1Amending Titles 24 (Education) and 51 (Military Affairs) of the
2Pennsylvania Consolidated Statutes, in preliminary
3provisions, further providing for definitions and
4construction and providing for references; in retirement
5membership, contributions and benefits, further providing for
6mandatory and optional membership, for credited school
7service, for waiver of adjustments and for classes of
8service, for elections, for eligibility points, for
9eligibility for annuities, for eligibility for refunds, for
10pickup contributions, for member contributions, for
11contributions for purchase of credit, for incomplete
12payments, for annual compensation limit, for contributions by
13Commonwealth, for payments by employers, for actuarial cost
14method, for appropriations by Commonwealth, for return of
15accumulated deductions, for single life annuity, for
16disability annuities, for termination of annuities and
17payment of benefits; providing for school employees' defined
18contribution plan; in administrative and miscellaneous
19provisions, further providing for the Public School
20Employees' Retirement Board, for administrative duties of
21board, for health insurance, for advisory and reporting
22duties, for application and election duties, for duties of
23employers, for rights and duties of school employees and
24members, for management of fund and accounts, for Public
25School Employees' Retirement Fund, for State accumulation
26account, for annuity reserve account, for State guarantee,
27for taxation, for attachment and assignment of funds, for
28approval of domestic relations orders, for irrevocable
29survivor annuitant and for amendment of approved domestic
30relations orders; providing for irrevocable successor payee;
31further providing for fraud and adjustment of errors and for

1payments to school entities by Commonwealth; providing for
2payments to school entities by Commonwealth commencing with
3the 2015-2016 school year; in health insurance for retired
4school employees, further providing for definitions; and, in
5military leave of absence, further providing for retirement
6rights.

7The General Assembly of the Commonwealth of Pennsylvania
8hereby enacts as follows:

9Section 1. The definitions of "alternate payee,"
10"beneficiary," "compensation," "creditable nonschool service,"
11"credited service," "date of termination of service,"
12"distribution," "domestic relations order," "eligible
13annuitants," "final average salary," "inactive member,"
14"intervening military service," "irrevocable beneficiary,"
15"leave for service with a collective bargaining organization,"
16"previous school service," "salary deductions" and "valuation
17interest" in section 8102 of Title 24 of the Pennsylvania
18Consolidated Statutes are amended and the section is amended by
19adding definitions to read:

20§ 8102. Definitions.

21The following words and phrases when used in this part shall
22have, unless the context clearly indicates otherwise, the
23meanings given to them in this section:

24* * *

25"Accumulated employer defined contributions." The total of
26the employer defined contributions paid into the trust on
27account of a participant's school service together with any
28investment earnings and losses and adjustment for fees, costs
29and expenses credited or charged thereon.

30"Accumulated mandatory participant contributions." The total
31of the mandatory pickup participant contributions paid into the
32trust on account of a participant's school service together with
33any investment earnings and losses and adjustments for fees,

1costs and expenses credited or charged thereon.

2"Accumulated total defined contributions." The total of the
3accumulated mandatory participant contributions, accumulated
4employer defined contributions and accumulated voluntary
5contributions, reduced by any distributions, standing to the
6credit of a participant in an individual investment account in
7the trust.

8"Accumulated voluntary contributions." The total of
9voluntary contributions paid into the trust by a participant and
10any amounts rolled over by a participant or transferred by a
11direct trustee-to-trustee transfer into the trust together with
12any investment earnings and losses and adjustment for fees,
13costs and expenses credited or charged thereon.

14* * *

15"Active participant." A school employee for whom mandatory
16pickup participant contributions are being made to the trust or
17for whom such contributions otherwise required for current
18school service are not being made solely by reason of any
19provision of this part relating to the limitations under section
20401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public
21Law 99-514, 26 U.S.C. § 401(a)(17) or 415.

22* * *

23"Alternate payee." Any spouse, former spouse, child or 
24dependent of a member or participant who is recognized by a 
25domestic relations order as having a right to receive all or a 
26portion of the moneys payable to that member or participant 
27under this part.

28* * *

29"Beneficiary." [The] In the case of the system, the person 
30or persons last designated in writing to the board by a member
 

1to receive his accumulated deductions or a lump sum benefit upon 
2the death of such member. In the case of the plan, the person or 
3persons last designated in writing to the board by a participant 
4to receive his accumulated total defined contributions or a lump 
5sum benefit upon the death of such participant.

6* * *

7"Combined service employee." A current or former school
8employee who is both a member of the system and a participant in
9the plan.

10* * *

11"Compensation." Pickup contributions and mandatory pickup 
12participant contributions plus any remuneration received as a 
13school employee excluding reimbursements for expenses incidental 
14to employment and excluding any bonus, severance payments, any 
15other remuneration or other emolument received by a school 
16employee during his school service which is not based on the 
17standard salary schedule under which he is rendering service, 
18payments for unused sick leave or vacation leave, bonuses or 
19other compensation for attending school seminars and 
20conventions, payments under health and welfare plans based on 
21hours of employment or any other payment or emolument which may 
22be provided for in a collective bargaining agreement which may 
23be determined by the Public School Employees' Retirement Board 
24to be for the purpose of enhancing compensation as a factor in 
25the determination of final average salary, and for participants, 
26excluding payments for military leave, and any other payments 
27made by an employer while the participant is on USERRA leave, 
28leave of absence granted under 51 Pa.C.S. § 4102 (relating to 
29leave of absence for certain government employees), military 
30leave of absence granted under 51 Pa.C.S. § 7302 (relating to
 

1granting military leaves of absence), military leave of absence 
2granted under 24 P.S. § 11-1176, or other types of military 
3leave, including other types of leave payments, stipends, 
4differential wage payments as defined in IRC § 414(u)(12) and 
5any other payments, provided, however, that the limitation under 
6section 401(a)(17) of the Internal Revenue Code of 1986 (Public 
7Law 99-514, 26 U.S.C. § 401(a)(17)) taken into account for the 
8purpose of member contributions, including regular or joint 
9coverage member contributions, regardless of class of service, 
10shall apply to each member who first became a member of the 
11Public School Employes' Retirement System on or after July 1, 
121996, and who by reason of such fact is a noneligible member 
13subject to the application of the provisions of section 8325.1 
14(relating to annual compensation limit under IRC § 401(a)(17)) 
15and shall apply to each participant.

16* * *

17"Creditable nonschool service." Service other than service 
18as a school employee for which an active member may obtain 
19credit in the system.

20"Credited service." School or creditable nonschool service 
21for which the required contributions have been made to the fund, 
22or for which the contributions otherwise required for such 
23service were not made solely by reason of any provision of this 
24part relating to the limitations under section 401(a)(17) or 
25415(b) of the Internal Revenue Code of 1986 (Public Law 99-514, 
2626 U.S.C. § 401(a)(17) or 415(b)), or for which salary 
27deductions to the system or lump sum payments have been agreed 
28upon in writing.

29"Date of termination of service." The last date of service 
30for which: 

1(1) pickup contributions are made for an active member 
2[or,];

3(2) in the case of an inactive member, the effective 
4date of his resignation or the date his employment is 
5formally discontinued by his employer or two years following 
6the last day of service for which contributions were made, 
7whichever is earliest[.];

8(3) mandatory pickup participant contributions are made
9for an active participant;

10(4) in the case of an inactive participant, the date of
11his resignation or the date his employment is formally
12discontinued by his employer; or

13(5) in the case of a combined service employee, the
14latest of the dates in paragraph(3) or (4).

15* * *

16"Distribution." Payment of all or any portion of a person's 
17interest in either the Public School Employees' Retirement Fund 
18or the School Employees' Defined Contribution Trust, or both, 
19which is payable under this part.

20"Domestic relations order." Any judgment, decree or order, 
21including approval of a property settlement agreement, entered 
22on or after the effective date of this definition by a court of 
23competent jurisdiction pursuant to a domestic relations law 
24which relates to the marital property rights of the spouse or 
25former spouse of a member or participant, including the right to 
26receive all or a portion of the moneys payable to that member or 
27participant under this part in furtherance of the equitable 
28distribution of marital assets. The term includes orders of 
29support as that term is defined by 23 Pa.C.S. § 4302 (relating 
30to definitions) and orders for the enforcement of arrearages as
 

1provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
2arrearages).

3* * *

4"Eligible annuitants." All current and prospective 
5annuitants with 24 1/2 or more eligibility points and all 
6current and prospective disability annuitants. Beginning January 
71, 1995, "eligible annuitants" shall include members with 15 or 
8more eligibility points who terminated or who terminate school 
9service on or after attaining superannuation retirement age and 
10who are annuitants with an effective date of retirement after 
11superannuation age. The term eligible annuitants shall not 
12include participants.

13* * *

14"Employer defined contributions."

15(1) Unless paragraph (2) is applicable, contributions
16equal to four percent of an active participant's compensation
17that are made by an employer for current service to the trust
18to be credited in the participant's individual investment
19account.

20(2) For active participants who elected to be
21participants under section 8416 (relating to elections by
22members to be participants), contributions equal to 4% of an
23active participant's compensation which are made by an
24employer for current service to the trust to be credited in
25the participant's individual investment account. This
26paragraph shall apply to a participant only until termination
27of service such that the participant is eligible for benefits
28under section 8407 (relating to eligibility for benefits)
29without regard to whether or not a participant actually
30receives benefits. For subsequent school service as an active

1participant, the employer defined contributions shall equal
24% of an active participant's compensation.

3"Final average salary." The highest average compensation 
4received as an active member during any three nonoverlapping 
5periods of 12 consecutive months with the compensation for part-
6time service being annualized on the basis of the fractional 
7portion of the school year for which credit is received; except, 
8if the employee was not a member for three such periods, the 
9total compensation received as an active member annualized in 
10the case of part-time service divided by the number of such 
11periods of membership; in the case of a member with multiple 
12service credit, the final average salary shall be determined by 
13reference to compensation received by him as a [school employee] 
14member of the system or a State employee other than as a 
15participant in the State Employees' Defined Contribution Plan or 
16both; and, in the case of a noneligible member, subject to the 
17application of the provisions of section 8325.1 (relating to 
18annual compensation limit under IRC § 401(a)(17)).

19* * *

20"Inactive member." A member for whom no pickup contributions 
21are being made to the fund, except in the case of an active 
22member for whom such contributions otherwise required for 
23current school service are not being made solely by reason of 
24any provision of this part relating to the limitations under 
25section 401(a)(17) or 415(b) of the Internal Revenue Code of 
261986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)), who 
27has accumulated deductions standing to his credit in the fund 
28and for whom contributions have been made within the last two 
29school years or a multiple service member who is active in the 
30State Employees' Retirement System.

1"Inactive participant." A participant for whom no mandatory 
2pickup participant contributions are being made to the trust, 
3except in the case of an active participant for whom such 
4contributions otherwise required for current school service are 
5not being made solely by reason of any provision of this part 
6relating to limitations under section 401(a)(17) or 415 of the 
7Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
8401(a)(17) or 415), who has vested accumulated total defined 
9contributions standing to his credit in the trust and who has 
10not filed an application for an annuity.

11"Individual investment account." The account in the trust to
12which are credited the amounts of the contributions made by a
13participant and the participant's employer in accordance with
14the provisions of this part, together with all interest and
15investment earnings after deduction for fees, costs and
16expenses, investment losses and charges for distributions.

17"Intervening military service." Active military service of a 
18member who was a school employee and an active member of the 
19system immediately preceding his induction into the armed 
20services or forces of the United States in order to meet a draft 
21obligation excluding any voluntary extension of such 
22obligational service and who becomes a school employee and an 
23active member of the system within 90 days of the expiration of 
24such service.

25* * *

26"Irrevocable beneficiary." The person or persons permanently 
27designated by a member or a participant in writing to the board 
28pursuant to an approved domestic relations order to receive all 
29or a portion of the accumulated deductions, vested accumulated 
30total defined contributions or lump sum benefit payable upon the
 

1death of such member or participant.

2"Irrevocable successor payee." The person permanently
3designated by a participant receiving vested distributions in
4writing to the Board pursuant to an approved domestic relations
5order to receive one or more distributions from the plan upon
6the death of such participant.

7* * *

8"Leave for service with a collective bargaining 
9organization." Paid leave granted to an active member or active 
10participant by an employer for purposes of working full time for 
11or serving full time as an officer of a Statewide employee 
12organization or a local collective bargaining representative 
13under the act of July 23, 1970 (P.L.563, No.195), known as the 
14Public Employe Relations Act: Provided, That greater than one-
15half of the members of the employee organization are active 
16members of the system or active participants of the plan; that 
17the employer shall fully compensate the member or active 
18participant, including, but not limited to, salary, wages, 
19pension and retirement contributions and benefits, other 
20benefits and seniority, as if he were in full-time active 
21service; and that the employee organization shall fully 
22reimburse the employer for such salary, wages, pension and 
23retirement contributions and benefits and other benefits and 
24seniority.

25"Mandatory pickup participant contributions." Contributions
26equal to 4% of compensation that are made by the employer for
27active participants for current service that are picked up by
28the employer.

29* * *

30"Participant." An active participant, inactive participant

1or participant receiving distributions.

2"Participant receiving distributions." A participant in the
3plan who has commenced receiving distributions from his
4individual investment account but who has not received a total
5distribution of his vested interest in the individual investment
6account.

7* * *

8"Plan." The School Employees' Defined Contribution Plan as
9established by the provisions of this part and the board.

10"Plan document." The documents created by the board under
11section 8402 (relating to plan document) that contains the terms
12and provisions of the plan and trust as established by the board
13regarding the establishment, administration and investment of
14the plan and trust.

15"Previous school service." Service [rendered] as a school 
16employee including service in any summer school conducted by a 
17school district of the Commonwealth, but excluding service 
18rendered during which the school employee was or could have been 
19a participant in the plan, prior to the member's most recent 
20entrance in the system.

21* * *

22"Reemployed from USERRA leave." Resumption of active
23participation as a school employee after a period of USERRA
24leave, provided the resumption of active participation was
25within the time period and under conditions and circumstances
26such that the school employee was entitled to reemployment
27rights under 38 U.S.C. Ch. 43 (relating to employment and
28reemployment rights of members of the uniformed services).

29* * *

30"Required beginning date." The latest date by which

1distributions of a participant's interest in his individual
2investment account must commence under IRC § 401(a)(9).

3* * *

4"Salary deductions." The amounts certified by the board, 
5deducted from the compensation of an active member or active 
6participant or the State service compensation of a multiple 
7service member who is an active member of the State Employees' 
8Retirement System and paid into the fund or trust.

9* * *

10"State Employees' Defined Contribution Plan." The defined
11contribution plan for State employees established by part XXV
12(relating to retirement for State employees and officers).

13* * *

14"Successor payee." The person or persons last designated by
15a participant receiving distributions in writing to the board to
16receive one or more distributions upon the death of such
17participant.

18* * *

19"Trust." The School Employees' Defined Contribution Trust
20established under Chapter 84 (relating to school employees'
21defined contribution plan).

22"USERRA leave." Any period of time for service in the
23uniformed services (as defined in 38 U.S.C. Ch. 43 (relating to
24employment and reemployment rights of members of the uniformed
25services)) by a participant or former participant who terminated
26school service to perform such service in the uniformed
27services, if such current or former participant is entitled to
28reemployment rights under 38 U.S.C. Ch. 38 with respect to such
29uniformed service.

30"Valuation interest." Interest at 5 1/2% per annum,

1compounded annually and applied to all accounts of the fund
2other than the members' savings account.

3* * *

4"Voluntary contributions." Contributions made by a
5participant to the trust and credited to his individual
6investment account in excess of his mandatory pickup participant
7contributions, either by salary deductions paid through the
8employer or by an eligible rollover or direct trustee-to-trustee
9transfers.

10Section 2. Section 8103 of Title 24 is amended by adding
11subsections to read:

12§ 8103. Construction of part.

13* * *

14(c) Construction regarding inactive member and inactive
15participant.--As used in this part, the term "inactive member"
16does not include a combined service employee who is an "inactive
17participant." The term "inactive participant" does not include a
18combined service employee who is an "inactive member."

19(d) Provisions severable.--The provisions of this part are
20severable and if any of its provisions shall be held to be
21unconstitutional, the decision of the court shall not affect or
22impair any of the remaining provisions. It is hereby declared to
23be the legislative intent that this part would have been adopted
24had such unconstitutional provisions not been included.

25(e) References to certain Federal statutes.--References in
26this part to the IRC or the Uniformed Services Employment and
27Reemployment Rights Act of 1994 (Public Law 103-353, 38 U.S.C. §
284301), including administrative regulations promulgated under
29the IRC or the Uniformed Services Employment and Reemployment
30Rights Act of 1994, are intended to include laws and regulations

1in effect on the effective date of this section and amended,
2supplemented or supplanted on and after the effective date of
3this section.

4(f) Construction.--

5(1) This part may not be construed to mean that the
6limitations on benefits or other requirements under section
7401(a) of the IRC or other applicable provisions of the IRC
8that are applicable to participants or to the members of the
9system and the benefits payable under Part IV of the IRC.

10(2) This part may not be construed to mean that an
11interpretation or application of the provisions of Part IV or
12benefits available to members of the Public School Employees'
13Retirement System was not in accordance with the provisions
14of Part IV or other applicable law, including the IRC and the
15Uniformed Services Employment and Reemployment Rights Act of
161994 before the effective date of this section.

17(3) This part may not be construed to mean that the
18release or publicizing of a record, material or data that
19would not constitute a public record under section 8502(e)(2)
20(relating to administrative duties of board) is a violation
21of the fiduciary duties of the board.

22(g) Applicability.--The following shall apply:

23(1) The amendment of Part IV regarding the establishment
24of and participation in the plan shall apply to current and
25former members of the system who have returned to school
26service on or after July 1, 2015, after a termination of
27school service, notwithstanding the following:

28(i) Whether the termination occurred before or after
29July 1, 2015.

30(ii) Whether the school employee was an annuitant,

1inactive member or vestee or withdrew accumulated
2deductions during the period of termination.

3(2) A terminated school employee who returns to school
4service on or after July 1, 2015, is subject to the
5provisions of Part IV regarding participation in the plan or
6membership in the system that are in effect on the effective
7date of reemployment, including benefit formulas and accrual
8rates, eligibility for annuities and distributions,
9contribution rates, definitions, purchase of creditable
10school and nonschool service provisions and actuarial and
11funding assumptions.

12(3) This part shall apply to a record, material or data
13under section 8502(e)(2) notwithstanding whether:

14(i) The record, material or data was created,
15generated or stored before the effective date of this
16section.

17(ii) The record, material or data was previously
18released or made public.

19(iii) A request for the record, material or data was
20made or is pending final response under the former act of
21June 21, 1957 (P.L.390, No.212), referred to as the
22Right-to-Know Law, or the act of February 14, 2008
23(P.L.6, No.3), known as the Right-to-Know Law.

24Section 3. Title 24 is amended by adding a section to read:

25§ 8103.1. Reference to Public School Employees' Retirement
26System.

27(a) Reference.--As of the effective date of this section,
28unless the context clearly indicates otherwise, any reference to
29the Public School Employees' Retirement System in a statutory
30provision, other than this part, and 71 Pa.C.S. Pt. XXV

1(relating to retirement for State employees and officers), shall
2include a reference to the plan, and any reference to the Public
3School Employees' Retirement Fund shall include a reference to
4the trust.

5(b) Agreement.--The agreement of an employer to make
6contributions to the fund or to enroll its employees as members
7in the system shall be deemed to be an agreement to make
8contributions to the trust or to enroll its employees in the
9plan.

10Section 4. Sections 8301 and 8302(a), (b) and (c) of Title
1124 are amended and the sections are amended by adding
12subsections to read:

13§ 8301. Mandatory and optional membership in the system and 
14participation in the plan.

15(a) Mandatory membership.--[Membership] Unless an election 
16to be a participant in the plan is made, membership in the
17system shall be mandatory as of the effective date of employment
18for all school employees except the following:

19(1) [Any] Subject to the provisions in subsection (a.1), 
20any officer or employee of the Department of Education,
21State-owned educational institutions, community colleges,
22area vocational-technical schools, technical institutes[,] or
23[the] The Pennsylvania State University and who is a member
24of the [State Employees' Retirement System] system or a
25member of another retirement program approved by the
26employer.

27(2) [Any] Subject to the provisions in subsection (a.2), 
28any school employee who is not a member of the system and who 
29is employed on a per diem or hourly basis for less than 80
30full-day sessions or 500 hours in any fiscal year or

1annuitant who returns to school service under the provisions
2of section 8346(b) (relating to termination of annuities).

