An Act To Amend the Retirement Laws Pertaining to Participating Local Districts
Maine Legislature, Session 126, LD 1440
Committee: Appropriations and Financial Affairs
Sponsors: ROTUNDO
Amends: 5 MRSA §18301, 5 MRSA §18309, 5 MRSA §18310, 5 MRSA §18407, 5 MRSA §18451, 5 MRSA §18451-A, 5 MRSA §18452, 5 MRSA §18453, 5 MRSA §18462, 5 MRSA §18506, 5 MRSA §18530

Legislative Document 
No. 1440 
H.P. 1034 
House of Representatives, April 24, 2013 
An Act To Amend the Retirement Laws Pertaining to Participating 
Local Districts 
Reference to the Committee on Appropriations and Financial Affairs suggested and ordered 
printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative ROTUNDO of Lewiston. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  5 MRSA §18301, sub-§5 is enacted to read: 
5.  Member contributions to Participating Local District Consolidated 
Retirement Plan.  The board may establish by rule the rate at which members who 
participate in the consolidated plan described in chapter 427 contribute to that plan.  
Rules established pursuant to this subsection are routine technical rules pursuant to 
chapter 375, subchapter 2-A. 
Sec. 2.  5 MRSA §18309, sub-§1, as amended by PL 2007, c. 491, §221, is 
further amended to read: 
1.  Contribution rate.  Except as provided in subsection subsections 2 and 3, each 
firefighter, including the chief of a fire department, employed by a participating local 
district that provides a special retirement benefit under section 18453, subsection 4 or 5, 
shall contribute to the Participating Local District Retirement Program or have pick-up 
contributions made by the employer at a rate of 8% of earnable compensation as long as 
employed as a firefighter. 
Sec. 3.  5 MRSA §18309, sub-§3 is enacted to read: 
3.  Member contributions to Participating Local District Consolidated 
Retirement Plan.  The board may establish by rule the rate at which firefighters who 
participate in the consolidated plan described in chapter 427 contribute to that plan.  
Rules adopted pursuant to this subsection are routine technical rules pursuant to chapter 
375, subchapter 2-A. 
Sec. 4.  5 MRSA §18310, sub-§1, as amended by PL 2007, c. 491, §222, is 
further amended to read: 
1.  Contribution rate.  Except as provided in subsection subsections 2 and 3, each 
police officer, including the chief of a police department, employed by a participating 
local district that provides a special retirement benefit under section 18453, subsection 7 
or 8, shall contribute to the Participating Local District Retirement Program or have 
pick-up contributions made by the employer at a rate of 8% of earnable compensation as 
long as employed as a police officer. 
Sec. 5.  5 MRSA §18310, sub-§3 is enacted to read: 
3.   Member contributions to Participating Local District Consolidated 
Retirement Plan.  The board may establish by rule the rate at which police officers who 
participate in the consolidated plan described in chapter 427 contribute to that plan.  
Rules adopted pursuant to this subsection are routine technical rules pursuant to chapter 
375, subchapter 2-A. 
Sec. 6.  5 MRSA §18407, sub-§4, as amended by PL 2009, c. 473, §§5 and 6, is 
further amended to read: 
4.  Determination of adjustment for participating local districts not covered by 
chapter 427. The cost-of-living adjustment shall be is determined as follows.  
A.  Except as provided in paragraph A-1, whenever there is a percentage increase in 
the Consumer Price Index from July 1st to June 30th, the board shall automatically 
make an equal percentage increase in retirement benefits, beginning in September, up 
to a maximum annual increase of 4%. 
A-1.  If there is a percentage decrease in the Consumer Price Index from July 1st to 
June 30th, the board shall set the percentage change at 0% for that September.  The 
adjustment for the following year must be set based on the actuarially compounded 
Consumer Price Index for both years in a cost-neutral manner.  If the Consumer Price 
Index in the subsequent year or years is not sufficient to allow for the adjustment to 
be cost-neutral for the 2 years, then the adjustment needed for cost-neutrality must 
continue to be applied to following years until such time as the cost-neutrality 
requirement is met. 
