2019 -- H 5966

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LC002337

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO PUBLIC OFFICERS AND EMPLOYEES -- RETIREMENT SYSTEM --

CONTRIBUTIONS AND BENEFITS

     

     Introduced By: Representatives Millea, Morin, McKiernan, Almeida, and Jackson

     Date Introduced: April 05, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 36-10-1 and 36-10-10 of the General Laws in Chapter 36-10

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entitled "Retirement System - Contributions and Benefits" are hereby amended to read as follows:

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     36-10-1. Member contributions -- Deduction from compensation.

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     (a) Prior to July 1, 2012, each member of the retirement system shall contribute an

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amount equal to eight and three-quarters percent (8.75%) of his or her compensation as his or her

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share of the cost of annuities, benefits, and allowances. Effective July 1, 2012, each member of

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the retirement system shall contribute an amount equal to three and three quarters percent

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(3.75%) of his or her compensation, except for correctional officers as defined in § 36-10-9.2 who

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shall contribute an amount equal to eight and three quarters percent (8.75%) of his or her

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compensation. Effective July 1, 2015, each member of the retirement system, except for

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correctional officers as defined in § 36-10-9.2, with twenty (20) or more years of total service as

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of June 30, 2012 shall contribute an amount equal to eleven percent (11%) of compensation.

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Effective July 1, 2018, a member of the retirement system, except for correctional officers as

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defined in § 36-10-9.2, who was eligible to retire with fewer than twenty (20) years of total

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service as of June 30, 2012, and who does not make an election under § 36-10-1(d), shall

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contribute an amount equal to eleven percent (11%) of compensation. The contributions shall be

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made in the form of deductions from compensation.

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     (b) The deductions provided for herein shall be made notwithstanding that the minimum

 

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compensation provided by law for any member shall be reduced thereby. Every member shall be

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deemed to consent and agree to the deductions made and provided for herein and receipt of his or

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her full compensation and payment of compensation, less the deductions, shall be a full and

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complete discharge and acquittance of all claims and demands whatsoever for the services

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rendered by the person during the period covered by the payment except as to the benefit

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provided under this chapter.

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     (c) A member of the retirement system, except for correctional officers as defined in §

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36-10-9.2, who was eligible to retire with fewer than twenty (20) years of total service as of June

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30, 2012, and who does not make an election under § 36-10-1(d), may elect to pay into the

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retirement system an amount equal to two and one-quarter percent (2.25%) of current

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compensation per year for the years between July 1, 2015, and June 30, 2019, without interest if

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the election is made before December 31, 2019, and shall receive a retirement allowance in

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accordance with § 36-10-10(d)(iii).

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     (d) A member of the retirement system, except for correctional officers as defined in §

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36-10-9.2, who was eligible to retire with fewer than twenty (20) years of total service as of June

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30, 2012, may elect to contribute three and three-quarters percent (3.75%) of their compensation,

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effective July 1, 2018, by so notifying the retirement system before August 15, 2019, and such

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member shall be subject to chapter 10.3 of title 36, entitled "Defined Contribution Retirement

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Plan," and shall receive a retirement allowance in accordance with § 36-10-10(d)(i).

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     36-10-10. Amount of service retirement allowance.

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     (a) (1) (i) For employees eligible to retire on or before September 30, 2009, upon

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retirement for service under § 36-10-9, a member whose membership commenced before July 1,

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2005 and who has completed at least ten (10) years of contributory service on or before July 1,

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2005 shall receive a retirement allowance which shall be determined in accordance with schedule

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A below for service prior to July 1, 2012:

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Schedule A

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Years of Service Percentage Allowance

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     1st through 10th inclusive 1.7%

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     11th through 20th inclusive 1.9%

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     21st through 34th inclusive 3.0%

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     35th 2.0%

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     (ii) For employees eligible to retire on or after October 1, 2009, who were not eligible to

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retire on or before September 30, 2009, upon retirement from service under § 36-10-9, a member

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whose membership commenced before July 1, 2005 and who has completed at least ten (10) years

 

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of contributory service on or before July 1, 2005 shall receive a retirement allowance which shall

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be determined in accordance with schedule A above for service on before September 30, 2009,

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and shall be determined in accordance with schedule B in subsection (a)(2) below for service on

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or after October 1, 2009 and prior to July 1, 2012.

