RBH No. 6116
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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
HOUSE BILL 2174 By: Ford
AS INTRODUCED
An Act relating to the Oklahoma Police Pension and
Retirement System; amending 11 O.S. 2021, Section 50-
111.3, which relates to deferred op tion plans;
modifying provision relat ed to interest; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 11 O.S. 2021, Section 50 -111.3, is
amended to read as follows:
Section 50-111.3 A. In lieu of terminating employment and
accepting a service retirement pension pursuant to Section 50 -114 of
this title, any member of the Okla homa Police Pension and Retirement
System who has not less than twenty ( 20) years of creditable service
and who is eligible to receive a service retirement pension may make
an irrevocable election to participate in the Oklahoma Police
Deferred Option Plan and defer the receipts of benefits in
accordance with the provisions of this section. RBH No. 6116
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B. For purposes of this section, creditable service shall
include service credit reciprocally recognized pursuant to Section
50-101 et seq. of this title but for eligib ility purposes only.
C. The duration of participation in the Oklahoma Po lice
Deferred Option Plan for a member shall no t exceed five (5) years .
Participation in the Oklahoma Police Deferred Option Plan must begin
the first day of a month and end on the last day of a month. At the
conclusion of a member 's participation in the Oklahoma Police
Deferred Option Plan, the memb er shall terminate employment with all
participating municipalities as an officer, and shall start
receiving the member 's accrued monthly retirement benefit from the
System. Such a member may receive in -service distributions of such
member's accrued monthly retirement benefit from the System if such
member is reemployed by a participating municipality only if such
reemployment is as a po lice chief or in a position not covered under
the System.
D. When a member begins participation in the Oklahoma Police
Deferred Option Plan, the contribution of the employee shall cease .
The employer contributions shall continue to be paid in accordance
with Section 50-109 of this title. Municipal contributions for
employees who elect the Oklahoma Police Deferred Option P lan shall
be credited equally to the Oklahoma Police Pension and Retirement
System and to the Oklahoma Police Deferred Option Plan . The monthly
retirement benefits that would have been payable had the member RBH No. 6116
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elected to cease employment and receive a servi ce retirement shall
be paid into the Oklahoma Police Deferred Option Plan account.
E. 1. A member who participates in this plan sha ll be eligible
to receive cost of living increases.
2. A member who partici pates in this plan shall earn interest
at a rate of two percentage points below the rate of return of the
investment portfolio of the System, but no less than the actuarial
assumed interest rate as certified by the actuary in the yearly
evaluation report of the actuary seven and one-half percent (7.5%)
interest effective November 1, 2023 . The interest shall be credited
to the individual account balance of the member on an annual basis.
F. A participant in the Oklahoma Police Deferred Option Plan
shall receive, at the option of the participant:
1. A lump sum payment from th e account equal to the option
account balance of the participant, payable to the participant;
2. A lump sum payment from the account equal to the option
account balance of the participant, payable to the annuity provider
which shall be selected by the par ticipant as a result of the
research and investigation of the participant; or
3. Any other method of payment if approved by the State Board.
Notwithstanding any other provis ion contained herein t o the
contrary, commencement of distr ibutions under the Okla homa Police
Deferred Option Plan shall be no later than the time as set forth in
subsection C of Section 50 -114 of this title. RBH No. 6116
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G. If the participant dies during the period of participation
in the Oklahoma Police Deferred Option Plan , a lump sum payment
equal to the account balance of the participant shall be paid to the
recipients, which may include a trust, properly designated in
writing by the participant or, if none, to t he surviving spouse who
was married to the participant for t he thirty (30) continuo us months
immediately preceding the death of the participant; provided, a
surviving spouse of a participant who died in, and as a consequence
of, the performance of the part icipant's duty for a participating
municipality shall not be subject to the thirty -month marriage
requirement for survivor benefits or, if no surviving spouse, to the
estate of the participant.