B.    Whenever the annual percentage change in the Consumer Price Index from July 
1st to June 30th exceeds 4%, the board shall make whatever adjustments in the 
retirement benefits are necessary to reflect an annual increase or decrease of 4% and 
shall report that adjustment and the actual increase or decrease in the Consumer Price 
Index to the Legislature by February 1st of the following year. 
C.    Notwithstanding any other provision of this section, the amount of annual 
retirement benefit otherwise payable under this Part may not be less than the retired 
member received on the effective date of his retirement or on July 1, 1977, whichever 
amount is greater. 
Sec. 7.  5 MRSA §18407, sub-§6, as amended by PL 1993, c. 595, §10, is further 
amended to read: 
6.  Eligibility.  Cost-of-living adjustments under this section subsection 4 must be 
applied to the retirement benefits of all retirees who have been retired for at least 6 
months before the date that the adjustment becomes payable. Beneficiaries of deceased 
retirees and members are eligible for the cost-of-living adjustment at the same time the 
deceased retiree would have become eligible. 
Sec. 8.  5 MRSA §18407, sub-§§7 and 8 are enacted to read: 
7.  Determination of adjustment for participating local districts covered by 
chapter 427. The cost-of-living adjustment is determined as follows. 
A.  Prior to July 1, 2014, the determination of cost-of-living adjustments for retirees 
from participating local districts covered by chapter 427 is governed by subsection 4. 
B.  Except as provided in paragraph C, whenever there is a percentage increase in the 
Consumer Price Index from July 1st to June 30th, the board shall automatically make 
an equal percentage increase in retirement benefits, beginning in September, up to a 
maximum annual increase of 3%. 
C.  If there is a percentage decrease in the Consumer Price Index from July 1st to 
June 30th, the board shall set the percentage change at 0% for that September.  The 
adjustment for the following year must be set based on the actuarially compounded 
Consumer Price Index for both years in a cost-neutral manner.  If the Consumer Price 
Index in the subsequent year or years is not sufficient to allow for the adjustment to 
be cost-neutral for the 2 years, the adjustment needed for the cost-neutrality must 
continue to be applied to following years until such time as the cost-neutrality 
requirement is met. 
D.  Whenever the annual percentage change in the Consumer Price Index from July 
1st to June 30th exceeds 3%, the board shall make whatever adjustments in the 
retirement benefits are necessary to reflect an annual increase of 3% and shall report 
that adjustment and the actual increase in the Consumer Price Index to the Legislature 
by February 1st of the following year. 
E.  Notwithstanding any other provision of this section, the amount of annual 
retirement benefit otherwise payable under this Part may not be less than the 
retirement member received on the effective date of retirement or on July 1, 1977, 
whichever amount is greater. 
8.  Eligibility.  Cost-of-living adjustments under subsection 7 must be applied to the 
retirement benefits of retirees as follows. 
A.  For retirees who retire prior to September 1, 2015, a cost-of-living adjustment is 
applied if the retiree has been retired for at least 6 months before the date that the 
adjustment becomes payable. 
B.  For retirees who retire on or after September 1, 2015, a cost-of-living adjustment 
is applied if the retiree has been retired for at least 12 months before the date that the 
adjustment becomes payable. 
C.  A beneficiary of a deceased retiree or member is eligible for the cost-of-living 
adjustment at the same time the deceased retiree or member would have become 
eligible. 
Sec. 9.  5 MRSA §18451, as amended by PL 2007, c. 491, §§239 to 243, is further 
amended to read: 
§18451.  Qualification for benefits for members not covered under chapter 427 
A member's qualification Qualification for service retirement benefits for a member 
not covered under chapter 427 is governed by subsection 1, 2 or 3, unless the 
requirements of section 18453 are satisfied, in which case, one or more of the subsections 
of section 18453 governs. 
