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SENATE BILL NO. 88
IN THE LEGISLATURE OF THE STATE OF ALASKA
THIRTY-THIRD LEGISLATURE - FIRST SESSION
BY SENATORS GIESSEL, Bishop, Stevens, Kiehl, Kawasaki, Tobin, Wielechowski, Gray-Jackson, Dunbar,
Claman
Introduced: 3/1/23
Referred: Labor & Commerce, Finance
A BILL
FOR AN ACT ENTITLED
"An Act relating to the Public Employees' Retirement System of Alaska and the 1
teachers' retirement system; providing certain employees an opportunity to choose 2
between the defined benefit and defined contribution plans of the Public Employees' 3
Retirement System of Alaska and the teachers' retirement system; and providing for an 4
effective date." 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 6
* Section 1. AS 14.25.009 is repealed and reenacted to read: 7
Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. The provisions of 8
AS 14.25.009 - 14.25.220 apply to members of the teachers' retirement system who 9
are not members of the defined contribution retirement plan under AS 14.25.310 - 10
14.25.590. 11
* Sec. 2. AS 14.25.040(a) is amended to read: 12
(a) A teacher or member contracting for service with a participating
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employer is subject to AS 14.25.009 - 14.25.220 unless the [A] teacher or member 1
(1) participates in a university retirement program under AS 14.40.661 2
- 14.40.799; 3
(2) became a member after June 30, 2006, and before July 1, 2024, 4
and does not, before November 1, 2024, elect to participate in the defined benefit 5
retirement plan under AS 14.25.009 - 14.25.220; or 6
(3) has elected under former AS 14.25.540 to participate in the plan 7
established in AS 14.25.310 - 14.25.590 [, A TEACHER OR MEMBER 8
CONTRACTING FOR SERVICE WITH A PARTICIPATING EMPLOYER IS 9
SUBJECT TO AS 14.25.009 - 14.25.220]. 10
* Sec. 3. AS 14.25.048(b) is amended to read: 11
(b) An employee or former employee who first became a member of the 12
plan before July 1, 2006, may receive credit for retroactive membership service for 13
employment before June 5, 1988, if the employee or former employee met the 14
requirements listed in (a) of this section at the time of the employment. To receive 15
credit for the retroactive membership service, the employee or former employee shall 16
claim the service and pay the retroactive contributions required under former 17
AS 14.25.061. However, an employee or former employee may not receive retroactive 18
credit under this subsection if the employee received credited service under AS 39.35 19
for the employment. 20
* Sec. 4. AS 14.25.048(c) is amended to read: 21
(c) An employee or former employee who first became a member of the 22
plan before July 1, 2006, and who received credit under AS 39.35 for service that 23
qualifies under (a) of this section may elect to transfer those periods of employment to 24
the plan. To receive credit for retroactive membership service under this subsection, 25
the employee or former employee shall claim the service and pay the retroactive 26
contributions required under former AS 14.25.061. 27
* Sec. 5. AS 14.25.050(a) is amended to read: 28
(a) Except as provided in (c) and (e) of this section, beginning January 1, 29
1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 30
member's base salary accrued from July 1 to the following June 30. [THE 31 33-LS0505\B
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EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 1
SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 2
CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 3
CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 4
FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 5
APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 6
CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 7
THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 8
INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 9
EMPLOYER.] 10
* Sec. 6. AS 14.25.050 is amended by adding new subsections to read: 11
(e) A member who first participates in the plan after June 30, 2006, shall 12
contribute to the plan an amount equal to eight percent of the member's base salary 13
accrued from July 1 to the following June 30. The board may, from time to time, 14
adjust the contribution under this subsection to an amount that, 15
(1) if decreased, is not less than eight percent of the member's base 16
salary; and 17
(2) if increased, is not more than 10 percent of the member's base 18
salary. 19
(f) The employer shall deduct a contribution under this section from the 20
member's salary at the end of each payroll period, and the contribution shall be 21
credited by the plan to the member contribution account. The contributions shall be 22
deducted from member compensation before the computation of applicable federal 23
taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 24
member may not have the option of making the payroll deduction directly in cash 25
instead of having the contribution picked up by the employer. 26
* Sec. 7. AS 14.25.070(a) is amended to read: 27
(a) Except as provided in (i) of this section, each [EACH] employer shall 28
contribute to the system every payroll period an amount calculated by applying a rate 29
of 12.56 percent to the total of all base salaries paid by the employer, including any 30
adjustments to contributions required by AS 14.25.173(a), to 31 33-LS0505\B
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(1) active members of the system who first became members of the 1
plan before July 1, 2006; and 2
(2) [TO] members who first became members of the plan before 3
July 1, 2006, and who are retired from the plan and reemployed under AS 14.20.136 4
[, INCLUDING ANY ADJUSTMENTS TO CONTRIBUTIONS REQUIRED BY 5
AS 14.25.173(a)]. 6
* Sec. 8. AS 14.25.070(d) is amended to read: 7
(d) Notwithstanding (a) and (i) of this section, the annual employer 8
contribution rate may not be less than the rate sufficient to allow payment of the 9
employer normal cost and the employer contributions required under AS 14.25.350 10
and AS 39.30.370. 11
* Sec. 9. AS 14.25.070 is amended by adding new subsections to read: 12
(i) An employer that employs a member who first participates in the plan after 13
June 30, 2006, shall contribute to the system every payroll period an amount equal to 14
the greater of 15
(1) a per capita amount calculated by applying a rate, determined by 16
the board, of not less than 12 percent of the total monthly base salaries the employer 17
pays to all members who first became members of the plan after June 30, 2006; or 18
(2) a per capita amount, determined by the board, that is equal to the 19
amount calculated under (a) of this section expressed on a per capita basis. 20
(j) The board may, from time to time, increase the percentage rate determined 21
under (i)(1) of this section; however, the increase must be based on a concurrent 22
increase, if any, in the member contribution rate under AS 14.25.050(e). 23
* Sec. 10. AS 14.25.075(a) is amended to read: 24
(a) An employee who is eligible to purchase credited service under 25
AS 14.25.047 or 14.25.048, a member who is eligible to purchase credited service 26
under former AS 14.25.061 or under AS 14.25.048, 14.25.050, 14.25.060, 27
[14.25.061,] 14.25.100, or 14.25.107, or a teacher who is eligible to purchase credited 28
service under AS 14.20.345, AS 14.25.050, or 14.25.105, in lieu of making payments 29
directly to the plan, may elect to have the member's employer make payments as 30
provided in this section. 31 33-LS0505\B
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* Sec. 11. AS 14.25.075(b) is amended to read: 1
(b) A member may elect to have the employer make payments for all or any 2
portion of the amounts payable for the member's purchase of credited service through 3
a salary reduction program as follows: 4
(1) the amounts paid under a salary reduction program are in lieu of 5
contributions by the member making the election; the electing member's salary or 6
other compensation shall be reduced by the amount paid by the employer under this 7
subsection; 8
(2) the member shall make an irrevocable election under this 9
subsection to purchase credited service as permitted in former AS 14.25.061 or in 10
AS 14.20.345, AS 14.25.047, 14.25.048, 14.25.050, 14.25.060, [14.25.061,] 11
14.25.100, 14.25.105, or 14.25.107 before the member's termination of employment; 12
the irrevocable election must specify the number of payroll periods that deductions 13
will be made from the member's compensation and the dollar amount of deductions 14
for each payroll period during the specified number of payroll periods; the deductions 15
made under this paragraph cease upon the earlier of the member's termination of 16
employment with the employer or the member's death; amounts paid by an employer 17
under (f) of this section may not be applied toward the payment of the dollar amount 18
of the deductions representing the portion of the credited service that is being 19
purchased by the member through payroll deduction in accordance with the member's 20
irrevocable election under this paragraph; 21
(3) amounts paid by an employer under this subsection shall be treated 22
as employer contributions for the purpose of determining tax treatment under 26 23
U.S.C. (Internal Revenue Code); the amounts paid by the employer under this section 24
may not be included in the member's gross income for income tax purposes until those 25
amounts are distributed by refund or retirement benefit payments. 26
* Sec. 12. AS 14.25.075(i) is amended to read: 27
(i) On satisfaction of the eligibility requirements of former AS 14.25.061 or 28
of AS 14.20.345, AS 14.25.047, 14.25.048, 14.25.050, 14.25.060, [14.25.061,] 29
14.25.100, 14.25.105, or 14.25.107, the requirements of this section, and the 30
administrative filing requirements specified by the administrator, the plan shall adjust 31 33-LS0505\B
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the member's credited service history and add any additional service credits acquired. 1
* Sec. 13. AS 14.25.087 is amended to read: 2
Sec. 14.25.087. Contributions for medical benefits. Contributions made by 3
an employer under AS 14.25.070 and 14.25.085 must [SHALL] be separately 4
computed for benefits provided by AS 14.25.168 and 14.25.171. The contributions 5
computed for benefits provided by AS 14.25.168 must [AND SHALL] be deposited 6
in the Alaska retiree health care trust established under AS 39.30.097(a), and the 7
contributions computed for benefits provided by AS 14.25.171 must be deposited 8
in the teachers' and public employees' retiree health reimbursement arrangement 9
plan trust fund established under AS 39.30.340. 10
* Sec. 14. AS 14.25.110(a) is amended to read: 11
(a) Subject to AS 14.25.167, a member who first became a member of the 12
plan before July 1, 2006, is eligible for a normal retirement benefit if the member 13
(1) was first hired before July 1, 1975, has attained the age of 55 years, 14
and has at least 15 years of credited service, the last five of which have been 15
membership service, or is otherwise vested in the plan; 16
(2) has attained the age of 60 years and has at least eight years of 17
membership service; 18
(3) has attained the age of 60 years, has at least five years of 19
membership service, and has Alaska BIA service which, when added to the 20
membership service, will equal at least eight years; 21
(4) has at least 25 years of credited service, the last five of which have 22
been membership service; 23
(5) has at least 20 years of membership service; 24
(6) has at least 20 years of combined membership service and Alaska 25
BIA service, the last five of which have been membership service; or 26
(7) has, for each of 20 school years, 27
(A) at least one-half year of membership service as a part-time 28
teacher; 29
(B) one full year of membership service as a full-time teacher; 30
or 31 33-LS0505\B
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(C) any combination of service qualified under this paragraph. 1
* Sec. 15. AS 14.25.110(d) is amended to read: 2
(d) The monthly amount of a retirement benefit for a member who first 3
became a member of the plan before July 1, 2006, and who has paid the full 4
amount of any indebtedness is one-twelfth of the member's average base salary during 5
any three school years of membership service multiplied by 6
(1) two percent of the years of credited service earned before June 30, 7
1990, including credited fractional years, and the years of credited service through a 8
total of 20 years; plus 9
(2) two and one-half percent of the years of credited service earned 10
after June 30, 1990, that are more than 20 years of total credited service. 11
* Sec. 16. AS 14.25.110 is amended by adding new subsections to read: 12
(n) Subject to AS 14.25.167, a member who first became a member of the 13
plan after June 30, 2006, is eligible for a normal retirement benefit if the member 14
(1) has attained the age of 60 years and has at least five years of 15
membership service; or 16
(2) has at least 30 years of membership service. 17
(o) The monthly amount of a retirement benefit for a member who first 18
became a member of the plan after June 30, 2006, and who has paid the full amount of 19
any indebtedness is one-twelfth of the member's average base salary during any five 20
school years of membership service multiplied by 21
(1) two percent of the years of credited service through a total of 10 22
years; plus 23
(2) two and one-quarter percent of the years over 10 years of total 24
credited service through 20 years; plus 25
