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 member's options, for termination
17of annuities and payment of benefits; providing for school
18employees' defined contribution plan; in administrative and
19miscellaneous provisions, further providing for the Public
20School Employees' Retirement Board, for administrative duties
21of board, 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

1relations orders; providing for irrevocable successor payee;
2further providing for fraud and adjustment of errors and for
3payments to school entities by Commonwealth; providing for
4payments to school entities by Commonwealth commencing with
5the 2015-2016 school year; in health insurance for retired
6school employees, further providing for definitions; and, in
7military leave of absence, further providing for retirement
8rights.

9The General Assembly of the Commonwealth of Pennsylvania
10hereby enacts as follows:

11Section 1. The definitions of "alternate payee,"
12"beneficiary," "compensation," "creditable nonschool service,"
13"credited service," "date of termination of service,"
14"distribution," "domestic relations order," "eligible
15annuitants," "final average salary," "inactive member,"
16"intervening military service," "irrevocable beneficiary,"
17"leave for service with a collective bargaining organization,"
18"previous school service," "salary deductions" and "valuation
19interest" in section 8102 of Title 24 of the Pennsylvania
20Consolidated Statutes are amended and the section is amended by
21adding definitions to read:

22§ 8102. Definitions.

23The following words and phrases when used in this part shall
24have, unless the context clearly indicates otherwise, the
25meanings given to them in this section:

26* * *

27"Accumulated employer defined contributions." The total of
28the employer defined contributions paid into the trust on
29account of a participant's school service together with any
30investment earnings and losses and adjustment for fees, costs
31and expenses credited or charged thereon.

32"Accumulated mandatory participant contributions." The total
33of the mandatory pickup participant contributions paid into the
34trust on account of a participant's school service together with

1any investment earnings and losses and adjustments for fees,
2costs and expenses credited or charged thereon.

3"Accumulated total defined contributions." The total of the
4accumulated mandatory participant contributions, accumulated
5employer defined contributions and accumulated voluntary
6contributions, reduced by any distributions, standing to the
7credit of a participant in an individual investment account in
8the trust.

9"Accumulated voluntary contributions." The total of
10voluntary contributions paid into the trust by a participant and
11any amounts rolled over by a participant or transferred by a
12direct trustee-to-trustee transfer into the trust together with
13any investment earnings and losses and adjustment for fees,
14costs and expenses credited or charged thereon.

15* * *

16"Active participant." A school employee for whom mandatory
17pickup participant contributions are being made to the trust or
18for whom such contributions otherwise required for current
19school service are not being made solely by reason of any
20provision of this part relating to the limitations under section
21401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public
22Law 99-514, 26 U.S.C. § 401(a)(17) or 415.

23* * *

24"Alternate payee." Any spouse, former spouse, child or 
25dependent of a member or participant who is recognized by a 
26domestic relations order as having a right to receive all or a 
27portion of the moneys payable to that member or participant 
28under this part.

29* * *

30"Beneficiary." [The] In the case of the system, the person
 

1or persons last designated in writing to the board by a member 
2to receive his accumulated deductions or a lump sum benefit upon 
3the death of such member. In the case of the plan, the person or 
4persons last designated in writing to the board by a participant 
5to receive his accumulated total defined contributions or a lump 
6sum benefit upon the death of such participant.

7* * *

8"Combined service employee." A current or former school
9employee who is both a member of the system and a participant in
10the plan.

11* * *

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

1leave of absence granted under 51 Pa.C.S. § 7302 (relating to 
2granting military leaves of absence), military leave of absence 
3granted under 24 P.S. § 11-1176, or other types of military 
4leave, including other types of leave payments, stipends, 
5differential wage payments as defined in IRC § 414(u)(12) and 
6any other payments, provided, however, that the limitation under 
7section 401(a)(17) of the Internal Revenue Code of 1986 (Public 
8Law 99-514, 26 U.S.C. § 401(a)(17)) taken into account for the 
9purpose of member contributions, including regular or joint 
10coverage member contributions, regardless of class of service, 
11shall apply to each member who first became a member of the 
12Public School Employes' Retirement System on or after July 1, 
131996, and who by reason of such fact is a noneligible member 
14subject to the application of the provisions of section 8325.1 
15(relating to annual compensation limit under IRC § 401(a)(17)) 
16and shall apply to each participant.

17* * *

18"Creditable nonschool service." Service other than service 
19as a school employee for which an active member may obtain 
20credit in the system.

21"Credited service." School or creditable nonschool service 
22for which the required contributions have been made to the fund, 
23or for which the contributions otherwise required for such 
24service were not made solely by reason of any provision of this 
25part relating to the limitations under section 401(a)(17) or 
26415(b) of the Internal Revenue Code of 1986 (Public Law 99-514, 
2726 U.S.C. § 401(a)(17) or 415(b)), or for which salary 
28deductions to the system or lump sum payments have been agreed 
29upon in writing.

30"Date of termination of service." The last date of service
 

1for which: 

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

4(2) in the case of an inactive member, the effective 
5date of his resignation or the date his employment is 
6formally discontinued by his employer or two years following 
7the last day of service for which contributions were made, 
8whichever is earliest[.];

9(3) mandatory pickup participant contributions are made
10for an active participant;

11(4) in the case of an inactive participant, the date of
12his resignation or the date his employment is formally
13discontinued by his employer; or

14(5) in the case of a combined service employee, the
15latest of the dates in paragraph(3) or (4).

16* * *

17"Distribution." Payment of all or any portion of a person's 
18interest in either the Public School Employees' Retirement Fund 
19or the School Employees' Defined Contribution Trust, or both, 
20which is payable under this part.

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

1to definitions) and orders for the enforcement of arrearages as 
2provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
3arrearages).

4* * *

5"Eligible annuitants." All current and prospective 
6annuitants with 24 1/2 or more eligibility points and all 
7current and prospective disability annuitants. Beginning January 
81, 1995, "eligible annuitants" shall include members with 15 or 
9more eligibility points who terminated or who terminate school 
10service on or after attaining superannuation retirement age and 
11who are annuitants with an effective date of retirement after 
12superannuation age. The term eligible annuitants shall not 
13include participants.

14* * *

15"Employer defined contributions."

16(1) Unless paragraph (2) is applicable, contributions
17equal to four percent of an active participant's compensation
18that are made by an employer for current service to the trust
19to be credited in the participant's individual investment
20account.

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

1receives benefits. For subsequent school service as an active
2participant, the employer defined contributions shall equal
34% of an active participant's compensation.

<-4"Final average salary." The highest average compensation
5received as an active member during any three nonoverlapping
6periods of 12 consecutive months with the compensation for part-
7time service being annualized on the basis of the fractional
8portion of the school year for which credit is received; except,
9if the employee was not a member for three such periods, the
10total compensation received as an active member annualized in
11the case of part-time service divided by the number of such
12periods of membership; in the case of a member with multiple
13service credit, the final average salary shall be determined by
14reference to compensation received by him as a [school employee]
15member of the system or a State employee other than as a
16participant in the State Employees' Defined Contribution Plan or
17both; and, in the case of a noneligible member, subject to the
18application of the provisions of section 8325.1 (relating to
19annual compensation limit under IRC § 401(a)(17)).

<-20"Final average salary." [The]

21(1) As applied to service performed and service credit 
22purchased before July 1, 2015, as a member of the system, the 
23highest average compensation received as an active member 
24during any three nonoverlapping periods of 12 consecutive 
25months with the compensation for part-time service being 
26annualized on the basis of the fractional portion of the 
27school year for which credit is received; except, if the 
28employee was not a member for three such periods, the total 
29compensation received as an active member annualized in the 
30case of part-time service divided by the number of such
 

1periods of membership; in the case of a member with multiple 
2service credit, the final average salary shall be determined 
3by reference to compensation received by him as a [school 
4employee] member of the system or a State employee, other 
5than as a participant in the State Employees' Defined 
6Contribution Plan, or both; and, in the case of a noneligible 
7member, subject to the application of the provisions of 
8section 8325.1 (relating to annual compensation limit under 
9IRC § 401(a)(17)).

10(2) As applied to service performed and service credit 
11purchased on or after July 1, 2015, as a member of the 
12system, the highest average compensation received as an 
13active member during any five fiscal years, with the 
14compensation for part-time service being annualized on the 
15basis of the fractional portion of the school year for which 
16credit is received, provided that if the compensation 
17received during a fiscal year included in the period used to 
18determine final average salary exceeds that of the average of 
19the previous four fiscal years, with the compensation for 
20part-time service being annualized on the basis of the 
21fractional portion of the school year for which credit is 
22received, and with compensation for a partial year of service 
23being annualized, by more than 10%, the amount in excess of 
2410% shall be excluded from the computation of final average 
25salary. If the employee was not a member for five fiscal 
26years, the formula under this definition shall be applied to 
27the extent practicable. In the case of a member with multiple 
28service credit, the salary shall be determined by reference 
29to include compensation received as a school employee or 
30State employee, or both. In the case of a noneligible member,
 

1the salary shall be subject to the application of the 
2provisions of section 8325.1 (relating to annual compensation 
3limit under IRC § 401(a)(17)).

4* * *

5"Inactive member." A member for whom no pickup contributions 
6are being made to the fund, except in the case of an active 
7member for whom such contributions otherwise required for 
8current school service are not being made solely by reason of 
9any provision of this part relating to the limitations under 
10section 401(a)(17) or 415(b) of the Internal Revenue Code of 
111986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)), who 
12has accumulated deductions standing to his credit in the fund 
13and for whom contributions have been made within the last two 
14school years or a multiple service member who is active in the 
15State Employees' Retirement System.

16"Inactive participant." A participant for whom no mandatory 
17pickup participant contributions are being made to the trust, 
18except in the case of an active participant for whom such 
19contributions otherwise required for current school service are 
20not being made solely by reason of any provision of this part 
21relating to limitations under section 401(a)(17) or 415 of the 
22Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
23401(a)(17) or 415), who has vested accumulated total defined 
24contributions standing to his credit in the trust and who has 
25not filed an application for an annuity.

26"Individual investment account." The account in the trust to
27which are credited the amounts of the contributions made by a
28participant and the participant's employer in accordance with
29the provisions of this part, together with all interest and
30investment earnings after deduction for fees, costs and

1expenses, investment losses and charges for distributions.

2"Intervening military service." Active military service of a 
3member who was a school employee and an active member of the 
4system immediately preceding his induction into the armed 
5services or forces of the United States in order to meet a draft 
6obligation excluding any voluntary extension of such 
7obligational service and who becomes a school employee and an 
8active member of the system within 90 days of the expiration of 
9such service.

10* * *

11"Irrevocable beneficiary." The person or persons permanently 
12designated by a member or a participant in writing to the board 
13pursuant to an approved domestic relations order to receive all 
14or a portion of the accumulated deductions, vested accumulated 
15total defined contributions or lump sum benefit payable upon the 
16death of such member or participant.

17"Irrevocable successor payee." The person permanently
18designated by a participant receiving vested distributions in
19writing to the Board pursuant to an approved domestic relations
20order to receive one or more distributions from the plan upon
21the death of such participant.

22* * *

23"Leave for service with a collective bargaining 
24organization." Paid leave granted to an active member or active 
25participant by an employer for purposes of working full time for 
26or serving full time as an officer of a Statewide employee 
27organization or a local collective bargaining representative 
28under the act of July 23, 1970 (P.L.563, No.195), known as the 
29Public Employe Relations Act: Provided, That greater than one-
30half of the members of the employee organization are active
 

1members of the system or active participants of the plan; that 
2the employer shall fully compensate the member or active 
3participant, including, but not limited to, salary, wages, 
4pension and retirement contributions and benefits, other 
5benefits and seniority, as if he were in full-time active 
6service; and that the employee organization shall fully 
7reimburse the employer for such salary, wages, pension and 
8retirement contributions and benefits and other benefits and 
9seniority.

10"Mandatory pickup participant contributions." Contributions
11equal to 4% of compensation that are made by the employer for
12active participants for current service that are picked up by
13the employer.

14* * *

15"Participant." An active participant, inactive participant
16or participant receiving distributions.

17"Participant receiving distributions." A participant in the
18plan who has commenced receiving distributions from his
19individual investment account but who has not received a total
20distribution of his vested interest in the individual investment
21account.

22* * *

23"Plan." The School Employees' Defined Contribution Plan as
24established by the provisions of this part and the board.

25"Plan document." The documents created by the board under
26section 8402 (relating to plan document) that contains the terms
27and provisions of the plan and trust as established by the board
28regarding the establishment, administration and investment of
29the plan and trust.

30"Previous school service." Service [rendered] as a school
 

1employee including service in any summer school conducted by a 
2school district of the Commonwealth, but excluding service 
3rendered during which the school employee was or could have been 
4a participant in the plan, prior to the member's most recent 
5entrance in the system.

6* * *

7"Reemployed from USERRA leave." Resumption of active
8participation as a school employee after a period of USERRA
9leave, provided the resumption of active participation was
10within the time period and under conditions and circumstances
11such that the school employee was entitled to reemployment
12rights under 38 U.S.C. Ch. 43 (relating to employment and
13reemployment rights of members of the uniformed services).

14* * *

15"Required beginning date." The latest date by which
16distributions of a participant's interest in his individual
17investment account must commence under IRC § 401(a)(9).

18* * *

19"Salary deductions." The amounts certified by the board, 
20deducted from the compensation of an active member or active 
21participant or the State service compensation of a multiple 
22service member who is an active member of the State Employees' 
23Retirement System and paid into the fund or trust.

24* * *

25"State Employees' Defined Contribution Plan." The defined
26contribution plan for State employees established by part XXV
27(relating to retirement for State employees and officers).

28* * *

29"Successor payee." The person or persons last designated by
30a participant receiving distributions in writing to the board to

1receive one or more distributions upon the death of such
2participant.

3* * *

4"Trust." The School Employees' Defined Contribution Trust
5established under Chapter 84 (relating to school employees'
6defined contribution plan).

7"USERRA leave." Any period of time for service in the
8uniformed services (as defined in 38 U.S.C. Ch. 43 (relating to
9employment and reemployment rights of members of the uniformed
10services)) by a participant or former participant who terminated
11school service to perform such service in the uniformed
12services, if such current or former participant is entitled to
13reemployment rights under 38 U.S.C. Ch. 38 with respect to such
14uniformed service.

15"Valuation interest." Interest at 5 1/2% per annum,
16compounded annually and applied to all accounts of the fund
17other than the members' savings account.

18* * *

19"Voluntary contributions." Contributions made by a
20participant to the trust and credited to his individual
21investment account in excess of his mandatory pickup participant
22contributions, either by salary deductions paid through the
23employer or by an eligible rollover or direct trustee-to-trustee
24transfers.

25Section 2. Section 8103 of Title 24 is amended by adding
26subsections to read:

27§ 8103. Construction of part.

28* * *

29(c) Construction regarding inactive member and inactive
30participant.--As used in this part, the term "inactive member"

1does not include a combined service employee who is an "inactive
2participant." The term "inactive participant" does not include a
3combined service employee who is an "inactive member."

4(d) Provisions severable.--The provisions of this part are
5severable and if any of its provisions shall be held to be
6unconstitutional, the decision of the court shall not affect or
7impair any of the remaining provisions. It is hereby declared to
8be the legislative intent that this part would have been adopted
9had such unconstitutional provisions not been included.

10(e) References to certain Federal statutes.--References in
11this part to the IRC or the Uniformed Services Employment and
12Reemployment Rights Act of 1994 (Public Law 103-353, 38 U.S.C. §
134301), including administrative regulations promulgated under
14the IRC or the Uniformed Services Employment and Reemployment
15Rights Act of 1994, are intended to include laws and regulations
16in effect on the effective date of this section and amended,
17supplemented or supplanted on and after the effective date of
18this section.

19(f) Construction.--

20(1) This part may not be construed to mean that the
21limitations on benefits or other requirements under section
22401(a) of the IRC or other applicable provisions of the IRC
23that are applicable to participants or to the members of the
24system and the benefits payable under Part IV of the IRC.

25(2) This part may not be construed to mean that an
26interpretation or application of the provisions of Part IV or
27benefits available to members of the Public School Employees'
28Retirement System was not in accordance with the provisions
29of Part IV or other applicable law, including the IRC and the
30Uniformed Services Employment and Reemployment Rights Act of

11994 before the effective date of this section.

2(3) This part may not be construed to mean that the
3release or publicizing of a record, material or data that
4would not constitute a public record under section 8502(e)(2)
5(relating to administrative duties of board) is a violation
6of the fiduciary duties of the board.

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

8(1) The amendment of Part IV regarding the establishment
9of and participation in the plan shall apply to current and
10former members of the system who have returned to school
11service on or after July 1, 2015, after a termination of
12school service, notwithstanding the following:

13(i) Whether the termination occurred before or after
14July 1, 2015.

15(ii) Whether the school employee was an annuitant,
16inactive member or vestee or withdrew accumulated
17deductions during the period of termination.

18(2) A terminated school employee who returns to school
19service on or after July 1, 2015, is subject to the
20provisions of Part IV regarding participation in the plan or
21membership in the system that are in effect on the effective
22date of reemployment, including benefit formulas and accrual
23rates, eligibility for annuities and distributions,
24contribution rates, definitions, purchase of creditable
25school and nonschool service provisions and actuarial and
26funding assumptions.

27(3) This part shall apply to a record, material or data
28under section 8502(e)(2) notwithstanding whether:

29(i) The record, material or data was created,
30generated or stored before the effective date of this

1section.

2(ii) The record, material or data was previously
3released or made public.

4(iii) A request for the record, material or data was
5made or is pending final response under the former act of
6June 21, 1957 (P.L.390, No.212), referred to as the
7Right-to-Know Law, or the act of February 14, 2008
8(P.L.6, No.3), known as the Right-to-Know Law.

9Section 3. Title 24 is amended by adding a section to read:

10§ 8103.1. Reference to Public School Employees' Retirement
11System.

12(a) Reference.--As of the effective date of this section,
13unless the context clearly indicates otherwise, any reference to
14the Public School Employees' Retirement System in a statutory
15provision, other than this part, and 71 Pa.C.S. Pt. XXV
16(relating to retirement for State employees and officers), shall
17include a reference to the plan, and any reference to the Public
18School Employees' Retirement Fund shall include a reference to
19the trust.

20(b) Agreement.--The agreement of an employer to make
21contributions to the fund or to enroll its employees as members
22in the system shall be deemed to be an agreement to make
23contributions to the trust or to enroll its employees in the
24plan.

25Section 4. Sections 8301 and 8302(a), (b) and (c) of Title
2624 are amended and the sections are amended by adding
27subsections to read:

28§ 8301. Mandatory and optional membership in the system and 
29participation in the plan.

30(a) Mandatory membership.--[Membership] Unless an election
 

1to be a participant in the plan is made, membership in the
2system shall be mandatory as of the effective date of employment
3for all school employees except the following:

4(1) [Any] Subject to the provisions in subsection (a.1), 
5any officer or employee of the Department of Education,
6State-owned educational institutions, community colleges,
7area vocational-technical schools, technical institutes[,] or
8[the] The Pennsylvania State University and who is a member
9of the [State Employees' Retirement System] system or a
10member of another retirement program approved by the
11employer.

12(2) [Any] Subject to the provisions in subsection (a.2), 
13any school employee who is not a member of the system and who 
14is employed on a per diem or hourly basis for less than 80
15full-day sessions or 500 hours in any fiscal year or
16annuitant who returns to school service under the provisions
17of section 8346(b) (relating to termination of annuities).

18(3) Any officer or employee of a governmental entity who
19subsequent to December 22, 1965, and prior to July 1, 1975,
20administers, supervises[,] or teaches classes financed wholly
21or in part by the Federal Government so long as he continues
22in such service.

23(4) [Any] Subject to the provisions in subsection (a.2), 
24any part-time school employee who has an individual
25retirement account pursuant to the Federal act of September
262, 1974 (Public Law 93-406, 88 Stat. 829), known as the
27Employee Retirement Income Security Act of 1974.

28(5) School employees whose most recent period of school
29service starts on or after July 1, 2015.

30(a.1) (1) Any officer or employee of the Department of

1Education, State-owned educational institutions, community
2colleges and The Pennsylvania State University who is an
3active member on December 31, 2014, and January 1, 2015,
4shall remain an active member in their class of service until
5termination of school service. Any officer or employee of the
6Department of Education, State-owned educational
7institutions, community colleges and The Pennsylvania State
8University who becomes a school employee, or who returns to
9school service, on or after January 1, 2015, shall not be
10eligible for membership in the system and shall not be
11eligible to become a participant in the plan.

