0001| HOUSE BILL 191 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| KIP W. NICELY | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| RELATING TO PUBLIC EMPLOYEE RETIREMENT; PROVIDING A PORTABLE | 0012| RETIREMENT OPTION (PRO) FOR MEMBERS OF THE PUBLIC EMPLOYEES | 0013| RETIREMENT ASSOCIATION. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. A new section of the Public Employees | 0017| Retirement Act is enacted to read: | 0018| "[NEW MATERIAL] PORTABLE RETIREMENT PLAN--OPTION.-- | 0019| A. At any time not later than December 31, 1999 or | 0020| six months after initial employment with an affiliated public | 0021| employer, whichever is later, a member may elect to be placed | 0022| under a portable retirement plan in lieu of the coverage plan | 0023| that would otherwise be applicable. | 0024| B. Any election made pursuant to this section | 0025| shall be in writing on forms prescribed by the retirement | - 1 - 0001| board and shall be filed with the executive director. | 0002| C. Once an election is made pursuant to this | 0003| section, except as provided in Subsection E of this section, | 0004| the amount of all pensions and other benefits obtained | 0005| pursuant to the Public Employees Retirement Act shall be | 0006| determined exclusively by those provisions of that act | 0007| relating to portable retirement plans. | 0008| D. An election made pursuant to this section is | 0009| irrevocable. Except as provided in Subsection E of this | 0010| section, the rights and benefits of a member, who at any time | 0011| has made an election pursuant to this section, shall be only | 0012| those available pursuant to those provisions of the Public | 0013| Employees Retirement Act relating to portable retirement | 0014| plans. | 0015| E. Nothing in this section or other provisions of | 0016| the Public Employees Retirement Act prevents a member who has | 0017| elected to be placed under a portable retirement plan from | 0018| participating in a group health insurance plan under Section | 0019| 10-11-121 NMSA 1978 or under the provisions of the Retiree | 0020| Health Care Act." | 0021| Section 2. A new section of the Public Employees | 0022| Retirement Act is enacted to read: | 0023| "[NEW MATERIAL] PORTABLE RETIREMENT PLAN FUND.-- | 0024| A. The portable retirement plan fund is the | 0025| accounting fund for individual portable retirement plan | - 2 - 0001| accounts. Each portable retirement account shall be invested | 0002| as directed by the member in whose name the account is held. | 0003| B. The portable retirement plan fund is a trust | 0004| fund of which the retirement board is trustee. Members of the | 0005| retirement board jointly and individually shall be indemnified | 0006| from the fund by the state from all claims, demands, suits, | 0007| actions, damages, judgments, costs, charges and expenses, | 0008| including court costs and attorney fees, and against all | 0009| liability losses and damages of any nature that members | 0010| sustain by reason of any decision made in the performance of | 0011| their duties pursuant to the state retirement system acts. | 0012| The retirement board may invest the portability retirement | 0013| plan fund only as provided in Subsection A of this section." | 0014| Section 3. A new section of the Public Employees | 0015| Retirement Act is enacted to read: | 0016| "[NEW MATERIAL] PORTABLE RETIREMENT PLAN ACCOUNTS.-- | 0017| A. The retirement board shall maintain an | 0018| individual portable retirement plan account within the | 0019| portable retirement plan fund for each member who has elected | 0020| to be placed under a portable retirement plan. A member's | 0021| individual portable retirement plan account includes the | 0022| amounts transferred to the account pursuant to this section | 0023| and any gain or loss from the investment of the account, less | 0024| any deductions taken from the account for administrative | 0025| expenses. | - 3 - 0001| B. Upon the election of a member to be placed | 0002| under a portable retirement plan, the following amounts shall | 0003| be transferred to the member's individual portable retirement | 0004| plan account: | 0005| (1) an amount from the member contribution | 0006| fund equal to the member's individual account; | 0007| (2) an amount from the employer's | 0008| accumulation fund equal to the total contributions made on | 0009| behalf of the member by affiliated public employers; provided | 0010| that if