PRIOR PRINTER'S NOS. 311, 615, 1081, PRINTER'S NO. 1905 1749
No. 26 Session of 2001
INTRODUCED BY STRITTMATTER, LUCYK, SCHULER, ARMSTRONG, BUNT, CALTAGIRONE, CAPPABIANCA, CURRY, GEORGE, GODSHALL, HENNESSEY, HERSHEY, LESCOVITZ, STAIRS, E. Z. TAYLOR, THOMAS, TIGUE, TULLI, YOUNGBLOOD, PISTELLA, WILT, GEIST, R. MILLER, HORSEY, STEELMAN, L. I. COHEN, WATERS, FRANKEL AND WASHINGTON, JANUARY 31, 2001
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES, MAY 8, 2001
AN ACT 1 Amending Titles 24 (Education) and 71 (State Government) of the <-- 2 Pennsylvania Consolidated Statutes, further providing for 3 mandatory and optional membership, for credited school 4 service, for termination of annuities, for membership of the 5 Public School Employees' Retirement Board and the State 6 Employees' Retirement Board, for administrative duties of 7 board and for management of fund and accounts. 8 AMENDING TITLES 24 (EDUCATION) AND 71 (STATE GOVERNMENT) OF THE <-- 9 PENNSYLVANIA CONSOLIDATED STATUTES, FURTHER PROVIDING FOR 10 PUBLIC SCHOOL EMPLOYEES' RETIREMENT AND STATE EMPLOYEES' 11 RETIREMENT; DEFINING TERMS; PROVIDING FOR ADDITIONAL OPTIONAL 12 CLASSIFICATIONS FOR EXISTING MEMBERS, FOR NEW CLASSIFICATIONS 13 FOR PROSPECTIVE MEMBERS AND FOR HEALTH INSURANCE FOR RETIRED 14 SCHOOL EMPLOYEES; AND FURTHER PROVIDING FOR CREDIBLE SCHOOL 15 AND STATE SERVICE, FOR CREDIBLE NONSCHOOL AND NONSTATE 16 SERVICE, FOR ELIGIBILITY, FOR VESTING, FOR REGULAR MEMBER 17 CONTRIBUTIONS, FOR RETURN TO SERVICE, FOR PAYMENTS BY 18 EMPLOYERS AND THE COMMONWEALTH, FOR TERMINATION OF ANNUITIES, 19 FOR ACTUARIAL COST METHODS, FOR MEMBER OPTIONS, FOR FUNDING 20 OF SUPPLEMENTAL ANNUITIES, FOR ADMINISTRATION, FOR REPORTS TO 21 AGENCIES AND MEMBERS, FOR APPLICATIONS AND ELECTIONS, FOR THE 22 COMPOSITION OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD 23 AND OF THE STATE EMPLOYEES' RETIREMENT BOARD, FOR INVESTMENT 24 POWERS OF THE BOARDS, FOR MANAGEMENT OF FUNDS AND ACCOUNTS 25 AND FOR ENFORCEMENT OFFICERS' BENEFIT AND SUPPLEMENTAL 26 ANNUITY ACCOUNTS. 27 The General Assembly of the Commonwealth of Pennsylvania
1 hereby enacts as follows: 2 Section 1. Sections 8301, 8302(a), 8346, 8501(a) and (b), <-- 3 8502(g), 8521(h), (i) and (j) of Title 24 of the Pennsylvania 4 Consolidated Statutes are amended to read: 5 § 8301. Mandatory and optional membership. 6 (a) Mandatory membership.--Membership in the system shall be 7 mandatory as of the effective date of employment for all school 8 employees except the following: 9 (1) Any officer or employee of the Department of 10 Education, State-owned educational institutions, community 11 colleges, area vocational-technical schools, technical 12 institutes, or the Pennsylvania State University and who is a 13 member of the State Employees' Retirement System or a member 14 of another retirement program approved by the employer. 15 (2) Any school employee who is employed on a per diem or 16 hourly basis for less than 80 full-day sessions or 500 hours 17 in any fiscal year or annuitant who returns to school service 18 under the provisions of section 8346(b) (relating to 19 termination of annuities). 20 (3) Any officer or employee of a governmental entity who 21 subsequent to December 22, 1965 and prior to July 1, 1975 22 administers, supervises, or teaches classes financed wholly 23 or in part by the Federal Government so long as he continues 24 in such service. 25 (4) Any part-time school employee who has an individual 26 retirement account pursuant to the Federal act of September 27 2, 1974 (Public Law 93-406, 88 Stat. 829), known as the 28 Employee Retirement Income Security Act of 1974. 29 (5) Employees of a charter school, as defined in Article 30 XVII-A of the act of March 10, 1949 (P.L.30, No.14), known as 20010H0026B1905 - 2 -
1 the Public School Code of 1949. 2 (b) Prohibited membership.--The school employees categorized 3 in subsection (a)(1) and (2) shall not have the right to elect 4 membership in the system. 5 (c) Optional membership.-- 6 (1) The school employees categorized in subsection 7 (a)(3) and, if otherwise eligible, subsection (a)(4) shall 8 have the right to elect membership in the system. Once such 9 election is exercised, membership shall commence from the 10 original date of eligibility and shall continue until the 11 termination of such service. 12 (2) Notwithstanding anything to the contrary in Article 13 XVII-A of the act of March 10, 1949 (P.L.30, No.14), known as 14 the Public School Code of 1949, employees of a charter school 15 shall only be eligible for membership in the system if the 16 charter school in which they are employed affirmatively 17 elects to have its employees to be eligible for membership in 18 the system. Said election shall be in writing on a form 19 prescribed by the board and filed with the system. Once such 20 election is exercised, membership for eligible employees 21 shall commence from the original date of their eligibility 22 and shall continue until the termination of such service. 23 § 8302. Credited school service. 24 (a) Computation of credited service.--In computing credited 25 school service of a member for the determination of benefits, a 26 full-time salaried school employee shall receive one year of 27 credit for each school year or the corresponding fraction 28 thereof, in accordance with the proportion of the full school 29 year for which both the required regular member and employer 30 contributions have been made, or for which such contributions 20010H0026B1905 - 3 -
