Bill Text: IN HB1411 | 2011 | Regular Session | Introduced
Bill Title: Early retirement for state employees.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-01-18 - First reading: referred to Committee on Employment, Labor and Pensions [HB1411 Detail]
Download: Indiana-2011-HB1411-Introduced.html
Citations Affected: IC 4-15-2-25; IC 5-10; IC 5-10.2-4;
IC 5-10.3-6-8.9; IC 10-12-4-5.
Effective: Upon passage; July 1, 2011.
January 18, 2011, read first time and referred to Committee on Employment, Labor and
Pensions.
Digest Continued
retirement benefit. Provides that a participant in the plan who enters the
deferred retirement option program (DROP) who subsequently enters
the program is not entitled to a DROP benefit. Provides that a
beneficiary employee of the state police 1987 benefit system who elects
to enter the program is entitled to a full basic pension benefit.
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A BILL FOR AN ACT to amend the Indiana Code concerning state
offices and administration and to make an appropriation.
(b) Except as provided in subsection (d), if:
(1) a participant is at least fifty-five (55) years of age; and
(2) the sum of the participant's years of creditable service and age in years equals at least eighty-five (85);
the participant may retire and become eligible for benefits as provided in section 12(b) of this chapter.
(c) A participant who:
(1) is at least fifty (50) years of age; and
(2) has accrued at least twenty-five (25) years of creditable service;
may retire and become eligible for benefits under section 12(b) of this chapter.
(d) A participant who:
(1) elects to participate in the state employee early retirement program established by IC 5-10-16-8;
(2) retires after June 30, 2011, and before July 1, 2012;
(3) is at least fifty-five (55) years of age;
(4) has accrued at least ten (10) years of creditable service;
may retire and become eligible for benefits under section 12(b) of this chapter.
(b) The amount of annual retirement allowance payable in equal monthly installments to a participant who retires under section 11(b),
(b) As used in this section, "DROP entry date" means the date that a participant's election to enter a DROP becomes effective.
(c) As used in this section, "DROP frozen benefit" refers to an annual retirement allowance computed under section 10 of this chapter based on a participant's:
(1) average annual salary; and
(2) years of creditable service;
on the date the participant enters the DROP.
(d) As used in this section, "DROP retirement date" means the future retirement date selected by a participant at the time the participant elects to enter the DROP.
(e) Only a participant who is eligible to receive an unreduced annual retirement allowance immediately upon termination of employment may elect to enter a DROP. A participant who elects to enter the DROP must agree to the following:
(1) The participant shall execute an irrevocable election to retire on the DROP retirement date and must remain in active service until that date.
(2) While in the DROP, the participant shall continue to make contributions under section 8 of this chapter.
(3) The participant shall select a DROP retirement date not less than twelve (12) months and not more than thirty-six (36) months after the participant's DROP entry date.
(4) The participant may not remain in the DROP after the date the participant reaches the mandatory retirement age under section 9 of this chapter.
(5) The participant may make an election to enter the DROP only once in the participant's lifetime.
(f) Contributions or payments provided by the general assembly under section 4(b)(4) of this chapter continue for a participant while the participant is in the DROP.
(g) A participant shall exit the DROP on the earliest of the following:
(1) The participant's DROP retirement date.
(2) Thirty-six (36) months after the participant's DROP entry date.
(3) The participant's mandatory retirement age.
(4) The date the participant retires because of a disability as provided by subsection (k).
(h) A participant who retires on the participant's DROP retirement date or on the date the participant retires because of a disability as provided by subsection (k) may elect to receive an annual retirement allowance:
(1) computed under section 10 of this chapter as if the participant had never entered the DROP; or
(2) consisting of:
(A) the DROP frozen benefit; plus
(B) an additional amount, paid as the participant elects under subsection (i), determined by multiplying:
(i) the DROP frozen benefit; by
(ii) the number of months the participant was in the DROP.
(i) The participant shall elect, at the participant's retirement, to receive the additional amount calculated under subsection (h)(2)(B) in one (1) of the following ways:
(1) A lump sum paid on:
(A) the participant's DROP retirement date; or
(B) the date the participant retires because of a disability as provided by subsection (k).
(2) Three (3) equal annual payments:
(A) commencing on:
(i) the participant's DROP retirement date; or
(ii) the date the participant retires because of a disability as provided by subsection (k); and
(B) thereafter paid on:
(i) the anniversary of the participant's DROP retirement date; or
(ii) the date the participant retires because of a disability as provided by subsection (k).
