AN ACT

 

1Amending Titles 51 (Military Affairs) and 71 (State Government)
2of the Pennsylvania Consolidated Statutes, in Title 51, in
3employment preferences and pensions, further providing for
4military leaves of absence; in Title 71, in retirement for
5State employees and officers, further providing for
6definitions, for preliminary provisions and for membership,
7credited service, classes of service, and eligibility
8benefits, providing for State Employees' Defined Contribution
9Plan, further providing for contributions, for benefits and
10for administration, funds and accounts; and making editorial
11changes.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Section 7306(a) introductory paragraph of Title
1551 of the Pennsylvania Consolidated Statutes, amended October
1624, 2012 (P.L.1436, No.181), is amended and the section is
17amended by adding a subsection to read:

18§ 7306. Retirement rights.

19(a) Options available to employees.--Any employee who is a
20member of a retirement system other than an active member or 
21inactive member on leave without pay of the State Employees'
 

1Retirement System or an active participant or inactive 
2participant on leave without pay of the State Employees' Defined 
3Contribution Plan at the time he is granted a military leave of
4absence shall be entitled to exercise any one of the following
5options in regard thereto:

6* * *

7(e) Participants of the State Employees' Defined
8Contribution Plan.--An employee who is an active participant or
9inactive participant on leave without pay of the State
10Employees' Defined Contribution Plan at the time he is granted a
11military leave of absence shall be entitled to make
12contributions to the State Employees' Defined Contribution Trust
13for such leave as provided in 71 Pa.C.S. Pt. XXV (relating to
14retirement for State employees and officers).

15Section 2. The definitions of "alternate payee," "average
16noncovered salary," "beneficiary," "compensation," "creditable
17nonstate service," "credited service," "date of termination of
18service," "distribution," "domestic relations order," "final
19average salary," "inactive member," "intervening military
20service," "irrevocable beneficiary," "previous State service,"
21"reemployed from USERRA leave," "retirement counselor," "salary
22deductions," "special vestee," "State employee," "superannuation
23age" and "valuation interest" in section 5102 of Title 71,
24amended or added October 24, 2012 (P.L.1436, No.181), are
25amended and the section is amended by adding definitions to
26read:

27§ 5102. Definitions.

28The following words and phrases as used in this part, unless
29a different meaning is plainly required by the context, shall
30have the following meanings:

1* * *

2"Accumulated employer defined contributions." The total of
3the employer defined contributions paid into the trust on
4account of a participant's State service together with any
5investment earnings and losses and adjustment for fees, costs
6and expenses credited or charged thereon.

7"Accumulated mandatory participant contributions." The total
8of the mandatory pickup participant contributions paid into the
9trust on account of a participant's State service together with
10any investment earnings and losses and adjustments for fees,
11costs and expenses credited or charged thereon.

12"Accumulated total defined contributions." The total of the
13accumulated mandatory participant contributions, accumulated
14employer defined contributions and accumulated voluntary
15contributions, reduced by any distributions, standing to the
16credit of a participant in an individual investment account in
17the trust.

18"Accumulated voluntary contributions." The total of
19voluntary contributions paid into the trust by a participant and
20any amounts rolled over by a participant or transferred by a
21direct trustee-to-trustee transfer into the trust together with
22any investment earnings and losses and adjustment for fees,
23costs and expenses credited or charged thereon.

24* * *

25"Active participant." A State employee for whom mandatory 
26pickup participant contributions are being made to the trust or 
27for whom such contributions otherwise required for current State 
28service are not being made solely by reason of any provision of 
29this part relating to the limitations under section 401(a)(17) 
30or 415 of the Internal Revenue Code of 1986 (Public Law 99-514,
 

126 U.S.C. § 401(a)(17) or § 415).

2* * *

3"Alternate payee." Any spouse, former spouse, child or 
4dependent of a member or participant who is recognized by a 
5domestic relations order as having a right to receive all or a 
6portion of the moneys payable to that member or participant 
7under this part.

8* * *

9"Average noncovered salary." The average of the amounts of 
10compensation received by an active member each calendar year 
11since January 1, 1956, exclusive of the amount which was or 
12could have been covered by the Federal Social Security Act[,]
13(42 U.S.C. § 301 et seq.), during that portion of the member's 
14service since January 1, 1956, for which he has received social 
15security integration credit.

16* * *

17"Beneficiary." The person or persons last designated in 
18writing to the board by a member to receive his accumulated 
19deductions or a lump sum benefit upon the death of [such] the 
20member[.] or by a participant to receive the participant's 
21accumulated total defined contributions or a lump sum benefit 
22upon the death of the participant.

23* * *

24"Combined service employee." A current or former State
25employee who is both a member of the system and a participant in
26the plan.

27* * *

28"Compensation." Pickup contributions and mandatory pickup 
29contributions plus remuneration actually received as a State 
30employee excluding refunds for expenses, contingency and
 

1accountable expense allowances; excluding any severance payments 
2or payments for unused vacation or sick leave; and excluding 
3payments for military leave and any other payments made by an 
4employer while on USERRA leave, leave of absence granted under 
551 Pa.C.S. § 4102 (relating to leaves of absence for certain 
6government employees), military leave of absence granted under 
751 Pa.C.S. § 7302 (relating to granting military leaves of 
8absence) or other types of military leave, including other types 
9of leave payments, stipends, differential wage payments as 
10defined in IRC § 414(u)(12) and any other payments: Provided, 
11however, That compensation received prior to January 1, 1973, 
12shall be subject to the limitations for retirement purposes in 
13effect December 31, 1972, if any: Provided further, That the 
14limitation under section 401(a)(17) of the Internal Revenue Code 
15of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17)) taken into 
16account for the purpose of member contributions, including any 
17additional member contributions in addition to regular or joint 
18coverage member contributions and Social Security integration 
19contributions, regardless of class of service, shall apply to 
20each member who first became a member of the State Employees' 
21Retirement System on or after January 1, 1996, and who by reason 
22of such fact is a noneligible member subject to the application 
23of the provisions of section 5506.1(a) (relating to annual 
24compensation limit under IRC § 401(a)(17)) and shall apply to 
25each participant.

26* * *

27"Creditable nonstate service." Service other than:

28(1) service as a State employee;

29(2) service converted to State service pursuant to
30section 5303.1 (relating to election to convert county

1service to State service); or

2(3) school service converted to State service pursuant
3to section 5303.2 (relating to election to convert school
4service to State service)

5for which an active member may obtain credit in the system.

6"Credited service." State or creditable nonstate service for 
7which the required contributions have been made to the fund or 
8for which the contributions otherwise required for such service 
9were not made solely by reason of section 5502.1 (relating to 
10waiver of regular member contributions and Social Security 
11integration member contributions) or any provision of this part 
12relating to the limitations under section 401(a)(17) or 415(b) 
13of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
14U.S.C. § 401(a)(17) or 415(b)), or for which salary deductions 
15to the system or lump sum payments have been agreed upon in 
16writing.

17"Date of termination of service." The last day of service 
18for which:

19(1) pickup contributions are made for an active member 
20[or] ;

21(2) in the case of an inactive member on leave without 
22pay, the date of his resignation or the date his employment 
23is formally discontinued by his employer[.];

24(3) mandatory pickup participant contributions are made 
25for an active participant;

26(4) in the case of an inactive participant on leave 
27without pay, the date of his resignation or the date his 
28employment is formally discontinued by his employer; or

29(5) in the case of a combined service employee, the
30latest of the dates in paragraphs (1), (2), (3) and (4).

1* * *

2"Distribution." Payment of all or any portion of a person's 
3interest in either the State Employees' Retirement Fund or the 
4State Employees' Defined Contribution Trust or both which is 
5payable under this part.

6"Domestic relations order." Any judgment, decree or order, 
7including approval of a property settlement agreement, entered 
8on or after the effective date of this definition by a court of 
9competent jurisdiction pursuant to a domestic relations law 
10which relates to the marital property rights of the spouse or 
11former spouse of a member or participant, including the right to 
12receive all or a portion of the moneys payable to that member or 
13participant under this part in furtherance of the equitable 
14distribution of marital assets. The term includes orders of 
15support as that term is defined by 23 Pa.C.S. § 4302 (relating 
16to definitions) and orders for the enforcement of arrearages as 
17provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
18arrearages).

19* * *

20"Employer defined contributions."

21(1) Unless paragraph (2) applies, contributions equal to
224% of an active participant's compensation which are made by
23the Commonwealth or other employer for current service to the
24trust to be credited in the participant's individual
25investment account.

26(2) (i) For Pennsylvania State Police, contributions
27equal to 12.2% of an active participant's compensation
28which are made by the Commonwealth for current service to
29the trust to be credited in the participant's individual
30investment account.

1(ii) For an enforcement officer, correction officer,
2psychiatric security aide, Delaware River Port Authority
3policeman, park ranger or Capitol police officer,
4contributions equal to 5.5% of an active participant's
5compensation which are made by the Commonwealth or other
6employer for current service to the trust to be credited
7in the participant's individual investment account.

8* * *

9"Final average salary." The highest average compensation 
10received as a member during any three nonoverlapping periods of 
11four consecutive calendar quarters during which the member was a 
12State employee, with the compensation for part-time service 
13being annualized on the basis of the fractional portion of the 
14year for which credit is received; except if the employee was 
15not a member for three nonoverlapping periods of four 
16consecutive calendar quarters, the total compensation received 
17as a member, annualized in the case of part-time service, 
18divided by the number of nonoverlapping periods of four 
19consecutive calendar quarters of membership; in the case of a 
20member with multiple service, the final average salary shall be 
21determined on the basis of the compensation received by him as a 
22[State employee] member of the system or as a school employee 
23other than as a participant in the School Employees' Defined 
24Contribution Plan, or both; in the case of a member with Class 
25A-3 or Class A-4 service and service in one or more other 
26classes of service, the final average salary shall be determined 
27on the basis of the compensation received by him in all classes 
28of State service credited in the system; and, in the case of a 
29member who first became a member on or after January 1, 1996, 
30the final average salary shall be determined as hereinabove
 

1provided but subject to the application of the provisions of 
2section 5506.1(a) (relating to annual compensation limit under 
3IRC § 401(a)(17)). Final average salary shall be determined by 
4including in compensation payments deemed to have been made to a 
5member reemployed from USERRA leave to the extent member 
6contributions have been made as provided in section 5302(f)(2) 
7(relating to credited State service) and payments made to a 
8member on leave of absence under 51 Pa.C.S. § 4102 (relating to 
9leaves of absence for certain government employees) as provided 
10in section 5302(f)(6).

11* * *

12"Inactive member." A member for whom no pickup contributions
13are being made to the fund, except in the case of an active
14member for whom such contributions otherwise required for
15current State service are not being made solely by reason of
16section 5502.1 (relating to waiver of regular member
17contributions and Social Security integration member
18contributions) or any provision of this part relating to the
19limitations under section 401(a)(17) or 415(b) of the Internal
20Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17)
21or 415(b)), but who has accumulated deductions standing to his
22credit in the fund and who is not eligible to become or has not
23elected to become a vestee or has not filed an application for
24an annuity.

25"Inactive participant." A participant for whom no mandatory
26pickup participant contributions are being made to the trust,
27except in the case of an active participant for whom such
28contributions otherwise required for current State service are
29not being made solely by reason of any provision of this part
30relating to limitations under section 401(a)(17) or 415 of the

1Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
2401(a)(17) or 415), but who has accumulated total defined
3contributions standing to his credit in the trust and who has
4not filed an application for an annuity.

5"Individual investment account." The account in the trust to
6which are credited the amounts of the contributions made by a
7participant and the participant's employer in accordance with
8the provisions of this part, together with all interest and
9investment earnings after deduction for fees, costs, expenses
10and investment losses and charges for distributions.

11"Intervening military service." Active military service of a 
12member who was a State employee and active member of the system 
13immediately preceding his induction into the armed services or 
14forces of the United States in order to meet a military 
15obligation excluding any voluntary extension of such service and 
16who becomes a State employee within 90 days of the expiration of 
17such service.

18* * *

19"Irrevocable beneficiary." The person or persons permanently 
20designated by a member or a participant in writing to the State 
21Employees' Retirement Board pursuant to an approved domestic 
22relations order to receive all or a portion of the accumulated 
23deductions, accumulated total defined contributions or lump sum 
24benefit payable upon the death of such member or participant.

25"Irrevocable successor payee." The person permanently
26designated by a participant receiving distributions in writing
27to the board pursuant to an approved domestic relations order to
28receive one or more distributions from the plan upon the death
29of such participant.

30* * *

1"Mandatory pickup participant contributions." Contributions
2equal to 4% of compensation that are made by the Commonwealth or
3other employer for active participants for current service which
4are picked up by the employer.

5* * *

6"Participant." An active participant, inactive participant
7or participant receiving distributions.

8"Participant receiving distributions." A participant in the
9plan who has commenced receiving distributions from his
10individual investment account but who has not received a total
11distribution of his interest in the account.

12* * *

13"Plan." The State Employees' Defined Contribution Plan as
14established by the provisions of this part and the board.

15"Plan document." The documents created by the board under
16section 5402 (relating to plan document) that contain the terms
17and provisions of the plan and trust as established by the board
18regarding the establishment, administration and investment of
19the plan and trust.

20"Previous State service." Service rendered as a State 
21employee prior to his most recent entrance in the system[.], 
22provided that the State employee was not a participant in the 
23plan, was not eligible to be an optional participant in the plan 
24under section 5301(b.1) (relating to mandatory and optional 
25membership) or was not prohibited from being a participant under 
26section 5301(c.1) during such service.

27* * *

28"Reemployed from USERRA leave." Resumption of active 
29membership or active participation as a State employee after a 
30period of USERRA leave, provided, however, that the resumption
 

1of active membership or active participation was within the time 
2period and under conditions and circumstances such that the 
3State employee was entitled to reemployment rights under 38 
4U.S.C. Ch. 43 (relating to employment and reemployment rights of 
5members of the uniformed services).

6* * *

7"Required beginning date." The latest date by which
8distributions of a participant's interest in his individual
9investment account must commence under section 401(a)(9) of the
10Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
11401(a)(9)).

12"Retirement counselor." The State Employees' Retirement 
13System or State Employees' Defined Contribution Plan employee 
14whose duty it shall be to advise each employee of his rights and 
15duties as a member of the system or as a participant of the 
16plan.

17"Salary deductions." The amounts certified by the board, 
18deducted from the compensation of an active member or active 
19participant, or the school service compensation of a multiple 
20service member who is an active member of the Public School 
21Employees' Retirement System, and paid into the fund or trust.

22"School Employees' Defined Contribution Plan." The defined
23contribution plan for school employees established under 24
24Pa.C.S. Pt. IV (relating to retirement for school employees).

25* * *

26"Special vestee." An employee of The Pennsylvania State
27University who is a member of the State Employees' Retirement
28System with five or more but less than ten eligibility points
29and who has a date of termination of service from The
30Pennsylvania State University of June 30, 1997, because of the

1transfer of his job position or duties to a controlled
2organization of the Penn State Geisinger Health System or
3because of the elimination of his job position or duties due to
4the transfer of other job positions or duties to a controlled
5organization of the Penn State Geisinger Health System, provided
6that:

7(1) subsequent to termination of State service as an
8employee of The Pennsylvania State University, the member has
9not returned to State service in any other capacity or
10position as a State employee;

11(2) The Pennsylvania State University certifies to the
12board that the member is eligible to be a special vestee;

13(3) the member files an application to vest the member's
14retirement rights pursuant to section 5907(f) (relating to
15rights and duties of State employees [and], members and 
16participants) on or before September 30, 1997; and

17(4) the member elects to leave the member's total
18accumulated deductions in the fund and to defer receipt of an
19annuity until attainment of superannuation age.

20* * *

21"State employee." Any person holding a State office or
22position under the Commonwealth, employed by the State
23Government of the Commonwealth, in any capacity whatsoever,
24except an independent contractor or any person compensated on a
25fee basis or any person paid directly by an entity other than a
26State Employees' Retirement System employer, and shall include
27members of the General Assembly, and any officer or employee of
28the following:

29(1) (i) The Department of Education.

30(ii) State-owned educational institutions.

1(iii) Community colleges.

2(iv) The Pennsylvania State University, except an 
3employee in the College of Agriculture who is paid wholly 
4from Federal funds or an employee who is participating in 
5the Federal Civil Service Retirement System. The 
6university shall be totally responsible for all employer 
7contributions under [section] sections 5507 (relating to 
8contributions to the system by the Commonwealth and other 
9[employers).] employers before July 1, 2015) and 5507.1 
10(relating to contributions to the system by the 
11Commonwealth and other employers starting July 1, 2015).

12(2) The Pennsylvania Turnpike Commission, the Delaware 
13River Port Authority, the Port Authority Transit Corporation, 
14the Philadelphia Regional Port Authority, the Delaware River 
15Joint Toll Bridge Commission, the State Public School 
16Building Authority, The General State Authority, the State 
17Highway and Bridge Authority, the Delaware Valley Regional 
18Planning Commission, the Interstate Commission of the 
19Delaware River Basin, and the Susquehanna River Basin 
20Commission any time subsequent to its creation, provided the 
21commission or authority agrees to contribute and does 
22contribute to the fund or to the trust, from time to time, 
23the moneys required to build up the reserves necessary for 
24the payment of the annuities or other benefits of such 
25officers and employees without any liability on the part of 
26the Commonwealth to make appropriations for such purposes, 
27and provided in the case of employees of the Interstate 
28Commission of the Delaware River Basin, that the employee 
29shall have been a member of the system for at least ten years 
30prior to January 1, 1963.

1(3) Any separate independent public corporation created 
2by statute, not including any municipal or quasi-municipal 
3corporation, so long as he remains an officer or employee of 
4such public corporation, and provided that such officer or 
5employee of such public corporation was an employee of the 
6Commonwealth immediately prior to his employment by such 
7corporation, and further provided such public corporation 
8shall agree to contribute and contributes to the fund or to 
9the trust, from time to time, the moneys required to build up 
10the reserves necessary for the payment of the annuities or 
11other benefits of such officers and employees without any 
12liability on the part of the Commonwealth to make 
13appropriations for such purposes.

14* * *

15"Successor payee." The person or persons last designated by
16a participant receiving distributions in writing to the board to
17receive one or more distributions upon the death of such
18participant.

19"Superannuation age." For classes of service in the system 
20other than Class A-3 and Class A-4, any age upon accrual of 35 
21eligibility points or age 60, except for a member of the General 
22Assembly, an enforcement officer, a correction officer, a 
23psychiatric security aide, a Delaware River Port Authority 
24policeman or an officer of the Pennsylvania State Police, age 
2550, and, except for a member with Class G, Class H, Class I, 
26Class J, Class K, Class L, Class M or Class N service, age 55 
27upon accrual of 20 eligibility points. For Class A-3 and Class 
28A-4 service, any age upon attainment of a superannuation score 
29of 92, provided the member has accrued 35 eligibility points, or 
30age 65, or for park rangers or capitol police officers, age 55
 

1with 20 years of service as a park ranger or capitol police 
2officer, except for a member of the General Assembly, an 
3enforcement officer, a correction officer, a psychiatric 
4security aide, a Delaware River Port Authority policeman or an 
5officer of the Pennsylvania State Police, age 55. A vestee with 
6Class A-3 or Class A-4 service credit attains superannuation age 
7on the birthday the vestee attains the age resulting in a 
8superannuation score of 92, provided that the vestee has at 
9least 35 eligibility points, or attains another applicable 
10superannuation age, whichever occurs first.

11* * *

12"Trust." The State Employees' Defined Contribution Trust
13established under Chapter 54 (relating to State Employees'
14Defined Contribution Plan).

15* * *

16"Valuation interest." Interest at 5 1/2% per annum 
17compounded annually and applied to all accounts of the fund 
18other than the members' savings account.

19* * *

20"Voluntary contributions." Contributions made by a
21participant to the trust and credited to his individual
22investment account in excess of his mandatory pickup participant
23contributions, by salary deductions paid through the
24Commonwealth or other employer, or by an eligible rollover or
25direct trustee-to-trustee transfer.

26Section 3. Section 5103 of Title 71 is amended to read:

27§ 5103. Notice to members and participants.

28Notice by publication, including, without being limited to,
29newsletters, newspapers, forms, first class mail, letters,
30manuals and, to the extent authorized by a policy adopted by the

1board, electronically, including, without being limited to, e-
2mail or [World Wide Web] Internet sites, distributed or made
3available to members and participants in a manner reasonably
4calculated to give actual notice of those sections of the State
5Employees' Retirement Code that require notice to members or 
6participants shall be deemed sufficient notice for all purposes.

7Section 4. Title 71 is amended by adding a section to read:

8§ 5104. Reference to State Employees' Retirement System.

9(a) Construction.--As of the effective date of this section,
10unless the context clearly indicates otherwise, any reference to
11the State Employees' Retirement System in a statutory provision
12other than this part and 24 Pa.C.S. Pt. IV (relating to
13retirement for school employees) shall include a reference to
14the State Employees' Defined Contribution Plan and any reference
15to the State Employees' Retirement Fund shall include a
16reference to the State Employees' Defined Contribution Trust.

17(b) Agreement.--The agreement of an employer listed in the
18definition of "State employee" under section 5102 (relating to
19definitions) or any other law to make contributions to the State
20Employees' Retirement Fund or to enroll its employees as members
21in the State Employees' Retirement System shall be deemed to be
22an agreement to make contributions to the State Employees'
23Defined Contribution Trust or to enroll its employees in the
24State Employees' Defined Contribution Plan.

25Section 5. Section 5301 heading, (a), (b), (c) and (d) of
26Title 71 are amended and the section is amended by adding
27subsections to read:

28§ 5301. 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 State employees except the following:

4(1) Governor.

5(2) Lieutenant Governor.

6(3) Members of the General Assembly.

7(4) Heads or deputy heads of administrative departments.

8(5) Members of any independent administrative board or
9commission.

10(6) Members of any departmental board or commission.

11(7) Members of any advisory board or commission.

12(8) Secretary to the Governor.

13(9) Budget Secretary.

14(10) Legislative employees.

15(11) School employees who have elected membership in the
16Public School Employees' Retirement System.

17(12) School employees who have elected membership in an
18independent retirement program approved by the employer,
19provided that in no case, except as hereinafter provided,
20shall the employer contribute on account of such elected
21membership at a rate greater than the employer normal
22contribution rate as determined in section 5508(b) (relating
23to actuarial cost method for fiscal years ending before July 
241, 2015). For the fiscal year 1986-1987 an employer may
25contribute on account of such elected membership at a rate
26which is the greater of 7% or the employer normal
27contribution rate as determined in section 5508(b) and for
28the fiscal year 1992-1993 and all years after that at a rate
29of 9.29%.

30(13) Persons who have elected to retain membership in

1the retirement system of the political subdivision by which
2they were employed prior to becoming eligible for membership
3in the State Employees' Retirement System.

