Amendment ASA1-AB318

Mandatory period of separation from covered employment

Under current law, a WRS participant who has applied to receive a retirement annuity must wait at least 30 days between terminating covered employment with a WRS employer and returning to covered employment again as a participating employee. If the participant does not wait the 30-day period, and is rehired before the expiration of the 30-day period, the participant is not eligible to receive a WRS retirement annuity. The bill provides that the participant must remain separated from covered employment under the WRS for at least 75 days in order to be an eligible rehired annuitant.

Termination of annuity for rehired annuitants

Currently, when a WRS participant terminates employment and receives an annuity he or she may return to covered employment and either terminate the annuity and again become a WRS participating employee or, instead, continue to receive the annuity, as well as wages from covered employment. If a participant does not terminate the annuity, the participant may not be a participating employee in the WRS and, in the case of state employment, is not eligible for group insurance benefits provided to participating employees, and may not use any of his or her employment service as a rehired annuitant for any WRS purposes. If the participant terminates the annuity, the participant returns to participating employee status and is eligible for all group insurance benefits provided other participating employees, as well as is able to accumulate additional years of creditable service under the WRS for the additional period of covered employment.

This bill provides that if a WRS participant who is receiving an annuity, or a disability annuitant who has attained his or her normal retirement date, is appointed to a position in covered employment in which he or she is expected to work at least one-half of what is considered full-time employment by the DETF, as determined by rule, the participant's annuity must be terminated and no annuity payment is payable until after the participant again terminates covered employment.

Under the bill, even though the participant again becomes a WRS participating employee after terminating his or her annuity, and becomes eligible to receive group insurance benefits provided to other participating employees, the participant may not accumulate additional years of creditable service under the WRS for the additional period of covered employment. Also, all WRS employee required contributions that are paid by the participant during the period in which the annuity was terminated, as well as any interest on those contributions, must be paid to the participant as a lump sum upon the reestablishment of the terminated annuity.

Termination of annuity for annuitants providing employee services

The bill also provides that if a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, enters into a contract to provide employee services with a participating employer after the bill's effective date, and he or she is expected to work at least one-half of what is considered full-time employment by DETF, as determined by rule, the participant's retirement annuity must be terminated and no annuity payment is payable until after the participant no longer provides employee services under the contract.

Two-thirds employment requirement for participation in WRS

Finally, 2011 Wisconsin Act 32 increased the number of hours that an employee must work in order to become a participating employee in the WRS, from one-third of what is considered full-time employment to two-thirds of what is considered full-time employment, as determined by DETF by rule. Under 2011 Wisconsin Act 32, this change in law did not apply to those employees who were first hired by a WRS employer before July 1, 2011, regardless of whether they were participating employees before that date. This bill provides that in order to be exempt from this change in law, employees must have been participating employees before July 1, 2011.

Because this bill relates to public employee retirement or pensions, it may be referred to the Joint Survey Committee on Retirement Systems for a report to be printed as an appendix to the bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB318-ASA1, s. 1 Section 1. 40.22 (2) (a) of the statutes, as affected by 2011 Wisconsin Act 32, is amended to read:

AB318-ASA1,3,6 40.22 (2) (a) Except as provided in sub. (2m), the employee was initially employed by a participating employer a participating employee before July 1, 2011, and is not expected to work at least one-third of what is considered full-time employment by the department, as determined by rule.

AB318-ASA1, s. 2 Section 2. 40.22 (2m) (intro.) of the statutes, as affected by 2011 Wisconsin Act 32, is amended to read:

AB318-ASA1,3,15 40.22 (2m) (intro.) An employee who was initially employed by a participating employer a participating employee before July 1, 2011, who is not expected to work at least one-third of what is considered full-time employment by the department, as determined by rule, and who is not otherwise excluded under sub. (2) from becoming a participating employee shall become a participating employee if he or she is subsequently employed by the state agency or other participating employer for either of the following periods:

AB318-ASA1, s. 3 Section 3. 40.26 (1) of the statutes is amended to read:

AB318-ASA1,4,6 40.26 (1) Except as provided in sub. (1m) and ss. 40.05 (2) (g) 2. and 40.23 (1) (am), if a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, receives earnings that are subject to s. 40.05 (1) or that would be subject to s. 40.05 (1) except for the exclusion specified in s. 40.22 (2) (L), the annuity shall be terminated and no annuity payment shall be payable after the month in which the participant files with the department a written election to be included within the provisions of the Wisconsin retirement system as a participating employee.