3(3) Any officer or employee of a governmental entity who
4subsequent to December 22, 1965, and prior to July 1, 1975,
5administers, supervises[,] or teaches classes financed wholly
6or in part by the Federal Government so long as he continues
7in such service.

8(4) [Any] Subject to the provisions in subsection (a.2), 
9any part-time school employee who has an individual
10retirement account pursuant to the Federal act of September
112, 1974 (Public Law 93-406, 88 Stat. 829), known as the
12Employee Retirement Income Security Act of 1974.

13(5) School employees whose most recent period of school
14service starts on or after July 1, 2015.

15(a.1) (1) Any officer or employee of the Department of
16Education, State-owned educational institutions, community
17colleges and The Pennsylvania State University who is an
18active member on December 31, 2014, and January 1, 2015,
19shall remain an active member in their class of service until
20termination of school service. Any officer or employee of the
21Department of Education, State-owned educational
22institutions, community colleges and The Pennsylvania State
23University who becomes a school employee, or who returns to
24school service, on or after January 1, 2015, shall not be
25eligible for membership in the system and shall not be
26eligible to become a participant in the plan.

27(2) Any officer or employee of an area vocational-
28technical school or technical institute who is an active
29member on June 30, 2015, and July 1, 2015, shall remain an
30active member in their class of service until termination of

1school service. Any officer or employee of an area
2vocational-technical school or technical institute who
3becomes a school employee, or who returns to school service,
4on or after July 1, 2015, shall be a mandatory participant in
5the plan and shall not be eligible to elect membership or
6participation in the State Employees' Retirement System or
7plan or another retirement program approved by the employer.

8(3) Any school employee other than those listed in
9subsection (a)(1) who are active members on June 30, 2015 and
10July 1, 2015, shall remain active members in their class of
11service until termination of school service.

12(a.2) On or after July 1, 2015, any school employee who is
13not a member of the system and who is employed on a per diem or
14hourly basis, or annuitant who returns to school service under
15the provisions of section 8346(b), shall be a mandatory
16participant in the plan, unless the school employee is:

17(1) a part-time school employee who has an individual
18retirement account pursuant to the Employee Retirement Income
19Security Act of 1974; and

20(2) makes an election not to become a participant.

21(b) Prohibited membership in the system.--The school
22employees categorized in subsection (a)(1) [and (2)], (2), (4) 
23and (5) shall not have the right to elect membership in the
24system.

25(c) Optional membership in the system.--The school employees
26categorized in subsection (a)(3) and, if otherwise eligible,
27subsection (a)(4) shall have the right to elect membership in
28the system on or before July 1, 2015. Once such election is
29exercised, membership shall commence from the original date of
30eligibility and shall continue until the termination of such

1service or the school employee elects to be a participant of the 
2plan.

3(d) Mandatory participation in the plan.--Subject to the
4exceptions in subsections (a.1) and (a.2), a school employee who
5begins school service, or who returns to school service after a
6break in service, on or after July 1, 2015, shall be a mandatory
7participant in the plan as a result of such school service.

8§ 8302. Credited school service.

9(a) Computation of credited service.--In computing credited
10school service of a member for the determination of benefits, a
11full-time salaried school employee shall receive one year of
12credit for each school year or the corresponding fraction
13thereof, in accordance with the proportion of the full school
14year for which the required regular member contributions have
15been made to the fund, or for which such contributions otherwise
16required for such service were not made to the fund solely by
17reason of any provision of this part relating to the limitations
18under IRC § 401(a)(17) or 415(b). A per diem or hourly school
19employee shall receive one year of credited service for each
20nonoverlapping period of 12 consecutive months in which he is
21employed and for which contributions are made to the fund, or
22would have been made but for such limitations under the IRC, for
23at least 180 full-day sessions or 1,100 hours of employment. If
24such member was employed and contributions were made to the fund
25for less than 180 full-day sessions or 1,100 hours, he shall be
26credited with a fractional portion of a year determined by the
27ratio of the number of full-day sessions or hours of service
28actually rendered and for which contributions are made to the 
29fund to 180 full-day sessions or 1,100 hours, as the case may
30be. A part-time salaried employee shall be credited with the

1fractional portion of the year which corresponds to the service
2actually rendered and for which contributions are made to the 
3fund in relation to the service required as a comparable full-
4time salaried employee. In no case shall a member receive more
5than one year of credited service for any 12 consecutive months
6or a member who has elected multiple service receive an
7aggregate in the two systems of more than one year of credited
8service for any 12 consecutive months.

9(b) Approved leaves of absence.--An active member or active 
10participant shall receive credit for an approved leave of
11absence provided that:

12(1) the member returns for a period at least equal to
13the length of the leave or one year as a member of the system 
14or the participant returns to school service as an active 
15participant in the plan, whichever is less, to the school
16district which granted his leave, unless such condition is
17waived by the employer; and

18(2) the proper contributions are made by the member and
19the employer or by the active participant and the employer.

20* * *

21(c) Cancellation of credited service.--All credited service 
22in the system shall be cancelled if a member withdraws his
23accumulated deductions. A partial or total distribution of 
24accumulated total defined contributions to a combined service 
25employee shall not cancel service credited in the system.

26(d) Military service by a participant.--A participant who
27has performed USERRA leave shall be treated and may make
28contributions as provided by this subsection.

29(1) A participant who is reemployed from USERRA leave
30shall be treated as not having incurred a break in school

1service by reason of the USERRA leave. If a participant who
2is reemployed from USERRA leave subsequently makes mandatory
3pickup participant contributions in the amounts and in the
4time periods required by 38 U.S.C. Ch. 43 (relating to
5employment and reemployment rights of members of the
6uniformed services) and IRC § 414(u) as if the participant
7had continued in his school employment and performed school
8service and been compensated during the period of USERRA
9leave, then the participant's employer shall make the
10corresponding employer defined contributions. Such an
11employee shall have his contributions, benefits, rights and
12obligations determined under this part as if he was an active
13participant who performed school service during the USERRA
14leave in the job position that he would have held had he not
15been on USERRA leave and received the compensation on which
16the mandatory pickup participant contributions to receive
17school service credit for the USERRA leave were determined,
18including the right to make voluntary contributions on such
19compensation as permitted by law.

20(2) A participant who is reemployed from USERRA leave
21who does not make the mandatory pickup participant
22contributions or makes only part of the mandatory pickup
23participant contributions within the allowed payment period
24shall not be eligible to make mandatory pickup participant
25contributions and voluntary contributions at a later date for
26the period of USERRA leave for which the mandatory pickup
27participant contributions were not timely made.

28(3) A participant employee who performs USERRA leave
29from which the employee could have been reemployed from
30USERRA leave had the school employee returned to school

1service in the time frames required by 38 U.S.C. Ch. 43 for
2reemployment rights, but did not do so, shall not be eligible
3to make mandatory pickup participant contributions or
4voluntary contributions for the period of USERRA leave should
5the employee later return to school service and be a
6participant in the plan.

7(4) An active participant or inactive participant who,
8on or after the effective date of this subsection, is granted
9a leave of absence under 51 Pa.C.S. § 4102 (relating to
10leaves of absence for certain government employees) or a
11military leave under 51 Pa.C.S. Ch. 73 (relating to military
12leave of absence), that is not USERRA leave shall not be able
13to make mandatory pickup participant contributions or
14voluntary contributions during or for the leave of absence or
15military leave, and shall not have employer defined
16contributions made during such leave, without regard to
17whether or not the school employee received salary, wages,
18stipends, differential wage payments or other payments from
19his employer during the leave, notwithstanding any provision
20to the contrary in 51 Pa.C.S. § 4102 or Ch 73.

21(5) If a participant dies while performing USERRA leave,
22then the beneficiaries or successor payees, as the case may
23be, of the deceased participant are entitled to any
24additional benefits, other than benefit accruals relating to
25the period of qualified military service, provided under this
26part had the participant resumed and then terminated
27employment on account of death.

28Section 5. Section 8303.1 of Title 24 is amended to read:

29§ 8303.1. Waiver of adjustments.

30(a) Allowance.--Upon appeal by an affected member,
 

1participant, beneficiary or survivor annuitant, the board may
2waive an adjustment or any portion of an adjustment made under
3section 8534(b) (relating to fraud and adjustment of errors) if
4in the opinion of the board or the board's designated
5representative:

6(1) the adjustment or portion of the adjustment will
7cause undue hardship to the member, participant, beneficiary
8or survivor annuitant;

9(2) the adjustment was not the result of erroneous
10information supplied by the member, participant, beneficiary
11or survivor annuitant;

12(3) the member or participant had no knowledge or notice
13of the error before adjustment was made, and the member, 
14participant, beneficiary or survivor annuitant took action
15with respect to their benefits based on erroneous information
16provided by the system or plan; and

17(4) the member, participant, beneficiary or survivor
18annuitant had no reasonable grounds to believe the erroneous
19information was incorrect before the adjustment was made.

20(b) Time period.--In order to obtain consideration of a
21waiver under this section, the affected member, participant,
22beneficiary or survivor annuitant must appeal to the board in
23writing within 30 days after receipt of notice that benefits
24have been adjusted or, if no notice was given, within 30 days
25after the adjustment was known or should have been known to the
26affected member, participant, beneficiary or survivor annuitant.
27For any adjustments made prior to the effective date of this
28subsection for which the member, participant, beneficiary or
29survivor annuitant appealed to the board and was denied, an
30appeal under this section must be filed within 90 days of the

1effective date of this subsection.

2Section 6. Section 8305(b) of Title 24 is amended and the
3section is amended by adding a subsection to read:

4§ 8305. Classes of service.

5* * *

6(b) Other class membership.--A school employee who is a
7member of a class of service other than Class T-C on the
8effective date of this part may elect to become a member of
9Class T-C or Class T-D or may retain his membership in such
10other class until the service is discontinued or he elects to
11become a full coverage member or elects to purchase credit for
12previous school or creditable nonschool service. Any service
13thereafter as a member of the system shall be credited as Class
14T-C or T-D service as applicable.

15* * *

16(f) Ineligibility for active membership and classes of
17service.--An individual who elects to be a participant in the
18plan or who first becomes a school employee on or after July 1,
192015, or who returns to school service on or after July 1, 2015
20after a termination of school service, shall be ineligible for
21active membership in the system. Instead, any such school
22employee shall be a participant in the plan as a result of such
23school service, subject to the provisions in section 8301
24(relating to mandatory and optional membership).

25Section 7. Sections 8305.1(c) and 8305.2(c) and (d) of Title
2624 are amended to read:

27§ 8305.1. Election to become a Class T-D member.

28* * *

29(c) Effect of election.--An election to become a Class T-D
30member shall remain in effect until the termination of

1employment. Those members who, on the effective date of this
2section, contribute at the rate of 5 1/4% shall be deemed to
3have accepted the basic contribution rate of 6 1/2% for all
4Class T-D service performed on or after January 1, 2002. Those
5members who, on the effective date of this section, contribute
6at the rate of 6 1/4% shall be deemed to have accepted the basic
7contribution rate of 7 1/2% for all Class T-D service performed
8on or after January 1, 2002. Upon termination and a subsequent 
9reemployment that occurs before July 1, 2015, the school 
10employee's class of service shall be credited in the class of 
11service otherwise provided for in this part. If the reemployment 
12occurs on or after July 1, 2015, the school employee's 
13eligibility for membership in the system or participation in the 
14plan shall be as provided in this part.

15* * *

16§ 8305.2. Election to become a Class T-F member.

17* * *

18(c) Effect of election.--An election to become a Class T-F 
19member shall be irrevocable and shall commence from the original 
20date of eligibility and shall remain in effect for all future 
21school service creditable in the system. [A member who elects 
22Class T-F membership shall receive Class T-F service credit on 
23any and all future service, regardless of whether the member 
24terminates service or has a break in service.]

25(d) Effect of failure to make election.--If a member fails 
26to timely file an election to become a Class T-F member, then 
27the member shall be enrolled as a member of Class T-E, unless 
28the school employee elects or is required to be a participant in 
29the plan, and the member shall never be able to elect Class T-F 
30service, regardless of whether the member terminates service or
 

1has a break in service.

2Section 8. Section 8306(b) of Title 24 is amended and the
3section is amended by adding a subsection to read:

4§ 8306. Eligibility points.

5* * *

6(b) Transitional rule.--For the purposes of the transition:

7(1) In determining whether a member, other than a
8disability annuitant who returns to school service after June
930, 2001, upon termination of the disability annuity, who is
10not a school employee or a State employee on June 30, 2001,
11and July 1, 2001, and who has previous school service, has
12the five eligibility points required by the definition of
13"vestee" in sections 8102 (relating to definitions), 8307
14(relating to eligibility for annuities), 8308 (relating to
15eligibility for vesting) and 8345 (relating to member's
16options), only eligibility points earned by performing
17credited school service as an active member of the system or
18credited State service as an active member of the State 
19Employees' Retirement System after June 30, 2001, shall be
20counted until such member earns one eligibility point by
21performing credited school service or credited State service
22after June 30, 2001, at which time all eligibility points as
23determined under subsection (a) shall be counted.

24(2) A member subject to paragraph (1) shall be
25considered to have satisfied any requirement for five
26eligibility points contained in this part if the member has
27at least ten eligibility points determined under subsection
28(a).

29(c) Transitional rule for members electing participation.--
30In determining whether a school employee, who is an active

1member or an inactive member on July 1, 2015, and who elects to
2become a participant in the plan under section 8416 (relating to
3election by members to be participants) has the five or ten
4eligibility points required by sections 8102, 8307(b), 8308,
58344(b) (relating to disability annuities) and 8345(a), any such
6combined service employee shall be considered to have satisfied
7any requirement for five or ten eligibility points, as
8applicable, if the combined service employee does not terminate
9school service for three or more years after the effective date
10of participation in the plan.

11Section 9. Section 8307(a) and (b) of Title 24 are amended
12and the section is amended by adding a subsection to read:

13§ 8307. Eligibility for annuities.

14(a) Superannuation annuity.--An active or an inactive
15member, or a combined service employee who is an active or 
16inactive participant, and who attains superannuation age shall
17be entitled to receive a superannuation annuity upon termination
18of service and filing of a proper application.

19(a.1) Points.--Notwithstanding any regulation promulgated by
20the board, application or interpretation of Part IV (relating to
21retirement for school employees), or administrative practice to
22the contrary, a combined service employee's eligibility for a
23superannuation annuity or other rights and benefits based on
24attaining superannuation age or a superannuation score of 92
25shall be determined by including only those eligibility points
26actually accrued.

27(b) Withdrawal annuity.--A vestee in Class T-C or Class T-D 
28with five or more eligibility points or an active or inactive 
29Class T-C or Class T-D member, or a combined service employee 
30with Class T-C or T-D service, who terminates school service
 

1having five or more eligibility points shall, upon filing a 
2proper application, be entitled to receive an early annuity. A 
3vestee in Class T-E or Class T-F with ten or more eligibility 
4points or an active or inactive Class T-E or Class T-F member, 
5or a combined service employee with Class T-E or T-F service, 
6who terminates school service having ten or more eligibility 
7points shall, upon filing a proper application, be entitled to 
8receive an early annuity.

9* * *

10Section 10. Sections 8310, 8321(b), 8322.1(a), 8323(a) and
11(d), 8324(b), (c) and (d), 8325, 8325.1(a), 8326(a) and (c),
128327, 8328(b), (c), (d), (e), (g) and (h), 8330 and 8341 of
13Title 24 are amended to read:

14§ 8310. Eligibility for refunds.

15Upon termination of service any active member, regardless of
16eligibility for benefits, may elect to receive his accumulated
17deductions in lieu of any benefit from the system to which he is
18entitled.

19§ 8321. Regular member contributions for current service.

20* * *

21(b) Class T-E and Class T-F shared-risk contributions.--
22Commencing with the annual actuarial valuation performed under
23section 8502(j) (relating to administrative duties of board),
24for the period ending June 30, 2014, and every three years
25thereafter, the board shall compare the actual investment rate
26of return, net of fees, to the annual interest rate adopted by
27the board for the calculation of the normal contribution rate,
28based on the market value of assets, for the prior ten-year
29period. If the actual investment rate of return, net of fees, is
30less than the annual interest rate adopted by the board by an

1amount of 1% or more, the shared-risk contribution rate of Class
2T-E and T-F members will increase by .5%. If the actual
3investment rate of return, net of fees, is equal to or exceeds
4the annual interest rate adopted by the board, the shared-risk
5contributions rate of Class T-E and T-F members will decrease by
6.5%. Class T-E and T-F members will contribute at the total
7member contribution rate in effect when they are hired. The
8total member contribution rate for Class T-E members shall not
9be less than 7.5%, nor more than 9.5%. The total member
10contribution rate for Class T-F members shall not be less than
1110.3%, nor more than 12.3%. Notwithstanding this subsection, if
12the system's actuarial funded status is 100% or more as of the
13date used for the comparison required under this subsection, as
14determined in the current annual actuarial valuation, the
15shared-risk contribution rate shall be zero. In the event that
16the annual interest rate adopted by the board for the
17calculation of the normal contribution rate is changed during
18the period used to determine the shared-risk contribution rate,
19the board, with the advice of the actuary, shall determine the
20applicable rate during the entire period, expressed as an annual
21rate. For periods commencing on or after July 1, 2015, the 
22determination of the shared-risk member contribution rate shall 
23be based on the annual interest rate adopted by the board for 
24the calculation of the accrued liability contribution rate under 
25section 8328(c) (relating to actuarial cost method).

26(1) Until the system has a ten-year period of investment
27rate of return experience following the effective date of
28this subsection, the look-back period shall begin not earlier
29than the effective date of this subsection.

30(2) For any fiscal year in which the employer

1contribution rate is lower than the final contribution rate
2under section 8328(h) (relating to actuarial cost method),
3the total member contribution rate for Class T-E and T-F
4members shall be prospectively reset to the basic
5contribution rate.

6(3) There shall be no increase in the member
7contribution rate if there has not been an equivalent
8increase to the employer contribution rate over the previous
9three-year period.

10§ 8322.1. Pickup contributions.

11(a) Treatment for purposes of IRC § 414(h).--All
12contributions to the fund required to be made under sections
138321 (relating to regular member contributions for current
14service) and 8322 (relating to joint coverage member
15contributions), with respect to current school service rendered
16by an active member on or after January 1, 1983, shall be picked
17up by the employer and shall be treated as the employer's
18contribution for purposes of IRC § 414(h).

19* * *

20§ 8323. Member contributions for creditable school service.

21(a) Previous school service, sabbatical leave and full
22coverage.--The contributions to be paid by an active member or
23an eligible State employee for credit in the system for
24reinstatement of all previously credited school service, school
25service not previously credited, sabbatical leave as if he had
26been in full-time daily attendance, or full-coverage membership
27shall be sufficient to provide an amount equal to the
28accumulated deductions which would have been standing to the
29credit of the member for such service had regular member
30contributions been made with full coverage at the rate of

1contribution necessary to be credited as Class T-C service,
2Class T-D service if the member is a Class T-D member, Class T-E 
3service if the member is a Class T-E member or Class T-F service 
4if the member is a Class T-F member and had such contributions
5been credited with statutory interest during the period the
6contributions would have been made and during all periods of
7subsequent school service as an active member or inactive member
8and State service as an active member or inactive member on 
9leave without pay up to the date of purchase.

10* * *

11(d) Certification and payment of contributions.--

12(1) In all cases other than for the purchase of credit
13for sabbatical leave and activated military service leave
14beginning before the effective date of paragraph (2), the
15amount payable shall be certified by the board in accordance
16with methods approved by the actuary and may be paid in a
17lump sum within 90 days or in the case of an active member or
18an eligible State employee who is an active member of the
19State Employees' Retirement System it may be amortized with
20statutory interest through salary deductions to the system in
21amounts agreed upon by the member and the board. The salary
22deduction amortization plans agreed to by members and the
23board may include a deferral of payment amounts and statutory
24interest until the termination of school service or State
25service or becoming a participant and combined service 
26employee as the board in its sole discretion decides to
27allow. The board may limit salary deduction amortization
28plans to such terms as the board in its sole discretion
29determines. In the case of an eligible State employee who is
30an active member of the State Employees' Retirement System,

1the agreed upon salary deductions shall be remitted to the
2State Employees' Retirement Board, which shall certify and
3transfer to the board the amounts paid.

