Signed by Governor Rick Snyder

Vote Smart's Synopsis:

Vote to concur with Senate amendments and pass a bill that amends public school employee pension plans and requires a study reviewing costs of and recommendations to transition to a defined contribution plan only that is identical to a 401(k) plan.

Highlights:

• Requires the State to commission a third party at a cost of no more than $150,000 to study the impact of implementing a defined contribution, hybrid defined contribution, and other defined contribution plan options as well as develop a proposed plan to ensure the long-term sustainability of the retirement system by November 15, 2012 (Sec. 93).

• Requires the study to also include costs of and recommendations to fully transition new members and qualified participants of the Tier 1 and Tier 2 plans in effect on September 4, 2012 to a defined contribution only plan that is identical to a 401(k) plan (Sec. 93).

• Specifies that a “Tier 1 plan” is a hybrid of the current retirement pension plan under existing law and a defined contribution plan that is calculated using credit earned (Sec. 8).

• Specifies that “credit” is used to calculate how much retirement allowance a member will be given for years serving as a public school employee (Sec. 8).

• Establishes a Tier 2 plan in which optional employee contributions are made into a 457 retirement plan and employer contributions are made into a 401(k) plan (Sec. 8).

• Authorizes teachers and other employees of the public school system who begin on or after August 1, 2012 to choose either the Tier 1 plan or a Tier 2 plan (Sec. 81).

• Requires any individual who does not choose a retirement plan to be automatically enrolled in the Tier 1 plan (Sec. 81).

• Authorizes qualified members to either choose the Tier 2 plan or to continue receiving credit for any future service and compensation on or after the transition date for purposes of calculating their retirement allowance (Sec. 59).

• Defines “qualified member” as an individual who meets all of the following requirements (Sec. 59):
• He or she first became a member before July 1, 2010; and
• He or she earned service credit in the 12 months ending September 3, 2012 or was on an approved professional service or military leave of absence on September 3, 3012.

• Defines “transition date” as the first day of the pay period that begins on or after December 1, 2012 for the applicable member (Sec. 8).

• Requires the retirement system to determine a method for determining service credit, compensation, and any applicable contribution in order to implement the provisions of this bill (Sec. 8).

• Authorizes qualified members who choose to continue receiving credit for any future service and compensation to designate whether they will or will not continue making additional contributions after their attainment date to calculate their retirement allowance as follows (Secs. 59 & 84):
• Members who will make additional contributions will receive 1.5 percent of their final average compensation multiplied by the total credit accumulated;
• Members who will not make additional contributions will receive:
• 1.5 percent of their final average compensation multiplied by the credit earned before the attainment date; and
• 1.25 percent of their final average compensation multiplied by the credit earned after the attainment date.

• Defines “attainment date” as the final day of the pay period in which a member attains 30 years of credited service (Sec. 84).

• Requires qualified members who want to keep receiving credit for future service and who choose to continue making additional contributions after their attainment date to contribute the following percentages (Sec. 43):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to September 3, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to September 3, 2012.

• Requires qualified members who want to keep receiving credit for future service and who choose to not make additional contributions after their attainment date to contribute the following percentages until their attainment date, then contribution levels will revert back to what they contributed to under the current retirement plan (Secs. 43 & 59):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to September 3, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to September 3, 2012.

• Specifies that qualified members who do not make a credit designation, make no attainment date designation, and do not choose the Tier 2 plan after December 1, 2012, their retirement allowance choice will be considered the sum of the following (Secs. 59 & 84):
• 1.5 percent of final average compensation multiplied by the credit earned before the transition date; and
• 1.25 percent of final average compensation multiplied by the credit earned after the transition date.

• Authorizes teachers and other employees of the public school system to freeze all payments made to their Tier 1 plan and move to the Tier 2 plan, regardless of their date of employment (Sec. 59).

• Specifies that a teacher or other employee of the public school system who chooses to take part in the Tier 2 plan will not accrue any more credit for services and compensation after December 1, 2012 and the member’s retirement allowance will be the sum of the following (Sec. 84):
• 1.5 percent of final average compensation multiplied by the credit earned before the transition date; and
• 4 percent match to the member’s compensation that is contributed by the employer.

• Specifies that any member who chooses the Tier 2 plan or who becomes a member on or after September 4, 2012 will not receive health insurance premium coverage from the retirement system, and instead replaces the health care premium payments with matching contributions made by the employer of up to 2 percent of a member’s compensation into the Tier 2 retirement plan (Sec. 91).

