The National Picture of Public Pension Changesigpa.uillinois.edu/sites/igpa.uillinois.edu/files/reports... · 2015-12-30 · Enacted Changes To Public Pensions – Increased Contributions

T h e N a t i o n a l P i c t u r e o f P u b l i c Pe n s i o n C h a n g e s :W h a t b e n e f i t r e d u c t i o n s h a v e o t h e r s t a t e s e n a c t e d ?May 10, 2013

Nancy HudspethUniversity of Illinois at ChicagoThis research was produced by the IGPA Fiscal Futures Project. Learn more at igpa.uillinois.edu/fiscalfutures

This month Illinois lawmakers are debating two proposals that would alter the retirement plans of current state employees, teachers, university employees, and the General Assembly.

Illinois’ state pension system has the lowest funding ratio of any U.S. state, with roughly $100 billion in unfunded liabilities – that means that the state has promised to make these payments to workers when they retire, but does not have resources set aside to do so.

Illinois’ lawmakers are voting on two pension bills before the end of the month. The current proposals being debated would increase employee contribution rates and/or reduce post-retirement annual cost-of-living adjustments (COLAs) for workers. Since 2009, these types of changes have been made to public employee

pension systems in about half of all U.S. states, but the details vary widely. Post-retirement COLAs have been reduced, adjusted, and tied to inflation and pension funding ratios. Employee contribution rates have been increased in numerous states, but these increases are not always permanent, and some states have also mandated larger employer contributions.

In the following tables, we present a compilation of changes to current employees’ retirement contribution rates and post-retirement COLAs that have been enacted in U.S. states since 2009. This information was gathered from various sources, mainly the National Conference of State Legislatures.

The Institute of Government and Public Affairs (IGPA) is a public policy research organization based in all three University of Illinois campus cities. IGPA’s mission is to improve public policy and government performance by: producing and distributing cutting-edge research and analysis, engaging the public in dialogue and education, and providing practical assistance in decision making to government and policymakers. The institute’s work not only advances knowledge, but also provides real solutions for the state’s most difficult challenges.

To learn more, visit igpa.uillinois.edu and follow @IllinoisIGPA.

I. Increased Employee Contributions

Between 2009 and 2012 the following states have enacted legislation requiring higher employee contributions for current members of some, or all, of the public employee pension systems – either temporarily or permanently; and often phased over a period of several years.

In a number of these states, the employer contribution rates are also increased. In a few states, the employers’ contribution rates are reduced, so that employees are taking on a greater share of the funding. In Colorado, the fiscal analysis noted that because of the funding structure of the system, an employee dollar is worth 70-80% of an employer dollar, so this shift actually increased unfunded liabilities and contributed to lower tax collections since employee taxable income is reduced.

In some states the employee contributions were previously paid by the employers, and the enacted legislation changes this practice but does not increase the actual rate. The following table is a compilation of enacted legislation summaries found in various sources, mainly National Conference of State Legislatures.

AL2011

AZ20112012

CA2010

CO20102011

FL2011

IA2010

KS2012

LA2011

MD20112012

MI201020112012

MN2010

MS201o

NE20092011

NH2011

NJ20112012

NM20092011

OK2009

TX20092011

ND2011

RI2011*

SC2012

VT20102011

VA*20112012

WA2009

WI2011

WY20102012

*Rhode Island required contributions were reduced but employee benefits were cut– employees moved into a mandatory DC plan. In Virginia, the cost of the reduction was offset by an equivalent salary increase.

States that have enacted legislation requiring higher employee contributions, with year enacted

Enacted Changes To Public Pensions – Increased Contributions For Current Employees (or a choice between higher contributions and lower benefits): 2009-2012

Alabama, 2011 Act 676 of 2011 (House Bill 414)

Employer contributions will be reduced and offset by higher employee contributions. Judges’ employee contributions increase from 6% to 8.25% in 2011 and to 8.5% in 2012. For teachers and general state employees: from 5% to 7.25% and 7.5% on dates above. For firefighters, law enforcement and correctional officers: increase from 6% to 8.25% and 8.5% on dates above.