4(2) In the case of activated military service leave
5beginning before the effective date of this paragraph, the
6amount payable may be paid according to this subsection or
7subsection (c.1), but all lump sum payments must be made
8within one year of the termination of activated military
9service leave.

10§ 8324. Contributions for purchase of credit for creditable 
11nonschool service and noncreditable school service.

12* * *

13(b) Nonintervening military service.--The amount due for the 
14purchase of credit for military service other than intervening 
15military service shall be determined by applying the member's 
16basic contribution rate plus the normal contribution rate as 
17provided in section 8328 (relating to actuarial cost method) at 
18the time of entry of the member into school service subsequent 
19to such military service to one-third of his total compensation 
20received during the first three years of such subsequent 
21credited school service and multiplying the product by the 
22number of years and fractional part of a year of creditable 
23nonintervening military service being purchased together with 
24statutory interest during all periods of subsequent school 
25service as an active or inactive member and State service as an 
26active member or inactive member on leave without pay to date of 
27purchase. Upon certification of the amount due, payment may be 
28made in a lump sum within 90 days or in the case of an active 
29member or an eligible State employee who is an active member of 
30the State Employees' Retirement System it may be amortized with
 

1statutory interest through salary deductions to the system in 
2amounts agreed upon by the member and the board. The salary 
3deduction amortization plans agreed to by members and the board 
4may include a deferral of payment amounts and statutory interest 
5until the termination of school service or State service or 
6becoming a participant and a combined service employee as the 
7board in its sole discretion decides to allow. The board may 
8limit salary deduction amortization plans to such terms as the 
9board in its sole discretion determines. In the case of an 
10eligible State employee who is an active member of the State 
11Employees' Retirement System, the agreed upon salary deductions 
12shall be remitted to the State Employees' Retirement Board, 
13which shall certify and transfer to the board the amounts paid. 
14Application may be filed for all such military service credit 
15upon completion of three years of subsequent credited school 
16service and shall be credited as Class T-C service. In the event 
17that a Class T-E member makes a purchase of credit for such 
18military service, then such service shall be credited as Class 
19T-E service. In the event that a Class T-F member makes a 
20purchase of credit for such military service, then such service 
21shall be credited as Class T-F service.

22(c) Intervening military service.--Contributions on account
23of credit for intervening military service shall be determined
24by the member's basic contribution rate and compensation at the
25time of entry of the member into active military service,
26together with statutory interest during all periods of
27subsequent school service as an active or inactive member and
28State service as an active member or inactive member on leave 
29without pay to date of purchase. Upon application for such
30credit the amount due shall be certified in the case of each

1member by the board, in accordance with methods approved by the
2actuary, and contributions may be made by one of the following
3methods:

4(1) Regular monthly payments during active military
5service.

6(2) A lump sum payment within 90 days of certification
7of the amount due.

8(3) Salary deductions to the system in amounts agreed
9upon by the member and the board. The salary deduction
10amortization plans agreed to by the members and the board may
11include a deferral of payment amounts and statutory interest
12until the termination of school service or State service or 
13becoming a participant and a combined service employee as the
14board in its sole discretion decides to allow. The board may
15limit salary deduction amortization plans to such terms as
16the board in its sole discretion determines. In the case of
17an eligible State employee who is an active member of the
18State Employees' Retirement System, the agreed upon salary
19deductions shall be remitted to the State Employees'
20Retirement Board, which shall certify and transfer to the
21board the amounts paid.

22(d) Other creditable nonschool service and noncreditable 
23school service.--

24(1) Contributions on account of Class T-C credit for 
25creditable nonschool service other than military service 
26shall be determined by applying the member's basic 
27contribution rate plus the normal contribution rate as 
28provided in section 8328 at the time of the member's entry 
29into school service subsequent to such creditable nonschool 
30service to his total compensation received during the first
 

1year of subsequent credited school service and multiplying 
2the product by the number of years and fractional part of a 
3year of creditable nonschool service being purchased together 
4with statutory interest during all periods of subsequent 
5school service as an active or inactive member or State 
6service as an active member or inactive member on leave 
7without pay to the date of purchase, except that in the case 
8of purchase of credit for creditable nonschool service as set 
9forth in section 8304(b)(5) (relating to creditable nonschool 
10service) the member shall pay only the employee's share 
11unless otherwise provided by law. Upon certification of the 
12amount due, payment may be made in a lump sum within 90 days 
13or in the case of an active member or an eligible State 
14employee who is an active member of the State Employees' 
15Retirement System it may be amortized with statutory interest 
16through salary deductions to the system in amounts agreed 
17upon by the member and the board. The salary deduction 
18amortization plans agreed to by the members and the board may 
19include a deferral of payment amounts and statutory interest 
20until the termination of school service or State service or 
21becoming a participant and combined service employee as the 
22board in its sole discretion decides to allow. The board may 
23limit salary deduction amortization plans to such terms as 
24the board in its sole discretion determines. In the case of 
25an eligible State employee who is an active member of the 
26State Employees' Retirement System, the agreed upon salary 
27deductions shall be remitted to the State Employees' 
28Retirement Board, which shall certify and transfer to the 
29board the amounts paid.

30(2) Contributions on account of Class T-E or Class T-F

1credit for creditable nonschool service other than military
2service shall be the present value of the full actuarial cost
3of the increase in the projected superannuation annuity
4caused by the additional service credited on account of the
5purchase. Upon certification of the amount due, payment may
6be made in a lump sum within 90 days or, in the case of an
7active member or an eligible State employee who is an active
8member of the State Employees' Retirement System, it may be
9amortized with statutory interest through salary deductions 
10to the system in amounts agreed upon by the member and the
11board. The salary deduction amortization plans agreed to by
12the members and the board may include a deferral of payment
13amounts and statutory interest until the termination of
14school service or State service or becoming a participant and 
15combined service employee as the board in its sole discretion
16decides to allow. The board may limit salary deduction
17amortization plans to the terms as the board in its sole
18discretion determines. In the case of an eligible State
19employee who is an active member of the State Employees'
20Retirement System, the agreed upon salary deductions shall be
21remitted to the State Employees' Retirement Board, which
22shall certify and transfer to the board the amounts paid.

23(3) Contributions on account of Class T-E or Class T-F
24credit for noncreditable school service other than military
25service shall be the present value of the full actuarial cost
26of the increase in the projected superannuation annuity
27caused by the additional service credited on account of the
28purchase. Upon certification of the amount due, payment may
29be made in a lump sum within 90 days or, in the case of an
30active member or an eligible State employee who is an active

1member of the State Employees' Retirement System, it may be
2amortized with statutory interest through salary deductions 
3to the system in amounts agreed upon by the member and the
4board. The salary deduction amortization plans agreed to by
5the members and the board may include a deferral of payment
6amounts and statutory interest until the termination of
7school service or State service or becoming a participant and 
8combined service employee as the board in its sole discretion
9decides to allow. The board may limit salary deduction
10amortization plans to the terms as the board in its sole
11discretion determines. In the case of an eligible State
12employee who is an active member of the State Employees'
13Retirement System, the agreed upon salary deductions shall be
14remitted to the State Employees' Retirement Board, which
15shall certify and transfer to the board the amounts paid.

16* * *

17§ 8325. Incomplete payments.

18In the event that a member terminates school service or 
19becomes a participant or a multiple service member who is an
20active member of the State Employees' Retirement System
21terminates State service before any agreed upon payments or
22return of benefits on account of returning to school service or
23entering State service and electing multiple service have been
24completed, the member or multiple service member who is an
25active member of the State Employees' Retirement System shall
26have the right to pay within 30 days of termination of school
27service or State service or becoming a participant the balance
28due, including interest, in a lump sum, and the annuity shall be
29calculated including full credit for the previous school
30service, creditable nonschool service, or full-coverage

1membership. In the event a member does not pay the balance due
2within 30 days of termination of school service or becoming a 
3participant or in the event a member dies in school service or
4within 30 days of termination of school service or in the case
5of a multiple service member who is an active member of the
6State Employees' Retirement System does not pay the balance due
7within 30 days of termination of State service or dies in State
8service or within 30 days of termination of State service or 
9becoming a participant and before the agreed upon payments have
10been completed, the present value of the benefit otherwise
11payable shall be reduced by the balance due, including interest,
12and the benefit payable shall be calculated as the actuarial
13equivalent of such reduced present value.

14§ 8325.1. Annual compensation limit under IRC § 401(a)(17).

15(a) General rule.--In addition to other applicable
16limitations set forth in this part, and notwithstanding any
17provision of this part to the contrary, the annual compensation
18of each noneligible member and each participant taken into
19account for benefit purposes under this subchapter shall not
20exceed the limitation under IRC § 401(a)(17). On and after July
211, 1996, any reference in this part to the limitation under IRC
22§ 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
231993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
24compensation limit set forth in this subsection. The OBRA '93
25annual compensation limit is $150,000, as adjusted by the
26commissioner for increases in the cost of living in accordance
27with IRC § 401(a)(17)(B). The cost-of-living adjustment in
28effect for a calendar year applies to any determination period
29which is a period, not exceeding 12 months, over which
30compensation is determined, beginning in such calendar year. If

1a determination period consists of fewer than 12 months, the
2OBRA '93 compensation limit will be multiplied by a fraction,
3the numerator of which is the number of months in the
4determination period and the denominator of which is 12.

5* * *

6§ 8326. Contributions by the Commonwealth.

7(a) Contributions on behalf of active members and 
8participants.--The Commonwealth shall make contributions into
9the fund on behalf of all active members and participants,
10including members and participants on activated military service
11leave, in an amount equal to one-half the amount certified by
12the board as necessary to provide, together with the members'
13contributions, annuity reserves on account of prospective
14annuities as provided in this part in accordance with section
158328 (relating to actuarial cost method). In case a school
16employee has elected membership in a retirement program approved
17by the employer, the Commonwealth shall contribute to such
18program on account of his membership an amount no greater than
19the amount it would have contributed had the employee been a
20member of the Public School Employees' Retirement System.

21* * *

22(c) Contributions after June 30, 1995.--

23(1) The Commonwealth shall make contributions into the
24fund on behalf of all active members and participants,
25including members and participants on activated military
26service leave, for service performed after June 30, 1995, in
27the following manner:

28(i) For members and participants who are employees
29of employers that are school entities, no Commonwealth
30contributions shall be made.

1(ii) For members and participants who are employees
2of employers that are not school entities, the amount
3computed under subsection (a).

4(2) The Commonwealth shall make contributions into the
5fund on behalf of annuitants for all amounts due to the fund
6after June 30, 1995, including, but not limited to, amounts
7due pursuant to section 8328(d) and (f), in the following
8manner:

9(i) For members and participants who are employees
10of employers who are school entities, no Commonwealth
11contributions shall be made.

12(ii) For members and participants who are employees
13of employers who are not school entities, the amount
14computed under subsection (b).

15§ 8327. Payments by employers.

16(a) General rule.--[Each]

17(1) For payments prior to June 30, 2015, each employer,
18including the Commonwealth as employer of employees of the
19Department of Education, State-owned colleges and
20universities, Thaddeus Stevens College of Technology, Western 
21Pennsylvania School for the Deaf, Scotland School for
22Veterans' Children[,] and [the] The Pennsylvania State
23University, shall make payments to the fund each quarter in
24an amount equal to one-half the sum of the percentages, as
25determined under section 8328 (relating to actuarial cost
26method), applied to the total compensation during the pay
27periods in the preceding quarter of all its employees who
28were members of the system during such period, including
29members on activated military service leave. In the event a
30member on activated military service leave does not return to

1service for the necessary time or receives an undesirable,
2bad conduct or dishonorable discharge or does not elect to
3receive credit for activated military service under section
48302(b.1)(3) (relating to credited school service), the
5contributions made by the employer on behalf of such member
6shall be returned with valuation interest upon application by
7the employer.

8(2) For payments after June 30, 2015, each employer,
9including the Commonwealth as employer of employees of the
10Department of Education, State-owned colleges and
11universities, Thaddeus Stevens College of Technology, Western
12Pennsylvania School for the Deaf, Scotland School for
13Veterans' Children and The Pennsylvania State University,
14shall make payments to the fund each quarter in an amount
15equal to one-half the sum of the percentages, as determined
16under section 8328, applied to the total compensation during
17the pay periods in the preceding quarter of all its employees
18who were members of the system during such period, including
19members on activated military service leave, plus the accrued
20liability contribution rate applied to the total compensation
21of all active participants in the plan. In the event a member
22on activated military service leave does not return to
23service for the necessary time or receives an undesirable,
24bad conduct or dishonorable discharge or does not elect to
25receive credit for activated military service under section
268302(b.1)(3), the contributions made by the employer on
27behalf of such member shall be returned with valuation
28interest upon application by the employer.

29(b) Deduction from appropriations.--

30(1) To facilitate the payment of amounts due from any

1employer to the fund and the trust through the State
2Treasurer and to permit the exchange of credits between the
3State Treasurer and any employer, the Secretary of Education
4and the State Treasurer shall cause to be deducted and paid
5into the fund and the trust from the amount of any moneys due
6to any employer on account of any appropriation for schools
7or other purposes amounts equal to the employer and pickup
8contributions which an employer is required to pay to the
9fund, as certified by the board, and as remains unpaid on the
10date such appropriations would otherwise be paid to the
11employer. Such amount shall be credited to the appropriate
12accounts in the fund and the trust.

13(2) To facilitate the payments of amounts due from any
14charter school, as defined in Article XVII-A of the act of 
15March 10, 1949 (P.L.30, No.14), known as the Public School
16Code of 1949, to the fund and the trust through the State
17Treasurer and to permit the exchange of credits between the
18State Treasurer and any employer, the Secretary of Education
19and the State Treasurer shall cause to be deducted and paid
20into the fund and the trust from any funds appropriated to
21the Department of Education for basic education of the
22chartering school district of a charter school and public
23school employees' retirement contributions amounts equal to
24the employer and pickup contributions which a charter school
25is required to pay to the fund and the trust, as certified by
26the board, and as remains unpaid on the date such
27appropriations would otherwise be paid to the chartering
28school district or charter school. Such amounts shall be
29credited to the appropriate accounts in the fund and the 
30trust. Any reduction in payments to a chartering school

1district made pursuant to this section shall be deducted from
2the amount due to the charter school district pursuant to the
3Public School Code of 1949.

4(c) Payments by employers after June 30, 1995.--After June
530, 1995, and before July 1, 2015, each employer, including the
6Commonwealth as employer of employees of the Department of
7Education, State-owned colleges and universities, Thaddeus
8Stevens College of Technology, Western Pennsylvania School for
9the Deaf, Scotland School for Veterans' Children and The
10Pennsylvania State University, shall make payments to the fund 
11and the trust each quarter in an amount computed in the
12following manner:

13(1) For an employer that is a school entity, the amount
14shall be the sum of the percentages as determined under
15section 8328 applied to the total compensation during the pay
16periods in the preceding quarter of all employees who were
17active members of the system or active participants of the 
18plan during such period, including members or active 
19participants on activated military service leave. In the
20event a member on activated military service leave does not
21return to service for the necessary time or receives an
22undesirable, bad conduct or dishonorable discharge or does
23not elect to receive credit for activated military service
24under section 8302(b.1)(3), the contribution made by the
25employer on behalf of such member shall be returned with
26valuation interest upon application by the employer.

27(2) For an employer that is not a school entity, the
28amount computed under subsection (a).

29(3) For any employer, whether or not a school entity, in
30computing the amount of payment due each quarter, there shall

1be excluded from the total compensation referred to in this
2subsection and subsection (a) any amount of compensation of a
3noneligible member on the basis of which member or 
4participant contributions have not been made by reason of the
5limitation under IRC § 401(a)(17). Any amount of contribution
6to the fund or trust paid by the employer on behalf of a
7noneligible member or participant on the basis of
8compensation which was subject to exclusion from total
9compensation in accordance with the provisions of this
10paragraph shall, upon the board's determination or upon
11application by the employer, be returned to the employer with
12valuation interest.

13(d) Payments by employers after June 30, 2014.--After June
1430, 2015, each employer, including the Commonwealth as employer
15of employees of the Department of Education, State-owned
16colleges and universities, Thaddeus Stevens College of
17Technology, Western Pennsylvania School for the Deaf, Scotland
18School for Veterans' Children and The Pennsylvania State
19University, shall make payments to the fund and trust each
20quarter in an amount computed in the following manner:

21(1) For an employer that is a school entity, the amount
22shall be the sum of the percentages as determined under
23section 8328 applied to the total compensation during the pay
24periods in the preceding quarter of all employees who were
25active members of the system during such period, including
26members on activated military service leave, plus the accrued
27liability contribution rate applied to the total compensation
28of all active participants in the plan. In the event a member
29on activated military service leave does not return to
30service for the necessary time or receives an undesirable,

1bad conduct or dishonorable discharge or does not elect to
2receive credit for activated military service under section
38302(b.1)(3), the contribution made by the employer on behalf
4of such member shall be returned with valuation interest upon
5application by the employer.

6(2) For an employer that is not a school entity, the
7amount computed under subsection (a).

8(3) For any employer, whether or not a school entity, in
9computing the amount of payment due each quarter, there shall
10be excluded from the total compensation referred to in this
11subsection and subsection (a) any amount of compensation of a
12noneligible member on the basis of which member or
13participant contributions have not been made by reason of the
14limitation under IRC § 401(a)(17). Any amount of contribution
15to the fund paid by the employer on behalf of a noneligible
16member or participant on the basis of compensation which was
17subject to exclusion from total compensation in accordance
18with the provisions of this paragraph shall, upon the board's
19determination or upon application by the employer, be
20returned to the employer with valuation interest.

21(e) Deemed agreed to.--The agreement of an employer listed
22in the definition of school employee under section 8102
23(relating to definitions) or any other law to make contributions
24to the fund or to enroll its employees as members in the system
25shall be deemed to be an agreement to make contributions to the
26trust or enroll its employees in the plan.

27(f) Contributions.--The employer employing a participant
28shall pick up the required mandatory participant contributions
29by a reduction in the compensation of the participant.

30(g) Contributions resulting from members reemployed from

1USERRA leave.--When a school employee reemployed from USERRA
2leave makes the member contributions required to be granted
3school service credit for the USERRA leave after June 30, 2015,
4either by actual payment or by actuarial debt under section 8325
5(relating to incomplete payments), the employer that employed
6the school employee when the member contributions are made or
7the last employer before termination in the case of payments
8under section 8325 shall make the employer contributions that
9would have been made under this section if the employee making
10the member contributions after he is reemployed from USERRA
11leave continued to be employed in his school office or position
12instead of performing USERRA leave.

13§ 8328. Actuarial cost method.

14* * *

15(b) Normal contribution rate.--[The]

16(1) For the fiscal year ending June 30, 2014, the normal
17contribution rate shall be determined after each actuarial
18valuation. Until all accrued liability contributions have
19been completed, the normal contribution rate shall be
20determined, on the basis of an annual interest rate and such
21mortality and other tables as shall be adopted by the board
22in accordance with generally accepted actuarial principles,
23as a level percentage of the compensation of the average new
24active member, which percentage, if contributed on the basis
25of his prospective compensation through the entire period of
26active school service, would be sufficient to fund the
27liability for any prospective benefit payable to him, in
28excess of that portion funded by his prospective member
29contributions, excluding the shared-risk contributions.

30(2) For fiscal years beginning on or after July 1, 2014,

1the normal contribution rate shall be determined after each
2actuarial valuation. Until all accrued liability
3contributions have been completed, the normal contribution
4rate shall be determined, on the basis of an annual interest
5rate and such mortality and other tables as shall be adopted
6by the board in accordance with generally accepted actuarial
7principles, as a level percentage of the compensation of all
8active members, which percentage, if contributed on the basis
9of the member's prospective compensation through the entire
10period of active school service, would be sufficient to fund
11the liability for any prospective benefit payable to him, in
12excess of that portion funded by his prospective member
13contributions, excluding the shared-risk contributions.

14(c) Accrued liability contribution rate.--

15(1) For the fiscal years beginning July 1, 2002, and 
16ending June 30, 2011, the accrued liability contribution rate
17shall be computed as the rate of total compensation of all
18active members which shall be certified by the actuary as
19sufficient to fund over a period of ten years from July 1,
202002, the present value of the liabilities for all
21prospective benefits of active members, except for the
22supplemental benefits provided in sections 8348 (relating to 
23supplemental annuities), 8348.1 (relating to additional 
24supplemental annuities), 8348.2 (relating to further 
25additional supplemental annuities), 8348.3 (relating to 
26supplemental annuities commencing 1994), 8348.4 (relating to 
27special supplemental postretirement adjustment), 8348.5
28(relating to supplemental annuities commencing 1998), 8348.6
29(relating to supplemental annuities commencing 2002) and
308348.7 (relating to supplemental annuities commencing 2003),

1in excess of the total assets in the fund (calculated by
2recognizing the actuarially expected investment return
3immediately and recognizing the difference between the actual
4investment return and the actuarially expected investment
5return over a five-year period), excluding the balance in the
6annuity reserve account, and of the present value of normal
7contributions and of member contributions payable with
8respect to all active members on July 1, 2002, during the
9remainder of their active service.

