HB0095

HOUSE BILL 95

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Jim R. Trujillo

ENDORSED BY THE INVESTMENTS AND PENSIONS OVERSIGHT COMMITTEE

AN ACT

RELATING TO PENSIONS; AMENDING THE JUDICIAL RETIREMENT ACT AND THE MAGISTRATE RETIREMENT ACT BY INCREASING EMPLOYER CONTRIBUTION RATES; INCREASING AGE AND SERVICE REQUIREMENTS FOR NORMAL RETIREMENT; DECREASING THE PENSION MULTIPLIER FOR SERVICE CREDIT EARNED AFTER JUNE 30, 2013; DECREASING AND DELAYING THE COST-OF-LIVING ADJUSTMENT AND INCREASING THE MAXIMUM PENSION BENEFIT; MAKING AN APPROPRIATION.

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

SECTION 1. Section 10-12B-8 NMSA 1978 (being Laws 1992, Chapter 111, Section 8, as amended) is amended to read:

"10-12B-8. AGE AND SERVICE CREDIT REQUIREMENTS FOR NORMAL RETIREMENT.--

A. For an individual who initially became a member prior to July 1, 2005, the age and service credit requirements for retirement provided for in the Judicial Retirement Act are:

(1) age [sixty-four] sixty-five years or older and five or more years of service credit; or

(2) age sixty years or older and fifteen or more years of service credit.

B. For an individual who initially became a member on or after July 1, 2005, the age and service credit requirements for retirement provided for in the Judicial Retirement Act are:

(1) age [sixty-four] sixty-five years or older and five or more years of service credit; or

(2) age [fifty-five] sixty years or older and [sixteen] fifteen or more years of service credit.

C. If a member leaves office for any reason, other than removal pursuant to Article 6, Section 32 of the constitution of New Mexico, before meeting the age and service credit requirements for retirement pursuant to the provisions of this section and if that member leaves [his] the member contributions on deposit in the fund, that member may apply for retirement when that member meets the age and service credit requirements for retirement pursuant to the provisions of the Judicial Retirement Act or provisions of the Public Employees Retirement Reciprocity Act.

D. No member shall be eligible to receive a pension pursuant to the provisions of the Judicial Retirement Act while still in office."

SECTION 2. Section 10-12B-9 NMSA 1978 (being Laws 1992, Chapter 111, Section 9, as amended) is amended to read:

"10-12B-9. AMOUNT OF PENSION.--The amount of monthly pension is equal to:

A. in the case of a former or current judge or justice, an amount equal to one-twelfth of:

seventy-five percent

of salary received X number of years of

during last year in service, not exceeding

office prior to ten years, divided

retirement by ten; B. in the case of a new judge or justice who initially became a member prior to July 1, 2005:

(1) for service credit earned on or before June 30, 2013, an amount equal to one-twelfth of:

seventy-five (number of years of

percent of salary service, not

received during X .05 X exceeding fifteen last year in office years, plus five prior to retirement years); [or] and

(2) for service credit earned on and after July 1, 2013, an amount equal to one-twelfth of the salary received during the last year in office prior to retirement multiplied by the product of three and one-half percent times the sum of the number of years of service; provided that a pension calculated pursuant to this subsection shall not exceed eighty-five percent of one-twelfth of the salary received during the last year in office; or

C. in the case of a new judge or justice who initially became a member on or after July 1, 2005:

(1) for service credit earned on or before June 30, 2013, an amount equal to one-twelfth of the salary received during the last year in office prior to retirement multiplied by the product of three and seventy-five hundredths percent times the sum of the number of years of service; provided that a pension calculated pursuant to this subsection shall not exceed seventy-five percent of one-twelfth of the salary received during the last year in office; and

SECTION 3. Section 10-12B-10 NMSA 1978 (being Laws 1992, Chapter 111, Section 10, as amended) is amended to read:

"10-12B-10. MEMBER CONTRIBUTIONS--TAX TREATMENT.--

A. On and after July 1, 2013, members, while in office, shall contribute nine percent of salary to the member contribution fund [pursuant to the following schedule:

(1) prior to July 1, 2005, five and one-half percent of salary;

(2) from July 1, 2005 through June 30, 2006, six and one-half percent of salary; and

(3) on and after July 1, 2006, seven and one-half percent of salary, except that for members whose annual salary is greater than twenty thousand dollars ($20,000):

(a) from July 1, 2009 through June 30, 2011, the member contribution rate shall be nine percent of salary;

(b) from July 1, 2011 through June 30, 2012, the member contribution rate shall be ten and three-fourths percent of salary; and

B. Upon implementation, the state, acting as employer of members covered pursuant to the provisions of the Judicial Retirement Act, shall, solely for the purpose of compliance with Section 414(h) of the Internal Revenue Code of 1986, pick up for the purposes specified in that section member contributions required by this section for all annual salary earned by the member. Member contributions picked up pursuant to the provisions of this section shall be treated as employer contributions for purposes of determining income tax obligations under the Internal Revenue Code of 1986; however, such picked-up member contributions shall be included in the determination of the member's gross annual salary for all other purposes under federal and state laws. Member contributions picked up pursuant to the provisions of this section shall continue to be designated member contributions for all purposes of the Judicial Retirement Act and shall be considered as part of the member's annual salary for purposes of determining the amount of the member's contribution. The provisions of this section are mandatory, and the member shall have no option concerning the pickup or concerning the receipt of the contributed amounts directly instead of having the amounts paid by the employer to the retirement system. Implementation occurs upon authorization by the board. In no event may implementation occur other than at the beginning of a pay period applicable to the member."

SECTION 4. Section 10-12B-11 NMSA 1978 (being Laws 1992, Chapter 111, Section 11, as amended) is amended to read:

"10-12B-11. EMPLOYER CONTRIBUTIONS.--

A. On and after July 1, 2013, the member's court shall contribute [the following amounts] fifteen percent of salary for each member in office to the fund

[(1) prior to July 1, 2005, nine percent of salary for each member in office;

(2) from July 1, 2005 through June 30, 2006, ten and one-half percent of salary for each member in office; and

(3) on and after July 1, 2006, twelve percent of salary for each member in office, except that for members whose annual salary is greater than twenty thousand dollars ($20,000):

(a) from July 1, 2009 through June 30, 2011, the member's court contribution rate shall be ten and one-half percent of salary for each member in office;

(b) from July 1, 2011 through June 30, 2012, the member's court contribution rate shall be eight and three-fourths percent of salary for each member in office; and

(c) from July 1, 2012 through June 30, 2013, the member's court contribution rate shall be ten and one-half percent of salary for each member in office].

B. Thirty-eight dollars ($38.00) from each civil case docket fee paid in the district court, twenty-five dollars ($25.00) from each civil docket fee paid in metropolitan court and ten dollars ($10.00) from each jury fee paid in metropolitan court shall be paid by the court clerk to the employer's accumulation fund."

SECTION 5. Section 10-12B-15 NMSA 1978 (being Laws 1992, Chapter 111, Section 15) is amended to read:

"10-12B-15. COST-OF-LIVING ADJUSTMENT.--[A yearly cost-of-living adjustment shall be made to each pension]

A. A qualified pension recipient is eligible for a cost-of-living adjustment payable pursuant to the provisions of the Judicial Retirement Act [as provided in the Public Employees Retirement Act] as follows:

(1) beginning July 1, 2013 and continuing through June 30, 2015, there shall not be a cost-of-living adjustment applied to a pension payable pursuant to the Judicial Retirement Act; and

(2) beginning on May 1, 2015 and no later than each May 1 thereafter, the board shall certify to the association the actuarial funded ratio of the fund as of June 30 of the preceding calendar year. On each July 1 following the board's certification of the funded ratio, the cost-of-living adjustment, if any, applied to a pension payable pursuant to the Judicial Retirement Act shall be determined as follows:

(a) if the funded ratio of the fund, as certified by the board pursuant to this subsection, is greater than or equal to seventy percent, the amount of pension payable shall be increased two percent. The amount of the increase applied pursuant to this subparagraph shall be determined by multiplying the amount of the pension inclusive of all prior adjustments by two percent; and

(b) if the funded ratio of the fund, as certified by the board pursuant to this subsection, is less than seventy percent, the amount of pension payable shall not include a cost-of-living increase.

