LB582 LB582
2021 2021
LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 582
Introduced by Nebraska Retirement Systems Committee: Kolterman, 24,
Chairperson; Clements, 2; Lindstrom, 18; Slama, 1; Stinner,
48.
Read first time January 19, 2021
Committee: Nebraska Retirement Systems
1 A BILL FOR AN ACT relating to retirement; to amend sections 79-978,
2 79-980, 79-981, 79-982, 79-982.01, 79-982.02, 79-983, 79-984,
3 79-985, 79-987, 79-990, 79-991, 79-992, 79-992.02, 79-996, 79-998,
4 79-9,102, 79-9,103, 79-9,105, 79-9,115, and 79-9,117, Revised
5 Statutes Cumulative Supplement, 2020; to change provisions of the
6 Class V School Employees Retirement Act relating to administration
7 of the retirement system as prescribed; to define and redefine
8 terms; to harmonize provisions; to provide severability; to repeal
9 the original sections; and to declare an emergency.
10 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 79-978, Revised Statutes Cumulative Supplement,
2 2020, is amended to read:
3 79-978 For purposes of the Class V School Employees Retirement Act,
4 unless the context otherwise requires:
5 (1) Accumulated contributions means the sum of amounts contributed
6 by a member of the system together with regular interest credited
7 thereon;
8 (2) Actuarial equivalent means the equality in value of the
9 retirement allowance for early retirement or the retirement allowance for
10 an optional form of annuity, or both, with the normal form of the annuity
11 to be paid, as determined by the application of the appropriate actuarial
12 table, except that use of such actuarial tables shall not effect a
13 reduction in benefits accrued prior to September 1, 1985, as determined
14 by the actuarial tables in use prior to such date;
15 (3) Actuarial tables means:
16 (a) For determining the actuarial equivalent of any annuities other
17 than joint and survivorship annuities:
18 (i) For members hired before July 1, 2018, a unisex mortality table
19 using twenty-five percent of the male mortality and seventy-five percent
20 of the female mortality from the 1994 Group Annuity Mortality Table with
21 a One Year Setback and using an interest rate of eight percent compounded
22 annually; and
23 (ii) For members hired on or after July 1, 2018, or rehired on or
24 after July 1, 2018, after termination of employment and being paid a
25 retirement benefit, the determinations shall be based on a unisex
26 mortality table and an interest rate specified by the board of trustees
27 until xxx, and beginning xxx, by the board of education. Both the
28 mortality table and the interest rate shall be recommended by the actuary
29 as provided in section 79-984 retained by the board of trustees and
30 approved by the board of trustees until xxxx, and beginning xxxx, by the
31 board of education following an actuarial experience study, a benefit
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1 adequacy study, or a plan valuation. The mortality table, interest rate,
2 and actuarial factors in effect on the member's retirement date shall be
3 used to calculate the actuarial equivalency of any retirement benefit.
4 Such interest rate may be, but is not required to be, equal to the
5 assumed rate; and
6 (b) For joint and survivorship annuities:
7 (i) For members hired before July 1, 2018, a unisex retiree
8 mortality table using sixty-five percent of the male mortality and
9 thirty-five percent of the female mortality from the 1994 Group Annuity
10 Mortality Table with a One Year Setback and using an interest rate of
11 eight percent compounded annually and a unisex joint annuitant mortality
12 table using thirty-five percent of the male mortality and sixty-five
13 percent of the female mortality from the 1994 Group Annuity Mortality
14 Table with a One Year Setback and using an interest rate of eight percent
15 compounded annually; and
16 (ii) For members hired on or after July 1, 2018, or rehired on or
17 after July 1, 2018, after termination of employment and being paid a
18 retirement benefit, the determinations shall be based on a unisex
19 mortality table and an interest rate specified by the board of trustees
20 until xxx, and beginning xxx, by the board of education. Both the
21 mortality table and the interest rate shall be recommended by the actuary
22 as provided in section 79-984 retained by the board of trustees and
23 approved by the board of trustees until xxx, and beginning xxx, by the
24 board of education following an actuarial experience study, a benefit
25 adequacy study, or a plan valuation. The mortality table, interest rate,
26 and actuarial factors in effect on the member's retirement date shall be
27 used to calculate the actuarial equivalency of any retirement benefit.