the amount to be transferred pursuant to this | 0011| paragraph plus the amount to be transferred pursuant to | 0012| Paragraph (1) of this subsection would exceed the limitation | 0013| contained in Section 415(c) of the Internal Revenue Code of | 0014| 1986, as amended, then only the amount necessary to reach that | 0015| limitation shall be transferred pursuant to this paragraph; | 0016| and | 0017| (3) an amount from the employer's | 0018| accumulation fund equal to distributions made from the income | 0019| fund and attributable to the total contributions made on | 0020| behalf of the member by affiliated public employers. | 0021| C. After the election of a member to be placed | 0022| under a portable retirement plan, the following amounts shall | 0023| be transferred to the member's individual portable retirement | 0024| plan account upon receipt from the affiliated public employer: | 0025| (1) an amount from the member contribution | - 4 - 0001| fund equal to each deduction made from the member's salary and | 0002| remitted to the member contribution fund by the affiliated | 0003| public employer; and | 0004| (2) an amount from the employer's | 0005| accumulation fund equal to each contribution made to the | 0006| employer's accumulation fund on behalf of the member by | 0007| affiliated public employers; provided that if the amount to be | 0008| transferred pursuant to this paragraph plus the amount to be | 0009| transferred pursuant to Paragraph (1) of this subsection would | 0010| exceed the limitation contained in Section 415(c) of the | 0011| Internal Revenue Code of 1986, as amended, then only the | 0012| amount necessary to reach that limitation shall be transferred | 0013| pursuant to this paragraph." | 0014| Section 4. A new section of the Public Employees | 0015| Retirement Act is enacted to read: | 0016| "[NEW MATERIAL] PORTABLE RETIREMENT PLAN ACCOUNTS-- | 0017| PORTABILITY.-- | 0018| A. A member is vested in a portable retirement | 0019| plan if he has elected to be placed under a portable | 0020| retirement plan and: | 0021| (1) is employed by an affiliated public | 0022| employer on January 1, 2000 and has five or more years of | 0023| credited service; | 0024| (2) is employed by an affiliated public | 0025| employer on January 1, 2001 and has four or more years of | - 5 - 0001| credited service; | 0002| (3) is employed by an affiliated public | 0003| employer on January 1, 2002 and has three or more years of | 0004| credited service; | 0005| (4) is employed by an affiliated public | 0006| employer on January 1, 2003 and has two or more years of | 0007| credited service; or | 0008| (5) is employed by an affiliated public | 0009| employer on January 1, 2004 and has one or more years of | 0010| credited service. | 0011| B. If a member vested in a portable retirement | 0012| plan terminates employment, upon written request of the member | 0013| in a form prescribed by the retirement board, a | 0014| trustee-to-trustee transfer shall be made of the total amount | 0015| in the member's individual portable retirement plan account to | 0016| another qualified plan as allowed by the Internal Revenue Code | 0017| of 1986, as amended. | 0018| C. Upon the termination of employment by a member | 0019| who has elected to be placed under a portable retirement plan | 0020| and is not vested in the plan, the member shall receive an | 0021| amount equal to that portion of the member's individual | 0022| portable retirement plan account that is attributable to the | 0023| member contributions." | 0024| Section 5. A new section of the Public Employees | 0025| Retirement Act is enacted to read: | - 6 - 0001| "[NEW MATERIAL] PORTABLE RETIREMENT PLAN ACCOUNTS-- | 0002| INVESTMENT--EXPENSES.-- | 0003| A. The retirement board shall offer as many | 0004| investment plans and retirement options as practicable to | 0005| those members who have elected to be placed in a portable | 0006| retirement plan. For that purpose, the executive director, | 0007| with the approval of the retirement board, shall hire or | 0008| contract with a plan administrator to administer the portable | 0009| retirement plan accounts. The administrator may: | 0010| (1) contract with private pension, insurance, | 0011| annuity, mutual fund, bank, savings association or other | 0012| qualified companies or any combination of these companies to | 0013| provide investment advice or services; and | 0014| (2) purchase group annuity contracts, | 