4(14) Persons who are not members of the system and are
5employed on a per diem or hourly basis for less than 100 days
6or 750 hours in a 12-month period.

7(15) Employees of the Philadelphia Regional Port
8Authority who have elected to retain membership in the
9pension plan or retirement system in which they were enrolled
10as employees of the predecessor Philadelphia Port Corporation
11prior to the creation of the Philadelphia Regional Port
12Authority.

13(16) Employees of the Juvenile Court Judges' Commission
14who, before the effective date of this paragraph, were
15transferred from the State System of Higher Education to the
16Juvenile Court Judges' Commission as a result of an
17interagency transfer of staff approved by the Office of
18Administration and who, while employees of the State System
19of Higher Education, had elected membership in an independent
20retirement program approved by the employer.

21(17) State employees whose most recent period of State 
22service starts on or after January 1, 2015. For purposes of 
23this paragraph and section 5955(c) (relating to construction 
24of part), a State employee who is furloughed under section 
25802 of the act of August 5, 1941 (P.L.752, No.286), known as 
26the Civil Service Act, and reemployed pursuant to the Civil 
27Service Act in any class of service or civil service status 
28which was previously held shall not be treated as having a 
29break in State service.

30(a.1) Mandatory participation in the plan.--State employees

1listed in subsection (a)(17) who are not listed in subsection
2(a)(1) through (13) shall be mandatory participants as of the
3most recent effective date of State service without regard to
4whether or not they are combined service employees.

5(b) Optional membership in the system.--The State employees
6listed in subsection (a)(1) through (11) shall have the right to
7elect membership in the system on or before December 31, 2014;
8once such election is exercised, membership shall continue until
9the termination of State service or until the State employee 
10elects to be a participant of the plan.

11(b.1) Optional participation in the plan.--The State
12employees listed in subsection (a)(17) who also are listed in
13subsection (a)(1) through (10) shall have the right to elect
14participation in the plan; once such election is exercised,
15participation will be effective as of the date of election and
16shall continue until the termination of State service.

17(c) Prohibited membership in the system.--The State
18employees listed in subsection (a)(12), (13), (14) [and], (15) 
19and (17) shall not have the right to elect membership in the
20system.

21(c.1) Prohibited participation in the plan.--The State
22employees listed in subsection (a)(17) who also are listed in
23subsection (a)(13) and (15) or who are employees of The
24Pennsylvania State University, the State System of Higher
25Education, State-owned educational institutions or community
26colleges shall not be eligible to participate in the plan.

27(d) Return to service.--An annuitant who returns to service
28as a State employee before January 1, 2015, shall resume active
29membership in the system as of the effective date of employment,
30except as otherwise provided in section 5706(a) (relating to

1termination of annuities), regardless of the optional membership
2category of the position. An annuitant, inactive participant or 
3a participant receiving distributions who returns to service as 
4a State employee on or after January 1, 2015, shall be an active 
5participant of the plan as of the effective date of employment 
6unless the position is eligible for optional participation or is 
7not eligible for participation in the plan, or except as 
8otherwise provided in section 5706(a).

9* * *

10Section 6. Section 5302(a), (b), (e) and (f) of Title 71,
11amended October 24, 2012 (P.L.1436, No.181), are amended to
12read:

13§ 5302. Credited State service.

14(a) Computation of credited service.--In computing credited
15State service of a member for the determination of benefits, a
16full-time salaried State employee, including any member of the
17General Assembly, shall receive credit for service in each
18period for which contributions as required are made to the fund,
19or for which contributions otherwise required for such service
20were not made to the fund solely by reason of section 5502.1
21(relating to waiver of regular member contributions and Social
22Security integration member contributions) or any provision of
23this part relating to the limitations under IRC § 401(a)(17) or
24415(b), but in no case shall he receive more than one year's
25credit for any 12 consecutive months or 26 consecutive biweekly
26pay periods. A per diem or hourly State employee shall receive
27one year of credited service for each nonoverlapping period of
2812 consecutive months or 26 consecutive biweekly pay periods in
29which he is employed and for which contributions are made to the 
30fund or would have been made to the fund but for such waiver

1under section 5502.1 or limitations under the IRC for at least
2220 days or 1,650 hours of employment. If the member was
3employed and contributions were made to the fund for less than
4220 days or 1,650 hours, he shall be credited with a fractional
5portion of a year determined by the ratio of the number of days
6or hours of service actually rendered to 220 days or 1,650
7hours, as the case may be. A part-time salaried employee shall
8be credited with the fractional portion of the year which
9corresponds to the number of hours or days of service actually
10rendered and for which contributions are made to the fund in
11relation to 1,650 hours or 220 days, as the case may be. In no
12case shall a member who has elected multiple service receive an
13aggregate in the two systems of more than one year of credited
14service for any 12 consecutive months.

15(b) Creditable leaves of absence.--

16(1) A member on leave without pay who is studying under 
17a Federal grant approved by the head of his department or who 
18is engaged up to a maximum of two years of temporary service 
19with the United States Government, another state or a local 
20government under the Intergovernmental Personnel Act of 1970 
21(5 U.S.C. §§ 1304, 3371-3376; 42 U.S.C. §§ 4701-4772) shall 
22be eligible for credit for such service: Provided, That 
23contributions are made in accordance with sections 5501 
24(relating to regular member contributions for current 
25service), 5501.1 (relating to shared-risk member 
26contributions for Class A-3 and Class A-4 service), 5505.1 
27(relating to additional member contributions) [and], 5507 
28(relating to contributions to the system by the Commonwealth 
29and other employers before July 1, 2015) and 5507.1 (relating 
30to contributions to the system by the Commonwealth and other
 

1employers starting July 1, 2015), the member returns from 
2leave without pay to active State service as a member of the 
3system for a period of at least one year, and he is not 
4entitled to retirement benefits for such service under a 
5retirement system administered by any other governmental 
6agency.

7(2) An active member or active participant on paid leave
8granted by an employer for purposes of serving as an elected
9full-time officer for a Statewide employee organization which
10is a collective bargaining representative under the act of 
11June 24, 1968 (P.L.237, No.111), referred to as the Policemen
12and Firemen Collective Bargaining Act, or the act of July 23, 
131970 (P.L.563, No.195), known as the Public Employe Relations
14Act, and up to 14 full-time business agents appointed by an
15employee organization that represents correction officers
16employed at State correctional institutions: Provided, That
17for elected full-time officers such leave shall not be for
18more than three consecutive terms of the same office and for
19up to 14 full-time business agents appointed by an employee
20organization that represents correction officers employed at
21State correctional institutions no more than three
22consecutive terms of the same office; that the employer shall
23fully compensate the member or the participant, including,
24but not limited to, salary, wages, pension and retirement
25contributions and benefits, other benefits and seniority, as
26if he were in full-time active service; and that the
27Statewide employee organization shall fully reimburse the
28employer for all expenses and costs of such paid leave,
29including, but not limited to, contributions and payment in
30accordance with [sections] section 5404 (relating to
 

1participant contributions), 5405 (relating to mandatory 
2pickup participant contributions), 5406 (relating to employer 
3defined contributions), 5501, 5501.1, 5505.1 [and], 5507 or 
45507.1, if the employee organization either directly pays, or
5reimburses the Commonwealth or other employer for,
6contributions made in accordance with [section] sections 
75404, 5405, 5406, 5507 and 5507.1.

8* * *

9(e) Cancellation of credited service.--All credited service 
10in the system shall be cancelled if a member withdraws his total 
11accumulated deductions, except that a member with Class A-3 or 
12Class A-4 service credit and one or more other classes of 
13service credit shall not have his service credit as a member of 
14any classes of service other than as a member of Class A-3 or 
15Class A-4 cancelled when the member receives a lump sum payment 
16of accumulated deductions resulting from Class A-3 or Class A-4 
17service pursuant to section 5705.1 (relating to payment of 
18accumulated deductions resulting from Class A-3 and Class A-4 
19service). A partial or total distribution of accumulated total 
20defined contributions to a combined service employee shall not 
21cancel service credited in the system.

22(f) Credit for military service.--A State employee who has 
23performed USERRA leave may receive credit in the system or 
24participate in the plan as follows:

25(1) For purposes of determining whether a member is
26eligible to receive credited service in the system for a
27period of active military service, other than active duty
28service to meet periodic training requirements, rendered
29after August 5, 1991, and that began before the effective
30date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73

1(relating to military leave of absence) shall apply to all
2individuals who were active members of the system when the
3period of military service began, even if not defined as an
4employee pursuant to 51 Pa.C.S. § 7301 (relating to
5definitions).

6(1.1) State employees may not receive service credit in 
7the system or exercise the options under 51 Pa.C.S. § 7306
8(relating to retirement rights) for military leaves that
9begin on or after the effective date of this subsection,
10except as otherwise provided by this subsection.

11(1.2) State employees may not participate in the plan or
12exercise the options under 51 Pa.C.S. § 7306 (relating to
13retirement rights) for military leaves that begin on or after
14the effective date of this paragraph, except as otherwise
15provided by this subsection.

16(2) A State employee who has performed USERRA leave may
17receive credit in the system as provided by this paragraph.
18The following shall apply:

19(i) A State employee who is reemployed from USERRA
20leave as an active member of the system shall be treated
21as not having incurred a break in State service by reason
22of the USERRA leave and shall be granted eligibility
23points as if the State employee had not been on the
24USERRA leave. If a State employee who is reemployed from
25USERRA leave as an active member of the system
26subsequently makes regular member contributions,
27additional member contributions, Social Security
28integration member contributions, shared-risk member
29contributions and any other member contributions in the
30amounts and in the time periods required by 38 U.S.C. Ch.

143 (relating to employment and reemployment rights of
2members of the uniformed services) and IRC § 414(u) as if
3the State employee had continued in State office or
4employment and performed State service and was
5compensated during the period of USERRA leave, then the
6State employee shall be granted State service credit for
7the period of USERRA leave. The State employee shall have
8the State employee's benefits, rights and obligations
9determined under this part as if the State employee was
10an active member who performed creditable State service
11during the USERRA leave in the job position that the
12State employee would have held had the State employee not
13been on USERRA leave and received the compensation on
14which the member contributions to receive State service
15credit for the USERRA leave were determined.

16(ii) For purposes of determining whether a State
17employee has made the required employee contributions for
18State service credit for USERRA leave, if an employee who
19is reemployed from USERRA leave as an active member of 
20the system terminates State service or dies in State
21service before the expiration of the allowed payment
22period, then State service credit for the USERRA leave
23will be granted as if the required member contributions
24were paid the day before termination or death. The amount
25of the required member contributions will be treated as
26an incomplete payment subject to the provisions of
27section 5506 (relating to incomplete payments). Upon a
28subsequent return to State service or to school service
29as a multiple service member, the required member
30contributions treated as incomplete payments shall be

1treated as member contributions that were either
2withdrawn in a lump sum at termination or paid as a lump
3sum pursuant to section 5705(a)(4) (relating to member's
4options), as the case may be.

5(iii) A State employee who is reemployed from USERRA
6leave as an active member of the system who does not make
7the required member contributions or makes only part of
8the required member contributions within the allowed
9payment period shall not be granted credited service for
10the period of USERRA leave for which the required member
11contributions were not timely made, shall not be eligible
12to subsequently make contributions and shall not be
13granted either State service credit or nonstate service
14credit for the period of USERRA leave for which the
15required member contributions were not timely made.

16(2.1) The following shall apply:

17(i) A participant who is reemployed from USERRA
18leave shall be treated as not having incurred a break in
19State service by reason of the USERRA leave. If a
20participant who is reemployed from USERRA leave
21subsequently makes mandatory pickup participant
22contributions in the amounts and in the time periods
23required by 38 U.S.C. Ch. 43 and IRC § 414(u) as if the
24participant had continued in his State office or
25employment and performed State service and been
26compensated during the period of USERRA leave, the
27participant's employer shall make the corresponding
28employer defined contributions. Such an employee shall
29have his contributions, benefits, rights and obligations
30determined under this part as if he were an active

1participant who performed State service during the USERRA
2leave in the job position that he would have held had he
3not been on USERRA leave and received the compensation on
4which the mandatory pickup participant contributions to
5receive State service credit for the USERRA leave were
6determined, including the right to make voluntary
7contributions on such compensation as permitted by law.

8(ii) A participant who is reemployed from USERRA
9leave who does not make the mandatory pickup participant
10contributions or makes only part of the mandatory pickup
11participant contributions within the allowed payment
12period shall not be eligible to make mandatory pickup
13participant contributions or voluntary contributions at a
14later date for the period of USERRA leave for which the
15mandatory pickup participant contributions were not
16timely made.

17(3) A State employee who is a member of the system and
18performs USERRA leave from which the employee could have been
19reemployed from USERRA leave had the State employee returned
20to State service in the time frames required by 38 U.S.C. Ch.
2143 for reemployment rights, but did not do so, shall be able
22to receive creditable nonstate service as nonintervening
23military service for the period of USERRA leave should the
24employee later return to State service as an active member of 
25the system and is otherwise eligible to purchase the service
26as nonintervening military service.

27(3.1) A State employee who is a participant in the plan
28and performs USERRA leave from which the employee could have
29been reemployed from USERRA leave had the employee returned
30to State service in the time frames required by 38 U.S.C. Ch.

143 for reemployment rights, but was not reemployed, shall not
2be eligible to make mandatory pickup participant
3contributions or voluntary contributions for the period of
4USERRA leave should the employee later return to State
5service and be a participant in the plan.

6(4) [A State employee] An active member or inactive 
7member on leave without pay who on or after the effective
8date of this subsection is granted a leave of absence under
951 Pa.C.S. § 4102 (relating to leaves of absence for certain
10government employees) or a military leave under 51 Pa.C.S.
11Ch. 73, that is not USERRA leave shall be able to receive
12creditable nonstate service as nonintervening military
13service should the employee return to State service as an 
14active member of the system and is otherwise eligible to
15purchase the service as nonintervening military service.

16(4.1) An active participant or inactive participant on
17leave without pay who, on or after the effective date of this
18paragraph, is granted a leave of absence under 51 Pa.C.S. §
194102 or a military leave under 51 Pa.C.S. Ch.73 that is not
20USERRA leave shall not be able to make mandatory pickup
21participant contributions or voluntary contributions during
22or for the leave of absence or military leave and shall not
23have employer defined contributions made during such leave,
24without regard to whether or not the State employee received
25salary, wages, stipends, differential wage payments or other
26payments from his employer during the leave, notwithstanding
27any provision to the contrary in 51 Pa.C.S. § 4102 or 51
28Pa.C.S. Ch. 73.

29(5) If a member dies while performing USERRA leave, then
30the beneficiaries or survivor annuitants, as the case may be,

1of the deceased member are entitled to any additional
2benefits, including eligibility points, other than benefit
3accruals relating to the period of qualified military
4service, provided under this part had the member resumed and
5then terminated employment on account of death.

6(5.1) If a participant dies while performing USERRA
7leave, the beneficiaries or successor payees of the deceased
8participant are entitled to any additional benefits, other
9than benefit accruals relating to the period of qualified
10military service, provided under this part had the
11participant resumed and terminated employment on account of
12death.

13(6) A State employee who is on a leave of absence from
14his duties as a State employee for which 51 Pa.C.S. § 4102
15provides that he is not to suffer a loss of pay, time or
16efficiency rating shall not be an active member, receive
17service credit or make member contributions for the leave of
18absence, except as provided for in this part. Notwithstanding
19this paragraph, any pay the member receives pursuant to 51
20Pa.C.S. § 4102 shall be included in the determination of
21final average salary and other calculations in the system
22utilizing compensation as if the payments were compensation
23under this part.

24Section 7. Sections 5303(b)(2), (d)(1), (e)(1) and (4),
255303.2(a) and (e), 5304(a) and (b), 5305(b) introductory
26paragraph and (3) and 5305.1 of Title 71 are amended to read:

27§ 5303. Retention and reinstatement of service credits.

28* * *

29(b) Eligibility points for prospective credited service.--

30* * *

1(2) A special vestee or person otherwise eligible to be
2a special vestee who returns to State service, other than as 
3a participant in the plan, or withdraws his accumulated
4deductions pursuant to section 5311 (relating to eligibility
5for refunds) or 5701 (relating to return of total accumulated
6deductions) shall receive or retain eligibility points in
7accordance with paragraph (1) but upon subsequent termination
8of State service shall only be eligible to be an annuitant,
9vestee or inactive member without regard to previous status
10as a special vestee and without regard to the provisions of
11this part providing for special vestees.

12* * *

13(d) Transfer of certain pension service credit.--

14(1) Any person who was an employee of any county in this
15Commonwealth on the personal staff of an appellate court
16judge prior to September 9, 1985, and who had that employment
17transferred to the Commonwealth pursuant to 42 Pa.C.S. § 3703
18(relating to local chamber facilities) shall be a member of
19the system for all service rendered as an employee of the
20Commonwealth on the personal staff of an appellate court
21judge subsequent to the date of the transfer unless
22specifically prohibited pursuant to section 5301(c) (relating
23to mandatory and optional membership in the system and 
24participation in the plan). The employee shall be entitled to
25have any prior service credit in that county or other
26municipal pension plan or retirement system transferred to
27the system and deemed to be State service for all purposes
28under this part. However, for those employees who were in
29continuous county employment which commenced prior to July
3022, 1983, section 5505.1 shall not apply. The transfer of

1prior service credit to the system shall occur upon the
2transfer, by the member, county or other municipal pension
3plan or retirement system, to the system of the amount of
4accumulated member contributions, pick-up contributions and
5credited interest standing in the employee's county or
6municipal pension plan or retirement system account as of the
7date that these funds are transferred to the system. In the
8event that these funds have been refunded to the member, the
9transfer of service credit shall occur when the member
10transfers an amount equal to either the refund which the
11member received from the county or municipal pension plan or
12retirement system or the amount due under section 5504, if
13less. In the case of a transfer by the member, the transfer
14shall occur by December 31, 1987, in order for the member to
15receive credit for the prior service. In the case of a
16transfer by the county or other municipal pension plan or
17retirement system, the transfer shall also occur by December
1831, 1987. If the amount transferred to the system by the
19member of a county or municipal pension plan or retirement
20system is greater than the amount that would have accumulated
21in the member's account if the employee had been a member of
22the system, all excess funds shall be returned to the
23employee within 90 days of the date on which such funds are
24credited to the member's account in the system. Within 60
25days of receipt of written notice that an employee has
26elected to transfer credits under the provisions of this
27subsection, the county or other municipal pension plans or
28retirement systems shall be required to transfer to the
29system an amount, excluding contributions due under section
305504(a), equal to the liability of the prior service in

1accordance with county or other municipal pension plan or
2retirement system benefit provisions, multiplied by the ratio
3of system actuarial value of assets for active members to the
4system actuarial accrued liability for active members. The
5Public Employee Retirement Study Commission shall determine
6the appropriate amount of employer contributions to be
7transferred to the system by the county or other municipal
8pension plans or retirement systems.

9* * *

10(e) Transfer and purchase of certain pension service credit;
11Philadelphia Regional Port Authority.--

12(1) Any employee of the Philadelphia Regional Port
13Authority who becomes a State employee, as defined in section
145102 (relating to definitions), and an active member of the 
15system shall be eligible to obtain retirement credit for
16prior uncredited service with the Philadelphia Port
17Corporation, a Pennsylvania not-for-profit corporation
18("predecessor corporation"), provided that the Commonwealth
19does not incur any liability for the funding of the annuities
20attributable to the prior, uncredited "predecessor
21corporation" service, the cost of which shall be determined
22according to paragraph (2).

23* * *

24(4) Any person who became employed by the Philadelphia
25Regional Port Authority between July 10, 1989, and passage of
26this act and who becomes a State employee, as defined in
27section 5102, and an active member of the system shall be
28eligible to obtain retirement credit for service from the
29date of employment with the Philadelphia Regional Port
30Authority, provided that the contributions are made in

1accordance with sections 5501, 5504, 5505.1 and 5506.

2* * *

3§ 5303.2. Election to convert school service to State service.

4(a) Eligibility.--An active member or inactive member on
5leave without pay who was an employee transferred from the
6Department of Education to the Department of Corrections
7pursuant to section 908-B of the act of April 9, 1929 (P.L.177,
8No.175), known as The Administrative Code of 1929, and who on
9the effective date of that transfer did not participate in an
10independent retirement program approved by the Department of
11Education under 24 Pa.C.S. § 8301(a)(1) (relating to mandatory
12and optional membership) or section 5301(a)(12) (relating to
13mandatory and optional membership in the system and 
14participation in the plan), notwithstanding any other provision
15of law or any collective bargaining agreement, arbitration
16award, contract or term or conditions of any retirement system
17or pension plan, may make a one-time election to convert all
18service credited in the Public School Employees' Retirement
19System as of June 30, 1999, and transfer to the system all
20accumulated member contributions and statutory interest credited
21in the members' savings account in the Public School Employees'
22Retirement System as of June 30, 1999, plus statutory interest
23on that amount credited by the Public School Employees'
24Retirement System from July 1, 1999, to the date of transfer to
25the system.

26* * *

27(e) Transfer.--Within 180 days after the effective date of
28this subsection, the Public School Employees' Retirement System
29shall transfer to the board for each member electing to convert
30under this section the accumulated member contributions and

1statutory interest credited in the Public School Employees'
2Retirement System, plus an amount equal to the value of all
3annual employer contributions made to the Public School
4Employees' Retirement System with interest at the annual rate
5adopted by the board for the calculation of the normal
6contribution rate under section 5508(b) (relating to actuarial
7cost method for fiscal years ending before July 1, 2015), from
8the date of each contribution to the date of the transfer of the
9funds to the board. Any debt owed by a member to the Public
10School Employees' Retirement System for whatever reason shall be
11transferred to the system and shall be paid in a manner and in
12accordance with conditions prescribed by the board.

13* * *

14§ 5304. Creditable nonstate service.

15(a) Eligibility.--

16(1) An active member who first becomes an active member 
17before January 1, 2011, or before December 1, 2010, as a 
18member of the General Assembly, or a multiple service member
19who first becomes an active member before January 1, 2011, or 
20before December 1, 2010, as a member of the General Assembly, 
21and who is a school employee and an active member of the
22Public School Employees' Retirement System shall be eligible
23for Class A service credit for creditable nonstate service as
24set forth in subsections (b) and (c) except that intervening
25military service shall be credited in the class of service
26for which the member was eligible at the time of entering
27into military service and for which he makes the required
28contributions to the fund and except that a multiple service
29member who is a school employee and an active member of the
30Public School Employees' Retirement System shall not be

1eligible to purchase service credit for creditable nonstate
2service set forth in subsection (c)(5).

