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HF 967 – IPERS Protection Occupations, Credit and Annual Adjustments (LSB2794HV)
Staff Contact: Xavier Leonard (515.725.0509) xavier.leonard@legis.iowa.gov
Fiscal Note Version – New
Description
House File 967 relates to benefits for members of the Iowa Public Employees’ Retirement
System (IPERS) who are employed in a protection occupation.
The Bill permits Protection Occupation members of the IPERS who are at least 50 years of age
and have at least 22 years of service to retire, beginning July 1, 2025. The Bill adjusts the
contribution rate for Protection Occupation members of the IPERS from a 60.0%
employer/40.0% employee split to be split evenly between the State and the members
beginning July 1, 2025, with 50.0% of the required contribution rate to be paid by the employer
and 50.0% of the required contribution rate to be paid by the employee.
The Bill establishes an annual adjustment to the monthly allowance for active and inactive
Protection Occupation members of the IPERS, and to any beneficiaries or contingent
annuitants, for retirements occurring on or after July 1, 2025. Beginning on July 1, 2026, and
each July 1 thereafter, the monthly retirement allowance will be increased by 1.5% of the
monthly retirement allowance payable on that date. Protection Occupation members of the
IPERS who retire after July 1, 2025, will not be eligible to receive a retirement dividend under
Iowa Code section 97B.49F.
House File 967 increases the applicable percentage for retirement benefit payments of
protection occupation members of the IPERS retiring on or after July 1, 2025, for each calendar
quarter of service beyond 22 years of service from 0.375% to 0.625%, which increases the
maximum accumulation from 72.0% to 80.0%.
Background
The Protection Occupation membership group of the IPERS is comprised of a range of
occupations, including fire fighters and police officers not covered by Iowa Code chapter 411,
correctional officers, conservation officers, county attorney investigators, emergency medical
service (EMS) providers, high-risk unit officers, insurance fraud investigators, and, dependent
on their years of service, select Department of Transportation (DOT) peace officers.
Based on the June 30, 2024, actuarial valuation, the IPERS Protection Occupation membership
group covers approximately 7,822 active members and 4,184 retired members. The current
funded ratio is 103.65%. The current actuarial accrued liability is $2.262 billion, the actuarial
value of assets is $2.344 billion, and the unfunded actuarial liability (UAL) is $-82.5 million.
For FY 2026, the IPERS Protection Occupation membership group’s estimated contributions at
the current rate of 15.52% of payroll total $25.7 million, split 60.0% for the State and 40.0% for
the members. Figure 1 displays the contribution rates for FY 2022 through FY 2026.
Fiscal Note
Fiscal Services Division 2
Figure 1 — Contribution Rates for the IPERS Protection
Occupation Membership Group Under Current Law, FY 2022 – FY 2026
Currently, a vested member of the IPERS Protection Occupation membership group is eligible
to receive one of two retirement dividends under Iowa Code section 97B.49F, depending on
when the member retired. A member who retired before July 1, 1990, is eligible to receive
annual dividend payments in November of each year. A member who retired on or after
July 1, 1990, is eligible to receive a favorable experience dividend (FED) when a favorable
experience on the actuarial liabilities and assets occurs and the IPERS Fund is fully funded.
Due to the funding status of the IPERS Trust Fund, the IPERS has not made any FED
payments since 2014.
Protection occupation members of the IPERS receive a retirement benefit based on the average
of the highest three years of compensation times a multiplier that is determined by the
member’s length of service. The first 22 years of service earn the member a retirement benefit
payment multiplier of 60.0%. Under current law, the applicable percentage used to calculate a
retiree’s monthly retirement benefit is increased by 0.375% for each calendar quarter of service
beyond 22 years of service. The current maximum retirement benefit is 72.0%. The Bill
increases the maximum retirement benefit payment to 80.0%. Figure 2 displays the applicable
percentage for the current law and proposed law under House File 967.
Figure 2 — Applicable Percentage, Current and Proposed Law
Assumptions
• According to the actuarial cost study performed by Cavanaugh Macdonald Consulting in
August 2024 using the FY 2023 valuation report, splitting the contribution rate evenly
between the State and the employees, permitting early retirement at age 50 with 22 years of
service, increasing the applicable percentage, and establishing a 1.5% annual adjustment to
the monthly allowance for FY 2023 would have increased the IPERS Protection Occupation
membership group’s UAL from $-63.8 million to $198.7 million, a $262.5 million increase.
• While the results of the actuarial cost study cannot be directly applied to the FY 2024
valuation report to arrive at an updated fiscal impact, the cost study can be broadly applied
to anticipate a similar impact. FY 2022FY 2023FY 2024FY 2025FY 2026
Employer Contribution Rate 9.31%9.31%9.31%9.31%9.31%
Employee Contribution Rate 6.21%6.21%6.21%6.21%6.21%
Total 15.52%15.52%15.52%15.52%15.52% Years of ServiceCurrent LawProposed LawDifference
22 60.00% 60.00% 0.00%
23 61.50% 62.50% 1.00%
24 63.00% 65.00% 2.00%
25 64.50% 67.50% 3.00%
26 66.00% 70.00% 4.00%
27 67.50% 72.50% 5.00%
28 69.00% 75.00% 6.00%
29 70.50% 77.50% 7.00%
30+ 72.00% 80.00% 8.00% 3
• The IPERS will incur administrative costs, including costs to update software. The costs are
unknown, but are estimated to be nominal.
Fiscal Impact
The Cavanaugh Macdonald Consulting actuarial cost study performed in August 2024 using the
FY 2023 valuation report estimated a $262.5 million increase in the UAL, a decrease in the
funded ratio of 11.16%, and an increase in the contribution rate of 7.10%. The change in
the contribution split from 60/40 to 50/50 results in an increase in the contribution rate of 2.00%
for the employer and 5.10% for the employee for the IPERS Protection Occupation membership
group.
According to the FY 2024 valuation report, the UAL was $-82.5 million, the funded ratio was
103.65%, and the contribution rate was 15.52% (split 60.0% employer and 40.0% employee)
for the IPERS Protection Occupation membership group.
A 7.10% increase to the contribution rate changes it from 15.52% to 22.62% and the increase
would be split between employer (2.00%) and employee (5.10%) and is estimated to increase
costs by approximately $10.3 million for the employer, and $26.2 million for the employee group
or $3,400 per employee.
Administrative costs to the IPERS are unknown at this time but are estimated to be nominal.
Any increased administrative costs for the IPERS will be paid from the IPERS Trust Fund.
Sources
Iowa Public Employees’ Retirement System
Iowa Public Employees’ Retirement System FY 2023 Actuarial Analysis
Iowa Public Employees’ Retirement System FY 2024 Actuarial Analysis
Cavanaugh Macdonald Consulting Cost Study for Non-Retired Protection Occupation Members
(August 2024)
Legislative Services Agency
/s/ Jennifer Acton
March 26, 2025
Doc ID 1524747
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov