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LEGISLATIVE BILL 686
Approved by the Governor April 15, 2024
Introduced by Walz, 15; Conrad, 46; Vargas, 7; Blood, 3.
A BILL FOR AN ACT relating to retirement; to amend sections 16-1020, 16-1021,
16-1023, 16-1024, 16-1025, 16-1030, 16-1033, 16-1034, 16-1036, 16-1037,
16-1038, 16-1041, 18-1723, and 68-621, Reissue Revised Statutes of
Nebraska, and sections 35-1001 and 81-8,317, Revised Statutes Cumulative Supplement, 2022; to name the Cities of the First Class Firefighters Retirement Act; to change provisions relating to retirement plans for firefighters employed by a city of the first class; to define and redefine terms; to eliminate obsolete provisions; to harmonize provisions; and to
repeal the original sections.
Be it enacted by the people of the State of Nebraska,
Section 1. Section 16-1020, Reissue Revised Statutes of Nebraska, is amended to read:
16-1020 (1) Sections 16-1020 to 16-1042 shall be known and may be cited as the Cities of the First Class Firefighters Retirement Act.
(2) Except as provided in section 16-1039, sections 16-1020 to 16-1038
shall apply to all firefighters of a city of the first class.
Sec. 2. Section 16-1021, Reissue Revised Statutes of Nebraska, is amended to read:
16-1021 For the purposes of the Cities of the First Class Firefighters Retirement Act sections 16-1020 to 16-1042, unless the context otherwise requires:
(1) Absolute coverage group means an absolute coverage group as described in 20 C.F.R. 404.1205 as such regulation existed on January 1, 2024;
(2) (1) Actuarial equivalent means equality in value of the aggregate amount of benefit expected to be received under different forms or at different times determined as of a given date as adopted by the city or the retirement committee for use by the retirement system. Actuarial equivalencies shall be
specified in the funding medium established for the retirement system, except that if benefits under the retirement system are obtained through the purchase of an annuity contract, the actuarial equivalency of any such form of benefit shall be the amount of pension benefit which can be purchased or otherwise provided by such contract. All actuarial and mortality assumptions adopted by
the city or retirement committee shall be on a sex-neutral basis;
(3) (2) Annuity contract means the contract or contracts issued by one or
more life insurance companies or designated trusts and purchased by the retirement system in order to provide any of the benefits described in the Cities of the First Class Firefighters Retirement Act such sections. Annuity conversion rates contained in any such contract shall be specified on a sex-
neutral basis;
(4) (3) Beneficiary means the person or persons designated by a firefighter, pursuant to a written instrument filed with the retirement committee before the firefighter's death, to receive death benefits which may be payable under the retirement system;
(5) (4) Funding agent means any bank, trust company, life insurance company, thrift institution, credit union, or investment management firm selected by the retirement committee, subject to the approval of the city, to hold or invest the funds of the retirement system;
(6) (5) Regular interest means the rate of interest earned each calendar year commencing January 1, 1984, equal to the rate of net earnings realized for the calendar year from investments of the retirement fund. Net earnings means the amount by which income or gain realized from investments of the retirement fund exceeds the amount of any realized losses from such investments during the calendar year. The retirement committee shall annually report the amount of
regular interest earned for such year;
(7) (6) Regular pay means the salary of a firefighter at the date such firefighter elects to retire or terminate employment with the city;
(8) (7) Retirement committee means the retirement committee created pursuant to section 16-1034;
(9) (8) Retirement system means a retirement system established pursuant to the Cities of the First Class Firefighters Retirement Act sections 16-1020
to 16-1042;
(10) (9) Retirement value means the accumulated value of the firefighter's employee account and employer account. The retirement value at any time shall consist of the sum of the contributions made or transferred to such accounts by
the firefighter and by the city on the firefighter's behalf and the regular interest credited to the accounts through such date, reduced by any realized losses which were not taken into account in determining regular interest in any year, and as further adjusted each year to reflect the accounts' pro rata share of the appreciation or depreciation of the assets of the retirement system as
determined by the retirement committee at their fair market values, including any account under subsection (2) of section 16-1036. Such valuation shall be
undertaken at least annually as of December 31 of each year and at such other
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times as may be directed by the retirement committee. The value of each account shall be reduced each year by the appropriate share of the investment costs as
provided in section 16-1036.01. The retirement value shall be further reduced by the amount of all distributions made to or on the behalf of the firefighter from the retirement system;
(11)(a) Salary means all amounts paid to a participating firefighter by
the employing city for personal services as reported on the participant's federal income tax withholding statement, including overtime, call-in, and call-back pay and the firefighter's contributions picked up by the city as
provided in subsection (2) of section 16-1024 and any salary reduction contributions that are excludable from income for federal income tax purposes pursuant to section 125 or 457 of the Internal Revenue Code; and
(b) Salary does not include clothing allowances;
(10) Salary means the base rate of pay, excluding overtime, callback pay,
clothing allowances, and other such benefits as reported on the participant's federal income tax withholding statement including the firefighters'
contributions picked up by the city as provided in subsection (2) of section
16-1024 and any salary reduction contributions which are excludable from income for federal income tax purposes pursuant to section 125 or 457 of the Internal Revenue Code;
(12) (11) Sex-neutral basis means the benefit calculation provided to the city of the first class by a licensed domestic or foreign insurance or annuity company with a product available for purchase in Nebraska that utilizes a blended, non-gender-specific rate for actuarial assumptions, mortality assumptions, and annuity conversion rates for a particular participant, except that if a blended, non-gender-specific rate is not available for purchase in
Nebraska, the benefit calculation shall be performed using the arithmetic mean of the male-specific actuarial assumptions, mortality assumptions, or annuity conversion rates and the female-specific actuarial assumptions, mortality assumptions, or annuity conversion rates, as applicable, for a particular participant, and the arithmetic mean shall be determined by adding the male-
specific actuarial assumptions, mortality assumptions, or annuity conversion rates to the female-specific actuarial assumptions, mortality assumptions, or annuity conversion rates applicable to a particular participant and dividing the sum by two; and
(13) (12) Straight life annuity means an ordinary annuity payable for the life of the primary annuitant only, and terminating at his or her death without refund or death benefit of any kind.
