HOUSE AMENDED
        PRIOR PRINTER'S NOS. 484, 1162                PRINTER'S NO. 1663

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 471 Session of 1973


        INTRODUCED BY REIBMAN, STAUFFER, SCALES, EWING AND MURPHY,
           MARCH 12, 1973

        AS REPORTED FROM COMMITTEE ON LOCAL GOVERNMENT, HOUSE OF
           REPRESENTATIVES, AS AMENDED, DECEMBER 4, 1973

                                     AN ACT

     1  Creating a Pennsylvania Municipal Retirement System for the
     2     payment of retirement allowances to officers, employes,
     3     firemen and police of political subdivisions and municipal
     4     authorities and of institutions supported and maintained by
     5     political subdivisions and municipal government associations
     6     and providing for the administration of the same by a board
     7     composed of the State Treasurer and others appointed by the
     8     Governor; imposing certain duties on the Pennsylvania
     9     Municipal Retirement Board and the actuary thereof; providing
    10     the procedure whereby political subdivisions and municipal
    11     authorities may join such system, and imposing certain
    12     liabilities and obligations on such political subdivisions
    13     and municipal authorities in connection therewith, and as to
    14     certain existing retirement and pension systems, and upon
    15     officers, employes, firemen and police of such political
    16     subdivisions, institutions supported and maintained by
    17     political subdivisions, and upon municipal authorities;
    18     providing for the continuation of certain municipal
    19     retirement systems now administered by the Commonwealth;
    20     providing certain exemptions from taxation, execution,
    21     attachment, levy and sale and providing for the repeal of
    22     certain related acts.

    23     The General Assembly of the Commonwealth of Pennsylvania
    24  hereby enacts as follows:
    25                             ARTICLE I
    26                         GENERAL PROVISIONS
    27     Section 101.  This act shall be known and may be cited as the

     1  "Pennsylvania Municipal Retirement Law."
     2     Section 102.  Definitions.--As used in this act:
     3     "Accumulated deductions" means the total amount deducted from
     4  the salary or compensation of the contributor and paid over by
     5  the municipality or paid by the member or from any existing
     6  pension or retirement system directly into the retirement fund
     7  and credited to the member's account, together with regular
     8  interest thereon, unless interest is excluded in a contract for
     9  an optional retirement plan entered into under the provisions of
    10  clause (11) of section 104 of this act.
    11     "Actuarially sound" means a plan which is being operated
    12  under supervision of an actuary and which is being funded
    13  annually at a level not lower than the normal cost of the plan
    14  plus a contribution towards the unfunded accrued liability
    15  sufficient to complete the funding thereof within thirty years
    16  of the effective date of the system. If the unfunded accrued
    17  liability is increased subsequent to the effective date of the
    18  system, such additional liability shall be funded within a
    19  period of thirty years from the effective date of the increase.
    20     "Actuary" means: (i) a member of the American Academy of
    21  Actuaries, or (ii) an individual who has demonstrated to the
    22  satisfaction of the Insurance Commissioner of Pennsylvania that
    23  he had the educational background necessary for the practice of
    24  actuarial science and has had at least seven years of actuarial
    25  experience, or (iii) a firm, partnership or corporation of which
    26  one or more members meets the requirements of subclauses (i) or
    27  (ii) above.
    28     "Annuitant" means a former contributor in receipt of a
    29  superannuation retirement allowance or other benefit provided by
    30  this act.
    19730S0471B1663                  - 2 -

     1     "Beneficiary" means a person designated by a contributor or
     2  an annuitant to receive benefits after the death of such
     3  contributor or annuitant.
     4     "Board" means the Pennsylvania Municipal Retirement Board
     5  created by this act.
     6     "Contributor" means a member who has accumulated deductions
     7  standing to his credit in the member's account of the fund
     8  created by this act.
     9     "Equivalent actuarial value" means benefits which have equal
    10  present value when computed on the basis of regular interest and
    11  the mortality tables adopted by the board and in use at the date
    12  the benefit becomes effective.
    13     "Final salary" means the average annual salary or
    14  compensation earned by a member and paid by the municipality
    15  during the last five years immediately preceding retirement, or
    16  if not so long employed, then the average annual salary or
    17  compensation earned and paid during the whole period of such
    18  employment; or, if applicable, the amount or formula stipulated
    19  between the municipality and the board in a contract for an
    20  optional retirement plan entered into under the provisions of
    21  clause (11) of section 104 of this act.
    22     "Fund" means the Pennsylvania Municipal Retirement Fund
    23  created by this act.
    24     "Joint coverage member" means a member who shall have become
    25  a member of the retirement system subsequent to the last date
    26  permitted by the municipality employing him for statement of
    27  preference concerning social security coverage, or who, having
    28  become a member on or before such date, shall have filed with
    29  the municipality a written statement that he elects social
    30  security coverage under an agreement with the Federal Secretary
    19730S0471B1663                  - 3 -

     1  of Health, Education and Welfare entered into by the
     2  Commonwealth.
     3     "Member" means a municipal officer, employe, fireman or
     4  policeman, or an employe of a municipal government association
     5  who has become a member of the Pennsylvania Municipal Retirement
     6  System created by this act.
     7     "Member's account" means the account to which shall be
     8  credited the payroll deductions and other contributions, plus
     9  interest, if any, of the members.
    10     "Member's annuity" means that portion or component of the
    11  retirement allowance which is of equivalent actuarial value, at
    12  date of retirement, to the accumulated deductions of the member.
    13     "Municipal account" means the account maintained for each
    14  municipality, to which shall be credited the contributions made
    15  by it toward the superannuation retirement and death benefits of
    16  members.
    17     "Municipal annuity" means that portion or component of the
    18  retirement allowance computed in accordance with the formula
    19  applicable to each municipality.
    20     "Municipal employe" means a person holding an office or
    21  position, other than that of a municipal fireman or municipal
    22  policeman, under a municipality or a municipal government
    23  association and paid on a regular salary or per diem basis. The
    24  term shall not include officers and employes paid wholly on a
    25  fee basis.
    26     "Municipal fireman" means a person holding a full-time
    27  position in the fire department of a municipality and who works
    28  for a stated salary or compensation.
    29     "Municipal policeman" means a person holding a full-time
    30  position in the police department of a municipality and who
    19730S0471B1663                  - 4 -

     1  works for a stated salary or compensation.
     2     "Municipality" means a city, borough, town, township, county,
     3  institution district, or any newly created governmental unit, or
     4  an authority created by a city, borough, town, township, county
     5  or county institution district, or jointly by any such political
     6  subdivisions, or an institution supported and maintained by a
     7  municipality or a municipal government association, or an
     8  industrial development agency as defined by the act of May 31,
     9  1956 (P.L.1911, No.635), known as the "Industrial Development
    10  Assistance Law," which has adopted bylaws and the governing body
    11  of which is organized and holds regular public meetings.
    12     "New member" means a municipal officer, employe, fireman or
    13  policeman, or an employe of a municipal government association
    14  who first becomes a member after the date the municipality by
    15  which he is employed joined the retirement system created by
    16  this act.
    17     "Original member" means a municipal officer, employe, fireman
    18  or policeman, or an employe of a municipal government
    19  association who was employed by the municipality at the date the
    20  municipality joined the system.
    21     "Prior salary" means the annual salary or compensation earned
    22  by a member and paid by the municipality during the year
    23  immediately preceding the date the municipality by which he is
    24  employed joined the system.
    25     "Prior service" means all service as a municipal employe,
    26  municipal fireman or municipal policeman completed at the time
    27  the municipality by which he is or was employed elected to join
    28  the system or the same municipality under a prior name or
    29  classification, unless the municipality has elected to limit the
    30  period of such service for municipal employes enrolled in a plan
    19730S0471B1663                  - 5 -

     1  under Article II or Article IV of this act.
     2     "Regular interest" means the rate fixed by the board, from
     3  time to time, on the basis of earnings on investments.
     4     "Retired member's reserve account" means the account from
     5  which all retirement allowances shall be paid for superannuation
     6  and total disability retirement and voluntary and involuntary
     7  withdrawals.
     8     "Retirement allowance" means the sum of the municipal annuity
     9  and the member's annuity and, if the member is entitled to a
    10  disability annuity under the provisions of this act, the
    11  disability annuity.
    12     "Service connected disability" means total and permanent
    13  disability of a member prior to eligibility for superannuation
    14  retirement resulting from a condition arising out of and
    15  incurred in the course of his employment, and which is
    16  compensable under the applicable provisions of the act of June
    17  2, 1915 (P.L.736, No.338), known as "The Pennsylvania Workmen's
    18  Compensation Act," or the act of June 21, 1939 (P.L.566,
    19  No.284), known as "The Pennsylvania Occupational Disease Act."
    20     "Single coverage member" means a member who shall become a
    21  member of the retirement system on or before the last date
    22  permitted by the municipality employing him for statement of
    23  preference concerning social security coverage and who either
    24  shall have filed with the municipality a written statement that
    25  he does not elect social security coverage under any agreement
    26  with the Federal Secretary of Health, Education and Welfare
    27  entered into by the Commonwealth, or shall not have filed with
    28  the municipality any written statement.
    29     "Superannuation retirement age" means sixty-five years of age
    30  for municipal employes, fifty-five years of age for municipal
    19730S0471B1663                  - 6 -

     1  firemen and municipal police or such other age as may be
     2  stipulated between the municipality and the board in a contract
     3  for an optional retirement plan entered into under the
     4  provisions of clause (11) of section 104 of this act.
     5     "Survivor annuitant" means any person who has been named by a
     6  member under a joint and survivor annuity option to receive an
     7  annuity upon the death of such member.
     8     "System" means the Pennsylvania Municipal Retirement System
     9  as established herein.
    10     "Total disability reserve account" means the account to which
    11  shall be credited the contributions made by municipalities
    12  toward the disability retirement of members.
    13     Section 103.  Pennsylvania Municipal Retirement Board.--A
    14  Pennsylvania Municipal Retirement Board is hereby created, which
    15  shall consist of the State Treasurer, SECRETARY OF THE            <--
    16  COMMONWEALTH, six municipal employes employed by ELECTED          <--
    17  OFFICIALS OR EMPLOYES OF different classes of municipalities
    18  which have joined the system, one municipal fireman employed by
    19  a municipality which has joined the system and one municipal
    20  policeman employed by a municipality which has joined the
    21  system. The eight latter members shall be appointed by the
    22  Governor from among nominations made by various associations of   <--
    23  county and municipal taxing officials THE COUNTY COMMISSIONERS    <--
    24  ASSOCIATION, THE PENNSYLVANIA LEAGUE OF CITIES, THE PENNSYLVANIA
    25  ASSOCIATION OF TOWNSHIP COMMISSIONERS, THE PENNSYLVANIA STATE
    26  ASSOCIATION OF TOWNSHIP SUPERVISORS, THE PENNSYLVANIA STATE
    27  ASSOCIATION OF BOROUGHS AND THE PENNSYLVANIA MUNICIPAL
    28  AUTHORITIES ASSOCIATION, and associations representing municipal
    29  firemen and municipal police, to serve for a term of four years
    30  each and until their successors are appointed and qualified.
    19730S0471B1663                  - 7 -

     1  Appointments of members made by the Governor shall not require
     2  the advice and consent of the Senate. The two municipal employe
     3  members of the Municipal Employes' Retirement Board, appointed
     4  by the Governor from among nominations made by various
     5  associations of county and municipal taxing officials, who are    <--
     6  serving on the effective date of this act, shall continue to
     7  serve as members of the Pennsylvania Municipal Retirement Board
     8  until the expiration of their respective terms.
     9     A chairman and vice chairman of the board shall be elected by
    10  the board every four years.
    11     Vacancies happening from among members appointed from among
    12  the nominations made by the associations shall be filled by the
    13  appointment of a successor for a full term of four years.
    14     No appointed member shall serve more than two consecutive
    15  full terms.
    16     Each member of the board shall take an oath of office that he
    17  will diligently and honestly administer the affairs of the
    18  board, and that he will not knowingly violate or wilfully permit
    19  to be violated any of the provisions of this act.
    20     A quorum of the board shall consist of five SIX members.       <--
    21     Section 104.  General Powers of the Board.--The board shall:
    22     (1)  Appoint a secretary who shall appoint the clerical and
    23  other employes of the board, whose positions, including the
    24  secretary's, shall be under the classified service provisions of
    25  the act of August 5, 1941 (P.L.752, No.286), as amended and the
    26  secretary shall fill future vacancies in accordance with such
    27  provisions. The compensation of all persons so appointed shall
    28  be fixed by the board and shall be consistent with the standards
    29  established by the Executive Board of this Commonwealth;
    30     (2)  Contract for professional services, including but not
    19730S0471B1663                  - 8 -

     1  limited to actuarial, investment and medical as it deems
     2  advisable;
     3     (3)  Keep in convenient form such data as shall be deemed
     4  necessary for actuarial valuation purposes;
     5     (4)  From time to time, through its actuary, make an
     6  actuarial investigation into the mortality and service
     7  experience of the contributors and annuitants and of the various
     8  accounts created by this act;
     9     (5)  Adopt for the system one or more mortality tables and
    10  such other tables as shall be deemed necessary;
    11     (6)  Certify the rates of deduction from salary necessary to
    12  pay the member's annuities;
    13     (7)  Certify annually the amount of appropriation which each
    14  municipality shall pay into the retirement fund, which amounts
    15  shall be based on estimates furnished by the actuary, and shall
    16  be credited to the municipal account of the fund;
    17     (8)  Prepare and publish annually a financial statement
    18  showing the condition of the fund and the various accounts
    19  thereof, and setting forth such other facts, recommendations and
    20  data as may be of use in the advancement of knowledge concerning
    21  the Pennsylvania Municipal Retirement System, and furnish a copy
    22  thereof to each municipality which has joined the system, and to
    23  such persons as may request copies thereof;
    24     (9)  Keep a record of all its proceedings, which will be open
    25  to inspection by the public;
    26     (10)  From time to time, with the advice of the Attorney
    27  General and the actuary, adopt and promulgate such rules and
    28  regulations as may be required for the proper administration of
    29  the fund created by this act and the several accounts thereof,
    30  and for the transaction of the business of the board;
    19730S0471B1663                  - 9 -

     1     (11)  Be authorized to approve any optional retirement plan
     2  for municipal employes, municipal firemen or municipal police,
     3  with any municipality as long as it is actuarially sound and
     4  benefits under the plan are not in excess of or member's minimum
     5  contribution rates are not less than those provided in other
     6  existing retirement laws pertaining to that class of
     7  municipality;
     8     (12)  PREPARE AND DISTRIBUTE ANNUAL STATEMENTS OF ACCOUNTS TO  <--
     9  EACH OF THE ACTIVE MEMBERS OF THE SYSTEM, SHOWING THE
    10  CONTRIBUTIONS MADE DURING THE YEAR, THE INTEREST EARNED AND THE
    11  TOTAL BALANCE STANDING IN THE MEMBER'S ACCOUNT AT THE END OF THE
    12  YEAR.
    13     (12) (13)  Perform such other functions as are required for    <--
    14  the execution of the provisions of this act.
    15     Section 105.  Preliminary Actuarial Investigation Tables and
    16  Rates.--As soon as may be after the passage of this act, the
    17  actuary shall make an investigation of the mortality, service
    18  and salary experience of municipal employes, municipal firemen
    19  and municipal police as he shall deem necessary, for the purpose
    20  of determining upon tentative tables and municipal
    21  contributions. On the basis of such investigation and
    22  recommendation, the board shall adopt such tentative tables and
    23  certify such tentative rates for the purpose of giving
    24  municipalities and municipal employes, municipal firemen and
    25  municipal police estimates of the cost involved in electing to
    26  join the retirement system established by this act. Such tables
    27  may thereafter be accepted or changed by the board, as
    28  experience may require.
    29     Section 106.  Information to Municipalities.--The board
    30  shall, with the aid of its actuary, prepare a circular of
    19730S0471B1663                 - 10 -

     1  information relative to the system, showing estimates of the
     2  costs thereof to municipalities and members, including costs of
     3  administration, the benefits to be derived therefrom, the
     4  methods of administration by the board and the municipality, and
     5  such other information as may be deemed appropriate. Such
     6  circular of information shall be furnished to municipalities
     7  upon request.
     8     Section 107.  Election by Municipalities to Join Retirement
     9  System.--Any municipality may elect, by ordinance or resolution
    10  adopted by the tax levying body, or in the case of municipal
    11  authorities by the board of such municipal authority to join the
    12  system: Provided, however, That any municipality electing
    13  coverage under the provisions of Article II of this act must
    14  have first placed its municipal employes in so far as they are
    15  eligible under the Federal Social Security Act. In the case of    <--
    16  townships of the second class, no resolution shall be adopted,
    17  except by unanimous vote of all three supervisors.
    18     Any municipality, by action of its tax levying body, may and
    19  upon petition of electors equal to at least five per cent of the
    20  registered electors of the municipality, shall, submit the
    21  question of joining such system to the voters of the
    22  municipality at any municipal or general election, in the same
    23  manner as other questions are submitted to the electors under
    24  the election code of the Commonwealth. If the majority of the
    25  electors voting on the question vote in favor thereof, the tax
    26  levying body shall adopt an ordinance or resolution electing to
    27  join such system. If the electors vote against joining the
    28  system, then no further action shall be taken in the
    29  municipality for a period of two years.
    30     A duly certified copy of any such ordinance or resolution
    19730S0471B1663                 - 11 -