(3) two and one-half percent of the years of credited service that are 26
more than 20 years of total credited service. 27
* Sec. 17. AS 14.25.130(a) is amended to read: 28
(a) A member who first became a member of the plan before July 1, 2006, 29
and who has five or more years of membership service is eligible for a disability 30
pension if, after July 1, 1966, and before the member's normal retirement date, the 31 33-LS0505\B
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member's employment is terminated because of a permanent disability as defined in 1
AS 14.25.220. 2
* Sec. 18. AS 14.25 is amended by adding new sections to read: 3
Sec. 14.25.131. Nonoccupational disability benefits. (a) A member who first 4
became a member of the plan after June 30, 2006, is eligible for a nonoccupational 5
disability benefit if the member's employment is terminated because of a total and 6
apparently permanent nonoccupational disability, as defined in AS 14.25.220, before 7
the member's normal retirement date and after five or more years of membership 8
service. A member is not entitled to a nonoccupational disability benefit under this 9
section unless the member files an application for the benefit with the administrator 10
within 90 days after the member terminated employment. The board may waive a 11
filing deadline if there are extraordinary circumstances that resulted in the inability to 12
meet the deadline. The board may delegate the authority to waive a filing deadline 13
under this subsection to the administrator. 14
(b) The nonoccupational disability benefits accrue beginning the first day of 15
the month following termination of employment as a result of the disability and are 16
payable the last day of the month. If a final determination granting the benefit is not 17
made in time to pay the benefit when due, a retroactive payment shall be made to 18
cover the period of deferment. The last payment shall be for the first month in which 19
the disabled member 20
(1) dies; 21
(2) recovers from disability; 22
(3) fails to meet the requirements under (e) of this section or under 23
AS 14.25.133; or 24
(4) reaches normal retirement age. 25
(c) If the disabled member becomes ineligible to receive nonoccupational 26
disability benefits, the member is entitled to receive a normal or early retirement 27
benefit if the member would have been eligible for the benefit had employment 28
continued during the period of disability. However, the period of disability does not 29
constitute membership service. 30
(d) The monthly amount of the nonoccupational disability benefit shall be 31 33-LS0505\B
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determined in accordance with AS 14.25.110(o), considering the member's 1
membership service and base salary before termination of employment. 2
(e) A disabled member receiving a nonoccupational disability benefit shall 3
provide the administrator, one year after appointment to disability benefits and once 4
each year thereafter until disability benefits cease, proof of continuing eligibility to 5
receive disability payments under the Social Security Act. If the disabled member is 6
otherwise ineligible for a social security payment, the member shall provide the 7
administrator with sufficient medical evidence once each year to demonstrate that 8
disability payments under the Social Security Act would be payable had the member 9
been otherwise eligible. If the disabled member fails to provide the administrator with 10
evidence of continuing eligibility for disability payments under the Social Security Act 11
or other medical evidence required by the administrator within 30 days following each 12
anniversary date, the disability benefits from the plan shall cease. If that information is 13
subsequently provided to the administrator, benefit payments shall resume beginning 14
for the month following that in which the information is provided. When disability 15
payments under the Social Security Act cease, it is the responsibility of the disabled 16
member to notify the administrator immediately. 17
(f) A disabled member's nonoccupational disability benefit terminates when 18
the member first attains eligibility for normal retirement. At that time, the member's 19
retirement benefit shall be calculated under AS 14.25.110(o). 20
Sec. 14.25.132. Occupational disability benefits. (a) A member who first 21
became a member of the plan after June 30, 2006, is eligible for an occupational 22
disability benefit if employment is terminated because of a total and apparently 23
permanent occupational disability, as defined in AS 14.25.220, before the member's 24
normal retirement date. 25
(b) The occupational disability benefits accrue beginning the first day of the 26
month following termination of employment as a result of the disability and are 27
payable the last day of the month. If a final determination granting the benefit is not 28
made in time to pay the benefit when due, a retroactive payment shall be made to 29
cover the period of deferment. The last payment shall be for the first month in which 30
the disabled member 31 33-LS0505\B
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(1) dies; 1
(2) recovers from disability; 2
(3) fails to meet the requirements under (f) of this section or under 3
AS 14.25.133; or 4
(4) reaches normal retirement age. 5
(c) If the disabled member becomes ineligible to receive occupational 6
disability benefits before the normal retirement date, the disabled member shall then 7
be entitled to receive an early retirement benefit if the member would have been 8
eligible for the benefit had employment continued during the period of disability. The 9
period of disability constitutes membership service. 10
(d) The monthly amount of an occupational disability benefit is 40 percent of 11
the disabled member's base salary at the time of termination due to disability, divided 12
by 12. 13
(e) A member is not entitled to an occupational disability benefit unless the 14
member files an application for it with the administrator within 90 days of the date of 15
terminating employment. If the member is unable to meet a filing requirement of this 16
subsection, it may be waived by the commissioner if there are extraordinary 17
circumstances that resulted in the member's inability to meet the filing requirement. 18
(f) A disabled member receiving an occupational disability benefit shall 19
undergo a medical examination as often as the administrator considers advisable but 20
not more frequently than once each year. The administrator shall determine the place 21
of the examination and engage the physician or physicians. If, in the judgment of the 22
administrator, the examination indicates that the retired member is no longer 23
incapacitated because of a total and apparently permanent occupational disability, the 24
administrator may not issue further disability benefits to the member. 25
(g) A disabled member's occupational disability benefit terminates when the 26
disabled member first attains eligibility for normal retirement. At that time, the 27
member's retirement benefit shall be calculated under AS 14.25.110(o). 28
Sec. 14.25.133. Reemployment of disabled members. A member who first 29
became a member of the plan after June 30, 2006, appointed to disability benefits 30
under AS 14.25.131 or 14.25.132 shall apply to the division of vocational 31 33-LS0505\B
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rehabilitation within 30 days of the date disability benefits commence. The member 1
shall be enrolled in a rehabilitation program if the member meets the eligibility 2
requirements of the division of vocational rehabilitation. Unless the member 3
demonstrates cause, benefits shall terminate at the end of the first month in which a 4
disabled member 5
(1) fails to report to the division of vocational rehabilitation; 6
(2) is certified by the division of vocational rehabilitation as failing to 7
cooperate in a vocational rehabilitation program; 8
(3) fails to interview for a job; or 9
(4) fails to accept a position offered. 10
Sec. 14.25.134. Death after occupational disability. (a) Upon the death of a 11
disabled member who is receiving or is entitled to receive an occupational disability 12
benefit, the administrator shall pay the surviving spouse a surviving spouse's pension, 13
equal to 40 percent of the member's base salary at the termination of employment 14
because of occupational disability, divided by 12. If there is no surviving spouse, the 15
administrator shall pay the survivor's pension in equal parts to the dependent children 16
of the member. On the date the normal retirement of the member would have occurred 17
if the member had lived, the administrator shall adjust the monthly payments to equal 18
the monthly amount of the normal retirement benefit to which the member, had the 19
member lived and continued employment until the member's normal retirement date, 20
would have been entitled with an average base salary as existed at death and the 21
membership service to which the member would have been entitled. If the death of a 22
member occurs from occupational causes but no surviving spouse or dependent 23
children exist at the time of the death, or if the member designates as beneficiary 24
under AS 14.25.166 someone other than the surviving spouse or dependent children, 25
the administrator shall pay the member's designated beneficiary those benefits 26
available to a beneficiary under AS 14.25.156(c) and may not pay an occupational 27
death benefit to the surviving spouse or dependent children. 28
(b) The first payment of the surviving spouse's pension or of a dependent 29
child's pension shall accrue from the first day of the month following the member's 30
death and is payable the last day of the month. The last payment shall be made for the 31 33-LS0505\B
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last month in which there is an eligible surviving spouse or child. 1
* Sec. 19. AS 14.25.142(a) is amended to read: 2
(a) While residing in the state, a person who first became a member of the 3
plan before July 1, 2006, who is receiving a benefit under AS 14.25.009 - 14.25.220, 4
and who is at least 65 years of age or a person who first became a member of the 5
plan before July 1, 2006, and who is receiving a disability benefit under 6
AS 14.25.009 - 14.25.220 is entitled to receive a monthly cost-of-living allowance in 7
addition to the basic benefit. The amount of this allowance is 10 percent of the basic 8
benefit. 9
* Sec. 20. AS 14.25.143(a) is amended to read: 10
(a) Once each year, the administrator shall increase benefit payments to 11
eligible disabled members, to persons age 60 or older receiving benefits under this 12
plan in the preceding calendar year, and to persons who have received benefits under 13
this plan for at least five [EIGHT] years who are not otherwise eligible for an increase 14
under this section. 15
* Sec. 21. AS 14.25.143(b) is amended to read: 16
(b) Subject to (g) of this section, the [THE] increase in benefit payments 17
applies to total benefit payments except for the cost-of-living allowance under 18
AS 14.25.142. The amount of the increase is a percentage of the current benefit equal 19
to 20
(1) the lesser of 75 percent of the increase in the cost of living in the 21
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 22
years old and for members receiving disability benefits; and 23
(2) the lesser of 50 percent of the increase in the cost of living in the 24
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 25
less than 65 years old or for recipients who on July 1 are less than 60 years old but 26
who have received benefits from the plan for at least eight years. 27
* Sec. 22. AS 14.25.143(e) is amended to read: 28
(e) When computing a death benefit under AS 14.25.155 - 14.25.160 29
[AS 14.25.155, 14.25.157, OR 14.25.160] or a survivor's benefit under AS 14.25.162, 30
14.25.164, or 14.25.167, adjustments granted to the deceased member or survivor 31 33-LS0505\B
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under this section shall be included in the computation. 1
* Sec. 23. AS 14.25.143 is amended by adding a new subsection to read: 2
(g) If the board determines that the portion of unfunded liability of the plan 3
that is attributable to all members who first became members of the plan after June 30, 4
2006, is greater than 10 percent, the board may reduce the amount of the increase 5
under (b) of this section that is payable to a member who first became a member after 6
June 30, 2006. At any time, the board may terminate a reduction made under this 7
subsection. 8
* Sec. 24. AS 14.25.155 is amended to read: 9
Sec. 14.25.155. Nonoccupational death benefits; members first hired 10
before July 1, 2006. (a) If the death of a member who first became a member of the 11
plan before July 1, 2006, occurs after completing less than one year of membership 12
service and the proximate cause of death is not a bodily injury sustained or hazard 13
undergone while in the performance and within the scope of the member's duties of 14
employment, the member's designated beneficiary shall be paid the balance of the 15
member contribution account. 16
(b) If the death of a member who first became a member of the plan before 17
July 1, 2006, occurs after completing at least one year of membership service but 18
before becoming a vested member, and the proximate cause of death is not a bodily 19
injury sustained or hazard undergone while in the performance and within the scope of 20
the member's duties of employment, the lump-sum death benefit described in 21
AS 14.25.160(b) and (c) shall be paid to the designated beneficiary of the member. 22
