2012 Legislative Update ERS Employees Retirement System June 2012

Alabama Division

Jun 4, 2012

HB255 (Act 2012-302) requires retirement contributions on overtime pay with earnable compensation capped at 120% of base pay for all members of the TRS and ERS.

SB213 (Act 2012-412) requires members of TRS, ERS, and JRF convicted of a felony offense related to their public position to forfeit their right to lifetime retirement benefits. However, the employee would receive a refund of his or her retirement contributions. This legislation is not retroactive and does not affect any member that has already been found guilty of an offense.

SB388 (Act 2012-377) creates a Tier 2 Defined Benefit plan for all TRS and ERS members hired on or after January 1, 2013. New members will pay lower contribution rates, but will not be able to draw a retirement benefit until they reach age 62. State Police, law enforcement, firefighters, and correctional officers will be able to draw a benefit at age 56. (Local agencies that did not elect to increase employee contributions will have an increase in employee contributions.)

TIER 2 Retirement Benefits

Members hired for the first time on or after January 1, 2013:

No 25-year retirement benefits Retirement benefits for regular state employees and regular local employees at age 62

Benefits for State Police and regular and local Firefighters, Law Enforcement, Correctional Officers (FLC) at age 56

Retirement Benefit Factor:

ERS state employees, local employees, & FLC – 1.65%

State Police – 2.375%

Average Final Salary – the average of the highest five years out of the last ten years

Member Contribution Rate:

Regular State Employee & Local Employee – 6%

FLC (state and local) – 7:

State Police – 10%

No bonus years for State Police of FLC

No Sick Leave Conversion

Benefit cap of 80% of Final Average Salary

Earnable Compensation shall not exceed 120% of base pay

New disability standard for new hired

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