Nebraska Retirement Systems explains judges’ pension tiers, contribution changes and benefit options

Nicholas Bennetts, a training specialist with Nebraska Retirement Systems, laid out the main features of the Judges’ Retirement Plan in an educational video, explaining tiered membership, contribution rates, benefit‑calculation rules, annuity options and tax and reemployment rules.

Bennetts said the plan uses three tiers tied to hire date: Tier 1 for judges serving before July 1, 2015; Tier 2 for those who began serving between July 1, 2015 and before July 1, 2017; and Tier 3 for service beginning on or after July 1, 2017. He said tier status affects contribution rates, which vary with service length and whether LB 1097 applies.

He described contribution differences: Tier‑1 members who opted out of LB 1097 contribute 7% of salary for the first 20 years and 1% thereafter; Tier‑1 members subject to LB 1097 (or who elected its changes) contribute 9% for the first 20 years and 5% after that. For Tiers 2 and 3 Bennetts said the contribution structure changed under LB 1101 (effective July 1, 2026) from a prior 10% to 9% before 20 years of service and 5% thereafter.

On funding, Bennetts said the judges’ plan is well funded and cited a most recent funded ratio of 102.1%. He warned that if funded status fell below 100% statute could trigger additional contribution requirements and noted that a state contribution rate the transcript described as 5% would drop to 0% as of July 1, 2026 because of the plan’s funded status.

The plan is a defined‑benefit (401(a)) arrangement and Bennetts emphasized benefits are calculated by a formula, not by an individual account balance. He summarized the formula inputs as average compensation (three highest 12‑month periods for Tier 1; five highest years for Tiers 2 and 3), years of service (up to a 20‑year cap for the replacement factor), a 3.5% per‑year formula factor, an option factor and age at the effective date.

Using the 3.5% factor, he showed that five years of service provides about 17.5% replacement, 10 years about 35%, 15 years about 52.5% and 20 years about 70% replacement. He stressed that after 20 years the replacement percentage does not increase, though higher compensation in later years can raise the average used in the calculation.

Age and effective date matter: full benefit age is 65; earliest claim age is 55 with actuarial reductions. Bennetts described reductions for claims before 65, including a flat 3% per‑year adjustment after age 62 (for example, a 9% reduction at 62, 6% at 63 and 3% at 64) and noted reductions are determined by age at the effective date. The first payable benefit is processed within about 90 days and is retroactive to the effective date.

Bennetts walked through the five annuity options available and the eligibility or documentation requirements for each: modified cash refund; life‑only; period‑certain and continuous (five/10/15‑year guarantees); spousal joint and survivor (50%, 66 2/3% or 100% survivor options); and joint and last survivor. He noted higher survivor‑percentage choices reduce the monthly payment and that spousal options require proof of spouse age and certified marriage documentation.

He also described cost‑of‑living adjustments: COLAs are reviewed each July and tied to the CPI‑W index, with a typical maximum increase of 2.5%. Tier‑1 members have a purchasing‑power maintenance rule (a 75% floor) that can, under specified conditions, allow COLAs above 2.5% to prevent erosion below that threshold; Tiers 2 and 3 have a 2.5% maximum without the 75% protection Bennetts described.

On taxes, Bennetts said monthly benefits are taxable and NPERS will withhold federal and Nebraska state taxes at default rates (20% federal, 5% state) unless members file a Withholding Certificate for Annuity Payments. He explained pre‑1986 contributions receive a safe‑harbor calculation so a portion of early payments is tax‑free until those pre‑1986 amounts are exhausted.

Bennetts emphasized administrative rules members must follow: keep addresses current because benefits can be suspended after two returned mailings; file the retirement packet and withholding form in a timely way; and observe reemployment rules. He cited Nebraska statute requiring a bona‑fide termination (a break in employment of at least 120 days) before collecting benefits and warned violations can lead to suspension, repayment of benefits (potentially with interest) or garnishment.

The video ends with Bennetts directing members to NPERS online resources (including a benefit estimator and plan booklet) and contact options (phone, mail, office visit) for questions or to begin the retirement packet process.