12(2) Any officer or employee of an area vocational-
13technical school or technical institute who is an active
14member on June 30, 2015, and July 1, 2015, shall remain an
15active member in their class of service until termination of
16school service. Any officer or employee of an area
17vocational-technical school or technical institute who
18becomes a school employee, or who returns to school service,
19on or after July 1, 2015, shall be a mandatory participant in
20the plan and shall not be eligible to elect membership or
21participation in the State Employees' Retirement System or
22plan or another retirement program approved by the employer.

23(3) Any school employee other than those listed in
24subsection (a)(1) who are active members on June 30, 2015 and
25July 1, 2015, shall remain active members in their class of
26service until termination of school service.

27(a.2) On or after July 1, 2015, any school employee who is
28not a member of the system and who is employed on a per diem or
29hourly basis, or annuitant who returns to school service under
30the provisions of section 8346(b), shall be a mandatory

1participant in the plan, unless the school employee is:

2(1) a part-time school employee who has an individual
3retirement account pursuant to the Employee Retirement Income
4Security Act of 1974; and

5(2) makes an election not to become a participant.

6(b) Prohibited membership in the system.--The school
7employees categorized in subsection (a)(1) [and (2)], (2), (4) 
8and (5) shall not have the right to elect membership in the
9system.

10(c) Optional membership in the system.--The school employees
11categorized in subsection (a)(3) and, if otherwise eligible,
12subsection (a)(4) shall have the right to elect membership in
13the system on or before July 1, 2015. Once such election is
14exercised, membership shall commence from the original date of
15eligibility and shall continue until the termination of such
16service or the school employee elects to be a participant of the 
17plan.

18(d) Mandatory participation in the plan.--Subject to the
19exceptions in subsections (a.1) and (a.2), a school employee who
20begins school service, or who returns to school service after a
21break in service, on or after July 1, 2015, shall be a mandatory
22participant in the plan as a result of such school service.

23§ 8302. Credited school service.

24(a) Computation of credited service.--In computing credited
25school service of a member for the determination of benefits, a
26full-time salaried school employee shall receive one year of
27credit for each school year or the corresponding fraction
28thereof, in accordance with the proportion of the full school
29year for which the required regular member contributions have
30been made to the fund, or for which such contributions otherwise

1required for such service were not made to the fund solely by
2reason of any provision of this part relating to the limitations
3under IRC § 401(a)(17) or 415(b). A per diem or hourly school
4employee shall receive one year of credited service for each
5nonoverlapping period of 12 consecutive months in which he is
6employed and for which contributions are made to the fund, or
7would have been made but for such limitations under the IRC, for
8at least 180 full-day sessions or 1,100 hours of employment. If
9such member was employed and contributions were made to the fund
10for less than 180 full-day sessions or 1,100 hours, he shall be
11credited with a fractional portion of a year determined by the
12ratio of the number of full-day sessions or hours of service
13actually rendered and for which contributions are made to the 
14fund to 180 full-day sessions or 1,100 hours, as the case may
15be. A part-time salaried employee shall be credited with the
16fractional portion of the year which corresponds to the service
17actually rendered and for which contributions are made to the 
18fund in relation to the service required as a comparable full-
19time salaried employee. In no case shall a member receive more
20than one year of credited service for any 12 consecutive months
21or a member who has elected multiple service receive an
22aggregate in the two systems of more than one year of credited
23service for any 12 consecutive months.

24(b) Approved leaves of absence.--An active member or active 
25participant shall receive credit for an approved leave of
26absence provided that:

27(1) the member returns for a period at least equal to
28the length of the leave or one year as a member of the system 
29or the participant returns to school service as an active 
30participant in the plan, whichever is less, to the school

1district which granted his leave, unless such condition is
2waived by the employer; and

3(2) the proper contributions are made by the member and
4the employer or by the active participant and the employer.

5* * *

6(c) Cancellation of credited service.--All credited service 
7in the system shall be cancelled if a member withdraws his
8accumulated deductions. A partial or total distribution of 
9accumulated total defined contributions to a combined service 
10employee shall not cancel service credited in the system.

11(d) Military service by a participant.--A participant who
12has performed USERRA leave shall be treated and may make
13contributions as provided by this subsection.

14(1) A participant who is reemployed from USERRA leave
15shall be treated as not having incurred a break in school
16service by reason of the USERRA leave. If a participant who
17is reemployed from USERRA leave subsequently makes mandatory
18pickup participant contributions in the amounts and in the
19time periods required by 38 U.S.C. Ch. 43 (relating to
20employment and reemployment rights of members of the
21uniformed services) and IRC § 414(u) as if the participant
22had continued in his school employment and performed school
23service and been compensated during the period of USERRA
24leave, then the participant's employer shall make the
25corresponding employer defined contributions. Such an
26employee shall have his contributions, benefits, rights and
27obligations determined under this part as if he was an active
28participant who performed school service during the USERRA
29leave in the job position that he would have held had he not
30been on USERRA leave and received the compensation on which

1the mandatory pickup participant contributions to receive
2school service credit for the USERRA leave were determined,
3including the right to make voluntary contributions on such
4compensation as permitted by law.

5(2) A participant who is reemployed from USERRA leave
6who does not make the mandatory pickup participant
7contributions or makes only part of the mandatory pickup
8participant contributions within the allowed payment period
9shall not be eligible to make mandatory pickup participant
10contributions and voluntary contributions at a later date for
11the period of USERRA leave for which the mandatory pickup
12participant contributions were not timely made.

13(3) A participant employee who performs USERRA leave
14from which the employee could have been reemployed from
15USERRA leave had the school employee returned to school
16service in the time frames required by 38 U.S.C. Ch. 43 for
17reemployment rights, but did not do so, shall not be eligible
18to make mandatory pickup participant contributions or
19voluntary contributions for the period of USERRA leave should
20the employee later return to school service and be a
21participant in the plan.

22(4) An active participant or inactive participant who,
23on or after the effective date of this subsection, is granted
24a leave of absence under 51 Pa.C.S. § 4102 (relating to
25leaves of absence for certain government employees) or a
26military leave under 51 Pa.C.S. Ch. 73 (relating to military
27leave of absence), that is not USERRA leave shall not be able
28to make mandatory pickup participant contributions or
29voluntary contributions during or for the leave of absence or
30military leave, and shall not have employer defined

1contributions made during such leave, without regard to
2whether or not the school employee received salary, wages,
3stipends, differential wage payments or other payments from
4his employer during the leave, notwithstanding any provision
5to the contrary in 51 Pa.C.S. § 4102 or Ch 73.

6(5) If a participant dies while performing USERRA leave,
7then the beneficiaries or successor payees, as the case may
8be, of the deceased participant are entitled to any
9additional benefits, other than benefit accruals relating to
10the period of qualified military service, provided under this
11part had the participant resumed and then terminated
12employment on account of death.

13Section 5. Section 8303.1 of Title 24 is amended to read:

14§ 8303.1. Waiver of adjustments.

15(a) Allowance.--Upon appeal by an affected member, 
16participant, beneficiary or survivor annuitant, the board may
17waive an adjustment or any portion of an adjustment made under
18section 8534(b) (relating to fraud and adjustment of errors) if
19in the opinion of the board or the board's designated
20representative:

21(1) the adjustment or portion of the adjustment will
22cause undue hardship to the member, participant, beneficiary
23or survivor annuitant;

24(2) the adjustment was not the result of erroneous
25information supplied by the member, participant, beneficiary
26or survivor annuitant;

27(3) the member or participant had no knowledge or notice
28of the error before adjustment was made, and the member, 
29participant, beneficiary or survivor annuitant took action
30with respect to their benefits based on erroneous information

1provided by the system or plan; and

2(4) the member, participant, beneficiary or survivor
3annuitant had no reasonable grounds to believe the erroneous
4information was incorrect before the adjustment was made.

5(b) Time period.--In order to obtain consideration of a
6waiver under this section, the affected member, participant,
7beneficiary or survivor annuitant must appeal to the board in
8writing within 30 days after receipt of notice that benefits
9have been adjusted or, if no notice was given, within 30 days
10after the adjustment was known or should have been known to the
11affected member, participant, beneficiary or survivor annuitant.
12For any adjustments made prior to the effective date of this
13subsection for which the member, participant, beneficiary or
14survivor annuitant appealed to the board and was denied, an
15appeal under this section must be filed within 90 days of the
16effective date of this subsection.

17Section 6. Section 8305(b) of Title 24 is amended and the
18section is amended by adding a subsection to read:

19§ 8305. Classes of service.

20* * *

21(b) Other class membership.--A school employee who is a
22member of a class of service other than Class T-C on the
23effective date of this part may elect to become a member of
24Class T-C or Class T-D or may retain his membership in such
25other class until the service is discontinued or he elects to
26become a full coverage member or elects to purchase credit for
27previous school or creditable nonschool service. Any service
28thereafter as a member of the system shall be credited as Class
29T-C or T-D service as applicable.

30* * *

1(f) Ineligibility for active membership and classes of
2service.--An individual who elects to be a participant in the
3plan or who first becomes a school employee on or after July 1,
42015, or who returns to school service on or after July 1, 2015
5after a termination of school service, shall be ineligible for
6active membership in the system. Instead, any such school
7employee shall be a participant in the plan as a result of such
8school service, subject to the provisions in section 8301
9(relating to mandatory and optional membership).

10Section 7. Sections 8305.1(c) and 8305.2(c) and (d) of Title
1124 are amended to read:

12§ 8305.1. Election to become a Class T-D member.

13* * *

14(c) Effect of election.--An election to become a Class T-D
15member shall remain in effect until the termination of
16employment. Those members who, on the effective date of this
17section, contribute at the rate of 5 1/4% shall be deemed to
18have accepted the basic contribution rate of 6 1/2% for all
19Class T-D service performed on or after January 1, 2002. Those
20members who, on the effective date of this section, contribute
21at the rate of 6 1/4% shall be deemed to have accepted the basic
22contribution rate of 7 1/2% for all Class T-D service performed
23on or after January 1, 2002. Upon termination and a subsequent 
24reemployment that occurs before July 1, 2015, the school 
25employee's class of service shall be credited in the class of 
26service otherwise provided for in this part. If the reemployment 
27occurs on or after July 1, 2015, the school employee's 
28eligibility for membership in the system or participation in the 
29plan shall be as provided in this part.

30* * *

1§ 8305.2. Election to become a Class T-F member.

2* * *

3(c) Effect of election.--An election to become a Class T-F 
4member shall be irrevocable and shall commence from the original 
5date of eligibility and shall remain in effect for all future 
6school service creditable in the system. [A member who elects 
7Class T-F membership shall receive Class T-F service credit on 
8any and all future service, regardless of whether the member 
9terminates service or has a break in service.]

10(d) Effect of failure to make election.--If a member fails 
11to timely file an election to become a Class T-F member, then 
12the member shall be enrolled as a member of Class T-E, unless 
13the school employee elects or is required to be a participant in 
14the plan, and the member shall never be able to elect Class T-F 
15service, regardless of whether the member terminates service or 
16has a break in service.

17Section 8. Section 8306(b) of Title 24 is amended and the
18section is amended by adding a subsection to read:

19§ 8306. Eligibility points.

20* * *

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

22(1) In determining whether a member, other than a
23disability annuitant who returns to school service after June
2430, 2001, upon termination of the disability annuity, who is
25not a school employee or a State employee on June 30, 2001,
26and July 1, 2001, and who has previous school service, has
27the five eligibility points required by the definition of
28"vestee" in sections 8102 (relating to definitions), 8307
29(relating to eligibility for annuities), 8308 (relating to
30eligibility for vesting) and 8345 (relating to member's

1options), only eligibility points earned by performing
2credited school service as an active member of the system or
3credited State service as an active member of the State 
4Employees' Retirement System after June 30, 2001, shall be
5counted until such member earns one eligibility point by
6performing credited school service or credited State service
7after June 30, 2001, at which time all eligibility points as
8determined under subsection (a) shall be counted.

9(2) A member subject to paragraph (1) shall be
10considered to have satisfied any requirement for five
11eligibility points contained in this part if the member has
12at least ten eligibility points determined under subsection
13(a).

14(c) Transitional rule for members electing participation.--
15In determining whether a school employee, who is an active
16member or an inactive member on July 1, 2015, and who elects to
17become a participant in the plan under section 8416 (relating to
18election by members to be participants) has the five or ten
19eligibility points required by sections 8102, 8307(b), 8308,
208344(b) (relating to disability annuities) and 8345(a), any such
21combined service employee shall be considered to have satisfied
22any requirement for five or ten eligibility points, as
23applicable, if the combined service employee does not terminate
24school service for three or more years after the effective date
25of participation in the plan.

26Section 9. Section 8307(a) and (b) of Title 24 are amended
27and the section is amended by adding a subsection to read:

28§ 8307. Eligibility for annuities.

29(a) Superannuation annuity.--An active or an inactive
30member, or a combined service employee who is an active or
 

1inactive participant, and who attains superannuation age shall
2be entitled to receive a superannuation annuity upon termination
3of service and filing of a proper application.

4(a.1) Points.--Notwithstanding any regulation promulgated by
5the board, application or interpretation of Part IV (relating to
6retirement for school employees), or administrative practice to
7the contrary, a combined service employee's eligibility for a
8superannuation annuity or other rights and benefits based on
9attaining superannuation age or a superannuation score of 92
10shall be determined by including only those eligibility points
11actually accrued.

12(b) Withdrawal annuity.--A vestee in Class T-C or Class T-D 
13with five or more eligibility points or an active or inactive 
14Class T-C or Class T-D member, or a combined service employee 
15with Class T-C or T-D service, who terminates school service 
16having five or more eligibility points shall, upon filing a 
17proper application, be entitled to receive an early annuity. A 
18vestee in Class T-E or Class T-F with ten or more eligibility 
19points or an active or inactive Class T-E or Class T-F member, 
20or a combined service employee with Class T-E or T-F service, 
21who terminates school service having ten or more eligibility 
22points shall, upon filing a proper application, be entitled to 
23receive an early annuity.

24* * *

25Section 10. Sections 8310, 8321(b), 8322.1(a), 8323(a) and
26(d), 8324(b), (c) and (d), 8325, 8325.1(a), 8326(a) and (c),
278327, 8328(b), (c), (d), (e), (g) and (h), 8330 and 8341 of
28Title 24 are amended to read:

29§ 8310. Eligibility for refunds.

30Upon termination of service any active member, regardless of

1eligibility for benefits, may elect to receive his accumulated
2deductions in lieu of any benefit from the system to which he is
3entitled.

4§ 8321. Regular member contributions for current service.

5* * *

6(b) Class T-E and Class T-F shared-risk contributions.--
7Commencing with the annual actuarial valuation performed under
8section 8502(j) (relating to administrative duties of board),
9for the period ending June 30, 2014, and every three years
10thereafter, the board shall compare the actual investment rate
11of return, net of fees, to the annual interest rate adopted by
12the board for the calculation of the normal contribution rate,
13based on the market value of assets, for the prior ten-year
14period. If the actual investment rate of return, net of fees, is
15less than the annual interest rate adopted by the board by an
16amount of 1% or more, the shared-risk contribution rate of Class
17T-E and T-F members will increase by .5%. If the actual
18investment rate of return, net of fees, is equal to or exceeds
19the annual interest rate adopted by the board, the shared-risk
20contributions rate of Class T-E and T-F members will decrease by
21.5%. Class T-E and T-F members will contribute at the total
22member contribution rate in effect when they are hired. The
23total member contribution rate for Class T-E members shall not
24be less than 7.5%, nor more than 9.5%. The total member
25contribution rate for Class T-F members shall not be less than
2610.3%, nor more than 12.3%. Notwithstanding this subsection, if
27the system's actuarial funded status is 100% or more as of the
28date used for the comparison required under this subsection, as
29determined in the current annual actuarial valuation, the
30shared-risk contribution rate shall be zero. In the event that

1the annual interest rate adopted by the board for the
2calculation of the normal contribution rate is changed during
3the period used to determine the shared-risk contribution rate,
4the board, with the advice of the actuary, shall determine the
5applicable rate during the entire period, expressed as an annual
6rate. For periods commencing on or after July 1, 2015, the 
7determination of the shared-risk member contribution rate shall 
8be based on the annual interest rate adopted by the board for 
9the calculation of the accrued liability contribution rate under 
10section 8328(c) (relating to actuarial cost method).

11(1) Until the system has a ten-year period of investment
12rate of return experience following the effective date of
13this subsection, the look-back period shall begin not earlier
14than the effective date of this subsection.

15(2) For any fiscal year in which the employer
16contribution rate is lower than the final contribution rate
17under section 8328(h) (relating to actuarial cost method),
18the total member contribution rate for Class T-E and T-F
19members shall be prospectively reset to the basic
20contribution rate.

21(3) There shall be no increase in the member
22contribution rate if there has not been an equivalent
23increase to the employer contribution rate over the previous
24three-year period.

25§ 8322.1. Pickup contributions.

26(a) Treatment for purposes of IRC § 414(h).--All
27contributions to the fund required to be made under sections
288321 (relating to regular member contributions for current
29service) and 8322 (relating to joint coverage member
30contributions), with respect to current school service rendered

1by an active member on or after January 1, 1983, shall be picked
2up by the employer and shall be treated as the employer's
3contribution for purposes of IRC § 414(h).

4* * *

5§ 8323. Member contributions for creditable school service.

6(a) Previous school service, sabbatical leave and full
7coverage.--The contributions to be paid by an active member or
8an eligible State employee for credit in the system for
9reinstatement of all previously credited school service, school
10service not previously credited, sabbatical leave as if he had
11been in full-time daily attendance, or full-coverage membership
12shall be sufficient to provide an amount equal to the
13accumulated deductions which would have been standing to the
14credit of the member for such service had regular member
15contributions been made with full coverage at the rate of
16contribution necessary to be credited as Class T-C service,
17Class T-D service if the member is a Class T-D member, Class T-E 
18service if the member is a Class T-E member or Class T-F service 
19if the member is a Class T-F member and had such contributions
20been credited with statutory interest during the period the
21contributions would have been made and during all periods of
22subsequent school service as an active member or inactive member
23and State service as an active member or inactive member on 
24leave without pay up to the date of purchase.

25* * *

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

27(1) In all cases other than for the purchase of credit
28for sabbatical leave and activated military service leave
29beginning before the effective date of paragraph (2), the
30amount payable shall be certified by the board in accordance

1with methods approved by the actuary and may be paid in a
2lump sum within 90 days or in the case of an active member or
3an eligible State employee who is an active member of the
4State Employees' Retirement System it may be amortized with
5statutory interest through salary deductions to the system in
6amounts agreed upon by the member and the board. The salary
7deduction amortization plans agreed to by members and the
8board may include a deferral of payment amounts and statutory
9interest until the termination of school service or State
10service or becoming a participant and combined service 
11employee as the board in its sole discretion decides to
12allow. The board may limit salary deduction amortization
13plans to such terms as the board in its sole discretion
14determines. In the case of an eligible State employee who is
15an active member of the State Employees' Retirement System,
16the agreed upon salary deductions shall be remitted to the
17State Employees' Retirement Board, which shall certify and
18transfer to the board the amounts paid.

19(2) In the case of activated military service leave
20beginning before the effective date of this paragraph, the
21amount payable may be paid according to this subsection or
22subsection (c.1), but all lump sum payments must be made
23within one year of the termination of activated military
24service leave.

25§ 8324. Contributions for purchase of credit for creditable 
26nonschool service and noncreditable school service.

27* * *

28(b) Nonintervening military service.--The amount due for the 
29purchase of credit for military service other than intervening 
30military service shall be determined by applying the member's
 

1basic contribution rate plus the normal contribution rate as 
2provided in section 8328 (relating to actuarial cost method) at 
3the time of entry of the member into school service subsequent 
4to such military service to one-third of his total compensation 
5received during the first three years of such subsequent 
6credited school service and multiplying the product by the 
7number of years and fractional part of a year of creditable 
8nonintervening military service being purchased together with 
9statutory interest during all periods of subsequent school 
10service as an active or inactive member and State service as an 
11active member or inactive member on leave without pay to date of 
12purchase. Upon certification of the amount due, payment may be 
13made in a lump sum within 90 days or in the case of an active 
14member or an eligible State employee who is an active member of 
15the State Employees' Retirement System it may be amortized with 
16statutory interest through salary deductions to the system in 
17amounts agreed upon by the member and the board. The salary 
18deduction amortization plans agreed to by members and the board 
19may include a deferral of payment amounts and statutory interest 
20until the termination of school service or State service or 
21becoming a participant and a 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 the 
24board in its sole discretion determines. In the case of an 
25eligible State employee who is an active member of the State 
26Employees' Retirement System, the agreed upon salary deductions 
27shall be remitted to the State Employees' Retirement Board, 
28which shall certify and transfer to the board the amounts paid. 
29Application may be filed for all such military service credit 
30upon completion of three years of subsequent credited school
 

1service and shall be credited as Class T-C service. In the event 
2that a Class T-E member makes a purchase of credit for such 
3military service, then such service shall be credited as Class 
4T-E service. In the event that a Class T-F member makes a 
5purchase of credit for such military service, then such service 
6shall be credited as Class T-F service.

