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SPONSOR: |
Altamirano |
DATE TYPED: |
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HB |
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SHORT TITLE: |
Suspension of Retiree Benefits for Re-Employed |
SB |
376 |
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ANALYST: |
Gilbert |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
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$0.1
See Narrative |
Recurring |
PERA |
(Parenthesis
( ) Indicate Expenditure Decreases)
Relates to: HB 111, HB 348
LFC Files
Response
Received From
Public
Employees Retirement Association (PERA)
State
Personnel Office (SPO)
SUMMARY
Synopsis
of Bill
Senate Bill 376 amends the Public Employees
Retirement Act to allow Public Employees Retirement Association (PERA)
retirees, who wait 90 days prior to returning to work, to accept employment
with a PERA affiliated employer, without suspension of their pension
benefits. However, such retirees would
not accrue service credit for such post-retirement employment and would be
required to pay PERA employee contributions as specified in the PERA Act. In addition, public employers must remit
employer contributions as specified in the PERA Act or as adjusted for the full
actuarial cost, as determined by PERA.
Significant
Issues
Under current law, if an affiliated employer
subsequently reemploys a PERA retiree, the retiree’s pension is suspended when
post-retirement earnings reach $15.0.
According to PERA, without a determination of its actuarial impact by PERA’s actuary, SB 376 may be contrary to NM Const., Art. XX, Section 22 (no benefits may be enhanced unless the costs of those benefits are properly funded in accordance with actuarial standards).
However, the bill appears to resolve this issue with the inclusion of the following language: The affiliated public employer's contributions as specified in that act or as adjusted for full actuarial cost at the determination of the association shall be paid to the fund. Therefore, this PERA benefit change appears to be cost neutral.
According to PERA, SB
376 would result in minimal administrative impact to the Association. However, PERA would be required to amend its
regulations to address the statutory changes to the PERA Act.
RELATIONSHIP
HB 111 proposes to increase the earnings limit for PERA retirees from the current $15.0 to $25.0.
HB 348 proposes to allow a retiree to collect a pension and continue to work for a public affiliated employer without restriction if they remain unemployed for a period of 12 consecutive months after retirement.
OTHER SUBSTANTIVE ISSUES
If implemented, SB 376
could benefit public employers in two ways: they could utilize the expertise
and knowledge of PERA retirees, and potentially reduce payroll costs associated
with group insurance benefits, assuming such employees remain covered by the
Retiree Health Care Authority (RHCA).
AMMENDMENTS
On page 5, line 6, after the word “act.”, strike the last sentence in Section 1(C)(2) and replace with, “The affiliated public employer shall make contributions as specified in the act or as adjusted for the full actuarial cost as determined by the association; and
POSSIBLE QUESTIONS
Would retirees who return to work be allowed to participate in their employers’ group insurance plans, or would RHCA coverage continue?
Upon returning to work with an affiliated public employer, would retirees be allowed under law to continue receiving payments from their deferred compensation plans?
RLG/prr