SECOND REGULAR SESSION
HOUSE BILL NO. 1305
93RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVES SMITH (118) (Sponsor), DEMPSEY, FRANZ, VIEBROCK, BEAN, YAEGER, PORTWOOD AND SANDER (Co-sponsors).
Read 1st time January 10, 2006 and copies ordered printed.
STEPHEN S. DAVIS, Chief Clerk
To repeal sections 70.615, 105.660, 105.665, and 320.320, RSMo, and to enact in lieu thereof nine new sections relating to retirement plans.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 70.615, 105.660, 105.665, and 320.320, RSMo, are repealed and nine new sections enacted in lieu thereof, to be known as sections 70.615, 104.1095, 105.660, 105.665, 105.666, 105.667, 105.684, 320.320, and 321.696, to read as follows:
70.615. After October 13, 1967, a political subdivision shall not commence coverage of its employees [who are neither policemen nor firemen] under another plan similar in purpose to this system, other than under this system, except the federal Social Security Old Age, Survivors, and Disability Insurance Program, as amended; except that, any political corporation or subdivision of this state, now having or which may hereafter have an assessed valuation of [one] five hundred million dollars or more, which does not now have a pension system for its officers and employees adopted pursuant to state law, may provide by proper legislative action of its governing body for the pensioning of its officers and employees and the widows and minor children of deceased officers and employees under a plan separate and apart from that provided in sections 70.600 to 70.670 and appropriate and utilize its revenues and other available funds for such purposes, and except that the board of hospital trustees of any hospital which is owned by any political corporation or subdivision of this state, may provide for the pensioning of its employees and the widows and minor children of deceased employees under a plan separate and apart from that provided in sections 70.600 to 70.670, and utilize its revenues and other funds for such purposes.
104.1095. Notwithstanding any law to the contrary, if the actuary for the system created and established under sections 104.020 and 104.1006 determines that the plan has a funded ratio below fifty percent for three consecutive plan years, the plan shall be closed to any new members effective January first of the year following such determination.
105.660. The following words and phrases as used in sections 105.660 to 105.685, unless a different meaning is plainly required by the context, shall mean:
(1) "Actuarial valuation", a mathematical process which determines plan financial condition and plan benefit cost;
(2) "Actuary", an actuary (i) who is a member of the American Academy of Actuaries or who is an enrolled actuary under the Employee Retirement Income Security Act of 1974 and (ii) who is experienced in retirement plan financing;
(3) "Board", the governing board or decision-making body of a plan that is authorized by law to administer the plan;
(4) "Defined benefit plan", a plan providing a definite benefit formula for calculating retirement benefit amounts;
(5) "Defined contribution plan", a plan in which the contributions are made to an individual retirement account for each employee;
(6) "Funded ratio", the ratio of the actuarial value of assets over its actuarial accrued liability;
(7) "Lump sum benefit plan", payment within one taxable year of the entire balance to the participant from a plan;
[(3)] (8) "Plan", any retirement system established by the state of Missouri or any political subdivision or instrumentality of the state for the purpose of providing plan benefits for elected or appointed public officials or employees of the state of Missouri or any political subdivision or instrumentality of the state;
[(4)] (9) "Plan benefit", the benefit amount payable from a plan together with any supplemental payments from public funds;
[(5)] (10) "Substantial proposed change", a proposed change in future plan benefits which would increase or decrease the total contribution percent by at least one-quarter of one percent of active employee payroll, or would increase or decrease a plan benefit by five percent or more, or would materially affect the actuarial soundness of the plan. In testing for such one-quarter of one percent of payroll contribution increase, the proposed change in plan benefits shall be added to all actual changes in plan benefits since the last date that an actuarial valuation was prepared.
105.665. 1. The legislative body or committee thereof which determines the amount and type of plan benefits to be paid shall, before taking final action on any substantial proposed change in plan benefits, cause to be prepared a statement regarding the cost of such change.
2. The cost statement shall be prepared by an actuary using the methods used in preparing the most recent periodic actuarial valuation for the plan and shall, without limitation by enumeration, include the following:
(1) The level normal cost of plan benefits currently in effect, which cost is expressed as a percent of active employee payroll;
(2) The contribution for unfunded accrued liabilities currently payable by the plan, which cost is expressed as a percent of active employee payroll and shall be over a period not to exceed [forty] thirty years;
(3) The total contribution rate expressed as a percent of active employees payroll, which contribution rate shall be the total of the normal cost percent plus the contribution percent for unfunded accrued liabilities;
(4) A statement as to whether the legislative body is currently paying the total contribution rate as defined in subdivision (3) of this subsection;
(5) The total contribution rate expressed as a percent of active employee payroll which would be sufficient to adequately fund the proposed change in benefits;
(6) A statement as to whether such additional contributions are mandated by the proposed change;
(7) A statement as to whether or not the proposed change would in any way impair the ability of the plan to meet the obligations thereof in effect at the time the proposal is made;
(8) All assumptions relied upon to evaluate the present financial condition of the plan and all assumptions relied upon to evaluate the impact of the proposed change upon the financial condition of the plan, which shall be those assumptions used in preparing the most recent periodic actuarial valuation for the plan, unless the nature of the proposed change is such that alternative assumptions are clearly warranted, and shall be made and stated with respect to at least the following:
(a) Investment return;
(b) Pay increase;
(c) Mortality of employees and officials, and other persons who may receive benefits under the plan;
(d) Withdrawal (turnover);
(f) Retirement ages;
(g) Change in active employee group size;
(9) The actuary shall certify that in the actuary's opinion the assumptions used for the valuation produce results which, in the aggregate, are reasonable;
(10) A description of the actuarial funding method used in preparing the valuation including a description of the method used and period applied in amortizing unfunded actuarial accrued liabilities;
(11) The increase in the total contribution amount required to adequately fund the proposed change in benefits, expressed in annual dollars as determined by multiplying the increase in total contribution rate by the active employee annual payroll used for this valuation.