7(c) Intervening military service.--Contributions on account
8of credit for intervening military service shall be determined
9by the member's basic contribution rate and compensation at the
10time of entry of the member into active military service,
11together with statutory interest during all periods of
12subsequent school service as an active or inactive member and
13State service as an active member or inactive member on leave 
14without pay to date of purchase. Upon application for such
15credit the amount due shall be certified in the case of each
16member by the board, in accordance with methods approved by the
17actuary, and contributions may be made by one of the following
18methods:

19(1) Regular monthly payments during active military
20service.

21(2) A lump sum payment within 90 days of certification
22of the amount due.

23(3) Salary deductions to the system in amounts agreed
24upon by the member and the board. The salary deduction
25amortization plans agreed to by the members and the board may
26include a deferral of payment amounts and statutory interest
27until the termination of school service or State service or 
28becoming a participant and a combined service employee as the
29board in its sole discretion decides to allow. The board may
30limit salary deduction amortization plans to such terms as

1the board in its sole discretion determines. In the case of
2an eligible State employee who is an active member of the
3State Employees' Retirement System, the agreed upon salary
4deductions shall be remitted to the State Employees'
5Retirement Board, which shall certify and transfer to the
6board the amounts paid.

7(d) Other creditable nonschool service and noncreditable 
8school service.--

9(1) Contributions on account of Class T-C credit for 
10creditable nonschool service other than military service 
11shall be determined by applying the member's basic 
12contribution rate plus the normal contribution rate as 
13provided in section 8328 at the time of the member's entry 
14into school service subsequent to such creditable nonschool 
15service to his total compensation received during the first 
16year of subsequent credited school service and multiplying 
17the product by the number of years and fractional part of a 
18year of creditable nonschool service being purchased together 
19with statutory interest during all periods of subsequent 
20school service as an active or inactive member or State 
21service as an active member or inactive member on leave 
22without pay to the date of purchase, except that in the case 
23of purchase of credit for creditable nonschool service as set 
24forth in section 8304(b)(5) (relating to creditable nonschool 
25service) the member shall pay only the employee's share 
26unless otherwise provided by law. Upon certification of the 
27amount due, payment may be made in a lump sum within 90 days 
28or in the case of an active member or an eligible State 
29employee who is an active member of the State Employees' 
30Retirement System it may be amortized with statutory interest
 

1through salary deductions to the system in amounts agreed 
2upon by the member and the board. The salary deduction 
3amortization plans agreed to by the members and the board may 
4include a deferral of payment amounts and statutory interest 
5until the termination of school service or State service or 
6becoming a participant and 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 
9the board in its sole discretion determines. In the case of 
10an eligible 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' 
13Retirement Board, which shall certify and transfer to the 
14board the amounts paid.

15(2) Contributions on account of Class T-E or Class T-F
16credit for creditable nonschool service other than military
17service shall be the present value of the full actuarial cost
18of the increase in the projected superannuation annuity
19caused by the additional service credited on account of the
20purchase. Upon certification of the amount due, payment may
21be made in a lump sum within 90 days or, in the case of an
22active member or an eligible State employee who is an active
23member of the State Employees' Retirement System, it may be
24amortized with statutory interest through salary deductions 
25to the system in amounts agreed upon by the member and the
26board. The salary deduction amortization plans agreed to by
27the members and the board may include a deferral of payment
28amounts and statutory interest until the termination of
29school service or State service or becoming a participant and 
30combined service employee as the board in its sole discretion

1decides to allow. The board may limit salary deduction
2amortization plans to the terms as the board in its sole
3discretion determines. In the case of an eligible State
4employee who is an active member of the State Employees'
5Retirement System, the agreed upon salary deductions shall be
6remitted to the State Employees' Retirement Board, which
7shall certify and transfer to the board the amounts paid.

8(3) Contributions on account of Class T-E or Class T-F
9credit for noncreditable school service other than military
10service shall be the present value of the full actuarial cost
11of the increase in the projected superannuation annuity
12caused by the additional service credited on account of the
13purchase. Upon certification of the amount due, payment may
14be made in a lump sum within 90 days or, in the case of an
15active member or an eligible State employee who is an active
16member of the State Employees' Retirement System, it may be
17amortized with statutory interest through salary deductions 
18to the system in amounts agreed upon by the member and the
19board. The salary deduction amortization plans agreed to by
20the members and the board may include a deferral of payment
21amounts and statutory interest until the termination of
22school service or State service or becoming a participant and 
23combined service employee as the board in its sole discretion
24decides to allow. The board may limit salary deduction
25amortization plans to the terms as the board in its sole
26discretion determines. In the case of an eligible State
27employee who is an active member of the State Employees'
28Retirement System, the agreed upon salary deductions shall be
29remitted to the State Employees' Retirement Board, which
30shall certify and transfer to the board the amounts paid.

1* * *

2§ 8325. Incomplete payments.

3In the event that a member terminates school service or 
4becomes a participant or a multiple service member who is an
5active member of the State Employees' Retirement System
6terminates State service before any agreed upon payments or
7return of benefits on account of returning to school service or
8entering State service and electing multiple service have been
9completed, the member or multiple service member who is an
10active member of the State Employees' Retirement System shall
11have the right to pay within 30 days of termination of school
12service or State service or becoming a participant the balance
13due, including interest, in a lump sum, and the annuity shall be
14calculated including full credit for the previous school
15service, creditable nonschool service, or full-coverage
16membership. In the event a member does not pay the balance due
17within 30 days of termination of school service or becoming a 
18participant or in the event a member dies in school service or
19within 30 days of termination of school service or in the case
20of a multiple service member who is an active member of the
21State Employees' Retirement System does not pay the balance due
22within 30 days of termination of State service or dies in State
23service or within 30 days of termination of State service or 
24becoming a participant and before the agreed upon payments have
25been completed, the present value of the benefit otherwise
26payable shall be reduced by the balance due, including interest,
27and the benefit payable shall be calculated as the actuarial
28equivalent of such reduced present value.

29§ 8325.1. Annual compensation limit under IRC § 401(a)(17).

30(a) General rule.--In addition to other applicable

1limitations set forth in this part, and notwithstanding any
2provision of this part to the contrary, the annual compensation
3of each noneligible member and each participant taken into
4account for benefit purposes under this subchapter shall not
5exceed the limitation under IRC § 401(a)(17). On and after July
61, 1996, any reference in this part to the limitation under IRC
7§ 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
81993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
9compensation limit set forth in this subsection. The OBRA '93
10annual compensation limit is $150,000, as adjusted by the
11commissioner for increases in the cost of living in accordance
12with IRC § 401(a)(17)(B). The cost-of-living adjustment in
13effect for a calendar year applies to any determination period
14which is a period, not exceeding 12 months, over which
15compensation is determined, beginning in such calendar year. If
16a determination period consists of fewer than 12 months, the
17OBRA '93 compensation limit will be multiplied by a fraction,
18the numerator of which is the number of months in the
19determination period and the denominator of which is 12.

20* * *

21§ 8326. Contributions by the Commonwealth.

22(a) Contributions on behalf of active members and 
23participants.--The Commonwealth shall make contributions into
24the fund on behalf of all active members and participants,
25including members and participants on activated military service
26leave, in an amount equal to one-half the amount certified by
27the board as necessary to provide, together with the members'
28contributions, annuity reserves on account of prospective
29annuities as provided in this part in accordance with section
308328 (relating to actuarial cost method). In case a school

1employee has elected membership in a retirement program approved
2by the employer, the Commonwealth shall contribute to such
3program on account of his membership an amount no greater than
4the amount it would have contributed had the employee been a
5member of the Public School Employees' Retirement System.

6* * *

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

8(1) The Commonwealth shall make contributions into the
9fund on behalf of all active members and participants,
10including members and participants on activated military
11service leave, for service performed after June 30, 1995, in
12the following manner:

13(i) For members and participants who are employees
14of employers that are school entities, no Commonwealth
15contributions shall be made.

16(ii) For members and participants who are employees
17of employers that are not school entities, the amount
18computed under subsection (a).

19(2) The Commonwealth shall make contributions into the
20fund on behalf of annuitants for all amounts due to the fund
21after June 30, 1995, including, but not limited to, amounts
22due pursuant to section 8328(d) and (f), in the following
23manner:

24(i) For members and participants who are employees
25of employers who are school entities, no Commonwealth
26contributions shall be made.

27(ii) For members and participants who are employees
28of employers who are not school entities, the amount
29computed under subsection (b).

30§ 8327. Payments by employers.

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

2(1) For payments prior to June 30, 2015, each employer,
3including the Commonwealth as employer of employees of the
4Department of Education, State-owned colleges and
5universities, Thaddeus Stevens College of Technology, Western 
6Pennsylvania School for the Deaf, Scotland School for
7Veterans' Children[,] and [the] The Pennsylvania State
8University, shall make payments to the fund each quarter in
9an amount equal to one-half the sum of the percentages, as
10determined under section 8328 (relating to actuarial cost
11method), applied to the total compensation during the pay
12periods in the preceding quarter of all its employees who
13were members of the system during such period, including
14members on activated military service leave. In the event a
15member on activated military service leave does not return to
16service for the necessary time or receives an undesirable,
17bad conduct or dishonorable discharge or does not elect to
18receive credit for activated military service under section
198302(b.1)(3) (relating to credited school service), the
20contributions made by the employer on behalf of such member
21shall be returned with valuation interest upon application by
22the employer.

23(2) For payments after June 30, 2015, each employer,
24including the Commonwealth as employer of employees of the
25Department of Education, State-owned colleges and
26universities, Thaddeus Stevens College of Technology, Western
27Pennsylvania School for the Deaf, Scotland School for
28Veterans' Children and The Pennsylvania State University,
29shall make payments to the fund each quarter in an amount
30equal to one-half the sum of the percentages, as determined

1under section 8328, applied to the total compensation during
2the pay periods in the preceding quarter of all its employees
3who were members of the system during such period, including
4members on activated military service leave, plus the accrued
5liability contribution rate applied to the total compensation
6of all active participants in the plan. In the event a member
7on activated military service leave does not return to
8service for the necessary time or receives an undesirable,
9bad conduct or dishonorable discharge or does not elect to
10receive credit for activated military service under section
118302(b.1)(3), the contributions made by the employer on
12behalf of such member shall be returned with valuation
13interest upon application by the employer.

14(b) Deduction from appropriations.--

15(1) To facilitate the payment of amounts due from any
16employer 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 the amount of any moneys due
21to any employer on account of any appropriation for schools
22or other purposes amounts equal to the employer and pickup
23contributions which an employer is required to pay to the
24fund, as certified by the board, and as remains unpaid on the
25date such appropriations would otherwise be paid to the
26employer. Such amount shall be credited to the appropriate
27accounts in the fund and the trust.

28(2) To facilitate the payments of amounts due from any
29charter school, as defined in Article XVII-A of the act of 
30March 10, 1949 (P.L.30, No.14), known as the Public School

1Code of 1949, 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 any funds appropriated to
6the Department of Education for basic education of the
7chartering school district of a charter school and public
8school employees' retirement contributions amounts equal to
9the employer and pickup contributions which a charter school
10is required to pay to the fund and the trust, as certified by
11the board, and as remains unpaid on the date such
12appropriations would otherwise be paid to the chartering
13school district or charter school. Such amounts shall be
14credited to the appropriate accounts in the fund and the 
15trust. Any reduction in payments to a chartering school
16district made pursuant to this section shall be deducted from
17the amount due to the charter school district pursuant to the
18Public School Code of 1949.

19(c) Payments by employers after June 30, 1995.--After June
2030, 1995, and before July 1, 2015, each employer, including the
21Commonwealth as employer of employees of the Department of
22Education, State-owned colleges and universities, Thaddeus
23Stevens College of Technology, Western Pennsylvania School for
24the Deaf, Scotland School for Veterans' Children and The
25Pennsylvania State University, shall make payments to the fund 
26and the trust each quarter in an amount computed in the
27following manner:

28(1) For an employer that is a school entity, the amount
29shall be the sum of the percentages as determined under
30section 8328 applied to the total compensation during the pay

1periods in the preceding quarter of all employees who were
2active members of the system or active participants of the 
3plan during such period, including members or active 
4participants on activated military service leave. In the
5event a member on activated military service leave does not
6return to service for the necessary time or receives an
7undesirable, bad conduct or dishonorable discharge or does
8not elect to receive credit for activated military service
9under section 8302(b.1)(3), the contribution made by the
10employer on behalf of such member shall be returned with
11valuation interest upon application by the employer.

12(2) For an employer that is not a school entity, the
13amount computed under subsection (a).

14(3) For any employer, whether or not a school entity, in
15computing the amount of payment due each quarter, there shall
16be excluded from the total compensation referred to in this
17subsection and subsection (a) any amount of compensation of a
18noneligible member on the basis of which member or 
19participant contributions have not been made by reason of the
20limitation under IRC § 401(a)(17). Any amount of contribution
21to the fund or trust paid by the employer on behalf of a
22noneligible member or participant on the basis of
23compensation which was subject to exclusion from total
24compensation in accordance with the provisions of this
25paragraph shall, upon the board's determination or upon
26application by the employer, be returned to the employer with
27valuation interest.

28(d) Payments by employers after June 30, 2014.--After June
2930, 2015, each employer, including the Commonwealth as employer
30of employees of the Department of Education, State-owned

1colleges and universities, Thaddeus Stevens College of
2Technology, Western Pennsylvania School for the Deaf, Scotland
3School for Veterans' Children and The Pennsylvania State
4University, shall make payments to the fund and trust each
5quarter in an amount computed in the following manner:

6(1) For an employer that is a school entity, the amount
7shall be the sum of the percentages as determined under
8section 8328 applied to the total compensation during the pay
9periods in the preceding quarter of all employees who were
10active members of the system during such period, including
11members on activated military service leave, plus the accrued
12liability contribution rate applied to the total compensation
13of all active participants in the plan. In the event a member
14on activated military service leave does not return to
15service for the necessary time or receives an undesirable,
16bad conduct or dishonorable discharge or does not elect to
17receive credit for activated military service under section
188302(b.1)(3), the contribution made by the employer on behalf
19of such member shall be returned with valuation interest upon
20application by the employer.

21(2) For an employer that is not a school entity, the
22amount computed under subsection (a).

23(3) For any employer, whether or not a school entity, in
24computing the amount of payment due each quarter, there shall
25be excluded from the total compensation referred to in this
26subsection and subsection (a) any amount of compensation of a
27noneligible member on the basis of which member or
28participant contributions have not been made by reason of the
29limitation under IRC § 401(a)(17). Any amount of contribution
30to the fund paid by the employer on behalf of a noneligible

1member or participant on the basis of compensation which was
2subject to exclusion from total compensation in accordance
3with the provisions of this paragraph shall, upon the board's
4determination or upon application by the employer, be
5returned to the employer with valuation interest.

6(e) Deemed agreed to.--The agreement of an employer listed
7in the definition of school employee under section 8102
8(relating to definitions) or any other law to make contributions
9to the fund or to enroll its employees as members in the system
10shall be deemed to be an agreement to make contributions to the
11trust or enroll its employees in the plan.

12(f) Contributions.--The employer employing a participant
13shall pick up the required mandatory participant contributions
14by a reduction in the compensation of the participant.

15(g) Contributions resulting from members reemployed from
16USERRA leave.--When a school employee reemployed from USERRA
17leave makes the member contributions required to be granted
18school service credit for the USERRA leave after June 30, 2015,
19either by actual payment or by actuarial debt under section 8325
20(relating to incomplete payments), the employer that employed
21the school employee when the member contributions are made or
22the last employer before termination in the case of payments
23under section 8325 shall make the employer contributions that
24would have been made under this section if the employee making
25the member contributions after he is reemployed from USERRA
26leave continued to be employed in his school office or position
27instead of performing USERRA leave.

28§ 8328. Actuarial cost method.

29* * *

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

1(1) For the fiscal year ending June 30, 2014, the normal
2contribution rate shall be determined after each actuarial
3valuation. Until all accrued liability contributions have
4been completed, the normal contribution rate shall be
5determined, on the basis of an annual interest rate and such
6mortality and other tables as shall be adopted by the board
7in accordance with generally accepted actuarial principles,
8as a level percentage of the compensation of the average new
9active member, which percentage, if contributed on the basis
10of his prospective compensation through the entire period of
11active school service, would be sufficient to fund the
12liability for any prospective benefit payable to him, in
13excess of that portion funded by his prospective member
14contributions, excluding the shared-risk contributions.

15(2) For fiscal years beginning on or after July 1, 2014,
16the normal contribution rate shall be determined after each
17actuarial valuation. Until all accrued liability
18contributions have been completed, the normal contribution
19rate shall be determined, on the basis of an annual interest
20rate and such mortality and other tables as shall be adopted
21by the board in accordance with generally accepted actuarial
22principles, as a level percentage of the compensation of all
23active members, which percentage, if contributed on the basis
24of the member's prospective compensation through the entire
25period of active school service, would be sufficient to fund
26the liability for any prospective benefit payable to him, in
27excess of that portion funded by his prospective member
28contributions, excluding the shared-risk contributions.

29(c) Accrued liability contribution rate.--

30(1) For the fiscal years beginning July 1, 2002, and
 

1ending June 30, 2011, the accrued liability contribution rate
2shall be computed as the rate of total compensation of all
3active members which shall be certified by the actuary as
4sufficient to fund over a period of ten years from July 1,
52002, the present value of the liabilities for all
6prospective benefits of active members, except for the
7supplemental benefits provided in sections 8348 (relating to 
8supplemental annuities), 8348.1 (relating to additional 
9supplemental annuities), 8348.2 (relating to further 
10additional supplemental annuities), 8348.3 (relating to 
11supplemental annuities commencing 1994), 8348.4 (relating to 
12special supplemental postretirement adjustment), 8348.5
13(relating to supplemental annuities commencing 1998), 8348.6
14(relating to supplemental annuities commencing 2002) and
158348.7 (relating to supplemental annuities commencing 2003),
16in excess of the total assets in the fund (calculated by
17recognizing the actuarially expected investment return
18immediately and recognizing the difference between the actual
19investment return and the actuarially expected investment
20return over a five-year period), excluding the balance in the
21annuity reserve account, and of the present value of normal
22contributions and of member contributions payable with
23respect to all active members on July 1, 2002, during the
24remainder of their active service.

25(2) For the fiscal years beginning July 1, 2003, and 
26ending June 30, 2011, the amount of each annual accrued
27liability contribution shall be equal to the amount of such
28contribution for the fiscal year, beginning July 1, 2002,
29except that, if the accrued liability is increased by
30legislation enacted subsequent to June 30, 2002, but before

1July 1, 2003, such additional liability shall be funded over
2a period of ten years from the first day of July, coincident
3with or next following the effective date of the increase.
4The amount of each annual accrued liability contribution for
5such additional legislative liabilities shall be equal to the
6amount of such contribution for the first annual payment.

7(3) Notwithstanding any other provision of law,
8beginning July 1, 2004, and ending June 30, 2011, the
9outstanding balance of the increase in accrued liability due
10to the change in benefits enacted in 2001 and the outstanding
11balance of the net actuarial loss incurred in fiscal year
122000-2001 shall be amortized in equal dollar annual
13contributions over a period that ends 30 years after July 1,
142002, and the outstanding balance of the net actuarial loss
15incurred in fiscal year 2001-2002 shall be amortized in equal
16dollar annual contributions over a period that ends 30 years
17after July 1, 2003. For fiscal years beginning on or after
18July 1, 2004, if the accrued liability is increased by
19legislation enacted subsequent to June 30, 2003, such
20additional liability shall be funded in equal dollar annual
21contributions over a period of ten years from the first day
22of July coincident with or next following the effective date
23of the increase.

