Senate File 2073 - Introduced SENATE FILE 2073 BY DAWSON A BILL FOR An Act concerning special service members of the Iowa public 1 employees’ retirement system by establishing a deferred 2 retirement option plan and including public safety 3 telecommunicators in the protection occupation category. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5545XS (6) 87 ec/rn
S.F. 2073 Section 1. Section 97B.49B, subsection 1, paragraph e, Code 1 2018, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (17) A person employed by an employer 3 under this chapter as a public safety telecommunicator who is 4 not a member of the retirement system established in chapter 5 97A or 411. 6 Sec. 2. NEW SECTION . 97B.50B Deferred retirement option 7 plan for special service members. 8 1. For purposes of this section, unless the context 9 otherwise requires: 10 a. “Applicable percentage” means that percentage, not 11 greater than one hundred percentage points, equal to fifty-two 12 percentage points plus two percentage points for each month for 13 the period between the eligible member’s plan eligibility month 14 and the month the eligible member commences membership in the 15 plan. 16 b. “Drop benefit” means, for a participant, an amount 17 credited to the participant’s account each applicable month 18 equal to the member’s applicable percentage multiplied by the 19 member’s participant retirement amount. 20 c. “Eligible member” means a member, as defined in section 21 97B.50A, who has attained fifty-five years of age with at least 22 twenty-two years of membership service. 23 d. “Participant account” means an administrative record 24 maintained by the system reflecting the participant’s 25 accumulated drop benefit. 26 e. “Participant retirement amount” means the amount equal to 27 the monthly retirement allowance the eligible member would have 28 received under section 97B.49B or 97B.49C, as applicable, if 29 the member retired on the date the eligible member commenced 30 participation in the plan, based on earnings through the 31 previous full quarter of covered wages earned by the member. 32 f. “Plan” means the deferred retirement option plan 33 established by this section. 34 g. “Plan eligibility month” means the first full calendar 35 -1- LSB 5545XS (6) 87 ec/rn 1/ 5
S.F. 2073 month in which the participant is an eligible member. 1 2. a. An eligible member may elect to participate in the 2 deferred retirement option plan as provided in this section. 3 A decision by an eligible member to participate in the plan 4 is irrevocable. Upon commencing membership in the plan, the 5 member shall remain an active member of the system and shall 6 have credited to a participant account on behalf of the member 7 from the retirement fund for each month the member participates 8 in the plan the member’s drop benefit. The amounts credited 9 shall be invested by the system in risk-free assets of a 10 short-term nature and interest and earnings shall not be 11 credited to the member’s participant account but shall remain 12 with the retirement fund established in section 97B.7. 13 b. Upon termination of an eligible member’s participation 14 in the plan, the eligible member shall be deemed to be retired 15 under the system as of that date for purposes of the system 16 and shall begin receiving a retirement allowance equal to 17 the member’s participant retirement amount or such optional 18 retirement benefits, based upon that amount, pursuant to 19 section 97B.51. In addition, the eligible member shall receive 20 the moneys credited to the member’s participant account while 21 participating in the plan. The eligible member shall select, 22 upon written application to the system, whether to receive 23 the amount in the member’s participant account in the form 24 of a lump sum distribution or as a rollover to an eligible 25 retirement plan as defined in section 97B.53B. 26 c. If an eligible member terminates participation in the 27 plan prior to the date selected by the member upon commencing 28 membership in the plan and the termination is not due to the 29 death or disability of the member under this chapter, then 30 the system shall assess a twenty-five percent penalty on the 31 amount credited to the member’s participant account prior to 32 distributing the amount to the member. The penalty amount 33 shall be transferred to and remain with the retirement fund. 34 3. To participate in the plan, an eligible member shall 35 -2- LSB 5545XS (6) 87 ec/rn 2/ 5
