SB 1227 Summary

• Creates Tier 2 hybrid defined contribution retirement plan for public school employees hired on or after July 1, 2010, with 2% mandatory employee contributions matched at 50% by employers, replacing traditional defined benefit plan for new hires.

• Establishes incentivized early retirement window through September 1, 2010 for eligible members with enhanced benefit calculations (1.6% or 1.55% of final average compensation) and allows up to 2,500 extensions of retirement dates through September 1, 2011.

• Implements 3% employee contribution to health care funding account effective July 1, 2010 (reduced to 1.5% for employees earning under $18,000 in first year), with employer contributions to be deducted and remitted as employer contributions.

• Restricts retirants who return to work after July 1, 2010 from receiving retirement allowances if earnings exceed one-third of final average compensation, with forfeiture of health care benefits until termination of employment.

• Requires separate 7% investment return assumption for Tier 2 plan versus 8% for Tier 1, with department administration of Tier 2 as fiduciary and trustee independent of traditional retirement board rulemaking authority.