February 21, 2012 - Offered by Representative Stroebel.
AB318-ASA2,1,5 1An Act to amend 40.22 (2) (a), 40.22 (2m) (intro.), 40.26 (1), 40.26 (2) (intro.),
240.26 (2) (c) and 40.26 (5) (intro.); and to create 40.26 (1m) and 40.26 (2) (d) of
3the statutes; relating to: post-retirement employment of annuitants under
4the Wisconsin Retirement System, participation status under the Wisconsin
5Retirement System, and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This substitute amendment makes all of the following changes with respect to
the receipt of an annuity under the Wisconsin Retirement System (WRS), the
termination of an annuity under certain conditions, and participation status under
the WRS:
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 substitute amendment 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. This provision first applies to a WRS
participating employee who terminates covered employment under the WRS on the
substitute amendment's effective date.
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 substitute amendment 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. This provision first applies to a WRS participating employee who
terminates covered employment under the WRS on the substitute amendment's
effective date.
Under the substitute amendment, 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 substitute amendment 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 substitute amendment'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. This provision first applies to a WRS
participating employee who terminates covered employment under the WRS on the
substitute amendment's effective date.

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 substitute amendment provides that in order to be
exempt from this change in law, employees must have been participating employees
before July 1, 2011.
Because this substitute amendment 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.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB318-ASA2, s. 1 1Section 1. 40.22 (2) (a) of the statutes, as affected by 2011 Wisconsin Act 32,
2is amended to read:
AB318-ASA2,3,63 40.22 (2) (a) Except as provided in sub. (2m), the employee was initially
4employed by a participating employer
a participating employee before July 1, 2011,
5and is not expected to work at least one-third of what is considered full-time
6employment by the department, as determined by rule.
AB318-ASA2, s. 2 7Section 2. 40.22 (2m) (intro.) of the statutes, as affected by 2011 Wisconsin Act
832
, is amended to read:
AB318-ASA2,3,159 40.22 (2m) (intro.) An employee who was initially employed by a participating
10employer
a participating employee before July 1, 2011, who is not expected to work
11at least one-third of what is considered full-time employment by the department,
12as determined by rule, and who is not otherwise excluded under sub. (2) from
13becoming a participating employee shall become a participating employee if he or she
14is subsequently employed by the state agency or other participating employer for
15either of the following periods:
AB318-ASA2, s. 3
1Section 3. 40.26 (1) of the statutes is amended to read:
AB318-ASA2,4,92 40.26 (1) Except as provided in sub. (1m) and ss. 40.05 (2) (g) 2. and 40.23 (1)
3(am), if a participant receiving a retirement annuity, or a disability annuitant who
4has attained his or her normal retirement date, receives earnings that are subject
5to s. 40.05 (1) or that would be subject to s. 40.05 (1) except for the exclusion specified
6in s. 40.22 (2) (L), the annuity shall be terminated and no annuity payment shall be
7payable after the month in which the participant files with the department a written
8election to be included within the provisions of the Wisconsin retirement system as
9a participating employee.
AB318-ASA2, s. 4 10Section 4. 40.26 (1m) of the statutes is created to read:
AB318-ASA2,4,1711 40.26 (1m) (a) If a participant receiving a retirement annuity, or a disability
12annuitant who has attained his or her normal retirement date, is employed in a
13position in covered employment in which he or she is expected to work at least
14one-half of what is considered full-time employment by the department, as
15determined by rule, the participant's annuity shall be terminated and no annuity
16payment shall be payable until after the participant terminates covered
17employment.
AB318-ASA2,4,2418 (b) If a participant receiving a retirement annuity, or a disability annuitant
19who has attained his or her normal retirement date, enters into a contract to provide
20employee services with a participating employer and he or she is expected to work
21at least one-half of what is considered full-time employment by the department, as
22determined by rule, the participant's annuity shall be terminated and no annuity
23payment shall be payable until after the participant no longer provides employee
24services under the contract.
AB318-ASA2, s. 5 25Section 5. 40.26 (2) (intro.) of the statutes is amended to read:
AB318-ASA2,5,3
140.26 (2) (intro.) Upon termination of an annuity under sub. (1) or (1m), the
2retirement account of the participant whose annuity is so terminated shall be
3reestablished on the following basis:
AB318-ASA2, s. 6 4Section 6. 40.26 (2) (c) of the statutes is amended to read:
AB318-ASA2,5,85 40.26 (2) (c) Except as provided in pars. (a) and, (b), and (d), the retirement
6account shall be reestablished as if the terminated annuity had never been effective,
7including crediting of interest and of any contributions made and creditable service
8earned during the period the annuity was in force.
AB318-ASA2, s. 7 9Section 7. 40.26 (2) (d) of the statutes is created to read:
AB318-ASA2,5,1410 40.26 (2) (d) 1. Notwithstanding s. 40.02 (17) and (33), a participant who
11terminates an annuity under sub. (1m) may not receive any creditable service during
12the period in which the annuity was terminated, nor may any earnings received
13during the period in which the annuity was terminated be used for purposes of
14recalculating the participant's final average earnings.
AB318-ASA2,5,1915 2. All employee required contributions under s. 40.05 (1) (a) that are paid by
16a participant who terminates an annuity under sub. (1m), during the period in which
17the annuity was terminated, as well as any interest on those contributions, shall be
18paid to the participant as a lump sum upon the reestablishment of the terminated
19annuity.
AB318-ASA2, s. 8 20Section 8. 40.26 (5) (intro.) of the statutes is amended to read:
AB318-ASA2,5,2521 40.26 (5) (intro.) If a participant applies for an annuity or lump sum payment
22during the period in which less than 30 75 days have elapsed between the
23termination of employment with a participating employer and becoming a
24participating employee with any participating employer, all of the following shall
25apply:
AB318-ASA2, s. 9
1Section 9. Nonstatutory provisions.
AB318-ASA2,6,122 (1) Promulgation of emergency rules for reentry into service. The
3department of employee trust funds may use the procedure under section 227.24 of
4the statutes to promulgate rules under section 40.26 (1m) of the statutes, as created
5by this act. Notwithstanding section 227.24 (1) (c) and (2) of the statutes, emergency
6rules promulgated under this subsection remain in effect until January 1, 2013, or
7the date on which permanent rules take effect, whichever is sooner.
8Notwithstanding section 227.24 (1) (a) and (3) of the statutes, the department is not
9required to provide evidence that promulgating a rule under this subsection as an
10emergency rule is necessary for the preservation of the public peace, health, safety,
11or welfare and is not required to provide a finding of emergency for a rule
12promulgated under this subsection.
AB318-ASA2, s. 10 13Section 10. Initial applicability.
AB318-ASA2,6,1714 (1) The treatment of section 40.26 (1), (1m), (2) (intro.), (c), and (d), and (5)
15(intro.) of the statutes first applies to participating employees under the Wisconsin
16Retirement System who terminate covered employment under the Wisconsin
17Retirement System on the effective date of this subsection.
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