Spring Break Legislative Update
On March 30, the Missouri Legislature returned from their spring break. So far this session 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
Two bills have been introduced containing language to re-establish the 2.55% benefit formula factor for PSRS members. By law, this provision expired on July 1, 2014.
House Bill (HB) 478, introduced by Representative Paul Fitzwater, and Senate Bill (SB) 219, introduced by Senator Wayne Wallingford, repeal the July 1, 2014 expiration date so that members with 31 years or more of service will have their retirement allowance calculated using a 2.55% benefit factor. Currently, PSRS members with over 31 years of service utilize a 2.5% benefit factor.
The PSRS/PEERS Board of Trustees took a position in favor of these bills at the February 2015 Board meeting. The permanent re-establishment of the 2.55% benefit factor would result in a cost savings of $7.7 million annually for the Systems and would reduce PSRS/PEERS' Unfunded Actuarial Accrued Liability (UAAL) by nearly $70 million.
Work for Independent Contractors
House Bill (HB) 1085, introduced by Representative Mike Lair, requires any retiree employed by a third party or working as an independent contractor in the position of a temporary or long-term substitute teacher to comply with 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 school district or for a third-party contractor providing substitutes for a covered school district.
Joint-and-Survivor Plan Divorce "Pop-up"
House Bill (HB) 1086, also introduced by Representative Lair, allows any Joint-and-Survivor plan benefit recipient who has named his or her spouse to receive lifetime benefits at his or her death and subsequently divorces to "pop-up" to a Single Life benefit, if qualifications are met. Currently, such a pop-up is only available to Joint-and-Survivor plan benefit recipients when a spouse is named as beneficiary and that spouse predeceases the member.
- The divorce decree must provide for sole retention of retirement benefits.
- Retroactive benefits are not payable.
- The divorce must occur on or after September 1, 2015.
- The retiree must apply for the divorce "pop-up" provision.
The Board has taken a position in favor of this bill, as well.
Other Retirement Legislation
House Bill (HCS HB) 752, introduced by Representative Tony Dugger, changes the Pension Forfeiture Act of 2014, which was initially passed last year. The Pension Forfeiture Act states that any public retirement system participant found guilty of certain felonies in connection to his or her employment will forfeit retirement benefits from that public retirement system. HB 752 makes the following modifications to that act:
- It requires employers to notify PSRS/PEERS of any felony charge or conviction in connection with an active member's employment.
- It increases the threshold from $5,000 to $25,000 for felony stealing and felony receiving stolen property.
Please keep in mind that these bills have only been introduced and must be passed and approved by the legislature and signed by the governor in order to become law. This year's legislative session ends May 15.
While the Missouri legislature is in session, the PSRS/PEERS Board of Trustees and staff will continue to closely monitor any proposed legislation regarding retirement and education.