LB478 LB478
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LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 478
Introduced by Blood, 3; Day, 49; Walz, 15.
Read first time January 15, 2021
Committee: Nebraska Retirement Systems
1 A BILL FOR AN ACT relating to retirement; to amend sections 4-108,
2 16-1020, and 84-1511, Reissue Revised Statutes of Nebraska, and
3 sections 84-1501 and 84-1503, Revised Statutes Cumulative
4 Supplement, 2020; to adopt the Cities of the First Class
5 Firefighters Cash Balance Retirement Act; to create funds; to change
6 provisions relating to the Public Employees Retirement Board; to
7 harmonize provisions; to provide for severability; to repeal the
8 original sections; and to declare an emergency.
9 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 37 of this act shall be known and may be
2 cited as the Cities of the First Class Firefighters Cash Balance
3 Retirement Act.
4 Sec. 2. For purposes of the Cities of the First Class Firefighters
5 Cash Balance Retirement Act, unless the context otherwise requires:
6 (1) Actuarial equivalent means the equality in value of the
7 aggregate amounts expected to be received under different forms of an
8 annuity payment. The mortality assumption used for purposes of converting
9 the member cash balance account shall be the 1994 Group Annuity Mortality
10 Table using a unisex rate that is fifty percent male and fifty percent
11 female;
12 (2) Annuity means equal monthly payments provided by the retirement
13 system to a member or beneficiary under forms determined by the board
14 beginning the first day of the month after an annuity election is
15 received in the office of the Nebraska Public Employees Retirement
16 Systems or the first day of the month after the employee's termination of
17 employment, whichever is later. The last payment shall be at the end of
18 the calendar month in which the member dies or in accordance with the
19 payment option chosen by the member;
20 (3) Annuity start date means the date upon which a member's annuity
21 is first effective and shall be the first day of the month following the
22 member's termination or following the date the application is received by
23 the board, whichever is later;
24 (4) Board means the Public Employees Retirement Board;
25 (5) Cash balance benefit means a member's retirement benefit that is
26 equal to an amount based on annual employee contribution credits plus
27 interest credits and, if vested, employer contribution credits plus
28 interest credits and dividend amounts credited in accordance with
29 subdivision (3)(c) of section 21 of this act;
30 (6) City means a city of the first class;
31 (7)(a) Compensation means the base rate of pay, excluding overtime,
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1 callback pay, clothing allowances, and other such benefits as reported on
2 the employee's federal income tax withholding statement including the
3 employee's contributions picked up by the city as provided in section 8
4 of this act and any salary reduction contributions which are excludable
5 from income for federal income tax purposes pursuant to section 125 or
6 457 of the Internal Revenue Code.
7 (b) Compensation in excess of the limitations set forth in section
8 401(a)(17) of the Internal Revenue Code shall be disregarded;
9 (8) Date of disability means the date on which a member is
10 determined by the city to be disabled;
11 (9) Disability means the complete inability of the firefighter, for
12 reasons of accident or other cause while in the line of duty, to perform
13 the duties of a firefighter as defined by fire department job
14 descriptions or ordinance of the city in which the firefighter is
15 employed;
16 (10) Employee means all persons who are first employed as
17 firefighters on or after January 1, 2023, by a city on a permanent full-
18 time basis and firefighters employed on a permanent full-time basis who
19 elect to become members of the retirement system;
20 (11) Employee contribution credit means an amount equal to the
21 member contribution amount required by section 7 of this act;
22 (12) Employer means a city of the first class;
23 (13) Employer contribution credit means an amount equal to the
24 employer contribution amount required by section 10 of this act;
25 (14) Five-year break in service means a period of five consecutive
26 one-year breaks in service;
27 (15) Full-time employee means an employee who is employed to work
28 one-half or more of the regularly scheduled hours during each pay period;
29 (16) Fund means the Cities of the First Class Firefighters Cash
30 Balance Retirement Fund;
31 (17) Future service means service following the date of adoption of
