SB0303

SENATE BILL 303

50th legislature - STATE OF NEW MEXICO - first session, 2011

INTRODUCED BY

Cynthia Nava

AN ACT

RELATING TO PUBLIC EMPLOYEES RETIREMENT; AMENDING THE PUBLIC EMPLOYEES RETIREMENT ACT AND THE EDUCATIONAL RETIREMENT ACT TO PROVIDE THAT, FOR MEMBERS BEGINNING EMPLOYMENT AFTER DECEMBER 31, 2013, CERTAIN STATE MEMBERS UNDER THE PUBLIC EMPLOYEES RETIREMENT ACT AND THE MEMBERS UNDER THE EDUCATIONAL RETIREMENT ACT SHALL HAVE IDENTICAL RETIREMENT ELIGIBILITY REQUIREMENTS, IDENTICAL CONTRIBUTION RATES, IDENTICAL COST-OF-LIVING ADJUSTMENTS AND IDENTICAL METHODS FOR CALCULATING FINAL AVERAGE SALARIES; REQUIRING EACH RETIREMENT BOARD TO CONDUCT ACTUARIAL STUDIES TO DETERMINE RETIREMENT BENEFITS FOR THOSE NEW EMPLOYEES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 10-11-14.6 NMSA 1978 (being Laws 2009, Chapter 288, Section 12) is amended to read:

"10-11-14.6. CALCULATION OF FINAL AVERAGE SALARY.--

A. Except as provided in Subsection B of this section, under each coverage plan of the Public Employees Retirement Act, the final average salary is one thirty-sixth of the greatest aggregate amount of salary paid a member for thirty-six consecutive but not necessarily continuous months of service credit.

B. For a member under state general member coverage plan 3 who was not a retired member or a member on December 31, 2013, the final average salary is one forty-eighth of the greatest aggregate amount of salary paid a member for forty-eight consecutive but not necessarily continuous months of service."

SECTION 2. Section 10-11-26.3 NMSA 1978 (being Laws 1994, Chapter 128, Section 4) is amended to read:

"10-11-26.3. STATE GENERAL MEMBER COVERAGE PLAN 3--AMOUNT OF PENSION--FORM OF PAYMENT A.--

A. Under state general member coverage plan 3:

(1) except as provided in Paragraph (2) of this subsection, the amount of pension under form of payment A is equal to three percent of final average salary multiplied by service credit; and

(2) for a member who was not a retired member or a member on December 31, 2013, the amount of pension shall be determined by act of the legislature after receiving the actuarial study required by Section 10-11-26.8 NMSA 1978.

B. The amount shall not exceed eighty percent of the final average salary."

SECTION 3. Section 10-11-26.5 NMSA 1978 (being Laws 1994, Chapter 128, Section 6, as amended) is amended to read:

"10-11-26.5. STATE GENERAL MEMBER COVERAGE PLAN 3--MEMBER CONTRIBUTION RATE.--

A. Except as provided in Subsection B of this section, a member under state general member coverage plan 3 shall contribute seven and forty-two hundredths percent of salary starting with the first full pay period that ends within the calendar month in which state general member coverage plan 3 becomes applicable to the member [except that, from July 1, 2009 through June 30, 2011, for members whose annual salary is greater than twenty thousand dollars ($20,000), the member contribution rate shall be eight and ninety-two hundredths percent of salary].

B. A member under state general member coverage plan 3 who was not a retired member or a member on December 31, 2013 shall contribute seven and sixty-six hundredths percent of salary."

SECTION 4. Section 10-11-26.6 NMSA 1978 (being Laws 1994, Chapter 128, Section 7, as amended) is amended to read:

"10-11-26.6. STATE GENERAL MEMBER COVERAGE PLAN 3--STATE CONTRIBUTION RATE.--

A. Except as provided in Subsection B of this section, the state shall contribute sixteen and fifty-nine hundredths percent of the salary of each member covered by state general member coverage plan 3 starting with the first pay period that ends within the calendar month in which state general member coverage plan 3 becomes applicable to the member [except that, from July 1, 2009 through June 30, 2011, for members whose annual salary is greater than twenty thousand dollars ($20,000), the state contribution rate shall be fifteen and nine hundredths percent of the salary of each member].

