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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
SENATE BILL 1281 By: Montgomery
AS INTRODUCED
An Act relating to the defined contribution system;
amending 62 O.S. 2021, Section 3103, which relates to
Oklahoma Pension Legislation Actuarial Analysis Act
definitions; establishing certain measures increasing
certain contributions for system as nonfiscal
retirement bills; amending 74 O.S. 2021, Section
935.5, which relates to employer and employee
contributions; increasing employer matching amount
for certain contributions; increasing amount
employees may contribute; further increasing employer
match requirement under certain circumsta nces;
exempting certain contribution rate increases from
Oklahoma Pension Legislation Actuarial Analysis Act.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2021, Section 3103, is
amended to read as follows:
Section 3103. As used in the Oklahoma Pension Legislation
Actuarial Analysis Act:
1. "Amendment" means any amendment, including a substitute
bill, made to a retirement bill by any commi ttee of the House of
Representatives or Senate, any conference committee of the House of
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Representatives or Senate or by the House of Representatives or
Senate;
2. "RB number" means that number preceded by the letters "RB"
assigned to a retirement bill by the respective staffs of the
Oklahoma State Senate and the Oklahoma House of Representatives when
the respective staff office prepares a retirement bill for a member
of the Legislature;
3. "Legislative Actuary" means the firm or entity that enters
into a contract with t he Legislative Service Bureau pursuant to
Section 452.15 of Title 74 of the Oklahoma Statutes to provide the
actuarial services and other duties provided for in the Oklahoma
Pension Legislation Actuarial Analysis Act;
4. "Nonfiscal amendment" means an amendment to a retirement
bill having a fiscal impact, which amendment does not change any
factor of an actuarial investigation specified in subsection A of
Section 3109 of this title;
5. "Nonfiscal retirement bill " means a retirement bill:
a. which does not affect the cost or funding factors of a
retirement system,
b. which affects such factors only in a manner which does
not:
(1) grant a benefit increase under the retirement
system affected by the bill,
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(2) create an actuarial accrued liability for or
increase the actuarial accrued liab ility of the
retirement system affected by the bill, or
(3) increase the normal cost of the retirement system
affected by the bill,
c. which authorizes the purchase by an active member of
the retirement system, at the actua rial cost for the
purchase as computed pursuant to the statute in effect
on the effective date of the measure allowing such
purchase, of years of service for purposes of reaching
a normal retirement date in the applicable retirement
system, but which canno t be used in order to compute
the number of years o f service for purposes of
computing the retirement benefit for the member,
d. which provides for the computation of a service -
connected disability retirement benefit for members of
the Oklahoma Law Enforce ment Retirement System
pursuant to Section 2-305 of Title 47 of the Oklahoma
Statutes if the members were unable to complete twenty
(20) years of service as a result of the disability,
e. which requires membership in the defined benefit plan
authorized by Section 901 et seq. of Title 74 of the
Oklahoma Statutes for persons whose first elected or
appointed service occurs on or after November 1, 2018,
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if such persons had any prior service in the Oklahoma
Public Employees Retirement System prior to November
1, 2015,
f. which provides for a one-time increase in retirement
benefits if the increase in retirement benefits is not
a permanent increase in the gross annual retirement
benefit payable to a member or beneficiary, occurs
only once pursuant to a single statutory authorization
and does not exceed:
(1) the lesser of two percent (2%) of the gross
annual retirement benefit of the member or One
Thousand Dollars ($1,000.00) and requires that
the benefit may only be provided if the funded
ratio of the affected retirement system would not
be less than sixty percent (60%) but not greater
than eighty percent (80%) after the benefit
increase is paid,
(2) the lesser of two percent (2%) of the gross
annual retirement benefit of the member or One
Thousand Two Hundred D ollars ($1,200.00) and
requires that the benefit may on ly be provided if
the funded ratio of the affected retirement
system would be greater than eighty percent (80%)
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but not greater than one hundred percent (100%)
after the benefit increase is paid,
(3) the lesser of two percent (2%) of the gross
annual retirement benefit of the member or One
Thousand Four Hundred Dollars ($1,400.00) and
requires that the benefit may only be provided if
the funded ratio of the affected retirement
system would be greater th an one hundred percent
(100%) after the benefit increas e is paid, or
(4) the greater of two percent (2%) of the gross
annual retirement benefit of the volunteer
firefighter or One Hundred Dollars ($100.00) for
persons who retired from the Oklahoma
Firefighters Pension and Retirement System as
volunteer firefighters and who did not retire
from the Oklahoma Firefighters Pension and
Retirement System as a paid firefighter.
