SB0317

SENATE BILL 317

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Michael S. Sanchez

AN ACT

RELATING TO PENSIONS; AMENDING THE PUBLIC EMPLOYEES RETIREMENT ACT; REDUCING AND DELAYING THE COST-OF-LIVING ADJUSTMENT FOR CERTAIN RETIREES AND PROVIDING THAT BEGINNING JULY 2030 A ONE PERCENT INCREASE TO THE COST-OF-LIVING ADJUSTMENT SHALL BE DEPENDENT UPON THE ACTUARIAL FUNDED RATIO OF THE RETIREMENT FUND; CLARIFYING HOW SERVICE CREDIT EARNED UNDER MULTIPLE COVERAGE PLANS WILL BE CALCULATED; AMENDING CERTAIN PROVISIONS APPLICABLE TO MUNICIPAL FIRE MEMBER COVERAGE PLAN 5 MEMBERS BY INCREASING EMPLOYEE AND EMPLOYER CONTRIBUTION RATES, DECREASING THE PENSION MULTIPLIER FOR MEMBERS HIRED ON OR AFTER JULY 1, 2013 AND ELIMINATING THE PICK-UPS BY AN AFFILIATED PUBLIC EMPLOYER OF THE ONE AND ONE-HALF PERCENT EMPLOYEE CONTRIBUTION RATE INCREASE EFFECTIVE JULY 1, 2013.

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

SECTION 1. Section 10-11-5 NMSA 1978 (being Laws 1987, Chapter 253, Section 5, as amended) is amended to read:

"10-11-5. CREDITED SERVICE--MUNICIPAL ELECTION TO MAKE EMPLOYEE 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, [however, a] except that the affiliated public employer shall not pay the one and one-half percent increase in employee member contribution rates effective July 1, 2013 applicable to members covered under municipal fire member coverage plan 5;

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

(1) elect to increase the percentage of employee member contributions for which it will be responsible; or

(2) 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 member contributions than that which it elected to make under a previous coverage plan;

[B.] C. the resolution or 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;

[C.] D. the portion of the employee 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 [under] pursuant to the provisions of this section;

[D.] 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

[E.] F. any municipal affiliated public employer increasing the percentage of the employee member contributions it 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 member contributions that will be made by the municipal affiliated public employer."

SECTION 2. Section 10-11-8 NMSA 1978 (being Laws 1987, Chapter 253, Section 8, as amended) is amended to read:

"10-11-8. NORMAL RETIREMENT--RETURN TO EMPLOYMENT--BENEFITS CONTINUED--[EMPLOYER] CONTRIBUTIONS--SERVICE CREDIT EARNED UNDER MULTIPLE COVERAGE PLANS.--

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 D 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 employment or reemployment with an affiliated public employer;

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

(3) except as provided in Subsection F of this section, the previously retired member shall not become a member and thus the previously retired member shall accrue no service credit and the previously retired member and that person's affiliated public employer shall make no contributions under any coverage plan pursuant to the Public Employees Retirement Act; and

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

D. The provisions of Subsection C 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; 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.

E. A retired member who returns to employment during retirement pursuant to Subsection D 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 previously retired member's reemployment with an affiliated public employer.

F. At any time during a previously retired member's subsequent employment pursuant to Subsection C of this section, the previously 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

G. A previously 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 previously retired member returned to work; provided that, on and after July 1, 2010, the previously retired member shall pay the employee contribution in an amount specified in the Public Employees Retirement Act for the position in which the previously retired member is employed.

H. 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 3. Section 10-11-112 NMSA 1978 (being Laws 1987, Chapter 253, Section 112) is amended to read:

"10-11-112. MUNICIPAL FIRE MEMBER COVERAGE PLAN 5--AMOUNT OF PENSION--FORM OF PAYMENT A.--Under municipal fire member coverage plan 5, the amount of pension under form of payment A is equal to:

A. for a member who was a retired member or a member on June 30, 2013, the sum of three and one-half percent of the final average salary multiplied by credited service. The amount shall not exceed eighty percent of the final average salary; and

B. for a member who was not a retired member or a member on June 30, 2013, the sum of three and twenty-five hundredths percent of the final average salary multiplied by credited service. The amount shall not exceed eighty-five percent of the final average salary."

SECTION 4. Section 10-11-114 NMSA 1978 (being Laws 1987, Chapter 253, Section 114, as amended) is amended to read:

"10-11-114. MUNICIPAL FIRE MEMBER COVERAGE PLAN 5--MEMBER CONTRIBUTION RATE.--A member under municipal fire member coverage plan 5 shall contribute [sixteen and two-tenths] seventeen and seven-tenths percent of salary."