B. For a member under state general member coverage plan 3 who was not a retired member or a member on December 31, 2013, the state shall contribute fifteen and two hundred forty-five thousandths percent of salary."

SECTION 5. A new section of the Public Employees Retirement Act, Section 10-11-26.8 NMSA 1978, is enacted to read:

"10-11-26.8. [NEW MATERIAL] ACTUARIAL STUDY REQUIRED--REPORT TO LEGISLATURE.--Taking into account the appropriate retirement eligibility requirements, the state contribution rate, the employee contribution rate, the method for determining final average salary and the method for determining cost-of-living adjustments, the retirement board shall conduct an actuarial study to determine the amount of pension for members covered by state general member coverage plan 3 who will not be retired members or members on December 31, 2013. The report shall be submitted to the appropriate legislative interim committee no later than August 1, 2012 and to the legislature no later than December 1, 2012."

SECTION 6. Section 22-11-21 NMSA 1978 (being Laws 1967, Chapter 16, Section 144, as amended) is amended to read:

"22-11-21. CONTRIBUTIONS--MEMBERS--LOCAL ADMINISTRATIVE

UNITS.--

A. Except as provided in Subsection C of this section, each member shall make contributions to the fund according to the following schedule:

(1) through June 30, 2005, an amount equal to seven and six-tenths percent of the member's annual salary;

(2) from July 1, 2005 through June 30, 2006, an amount equal to seven and six hundred seventy-five thousandths percent of the member's annual salary;

(3) from July 1, 2006 through June 30, 2007, an amount equal to seven and seventy-five hundredths percent of the member's annual salary;

(4) from July 1, 2007 through June 30, 2008, an amount equal to seven and eight hundred twenty-five thousandths percent of the member's annual salary; and

(5) on and after July 1, 2008:

(a) except as provided in Subparagraph (b) of this paragraph, an amount equal to seven and nine-tenths percent of the member's annual salary [except that from July 1, 2009 through June 30, 2011, for members whose annual salary is greater than twenty thousand dollars ($20,000), the member contribution rate shall be nine and four-tenths percent of the member's annual salary]; or

(b) for a member who was not a retired member or a member on December 31, 2013, an amount equal to seven and sixty-six hundredths percent of the member's annual salary.

B. Except as provided in Subsection C of this section, each local administrative unit shall make an annual contribution to the fund according to the following schedule:

(1) through June 30, 2005, a sum equal to eight and sixty-five hundredths percent of the annual salary of each member employed by the local administrative unit;

(2) from July 1, 2005 through June 30, 2006, a sum equal to nine and forty-hundredths percent of the annual salary of each member employed by the local administrative unit;

(3) from July 1, 2006 through June 30, 2007, a sum equal to ten and fifteen-hundredths percent of the annual salary of each member employed by the local administrative unit;

(4) from July 1, 2007 through June 30, 2008, a sum equal to ten and ninety-hundredths percent of the annual salary of each member employed by the local administrative unit;

(5) from July 1, 2008 through June 30, 2009, a sum equal to eleven and sixty-five hundredths percent of the annual salary of each member employed by the local administrative unit;

(6) from July 1, 2009 through June 30, 2011, a sum equal to ten and nine-tenths percent of the annual salary of each member employed by the local administrative unit, except that for members whose annual salary is twenty thousand dollars ($20,000) or less, the local administrative unit shall contribute twelve and four-tenths percent of the member's annual salary;

(7) from July 1, 2011 through June 30, 2012, a sum equal to thirteen and fifteen-hundredths percent of the annual salary of each member employed by the local administrative unit; and

(8) on and after July 1, 2012:

(a) except as provided in Subparagraph (b) of this paragraph, a sum equal to thirteen and nine-tenths percent of the annual salary of each member employed by the local administrative unit; or

(b) for members who were not retired members or members on December 31, 2013, a sum equal to fifteen and two hundred forty-five thousandths percent of the annual salary of each member employed by the local administrative unit.