10(2) For the fiscal years beginning July 1, 2003, and 
11ending June 30, 2011, the amount of each annual accrued
12liability contribution shall be equal to the amount of such
13contribution for the fiscal year, beginning July 1, 2002,
14except that, if the accrued liability is increased by
15legislation enacted subsequent to June 30, 2002, but before
16July 1, 2003, such additional liability shall be funded over
17a period of ten years from the first day of July, coincident
18with or next following the effective date of the increase.
19The amount of each annual accrued liability contribution for
20such additional legislative liabilities shall be equal to the
21amount of such contribution for the first annual payment.

22(3) Notwithstanding any other provision of law,
23beginning July 1, 2004, and ending June 30, 2011, the
24outstanding balance of the increase in accrued liability due
25to the change in benefits enacted in 2001 and the outstanding
26balance of the net actuarial loss incurred in fiscal year
272000-2001 shall be amortized in equal dollar annual
28contributions over a period that ends 30 years after July 1,
292002, and the outstanding balance of the net actuarial loss
30incurred in fiscal year 2001-2002 shall be amortized in equal

1dollar annual contributions over a period that ends 30 years
2after July 1, 2003. For fiscal years beginning on or after
3July 1, 2004, if the accrued liability is increased by
4legislation enacted subsequent to June 30, 2003, such
5additional liability shall be funded in equal dollar annual
6contributions over a period of ten years from the first day
7of July coincident with or next following the effective date
8of the increase.

9(4) For the fiscal year beginning July 1, 2011, the 
10accrued liability contribution rate shall be computed as the 
11rate of total compensation of all active members which shall 
12be certified by the actuary as sufficient to fund as a level 
13percentage of compensation over a period of 24 years from 
14July 1, 2011, the present value of the liabilities for all 
15prospective benefits calculated as of June 30, 2010, 
16including the supplemental benefits as provided in sections 
178348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 
188348.7, in excess of the actuarially calculated assets in the 
19fund (calculated recognizing all realized and unrealized 
20investment gains and losses each year in level annual 
21installments over a ten-year period, provided that the 
22resulting actuarially calculated assets are constrained 
23within a range of 70%-130% of market value). In the event 
24that the accrued liability is [increased] changed by 
25legislation enacted subsequent to June 30, 2010, such 
26[additional] change in liability shall be funded as a level 
27percentage of compensation over a period of ten years from 
28the July 1 second succeeding the date such legislation is 
29enacted.

30(5) Notwithstanding the above, for the fiscal years

1beginning July 1, 2014, compensation shall be defined as the
2total compensation of all active members and active
3participants.

4(6) For purposes of determining the accrued liability
5contribution rate in subsection (c) and the experience
6adjustment factor in subsection (e) for The Pennsylvania
7State University, the State System of Higher Education,
8State-owned educational institutions and community colleges,
9the term "compensation of all active members and active
10participants" shall include an additional amount equal to the
11difference between:

12(i) the actual compensation of all active members
13and active participants of The Pennsylvania State
14University, the State System of Higher Education, State-
15owned educational institutions and community colleges;
16and,

17(ii) the compensation of all active members, active
18participants, active members of the State Employees'
19Retirement System, active participants of the State
20Employees' Defined Contribution Plan and employees who
21are members or participants of an independent retirement
22program approved by the employer of The Pennsylvania
23State University, the State System of Higher Education,
24State-owned educational institutions and community
25collective colleges multiplied by a fraction equal to the
26amount determined under subparagraph (i) as part of the
27June 30, 2014, actuarial valuation divided by the amount
28of compensation of all active members, active
29participants, active members of the State Employees'
30Retirement System, active participants of the State

1Employees' Defined Contribution Plan and employees who
2are members or participants of an independent retirement
3program approved by the employer determined as part of
4the June 30, 2014, actuarial valuation.

5(7) For the fiscal year beginning July 1, 2015, and all
6subsequent fiscal years, The Pennsylvania State University,
7the State System of Higher Education, each State-owned
8educational institution and each community college shall make
9such additional actuarial accrued liability contributions as
10shall be certified by the board. The additional actuarial
11accrued liability contributions shall be the product of:

12(i) the amount by which the final contribution rate
13exceeds the employer normal contribution rate determined
14under subsection (b)(1); multiplied by,

15(ii) and the difference between:

16(A) the actual compensation of all active
17members and active participants of each such
18educational institution; and

19(B) the compensation of all active members, 
20active participants, active members of the State 
21Employees' Retirement System, active participants of 
22the State Employees' Defined Contribution Plan and 
23employees who are members or participants of an 
24independent retirement program approved by the 
25employer of each such educational institution 
26multiplied by a fraction equal to the amount 
27determined under clause (A) as part of the June 30, 
282014, actuarial valuation divided by the amount of 
29compensation of all active members, active 
30participants, active members of the State Employees'
 

1Retirement System, active participants of the State 
2Employees' Defined Contribution Plan and employees 
3who are members or participants of an independent 
4retirement program approved by the employer of each 
5such educational institution determined as part of 
6the June 30, 2014, actuarial valuation.

7(d) Supplemental annuity contribution rate.--

8(1) For the period of July 1, 2002, to June 30, 2011, 
9contributions from the Commonwealth and other employers
10required to provide for the payment of the supplemental
11annuities provided for in sections 8348, 8348.1, 8348.2,
128348.4 and 8348.5 shall be paid over a period of ten years
13from July 1, 2002. The funding for the supplemental annuities
14commencing 2002 provided for in section 8348.6 shall be as
15provided in section 8348.6(f). The funding for the
16supplemental annuities commencing 2003 provided for in
17section 8348.7 shall be as provided in section 8348.7(f). The
18amount of each annual supplemental annuities contribution
19shall be equal to the amount of such contribution for the
20fiscal year beginning July 1, 2002.

21(2) For fiscal years beginning July 1, 2011, and ending 
22June 30, 2014, contributions from the Commonwealth and other 
23employers whose employees are members of the system required 
24to provide for the payment of supplemental annuities as 
25provided in sections 8348, 8348.1, 8348.2, 8348.3, 8348.4, 
268348.5, 8348.6 and 8348.7 shall be paid as part of the 
27accrued liability contribution rate as provided for in 
28subsection (c)(4), and there shall not be a separate 
29supplemental annuity contribution rate attributable to those 
30supplemental annuities. In the event that supplemental
 

1annuities are increased by legislation enacted subsequent to 
2June 30, 2010, [the] but before July 1, 2013, such additional 
3liability for the increase in benefits shall be funded as a 
4level percentage of compensation over a period of ten years 
5from the July 1 second succeeding the date such legislation 
6is enacted.

7(3) For fiscal years beginning on or after July 1, 2014,
8contributions from employers whose employees are members of
9the system required to provide for the payment of
10supplemental annuities as provided in sections 8348, 8348.1,
118348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 8348.7 shall be
12paid as part of the accrued liability contribution rate as
13provided for in subsection (c)(4), and there shall not be a
14separate supplemental annuity contribution rate attributable
15to those supplemental annuities. In the event that
16supplemental annuities are increased by legislation enacted
17subsequent to June 30, 2013, the additional liability for the
18increase in benefits shall be funded as a level in equal
19dollar installments as a percentage of compensation of all
20active members and active participants over a period of ten
21years from the July 1 second succeeding the date such
22legislation is enacted.

23(e) Experience adjustment factor.--

24(1) For each year after the establishment of the accrued
25liability contribution rate for the fiscal year beginning
26July 1, 2011, and ending June 30, 2014, any increase or
27decrease in the unfunded accrued liability, excluding the
28gains or losses on the assets of the health insurance
29account, due to actual experience differing from assumed
30experience, changes in actuarial assumptions, changes in
 

1contributions caused by the final contribution rate being 
2different from the actuarially required contribution rate, 
3active members making shared-risk contributions or changes in
4the terms and conditions of the benefits provided by the
5system by judicial, administrative or other processes other
6than legislation, including, but not limited to,
7reinterpretation of the provisions of this part, recognized 
8by the actuarial valuations on June 30, 2011, and June 30, 
92012, shall be amortized as a level percentage of 
10compensation over a period of 24 years beginning with the
11July 1 second succeeding the actuarial valuation determining 
12said increases or decreases.

13(2) (Reserved).

14(3) For fiscal years beginning July 1, 2014, any
15increase or decrease in the unfunded accrued liability,
16excluding the gains or losses on the assets of the health
17insurance account, due to actual experience differing from
18assumed experience, changes in actuarial assumptions, changes
19in contributions caused by the final contribution rate being
20different from the actuarially required contribution rate,
21active members making shared-risk contributions or changes in
22the terms and conditions of the benefits provided by the
23system by judicial, administrative or other processes other
24than legislation, including, but not limited to,
25reinterpretation of the provisions of this part, shall be
26amortized as a level percentage of compensation of all active
27members and active participants over a period of 24 years
28beginning with the July 1 second succeeding the actuarial
29valuation determining such increases or decreases.

30* * *

1(g) Temporary application of collared contribution rate.--

2(1) The collared contribution rate for each year shall
3be determined by comparing the actuarially required
4contribution rate, calculated without regard for the costs
5added by legislation, to the prior year's final contribution
6rate.

7(2) If, for any of the fiscal years beginning July 1,
82011, July 1, 2012, [and] or on or after July 1, 2013, the
9actuarially required contribution rate, calculated without
10regard for the costs added by legislation, is more than 3%,
113.5% and 4.5%, respectively, of the total compensation of all
12active members greater than the prior year's final
13contribution rate, then the collared contribution rate shall
14be applied and be equal to the prior year's final
15contribution rate increased by 3%, 3.5% and 4.5%,
16respectively, of total compensation of all active members.
17Otherwise, and for all other fiscal years, the collared
18contribution rate shall not be applicable. In no case shall
19the collared contribution rate be less than 4% of the total
20compensation of all active members.

21(h) Final contribution rate.--

22(1) For the fiscal year beginning July 1, 2010, the 
23final contribution rate is 5% of the total compensation of 
24all active members. For each subsequent fiscal year for which 
25the collared contribution rate is applicable, the final 
26contribution rate shall be the collared contribution rate as 
27calculated in subsection (g), plus the costs added by 
28legislation.

29(2) For all other fiscal years ending before June 30, 
302015, the final contribution rate shall be the actuarially

1required contribution rate, provided that the final
2contribution rate shall not be less than the normal
3contribution rate as provided in subsection (b).

4* * *

5§ 8330. Appropriations by the Commonwealth.

6(a) Annual submission of budget.--The board shall prepare
7and through the Governor submit annually to the General Assembly
8an itemized budget consisting of the amounts necessary to be
9appropriated by the Commonwealth out of the General Fund
10required to meet the separate obligations to both the fund and 
11the trust accruing during the fiscal period beginning July 1 of
12the following year.

13(b) Appropriation and payment.--The General Assembly shall
14make an appropriation sufficient to provide for the separate
15obligations of the Commonwealth to both the fund and the trust.
16Such amount shall be paid by the State Treasurer through the
17Department of Revenue into the fund or the trust as the case may 
18be within 30 days of receipt of the requisition presented each
19quarter by the board.

20§ 8341. Return of accumulated deductions.

21Any member upon termination of service may, in lieu of all
22benefits payable from the system under this chapter to which he
23may be entitled, elect to receive his accumulated deductions.

24Section 11. Section 8342 of Title 24 is amended by adding a
25subsection to read:

26§ 8342. Maximum single life annuity.

27* * *

28(d) Coordination of benefits.--The determination and payment
29of the maximum single life annuity under this section shall be
30in addition to any payments a combined service employee may be

1entitled to receive, has received or is receiving as a result of
2being a participant in the plan.

3Section 12. Section 8344(b) of Title 24 is amended and the
4section is amended by adding a subsection to read:

5§ 8344. Disability annuities.

6* * *

7(b) Reduction on account of earned income.--Payments on
8account of disability shall be reduced by that amount by which
9the earned income of the annuitant, as reported in accordance
10with section 8508(b) (relating to rights and duties of
11annuitants) for the preceding year together with the disability
12annuity payments for the year, exceeds the greater of $5,000 or
13the last year's salary of the annuitant as a [school employee] 
14member of the system, provided that the annuitant shall not
15receive less than his member's annuity or the amount to which he
16may be entitled under section 8342, whichever is greater.

17* * *

18(f) Coordination of benefits.--The determination and payment
19of a disability annuity under this section shall be in addition
20to any payments a combined service employee may be entitled to
21receive, has received or is receiving as a result of being a
22participant in the plan.

23Section 13. Sections 8346 and 8349(a) and (b) of Title 24
24are amended to read:

25§ 8346. Termination of annuities.

26(a) General rule.--If an annuitant returns to school service
27or enters or has entered State service and elects multiple
28service membership, any annuity payable to him under this part
29shall cease effective upon the date of his return to school
30service or entering State service without regard to whether he
 

1is a mandatory, optional or prohibited member of the system or 
2participant in the plan or, if a multiple service member, 
3whether he is a mandatory, optional or prohibited member or 
4participant of the State Employees' Retirement System or State 
5Employees' Defined Contribution Plan and in the case of an
6annuity other than a disability annuity the present value of
7such annuity, adjusted for full coverage in the case of a joint
8coverage member who makes the appropriate back contributions for
9full coverage, shall be frozen as of the date such annuity
10ceases. An annuitant who is credited with an additional 10% of
11membership service as provided in section 8302(b.2) (relating to
12credited school service) and who returns to school service,
13except as provided in subsection (b), shall forfeit such
14credited service and shall have his frozen present value
15adjusted as if his 10% retirement incentive had not been applied
16to his account. In the event that the cost-of-living increase
17enacted December 18, 1979, occurred during the period of such
18State or school employment, the frozen present value shall be
19increased, on or after the member attains superannuation age, by
20the percent applicable had he not returned to service.

21(a.1) Return of benefits.--In the event an annuitant whose
22annuity ceases pursuant to this section receives any annuity
23payment, including a lump sum payment pursuant to section 8345
24(relating to member's options) on or after the date of his
25return to school service or entering State service, the
26annuitant shall return to the board the amount so received plus
27statutory interest. The amount payable shall be certified in
28each case by the board in accordance with methods approved by
29the actuary and shall be paid in a lump sum within 90 days or in
30the case of an active member or a State employee who is an

1active member of the State Employees' Retirement System may be
2amortized with statutory interest through salary deductions to 
3the system in amounts agreed upon by the member and the board.
4The salary deduction amortization plans agreed to by the member
5and the board may include a deferral of payment amounts and
6statutory interest until the termination of school service or
7State service as the board in its sole discretion decides to
8allow. The board may limit salary deduction amortization plans
9to such terms as the board in its sole discretion determines. In
10the case of a State employee who is an active member of the
11State Employees' Retirement System, the agreed upon salary
12deductions shall be remitted to the State Employees' Retirement
13Board, which shall certify and transfer to the board the amounts
14paid.

15(b) Return to school service during emergency.--When, in the
16judgment of the employer, an emergency creates an increase in
17the work load such that there is serious impairment of service
18to the public or in the event of a shortage of appropriate
19subject certified teachers or other personnel, an annuitant or 
20participant receiving distributions may be returned to school
21service for a period not to extend beyond the school year during
22which the emergency or shortage occurs, without loss of his
23annuity or distributions. The annuitant shall not be entitled to
24earn any credited service, and no contributions may be made by
25the annuitant, the employer or the Commonwealth on account of
26such employment. Such service shall not be subject to member 
27contributions or be eligible for qualification as creditable 
28school service or for participation in the plan, mandatory 
29pickup participant contributions or employer defined 
30contributions.

1(b.1) Return to school service in an extracurricular
2position.--

3(1) An annuitant or participant receiving distributions
4may be employed under separate contract by a public school or
5charter school in an extracurricular position performed
6primarily outside regular instructional hours and not part of
7mandated curriculum without loss of annuity. Neither the
8annuitant, the participant receiving distributions, nor the
9employer shall make contributions to the member's savings
10account, the individual investment account or State
11accumulation account respectively for such service. Further,
12such contract shall contain a waiver whereby the annuitant
13waives any potential retirement benefits that could arise
14from the contract and releases the employer and the board
15from any liability for such benefits. Such service shall not 
16be subject to member or participant contributions nor be 
17eligible for qualification as creditable school service or 
18for participation in the plan, mandatory pickup participant 
19contributions or employer defined contributions.

20(2) Nothing in this subsection shall be construed to
21abridge or limit any rights provided under a collective
22bargaining agreement or any rights provided under the act of 
23July 23, 1970 (P.L.563, No.195), known as the Public Employe
24Relations Act.

25(3) For purposes of this subsection, the term
26"extracurricular position" means a contract position filled
27by an annuitant that is separate from the established
28academic course structure, including the position of athletic
29director.

30(c) Subsequent discontinuance of service.--Upon subsequent

1discontinuance of service, such [member] terminating school 
2employee other than a former annuitant who had the effect of his
3frozen present value eliminated in accordance with subsection
4(d) or a former disability annuitant shall be entitled to an
5annuity which is actuarially equivalent to the sum of the
6present value as determined under subsection (a) [and] to which 
7shall be added, if the service after reemployment was as a 
8member of the system, the present value of a maximum single life
9annuity based on years of service credited subsequent to reentry
10in the system and his final average salary computed by reference
11to his compensation as a member of the system or as a member of 
12the State Employees' Retirement System during his entire period
13of school and State service.

14(d) Elimination of the effect of frozen present value.--

15(1) An annuitant who returns to school service as an 
16active member of the system and earns three eligibility
17points by performing credited school service following the
18most recent period of receipt of an annuity under this part,
19or an annuitant who enters State service other than a 
20participant in the State Employees' Defined Contribution Plan
21and:

22(i) is a multiple service member; or

23(ii) who elects multiple service membership, and

24earns three eligibility points by performing credited
25State service or credited school service following the
26most recent period of receipt of an annuity under this
27part, and who had the present value of his annuity frozen
28in accordance with subsection (a), shall qualify to have
29the effect of the frozen present value resulting from all
30previous periods of retirement eliminated, provided that

1all payments under Option 4 and annuity payments payable
2during previous periods of retirement plus interest as
3set forth in paragraph (3) shall be returned to the fund
4in the form of an actuarial adjustment to his subsequent
5benefits or in such form as the board may otherwise
6direct.

7(2) Upon subsequent discontinuance of service and the
8filing of an application for an annuity, a former annuitant
9who qualifies to have the effect of a frozen present value
10eliminated under this subsection shall be entitled to receive
11the higher of either:

12(i) an annuity (prior to optional modification)
13calculated as if the freezing of the former annuitant's
14account pursuant to subsection (a) had not occurred,
15adjusted by crediting Class T-C school service as Class
16T-D service as provided for in section 8305(c) (relating
17to classes of service) and further adjusted according to
18paragraph (3), provided that a former annuitant of the
19system or a former annuitant of the State Employees'
20Retirement System who retired under a provision of law
21granting additional service credit if termination of
22school or State service or retirement occurred during a
23specific period of time shall not be permitted to retain
24the additional service credit under the prior law when
25the annuity is computed for his most recent retirement;
26or

27(ii) an annuity (prior to optional modification)
28calculated as if the former annuitant did not qualify to
29have the effect on the frozen present value eliminated,

30unless the former annuitant notifies the board in writing by

1the later of the date the application for annuity is filed or
2the effective date of retirement that the former annuitant
3wishes to receive the lower annuity.

4(3) In addition to any other adjustment to the present
5value of the maximum single life annuity that a member may be
6entitled to receive that occurs as a result of any other
7provision of law, the present value of the maximum single
8life annuity shall be reduced by all amounts paid or payable
9to him during all previous periods of retirement plus
10interest on these amounts until the date of subsequent
11retirement. The interest for each year shall be calculated
12based upon the annual interest rate adopted for that school
13year by the board for the calculation of the normal
14contribution rate pursuant to section 8328(b) (relating to
15actuarial cost method).

16§ 8349. Payment of benefits from the system.

17(a) Annuities.--Any annuity granted under the provisions of
18this part and paid from the fund shall be paid in equal monthly
19installments.

