Governor signs important annuity and 13th check bills
Governor Pence signed HEA 1075 and HEA 1074 today in time to meet the deadline for his signature in order for the legislation to become law.
We covered both of these bills extensively throughout the session. Below is a summary we wrote from our 2014 Legislative Wrap Up:
HEA 1075: Teachers Retirement Fund (TRF) / Public Employees Retirement Fund (PERF) Annuity Account (ASA) Program
Changes: This bill was brought forward in response to action taken by the Indiana Public Retirement System (INPRS) last June to privatize its annuity work beginning October 1, 2014 (thereby reducing by upwards of 25% ASA member benefits for those choosing to annuitize “in-house” after September 30, 2014).
ISTA members lobbied legislators for months to “undo” INPRS’ intentions. Because of that, the awareness level by rank and file legislators on this issue was extraordinarily high. The provisions in this bill changed numerous times throughout the session. Under the enacted version of this bill:
- The annuity discount rate will remain at the current 7.5% through September 30, 2014.
- Beginning October 1, 2014 through September 30, 2015, the rate will be 5.75% (which was the highest proposed rate we had seen since early in the session when the House passed the bill out).
- Beginning October 1, 2015 through December 31, 2016, the rate will be the greater of the interest rate for similar annuities being purchased in the private market as determined by INPRS or 4.5%. If interest rates increase over time, the rate will increase.
- Beginning January 1, 2017, INPRS will be permitted to outsource this work--which gives us all time to work this issue into the deeper future.
ISTA and its members never stopped advocating for a better formula and were always considered to be a lead stakeholder group working this bill.
HEA 1074: 13th Check (PERF/TRF): Provides a 13th check to PERF and TRF member retirees; delivered September 2014. Of course, ISTA prefers a cost-of-living-adjustment (COLA) as TRF/PERF members have not had a COLA since 2009. However, the 13th check will provide some assistance. The benefit structure for both PERF/TRF is as follows:
If a member has creditable service of at least:
- 5 years but less than 10 years -- $150 (only in the case of the member receiving disability retirement benefits)
- 10 years but less than 20 years -- $275
- 20 years but less than 30 years -- $375
- 30 years -- $450