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NPERS webinar: LB645 lets contribution rates change annually; trainers explain salary capping and new rates
Summary
NPERS trainers told school‑plan members that LB645 permits annual July 1 updates to contribution rates based on actuarial results, outlined current and upcoming rates, and explained the 8% salary‑cap rule that limits benefit calculation spikes in the last five years of service.
Nicholas Bennett, a training specialist with the Nebraska Public Employees Retirement System (NPERS), told school‑plan members in a webinar that a change enacted by LB645 allows contribution rates to be recalculated each July 1 using the prior actuarial report. "July 1st, 2025, so last summer, LB645 passed. And what this did is it made it so contribution rates can be updated every single year on July 1st based on the actuarial report," he said.
Why it matters: annual rate adjustments tie member and employer contributions more closely to funding performance. Bennett emphasized that the plan’s funded status determines contribution bands and therefore affects how much members and employers pay in the coming year.
Key figures and context: Bennett said the plan was about 102% funded at the time of the webinar and gave concrete contribution figures the presentation used: employee contributions had been 8.00% of salary with an employer match at 101% (8.08%) and a 0.7% state contribution. Because of the plan’s funding the webinar showed lower rates effective the next July 1: employee contributions of 7.25% and an employer rate of 7.3225% for the following 12‑month period. Bennett framed rate decreases as a benefit to current paychecks while noting the plan’s formula determines lifetime benefits.
Salary‑capping protections: Bennett also explained a salary cap that applies when a member’s compensation spikes in the last five years of employment. To protect the plan’s funding from short‑term overtime or promotions that disproportionately raise a benefit, NPERS applies an 8% year‑to‑year cap to salary increases used in the final five years of benefit calculation. He walked through examples showing how a modest 10% raise near retirement would be capped at 8% for benefit calculation, while a large 20% promotion could cause multiple years to be capped and materially affect a benefit.
What members can do: NPERS trainers recommended members use the benefit estimator on the NPERS member website, review their tier status (which determines whether the highest three or five years of pay are used), and consult employer HR/payroll records for accurate compensation and service data before deciding when to set an effective date.
Closing note: Bennett said the changes reflect the plan’s strong funding position but underscored that members should check their own data and use the online tools NPERS provides to see how any change would affect their monthly benefit.
