Committee reviews NPERS cleanup bill LB 295, discusses waiver for inadvertent overpayments and school-plan technical fixes

Trevor Fitzgerald, committee legal counsel, introduced LB 295 to the Nebraska Retirement Systems Committee as a committee-introduced cleanup bill submitted at NPERS’ request. Fitzgerald told the committee the bill “serves as their annual clean up bill” and summarized the major provisions, including a new process for PERB to waive repayment of inadvertent benefit overpayments, expanded acceptable identification documents, technical clarifications to the school employees retirement act, changes to pre-retirement planning program authority, procedural clarifications for PERB meetings and mileage reimbursement, and a prohibition on use of NPERS names or logos in written solicitations without PERB approval.

Fitzgerald described specific provisions: - A process allowing PERB to waive repayment of retirement overpayments in certain situations where the member received an inadvertent overpayment and repayment would create a hardship. - Addition of state-issued learner’s permits and certain automatically extended federal immigration documents to the list of acceptable identification for participation in state retirement systems. - Inclusion of the Omaha School Employees Retirement System (OSERS) in the Nebraska Spousal Pension Rights Act so NPERS can administratively process qualifying domestic relations orders (QDROs) for that plan; Fitzgerald clarified this change does not transfer financial liability for OSERS from Omaha Public Schools to the state. - Multiple technical clarifications for the school plan: codifying leave-of-absence pay as compensation, codifying the formula used to determine whether a school employee is full time or part time (intended for use across 265 school districts), allowing independent lump-sum payments to multiple beneficiaries, clarifying early retirement and full-time status retention for OSERS participants, eliminating a 60-day deadline for beneficiaries to elect a lump-sum distribution, and aligning COLA application to formula annuities rather than service annuities where practice supports that interpretation. - Language authorizing online pre-retirement planning programs and clarifying that certain full‑day educational events should be interpreted as at least eight hours. - Section prohibiting third-party written solicitations from using NPERS’ names or logos without board approval; the provision is a member-protection measure to avoid misleading communications from financial marketers.

Fitzgerald also described two amendments: AM 18 (filed by Senator Ballard) corrected a drafting error and extended the window for teachers to file for retirement from 120 days to 270 days before the effective date of the initial benefit; and AM 61, provided to members before the hearing, continued AM 18’s provisions, struck a section (section 18) at NPERS’ request that would have created an appropriations issue for the state patrol plan, and narrowed the inadvertent overpayment waiver so PERB may waive repayments only if repayment would create a hardship (language revised after consultation with the attorney general’s office).

Tag Herbeck, legal counsel for PERB and NPERS, testified in support and explained the hardship rationale for waiver authority. Herbeck cited recent IRS guidance associated with the SECURE 2.0 provisions allowing qualified plans to make mandatory repayment exceptions for inadvertent benefit overpayments, and offered a concrete example: a member takes a distribution believing they had properly terminated, an employer re-hires them in a non‑eligible role without notifying NPERS, and the member becomes subject to repayment obligations that could amount to tens of thousands of dollars. Herbeck said the PERB-requested waiver process is intended to provide relief in such cases and provide NPERS staff time-savings in administering complex correction events.

Committee members asked questions about implementation and scope. Senator Morris asked who would decide waiver requests; Fitzgerald and Herbeck said the PERB board would hear and decide repayment-exception requests under the proposed language, with further guidance from NPERS staff and possible future agency/attorney-general conversations. Senators asked whether adding OSERS to the Spousal Pension Rights Act would make the state financially responsible for OSERS liabilities; Fitzgerald explicitly stated that current statute still makes Omaha Public Schools responsible for OSERS funding obligations and that adding OSERS to the act is an administrative alignment to permit NPERS to process QDROs. Senators asked for clarification about what “leave-of-absence pay” includes; NPERS counsel said it refers to paid leaves arranged and paid by the employer and that disability pay is not included. Several senators asked what minimum hours would constitute “full time” under the codified formula; NPERS counsel said it depends on district application and the bill codifies the simple formula NPERS already uses to ensure consistency across 265 separate school employers rather than adopting more complex formulas that would be harder for districts to administer.

Fitzgerald and Herbeck also explained other technical changes intended to reduce delays in benefit payments (for example, allowing multiple beneficiaries to receive independent lump-sum payments without waiting for all claims to be submitted) and to align statutes with IRS plan qualification requirements and PERB policy.

The committee heard no in-room proponents or opponents; Fitzgerald read online submissions at the close of the hearing (0 proponents, 2 opponents, 2 neutral). The committee closed the hearing on LB 295; the transcript does not record a committee vote on the bill or any motion to advance it during this session.

Ending: Bill sponsors and NPERS staff indicated further interagency conversations with the attorney general’s office may continue to refine language on overpayment waivers and any funding implications for specific plans. The committee closed the LB 295 hearing without recording committee action on advancement.