PRIOR PRINTER'S NOS. 1077, 1342, 1398, PRINTER'S NO. 2036
1440, 1733, 1779, 1988, 2017
No. 974 Session of 1993
INTRODUCED BY SCHWARTZ, AFFLERBACH, JONES, LEWIS, REIBMAN,
FATTAH, HART AND DAWIDA, APRIL 22, 1993
SENATE AMENDMENTS TO HOUSE AMENDMENTS, APRIL 13, 1994
AN ACT
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, further providing for the
3 Public School Employees' Retirement System and the State
4 Employees' Retirement System; adding and amending certain
5 definitions; and further providing for older workers, for
6 nonintervening military service, for eligibility for and the
7 computation of annuities and other retirement benefits, for
8 contributions and other payments made by employers, for
9 certain credited service, for the powers and duties of the
10 Public School Employees' Retirement Board and the State
11 Employees' Retirement Board, for the rights and duties of
12 members, for the management of funds and accounts, for
13 taxation, attachment and assignment of funds and for certain
14 domestic relations matters.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. The definitions of "effective date of
18 retirement," "eligible annuitants," "leave for service with a
19 collective bargaining organization" and "superannuation
20 annuitant" in section 8102 of Title 24 of the Pennsylvania
21 Consolidated Statutes are amended and the section is amended by
22 adding definitions to read:
23 § 8102. Definitions.
1 The following words and phrases when used in this part shall
2 have, unless the context clearly indicates otherwise, the
3 meanings given to them in this section:
4 * * *
5 "Alternate payee." Any spouse, former spouse, child or
6 dependent of a member who is recognized by a domestic relations
7 order as having a right to receive all, or a portion of, the
8 moneys payable to that member under this part.
9 * * *
10 "Approved domestic relations order." Any domestic relations
11 order which has been determined to be approved in accordance
12 with section 8533.1 (relating to approval of domestic relations
13 orders).
14 * * *
15 "Disability annuitant." A member on or after the effective
16 date of disability until his disability annuity, or the portion
17 of his disability annuity payments in excess of any annuity to
18 which he may otherwise be entitled, is terminated.
19 "Domestic relations order." Any judgment, decree or order,
20 including approval of a property settlement agreement, entered
21 on or after the effective date of this definition by a court of
22 competent jurisdiction pursuant to a domestic relations law
23 which relates to the marital property rights of the spouse or
24 former spouse of a member, including the right to receive all,
25 or a portion of, the moneys payable to that member under this
26 part in furtherance of the equitable distribution of marital
27 assets. The term includes orders of support as that term is
28 defined by 23 Pa.C.S. § 4302 (relating to definitions) and
29 orders for the enforcement of arrearages as provided in 23
30 Pa.C.S. § 3703 (relating to enforcement of arrearages).
19930S0974B2036 - 2 -
1 "Effective date of retirement." The first day following the
2 date of termination of service of a member if he has properly
3 filed an application for an annuity within 90 days of such date
4 or:
5 (1) In the case of a member who applies for an annuity
6 subsequent to 90 days after termination of service, the date
7 of filing such application or the date specified on the
8 application, whichever is later.
9 (2) In the case of a vestee who files an application for
10 an annuity within 90 days of his superannuation age, the
11 attainment of such age.
12 (3) In the case of a vestee who defers the filing of an
13 application for an annuity to a date later than 90 days
14 following attainment of superannuation age, the date of
15 filing or the date specified on the application, whichever is
16 later.
17 [(3)] (4) In the case of a finding of disability, the
18 date certified by the board as the effective date of
19 disability.
20 "Eligible annuitants." All current and prospective
21 annuitants with 24 1/2 or more eligibility points and all
22 current and prospective disability annuitants. Beginning July <--
23 JANUARY 1, 1995, "eligible annuitants" shall include members <--
24 with 15 or more eligibility points who terminated, or who
25 terminate, school service on or after attaining superannuation
26 retirement age and who are annuitants with an effective date of
27 retirement after superannuation age.
28 * * *
29 "Irrevocable beneficiary." The person or persons permanently
30 designated by a member in writing to the board pursuant to an
19930S0974B2036 - 3 -
1 approved domestic relations order to receive all, or a portion
2 of, the accumulated deductions or lump sum benefit payable upon
3 the death of such member.
4 "Irrevocable survivor annuitant." The person permanently
5 designated by a member in writing to the board pursuant to an
6 approved domestic relations order to receive an annuity upon the
7 death of such member.
8 * * *
9 "Leave for service with a collective bargaining
10 organization." Paid leave granted to an active member by an
11 employer for purposes of [serving as an elected full-time
12 officer for a Statewide employee organization which is a
13 collective bargaining representative] working full time for or
14 serving full time as an officer of a Statewide employee
15 organization or a local collective bargaining representative
16 under the act of July 23, 1970 (P.L.563, No.195), known as the
17 Public Employe Relations Act: Provided, That greater than one-
18 half of the members of the [Statewide] employee organization are
19 active members of the system; [that such leave shall not be for
20 more than two consecutive terms of the same office;] that the
21 employer shall fully compensate the member, including, but not
22 limited to, salary, wages, pension and retirement contributions
23 and benefits, other benefits and seniority, as if he were in
24 full-time active service; and that the [Statewide] employee
25 organization shall fully reimburse the employer [and the
26 Commonwealth for all expenses and costs of such paid leave,
27 including, but not limited to, contributions and payment on
28 account of such service made to the system in accordance with
29 sections 8326 (relating to contributions by the Commonwealth)
30 and 8327 (relating to payments by employers) and made by the
19930S0974B2036 - 4 -
1 Commonwealth to the employer, made in accordance with section
2 8329 (relating to payments on account of social security
3 deductions from appropriations).] for such salary, wages,
4 pension and retirement contributions and benefits and other
5 benefits and seniority.
6 * * *
7 "Public School Code." The act of March 10, 1949 (P.L.30,
8 No.14), known as the Public School Code of 1949.
9 * * *
10 "School entity." A school district of any class,
11 intermediate unit or an area vocational-technical school, as
12 provided for under the act of March 10, 1949 (P.L.30, No.14),
13 known as the Public School Code of 1949.
14 * * *
15 "Superannuation annuitant." An annuitant whose annuity first
16 became payable on or after the attainment of superannuation age
17 and who is not a disability annuitant.
18 * * *
19 Section 2. Sections 8103, 8302(b.2), 8307(c) and 8312 of
20 Title 24 are amended to read:
21 § 8103. Construction of part.
22 (a) General rule.--The provisions of this part in so far as
23 they are the same as those of existing law are intended as a
24 continuation of such laws and not as new enactments. The
25 provisions of this part shall not affect any act done, liability
26 incurred, right accrued or vested, or any suit or prosecution
27 pending or to be instituted to enforce any right or penalty or
28 to punish any offense under the authority of any repealed laws.
29 (b) Construction of part with regard to older workers
30 protection.--It is hereby found and declared that the provisions
19930S0974B2036 - 5 -
1 of this part constitute a bona fide retirement or pension plan
2 within the meaning of the Age Discrimination in Employment Act
3 of 1967 (Public Law 90-202, 81 Stat. 602), and the act of
4 October 27, 1955 (P.L.744, No.222), known as the Pennsylvania
5 Human Relations Act. Any provision of this part which is not
6 inconsistent with the provisions of the Age Discrimination in
7 Employment Act of 1967, as amended by the Older Workers Benefit
8 Protection Act (Public Law 101-43, 104 Stat. 978) and the rules
9 and regulations of the Federal Equal Employment Opportunity
10 Commission under such Federal laws shall be deemed not
11 inconsistent with such provisions of the Pennsylvania Human
12 Relations Act as relate to discrimination on the basis of age
13 with respect to the terms, conditions or privileges of
14 employment.
15 § 8302. Credited school service.
16 * * *
17 (b.2) Credited service as retirement incentive.--
18 Notwithstanding any provisions of this title to the contrary,
19 for the period of [July 1, 1992] May 15, 1992, to August 31,
20 1993, a member who is not an annuitant on [July 1, 1992] May 15,
21 1992, who terminates school service between [July 1, 1992] May
22 15, 1992, and August 31, 1993, inclusive, who will be 55 years
23 of age or older on August 31, 1993, with ten or more eligibility
24 points, who files an application for retirement before September
25 1, 1993, and who declares his intent to retire prior to April 1,
26 1993, shall be credited with an additional 10% of their credited
27 service.
28 * * *
29 § 8307. Eligibility for annuities.
30 * * *
19930S0974B2036 - 6 -
1 (c) Disability annuity.--An active or inactive member who
2 has credit for at least five years of service shall, upon filing
3 of a proper application, be entitled to a disability annuity
4 if[, prior to attainment of superannuation age,] he becomes
5 mentally or physically incapable of continuing to perform the
6 duties for which he is employed and qualifies for an annuity in
7 accordance with the provisions of section 8505(c)(1) (relating
8 to duties of board regarding applications and elections of
9 members).
10 § 8312. Eligibility for special early retirement.
11 Notwithstanding any provisions of this title to the contrary,
12 for the period only of July 1, 1985, to [June 30, 1993] July 1,
13 1997, the following special early retirement provisions shall be
14 applicable to specified eligible members as follows:
15 (1) During the period of July 1, 1985 to June 30, 1986,
16 any member who has attained the age of at least 53 years and
17 has credit for at least 30 eligibility points shall be
18 entitled, upon termination of service and filing of a proper
19 application, to receive a maximum single life annuity
20 calculated pursuant to section 8342 (relating to maximum
21 single life annuity) without any reduction by virtue of an
22 effective date of retirement which is under the
23 superannuation age.
24 (2) During the period of July 1, 1985 to June 30, 1986,
25 any member who has attained the age of at least 50 years but
26 not greater than 53 years and has credit for at least 30
27 eligibility points shall be entitled, upon termination of
28 service and filing of a proper application, to receive a
29 maximum single life annuity calculated pursuant to section
30 8342 with a reduction by virtue of an effective date of
19930S0974B2036 - 7 -
1 retirement which is under the superannuation age of a
2 percentage determined by multiplying the number of months,
3 including a fraction of a month as a full month, by which the
4 effective date of retirement precedes the attainment of age
5 53 by 0.25%.
6 (3) During the period of July 1, 1987, to June 30, 1993,
7 a member who has credit for at least 30 eligibility points
8 shall be entitled, upon termination of service and filing of
9 a proper application, to receive a maximum single life
10 annuity calculated pursuant to section 8342 without any
11 reduction by virtue of an effective date of retirement which
12 is under the superannuation age.
13 (4) During the period of July 1, 1993, to July 1, 1997,
14 a member who has credit for at least 30 eligibility points
15 shall be entitled, upon termination of service and filing of
16 a proper application, to receive a maximum single life
17 annuity calculated pursuant to section 8342 without any
18 reduction by virtue of an effective date of retirement which
19 is under the superannuation age.
20 Section 3. Sections 8326 and 8327 of Title 24 are amended by
21 adding subsections to read:
22 § 8326. Contributions by the Commonwealth.
23 * * *
24 (c) Contributions after June 30, 1994 1995.-- <--
25 (1) The Commonwealth shall make contributions into the
26 fund on behalf of all active members, including members on
27 activated military service leave, for service performed after
28 June 30, 1994 1995, in the following manner: <--
29 (i) For members who are employees of employers that
30 are school entities, no Commonwealth contributions shall
19930S0974B2036 - 8 -
1 be made.
2 (ii) For members who are employees of employers that
3 are not school entities, the amount computed under
4 subsection (a).
5 (2) The Commonwealth shall make contributions into the
6 fund on behalf of annuitants for all amounts due to the fund
7 after June 30, 1994 1995, including, but not limited to, <--
8 amounts due pursuant to section 8328(d) and (f), in the
9 following manner:
10 (i) For members who are employees of employers who
11 are school entities, no Commonwealth contributions shall
12 be made.
13 (ii) For members who are employees of employers who
14 are not school entities, the amount computed under
15 subsection (b).
16 § 8327. Payments by employers.
17 * * *
18 (c) Payments by employers after June 30, 1994 1995.--After <--
19 June 30, 1994 1995, each employer, including the Commonwealth as <--
20 employer of employees of the Department of Education, State-
21 owned colleges and universities, Thaddeus Stevens State School
22 of Technology, Pennsylvania State Oral School for the Deaf,
23 Scotland School for Veterans' Children and The Pennsylvania
24 State University, shall make payments to the fund each quarter
25 in an amount computed in the following manner:
26 (1) For an employer that is a school entity, the amount
27 shall be the sum of the percentages as determined under
28 section 8328 applied to the total compensation during the pay
29 periods in the preceding quarter of all employees who were
30 active members of the system during such period, including
19930S0974B2036 - 9 -
1 members on activated military service leave. In the event a
2 member on activated military service leave does not return to
3 service for the necessary time or receives an undesirable,
4 bad conduct or dishonorable discharge or does not elect to
5 receive credit for activated military service under section
6 8302(c)(3), the contribution made by the employer on behalf
7 of such member shall be returned with valuation interest upon
8 application by the employer.
9 (2) For an employer that is not a school entity, the
10 amount computed under subsection (a).
11 Section 4. Sections 8328(b), (c) and (d), 8329(a), 8344(a),
12 8345(a)(4) and 8346 of Title 24 are amended to read:
13 § 8328. Actuarial cost method.
14 * * *
15 (b) Normal contribution rate.--The normal contribution rate
16 shall be determined after each actuarial valuation. Until all
17 accrued liability contributions have been completed, the normal
18 contribution rate shall be determined, on the basis of an annual
19 interest rate and such mortality and other tables as shall be
20 adopted by the board in accordance with generally accepted
21 actuarial principles, as a level percentage of the compensation
22 of the average new active member, which percentage, if
23 contributed on the basis of his prospective compensation through
24 the entire period of active school service, would be sufficient
25 to fund the liability for any prospective benefit payable to
26 him, in excess of that portion funded by his prospective member
27 contributions, except for the supplemental benefits provided in
28 sections 8348 (relating to supplemental annuities), 8348.1
29 (relating to additional supplemental annuities) [and], 8348.2
30 (relating to further additional supplemental annuities) and
19930S0974B2036 - 10 -
1 8348.3 (relating to supplemental annuities commencing 1994).
2 (c) Accrued liability contribution rate.--For the fiscal
3 year beginning July 1, 1991, the accrued liability contribution
4 rate shall be computed as the rate of total compensation of all
5 active members which shall be certified by the actuary as
6 sufficient to fund over a period of 20 years from July 1, 1991,
7 the present value of the liabilities for all prospective
8 benefits of active members, except for the supplemental benefits
9 provided in sections 8348, 8348.1 [and 8348.2], 8348.2 and
10 8348.3, in excess of the total assets in the fund, excluding the
11 balance in the annuity reserve account, and of the present value
12 of normal contributions and of member contributions payable with
13 respect to all active members on July 1, 1991, during the
14 remainder of their active service. Thereafter, the amount of
15 each annual accrued liability contribution shall be 5% greater
16 than the amount of such contribution for the previous fiscal
17 year, except that, if the accrued liability is increased by
18 legislation enacted subsequent to July 1, 1991, such additional
19 liability shall be funded over a period of 20 years from the
20 first day of July, coincident with or next following the
21 effective date of the increase, provided that the liability for
22 any additional benefits created by this act, except for the
23 health insurance premium assistance program established in
24 section 8509 (relating to health insurance premium assistance
25 program), shall be funded over a period of 20 years commencing
26 July 1, 1992. The amount of each annual accrued liability
27 contribution for such additional legislative liabilities shall
28 be 5% greater than the amount of such contribution for the
29 previous fiscal year.
30 (d) Supplemental annuity contribution rate.--Contributions
19930S0974B2036 - 11 -
1 from the Commonwealth and other employers required to provide
2 for the payment of the supplemental annuities provided for in
3 sections 8348, 8348.1 and 8348.2 shall be paid over a period of
4 20 years from July 1, 1991. The amount of each annual
5 supplemental annuities contribution shall be 5% greater than the
6 amount of such contribution for the previous fiscal year. In the
7 event that supplemental annuities are increased by legislation
8 enacted subsequent to July 1, 1991, the additional liability for
9 the increased benefits shall be funded in annual installments
10 increasing by 5% each year over a period of 20 years from the
11 July 1, coincident with or next following the effective date of
12 such legislation. Notwithstanding the preceding, the funding for
13 the supplemental annuities commencing 1994 provided for in
14 section 8348.3 shall be as provided in section 8348.3(f).
15 * * *
16 § 8329. Payments on account of social security deductions from
17 appropriations.