20(b) Death benefits.--If the amount of a death benefit
21payable from the fund to a beneficiary of a member under section
228347 (relating to death benefits) or under the provisions of
23Option 1 of section 8345(a)(1) (relating to member's options) is
24$10,000 or more, such beneficiary may elect to receive payment
25according to one of the following options:

26(1) A lump sum payment.

27(2) An annuity actuarially equivalent to the amount
28payable.

29(3) A lump sum payment and an annuity such that the
30annuity is actuarially equivalent to the amount payable less

1the lump sum payment specified by the beneficiary.

2* * *

3Section 14. Title 24 is amended by adding a chapter to read:

4CHAPTER 84

5SCHOOL EMPLOYEES' DEFINED CONTRIBUTION PLAN

6Sec.

78401. Establishment.

88402. Plan document.

98403. Individual investment accounts.

108404. Participant contributions.

118405. Mandatory participant pickup contributions.

128406. Employer defined contributions.

138407. Eligibility for benefits.

148408. Death benefits.

158409. Vesting.

168410. Termination of distributions.

178411. Agreements with financial institutions and other
18organizations.

198412. Powers and duties of board.

208413. Responsibility for investment loss.

218414. Investments based on participants' investment allocation
22choices.

238415. Expenses.

248416. Election by members to be participants.

258417. Required distributions.

26§ 8401. Establishment.

27(a) School Employees' Defined Contribution Plan.---The plan
28is established in accordance with this part. The board shall
29administer and manage the plan, which shall be a defined
30contribution plan exclusively for the benefit of those school

1employees who participate in the plan and their beneficiaries
2within the meaning of and in conformity with IRC § 401(a). The
3board shall determine the terms and provisions of the plan not
4inconsistent with this part, the Internal Revenue Code of 1986
5and other applicable law and shall provide for the plan's
6administration.

7(b) School Employees Defined Contribution Trust.--The trust
8is established as part of the plan in accordance with this part.
9The trust shall be comprised of the individual investment
10accounts and all assets and moneys in those accounts. The
11members of the board shall be the trustees of the trust, which
12shall be administered exclusively for the benefit of those
13school employees who participate in the plan and their
14beneficiaries within the meaning of and conformity with IRC §
15401(a). The board shall determine the terms and provisions of
16the trust not inconsistent with this part, the Internal Revenue
17Code of 1986 and other applicable law and shall provide for the
18investment and administration of the trust.

19(c) Assets held in trust.--All assets and income in the plan
20that have been or shall be withheld or contributed by the
21participants, the Commonwealth and employers in accordance with
22this part shall be held in trust in any funding vehicle
23permitted by the applicable provisions of IRC for the exclusive
24benefit of the plan's participants and their beneficiaries until
25such time as the funds are distributed to the participants or
26their beneficiaries in accordance with the terms of the plan
27document. The assets of the plan held in trust for the exclusive
28benefit of the participants and their beneficiaries may be used
29for the payment of the fees, costs and expenses related to the
30administration and investment of the plan and the trust.

1(d) Name for transacting business.--By the name of "The
2School Employees' Defined Contribution Plan," all of the
3business of the plan shall be transacted, the trust invested,
4all requisitions for money drawn and payments made, and all of
5its cash and securities and other property shall be held, except
6that, any other law to the contrary notwithstanding, the board
7may establish a nominee registration procedure for the purpose
8of registering securities in order to facilitate the purchase,
9sale or other disposition of securities pursuant to the
10provisions of this part.

11§ 8402. Plan document.

12The board shall set forth the terms and provisions of the
13plan and trust in a document containing the terms and conditions
14of the plan and in a trust declaration that shall be published
15in the Pennsylvania Bulletin. The creation of the document
16containing the terms and conditions of the plan and the trust
17declaration and the establishment of the terms and provisions of
18the plan and the trust need not be promulgated by regulation or
19formal rulemaking and shall not be subject to the act of July
2031, 1968 (P.L.769, No.240), referred to as the Commonwealth
21Documents Law. A reference in this part or other law to the plan
22shall include the plan document unless the context clearly
23indicates otherwise.

24§ 8403. Individual investment accounts.

25The board shall:

26(1) Establish in the trust an individual investment
27account for each participant in the plan. All contributions
28by a participant or an employer for or on behalf of a
29participant shall be credited to the participant's individual
30investment account, together with all interest and investment

1earnings and losses. Investment and administrative fees,
2costs and expenses shall be charged to the participants'
3individual investment accounts.

4(2) Separately track participant contributions,
5including investment gains and losses and employer
6contributions, including investment gains and losses, but all
7interest, investment gains and losses and investment and
8administrative fees, costs and expenses shall be allocated
9proportionately.

10§ 8404. Participant contributions.

11(a) Mandatory contributions.--Each participant shall make
12mandatory pickup participant contributions through payroll
13deductions to his individual investment account equal to 4% of
14compensation for current school service. The employer shall
15cause such contributions for current service to be made and
16deducted from each payroll or on such schedule established by
17the board.

18(b) Voluntary contributions.--A participant may make
19voluntary contributions through payroll deductions or through
20direct trustee to trustee transfers or through transfers of
21money received in an eligible rollover into the trust to the
22extent allowed by IRC § 402. Such rollovers shall be made in a
23form and manner as determined by the board, shall be credited to
24the participant's individual investment account and shall be
25separately accounted for by the board.

26(c) Limitations on contributions.--No contributions shall be
27allowed that would cause a violation of the limitations related
28to contributions applicable to governmental plans contained in
29IRC § 415 or in other provisions of law. In the event that any
30disallowed contributions are made, any participant contributions

1in excess of the limitations and investment earnings thereon
2shall be refunded to the participant by the board.

3§ 8405. Mandatory pickup participant contributions.

4(a) Treatment for purposes of IRC § 414(h).--All
5contributions to the trust required to be made under section
68404(a) (relating to participant contributions) with respect to
7current school service rendered by an active participant shall
8be picked up by the employer and shall be treated as the
9employer's contribution for purposes of IRC § 414(h). After the
10effective date of this section, an employer employing a
11participant in the plan shall pick up the required mandatory
12participant contributions by a reduction in the compensation of
13the participant.

14(b) Treatment for other purposes.--For all other purposes
15under this part and otherwise, such mandatory pickup participant
16contributions shall be treated as contributions made by a
17participant in the same manner and to the same extent as if the
18contributions were made directly by the participant and not
19picked up.

20§ 8406. Employer defined contributions.

21(a) Contributions for current service.--The employer of a
22participant shall make employer defined contributions for
23current service of each active participant, which shall be
24credited to the active participant's individual investment
25account. Employer defined contributions must be recorded and
26accounted for separately from participant contributions.

27(b) Contributions resulting from participants reemployed
28from USERRA leave.--When a school employee reemployed from
29USERRA leave makes the mandatory pickup participant
30contributions permitted to be made for the USERRA leave, the

1employer by whom the school employee is employed at the time the
2participant contributions are made shall make whatever employer
3defined contributions would have been made under this section
4had the employee making the participant contributions after
5being reemployed from USERRA leave continued to be employed in
6the employee's school position instead of performing USERRA
7leave. Such employer defined contributions shall be placed in
8the participant's individual investment account as otherwise
9provided by this part.

10(c) Limitations on contributions.--No contributions shall be
11allowed that would cause a violation of the limitations related
12to contributions applicable to governmental plans contained in
13IRC § 415 or in other provisions of law. In the event that any
14disallowed contributions are made, any employer defined
15contributions in excess of the limitations and investment
16earnings thereon shall be refunded to the employer by the board.

17§ 8407. Eligibility for benefits.

18(a) General.--A participant who terminates school service
19shall be eligible to withdraw the vested accumulated total
20defined contributions standing to his credit in his individual
21investment account or such lesser amount as the participant may
22request. Payment shall be made in a lump sum unless the board
23has established other forms of distribution in the plan
24document. A participant who withdraws the vested accumulated
25total defined contributions shall no longer be a participant in
26the plan, notwithstanding that the participant may have
27contracted to receive an annuity or other form of payment from a
28provider retained by the board for such purposes.

29(b) Required distributions.--All payments pursuant to this
30section shall start and be made in compliance with the minimum

1distribution requirements and incidental death benefit rules of
2IRC § 401(a)(9). The board is authorized to take whatever
3actions and make whatever distributions it may determine are
4necessary to comply with such requirements.

5(c) Spousal consent not required.--A participant who is
6married may receive a lump sum distribution or other
7distribution directly from the board without the consent of the
8spouse.

9(d) Combined service.--A participant who is a combined
10service employee must be terminated from all positions that
11result in either membership in the system or participation in
12the plan to be eligible to receive a distribution.

13(e) Prohibition.--Loans or other distributions from the plan
14to school employees who have not terminated school service are
15not permitted.

16(f) Small individual investment accounts.--A participant who
17terminates school service and whose vested accumulated total
18defined contributions are below the threshold established by law
19as of the date of termination of service may be paid the vested
20accumulated total defined contributions in a lump sum as
21provided in IRC § 401(a)(31).

22§ 8408. Death benefits.

23(a) General.--In the event of the death of an active
24participant or inactive participant, the board shall pay to the
25participant's beneficiary the vested balance in the
26participant's individual investment account in a lump sum or in
27such other manner as the board may establish in the plan
28document.

29(b) Lump sum distribution.--In the event of the death of a
30participant receiving distributions, the board shall pay to the

1participant's beneficiary the vested balance in the
2participant's individual investment account in a lump sum or in
3such other manner as the board may establish in the plan
4document or, if the board has established alternative methods of
5distribution in the plan document under which the participant
6was receiving distributions, to the participant's beneficiary or
7successor payee as provided in the plan document.

8(c) Contracts.--The board may contract with financial
9institutions, insurance companies or other types of third-party
10providers to allow participants who receive a lump sum
11distribution to receive payments and death benefits in a form
12and manner as provided by the contract.

13§ 8409. Vesting.

14Subject to the forfeiture and attachment provisions of
15section 8533 (relating to taxation, attachment and assignment of
16funds) or otherwise as provided by law, a participant shall be
17100% vested with respect to all mandatory pickup participant
18contributions, voluntary contributions and employer defined
19contributions paid by or on behalf of the participant to the
20trust plus interest and earnings on the participant and employer
21contributions but minus investment fees and administrative
22charges.

23§ 8410. Termination of distributions.

24(a) Return to school service.--A participant receiving
25distributions or an inactive participant who returns to school
26service shall cease receiving distributions and shall not be
27eligible to receive distributions until the participant
28subsequently terminates school service, without regard to
29whether the participant is a mandatory, optional or prohibited
30member of the system or participant in the plan.

1(b) Return of benefits paid during USERRA leave.--In the
2event that a former school employee is reemployed from USERRA
3leave who had received any payments or annuity from the plan
4during the USERRA leave, the employee shall return to the board
5the amount so received plus interest as provided in the plan
6document. The amount payable shall be certified in each case by
7the board in accordance with methods approved by the actuary and
8shall be paid in a lump sum within 30 days or in the case of an
9active participant may be amortized with interest as provided in
10the plan document through salary deductions to the trust in
11amounts agreed upon by the active participant and the board, but
12not longer than a period that starts with the date of
13reemployment and continuing for up to three times the length of
14the participant's immediate past period of USERRA leave, with
15the repayment period not to exceed five years.

16§ 8411. Agreements with financial institutions and other
17organizations.

18To establish and administer the plan, the board may enter
19into written agreements with one or more financial institutions
20or other organizations relating to the plan's administration and
21investment of funds held pursuant to the plan.

22§ 8412. Powers and duties of board.

23The board shall have the following powers and duties to
24establish the plan and trust and to administer the provisions of
25this part:

26(1) The board may commingle or pool assets with the
27assets of other persons or entities.

28(2) The board shall pay all administrative fees, costs
29and expenses of managing, investing, and administering the
30plan, the trust and the individual investment accounts from

1the balance of such individual investment accounts except as
2may be provided otherwise by law.

3(3) The board may establish investment guidelines and
4limits on the types of investments that participants can
5make, consistent with the board's fiduciary obligations.

6(4) The board shall at all times have the power to
7change the terms of the plan as may be necessary to maintain
8the tax-qualified status of the plan.

9(5) The board may establish a process for election to
10participate in the plan by those school employees for whom
11participation is not mandatory.

12(6) The board may perform an annual review of any
13qualified fund manager for the purpose of assuring it
14continues to meet all standards and criteria established.

15(7) The board may allow for eligible rollovers and
16direct trustee to trustee transfers into the trust from
17qualified plans of other employers, regardless of whether the
18employers are private employers or public employers.

19(8) The board may allow a former participant to maintain
20the participant's individual investment account within the
21plan.

22(9) The board shall administer the plan in compliance
23with the qualification and other rules of IRC.

24(10) The board may establish procedures to provide for
25the lawful payment of benefits.

26(11) The board shall determine what constitutes a
27termination of school service.

28(12) The board may establish procedures for
29distributions of small accounts as required or permitted by
30IRC.

1(13) The board shall have the power to establish
2procedures in the plan document or to promulgate rules and
3regulations as it deems necessary for the administration and
4management of the plan, including, but not limited to,
5establishing:

6(i) Procedures whereby eligible participants may
7change voluntary contribution amounts or their investment
8choices on a periodic basis or make other elections
9regarding their participation in the plan.

10(ii) Procedures for deducting mandatory pick up
11participant contributions and voluntary contributions
12from a participant's compensation.

13(iii) Procedures for rollovers and trustee-to-
14trustee transfers allowed under IRC and permitted by the
15board as part of the plan.

16(iv) Standards and criteria for disclosing and
17providing options to eligible individuals regarding
18investments of amounts deferred under the plan, provided
19that one of the available options must serve as the
20default option for participants who do not make a timely
21election.

22(v) Standards and criteria for disclosing to the
23participants the anticipated and actual income
24attributable to amounts invested, property rights and all
25fees, costs and expenses to be made against amounts
26deferred to cover the costs and expenses of administering
27and managing the plan or trust.

28(vi) Procedures, standards and criteria for the
29making of distributions from the plan upon termination
30from employment or death or in other circumstances

1consistent with the purpose of the plan.

2(14) The board may waive any reporting or information
3requirement contained in this part if the board determines
4that the information is not needed for the administration of
5the plan.

6(15) The board may contract any services and duties in
7lieu of staff except final adjudications and as prohibited by
8law. Any duties or responsibilities of the board not required
9by law to be performed by the board can be delegated to a
10third-party provider subject to appeal to the board.

11(16) The board may provide that any duties of the
12employer or information provided by the participant to the
13employer can be performed or received directly by the board.

14(17) The provisions and restrictions of the act of July
152, 2010 (P.L.266, No.44), known as Protecting Pennsylvania's
16Investments Act, shall not apply to the plan or trust or the
17investments thereof, but the board is authorized to offer to
18the plan participants investment vehicles that would be
19allowed under the Protecting Pennsylvania's Investments Act.
20The board shall also to the extent commercially available
21provide that one option for participants will have an annuity
22investment feature.

23§ 8413. Responsibility for investment loss.

24Neither the Commonwealth, the board, an employer nor any
25school entity or other political subdivision shall be
26responsible for any investment loss incurred under the plan or
27for the failure of any investment to earn any specific or
28expected return, or to earn as much as any other investment
29opportunity, whether or not such other opportunity was offered
30to participants in the plan.

1§ 8414. Investments based on participants' investment
2allocation choices.

3(a) Vesting.--All contributions, interest and investment
4earnings shall be 100% vested and shall be invested based on the
5participant's investment allocation choices. Each participant
6shall be credited individually with the amount of contributions,
7interest and investment earnings. All investment allocation
8choices shall be credited proportionately between participant
9contributions and employer defined contributions.

10(b) Investment.--Investment of contributions by any
11corporation, institution, insurance company or custodial bank or
12other entity that the board has approved shall not be
13unreasonably delayed, and in no case shall the investment of
14contributions be delayed more than 30 days from the date of
15payroll deductions or the date voluntary contributions are made
16to the date that funds are invested. Any interest earned on the
17funds pending investment shall be allocated to the employers and
18credited to the individual investment accounts of participants
19who are then participating in the plan unless the interest is
20used to defray administrative costs and fees that would
21otherwise be required to be borne by participants who are then
22participating in the program.

23§ 8415. Expenses.

24All expenses, fees and cost of administering the plan and
25investing the assets of the trust shall be borne by the
26participants and paid from assessments against the balances of
27the individual investment accounts as established by the board
28except as may be provided otherwise by law.

29§ 8416. Election by members to be participants.

30(a) General rule.--Any school employee who is an active

1member or inactive member on or after July 1, 2015, and who is
2employed in a position that would otherwise be eligible for
3participation in the plan may elect to become a participant in
4the plan.

5(b) Time for making election.--An eligible school employee
6may elect to become a participant and a combined service
7employee at any time before termination of school service by
8filing a written election with the board.

9(c) Effect of election.--An election to become a participant
10shall be irrevocable. Participation shall be effective at the
11beginning of the next pay period starting after the election is
12filed with the board. A member who elects to become a
13participant shall remain a participant for all future school
14service. Any prior school or nonschool service credited in the
15system shall remain in the class of service in which it is
16credited on the effective date of participation. A combined
17service employee shall not be eligible to receive an annuity
18from the system or a withdrawal of accumulated deductions until
19the employee has terminated school service. A participant shall
20not be entitled to purchase any previous school service or
21creditable nonschool service. The eligibility of a combined
22service employee for an annuity from the system and, if
23eligible, the amount of such annuity shall be as determined
24under this part.

25§ 8417. Required distributions.

26(a) Compliance.--All payments pursuant to this chapter shall
27start and be made in compliance with the minimum distribution
28requirements and incidental death benefit rules of IRC § 401(a).

29(b) Applicability.--The following shall apply:

30(1) (i) Except as provided under subparagraph (ii) and

1notwithstanding any provision of this part, a
2contribution or benefit related to the plan may not
3exceed a limitation under IRC § 415 with respect to
4governmental plans that are in effect on the date the
5contribution or benefit payment takes effect.

6(ii) An increase in a limitation under IRC § 415
7shall apply to the participants on or after the effective
8date of this section.

9(iii) For the purposes of this paragraph, the term
10"government plans" shall have the same meaning as in IRC
11§ 414(d).

12(2) (i) Except as provided under subparagraph (ii), an
13amendment of this part on or after the effective date of
14the addition of subsection (b) to this section that
15increases contributions or benefits for active
16participants, inactive participants or participants
17receiving distributions may not be deemed to provide for
18a contribution or benefit in excess of a limitation,
19adjusted on or after the effective date of the addition
20of subsection (b) to this section, under IRC §415 unless
21specifically provided for by legislation.

22(ii) Notwithstanding subparagraph (i), an increase
23in benefits on or after the effective date of the
24addition of subsection (b) to this section for a
25participant in the plan shall be authorized and apply to
26the fullest extent allowed by law.

27Section 15. Section 8501(a), (c) and (d) of Title 24 are
28amended to read:

29§ 8501. Public School Employees' Retirement Board.

30(a) Status and membership.--The board shall be an

1independent administrative board and shall consist of 15
2members: the Secretary of Education, ex officio; the State
3Treasurer, ex officio; two Senators; two members of the House of
4Representatives; the executive secretary of the Pennsylvania
5School Boards Association, ex officio; two to be appointed by
6the Governor, at least one of whom shall not be a school
7employee or an officer or employee of the State; three to be
8elected by the active professional members of the system and 
9active professional participants of the plan from among their
10number; one to be elected by annuitants or a participant of the 
11plan who has terminated school service and is receiving or is 
12eligible to receive distributions from among their number; one
13to be elected by the active nonprofessional members of the
14system or active nonprofessional participants of the plan from
15among their number; and one to be elected by members of
16Pennsylvania public school boards from among their number. The
17appointments made by the Governor shall be confirmed by the
18Senate and each election shall be conducted in a manner approved
19by the board. The terms of the appointed and nonlegislative
20elected members shall be three years. The members from the
21Senate shall be appointed by the President pro tempore of the
22Senate and shall consist of one member from the majority and one
23member from the minority. The members from the House of
24Representatives shall be appointed by the Speaker of the House
25of Representatives and shall consist of one member from the
26majority and one member from the minority. The legislative
27members shall serve on the board for the duration of their
28legislative terms and shall continue to serve until 30 days
29after the convening of the next regular session of the General
30Assembly after the expiration of their respective legislative

1terms or until a successor is appointed for the new term,
2whichever occurs first. The chairman of the board shall be
3elected by the board members. Each ex officio member of the
4board and each legislative member of the board may appoint a
5duly authorized designee to act in his stead. In the event that 
6a board member, who is designated as an active participant or as 
7the participant in the plan who is receiving or is eligible to 
8receive distributions, receives a total distribution of the 
9board member's interest in the plan, that board member may 
10continue to serve on the board for the remainder of the term.

