PRINTER'S NO. 131
No. 147 Session of 1999
INTRODUCED BY M. N. WRIGHT, JANUARY 26, 1999
REFERRED TO COMMITTEE ON STATE GOVERNMENT, JANUARY 26, 1999
AN ACT
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, authorizing annuitants to
3 redetermine the effect of frozen present value.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Section 8346 of Title 24 of the Pennsylvania
7 Consolidated Statutes is amended by adding a subsection to read:
8 § 8346. Termination of annuities.
9 * * *
10 (e) Elimination of the effect of frozen present value as
11 applied to annuitants.--
12 (1) A member who was an annuitant on July 1, 1994, and
13 who is not a member with multiple service credit and who had
14 returned to school service and earned three eligibility
15 points by performing credited school service between the
16 termination of school service most recently before July 1,
17 1994, and most recent commencement of an annuity before such
18 termination of school service and the calculation of whose
1 annuity included a frozen present value calculation in
2 accordance with subsections (a) and (b) shall have that
3 annuitant's annuity adjusted as follows:
4 (i) The system shall calculate the maximum single
5 life annuity that the member would have been entitled to
6 receive on that member's effective date of retirement,
7 calculated as if the member had been a vestee during all
8 periods as an annuitant which resulted in the present
9 value of that annuity being frozen in accordance with
10 subsection (a). Such calculated maximum single life
11 annuity shall then be modified by the optional
12 modification of annuity actually selected by the
13 annuitant and such actual postretirement adjustments to
14 that annuity as the annuitant had been eligible to
15 receive as of the effective date of this subsection.
16 (ii) The present value of the recalculated annuity
17 as modified under subparagraph (i), as of the effective
18 date of this subsection, shall be reduced by all amounts
19 paid or payable to that annuitant during all previous
20 periods as an annuitant during which the member is being
21 treated as a vestee plus interest on these amounts until
22 the effective date of this subsection. The interest for
23 each year shall be calculated based upon the annual
24 interest rate adopted for that fiscal year by the board
25 for the calculation of the normal contribution rate
26 pursuant to section 8328(b).
27 (iii) If the annuity produced by the resulting
28 present value, modified for the optional benefit payment
29 plan selected by the member, is greater than the annuity
30 being received by the member on the effective date of
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1 this subsection, then the member shall be entitled to
2 receive the greater annuity beginning with the effective
3 date of this subsection. If the annuity produced by the
4 resulting present value, modified for the optional
5 benefit payment plan selected by the member, is less than
6 the annuity being received by the member on the effective
7 date of this subsection, then the annuity being received
8 by the member will remain unchanged.
9 (2) No payments shall be made for any period of time
10 before the effective date of this subsection.
11 (3) A member who has the member's benefit adjusted
12 pursuant to this subsection shall not be entitled to reelect
13 an option unless otherwise permitted to do so pursuant to
14 section 8507(j) (relating to rights and duties of school
15 employees and members).
16 (4) This subsection shall not apply to the beneficiaries
17 and survivor annuitants of any annuitant who died prior to
18 the effective date of this subsection.
19 Section 2. Section 5706 of Title 71 is amended by adding a
20 subsection to read:
21 § 5706. Termination of annuities.
22 * * *
23 (d) Elimination of the effect of frozen present value as
24 applied to annuitants.--
25 (1) A member who was an annuitant on July 1, 1994, and
26 who is not a member with multiple service credit and who had
27 returned to State service and earned three eligibility points
28 by performing credited State service between the termination
29 of State service most recently before July 1, 1994, and most
30 recent commencement of an annuity before such termination of
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1 State service and the calculation of whose annuity included a
2 frozen present value calculation in accordance with
3 subsections (a) and (b) shall have that annuitant's annuity
4 adjusted as follows:
5 (i) The system shall calculate the maximum single
6 life annuity that the member would have been entitled to
7 receive on that member's effective date of retirement,
8 calculated as if the member had been a vestee during all
9 periods as an annuitant which resulted in the present
10 value of that annuity being frozen in accordance with
11 subsection (a). Such calculated maximum single life
12 annuity shall then be modified by the optional
13 modification of annuity actually selected by the
14 annuitant and such actual postretirement adjustments to
15 that annuity as the annuitant had been eligible to
16 receive as of the effective date of this subsection.
17 (ii) The present value of the recalculated annuity
18 as modified under subparagraph (i), as of the effective
19 date of this subsection, shall be reduced by all amounts
20 paid or payable to that annuitant during all previous
21 periods as an annuitant during which the member is being
22 treated as a vestee plus interest on these amounts until
23 the effective date of this subsection. The interest for
24 each year shall be calculated based upon the annual
25 interest rate adopted for that fiscal year by the board
26 for the calculation of the normal contribution rate
27 pursuant to section 5508(b).
28 (iii) If the annuity produced by the resulting
29 present value, modified for the optional benefit payment
30 plan selected by the member, is greater than the annuity
19990H0147B0131 - 4 -
1 being received by the member on the effective date of
2 this subsection, then the member shall be entitled to
3 receive the greater annuity beginning with the effective
4 date of this subsection. If the annuity produced by the
5 resulting present value, modified for the optional
6 benefit payment plan selected by the member, is less than
7 the annuity being received by the member on the effective
8 date of this subsection, then the annuity being received
9 by the member will remain unchanged.
10 (2) No payments shall be made for any period of time
11 before the effective date of this subsection.
12 (3) A member who has the member's benefit adjusted
13 pursuant to this subsection shall not be entitled to reelect
14 an option unless otherwise permitted to do so pursuant to
15 section 5907(j) (relating to rights and duties of State
16 employees and members).
17 (4) This subsection shall not apply to the beneficiaries
18 and survivor annuitants of any annuitant who died prior to
19 the effective date of this subsection.
20 Section 3. The amendment of 24 Pa.C.S. § 8346 and 71 Pa.C.S.
21 § 5706 shall be applicable on the July 1 coincident with or
22 following the effective date of this act.
23 Section 4. This act shall take effect immediately.
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