18 (a) Payments by Commonwealth.--Where the Secretary of
19 Education enters into an agreement with the Commonwealth to
20 place under the Federal Social Security Act members who have
21 elected coverage, the Commonwealth shall pay to the employers
22 one-half of the contributions payable under the employer's tax
23 established by the Social Security Act (Public Law 74-271, 42
24 U.S.C. § 301 et seq.) on all covered wages which are not
25 federally funded[.], except that after June 30, 1994 1995, the <--
26 Commonwealth shall pay to an employer that is a school entity an
27 amount as follows:
28 (1) For all employees whose effective dates of
29 employment with their employing school entities are after
30 June 30, 1993 1994, and who also had not previously been <--
19930S0974B2036 - 12 -
1 employed by any school entity within this Commonwealth the
2 Commonwealth shall pay each school entity an amount equal to
3 the total contributions payable under the employer's tax
4 established by the Social Security Act on all covered wages
5 which are not federally funded, multiplied by the market
6 value/income aid ratio of the school entity. For no school
7 year shall any school entity receive less than the amount
8 that would result if the market value/income aid ratio as
9 defined in section 2501(14.1) of the Public School Code of
10 1949, was .15 0.50. If the sum of all Commonwealth payments <--
11 to school entities under this paragraph does not equal one-
12 half the sum of the entire employer's share for all such
13 employees of all school entities, the payments to the school
14 entities by the Commonwealth shall be proportionately reduced
15 or increased to make the sum of all Commonwealth payments
16 equal to one-half the sum of the entire employer's share for
17 all such employees of all the school entities.
18 (2) For all employees who are not described in paragraph
19 (1), the Commonwealth shall pay each school entity one-half
20 of the contributions payable under the employer's tax
21 established by the Social Security Act on all covered wages
22 which are not federally funded.
23 * * *
24 § 8344. Disability annuities.
25 (a) Amount of annuity.--A member who has made application
26 for a disability annuity as provided in section 8507(k)
27 (relating to rights and duties of school employees and members)
28 and has been found to be eligible in accordance with the
29 provisions of sections 8307(c) (relating to eligibility for
30 annuities) and 8505(c)(1) (relating to duties of board regarding
19930S0974B2036 - 13 -
1 applications and elections of members) shall receive a
2 disability annuity payable from the effective date of disability
3 and continued until a subsequent determination by the board that
4 the annuitant is no longer entitled to a disability annuity. The
5 disability annuity shall be equal to a standard single life
6 annuity if the total number of years of credited service is
7 greater than 16.667, otherwise the standard single life annuity
8 shall be multiplied by the lesser of the following ratios:
9 Y*/Y or 16.667/Y
10 where Y = number of years of credited service and Y* = total
11 years of credited service if the member were to continue as a
12 school employee until attaining superannuation age, or if the
13 member has attained superannuation age then the number of years
14 of credited service. In no event shall the disability annuity
15 plus any cost-of-living increases be less than $100 for each
16 full year of credited service. The member shall be entitled to
17 the election of a joint and survivor annuity on that portion of
18 the disability annuity to which he is entitled under section
19 8342 (relating to maximum single life annuity).
20 * * *
21 § 8345. Member's options.
22 (a) General rule.--Any vestee with ten or more eligibility
23 points or any other eligible member upon termination of school
24 service who has not withdrawn his accumulated deductions as
25 provided in section 8341 (relating to return of accumulated
26 deductions) may apply for and elect to receive either a maximum
27 single life annuity, as calculated in accordance with the
28 provisions of section 8342 (relating to maximum single life
29 annuity), or a reduced annuity certified by the actuary to be
30 actuarially equivalent to the maximum single life annuity and in
19930S0974B2036 - 14 -
1 accordance with one of the following options, except that no
2 member shall elect an annuity payable to one or more survivor
3 annuitants other than his spouse or alternate payee of such a
4 magnitude that the present value of the annuity payable to him
5 for life plus any lump sum payment he may have elected to
6 receive is less than 50% of the present value of his maximum
7 single life annuity.
8 * * *
9 (4) Option 4.--Some other benefit which shall be
10 certified by the actuary to be actuarially equivalent to the
11 maximum single life annuity, subject to the following
12 restrictions:
13 (i) Any annuity shall be payable without reduction
14 during the lifetime of the member [except as the result
15 of the member's election to receive an annuity reduced
16 upon attainment of age 65, in anticipation of the receipt
17 of a social security benefit].
18 (ii) The sum of all annuities payable to the
19 designated survivor annuitants shall not be greater than
20 one and one-half times the annuity payable to the member.
21 (iii) A portion of the benefit may be payable as a
22 lump sum, except that such lump sum payment shall not
23 exceed an amount equal to the accumulated deductions
24 standing to the credit of the member. The balance of the
25 present value of the maximum single life annuity adjusted
26 in accordance with section 8342(b) shall be paid in the
27 form of an annuity with a guaranteed total payment, a
28 single life annuity, or a joint and survivor annuity or
29 any combination thereof but subject to the restrictions
30 of subparagraphs (i) and (ii) of this paragraph.
19930S0974B2036 - 15 -
1 * * *
2 § 8346. Termination of annuities.
3 (a) General rule.--If an annuitant returns to school service
4 or enters State service and elects multiple service membership,
5 any annuity payable to him under this part shall cease and in
6 the case of an annuity other than a disability annuity the
7 present value of such annuity, adjusted for full coverage in the
8 case of a joint coverage member who makes the appropriate back
9 contributions for full coverage, shall be frozen as of the date
10 such annuity ceases. An annuitant who is credited with an
11 additional 10% of membership service as provided in section
12 8302(b.2) (relating to credited school service) and who returns
13 to school service, except as provided in subsection (b), shall
14 forfeit such credited service and shall have his frozen present
15 value adjusted as if his 10% retirement incentive had not been
16 applied to his account. In the event that the cost-of-living
17 increase enacted December 18, 1979, occurred during the period
18 of such State or school employment, the frozen present value
19 shall be increased, on or after the member attains
20 superannuation age, by the percent applicable had he not
21 returned to service.
22 (b) Return to school service during emergency.--When, in the
23 judgment of the employer, an emergency creates an increase in
24 the work load such that there is serious impairment of service
25 to the public or in the event of a shortage of appropriate
26 subject certified teachers, an annuitant may be returned to
27 school service for a period not to exceed 95 full-day sessions
28 in any school year without loss of his annuity. In computing the
29 number of days an annuitant has returned to school service, any
30 amount of time less than one-half of a day shall be counted as
19930S0974B2036 - 16 -
1 one-half of a day.
2 (c) Subsequent discontinuance of service.--Upon subsequent
3 discontinuance of service, such member other than a former
4 annuitant who elected to eliminate the effect of his frozen
5 present value in accordance with subsection (d) or a former
6 disability annuitant shall be entitled to an annuity which is
7 actuarially equivalent to the sum of the present value as
8 determined under subsection (a) and the present value of a
9 maximum single life annuity based on years of service credited
10 subsequent to reentry in the system and his final average salary
11 computed by reference to his compensation during his entire
12 period of school and State service.
13 (d) Election to eliminate the effect of frozen present
14 value.--
15 (1) If an annuitant who has not elected multiple service
16 returns to school service and earns three eligibility points
17 by performing credited school service following the most
18 recent period of receipt of an annuity under this part and
19 the present value of his annuity has been frozen in
20 accordance with subsection (a), the former annuitant may
21 elect to eliminate the effect of the frozen present value
22 resulting from all previous periods of retirement by agreeing
23 to return to the fund all payments under Option 4 and annuity
24 payments payable during previous periods of retirement plus
25 interest as set forth in paragraph (4) in the form of an
26 actuarial adjustment to his subsequent benefits.
27 (2) A former annuitant who has not elected multiple
28 service and chooses to eliminate the effect of his frozen
29 present value must elect to do so in the school year in which
30 he first becomes eligible or in the following school year.
19930S0974B2036 - 17 -
1 Only an active or inactive member on leave OR A MEMBER WHO <--
2 HAS TERMINATED SERVICE BUT HAS NOT YET ELECTED TO RETIRE can
3 elect to eliminate the effect of frozen present value.
4 (3) Upon subsequent discontinuance of service where a
5 former annuitant has elected to eliminate the effect of the
6 frozen present value under this subsection, that portion of
7 the present value of his account upon which his annuity had
8 been calculated shall no longer be frozen and he shall be
9 entitled to an annuity calculated in accordance with the
10 provisions of this part as then in effect, adjusted according
11 to paragraph (4), provided that a former annuitant who
12 retired under a provision of law granting additional service
13 credit if termination of school service or retirement
14 occurred during a specific period of time, shall not be
15 permitted to retain the additional service credit under the
16 prior law when the annuity is computed for his most recent
17 retirement.
18 (4) In addition to any other adjustment to the present
19 value of the maximum single life annuity that a member may be
20 entitled to receive that occurs as a result of any other
21 provision of law, the present value of the maximum single
22 life annuity shall be reduced by all amounts paid or payable
23 to him during all previous periods of retirement plus
24 interest on these amounts until the date of subsequent
25 retirement. The interest for each year shall be calculated
26 based upon the annual interest rate adopted for that school
27 year by the board for the calculation of the normal
28 contribution rate pursuant to section 8328(b) (relating to
29 actuarial cost method).
30 Section 5. Title 24 is amended by adding a section to read:
19930S0974B2036 - 18 -
1 § 8348.3. Supplemental annuities commencing 1994.
2 (a) Benefits.--Commencing with the first monthly annuity
3 payment after July 1, 1994, any eligible benefit recipient shall
4 be entitled to receive a further additional monthly supplemental
5 annuity from the system. This shall be in addition to the
6 supplemental annuities provided for in sections 8348 (relating
7 to supplemental annuities), 8348.1 (relating to additional
8 supplemental annuities) and 8348.2 (relating to further
9 additional supplemental annuities).
10 (b) Amount of additional supplemental annuity.--The amount
11 of the additional monthly supplemental annuity shall be
12 determined on the basis of the most recent effective date of
13 retirement and payable on the first $3,000 of annuity received
14 per month, as follows:
15 Most recent effective Percentage factor
16 date of retirement
17 July 1, 1991, through June 30, 1992 1.5%
18 July 1, 1990, through June 30, 1991 2.8%
19 July 1, 1989, through June 30, 1990 5.3%
20 On or prior to June 30, 1989 7.9%
21 In addition to the supplemental annuity payable as a result of
22 the percentage factors as set forth in this subsection, there
23 shall be a monthly longevity supplemental annuity payable as
24 follows:
25 (1) For those individuals whose most recent effective
26 date of retirement is on or after July 1, 1969, and on or
27 before July 1, 1984, and who have 20 or more eligibility
28 points, the monthly longevity supplemental annuity shall be
29 equal to 0.25% of the first $3,000 of annuity received per
30 month multiplied by the number of years on retirement.
19930S0974B2036 - 19 -
1 (2) For those individuals whose most recent effective
2 date of retirement is on or before June 30, 1969, and who
3 have 20 or more eligibility points, the monthly longevity
4 supplemental annuity shall be equal to 0.25% of the first
5 $3,000 of annuity received per month multiplied by the number
6 of years on retirement between July 1, 1969, and July 1,
7 1989, plus 0.50% of the first $3,000 of annuity received per
8 month multiplied by the years on retirement on or before June
9 30, 1969.
10 (c) Payment.--The additional monthly supplemental annuity
11 provided under this section shall be paid automatically unless
12 the intended recipient files a written notice with the system
13 requesting that the additional monthly supplemental annuity not
14 be paid.
15 (d) Conditions.--The additional supplemental annuity
16 provided under this section shall be payable under the same
17 terms and conditions as provided under the option plan in effect
18 June 30, 1994.
19 (e) Benefits paid to beneficiaries or survivors.--No
20 supplemental annuity effective after the death of the member
21 shall be payable to the beneficiary or survivor annuitant of the
22 deceased member.
23 (f) Funding.--Notwithstanding section 8328(d) (relating to
24 actuarial cost method), the additional liability for the
25 increase in benefits provided in this section shall be funded in
26 annual installments increasing by 5% each year over a period of
27 20 years beginning July 1, 1995.
28 (g) Definitions.--As used in this section, the following
29 words and phrases shall have the meanings given to them in this
30 subsection:
19930S0974B2036 - 20 -
1 "Eligible benefit recipient." A person who is receiving a
2 superannuation, withdrawal or disability annuity and who
3 commenced receipt of that annuity on or prior to June 30, 1992,
4 but the supplemental annuities shall not be payable to an
5 annuitant receiving a withdrawal annuity prior to the first day
6 of July coincident with or following the annuitant's attainment
7 of superannuation age. Notwithstanding the preceding, the term
8 "eligible benefit recipient" shall not include those annuitants
9 who were and currently are credited with an additional 10% of
10 their credited service under section 8302(b.2) (relating to
11 credited school service).
12 "Years on retirement." The number of full years as of July
13 1, 1989, which have elapsed since the eligible benefit recipient
14 most recently commenced the receipt of an annuity and during
15 which the eligible benefit recipient received an annuity.
16 Section 6. Sections 8502, 8505(c), (f), (g) and (h),
17 8507(f), (h) and (k), 8508(c), 8509(b), 8521 and 8533 of Title
18 24 are amended to read:
19 § 8502. Administrative duties of board.
20 (a) Employees.--The secretary, clerical and other employees
21 of the board and their successors whose positions on the
22 effective date of this part are under the classified service
23 provisions of the act of August 5, 1941 (P.L.752, No.286), known
24 as the Civil Service Act, shall continue under such provisions.
25 Notwithstanding any other provision of law, the compensation and
26 classification shall be established by the board for the
27 secretary, the assistant secretary, investment professionals and
28 other professionals as designated by the board who are not
29 covered by a collective bargaining agreement.
30 (b) Professional personnel.--The board shall contract for
19930S0974B2036 - 21 -
1 the services of a chief medical examiner, an actuary, investment
2 advisors, counselors, an investment coordinator, and such other
3 professional personnel as it deems advisable.
4 (c) Expenses.--The board shall, through the Governor, submit
5 to the General Assembly annually a budget covering the
6 administrative expenses of this part. Such expenses as approved
7 by the General Assembly in an appropriation bill shall be paid
8 from investment earnings of the fund. Concurrently with its
9 administrative budget, the board shall also submit to the
10 General Assembly annually a list of proposed expenditures which
11 the board intends to pay through the use of directed commissions
12 together with a list of the actual expenditures from the past
13 year actually paid by the board through the use of directed
14 commissions. All such directed commission expenditures shall be
15 made by the board for the exclusive benefit of the system and
16 its members.
17 (d) Meetings.--The board shall hold at least six regular
18 meetings annually and such other meetings as it may deem
19 necessary.
20 (e) Records.--The board shall keep a record of all its
21 proceedings which shall be open to inspection by the public.
22 (f) Functions.--The board shall perform such other functions
23 as are required for the execution of this part and shall have
24 the right to inspect the employment records of employers.
25 (g) Performance of employer duties.--In the event the
26 employer fails to comply with the procedures as mandated in
27 section 8506 (relating to duties of employers), the board shall
28 perform such duties and bill the employer who shall pay for the
29 cost of same. In the event the employer is delinquent in payment
30 of contributions in accordance with section 8327 (relating to
19930S0974B2036 - 22 -
1 payments by employers), the board shall notify the Secretary of
2 Education and the State Treasurer of such delinquency.
3 (h) Regulations and procedures.--The board shall, with the
4 advice of the Attorney General and the actuary, adopt and
5 promulgate rules and regulations for the uniform administration
6 of the system. The actuary shall approve in writing all
7 computational procedures used in the calculation of
8 contributions and benefits prior to their application by the
9 board.
10 (i) Data.--The board shall keep in convenient form such data
11 as are stipulated by the actuary in order that an annual
12 actuarial valuation of the various accounts can be completed
13 within six months of the close of each fiscal year. The board
14 shall have final authority over the means by which data is
15 collected, maintained and stored and in so doing shall protect
16 the rights of its membership as to privacy and confidentiality.
17 (j) Actuarial investigation and valuation.--The board shall
18 have the actuary make an annual valuation of the various
19 accounts within six months of the close of each fiscal year. In
20 the fiscal year ending 1975 and in every fifth year thereafter,
21 the board shall have the actuary conduct an actuarial
22 investigation and valuation of the system based on data
23 including the mortality, service, and compensation experience
24 provided by the board annually during the preceding five years
25 concerning the members and beneficiaries. The board shall adopt
26 such tables as are necessary for the actuarial valuation of the
27 fund and calculation of contributions, annuities, and benefits
28 based on the reports and recommendations of the actuary.
29 (k) Certification of employer contributions.-- The board
30 shall, each year in addition to the itemized budget required
19930S0974B2036 - 23 -
1 under section 8330 (relating to appropriations by the
2 Commonwealth), certify to the employers and the Commonwealth the
3 employer contribution rate expressed as a percentage of members'
4 payroll necessary for the funding of prospective annuities for
5 active members and the annuities of annuitants, and certify the
6 rates and amounts of the normal contributions as determined
7 pursuant to section 8328(b) (relating to actuarial cost method),
8 accrued liability contributions as determined pursuant to
9 section 8328(c), supplemental annuities contribution rate as
10 determined pursuant to section 8328(d) and the experience
11 adjustment factor as determined pursuant to section 8328(e) and
12 premium assistance contributions as determined pursuant to
13 section 8328(f), which shall be paid to the fund and credited to
14 the appropriate accounts. These certifications shall be regarded
15 as final and not subject to modification by the Budget
16 Secretary.
17 (l) Commonwealth payments.--The board shall within 30 days
18 following the end of each quarter determine the amount due to
19 the fund from the Commonwealth during that quarter and submit at
20 that time a requisition for the amount determined to be due from
21 the Commonwealth to the State Treasurer.
