties with regard to 20 the plan and the trust fund as provided in AS 14.25.003 and 14.25.004. 21 * Sec. 46. AS 39.30.370 is amended to read: 22 Sec. 39.30.370. Contributions by employers. Except as required under (b) 23 of this section, for [FOR] each member of the plan, an employer shall contribute to 24 the teachers' and public employees' retiree health reimbursement arrangement plan 25 trust fund an amount equal to three percent of the average annual compensation of all 26 employees of all employers in the teachers' retirement system and public employees' 27 retirement system. [THE ADMINISTRATOR SHALL MAINTAIN A RECORD FOR 28 EACH MEMBER TO ACCOUNT FOR EMPLOYER CONTRIBUTIONS ON 29 BEHALF OF THAT MEMBER. THE BOARD SHALL ESTABLISH BY 30 REGULATION THE RATE OF INTEREST TO BE APPLIED ANNUALLY TO 31 THE AMOUNT IN A MEMBER'S INDIVIDUAL ACCOUNT.]
01 * Sec. 47. AS 39.30.370 is amended by adding new subsections to read: 02 (b) For each member of the plan who is a peace officer or firefighter, an 03 employer shall contribute to the teachers' and public employees' retiree health 04 reimbursement arrangement plan trust fund an amount equal to four percent of the 05 average annual compensation of all employees of all employers in the teachers' 06 retirement system and public employees' retirement system. 07 (c) The administrator shall maintain a record for each member to account for 08 employer contributions on behalf of that member. The board shall establish by 09 regulation the rate of interest to be applied annually to the amount in a member's 10 individual account. 11 (d) In this section, "peace officer" and "firefighter" have the meaning given in 12 AS 39.35.990. 13 * Sec. 48. AS 39.30.380 is amended to read: 14 Sec. 39.30.380. Termination of employment. A person who terminates 15 employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 16 AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 17 contributions made on behalf of the person to the teachers' and public employees' 18 retiree health reimbursement arrangement trust fund. If a person returns to 19 employment with a participating employer by December 31 of the year in which the 20 person reaches 65 years of age, the person's account balance shall be restored in the 21 amount recorded on the date of termination from the trust, adjusted for inflation at the 22 rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 23 employment with a participating employer shall be credited toward eligibility for 24 medical benefits. 25 * Sec. 49. AS 39.30.390 is amended to read: 26 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 27 eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 28 [AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 29 individual account established for a member under the plan [, EXCEPT MEMBERS 30 DO NOT HAVE TO RETIRE DIRECTLY FROM THE SYSTEM]. A person who is 31 the dependent child of an eligible member is eligible for reimbursements if the eligible
01 member and surviving spouse have both died so long as the person meets the 02 definition of dependent child. 03 * Sec. 50. 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. 51. 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. 52. 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. 53. 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. 54. 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. 55. 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. 56. 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. 57. AS 39.30.495(9) is amended to read: 15 (9) "member" means a member of the plan [DEFINED 16 CONTRIBUTION PLAN OF THE TEACHERS' RETIREMENT SYSTEM IN 17 AS 14.25.310 - 14.25.590 OR A MEMBER OF THE PUBLIC EMPLOYEES' 18 RETIREMENT SYSTEM IN AS 39.35.700 - 39.35.990]; 19 * Sec. 58. AS 39.35.095 is amended to read: 20 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 21 [FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 22 only to members first hired 23 (1) before July 1, 2006, who have 24 (A) not elected under AS 39.35.940 to participate in the 25 defined contribution retirement plan under AS 39.35.700 - 39.35.990; or 26 (B) elected under AS 39.35.940 to participate in the defined 27 contribution retirement plan under AS 39.35.700 - 39.35.990 and are 28 former members of the defined contribution retirement plan under 29 AS 39.35.700 - 39.35.990; 30 (2) after June 30, 2006, and before July 1, 2025, who are former 31 members of the defined contribution retirement plan under AS 39.35.700 -
01 39.35.990; or 02 (3) on or after July 1, 2025 [: AS 39.35.095 - 39.35.680]. 03 * Sec. 59. AS 39.35.095 is amended by adding a new subsection to read: 04 (b) An employee who became a member of the system after June 30, 2006, 05 and before July 1, 2025, or who has elected under AS 39.35.940 to participate in the 06 defined contribution retirement plan under AS 39.35.700 - 39.35.990, is subject to 07 AS 39.35.095 - 39.35.680 if the employee 08 (1) is not employed by an employer on July 1, 2025; 09 (2) is reemployed by an employer after July 1, 2025; and 10 (3) has, before the date of reemployment, received 11 (A) a distribution, other than a rollover distribution, of the 12 entire balance in the member's individual account in the defined contribution 13 retirement plan; or 14 (B) a rollover distribution of the entire balance in the member's 15 individual account in the defined contribution retirement plan and has not 16 within 180 days of reemployment had all or part of a direct rollover 17 distribution from an eligible retirement plan owned by the member paid 18 directly into the member's individual account. 19 * Sec. 60. AS 39.35.100(b) is amended to read: 20 (b) An individual account shall be maintained for each employee to record the 21 amount of the employee's mandatory contributions collected under AS 39.35.160 22 [AS 39.35.160(a)]. As of the last day of each calendar year and of each fiscal year, this 23 account shall be credited with interest by applying the prescribed rate of interest, as 24 determined by the board, to the balance in the account as of that date. When the 25 employee is appointed to retirement, the amount held in the individual account shall 26 be used first to fully finance the benefits paid. Once this account has been exhausted, 27 the plan shall fully finance the benefits paid that were not financed by the employee's 28 individual account. 29 * Sec. 61. AS 39.35 is amended by adding a new section to article 3 to read: 30 Sec. 39.35.159. Election of defined benefit retirement plan by reemployed 31 employees. (a) An employee may make a one-time election to participate in the plan
