SENATE BILL 194

49th legislature - STATE OF NEW MEXICO - second session, 2010

INTRODUCED BY

Sue Wilson Beffort

AN ACT

RELATING TO PUBLIC EMPLOYEE RETIREMENT; PROVIDING THAT PUBLIC EMPLOYEES BEGINNING EMPLOYMENT ON OR AFTER JULY 1, 2011 SHALL ENROLL IN A COMBINED CONTRIBUTION PENSION PLAN; REQUIRING A CONVERSION STRATEGY BY THE RETIREMENT BOARD OF THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION FOR TRANSFERRING FROM THE EXISTING DEFINED BENEFIT PENSION PLAN TO A COMBINED CONTRIBUTION PENSION PLAN.

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

     Section 1. A new section of the Public Employees Retirement Act is enacted to read:

     "[NEW MATERIAL] COMBINED CONTRIBUTION PENSION PLAN FOR EMPLOYEE CONTRIBUTIONS REQUIRED--CONVERSION STRATEGY REPORTING.--

          A. Every employee, initially employed by a public employer on or after July 1, 2011, shall enroll in a combined contribution pension plan administered by the retirement board.

          B. No later than December 15, 2010, the retirement board shall submit to the governor and the legislature a strategy, including measures necessary to ensure the continued actuarial soundness of the existing pension plans, for converting from the existing pension plans to a combined contribution pension plan pursuant to which:

                (1) the employer's contribution is made to a defined benefit pension plan, with employer contributions made pursuant to the existing pension plans; and

                (2) the employee's contribution is made to a defined contribution pension plan.

          C. The retirement board's strategy pertaining to the employer's defined benefit pension plan strategy shall contain alternatives for the governor and the legislature to consider in making changes to the existing defined benefit pension plan, including recommendations as to any reduction in benefits or increase in employer contributions.

          D. The strategy pertaining to the employee's defined contribution pension plan shall contain alternatives for the governor and the legislature to consider in adopting a defined contribution pension plan, including:

                (1) employee contribution rates;

                (2) plan portability;

                (3) a recommendation as to whether to provide employees with an investment selection based upon the state's investment portfolio;

                (4) options for current members to transfer from the existing pension plan to the combined contribution pension plan;

                (5) methods for selecting a plan administrator; and

                (6) methods for educating employees about the combined contribution pension plan, including education regarding investment strategies.

          E. As used in this section:

                (1) "combined contribution pension plan" means a system providing a pension benefit that consists of an employer's defined benefit pension plan in addition to an employee's defined contribution pension plan; and

                (2) "defined contribution pension 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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