H. In lieu of participating in the Oklahoma Police Deferred
Option Plan pursuant to subsections A, B, C, D, E and F of th is
section, a member ma y make an irrevocable election to participate in
the Oklahoma Police Deferred Option Plan pursuant to this subsection
as follows:
1. For purposes of this subsection, the following definitions
shall apply:
a. "back drop date" means the date selected by the
member, which is up to five (5) years before the
member elects to participate in the Oklahoma Police
Deferred Option Plan, but not before the date at which RBH No. 6116
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the member completes twenty (20) years of credited
service,
b. "termination date" means the date the member elects to
participate in the Oklahoma Police Deferred Option
Plan pursuant to this subsection, and the date the
member terminates employment with all participat ing
municipalities as an ac tive police officer, such
termination has at all times inclu ded reemployment of
a member by a participating municipality only if such
reemployment is as a police chief or in a position not
covered under the System,
c. "earlier attained credited service " means the credited
service earned by a member as of the back d rop date,
and earlier attained credited service cannot be
reduced to less than twenty (20) years of credited
service, and
d. "deferred benefit balance " means all monthly
retirement benefits that w ould have been payable had
the member elected to cease emplo yment on the back
drop date and receive a service retirement from the
back drop date to the termination date, all of the
member's contributions and one -half (1/2) of the
employer contributions fro m the back drop date to the
termination date, with interest based on how the RBH No. 6116
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benefit would have accumulated as if the member had
participated in the Oklahoma Police Deferred Option
Plan pursuant to subsections A, B, C, D and E of this
section from the back drop date to the termination
date;
2. At the termination d ate, the monthly pension benefit shall
be determined based on earlier attained credited service and on the
final average salary as of the back drop date . The member's
individual deferred option a ccount shall be credited with an amou nt
equal to the deferre d benefit balance; the member shall terminate
employment with all participating municipalities as a police officer
and shall start receiving the member 's accrued monthly retirement
benefit from the System. The provisions of subsecti ons B, C, E, F
and G of this section shall apply to this subsection . A member
shall not participate in the Oklahoma Police Deferred Option Plan
pursuant to this subsection if the member ha s elected to participate
in the Oklahoma Police Deferred Option Pla n pursuant to subsectio ns
A, B, C, D, E and F of this section; and
3. If a member who has not less than twenty (20) years of
creditable service and who is eligible to receive a service
retirement pension dies prior to terminating employment, the
surviving spouse shall be eligib le to elect to receive a benefit
determined as if the member had elected to participate in the
Oklahoma Police Deferred Option Plan in accordance with this RBH No. 6116
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subsection on the day immediately preced ing the death. The
surviving spouse must have been married to the member for the thirty
(30) continuous months preceding the member 's death; provided, the
surviving spouse of a member who died while in, and as a consequence
of, the performance of the memb er's duty for a participating
municipality shall not be subj ect to the thirty-month marriage
requirement for this election.
SECTION 2. This act shall become effective November 1, 2023.
59-1-6116 CMA 01/04/23
THOMAS E. CUMMINS CONSULTING ACTUARY, INC.
2512 E. 71
st
Street , Suite D ∙ Tulsa, Oklahoma 74136
(918) 492-9658 ∙ (918) 492- 9659
January 5, 2023
Representative Russ Ford
Room 300
Re: RBH No. 6116
RBH No. 6116 creates a hard minimum interest rate of 7.5% per year
for participants in the Oklahoma Police Pension and Retirement
System. The current interest rate to be used is greater of interest
rate earned by the fund less 2% and the actuarial interest rate used
in the latest actuarial valuation. The current actuarial interest
rate is 7.5%.
RBH No. 6116 is a non fiscal bill as defined by OPLAAA.
RBH No. 6116 could become fiscal sometime in the future should the
system’s actuary lower the actuarial interest assumption. Such
change would be made on fund’s performance and expecte d performance
in the future.
I am a member of the American Academy of Actuaries and meet the
Qualification Standards of the American Academy of Actuaries to
render the actuarial opinion herein.
Thomas E. Cummins
Thomas E. Cummins, MAAA