AN ACT RELATIVE TO THE ANNUAL COST OF LIVING ADJUSTMENTS FOR RETIREES.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Subdivision (3) of section 21 of chapter 32 of the General Laws, as amended by section 34 of chapter 306 of the acts of 1996, is hereby further amended by inserting after paragraph (e) the following paragraph:-
(f) the preparation and filing with the general court, of a report, annually, in the month of January, on the computation of any increase in the United States Consumer Price Index and the percentage thereof in the previous year by the Commissioner of Social Security, including a statement that such increase in said Consumer Price Index during the last previous year requires a cost of living increase in the retirement allowances, pensions or annuities of eligible members, as defined in sections 102 and 103, equal to the percentage increase in the Consumer Price Index or 3 per cent, whichever is less.
SECTION 2. The first paragraph of subdivision (1) of section 22D of said chapter 32, as so appearing, is hereby amended by striking out the third, fourth and fifth sentences and inserting in place thereof the following three sentences:- The funding schedule shall be reviewed from time to time by the actuary after reviewing periodic actuarial valuation reports required by section 21 and such other reports as may be prepared pursuant to section 35H of chapter 10 and other provisions of law. Said funding schedule, and any future updates thereto, shall be designed to reduce the unfunded actuarial liability of each system accepting the provisions of this section as of January 1, 1983 to zero as of June 30, 2028; provided, however, that in the event that a system has accepted the provisions of section 102, the funding schedule, and any updates thereto, shall be designed to reduce the unfunded actuarial liability of said system to zero as of such year as the commission shall approve. Updates of the funding schedule required by changes in the projected unfunded actuarial liability as determined by any periodic actuarial valuation report pursuant to section 21 or resulting from the acceptance by a system of the provisions of section 103, may reflect the further amortization time periods authorized by said section 21 and said section 103 but shall not contravene the provisions of this section which relate to the establishment of total annual payments and the reduction in value of the pension reserve fund.
SECTION 3. Section 102 of said chapter 32 is hereby amended by striking out paragraph (a), as amended by section 53 of chapter 306 of the acts of 1996, and inserting in place thereof the following paragraph:-
(a) The actuary in the commission shall annually in the month of January file with the clerk of the house of representatives the report prepared in accordance with paragraph (f) of subdivision (3) of section 21. If the general court thereafter determines by law that a cost of living increase is required and establishes the percentage thereof, the retirement allowance, pension or annuity of every member of the state employees' system and the teachers' retirement system who has received a retirement allowance, pension or annuity on June 30 of the preceding fiscal year, or of a spouse or other beneficiary of such member who has received a retirement allowance, pension or annuity on June 30 of the prior fiscal year, shall be increased by the percentage as determined by such law. Said cost of living increase shall be funded from the investment income account of the state employees' and state teachers' systems. The sum of the dollar amount of each cost of living increase, together with the amount of retirement allowance, pension or annuity to which the cost of living per cent factor is applied, shall become the fixed retirement allowance, pension or annuity for all future purposes, including the application of subsequent cost of living adjustments in future years.
SECTION 4. Paragraph (b) of said section 102 of said chapter 32, as appearing in the 1994 Official Edition, is hereby amended by striking out, in line 57, the words "or deducted from".
SECTION 5. Said section 102 of said chapter 32, as so appearing, is hereby further amended by striking out paragraph (c) and inserting in place thereof the following paragraph:-
(c) In any case where such former employee, spouse, or other beneficiary is receiving an annual retirement allowance, pension or annuity which is $12,000 or more exclusive of additional annuity obtained by special purchase under paragraph (g) of subdivision (1) of section 22 or any similar law, the cost of living adjustment shall be in an amount determined by applying the percentum of change determined pursuant to paragraph (a) to the sum of $12,000. Whenever a cost of living adjustment is granted pursuant to said paragraph (a), the dollar amount of such increase as determined in said paragraph (a) shall be added to each retirement allowance, pension or annuity which is in excess of said maximum base amount. The sum of the dollar amount of such cost of living adjustments, together with the amount of retirement allowance, pension or annuity to which the cost of living percentum factor is applied and any amounts in excess of $12,000 shall become the fixed retirement allowance, pension or annuity for all future purposes including the application of subsequent cost of living adjustments in future years; provided, however, that the limitations of this paragraph shall continue to apply.
SECTION 6. Paragraph (d) of said section 102 of said chapter 32, as so appearing, is hereby amended by striking out, in line 89, the words "or deducted from".
SECTION 7. Paragraph (e) of said section 102 of said chapter 32, as so appearing, is hereby amended by striking out, in line 100, the word "life".
SECTION 8. Said chapter 32 is hereby further amended by adding the following section:-
Section 103. (a) Any system other than the state employees' retirement system and the teachers' retirement system may, by accepting the provisions of this section as hereinafter provided, elect to establish a cost of living adjustment calculation pursuant to this section; provided, however, that such system shall have established a funding schedule pursuant to the provisions of subdivision (6A) of section 22 or section 22D. Such election shall be made by majority vote of the board of such system, subject to the approval of the legislative body. For the purposes of this section, legislative body shall mean in the case of a city the city council in accordance with its charter, in the case of a town the town meeting, in the case of a county the county retirement board advisory council, in the case of a district the district members, and in the case of an authority the governing body. The base amount upon which such cost of living adjustment shall be calculated shall be $12,000. Acceptance of this section shall be deemed to have occurred upon the filing of certification of such votes with the commission. A decision to accept the provisions of this section may not be revoked.