S.F. 2073 make written application to the system. The application shall 1 include the following: 2 a. The month the eligible member intends to commence 3 participation in the plan. 4 b. The eligible member’s selection of a plan termination 5 date. The plan termination date shall be either three, 6 four, or five years after the date the eligible member 7 commences membership in the plan. However, for the two-year 8 period beginning with the first of the month following the 9 implementation date of this section, an eligible member between 10 sixty-two and sixty-four years of age may also select a plan 11 termination date that is one or two years after the date the 12 eligible member commences membership in the plan. 13 4. Participation in the plan by an eligible member does not 14 guarantee continued employment. Contributions required from 15 members and participating cities shall continue based on the 16 earnable compensation of an eligible member participating in 17 the plan. However, contributions made while an eligible member 18 participates in the plan shall remain with the retirement fund 19 and shall not be subject to a refund of contributions under 20 section 97B.53. 21 5. The system’s actuary, while making the annual valuation 22 of the assets and liabilities of the retirement system, shall 23 determine whether establishment and operation of the plan 24 created in this section has resulted in an increased actuarial 25 cost to the system. If the actuary determines that the plan 26 has resulted in an increased actuarial cost to the system, 27 then, notwithstanding any provision of section 97B.11 to the 28 contrary, the system shall increase the members’ contribution 29 rate as necessary to cover the increased cost of the plan 30 created in this section. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill concerns special services members of the Iowa 35 -3- LSB 5545XS (6) 87 ec/rn 3/ 5
S.F. 2073 public employees’ retirement system (IPERS) created in Code 1 chapter 97B. 2 Code section 97B.49B is amended to provide that persons 3 employed as a public safety telecommunicator that are not 4 otherwise a member of the retirement system in Code chapter 97A 5 or 411 are included within the protection occupation category 6 of IPERS. 7 New Code section 97B.50B establishes a deferred retirement 8 option plan (DROP) for special service members of IPERS. 9 The new Code section provides that special service members 10 of IPERS who are at least 55 years of age and have at least 11 22 years of service are eligible to participate in the DROP 12 plan. The DROP plan provides that an eligible member can delay 13 retirement, continue working for a set number of additional 14 years, and have a portion of the retirement allowance they 15 otherwise would have received if they had retired instead of 16 participating in the DROP plan deposited in an account that is 17 then distributed to them when they eventually retire. However, 18 the member’s retirement allowance is set at the time the member 19 enters the DROP plan. 20 Prior to participating in the DROP plan, a member shall 21 submit an application to the system indicating when they intend 22 to start participation in the DROP plan and when they intend 23 to terminate their participation in the plan and retire. The 24 bill permits an eligible member to elect to participate in the 25 DROP plan for three, four, or five years. However, for the 26 two-year period beginning on the implementation date of this 27 Code section, an eligible member between the ages of 62 and 64 28 can elect to participate in the DROP plan and terminate their 29 participation in one or two years. 30 Upon electing to participate in the DROP plan, the eligible 31 member continues to work but has a portion of the retirement 32 allowance they would have received if they had decided to 33 retire credited to an account. The amount credited is equal 34 to a percentage of the retirement allowance they would have 35 -4- LSB 5545XS (6) 87 ec/rn 4/ 5
S.F. 2073 received. The percentage rate is determined by starting with 1 52 percent and adding 2 percent per month, up to a maximum of 2 100 percent, based upon the number of months between the month 3 the member first became eligible to participate in the DROP 4 plan and the month the member actually participates. The bill 5 provides that the amount deposited in the member’s account does 6 not accrue interest or dividends. Upon termination from the 7 DROP plan, the eligible member begins to receive a retirement 8 allowance based upon the amount the member would have received 9 when the member commenced participation in the DROP plan plus 10 the amount in the member’s account. If the member terminates 11 participation in the plan prior to the date set by the member 12 and the termination is not due to the member’s death or 13 disability, IPERS shall withhold 25 percent of the amount in 14 the account as a penalty. The bill provides that participation 15 in the DROP plan does not guarantee continued employment. 16 The new Code section also provides that if the IPERS actuary 17 determines that the DROP plan has increased the actuarial cost 18 of the system, the contribution rate paid by special service 19 members shall be increased to cover this increased cost. 20 -5- LSB 5545XS (6) 87 ec/rn 5/ 5