     1  electing to join the system shall be filed with the board.
     2     Section 108.  Retirement Funds and Accounts.--The
     3  Pennsylvania Municipal Retirement Fund shall consist of the
     4  money received from municipalities arising from contributions by
     5  municipalities, and from payroll deductions from salary or
     6  compensation of members, and other contributions made by members
     7  through the municipality to the system, from transfers made from
     8  municipal retirement or pension systems and credited as provided
     9  in this act, and investment earnings thereon.
    10     Contributions made by municipalities toward superannuation
    11  retirement and death benefits of members shall be credited to
    12  the municipal account of said fund, contributions made by
    13  municipalities toward disability retirement of members shall be
    14  credited to the total disability reserve account of said fund,
    15  and payroll deductions and other contributions of members shall
    16  be credited to the member's account of said fund. Transfers made
    17  from existing municipal retirement or pension systems shall be
    18  credited as provided in this act.
    19     The board shall keep separate accounts of each municipality
    20  and for each separate class of employes enrolled by that
    21  municipality under the several articles of this act, except the
    22  total disability reserve account and the retired member's
    23  reserve account which shall be maintained as pooled accounts.
    24  Each municipality and the members thereof shall be liable to the
    25  board for the amount of contributions required to cover the cost
    26  of the retirement allowance and other benefits payable to such
    27  members.
    28     Upon the granting of a superannuation or voluntary or
    29  involuntary withdrawal retirement allowance to any contributor,
    30  the amount of such contributor's accumulated deductions in the
    19730S0471B1663                 - 12 -

     1  member's account shall lose their status as accumulated
     2  deductions and shall be transferred to the retired member's
     3  reserve account and the actuarial equivalent of the municipal
     4  annuity shall be similarly transferred from the municipal
     5  account to the retired member's reserve account.
     6     Upon the granting of a disability retirement allowance to any
     7  contributor, there shall be transferred to the retired member's
     8  reserve account the amount of the contributor's accumulated
     9  deductions in the member's account, the amount of the equivalent
    10  actuarial value to the municipal annuity, and such additional
    11  amount from the total disability reserve account as is needed in
    12  addition thereto to provide the actuarial equivalent of the
    13  total disability allowance to which the contributor is entitled.
    14     Section 109.  Custody of and Payments from Fund.--All moneys
    15  and securities in the fund shall be placed in the custody of the
    16  State Treasurer for safekeeping, and all payments on account of
    17  retirement allowances shall be made on requisition signed by the
    18  chairman and secretary of the board.
    19     Section 110.  Management and Investment of Fund; Interest
    20  Credits.--The members of the board shall be trustees of the
    21  fund, and shall have the exclusive management of said fund, with
    22  full power to invest the moneys therein, subject to the terms,
    23  conditions, limitations and restrictions imposed by law upon
    24  fiduciaries. The said trustees shall have power to hold,
    25  purchase, sell, assign, transfer and dispose of any securities
    26  and investments in said fund, as well as the proceeds of such
    27  investments, and of the money belonging to such fund.
    28     The board shall annually allow regular interest to the credit
    29  on each account, including each contributor's account.
    30     Section 111.  Municipal Guarantee.--The regular interest
    19730S0471B1663                 - 13 -

     1  charges payable and the creation and maintenance of the
     2  necessary reserves for the payment of the municipal and member's
     3  annuities, as to any municipality in accordance with this act,
     4  are hereby made the obligation of that municipality.
     5     IN THE CASE OF THE FAILURE OF A MUNICIPALITY TO MAKE PAYMENTS  <--
     6  AS REQUIRED BY THIS ACT, THE COMMONWEALTH SHALL WITHHOLD PAYMENT
     7  TO THE MUNICIPALITY OF ANY FUNDS TO WHICH THE MUNICIPALITY MAY
     8  BE ENTITLED FOR PENSION PURPOSES. THE BOARD MAY RECOVER ANY SUMS
     9  DUE TO THE FUND BY SUIT AT LAW, OR OTHER APPROPRIATE REMEDY.
    10     Section 112.  Annual Estimates to Municipalities;
    11  Administrative Expenses.--The board shall prepare and submit to
    12  each municipality, on or before the first day of the fourth
    13  month preceding the commencing of each municipality's fiscal
    14  year, an itemized estimate of the amounts necessary to be
    15  appropriated by the municipality to complete the payments of the
    16  obligations of the municipality to the fund during its next
    17  fiscal year.
    18     The board shall annually prepare and approve a budget          <--
    19  covering the administrative expenses of this act. Such expenses
    20  as approved by the board shall be paid from receipts from
    21  assessments made against each municipality for administrative
    22  expenses. This assessment shall be based on the number of
    23  members in each municipality and shall not exceed the sum of ten
    24  dollars ($10) per member during calendar year 1973 and a sum of
    25  twenty-five dollars ($25) per member in any succeeding year.
    26     THE BOARD SHALL ANNUALLY PREPARE AND APPROVE A BUDGET          <--
    27  COVERING THE ADMINISTRATIVE EXPENSES OF THIS ACT. SUCH EXPENSES
    28  AS APPROVED BY THE BOARD SHALL BE PAID FROM RECEIPTS FROM
    29  ASSESSMENTS MADE AGAINST EACH MUNICIPALITY FOR ADMINISTRATIVE
    30  EXPENSES. THIS ASSESSMENT SHALL BE BASED ON THE NUMBER OF
    19730S0471B1663                 - 14 -

     1  MEMBERS IN EACH MUNICIPALITY AND SHALL NOT EXCEED THE SUM OF
     2  TWENTY DOLLARS ($20) PER MEMBER PER YEAR. IF, IN THE CALENDAR
     3  YEARS 1974 AND 1975, THE AMOUNT RECEIVED FROM SUCH ASSESSMENTS,
     4  WHEN IMPOSED AT THE MAXIMUM RATE, IS NOT SUFFICIENT TO COVER THE
     5  ADMINISTRATIVE EXPENSES, THEN THE BALANCE OF SUCH EXPENSES SHALL
     6  BE PAID FROM INTEREST EARNINGS ON THE FUND IN EXCESS OF THE
     7  REGULAR INTEREST CREDITED TO THE MUNICIPAL AND MEMBER'S ACCOUNTS
     8  AND SHALL NOT, IN EITHER YEAR, EXCEED ONE-HALF OF ONE PER CENT
     9  OF THE TOTAL ASSET VALUE OF THE FUND AS OF THE BEGINNING OF THE
    10  CALENDAR YEAR.
    11     Section 113.  Existing Local Retirement Systems.--Where a
    12  municipality elects to join the system established by this act,
    13  and is then maintaining a retirement or pension system or
    14  systems covering its employes in whole or in part, those
    15  employes so covered, and employes thereafter eligible to join
    16  such pension system, shall not become members of the retirement
    17  system established by this act, unless at the time the
    18  municipality elects to join the system, the members of such       <--
    19  existing retirement or pension system shall, by the affirmative
    20  vote of seventy-five per cent of all the members thereof, EACH    <--
    21  SUCH EXISTING RETIREMENT OR PENSION SYSTEM SHALL, BY THE
    22  AFFIRMATIVE VOTE OF SEVENTY-FIVE PER CENT OF ALL THE MEMBERS OF
    23  EACH PENSION SYSTEM, elect to be covered by the retirement
    24  system established by this act. At any time thereafter, within a
    25  period of three years after the municipality has elected to join
    26  the system, but not thereafter, the members of an existing
    27  retirement or pension system may, in like manner, elect to join
    28  the system established by this act. In any such case, provisions
    29  may be made for the transfer of moneys and securities in its
    30  retirement or pension fund or funds, in whole or in part, to the
    19730S0471B1663                 - 15 -

     1  fund established by this act. Securities so transferred shall be
     2  only those acceptable to the board. Securities not so acceptable
     3  shall be converted into cash, and said cash transferred to the
     4  fund created by this act. In any such transfer, provision shall
     5  be made to credit the accumulated deductions of each member, at
     6  least the amount he has paid into the retirement or pension
     7  system of the municipality, which moneys shall be credited
     8  against the prior service contributions of such member, or a
     9  municipality may turn over to the retirement system created by
    10  this act any existing local pension system on a completely
    11  funded basis, as to pensioners and pension credits of members
    12  related to prior service to the date of transfer, or on a
    13  partially funded basis if the municipality pays annually into
    14  the retirement system amounts sufficient to completely liquidate
    15  the municipality's liability for prior service within a period
    16  not to exceed thirty years.
    17     No liability, on account of retirement allowances or pensions
    18  being paid from any retirement or pension fund of the
    19  municipality, shall attach against the fund, except as provided
    20  in the agreement, making a transfer of an existing system in
    21  accordance with this section. The liability to continue payment
    22  of pensions not so transferred shall attach against the
    23  municipality, which shall annually make appropriations from its
    24  tax revenues sufficient to pay the same. In cases where workers
    25  covered by an existing retirement or pension system elect to
    26  join the system created by this act, the election to join shall
    27  be deemed to have been made at the time the municipality elected
    28  to join the system, and the liabilities of the municipality
    29  shall be fixed accordingly.
    30     Section 114.  Monthly Payments.--Any retirement allowance
    19730S0471B1663                 - 16 -

     1  created under the provisions of this act shall be paid in equal
     2  monthly installments and shall not be increased, decreased,
     3  revoked or repealed, except where specifically otherwise
     4  provided by this act.
     5     Section 115.  Exemption of Retirement Allowance.--The
     6  retirement allowance and the contributions of members to the
     7  fund, all contributions returned to contributors under the
     8  provisions of this act and the moneys in the fund created by
     9  this act, shall be exempt from any State or municipal tax, and
    10  from any levy, sale, garnishment, attachment or other process
    11  whatsoever, and shall be unassignable except to a beneficiary.
    12     Section 116.  Source of Municipal Funds.--The amounts to be
    13  paid by municipalities under the provisions of this act shall be
    14  paid out of moneys raised annually by general taxation, or in
    15  the case of townships of the second class, out of taxes levied
    16  for road, bridge and general township purposes and out of moneys
    17  received from the State which are designated for pension
    18  purposes.
    19                             ARTICLE II
    20             PROVISIONS RELATING TO MUNICIPAL EMPLOYES
    21     Section 201.  Purpose.--This article shall provide for the
    22  uninterrupted continuation of retirement plans established under
    23  the act of June 4, 1943 (P.L.886, No.371), known as the
    24  "Municipal Employes' Retirement Law." It shall also provide for
    25  the enrollment of municipal employes' of new municipalities
    26  joining the system, at the contribution rates and benefit rates
    27  outlined in this article of the act.
    28     Section 202.  Transfer of the Municipal Employes' Retirement
    29  Fund to the Pennsylvania Municipal Retirement Fund.--On the
    30  effective date of this act all of the assets and liabilities of
    19730S0471B1663                 - 17 -

     1  the Municipal Employes' Retirement Fund shall be transferred
     2  intact to the Pennsylvania Municipal Retirement Fund. The rights
     3  and benefits of the members and of the municipalities which have
     4  joined the Municipal Employes' Retirement System shall not be
     5  impaired in any way as a result of this transfer. Likewise, the
     6  obligations and responsibilities of both the members and the
     7  member municipalities which have joined the system shall not be
     8  changed and the contractual arrangements as they existed at the
     9  time the municipalities joined the Municipal Employes'
    10  Retirement System shall continue in force. Prior service credits
    11  for any members so transferred shall be computed from the date
    12  on which the municipality joined the Municipal Employes'
    13  Retirement System.
    14     Section 203.  Existing Local Retirement Systems and
    15  Compulsory and Optional Membership.--Where a municipality elects
    16  to join the system established by this act, and is then
    17  maintaining a retirement or pension system or systems covering
    18  its employes in whole or in part, those employes so covered, and
    19  employes thereafter eligible to join such pension system, shall
    20  not become members of the retirement system established by this
    21  act, unless at the time the municipality elects to join the
    22  system, the members of such existing retirement or pension        <--
    23  system shall, by the affirmative vote of seventy-five per cent
    24  of all the members thereof, EACH SUCH EXISTING RETIREMENT OR      <--
    25  PENSION SYSTEM SHALL, BY THE AFFIRMATIVE VOTE OF SEVENTY-FIVE
    26  PER CENT OF ALL THE MEMBERS OF EACH PENSION SYSTEM, elect to be
    27  covered by the retirement system established by this act. At any
    28  time thereafter, within a period of three years after the
    29  municipality has elected to join the system, but not thereafter,
    30  the members of an existing retirement or pension system may, in
    19730S0471B1663                 - 18 -

     1  like manner, elect to join the system established by this act.
     2  In any such case, provisions may be made for the transfer of
     3  moneys and securities in its retirement or pension fund or
     4  years. FUNDS, IN WHOLE OR IN PART, TO THE FUND ESTABLISHED BY     <--
     5  THIS ACT. SECURITIES SO TRANSFERRED SHALL BE ONLY THOSE
     6  ACCEPTABLE TO THE BOARD. SECURITIES NOT SO ACCEPTABLE SHALL BE
     7  CONVERTED INTO CASH, AND SAID CASH TRANSFERRED TO THE FUND
     8  CREATED BY THIS ACT. IN ANY SUCH TRANSFER, PROVISION SHALL BE
     9  MADE TO CREDIT THE ACCUMULATED DEDUCTIONS OF EACH MEMBER, AT
    10  LEAST THE AMOUNT HE HAS PAID INTO THE RETIREMENT OR PENSION
    11  SYSTEM OF THE MUNICIPALITY, WHICH MONEYS SHALL BE CREDITED
    12  AGAINST THE PRIOR SERVICE CONTRIBUTIONS OF SUCH MEMBER, OR A
    13  MUNICIPALITY MAY TURN OVER TO THE RETIREMENT SYSTEM CREATED BY
    14  THIS ACT ANY EXISTING LOCAL PENSION SYSTEM ON A COMPLETELY
    15  FUNDED BASIS, AS TO PENSIONERS AND PENSION CREDITS OF MEMBERS
    16  RELATED TO PRIOR SERVICE TO THE DATE OF TRANSFER, OR ON A
    17  PARTIALLY FUNDED BASIS IF THE MUNICIPALITY PAYS ANNUALLY INTO
    18  THE RETIREMENT SYSTEM AMOUNTS SUFFICIENT TO COMPLETELY LIQUIDATE
    19  THE MUNICIPALITY'S LIABILITY FOR PRIOR SERVICE WITHIN A PERIOD
    20  NOT TO EXCEED THIRTY YEARS.
    21     No liability, on account of retirement allowances or pensions
    22  being paid from any retirement or pension fund of the
    23  municipality, shall attach against the fund, except as provided
    24  in the agreement, making a transfer of an existing system in
    25  accordance with this section. The liability to continue payment
    26  of pensions not so transferred shall attach against the
    27  municipality, which shall annually make appropriations from its
    28  tax revenues sufficient to pay the same. In cases where workers
    29  covered by an existing retirement or pension system elect to
    30  join the system created by this act, the election to join shall
    19730S0471B1663                 - 19 -

     1  be deemed to have been made at the time the municipality elected
     2  to join the system, and the liabilities of the municipality
     3  shall be fixed accordingly.
     4     If a municipality elects to join the system under the
     5  provisions of this Article II, then each officer other than
     6  elected officers, and each employe thereof other than a
     7  municipal fireman and a municipal policeman, employed on a
     8  permanent basis, except one who is not eligible for Federal
     9  Social Security coverage and except one who is covered by an
    10  existing retirement or pension system and is exempted as
    11  outlined above, shall be required to become a member of the
    12  system. Each municipality shall determine whether membership in
    13  said system for elected officials and employes hired on a
    14  temporary or seasonal basis shall be compulsory, optional or
    15  prohibited. Where membership may be optional with an elected
    16  officer or an employe hired on a temporary or seasonal basis, an
    17  election to join the system must be made within one year after
    18  the municipality elected to join the system or within one year
    19  after the officer or temporary or seasonal employe first entered
    20  the service of the municipality. Officers and employes paid only
    21  on a fee basis shall not be eligible to join the system.
    22     WHEN A MUNICIPALITY HAS ESTABLISHED A POLICY OF PLACING NEW    <--
    23  EMPLOYES ON A PROBATIONARY STATUS IT MAY ELECT TO REFRAIN FROM
    24  ENROLLING SUCH EMPLOYES INTO THE SYSTEM FOR A PERIOD OF UP TO
    25  ONE YEAR FROM THE DATE THE PROBATIONARY EMPLOYE FIRST ENTERED
    26  THE SERVICE OF THE MUNICIPALITY. IN SUCH CASES SERVICE CREDITS
    27  SHALL NOT BE EARNED BY THE EMPLOYE FOR PROBATIONARY TIME SERVED
    28  PRIOR TO ENROLLMENT.
    29     Section 204.  Service Allowance; Change of Employment;
    30  Military Service.--In computing the length of service of a
    19730S0471B1663                 - 20 -

