Legislature(2005 - 2006)HOUSE FINANCE 519
04/12/2006 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB390 | |
| HB475 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 390 | TELECONFERENCED | |
| += | HB 475 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 475
An Act describing contributions to the health
reimbursement arrangement plan for certain teachers and
public employees; clarifying eligibility for membership
in that health reimbursement arrangement plan; relating
to the 'administrator' of the Public Employees'
Retirement System of Alaska; and providing for an
effective date.
Co-Chair Chenault MOVED to ADOPT work draft #24-LS1685\S,
Wayne, 4/11/06, as the version of the committee substitute
before the Committee. There being NO OBJECTION, it was
adopted.
9:34:32 AM
REPRESENTATIVE PAUL SEATON, SPONSOR, updated Committee
members on the process to date. He stated that HB 475 was a
clean up bill to the Retirement Security Act (SB 141) passed
in 2005. Due to the length of SB 141, a handful of errors
and oversights were made that need to be changed for the
transition to Tier IV. HB 475 is a technical bill and
intended to include any policy change.
Revisions encompassed in HB 475:
· Clarifies the procedure for an appeal to the Office of
Administrative Hearings
· Requires employer to contribute at least the normal
cost rate starting in 2008
· Changes the requirements to receive a conditional
service benefit
· Clarifies provisions regarding Personnel Employees
Retirement System (PERS) and Teachers Retirement System
(TRS) death and disability benefits including how those
benefits would be funded:
Funding death and disability
The structure of death and disability benefits
The survivor benefit
· Clarifies the eligibility requirements for medical
benefits
· Clarifies requirements for non-vested Tier II or Tier
III employees who wish to transfer to Tier IV
· Clarifies the basis for calculating employer
contribution rates
· Gives regulatory authority to the appropriate party
· Changes the basis for calculating HRA employer
contributions to meet the Internal Revenue Service
(IRS) tax qualifications
· Definitions
· Disallows employment with National Education
Association (NEA) as counting towards Tier IV
retirement eligibility
· Establishes provisions for employer termination of
participation in the plan
· Clarifies defined benefit and defined contribution
components of the plan
· Establishes adherence to IRS limitations
The changes are not absolutely necessary for Tier IV to come
on line July 1, 2006. The revisions clarify many aspects of
the statutes, providing a benefit both to the plan and
members. If changes are not made, many crucial decisions
would be left to the Administrator of the plan without
proper guidance from the Legislature.
9:42:19 AM
Representative Weyhrauch noted that the sponsor statement
was written to version \L and that the Committee had just
adopted version\S. Representative Seaton noted the only
substantive change to version\S is located on Page 33,
Sections 73 & 77, the contribution amount for death and
disability. The amount that employers would have to provide
was recalculated; it found that Mercer had not calculated in
the Cost-of-Living-Allowance (COLA) over time for those in
Tier III.
9:44:32 AM
In response to Representative Weyhrauch regarding over
funding, Representative Seaton explained it was a
retroactive date listed on Page 33. The amount was backed-
out and given two years to catch up. He added that the
Division of Retirement and Benefits had assured his office
that under no circumstance would they allow drawing from
over-funded to under-funded status.
9:47:49 AM
Representative Holm observed the clause that a "period of
death" counts toward retirement, questioning what that
meant. Representative Seaton replied that it is
occupational death and disability and if a member was
working for a PERS or TRS employer and died, their heirs
would receive the survivor's benefit.
9:49:22 AM
Representative Seaton observed that the bill would change
the requirement to receive a conditional death benefit until
2010, clarifying that the employee could buy-back years.
Representative Kerttula asked the explanation of refunded
contributions being creditable. Representative Seaton
clarified that after 2010, a member who was in PERS and
withdrew their funds and then returns, they would be able to
fully buy-back the funds and be eligible for a deferred
compensation (DC) plan. They would not be able to do that
after 2010. The employee would need the employers consent
to buy into a DC plan. If the employee was a Deferred
Benefit (DB) employee, they would still be able to buy-back.
KATIE SHOWS, STAFF, REPRESENTATIVE SEATON, explained that
there are a number of sections that deal with conditional
service benefits. The first one clarifies that the employee
has until 2010 to payback service to be where they left off,
which represents a large unfunded liability to the system.
The intent of SB 141 made that change; HB 475 provides
further clarification. The transfer is a separate section.
Representative Kerttula concluded that a member could refund
their service until 2010. Ms. Shows clarified that the
employee could still do it until 2010. If the service was
not refunded, the employee could do it at any time. The
buy-back must be initiated before 2010 in order to return to
their previous retirement plan if they are reemployed on a
PERS or TRS plan.
9:56:07 AM
Representative Seaton reviewed the death and disability
aspect, which looks at funding, structure of the benefits
and the survivor benefits. The bill also clarifies the
eligibility for medical benefits. The member does not have
to be continuously insured for their eligibility.
Representative Kerttula questioned current practice.
Representative Seaton observed that the provision pertains
to early retirement. He noted that under the new plan, the
medical benefits apply at the age of retirement. If the
member returns to work, and shows that they were eligible
during that period of unemployment, they would still
qualify.
Representative Kerttula mentioned the "letter of coverage".
Currently, if the person retires early, they receive full
medical benefits. Representative Seaton responded that
currently, the medical benefits start at retirement age. He
added that 75% of all medical expenses are happening on
early retirees not on the very elderly.
HB 475 was HELD in Committee for further consideration.
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