SECTION 5. Section 10-11-115 NMSA 1978 (being Laws 1987, Chapter 253, Section 115, as amended) is amended to read:

"10-11-115. MUNICIPAL FIRE MEMBER COVERAGE PLAN 5--AFFILIATED PUBLIC EMPLOYER CONTRIBUTION RATE.--The affiliated public employer shall contribute [twenty-one and twenty-five one-hundredths] twenty-two and seventy-five hundredths percent of the salary of each member whom it employs and covers under municipal fire member coverage plan 5, except that:

A. from July 1, 2013 through June 30, 2014, the affiliated public employer contribution rate shall be twenty-one and seventy-five hundredths percent of the salary of each member; and

B. from July 1, 2014 through June 30, 2015, the affiliated public employer contribution rate shall be twenty-two and twenty-five hundredths percent of the salary of each member."

SECTION 6. Section 10-11-118 NMSA 1978 (being Laws 1987, Chapter 253, Section 118, as amended) is amended to read:

"10-11-118. COST-OF-LIVING ADJUSTMENTS--QUALIFIED PENSION RECIPIENT.--

A. For the purposes of this section:

(1) "preceding calendar year" means the twelve-month period ending on the December 31 preceding the July 1 in which pensions are being adjusted; and

(2) "second preceding calendar year" means the full calendar year prior to the preceding calendar year.

B. A qualified pension recipient is eligible for a cost-of-living pension adjustment. Beginning July 1, 2013, the amount of pension payable to a qualified pension recipient shall be increased [three] two percent each July 1. The amount of the increase shall be determined by multiplying the amount of pension inclusive of all prior adjustments by [three] two percent, except that beginning on May 1, 2030, and no later than May 1 every five years thereafter, the retirement board shall certify to the association the actuarial funded ratio of the fund as of June 30 of the preceding calendar year. The amount of pension payable to a qualified pension recipient shall be determined as follows:

(1) if the certified funded ratio of the fund equals an amount less than eighty percent funded, the amount of pension payable shall be increased two percent. The amount of the increase applied pursuant to this paragraph shall be determined by multiplying the amount of the pension inclusive of all prior adjustments by two percent; or

(2) if the certified funded ratio of the fund equals an amount greater than or equal to eighty percent funded, the amount of pension payable shall be increased three percent. The amount of the increase applied pursuant to this paragraph shall be determined by multiplying the amount of the pension inclusive of al1 prior adjustments by three percent.

C. A qualified pension recipient is:

(1) a normal retired member who:

(a) retires on or before June 30, 2016 and has been retired for at least two full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted; or

(b) retires on or after July 1, 2016 and has been retired for at least three full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(2) a normal retired member who has attained age sixty-five years and been retired for at least one full calendar year from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(3) a disability retired member who has been retired for at least one full calendar year from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(4) a survivor beneficiary who has received a survivor pension for at least two full calendar years; or

(5) a survivor beneficiary of a deceased retired member who otherwise would have been retired at least two full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted.

D. A qualified pension recipient may decline an increase in a pension by giving the association written notice of the decision to decline the increase at least thirty days prior to the date the increase would take effect."

SECTION 7. Section 10-11-130 NMSA 1978 (being Laws 1987, Chapter 253, Section 130, as amended) is amended to read:

"10-11-130. RETIREMENT BOARD--AUTHORITY--MEMBERSHIP--DUTY TO CERTIFY FUNDED RATIO.--

A. The "retirement board" is created and is the trustee of the association and the funds created by the state retirement system acts and has all the powers necessary or convenient to carry out and effectuate the purposes and provisions of the state retirement system acts, including, in addition to any specific powers provided for in the Public Employees Retirement Act but without limiting the generality of the foregoing, the power to:

(1) administer the state retirement system acts, including the management of the association and making effective the provisions of those acts, as well as to administer and manage any other employee benefit acts as provided by law;

(2) in addition to utilizing services of the attorney general and notwithstanding any other provision of law, employ or contract with and compensate competent legal counsel to handle the legal matters and litigation of the retirement board and the association and to give advice and counsel in regard to any matter connected with the duties of the retirement board;

(3) administer oaths;

(4) adopt and use a seal for authentication of records, processes and proceedings;

(5) create and maintain records relating to all members, affiliated public employers and all activities and duties required of the retirement board;

(6) issue subpoenas and compel the production of evidence and attendance of witnesses in connection with any hearings or proceedings of the retirement board;

(7) make and execute contracts;

(8) purchase, acquire or hold land adjacent to the state capitol grounds or other suitable location and build thereon a building to house the association and its employees and, in the event additional office space is available in the building after the retirement board and its employees have been housed, to rent or lease the additional space to any public agency or private person; provided that first priority for the rental or leasing shall be to public agencies; and further provided that for the purpose of purchasing, acquiring or holding the land and the building thereon, the retirement board may use funds from the income fund and any other funds controlled by the retirement board the use of which for such purposes is not prohibited by law;

