HCS#2 SB 406 -- EMPLOYEE BENEFIT PLANS

SPONSOR:  Crowell (Wallace)

COMMITTEE ACTION:  Voted "do pass" by the Special Committee on
Retirement by a vote of 7 to 0.

This substitute changes the laws regarding employee benefit
plans.  In its main provisions, the substitute:

(1)  Clarifies the benefit amount payable to an ex-spouse when a
division of benefits order has been issued and the ex-spouse is
also the named beneficiary of a joint and survivor option under
the Missouri State Employees' Retirement System (MOSERS) and the
Missouri Department of Transportation and Highway Patrol
Employees' Retirement System (MPERS).  The division of benefits
order will be applied to either the plan the member was
participating in on the date of dissolution or the Year 2000
Plan;

(2)  Removes the provision which allows members of MOSERS to
purchase service that was performed under contract for the State
of Missouri;

(3)  Clarifies that members cannot receive credit for the same
period of service in more than one retirement system;

(4)  Requires members of MOSERS or MPERS to complete the purchase
of creditable service prior to applying for retirement benefits.
Transferring vested service from another public employee
retirement system to the Year 2000 Plan requires that the plans
enter into an agreement;

(5)  Specifies that if a retiree of MOSERS who has elected a
joint and survivor option dies prior to notifying the system of
the spouse's death, his or her benefit will not revert to a
normal annuity and no retroactive payments will be made;

(6)  Specifies that if the board of MOSERS or MPERS provides
education or advice to members pertaining to retirement planning,
it will not be liable for retirement or investment decisions made
by members if the board acted with due diligence in providing the
advice;

(7)  Clarifies that any temporary annuity payable to a retiree,
under the Year 2000 Plan, will terminate no later than age 62;

(8)  Clarifies that retirees, under the Year 2000 Plan, can
retain optional life insurance coverage in excess of $60,000
until age 62;

(9)  Requires that retirees under the MOSERS Closed Plan and the
Year 2000 Plan who are re-employed with the state in a position
normally requiring them to work at least 1,040 hours per year
must work continuously for at least one year in order to accrue
creditable service for retirement purposes;

(10)  Allows the retirement boards to establish rules to
accommodate changes in the state's payroll system as it relates
to the final average compensation for the retirement benefit
calculation;

(11)  Changes the required hours for an employee to be eligible
for benefits from 1,000 hours to 1,040 hours;

(12)  Specifies that after August 28, 2007, part-time employees
of the General Assembly working less than 1,040 hours per year
will not be considered employees as it relates to retirement
benefits;

(13)  Clarifies that a member may receive only one day of
credited service for any one day of calendar service;

(14)  Changes the vesting requirement for service purchase
transfers for legislators from two to three full biennial
assemblies;

(15)  Authorizes MOSERS to provide services in connection with
medical benefit funds established for state employees, retirees,
and their dependents participating in the state medical plan
administered by the Missouri Consolidated Health Care Plan
(MCHCP) or any other medical benefit plan for state employees,
retirees, and their dependents.  MOSERS will invest the funds
received from the state medical plans in the same manner as it
invests the funds of the retirement system.  All assets of the
fund will be exclusively used for satisfying obligations of the
state medical plans and to pay for medical benefits of state
employees, retirees, and their covered dependents;

(16)  Transfers, beginning August 28, 2007, the administration of
the Missouri State Public Employees Deferred Compensation Fund to
the Board of Trustees of MOSERS.  Currently, the fund is
administered by the Missouri State Public Employees Deferred
Compensation Commission;

(17)  Extends the election date of a certain retirement option
under the Public School Retirement System of Missouri from
July 1, 2008, to July 1, 2013;

(18)  Allows the board of trustees of the Public School
Retirement System of the City of St. Louis, at its discretion, to
increase benefits for retired members if the additional benefit
will not require an increase in the contribution rate;

