HB0234

HOUSE BILL 234

52nd legislature - STATE OF NEW MEXICO - second session, 2016

INTRODUCED BY

Jason C. Harper and Carl Trujillo and Yvette Herrell and Nora Espinoza and Bob Wooley

AN ACT

RELATING TO PENSIONS; AMENDING THE PUBLIC EMPLOYEES RETIREMENT ACT BY CREATING THE PENSION INVESTMENT PLAN FOR CERTAIN RETIRED LAW ENFORCEMENT OFFICERS; CREATING THE PENSION INVESTMENT PLAN ACCUMULATION FUND; PROVIDING THAT A PARTICIPANT IN THE PENSION INVESTMENT PLAN SHALL MAKE MEMBER CONTRIBUTIONS AND THE SUBSEQUENT AFFILIATED PUBLIC EMPLOYER SHALL NOT MAKE EMPLOYER CONTRIBUTIONS.

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

SECTION 1. Section 10-11-2 NMSA 1978 (being Laws 1987, Chapter 253, Section 2, as amended) is amended to read:

"10-11-2. DEFINITIONS.--As used in the Public Employees Retirement Act:

A. "accumulated member contributions" means the amounts deducted from the salary of a member and credited to the member's individual account, together with interest, if any, credited to that account;

B. "affiliated public employer" means the state and any public employer affiliated with the association as provided in the Public Employees Retirement Act, but does not include an employer pursuant to the Magistrate Retirement Act, the Judicial Retirement Act or the Educational Retirement Act;

C. "association" means the public employees retirement association established under the Public Employees Retirement Act;

D. "disability retired member" means a retired member who is receiving a pension pursuant to the disability retirement provisions of the Public Employees Retirement Act;

E. "disability retirement pension" means the pension paid pursuant to the disability retirement provisions of the Public Employees Retirement Act;

F. "educational retirement system" means that retirement system provided for in the Educational Retirement Act;

G. "employee" means any employee of an affiliated public employer;

H. "federal social security program" means that program or those programs created and administered pursuant to the act of congress approved August 14, 1935, Chapter 531, 49 Stat. 620, as that act may be amended;

I. "final average salary" means the final average salary calculated in accordance with the provisions of the applicable coverage plan;

J. "form of payment" means the applicable form of payment of a pension provided for in Section 10-11-117 NMSA 1978;

K. "former member" means a person who was previously employed by an affiliated public employer, who has terminated that employment and who has received a refund of member contributions;

L. "fund" means the funds included under the Public Employees Retirement Act;

M. "member" means a currently employed, contributing employee of an affiliated public employer or a person who has been but is not currently employed by an affiliated public employer, who has not retired and who has not received a refund of member contributions; ["member" also] and includes the following:

(1) "adult correctional officer member" means a member who is employed as an adult correctional officer or an adult correctional officer specialist by a state correctional facility of the corrections department or its successor agency;

(2) "juvenile correctional officer member" means a member who is employed as a juvenile correctional officer by the children, youth and families department or its successor agency;

(3) "municipal detention officer member" means a member who is employed by an affiliated public employer other than the state and who has inmate custodial responsibilities at a facility used for the confinement of persons charged with or convicted of a violation of a law or ordinance;

(4) "municipal fire member" means any member who is employed as a full-time nonvolunteer firefighter by an affiliated public employer and who has taken the oath prescribed for firefighters;

(5) "municipal police member" means any member who is employed as a police officer by an affiliated public employer, other than the state, and who has taken the oath prescribed for police officers; and

(6) "state police member" means a member who is an officer of the New Mexico state police and who has taken the oath prescribed for such officers, except that a state police member shall not include a member who is an officer of the New Mexico state police division and who was certified and commissioned as of June 30, 2015 in the former motor transportation division or the former special investigations division of the department of public safety;

N. "membership" means membership in the association;

O. "pension" means a series of monthly payments to a retired member or survivor beneficiary as provided in the Public Employees Retirement Act;

P. "pension investment plan" means the pension investment plan administered by the association pursuant to the provisions of the Public Employees Retirement Act;

Q. "pension investment plan account" means the balance accumulated in a pension investment plan account during a period of subsequent employment from deposits of a pension investment plan participant's pension, any cost-of-living adjustments and investment earnings on the balance in the account, if any, as determined by the retirement board;