• Authorizes a teacher or other employee of the public school system who first became a member before September 4, 2012 and has earned service credit in the 12 months ending September 3, 2012 to opt out of the health insurance coverage premiums that would have been paid by the Tier 1 plan and into the Tier 2 plan between September 4, 2012 and October 26, 2012 (Sec. 91).

• Reduces the retirement system’s payment of monthly premium costs of a member’s health benefits from 100 percent to the following amounts (Sec. 91):
• 80 percent if the member is not eligible for Medicare; or
• 90 percent if the member is eligible for Medicare.

• Requires the retirement system to calculate an amount to be credited to a Tier 2 account for each member who chose to be part of the Tier 2 plan in reimbursement for health care contributions of 3% of each of the member’s compensation when the member was part of the defined benefits pension plan under existing law (Secs. 43 & 91).

• Limits the liability local school districts have to the pension system to 20.96 percent of their total payroll costs, beginning in the 2012-2013 school year (Sec. 41).

Full Bill Text

Vote Smart's Synopsis:

Vote to concur with House amendments and adopt additional amendments to a bill that amends public school employee pension plans and requires a study reviewing costs of and recommendations to transition to a defined contribution plan only that is identical to a 401(k) plan.

Highlights:

• Requires the State to commission a third party at a cost of no more than $150,000 to study the impact of implementing a defined contribution, hybrid defined contribution, and other defined contribution plan options as well as develop a proposed plan to ensure the long-term sustainability of the retirement system by November 15, 2012 (Sec. 93).

• Requires the study to also include costs of and recommendations to fully transition new members and qualified participants of the Tier 1 and Tier 2 plans in effect on September 4, 2012 to a defined contribution only plan that is identical to a 401(k) plan (Sec. 93).

• Specifies that a “Tier 1 plan” is a hybrid of the current retirement pension plan under existing law and a defined contribution plan that is calculated using credit earned (Sec. 8).

• Specifies that “credit” is used to calculate how much retirement allowance a member will be given for years serving as a public school employee (Sec. 8).

• Establishes a Tier 2 plan in which optional employee contributions are made into a 457 retirement plan and employer contributions are made into a 401(k) plan (Sec. 8).

• Authorizes teachers and other employees of the public school system who begin on or after August 1, 2012 to choose either the Tier 1 plan or a Tier 2 plan (Sec. 81).

• Requires any individual who does not choose a retirement plan to be automatically enrolled in the Tier 1 plan (Sec. 81).

• Authorizes qualified members to either choose the Tier 2 plan or to continue receiving credit for any future service and compensation on or after the transition date for purposes of calculating their retirement allowance (Sec. 59).

• Defines “qualified member” as an individual who meets all of the following requirements (Sec. 59):
• He or she first became a member before July 1, 2010; and
• He or she earned service credit in the 12 months ending September 3, 2012 or was on an approved professional service or military leave of absence on September 3, 3012.

• Defines “transition date” as the first day of the pay period that begins on or after December 1, 2012 for the applicable member (Sec. 8).

• Requires the retirement system to determine a method for determining service credit, compensation, and any applicable contribution in order to implement the provisions of this bill (Sec. 8).

• Authorizes qualified members who choose to continue receiving credit for any future service and compensation to designate whether they will or will not continue making additional contributions after their attainment date to calculate their retirement allowance as follows (Secs. 59 & 84):
• Members who will make additional contributions will receive 1.5 percent of their final average compensation multiplied by the total credit accumulated;
• Members who will not make additional contributions will receive:
• 1.5 percent of their final average compensation multiplied by the credit earned before the attainment date; and
• 1.25 percent of their final average compensation multiplied by the credit earned after the attainment date.

• Defines “attainment date” as the final day of the pay period in which a member attains 30 years of credited service (Sec. 84).

• Requires qualified members who want to keep receiving credit for future service and who choose to continue making additional contributions after their attainment date to contribute the following percentages (Sec. 43):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to September 3, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to September 3, 2012.

• Requires qualified members who want to keep receiving credit for future service and who choose to not make additional contributions after their attainment date to contribute the following percentages until their attainment date, then contribution levels will revert back to what they contributed to under the current retirement plan (Secs. 43 & 59):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to September 3, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to September 3, 2012.

• Specifies that qualified members who do not make a credit designation, make no attainment date designation, and do not choose the Tier 2 plan after December 1, 2012, their retirement allowance choice will be considered the sum of the following (Secs. 59 & 84):
• 1.5 percent of final average compensation multiplied by the credit earned before the transition date; and
• 1.25 percent of final average compensation multiplied by the credit earned after the transition date.

