SUMMARY OF PLAN MODIFICATIONS ASSOCIATED WITH SENATE BILL 1609
The 50th Legislature – First Regular Session adjourned April 20, 2011. Senate Bills 1317 and 1609 were signed into law. Following is a summary of statutory changes to Corrections Officer Retirement Plan.
CORP
Existing Members
• Maintain high 3 FAC (Final Average Compensation)
• Maintain refund provision which includes employer match of contributions at percentage tied to
years of service
• Maintain normal retirement requirements (20 years or 25 years for a dispatcher; 62 years if age
with 10 years of service; sum of age and years of service equals 80)
• Contribution rates for members:
1. Through June 30, 2011, 8.41% of salary, except dispatchers 7.96%
2. For fiscal year 2011-2012 and each fiscal year thereafter, 8.41%, except dispatchers
7.96%, OR a 50/50 split of the actuarial required contribution between employer/
employee, whichever is less, with a floor of 7.65% for employees and 6% for
employers. Member contribution rate increases retro to July 1, 2011. Additional
member contributions do not reduce the employer contribution because there is a
“maintenance of effort” provision.
• Alternate contribution rate (ACR) is required from the employer for any member who retires
and returns to work in a position normally covered by the plan from which the member
retired. The ARC is set annually by the actuary and is that portion of the total actuarial required
contribution that is allocated to the amortization of the unfunded actuarial accrued liability
(UAAL), with a minimum rate of 6%.
• Dispatcher contribution rate is .45% less than the non-dispatcher rate until the CORP is 100%
funded then rates are equal thereafter
• After the effective date of the bill, a member must have 10 years of service to redeem up to 5 years
of prior public and up to 5 years of prior military service.
• From and after 12/31/2015, legislature may enact permanent one-time benefit increases
• Effective July 1, 2013 and thereafter, benefit increases for retirees and survivors will be based on
the following:
1. If the ratio of the actuarial value of assets to liabilities is 60-64% AND the total return is
more than 10.5% for the prior fiscal year, 2% maximum increase for all eligible retirees
and survivors
2. If the ratio of the actuarial value of assets to liabilities is 65-69% AND the total return is more than 10.5% for the prior fiscal year, 2.5% maximum increase for all eligible
retirees and survivors
3. If the ratio of the actuarial value of assets to liabilities is 70-74% AND the total return is
more than 10.5% for the prior fiscal year, 3% maximum increase for all eligible retirees
and survivors
4. If the ratio of the actuarial value of assets to liabilities is 75-79% AND the total return
is more than 10.5% for the prior fiscal year, 3.5% maximum increase for all eligible
retirees and survivors
5. If the ratio of the actuarial value of assets to liabilities is 80% or more AND the total return is more than 10.5% for the prior fiscal year, 4% maximum increase for all eligible retirees and survivors
Effective July 1, 2013 and thereafter, a COLA is available only if the fund earns more than 10.5% for the prior fiscal year. The portion of the return in excess of 10.5% is used to cover the actuarial present value of the percentage increase in benefits for all those eligible to receive it. If the excess return is insufficient to support the percentage increase as set forth above, then the increase will be limited to that percentage that can be supported by the excess return available. Any excess return that is not needed to support the maximum percentage benefit increase in any year is allocated to the Plan’s assets. There is no longer any “Reserve” for future benefit increases. This new benefit adjustment mechanism will not apply until all the assets remaining in the existing Plan Reserve are exhausted.
Effective May 31, 2011, NO EXCESS INVESTMENT EARNINGS SHALL BE TRANSFERRED TO THE PLAN RESERVE (the “COLA ACCOUNT”).
• A member who received a refund and is subsequently re-employed by an employer or a member who redeems prior service is subject to the terms of the plan in effect at the time of the most recent re-employment. However, a member that transfers service from one employer to another employer retains the terms of the Plan in effect from the previous employment
NEW HIRES ON OR AFTER JANUARY 1, 2012
• High 5 FAC (Final Average Compensation)
• If a member terminates employment for any reason other than death or retirement, the member
can withdraw his/her accumulated contributions less any benefit payments already received
or any amount the member owes the Plan (but no employer match of refund contributions) plus
interest at a rate determined by the PSPRS Board
• 25 years of service AND age 52.5
• Member contribution rate is the same as that for existing members
• 25 years of service: Receive a monthly amount that equals 62.5% of the member’s average
monthly benefit compensation; but if less than 25 years of “credited” service, reduced 4% for each
credited year under 25 yrs. If a member has more than 25 years of service, the monthly amount
increases by 2.5% of the average monthly benefit multiplied by number of years over 25 with a
maximum benefit amount equal to 80% of the average monthly compensation
• In the case of a member who became a member on or after January 1, 2012, post-retirement
adjustments in benefits will be the same as outlined above except that the member:
1. Must be 55 years of age or older on July 1 and receiving benefits
2. If under 55 years of age on July 1, the member must have been receiving an accidental
disability benefit for the two preceding years
3. In the case of a survivor who is under 55 years of age on July 1 and who is the survivor of
a member who became a member on or after January 1, 2012 and who was thereafter
“killed in the line of duty,” the survivor must have been receiving survivor benefits for the
two preceding years
• 25 years of service at age 52.5 or 62 years of age with 10 years of service
• Contribution rates same as existing members
|