Analysis, fiscal note:http://governor.alabama.gov/pdfs/RoadDetail.pdf http://www.openbama.org/index.php/bill/display/4051http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf

Arizona, 2011 Chapter 26, Laws of 2011 (Senate Bill 1614)

From FY 2011 to FY 2014, employee contribution rates for the Elected Officials Retirement Plan will increase in stages from 7% to 13% of member’s salary, OR 33.3% of the sum of contribution rate from the preceding fiscal year and the normal cost plus the actuarially determined amount required to amortize the unfunded accrued liability for the employer, whichever is lower. Contribution rates for members of the Public Safety Personnel Retirement System will increase in stages from 8.65% to 11.65% of salary in FY 2016 and thereafter.

More info:http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf https://www.azasrs.gov/content/pdf/2011_legislation_summary.pdf

California, 2010Chapter 162 (SB 846) and Chapter 163 (A B 1592), Laws of 2010, and Chapter 3 (S22f) of the 6th Extraordinary Session

Revised contribution and benefit provisions for all employees covered by the bargaining units. Members will pay 10% of salary for retirement benefits (11% for members in public safety occupations.)

More info:http://www.ncsl.org/documents/fiscal/2010_pension_summary.pdf

Colorado, 2011, 2010 Chapter 204, Laws of 2011 (Senate Bill 76); Chapter 65, Laws of 2010 (SB 146)

Temporarily increases employee contribution rates by 2.5 percentage points and decreases employer contribution rates by the same amount. Effective for two fiscal years – FYs 2011 and 2012. Employee contributions for all except state troopers increase from 8% to 10.5% of salary. State-troopers’ contributions increase from 10% to 12.5%.

More info:http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf Fiscal note points out that by reducing taxable income this will impact tax collections. Also due to the funding structure of Public Employees’ Retirement Association (PERA), a member dollar is worth 70-80% of an employer dollar so shifting the payments to employees increases the unfunded liabilities.

Florida, 2011 Chapter 68, Laws of 2011 (Senate Bill 2100)

Requires all members of the Florida Retirement System (FRS) to contribute 3% of salary, effective July 1, 2011. Reduces employer contributions to FRS for FY 2012 and FY 2013 but not for all classes of employees.

More info:http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf

Iowa, 2010 House File 2518 (signed by governor April 23, 2010)

Increased contribution rates for employees and employers for the Peace Officers Retirement System (PORS) and the Iowa Public Employees Retirement System (IPERS). Employees will continue to pay about 40% of the total; employers, 60%. PORS employees’ contribution rates increase from 9.35% to 11.35% in FY 2013.


Kansas 2012, 2011 Chapter 171, Laws of 2012 (House Bill 2333) enacted June 1, 2012Chapter 98, Laws of 2011 (House Bill 2194)

Increases KPERS current member contributions by 2 percentage points – from 4% to 6% - OR reduces benefits: the member’s multiplier for future service will be reduced from 1.75% to 1.4% (employees’ choice).

More info:http://www.kpers.org/Legislation_CompWeb2012.pdf http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension- http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf

Louisiana, 2011 Act 238, Laws of 2011 (House Bill 332)

Changed contribution requirements for employers and employees in the Firefighters’ Retirement System and the Municipal Police Employees’ Retirement System. Employee rates are variable and tied to employer rates: 8% to 10% for Firefighters’ System employees; 7.5%-10% for Police Employees’ System.


Maryland 2011, 2012 Chapter 485, Laws of 2012 (Senate Bill 335), enacted April 6, 2012; Chapter 397, Laws of 2011 (House Bill 72, the Budget Reconciliation and Financing Act), became law w/o governor’s signature on April 8, 2011 (see NASRA).

Judges’ contributions increase from 6% to 8% (2012); Teachers’ Pension System (TPS) and Employees’ Pension System (EPS) increase from 5% to 7% (2011); Law Enforcement Officers’ Pension System (LEOPS): Increase from 4% to 6% in FY 2012 and to 7% in FY 2013 and thereafter (2011).