(c) If the death of a vested member or deferred vested member, who first 23
became a member of the plan before July 1, 2006, occurs and the proximate cause 24
of death is not a bodily injury sustained or hazard undergone while in the performance 25
and within the scope of the member's duties of employment, the surviving spouse may 26
elect to receive either the benefits described in (b) of this section or a 50 percent joint 27
and survivor option as provided under AS 14.25.167(a)(2) based on credited service to 28
the date of the member's termination. If no spouse survives a vested or deferred vested 29
member, or if a person other than the spouse is designated as beneficiary in 30
accordance with AS 14.25.166, the administrator shall pay the designated beneficiary 31 33-LS0505\B
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the benefits described in AS 14.25.160(b) and (c). Benefits accrue from the first day of 1
the month following the member's death and are payable the last day of the month. 2
(d) Benefits are not payable under this section if benefits are payable under 3
AS 14.25.156 - 14.25.162 [AS 14.25.157, 14.25.160, 14.25.162], 14.25.164, or 4
14.25.167. 5
* Sec. 25. AS 14.25 is amended by adding a new section to read: 6
Sec. 14.25.156. Nonoccupational death benefits; members first hired after 7
June 30, 2006. (a) If the death of a member who first became a member of the plan 8
after June 30, 2006, occurs from nonoccupational causes after completing less than 9
one year of membership service, the member's designated beneficiary shall be paid the 10
balance of the member contribution account. If the death of a member occurs from 11
nonoccupational causes after completing at least one year but less than five years of 12
membership service, a death benefit shall be paid to the member's designated 13
beneficiary. The amount of the death benefit shall be the amount set out in (c) of this 14
section. 15
(b) If the death of a vested member or deferred vested member, who first 16
became a member of the plan after June 30, 2006, occurs from nonoccupational causes 17
and the member designated no person other than the surviving spouse as beneficiary to 18
receive nonoccupational death benefits, the surviving spouse may elect to receive 19
either the amounts set out in (c) of this section or a 50 percent joint and survivor 20
option based on credited service to the date of the member's death or termination. 21
Benefits accrue from the first day of the month following the member's death and are 22
payable the last day of the month. 23
(c) If, under AS 14.25.166, a vested or deferred vested member, who first 24
became a member of the plan after June 30, 2006, designates as beneficiary to receive 25
nonoccupational benefits someone other than the surviving spouse to whom the 26
member has been married for at least one year, the administrator shall pay the 27
designated beneficiary 28
(1) the balance of the deceased member's member contribution 29
account; and 30
(2) a lump-sum death benefit; the amount of the lump-sum death 31 33-LS0505\B
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benefit is $100 times the years of membership service of the deceased member plus 1
$1,000. 2
* Sec. 26. AS 14.25.157(a) is amended to read: 3
(a) If (1) the death of a member who first became a member of the plan 4
before July 1, 2006, occurs before the member first attains eligibility for normal 5
retirement, and (2) the proximate cause of death is a bodily injury sustained or hazard 6
undergone while in the performance and within the scope of the member's duties of 7
employment, and (3) the injury or hazard is not the proximate result of wilful 8
negligence on the part of the member, the administrator shall pay a monthly survivor's 9
pension equal to 40 percent of the member's base salary at the time of termination of 10
employment, divided by 12, to the member's surviving spouse. If there is no surviving 11
spouse, the administrator shall pay the monthly survivor's pension in equal parts to the 12
dependent children of the member. On the date the normal retirement of the member 13
would have occurred if the member had lived, monthly payments must equal the 14
monthly amount of the normal retirement benefit to which the member, had the 15
member lived and continued employment until the member's normal retirement date, 16
would have been entitled with an average base salary as existed at the member's death 17
and the credited service to which the member would have been entitled. If the member 18
does not have a spouse or dependent children at the time of death or if the member 19
designates as beneficiary under AS 14.25.166 someone other than the surviving 20
spouse or dependent children, the administrator shall pay the member's designated 21
beneficiary those benefits available to a beneficiary under AS 14.25.160(b) and (c) 22
and may not pay a benefit to the surviving spouse or dependent children. 23
* Sec. 27. AS 14.25.157(c) is amended to read: 24
(c) Benefits are not payable under this section if benefits are payable under 25
AS 14.25.155, 14.25.156, 14.25.158 - 14.25.162 [14.25.160, 14.25.162], 14.25.164, or 26
14.25.167. 27
* Sec. 28. AS 14.25.157(d) is amended to read: 28
(d) If the [A MEMBER'S] death of a member who first became a member 29
of the plan before July 1, 2006, is caused by an act of assault, assassination, or 30
terrorism directly related to the person's status as a member, whether the act occurs on 31 33-LS0505\B
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or off the member's job site, the death shall be considered to have occurred in the 1
performance of and within the scope of the member's duties for purposes of (a)(2) of 2
this section. If the expressed or apparent motive and intent of the perpetrator of the 3
harm inflicted on [UPON] the member was due to the performance of the member's 4
job duties or employment as a member, the death shall be considered to be directly 5
related to the member's status as a member. A member's job duties are those 6
performed within the course and scope of the member's employment with an 7
employer. 8
* Sec. 29. AS 14.25 is amended by adding a new section to read: 9
Sec. 14.25.158. Occupational death benefit; members first hired after 10
June 30, 2006. (a) If the death of a member who first became a member of the plan 11
after June 30, 2006, occurs before the member's retirement and before the member's 12
normal retirement date, the proximate cause of death is a bodily injury sustained or a 13
hazard undergone while in the performance and within the scope of the member's 14
duties, and the injury or hazard is not the proximate result of wilful negligence of the 15
member, a monthly survivor's pension shall be paid to the surviving spouse. If there is 16
no surviving spouse or if the spouse later dies, the monthly survivor's pension shall be 17
paid in equal parts to the dependent children of the member. On the date the normal 18
retirement of the member would have occurred if the member had lived, monthly 19
payments shall equal the monthly amount of the normal retirement benefit to which 20
the member, had the member lived and continued employment until the member's 21
normal retirement date, would have been entitled with an average base salary as 22
existed at death and the credited service to which the member would have been 23
entitled. 24
(b) The first payment of the surviving spouse's pension or of a dependent 25
child's pension shall be made for the month following the month in which the member 26
dies and payment shall cease to be made beginning with the month in which there is 27
no surviving spouse or no dependent child. 28
(c) If the death of a member occurs from occupational causes but no surviving 29
spouse or dependent children exist at the time of the death or if the member designates 30
as beneficiary under AS 14.25.166 someone other than the surviving spouse or 31 33-LS0505\B
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dependent children, the member's designated beneficiary is entitled to receive those 1
benefits available to a beneficiary under AS 14.25.156(c) and an occupational death 2
benefit may not be paid to the surviving spouse or dependent children. 3
(d) The monthly survivor's pension in (a) of this section for survivors of 4
members is 40 percent of the member's base salary when the member dies. 5
(e) If a member's death is caused by an act of assault, assassination, or 6
terrorism directly related to the person's status as a member, whether the act occurs on 7
or off the member's job site, the death shall be considered to have occurred in the 8
performance of and within the scope of the member's duties for purposes of (a) of this 9
section. If the expressed or apparent motive and intent of the perpetrator of the harm 10
inflicted on the member was due to the performance of the member's job duties or 11
employment, the death shall be considered to be directly related to the member's status 12
as a member. A member's job duties are those performed within the course and scope 13
of the person's employment with an employer. 14
* Sec. 30. AS 14.25.162(b) is amended to read: 15
(b) A survivor's allowance is payable under this section as follows: 16
(1) an allowance of 10 percent of the member's base salary 17
immediately before the member's death, retirement, or disability shall be paid for each 18
dependent child; if there are four or more dependent children, the total amount paid to 19
those children is 40 percent of the member's base salary before the member's death, 20
retirement, or disability, paid in equal amounts to each child; the allowance shall be 21
recomputed for the month in which the number of dependent children is less than four 22
and the benefits shall be decreased accordingly; the adoption of a dependent child does 23
not terminate the survivor's allowance payable under this section; 24
(2) an allowance of 35 percent of the member's base salary shall be 25
paid to the member's surviving spouse as long as there is an eligible dependent child, 26
as determined under (b)(1) of this section, for whom the surviving spouse is legally 27
responsible; if there is no surviving spouse, an allowance of 10 percent of the 28
member's base salary shall be paid to each court-appointed guardian, not to exceed one 29
allowance for each child or for each group of children who have
the same guardian or 30
joint guardians; 31 33-LS0505\B
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(3) when no further benefits are payable under this section, the 1
difference between the amount that would have been paid under AS 14.25.160 and any 2
payments made to the member, spouse, guardian, or dependent children under this 3
section shall be paid to those beneficiaries described in AS 14.25.166; 4
(4) benefits are not payable under this section if benefits are payable 5
under AS 14.25.155 - 14.25.158 [AS 14.25.155, 14.25.157], 14.25.164, or 14.25.167. 6
* Sec. 31. AS 14.25.164(b) is amended to read: 7
(b) A spouse's pension is payable under this section as follows: 8
(1) a spouse's pension is equal to 50 percent of the retirement benefit 9
that the deceased member was receiving; if the member was not receiving a retirement 10
benefit, the spouse's pension is equal to 50 percent of the amount the member would 11
have received, based on the member's average base salary and credited service to the 12
date of the member's death and assuming that the member would have been eligible 13
for a normal retirement benefit as of that date; 14
(2) in the event of the death of a member's spouse who is receiving a 15
spouse's pension, the difference between the amount that would have been paid under 16
AS 14.25.160 and any payments made to the member, spouse, guardian, or dependent 17
children shall be paid to those beneficiaries described in AS 14.25.166; 18
(3) benefits are not payable under this section if benefits are payable 19
under AS 14.25.155 - 14.25.158 [AS 14.25.155, 14.25.157], 14.25.162, or 14.25.167. 20
* Sec. 32. AS 14.25.167(a) is amended to read: 21
(a) Benefits payable under this section are in place of benefits payable under 22
AS 14.25.110, 14.25.125, 14.25.155 - 14.25.162 [14.25.155, 14.25.157, 14.25.160, 23
14.25.162], or 14.25.164. Upon filing an application for retirement with the 24
administrator, or when a disabled member becomes eligible for normal retirement 25
under AS 14.25.130(e), the member shall designate the person who is the member's 26
spouse at the time of appointment to retirement as the contingent beneficiary. 27
However, if the designation of the spouse is revoked under (c) of this section, the 28
member may designate a dependent approved by the administrator as the contingent 29
beneficiary or may take normal or early retirement under AS 14.25.110 or 14.25.125. 30
The administrator shall pay benefits under the option elected by the member. The 31 33-LS0505\B
SB0088A -19- SB 88
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member may elect an option that provides that 1
(1) the member is entitled to receive a reduced benefit payable for life, 2
and, after the member's death, the contingent beneficiary is entitled to receive 3
payments in the amount of 75 percent of the reduced benefit for life; 4
(2) the member is entitled to receive a reduced benefit payable for life, 5
and, after the member's death, the contingent beneficiary is entitled to receive 6
payments in the amount of 50 percent of the reduced benefit for life; or 7
(3) the member is entitled to receive a reduced benefit payable during 8
the joint lifetime of the member and the contingent beneficiary, and, after the death of 9