11* * *

12(c) Oath of office.--Each member of the board shall take an
13oath of office that he will, so far as it devolves upon him,
14diligently and honestly administer the affairs of said board, 
15the system and the plan and that he will not knowingly violate
16or willfully permit to be violated any of the provisions of law
17applicable to this part. Such oath shall be subscribed by the
18member making it and certified by the officer before whom it is
19taken and shall be immediately filed in the office of the
20Secretary of the Commonwealth.

21(d) Compensation and expenses.--The members of the board who
22are members of the system or participants in the plan shall
23serve without compensation. Members of the board who are members
24of the system or participants in the plan and who are employed
25by a governmental entity shall not suffer loss of salary or
26wages through serving on the board. The board, on request of the
27employer of any member of the board who is an active
28professional or nonprofessional member of the system or active 
29professional or nonprofessional participant in the plan, may
30reimburse such employer for the salary or wages of the member,

1or for the cost of employing a substitute for such member or 
2participant, while the member or participant is necessarily
3absent from employment to execute the duties of the board. The
4members of the board who are not members of either the school
5system or the State Employees' Retirement System may be paid
6$100 per day when attending meetings and all board members shall
7be reimbursed for any necessary expenses. However, when the
8duties of the board as mandated are not executed, no
9compensation or reimbursement for expenses of board members
10shall be paid or payable during the period in which such duties
11are not executed.

12* * *

13Section 16. Section 8502(b), (c), (e), (h), (i), (j), (k),
14(n) and (o) of Title 24 are amended and the section is amended
15by adding a subsection to read:

16§ 8502. Administrative duties of board.

17* * *

18(b) Professional personnel.--The board shall contract for
19the services of a chief medical examiner, an actuary, investment
20advisors, counselors, an investment coordinator, and such other
21professional personnel as it deems advisable. The board may 
22utilize the same individuals and firms contracted under this 
23subsection for both the system and the plan but shall allocate 
24the fees, costs and expenses incurred under this subsection 
25between the system and the plan as appropriate.

26(c) Expenses.--The board shall, through the Governor, submit
27to the General Assembly annually a budget covering the
28administrative expenses of [this part] the system and a separate 
29budget covering the administrative expenses of the plan. Such
30expenses of the system as approved by the General Assembly in an

1appropriation bill shall be paid from investment earnings of the
2fund. Such expenses of the plan as approved by the General 
3Assembly shall be paid from interest, pursuant to section 
48414(b) (relating to investments based on participant investment 
5allocation choices) or assessments on the balances of the 
6participants' individual investment accounts except as may be 
7provided otherwise by law. Concurrently with its administrative
8budget, the board shall also submit to the General Assembly
9annually a list of proposed expenditures which the board intends
10to pay through the use of directed commissions, together with a
11list of the actual expenditures from the past year actually paid
12by the board through the use of directed commissions. All such
13directed commission expenditures shall be made by the board for
14the exclusive benefit of the system and its members and for the 
15exclusive benefit of the plan and its participants, 
16respectively.

17* * *

18(e) Records.--

19(1) The board shall keep a record of all its proceedings
20which shall be [open to inspection by] accessible to the
21public, except as otherwise provided in this part or by other
22law.

23(2) Any record, material or data received, prepared,
24used or retained by the board or its employees, investment
25professionals or agents relating to an investment shall not
26constitute a public record subject to public inspection under
27the act of [June 21, 1957 (P.L.390, No.212), referred to]
28February 14, 2008 (P.L.6, No.3), known as the Right-to-Know
29Law, if, in the reasonable judgment of the board, the
30[inspection] access would:

1(i) in the case of an alternative investment or
2alternative investment vehicle involve the release of
3sensitive investment or financial information relating to
4the alternative investment or alternative investment
5vehicle which the fund or trust was able to obtain only
6upon agreeing to maintain its confidentiality;

7(ii) cause substantial competitive harm to the
8person from whom sensitive investment or financial
9information relating to the investment was received; or

10(iii) have a substantial detrimental impact on the
11value of an investment to be acquired, held or disposed
12of by the fund or trust, or would cause a breach of the
13standard of care or fiduciary duty set forth in this
14part.

15(3) (i) The sensitive investment or financial
16information excluded from [inspection] access under
17paragraph (2)(i), to the extent not otherwise excluded
18from [inspection] access, shall constitute a public
19record subject to public [inspection] access under the
20Right-to-Know Law once the board is no longer required by
21its agreement to maintain confidentiality.

22(ii) The sensitive investment or financial
23information excluded from inspection under paragraph (2)
24(ii), to the extent not otherwise excluded from
25[inspection] access, shall constitute a public record
26subject to public [inspection] access under the Right-to-
27Know Law once:

28(A) the [inspection] access no longer causes
29substantial competitive harm to the person from whom
30the information was received; or

1(B) the entity in which the investment was made
2is liquidated;

3whichever is later.

4(iii) The sensitive investment or financial
5information excluded from [inspection] access under
6paragraph (2)(iii), to the extent not otherwise excluded
7from [inspection] access, shall constitute a public
8record subject to public [inspection] access under the
9Right-to-Know Law once:

10(A) the [inspection] access no longer has a
11substantial detrimental impact on the value of an
12investment of the fund or trust and would not cause a
13breach of the standard of care or fiduciary duty set
14forth in this part; or

15(B) the entity in which the investment was made
16is liquidated;

17whichever is later.

18(4) Except for the provisions of paragraph (3), nothing
19in this subsection shall be construed to designate any
20record, material or data received, prepared, used or retained
21by the board or its employees, investment professionals or
22agents relating to an investment as a public record subject
23to public [inspection] access under the Right-to-Know Law.

24(5) Notwithstanding the provisions of this subsection,
25the following information regarding an alternative investment
26vehicle shall be subject to public [inspection] access under
27the Right-to-Know Law:

28(i) The name, address and vintage year of the
29alternative investment vehicle.

30(ii) The identity of the manager of the alternative

1investment vehicle.

2(iii) The dollar amount of the commitment made by
3the system or plan to the alternative investment vehicle.

4(iv) The dollar amount of cash contributions made by
5the system or plan to the alternative investment vehicle
6since inception.

7(v) The dollar amount of cash distributions received
8by the system or plan from the alternative investment
9vehicle since inception.

10(vi) The net internal rate of return of the
11alternative investment vehicle since inception, provided
12that the system or plan shall not be required to disclose
13the net internal rate of return under circumstances in
14which, because of the limited number of portfolio assets
15remaining in the alternative investment vehicle, the
16disclosure could reveal the values of specifically
17identifiable remaining portfolio assets to the detriment
18of the alternative investment.

19(vii) The aggregate value of the remaining portfolio
20assets attributable to the system's or plan's investment
21in the alternative investment vehicle, provided that the
22system or plan shall not be required to disclose the
23value under circumstances in which, because of the
24limited number of portfolio assets remaining in the
25alternative investment vehicle, the disclosure could
26reveal the values of specifically identifiable remaining
27portfolio assets to the detriment of the alternative
28investment.

29(viii) The dollar amount of total management fees
30and costs paid to the alternative investment vehicle by

1the system or plan on an annual fiscal year-end basis.

2(6) Any record, material or data received, prepared,
3used or retained by the board or its employees or agents
4relating to a participant shall not constitute a public
5record subject to public access under the Right-to-Know Law,
6if, in the reasonable judgment of the board, the access would
7disclose any of the following:

8(i) The existence, date, amount and any other
9information pertaining to the voluntary contributions,
10including rollover contributions and trustee-to-trustee
11transfers, of any participant.

12(ii) The investment option selections of any
13participant.

14(iii) The balance of a participant's individual
15investment account, including the amount distributed to
16the participant, and any investment gains or losses, or
17rates of return.

18(iv) The identity of a participant's designated
19beneficiary, successor payee or alternate payee.

20(v) The benefit payment option of a participant.

21(7) Nothing in this subsection shall be construed to
22designate any record, material or data received, prepared,
23used or retained by the board or its employees or agents
24relating to the contributions, investments, account value or
25benefits payable to or on account of a participant as a
26public record subject to public access under the Right-to-
27Know Law.

28* * *

29(h) Regulations and procedures.--The board shall, with the
30advice of the Attorney General and the actuary, adopt and

1promulgate rules and regulations for the uniform administration
2of the system. The actuary shall approve in writing all
3computational procedures used in the calculation of
4contributions and benefits pertaining to the system, and the
5board shall by resolution adopt such computational procedures,
6prior to their application by the board. Such rules, regulations
7and computational procedures as so adopted from time to time and
8as in force and effect at any time, together with such tables as
9are adopted and published pursuant to subsection (j) as
10necessary for the calculation of annuities and other benefits,
11shall be as effective as if fully set forth in this part. Any
12actuarial assumption specified in or underlying any such rule,
13regulation or computational procedure and utilized as a basis
14for determining any benefit shall be applied in a uniform
15manner.

16(i) Data.--The board shall keep in convenient form such data
17as are stipulated by the actuary in order that an annual
18actuarial valuation of the various accounts of the fund can be
19completed within six months of the close of each fiscal year.
20The board shall have final authority over the means by which
21data is collected, maintained and stored and in so doing shall
22protect the rights of its membership as to privacy and
23confidentiality.

24(j) Actuarial investigation and valuation.--The board shall
25have the actuary make an annual valuation of the various
26accounts of the fund within six months of the close of each
27fiscal year. In the fiscal year 1975 and in every fifth year
28thereafter, the board shall have the actuary conduct an
29actuarial investigation and evaluation of the system based on
30data including the mortality, service, and compensation

1experience provided by the board annually during the preceding
2five years concerning the members and beneficiaries of the 
3system. The board shall by resolution adopt such tables as are
4necessary for the actuarial valuation of the fund and the trust
5and calculation of contributions, annuities, and other benefits
6based on the reports and recommendations of the actuary. Within
730 days of their adoption, the secretary of the board shall
8cause those tables which relate to the calculation of annuities
9and other benefits to be published in the Pennsylvania Bulletin
10in accordance with the provisions of 45 Pa.C.S. § 725(a)
11(relating to additional contents of Pennsylvania Bulletin) and,
12unless the board specifies therein a later effective date, such
13tables shall become effective on such publication. The board
14shall include a report on the significant facts, recommendations
15and data developed in each five-year actuarial investigation and
16evaluation of the system in the annual financial statement
17published pursuant to the requirements of subsection (n) for the
18fiscal year in which such investigation and evaluation were
19concluded.

20(k) Certification of employer contributions to fund.--The
21board shall, each year in addition to the itemized budget
22required under section 8330 (relating to appropriations by the
23Commonwealth), certify to the employers and the Commonwealth the
24employer contribution rate expressed as a percentage of members'
25payroll necessary for the funding of prospective annuities for
26active members and the annuities of annuitants, and certify the
27rates and amounts of the normal contributions as determined
28pursuant to section 8328(b) (relating to actuarial cost method),
29accrued liability contributions as determined pursuant to
30section 8328(c), supplemental annuities contribution rate as

1determined pursuant to section 8328(d), the experience
2adjustment factor as determined pursuant to section 8328(e),
3premium assistance contributions as determined pursuant to
4section 8328(f), the costs added by legislation as determined 
5pursuant to section 8328(i), the actuarial required contribution 
6rate as determined pursuant to section 8328(i), the collared 
7contribution rate as determined pursuant to section 8328(g), the 
8final contribution rate as determined pursuant to section 
98328(h) and the shared-risk contribution rate as determined 
10under section 8321(b) (relating to regular member contributions 
11for current service), which shall be paid to the fund and
12credited to the appropriate accounts. These certifications shall
13be regarded as final and not subject to modification by the
14Secretary of the Budget.

15* * *

16(n) Annual financial statement.--The board shall prepare and
17have published, on or before January 1 of each year, [a
18financial statement] financial statements as of the fiscal year
19ending June 30 of the previous year showing the condition of the
20fund, the trust and the various accounts, including, but not
21limited to, the board's accrual and expenditure of directed
22commissions, and setting forth such other facts, recommendations
23and data as may be of use in the advancement of knowledge
24concerning annuities and other benefits provided by this part.
25The board shall submit said financial [statement] statements to
26the Governor and shall make copies available to the employers
27for the use of the school employees and the public.

28(o) Independent [audit] audits.--The board shall provide for
29[an annual audit] annual audits of the system and the plan by an
30independent certified public accounting firm, which [audit]

1audits shall include the board's accrual and expenditure of
2directed commissions. The board may use the same independent 
3certified public accountant for the audits of both the system 
4and the plan.

5* * *

6(q) Participant and employer contributions to trust.--The
7board shall, each year in addition to any fees and itemized
8budget required under section 8330, certify, as a percentage of
9each participant's compensation, the employer defined
10contributions, which shall be paid to the trust and credited to
11each participant's individual investment account. These
12certifications shall be regarded as final and not subject to
13modification by the Secretary of the Budget. The board shall
14cause all mandatory pickup participant contributions made on
15behalf of a participant and all voluntary contributions made by
16a participant to be credited to the participant's individual
17investment account.

18Section 17. Section 8502.2(a) of Title 24 is amended to
19read:

20§ 8502.2. Health insurance.

21(a) Authority.--The board may sponsor a participant-funded
22group health insurance program for annuitants, participants 
23receiving distributions, spouses of annuitants and participants 
24receiving distributions, survivor annuitants and their
25dependents. The board may promulgate regulations regarding the
26prudent and efficient operation of the program, including, but
27not limited to:

28(1) Establishment of an annual budget and disbursements
29in accordance with the budget.

30(2) Determination of the benefits structure.

1(3) Determination of enrollment procedures.

2(4) Establishment of premium rates sufficient to fully
3fund the program, including administrative expenses.

4(5) Contracting for goods, equipment, services,
5consultants and other professional personnel as needed to
6operate the program.

7* * *

8Section 18. Section 8503 heading and (a) of Title 24 are
9amended and the section is amended by adding a subsection to
10read:

11§ 8503. Duties of board to advise and report to employers [and
12members], members and participants.

13(a) Manual of regulations.--The board shall, with the advice
14of the Attorney General and the actuary, prepare, within 90 days
15of the effective date of this part, a manual incorporating rules
16and regulations consistent with the provisions of this part for
17the employers who shall make information contained therein
18available to the general membership. The board shall thereafter
19advise the employers within 90 days of any changes in such rules
20and regulations due to changes in the law or due to changes in
21administrative policies. As soon as practicable after the
22commissioner's publication with respect thereto, the board shall
23also advise the employers as to any cost-of-living adjustment
24for the succeeding calendar year in the amount of the limitation
25under IRC § 401(a)(17) and the dollar amounts of the limitations
26under IRC § 415[(b)].

27* * *

28(b.1) Participant status statements.--The board shall have
29furnished annually to each participant on or before December 31,
30and more frequently as the board may agree or as required by

1law, a statement showing the accumulated total defined
2contributions credited to the participant's individual
3investment account, the nature and type of investments and the
4investment allocation of future contributions as of June 30 of
5the current year and requesting the participant to make any
6necessary corrections or revision regarding his designated
7beneficiary.

8* * *

9Section 19. Section 8504(c) of Title 24 is amended to read:

10§ 8504. Duties of board to report to State Employees'
11Retirement Board.

12* * *

13(c) Applications for benefits for State employees.--Upon
14receipt of notification and the required data from the State
15Employees' Retirement Board that a former school employee who
16elected multiple service has applied for a State employee's
17retirement benefit or, in the event of his death, his legally
18constituted representative has applied for such benefit, the
19board shall:

20(1) Certify to the State Employees' Retirement Board:

21(i) The salary history as a member of the Public
22School Employees' Retirement System and the final average
23salary as calculated on the basis of the compensation
24received as a State and school employee.

25(ii) The annuity or benefit which the member or his
26beneficiary is entitled to receive under this part and
27modified according to the option selected.

28(2) Transfer to the State Employees' Retirement Fund the
29accumulated deductions standing to such member's credit and
30the actuarial reserve required on account of the member's

1years of credited service in the school system and his final
2average salary determined on the basis of his compensation as 
3a member in both systems.

4Section 20. Sections 8505 heading, (b), (h), and (i),
58506(a), (d), (e), (g) and (h) and 8507 heading, (a), (e) and
6(f) of Title 24 are amended and the sections are amended by
7adding subsections to read:

8§ 8505. Duties of board regarding applications and elections of
9members and participants.

10* * *

11(b) State employees electing multiple service status.--Upon
12receipt of notification from the State Employees' Retirement
13Board that a former school employee has become an active member
14in the State Employees' Retirement System and has elected to
15become a member with multiple service status, the board shall:

16(1) In case of a member who is receiving an annuity from
17the system:

18(i) Discontinue payments, transfer the present value
19of the member's annuity at the time of entering State
20service, plus the amount withdrawn in a lump sum payment,
21on or after the date of entering State service, pursuant
22to section 8345 (relating to member's options), with
23statutory interest to date of transfer, minus the amount
24to be returned to the board on account of return to
25service that the board has determined is to be credited
26in the members' savings account, from the annuity reserve
27account to the members' savings account and resume
28crediting of statutory interest on the amount restored to
29his credit.

30(ii) Transfer the balance of the present value of

1the total annuity, minus the amount to be returned to the
2board on account of return to service that the board has
3determined is to be credited in the State accumulation
4account, from the annuity reserve account to the State
5accumulation account.

6(iii) Certify to the member the amount of lump sum
7and annuity payments with statutory interest the member
8is to return to the board and, of those amounts, which
9amount shall be credited to the members' savings account
10and credited with statutory interest as such payments are
11returned and which amount shall be credited to the State
12accumulation account.

13(2) In case of a member who is not receiving an annuity
14from the system and who has not withdrawn his accumulated
15deductions, continue or resume the crediting of statutory
16interest on his accumulated deductions.

17(3) In case of a member who is not receiving an annuity
18from the system and his accumulated deductions were
19withdrawn, certify to the member the accumulated deductions
20as they would have been at the time of his separation had he
21been a full coverage member together with statutory interest
22for all periods of subsequent State service eligible for 
23membership in the State Employees' Retirement System and
24school service eligible for active membership in the system
25to the date of repayment. Such amount shall be restored by
26him and shall be credited with statutory interest as such
27payments are restored.

28* * *

29(e.1) Certification to participants terminating service.--
30The board shall certify to a participant, within one year of

1termination of service of such participant, in writing of the
2vested accumulated total defined contributions credited to the
3participant's individual investment account as of the date
4stated in the writing, any notices regarding rollover or other
5matters required by IRC or other law, the obligation of the
6participant to commence distributions from the plan by the
7participant's required beginning date, and the ability to
8receive all or part of the vested balance in the participant's
9individual investment account in a lump sum or in such other
10form as the board may authorize or as is required by law.

11* * *

12(f.1) Notification to inactive participants approaching
13required beginning date.--The board shall notify each inactive
14participant who has terminated school service and had not
15commenced distribution by 90 days before the participant's
16required beginning date, in writing that the inactive
17participant has an obligation to commence distributions by his
18required beginning date in a form and manner required by IRC §
19401(a)(9) and other applicable provisions of IRC.

20* * *

21(g.1) Initial payment to a participant.--The board shall
22make the initial payment to a participant who has applied for a
23distribution within 60 days of the filing of his application.

24(h) Death benefits.--Upon receipt of notification of the
25death of a member, an active participant, an inactive 
26participant or a former participant performing USERRA leave, the
27board shall notify the designated beneficiary or survivor
28annuitant of the benefits to which he is entitled and shall make
29the first payment to the beneficiary under the plan elected by
30the beneficiary within 60 days of receipt of certification of

1death and other necessary data. If no beneficiary designation is
2in effect at the date of the member's or participant's death or
3no notice has been filed with the board to pay the amount of
4such benefits to the member's or participant's estate, the board
5is authorized to pay such benefits to the executor,
6administrator, surviving spouse or next-of-kin of the deceased
7member or participant, and payment pursuant hereto shall fully
8discharge the fund or plan from any further liability to make
9payment of such benefits to any other person. If the surviving
10spouse or next-of-kin of the deceased member or participant
11cannot be found for the purpose of paying such benefits for a
12period of seven years from the date of death of the member or 
13participant, then such benefits shall be escheated to the
14Commonwealth for the benefit of the fund or plan.