• Authorizes teachers and other employees of the public school system to freeze all payments made to their Tier 1 plan and move to the Tier 2 plan, regardless of their date of employment (Sec. 59).

• Specifies that a teacher or other employee of the public school system who chooses to take part in the Tier 2 plan will not accrue any more credit for services and compensation after December 1, 2012 and the member’s retirement allowance will be the sum of the following (Sec. 84):
• 1.5 percent of final average compensation multiplied by the credit earned before the transition date; and
• 4 percent match to the member’s compensation that is contributed by the employer.

• Specifies that any member who chooses the Tier 2 plan or who becomes a member on or after September 4, 2012 will not receive health insurance premium coverage from the retirement system, and instead replaces the health care premium payments with matching contributions made by the employer of up to 2 percent of a member’s compensation into the Tier 2 retirement plan (Sec. 91).

• Authorizes a teacher or other employee of the public school system who first became a member before September 4, 2012 and has earned service credit in the 12 months ending September 3, 2012 to opt out of the health insurance coverage premiums that would have been paid by the Tier 1 plan and into the Tier 2 plan between September 4, 2012 and October 26, 2012 (Sec. 91).

• Reduces the retirement system’s payment of monthly premium costs of a member’s health benefits from 100 percent to the following amounts (Sec. 91):
• 80 percent if the member is not eligible for Medicare; or
• 90 percent if the member is eligible for Medicare.

• Requires the retirement system to calculate an amount to be credited to a Tier 2 account for each member who chose to be part of the Tier 2 plan in reimbursement for health care contributions of 3% of each of the member’s compensation when the member was part of the defined benefits pension plan under existing law (Secs. 43 & 91).

• Limits the liability local school districts have to the pension system to 20.96 percent of their total payroll costs, beginning in the 2012-2013 school year (Sec. 41).

Full Bill Text

Vote Smart's Synopsis:

Vote to concur with House amendments and pass a bill that authorizes new public school employees to qualify for either of the new retirement plans.

Highlights:

• Authorizes teachers and other employees of the public school system who begin after July 30, 2012 to choose either the Tier 1 plan or a Tier 2 plan (Sec. 81).

• Specifies that a “Tier 1 plan” is a hybrid of the current retirement pension plan under existing law and a defined contribution plan that is calculated using credit earned (Sec. 8).

• Specifies that “credit” is used to calculate how much retirement allowance a member will be given for years serving as a public school employee (Sec. 8).

• Establishes a Tier 2 plan in which optional employee contributions are made into a 457 retirement plan and employer contributions are made into a 401(k) plan (Sec. 8).

• Requires any individual who does not choose a retirement plan to be automatically enrolled in the Tier 1 plan (Sec. 81).

• Authorizes qualified members to either choose the Tier 2 plan or to continue receiving credit for any future service and compensation on or after November 1, 2012 for purposes of calculating their retirement allowance (Sec. 59).

• Defines “qualified member” as an individual who meets all of the following requirements (Sec. 59):
• He or she first became a member before July 1, 2010; and
• He or she earned service credit in the 12 months ending July 15, 2012 or was on an approved professional service or military leave of absence on July 15, 3012.

• Authorizes qualified members who choose to continue receiving credit for any future service and compensation to designate whether they will or will not continue making additional contributions after their attainment date to calculate their retirement allowance as follows (Secs. 59 & 84):
• Members who will make additional contributions will receive 1.5 percent of their final average compensation multiplied by the total credit accumulated;
• Members who will not make additional contributions will receive:
• 1.5 percent of their final average compensation multiplied by the credit earned before the attainment date; and
• 1.25 percent of their final average compensation multiplied by the credit earned after the attainment date.

• Defines “attainment date” as the final day of the pay period in which a member attains 30 years of credited service (Sec. 84).

• Requires qualified members who want to keep receiving credit for future service and who choose to continue making additional contributions after their attainment date to contribute the following percentages (Sec. 43):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to July 15, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to July 15, 2012.

• Requires qualified members who want to keep receiving credit for future service and who choose to not make additional contributions after their attainment date to contribute the following percentages until their attainment date, then contribution levels will revert back to what they contributed to the defined benefits pension plan (Sec. 59):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to July 15, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to July 15, 2012.

• Specifies that qualified members who do not make a credit designation, make no attainment date designation, and do not choose the Tier 2 plan after November 1, 2012, their retirement allowance choice will be considered the sum of the following (Secs. 59 & 84):
• 1.5 percent of final average compensation multiplied by the credit earned before November 1, 2012; and
• 1.25 percent of final average compensation multiplied by the credit earned after November 1, 2012.

