An Act To Restore Equity to the Maine Public Employees Retirement System
Maine Legislature, Session 124, LD 0292
Committee: Labor
Sponsors: SCHATZ, DAMON, CLARK, GIFFORD, HOGAN, SUTHERLAND, THERIAULT
Amends: 4 MRSA §1351, 5 MRSA §17852

Legislative Document 
No. 292 
RP,232 
House of Representatives, Febmary 2,2009 
An Act To Restore Equity to the Maine Public Employees 
Retirement System 
Reference to the Committee on Labor suggested and ordered printed, 
Presented by Representative SCHATZ of Blue Hill. 
Cosponsored by Senator DAMON of Hancock and 
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MILLICENT M. MacFARLAND 
Clerk 
Representatives: CLARK of Millinocket, GIFFORD of Lincoln, HOGAN of Old Orchard 
Beach, SUTHERLAND of Chapman, THERIAULT of Madawaska. 
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Be it enacted by the People ofthe State of Maine as follows: 
PART A 
Sec. A-1. 3 MRS A §851, sub-§2-A, as amended by PL 2007, c. 491, §26, is 
further amended to read: 
2-A. Early retirement; employed under program on June 30,1993, but less than 
years creditable service on July 1, 1993. Any member, whether or not in service at 
retirement, who on June 30, 1993 was employed in a position that is covered under the 
State Employee and Teacher Retirement Program, the Legislative Retirement Program or 
the Judicial Retirement Program but who on July 1, 1993 had less than 10 years of 
creditable service and who has completed at least 25 years of creditable service may retire 
any time before the member's 62nd birthday. Creditable service as a member of any other 
retirement program of the Maine Public Employees Retirement System may be combined 
with creditable service as a member of the Legislative Retirement Program for the 
purpose of determining the completion of 25 years of creditable service. The retirement 
allowance is determined in accordance with section 852, except that it is reduced by 6% 
3% for each year that the member's age precedes age 62. 
Sec. A-2. 3 MRS A §851, sub-§2-C is enacted to read: 
2-C. Early retirement; not employed under program on June 30, 1993 and less 
than 10 years creditable service on July 1, 1993. Any member, whether or not in 
service at retirement, who on June 30, 1993 was not employed in a position that is 
covered under the State Employee and Teacher Retirement Program, the Legislative 
Retirement Program or the Judicial Retfrement Program, and who on July 1, 1993 had 
less than 10 years creditable service, and who has completed at least 25 years of 
creditable service may retire any time before the member's 62nd birthday. Creditable 
service as a member of the Maine Public Employees Retirement System may be 
combined with creditable service as a member of the Maine Legislative Retirement 
System for the purpose of determining the completion of 25 years of creditable service. 
The retirement allowance is determined in accordance with section 852, except that it is 
reduced by 6% for each year that the member's age precedes age 62. 
Sec. A-3. 4 MRSA §1351, sub-§3-A, as amended by PL 1999, c. 756, §9, is 
further amended to read: 
3-A. Early retirement; employed under program on June 30, 1993, but less than 
years creditable service on July 1, 1993. Any member, whether or not in service at 
retirement, who on June 30, 1993 was employed in a position that is covered under the 
State Employee and Teacher Retirement Program, the Legislative Retirement Program or 
the Judicial Retirement Program but who on July 1, 1993 had less than 10 years of 
creditable service and who has completed at least 25 years of creditable service may retire 
any time before the member's 62nd birthday. The retirement allowance is determined in 
accordance with section 1352, except that the benefit is reduced by ~ 
3% for each year 
that the member's age precedes age 62. 
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Sec. A-4. 4 MRSA §1351, sub-§3-B is enacted to read: 
3-B. Early retirement; not employed under program on June 30, 1993 and less 
than 10 years creditable service on July 1, 1993. Any member, whether or not in 
service at retirement, who on June 30, 1993 was not employed in a position that is 
covered under the State Employee and Teacher Retirement Program, the Legislative 
Retirement Program or the Judicial Retirement Program, and who on July 1, 1993 had 
less than 10 years creditable service, and who has completed at least 25 years of 
creditable service, may retire any time before the member's 62nd birthday. 
The 
retirement allowance is detennined in accordance with section 1352, except that the 
benefit is reduced by 6% for each year that the member's age precedes age 62. 
Sec. A-5. 5 MRSA §17852, sub-§3-A, as amended byPL 1999, c. 489, §17, is 
further amended to read: 
3-A. Member with creditable service of 25 years or more whether or not in 
service at retirement; employed under program on June 30, 1993, but less than 10 
years of creditable service on July 1, 1993. The amount of the service retirement 
benefit for members qualified under section 17851, subsection 3, is computed in 
accordance with subsection 1, except that: 
C. 
The benefit is reduced by 6% 3% for each year that the member's age precedes 
years of age; and 
D. 