15(i) Medical insurance coverage.--Upon receipt of
16notification from an insurance carrier offering a health
17insurance program approved by the board that an annuitant or 
18terminated participant who has attained age 65 has elected
19medical, major medical, and hospitalization insurance coverage
20or notification that annuitants of the system with less than 24
211/2 eligibility points (other than disability annuitants of the 
22system), spouses of annuitants and survivor annuitants eligible
23to elect to enroll in the approved health insurance program have
24elected participation in such health insurance program, the
25board may deduct from the annuity payments the appropriate
26annual charges in equal monthly installments. Such deductions
27shall be transmitted to the insurance carrier.

28* * *

29§ 8506. Duties of employers.

30(a) Status of members and participants.--The employer shall,

1each month, notify the board in a manner prescribed by the board
2of the salary changes effective during the past month, the date
3of all removals from the payroll, and the type of leave of any
4member or participant who has been removed from the payroll for
5any time during that month, and:

6(1) if the removal is due to leave without pay, the
7employer shall furnish the board with the date of beginning
8leave, the date of return to service, and the reason for
9leave;

10(2) if the removal is due to a transfer to another
11employer, the former employer shall furnish such employer and
12the board with a complete school service record, including
13credited or creditable nonschool service; or

14(3) if the removal is due to termination of school
15service, the employer shall furnish the board with a complete
16school service record including credited or creditable
17nonschool service and in the case of death of the member the
18employer shall so notify the board.

19* * *

20(c.1) Participant and employer defined contributions.--The 
21employer shall cause the mandatory pickup participant 
22contributions on behalf of a participant to be made and shall 
23cause to be deducted any voluntary contributions authorized by a 
24participant. The employer shall also cause the employer defined 
25contributions on behalf of a participant to be made. The 
26employer shall notify the board at times and in a manner 
27prescribed by the board of the compensation of any participant 
28to whom the limitation under IRC § 401(a)(17) either applies or 
29is expected to apply and shall cause such participant's 
30contributions to be deducted from payroll to cease at the
 

1limitation under IRC § 401(a)(17) on the payroll date if and 
2when such limit shall be reached. The employer shall certify to 
3the board the amounts picked up and deducted and the employer 
4defined contributions being made and shall send the total amount 
5picked up, deducted and contributed together with a duplicate of 
6such voucher to the secretary of the board every pay period or 
7on such schedule as established by the board.

8(d) New employees subject to mandatory membership or 
9participation.--Upon the assumption of duties of each new school
10employee whose membership in the system or plan is mandatory,
11the employer shall no later than 30 days thereafter cause an
12application for membership or participation, which application
13shall include the employee's home address, birthdate certified
14by the employer, previous school or State service and any other
15information requested by the board, and a nomination of
16beneficiary to be made by such employee and filed with the board
17and shall make pickup contributions or mandatory pickup 
18participant contributions from the effective date of school
19employment.

20(e) New employees subject to optional membership or 
21participation.--The employer shall inform any eligible school
22employee whose membership in the system or participation in the 
23plan is not mandatory of his opportunity to become a member of
24the system or participant in the plan provided that he elects to
25purchase credit for all such continuous creditable service. If
26such employee so elects, the employer shall no later than 30
27days thereafter cause an application for membership which
28application shall include the employee's home address, birthdate
29certified by the employer, previous school or State service and
30any other information requested by the board, and a nomination

1of beneficiary to be made by him and filed with the board and
2shall cause proper contributions to be made from the date of
3election of membership or participation.

4* * *

5(g) Former State employee contributors.--The employer shall,
6upon the employment of a former member of the State Employees'
7Retirement System who is not an annuitant of the State
8Employees' Retirement System, advise such employee of his right
9to elect multiple service membership within 365 days of entry
10into the system and, in the case any such employee who so elects
11has withdrawn his accumulated deductions, require him to restore
12his accumulated deductions as they would have been at the time
13of his separation had he been a full coverage member, together
14with statutory interest for all periods of subsequent State and
15school service to date of repayment. The employer shall advise
16the board of such election. This subsection shall not apply to a 
17school employee who is employed in a position where the school 
18employee is or could be a participant in the plan other than a 
19member who elects to become a participant in the plan.

20(h) Former State employee annuitants.--The employer shall,
21upon the employment of an annuitant of the State Employees'
22Retirement System who applies for membership in the system,
23advise such employee that he may elect multiple service
24membership within 365 days of entry into the system and that if
25he so elects his annuity from the State Employees' Retirement
26System will be discontinued effective upon the date of his
27return to school service and, upon termination of school service
28and application for an annuity, the annuity will be adjusted in
29accordance with section 8346 (relating to termination of
30annuities). The employer shall advise the board of such

1election. This subsection shall not apply to a school employee 
2who is employed in a position where the school employee is or 
3could be a participant in the plan other than a member who 
4elects to become a participant in the plan.

5* * *

6(k) School employees performing USERRA or military related
7leave of absence.--The employer shall report to the board any
8school employee who ceases to be an active participant to
9perform USERRA service, or who is granted a leave of absence
10under 51 Pa.C.S. § 4102 (relating to leaves of absences for
11certain government employees) or a military leave of absence
12under 51 Pa.C.S. § 7302 (relating to granting military leaves of
13absence), the date on which such USERRA service, leave of
14absence or military leave of absence began, the date on which
15the school employee is reemployed from USERRA leave or returns
16after the leave of absence or military leave of absence, if such
17event occurs, and any other information the board may require or
18direct.

19(l) Differential wage payments and military leave of absence
20payments.-—Notwithstanding the exclusion of differential wage
21payments as defined in IRC § 414(u)(12) from compensation under
22this part, the employer of any school employee on USERRA leave
23shall report differential wage payments made to such employee to
24the board, and the employer of any school employee on leave of
25absence pursuant to 51 Pa.C.S. § 4102 shall report any payment
26made to such employee, in the form and manner established by the
27board.

28(m) Obligation of educational institutions to report
29participation and compensation of employees in independent
30retirement programs.--The Pennsylvania State University, the

1State System of Higher Education, State-owned educational
2institutions and community colleges shall report to the board
3the compensation and other information as the board may request
4for employees who are participants or members in the State
5Employees' Retirement System, plan or independent retirement
6programs approved by the employer.

7§ 8507. Rights and duties of school employees [and members], 
8members and participants.

9(a) Information on new employees.--Upon his assumption of
10duties, each new school employee shall furnish his employer with
11a complete record of his previous school or State service, or
12creditable nonschool service, proof of his date of birth, his
13home address, his current status in the system and the plan and
14in the State Employees' Retirement System and the State 
15Employees' Defined Contribution Plan and such other information
16as the board may require. Willful failure to provide the
17information required by this subsection to the extent available
18or the provision of erroneous information upon entrance into the
19system shall result in the forfeiture of the right of the member
20to subsequently assert any right to benefits based on erroneous
21information or on any of the required information which he
22failed to provide. In any case in which the board finds that a
23member is receiving an annuity based on false information, the
24additional amounts received predicated on such false information
25together with statutory interest doubled and compounded shall be
26deducted from the present value of any remaining benefits to
27which the member is legally entitled and such remaining benefits
28shall be correspondingly decreased.

29* * *

30(b.1) Application for participation.--On or after July 1,

12015, in the case of a new employee who is not currently a
2participant in the plan and whose participation is mandatory, or
3in the case of a new employee whose participation is not
4mandatory but is permitted and who desires to become a
5participant in the plan, the new employee shall execute an
6application for participation and a nomination of a beneficiary.

7* * *

8(d.1) Voluntary contributions by a participant.--Any active
9participant who desires to make voluntary contributions to be
10credited to his individual investment account shall notify the
11board and, upon compliance with the requirements, procedures and
12limitations established by the board in the plan document, may
13do so subject to the limitations under IRC §§ 401(a) and 415 and
14other applicable law.

15(d.2) Contributions for USERRA leave.--Any active
16participant or inactive participant or former participant who
17was reemployed from USERRA leave and who desires to make
18mandatory pickup participant contributions and voluntary
19contributions for his USERRA leave shall so notify the board
20within the time period required under 38 U.S.C. Ch. 43 (relating
21to employment and reemployment rights of members of the
22uniformed services) and IRC § 414(u) of his desire to make such
23contributions. Upon making the permitted mandatory pickup
24participant contributions within the allowed time period, the
25employer shall make the corresponding employer defined
26contributions at the same time.

27(e) Beneficiary for death benefits from system.--Every
28member shall nominate a beneficiary by written designation filed
29with the board to receive the death benefit or the benefit
30payable under the provisions of Option 1. Such nomination may be

1changed at any time by the member by written designation filed
2with the board. A member may also nominate a contingent
3beneficiary or beneficiaries to receive the death benefit or the
4benefit payable under the provisions of Option 1.

5(e.1) Beneficiary for death benefits from plan.--Every
6participant shall nominate a beneficiary by written designation
7filed with the board as provided in section 8506 (relating to
8duties of employers) to receive the death benefit payable under
9section 8347 (relating to death benefits). A participant may
10also nominate a contingent beneficiary or beneficiaries to
11receive the death benefit provided under this section. Such
12nomination may be changed at any time by the participant by
13written designation filed with the board.

14(e.2) Beneficiary for combined service employee.--A combined
15service employee may designate or nominate different persons to
16be beneficiaries, survivor annuitants and successor payees for
17his benefits from the system and the plan.

18(f) Termination of service by members.--Each member who
19terminates school service and who is not then a disability
20annuitant shall execute on or before the date of termination of
21service a written application, duly attested by the member or
22his legally constituted representative, electing to do one of
23the following:

24(1) Withdraw his accumulated deductions.

25(2) Vest his retirement rights and if he is a joint
26coverage member, and so desires, elect to become a full
27coverage member and agree to pay within 30 days of the date
28of termination of service the lump sum required.

29(3) Receive an immediate annuity, if eligible, and may,
30if he is a joint coverage member, elect to become a full

1coverage member and agree to pay within 30 days of date of
2termination of service the lump sum required.

3* * *

4(g.1) Deferral of retirement rights.--If a participant
5terminates school service and does not commence receiving a
6distribution, he shall nominate a beneficiary by written
7designation filed with the board, and he may anytime thereafter,
8but no later than his required beginning date, withdraw the
9vested accumulated total defined contributions standing to his
10credit or apply for another form of distribution required by law
11or authorized by the board.

12* * *

13Section 21. Sections 8521(b), 8522, 8524, 8525, 8531, 8533,
148533.1, 8533.3 and 8533.4(a) of Title 24 are amended to read:

15§ 8521. Management of fund and accounts.

16* * *

17(b) Crediting of interest.--The board annually shall allow
18statutory interest, excluding the individual investment 
19accounts, to the credit of the members' savings account on the
20mean amount of the accumulated deductions of all members for
21whom interest is payable for the preceding year and valuation
22interest on the mean amount of the annuity reserve account for
23the preceding year to the credit of that account. The board
24annually shall allow valuation interest calculated on the mean
25amount for the preceding year of the balance in the State
26accumulation account excluding any earnings of the fund credited
27to the account during that year. In the event the total earnings
28for the year do not exceed 5 1/2% of the mean amount for the
29preceding year of the total assets of the fund less earnings
30credited to the fund during that year plus the administrative

1expenses of the board, the difference required to be
2appropriated from the General Fund shall be credited to the
3State accumulation account.

4* * *

5§ 8522. Public School Employees' Retirement Fund.

6The fund shall consist of all moneys in the several separate
7funds in the State Treasury set apart to be used under the
8direction of the board for the benefit of members of the system;
9and the Treasury Department shall credit to the fund all moneys
10received from the Department of Revenue arising from the
11contributions relating to or on behalf of the members of the 
12system required under the provisions of Chapter 83 (relating to
13membership, contributions and benefits) and all earnings from
14investments or moneys of said fund. There shall be established
15and maintained by the board the several ledger accounts
16specified in sections 8523 (relating to members' savings
17account), 8524 (relating to State accumulation account), 8525
18(relating to annuity reserve account) and 8526 (relating to
19health insurance account). The individual investment accounts 
20that are part of the trust are not part of the fund. Mandatory 
21pickup participant contributions, voluntary contributions and 
22employer defined contributions made under this part and any 
23income earned by the investment of such contributions shall not 
24be paid or credited to the fund but instead shall be paid to the 
25trust and credited to the individual investment accounts.

26§ 8524. State accumulation account.

27The State accumulation account shall be the ledger account to
28which shall be credited all contributions of the Commonwealth
29and other employers as well as the earnings of the fund, except
30the premium assistance contributions and earnings thereon in the

1health insurance account. Valuation interest shall be allowed on
2the total amount of such account less any earnings of the fund
3credited during the year. The reserves necessary for the payment
4of annuities and death benefits resulting from membership in the 
5system as approved by the board and as provided in Chapter 83
6(relating to membership, contributions and benefits) shall be
7transferred from the State accumulation account to the annuity
8reserve account. At the end of each year the required interest
9shall be transferred from the State accumulation account to the
10credit of the members' savings account and the annuity reserve
11account. The administrative expenses of the board shall be
12charged to the State accumulation account.

13§ 8525. Annuity reserve account.

14(a) Credits and charges to account.--The annuity reserve
15account shall be the ledger account to which shall be credited
16the reserves held for the payment of annuities and death
17benefits resulting from membership in the system on account of
18all annuitants and the contributions from the Commonwealth and
19other employers as determined in accordance with section 8328
20(relating to actuarial cost method) for the payment of the
21supplemental annuities provided in sections 8348 (relating to
22supplemental annuities), 8348.1 (relating to additional
23supplemental annuities), 8348.2 (relating to further additional
24supplemental annuities), 8348.3 (relating to supplemental
25annuities commencing 1994), 8348.4 (relating to special
26supplemental postretirement adjustment), 8348.5 (relating to
27supplemental annuities commencing 1998), 8348.6 (relating to
28supplemental annuities commencing 2002) and 8348.7 (relating to
29supplemental annuities commencing 2003). The annuity reserve
30account shall be credited with valuation interest. After the

1transfers provided in sections 8523 (relating to members'
2savings account) and 8524 (relating to State accumulation
3account), all annuity and death benefit payments shall be
4charged to the annuity reserve account and paid from the fund.

5(b) Transfers from account.--Should an annuitant be
6subsequently restored to active service either as a member of 
7the system or as a participant in the plan, the present value of
8his member's annuity at the time of reentry into school service
9shall be transferred from the annuity reserve account and placed
10to his individual credit in the members' savings account. In
11addition, the actuarial reserve for his annuity less the amount
12transferred to the members' savings account shall be transferred
13from the annuity reserve account to the State accumulation
14account.

15§ 8531. State guarantee regarding the system.

16Statutory interest charges payable, the maintenance of
17reserves in the fund, and the payment of all annuities and other
18benefits granted by the board from the system under the
19provisions of this part relating to the establishment and 
20administration of the system are hereby made obligations of the
21Commonwealth. All income, interest, and dividends derived from
22deposits and investments of the system authorized by this part
23shall be used for the payment of the said obligations of the
24Commonwealth and shall not be used for any obligations of the 
25plan or trust.

26§ 8533. Taxation, attachment and assignment of funds.

27(a) General rule.--Except as provided in subsections (b),
28(c) and (d), the right of a person to a member's annuity, a
29State annuity, or retirement allowance, to the return of
30contributions, any benefit or right accrued or accruing to any

1person under the provisions of this part, and the moneys in the
2fund and the trust are hereby exempt from any State or municipal
3tax, and exempt from levy and sale, garnishment, attachment, the 
4provisions of Article XIII.1 of the the act of April 9, 1929 
5(P.L.343, No.176), known as The Fiscal Code, or any other
6process whatsoever, and shall be unassignable. No participant or 
7beneficiary, successor payee, spouse or alternate payee of a 
8participant shall have the ability to commute, sell, assign, 
9alienate, anticipate, mortgage, pledge, hypothecate, commutate 
10or otherwise transfer or convey any benefit or interest in an 
11individual investment account or rights to receive or direct 
12distributions under this part or under agreements entered into 
13under this part except as otherwise provided in this part and in 
14the case of either a member or a participant.

15(b) Forfeiture.--Rights under this part shall be subject to
16forfeiture as provided by the act of July 8, 1978 (P.L.752, 
17No.140), known as the Public Employee Pension Forfeiture Act. 
18Forfeitures under this subsection or under any other provision
19of law may not be applied to increase the benefits that any
20member would otherwise receive under this part. Notwithstanding 
21this paragraph, the act of July 8, 1978 (P.L.752, No.140), known 
22as the Public Employee Pension Forfeiture Act, section 16(b) of 
23Article V of the Constitution of Pennsylvania or 42 Pa.C.S. § 
243352 (relating to pension rights), the accumulated mandatory 
25participant contributions and accumulated voluntary 
26contributions standing to the credit of a participant shall not 
27be forfeited but shall be available for payment of fines and 
28restitution as provided by law. Furthermore, amounts in the 
29trust that have been ordered to be distributed to an alternate 
30payee as the result of an equitable distribution of marital
 

1property as part of an approved domestic relations order entered 
2before the date of the order or action in a court or other 
3tribunal resulting in a forfeiture of a participant's interest 
4in the trust shall not be subject to the Public Employee Pension 
5Forfeiture Act, section 16(b) of the Article V of the 
6Constitution of Pennsylvania or 42 Pa.C.S. § 3352. Any 
7accumulated employer defined contributions forfeited as a result 
8of this subsection or other law shall be retained by the board 
9and used for the payment of expenses of the plan.

10(c) Domestic relations order.--Rights under this part shall
11be subject to attachment in favor of an alternate payee as set
12forth in an approved domestic relations order.

13(d) Direct rollover.--Effective with distributions made on 
14or after January 1, 1993, and notwithstanding any other 
15provision of this part to the contrary, a distributee may elect, 
16at the time and in the manner prescribed by the board, to have 
17any portion of an eligible rollover distribution paid directly 
18to an eligible retirement plan by way of a direct rollover. For 
19purposes of this subsection, a "distributee" includes a member, 
20a participant, [and] a member's surviving spouse, a 
21participant's surviving spouse [and] a member's former spouse 
22who is an alternate payee under an approved domestic relations 
23order and a participant's former spouse who is an alternate 
24payee under an approved domestic relations order and anyone else 
25authorized under the IRC and the plan terms approved by the 
26board to have an eligible rollover distribution paid directly to 
27an eligible retirement plan by way of a direct rollover. For 
28purposes of this subsection, the term "eligible rollover 
29distribution" has the meaning given such term by IRC § 402(f)(2)
30(A) and "eligible retirement plan" has the meaning given such
 

1term by IRC § 402(c)(8)(B), except that a qualified trust shall 
2be considered an eligible retirement plan only if it accepts the 
3distributee's eligible rollover distribution; however, in the 
4case of an eligible rollover distribution to a surviving spouse, 
5an eligible retirement plan is an "individual retirement 
6account" or an "individual retirement annuity" as those terms 
7are defined in IRC § 408(a) and (b).

8§ 8533.1. Approval of domestic relations orders.

9(a) Certification regarding members.--A domestic relations
10order pertaining to a member of the system shall be certified as
11an approved domestic relations order by the secretary of the
12board, or his designated representative, only if such order
13meets all of the following:

14(1) Requires the system to provide any type or form of
15benefit or any option applicable to members already provided
16under this part.

17(2) Requires the system to provide no more than the
18total amount of benefits than the member would otherwise
19receive (determined on the basis of actuarial value) unless
20increased benefits are paid to the member or alternate payee
21based upon cost-of-living increases or increases based on
22other than actuarial value.

23(3) Specifies the amount or percentage of the member's
24benefits to be paid by the system to each such alternate
25payee or the manner in which the amount or percentage is to
26be determined.

27(4) Specifies the retirement option to be selected by
28the member upon retirement or states that the member may
29select any retirement option offered by this part upon
30retirement.

1(5) Specifies the name and last known mailing address,
2if any, of the member and the name and last known mailing
3address of each alternate payee covered by the order and
4states that it is the responsibility of each alternate payee
5to keep a current mailing address on file with the system.

6(6) Does not grant an alternate payee any of the rights,
7options or privileges of a member under this part.

8(7) Requires the member to execute an authorization
9allowing each alternate payee to monitor the member's
10compliance with the terms of the domestic relations order
11through access to information concerning the member
12maintained by the system.

13(a.1) Certification regarding participants.--A domestic
14relations order pertaining to a participant shall be certified
15as an approved domestic relations order by the secretary of the
16board, or his designated representative, only if that order
17meets all of the following:

18(1) Does not require the plan to provide any type or
19form of benefit or any option applicable to members of the
20system or participants in the plan.

