Stricken language would be deleted from and underlined language would be added to present law.
Act 711 of the Regular Session
1 State of Arkansas As Engrossed: H4/6/21
2 93rd General Assembly A Bill
3 Regular Session, 2021 HOUSE BILL 1325
4
5 By: Representative Warren
6
7 For An Act To Be Entitled
8 AN ACT TO DEFINE AND CLARIFY RECIPROCAL SERVICE
9 CREDIT AMONG THE PUBLIC EMPLOYMENT RETIREMENT SYSTEMS
10 GENERALLY; TO AMEND THE LAW CONCERNING RECIPROCAL
11 SERVICE CREDIT; TO DECLARE AN EMERGENCY; AND FOR
12 OTHER PURPOSES.
13
14
15 Subtitle
16 TO DEFINE AND CLARIFY RECIPROCAL SERVICE
17 CREDIT AMONG THE PUBLIC EMPLOYMENT
18 RETIREMENT SYSTEMS GENERALLY; TO AMEND
19 THE LAW CONCERNING RECIPROCAL SERVICE
20 CREDIT; AND TO DECLARE AN EMERGENCY.
21
22
23 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
24
25 SECTION 1. Arkansas Code 24-2-401, concerning definitions applicable
26 to reciprocal service credits, is amended to add additional subdivisions to
27 read as follows:
28 (5) "Member" means an employee of a state-retirement-plan-
29 covered employer as defined under the plan of the retirement system;
30 (6)(A) "Retirement benefit" means a benefit that is offered to a
31 retired member in accordance with the law applicable to the retirement system
32 and includes without limitation a:
33 (i) Monthly retirement benefit; and
34 (ii) Deferred retirement plan benefit or annuity, if
35 available.
36 (B) "Retirement benefit" does not exclusively mean a
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1 monthly retirement benefit that is offered to a retired member in accordance
2 with the law applicable to the retirement system; and
3 (7) "Service credit" means retirement credit earned by a member
4 for time worked that is used as a factor that is applied to a retirement
5 benefit formula under the law applicable to the retirement system in order to
6 determine the monthly retirement benefit of the member.
7
8 SECTION 2. Arkansas Code 24-2-402 is amended to read as follows:
9 24-2-402. Deferred annuity Eligibility Definition Retirement
10 eligibility Calculation of reciprocal service using deferred service
11 credit.
12 If a member of a reciprocal system left or leaves a position covered by
13 a reciprocal system, if an employee in a position covered by a reciprocal
14 system left the employ of a state employer before the latter position was
15 covered by a reciprocal system, or if an employee in a position later covered
16 by a reciprocal system leaves that position before it is covered by a
17 reciprocal system, which in this section in each case is called the
18 preceding system, and if that person entered or enters a position covered
19 by a reciprocal system, which in this section is called the succeeding
20 system, and if the person is a member of the succeeding system after July 1,
21 1975, then the person shall be entitled to a deferred annuity payable by the
22 preceding system subject to the following conditions:
23 (1) The person has credited service acquired in the employ of
24 the preceding state employer;
25 (2)(A) The person does not withdraw his or her accumulated
26 contributions from the preceding reciprocal system, or if he or she has
27 withdrawn his or her accumulated contributions, he or she deposits with the
28 preceding reciprocal system the amount he or she withdrew, together with
29 interest from the date of withdrawal to the date of repayment at the rate in
30 effect for the preceding reciprocal system, but that deposit must be made
31 while he or she is an active member of a reciprocal system.
32 (B) In addition to the forfeited credited service, the
33 active member of a reciprocal system shall receive credit for his or her
34 previous employment with a public employer upon his or her paying the
35 prescribed employee and employer contributions based upon the rate in effect
36 during the previous employment, together with regular interest from the dates
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1 for the previous service to the date of repayment.
2 (C) The provisions for determining a year of service
3 credit shall be the prevailing rules of each reciprocal system;
4 (3) The person qualifies for age and service retirement in the
5 succeeding reciprocal system using his or her credited service in force with
6 the preceding reciprocal system plus his or her credited service acquired in
7 the employ of succeeding state employers to meet the minimum service
8 requirements of the succeeding systems;
9 (4)(A) The person's annuity payable by the preceding reciprocal
10 system shall be upon the basis of the annuity formula of the preceding
11 reciprocal system, exclusive of any minimum amount at the time the person
12 begins to receive monthly retirement benefits from that system.