     1  contributor for retirement purposes, full credit shall be given
     2  to each original member for each year of service rendered to the
     3  municipality prior to the time the municipality joined the
     4  system, whether or not such service was continuous.
     5     As soon as practicable, the board shall issue to each
     6  original member a certificate certifying the aggregate length of
     7  service rendered to the municipality prior to the time it joined
     8  the system. Such certificate shall be final and conclusive as to
     9  his prior service unless thereafter modified by the board, upon
    10  application of the member.
    11     The time during which a member was absent from service
    12  without pay shall not be counted in computing the service of a
    13  contributor in his certificate, or upon retirement, unless
    14  specifically allowed by the municipality, with the approval of
    15  the board.
    16     When a contributor leaves the employ of a municipality which
    17  has joined the system, and enters into the employ of another
    18  municipality which has also joined the system, his service
    19  credits shall remain unimpaired, but in such cases the unpaid
    20  municipal liability for prior service shall be prorated by the
    21  board between the municipalities on an equitable basis.
    22     A contributor who has been employed by a municipality for a
    23  period of at least six months and is an active member of the
    24  system and who thereafter, heretofore, or hereafter, shall be
    25  inducted into the military service of the United States in times
    26  of war, armed conflict, or National emergency, so proclaimed by
    27  the President of the United States, shall have credited to his
    28  employment record, for pension or retirement benefits, all of
    29  the time spent by him in such military service during the
    30  continuance of such war, armed conflict, or National emergency
    19730S0471B1663                 - 21 -

     1  if such person returns or has heretofore returned to his
     2  employment within six months after his separation from the
     3  service. The municipality shall, during the period of the
     4  member's intervening military service, continue to make current
     5  service contributions toward the municipal annuity of the
     6  member. An active member may file an application with the board
     7  for permission to purchase credit toward his member's share of
     8  the annuity for intervening military service. These
     9  contributions shall be computed by applying the member's
    10  contribution rate to his annual rate of compensation at the time
    11  of entry of the member into active military service, and
    12  multiplying the result by the number of years and fractional
    13  part of a year of creditable intervening military service,
    14  together with interest from date of return to employment to date
    15  of purchase. The amount due from the member shall be certified
    16  by the board in accordance with methods approved by the actuary,
    17  and may be paid by (1) regular monthly payments during active
    18  military service, or (2) a lump sum payment within thirty days
    19  or (3) it may be amortized with additional interest through
    20  salary deductions in amounts agreed upon by the member of the
    21  board.
    22     An active member may also purchase credit for other than
    23  intervening military service performed for the United States in
    24  times of war, armed conflict or National emergency, so
    25  proclaimed by the President of the United States, for a perios
    26  not to exceed five years: Provided, That the member has
    27  completed five years of service to the municipality subsequent
    28  to such military service. An active member may file an
    29  application with the board for permission to purchase credit for
    30  nonintervening military service upon completion of five years of
    19730S0471B1663                 - 22 -

     1  subsequent service to the municipality. The type of service
     2  credit for such service shall be determined by the date of entry
     3  of the municipality into the system. If the date of the member's
     4  separation from military service is prior to the date on which
     5  the municipality joined the system, then the credit purchased
     6  shall be considered as prior service credit. In this case the
     7  amount due from the member shall be computed by applying the
     8  member's basic contribution rate plus the rate of contribution
     9  the municipality paid for current service during its first year
    10  of entry into the system to his prior salary and multiplying the
    11  result by the number of years and fractional part of a year of
    12  creditable nonintervening military service, plus interest from
    13  the date of the member's employment by the municipality to the
    14  date of purchase. The amount due from the member shall be
    15  certified by the board in accordance with methods approved by
    16  the actuary, and may be paid in a lump sum within thirty days or
    17  it may be amortized with additional interest through salary
    18  deductions in amounts agreed upon by the member and the board.
    19  If, on the other hand, the date of the member's separation from
    20  military service is later than the date of entry of the
    21  municipality into the system, then the credit purchased shall be
    22  considered as current service credit. In this case the amount
    23  due from the member shall be computed by applying the member's
    24  basic contribution rate plus the municipality's normal
    25  contribution rate for current service which was in effect on the
    26  date of the member's entry into employment with the municipality
    27  to his average annual rate of compensation over the first five
    28  years of his subsequent employment and multiplying the result by
    29  the number of years and fractional part of a year of creditable
    30  nonintervening military service being purchased, plus interest
    19730S0471B1663                 - 23 -

     1  from the date of employment by the municipality to date of
     2  purchase.
     3     The amount due from the member shall be certified by the
     4  board in accordance with methods approved by the actuary, and
     5  may be paid in a lump sum within thirty days or it may be
     6  amortized with additional interest through salary deductions in
     7  amounts agreed upon by the member and the board.
     8     The rate of interest to be charged to members on their
     9  purchase of credit for intervening or nonintervening military
    10  service shall be the rate being credited by the system to
    11  member's contribution accounts in effect on the date of the
    12  member's application, compounded annually.
    13     A member may purchase credit for intervening or
    14  nonintervening military service only if his discharge or
    15  separation from the service was granted under other than
    16  dishonorable conditions.
    17     A member may not purchase credit for any military service for
    18  which he is entitled to receive a retirement allowance from the
    19  United States Government.
    20     Applications for permission to purchase credit for military
    21  service must be accompanied by proof of the nature of his
    22  discharge or separation from the military service.
    23     Section 205.  Determination of Municipal Liability.--The
    24  actuary shall as soon as may be, determine the present value of
    25  the liability of each municipality for the prior service credits
    26  to its original members, and shall establish an amount payable
    27  annually over a period not exceeding thirty years, through which
    28  payments such prior service liability may be funded. Each
    29  municipality shall have the option to spread the payment of such
    30  prior service liability over such period of years.
    19730S0471B1663                 - 24 -

     1     The municipal liability to be determined by the actuary shall
     2  be based upon credit for all years of prior service toward the
     3  municipal annuity of each original member, subject to such of
     4  the following options as the municipality may elect:
     5     (1)  The municipality may limit to ten years the credit for
     6  prior service toward the municipal annuity of each original
     7  member;
     8     (2)  The municipality may assume the liability for payment of
     9  the member's contributions for the prior service or any portion
    10  thereof of each original member.
    11     The actuary shall also determine, from time to time, the
    12  amount which shall be contributed annually by each municipality
    13  for service credits of original and new members subsequent to
    14  the time the municipality joined the system, and the additional
    15  amount which shall be contributed annually by each municipality
    16  toward a reserve account for disability allowances payable to
    17  original or new members, in order that all future service
    18  liability may be fully funded on an actuarial basis.
    19     The amounts so determined by the actuary may be expressed in
    20  a percentage of the payroll of the municipality covering its
    21  contributing members.
    22     The cost of making the valuations required by this section
    23  and in the transfer of any existing pension system of any
    24  municipality, shall be part of the costs of administration of
    25  this act.
    26     Section 206.  Contributions by Members; Consolidation of
    27  Credits; Change of Employment.--Each member of the system shall
    28  be required to contribute to the fund such per cent of his
    29  actual salary or compensation, including fees where paid in part
    30  on a fee basis, as shall be computed by the actuary to be
    19730S0471B1663                 - 25 -

     1  approximately sufficient to procure for him on a superannuation
     2  retirement age, a member's annuity of approximately one two-
     3  hundred-fiftieth of that portion of his final salary on which
     4  social security benefits are payable and of one one-hundred-
     5  twenty-fifth of any portion of his final salary in excess of the
     6  amount on which social security benefits are payable for each
     7  year of service, after the time the municipality by which he is
     8  employed joined the system.
     9     In order to increase his member's annuity, each member shall
    10  also have the option to make contributions for his prior
    11  service. Such contributions for prior service may be anticipated
    12  in whole or in part at the time the municipality joins the
    13  system, or payment thereof or such part thereof as is not
    14  anticipated may be spread over a period of time by increasing
    15  the payroll deduction of the member by at least one-third. When
    16  a member elects to contribute on account of all of his unpaid
    17  prior service, his rate of contribution shall be calculated as
    18  of his age at the time he first entered the service of the
    19  municipality: Provided, however, That any municipality may, at
    20  the time it elects to join the system, or at any time
    21  thereafter, agree with the board to pay into the fund as part of
    22  its liability under and in accordance with section 205 hereof,
    23  the moneys necessary to provide the member's contributions for
    24  prior service, and in such case no contributions for prior
    25  service shall be made by the members.
    26     Member's contributions shall be paid into the fund by the
    27  municipality through payroll deductions in such manner and at
    28  such time as the board may by rule and regulation determine.
    29     When a municipal employe is employed by more than one
    30  municipality, he shall be required to make contributions on
    19730S0471B1663                 - 26 -

     1  account of his salary paid by each municipality. In such cases
     2  the board shall provide for the consolidation of credits of the
     3  contributor and, upon his retirement, for a consolidated
     4  retirement allowance.
     5     Section 207.  Withdrawal; Return to Service; Death in
     6  Service.--(a) Should a contributor, before reaching
     7  superannuation retirement age, for any reason cease to be a
     8  municipal employe, he shall be paid by the board the full amount
     9  of the accumulated deductions standing to his credit in the
    10  member's account, unless he is entitled to vesting rights or to
    11  a retirement allowance for retirement not voluntarily, and
    12  elects to exercise such vesting rights or take such retirement
    13  allowance. Should such former contributor thereafter return to
    14  the service of the same municipality and restore to the fund, in
    15  such manner as may be agreed upon by such person and the board,
    16  his withdrawn accumulated deductions as they were at the time of
    17  his separation from service, his annuity rights as they existed
    18  at the time of separation from service shall be restored and his
    19  obligations as a member shall begin again. The rate of
    20  contribution of such returning member shall be the same as it
    21  was at the time he separated from service.
    22     (b)  Should a contributor, having attained or passed
    23  superannuation age, elect, upon leaving the service of the
    24  municipality, not to claim the retirement allowance to which he
    25  is entitled, he shall, upon written application, be paid by the
    26  board the full amount of the accumulated deductions standing to
    27  his credit in the member's account.
    28     (c)  Should a person who has been retired on a retirement
    29  allowance under this act, return to employment on a regular
    30  full-time basis in the same municipality, his retirement
    19730S0471B1663                 - 27 -

     1  allowance shall cease, and all his rights as they existed at the
     2  time of retirement shall be restored, and such person may by
     3  further service and further payroll deductions add to such
     4  rights on account of future retirement. For the purposes of this
     5  section if a person is reemployed on a temporary or seasonal
     6  basis and his gross post-retirement earnings from such
     7  reemployment during the calendar year are less than two thousand
     8  one hundred dollars ($2,100) or such other maximum as the board
     9  may establish, he shall not be deemed reemployed, but if and
    10  when his gross post-retirement earnings exceed two thousand one
    11  hundred dollars ($2,100) or such other maximum as the board may
    12  establish in any calendar year he shall not be entitled to
    13  receive his retirement allowance for that month or any
    14  subsequent month in the calendar year in which he continues in
    15  service. The municipality is required to notify the board
    16  immediately of the reemployment status of any retired former
    17  employe and file separate monthly reports of his gross earnings
    18  as prescribed by the board.
    19     (d)  Should a contributor die while in service, prior to
    20  becoming eligible for a retirement allowance, his accumulated
    21  deductions shall be paid to his estate, or to such person, if
    22  living, as he shall have designated in writing, filed with the
    23  board as his beneficiary. In case any contributor has failed to
    24  designate a beneficiary, or if the named beneficiary has
    25  predeceased the member and no such successor beneficiary has
    26  been named, and upon the death in service shall have less than
    27  one hundred dollars ($100) in accumulated deductions standing to
    28  his credit, the board may, if letters testamentary or of
    29  administration have not been taken out on his estate within six
    30  months after death, pay such accumulated deductions on the claim
    19730S0471B1663                 - 28 -

     1  of the undertaker, or to any person or municipality which shall
     2  have paid the claim of the undertaker.
     3     Section 208.  Superannuation Retirement.--Retirement for
     4  superannuation shall be as follows:
     5     (a)  Any contributor who has reached superannuation
     6  retirement age may retire for superannuation by filing with the
     7  board a written statement, duly attested, setting forth on what
     8  date he desires to be retired. Said application shall make the
     9  superannuation retirement allowance effective on the date so
    10  specified, if such application was filed in the office of the
    11  board or deposited in the United States mail, addressed to the
    12  board, before the date specified in the application and before
    13  the death of the contributor, but the date so specified in the
    14  application shall not be more than ninety days after the date of
    15  filing, or the date the application was deposited in the mail.
    16     (b)  On retirement for superannuation, a contributor shall be
    17  entitled to a retirement allowance throughout his life, which
    18  shall consist of:
    19     (1)  A member's annuity of equivalent actuarial value of his
    20  accumulated deductions; and
    21     (2)  A municipal annuity which shall be equal to (i) for
    22  current service, one two-hundred-fiftieth of that portion of his
    23  final salary on which social security benefits are payable plus
    24  one one-hundred-twenty-fifth of any portion of his final salary
    25  in excess of the amount on which social security benefits are
    26  payable for each year of service while a member, and in addition
    27  thereto, (ii) for prior service in case of an original member,
    28  one two-hundred-fiftieth of that portion of his prior salary on
    29  which social security benefits are payable plus one one-hundred-
    30  twenty-fifth of any portion of his prior salary in excess of the
    19730S0471B1663                 - 29 -

     1  amount on which social security benefits are payable for each
     2  year of prior service or for a maximum of ten years if the
     3  municipality has so limited the period of prior service, and in
     4  addition thereto, one two-hundred-fiftieth of his prior salary
     5  on which social security benefits are payable plus one one-
     6  hundred-twenty-fifth of any portion of his prior salary in
     7  excess of the amount on which social security benefits are
     8  payable for each year of prior service for which the
     9  municipality has paid or has obligated itself to pay the
    10  member's contributions.
    11     (c)  In no event shall the municipal annuity exceed fifty per
    12  cent of the final salary.
    13     Sections 209.  Death Benefits.--(a) The provisions of
    14  subsection (b) and (c) of this section shall not apply to any
    15  member unless the municipality by which he is employed has
    16  elected by ordinance or resolution, to extend the provisions of
    17  this section to its employes. A duly certified copy of such
    18  ordinance or resolution shall be filed with the board.
    19     (b)  A contributor to the system who is entitled to a
    20  superannuation retirement allowance by reason of having reached
    21  superannuation retirement age or who is entitled to a withdrawal
    22  allowance by reason of having completed twenty-four years of
    23  total service, may file with the board a written application for
    24  retirement, in the form required for such application, but
    25  requesting that such retirement shall become effective as of the
    26  time of his death, electing one of the options provided in
    27  section 211 and nominating a person having an insurable interest
    28  in his life under said option as required in said section. In
    29  all such cases, the application shall be held by the board until
    30  the contributor shall file a later application in the usual
    19730S0471B1663                 - 30 -

     1  manner for a superannuation retirement allowance or until the
     2  death of the contributor occurring while in municipal service,
     3  at which time his retirement shall become effective with the
     4  same benefits to the person designated as if the contributor had
     5  retired on the day immediately preceding his death.
     6     (c)  A contributor to the system who is entitled to a
     7  superannuation retirement allowance by reason of having reached
     8  superannuation retirement age or who is entitled to a withdrawal
     9  allowance by reason of having completed twenty-four years of
    10  total service and who has died in municipal service before
    11  filing with the board a written application for a superannuation
    12  retirement allowance as provided in subsection (b) of this
    13  section shall be considered as having elected Option 1 as
    14  provided in section 211 as of the date of his death. In such
    15  event, payment under Option 1 shall be made to the beneficiary
    16  designated in the nomination of beneficiary form on file with
    17  the board, or if said beneficiary has predeceased the
    18  contributor, to the legal representative of said contributor.
    19     Section 210.  Early Retirement.--Should a contributor be
    20  discontinued from service not voluntarily, after having
    21  completed eight years of total service, or voluntarily after
    22  having completed twenty-four years of total service, but in
    23  either event before reaching superannuation retirement age, he
    24  shall be paid as he may elect, as follows:
    25     (1)  The full amount of the accumulated deductions standing
    26  to his credit in the member's account of the fund; or
    27     (2)  Upon the filing of an application in the manner outlined
    28  in subsection (a) of section 208, a retirement allowance which
    29  shall consist of (i) a member's annuity of equivalent actuarial
    30  value to his accumulated deductions; and (ii) a municipal
    19730S0471B1663                 - 31 -

