|Date Requested:February 23, 2005
Time Requested:02:53 PM
| FUND(S) |
Sources of Revenue
Legislation creates:Neither Program nor Fund
Effect this measure will have on costs and revenues of state government.
| Actuarial Note Regarding Pension Legislation
The Bill modifies certain administrative provisions of the TDC plan. Most changes are administrative only, with no expected cost impact. Four changes that have a benefit impact are as follows:
1. Forfeiture for terminated non-vested members are to be keyed on date of termination of employment instead of distribution of their vested account balance. This could result in forfeitures occurring earlier than they otherwise would occur. The total forfeiture amount would not be expected to change.
2. Elimination of automatic required distributions for members with vested lump sum amounts of under $5,000. This provision protects members who are temporarily laid off or out of work who expect to return to covered TDC employment by allowing them to keep their account balance on deposit. This could reduce forfeitures for members who would not have repaid their prior distribution upon rehire.
3. Service for vesting is amended to include all employment service, regardless of prior distributions or repayments. This change will significantly increase vesting percentages for members who terminate, take distributions and are later rehired without repayment. Based on a review of TDC distributions and repayments, the expanded service definition will decrease the forfeitures available to participating employers.
4. Change in disability standard to the standard currently used for the Teachers Retirement System. This provides for equality among all members regardless of which plan they participate in. Current TDC standard does not require disability to be permanent and has the potential for abuse due to temporary disabilities resulting is vesting and PEIA benefits normally provided only to permanent disabilities.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||0||0||0|
|Repairs and Alterations||0||0||0|
|2. Estimated Total Revenues||0||0||0|
3. Explanation of above estimates (including long-range effect):
The Bill contains various provisions relating to the administration of the plan that should not impact the administrative costs of the Plan.
The primary TDC cost impact of the Bill relates to the impact on employer forfeiture amounts as discussed above.
The primary PEIA cost impact is due to the elimination of higher PEIA premium subsidies resulting from the permanent disability requirement.
|Although most changes in the bill are administrative in nature, the change in definition of service for vesting is a significant change that reduces forfeitures to participating employers.|