3(2) An active member who first becomes an active member
4on or after January 1, 2011, or on or after December 1, 2010,
5as a member of the General Assembly, or a multiple service
6member who first becomes an active member on or after January
71, 2011, or on or after December 1, 2010, as a member of the
8General Assembly, and who is a school employee and an active
9member of the Public School Employees' Retirement System
10shall be eligible for Class A-3 service credit for creditable
11nonstate service as set forth in subsections (b) and (c)
12except that intervening military service shall be credited in
13the class of service for which the member was eligible at the
14time of entering into military service and for which he makes
15the required contributions to the fund and except that a
16multiple service member who is a school employee and an
17active member of the Public School Employees' Retirement
18System shall not be eligible to purchase service credit for
19creditable nonstate service set forth in subsection (c)(5).

20* * *

21(b) Limitations on eligibility.--An active member or a
22multiple service member who is a school employee and an active
23member of the Public School Employees' Retirement System shall
24be eligible to receive credit for nonstate service provided that
25he does not have credit for such service in the system or in the
26school system and is not entitled to receive, eligible to
27receive now or in the future, or is receiving retirement
28benefits for such service in the system or under a retirement
29system administered and wholly or partially paid for by any
30other governmental agency or by any private employer, or a

1retirement program approved by the employer in accordance with
2section 5301(a)(12) (relating to mandatory and optional
3membership in the system and participation in the plan), and
4further provided, that such service is certified by the previous
5employer and contributions are agreed upon and made in
6accordance with section 5505 (relating to contributions for the
7purchase of credit for creditable nonstate service).

8* * *

9§ 5305. Social security integration credits.

10* * *

11(b) Accrual of subsequent credits.--Any active member who
12has social security integration accumulated deductions to his
13credit or is receiving a benefit on account of social security
14integration credits may accrue one social security integration
15credit for each year of service as a State employee on or
16subsequent to March 1, 1974 and a fractional credit for a
17corresponding fractional year of service provided that
18contributions are made to the fund, or would have been made to 
19the fund but for section 5502.1 (relating to waiver of regular
20member contributions and Social Security integration member
21contributions) or the limitations under IRC § 401(a)(17) or
22415(b), in accordance with section 5502 (relating to Social
23Security integration member contributions), and he:

24* * *

25(3) terminates his status as a vestee or an annuitant
26and returns to State service as an active member of the 
27system.

28* * *

29§ 5305.1. Eligibility for actuarial increase factor.

30A person who is:

1(1) an active member;

2(2) an inactive member on leave without pay; [or]

3(3) a multiple service member who is a school employee
4and an active member of the Public School Employees'
5Retirement System; or

6(4) a combined service employee who is an active
7participant or inactive participant on leave without pay

8who terminates State service or school service, as the case may
9be, after attaining age 70 and who applies for a superannuation
10annuity with an effective date of retirement the day after the
11date of termination of State service or school service shall
12have that person's maximum single life annuity calculated
13pursuant to section 5702(a.1) (relating to maximum single life
14annuity).

15Section 8. Section 5306(a), (a.1)(2) and (6), (a.2)(1) and
16(2) and (b) of Title 71 are amended and the section is amended
17by adding a subsection to read:

18§ 5306. Classes of service.

19(a) Class A and Class A-3 membership.--

20(1) A State employee who is a member of Class A on the
21effective date of this part or who first becomes a member of
22the system subsequent to the effective date of this part and 
23before January 1, 2011, or before December 1, 2010, as a 
24member of the General Assembly, shall be classified as a
25Class A member and receive credit for Class A service upon
26payment of regular and additional member contributions for
27Class A service, provided that the State employee does not
28become a member of Class AA pursuant to subsection (a.1)
29[or], a member of Class D-4 pursuant to subsection (a.2) or a 
30participant in the plan.

1(2) A State employee who first becomes a member of the 
2system on or after January 1, 2011, or on or after December 
31, 2010, as a member of the General Assembly, shall be 
4classified as a Class A-3 member and receive credit for Class 
5A-3 service upon payment of regular member contributions and 
6shared-risk member contributions for Class A-3 service 
7provided that the State employee does not become a member of 
8Class A-4 pursuant to subsection (a.3), except that a member 
9of the judiciary shall be classified as a member of such 
10other class of service for which the member of the judiciary 
11is eligible, shall elect and make regular member 
12contributions[.] and further provided that the State employee 
13does not become a participant in the plan or is not eligible
14to be an optional participant of the plan under section 5301 
15(relating to mandatory and optional membership in the system 
16and participation in the plan).

17(a.1) Class AA membership.--

18* * *

19(2) A person who is a State employee on June 30, 2001,
20and July 1, 2001, but is not an active member of the system
21because membership in the system is optional or prohibited
22pursuant to section 5301 (relating to mandatory and optional
23membership in the system and participation in the plan) and
24who first becomes an active member after June 30, 2001, and
25before January 1, 2011, or before December 1, 2010, as a
26member of the General Assembly, and who is not a State police
27officer and not employed in a position for which a class of
28service other than Class A is credited or could be elected
29shall be classified as a Class AA member and receive credit
30for Class AA State service upon payment of regular member

1contributions for Class AA service and, subject to the
2limitations contained in paragraph (7), if previously a
3member of Class A or previously employed in a position for
4which Class A service could have been earned, shall have all
5Class A State service (other than State service performed as
6a State Police officer or for which a class of service other
7than Class A was earned or could have been elected)
8classified as Class AA service.

9* * *

10(6) A State employee who after June 30, 2001, becomes a
11State police officer or who is employed in a position in
12which the member could elect membership in the system in a
13class of service other than Class AA or Class D-4 shall
14retain any Class AA service credited prior to becoming a
15State police officer or being so employed but shall be
16ineligible to receive Class AA credit thereafter and instead
17shall receive Class A credit for service as a member of the 
18judiciary if such judicial service begins before January 1, 
192015, or if he first became a member before January 1, 2011, 
20or December 1, 2010, as a member of the General Assembly, or 
21Class A-3 credit for service other than as a member of the 
22judiciary if such nonjudicial service begins before January 
231, 2015, and he first became a member on or after January 1, 
242011, or December 1, 2010, as a member of the General 
25Assembly, unless a class of membership other than Class A is
26elected.

27* * *

28(a.2) Class of membership for members of the General
29Assembly.--

30(1) A person who:

1(i) becomes a member of the General Assembly and an
2active member of the system after June 30, 2001, and 
3before December 1, 2010; or

4(ii) is a member of the General Assembly on July 1,
52001, but is not an active member of the system because
6membership in the system is optional pursuant to section
75301 and who becomes an active member after June 30,
82001, and before December 1, 2010;

9and who was not a State police officer on or after July 1,
101989, shall be classified as a Class D-4 member and receive
11credit as a Class D-4 member for all State service as a 
12member of the system performed as a member of the General
13Assembly upon payment of regular member contributions for
14Class D-4 service and, subject to the limitations contained
15in subsection (a.1)(7), if previously a member of Class A or
16employed in a position for which Class A service could have
17been earned, shall receive Class AA service credit for all
18Class A State service, other than State service performed as
19a State police officer or for which a class of service other
20than Class A or Class D-4 was or could have been elected or
21credited.

22(2) Provided an election to become a Class D-4 member is
23made pursuant to section 5306.2 (relating to elections by
24members of the General Assembly), a State employee who was
25not a State police officer on or after July 1, 1989, who on
26July 1, 2001, is a member of the General Assembly and an
27active member of the system and not a member of Class D-3
28shall be classified as a Class D-4 member and receive credit
29as a Class D-4 member for all State service as a member of 
30the system performed as a member of the General Assembly not

1credited as another class other than Class A upon payment of
2regular member contributions for Class D-4 service and,
3subject to the limitations contained in paragraph (a.1)(7),
4shall receive Class AA service credit for all Class A State
5service, other than State service performed as a State police
6officer or as a State employee in a position in which the
7member could have elected a class of service other than Class
8A, performed before July 1, 2001.

9* * *

10(b) Other class membership.--

11(1) A State employee who is a member of a class of
12service other than Class A on the effective date of this part
13shall retain his membership in that class until such service
14is discontinued; any service as a member of the system 
15thereafter shall be credited as Class A service, Class AA
16service or Class D-4 service as provided for in this section.

17(2) Notwithstanding any other provision of this section,
18a State employee who is appointed bail commissioner of the
19Philadelphia Municipal Court under 42 Pa.C.S. § 1123(a)(5)
20(relating to jurisdiction and venue) and is eligible to be a 
21member of the system as a bail commissioner may, within 30
22days of the effective date of this sentence or within 30 days
23of his initial appointment as a bail commissioner, whichever
24is later, elect Class E-2 service credit for service
25performed as a bail commissioner. This class of service
26multiplier for E-2 service as a bail commissioner shall be
271.5.

28* * *

29(e) Ineligibility for active membership and classes of
30service.--An individual who elects to be a participant in the

1plan or who is a State employee on January 1, 2015, but is not a
2member of the system or who first becomes a State employee on or
3after January 1, 2015, or who returns to State service after a
4termination of State service, without regard to whether the
5termination occurred before or after January 1, 2015, shall be
6ineligible for active membership in the system or the several
7classes of State service as otherwise provided for under this
8section. Any such State employee, if eligible, may be a
9participant in the plan as a result of such State service.

10Section 9. Sections 5306.1(c), 5306.2(b) and 5306.3(c) and
11(d) of Title 71 are amended to read:

12§ 5306.1. Election to become a Class AA member.

13* * *

14(c) Effect of election.--An election to become a Class AA
15member shall become effective the later of July 1, 2001, or the
16date when the election is filed with the board and shall remain
17in effect until the termination of employment or election to be 
18a participant in the plan. Upon termination and a subsequent
19reemployment that occurs before January 1, 2015, the member's
20class of service shall be credited in the class of service
21otherwise provided for in this part. If the reemployment occurs 
22on or after January 1, 2015, the State employee's eligibility 
23for membership in the system or participation in the plan shall 
24be as provided in this part.

25* * *

26§ 5306.2. Elections by members of the General Assembly.

27* * *

28(b) Effect of election.--Membership as a Class D-4 member
29shall become effective on July 1, 2001, and shall remain in
30effect until the termination of service as a member of the

1General Assembly or election to be a participant in the plan.
2Upon termination and a subsequent reemployment that occurs 
3before January 1, 2015, the member's class of service shall be
4credited in the class of service otherwise provided for in this
5part. If the reemployment occurs on or after January 1, 2015, 
6the State employee's eligibility for membership in the system or 
7participation in the plan shall be as provided in this part.

8* * *

9§ 5306.3. Election to become a Class A-4 member.

10* * *

11(c) Effect of election.--An election to become a Class A-4 
12member shall be irrevocable and shall become effective on the 
13effective date of membership in the system and shall remain in 
14effect for all future [creditable] State service creditable in 
15the system, other than service performed as a member of the 
16judiciary and service performed after a termination and a 
17reemployment when the reemployment occurs on or after January 1, 
182015. Payment of regular member contributions for Class A-4 
19State service performed prior to the election of Class A-4 
20membership shall be made in a form, manner and time determined 
21by the board. Upon termination and a subsequent reemployment 
22before January 1, 2015, a member who elected Class A-4 
23membership shall be credited as a Class A-4 member for 
24creditable State service performed after reemployment and before 
25the next termination of State service or election to be a 
26participant, except as a member of the judiciary, regardless of 
27termination of employment, termination of membership by 
28withdrawal of accumulated deductions or status as an annuitant, 
29vestee or inactive member after the termination of service and 
30before reemployment occurring before January 1, 2015.

1(d) Effect of failure to make election.--Failure to elect to 
2become a Class A-4 member within the election period set forth 
3in subsection (b) shall result in all of the member's State 
4service, other than service performed as a member of the 
5judiciary, being credited as Class A-3 service, unless the State 
6employee elects or is required to be a participant in the plan, 
7and not subject to further election or crediting as Class A-4 
8service. Upon termination and subsequent employment, a member 
9who failed to elect to become a Class A-4 member shall not be 
10eligible to make another election to become a Class A-4 member 
11for either past or future State service.

12Section 10. Sections 5307(b)(1) and 5308(a) and (b) of Title
1371, amended October 24, 2012 (P.L.1436, No.181), are amended and
14the sections are amended by adding subsections to read:

15§ 5307. Eligibility points.

16* * *

17(b) Transitional rule.--

18(1) In determining whether a member who is not a State 
19employee or school employee on June 30, 2001, and July 1, 
202001, and who has previous State service (except a disability 
21annuitant who returns to State service after June 30, 2001, 
22upon termination of the disability annuity) has the five 
23eligibility points required by sections 5102 (relating to 
24definitions), 5308(b) (relating to eligibility for 
25annuities), 5309 (relating to eligibility for vesting), 
265704(b) (relating to disability annuities) and 5705(a) 
27(relating to member's options), only eligibility points 
28earned by performing credited State service as an active 
29member of the system, USERRA leave or credited school service 
30as an active member of the Public School Employees'
 

1Retirement System after June 30, 2001, shall be counted until 
2such member earns one eligibility point by performing 
3credited State service or credited school service after June 
430, 2001, at which time all eligibility points as determined 
5pursuant to subsection (a) shall be counted.

6* * *

7(c) Transitional rule for members electing participation.--
8In determining whether a State employee who is an active member
9or an inactive member on leave without pay on January 1, 2015,
10and who elects to become a participant in the plan under section
115416 (relating to election by members to be participants) has
12the five eligibility points required by sections 5102, 5308(b)
13(1), 5309(1) and 5705(a) or the ten eligibility points required
14by sections 5102, 5308(b)(2), 5309(2) and 5705(a), any such
15combined service employee shall be considered to have satisfied
16any requirement for five or ten eligibility points, as the case
17may be, if the combined service employee does not terminate
18State service for three or more years after the effective date
19of participation in the plan.

20§ 5308. Eligibility for annuities.

21(a) Superannuation annuity.--Attainment of superannuation 
22age by an active member [or], an inactive member on leave 
23without pay or a combined service employee who is an active 
24participant or inactive participant on leave without pay with 
25three or more eligibility points other than eligibility points 
26resulting from nonstate service or nonschool service shall 
27entitle him to receive a superannuation annuity upon termination 
28of State service and compliance with section 5907(f) (relating 
29to rights and duties of State employees [and], members and 
30participants).

1(b) Withdrawal annuity.--

2(1) Any vestee or any active member [or], inactive
3member on leave without pay or a combined service employee 
4who is an active participant or inactive participant on leave 
5without pay who terminates State service having five or more
6eligibility points and who does not have Class A-3 or Class 
7A-4 service credit or Class T-E or Class T-F service credit 
8in the Public School Employees' Retirement System, or who has
9Class G, Class H, Class I, Class J, Class K, Class L, Class M
10or Class N service and terminates State service having five
11or more eligibility points, upon compliance with section
125907(f), (g) or (h) shall be entitled to receive an annuity.

13(2) Any vestee, active member [or], inactive member on 
14leave without pay or combined service employee who is an 
15active participant or inactive participant on leave without 
16pay who has Class A-3 or Class A-4 service credit or Class T-
17E or Class T-F service credit in the Public School Employees' 
18Retirement System who terminates State service having ten or 
19more eligibility points, upon compliance with section 
205907(f), (g) or (h), shall be entitled to receive an annuity.

21(3) Any vestee, active member [or], inactive member on 
22leave without pay or combined service employee who is an 
23active participant or inactive participant on leave without 
24pay who has either Class A-3 or Class A-4 service credit or 
25Class T-E or Class T-F service credit in the Public School 
26Employees' Retirement System and also has service credited in 
27the system in one or more other classes of service who has 
28five or more, but fewer than ten, eligibility points, upon 
29compliance with section 5907(f), (g) or (h), shall be 
30eligible to receive an annuity calculated on his service
 

1credited in classes of service other than Class A-3 or Class 
2A-4, provided that the member has five or more eligibility 
3points resulting from service in classes other than Class A-3 
4or Class A-4 or Class T-E or Class T-F service in the Public 
5School Employees' Retirement System.

6* * *

7(d) Eligibility of combined service employees for
8superannuation annuity.--A State employee who is an active
9member or inactive member on leave without pay on January 1,
102015, and who elects to become a participant under section 5416
11(relating to election by members to be participants) will be
12deemed to have satisfied the requirement of three or more years
13of credited State or school service under subsection (a) if the
14State employee does not terminate State service before three
15years after the effective date of the election to be a
16participant. Nothing in this subsection amends or waives any
17other requirement to be eligible for a superannuation annuity.

18Section 11. Sections 5308.1(1) and 5311(a) of Title 71 are
19amended to read:

20§ 5308.1. Eligibility for special early retirement.

21Notwithstanding any provisions of this title to the contrary,
22the following special early retirement provisions shall be
23applicable to specified eligible members as follows:

24(1) During the period of July 1, 1985, to September 30,
251991, an active member who has attained the age of at least
2653 years and has accrued at least 30 eligibility points shall
27be entitled, upon termination of State service and compliance
28with section 5907(f) (relating to rights and duties of State
29employees [and], members and participants), to receive a
30maximum single life annuity calculated under section 5702

1(relating to maximum single life annuity) without a reduction
2by virtue of an effective date of retirement which is under
3the superannuation age.

4* * *

5§ 5311. Eligibility for refunds.

6(a) Total accumulated deductions.--Any active member,
7regardless of eligibility for benefits, may elect to receive his
8total accumulated deductions upon termination of service in lieu
9of any benefit from the system to which he is entitled.

10* * *

11Section 12. Title 71 is amended by adding a chapter to read:

12CHAPTER 54

13STATE EMPLOYEES' DEFINED CONTRIBUTION PLAN

14Sec.

155401. Establishment.

165402. Plan document.

175403. Individual investment accounts.

185404. Participant contributions.

195405. Mandatory pickup participant contributions.

205406. Employer defined contributions.

215407. Eligibility for benefits.

225408. Death benefits.

235409. Vesting.

245410. Termination of distributions.

255411. Agreements with financial institutions and other
26organizations.

275412. Powers and duties of board.

285413. Responsibility for investment loss.

295414. Investments based on participants' investment allocation
30choices.

15415. Expenses.

25416. Election by members to be participants.

35417. Required distributions.

4§ 5401. Establishment.

5(a) State Employees' Defined Contribution Plan.--The State
6Employees' Defined Contribution Plan is established. The board
7shall administer and manage the plan which shall be a defined
8contribution plan exclusively for the benefit of those State
9employees who participate in the plan and their beneficiaries
10within the meaning of and in conformity with IRC § 401(a). The
11board shall determine the terms and provisions of the plan not
12inconsistent with this part, IRC or other applicable law and
13shall provide for the plan's administration.

14(b) State Employees' Defined Contribution Trust.--The State
15Employees' Defined Contribution Trust is established as part of
16the State Employees' Defined Contribution Plan. The trust shall
17be comprised of the individual investment accounts and all
18assets and moneys in those accounts. The members of the board
19shall be the trustees of the trust established under this
20section which shall be administered exclusively for the benefit
21of those State employees who participate in the plan and their
22beneficiaries within the meaning of and conformity with IRC §
23401(a). The board shall determine the terms and provisions of
24the trust not inconsistent with this part, IRC or other
25applicable law and shall provide for the investment and
26administration of the trust.

27(c) Holding of assets.--All assets and income in the plan
28that have been or shall be withheld or contributed by the
29participants, the Commonwealth and other employers in accordance
30with this part shall be held in trust in any funding vehicle

1permitted by the applicable provisions of IRC for the exclusive
2benefit of the plan's participants and their beneficiaries until
3such time as the funds are distributed to the participants or
4their beneficiaries in accordance with the terms of the plan
5document. The assets of the plan held in trust for the exclusive
6benefit of the plan's participants and their beneficiaries may
7be used for the payment of the fees, costs and expenses related
8to the administration and investment of the plan and the trust.

9(d) Name for transacting business.--All of the business of
10the plan shall be transacted, the trust invested, all
11requisitions for money drawn and payments made and all of its
12cash and securities and other property shall be held by the name
13of the "State Employees' Defined Contribution Plan," except
14that, any other law to the contrary notwithstanding, the board
15may establish a nominee registration procedure for the purpose
16of registering securities in order to facilitate the purchase,
17sale or other disposition of securities pursuant to the
18provisions of this part.

19§ 5402. Plan document.

20The board shall set forth the terms and provisions of the
21plan and trust in a document containing the terms and conditions
22of the plan and in a trust declaration that shall be published
23in the Pennsylvania Bulletin. The creation of the document
24containing the terms and conditions of the plan and the trust
25declaration and the establishment of the terms and provisions of
26the plan and the trust need not be promulgated by regulation or
27formal rulemaking and shall not be subject to the act of July
2831, 1968 (P.L.769, No.240), referred to as the Commonwealth
29Documents Law. A reference in this part or other law to the plan
30shall include the plan document unless the context clearly

1indicates otherwise.

2§ 5403. Individual investment accounts.

3The board shall establish in the trust an individual
4investment account for each participant in the plan. All
5contributions by a participant or an employer for or on behalf
6of a participant shall be credited to the participant's
7individual investment account, together with all interest and
8investment earnings and losses. Investment and administrative
9fees, costs and expenses shall be charged to the participants'
10individual investment accounts. Employer defined contributions 
11shall be recorded and accounted for separately from participant 
12contributions, but all interest, investment earnings and losses, 
13and investment and administrative fees, costs and expenses shall 
14be allocated proportionately.

15§ 5404. Participant contributions.

16(a) Mandatory contributions.--Each participant shall make
17mandatory pickup participant contributions through payroll
18deductions to the participant's individual investment account
19equal to 4% of compensation for current State service. The
20employer shall cause such contributions for current service to
21be made and deducted from each payroll or on such schedule as
22established by the board.

23(b) Voluntary contributions.--A participant may make 
24voluntary contributions through payroll deductions or through 
25direct trustee-to-trustee transfers or through transfers of 
26money received in an eligible rollover into the trust to the 
27extent allowed by IRC § 402. Such rollovers shall be made in a 
28form and manner as determined by the board, shall be credited to 
29the participant's individual investment account and shall be 
30separately accounted for by the board.

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

8§ 5405. Mandatory pickup participant contributions.

9(a) Treatment for purposes of IRC § 414(h).--All
10contributions to the trust required to be made under section
115404(a) (relating to participant contributions) with respect to
12current State service rendered by an active participant shall be
13picked up by the Commonwealth or other employer and shall be
14treated as the employer's contribution for purposes of IRC §
15414(h). After the effective date of this section, an employer 
16employing a participant in the plan shall pick up the required 
17mandatory participant contributions by a reduction in the 
18compensation of the participant.

19(b) Treatment for other purposes.--For all purposes other
20than the IRC, such mandatory pickup participant contributions
21shall be treated as contributions made by a participant in the
22same manner and to the same extent as if the contributions were
23made directly by the participant and not picked up.

24§ 5406. Employer defined contributions.

25(a) Contributions for current service.--The Commonwealth or
26other employer of a participant shall make employer defined
27contributions for current service of each active participant
28which shall be credited to each respective participant's
29individual investment account.

30(b) Contributions resulting from participants reemployed

1from USERRA leave.--When a State employee reemployed from USERRA
2leave makes the mandatory pickup participant contributions
3permitted to be made for the USERRA leave, the Commonwealth or
4other employer by whom the State employee is employed at the
5time the participant contributions are made shall make whatever
6employer defined contributions would have been made under this
7section had the employee making the participant contributions
8continued to be employed in the employee's State office or
9position instead of performing USERRA leave. Such employer
10defined contributions shall be placed in the participant's
11individual investment account as otherwise provided by this
12part.

