PA 07-211—HB 6988
Labor and Public Employees Committee
AN ACT UPDATING THE SOCIAL SECURITY RETIREMENT AGE TO REFLECT FEDERAL CHANGES AND CONCERNING A RETIREMENT ANNUITY PROGRAM FOR MUNICIPAL EMPLOYEES
SUMMARY: This act increases the age, from 65 to the eligibility age for full Social Security retirement benefits, after which a Tier I state retiree no longer receives the additional temporary retirement benefit. This ties the cut-off for the additional benefits to the age at which people are eligible for full Social Security benefits.
Under federal law, the age that a person is eligible for full Social Security retirement benefits is increasing each year in two-month increments until it reaches age 66 in 2008 (e. g. , if someone turns 65 in 2007, he or she would not be eligible for full federal benefits until reaching age 65 and 10 months). It will stay at age 66 for 11 years, then gradually increase again until reaching age 67 in 2025.
The act also requires the comptroller, if asked by a political subdivision of the state, to allow employees of the subdivision to join the state's 403(b) deferred compensation program for state education employees. It permits the comptroller to set additional terms and conditions for employees to join the program. This annuity program is authorized under federal tax law. Political subdivisions of the state include towns, cities, boroughs, special tax districts, fire districts, water districts, and similar entities.
EFFECTIVE DATE: October 1, 2007, except the provision on the deferred compensation program takes effect upon passage.
The state employee retirement system has three tiers. Generally, employees hired before July 1, 1984 are in Tier I. Those hired on or after July 1, 1984 and before July 1, 1997 are in Tier II. Those hired on or after July 1, 1997 are in Tier IIA.
403(b) Deferred Compensation Plans
Section 403(b) of the Internal Revenue Code allows employees of public educational institutions to elect to defer a portion of their current earnings and invest those earnings, tax-free, until withdrawn, usually at retirement. The 403(b) plans are similar to plans the code authorizes for private-sector employees (401(k) plans) and noneducational public employees (457 plans).
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