22 (m) Member contributions and interest.--The board shall
23 cause each member's contributions, including payroll deductions,
24 pickup contributions and all other payments, to be credited to
25 the account of such member and shall pay all such amounts into
26 the fund. Such contributions shall be credited with statutory
27 interest until date of termination of service, except in the
28 case of a vestee, who shall have such interest credited until
29 the effective date of retirement or until the return of his
30 accumulated deductions, if he so elects; and in the case of a
19930S0974B2036 - 24 -
1 multiple service member who shall have such interest credited
2 until termination of service in both the school and the State
3 systems.
4 (n) Annual financial statement.--The board shall prepare and
5 have published, on or before January 1 of each year, a financial
6 statement as of the fiscal year ending June 30 of the previous
7 year showing the condition of the fund and the various accounts,
8 including, but not limited to, the board's accrual and
9 expenditure of directed commissions, and setting forth such
10 other facts, recommendations and data as may be of use in the
11 advancement of knowledge concerning annuities and other benefits
12 provided by this part. The board shall submit said financial
13 statement to the Governor and shall make copies available to the
14 employers for the use of the school employees and the public.
15 (o) Independent audit.--The board shall provide for an
16 annual audit of the system by an independent certified public
17 accounting firm, which audit shall include the board's accrual
18 and expenditure of directed commissions.
19 (p) Transfer of employer contributions.--The board shall,
20 upon receipt of a written request from a public employee
21 retirement system of a county of the third class and upon
22 receipt of written verification that a member of the fund who
23 withdrew contributions upon termination of employment will
24 deposit the employee's contributions with the retirement system
25 of a county of the third class, transfer, within 30 days, to the
26 retirement system of the county of the third class the full
27 amount of employer contributions and the accumulated interest on
28 such contributions credited to the former member's account. This
29 subsection shall apply only where the transfer of employment
30 from the public school district to the county was not voluntary
19930S0974B2036 - 25 -
1 on the part of the employee.
2 § 8505. Duties of board regarding applications and elections of
3 members.
4 * * *
5 (c) Disability annuities.--In every case where the board has
6 received an application duly executed by the member or by a
7 person legally authorized to act in his behalf for a disability
8 annuity based upon the member's physical or mental incapacity
9 for the performance of the job for which [the member] he is
10 employed, the board shall:
11 (1) Through the medical examiner, have the application
12 and any supporting medical records and other documentation
13 submitted with the application reviewed and, on the basis of
14 said review and the subsequent recommendation by the medical
15 examiner regarding the applicant's medical qualification for
16 a disability annuity along with such other recommendations
17 which he may make with respect to the permanency of
18 disability or the need for subsequent reviews, make a finding
19 of disability or nondisability and, in the case of
20 disability, establish an effective date of disability and the
21 terms and conditions regarding subsequent reviews.
22 (2) Upon the recommendation of the medical examiner on
23 the basis of a review of subsequent medical reports submitted
24 with an application for continuance of disability, make a
25 finding of disability or nondisability and, in the case of a
26 finding of nondisability, establish the date of termination
27 of disability and at that time discontinue any annuity
28 payments in excess of any annuity to which he may be
29 otherwise entitled under section 8342 (relating to maximum
30 single life annuity).
19930S0974B2036 - 26 -
1 (3) Upon receipt of a written statement from a
2 disability annuitant of his earned income of the previous
3 year, adjust the payments of the disability annuity for the
4 following year in accordance with the provisions for a
5 reduction of disability payments of section 8344 (relating to
6 disability annuities).
7 * * *
8 (f) Notification to vestees approaching superannuation
9 age.--The board shall notify each vestee in writing 90 days
10 prior to his attainment of superannuation age that he shall
11 apply for his annuity within 90 days of attainment of
12 superannuation age [and that failure to apply within that time
13 shall result in the cancellation of the right of the vestee to
14 any death benefit in excess of his accumulated deductions.];
15 that, if he does so apply, his effective date of retirement will
16 be the date of attainment of superannuation age; that, if he
17 does not so apply but defers his application to a later date,
18 his effective date of retirement will be the date of filing the
19 application or the date specified on the application, whichever
20 is later, and that, if he does not file an application within
21 seven years after attaining superannuation age, he shall be
22 deemed to have elected to receive his accumulated deductions
23 upon attainment of superannuation age.
24 (g) Initial annuity payment and certification.--The board
25 shall make the first monthly payment to a member who is eligible
26 for an annuity within 60 days of the filing of his application
27 for an annuity or, in the case of a vestee who has deferred the
28 filing of his application to a date later than 90 days following
29 attainment of superannuation age, within 60 days of his
30 effective date of retirement, and receipt of the required data
19930S0974B2036 - 27 -
1 from the employer of the member. Concurrently the board shall
2 certify to such member:
3 (1) The accumulated deductions standing to his credit
4 showing separately the amount contributed by the member, the
5 pickup contribution and the interest credited to the date of
6 termination of service.
7 (2) The number of years and fractional part of a year
8 credited in each class of service.
9 (3) The final average salary on which his annuity is
10 based as well as any applicable reduction factors due to age
11 or election of an option or both.
12 (4) The total annuity payable under the option elected
13 and the amount and effective date of any future reduction on
14 account of social security old-age insurance benefits.
15 (h) Death benefits.--Upon receipt of notification of the
16 death of a member, the board shall notify the designated
17 beneficiary or survivor annuitant of the benefits to which he is
18 entitled and shall make the first payment to the beneficiary
19 under the plan elected by the beneficiary within 60 days of
20 receipt of certification of death and other necessary data. If
21 no beneficiary designation is in effect at the date of the
22 member's death or no notice has been filed with the board to pay
23 the amount of such benefits to the member's estate, the board is
24 authorized to pay such benefits to the executor, administrator,
25 surviving spouse or next-of-kin of the deceased member, and
26 payment pursuant hereto shall fully discharge the fund from any
27 further liability to make payment of such benefits to any other
28 person. If the surviving spouse or next-of-kin of the deceased
29 member cannot be found for the purpose of paying such benefits
30 for a period of seven years from the date of death of the
19930S0974B2036 - 28 -
1 member, then such benefits shall be escheated to the
2 Commonwealth for the benefit of the fund.
3 * * *
4 § 8507. Rights and duties of school employees and members.
5 * * *
6 (f) Termination of service.--Each member who terminates
7 school service and who is not then a disability annuitant shall
8 execute on or before the date of termination of service a
9 written application, duly attested by the member or his legally
10 constituted representative, electing to do one of the following:
11 (1) Withdraw his accumulated deductions.
12 (2) Vest his retirement rights and if he is a joint
13 coverage member, and so desires, elect to become a full
14 coverage member and agree to pay within 30 days of the date
15 of termination of service the lump sum required.
16 (3) Receive an immediate annuity, and may, if he is a
17 joint coverage member, elect to become a full coverage member
18 and agree to pay within 30 days of date of termination of
19 service the lump sum required.
20 * * *
21 (h) Vestees attaining superannuation age.--Upon attainment
22 of superannuation age a vestee shall execute and file within 90
23 days an application for an annuity. Any application filed after
24 such 90 day period shall be effective as of the date it is filed
25 with the board, subject to the provisions of section 8505(g)
26 (relating to duties of board regarding applications and
27 elections of members). If a vestee does not file an application
28 within seven years after attaining superannuation age, he shall
29 be deemed to have elected to receive his accumulated deductions
30 upon attainment of superannuation age.
19930S0974B2036 - 29 -
1 * * *
2 (k) Disability annuities.--If service of a member [who is
3 under superannuation age] is terminated due to his physical or
4 mental incapacity for the performance of duty, in lieu of an
5 application and election under subsection (f), an application
6 for a disability annuity may be executed by him or by a person
7 legally authorized to act on his behalf.
8 § 8508. Rights and duties of annuitants.
9 * * *
10 (c) Medical examinations of disability annuitants.--Should
11 any disability annuitant [receiving a disability annuity while
12 still under superannuation age] refuse to submit to a medical
13 examination by a physician or physicians at the request of the
14 board, his payments due to disability shall be discontinued
15 until the withdrawal of such refusal. Should such refusal
16 continue for a period of six months, all of his rights to the
17 disability annuity payments in excess of any annuity to which he
18 is otherwise entitled shall be forfeited.
19 * * *
20 § 8509. Health insurance premium assistance program.
21 * * *
22 (b) Amount of premium assistance.--Effective July 1, 1992,
23 participating eligible annuitants shall receive premium
24 assistance payments of $55 per month or the actual monthly
25 premium, whichever is less. [Such payments will be made directly
26 to the insurance carriers by the board.] Such payments shall be
27 made by the board to the participating eligible annuitants for
28 their payment directly to their approved insurance carriers.
29 Such payments may also be paid by the board, at the board's
30 discretion, directly to the participating eligible annuitants'
19930S0974B2036 - 30 -
1 approved insurance carriers. The board shall have the right to
2 verify the application and receipt of the payments by the
3 participating eligible annuitants and their approved insurance
4 carriers.
5 * * *
6 § 8521. Management of fund and accounts.
7 (a) Control and management of fund.--The members of the
8 board shall be the trustees of the fund [and]. Regardless of any
9 other provision of law governing the investments of funds under
10 the control of an administrative board of the State government,
11 the trustees shall have exclusive control and management of the
12 said fund and full power to invest the same, in accordance with
13 the provisions of this section, subject, however, to the
14 exercise of that degree of judgment, skill and care under the
15 circumstances then prevailing which persons of prudence,
16 discretion and intelligence who are familiar with such matters
17 exercise in the management of their own affairs not in regard to
18 speculation, but in regard to the permanent disposition of the
19 fund, considering the probable income to be derived therefrom as
20 well as the probable safety of their capital[, and further
21 subject to all the terms, conditions, limitations, and
22 restrictions imposed by this part or other law upon the making
23 of investments. Subject to like terms, conditions, limitations,
24 and restrictions, said]. The trustees shall have the power to
25 hold, purchase, sell, lend, assign, transfer, or dispose of any
26 of the securities and investments in which any of the moneys in
27 the fund shall have been invested as well as of the proceeds of
28 said investments, including any directed commissions which have
29 accrued to the benefit of the fund as a consequence of the
30 investments, and of any moneys belonging to said fund, subject
19930S0974B2036 - 31 -
1 in every case to meeting the standard of prudence set forth in
2 this subsection.
3 (b) Crediting of interest.--The board annually shall allow
4 statutory interest to the credit of the members' savings account
5 on the mean amount of the accumulated deductions of all members
6 for whom interest is payable for the preceding year and
7 valuation interest on the mean amount of the annuity reserve
8 account for the preceding year to the credit of that account.
9 The board annually shall allow valuation interest calculated on
10 the mean amount for the preceding year of the balance in the
11 State accumulation account excluding any earnings of the fund
12 credited to the account during that year. In the event the total
13 earnings for the year do not exceed 5 1/2% of the mean amount
14 for the preceding year of the total assets of the fund less
15 earnings credited to the fund during that year plus the
16 administrative expenses of the board, the difference required to
17 be appropriated from the General Fund shall be credited to the
18 State accumulation account.
19 (c) Custodian of fund.--The State Treasurer shall be the
20 custodian of the fund.
21 (d) Payments from fund.--All payments from the fund shall be
22 made by the State Treasurer in accordance with requisitions
23 signed by the secretary of the board, or his designee, and
24 ratified by resolution of the board.
25 (e) Fiduciary status of board.--The members of the board,
26 employees of the board, and agents thereof shall stand in a
27 fiduciary relationship to the members of the system regarding
28 the investments and disbursements of any of the moneys of the
29 fund and shall not profit either directly or indirectly with
30 respect thereto. The board may, when possible and consistent
19930S0974B2036 - 32 -
1 with its fiduciary duties imposed by this subsection or other
2 law, including its obligation to invest and manage the fund for
3 the exclusive benefit of the members of the system, consider
4 whether an investment in any project or business enhances and
5 promotes the general welfare of this Commonwealth and its
6 citizens, including, but not limited to, investments that
7 increase and enhance the employment of Commonwealth residents,
8 encourage the construction and retention of adequate housing and
9 stimulate further investment and economic activity in this
10 Commonwealth. The board shall, through the Governor, submit to
11 the General Assembly annually, at the same time the board
12 submits its budget covering administrative expenses, a report
13 identifying the nature and amount of all existing investments
14 made pursuant to this subsection.
15 (f) Name for transacting business.--By the name of "The
16 Public School Employees' Retirement System" or "The Public
17 School Employes' Retirement System" all of the business of the
18 system shall be transacted, its fund invested, all requisitions
19 for money drawn and payments made, and all of its cash and
20 securities and other property shall be held, except that, any
21 other law to the contrary notwithstanding, the board may
22 establish a nominee registration procedure for the purpose of
23 registering securities in order to facilitate the purchase,
24 sale, or other disposition of securities pursuant to the
25 provisions of this part.
26 (g) Deposits in banks and trust companies.--For the purpose
27 of meeting disbursements for annuities and other payments in
28 excess of the receipts, there shall be kept available by the
29 State Treasurer an amount, not exceeding 10% of the total amount
30 in the fund, on deposit in any bank, savings bank or savings and
19930S0974B2036 - 33 -
1 loan association in this Commonwealth organized under the laws
2 thereof or under the laws of the United States or with any trust
3 company or companies incorporated by any law of this
4 Commonwealth, provided any of such banks, trust companies,
5 savings banks or savings and loan associations shall furnish
6 adequate security for said deposit. The sum deposited in any one
7 bank or trust company shall not exceed 25% of the paid-up
8 capital and surplus of said bank or trust company or, in the
9 case of savings banks or savings and loan associations, shall
10 not exceed 25% of the unappropriated surplus.
11 [(h) Investment in corporate stocks.--Preferred and common
12 stock of any corporation organized under the laws of the United
13 States or of any commonwealth or state thereof or of the
14 District of Columbia and preferred and common stock as defined
15 in subsection (i) of any corporation as defined in subsection
16 (j) whose shares are traded in United States dollars on the New
17 York Stock Exchange and American Stock Exchange shall be an
18 authorized investment of the fund, provided that they fulfill
19 certain guidelines in paragraph (1), regardless of any other
20 provision of law provided that:
21 (1) in the case of any stock other than stock of a bank
22 or insurance company, the stock is listed or traded (or if
23 unlisted or not entitled to trading privileges shall be
24 eligible for listing and application for such listing shall
25 have been made) on the New York Stock Exchange or American
26 Stock Exchange. No investment in the stock of corporations
27 not organized under the laws of the United States or of any
28 commonwealth or state thereof or of the District of Columbia
29 shall be made which would cause the book value of such
30 investment to exceed 5% of the book value of the total assets
19930S0974B2036 - 34 -
1 of the fund. Shares of banks and insurance companies shall be
2 eligible for purchase whether or not traded on the New York
3 Stock Exchange. The shares of unlisted nonfinancial companies
4 shall be eligible for purchase provided such corporations
5 produce revenue of $200,000,000 or more in their most recent
6 fiscal year-end and have paid cash dividends for the past
7 five or more consecutive years;
8 (2) no investment in common stock be made which at that
9 time would cause the book value of the investments in common
10 stock to exceed 50% of the total assets of the fund;
11 (3) the amount invested in the common stock of any one
12 company shall not exceed at cost 2% of the book value of the
13 assets of the fund at the time of purchase and shall not
14 exceed 5% of the issued and outstanding common stock of that
15 company; and
16 (4) the percentage limitations of paragraph (3) shall
17 not apply to the reinvestment of funds realized from the sale
18 or transfer of common stocks and no sale or other liquidation
19 of any investment shall be required solely because of any
20 change in market values whereby the percentages of stocks set
21 forth in this subsection are exceeded.
22 (i) Common stock defined.--"Common stock" as used in
23 subsection (h) shall include the stock certificates,
24 certificates of beneficial interests, or trust participation
25 certificates issued by any corporation or unincorporated
26 association included under the definition of "corporation" in
27 subsection (j).
28 (j) Corporation defined.--"Corporation" as used in
29 subsection (h) shall include a voluntary association, a joint-
30 stock association or company, a business trust, a Massachusetts
19930S0974B2036 - 35 -
1 trust, a common-law trust, and any other organization organized
2 and existing for any lawful purpose and which like a
3 corporation, continues to exist, notwithstanding changes in the
4 personnel of its members or participants and conducts its
5 affairs through a committee, a board, or some other group acting
6 in a representative capacity.