• Authorizes teachers and other employees of the public school system to freeze all payments made to their Tier 1 plan and move to the Tier 2 plan, regardless of their date of employment (Sec. 59).

• Specifies that a teacher or other employee of the public school system who chooses to take part in the Tier 2 plan will not accrue any more credit for services and compensation after November 1, 2012 and the member’s retirement allowance will be the sum of the following (Sec. 84):
• 1.5 percent of final average compensation multiplied by the credit earned before November 1, 2012; and
• 4 percent match to the member’s compensation that is contributed by the employer.

• Specifies that any member who chooses the Tier 2 plan or who becomes a member on or after August 1, 2012 will not receive health insurance premium coverage from the retirement system, and instead replaces the health care premium payments with matching contributions made by the employer of up to 2 percent of a member’s compensation into the Tier 2 retirement plan (Sec. 91).

• Requires a teacher or other employee of the public school system who first became a member before August 1, 2012 and has earned service credit in the 12 months ending July 15, 2012 to opt out of the health insurance coverage premiums that would have been paid by the Tier 1 plan and into the Tier 2 plan between July 16, 2012 and September 28, 2012 (Sec. 91).

• Reduces the retirement system’s payment of monthly premium costs of a member’s health benefits from 100 percent to the following amounts (Sec. 91):
• 80 percent if the member is not eligible for Medicare; or
• 90 percent if the member is eligible for Medicare.

• Requires the retirement system to calculate an amount to be credited to a Tier 2 account for each member who chose to be part of the Tier 2 plan in reimbursement for health care contributions of 3% of each of the member’s compensation when the member was part of the defined benefits pension plan under existing law (Secs. 43 & 91).

• Limits the liability local school districts have to the pension system to 20.96 percent of their total payroll costs, beginning in the 2012-2013 school year (Sec. 41).

• Requires the State to commission a third party at a cost of no more than $100,000 to study the impact of implementing a defined contribution, hybrid defined contribution, and other defined contribution plan options as well as develop a proposed plan to ensure the long-term sustainability of the retirement system by December 31, 2012 (Sec. 93).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that authorizes new public school employees to qualify for either of the new retirement plans.

Highlights:

• Authorizes teachers and other employees of the public school system who begin on or after August 1, 2012 to choose either the Tier 1 plan or a Tier 2 plan (Sec. 81).

• Specifies that a “Tier 1 plan” is a hybrid of the current retirement pension plan under existing law and a defined contribution plan that is calculated using credit earned (Sec. 8).

• Specifies that “credit” is used to calculate how much retirement allowance a member will be given for years serving as a public school employee (Sec. 8).

• Establishes a Tier 2 plan in which optional employee contributions are made into a 457 retirement plan and employer contributions are made into a 401(k) plan (Sec. 8).

• Requires any individual who does not choose a retirement plan to be automatically enrolled in the Tier 1 plan (Sec. 81).

• Authorizes qualified members to either choose the Tier 2 plan or to continue receiving credit for any future service and compensation on or after November 1, 2012 for purposes of calculating their retirement allowance (Sec. 59).

• Defines “qualified member” as an individual who meets all of the following requirements (Sec. 59):
• He or she first became a member before July 1, 2010; and
• He or she earned service credit in the 12 months ending July 15, 2012 or was on an approved professional service or military leave of absence on July 15, 3012.

• Authorizes qualified members who choose to continue receiving credit for any future service and compensation to designate whether they will or will not continue making additional contributions after their attainment date to calculate their retirement allowance as follows (Secs. 59 & 84):
• Members who will make additional contributions will receive 1.5 percent of their final average compensation multiplied by the total credit accumulated;
• Members who will not make additional contributions will receive:
• 1.5 percent of their final average compensation multiplied by the credit earned before the attainment date; and
• 1.25 percent of their final average compensation multiplied by the credit earned after the attainment date.

• Defines “attainment date” as the final day of the pay period in which a member attains 30 years of credited service (Sec. 84).

• Requires qualified members who want to keep receiving credit for future service and who choose to continue making additional contributions after their attainment date to contribute the following percentages (Sec. 43):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to July 15, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to July 15, 2012.

• Requires qualified members who want to keep receiving credit for future service and who choose to not make additional contributions after their attainment date to contribute the following percentages until their attainment date, then contribution levels will revert back to what they contributed to the defined benefits pension plan (Sec. 59):
• 7 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to July 15, 2012; or
• 4 percent of the compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to July 15, 2012.