More info:http://www.sra.state.md.us/Employers/ContributoryRates.aspx http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspxhttp://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf

Michigan, 2012 Senate Bill 1040 - approved by the Governor September 4, 2012 Act No. 300 Public Acts of 2012

Public School Employees’ Retirement System members hired before July 1, 2010 (non-hybrid), would choose between: 1) make higher contributions in order to continue receiving a 1.5% multiplier for future years of service; 2) continue paying current contributions but receive a 1.25% multiplier for future years of service; or 3) freeze pension benefits earned to date and move to a defined contribution plan for future.

Legislation and fiscal analysis:http://www.legislature.mi.gov/%28S%28o5ioxu451cemyw55wpk2zp55%29%29/mileg.aspx?page=getobject&objectname=2012-SB-1040

Synopsis:http://www.mea.org/analysis-impacts-sb-1040 http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspx

Michigan, 2011 Public Act 264 of 2011 (House Bill 4701)

The SERS DB plan was noncontributory prior to this legislation (closed to new members in 1997). Employees currently in the DB pension plan are now required to choose between remaining in the plan and contributing 4% of salary to the retirement system, or freezing the service credit they have earned in the DB plan and converting to the DC plan for the future.


Michigan, 2010 Senate Bill 1227, Public Act 75 of 2010

Requires all employees in the Michigan Public School Employees Retirement System to contribute an additional 3.0% of salary on wages earned after July 1, 2010.


Minnesota, 2010 Chapter 359, Laws of 2010 (Senate File 2918 and House File 3281)

Increased employee contribution rates by the following percentage of salary: State Patrol Retirement Plan additional 3%; Public Employee Retirement Association (PERA) General Employee Plan from 6 % to 6.25 %; PERA Police and Fire Plan from 9.4% to 9.6%; Duluth Teachers Retirement Fund Association (DTRFA) from 5.5% to 6.5%; St. Paul Teachers Retirement Fund Association (SPTRFA) from 8.0 % to 9.0 % and the coordinated program from 5.5% to 6.5%. Teachers Retirement Association (TRA) member contribution rates (currently 5.5 percent) increased 0.5 percent each July 1 for four years beginning on July 1, 2011. After July 1, 2015, if actuarial valuation indicates a deficiency, member contribution rate will increase by 0.25% of salary.


Mississippi, 2010 Chapter 1, laws of the First Special Session of 2010 (HB 1)

Increased the employee contribution rate for the Public Employees Retirement System from 7.25% of salary to 9%. Effective July 1, 2010 to July 1, 2012, HB 1 includes two benefit enhancements intended to offset the rate increase on employees (additional leave calculation).


Nebraska, 2011 Legislative Bill 382 (approved by the governor May 4, 2011)

Temporarily increases some employee and employer contributions. School Employees Retirement System employee rate increases from 8.28% to 9.78% of salary in 2012 and returns to 7.28% in 2017. For the Nebraska State Patrol Retirement, in 2011 the patrol and state/employer contribution rates increase from 16% to 19% and returns to 16% in 2013. In 2011 the employee contribution for Class V (Omaha) School increases by one percentage point to 9.3%.


Nebraska, 2009 LB 187, LB 188, LB 315, and LB 414 of 2009

LB 187: School employees’ contribution rates are increased from 7.28% to 8.28% of salary between Sept. 2009 and Sept 2014 (then reverts); employers’ rate also increases during this time. LB 188: Increases employee contribution for State Patrol members from 13% to 15% of salary for 2009, in 2010 it increases permanently to 16%; employers’ rate also increases. LB 414: increases judges’ contribution rate 1 percentage point for five years (% of salary varies from 1 to 9%.)


New Jersey, 2012 Senate Concurrent Resolution 110 Enacted June 21, 2012

Amends the NJ State Constitution to allow the state to deduct higher contributions from justices, Supreme Court judges, and other public employees. This is in response to 2011 lawsuit arguing against higher employee contributions.

