It is enacted by the General Assembly as follows:
SECTION 1. Section 36-8 of the general laws entitled "Retirement System -- Administration" is hereby amended by adding thereto the following section:
{ADD 36-8-20. Internal Revenue Code Qualification. -- ADD} {ADD It is intended that the retirement system satisfy the requirements of Section 401(a) of the Internal Revenue Code of 1986 as amended from time to time (hereinafter referred to as the "code"), in form and operation, to the extent that such requirements apply to a governmental plan described in section 414(d) of the code. To this end, the following provisions shall be applicable, shall be administered and interpreted in a manner consistent with maintaining the tax qualification of the retirement system, and shall supersede any conflicting provisions of chapters 8-10, inclusive, of this title, of chapter 16 of title 16, or of chapter 21 of title 45.
(a) Exclusive benefit--All funds of the retirement systems shall be held in one or more trusts, in one or more custodial accounts treated as trusts in accordance with section 401(f) of the code, or in a combination thereof. Under any such trust or custodial account, it shall be impossible at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries, for any part of the corpus or income to be used for, or diverted to, purposes other than the payment of retirement allowances and other pension benefits to employees and their beneficiaries. However, this requirement shall not prohibit: (1) the return of a contribution within six (6) months after the executive director determines that the contribution was made by a mistake of fact; or (2) the payment of expenses of the retirement system in accordance with applicable law.
(b) Vesting on Plan Termination. In the event of the termination (within the meaning of the code) of the retirement system, the accrued benefits of eligible employees shall become fully and immediately vested but only to the extent such benefits are already funded.
(c) Forfeitures -- Credits forfeited by an employee pursuant to section 36-10-8, section 16-16-31, or section 45-21-28, shall not be applied to increase the benefits of any other employee.
(d) Required distributions--Distributions shall begin to be made not later than the employee's required beginning date (as defined under section 401(a)(9) of the code) and shall be made in accordance with all other requirements of such code section.
(e) Limitation on benefits--Benefits shall not be payable to the extent that they exceed the limitations imposed by section 415 of the code.
(f) Limitation on Compensation--Benefits and contributions shall not be computed with reference to any compensation that exceeds the maximum dollar amount permitted by section 401(a)(17) of the code (as adjusted for increases in the cost-of-living). This provision shall take effect July 1, 1994, and shall apply only with respect to an employee who first becomes a member of the retirement system on or after that date.
(g) Actuarial Determination--Whenever the amount of any employee's benefit is to be determined on the basis of actuarial assumptions done by a professional actuary, such assumptions shall be specified by resolution of the retirement board.
(h) Direct Rollovers--Any individual withdrawing any distribution from the retirement system which constitutes an "eligible rollover distribution" (within the meaning of section 402(c) of the Code) may elect, in the time and manner prescribed by the retirement board and after receipt of proper notice, to have any portion of such distribution paid directly to another plan that is qualified under section 401(a) or 403(a) of the code, or to an individual retirement account or annuity described in section 408(a) or (b) of the code, in a direct rollover. ADD}
SECTION 2. Section 42-28 of the general laws entitled "State Police" is hereby amended by adding the following section:
{ADD 42-28-22.3. Separate plan and trust for retirement program of state police.-- ADD} {ADD (a) The retirement program established by section 42-28-22.1 shall constitute a separate retirement program known as the "State Police Retirement Program" which shall be deemed to be a separate plan for purposes of section 401(a) of the Internal Revenue Code of 1986, as amended. The provisions of section 36-8-20(a)-(h) shall be applicable to such program, shall be administered and interpreted in a manner consistent with maintaining the tax qualification of such program, and shall supercede any conflicting provision of law.
(b) Any trust established for the purpose of providing retirement benefits under the state police retirement program, including the trust described in section 42-28-22.1, shall be maintained pursuant to a written document which expressly provides that it shall be impossible at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries, for any part of the corpus or income of the trust to be used for, or diverted to, purposes other than the payment of retirement allowances and other pension benefits to employees and their beneficiaries. However, this requirement shall not prohibit (1) the return of a contribution made by a mistake of fact within six (6) months, or (2) the payment of expenses in accordance with applicable law; nor shall this provision restrict the collective investment of the funds of such trust with the funds of the state and municipal retirement systems or other retirement programs administered by the retirement board, as determined by the State Investment Commission. ADD}
SECTION 3. Section 36-8-15 of the General Laws in Chapter 36-8 entitled "Retirement System -- Administration" is hereby amended to read as follows:
{DEL 36-8-15. Investment of funds. -- DEL} {ADD 36-8-15. Custody and investment of funds. -- ADD} {ADD (a) All moneys immediately required for the payment of retirement allowances or other benefits shall be deemed to be held in a trust (under the laws of the state of Rhode Island) with respect to which the general treasurer is designated the trustee in accordance with section 36-8-20(a). The trustee shall only invest such funds in accordance with the written objectives and guidelines established by the state investment commission pursuant to the provisions of chapter 10 of title 35, and other applicable law. ADD}
{ADD (b) ADD} All moneys not immediately required for the payment of retirement allowances or other benefits shall be invested in accordance with the provisions of chapter 10 of title 35 {DEL . DEL} {ADD and other applicable law, and shall be held in a custodial or trust account in accordance with section 36-8-20(a).