R. "pension investment plan participant" means a retired adult correctional officer member, a retired juvenile correctional officer member, a retired municipal detention officer member, a retired municipal fire member, a retired municipal police member or a retired state police member who is subsequently employed by an affiliated public employer and who elects to participate in the pension investment plan;

[P.] S. "public employer" means the state, any municipality, city, county, metropolitan arroyo flood control authority, economic development district, regional housing authority, soil and water conservation district, entity created pursuant to a joint powers agreement, council of government, conservancy district, irrigation district, water and sanitation district, water district and metropolitan water board, including the boards, departments, bureaus and agencies of a public employer, so long as these entities fall within the meaning of governmental plan as that term is used in Section 414(d) of the Internal Revenue Code of 1986, as amended;

[Q.] T. "refund beneficiary" means a person designated by the member, in writing, in the form prescribed by the association, as the person who would be refunded the member's accumulated member contributions payable if the member dies and no survivor pension is payable or who would receive the difference between pension paid and accumulated member contributions if the retired member dies before receiving in pension payments the amount of the accumulated member contributions;

[R.] U. "retire" means to:

(1) terminate employment with all employers covered by any state system or the educational retirement system; and

(2) receive a pension from a state system or the educational retirement system;

[S.] V. "retired member" means a person who has met all requirements for retirement and who is receiving a pension from the fund;

[T.] W. "retirement board" means the retirement board provided for in the Public Employees Retirement Act;

[U.] X. "salary" means the base salary or wages paid a member, including longevity pay, for personal services rendered an affiliated public employer. "Salary" shall not include overtime pay, allowances for housing, clothing, equipment or travel; payments for unused sick leave, unless the unused sick leave payment is made through continuation of the member on the regular payroll for the period represented by that payment; and any other form of remuneration not specifically designated by law as included in salary for Public Employees Retirement Act purposes. Salary in excess of the limitations set forth in Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, shall be disregarded. The limitation on compensation for eligible employees shall not be less than the amount that was allowed to be taken into account under the state retirement system acts in effect on July 1, 1993. For purposes of this subsection, "eligible employee" means an individual who was a member of a state system before the first plan year beginning after December 31, 1995;

[V.] Y. "state system" means the retirement programs provided for in the Public Employees Retirement Act, the Magistrate Retirement Act and the Judicial Retirement Act;

[W.] Z. "state retirement system acts" means collectively the Public Employees Retirement Act, the Magistrate Retirement Act, the Judicial Retirement Act and the Volunteer Firefighters Retirement Act; and

[X.] AA. "survivor beneficiary" means a person who receives a pension or who has been designated to be paid a pension as a result of the death of a member or retired member."

SECTION 2. Section 10-11-4 NMSA 1978 (being Laws 1987, Chapter 253, Section 4, as amended) is amended to read:

"10-11-4. SERVICE CREDIT--CERTAIN SERVICE CREDIT NOT ACQUIRED--REQUIREMENTS FOR--FORFEITURE--REINSTATEMENT.--

A. Personal service rendered an affiliated public employer by a member shall be credited to the member's service credit account in accordance with retirement board rules and regulations. Service shall be credited to the nearest month. In no case shall any member be credited with a year of service for less than twelve months of service in any calendar year or more than a month of service for all service in any calendar month or more than a year of service for all service in any calendar year. In no case shall any member be allowed to purchase service credit unless the purchase is authorized in the Public Employees Retirement Act.

B. Personal service rendered an affiliated public employer prior to August 1, 1947 shall be credited to a member if the member acquires one year of service credit for personal service rendered an affiliated public employer.

C. Personal service rendered an affiliated public employer after July 31, 1947 but prior to the date the public employer became an affiliated public employer is prior service and shall be credited to a member if:

(1) the member has the applicable minimum number of years of service credit required for normal retirement. As used in this paragraph, "service credit" means only the service credit earned by the member during periods of employment with an affiliated public employer; and

(2) the member pays the association the amount determined in accordance with Subsection D of this section.

D. The purchase cost for each month of service credit purchased under the provisions of this section is equal to the member's final average salary multiplied by the sum of the member contribution rate and employer contribution rate determined in accordance with the coverage plan applicable to the member at the time of the written election to purchase. Full payment shall be made in a single lump-sum amount in accordance with the procedures established by the retirement board. The portion of the purchase cost derived from the employer contribution rate shall be credited to the employers accumulation fund and shall not be refunded to the member in the event of cessation of membership. In no case shall any member be credited with a month of service for less than the purchase cost as defined in this section.

