HCS HB 152 & 180 -- KANSAS CITY POLICE RETIREMENT SYSTEM

SPONSOR:  Smith, 118 (Johnson, 47)

COMMITTEE ACTION:  Voted "do pass by consent" by the Committee on
Retirement by a vote of 11 to 0.

Regarding the Kansas City Police Retirement System, this
substitute:

(1)  Requires benefits and conditions to always be adjusted to
qualify for tax-exempt status;

(2)  Requires a member's benefits to be 100% vested and
nonforfeitable upon the member's attainment of the normal
retirement age;

(3)  Requires the distribution of retirement benefits to begin no
later than April 1 of the year following the calendar year during
which the member becomes 70 1/2 years of age;

(4)  Prohibits benefits in excess of the limits set by Section
415 of the Internal Revenue Code;

(5)  Limits the total salary taken into account for any purpose
for any member to no more than $200,000 per year, subject to
adjustments permitted by the Internal Revenue Code;

(6)  Gives the Retirement Board authority to change actuarial
assumptions at any time annually, but a change in actuarial
assumptions may not result in any decrease in benefits accrued as
of the effective date of the change;

(7)  Allows a member or beneficiary to transfer an eligible
rollover distribution to another eligible retirement plan;

(8)  Gives the board authority to provide fiduciary liability
insurance; and

(9)  Makes other changes to conform with the Internal Revenue
Code.

The substitute also changes the requirements for the five elected
members of the Kansas City Police Retirement Board.  If Kansas
City has established a Civilian Employees' Retirement System of
the police department, the substitute requires the elected
members to consist of three restricted members and two open
members.  The three restricted members will consist of a retired
member, an active member below the rank of sergeant, and a
civilian member.  If Kansas City has not established a Civilian
Employees' Retirement System of the police department, three
members will be open members.  (Kansas City has established a
Civilian Employees' Retirement System.)  Open members will have
no qualification requirements.  Current law has no requirement
that the board have an open member.  The substitute outlines a
staggered election process.

The substitute further allows members of the Police Retirement
System and the Civilian Employees' Retirement System to receive a
partial lump-sum option payment.  Police officers who have a
minimum of 26 years of service are eligible to receive up to
three years of benefit payments in a lump-sum, depending on their
years of creditable service.  The member would then receive a
reduced pension on a normal monthly basis.  Civilian employees
working one year beyond their earliest eligible retirement date
would also be eligible for the partial lump-sum option.  The
election to receive a lump-sum distribution and reduced monthly
base pension is void if the member dies before retirement and
amounts due a beneficiary will be determined without regard to
the election.

Finally, the substitute makes the retirement board a state agency
for the purpose of the administrative procedure and review
process.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the bill will make the
retirement system compliant with the Internal Revenue Code in
order to maintain a tax-exempt status.  Vested members can
transfer certain funds to certain plans without penalty.  The
bill designates members of the Retirement Board and makes the
board a state agency for the purpose of implementing the
retirement plans.

Testifying for the bill were Representative Johnson (47); James
Pyle, Executive Director, Kansas City Police and Civilian
Retirement System; and St. Louis Police Retirement System.

OPPONENTS:  There was no opposition voiced to the committee.

Joseph Deering, Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:10 am