24(4) For the fiscal year beginning July 1, 2011, the 
25accrued liability contribution rate shall be computed as the 
26rate of total compensation of all active members which shall 
27be certified by the actuary as sufficient to fund as a level 
28percentage of compensation over a period of 24 years from 
29July 1, 2011, the present value of the liabilities for all 
30prospective benefits calculated as of June 30, 2010,
 

1including the supplemental benefits as provided in sections 
28348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 
38348.7, in excess of the actuarially calculated assets in the 
4fund (calculated recognizing all realized and unrealized 
5investment gains and losses each year in level annual 
6installments over a ten-year period, provided that the 
7resulting actuarially calculated assets are constrained 
8within a range of 70%-130% of market value). In the event 
9that the accrued liability is [increased] changed by 
10legislation enacted subsequent to June 30, 2010, such 
11[additional] change in liability shall be funded as a level 
12percentage of compensation over a period of ten years from 
13the July 1 second succeeding the date such legislation is 
14enacted.

15(5) Notwithstanding the above, for the fiscal years
16beginning July 1, 2014, compensation shall be defined as the
17total compensation of all active members and active
18participants.

19(6) For purposes of determining the accrued liability
20contribution rate in subsection (c) and the experience
21adjustment factor in subsection (e) for The Pennsylvania
22State University, the State System of Higher Education,
23State-owned educational institutions and community colleges,
24the term "compensation of all active members and active
25participants" shall include an additional amount equal to the
26difference between:

27(i) the actual compensation of all active members
28and active participants of The Pennsylvania State
29University, the State System of Higher Education, State-
30owned educational institutions and community colleges;

1and,

2(ii) the compensation of all active members, active
3participants, active members of the State Employees'
4Retirement System, active participants of the State
5Employees' Defined Contribution Plan and employees who
6are members or participants of an independent retirement
7program approved by the employer of The Pennsylvania
8State University, the State System of Higher Education,
9State-owned educational institutions and community
10collective colleges multiplied by a fraction equal to the
11amount determined under subparagraph (i) as part of the
12June 30, 2014, actuarial valuation divided by the amount
13of compensation of all active members, active
14participants, active members of the State Employees'
15Retirement System, active participants of the State
16Employees' Defined Contribution Plan and employees who
17are members or participants of an independent retirement
18program approved by the employer determined as part of
19the June 30, 2014, actuarial valuation.

20(7) For the fiscal year beginning July 1, 2015, and all
21subsequent fiscal years, The Pennsylvania State University,
22the State System of Higher Education, each State-owned
23educational institution and each community college shall make
24such additional actuarial accrued liability contributions as
25shall be certified by the board. The additional actuarial
26accrued liability contributions shall be the product of:

27(i) the amount by which the final contribution rate
28exceeds the employer normal contribution rate determined
29under subsection (b)(1); multiplied by,

30(ii) and the difference between:

1(A) the actual compensation of all active
2members and active participants of each such
3educational institution; and

4(B) the compensation of all active members, 
5active participants, active members of the State 
6Employees' Retirement System, active participants of 
7the State Employees' Defined Contribution Plan and 
8employees who are members or participants of an 
9independent retirement program approved by the 
10employer of each such educational institution 
11multiplied by a fraction equal to the amount 
12determined under clause (A) as part of the June 30, 
132014, actuarial valuation divided by the amount of 
14compensation of all active members, active 
15participants, active members of the State Employees' 
16Retirement System, active participants of the State 
17Employees' Defined Contribution Plan and employees 
18who are members or participants of an independent 
19retirement program approved by the employer of each 
20such educational institution determined as part of 
21the June 30, 2014, actuarial valuation.

22(d) Supplemental annuity contribution rate.--

23(1) For the period of July 1, 2002, to June 30, 2011, 
24contributions from the Commonwealth and other employers
25required to provide for the payment of the supplemental
26annuities provided for in sections 8348, 8348.1, 8348.2,
278348.4 and 8348.5 shall be paid over a period of ten years
28from July 1, 2002. The funding for the supplemental annuities
29commencing 2002 provided for in section 8348.6 shall be as
30provided in section 8348.6(f). The funding for the

1supplemental annuities commencing 2003 provided for in
2section 8348.7 shall be as provided in section 8348.7(f). The
3amount of each annual supplemental annuities contribution
4shall be equal to the amount of such contribution for the
5fiscal year beginning July 1, 2002.

6(2) For fiscal years beginning July 1, 2011, and ending 
7June 30, 2014, contributions from the Commonwealth and other 
8employers whose employees are members of the system required 
9to provide for the payment of supplemental annuities as 
10provided in sections 8348, 8348.1, 8348.2, 8348.3, 8348.4, 
118348.5, 8348.6 and 8348.7 shall be paid as part of the 
12accrued liability contribution rate as provided for in 
13subsection (c)(4), and there shall not be a separate 
14supplemental annuity contribution rate attributable to those 
15supplemental annuities. In the event that supplemental 
16annuities are increased by legislation enacted subsequent to 
17June 30, 2010, [the] but before July 1, 2013, such additional 
18liability for the increase in benefits shall be funded as a 
19level percentage of compensation over a period of ten years 
20from the July 1 second succeeding the date such legislation 
21is enacted.

22(3) For fiscal years beginning on or after July 1, 2014,
23contributions from employers whose employees are members of
24the system required to provide for the payment of
25supplemental annuities as provided in sections 8348, 8348.1,
268348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 8348.7 shall be
27paid as part of the accrued liability contribution rate as
28provided for in subsection (c)(4), and there shall not be a
29separate supplemental annuity contribution rate attributable
30to those supplemental annuities. In the event that

1supplemental annuities are increased by legislation enacted
2subsequent to June 30, 2013, the additional liability for the
3increase in benefits shall be funded as a level in equal
4dollar installments as a percentage of compensation of all
5active members and active participants over a period of ten
6years from the July 1 second succeeding the date such
7legislation is enacted.

8(e) Experience adjustment factor.--

9(1) For each year after the establishment of the accrued
10liability contribution rate for the fiscal year beginning
11July 1, 2011, and ending June 30, 2014, any increase or
12decrease in the unfunded accrued liability, excluding the
13gains or losses on the assets of the health insurance
14account, due to actual experience differing from assumed
15experience, changes in actuarial assumptions, changes in 
16contributions caused by the final contribution rate being 
17different from the actuarially required contribution rate, 
18active members making shared-risk contributions or changes in
19the terms and conditions of the benefits provided by the
20system by judicial, administrative or other processes other
21than legislation, including, but not limited to,
22reinterpretation of the provisions of this part, recognized 
23by the actuarial valuations on June 30, 2011, and June 30, 
242012, shall be amortized as a level percentage of 
25compensation over a period of 24 years beginning with the
26July 1 second succeeding the actuarial valuation determining 
27said increases or decreases.

28(2) (Reserved).

29(3) For fiscal years beginning July 1, 2014, any
30increase or decrease in the unfunded accrued liability,

1excluding the gains or losses on the assets of the health
2insurance account, due to actual experience differing from
3assumed experience, changes in actuarial assumptions, changes
4in contributions caused by the final contribution rate being
5different from the actuarially required contribution rate,
6active members making shared-risk contributions or changes in
7the terms and conditions of the benefits provided by the
8system by judicial, administrative or other processes other
9than legislation, including, but not limited to,
10reinterpretation of the provisions of this part, shall be
11amortized as a level percentage of compensation of all active
12members and active participants over a period of 24 years
13beginning with the July 1 second succeeding the actuarial
14valuation determining such increases or decreases.

15* * *

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

17(1) The collared contribution rate for each year shall
18be determined by comparing the actuarially required
19contribution rate, calculated without regard for the costs
20added by legislation, to the prior year's final contribution
21rate.

22(2) If, for any of the fiscal years beginning July 1,
232011, July 1, 2012, [and] or on or after July 1, 2013, the
24actuarially required contribution rate, calculated without
25regard for the costs added by legislation, is more than 3%,
263.5% and 4.5%, respectively, of the total compensation of all
27active members greater than the prior year's final
28contribution rate, then the collared contribution rate shall
29be applied and be equal to the prior year's final
30contribution rate increased by 3%, 3.5% and 4.5%,

1respectively, of total compensation of all active members.
2Otherwise, and for all other fiscal years, the collared
3contribution rate shall not be applicable. In no case shall
4the collared contribution rate be less than 4% of the total
5compensation of all active members.

6(h) Final contribution rate.--

7(1) For the fiscal year beginning July 1, 2010, the 
8final contribution rate is 5% of the total compensation of 
9all active members. For each subsequent fiscal year for which 
10the collared contribution rate is applicable, the final 
11contribution rate shall be the collared contribution rate as 
12calculated in subsection (g), plus the costs added by 
13legislation.

14(2) For all other fiscal years ending before June 30, 
152015, the final contribution rate shall be the actuarially
16required contribution rate, provided that the final
17contribution rate shall not be less than the normal
18contribution rate as provided in subsection (b).

19* * *

20§ 8330. Appropriations by the Commonwealth.

21(a) Annual submission of budget.--The board shall prepare
22and through the Governor submit annually to the General Assembly
23an itemized budget consisting of the amounts necessary to be
24appropriated by the Commonwealth out of the General Fund
25required to meet the separate obligations to both the fund and 
26the trust accruing during the fiscal period beginning July 1 of
27the following year.

28(b) Appropriation and payment.--The General Assembly shall
29make an appropriation sufficient to provide for the separate
30obligations of the Commonwealth to both the fund and the trust.

1Such amount shall be paid by the State Treasurer through the
2Department of Revenue into the fund or the trust as the case may 
3be within 30 days of receipt of the requisition presented each
4quarter by the board.

5§ 8341. Return of accumulated deductions.

6Any member upon termination of service may, in lieu of all
7benefits payable from the system under this chapter to which he
8may be entitled, elect to receive his accumulated deductions.

9Section 11. Section 8342 of Title 24 is amended by adding a
10subsection to read:

11§ 8342. Maximum single life annuity.

12* * *

13(d) Coordination of benefits.--The determination and payment
14of the maximum single life annuity under this section shall be
15in addition to any payments a combined service employee may be
16entitled to receive, has received or is receiving as a result of
17being a participant in the plan.

18Section 12. Section 8344(b) of Title 24 is amended and the
19section is amended by adding a subsection to read:

20§ 8344. Disability annuities.

21* * *

22(b) Reduction on account of earned income.--Payments on
23account of disability shall be reduced by that amount by which
24the earned income of the annuitant, as reported in accordance
25with section 8508(b) (relating to rights and duties of
26annuitants) for the preceding year together with the disability
27annuity payments for the year, exceeds the greater of $5,000 or
28the last year's salary of the annuitant as a [school employee] 
29member of the system, provided that the annuitant shall not
30receive less than his member's annuity or the amount to which he

1may be entitled under section 8342, whichever is greater.

2* * *

3(f) Coordination of benefits.--The determination and payment
4of a disability annuity under this section shall be in addition
5to any payments a combined service employee may be entitled to
6receive, has received or is receiving as a result of being a
7participant in the plan.

8Section 13. Sections <-8345(a), 8346 and 8349(a) and (b) of
9Title 24 are amended to read:

<-10§ 8345. Member's options.

11(a) General rule.--Any Class T-C or Class T-D member who is 
12a vestee with five or more eligibility points, any Class T-E or 
13Class T-F member who is a vestee with ten or more eligibility 
14points, or any other eligible member upon termination of school
15service who has not withdrawn his accumulated deductions as
16provided in section 8341 (relating to return of accumulated
17deductions) may apply for and elect to receive either a maximum
18single life annuity, as calculated in accordance with the
19provisions of section 8342 (relating to maximum single life
20annuity), or a reduced annuity certified by the actuary to be
21actuarially equivalent to the maximum single life annuity and in
22accordance with one of the following options, except that no
23member shall elect an annuity payable to one or more survivor
24annuitants other than his spouse or alternate payee of such a
25magnitude that the present value of the annuity payable to him
26for life plus any lump sum payment he may have elected to
27receive is less than 50% of the present value of his maximum
28single life annuity. In no event shall a Class T-E or Class T-F 
29member receive an annual benefit, calculated as of the effective 
30date of retirement, greater than the member's final average
 

1salary.

2(1) Option 1.--A life annuity to the member with a
3guaranteed total payment equal to the present value of the
4maximum single life annuity on the effective date of
5retirement with the provision that, if, at his death, he has
6received less than such present value, the unpaid balance
7shall be payable to his beneficiary.

8(2) Option 2.--A joint and survivor annuity payable
9during the lifetime of the member with the full amount of
10such annuity payable thereafter to his survivor annuitant, if
11living at his death.

12(3) Option 3.--A joint and fifty percent (50%) survivor
13annuity payable during the lifetime of the member with one-
14half of such annuity payable thereafter to his survivor
15annuitant, if living at his death.

16(4) Option 4.--Some other benefit which shall be
17certified by the actuary to be actuarially equivalent to the
18maximum single life annuity, subject to the following
19restrictions:

20(i) Any annuity shall be payable without reduction
21during the lifetime of the member.

22(ii) The sum of all annuities payable to the
23designated survivor annuitants shall not be greater than
24one and one-half times the annuity payable to the member.

25(iii) A portion of the benefit may be payable as a 
26lump sum, except that such lump sum payment shall not 
27exceed an amount equal to the accumulated deductions 
28standing to the credit of the member. The balance of the 
29present value of the maximum single life annuity adjusted 
30in accordance with section 8342(b) shall be paid in the
 

1form of an annuity with a guaranteed total payment, a 
2single life annuity, or a joint and survivor annuity or 
3any combination thereof but subject to the restrictions 
4of subparagraphs (i) and (ii) of this paragraph. This 
5subparagraph shall not apply to a Class T-E or Class T-F 
6member. For purposes of this subparagraph only, the term 
7"actuarially equivalent," as applied to any lump sum 
8withdrawal attributable to contributions credited to the 
9member's savings account on or after July 1, 2015, 
10together with all interest thereon, shall mean equal 
11present values, computed on the basis of the interest 
12rate and such mortality and other tables as adopted by 
13the board pursuant to section 8328(b) (relating to 
14actuarial cost method) in effect on the effective date of 
15retirement of the member.

16* * *

17§ 8346. Termination of annuities.

18(a) General rule.--If an annuitant returns to school service
19or enters or has entered State service and elects multiple
20service membership, any annuity payable to him under this part
21shall cease effective upon the date of his return to school
22service or entering State service without regard to whether he 
23is a mandatory, optional or prohibited member of the system or 
24participant in the plan or, if a multiple service member, 
25whether he is a mandatory, optional or prohibited member or 
26participant of the State Employees' Retirement System or State 
27Employees' Defined Contribution Plan and in the case of an
28annuity other than a disability annuity the present value of
29such annuity, adjusted for full coverage in the case of a joint
30coverage member who makes the appropriate back contributions for

1full coverage, shall be frozen as of the date such annuity
2ceases. An annuitant who is credited with an additional 10% of
3membership service as provided in section 8302(b.2) (relating to
4credited school service) and who returns to school service,
5except as provided in subsection (b), shall forfeit such
6credited service and shall have his frozen present value
7adjusted as if his 10% retirement incentive had not been applied
8to his account. In the event that the cost-of-living increase
9enacted December 18, 1979, occurred during the period of such
10State or school employment, the frozen present value shall be
11increased, on or after the member attains superannuation age, by
12the percent applicable had he not returned to service.

13(a.1) Return of benefits.--In the event an annuitant whose
14annuity ceases pursuant to this section receives any annuity
15payment, including a lump sum payment pursuant to section 8345
16(relating to member's options) on or after the date of his
17return to school service or entering State service, the
18annuitant shall return to the board the amount so received plus
19statutory interest. The amount payable shall be certified in
20each case by the board in accordance with methods approved by
21the actuary and shall be paid in a lump sum within 90 days or in
22the case of an active member or a State employee who is an
23active member of the State Employees' Retirement System may be
24amortized with statutory interest through salary deductions to 
25the system in amounts agreed upon by the member and the board.
26The salary deduction amortization plans agreed to by the member
27and the board may include a deferral of payment amounts and
28statutory interest until the termination of school service or
29State service as the board in its sole discretion decides to
30allow. The board may limit salary deduction amortization plans

1to such terms as the board in its sole discretion determines. In
2the case of a State employee who is an active member of the
3State Employees' Retirement System, the agreed upon salary
4deductions shall be remitted to the State Employees' Retirement
5Board, which shall certify and transfer to the board the amounts
6paid.

7(b) Return to school service during emergency.--When, in the
8judgment of the employer, an emergency creates an increase in
9the work load such that there is serious impairment of service
10to the public or in the event of a shortage of appropriate
11subject certified teachers or other personnel, an annuitant or 
12participant receiving distributions may be returned to school
13service for a period not to extend beyond the school year during
14which the emergency or shortage occurs, without loss of his
15annuity or distributions. The annuitant shall not be entitled to
16earn any credited service, and no contributions may be made by
17the annuitant, the employer or the Commonwealth on account of
18such employment. Such service shall not be subject to member 
19contributions or be eligible for qualification as creditable 
20school service or for participation in the plan, mandatory 
21pickup participant contributions or employer defined 
22contributions.

23(b.1) Return to school service in an extracurricular
24position.--

25(1) An annuitant or participant receiving distributions
26may be employed under separate contract by a public school or
27charter school in an extracurricular position performed
28primarily outside regular instructional hours and not part of
29mandated curriculum without loss of annuity. Neither the
30annuitant, the participant receiving distributions, nor the

1employer shall make contributions to the member's savings
2account, the individual investment account or State
3accumulation account respectively for such service. Further,
4such contract shall contain a waiver whereby the annuitant
5waives any potential retirement benefits that could arise
6from the contract and releases the employer and the board
7from any liability for such benefits. Such service shall not 
8be subject to member or participant contributions nor be 
9eligible for qualification as creditable school service or 
10for participation in the plan, mandatory pickup participant 
11contributions or employer defined contributions.

12(2) Nothing in this subsection shall be construed to
13abridge or limit any rights provided under a collective
14bargaining agreement or any rights provided under the act of 
15July 23, 1970 (P.L.563, No.195), known as the Public Employe
16Relations Act.

17(3) For purposes of this subsection, the term
18"extracurricular position" means a contract position filled
19by an annuitant that is separate from the established
20academic course structure, including the position of athletic
21director.

22(c) Subsequent discontinuance of service.--Upon subsequent
23discontinuance of service, such [member] terminating school 
24employee other than a former annuitant who had the effect of his
25frozen present value eliminated in accordance with subsection
26(d) or a former disability annuitant shall be entitled to an
27annuity which is actuarially equivalent to the sum of the
28present value as determined under subsection (a) [and] to which 
29shall be added, if the service after reemployment was as a 
30member of the system, the present value of a maximum single life

1annuity based on years of service credited subsequent to reentry
2in the system and his final average salary computed by reference
3to his compensation as a member of the system or as a member of 
4the State Employees' Retirement System during his entire period
5of school and State service.

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

7(1) An annuitant who returns to school service as an 
8active member of the system and earns three eligibility
9points by performing credited school service following the
10most recent period of receipt of an annuity under this part,
11or an annuitant who enters State service other than a 
12participant in the State Employees' Defined Contribution Plan
13and:

14(i) is a multiple service member; or

15(ii) who elects multiple service membership, and

16earns three eligibility points by performing credited
17State service or credited school service following the
18most recent period of receipt of an annuity under this
19part, and who had the present value of his annuity frozen
20in accordance with subsection (a), shall qualify to have
21the effect of the frozen present value resulting from all
22previous periods of retirement eliminated, provided that
23all payments under Option 4 and annuity payments payable
24during previous periods of retirement plus interest as
25set forth in paragraph (3) shall be returned to the fund
26in the form of an actuarial adjustment to his subsequent
27benefits or in such form as the board may otherwise
28direct.

29(2) Upon subsequent discontinuance of service and the
30filing of an application for an annuity, a former annuitant

1who qualifies to have the effect of a frozen present value
2eliminated under this subsection shall be entitled to receive
3the higher of either:

4(i) an annuity (prior to optional modification)
5calculated as if the freezing of the former annuitant's
6account pursuant to subsection (a) had not occurred,
7adjusted by crediting Class T-C school service as Class
8T-D service as provided for in section 8305(c) (relating
9to classes of service) and further adjusted according to
10paragraph (3), provided that a former annuitant of the
11system or a former annuitant of the State Employees'
12Retirement System who retired under a provision of law
13granting additional service credit if termination of
14school or State service or retirement occurred during a
15specific period of time shall not be permitted to retain
16the additional service credit under the prior law when
17the annuity is computed for his most recent retirement;
18or

19(ii) an annuity (prior to optional modification)
20calculated as if the former annuitant did not qualify to
21have the effect on the frozen present value eliminated,

22unless the former annuitant notifies the board in writing by
23the later of the date the application for annuity is filed or
24the effective date of retirement that the former annuitant
25wishes to receive the lower annuity.

