For members retiring on and after July 1, 1990, dividends are
payable as follows.
(1)
Allocation of favorable experience. The
system shall,
following the first annual actuarial evaluation in which
IPERS is found to be
fully funded, determine by rule the allocation of the
system's favorable
actuarial experience, if any, between the reserve account created under Iowa
Code section
97B.49F(2) and the remainder of the retirement fund.
Effective July 1,2006, IPERS shall in no event credit amounts
attributable to favorable experience to the FED reserve account, unless IPERS
is fully funded and will remain fully funded after such amounts are credited to
the FED reserve account. "Fully funded" means that the funded ratio as
determined under Iowa Code section 97B.1A (11 A) remains at least 100 percent
following the allocation of favorable experience to the FED reserve
account.
(2)
Determination of applicable percentage. The
system shall have
sole discretion to determine the applicable percentages that will be used in
calculating favorable experience dividends payable under this rule, if any,
subject to the actuary's certification that the resulting favorable experience
dividends meet the requirements of Iowa Code section
97B.49F(2) and this rule.
a. The system's annual applicable percentage
target for calculating dividends under Iowa Code section
97B.49F(2) shall be equal to the applicable percentage
used in calculating dividends payable to retired members under Iowa Code
section
97B.49F(1).
Notwithstanding the foregoing, the system may set a greater or lesser
applicable percentage for calculating dividends under this rule depending on
the funding adequacy of the reserve account. In no event shall the applicable
percentage exceed 3 percent.
b. In
determining the annual applicable percentage, the system shall consider, but
not be limited to, the value of the reserve account, distributions made from
the reserve account in previous years, and the likelihood of future credits to
and distributions from the reserve account. The system shall make its annual
applicable percentage decisions using at least a rolling five-year
period.
c. If for any year the
system cannot afford an applicable percentage equal to that payable to retired
members under Iowa Code section
97B.49F(1),
the system may use applicable percentages in succeeding years that are higher
than those used in calculating dividends for retired members under Iowa Code
section
97B.49F(1) (but not in excess of 3 percent).
d. An applicable percentage in excess of the
applicable percentage declared under Iowa Code section
97B.49F(1) made for catch-up purposes shall not reduce
the funding of the reserve account below the amount the system's actuary
determines is necessary to pay the maximum favorable experience dividend for
each of the next five years, based on reasonable actuarial
assumptions.
(3)
Calculation of FED for individual members and beneficiaries. A
member must be retired for one full year to qualify for a favorable experience
dividend. In determining whether a member has been retired one full year, the
system shall count the member's first month of entitlement as the first month
of the one-year period. The month in which the favorable experience dividend is
payable shall be included in determining whether a member meets the eligibility
requirements.
An eligible member's favorable experience dividend shall be
calculated by multiplying the retirement allowance payable to the retired
member, beneficiary, or contingent annuitant for the previous December, or such
other month as determined by the system, by 12, and then multiplying that
amount by the number of complete years the member has been retired or would
have been retired if living on the date the dividend is payable, and by the
applicable percentage set by the system. The number of complete years the
member has been retired shall be determined by rounding down to the nearest
whole year.
For otherwise eligible retired reemployed members who chose to
suspend their monthly allowance under 495-paragraph 12.8(2)"c,
" the suspension shall have no effect on the calculation of
FED.
(4)
FED for
eligible members and beneficiaries who die before the January distribution
date. If a member or beneficiary receiving monthly payments would have
been eligible for a FED distribution in the following January but dies prior to
the January distribution date,
IPERS will pay a FED to the member's or
beneficiary's account for the calendar year in which the death occurred. The
FED shall be calculated using the monthly payments received in the calendar
year the death occurred. A lump sum death benefit shall not constitute a
monthly payment for purposes of determining FED eligibility or in making FED
calculations.
The FED percentage applied to the monthly payments received in
the calendar year of death shall be the most recently declared FED percentage
in effect at the time of the FED payment to the member or beneficiary. This
subrule shall not be construed to permit a FED distribution to a member where
the total monthly benefits received by the member, counting the month of death,
is less than 12, even if a period of 12 months has elapsed between the first
payment of monthly benefits to the member and the January distribution
date.
Notwithstanding the foregoing, if IPERS determines in January
of a given year that, based on reasonable actuarial assumptions, there is a
reasonable likelihood that a FED will not be declared for the next following
January, IPERS may defer paying FED distributions under this subrule until the
determination is made. If IPERS subsequently determines that no FED will be
declared for a given year, no FED will be payable to a person whose death
occurs during the applicable calendar year.
Effective July 1, 2000, a retired member or beneficiary
eligible for a FED payment must, in addition to all other applicable
requirements, be living on January 1 in order to receive a FED payment
otherwise payable in that January.
(5)
Limit on transfers of favorable
experience. Rescinded IAB 11/22/06, effective 12/27/06.
(6)
Determination of sufficiency of
FED reserve account. The
system is charged in Iowa Code section
97B.49F(2)
"d" with determining
whether the reserve account is sufficiently funded to make a distribution. The
system shall make this determination in the following manner.
a. The system shall declare the value of the
FED reserve account balance as specified in the Allocation of Net Assets Held
in Trust in the financial statements for the fiscal year that ended immediately
preceding a January FED payment. The value shall include, but is not limited
to, investment income and expenses and certain noninvestment income that are
properly recorded for the FED reserve balance based on standard accounting
rules used to determine a final balance at the conclusion of a fiscal
year.
b. The above-declared reserve
account balance shall be compared to the total estimated FED payment for the
following January as calculated pursuant to rule
495-15.2 (97B) utilizing a 1 percent multiplier.
c. The reserve account shall be declared not
sufficiently funded when the estimated FED payment as determined in
paragraph"b " of this subrule is equal to or greater than the
declared reserve account balance as defined in paragraph"a" of
this subrule.
(7)
Determination of FED distribution if reserve account is not
sufficiently funded.
a. When the
system has determined pursuant to subrule 15.2(6) that the reserve account is
not sufficiently funded, the
system shall declare a multiplier to be used in
the formula pursuant to rule
495-15.2 (97B) that is best estimated to approximate a full distribution of the declared
reserve account balance as of the preceding June 30 fiscal year end.
b. No investment gains or losses shall change
this balance between July 1 and the FED payment in January of the fiscal year
in which the remaining balance of the reserve account will be paid by
IPERS.
c. Any remaining reserve
account balance shall be credited among the membership groups in the net assets
held in trust, and the reserve account balance will be zero at the end of the
fiscal year in which a FED payment is made pursuant to this subrule.
d. Any funds the system collects from a FED
payment to a member or beneficiary because of an erroneous FED payment made by
IPERS shall be deposited in the IPERS trust fund.
e. Payments under this subrule will represent
a final distribution of the balance of the reserve account as determined in
rule
495-15.2 (97B) effectively halting any future FED payment, unless and until the reserve
account is funded again pursuant to subrule 15.2(1).
f. No claim or administrative appeal will be
allowed under this subrule if made more than 30 calendar days following the
date on which IPERS made a FED payment to a member or beneficiary based upon
the date of the EFT or the date IPERS mailed a state warrant to the member or
beneficiary.
g. No payment will
occur after January 31 in the year of the FED payment under this subrule for
any adjustment to any previous fiscal years' FED payment to a member or
beneficiary.
