Using some of the excess actuarial assets of the system, the Legislature also reduced the FRS contribution rates by one percentage point. The savings are reflected, at least in the community colleges, as increased allocations to the institutions. The real innovation of HB 2393 is in establishing a defined contribution plan in which your retirement benefits are solely dependent on what the employer contributed and on the investment growth of that contribution. This defined contribution program is elective, and is in lieu of participation in the traditional FRS defined benefit plan. Participants in the new plan will be vested after completing one work year with an employer.
Benefits are payable when a participant terminates employment or dies.
Distribution of funds can be a lump sum, a direct rollover to an eligible retirement plan as defined by the Internal Revenue Code, or a periodic distribution as authorized by the State Board of Administration. Currently there are no disability benefits under this plan. An FRS member who elects to participate in the new program may retain all retirement system credit earned under his or her current program. Further benefits won't accrue, but years of service will be credited to meet the vesting requirements of the FRS plan. Or, instead of retaining the FRS plan along with the new plan, the employee may transfer over the entire amount of accumulated benefits.