7 (k) Investment in real estate and mortgages.--Real estate,
8 whether direct or through pooled funds, including but not
9 limited to real estate which shall not require managerial
10 responsibility by the board; and bonds, notes and deeds of
11 trust, of individuals or corporations secured by mortgages on
12 real estate located in any state, district or territory of the
13 United States, shall be an authorized investment of the board
14 regardless of any other provision of law. All instruments,
15 transfers of interest, and all records pertaining to real
16 estate, mortgages or bonds invested in by the board, shall be
17 open to public inspection.
18 (l) Additional board power on investments.--Regardless of
19 any limitations, conditions or restrictions imposed on the
20 making of investments by this part or other law, the board may,
21 at its discretion, invest a maximum of 10% of the book value of
22 the assets of the fund in any investments not otherwise
23 specifically authorized, provided that such investments are made
24 with the exercise of that degree of judgment and care under the
25 circumstances then prevailing which persons of prudence,
26 discretion and intelligence who are familiar with such matters
27 exercise in the management of their own affairs not in regard to
28 speculation, but in regard to the permanent disposition of the
29 fund, considering the probable income to be derived therefrom as
30 well as the probable safety of their capital.
19930S0974B2036 - 36 -
1 (m) Obligations of United States to be authorized
2 investments.--Regardless of any other provision of law,
3 obligations of the United States Government and its agencies
4 shall be authorized investments of the fund.
5 (n) Vehicles for authorized investments.--The board may make
6 any investments authorized in this part or other law by becoming
7 a limited partner in partnerships that will hold such
8 investments, or by acquiring shares or units of participation or
9 otherwise participating beneficially in bank collective trusts
10 or in separate accounts of any insurance company authorized to
11 do business in this Commonwealth, or by acquiring stocks or
12 shares or units of participation or otherwise participating
13 beneficially in the fund of any corporation or trust organized
14 or existing under the laws of the United States or of any state,
15 district or territory thereof which fund is maintained for and
16 consists of assets of employees' benefit trusts (including
17 governmental plans as defined in section 414(d) of the Internal
18 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 414(d)), as
19 from time to time amended) which meet the requirements for
20 qualification under section 401 of the Internal Revenue Code of
21 1986; provided that, in any such case, the liability of the
22 Public School Employees' Retirement Fund shall be limited to the
23 amount of its investment. In the case of authorized investments
24 in real estate or interests therein, the board's acquisition of
25 the stock or shares of or its other participation beneficially
26 in the fund or any such vehicle (including any entity organized
27 and maintained as a vehicle for an investment or investments of
28 the board exclusively) shall not be deemed an investment in the
29 common stock as defined in subsection (i) of any corporation as
30 defined in subsection (j) for the purposes of any limitation on
19930S0974B2036 - 37 -
1 investment in corporate stocks set forth in subsection (h).
2 (o)] (h) Venture capital.--[The provisions of subsection (l)
3 notwithstanding, venture] Venture capital investments [made
4 through limited partnerships and through separate accounts]
5 shall be limited to not more than 2% of the book value of the
6 total assets of the fund as determined for financial statement
7 purposes as of June 30 next preceding the date of investment. [A
8 venture capital investment shall be made only if such investment
9 will enhance the general welfare of this Commonwealth and its
10 citizens through economic development and meets the standard of
11 prudence set forth in subsection (l).] An investment shall be
12 deemed a venture capital investment if it results in the
13 acquisition of equity interests or a combination of debt and
14 equity interests in a business which is expected to grow
15 substantially in the future and in which the expected return on
16 investment is to come predominantly from an increase in value of
17 the equity [interest and that are not held through or secured by
18 stock that is an authorized investment under the authority of
19 subsection (h)] interests and are not interests in or secured by
20 real estate. A venture capital investment may be made only if,
21 in the judgment of the board, the investment is reasonably
22 likely to enhance the general welfare of this Commonwealth and
23 its citizens and meets the standard of prudence set forth in
24 subsection (a). In determining whether the investment meets the
25 standard of prudence, the board may consider, together with the
26 expected return on and the risk characteristics of the
27 particular investment, the actual and expected future returns
28 and the risk characteristics of the total venture capital
29 investments held by the board at the time and the degree to
30 which the proposed new investment would promote further
19930S0974B2036 - 38 -
1 diversification within the venture capital asset class.
2 (i) Vehicles for authorized investments.--The board in its
3 prudent discretion may make any investments which meet the
4 standard of prudence set forth in subsection (a) by becoming a
5 limited partner in partnerships that will hold such investments;
6 or by acquiring shares or units of participation or otherwise
7 participating beneficially in bank collective trusts or in the
8 separate accounts of any insurance company authorized to do
9 business in this Commonwealth; or by acquiring stocks or shares
10 or units of participation or otherwise participating
11 beneficially in the fund of any corporation or trust organized
12 or existing under the laws of the United States or of any state,
13 district or territory thereof which fund is maintained for and
14 consists of assets of employees' benefit trusts, including
15 governmental plans as defined in section 414(d) of the Internal
16 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 414(d)) or
17 which meet the requirements for qualification under section 401
18 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
19 U.S.C. § 401), provided that, in any such case, the liability of
20 the Public School Employees' Retirement Fund shall be limited to
21 the amount of its investment.
22 (j) Legislative declaration concerning certain authorized
23 investments.--The General Assembly finds and declares that
24 authorized investments of the fund made by or on behalf of the
25 board under this section whereby the board becomes a joint owner
26 or stockholder in any company, corporation or association are
27 outside the scope of the original intent of and therefor do not
28 violate the prohibition set forth in section 8 of Article VIII
29 of the Constitution of Pennsylvania.
30 § 8533. Taxation, attachment and assignment of funds.
19930S0974B2036 - 39 -
1 (a) General rule.--Except as provided in [subsection (b)]
2 subsections (b), (c) and (d), the right of a person to a
3 member's annuity, a State annuity, or retirement allowance, to
4 the return of contributions, any benefit or right accrued or
5 accruing to any person under the provisions of this part, and
6 the moneys in the fund are hereby exempt from any State or
7 municipal tax, and exempt from levy and sale, garnishment,
8 attachment, or any other process whatsoever, and shall be
9 unassignable.
10 (b) Forfeiture.--Rights under this part shall be subject to
11 forfeiture as provided by the act of July 8, 1978 (P.L.752,
12 No.140), known as the ["]Public Employee Pension Forfeiture
13 Act.["]
14 (c) Domestic relations order.--Rights under this part shall
15 be subject to attachment in favor of an alternate payee as set
16 forth in an approved domestic relations order.
17 (d) Direct rollover.--Effective with distributions made on
18 or after January 1, 1993, and notwithstanding any other
19 provision of this part to the contrary, a distributee may elect,
20 at the time and in the manner prescribed by the board, to have
21 any portion of an eligible rollover distribution paid directly
22 to an eligible retirement plan by way of a direct rollover. For
23 purposes of this subsection, a "distributee" includes a member
24 and a member's surviving spouse and a member's former spouse who
25 is an alternate payee under an approved domestic relations
26 order. For purposes of this subsection, the term "eligible
27 rollover distribution" has the meaning given such term by
28 section 402(f)(2)(A) of the Internal Revenue Code of 1986
29 (Public Law 99-514, 26 U.S.C. § 402(f)(2)(A)) and "eligible
30 retirement plan" has the meaning given such term by section
19930S0974B2036 - 40 -
1 402(c)(8)(B) of the Internal Revenue Code of 1986, except that a
2 qualified trust shall be considered an eligible retirement plan
3 only if it accepts the distributee's eligible rollover
4 distribution; however, in the case of an eligible rollover
5 distribution to a surviving spouse, an eligible retirement plan
6 is an "individual retirement account" or an "individual
7 retirement annuity" as those terms are defined in section 408(a)
8 and (b) of the Internal Revenue Code of 1986.
9 Section 7. Title 24 is amended by adding sections to read:
10 § 8533.1. Approval of domestic relations orders.
11 (a) Certification.--A domestic relations order shall be
12 certified as an approved domestic relations order by the
13 secretary of the board, or his designated representative, only
14 if such order meets all of the following:
15 (1) Requires the system to provide any type or form of
16 benefit or any option already provided under this part.
17 (2) Requires the system to provide no more than the
18 total amount of benefits than the member would otherwise
19 receive (determined on the basis of actuarial value) unless
20 increased benefits are paid to the member or alternate payee
21 based upon cost-of-living increases or increases based on
22 other than actuarial value.
23 (3) Specifies the amount or percentage of the member's
24 benefits to be paid by the system to each such alternate
25 payee or the manner in which the amount or percentage is to
26 be determined.
27 (4) Specifies the retirement option to be selected by
28 the member upon retirement or states that the member may
29 select any retirement option offered by this part upon
30 retirement.
19930S0974B2036 - 41 -
1 (5) Specifies the name and last known mailing address,
2 if any, of the member and the name and last known mailing
3 address of each alternate payee covered by the order and
4 states that it is the responsibility of each alternate payee
5 to keep a current mailing address on file with the system.
6 (6) Does not grant an alternate payee any of the rights,
7 options or privileges of a member under this part.
8 (7) Requires the member to execute an authorization
9 allowing each alternate payee to monitor the member's
10 compliance with the terms of the domestic relations order
11 through access to information concerning the member
12 maintained by the system.
13 (b) Determination by secretary.--Within a reasonable period
14 of time after receipt of a domestic relations order, the
15 secretary of the board, or his designated representative, shall
16 determine whether this order is an approved domestic relations
17 order and notify the member and each alternate payee of this
18 determination. Notwithstanding any other provision of law, the
19 exclusive remedy of any member or alternate payee aggrieved by a
20 decision of the secretary of the board, or his designated
21 representative, shall be the right to an adjudication by the
22 board under 2 Pa.C.S. Ch. 5 (relating to practice and procedure)
23 with appeal therefrom to the Commonwealth court under 2 Pa.C.S.
24 Ch. 7 (relating to judicial review) and 42 Pa.C.S. § 763(a)(1)
25 (relating to direct appeals from government agencies).
26 (c) Other orders.--The requirements for approval identified
27 in subsection (a) shall not apply to any domestic relations
28 order which is an order for support as that term is defined in
29 23 Pa.C.S. § 4302 (relating to definitions) or an order for the
30 enforcement of arrearages as provided in 23 Pa.C.S. § 3703
19930S0974B2036 - 42 -
1 (relating to enforcement of arrearages). These orders shall be
2 approved to the extent that they do not attach moneys in excess
3 of the limits on attachments as established by the laws of this
4 Commonwealth and the United States.
5 (d) Obligation discharged.--Only the requirements of this
6 part and any regulations promulgated hereunder shall be used to
7 govern the approval or disapproval of a domestic relations
8 order. Therefore, if the secretary of the board, or his
9 designated representative, acts in accordance with the
10 provisions of this part and any promulgated regulations in
11 approving or disapproving a domestic relations order, then the
12 obligations of the system with respect to such approval or
13 disapproval shall be discharged.
14 § 8533.2. Irrevocable beneficiary.
15 Notwithstanding any other provision of this part, a domestic
16 relations order may provide for an irrevocable beneficiary. A
17 domestic relations order requiring the nomination of an
18 irrevocable beneficiary shall be deemed to be one that requires
19 a member to nominate an alternate payee as a beneficiary and
20 that prohibits the removal or change of that beneficiary without
21 approval of a court of competent jurisdiction, except by
22 operation of law. Such a domestic relations order may be
23 certified as an approved domestic relations order by the
24 secretary of the board, or his designated representative, after
25 the member makes such nomination, in which case the irrevocable
26 beneficiary so ordered by the court cannot be changed by the
27 member without approval by the court.
28 § 8533.3. Irrevocable survivor annuitant.
29 Notwithstanding any other provisions of this part, a domestic
30 relations order may provide for an irrevocable survivor
19930S0974B2036 - 43 -
1 annuitant. A domestic relations order requiring the designation
2 of an irrevocable survivor annuitant shall be deemed to be one
3 that requires a member to designate an alternate payee as a
4 survivor annuitant and that prohibits the removal or change of
5 that survivor annuitant without approval of a court of competent
6 jurisdiction, except by operation of law. Such a domestic
7 relations order may be certified as an approved domestic
8 relations order by the secretary of the board, or his designated
9 representative, in which case the irrevocable survivor annuitant
10 so ordered by the court cannot be changed by the member without
11 approval by the court. A person ineligible to be designated as a
12 survivor annuitant may not be designated an irrevocable survivor
13 annuitant.
14 § 8533.4. Amendment of approved domestic relations orders.
15 (a) Deceased alternate payee.--In the event that the
16 alternate payee predeceases the member and there are benefits
17 payable to the alternate payee, the divorce court may amend the
18 approved domestic relations order to substitute a person for the
19 deceased alternate payee to receive any benefits payable to the
20 deceased alternate payee.
21 (b) Recertification of amended order.--If a divorce court
22 amends the approved domestic relations order for any reason,
23 then the amended order must be submitted for recertification as
24 an approved domestic relations order as set forth in this part.
25 § 8535. Payments to school entities by Commonwealth.
26 For each school year beginning with the 1994-1995 1995-1996 <--
27 school year, each school entity shall be paid by the
28 Commonwealth for contributions based upon school service of
29 active members of the system after June 30, 1994 1995, as <--
30 follows:
19930S0974B2036 - 44 -
1 (1) The Commonwealth shall pay each school entity for
2 contributions made to the Public School Employees' Retirement
3 Fund based upon school service of all active members,
4 including members on activated military service leave, whose
5 effective dates of employment with their school entities are
6 after June 30, 1993 1994, and who also had not previously <--
7 been employed by any school entity within this Commonwealth
8 an amount equal to the amount certified by the Public School
9 Employees' Retirement Board as necessary to provide, together
10 with the members' contributions, reserves on account of
11 prospective annuities, supplemental annuities and the premium
12 assistance program as provided in this part in accordance
13 with section 8328 (relating to actuarial cost method),
14 multiplied by the market value/income aid ratio of the school
15 entity. For no school year shall any school entity receive
16 less than the amount that would result if the market
17 value/income aid ratio as defined in section 2501(14.1) of
18 the Public School Code of 1949, was .15 0.50. <--
19 (2) The Commonwealth shall pay each school entity for
20 contributions made to the Public School Employees' Retirement
21 Fund based upon school service of all active members,
22 including members on activated military service leave, who
23 are not described in paragraph (1), one-half of the amount
24 certified by the Public School Employees' Retirement Board as
25 necessary to provide, together with the members'
26 contributions, reserves on account of prospective annuities,
27 supplemental annuities and the premium assistance program as
28 provided in this part in accordance with section 8328.
29 (3) The State Treasurer shall make payment to school <--
30 entities of the Commonwealth's portion of the employer's
19930S0974B2036 - 45 -
1 liability under this section no later than five calendar days
2 prior to the Public School Employees' Retirement Fund's
3 payment due dates.
4 (3) SCHOOL ENTITIES SHALL HAVE UP TO FIVE DAYS AFTER <--
5 RECEIPT OF THE COMMONWEALTH'S PORTION OF THE EMPLOYER'S
6 LIABILITY TO MAKE PAYMENT TO THE PUBLIC SCHOOL EMPLOYEES'
7 RETIREMENT FUND.
8 Section 8. The definition of "superannuation annuitant" in
9 section 5102 of Title 71 is amended and the section is amended
10 by adding definitions to read:
11 § 5102. Definitions.
12 The following words and phrases as used in this part, unless
13 a different meaning is plainly required by the context, shall
14 have the following meanings:
15 * * *
16 "Alternate payee." Any spouse, former spouse, child or
17 dependent of a member who is recognized by a domestic relations
18 order as having a right to receive all or a portion of the
19 moneys payable to that member under this part.
20 * * *
21 "Approved domestic relations order." Any domestic relations
22 order which has been determined to be approved in accordance
23 with section 5953.1 (relating to approval of domestic relations
24 orders).
25 * * *
26 "Disability annuitant." A member on and after the effective
27 date of disability until his annuity, or the portion of his
28 annuity payments in excess of any annuity to which he may
29 otherwise be entitled, is terminated.
30 "Domestic relations order." Any judgment, decree or order,
19930S0974B2036 - 46 -
1 including approval of a property settlement agreement, entered
2 on or after the effective date of this definition by a court of
3 competent jurisdiction pursuant to a domestic relations law
4 which relates to the marital property rights of the spouse or
5 former spouse of a member, including the right to receive all,
6 or a portion of, the moneys payable to that member under this
7 part in furtherance of the equitable distribution of marital
8 assets. The term includes orders of support as that term is
9 defined by 23 Pa.C.S. § 4302 (relating to definitions) and
10 orders for the enforcement of arrearages as provided in 23
11 Pa.C.S. § 3703 (relating to enforcement of arrearages).
12 * * *
13 "Irrevocable beneficiary." The person or persons permanently
14 designated by a member in writing to the State Employees'
15 Retirement Board pursuant to an approved domestic relations
16 order to receive all or a portion of the accumulated deductions
17 or lump sum benefit payable upon the death of such member.
18 "Irrevocable survivor annuitant." The person permanently
19 designated by a member in writing to the State Employees'
20 Retirement Board pursuant to an approved domestic relations
21 order to receive an annuity upon the death of such member.