01 under AS 39.35.095 - 39.35.680 if the employee was first hired after June 30, 2006, 02 and before July 1, 2025, and, if not employed by an employer on July 1, 2025, is 03 reemployed by an employer after July 1, 2025, and, before the date of reemployment, 04 (1) has not received a distribution of the entire balance in the 05 employee's individual account under the defined contribution retirement plan 06 established in AS 39.35.700 - 39.35.990; or 07 (2) has received a rollover distribution of the entire balance in the 08 member's individual account in the defined contribution retirement plan and has 09 within 180 days of reemployment had all or part of a direct rollover distribution from 10 an eligible retirement plan owned by the member paid directly into the member's 11 individual account. 12 (b) An election under (a) of this section may be made not more than 180 days 13 after the date of reemployment. A reemployed employee electing to participate under 14 (a) of this section shall use the balance of the employee's individual account in the 15 plan under AS 39.35.700 - 39.35.990, including any rollover contributions, to 16 purchase credited service in the plan under AS 39.35.095 - 39.35.680. An election 17 made under (a) of this section must be made in writing in the manner prescribed by the 18 administrator. An election made by an employee who is married is not effective unless 19 the election is signed by the employee's spouse. The administrator shall provide an 20 employee who is eligible to make an election under (a) of this section with 21 information about the potential consequences of the employee's election, including 22 calculations to illustrate the effect of moving the employee's retirement plan from a 23 defined contribution retirement plan to a defined benefit retirement plan. 24 (c) An election made under (a) of this section to participate in the plan under 25 AS 39.35.095 - 39.35.680 is irrevocable. On the effective date of the election, an 26 eligible employee shall be enrolled as a member of the plan, and the employee's 27 participation in the plan shall be governed by the applicable provisions of the plan. 28 The employee's enrollment in the plan is retroactive to the date of hire. 29 (d) When an eligible employee makes an election under this section to 30 participate in the plan under AS 39.35.095 - 39.35.680, the administrator shall cause 31 the total amount of the employee's employee and employer contributions to the plan
01 under AS 39.35.700 - 39.35.990, with investment earnings and losses through the day 02 of the employee's election to participate as a member in the plan under AS 39.35.095 - 03 39.35.680, to be actuarially calculated and, subject to (f) of this section, transferred to 04 the pension fund in the plan under AS 39.35.095 - 39.35.680. On the effective date of 05 the employee's participation in the plan under AS 39.35.095 - 39.35.680, the employee 06 shall be credited with service in the plan. The board shall determine the cost of the 07 employee's actual service time based on the employee's accrued actuarial liability of 08 pension benefits in the plan, and credit the employee with service time equal to the 09 value actuarially calculated and transferred to the pension fund in the plan under 10 AS 39.35.095 - 39.35.680. The board shall adopt regulations establishing transfer 11 procedures. The transfer may not occur later than 60 days after the date the 12 administrator receives the employee's election, unless the major financial markets for 13 securities available for a transfer are seriously disrupted by an unforeseen event that 14 also causes the suspension of trading on a national securities exchange in the country 15 where the securities were issued; in that event, the 60-day period may be extended by 16 a resolution of the board. A transfer is not commissionable or subject to a fee and may 17 be in the form of cash or a security as determined by the board. The value of a security 18 shall be assessed on the date the security is received in the employee's account. 19 (e) When making a transfer under (d) of this section or a transfer for a 20 reemployed employee subject to the plan under AS 39.35.095(b), the administrator 21 shall transfer 22 (1) an amount equal to the decrease in the accrued actuarial liability of 23 the death and disability trust in the plan under AS 39.35.700 - 39.35.990 resulting 24 from the transfer as of the date of transfer, based on the most recent actuarial valuation 25 of the death and disability trust, from the death and disability trust in the plan under 26 AS 39.35.700 - 39.35.990 to the pension fund in the plan under AS 39.35.095 - 27 39.35.680; and 28 (2) an amount equal to the increase in the accrued actuarial liability of 29 the health care trust in the plan under AS 39.35.095 - 39.35.680 resulting from the 30 transfer as of the date of transfer, based on the actuarial assumptions set out in (g) of 31 this section, from the trust established under AS 39.30.097(b) for the prefunding of
