SUMMARY

To avoid artificially increasing retirement benefits, current law limits increases in compensation for state employees and teachers that may be counted as earnable compensation for purposes of calculating retirement benefits under the Maine State Retirement System to 5% in any one year and to 10% over a member's highest 3 years of compensation. This bill requires the retirement system to use a member's 4th highest year of compensation as the base year in determining whether the caps have been exceeded.

In the case of a retiree who exercised a benefit payment option calling for a reduced benefit during the member's lifetime in return for continued payment of a benefit to a designated beneficiary after the retiree's death, the bill requires the recalculation of the retirement benefit if the beneficiary dies before the retiree. Retroactive to July 1, 1996, the retiree's benefit would be recalculated as if the option of full benefit payment had been selected.