Below is a description of recent legislation which affects active or retired members of the Oklahoma Public Employees Retirement System (OPERS).
2009 Legislation
There was one bill passed during the 2009 legislative session that impacted OPERS members. Below is a description of SB 899 which amends the “felony forfeiture” provision in 51 Okla. Statutes, Section 24.1. Senate Bill 212 amends a provision of law dealing with the Board of Trustees’ authority to set employer contribution rates for the URSJJ. House Bill 1254 provides additional funding to the URSJJ.
Senate Bill 899
This bill amends 51 O.S. § 24.1 dealing with the loss of public officials’ positions and pensions if they are convicted of certain crimes. Under prior law, state officers and employees could lose their state pensions if the crime amounted to a “violation of the oath of office” of that official. This provision was removed and replaced by identifying specific crimes that will forfeit an official’s pension. Felony crimes such as bribery, forgery, perjury and campaign-related offenses are all specifically identified. In addition, other felony crimes related to the official’s office or employment will trigger a forfeiture. The procedure followed by the retirement system when receiving notice of a conviction or plea of guilt to one of these crimes is spelled out. When the system receives such notice, the pension of that individual is suspended with the right of an appeal to the system. The Governor signed the bill on April 21, 2009.
Senate Bill 212
This bill deletes the mandatory requirement that the URSJJ never fall below a 100% funded ratio. Instead, a target of “at or near” a 90% funded ratio is adopted, coupled with the preservation of the Board’s ability to adjust contribution rates. The bill makes the contribution rate setting power of the Board more flexible. Under prior law, once the URSJJ has a funded ratio below 100%, the Board had to set a very high employer contribution rate. It had to be high enough to get the funded ratio back to 100% in a single fiscal year. Under the revised law, the Board and staff can work toward achieving the setting and collecting of the actuarially determined employer rate over a period of time. The Governor signed the bill on June 1, 2009.
House Bill 1254
This bill was a spending bill for the Court System. It provides in Section 9 that $6 million in the Supreme Court’s Management Information System’s fund, may be used to pay employer contributions to the URSJJ. The Governor signed the bill on June 2, 2009.
2008 Legislation
Senate Bill 1641
Revision to Elected Officials’ Benefits
Senate Bill 1641 becomes effective Aug. 21, 2008, and closes a benefit provision that allows non-elected service to be counted the same as elected service for retirement. Prior to the passage of this bill, any regular, non-elected member of OPERS who finished their career as an elected official, and had at least six (6) years in elected office, was able to count all of their non-elected service as if they were in office for their entire career. This may have given certain elected officials a larger pension than they actually paid for throughout their career. Members who are elected officials prior to the effective date of the bill are not affected by the change in law. Current OPERS members who are elected after the effective date will have a benefit cap of 100% of their highest annual salary that they received. Members who join OPERS after the effective date of the bill will receive a benefit consisting of two separate calculations. Non-elected years will be multiplied by 2%, and elected years multiplied by the applicable percentage selected and paid for by the member.
House Bill 3112
OPERS Retiree Cost of Living Adjustment
House Bill 3112 provides that any person receiving benefits from OPERS as of June 30, 2007, who is still receiving the benefit on July 1, 2008, will receive a 4% cost of living adjustment applied to their gross benefit amount paid beginning July 2008.
Rules Changes for Retirees Returning to Work
House Bill 3112 prevents a retiring member from returning to work with the same employer from which he or she retired for a period of one (1) year, unless electing to waive the receipt of their OPERS retirement benefit during that re-employment period.
2007 Legislation
Senate Bill 1112
OPERS 60-Day Notice to Retire Waiver Procedure
This amends the statute that deals with the 60-day notice required to retire from OPERS. The former law permitted the Board of Trustees to waive the notice at its discretion. The amendment will permit the Executive Director of OPERS to grant waivers of the 60-day notice “for good cause shown” as defined by the Board. The Board can still review denials of waiver requests.
Medicare Gap Benefit Change
This amends the Medicare Gap benefit statute. Under the former law, most OPERS members can select this benefit which gives them a slightly higher retirement benefit until they reach Medicare age. The member then sees an actuarially reduced benefit for the rest of his or her life to pay for the higher benefit. Under the former law, the reduction in benefits after age 65 takes place "in January of the year following the member's 65th birthday." The amendment starts the reduction in the "month following" the 65th birthday. The change in law will have no application to those who retired prior to the effective date of SB 1112.
2006 Legislation
Senate Bill 1894
Oklahoma Pension Legislation Actuarial Analysis Act (“Georgia” bill)
The bill applies to OPERS, the Judicial Retirement System and the Teachers Retirement System. The bill has three (3) prominent features. All retirement bills with fiscal impact must be introduced in odd years and voted on in even-numbered years. This can be bypassed for an “emergency” bill by a ¾ vote of each house. Each such bill must be analyzed for actuarial fiscal impact by a “Legislative Actuary.” The actuary is hired by the Legislative Service Bureau. Finally, any retirement bill with fiscal impact must contain adequate funding either through a lump-sum appropriation or an increase in contributions sufficient to pay the cost of the change. The bill permits the Legislature to grant Cost of Living Adjustments (COLAs) without following the restrictions in the bill. COLAs can be given by the Legislature as long as they do not exceed the actuarial assumption of the System. OPERS assumes it will pay a 2% COLA each year for actuarial purposes.
House Bill 1179 XX (Special Session)
OPERS Option C Retirement Benefit
Section 33 of the bill amends the “Option C” retirement benefit option in 74 O.S. § 918. Option C provides for a benefit paid to a member which is only slightly reduced from the maximum benefit. If the member dies before the passage of ten years, a beneficiary is guaranteed to receive the same payment for the remaining part of the 10 year certain period. Under current law, if a member dies before the passage of the ten year period, and the beneficiary isn’t alive or doesn’t survive for the ten year period, the estate of the member or the beneficiary receives the payment. The amendment permits OPERS to pay the present value of the payments in a lump sum so it can be distributed immediately.
OPERS Employee Contribution Rate
Section 34 amends 74 O.S. § 919.1 and makes the OPERS state employee contributions a flat 3.5%. The current rate structure of 3% on the first $25,000 of salary and 3.5% on the remainder is repealed. All state employees who earn at least $25,000 per year will only pay $125 more due to this increase.
OPERS Retiree Cost of Living Adjustment (COLA)
House Bill 1179 XX provides that any person receiving benefits from OPERS as of June 30, 2005, who is still receiving the benefit on July 1, 2006, will get a 4% increase in that benefit. The increased benefit will take effect with the payments and checks at the end of July. Retirees, disability retirees, Option C beneficiaries, and surviving joint annuitants will all get this increase. As an example, if the gross benefit was $1,000 per month, the new gross benefit will be $1,040.