01 medical benefits provided by AS 39.35.880 to the trust established under 02 AS 39.30.097(a) for the prefunding of medical benefits provided by AS 39.35.537. 03 (f) If the value actuarially calculated under (d) of this section is insufficient to 04 pay for service credit equal to the employee's actual service, the administrator shall 05 allow the employee the option of purchasing service credit in an amount up to the 06 amount needed to eliminate the insufficiency; however, if that value exceeds the 07 amount needed to pay for service credit equal to the employee's actual service, the 08 administrator shall cause the excess to be paid to the employee as a rollover transfer 09 either to an individual employee annuity account in the Department of Administration 10 under the terms of AS 39.30.150 - 39.30.180 (State of Alaska Supplemental Annuity 11 Plan) or, if the member's employer does not participate in the State of Alaska 12 Supplemental Annuity Plan, to an eligible retirement plan as defined in 13 AS 39.35.760(d). An excess may not be used to purchase additional service credit in 14 the plan under AS 39.35.095 - 39.35.680. When a reemployed employee enters the 15 plan under AS 39.35.095(b), the administrator shall allow the employee to pay for a 16 period of service credit up to the employee's actual service. When an employee elects 17 to purchase service credit under this section and does not immediately pay for the 18 service credit purchased, an indebtedness is established. Interest as prescribed by 19 regulation accrues on an employee's indebtedness. If the indebtedness exists when the 20 employee is appointed to retirement, the administrator shall make a corresponding 21 actuarial adjustment to the benefit payable to the employee for service in the defined 22 contribution retirement plan. 23 (g) Actuarial assumptions about the plan under AS 39.35.095 - 39.35.680 24 must be based on the most recent actuarial valuation of the plan, except that the 25 retirement rates are computed at 25 percent of the retirement rates used in the most 26 recent actuarial valuation of the pension fund for the plan plus 75 percent of the 27 retirement rates used in the most recent actuarial valuation of the plan under 28 AS 39.35.700 - 39.35.990. 29 (h) The provisions of this section are subject to the requirements of the 30 Internal Revenue Code and the limitations under AS 39.35.115, 39.35.678, 31 39.35.710(c) and (d), and 39.35.895. In this subsection, "Internal Revenue Code" has
01 the meaning given in AS 39.35.990. 02 * Sec. 62. AS 39.35.160(a) is amended to read: 03 (a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 04 each peace officer or firefighter shall contribute to the plan an amount equal to seven 05 and one-half percent of the peace officer's or firefighter's compensation, and, except [. 06 EXCEPT] as provided in (d) - (e) [(d)] of this section, beginning January 1, 1987, 07 each other employee shall contribute to the plan an amount equal to six and three- 08 quarters percent of the employee's compensation. [THE CONTRIBUTIONS SHALL 09 BE DEDUCTED BY THE EMPLOYER AT THE END OF EACH PAYROLL 10 PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 11 COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 12 TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 13 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 14 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 15 OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 16 * Sec. 63. AS 39.35.160 is amended by adding new subsections to read: 17 (e) An employee who first participates in the plan after June 30, 2006, shall 18 contribute to the plan an amount equal to eight percent of the employee's 19 compensation. The board may, from time to time, adjust the employee contribution 20 under this subsection to an amount that, 21 (1) if decreased, is not less than eight percent of the employee's 22 compensation; and 23 (2) if increased, is not more than 12 percent of the employee's 24 compensation. 25 (f) Contributions under (a) and (e) of this section shall be deducted by the 26 employer at the end of each payroll period. The contributions shall be deducted from 27 employee compensation before computation of applicable federal taxes, and the 28 contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 29 member may not have the option of making the payroll deduction directly instead of 30 having the contribution picked up by the employer. 31 (g) The board shall increase the employee contribution under (e) of this
01 section if the board determines that, unless the contribution is increased, the portion of 02 the liability of the plan that is attributable to employees who first participate in the 03 plan after June 30, 2006, will be funded below 90 percent. The board may not increase 04 the employee contribution unless the board increases the employer contribution under 05 AS 39.35.255(a)(2) by an equal amount. The board may decrease the contribution 06 under (e) of this section if the board determines that, after the contribution is 07 decreased, the portion of the liability of the plan that is attributable to all members 08 who first became members of the plan after June 30, 2006, will be funded above 90 09 percent. The board may not decrease the employee contribution unless the board 10 decreases the employer contribution under AS 39.35.255(a)(2) by an equal amount. 11 * Sec. 64. AS 39.35.165(a) is amended to read: 12 (a) An employee who is eligible to purchase credited service under 13 AS 39.35.159, 39.35.310 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 14 39.35.360, or 39.35.370, a member who is eligible to purchase credited service under 15 AS 39.35.375, or an elected public official who is eligible to purchase credited service 16 under AS 39.35.381 is an employee for purposes of this section. An employee may, in 17 lieu of making payments directly to the plan, elect to have the employee's employer 18 make payments as provided in this section. 