The Legislature passed a modified version of House Bill 2391, which will remove the gain sharing distribution (if any) after January 1, 2008 and replace it with the following:
For PERS and TRS Plan 1 retirees:
Beginning July 1, 2009, a cost of living adjustment of 40 cents per month, per year of service, minus the 2008 gain sharing increase to the COLA. The adjustment couldn’t decrease the annual amount of the COLA or exceed 20 cents per month, per year of service.
For PERS, TRS and SERS Plan 2 and Plan 3 members:
A member with 30 years of service who has reached age 62 will be able to retire with no reduction in benefit. The current three percent reduction per year before age 65 will be replaced with:
| Existing ERF | Retirement Age | New 2008 ERF | ||
|---|---|---|---|---|
| Reduction Factor | Portion of a Normal Benefit You Receive | Reduction Factor | Percent of a Normal Benefit You Receive | |
| 30% | 70% | 55 | 20% | 80% |
| 27% | 73% | 56 | 17% | 83% |
| 24% | 76% | 57 | 14% | 86% |
| 21% | 79% | 58 | 11% | 89% |
| 18% | 82% | 59 | 8% | 92% |
| 15% | 85% | 60 | 5% | 95% |
| 12% | 88% | 61 | 2% | 98% |
| 9% | 91% | 62 | 0% | 100% |
| 6% | 94% | 63 | 0% | 100% |
| 3% | 97% | 64 | 0% | 100% |
This will be effective for PERS Plan 2 and 3 members July 1, 2008 and effective for TRS and SERS Plan 2 and 3 members September 1, 2008.
Any member who retires under the new reduction factors can not return to work for a public employer, without forfeiting his or her pension, until age 65. That includes any work performed under a personal service contract, as a temporary or project employee, or under any other similar compensated relationship with a public employer.
Choice of Plan 3 Membership
Newly hired (July 1, 2007 and after) TRS and SERS members will have 90 days to choose between Plan 2 and Plan 3.
Final gain sharing distribution (if any) will occur January 2008
If the average rate of investment return over the previous four fiscal years is more than 10 percent, one half of the excess return will be paid out in a gain sharing benefit on January 1, 2008. This will be the final gain sharing distribution.
If a court of law should decide the repeal of gain sharing is invalid, any member who qualifies for early retirement but has not yet received a benefit under the provisions of the new law will be subject to the reductions for early retirement that were in place before passage of the new law. Additionally, if the court reinstates gain sharing, any new SERS or TRS members hired after that action would no longer have a choice between Plan 2 and Plan 3 and would be mandated into Plan 3.