WEST virginia Legislature

2020 regular session

Introduced

Senate Bill 757

By Senators Prezioso, Baldwin, Beach, Facemire, Hardesty, Ihlenfeld, Jeffries, Lindsay, Palumbo, Plymale, Romano, Stollings, Unger, and Woelfel

[Introduced February 12, 2020; referred
to the Committee on Pensions; and then to the Committee on Finance]
 

A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new section, designated §5-10-22m; and to amend said code by adding thereto a new section, designated §18-7A-26x, all relating to an annual cost-of-living adjustment to certain retirees of the Public Employees Retirement System and the State Teachers Retirement System.

Be it enacted by the Legislature of West Virginia:

CHAPTER 5. GENERAL POWERS AND AUTHORITY OF THE GOVERNOR, SECRETARY OF STATE AND ATTORNEY GENERAL; BOARD OF PUBLIC WORKS; MISCELLANEOUS AGENCIES, COMMISSIONS, OFFICES, PROGRAMS, ETC.

ARTICLE 10. WEST VIRGINIA PUBLIC EMPLOYEES RETIREMENT ACT.

§5-10-22m. Annual cost-of-living adjustments.

(a) Except as provided in subsection (b) of this section, each fiscal year, the Board of Trustees shall adjust retirement benefits paid to retirees of the system as provided in this section. The adjustment provided by this section applies to any retiree who currently receives an annual retirement annuity. This adjustment is subject to any applicable limitations under section 415 of the Internal Revenue Code of 1986, as amended.

(b) An initial cost-of-living adjustment may not be made until the second July 1 after the day preceding the effective date of an allowance.

(c) A cost-of-living adjustment does not apply to:

(1) Benefits paid in a single payment;

(2) The return of accumulated contributions; or

(3) Benefits attributable to additional contributions.

(d) Computation of cost-of-living rate. -- (1) Except as provided in subdivision (2) of this subsection, and subject to subsection (g) of this section, to determine the cost-of-living rate used to adjust an allowance in a fiscal year, the Board of Trustees shall:

(A) Subtract the Consumer Price Index for the calendar year ending December 31 in the second preceding fiscal year from the Consumer Price Index for the calendar year ending December 31 in the preceding fiscal year; and

(B) Divide the amount determined under paragraph (A) of this subdivision by the Consumer Price Index for the calendar year ending December 31 in the second preceding fiscal year.

(2) The cost-of-living rate used to adjust an allowance in a fiscal year may not exceed three percent.

(e) The cost-of-living adjustment as of July 1 of a fiscal year shall be determined by multiplying the cost-of-living rate determined in subsection (d) of this section by the initial allowance.

(f) Total allowance payable in fiscal year. The total allowance payable in any fiscal year shall be the sum of:

(1) The initial allowance;

(2) The cost-of-living adjustment;

(3) The accumulated cost-of-living adjustment amount; and

(4) Any additional annuity.

(g) “Zero-rate fiscal year” defined and effect.

(1) In this subsection, “zero-rate fiscal year” means any fiscal year when the cost-of-living rate calculated under subsection (d) of this section is less than zero percent.

(2) For any fiscal year in which the cost-of-living rate determined under subsection (d) of this section is less than zero percent, the cost-of-living rate for that fiscal year shall be zero percent.

(3) In a fiscal year that is not a zero-rate fiscal year:

(A) Subject to paragraph (B) of this subdivision:

(i) For a fiscal year that follows immediately after a zero-rate fiscal year, the cost-of-living rate determined under subsection (d) of this section shall be reduced by the difference between zero percent and the cost-of-living rate that would have been determined under subsection (d) of this section for the preceding fiscal year without regard to subdivision (2) of this subsection; and

(ii) For a fiscal year that follows immediately after two or more consecutive zero-rate fiscal years, the cost-of-living rate determined under subsection (d) of this section shall be reduced by the difference between zero percent and the total cost-of-living rate that would have been determined under subsection (d) of this section for each of those fiscal years without regard to subdivision (2) of this subsection.