B. Pursuant to the Judicial Retirement Act, a qualified pension recipient is:

(1) a normal retired member who:

(a) retires before June 30, 2014 and 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 pension is being adjusted;

(b) retires between July 1, 2014 and June 30, 2015 and has been retired for at least three full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(c) retires between July 1, 2015 and June 30, 2016 and has been retired for at least four full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted; or

(d) retires after July 1, 2016 and has been retired for at least seven full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(2) a normal retired member who is at least sixty-five years of age and 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 pension 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 pension is being adjusted;

(4) a survivor beneficiary who has received a survivor pension 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 pension is being adjusted.

C. A qualified pension recipient may decline an increase in a pension 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 6. Section 10-12C-8 NMSA 1978 (being Laws 1992, Chapter 118, Section 8) is amended to read:

"10-12C-8. AGE AND SERVICE CREDIT REQUIREMENTS FOR NORMAL RETIREMENT.--

A. On and after July 1, 2013, the age and service credit requirements for retirement provided for in the Magistrate Retirement Act are:

(1) age [sixty-four] sixty-five years or older and five or more years of service credit;

(2) age sixty years or older and fifteen or more years of service credit; or

(3) any age and twenty-four or more years of service credit.

B. If a member leaves office for any reason, other than removal pursuant to Article 6, Section 32 of the constitution of New Mexico before meeting the age and service credit requirements for retirement pursuant to the provisions of this section and if that member leaves [his] the member contributions on deposit in the fund, that member may apply for retirement when that member meets the age and service credit requirements for retirement pursuant to the provisions of the Magistrate Retirement Act or provisions of the Public Employees Retirement Reciprocity Act [if enacted by the second session of the fortieth legislature of the state of New Mexico].

C. No member shall be eligible to receive a pension pursuant to the provisions of the Magistrate Retirement Act while still in office."

SECTION 7. Section 10-12C-9 NMSA 1978 (being Laws 1992, Chapter 118, Section 9) is amended to read:

"10-12C-9. AMOUNT OF PENSION.--

A. For service credit earned on or before June 30, 2013, the amount of pension is equal to one-twelfth of:

seventy-five percent

of salary received (number of years of during last year in X .05 X service, not exceeding office prior to fifteen years, [+]

retirement plus five years).

B. For service credit earned on and after July 1, 2013, the amount of pension is equal to one-twelfth of the salary received during the last year in office prior to retirement multiplied by the product of three and one-half percent times the sum of the number of years of service; provided that a pension calculated pursuant to this subsection shall not exceed eighty-five percent of one-twelfth of the salary received during the last year in office."

SECTION 8. Section 10-12C-10 NMSA 1978 (being Laws 1992, Chapter 118, Section 10, as amended) is amended to read:

"10-12C-10. MEMBER CONTRIBUTIONS--TAX TREATMENT.--

A. Members, while in office, shall contribute [the following amounts] nine percent of salary to the member contribution fund

[(1) through June 30, 2006, six and one-half percent of salary; and

(2) on and after July 1, 2006, seven and one-half percent of salary, except that for members whose annual salary is greater than twenty thousand dollars ($20,000):

(a) from July 1, 2009 through June 30, 2011, the member contribution rate shall be nine percent of salary;

(b) from July 1, 2011 through June 30, 2012, the member contribution rate shall be ten and three-fourths percent of salary; and

