PRINTER'S NO. 1535

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1268

Session of

2017

INTRODUCED BY CALTAGIRONE, DELOZIER, O'NEILL, PASHINSKI,

MILLARD, SOLOMON, RYAN, GILLEN AND GOODMAN, APRIL 24, 2017

REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, APRIL 24, 2017

maintained by political subdivisions and municipal government

associations and providing for the administration of the same

by a board composed of the State Treasurer and others

appointed by the Governor; imposing certain duties on the

Pennsylvania Municipal Retirement Board and the actuary

thereof; providing the procedure whereby political

subdivisions and municipal authorities may join such system,

and imposing certain liabilities and obligations on such

political subdivisions and municipal authorities in

connection therewith, and as to certain existing retirement

execution, attachment, levy and sale and providing for the

repeal of certain related acts," in general provisions,

further providing for definitions, for general powers of

board, for retirement funds and accounts and for management

and investment of fund and interest credits; and providing

for Statewide Municipal Police Officers Pension Plan.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definitions of "compensation," "final

salary," "municipal account," "Municipal Pension Funding

"Article IV-A annuitant" means an annuitant under Article

IV- A of this act.

"Article IV-A member" means a member under Article IV-A of

this act.

* * *

"Compensation" means remuneration actually received for

services rendered as a municipal employee, municipal fire

fighter or municipal police officer, excluding reimbursement for

expenses incidental to employment. For Article IV-A members, the

term shall also exclude lump sum accrued leave payments and

overtime pay in excess of thirty percent of base salary, but

(2) For members who are enrolled in a plan that has adopted

the provisions of section 414(h) of the Internal Revenue Code

(26 U.S.C. § 414(h)), the term includes a contribution

designated as a pickup contribution.

(3) Notwithstanding any provision of this act to the

contrary, a member's compensation shall not exceed the

limitations under section 401(a)(17) of the Internal Revenue

(B) which does not exceed twelve months; and

(C) over which compensation is determined.

(ii) If a determination period consists of fewer than twelve

months, the compensation limit shall be multiplied by a

fraction:

(A) the numerator of which is the number of months in the

determination period; and

(B) the denominator of which is twelve.

* * *

"Employers' account" means the account to which are credited

all contributions made by municipalities required under Article

or if not so long employed, then the average annual salary or

compensation earned and paid during the whole period of such

employment; or, if applicable, the amount or formula stipulated

between the municipality and the board in a contract for an

optional retirement plan entered into under the provisions of

clause (11) of section 104 of this act. Notwithstanding any

other provisions of this act to the contrary, "final salary"

* * *

"Municipal account" means the account maintained for each

municipality that establishes a retirement plan under Article

II, III or IV of this act, to which shall be credited the

contributions made by it toward the superannuation retirement

and death benefits of members.

* * *

"Municipal Pension Plan Funding Standard and Recovery Act"

means the act of December 18, 1984 (P.L.1005, No.205), known as

the Municipal Pension Plan Funding Standard and Recovery Act.

* * *

Article IV-A members, fifty years of age.

* * *

Section 2. Sections 104(12.1) and (12.2), 108 and 110 of the

act are amended to read:

Section 104. General Powers of the Board.--The board shall:

(12.1) In accordance with the plan contract, provide cost-

interest shall not be made under this paragraph if the plan is

less than 95% funded as of the plan's most recent filing of the

actuarial report required under the Municipal Pension Funding

Standard and Recovery Act.

(12.2) In accordance with the plan contract, the board shall

allocate excess investment earnings for active members [of such

municipalities] enrolled under the provisions of Article II, III

or IV of this act by applying such allocation to [member] the

members' contributions. To the extent that additional

liabilities may accrue as a result of such allocation, the

actuary shall employ actuarial assumptions, on a fully funded

* * *

Section 108. Retirement Funds and Accounts.--(a) The

Pennsylvania Municipal Retirement Fund shall consist of the

money received from municipalities arising from contributions by

municipalities, from payroll deductions from salary or

compensation of members, and other contributions made by members

through the municipality to the system, from DROP participants

exclusive benefit of the members, their spouses or the members'

beneficiaries prior to the satisfaction of all liabilities of

the system with respect to them. The assets of the fund shall

only be used to pay:

(1) Benefits to members in accordance with this act.

(2) Necessary expenses of the system as established in this

act.