either the member or the contingent beneficiary, the survivor is entitled to receive 10
payments in the amount of 66-2/3 percent of the reduced benefit for life. 11
* Sec. 33. AS 14.25.167(e) is amended to read: 12
(e) If either the member or contingent beneficiary dies before the member is 13
appointed to retirement, the election becomes inoperative. Once the member is 14
appointed to retirement, the election is irrevocable, even if the retired member is 15
reemployed. Any additional retirement benefit to which the reemployed member may 16
become entitled shall [WILL] be paid in accordance with the initial election made 17
under this section, unless the contingent beneficiary is deceased. If the contingent 18
beneficiary is deceased, the benefits earned during the period of reemployment are 19
subject to AS 14.25.110, or this section if another contingent beneficiary was 20
designated during the period of reemployment. All other benefits earned during 21
previous periods of employment are subject to the election at the time the member was 22
appointed to retirement. If death occurs during the period of reemployment and the 23
proximate cause of death is not a bodily injury sustained or hazard undergone while in 24
the performance and within the scope of the member's duties of employment, those 25
benefits earned while reemployed are subject to AS 14.25.155(c) or 14.25.156. All 26
other benefits earned during previous periods of employment are subject to the 27
election at the time the member was appointed to retirement. If death occurs during the 28
period of reemployment and the proximate cause of death is a bodily injury sustained 29
or hazard undergone while in the performance and within the scope of the member's 30
duties of employment and the injury or hazard is not the proximate result of wilful 31 33-LS0505\B
SB 88 -20- SB0088A
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negligence on the part of the member, all benefits earned during all periods of 1
employment are subject to AS 14.25.157 or 14.25.158. 2
* Sec. 34. AS 14.25.168(a) is amended to read: 3
(a) Except as provided in AS 14.25.171 and (c) of this section, the following 4
persons are entitled to major medical insurance coverage under this section: 5
(1) for teachers first hired before July 1, 1990, 6
(A) a teacher who is receiving a monthly benefit from the plan 7
and who has elected coverage; 8
(B) the spouse and dependent children of the teacher described 9
in (A) of this paragraph; 10
(C) the surviving spouse of a deceased teacher who is receiving 11
a monthly benefit from the plan and who has elected coverage; 12
(D) the dependent children of a deceased teacher who are 13
dependent on the surviving spouse described in (C) of this paragraph; 14
(2) for teachers first hired [ON OR] after June 30 [JULY 1], 1990, 15
(A) a teacher who is receiving a monthly benefit from the plan 16
and who has elected coverage for the teacher; 17
(B) the spouse of the teacher described in (A) of this paragraph 18
if the teacher elected coverage for the spouse; 19
(C) the dependent children of the teacher described in (A) of 20
this paragraph if the teacher elected coverage for the dependent children; 21
(D) the surviving spouse of a deceased teacher who is receiving 22
a monthly benefit from the plan and who has elected coverage; 23
(E) the dependent children of a deceased teacher who are 24
dependent on the surviving spouse described in (D) of this paragraph if the 25
surviving spouse has elected coverage for the dependent children. 26
* Sec. 35. AS 14.25.169 is amended to read: 27
Sec. 14.25.169. Duplicate benefits. If payments from this retirement plan are 28
due to a teacher or to the teacher's spouse under more than one provision of this plan, 29
the teacher or spouse shall elect under which provision and which benefit the teacher 30
or spouse wishes to receive and no payments may be made under any other provision. 31 33-LS0505\B
SB0088A -21- SB 88
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However, benefits under AS 14.25.155 - 14.25.162 [AS 14.25.155, 14.25.157, 1
14.25.160, 14.25.162], 14.25.164, and 14.25.167 shall be paid in addition to those 2
benefits or that service credit a person is entitled to receive because of the person's 3
own membership in the retirement plan. A teacher may not receive (1) duplicate credit 4
under this plan for the same period of service, (2) more than one year of service credit 5
in the course of a school year, or (3) a benefit while accruing service credit under this 6
plan, except as provided in this section. 7
* Sec. 36. AS 14.25 is amended by adding a new section to read: 8
Sec. 14.25.171. Medical benefit; eligibility of employees first hired after 9
June 30, 2006; surviving spouses and dependents. (a) An employee who became a 10
member of the plan after June 30, 2006, receives a monthly benefit from the plan, and 11
has elected benefits under this section is entitled to medical benefits under this section. 12
A member who applies for medical benefits under this section shall apply on the forms 13
and in the manner prescribed by the administrator. 14
(b) The member's surviving spouse is eligible to elect medical benefits if the 15
member had retired or was eligible for retirement and medical benefits at the time of 16
the member's death. 17
(c) The medical benefits available to eligible persons are access to the retiree 18
major medical insurance plan and access to the health reimbursement arrangement 19
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 20
that an eligible person may not be denied insurance coverage except for failure to pay 21
the required premium. 22
(d) Retiree major medical insurance plan coverage elected by an eligible 23
member under this section covers the eligible member, the spouse of the eligible 24
member, and the dependent children of the eligible member. 25
(e) Retiree major medical insurance plan coverage elected by a surviving 26
spouse of an eligible member under this section covers the surviving spouse and the 27
dependent children of the eligible member who are dependent on the surviving spouse. 28
(f) Participation in the retiree major medical insurance plan is not required in 29
order to participate in the health reimbursement arrangement plan. 30
(g) A person eligible for medical benefits under this section is not required to 31 33-LS0505\B
SB 88 -22- SB0088A
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participate in the health reimbursement arrangement plan in order to participate in the 1
retiree major medical insurance plan. 2
(h) A person who is eligible for medical benefits under this section must make 3
the irrevocable election to participate or not participate in the retiree major medical 4
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 5
person applies for retirement and medical benefits, whichever is later. 6
(i) Major medical insurance coverage takes effect on the first day of the month 7
following the date of the administrator's approval of the election and stops when the 8
person who elects coverage dies or fails to make a required premium payment. 9
(j) The coverage for persons 65 years of age or older is the same as that 10
available for persons under 65 years of age. The benefits payable to those persons 65 11
years of age or older supplement any benefits provided under the federal old age, 12
survivors, and disability insurance program. 13
(k) The medical and optional insurance premiums owed by the person who 14
elects coverage may be deducted from the health reimbursement arrangement plan. If 15
the amount of the health reimbursement arrangement plan becomes insufficient to pay 16
the premiums, the person who elects coverage under (a) of this section shall pay the 17
premiums directly. 18
(l) The cost of premiums for retiree major medical insurance coverage under 19
this section for an eligible member or surviving spouse who is 20
(1) not eligible for Medicare is an amount equal to the full monthly 21
group premiums for retiree major medical insurance coverage; 22
(2) eligible for Medicare is the following percentage of the premium 23
amounts established for retirees who are eligible for Medicare: 24
(A) 30 percent if the member had 10 or more, but less than 15, 25
years of service; 26
(B) 25 percent if the member had 15 or more, but less than 20, 27
years of service; 28
(C) 20 percent if the member had 20 or more, but less than 25, 29
years of service; 30
(D) 15 percent if the member had 25 or more, but less than 30, 31 33-LS0505\B
SB0088A -23- SB 88
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years of service; 1
(E) 10 percent if the member had 30 or more years of service. 2
(m) The eligibility for retiree major medical insurance coverage for an 3
alternate payee under a qualified domestic relations order shall be determined based 4
on the eligibility of the member to elect coverage. The alternate payee shall pay the 5
full monthly premium for retiree major medical insurance coverage. 6
(n) The administrator shall 7
(1) inform a person entitled to retiree major medical insurance 8
coverage under this section in writing 9
(A) that the health insurance coverage available to retired 10
members may be different from the health insurance coverage provided to 11
employees; 12
(B) of time limits for selecting optional health insurance 13
coverage; and 14
(C) whether the election is irrevocable; and 15
(2) require that a person entitled to retiree major medical insurance 16
coverage under this section indicate in writing on a form provided by the administrator 17
whether the person has chosen to receive optional health insurance coverage. 18
(o) The monthly group premiums for retiree major medical insurance coverage 19
under this section are established by the administrator in accordance with 20
AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 21
(a) of this section a monthly group premium rate for retiree major medical insurance 22
coverage other than the premium in effect for the month in which the premium is due 23
for coverage for that month. 24
(p) In this section, "health reimbursement arrangement plan" means the State 25
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 26
Arrangement Plan established in AS 39.30.300. 27
* Sec. 37. AS 14.25.220(5) is amended to read: 28
(5) "average base salary" means, 29
(A) for a teacher who first became a member before July 1, 30
2006, the result obtained by dividing the sum of the member's three highest 31 33-LS0505\B
SB 88 -24- SB0088A
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years' base salary by three, or if a member does not have three years base 1
salary, then by dividing the sum of all base salaries by the number of years of 2
base salary; the base salary for a year in which credit is granted for disability 3
totaling more than one-third of a year may not be used in the computation of 4
the average base salary; the base salary in a school year for which the member 5
receives compensation for less than two-thirds of a year may not be used in the 6
computation of the average base salary; if compensation is received for more 7
than two-thirds of a year, the full base salary for that school year shall be used 8
in the computation of the average base salary; 9
(B) for a teacher who first became a member after June 30, 10
2006, the result obtained by dividing the sum of the member's five highest 11
consecutive years' base salary by five, or if a member does not have five 12
years' base salary, then by dividing the sum of all base salaries by the 13
number of years of base salary; the base salary for a year in which credit 14
is granted for disability totaling more than one-third of a year may not be 15
used in the computation of the average base salary; the base salary in a 16
school year for which the member receives compensation for less than 17
two-thirds of a year may not be used in the computation of the average 18
base salary; if compensation is received for more than two-thirds of a 19
year, the full base salary for that school year shall be used in the 20
computation of the average base salary; 21
* Sec. 38. AS 14.25.220(46) is amended to read: 22
(46) "vested member" or "vested teacher" means an active member 23
who [HAS COMPLETED EITHER] 24
(A) first became a member before July 1, 2006, and has 25
completed 26
(i) 15 years of service, the last five of which have been 27
membership service, for a member first hired before July 1, 1975; 28
(ii) [(B)] eight years of membership service; 29
(iii) [(C)] five years of membership and three years of 30
BIA service; or 31 33-LS0505\B
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(iv) [(D)] 12 school years of part-time membership 1
service or 12 school years in each of which the member earned either 2
part-time or full-time membership service; 3
(B) first became a member after June 30, 2006, and has 4
completed five years of membership service; 5
* Sec. 39. AS 14.25.220 is amended by adding new paragraphs to read: 6
(48) "nonoccupational disability" means a physical or mental condition 7
that, in the judgment of the administrator, presumably permanently prevents a member 8
from satisfactorily performing the member's usual duties for an employer or the duties 9
of another position or job that an employer makes available and for which the member 10
is qualified by training or education, not including a condition resulting from a cause 11
that the board, in its regulations, has excluded; 12
(49) "occupational disability" means a physical or mental condition 13
that, in the judgment of the administrator, presumably permanently prevents a member 14
