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NebraskaLB820109th Legislature 1st and 2nd SessionslegislatureWALLET

Change retirement provisions relating to approved identification documents, participation in certain retirement systems, state contributions, ex officio members of the Nebraska Investment Council, contributions by school districts, computation of tax withholdings, retirement allowances, cost-of-living adjustments, and the Nebraska State Patrol and change the title of the executive director of the Nebraska Public Employees Retirement Systems

Sponsored By: Nebraska Retirement Systems Committee

Signed by Governor

Nebraska Retirement Systems Committee

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Bill Overview

Analyzed Economic Effects

20 provisions identified: 5 benefits, 3 costs, 12 mixed.

New medical add-on for long-time retirees

The state pays each year into the Service Annuity Fund for members who joined before July 1, 2016, to cover normal cost and reduce unfunded liabilities. Starting September 1, 2026, annuitants who joined before July 1, 2016 and have received payments for at least 10 years get a medical cost‑of‑living supplemental each month. The supplemental equals (years of service ÷ 20, capped at 1) × $10 × years paid, and it rises by $10 each September 1 up to $250 per month. The supplemental ends at death.

Public workers must prove lawful presence

To join any Nebraska public retirement plan or deferred comp, you must be a U.S. citizen or lawfully present. You and your employer must keep an approved ID (such as a driver’s license, passport, or USCIS card) and show it if NPERS asks. Schools and employees must send ID and membership info when requested. People living outside the U.S. who work here temporarily as school staff cannot join the plan.

Lawful presence and ID now required

Agencies must check lawful presence before giving public benefits unless an exemption in law applies. People not lawfully present cannot get public benefits. To join the State Employees Retirement Act, you must be a U.S. citizen or lawfully present. The employee and the state agency must keep an approved ID on file and show it on request.

More state money for Class V

Beginning with fiscal years starting July 1, 2025, the state pays an extra amount each year equal to 2% of all Class V member pay, plus any amount set under section 79‑966(1)(b). The payment is due on or before July 1 each year. If an actuary finds the needed contribution is above current rates, a Class V board can seek added state help through a public hearing and legislative approval.

If employer loses status, you vest immediately

If NPERS finds your employer no longer qualifies as a governmental plan under section 414(d), it notifies the employer within 10 business days. You and other affected members become fully vested right away and inactive within 90 days. The employer must pay any funding owed, admin costs, and actuary study costs.

Judges get funding; court fees rise

Starting July 1, 2023, the state pays each year an amount equal to 5% of all judges’ reported pay into the Judges Retirement Fund. Court filing fees that support the fund rise over time to $12 starting July 1, 2025, while certain criminal and traffic case fees stay $6. Clerks must send collected fees monthly to the State Treasurer.

Patrol retirement: later age and DROP changes

Mandatory retirement for State Patrol officers rises from age 60 to 65. More officers can use the deferred retirement option if they meet rules like normal retirement age and about 25 years of service, and they must leave by the end of the five‑year period. While in the deferred option, no cost‑of‑living increases apply to the benefit.

School employee and state contribution rates change

Starting July 1, 2025, your rate depends on the fund’s health. If funded ratio is under 96%, you pay 9.75% of pay; 96% to under 98%: 8.75%; 98% to under 100%: 8.00%; 100% or more: 7.25%. The state pays 2.0% of pay when the funded ratio is under 96%, 0.7% when 96% to under 100%, and nothing at 100% or more. Rates are calculated each July 1. The July 1, 2025 rate applies through June 30, 2026; the July 1, 2026 rate applies through August 31, 2027; from 2027, each new rate starts September 1.

Stronger checks on pension errors

The retirement board can change or recover contributions and benefits when payments are wrong. It can require refunds or extra contributions, set dispute and notice rules, and close small inactive accounts. The executive director can investigate overpayments, including after death, demand records, compel witnesses, and issue subpoenas with district‑court power.

Tax rules for pension and Roth

Picked‑up member retirement contributions are treated as employer contributions and are not taxed until paid out. Deferred sums generally are not counted in tax withholding. But money you put in a designated Roth account is included in withholding, which can lower take‑home pay that period.

Class V pensions move to NPERS

Beginning September 1, 2024, the state retirement board runs the Class V school pension system. School districts no longer manage it but still must fund it. Districts must pay all transition costs from May 27, 2021 through September 1, 2025, and can be billed monthly. Employers must give any requested records within 30 days and provide accurate member and ID data. The old local administrator position ends, and the NPERS executive director keeps full records and runs an employer education program. The board also directs the State Treasurer to move money between the Class V processing and retirement funds to cover admin costs.

Class V retirement moves to NPERS, new funding

Beginning September 1, 2024, NPERS runs the Class V school plan. District, state‑transferred, and employee deposits go to the Class V Fund, and all benefits are paid from it. Each year, a district must pay at least 101% of employee contributions or the actuarial amount needed for solvency, whichever is higher, with the solvency payment due by August 31 each year starting in 2025. Costs tied to the 2017 investment transfer can be charged to the fund. The board may bill employers quarterly for transition work, and employers must pay within 45 days. Monthly benefit payments start the first day of a month and are paid on the last business day; the first payment includes any accrued amount.

Pension funding changes spread over 25 years

Starting July 1, 2021, any change in unfunded pension liability is measured and paid off over 25 years from the valuation date. If the unfunded liability is zero or less at a valuation, it is reset and then amortized over 25 years.

