SENATE BILL 1041

47th legislature - STATE OF NEW MEXICO - first session, 2005

INTRODUCED BY

Leonard Lee Rawson

AN ACT

RELATING TO PUBLIC EMPLOYEE RETIREMENT; PROVIDING THAT PUBLIC EMPLOYEES BEGINNING EMPLOYMENT AFTER JULY 1, 2006 SHALL ENROLL IN A DEFINED CONTRIBUTION PLAN; REQUIRING A CONVERSION PLAN BY THE RETIREMENT BOARD OF THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION FOR TRANSFERRING FROM THE EXISTING DEFINED BENEFIT PENSION PLAN TO A DEFINED CONTRIBUTION PLAN.

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

     Section 1. Section 10-11-3 NMSA 1978 (being Laws 1987, Chapter 253, Section 3, as amended) is amended to read:

     "10-11-3. MEMBERSHIP--REQUIREMENTS--EXCLUSIONS--

TERMINATION.--

          A. Except as may be provided for in the Volunteer Firefighters Retirement Act, the Judicial Retirement Act, the Magistrate Retirement Act, the Educational Retirement Act and the provisions of Sections 29-4-1 through 29-4-11 NMSA 1978 governing the state police pension fund, each employee and elected official of every affiliated public employer shall be a member of the association, unless excluded from membership in accordance with Subsection B of this section.

          B. The following employees and elected officials are excluded from membership in the association:

                (1) elected officials who file with the association a written application for exemption from membership within twenty-four months of taking office;

                (2) elected officials who file with the association a written application for exemption from membership within twenty-four months of the date the elected official's public employer becomes an affiliated public employer;

                (3) employees designated by the affiliated public employer as seasonal or student employees;

                (4) employees who file with the association a written application for exemption from membership within thirty days of the date the employee's public employer becomes an affiliated public employer;

                (5) employees of an affiliated public employer that is making contributions to a private retirement program on behalf of the employee as part of a compensation arrangement who file with the association a written application for exemption within thirty days of employment, unless the employee has previously retired under the provisions of the Public Employees Retirement Act;

                (6) employees of an affiliated public employer who have retired under and are receiving a pension pursuant to the provisions of the Educational Retirement Act; [and]

                (7) retired members who return to work pursuant to Section 10-11-8 NMSA 1978 and are exempted from membership by the provisions of that section; and

                (8) employees of a public employer who were initially employed by any public employer on or after July 1, 2006.

          C. Employees designated as seasonal and student employees shall be notified in writing by their affiliated public employer of the designation and the consequences of the designation with respect to membership, service credit and benefits. A copy of the notification shall be filed with the association within thirty days of the date of employment.

          D. An exemption from membership by an elected official shall expire at the end of the term of office for which filed.

          E. Employees and elected officials who have exempted themselves from membership may subsequently withdraw the exemption by filing a membership application. Membership shall commence the first day of the first pay period following the date the application is filed.

          F. The membership of an employee or elected official shall cease if the employee terminates employment with an affiliated public employer or the elected official leaves office and the employee or elected official requests and receives a refund of member contributions."

     Section 2. A new section of the Public Employees Retirement Act is enacted to read:

     "[NEW MATERIAL] DEFINED CONTRIBUTION PLAN REQUIRED--CONVERSION PLAN.--

          A. Every employee, initially employed by a public employer on or after July 1, 2006, shall enroll in a defined contribution plan administered by the retirement board.

          B. No later than December 15, 2005, the retirement board shall submit a plan to the governor and the legislature for converting from the existing pension plans to a defined contribution plan. The plan shall contain alternatives for the governor and the legislature to consider in adopting a defined contribution plan, including:

                (1) employer and employee contribution rates;

                (2) plan portability;

                (3) options for current members to transfer from the existing pension plan to the defined contribution plan;

                (4) measures necessary to ensure the continued actuarial soundness of the existing plans;

                (5) methods for selecting a plan administrator; and

                (6) methods for educating employees about the defined contribution plan.

          C. As used in this section, "defined contribution plan" means a system providing a pension benefit, unique to each retiree, that is equal to the combined employer and employee contributions for that employee plus interest and other net investment earnings, less administrative expenses."

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