(j) A cost of living increase determined under section 21(c) of this chapter does not apply to the additional amount calculated under subsection (h)(2)(B) at the participant's DROP retirement date or the date the participant retires because of a disability as provided by subsection (k). No cost of living increase is applied to a DROP frozen benefit while the participant is in the DROP. After the participant's DROP retirement date or the date the participant retires because of a disability as provided by subsection (k), cost of living increases determined under section 21(c) of this chapter apply to the participant's annual retirement allowance computed under this section.
(k) If a participant becomes disabled, in the line of duty or other than in the line of duty while in the DROP, the participant's annual retirement allowance is computed as follows:
(1) If the participant retires because of a disability less than twelve (12) months after the date the participant enters the DROP, the participant's annual retirement allowance is calculated as if the participant had never entered the DROP.
(2) If the participant retires because of a disability at least twelve (12) months after the date the participant enters the DROP, the
participant's annual retirement allowance is calculated under this
section, and the participant's retirement date is the date the
member retires because of a disability rather than the participant's
DROP retirement date.
(l) If, before payment of the participant's annual retirement
allowance begins, the participant dies in the line of duty or other than
in the line of duty, death benefits are payable as follows:
(1) The benefit calculated under subsection (h)(2)(B) is paid in a
lump sum to the participant's surviving spouse. If there is no
surviving spouse, the lump sum must be divided equally among
the participant's surviving children. If there are no surviving
children, the lump sum is paid to the participant's parents. If there
are no surviving parents, the lump sum is paid to the participant's
estate.
(2) A benefit is paid on the DROP frozen benefit under the terms
of the retirement plan created by this chapter.
(m) Except as provided under subsections (k) and (l), the annual
retirement allowance for a participant who exits the DROP for any
reason other than retirement on the participant's DROP retirement date
is calculated as if the participant had never entered the DROP.
(n) A participant may not elect to participate in the DROP if the
participant elects to participate in the state employee early
retirement program established by IC 5-10-16-8. If a participant
who elected to enter the DROP prior to July 1, 2011, subsequently
elects to participate in the state employee early retirement
program under IC 5-10-16-8, the participant's retirement benefit
is calculated as if the participant never elected to participate in the
DROP.
Chapter 8.6. State Employee Early Retirement Program Medical Benefits Account
Sec. 1. (a) This chapter applies to a state employee who elects to participate in the state employee early retirement program under IC 5-10-16-8.
(b) An individual described in subsection (a) is entitled to receive benefits from the state employee early retirement program medical benefits account.
Sec. 2. As used in this chapter, "account" refers to the state employee early retirement program medical benefits account established under section 12 of this chapter.
Sec. 3. As used in this chapter, "budget agency" refers to the budget agency established by IC 4-12-1-3.
Sec. 4. As used in this chapter, "department" refers to the state personnel department established by IC 4-15-1.8-2.
Sec. 5. As used in this chapter, "employer" means the state agency that employs a state employee at the time the state employee elects to participate in the state employee early retirement program.
Sec. 6. As used in this chapter, "Internal Revenue Code" has the meaning set forth in IC 6-3-1-11.
Sec. 7. As used in this chapter, "participant" means a state employee for whom a subaccount is established under section 15 of this chapter.
Sec. 8. As used in this chapter, "state agency" has the meaning set forth in IC 5-10-16-6.
Sec. 9. As used in this chapter, "state employee" has the meaning set forth in IC 5-10-16-7.
Sec. 10. As used in this chapter, "subaccount" means a participant's allocable share of the account.
Sec. 11. (a) The state employee early retirement health benefit trust fund is established to provide funding for the state employee early retirement program medical benefits account developed under section 12 of this chapter.
(b) The trust fund shall be administered by the budget agency. The expenses of administering the trust fund shall be paid from money in the trust fund. The trust fund consists of contributions deposited in the fund under section 16 of this chapter and other appropriations, revenues, or transfers to the trust fund under IC 4-12-1.
(c) The treasurer of state shall invest the money in the trust fund not currently needed to meet the obligations of the trust fund in the same manner as other public money may be invested.
(d) The trust fund is considered a trust fund for purposes of IC 4-9.1-1-7. Except as provided in section 19 of this chapter, money may not be transferred, assigned, or otherwise removed from the trust fund by the state board of finance, the budget agency, or any other state agency.
