Resolve, To Reform Public Retirement Benefits and Eliminate Social Security Offsets
Maine Legislature, Session 124, LD 1431
Committee: Labor
Sponsors: MILLS

FIRST REGULAR SESSIO~~-2009 
Legislative Document 
No. 1431 
S.P.515 
In Senate, April 7, 2009 
Resolve, To Reform Public Retirement Benefits and Eliminate 
Social Security Offsets 
Reference to the Committee on Labor suggested andordered printed. 
9tg(J~ 
JOY J. O'BRIEN. 
Secretary of the Senate 
Presented by Senator MILLS of Somerset. 
Printed on ft!cyded paper 
Sec. 1. Design of unified pension and benefit plan for all state employees 
and teachers who are first employed with the State after December 31, 2010. 
Resolved: That the Maine Public Employees Retirement System, the Commissioner of 
Administrative and Financial Services and the State Employee Health Commission, 
collectively referred to in this resolve as "the .task force," shall, within their existing 
resources, design in accordance with this resolve a unified pension and benefit plan, 
referred to in this resolve as "the plan," to apply to all state employees and teachers who 
are first hired after December 31,2010 with no prior creditable service. 
1. Definitions. For purposes of this resolve, the following terms have the following 
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meanings. 
A. "Teacher" has the same meaning as in the Maine Revised Statutes, Title 5, section 
17001, subsection 42. 
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B. "State employee" includes: 
(1) Employees as defined in Title 5, section 17001, subsection 40; 
(2) Judges entitled to retirement benefits under Title 4, chapter 27 or 29; 
(3) Members of the State Police; and 
(4) Legislators entitled to retirement benefits under Title 3, chapter 29. 
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2. Health plan. The task force shall design the hea!th plan component of the plan in 
accordance with this subsection and may propose additional variations on the plan. 
A. All active members of the plan and their dependents must be entitled to 
membership in the health plan. Assessments for coverage under the health plan must 
. be imposed and budgeted in accordance with Title 5, section 286-A. The proportion 
of the assessment paid on behalf of lr;embers by their employers must be in 
accordance with the law existing on the effective date of this resolve orin accordance 
with applicable collective bargaining agreements. 
B. Every active member of the plan and the spouse and dependents of each such 
member may continue coverage under the health plan in retirement if criteria for 
eligibility are met as prescribed in Title 5, section 285, subsection I-A. The task force 
may recommend changes in eligibility criteria. 
C. The health plan premium for any eligible retired member and any covered spouse 
or dependent of the member must be paid from the Bureau of Human Resources' 
State Employee Health Dedicated Revenue Account established in Title 5, section 
286-A. Each retired member must be entitled to 3 % of the premium for each year of 
creditable service up to a maximum of 90% of the total premium. For a covered 
spouse or dependent, the subsidy is 1.5% of the premium for each year of the 
member's creditable service up to a maximum of 45% of the premium. 
D. The present actuarial cost of the future benefit subsidy for retired state employees 
and teachers must be paid 1/2 by the employee and 1/2 by the employer. Payments as 
calculated and assessed by the Commissioner of Administrative and Financial 
Services must be remitted on a regular and periodic basis to the Bureau of Human 
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Resources' State Employee Health Dedicated Revenue Account established in Title 5, 
section 286-A. 
3. Pension plan. The task force shall design Hie pension plan component of the plan 
in accordaJlce with tIus subsection and may propose additional variations on the plan. 
A. Every member of the plan must contribute to both Social Security and Medicare, 
and the employer of each member must contribute the employer's share of Social 
SecUlity and Medicare. 
B. Each active member of the plan must be entitled to a supplemental defined benefit 
pension calculated as a percentage of base compensation for each year of service. 
Base compensation equals the income received in the 5th lughest calendar year of 
service. Benefits are vested after 6 years. 
C. Normal pension benefits commence after 30 years of service or at 62 years of age, 
whichever occurs first. 
