BEFORE THE TEACHERS' RETIREMENT SYSTEM

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 2.44.304 and 2.44.524 pertaining to the qualifications of the actuary engaged by the teachers' retirement system and the annual report of employment earnings by disabled retirees of the teachers' retirement system

) ) ) ) ) ) )

NOTICE OF PROPOSED AMENDMENT   NO PUBLIC HEARING CONTEMPLATED

 

TO:  All Concerned Persons

 

1.  On October 14, 2010, the Teachers' Retirement System of the State of Montana proposes to amend the above-stated rules.

 

2.  The Teachers' Retirement System will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice.  If you require an accommodation, contact the Teachers' Retirement System no later than 5:00 p.m. on August 16, 2010, to advise us of the nature of the accommodation that you need.  Please contact Melissa Michalk, Teachers' Retirement System of the State of Montana, 1500 E. Sixth Avenue, P.O. Box 200139, Helena, Montana, 59620-0139; telephone (406) 444-3754; fax (406) 444-2641; TDD (406) 444-1421; or e-mail MMichalk@mt.gov.

 

3.  The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

 

2.44.304  QUALIFICATION OF THE ACTUARY  (1)  The actuary designated by the Teachers' Retirement Board, at a minimum, must meet the qualification of an "enrolled actuary".:

            (a)  be a member of at least one of the following professional organizations, as designated:

            (i)  a Member of the American Academy of Actuaries;

            (ii)  a Fellow or Member of the American Society of Pension Professionals; or

            (iii)  an Associate or Fellow of the Society of Actuaries.

            (b)  comply with the qualification standards applicable to actuaries issuing statements of actuarial opinion as adopted by the American Academy of Actuaries, which qualification standards may be obtained from the American Academy of Actuaries, 1850 M Street NW, Suite 300, Washington, DC 20036, or on the Academy's web site at www.actuary.org; and

            (c)  comply with all applicable actuarial standards of practice (ASOPs) as adopted by the Actuarial Standards Board.

(2)  The actuary designated by the Teachers' Retirement Board must comply with the identified qualifications at all times while engaged as the actuary for the Teachers' Retirement System, including that the actuary must comply with the standards set forth in (1)(b) and (1)(c) as those standards may be amended from time to time by the adopting entity.

(2)(3)  Upon request of the board, proof of certification as an "enrolled actuary" qualification must be provided.

 

AUTH:  19-20-201, MCA

IMP:  19-20-203, MCA

 

STATEMENT OF REASONABLE NECESSITY:  The proposed amendment of this rule is reasonably necessary to provide a more meaningful description of the minimum qualifications necessary for an actuary engaged by the board of the Teachers' Retirement System.  The qualification standard currently imposed, that the actuary meet the qualification of an "enrolled actuary," may substantially limit the board's ability to engage an actuary whose particular or sole area of practice is with public pension systems.  Enrolled actuary status is a certification status conferred by a joint board of the United States Department of Treasury and the United States Department of Labor, and is closely related to the conduct expected of actuaries with respect to private pension plans – those governed by the Employee Retirement Income Security Act of 1973 (ERISA). 

 

The qualification standards for actuaries issuing statements of actuarial opinion adopted by the American Academy of Actuaries provide a more comprehensive and stringent set of qualification standards, including initial and continuing education requirements, which are specifically directed at ensuring that an actuary is qualified to issue statements of actuarial opinion in the United States.  As the actuary engaged by the board is expressly engaged to issue statements of actuarial opinion specific to the needs and circumstances of a public pension plan, upon which the board can and will rely in administering the retirement system, a more comprehensive and stringent set of standards to establish qualification to do so will help ensure the soundness of the actuarial services being provided to the retirement system.

 

At this point in time, the qualification standards adopted by the American Academy of Actuaries represent the professional standard applied in the actuarial profession, and represent what the Teachers' Retirement Board believes is the "best practice" standard when engaging the services of an actuary on behalf of the retirement system. 

 

The proposed amended rule also includes a new requirement for an appropriate level of membership in one of the professional societies that credentials actuaries practicing in the United States.  This additional specification of a minimum qualification will ensure that any actuary engaged by the Teachers' Retirement Board will have been evaluated by a professional society and will have been found to meet applicable standards of education and professional experience to be a credentialed member.  As well, credentialed membership in any of the professional societies identified ensures that the actuary is subject to the counseling and disciplinary authority of the Actuarial Board for Standards and Discipline.

