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H.547

Introduced by   Committee on Government Operations

Date:

Subject:  Executive branch; state employees; retirement; group G

Statement of purpose:  This bill proposes to:  (1) create a group G plan in the Vermont state retirement system; (2) provide state employees and teachers with an opportunity to recapture medical insurance at retirement; (3) establish tiered medical plan subsidies for state employee retirees; and (4) increase the minimum service retirement allowance for state employees and teachers.

AN ACT RELATING TO ADJUSTMENTS TO THE RETIREMENT SYSTEMS OF STATE EMPLOYEES AND TEACHERS

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  3 V.S.A. § 455 is amended to read:

§ 455.  DEFINITIONS

(a)  Unless a different meaning is plainly required by the context, the following words and phrases as used in this subchapter shall have the following meanings:

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(4)  “Average final compensation” shall mean, with respect to a group A and a, group F, or group G member, the average annual earnable compensation of such a member during the three consecutive years of his or her creditable service affording the highest such average, or during all of the years in his or her creditable service if less than three years; and, with respect to a group C member, shall mean such compensation during the two such consecutive years, or during all of his or her creditable service if less than two years.  For purposes of determining average final compensation for group A, group C, and group D members, a member who has accumulated unused sick leave at retirement shall be deemed to have worked the full normal working time for his or her position for 50 percent of such leave, at his or her full rate of compensation in effect at the date of his or her retirement.  For purposes of determining average final compensation for group F members, unused annual or sick leave, termination bonuses, and any other compensation for service not actually performed shall be excluded.  For purposes of determining average final compensation for group G members, a member who has accumulated unused sick leave at retirement shall be deemed to have worked the full normal working time for his or her position for up to 40 days at the member’s full rate of compensation in effect at the date of his or her retirement.  

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(9)  “Employee” shall mean:

(A)  any regular officer or employee of the Vermont historical society or in a department other than a person included under subdivision (B) or (C) of this subdivision (9), who is employed for not less than 40 calendar weeks in a year; and

(B)  any regular officer or employee of the department of public safety assigned to police and law enforcement duties, including the commissioner of public safety appointed before July 1, 2001; but, irrespective of the member’s classification, shall not include any member of the general assembly as such, any person who is covered by the Vermont teachers’ retirement system, any person engaged under retainer or special agreement or C beneficiary employed by the department of public safety for not more than 208 hours per year, or any person whose principal source of income is other than state employment. In all cases of doubt, the retirement board shall determine whether any person is an employee as defined in this subchapter.  Also included under this subdivision are employees of the department of liquor control who exercise law enforcement powers, employees of the department of fish and wildlife assigned to law enforcement duties, motor vehicle inspectors, full-time deputy sheriffs employed by the state of Vermont, investigators employed by the criminal division of the office of the attorney general, department of state’s attorneys, department of health or office of the secretary of state, who have attained full-time certification from the Vermont criminal justice training council, who are required to perform law enforcement duties as the primary function of their employment, and who may be subject to mandatory retirement permissible under 29 U.S.C. section 623(j), who are first included in membership of the system on or after July 1, 2000 and on or before June 30, 2005 and who has elected to remain in the group C plan.  Also included under this subdivision are full-time firefighters employed by the state of Vermont;

(C)  an employee of the department of liquor control who exercises law enforcement powers, an employee of the department of fish and wildlife assigned to law enforcement duties, a motor vehicle inspector, a full-time deputy sheriff employed by the state of Vermont, or an investigator employed by the criminal division of the office of the attorney general, the department of state’s attorneys, the department of health, or the office of the secretary of state who has attained full-time certification from the Vermont criminal justice training council, who is required to perform law enforcement duties as the primary function of his or her employment, who may be subject to mandatory retirement permissible under 29 U.S.C. § 623(j), and who is first included in membership of the system on or after July 1, 2005.

(10)  “Medical board” shall mean the board of physicians provided for in section 471 of this title.