B. Upon implementation, the state, acting as employer of members covered pursuant to the provisions of the Magistrate Retirement Act, shall, solely for the purpose of compliance with Section 414(h) of the Internal Revenue Code of 1986, pick up for the purposes specified in that section member contributions required by this section for all annual salary earned by the member. Member contributions picked up pursuant to the provisions of this section shall be treated as employer contributions for purposes of determining income tax obligations under the Internal Revenue Code of 1986; however, such picked-up member contributions shall be included in the determination of the member's gross annual salary for all other purposes under federal and state laws. Member contributions picked up pursuant to the provisions of this section shall continue to be designated member contributions for all purposes of the Magistrate Retirement Act and shall be considered as part of the member's annual salary for purposes of determining the amount of the member's contribution. The provisions of this section are mandatory, and the member shall have no option concerning the pick up or concerning the receipt of the contributed amounts directly instead of having the amounts paid by the employer to the retirement system. Implementation occurs upon authorization by the board. In no event may implementation occur other than at the beginning of a pay period applicable to the member."

SECTION 9. Section 10-12C-11 NMSA 1978 (being Laws 1992, Chapter 118, Section 11, as amended) is amended to read:

"10-12C-11. EMPLOYER CONTRIBUTIONS.--

A. The state, through the administrative office of the courts, shall contribute [the following amounts] fifteen percent of salary for each member in office to the fund

[(1) through June 30, 2006, ten percent of salary for each member in office; and

(2) on and after July 1, 2006, eleven percent of salary for each member in office, except that for members whose annual salary is greater than twenty thousand dollars ($20,000):

(a) from July 1, 2009 through June 30, 2011, the state contribution rate shall be nine and one-half percent of salary for each member in office;

(b) from July 1, 2011 through June 30, 2012, the state contribution rate shall be seven and three-fourths percent of salary for each member in office; and

(c) from July 1, 2012 through June 30, 2013, the state contribution rate shall be nine and one-half percent of salary for each member in office].

B. Twenty-five dollars ($25.00) from each civil case docket fee paid in magistrate court and ten dollars ($10.00) from each civil jury fee paid in magistrate court shall be paid by the court clerk to the employer's accumulation fund."

SECTION 10. Section 10-12C-14 NMSA 1978 (being Laws 1992, Chapter 118, Section 14) is amended to read:

"10-12C-14. COST-OF-LIVING ADJUSTMENT.--[A yearly cost-of-living adjustment shall be made to each pension]

A. A qualified pension recipient is eligible for a cost-of-living adjustment payable pursuant to the provisions of the Magistrate Retirement Act [as provided in the Public Employees Retirement Act] as follows:

(1) beginning July 1, 2013 and continuing through June 30, 2015, there shall not be a cost-of-living adjustment applied to a pension payable pursuant to the Magistrate Retirement Act; and

(2) beginning on May 1, 2015 and no later than each May 1 thereafter, the board shall certify to the association the actuarial funded ratio of the fund as of January 31 of the calendar year in which the board certifies the funded ratio. On each July 1 following the board's certification of the funded ratio, the cost-of-living adjustment, if any, applied to a pension payable pursuant to the Magistrate Retirement Act shall be determined as follows:

(b) if the funded ratio of the fund, as certified by the board pursuant to this subsection, is less than seventy percent, the amount of pension payable shall not include a cost-of-living increase.

B. Pursuant to the Magistrate Retirement Act, a qualified pension recipient is:

(1) a normal retired member who:

(a) retires on or before June 30, 2014 and 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 pension is being adjusted;

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

SECTION 11. APPROPRIATION.--

A. Fifteen million dollars ($15,000,000) is appropriated from the general fund for expenditure in fiscal year 2014 and subsequent fiscal years to improve the funded ratios of the judicial retirement fund and the magistrate retirement fund as follows:

(1) eleven million dollars ($11,000,000) to the judicial retirement fund; and

(2) four million dollars ($4,000,000) to the magistrate retirement fund.

B. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.

SECTION 12. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2013.

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