Legislature(2013 - 2014)SENATE FINANCE 532
04/16/2014 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB379 | |
| SB220 | |
| HB308 | |
| HB361 | |
| HB160 | |
| HB116 | |
| SB48 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 278 | TELECONFERENCED | |
| + | HB 385 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 379 | ||
| = | SB 220 | ||
| = | HB 308 | ||
| = | HB 361 | ||
| = | HB 160 | ||
| = | SB 48 | ||
| = | HB 116 | ||
CS FOR HOUSE BILL NO. 116(L&C)
"An Act relating to the use of credited military
service by retired peace officers and firefighters to
meet certain requirements for major medical insurance
coverage; and providing for an effective date."
3:29:00 PM
KATHY LEA, CHIEF PENSION OFFICER, DIVISION OF RETIREMENT
AND BENEFITS, DEPARTMENT OF ADMINISTRATION, introduced
herself.
VASILIOS GIALOPSOS, STAFF, REPRESENTATIVE CHARISSE MILLET,
explained the legislation. He announced that Honorably
discharged members of our nations' military service who
come to work for the State of Alaska are currently allowed
to purchase qualifying time within the PERS system for
their previous military service. Under current law, this
purchased time may not be used to satisfy the credited
service requirements for normal retirement. This exemption
precludes persons from using their purchased time to
qualify for health care benefits. He state that HB 116
proposes that peace officers or firefighters be allowed to
use the time they purchase for normal retirement. Already
these brave individuals have served their country. They
have then made a career providing public safety and rescue
in one of the most hazardous working environments to be
found. Their service to others, by placing themselves in
harm's way on a continuous basis, merits consideration in
the development of Alaska's retirement and benefit system.
He announced that HB 116 makes a minor, and tightly
tailored, modification to our retirement laws to allow a
person to use their purchased service to qualify for normal
retirement benefits. The intent of HB 116 is that peace
officers or firefighters who choose to purchase the service
time bear the cost to the state that the additional
benefits will create. He stated that HB 116 creates an
appropriate recognition of their service to their country
and their state by ensuring the have a fair retirement in
their future.
Vice-Chair Fairclough queried the length of time it takes
for a firefighter or police officer to qualify for
benefits. Ms. Lea replied that a police officer or
firefighter could reach eligibility for retirement benefits
with 20 years of service; but they needed to have 25 years
of service to have system-paid medical coverage if they are
in tiers 2 or 3.
Vice-Chair Fairclough remarked that there was a disparity
between what was required to acquire a pension and medical
coverage in tiers 2 and 3. Ms. Lea agreed, and stated that
the five extra years was required to gain system-paid
premium health care. She stated that there was access to
health care, but they must have five extra years in order
for the system to pay for the premiums.
Vice-Chair Fairclough wondered if an honorable discharge
was recognized under military service. Ms. Lea replied that
the military service required an honorable discharge.
Co-Chair Meyer wondered if Vice-Chair Fairclough was
concerned about "double dipping."
3:33:48 PM
Vice-Chair Fairclough stressed that she was attempting to
determine what benefit would be achieved, and what the
individual was currently receiving. She stressed that there
was a 25 percent buy back over 20 years, and a 25 percent
buyback with the 25 year requirement. She understood that
there was an actuarially draw for the pension, but felt
that there was a possible allowance for double benefits.
Ms. Lea replied that she could not speak to the intent of
the legislation. She announced that there were some
restrictions within the system for claiming benefits under
the military category, if one was already eligible for
retirement benefits from one's military service. A person
with 20 years of military service that would qualify for a
federal benefit could not claim the service if they were
tier 2 or 3. She furthered that she was unsure about the
health care benefits related to that issue.
Mr. Gialopsos looked at AS 39.35.340(a):
A vested employee is entitled to credited service for
active military service in the armed forces of the
United States, either by enlistment or induction, if
the employee received a discharge under conditions and
was not entitled to receive retirement benefits from
the United States government for the same service.
Senator Olson wondered what efforts were being made for the
tier 4 employees. Mr. Gialopsos responded that, because
tier 4 was a defined contribution system, the provisions of
health care after a person left service were fundamentally
different.
Ms. Lea agreed with Mr. Gialopsos, and furthered that,
under tier 4, there were no provisions to claim any type of
service in the plan. There were no predications on years of
service to claim service. A tier 4 employee must retire
directly from the plan, must have at least 10 years of
service, and be Medicare age eligible to receive retirement
health coverage.
Vice-Chair Fairclough stated that, usually, when a policy
or bill was considered, the reason was because an
individual was adversely affected. She wondered if there
was an adversely affected individual who may have
influenced the drafting of the bill. Mr. Gialopsos replied
that there were several peace officers and firefighters who
purchased their military time, under the assumption that it
would bring them full retirement. He stated that there were
several letters of support who were looking to retire early
that would like to purchase their medical time, because
they recognized that they were a liability to their
colleagues because of their age.
3:38:53 PM
Vice-Chair Fairclough asked if the individual's payments
into the plan would count toward their health benefits. Ms.
Lea replied that those were two different calculations. The
calculation to use military service to increase the number
of years of service to increase their retirement benefit
was partially subsidized by the employer, so it was a flat
percentage of their vesting year salary. The legislation
outlined an additional cost, if the member wanted to claim
it for pension purposes and health care services.
Vice-Chair Fairclough wondered if there would be a negative
impact to those that were already in the system, because
there was a change to the cost of the system. Ms. Lea
replied that there would be no impact on the remainder of
the population in the system, because the claimant would
pay the full cost for the coverage.
Vice-Chair Fairclough surmised that the calculations were
based on a certain set of assumptions. Ms. Lea agreed.
Senator Bishop queried the cost of the full five years. Ms.
Lea replied that the cost would be approximately $60,000 to
$70,000, depending on age, circumstances, and number of
years purchased.
Senator Hoffman wondered what other categories under tiers
2 and 3 could be a net zero. Ms. Lea replied that there
were other types of claim service that were full actuarial
costs. She stated that purchasing temporary service to be
used for retirement eligibility already existed in statute.
She stated that the legislation was similar to the statute,
and furthered that there was a public service benefit that
was full actuarial cost.
Senator Hoffman surmised that all other programs already
had the option to purchase in tiers 2 and 3 for other
categories of 20 and 30 years for buyback. Ms. Lea
responded that all others did not have the specific
provision to purchase military time to be used toward their
30 year retirement.
Senator Hoffman wondered why other positions or categories
of employment were not offered the option to purchase the
time for a 30 year retirement, if it was a net zero. Mr.
Gialopsos replied that it was the sponsor's intent to look
at a particular segment within tiers 2 and 3, who post the
highest risk in the actuarial pool. He could not
specifically address the reasons why it would not directly
apply to the purchase of a 30 year retirement.
3:44:48 PM
AT EASE
3:46:11 PM
RECONVENED
Co-Chair Meyer CLOSED public testimony
Vice-Chair Fairclough MOVED to REPORT CSHB 116(L&C) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 116(L&C) was REPORTED out of committee with a "do
pass" recommendation and with previously published zero
fiscal note: FN1(ADM).
3:47:07 PM
AT EASE
3:48:39 PM
RECONVENED
Co-Chair Meyer handed the gavel to Vice-Chair Fairclough.