1.  Member in service.  A member who is in service when reaching 60 years of age, 
or is in service after reaching 60 years of age, qualifies for a service retirement benefit if 
the member: 
A.  Retires upon or after reaching 60 years of age and has been in service for a 
minimum of one year immediately before retirement; 
D.  Except as provided in paragraph E, has at least 10 years of creditable service, 
which, for the purpose of determining completion of the 10-year requirement, may 
include creditable service as a member of the Legislative Retirement Program; or 
E.  Has at least 5 years of creditable service, which, for the purposes of determining 
completion of the 5-year requirement, may include creditable service as a member of 
the Legislative Retirement Program, and: 
(1)  Was in service on October 1, 1999; 
(2)  Had left prior to October 1, 1999 with or without withdrawing contributions 
and on or after October 1, 1999 returned to service; or 
(3)  Was first in service on or after October 1, 1999. 
2.  Member not in service.  A member who is not in service when reaching 60 years 
of age qualifies for a service retirement benefit if the member: 
A.    Retires upon or after reaching 60 years of age and, except as provided in 
paragraph D, has at least 10 years of creditable service, which, for the purpose of 
determining completion of the 10-year requirement, may include creditable service as 
a member of the Legislative Retirement Program; or 
D.  Has at least 5 years of creditable service, which, for the purposes of determining 
completion of the 5-year requirement, may include creditable service as a member of 
the Legislative Retirement Program, and: 
(1) Was in service on October 1, 1999; 
(2) Had left service prior to October 1, 1999 with or without withdrawing 
contributions and on or after October 1, 1999 returned to service; or 
(3) Was first in service on or after October 1, 1999. 
3.  Member with creditable service of 25 years or more.  A member, whether or 
not in service at retirement, who has completed 25 or more years of creditable service 
qualifies for a service retirement benefit if the member retires at any time after 
completing 25 years of service, which may include, for the purpose of meeting eligibility 
requirements, creditable service as a member of the Legislative Retirement Program 
under Title 3, section 701, subsection 8. 
3-A.  Five-year minimum creditable service requirement for eligibility to receive 
service retirement benefit at applicable age; applicability.  The minimum requirement 
of 5 years of creditable service for eligibility to receive service retirement benefits under 
subsection 1, paragraph E or subsection 2, paragraph D applies only to: 
A.  A member who is in service on October 1, 1999; 
B.  Upon return to service, a member who had left service prior to October 1, 1999 
with or without withdrawing that member's contributions and on or after October 1, 
1999 returned to service; or 
C.  A member who was first in service on or after October 1, 1999. 
For those members to whom the 5-year minimum creditable service requirement does not 
apply, the 10-year minimum creditable service requirement for eligibility to receive 
service retirement benefits remains in effect on and after October 1, 1999. 
Sec. 10.  5 MRSA §18451-A is enacted to read: 
§18451-A.  Qualification for benefits for members covered under chapter 427 
Qualification for service retirement benefits for a member covered under chapter 427 
is governed by subsection 1 or 2, unless the requirements of a special plan, as established 
by the board by rule, have been met. 
1.  Members prior to July 1, 2014.  Qualification for a service retirement benefit for 
a member covered under chapter 427 who was a member of a plan provided under 
chapter 427 prior to July 1, 2014 is governed by section 18451. 
2.  Members after June 30, 2014.  After June 30, 2014, qualification for a service 
retirement benefit for a member who was not covered under chapter 427 is governed as 
follows. 
A.  A member who is in service when reaching 65 years of age, or is in service after 
reaching 65 years of age, qualifies for a service retirement benefit if the member: 
(1)  Retires upon or after reaching 65 years of age and has been in service for a 
minimum of one year immediately before retirement; and 
(2)  Has at least 5 years of creditable service, which, for the purposes of 
determining completion of the 5-year requirement, may include creditable service 
as a member of the Legislative Retirement Program. 
