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SPONSOR: |
Vigil |
DATE TYPED: |
02/03/03 |
HB |
348 |
||
SHORT TITLE: |
Suspension of Retiree Benefits While Employed |
SB |
|
||||
|
ANALYST: |
Gilbert |
|||||
APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
$0.1
See Narrative |
Recurring |
PERA |
(Parenthesis
( ) Indicate Expenditure Decreases)
Relates to: HB 111, SB 376
LFC Files
Response
Received From
Public
Employees Retirement Association (PERA)
SUMMARY
Synopsis
of Bill
House Bill 348 amends the Public Employees
Retirement Act to allow Public Employees Retirement Association (PERA) retirees
to return to work with PERA affiliated employers, without suspension of pension
benefits. To avoid suspension of
benefits, such individuals must have received a pension pursuant to PERA for at
least twelve months and not have been employed as an employee or independent
contractor by an affiliated employer for at least 12 consecutive months. This provision would remain in effect from
January 1, 2004, until January 1, 2014.
Significant
Issues
Without a determination of its actuarial cost
(if any) by PERA’s actuary, HB 348 may violate NM Const., Art. XX, Section 22
(no benefits may be enhanced unless the costs of those benefits are properly
funded in accordance with actuarial standards).
Although PERA’s
actuaries have not performed a study to determine the impact of removal of the
retiree earnings limit, PERA believes that HB 348 may represent an increase in
benefits to PERA members.
NM Const., Art. XX, Section
22 provides that no benefits may be enhanced unless the costs of such benefits
are properly funded in accordance with actuarial standards. For HB 348 to be consistent with NM Const.
Art. XX, Section 22, an actuarial study must be performed showing that such
benefits are cost-neutral.
If this bill is
adopted, PERA must amend its regulations and retiree and member publications.
RELATIONSHIP
HB 111 proposes to increase the earnings limit for PERA retirees from the current $15.0 to $25.0.
SB 376 proposes to allow a retiree to collect a pension and continue working for an affiliated public employer without restriction if they remain unemployed for a period of 90-days after retirement.
OTHER SUBSTANTIVE ISSUES
If implemented, HB 348
could benefit public employers in two ways: they could utilize the expertise
and knowledge of PERA retirees, and also reduce their payroll costs associated
with group insurance benefits and PERA contributions.
According to PERA, HB 348 proposes to change the definition of “retire” as the term is used throughout the PERA Act by permitting retirees to collect pensions and, without earnings restrictions, continue to work for a PERA affiliated employer.
POSSIBLE QUESTIONS
Would HB 348 be cost neutral and thus avoid issues arising from NM Const., Art. XX, Section 22, if public employers and retirees are required to continue making contributions to PERA for all such earnings according to the provisions of the relevant retirement plan?
RLG/yr