Divorce and death rules for retirement

For divorce orders, NPERS sets aside the money and decides if the order is qualified. You control investments until the decision. If the order is qualified within 18 months, the alternate payee gets the set‑aside amount plus interest; otherwise it goes back to you or your beneficiaries. For deferred comp death benefits, payment goes to your named beneficiary first, then your spouse if no beneficiary, then your estate. Joint‑and‑survivor retirees follow their option rules.

State worker status, rehire, and separation

If you are a temporary state worker who was a prior contributing member and return before a 120‑day break, you must restart participation within 30 days. You may ask NPERS to confirm you have been separated for at least 180 days; send clear evidence within 45 days of your separation or application date. You can appeal within 30 days. For legislative staff, working at least half the scheduled session hours counts as full‑time; less than half counts as part‑time. Temporary hires are limited to short periods or set hours (for example, less than six months or up to 2,080 hours).

Stronger NPERS executive director and oversight

The board appoints an NPERS executive director, with approval by the Governor and a majority of the Legislature. The director keeps full member records, sets reporting forms, tests data accuracy, and can get agency records. The law updates the title to “executive director,” clarifies staff classifications, and requires an employer education program. The investment officer must sell investments when the director needs cash to pay benefits.

COLA date shifts and a 1% cap

Annual cost‑of‑living increases post on January 1 through 2026. Starting September 1, 2026, they post each September 1. Each year’s increase is the smaller of 1% or the CPI rise since your benefit started, minus prior COLAs. If CPI‑U is discontinued, a Labor Department index is chosen: the board selects it if before Sept. 1, 2024; the Public Employees Retirement Board selects it on or after that date.

Investment council changes and payout rules

The State Treasurer and the NPERS executive director join the Nebraska Investment Council as nonvoting members. Those two do not get the $75 per‑day payment, while appointed members still do. The state investment officer must sell investments when asked by the executive director to provide cash to pay Nebraska State Patrol benefits and annuities.

Judges plan state contribution can adjust

If the judges plan is 100% funded for two straight years, the actuary reviews whether the state contribution (capped at 5%) should be lowered and reports it. If it was lowered before and the plan is under 100% funded for two straight years, the actuary reviews whether it should rise. After the board approves the valuation, it must notify the Legislature’s committee, the Governor, and the Supreme Court within 7 business days. The committee decides any adjustment and may propose it to the Legislature.

Protect pension tax status and oversight

The board must run plans to keep them tax‑qualified under federal law. A governmental employer planning a deal that could end its qualified status must notify the board up to 180 days before and may pay for needed actuarial studies. The board must get an experience study at least every four years and present it publicly, with written reasons if it declines recommendations.

Sponsors & Cosponsors

Sponsor

  • Nebraska Retirement Systems Committee

    Affiliation unavailable

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 215 • No: 0

legislature vote • 4/10/2026

Final Reading

Yes: 49 • No: 0

legislature vote • 3/31/2026

Vote

Yes: 39 • No: 0 • Other: 10

legislature vote • 3/12/2026

Vote

Yes: 30 • No: 0 • Other: 19

legislature vote • 3/12/2026

Vote

Yes: 29 • No: 0 • Other: 20

legislature vote • Unknown

Vote

Yes: 29 • No: 0 • Other: 20

legislature vote • Unknown

Vote

Yes: 39 • No: 0 • Other: 10

Actions Timeline

  1. Provisions/portions of LB1166 amended into LB820 by AM2425

    4/17/2026legislature

  2. Provisions/portions of LB1103 amended into LB820 by AM2425

    4/17/2026legislature

  3. Provisions/portions of LB1102 amended into LB820 by AM2425

    4/17/2026legislature

  4. Provisions/portions of LB433 amended into LB820 by AM2736

    4/17/2026legislature

  5. Presented to Governor on April 10, 2026

    4/17/2026legislature

  6. Approved by Governor on April 14, 2026

    4/14/2026legislature

  7. President/Speaker signed

    4/10/2026legislature

  8. Passed on Final Reading with Emergency Clause 49-0-0

    4/10/2026legislature

  9. Dispensing of reading at large approved

    4/10/2026legislature

  10. Placed on Final Reading

    4/7/2026legislature

  11. Advanced to Enrollment and Review for Engrossment

    3/31/2026legislature

  12. Sorrentino AM2736 adopted

    3/31/2026legislature

  13. Kauth FA449 withdrawn

    3/31/2026legislature

  14. Enrollment and Review ER149 adopted

    3/31/2026legislature

  15. Sorrentino AM2736 filed

    3/19/2026legislature

  16. Enrollment and Review ER149 filed

    3/18/2026legislature

  17. Placed on Select File with ER149

    3/18/2026legislature

  18. Advanced to Enrollment and Review Initial

    3/12/2026legislature

  19. Nebraska Retirement Systems AM2425 adopted

    3/12/2026legislature

  20. Nebraska Retirement Systems AM2425 filed

    3/9/2026legislature

  21. Placed on General File with AM2425

    3/9/2026legislature

  22. Nebraska Retirement Systems priority bill

    2/17/2026legislature

  23. Notice of hearing for January 23, 2026

    1/14/2026legislature

  24. Referred to Nebraska Retirement Systems Committee

    1/9/2026legislature

  25. Kauth FA449 filed

    1/8/2026legislature

Bill Text

  • Introduced

    1/7/2026

    PDF

  • Enrolled / Slip Law

    PDF

  • Final / Enacted

    PDF

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