Washington Report Hank H. Kim, Esq. NCPERS Executive Director and Counsel

Presentation Outline Introduction to National Conference on Public Employee Retirement Systems Issues for the remainder of 110 th Congress First Session NCPERS legislative priorities for 2008 Q&A and wrap up

NCPERS Largest nonprofit trade association representing 500 public sector DB plans Who we ARE: –Advocacy –Research –Education

NCPERS Position All workers (public and private) should have a traditional pension benefit (DB plan) as their primary pension plan DB plans are good for governments, employees, taxpayers and the economy

First Session Items Pension Protection Act (PPA) Signed into law August Number of provisions beneficial to public pensions and beneficiaries. Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act –Sec. 845 of PPA

HELPS Retirees Act Up to $3,000 per year can be used tax-free to pay for health or LTC insurance premiums. –$6,000 if both husband & wife are PSOs. Eligible PSOs –DOJ definition of PSO. –Must have retired or separated as a PSO. –Must be eligible for actuarially unreduced pension benefit. Pension plan must pay directly to health plan(s). Self-insured health plans can participate. No survivor benefits.

First Session Items Pension Protection Act HELPS Retirees provision (Sec. 845). Effective January 1, On January 10, Treasury issued preliminary guidance (2007-7). On May 15, Treasury sent a letter to Congress saying that self-insured plans would be treated as health insurance plans for the purposes of HELPS Retirees and that pension systems could rely upon the letter to begin implementing HELPS Retirees benefits immediately

First Session Items HELPS Retirees Act (cont.) In June, the IRS issued 1099-R Instructions and OPM issued a Benefits Administration Letter where both agencies stated that the $3,000 tax exclusion for health insurance premiums under HELPS Retirees is to be claimed on individuals' tax returns. In early August, Congress introduced the technical corrections bills to the PPA. –S 1974 –HR 3361

First Session Items Pension Protection Act Public Safety DROP Distribution (Sec. 828). Lump sum distribution of DB plan at age 50 without 10% tax. Rollover issue. Those who elected to take substantially equal distributions prior to PPA.

First Session Items Pension Protection Act Age Discrimination in Employment Act modifications (Sec. 701). ADEA intended to protect older workers from discriminatory practices. ADEA issue for public plans that credit interest.

First Session Items PPA Technical Corrections Outlook Technical corrections bills introduced August 2 & 3. Legislative fix for IRS error on self-funded plans. Number of must pass corrections. Recess in December. –Appropriations –Defense Authorization

Other Items Divestments September 11; genocide in Darfur, Sudan; Iranian nuclear ambitions have rekindled the call for divestment.

Sudan Divestment Alaska Texas Utah Montana California Arizona Idaho Nevada Oregon Iowa Colorado Kansas Wyoming New Mexico Missouri Minnesota Nebraska Oklahoma South Dakota Washington Arkansas North Dakota Louisiana Hawaii Illinois Ohio Florida Georgia Alabama Wisconsin Virginia Indiana Michigan Mississippi Kentucky Tennessee Pennsylvania North Carolina South Carolina West Virginia New Jersey Maine New York Vermont Maryland New Hampshire Connecticut Delaware Massachusetts Rhode Island

Iran/Other Divestment Alaska Texas Utah Montana California Arizona Idaho Nevada Oregon Iowa Colorado Kansas Wyoming New Mexico Missouri Minnesota Nebraska Oklahoma South Dakota Washington Arkansas North Dakota Louisiana Hawaii Illinois Ohio Florida Georgia Alabama Wisconsin Virginia Indiana Michigan Mississippi Kentucky Tennessee Pennsylvania North Carolina South Carolina West Virginia New Jersey Maine New York Vermont Maryland New Hampshire Connecticut Delaware Massachusetts Rhode Island

Federal Updates HR 1357 (Ros-Lehtinen): Divest from Iran HR 2347 (Frank): Divest from Iran At least 10 other bills introduced.

Divestment NCPERS Position NCPERS does not support terrorism sponsoring states. NCPERS does not support the genocide in Darfur. Foreign policy is exclusive jurisdiction of the Federal government. Trustees and other fiduciaries must act in the best interest of the beneficiaries.

Communications with Feds State, Treasury, Commerce, SEC Institutional investors need more information in a searchable format Only the federal government is in a position to provide this information

Other Items GPO/WEP Reform. Growing media/Congressional interest in private equity, hedge funds, and subprime mess and their potential impact on public funds. GAO Studies SEC White Paper

Second Session Items HELPS Retirees Implementation. HELPS II. DROP Rollover.

NCPERS 2008 Educational Programs Legislative Conference February 4-6, 2008 in Washington, DC Trustee Educational Conference May 16-17, 2008 in New Orleans, LA Annual Conference May 18-22, 2008 in New Orleans, LA Program for Advanced Trustee Studies July 22-24, 2008 in Cambridge, MA ( Harvard Law School ) Public Sector Health Care Symposium September 9-10, 2008 in San Francisco, CA Public Safety Employee Pension & Benefits Conference October 12-15, 2008 in Palm Springs, CA

For More Information NCPERS 444 North Capitol Street, NW, Suite 221 Washington, DC