22 * * *
23 "Superannuation annuitant." An annuitant whose annuity
24 [becomes] first became payable on or after the attainment of
25 superannuation age and who is not a disability annuitant.
26 * * *
27 Section 9. Section 5304(e) of Title 71 is repealed.
28 Section 10. Sections 5308(c), 5308.1, 5505(b), 5508(b), (c)
29 and (e), 5704(a), 5705(a)(4) and 5706 of Title 71 are amended to
30 read:
19930S0974B2036 - 47 -
1 § 5308. Eligibility for annuities.
2 * * *
3 (c) Disability annuity.--An active member or inactive member
4 on leave without pay who has credit for at least five years of
5 service or any active member or inactive member on leave without
6 pay who is an officer of the Pennsylvania State Police or an
7 enforcement officer shall, upon compliance with section 5907(k),
8 be entitled to a disability annuity if [prior to attainment of
9 superannuation age] he becomes mentally or physically incapable
10 of continuing to perform the duties for which he is employed and
11 qualifies in accordance with the provisions of section
12 5905(c)(1) (relating to duties of the board regarding
13 applications and elections of members).
14 § 5308.1. Eligibility for special early retirement.
15 Notwithstanding any provisions of this title to the contrary,
16 the following special early retirement provisions shall be
17 applicable to specified eligible members as follows:
18 (1) During the period of July 1, 1985, to September 30,
19 1991, an active member who has attained the age of at least
20 53 years and has accrued at least 30 eligibility points shall
21 be entitled, upon termination of State service and compliance
22 with section 5907(f) (relating to rights and duties of State
23 employees and members), to receive a maximum single life
24 annuity calculated under section 5702 (relating to maximum
25 single life annuity) without a reduction by virtue of an
26 effective date of retirement which is under the
27 superannuation age.
28 (2) During the period of July 1, 1985, to September 30,
29 1991, an active member who has attained the age of at least
30 50 years but not greater than 53 years and has accrued at
19930S0974B2036 - 48 -
1 least 30 eligibility points shall be entitled, upon
2 termination of State service and compliance with section
3 5907(f), to receive a maximum single life annuity calculated
4 under section 5702 with a reduction by virtue of an effective
5 date of retirement which is under the superannuation age of a
6 percentage factor which shall be determined by multiplying
7 the number of months, including a fraction of a month as a
8 full month, by which the effective date of retirement
9 precedes the attainment of age 53 by 0.25%.
10 (3) During the period of October 1, 1991, to June 30,
11 1993, a member who has credit for at least 30 eligibility
12 points shall be entitled, upon termination of service and
13 filing of a proper application, to receive a maximum single
14 life annuity calculated pursuant to section 5702 without any
15 reduction by virtue of an effective date of retirement which
16 is under the superannuation age.
17 (4) During the period of July 1, 1993, to July 1, 1997,
18 a member who has credit for at least 30 eligibility points
19 shall be entitled, upon termination of service and filing of
20 a proper application, to receive a maximum single life
21 annuity calculated pursuant to section 5702 without any
22 reduction by virtue of an effective date of retirement which
23 is under the superannuation age.
24 § 5505. Contributions for the purchase of credit for creditable
25 nonstate service.
26 * * *
27 (b) Nonintervening military service.--
28 (1) The amount due for the purchase of credit for
29 military service other than intervening military service
30 shall be determined by applying the member's basic
19930S0974B2036 - 49 -
1 contribution rate, the additional contribution rate plus the
2 Commonwealth normal contribution rate for active members at
3 the time of entry, subsequent to such military service, of
4 the member into State service to his average annual rate of
5 compensation over the first three years of such subsequent
6 State service and multiplying the result by the number of
7 years and fractional part of a year of creditable
8 nonintervening military service being purchased together with
9 statutory interest during all periods of subsequent State and
10 school service to date of purchase. Upon application for
11 credit for such service, payment shall be made in a lump sum
12 within 30 days or in the case of an active member it may be
13 amortized with statutory interest through salary deductions
14 in amounts agreed upon by the member and the board.
15 Application may be filed for all such military service credit
16 upon completion of three years of subsequent State service
17 and shall be credited as Class A service.
18 (2) Applicants may purchase credit as follows:
19 (i) one purchase of the total amount of creditable
20 nonintervening military service; or
21 (ii) one purchase per 12-month period of a portion
22 of creditable nonintervening military service.
23 The amount of each purchase shall be not less than one year
24 of creditable nonintervening military service.
25 * * *
26 § 5508. Actuarial cost method.
27 * * *
28 (b) Employer normal contribution rate.--The employer normal
29 contribution rate shall be determined after each actuarial
30 valuation on the basis of an annual interest rate and such
19930S0974B2036 - 50 -
1 mortality and other tables as shall be adopted by the board in
2 accordance with generally accepted actuarial principles. The
3 employer normal contribution rate shall be determined as a level
4 percentage of the compensation of the average new active member,
5 which percentage, if contributed on the basis of his prospective
6 compensation through his entire period of active State service,
7 would be sufficient to fund the liability for any prospective
8 benefit payable to him, except for the supplemental benefits
9 provided for in sections 5708 (relating to supplemental
10 annuities), 5708.1 (relating to additional supplemental
11 annuities) [and], 5708.2 (relating to further additional
12 supplemental annuities) and 5708.3 (relating to supplemental
13 annuities commencing 1994), in excess of that portion funded by
14 his prospective member contributions.
15 (c) Accrued liability contribution rate.--For the fiscal
16 year beginning July 1, 1991, the accrued liability contribution
17 rate shall be computed as the rate of total compensation of all
18 active members which shall be certified by the actuary as
19 sufficient to fund over a period of 20 years from July 1, 1991,
20 the present value of the liabilities for all prospective
21 benefits, except for the supplemental benefits as provided in
22 sections 5708, 5708.1 [and], 5708.2 and 5708.3, in excess of the
23 total assets in the fund (calculated recognizing all investment
24 gains and losses over a five-year period), excluding the balance
25 in the supplemental annuity account, and the present value of
26 employer normal contributions and of member contributions
27 payable with respect to all active members on July 1, 1991. The
28 amount of each annual accrued liability contribution shall be 5%
29 greater than the amount of such contribution for the previous
30 fiscal year, except that, if the accrued liability is increased
19930S0974B2036 - 51 -
1 by legislation enacted subsequent to July 1, 1991, such
2 additional liability shall be funded over a period of 20 years
3 from the first day of July, coincident with or next following
4 the effective date of the increase, provided that the liability
5 for any additional benefits created by this act shall be funded
6 over a period of 20 years commencing July 1, 1992. The amount of
7 each annual accrued liability contribution for such additional
8 legislative liabilities shall be 5% greater than the amount of
9 such contribution for the previous fiscal year.
10 * * *
11 (e) Supplemental annuity contribution rate.--Contributions
12 from the Commonwealth required to provide for the payment of
13 supplemental annuities as provided in sections 5708, 5708.1 and
14 5708.2 shall be paid over a period of 20 years from July 1,
15 1991. The amount of each annual supplemental annuities
16 contribution shall be 5% greater than the amount of such
17 contribution for the previous fiscal year. In the event that
18 supplemental annuities are increased by legislation enacted
19 subsequent to July 1, 1991, the additional liability for the
20 increase in benefits shall be funded in annual installments
21 increasing by 5% each year over a period of 20 years from the
22 July first, coincident with or next following the effective date
23 of such legislation. Notwithstanding the preceding, the funding
24 for the supplemental annuities commencing 1994 provided for in
25 section 5708.3 shall be as provided in section 5708.3(f).
26 * * *
27 § 5704. Disability annuities.
28 (a) Amount of annuity.--A member who has made application
29 for a disability annuity and has been found to be eligible in
30 accordance with the provisions of section 5905(c)(1) (relating
19930S0974B2036 - 52 -
1 to duties of the board regarding applications and elections of
2 members) shall receive a disability annuity payable from the
3 effective date of disability as determined by the board and
4 continued until a subsequent determination by the board that the
5 annuitant is no longer entitled to a disability annuity. The
6 disability annuity shall be equal to a standard single life
7 annuity multiplied by the class of service multiplier applicable
8 to the class of service at the time of disability if the product
9 of such class of service multiplier and the total number of
10 years of credited service is greater than 16.667, otherwise the
11 standard single life annuity shall be multiplied by the lesser
12 of the following ratios:
13 MY*/Y or 16.667/Y
14 where Y = number of years of credited service, Y* = total years
15 of credited service if the member were to continue as a State
16 employee until attaining superannuation age as applicable at the
17 time of disability, or if the member has attained superannuation
18 age, as applicable at the time of disability, then the number of
19 years of credited service and M = the class of service
20 multiplier as applicable at the [time of disability] effective
21 date of disability. A member of Class C shall receive, in
22 addition, any annuity to which he may be eligible under section
23 5702(a)(3) (relating to maximum single life annuity). The member
24 shall be entitled to the election of a joint and survivor
25 annuity on that portion of the disability annuity to which he is
26 entitled under section 5702.
27 * * *
28 § 5705. Member's options.
29 (a) General rule.--Any vestee having ten or more eligibility
30 points or any other eligible member upon termination of State
19930S0974B2036 - 53 -
1 service who has not withdrawn his total accumulated deductions
2 as provided in section 5701 (relating to return of total
3 accumulated deductions) may apply for and elect to receive
4 either a maximum single life annuity, as calculated in
5 accordance with the provisions of section 5702 (relating to
6 maximum single life annuity), or a reduced annuity certified by
7 the actuary to be actuarially equivalent to the maximum single
8 life annuity and in accordance with one of the following
9 options; except that no member shall elect an annuity payable to
10 one or more survivor annuitants other than his spouse or
11 alternate payee of such a magnitude that the present value of
12 the annuity payable to him for life plus any lump sum payment he
13 may have elected to receive is less than 50% of the present
14 value of his maximum single life annuity:
15 * * *
16 (4) Option 4.--Some other benefit which shall be
17 certified by the actuary to be actuarially equivalent to the
18 maximum single life annuity, subject to the following
19 restrictions:
20 (i) any annuity shall be payable without reduction
21 during the lifetime of the member [except as the result
22 of the member's election to receive an annuity reduced
23 upon attainment of age 65, in anticipation of the receipt
24 of a social security benefit];
25 (ii) the sum of all annuities payable to the
26 designated survivor annuitants shall not be greater than
27 one and one-half times the annuity payable to the member;
28 and
29 (iii) a portion of the benefit may be payable as a
30 lump sum, except that such lump sum payment shall not
19930S0974B2036 - 54 -
1 exceed an amount equal to the total accumulated
2 deductions standing to the credit of the member. The
3 balance of the present value of the maximum single life
4 annuity adjusted in accordance with section 5702(b) shall
5 be paid in the form of an annuity with a guaranteed total
6 payment, a single life annuity, or a joint and survivor
7 annuity or any combination thereof but subject to the
8 restrictions of subparagraphs (i) and (ii) under this
9 option.
10 * * *
11 § 5706. Termination of annuities.
12 (a) General rule.--If the annuitant returns to State service
13 or enters school service and elects multiple service membership,
14 any annuity payable to him under this part shall cease and in
15 the case of an annuity other than a disability annuity the
16 present value of such annuity, adjusted for full coverage in the
17 case of a joint coverage member who makes the appropriate back
18 contributions for full coverage, shall be frozen as of the date
19 such annuity ceases. An annuitant who is credited with an
20 additional 10% of Class A and Class C service as provided in
21 section 5302(c) (relating to credited State service) and who
22 returns to State service shall forfeit such credited service and
23 shall have his frozen present value adjusted as if his 10%
24 retirement incentive had not been applied to his account. In the
25 event that the cost-of-living increase enacted December 18, 1979
26 occurred during the period of such State or school employment,
27 the frozen present value shall be increased, on or after the
28 member attains superannuation age, by the percent applicable had
29 he not returned to service. This subsection shall not apply in
30 the case of any annuitant who may render services to the
19930S0974B2036 - 55 -
1 Commonwealth in the capacity of an independent contractor or as
2 a member of an independent board or commission or as a member of
3 a departmental administrative or advisory board or commission
4 when such members of independent or departmental boards or
5 commissions are compensated on a per diem basis for not more
6 than [100] 150 days per calendar year.
7 (a.1) Return to State service during emergency.--When, in
8 the judgment of the employer, an emergency creates an increase
9 in the work load such that there is serious impairment of
10 service to the public, an annuitant may be returned to State
11 service for a period not to exceed 95 days in any fiscal year
12 without loss of his annuity. In computing the number of days an
13 annuitant has returned to State service, any amount of time less
14 than one-half of a day shall be counted as one-half of a day.
15 For agencies, boards and commissions under the Governor's
16 jurisdiction, the approval of the Governor that an emergency
17 exists shall be required before an annuitant may be returned to
18 State service.
19 (b) Subsequent discontinuance of service.--Upon subsequent
20 discontinuance of service, such member other than a former
21 annuitant who elected to eliminate the effect of his frozen
22 present value in accordance with subsection (c) or a former
23 disability annuitant shall be entitled to an annuity which is
24 actuarially equivalent to the sum of the present value as
25 determined under subsection (a) and the present value of a
26 maximum single life annuity based on years of service credited
27 subsequent to reentry in the system and his final average salary
28 computed by reference to his compensation during his entire
29 period of State and school service.
30 (c) Election to eliminate the effect of frozen present
19930S0974B2036 - 56 -
1 value.--
2 (1) If an annuitant who has not elected multiple service
3 returns to State service and earns three eligibility points
4 by performing credited State service following the most
5 recent period of receipt of an annuity under this part and
6 the present value of his annuity has been frozen in
7 accordance with subsection (a), the former annuitant may
8 elect to eliminate the effect of the frozen present value
9 resulting from all previous periods of retirement by agreeing
10 to return to the fund all payments under Option 4 and annuity
11 payments payable during previous periods of retirement plus
12 interest as set forth in paragraph (4) in the form of an
13 actuarial adjustment to his subsequent benefits.
14 (2) A former annuitant who has not elected multiple
15 service and chooses to eliminate the effect of his frozen
16 present value must elect to do so in the fiscal year in which
17 he first becomes eligible or in the following fiscal year.
18 Only an active or inactive member on leave can elect to
19 eliminate the effect of frozen present value.
20 (3) Upon subsequent discontinuance of service where a
21 former annuitant has elected to eliminate the effect of the
22 frozen present value under this subsection, that portion of
23 the present value of his account upon which his annuity had
24 been calculated shall no longer be frozen and he shall be
25 entitled to an annuity calculated in accordance with the
26 provisions of this part as then in effect, adjusted according
27 to paragraph (4), provided that a former annuitant who
28 retired under a provision of law granting additional service
29 credit if termination of State service or retirement occurred
30 during a specific period of time, shall not be permitted to
19930S0974B2036 - 57 -
1 retain the additional service credit under the prior law when
2 the annuity is computed for his most recent retirement.
3 (4) In addition to any other adjustment to the present
4 value of the maximum single life annuity that a member may be
5 entitled to receive that occurs as a result of any other
6 provision of law, the present value of the maximum single
7 life annuity shall be reduced by all amounts paid or payable
8 to him during all previous periods of retirement plus
9 interest on these amounts until the date of subsequent
10 retirement. The interest for each year shall be calculated
11 based upon the annual interest rate adopted for that fiscal
12 year by the board for the calculation of the normal
13 contribution rate pursuant to section 5508(b) (relating to
14 actuarial cost method).
15 Section 11. Title 71 is amended by adding a section to read:
16 § 5708.3. Supplemental annuities commencing 1994.
17 (a) Benefits.--Commencing with the first monthly annuity
18 payment after July 1, 1994, any eligible benefit recipient shall
19 be entitled to receive a further additional monthly supplemental
20 annuity from the system. This shall be in addition to the
21 supplemental annuities provided for in sections 5708 (relating
22 to supplemental annuities), 5708.1 (relating to additional
23 supplemental annuities) and 5708.2 (relating to further
24 additional supplemental annuities).
25 (b) Amount of additional supplemental annuity.--The amount
26 of the additional monthly supplemental annuity shall be
27 determined on the basis of the most recent effective date of
28 retirement and payable on the first $3,000 of annuity received
29 per month, as follows:
30 Most recent effective Percentage factor
19930S0974B2036 - 58 -
1 date of retirement
2 July 1, 1991, through June 30, 1992 1.5%
3 July 1, 1990, through June 30, 1991 2.8%
4 July 1, 1989, through June 30, 1990 5.3%
5 On or prior to June 30, 1989 7.9%
6 In addition to the supplemental annuity payable as a result of
7 the percentage factors as set forth in this subsection, there
8 shall be a monthly longevity supplemental annuity payable as
9 follows:
10 (1) For those individuals whose most recent effective
11 date of retirement is on or after July 1, 1969, and on or
12 before July 1, 1984, and who have 20 or more eligibility
13 points, the monthly longevity supplemental annuity shall be
14 equal to 0.25% of the first $3,000 of annuity received per
15 month multiplied by the number of years on retirement.