(11)  “Member” shall mean any employee included in the membership of the retirement system under section 457 of this title.

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(F)  “Group G members” shall mean and be restricted to employees classified under subdivision (9)(C) of this subsection.

(12)  “Membership service” shall mean service rendered while a member of the retirement system.

(13)  “Normal retirement date” shall mean (A) with respect to a group A member, the first day of the calendar month next following (i) attainment of age 65, and following completion of five years of creditable service for those members hired on or after July 1, 2004 or (ii) attainment of age 62 and completion of 20 years of creditable service, whichever is earlier; (B) with respect to a group C member, the first day of the calendar month next following attainment of age 55, and following completion of five years of creditable service for those members hired on or after July 1, 2004 or completion of 30 years of service, whichever is earlier; (C) with respect to a group D member, the first day of the calendar month next following attainment of age 62 and completion of five years of creditable service; and (D) with respect to a group F member, the first day of the calendar month next following attainment of age 62, and following completion of five years of creditable service for those members hired on or after July 1, 2004, or completion of 30 years of creditable service, whichever is earlier; and (E) with respect to a group G member, the first day of the calendar month next following attainment of age 55, and following completion of five years of creditable service, or completion of 30 years of creditable service, whichever is earlier.

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Sec. 2.  3 V.S.A. § 457(d) is amended to read:

(d)  Should any group A, C, D or, F, or G member, in any period of five consecutive years after last becoming a member, be absent from service more than three years or should he the member withdraw his contributions, or become a beneficiary or die, he the member shall thereupon cease to be a member.  However, the membership of any employee entering such classes of military or naval service of the United States as may be approved by resolution of the retirement board, shall be continued during such military or naval service if he the member does not withdraw his contributions, but no such member shall be considered in the service of the state for the purpose of the retirement system during such military or naval service, except as provided in section subsection 458(e) of this title.

Sec. 3.  3 V.S.A. § 458(b) is amended to read:

(b)  All service of a group A, group C, group D or, group F, or group G member since he the member last became a member on account of which contributions are made shall be credited as membership service.

Sec. 4.  3 V.S.A. § 459 is amended to read:

§ 459.  NORMAL AND EARLY RETIREMENT

(a)  Normal retirement.

(1)  Group A, Group group D and Group, group F, and group G members.  Any group A, group D or, group F, or group G member who has reached his or her normal retirement date may retire on a normal retirement allowance on the first day of any month after his or her separation from service by filing an application in the manner outlined in subdivision (3) of this subsection.

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(b)  Normal retirement allowance.

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(6)  Upon normal retirement, a group G member shall receive a normal retirement allowance which shall be equal to 1‑2/3 percent of his or her average final compensation multiplied by the number of years of creditable service.  The maximum retirement allowance shall be 50 percent of average final compensation.

(c)  Early retirement.

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(4)  Group G members.  Any group G member who has not attained age 55 but who has attained age 50 and completed 25 years, but fewer than 30 years, of creditable service may retire on an early retirement allowance.

(d)  Early retirement allowance.

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(5)  Upon early retirement, a group G member shall receive an early retirement allowance which shall be equal to his or her normal retirement allowance computed under subsection (b) of this section.

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(f)  Beginning July 1, 1989, the normal retirement allowance for group A members shall be not less than the larger of $3,000.00 a year or 50 percent of his or her average final compensation for any member or beneficiary who has completed 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed less than 30 years of creditable service.  Beginning March 1, 1998, the service retirement allowance shall be not less than the larger of $4,200.00 a year or 50 percent of the member’s average final compensation for any member or beneficiary who has completed 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed at least five years, but less than 30 years, of creditable service.  Beginning September 1, 2005, the service retirement allowance for group A members shall be not less than the larger of $6,200.00 a year or 50 percent of his or her average final compensation for any member or beneficiary who has completed 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed less than 30 years of creditable service.