 

            2.44.524  ADJUSTMENT OF DISABILITY ALLOWANCE FOR OUTSIDE EARNINGS  (1)  A Disabled disabled members who are is gainfully employed engaged in a gainful occupation must notify the Tteachers' Rretirement Ssystem within thirty days of being employed engaged in that occupation.  Notification must include:

            (a)  name and address of employer, including if self-employed,;

            (b)  salary or hourly rate of pay and estimated yearly earnings,; and

            (c)  description of their duties and responsibilities and if the position is full-time or part-time.

            (2)  The disabled member must report to the Teachers' Retirement System, no less than annually, the total amount earned each year.  Members are encouraged to report earnings each month so that the TRS can advise the member when they will earn more than allowed and adjust their benefit if necessary.

            (3)  A disabled member who is at least sixty years of age and is not engaged in a gainful occupation is not required to file an annual earnings statement if the disabled member has not been engaged in a gainful occupation and has reported no earnings for at least the three consecutive preceding years.

(4)  A disabled member who is not required to submit an annual earnings statement by application of (3) will be required to resume submitting annual earnings statements if the disabled member again becomes gainfully employed, and must continue to submit annual earnings statements until the disabled member again has not been gainfully employed and has reported no employment income for at least the three consecutive preceding years.

 

AUTH:  19-20-201, MCA

IMP:  19-20-904, MCA

 

STATEMENT OF REASONABLE NECESSITY:  The proposed amendment of this rule is reasonably necessary to reduce administrative burden and expense to the retirement system and to disabled retirees of the retirement system.  A review of retirement system records indicates that disabled members who are not gainfully employed at the time they reach the age of sixty, and have not had a recent history of gainful employment, will likely not return to gainful employment after that time.  Therefore, the requirement that such members continue to submit annual statements of employment earnings represents a burden to those disabled members, and administrative burden and expense to the retirement system, with very little, if any, value provided to the retirement system.  The Teachers' Retirement Board believes allowing such members to discontinue submitting annual earnings reports, on the condition that reports must resume if gainful employment is subsequently obtained, provides sufficient protection to the retirement system while giving appropriate consideration to the burden imposed on the retirement system's disabled members.  Other changes were made simply to make the terminology used in the administrative rule consistent with statute and with the form letters used by the retirement system.

 

4.  Concerned persons may submit their data, views, or arguments either orally or in writing to David L. Senn, Teachers' Retirement System of the State of Montana, 1500 E. Sixth Avenue, P.O. Box 200139, Helena, Montana, 59620-0139; telephone (406) 444-3376; fax (406) 444-2641; or e-mail dsenn@mt.gov, and must be received no later than 5:00 p.m., September 10, 2010.

 

5.  If persons who are directly affected by the proposed actions wish to express their data, views, or arguments orally or in writing at a public hearing, they must make written request for a hearing and submit this request along with any written comments to David L. Senn at the above address no later than 5:00 p.m. on Monday, September 10, 2010.

 

6.  If the agency receives requests for a public hearing on the proposed action from either 10 percent or 25, whichever is less, of the persons directly affected by the proposed action; from the appropriate rule review committee of the Legislature; from a governmental subdivision or agency; or from an association having not less than 25 members who will be directly affected, a hearing will be held at a later date.  Notice of the hearing will be published in the Montana Administrative Register.  Ten percent of those directly affected has been determined to be 30 persons based on a total of 305 current recipients of disability retirement benefits from the Teachers' Retirement System.

 

7.  The Teachers' Retirement System of the State of Montana maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to the contact person in 4 above or may be made by completing a request form at any rules hearing held by the Teachers' Retirement System of the State of Montana.

 

8.  An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register.  The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that if a discrepancy exists between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

9.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

 

 

By    /s/ Denise Pizinni                                  By     /s/ David L. Senn                              

         Denise Pizzini                                               David L. Senn

         Rule Reviewer                                               Executive Director

Teachers' Retirement System of the State of Montana

 

Certified to the Secretary of State August 2, 2010.