(b) For each system that has accepted the provisions of this section, the board, in consultation with the commission, shall prepare a funding schedule which shall reflect the costs and the actuarial liabilities attributable to the cost of living allowance that may be paid in accordance with the provisions of this section and said schedule shall be designed to reduce the applicable retirement system's additional pension liability to zero by such year as approved by the commission. The board shall file revised funding schedules triennially with the joint committee on public service until such costs and liabilities are reduced to zero.
(c) On April 1 of each year, the commission shall send to every system that has accepted the provisions of this section the report prepared in accordance with paragraph (f) of subdivision (3) of section 21. Such report shall be subject to the review of the retirement board of such system after said April 1. In the event that the board determines that the cost of living adjustment recommended by said report shall substantially impair the funding schedule of said system, the board may elect not to pay a cost of living increase for said fiscal year and shall file notice of its election not to pay and analysis of the impact on the funding schedule with the commission within 30 days of its action. In the event that the board votes to adopt the cost of living increase recommended by said report, it shall file notice of its election to pay with the commission within 30 days of its action and the retirement allowance, pension or annuity of every member of the system who has received a retirement allowance, pension or annuity on June 30 of the prior fiscal year, or of a spouse or other beneficiary of such member who has received a retirement allowance, pension or annuity on June 30 of the prior fiscal year, shall be increased by the percentage as recommended by said report. Said cost of living increase shall be funded from the investment income account of the system. The sum of the dollar amount of each cost of living increase, together with the amount of retirement allowance, pension or annuity to which the cost of living per cent factor is applied, shall become the fixed retirement allowance, pension or annuity for all future purposes, including the application of subsequent cost of living adjustments in future years.
(d) Whenever the amount of any retirement allowance, pension or annuity is revised in accordance with the provisions of this section, the monthly payment provided for in section 13 shall be recomputed on the basis of such revised retirement allowance, pension or annuity, and one-twelfth of such new figure shall be due and payable each month. In any case where such revised retirement allowance, pension or annuity cannot be administratively determined in time for adjusting the monthly payment for July pursuant to said section 13, such cost of living adjustment shall be added to the monthly retirement allowance, pension or annuity in August or September, as the case may be.
(e) In any case where such former employee, spouse, or other beneficiary is receiving an annual retirement allowance, pension or annuity which is equal to or in excess of the maximum base amount set by the board and approved by the legislative authority pursuant to clause (i) of paragraph (a) exclusive of an additional annuity obtained by special purchase under paragraph (g) of subdivision (1) of section 22 or any similar law, the cost of living adjustment shall be in an amount determined by applying the percentum of change set by the board pursuant to said paragraph (c) to said maximum base amount. When a cost of living adjustment is granted pursuant to paragraph (c), the dollar amount of such increase as determined in said paragraph (c) shall be added to each retirement allowance, pension or annuity which is in excess of said maximum base amount. The sum of the dollar amount of such cost of living adjustments, together with the amount of retirement allowance, pension or annuity to which the cost of living percentum factor is applied and any amounts in excess of said maximum base amount shall become the fixed retirement allowance, pension or annuity for all future purposes including the application of subsequent cost of living adjustments in future years; provided, however, that the limitations of this paragraph shall continue to apply.
(f) Whenever the amount of any retirement allowance, pension or annuity is revised in accordance with the provisions of subsection (c), the monthly payment provided for in section 13 shall be recomputed on the basis of such revised retirement allowance, pension or annuity and one-twelfth of such new figure shall be due and payable each month. In any case where such revised retirement allowance, pension or annuity cannot be administratively determined in time for adjusting the monthly payment for July pursuant to said section 13, such cost of living adjustment shall be added to the monthly retirement allowance, pension or annuity in August or September, as the case may be.
(g) Notwithstanding any provision of this section to the contrary, the supplemental payments due and payable to a spouse receiving the minimum allowance under the provisions of option (d) of subdivision (2) of section 12, or under section 101, or under the provisions of chapter 526 of the acts of 1963 to any spouse, child or children under the provisions of section 12B, shall be, at all times, in an amount equal to the cumulative percentum of change in the cost of living resulting from the determination by the life actuary, with the average of the cost of living for the year 1972 serving as the basis of the comparison to be made by the actuary as set forth in paragraph (a) of section 102.
SECTION 9. Chapter 427 of the acts of 1996 is hereby amended by striking out section 14 and inserting in place thereof the following section:-
Section 14. The public employee retirement administration commission, in consultation with the Massachusetts Municipal Association, the Massachusetts Association of Contributory Retirement Systems, the state board of retirement and the teachers' retirement board, shall study and evaluate the early intervention program established by section 5B of chapter 32 of the General Laws. Said early intervention program shall be effective and shall be implemented on January 1, 1998. On or before October 1, 1997, said commission shall file the results of its study together with any recommendations with the clerk of the house of representatives who shall forward the same to the house and senate committees on ways and means and the joint committee on public service.
SECTION 10. The public employee retirement administration commission shall analyze and valuate the costs and the actuarial liabilities attributable to the cost of living benefits payable in accordance with the provisions of section 9 of this act for each retirement system that has adopted a funding schedule pursuant to subdivision (6A) of section 22 of chapter 32 of the General Laws or pursuant to section 22D of said chapter 32. On or before December 31, 1997, the commission shall file a report in writing of its findings with the joint committee on public service and with the board of each such system and with each legislative body as defined in subsection (1) of section 22D of said chapter 32 of each such system.