2016 Spring Legislative Session Update

April 4, 2016

The following bills have been introduced that impact the Public School and Education Employee Retirement Systems of Missouri (PSRS/PEERS) and our members.

PSRS 2.55% Benefit Factor

House Bill (HB) 1420, introduced by Representative Nate Walker, HB 1780, introduced by Representative Paul Fitzwater, and Senate Bill (SB) 954, introduced by Senator David Pearce, re-establish the 2.55% benefit formula factor for PSRS members retiring with 31 or more years of service. All three bills contain emergency clauses and would be effective immediately upon becoming law. HB 1420 and HB 1780 were combined in committee as House Committee Substitute HCS HBs 1780 and HB 1420. HCS HBs 1780 and HB 1420 has passed the House and will have to be adopted by the Senate before it will go to Governor Nixon's desk.

The PSRS/PEERS Board of Trustees took a position in favor of these bills at the February 2016 Board meeting. The permanent re-establishment of the 2.55% benefit factor would result in a cost savings of almost $7.65 million annually for the Systems and would reduce PSRS/PEERS' Unfunded Actuarial Accrued Liability (UAAL) by over $78 million.

Joint-and-Survivor Plan Divorce "Pop-up"

House Bill (HB) 1709, introduced by Representative Mike Lair, allows PSRS/PEERS retirees who named their spouses under a Joint-and-Survivor plan to pop-up to the Single Life plan in the event of a divorce, if specific qualifications are met. Currently, such a pop-up is only available to Joint-and-Survivor plan benefit recipients when a beneficiary predeceases the member.

To qualify:

The divorce must occur on or after September 1, 2016.
The divorce decree must provide for sole retention of retirement benefits.
The retiree must file an application for the divorce "pop-up" provision.
Increased benefits begin at the time of application. Retroactive benefits are not payable.

HB 1709 will also change the time frame from 90 days to one year to file notification to the Systems of a remarriage for the purposes of changing the successor beneficiary.

The Board has taken a position in favor of this bill. This bill has already been passed by the House and will have to be adopted by the Senate before it will go to the Governor Nixon's desk.

Working After Retirement for Third-Party Employers or as Independent Contractors

House Bill (HB) 1710, introduced by Representative Mike Lair, requires PSRS retirees employed by a third party or working as an independent contractor in a temporary or long-term substitute position that requires a certificate to also comply with the statutory 50% salary and 550-hour working after retirement limits.

The Board has taken a position in favor of this bill, which would create a more equitable situation for retirees working as substitute teachers, whether they work directly for a covered employer or for a third-party contractor. This legislation would close a current gap in the working after retirement provisions for the System.

This bill has already been passed by the House and will have to be adopted by the Senate before it will go to Governor Nixon's desk.

Other Retirement Legislation

House Bill (HCS HB) 1472, introduced by Representative Tony Dugger, makes a minor change to the Pension Forfeiture Act of 2014. The Pension Forfeiture Act of 2014 states that any public retirement system participant found guilty or convicted of certain felonies in connection to his or her employment will forfeit retirement benefits from that public retirement system. HB 1472 makes the following modification:

It requires the employers to notify PSRS/PEERS of any felony charge or conviction in connection with an active member's employment. The current burden is on the courts to report to the Retirement System.

This bill has already been passed by the House and will have to be adopted by the Senate before it will go to Governor Nixon's desk.

Senate Bill (SB) 573, introduced by Senator Eric Schmitt, prohibits any public pension plan from contracting with or investing in stocks, bonds, or any direct holdings in companies that have active business operations in countries designated as "state sponsors of terrorism" by the United States Department of State as of January 1, 2015.

The Systems have an existing policy regarding terror-free investing that has been in place for nearly 10 years (since May 2005). The Systems' current policy requires our PSRS/PEERS investment staff to, at minimum, annually contact the Department of Homeland Security, the State Department, the Commerce Department, the Justice Department, the Treasury Department, the Securities and Exchange Commission, and any other federal agency deemed to have useful information in accurately identifying companies that are supporting terrorism.

The Systems have not identified any terrorist-related investments since the inception of the PSRS/PEERS policy in 2005.

This bill has already been passed by the Senate and will have to be adopted by the House before it will go to Governor Nixon's desk.

Senate Bill (SB) 980, introduced by Senator Joseph Keaveny, requires that certain information regarding the plan's financial details must be included in an annual pension statement, and states that each plan shall provide this annual statement to active participants. regardless of whether the statement is requested. A plan failing to provide an annual pension statement to active participants must submit in writing to the Joint Committee on Public Employee Retirement the reasons for not complying with the law.

SS SCS SB 980 still needs to be adopted by the Senate.

PSRS/PEERS sends nearly 150,000 member statements every year to our members. PSRS/PEERS Member Statements provide 10 pages of information, including details regarding dates for retirement eligibility, projected benefits, service and salary history, accrued contributions and interest as well as beneficiary information.

Stay Informed

Please keep in mind that the status of these bills can change daily. Bills must be passed and approved by the legislature and signed by Governor Nixon in order to become law.

Governor Nixon has 15 days to act on a bill if it is delivered to him during the legislative session, and 45 days if delivered to him after the legislature adjourns on May 13.