Legislative fiscal estimate:http://www.njleg.state.nj.us/2012/Bills/SCR/110_E1.PDF http://www.njleg.state.nj.us/bills/BillView.asp?BillNumber=SCR110http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspx

New Jersey, 2011 Chapter 78, Laws of 2011 (Senate Bill 2937)

Increases employee contribution rates from 5.5% to 6.5% of salary plus an additional 1% phased in over 7 years for Teachers’ Pension and Annuity Fund (TPAF) and Public Employees’ Retirement System (PERS), including legislators, Law Enforcement Officer (LEO) members, and workers compensation judges). Contributions for Judges’ Retirement System increased from 3% to 12% phased-in over seven years. For Police and Firemen’s Retirement Systems members and members of the Prosecutors Part of PERS, from 8.5% to 10%; and For SPRS members, from 7.5% to 9%.


New Mexico, 2011 Chapter 178, Laws of 2011 (House Bill 628)

Extends the two-year 1.5% contribution shift implemented for FY 2010 and FY 2011from the employer to the employee for employees making more than $20,000 for another two years (FY 2012 and FY 2013), but provides for the cancellation of the extension to FY 2013 contingent upon specified levels of General Fund revenue and state reserves; Makes a one-year contribution shift of 1.75% from the employer rate to the employee rate for those making more than $20,000 for FY 2012; and Delays the two remaining 0.75% increases for ERB members, currently scheduled for FY 2012 and FY 2013, to FY 2014 and FY 2015.

New Mexico Legislature, Fiscal Impact Report, House Bill 628, March 15, 2011. http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf The fiscal impact to employees of an additional 1.75% contribution shift will be offset by the 2011 reduction in the federal social security tax of -2%. Assuming normal pretax deductions, the 18-month impact is minimal when compared with the baseline salary as of December 2011.

North Dakota, 2011 Chapter 432, Laws of 2011 (Senate Bill 2108)

Temporarily increases member and employer contributions for the North Dakota Public Employee Retirement System’s main retirement system, judges’ plan, defined contribution and Highway Patrol systems by one percentage point each in January of 2012 and 2013. The law enforcement plan increase is 0.5% for the member and 0.5% for the employer. For the main retirement plan, the two-year increases will be from 10.3% for employees to 12.3% of compensation over the two years. Chapter 135, Laws of 2011 (House Bill 1134) increased contribution requirements for the Teachers’ Retirement Fund from the present level of 7.75% of annual salary to 9.75% beginning on July 1, 2012 and 11.75% beginning on July 1, 2014, and will drop back to 7.75% if the funded ratio reaches 90%. Employers’ contributions will also increase.


Oklahoma, 2009Chapter 88, Laws of 2009 (SB 397)

Allows total employer and employee contribution for retirement benefits for county employees, employees of courts and employees of the Law Library to rise from 10% to 16.5% of salary in fiscal year 2011 and thereafter.


Rhode Island, 2011Chapter 408, Laws of 2011 (Senate Bill 1111)

Revised the state defined benefit plan for state employees, teachers, and municipal employees to reduce employee required contributions and benefits for members as of July 1, 2012 and adds a defined contribution component for all members of the plan except State Police and judges.

The state employee contribution to the DB plan is from 8.75% of salary to 3.75% and for teachers from 9.75% to 3.75%. For municipal employee members, the rate changes from 6% to 1%, or from 7% to 2% for those who elect the cost-of-living option. The three groups of employees listed above will all participate in a mandatory defined contribution plan. Employees will contribute 5% of salary and employers will contribute 1% of salary to the DC plan. For teachers who are not covered by Social Security, the DC plan contribution amounts will be 7% from employees and 3% from employers. For municipal police and firefighters who are not covered by Social Security, the DC plan contribution amounts will be 8% from employees and 4% from local government employers. The legislation also extends the amortization period for the current unfunded liability from 19 years to 25 years, for a contribution reduction in FY 2013 of $62.3 million. Future net changes due to asset losses or gains or the effect of changes in assumptions will be amortized over individual 20-year periods.


South Carolina, 2012Act 278, Laws of 2012 (House Bill 4967) enacted June 26, 2012

Employee contributions in the South Carolina Retirement System (SCRS) and Police Officers’ Retirement System (PORS) will increase from 6.5% to 8% in 0.5% increments from July 1, 2012 to July 1, 2014. Employer contributions to SCRS will increase from 10.6% to 10.9% over the same period. Employer contributions to PORS will increase from 12.3% to 13% on July 1, 2014. For members of the General Assembly Retirement System, employee contributions will increase from 10% to 11% on January 1, 2013.