(9) after the sale of the land and building acquired pursuant to Paragraph (8) of this subsection, acquire land and build thereon a new building to house the association and its employees and hold the building and land in fee simple in the name of the association. In order to acquire the land and plan, design and construct the building, the retirement board may expend the proceeds of the sale of the land and building acquired pursuant to Paragraph (8) of this subsection or any funds controlled by the board, the use of which for such purposes is not otherwise prohibited by law;

(10) make and adopt such reasonable rules as may be necessary or convenient to carry out the duties of the retirement board and activities of the association, including any rules necessary to preserve the status of the association as a qualified pension plan under the provisions of the Internal Revenue Code of 1986, as amended, or under successor or related provisions of law;

(11) designate committees and designate committee members, including individuals who may not be members of the association; and

(12) select and contract for the services of one or more custodian banks for all funds under the retirement board's management. For the purpose of this paragraph, "custodian bank" means a financial institution with the general fiduciary duties to manage, control and collect the assets of an investment fund, including receiving all deposits and paying all disbursements as directed by staff, safekeeping of assets, coordination of asset transfers, timely settlement of securities transactions and accurate and timely reporting of the assets by individual account and in total.

B. In addition to the powers provided to the retirement board in Subsection A of this section, the retirement board shall certify to the association the actuarial funded ratio of the fund as provided in Subsection B of Section 10-11-118 NMSA 1978.

[B.] C. The retirement board consists of:

(1) the secretary of state;

(2) the state treasurer;

(3) four members under a state coverage plan to be elected by the members under state coverage plans;

(4) four members under a municipal coverage plan to be elected by the members under municipal coverage plans, provided one member shall be a municipal member employed by a county; and

(5) two retired members to be elected by the retired members of the association.

[C.] D. The results of elections of elected members of the retirement board shall be certified at the annual meeting of the association. Elections shall be conducted according to rules the retirement board adopts from time to time.

[D.] E. The regular term of office of the elected members of the retirement board is four years. The term of one retirement board member under a state coverage plan expires annually on December 31. The terms of retirement board members under a municipal coverage plan expire on December 31 of noncoinciding years in the pattern set by the retirement board. Members of the retirement board serve until their successors have qualified.

[E.] F. A member elected to the retirement board who fails to attend four consecutively scheduled meetings of the retirement board, unless in each case excused for cause by the retirement board members in attendance, is considered to have resigned from the retirement board, and the retirement board shall by resolution declare the office vacated as of the date of adoption of the resolution. A vacancy occurring on the retirement board, except in the case of an elected official, shall be filled by the remaining retirement board members, without requirement that a quorum be present. The member appointed to fill the vacancy serves for the remainder of the vacated term.

[F.] G. Members of the retirement board serve without salary for their services as retirement board members, but they shall receive those amounts authorized under the Per Diem and Mileage Act.

[G.] H. The retirement board shall hold four regular meetings each year and shall designate in advance the time and place of the meetings. Special meetings and emergency meetings of the retirement board may be held upon call of the chair or any three members of the retirement board. Written notice of special meetings shall be sent to each member of the retirement board at least seventy-two hours in advance of the special meeting. Verbal notice of emergency meetings shall be given to as many members as is feasible at least eight hours before the emergency meeting, and the meeting shall commence with a statement of the nature of the emergency. The retirement board shall adopt its own rules of procedure and shall keep a record of its proceedings. All meetings of the retirement board shall comply with the Open Meetings Act. A majority of retirement board members shall constitute a quorum. Each attending member of the retirement board is entitled to one vote on each question before the retirement board, and at least a majority of a quorum shall be necessary for a decision by the retirement board.

[H.] I. Annual meetings of the members of the association shall be held in Santa Fe at such time and place as the retirement board shall from time to time determine. Special meetings of the members of the association shall be held in Santa Fe upon call of any seven retirement board members. The retirement board shall send a written notice to the last known residence address of each member currently employed by an affiliated public employer at least ten days prior to any meeting of the members of the association. The notice shall contain the call of the meeting and the principal purpose of the meeting. All meetings of the association shall be public and shall be conducted according to procedures the retirement board shall from time to time adopt. The retirement board shall keep a record of the proceedings of each meeting of the association.

[I.] J. Neither the retirement board nor the association shall allow public inspection of, or disclosure of, information from any member or retiree file unless a prior release and consent, in the form prescribed by the association, has been executed by the member or retiree; except that applicable coverage plans, amounts of retirement plan contributions made by members and affiliated public employers, pension amounts paid and the names and addresses of public employees retirement association members or retirees requested for election purposes by candidates for election to the retirement board may be produced or disclosed without release or consent."

SECTION 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2013.

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