The distribution was not free of controversy. Also, a large number of high-benefit Money Match retirements during 1998 were fueled by the high returns of 1996 and 1997. Because these must be matched by funds from employer reserves, an additional burden was imposed on employers. Employer contribution rates had to be raised, on average, higher than had been expected. Consequently, the Board was under pressure from some employers to reduce member distributions and make earnings available to reduce employer rates.
Board members are very aware of the difficulties faced by some local government employers, however.
After thorough consideration of possible remedies and extensive legal advice, the Board provided some relief to employers without reducing member distributions. The Board decided to allow employers to phase in their increases in up to five years and elect to amortize their unfunded liabilities in up to 38 years instead of the traditional 30 years. The Board also decided it needed further study on the option of employers participating in the variable. This would allow employers to accrue earnings at the same rates as their employees. This would be provided by SB 1135 which is now being considered.