Sixty-ninth Legislative Assembly of North Dakota
In Regular Session Commencing Tuesday, January 7, 2025
HOUSE BILL NO. 1146
(Representatives Lefor, Dockter, Schauer, Stemen, M. Ruby)
(Senators Davison, Dever, Hogue)
AN ACT to amend and reenact sections 54-52-02.1, 54-52-06, 54-52.6-01, 54-52.6-02.2, 54-52.6-05,
and 54-52.6-09.5 of the North Dakota Century Code, relating to employer eligibility to participate
in the public employees retirement system defined contribution retirement plan, employer
contribution requirements for the defined benefit and defined contribution retirement plans, and
employee eligibility to elect to transfer to the defined contribution retirement plan; to provide for
retroactive application; and to declare an emergency.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
SECTION 1. AMENDMENT. Section 54-52-02.1 of the North Dakota Century Code is amended and
reenacted as follows:
54-52-02.1. Political subdivisions authorized to join public employees retirement system.
1.A political subdivision may, on behalf of its permanent employees, on behalf of its peace
officers, firefighters, and correctional officers separately from its other employees, and
permanent noncertified employees only in the case of school districts, enter agreements with
the retirement board for the purpose of extending the benefits of the public employees
retirement system, as provided in this chapter or chapter 54 - 52.6 , to those employees. The
agreement may, in accordance with this chapter and chapter 54 - 52.6 , contain provisions
relating to benefits, contributions, effective date, modification, administration, and other
appropriate provisions as the retirement board and the political subdivision agree upon, but
the agreement must provide:
a.The political subdivision will contribute on behalf of each eligible employee an amount
equal to that provided in section 54-52-06 or 54-52-06.3 for peace officers, firefighters,
and correctional officers participating separately from other political subdivision
employees.
b.A portion of the moneys paid by the political subdivision may be used to pay
administrative expenses of the retirement board.
2.Notwithstanding any other provision of law, a political subdivision having an existing police or
firefighter pension plan may merge that plan into the public employees retirement system
under rules adopted by and in a manner determined by the board.
3.Notwithstanding any other provision of this chapter, a political subdivision of this state not
currently participating in the public employees retirement system may not become a
participant in the retirement system until an actuarial study is performed under the direction of
the board to calculate the required employer contribution for any past service liability and the
required employer contribution must be an amount determined sufficient to amortize and fund
any past service liability over a period not to exceed thirty years as determined by the board.
Any fees incurred in performing the actuarial study must be paid for by the political subdivision
in a manner determined by the board.
SECTION 2. AMENDMENT. Section 54-52-06 of the North Dakota Century Code is amended and
reenacted as follows: H. B. NO. 1146 - PAGE 2
54-52-06. Employer's contribution to retirement plan - Report to the employee benefits
programs committee. (Effective through December 31, 2025)
1.Each governmental unit shall contribute an amount equal to four and twelve-hundredths
percent of the monthly salary or wage of a participating member. Governmental unit
contributions increase by one percent of the monthly salary or wage of a participating member
beginning with the monthly reporting period of January 2012; with an additional increase of
one percent, beginning with the reporting period of January 2013; with an additional increase
of one percent, beginning with the monthly reporting period of January 2014; and with an
additional increase of one percent, beginning with the monthly reporting period of January
2024. For a participating member who first enrolls after December 31, 2019, the governmental
unit shall contribute an additional amount equal to one and fourteen-hundredths percent of the
monthly salary or wage of the participating member.