More info:http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspxhttp://legiscan.com/SC/text/H4967/id/638602

Texas, 2011 Senate Bill 1664 (signed by the governor June 17, 2011)

Amends current law to maintain the member contributions for the Employees Retirement System and the Law Enforcement and Custodial Officer Supplemental Retirement System at 6.5 percent and 0.5 percent, respectively.


Texas, 2009 Chapter 1308, Laws of 2009 (SB 397)

Increases the contribution requirement for employee members of the Employee Retirement System from 6.0% to 6.45% of payroll. For law enforcement and custodial members, a new contribution rate of 0.5% was established – previously was non-contributory.


Vermont, 2011 Act 63 of 2011 (House Bill 441, the Fiscal Year 2012 Appropriations Act), §H4

Increases contribution rates for general state employees and judges from 5% of compensation to 6.3% from 2011 thru 2016. The increase for members of Group C of the law enforcement plan will be from 6.18% to 8.18%. In 2016 if plans are fully funded contributions will return to previous levels. The act also increases contribution rates for members of the Vermont Municipal Retirement Fund.


Vermont, 2010 Act 74 of 2010 (HB 764), Act 139 of 2010 (HB 778)

Increases the employee contribution rate for all members of the Teachers Retirement System from 3.54% of compensation to 5%. Act 139 of 2010 (HB 778) increases member contribution rates for the Vermont Municipal Retirement System for FY 2011 for group C members from 9% to 9.5%.

Virginia, 2012 Act 822 of 2012 (Senate Bill 497)

School division and local government employees whose employers currently pay all or part of the 5% member contribution will begin paying the contribution on July 1, 2012. Localities and school boards are required to increase employee compensation on 7/1/12 to offset the employee payments. Employers may elect to phase in these changes over 5 years.

More info:http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspx

Virginia, 2011 Chapter 890, Laws of 2011 (House Bill 1500, the 2011 budget bill, §1-469)

Requires all state employees, except for legislators in a defined benefit plan, to begin paying the statutory 5 percent employee contribution to the Virginia Retirement System that in recent years has been picked up by employers. 2010 legislation had imposed this requirement on new employees. This legislation extended the practice to existing employees. The cost to employees was offset with a 5 percent salary increase for fiscal year 2012.

For discussion, see summary of 2010-2012 Budget Actions from the staffs of the House Appropriations Committee and Senate Finance Committee, May 25, 2011, at http://lis.virginia.gov/111/bud/FinalSum/FullReport.pdf http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf

Washington, 2009 Chapter 561, Laws of 2009 (SB 161)

Provides that the rates collected for the pension systems will be increased based on amortization.


Wisconsin, 2011 Act 10 of 2011 (Assembly Bill 11 of the January 2011 Special Session)

Amended employer and employee contributions to the Wisconsin Retirement System (WRS). Calculated by a formula which is altered by the legislation – see NCSL report. Some employers have paid the employees’ contributions in the past but now these contributions will be deducted from salary.

Source: Wisconsin Legislative Council Amendment Memo, Assembly Bill 11, published February 25, 2011. http://legis.wisconsin.gov/lc/publications/amendment/2011/PDFs/jr1ab011.pdf http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf

Wyoming, 2012 Chapter 23, Laws of 2012 (Senate File 30/Senate Enrolled Act 11)

Increases the contribution rate for the Warden, Patrol & DCI Plan by 3.25 percent. The increase is split between employers (1.63%) and employees (1.62%).


Wyoming, 2010 Chapter 85, laws of 2010 (Senate File 72, effective September 1, 2010)

Provides for an employee contribution to the state retirement plan affecting all state and local government employees, except public safety and EMT employees. Increases the employee contribution from 5.57% to 7% of salary. For state employees, the agency will continue to pay the 5.57%, but the employee must pay the additional 1.43% unless the legislature enacts specific legislation authorizing payment of the 1.43%.


II.Changes to Cost of Living Adjustments (COLAs)

For an overview of public pension COLAs, including state-level COLAs and recent changes, see NASRA Issue Brief: Cost-of-Living Adjustments, June 2012 (http://www.nasra.org/resources/COLA%20IB%20060512.pdf).