19 * Sec. 65. AS 39.35.165(b) is amended to read: 20 (b) An employee may elect to have the employer make payments for all or any 21 portion of the amounts payable for the employee's purchase of credited service 22 through a salary reduction program as follows: 23 (1) the amounts paid under a salary reduction program are in lieu of 24 contributions by the employee making the election; the electing employee's salary or 25 other compensation shall be reduced by the amount paid by the employer under this 26 subsection; 27 (2) the employee shall make an irrevocable election under this section 28 to purchase credited service as permitted in AS 39.35.159, 39.35.310 [AS 39.35.310], 29 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 39.35.375, or 30 39.35.381 and before the employee's termination of employment; the irrevocable 31 election must specify the number of payroll periods that deductions will be made from
01 the employee's compensation and the dollar amount of deductions for each payroll 02 period during the specified number of payroll periods; the deductions made under this 03 paragraph cease upon the earlier of the member's termination of employment with the 04 employer or the member's death; amounts paid by an employer under (f) of this 05 section may not be applied toward the payment of the dollar amount of the deductions 06 representing the portion of the credited service that is being purchased by the member 07 through payroll deduction in accordance with the member's irrevocable election under 08 this subsection; 09 (3) amounts paid by an employer under this subsection shall be treated 10 as employer contributions for the purpose of determining tax treatment under the 11 Internal Revenue Code; the amounts paid by the employer under this section may not 12 be included in the member's gross income for income tax purposes until those amounts 13 are distributed by refund or retirement benefit payments. 14 * Sec. 66. AS 39.35.165(g) is amended to read: 15 (g) Payments made under this section shall be applied to reduce the 16 employee's outstanding indebtedness described in AS 39.35.159, 39.35.310 17 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.342, 39.35.345, 39.35.360, 39.35.370, 18 39.35.375, or 39.35.381 at the time that the contributions are received by the plan. 19 * Sec. 67. AS 39.35.165(i) is amended to read: 20 (i) On satisfaction of the eligibility requirements of AS 39.35.159, 39.35.310 21 [AS 39.35.310], 39.35.330, 39.35.340, 39.35.341, 39.35.345, 39.35.360, 39.35.370, 22 39.35.375, or 39.35.381, the requirements of this section, and the administrative filing 23 requirements specified by the commissioner, the plan shall adjust the employee's 24 credited service history and add any additional service credits acquired. 25 * Sec. 68. AS 39.35.255(a) is amended to read: 26 (a) Each employer, except as provided in (h) of this section, shall contribute to 27 the system every payroll period the lesser of 28 (1) an amount calculated by applying a rate of 22 percent of the greater 29 of the total of all base salaries 30 (A) [(1)] paid by the employer to employees who are active 31 members of the system, including any adjustments to contributions required by
01 AS 39.35.520; or 02 (B) [(2)] paid by the employer to employees who were active 03 members of the system during the corresponding payroll period for the fiscal 04 year ending 05 (i) [(A)] June 30, 2008; or 06 (ii) [(B)] June 30, 2012, if that total is less than the total 07 under (i) of this subparagraph [(A) OF THIS PARAGRAPH], and the 08 employer is a municipality in which the population decreased by more 09 than 25 percent between 2000 and 2010, according to the decennial 10 census conducted by the United States Bureau of the Census; or 11 (2) an amount calculated by applying a rate established by the 12 board under AS 37.10.220 to the total of all base salaries paid by the employer to 13 active members of the system; the rate must be at least 12 percent and be 14 sufficient to pay the actuarially determined employer normal cost, all 15 contributions required under AS 39.30.370 and AS 39.35.750, and past service 16 cost for members of the system. 17 * Sec. 69. AS 39.35.255 is amended by adding a new subsection to read: 18 (j) If the legislature appropriates funds for the purpose of decreasing an 19 employer's contribution, the employer's contribution under (a) of this section shall 20 decrease by that amount. 21 * Sec. 70. AS 39.35 is amended by adding a new section to read: 22 Sec. 39.35.281. Sub-trust for members who first became members after 23 June 30, 2006. The administrator shall deposit a portion of employer contributions 24 under AS 39.35.255 and 39.35.280 in a sub-trust of the retirement fund established by 25 the board for members who first became members after June 30, 2006. The amount 26 deposited, when combined with the amount separately computed for medical benefits 27 under AS 39.35.282, must be sufficient to pay the actuarially determined employer 28 normal cost and past service cost for members of the system who first became 29 members after June 30, 2006. When the amount sufficient to pay the actuarially 30 determined employer normal cost, all contributions required under AS 39.30.370 and 31 AS 39.35.750, and past service cost for members of the system is less than 12 percent