from satisfactorily performing the member's usual duties for an employer or the duties 15
of another comparable position or job that an employer makes available and for which 16
the member is qualified by training or education; however, the proximate cause of the 17
condition must be a bodily injury sustained, or a hazard undergone, while in the 18
performance and within the scope of the member's duties and not the proximate result 19
of the wilful negligence of the member. 20
* Sec. 40. AS 14.25.310 is amended to read: 21
Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 22
AS 14.25.310 - 14.25.590 apply only to 23
(1) teachers who first become members [ON OR] after June 30, 2006, 24
and before July 1, 2024, and who do not, before November 1, 2024, elect to 25
participate in a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or 26
AS 39.35.095 - 39.35.680; and 27
(2) teachers [JULY 1, 2006, TO MEMBERS WHO ARE 28
EMPLOYED BY EMPLOYERS THAT DO NOT PARTICIPATE IN THE 29
DEFINED BENEFIT RETIREMENT PLAN ESTABLISHED UNDER AS 14.25.009 30
- 14.25.220, TO FORMER MEMBERS UNDER AS 14.25.220, OR TO MEMBER S] 31 33-LS0505\B
SB 88 -26- SB0088A
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who transferred [TRANSFER] into the defined contribution retirement plan under 1
former AS 14.25.540. 2
* Sec. 41. AS 14.25.310 is amended by adding a new subsection to read: 3
(b) An employer that participates in the plan shall also participate in the 4
defined benefit retirement plan under AS 14.25.009 - 14.25.220. 5
* Sec. 42. AS 14.25.330(a) is amended to read: 6
(a) A teacher who first becomes a member [ON OR] after June 30, 2006, and 7
before July 1, 2024, and who does not, before November 1, 2024, elect to 8
participate in a defined benefit retirement plan under AS 14.25.009 - 14.25.220 or 9
AS 39.35.095 - 39.35.680 [JULY 1, 2006,] shall participate in the plan as a member of 10
the defined contribution retirement plan. 11
* Sec. 43. AS 14.25.350 is amended by adding a new subsection to read: 12
(f) This section does not apply to contributions made under AS 14.25.070(i) 13
and does not require an employer that makes a contribution for a member under 14
AS 14.25.070(i) to make another contribution for that member. 15
* Sec. 44. AS 14.25.490(a) is amended to read: 16
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 17
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 18
time, in whole or in part, including the right to make retroactive amendments referred 19
to in 26 U.S.C. 401(b). 20
* Sec. 45. AS 14.25.490(b) is amended to read: 21
(b) The plan administrator may not modify or amend the plan retroactively [IN 22
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 23
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 24
MADE] before the modification or amendment except to the extent that the reduction 25
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 26
Revenue Code. 27
* Sec. 46. AS 14.25.490(c) is amended to read: 28
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 29
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 30
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 31 33-LS0505\B
SB0088A -27- SB 88
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is terminated, all investments at the time of termination remain in force until all 1
individual accounts have been completely distributed under the plan. After [, AND, 2
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 3
employer. 4
* Sec. 47. AS 14.25.490(d) is repealed and reenacted to read: 5
(d) Within one year after determining that a contribution to the plan by an 6
employer was the result of a mistake of fact, the administrator shall return the 7
contribution to the employer. 8
* Sec. 48. AS 37.10.220(a) is amended to read: 9
(a) The board shall 10
(1) hold regular and special meetings at the call of the chair or of at 11
least five members; meetings are open to the public, and the board shall keep a full 12
record of all its proceedings; 13
(2) after reviewing recommendations from the Department of 14
Revenue, adopt investment policies for each of the funds entrusted to the board; 15
(3) determine the appropriate investment objectives for the defined 16
benefit plans established under the teachers' retirement system under AS 14.25 and the 17
public employees' retirement system under AS 39.35; 18
(4) assist in prescribing the policies for the proper operation of the 19
systems and take other actions necessary to carry out the intent and purpose of the 20
systems in accordance with AS 37.10.210 - 37.10.390; 21
(5) provide a range of investment options and establish the rules by 22
which participants can direct their investments among those options with respect to 23
accounts established under 24
(A) AS 14.25.340 - 14.25.350 (teachers' retirement system 25
defined contribution individual accounts); 26
(B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 27
Annuity Plan); 28
(C) AS 39.35.730 - 39.35.750 (public employees' retirement 29
system defined contribution individual accounts); and 30
(D) AS 39.45.010 - 39.45.060 (public employees' deferred 31 33-LS0505\B
SB 88 -28- SB0088A
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compensation program); 1
(6) establish the rate of interest that shall be annually credited to each 2
member's individual contribution account in accordance with AS 14.25.145 and 3
AS 39.35.100 and the rate of interest that shall be annually credited to each member's 4
account in the health reimbursement arrangement plan under AS 39.30.300 - 5
39.30.495; the rate of interest shall be adopted on the basis of the probable effective 6
rate of interest on a long-term basis, and the rate may be changed from time to time; 7
(7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 8
(8) coordinate with the retirement system administrator to have an 9
annual actuarial valuation of each retirement system prepared to determine system 10
assets, accrued liabilities, and funding ratios and to certify to the appropriate 11
budgetary authority of each employer in the system 12
(A) an appropriate contribution rate for normal costs; [AND] 13
(B) an appropriate contribution rate for liquidating any past 14
service liability; in this subparagraph, the appropriate contribution rate for 15
liquidating the past service liability of the defined benefit retirement plan under 16
AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 17
retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 18
percent of pay method based on amortization of the past service liability for a 19
closed term of 25 years; 20
(C) an appropriate monthly employer contribution rate 21
under AS 14.25.070(i) and AS 39.35.255(j); and 22
(D) appropriate adjustments, if any, under AS 14.25.050(e) 23
and AS 39.35.160(e) and (f); 24
(9) review actuarial assumptions prepared and certified by a member 25
of the American Academy of Actuaries and conduct experience analyses of the 26
retirement systems not less than once every four years, except for health cost 27
assumptions, which shall be reviewed annually; the results of all actuarial assumptions 28
prepared under this paragraph shall be reviewed and certified by a second member of 29
the American Academy of Actuaries before presentation to the board; 30
(10) contract for an independent audit of the state's actuary not less 31 33-LS0505\B
SB0088A -29- SB 88
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than once every four years; 1
(11) contract for an independent audit of the state's performance 2
consultant not less than once every four years; 3
(12) obtain an external performance review to evaluate the investment 4
policies of each fund entrusted to the board and report the results of the review to the 5
appropriate fund fiduciary; 6
(13) by the first day of each regular legislative session, report to the 7
governor, the legislature, and the individual employers participating in the state's 8
retirement systems on the financial condition of the systems in regard to 9
(A) the valuation of trust fund assets and liabilities; 10
(B) current investment policies adopted by the board; 11
(C) a summary of assets held in trust listed by the categories of 12
investment; 13
(D) the income and expenditures for the previous fiscal year; 14
(E) the return projections for the next calendar year; 15
(F) one-year, three-year, five-year, and 10-year investment 16
performance for each of the funds entrusted to the board; and 17
(G) other statistical data necessary for a proper understanding 18
of the financial status of the systems; 19
(14) submit quarterly updates of the investment performance reports to 20
the Legislative Budget and Audit Committee; 21
(15) develop an annual operating budget; [AND] 22
(16) administer pension forfeitures required under AS 37.10.310 using 23
the procedures of AS 44.62 (Administrative Procedure Act); and 24
(17) determine the amount of the monthly employer contributions 25
under AS 14.25.070(i) and AS 39.35.255(j). 26
* Sec. 49. AS 37.10.220(b) is amended to read: 27
(b) The board may 28
(1) employ outside investment advisors to review investment policies; 29
(2) enter into an agreement with the fiduciary of another state fund in 30
order to assume the management and investment of those assets; 31 33-LS0505\B
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(3) contract for other services necessary to execute the board's powers 1
and duties; 2
(4) enter into confidentiality agreements that would exempt records 3
from AS 40.25.110 and 40.25.120 if the records contain information that could affect 4
the value of investment by the board or that could impair the ability of the board to 5
acquire, maintain, or dispose of investments; 6
(5) adjust the amount of the increase in benefits payable to a 7
member who first became a member after June 30, 2006, as provided under 8
AS 14.25.143 and AS 39.35.475; 9
(6) adjust contribution rates under AS 14.25.050(e) and 10
AS 39.35.160(e) and (f). 11
* Sec. 50. AS 39.30.090(a) is amended to read: 12
(a) The Department of Administration may obtain a policy or policies of group 13
insurance covering state employees, persons entitled to coverage under AS 14.25.168, 14
14.25.171, 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 15
AS 39.37.145, employees of other participating governmental units, or persons 16
entitled to coverage under AS 23.15.136, subject to the following conditions: 17
(1) a group insurance policy shall provide one or more of the following 18
benefits: life insurance, accidental death and dismemberment insurance, weekly 19
indemnity insurance, hospital expense insurance, surgical expense insurance, dental 20
expense insurance, audiovisual insurance, or other medical care insurance; 21
(2) each eligible employee of the state, the spouse and the unmarried 22
children chiefly dependent on the eligible employee for support, and each eligible 23
employee of another participating governmental unit shall be covered by the group 24
policy, unless exempt under regulations adopted by the commissioner of 25
administration; 26
(3) a governmental unit may participate under a group policy if 27
(A) its governing body adopts a resolution authorizing 28
participation and payment of required premiums; 29
(B) a certified copy of the resolution is filed with the 30
Department of Administration; and 31 33-LS0505\B
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(C) the commissioner of administration approves the 1
participation in writing; 2
(4) in procuring a policy of group health or group life insurance as 3
provided under this section or excess loss insurance as provided in AS 39.30.091, the 4
Department of Administration shall comply with the dual choice requirements of 5
AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 6
transact business in the state under AS 21.09, a hospital or medical service corporation 7
authorized to transact business in this state under AS 21.87, or a health maintenance 8
organization authorized to operate in this state under AS 21.86; an excess loss 9
insurance policy may be obtained from a life or health insurer authorized to transact 10
business in this state under AS 21.09 or from a hospital or medical service corporation 11
authorized to transact business in this state under AS 21.87; 12
(5) the Department of Administration shall make available bid 13
specifications for desired insurance benefits or for administration of benefit claims and 14
payments to (A) all insurance carriers authorized to transact business in this state 15
under AS 21.09 and all hospital or medical service corporations authorized to transact 16
business under AS 21.87 who are qualified to provide the desired benefits; and (B) 17
insurance carriers authorized to transact business in this state under AS 21.09, hospital 18
or medical service corporations authorized to transact business under AS 21.87, and 19
third-party administrators licensed to transact business in this state and qualified to 20
provide administrative services; the specifications shall be made available at least once 21
every five years; the lowest responsible bid submitted by an insurance carrier, hospital 22
or medical service corporation, or third-party administrator with adequate servicing 23
facilities shall govern selection of a carrier, hospital or medical service corporation, or 24
third-party administrator under this section or the selection of an insurance carrier or a 25
hospital or medical service corporation to provide excess loss insurance as provided in 26
AS 39.30.091; 27
(6) if the aggregate of dividends payable under the group insurance 28
policy exceeds the governmental unit's share of the premium, the excess shall be 29
