House Bill No. 112

Introduced By ahner

By Request of the Teachers' Retirement Board

A Bill for an Act entitled: "An Act providing for a biennial postretirement adjustment for retired teachers; providing a state contribution; revising eligibility requirements; amending sections 19-20-711, 19-20-712, and 19-20-713, MCA; and providing an immediate effective date."

Be it enacted by the Legislature of the State of Montana:

NEW SECTION. Section 1.  State contribution -- biennial postretirement adjustment. (1) The state shall contribute monthly to the pension trust fund a sum equal to 0.40% of the compensation reported to the retirement system each month.

(2) The amount received by the retirement system under subsection (1) must be deposited into a reserve fund to be used in each odd-numbered year to pay a postretirement adjustment pursuant to 19-20-713.

Section 2.  Section 19-20-711, MCA, is amended to read:

"19-20-711.   Eligibility for postretirement adjustment. (1) Except as provided in subsection (2), a member retiree or beneficiary is eligible to receive a postretirement adjustment, as provided in 19-20-713, if he the retiree or beneficiary is receiving a:

(a)  service is receiving a monthly retirement allowance and is 55 60 years of age or older on or before June 30 in the year that the postretirement adjustment is made; or and

(b)  disability or survivorship allowance.

(2)  A member or beneficiary is ineligible to receive a postretirement adjustment under subsection (1) unless he has been receiving a monthly service, disability, or survivorship

(b) has been receiving the monthly retirement allowance for at least 24 60 consecutive months on or before June 30 in the year that the adjustment is made."

Section 3.  Section 19-20-712, MCA, is amended to read:

"19-20-712.   Funding for postretirement adjustment -- reserve fund. (1) At the end of each fiscal year, the board shall determine the total investment income earned minus any unrealized gains or losses on the retirement fund for that fiscal year. From this amount, the board shall subtract the:

(a)  actuarial amount required to fund the retirement system for the fiscal year amount equivalent to the actuarially required investment yield; and

(b)  retirement system's administrative and investment expenses for the fiscal year.

(2)  (a) From the remainder obtained in subsection (1), the board shall calculate the amount of investment income earned on that portion of the retirement fund balance representing retired members.

(b)  The board shall deposit the amount calculated in subsection (2)(a) in a reserve fund.

(3)  Subject to the restrictions contained in subsections (4) and (5), the board shall annually use 90% of the amount in the reserve fund provided for in subsection (2)(b) to pay a postretirement adjustment to eligible members retirees or beneficiaries under 19-20-713.

(4)  If the amount in the reserve fund is insufficient to provide an average monthly postretirement adjustment of at least $1 under 19-20-713, an adjustment may not be made in that calendar year.

(5)  The amount available for payment of the postretirement allowance adjustment under 19-20-713 is limited to an amount that would provide a percentage increase in the average service, disability, or survivorship allowance of all eligible members, when combined with the postretirement adjustment, that is equal to or less than the percentage increase for the previous calendar year in the annual average consumer price index for urban wage earners and workers compiled by the bureau of labor statistics, United States department of labor, or its successor agency."

Section 4.  Section 19-20-713, MCA, is amended to read:

"19-20-713.   Payment and amount of postretirement adjustment. (1) Effective January 1 of following each year that funds are available under 19-20-712 and in each odd-numbered year that funds are available pursuant to [section 1], a member retiree or beneficiary eligible under 19-20-711 shall must receive a postretirement adjustment in the form of a monthly benefit payable for life.

(2)  The board shall calculate the amount of the postretirement allowance payable to an eligible member retiree or beneficiary by:

(a)  dividing the amount available under 19-20-712(3) and [section 1] for payment of the postretirement allowance by the total accumulated years of service for all eligible members retirees and beneficiaries;

(b)  multiplying the quotient obtained in subsection (2)(a) by the member's retiree's total years of service at the time of retirement;

(c)  dividing the product obtained in subsection (2)(b) by a factor for calculating a monthly annuity retirement allowance from actuarial tables adopted by the board; and

(d)  applying the provisions contained in subsections (3) and (4).

(3)  If a member retiree had elected to receive an optional retirement allowance, the amount of his the retiree's postretirement allowance must be adjusted by the appropriate optional factor.

(4)  If more than one beneficiary is receiving a member's retiree's retirement allowance, the postretirement adjustment must be divided in the same manner as the member's retiree's retirement allowance."

NEW SECTION. Section 5.  Codification instruction. [Section 1] is intended to be codified as an integral part of Title 19, chapter 20, part 7, and the provisions of Title 19, chapter 20, part 7, apply to [section 1].

NEW SECTION. Section 6.  Effective date. [This act] is effective on passage and approval.