House of Representatives

SB 1320

ASRS; benefits; increases

Sponsors: Senators Bennett, Solomon, Soltero, et al

dp	Committee on Government Operations
dpa	Caucus and COW
x	As Passed the House

SB 1320 changes the current requirements for receiving a retirement benefit increase, changes the actuarial computation method for ASRS, creates a task force to study the computation method change, and creates a graded multiplier for retirement benefits.

History

Currently, a retired member must be 55 years old and receiving retirement benefits by June 30 of the previous calendar year in order to receive a retirement benefit increase. A beneficiary of a member may receive benefit increases if the member turned 55 before death, and was receiving benefits on or before June 30 of the previous year. Benefit increases are contingent upon an 8% return on investments, and are not to exceed a 4% increase in aggregate for all persons eligible.

SB 1083, Ch. 327, from the Forty-fourth Legislature, First Regular Session, increased the retirement formula multiplier from 2.0 per cent to 2.1 per cent, giving all defined benefit ASRS members and retirees, who have achieved normal retirement status, a five per cent monthly compensation increase. A retired member’s monthly compensation is calculated by the member’s years of service multiplied by 2.1 per cent multiplied by their average monthly compensation.

Provisions

· Allows a retirement compensation benefit increase if the retired member or beneficiary has been receiving benefits by July 31 of the previous calendar year, regardless of age.

· Changes the actuarial computation method from projected unit credit (PUC) to entry age normal (EAN).

· Creates a task force to study the EAN cost method of ASRS.

· Requires the task force to submit their report by December 1, 2000.

· Establishes a graduated retirement multiplier which begins at 2.1 per cent for members with less that 15 years of service, and increases as follows:

1) 2.15 per cent if the member has 15 or more years of service but less than 20 years.

2) 2.2 per cent if the member has 20 or more years of service but less than 25 years.

3) 2.25 per cent if the member has 25 or more years of service.

· Caps the member’s monthly compensation at 80 per cent of the member’s average monthly compensation for employees who become members after June 30, 2001.

· Provides the same graduated multiplier increases to current retired defined benefit ASRS members and beneficiaries.

· Provides a delayed effective date of July 1, 2001.

· Makes technical and conforming changes.

HB 1320 passed the Government Operations committee unamended.

HB 1320 was amended in the Committee of the Whole as follows:

· Changes the actuarial computation method from projected unit credit (PUC) to entry age normal (EAN).

· Creates a task force to study the EAN cost method of ASRS.

· Requires the task force to submit their report by December 1, 2000.

· Establishes a graduated retirement multiplier which begins at 2.1 per cent for members with less that 15 years of service, and increases as follows:

4) 2.15 per cent if the member has 15 or more years of service but less than 20 years.

5) 2.2 per cent if the member has 20 or more years of service but less than 25 years.

6) 2.25 per cent if the member has 25 or more years of service.

· Caps the member’s monthly compensation at 80 per cent of the member’s average monthly compensation for employees who become members after June 30, 2001.

· Provides the same graduated multiplier increases to current retired defined benefit ASRS members and beneficiaries.

· Provides a delayed effective date of July 1, 2001.

· Makes technical and conforming changes.

·

·

· ---------- DOCUMENT FOOTER ---------

· 44th Legislature Analyst Initials _______

· Second Regular Session March 29, 2000

·

· ---------- DOCUMENT FOOTER ---------