C. If, in a calendar year, the salary of a member, initially employed by a local administrative unit on or after July 1, 1996, equals the annual compensation limit set pursuant to Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, then:

(1) for the remainder of that calendar year, no additional member contributions or local administrative unit contributions for that member shall be made pursuant to this section; provided that no member shall be denied service credit solely because contributions are not made by the member or on behalf of the member pursuant to the provisions of this subsection; and

(2) the amount of the annual compensation limit shall be divided into four equal portions, and, for purposes of attributing contributory employment and crediting service credit, each portion shall be attributable to one of the four quarters of the calendar year."

SECTION 7. Section 22-11-23.1 NMSA 1978 (being Laws 2009, Chapter 286, Section 2 and Laws 2009, Chapter 288, Section 15) is amended to read:

"22-11-23.1. RETIREMENT ELIGIBILITY--INITIAL MEMBERSHIP ON OR AFTER JULY 1, 2010.--

A. A member who initially became a member on or after July 1, 2010 or a member who was a member at any time prior to that date and had, before that date, been refunded all member contributions pursuant to Subsection A of Section 22-11-15 NMSA 1978, shall be eligible for retirement benefits pursuant to the Educational Retirement Act when one of the following conditions occurs:

(1) the member is any age and has thirty or more years of earned service credit;

(2) the member is at least sixty-seven years of age and has five or more years of earned service credit; or

(3) the sum of the member's age and years of earned service credit equals at least eighty; provided that a member who was a retired member or a member on December 31, 2013 and who retires pursuant to this paragraph shall be subject to the benefit reductions provided in Paragraphs (1) and (2) of Subsection H of Section 22-11-30 NMSA 1978.

B. A member shall be subject to the provisions of this section as they existed at the beginning of the member's last cumulated four quarters of earned service credit, regardless of later amendment."

SECTION 8. Section 22-11-30 NMSA 1978 (being Laws 1967, Chapter 16, Section 153, as amended by Laws 2009, Chapter 286, Section 3 and by Laws 2009, Chapter 288, Section 17) is amended to read:

"22-11-30. RETIREMENT BENEFITS.--

A. Retirement benefits for a member retired pursuant to the Educational Retirement Act on or before June 30, 1967 shall be paid monthly and shall be one-twelfth of a sum equal to one and one-half percent of the first four thousand dollars ($4,000) of the member's average annual salary and one percent of the remainder of the member's average annual salary multiplied by the number of years of the member's total service credit.

B. Retirement benefits for a member retired pursuant to the Educational Retirement Act on or after July 1, 1967 but on or before June 30, 1971 shall be paid monthly and shall be one-twelfth of a sum equal to one and one-half percent of the first six thousand six hundred dollars ($6,600) of the member's average annual salary and one percent of the remainder of the member's average annual salary multiplied by the number of years of the member's total service credit.

C. Retirement benefits for a member retired pursuant to the Educational Retirement Act on or after July 1, 1971 but on or before June 30, 1974 shall be paid monthly and shall be one-twelfth of a sum equal to one and one-half percent of the member's average annual salary multiplied by the number of years of the member's total service credit.

D. Retirement benefits for a member retired pursuant to the Educational Retirement Act on or before June 30, 1974 but returning to employment on or after July 1, 1974 for a cumulation of one or more years shall be computed pursuant to Subsection E of this section. Retirement benefits for a member retired pursuant to the Educational Retirement Act on or before June 30, 1974 but returning to employment on or after July 1, 1974 for a cumulation of less than one year shall be computed pursuant to Subsection A of this section if the member's date of last retirement was on or before June 30, 1967 or pursuant to Subsection B of this section if the member's date of last retirement was on or after July 1, 1967 but not later than June 30, 1971 or pursuant to Subsection C of this section if the member's date of last retirement was on or after July 1, 1971 but not later than June 30, 1974.

E. Retirement benefits for a member age sixty or over, retired pursuant to the Educational Retirement Act on or after July 1, 1974 but not later than June 30, 1987, shall be paid monthly and shall be one-twelfth of a sum equal to:

(1) one and one-half percent of the member's average annual salary multiplied by the number of years of service credit for:

(a) prior employment; and

(b) allowed service credit for service performed prior to July 1, 1957, except United States military service credit purchased pursuant to Paragraph (3) of Subsection A of Section 22-11-34 NMSA 1978; plus

(2) two percent of the member's average annual salary multiplied by the number of years of service credit for:

(a) contributory employment;

(b) allowed service credit for service performed after July 1, 1957; and

(c) United States military service credit for service performed prior to July 1, 1957 and purchased pursuant to Paragraph (3) of Subsection A of Section 22-11-34 NMSA 1978.