Sec. 5.  3 V.S.A. § 460 is amended to read:

§ 460.  ORDINARY DISABILITY RETIREMENT

(a)  Upon the application of a member or of his or her department head not later than 90 days, or longer for cause shown, after the date the member may have separated from service, any group A, group C, group D, or group F, or group G member who has had five or more years of creditable service may be retired by the retirement board on an ordinary disability retirement allowance, not less than 30 nor more than 90 days after filing such application; provided he or she is not eligible for accidental disability retirement; provided he or she has requested application prior to death; and provided that the medical board, after a medical examination of such member, shall certify that the member is mentally or physically incapacitated for the further performance of duty, that such incapacity has existed since the time of the member’s separation from service and is likely to be permanent, and that he or she should be retired.  The retirement board may consider, or may ask the medical board or a certified vocational rehabilitation counselor to consider whether the individual is disabled from performing other types of suitable work.  However, if disability is denied because the individual is found to be suitable for other work, the member shall be advised at the time of denial of the following provisions which shall apply:

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(b)(1)  Upon ordinary disability retirement, a group A, group D or, group F, or group G member shall receive a normal retirement allowance equal to the normal retirement benefit accrued to the effective date of the disability retirement, provided, however, that such allowance shall not be less than twenty-five 25 percent of his or her average final compensation at the time of his or her disability retirement.

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Sec. 6.  3 V.S.A. § 464(a) is amended to read:

(a)  If the retirement board shall find on the basis of such evidence as may come before it that a group A, group D, or group F, or group G member in service died prior to his or her retirement under the system as the natural and proximate result of an accident occurring at a definite time and place during the course of his or her performance of duty as an employee and that such accident was not the result of the member’s own gross negligence or willful misconduct, a retirement allowance shall be paid to his or her designated dependent beneficiary during his or her life.

Sec. 7.  3 V.S.A. § 465(c) and (f) are amended to read:

(c)  If a group A, group D, or group F, or group G member dies in service after becoming eligible for early retirement or after completing 20 years of creditable service, a retirement allowance will be payable to the member’s designated dependent beneficiary during his or her life.  If the designated dependent beneficiary so elects, however, the return of the member’s accumulated contributions shall be made in lieu thereof.

(f)  Unless the designated dependent beneficiary elects to receive payment of a deceased member’s accumulated contributions as provided under subsection (c) of this section, the retirement allowance payable to the designated dependent beneficiary of a deceased group A, group D, or group F, or group G member under this section shall be equal to the retirement allowance that would have been payable had the member elected option 3 and retired on the member’s date of death.  In the case of a member who has not attained the normal retirement date as of his or her date of death, the retirement allowance shall be computed on the basis of a disability retirement allowance or an early retirement allowance, whichever provides the greater benefit to the dependent beneficiary.  If the deceased member has no eligible dependent beneficiary, the member’s accumulated contributions shall be payable in accordance with the provisions of subsection (b) of this section.

Sec. 8.  3 V.S.A. § 470(b) is amended to read:

(b)  For group F and group G members, as of June 30 in each year, commencing January 1, 1991, a determination shall be made of the increase or decrease, to the nearest one-tenth of a percent of the Consumer Price Index for the preceding fiscal year.  The retirement allowance of each beneficiary in receipt of an allowance for at least one year on the next following December 31st shall be increased or decreased, as the case may be, by an amount equal to one-half of the percentage increase or decrease.  The increase or decrease shall commence on the January 1st immediately following such December 31st.  The adjustment shall apply to group F members receiving an early retirement allowance only in the year following attainment of age 62, provided the member has received benefits for at least 12 months as of December 31 of the year preceding any January adjustment.  The maximum adjustment of any retirement allowance resulting from any such determination shall be five percent and the minimum shall be one percent, and no retirement allowance shall be reduced below the amount payable to the beneficiary without regard to the provisions of this section.

Sec. 9.  3 V.S.A. § 473(b) is amended to read:

(b)  Annuity savings fund.