Sec. 3. Section 16-1023, Reissue Revised Statutes of Nebraska, is amended to read:
16-1023 (1) Commencing on January 1, 1984, each city of the first class having a paid fire department shall keep and maintain a Firefighters Retirement System Fund for the purpose of investing payroll deductions and city contributions to the retirement system. The fund shall be maintained separate and apart from all city money and funds. The fund shall be administered exclusively for the purposes of the retirement system and for the benefit of
participating firefighters and their beneficiaries and so as to establish the fund as a trust under the law of this state for all purposes of section 401(a)
of the Internal Revenue Code. Upon the passage of sections 16-1020 to 16-1038
all of the contributions made by a firefighter under section 35-203.01 as it
formerly existed and interest accrued at five percent per annum on such contributions prior to January 1, 1984, shall be transferred to the firefighter's employee account. Regular interest shall begin to accrue on the contributions transferred into the fund. Such funds shall be invested in the manner prescribed in section 16-1036.
(2) The city shall establish a medium for funding the retirement system which, with the approval of the retirement committee, may be a pension trust fund, custodial account, group annuity contract, or combination thereof, for the purpose of investing money for the retirement system in the manner prescribed by section 16-1036 and to provide the retirement, death, and disability benefits for firefighters granted by the Cities of the First Class Firefighters Retirement Act sections 16-1020 to 16-1042. The trustee or
custodian of any trust fund shall be a designated funding agent which is
qualified to act as a fiduciary or custodian in this state, the city treasurer,
an appropriate city officer authorized to administer funds of the city, or a combination thereof.
Sec. 4. Section 16-1024, Reissue Revised Statutes of Nebraska, is amended to read:
16-1024 (1)(a) Each firefighter participating in the retirement system shall contribute to the retirement system a sum equal to:
(i) Until September 30, 2024, six and one-half percent of his or her salary;
(ii) Beginning October 1, 2024, and until September 30, 2025, eight and seven-tenths percent of his or her salary;
(iii) Beginning October 1, 2025, and until September 30, 2026, ten and seven-tenths percent of his or her salary; and
(iv) Beginning October 1, 2026, twelve and seven-tenths percent of his or
her salary.
(b) Such payment shall be made by regular payroll deductions from his or
her periodic salary and shall be credited to his or her employee account on a monthly basis. Each such account shall also be credited with regular interest.
(c) Beginning July 20, 2024, each firefighter covered by an absolute coverage group and participating in the retirement system shall receive an
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offset from his or her retirement system contribution equal to six and two-
tenths percent of his or her salary. This subdivision (1)(c) shall not apply to
any firefighter, covered by an absolute coverage group, employed as a firefighter by a city with a population of more than sixty thousand inhabitants located in a county with a population of more than one hundred thousand inhabitants.
(1) Each firefighter participating in the retirement system shall contribute to the retirement system a sum equal to six and one-half percent of
his or her salary. Such payment shall be made by regular payroll deductions from his or her periodic salary and shall be credited to his or her employee account on a monthly basis. Each such account shall also be credited with regular interest.