01 of all base salaries paid to active members of the system, the administrator shall 02 deposit the difference in the sub-trust established under this section. 03 * Sec. 71. AS 39.35.282 is amended to read: 04 Sec. 39.35.282. Contributions for medical benefits. Contributions made by 05 an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 06 computed for benefits provided by AS 39.35.535 and retiree major medical 07 insurance plan benefits provided under AS 39.35.537, and must [SHALL] be 08 deposited in the Alaska retiree health care trust established under AS 39.30.097(a). 09 * Sec. 72. AS 39.35.340(i) is amended to read: 10 (i) Notwithstanding (d) of this section, a member who retires as a peace officer 11 or firefighter may elect to use five or fewer years of credited service granted under this 12 section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 13 When eligibility for credited service for military service has been established and an 14 election under this subsection has been made, an indebtedness in addition to the 15 indebtedness determined under (b) of this section shall be determined for each year of 16 military service used under this subsection, in an amount based on the increase, if any, 17 in the present value of future benefits for that year as determined by the department. 18 * Sec. 73. AS 39.35.345(d) is amended to read: 19 (d) An employee may choose whether the credited service granted under this 20 section is used to satisfy the credited service requirements for normal retirement under 21 AS 39.35.370(a)(1)(B) or (C), 39.35.370(a)(2)(B), (C), or (D), [AS 39.35.370(a)(2) 22 OR (3)] or 39.35.385(f) or is only used for the calculation of benefits. An election 23 under this subsection is irrevocable and applies to all temporary credited service that 24 the employee has accrued when the employee retires. An election under this 25 subsection does not change the date that an employee is considered to have 26 commenced participation in the plan under AS 39.35.120. 27 * Sec. 74. AS 39.35.370(a) is amended to read: 28 (a) Subject to AS 39.35.450, a terminated employee 29 (1) who first became a member before July 1, 2006, is eligible for a 30 normal retirement benefit 31 (A) [(1)] at age 60 with at least five years of credited service;
01 (B) [(2)] with at least 20 years of credited service as a peace 02 officer or firefighter; or 03 (C) [(3)] with at least 30 years of credited service; 04 (2) who first became a member after June 30, 2006, is eligible for a 05 normal retirement benefit 06 (A) at age 60 with at least five years of credited service; 07 (B) at age 55 with at least 20 years of credited service as a 08 peace officer or firefighter; 09 (C) at age 50 with at least 25 years of credited service as a 10 peace officer or firefighter; or 11 (D) with at least 30 years of credited service [FOR ALL 12 OTHER EMPLOYEES]. 13 * Sec. 75. AS 39.35.381(e) is amended to read: 14 (e) A person who retires under this section is not entitled to disability or death 15 benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 16 to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 17 section may not be used for vesting under AS 39.35.095 - 39.35.680. 18 * Sec. 76. AS 39.35.475(b) is amended to read: 19 (b) Subject to (g) and (h) of this section, the [THE] increase in benefit 20 payments applies to total benefit payments except for the cost-of-living allowance 21 under AS 39.35.480. The amount of the increase is a percentage of the current benefit 22 equal to 23 (1) the lesser of 75 percent of the increase in the cost of living in the 24 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 25 years old and for members receiving disability benefits; and 26 (2) the lesser of 50 percent of the increase in the cost of living in the 27 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 28 less than 65 years old or for recipients who are less than 60 years old on July 1 but 29 who have received benefits from the plan for at least five years. 30 * Sec. 77. AS 39.35.475 is amended by adding a new subsection to read: 31 (g) Subject to (h) of this section, the amount of an increase for members who
01 first became members of the plan after June 30, 2006, and do not meet the eligibility 02 requirements for a permanent fund dividend under AS 43.23.005(a) in effect on July 1, 03 2025, is equal to one-half of the applicable percentage under (b) of this section. 04 (h) If the board determines that the portion of the liability of the plan that is 05 attributable to all members who first became members of the plan after June 30, 2006, 06 is funded below 90 percent, the board may reduce the amount of the increase 07 determined under (b) or (g) of this section that is payable to a member who first 08 became a member after June 30, 2006. At any time, the board may terminate a 09 reduction made under this subsection. 10 * Sec. 78. AS 39.35.480(a) is amended to read: 11 (a) While residing in the state, a person who first became a member of the 12 plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 13 and who is 65 years of age or older or a person who first became a member of the 14 plan before July 1, 2006, and who is receiving a disability benefit is entitled to 15 receive a monthly cost-of-living allowance in addition to the basic benefit. The 16 amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 17 greater. 18 * Sec. 79. AS 39.35.535(a) is amended to read: 19 (a) Except as provided in (d) and (g) of this section, the following persons are 20 entitled to major medical insurance coverage under this section: 21 (1) for employees first hired before July 1, 1986, 22 (A) an employee who is receiving a monthly benefit from the 23 plan and who has elected coverage; 24 (B) the spouse and dependent children of the employee 25 described in (A) of this paragraph; 26 (C) the surviving spouse of a deceased employee who is 27 receiving a monthly benefit from the plan and who has elected coverage; 28 (D) the dependent children of a deceased employee who are 29 dependent on the surviving spouse described in (C) of this paragraph; 30 (2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 31 (A) an employee who is receiving a monthly benefit from the