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(2)  Contributions shall be made on and after the date of establishment at the rate of five percent of compensation except at a rate of 6.18 percent of compensation for each group C member unless such member was a group C member on June 30, 1998 in which case contributions shall be at the rate of six percent of compensation for each such group C member who has elected not to have his the member’s compensation from the state be subject to social security withholding or at the rate of five percent of compensation if such member elected to have compensation from the state subject to Social Security withholding and at the rate of 3.25 percent of compensation for each group F and group G member.  In determining the amount earnable by a member in a payroll period, the retirement board may consider the annual or other periodic rate of earnable compensation payable to such member on the first day of the payroll period as continuing throughout such payroll period, and it may omit deduction from compensation for any period less than a full payroll period if an employee was not a member on the first day of the payroll period, and to facilitate the making of deductions it may modify the deduction required of any member by such an amount as, on an annual basis, shall not exceed one-tenth of one percent of the annual earnable compensation upon the basis of which such deduction is to be made.  Each of the amounts shall be deducted until the member retires or otherwise withdraws from service, and when deducted shall be paid into the annuity savings fund, and shall be credited to the individual account of the member from whose compensation the deduction was made.

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(6)  Contributions required under this subsection shall be limited to contributions from group A, group C, group D and, group F, and group G members.

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Sec. 10.  3 V.S.A. § 479 is amended to read:

§ 479.  GROUP INSURANCE

(a)  As provided under section 631 of this title, a member who is insured by the respective group insurance plans immediately preceding the member’s effective date of retirement shall be entitled to continuation of group insurance as follows:

(1)  coverage in the group medical benefit plan provided by the state of Vermont for active state employees; and

(2)  members who have completed 20 years of creditable service at their effective date of retirement shall be entitled to the continuation of life insurance in the amount of $5,000.00.

(b)  Group C members, and group A and group F members hired prior to June 30, 2005 who are eligible for early retirement at 55 with no penalty, and group D, group F, and group G members who are first included in the membership of the system on or after July 1, 2005, who separate from service prior to being eligible for retirement benefits under this chapter, who have completed at least 20 years of creditable service, and who participated in the group medical benefit plan at the time of separation from service, shall have a one‑time option at the time retirement benefits commence to participate in the group medical benefit plan as described in subsection (a) of this section with premiums for the plan prorated between the retired member and the retirement system in accordance with this section.

(c)  Premiums for coverage of retired members first included in the membership of the system on or before June 30, 2005 and their dependents in the group medical benefit plan shall be prorated on the same basis as is provided for active employees by the current collective bargaining agreement for the nonmanagement unit.  The amounts designated as the state’s share of premium for the medical benefit plan and the total premium for group life insurance provided under subdivision (a)(2) of this section shall be paid by the fund as an operating expense in accordance with subsection 473(d) of this title.

(d)  Premiums for coverage in the group medical benefit plan of retired group C members with 10 or more years of creditable service who were first included in the membership of the system on or after July 1, 2005 and their dependents shall be prorated between the members and the fund and shall be paid by the fund as an operating expense in accordance with the following:

(1)  30 percent for retired members with at least 10 years of creditable service;

(2)  50 percent for retired members with at least 15 years of creditable service;

(3)  80 percent for retired members with at least 20 years of creditable service.

(e)  Premiums for coverage in the group medical benefit plan of all retired members with 10 or more years of creditable service who were not members of group C and who were first included in the membership of the system on or after July 1, 2005 and their dependents shall be prorated between the members and the fund and shall be paid by the fund as an operating expense in accordance with the following: 

(1)  30 percent for retired members with at least 10 years of creditable service;

(2)  50 percent for retired members with at least 15 years of creditable service;

(3)  70 percent for retired members with at least 20 years of creditable service; and

(4)  80 percent for retired members with at least 25 years of creditable service.