0015| individual retirement annuities, disability insurance | 0016| investment contracts, securities, mutual funds, interests in | 0017| trusts and other financial instruments, health care benefit | 0018| plans and group insurance as necessary or appropriate for the | 0019| plan to provide optimum retirement and related benefits. | 0020| B. The plan administrator shall prepare a | 0021| quarterly statement for each member's individual portable | 0022| retirement plan account. The statement shall include the | 0023| current market value of the account, including self-directed | 0024| investment options, an itemization of changes in the account | 0025| and other information required by the executive director or | - 7 - 0001| the retirement board. | 0002| C. The executive director shall transfer from the | 0003| portable retirement plan fund to the income fund an amount | 0004| necessary to pay all expenses for administering portable | 0005| retirement plans. A proportionate share of the administrative | 0006| expenses shall be deducted from each individual portable | 0007| retirement plan account." | 0008| Section 6. A new section of the Public Employees | 0009| Retirement Act is enacted to read: | 0010| "[NEW MATERIAL] PORTABLE RETIREMENT PLANS--RETIREMENT | 0011| REQUIREMENTS--CONTRIBUTION RATES.--The age and service | 0012| requirements for normal retirement, member contribution rates | 0013| and employer contribution rates for a member who has elected | 0014| to be placed under a portable retirement plan are the | 0015| requirements and rates that would otherwise be applicable if | 0016| the member had not elected to be placed under a portable | 0017| retirement plan." | 0018| Section 7. A new section of the Public Employees | 0019| Retirement Act is enacted to read: | 0020| "[NEW MATERIAL] RETIREMENT BOARD--RULES.--The | 0021| retirement board shall adopt such rules relating to portable | 0022| retirement plans as are necessary to implement and carry out | 0023| the provisions of the Public Employees Retirement Act relating | 0024| to portable retirement plans, including any rules necessary to | 0025| preserve the status of the plans as qualified pension plans | - 8 - 0001| under the provisions of the Internal Revenue Code of 1986, as | 0002| amended." | 0003| Section 8. Section 10-11-2 NMSA 1978 (being Laws 1987, | 0004| Chapter 253, Section 2, as amended) is amended to read: | 0005| "10-11-2. DEFINITIONS.--As used in the Public Employees | 0006| Retirement Act: | 0007| A. "accumulated member contributions" means the | 0008| amounts deducted from the salary of a member and credited to | 0009| the member's individual account, together with interest, if | 0010| any, credited to that account; | 0011| B. "affiliated public employer" means the state | 0012| and any public employer affiliated with the association as | 0013| provided in the Public Employees Retirement Act, but does not | 0014| include an employer pursuant to the Magistrate Retirement Act, | 0015| the Judicial Retirement Act or the Educational Retirement Act; | 0016| C. "association" means the public employees | 0017| retirement association established under the Public Employees | 0018| Retirement Act; | 0019| D. "disability retired member" means a retired | 0020| member who is receiving a pension pursuant to the disability | 0021| retirement provisions of the Public Employees Retirement Act; | 0022| E. "disability retirement pension" means the | 0023| pension paid pursuant to the disability retirement provisions | 0024| of the Public Employees Retirement Act; | 0025| F. "educational retirement system" means that | - 9 - 0001| retirement system provided for in the Educational Retirement | 0002| Act; | 0003| G. "employee" means any employee of an affiliated | 0004| public employer; | 0005| H. "federal social security program" means that | 0006| program or those programs created and administered pursuant to | 0007| the act of congress approved August 14, 1935, Chapter 531, 49 | 0008| Stat. 620, as that act may be amended; | 0009| I. "final average salary" means the final average | 0010| salary calculated in accordance with the provisions of the | 0011| applicable coverage plan; | 0012| J. "form of payment" means the applicable form of | 0013| payment of a pension provided for in Section 10-11-117 NMSA | 0014| 1978; | 0015| K. "former member" means a person who was | 0016| previously employed by an affiliated public employer, who has | 0017| terminated that