(2) Each city of the first class with firefighters participating in a retirement system shall pick up the firefighters' contributions required by
subsection (1) of this section for all compensation paid on or after January 1,
1984, and the contributions so picked up shall be treated as employer contributions in determining federal income tax treatment under the Internal Revenue Code, except that the city shall continue to withhold federal income taxes based upon such contributions until the Internal Revenue Service or the federal courts rule that, pursuant to section 414(h) of the Internal Revenue Code, such contributions shall not be included as gross income of the employee until such time as they are distributed from the retirement system. The city shall pay the employee contributions from the same source of funds which is
used in paying compensation to the employee. The city shall pick up the employee contributions by a salary deduction either through a reduction in the cash salary of the employee or a combination of a reduction in salary and offset against a future salary increase. In no event shall a firefighter be
given an option to choose to receive the amount of the required contribution in
lieu of having such contribution paid directly to the retirement system.
(3) Each firefighter participating in the retirement system shall be
entitled to make voluntary cash contributions to the retirement system in an amount not to exceed the contribution limitations established by the Internal Revenue Code. Voluntary contributions shall be credited to the employee account and shall thereafter be credited with regular interest. A voluntary contribution shall become a part of the Firefighters Retirement System Fund and shall be held, administered, invested, and distributed in the same manner as
any other employee contribution to the retirement system.
Sec. 5. Section 16-1025, Reissue Revised Statutes of Nebraska, is amended to read:
16-1025 (1)(a) (1) Beginning January 1, 1984, each city of the first class with firefighters participating in a retirement system shall contribute to the retirement system a sum equal to:
(i) Until September 30, 2025, thirteen percent of each such participating firefighter's periodic salary; .
(ii) Beginning October 1, 2025, and until September 30, 2026, fourteen percent of each such participating firefighter's periodic salary; and
(iii) Beginning October 1, 2026, fifteen percent of each such participating firefighter's periodic salary.
(b) Such payment shall be credited to his or her employer account on a monthly basis. Each such account shall also be credited with regular interest.
The city shall also contribute to the employer account of any firefighter employed by the city on January 1, 1984, an amount equal to the employee's contributions, without interest, that were made to the city prior to January 1,
1984, with such contribution to be made at the time the firefighter retires or
terminates employment with the city. The city may contribute such amount before the firefighter's retirement or termination of employment or credit interest on
such contribution.
(c) Beginning July 20, 2024, each city of the first class with firefighters covered by an absolute coverage group and participating in a retirement system shall receive an offset from the retirement system contribution equal to six and two-tenths of each such participating firefighter's periodic salary. This subdivision (1)(c) shall not apply to any city with a population of sixty thousand or more inhabitants located in a county with a population of one hundred thousand or more inhabitants with firefighters covered by an absolute coverage group.
(2) Each such city shall contribute any additional amounts necessary to
fund retirement or other retirement plan benefits not provided by employee contributions or city contributions to the employer account required by
subsection (1) of this section. Such additional contributions shall be
accumulated in an unallocated employer account of the Firefighters Retirement System Fund and used to provide the benefits, if any, specified in sections
16-1027 and 16-1029 to 16-1031 which are not otherwise funded by the firefighter's retirement value. Funds needed to provide for a firefighter's benefits shall be transferred from the unallocated employer account when and as
such funds are needed. All funds committed by the city to the funding of a firefighter pension system on January 1, 1984, that are not transferred to the firefighters employee accounts shall be transferred to the unallocated employer account.
Sec. 6. Section 16-1030, Reissue Revised Statutes of Nebraska, is amended to read:
16-1030 (1) When prior to commencement of retirement benefits any firefighter participating in the retirement system dies in the line of duty or
in case death is caused by or is the result of injuries received while in the
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line of duty and such firefighter is not survived by a spouse or minor children, the entire retirement value shall be payable to the beneficiary or
beneficiaries specified by the deceased firefighter prior to his or her death or to the deceased firefighter's estate in the event that no beneficiary was specified. The retirement value or portion thereof may be paid in the form of a single lump-sum payment, a straight life annuity, or any other optional form of
benefit specified in the retirement system's funding medium. For a firefighter who is survived by a spouse or minor children, a retirement pension of fifty percent of regular pay shall be paid to the surviving spouse or, upon his or
her remarriage or death, to the minor child or children during such child's or
children's minority subject to deduction of the amounts paid as workers'
compensation benefits on account of death as provided in section 16-1032. Each such child shall share equally in the total pension benefit to the age of
majority, except that as soon as a child attains the age of majority, such pension benefit to such child shall cease and be reallocated among the remaining minor children until the last remaining child dies or reaches the age of majority.
(2) Any payments for the benefit of a minor child shall be made on behalf of such child to the surviving spouse or, if there is none, to the legal guardian of the child.
(3) In the event the surviving spouse or minor children of such deceased firefighter die before the aggregate amount of pension payments received by the firefighter and his or her survivor beneficiaries, if any, equals the total amount in the firefighter's employee account at the time of the first benefit payment, the difference between the total amount in the employee account and the aggregate amount of pension payments received by the retired firefighter and his or her surviving beneficiaries, if any, shall be paid in a single sum to the firefighter's beneficiary