16 (2) For those individuals whose most recent effective
17 date of retirement is on or before June 30, 1969, and who
18 have 20 or more eligibility points, the monthly longevity
19 supplemental annuity shall be equal to 0.25% of the first
20 $3,000 of annuity received per month multiplied by the number
21 of years on retirement between July 1, 1969, and July 1,
22 1989, plus 0.50% of the first $3,000 of annuity received per
23 month multiplied by the years on retirement on or before June
24 30, 1969.
25 (c) Payment.--The additional monthly supplemental annuity
26 provided under this section shall be paid automatically unless
27 the intended recipient files a written notice with the system
28 requesting that the additional monthly supplemental annuity not
29 be paid.
30 (d) Conditions.--The additional supplemental annuity
19930S0974B2036 - 59 -
1 provided under this section shall be payable under the same
2 terms and conditions as provided under the option plan in effect
3 as of June 30, 1994.
4 (e) Benefits paid to beneficiaries or survivors.--No
5 supplemental annuity effective after the death of the member
6 shall be payable to the beneficiary or survivor annuitant of the
7 deceased member.
8 (f) Funding.--Notwithstanding section 5508(e) (relating to
9 actuarial cost method), the additional liability for the
10 increase in benefits provided in this section shall be funded in
11 annual installments increasing by 5% each year over a period of
12 20 years beginning July 1, 1995.
13 (g) Definitions.--As used in this section, the following
14 words and phrases shall have the meanings given to them in this
15 subsection:
16 "Eligible benefit recipient." A person who is receiving a
17 superannuation, withdrawal or disability annuity and who
18 commenced receipt of that annuity on or prior to June 30, 1992,
19 but the supplemental annuities shall not be payable to an
20 annuitant receiving a withdrawal annuity prior to the first day
21 of July coincident with or following the annuitant's attainment
22 of superannuation age. Notwithstanding the preceding, the term
23 "eligible benefit recipient" shall not include those annuitants
24 who were and currently are credited with an additional 10% of
25 their Class A or Class C service under section 5302(c) (relating
26 to credited State service).
27 "Years on retirement." The number of full years as of July
28 1, 1989, which have elapsed since the eligible benefit recipient
29 most recently commenced the receipt of an annuity and during
30 which the eligible benefit recipient received an annuity.
19930S0974B2036 - 60 -
1 Section 12. Sections 5901(a), 5902, 5905, 5907(f), (h) and
2 (k), 5908(b) and (c), 5931 and 5953 of Title 71 are amended to
3 read:
4 § 5901. The State Employees' Retirement Board.
5 (a) Status and membership.--The board shall be an
6 independent administrative board and consist of 11 members: the
7 State Treasurer, ex officio, two Senators or former Senators,
8 two members or former members of the House of Representatives
9 and six members appointed by the Governor, one of whom shall be
10 an annuitant of the system, for terms of four years, subject to
11 confirmation by the Senate. At least five board members shall be
12 active members of the system, and at least two shall have ten or
13 more years of credited State service. The chairman of the board
14 shall be designated by the Governor from among the members of
15 the board. Each member of the board who is a member of the
16 General Assembly may appoint a duly authorized designee to act
17 in his stead.
18 * * *
19 § 5902. Administrative duties of the board.
20 (a) Employees.--The secretary, clerical, and other employees
21 of the board and their successors whose positions on the
22 effective date of this part are under the classified service
23 provisions of the act of August 5, 1941 (P.L.752, No.286), known
24 as the Civil Service Act, shall continue under such provisions.
25 Notwithstanding any other provisions of law, the compensation
26 shall be established by the board for the secretary, the
27 assistant secretary, investment professionals and other
28 professionals designated by the board who are not covered by a
29 collective bargaining agreement. The secretary shall act as
30 chief administrative officer for the board. In addition to other
19930S0974B2036 - 61 -
1 powers and duties conferred upon and delegated to the secretary
2 by the board, the secretary shall:
3 (1) Serve as the administrative agent of the board.
4 (2) Serve as liaison between the board and applicable
5 legislative committees, the Treasury Department, the
6 Department of the Auditor General, and between the board and
7 the investment counsel and the mortgage supervisor in
8 arranging for investments to secure maximum returns to the
9 fund.
10 (3) Review and analyze proposed legislation and
11 legislative developments affecting the system and present
12 findings to the board, legislative committees, and other
13 interested groups or individuals.
14 (4) Direct the maintenance of files and records and
15 preparation of periodic reports required for actuarial
16 evaluation studies.
17 (5) Receive inquiries and requests for information
18 concerning the system from the press, Commonwealth officials,
19 State employees, the general public, research organizations,
20 and officials and organizations from other states, and
21 provide information as authorized by the board.
22 (6) Supervise a staff of administrative, technical, and
23 clerical employees engaged in record-keeping and clerical
24 processing activities in maintaining files of members,
25 accounting for contributions, processing payments to
26 annuitants, preparing required reports, and retirement
27 counseling.
28 (b) Professional personnel.--The board shall contract for
29 the services of a chief medical examiner, an actuary, investment
30 advisors and counselors, and such other professional personnel
19930S0974B2036 - 62 -
1 as it deems advisable. The board may, with the approval of the
2 Attorney General, contract for legal services.
3 (c) Expenses.--The board shall, through the Governor, submit
4 to the General Assembly annually a budget covering the
5 administrative expenses of this part. Such expenses as approved
6 by the General Assembly in an appropriation bill shall be paid
7 from investment earnings of the fund. Concurrently with its
8 administrative budget, the board shall also submit to the
9 General Assembly annually a list of proposed expenditures which
10 the board intends to pay through the use of directed commissions
11 together with a list of the actual expenditures from the past
12 year actually paid by the board through the use of directed
13 commissions. All such directed commission expenditures shall be
14 made by the board for the exclusive benefit of the system and
15 its members.
16 (d) Meetings.--The board shall hold at least six regular
17 meetings annually and such other meetings as it may deem
18 necessary.
19 (e) Records.--The board shall keep a record of all its
20 proceedings which shall be open to inspection by the public.
21 (f) Functions.--The board shall perform such other functions
22 as are required for the execution of the provisions of this
23 part.
24 (g) Performance of departmental duties.--In the event the
25 head of the department fails to comply with the procedures as
26 mandated in section 5906 (relating to duties of heads of
27 departments), the board shall perform such duties and bill the
28 department for the cost of same.
29 (h) Regulations and procedures.--The board shall, with the
30 advice of the Attorney General and the actuary, adopt and
19930S0974B2036 - 63 -
1 promulgate rules and regulations for the uniform administration
2 of the system. The actuary shall approve in writing all
3 computational procedures used in the calculation of
4 contributions and benefits prior to their application by the
5 board.
6 (i) Data.--The board shall keep in convenient form such data
7 as are stipulated by the actuary in order that an annual
8 actuarial valuation of the various accounts can be completed
9 within six months of the close of each calendar year.
10 (j) Actuarial investigation and valuation.--The board shall
11 have the actuary make an annual valuation of the various
12 accounts within six months of the close of each calendar year.
13 In the year 1975 and in every fifth year thereafter the board
14 shall have the actuary conduct an actuarial investigation and
15 evaluation of the system based on data including the mortality,
16 service, and compensation experience provided by the board
17 annually during the preceding five years concerning the members
18 and beneficiaries. The board shall adopt such tables as are
19 necessary for the actuarial valuation of the fund and
20 calculation of contributions, annuities and benefits based on
21 the reports and recommendations of the actuary.
22 (k) Certification of employer contributions.--The board
23 shall, each year in addition to the itemized budget required
24 under section 5509 (relating to appropriations and assessments
25 by the Commonwealth), certify, as a percentage of the members'
26 payroll, the employers' contributions as determined pursuant to
27 section 5508 (relating to actuarial cost method) necessary for
28 the funding of prospective annuities for active members and the
29 annuities of annuitants and certify the rates and amounts of the
30 employers' normal contributions as determined pursuant to
19930S0974B2036 - 64 -
1 section 5508(b), accrued liability contributions as determined
2 pursuant to section 5508(c), supplemental annuities contribution
3 rate as determined pursuant to section 5508(e) and the
4 experience adjustment factor as determined pursuant to section
5 5508(f), which shall be paid to the fund and credited to the
6 appropriate accounts. These certifications shall be regarded as
7 final and not subject to modification by the Budget Secretary.
8 (l) Member contributions.--The board shall cause all pickup
9 contributions made on behalf of a member to be credited to the
10 account of the member and credit to his account any other
11 payment made by such member and shall pay all such amounts into
12 the fund.
13 (m) Annual financial statement.--The board shall prepare and
14 have published, on or before July 1 of each year, a financial
15 statement as of the calendar year ending December 31 of the
16 previous year showing the condition of the fund and the various
17 accounts, including, but not limited to, the board's accrual and
18 expenditure of directed commissions, and setting forth such
19 other facts, recommendations, and data as may be of use in the
20 advancement of knowledge concerning annuities and other benefits
21 provided by this part. The board shall submit said financial
22 statement to the Governor and shall file copies with the head of
23 each department for the use of the State employees and the
24 public.
25 (n) Independent audit.--The board shall provide for an
26 annual audit of the system by an independent certified public
27 accountant, which audit shall include the board's accrual and
28 expenditure of directed commissions.
29 § 5905. Duties of the board regarding applications and
30 elections of members.
19930S0974B2036 - 65 -
1 (a) Statement to new members.--As soon as practicable after
2 each member shall have become an active member in the system,
3 the board shall issue to the member a statement certifying his
4 class of service, his member contribution rate, and the
5 aggregate length of total previous State service and creditable
6 nonstate service for which he may receive credit.
7 (b) School employees electing multiple service status.--Upon
8 receipt of notification from the Public School Employees'
9 Retirement Board that a former State employee has become an
10 active member in the Public School Employees' Retirement System
11 and has elected to become a member with multiple service status
12 the board shall:
13 (1) in case of a member receiving an annuity from the
14 system, discontinue payments, transfer the present value, at
15 that time, of the member's annuity from the annuity reserve
16 account to the members' savings account and resume crediting
17 of statutory interest on the amount restored to his credit
18 and transfer the balance of the present value of the total
19 annuity from the annuity reserve account to the State
20 accumulation account; or
21 (2) in case of a member who is not receiving an annuity
22 and has not withdrawn his total accumulated deductions,
23 continue or resume the crediting of statutory interest on his
24 total accumulated deductions during the period his total
25 accumulated deductions remain in the fund; or
26 (3) in case of a former State employee who is not
27 receiving an annuity from the system and his total
28 accumulated deductions were withdrawn, certify to the former
29 State employee the accumulated deductions as they would have
30 been at the time of his separation had he been a full
19930S0974B2036 - 66 -
1 coverage member together with statutory interest for all
2 periods of subsequent State and school service to the date of
3 repayment. Such amount shall be restored by him and shall be
4 credited with statutory interest as such payments are
5 restored.
6 (c) Disability annuities.--In every case where the board has
7 received an application duly executed by the member or by a
8 person legally authorized to act in his behalf for a disability
9 annuity based upon the member's physical or mental incapacity
10 for the performance of the job for which [the member is
11 employed] he is employed, with or without a supplement for a
12 service-connected disability, taking into account relevant
13 decisions by The Pennsylvania Workmen's Compensation Board, the
14 board shall:
15 (1) through the medical examiner, have the application
16 and any supporting medical records and other documentation
17 submitted with the application reviewed and on the basis of
18 said review, and the subsequent recommendation by the medical
19 examiner regarding the applicant's medical qualification for
20 a disability annuity along with such other recommendations
21 which he may make with respect to the permanency of
22 disability or the need for subsequent reviews, make a finding
23 of disability and whether or not the disability is service
24 connected or nondisability and in the case of disability
25 establish an effective date of disability and the terms and
26 conditions regarding subsequent reviews;
27 (2) upon the recommendation of the medical examiner on
28 the basis of a review of subsequent medical reports submitted
29 with an application for continuance of disability, make a
30 finding of continued disability and whether or not the
19930S0974B2036 - 67 -
1 disability continues to be service connected, or a finding of
2 nondisability; and in the case of a finding that the
3 disability is no longer service connected, discontinue any
4 supplemental payments on account of such service connected
5 disability as of the date of the finding; and in the case of
6 a finding of nondisability establish the date of termination
7 of disability and at that time discontinue any annuity
8 payments in excess of an annuity calculated in accordance
9 with section 5702 (relating to maximum single life annuity);
10 and
11 (3) upon receipt of a written statement from a
12 disability annuitant of his earned income of the previous
13 quarter, adjust the payments of the disability annuity for
14 the following quarter in accordance with the provisions of
15 section 5704(c) (relating to disability annuities).
16 (c.1) Termination of service.--[The board shall, in] In the
17 case of any member terminating State service who is entitled to
18 an annuity[,] and who is not then a disability annuitant, the
19 board shall advise such member in writing of any benefits to
20 which he may be entitled under the provisions of this part and
21 shall have the member prepare, on or before the date of
22 termination of State service, one of the following three forms,
23 a copy of which shall be given to the member and the original of
24 which shall be filed with the board:
25 (1) an application for the return of total accumulated
26 deductions;
27 (2) an election to vest his retirement rights and, if he
28 is a joint coverage member and so desires, elect to become a
29 full coverage member and agree to pay within 30 days of the
30 date of termination of service the lump sum required; or
19930S0974B2036 - 68 -
1 (3) an application for an immediate annuity and, if he
2 desires:
3 (i) an election to convert his medical, major
4 medical and hospitalization insurance coverage to the
5 plan for State annuitants; and
6 (ii) if he is a joint coverage member, an election
7 to become a full coverage member and an agreement to pay
8 within 30 days of date of termination of service the lump
9 sum required.
10 (e) Certification to vestees terminating service.--The board
11 shall certify to a vestee within one year of termination of
12 State service of such member:
13 (1) the total accumulated deductions standing to his
14 credit at the date of termination of service;
15 (2) the number of years and fractional part of a year of
16 credit in each class of service; and
17 (3) the maximum single life annuity to which the vestee
18 shall become entitled upon the attainment of superannuation
19 age and the filing of an application for such annuity.
20 (e.1) Notification to vestees approaching superannuation
21 age.--The board shall notify each vestee in writing 90 days
22 prior to his attainment of superannuation age[,] that he shall
23 apply for his annuity within 90 days of attainment of
24 superannuation age[, and that failure to apply within that time
25 shall result in the cancellation of the right of the vestee to
26 any death benefit in excess of]; that, if he does so apply, his
27 effective date of retirement will be the date of attainment of
28 superannuation age; that, if he does not so apply but defers his
29 application to a later date, his effective date of retirement
30 will be the date of filing such application or the date
19930S0974B2036 - 69 -
1 specified on the application, whichever is later; and that, if
2 he does not file an application within seven years after
3 attaining superannuation age, he shall be deemed to have elected
4 to receive his total accumulated deductions upon attainment of
5 superannuation age.
6 (f) Initial annuity payment and certification.--The board
7 shall make the first monthly payment to a member who is eligible
8 for an annuity within 60 days of the filing of his application
9 for an annuity or, in the case of a vestee who has deferred the
10 filing of his application to a date later than 90 days following
11 attainment of superannuation age, within 60 days of the
12 effective date of retirement, and receipt of the required data
13 from the head of the department. Concurrently the board shall
14 certify to such member:
15 (1) the total accumulated deductions standing to his
16 credit showing separately the amount contributed by the
17 member, the pickup contribution and the interest credited to
18 the date of termination of service;
19 (2) the number of years and fractional part of a year
20 credited in each class of service;
21 (3) the final average salary on which his annuity is
22 based as well as any applicable reduction factors due to age
23 and/or election of an option; and
24 (4) the total annuity payable under the option elected
25 and the amount and effective date of any future reduction
26 under section 5703 (relating to reduction of annuities on
27 account of social security old-age insurance benefits).
28 (g) Death benefits.--Upon receipt of notification from the
29 head of a department of the death of an active member or a
30 member on leave without pay, the board shall advise the
19930S0974B2036 - 70 -
1 designated beneficiary of the benefits to which he is entitled,
2 and shall make the first payment to the beneficiary within 60
3 days of receipt of certification of death and other necessary
4 data. If no beneficiary designation is in effect at the date of
5 the member's death or no notice has been filed with the board to
6 pay the amount of the benefits to the member's estate, the board
7 is authorized to pay the benefits to the executor,
8 administrator, surviving spouse or next of kin of the deceased
9 member, and payment pursuant hereto shall fully discharge the
10 fund from any further liability to make payment of such benefits
11 to any other person. If the surviving spouse or next of kin of
12 the deceased member cannot be found for the purpose of paying
13 the benefits for a period of seven years from the date of death
14 of the member, then the benefits shall be escheated to the
15 Commonwealth for the benefit of the fund.
16 (h) Medical insurance coverage.--Upon receipt of the
17 election by an eligible member to convert his medical, major
18 medical, and hospitalization insurance coverage to the plan for
19 State annuitants, the board shall notify the insurance carrier
20 of such election and shall deduct the appropriate annual charges
21 in equal monthly installments. Such deductions shall be
22 transmitted to the designated fiscal officer of the Commonwealth
23 having jurisdiction over the payment of such group charges on
24 behalf of the annuitant.
