Resolves

124th Legislature

First Regular Session



Chapter 111

S.P. 515 - L.D. 1431

Resolve, To Reform Public Retirement Benefits and Eliminate Social Security Offsets

Sec. 1. Design of unified pension and benefit plan for all state employees and teachers who are first employed with the State after December 31, 2010. Resolved: That the task force established in subsection 2 shall design a unified pension and benefit plan, referred to in this resolve as "the plan," to apply to all state employees and teachers who are first hired after December 31, 2010 with no prior creditable service. The task force must be staffed within existing resources of the Maine Public Employees Retirement System and the State Employee Health Commission.

1. Definitions. For purposes of this resolve, the following terms have the following meanings.

A. "Member" means teachers and state employees first hired after December 31, 2010 with no prior creditable service.
B. "State employee" means:
(1) Employees as defined in the Maine Revised Statutes, Title 5, section 17001, subsection 40;
(2) Judges entitled to retirement benefits under Title 4, chapter 27 or 29;
(3) Members of the State Police; and
(4) Legislators entitled to retirement benefits under Title 3, chapter 29.
C. "Teacher" has the same meaning as in Title 5, section 17001, subsection 42.

2. Task force established. A task force to reform public retirement benefits and eliminate social security offsets is established. The task force is composed of:

A. The Chair of the Board of Trustees of the Maine Public Employees Retirement System, who serves as the task force chair;
B. The Commissioner of Administrative and Financial Services, or a designee of the commissioner;
C. The Executive Director of the State Employee Health Commission;
D. The State Controller;
E. An employee member of the Board of Trustees of the Maine Public Employees Retirement System, appointed by the board;
F. An employee member of the State Employee Health Commission, appointed by the State Employee Health Commission;
G. A member appointed by the Maine Education Association; and
H. A member appointed by the Maine School Management Association.

3. Health plan. The task force shall design the health plan component of the plan in accordance with this subsection and may propose additional variations on the plan.

A. All active members of the plan and their dependents must be entitled to membership in the health plan. Assessments for coverage under the health plan must be imposed and budgeted in accordance with Title 5, section 286-A and Title 20-A, section 13451. The proportion of the assessment paid on behalf of members by their employers must be in accordance with the law existing on the effective date of this resolve or in accordance with applicable collective bargaining agreements.
B. Every active member of the plan and the spouse and dependents of each such member may continue coverage under the health plan in retirement if criteria for eligibility are met as prescribed in Title 5, section 285, subsection 1-A and Title 20-A, section 13451. The task force may recommend changes in eligibility criteria.
C. The health plan premium for any eligible retired member and any covered spouse or dependent of the member must be paid from the Bureau of Human Resources' State Employee Health Dedicated Revenue Account established in Title 5, section 286-A. Each retired member must be entitled to 3% of the premium for each year of creditable service up to a maximum of 100% of the total premium. For a covered spouse or dependent, the subsidy is 1.5% of the premium for each year of the member's creditable service up to a maximum of 50% of the premium.
D. The present actuarial cost of the future benefit subsidy for retired state employees and teachers must be paid 1/2 by the employee and 1/2 by the employer. Payments as calculated and assessed by the Commissioner of Administrative and Financial Services must be remitted on a regular and periodic basis to the Bureau of Human Resources' State Employee Health Dedicated Revenue Account established in Title 5, section 286-A.

4. Pension plan. The task force shall design the pension plan component of the plan in accordance with this subsection and may propose additional variations on the plan.

A. Every member of the plan must contribute to both Social Security and Medicare, and the employer of each member must contribute the employer's share of Social Security and Medicare.
B. Each active member of the plan must be entitled to a supplemental defined benefit pension calculated as a percentage of base compensation for each year of service. Base compensation equals the income received in the 5th highest calendar year of service. Benefits are vested after 6 years.
C. Normal pension benefits commence after 30 years of service or at 62 years of age, whichever occurs first.
D. A member who separates from service before normal retirement may:
(1) If the member has at least 6 years of service in the plan, leave the member's contributions and interest on account in the plan until the member retires at 62 years of age, with those benefits adjusted each year by an amount equal to the Consumer Price Index, up to an annual maximum of 3.5%;
(2) Withdraw 1.5 times the amount of the member's own contributions, plus 6% interest, with the option to roll the amount withdrawn into a tax-sheltered account;
(3) Purchase one or more irrevocable annuities, or, with a spouse, joint life annuities, to commence at any future time and to end either at death or at the annuitant's normal retirement age for Social Security. The annuity values must equal 1.8 times the member's own contributions plus 6% interest. The Maine Public Employees Retirement System may serve as the annuity underwriter; or
(4) Use a combination of the options under subparagraphs (2) and (3).

5. Disability plan. The task force shall design a disability component of the plan whose structure and benefits are integrated with Social Security but are otherwise modeled on disability benefits currently available to employees hired on or before December 31, 2010.

6. Cost of the plans. The combined actuarial cost of the retiree health insurance, the supplemental defined pension benefits and the disability provisions of the plan must be divided equally between the member and the member’s employer and calculated as a percent of payroll for each member; and be it further

Sec. 2. Report. Resolved: That the task force shall submit a report on its design of the plan, together with any necessary implementing legislation, to the Joint Standing Committee on Labor by March 1, 2010. After receipt and review of the report, the joint standing committee may report out a bill to the Second Regular Session of the 124th Legislature.

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