     1  annuity of equivalent actuarial value to the present value of a
     2  municipal annuity, beginning at superannuation retirement age,
     3  calculated in accordance with the provisions of section 208; or
     4     (3)  If qualified, a deferred retirement allowance as
     5  provided in section 213.
     6     Section 211.  Options on Superannuation or Early
     7  Retirement.--At the time of his superannuation or early
     8  retirement, a contributor may elect to receive his benefits in a
     9  retirement allowance payable throughout his life, which shall be
    10  known as a single life annuity, or instead, he may elect to
    11  receive the equivalent actuarial value at that time of his
    12  retirement allowance in a lesser allowance, payable throughout
    13  life with provisions that:
    14     (1)  Option 1.  If he shall die before receiving in payments
    15  the present value of his retirement allowance as it was at the
    16  time of his retirement, the balance, if less than five thousand
    17  dollars ($5,000), shall be paid in a lump sum to his legal
    18  representative, or to or in trust for his beneficiary. If the
    19  balance is five thousand dollars ($5,000) or more, the
    20  beneficiary may elect by application duly acknowledged and filed
    21  with the board to receive payment of such balance according to
    22  any one of the following provisions: (i) a lump sum payment;
    23  (ii) an annuity having a present value equal to the balance
    24  payable; (iii) a lump sum payment and an annuity. Such annuity
    25  shall be of equivalent actuarial value to the balance payable
    26  less the amount of the lump sum payment specified by the
    27  beneficiary.
    28     (2)  Option 2.  Upon his death, his retirement allowance
    29  shall be continued throughout the life of and paid to his
    30  survivor annuitant, if then living.
    19730S0471B1663                 - 32 -

     1     (3)  Option 3.  Upon his death, one-half of his retirement
     2  allowance shall be continued throughout the life of and paid to
     3  his survivor annuitant, if then living.
     4     Section 212.  Disability Retirement.--(a) After a contributor
     5  has had ten or more years of total service, he may, upon
     6  application or on the application of one acting in his behalf,
     7  or upon application of a head of the department of the
     8  municipality by which he is employed, be retired by the board on
     9  a disability allowance if he is under superannuation retirement
    10  age, and on a superannuation retirement allowance if he has
    11  attained or passed such age, if the physician designated by the
    12  board, after medical examination of the contributor made at the
    13  place of residence of the contributor or at a place mutually
    14  agreed upon, shall certify to the board that the contributor is
    15  unable to engage in any gainful employment and that said
    16  contributor ought to be retired. When the disability of a
    17  contributor is determined to be service-connected, as defined in
    18  this act, no minimum period of service shall be required for
    19  eligibility. Application filing requirements shall be identical
    20  to those outlined in subsection (a) of section 208.
    21     (b)  On retirement for disability a member shall receive a
    22  retirement allowance which shall consist of:
    23     (1)  A member's annuity of the equivalent actuarial value to
    24  his accumulated deductions;
    25     (2)  A municipal annuity of the equivalent actuarial value to
    26  the present value of a municipal annuity, beginning at
    27  superannuation retirement age, calculated in accordance with the
    28  provision of section 208; and
    29     (3)  A disability annuity payable from the total disability
    30  reserve account which, together with the member's annuity and
    19730S0471B1663                 - 33 -

     1  the municipal annuity, shall be sufficient to produce a
     2  retirement allowance of thirty per cent of the final salary.
     3  Where the disability of the member is determined to be service-
     4  connected, as defined in this act, the retirement allowance
     5  shall equal fifty per cent of his final salary. The disability
     6  annuity shall be reduced by the amount of any payments for which
     7  the member shall be eligible under the act of June 2, 1915
     8  (P.L.736, No.338), known as "The Pennsylvania Workmen's
     9  Compensation Act," or the act of June 21, 1939 (P.L.566,
    10  No.284), known as "The Pennsylvania Occupational Disease Act."
    11     (c)  Once every year the board may require any disability
    12  annuitant, while still under superannuation retirement age, to
    13  undergo medical examination by a physician designated by the
    14  board. Such examination shall be made at the place of residence
    15  of the beneficiary or other place mutually agreed upon. Should
    16  the physician report and certify to the board that such
    17  disability beneficiary is no longer physically or mentally
    18  incapacitated for the performance of duty and is able to engage
    19  in a gainful occupation, then his disability retirement
    20  allowance shall be discontinued, and in lieu thereof an early
    21  involuntary retirement allowance shall at that time be granted
    22  as if such person had been retired not voluntarily, if such
    23  person shall have had eight or more years of total service.
    24     (d)  Should a disability annuitant, while under
    25  superannuation retirement age, refuse to submit to at least one
    26  medical examination in any year by a physician designated by the
    27  board, his disability retirement allowance shall be discontinued
    28  until the withdrawal of such refusal, and should such refusal
    29  continue for one year, then all his rights in and to any
    30  disability retirement allowance or for early involuntary
    19730S0471B1663                 - 34 -

     1  retirement allowance provided for by this act, shall be
     2  forfeited.
     3     (e)  Any contributor entitled to retire for disability may,
     4  in lieu of such retirement, if he has eight or more years of
     5  total service, elect to retire not voluntarily under the
     6  provisions of this act.
     7     (f)  Should a disability annuitant die before the total
     8  disability retirement allowance received shall be at least equal
     9  to the amount of his accumulated deductions at the time of
    10  disability retirement, then the board shall pay to the named
    11  beneficiary, if living, or if the beneficiary predeceased the
    12  annuitant, or no beneficiary was named, then to the annuitant's
    13  estate, an amount equal to the difference between such total
    14  retirement allowance received and the annuitant's accumulated
    15  deductions, and if such difference is less than one hundred
    16  dollars ($100) and no letters have been taken out on the estate
    17  within six months after death, then such difference may be paid
    18  to the undertaker or to any person or municipality who or which
    19  shall have paid the claim of the undertaker.
    20     Section 213.  Vesting.--(a) Should a contributor, before
    21  reaching superannuation retirement age and after having
    22  completed twelve years of total service, for any reason cease to
    23  be a municipal employe, he shall be entitled to vest his
    24  retirement benefits until he attains superannuation retirement
    25  age, by filing with the board a written notice of his intentions
    26  to vest, within ninety days of the date of his termination.
    27     (b)  A contributor, who was terminated not voluntarily, may
    28  elect, after he has vested, to be paid as follows:
    29     (1)  The full amount of the accumulated deductions, including
    30  interest to the date of termination, standing to his credit in
    19730S0471B1663                 - 35 -

     1  the member's account of the fund; or
     2     (2)  An early retirement allowance as computed under the
     3  provisions of clause (2) of section 210; or
     4     (3)  Upon reaching superannuation retirement age, a
     5  superannuation retirement allowance as computed under the
     6  provisions of section 208.
     7     (c)  A contributor, who voluntarily terminated his service,
     8  may elect, after he has vested, to be paid as follows:
     9     (1)  The full amount of the accumulated deductions, including
    10  interest to the date of termination, standing to his credit in
    11  the member's account of the fund; or
    12     (2)  If the contributor has completed twenty-four years or
    13  more of total service, a voluntary withdrawal allowance computed
    14  in accordance with the provisions of section 210; or
    15     (3)  Upon reaching superannuation retirement age, a
    16  superannuation retirement allowance as computed under the
    17  provisions of section 208.
    18     (d)  Should a contributor, who has vested, die before he
    19  becomes eligible for a retirement allowance, the full amount of
    20  the accumulated deductions, including interest to the date of
    21  his termination, standing to his credit in the member's account
    22  of the fund shall be paid to his estate or to his named
    23  beneficiary in accordance with the provisions of subsection (d)
    24  of section 207.
    25     Section 214.  Withdrawal Provisions.--At any time within       <--
    26  three years after a municipality has initially joined the
    27  retirement system created or continued under this Article II it
    28  may withdraw from the system if it has met all of its financial
    29  obligations to the fund. The member's contributions of the
    30  withdrawing municipality's employes shall be returned to the
    19730S0471B1663                 - 36 -

     1  members. No refund of any contributions paid by the municipality
     2  shall be made and these moneys shall remain in the Pennsylvania
     3  Municipal Retirement Fund for the benefit of the remaining
     4  members. Any such withdrawal must be effected through an
     5  ordinance or resolution containing the affirmative vote of
     6  seventy-five per cent of all of the members of its legislative
     7  body and if the legislative body is composed of only three
     8  persons, then by an unanimous affirmative vote. In all cases an
     9  affirmative vote approving such action by seventy-five per cent
    10  of the municipal employes affected by the ordinance or
    11  resolution must be certified by the municipality to the board.
    12     Thereafter, no municipality, after it has joined the system
    13  under the provisions of this Article II, shall be permitted to
    14  withdraw therefrom, and, in the case of failure to make payments
    15  as required by this act, the Commonwealth shall withhold payment
    16  to the municipality any funds to which the municipality may be
    17  entitled for pension purposes. The board may recover any sums
    18  due to the fund by suit at law, or other appropriate remedy.
    19     SECTION 214.  WITHDRAWAL PROVISIONS.--A MUNICIPALITY WHICH     <--
    20  HAS JOINED THE RETIREMENT SYSTEM CREATED OR CONTINUED UNDER THIS
    21  ARTICLE II MAY, FOR GOOD AND STATED CAUSE, FILE AN APPLICATION
    22  WITH THE BOARD FOR PERMISSION TO WITHDRAW FROM THE SYSTEM IF IT
    23  MEETS ALL OF THE FOLLOWING REQUIREMENTS:
    24     (1)  THE MUNICIPALITY HAS BEEN ENROLLED IN THE SYSTEM FOR A
    25  PERIOD OF AT LEAST FIVE YEARS.
    26     (2)  THE MUNICIPALITY HAS MET ALL OF ITS FINANCIAL
    27  OBLIGATIONS TO THE SYSTEM.
    28     (3)  THE LEGISLATIVE BODY OF THE MUNICIPALITY HAS PASSED AN
    29  ORDINANCE OR RESOLUTION SIGNIFYING ITS INTENTION TO WITHDRAW
    30  FROM THE SYSTEM.
    19730S0471B1663                 - 37 -

     1     (4)  THE MUNICIPALITY HAS CERTIFIED TO THE BOARD THAT AN
     2  AFFIRMATIVE VOTE APPROVING WITHDRAWAL FROM THE SYSTEM HAD BEEN
     3  OBTAINED FROM AT LEAST SEVENTY-FIVE PER CENT OF ALL OF THE
     4  MUNICIPAL EMPLOYES AFFECTED BY THE ORDINANCE OR RESOLUTION.
     5     THE BOARD SHALL WITHIN NINETY DAYS OF ITS RECEIPT, TAKE
     6  ACTION ON AN APPLICATION FILED BY A MUNICIPALITY FOR PERMISSION
     7  TO WITHDRAW FROM THE SYSTEM. IF THE APPLICATION IS APPROVED THE
     8  WITHDRAWING MUNICIPALITY SHALL BE ENTITLED TO RECEIVE A NET
     9  REFUND OF THE AMOUNTS THEN STANDING TO THE CREDIT OF THE
    10  MUNICIPALITY IN THE MEMBER'S ACCOUNT, THE MUNICIPAL ACCOUNT AND
    11  THE RETIRED MEMBER'S RESERVE ACCOUNTS OF THE SYSTEM. IN NO EVENT
    12  SHALL THE TOTAL AMOUNT OF THE NET REFUND TO THE MUNICIPALITY
    13  EXCEED THE PRO RATA INTEREST OF THE WITHDRAWING MUNICIPALITY IN
    14  THE NET ASSETS OF THE ENTIRE FUND BASED ON THE MARKET VALUE OF
    15  THE INVESTMENTS OF THE FUND AS OF THE DATE OF RECEIPT OF THE
    16  APPLICATION FOR PERMISSION TO WITHDRAW. THE LIABILITY FOR THE
    17  CONTINUATION OF RETIREMENT OR DISABILITY ALLOWANCES BEING PAID
    18  FROM THE FUND SHALL ATTACH AGAINST THE WITHDRAWING MUNICIPALITY
    19  AND BE PAID FROM FUNDS TRANSFERRED TO A RETIREMENT SYSTEM
    20  ESTABLISHED SUBSEQUENT TO ITS WITHDRAWAL FROM THE SYSTEM OR FROM
    21  MONEYS APPROPRIATED ANNUALLY FROM TAX REVENUES SUFFICIENT TO PAY
    22  THE SAME. IF THE BOARD DISAPPROVES THE APPLICATION OF THE
    23  MUNICIPALITY FOR PERMISSION TO WITHDRAW FROM THE SYSTEM THE
    24  BOARD SHALL PROMPTLY NOTIFY THE MUNICIPALITY OF ITS DECISION AND
    25  ADVISE THE MUNICIPALITY OF THE BOARD'S REASON OR REASONS FOR
    26  DISAPPROVAL. THE BOARD SHALL ESTABLISH RULES AND REGULATIONS, IN
    27  ACCORDANCE WITH THE PROVISIONS OF CLAUSE (10) OF SECTION 104 OF
    28  THIS ACT, GOVERNING THE DETAILS OF THE PROCEDURES TO BE FOLLOWED
    29  IN THE WITHDRAWAL OF MUNICIPALITIES FROM THE SYSTEM.
    30     Section 215.  Procedures for Amending Contracts.--Any
    19730S0471B1663                 - 38 -

     1  municipality which has joined the system under the provisions of
     2  this Article II may, with the approval of the board, enter into
     3  a contract with the board as outlined in Article IV of this act,
     4  to increase any of the benefits enumerated in Article IV. The
     5  board shall not enter into any contract with any municipality
     6  which decreases benefits, nor shall it enter into any contract
     7  with a municipality which provides for benefits in excess of or
     8  minimum member's contribution rates less than those available to
     9  it under any other existing law pertaining to the establishment
    10  of retirement systems for that class of municipality. Before the
    11  board approves any such contract it shall first determine,
    12  through its actuary, that the plan outlined in the contract is
    13  actuarially sound. Any municipality which elects to enter into a
    14  contract for increased benefits which would result in an
    15  increase in its employes contribution rates shall first obtain
    16  the written consent of at least seventy-five per cent of its
    17  then member employes. Additional costs for contracted increases
    18  in benefits shall become the responsibility of the municipality
    19  and/or the members as specified in the contract.
    20                            ARTICLE III
    21   PROVISIONS RELATING TO MUNICIPAL FIREMEN AND MUNICIPAL POLICE
    22     Section 301.  Purpose.--This article shall provide for the
    23  uninterrupted continuation of retirement plans established under
    24  the act of July 31, 1968 (P.L.944, No.291), known as the
    25  "Municipal Police Retirement Law." It shall also provide for the
    26  enrollment of municipal firemen and municipal police of new
    27  municipalities joining the system at the contribution rates and
    28  benefit rates outlined in this article of the act.
    29     Section 302.  Transfer of the Municipal Police Retirement
    30  Fund to the Pennsylvania Municipal Retirement Fund.--On the
    19730S0471B1663                 - 39 -

     1  effective date of this act all of the assets and liabilities of
     2  the Municipal Police Retirement Fund shall be transferred intact
     3  to the Pennsylvania Municipal Retirement Fund. The rights and
     4  benefits of the members and of the municipalities which have
     5  joined the Municipal Police Retirement System shall not be
     6  impaired in any way as a result of this transfer. Likewise, the
     7  obligations and responsibilities of both the members and the
     8  municipalities which have joined the system shall not be changed
     9  and the contractual arrangements as they existed at the time the
    10  municipalities joined the Municipal Police Retirement System
    11  shall continue in force. Prior service credits for any members
    12  so transferred shall be computed from the date on which the
    13  municipality joined the Municipal Police Retirement System.
    14     Section 303.  Existing Local Retirement Systems and
    15  Compulsory Membership.--Where a municipality elects to join the
    16  system established by this act, and is then maintaining a
    17  retirement or pension system or systems covering its employes in
    18  whole or in part, those employes so covered, and employes
    19  thereafter eligible to join such pension system, shall not
    20  become members of the retirement system established by this act,
    21  unless at the time the municipality elects to join the system,
    22  the members of such existing retirement or pension system shall,  <--
    23  by the affirmative vote of seventy-five per cent of all the
    24  members thereof, EACH SUCH EXISTING RETIREMENT OR PENSION SYSTEM  <--
    25  SHALL, BY THE AFFIRMATIVE VOTE OF SEVENTY-FIVE PER CENT OF ALL
    26  THE MEMBERS OF EACH PENSION SYSTEM, elect to be covered by the
    27  retirement system established by this act. At any time
    28  thereafter, within a period of three years after the
    29  municipality has elected to join the system, but not thereafter,
    30  the members of an existing retirement or pension system may, in
    19730S0471B1663                 - 40 -