E. Service credit shall be forfeited if a member terminates employment with an affiliated public employer and withdraws the member's accumulated member contributions.

F. A member or former member who is a member of another state system or the educational retirement system and who has forfeited service credit by withdrawal of member contributions may reinstate the forfeited service credit by repaying the amount withdrawn plus compound interest from the date of withdrawal to the date of repayment at the rate set by the retirement board. Withdrawn member contributions may be repaid in increments of one year in accordance with the procedures established by the retirement board. Full payment of each one-year increment shall be made in a single lump-sum amount in accordance with procedures established by the retirement board.

G. Personal service rendered by a retired member who is a pension investment plan participant shall not be considered service credit for any purpose, and the pension investment plan participant shall not accrue service credit for any subsequent employment with an affiliated public employer."

SECTION 3. Section 10-11-5 NMSA 1978 (being Laws 1987, Chapter 253, Section 5, as amended) is amended to read:

"10-11-5. [CREDITED] SERVICE CREDIT--MUNICIPAL ELECTION TO MAKE [EMPLOYEE] EMPLOYEES' CONTRIBUTIONS.--A municipal affiliated public employer may elect by resolution of its governing body or by execution of a collective bargaining agreement and in the manner prescribed by the retirement board to be responsible for making contributions of up to seventy-five percent of its employees' member contributions as follows:

A. the resolution or collective bargaining agreement shall be irrevocable, except that:

(1) if the resolution is passed or the collective bargaining agreement is executed on or before

June 30, 2013, the percentage of [the employee] employees' contributions that the municipal affiliated public employer elects to be responsible for making shall apply to the statutory [employee] member contribution rate in effect on June 30, 2013 and shall not apply to any increase in the statutory [employee] member contribution rate that may occur after that date; and

(2) if the resolution is passed or the collective bargaining agreement is executed on or after

July 1, 2013, the percentage of the [employee] employees' contributions that the municipal affiliated public employer elects to be responsible for making shall apply to the statutory [employee] member contribution rate in effect on the date that the resolution is passed or the collective bargaining agreement is executed and shall not apply to any increases in the statutory [employee] member contribution rate that may occur after that date; provided, however, that if the statutory [employee] member contribution rate is decreased after the date that the resolution is passed or the collective bargaining agreement is executed, the percentage of [the employee] employees' contributions that the municipal public affiliated employer is responsible for making shall apply to the decreased statutory [employee] member contribution rate;

B. a municipal affiliated public employer may by subsequent resolution or collective bargaining agreement:

(1) elect to increase the percentage of [employee] employees' member contributions for which it will be responsible;

(2) elect to be responsible for a percentage of any increase to the statutory [employee] member contribution rate in effect after the passing of an earlier resolution or the execution of an earlier collective bargaining agreement; or

(3) at the time a new coverage plan is adopted, elect to be responsible under the new coverage plan for making a different percentage of [employee] employees' member contributions than that which it elected under a previous coverage plan;

C. the resolution or executed collective bargaining agreement shall apply to all employees or else to specified employee divisions of the municipal affiliated public employer and shall be effective the first pay period of the month following the filing of the resolution with the retirement board;

D. except as provided in Subsection G of this section, the portion of the [employee] member contributions made by the municipal affiliated public employer on behalf of a member shall be credited to the member's individual accumulated member contribution account in the member contribution fund. The member shall be responsible for the difference between the contributions the member would be required to make if the municipal affiliated public employer had not made the election provided for in this section and the amount contributed by the municipal affiliated public employer pursuant to the provisions of this section;

E. pensions payable to members whose municipal affiliated public employer makes the election provided for in this section shall be the same as if the member had made the entire member contribution; [and]

F. any municipal affiliated public employer increasing the percentage of the [employee] employees' member contributions [it] the municipal affiliated public employer elects to make pursuant to this section shall submit a resolution or executed collective bargaining agreement to the association by July 1 of the fiscal year in which the increase will take place indicating the percentage of the [employee] employees' member contributions that will be made by the municipal affiliated public employer; and

G. the portion of the member contributions made by the municipal affiliated public employer on behalf of a pension investment plan participant shall be credited to the member contribution fund and shall not be credited to the retired member's pension investment plan account. The pension investment plan participant shall be responsible for the difference between the contributions that the pension investment plan participant would be required to make if the municipal affiliated public employer had not made the election provided for in this section and the amount contributed by the municipal affiliated public employer pursuant to the provisions of this section."