25 (i) Joint coverage annuitants.--The board shall notify in
26 writing each joint coverage annuitant who retired prior to July
27 1, 1962 that he may elect any time prior to July 1, 1974 to
28 receive his annuity without reduction attributable to social
29 security coverage upon payment in a lump sum of the amount which
30 shall be certified by the board within 60 days of such election.
19930S0974B2036 - 71 -
1 Upon receipt of such payment the board shall recompute the
2 annuity payable to such annuitant and the annuity and/or lump
3 sum, if any, payable upon his death to his beneficiary or
4 survivor annuitant as though he had been a full coverage member
5 on the effective date of retirement. Such recomputed annuity
6 shall be paid beginning with the second monthly payment next
7 following the month in which the lump sum payment is received.
8 § 5907. Rights and duties of State employees and members.
9 * * *
10 (f) Termination of service.--Each member who terminates
11 State service and who is not then a disability annuitant shall
12 execute on or before the date of termination of service the
13 appropriate application, duly attested by the member or his
14 legally constituted representative, electing to:
15 (1) withdraw his total accumulated deductions; or
16 (2) vest his retirement rights; and if he is a joint
17 coverage member, and so desires, elect to become a full
18 coverage member and agree to pay within 30 days of the date
19 of termination of service the lump sum required; or
20 (3) receive an immediate annuity[,] and may,
21 (i) if eligible, elect to convert his medical, major
22 medical, and hospitalization coverage to the plan for
23 State annuitants; and
24 (ii) if he is a joint coverage member, elect to
25 become a full coverage member and agree to pay within 30
26 days of date of termination of service the lump sum
27 required.
28 * * *
29 (h) Vestees attaining superannuation age.--Upon attainment
30 of superannuation age a vestee shall execute and file an
19930S0974B2036 - 72 -
1 application for an annuity. Any such application filed within 90
2 days after attaining superannuation age shall be effective as of
3 the date of attainment of superannuation age. Any application
4 filed after such period shall be effective as of the date it is
5 filed with the board[.], subject to the provisions of section
6 5905(f) (relating to duties of the board regarding applications
7 and elections of members). If a vestee does not file an
8 application within seven years after attaining superannuation
9 age, he shall be deemed to have elected to receive his total
10 accumulated deductions upon attainment of superannuation age.
11 * * *
12 (k) Disability annuities.--If service of a member [who is
13 under superannuation age] is terminated due to his physical or
14 mental incapacity for the performance of duty, in lieu of an
15 application and election under subsection (f), an application
16 for a disability annuity with or without a supplement for a
17 service connected disability may be executed by him or by a
18 person legally authorized to act on his behalf.
19 § 5908. Rights and duties of annuitants.
20 * * *
21 (b) Periodic earnings statements by disability annuitants.--
22 It shall be the duty of an annuitant receiving a disability
23 annuity prior to the attainment of superannuation age [50] to
24 furnish a written statement within 30 days of the close of each
25 calendar quarter of all earned income during that quarter and
26 information showing whether or not he is able to engage in a
27 gainful occupation and such other information as may be required
28 by the board. On failure, neglect, or refusal to furnish such
29 information for the period of the preceding quarter, the board
30 may refuse to make further payments due to disability to such
19930S0974B2036 - 73 -
1 annuitant until he has furnished such information to the
2 satisfaction of the board. Should such refusal continue for six
3 months, all of his rights to the disability annuity payments in
4 excess of any annuity to which he is otherwise entitled shall be
5 forfeited from the date of his last written statement to the
6 board. Any moneys received in excess of those to which he was
7 entitled shall be deducted from the present value of the annuity
8 to which he is otherwise entitled.
9 (c) Medical examinations of disability annuitants.--Should
10 any disability annuitant [receiving a disability annuity while
11 still under superannuation age] refuse to submit to a medical
12 examination by a physician or physicians at the request of the
13 board, his payments due to disability shall be discontinued
14 until the withdrawal of such refusal. Should such refusal
15 continue for a period of six months, all of his rights to the
16 disability annuity payments in excess of any annuity to which he
17 is otherwise entitled shall be forfeited.
18 * * *
19 § 5931. Management of fund and accounts.
20 (a) Control and management of fund.--The members of the
21 board shall be the trustees of the fund [and]. Regardless of any
22 other provision of law governing the investments of funds under
23 the control of an administrative board of the State government,
24 the trustees shall have exclusive control and management of the
25 said fund and full power to invest the same in accordance with
26 the provisions of this section, subject, however, to the
27 exercise of that degree of judgment, skill and care under the
28 circumstances then prevailing which persons of prudence,
29 discretion and intelligence, who are familiar with such matters,
30 exercise in the management of their own affairs not in regard to
19930S0974B2036 - 74 -
1 speculation, but in regard to the permanent disposition of the
2 funds, considering the probable income to be derived therefrom
3 as well as the probable safety of their capital[, and further
4 subject to all the terms, conditions, limitations and
5 restrictions imposed by this part or other law upon the making
6 of investments. The board shall when possible and consistent
7 with the terms, conditions, limitations, responsibilities and
8 restrictions imposed by this subsection or other law, invest in
9 any project or business which promotes employment of
10 Pennsylvania residents. Subject to like terms, conditions,
11 limitations and restrictions, said]. The trustees shall have the
12 power to hold, purchase, sell, lend, assign, transfer or dispose
13 of any of the securities and investments in which any of the
14 moneys in the fund shall have been invested as well as of the
15 proceeds of said investments, including any directed commissions
16 which have accrued to the benefit of the fund as a consequence
17 of the investments, and of any moneys belonging to said fund[.],
18 subject in every case to meeting the standard of prudence set
19 forth in this subsection.
20 (b) Crediting of interest.--The board, annually, shall allow
21 the required interest on the mean amount for the preceding year
22 to the credit of each of the accounts. The amount so allowed
23 shall be credited thereto by the board and transferred from the
24 interest reserve account.
25 (c) Custodian of fund.--The State Treasurer shall be the
26 custodian of the fund.
27 (d) Payments from fund.--All payments from the fund shall be
28 made by the State Treasurer in accordance with requisitions
29 signed by the secretary of the board, or his designee, and
30 ratified by resolution of the board.
19930S0974B2036 - 75 -
1 (e) Fiduciary status of board.--The members of the board,
2 employees of the board and agents thereof shall stand in a
3 fiduciary relationship to the members of the system regarding
4 the investments and disbursements of any of the moneys of the
5 fund and shall not profit either directly or indirectly with
6 respect thereto. The board may, when possible and consistent
7 with its fiduciary duties imposed by this subsection or other
8 law, including its obligation to invest and manage the fund for
9 the exclusive benefit of the members of the system, consider
10 whether an investment in any project or business enhances and
11 promotes the general welfare of this Commonwealth and its
12 citizens, including, but not limited to, investments that
13 increase and enhance the employment of Commonwealth residents,
14 encourage the construction and retention of adequate housing and
15 stimulate further investment and economic activity in this
16 Commonwealth. The board shall, through the Governor, submit to
17 the General Assembly annually, at the same time the board
18 submits its budget covering administrative expenses, a report
19 identifying the nature and amount of all existing investments
20 made pursuant to this subsection.
21 (f) Name for transacting business.--By the name of "The
22 State Employees' Retirement System" or "The State Employes'
23 Retirement System" all of the business of the system shall be
24 transacted, its fund invested, all requisitions for money drawn
25 and payments made, and all of its cash and securities and other
26 property shall be held, except that, any other law to the
27 contrary notwithstanding, the board may establish a nominee
28 registration procedure for the purpose of registering securities
29 in order to facilitate the purchase, sale or other disposition
30 of securities pursuant to the provisions of this law.
19930S0974B2036 - 76 -
1 (g) Deposits in banks and trust companies.--For the purpose
2 of meeting disbursements for annuities and other payments in
3 excess of the receipts, there shall be kept available by the
4 State Treasurer an amount, not exceeding 10% of the total amount
5 in the fund, on deposit in any bank or banks in this
6 Commonwealth organized under the laws thereof or under the laws
7 of the United States or with any trust company or companies
8 incorporated by any law of this Commonwealth, provided any of
9 such banks or trust companies shall furnish adequate security
10 for said deposit, and provided that the sum so deposited in any
11 one bank or trust company shall not exceed 25% of the paid-up
12 capital and surplus of said bank or trust company.
13 [(h) Investment in corporate stocks.--Preferred and common
14 stock as defined in subsection (i) of any corporation as defined
15 in subsection (j) organized under the laws of the United States
16 or of any commonwealth or state thereof or of the District of
17 Columbia and preferred and common stock as defined in subsection
18 (i) of any corporation as defined in subsection (j) whose shares
19 are traded in United States dollars on the New York Stock
20 Exchange shall be authorized investments of the fund, regardless
21 of any other provision of law provided that:
22 (1) no investment in common stock be made which at that
23 time would cause the book value of the investments in common
24 stock to exceed 50% of the total assets of the fund;
25 (2) the amount invested in the common stock of any one
26 company not exceed at cost 2% of the book value of the assets
27 of the fund at the time of purchase and shall not exceed 5%
28 of the issued and outstanding common stock of that company;
29 (3) no investment in the stock of corporations not
30 organized under the laws of the United States or of any
19930S0974B2036 - 77 -
1 commonwealth or state thereof or of the District of Columbia
2 shall be made which would cause the book value of such
3 investment to exceed 5% of the book value of the total assets
4 of the fund; and
5 (4) no sale or other liquidation of any investment be
6 required solely because of any change in market values
7 whereby the percentages of stocks hereinabove set forth are
8 exceeded.
9 (i) Common stock defined.--"Common stock" as used in
10 subsection (h) shall include the stock certificates,
11 certificates of beneficial interests or trust participation
12 certificates issued by any corporation or unincorporated
13 association included under the definition of "corporation" in
14 the following paragraph.
15 (j) Corporation defined.--"Corporation" as used in
16 subsection (h) shall include a voluntary association, a joint-
17 stock association or company, a business trust, a Massachusetts
18 trust, a common-law trust and any other organization organized
19 and existing for any lawful purpose and which like a
20 corporation, continues to exist, notwithstanding changes in the
21 personnel of its members or participants and conducts its
22 affairs through a committee, a board or some other group acting
23 in a representative capacity.
24 (k) Investment in real estate and mortgages.--Real estate
25 subject to a lease to one or more financially responsible
26 tenants which lease shall not require managerial responsibility
27 by the board; and bonds, notes and deeds of trust, of
28 individuals or corporations secured by mortgages on real estate
29 located in any state, district or territory of the United
30 States, shall be an authorized investment of the board
19930S0974B2036 - 78 -
1 regardless of any other provision of law. The board shall
2 promulgate regulations to implement the foregoing to insure the
3 safety of investments made pursuant to this subsection which
4 regulations shall be in accordance with generally accepted
5 standards and investment principles for pension funds of
6 comparable size. All instruments, transfers of interest, and all
7 records pertaining to real estate, mortgages or bonds invested
8 in by the board, shall be open to public inspection. Reports as
9 requested by the board, shall be submitted on all real estate
10 and mortgage investments by mortgage advisors and
11 correspondents.
12 (l) Investment in institutional real estate.--Institutional
13 real estate funds shall be an authorized investment of the fund
14 provided that no investment shall be made which, at the time of
15 purchase, would cause the book value of such investments to
16 exceed 15% of the book value of the total assets of the fund.
17 (m) Additional board power on investments.--Regardless of
18 any limitations, conditions or restrictions imposed on the
19 making of investments by this part or other law, the board may,
20 at its discretion, invest a maximum of 10% of the book value of
21 the assets of the fund in any investments not otherwise
22 specifically authorized, provided that such investments are made
23 with the exercise of that degree of judgment, skill and care
24 under the circumstances then prevailing which persons of
25 prudence, discretion and intelligence, who are familiar with
26 such matters, exercise in the management of their own affairs
27 not in regard to speculation, but in regard to the permanent
28 disposition of the funds, considering the probable income to be
29 derived therefrom as well as the probable safety of their
30 capital.
19930S0974B2036 - 79 -
1 (n) Obligations of United States to be authorized
2 investments.--Regardless of any other provision of law,
3 obligations of the United States Government and its agencies
4 shall be authorized investments of the fund.
5 (o) Holding entities for authorized investments.--The board
6 may make any investments authorized by this part or other law by
7 becoming a limited partner in partnerships that will hold such
8 investments, or by acquiring shares or units of participation or
9 otherwise participating beneficially in bank collective trusts
10 or in separate accounts of any insurance company authorized to
11 do business in this Commonwealth, or by acquiring stocks or
12 shares or units of participation or otherwise participating
13 beneficially in the fund of any corporation or trust organized
14 or existing under the laws of the United States or of any state,
15 district or territory thereof which fund is maintained for and
16 consists of assets of employees' benefit trusts, including
17 governmental plans as defined in section 414(d) of the Internal
18 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 414(d)), or
19 which meet the requirements for qualification under section 401
20 of the Internal Revenue Code of 1986, provided that, in any such
21 case, the liability of the State Employees' Retirement Fund
22 shall be limited to the amount of its investment. In the case of
23 authorized investments in real estate or interests therein, the
24 board's acquisition of the stock or shares of or its other
25 participation beneficially in the fund of any such vehicle,
26 including any entity organized and maintained as a vehicle for
27 an investment or investments of the board exclusively, shall not
28 be deemed an investment in the common stock as defined in
29 subsection (i) of any corporation as defined in subsection (j)
30 for the purposes of any limitation on investment in corporate
19930S0974B2036 - 80 -
1 stocks set forth in subsection (h). Nothing in this subsection
2 shall be deemed to supersede the limitation on investment in
3 institutional real estate funds as set forth in subsection (l).
4 (p)] (h) Venture capital.--[The provisions of subsection (m)
5 notwithstanding, venture] Venture capital investments [made
6 through limited partnerships and through separate accounts]
7 shall be limited to not more than 2% of the book value of the
8 total assets of the fund[. A venture capital investment shall be
9 made only if such investment will enhance the general welfare of
10 this Commonwealth and its citizens through economic development
11 and meets the standard of prudence set forth in subsection (m).]
12 as determined for financial statement purposes as of December 31
13 next preceding the date of investment. An investment shall be
14 deemed a venture capital investment if it results in the
15 acquisition of equity interests or a combination of debt and
16 equity interests in a business which is expected to grow
17 substantially in the future and in which the expected return on
18 investment is to come predominantly from an increase in value of
19 the equity [interest and that are not held through or secured by
20 stock that is an authorized investment under the authority of
21 subsection (h)] interests and are not interests in or secured by
22 real estate. A venture capital investment may be made only if,
23 in the judgment of the board, the investment is reasonably
24 likely to enhance the general welfare of this Commonwealth and
25 its citizens and meets the standard of prudence set forth in
26 subsection (a). In determining whether the investment meets the
27 standard of prudence, the board may consider, together with the
28 expected return on and the risk characteristics of the
29 particular investment, the actual and expected future returns
30 and the risk characteristics of the total venture capital
19930S0974B2036 - 81 -
1 investments held by the board at the time and the degree to
2 which the proposed new investment would promote further
3 diversification within the venture capital asset class.
4 (i) Vehicles for authorized investments.--The board in its
5 prudent discretion may make any investments which meet the
6 standard of prudence set forth in subsection (a) by becoming a
7 limited partner in partnerships that will hold such investments;
8 or by acquiring shares or units of participation or otherwise
9 participating beneficially in bank collective trusts or in the
10 separate accounts of any insurance company authorized to do
11 business in this Commonwealth; or by acquiring stocks or shares
12 or units of participation or otherwise participating
13 beneficially in the fund of any corporation or trust organized
14 or existing under the laws of the United States or of any state,
15 district or territory thereof, which fund is maintained for and
16 consists of assets of employees' benefit trusts, including
17 governmental plans as defined in section 414(d) of the Internal
18 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 414(d)) or
19 which meet the requirements for qualification under section 401
20 of the Internal Revenue Code of 1986, provided that, in any such
21 case, the liability of the State Employees' Retirement Fund
22 shall be limited to the amount of its investment.
23 (j) Legislative declaration concerning certain authorized
24 investments.--The General Assembly finds and declares that
25 authorized investments of the fund made by or on behalf of the
26 board under this section whereby the board becomes a joint owner
27 or stockholder in any company, corporation or association are
28 outside the scope of the original intent of and therefore do not
29 violate the prohibition set forth in section 8 of Article VIII
30 of the Constitution of Pennsylvania.
19930S0974B2036 - 82 -
1 § 5953. Taxation, attachment and assignment of funds.