2.For those members who elect to exercise their rights under section 54-52-17.14, the
employing governmental unit, or in the case of a member not presently under covered
employment the most recent employing governmental unit, shall pay the associated employer
contribution. If the employee's contribution is paid by the governmental unit under
subsection 3 of section 54-52-05, the employer unit shall contribute, in addition, an amount
equal to the required employee's contribution. Each governmental unit shall pay the
contribution monthly, or in the case of an election made pursuant to section 54-52-17.14 a
lump sum, into the retirement fund from the governmental unit's funds appropriated for payroll
and salary or any other funds available for these purposes. Any governmental unit failing to
pay the contributions monthly, or in the case of an election made pursuant to section
54-52-17.14 a lump sum, or failing to otherwise comply with the board's established wage
reporting or payroll reporting process requirements, is subject to a civil penalty of fifty dollars
and, as interest, one percent of the amount due for each month of delay or fraction of a month
after the payment became due. In lieu of assessing a civil penalty or one percent per month,
or both, interest at the actuarial rate of return may be assessed for each month the
contributions are delinquent. If contributions are paid within ninety days of the date the
contributions became due, penalty and interest to be paid on delinquent contributions may be
waived.
3.An employer is required to submit contributions for any past eligible employee who was
employed after July 1, 1977, for which contributions were not made if the employee would
have been eligible to become vested had the employee participated and if the employee
elects to join the public employees retirement system. Employer contributions may not be
assessed for eligible service that an employee has waived pursuant to subsection 1 of section
54-52-05.
4.Annually, the board shall report to the employee benefits programs committee the
contributions necessary, as determined by the actuarial study, to maintain the fund's actuarial
soundness.
Employer's contribution to retirement plan - Report to the employee benefits programs
committee. (Effective after December 31, 2025)
1.a.As determined by actuarial valuations, each state governmental unit that receives
budgetary approval from the legislative assembly shall contribute to the defined benefit
plan an amount on a level percent of compensation basis for all main system defined
benefit retirement plan employees and all defined contribution retirement plan employees
sufficient under the actuarial valuation to meet both the normal cost plus the actuarially
determined amount required to amortize the unfunded accrued liability of the main plan
over a closed period of thirty and one-half years, beginning January 1, 2026, and
continuing through June 30, 2056. By November fifteenth of each even-numbered year
the board shall publish the contribution rate required under this subsection. The board
shall calculate this rate based on the July first actuarial report of that year. In lieu of each H. B. NO. 1146 - PAGE 3
state governmental unit that receives budgetary approval from the legislative assembly
contributing the additional actuarially determined rate, the legislative assembly may
authorize a transfer to the public employees retirement system fund in an amount equal
to or greater than the actuarially determined amount as most recently published by the
board for the succeeding biennium.
b.Each participating political subdivision and state governmental unit that does not receive
budgetary approval from the legislative assembly shall contribute an amount equal to
eight and twelve-hundredths percent of the monthly salary or wage of a participating
member.
c.For a participating member who first enrolls after December 31, 2019, a participating
political subdivision shall contribute an additional amount equal to one and fourteen-
hundredths percent of the monthly salary or wage of the participating member.
2.For those members who elect to exercise their rights under section 54-52-17.14, the
employing governmental unit, or in the case of a member not presently under covered
employment the most recent employing governmental unit, shall pay the associated employer
contribution. If the employee's contribution is paid by the governmental unit under
subsection 3 of section 54-52-05, the employer unit shall contribute, in addition, an amount
equal to the required employee's contribution. Each governmental unit shall pay the
contribution monthly, or in the case of an election made pursuant to section 54-52-17.14 a
lump sum, into the retirement fund from the governmental unit's funds appropriated for payroll
and salary or any other funds available for these purposes. Any governmental unit failing to
pay the contributions monthly, or in the case of an election made pursuant to section
54-52-17.14 a lump sum, or failing to otherwise comply with the board's established wage
reporting or payroll reporting process requirements, is subject to a civil penalty of fifty dollars
and, as interest, one percent of the amount due for each month of delay or fraction of a month
after the payment became due. In lieu of assessing a civil penalty or one percent per month,
or both, interest at the actuarial rate of return may be assessed for each month the
contributions are delinquent. If contributions are paid within ninety days of the date the
contributions became due, penalty and interest to be paid on delinquent contributions may be
waived.