SECTION 4. Section 10-11-8 NMSA 1978 (being Laws 1987, Chapter 253, Section 8, as amended by Laws 2014, Chapter 35, Section 1 and by Laws 2014, Chapter 39, Section 1 and also by Laws 2014, Chapter 43, Section 1) is amended to read:

"10-11-8. NORMAL RETIREMENT [RETURN TO EMPLOYMENT--BENEFITS CONTINUED--CONTRIBUTIONS].--

A. A member may retire upon fulfilling the following requirements prior to the selected date of retirement:

(1) a written application for normal retirement, in the form prescribed by the association, is filed with the association;

(2) employment is terminated with all employers covered by any state system or the educational retirement system;

(3) the member selects an effective date of retirement that is the first day of a calendar month; and

(4) the member meets the age and service credit requirement for normal retirement specified in the coverage plan applicable to the member.

B. The amount of normal retirement pension is determined in accordance with the coverage plan applicable to the member.

[C. Except as provided in Subsection E of this section, on or after July 1, 2010, a retired member may be subsequently employed by an affiliated public employer only pursuant to the following provisions:

(1) the retired member has not been employed as an employee of an affiliated public employer or retained as an independent contractor by the affiliated public employer from which the retired member retired for at least twelve consecutive months from the date of retirement to the commencement of subsequent employment or reemployment with an affiliated public employer;

(2) the retired member's pension shall be suspended upon commencement of the subsequent employment;

(3) except as provided in Subsection G of this section, the retired member shall not become a member and shall not accrue service credit, and the retired member and that person's subsequent affiliated public employer shall not make contributions under any coverage plan pursuant to the Public Employees Retirement Act; and

(4) upon termination of the subsequent employment, the retired member's pension shall resume in accordance with the provisions of Subsection A of this section.

D. Notwithstanding the provisions of Subsection B of Section 10-11-118 NMSA 1978, on and after July 1, 2013, if a retired member becomes employed with an employer pursuant to the Educational Retirement Act, and effective July 1, 2014, if a retired member who, subsequent to retirement, is employed and covered pursuant to the Judicial Retirement Act, and, effective July 1, 2014, if a retired member who, subsequent to retirement, is employed and covered pursuant to the Magistrate Retirement Act:

(1) the retired member's cost-of-living pension adjustment shall be suspended upon commencement of the employment; and

(2) upon termination of the employment, the retired member's suspended cost-of-living pension adjustment shall be reinstated as provided under Subsection B of Section 10-11-118 NMSA 1978.

E. The provisions of Subsections C, H and I of this section do not apply to:

(1) a retired member employed by the legislature for legislative session work;

(2) a retired member employed temporarily as a precinct board member for a municipal election or an election covered by the Election Code; or

(3) a retired member who is elected to serve a term as an elected official in an office covered pursuant to the Public Employees Retirement Act; provided that:

(a) the retired member files an irrevocable exemption from membership with the association within thirty days of taking office; and

(b) the irrevocable exemption shall be for the elected official's term of office.

F. A retired member who returns to employment during retirement pursuant to Subsection E of this section is entitled to receive retirement benefits but is not entitled to accrue service credit or to acquire or purchase service credit in the future for the period of the retired member's subsequent employment with an affiliated public employer.

G. At any time during a retired member's subsequent employment pursuant to Subsection C of this section, the retired member may elect to become a member and the following conditions shall apply:

(1) the previously retired member and the subsequent affiliated public employer shall make the required employee and employer contributions, and the previously retired member shall accrue service credit for the period of subsequent employment; and

(2) when the previously retired member terminates the subsequent employment with an affiliated public employer, the previously retired member shall retire according to the provisions of the Public Employees Retirement Act, subject to the following conditions:

(a) payment of the pension shall resume in accordance with the provisions of Subsection A of this section;

(b) unless the previously retired member accrued at least three years of service credit on account of the subsequent employment, the recalculation of pension shall: 1) employ the form of payment selected by the previously retired member at the time of the first retirement; and 2) use the provisions of the coverage plan applicable to the member on the date of the first retirement; and

H. A retired member who returned to work with an affiliated public employer prior to July 1, 2010 shall be subject to the provisions of this section in effect on the date the retired member returned to work; provided that:

(1) on and after July 1, 2010, the retired member shall pay the employee contribution in an amount specified in the Public Employees Retirement Act for the position in which the retired member is subsequently employed;

(2) notwithstanding the provisions of Subsection B of Section 10-11-118 NMSA 1978, on and after July 1, 2013, the retired member's cost-of-living pension adjustment shall be suspended; and

(3) upon termination of the subsequent employment with the affiliated public employer, the retired member's cost-of-living pension adjustment shall be reinstated as provided in Subsection B of Section 10-11-118 NMSA 1978.

I. Effective July 1, 2014, if a retired member who, subsequent to retirement, is employed and covered pursuant to the provisions of the Magistrate Retirement Act or Judicial Retirement Act, during the period of subsequent employment:

(1) the member shall be entitled to receive retirement benefits;

(2) the retired member's cost-of-living pension adjustment shall be suspended upon commencement of the employment; and

(3) upon termination of the employment, the retired member's suspended cost-of-living pension adjustment shall be reinstated as provided under Subsection B of Section

10-11-118 NMSA 1978.

J.] C. The pension of a member who has earned service credit under more than one coverage plan shall be determined as follows:

(1) the pension of a member who has three or more years of service credit earned on or before June 30, 2013 under each of two or more coverage plans shall be determined in accordance with the coverage plan that produces the highest pension;

(2) the pension of a member who has service credit earned on or before June 30, 2013 under two or more coverage plans but who has three or more years of service credit under only one of those coverage plans shall be determined in accordance with the coverage plan in which the member has three or more years of service credit. If the service credit is acquired under two different coverage plans applied to the same affiliated public employer as a consequence of an election by the members, adoption by the affiliated public employer or a change in the law that results in the application of a coverage plan with a greater pension, the greater pension shall be paid a member retiring from the affiliated public employer under which the change in coverage plan took place regardless of the amount of service credit under the coverage plan producing the greater pension; provided that the member has three or more years of continuous employment with that affiliated public employer immediately preceding or immediately preceding and immediately following the date the coverage plan changed;

(3) the pension of a member who has service credit earned on or before June 30, 2013 under each of two or more coverage plans and who has service credit earned under any coverage plan on or after July 1, 2013 shall be equal to the sum of:

(a) the pension attributable to the service credit earned on or before June 30, 2013 determined pursuant to Paragraph (1) or (2) of this subsection; and

(b) the pension attributable to the service credit earned under each coverage plan on or after July 1, 2013;

(4) the pension of a member who has service credit earned only on and after July 1, 2013 shall be equal to the sum of the pension attributable to the service credit the member has accrued under each coverage plan; and

(5) the provisions of each coverage plan for the purpose of this subsection shall be those in effect at the time the member ceased to be covered by the coverage plan. "Service credit", for the purposes of this subsection, shall be only personal service rendered an affiliated public employer and credited to the member under the provisions of Subsection A of Section 10-11-4 NMSA 1978. Service credited under any other provision of the Public Employees Retirement Act shall not be used to satisfy the three-year service credit requirement of this subsection."

SECTION 5. Section 10-11-123 NMSA 1978 (being Laws 1987, Chapter 253, Section 123) is amended to read:

"10-11-123. FUNDS OF ASSOCIATION.--

A. The accounting funds of the association are the "member contribution fund", "employers accumulation fund", "retirement reserve fund", [and] "income fund" and "pension investment plan accumulation fund". The maintenance of separate accounting funds shall not require the actual segregation of the assets of the association among the various funds.

B. The accounting funds provided for in Subsection A of this section are trust funds and shall be used only for the purposes provided in the Public Employees Retirement Act."

SECTION 6. Section 10-11-129 NMSA 1978 (being Laws 1987, Chapter 253, Section 129) is amended to read:

"10-11-129. DISTRIBUTION OF INCOME FUND.--The association shall at least annually distribute all or a portion of the balance in the income fund to the member contribution fund, the retirement reserve fund, [and] the [employer] employers accumulation fund and the pension investment plan accumulation fund. Distribution rates shall be determined by the retirement board and may vary by fund."