13(c) Limitations on contributions.--No contributions shall be
14allowed which would cause a violation of the limitations related
15to contributions applicable to governmental plans contained in
16IRC § 415 or in other provisions of law. In the event that any
17disallowed contributions are made, any employer defined
18contributions in excess of the limitations and investment
19earnings thereon shall be refunded to the employer by the board.

20§ 5407. Eligibility for benefits.

21(a) Termination of service.--A participant who terminates
22State service shall be eligible to withdraw the accumulated
23total defined contributions standing to his credit in the
24participant's individual investment account or such lesser
25amount as the participant may request. Payment shall be made in
26a lump sum unless the board has established other forms of
27distribution in the plan document. A participant who withdraws
28his accumulated total defined contributions shall no longer be a
29participant in the plan, notwithstanding that the participant
30may have contracted to receive an annuity or other form of

1payment from a provider retained by the board for such purposes.

2(b) Required distributions.--All payments pursuant to this
3section shall start and be made in compliance with the minimum
4distribution requirements and incidental death benefit rules of
5IRC § 401(a)(9). The board shall take any action and make any
6distributions it may determine are necessary to comply with such
7requirements.

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

12(d) Loans.--Loans or other distributions from the plan to
13State employees who have not terminated State service are not
14permitted, except as required by law.

15(e) Small individual investment accounts.--A participant who
16terminates State service and whose accumulated total defined
17contributions are below the threshold established by law as of
18the date of termination of service may be paid the accumulated
19total defined contributions in a lump sum as provided in IRC §
20401(a)(31).

21§ 5408. Death benefits.

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

27(b) Death of participant receiving distributions.--In the
28event of the death of a participant receiving distributions, the
29board shall pay to the participant's beneficiary the balance in
30the participant's individual investment account in a lump sum or

1in such other manner as the board may establish in the plan
2document or, if the board has established alternative methods of
3distribution in the plan document under which the participant
4was receiving distributions, to the participant's beneficiary or
5successor payee, as the case may be, as provided in the plan
6document.

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

12§ 5409. Vesting.

13Subject to the forfeiture and attachment provisions of
14section 5953 (relating to taxation, attachment and assignment of
15funds) or otherwise as provided by law, a participant shall be
16100% vested with respect to all mandatory pickup participant
17contributions, voluntary contributions and employer defined
18contributions paid by or on behalf of the participant to the
19trust in addition to interest and earnings on the participant
20and employer contributions but not including investment fees and
21administrative charges.

22§ 5410. Termination of distributions.

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

30(b) Return of benefits paid during USERRA leave.--If a

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

15§ 5411. Agreements with financial institutions and other
16organizations.

17To establish and administer the State Employees' Defined
18Contribution Plan, the board shall have the power to enter into
19written agreements with one or more financial institutions or
20other organizations relating to the plan's administration and
21investment of funds held pursuant to the plan.

22§ 5412. Powers and duties of board.

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

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

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

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

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

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

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

12(6) The board may perform an annual review of any
13qualified fund manager for the purpose of assuring that the
14fund manager continues to meet all standards and criteria
15established.

16(7) The board may allow for eligible rollovers and
17direct trustee-to-trustee transfers into the trust from
18qualified plans of other employers, regardless of whether the
19employers are private employers or public employers.

20(8) The board may allow a former participant to maintain
21his or her individual investment account within the plan.

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

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

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

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

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

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

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

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

16(iv) Standards and criteria for disclosing and
17providing options to eligible individuals regarding
18investments of amounts deferred under the plan, provided
19that one of the available options must serve as the
20default option for participants who do not make a timely
21election and that, to the extent commercially available,
22one option must have an annuity investment feature.

23(v) Standards and criteria for disclosing to the
24participants the anticipated and actual income
25attributable to amounts invested, property rights and all
26fees, costs and charges to be made against amounts
27deferred to cover the fees, costs and expenses of
28administering and managing the plan or trust.

29(vi) Procedures, standards and criteria for the
30making of distributions from the plan upon termination

1from employment or death or in other circumstances
2consistent with the purpose of the plan.

3(14) The board may waive any reporting or information
4requirement contained in this part if the board determines
5that the information is not needed for the administration of
6the plan.

7(15) The board may contract any services and duties in
8lieu of staff, except final adjudications or if prohibited by
9law. Any duties or responsibilities of the board not required
10by law to be performed by the board can be delegated to a
11third-party provider subject to appeal to the board.

12(16) The board may provide that any duties of the
13employer or information provided by the participant to the
14employer can be performed or received directly by the board.

15(17) The provisions and restrictions of the act of July
162, 2010 (P.L.266, No.44), known as the Protecting
17Pennsylvania's Investments Act, shall not apply to the plan
18or trust or the investments thereof, but the board is
19authorized to offer to the plan participants investment
20vehicles that would be permitted under the Protecting
21Pennsylvania's Investments Act.

22§ 5413. Responsibility for investment loss.

23The board, the Commonwealth, an employer or other political
24subdivision shall not be responsible for any investment loss
25incurred under the plan, or for the failure of any investment to
26earn any specific or expected return or to earn as much as any
27other investment opportunity, whether or not such other
28opportunity was offered to participants in the plan.

29§ 5414. Investments based on participants' investment
30allocation choices.

1(a) General rule.--All contributions, interest and
2investment earnings shall be 100% vested and shall be invested
3based on the participant's investment allocation choices. All 
4investment allocation choices shall be credited proportionally 
5between participant contributions and employer defined 
6contributions. Each participant shall be credited individually
7with the amount of contributions, interest and investment
8earnings.

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

23§ 5415. Expenses.

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

29§ 5416. Election by members to be participants.

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

1member or inactive member on leave without pay of the system on
2or after January 1, 2015, and who is employed in a position
3which would otherwise be eligible for participation in the plan
4may elect to become a participant in the plan.

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

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

25§ 5417. Required distributions.

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

29Section 13. Section 5501.1(b)(7) and (8) of Title 71 are
30amended and the subsection is amended by adding a paragraph to

1read:

2§ 5501.1. Shared-risk member contributions for Class A-3 and
3Class A-4 service.

4* * *

5(b) Determination of shared-risk contribution rate.--

6* * *

7(7) For any fiscal year in which the actual 
8contributions by the Commonwealth or an employer are lower 
9than those required to be made under section 5507(d) 
10[(relating to contributions by the Commonwealth and other 
11employers)] (relating to contributions to the system by the 
12Commonwealth and other employers before July 1, 2015) or 
135507.1 (relating to contributions to the system by the 
14Commonwealth and other employers starting July 1, 2015), the 
15prospective shared-risk contribution rate for those employees 
16whose employers are not making the contributions required by 
17section 5507(d) shall be zero and shall not subsequently be 
18increased, except as otherwise provided in this section.

19(8) If the actuary certifies that the accrued liability
20contributions calculated in accordance with the actuarial
21cost method provided in [section 5508(b)] section 5508
22(relating to actuarial cost method for fiscal years ending 
23before July 1, 2015) or 5508.1 (relating to actuarial cost 
24method for fiscal years beginning July 1, 2015, or later), as
25adjusted by the experience adjustment factor, are zero or
26less, then the shared-risk contribution rate for the next
27fiscal year shall be zero and shall not subsequently be
28increased, except as otherwise provided in this section.

29(9) For periods commencing on or after July 1, 2015, the
30determination of shared-risk member contribution rate shall

1be based on the annual interest rate adopted by the board for
2the calculation of the accrued liability contribution rate
3under section 5508.1(c).

4Section 14. The definition of "actuarially required
5contribution rate" in section 5501.2 of Title 71 is amended to
6read:

7§ 5501.2. Definitions.

8The following words and phrases when used in this chapter
9shall have the meanings given to them in this section unless the
10context clearly indicates otherwise:

11"Actuarially required contribution rate." The employer 
12contribution rate as calculated pursuant to section 5508(a), 
13(b), (c), (e) and (f) (relating to actuarial cost method for 
14fiscal years ending before July 1, 2015) or 5508.1(a), (b), (c), 
15(e) and (f) (relating to actuarial cost method for fiscal years 
16beginning July 1, 2015, or later).

17* * *

18Section 15. Sections 5502, 5503.1(a) and 5504(a)(1), (a.1)
19and (b) of Title 71 are amended to read:

20§ 5502. Social Security integration member contributions.

21Except for any period of current service in which the making 
22of regular member contributions has ceased solely by reason of 
23section 5502.1 (relating to waiver of regular member 
24contributions and Social Security integration member 
25contributions) or any provision of this part relating to 
26limitations under IRC § 401(a)(17) or 415(b), contributions 
27shall be made on behalf of [a] an active member of any class who 
28prior to March 1, 1974, has elected Social Security integration 
29coverage. The amount of such contributions shall be 6 1/4% of 
30that portion of his compensation as an active member in excess
 

1of the maximum wages taxable under the provisions of the Social 
2Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), in 
3addition to the regular member contributions which, after such 
4election, shall be determined on the basis of the basic 
5contribution rate of 5% and the additional member contribution 
6of 1 1/4%: Provided, That a member may elect to discontinue 
7Social Security integration coverage and shall thereafter be 
8ineligible to accrue any further Social Security integration 
9credits or any additional benefits on account of Social Security 
10integration membership.

11§ 5503.1. Pickup contributions.

12(a) Treatment for purposes of IRC § 414(h).--All
13contributions to the fund required to be made under sections
145501 (relating to regular member contributions for current
15service), 5501.1 (relating to shared-risk member contributions 
16for Class A-3 and Class A-4 service), 5502 (relating to Social
17Security integration member contributions), 5503 (relating to
18joint coverage member contributions) and [section] 5505.1
19(relating to additional member contributions), with respect to
20current State service rendered by an active member on or after
21January 1, 1982, shall be picked up by the Commonwealth or other
22employer and shall be treated as the employer's contribution for
23purposes of IRC § 414(h).

24* * *

25§ 5504. Member contributions for the purchase of credit for
26previous State service or to become a full coverage
27member.

28(a) Amount of contributions for service in other than Class
29G through N.--

30(1) The contributions to be paid by an active member or

1eligible school employee for credit in the system for total
2previous State service other than service in Class G, Class
3H, Class I, Class J, Class K, Class L, Class M and Class N or
4to become a full coverage member shall be sufficient to
5provide an amount equal to the regular and additional
6accumulated deductions which would have been standing to the
7credit of the member for such service had regular and
8additional member contributions been made with full coverage
9in the class of service and at the rate of contribution
10applicable during such period of previous service and had his
11regular and additional accumulated deductions been credited
12with statutory interest during all periods of subsequent
13State service as an active member or inactive member on leave 
14without pay and school service as an active member or 
15inactive member on leave without pay of the Public School 
16Employees' Retirement System up to the date of purchase.

17* * *

18(a.1) Converted county service.--No contributions shall be
19required to restore credit for previously credited State service
20in Class G, Class H, Class I, Class J, Class K, Class L, Class M
21and Class N. Such service shall be restored upon the
22commencement of payment of the contributions required to restore
23credit in the system for all other previous State service.

24(b) Certification and method of payment.--The amount payable 
25shall be certified in each case by the board in accordance with 
26methods approved by the actuary and shall be paid in a lump sum 
27within 30 days or in the case of an active member or eligible 
28school employee who is an active member of the Public School 
29Employees' Retirement System may be amortized with statutory 
30interest through salary deductions to the system in amounts
 

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

13Section 16. Section 5505(b)(1), (c), (d) and (i)(4) of Title
1471, amended October 24, 2012 (P.L.1436, No.181), are amended to
15read:

16§ 5505. Contributions for the purchase of credit for creditable
17nonstate service.

18* * *

19(b) Nonintervening military service.--

20(1) The amount due for the purchase of credit for 
21military service other than intervening military service 
22shall be determined by applying the member's basic 
23contribution rate, the additional contribution rate plus the 
24Commonwealth normal contribution rate for active members at 
25the time of entry, subsequent to such military service, of 
26the member into State service to his average annual rate of 
27compensation over the first three years of such subsequent 
28State service and multiplying the result by the number of 
29years and fractional part of a year of creditable 
30nonintervening military service being purchased together with
 

1statutory interest during all periods of subsequent State 
2service as an active member or inactive member on leave 
3without pay and school service as an active member or 
4inactive member on leave without pay of the Public School 
5Employees' Retirement System to date of purchase. Upon 
6application for credit for such service, payment shall be 
7made in a lump sum within 30 days or in the case of an active 
8member or eligible school employee who is an active member of 
9the Public School Employees' Retirement System it may be 
10amortized with statutory interest through salary deductions 
11to the system in amounts agreed upon by the member and the 
12board. The salary deduction amortization plans agreed to by 
13members and the board may include a deferral of payment 
14amounts and statutory interest until the termination of 
15school service or State service or beginning service as a 
16participant as the board in its sole discretion decides to 
17allow. The board may limit salary deduction amortization 
18plans to such terms as the board in its sole discretion 
19determines. In the case of an eligible school employee who is 
20an active member of the Public School Employees' Retirement 
21System, the agreed upon salary deductions shall be remitted 
22to the Public School Employees' Retirement Board, which shall 
23certify and transfer to the board the amounts paid. 
24Application may be filed for all such military service credit 
25upon completion of three years of subsequent State service 
26and shall be credited as Class A service.

27* * *

28(c) Intervening military service.--Contributions on account
29of credit for intervening military service shall be determined
30by the member's regular contribution rate, shared-risk
 

1contribution rate, Social Security integration contribution 
2rate, the additional contribution rate which shall be applied
3only to those members who began service on or after the
4effective date of this amendatory act and compensation at the
5time of entry of the member into active military service,
6together with statutory interest during all periods of
7subsequent State service as an active member or inactive member 
8on leave without pay and school service as an active member or 
9inactive member on leave without pay of the Public School 
10Employees' Retirement System to date of purchase. Upon
11application for such credit the amount due shall be certified in
12the case of each member by the board in accordance with methods
13approved by the actuary, and contributions may be made by:

14(1) regular monthly payments during active military
15service; or

16(2) a lump sum payment within 30 days of certification;
17or

18(3) salary deductions to the system in amounts agreed
19upon by the member or eligible school employee who is an
20active member of the Public School Employees' Retirement
21System and the board.

22The salary deduction amortization plans agreed to by members and
23the board may include a deferral of payment amounts and
24statutory interest until the termination of school service or
25State service or beginning service as a participant as the board
26in its sole discretion decides to allow. The board may limit
27salary deduction amortization plans to such terms as the board
28in its sole discretion determines. In the case of an eligible
29school employee who is an active member of the Public School
30Employees' Retirement System, the agreed upon salary deductions

1shall be remitted to the Public School Employees' Retirement
2Board, which shall certify and transfer to the board the amounts
3paid.

4(d) Nonmilitary and nonmagisterial service.--Contributions 
5on account of credit for creditable nonstate service other than 
6military and magisterial service by State employees who first 
7become members of the system before January 1, 2011, or before 
8December 1, 2010, as a member of the General Assembly shall be 
9determined by applying the member's basic contribution rate, the 
10additional contribution rate plus the Commonwealth normal 
11contribution rate for active members at the time of entry 
12subsequent to such creditable nonstate service of the member 
13into State service to his compensation at the time of entry into 
14State service as a member of the system and multiplying the 
15result by the number of years and fractional part of a year of 
16creditable nonstate service being purchased together with 
17statutory interest during all periods of subsequent State 
18service as an active member or inactive member on leave without 
19pay and school service as an active member or inactive member on 
20leave without pay of the Public School Employees' Retirement 
21System to the date of purchase. Upon application for credit for 
22such service payment shall be made in a lump sum within 30 days 
23or in the case of an active member or eligible school employee 
24who is an active member of the Public School Employees' 
25Retirement System it may be amortized with statutory interest 
26through salary deductions to the system in amounts agreed upon 
27by the member and the board. The salary deduction amortization 
28plans agreed to by members and the board may include a deferral 
29of payment amounts and statutory interest until the termination 
30of school service or State service or beginning service as a
 

1participant as the board in its sole discretion decides to 
2allow. The board may limit salary deduction amortization plans 
3to such terms as the board in its sole discretion determines. In 
4the case of an eligible school employee who is an active member 
5of the Public School Employees' Retirement System, the agreed 
6upon salary deduction shall be remitted to the Public School 
7Employees' Retirement Board, which shall certify and transfer to 
8the board the amounts paid.

9* * *

10(i) Purchases of nonstate service credit by State employees
11who first became members of the system on or after December 1,
122010.--

13* * *

14(4) The payment for credit purchased under this 
15subsection shall be certified in each case by the board in 
16accordance with methods approved by the actuary and shall be 
17paid in a lump sum within 30 days or in the case of an active 
18member or eligible school employee who is an active member of 
19the Public School Employees' Retirement System may be 
20amortized with statutory interest through salary deductions 
21to the system in amounts agreed upon by the member and the 
22board. The salary deduction amortization plans agreed to by 
23members and the board may include a deferral of payment 
24amounts and interest until the termination of school service 
25or State service or beginning service as a participant as the 
26board in its sole discretion decides to allow. The board may 
27limit the salary deduction amortization plans to such terms 
28as the board in its sole discretion determines. In the case 
29of an eligible school employee who is an active member of the 
30Public School Employees' Retirement System, the agreed upon
 

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

4Section 17. Section 5505.1 of Title 71 is amended to read:

5§ 5505.1. Additional member contributions.

6In addition to regular or joint coverage member contributions
7and social security integration contributions, contributions
8shall be made on behalf of each active member, regardless of
9class of service, at the rate of 1 1/4% of compensation until
10such time as the actuary certifies that all accrued liability
11contributions have been completed in accordance with the
12actuarial cost method provided in section 5508(b) (relating to
13actuarial cost method for fiscal years ending before July 1, 
142015).

15Section 18. Section 5506 of Title 71, amended October 24,
162012 (P.L.1436, No.181), is amended to read:

17§ 5506. Incomplete payments.

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

1and the annuity shall be calculated including full credit for 
2the previous State service, creditable nonstate service, social 
3security integration, or full coverage membership. In the event 
4a member does not pay the balance due within 30 days of 
5termination of State service or becoming a participant or in the 
6event a member dies in State service or within 30 days of 
7termination of State service or becoming a participant or in the 
8case of a multiple service member who is an active member of the 
9Public School Employees' Retirement System does not pay the 
10balance due within 30 days of termination of school service or 
11dies in school service or within 30 days of termination of 
12school service and before the agreed upon payments have been 
13completed, the present value of the benefit otherwise payable 
14shall be reduced by the balance due, including interest, and the 
15benefit payable shall be calculated as the actuarial equivalent 
16of such reduced present value.

17Section 19. Section 5506.1(a) of Title 71 is amended to
18read:

19§ 5506.1. Annual compensation limit under IRC § 401(a)(17).

20(a) General rule.--In addition to other applicable
21limitations set forth in this part, and notwithstanding any
22provision of this part to the contrary, the annual compensation
23of each noneligible member and each participant taken into
24account for benefit purposes under this part shall not exceed
25the limitation under IRC § 401(a)(17). On and after January 1,
261996, any reference in this part to the limitation under IRC §
27401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
281993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
29compensation limit set forth in this subsection. The OBRA '93
30annual compensation limit is $150,000, as adjusted by the

1commissioner for increases in the cost of living in accordance
2with IRC § 401(a)(17)(B). The cost-of-living adjustment in
3effect for a calendar year applies to any determination period
4which is a period, not exceeding 12 months, over which
5compensation is determined, beginning in such calendar year. If
6a determination period consists of fewer than 12 months, the
7OBRA '93 compensation limit will be multiplied by a fraction,
8the numerator of which is the number of months in the
9determination period and the denominator of which is 12.

10* * *

11Section 20. Section 5507(a), (b), (d), (e) and (f) of Title
1271, amended October 24, 2012 (P.L.1436, No.181), are amended to
13read:

14§ 5507. Contributions to the system by the Commonwealth and
15other employers before July 1, 2015.

16(a) Contributions on behalf of active members.--[The] Until 
17June 30, 2015, the Commonwealth and other employers whose
18employees are members of the system, and from January 1, 2015, 
19to June 30, 2015, the Commonwealth and other employers whose 
20employees are participants in the plan, shall make contributions
21to the fund on behalf of all active members in such amounts as
22shall be certified by the board as necessary to provide,
23together with the members' total accumulated deductions, annuity
24reserves on account of prospective annuities other than those
25provided in sections 5708 (relating to supplemental annuities), 
265708.1 (relating to additional supplemental annuities), 5708.2 
27(relating to further additional supplemental annuities), 5708.3 
28(relating to supplemental annuities commencing 1994), 5708.4 
29(relating to special supplemental postretirement adjustment), 
305708.5 (relating to supplemental annuities commencing 1998),
 

15708.6 (relating to supplemental annuities commencing 2002), 
25708.7 (relating to supplemental annuities commencing 2003) and 
35708.8 (relating to special supplemental postretirement 
4adjustment of 2002), in accordance with the actuarial cost
5method provided in section 5508(a), (b), (c), (d) and (f)
6(relating to actuarial cost method for fiscal years ending 
7before July 1, 2015).

8(b) Contributions on behalf of annuitants.--[The] Until June 
930, 2015, the Commonwealth and other employers whose employees 
10are members of the system shall make contributions on behalf of
11annuitants in such amounts as shall be certified by the board as
12necessary to fund the liabilities for supplemental annuities in
13accordance with the actuarial cost method provided in section
145508(e) [(relating to actuarial cost method)].

15* * *

16(d) Payment of final contribution rate.--Notwithstanding the
17calculation of the actuarially required contribution rate and
18the provisions of subsections (a) and (b), until June 30, 2015,
19the Commonwealth and other employers whose employees are members
20of the system shall make contributions to the fund on behalf of
21all active members and annuitants in such amounts as shall be
22certified by the board in accordance with section 5508(i).

23(e) Benefits completion plan contributions.--In addition to 
24all other contributions required under this section and section 
255508, until June 30, 2015, the Commonwealth and other employers 
26whose employees are members of the system shall make 
27contributions as certified by the board pursuant to section 5941 
28(relating to benefits completion plan).

29(f) Contributions resulting from members reemployed from 
30USERRA leave.--When a State employee reemployed from USERRA
 

1leave makes the member contributions required to be granted 
2State service credit for the USERRA leave before July 1, 2015, 
3either by actual payment or by actuarial debt under section 5506 
4(relating to incomplete payments), then the Commonwealth 
5employer or other employer by whom the State employee is 
6employed at the time the member contributions are made, or the 
7last employer before termination in the case of payment under 
8section 5506, shall make whatever employer contributions would 
9have been made under this section had the employee making the 
10member contributions after being reemployed from USERRA leave 
11continued to be employed in his State office or position instead 
12of performing USERRA leave.