(e) The trust fund shall be established and administered in a manner that complies with Internal Revenue Code requirements concerning health reimbursement arrangement (HRA) trusts. Contributions by the state to the trust fund are irrevocable. All assets held in the trust fund must be held for the exclusive benefit
of participants of the state employee early retirement program
medical benefits account developed under section 12 of this chapter
and their beneficiaries. All assets in the trust fund:
(1) are dedicated exclusively to providing benefits to
participants of the plan and their beneficiaries according to
the terms of the plan; and
(2) are exempt from levy, sale, garnishment, attachment, or
other legal process.
(f) Money in the trust fund does not revert to the state general
fund at the end of any state fiscal year.
Sec. 12. (a) The budget agency shall adopt provisions to
establish a state employee early retirement program medical
benefits account as a health reimbursement arrangement or as a
separate fund under another applicable section of the Internal
Revenue Code for the purpose of funding by an employer on a
pretax basis benefits for sickness, accident, hospitalization, and
medical expenses for a participant and the spouse and dependents
of a participant.
(b) Notwithstanding any other provision of this chapter, the
budget agency may not establish the account or implement the
health reimbursement arrangement unless the state agency
provides the contribution under section 16 of this chapter or the
general assembly makes a specific appropriation to implement the
health reimbursement arrangement.
(c) The budget agency may adopt rules under IC 4-22-2 that it
considers appropriate or necessary to administer the account.
Sec. 13. The budget agency may request from the Internal
Revenue Service any rulings or determination letters that the
budget agency considers necessary or appropriate in order to
implement or administer the account.
Sec. 14. The account and subaccount records of individual
participants and participants' information are confidential, except
for the name and contributions made on behalf of the participant.
Sec. 15. The budget agency shall establish a subaccount for each
participant. Each participant's subaccount shall be credited with
the following after subtraction of the costs described in section
11(b) of this chapter:
(1) The contributions made to the account on behalf of the
participant under section 16 of this chapter.
(2) Any earnings attributable to the balance of the
subaccount.
Sec. 16. (a) A participant's employer shall make an annual
contribution to the account on behalf of the participant for five (5)
years. The five (5) year period begins the next business day
following the participant's last day of state service. The annual
amount of the contribution to the participant's subaccount is seven
thousand dollars ($7,000).
(b) The employer's first contribution shall be deposited in the
participant's subaccount not later than thirty (30) days after the
participant's last day of service with the state. Each subsequent
annual contribution shall be credited to the participant's
subaccount not later than the anniversary date of the business day
following the participant's last day in state service.
Sec. 17. (a) A participant or a surviving spouse or dependent of
the participant may use the balance in a participant's subaccount
to pay for medical expenses that qualify for a medical and dental
expense deduction under Section 213 of the Internal Revenue Code
that have not been otherwise paid under IC 5-10-8.5-18.
(b) An amount remaining in a participant's subaccount at the
end of the year may be used during a subsequent year and may be
used by a participant or a surviving spouse or dependent of a
participant to pay for medical expenses described under subsection
(a) until the participant or the surviving spouse or dependent of the
participant uses the total amount contributed to the participant's
subaccount under section 15 of this chapter.
Sec. 18. (a) The surviving spouse or dependent of a participant
may use amounts credited to the retired participant to pay health
insurance and other health care related expenses to the same extent
and in the same manner as the participant.
(b) If a retired participant dies without a surviving spouse or
dependents, unused amounts credited to the retired participant are
forfeited.
Sec. 19. An amount in a participant's subaccount which is
forfeited under section 18(b) shall be used to pay administrative
expenses of the fund.
Sec. 20. The budget committee shall annually review the
financial status of the account.
Sec. 21. The amount in a participant's subaccount is in addition
to any amounts that the participant may be entitled to from an
account under IC 5-10-8.5.
Chapter 16. State Employee Early Retirement Program
Sec. 1. As used in this chapter, "budget agency" refers to the budget agency established under IC 4-12-1-3.
Sec. 2. As used in this chapter, "creditable service" refers to all service as a state employee.
Sec. 3. As used in this chapter, "department" refers to the state personnel department established by IC 4-15-1.8-2.
Sec. 4. As used in this chapter, "eligible employee" refers to a state employee who:
(1) is at least fifty-five (55) years of age; and
(2) has at least ten (10) years of creditable service.
Sec. 5. As used in this chapter, "program" refers to the state employee early retirement program established by section 8 of this chapter.
Sec. 6. As used in this chapter, "state agency" means an authority, board, branch, commission, committee, department, division, or other instrumentality of the executive, including the administrative, department of state government. The term "state agency" does not include the judicial or legislative departments of state government, nor does that term include a state educational institution.