employment and who has either received a | 0018| refund of member contributions or obtained a transfer of the | 0019| amount in the member's individual portable retirement plan | 0020| account; | 0021| L. "fund" means the funds included under the | 0022| Public Employees Retirement Act; | 0023| M. "member" means a currently employed, | 0024| contributing employee of an affiliated public employer, or a | 0025| person who has been but is not currently employed by an | - 10 - 0001| affiliated public employer, who has not retired and who has | 0002| ~~[not]~~ neither received a refund of member contributions | 0003| nor obtained a transfer of the amount in the member's | 0004| individual portable retirement plan account; "member" also | 0005| includes the following: | 0006| (1) "hazardous duty member" means a state | 0007| policeman who is a member and who is a juvenile or adult | 0008| correctional officer employed by a corrections facility of the | 0009| corrections department or its successor agency; | 0010| (2) "municipal fire member" means any member | 0011| who is employed as a full-time nonvolunteer firefighter by an | 0012| affiliated public employer and who has taken the oath | 0013| prescribed for firefighters; | 0014| (3) "municipal police member" means any | 0015| member who is employed as a police officer by an affiliated | 0016| public employer, other than the state, and who has taken the | 0017| oath prescribed for police officers; and | 0018| (4) "state police member" means any member | 0019| who is an officer of the New Mexico state police and who has | 0020| taken the oath prescribed for such officers; | 0021| N. "membership" means membership in the | 0022| association; | 0023| O. "pension" means a series of monthly payments to | 0024| a retired member or survivor beneficiary as provided in the | 0025| Public Employees Retirement Act; | - 11 - 0001| P. "public employer" means the state, any | 0002| municipality, city, county, metropolitan arroyo flood control | 0003| authority, economic development district, regional housing | 0004| authority, soil and water conservation district, entity | 0005| created pursuant to a joint powers agreement, council of | 0006| government, conservancy district, water and sanitation | 0007| district, water district and metropolitan water board, | 0008| including the boards, departments, bureaus and agencies of a | 0009| public employer, so long as these entities fall within the | 0010| meaning of governmental plan as that term is used in Section | 0011| 414(d) of the Internal Revenue Code of 1986, as amended; | 0012| Q. "refund beneficiary" means a person designated | 0013| by the member, in writing, in the form prescribed by the | 0014| association, as the person who would be refunded the member's | 0015| accumulated member contributions payable if the member dies | 0016| and no survivor pension is payable or who would receive the | 0017| difference between pension paid and accumulated member | 0018| contributions if the retired member dies before receiving in | 0019| pension payments the amount of the accumulated member | 0020| contributions; | 0021| R. "retire" means to: | 0022| (1) terminate employment with all employers | 0023| covered by any state system or the educational retirement | 0024| system; and | 0025| (2) receive a pension from a state system or | - 12 - 0001| the educational retirement system; | 0002| S. "retired member" means a person who has met all | 0003| requirements for retirement and who is receiving a pension | 0004| from the fund; | 0005| T. "retirement board" means the retirement board | 0006| provided for in the Public Employees Retirement Act; | 0007| U. "salary" means the base salary or wages paid a | 0008| member, including longevity pay, for personal services | 0009| rendered an affiliated public employer. "Salary" shall not | 0010| include overtime pay, allowances for housing, clothing, | 0011| equipment or travel, payments for unused sick leave, unless | 0012| the unused sick leave payment is made through continuation of | 0013| the member on the regular payroll for the period represented | 0014| by that payment, and any other form of remuneration not | 0015| specifically designated by law as included in salary for | 0016| Public Employees Retirement Act purposes. Salary in excess of | 0017| the limitations set forth in Section 401(a)(17) of the | 0018| Internal Revenue Code of 1986, as amended shall be | 0019| disregarded. The