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     (2) Upon retirement for service under § 36-10-9, a member whose membership

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commenced after July 1, 2005, or who has not completed at least ten (10) years of contributory

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service as of July 1, 2005, shall, receive a retirement allowance which shall be determined in

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accordance with Schedule B below for service prior to July 1, 2012:

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Schedule B

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Years of Service Percentage Allowance

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     1st through 10th inclusive 1.60%

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     11th through 20th inclusive 1.80%

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     21st through 25th inclusive 2.0%

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     26th through 30th inclusive 2.25%

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     31st through 37th inclusive 2.50%

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     38th 2.25%

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     (b) The retirement allowance of any member whose membership commenced before July

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1, 2005 and who has completed at least ten (10) years of contributory service on or before July 1,

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2005 shall be in an amount equal to the percentage allowance specified in subsection (a)(1) of his

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or her average highest three (3) consecutive years of compensation multiplied by the number of

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years of total service, but in no case to exceed eighty percent (80%) of the compensation payable

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at completion of thirty-five (35) years of service; provided, however, for employees retiring on or

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after October 1, 2009 who were not eligible to retire as of September 30, 2009 the calculation

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shall be based on the average highest five (5) consecutive years of compensation. Any member

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who has in excess of thirty-five (35) years on or before June 2, 1985, shall not be entitled to any

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refund, and any member with thirty-five (35) years or more on or after June 2, 1985, shall

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contribute from July 1, 1985, until his or her retirement.

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     The retirement allowance of any member whose membership commenced after July 1,

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2005 or who had not completed at least ten (10) years of contributory service as of July 1, 2005,

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shall, be in an amount equal to the percentage allowance specified in Schedule B of his or her

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average highest three (3) consecutive years of compensation multiplied by the number of years of

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total service, but in no case to exceed seventy-five percent (75%) of the compensation payable at

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the completion of thirty-eight (38) years of service; provided, however, for employees retiring on

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or after October 1, 2009 who were not eligible to retire as of September 30, 2009 the calculation

 

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shall be based on the average highest five (5) consecutive years of compensation.

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     (c) Any member with thirty-eight (38) years or more of service prior to December 31,

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1985, shall not be required to make additional contributions. Contributions made between

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December 31, 1985, and July 1, 1987, by members with thirty-eight (38) or more years of service

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prior to December 31, 1985, shall be refunded by the retirement board to the persons, their heirs,

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administrators, or legal representatives.

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     (d) For service prior to July 1, 2012, the retirement allowance of a member shall be

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determined in accordance with subsections (a)(1) and (a)(2) above. For service on and after July

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1, 2012, a member's retirement allowance shall be equal to:

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     (i) For members with fewer than twenty (20) years of total service as of June 30, 2012,

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including members who were eligible to retire with fewer than twenty (20) years of service as of

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June 30, 2012, who make an election in accordance with § 36-10-1(d), one percent (1%) of the

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member's average compensation multiplied by the member's years of total service on and after

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July 1 2012, except that the retirement allowance of a member who was eligible to retire as of

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June 30, 2012, with fewer than twenty (20) years of service and who does not make an election

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under § 36-10-1(d) shall be in accordance with § 36-10-10(d)(iii); and

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     (ii) For members with twenty (20) or more years of total service as of June 30, 2012, a

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member's retirement allowance shall be equal to one percent (1%) of the member's average

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compensation multiplied by the member's years of total service between July 1, 2012 and June

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30, 2015, and two percent (2%) of the member's average compensation multiplied by the

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member's years of total service on and after July 1, 2015. For purposes of computing a member's

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total service under the preceding sentence, service purchases shall be included in total service

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only with respect to those service purchases approved prior to June 30, 2012 and those

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applications for service purchases received by the retirement system on or before June 30, 2012.

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     In no event shall a member's retirement allowance exceed the maximum limitations set

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forth in paragraph (b) above.