01 plan and who has elected coverage for the employee; 02 (B) the spouse of the employee described in (A) of this 03 paragraph if the employee elected coverage for the spouse; 04 (C) the dependent children of the employee described in (A) of 05 this paragraph if the employee elected coverage for the dependent children; 06 (D) the surviving spouse of a deceased employee who is 07 receiving a monthly benefit from the plan and who has elected coverage; 08 (E) the dependent children of a deceased employee who are 09 dependent on the surviving spouse described in (D) of this paragraph if the 10 surviving spouse has elected coverage for the dependent children. 11 * Sec. 80. AS 39.35.535(c) is amended to read: 12 (c) A benefit recipient who became a member before July 1, 2006, or the 13 surviving spouse of the member may elect major medical insurance coverage in 14 accordance with regulations and under the following conditions: 15 (1) a person, other than a disabled member or a disabled member who 16 is appointed to normal retirement, shall [MUST] pay an amount equal to the full 17 monthly group premium for retiree major medical insurance coverage if the person is 18 (A) younger than 60 years of age and has less than 19 (i) 25 years of credited service as a peace officer under 20 AS 39.35.360 and 39.35.370; or 21 (ii) 30 years of credited service under AS 39.35.360 and 22 39.35.370 that is not service as a peace officer; or 23 (B) of any age and has less than 10 years of credited service; 24 (2) a person is not required to make premium payments for retiree 25 major medical coverage if the person 26 (A) is a disabled member; 27 (B) is a disabled member who is appointed to normal 28 retirement; 29 (C) is 60 years of age or older and has at least 10 years of 30 credited service; or 31 (D) has at least
01 (i) 25 years of credited service as a peace officer under 02 AS 39.35.360 and 39.35.370; or 03 (ii) 30 years of credited service under AS 39.35.360 and 04 39.35.370 not as a peace officer. 05 * Sec. 81. AS 39.35.535 is amended by adding a new subsection to read: 06 (g) A benefit recipient who first became a member after June 30, 2006, or a 07 surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 08 under this section but may elect medical benefits under AS 39.35.537. 09 * Sec. 82. AS 39.35 is amended by adding a new section to read: 10 Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 11 June 30, 2006; surviving spouses and dependents. (a) An employee who first 12 became a member of the plan after June 30, 2006, receives a monthly benefit from the 13 plan, retired from the plan, and has elected benefits under this section is entitled to 14 medical benefits under this section. A member who applies for medical benefits under 15 this section shall apply on the forms and in the manner prescribed by the 16 administrator. A member is eligible to retire from the plan if the member 17 (1) is at least 18 (A) 50 years of age and has at least 25 years of membership 19 service as a peace officer or firefighter; 20 (B) 55 years of age and has at least 20 years of membership 21 service as a peace officer or firefighter; 22 (2) has at least 30 years of membership; or 23 (3) reaches the age set for Medicare eligibility and has at least 10 years 24 of membership service. 25 (b) The member's surviving spouse is eligible to elect medical benefits if the 26 member had retired or was eligible for retirement and medical benefits at the time of 27 the member's death. 28 (c) The medical benefits available to eligible persons are access to the retiree 29 major medical insurance plan and access to the health reimbursement arrangement 30 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 31 that an eligible person may not be denied insurance coverage except for failure to pay
01 the required premium. 02 (d) Retiree major medical insurance plan coverage elected by an eligible 03 member under this section covers the eligible member, the spouse of the eligible 04 member, and the dependent children of the eligible member. 05 (e) Retiree major medical insurance plan coverage elected by a surviving 06 spouse of an eligible member under this section covers the surviving spouse and the 07 dependent children of the eligible member who are dependent on the surviving spouse. 08 (f) Participation in the retiree major medical insurance plan is not required in 09 order to participate in the health reimbursement arrangement plan. 10 (g) A person eligible for medical benefits under this section is not required to 11 participate in the health reimbursement arrangement plan in order to participate in the 12 retiree major medical insurance plan. 13 (h) A person who is eligible for medical benefits under this section must make 14 the irrevocable election to participate or not participate in the retiree major medical 15 insurance plan on or before the date the person reaches 70 1/2 years of age or when the 16 person applies for retirement and medical benefits, whichever is later. 17 (i) Major medical insurance coverage takes effect on the first day of the month 18 following the date of the administrator's approval of the election and stops when the 19 person who elects coverage dies or fails to make a required premium payment. 20 (j) The coverage for persons 65 years of age or older is the same as that 21 available for persons under 65 years of age. The benefits payable to those persons 65 22 years of age or older supplement any benefits provided under the federal old age, 23 survivors, and disability insurance program. 24 (k) The medical and optional insurance premiums owed by the person who 25 elects coverage may be deducted from the health reimbursement arrangement plan. If 26 the amount of the health reimbursement arrangement plan becomes insufficient to pay 27 the premiums, the person who elects coverage under (a) of this section shall pay the 28 premiums directly. 29 (l) The cost of premiums for retiree major medical insurance coverage under 30 this section for an eligible member or surviving spouse who is 31 (1) not eligible for Medicare is an amount equal to the full monthly
