OK
Oklahoma Senate Bill SB1281

Oklahoma 2022 Regular Session

Oklahoma Senate Bill SB1281 Compare Versions

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29-SENATE FLOOR VERSION
30-March 3, 2022
31-AS AMENDED
53+STATE OF OKLAHOMA
3254
33-SENATE BILL NO. 1281 By: Montgomery of the Senate
55+2nd Session of the 58th Legislature (2022)
3456
35- and
36-
37- Roberts (Dustin) of the
38-House
57+SENATE BILL 1281 By: Montgomery
3958
4059
4160
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43-[ defined contribution system - Oklahoma Pension
44-Legislation Actuarial Analysis Act - nonfiscal
45-retirement bills - employer matching amount ]
62+
63+AS INTRODUCED
64+
65+An Act relating to the defined contribution system;
66+amending 62 O.S. 2021, Section 3103, which relates to
67+Oklahoma Pension Legislation Actuarial Analysis Act
68+definitions; establishing certain measures increasing
69+certain contributions for system as nonfiscal
70+retirement bills; amending 74 O.S. 2021, Section
71+935.5, which relates to employer and employee
72+contributions; increasing employer matching amount
73+for certain contributions; increasing amount
74+employees may contribute; further increasing employer
75+match requirement under certain circumsta nces;
76+exempting certain contribution rate increases from
77+Oklahoma Pension Legislation Actuarial Analysis Act.
4678
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5183 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
5284 SECTION 1. AMENDATORY 62 O.S. 2021, Section 3103, is
5385 amended to read as follows:
5486 Section 3103. As used in the Oklahoma Pension Legislation
5587 Actuarial Analysis Act:
5688 1. "Amendment" means any amendment, including a substitute
5789 bill, made to a retirement bill by any commi ttee of the House of
5890 Representatives or Senate, any conference committee of the House of
59-Representatives or Senate or by the House of Representatives or
60-Senate;
61-2. "RB number" means that number preceded by the letters "RB"
62-assigned to a retirement bill by the respective staffs of the
63-Oklahoma State Senate and the Oklahoma House of Representatives when RBS No. 2768
91+RBS No. 2768
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142+Representatives or Senate or by the House of Representatives or
143+Senate;
144+2. "RB number" means that number preceded by the letters "RB"
145+assigned to a retirement bill by the respective staffs of the
146+Oklahoma State Senate and the Oklahoma House of Representatives when
91147 the respective staff office prepares a retirement bill for a member
92148 of the Legislature;
93149 3. "Legislative Actuary" means the firm or entity that enters
94150 into a contract with t he Legislative Service Bureau pursuant to
95151 Section 452.15 of Title 74 of the Oklahoma Statutes to provide the
96152 actuarial services and other duties provided for in the Oklahoma
97153 Pension Legislation Actuarial Analysis Act;
98154 4. "Nonfiscal amendment" means an amendment to a retirement
99155 bill having a fiscal impact, which amendment does not change any
100156 factor of an actuarial investigation specified in subsection A of
101157 Section 3109 of this title;
102158 5. "Nonfiscal retirement bill " means a retirement bill:
103159 a. which does not affect the cost or funding factors of a
104160 retirement system,
105161 b. which affects such factors only in a manner which does
106162 not:
107163 (1) grant a benefit increase under the retirement
108164 system affected by the bill,
109-(2) create an actuarial accrued liability for or
110-increase the actuarial accrued liab ility of the
111-retirement system affected by the bill, or
112-(3) increase the normal cost of the retirement system
113-affected by the bill, RBS No. 2768
165+RBS No. 2768
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216+(2) create an actuarial accrued liability for or
217+increase the actuarial accrued liab ility of the
218+retirement system affected by the bill, or
219+(3) increase the normal cost of the retirement system
220+affected by the bill,
141221 c. which authorizes the purchase by an active member of
142222 the retirement system, at the actua rial cost for the
143223 purchase as computed pursuant to the statute in effect
144224 on the effective date of the measure allowing such
145225 purchase, of years of service for purposes of reaching
146226 a normal retirement date in the applicable retirement
147227 system, but which canno t be used in order to compute
148228 the number of years o f service for purposes of
149229 computing the retirement benefit for the member,
150230 d. which provides for the computation of a service -
151231 connected disability retirement benefit for members of
152232 the Oklahoma Law Enforce ment Retirement System
153233 pursuant to Section 2-305 of Title 47 of the Oklahoma
154234 Statutes if the members were unable to complete twenty
155235 (20) years of service as a result of the disability,
156236 e. which requires membership in the defined benefit plan
157237 authorized by Section 901 et seq. of Title 74 of the
158238 Oklahoma Statutes for persons whose first elected or
159239 appointed service occurs on or after November 1, 2018,
160-if such persons had any prior service in the Oklahoma
161-Public Employees Retirement System prior to November
162-1, 2015,
163-f. which provides for a one-time increase in retirement
164-benefits if the increase in retirement benefits is not RBS No. 2768
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291+if such persons had any prior service in the Oklahoma
292+Public Employees Retirement System prior to November
293+1, 2015,
294+f. which provides for a one-time increase in retirement