limitation on compensation for eligible | 0020| employees shall not be less than the amount that was allowed | 0021| to be taken into account under the state retirement system | 0022| acts in effect on July 1, 1993. For purposes of this section, | 0023| "eligible employee" means an individual who was a member of a | 0024| state system before the first plan year beginning after | 0025| December 31, 1995; | - 13 - 0001| V. "state system" means the retirement programs | 0002| provided for in the Public Employees Retirement Act, the | 0003| Magistrate Retirement Act and the Judicial Retirement Act; | 0004| W. "state retirement system acts" means | 0005| collectively the Public Employees Retirement Act, the | 0006| Magistrate Retirement Act, the Judicial Retirement Act and the | 0007| Volunteer Firefighters Retirement Act; and | 0008| X. "survivor beneficiary" means a person who | 0009| receives a pension or who has been designated to be paid a | 0010| pension as a result of the death of a member or retired | 0011| member." | 0012| Section 9. Section 10-11-3 NMSA 1978 (being Laws 1987, | 0013| Chapter 253, Section 3, as amended) is amended to read: | 0014| "10-11-3. MEMBERSHIP--REQUIREMENTS--EXCLUSIONS-- | 0015| TERMINATION.-- | 0016| A. Except as may be provided for in the Volunteer | 0017| Firefighters Retirement Act, the Judicial Retirement Act, the | 0018| Magistrate Retirement Act, the Educational Retirement Act and | 0019| the provisions of Sections 29-4-1 through 29-4-11 NMSA 1978 | 0020| governing the state police pension fund, each employee and | 0021| elected official of every affiliated public employer shall be | 0022| a member of the association, unless excluded from membership | 0023| in accordance with Subsection B of this section. | 0024| B. The following employees and elected officials | 0025| are excluded from membership in the association: | - 14 - 0001| (1) elected officials who file with the | 0002| association a written application for exemption from | 0003| membership within thirty days of taking office; | 0004| (2) elected officials who file with the | 0005| association a written application for exemption from | 0006| membership within thirty days of the date the elected | 0007| official's public employer becomes an affiliated public | 0008| employer; | 0009| (3) employees designated by the affiliated | 0010| public employer as seasonal or student employees; | 0011| (4) employees who file with the association a | 0012| written application for exemption from membership within | 0013| thirty days of the date the employee's public employer becomes | 0014| an affiliated public employer; | 0015| (5) employees of an affiliated public | 0016| employer that is making contributions to a private retirement | 0017| program on behalf of the employee as part of a compensation | 0018| arrangement who file with the association a written | 0019| application for exemption within thirty days of employment, | 0020| unless the employee has previously retired under the | 0021| provisions of the Public Employees Retirement Act; and | 0022| (6) employees of an affiliated public | 0023| employer who have retired under and are receiving a pension | 0024| pursuant to the provisions of the Educational Retirement Act. | 0025| C. Employees designated as seasonal and student | - 15 - 0001| employees shall be notified in writing by their affiliated | 0002| public employer of the designation and the consequences of the | 0003| designation with respect to membership, service credit and | 0004| benefits. A copy of the notification shall be filed with the | 0005| association within thirty days of the date of employment. | 0006| D. An exemption from membership by an elected | 0007| official shall expire at the end of the term of office for | 0008| which filed. | 0009| E. Employees and elected officials who have | 0010| exempted themselves from membership may subsequently withdraw | 0011| the exemption by filing a membership application. Membership | 0012| shall commence the first day of the first pay period following | 0013| the date the application is filed. | 0014| F. The membership of an employee or elected | 0015| official shall cease if the employee terminates employment | 0016| with an affiliated public employer or the elected official | 0017| leaves office and the employee or elected official either | 0018| requests and receives a refund of member contributions or | 0019| requests and obtains a transfer of the amount in the | 0020| employee's or elected official's individual portable | 0021| retirement plan account." | 0022| Section 10. Section 10-11-4 NMSA 1978 (being Laws 1987, | 0023| Chapter 253, Section 4, as amended) is amended to read: | 0024| "10-11-4. SERVICE CREDIT--REQUIREMENTS FOR--FORFEITURE-- | 0025| REINSTATEMENT.