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     (iii) For members who were eligible to retire with fewer than twenty (20) years of total

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service as of June 30, 2012, a member's retirement allowance shall be equal to one percent (1%)

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of the member's average compensation multiplied by the member's years of total service between

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July 1, 2012, and June 30, 2019, and two percent (2%) of the member's average compensation

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multiplied by the member's years of total service on and after July 1, 2019; provided, however,

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that the retirement allowance of a member who was eligible to retire with fewer than twenty (20)

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years of total service as of June 30, 2012 and who makes an election in accordance with § 36-10-

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l(c), shall be equal to one percent (1%) of the member's average compensation multiplied by the

 

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member's years of total service between July 1, 2012, and June 30, 2019, except that the

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retirement allowance shall be equal to two percent (2%) of the member's average compensation

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for each year between July 1, 2015 and June 30, 2019, for which the member has paid two and

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one quarter percent (2.25%) of compensation pursuant to § 36-10-1(c), and two percent (2%) of

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the member's average compensation multiplied by the member's years of total service on and after

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July 1, 2019. For purposes of computing a member's total service under the preceding sentence,

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service purchases shall be included in total service only with respect to those service purchases

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approved prior to June 30, 2012, and those applications for service purchases received by the

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retirement system on or before June 30, 2012, except that amounts paid for a member's election in

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accordance with § 36-10-l(c) shall not to be deemed service purchases. In no event shall a

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member's retirement allowance exceed the maximum limitations set forth in subsection (b) of this

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section.

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     SECTION 2. Section 36-10.3-1 of the General Laws in Chapter 36-10.3 entitled "Defined

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Contribution Retirement Plan" is hereby amended to read as follows:

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     36-10.3-1. Definitions.

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     As used in this chapter, the following terms, unless the context requires a different

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interpretation, shall have the following meanings:

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     (1) "Compensation" means compensation as defined in section 36-8-1(8).

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     (2) "Employee" means an employee as defined in §§ 36-8-1(9) and 45-21-2(7) and a

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teacher as defined in § 16-16-1(12), effective July 1, 2012; provided however, effective July 1,

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2015, "employee" shall not include any employee with twenty (20) or more years of total service

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as of June 30, 2012 in the employees retirement system under chapters 8 through 10 of title 36 or

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chapter 16 of title 16 (ERS), or the municipal employees retirement system under chapter 21 of

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title 45 (MERS); provided, however, effective July 1, 2019, "employee" shall not include any

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employee in the employees' retirement system under chapters 8 through 10 of title 36 who is

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eligible to retire with fewer than twenty (20) years of total service as of June 30, 2012, and who

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does not make an election in accordance with § 36-10-1(d).

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     (3) "Employer" means the State of Rhode Island or the local municipality which employs

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a member of the Employees Retirement System under chapters 8 through 10 of title 36 or chapter

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16 of title 16 (ERS) or the Municipal Employees Retirement System under chapters 21 and 21.2

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of title 45 (MERS).

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     (4) "Plan" means the retirement plan established by this chapter.

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     (5) A "public safety member" shall mean a member of MERS who is a municipal fire

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fighter or a municipal policeman or policewoman as defined in § 45-21.2-2 who does not

 

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participate in Social Security under the Federal Old Age, Survivors, and Disability income

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program.

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     (6) "Regular member" means:

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     (i) An employee who is a member of ERS other than correctional officers as defined in §

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36-10-9.2; or

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     (ii) An employee who is a member of MERS other than a public safety member.

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     (7) The "retirement board" or "board" shall mean the retirement board of the Employees

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Retirement System of Rhode Island as defined in Chapter 36-8. The retirement board shall be the

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plan administrator and plan trustee and shall administer the plan in accordance with § 36-8-4.1.

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     (8) "State investment commission" or "commission" means the state investment

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commission as defined in § 35-10-1.

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     (9) "Supplemental employer" includes any employer that provides supplemental

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contributions to the defined contribution retirement plan as provided in § 36-10.3-3.

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     (10) "Supplemental member" is defined in § 36-10.3-3.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC OFFICERS AND EMPLOYEES -- RETIREMENT SYSTEM --

CONTRIBUTIONS AND BENEFITS

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     This act would change the retirement benefits of state employees who were eligible to

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retire by reason of age on June 30, 2012. The act would exempt these employees from the 401(a)

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plan, and return them to the traditional defined benefit plan. The act would give the affected

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employees the option of remaining in the hybrid plan.

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     This act would take effect upon passage.

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