Paul Zorn, Mark Randall and Joe Newton. 2011. GRS Insight: Postemployment Cost-of-Living Adjustments: Concepts and Recent Trends (http://www.wikipension.com/images/f/fa/GRSCOLAbrief.pdf).

For an update on pension litigation as of February 2013 see http://www.statebudgetsolutions.org/publications/detail/state-pension-litigation-update-february-2013

AZ2011

CO2010

FL2011

KS20122011

LA2009

MD2011

MN2010

NJ2011

OK2011

SD2010

RI20102011

SC2012

VA2012

WA2011

WY2012

CT2010

ME2011

MA2011

MO2011

NV2009

States that have enacted legislation changing Cost of Living Adjustments, with year enacted

Arizona, 2011 Chapter 357, Laws of 2011 (Senate Bill 1609)

Revises the structure of COLAs for members of the Elected Officials’, the Public Safety Personnel’s and the Corrections Officers’ retirement plans. A minimum investment return of 10.5% for the prior fiscal year is required to allow for a COLA. The COLA is tied to the actuarial funded ratio: if the ratio is 60-65% COLA = 2%; 65-70% COLA = 2.5%; 70-75% COLA = 3.0%; 75-80% COLA = 3.5%; 80% and above COLA = 4.0%.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2 http://www.aztreasury.gov/wp-content/uploads/2012/02/SB1609-Pension-Study-Committee-Final-Report-Dec-21-2012.pdf

Colorado, 2010Chapter 2, Laws of 2010 (SB 1)

Reduces the COLA to the lesser of 2% or inflation for 2010 based on 0% inflation in 2009. For 2011 and beyond, COLA limited to 2% per year, unless retirement system experiences negative investment returns, in which case the COLA will be calculated as the lesser of 2% or the inflation rate from the previous 3 years. In 2011 and thereafter, annuitants must be retired for 1 year before receiving COLA. COLA must be adjusted based on the actuarial funded ratio.


Legal challengehttp://www.denverpost.com/newsheadlines/ci_21754161/pera-wins-ruling-cuts-pension-raises http://www.statebudgetsolutions.org/blog/detail/colorado-and-minnesota-pension-lawsuits-dismissed

Connecticut, 2010Negotiations with unions

Connecticut SERS and Connecticut Teachers: reduced the minimum COLA to 2% from 2.5% (maximum remains unchanged at 7.5%).

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2 http://www.osc.ct.gov/empret/tier2summ/workshop/benindex.htm#Cost

Florida, 2011Chapter 68, Laws of 2011 (Senate Bill 2100)

Eliminates the COLA for service earned after 7-1-2011. Subject to the availability of funding and the Legislature’s enacting sufficient employer contributions specifically for the purpose of funding the reinstatement of the COLA, the new COLA formula will expire effective June 30, 2016, and the 3% COLA will be reinstated.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2 http://laws.flrules.org/files/Ch_2011-068.pdf

Enacted Changes To Public Pensions – Changes To Colas For Current Employees: 2009-2012

Kansas, 2012Chapter 171, Laws of 2012 (House Bill 2333)

Repeals post-retirement COLAs for Tier 2 members of the Kansas Public Employee Retirement System (those hired on or after July 1, 2009). In exchange, members will receive an increased multiplier for all service, raised from 1.75% to 1.85%. Effective for employees retiring on or after January 1, 2014.

Analysis, fiscal note:http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspx http://www.ncsl.org/documents/employ/Highlights-Pension-Reform2012.pdf

Kansas, 2011 Chapter 98, Laws of 2011 (House Bill 2194)

Provides options regarding COLAs for Tier 2 employees (hired after 2005). Employees would choose either (1) eliminate post-retirement COLAs; (2) retain COLAs but reduce benefit multiplier from 1.75 % to 1.4 %.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2

Louisiana, 2009Act 144 of 2009 (House Bill 586)

Provides retirees, beneficiaries, and survivors who receive a benefit below $1200 per month, a minimum benefit increase which shall not be more than $300 per month.