295+benefits if the increase in retirement benefits is not
192296 a permanent increase in the gross annual retirement
193297 benefit payable to a member or beneficiary, occurs
194298 only once pursuant to a single statutory authorization
195299 and does not exceed:
196300 (1) the lesser of two percent (2%) of the gross
197301 annual retirement benefit of the member or One
198302 Thousand Dollars ($1,000.00) and requires that
199303 the benefit may only be provided if the funded
200304 ratio of the affected retirement system would not
201305 be less than sixty percent (60%) but not greater
202306 than eighty percent (80%) after the benefit
203307 increase is paid,
204308 (2) the lesser of two percent (2%) of the gross
205309 annual retirement benefit of the member or One
206310 Thousand Two Hundred D ollars ($1,200.00) and
207311 requires that the benefit may on ly be provided if
208312 the funded ratio of the affected retirement
209313 system would be greater than eighty percent (80%)
210-but not greater than one hundred percent (100%)
211-after the benefit increase is paid,
212-(3) the lesser of two percent (2%) of the gross
213-annual retirement benefit of the member or One
214-Thousand Four Hundred Dollars ($1,400.00) and
215-requires that the benefit may only be provided if RBS No. 2768
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365+but not greater than one hundred percent (100%)
366+after the benefit increase is paid,
367+(3) the lesser of two percent (2%) of the gross
368+annual retirement benefit of the member or One
369+Thousand Four Hundred Dollars ($1,400.00) and
370+requires that the benefit may only be provided if
243371 the funded ratio of the affected retirement
244372 system would be greater th an one hundred percent
245373 (100%) after the benefit increas e is paid, or
246374 (4) the greater of two percent (2%) of the gross
247375 annual retirement benefit of the volunteer
248376 firefighter or One Hundred Dollars ($100.00) for
249377 persons who retired from the Oklahoma
250378 Firefighters Pension and Retirement System as
251379 volunteer firefighters and who did not retire
252380 from the Oklahoma Firefighters Pension and
253381 Retirement System as a paid firefighter.
254382 As used in this subparagraph, "funded ratio" means the
255383 figure derived by dividing the ac tuarial value of
256384 assets of the applicable retirement sy stem by the
257385 actuarial accrued liability of the applicable
258386 retirement system,
259387 g. which modifies the disability pension standard for
260388 police officers who are members of the Oklahoma Police
261-Pension and Retirement System as provi ded by Section 3
262-50-115 of this act Title 11, or
263-h. which provides a cost-of-living benefit increase
264-pursuant to the provisions of Sections 2 through 7 of
265-this act 49-143.7 and 50-136.9 of Title 11, Section RBS No. 2768
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440+Pension and Retirement System as provi ded by Section 3
441+50-115 of this act Title 11, or
442+h. which provides a cost-of-living benefit increase
443+pursuant to the provisions of Sections 2 through 7 of
444+this act 49-143.7 and 50-136.9 of Title 11, Section
293445 1104K of Title 20, Sections 2-305.12 and 930.11 of
294446 Title 47, and Section 17-116.22 of Title 70.
295447 A nonfiscal retirement bill shall include any retirement bill that
296448 has as its sole purpose the appropriat ion or distribution or
297449 redistribution of monies in some manner to a retirement system for
298450 purposes of reducing the unfunded liability of such system or the
299451 earmarking of a portion of the revenue from a tax to a re tirement
300452 system or increasing the percentag e of the revenue earmarked fr om a
301453 tax to a retirement system. Notwithstanding any other provision of
302454 law, a nonfiscal retirement bill shall also include any measure that
303455 increases the employer and employee contribution rates in the
304456 defined contribution retirement system;
305457 6. "Reduction-in-cost amendment" means an amendment to a
306458 retirement bill having a fiscal impact whic h reduces the cost of the
307459 bill as such cost is determined by the ac tuarial investigation for
308460 the bill prepared pursuant t o Section 3109 of this title;
309461 7. "Retirement bill" means any bill or joint resolution
310462 introduced or any bill or joint resolution amend ed by a member of
311463 the Oklahoma Legislature wh ich creates or amends any law directly
312-affecting a retirement system. A re tirement bill shall not mean a
313-bill or resolution that impacts the revenue of any state tax in
314-which a portion of the revenue generated from such tax is earmarked
315-for the benefit of a retirement system; RBS No. 2768
464+RBS No. 2768
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515+affecting a retirement system. A re tirement bill shall not mean a
516+bill or resolution that impacts the revenue of any state tax in
517+which a portion of the revenue generated from such tax is earmarked
518+for the benefit of a retirement system;
343519 8. "Retirement bill having a fiscal impact" means any
344520 retirement bill creating or establishing a retirement system and any
345521 other retirement bill other than a nonfiscal retirement bill; and
346522 9. "Retirement system" means the Teachers' Retirement System of
347523 Oklahoma, the Oklahoma Public Employees Retirement System, the
348524 Uniform Retirement System for Just ices and Judges, the Oklahoma
349525 Firefighters Pension and Retirement System, the Oklahoma Police
350526 Pension and Retirement System, the Oklahoma Law Enforcement
351527 Retirement System, or a retirement system established after January
352528 1, 2006.