13 (B) The final average compensation to be used to determine
14 monthly benefits payable to that person shall be that of the reciprocal
15 system which furnishes the highest final average compensation at the time of
16 retirement, but each reciprocal system shall use the method of computing
17 final average compensation stipulated by its law, and compensation in the
18 Arkansas Judicial Retirement System shall not be used to determine final
19 average compensation.
20 (C) Any person retiring on or after July 1, 1982, with
21 credited service in more than one (1) reciprocal system shall have his or her
22 benefits recomputed based on the provisions of this section;
23 (a)(1) A member who maintains deferred service credit in one (1) or
24 more reciprocal systems may combine the deferred service credit with service
25 credit earned under a reciprocal system to meet the separate eligibility
26 requirements for receiving a monthly retirement benefit under each reciprocal
27 system.
28 (2) The combined service credit calculated under subdivision
29 (a)(1) of this section shall:
30 (A) Be used for the purpose of establishing the
31 eligibility of a member to receive a retirement benefit from a retirement
32 system; and
33 (B) Not be used to calculate the monthly retirement
34 benefit for service credit earned by a member under each retirement system.
35 (b)(1) To establish the eligibility of a member to receive a monthly
36 retirement benefit from each retirement system, the credited service under
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1 all reciprocal systems shall be totaled, and the total credited service shall
2 be used to determine the eligibility of a member to receive a retirement
3 benefit from each retirement system according to the eligibility requirements
4 of that retirement system.
5 (2)(A) The separate retirement system's eligibility requirements
6 for receiving a monthly retirement benefit, the calculation of a monthly
7 retirement benefit, or a deferred retirement option plan, if available, under
8 one (1) retirement system shall not apply to the eligibility requirements for
9 receiving a monthly retirement benefit or a deferred retirement option plan,
10 if available, under a reciprocal system.
11 (B) Any interest credited to the deferred retirement
12 account shall be paid to the member's account under the deferred retirement
13 option benefit program in effect for that retirement system.
14 (c)(1) Once a member meets the eligibility requirements to receive a
15 retirement benefit, the monthly retirement benefit received by the member
16 from a reciprocal system shall be limited to the member's service credit
17 under the reciprocal system and calculated separately under the retirement
18 benefit formula of that reciprocal system.
19 (2) A retirement system shall not use a member's service credit
20 from a reciprocal system to calculate or increase the monthly retirement
21 benefit of the member.
22 (d)(1) Service credit earned by a member under a retirement system
23 shall not be combined with service credit earned by the member under a
24 reciprocal system if the member withdraws his or her employee contributions
25 from either the retirement system or the reciprocal systems.
26 (2) Service credit may be combined under this section if:
27 (A) A member withdraws his or her employee contributions
28 from a retirement system; and
29 (B) After the withdrawal of his or her employee
30 contributions from the retirement system, the member reestablishes service
31 credit by depositing the amount required in accordance with the law
32 applicable to the retirement system from which the employee contributions
33 were withdrawn.
34 (e)(1) The final average compensation used to determine a monthly
35 retirement benefit payable to a member by a reciprocal system shall be the
36 final average compensation calculated for credited service under the
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1 reciprocal system as provided by the law applicable to the reciprocal system.
2 (2)(A) A retirement system is not required to calculate a
3 monthly retirement benefit based on the final highest salary or final average
4 compensation under the reciprocal system in which the member has service
5 credit.
6 (B) If a retirement system uses the highest final average
7 compensation of the reciprocal system to determine a monthly benefit payable
8 to a member, the final average compensation shall be computed as prescribed
9 by the law of the reciprocal system.
10 (3) Compensation and salary earned in the Arkansas Judicial
11 Retirement System shall not be used to determine the final highest salary of
12 a member who has service credit in both the Arkansas Judicial Retirement
13 System and a reciprocal system under this section.
14 (4)(A) A member who has earned service credit in more than one
15 (1) reciprocal system on or before June 30, 2021, shall have his or her
16 monthly benefit calculated by using the highest final average compensation
17 the member has earned from any reciprocal system, excepting compensation and
18 salary earned under subdivision (e)(3) of this section.
19 (B) The final average compensation under subdivision
20 (e)(4)(A) of this section shall be computed as prescribed by the law of each
21 reciprocal system at the time of the members retirement.
22 (f) Each reciprocal system that has a minimum benefit provision in the
23 plan of the reciprocal system shall pay only a proportionate share of the
24 minimum benefit amount based on the ratio of service credit in the reciprocal
25 system to the total service in all reciprocal systems.