13Section 21. Title 71 is amended by adding a section to read:

14§ 5507.1. Contributions to the system by the Commonwealth and
15other employers starting July 1, 2015.

16(a) Contributions on behalf of members.--For fiscal years 
17beginning on or after July 1, 2015, the Commonwealth and other 
18employers whose employees are or were members of the system 
19shall make contributions to the fund on behalf of all members in 
20such amounts as shall be certified by the board as necessary to 
21provide, together with the members' total accumulated 
22deductions, annuity reserves on account of annuities including 
23those provided in sections 5708 (relating to supplemental 
24annuities), 5708.1 (relating to additional supplemental 
25annuities), 5708.2 (relating to further additional supplemental 
26annuities), 5708.3 (relating to supplemental annuities 
27commencing 1994), 5708.4 (relating to special supplemental 
28postretirement adjustment), 5708.5 (relating to supplemental
29annuities commencing 1998), 5708.6 (relating to supplemental 
30annuities commencing 2002), 5708.7 (relating to supplemental
 

1annuities commencing 2003) and 5708.8 (relating to special 
2supplemental postretirement adjustment of 2002), in accordance 
3with the actuarial cost method provided in section 5508.1 
4(relating to actuarial cost method for fiscal years beginning 
5July 1, 2015, or later).

6(b) Payment of employer contributions to the system.--

7(1) Payment of employer normal contributions shall be as
8a percentage of compensation of active members.

9(2) Payment of accrued liability contributions as
10modified by the experience adjustment factor shall be as a
11percentage of compensation of active members and active
12participants.

13(3) Payment of the additional accrued liability
14contributions determined under section 5508.1(d) shall be in
15equal monthly payments during the fiscal year on the first
16day of each month, or in such other time and manner as the
17board may establish.

18(c) Payment of final contribution rate.--Notwithstanding the
19calculation of the actuarially required contribution rate and
20the provisions of subsections (a) and (b)(1) and (2), after June
2130, 2015, the Commonwealth and other employers whose employees
22are members of the system shall make contributions to the fund
23on behalf of all active members and annuitants in such amounts
24as shall be certified by the board in accordance with section
255508.1(h).

26(d) Benefits completion plan contributions.--In addition to
27all other contributions required under this section and section
285508.1, after June 30, 2015, the Commonwealth and other
29employers whose employees are active members of the system shall
30make contributions as certified by the board pursuant to section

15941 (relating to benefits completion plan).

2(e) Contributions resulting from members reemployed from
3USERRA leave.--When a State employee reemployed from USERRA
4leave makes the member contributions required to be granted
5State service credit for the USERRA leave after June 30, 2015,
6either by actual payment or by actuarial debt under section 5506
7(relating to incomplete payments), the Commonwealth employer or
8other employer that employed the State employee when the member
9contributions are made or the last employer before termination
10in the case of payment under section 5506 shall make the
11employer contributions that would have been made under this
12section if the employee making the member contributions after
13the employee is reemployed from USERRA leave continued to be
14employed in the employee's State office or position instead of
15performing USERRA leave.

16Section 22. Section 5508 heading, (a), (b), (c)(3), (e)(2),
17(f)(1), (h) and (i) of Title 71 are amended and subsection (c)
18is amended by adding a paragraph to read:

19§ 5508. Actuarial cost method for fiscal years ending before 
20July 1, 2015.

21(a) Employer contribution rate on behalf of active
22members.--[The] For the fiscal years ending before July 1, 2015, 
23the amount of the Commonwealth and other employer contributions
24on behalf of all active members shall be computed by the actuary
25as a percentage of the total compensation of all active members
26during the period for which the amount is determined and shall
27be so certified by the board. The actuarially required
28contribution rate on behalf of all active members shall consist
29of the employer normal contribution rate, as defined in
30subsection (b), and the accrued liability contribution rate as

1defined in subsection (c). The actuarially required contribution
2rate on behalf of all active members shall be modified by the
3experience adjustment factor as calculated in subsection (f).

4(b) Employer normal contribution rate.--[The] For the fiscal 
5years ending before July 1, 2015, the employer normal
6contribution rate shall be determined after each actuarial
7valuation on the basis of an annual interest rate and such
8mortality and other tables as shall be adopted by the board in
9accordance with generally accepted actuarial principles. The
10employer normal contribution rate shall be determined as a level
11percentage of the compensation of the average new active member,
12which percentage, if contributed on the basis of his prospective
13compensation through his entire period of active State service,
14would be sufficient to fund the liability for any prospective
15benefit payable to him in excess of that portion funded by his
16prospective member contributions, excluding shared-risk member 
17contributions.

18(c) Accrued liability contribution rate.--

19* * *

20(3) For the fiscal year beginning July 1, 2010, the 
21accrued liability contribution rate shall be computed as the 
22rate of total compensation of all active members which shall 
23be certified by the actuary as sufficient to fund in equal 
24dollar installments over a period of 30 years from July 1, 
252010, the present value of the liabilities for all 
26prospective benefits calculated as of the immediately prior 
27valuation date, including the supplemental benefits as 
28provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4, 
295708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits 
30payable from the retirement benefit plan established pursuant
 

1to section 5941 (relating to benefits completion plan), in 
2excess of the actuarially calculated assets in the fund 
3(calculated recognizing all realized and unrealized 
4investment gains and losses each year in level annual 
5installments over five years), including the balance in the 
6supplemental annuity account, and the present value of 
7employer normal contributions and of member contributions 
8payable with respect to all active members, inactive members 
9on leave without pay, vestees and special vestees on December 
1031, 2009. If the accrued liability is changed by legislation 
11enacted subsequent to December 31, 2009, and before January 
121, 2014, such change in liability shall be funded in equal 
13dollar installments over a period of ten years from the first 
14day of July following the valuation date coincident with or 
15next following the date such legislation is enacted.

16(4) For the fiscal year beginning July 1, 2014, the
17accrued liability contribution rate shall be computed as
18provided for under this section, except that the rate shall
19be computed as a rate of total compensation of all active
20members and active participants for the fiscal year. In
21addition to any employer defined contributions made to the
22trust, the Commonwealth and other employers of participants
23shall make the accrued liability contributions to the fund
24certified by the board.

25* * *

26(e) Supplemental annuity contribution rate.--

27* * *

28(2) For fiscal years beginning on or after July 1, 2010, 
29and ending on or before June 30, 2015, contributions from the 
30Commonwealth and other employers whose employees are members
 

1of the system required to provide for the payment of 
2supplemental annuities as provided in sections 5708, 5708.1, 
35708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8 
4shall be paid as part of the accrued liability contribution 
5rate as provided for in subsection (c)(3), and there shall 
6not be a separate supplemental annuity contribution rate 
7attributable to those supplemental annuities. In the event 
8that supplemental annuities are increased by legislation 
9enacted subsequent to December 31, 2009, and before January 
101, 2014, the additional liability for the increase in 
11benefits shall be funded in equal dollar installments over a 
12period of ten years from the first day of July following the 
13valuation date coincident with or next following the date 
14such legislation is enacted.

15(f) Experience adjustment factor.--

16(1) For each [year] fiscal year ending before July 1, 
172015, after the establishment of the accrued liability
18contribution rate and the supplemental annuity contribution 
19rate for the fiscal year beginning July 1, 2010, any increase
20or decrease in the unfunded accrued liability and any 
21increase or decrease in the liabilities and funding for
22supplemental annuities, due to actual experience differing
23from assumed experience (recognizing all realized and 
24unrealized investment gains and losses over a five-year 
25period), changes in contributions caused by the final 
26contribution rate being different from the actuarially 
27required contribution rate, State employees making shared-
28risk member contributions, changes in actuarial assumptions
29or changes in the terms and conditions of the benefits
30provided by the system by judicial, administrative or other

1processes other than legislation, including, but not limited
2to, reinterpretation of the provisions of this part
3recognized by the actuarial valuations on December 31, 2010, 
4and through December 31, 2013, shall be amortized in equal
5dollar annual contributions over a period of 30 years
6beginning with the July 1 succeeding the actuarial valuation
7determining said increases or decreases.

8* * *

9(h) Temporary application of collared contribution rate.--
10The collared contribution rate for each [year] fiscal year 
11ending on or before June 30, 2015, shall be determined by
12comparing the actuarially required contribution rate calculated
13without regard for costs added by legislation to the prior
14year's final contribution rate. If, for any of the fiscal years
15beginning July 1, 2011, July 1, 2012, [and on or after] July 1,
162013, and July 1, 2014, the actuarially required contribution
17rate calculated without regard for costs added by legislation is
18more than 3%, 3.5%, 4.5% and 4.5%, respectively, of the total
19compensation of all active members greater than the prior year's
20final contribution rate, then the collared contribution rate
21shall be applied and be equal to the prior year's final
22contribution rate increased by the respective percentage above
23of total compensation of all active members. Otherwise, and for
24all subsequent fiscal years, the collared contribution rate
25shall not be applicable. In no case shall the collared
26contribution rate be less than 4% of total compensation of all
27active members.

28(i) Final contribution rate.--For the fiscal year beginning
29July 1, 2010, the final contribution rate shall be 5% of total
30compensation of all active members. For each subsequent fiscal

1year for which the collared contribution rate is applicable, the
2final contribution rate shall be the collared contribution rate
3plus the costs added by legislation. For all other fiscal years
4ending before July 1, 2015, the final contribution rate shall be
5the actuarially required contribution rate, provided that the
6final contribution rate shall not be less than the employer
7normal contribution rate, as defined in subsection (b).

8Section 23. Title 71 is amended by adding a section to read:

9§ 5508.1. Actuarial cost method for fiscal years beginning July
101, 2015, or later.

11(a) Employer contributions on behalf of members.--For fiscal
12years beginning on or after July 1, 2015, the amount of the
13Commonwealth and other employer contributions on behalf of all
14members shall be computed by the actuary and certified by the
15board as an employer normal contribution rate as defined in
16subsection (b) and the accrued liability contribution amount as
17defined in subsection (c). The accrued liability contribution
18amount shall be modified by the experience adjustment factor as
19calculated in subsection (f).

20(b) Employer normal contribution rate.--For fiscal years
21beginning on or after July 1, 2015, the employer normal
22contribution rate for all active members of the system shall be
23the employer normal contribution rate that would have been
24applicable if the employer normal contribution rate was
25determined as part of the December 31, 2014, actuarial valuation
26under section 5508(b) (relating to actuarial cost method for
27fiscal years ending before July 1, 2015) without regard to the
28provisions of this section and the inapplicability of that rate
29to periods on or after July 1, 2015.

30(c) Accrued liability contribution amount.--

1(1) For fiscal years beginning July 1, 2015, the accrued 
2liability contribution rate shall be computed as the rate of 
3total compensation of all active members and active 
4participants which shall be determined by the actuary as 
5sufficient to fund in equal dollar installments over a period 
6of 30 years from July 1, 2015, the present value of all the 
7liabilities for all prospective benefits of members of the 
8system calculated as of the immediately prior valuation date, 
9including the supplemental benefits as provided in sections 
105708 (relating to supplemental annuities), 5708.1 (relating 
11to additional supplemental annuities), 5708.2 (relating to 
12further additional supplemental annuities), 5708.3 (relating 
13to supplemental annuities commencing 1994), 5708.4 (relating 
14to special supplemental postretirement adjustment), 5708.5 
15(relating to supplemental annuities commencing 1998), 5708.6 
16(relating to supplemental annuities commencing 2002), 5708.7 
17(relating to supplemental annuities commencing 2003) and 
185708.8 (relating to special supplemental postretirement 
19adjustment of 2002), but excluding the benefits payable from 
20the retirement benefit plan established pursuant to section 
215941 (relating to benefits completion plan), in excess of the 
22actuarially calculated assets in the fund, calculated 
23recognizing all realized and unrealized investment gains and 
24losses each year in level annual installments over five 
25years, including the balance in the supplemental annuity 
26account, and the present value of employer normal 
27contributions and of member contributions payable with 
28respect to all active members, inactive members on leave 
29without pay, vestees and special vestees on December 31, 
302014. If the accrued liability is changed by legislation
 

1enacted subsequent to December 31, 2014, such change in 
2liability shall be funded in equal dollar installments as a 
3percentage of compensation of all active members and active 
4participants over a period of ten years from the first day of 
5July following the valuation date coincident with or next 
6following the date such legislation is enacted. The accrued 
7liability contribution rate shall be determined after each 
8actuarial valuation on the basis of an annual interest rate 
9and such mortality and other tables as shall be adopted by 
10the board in accordance with generally accepted actuarial 
11principles.

12(2) For purposes of determining the accrued liability
13contribution rate in paragraph (1) and subsection (e) and the
14experience adjustment factor in subsection (f), the term
15"compensation of all active members and active participants"
16shall include an additional amount equal to the difference
17between:

18(i) The actual compensation of all active members
19and active participants of The Pennsylvania State
20University, the State System of Higher Education, State-
21owned educational institutions and community colleges.

22(ii) The compensation of all employees of The
23Pennsylvania State University, the State System of Higher
24Education, State-owned educational institutions and
25community colleges who are active members, active
26participants, active members of the Public School
27Employees' Retirement System, active participants of the
28School Employees' Defined Contribution Plan and employees
29who are members or participants of an independent
30retirement program approved by the employer multiplied by

1a fraction equal to the amount determined under
2subparagraph (i) as part of the December 31, 2014,
3actuarial valuation divided by the amount determined
4under this subparagraph as of December 31, 2014.

5(d) Allocation of accrued liability contribution amount.--
6For the fiscal year beginning July 1, 2015, and all subsequent
7fiscal years, The Pennsylvania State University, the State
8System of Higher Education, each State-owned educational
9institution and each community college shall make such
10additional actuarial accrued liability contributions as shall be
11certified by the board. The additional actuarial accrued
12liability contributions shall be the product of:

13(1) the amount by which the final contribution rate
14exceeds the employer normal contribution rate determined
15under subsection (b)(1); multiplied by

16(2) the difference between:

17(i) the actual compensation of all active members
18and active participants of each such educational
19institution; and

20(ii) the compensation of all active members, active
21participants, active members of the Public School
22Employees' Retirement System, active participants of the
23School Employees' Defined Contribution Plan and employees
24who are members or participants of an independent
25retirement program approved by the employer of each such
26educational institution multiplied by a fraction equal to
27the amount determined under subparagraph (i) as part of
28the December 31, 2014, actuarial valuation divided by the
29amount of compensation of all active members, active
30participants, active members of the Public School

1Employees' Retirement System, active participants of the
2School Employees' Defined Contribution Plan and employees
3who are members or participants of an independent
4retirement program approved by the employer of each such
5educational institution determined as of December 31,
62014.

7(e) Supplemental annuity contribution amounts.--For fiscal
8years beginning on or after July 1, 2015, contributions from the
9Commonwealth and other employers whose employees are members of
10the system required to provide for the payment of supplemental
11annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3,
125708.4, 5708.5, 5708.6, 5708.7 and 5708.8 shall be paid as part
13of the accrued liability contribution rate as provided for in
14subsection (c) and there shall not be a separate supplemental
15annuity contribution amount attributable to those supplemental
16annuities. In the event that supplemental annuities are
17increased by legislation enacted subsequent to December 31,
182014, the additional liability for the increase in benefits
19shall be funded in equal dollar installments as a percentage of
20compensation of all active members and active participants over
21a period of ten years from the first day of July following the
22valuation date coincident with or next following the date such
23legislation is enacted as part of the accrued liability amount
24and not as a separate supplemental annuity contribution amount.

25(f) Experience adjustment factor.--

26(1) For each year after the establishment of the accrued
27liability contribution amount for the fiscal year beginning
28July 1, 2015, any increase or decrease in the unfunded
29accrued liability and any increase or decrease in the
30liabilities and funding for supplemental annuities, due to

1actual experience differing from assumed experience,
2recognizing all realized and unrealized investment gains and
3losses over a five-year period, changes in contributions
4caused by the final contribution rate being different from
5the actuarially required contribution rate, State employees
6making shared-risk member contributions, changes in actuarial
7assumptions or changes in the terms and conditions of the
8benefits provided by the system by judicial, administrative
9or other processes other than legislation, including, but not
10limited to, reinterpretation of the provisions of this part,
11shall be amortized in equal dollar installments expressed as
12a level percentage of compensation of all active members and
13active participants over a period of 30 years beginning with
14the July 1 succeeding the actuarial valuation determining
15said increases or decreases.

16(2) The actuarially required contribution rate shall be
17the sum of the normal contribution rate determined under
18subsection (b)(2), the accrued liability contribution rate
19and the supplemental annuity contribution rate modified by
20the experience adjustment factor as calculated in paragraph
21(1).

22(g) Temporary application of collared contribution rate.--
23The collared contribution rate for each fiscal year beginning on
24or after July 1, 2015, shall be determined by comparing the
25actuarially required contribution rate calculated without regard
26for costs added by legislation to the prior year's final
27contribution rate. If the actuarially required contribution rate
28calculated without regard for costs added by legislation is more
29than 4.5% of the total compensation of all active members
30greater than the prior year's final contribution rate, then the

1collared contribution rate shall be applied and be equal to the
2prior year's final contribution rate increased by 4.5% of total
3compensation of all active members. Otherwise, and for all
4subsequent fiscal years, the collared contribution rate shall
5not be applicable. In no case shall the collared contribution
6rate be less than 4% of total compensation of all active
7members.

8(h) Final contribution rate.--For the fiscal year beginning
9July 1, 2015, if the collared contribution rate is applicable,
10the final contribution rate shall be the collared contribution
11rate plus the costs added by legislation. For each subsequent
12fiscal year for which the collared contribution rate is
13applicable, the final contribution rate shall be the collared
14contribution rate plus the costs added by legislation. For all
15other fiscal years beginning on or after July 1, 2015, the final
16contribution rate shall be the actuarially required contribution
17rate, provided that the final contribution rate shall not be
18less than the employer normal contribution rate, as provided
19under subsection (b).

20Section 24. Section 5509 of Title 71, amended October 24,
212012 (P.L.1436, No.181), is amended to read:

22§ 5509. Appropriations and assessments by the Commonwealth.

23(a) Annual submission of budget.--The board shall prepare
24and submit annually an itemized budget consisting of the amounts
25necessary to be appropriated by the Commonwealth out of the
26General Fund and special operating funds and the amounts to be
27assessed the other employers required to meet the separate
28obligations to both the fund and the trust accruing during the
29fiscal period beginning the first day of July of the following
30year.

1(b) Appropriation and payment.--The General Assembly shall
2make an appropriation sufficient to provide for the separate 
3obligations of the Commonwealth to both the fund and the trust. 
4Such amount shall be paid by the State Treasurer through the
5Department of Revenue into the fund or the trust, as the case 
6may be, in accordance with requisitions presented by the board.
7The contributions to the system by the Commonwealth on behalf of
8active members who are officers of the Pennsylvania State Police
9shall be charged to the General Fund and to the Motor License
10Fund in the same ratios as used to apportion the appropriations
11for salaries of members of the Pennsylvania State Police. The
12contributions to the system by the Commonwealth on behalf of
13active members who are enforcement officers and investigators of
14the Pennsylvania Liquor Control Board shall be charged to the
15General Fund and to the State Stores Fund.

16(c) Contributions from funds other than General Fund.--The
17amounts assessed other employers who are required to make the
18necessary separate contributions to both the fund and the trust
19out of funds other than the General Fund shall be paid by such
20employers into the fund or the trust, as the case may be, in
21accordance with requisitions presented by the board. The General
22Fund of the Commonwealth shall not be held liable to appropriate
23the moneys required to build up the reserves in the fund 
24necessary for the payment of benefits from the system to
25employees or to make the employer defined contributions for 
26employees of such other employers. In case any such other
27employer shall fail to provide to the fund the moneys necessary
28for such purpose, then the service of such members of the system
29for such period for which money is not so provided shall be
30credited and pickup contributions with respect to such members

1shall continue to be credited to the members' savings account.
2The annuity to which such member is entitled shall be determined
3as actuarially equivalent to the present value of the maximum
4single life annuity of each such member reduced by the amount of
5employer contributions to the system payable on account and
6attributable to his compensation during such service, except 
7that no reduction shall be made as a result of the failure of an 
8employer to make contributions required for a period of USERRA 
9leave.

10Section 25. Sections 5701 and 5701.1 of Title 71 are amended
11to read:

12§ 5701. Return of total accumulated deductions.

13Any member upon termination of service may, in lieu of all
14benefits payable from the system under this chapter to which he
15may be entitled, elect to receive his total accumulated
16deductions.

17§ 5701.1. Transfer of accumulated deductions.

18When an employee of the Juvenile Court Judges' Commission
19elects membership in an independent retirement program pursuant
20to section 5301(f) (relating to mandatory and optional
21membership in the system and participation in the plan), the
22board shall transfer directly to the trustee or administrator of
23the independent retirement program all accumulated deductions
24resulting from service credited while an employee of the
25Juvenile Court Judges' Commission.

26Section 26. Sections 5702(a)(1) and 5704(c) of Title 71 are
27amended and the sections are amended by adding subsections to
28read:

29§ 5702. Maximum single life annuity.

30(a) General rule.--Any full coverage member who is eligible

1to receive an annuity pursuant to the provisions of section
25308(a) or (b) (relating to eligibility for annuities) who
3terminates State service, or if a multiple service member who is
4a school employee who is an active member of the Public School
5Employees' Retirement System who terminates school service,
6before attaining age 70 shall be entitled to receive a maximum
7single life annuity attributable to his credited service and
8equal to the sum of the following single life annuities
9beginning at the effective date of retirement:

10(1) A standard single life annuity multiplied by the sum
11of the products, determined separately for each class of
12service, obtained by multiplying the appropriate class of
13service multiplier by the ratio of years of service credited
14in that class to the total credited service. In case the
15member on the effective date of retirement is under
16superannuation age for any service, a reduction factor
17calculated to provide benefits actuarially equivalent to an
18annuity starting at superannuation age shall be applied to
19the product determined for that service. The class of service
20multiplier for any period of concurrent service shall be
21multiplied by the proportion of total State and school
22compensation during such period attributable to State service
23as a member of the system. In the event a member has two
24multipliers for one class of service the class of service
25multiplier to be used for calculating benefits for that class
26shall be the average of the two multipliers weighted by the
27proportion of compensation attributable to each multiplier
28during the three years of highest annual compensation in that
29class of service: Provided, That in the case of a member of
30Class E-1, a portion but not all of whose three years of

1highest annual judicial compensation is prior to January 1,
21973, two class of service multipliers shall be calculated on
3the basis of his entire judicial service, the one applying
4the judicial class of service multipliers effective prior to
5January 1, 1973 and the second applying the class of service
6multipliers effective subsequent to January 1, 1973. The
7average class of service multiplier to be used for
8calculating benefits for his judicial service shall be the
9average of the two calculated multipliers weighted by the
10proportion of compensation attributable to each of the
11calculated multipliers during the three years of highest
12annual compensation in that class of service.