AB318-ASA1, s. 4 Section 4. 40.26 (1m) of the statutes is created to read:

AB318-ASA1,4,14 40.26 (1m) (a) If a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, is appointed to a position in covered employment after the effective date of this paragraph .... [LRB inserts date], in which he or she is expected to work at least one-half of what is considered full-time employment by the department, as determined by rule, the participant's annuity shall be terminated and no annuity payment shall be payable until after the participant terminates covered employment.

AB318-ASA1,4,22 (b) If a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, enters into a contract to provide employee services with a participating employer after the effective date of this paragraph .... [LRB inserts date], and he or she is expected to work at least one-half of what is considered full-time employment by the department, as determined by rule, the participant's annuity shall be terminated and no annuity payment shall be payable until after the participant no longer provides employee services under the contract.

AB318-ASA1, s. 5 Section 5. 40.26 (2) (intro.) of the statutes is amended to read:

AB318-ASA1,5,3 40.26 (2) (intro.) Upon termination of an annuity under sub. (1) or (1m), the retirement account of the participant whose annuity is so terminated shall be reestablished on the following basis:

AB318-ASA1, s. 6 Section 6. 40.26 (2) (c) of the statutes is amended to read:

AB318-ASA1,5,8 40.26 (2) (c) Except as provided in pars. (a) and, (b), and (d), the retirement account shall be reestablished as if the terminated annuity had never been effective, including crediting of interest and of any contributions made and creditable service earned during the period the annuity was in force.

AB318-ASA1, s. 7 Section 7. 40.26 (2) (d) of the statutes is created to read:

AB318-ASA1,5,14 40.26 (2) (d) 1. Notwithstanding s. 40.02 (17) and (33), a participant who terminates an annuity under sub. (1m) may not receive any creditable service during the period in which the annuity was terminated, nor may any earnings received during the period in which the annuity was terminated be used for purposes of recalculating the participant's final average earnings.

AB318-ASA1,5,19 2. All employee required contributions under s. 40.05 (1) (a) that are paid by a participant who terminates an annuity under sub. (1m), during the period in which the annuity was terminated, as well as any interest on those contributions, shall be paid to the participant as a lump sum upon the reestablishment of the terminated annuity.

AB318-ASA1, s. 8 Section 8. 40.26 (5) (intro.) of the statutes is amended to read:

AB318-ASA1,5,25 40.26 (5) (intro.) If a participant applies for an annuity or lump sum payment during the period in which less than 30 75 days have elapsed between the termination of employment with a participating employer and becoming a participating employee with any participating employer, all of the following shall apply:

AB318-ASA1, s. 9 Section 9. Nonstatutory provisions.

AB318-ASA1,6,12 (1) Promulgation of emergency rules for reentry into service. The department of employee trust funds may use the procedure under section 227.24 of the statutes to promulgate rules under section 40.26 (1m) of the statutes, as created by this act. Notwithstanding section 227.24 (1) (c) and (2) of the statutes, emergency rules promulgated under this subsection remain in effect until January 1, 2013, or the date on which permanent rules take effect, whichever is sooner. Notwithstanding section 227.24 (1) (a) and (3) of the statutes, the department is not required to provide evidence that promulgating a rule under this subsection as an emergency rule is necessary for the preservation of the public peace, health, safety, or welfare and is not required to provide a finding of emergency for a rule promulgated under this subsection.

AB318-ASA1, s. 10 Section 10. Initial applicability.

AB318-ASA1,6,17 (1) The treatment of section 40.26 (5) (intro.) of the statutes first applies to participating employees under the Wisconsin Retirement System who terminate covered employment under the Wisconsin Retirement System on the effective date of this subsection.

AB318-ASA1,6,18 (End)