3.An employer is required to submit contributions for any past eligible employee who was
employed after July 1, 1977, for which contributions were not made if the employee would
have been eligible to become vested had the employee participated and if the employee
elects to join the public employees retirement system. Employer contributions may not be
assessed for eligible service that an employee has waived pursuant to subsection 1 of section
54-52-05.
4.Annually, the board shall report to the employee benefits programs committee the
contributions necessary, as determined by the actuarial study, to maintain the fund's actuarial
soundness.
SECTION 3. AMENDMENT. Section 54-52.6-01 of the North Dakota Century Code is amended and
reenacted as follows:
54-52.6-01. Definition of terms.
As used in this chapter, unless the context otherwise requires:
1."Board" means the public employees retirement system board.
2."Deferred member" means a personan individual who elected to receive deferred vested
retirement benefits under chapter 54-52. H. B. NO. 1146 - PAGE 4
3."Eligible employee", for employees who become participating members after December 31,
2024, has the same meaning as provided under section 54-52-02.15. For employees who
elected to join the defined contribution retirement plan under this chapter before January 1,
2025, the term includes a permanent state employee, except an employee of the judicial
branch or an employee of the board of higher education and state institutions under the
jurisdiction of the board of higher education, who is at least eighteen years of age and who is
in a position not classified by the North Dakota human resource management services.
4."Employee" means any personan individual employed by the state, whose compensation is
paid out of state funds, or funds controlled or administered by the state or paid by the federal
government through any of its executive or administrative officials.
5."Employer" means the state of North Dakota, except the highway patrol for members of the
retirement plan created under chapter 39 - 03.1, or a participating political subdivision of the
state.
6."Participating member" means an eligible employee who elects to participate in the defined
contribution retirement plan established under this chapter.
7."Permanent employee" means a state employee whose services are not limited in duration
and who is filling an approved and regularly funded position and is employed twenty hours or
more per week and at least five months each year.
8."Wages" and "salaries" means earnings in eligible employment under this chapter reported as
salary on a federal income tax withholding statement plus any salary reduction or salary
deferral amounts under 26 U.S.C. 125, 401(k), 403(b), 414(h), or 457. "Salary" does not
include fringe benefits such as payments for unused sick leave, personal leave, vacation leave
paid in a lump sum, overtime, housing allowances, transportation expenses, early retirement,
incentive pay, severance pay, medical insurance, workforce safety and insurance benefits,
disability insurance premiums or benefits, or salary received by a member in lieu of previously
employer-provided fringe benefits under an agreement between an employee and a
participating employer. Bonuses may be considered as salary under this section if reported
and annualized pursuant to rules adopted by the board.
SECTION 4. AMENDMENT. Section 54-52.6-02.2 of the North Dakota Century Code is amended
and reenacted as follows:
54-52.6-02.2. Election after December 31, 2024 - Additional employer contribution.
1.As used in this section, "eligible employee" means a permanent state employee of a state
entity that as of January 1, 2025, receives budgetary approval from the legislative assembly,
who on December 31, 2024, is a participating member of the public employees retirement
system main system plan under chapter 54-4254-52, who has been a participating member
under chapter 54-52 for no more than five years, and who is at least eighteen years of age.
2.The board shall provide a three-month election period, from January 1, 2025, through March
31, 2025, for an eligible employee to transfer to the defined contribution plan under this
chapter pursuant to the rules and policies adopted by the board.
a.An election under this section made by a member of the public employees retirement
system under chapter 54-52 to transfer to the defined contribution retirement plan under
this chapter is irrevocable.
b.For an eligible employee who elects to transfer from the public employees retirement
system under chapter 54-52 to the defined contribution retirement plan under this
chapter, the board shall transfer a lump sum amount from the public employees
retirement system fund to the member's account in the defined contribution retirement
plan under this chapter. However, if the eligible employee terminates employment before H. B. NO. 1146 - PAGE 5
receiving the lump sum transfer under this section, the election made is ineffective and
the eligible employee remains a member of the public employees retirement system
under chapter 54-52 and retains all the rights and privileges under that chapter.
c.The board shall calculate the lump sum amount to be transferred based on the actuarial
present value of the eligible employee's accumulated benefit obligation under the public
employees retirement system based on the assumption the eligible employee will retire
under the earlier applicable normal retirement age, plus interest from January 1, 2025, to
the date of transfer, at the rate of one-half of one percent less than the actuarial interest
assumption at the time of the election.
d.This section does not affect an eligible individual's right to health benefits under chapter
54-52.1.
