school districts; annual
financial reports
w/d |
Committee on Education |
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s/e dpa |
Committee on Government Reform |
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x |
Caucus and COW |
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As Passed the House |
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The strike-everything amendment to SB 1328 establishes a deferred retirement option plan (DROP) for Public Safety Personnel Retirement System (PSPRS) and Correctional Officers Retirement Plan (CORP) members. This bill also establishes the guidelines for the plan.
DROP’s are designed to give members an additional option at normal retirement. A member is required to designate a period, a beneficiary, agree to cease to accrue benefits during the period and terminate employment at the end of the period. The benefits credited to the DROP account are paid-out upon termination as a lump sum.
·
Requires
the board or fund manager to offer DROP to eligible PSPRS or CORP members on a
voluntary basis as an alternative method of benefit accrual under the system
from July 1, 2001 to June 30, 2006.
·
Establishes DROP to provide members who elect to
participate access to a lump sum benefit upon termination, in addition to their
normal monthly retirement benefit.
·
States
that any member of PSPRS or CORP who is eligible for a normal pension is
eligible to participate in DROP.
·
Requires
that a member who elects to participate in DROP must voluntarily and
irrevocably:
1)
Designate
a period of participation that is not more than sixty consecutive months.
2)
Cease
to accrue membership benefits beginning on the first day of the member's
participation in DROP.
3)
Have
DROP plan benefits credited to a DROP participation account.
4)
Receive
benefits from the system on termination of employment at the same time and in
the same manner as a normal retirement pension.
5)
Agree
to terminate employment on completion of the DROP participation period. If a member fails to terminate employment on
completion of the designated DROP participation period, the member is not
entitled to the interest accumulation on the DROP participation account. However, a member may terminate
participation in DROP by voluntarily terminating employment at any time before
completing the DROP participation period.
·
States
that participation in DROP terminates upon one of the following:
1)
Completion
of the DROP participation period.
2)
Termination
of employment. If termination of
employment is reversed, a member's participation in DROP, minus any benefits
previously distributed, shall be reinstated for the duration of the original
DROP participation period.
3)
Death
of a member.
4)
Approval of disability retirement benefits.
·
Establishes a DROP participation account within the system
on behalf of each DROP participant.
·
Requires that all accrued benefits be accounted for in the
DROP participation account.
·
States that a member does not have a claim on the member’s
DROP assets during the DROP period, and that assets cannot be held separately
from the fund assets for a DROP participant.
·
States
that all amounts credited to a member's DROP participation account are fully
vested.
·
Requires
a member's DROP participation account to be credited with the following:
1) An amount that is
computed in the same manner as a normal retirement. This amount shall be increased annually if applicable.
2) Interest in an amount equal to the assumed rate of return of the fund.
·
Prohibits
members from receiving retirement benefits during the DROP participation
period.
·
States
that beginning on the date the member elects to participate in DROP, employee
and employer contributions for that member stop.
·
Allows
a DROP member who becomes disabled during the period of DROP participation to
apply for disability retirement benefits.
·
Requires
a member who elects to participate in the DROP to designate a beneficiary.
·
States
that if a member dies during the member's DROP participation, the designated
beneficiary of the member is entitled to receive all amounts in the member's
DROP participation account.
·
States
that if a beneficiary predeceases a DROP participant who dies before
designating a new beneficiary, all distributions are made to the estate of the
DROP participant.
· Prohibits a member from making a beneficiary designation that results in a repeal of a member's community property obligations.
·
States
that upon termination of DROP participation and employment, a member is
entitled to receive both of the following:
1)
The
monthly retirement allowance.
2)
All
amounts credited to the member's DROP participation account on the effective
date of termination.
·
Allows
the member to choose to transfer a lump sum distribution to an IRA or other
eligible retirement plan.
· Allows the board or fund manager to adopt rules for the DROP to comply with federal law.
· Provides a repeal date of DROP June 30, 2006.
· Allows a member who is participating in DROP before July 1, 2006 to continue to participate until the member's effective date of termination, even after the repeal of DROP.
The strike-everything amendment to SB 1328 passed the Government Reform committee with no further changes.
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44th Legislature Analyst Initials _______
Second Regular Session March 14, 2000
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