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28th Legislature(2013-2014)

Bill Text 28th Legislature


00 Enrolled HB 385                                                                                                         
01 Relating to the past service liabilities of the defined benefit plan in the teachers' retirement                        
02 system and the defined benefit plan in the public employees' retirement system, and to excess                           
03 assets of those plans on termination of the plans; and providing for an effective date.                                 
04                           _______________                                                                               
05    * Section 1. AS 14.25.181(b) is amended to read:                                                                   
06            (b)  If, upon termination of the plan, all liabilities are satisfied, any excess                             
07       assets shall be deposited in the general fund, [REVERT TO THE EMPLOYERS AS                                    
08       DETERMINED BY THE ADMINISTRATOR] subject to the approval of the                                                   
09       termination by the Internal Revenue Service.                                                                    
10    * Sec. 2. AS 37.10.220(a) is amended to read:                                                                      
11            (a)  The board shall                                                                                         
12                 (1)  hold regular and special meetings at the call of the chair or of at                                
13       least five members; meetings are open to the public, and the board shall keep a full                              
01       record of all its proceedings;                                                                                    
02                 (2)  after reviewing recommendations from the Department of                                             
03       Revenue, adopt investment policies for each of the funds entrusted to the board;                                  
04                 (3)  determine the appropriate investment objectives for the defined                                    
05       benefit plans established under the teachers' retirement system under AS 14.25 and the                            
06       public employees' retirement system under AS 39.35;                                                               
07                 (4)  assist in prescribing the policies for the proper operation of the                                 
08       systems and take other actions necessary to carry out the intent and purpose of the                               
09       systems in accordance with AS 37.10.210 - 37.10.390;                                                              
10                 (5)  provide a range of investment options and establish the rules by                                   
11       which participants can direct their investments among those options with respect to                               
12       accounts established under                                                                                        
13                      (A)  AS 14.25.340 - 14.25.350 (teachers' retirement system                                         
14            defined contribution individual accounts);                                                                   
15                      (B)  AS 39.30.150 - 39.30.180 (State of Alaska Supplementary                                       
16            Annuity Plan);                                                                                               
17                      (C)  AS 39.35.730 - 39.35.750 (public employees' retirement                                        
18            system defined contribution individual accounts); and                                                        
19                      (D)  AS 39.45.010 - 39.45.060 (public employees' deferred                                          
20            compensation program);                                                                                       
21                 (6)  establish the rate of interest that shall be annually credited to each                             
22       member's individual contribution account in accordance with AS 14.25.145 and                                      
23       AS 39.35.100 and the rate of interest that shall be annually credited to each member's                            
24       account in the health reimbursement arrangement plan under AS 39.30.300 -                                         
25       39.30.495; the rate of interest shall be adopted on the basis of the probable effective                           
26       rate of interest on a long-term basis, and the rate may be changed from time to time;                             
27                 (7)  adopt a contribution surcharge as necessary under AS 39.35.160(c);                                 
28                 (8)  coordinate with the retirement system administrator to have an                                     
29       annual actuarial valuation of each retirement system prepared to determine system                                 
30       assets, accrued liabilities, and funding ratios and to certify to the appropriate                                 
31       budgetary authority of each employer in the system                                                                
01                      (A)  an appropriate contribution rate for normal costs; and                                        
02                      (B)  an appropriate contribution rate for liquidating any past                                     
03            service liability; in this subparagraph, the appropriate contribution rate                               
04            for liquidating the past service liability of the defined benefit retirement                             
05            plan under AS 14.25.009 - 14.25.220 or the past service liability of the                                 
06            defined benefit retirement plan under AS 39.35.095 - 39.35.680 must be                                   
07            determined by a level percent of pay method based on amortization of the                                 
08            past service liability for a closed term of 25 years;                                                    
09                 (9)  review actuarial assumptions prepared and certified by a member                                    
10       of the American Academy of Actuaries and conduct experience analyses of the                                       
11       retirement systems not less than once every four years, except for health cost                                    
12       assumptions, which shall be reviewed annually; the results of all actuarial assumptions                           
13       prepared under this paragraph shall be reviewed and certified by a second member of                               
14       the American Academy of Actuaries before presentation to the board;                                               
15                 (10)  contract for an independent audit of the state's actuary not less                                 
16       than once every four years;                                                                                       
17                 (11)  contract for an independent audit of the state's performance                                      
18       consultant not less than once every four years;                                                                   
19                 (12)  obtain an external performance review to evaluate the investment                                  
20       policies of each fund entrusted to the board and report the results of the review to the                          
21       appropriate fund fiduciary;                                                                                       
22                 (13)  by the first day of each regular legislative session, report to the                               
23       governor, the legislature, and the individual employers participating in the state's                              
24       retirement systems on the financial condition of the systems in regard to                                         
25                      (A)  the valuation of trust fund assets and liabilities;                                           
26                      (B)  current investment policies adopted by the board;                                             
27                      (C)  a summary of assets held in trust listed by the categories of                                 
28            investment;                                                                                                  
29                      (D)  the income and expenditures for the previous fiscal year;                                     
30                      (E)  the return projections for the next calendar year;                                            
31                      (F)  one-year, three-year, five-year, and 10-year investment                                       
01            performance for each of the funds entrusted to the board; and                                                
02                      (G)  other statistical data necessary for a proper understanding                                   
03            of the financial status of the systems;                                                                      
04                 (14)  submit quarterly updates of the investment performance reports to                                 
05       the Legislative Budget and Audit Committee;                                                                       
06                 (15)  develop an annual operating budget; and                                                           
07                 (16)  administer pension forfeitures required under AS 37.10.310 using                                  
08       the procedures of AS 44.62 (Administrative Procedure Act).                                                        
09    * Sec. 3. AS 39.35.115(e) is amended to read:                                                                      
10            (e)  If, upon termination of the plan, all liabilities are satisfied, any excess                             
11       assets shall be deposited in the general fund [REVERT TO THE EMPLOYERS AS                                     
12       DETERMINED BY THE ADMINISTRATOR], subject to the approval of the                                                  
13       termination by the Internal Revenue Service.                                                                      
14    * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to                          
15 read:                                                                                                                   
16       TRANSITION: REINITIALIZE AMORTIZATION OF PAST SERVICE LIABILITY                                                   
17 OF RETIREMENT SYSTEMS. The Alaska Retirement Management Board shall, based on a                                         
18 level percent of pay method, reinitialize the amortization of the past service liability of                             
19            (1)  the defined benefit retirement plan under AS 14.25.009 - 14.25.220 for a                                
20 term beginning July 1, 2014, and ending June 30, 2039;                                                                  
21            (2)  the defined benefit retirement plan under AS 39.35.095 - 39.35.680 for a                                
22 term beginning July 1, 2014, and ending June 30, 2039.                                                                  
23    * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to                          
24 read:                                                                                                                   
25       RETROACTIVITY. Sections 2 and 4 of this Act are retroactive to April 21, 2014.                                    
26    * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).                                                 
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