B.  A member who is not in service when reaching 65 years of age qualifies for a 
service retirement benefit if the member: 
(1)  Retires upon or after reaching 65 years of age; and 
(2)  Has at least 5 years of creditable service, which, for the purposes of 
determining completion of the 5-year requirement, may include creditable service 
as a member of the Legislative Retirement Program. 
C.  A member, whether or not in service at retirement, who has completed 25 or more 
years of creditable service qualifies for a service retirement benefit if the member 
retires at any time after completing 25 years of service, which may include, for the 
purpose of meeting eligibility requirements, creditable service as a member of the 
Legislative Retirement Program. 
Sec. 11.  5 MRSA §18452, sub-§3, as enacted by PL 1985, c. 801, §§5 and 7, is 
amended to read: 
3.  Member with creditable service of 25 years or more.  The amount of the 
service retirement benefit for members qualified under section 18451, subsection 3, shall 
be is computed in accordance with subsection 1, except that:  
A.  The amount arrived at under subsection 1 shall be is reduced by applying to that 
amount the percentage that a life annuity due at age 60 years of age bears to the life 
annuity due at the age of retirement. 
B.  For the purpose of making the computation under paragraph A, the board-
approved tables of annuities in effect at the date of the member's retirement shall be is 
used. 
The amount of the service retirement benefit for members qualified under section 
18451-A, subsection 2, paragraph C is computed in accordance with subsection 1, except 
that the benefit is reduced by 6% for each year that the member's age precedes 65 years of 
age. 
Sec. 12.  5 MRSA §18453, first ¶, as enacted by PL 1985, c. 801, §§5 and 7, is 
amended to read: 
A participating local district may, by filing with the board a duly certified copy of its 
action, provide, in lieu of any other retirement benefit in this Part, special retirement 
benefit plans in this section. If a member retires after becoming qualified to retire under 
section 18451 or 18451-A, his the member's retirement benefit will must be computed in 
accordance with section 18452, if that amount is greater than the amount computed under 
this section. 
Sec. 13.  5 MRSA §18462, sub-§3, as amended by PL 2001, c. 699, §6, is further 
amended to read: 
3.  Reduction of benefits.  Upon retirement before reaching normal retirement age 
60, the service retirement benefit of a member who transferred or who was restored to 
service subject to subsection 2 shall must be reduced as follows. 
A.  If the member transferred under the provisions of subsection 2, paragraph A, the 
portion of the retirement benefit based upon creditable service earned after being 
transferred shall must be reduced in accordance with section 18452, subsection 3. 
C.  If the member was transferred subject to subsection 2, paragraph C, the retirement 
benefit shall must be reduced in accordance with section 18452, subsection 3. 
D.  If the member was transferred subject to subsection 2, paragraph D, and: 
(1)  If the member completes the service or service and age requirements for 
retirement under the special plan the member was under previously, the 
retirement benefit shall may not be reduced; or 
(2)  If the member does not complete the service or service and age requirements 
for retirement under the special plan the member was under previously, the 
retirement benefit shall must be reduced in accordance with section 18452, 
subsection 3. 
Sec. 14.  5 MRSA §18506, sub-§1, as amended by PL 2001, c. 443, §3 and 
affected by §7, is further amended to read: 
1.  Excess compensation.  If the compensation received from engaging in any 
gainful occupation by a beneficiary of a disability retirement benefit exceeds $20,000 in 
calendar year 2000 or in any subsequent calendar year exceeds that amount cumulatively 
increased or decreased by the same percentage adjustments granted under section 18407, 
subsection 4: 
A.  The excess must be deducted from the disability or service retirement benefits 
during the next calendar year, the deductions to be prorated on a monthly basis in an 
equitable manner prescribed by the board over the year or part of the year for which 
the benefits are received; and 
B.  The beneficiary shall reimburse the retirement system for any excess payments 
not deducted under paragraph A. 