28 Such interest rate may be, but is not required to be, equal to the
29 assumed rate;
30 (4) Annuitant means any member receiving an allowance;
31 (5) Annuity means annual payments, for both prior service and
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1 membership service, for life as provided in the Class V School Employees
2 Retirement Act;
3 (6) Audit year means the period beginning January 1 in any year and
4 ending on December 31 of that same year except for the initial audit year
5 which will begin September 1, 2016, and end on December 31, 2016.
6 Beginning September 1, 2016, the audit year will be the period of time
7 used in the preparation of the annual actuarial analysis and valuation
8 and a financial audit of the investments of the retirement system;
9 (7) Beneficiary means any person entitled to receive or receiving a
10 benefit by reason of the death of a member;
11 (8) Board of education means the board of education of the school
12 district;
13 (9) Board of trustees means (a) until xxxx, the trustees granted
14 authority to administer the retirement system as provided in the Class V
15 School Employees Retirement Act and (b) beginning xxxx, the persons
16 appointed by the board of education to serve as executive officers to
17 administer the retirement system as directed and approved by the board of
18 education and to facilitate the transition and transfer of the management
19 and administration of the retirement system to the Public Employees
20 Retirement Board effective September 1, 2024;
21 (10)(a) (9)(a) Compensation means gross wages or salaries payable to
22 the member during a fiscal year and includes (i) overtime pay, (ii)
23 member contributions to the retirement system that are picked up under
24 section 414(h) of the Internal Revenue Code, as defined in section
25 49-801.01, (iii) retroactive salary payments paid pursuant to court
26 order, arbitration, or litigation and grievance settlements, and (iv)
27 amounts contributed by the member to plans under sections 125, 403(b),
28 and 457 of the Internal Revenue Code, as defined in section 49-801.01, or
29 any other section of the code which defers or excludes such amounts from
30 income.
31 (b) Compensation does not include (i) fraudulently obtained amounts
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1 as determined by the board, (ii) amounts for accrued unused sick leave or
2 accrued unused vacation leave converted to cash payments, (iii) insurance
3 premiums converted into cash payments, (iv) reimbursement for expenses
4 incurred, (v) fringe benefits, (vi) per diems paid as expenses, (vii)
5 bonuses for services not actually rendered, (viii) early retirement
6 inducements, (ix) cash awards, (x) severance pay, or (xi) employer
7 contributions made for the purposes of separation payments made at
8 retirement and early retirement inducements.
9 (c) Compensation in excess of the limitations set forth in section
10 401(a)(17) of the Internal Revenue Code, as defined in section 49-801.01,
11 shall be disregarded;
12 (11) (10) Council means the Nebraska Investment Council created and
13 acting pursuant to section 72-1237;
14 (12) (11) Creditable service means the sum of the membership service
15 and the prior service, measured in one-tenth-year increments;
16 (13) (12) Early retirement date means, for members hired prior to
17 July 1, 2016, who have attained age fifty-five, that month and year
18 selected by a member having at least ten years of creditable service
19 which includes a minimum of five years of membership service. Early
20 retirement date means, for members hired on or after July 1, 2016, that
21 month and year selected by a member having at least five years of
22 creditable service and who has attained age sixty;
23 (14) (13) Early retirement inducement means, but is not limited to:
24 (a) A benefit, bonus, or payment to a member in exchange for an
25 agreement by the member to retire with a reduced retirement benefit;
26 (b) A benefit, bonus, or payment paid to a member in addition to the
27 member's retirement benefit;
28 (c) Lump-sum or installment cash payments, except payments for
29 accrued unused leave converted to cash payments;
30 (d) An additional salary or wage component of any kind that is being
31 paid as an incentive to leave employment and not for personal services
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1 performed for which creditable service is granted;
2 (e) Partial or full employer payment of a member's health, dental,
3 life, or long-term disability insurance benefits or cash in lieu of such
4 insurance benefits that extend beyond the member’s termination of
5 employment and contract of employment dates. This subdivision does not
6 apply to any period during which the member is contributing to the
7 retirement system and being awarded creditable service; and
8 (f) Any other form of separation payments made by an employer to a
9 member at termination, including, but not limited to, purchasing