21(2) Does not require the segregation of the alternate
22payee's share of the participant's individual investment
23account into a subaccount or newly established individual
24account titled in the name of the alternate payee.

25(3) Does not require the plan to recover and/or
26distribute any funds which were distributed to the
27participant and/or at the participant's direction prior to
28the approval of the domestic relations order by the secretary
29of the board or his designated representative.

30(4) Requires the plan to pay to the alternate payee no

1more than the lesser of the vested amount of the
2participant's individual investment account specified by the
3domestic relations order or the amount of the participant's
4individual investment account as of the date of the transfer
5of the alternate payee's share to the alternate payee.

6(5) States that the plan shall not be required to recoup
7or make good for losses in value to the participant's
8individual investment account incurred between the date of
9the valuation of the account used for equitable distribution
10purposes and the date of distribution to the alternate payee.

11(6) Specifies the amount or percentage of the
12participant's individual investment account to be paid to the
13alternate payee and the date upon which such valuation is
14based.

15(7) Specifies the name and last known mailing address,
16if any, of the participant and the name and last known
17mailing address of each alternate payee covered by the order
18and states that it is the responsibility of each alternate
19payee to keep a current mailing address on file with the
20system.

21(8) Does not grant an alternate payee the rights,
22privileges or options available to a participant.

23(9) Requires the participant to execute an authorization
24allowing each alternate payee to monitor the participant's
25compliance with the terms of the domestic relations order
26through access to information concerning the participant
27maintained by the plan. Any authorization granted under this
28section shall be construed only as an authorization for the
29alternate payee to receive information concerning the
30participant which relates to the administration, calculation,

1and payment of the alternate payee's share of the
2participant's account and not as an authorization to exercise
3the rights afforded to participants or obtain information
4that is not related to the administration, calculation and
5payment of the alternate payee's share of the participant's
6account.

7(10) In the case of participants who have not yet begun
8to receive distributions as of the date the domestic
9relations order is approved by the secretary of the board or
10his designated representative, requires the immediate
11distribution of the alternate payee's share of the
12participant's individual investment account, which may be
13made by direct payment, eligible rollover or trustee-to-
14trustee transfer to another eligible plan or qualified
15account owned by the alternate payee.

16(11) In the case of participants who are currently
17receiving distributions from the trust as of the date the
18domestic relations order is approved by the secretary of the
19board or his designated representative, the domestic
20relations order may not order the board to pay the alternate
21payee more than the balance available in the participant's
22individual investment account as of the date the order is
23approved or require that distributions continue to the
24alternate payee after the death of the participant and final
25settlement of the participant's individual investment
26account.

27(b) Determination by secretary.--Within a reasonable period
28of time after receipt of a domestic relations order, the
29secretary of the board, or his designated representative, shall
30determine whether this order is an approved domestic relations

1order and notify the member or participant and each alternate
2payee of this determination. Notwithstanding any other provision
3of law, the exclusive remedy of any member, participant or
4alternate payee aggrieved by a decision of the secretary of the
5board, or his designated representative, shall be the right to
6an adjudication by the board under 2 Pa.C.S. Ch. 5 (relating to 
7practice and procedure) with appeal therefrom to the 
8Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to judicial 
9review) and 42 Pa.C.S. § 763(a)(1) (relating to direct appeals 
10from government agencies).

11(c) Other orders.--The requirements for approval identified 
12in [subsection (a)] subsections (a) and (a.1) shall not apply to 
13any domestic relations order which is an order for support as 
14that term is defined in 23 Pa.C.S. § 4302 (relating to 
15definitions) or an order for the enforcement of arrearages as 
16provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
17arrearages). These orders shall be approved to the extent that
18they do not attach moneys in excess of the limits on attachments
19as established by the laws of this Commonwealth and the United
20States, require distributions of benefits in a manner that would 
21violate the laws of the United States, any state or this 
22Commonwealth or require the distribution of funds for support or 
23enforcement of arrearages against any participant who is not 
24receiving distributions from the plan at the time such order is 
25entered.

26(d) Obligation discharged.--Only the requirements of this
27part and any regulations promulgated hereunder shall be used to
28govern the approval or disapproval of a domestic relations
29order. Therefore, if the secretary of the board, or his
30designated representative, acts in accordance with the

1provisions of this part and any promulgated regulations in
2approving or disapproving a domestic relations order, then the
3obligations of the system or plan with respect to such approval
4or disapproval shall be discharged.

5§ 8533.3. Irrevocable survivor annuitant.

6Notwithstanding any other provisions of this part, a domestic
7relations order pertaining to a member may provide for an
8irrevocable survivor annuitant. A domestic relations order
9requiring the designation of an irrevocable survivor annuitant
10shall be deemed to be one that requires a member to designate an
11alternate payee as a survivor annuitant and that prohibits the
12removal or change of that survivor annuitant without approval of
13a court of competent jurisdiction, except by operation of law.
14Such a domestic relations order may be certified as an approved
15domestic relations order by the secretary of the board, or his
16designated representative, in which case the irrevocable
17survivor annuitant so ordered by the court cannot be changed by
18the member without approval by the court. A person ineligible to
19be designated as a survivor annuitant may not be designated an
20irrevocable survivor annuitant.

21§ 8533.4. Amendment of approved domestic relations orders.

22(a) Deceased alternate payee.--In the event that the
23alternate payee predeceases the member or participant and there
24are benefits payable to the alternate payee, the divorce court
25may amend the approved domestic relations order to substitute a
26person for the deceased alternate payee to receive any benefits
27payable to the deceased alternate payee.

28* * *

29Section 22. Title 24 is amended by adding a section to read:

30§ 8533.5. Irrevocable successor payee.

1Notwithstanding any other provisions of this part, a domestic
2relations order pertaining to a participant may provide for an
3irrevocable successor payee, only if the participant is
4receiving a payment pursuant to a payment option provided by the
5board that allows for a successor payee. A domestic relations
6order requiring the designation of an irrevocable successor
7payee shall be deemed to be one that requires a participant who
8is receiving payments from an annuity or other distribution
9option to designate an alternate payee as a successor payee and
10that prohibits the removal or change of that successor payee
11without approval of a court of competent jurisdiction, except by
12operation of law. Such a domestic relations order may be
13certified as an approved domestic relations order by the
14secretary of the board, or his designated representative, in
15which case the irrevocable successor payee so ordered by the
16court cannot be changed by the participant except by approval by
17the court. A person ineligible to be designated as a successor
18payee may not be designated as an irrevocable successor payee. A
19court may not name an irrevocable successor payee if the
20alternate payee is eligible to receive a lump sum distribution
21of the alternate payee's portion of the marital portion of the
22pension benefit.

23Section 23. Sections 8534 and 8535 of Title 24 are amended
24to read:

25§ 8534. Fraud and adjustment of errors.

26(a) Penalty for fraud.--Any person who shall knowingly make
27any false statement or shall falsify or permit to be falsified
28any record or records of this system or plan in any attempt to
29defraud the system or plan as a result of such act shall be
30guilty of a misdemeanor of the second degree.

1(b) Adjustment of errors.--Should any change or mistake in
2records result in any member, participant, beneficiary, [or],
3survivor annuitant or successor payee receiving from the system 
4or plan more or less than he would have been entitled to receive
5had the records been correct, then regardless of the intentional
6or unintentional nature of the error and upon the discovery of
7such error, the board shall correct the error and if the error 
8affects contributions to or payments from the system, then so
9far as practicable shall adjust the payments which may be made
10for and to such person in such a manner that the actuarial
11equivalent of the benefit to which he was correctly entitled
12shall be paid. If the error affects contributions to or payments 
13from the plan, the board shall take such action as shall be 
14provided for in the plan document.

15§ 8535. Payments to school entities by Commonwealth.

16For each school year beginning with the 1995-1996 school year
17and ending with the 2014-2015 school year, each school entity
18shall be paid by the Commonwealth for contributions based upon
19school service of active members of the system after June 30,
201995, as follows:

21(1) The Commonwealth shall pay each school entity for
22contributions made to the Public School Employees' Retirement
23Fund based upon school service of all active members,
24including members on activated military service leave, whose
25effective dates of employment with their school entities are
26after June 30, 1994, and who also had not previously been
27employed by any school entity within this Commonwealth an
28amount equal to the amount certified by the Public School
29Employees' Retirement Board as necessary to provide, together
30with the members' contributions, reserves on account of

1prospective annuities, supplemental annuities and the premium
2assistance program as provided in this part in accordance
3with section 8328 (relating to actuarial cost method),
4multiplied by the market value/income aid ratio of the school
5entity. For no school year shall any school entity receive
6less than the amount that would result if the market
7value/income aid ratio as defined in section 2501(14.1) of
8the Public School Code [of 1949] was 0.50.

9(2) The Commonwealth shall pay each school entity for
10contributions made to the Public School Employees' Retirement
11Fund based upon school service of all active members,
12including members on activated military service leave, who
13are not described in paragraph (1), one-half of the amount
14certified by the Public School Employees' Retirement Board as
15necessary to provide, together with the members'
16contributions, reserves on account of prospective annuities,
17supplemental annuities and the premium assistance program as
18provided in this part in accordance with section 8328.

19(3) School entities shall have up to five days after
20receipt of the Commonwealth's portion of the employer's
21liability to make payment to the Public School Employees'
22Retirement Fund. School entities are expected to make the 
23full payment to the Public School Employees' Retirement Fund 
24in accordance with section 8327 (relating to payments by 
25employers) in the event the receipt of the Commonwealth's 
26portion of the employer's liability is delayed because of 
27delinquent salary reporting or other conduct by the school 
28entities.

29Section 24. Title 24 is amended by adding a section to read:

30§ 8535.1. Payments to school entities by Commonwealth

1commencing with the 2015-2016 school year.

2For each school year, beginning with the 2015-2016 school
3year, each school entity shall be paid by the Commonwealth for
4contributions based upon school service of active members of the
5system and active participants of the plan after June 30, 2015,
6as follows:

7(1) The Commonwealth shall pay each school entity for
8contributions made to the fund based upon school service of
9all active members, including members on activated military
10service leave, and active participants of the plan whose
11effective dates of employment with their school entities are
12after June 30, 1994, and who also had not previously been
13employed by any school entity within this Commonwealth an
14amount equal to the amount certified by the board as
15necessary to provide, together with the members' and
16participants' contributions, reserves on account of
17prospective annuities, supplemental annuities and the premium
18assistance program as provided in this part in accordance
19with section 8328 (relating to actuarial cost method),
20multiplied by the market value/income aid ratio of the school
21entity. For no school year shall any school entity receive
22less than the amount that would result if the market
23value/income aid ratio as defined in section 2501(14.1) of
24the Public School Code was 0.50.

25(2) The Commonwealth shall pay each school entity for
26contributions made to the fund based upon school service of
27all active members, including members on activated military
28service leave, and active participants of the plan who are
29not described in paragraph (1), one-half of the amount
30certified by the board as necessary to provide, together with

1the members' and participants' contributions, reserves on
2account of prospective annuities, supplemental annuities and
3the premium assistance program as provided in this part in
4accordance with section 8328.

5(3) School entities shall have up to five days after
6receipt of the Commonwealth's portion of the employer's
7liability to make payment to the fund. School entities are
8expected to make the full payment to the fund in accordance
9with section 8327 (relating to payments by employers) in the
10event the receipt of the Commonwealth's portion of the
11employer's liability is delayed because of delinquent salary
12reporting or other conduct by the school entities.

13Section 25. The definition of "eligible person" in section
148702(a) of Title 24 is amended to read:

15§ 8702. Definitions.

16(a) General rule.--Subject to additional definitions
17contained in subsequent provisions of this part which are
18applicable to specific provisions of this part, the following
19words and phrases when used in this part shall have the meanings
20given to them in this section unless the context clearly
21indicates otherwise:

22"Eligible person." An individual who is an annuitant or
23survivor annuitant or the spouse or dependent of an annuitant or
24survivor annuitant, or an individual who is a participant 
25receiving distributions or a successor payee, or the spouse or 
26dependent of a participant receiving distributions or successor 
27payee.

28* * *

29Section 26. Section 7306(a) of Title 51, amended October 24,
302012 (P.L.1436, No.181), is amended and the section is amended

1by adding a subsection to read:

2§ 7306. Retirement rights.

3(a) Options available to employees.--Any employee who is a
4member of a retirement system other than an active member or
5inactive member on leave without pay of the State Employees' 
6Retirement System or an active or inactive participant of the 
7School Employees' Defined Contribution Plan at the time he is
8granted a military leave of absence shall be entitled to
9exercise any one of the following options in regard thereto:

10(1) He may continue to make regular payments into the
11fund during the period of his military leave of absence. The
12amount of such payments shall be the same as they would have
13been, had he not been granted a military leave of absence,
14but had instead remained actively in his employment. The time
15of making such payments shall be mutually agreed upon by the
16employee and the retirement association of which he is a
17member, but in no event shall be less frequent than
18semiannually. The employer shall make its contributions on
19the same basis as is used to compute the employee's
20contributions. In this case, his retirement rights shall be
21determined on the basis that he was in the active, continuous
22and uninterrupted employ of his employer for the period
23during which he was on military leave of absence.

24(2) He may discontinue making payments into the fund
25during the period of his military leave of absence. In such
26event, the employer shall also discontinue making its
27contributions during this period. In this case, his
28retirement rights shall be determined by completely
29disregarding the period of his military leave of absence for
30all purposes.

1* * *

2(e) Participants of the School Employees' Defined
3Contribution Plan.--An employee who is an active or inactive
4participant of the School Employees' Defined Contribution Plan
5at the time he is granted a military leave of absence shall be
6entitled to make contributions to the Public School Employees'
7Defined Contribution Trust for such leave as provided in the
8Public School Employees' Retirement Code.

9Section 27. (1) None of the following shall create in any
10member of the School Employees' Retirement System or participant
11in the School Employees' Defined Contribution Plan or in any
12other person claiming an interest in the account of any such
13member or participant a contractual right, either express or
14implied, in such provisions nor in any construction of 24
15Pa.C.S. Pt. IV or 51 Pa.C.S., as so amended or supplemented, or
16any rules or regulations adopted under 24 Pa.C.S. Pt. IV or 51
17Pa.C.S.:

18(i) Anything in this act which amends or supplements
19provisions of 51 Pa.C.S. or 24 Pa.C.S. Pt. IV in relation
20to requirements for:

21(A) qualification of the School Employees'
22Defined Contribution Plan as a qualified pension plan
23under the Internal Revenue Code of 1986 (Public Law
2499-514, 26 U.S.C. §§ 401(a) and 415(b)) or compliance
25with the Uniformed Services Employment and 
26Reemployment Rights Act of 1994 (Public Law 103-353, 
27108 Stat. 3149);

28(B) contributions to, participation in or
29benefits from the School Employees' Defined
30Contribution Plan or School Employees' Defined

1Contribution Trust; and

2(C) domestic relations orders regarding
3alternate payees of participants in the Public School
4Employees' Defined Contribution Plan.

5(ii) Any construction of 24 Pa.C.S. Pt. IV or 51
6Pa.C.S., as so amended or supplemented, or any rules or
7regulations adopted under 24 Pa.C.S. Pt. IV or 51
8Pa.C.S., or any term or provision of the School
9Employees' Defined Contribution Plan or School Employees'
10Defined Contribution Trust, whether established by
11statute or in the plan document or trust declaration.

12(2) The provisions of 24 Pa.C.S. Pt. IV shall remain
13subject to the Internal Revenue Code of 1986 and the
14Uniformed Services Employment and Reemployment Rights Act of 
151994 (Public Law 103-353, 108 Stat. 3149), and regulations
16under those statutes, and the General Assembly reserves to
17itself such further exercise of its legislative power to
18amend or supplement such provisions as may from time to time
19be required in order to maintain the qualification of such
20system as a qualified pension plan under section 401(a) and
21other applicable provisions of the Internal Revenue Code of
221986 and the Uniformed Services Employment and Reemployment 
23Rights Act of 1994 (Public Law 103-353, 108 Stat. 3149).

24Section 28. Nothing in this act shall be construed or deemed
25to imply that, but for the expressed applications of the
26limitations on benefits or other requirements under section
27401(a) or applicable provisions of the Internal Revenue Code of
281986 (Public Law 99-514, 26 U.S.C. § 401 et seq.) to
29participants in the School Employees' Defined Contribution Plan,
30those limitations would not otherwise apply to such participants

1or to members of the Public School Employees' Retirement System
2and the benefits payable pursuant to 24 Pa.C.S. Pt. IV.

3Section 29. The amendment of 24 Pa.C.S. Pt. IV regarding the
4establishment of and participation in the School Employees'
5Defined Contribution Plan shall apply to all current and former
6members of the Public School Employees' Retirement System who
7have returned to school service on or after July 1, 2015, after
8a termination of school service, without regard to whether the
9termination occurred before or after July 1, 2015, and without
10regard to whether the school employee was an annuitant, inactive
11member, vestee or special vestee or withdrew accumulated
12deductions during the period of termination. A terminated school
13employee who returns to school service on or after July 1, 2015,
14does so with the expressed and specific understanding that he is
15subject to and accepts the terms and provisions of 24 Pa.C.S.
16Pt. IV as they exist regarding participation in the plan or
17membership in the system on the effective date of reemployment,
18including, but not limited to, benefit formulas and accrual
19rates, eligibility for annuities and distributions, contribution
20rates, definitions, purchase of creditable school, nonschool,
21school and nonschool service provisions and actuarial and
22funding assumptions.

23Section 30. Nothing in this act shall be construed or deemed
24to imply that any calculation or actuarial method used by the
25Public School Employees' Retirement Board, its actuaries or the
26Public School Employees' Retirement System was not in accordance
27with the provisions of the 24 Pa.C.S. Pt. IV or other applicable
28law prior to the effective date of this section.

29Section 31. Nothing in this act shall be construed or deemed 
30to imply that any interpretation or application of the
 

1provisions of 24 Pa.C.S. Pt. IV or benefits available to members 
2of the Public School Employees' Retirement System was not in 
3accordance with the provisions of 24 Pa.C.S. Pt. IV or other 
4applicable law, including the Internal Revenue Code of 1986 
5(Public Law 99-514, 26 U.S.C. § 1 et seq.) and the Uniformed 
6Services Employment and Reemployment Rights Act of 1994 (Public 
7Law 103-353, 108 Stat. 3149) prior to the effective date of this 
8section.

9Section 32. This act shall be construed and administered in
10such a manner that the Public School Employees' Retirement
11System and the School Employees' Defined Contribution Plan will
12satisfy the requirements necessary to qualify as a qualified
13pension plan under section 401(a) and other applicable
14provisions of the Internal Revenue Code of 1986 (Public Law 99-
15514, 26 U.S.C. § 1 et seq.) and the Uniformed Services 
16Employment and Reemployment Rights Act of 1994 (Public Law 103-
17353, 108 Stat. 3149). The rules, regulations and procedures
18adopted and promulgated by the Public School Employees'
19Retirement Board, and the terms and conditions of the plan
20document and trust declaration adopted by the Public School
21Employees' Retirement Board, may include those necessary to
22accomplish the purpose of this section.

23Section 33. If the application of any provision of this act 
24to any person is held invalid, the invalidity shall not affect 
25the application of this act to any other person, but the entire 
26act shall be invalid as to the person to whom part of it was 
27invalid. In the event that a school employee's participation in 
28the School Employees' Defined Contribution Plan is declared 
29invalid, the affected school employee shall return to the School 
30Employees' Defined Contribution Trust any distributions and
 

1shall be granted status and service credit in the Public School 
2Employees' Retirement System and shall be required to make all 
3contributions to the Public School Employees' Retirement Fund as 
4if this act had not been enacted. The affected school employee's 
5accumulated mandatory participant contributions and accumulated 
6voluntary contributions shall be transferred to the affected 
7employee's member savings account to the extent necessary to 
8fund that account with the member contributions and interest 
9that would have been standing to the member's account had this 
10act not been passed. Any remaining balance shall be refunded to 
11the school employee who shall be responsible for paying to the 
12fund in a manner and time determined by the Public School 
13Employees' Retirement Board any additional funds required if the 
14accumulated mandatory participant contributions and accumulated 
15voluntary contributions were not sufficient. The accumulated 
16employer defined contributions shall be transferred to the State 
17accumulation account, and no further amount shall be due from 
18the employer or refund paid on account of the service performed 
19as a participant.

20Section 34. This act shall take effect immediately.