13* * *

14(e) Coordination of benefits.--The determination and payment
15of the maximum single life annuity under this section shall be
16in addition to any payments a combined service employee may be
17entitled to receive, has received or is receiving as a result of
18being a participant in the plan.

19§ 5704. Disability annuities.

20* * *

21(c) Reduction on account of earned income.--Subsequent to
22January 1, 1972, payments on account of disability shall be
23reduced by that amount by which the earned income of the
24annuitant, as reported in accordance with section 5908(b)
25(relating to rights and duties of annuitants), for the preceding
26calendar year together with the disability annuity payments
27provided in this section other than subsection (b), for the
28year, exceeds the product of:

29[(i)] (1)  the last year's salary of the annuitant as
30a [State employee] member of the system; and

1[(ii)] (2) the ratio of the current monthly payment
2to the monthly payment at the effective date of
3disability;

4Provided, That the annuitant shall not receive less than his
5member's annuity or the amount to which he may be entitled under
6section 5702 whichever is greater.

7* * *

8(h) Coordination of benefits.--The determination and payment
9of a disability annuity under this section shall be in addition
10to any payments a combined service employee may be entitled to
11receive, has received or is receiving as a result of being a
12participant in the plan.

13Section 27. Section 5706(a), (a.1), (a.2), (b) and (c)(1)
14and (3) of Title 71 are amended to read:

15§ 5706. Termination of annuities.

16(a) General rule.--If the annuitant returns to State service
17or enters or has entered school service and elects multiple
18service membership, any annuity payable to him under this part
19shall cease effective upon the date of his return to State
20service or entering school service without regard to whether he 
21is a mandatory, optional or prohibited member of the system or 
22participant in the plan, or if a multiple service member, 
23whether he is a mandatory, optional or prohibited member or 
24participant of the Public School Employees' Retirement System or 
25School Employees' Defined Contribution Plan and in the case of
26an annuity other than a disability annuity the present value of
27such annuity, adjusted for full coverage in the case of a joint
28coverage member who makes the appropriate back contributions for
29full coverage, shall be frozen as of the date such annuity
30ceases. An annuitant who is credited with an additional 10% of

1Class A and Class C service as provided in section 5302(c)
2(relating to credited State service) and who returns to State
3service shall forfeit such credited service and shall have his
4frozen present value adjusted as if his 10% retirement incentive
5had not been applied to his account. In the event that the cost-
6of-living increase enacted December 18, 1979 occurred during the
7period of such State or school employment, the frozen present
8value shall be increased, on or after the member attains
9superannuation age, by the percent applicable had he not
10returned to service. This subsection shall not apply in the case
11of any annuitant who may render services to the Commonwealth in
12the capacity of an independent contractor or as a member of an
13independent board or commission or as a member of a departmental
14administrative or advisory board or commission when such members
15of independent or departmental boards or commissions are
16compensated on a per diem basis for not more than 150 days per
17calendar year or as a member of an independent board or
18commission requiring appointment by the Governor, with advice
19and consent of the Senate, where the annual salary payable to
20the member does not exceed $35,000 and where the member has been
21an annuitant for at least six months immediately preceding the
22appointment. Such service shall not be subject to member
23contributions or be eligible for qualification as creditable
24State service or for participation in the plan, mandatory pickup 
25participant contributions or employer defined contributions.

26(a.1) Return to State service during emergency.--When, in
27the judgment of the employer, an emergency creates an increase
28in the work load such that there is serious impairment of
29service to the public, an annuitant may be returned to State
30service for a period not to exceed 95 days in any calendar year

1without loss of his annuity. In computing the number of days an
2annuitant has returned to State service, any amount of time less
3than one-half of a day shall be counted as one-half of a day.
4For agencies, boards and commissions under the Governor's
5jurisdiction, the approval of the Governor that an emergency
6exists shall be required before an annuitant may be returned to
7State service. Such service shall not be subject to member 
8contributions or be eligible for qualification as creditable 
9State service or for participation in the plan, mandatory pickup 
10participant contributions or employer defined contributions.

11(a.2) Return of benefits.--In the event an annuitant whose
12annuity ceases pursuant to this section receives any annuity
13payment, including a lump sum payment pursuant to section 5705
14(relating to member's options) on or after the date of his
15return to State service or entering school service, the
16annuitant shall return to the board the amount so received plus
17statutory interest. The amount payable shall be certified in
18each case by the board in accordance with methods approved by
19the actuary and shall be paid in a lump sum within 30 days or in
20the case of an active member or school employee who is an active
21member of the Public School Employees' Retirement System may be
22amortized with statutory interest through salary deductions to 
23the system in amounts agreed upon by the member and the board.
24The salary deduction amortization plans agreed to by the member
25and the board may include a deferral of payment amounts and
26statutory interest until the termination of school service or
27State service or beginning service as a participant as the board
28in its sole discretion decides to allow. The board may limit
29salary deduction amortization plans to such terms as the board
30in its sole discretion determines. In the case of a school

1employee who is an active member of the Public School Employees'
2Retirement System, the agreed upon salary deductions shall be
3remitted to the Public School Employees' Retirement Board, which
4shall certify and transfer to the board the amounts paid.

5(b) Subsequent discontinuance of service.--Upon subsequent
6discontinuance of service, such [member] terminating State 
7employee other than a former annuitant who had the effect of his
8frozen present value eliminated in accordance with subsection
9(c) or a former disability annuitant shall be entitled to an
10annuity which is actuarially equivalent to [the sum of] the
11present value as determined under subsection (a) [and] to which 
12shall be added, if the service after reemployment was as a 
13member of the system, the present value of a maximum single life
14annuity based on years of service credited subsequent to reentry
15in the system and his final average salary computed by reference
16to his compensation as a member of the system or as a member of 
17the Public School Employees' Retirement System during his entire
18period of State and school service.

19(c) Elimination of the effect of frozen present value.--

20(1) An annuitant who returns to State service as an 
21active member of the system and earns three eligibility
22points by performing credited State service following the
23most recent period of receipt of an annuity under this part,
24or an annuitant who enters school service other than as a 
25participant in the School Employees' Defined Contribution 
26Plan and:

27(i) is a multiple service member; or

28(ii) who elects multiple service membership, and

29earns three eligibility points by performing credited State
30service or credited school service following the most recent

1period of receipt of an annuity under this part, and who had
2the present value of his annuity frozen in accordance with
3subsection (a), shall qualify to have the effect of the
4frozen present value resulting from all previous periods of
5retirement eliminated, provided that all payments under
6Option 4 and annuity payments payable during previous periods
7of retirement plus interest as set forth in paragraph (3)
8shall be returned to the fund in the form of an actuarial
9adjustment to his subsequent benefits or in such form as the
10board may otherwise direct.

11* * *

12(3) In addition to any other adjustment to the present 
13value of the maximum single life annuity that a member may be 
14entitled to receive that occurs as a result of any other 
15provision of law, the present value of the maximum single 
16life annuity shall be reduced by all amounts paid or payable 
17to him during all previous periods of retirement plus 
18interest on these amounts until the date of subsequent 
19retirement. The interest for each year shall be calculated 
20based upon the annual interest rate adopted for that fiscal 
21year by the board for the calculation of the normal 
22contribution rate pursuant to section 5508(b) (relating to 
23actuarial cost method[).] for fiscal years ending before July 
241, 2015) or for the calculation of the accrued liability 
25contribution rate under section 5508.1(c) (relating to 
26actuarial cost method for fiscal years beginning July 1, 
272015, or later) for fiscal years starting on or after July 1, 
282015.

29Section 28. Section 5707(a), (b) and (f) of Title 71,
30amended October 24, 2012 (P.L.1436, No.181), are amended to

1read:

2§ 5707. Death benefits.

3(a) Members eligible for annuities.--Any active member,
4inactive member on leave without pay, combined service employee 
5who is an active participant or inactive participant on leave 
6without pay, vestee or current or former State employee 
7performing USERRA leave who dies and was eligible for an annuity
8in accordance with section 5308(a) or (b) (relating to
9eligibility for annuities) or special vestee who has attained
10superannuation age and dies before applying for a superannuation
11annuity shall be considered as having applied for an annuity to
12become effective the day before his death and in the event he
13has not elected an option or such election has not been approved
14prior to his death, it shall be assumed that he elected Option
151.

16(b) Members ineligible for annuities.--In the event of the
17death of a special vestee, an active member, an inactive member
18on leave without pay, combined service employee who is an active 
19participant or inactive participant on leave without pay, or a 
20current or former State employee performing USERRA leave who is
21not entitled to a death benefit as provided in subsection (a),
22his designated beneficiary shall be paid the full amount of his
23total accumulated deductions.

24* * *

25(f) Members subject to limitations under section 5702(c).--
26Subject to the limitations contained in section 401(a)(9) of the
27Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
28401(a)(9)), the present value of any annuity in excess of that
29payable under section 5702 (relating to maximum single life
30annuity) that is not subject to the limitations under section

1415(b) of the Internal Revenue Code of 1986 shall be paid in a
2lump sum to the beneficiary designated by the member after the
3death of the member. A beneficiary receiving a benefit under
4this subsection shall not be able to elect a payment method
5otherwise allowed under section 5709(b)(2) and (3) (relating to
6payment of benefits from the system).

7Section 29. Sections 5708.1(f), 5708.2(f), 5708.3(f),
85708.5(f), 5708.6(f), 5708.7(f), 5708.8(g), 5709 heading, (a)
9and (b) and 5901(a), (c) and (d) of Title 71 are amended to
10read:

11§ 5708.1. Additional supplemental annuities.

12* * *

13(f) Funding.--The actuary shall annually certify the amount
14of appropriations for the next fiscal year needed to fund, over
15a period of ten years from July 1, 2002, the additional monthly
16supplemental annuity provided for in this section, which amounts 
17shall be paid during the period beginning July 1, 2002, and 
18ending June 30, 2010. For fiscal years beginning on or after 
19July 1, 2010, the additional liability provided in this section 
20shall be funded as part of the actuarial accrued liability as 
21provided in [section 5508 (relating to actuarial cost method).] 
22sections 5508 (relating to actuarial cost method for fiscal 
23years ending before July 1, 2015) and 5508.1 (relating to 
24actuarial cost method for fiscal years beginning July 1, 2015, 
25or later).

26* * *

27§ 5708.2. Further additional supplemental annuities.

28* * *

29(f) Funding.--The actuary shall annually estimate the amount
30of Commonwealth appropriations for the next fiscal year needed

1to fund, over a period of ten years from July 1, 2002, the
2additional monthly supplemental annuity provided for in this
3section, which amounts shall be paid during the period beginning 
4July 1, 2002, and ending June 30, 2010. For fiscal years 
5beginning on or after July 1, 2010, the additional liability 
6provided in this section shall be funded as part of the 
7actuarial accrued liability as provided in [section 5508 
8(relating to actuarial cost method).] sections 5508 (relating to 
9actuarial cost method for fiscal years ending before July 1, 
102015) and 5508.1 (relating to actuarial cost method for fiscal 
11years beginning July 1, 2015, or later).

12* * *

13§ 5708.3. Supplemental annuities commencing 1994.

14* * *

15(f) Funding.--For the period beginning July 1, 2002, and 
16ending June 30, 2010, the additional liability for the increase
17in benefits provided in this section shall be funded in equal
18dollar annual installments over a period of ten years beginning
19July 1, 2002. For fiscal years beginning on or after July 1, 
202010, the additional liability for the increase in benefits 
21provided in this section shall be funded as part of the 
22actuarial accrued liability as provided in [section 5508 
23(relating to actuarial cost method).] sections 5508 (relating to 
24actuarial cost method for fiscal years ending before July 1, 
252015) and 5508.1 (relating to actuarial cost method for fiscal 
26years beginning July 1, 2015, or later).

27* * *

28§ 5708.5. Supplemental annuities commencing 1998.

29* * *

30(f) Funding.--For the period beginning July 1, 2002, and
 

1ending June 30, 2010, the additional liability for the increase
2in benefits provided in this section shall be funded in equal
3dollar annual installments over a period of ten years beginning
4July 1, 2002. For fiscal years beginning on or after July 1, 
52010, the additional liability for the increase in benefits 
6provided in this section shall be funded as part of the 
7actuarial accrued liability as provided in [section 5508 
8(relating to actuarial cost method).] sections 5508 (relating to 
9actuarial cost method for fiscal years ending before July 1, 
102015) and 5508.1 (relating to actuarial cost method for fiscal 
11years beginning July 1, 2015, or later).

12* * *

13§ 5708.6. Supplemental annuities commencing 2002.

14* * *

15(f) Funding.--For the period beginning July 1, 2003, and 
16ending June 30, 2010, the additional liability for the increase
17in benefits provided in this section shall be funded in equal
18dollar annual installments over a period of ten years beginning
19July 1, 2003. For fiscal years beginning on or after July 1, 
202010, the additional liability for the increase in benefits 
21provided in this section shall be funded as part of the 
22actuarial accrued liability as provided in [section 5508 
23(relating to actuarial cost method).] sections 5508 (relating to 
24actuarial cost method for fiscal years ending before July 1, 
252015) and 5508.1 (relating to actuarial cost method for fiscal 
26years beginning July 1, 2015, or later).

27* * *

28§ 5708.7. Supplemental annuities commencing 2003.

29* * *

30(f) Funding.--For the period beginning July 1, 2004, and
 

1ending June 30, 2010, the additional liability for the increase
2in benefits provided in this section shall be funded in equal
3dollar annual installments over a period of ten years beginning
4July 1, 2004. For fiscal years beginning on or after July 1, 
52010, the additional liability for the increase in benefits 
6provided in this section shall be funded as part of the 
7actuarial accrued liability as provided in [section 5508 
8(relating to actuarial cost method).] sections 5508 (relating to 
9actuarial cost method for fiscal years ending before July 1, 
102015) and 5508.1 (relating to actuarial cost method for fiscal 
11years beginning July 1, 2015, or later).

12* * *

13§ 5708.8. Special supplemental postretirement adjustment of
142002.

15* * *

16(g) Funding.--For the period beginning July 1, 2003, and 
17ending June 30, 2010, the additional liability for the increase
18in benefits provided in this section shall be funded in equal
19dollar annual installments over a period of ten years beginning
20July 1, 2003. For fiscal years beginning on or after July 1, 
212010, the additional liability for the increase in benefits 
22provided in this section shall be funded as part of the 
23actuarial accrued liability as provided in [section 5508 
24(relating to actuarial cost method).] sections 5508 (relating to 
25actuarial cost method for fiscal years ending before July 1, 
262015) and 5508.1 (relating to actuarial cost method for fiscal 
27years beginning July 1, 2015, or later).

28* * *

29§ 5709. Payment of benefits from the system.

30(a) Annuities.--Any annuity granted under the provisions of

1this part and paid from the fund shall be paid in equal monthly
2installments.

3(b) Death benefits.--If the amount of a death benefit
4payable from the fund to a beneficiary of a member under section
55707 (relating to death benefits) or under the provisions of
6Option 1 of section 5705(a)(1) (relating to member's options) is
7$10,000 or more, such beneficiary may elect to receive payment
8according to one of the following options:

9(1) a lump sum payment;

10(2) an annuity actuarially equivalent to the amount
11payable; or

12(3) a lump sum payment and an annuity such that the
13annuity is actuarially equivalent to the amount payable less
14the lump sum payment specified by the beneficiary.

15* * *

16§ 5901. The State Employees' Retirement Board.

17(a) Status and membership.--The board shall be an
18independent administrative board and consist of 11 members: the
19State Treasurer, ex officio, two Senators, two members of the
20House of Representatives and six members appointed by the
21Governor, one of whom shall be an annuitant of the system or a 
22participant of the plan who has terminated State service and is 
23receiving or is eligible to receive distributions, for terms of
24four years, subject to confirmation by the Senate. At least five
25board members shall be active members of the system or active 
26participants of the plan, and at least two shall have ten or
27more years of credited State service or shall have been active 
28participants of the plan for ten calendar years. The chairman of
29the board shall be designated by the Governor from among the
30members of the board. Each member of the board who is a member

1of the General Assembly may appoint a duly authorized designee
2to act in his stead. In the event that a board member, who is 
3designated as an active participant or as the participant in the 
4plan who is receiving or is eligible to receive distributions, 
5receives a total distribution of his interest in the plan, that 
6board member may continue to serve on the board for the 
7remainder of his term.

8* * *

9(c) Oath of office.--Each member of the board shall take an
10oath of office that he will, so far as it devolves upon him,
11diligently and honestly, administer the affairs of said board, 
12the system and the plan and that he will not knowingly violate
13or willfully permit to be violated any of the provisions of law
14applicable to this part. Such oath shall be subscribed by the
15member taking it and certified by the officer before whom it is
16taken and shall be immediately filed in the Office of the
17Secretary of the Commonwealth.

18(d) Compensation and expenses.--The members of the board who
19are members of the system or participants in the plan shall
20serve without compensation but shall not suffer loss of salary
21or wages through serving on the board. The members of the board
22who are not members of the system or participants in the plan
23shall receive $100 per day when attending meetings and all board
24members shall be reimbursed for any necessary expenses. However,
25when the duties of the board as mandated are not executed, no
26compensation or reimbursement for expenses of board members
27shall be paid or payable during the period in which such duties
28are not executed.

29* * *

30Section 30. Sections 5902(a.1) introductory paragraph, (3),

1(5) and (6), (b), (c), (e), (h), (i), (j), (k), (m) and (n) and
25903 heading and (a) of Title 71 are amended and the sections
3are amended by adding subsections to read:

4§ 5902. Administrative duties of the board.

5* * *

6(a.1) Secretary.--The secretary shall act as chief
7administrative officer for the board with respect to both the 
8system and the plan. In addition to other powers and duties
9conferred upon and delegated to the secretary by the board, the
10secretary shall:

11* * *

12(3) Review and analyze proposed legislation and
13legislative developments affecting the system or the plan and
14present findings to the board, legislative committees, and
15other interested groups or individuals.

16* * *

17(5) Receive inquiries and requests for information
18concerning the system or the plan from the press,
19Commonwealth officials, State employees, the general public,
20research organizations, and officials and organizations from
21other states, and provide information as authorized by the
22board.

23(6) Supervise a staff of administrative, technical, and
24clerical employees engaged in record-keeping and clerical
25processing activities for both the system and the plan in
26maintaining files of members and participants, accounting for
27contributions, processing payments to annuitants and 
28terminated participants, preparing required reports, and
29retirement counseling. The board may utilize the staff of 
30employees provided for under this subsection for both the
 

1system and the plan but shall allocate the fees, costs and 
2expenses incurred under this subsection between the system 
3and the plan as appropriate.

4(b) Professional personnel.--The board shall contract for
5the services of a chief medical examiner, an actuary, investment
6advisors and counselors, and such other professional personnel
7as it deems advisable. The board may, with the approval of the
8Attorney General, contract for legal services. The board may 
9utilize the same individuals and firms contracted under this 
10subsection for both the system and the plan but shall allocate 
11the fees, costs and expenses incurred under this subsection 
12between the system and the plan as appropriate.

13(c) Expenses.--The board shall, through the Governor, submit
14to the General Assembly annually a budget covering the
15administrative expenses of [this part] the system and a separate 
16budget covering the administrative expenses of the plan. Such
17expenses of the system as approved by the General Assembly in an
18appropriation bill shall be paid from investment earnings of the
19fund. Such expenses of the plan as approved by the General 
20Assembly shall be paid from interest, pursuant to section 
215414(b) (relating to investments based on members' investment 
22allocation choices), or assessments on the balances of the 
23participants' individual investment accounts except as may be 
24provided otherwise by law. Concurrently with its administrative
25budget, the board shall also submit to the General Assembly
26annually a list of proposed expenditures which the board intends
27to pay through the use of directed commissions, together with a
28list of the actual expenditures from the past year actually paid
29by the board through the use of directed commissions. All such
30directed commission expenditures shall be made by the board for

1the exclusive benefit of the system and its members.

2* * *

3(e) Records.--

4(1) The board shall keep a record of all its proceedings
5which shall be open to [inspection] access by the public,
6except as otherwise provided in this part or by other law.

7(2) Any record, material or data received, prepared,
8used or retained by the board or its employees, investment
9professionals or agents relating to an investment shall not
10constitute a public record subject to public [inspection]
11access under the act of [June 21, 1957 (P.L.390, No.212),
12referred to as the Right-to-Know Law,] February 14, 2008 
13(P.L.6, No.3), known as the Right-to-Know Law, if, in the
14reasonable judgment of the board, the [inspection] access 
15would:

16(i) in the case of an alternative investment or
17alternative investment vehicle, involve the release of
18sensitive investment or financial information relating to
19the alternative investment or alternative investment
20vehicle which the fund or trust was able to obtain only
21upon agreeing to maintain its confidentiality;

22(ii) cause substantial competitive harm to the
23person from whom sensitive investment or financial
24information relating to the investment was received; or

25(iii) have a substantial detrimental impact on the
26value of an investment to be acquired, held or disposed
27of by the fund or trust or would cause a breach of the
28standard of care or fiduciary duty set forth in this
29part.

30(3) (i) The sensitive investment or financial

1information excluded from [inspection] access under
2paragraph (2)(i), to the extent not otherwise excluded
3from [inspection] access, shall constitute a public
4record subject to public [inspection] access under the
5Right-to-Know Law once the board is no longer required by
6its agreement to maintain confidentiality.

7(ii) The sensitive investment or financial
8information excluded from [inspection] access under
9paragraph (2)(ii), 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:

13(A) the [inspection] access no longer causes
14substantial competitive harm to the person from whom
15the information was received; or

16(B) the entity in which the investment was made
17is liquidated;

18whichever is later.

19(iii) The sensitive investment or financial
20information excluded from [inspection] access under
21paragraph (2)(iii), to the extent not otherwise excluded
22from [inspection] access, shall constitute a public
23record subject to public [inspection] access under the
24Right-to-Know Law once:

25(A) the [inspection] access no longer has a
26substantial detrimental impact on the value of an
27investment of the fund or trust and would not cause a
28breach of the standard of care or fiduciary duty set
29forth in this part; or

30(B) the entity in which the investment was made

1is liquidated;

2whichever is later.

3(4) Except for the provisions of paragraph (3), nothing
4in this subsection shall be construed to designate any
5record, material or data received, prepared, used or retained
6by the board or its employees, investment professionals or
7agents relating to an investment as a public record subject
8to public [inspection] access under the Right-to-Know Law.

9(5) Any record, material or data received, prepared,
10used or retained by the board or its employees, or agents
11relating to the contributions, account value or benefits
12payable to or on account of a participant shall not
13constitute a public record subject to public access under the
14Right-to-Know Law, if, in the reasonable judgment of the
15board, the access would disclose any of the following:

16(i) The existence, date, amount and any other
17information pertaining to the voluntary contributions,
18including rollover contributions or trustee-to-trustee
19transfers, of any participant.

20(ii) The investment options selections of any
21participant.

22(iii) The balance of a participant's account,
23including the amount distributed to the participant
24investment gains or losses or rates of return.