(c) Contributions made by municipalities for plans

established under the provisions of Article II, III or IV of

this act toward superannuation retirement and death benefits of

members shall be credited to the municipal account of [said] the

paid to the municipalities' plan members during the quarter and

credited to the employers' account. Actuarial gains and losses

associated with Article IV-A members shall be calculated in

accordance with the Municipal Pension Plan Funding Standard and

Recovery Act but shall be expressed as a percentage of

compensation and shall be incorporated in the plan's employer

cost percentage. Retirement benefits paid to DROP participants

municipality and for each separate class of employes enrolled by

that municipality under [the several articles] Articles II, III

and IV of this act, except the total disability reserve account

[and], the retired member's reserve account and the employers'

account which shall be maintained as pooled accounts. Each

municipality and the members thereof shall be liable to the

board for the amount of contributions required to cover the cost

of the retirement allowance and other benefits payable to such

members.

(e) Upon the granting of a superannuation or voluntary or

involuntary withdrawal retirement allowance to any contributor,

member's reserve account.

(f) Upon the granting of a superannuation retirement

allowance to any DROP participant, the full amount of the DROP

participant's monthly retirement benefit shall be deposited

monthly to a subsidiary DROP participant account in the

subsidiary DROP participant reserve account until the DROP

participant terminates employment.

the total disability reserve account as is needed in addition

thereto to provide the actuarial equivalent of the total

disability allowance to which the contributor is entitled.

(h) Upon the granting of a disability retirement allowance

to an Article IV-A member, there shall be transferred to the

retired member's reserve account the amount of the member's

accumulated deductions in the member's account and such

additional amount from the employers' account as is needed to

provide the actuarial equivalent of the total disability

allowance to which the Article IV-A member is entitled.

Section 110. Management and Investment of Fund; Interest

and investments in said fund, as well as the proceeds of such

investments, and of the money belonging to such fund.

(b) The board shall annually allow regular interest to the

credit on each [contributor's] member's account, municipal

account, employers' account, the retired members reserve account

and the total disability reserve account. The board shall

monthly credit DROP interest to the subsidiary DROP participant

members reserve accounts. Except as provided in a contract, the

board shall credit the excess interest to the [plan's] municipal

account[.] for plans established under the provisions of Article

II, III or IV of this act. Excess interest attributable to

Article IV-A accounts shall be credited to the employers'

account.

(a) Establishment.--The Statewide Municipal Police Officers

Pension Plan is established to provide for the mandatory

enrollment of municipal policemen at the contribution rates and

benefit rates outlined in this article.

(b) Pension rights.--Regardless of any other provision of

law, pension rights of Article IV-A members shall be determined

solely by this article and no collective bargaining agreement

nor any arbitration award between the municipality and its

employees or their collective bargaining representatives shall

be construed to change any of the provisions of this article, to

require the board to administer pension benefits not specified

completed 20 years of credited service.

not to exceed 65% of the member's final salary.

(c) Application.--

(1) An active Article IV-A member who terminates service

and who is not then a disability annuitant shall execute and

file with the board a written statement, duly attested by the

member or the member's legal representative, electing to

receive an immediate annuity and stating on what date the

member desires to be retired.

(2) The application shall make the superannuation

retirement benefit effective on the date so specified if the

application was filed in the office of the board or deposited

to an Article IV-A member who is eligible for an annuity within

60 days of the filing of an application for an annuity or within

60 days of the effective date of retirement, whichever is later,

and receipt of the required data from the employer.

Section 407-A. Refund.

(a) Eligibility.--Upon termination of service, an Article

IV-A member, regardless of eligibility for benefits, may elect

account.

Section 408-A. Vesting.

(a) Eligibility.--An Article IV-A member who terminates

service with 12 or more years of credited service shall be

entitled to vest the member's retirement benefits until the date

upon which the member would have become eligible for a

superannuation retirement benefit under section 406-A(a) if the

member had continued to be employed and eligible for membership

under section 402-A.

(b) Notification following termination of service.--

(1) The municipality shall immediately notify the board

the board an application to vest within 90 days of the date

of notice to vest. If the Article IV-A member fails to file

an application to vest within 90 days of the date of notice

to vest, the member shall be deemed to have elected to

receive the accumulated deductions in lieu of any benefit to

which the member may be entitled.

(c) Failure to elect.--In the event that an Article IV-A

(d) Interest.--Regular interest will continue to be credited

on a vested Article IV-A member's accumulated deductions from

date of termination of service until the earlier of the date of

the commencement of the annuity or the date of payment of member

contributions.

(e) Application for benefits.--

(1) A vested Article IV-A member may submit an

application in accordance with section 406-A within 90 days

of the date upon which the member would have become eligible

for a superannuation retirement benefit under section

406- A(a) if the member had continued to be employed and

days, the effective date of retirement will be the date the

application was filed or the date specified on the

application, whichever is later.

Section 409-A. Deferred Retirement Option Program.