     1  like manner, elect to join the system established by this act.
     2  In any such case, provisions may be made for the transfer of
     3  moneys and securities in its retirement or pension fund or
     4  years. FUNDS, IN WHOLE OR IN PART, TO THE FUND ESTABLISHED BY     <--
     5  THIS ACT. SECURITIES SO TRANSFERRED SHALL BE ONLY THOSE
     6  ACCEPTABLE TO THE BOARD. SECURITIES NOT SO ACCEPTABLE SHALL BE
     7  CONVERTED INTO CASH, AND SAID CASH TRANSFERRED TO THE FUND
     8  CREATED BY THIS ACT. IN ANY SUCH TRANSFER, PROVISION SHALL BE
     9  MADE TO CREDIT THE ACCUMULATED DEDUCTIONS OF EACH MEMBER, AT
    10  LEAST THE AMOUNT HE HAS PAID INTO THE RETIREMENT OR PENSION
    11  SYSTEM OF THE MUNICIPALITY, WHICH MONEYS SHALL BE CREDITED
    12  AGAINST THE PRIOR SERVICE CONTRIBUTIONS OF SUCH MEMBER, OR A
    13  MUNICIPALITY MAY TURN OVER TO THE RETIREMENT SYSTEM CREATED BY
    14  THIS ACT ANY EXISTING LOCAL PENSION SYSTEM ON A COMPLETELY
    15  FUNDED BASIS, AS TO PENSIONERS AND PENSION CREDITS OF MEMBERS
    16  RELATED TO PRIOR SERVICE TO THE DATE OF TRANSFER, OR ON A
    17  PARTIALLY FUNDED BASIS IF THE MUNICIPALITY PAYS ANNUALLY INTO
    18  THE RETIREMENT SYSTEM AMOUNTS SUFFICIENT TO COMPLETELY LIQUIDATE
    19  THE MUNICIPALITY'S LIABILITY FOR PRIOR SERVICE WITHIN A PERIOD
    20  NOT TO EXCEED THIRTY YEARS.
    21     No liability, on account of retirement allowances or pensions
    22  being paid from any retirement or pension fund of the
    23  municipality, shall attach against the fund, except as provided
    24  in the agreement, making a transfer of an existing system in
    25  accordance with this section. The liability to continue payment
    26  of pensions not so transferred shall attach against the
    27  municipality, which shall annually make appropriations from its
    28  tax revenues sufficient to pay the same. In cases where workers
    29  covered by an existing retirement or pension system elect to
    30  join the system created by this act, the election to join shall
    19730S0471B1663                 - 41 -

     1  be deemed to have been made at the time the municipality elected
     2  to join the system, and the liabilities of the municipality
     3  shall be fixed accordingly.
     4     If a municipality elects to cover its municipal firemen under
     5  the provisions of the system created by this Article III, then
     6  each municipal fireman shall be required to become a member of
     7  the system.
     8     If a municipality elects to cover its municipal police under
     9  the provisions of the system created by this Article III, then
    10  each municipal policeman shall be required to become a member of
    11  the system.
    12     WHEN A MUNICIPALITY HAS ESTABLISHED A POLICY OF PLACING NEW    <--
    13  EMPLOYES ON A PROBATIONARY STATUS IT MAY ELECT TO REFRAIN FROM
    14  ENROLLING SUCH EMPLOYES INTO THE SYSTEM FOR A PERIOD OF UP TO
    15  ONE YEAR FROM THE DATE THE PROBATIONARY EMPLOYE FIRST ENTERED
    16  THE SERVICE OF THE MUNICIPALITY. IN SUCH CASES SERVICE CREDITS
    17  SHALL NOT BE EARNED BY THE EMPLOYE FOR PROBATIONARY TIME SERVED
    18  PRIOR TO ENROLLMENT.
    19     Section 304.  Separate Ordinances or Resolutions; Separate
    20  Accounts.--Any municipality electing to cover both its municipal
    21  firemen and municipal police under the system created by this
    22  Article III shall be required to pass separate ordinances or
    23  resolutions covering each class of employes.
    24     The board shall maintain separate accounting records for
    25  municipal firemen and for municipal police. However, in the
    26  interest of good investment practice, the board may, in its
    27  discretion, comingle moneys received from municipalities,
    28  municipal employes, municipal firemen and municipal police.
    29     Section 305.  Service Allowance; Change of Employment;
    30  Military Service.--In computing the length of service of a
    19730S0471B1663                 - 42 -

     1  contributor for retirement purposes, full credit shall be given
     2  to each original member for each year of service rendered to the
     3  municipality prior to the time the municipality joined the
     4  system.
     5     As soon as practicable, the board shall issue to each
     6  original member a certificate certifying the aggregate length of
     7  service rendered to the municipality prior to the time it joined
     8  the system. Such certificate shall be final and conclusive as to
     9  his prior service unless thereafter modified by the board, upon
    10  application of the member.
    11     The time during which a member was absent from service
    12  without pay, except for military service, shall not be counted
    13  in computing the service of a contributor in his certificate, or
    14  upon retirement unless specially allowed by the municipality,
    15  with the approval of the board.
    16     When a contributor leaves the employ of a municipality which
    17  has joined the system, and enters into the employ of another
    18  municipality which has also joined the system, his service
    19  credits shall remain unimpaired, but in such cases the unpaid
    20  municipal liability for prior service shall be prorated by the
    21  board between the municipalities on an equitable basis.
    22     Any municipal fireman or municipal policeman employed by a
    23  municipality who has been a regularly appointed fireman or
    24  policeman for a period of at least six months and is an active
    25  member of the system and who thereafter, heretofore, or
    26  hereafter, shall be inducted into the military service of the
    27  United States in times of war, armed conflict, or National
    28  emergency, so proclaimed by the President of the United States,
    29  shall have credited to his employment record, for pension or
    30  retirement benefits, all of the time spent by him in such
    19730S0471B1663                 - 43 -

     1  military service during the continuance of such war, armed
     2  conflict, or National emergency if such person returns or has
     3  heretofore returned to his employment within six months after
     4  his separation from the service. The municipality shall, during
     5  the period of the member's intervening military service,
     6  continue to make current service contributions toward the
     7  municipal annuity of the member. An active member may file an
     8  application with the board for permission to purchase credit
     9  toward his member's share of the annuity for intervening
    10  military service. These contributions shall be computed by
    11  applying the member's contribution rate to his annual rate of
    12  compensation at the time of entry of the member into active
    13  military service, and multiplying the result by the number of
    14  years and fractional part of a year of creditable intervening
    15  military service, together with interest from date of return to
    16  employment to date of purchase. The amount due from the member
    17  shall be certified by the board in accordance with methods
    18  approved by the actuary, and may be paid by (1) regular monthly
    19  payments during active military service, or (2) a lump sum
    20  payment within thirty days, or (3) it may be amortized with
    21  additional interest through salary deductions in amounts agreed
    22  upon by the member and the board.
    23     An active member may also purchase credit for other than
    24  intervening military service performed for the United States in
    25  times of war, armed conflict or National emergency, so
    26  proclaimed by the President of the United States, for a period
    27  not to exceed five years: Provided, That the member has
    28  completed five years of service to the municipality subsequent
    29  to such military service. An active member may file an
    30  application with the board for permission to purchase credit for
    19730S0471B1663                 - 44 -

     1  nonintervening military service upon completion of five years of
     2  subsequent service to the municipality. The type of service
     3  credit for such service shall be determined by the date of entry
     4  of the municipality into the system. If the date of the member's
     5  separation from military service is prior to the date on which
     6  the municipality joined the system, then the credit purchased
     7  shall be considered as prior service credit. In this case the
     8  amount due from the member shall be computed by applying the
     9  member's basic contribution rate plus the rate of contribution
    10  the municipality paid for current service during its first year
    11  of entry into the system to his prior salary and multiplying the
    12  result by the number of years and fractional part of a year of
    13  creditable nonintervening military service, plus interest from
    14  the date of the member's employment by the municipality to the
    15  date of purchase. The amount due from the member shall be
    16  certified by the board in accordance with methods approved by
    17  the actuary, and may be paid in a lump sum within thirty days or
    18  it may be amortized with additional interest through salary
    19  deductions in amounts agreed upon by the member and the board.
    20  If, on the other hand, the date of the member's separation from
    21  military service is later than the date of entry of the
    22  municipality into the system, then the credit purchased shall be
    23  considered as current service credit. In this case the amount
    24  due from the member shall be computed by applying the member's
    25  basic contribution rate plus the municipality's normal
    26  contribution rate for current service which was in effect on the
    27  date of the member's entry into employment with the municipality
    28  to his average annual rate of compensation over the first five
    29  years of his subsequent employment and multiplying the result by
    30  the number of years and fractional part of a year of creditable
    19730S0471B1663                 - 45 -

     1  nonintervening military service being purchased, plus interest
     2  from the date of employment by the municipality to date of
     3  purchase.
     4     The amount due from the member shall be certified by the
     5  board in accordance with methods approved by the actuary, and
     6  may be paid in a lump sum within thirty days or it may be
     7  amortized with additional interest through salary deductions in
     8  amounts agreed upon by the member and the board.
     9     The rate of interest to be charged to members on their
    10  purchase of credit for intervening or nonintervening military
    11  service shall be the rate being credited by the system to
    12  member's contribution accounts in effect on the date of the
    13  member's application, compounded annually.
    14     A member may purchase credit for intervening or
    15  nonintervening military service only if his discharge or
    16  separation from the service was granted under other than
    17  dishonorable conditions.
    18     A member may not purchase credit for any military service for
    19  which he is entitled to receive a retirement allowance from the
    20  United States Government.
    21     Applications for permission to purchase credit for military
    22  service must be accompanied by proof of the nature of his
    23  discharge or separation from the military service.
    24     Section 306.  Determination of Municipal Liability.--The
    25  actuary shall, as soon as may be, determine the present value of
    26  the liability of each municipality for the prior service credits
    27  to its original members, and shall establish an amount payable
    28  annually over a period not exceeding thirty years, through which
    29  payments such prior service liability may be funded. Each
    30  municipality shall have the option to spread the payment of such
    19730S0471B1663                 - 46 -

     1  prior service liability over such period of years.
     2     The municipal liability to be determined by the actuary shall
     3  be based upon credit for all years of prior service toward the
     4  municipal annuity of each original member.
     5     The actuary shall also determine, from time to time, the
     6  amount which shall be contributed annually by each municipality,
     7  for service credits of original and new members subsequent to
     8  the time the municipality joined the system, and the additional
     9  amount which shall be contributed annually by each municipality
    10  toward a reserve account for disability allowances payable to
    11  original and new members, in order that all future service
    12  liability may be fully funded on an actuarial basis.
    13     The amounts so determined by the actuary may be expressed in
    14  a percentage of payroll of the municipality covering its
    15  contributing members.
    16     The payments made by the State Treasurer to the treasurer of
    17  the municipality from moneys received from taxes paid upon
    18  premiums by foreign fire insurance companies for purposes of
    19  pension, retirement or disability benefits for municipal firemen
    20  shall be used as follows: (i) to reduce the unfunded liability
    21  or, after such liability has been funded, (ii) to apply against
    22  the annual obligation of the municipality for future service and
    23  disability reserve costs. It shall be the duty of the governing
    24  body to apply such payments in accordance with the provisions of
    25  this act.
    26     The payments made by the State Treasurer to the treasurer of
    27  the municipality from the moneys received from taxes paid upon
    28  premiums by foreign casualty insurance companies for purposes of
    29  pension, retirement or disability benefits for municipal
    30  policemen shall be used as follows: (i) to reduce the unfunded
    19730S0471B1663                 - 47 -

     1  liability or, after such liability has been funded, (ii) to
     2  apply against the annual obligation of the municipality for
     3  future service and disability reserve costs. It shall be the
     4  duty of the governing body to apply such payments in accordance
     5  with the provisions of this act.
     6     The cost of making the valuations required by this section
     7  and in the transfer of any existing pension system of any
     8  municipality, shall be part of the costs of administration of
     9  this act.
    10     Section 307.  Contributions by Members; Consolidation of
    11  Credits.--Each single coverage member of the system created
    12  under this Article III, shall be required to contribute to the
    13  fund such per cent of his actual salary or compensation as shall
    14  be computed by the actuary to be approximately sufficient to
    15  procure for him on superannuation retirement, a member's annuity
    16  of approximately one one-hundredth of his final salary for each
    17  year of service after the time the municipality by which he is
    18  employed joined the system. The member shall not be required to
    19  contribute more than eight per cent of his salary or
    20  compensation to the fund.
    21     The amount of contribution by each joint coverage member
    22  shall be computed in the manner described above for a single
    23  coverage member, except that the amount of such deductions from
    24  salary or compensation shall be reduced with respect to wages
    25  (as defined in the Federal Insurance Contributions Act) by forty
    26  per cent of the tax on employes prescribed by the Federal
    27  Insurance Contributions Act exclusive of that portion of such
    28  tax attributable to disability coverage.
    29     Members' contributions shall be paid into the fund by the
    30  municipality through payroll deductions in such manner and at
    19730S0471B1663                 - 48 -

     1  such time as the board may by rule and regulation determine.
     2     Section 308.  Withdrawal; Return to Service; Death in
     3  Service.--(a) Should a contributor, before reaching
     4  superannuation retirement age, for any reason cease to be a
     5  municipal fireman or a municipal policeman, he shall be paid by
     6  the board the full amount of the accumulated deductions standing
     7  to his credit in the member's account, unless he is entitled to
     8  vesting rights or to a retirement allowance for retirement not
     9  voluntarily, and elects to exercise such vesting rights or take
    10  such retirement allowance. Should such former contributor
    11  thereafter return to the service of the same municipality and
    12  restore to the fund, in such manner as may be agreed upon by
    13  such person and the board, his withdrawn accumulated deductions
    14  as they were at the time of his separation from service, his
    15  annuity rights as they existed at the time of separation from
    16  service shall be restored and his obligations as a member shall
    17  begin again.
    18     (b)  Should a contributor, having attained or passed
    19  superannuation age, elect, upon leaving the service of the
    20  municipality, not to claim the retirement allowance to which he
    21  is entitled, he shall, upon written application, be paid by the
    22  board the full amount of the accumulated deductions standing to
    23  his credit in the member's account.
    24     (c)  Should a person who has been retired on a retirement
    25  allowance under this act, return to employment on a regular
    26  full-time basis in the same municipality, his retirement
    27  allowance shall cease, and all his rights as they existed at the
    28  time of retirement shall be restored, and such person may by
    29  further service and further payroll deductions add to such
    30  rights on account of future retirement. For the purposes of this
    19730S0471B1663                 - 49 -

     1  section if a person is reemployed on a temporary or seasonal
     2  basis and his gross post-retirement earnings from such
     3  reemployment during the calendar year are less than two thousand
     4  one hundred dollars ($2,100) or such other maximum as the board
     5  may establish, he shall not be deemed reemployed, but if and
     6  when his gross post-retirement earnings exceed two thousand one
     7  hundred dollars ($2,100) or such other maximum as the board may
     8  establish in any calendar year he shall not be entitled to
     9  receive his retirement allowance for that month or any
    10  subsequent month in the calendar year in which he continues in
    11  service. The municipality is required to notify the board
    12  immediately of the reemployment status of any retired former
    13  employe and file separate monthly reports of his gross earnings
    14  as prescribed by the board.
    15     (d)  Should a contributor die while in service, prior to
    16  become eligible for a retirement allowance, his accumulated
    17  deductions shall be paid to his estate, or to such person, if
    18  living, as he shall have designated, in writing, filed with the
    19  board as his beneficiary. In case any contributor has failed to
    20  designate a beneficiary, or if the named beneficiary has
    21  predeceased the member and no successor beneficiary has been
    22  named, and upon the death in service shall have less than one
    23  hundred dollars ($100) in accumulated deductions standing to his
    24  credit, the board may, if letters testamentary or of
    25  administration have not been taken out on his estate within six
    26  months after his death, pay such accumulated deductions on the
    27  claim of the undertaker, or to such person or municipality which
    28  shall have paid the claim of the undertaker.
    29     Section 309.  Superannuation Retirement.--Retirement for
    30  superannuation shall be as follows:
    19730S0471B1663                 - 50 -