As used in this subparagraph, "funded ratio" means the
figure derived by dividing the ac tuarial value of
assets of the applicable retirement sy stem by the
actuarial accrued liability of the applicable
retirement system,
g. which modifies the disability pension standard for
police officers who are members of the Oklahoma Police
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Pension and Retirement System as provi ded by Section 3
50-115 of this act Title 11, or
h. which provides a cost-of-living benefit increase
pursuant to the provisions of Sections 2 through 7 of
this act 49-143.7 and 50-136.9 of Title 11, Section
1104K of Title 20, Sections 2-305.12 and 930.11 of
Title 47, and Section 17-116.22 of Title 70.
A nonfiscal retirement bill shall include any retirement bill that
has as its sole purpose the appropriat ion or distribution or
redistribution of monies in some manner to a retirement system for
purposes of reducing the unfunded liability of such system or the
earmarking of a portion of the revenue from a tax to a re tirement
system or increasing the percentag e of the revenue earmarked fr om a
tax to a retirement system. Notwithstanding any other provision of
law, a nonfiscal retirement bill shall also include any measure that
increases the employer and employee contribution rates in the
defined contribution retirement system;
6. "Reduction-in-cost amendment" means an amendment to a
retirement bill having a fiscal impact whic h reduces the cost of the
bill as such cost is determined by the ac tuarial investigation for
the bill prepared pursuant t o Section 3109 of this title;
7. "Retirement bill" means any bill or joint resolution
introduced or any bill or joint resolution amend ed by a member of
the Oklahoma Legislature wh ich creates or amends any law directly
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affecting a retirement system. A re tirement bill shall not mean a
bill or resolution that impacts the revenue of any state tax in
which a portion of the revenue generated from such tax is earmarked
for the benefit of a retirement system;
8. "Retirement bill having a fiscal impact" means any
retirement bill creating or establishing a retirement system and any
other retirement bill other than a nonfiscal retirement bill; and
9. "Retirement system" means the Teachers' Retirement System of
Oklahoma, the Oklahoma Public Employees Retirement System, the
Uniform Retirement System for Just ices and Judges, the Oklahoma
Firefighters Pension and Retirement System, the Oklahoma Police
Pension and Retirement System, the Oklahoma Law Enforcement
Retirement System, or a retirement system established after January
1, 2006.
SECTION 2. AMENDATORY 74 O.S . 2021, Section 935.5, is
amended to read as follows:
Section 935.5. A. Except as otherwise provided by subsection B
of this section, employers of employees who become participants in
the defined contribution retirement system shall match the employee
contribution paid on a monthl y or more frequent basis at the rate of
six percent (6.0%) ten and five-tenths percent (10.5%) based on the
same compensation amount used to compute the employee contribution
amount.
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B. If an employee selects a contribution rate of seven percent
(7.0%) eight percent (8.0%) or more, but not higher than allowed
pursuant to the maximum annual contribution limit prescribed by
Section 415 of the Internal Revenue Code of 1986, as amended, the
employer matching amount shall be seven percent (7.0%) thirteen
percent (13%).
C. The initial four and fiv e-tenths percent (4.5%) employee
contribution shall be the only mandatory contribution of an em ployee
participating in the defined contribution retirement system created
by this act. These fu nds shall be placed by the System in either a
401(a) plan or a 457(b) plan, to be determined by the Board to
maintain the plan consistent with the Internal Rev enue Code. Any
employee contributions eligible to be matched under this section
over the four and five-tenths percent (4.5% ) initial contribution
shall be considered voluntary deferrals of compensation and placed
in a 457(b) plan. All employer matching f unds shall be placed in a
401(a) plan.
Any contribution rate that is more than the four and five -tenths
percent (4.5%) rate can be chosen by the participating em ployee upon
the employee's initial participation, and can be changed once per
month. The employee contribution rate chosen shall continue until
the employee elects to change the contribution rate or terminates
service or retires.
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D. The employer match as set forth in subsection A of this
section may be increased at any time by the Legislature with out
affecting the then-existing rights of participating employees and
beneficiaries in order to e ncourage participating empl oyees to
accumulate deferred income r eserves for themselves and their
dependents. The employer match may be decreased at any time b y the
Legislature without affecting the then -existing rights of
participating employees and benef iciaries in order to provid e
funding as may be needed to reduce the unfunded liabilities of the
defined benefit plan as set forth in Section 901 et seq. of thi s
title, but shall not be less than six percent (6.0%) for any year
during which the defined cont ribution plan is maintained .
E. Increases in the employee and employer contribution rate to
the defined contribution retirement system shall not be subject to
the provisions of the Oklahoma Pension Legislation Actu arial
Analysis Act pursuant to Section 3103 of Title 62 of the Oklahoma
Statutes.
58-2-2768 RJ 1/14/2022 9:36:52 AM