Summary of 2019 Legislation
This summary provides a quick description of legislative bills signed by the Governor as they relate to NDPERS benefits.
As you read this summary, notice there are different effective dates and some bills purely provide flexibility to enhance how NDPERS benefits are administered.
This bill does not impact the current NDPERS Health Insurance plan. It simply provides flexibility for the health insurance plan to be structured as a self-funded health insurance plan if the Board decides that is in our participants’ best interests.
NDPERS currently operates as a modified fully-insured health plan where the "health insurance carrier" carries the financial risk in making sure all insurance claims can be covered. If NDPERS were to move to a self-funded plan, NDPERS would be responsible for ensuring there is enough money to cover all insurance claims.
This bill does not impact the current NDPERS Health Insurance plan or its membership.
Effective August 1, 2019, before the NDPERS Board enters into any prescription drug coverage contracts that involve a Pharmacy Benefit Manager (PBM), the Board must ensure the PBM will grant full access to plan data.
This bill impacts the current retirees effective August 1, 2019. Retirees will be able to use the Retiree Health Insurance Credit (RHIC) for any after-tax dental, vision, and long-term care plans.
The bill also made changes to the NDPERS Internal Revenue Code section 457 Deferred Compensation Plan to allow employer contributions to the plan.
This bill ONLY impacts employees hired after December 31, 2019. When these employees (under the Defined Benefit Hybrid (Main) and the Defined Contribution Retirement Plans) retire, they will not be offered RHIC as a retirement benefit.
Why the change?
The funds previously contributed to RHIC by the employers will be reallocated to fund the Main retirement plan in an effort to restore the Main retirement plan to 100% funding.
Members of the Defined Contribution Retirement Plan hired after 1/1/2020 will have the funds reallocated directly into their account.
Final Average Salary x Years of Service x Multiplier
This bill ONLY impacts employees hired after December 31, 2019. The retirement multiplier for these employees will be reduced to 1.75% under the Defined Benefit Hybrid (Main) Retirement Plan and the Public Safety Plans. When these employees retire, their retirement benefit (pension) will be reduced.
This does not impact employees hired before January 1, 2020 or deferred members that have chosen to delay receiving their retirement benefit.
Why the change?
To help restore the Main retirement plan to its 100% funding level.
This bill impacts members who terminate employment after December 31, 2019. The bill prospectively changes the definition of "Final Average Salary" (FAS) in order to level salary fluctuations resulting from different pay schedules. The new definition of FAS will treat members similarly regardless of their pay schedule.
When members retire after December 31, 2019, they will receive the higher of the FAS determined under the old method as of December 31, 2019, or under the new method as of the date of retirement.
What is FAS?
Final Average Salary (FAS) is one of the factors used to calculate the retirement benefit (pension) for those that retire from the Defined Benefit Hybrid (Main), Judges, Public Safety, and Highway Patrol Retirement Plans.
Under the old method, which we currently use, NDPERS uses the 36 highest monthly salaries out of the last 180 months. Effective January 1, 2020, the new method will use the three highest twelve consecutive month periods out of the last 180 months.
Visit the Legislative Branch site for complete details of the 67th Assembly.