Effective October 1, 1999, the reduction to be applied to the service retirement 
benefit of a member to whom this subsection applies may not be greater than that in 
effect on October 1, 1999 under paragraph C for a member who, on October 1, 1999 
or thereafter, meets the creditable service requirement for eligibility to receive a 
service retirement benefit under section 17851, subsection l-C, paragraph A; section 
17851, subsection l-C, paragraph B; section 17851, subsection 2-C, paragraph A; 
section 17851, subsection 2-C, paragraph B; or section 17851-A, subsection 2, 
paragraph A. For a member to whom section 17851-A applies, this paragraph must 
be applied in accordance with the requirements of section 17851-A, subsection 4. 
This subsection applies to members who on June 30, 1993 were employed in a position 
that is covered under the State Employee and Teacher Retirement Program, the 
Legislative Retirement Program or the Judicial Retirement Program but who, on July 1, 
1993, do not have 10 years of creditable service. 
Sec. A-6. 5 MRS A §17852, sub-§3-B is enacted to read: 
3-B. Member with creditable service of 25 years or more whether or not in 
service at retirement; not employed under program on June 30, 1993 and less than 
years creditable service on July 1, 1993. The amount of the service retirement 
benefit for members qualified under section 17851, subsection 3 is computed in 
accordance with subsection 1, except that: 
A. The benefit is reduced by 6% for each year that the member's age precedes 62 
years of age. 
This subsection applies to members who on June 30, 1993 were not employed in a 
position that is covered under the State Employee and Teacher Retirement Program, the 
Legislative Retirement Program or the Judicial Retirement Program and who on July 1, 
1993 have less than 10 years creditable service. 
Sec. A-7. Members receiving service retirement benefits on effective date 
of Act. Members of the state employee and teacher retirement system governed by the 
Maine Revised Statutes, Title 5, chapter 423, the legislative retirement system governed 
by Title 3, chapter 29 and the judicial retirement system governed by Title 4, chapter 27 
receiving service retirement benefits on the effective date of this Act who would have 
received an increased service retirement benefit if their benefit had been calculated using 
the 3% reduction factor provided in this Act must receive such an increased benefit 
retroactive to their effective date of retirement. 
Sec. A-S. Members who retire on or after the effective date of this Act. 
As members of the state employee and teacher retirement system governed by the Maine 
Revised Statutes, Title 5, chapter 423, the legislative retirement system governed by Title 
3, chapter 29 and the judicial retirement system governed by Title 4, chapter 27 retire on 
or after the effective date of this Act, their benefits based on service earned in the 
applicable system on or after the effective date of this Act and their benefits based on 
service earned in the applicable system prior to the effective date of this Act must be 
calculated using the 3% reduction factor specified in Title 3, section 851; Title 4, section 
1351; and Title 5, section 17852. 
Sec. A-9. Funding benefits under this Act. This section provides funding for 
the benefits provided under this Act. 
1. For purposes of this section, the following tenns have the following meanings. 
A. "Cost of this Act" means the total of: 
(1) All past service liabilities created by the benefits provided in this Act; 
(2) 
The nonnal cost payments for fiscal year 2009-10 associated with the 
benefits provided in this Act; and 
(3) The fiscal year 2009-10 unfunded liability supplemental payment. 
B. "Fiscal year 2009-10 unfunded liability supplemental payment" means payment of 
an amount toward the unfunded liability that equals the first year's payment of a 20-
year amortization of the amount of the fiscal year 2008-09 unfunded liability 
payment that is deferred in order to pay the cost of this Act. 
C. "Unfunded liability" means the unfunded actuarial liability of the Maine Public 
Employees Retirement System attributable to state employees and teachers under the 
Constitution of Maine, Article IX, Section 18-B. 
D. "Unfunded liability payment" means the amount appropriated or allocated by the 
Legislature for the Maine Public Employees Retirement System as the employer 
contribution amount paid toward the unfunded liability. 
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2. Notwithstanding the Maine Revised Statutes, Title 5, section 17160, the employer 
contribution amount paid toward the unfunded liability may be less for fiscal year 2008-
than the amount paid for that purpose during fiscal year 2007-08, as long as the Board 
of Trustees of the Maine Public Employees Retirement System takes an action, consistent 
with sound actuarial practice, to reduce the required unfunded liability payment in fiscal 
year 2008-09. 
A. If, on or before the effective date of this Act, the Board of Trustees of the Maine 
Public Employees Retirement System takes an action to reduce the required unfunded 
liability payment for fiscal year 2008-09 by an amount that leaves a balance sufficient 
to fund the cost of this Act, that balance is committed by this Act to fund the cost of 
this Act. 
B. If, on or before the effective date of this Act, the Board of Trustees of the Maine 
Public Employees Retirement System does not take an action that reduces the 
required unfunded liability payment for fiscal year 2008-09 by an amount sufficient 
to fund the cost of this Act, the entire amount of the fiscal year 2008-09 unfunded 
liability payment must be applied toward the unfunded liability. 
3. 