(f)  As of September 1, 2005 and thereafter, upon retirement, members entitled to prorated group medical benefit plan premium payments from the retirement system under the terms of this section shall have a one‑time option to reduce the percentage of premium payments from the retirement system during the member’s life, with the provision that the fund shall continue making an equal percentage of premium payments after the member’s death for the life of the dependent beneficiary nominated by the member under section 468 of this title, should such dependent beneficiary survive the member.  The retirement board, after consultation with its actuary, shall establish reduced premium payment percentages that are as cost neutral to the fund as possible.

Sec. 11.  3 V.S.A. § 500(b) is amended to read:

(b)  Employees who are not members of the classified system who are first employed by the state on and after January 1, 1999 and would otherwise be members of group A, B, C, D or, F, or G of the Vermont state retirement system shall be eligible to participate in the defined contribution retirement plan.

Sec. 12.  ONE-TIME ELECTION FOR GROUP F AND GROUP C LAW

ENFORCEMENT EMPLOYEES

(a)  Employees of the department of liquor control who exercise law enforcement powers, employees of the department of fish and wildlife assigned to law enforcement duties, motor vehicle inspectors, full-time deputy sheriffs employed by the state of Vermont, investigators employed by the criminal division of the office of the attorney general, the department of state’s attorneys, the department of health, or the office of the secretary of state who are in the group F plan shall have a one-time option to transfer to the group C or the group G plan.  Election to join the group C or group G plan under this subsection shall be made by December 31, 2005 and shall be irrevocable.

(b)  Employees of the department of liquor control who exercise law enforcement powers, employees of the department of fish and wildlife assigned to law enforcement duties, motor vehicle inspectors, full-time deputy sheriffs employed by the state of Vermont, investigators employed by the criminal division of the office of the attorney general, the department of state’s attorneys, the department of health, or the office of the secretary of state who are in the group C plan shall have a one-time option to transfer to the group G plan.  Election to join the group G plan under this subsection shall be made by December 31, 2005 and shall be irrevocable.

(c)  The effective date of participation in a new group plan for those employees covered under this section and who elect to transfer shall be January 1, 2006.  All past service accrued through the date of transfer shall be calculated based upon the plan in which it was accrued, with all provisions and penalties, if applicable, applied.

Sec. 13.  16 V.S.A. § 1937(b)(4) is amended to read:

(4)  Beginning July 1, 1989, the service retirement allowance shall be not less than the larger of $4,550.00 a year or 50 percent of the member’s average final compensation for any member or beneficiary who has completed 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed less than 30 years of creditable service.  Beginning March 1, 1998, the service retirement allowance shall be not less than the larger of $6,600.00 a year or 50 percent of the member’s average final compensation for any member or beneficiary who has completed 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed at least five years, but less than 30 years, of creditable service.  Beginning September 1, 2005, the service retirement allowance shall be not less than the larger of $8,600.00 a year or 50 percent of the member’s average final compensation for any member or beneficiary who has completed 30 years or more of creditable service, nor less than a proportionate amount thereof for any member or beneficiary who has completed at least five years, but less than 30 years, of creditable service.  For this purpose, any annuity derived from the member’s contributions transferred from the existing system under section subsection 1934(c) of this title and from additional contributions made under section subdivisions 1944(b)(5) and (6) of this title shall not be included as part of the retirement allowance.

Sec. 14.  16 V.S.A. § 1944(c)(12)(G) is added to read:

(G)  As of September 1, 2005 and thereafter, upon retirement, members entitled to prorated group medical benefit plan premium payments from the retirement system under the terms of this section shall have a one‑time option to reduce the percentage of premium payments from the fund during the member’s life, with the provision that the fund shall continue making an equal percentage of premium payments after the member’s death for the life of the dependent beneficiary nominated by the member under section 1941 of this title, should such dependent beneficiary survive the member.  The retirement board, after consultation with its actuary, shall establish reduced premium payment percentages that are as cost neutral to the fund as possible.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us