3.The state employer of an eligible employee who elects under this section to participate in the
defined contribution retirement plan under this chapter shall pay an additional annual
contribution of three thousand three hundred and thirty-three dollars for up to three years.
Under this subsection, the employer shall pay the additional contribution each year the eligible
employee continues permanent employment with the state, beginning January 2026, and
extending no further than January 2028.
4.If the board receives notification from the internal revenue service that this section or any
portion of this section will cause the public employees retirement system or the retirement plan
established under this chapter to be disqualified for tax purposes under the Internal Revenue
Code, that portion that will cause the disqualification does not apply.
SECTION 5. AMENDMENT. Section 54-52.6-05 of the North Dakota Century Code is amended and
reenacted as follows:
54-52.6-05. Direction of investments.
1.Each participating member shall direct the investment of the individual's accumulated
employer and employee contributions and earnings to one or more investment choices within
available categories of investment provided by the board.
2.The board shall provide an investment menu of investment options. In establishing the
investment options, the board shall:
a.Include predetermined investment portfolio options constructed to reflect different risk
profiles that automatically reallocate and rebalance contributions as a participating
member ages.
b.Allow a participating member to construct an investment portfolio using some or all of the
investment options.
3.The board shall provide a diversified menu of mutual fundsinvestment solutions and in-plan
lifetime annuity options that may include in-plan and out-of-plan options, either fixed, variable,
or a combination of both. In selecting an annuity provider the board shall comply with section
54-52.6-05.1.
SECTION 6. AMENDMENT. Section 54-52.6-09.5 of the North Dakota Century Code is amended
and reenacted as follows:
54-52.6-09.5. Employer contribution for defined benefit plan. (Effective after December 31,
2025)
In addition to the employer contribution under section 54-52.6-09, a state employer that receives
budgetary approval from the legislative assembly shall contribute to the defined benefit retirement plan
under chapter 54-52, an amount equal to the contribution rate calculated under section 54-52-06 less H. B. NO. 1146 - PAGE 6
the amount of the required employer contribution under sections 54-52.2-09 and 54-52.6-09. If a state
employer uses federal funds to pay any or all of an employee's wages, the employer shall use state
funds to pay this additional contribution.
SECTION 7. RETROACTIVE APPLICATION. Section 4 of this Act applies retroactively to
January 1, 2025.
SECTION 8. EMERGENCY. Section 4 of this Act is declared to be an emergency measure. H. B. NO. 1146 - PAGE 7
____________________________ ____________________________
Speaker of the House President of the Senate
____________________________ ____________________________
Chief Clerk of the House Secretary of the Senate
This certifies that the within bill originated in the House of Representatives of the Sixty-ninth Legislative
Assembly of North Dakota and is known on the records of that body as House Bill No. 1146 and that
two-thirds of the members-elect of the House of Representatives voted in favor of said law.
Vote: Yeas 82 Nays 7 Absent 5
____________________________ ____________________________
Speaker of the House Chief Clerk of the House
This certifies that two-thirds of the members-elect of the Senate voted in favor of said law.
Vote: Yeas 46 Nays 0 Absent 1
____________________________ ____________________________
President of the Senate Secretary of the Senate
Received by the Governor at ________M. on _____________________________________, 2025.
Approved at ________M. on __________________________________________________, 2025.
____________________________
Governor
Filed in this office this ___________day of _______________________________________, 2025,
at ________ o’clock ________M.
____________________________
Secretary of State