F. Retirement benefits for a member age sixty or over, retired pursuant to the Educational Retirement Act on or after July 1, 1987 but not later than June 30, 1991, shall be paid monthly and shall be one-twelfth of a sum equal to two and fifteen hundredths percent of the member's average annual salary multiplied by the number of years of the member's total service credit; provided that this subsection shall not apply to any member who was retired in any of the four quarters ending on June 30, 1987 without having accumulated not less than 1.0 years earned service credit after June 30, 1987.

G. Retirement benefits for a member age sixty or over, retired pursuant to Section 22-11-23 NMSA 1978 on or after July 1, 1991, shall be paid monthly and shall be one-twelfth of a sum equal to two and thirty-five hundredths percent of the member's average annual salary multiplied by the number of years of the member's total service credit; provided that this subsection shall not apply to any member who was retired in any of the four consecutive quarters ending on June 30, 1991 without having accumulated at least one year earned service credit beginning on or after July 1, 1991.

H. Except as provided in Subsection I of this section, retirement benefits for a member, retired pursuant to Section 22-11-23.1 NMSA 1978, shall be paid monthly and shall be one-twelfth of a sum equal to two and thirty-five hundredths percent of the member's average annual salary multiplied by the number of years of the member's total service credit; provided that the benefit for a member retiring pursuant to Paragraph (3) of Subsection A of Section 22-11-23.1 NMSA 1978 shall be reduced by:

(1) six-tenths of one percent for each one-fourth, or portion thereof, year that retirement occurs prior to the member's sixty-fifth birthday but after the sixtieth birthday; and

(2) one and eight-tenths percent for each one-fourth, or portion thereof, year that retirement occurs prior to the member's sixtieth birthday.

I. Retirement benefits for a member, retired pursuant to Section 22-11-23.1 NMSA 1978, who was not a retired member or a member on December 31, 2013 shall be as determined by act of the legislature after receiving the actuarial study required by Section 22-11-30.2 NMSA 1978.

[I.] J. Except as provided in Subsection K of this section, a member's average annual salary, pursuant to this section, shall be computed on the basis of the last five years for which contribution was made or upon the basis of any consecutive five years for which contribution was made by the member, whichever is higher; provided, however, that lump-sum payments made after July 1, 2010 of accrued sick leave or annual leave shall be excluded from the calculation of salary.

K. The average annual salary for a member who was not a retired member or a member on December 31, 2013 is the greatest aggregate amount of salary paid a member for four consecutive years; provided that lump-sum payments of accrued sick leave or annual leave shall be excluded from the calculation of salary.

[J.] L. Unless otherwise required by the provisions of the Internal Revenue Code of 1986, members shall begin receiving retirement benefits by age seventy and six months, or upon termination of employment, whichever occurs later."

SECTION 9. A new section of the Educational Retirement Act, Section 22-11-30.2 NMSA 1978, is enacted to read:

"22-11-30.2. [NEW MATERIAL] ACTUARIAL STUDY REQUIRED--REPORT TO LEGISLATURE.--Taking into account the appropriate retirement eligibility requirements, the local administrative unit contribution rate, the member contribution rate, the method for determining final average salary and the method for determining cost-of-living adjustments, the board shall conduct an actuarial study to determine the annuity amount for members covered who will not be retired members or members on December 31, 2013. The report shall be submitted to the appropriate legislative interim committee no later than August 1, 2012 and to the legislature no later than December 1, 2012."

SECTION 10. Section 22-11-31 NMSA 1978 (being Laws 1979, Chapter 333, Section 2, as amended) is amended to read:

"22-11-31. COST-OF-LIVING ADJUSTMENT--ADDITIONAL CONTRIBUTIONS.--

A. For the purposes of this section:

(1) "adjustment factor" means a multiplicative factor computed to provide an annuity adjustment pursuant to the provisions of Subsection B of this section;

(2) "annuity" means any benefit payable under the Educational Retirement Act or the Public Employees Retirement Reciprocity Act as a retirement benefit, disability benefit or survivor benefit;

(3) "calendar year" means the full twelve months beginning January 1 and ending December 31;

(4) "consumer price index" means the average of the monthly consumer price indexes for a calendar year for the entire United States for all items as published by the United States department of labor;

(5) "next preceding calendar year" means the full calendar year immediately prior to the preceding calendar year; and

(6) "preceding calendar year" means the full calendar year preceding the July 1 on which a benefit is to be adjusted.

B. On or after July 1, 1984, each annuity shall be adjusted annually and cumulatively commencing on July 1 of the year in which a member attains the age of sixty-five or on July 1 following the year a member retires, whichever is later. The annuity shall be adjusted by applying an adjustment factor that results in an adjustment equal to one-half of the percentage increase of the consumer price index between the next preceding calendar year and the preceding calendar year, except that the adjustment shall not exceed four percent, in absolute value, nor be less than two percent, in absolute value. In the event that the percentage increase of the consumer price index is less than two percent, in absolute value, the adjustment factor shall be the same as the percentage increase of the consumer price index. Annuities shall not be decreased in the event that there is a decrease in the consumer price index between the next preceding calendar year and the preceding calendar year.

C. A retired member whose benefit is subject to adjustment under the provisions of the Educational Retirement Act in effect prior to July 1, 1984 shall have the member's annuity readjusted annually and cumulatively under the provisions of that act in effect prior to July 1, 1984 until July 1 of the year in which the member attains the age of sixty-five, when the member shall have the annuity readjusted annually and cumulatively under the provisions of this section. A member who retires after attaining the age of sixty-five shall have the member's annuity adjusted annually and cumulatively commencing on July 1 of the year following the member's retirement.

D. A retired member who returns to work shall be subject to the provisions of this section as they exist at the time of the member's final retirement.

E. Benefits of a member who is on a disability status in accordance with Section 22-11-35 NMSA 1978 or a member who the board certifies was disabled at regular retirement shall be adjusted in accordance with Subsections B and C of this section, except that the benefits shall be adjusted annually and cumulatively commencing on July 1 of the third full year following the year in which the member was approved by the board for disability or retirement.

F. The board shall adjust the benefits of each person receiving an annuity as of June 30, 1999. The adjustment shall be made on July 1, 1999 on the basis of an increase of two dollars ($2.00) per month for each year since the member's last retirement plus an increase of one dollar ($1.00) per month for each year of credited service at the time of the last retirement.

G. The provisions of this section do not apply to members who were not retired members or members on December 31, 2013. The cost-of-living adjustment for those members shall be determined pursuant to Section 22-11-31.1 NMSA 1978."

SECTION 11. A new section of the Educational Retirement Act, Section 22-11-31.1 NMSA 1978, is enacted to read:

"22-11-31.1. [NEW MATERIAL] COST-OF-LIVING ADJUSTMENT FOR NEW MEMBERS.--

A. The amount of annuity payable to a qualified annuity recipient shall be increased three percent each July 1. The amount of the increase shall be determined by multiplying the amount of annuity inclusive of all prior adjustments by three percent.

B. A qualified annuity recipient is:

(1) a normal retired member who has been retired for at least two full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the annuity is being adjusted;

(2) a normal retired member who has attained age sixty-five years and been retired for at least one full calendar year from the effective date of the latest retirement prior to July 1 of the year in which the annuity is being adjusted;

(3) a disability retired member who has been retired for at least one full calendar year from the effective date of the latest retirement prior to July 1 of the year in which the annuity is being adjusted;

(4) a survivor beneficiary who has received a survivor annuity for at least two full calendar years; or

(5) a survivor beneficiary of a deceased retired member who otherwise would have been retired at least two full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the annuity is being adjusted.

C. A qualified annuity recipient may decline an increase in an annuity by giving the association written notice of the decision to decline the increase at least thirty days prior to the date the increase would take effect."

SECTION 12. EFFECTIVE DATES.--

A. The effective date of the provisions of Sections 5 and 9 of this act is July 1, 2011.

B. The effective date of the provisions of Sections 1 through 4, 6 through 8, 10 and 11 of this act is January 1, 2014.

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