Sec. 7. As used in this chapter, "state employee" refers to a full-time employee of a state agency.
Sec. 8. (a) The state employee early retirement program is established. The program shall be administered by the department in coordination with the budget agency.
(b) An eligible employee may make an election to participate in the program by completing an application, on forms prescribed by the department, not later than June 30, 2012.
(c) If a state employee elects to participate in the program, the employee:
(1) must separate from service with the state agency within thirty (30) days after electing to participate in the program;
(2) is entitled to receive a payment of money equal to one-half the state employee's annual salary calculated using the state employee's base salary on the last day of the employee's state service after electing to participate in the program, minus federal, state, and local taxes withheld by the state agency. The state agency shall pay the employee the payment in a lump sum from money appropriated to the state agency for personnel services or operating expenses within sixty (60) days after the employee's last day of service with the state agency;
(3) may receive:
(A) a normal retirement benefit under IC 5-10.2-4-1.8 or IC 5-10.3-6-8.9;
(B) an unreduced retirement benefit under IC 5-10-5.5-11; or
(C) the full amount of the basic pension amount under IC 10-12-4-5; and
(3) becomes a participant in the state employee early retirement program medical benefits account under IC 5-10-8.6.
(d) A state employee who elects to participate in the program is not eligible for reemployment with the state for five (5) years from the employee's last day of service with the state agency.
Sec. 9. A state agency shall make contributions out of money appropriated for personnel services or operating expenses on behalf of an eligible employee who elects to participate in the program to the state employee early retirement program medical benefits account in the manner provided in IC 5-10-8.6-16.
Sec. 10. The department and the budget agency may adopt emergency rules under IC 4-22-2-37.1 to carry out the purpose of this chapter.
Sec. 11. This chapter expires January 1, 2018.
(1) members of the public employees' retirement fund who retire before July 1, 1995; and
(2) members of the Indiana state teachers' retirement fund who retire before May 2, 1989.
A member who has reached age sixty-five (65) and has at least ten (10) years of creditable service is eligible for normal retirement.
(b) This subsection applies to members of the Indiana state teachers' retirement fund who retire after May 1, 1989, except as provided in section 1.8 of this chapter, and to members of the public employees' retirement fund who retire after June 30, 1995, except as provided in section 1.7 or 1.8 of this chapter. A member is eligible for normal retirement if:
(1) the member is at least sixty-five (65) years of age and has at least ten (10) years of creditable service;
(2) the member is at least sixty (60) years of age and has at least fifteen (15) years of creditable service; or
(3) the member's age in years plus the member's years of service
is at least eighty-five (85) and the member is at least fifty-five
(55) years of age.
(c) A member who has reached age fifty (50) and has at least fifteen
(15) years of creditable service is eligible for early retirement with a
reduced pension.
(d) A member who is eligible for normal or early retirement is
entitled to choose a retirement date on which the member's benefit
begins if the following conditions are met:
(1) The application for retirement benefits and the choice of the
date is filed on a form provided by the board.
(2) The date must be after the cessation of the member's service
and be the first day of a month.
(3) The retirement date is not more than six (6) months before the
date the application is received by the board. However, if the
board determines that a member is incompetent to file for benefits
and choose a retirement date, the retirement date may be any date
that is the first of the month after the time the member became
incompetent.
(1) who are state employees (as defined in IC 5-10-16-7);
(2) who elect to participate in the state employee early retirement program established by IC 5-10-16-8; and
(3) who retire after June 30, 2011, and before July 1, 2012.
(b) Notwithstanding section 1 of this chapter, a member is eligible for normal retirement after becoming fifty-five (55) years of age if the member:
(1) has at least ten (10) years of service; and
(2) elects to participate in the state employee early retirement program under IC 5-10-16-8.
(1) a lease or other transfer of state property to a nongovernmental entity; or
(2) a contractual arrangement with a nongovernmental entity to perform certain state functions.
(b) The governor shall request coverage under this section from the board whenever an employee of the state is terminated as described in subsection (a).
(c) The board must approve a request from the governor under subsection (b) unless approval violates subsection (k), federal or state law, or the terms of the fund.
(d) As used in this section, "early retirement" means a member is eligible to retire with a reduced pension under IC 5-10.2-4-1, because the member:
(1) is at least fifty (50) years of age; and
(2) has at least fifteen (15) years of creditable service.
The phrase does not include a member who elects to participate in the state employee early retirement program established by IC 5-10-16-8.