     1     (1)  Any contributor who has reached superannuation
     2  retirement age may retire for superannuation by filing with the
     3  board a written statement, duly attested, setting forth on what
     4  date he desires to be retired. Said application shall make the
     5  superannuation retirement allowance effective on the date so
     6  specified, if such application was filed in the office of the
     7  board or deposited in the United States mail, addressed to the
     8  board, before the date specified in the application and before
     9  the death of the contributor, but the date so specified in the
    10  application shall not be more than ninety days after the date of
    11  filing, or the date the application was deposited in the mail.
    12     (2)  On retirement for superannuation, a contributor shall be
    13  entitled to a retirement allowance throughout his life, which
    14  shall consist of (i) a member's annuity of equivalent actuarial
    15  value to his accumulated deductions, and (ii) a municipal
    16  annuity which shall be equal to, for current service, one one-
    17  hundredth of his final salary for each year of service while a
    18  member, and, in addition thereto for prior service in the case
    19  of an original member, one one-hundredth of his prior salary for
    20  each year of prior service.
    21     (3)  The superannuation retirement allowance provided in this
    22  section or the withdrawal allowance provided in section 311, as
    23  the case may be, payable to a joint coverage member after the
    24  age at which social security old age insurance benefits become
    25  payable shall be reduced by an amount equal to forty per cent of
    26  the primary insurance amount of social security paid or payable
    27  to him. Such reduction shall be subject to the following
    28  provisions: (i) the reduction in benefits in accordance with
    29  this clause (3) shall not be applied in the case of an annuitant
    30  until age sixty-five, unless such annuitant shall have elected
    19730S0471B1663                 - 51 -

     1  to receive social security benefits prior to age sixty-five,
     2  (ii) the eligibility of such member for the old age insurance
     3  benefit (primary insurance amount) and the amount of such old
     4  age insurance benefit upon which the reduction in his allowance
     5  shall be based, shall be determined by the board in accordance
     6  with the provisions of the Federal Social Security Act, in
     7  effect on the effective date of superannuation retirement, or
     8  withdrawal, of the member, except that in determining such
     9  eligibility and such amount only wages or compensation for
    10  service covered by the system shall be included, (iii) the
    11  reduction in benefits in accordance with this clause (3) shall
    12  apply only to that portion of benefits based on wages as defined
    13  in the Federal Insurance Contribution Act,(iv) the reduction of
    14  benefits in accordance with this clause (3) shall be limited to
    15  the municipal annuity calculated in accordance with clause (2)
    16  of this section, (v) the total sum including social security old
    17  age insurance benefits to be received upon superannuation
    18  retirement or withdrawal by a joint coverage member shall not be
    19  less than the allowance that he would be paid as a single
    20  coverage member, (vi) whenever the amount of the reduction from
    21  the superannuation retirement allowance or the withdrawal
    22  allowance shall have been once determined, it shall remain fixed
    23  for the duration of the allowance, except that any decrease in
    24  the old age insurance benefit under the Federal Social Security
    25  Act shall result in a corresponding decrease in the amount of
    26  the reduction in the allowance, (vii) the reduction provided for
    27  in this clause (3) shall not apply to disability allowances
    28  payable under section 313 of this act.
    29     (4)  In no event shall the municipal annuity exceed fifty per
    30  cent of the contributor's final salary.
    19730S0471B1663                 - 52 -

     1     (5)  Other provisions of this act notwithstanding, any member
     2  of a police force who was a member of a pension fund created
     3  under the provisions of the act of May 29, 1956 (P.L.1804,
     4  No.600), and who was entitled to retire at the age of fifty-five
     5  or sixty years after twenty years of total service, or at the
     6  age of fifty or fifty-five after twenty-five years of service,
     7  and to receive the pension provided by that act, shall have the
     8  same entitlement under the system created pursuant to this act.
     9  The municipal annuity, computed under subclause (ii) of clause
    10  (3) above, shall be increased as needed, in addition to the
    11  member's annuity, in order to pay any increased retirement
    12  allowance resulting from the provisions of the act.
    13     Section 310.  Death Benefits.--(a) A contributor to the
    14  system who is entitled to a superannuation retirement allowance
    15  by reason of having reached superannuation retirement age or who
    16  is entitled to a withdrawal allowance by reason of having
    17  completed twenty-four years of total service, may file with the
    18  board a written application for retirement in the form required
    19  for such application, but requesting that such retirement shall
    20  become effective as of the time of his death, electing one of
    21  the options provided in section 312 of this act and nominating a
    22  person having an insurable interest in his life under said
    23  option as required in said section. In all such cases, the
    24  application shall be held by the board until the contributor
    25  shall file a later application in the usual manner for a
    26  superannuation retirement allowance or until the death of the
    27  contributor occurring while in the municipal service, at which
    28  time his retirement shall become effective with the same
    29  benefits to the person designated as if the contributor had
    30  retired on the day immediately preceding his death.
    19730S0471B1663                 - 53 -

     1     (b)  A contributor to the system who is entitled to a
     2  superannuation retirement allowance by reason of having reached
     3  superannuation retirement age or who is entitled to a withdrawal
     4  allowance by reason of having completed twenty-four years of
     5  service and who has died in municipal service before filing with
     6  the board a written application for a superannuation retirement
     7  allowance as provided in subsection (a) of this section shall be
     8  considered as having elected Option 1 as provided in section 312
     9  as of the date of his death. In such event, payment under Option
    10  1 shall be made to the beneficiary designated in the nomination
    11  of beneficiary form on file with the board, or if said
    12  beneficiary has predeceased the contributor, to the legal
    13  representative of said contributor.
    14     Section 311.  Early Retirement.--Should a contributor be
    15  discontinued from service not voluntarily after having completed
    16  eight years of total service, or voluntarily after having
    17  completed twenty-four years of total service, but in either
    18  event before reaching superannuation retirement age, he shall be
    19  paid as he may elect, as follows:
    20     (1)  The full amount of his accumulated deductions standing
    21  to his credit in the member's account of the fund; or
    22     (2)  Upon the filing of an application in the manner outlined
    23  in section 309 (a) a retirement allowance which shall consist of
    24  (i) a member's annuity of equivalent actuarial value to his
    25  accumulated deductions, and (ii) a municipal annuity of
    26  equivalent actuarial value to the present value of a municipal
    27  annuity, beginning at superannuation retirement age, calculated
    28  in accordance with the provisions of section 309; or
    29     (3)  If qualified, a deferred retirement allowance as
    30  provided in section 314.
    19730S0471B1663                 - 54 -

     1     Section 312.  Options on Superannuation or Early
     2  Retirement.--At the time of his superannuation or early
     3  retirement, a contributor may elect to receive his benefits in a
     4  retirement allowance payable throughout his life, which shall be
     5  known as a single life annuity, or instead, he may elect, to
     6  receive the actuarial equivalent value at that time of his
     7  retirement allowance in a lesser allowance, payable throughout
     8  life with provisions that:
     9     (1)  Option 1.  If he shall die before receiving in payments
    10  the present value of his retirement allowance as it was at the
    11  time of his retirement, the balance, if less than five thousand
    12  dollars ($5,000) shall be paid in a lump sum to his legal
    13  representative, or to or in trust for his beneficiary. If the
    14  balance is five thousand dollars ($5,000) or more, the
    15  beneficiary may elect by application duly acknowledged and filed
    16  with the board to receive payment of such balance according to
    17  any of the following provisions: (i) a lump sum payment, (ii) an
    18  annuity having a present value equal to the balance payable,
    19  (iii) a lump sum payment and an annuity. Such annuity shall be
    20  of equivalent actuarial value to the balance payable less the
    21  amount of the lump sum payment specified by the beneficiary.
    22     (2)  Option 2.  Upon his death his retirement allowance shall
    23  be continued throughout the life of and paid to his survivor
    24  annuitant, if then living.
    25     (3)  Option 3.  Upon his death, one-half of his retirement
    26  allowance shall be continued throughout the life of and paid to
    27  his survivor annuitant, if then living.
    28     Section 313.  Disability Retirement.--(a) After a contributor
    29  has had ten or more years of total service, he may, upon
    30  application or on application of one acting in his behalf, or
    19730S0471B1663                 - 55 -

     1  upon application of a head of the department of the municipality
     2  by which he is employed, be retired by the board on a disability
     3  allowance if he is under superannuation retirement age, and on a
     4  superannuation retirement allowance if he has attained or passed
     5  such age, if the physician designated by the board, after
     6  medical examination of the contributor made at the place of
     7  residence of the contributor or at a place mutually agreed upon,
     8  shall certify to the board that the contributor is unable to
     9  engage in any gainful employment and that said contributor ought
    10  to be retired. When the disability of a contributor is
    11  determined to be service-connected, as defined in this act, no
    12  minimum period of service shall be required for eligibility.
    13  Application filing requirements shall be identical to those
    14  outlined in clause (1) of section 309.
    15     (b)  On retirement for disability, a member shall receive a
    16  retirement allowance which shall consist of:
    17     (1)  A member's annuity of equivalent actuarial value to his
    18  accumulated deductions;
    19     (2)  A municipal annuity of equivalent actuarial value to the
    20  present value of a municipal annuity, beginning at
    21  superannuation retirement age, calculated in accordance with the
    22  provisions of section 309; and
    23     (3)  A disability annuity payable from the total disability
    24  reserve account which, together with the member's annuity and
    25  the municipal annuity, shall be sufficient to produce a
    26  retirement allowance of thirty per cent of the contributor's
    27  final salary. Where the disability of the member is determined
    28  to be service-connected, as defined in this act, the retirement
    29  allowance shall equal fifty per cent of his final salary. The
    30  disability annuity shall be reduced by the amount of any
    19730S0471B1663                 - 56 -

     1  payments for which the member shall be eligible under the act of
     2  June 2, 1915 (P.L.736, No.338), known as "The Pennsylvania
     3  Workmen's Compensation Act," or the act of June 21, 1939
     4  (P.L.566, No.284), known as "The Pennsylvania Occupational
     5  Disease Act."
     6     (c)  Once every year the board may require any disability
     7  annuitant, while still under superannuation retirement age, to
     8  undergo medical examination by a physician designated by the
     9  board, and such examination shall be made at the place of
    10  residence of the annuitant or other place mutually agreed upon.
    11  Should the physician report and certify to the board that such
    12  disabled annuitant is no longer physically or mentally
    13  incapacitated for the performance of duty and is able to engage
    14  in a gainful occupation, then his disability retirement
    15  allowance shall be discontinued, and in lieu thereof an early
    16  involuntary retirement allowance shall at that time be granted
    17  as if such person had been retired not voluntarily, if such
    18  person shall have eight or more years of total service.
    19     (d)  Should a disability annuitant, while under
    20  superannuation retirement age, refuse to submit to at least one
    21  medical examination in any year by a physician designated by the
    22  board, his disability retirement allowance shall be discontinued
    23  until withdrawal of such refusal, and should such refusal
    24  continue for one year, then all his rights in and to any
    25  disability retirement allowance or for early involuntary
    26  retirement allowance provided by this act shall be forfeited.
    27     (e)  Any contributor entitled to retire for disability may,
    28  in lieu of such retirement, if he has eight or more years of
    29  total service, elect to retire not voluntarily under the
    30  provisions of this act.
    19730S0471B1663                 - 57 -

     1     (f)  Should a disability annuitant die before the total
     2  disability retirement allowance received shall be at least equal
     3  to the amount of his accumulated deductions at the time of
     4  disability retirement, then the board shall pay to the named
     5  beneficiary, if living, or if the named beneficiary predeceased
     6  the annuitant, or no beneficiary was named, then to the
     7  annuitant's estate, an amount equal to the difference between
     8  such total retirement allowance received and the annuitant's
     9  accumulated deductions, and if such difference is less than one
    10  hundred dollars ($100) and no letters have been taken out on the
    11  estate within six months after death, then such difference may
    12  be paid to the undertaker or to any person or municipality who
    13  or which shall have paid the claim of the undertaker.
    14     Section 314.  Vesting.--(a) Should a contributor, before
    15  reaching superannuation retirement age and after having
    16  completed twelve years of total service, for any reason cease to
    17  be a municipal fireman or a municipal policeman, he shall be
    18  entitled to vest his retirement benefits until he attains
    19  superannuation retirement age, by filing with the board a
    20  written notice of his intentions to vest, within ninety days of
    21  the date of his termination.
    22     (b)  A contributor, who was terminated not voluntarily, may
    23  elect, after he has vested, to be paid as follows:
    24     (1)  The full amount of the accumulated deductions, including
    25  interest to the date of termination, standing to his credit in
    26  the member's account of the fund; or
    27     (2)  An early retirement allowance as computed under the
    28  provisions of clause (2) of section 311; or
    29     (3)  Upon reaching superannuation retirement age, a
    30  superannuation retirement allowance as computed under the
    19730S0471B1663                 - 58 -

     1  provisions of section 309.
     2     (c)  A contributor, who voluntarily terminated his service,
     3  may elect, after he has vested, to be paid as follows:
     4     (1)  The full amount of the accumulated deductions, including
     5  interest to the date of termination, standing to his credit in
     6  the member's account of the fund; or
     7     (2)  If the contributor has completed twenty-four years or
     8  more of total service, a voluntary withdrawal allowance computed
     9  in accordance with the provisions of section 311; or
    10     (3)  Upon reaching superannuation retirement age, a
    11  superannuation retirement allowance as computed under the
    12  provisions of section 309.
    13     (d)  Should a contributor, who has vested, die before he
    14  becomes eligible for a retirement allowance, the full amount of
    15  the accumulated deductions, including interest to the date of
    16  his termination, standing to his credit in the member's account
    17  of the fund shall be paid to his estate or to his named
    18  beneficiary in accordance with the provisions of subsection (d)
    19  of section 308.
    20     Section 315.  Compliance.--When a municipality joins the
    21  system, its action shall be construed as compliance with the
    22  provisions of the act of May 29, 1956 (P.L.1804, No.600), or any
    23  other statute requiring the creation of a pension or retirement
    24  system for firemen or police.
    25     Section 316.  Withdrawal Provisions.--At any time within       <--
    26  three years after a municipality has initially joined the
    27  retirement system created or continued under this Article III it
    28  may withdraw from the system if it has met all of its financial
    29  obligations to the fund. The member's contributions of the
    30  withdrawing municipality's employes shall be returned to the
    19730S0471B1663                 - 59 -

     1  members. No refund of any contributions paid by the municipality
     2  shall be made and these moneys shall remain in the Pennsylvania
     3  Municipal Retirement Fund for the benefit of the remaining
     4  members. Any such withdrawal must be effected through an
     5  ordinance or resolution containing the affirmative vote of
     6  seventy-five per cent of all of the members of its legislative
     7  body and if the legislative body is composed of only three
     8  persons, then by an unanimous affirmative vote. In all cases an
     9  affirmative vote approving such action by seventy-five per cent
    10  of the municipal employes affected by the ordinance or
    11  resolution must be certified by the municipality to the board.
    12     Thereafter, no municipality, after it has joined the system
    13  under the provisions of this Article III, shall be permitted to
    14  withdraw therefrom, and, in the case of failure to make payments
    15  as required by this act, the Commonwealth shall withhold payment
    16  to the municipality any funds to which the municipality may be
    17  entitled for pension purposes. The board may recover any sums
    18  due to the fund by suit at law, or other appropriate remedy.
    19     SECTION 316.  WITHDRAWAL PROVISIONS.--A MUNICIPALITY WHICH     <--
    20  HAS JOINED THE RETIREMENT SYSTEM CREATED OR CONTINUED UNDER THIS
    21  ARTICLE III MAY, FOR GOOD AND STATED CAUSE, FILE AN APPLICATION
    22  WITH THE BOARD FOR PERMISSION TO WITHDRAW FROM THE SYSTEM IF IT
    23  MEETS ALL OF THE FOLLOWING REQUIREMENTS:
    24     (1)  THE MUNICIPALITY HAS BEEN ENROLLED IN THE SYSTEM FOR A
    25  PERIOD OF AT LEAST FIVE YEARS.
    26     (2)  THE MUNICIPALITY HAS MET ALL OF ITS FINANCIAL
    27  OBLIGATIONS TO THE SYSTEM.
    28     (3)  THE LEGISLATIVE BODY OF THE MUNICIPALITY HAS PASSED AN
    29  ORDINANCE OR RESOLUTION SIGNIFYING ITS INTENTION TO WITHDRAW
    30  FROM THE SYSTEM.
    19730S0471B1663                 - 60 -