applied by the governmental unit for the sole benefit of the employees; 30
(7) a person receiving benefits under AS 14.25.110, AS 22.25,
31 33-LS0505\B
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AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 1
effect under this section at the time of termination of employment with the state or 2
participating governmental unit; 3
(8) a person electing to have insurance under (7) of this subsection 4
shall pay the cost of this insurance; 5
(9) for each permanent part-time employee electing coverage under 6
this section, the state shall contribute one-half the state contribution rate for permanent 7
full-time state employees, and the permanent part-time employee shall contribute the 8
other one-half; 9
(10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 10
or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 11
and eligible dependents under this section; the level of coverage for persons over 65 12
shall be the same as that available before reaching age 65 except that the benefits 13
payable shall be supplemental to any benefits provided under the federal old age, 14
survivors, and disability insurance program; a person electing to have insurance under 15
this paragraph shall pay the cost of the insurance; the commissioner of administration 16
shall adopt regulations implementing this paragraph; 17
(11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 18
or former AS 39.37 may obtain long-term care insurance for that person and eligible 19
dependents under this section; a person who elects insurance under this paragraph 20
shall pay the cost of the insurance premium; the commissioner of administration shall 21
adopt regulations to implement this paragraph; 22
(12) each licensee holding a current operating agreement for a vending 23
facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 24
applies to governmental units other than the state. 25
* Sec. 51. AS 39.30.097(a) is amended to read: 26
(a) The commissioner of administration is authorized to prefund medical 27
benefits provided by AS 14.25.168, 14.25.171, AS 22.25.090, [AND] AS 39.35.535, 28
and 39.35.537 by establishing an irrevocable trust that is exempt from federal income 29
tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 30
and actuarial requirements of the Governmental Accounting Standards Board. 31 33-LS0505\B
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* Sec. 52. AS 39.30.097(b) is amended to read: 1
(b) The commissioner of administration is authorized to prefund medical 2
benefits provided by AS 14.25.171, 14.25.480 [AS 14.25.480], AS 39.30.300, 3
AS 39.35.537, and 39.35.880 [AS 39.35.880] by establishing an irrevocable trust that 4
is exempt from federal income tax under 26 U.S.C. 115 and subject to the applicable 5
financial reporting, disclosure, and actuarial requirements of the Governmental 6
Accounting Standards Board. 7
* Sec. 53. AS 39.30.300 is amended to read: 8
Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 9
Health Reimbursement Arrangement Plan established. The State of Alaska 10
Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 11
established for teachers who first become members of the [DEFINED 12
CONTRIBUTION PLAN OF THE ] teachers' retirement system under AS 14.25.009 - 13
14.25.590 [AS 14.25.310 - 14.25.590 ON OR] after June 30 [JULY 1], 2006, and 14
employees of the state, political subdivisions of the state, and public organizations of 15
the state who first become members [OF THE DEFINED CONTRIBUTION PLAN] 16
of the Public Employees' Retirement System of Alaska (AS 39.35) [PUBLIC 17
EMPLOYEES' RETIREMENT SYSTEM UNDER AS 39.35.700 - 39.35.990 ON 18
OR] after June 30 [JULY 1], 2006. 19
* Sec. 54. AS 39.30.380 is amended to read: 20
Sec. 39.30.380. Termination of employment. A person who terminates 21
employment before meeting the eligibility requirements of AS 14.25.171, 14.25.470, 22
AS 39.35.537, or 39.35.870 [AS 14.25.470 OR AS 39.35.870] loses any right to the 23
contributions made on behalf of the person to the teachers' and public employees' 24
retiree health reimbursement arrangement trust fund. If a person returns to 25
employment with a participating employer by December 31 of the year in which the 26
person reaches 65 years of age, the person's account balance shall be restored in the 27
amount recorded on the date of termination from the trust, adjusted for inflation at the 28
rate of the Consumer Price Index for Anchorage, Alaska. The earlier period of 29
employment with a participating employer shall be credited toward eligibility for 30
medical benefits. 31 33-LS0505\B
SB 88 -34- SB0088A
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* Sec. 55. AS 39.30.390 is amended to read: 1
Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 2
eligibility requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 3
[AS 14.25.470 AND AS 39.35.870] are eligible for reimbursements from the 4
individual account established for a member under the plan, except members do not 5
have to retire directly from the system. A person who is the dependent child of an 6
eligible member is eligible for reimbursements if the eligible member and surviving 7
spouse have both died so long as the person meets the definition of dependent child. 8
* Sec. 56. AS 39.30.400(a) is amended to read: 9
(a) The administrator may deduct the cost of monthly premiums from the 10
individual account for retiree major medical insurance on behalf of an eligible person 11
who elected retiree major medical insurance under AS 14.25.171, 14.25.480, 12
AS 39.35.537, or 39.35.880 [AS 14.25.480 OR AS 39.35.880]. 13
* Sec. 57. AS 39.30.420(a) is amended to read: 14
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 15
[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 16
time, in whole or in part, including the right to make retroactive amendments referred 17
to in 26 U.S.C. 401(b). 18
* Sec. 58. AS 39.30.420(b) is amended to read: 19
(b) The plan administrator may not modify or amend the plan retroactively [IN 20
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 21
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 22
MADE] before the modification or amendment except to the extent that the reduction 23
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 24
Revenue Code. 25
* Sec. 59. AS 39.30.420(c) is amended to read: 26
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 27
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 28
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 29
is terminated, all investments at the time of termination remain in force until all 30
individual accounts have been completely distributed under the plan. After [, AND, 31 33-LS0505\B
SB0088A -35- SB 88
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AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 1
employer. 2
* Sec. 60. AS 39.30.420(d) is repealed and reenacted to read: 3
(d) Within one year after determining that a contribution to the plan by an 4
employer was the result of a mistake of fact, the administrator shall return the 5
contribution to the employer. 6
* Sec. 61. AS 39.30.495(5) is amended to read: 7
(5) "eligible person" means a person who meets the eligibility 8
requirements of AS 14.25.171, 14.25.470, AS 39.35.537, or 39.35.870 [AS 14.25.470 9
OR AS 39.35.870]; 10
* Sec. 62. AS 39.35.095 is amended to read: 11
Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 12
[FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 13
only to members first hired 14
(1) before July 1, 2006; 15
(2) after June 30, 2006, and before July 1, 2024, who are former 16
members of the defined contribution retirement plan under AS 39.35.700 - 17
39.35.990; or 18
(3) on or after July 1, 2024 [: AS 39.35.095 - 39.35.680]. 19
* Sec. 63. AS 39.35.160(a) is amended to read: 20
(a) Subject to (e) and (f) of this section, beginning [BEGINNING] 21
January 1, 1987, each peace officer or firefighter shall contribute to the plan an 22
amount equal to seven and one-half percent of the peace officer's or firefighter's 23
compensation, and, except [. EXCEPT] as provided in (d) - (f) [(d)] of this section, 24
beginning January 1, 1987, each other employee shall contribute to the plan an amount 25
equal to six and three-quarters percent of the employee's compensation. [THE 26
CONTRIBUTIONS SHALL BE DEDUCTED BY THE EMPLOYER AT THE END 27
OF EACH PAYROLL PERIOD. THE CONTRIBUTIONS SHALL BE DEDUCTED 28
FROM EMPLOYEE COMPENSATION BEFORE COMPUTATION OF 29
APPLICABLE FEDERAL TAXES, AND THE CONTRIBUTIONS SHALL BE 30
TREATED AS EMPLOYER CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A 31 33-LS0505\B
SB 88 -36- SB0088A
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MEMBER MAY NOT HAVE THE OPTION OF MAKING THE PAYROLL 1
DEDUCTION DIRECTLY INSTEAD OF HAVING THE CONTRIBUTION 2
PICKED UP BY THE EMPLOYER.] 3
* Sec. 64. AS 39.35.160 is amended by adding new subsections to read: 4
(e) A peace officer or firefighter who first participates in the plan after 5
June 30, 2006, shall contribute to the plan an amount equal to eight percent of the 6
employee's compensation. The board may, from time to time, adjust the employee 7
contribution under this subsection to an amount that, 8
(1) if decreased, is not less than eight percent of the employee's 9
compensation; and 10
(2) if increased, is not more than 10 percent of the employee's 11
compensation. 12
(f) An employee who first participates in the plan after June 30, 2006, and is 13
not a peace officer or firefighter shall contribute to the plan an amount equal to eight 14
percent of the employee's compensation. The board may, from time to time, adjust the 15
employee contribution under this subsection to an amount that, 16
(1) if decreased, is not less than eight percent of the employee's 17
compensation; and 18
(2) if increased, is not more than 10 percent of the employee's 19
compensation. 20
(g) Contributions under (a), (e), and (f) of this section shall be deducted by the 21
employer at the end of each payroll period. The contributions shall be deducted from 22
employee compensation before computation of applicable federal taxes, and the 23
contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 24
member may not have the option of making the payroll deduction directly instead of 25
having the contribution picked up by the employer. 26
* Sec. 65. AS 39.35.255(a) is amended to read: 27
(a) Each employer, except as provided in (h) and (j) of this section, shall 28
contribute to the system every payroll period an amount calculated by applying a rate 29
of 22 percent of the greater of the total of all base salaries 30
(1) paid by the employer to employees who first became members of 31 33-LS0505\B
SB0088A -37- SB 88
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the plan before July 1, 2006, and who are active members of the system, including 1
any adjustments to contributions required by AS 39.35.520; or 2
(2) paid by the employer to employees who first became members of 3
the plan before July 1, 2006, and who were active members of the system during the 4
corresponding payroll period for the fiscal year ending 5
(A) June 30, 2008; or 6
(B) June 30, 2012, if that total is less than the total under (A) of 7
this paragraph, and the employer is a municipality in which the population 8
decreased by more than 25 percent between 2000 and 2010, according to the 9
decennial census conducted by the United States Bureau of the Census. 10
* Sec. 66. AS 39.35.255(d) is amended to read: 11
(d) Notwithstanding (a) and (j) of this section, the annual employer 12
contribution rate may not be less than the rate sufficient to allow payment of the 13
employer normal cost and the employer contributions required under AS 39.30.370 14
and AS 39.35.750. 15
* Sec. 67. AS 39.35.255(e) is amended to read: 16
(e) An employer of a retired member rehired under AS 39.35.150 shall include 17
that member's base salary when calculating the contribution amount established in (a) 18
or (j) of this section. 19
* Sec. 68. AS 39.35.255 is amended by adding new subsections to read: 20
(j) An employer that employs an employee who first participates in the plan 21
after June 30, 2006, shall contribute to the system every payroll period an amount 22
equal to the greater of 23
(1) a per capita amount calculated by applying a rate, determined by 24
the board, of not less than 12 percent of the total monthly compensation the employer 25
pays to all members who first became members of the plan after June 30, 2006; or 26
(2) a per capita amount, determined by the board, that is equal to the 27
amount calculated under (a) of this section expressed on a per capita basis. 28
(k) The board may, from time to time, increase the percentage rate determined 29
under (j)(1) of this section; however, the increase must be based on a concurrent 30
increase, if any, in the member contribution rate under AS 39.35.160(e) or (f). 31 33-LS0505\B
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* Sec. 69. AS 39.35.282 is amended to read: 1
Sec. 39.35.282. Contributions for medical benefits. Contributions made by 2
an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 3
computed for benefits provided by AS 39.35.535 and 39.35.537. The contributions 4
computed for benefits provided by AS 39.35.535 must [AND SHALL] be deposited 5
in the Alaska retiree health care trust established under AS 39.30.097(a), and the 6
contributions computed for benefits provided by AS 39.35.537 must be deposited 7
in the teachers' and public employees' retiree health reimbursement arrangement 8
plan trust fund established under AS 39.30.340. 9
* Sec. 70. AS 39.35.370(a) is amended to read: 10