26(3) In addition to any other adjustment to the present
27value of the maximum single life annuity that a member may be
28entitled to receive that occurs as a result of any other
29provision of law, the present value of the maximum single
30life annuity shall be reduced by all amounts paid or payable

1to him during all previous periods of retirement plus
2interest on these amounts until the date of subsequent
3retirement. The interest for each year shall be calculated
4based upon the annual interest rate adopted for that school
5year by the board for the calculation of the normal
6contribution rate pursuant to section 8328(b) (relating to
7actuarial cost method).

8§ 8349. Payment of benefits from the system.

9(a) Annuities.--Any annuity granted under the provisions of
10this part and paid from the fund shall be paid in equal monthly
11installments.

12(b) Death benefits.--If the amount of a death benefit
13payable from the fund to a beneficiary of a member under section
148347 (relating to death benefits) or under the provisions of
15Option 1 of section 8345(a)(1) (relating to member's options) is
16$10,000 or more, such beneficiary may elect to receive payment
17according to one of the following options:

18(1) A lump sum payment.

19(2) An annuity actuarially equivalent to the amount
20payable.

21(3) A lump sum payment and an annuity such that the
22annuity is actuarially equivalent to the amount payable less
23the lump sum payment specified by the beneficiary.

24* * *

25Section 14. Title 24 is amended by adding a chapter to read:

26CHAPTER 84

27SCHOOL EMPLOYEES' DEFINED CONTRIBUTION PLAN

28Sec.

298401. Establishment.

308402. Plan document.

18403. Individual investment accounts.

28404. Participant contributions.

38405. Mandatory participant pickup contributions.

48406. Employer defined contributions.

58407. Eligibility for benefits.

68408. Death benefits.

78409. Vesting.

88410. Termination of distributions.

98411. Agreements with financial institutions and other
10organizations.

118412. Powers and duties of board.

128413. Responsibility for investment loss.

138414. Investments based on participants' investment allocation
14choices.

158415. Expenses.

168416. Election by members to be participants.

178417. Required distributions.

18§ 8401. Establishment.

19(a) School Employees' Defined Contribution Plan.---The plan
20is established in accordance with this part. The board shall
21administer and manage the plan, which shall be a defined
22contribution plan exclusively for the benefit of those school
23employees who participate in the plan and their beneficiaries
24within the meaning of and in conformity with IRC § 401(a). The
25board shall determine the terms and provisions of the plan not
26inconsistent with this part, the Internal Revenue Code of 1986
27and other applicable law and shall provide for the plan's
28administration.

29(b) School Employees Defined Contribution Trust.--The trust
30is established as part of the plan in accordance with this part.

1The trust shall be comprised of the individual investment
2accounts and all assets and moneys in those accounts. The
3members of the board shall be the trustees of the trust, which
4shall be administered exclusively for the benefit of those
5school employees who participate in the plan and their
6beneficiaries within the meaning of and conformity with IRC §
7401(a). The board shall determine the terms and provisions of
8the trust not inconsistent with this part, the Internal Revenue
9Code of 1986 and other applicable law and shall provide for the
10investment and administration of the trust.

11(c) Assets held in trust.--All assets and income in the plan
12that have been or shall be withheld or contributed by the
13participants, the Commonwealth and employers in accordance with
14this part shall be held in trust in any funding vehicle
15permitted by the applicable provisions of IRC for the exclusive
16benefit of the plan's participants and their beneficiaries until
17such time as the funds are distributed to the participants or
18their beneficiaries in accordance with the terms of the plan
19document. The assets of the plan held in trust for the exclusive
20benefit of the participants and their beneficiaries may be used
21for the payment of the fees, costs and expenses related to the
22administration and investment of the plan and the trust.

23(d) Name for transacting business.--By the name of "The
24School Employees' Defined Contribution Plan," all of the
25business of the plan shall be transacted, the trust invested,
26all requisitions for money drawn and payments made, and all of
27its cash and securities and other property shall be held, except
28that, any other law to the contrary notwithstanding, the board
29may establish a nominee registration procedure for the purpose
30of registering securities in order to facilitate the purchase,

1sale or other disposition of securities pursuant to the
2provisions of this part.

3§ 8402. Plan document.

4The board shall set forth the terms and provisions of the
5plan and trust in a document containing the terms and conditions
6of the plan and in a trust declaration that shall be published
7in the Pennsylvania Bulletin. The creation of the document
8containing the terms and conditions of the plan and the trust
9declaration and the establishment of the terms and provisions of
10the plan and the trust need not be promulgated by regulation or
11formal rulemaking and shall not be subject to the act of July
1231, 1968 (P.L.769, No.240), referred to as the Commonwealth
13Documents Law. A reference in this part or other law to the plan
14shall include the plan document unless the context clearly
15indicates otherwise.

16§ 8403. Individual investment accounts.

17The board shall:

18(1) Establish in the trust an individual investment
19account for each participant in the plan. All contributions
20by a participant or an employer for or on behalf of a
21participant shall be credited to the participant's individual
22investment account, together with all interest and investment
23earnings and losses. Investment and administrative fees,
24costs and expenses shall be charged to the participants'
25individual investment accounts.

26(2) Separately track participant contributions,
27including investment gains and losses and employer
28contributions, including investment gains and losses, but all
29interest, investment gains and losses and investment and
30administrative fees, costs and expenses shall be allocated

1proportionately.

2§ 8404. Participant contributions.

3(a) Mandatory contributions.--Each participant shall make
4mandatory pickup participant contributions through payroll
5deductions to his individual investment account equal to 4% of
6compensation for current school service. The employer shall
7cause such contributions for current service to be made and
8deducted from each payroll or on such schedule established by
9the board.

10(b) Voluntary contributions.--A participant may make
11voluntary contributions through payroll deductions or through
12direct trustee to trustee transfers or through transfers of
13money received in an eligible rollover into the trust to the
14extent allowed by IRC § 402. Such rollovers shall be made in a
15form and manner as determined by the board, shall be credited to
16the participant's individual investment account and shall be
17separately accounted for by the board.

18(c) Limitations on contributions.--No contributions shall be
19allowed that would cause a violation of the limitations related
20to contributions applicable to governmental plans contained in
21IRC § 415 or in other provisions of law. In the event that any
22disallowed contributions are made, any participant contributions
23in excess of the limitations and investment earnings thereon
24shall be refunded to the participant by the board.

25§ 8405. Mandatory pickup participant contributions.

26(a) Treatment for purposes of IRC § 414(h).--All
27contributions to the trust required to be made under section
288404(a) (relating to participant contributions) with respect to
29current school service rendered by an active participant shall
30be picked up by the employer and shall be treated as the

1employer's contribution for purposes of IRC § 414(h). After the
2effective date of this section, an employer employing a
3participant in the plan shall pick up the required mandatory
4participant contributions by a reduction in the compensation of
5the participant.

6(b) Treatment for other purposes.--For all other purposes
7under this part and otherwise, such mandatory pickup participant
8contributions shall be treated as contributions made by a
9participant in the same manner and to the same extent as if the
10contributions were made directly by the participant and not
11picked up.

12§ 8406. Employer defined contributions.

13(a) Contributions for current service.--The employer of a
14participant shall make employer defined contributions for
15current service of each active participant, which shall be
16credited to the active participant's individual investment
17account. Employer defined contributions must be recorded and
18accounted for separately from participant contributions.

19(b) Contributions resulting from participants reemployed
20from USERRA leave.--When a school employee reemployed from
21USERRA leave makes the mandatory pickup participant
22contributions permitted to be made for the USERRA leave, the
23employer by whom the school employee is employed at the time the
24participant contributions are made shall make whatever employer
25defined contributions would have been made under this section
26had the employee making the participant contributions after
27being reemployed from USERRA leave continued to be employed in
28the employee's school position instead of performing USERRA
29leave. Such employer defined contributions shall be placed in
30the participant's individual investment account as otherwise

1provided by this part.

2(c) Limitations on contributions.--No contributions shall be
3allowed that would cause a violation of the limitations related
4to contributions applicable to governmental plans contained in
5IRC § 415 or in other provisions of law. In the event that any
6disallowed contributions are made, any employer defined
7contributions in excess of the limitations and investment
8earnings thereon shall be refunded to the employer by the board.

9§ 8407. Eligibility for benefits.

10(a) General.--A participant who terminates school service
11shall be eligible to withdraw the vested accumulated total
12defined contributions standing to his credit in his individual
13investment account or such lesser amount as the participant may
14request. Payment shall be made in a lump sum unless the board
15has established other forms of distribution in the plan
16document. A participant who withdraws the vested accumulated
17total defined contributions shall no longer be a participant in
18the plan, notwithstanding that the participant may have
19contracted to receive an annuity or other form of payment from a
20provider retained by the board for such purposes.

21(b) Required distributions.--All payments pursuant to this
22section shall start and be made in compliance with the minimum
23distribution requirements and incidental death benefit rules of
24IRC § 401(a)(9). The board is authorized to take whatever
25actions and make whatever distributions it may determine are
26necessary to comply with such requirements.

27(c) Spousal consent not required.--A participant who is
28married may receive a lump sum distribution or other
29distribution directly from the board without the consent of the
30spouse.

1(d) Combined service.--A participant who is a combined
2service employee must be terminated from all positions that
3result in either membership in the system or participation in
4the plan to be eligible to receive a distribution.

5(e) Prohibition.--Loans or other distributions from the plan
6to school employees who have not terminated school service are
7not permitted.

8(f) Small individual investment accounts.--A participant who
9terminates school service and whose vested accumulated total
10defined contributions are below the threshold established by law
11as of the date of termination of service may be paid the vested
12accumulated total defined contributions in a lump sum as
13provided in IRC § 401(a)(31).

14§ 8408. Death benefits.

15(a) General.--In the event of the death of an active
16participant or inactive participant, the board shall pay to the
17participant's beneficiary the vested balance in the
18participant's individual investment account in a lump sum or in
19such other manner as the board may establish in the plan
20document.

21(b) Lump sum distribution.--In the event of the death of a
22participant receiving distributions, the board shall pay to the
23participant's beneficiary the vested balance in the
24participant's individual investment account in a lump sum or in
25such other manner as the board may establish in the plan
26document or, if the board has established alternative methods of
27distribution in the plan document under which the participant
28was receiving distributions, to the participant's beneficiary or
29successor payee as provided in the plan document.

30(c) Contracts.--The board may contract with financial

1institutions, insurance companies or other types of third-party
2providers to allow participants who receive a lump sum
3distribution to receive payments and death benefits in a form
4and manner as provided by the contract.

5§ 8409. Vesting.

6Subject to the forfeiture and attachment provisions of
7section 8533 (relating to taxation, attachment and assignment of
8funds) or otherwise as provided by law, a participant shall be
9100% vested with respect to all mandatory pickup participant
10contributions, voluntary contributions and employer defined
11contributions paid by or on behalf of the participant to the
12trust plus interest and earnings on the participant and employer
13contributions but minus investment fees and administrative
14charges.

15§ 8410. Termination of distributions.

16(a) Return to school service.--A participant receiving
17distributions or an inactive participant who returns to school
18service shall cease receiving distributions and shall not be
19eligible to receive distributions until the participant
20subsequently terminates school service, without regard to
21whether the participant is a mandatory, optional or prohibited
22member of the system or participant in the plan.

23(b) Return of benefits paid during USERRA leave.--In the
24event that a former school employee is reemployed from USERRA
25leave who had received any payments or annuity from the plan
26during the USERRA leave, the employee shall return to the board
27the amount so received plus interest as provided in the plan
28document. The amount payable shall be certified in each case by
29the board in accordance with methods approved by the actuary and
30shall be paid in a lump sum within 30 days or in the case of an

1active participant may be amortized with interest as provided in
2the plan document through salary deductions to the trust in
3amounts agreed upon by the active participant and the board, but
4not longer than a period that starts with the date of
5reemployment and continuing for up to three times the length of
6the participant's immediate past period of USERRA leave, with
7the repayment period not to exceed five years.

8§ 8411. Agreements with financial institutions and other
9organizations.

10To establish and administer the plan, the board may enter
11into written agreements with one or more financial institutions
12or other organizations relating to the plan's administration and
13investment of funds held pursuant to the plan.

14§ 8412. Powers and duties of board.

15The board shall have the following powers and duties to
16establish the plan and trust and to administer the provisions of
17this part:

18(1) The board may commingle or pool assets with the
19assets of other persons or entities.

20(2) The board shall pay all administrative fees, costs
21and expenses of managing, investing, and administering the
22plan, the trust and the individual investment accounts from
23the balance of such individual investment accounts except as
24may be provided otherwise by law.

25(3) The board may establish investment guidelines and
26limits on the types of investments that participants can
27make, consistent with the board's fiduciary obligations.

28(4) The board shall at all times have the power to
29change the terms of the plan as may be necessary to maintain
30the tax-qualified status of the plan.

1(5) The board may establish a process for election to
2participate in the plan by those school employees for whom
3participation is not mandatory.

4(6) The board may perform an annual review of any
5qualified fund manager for the purpose of assuring it
6continues to meet all standards and criteria established.

7(7) The board may allow for eligible rollovers and
8direct trustee to trustee transfers into the trust from
9qualified plans of other employers, regardless of whether the
10employers are private employers or public employers.

11(8) The board may allow a former participant to maintain
12the participant's individual investment account within the
13plan.

14(9) The board shall administer the plan in compliance
15with the qualification and other rules of IRC.

16(10) The board may establish procedures to provide for
17the lawful payment of benefits.

18(11) The board shall determine what constitutes a
19termination of school service.

20(12) The board may establish procedures for
21distributions of small accounts as required or permitted by
22IRC.

23(13) The board shall have the power to establish
24procedures in the plan document or to promulgate rules and
25regulations as it deems necessary for the administration and
26management of the plan, including, but not limited to,
27establishing:

28(i) Procedures whereby eligible participants may
29change voluntary contribution amounts or their investment
30choices on a periodic basis or make other elections

1regarding their participation in the plan.

2(ii) Procedures for deducting mandatory pick up
3participant contributions and voluntary contributions
4from a participant's compensation.

5(iii) Procedures for rollovers and trustee-to-
6trustee transfers allowed under IRC and permitted by the
7board as part of the plan.

8(iv) Standards and criteria for disclosing and
9providing options to eligible individuals regarding
10investments of amounts deferred under the plan, provided
11that one of the available options must serve as the
12default option for participants who do not make a timely
13election.

14(v) Standards and criteria for disclosing to the
15participants the anticipated and actual income
16attributable to amounts invested, property rights and all
17fees, costs and expenses to be made against amounts
18deferred to cover the costs and expenses of administering
19and managing the plan or trust.

20(vi) Procedures, standards and criteria for the
21making of distributions from the plan upon termination
22from employment or death or in other circumstances
23consistent with the purpose of the plan.

24(14) The board may waive any reporting or information
25requirement contained in this part if the board determines
26that the information is not needed for the administration of
27the plan.

28(15) The board may contract any services and duties in
29lieu of staff except final adjudications and as prohibited by
30law. Any duties or responsibilities of the board not required

1by law to be performed by the board can be delegated to a
2third-party provider subject to appeal to the board.

3(16) The board may provide that any duties of the
4employer or information provided by the participant to the
5employer can be performed or received directly by the board.

6(17) The provisions and restrictions of the act of July
72, 2010 (P.L.266, No.44), known as Protecting Pennsylvania's
8Investments Act, shall not apply to the plan or trust or the
9investments thereof, but the board is authorized to offer to
10the plan participants investment vehicles that would be
11allowed under the Protecting Pennsylvania's Investments Act.
12The board shall also to the extent commercially available
13provide that one option for participants will have an annuity
14investment feature.

15§ 8413. Responsibility for investment loss.

16Neither the Commonwealth, the board, an employer nor any
17school entity or other political subdivision shall be
18responsible for any investment loss incurred under the plan or
19for the failure of any investment to earn any specific or
20expected return, or to earn as much as any other investment
21opportunity, whether or not such other opportunity was offered
22to participants in the plan.

23§ 8414. Investments based on participants' investment
24allocation choices.

25(a) Vesting.--All contributions, interest and investment
26earnings shall be 100% vested and shall be invested based on the
27participant's investment allocation choices. Each participant
28shall be credited individually with the amount of contributions,
29interest and investment earnings. All investment allocation
30choices shall be credited proportionately between participant

1contributions and employer defined contributions.

2(b) Investment.--Investment of contributions by any
3corporation, institution, insurance company or custodial bank or
4other entity that the board has approved shall not be
5unreasonably delayed, and in no case shall the investment of
6contributions be delayed more than 30 days from the date of
7payroll deductions or the date voluntary contributions are made
8to the date that funds are invested. Any interest earned on the
9funds pending investment shall be allocated to the employers and
10credited to the individual investment accounts of participants
11who are then participating in the plan unless the interest is
12used to defray administrative costs and fees that would
13otherwise be required to be borne by participants who are then
14participating in the program.

15§ 8415. Expenses.

16All expenses, fees and cost of administering the plan and
17investing the assets of the trust shall be borne by the
18participants and paid from assessments against the balances of
19the individual investment accounts as established by the board
20except as may be provided otherwise by law.

21§ 8416. Election by members to be participants.

22(a) General rule.--Any school employee who is an active
23member or inactive member on or after July 1, 2015, and who is
24employed in a position that would otherwise be eligible for
25participation in the plan may elect to become a participant in
26the plan.

27(b) Time for making election.--An eligible school employee
28may elect to become a participant and a combined service
29employee at any time before termination of school service by
30filing a written election with the board.

1(c) Effect of election.--An election to become a participant
2shall be irrevocable. Participation shall be effective at the
3beginning of the next pay period starting after the election is
4filed with the board. A member who elects to become a
5participant shall remain a participant for all future school
6service. Any prior school or nonschool service credited in the
7system shall remain in the class of service in which it is
8credited on the effective date of participation. A combined
9service employee shall not be eligible to receive an annuity
10from the system or a withdrawal of accumulated deductions until
11the employee has terminated school service. A participant shall
12not be entitled to purchase any previous school service or
13creditable nonschool service. The eligibility of a combined
14service employee for an annuity from the system and, if
15eligible, the amount of such annuity shall be as determined
16under this part.

17§ 8417. Required distributions.

18(a) Compliance.--All payments pursuant to this chapter shall
19start and be made in compliance with the minimum distribution
20requirements and incidental death benefit rules of IRC § 401(a).

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

22(1) (i) Except as provided under subparagraph (ii) and
23notwithstanding any provision of this part, a
24contribution or benefit related to the plan may not
25exceed a limitation under IRC § 415 with respect to
26governmental plans that are in effect on the date the
27contribution or benefit payment takes effect.

28(ii) An increase in a limitation under IRC § 415
29shall apply to the participants on or after the effective
30date of this section.

1(iii) For the purposes of this paragraph, the term
2"government plans" shall have the same meaning as in IRC
3§ 414(d).

4(2) (i) Except as provided under subparagraph (ii), an
5amendment of this part on or after the effective date of
6the addition of subsection (b) to this section that
7increases contributions or benefits for active
8participants, inactive participants or participants
9receiving distributions may not be deemed to provide for
10a contribution or benefit in excess of a limitation,
11adjusted on or after the effective date of the addition
12of subsection (b) to this section, under IRC §415 unless
13specifically provided for by legislation.

14(ii) Notwithstanding subparagraph (i), an increase
15in benefits on or after the effective date of the
16addition of subsection (b) to this section for a
17participant in the plan shall be authorized and apply to
18the fullest extent allowed by law.

19Section 15. Section 8501(a), (c) and (d) of Title 24 are
20amended to read:

21§ 8501. Public School Employees' Retirement Board.

22(a) Status and membership.--The board shall be an
23independent administrative board and shall consist of 15
24members: the Secretary of Education, ex officio; the State
25Treasurer, ex officio; two Senators; two members of the House of
26Representatives; the executive secretary of the Pennsylvania
27School Boards Association, ex officio; two to be appointed by
28the Governor, at least one of whom shall not be a school
29employee or an officer or employee of the State; three to be
30elected by the active professional members of the system and
 

1active professional participants of the plan from among their
2number; one to be elected by annuitants or a participant of the 
3plan who has terminated school service and is receiving or is 
4eligible to receive distributions from among their number; one
5to be elected by the active nonprofessional members of the
6system or active nonprofessional participants of the plan from
7among their number; and one to be elected by members of
8Pennsylvania public school boards from among their number. The
9appointments made by the Governor shall be confirmed by the
10Senate and each election shall be conducted in a manner approved
11by the board. The terms of the appointed and nonlegislative
12elected members shall be three years. The members from the
13Senate shall be appointed by the President pro tempore of the
14Senate and shall consist of one member from the majority and one
15member from the minority. The members from the House of
16Representatives shall be appointed by the Speaker of the House
17of Representatives and shall consist of one member from the
18majority and one member from the minority. The legislative
19members shall serve on the board for the duration of their
20legislative terms and shall continue to serve until 30 days
21after the convening of the next regular session of the General
22Assembly after the expiration of their respective legislative
23terms or until a successor is appointed for the new term,
24whichever occurs first. The chairman of the board shall be
25elected by the board members. Each ex officio member of the
26board and each legislative member of the board may appoint a
27duly authorized designee to act in his stead. In the event that 
28a board member, who is designated as an active participant or as 
29the participant in the plan who is receiving or is eligible to 
30receive distributions, receives a total distribution of the
 

1board member's interest in the plan, that board member may 
2continue to serve on the board for the remainder of the term.