(e) As used in this section, "normal retirement" means:
(1) except for a member who elects to participate in the state employee early retirement program established by IC 5-10-16-8, a member is eligible to retire under IC 5-10.2-4-1, because:
(2) for a member who elects to participate in the state employee early retirement program established by IC 5-10-16-8 and retires after June 30, 2011, and before July 1, 2012, a member is eligible to retire under IC 5-10.2-4-1.8, because the member is at least fifty-five (55) years of age and has at least ten (10) years of creditable service.
(f) The withdrawal of the employees described in subsection (a) from the fund is effective on a termination date established by the board. The board may not establish a termination date that occurs before all of the following have occurred:
(1) The governor has requested coverage under this section and provided written notice of the following to the board:
(A) The intent of the state to terminate the employees from employment.
(B) The names of the terminated employees as of the date that the termination is to occur.
(2) The expiration of a thirty (30) day period following the filing of the notice with the board.
(3) The state complies with subsections (g) and (i).
(g) A member who:
(1) is an employee of the state described in subsection (a) with at least twenty-four (24) months of creditable service as of the date of the notice under subsection (f); and
(2) is listed in the notice under subsection (f);
is vested in the pension portion of the member's retirement benefit. The state must contribute to the fund the amount the board determines is necessary to completely fund the vested benefit. The contribution by the state must be made in a lump sum or in a series of payments determined by the board. The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service.
(h) A member who is covered by subsection (g) and who is at least sixty-five (65) years of age as of the date of the notice under subsection (f) may elect to retire under IC 5-10.2-4-1 even if the member has less than ten (10) years of service. The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service.
(i) A member who is covered by subsection (f) and who, as of the date of the notice under subsection (f), is less than twenty-four (24) months from being eligible for normal or early retirement under IC 5-10.2-4-1 may elect to retire by purchasing the service credit needed for retirement under the following conditions:
(1) The state shall contribute to the fund an amount determined under IC 5-10.2-3-1.2 and payable from the sources described in subsection (j) sufficient to pay the member's contributions required for the member's purchase of the service credit the member needs to retire.
(2) The maximum amount of creditable service that the state may purchase for a member under this subsection is twenty-four (24) months.
(3) The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service plus all other service for which the fund gives credit, including the creditable service purchased under this subsection.
(j) The amounts that the state is required to contribute to the fund under subsection (i) must come from the following sources:
(1) If the state receives monetary payments under the lease or contractual arrangement described in subsection (a), the proceeds
of the monetary payments received by the state. The state may not
require, as a condition of the transaction to transfer state property
or have certain state functions performed by a nongovernmental
entity, that the nongovernmental entity directly or indirectly pay
the amounts that the state is required to contribute under
subsection (i).
(2) If the state does not receive any monetary payments under the
lease or contractual arrangement described in subsection (a), any
remaining appropriations made to the state department, agency,
or other entity terminating the employees described in subsection
(a).
(3) If the sources described in subdivisions (1) and (2) do not
fully fund the amounts that the state is required to contribute to
the fund under subsection (i), the board shall request that the
general assembly appropriate the amount necessary to fully fund
the state's required contribution under subsection (i) in the next
biennial state budget.
(k) The board shall evaluate each withdrawal under this section to
determine if the withdrawal affects the fund's compliance with Section
401(a) of the Internal Revenue Code of 1954, as in effect on September
1, 1974. The board may deny an employee permission to withdraw if
the denial is necessary to achieve compliance with Section 401(a) of
the Internal Revenue Code of 1954, as in effect on September 1, 1974.
(b) Except as provided in subsection (c), an employee beneficiary who has completed less than twenty-five (25) years of service is entitled to a proportionate amount of the basic pension amount specified in section 7 of this chapter, based upon the employee beneficiary's years of service to the department. However, benefit payments to an employee beneficiary with less than twenty-five (25) years of service may not begin until the first day of the month on or after the date on which:
(1) the employee beneficiary becomes fifty (50) years of age; or
(2) the employee beneficiary retires;
whichever is later.
(c) This subsection applies to an employee beneficiary that elects to participate in the state employee early retirement program
under IC 5-10-16-8. An employee beneficiary who has completed
ten (10) years of service and who is at least fifty-five (55) years of
age is entitled to the full amount of the basic pension amount
specified in section 7 of this chapter.
(b) An emergency rule adopted under this SECTION expires on the earlier of the following:
(1) The date the budget agency adopts permanent rules under IC 4-22-2 to replace the emergency rules.
(2) January 1, 2013.
(c) This SECTION expires January 1, 2013.
