AN ACT
ENTITLED, An Act to revise the computation of final average compensation for benefits relating
to the South Dakota Retirement System.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That § 3-12-89.4 be amended to read:
3-12-89.4. For any foundation member whose contributory service concluded before July 1, 2021, the term, final average compensation, means the highest average annual compensation earned by a member during any period of twelve consecutive calendar quarters during the member's last forty calendar quarters of membership in the system including time during which the member was not a member but for which the member has received credit under the system.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That § 3-12-89.4 be amended to read:
3-12-89.4. For any foundation member whose contributory service concluded before July 1, 2021, the term, final average compensation, means the highest average annual compensation earned by a member during any period of twelve consecutive calendar quarters during the member's last forty calendar quarters of membership in the system including time during which the member was not a member but for which the member has received credit under the system.
For purposes of determining final average compensation if periods of contributory service are
separated by breaks, any service earned from covered employment may be aggregated to constitute
a period of twelve consecutive calendar quarters. For any member who has less than twelve but more
than four calendar quarters of membership in the system, the member's final average compensation
shall be based on the compensation received in all quarters of membership. For any member who
has four calendar quarters of membership or less, the member's final average compensation shall be
based on the member's annual compensation.
Section 2. That chapter 3-12 be amended by adding a NEW SECTION to read:
Section 2. That chapter 3-12 be amended by adding a NEW SECTION to read:
For any foundation member whose contributory service concluded after June 30, 2021, and
before July 1, 2022, the term, final average compensation, means the highest average annual
compensation earned by a member during any period of sixteen consecutive calendar quarters during
the member's last forty calendar quarters of membership in the system, including time during which
the member was not a member but for which the member has received credit under the system.
For any foundation member whose contributory service concluded after June 30, 2022, the term,
final average compensation, means the highest average annual compensation earned by a member
during any period of twenty consecutive calendar quarters during the member's last forty calendar
quarters of membership in the system, including time during which the member was not a member
but for which the member has received credit under the system.
For purposes of determining final average compensation if periods of contributory service are
separated by breaks, any service earned from covered employment may be aggregated to constitute
a period of consecutive calendar quarters.
For any member who has less than the number of calendar quarters of membership considered
in the computation of the member's final average compensation, but more than four, the member's
final average compensation shall be based on the compensation received in all quarters of
membership. For any member who has four calendar quarters of membership or less, the member's
final average compensation shall be based on the member's annual compensation.
Section 3. That chapter 3-12 be amended by adding a NEW SECTION to read:
Section 3. That chapter 3-12 be amended by adding a NEW SECTION to read:
For any foundation member whose contributory service concluded before July 1, 2020, if the
compensation received in the last calendar quarter considered exceeds a set percentage of the amount
in the highest previous calendar quarter, or if the average compensation received in the last four
calendar quarters considered exceeds a set percentage of the amount earned in the highest calendar
quarter prior to the last four calendar quarters considered, only the lesser amount shall be considered
and the excess may not be included in the computation of final average compensation. Those
respective set percentages are as follows:
(1) Before July 1, 2004, one hundred twenty-five percent and one hundred fifteen percent;
(2) Between July 1, 2004, and June 30, 2005, one hundred fifteen percent and one hundred
ten percent; and
(3) After June 30, 2005, one hundred five percent and one hundred five percent.
Section 4. That chapter 3-12 be amended by adding a NEW SECTION to read:
Section 4. That chapter 3-12 be amended by adding a NEW SECTION to read:
For purposes of this section, the term, compensation year, means each separate, mutually
exclusive period of four consecutive calendar quarters considered in the computation of final average
compensation. The earliest compensation year is the earliest four consecutive calendar quarters
considered in the computation of final average compensation, and each subsequent compensation
year is the subsequent period of four consecutive calendar quarters beginning after the earliest
compensation year and continuing with each compensation year thereafter.
For any foundation member whose contributory service concluded after June 30, 2020,
compensation is limited as follows:
(1) Compensation in the earliest compensation year is limited to one hundred five percent of
the highest compensation received for any prior four-consecutive-calendar-quarter period
during the member's last forty calendar quarters of membership in the system, including
time during which the member was not a member but for which the member has received
credit under the system; and
(2) Compensation for each subsequent compensation year is limited to one hundred five
percent of the highest compensation considered for any prior compensation year, but the
amount may not be less than the limit applied in subdivision (1).
Compensation in excess of the limited amount may not be included in the computation of final
average compensation but is payable pursuant to section 7 of this Act.
If the earliest compensation year includes one or more quarters from the earliest four consecutive
calendar quarters in the member's last forty quarters of membership in the system, that compensation
year may not be limited.
Compensation in the last calendar quarter considered in the computation of final average
compensation is limited to one hundred five percent of the highest compensation considered for any
prior calendar quarter during the member's last forty calendar quarters of membership in the system.