(a) Subject to AS 39.35.450, a terminated employee who first became a 11
member before July 1, 2006, is eligible for a normal retirement benefit 12
(1) at age 60 with at least five years of credited service; 13
(2) with at least 20 years of credited service as a peace officer or 14
firefighter; or 15
(3) with at least 30 years of credited service [FOR ALL OTHER 16
EMPLOYEES]. 17
* Sec. 71. AS 39.35.370 is amended by adding a new subsection to read: 18
(l) Subject to AS 39.35.450, a terminated employee who first became a 19
member after June 30, 2006, is eligible for a normal retirement benefit 20
(1) at age 60 with at least five years of credited service; 21
(2) at age 55 with at least 20 years of credited service as a peace 22
officer or firefighter; 23
(3) at age 50 with at least 25 years of credited service as a peace 24
officer or firefighter; or 25
(4) with at least 30 years of credited service. 26
* Sec. 72. AS 39.35.381(e) is amended to read: 27
(e) A person who retires under this section is not entitled to disability or death 28
benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 29
to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 30
section may not be used for vesting under AS 39.35.095 - 39.35.680. 31 33-LS0505\B
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* Sec. 73. AS 39.35.475(b) is amended to read: 1
(b) Subject to (g) of this section, the [THE] increase in benefit payments 2
applies to total benefit payments except for the cost-of-living allowance under 3
AS 39.35.480. The amount of the increase is a percentage of the current benefit equal 4
to 5
(1) the lesser of 75 percent of the increase in the cost of living in the 6
preceding calendar year or nine percent, for recipients who on July 1 are at least 65 7
years old and for members receiving disability benefits; and 8
(2) the lesser of 50 percent of the increase in the cost of living in the 9
preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 10
less than 65 years old or for recipients who are less than 60 years old on July 1 but 11
who have received benefits from the plan for at least five years. 12
* Sec. 74. AS 39.35.475 is amended by adding a new subsection to read: 13
(g) If the board determines that the portion of unfunded liability of the plan 14
that is attributable to all members who first became members of the plan after June 30, 15
2006, is greater than 10 percent, the board may reduce the amount of the increase 16
under (b) of this section that is payable to a member who first became a member after 17
June 30, 2006. At any time, the board may terminate a reduction made under this 18
subsection. 19
* Sec. 75. AS 39.35.480(a) is amended to read: 20
(a) While residing in the state, a person who first became a member of the 21
plan before July 1, 2006, who is receiving a benefit under AS 39.35.095 - 39.35.680, 22
and who is 65 years of age or older or a person who first became a member of the 23
plan before July 1, 2006, and who is receiving a disability benefit is entitled to 24
receive a monthly cost-of-living allowance in addition to the basic benefit. The 25
amount of this allowance shall be $50 or 10 percent of the basic benefit, whichever is 26
greater. 27
* Sec. 76. AS 39.35.535(a) is amended to read: 28
(a) Except as provided in (d) and (g) of this section, the following persons are 29
entitled to major medical insurance coverage under this section: 30
(1) for employees first hired before July 1, 1986, 31 33-LS0505\B
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(A) an employee who is receiving a monthly benefit from the 1
plan and who has elected coverage; 2
(B) the spouse and dependent children of the employee 3
described in (A) of this paragraph; 4
(C) the surviving spouse of a deceased employee who is 5
receiving a monthly benefit from the plan and who has elected coverage; 6
(D) the dependent children of a deceased employee who are 7
dependent on the surviving spouse described in (C) of this paragraph; 8
(2) for members first hired [ON OR] after June 30 [JULY 1], 1986, 9
(A) an employee who is receiving a monthly benefit from the 10
plan and who has elected coverage for the employee; 11
(B) the spouse of the employee described in (A) of this 12
paragraph if the employee elected coverage for the spouse; 13
(C) the dependent children of the employee described in (A) of 14
this paragraph if the employee elected coverage for the dependent children; 15
(D) the surviving spouse of a deceased employee who is 16
receiving a monthly benefit from the plan and who has elected coverage; 17
(E) the dependent children of a deceased employee who are 18
dependent on the surviving spouse described in (D) of this paragraph if the 19
surviving spouse has elected coverage for the dependent children. 20
* Sec. 77. AS 39.35.535(c) is amended to read: 21
(c) A benefit recipient who became a member before July 1, 2006, or the 22
surviving spouse of the member may elect major medical insurance coverage in 23
accordance with regulations and under the following conditions: 24
(1) a person, other than a disabled member or a disabled member who 25
is appointed to normal retirement, shall [MUST] pay an amount equal to the full 26
monthly group premium for retiree major medical insurance coverage if the person is 27
(A) younger than 60 years of age and has less than 28
(i) 25 years of credited service as a peace officer under 29
AS 39.35.360 and 39.35.370; or 30
(ii) 30 years of credited service under AS 39.35.360 and 31 33-LS0505\B
SB0088A -41- SB 88
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39.35.370 that is not service as a peace officer; or 1
(B) of any age and has less than 10 years of credited service; 2
(2) a person is not required to make premium payments for retiree 3
major medical coverage if the person 4
(A) is a disabled member; 5
(B) is a disabled member who is appointed to normal 6
retirement; 7
(C) is 60 years of age or older and has at least 10 years of 8
credited service; or 9
(D) has at least 10
(i) 25 years of credited service as a peace officer under 11
AS 39.35.360 and 39.35.370; or 12
(ii) 30 years of credited service under AS 39.35.360 and 13
39.35.370 not as a peace officer. 14
* Sec. 78. AS 39.35.535 is amended by adding a new subsection to read: 15
(g) A benefit recipient who first becomes a member after June 30, 2006, or a 16
surviving spouse who is eligible under AS 39.35.537(b), is not eligible for benefits 17
under this section but may elect medical benefits under AS 39.35.537. 18
* Sec. 79. AS 39.35 is amended by adding a new section to read: 19
Sec. 39.35.537. Medical benefit; eligibility of employees first hired after 20
June 30, 2006; surviving spouses and dependents. (a) An employee who became a 21
member of the plan after June 30, 2006, receives a monthly benefit from the plan, and 22
has elected benefits under this section is entitled to medical benefits under this section. 23
A member who applies for medical benefits under this section shall apply on the forms 24
and in the manner prescribed by the administrator. 25
(b) The member's surviving spouse is eligible to elect medical benefits if the 26
member had retired or was eligible for retirement and medical benefits at the time of 27
the member's death. 28
(c) The medical benefits available to eligible persons are access to the retiree 29
major medical insurance plan and access to the health reimbursement arrangement 30
plan under AS 39.30.300. Access to the retiree major medical insurance plan means 31 33-LS0505\B
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that an eligible person may not be denied insurance coverage except for failure to pay 1
the required premium. 2
(d) Retiree major medical insurance plan coverage elected by an eligible 3
member under this section covers the eligible member, the spouse of the eligible 4
member, and the dependent children of the eligible member. 5
(e) Retiree major medical insurance plan coverage elected by a surviving 6
spouse of an eligible member under this section covers the surviving spouse and the 7
dependent children of the eligible member who are dependent on the surviving spouse. 8
(f) Participation in the retiree major medical insurance plan is not required in 9
order to participate in the health reimbursement arrangement plan. 10
(g) A person eligible for medical benefits under this section is not required to 11
participate in the health reimbursement arrangement plan in order to participate in the 12
retiree major medical insurance plan. 13
(h) A person who is eligible for medical benefits under this section must make 14
the irrevocable election to participate or not participate in the retiree major medical 15
insurance plan on or before the date the person reaches 70 1/2 years of age or when the 16
person applies for retirement and medical benefits, whichever is later. 17
(i) Major medical insurance coverage takes effect on the first day of the month 18
following the date of the administrator's approval of the election and stops when the 19
person who elects coverage dies or fails to make a required premium payment. 20
(j) The coverage for persons 65 years of age or older is the same as that 21
available for persons under 65 years of age. The benefits payable to those persons 65 22
years of age or older supplement any benefits provided under the federal old age, 23
survivors, and disability insurance program. 24
(k) The medical and optional insurance premiums owed by the person who 25
elects coverage may be deducted from the health reimbursement arrangement plan. If 26
the amount of the health reimbursement arrangement plan becomes insufficient to pay 27
the premiums, the person who elects coverage under (a) of this section shall pay the 28
premiums directly. 29
(l) The cost of premiums for retiree major medical insurance coverage under 30
this section for an eligible member or surviving spouse who is
31 33-LS0505\B
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(1) not eligible for Medicare is an amount equal to the full monthly 1
group premiums for retiree major medical insurance coverage; 2
(2) eligible for Medicare is the following percentage of the premium 3
amounts established for retirees who are eligible for Medicare: 4
(A) 30 percent if the member had 10 or more, but less than 15, 5
years of service; 6
(B) 25 percent if the member had 15 or more, but less than 20, 7
years of service; 8
(C) 20 percent if the member had 20 or more, but less than 25, 9
years of service; 10
(D) 15 percent if the member had 25 or more, but less than 30, 11
years of service; 12
(E) 10 percent if the member had 30 or more years of service. 13
(m) The eligibility for retiree major medical insurance coverage for an 14
alternate payee under a qualified domestic relations order shall be determined based 15
on the eligibility of the member to elect coverage. The alternate payee shall pay the 16
full monthly premium for retiree major medical insurance coverage. 17
(n) The administrator shall 18
(1) inform a person entitled to retiree major medical insurance 19
coverage under this section in writing 20
(A) that the health insurance coverage available to retired 21
members may be different from the health insurance coverage provided to 22
employees; 23
(B) of time limits for selecting optional health insurance 24
coverage; and 25
(C) whether the election is irrevocable; and 26
(2) require that a person entitled to retiree major medical insurance 27
coverage under this section indicate in writing on a form provided by the administrator 28
whether the person has chosen to receive optional health insurance coverage. 29
(o) The monthly group premiums for retiree major medical insurance coverage 30
under this section are established by the administrator in accordance with 31 33-LS0505\B
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AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 1
(a) of this section a monthly group premium rate for retiree major medical insurance 2
coverage other than the premium in effect for the month in which the premium is due 3
for coverage for that month. 4
(p) In this section, "health reimbursement arrangement plan" means the State 5
of Alaska Teachers' and Public Employees' Retiree Health Reimbursement 6
Arrangement Plan established in AS 39.30.300. 7
* Sec. 80. AS 39.35.680(4) is amended to read: 8
(4) "average monthly compensation" means the result obtained by 9
dividing the compensation earned by an employee during a considered period by the 10
number of months, including fractional months, for which compensation was earned; 11
an employee must have at least 115 days of credited service in the last payroll year in 12
order for that year to be used as part of the consecutive payroll years; the considered 13
period consists of 14
(A) for employees first hired before July 1, 1996, the three 15
consecutive payroll years during the period of credited service that yield the 16
highest average; 17
(B) for employees first hired [ON OR] after June 30 [JULY 1], 18
1996, the five consecutive payroll years during the period of credited service 19
that yield the highest average; 20
(C) if the employee does not have the number of consecutive 21
payroll years required by (A) or (B) of this paragraph, the actual number of 22
months, including fractional months, that the employee worked; 23
(D) for an employee who has made an election under 24
AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 25
fractional months, that the employee worked; 26
(E) for a peace officer or firefighter hired before July 1, 2006 27
[AT ANY TIME], the three consecutive payroll years during the period of 28
credited service that yield the highest average; 29
* Sec. 81. AS 39.35.680(26) is amended to read: 30