2 (a) General rule.--
3 (1) Except as provided in [paragraph (2)] paragraphs
4 (2), (3) and (4), the right of a person to any benefit or
5 right accrued or accruing under the provisions of this part
6 and the moneys in the fund are hereby exempt from any State
7 or municipal tax, levy and sale, garnishment, attachment,
8 spouse's election, or any other process whatsoever except for
9 a set-off by the Commonwealth in the case provided in
10 subparagraph (i), and shall be unassignable except:
11 (i) To the Commonwealth in the case of a member who
12 is terminating State service and has been determined to
13 be obligated to the Commonwealth for the repayment of
14 money owed on account of his employment or to the fund on
15 account of a loan from a credit union which has been
16 satisfied by the board from the fund.
17 (ii) To a credit union as security for a loan not to
18 exceed $750 and interest not to exceed 6% per annum
19 discounted and/or fines thereon if the credit union is
20 now or hereafter organized and incorporated under the
21 laws of this Commonwealth and the membership of such
22 credit union is limited solely to officials and employees
23 of the Commonwealth and if such credit union has paid to
24 the fund $3 for each such assignment.
25 (2) Rights under this part shall be subject to
26 forfeiture as provided by the act of July 8, 1978 (P.L.752,
27 No.140), known as the ["]Public Employee Pension Forfeiture
28 Act.["]
29 (3) Rights under this part shall be subject to
30 attachment in favor of an alternate payee as set forth in an
19930S0974B2036 - 83 -
1 approved domestic relations order.
2 (4) Effective with distributions made on or after
3 January 1, 1993, and notwithstanding any other provision of
4 this part to the contrary, a distributee may elect, at the
5 time and in the manner prescribed by the board, to have any
6 portion of an eligible rollover distribution paid directly to
7 an eligible retirement plan by way of a direct rollover. For
8 purposes of this subsection, a "distributee" includes a
9 member and a member's surviving spouse and a member's former
10 spouse who is an alternate payee under an approved domestic
11 relations order. For purposes of this subsection, the term
12 "eligible rollover distribution" has the meaning given such
13 term by section 402(f)(2)(A) of the Internal Revenue Code of
14 1986 (Public Law 99-514, 26 U.S.C. § 402(f)(2)(A) and
15 "eligible retirement plan" has the meaning given such term by
16 section 402(c)(8)(B) of the Internal Revenue Code of 1986,
17 except that a qualified trust shall be considered an eligible
18 retirement plan only if it accepts the distributee's eligible
19 rollover distribution; however, in the case of an eligible
20 rollover distribution to a surviving spouse, an eligible
21 retirement plan is an "individual retirement account" or an
22 "individual retirement annuity" as those terms are defined in
23 section 408(a) and (b) of the Internal Revenue Code of 1986.
24 (b) Authorized payments from fund.--The board shall be
25 authorized to pay from the fund:
26 (1) In the case of a member who is terminating service,
27 the amount determined after certification by the head of the
28 department that the member is so obligated, and after review
29 and approval by the department or agency's legal
30 representative or upon receipt of an assignment from the
19930S0974B2036 - 84 -
1 member in the amount so certified.
2 (2) In the case of a loan the amount of the loan and any
3 fine or interest due thereon to the credit union except 5% of
4 the total amount due which is to be retained in the fund as a
5 collection fee:
6 (i) if the member obtaining the loan shall have been
7 in default in required payments for a period of not less
8 than two years; or
9 (ii) at such time as the Department of Banking shall
10 require the credit union to charge the amount of the loan
11 against the reserve fund of such credit union.
12 Any member who shall have pledged such rights as security for
13 a loan from a credit union and, on whose behalf the board
14 shall have made any payment by reason of that member's
15 default, may not thereafter pledge or assign such rights to a
16 credit union.
17 Section 13. Title 71 is amended by adding sections to read:
18 § 5953.1. Approval of domestic relations orders.
19 (a) Certification.--A domestic relations order shall be
20 certified as an approved domestic relations order by the
21 secretary of the board, or his designated representative, only
22 if that order meets all of the following:
23 (1) Requires the system to provide any type or form of
24 benefit or any option already provided under this part.
25 (2) Requires the system to provide no more than the
26 total amount of benefits than the member would otherwise
27 receive (determined on the basis of actuarial value) unless
28 increased benefits are paid to the member or alternate payee
29 based upon cost-of-living increases or increases based on
30 other than actuarial value.
19930S0974B2036 - 85 -
1 (3) Specifies the amount or percentage of the member's
2 benefits to be paid by the system to each such alternate
3 payee or the manner in which such amount or percentage is to
4 be determined.
5 (4) Specifies the retirement option to be selected by
6 the member upon retirement or states that the member may
7 select any retirement option offered by this part upon
8 retirement.
9 (5) Specifies the name and last known mailing address,
10 if any, of the member and the name and last known mailing
11 address of each alternate payee covered by the order and
12 states that it is the responsibility of each alternate payee
13 to keep a current mailing address on file with the system.
14 (6) Does not grant an alternate payee any of the rights,
15 options or privileges of a member under this part.
16 (7) Requires the member to execute an authorization
17 allowing each alternate payee to monitor the member's
18 compliance with the terms of the domestic relations order
19 through access to information concerning the member
20 maintained by the system.
21 (b) Determination by secretary.--Within a reasonable period
22 after receipt of a domestic relations order, the secretary of
23 the board, or his designated representative, shall determine
24 whether this order is an approved domestic relations order and
25 notify the member and each alternate payee of this
26 determination. Notwithstanding any other provision of law, the
27 exclusive remedy of any member or alternate payee aggrieved by a
28 decision of the secretary of the board, or his designated
29 representative, shall be the right to an adjudication by the
30 board under 2 Pa.C.S. Ch. 5 Subch. A (relating to practice and
19930S0974B2036 - 86 -
1 procedure) with appeal therefrom to the Commonwealth Court under
2 2 Pa.C.S. Ch. 7 (relating to judicial review) and 42 Pa.C.S. §
3 763(a)(1) (relating to direct appeals from government agencies).
4 (c) Other orders.--The requirements for approval identified
5 in subsection (a) shall not apply to any domestic relations
6 order which is an order for support as the term is defined at 23
7 Pa.C.S. § 4302 (relating to definitions) or an order for the
8 enforcement of arrearages as provided in 23 Pa.C.S. § 3703
9 (relating to enforcement of arrearages). These orders shall be
10 approved to the extent that they do not attach moneys in excess
11 of the limits on attachments as established by the laws of the
12 United States and this Commonwealth.
13 (d) Obligation discharged.--Only the requirements of this
14 part and any regulations promulgated hereunder shall be used to
15 govern the approval or disapproval of a domestic relations
16 order. Therefore, if the secretary of the board, or his
17 designated representative, acts in accordance with the
18 provisions of this part and any promulgated regulations in
19 approving or disapproving a domestic relations order, then the
20 obligations of the system with respect to such approval or
21 disapproval shall be discharged.
22 § 5953.2. Irrevocable beneficiary.
23 Notwithstanding any other provision of this part, a domestic
24 relations order may provide for an irrevocable beneficiary. A
25 domestic relations order requiring the nomination of an
26 irrevocable beneficiary shall be deemed to be one that requires
27 a member to nominate an alternate payee as a beneficiary and
28 that prohibits the removal or change of that beneficiary without
29 approval of a court of competent jurisdiction, except by
30 operation of law. Such a domestic relations order may be
19930S0974B2036 - 87 -
1 certified as an approved domestic relations order by the
2 secretary of the board, or his designated representative, after
3 the member makes such nomination, in which case the irrevocable
4 beneficiary so ordered by the court cannot be changed by the
5 member without approval by the court.
6 § 5953.3. Irrevocable survivor annuitant.
7 Notwithstanding any other provisions of this part, a domestic
8 relations order may provide for an irrevocable survivor
9 annuitant. A domestic relations order requiring the designation
10 of an irrevocable survivor annuitant shall be deemed to be one
11 that requires a member to designate an alternate payee as a
12 survivor annuitant and that prohibits the removal or change of
13 that survivor annuitant without approval of a court of competent
14 jurisdiction, except by operation of law. Such a domestic
15 relations order may be certified as an approved domestic
16 relations order by the secretary of the board, or his designated
17 representative, in which case the irrevocable survivor annuitant
18 so ordered by the court cannot be changed by the member without
19 approval by the court. A person ineligible to be designated as a
20 survivor annuitant may not be designated as an irrevocable
21 survivor annuitant.
22 § 5953.4. Amendment of approved domestic relations orders.
23 (a) Deceased alternate payee.--In the event that the
24 alternate payee predeceases the member and there are benefits
25 payable to the alternate payee, the divorce court may amend the
26 approved domestic relations order to substitute a person for the
27 deceased alternate payee to receive any benefits payable to the
28 deceased alternate payee.
29 (b) Recertification of amended order.--If a divorce court
30 amends the approved domestic relations order for any reason,
19930S0974B2036 - 88 -
1 then the amended order must be submitted for recertification as
2 an approved domestic relations order as set forth in this part.
3 § 5955.1. Construction of part with respect to older workers
4 protection.
5 It is hereby found and declared that the provisions of this
6 part constitute a bona fide retirement or pension plan within
7 the meaning of the Federal Age Discrimination in Employment Act
8 of 1967 (29 U.S.C. § 621 et seq.) and the act of October 27,
9 1955 (P.L.744, No.222), known as the Pennsylvania Human
10 Relations Act, and that the intent of section 5955 (relating to
11 construction of part) as originally enacted and as subsequently
12 amended is to require the pension rights of State employees to
13 be determined solely by this part and any amendments thereto,
14 regardless of any other provision of State law, subject only to
15 such further requirements, exceptions or limitations as may be
16 set forth in section 5955 or as may be imposed by reason of any
17 provision of the Federal or State Constitution. Any provision of
18 this part which is not inconsistent with the provisions of the
19 Federal Age Discrimination in Employment Act of 1967 as amended
20 by the Federal Older Workers Benefit Protection Act (Public Law
21 101-433, 104, Stat. 978) and the rules and regulations of the
22 Federal Equal Employment Opportunity Commission under such
23 Federal laws shall be deemed not inconsistent with such
24 provisions of the Pennsylvania Human Relations Commission Act as
25 relate to discrimination on the basis of age with respect to the
26 terms, conditions or privileges of employment.
27 Section 14. Any and all investments of the Public School
28 Employees' Retirement Board and of the State Employees'
29 Retirement Board, respectively, which on the effective date of
30 this section are owned or held through a vehicle as described in
19930S0974B2036 - 89 -
1 24 Pa.C.S. § 8521(i) or 71 Pa.C.S. § 5931(i), as applicable,
2 shall be deemed to have been lawfully made through such vehicle
3 at inception.
4 Section 15. Nothing in this act shall be construed to repeal
5 all or any part of the act of July 8, 1978 (P.L.752, No.140),
6 known as the Public Employee Pension Forfeiture Act.
7 Section 16. Nothing in this act shall be construed to grant
8 any alternate payees any contractual rights, either express or
9 implied, in the terms or conditions of either the Public School
10 Employees' Retirement System or the State Employees' Retirement
11 System, including, but not limited to, benefits, options, rights
12 or privileges, established by either 24 Pa.C.S. Pt. IV or 71
13 Pa.C.S. Pt. XXV.
14 Section 17. Nothing in this act shall be construed to grant
15 any alternate payees or members of either the Public School
16 Employees' Retirement System or the State Employees' Retirement
17 System any contractual rights, either express or implied, in the
18 provisions of this act pertaining to alternate payees and
19 domestic relations orders.
20 Section 18. The amendment or addition of 24 Pa.C.S. §§ 8326,
21 8327, 8329 and 8535 shall apply to the 1994-1995 1995-1996 <--
22 school year and to each school year thereafter. THE REVISED <--
23 CONTRIBUTIONS AS PROVIDED FOR IN THESE SECTIONS SHALL APPLY TO
24 ALL ACTIVE MEMBERS WHOSE EFFECTIVE DATE OF EMPLOYMENT IS AFTER
25 JUNE 30, 1994.
26 Section 19. The liability for additional benefits created by
27 24 Pa.C.S. § 8312 and 71 Pa.C.S. § 5308.1 shall be funded over a
28 period of 20 years, commencing July 1, 1994.
29 Section 20. In relation to the amendment of 24 Pa.C.S. §
30 8346 and 71 Pa.C.S. § 5706, the following shall apply:
19930S0974B2036 - 90 -
1 (1) Nothing in this act shall be deemed to permit the
2 restoration of service credit or retirement benefits which
3 were the subject of an order of forfeiture pursuant to the
4 act of July 8, 1978 (P.L.752, No.140), known as the Public
5 Employee Pension Forfeiture Act.
6 (2) Former annuitants who elect to eliminate the effect
7 of frozen present value do so with the specific understanding
8 that they accept the terms and conditions of 24 Pa.C.S. Pt.
9 IV and 71 Pa.C.S. Pt. XXV as they are upon their subsequent
10 termination and do not retain any contractual rights to terms
11 and conditions of 24 Pa.C.S. Pt. IV and 71 Pa.C.S. Pt. XXV,
12 including, but not limited to, benefit formulas, accrual
13 rates and eligibility, contribution rates, definitions,
14 purchase of creditable school, nonschool, State and non-State
15 provisions and actuarial and funding assumptions or
16 provisions arising from any period of employment prior to
17 final termination of service.
18 (3) Former annuitants who are active members and <--
19 inactive members on leave who, INACTIVE MEMBERS WHO ARE ON <--
20 LEAVE, OR MEMBERS OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
21 SYSTEM WHO HAVE TERMINATED SERVICE BUT HAVE NOT YET ELECTED
22 TO RETIRE AND WHO have earned at least three eligibility
23 points since their most recent period of receipt of an
24 annuity may elect to eliminate the effect of frozen present
25 value during the school or fiscal year in which 24 Pa.C.S. §
26 8346 and 71 Pa.C.S. § 5706 become effective, provided that
27 the election is made prior to termination of service.
28 Section 21. The amendment of 24 Pa.C.S. § 8312 and 71
29 Pa.C.S. § 5308.1 shall take effect immediately and shall be
30 retroactive to July 1, 1993.
19930S0974B2036 - 91 -
1 Section 22. The addition of 24 Pa.C.S. § 8533(d) and 71
2 Pa.C.S. § 5953(a)(4) shall take effect immediately and shall be
3 retroactive to January 1, 1993.
4 Section 23. The amendment of 24 Pa.C.S. § 8509(b) shall take
5 effect immediately and shall be retroactive to July 1, 1992.
6 Section 24. The amendment or addition of 24 Pa.C.S. § 8346
7 and 71 Pa.C.S. § 5706(b) and (c) shall take effect the July 1
8 next following the effective date of section 26(4) of this act, <--
9 1994, OR IMMEDIATELY, WHICHEVER IS LATER. Notwithstanding 24
10 Pa.C.S. § 8328(c) and 71 Pa.C.S. § 5508(c), the accrued
11 liability created by the amendment or addition of 24 Pa.C.S. §
12 8346 and 71 Pa.C.S. § 5706(b) and (c) shall be funded in annual
13 installments increasing by 5% each year over a period of 20
14 years beginning July 1, 1995. Notwithstanding 24 Pa.C.S. §
15 8328(b) and 71 Pa.C.S. § 5508(b), the normal contribution rate
16 and employer normal contribution rate for the period from the
17 effective date of section 26 of this act to June 30, 1995, shall
18 be calculated as if the amendment of 24 Pa.C.S. § 8346 and 71
19 Pa.C.S. § 5706(b) and the addition of 71 Pa.C.S. § 5706(c) did
20 not occur. Any normal contributions and employer normal
21 contributions which would have been paid for the period from the
22 effective date of section 26 of this act to June 30, 1995, but
23 for this section, shall be funded in annual installments
24 increasing by 5% each year over a period of 20 years beginning
25 July 1, 1995.
26 Section 25. The amendment of 71 Pa.C.S. § 5706(a) shall take
27 effect the January 1 next following the effective date of
28 section 26(4) of this act.
29 Section 26. Except as otherwise provided in sections 21, 22
30 and 23 of this act, this act shall take effect as follows:
19930S0974B2036 - 92 -
1 (1) The addition of the definition of "eligible
2 annuitants" in 24 Pa.C.S. § 8102 shall take effect July 1,
3 1994.
4 (2) The amendment of 24 Pa.C.S. § 8345(a)(4) and 71
5 Pa.C.S. § 5705(a)(4) shall take effect January 1, 1995.
6 (3) The amendment of 24 Pa.C.S. §§ 8502(c), (n) and (o)
7 and 8521 and 71 Pa.C.S. §§ 5902(c), (m) and (n) and 5931
8 shall take effect immediately.
9 (4) The addition of 24 Pa.C.S. §§ 8326, 8327, 8329 and
10 8535 shall take effect July 1, 1994 1995. <--
11 (5) Section 14 of this act and this section shall take
12 effect immediately.
13 (6) The remainder of this act shall take effect in 60
14 days.
B11L24JS/19930S0974B2036 - 93 -