-- | - 16 - 0001| A. Personal service rendered an affiliated public | 0002| employer by a member shall be credited to the member's service | 0003| credit account in accordance with retirement board rules ~~[and~~ | 0004| ~~regulations]~~. Service shall be credited to the nearest | 0005| month. In no case shall any member be credited with a year of | 0006| service for less than twelve months of service in any calendar | 0007| year or more than a month of service for all service in any | 0008| calendar month or more than a year of service for all service | 0009| in any calendar year. In no case shall any member be allowed | 0010| to purchase service credit unless the purchase is authorized | 0011| in the Public Employees Retirement Act. | 0012| B. Personal service rendered an affiliated public | 0013| employer prior to August 1, 1947 shall be credited to a member | 0014| if the member acquires one year of service credit for personal | 0015| service rendered an affiliated public employer. | 0016| C. Personal service rendered an affiliated public | 0017| employer after July 31, 1947 but prior to the date the public | 0018| employer became an affiliated public employer is prior service | 0019| and shall be credited to a member if: | 0020| (1) the member acquires five years of service | 0021| credit for personal service rendered an affiliated public | 0022| employer; and | 0023| (2) the member pays the association the | 0024| amount determined in accordance with Subsection D of this | 0025| section. | - 17 - 0001| D. The purchase cost for each month of service | 0002| credit purchased under the provisions of this section is equal | 0003| to the member's final average salary multiplied by the sum of | 0004| the member contribution rate and employer contribution rate | 0005| determined in accordance with the coverage plan applicable to | 0006| the member at the time of the written election to purchase. | 0007| Full payment shall be made in a single lump-sum amount in | 0008| accordance with the procedures established by the retirement | 0009| board. The portion of the purchase cost derived from the | 0010| employer contribution rate shall be credited to the employer | 0011| accumulation fund and shall not be refunded to the member in | 0012| the event of cessation of membership. In no case shall any | 0013| member be credited with a month of service for less than the | 0014| purchase cost as defined in this section. | 0015| E. Service credit shall be forfeited if a member | 0016| terminates employment with an affiliated public employer and | 0017| either withdraws the member's accumulated member | 0018| contributions or obtains a transfer of the amount in the | 0019| member's individual portable retirement plan account. | 0020| F. A member or former member who is a member of | 0021| another state system or the educational retirement system and | 0022| who has forfeited service credit by withdrawal of member | 0023| contributions may reinstate the forfeited service credit by | 0024| repaying the amount withdrawn plus compound interest from the | 0025| date of withdrawal to the date of repayment at the rate set by | - 18 - 0001| the retirement board. Withdrawn member contributions may be | 0002| repaid in increments of one year in accordance with the | 0003| procedures established by the retirement board. Full payment | 0004| of each one-year increment shall be made in a single lump-sum | 0005| amount in accordance with procedures established by the | 0006| retirement board." | 0007| Section 11. Section 10-11-127 NMSA 1978 (being Laws | 0008| 1987, Chapter 253, Section 127) is amended to read: | 0009| "10-11-127. RETIREMENT RESERVE FUND.--Except for | 0010| pensions or other benefits obtained pursuant to a portable | 0011| retirement plan, the retirement reserve fund is the fund from | 0012| which shall be paid all pensions to retired members and | 0013| survivor pension beneficiaries and all residual refunds to | 0014| refund beneficiaries of retired members and survivor pension | 0015| beneficiaries." | 0016| Section 12. EFFECTIVE DATE.--The effective date of the | 0017| provisions of this act is July 1, 1999. | 0018| |