3* * *

4(c) Oath of office.--Each member of the board shall take an
5oath of office that he will, so far as it devolves upon him,
6diligently and honestly administer the affairs of said board, 
7the system and the plan and that he will not knowingly violate
8or willfully permit to be violated any of the provisions of law
9applicable to this part. Such oath shall be subscribed by the
10member making it and certified by the officer before whom it is
11taken and shall be immediately filed in the office of the
12Secretary of the Commonwealth.

13(d) Compensation and expenses.--The members of the board who
14are members of the system or participants in the plan shall
15serve without compensation. Members of the board who are members
16of the system or participants in the plan and who are employed
17by a governmental entity shall not suffer loss of salary or
18wages through serving on the board. The board, on request of the
19employer of any member of the board who is an active
20professional or nonprofessional member of the system or active 
21professional or nonprofessional participant in the plan, may
22reimburse such employer for the salary or wages of the member,
23or for the cost of employing a substitute for such member or 
24participant, while the member or participant is necessarily
25absent from employment to execute the duties of the board. The
26members of the board who are not members of either the school
27system or the State Employees' Retirement System may be paid
28$100 per day when attending meetings and all board members shall
29be reimbursed for any necessary expenses. However, when the
30duties of the board as mandated are not executed, no

1compensation or reimbursement for expenses of board members
2shall be paid or payable during the period in which such duties
3are not executed.

4* * *

5Section 16. Section 8502(b), (c), (e), (h), (i), (j), (k),
6(n) and (o) of Title 24 are amended and the section is amended
7by adding a subsection to read:

8§ 8502. Administrative duties of board.

9* * *

10(b) Professional personnel.--The board shall contract for
11the services of a chief medical examiner, an actuary, investment
12advisors, counselors, an investment coordinator, and such other
13professional personnel as it deems advisable. The board may 
14utilize the same individuals and firms contracted under this 
15subsection for both the system and the plan but shall allocate 
16the fees, costs and expenses incurred under this subsection 
17between the system and the plan as appropriate.

18(c) Expenses.--The board shall, through the Governor, submit
19to the General Assembly annually a budget covering the
20administrative expenses of [this part] the system and a separate 
21budget covering the administrative expenses of the plan. Such
22expenses of the system as approved by the General Assembly in an
23appropriation bill shall be paid from investment earnings of the
24fund. Such expenses of the plan as approved by the General 
25Assembly shall be paid from interest, pursuant to section 
268414(b) (relating to investments based on participant investment 
27allocation choices) or assessments on the balances of the 
28participants' individual investment accounts except as may be 
29provided otherwise by law. Concurrently with its administrative
30budget, the board shall also submit to the General Assembly

1annually a list of proposed expenditures which the board intends
2to pay through the use of directed commissions, together with a
3list of the actual expenditures from the past year actually paid
4by the board through the use of directed commissions. All such
5directed commission expenditures shall be made by the board for
6the exclusive benefit of the system and its members and for the 
7exclusive benefit of the plan and its participants, 
8respectively.

9* * *

10(e) Records.--

11(1) The board shall keep a record of all its proceedings
12which shall be [open to inspection by] accessible to the
13public, except as otherwise provided in this part or by other
14law.

15(2) Any record, material or data received, prepared,
16used or retained by the board or its employees, investment
17professionals or agents relating to an investment shall not
18constitute a public record subject to public inspection under
19the act of [June 21, 1957 (P.L.390, No.212), referred to]
20February 14, 2008 (P.L.6, No.3), known as the Right-to-Know
21Law, if, in the reasonable judgment of the board, the
22[inspection] access would:

23(i) in the case of an alternative investment or
24alternative investment vehicle involve the release of
25sensitive investment or financial information relating to
26the alternative investment or alternative investment
27vehicle which the fund or trust was able to obtain only
28upon agreeing to maintain its confidentiality;

29(ii) cause substantial competitive harm to the
30person from whom sensitive investment or financial

1information relating to the investment was received; or

2(iii) have a substantial detrimental impact on the
3value of an investment to be acquired, held or disposed
4of by the fund or trust, or would cause a breach of the
5standard of care or fiduciary duty set forth in this
6part.

7(3) (i) The sensitive investment or financial
8information excluded from [inspection] access under
9paragraph (2)(i), to the extent not otherwise excluded
10from [inspection] access, shall constitute a public
11record subject to public [inspection] access under the
12Right-to-Know Law once the board is no longer required by
13its agreement to maintain confidentiality.

14(ii) The sensitive investment or financial
15information excluded from inspection under paragraph (2)
16(ii), to the extent not otherwise excluded from
17[inspection] access, shall constitute a public record
18subject to public [inspection] access under the Right-to-
19Know Law once:

20(A) the [inspection] access no longer causes
21substantial competitive harm to the person from whom
22the information was received; or

23(B) the entity in which the investment was made
24is liquidated;

25whichever is later.

26(iii) The sensitive investment or financial
27information excluded from [inspection] access under
28paragraph (2)(iii), to the extent not otherwise excluded
29from [inspection] access, shall constitute a public
30record subject to public [inspection] access under the

1Right-to-Know Law once:

2(A) the [inspection] access no longer has a
3substantial detrimental impact on the value of an
4investment of the fund or trust and would not cause a
5breach of the standard of care or fiduciary duty set
6forth in this part; or

7(B) the entity in which the investment was made
8is liquidated;

9whichever is later.

10(4) Except for the provisions of paragraph (3), nothing
11in this subsection shall be construed to designate any
12record, material or data received, prepared, used or retained
13by the board or its employees, investment professionals or
14agents relating to an investment as a public record subject
15to public [inspection] access under the Right-to-Know Law.

16(5) Notwithstanding the provisions of this subsection,
17the following information regarding an alternative investment
18vehicle shall be subject to public [inspection] access under
19the Right-to-Know Law:

20(i) The name, address and vintage year of the
21alternative investment vehicle.

22(ii) The identity of the manager of the alternative
23investment vehicle.

24(iii) The dollar amount of the commitment made by
25the system or plan to the alternative investment vehicle.

26(iv) The dollar amount of cash contributions made by
27the system or plan to the alternative investment vehicle
28since inception.

29(v) The dollar amount of cash distributions received
30by the system or plan from the alternative investment

1vehicle since inception.

2(vi) The net internal rate of return of the
3alternative investment vehicle since inception, provided
4that the system or plan shall not be required to disclose
5the net internal rate of return under circumstances in
6which, because of the limited number of portfolio assets
7remaining in the alternative investment vehicle, the
8disclosure could reveal the values of specifically
9identifiable remaining portfolio assets to the detriment
10of the alternative investment.

11(vii) The aggregate value of the remaining portfolio
12assets attributable to the system's or plan's investment
13in the alternative investment vehicle, provided that the
14system or plan shall not be required to disclose the
15value under circumstances in which, because of the
16limited number of portfolio assets remaining in the
17alternative investment vehicle, the disclosure could
18reveal the values of specifically identifiable remaining
19portfolio assets to the detriment of the alternative
20investment.

21(viii) The dollar amount of total management fees
22and costs paid to the alternative investment vehicle by
23the system or plan on an annual fiscal year-end basis.

24(6) Any record, material or data received, prepared,
25used or retained by the board or its employees or agents
26relating to a participant shall not constitute a public
27record subject to public access under the Right-to-Know Law,
28if, in the reasonable judgment of the board, the access would
29disclose any of the following:

30(i) The existence, date, amount and any other

1information pertaining to the voluntary contributions,
2including rollover contributions and trustee-to-trustee
3transfers, of any participant.

4(ii) The investment option selections of any
5participant.

6(iii) The balance of a participant's individual
7investment account, including the amount distributed to
8the participant, and any investment gains or losses, or
9rates of return.

10(iv) The identity of a participant's designated
11beneficiary, successor payee or alternate payee.

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

13(7) Nothing in this subsection shall be construed to
14designate any record, material or data received, prepared,
15used or retained by the board or its employees or agents
16relating to the contributions, investments, account value or
17benefits payable to or on account of a participant as a
18public record subject to public access under the Right-to-
19Know Law.

20* * *

21(h) Regulations and procedures.--The board shall, with the
22advice of the Attorney General and the actuary, adopt and
23promulgate rules and regulations for the uniform administration
24of the system. The actuary shall approve in writing all
25computational procedures used in the calculation of
26contributions and benefits pertaining to the system, and the
27board shall by resolution adopt such computational procedures,
28prior to their application by the board. Such rules, regulations
29and computational procedures as so adopted from time to time and
30as in force and effect at any time, together with such tables as

1are adopted and published pursuant to subsection (j) as
2necessary for the calculation of annuities and other benefits,
3shall be as effective as if fully set forth in this part. Any
4actuarial assumption specified in or underlying any such rule,
5regulation or computational procedure and utilized as a basis
6for determining any benefit shall be applied in a uniform
7manner.

8(i) Data.--The board shall keep in convenient form such data
9as are stipulated by the actuary in order that an annual
10actuarial valuation of the various accounts of the fund can be
11completed within six months of the close of each fiscal year.
12The board shall have final authority over the means by which
13data is collected, maintained and stored and in so doing shall
14protect the rights of its membership as to privacy and
15confidentiality.

16(j) Actuarial investigation and valuation.--The board shall
17have the actuary make an annual valuation of the various
18accounts of the fund within six months of the close of each
19fiscal year. In the fiscal year 1975 and in every fifth year
20thereafter, the board shall have the actuary conduct an
21actuarial investigation and evaluation of the system based on
22data including the mortality, service, and compensation
23experience provided by the board annually during the preceding
24five years concerning the members and beneficiaries of the 
25system. The board shall by resolution adopt such tables as are
26necessary for the actuarial valuation of the fund and the trust
27and calculation of contributions, annuities, and other benefits
28based on the reports and recommendations of the actuary. Within
2930 days of their adoption, the secretary of the board shall
30cause those tables which relate to the calculation of annuities

1and other benefits to be published in the Pennsylvania Bulletin
2in accordance with the provisions of 45 Pa.C.S. § 725(a)
3(relating to additional contents of Pennsylvania Bulletin) and,
4unless the board specifies therein a later effective date, such
5tables shall become effective on such publication. The board
6shall include a report on the significant facts, recommendations
7and data developed in each five-year actuarial investigation and
8evaluation of the system in the annual financial statement
9published pursuant to the requirements of subsection (n) for the
10fiscal year in which such investigation and evaluation were
11concluded.

12(k) Certification of employer contributions to fund.--The
13board shall, each year in addition to the itemized budget
14required under section 8330 (relating to appropriations by the
15Commonwealth), certify to the employers and the Commonwealth the
16employer contribution rate expressed as a percentage of members'
17payroll necessary for the funding of prospective annuities for
18active members and the annuities of annuitants, and certify the
19rates and amounts of the normal contributions as determined
20pursuant to section 8328(b) (relating to actuarial cost method),
21accrued liability contributions as determined pursuant to
22section 8328(c), supplemental annuities contribution rate as
23determined pursuant to section 8328(d), the experience
24adjustment factor as determined pursuant to section 8328(e),
25premium assistance contributions as determined pursuant to
26section 8328(f), the costs added by legislation as determined 
27pursuant to section 8328(i), the actuarial required contribution 
28rate as determined pursuant to section 8328(i), the collared 
29contribution rate as determined pursuant to section 8328(g), the 
30final contribution rate as determined pursuant to section
 

18328(h) and the shared-risk contribution rate as determined 
2under section 8321(b) (relating to regular member contributions 
3for current service), which shall be paid to the fund and
4credited to the appropriate accounts. These certifications shall
5be regarded as final and not subject to modification by the
6Secretary of the Budget.

7* * *

8(n) Annual financial statement.--The board shall prepare and
9have published, on or before January 1 of each year, [a
10financial statement] financial statements as of the fiscal year
11ending June 30 of the previous year showing the condition of the
12fund, the trust and the various accounts, including, but not
13limited to, the board's accrual and expenditure of directed
14commissions, and setting forth such other facts, recommendations
15and data as may be of use in the advancement of knowledge
16concerning annuities and other benefits provided by this part.
17The board shall submit said financial [statement] statements to
18the Governor and shall make copies available to the employers
19for the use of the school employees and the public.

20(o) Independent [audit] audits.--The board shall provide for
21[an annual audit] annual audits of the system and the plan by an
22independent certified public accounting firm, which [audit]
23audits shall include the board's accrual and expenditure of
24directed commissions. The board may use the same independent 
25certified public accountant for the audits of both the system 
26and the plan.

27* * *

28(q) Participant and employer contributions to trust.--The
29board shall, each year in addition to any fees and itemized
30budget required under section 8330, certify, as a percentage of

1each participant's compensation, the employer defined
2contributions, which shall be paid to the trust and credited to
3each participant's individual investment account. These
4certifications shall be regarded as final and not subject to
5modification by the Secretary of the Budget. The board shall
6cause all mandatory pickup participant contributions made on
7behalf of a participant and all voluntary contributions made by
8a participant to be credited to the participant's individual
9investment account.

10Section 17. Section 8502.2(a) of Title 24 is amended to
11read:

12§ 8502.2. Health insurance.

13(a) Authority.--The board may sponsor a participant-funded
14group health insurance program for annuitants, participants 
15receiving distributions, spouses of annuitants and participants 
16receiving distributions, survivor annuitants and their
17dependents. The board may promulgate regulations regarding the
18prudent and efficient operation of the program, including, but
19not limited to:

20(1) Establishment of an annual budget and disbursements
21in accordance with the budget.

22(2) Determination of the benefits structure.

23(3) Determination of enrollment procedures.

24(4) Establishment of premium rates sufficient to fully
25fund the program, including administrative expenses.

26(5) Contracting for goods, equipment, services,
27consultants and other professional personnel as needed to
28operate the program.

29* * *

30Section 18. Section 8503 heading and (a) of Title 24 are

1amended and the section is amended by adding a subsection to
2read:

3§ 8503. Duties of board to advise and report to employers [and
4members], members and participants.

5(a) Manual of regulations.--The board shall, with the advice
6of the Attorney General and the actuary, prepare, within 90 days
7of the effective date of this part, a manual incorporating rules
8and regulations consistent with the provisions of this part for
9the employers who shall make information contained therein
10available to the general membership. The board shall thereafter
11advise the employers within 90 days of any changes in such rules
12and regulations due to changes in the law or due to changes in
13administrative policies. As soon as practicable after the
14commissioner's publication with respect thereto, the board shall
15also advise the employers as to any cost-of-living adjustment
16for the succeeding calendar year in the amount of the limitation
17under IRC § 401(a)(17) and the dollar amounts of the limitations
18under IRC § 415[(b)].

19* * *

20(b.1) Participant status statements.--The board shall have
21furnished annually to each participant on or before December 31,
22and more frequently as the board may agree or as required by
23law, a statement showing the accumulated total defined
24contributions credited to the participant's individual
25investment account, the nature and type of investments and the
26investment allocation of future contributions as of June 30 of
27the current year and requesting the participant to make any
28necessary corrections or revision regarding his designated
29beneficiary.

30* * *

1Section 19. Section 8504(c) of Title 24 is amended to read:

2§ 8504. Duties of board to report to State Employees'
3Retirement Board.

4* * *

5(c) Applications for benefits for State employees.--Upon
6receipt of notification and the required data from the State
7Employees' Retirement Board that a former school employee who
8elected multiple service has applied for a State employee's
9retirement benefit or, in the event of his death, his legally
10constituted representative has applied for such benefit, the
11board shall:

12(1) Certify to the State Employees' Retirement Board:

13(i) The salary history as a member of the Public
14School Employees' Retirement System and the final average
15salary as calculated on the basis of the compensation
16received as a State and school employee.

17(ii) The annuity or benefit which the member or his
18beneficiary is entitled to receive under this part and
19modified according to the option selected.

20(2) Transfer to the State Employees' Retirement Fund the
21accumulated deductions standing to such member's credit and
22the actuarial reserve required on account of the member's
23years of credited service in the school system and his final
24average salary determined on the basis of his compensation as 
25a member in both systems.

26Section 20. Sections 8505 heading, (b), (h), and (i),
278506(a), (d), (e), (g) and (h) and 8507 heading, (a), (e) and
28(f) of Title 24 are amended and the sections are amended by
29adding subsections to read:

30§ 8505. Duties of board regarding applications and elections of

1members and participants.

2* * *

3(b) State employees electing multiple service status.--Upon
4receipt of notification from the State Employees' Retirement
5Board that a former school employee has become an active member
6in the State Employees' Retirement System and has elected to
7become a member with multiple service status, the board shall:

8(1) In case of a member who is receiving an annuity from
9the system:

10(i) Discontinue payments, transfer the present value
11of the member's annuity at the time of entering State
12service, plus the amount withdrawn in a lump sum payment,
13on or after the date of entering State service, pursuant
14to section 8345 (relating to member's options), with
15statutory interest to date of transfer, minus the amount
16to be returned to the board on account of return to
17service that the board has determined is to be credited
18in the members' savings account, from the annuity reserve
19account to the members' savings account and resume
20crediting of statutory interest on the amount restored to
21his credit.

22(ii) Transfer the balance of the present value of
23the total annuity, minus the amount to be returned to the
24board on account of return to service that the board has
25determined is to be credited in the State accumulation
26account, from the annuity reserve account to the State
27accumulation account.

28(iii) Certify to the member the amount of lump sum
29and annuity payments with statutory interest the member
30is to return to the board and, of those amounts, which

1amount shall be credited to the members' savings account
2and credited with statutory interest as such payments are
3returned and which amount shall be credited to the State
4accumulation account.

5(2) In case of a member who is not receiving an annuity
6from the system and who has not withdrawn his accumulated
7deductions, continue or resume the crediting of statutory
8interest on his accumulated deductions.

9(3) In case of a member who is not receiving an annuity
10from the system and his accumulated deductions were
11withdrawn, certify to the member the accumulated deductions
12as they would have been at the time of his separation had he
13been a full coverage member together with statutory interest
14for all periods of subsequent State service eligible for 
15membership in the State Employees' Retirement System and
16school service eligible for active membership in the system
17to the date of repayment. Such amount shall be restored by
18him and shall be credited with statutory interest as such
19payments are restored.

20* * *

21(e.1) Certification to participants terminating service.--
22The board shall certify to a participant, within one year of
23termination of service of such participant, in writing of the
24vested accumulated total defined contributions credited to the
25participant's individual investment account as of the date
26stated in the writing, any notices regarding rollover or other
27matters required by IRC or other law, the obligation of the
28participant to commence distributions from the plan by the
29participant's required beginning date, and the ability to
30receive all or part of the vested balance in the participant's

1individual investment account in a lump sum or in such other
2form as the board may authorize or as is required by law.

3* * *

4(f.1) Notification to inactive participants approaching
5required beginning date.--The board shall notify each inactive
6participant who has terminated school service and had not
7commenced distribution by 90 days before the participant's
8required beginning date, in writing that the inactive
9participant has an obligation to commence distributions by his
10required beginning date in a form and manner required by IRC §
11401(a)(9) and other applicable provisions of IRC.

12* * *

13(g.1) Initial payment to a participant.--The board shall
14make the initial payment to a participant who has applied for a
15distribution within 60 days of the filing of his application.

16(h) Death benefits.--Upon receipt of notification of the
17death of a member, an active participant, an inactive 
18participant or a former participant performing USERRA leave, the
19board shall notify the designated beneficiary or survivor
20annuitant of the benefits to which he is entitled and shall make
21the first payment to the beneficiary under the plan elected by
22the beneficiary within 60 days of receipt of certification of
23death and other necessary data. If no beneficiary designation is
24in effect at the date of the member's or participant's death or
25no notice has been filed with the board to pay the amount of
26such benefits to the member's or participant's estate, the board
27is authorized to pay such benefits to the executor,
28administrator, surviving spouse or next-of-kin of the deceased
29member or participant, and payment pursuant hereto shall fully
30discharge the fund or plan from any further liability to make

1payment of such benefits to any other person. If the surviving
2spouse or next-of-kin of the deceased member or participant
3cannot be found for the purpose of paying such benefits for a
4period of seven years from the date of death of the member or 
5participant, then such benefits shall be escheated to the
6Commonwealth for the benefit of the fund or plan.

