A Senate panel on Thursday unanimously endorsed slight modifications and improvements to the South Dakota Retirement system, sending the proposed package of laws to the full Senate for consideration. Senate Retirement Laws approved three pieces of legislation – SB 29, SB 30 and SB 31 - all of which were recommended by the administrators of the public pension plan.

Senate Bill 29 allows the state retirement system to offer a Roth deferred compensation plan within the supplemental retirement system. The option, made possible by the federal Small Business Jobs Act, gives public employees a chance to make additional contributions to their retirement with after-tax dollars.

Most retirement system income is taxed at the time of distribution. Individuals aren't taxed on benefits received from a Roth because the individual paid taxes on the money before investing it in the Roth plan. In certain situations, funds invested in Roth plans grow without taxes on gains or interest.

Lawmakers also endorsed SB 30, a proposed law that will give system administrators the authority to develop an alternative enhancement methodology to protect the long-term stability of the system. Retirement system officials will develop the plan, but it couldn’t be put into place without additional legislative approval.

The final bill, SB 31, makes several style and form changes to a host of retirement system statutes by cleaning up definitions, eliminating gender-specific terms and making other small amendments.

ASBSD continues to monitor the legislation.

Comments (0) | Link to this story | Send to a friend | Print Story

Comments (0) | Link to this story | Send to a friend | Print Story

Lawmakers have given initial approval to sweeping changes to South Dakota law that allows public employees to return to work after being retired.

Members of the Senate Retirement Laws Committee voted 3-2 Thursday evening to pass SB 18, legislation that will likely dramatically reduce a practice referred to “retire-rehire” by deterring public employers from hiring retirees and penalizing individuals who return to work following retirement.

Rob Wylie, executive director of the South Dakota Retirement System, asked lawmakers to adopt the changes. He told lawmakers that the proposal is designed to compensate for the costs associated with current return to work laws – a sum he estimated at $5 million annually. The changes are designed to prevent possible investigation by the IRS, Wylie said.

If the legislation passes, there would be a mandatory three-month waiting period before a retired employee can return to work. Individuals returning to work after three months would lose 15 percent of their anticipated benefit and future employer contributions – both would be paid to the South Dakota Retirement System.

ASBSD Chief Financial Officer Bill Lynch testified in opposition to the measure, arguing that the proposal infringes on a local school boards' ability to make hiring decisions. Lynch told lawmakers that current and future teacher shortages will challenge school districts, adding that school boards need all the tools available to keep qualified educators.

Joining in opposition were Jim Holbeck and Wayne Semmler, two superintendents who questioned the motives of the legislation. Both administrators argued that the changes were brought about under false pretenses and would drive educators out of state.

Two members of the committee – Gene Abdullah, R-Brandon, and Sandy Jerstad, D-Sioux Falls – were swayed by opponent testimony. But Tom Nelson, R-Spearfish Lead, Corey Brown, R-Gettysburg, and Kathy Miles, D-Sioux Falls, jointed to move the measure along. No legislators took time to explain their position on the vote.

Comments (1) | Link to this story | Send to a friend | Print Story

The Senate Retirement Laws Committee has scheduled a hearing for Jan. 21 to consider a collection of legislative proposals that will reshape return-to-work rules, limit the cost-of-living adjustments for retirees and eliminate the optional spouse protection provision.

The package – found in SB 18, SB 19 and SB 20 – was endorsed last November by the South Dakota Retirement System (SDRS) Board of Directors. According to SDRS, the changes are necessary to improve the long-term stability of the system.

Changes to the return-to-work provisions, also known as retire-rehire, are certain to draw the most attention.

The return-to-work changes (SB 18), create a mandatory three-month break in service for anyone who retires and then is rehired into any employer that pays into SDRS. The bill also contains several punitive provisions related to retire-rehire, including an SDRS surcharge to employers for allowing a retire-rehire.

SDRS officials have said the limitations to retire-rehire will make the system IRS audit-proof and save money. ASBSD supports the employment decisions of local school boards and opposes the changes to retire-rehire policies.

The package (SB 20) also includes revisions to the cost-of-living adjustment for retirees. Currently, benefit payments increase at 3.1 percent annually due to the adjustment, also referred to as COLA. If the legislation passes, COLA increases will be 2.1 to 3.1 percent each year, depending on CPI-W.

The final piece (SB 19) prohibits new enrollments in a program that allows SDRS members to purchase an optional spouse protection plan. For individuals who currently buy into the program, the contribution will increase to 1.5 percent.

Comments (0) | Link to this story | Send to a friend | Print Story