SENATE BILL REPORT

SB 5646

BYSenators Garrett, Saling, Gaspard, Bauer, Conner, Bender, Lee, Rasmussen, Vognild, Kiskaddon, Nelson and West

Providing cost-of-living adjustment to public retirement benefits.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 24, 1987

Senate Staff:Charles Langen (786-7715)

AS OF FEBRUARY 24, 1987

BACKGROUND:

The Public Employees' Retirement System, Tier I (PERS I) and Teachers' Retirement System, Tier I (TRS I) do not have operative post-retirement adjustment provisions.  Each system does, however, have a provision for a minimum benefit which was established at $13 per month per year of service in 1986.

SUMMARY:

The following levels of post-retirement adjustments for PERS I and TRS I are provided:  (1) minimum benefit increased from $13 per month per year of service to $15;  (2) for those who retire after July 1, 1987, an increase of 2 percent of the original retirement allowance on the anniversary date of the member's retirement; (3) a permissive adjustment for all who retire prior to the effective date based on a determination of the post-retirement adjustment trust account's ability to bear the cost of such adjustment.

The contribution required by each member is increased from 6.0 percent of compensation to 6.5 percent of compensation.

The post-retirement adjustment trust account is created as a treasury account.  It is to be funded with an initial appropriation and subsequent annual appropriations until such time as funds sufficient to pay the adjustments from this account is attained.  A board is established within the Department of Retirement Systems (DRS) to administer the fund and make the determination of the possible adjustment.  The board is to consist of two members of PERS I and two members of TRS I each appointed by the Director, DRS, a member of the House of Representatives, a member of the State Senate, and a member of the State Investment Board.  The Director, DRS, and the State Actuary are to serve ex officio, but without vote.

Appropriation:    $50 million, state general fund

Fiscal Note:      available

Effective Date:July 1, 1987