10 retirement contracts for the member pursuant to section 79-514, or
11 depositing money for the member in an account established under section
12 403(b) of the Internal Revenue Code except for payments for accrued
13 unused leave;
14 (15) (14) Employee means the following enumerated persons receiving
15 compensation from the school district: (a) Regular teachers and
16 administrators employed on a written contract basis; and (b) regular
17 employees, not included in subdivision (15)(a) (14)(a) of this section,
18 hired upon a full-time basis, which basis shall contemplate a workweek of
19 not less than thirty hours;
20 (16) (15) Employer means a school district participating in a
21 retirement system established pursuant to the Class V School Employees
22 Retirement Act;
23 (17) (16) Fiscal year means the period beginning September 1 in any
24 year and ending on August 31 of the next succeeding year;
25 (18) (17) Hire date or date of hire means the first day of
26 compensated service subject to retirement contributions;
27 (19) (18) Interest means, for the purchase of service credit, the
28 purchase of prior service credit, restored refunds, and delayed payments,
29 the investment return assumption used in the most recent actuarial
30 valuation;
31 (20) (19) Member means any employee included in the membership of
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1 the retirement system or any former employee who has made contributions
2 to the system and has not received a refund;
3 (21) (20) Membership service means service on or after September 1,
4 1951, as an employee of the school district and a member of the system
5 for which compensation is paid by the school district. Credit for more
6 than one year of membership service shall not be allowed for service
7 rendered in any fiscal year. Beginning September 1, 2005, a member shall
8 be credited with a year of membership service for each fiscal year in
9 which the member performs one thousand or more hours of compensated
10 service as an employee of the school district. For an employee who
11 becomes a member prior to July 1, 2018, an hour of compensated service
12 shall include any hour for which the member is compensated by the school
13 district during periods when no service is performed due to vacation or
14 approved leave. For an employee who becomes a member on or after July 1,
15 2018, an hour of compensated service shall include any hour for which the
16 member is compensated by the school district during periods when no
17 service is performed due to used accrued sick days, used accrued vacation
18 days, federal and state holidays, and jury duty leave for which the
19 member is paid full compensation by the employer. If a member performs
20 less than one thousand hours of compensated service during a fiscal year,
21 one-tenth of a year of membership service shall be credited for each one
22 hundred hours of compensated service by the member in such fiscal year.
23 In determining a member's total membership service, all periods of
24 membership service, including fractional years of membership service in
25 one-tenth-year increments, shall be aggregated;
26 (22) (21) Military service means service in the uniformed services
27 as defined in 38 U.S.C. 4301 et seq., as such provision existed on March
28 27, 1997;
29 (23) (22) Normal retirement date means the end of the month during
30 which the member attains age sixty-five and has completed at least five
31 years of membership service;
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1 (24) (23) Primary beneficiary means the person or persons entitled
2 to receive or receiving a benefit by reason of the death of a member;
3 (25) (24) Prior service means service rendered prior to September 1,
4 1951, for which credit is allowed under section 79-999, service rendered
5 by retired employees receiving benefits under preexisting systems, and
6 service for which credit is allowed under sections 79-990, 79-991,
7 79-994, 79-995, and 79-997;
8 (26) (25) Regular interest means interest (a) on the total
9 contributions of the member prior to the close of the last preceding
10 fiscal year, (b) compounded annually, and (c)(i) beginning September 1,
11 2016, at a rate equal to the daily treasury yield curve for one-year
12 treasury securities, as published by the Secretary of the Treasury of the
13 United States, that applies on September 1 of each year and (ii) prior to
14 September 1, 2016, at rates to be determined annually by the board, which
15 shall have the sole, absolute, and final discretionary authority to make
16 such determination, except that the rate for any given year in no event
17 shall exceed the actual percentage of net earnings of the system during
18 the last preceding fiscal year;
19 (27) (26) Retirement allowance means the total annual retirement
20 benefit payable to a member for service or disability;
21 (28) (27) Retirement date means the date of retirement of a member
22 for service or disability a