26 (5)(A)(g)(1) It is the expressed intention of this subdivision
27 (5) to provide the This section does not prohibit providing the same death-
28 in-service benefits to a member that would have been payable had the member
29 died while an active member of a reciprocal retirement system.
30 (B)(2) A member who dies in service while a member of one
31 (1) reciprocal system shall be considered as currently employed by all
32 reciprocal systems in which the member retains credited service.
33 (C)(3) If a member has accrued credited service under the
34 provisions of this subchapter but dies before retirement or before becoming
35 eligible to retire, then the benefits payable shall be those provided by the
36 reciprocal retirement system named in this subchapter in which the member has
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1 deferred service, with each the reciprocal system being responsible for the
2 payment of the death-in-service benefits provided by the applicable
3 provisions of its the reciprocal system's retirement laws.
4 (D)(4) If death-in-service benefits are payable by more
5 than one (1) reciprocal system to eligible survivors of a deceased member,
6 the survivors shall not receive more, as a percentage of the deceased
7 member's final pay or as a minimum dollar amount, than the largest amount
8 payable by any single reciprocal system.
9 (E)(5) Each reciprocal system that has a minimum benefit
10 provision in its plan shall pay only a proportionate share of that minimum
11 amount based on the ratio of service in that reciprocal system to the total
12 service in all reciprocal systems.
13 (F)(6) If the reciprocal system is an alternate retirement
14 plan under 24-7-801 et seq. or 24-7-901 et seq., death-in-service
15 benefits shall be contingent on provision of that benefit death-in-service
16 benefits having been provided by the alternate retirement plan and having
17 been selected by the member as a benefit;.
18 (6)(h)(1) Both service in the Arkansas Public Employees'
19 Retirement System as a member of the General Assembly and service in another
20 reciprocal system during the same period of time may be counted to meet the
21 service requirements for benefits from the reciprocal system subject to the
22 following:.
23 (A)(2) The benefit payable by a reciprocal system will
24 shall be based on the credited service in that the reciprocal system and the
25 final average compensation under that the reciprocal system. However, nothing
26 in this subdivision (6)(A) shall diminish the General Assembly member's right
27 to a benefit for which the person is qualified under the provisions of 24-
28 4-706 [repealed]; and
29 (B)(i) Final average compensation as used in this
30 section means the combined highest salaries from the preceding and succeeding
31 systems equaling thirty-six (36) complete months divided by three (3) if a
32 member has:
33 (a) Fewer than twenty (20) years of credited
34 service on July 1, 2009; and
35 (b) Fewer than three (3) years of service in a
36 succeeding reciprocal system.
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1 (ii) If the member is a state police officer covered
2 under 24-6-401 et seq., the combined salaries shall be from the preceding
3 system and State Police Retirement System equaling forty-eight (48) months
4 divided by four (4);
5 (7)(A)(i)(1) If the preceding or succeeding reciprocal system is
6 the Arkansas Judicial Retirement System and the member's benefits are
7 determined under 24-8-201 et seq., the benefit payable by the Arkansas
8 Judicial Retirement System shall be determined by multiplying the benefit
9 provided by 24-8-218 by the following fraction:
10 (i)(A) The numerator shall be the number of the
11 actual years of service credited in the Arkansas Judicial Retirement System
12 as a justice of the Supreme Court or judge of the circuit or chancery courts
13 or the Court of Appeals; and
14 (ii)(B) The denominator shall be fourteen (14)
15 years.
16 (B)(2) In no instance shall the benefit payable by the
17 Arkansas Judicial Retirement System exceed the benefit provided by 24-8-
18 218;.
19 (8)(A)(i) If the preceding or succeeding reciprocal system
20 offers a deferred retirement option plan for its members, both service in the
21 preceding and the succeeding reciprocal system may be counted to meet the
22 minimum service credit requirements for benefits under a system's deferred
23 retirement option plan.
24 (ii) The benefit payable by the preceding reciprocal
25 system shall be based on the annuity formula of the preceding reciprocal
26 system, exclusive of any minimum amount at the time the person begins to
27 receive monthly retirement benefits from that system under its deferred
28 retirement option provisions.
29 (iii) The final average compensation to be used to
30 determine monthly benefits payable to that person shall be that of the
31 reciprocal system which furnishes the highest final average compensation at
32 the time of retirement, bu