7(i) Medical insurance coverage.--Upon receipt of
8notification from an insurance carrier offering a health
9insurance program approved by the board that an annuitant or 
10terminated participant who has attained age 65 has elected
11medical, major medical, and hospitalization insurance coverage
12or notification that annuitants of the system with less than 24
131/2 eligibility points (other than disability annuitants of the 
14system), spouses of annuitants and survivor annuitants eligible
15to elect to enroll in the approved health insurance program have
16elected participation in such health insurance program, the
17board may deduct from the annuity payments the appropriate
18annual charges in equal monthly installments. Such deductions
19shall be transmitted to the insurance carrier.

20* * *

21§ 8506. Duties of employers.

22(a) Status of members and participants.--The employer shall,
23each month, notify the board in a manner prescribed by the board
24of the salary changes effective during the past month, the date
25of all removals from the payroll, and the type of leave of any
26member or participant who has been removed from the payroll for
27any time during that month, and:

28(1) if the removal is due to leave without pay, the
29employer shall furnish the board with the date of beginning
30leave, the date of return to service, and the reason for

1leave;

2(2) if the removal is due to a transfer to another
3employer, the former employer shall furnish such employer and
4the board with a complete school service record, including
5credited or creditable nonschool service; or

6(3) if the removal is due to termination of school
7service, the employer shall furnish the board with a complete
8school service record including credited or creditable
9nonschool service and in the case of death of the member the
10employer shall so notify the board.

11* * *

12(c.1) Participant and employer defined contributions.--The 
13employer shall cause the mandatory pickup participant 
14contributions on behalf of a participant to be made and shall 
15cause to be deducted any voluntary contributions authorized by a 
16participant. The employer shall also cause the employer defined 
17contributions on behalf of a participant to be made. The 
18employer shall notify the board at times and in a manner 
19prescribed by the board of the compensation of any participant 
20to whom the limitation under IRC § 401(a)(17) either applies or 
21is expected to apply and shall cause such participant's 
22contributions to be deducted from payroll to cease at the 
23limitation under IRC § 401(a)(17) on the payroll date if and 
24when such limit shall be reached. The employer shall certify to 
25the board the amounts picked up and deducted and the employer 
26defined contributions being made and shall send the total amount 
27picked up, deducted and contributed together with a duplicate of 
28such voucher to the secretary of the board every pay period or 
29on such schedule as established by the board.

30(d) New employees subject to mandatory membership or
 

1participation.--Upon the assumption of duties of each new school
2employee whose membership in the system or plan is mandatory,
3the employer shall no later than 30 days thereafter cause an
4application for membership or participation, which application
5shall include the employee's home address, birthdate certified
6by the employer, previous school or State service and any other
7information requested by the board, and a nomination of
8beneficiary to be made by such employee and filed with the board
9and shall make pickup contributions or mandatory pickup 
10participant contributions from the effective date of school
11employment.

12(e) New employees subject to optional membership or 
13participation.--The employer shall inform any eligible school
14employee whose membership in the system or participation in the 
15plan is not mandatory of his opportunity to become a member of
16the system or participant in the plan provided that he elects to
17purchase credit for all such continuous creditable service. If
18such employee so elects, the employer shall no later than 30
19days thereafter cause an application for membership which
20application shall include the employee's home address, birthdate
21certified by the employer, previous school or State service and
22any other information requested by the board, and a nomination
23of beneficiary to be made by him and filed with the board and
24shall cause proper contributions to be made from the date of
25election of membership or participation.

26* * *

27(g) Former State employee contributors.--The employer shall,
28upon the employment of a former member of the State Employees'
29Retirement System who is not an annuitant of the State
30Employees' Retirement System, advise such employee of his right

1to elect multiple service membership within 365 days of entry
2into the system and, in the case any such employee who so elects
3has withdrawn his accumulated deductions, require him to restore
4his accumulated deductions as they would have been at the time
5of his separation had he been a full coverage member, together
6with statutory interest for all periods of subsequent State and
7school service to date of repayment. The employer shall advise
8the board of such election. This subsection shall not apply to a 
9school employee who is employed in a position where the school 
10employee is or could be a participant in the plan other than a 
11member who elects to become a participant in the plan.

12(h) Former State employee annuitants.--The employer shall,
13upon the employment of an annuitant of the State Employees'
14Retirement System who applies for membership in the system,
15advise such employee that he may elect multiple service
16membership within 365 days of entry into the system and that if
17he so elects his annuity from the State Employees' Retirement
18System will be discontinued effective upon the date of his
19return to school service and, upon termination of school service
20and application for an annuity, the annuity will be adjusted in
21accordance with section 8346 (relating to termination of
22annuities). The employer shall advise the board of such
23election. This subsection shall not apply to a school employee 
24who is employed in a position where the school employee is or 
25could be a participant in the plan other than a member who 
26elects to become a participant in the plan.

27* * *

28(k) School employees performing USERRA or military related
29leave of absence.--The employer shall report to the board any
30school employee who ceases to be an active participant to

1perform USERRA service, or who is granted a leave of absence
2under 51 Pa.C.S. § 4102 (relating to leaves of absences for
3certain government employees) or a military leave of absence
4under 51 Pa.C.S. § 7302 (relating to granting military leaves of
5absence), the date on which such USERRA service, leave of
6absence or military leave of absence began, the date on which
7the school employee is reemployed from USERRA leave or returns
8after the leave of absence or military leave of absence, if such
9event occurs, and any other information the board may require or
10direct.

11(l) Differential wage payments and military leave of absence
12payments.-—Notwithstanding the exclusion of differential wage
13payments as defined in IRC § 414(u)(12) from compensation under
14this part, the employer of any school employee on USERRA leave
15shall report differential wage payments made to such employee to
16the board, and the employer of any school employee on leave of
17absence pursuant to 51 Pa.C.S. § 4102 shall report any payment
18made to such employee, in the form and manner established by the
19board.

20(m) Obligation of educational institutions to report
21participation and compensation of employees in independent
22retirement programs.--The Pennsylvania State University, the
23State System of Higher Education, State-owned educational
24institutions and community colleges shall report to the board
25the compensation and other information as the board may request
26for employees who are participants or members in the State
27Employees' Retirement System, plan or independent retirement
28programs approved by the employer.

29§ 8507. Rights and duties of school employees [and members], 
30members and participants.

1(a) Information on new employees.--Upon his assumption of
2duties, each new school employee shall furnish his employer with
3a complete record of his previous school or State service, or
4creditable nonschool service, proof of his date of birth, his
5home address, his current status in the system and the plan and
6in the State Employees' Retirement System and the State 
7Employees' Defined Contribution Plan and such other information
8as the board may require. Willful failure to provide the
9information required by this subsection to the extent available
10or the provision of erroneous information upon entrance into the
11system shall result in the forfeiture of the right of the member
12to subsequently assert any right to benefits based on erroneous
13information or on any of the required information which he
14failed to provide. In any case in which the board finds that a
15member is receiving an annuity based on false information, the
16additional amounts received predicated on such false information
17together with statutory interest doubled and compounded shall be
18deducted from the present value of any remaining benefits to
19which the member is legally entitled and such remaining benefits
20shall be correspondingly decreased.

21* * *

22(b.1) Application for participation.--On or after July 1,
232015, in the case of a new employee who is not currently a
24participant in the plan and whose participation is mandatory, or
25in the case of a new employee whose participation is not
26mandatory but is permitted and who desires to become a
27participant in the plan, the new employee shall execute an
28application for participation and a nomination of a beneficiary.

29* * *

30(d.1) Voluntary contributions by a participant.--Any active

1participant who desires to make voluntary contributions to be
2credited to his individual investment account shall notify the
3board and, upon compliance with the requirements, procedures and
4limitations established by the board in the plan document, may
5do so subject to the limitations under IRC §§ 401(a) and 415 and
6other applicable law.

7(d.2) Contributions for USERRA leave.--Any active
8participant or inactive participant or former participant who
9was reemployed from USERRA leave and who desires to make
10mandatory pickup participant contributions and voluntary
11contributions for his USERRA leave shall so notify the board
12within the time period required under 38 U.S.C. Ch. 43 (relating
13to employment and reemployment rights of members of the
14uniformed services) and IRC § 414(u) of his desire to make such
15contributions. Upon making the permitted mandatory pickup
16participant contributions within the allowed time period, the
17employer shall make the corresponding employer defined
18contributions at the same time.

19(e) Beneficiary for death benefits from system.--Every
20member shall nominate a beneficiary by written designation filed
21with the board to receive the death benefit or the benefit
22payable under the provisions of Option 1. Such nomination may be
23changed at any time by the member by written designation filed
24with the board. A member may also nominate a contingent
25beneficiary or beneficiaries to receive the death benefit or the
26benefit payable under the provisions of Option 1.

27(e.1) Beneficiary for death benefits from plan.--Every
28participant shall nominate a beneficiary by written designation
29filed with the board as provided in section 8506 (relating to
30duties of employers) to receive the death benefit payable under

1section 8347 (relating to death benefits). A participant may
2also nominate a contingent beneficiary or beneficiaries to
3receive the death benefit provided under this section. Such
4nomination may be changed at any time by the participant by
5written designation filed with the board.

6(e.2) Beneficiary for combined service employee.--A combined
7service employee may designate or nominate different persons to
8be beneficiaries, survivor annuitants and successor payees for
9his benefits from the system and the plan.

10(f) Termination of service by members.--Each member who
11terminates school service and who is not then a disability
12annuitant shall execute on or before the date of termination of
13service a written application, duly attested by the member or
14his legally constituted representative, electing to do one of
15the following:

16(1) Withdraw his accumulated deductions.

17(2) Vest his retirement rights and if he is a joint
18coverage member, and so desires, elect to become a full
19coverage member and agree to pay within 30 days of the date
20of termination of service the lump sum required.

21(3) Receive an immediate annuity, if eligible, and may,
22if he is a joint coverage member, elect to become a full
23coverage member and agree to pay within 30 days of date of
24termination of service the lump sum required.

25* * *

26(g.1) Deferral of retirement rights.--If a participant
27terminates school service and does not commence receiving a
28distribution, he shall nominate a beneficiary by written
29designation filed with the board, and he may anytime thereafter,
30but no later than his required beginning date, withdraw the

1vested accumulated total defined contributions standing to his
2credit or apply for another form of distribution required by law
3or authorized by the board.

4* * *

5Section 21. Sections 8521(b), 8522, 8524, 8525, 8531, 8533,
68533.1, 8533.3 and 8533.4(a) of Title 24 are amended to read:

7§ 8521. Management of fund and accounts.

8* * *

9(b) Crediting of interest.--The board annually shall allow
10statutory interest, excluding the individual investment 
11accounts, to the credit of the members' savings account on the
12mean amount of the accumulated deductions of all members for
13whom interest is payable for the preceding year and valuation
14interest on the mean amount of the annuity reserve account for
15the preceding year to the credit of that account. The board
16annually shall allow valuation interest calculated on the mean
17amount for the preceding year of the balance in the State
18accumulation account excluding any earnings of the fund credited
19to the account during that year. In the event the total earnings
20for the year do not exceed 5 1/2% of the mean amount for the
21preceding year of the total assets of the fund less earnings
22credited to the fund during that year plus the administrative
23expenses of the board, the difference required to be
24appropriated from the General Fund shall be credited to the
25State accumulation account.

26* * *

27§ 8522. Public School Employees' Retirement Fund.

28The fund shall consist of all moneys in the several separate
29funds in the State Treasury set apart to be used under the
30direction of the board for the benefit of members of the system;

1and the Treasury Department shall credit to the fund all moneys
2received from the Department of Revenue arising from the
3contributions relating to or on behalf of the members of the 
4system required under the provisions of Chapter 83 (relating to
5membership, contributions and benefits) and all earnings from
6investments or moneys of said fund. There shall be established
7and maintained by the board the several ledger accounts
8specified in sections 8523 (relating to members' savings
9account), 8524 (relating to State accumulation account), 8525
10(relating to annuity reserve account) and 8526 (relating to
11health insurance account). The individual investment accounts 
12that are part of the trust are not part of the fund. Mandatory 
13pickup participant contributions, voluntary contributions and 
14employer defined contributions made under this part and any 
15income earned by the investment of such contributions shall not 
16be paid or credited to the fund but instead shall be paid to the 
17trust and credited to the individual investment accounts.

18§ 8524. State accumulation account.

19The State accumulation account shall be the ledger account to
20which shall be credited all contributions of the Commonwealth
21and other employers as well as the earnings of the fund, except
22the premium assistance contributions and earnings thereon in the
23health insurance account. Valuation interest shall be allowed on
24the total amount of such account less any earnings of the fund
25credited during the year. The reserves necessary for the payment
26of annuities and death benefits resulting from membership in the 
27system as approved by the board and as provided in Chapter 83
28(relating to membership, contributions and benefits) shall be
29transferred from the State accumulation account to the annuity
30reserve account. At the end of each year the required interest

1shall be transferred from the State accumulation account to the
2credit of the members' savings account and the annuity reserve
3account. The administrative expenses of the board shall be
4charged to the State accumulation account.

5§ 8525. Annuity reserve account.

6(a) Credits and charges to account.--The annuity reserve
7account shall be the ledger account to which shall be credited
8the reserves held for the payment of annuities and death
9benefits resulting from membership in the system on account of
10all annuitants and the contributions from the Commonwealth and
11other employers as determined in accordance with section 8328
12(relating to actuarial cost method) for the payment of the
13supplemental annuities provided in sections 8348 (relating to
14supplemental annuities), 8348.1 (relating to additional
15supplemental annuities), 8348.2 (relating to further additional
16supplemental annuities), 8348.3 (relating to supplemental
17annuities commencing 1994), 8348.4 (relating to special
18supplemental postretirement adjustment), 8348.5 (relating to
19supplemental annuities commencing 1998), 8348.6 (relating to
20supplemental annuities commencing 2002) and 8348.7 (relating to
21supplemental annuities commencing 2003). The annuity reserve
22account shall be credited with valuation interest. After the
23transfers provided in sections 8523 (relating to members'
24savings account) and 8524 (relating to State accumulation
25account), all annuity and death benefit payments shall be
26charged to the annuity reserve account and paid from the fund.

27(b) Transfers from account.--Should an annuitant be
28subsequently restored to active service either as a member of 
29the system or as a participant in the plan, the present value of
30his member's annuity at the time of reentry into school service

1shall be transferred from the annuity reserve account and placed
2to his individual credit in the members' savings account. In
3addition, the actuarial reserve for his annuity less the amount
4transferred to the members' savings account shall be transferred
5from the annuity reserve account to the State accumulation
6account.

7§ 8531. State guarantee regarding the system.

8Statutory interest charges payable, the maintenance of
9reserves in the fund, and the payment of all annuities and other
10benefits granted by the board from the system under the
11provisions of this part relating to the establishment and 
12administration of the system are hereby made obligations of the
13Commonwealth. All income, interest, and dividends derived from
14deposits and investments of the system authorized by this part
15shall be used for the payment of the said obligations of the
16Commonwealth and shall not be used for any obligations of the 
17plan or trust.

18§ 8533. Taxation, attachment and assignment of funds.

19(a) General rule.--Except as provided in subsections (b),
20(c) and (d), the right of a person to a member's annuity, a
21State annuity, or retirement allowance, to the return of
22contributions, any benefit or right accrued or accruing to any
23person under the provisions of this part, and the moneys in the
24fund and the trust are hereby exempt from any State or municipal
25tax, and exempt from levy and sale, garnishment, attachment, the 
26provisions of Article XIII.1 of the the act of April 9, 1929 
27(P.L.343, No.176), known as The Fiscal Code, or any other
28process whatsoever, and shall be unassignable. No participant or 
29beneficiary, successor payee, spouse or alternate payee of a 
30participant shall have the ability to commute, sell, assign,
 

1alienate, anticipate, mortgage, pledge, hypothecate, commutate 
2or otherwise transfer or convey any benefit or interest in an 
3individual investment account or rights to receive or direct 
4distributions under this part or under agreements entered into 
5under this part except as otherwise provided in this part and in 
6the case of either a member or a participant.

7(b) Forfeiture.--Rights under this part shall be subject to
8forfeiture as provided by the act of July 8, 1978 (P.L.752, 
9No.140), known as the Public Employee Pension Forfeiture Act. 
10Forfeitures under this subsection or under any other provision
11of law may not be applied to increase the benefits that any
12member would otherwise receive under this part. Notwithstanding 
13this paragraph, the act of July 8, 1978 (P.L.752, No.140), known 
14as the Public Employee Pension Forfeiture Act, section 16(b) of 
15Article V of the Constitution of Pennsylvania or 42 Pa.C.S. § 
163352 (relating to pension rights), the accumulated mandatory 
17participant contributions and accumulated voluntary 
18contributions standing to the credit of a participant shall not 
19be forfeited but shall be available for payment of fines and 
20restitution as provided by law. Furthermore, amounts in the 
21trust that have been ordered to be distributed to an alternate 
22payee as the result of an equitable distribution of marital 
23property as part of an approved domestic relations order entered 
24before the date of the order or action in a court or other 
25tribunal resulting in a forfeiture of a participant's interest 
26in the trust shall not be subject to the Public Employee Pension 
27Forfeiture Act, section 16(b) of the Article V of the 
28Constitution of Pennsylvania or 42 Pa.C.S. § 3352. Any 
29accumulated employer defined contributions forfeited as a result 
30of this subsection or other law shall be retained by the board
 

1and used for the payment of expenses of the plan.

2(c) Domestic relations order.--Rights under this part shall
3be subject to attachment in favor of an alternate payee as set
4forth in an approved domestic relations order.

5(d) Direct rollover.--Effective with distributions made on 
6or after January 1, 1993, and notwithstanding any other 
7provision of this part to the contrary, a distributee may elect, 
8at the time and in the manner prescribed by the board, to have 
9any portion of an eligible rollover distribution paid directly 
10to an eligible retirement plan by way of a direct rollover. For 
11purposes of this subsection, a "distributee" includes a member, 
12a participant, [and] a member's surviving spouse, a 
13participant's surviving spouse [and] a member's former spouse 
14who is an alternate payee under an approved domestic relations 
15order and a participant's former spouse who is an alternate 
16payee under an approved domestic relations order and anyone else 
17authorized under the IRC and the plan terms approved by the 
18board to have an eligible rollover distribution paid directly to 
19an eligible retirement plan by way of a direct rollover. For 
20purposes of this subsection, the term "eligible rollover 
21distribution" has the meaning given such term by IRC § 402(f)(2)
22(A) and "eligible retirement plan" has the meaning given such 
23term by IRC § 402(c)(8)(B), except that a qualified trust shall 
24be considered an eligible retirement plan only if it accepts the 
25distributee's eligible rollover distribution; however, in the 
26case of an eligible rollover distribution to a surviving spouse, 
27an eligible retirement plan is an "individual retirement 
28account" or an "individual retirement annuity" as those terms 
29are defined in IRC § 408(a) and (b).

30§ 8533.1. Approval of domestic relations orders.

1(a) Certification regarding members.--A domestic relations
2order pertaining to a member of the system shall be certified as
3an approved domestic relations order by the secretary of the
4board, or his designated representative, only if such order
5meets all of the following:

6(1) Requires the system to provide any type or form of
7benefit or any option applicable to members already provided
8under this part.

9(2) Requires the system to provide no more than the
10total amount of benefits than the member would otherwise
11receive (determined on the basis of actuarial value) unless
12increased benefits are paid to the member or alternate payee
13based upon cost-of-living increases or increases based on
14other than actuarial value.

15(3) Specifies the amount or percentage of the member's
16benefits to be paid by the system to each such alternate
17payee or the manner in which the amount or percentage is to
18be determined.

19(4) Specifies the retirement option to be selected by
20the member upon retirement or states that the member may
21select any retirement option offered by this part upon
22retirement.

23(5) Specifies the name and last known mailing address,
24if any, of the member and the name and last known mailing
25address of each alternate payee covered by the order and
26states that it is the responsibility of each alternate payee
27to keep a current mailing address on file with the system.

28(6) Does not grant an alternate payee any of the rights,
29options or privileges of a member under this part.

30(7) Requires the member to execute an authorization

1allowing each alternate payee to monitor the member's
2compliance with the terms of the domestic relations order
3through access to information concerning the member
4maintained by the system.