Sec. 15.  5 MRSA §18506, sub-§3, as amended by PL 2007, c. 491, §245, is 
further amended to read: 
3.  Restoration to service. If any recipient of a disability retirement benefit is 
restored to service, and if the total of the recipient's monthly retirement benefit for any 
year and the recipient's total earnable compensation for that year exceed the recipient's 
average final compensation at retirement, increased or decreased by the same percentage 
adjustments as have been received under section 18407, the excess must be deducted 
from the disability retirement benefit payments during the next calendar year.  
A.  The deductions must be prorated on a monthly basis over the year or part of the 
year for which benefits are received in an equitable manner prescribed by the board. 
B.  The recipient of the disability retirement benefit shall reimburse the retirement 
system for any excess payments not deducted under this section. 
C.  If the retirement benefit payments are eliminated by operation of this subsection:  
(1)  The person again becomes a member of the Participating Local District 
Retirement Program and begins contributing at the current rate; and  
(2)  When the person again retires, the person must receive benefits computed on 
the person's entire creditable service and in accordance with the law in effect at 
that time. 
Sec. 16.  5 MRSA §18530, sub-§2, as amended by PL 2001, c. 443, §4 and 
affected by §7, is further amended to read: 
2.  Compensation from employment not covered by this article.  If any person 
who is the recipient of a disability retirement benefit receives compensation in any year 
from engaging in any gainful activity or from employment with an employer whose 
employees are not covered by this article or chapter 423, subchapter V 5, article 3-A, 
which exceeds $20,000, increased or decreased by the same percentage adjustments as 
are granted under section 18407, subsection 4, or the difference between the person's 
disability retirement benefit for that year and the person's average final compensation at 
the time that the person became a recipient of a disability retirement benefit, increased or 
decreased by the same percentage adjustments as have been granted by section 18407, 
whichever is greater: 
A.  The excess must be deducted from the disability or service retirement benefits 
during the next calendar year; the deductions to be prorated on a monthly basis in an 
equitable manner prescribed by the board over the year or part of the year for which 
the benefits are received; 
B.  The person shall reimburse the retirement system for any excess payments not 
deducted under paragraph A.  If the retirement benefit payments are eliminated by 
this subsection, the disability is deemed to no longer exist, the payment of the 
disability retirement benefit must be discontinued and, except as provided in 
paragraph C, all of the person's rights to benefits under this article cease; 
C.  If, during the first 5 years of reemployment, the person again becomes disabled, 
terminates employment and is not covered by any other disability program, the 
retirement system shall resume paying the disability retirement benefit payable prior 
to the reemployment with all applicable cost-of-living adjustments and shall provide 
rehabilitation services under section 18527 if recommended by the medical board.  If 
the benefit payable under the other disability program is not equal to or greater than 
the benefit under this article, the retirement system shall pay the difference between 
the amount of the benefit payable under the other disability program and the amount 
of the benefit payable under this article.  The executive director shall require 
examinations or tests to determine whether the person is disabled as described in 
section 18521; and 
D.  At any time before the elimination of disability retirement benefit payments by 
this subsection, the person may request that benefit payments be terminated and the 
executive director shall terminate benefit payments at the end of the month in which 
the request is received. 
SUMMARY 
This bill amends specific defined benefit plan provisions that apply to members of the 
Participating Local District Consolidated Retirement Plan administered by the Maine 
Public Employees Retirement System.  Specifically, the bill: 
1.  Allows the Board of Trustees of the Maine Public Employees Retirement System 
to establish by rule the rate at which plan members contribute; 
2.  Reduces the cost-of-living adjustment cap from 4% to 3%; 
3.  Increases from 6 to 12 months the length of time that a retiree must be retired in 
order to receive a cost-of-living increase; 
4.  Raises the normal retirement age from 60 to 65 years of age for new hires; and 
5.  Increases the early retirement reduction from 2 1/4% to 6% for new hires. 
The proposed amendments are the recommendations of the Participating Local 
District Advisory Committee, a committee established by statute that represents both the 
labor and management interests of participating local districts.