HB 1325 Summary

• Member Contributions & Chapter 175 Funds: Chapter 175 insurance tax funds received in 2012-2013 shall reduce employee contributions to 13.1%, with the city making up any shortfall; effective October 1, 2013, employee contributions are 13.1% and chapter 175 funds resume allocation to share accounts.

• BackDROP Benefit Changes: Eliminates the requirement that members elect BackDROP participation within a specific timeframe or forfeit benefits; reduces the fixed interest rate from 8.25% to 4% for retirements after May 13, 2012; requires lump sum distribution of BackDROP benefits within 6 months of termination for new retirees.

• Share Account Distributions: Members retiring on or after May 13, 2012 must take a lump sum distribution of their entire share account balance within 6 months after termination of employment; earlier retirees retain options to defer, take installments, or select annuities.

• BackDROP Loan Restrictions: Loans from BackDROP are limited to members who reached normal retirement age before May 13, 2012, or had a calculated BackDROP date of October 1, 2011 or earlier; loans become unavailable to members retiring after these dates.

• Effective Date: The act takes effect upon becoming law.