• Specifies that qualified members who do not make a credit designation, make no attainment date designation, and do not choose the Tier 2 plan after November 1, 2012, their retirement allowance choice will be considered the sum of the following (Secs. 59 & 84):
• 1.5 percent of final average compensation multiplied by the credit earned before November 1, 2012; and
• 1.25 percent of final average compensation multiplied by the credit earned after November 1, 2012.

• Authorizes teachers and other employees of the public school system to freeze all payments made to their Tier 1 plan and move to the Tier 2 plan, regardless of their date of employment (Sec. 59).

• Specifies that a teacher or other employee of the public school system who chooses to take part in the Tier 2 plan will not accrue any more credit for services and compensation after November 1, 2012 and the member’s retirement allowance will be the sum of the following (Sec. 84):
• 1.5 percent of final average compensation multiplied by the credit earned before November 1, 2012; and
• 4 percent match to the member’s compensation that is contributed by the employer.

• Specifies that any member who chooses the Tier 2 plan or who becomes a member on or after August 1, 2012 will not receive health insurance premium coverage from the retirement system, and instead replaces the health care premium payments with matching contributions made by the employer of up to 2 percent of a member’s compensation into the Tier 2 retirement plan (Sec. 91).

• Authorizes a teacher or other employee of the public school system who first became a member before August 1, 2012 and has earned service credit in the 12 months ending July 15, 2012 to opt out of the health insurance coverage premiums that would have been paid by the Tier 1 plan and into the Tier 2 plan between July 16, 2012 and September 28, 2012 (Sec. 91).

• Reduces the retirement system’s payment of monthly premium costs of a member’s health benefits from 100 percent to the following amounts (Sec. 91):
• 80 percent if the member is not eligible for Medicare; or
• 90 percent if the member is eligible for Medicare.

• Requires the retirement system to calculate an amount to be credited to a Tier 2 account for each member who chose to be part of the Tier 2 plan in reimbursement for health care contributions of 3% of each of the member’s compensation when the member was part of the defined benefits pension plan under existing law (Secs. 43 & 91).

• Limits the liability local school districts have to the pension system to 20.96 percent of their total payroll costs, beginning in the 2012-2013 school year (Sec. 41).

• Requires the State to commission a third party at a cost of no more than $100,000 to study the impact of implementing a defined contribution, hybrid defined contribution, and other defined contribution plan options as well as develop a proposed plan to ensure the long-term sustainability of the retirement system by December 31, 2012 (Sec. 93).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends pension plans for public school employees.

Highlights:

• Prohibits teachers and other employees of the public school system hired on or after July 1, 2010 from being a qualified member of the Tier 1 plan (Sec. 41)

• Specifies that a “Tier 1 plan” is a hybrid of the current retirement pension plan under existing law and a defined contribution plan that is calculated using credit earned (Sec. 8).

• Specifies that “credit” is used to calculate how much retirement allowance a member will be given for years serving as a public school employee (Sec. 8).

• Defines “qualified member” as an individual who meets all of the following requirements (Sec. 59):
• He or she first became a member before July 1, 2010;
• He or she is still a member on June 30, 2012; and
• He or she has accrued at least .05 years of service credit in the 12 months ending on June 30, 2012 or was on an approved professional services or military leave of absence on June 30, 2012.

• Authorizes the retirement system to create a separate employer contribution rate for members who join after June 30, 2010 (Sec. 41).

• Requires members who joined the retirement system before July 1, 2010 to calculate their final average compensation in 36 consecutive months (Sec. 4).

• Defines “final average compensation” to mean the aggregate amount of compensation in a certain number of consecutive months when an individual’s compensation is highest, divided by that member’s years of credited service (Sec. 4).

• Requires members who joined the retirement system on or after July 1, 2010 to calculate their final average compensation in 60 consecutive months (Sec. 4).

• Prohibits an individual hired by a public school on or after July 1, 2012 from including in his or her final average compensation any amount exceeding $100,000 or that amount adjusted for inflation, whichever is greater (Sec. 4).

• Requires an individual, who first became a member of the defined benefits pension plan on or after July 1, 2008, to contribute the following percentage of his or her compensation to the retirement plan (Sec. 43):
• 3 percent if the individual’s compensation is less than $5,000;
• 3.6 percent of the amount in excess of $5,000 plus $150 if the individual’s compensation is between $5,000 and $15,000; and
• 6.4 percent of the amount in excess of $15,000 plus $510 if the individual’s compensation is greater than $15,000.