An Article IV-A member may elect to receive a retirement

benefit under the terms of the Deferred Retirement Option

Program as adopted by the board.

annuitant retirement allowance shall continue to be paid through

the period of reemployment, provided the Article IV-A annuitant

is otherwise eligible to receive an in-service distribution of

the Article IV-A annuitant retirement benefit by attainment of

normal retirement age as defined in section 411(a)(8) of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §

411(a)(8)), operation of section 401(a)(36) of the Internal

Revenue Code of 1986 (26 U.S.C. § 401(a)(36)) or operation of

any other provision as may be adopted by the board and

consistent with the tax qualification provisions of the Internal

Revenue Code of 1986.

(c) Notification by municipality.--The municipality shall

immediately notify the board of the reemployment status of any

Article IV-A annuitant.

Section 411-A. Death benefits.

(a) Options.--The current spouse or eligible dependent of a

vested Article IV-A member who has terminated service and dies

before filing an application for benefits under section 408-A(e)

IV-A member would have become eligible for a superannuation

retirement benefit under section 406-A(a) if the member had

continued to be employed and eligible for membership under

section 402-A.

(2) All of the money credited to the member's account as

of the date of the member's death.

(b) Withdrawal of money by survivor.--The current spouse or

eligible dependent of an active Article IV-A member who dies and

has less than 12 years of credited service at the time of death

shall receive all of the money credited to the member's account

as of the date of death.

had the member retired the day before the member's death

actuarially reduced from the member's superannuation date.

(2) The current spouse or eligible dependent of an

active Article IV-A member who dies and has at least 20 years

of credited service at the time of death shall receive a

monthly benefit equal to 50% of the benefit the member would

have received had the member retired the day before the

article, the current spouse shall be determined as of the date

of death of the member. In the event there is no current spouse,

an eligible dependent shall be the child or children of the

deceased Article IV-A member, provided the dependent is under 18

years of age or, if attending college, under 23 years of age.

(e) Duration of survivor annuity.--

(1) If the current spouse is entitled to receive a

benefit, the benefit shall be paid for the life of the

spouse.

(2) If an eligible dependent is receiving a benefit, the

benefit shall be paid until the child attains 18 years of age

and there is a surviving eligible dependent of the Article

IV-A member, the eligible dependent shall receive the benefit

as long as the eligible dependent is entitled.

(f) Default provision.--In the event there is no current

spouse or eligible dependent, the member's accumulated

deductions, less any money paid out as a benefit, shall be paid

to the beneficiary or, if one is not designated, the estate or

a result of a service-connected disability shall receive a

disability pension equal to 50% of the member's final salary,

regardless of age or credited service, provided the physician

designated by the board, after medical review, certifies that

the member is unable to perform the full duties of a

municipal policeman.

(2) An active Article IV-A member who is permanently

unable to perform substantial, gainful employment,

considering the member's age, education and work experience

as a result of a service-connected disability, shall receive

a disability pension equal to 75% of the member's final

resulting from:

(i) an injury arising out of and incurred in the

course of the member's employment as determined under the

applicable provisions of the act of June 2, 1915

(P.L.736, No.338), known as the Workers' Compensation

Act, or the act of June 21, 1939 (P.L.566, No.284), known

as The Pennsylvania Occupational Disease Act; or

offset by the amount of a payment made to an Article IV-A member

under the provisions of the Workers' Compensation Act, The

Pennsylvania Occupational Disease Act or the Social Security Act

(49 Stat. 620, 42 U.S.C. § 301 et seq.).

(c) Effective date of disability retirement.--The effective

date of a disability retirement shall be the first day of the

month following the earlier of:

(1) the granting of a disability retirement by the

board; or

(2) the date following the termination of benefits under

the Enforcement Officer Disability Benefits Law.

employment and become eligible to enroll as an Article IV-A

member, an annuity payable to the annuitant shall cease

effective upon the date of return to service.

(2) If an annuitant is receiving a disability under

subsection (a)(2) and is subsequently employed by a

municipality that has enrolled its employees under Article

II, III or IV and is otherwise subject to mandatory

retirement less the amount of disability payments paid to the

disability annuitant shall be transferred from the retired

member's reserve account and credited to the member's account

and the employers' account as follows:

(i) The present value of the member's annuity to

which the disability annuitant was receiving less the

total payments received on account of the member's

annuity as of the time of reentry into Article IV-A shall

be credited to the member's account.

(ii) The remainder shall be credited to the

employers' account.

by the system between the municipalities and the applicable plan

on an equitable basis.

Section 414-A. Municipal guarantee.

Regular interest charges payable, the maintenance of reserves

in the fund on account of benefits under this article and the

payment of all annuities and other benefits granted under this

article shall be obligations of municipalities employing Article