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1 the retirement system;
2 (18) Interest credit rate means the greater of (a) five percent or
3 (b) the applicable federal mid-term rate, as published by the Internal
4 Revenue Service as of the first day of the calendar quarter for which
5 interest credits are credited, plus one and one-half percent, such rate
6 to be compounded annually;
7 (19) Interest credits means the amounts credited to the employee
8 account and the employer account at the end of each day. Such interest
9 credit for each account shall be determined by applying the daily portion
10 of the interest credit rate to the account balance at the end of the
11 previous day. Such interest credits shall continue to be credited to the
12 employee account and the employer account after a member ceases to be an
13 employee, except that no such credit shall be made with respect to the
14 employee account and the employer account for any day beginning on or
15 after the member's date of final account value. If benefits payable to
16 the member's surviving spouse or beneficiary are delayed after the
17 member's death, interest credits shall continue to be credited to the
18 employee account and the employer account until such surviving spouse or
19 beneficiary commences receipt of a distribution from the plan;
20 (20) Member account means an account equal to the sum of the
21 employee account and, if vested, the employer account and dividend
22 amounts credited in accordance with subdivision (3)(c) of section 21 of
23 this act;
24 (21) Member city means a city of the first class that employs
25 permanent full-time firefighters;
26 (22) One-year break in service means a plan year during which the
27 member has not completed more than five hundred hours of service;
28 (23) Participation means qualifying for and making the required
29 deposits to the retirement system during the course of a plan year;
30 (24) Plan year means the twelve-month period beginning on January 1
31 and ending on December 31;
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1 (25) Prior service means service prior to the date of adoption of
2 the retirement system;
3 (26) Regular interest means the rate of interest earned each
4 calendar year as determined by the board in conformity with actual and
5 expected earnings on the investments;
6 (27) Regular pay means the salary of a firefighter at the date such
7 firefighter elects to retire or terminate employment with the city;
8 (28) Required contribution means the deduction to be made from the
9 compensation of employees as provided in the act;
10 (29) Retirement means qualifying for and accepting the retirement
11 benefit granted under the act after terminating employment;
12 (30) Retirement application means the form approved and provided by
13 the retirement system for a member's request for retirement;
14 (31) Retirement system means the Cash Balance Retirement System for
15 Firefighters in Cities of the First Class;
16 (32) Service means the actual total length of employment as an
17 employee and is not deemed to be interrupted by (a) temporary or seasonal
18 suspension of service that does not terminate the employee's employment,
19 (b) leave of absence authorized by the employer for a period not
20 exceeding twelve months, (c) leave of absence because of disability, or
21 (d) military service, when properly authorized by the board. Service does
22 not include any period of disability for which disability retirement
23 benefits are received under section 18 of this act;
24 (33) Surviving spouse means (a) the spouse married to the member on
25 the date of the member's death or (b) the spouse or former spouse of the
26 member if survivorship rights are provided under a qualified domestic
27 relations order filed with the board pursuant to the Spousal Pension
28 Rights Act. The spouse or former spouse shall supersede the spouse
29 married to the member on the date of the member's death as provided under
30 a qualified domestic relations order. If the benefits payable to the
31 spouse or former spouse under a qualified domestic relations order are
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1 less than the value of benefits entitled to the surviving spouse, the
2 spouse married to the member on the date of the member's death shall be
3 the surviving spouse for the balance of the benefits; and
4 (34) Termination of employment occurs on the date on which a city
5 which is a member of the retirement system determines that its employer-
6 employee relationship with an employee is dissolved. The city shall
7 notify the board of the date on which such a termination has occurred.