25(iv) The identity of a participant's designated
26beneficiary, successor payee or alternate payee.

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

28(6) Nothing in this subsection shall be construed to
29designate any record, material or data received, prepared,
30used or retained by the board or its employees, or agents

1relating to the contributions, account value or benefits
2payable to or on account of a participant as a public record
3subject to public access under the Right-to-Know Law.

4* * *

5(h) Regulations and procedures.--The board shall, with the
6advice of the Attorney General and the actuary, adopt and
7promulgate rules and regulations for the uniform administration
8of the system. The actuary shall approve in writing all
9computational procedures used in the calculation of
10contributions and benefits pertaining to the system, and the
11board shall by resolution adopt such computational procedures,
12prior to their application by the board. Such rules, regulations
13and computational procedures as so adopted from time to time and
14as in force and effect at any time, together with such tables as
15are adopted pursuant to subsection (j) as necessary for the
16calculation of annuities and other benefits, shall be as
17effective as if fully set forth in this part. Any actuarial
18assumption specified in or underlying any such rule, regulation
19or computational procedure and utilized as a basis for
20determining any benefit shall be applied in a uniform manner.

21(i) Data.--The board shall keep in convenient form such data
22as are stipulated by the actuary in order that an annual
23actuarial valuation of the various accounts of the fund can be
24completed within six months of the close of each calendar year.

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

1including the mortality, service, and compensation experience
2provided by the board annually during the preceding five years
3concerning the members and beneficiaries of the system. The
4board shall by resolution adopt such tables as are necessary for
5the actuarial valuation of the fund and calculation of
6contributions, annuities and other benefits based on the reports
7and recommendations of the actuary. Within 30 days of their
8adoption, the secretary of the board shall cause those tables
9which relate to the calculation of annuities and other benefits
10to be published in the Pennsylvania Bulletin in accordance with
11the provisions of 45 Pa.C.S. § 725(a) (relating to additional
12contents of Pennsylvania Bulletin) and, unless the board
13specifies therein a later effective date, such tables shall
14become effective on such publication. The board shall include a
15report on the significant facts, recommendations and data
16developed in each five-year actuarial investigation and
17evaluation of the system in the annual financial statement
18published pursuant to the requirements of subsection (m) for the
19fiscal year in which such investigation and evaluation were
20concluded.

21(k) Certification of employer contributions to the fund.--
22The board shall, each year in addition to the itemized budget
23required under section 5509 (relating to appropriations and
24assessments by the Commonwealth), certify, as a percentage of
25the members' payroll, the shared-risk contribution rate, the
26employers' contributions as determined pursuant to [section 5508
27(relating to actuarial cost method)] sections 5508 (relating to 
28actuarial cost method for fiscal years ending before July 1, 
292015) and 5508.1 (relating to actuarial cost method for fiscal 
30years beginning July 1, 2015, or later) necessary for the

1funding of prospective annuities for active members and the
2annuities of annuitants and certify the rates and amounts of the
3employers' normal contributions as determined pursuant to
4[section] sections 5508(b) and 5508.1(b), accrued liability
5contributions as determined pursuant to [section] sections
65508(c) and 5508.1(c) and (d), supplemental annuities
7contribution rate as determined pursuant to section 5508(e), the
8experience adjustment factor as determined pursuant to [section]
9sections 5508(f) and 5508.1(f), the collared contribution rate 
10pursuant to section 5508(h) and the final contribution rate 
11pursuant to section 5508(i), which shall be paid to the fund and
12credited to the appropriate accounts. The board may allocate the 
13final contribution rate and certify various employer 
14contribution rates and amounts based upon the different benefit 
15eligibility, class of service multiplier, superannuation age and 
16other benefit differences resulting from State service credited 
17for individual members even though such allocated employer 
18contribution rate on behalf of any given member may be more or 
19less than 5% of the member's compensation for the period from 
20July 1, 2010, to June 30, 2011, or may differ from the prior 
21year's contribution for that member by more or less than the 
22percentages used to calculate the collared contribution rate for 
23that year and may be below any minimum contribution rate 
24established for the collared contribution rate or final 
25contribution rate. These certifications shall be regarded as
26final and not subject to modification by the Secretary of the 
27Budget.

28* * *

29(m) Annual financial statement.--The board shall prepare and
30have published, on or before July 1 of each year, [a financial

1statement] financial statements as of the calendar year ending
2December 31 of the previous year showing the condition of the
3fund and the trust and the various accounts, including, but not
4limited to, the board's accrual and expenditure of directed
5commissions, and setting forth such other facts,
6recommendations, and data as may be of use in the advancement of
7knowledge concerning annuities and other benefits provided by
8this part. The board shall submit said financial [statement]
9statements to the Governor and shall file copies with the head
10of each department for the use of the State employees and the
11public.

12(n) Independent [audit] audits.--The board shall provide for 
13[an annual audit] annual audits of the system and the plan by 
14[an] independent certified public [accountant] accountants, 
15which [audit] audits shall include the board's accrual and 
16expenditure of directed commissions. The board may use the same 
17independent certified public accountant for the audits of both 
18the system and the plan.

19* * *

20(p) Participant and employer contributions to the trust.-- 
21The board shall, each year in addition to any fees and itemized 
22budget required under section 5509 (relating to appropriations 
23and assessments by the Commonwealth), certify, as a percentage 
24of each participant's compensation, the employer defined 
25contributions, which shall be paid to the trust and credited to 
26each participant's individual investment account. These 
27certifications shall be regarded as final and not subject to 
28modification by the Secretary of the Budget. The board shall 
29cause all mandatory pickup participant contributions made on 
30behalf of a participant and all voluntary contributions made by
 

1a participant to be credited to the participant's individual 
2investment account.

3§ 5903. Duties of the board to advise and report to heads of
4departments [and], members and participants.

5(a) Manual of regulations.--The board shall, with the advice
6of the Attorney General and the actuary, prepare and provide,
7within 90 days of the effective date of this part, a manual
8incorporating rules and regulations consistent with the
9provisions of this part to the heads of departments who shall
10make the information contained therein available to the general
11membership. The board shall thereafter advise the heads of
12departments within 90 days of any changes in such rules and
13regulations due to changes in the law or due to changes in
14administrative policies. As soon as practicable after the
15commissioner's announcement with respect thereto, the board
16shall also advise the heads of departments as to any cost-of-
17living adjustment for the succeeding calendar year in the amount
18of the limitation under IRC § 401(a)(17) and the dollar amounts
19of the limitations under IRC § 415[(b)]. As soon as practicable
20after January 1 of each year, the board shall also advise the
21heads of departments of the employees for whom, pursuant to
22section 5502.1 (relating to waiver of regular member
23contributions and Social Security integration member
24contributions), pickup contributions are not to be made.

25* * *

26(b.1) Participant status statements.--The board shall have
27furnished annually to each participant, on or before April 1 and
28more frequently as the board may agree or as required by law, a
29statement for each participant in the plan showing the
30accumulated total defined contributions credited to the

1participant's individual investment account, the nature and type
2of investments and the investment allocation of future
3contributions as of December 31 of the previous year and
4requesting the participant to make any necessary correction or
5revision regarding his designated beneficiary.

6* * *

7Section 31. Section 5904(c)(2) of Title 71 is amended to
8read:

9§ 5904. Duties of the board to report to the Public School
10Employees' Retirement Board.

11* * *

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

19* * *

20(2) transfer to the Public School Employees' Retirement
21Fund the total accumulated deductions standing to such
22member's credit and the actuarial reserve required on account
23of years of credited service in the State system, final
24average salary determined on the basis of his compensation as 
25a member in both systems and the average noncovered salary to
26be charged to the State accumulation account, the State
27Police benefit account or the enforcement officers' benefit
28account, as each case may require.

29* * *

30Section 32. Section 5905 heading, (b)(3), (c.1) and (g) of

1Title 71, amended October 24, 2012 (P.L.1436, No.181), are
2amended and the section is amended by adding subsections to
3read:

4§ 5905. Duties of the board regarding applications and
5elections of members and participants.

6* * *

7(b) School employees electing multiple service status.--Upon
8receipt of notification from the Public School Employees'
9Retirement Board that a former State employee has become an
10active member in the Public School Employees' Retirement System
11and has elected to become a member with multiple service status
12the board shall:

13* * *

14(3) in case of a former State employee who is not
15receiving an annuity from the system and his total
16accumulated deductions were withdrawn, certify to the former
17State employee the accumulated deductions as they would have
18been at the time of his separation had he been a full
19coverage member together with statutory interest for all
20periods of subsequent State service eligible for membership 
21in the system and school service as a member of the Public 
22School Employees' Retirement System to the date of repayment.
23Such amount shall be restored by him and shall be credited
24with statutory interest as such payments are restored.

25* * *

26(c.1) Termination of service by a member.--In the case of
27any member terminating State service who is entitled to an
28annuity and who is not then a disability annuitant, the board
29shall advise such member in writing of any benefits from the 
30system to which he may be entitled under the provisions of this

1part and shall have the member prepare, on or before the date of
2termination of State service, one of the following three forms,
3a copy of which shall be given to the member and the original of
4which shall be filed with the board:

5(1) an application for the return of total accumulated
6deductions;

7(2) an election to vest his retirement rights and, if he
8is a joint coverage member and so desires, elect to become a
9full coverage member and agree to pay within 30 days of the
10date of termination of service the lump sum required; or

11(3) an application for an immediate annuity and, if he
12desires:

13(i) an election to convert his medical, major
14medical and hospitalization insurance coverage to the
15plan for State annuitants; and

16(ii) if he is a joint coverage member, an election
17to become a full coverage member and an agreement to pay
18within 30 days of date of termination of service the lump
19sum required.

20(c.2) Termination of service by a participant.--In the case
21of any participant terminating State service, the board shall
22advise the participant in writing of the accumulated total
23defined contributions credited to the participant's individual
24investment account as of the date stated in the writing, any
25notices regarding rollover or other matters required by IRC or
26other law, the obligation of the participant to commence
27distributions from the plan by the participant's required
28beginning date and the ability to receive all or part of the
29balance in the participant's individual investment account in a
30lump sum or in such other form as the board may authorize or is

1required by law.

2* * *

3(e.2) Notification to inactive participants approaching
4required beginning date.--The board shall notify each inactive
5participant who has terminated State service and had not
6commenced distribution by 90 days before the participant's
7required beginning date in writing that the participant has an
8obligation to commence distributions by his required beginning
9date in a form and manner required by IRC § 401(a)(9) and other
10applicable provisions of the IRC.

11* * *

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

15(g) Death benefits.--Upon receipt of notification from the
16head of a department of the death of an active member, a member
17performing USERRA leave [or], a member on leave without pay, an 
18active participant, an inactive participant on leave without pay 
19or a former participant performing USERRA leave, the board shall
20advise the designated beneficiary of the benefits to which he is
21entitled, and shall make the first payment to the beneficiary
22within 60 days of receipt of certification of death and other
23necessary data. If no beneficiary designation is in effect at
24the date of the member's death or no notice has been filed with
25the board to pay the amount of the benefits to the member's
26estate, the board is authorized to pay the benefits to the
27executor, administrator, surviving spouse or next of kin of the
28deceased member, and payment pursuant hereto shall fully
29discharge the fund from any further liability to make payment of
30such benefits to any other person. If the surviving spouse or

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

13* * *

14Section 33. Section 5906(a) introductory paragraph and (3),
15(b), (d), (e), (g), (h), (i) and (l) of Title 71, amended
16October 24, 2012 (P.L.1436, No.181), are amended and the section
17is amended by adding subsections to read:

18§ 5906. Duties of heads of departments.

19(a) Status of members and participants.--The head of
20department shall, at the end of each pay period, notify the
21board in a manner prescribed by the board of salary changes
22effective during that period for any members and participants of
23the department, the date of all removals from the payroll, and
24the type of leave of any members and participants of the
25department who have been removed from the payroll for any time
26during that period, and:

27* * *

28(3) if the removal is due to termination of State
29service, he shall furnish the board with a complete State
30service record, including service in other departments or

1agencies, or creditable nonstate service and;

2(i) in the case of death of the member or 
3participant the head of the department shall so notify
4the board;

5(ii) in the case of a service connected disability
6of a member the head of department shall, to the best of
7his ability, investigate the circumstances surrounding
8the disablement of the member and submit in writing to
9the board information which shall include but not
10necessarily be limited to the following: date, place and
11time of disablement to the extent ascertainable; nature
12of duties being performed at such time; and whether or
13not the duties being performed were authorized and
14included among the member's regular duties. In addition,
15the head of department shall furnish in writing to the
16board all such other information as may be related to the
17member's disablement;

18(iii) in the case of a member terminating from The
19Pennsylvania State University who is a member of the
20system with five or more but less than ten eligibility
21points and who has terminated State service on June 30,
221997, because of the transfer of his job position or
23duties to a controlled organization of the Penn State
24Geisinger Health System or because of the elimination of
25his job position or duties due to the transfer of other
26job positions or duties to a controlled organization of
27the Penn State Geisinger Health System, the head of the
28department shall so certify to the board.

29(b) Records and information.--At any time at the request of
30the board and at termination of service of a member or a
 

1participant, the head of department shall furnish service and
2compensation records and such other information as the board may
3require and shall maintain and preserve such records as the
4board may direct for the expeditious discharge of its duties.

5* * *

6(c.1) Participant and employer defined contributions.--The
7head of the department shall:

8(1) Cause the mandatory pickup participant contributions
9on behalf of a participant to be made and cause to be
10deducted any voluntary contributions authorized by a
11participant.

12(2) Cause the employer defined contributions on behalf
13of a participant to be made.

14(3) Notify the board at times and in a manner prescribed
15by the board of the compensation of any participant to whom
16the limitation under IRC § 401(a)(17) either applies or is
17expected to apply and cause such participant's contributions
18to be deducted from payroll to cease at the limitation under
19IRC § 401(a)(17) on the payroll date if and when such limit
20shall be reached.

21(4) Certify to the State Treasurer the amounts picked up
22and deducted and the employer defined contributions being
23made and send the total amount picked up, deducted and
24contributed together with a duplicate of such voucher to the
25secretary of the board every pay period or on such schedule
26as established by the board.

27(d) New employees subject to mandatory membership or 
28participation.--Upon the assumption of duties of each new State
29employee whose membership in the system or plan is mandatory,
30the head of department shall cause an application for membership

1or participation and a nomination of beneficiary to be made by
2such employee and filed with the board and shall make pickup
3contributions or mandatory pickup participant contributions from
4the effective date of State employment.

5(e) New employees subject to optional membership or 
6participation.--The head of department shall, upon the
7employment or entering into office of any State employee whose
8membership in the system or participation in the plan is not
9mandatory, inform such employee of his opportunity to become a
10member of the system or participant in the plan. If such
11employee so elects, the head of department shall cause an
12application for membership and a nomination of beneficiary to be
13made by him and filed with the board and shall cause proper
14contributions to be made from the effective date of membership
15or participation.

16* * *

17(g) Former school employee contributors.--The head of
18department shall, upon the employment of a former contributor to
19the Public School Employees' Retirement System who is not an
20annuitant of the Public School Employees' Retirement System,
21advise such employee of his right to elect within 365 days of
22entry into the system to become a multiple service member, and
23in the case of any such employee who so elects and has withdrawn
24his accumulated deductions, require him to reinstate his credit
25in the Public School Employees' Retirement System. The head of
26the department shall advise the board of such election. This 
27subsection shall not apply to a State employee who is employed 
28in a position where he is or may be a participant in the plan 
29other than by an election under section 5416 (relating to 
30election by members to be participants).

1(h) Former school employee annuitants.--The head of
2department shall, upon the employment of an annuitant of the
3Public School Employees' Retirement System who applies for
4membership in the system, advise such employee that he may elect
5multiple service membership within 365 days of entry into the
6system and if he so elects his public school employee's annuity
7will be discontinued effective upon the date of his return to
8State service and, upon termination of State service and
9application for an annuity, the annuity will be adjusted in
10accordance with section 5706 (relating to termination of
11annuities). The head of department shall advise the board of
12such election. This subsection shall not apply to a State 
13employee who is employed in a position where he is or may be a 
14participant in the plan other than by an election under section 
155416.

16(i) Annual statement to members.--Annually, upon receipt
17from the board, the head of department shall furnish to each
18member the statement specified in section 5903(b) (relating to
19duties of the board to advise and report to heads of departments
20[and], members and participants).

21* * *

22(l) State employees performing USERRA or military-related 
23leave of absence.--The head of department shall report to the 
24board any State employee who ceases to be an active member or 
25active participant to perform USERRA service, or who is granted 
26a leave of absence under 51 Pa.C.S. § 4102 (relating to leaves 
27of absence for certain government employees) or a military leave 
28of absence under 51 Pa.C.S. § 7302 (relating to granting 
29military leaves of absence), the date on which the USERRA 
30service, leave of absence or military leave of absence began,
 

1the date on which the State employee is reemployed from USERRA 
2leave or returns after the leave of absence or military leave of 
3absence, if the event occurs, and any other information the 
4board may require or direct.

5* * *

6(n) Obligation of educational institutions to report
7participation and compensation of employees in independent
8retirement programs.--The Pennsylvania State University, the
9State System of Higher Education, State-owned educational
10institutions and community colleges shall report to the board
11the compensation and other information as the board may request
12for the application and administration of sections 5507.1
13(relating to contributions to the system by the Commonwealth and
14other employers starting July 1, 2015) and 5508.1(c) and (d)
15(relating to actuarial cost method for fiscal years beginning
16July 1, 2015, or later) of employees who are participants or
17members in the Public School Employees' Retirement System,
18School Employees' Defined Contribution Plan or independent
19retirement programs approved by the employer.

20Section 34. Section 5907 heading, (a), (e) and (f) of Title
2171 are amended and the section is amended by adding subsections
22to read:

23§ 5907. Rights and duties of State employees [and], members and 
24participants.

25(a) Information on new employees.--Upon his assumption of
26duties each new State employee shall furnish the head of
27department with a complete record of his previous State service,
28his school service or creditable nonstate service, and proof of
29his date of birth and current status in the system and the plan
30and in the Public School Employees' Retirement System and the
 

1School Employees' Defined Contribution Plan. Willful failure to
2provide the information required by this subsection to the
3extent available upon entrance into the system shall result in
4the forfeiture of the right of the member to subsequently assert
5any right to benefits based on any of the required information
6which he failed to provide. In any case in which the board finds
7that a member is receiving an annuity based on false
8information, the total amount received predicated on such false
9information together with statutory interest doubled and
10compounded shall be deducted from the present value of any
11remaining benefits to which the member is legally entitled.

12* * *

13(b.1) Application for participation.--On or after January 1,
142015, in the case of a new employee who is not currently a
15participant in the plan and whose participation is mandatory or
16in the case of a new employee whose participation is not
17mandatory but is permitted and who desires to become a
18participant in the plan, the new employee shall execute an
19application for participation and a nomination of a beneficiary.

20* * *

21(d.2) Contributions for USERRA leave.--Any active
22participant or inactive participant on leave without pay or
23former participant who was reemployed from USERRA leave who
24desires to make mandatory pickup participant contributions and
25voluntary contributions for his USERRA leave shall so notify the
26board within the time period required under 38 U.S.C. Ch. 43
27(relating to employment and reemployment rights of members of
28the uniformed services) and IRC § 414(u) of his desire to make
29such contributions. Upon making the permitted mandatory pickup
30participant contributions within the allowed time period, the

1head of the department shall make the corresponding employer
2defined contributions at the same time.

3(d.3) Voluntary contributions by participant.--Any active
4participant who desires to make voluntary contributions to be
5credited to his individual investment account shall notify the
6board and, upon compliance with the requirements, procedures and
7limitations established by the board in the plan document, may
8do so subject to the limitation under IRC §§ 401(a) and 415 and 
9other applicable law.

10(e) Beneficiary for death benefits from the system.--Every
11member shall nominate a beneficiary by written designation filed
12with the board as provided in section 5906(d) or (e) (relating
13to duties of heads of departments) to receive the death benefit
14payable under section 5707 (relating to death benefits) or the
15benefit payable under the provisions of Option 1 of section
165705(a)(1) (relating to member's options). Such nomination may
17be changed at any time by the member by written designation
18filed with the board. A member may also nominate a contingent
19beneficiary or beneficiaries to receive the death benefit
20provided under section 5707 or the benefit payable under the
21provisions of Option 1 of section 5705(a)(1).

22(e.1) Beneficiary for death benefits from the plan.--Every
23participant shall nominate a beneficiary by written designation
24filed with the board as provided in section 5906(d) or (e) to
25receive the death benefit payable under section 5408 (relating
26to death benefits). A participant may also nominate a contingent
27beneficiary or beneficiaries to receive the death benefit
28provided under section 5408. Such nomination may be changed at
29any time by the participant by written designation filed with
30the board.

1(e.2) Beneficiary for combined service employee.--A combined
2service employee may designate or nominate different persons to
3be beneficiaries, survivor annuitants and successor payees for
4his benefits from the system and the plan.

5(f) Termination of service by members.--Each member who
6terminates State service and who is not then a disability
7annuitant shall execute on or before the date of termination of
8service the appropriate application, duly attested by the member
9or his legally constituted representative, electing to:

10(1) withdraw his total accumulated deductions; or

11(2) vest his retirement rights; and if he is a joint
12coverage member, and so desires, elect to become a full
13coverage member and agree to pay within 30 days of the date
14of termination of service the lump sum required; or

15(3) receive an immediate annuity and may,

16(i) if eligible, elect to convert his medical, major
17medical, and hospitalization coverage to the plan for
18State annuitants; and

19(ii) if he is a joint coverage member, elect to
20become a full coverage member and agree to pay within 30
21days of date of termination of service the lump sum
22required.

23* * *

24(g.1) Deferral of retirement rights.--If a participant
25terminates State service and does not commence receiving a
26distribution, he shall nominate a beneficiary, and he may
27anytime thereafter, but no later than his required beginning
28date, withdraw the accumulated total defined contributions
29standing to his credit or apply for another form of distribution
30required by law or authorized by the board.

1* * *

2Section 35. Sections 5931(b), 5932, 5934, 5935, 5936, 5937,
35938, 5939, 5951 and 5953 of Title 71 are amended to read:

4§ 5931. Management of fund and accounts.

5* * *

6(b) Crediting of interest.--The board, annually, shall allow
7the required interest on the mean amount for the preceding year
8to the credit of each of the accounts other than the individual 
9investment accounts. The amount so allowed shall be credited
10thereto by the board and transferred from the interest reserve
11account.

12* * *

13§ 5932. State Employees' Retirement Fund.