01 group premiums for retiree major medical insurance coverage; 02 (2) eligible for Medicare is the following percentage of the premium 03 amounts established for retirees who are eligible for Medicare: 04 (A) 30 percent if the member had 10 or more, but less than 15, 05 years of service; 06 (B) 25 percent if the member had 15 or more, but less than 20, 07 years of service; 08 (C) 20 percent if the member had 20 or more, but less than 25, 09 years of service; 10 (D) 15 percent if the member had 25 or more, but less than 30, 11 years of service; 12 (E) 10 percent if the member had 30 or more years of service. 13 (m) The eligibility for retiree major medical insurance coverage for an 14 alternate payee under a qualified domestic relations order shall be determined based 15 on the eligibility of the member to elect coverage. The alternate payee shall pay the 16 full monthly premium for retiree major medical insurance coverage. 17 (n) The administrator shall 18 (1) inform a person entitled to retiree major medical insurance 19 coverage under this section in writing 20 (A) that the health insurance coverage available to retired 21 members may be different from the health insurance coverage provided to 22 employees; 23 (B) of time limits for selecting optional health insurance 24 coverage; and 25 (C) whether the election is irrevocable; and 26 (2) require that a person entitled to retiree major medical insurance 27 coverage under this section indicate in writing on a form provided by the administrator 28 whether the person has chosen to receive optional health insurance coverage. 29 (o) The monthly group premiums for retiree major medical insurance coverage 30 under this section are established by the administrator in accordance with 31 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under
01 (a) of this section a monthly group premium rate for retiree major medical insurance 02 coverage other than the premium in effect for the month in which the premium is due 03 for coverage for that month. 04 (p) In this section, "health reimbursement arrangement plan" means the State 05 of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 06 Arrangement Plan established in AS 39.30.300. 07 * Sec. 83. AS 39.35.610(a) is amended to read: 08 (a) The contributions of an employer and the contributions of its employees 09 shall be transmitted to the administrator as soon as practicable after the close of the 10 payroll period for which the contributions are made. Subject to (c) of this section, if an 11 employer is delinquent in transferring the contributions for more than 15 days, interest 12 shall be assessed on the outstanding contributions at [ONE AND ONE-HALF TIMES] 13 the most recent actuarially determined rate of earnings for the retirement plan from the 14 date that the contributions were originally due. 15 * Sec. 84. AS 39.35.680(4) is amended to read: 16 (4) "average monthly compensation" means the result obtained by 17 dividing the compensation earned by an employee during a considered period by the 18 number of months, including fractional months, for which compensation was earned; 19 an employee must have at least 115 days of credited service in the last payroll year in 20 order for that year to be used as part of the consecutive payroll years; the considered 21 period consists of 22 (A) for employees first hired before July 1, 1996, the three 23 consecutive payroll years during the period of credited service that yield the 24 highest average; 25 (B) for employees first hired [ON OR] after June 30 [JULY 1], 26 1996, the five consecutive payroll years during the period of credited service 27 that yield the highest average; 28 (C) if the employee does not have the number of consecutive 29 payroll years required by (A) or (B) of this paragraph, the actual number of 30 months, including fractional months, that the employee worked; 31 (D) for an employee who has made an election under
01 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 02 fractional months, that the employee worked; 03 (E) for a peace officer or firefighter hired before July 1, 2006 04 [AT ANY TIME], the three consecutive payroll years during the period of 05 credited service that yield the highest average; 06 * Sec. 85. AS 39.35.680(18) is amended to read: 07 (18) "employer" means 08 (A) the State of Alaska; 09 (B) a political subdivision or public organization of the state 10 that participates in the plan based on a resolution to participate in the plan that 11 was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 12 (C) a political subdivision or public organization of the state 13 that, as a result of consolidation or reorganization [THAT OCCURS ON OR 14 AFTER JULY 1, 2006], assumes liability under the plan of a political 15 subdivision or public organization described in (B) of this paragraph; 16 * Sec. 86. AS 39.35.680 is amended by adding a new paragraph to read: 17 (44) "first became a member after June 30, 2006" and "first became a 18 member of the plan after June 30, 2006" include a member who elected under 19 AS 39.35.940 to participate in the plan under AS 39.35.700 - 39.35.990 and who 20 elects to participate in the defined benefit retirement plan under AS 39.35.095 - 21 39.35.680. 22 * Sec. 87. AS 39.35.700 is amended to read: 23 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 24 AS 39.35.700 - 39.35.990 apply only to 25 (1) members first hired [ON OR] after June 30, 2006, and before 26 July 1, 2025, who do not participate in a defined benefit retirement plan under 27 AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; and 28 (2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 29 EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 30 RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 31 FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who