(c) By December 31, 1994, the trust and custodial account established under this section shall be maintained pursuant to written documents which expressly provide that it shall be impossible at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries, for any part of the corpus or income to be used for or diverted to purposes other than the payment of retirement allowances and other pension benefits to employees and their beneficiaries (except as otherwise permitted by section 36-8-20(a). ADD}
SECTION 4. Section 36-10-2 of the General Laws in Chapter 36-10 entitled "Retirement System Contributions and Benefits" is hereby amended to read as follows:
{ADD 36-10-2. State contributions. -- ADD} (a) The state of Rhode Island shall make its contribution for the maintaining of the system and providing the annuities, benefits, and retirement allowances in accordance with the provisions of this chapter by annually appropriating an amount which will pay a rate percent of the compensation paid to the members. The rate percent shall be computed by the actuary of the system and certified by the retirement board to the director of administration on or before the fifteenth day of December in each year. In arriving at the rate percent the actuary, after having determined the value to the retirement system fund of (a) the contributions made by the members, (b) income on investments, and (c) other income of the system, shall thereupon compute that rate percent such as will (1) pay the actuarial estimate of the cost of "current service" for the next succeeding fiscal year; (2) pay interest at the same percent used in the actuarial formula, on the "unfunded liability" of the system as of the end of the fiscal year preceding the submission of the budget, and (3) amortize the unfunded liability of the system as of June 30, 1985, over thirty (30) years in multiples of two hundred and fifteen thousandths of one percent (.215%) starting with one multiple in the fiscal year beginning July 1, 1986, and increasing by one multiple in each successive year until the fiscal year ending June 30, 1989; and amortize the remaining unfunded liability of the system as of June 30, 1988, over twenty-seven (27) years beginning in the fiscal year beginning July 1, 1989 calculated such that each year's total unfunded liability payment increases at the assumed rate of inflation over the prior year's total payment; provided, however, that in the calculation of such rate percent, there shall not be exceeded the application of the percentages as stipulated in the following for the factors (1) and (2) set out above:
Fiscal year
beginning on (1) Current (2) Interests on
July 1 service cost unfunded liability
1979 77% 45%
1980 81% 55%
1981 86% 65%
1982 91% 75%
1983 95% 85%
1984 100% and 95%
thereafter
1985 100% and
thereafter
(b) The state of Rhode Island shall remit to the general treasurer the employer's share of the state employee retirement payments on a payroll frequency basis.
(c) From the rate percent computed above, the state shall contribute a sum equal to one-eighth of one percent (0.125%) of each member's rate of compensation and an additional sum equal to one eighth of one percent (0.125%) of each member's rate of compensation effective July 1, 1990, as the state's share of the cost of providing retiree health benefits in accordance with the provisions of section 36-10-4. Contributions shall be actuarially adjusted to reflect refunds made to employees. Such contribution shall be placed in a restricted fund by the employees' retirement system and shall be used solely for providing health benefits to retirees as provided in section 36-12-4. The adequacy of the fund will be actuarially re-evaluated during the fiscal year prior to July 1, 1993 to determine the required amount to maintain this benefit in effect. If at any time during the aforementioned period the cost for health coverage exceeds the contributions in the restricted fund account the state shall assume the liability for that cost by making advances to the restricted fund, which advances shall be repaid from any subsequent excess funds in the restricted fund.
{ADD (d) In accordance with the intent of section 36-8-20 that the retirement system satisfy the requirements of section 401(a) of the Internal Revenue Code of 1986 as amended, the restricted fund for providing health benefits to retirees described in subsection (c) shall constitute a separate retiree medical benefits account within the meaning of section 401(h) of such code, and such account shall be administered in accordance with the applicable requirements. Prior to the satisfaction of all retiree health liabilities, it shall be impossible for any part of the corpus or income of such account to be used for, or diverted to, any purpose other than the payment of retiree medical benefits in accordance with the provisions of section 36-12-4 (but this shall not restrict the collective investment of funds of such account with funds of the retirement account). Following the satisfaction of all retiree health liabilities, any funds remaining in the retiree medical benefits account shall be paid to the state.