D. A member who separates from service before nomlal retirement rriay: 
(1) If the member has at least 6 years of service in the plan, leave the member's 
coritributionsand interest on account in the plan until the member retires at 62 
years of age, with those benefits adjusted each year by an amount equal to the 
Consumer Pri~e Index, up to an annual maximum of 3.5%; 
(2) Withdraw 1:5 times the amount of the member's own contributions, plus 6% 
interest, with the option to roll the amount withdrawn into a tax-sheltered 
account; 
(3) Purchase one or more irrevocable annuities or, with a spouse, joint life 
annuities, to commence at any future time and to end. either at death or .at the 
annuitant's normal retirement age for Social Security. The annui~y values must 
equal 1.8 times the member's own contributions plus 6% interest. The Maine 
Public Employees Retirement System may serve as the annuity underwriter; or 
(4) Use a combination of the options under subparagraphs (2) and (3). 
E. The combined actuarial cost of retiree health insurance and supplemental defined 
pension benefits may not exceed 6% of aggregate payroll for all members. The cost 
of the plan must be divided equally between the member and the member's employer. 
F. The actuarial cost of the retiree health benefit, expressed as a percentage of 
payroll, must be deducted from the 6% payroll charge, and the remainder must be 
allocated to the funding- of a defined benefit system that w'i11 be expressed as a 
percentage of base payroll, rounded to the nearest tenth of a percent; and be it further 
Sec. 2. Report. Resolved: That the task force shall submit a report on its design . 
of the plan, together with any necessary implementing legislation, to the Joint Standing 
Committee on Labor by December 10, 2009. After receipt and review of the report, the 
joint standing committee may report out a bill to the Second Regular Session of the 124th 
Legislature. 
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SUMMARY 
This resolve directs the Maine Public Employees Retirement System, the 
Commissioner of Administrative and Financial Services and the State Employee Health 
Commission, within their existing resoUrces, _to design a unified pension and benefit plan 
to apply to all state employees and ,teachers that are first hired after December 31, 20 I 0, 
It authorizes submi~sion of the proposed unified pension and benefit plan, together with 
proposed implementing legislation, to the Joint Standing Committee on Labor no later 
than December 10, 2009 and authorizes the committee to report out a bill to the Second 
Regular Session of the 124th Legislature. Under this unified pension and benefit plan: 
1. In order to enhance portability of benefits and eliminate the issues associated with 
the government pension offset and the windfall elimination provision of the federal Social 
Security Act, every state employee and teacher subject to the plan will be covered under 
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Social Security; 
2. All new employees will be members of a common health plan with benefits that 
are identical to those paid for in accordance with current law and collective bargaining 
contracts; 
3. In addition to Medicare and Social Security, each member will be entitled to a 
supplemental defined pension and retiree health benefit; 
4. The present actuarial cost of retiree benefits under the plan will be limited to 6% of 
payroll to be divided equally between the employee and the employer; 
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5. Continuing health coverage will be offered to retirees and their dependents; 
6. A retired member may receive a subsidy of up to 90% of the cost for the retiree's 
own health insurance and up to 45% of the cost of a spouse or dependent. The level of 
subsidy will be graduated to reflect length of service; 
7. The future cost of retiree health benefits will be paid into an existing dedicated 
revenue accolint by assessing the current payroll of active members a percentage that is' 
divided equally between the member and the member's employer; 
8. Each member's supplemental defined pension will be calculated as a percentage of 
base year compensation times years of service. The percentage, rounded to the nearest 
' tenth, will be calculated based on funding available after deducting the cost of the retiree 
health benefit from the 6% total benefit cost; and 
9. A vested member may retire after 30 years of service or at 62 years of age, 
whichever occurs first. A member who retires early may recover 1.5 times the member's 
own contribution plus 6% interest if benefits are withdrawn as cash, or 1.8 times the 
member's own contribution plus 6% interest if the benefits are withdrawn in the form of 
an annuity. 
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