Louisiana, 2009 Act 270 of 2009 (House Bill 96)

Allows a member of any state retirement system to self-fund a guaranteed 2.5% annual COLA thru reduction of benefits. This is in addition to any COLA provided by the retirement system.


Maine, 2011 Chapter 380, Public Laws of 2011 (L.D. 1043, the Biennial Budget Bill for fiscal years 2012 and 2013)

Maine State and Teacher COLAs will be frozen for 3 years, then capped at 3% in future years based on the CPI. Retirees will receive a COLA on the first $20,000 of benefits. The cap amount will be increased each year by the CPI for that year. A non-cumulative, one-time COLA may be awarded if funds permit, but would not become permanent. Previously the COLA was CPI up to 4%, compounded.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2 http://www.nasra.org/resources/COLA%20IB%20060512.pdf http://www.maine.gov/bhr/Executive_Summary_PL_2011_C380.htm

Maryland, 2011 Chapter 397, Laws of 2011

Changes the COLAs for members of: Employees’ Pension System, Teachers’ Pension System, Law Enforcement Officers Pension System, State Police Retirement System, and Correctional Officers’ Retirement System. For service after 6-30-2011, the COLA is lowered from CPI up to 3%, compounded. It is capped at 2.5% if the investment rate reaches its target (7.75%), otherwise capped at 1%.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2 http://www.nasra.org/resources/COLA%20IB%20060512.pdf

Massachusetts, 2011 Chapter 176, Acts of 2011 (Senate Bill 2065 in its final version)

Increases the base for post-retirement benefit increases from $12,000 to $13,000 (this is the only amount on which annual increases are calculated) for Massachusetts SERS and Massachusetts Teachers. Increases granted on ad hoc basis, typically based on CPI up to 3%.


Minnesota, 2010Chapter 359, Laws of 2010 (Senate File 2918 and House File 3281)

Post-retirement COLAs are reduced until plans reach a 90% funded ratio. Minnesota State Retirement Plan general employees’ rate is reduced from 2.5% to 2%; State Patrol Plan from 2.5% to 1.5%; for Public Employee Retirement Association members except police and fire the rate is reduced from 2.5% to 1%. Teachers’ Retirement Association post-retirement increases are suspended for 2011 and 2012; the following years’ COLAs will be 2% until the plan is 90% funded. A member must be retired for at least 6 months before receiving a COLA.

More info:http://www.ncsl.org/documents/fiscal/2010_pension_summary.pdf http://www.commissions.leg.state.mn.us/lcpr/documents/omnibus/2010/s2918_cc_report_summary.pdf

Legal challengehttp://www.statebudgetsolutions.org/blog/detail/colorado-and-minnesota-pension-lawsuits-dismissed

Missouri, 2011Pension board changed the policy.

Missouri PEERS and Missouri Teachers’ COLA was reduced to either 0%, 2%, or 5%, depending on whether the CPI is negative, positive and below 5% or over 5%, respectively, subject to a lifetime cap. Previously, the automatic COLA was based on the CPI not to exceed 5%, compounded.

More info:http://www.nasra.org/resources/COLA%20IB%20060512.pdf

Nevada, 2009Chapter 426, Laws of 2009 (SB 427)

For Nevada Police Officers and Firefighters and Nevada Regular Employees’ plans the COLA is capped at 4%. Prior to this legislation the COLA would be gradually increased until 14 years after retirement, when it would reach a maximum level of 5%.

More info:http://www.ncsl.org/documents/fiscal/2009_pension_summary.pdf http://www.nasra.org/resources/COLA%20IB%20060512.pdf

New Jersey, 2011Chapter 78, Laws of 2011 (SB 2937)

For New Jersey PERS, New Jersey Teachers, and New Jersey Police and Fire, suspends COLAs for current and future retirees until the retirement plans meet specified funding ratios. The target funded ratio is 75% in FY 2012, and is increased annually by equal increments in each of the subsequent seven fiscal years until the ratio reaches 80% at which it is to remain thereafter.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2 http://www.nasra.org/resources/COLA%20IB%20060512.pdf http://www.state.nj.us/treasury/pensions/pdf/laws/chapt78-2011.pdf

Legal challenge http://www.njea.org/news/2012-04-04/njea-refiles-pension-lawsuit

Oklahoma, 2011 Chapter 199, Laws of 2011 (House Bill 2132)

Amends the Oklahoma Pension Legislation Actuarial Analysis (OPLAAA) so that COLAs are required to be funded by the Legislature at the time of enactment, effectively ruling out COLAs for the foreseeable future. Prior to this, the policy was ad hoc but COLAs were regularly approved at 2% annually.