     1     (4)  THE MUNICIPALITY HAS CERTIFIED TO THE BOARD THAT AN
     2  AFFIRMATIVE VOTE APPROVING WITHDRAWAL FROM THE SYSTEM HAD BEEN
     3  OBTAINED FROM AT LEAST SEVENTY-FIVE PER CENT OF ALL OF THE
     4  MUNICIPAL EMPLOYES AFFECTED BY THE ORDINANCE OR RESOLUTION.
     5     THE BOARD SHALL WITHIN NINETY DAYS OF ITS RECEIPT, TAKE
     6  ACTION ON AN APPLICATION FILED BY A MUNICIPALITY FOR PERMISSION
     7  TO WITHDRAW FROM THE SYSTEM. IF THE APPLICATION IS APPROVED THE
     8  WITHDRAWING MUNICIPALITY SHALL BE ENTITLED TO RECEIVE A NET
     9  REFUND OF THE AMOUNTS THEN STANDING TO THE CREDIT OF THE
    10  MUNICIPALITY IN THE MEMBER'S ACCOUNT, THE MUNICIPAL ACCOUNT AND
    11  THE RETIRED MEMBER'S RESERVE ACCOUNTS OF THE SYSTEM. IN NO EVENT
    12  SHALL THE TOTAL AMOUNT OF THE NET REFUND TO THE MUNICIPALITY
    13  EXCEED THE PRO RATA INTEREST OF THE WITHDRAWING MUNICIPALITY IN
    14  THE NET ASSETS OF THE ENTIRE FUND BASED ON THE MARKET VALUE OF
    15  THE INVESTMENTS OF THE FUND AS OF THE DATE OF RECEIPT OF THE
    16  APPLICATION FOR PERMISSION TO WITHDRAW. THE LIABILITY FOR THE
    17  CONTINUATION OF RETIREMENT OR DISABILITY ALLOWANCES BEING PAID
    18  FROM THE FUND SHALL ATTACH AGAINST THE WITHDRAWING MUNICIPALITY
    19  AND BE PAID FROM FUNDS TRANSFERRED TO A RETIREMENT SYSTEM
    20  ESTABLISHED SUBSEQUENT TO ITS WITHDRAWAL FROM THE SYSTEM OR FROM
    21  MONEYS APPROPRIATED ANNUALLY FROM TAX REVENUES SUFFICIENT TO PAY
    22  THE SAME. IF THE BOARD DISAPPROVES THE APPLICATION OF THE
    23  MUNICIPALITY FOR PERMISSION TO WITHDRAW FROM THE SYSTEM THE
    24  BOARD SHALL PROMPTLY NOTIFY THE MUNICIPALITY OF ITS DECISION AND
    25  ADVISE THE MUNICIPALITY OF THE BOARD'S REASON OR REASONS FOR
    26  DISAPPROVAL. THE BOARD SHALL ESTABLISH RULES AND REGULATIONS, IN
    27  ACCORDANCE WITH THE PROVISIONS OF CLAUSE (10) OF SECTION 104 OF
    28  THIS ACT, GOVERNING THE DETAILS OF THE PROCEDURES TO BE FOLLOWED
    29  IN THE WITHDRAWAL OF MUNICIPALITIES FROM THE SYSTEM.
    30     Section 317.  Procedures for Amending Contracts.--Any
    19730S0471B1663                 - 61 -

     1  municipality which has joined the system under the provisions of
     2  this Article III may, with the approval of the board, enter into
     3  a contract with the board as outlined in Article IV of this act,
     4  to increase any of the benefits enumerated in Article IV. The
     5  board shall not enter into any contract with any municipality
     6  which decreases benefits, nor shall it enter into any contract
     7  with a municipality which provides for benefits in excess of or
     8  minimum members contribution rates less than those available to
     9  it under any other existing law pertaining to the establishment
    10  of retirement systems for that class of municipality. Before the
    11  board approves any such contract it shall first determine,
    12  through its actuary, that the plan outlined in the contract is
    13  actuarially sound. Any member municipality which elects to enter
    14  into a contract for increased benefits which would result in an
    15  increase in its employes contribution rates shall first obtain
    16  the written consent of at least seventy-five per cent of its
    17  then member employes. Additional costs for contracted increases
    18  in benefits shall become the responsibility of the municipality
    19  and/or the members as specified in the contract.
    20                             ARTICLE IV
    21                     OPTIONAL RETIREMENT PLANS
    22     Section 401.  Purpose.--This article shall provide for the
    23  enrollment of those municipalities in the Pennsylvania Municipal
    24  Retirement System which want to offer retirement benefits to
    25  their employes different from those available under Article II
    26  and Article III of this act. It shall also provide for
    27  increasing member benefits for municipalities formerly enrolled
    28  under the provisions of Article II and Article III of this act.
    29     Section 402.  Existing Local Retirement Systems and
    30  Compulsory and Optional Membership.--Where a municipality elects
    19730S0471B1663                 - 62 -

     1  to join the system established by this act, and is then
     2  maintaining a retirement or pension system or systems covering
     3  its employes in whole or in part, those employes so covered, and
     4  employes thereafter eligible to join such pension system, shall
     5  not become members of the retirement system established by this
     6  act, unless at the time the municipality elects to join the
     7  system, the members of such existing retirement or pension        <--
     8  system shall, by the affirmative vote of seventy-five per cent
     9  of all the members thereof, EACH SUCH EXISTING RETIREMENT OR      <--
    10  PENSION SYSTEM SHALL, BY THE AFFIRMATIVE VOTE OF SEVENTY-FIVE
    11  PER CENT OF ALL THE MEMBERS OF EACH PENSION SYSTEM, elect to be
    12  covered by the retirement system established by this act. At any
    13  time thereafter, within a period of three years after the
    14  municipality has elected to join the system, but not thereafter,
    15  the members of an existing retirement or pension system may, in
    16  like manner, elect to join the system established by this act.
    17  In any such case, provisions may be made for the transfer of
    18  moneys and securities in its retirement or pension fund or
    19  years. FUNDS, IN WHOLE OR IN PART, TO THE FUND ESTABLISHED BY     <--
    20  THIS ACT. SECURITIES SO TRANSFERRED SHALL BE ONLY THOSE
    21  ACCEPTABLE TO THE BOARD. SECURITIES NOT SO ACCEPTABLE SHALL BE
    22  CONVERTED INTO CASH, AND SAID CASH TRANSFERRED TO THE FUND
    23  CREATED BY THIS ACT. IN ANY SUCH TRANSFER, PROVISION SHALL BE
    24  MADE TO CREDIT THE ACCUMULATED DEDUCTIONS OF EACH MEMBER, AT
    25  LEAST THE AMOUNT HE HAS PAID INTO THE RETIREMENT OR PENSION
    26  SYSTEM OF THE MUNICIPALITY, WHICH MONEYS SHALL BE CREDITED
    27  AGAINST THE PRIOR SERVICE CONTRIBUTIONS OF SUCH MEMBER, OR A
    28  MUNICIPALITY MAY TURN OVER TO THE RETIREMENT SYSTEM CREATED BY
    29  THIS ACT ANY EXISTING LOCAL PENSION SYSTEM ON A COMPLETELY
    30  FUNDED BASIS, AS TO PENSIONERS AND PENSION CREDITS OF MEMBERS
    19730S0471B1663                 - 63 -

     1  RELATED TO PRIOR SERVICE TO THE DATE OF TRANSFER, OR ON A
     2  PARTIALLY FUNDED BASIS IF THE MUNICIPALITY PAYS ANNUALLY INTO
     3  THE RETIREMENT SYSTEM AMOUNTS SUFFICIENT TO COMPLETELY LIQUIDATE
     4  THE MUNICIPALITY'S LIABILITY FOR PRIOR SERVICE WITHIN A PERIOD
     5  NOT TO EXCEED THIRTY YEARS.
     6     No liability, on account of retirement allowances or pensions
     7  being paid from any retirement or pension fund of the
     8  municipality, shall attach against the fund, except as provided
     9  in the agreement, making a transfer of an existing system in
    10  accordance with this section. The liability to continue payment
    11  of pensions not so transferred shall attach against the
    12  municipality, which shall annually make appropriations from its
    13  tax revenues sufficient to pay the same. In cases where workers
    14  covered by an existing retirement or pension system elect to
    15  join the system created by this act, the election to join shall
    16  be deemed to have been made at the time the municipality elected
    17  to join the system, and the liabilities of the municipality
    18  shall be fixed accordingly.
    19     If a municipality elects to join the system under the
    20  provisions of this Article IV, it shall first negotiate a
    21  contract with the board, acceptable to both the municipality and
    22  the board, which shall set forth all the specific details of
    23  municipal and member contribution rates and benefits. The
    24  municipality shall then pass an ordinance or resolution electing
    25  to join the system, and confirming the terms of the contract by
    26  reference thereto. Separate contracts and separate resolutions
    27  shall be executed for each class of employes, namely municipal
    28  employes, municipal firemen and municipal police in those cases
    29  where the municipality elects to bring more than one class of
    30  its employes into the system.
    19730S0471B1663                 - 64 -

     1     When a municipality elects to enroll its municipal employes
     2  into the system, then each officer other than elected officers,
     3  and each municipal employe thereof, employed on a permanent
     4  basis, shall be required to become a member of the system. Each
     5  municipality shall determine whether membership in said system
     6  for elected officials and employes hired on a temporary or
     7  seasonal basis shall be compulsory, optional or prohibited.
     8  Where membership may be optional with an elected officer or an
     9  employe hired on a temporary or seasonal basis, an election to
    10  join the system must be made within one year after the
    11  municipality elected to join the system or within one year after
    12  the officer or temporary or seasonal employe first entered the
    13  service of the municipality. Officers and employes paid only on
    14  a fee basis shall not be eligible to join the system.
    15     When a municipality elects to enroll its municipal firemen or
    16  its municipal police into the system, then each municipal
    17  fireman or each municipal policeman, as defined in section 102
    18  of this act, shall be required to become a member of the system.
    19     When a municipality has established a policy of placing new
    20  employes on a probationary status it may elect to refrain from
    21  enrolling such employes into the system for a period of up to
    22  six months ONE YEAR from the date the probationary employe first  <--
    23  entered the service of the municipality. In such cases service
    24  credits shall not be earned by the employe for probationary time
    25  served prior to enrollment.
    26     Section 403.  Contract Provisions.--Any contract for an
    27  optional retirement plan entered into between a municipality and
    28  the board shall not provide for any benefits in excess of or
    29  minimum member's contribution rates less than those available to
    30  that municipality for that class of employes under any existing
    19730S0471B1663                 - 65 -

     1  law pertaining to the establishment of a retirement or pension
     2  system.
     3     The contract shall specifically state the following terms and
     4  conditions:
     5     (1)  The superannuation retirement age at which a member
     6  shall become eligible for a full normal retirement allowance in
     7  accordance with the formula specified in the contract.
     8     (2)  Length of service requirements which must be met before
     9  a member becomes eligible for either a superannuation retirement
    10  allowance, an early retirement allowance and the method of
    11  determining any reduction factors involved in the computation of
    12  the amount of the allowance because of retirement prior to
    13  attaining superannuation age.
    14     (3)  Provisions for the refunding of accumulated deductions
    15  to employes who leave the service of the municipality before
    16  they become eligible for any type of retirement benefit and
    17  whether or not the employe shall be entitled to interest earned
    18  on contributions.
    19     (4)  Provisions relating to the types and amounts of
    20  disability retirement benefits for which a member may become
    21  eligible, and the qualifications therefore.
    22     (5)  The availability of any vesting or deferred benefits to
    23  which a member may become entitled.
    24     (6)  A description of the amount and the manner in which a
    25  member may qualify for any death benefits, both before and after
    26  retirement, including any prescribed payments to widows or
    27  children under eighteen years of age.
    28     (7)  The formula used to determine the amount of normal
    29  retirement benefits, including an explanation of the salary or
    30  compensation to be used in the computations, and a statement
    19730S0471B1663                 - 66 -

     1  concerning any social security offset provisions included in the
     2  contract.
     3     (8)  A description of any optional methods of payment of
     4  retirement allowances available to a member.
     5     (9)  Any provisions for cost-of-living increases, and
     6  limitations thereon, which may be included.
     7     (10)  The manner in which the rate or rates of employe
     8  contributions shall be determined, together with any provisions
     9  for additional voluntary contributions.
    10     (11)  The manner in which the rates of contribution from the
    11  municipalities shall be determined.
    12     (12)  The manner in which costs for prior service for which
    13  the municipality is willing to assume liability shall be
    14  determined, with respect to both the municipality's share and
    15  the member's share, if any.
    16     (13)  The manner in which credit for any allowable military
    17  service shall be determined and the manner in which costs of
    18  service shall be paid.
    19     (14)  Any other information which might have a bearing on the
    20  costs or benefits of the retirement plan which might be required
    21  by the board in the administration of the plan.
    22     Section 404.  Determination of Municipal Liability.--The
    23  actuary shall, as soon as may be, determine the present value of
    24  the liability of each municipality for any prior service credits
    25  it has elected to extend to its original members, and shall
    26  establish an amount payable annually over a period not exceeding
    27  thirty years, through which payments such prior service
    28  liability may be funded. Each municipality shall have the option
    29  to spread the payment of such prior service liability over such
    30  period of years.
    19730S0471B1663                 - 67 -

     1     The municipal liability to be determined by the actuary shall
     2  be based upon credit for those years of prior service toward the
     3  municipal annuity of each original member, for which the
     4  municipality has agreed to pay, plus any liability for payment
     5  of the member's contributions for the prior service or any
     6  portion thereof of each original member which the municipality
     7  has agreed to pay.
     8     The actuary shall also determine, from time to time, the
     9  amount which shall be contributed annually by each municipality
    10  for service credits of original and new members subsequent to
    11  the time the municipality joined the system, and the additional
    12  amount which shall be contributed annually by each municipality
    13  toward a reserve account for disability allowance payable to
    14  original and new members, in order that all future service
    15  liability may be fully funded on an actuarial basis.
    16     The amounts so determined by the actuary may be expressed in
    17  a percentage of the payroll of the municipality covering its
    18  contributing members.
    19     The payments made by the State Treasurer to the treasurer of
    20  the municipality from moneys received from taxes paid upon
    21  premiums by foreign fire insurance companies for purposes of
    22  pension, retirement or disability benefits for municipal firemen
    23  shall be used as follows: (i) to reduce the unfunded liability
    24  or, after such liability has been funded, (ii) to apply against
    25  the annual obligation of the municipality for future service and
    26  disability reserve costs, and (iii) to reduce member
    27  contributions. It shall be the duty of the governing body to
    28  apply such payments in accordance with the provisions of this
    29  act.
    30     The payments made by the State Treasurer to the treasurer of
    19730S0471B1663                 - 68 -

     1  the municipality from the moneys received from taxes paid upon
     2  premiums by foreign casualty insurance companies for purposes of
     3  pension, retirement or disability benefits for municipal
     4  policemen shall be used as follows: (i) to reduce the unfunded
     5  liability or, after such liability has been funded, (ii) to
     6  apply against the annual obligation of the municipality for
     7  future service and disability reserve costs, and (iii) to reduce
     8  member contributions. It shall be the duty of the governing body
     9  to apply such payments in accordance with the provisions of this
    10  act.
    11     The cost of making the valuations required by this section
    12  and in the transfer of any existing pension system of any
    13  municipality, shall be part of the costs of administration of
    14  this act.
    15     Section 405.  Contributions by Members; Consolidation of
    16  Credits; Change of Employment.--Each member of the system shall
    17  be required to contribute to the fund such per cent of his
    18  actual salary or compensation, including fees where paid in part
    19  on a fee basis, as specified in the contract, which
    20  contributions shall be paid into the fund by the municipality
    21  through payroll deductions in such manner and at such time as
    22  the board may by rule and regulation determine.
    23     If such provision is contained in the contract between the
    24  municipality and the board, each member may increase his
    25  member's annuity by electing to make such additional voluntary
    26  contributions as prescribed therein.
    27     When a member is employed by more than one municipality, he
    28  shall be required to make contributions on account of his salary
    29  paid by each municipality. In such cases the board shall provide
    30  for the consolidation of credits of the contributor, and upon
    19730S0471B1663                 - 69 -

     1  his retirement, for a consolidated retirement allowance.
     2     When a contributor leaves the employ of a municipality which
     3  has joined the system, and enters into the employ of another
     4  municipality which has also joined the system, his service
     5  credits shall remain unimpaired, but in such cases any unpaid
     6  municipal liability for prior service shall be prorated by the
     7  board between the municipalities on an equitable basis.
     8     Section 406.  Withdrawal; Return to Service; Death in
     9  Service.--(a) Should a contributor, before reaching
    10  superannuation retirement age, for any reason terminate his
    11  employment with the municipality, he shall receive a refund of
    12  his contributions in full, either with or without interest
    13  earned as specified in the contract, unless he may be entitled
    14  to a retirement allowance for early retirement, and elects to
    15  take such retirement allowance. Should such former contributor
    16  thereafter return to the service of the same municipality and
    17  restore to the fund in such manner as may be agreed upon by such
    18  person and the board, his withdrawn contributions as they were
    19  at the time of his separation from service, his annuity rights
    20  as they existed at the time of separation from service, shall be
    21  restored and his obligations as a member shall begin again. The
    22  rate of contribution of such returning member shall be the same
    23  as it was at the time he separated from service.
    24     (b)  Should a contributor, having attained or passed
    25  superannuation age, elect, upon leaving the service of the
    26  member municipality, not to claim the retirement allowance to
    27  which he is entitled, he shall, upon written application, be
    28  paid by the board the full amount of his contributions standing
    29  to his credit in the member's account, either with or without
    30  interest earned as stipulated in the contract.
    19730S0471B1663                 - 70 -