(26) "normal retirement" means retirement for a member who is 31 33-LS0505\B
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eligible to receive benefits under AS 39.35.370(a) or (l) or [UNDER] 39.35.385(a) or 1
(f); 2
* Sec. 82. AS 39.35.700 is amended to read: 3
Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 4
AS 39.35.700 - 39.35.990 apply only to 5
(1) members first hired [ON OR] after June 30, 2006, and before 6
July 1, 2024, who do not, before November 1, 2024, elect to participate in a 7
defined benefit retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 8
39.35.680; and 9
(2) [JULY 1, 2006, TO] members [WHO ARE EMPLOYED BY 10
EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 11
RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 12
FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO MEMBERS] who 13
transferred [TRANSFER] into the defined contribution retirement plan under former 14
AS 39.35.940. 15
* Sec. 83. AS 39.35.700 is amended by adding a new subsection to read: 16
(b) A public organization as defined in AS 39.35.680 or a municipality or 17
other political subdivision of the state that participates in the plan shall also participate 18
in the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 19
* Sec. 84. AS 39.35.720 is amended to read: 20
Sec. 39.35.720. Membership. An employee who becomes a member [ON OR] 21
after June 30, 2006, and before July 1, 2024, who does not, before November 1, 22
2024, elect to participate in a defined benefit retirement plan under AS 14.25.009 23
- 14.25.220 or AS 39.35.095 - 39.35.680 [JULY 1, 2006,] shall participate in the plan 24
set out in AS 39.35.700 - 39.35.990. 25
* Sec. 85. AS 39.35.750 is amended by adding a new subsection to read: 26
(f) This section does not apply to contributions made under AS 39.35.255(j) 27
and does not require an employer that makes a contribution for an employee under 28
AS 39.35.255(j) to make another contribution for that employee. 29
* Sec. 86. AS 39.35.895(a) is amended to read: 30
(a) Subject to art. XII, sec. 7, Constitution of the State of Alaska, the 31 33-LS0505\B
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[THE] state may [HAS THE RIGHT TO] amend the plan at any time and from time to 1
time, in whole or in part, including the right to make retroactive amendments referred 2
to in 26 U.S.C. 401(b). 3
* Sec. 87. AS 39.35.895(b) is amended to read: 4
(b) The plan administrator may not modify or amend the plan retroactively [IN 5
SUCH A MANNER AS] to reduce [THE] benefits accrued by a [OF ANY] member 6
[ACCRUED TO DATE UNDER THE PLAN BY REASON OF CONTRIBUTIONS 7
MADE] before the modification or amendment except to the extent that the reduction 8
is permitted by art. XII, sec. 7, Constitution of the State of Alaska, and the Internal 9
Revenue Code. 10
* Sec. 88. AS 39.35.895(c) is amended to read: 11
(c) Subject to art. XII, sec. 7, Constitution of the State of Alaska, and the 12
Internal Revenue Code, the [THE] state may [, IN ITS DISCRETION,] terminate the 13
plan in whole or part [AT ANY TIME] without liability for the termination. If the plan 14
is terminated, all investments at the time of termination remain in force until all 15
individual accounts have been completely distributed under the plan. After [, AND, 16
AFTER] all plan liabilities are satisfied, excess assets of the plan revert to the 17
employer. 18
* Sec. 89. AS 39.35.895(d) is repealed and reenacted to read: 19
(d) Within one year after determining that a contribution to the plan by an 20
employer was the result of a mistake of fact, the administrator shall return the 21
contribution to the employer. 22
* Sec. 90. AS 14.25.012(c), 14.25.061, 14.25.540; and AS 39.35.940 are repealed. 23
* Sec. 91. The uncodified law of the State of Alaska is amended by adding a new section to 24
read: 25
RETIREMENT PLAN ELECTION. (a) A teacher who was first hired after June 30, 26
2006, and before the effective date of this section, and who is a member of the defined 27
contribution retirement plan of the teachers' retirement system under AS 14.25.310 - 28
14.25.590 may, before November 1, 2024, make a one-time election to participate in the 29
defined benefit retirement plan under AS 14.25.009 - 14.25.220 and to transfer all 30
contributions that have been made or should be made to the defined contribution retirement 31 33-LS0505\B
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plan for service the member completes before the effective date of the member's participation 1
in the defined benefit retirement plan. The transferred contributions shall be used to purchase 2
credited service in the defined benefit retirement plan on an actuarial equivalent basis 3
determined by the Alaska Retirement Management Board established under AS 37.10.210. 4
(b) An employee who was first hired after June 30, 2006, and before the effective date 5
of this section, and who is a member of the defined contribution retirement plan of the public 6
employees' retirement system under AS 39.35.700 - 39.35.990, may, before November 1, 7
2024, make a one-time election to participate in the defined benefit retirement plan under 8
AS 39.35.095 - 39.35.680 and to transfer all contributions that have been made or should be 9
made to the defined contribution retirement plan for service the member completes before the 10
effective date of the member's participation in the defined benefit retirement plan. The 11
transferred contributions shall be used to purchase credited service in the defined benefit 12
retirement plan on an actuarial equivalent basis determined by the Alaska Retirement 13
Management Board established under AS 37.10.210. 14
* Sec. 92. The uncodified law of the State of Alaska is amended by adding a new section to 15
read: 16
RETIREMENT PLAN ELECTION PROCEDURE. (a) An election made under sec. 17
91 of this Act to participate in a defined benefit retirement plan must be made in writing on 18
one or more forms and in the manner prescribed by the administrator. Before accepting an 19
election to participate in a defined benefit retirement plan, the administrator shall provide the 20
employee who plans on making an election to participate in a defined benefit retirement plan 21
with information, including calculations to illustrate the effect of moving the employee's 22
retirement plan from a defined contribution retirement plan to a defined benefit retirement 23
plan as well as other information that informs the employee of potential consequences of the 24
employee's election. 25
(b) An election made under sec. 91 of this Act to participate in a defined benefit 26
retirement plan is irrevocable. On the effective date of the election, an eligible employee who 27
makes the election shall be enrolled as a member of a defined benefit retirement plan, and the 28
employee's participation in the plan shall be governed by the applicable provisions of the 29
defined benefit retirement plan. The employee's enrollment in a defined benefit retirement 30
plan is retroactive to the date of hire. An election made by an eligible employee who is
31 33-LS0505\B
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married is not effective unless the election is signed by the employee's spouse. 1
(c) When an eligible employee makes a one-time election under sec. 91 of this Act, 2
the administrator shall cause the total amount of the employee's employee and employer 3
contributions, with investment earnings and losses through the day of the employee's election 4
to participate as a member in a defined benefit retirement plan, to be actuarially calculated 5
and, subject to (e) of this section, transferred to the pension fund in the corresponding defined 6
benefit retirement plan. On the effective date of the employee's participation in a defined 7
benefit retirement plan, the employee shall be credited with service in the defined benefit 8
retirement plan that may be purchased under an actuarial equivalent purchase formula as 9
determined by the board. The board shall establish transfer procedures by regulation, but the 10
actual transfer may not occur later than 60 days after the date the administrator receives the 11
employee's completed forms under (a) of this section, unless the major financial markets for 12
securities available for a transfer are seriously disrupted by an unforeseen event that also 13
causes the suspension of trading on any national securities exchange in the country where the 14
securities were issued. In that event, the 60-day period may be extended by a resolution of the 15
board. A transfer is not commissionable or subject to other fees and may be in the form of 16
cash or a security as determined by the board. A security shall be valued on the date of receipt 17
in the employee's account. In this subsection, "board" means the Alaska Retirement 18
Management Board established under AS 37.10.210. 19
(d) When making a transfer for an eligible employee under (c) of this section, the 20
administrator shall cause an amount equal to the 21
(1) decrease in the accrued actuarial liability of the death and disability trust in 22
the defined contribution retirement plan resulting from the transfer as of the date of transfer, 23
based on the most recent actuarial valuation of the death and disability trust, to be transferred 24
from the death and disability trust in the defined contribution retirement plan to the pension 25
fund in the defined benefit retirement plan; and 26
(2) increase in the accrued actuarial liability of the health care trust in the 27
defined benefit retirement plan resulting from the transfer as of the date of transfer, based on 28
the actuarial assumptions set out in (g) of this section, to be transferred from the trust 29
established under AS 39.30.097(b) for the prefunding of medical benefits provided by 30
AS 14.25.480 and AS 39.35.880 to the trust established under AS
39.30.097(a) for the 31 33-LS0505\B
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prefunding of medical benefits provided by AS 14.25.171 and AS 39.35.537. 1
(e) If the value actuarially calculated under (c) of this section is insufficient to pay for 2
service credit equal to the employee's actual service, the administrator shall allow the 3
employee the option of purchasing any indebtedness up to the amount needed to eliminate the 4
insufficiency; however, if that value exceeds the amount needed to pay for a service credit 5
equal to the employee's actual service, the administrator shall cause the excess to remain in 6
the employee's retirement plan established under AS 14.25.310 - 14.25.590 or AS 39.35.700 - 7
39.35.990. An excess under this subsection may not be used to purchase service credit in a 8
retirement plan administered under AS 14.25 or AS 39.35. 9
(f) The amount of service that can be purchased under (e) of this section is based on 10
the transferred employee's accrued actuarial liability of pension benefits in the defined benefit 11
retirement plan. The actuarial assumptions under this section are based on the actuarial 12
assumptions set out in (g) of this section. 13
(g) Actuarial assumptions about either the teachers' retirement system or the Public 14
Employees' Retirement System of Alaska must be based on the most recent actuarial 15
valuation of the corresponding defined benefit retirement plan, except that the retirement rates 16
are computed at 25 percent of the retirement rates used in the most recent actuarial valuation 17
of the pension trust for that plan plus 75 percent of the retirement rates used in the most recent 18
actuarial valuation of the corresponding defined contribution retirement plan. 19
(h) The provisions of this section are subject to the requirements of the Internal 20
Revenue Code and the limitations under AS 14.25.010, 14.25.181, 14.25.320(c) and (d), 21
14.25.490, AS 39.35.115, 39.35.678, 39.35.710(c) and (d), and 39.35.895. In this subsection, 22
"Internal Revenue Code" has the meaning given in AS 39.35.990. 23
(i) In this section, 24
(1) "administrator" means the commissioner of administration or the person 25
designated by the commissioner of administration under AS 39.35.003 for a public 26
employees' retirement plan; 27
(2) "defined benefit retirement plan" means a retirement plan established 28
under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; 29
(3) "defined contribution retirement plan" means a retirement plan established 30
under AS 14.25.310 - 14.25.590 or AS 39.35.700 - 39.35.990. 31 33-LS0505\B
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* Sec. 93. The uncodified law of the State of Alaska is amended by adding a new section to 1
read: 2
ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 3
may adopt regulations necessary to implement secs. 48 and 49 of this Act. Regulations 4
adopted by the Alaska Retirement Management Board under this Act relate to the internal 5
management of a state agency and are not subject to AS 44.62 (Administrative Procedure Act) 6
under AS 37.10.240. 7
(b) The commissioner of administration may adopt regulations necessary to 8
implement secs. 1 - 47 and 50 - 92 of this Act. Regulations adopted by the commissioner of 9
administration under this Act relate to the internal management of a state agency and are not 10
subject to AS 44.62 (Administrative Procedure Act) under AS 14.25.005, AS 39.30.098, and 11
AS 39.35.005. 12
(c) Regulations adopted under this section may not take effect before the effective 13
date of the law being implemented by the regulation. 14
* Sec. 94. Section 93 of this Act takes effect immediately under AS 01.10.070(c). 15
* Sec. 95. Except as provided in sec. 94 of this Act, this Act takes effect July 1, 2024. 16