• Requires an individual, who first became a member of the defined benefits pension plan between January 1, 1990 and July 1, 2008, to contribute the following percentage of his or her compensation to the retirement plan (Sec. 43):
• 3 percent if the individual’s compensation is less than $5,000;
• 3.6 percent of the amount in excess of $5,000 plus $150 if the individual’s compensation is between $5,000 and $15,000; and
• 4.3 percent of the amount in excess of $15,000 plus $510 if the individual’s compensation is greater than $15,000.

• Requires an individual, who first became a member of the defined benefits pension plan before January 1, 1990, to contribute 3.9 percent of his or her compensation to the retirement plan (Sec. 43).

• Authorizes qualified members to either choose the Tier 2 plan or to continue receiving credit for any future service and compensation on or after October 1, 2012 for purposes of calculating their retirement allowance (Sec. 59).

• Authorizes qualified members who choose to continue receiving credit for any future service and compensation to designate whether they will or will not continue making additional contributions after their attainment date to calculate their retirement allowance as follows (Secs. 43, 59 & 84):
• Members who will make additional contributions will receive 1.5 percent of their final average compensation multiplied by the total credit accumulated;
• Members who will not make additional contributions will receive the sum of the following:
• 1.5 percent of their final average compensation multiplied by the credit earned before the attainment date; and
• 1.25 percent of their final average compensation multiplied by the credit earned after the attainment date.

• Defines “attainment date” as the final day of the pay period in which a member attains 30 years of credited service (Sec. 84).

• Requires qualified members who choose the Tier 1 plan and who want to continue making additional contributions after their attainment date to contribute the following percentages (Sec. 43):
• 8 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to June 30, 2012; or
• 5 percent of their compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to June 30, 2012.

• Requires qualified members who choose the Tier 1 plan and who do not want to make additional contributions after their attainment date to contribute the following percentages until their attainment date, then the contribution level will revert back to what they contributed to the defined benefits pension plan (Sec. 59):
• 8 percent of their compensation to the member investment plan if they have been contributing members of the investment plan prior to June 30, 2012; or
• 5 percent of their compensation to the reserve for employee contributions if they have not been contributing members of the investment plan prior to June 30, 2012.

• Establishes a Tier 2 plan, in which optional employee contributions are made into a 457 retirement plan and employer contributions are made into a 401(k) plan, effective no later than January 1, 2011 (Secs. 8 & 120).

• Specifies that qualified members who do not make a credit designation, make no attainment date designation, and do not choose the Tier 2 plan after October 1, 2012, their retirement allowance choice will be considered the sum of the following (Secs. 59 & 84):
• 1.5 percent of final average compensation multiplied by the credit earned before October 1, 2012; and
• 1.25 percent of final average compensation multiplied by the credit earned after October 1, 2012.

• Specifies that a qualified member who chooses to take part in the Tier 2 plan will not accrue any more credit for services and compensation after October 1, 2012 and the member’s retirement allowance will be the sum of the following (Sec. 84):
• 1.5 percent of final average compensation multiplied by the credit earned before October 1, 2012; and
• 4 percent match to the member’s compensation that is contributed by the employer.

• Requires the Department to create a Tier 3 retirement contribution pension plan for qualified participants and the plan must offer participants 3 or more account plans provided by at least 3 different entities, effective no later than January 1, 2013 (Secs. 151 & 155).

• Defines “qualified participant” as a participant of Tier 3 who first was employed on or after January 1, 2013 (Sec. 154).

• Specifies that contributions to a participants Tier 3 plan will be the following (Sec. 161):
• 4 percent match to the participant’s compensation that is contributed by the employer;
• Optional contribution by the participant of no more than 3 percent of his or her compensation that must be matched by the employer; and
• Optional additional contribution made by participant to the extent permitted by the Department and the Internal Revenue code, but this contribution will not be matched by the employer.

• Limits the retirement system from paying more than 80 percent of retiree’s entire monthly health care premium if they were hired before July 1, 2012 (Sec. 91).

• Prohibits the retirement system from paying for the health care premiums of employees hired after July 1, 2012 and instead replaces the health care premium payments with matching contributions made by the employer of up to 2 percent of a member’s compensation into the Tier 2 retirement plan (Sec. 91).

• Appropriates $1 million to the Office of Retirement Services for fiscal year 2011-2012 to administer this bill (Sec. 92).

Full Bill Text