     1     (c)  Should a person who has been retired on a retirement
     2  allowance under this act, return to employment on a regular
     3  full-time basis in the same municipality, his retirement
     4  allowance shall cease, and all his rights as they existed at the
     5  time of retirement shall be restored, and such person may by
     6  further service and further payroll deductions add to such
     7  rights on account of future retirement. For the purposes of this
     8  section if a person is reemployed on a temporary or seasonal
     9  basis and his gross post-retirement earnings from such
    10  reemployment during the calendar year are less than two thousand
    11  one hundred dollars ($2,100) or such other maximum as the board
    12  may establish, he shall not be deemed reemployed, but if and
    13  when his gross post-retirement earnings exceed two thousand one
    14  hundred dollars ($2,100) or such other maximum as the board may
    15  establish in any calendar year he shall not be entitled to
    16  receive his retirement allowance for that month or any
    17  subsequent month in the calendar year in which he continues in
    18  service. The municipality is required to notify the board
    19  immediately of the reemployment status of any retired former
    20  employe and file separate monthly reports of his gross earnings
    21  as prescribed by the board.
    22     (d)  Should a contributor die while in service, any death or
    23  survivor benefits for which he may be eligible under the
    24  provisions of the contract shall be paid in accordance with the
    25  terms of the contract.
    26     (e)  Should a contributor die while in service, and before
    27  becoming eligible for any other benefits contained in the
    28  contract, the full amount of his contributions, either with or
    29  without interest earned as stipulated in the contract, shall be
    30  paid to his estate, or to such person, if living, as he shall
    19730S0471B1663                 - 71 -

     1  have designated in writing, filed with the board as his
     2  beneficiary. In case any contributor has failed to designate a
     3  beneficiary, or if the named beneficiary has predeceased the
     4  member and no such successor beneficiary has been named, and
     5  upon the death in service shall have less than one hundred
     6  dollars ($100) in accumulated deductions standing to his credit,
     7  the board may, if letters testamentary or of administration have
     8  not been taken out on his estate within six months after death,
     9  pay such accumulated deductions on the claim of the undertaker,
    10  or to any person or municipality which shall have paid the claim
    11  of the undertaker.
    12     Section 407.  Superannuation Retirement.--Retirement for
    13  superannuation shall be as follows:
    14     (1)  Any contributor who has reached superannuation
    15  retirement age may retire for superannuation by filing with the
    16  board a written statement, duly attested, setting forth on what
    17  date he desires to be retired. Said application shall make the
    18  superannuation retirement allowance effective on the date so
    19  specified, if such application was filed in the office of the
    20  board or deposited in the United States mail, addressed to the
    21  board, before the date specified in the application and before
    22  the death of the contributor, but the date so specified in the
    23  application shall not be more than ninety days after the date of
    24  filing, or the date the application was deposited in the mail.
    25     (2)  On retirement for superannuation, a contributor shall be
    26  entitled to a retirement allowance throughout his life, which
    27  shall consist of an amount computed in accordance with the
    28  formula specified in the contract.
    29     Section 408.  Early Retirement.--Should a member be
    30  discontinued from service not voluntarily, after having
    19730S0471B1663                 - 72 -

     1  completed a required number of years of total service, or
     2  voluntarily after having completed a required number of years of
     3  total service, but in either event before reaching
     4  superannuation retirement age, he shall be paid, as he may
     5  elect, as follows:
     6     (1)  The full amount of the accumulated deductions standing
     7  to his credit in the member's account of the fund; or
     8     (2)  The early retirement allowance, if any, specified in the
     9  contract.
    10     Section 409.  Options on Superannuation or Early
    11  Retirement.--At the time of his superannuation or early
    12  retirement, a contributor may elect to receive his benefits in a
    13  retirement allowance payable throughout his life, which shall be
    14  known as a single life annuity, or instead, he may elect to
    15  receive the actuarial equivalent at that time of his retirement
    16  allowance in a lesser allowance, payable throughout life with
    17  provisions that:
    18     (1)  Option 1.  If he shall die before receiving in payments
    19  the present value of his retirement allowance as it was at the
    20  time of his retirement, the balance, if less than five thousand
    21  dollars ($5,000), shall be paid in a lump sum to his legal
    22  representative, or to or in trust for his beneficiary. If the
    23  balance is five thousand dollars ($5,000) or more, the
    24  beneficiary may elect by application duly acknowledged and filed
    25  with the board to receive payment of such balance according to
    26  any one of the following provisions: (i) a lump sum payment,
    27  (ii) an annuity having a present value equal to the balance
    28  payable, (iii) a lump sum payment and an annuity. Such annuity
    29  shall be of equivalent actuarial value to the balance payable
    30  less the amount of the lump sum payment specified by the
    19730S0471B1663                 - 73 -

     1  beneficiary.
     2     (2)  Option 2.  Upon his death, his retirement allowance
     3  shall be continued throughout the life of and paid to his
     4  survivor annuitant, if then living.
     5     (3)  Option 3.  Upon his death, one-half of his retirement
     6  allowance shall be continued throughout the life of and paid to
     7  his survivor annuitant, if then living.
     8     (4)  Option 4.  Any other optional form of payment contained
     9  in the contract.
    10     Section 410.  Vesting.--Provisions for vesting may be
    11  included in the contract between the municipality and the board.
    12  When such provision is made it shall mean that a contributor who
    13  terminates his employment with the municipality after a
    14  stipulated age or length of service, or both, may, if he so
    15  elects in writing, leave his contributions, as credited to his
    16  account, in the fund, and, upon reaching superannuation
    17  retirement age, receive a superannuation retirement allowance.
    18     Section 411.  Disability Retirement.--(a) After a member has
    19  had the required number of years of total service as stated in
    20  the contract, he may, upon application or on the application of
    21  one acting in his behalf, or upon application of a head of the
    22  department of the municipality by which he is employed, be
    23  retired by the board on a disability allowance if he is under
    24  superannuation retirement age, and on a superannuation
    25  retirement allowance if he has attained or passed such age, if
    26  the physician designated by the board, after medical examination
    27  of the member made at the place of residence of the member or at
    28  a place mutually agreed upon, shall certify to the board that
    29  the member is unable to engage in any gainful employment and
    30  that said member ought to be retired. Where the disability of a
    19730S0471B1663                 - 74 -

     1  member is determined to be service-connected, as defined in this
     2  act, no minimum period of service shall be required for
     3  eligibility. Requirements for filing applications shall be
     4  identical to those outlined in clause (1) of section 407.
     5     (b)  On retirement for disability a member shall receive a
     6  retirement allowance which shall consist of an amount computed
     7  in accordance with the formula specified in the contract.
     8     (c)  Once every year the board may require any disability
     9  annuitant, while still under superannuation retirement age, to
    10  undergo medical examination by a physician designated by the
    11  board. Such examination shall be made at the place of residence
    12  of the beneficiary or other place mutually agreed upon. Should
    13  the physician report and certify to the board that such
    14  disability beneficiary is no longer physically or mentally
    15  incapacitated for the performance of duty and is able to engage
    16  in a gainful occupation, then his disability retirement
    17  allowance shall be discontinued, and in lieu thereof an early
    18  involuntary retirement allowance shall at that time be granted
    19  as if such person had been retired not voluntarily, if such a
    20  provision is included in the contract and if such person shall
    21  have had the required number of years of total service as stated
    22  in the contract.
    23     (d)  Should a disability annuitant, while under
    24  superannuation retirement age, refuse to submit to at least one
    25  medical examination in any year by a physician designated by the
    26  board, his disability retirement allowance shall be discontinued
    27  until the withdrawal of such refusal, and should such refusal
    28  continue for one year, then all his right in and to any
    29  disability retirement allowance or for early involuntary
    30  retirement allowance provided for by this act, shall be
    19730S0471B1663                 - 75 -

     1  forfeited.
     2     (e)  Any contributor entitled to retire for disability may,
     3  in lieu of such retirement, if he has a required number of years
     4  of total service, elect to retire not voluntarily under the
     5  provisions of this act if such provisions are included in the
     6  contract.
     7     (f)  Should a disability annuitant die before the total
     8  disability retirement allowance received shall be at least equal
     9  to the amount of the credit in his member's account at the time
    10  of disability retirement, then the board shall pay to the named
    11  beneficiary, if living, or if the beneficiary predeceased the
    12  annuitant, or no beneficiary was named, then to the annuitant's
    13  estate, an amount equal to the difference between such total
    14  retirement allowance received and the annuitant's accumulated
    15  deductions, and if such difference is less than one hundred
    16  dollars ($100) and no letters have been taken out on the estate
    17  within six months after death, then such difference may be paid
    18  to the undertaker or to any person or municipality who or which
    19  shall have paid the claim of the undertaker. If the contract
    20  between the municipality and the board provides that upon the
    21  death of a disability annuitant payments in a specific amount
    22  shall be continued to certain beneficiaries, then the provisions
    23  of subsection (f), above, shall not apply and payments shall be
    24  made in accordance with the terms of the contract.
    25     Section 412.  Withdrawal Provisions.--At any time within       <--
    26  three years after a municipality has initially joined the
    27  retirement system created under this Article IV it may withdraw
    28  from the system if it has met all of its financial obligations
    29  to the fund. The member's contributions of the withdrawing
    30  municipality's employes shall be returned to the members. No
    19730S0471B1663                 - 76 -

     1  refund of any contributions paid by the municipality shall be
     2  made and these moneys shall remain in the Pennsylvania Municipal
     3  Retirement Fund for the benefit of the remaining members. Any
     4  such withdrawal must be effected through an ordinance or
     5  resolution containing the affirmative vote of seventy-five per
     6  cent of all of the members of its legislative body and if the
     7  legislative body is composed of only three persons, then by an
     8  unanimous affirmative vote. In all cases an affirmative vote
     9  approving such action by seventy-five per cent of the municipal
    10  employes affected by the ordinance or resolution must be
    11  certified by the municipality to the board.
    12     Thereafter, no municipality, after it has joined the system
    13  under the provisions of this Article IV, shall be permitted to
    14  withdraw therefrom, and, in the case of failure to make payments
    15  as required by this act, the Commonwealth shall withhold payment
    16  to the municipality any funds to which the municipality may be
    17  entitled for pension purposes. The board may recover any sums
    18  due to the fund by suit at law, or other appropriate remedy.
    19     SECTION 412.  WITHDRAWL PROVISIONS.--A MUNICIPALITY WHICH HAS  <--
    20  JOINED THE RETIREMENT SYSTEM CREATED OR CONTINUED UNDER THIS
    21  ARTICLE IV MAY, FOR GOOD AND STATED CAUSE, FILE AN APPLICATION
    22  WITH THE BOARD FOR PERMISSION TO WITHDRAW FROM THE SYSTEM IF IT
    23  MEETS ALL OF THE FOLLOWING REQUIREMENTS:
    24     (1)  THE MUNICIPALITY HAS BEEN ENROLLED IN THE SYSTEM FOR A
    25  PERIOD OF AT LEAST FIVE YEARS.
    26     (2)  THE MUNICIPALITY HAS MET ALL OF ITS FINANCIAL
    27  OBLIGATIONS TO THE SYSTEM.
    28     (3)  THE LEGISLATIVE BODY OF THE MUNICIPALITY HAS PASSED AN
    29  ORDINANCE OR RESOLUTION SIGNIFYING ITS INTENTION TO WITHDRAW
    30  FROM THE SYSTEM.
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     1     (4)  THE MUNICIPALITY HAS CERTIFIED TO THE BOARD THAT AN
     2  AFFIRMATIVE VOTE APPROVING WITHDRAWAL FROM THE SYSTEM HAD BEEN
     3  OBTAINED FROM AT LEAST SEVENTY-FIVE PER CENT OF ALL OF THE
     4  MUNICIPAL EMPLOYES AFFECTED BY THE ORDINANCE OR RESOLUTION.
     5     THE BOARD SHALL WITHIN NINETY DAYS OF ITS RECEIPT, TAKE
     6  ACTION ON AN APPLICATION FILED BY A MUNICIPALITY FOR PERMISSION
     7  TO WITHDRAW FROM THE SYSTEM. IF THE APPLICATION IS APPROVED THE
     8  WITHDRAWING MUNICIPALITY SHALL BE ENTITLED TO RECEIVE A NET
     9  REFUND OF THE AMOUNTS THEN STANDING TO THE CREDIT OF THE
    10  MUNICIPALITY IN THE MEMBER'S ACCOUNT, THE MUNICIPAL ACCOUNT AND
    11  THE RETIRED MEMBER'S RESERVE ACCOUNTS OF THE SYSTEM. IN NO EVENT
    12  SHALL THE TOTAL AMOUNT OF THE NET REFUND TO THE MUNICIPALITY
    13  EXCEED THE PRO RATA INTEREST OF THE WITHDRAWING MUNICIPALITY IN
    14  THE NET ASSETS OF THE ENTIRE FUND BASED ON THE MARKET VALUE OF
    15  THE INVESTMENTS OF THE FUND AS OF THE DATE OF RECEIPT OF THE
    16  APPLICATION FOR PERMISSION TO WITHDRAW. THE LIABILITY FOR THE
    17  CONTINUATION OF RETIREMENT OR DISABILITY ALLOWANCES BEING PAID
    18  FROM THE FUND SHALL ATTACH AGAINST THE WITHDRAWING MUNICIPALITY
    19  AND BE PAID FROM FUNDS TRANSFERRED TO A RETIREMENT SYSTEM
    20  ESTABLISHED SUBSEQUENT TO ITS WITHDRAWAL FROM THE SYSTEM OR FROM
    21  MONEYS APPROPRIATED ANNUALLY FROM TAX REVENUES SUFFICIENT TO PAY
    22  THE SAME. IF THE BOARD DISAPPROVES THE APPLICATION OF THE
    23  MUNICIPALITY FOR PERMISSION TO WITHDRAW FROM THE SYSTEM THE
    24  BOARD SHALL PROMPTLY NOTIFY THE MUNICIPALITY OF ITS DECISION AND
    25  ADVISE THE MUNICIPALITY OF THE BOARD'S REASON OR REASONS FOR
    26  DISAPPROVAL. THE BOARD SHALL ESTABLISH RULES AND REGULATIONS, IN
    27  ACCORDANCE WITH THE PROVISIONS OF CLAUSE (10) OF SECTION 104 OF
    28  THIS ACT, GOVERNING THE DETAILS OF THE PROCEDURES TO BE FOLLOWED
    29  IN THE WITHDRAWAL OF MUNICIPALITIES FROM THE SYSTEM.
    30     Section 413.  Procedures for Amending Contracts.--Any
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     1  municipality which has joined the system under the provisions of
     2  this Article IV may, with the approval of the board, amend the
     3  contract with the board to increase any of the benefits
     4  enumerated in Article IV to its members. The board shall not
     5  enter into any amended contract with any municipality which
     6  decreases benefits, nor shall it enter into any amended contract
     7  with a municipality which provides for benefits in excess of or
     8  minimum member's contribution rates less than those available to
     9  it under any other existing law pertaining to the establishment
    10  of retirement systems for that class of municipality. Before the
    11  board approves any such amended contract it shall first
    12  determine, through its actuary, that the plan outlined is
    13  actuarially sound. Any member municipality which elects to enter
    14  into an amended contract for increased benefits which would
    15  result in an increase in its employes contribution rates shall
    16  first obtain the written consent of at least seventy-five per
    17  cent of its then member employes. Additional costs for increases
    18  in benefits shall become the responsibility of the municipality
    19  and/or the member as specified in the contract.
    20                             ARTICLE V
    21                     REPEALS AND EFFECTIVE DATE
    22     Section 501.  Repeals.--The following act are repealed
    23  absolutely:
    24     (1)  The act of June 4, 1943 (P.L.886, No.371), known as the
    25  "Municipal Employes' Retirement Law."
    26     (2)  The act of July 31, 1968 (P.L.944, No.291), known as the
    27  "Municipal Police Retirement Law,"
    28     Section 502.  Effective Date.--This act shall take effect in
    29  ninety days.

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