(19)  Allows a retired member of MCHCP to add an eligible
dependent to his or her coverage if the dependent terminates
employment or the dependent's health care benefits were
terminated by his or her employer.  The dependent must have had
continuous coverage for 12 months prior to the termination of his
or her health care coverage;

(20)  Allows juvenile officers in single county circuits to
receive creditable prior service in MOSERS for service as a
juvenile court employee prior to July 1, 1999, if the service is
not credited in a county retirement plan;

(21)  Allows employees who were transferred from the Division of
Motor Carrier Services, Highway Reciprocity, and the Department
of Natural Resources to the Motor Carrier Services Division in
the Department of Transportation to transfer their creditable
service from MOSERS to MPERS.  The decision to transfer must be
made in writing within 60 days of August 28, 2007;

(22)  Defines "defined benefit plan," "defined contribution
plan," "funded ratio," and "lump sum benefit plan";

(23)  Lowers the contribution period from 40 to 30 years for
which plans may not exceed unfunded accrued liabilities;

(24)  Requires retirement systems to establish mandatory board
member education programs regarding responsibilities, ethics,
governance, plan design, administration of benefits, investments,
legal liability, and actuarial principles.  Board members will be
required to attend at least two continuing education programs
each year;

(25)  Prohibits appointing authorities, board members, or
employees from receiving a gain or profit from funds or
transactions of the plan except benefits which are common to all
members of the plan.  If political contributions or other
compensations are accepted to influence the investment of system
funds, the person will forfeit his or her office and be subject
to the penalties for bribery;

(26)  Specifies that any trustee, employee, or plan participant
convicted of a plan-related felony directly connected with his or
her duties will be ineligible for retirement benefits;

(27)  Prohibits, after August 28, 2007, plans with a fund ratio
of less than 80% from providing additional benefits.  Plans with
a fund ratio greater than 80% can adopt benefit enhancements if
the ratio does not decrease below 75%.  The unfunded actuarial
accrued liabilities associated with these benefit changes will be
amortized over a period not to exceed 20 years;

(28)  Requires plans, after August 28, 2007, with a ratio of less
than 60% and the plan has not met 100% of the actuarially
required contribution payment for three successive plan years, to
be deemed delinquent in the contribution payment which will
constitute a first lien on the funds of the political
subdivision.  Until the delinquency in the contribution payment
is satisfied, the State Treasurer and Director of the Department
of Revenue will withhold 25% of all moneys due the political
subdivision from the state;

(29)  Requires a separate board of trustees to administer a fire
protection district's retirement plan rather than the district's
board of directors.  The board of trustees will include the
three-member board of directors and two pension plan participants
chosen from a list of three individuals submitted by the board of
directors;

(30)  Specifies that any condition of cancer which affects
certain bodily systems, as well as any condition of cancer which
may result from exposure to heat or radiation or to a known or
suspected carcinogen as determined by the International Agency
for Research on Cancer, is presumed to be suffered in the line of
duty for the purpose of computing retirement benefits for
firefighters, unless contrary competent evidence is shown and
proven that the condition did not result nor was contributed to
by the voluntary use of tobacco; and

(31)  Requires the Public School Retirement System when
calculating a member's final average salary to disregard any
increase in compensation in excess of 10% from one year to the
next in the final average salary period.  This limit will not
apply to increases because of a change in position or those
required by state statute or district-wide, salary schedule
adjustments.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $0 in
FY 2008, $80,000 in FY 2009, and $80,000 in FY 2010.  Estimated
Cost on Other State Funds of $41,000 in FY 2008, $36,000 in
FY 2009, and $190,000 in FY 2010.

PROPONENTS:  Supporters say that the bill is a clean-up bill for
the Missouri State Employees' Retirement System.  This has been
an issue for several years.  The laws need to be changed where
there is ambiguity.

Testifying for the bill was Senator Crowell.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
94th General Assembly, 1st Regular Session
Last Updated July 25, 2007 at 11:22 am