Nevada Retirement News

Public Employees Retirement System
Summer 2001

Senate Bill 349 of the 2001 Legislative session is the Retirement Board's legislative package. One of the benefit enhancements contained within the bill is an increased benefit multiplier for our members. All service earned after July 1, 2001 will be earned at the rate of 2.67% of pay for each year of service credit. Service credit earned before July 1, 2001 will remain at the 2.5% of pay. This increase in the benefit multiplier applies to members in both the regular fund and the police and firemen's retirement fund.

This increased multiplier assists our members with greater benefit adequacy in retirement. Replacement income is increased thus helping our members maintain self sufficiency in their retirement years. For a 20 year career beginning July 1, 2001 this change in the multiplier provides a retirement benefit of 53.4% of pay versus the current formula which results in a retirement benefit of 50% after 20 years.

Since the base retirement benefit is higher, all calculations for post retirement increases will be calculated on this higher amount, thus increasing the post retirement adjustments as well. Examples of how the multiplier increase will work are being prepared for our members to review on our web site at www.nvpers.org.

Note: Retirement eligibility is not affected by this increased multiplier. Regular members may retire at age 65 with 5 years of service, at age 60 with 10 years of service and at any age with 30 years of service. Police and fire members may retire with 5 years of service at age 65, 10 years of police/fire service at age 55, 20 years of police/fire service at age 50 and 25 years of police/fire service at any age (See 25 and Out for Police Fire Members).

Assembly Bill 555 contains modifications to our retiree reemployment restrictions designed to assist our employers with reemployment of retirees in areas of critical labor shortage. This benefit change is the result of a study conducted under Assembly Bill 74 of the 1999 legislative session. PERS surveyed pension systems across the country regarding retiree reemployment and held well-attended employer and employee association meetings. This collaborative process resulted in the passage of this important legislation.

AB 555 lifts reemployment restrictions in positions determined by our employers to be suffering from a critical labor shortage. The governing body of the employer will make this determination. For the State of Nevada, the Board of Examiners will determine, and the Board of Regents will do so for the University and Community College System. The Supreme Court will determine positions of critical labor shortage within the judicial branch of government; the Department of Education will do so for school districts and the governing body of a local jurisdiction will do so for positions within their respective jurisdictions. When making these determinations the governing body must consider the following:

• Turnover history
• The number of positions versus qualified candidates
• The length the position has been vacant, and
• The history of out of state recruitment

Exemption from PERS' reemployment restrictions allows a retiree to return to employment with a participating public employer and continue to receive their retirement benefit at the same time There will be no cap on earnings related to that public employment for our retiree in a critical labor shortage position. The retiree will have the option to reenroll in PERS and continue to receive their retirement benefit.

Eligibility
This law allows all retirees to apply for employment in positions deemed to be experiencing a critical labor shortage. In order to be eligible you must have retired with:

• For regular members 5 years of service at age 65, 10 years of service at age 60 and 30 years of service at any age
• For police and fire members 5 years of service at age 65, 10 years of police/fire service at age 55, 20 years of police/fire service at age 50 and 25 years of police/fire service at any age

• May return to employment under AB 555 when they reach the age at which they could have retired without early retirement reduction.

Members of the Police and Firemen's Retirement Fund will enjoy an additional early retirement feature beginning July 1, 2001. Members of this fund will have the opportunity to retire after 25 years of police/fire service without an early retirement reduction applied to their benefit. This benefit was proposed in keeping with the public policy behind the creation of the Police and Firemen's Retirement Fund: to promote a youthful and vigorous front line public safety force.

If you are thinking of retiring pursuant to this provision, please call our office for more information.

Beginning January 1, 2002, single members of the plan will be able to designate a named beneficiary to receive survivor benefits in the event of the member's death prior to retirement. The named beneficiary will receive the same benefits available to our married members. The chart set forth below provides a comparison of benefits available within PERS' survivor benefit program.

*If a member was already fully eligible to retire as to age and service, this benefit would be calculated using Option 2 instead of Option 3.

**The benefit amounts under options 2 and 3 are calculated as if the member retired on the date of death, without reduction for early retirement. Therefore, these amounts will be based on each member's age, service and average compensation at the time of death.

All members, regardless of marital status, continue to have coverage for dependent children as described in the chart. A dependent child is defined as a child under the age of 18 or to age 23 if a full time, unmarried student. Incapacitated adult children may also be eligible.

This benefit becomes effective January 1, 2002. In the fall of 2001 PERS will provide election forms to our members to complete and return to PERS so that we may have your designated beneficiary for survivor benefits on file when the benefit becomes available. It is important for all members to complete the form so that PERS will have an alternate beneficiary in the event of a spouse's death.

PERS currently allows purchases of service to be made with certain types of retirement savings accounts: 401(k), conduit IRAs and other 401(a) qualified pension trusts. Congress recently passed, and the President signed into law, provisions expanding our ability to accept funds from other types of retirement savings accounts. The law does not take effect until January 1, 2002.

Beginning January 1, 2002, PERS will allow active members to purchase service with monies from 457 and 403(b) retirement savings plans. Assembly Bill 555 provides the Retirement Board with the authority to adopt policies authorizing the System to allow for such roll-ins. Some restrictions may apply once full analysis is completed on the federal legislation. PERS will update our members on this issue in future Retirement News editions.

For questions related to distributions from these types of accounts, please contact your deferred compensation representative.

The Internal Revenue Code restricts certain actions within PERS' purchase of service program. Members who first become members after January 1, 2001 and who become eligible to purchase service (meaning they attain 5 years of service in the plan) will only be allowed to purchase if they are actively employed by a participating public employer. This is a requirement for plan qualification under the Internal Revenue Code.

Additionally, if a member enters into an agreement to purchase service and defaults on the agreement but is still an active member of the system, the Internal Revenue Code requires that the member's service be prorated to the amount paid, but no refund is available. To refund while actively employed is interpreted by the Internal Revenue Service as in "in service" distribution, which is prohibited.