353529 SECTION 2. AMENDATORY 74 O.S . 2021, Section 935.5, is
354530 amended to read as follows:
355531 Section 935.5. A. Except as otherwise provided by subsection B
356532 of this section, employers of employees who become participants in
357533 the defined contribution retirement system shall match the employee
358534 contribution paid on a monthl y or more frequent basis at the rate of
359-six percent (6.0%) eight percent (8.0%) based on the same
360-compensation amount used to compute the employee contribution
535+six percent (6.0%) ten and five-tenths percent (10.5%) based on the
536+same compensation amount used to compute the employee contribution
361537 amount.
362-B. If an employee selects a contribution rate of seven percent
363-(7.0%) eight percent (8.0%) or more, but not higher than allowed
364-pursuant to the maximum annual contribution limit prescribed by
365-Section 415 of the Internal Revenue Code of 1986, as amended, the RBS No. 2768
538+RBS No. 2768
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393-employer matching amount shall be seven percent (7.0%) ten percent
394-(10%).
589+B. If an employee selects a contribution rate of seven percent
590+(7.0%) eight percent (8.0%) or more, but not higher than allowed
591+pursuant to the maximum annual contribution limit prescribed by
592+Section 415 of the Internal Revenue Code of 1986, as amended, the
593+employer matching amount shall be seven percent (7.0%) thirteen
594+percent (13%).
395595 C. The initial four and fiv e-tenths percent (4.5%) employee
396596 contribution shall be the only mandatory contribution of an em ployee
397597 participating in the defined contribution retirement system created
398598 by this act. These fu nds shall be placed by the System in either a
399599 401(a) plan or a 457(b) plan, to be determined by the Board to
400600 maintain the plan consistent with the Internal Rev enue Code. Any
401601 employee contributions eligible to be matched under this section
402602 over the four and five-tenths percent (4.5% ) initial contribution
403603 shall be considered voluntary deferrals of compensation and placed
404604 in a 457(b) plan. All employer matching f unds shall be placed in a
405605 401(a) plan.
406606 Any contribution rate that is more than the four and five -tenths
407607 percent (4.5%) rate can be chosen by the participating em ployee upon
408608 the employee's initial participation, and can be changed once per
409609 month. The employee contribution rate chosen shall continue until
410610 the employee elects to change the contribution rate or terminates
411611 service or retires.
412-D. The employer match as set forth in subsection A of this
413-section may be increased at any time by the Legislatu re without
414-affecting the then-existing rights of participating employees and
415-beneficiaries in order to e ncourage participating empl oyees to
416-accumulate deferred income r eserves for themselves and their RBS No. 2768
612+RBS No. 2768
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663+D. The employer match as set forth in subsection A of this
664+section may be increased at any time by the Legislature with out
665+affecting the then-existing rights of participating employees and
666+beneficiaries in order to e ncourage participating empl oyees to
667+accumulate deferred income r eserves for themselves and their
444668 dependents. The employer match may be decreased at any time b y the
445669 Legislature without affecting the then -existing rights of
446670 participating employees and benef iciaries in order to provid e
447671 funding as may be needed to reduce the unfunded liabilities of the
448672 defined benefit plan as set forth in Section 901 et seq. of thi s
449673 title, but shall not be less than six percent (6.0%) for any year
450674 during which the defined cont ribution plan is maintained .
451675 E. Increases in the employee and employer contribution rate to
452676 the defined contribution retirement system shall not be subject to
453677 the provisions of the Oklahoma Pension Legislation Actu arial
454678 Analysis Act pursuant to Section 3103 of Title 62 of the Oklahoma
455679 Statutes.
456-COMMITTEE REPORT BY: COMMITTEE ON APPROPRIATIONS
457-March 3, 2022 - DO PASS AS AMENDED
680+
681+58-2-2768 RJ 1/14/2022 9:36:52 AM