5(a.1) Certification regarding participants.--A domestic
6relations order pertaining to a participant shall be certified
7as an approved domestic relations order by the secretary of the
8board, or his designated representative, only if that order
9meets all of the following:

10(1) Does not require the plan to provide any type or
11form of benefit or any option applicable to members of the
12system or participants in the plan.

13(2) Does not require the segregation of the alternate
14payee's share of the participant's individual investment
15account into a subaccount or newly established individual
16account titled in the name of the alternate payee.

17(3) Does not require the plan to recover and/or
18distribute any funds which were distributed to the
19participant and/or at the participant's direction prior to
20the approval of the domestic relations order by the secretary
21of the board or his designated representative.

22(4) Requires the plan to pay to the alternate payee no
23more than the lesser of the vested amount of the
24participant's individual investment account specified by the
25domestic relations order or the amount of the participant's
26individual investment account as of the date of the transfer
27of the alternate payee's share to the alternate payee.

28(5) States that the plan shall not be required to recoup
29or make good for losses in value to the participant's
30individual investment account incurred between the date of

1the valuation of the account used for equitable distribution
2purposes and the date of distribution to the alternate payee.

3(6) Specifies the amount or percentage of the
4participant's individual investment account to be paid to the
5alternate payee and the date upon which such valuation is
6based.

7(7) Specifies the name and last known mailing address,
8if any, of the participant and the name and last known
9mailing address of each alternate payee covered by the order
10and states that it is the responsibility of each alternate
11payee to keep a current mailing address on file with the
12system.

13(8) Does not grant an alternate payee the rights,
14privileges or options available to a participant.

15(9) Requires the participant to execute an authorization
16allowing each alternate payee to monitor the participant's
17compliance with the terms of the domestic relations order
18through access to information concerning the participant
19maintained by the plan. Any authorization granted under this
20section shall be construed only as an authorization for the
21alternate payee to receive information concerning the
22participant which relates to the administration, calculation,
23and payment of the alternate payee's share of the
24participant's account and not as an authorization to exercise
25the rights afforded to participants or obtain information
26that is not related to the administration, calculation and
27payment of the alternate payee's share of the participant's
28account.

29(10) In the case of participants who have not yet begun
30to receive distributions as of the date the domestic

1relations order is approved by the secretary of the board or
2his designated representative, requires the immediate
3distribution of the alternate payee's share of the
4participant's individual investment account, which may be
5made by direct payment, eligible rollover or trustee-to-
6trustee transfer to another eligible plan or qualified
7account owned by the alternate payee.

8(11) In the case of participants who are currently
9receiving distributions from the trust as of the date the
10domestic relations order is approved by the secretary of the
11board or his designated representative, the domestic
12relations order may not order the board to pay the alternate
13payee more than the balance available in the participant's
14individual investment account as of the date the order is
15approved or require that distributions continue to the
16alternate payee after the death of the participant and final
17settlement of the participant's individual investment
18account.

19(b) Determination by secretary.--Within a reasonable period
20of time after receipt of a domestic relations order, the
21secretary of the board, or his designated representative, shall
22determine whether this order is an approved domestic relations
23order and notify the member or participant and each alternate
24payee of this determination. Notwithstanding any other provision
25of law, the exclusive remedy of any member, participant or
26alternate payee aggrieved by a decision of the secretary of the
27board, or his designated representative, shall be the right to
28an adjudication by the board under 2 Pa.C.S. Ch. 5 (relating to 
29practice and procedure) with appeal therefrom to the 
30Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to judicial
 

1review) and 42 Pa.C.S. § 763(a)(1) (relating to direct appeals 
2from government agencies).

3(c) Other orders.--The requirements for approval identified 
4in [subsection (a)] subsections (a) and (a.1) shall not apply to 
5any domestic relations order which is an order for support as 
6that term is defined in 23 Pa.C.S. § 4302 (relating to 
7definitions) or an order for the enforcement of arrearages as 
8provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
9arrearages). These orders shall be approved to the extent that
10they do not attach moneys in excess of the limits on attachments
11as established by the laws of this Commonwealth and the United
12States, require distributions of benefits in a manner that would 
13violate the laws of the United States, any state or this 
14Commonwealth or require the distribution of funds for support or 
15enforcement of arrearages against any participant who is not 
16receiving distributions from the plan at the time such order is 
17entered.

18(d) Obligation discharged.--Only the requirements of this
19part and any regulations promulgated hereunder shall be used to
20govern the approval or disapproval of a domestic relations
21order. Therefore, if the secretary of the board, or his
22designated representative, acts in accordance with the
23provisions of this part and any promulgated regulations in
24approving or disapproving a domestic relations order, then the
25obligations of the system or plan with respect to such approval
26or disapproval shall be discharged.

27§ 8533.3. Irrevocable survivor annuitant.

28Notwithstanding any other provisions of this part, a domestic
29relations order pertaining to a member may provide for an
30irrevocable survivor annuitant. A domestic relations order

1requiring the designation of an irrevocable survivor annuitant
2shall be deemed to be one that requires a member to designate an
3alternate payee as a survivor annuitant and that prohibits the
4removal or change of that survivor annuitant without approval of
5a court of competent jurisdiction, except by operation of law.
6Such a domestic relations order may be certified as an approved
7domestic relations order by the secretary of the board, or his
8designated representative, in which case the irrevocable
9survivor annuitant so ordered by the court cannot be changed by
10the member without approval by the court. A person ineligible to
11be designated as a survivor annuitant may not be designated an
12irrevocable survivor annuitant.

13§ 8533.4. Amendment of approved domestic relations orders.

14(a) Deceased alternate payee.--In the event that the
15alternate payee predeceases the member or participant and there
16are benefits payable to the alternate payee, the divorce court
17may amend the approved domestic relations order to substitute a
18person for the deceased alternate payee to receive any benefits
19payable to the deceased alternate payee.

20* * *

21Section 22. Title 24 is amended by adding a section to read:

22§ 8533.5. Irrevocable successor payee.

23Notwithstanding any other provisions of this part, a domestic
24relations order pertaining to a participant may provide for an
25irrevocable successor payee, only if the participant is
26receiving a payment pursuant to a payment option provided by the
27board that allows for a successor payee. A domestic relations
28order requiring the designation of an irrevocable successor
29payee shall be deemed to be one that requires a participant who
30is receiving payments from an annuity or other distribution

1option to designate an alternate payee as a successor payee and
2that prohibits the removal or change of that successor payee
3without approval of a court of competent jurisdiction, except by
4operation of law. Such a domestic relations order may be
5certified as an approved domestic relations order by the
6secretary of the board, or his designated representative, in
7which case the irrevocable successor payee so ordered by the
8court cannot be changed by the participant except by approval by
9the court. A person ineligible to be designated as a successor
10payee may not be designated as an irrevocable successor payee. A
11court may not name an irrevocable successor payee if the
12alternate payee is eligible to receive a lump sum distribution
13of the alternate payee's portion of the marital portion of the
14pension benefit.

15Section 23. Sections 8534 and 8535 of Title 24 are amended
16to read:

17§ 8534. Fraud and adjustment of errors.

18(a) Penalty for fraud.--Any person who shall knowingly make
19any false statement or shall falsify or permit to be falsified
20any record or records of this system or plan in any attempt to
21defraud the system or plan as a result of such act shall be
22guilty of a misdemeanor of the second degree.

23(b) Adjustment of errors.--Should any change or mistake in
24records result in any member, participant, beneficiary, [or],
25survivor annuitant or successor payee receiving from the system 
26or plan more or less than he would have been entitled to receive
27had the records been correct, then regardless of the intentional
28or unintentional nature of the error and upon the discovery of
29such error, the board shall correct the error and if the error 
30affects contributions to or payments from the system, then so

1far as practicable shall adjust the payments which may be made
2for and to such person in such a manner that the actuarial
3equivalent of the benefit to which he was correctly entitled
4shall be paid. If the error affects contributions to or payments 
5from the plan, the board shall take such action as shall be 
6provided for in the plan document.

7§ 8535. Payments to school entities by Commonwealth.

8For each school year beginning with the 1995-1996 school year
9and ending with the 2014-2015 school year, each school entity
10shall be paid by the Commonwealth for contributions based upon
11school service of active members of the system after June 30,
121995, as follows:

13(1) The Commonwealth shall pay each school entity for
14contributions made to the Public School Employees' Retirement
15Fund based upon school service of all active members,
16including members on activated military service leave, whose
17effective dates of employment with their school entities are
18after June 30, 1994, and who also had not previously been
19employed by any school entity within this Commonwealth an
20amount equal to the amount certified by the Public School
21Employees' Retirement Board as necessary to provide, together
22with the members' contributions, reserves on account of
23prospective annuities, supplemental annuities and the premium
24assistance program as provided in this part in accordance
25with section 8328 (relating to actuarial cost method),
26multiplied by the market value/income aid ratio of the school
27entity. For no school year shall any school entity receive
28less than the amount that would result if the market
29value/income aid ratio as defined in section 2501(14.1) of
30the Public School Code [of 1949] was 0.50.

1(2) The Commonwealth shall pay each school entity for
2contributions made to the Public School Employees' Retirement
3Fund based upon school service of all active members,
4including members on activated military service leave, who
5are not described in paragraph (1), one-half of the amount
6certified by the Public School Employees' Retirement Board as
7necessary to provide, together with the members'
8contributions, reserves on account of prospective annuities,
9supplemental annuities and the premium assistance program as
10provided in this part in accordance with section 8328.

11(3) School entities shall have up to five days after
12receipt of the Commonwealth's portion of the employer's
13liability to make payment to the Public School Employees'
14Retirement Fund. School entities are expected to make the 
15full payment to the Public School Employees' Retirement Fund 
16in accordance with section 8327 (relating to payments by 
17employers) in the event the receipt of the Commonwealth's 
18portion of the employer's liability is delayed because of 
19delinquent salary reporting or other conduct by the school 
20entities.

21Section 24. Title 24 is amended by adding a section to read:

22§ 8535.1. Payments to school entities by Commonwealth
23commencing with the 2015-2016 school year.

24For each school year, beginning with the 2015-2016 school
25year, each school entity shall be paid by the Commonwealth for
26contributions based upon school service of active members of the
27system and active participants of the plan after June 30, 2015,
28as follows:

29(1) The Commonwealth shall pay each school entity for
30contributions made to the fund based upon school service of

1all active members, including members on activated military
2service leave, and active participants of the plan whose
3effective dates of employment with their school entities are
4after June 30, 1994, and who also had not previously been
5employed by any school entity within this Commonwealth an
6amount equal to the amount certified by the board as
7necessary to provide, together with the members' and
8participants' contributions, reserves on account of
9prospective annuities, supplemental annuities and the premium
10assistance program as provided in this part in accordance
11with section 8328 (relating to actuarial cost method),
12multiplied by the market value/income aid ratio of the school
13entity. For no school year shall any school entity receive
14less than the amount that would result if the market
15value/income aid ratio as defined in section 2501(14.1) of
16the Public School Code was 0.50.

17(2) The Commonwealth shall pay each school entity for
18contributions made to the fund based upon school service of
19all active members, including members on activated military
20service leave, and active participants of the plan who are
21not described in paragraph (1), one-half of the amount
22certified by the board as necessary to provide, together with
23the members' and participants' contributions, reserves on
24account of prospective annuities, supplemental annuities and
25the premium assistance program as provided in this part in
26accordance with section 8328.

27(3) School entities shall have up to five days after
28receipt of the Commonwealth's portion of the employer's
29liability to make payment to the fund. School entities are
30expected to make the full payment to the fund in accordance

1with section 8327 (relating to payments by employers) in the
2event the receipt of the Commonwealth's portion of the
3employer's liability is delayed because of delinquent salary
4reporting or other conduct by the school entities.

5Section 25. The definition of "eligible person" in section
68702(a) of Title 24 is amended to read:

7§ 8702. Definitions.

8(a) General rule.--Subject to additional definitions
9contained in subsequent provisions of this part which are
10applicable to specific provisions of this part, the following
11words and phrases when used in this part shall have the meanings
12given to them in this section unless the context clearly
13indicates otherwise:

14"Eligible person." An individual who is an annuitant or
15survivor annuitant or the spouse or dependent of an annuitant or
16survivor annuitant, or an individual who is a participant 
17receiving distributions or a successor payee, or the spouse or 
18dependent of a participant receiving distributions or successor 
19payee.

20* * *

21Section 26. Section 7306(a) of Title 51, amended October 24,
222012 (P.L.1436, No.181), is amended and the section is amended
23by adding a subsection to read:

24§ 7306. Retirement rights.

25(a) Options available to employees.--Any employee who is a
26member of a retirement system other than an active member or
27inactive member on leave without pay of the State Employees' 
28Retirement System or an active or inactive participant of the 
29School Employees' Defined Contribution Plan at the time he is
30granted a military leave of absence shall be entitled to

1exercise any one of the following options in regard thereto:

2(1) He may continue to make regular payments into the
3fund during the period of his military leave of absence. The
4amount of such payments shall be the same as they would have
5been, had he not been granted a military leave of absence,
6but had instead remained actively in his employment. The time
7of making such payments shall be mutually agreed upon by the
8employee and the retirement association of which he is a
9member, but in no event shall be less frequent than
10semiannually. The employer shall make its contributions on
11the same basis as is used to compute the employee's
12contributions. In this case, his retirement rights shall be
13determined on the basis that he was in the active, continuous
14and uninterrupted employ of his employer for the period
15during which he was on military leave of absence.

16(2) He may discontinue making payments into the fund
17during the period of his military leave of absence. In such
18event, the employer shall also discontinue making its
19contributions during this period. In this case, his
20retirement rights shall be determined by completely
21disregarding the period of his military leave of absence for
22all purposes.

23* * *

24(e) Participants of the School Employees' Defined
25Contribution Plan.--An employee who is an active or inactive
26participant of the School Employees' Defined Contribution Plan
27at the time he is granted a military leave of absence shall be
28entitled to make contributions to the Public School Employees'
29Defined Contribution Trust for such leave as provided in the
30Public School Employees' Retirement Code.

1Section 27. (1) None of the following shall create in any
2member of the School Employees' Retirement System or participant
3in the School Employees' Defined Contribution Plan or in any
4other person claiming an interest in the account of any such
5member or participant a contractual right, either express or
6implied, in such provisions nor in any construction of 24
7Pa.C.S. Pt. IV or 51 Pa.C.S., as so amended or supplemented, or
8any rules or regulations adopted under 24 Pa.C.S. Pt. IV or 51
9Pa.C.S.:

10(i) Anything in this act which amends or supplements
11provisions of 51 Pa.C.S. or 24 Pa.C.S. Pt. IV in relation
12to requirements for:

13(A) qualification of the School Employees'
14Defined Contribution Plan as a qualified pension plan
15under the Internal Revenue Code of 1986 (Public Law
1699-514, 26 U.S.C. §§ 401(a) and 415(b)) or compliance
17with the Uniformed Services Employment and 
18Reemployment Rights Act of 1994 (Public Law 103-353, 
19108 Stat. 3149);

20(B) contributions to, participation in or
21benefits from the School Employees' Defined
22Contribution Plan or School Employees' Defined
23Contribution Trust; and

24(C) domestic relations orders regarding
25alternate payees of participants in the Public School
26Employees' Defined Contribution Plan.

27(ii) Any construction of 24 Pa.C.S. Pt. IV or 51
28Pa.C.S., as so amended or supplemented, or any rules or
29regulations adopted under 24 Pa.C.S. Pt. IV or 51
30Pa.C.S., or any term or provision of the School

1Employees' Defined Contribution Plan or School Employees'
2Defined Contribution Trust, whether established by
3statute or in the plan document or trust declaration.

4(2) The provisions of 24 Pa.C.S. Pt. IV shall remain
5subject to the Internal Revenue Code of 1986 and the
6Uniformed Services Employment and Reemployment Rights Act of 
71994 (Public Law 103-353, 108 Stat. 3149), and regulations
8under those statutes, and the General Assembly reserves to
9itself such further exercise of its legislative power to
10amend or supplement such provisions as may from time to time
11be required in order to maintain the qualification of such
12system as a qualified pension plan under section 401(a) and
13other applicable provisions of the Internal Revenue Code of
141986 and the Uniformed Services Employment and Reemployment 
15Rights Act of 1994 (Public Law 103-353, 108 Stat. 3149).

16Section 28. Nothing in this act shall be construed or deemed
17to imply that, but for the expressed applications of the
18limitations on benefits or other requirements under section
19401(a) or applicable provisions of the Internal Revenue Code of
201986 (Public Law 99-514, 26 U.S.C. § 401 et seq.) to
21participants in the School Employees' Defined Contribution Plan,
22those limitations would not otherwise apply to such participants
23or to members of the Public School Employees' Retirement System
24and the benefits payable pursuant to 24 Pa.C.S. Pt. IV.

25Section 29. The amendment of 24 Pa.C.S. Pt. IV regarding the
26establishment of and participation in the School Employees'
27Defined Contribution Plan shall apply to all current and former
28members of the Public School Employees' Retirement System who
29have returned to school service on or after July 1, 2015, after
30a termination of school service, without regard to whether the

1termination occurred before or after July 1, 2015, and without
2regard to whether the school employee was an annuitant, inactive
3member, vestee or special vestee or withdrew accumulated
4deductions during the period of termination. A terminated school
5employee who returns to school service on or after July 1, 2015,
6does so with the expressed and specific understanding that he is
7subject to and accepts the terms and provisions of 24 Pa.C.S.
8Pt. IV as they exist regarding participation in the plan or
9membership in the system on the effective date of reemployment,
10including, but not limited to, benefit formulas and accrual
11rates, eligibility for annuities and distributions, contribution
12rates, definitions, purchase of creditable school, nonschool,
13school and nonschool service provisions and actuarial and
14funding assumptions.

15Section 30. Nothing in this act shall be construed or deemed
16to imply that any calculation or actuarial method used by the
17Public School Employees' Retirement Board, its actuaries or the
18Public School Employees' Retirement System was not in accordance
19with the provisions of the 24 Pa.C.S. Pt. IV or other applicable
20law prior to the effective date of this section.

21Section 31. Nothing in this act shall be construed or deemed 
22to imply that any interpretation or application of the 
23provisions of 24 Pa.C.S. Pt. IV or benefits available to members 
24of the Public School Employees' Retirement System was not in 
25accordance with the provisions of 24 Pa.C.S. Pt. IV or other 
26applicable law, including the Internal Revenue Code of 1986 
27(Public Law 99-514, 26 U.S.C. § 1 et seq.) and the Uniformed 
28Services Employment and Reemployment Rights Act of 1994 (Public 
29Law 103-353, 108 Stat. 3149) prior to the effective date of this 
30section.

1Section 32. This act shall be construed and administered in
2such a manner that the Public School Employees' Retirement
3System and the School Employees' Defined Contribution Plan will
4satisfy the requirements necessary to qualify as a qualified
5pension plan under section 401(a) and other applicable
6provisions of the Internal Revenue Code of 1986 (Public Law 99-
7514, 26 U.S.C. § 1 et seq.) and the Uniformed Services 
8Employment and Reemployment Rights Act of 1994 (Public Law 103-
9353, 108 Stat. 3149). The rules, regulations and procedures
10adopted and promulgated by the Public School Employees'
11Retirement Board, and the terms and conditions of the plan
12document and trust declaration adopted by the Public School
13Employees' Retirement Board, may include those necessary to
14accomplish the purpose of this section.

15Section 33. If the application of any provision of this act 
16to any person is held invalid, the invalidity shall not affect 
17the application of this act to any other person, but the entire 
18act shall be invalid as to the person to whom part of it was 
19invalid. In the event that a school employee's participation in 
20the School Employees' Defined Contribution Plan is declared 
21invalid, the affected school employee shall return to the School 
22Employees' Defined Contribution Trust any distributions and 
23shall be granted status and service credit in the Public School 
24Employees' Retirement System and shall be required to make all 
25contributions to the Public School Employees' Retirement Fund as 
26if this act had not been enacted. The affected school employee's 
27accumulated mandatory participant contributions and accumulated 
28voluntary contributions shall be transferred to the affected 
29employee's member savings account to the extent necessary to 
30fund that account with the member contributions and interest
 

1that would have been standing to the member's account had this 
2act not been passed. Any remaining balance shall be refunded to 
3the school employee who shall be responsible for paying to the 
4fund in a manner and time determined by the Public School 
5Employees' Retirement Board any additional funds required if the 
6accumulated mandatory participant contributions and accumulated 
7voluntary contributions were not sufficient. The accumulated 
8employer defined contributions shall be transferred to the State 
9accumulation account, and no further amount shall be due from 
10the employer or refund paid on account of the service performed 
11as a participant.

12Section 34. This act shall take effect immediately.