CONCEPT DRAFT

SUMMARY

This bill is a concept draft pursuant to Joint Rule 208.

This bill would create a new retirement program for teachers and state employees hired on or after January 1, 2004. Instead of being covered by the existing state employee and teacher plan of the Maine State Retirement System, new hires would be required to participate in Social Security and would also be covered by a newly created defined benefit plan.

The new plan would be modeled on current law but designed to have an initial actuarial cost of approximately 4% of payroll. The normal retirement age would be 62, and the penalty for early retirement would be 4% per year. The cost of the plan would be allocated so that the State would pay 75% of the cost and the employee would pay 25% of the cost. Employees would also have an option to purchase an increased benefit by paying 1/3 of the cost with the State paying the other 2/3, up to an additional 6% of payroll.