The final average compensation of any foundation member whose contributory service concluded
before July 1, 2022, may not be less than the member's final average compensation computed as of
June 30, 2017.
Section 5. That § 3-12-502 be amended to read:
3-12-502. For any generational member, the term, final average compensation, means the highest average annual compensation earned by a member during any period of twenty consecutive calendar quarters during the member's last forty calendar quarters of membership in the system.
Section 5. That § 3-12-502 be amended to read:
3-12-502. For any generational member, the term, final average compensation, means the highest average annual compensation earned by a member during any period of twenty consecutive calendar quarters during the member's last forty calendar quarters of membership in the system.
For purposes of determining final average compensation if periods of contributory service are
separated by breaks, any service earned from covered employment may be aggregated to constitute
a period of twenty consecutive calendar quarters.
For any member who has less than twenty but more than four calendar quarters of membership
in the system, the member's final average compensation shall be based on the compensation received
in all quarters of membership. For any member who has four calendar quarters of membership or
less, the member's final average compensation shall be based on the member's annual compensation.
Section 6. That chapter 3-12 be amended by adding a NEW SECTION to read:
Section 6. That chapter 3-12 be amended by adding a NEW SECTION to read:
For purposes of this section, the term, compensation year, means each separate, mutually
exclusive period of four consecutive calendar quarters considered in the computation of final average
compensation. The earliest compensation year is the earliest four consecutive calendar quarters
considered in the computation of final average compensation and each subsequent compensation
year is the subsequent period of four consecutive calendar quarters beginning after the earliest
compensation year and continuing with each compensation year thereafter.
For any generational member, compensation is limited as follows:
(1) Compensation in the earliest compensation year is limited to one hundred five percent of
the highest compensation received for any prior four-consecutive-calendar-quarter period
during the member's last forty calendar quarters of membership in the system, including
time during which the member was not a member but for which the member has received
credit under the system;
(2) Compensation for each subsequent compensation year is limited to one hundred five
percent of the highest compensation considered for any prior compensation year, but the
amount may not be less than the limit applied in subdivision (1).
Compensation in excess of the limited amount may not be included in the computation of final
average compensation but is payable pursuant to section 7 of this Act.
If the earliest compensation year includes one or more quarters from the earliest four consecutive
calendar quarters in the member's last forty quarters of membership in the system, that compensation
year may not be limited.
Compensation in the last calendar quarter considered in the computation of final average
compensation is limited to one hundred five percent of the highest compensation considered for any
prior calendar quarter during the member's last forty calendar quarters of membership in the system.
Section 7. That chapter 3-12 be amended by adding a NEW SECTION to read:
Section 7. That chapter 3-12 be amended by adding a NEW SECTION to read:
For purposes of this section, the term, excess contributions, means the employer and member
contributions on compensation not included in the computation of final average compensation
pursuant to sections 4 and 6 of this Act.
The excess contributions plus the credited investment return on the excess contributions are
payable at the retirement, disability, or death of the member. The credited investment return, which
shall be credited annually as of June thirtieth, is the South Dakota Investment Council's reported
money-weighted investment return of the system, net of fees, for the completed fiscal year. Any
excess contributions made during the fiscal year shall receive one-half year's credited investment
return for that year. For any account distributed during the fiscal year, the estimated investment
return shall be credited to the end of the month before the date on which the retirement benefit is
paid or the disability benefit is paid or death occurred, as applicable.
The excess contributions plus credited investment return are payable to the member when the
member commences a retirement benefit or a disability benefit or to the member's eligible child,
eligible spouse, or beneficiary upon the death of the member. The amount is not payable to any
member who withdraws his or her accumulated contributions from the system. For the purpose of
paying a distribution, the amount payable is the total of excess contributions plus credited investment
return or the total of excess contributions, whichever is greater. The amount may be paid in a lump
sum, rolled over to the South Dakota deferred compensation plan, rolled over to another eligible
plan, or used to purchase a supplemental pension benefit. However, the purchase of a supplemental
pension benefit is only available upon the member's retirement.
An Act to revise the computation of final average compensation for benefits relating to the South Dakota Retirement System.
An Act to revise the computation of final average compensation for benefits relating to the South Dakota Retirement System.
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I certify that the attached Act originated in the
HOUSE as Bill No. 1018
____________________________
Chief Clerk ____________________________
Speaker of the House
Attest:
____________________________
Chief Clerk
____________________________
Attest:
____________________________
Secretary of the Senate
House Bill No. 1018 File No. ____ Chapter No. ______ |
Received at this Executive Office this _____ day of _____________ ,
20____ at ____________ M.
By _________________________
for the Governor
The attached Act is hereby
approved this ________ day of
______________ , A.D., 20___
____________________________
Governor STATE OF SOUTH DAKOTA, ss.
Office of the Secretary of State
Filed ____________ , 20___
____________________________ Secretary of State
By _________________________ |