Notwithstanding subsection 2, the entire amount of the fiscal year 2008-09 
unfunded liability payment: 
A. Must be paid over to the Maine Public Employees Retirement System; and 
B. Is deemed the employer contribution amount paid toward the unfunded liability 
for fiscal year 2008-09 for the sole purpose of calculating the required unfunded 
liability payment for fiscal year 2009-10 and thereafter pursuant to Title 5, section 
17160. 
4. Begilming in fiscal year 2010-11, the increase in the normal cost resulting from 
the benefits provided under this Act and any increase in unfunded liability payments 
resulting from the application of the 2008-09 unfunded liability payment to fund the cost 
of this Act must be appropriated or allocated by the Legislature from the General Fund or 
other appropriate funds in accordance with law. 
Sec. A-IO. Contingent effective date. Since the Constitution of Maine, Article 
IX, Section 18-A requires the Maine Public Employees Retirement System to be funded 
annually on an actuarially sound basis and prohibits the creation of unfunded liabilities 
except those resulting from experience losses, sections 1 to 8 take effect only if the Board 
of Trustees of the Maine Public Employees Retirement System, pursuant to section 9, 
takes an action to reduce the required unfunded liability payment for fiscal year 2008-09. 
Within 10 days of the effective date of tlus Act, the Board of Trustees of the Maine 
Public Employees Retirement System shall notify the Secretary of the Senate, the Clerk 
of the House of Representatives and the Revisor of Statutes whether, pursuant to section 
9, it took an action on or before the effective date of this Act to reduce the required 
unfunded liability payment for fiscal year 2008-09. 
PARTB 
Sec. B-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. 
The Maine Public Employees Retirement System, the 
Commissioner of Administrative and Financial Services and the State Employee Health 
Commission, collectively referred to in this Part as "the task force," shall, within their 
existing resources, design in accordance with this Part a unified pension and benefit plan, 
referred to in this Part 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 Part, the following terms have the following 
meanings. 
A. "Teacher" has the same meaning as in the Maine Revised Statutes, Title 5, section 
17001, subsection 42. 
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. 
2. Health plan. The task force shall design the health plan component of the plan in 
accordance with this subsection. 
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 members by their employers must be in 
accordance with the law existing on the effective date of this Part or in 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 
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Services must be remitted on a regular and periodic basis to the Bureau of Human 
Resources' State Employee Health Dedicated Revenue Account established in Title 5, 
section 286-A. 
3. Pension plan. The task force shall design the pension plan component of the plan 
in accordance with this subsection. 
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 
Security 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 highest 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 normal retirement may: 
(1) If the member has at least 6 years of service in the plan, leave the member's 
contributions and 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 Price 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 annuity 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 paragraphs Band C, subparagraphs 
(2) and (3). 
E. The actuarial cost of retiree health insurance and supplemental defined pension 
benefits, when combined, 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 will be expressed as a 
percentage of base payroll, rounded to the nearest tenth of a percent. 
Sec. B-2. Report. The task force shall submit a report on its design of the plan, 
together with any necessary implementing legislation, to the joint standing committee of 
the Legislature having jurisdiction over labor matters by December 10, 2009. 
After 
receipt and review of the report, the joint standing committee may report out a bill to the 
SUMMARY 
The Maine Public Employees Retirement System currently contains 2 separate 
benefit structures based upon the status of participants on July 1, 1993. Part A of this 
bill: 
1. Reduces the early retirement reduction factor from 6% to 3% for employees who 
were already employed in a position that is covered under the State Employee and 
Teacher Retirement Program, the Legislative Retirement Program or the Judicial 
Retirement Program on July 1, 1993, and only those employees who do not have the 
option to retire at 55 years of age under a special plan; 
2. Allows the Board of Trustees of the Maine Public Employees Retirement System 
to reduce the payment in fiscal year 2008-09 toward the unfunded actuarial liability of the 
state employee and teacher retirement program and, if such a reduction is made, to apply 
the balance of the amount appropriated for that purpose to fund the past service liabilities 
created by the benefits provided under the bill, the increase in nonnal cost in fiscal year 
2009-10 associated with the benefits provided under the bill and any increased unfunded 
liabili ty payments required in fiscal year 2009-10 resulting from the reduced unfunded 
liability contribution in fiscal year 2008-09; and 
3. Provides that the substantive changes to the Maine Public Employees Retirement 
System a<?complished by this legislation take effect only if the Board of Trustees of the 
Maine Public Employees Retirement System determines that the reduction in the required 
unfunded liability payment in fiscal year 2008-09 is consistent with sound actuarial 
practice. 
Part B of this bill 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, 2010. 
It authorizes submission of the proposed unified pension and benefit plan, together with 
proposed implementing legislation, to the joint standing conunittee of the Legislature 
having jurisdiction over labor matters 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 pOliability of benefits and eliminate the issues associated with 
the govenunent 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 
Social Security; 
2. All new employees will be members of a COlmnon health plan with benefits that 
are identical to those paid for in accordance with current law and collective bargaining 
contracts; 
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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; 
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 account 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 defmed 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 of the 
member's own contribution plus 6% interest if benefits are withdrawn as cash.