8 Termination of employment does not occur if an employee whose employer-
9 employee relationship with a city is dissolved enters into an employer-
10 employee relationship as a firefighter with the same or another city
11 which participates in the retirement system and there are less than one
12 hundred twenty days between the date when the employee's employer-
13 employee relationship ceased with the city and the date when the
14 employer-employee relationship commenced with the same or another city
15 which qualifies the employee for participation in the plan. It is the
16 responsibility of the employer that is involved in the termination of
17 employment to notify the board of such change in employment and provide
18 the board with such information as the board deems necessary. If the
19 board determines that termination of employment has not occurred and a
20 retirement benefit has been paid to a member of the retirement system
21 pursuant to section 22 of this act, the board shall require the member
22 who has received such benefit to repay the benefit to the retirement
23 system.
24 Sec. 3. (1) A retirement system shall be established for the
25 purpose of providing a retirement annuity or other benefits for employees
26 as provided by the Cities of the First Class Firefighters Cash Balance
27 Retirement Act. It shall be known as the Cash Balance Retirement System
28 for Firefighters in Cities of the First Class, and by such name shall
29 transact all business and hold all cash and other property as provided in
30 the Cities of the First Class Firefighters Cash Balance Retirement Act.
31 (2) The retirement system shall not accept as contributions any
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1 money from members or member cities except the following:
2 (a) Mandatory contributions and fees established by subsection (1)
3 of section 7 and section 10 of this act;
4 (b) Money that is a repayment of refunded contributions made
5 pursuant to section 24 of this act;
6 (c) Contributions for military service credit made pursuant to
7 section 26 of this act;
8 (d) Actuarially required contributions pursuant to subdivision (3)
9 (b) of section 21 of this act;
10 (e) Trustee-to-trustee transfers pursuant to section 31 of this act;
11 or
12 (f) Corrections ordered by the board pursuant to section 5 of this
13 act.
14 Sec. 4. It shall be the duty of the board to administer the Cities
15 of the First Class Firefighters Cash Balance Retirement Act as provided
16 in section 84-1503. The board shall adopt and promulgate rules and
17 regulations to carry out the act.
18 Sec. 5. (1) If the board determines that the retirement system has
19 previously received contributions or distributed benefits which for any
20 reason are not in accordance with the statutory provisions of the Cities
21 of the First Class Firefighters Cash Balance Retirement Act, the board
22 shall refund contributions, require additional contributions, adjust
23 benefits, credit dividend amounts, or require repayment of benefits paid.
24 In the event of an overpayment of a benefit, the board may, in addition
25 to other remedies, offset future benefit payments by the amount of the
26 prior overpayment, together with regular interest or interest credits,
27 whichever is appropriate, thereon. In the event of an underpayment of a
28 benefit, the board shall immediately make payment equal to the deficit
29 amount plus regular interest or interest credits, whichever is
30 appropriate.
31 (2) The board shall have the power, through the director of the
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1 Nebraska Public Employees Retirement Systems or the director's designee,
2 to make a thorough investigation of any overpayment of a benefit, when in
3 the judgment of the retirement system such investigation is necessary,
4 including, but not limited to, circumstances in which benefit payments
5 are made after the death of a member or beneficiary and the retirement
6 system is not made aware of such member's or beneficiary's death. In
7 connection with any such investigation, the board, through the director
8 or the director's designee, shall have the power to compel the attendance
9 of witnesses and the production of books, papers, records, and documents,
10 whether in hardcopy, electronic form, or otherwise, and issue subpoenas
11 for such purposes. Such subpoenas shall be served in the same manner and
12 have the same effect as subpoenas from district courts.
13 (3) The board shall adopt and promulgate rules and regulations
14 implementing this section, which shall include, but not be limited to,
15 the following: (a) The procedures for refunding contributions, adjusting
16 future contributions or benefit payments, and requiring additional
17 contributions or repayment of benefits; (b) the process for a member,
18 member's beneficiary, employee, or employer to dispute an adjustment of
19 contributions or benefits; and (c) notice provided to all affected
20 persons. All notices shall be sent prior to an adjustment and shall
21 describe the process for disputing an adjustment of contributions or
22 benefits.
23 Sec. 6. (1) The membership of the retirement system shall be
24 composed of all employees who are or were employed by a member city and
25 maintain an account balance with