More info:http://www.ncsl.org/documents/employ/2011EnactmentsFinalReport.pdf http://www.nasra.org/resources/COLA%20IB%20060512.pdf

Rhode Island, 2011 Chapter 408, Laws of 2011 (SB 1111)

Suspends COLAs to retirees’ benefits until the system is 80% funded, but allows for COLAs at 5-year intervals before then. A COLA will be equal to the difference between the five-year smoothed investment return and 5.5%, not to be less than zero and not to exceed 4%. It will apply to the first $25,000 of a member’s benefit a limit that will be indexed to inflation annually whether or not a COLA is paid. Previously, the COLA was automatic 3% annually, compounded.


Legal challenge http://blogs.wpri.com/2013/04/22/judge-gets-another-update-on-mediation-in-ri-pension-lawsuit/

Rhode Island, 2010 HB 7397 (the budget bill), Article 6

Reduces post-retirement COLAs to the first $35,000 of retirement benefits, with that base to be increased annually by the CPI-U or 3%, whichever is less.


South Carolina, 2012Act 278, Laws of 2012 (House Bill 4967)

Reduces the COLA for current and future retirees of the South Carolina Retirement System from an automatic annual increase of 1%, to 1% subject to an annual cap of $500. This policy will also be applied to the Police Officers’ Retirement Plan which previously did not have an automatic annual COLA.

More info:http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspx http://www.scstatehouse.gov/code/t09c018.php

South Dakota, 2010SB 20 of the 2010 session (signed by the governor March 12, 2010)

Eliminates COLAs for retirees until they have been retired 1 year. Reduces the COLA from 3.1% to 2.1% for 1 year, and thereafter pins COLA to the market value funded ratio for the pensions systems. If the ratio is 100% or more, COLA = 3.1%; if the ratio is less than 80% the COLA will be 2.1% (sliding scale between these values).

More info:http://www.ncsl.org/documents/fiscal/2010_pension_summary.pdf http://www.nasra.org/resources/COLA%20IB%20060512.pdf

Virginia, 2012 Act 702 of 2012 (HB 1130/Senate Bill 498)

COLAs are capped at 3% for Plan 2 members (those hired after July 1, 2010) and non-vested Plan 1 members (as of Jan. 1, 2013). The COLA will match the first two percentage points of an increase in the CPI-U plus half of the increase in the next two percentage points. Members who retire with less than 20 years of service will not receive a COLA until 1 year after retirement.

Legislative fiscal estimate:http://www.ncsl.org/issues-research/labor/2012-enacted-state-pension-legislation.aspx

Washington, 2011 Chapter 362, Laws of 2011 (HB 2021)

Eliminates further increases beyond the COLA in effect on July 1, 2010 for Public Employees’ and Teachers’ Retirement Systems Plan 1 (PERS Plan 1 and TRS Plan 1) unless a retiree qualifies for the minimum benefit.

More info:http://www.ncsl.org/issues-research/labor/2011-pension-and-retirement-enacted-legislation.aspx#2http://www.nasra.org/resources/COLA%20IB%20060512.pdf

Legal challengehttp://www.theolympian.com/2012/11/20/2326162/pension-ruling-could-hobble-state.html

Wyoming, 2012 Chapter 107, Laws of 2012 (Senate Bill 59)

States that the intent of the legislature is to not grant any COLAs until the Wyoming Retirement System is fully-funded. Under existing law, the WRS may grant an annual COLA up to the inflation rate but not above 3%, if determined to be actuarially sound.


Documents

The National Picture of Public Pension Changesigpa.uillinois.edu/sites/igpa.uillinois.edu/files/reports... · 2015-12-30 · Enacted Changes To Public Pensions – Increased Contributions