(B) If the rate reduction required for any fiscal year under paragraph (A) of this subdivision would reduce the cost-of-living rate for the fiscal year to be less than zero percent, the difference between zero percent and the excess rate reduction shall be deducted from the cost-of-living rate in future years, subject to subdivision (2), until the total required rate reduction has been fully applied.

CHAPTER 18.  EDUCATION.

ARTICLE 7A. STATE TEACHERS RETIREMENT SYSTEM.

§18-7A-26x. Annual cost-of-living adjustments.

(a) Except as provided in subsection (b) of this section, each fiscal year, the retirement board shall adjust retirement benefits paid to retirees of the system as provided in this section. The adjustment provided by this section applies to any retiree who currently receives an annual retirement annuity. This adjustment is subject to any applicable limitations under section 415 of the Internal Revenue Code of 1986, as amended.

(b) An initial cost-of-living adjustment may not be made until the second July 1 after the day preceding the effective date of an allowance.

(c) A cost-of-living adjustment does not apply to:

(1) Benefits paid in a single payment;

(2) The return of accumulated contributions; or

(3) Benefits attributable to additional contributions.

(d) Computation of cost-of-living rate. -- (1) Except as provided in subdivision (2) of this subsection, and subject to subsection (g) of this section, to determine the cost-of-living rate used to adjust an allowance in a fiscal year, the retirement board shall:

(A) Subtract the Consumer Price Index for the calendar year ending December 31 in the second preceding fiscal year from the Consumer Price Index for the calendar year ending December 31 in the preceding fiscal year; and

(B) Divide the amount determined under paragraph (A) of this subdivision by the Consumer Price Index for the calendar year ending December 31 in the second preceding fiscal year.

(2) The cost-of-living rate used to adjust an allowance in a fiscal year may not exceed three percent.

(e) The cost-of-living adjustment as of July 1 of a fiscal year shall be determined by multiplying the cost-of-living rate determined in subsection (d) of this section by the initial allowance.

(f) Total allowance payable in fiscal year. -- The total allowance payable in any fiscal year shall be the sum of:

(1) The initial allowance;

(2) The cost-of-living adjustment;

(3) The accumulated cost-of-living adjustment amount; and

(4) Any additional annuity.

(g) “Zero-rate fiscal year” defined and effect.

(1) In this subsection, “zero-rate fiscal year” means any fiscal year when the cost-of-living rate calculated under subsection (d) of this section is less than zero percent.

(2) For any fiscal year in which the cost-of-living rate determined under subsection (d) of this section is less than zero percent, the cost-of-living rate for that fiscal year shall be zero percent.

(3) In a fiscal year that is not a zero-rate fiscal year:

(A) Subject to paragraph (B) of this subdivision:

(i) For a fiscal year that follows immediately after a zero-rate fiscal year, the cost-of-living rate determined under subsection (d) of this section shall be reduced by the difference between zero percent and the cost-of-living rate that would have been determined under subsection (d) of this section for the preceding fiscal year without regard to subdivision (2) of this subsection; and

(ii) For a fiscal year that follows immediately after two or more consecutive zero-rate fiscal years, the cost-of-living rate determined under subsection (d) of this section shall be reduced by the difference between zero percent and the total cost-of-living rate that would have been determined under subsection (d) of this section for each of those fiscal years without regard to subdivision (2) of this subsection.

(B) If the rate reduction required for any fiscal year under paragraph (A) of this subdivision would reduce the cost-of-living rate for the fiscal year to be less than zero percent, the difference between zero percent and the excess rate reduction shall be deducted from the cost-of-living rate in future years, subject to subdivision (2), until the total required rate reduction has been fully applied.

NOTE: The purpose of this bill is to provide an annual cost-of-living adjustment for certain retirees.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.