SECTION 7. A new section of the Public Employees Retirement Act is enacted to read:

"[NEW MATERIAL] RETURN TO EMPLOYMENT.--A retired member may be subsequently employed by a public employer if the retired member:

A. returns to work after not having been employed as an employee of an affiliated public employer or retained as an independent contractor by the affiliated public employer from which the retired member retired for at least twelve consecutive months from the date of retirement to the commencement of subsequent employment or reemployment with an affiliated public employer and:

(1) the retired member elects to not become a member during the subsequent employment and:

(a) upon commencement and for the duration of the subsequent employment, the retired member's pension and any cost-of-living adjustment are suspended;

(b) for the duration of the subsequent employment: 1) the retired member shall not make member contributions; 2) the retired member shall not accrue service credit; and 3) the retired member's subsequent affiliated public employer shall not make contributions under any coverage plan pursuant to the Public Employees Retirement Act; and

(c) at the conclusion of the subsequent employment, upon application to the association, the retired member's: 1) pension shall be reinstated in accordance with the coverage plan under which the retired member originally retired; and 2) cost-of-living pension adjustment shall be reinstated as provided in Subsection B of Section 10-11-118 NMSA 1978;

(2) the retired member elects to become a member and:

(a) the previously retired member's pension shall be terminated;

(b) the previously retired member and the subsequent affiliated public employer shall make the required member and employer contributions;

(d) when the previously retired member terminates the subsequent employment with an affiliated public employer, the pension shall be recalculated based on the form of payment selected by the previously retired member at the time of the first retirement and the provisions of the coverage plan applicable to the member on the date of the first retirement and the recalculated pension shall not be less than the amount of the terminated pension; or

(3) within five calendar years from the date of retirement, the retired adult correctional officer member, the retired juvenile correctional officer member, the retired municipal detention officer member, the retired municipal fire member, the retired municipal police member or the retired state police member elects to become a pension investment plan participant pursuant to the provisions of Section 10 of this 2016 act and:

(a) upon commencement of and for the duration of the subsequent employment, the pension investment plan participant's pension, including any cost-of-living adjustments, is deposited into an account in the participant's name in the pension investment plan accumulation fund during the time of subsequent employment with an affiliated public employer; and

(b) for the duration of the subsequent employment: 1) the pension investment plan participant shall make non-refundable member contributions to the member contribution fund pursuant to the coverage plan applicable to the participant's subsequent employment; 2) the pension investment plan participant's subsequent affiliated public employer shall not make the employer contributions pursuant to the coverage plan applicable to the participant's subsequent employment; 3) the pension investment plan participant shall not earn service credit for any period of the subsequent employment; and 4) the pension investment plan participant shall terminate participation in the pension investment plan within ten years of the date of retirement;

B. returns to employment during retirement pursuant to the provisions of the Magistrate Retirement Act, Judicial Retirement Act or the Educational Retirement Act. Such retired member is not subject to the provisions of Subsection A of this section and shall continue to receive a pension. Upon commencement and for the duration of the subsequent employment of a retired member pursuant to the provisions of this subsection, the retired member's cost-of-living pension adjustment shall be suspended. Upon termination of the subsequent employment, the retired member's cost-of-living pension adjustment shall be reinstated as provided in Subsection B of Section 10-11-118 NMSA 1978;

C. returns to employment as an employee of the legislature for a legislative session or a precinct board member for a municipal election or an election covered by the Election Code. Such retired member is entitled to continue to receive a pension during the subsequent employment and is not entitled to accrue service credit or purchase service credit in the future for all or any part of subsequent employment;

D. returns to employment after being elected to serve in an office covered pursuant to the Public Employees Retirement Act. Such retired member shall file an irrevocable application with the association within thirty days of taking office to:

(1) continue to receive a pension during the term of elected office; provided that during the term of elected office:

(a) the elected official shall not accrue service credit and shall not purchase service credit in the future for all or any part of the term of elected office; and

(b) the elected official shall not make member contributions and the affiliated public employer shall not make employer contributions;

(2) terminate retirement and reinstate membership during the term of elected office; provided that during the term of elected office:

(a) payment of the pension shall be discontinued;

(b) the elected official shall accrue service credit;

(d) at the conclusion of the term of elected office, the elected official shall retire under the terms of the retirement plan under which the elected official first retired; or