105.666. Each plan shall, in conjunction with its staff and advisors, establish a board member education program, which shall be in effect on or after January 1, 2007. The curriculum shall include, at a minimum, education in the areas of duties and responsibilities of board members as trustees, ethics, governance process and procedures, pension plan design and administration of benefits, investments including but not limited to the fiduciary duties as defined under section 105.688, legal liability and risks associated with the administration of a plan, sunshine law requirements under chapter 610, RSMo, actuarial principles and methods related to plan administration, and the role of staff and consultants in plan administration. Board members appointed or elected on a board on or after January 1, 2007, shall complete a board member education program designated to orient new board members in the areas described in this section within ninety days of becoming a new board member. Board members who have served one or more years shall attend at least two continuing education programs each year in the areas described in this section.
105.667. 1. Any appointing authority, board member, or employee shall be prohibited from receiving any gain or profit from any funds or transaction of the plan, except benefits from interest in investments common to all members of the plan, if entitled thereto.
2. Any appointing authority, board member, or employee accepting any political contribution, gratuity, or compensation for the purpose of influencing his or her action with respect to the investment of the funds of the system shall thereby forfeit his or her office and in addition thereto be subject to the penalties prescribed for bribery.
3. Any trustee, employee, or participant of a plan convicted of a felony that is determined by a court of law to have been committed in connection with the member's duties as either a trustee, employee, or participant of a plan shall not be eligible to receive any retirement benefits from the respective plan.
105.684. 1. Notwithstanding any law to the contrary, on or after August 28, 2006, any plan with a funded ratio less than eighty percent shall be prohibited from providing any additional benefit increase, supplement, enhancement, lump sum benefit payments to participants, or cost-of-living adjustment beyond the current provisions of the then existing plan.
2. Notwithstanding any law to the contrary, any plan with a funded ratio greater than eighty percent may adopt or implement a benefit increase, supplement, or enhancement, provided the funded ratio does not decrease more than ten percent and the total funded ratio does not fall below seventy-five percent.
3. The unfunded actuarial accrued liabilities associated with benefit changes described in this section shall be amortized over a period not to exceed fifteen years for purposes of calculation of the unfunded ratio and payment of contributions associated with the adoption or implementation of any such benefit increase, supplement, or enhancement.
4. Any plan with a funded ratio below sixty percent shall have the actuary prepare an accelerated contribution schedule based on a descending amortization period for inclusion in the actuarial valuation.
5. Any plan whose actuary determines that the plan has a funded ratio below fifty percent for three consecutive plan years shall be closed to any new members effective January first of the year following such determination.
6. Any plan whose actuary determines that the plan has a funded ratio below sixty percent not meeting one hundred percent of the actuarially required contribution payment shall be closed to any new members effective January first following such determination.
7. Nothing in this section shall apply to any plan established under chapter 476, RSMo.
320.320. 1. A volunteer firefighter serving a rural, volunteer or subscription fire department or organization is serving the state of Missouri in an official capacity as a fire protection volunteer and is hereby declared to be a public safety officer of the state of Missouri serving without wages, salary or certain other employee-type fringe benefits described in subsection 3 of this section.
2. The designation of a volunteer firefighter as a public safety officer of the state of Missouri in subsection 1 of this section does not entitle a volunteer firefighter to any rights, privileges or benefits provided to an employee or official of the state of Missouri, including retirement benefits and participation in the state legal defense fund, except as provided in subsection 3 of this section.
3. Notwithstanding the provisions of subsection 2 of this section, any rural, volunteer or subscription fire department or organization, or volunteer fire protection association as defined in section 320.300, may provide life insurance, accident, sickness, health, disability, annuity, [length of service, retirement, pension] defined contribution benefit and other employee-type fringe benefits, subject to the provisions of section 70.615, RSMo, for volunteer firefighters who are members of any such department, organization or association and such other benefits for their spouses and eligible unemancipated children as the governing board deems appropriate, either through a contributory or noncontributory plan, or both. For purposes of this section, "eligible unemancipated child" means a natural or adopted child of an insured, or a stepchild of an insured who is domiciled with the insured, who is less than twenty-three years of age, who is not married, not employed on a full-time basis, not maintaining a separate residence except for full-time students in an accredited school or institution of higher learning, and who is dependent on parents or guardians for at least fifty percent of his or her support. The type and extent of such benefits shall be determined by the governing board of the department, organization or association, whichever is applicable. The provision and receipt of such benefits shall not make the recipient an employee of the district, association or organization. Directors or board members who are also volunteer firefighters may receive such benefits while serving as a director or board member of the district, association or organization.
321.696. Notwithstanding any other provision of law, effective January 1, 2007, defined benefit pension plans shall not be established by any district for salaried members, volunteer members, or district board of directors except under the provisions of chapter 70, RSMo.