(e) In accordance with the intent of section 36-8-20 that the retirement system satisfy the requirements of section 401(a) of the Internal Revenue Code of 1986, the state shall pay to the retirement system --
(1) By June 30, 1995, an amount equal to the sum of the benefits paid to state legislators pursuant to section 36-10-10.1 in excess of ten thousand dollars ($10,000) per member (plus accrued interest on such amount at eight percent (8%)) for all fiscal years beginning July 1, 1991, and ending June 30, 1995, but this amount shall be paid only if section 5 of this act becomes effective January 1, 1995; and
(2) By December 31, 1994, twenty million seven hundred eighty eight thousand eight hundred twelve dollars and nineteen cents ($20,788,812.19) plus accrued interest on such amount at eight percent (8%) compounded monthly beginning March 1, 1991, and ending on the date this payment is completed (reduced by amortized amounts already repaid to the retirement system with respect to the amounts withdrawn by the state during the fiscal year July 1, 1990--June 30, 1991); and
(3) By June 30, 1995, the sum of the amounts paid by the retirement system for retiree health benefits described in section 36-12-4 for all fiscal years beginning July 1, 1989, and ending June 30, 1994, to the extent that such amounts were not paid from the restricted fund described in subsection (c).
Any and all amounts paid to the retirement system under this subsection shall not increase the amount otherwise payable to the system by the state of Rhode Island under subsection (a) for the applicable fiscal year. The actuary shall make such adjustments in the amortization bases and other accounts of the retirement system as he/she deemed appropriate to carry out the provisions and intent of this subsection. ADD}
SECTION 5. Section 36-10-10.1 of the General Laws in Chapter 36-10 entitled "Retirement System Contributions and Benefits" is hereby amended to read as follows:
{ADD 36-10-10.1. Amount of service retirement allowance -- Legislators. -- ADD} (a) Every person who shall have served as a member of the senate or of the house of representatives as provided in section 36-10-9.1 shall be entitled to receive, upon retirement from service as a member of the general assembly and not otherwise regularly employed by the state of Rhode Island or any of its agencies, commissions, or bureaus, an annual sum of six hundred dollars ($600) for each year of total service as determined in section 36-10-9.1; provided however, that no person shall receive more than twelve thousand dollars ($12,000.) annually, and provided, further however, that the retirement allowance shall be diminished by the amount of any other allowance or payment in the form of wages or salary to which the person shall be entitled from the state of Rhode Island or any of its agencies, commissions, or bureaus pursuant to any other general or special law of the state of Rhode Island, excepting amounts received under the old age and survivors disability insurance program; and provided, also that if any person shall reenter service of the state of Rhode Island or any of its agencies, commissions, or bureaus in any capacity other than as a member of the senate or of the house of representatives and shall render at least two (2) years of service, he or she shall have the option of electing the service retirement allowance provided hereinabove in this paragraph or the service retirement allowance under the other provisions of this chapter. No member of the general assembly, however, shall be permitted to receive the retirement allowance while serving in the general assembly.
(b) Any member of the general assembly who was duly elected at a special election shall be entitled to receive service credit for the full year during which he or she was duly elected and certified, and any legislator serving during the January 1983 session shall be given credit for a full year, provided the legislator pays to the retirement system a lump sum amount equal to the full actuarial value of the credit as certified by the retirement board.
(c) The provisions of this section shall apply regardless of the date of retirement; provided, however, that no senator or representative, except those in service on July 1, 1983, may purchase more than four (4) years of outside time from whatever source.
(d) Any legislator, elected at the general election in 1988, or thereafter, to serve as a member of the general assembly, shall not include other credits for the purposes of this section, except military service as provided in section 36-9-31, provided however, that the provisions of this subsection 36-10-10.1(d) shall not apply to any legislator who was elected to serve as a member of the general assembly prior to the general election of 1988.
{ADD (e) If a person is entitled under section 36-10-10.1(a) to an annual retirement allowance which is in excess of that amount permitted by section 415(b)(4) of the Internal Revenue Code, the amount in excess of ten thousand dollars ($10,000) (i) shall be paid until June 30, 1995, (not withstanding the limitation on benefits imposed by section 36-8-20(e)), (relating to section 415 of the internal revenue code of 1986), and (ii) shall be paid from the retirement system after June 30, 1995, only to the extent permitted by the limitation on benefits imposed by section 36-8-20(e). Any amount not permitted to be paid by the retirement system under (ii) shall be paid out of general funds, but only to the extent that amounts have been appropriated for such payments. ADD}
SECTION 6. {ADD Effective Date--This act shall take effect upon passage, and shall apply to years beginning on or after July 1, 1994. If, prior to January 1, 1995, the Congress of the United States amends section 415 of the Internal Revenue Code of 1986 in such a manner as to make subsection (b)(1) thereof (limiting annual benefits to 100 percent of an employees' average compensation for his high 3 years) inapplicable to the retirement system, Section 5 shall not take effect. ADD}