(3) within five calendar years from the date of retirement, the retired member elects to become a pension investment plan participant pursuant to the provisions of Section 10 of this 2016 act and:

(b) for the duration of the subsequent employment: 1) the pension investment plan participant shall make member contributions to the member contribution fund pursuant to the coverage plan applicable to the participant's subsequent employment; 2) the pension investment plan participant's subsequent affiliated public employer shall not make the employer contributions pursuant to the coverage plan applicable to the participant's subsequent employment; 3) the pension investment plan participant shall not earn service credit for any period of the subsequent employment; and 4) the pension investment plan participant shall terminate participation in the pension investment plan within ten years of the date of retirement; or

E. returned to employment with an affiliated public employer prior to July 1, 2010; provided that:

(1) the retired member shall pay the member contribution in an amount specified in the Public Employees Retirement Act for the position in which the retired member is subsequently employed; and

(2) notwithstanding the provisions of Section 10-11-118 NMSA 1978, the retired member's cost-of-living pension adjustment shall be suspended."

SECTION 8. A new section of the Public Employees Retirement Act is enacted to read:

"[NEW MATERIAL] PENSION INVESTMENT PLAN PURPOSE.--The purpose of the pension investment plan is to improve the funded status of the public employees retirement association funds, while also providing an incentive for skilled and trained members who retire after meeting the age and service requirements for normal retirement, to return to work for affiliated public employers, make the applicable employee contributions for that employment and invest their pensions into the public employees retirement association funds."

SECTION 9. A new section of the Public Employees Retirement Act is enacted to read:

"[NEW MATERIAL] PENSION INVESTMENT PLAN ACCUMULATION FUND CREATED.--The "pension investment plan accumulation fund" is the accounting fund in which shall be accumulated the pensions of participants in the pension investment plan and from which shall be paid all pensions deposited therein, together with investment earnings as determined by the retirement board and less any annual association service fee due and any penalties or taxes withheld pursuant to state or federal law, pursuant to the provisions of the Public Employees Retirement Act."

SECTION 10. A new section of the Public Employees Retirement Act is enacted to read:

"[NEW MATERIAL] PENSION INVESTMENT PLAN CREATED--SERVICE FEES.--

A. The "pension investment plan" is created. The pension investment plan and each pension investment plan account shall be administered by the association pursuant to the provisions of the Public Employees Retirement Act. The money deposited into the pension investment plan accumulation fund shall be invested by the retirement board as provided in the Public Employees Retirement Act.

B. Each pension investment plan account shall be debited a service fee in an amount equal to ten percent of the earnings on the balance in the account or one thousand two hundred dollars ($1,200) per year, whichever is greater.

C. A distribution from a pension investment plan account may be debited a withdrawal fee of ten percent of the lump-sum amount withdrawn. If applicable, the association may withhold from a distribution the amount of penalties or taxes incurred for such distribution under state or federal law.

D. Within three months of termination of subsequent employment consisting of twelve consecutive months or longer, a pension investment plan participant shall direct the association to distribute the pension investment plan account pursuant to an irrevocable election of one of the following payment options:

(1) a one-time payment of the balance, less the service fee due under Subsection B of this section and any withdrawal fee due under Subsection C of this section;

(2) a monthly payment of a portion of the balance for ten to thirty years in an amortized amount. The account shall be debited the service fee due under Subsection B of this section until the balance is zero; or

(3) a one-time payment of up to fifty percent of the balance, less the service fee due under Subsection B of this section and any withdrawal fee due under Subsection C of this section, and a monthly payment of a portion of the balance for ten to thirty years in an amortized amount. The account shall be debited the service fee due under Subsection B of this section until the balance is zero.

E. If the duration of subsequent employment is less than twelve consecutive months and the pension investment plan participant is not employed by another affiliated public employer within two months of termination of the subsequent employment, participation in the pension investment plan shall be terminated and the pension investment plan participant shall forfeit any investment earnings on the balance in the pension investment plan account. The service fee due under Subsection B of this section and any withdrawal fee due under Subsection C of this section shall be debited prior to the distribution of the balance pursuant to the provisions of this subsection.

F. In the case of death prior to termination of the subsequent employment, the balance in the pension investment plan account, less the service fee due under Subsection B of this section, shall be paid to the named beneficiary with no withdrawal fee."

SECTION 11. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2016.

- 32 -