14The fund shall consist of all balances in the several
15separate accounts set apart to be used under the direction of
16the board for the benefit of members of the system; and the
17Treasury Department shall credit to the fund all moneys received
18from the Department of Revenue arising from the contributions
19relating to or on behalf of members of the system required under
20the provisions of Chapter 55 (relating to contributions), and
21any income earned by the investments or moneys of said fund.
22There shall be established and maintained by the board the
23several ledger accounts specified in sections 5933 (relating to
24members' savings account), 5934 (relating to State accumulation
25account), 5935 (relating to annuity reserve account), 5936
26(relating to State Police benefit account), 5937 (relating to
27enforcement officers' benefit account), 5938 (relating to
28supplemental annuity account) and 5939 (relating to interest
29reserve account). The individual investment accounts that are 
30part of the trust shall not be part of the fund. Mandatory
 

1pickup participant contributions, voluntary contributions and 
2employer defined contributions made under this part and any 
3income earned by the investment of such contributions shall not 
4be paid or credited to the fund but shall be paid to the trust 
5and credited to the individual investment accounts.

6§ 5934. State accumulation account.

7The State accumulation account shall be the ledger account to 
8which shall be credited all contributions of the Commonwealth or 
9other employers whose employees are members of the system and 
10made in accordance with the provisions of [section 5507(a) or 
11(d) (relating to contributions by the Commonwealth and other 
12employers)] sections 5507(a) or (d) (relating to contributions 
13to the system by the Commonwealth before July 1, 2015) and 
145507.1 (relating to contributions to the system by the 
15Commonwealth and other employers starting July 1, 2015) except 
16that the amounts received under the provisions of the act of May 
1712, 1943 (P.L.259, No.120), and the amounts received under the 
18provisions of the Liquor Code, act of April 12, 1951 (P.L.90, 
19No.21), shall be credited to the State Police benefit account or 
20the enforcement officers' benefit account as the case may be. 
21All amounts transferred to the fund by county retirement systems 
22or pension plans in accordance with the provisions of section 
235507(c) also shall be credited to the State accumulation 
24account. All amounts transferred to the fund by the Public 
25School Employees' Retirement System in accordance with section 
265303.2(e) (relating to election to convert school service to 
27State service), except amounts credited to the members' savings 
28account, and all amounts paid by the Department of Corrections 
29in accordance with section 5303.2(f) also shall be credited to 
30the State accumulation account. The State accumulation account
 

1shall be credited with valuation interest. The reserves 
2necessary for the payment of annuities and death benefits 
3resulting from membership in the system as approved by the board 
4and as provided in Chapter 57 (relating to benefits) shall be 
5transferred from the State accumulation account to the annuity 
6reserve account provided for in section 5935 (relating to 
7annuity reserve account), except that the reserves necessary on 
8account of a member who is an officer of the Pennsylvania State 
9Police or an enforcement officer shall be transferred from the 
10State accumulation account to the State Police benefit account 
11provided for in section 5936 (relating to State Police benefit 
12account) or to the enforcement officers' benefit account as 
13provided for in section 5937 (relating to enforcement officers' 
14benefit account) as the case may be. The reserves necessary for 
15the payment of supplemental annuities in excess of those 
16reserves credited to the supplemental annuity account on June 
1730, 2010, shall be transferred from the State accumulation 
18account to the supplemental annuity account. In the event that 
19supplemental annuities are increased by legislation enacted 
20after December 31, 2009, the necessary reserves shall be 
21transferred from the State accumulation account to the 
22supplemental annuity account.

23§ 5935. Annuity reserve account.

24(a) Credits and charges to account.--The annuity reserve
25account shall be the ledger account to which shall be credited
26the reserves held for payment of annuities and death benefits on
27account of all annuitants except in the case of members who are
28officers of the Pennsylvania State Police or enforcement
29officers. The annuity reserve account shall be credited with
30valuation interest. After the transfers provided in sections

15933 (relating to members' savings account), 5934 (relating to
2State accumulation account) and 5938 (relating to supplemental
3annuity account), all annuity and death benefit payments
4resulting from membership in the system except those payable to
5any member who retires as an officer of the Pennsylvania State
6Police or an enforcement officer shall be charged to the annuity
7reserve account and paid from the fund.

8(b) Transfers from account.--Should an annuitant other than 
9a member who was retired as an officer of the Pennsylvania State 
10Police or an enforcement officer be subsequently restored to 
11active service as a member of the system or as a participant in 
12the plan, the present value of his member's annuity at the time 
13of reentry into State service shall be transferred from the 
14annuity reserve account and placed to his individual credit in 
15the members' savings account. In addition, the actuarial reserve 
16for his annuity less the amount transferred to the members' 
17savings account shall be transferred from the annuity reserve 
18account to the State accumulation account.

19§ 5936. State Police benefit account.

20(a) Credits and charges to account.--The State Police
21benefit account shall be the ledger account to which shall be
22credited all contributions received under the provisions of the
23act of May 12, 1943 (P.L.259, No.120), and any additional
24Commonwealth or other employer contributions provided for in
25[section 5507 (relating to contributions by the Commonwealth and
26other employers)] sections 5507 (relating to contributions to 
27the system by the Commonwealth and other employers before July 
281, 2015) and 5507.1 (relating to contributions to the system by 
29the Commonwealth and other employers starting July 1, 2015) 
30which are creditable to the State Police benefit account. The

1State Police benefit account shall be credited with the required
2interest. In addition, upon the filing of an application for an
3annuity by a member who is an officer of the Pennsylvania State
4Police, the total accumulated deductions standing to the credit
5of the member in the members' savings account and the necessary
6reserves from the State accumulation account shall be
7transferred to the State Police benefit account. Thereafter, the
8total annuity of such annuitant shall be charged to the State
9Police benefit account and paid from the fund.

10(b) Transfers from account.--Should the said annuitant be 
11subsequently restored to active service as a member of the 
12system or as a participant in the plan, the present value of the 
13member's annuity at the time of reentry into State service shall 
14be transferred from the State Police benefit account and placed 
15to his individual credit in the members' savings account. In 
16addition, the actuarial reserve for his annuity calculated as if 
17he had been a member of Class A if he has Class A or Class C 
18service credited; as if he had been a member of Class A-3 if the 
19annuitant has Class A-3 State service credited; or as if he had 
20been a member of Class A-4 if the annuitant has Class A-4 
21service credited, less the amount transferred to the members' 
22savings account shall be transferred from the State Police 
23benefit account to the State accumulation account. Upon 
24subsequent retirement other than as an officer of the 
25Pennsylvania State Police the actuarial reserve remaining in the 
26State Police benefit account shall be transferred to the 
27appropriate reserve account.

28§ 5937. Enforcement officers' benefit account.

29(a) Credits and charges to account.--The enforcement 
30officers' benefit account shall be the ledger account to which
 

1shall be credited moneys transferred from the enforcement 
2officers' retirement account in the State Stores Fund according 
3to the provisions of the act of April 12, 1951 (P.L.90, No.21), 
4known as the Liquor Code, and any additional Commonwealth or 
5other employer contributions provided for in [section 5507 
6(relating to contributions by the Commonwealth and other 
7employers)] sections 5507 (relating to contributions to the 
8system by the Commonwealth and other employers before July 1, 
92015) and 5507.1 (relating to contributions to the system by the 
10Commonwealth and other employers starting July 1, 2015) which 
11are creditable to the enforcement officers' benefit account. The 
12enforcement officers' benefit account shall be credited with the 
13required interest. In addition, upon the filing of an 
14application for an annuity by a member who is an enforcement 
15officer of the Pennsylvania Liquor Control Board, the total 
16accumulated deductions standing to the credit of the member in 
17the members' savings account and the necessary reserves from the 
18State accumulation account shall be transferred to the 
19enforcement officers' benefit account. Thereafter, the total 
20annuity of such annuitant shall be charged to the enforcement 
21officers' benefit account and paid from the fund.

22(b) Transfers from account.--Should the said annuitant be 
23subsequently restored to active service as a member of the 
24system or as a participant in the plan, the present value of the 
25member's annuity at the time of reentry into State service shall 
26be transferred from the enforcement officers' benefit account 
27and placed to his individual credit in the members' savings 
28account. In addition, the actuarial reserve for his annuity 
29calculated as if he had been a member of Class A if the 
30annuitant does not have any Class AA, Class A-3 or Class A-4
 

1service credited; as if he had been a member of Class AA if the 
2annuitant does have Class AA service credited; as if he had been 
3a member of Class A-3 if the annuitant has Class A-3 State 
4service credited; or as if he had been a member of Class A-4 if 
5the annuitant has Class A-4 service credited, less the amount 
6transferred to the members' savings account shall be transferred 
7from the enforcement officers' benefit account to the State 
8accumulation account. Upon subsequent retirement other than as 
9an enforcement officer the actuarial reserve remaining in the 
10enforcement officers' benefit account shall be transferred to 
11the appropriate reserve account.

12§ 5938. Supplemental annuity account.

13The supplemental annuity account shall be the ledger account
14to which shall be credited all contributions from the
15Commonwealth and other employers in accordance with section
165507(b) [(relating to contributions by the Commonwealth and
17other employers)] (relating to contributions to the system by 
18the Commonwealth and other employers before July 1, 2015) for
19the payment of the supplemental annuities provided in sections
205708 (relating to supplemental annuities), 5708.1 (relating to
21additional supplemental annuities), 5708.2 (relating to further
22additional supplemental annuities), 5708.3 (relating to
23supplemental annuities commencing 1994), 5708.4 (relating to
24special supplemental postretirement adjustment), 5708.5
25(relating to supplemental annuities commencing 1998), 5708.6
26(relating to supplemental annuities commencing 2002), 5708.7
27(relating to supplemental annuities commencing 2003) and 5708.8
28(relating to special supplemental postretirement adjustment of
292002) made before July 1, 2010, the amount transferred from the
30State accumulation account to provide all additional reserves

1necessary as of June 30, 2010, to pay such supplemental
2annuities and adjustments, and the amounts transferred from the
3State accumulation account to provide all additional reserves
4necessary as a result of supplemental annuities enacted after
5December 31, 2009. The supplemental annuity account shall be
6credited with valuation interest. The reserves necessary for the
7payment of such supplemental annuities shall be transferred from
8the supplemental annuity account to the annuity reserve account
9as provided in section 5935 (relating to annuity reserve
10account).

11§ 5939. Interest reserve account.

12The interest reserve account shall be the ledger account to 
13which shall be credited all income earned by the fund and to 
14which shall be charged all administrative and investment 
15expenses incurred by the fund. At the end of each year the 
16required interest shall be transferred from the interest reserve 
17account to the credit of each of the accounts of the fund in 
18accordance with the provisions of this subchapter. In addition, 
19at the end of each accounting period, the interest reserve 
20account shall be credited or charged with all recognized changes 
21in the market valuation of the investments of the fund. The 
22administrative and investment expenses of the board relating to 
23the administration of the system and investments of the fund 
24shall be paid from the fund out of earnings. Any surplus or 
25deficit in the interest reserve account at the end of each year 
26shall be transferred to the State accumulation account.

27§ 5951. State guarantee regarding the State Employees' 
28Retirement System.

29The required interest charges payable, the maintenance of 
30reserves in the fund, and the payment of all annuities and other
 

1benefits granted by the board from the system under the 
2provisions of this part relating to the establishment and 
3administration of the system are hereby made obligations of the 
4Commonwealth. All income, interest, and dividends derived from 
5deposits and investments of the system authorized by this part 
6shall be used for the payment of the said obligations of the 
7Commonwealth and shall not be used for any obligations of the 
8plan or trust.

9§ 5953. Taxation, attachment and assignment of funds.

10(a) General rule.--

11(1) Except as provided in paragraphs (2), (3) [and], (4)
12and (5), the right of a person to any benefit or right
13accrued or accruing under the provisions of this part and the
14moneys in the fund and the trust are hereby exempt from any
15State or municipal tax, levy and sale, garnishment,
16attachment, spouse's election, the provisions of Article 
17XIII.1 of the act of April 9, 1929 (P.L.343, No.176), known 
18as The Fiscal Code, or any other process whatsoever, and no 
19participant or beneficiary, successor payee or alternate 
20payee of a participant shall have the ability to commute, 
21sell, assign, alienate, anticipate, mortgage, pledge, 
22hypothecate, commutate or otherwise transfer or convey any 
23benefit or interest in an individual investment account or 
24rights to receive or direct distributions under this part or 
25under agreements entered into under this part except as 
26otherwise provided in this part and in the case of either a 
27member or a participant except for a set-off by the
28Commonwealth in the case provided in subparagraph (i), and
29shall be unassignable except:

30(i) To the Commonwealth in the case of a member or
 

1participant who is terminating State service and has been
2determined to be obligated to the Commonwealth for the
3repayment of money owed on account of his employment or
4to the fund on account of a loan from a credit union to a 
5member which has been satisfied by the board from the
6fund.

7(ii) To a credit union as security for a loan to a 
8member not to exceed $750 and interest not to exceed 6%
9per annum discounted and/or fines thereon if the credit
10union is now or hereafter organized and incorporated
11under the laws of this Commonwealth and the membership of
12such credit union is limited solely to officials and
13employees of the Commonwealth and if such credit union
14has paid to the fund $3 for each such assignment.

15(2) Rights under this part shall be subject to
16forfeiture as provided by the act of July 8, 1978 (P.L.752,
17No.140), known as the Public Employee Pension Forfeiture Act,
18and by or pursuant to section 16(b) of Article V of the
19Constitution of Pennsylvania. Forfeitures under this
20subsection or under any other provision of law may not be
21applied to increase the benefits that any member would
22otherwise receive under this part. Notwithstanding this 
23paragraph, 42 Pa.C.S. § 3352 (relating to pension rights), 
24the Public Employee Pension Forfeiture Act or section 16(b) 
25of Article V of the Constitution of Pennsylvania, the 
26accumulated mandatory participant contributions and 
27accumulated voluntary contributions standing to the credit of 
28a participant shall not be forfeited but shall be available 
29for payment of fines and restitution as provided by law. 
30Furthermore, amounts in the trust that have been ordered to
 

1be distributed to an alternate payee as the result of an 
2equitable distribution of marital property as part of an 
3approved domestic relations order entered before the date of 
4the order or action in a court or other tribunal resulting in 
5a forfeiture of a participant's interest in the trust shall 
6not be subject to 42 Pa.C.S. § 3352, the Public Employee 
7Pension Forfeiture Act or section 16(b) of Article V of the 
8Constitution of Pennsylvania. Any accumulated employer 
9defined contributions forfeited as a result of this paragraph 
10or other law shall be retained by the board and used for the 
11payment of expenses of the plan.

12(3) Rights under this part shall be subject to
13attachment in favor of an alternate payee as set forth in an
14approved domestic relations order.

15(4) Effective with distributions made on or after
16January 1, 1993, and notwithstanding any other provision of
17this part to the contrary, a distributee may elect, at the
18time and in the manner prescribed by the board, to have any
19portion of an eligible rollover distribution paid directly to
20an eligible retirement plan by way of a direct rollover. For
21purposes of this paragraph, a "distributee" includes a member
22[and], a participant, a member's surviving spouse [and], a 
23participant's surviving spouse, a member's former spouse who
24is an alternate payee under an approved domestic relations
25order, a participant's former spouse who is an alternate 
26payee under an approved domestic relations order and anyone 
27else authorized under the IRC and the plan terms approved by 
28the board to have an eligible rollover distribution paid 
29directly to an eligible retirement plan by way of a direct 
30rollover. For purposes of this paragraph, the term "eligible
 

1rollover distribution" has the meaning given such term by IRC
2§ 402(f)(2)(A), and "eligible retirement plan" has the
3meaning given such term by IRC § 402(c)(8)(B), except that a
4qualified trust shall be considered an eligible retirement
5plan only if it accepts the distributee's eligible rollover
6distribution; however, in the case of an eligible rollover
7distribution to a surviving spouse, an eligible retirement
8plan is an "individual retirement account" or an "individual
9retirement annuity" as those terms are defined in IRC §
10408(a) and (b).

11(b) Authorized payments from fund.--The board shall be
12authorized to pay from the fund:

13(1) In the case of a member or participant who is
14terminating service, the amount determined after
15certification by the head of the department that the member
16or participant is so obligated, and after review and approval
17by the department or agency's legal representative or upon
18receipt of an assignment from the member or participant in
19the amount so certified[.], except that no payment shall be 
20made from the individual investment account of a participant 
21until the participant otherwise applies for and receives a 
22distribution and shall not exceed the amount of the 
23distribution.

24(2) In the case of a loan to a member the amount of the
25loan and any fine or interest due thereon to the credit union
26except 5% of the total amount due which is to be retained in
27the fund as a collection fee:

28(i) if the member obtaining the loan shall have been
29in default in required payments for a period of not less
30than two years; or

1(ii) at such time as the Department of Banking shall
2require the credit union to charge the amount of the loan
3against the reserve fund of such credit union.

4Any member who shall have pledged such rights as security for
5a loan from a credit union and, on whose behalf the board
6shall have made any payment by reason of that member's
7default, may not thereafter pledge or assign such rights to a
8credit union.

9(3) In the case of a participant whose former spouse is
10an alternate payee of an equitable distribution of marital
11assets under an approved domestic relations order, a lump sum
12of the alternate payee's interest in the participant's
13accumulated total defined contributions. This paragraph
14applies without regard to whether the participant has not
15terminated, is terminating or has terminated State service.

16Section 36. Section 5953.1(a) introductory paragraph and
17(1), (b), (c) and (d) of Title 71 are amended and the section is
18amended by adding a subsection to read:

19§ 5953.1. Approval of domestic relations orders.

20(a) Certification regarding members.--A domestic relations
21order pertaining to a member of the system shall be certified as
22an approved domestic relations order by the secretary of the
23board, or his designated representative, only if that order
24meets all of the following:

25(1) Requires the system to provide any type or form of
26benefit or any option applicable to members already provided
27under this part.

28* * *

29(a.1) Certification regarding participants.--A domestic
30relations order pertaining to a participant shall be certified

1as an approved domestic relations order by the secretary of the
2board or his designated representative only if that order meets
3all of the following:

4(1) Does not require the plan to provide any type or
5form of benefit or any option applicable to members of the
6system or participants in the plan.

7(2) Does not require the segregation of the alternate
8payee's share of the participant's individual investment
9account into a subaccount or newly established individual
10account titled in the name of the alternate payee.

11(3) Does not require the plan to recover or distribute
12any funds which were distributed to the participant or at the
13participant's direction prior to the approval of the domestic
14relations order by the secretary of the board or his
15designated representative.

16(4) Requires the plan to pay to the alternate payee no
17more than the lesser of the amount of the participant's
18individual investment account specified by the domestic
19relations order or the amount of the participant's individual
20investment account as of the date of the transfer of the
21alternate payee's share to the alternate payee.

22(5) States that the plan shall not be required to recoup
23or make good for losses in value to the participant's
24individual investment account incurred between the date of
25the valuation of the account used for equitable distribution
26purposes and the date of distribution to the alternate payee.

27(6) Specifies the amount or percentage of the
28participant's individual investment account to be paid to the
29alternate payee and the date upon which such valuation is
30based.

1(7) Specifies the name and last known mailing address,
2if any, of the participant and the name and last known
3mailing address of each alternate payee covered by the order
4and states that it is the responsibility of each alternate
5payee to keep a current mailing address on file with the
6plan.

7(8) Does not grant an alternate payee the rights,
8privileges or options available to a participant.

9(9) Requires the participant to execute an authorization
10allowing each alternate payee to monitor the participant's
11compliance with the terms of the domestic relations order
12through access to information concerning the participant
13maintained by the plan. Any authorization granted pursuant to
14this section shall be construed only as an authorization for
15the alternate payee to receive information concerning the
16participant which relates to the administration, calculation
17and payment of the alternate payee's share of the
18participant's account and not as an authorization to exercise
19the rights afforded to participants or obtain information
20which is not related to the administration, calculation and
21payment of alternate payee's share of the participant's
22individual investment account.

23(10) In the case of a participant who has not yet begun
24to receive distributions as of the date the domestic
25relations order is approved by the secretary of the board or
26his designated representative, requires the immediate
27distribution of the alternate payee's share of the
28participant's individual investment account, which may be by
29direct payment, eligible rollover or trustee-to-trustee
30transfer to another eligible plan or qualified account owned

1by the alternate payee.

2(11) In the case of a participant who is currently
3receiving distributions from the trust as of the date the
4domestic relations order is approved by the secretary of the
5board or his designated representative, the domestic
6relations order may not order the board to pay the alternate
7payee more than the balance available in the participant's
8individual investment account as of the date the order is
9approved or require that distributions continue to the
10alternate payee after the death of the participant and final
11settlement of the participant's individual investment
12account.

13(b) Determination by secretary.--Within a reasonable period
14after receipt of a domestic relations order, the secretary of
15the board, or his designated representative, shall determine
16whether this order is an approved domestic relations order and
17notify the member or participant and each alternate payee of
18this determination. Notwithstanding any other provision of law,
19the exclusive remedy of any member, participant or alternate
20payee aggrieved by a decision of the secretary of the board, or
21his designated representative, shall be the right to an
22adjudication by the board under 2 Pa.C.S. Ch. 5 Subch. A
23(relating to practice and procedure) with appeal therefrom to
24the Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to
25judicial review) and 42 Pa.C.S. § 763(a)(1) (relating to direct
26appeals from government agencies).

27(c) Other orders.--The requirements for approval identified
28in [subsection (a)] subsections (a) and (a.1) shall not apply to
29any domestic relations order which is an order [for] of support
30as the term is defined at 23 Pa.C.S. § 4302 (relating to

1definitions) or an order for the enforcement of arrearages as
2provided in 23 Pa.C.S. § 3703 (relating to enforcement of
3arrearages). These orders shall be approved to the extent that
4they do not attach moneys in excess of the limits on attachments
5as established by the laws of the United States and this
6Commonwealth[.], require distributions of benefits in a manner 
7which would violate the laws of the United States, any other 
8state or this Commonwealth or require the distribution of funds 
9for support or enforcement of arrearages against any participant 
10who is not receiving distributions from the plan at the time 
11such order is entered.

12(d) Obligation discharged.--Only the requirements of this
13part and any regulations promulgated hereunder shall be used to
14govern the approval or disapproval of a domestic relations
15order. Therefore, if the secretary of the board, or his
16designated representative, acts in accordance with the
17provisions of this part and any promulgated regulations in
18approving or disapproving a domestic relations order, then the
19obligations of the system or the plan with respect to such
20approval or disapproval shall be discharged.

21Section 37. Sections 5953.2, 5953.3 and 5953.4(a) of Title
2271 are amended to read:

23§ 5953.2. Irrevocable beneficiary.

24Notwithstanding any other provision of this part, a domestic
25relations order may provide for an irrevocable beneficiary. A
26domestic relations order requiring the nomination of an
27irrevocable beneficiary shall be deemed to be one that requires
28a member or participant to nominate an alternate payee as a
29beneficiary and that prohibits the removal or change of that
30beneficiary without approval of a court of competent

1jurisdiction, except by operation of law. Such a domestic
2relations order may be certified as an approved domestic
3relations order by the secretary of the board, or his designated
4representative, after the member or participant makes such
5nomination, in which case the irrevocable beneficiary so ordered