01 transferred [TRANSFER] into the defined contribution retirement plan under 02 AS 39.35.940 and do not elect to participate in the defined benefit retirement plan 03 under AS 39.35.095 - 39.35.680. 04 * Sec. 88. AS 39.35.700 is amended by adding a new subsection to read: 05 (b) A public organization as defined in AS 39.35.680 or a municipality or 06 other political subdivision of the state that participates in the plan shall also participate 07 in the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 08 * Sec. 89. AS 39.35.720 is amended to read: 09 Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 10 after June 30, 2006, and before July 1, 2025, who does not participate in a defined 11 benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 12 39.35.680 [JULY 1, 2006,] shall participate in the plan set out in AS 39.35.700 - 13 39.35.990. 14 * Sec. 90. AS 39.35.870(a) is amended to read: 15 (a) In order to obtain medical benefits under AS 39.35.880, an active member 16 must retire [DIRECTLY] from the plan. A member is eligible to retire from the plan if 17 [THE MEMBER HAS BEEN AN ACTIVE MEMBER FOR AT LEAST 12 18 MONTHS BEFORE APPLICATION FOR RETIREMENT AND] 19 (1) the member has at least 20 [25] years of membership service as a 20 peace officer or firefighter or at least 25 [30] years of membership service for all other 21 employees; or 22 (2) the member reaches the normal retirement age and has at least 10 23 years of membership service. 24 * Sec. 91. AS 39.35.895(a) is amended to read: 25 (a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 26 [THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 27 time, in whole or in part, including the right to make retroactive amendments referred 28 to in 26 U.S.C. 401(b). 29 * Sec. 92. AS 39.35.895(b) is amended to read: 30 (b) The plan administrator may not modify or amend the plan retroactively [IN 31 SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member
01 [ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 02 MADE] before the modification or amendment except to the extent that the reduction 03 is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 04 Revenue Code. 05 * Sec. 93. AS 39.35.895(c) is amended to read: 06 (c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 07 Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 08 plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 09 is terminated, all investments at the time of termination remain in force until all 10 individual accounts have been completely distributed under the plan. After [, AND, 11 AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 12 employer. 13 * Sec. 94. AS 39.35.895(d) is repealed and reenacted to read: 14 (d) Within one year after determining that a contribution to the plan by an 15 employer was the result of a mistake of fact, the administrator shall return the 16 contribution to the employer. 17 * Sec. 95. AS 14.25.012(c) and 14.25.061 are repealed. 18 * Sec. 96. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: RETIREMENT PLAN ELECTION. (a) A teacher who became a 21 member of the defined contribution retirement plan of the teachers' retirement system after 22 June 30, 2006, and before July 1, 2025, and who, on July 1, 2025, is a member employed by 23 an employer in the defined contribution retirement plan of the teachers' retirement system 24 may, before January 1, 2026, make a one-time election to participate in the defined benefit 25 retirement plan and to transfer all contributions that have been made or should be made to the 26 defined contribution retirement plan for service the member completes before the effective 27 date of the member's participation in the defined benefit retirement plan. The transferred 28 contributions shall be used to purchase credited service in the defined benefit retirement plan 29 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 30 established under AS 37.10.210. The provisions of AS 14.25.044 apply to an election made 31 under this subsection.
01 (b) An employee who became a member of the defined contribution retirement plan 02 of the public employees' retirement system after June 30, 2006, and before July 1, 2025, and 03 who, on July 1, 2025, is a member employed by an employer in the defined contribution 04 retirement plan of the public employees' retirement system may, before January 1, 2026, make 05 a one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 06 39.35.680 and to transfer all contributions that have been made or should be made to the 07 defined contribution retirement plan for service the member completes before the effective 08 date of the member's participation in the defined benefit retirement plan. The transferred 09 contributions shall be used to purchase credited service in the defined benefit retirement plan 10 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 11 established under AS 37.10.210. The provisions of AS 39.35.159 apply to an election made 12 under this subsection. 13 * Sec. 97. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 16 may adopt regulations necessary to implement secs. 38 and 39 of this Act. Regulations 17 adopted by the Alaska Retirement Management Board under this Act relate to the internal 18 management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 19 under AS 37.10.240. 20 (b) The commissioner of administration may adopt regulations necessary to 21 implement secs. 1 - 37 and 40 - 96 of this Act. Regulations adopted by the commissioner of 22 administration under this Act relate to the internal management of a state agency and are not 23 subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 24 AS 39.35.005. 25 (c) Regulations adopted under this section may not take effect before the effective 26 date of the law being implemented by the regulation. 27 * Sec. 98. Section 97 of this Act takes effect immediately under AS 01.10.070(c). 28 * Sec. 99. Except as provided in sec. 98 of this Act, this Act takes effect July 1, 2025.