1 otherwise required for such service were not made solely by 2 reason of any provision of this part relating to the limitation 3 under IRC § 401(a)(17). A per diem or hourly school employee 4 shall receive one year of credited service for each 5 nonoverlapping period of 12 consecutive months in which he is 6 employed and for which both member and employer contributions 7 are made, or would have been made but for such limitation under 8 the IRC, for at least 180 full-day sessions or 1,100 hours of 9 employment. If such member was employed and member or employer 10 contributions were made for less than 180 full-day sessions or 11 1,100 hours, he shall be credited with a fractional portion of a 12 year determined by the ratio of the number of full-day sessions 13 or hours of service actually rendered to 180 full-day sessions 14 or 1,100 hours, as the case may be. A part-time salaried 15 employee shall be credited with the fractional portion of the 16 year which corresponds to the service actually rendered in 17 relation to the service required as a comparable full-time 18 salaried employee and for which both member and employer 19 contributions were made. In no case shall a member receive more 20 than one year of credited service for any 12 consecutive months 21 or a member who has elected multiple service receive an 22 aggregate in the two systems of more than one year of credited 23 service for any 12 consecutive months. 24 * * * 25 § 8346. Termination of annuities. 26 (a) General rule.--If an annuitant returns to school service 27 or enters State service and elects multiple service membership, 28 any annuity payable to him under this part shall cease and in 29 the case of an annuity other than a disability annuity the 30 present value of such annuity, adjusted for full coverage in the 20010H0026B1905 - 4 -
1 case of a joint coverage member who makes the appropriate back 2 contributions for full coverage, shall be frozen as of the date 3 such annuity ceases. An annuitant who is credited with an 4 additional 10% of membership service as provided in section 5 8302(b.2) (relating to credited school service) and who returns 6 to school service, except as provided in subsection (b), shall 7 forfeit such credited service and shall have his frozen present 8 value adjusted as if his 10% retirement incentive had not been 9 applied to his account. In the event that the cost-of-living 10 increase enacted December 18, 1979, occurred during the period 11 of such State or school employment, the frozen present value 12 shall be increased, on or after the member attains 13 superannuation age, by the percent applicable had he not 14 returned to service. 15 (b) Return to school service during emergency.--When, in the 16 judgment of the employer, an emergency creates an increase in 17 the work load such that there is serious impairment of service 18 to the public or in the event of a shortage of appropriate 19 subject certified teachers, an annuitant may be returned to 20 school service for a period not to exceed [95] 120 full-day 21 sessions in any school year without loss of his annuity. In 22 computing the number of days an annuitant has returned to school 23 service, any amount of time less than one-half of a day shall be 24 counted as one-half of a day. 25 (c) Subsequent discontinuance of service.--Upon subsequent 26 discontinuance of service, such member other than a former 27 annuitant who had the effect of his frozen present value 28 eliminated in accordance with subsection (d) or a former 29 disability annuitant shall be entitled to an annuity which is 30 actuarially equivalent to the sum of the present value as 20010H0026B1905 - 5 -
1 determined under subsection (a) and the present value of a 2 maximum single life annuity based on years of service credited 3 subsequent to reentry in the system and his final average salary 4 computed by reference to his compensation during his entire 5 period of school and State service. 6 (d) Elimination of the effect of frozen present value.-- 7 (1) An annuitant who returns to school service and earns 8 three eligibility points by performing credited school 9 service following the most recent period of receipt of an 10 annuity under this part, or an annuitant who enters State 11 service and: 12 (i) is a multiple service member; or 13 (ii) who elects multiple service membership, and 14 earns three eligibility points by performing credited State 15 service or credited school service following the most recent 16 period of receipt of an annuity under this part, and who had 17 the present value of his annuity frozen in accordance with 18 subsection (a), shall qualify to have the effect of the 19 frozen present value resulting from all previous periods of 20 retirement eliminated, provided that all payments under 21 Option 4 and annuity payments payable during previous periods 22 of retirement plus interest as set forth in paragraph (3) 23 shall be returned to the fund in the form of an actuarial 24 adjustment to his subsequent benefits or in such form as the 25 board may otherwise direct. 26 (2) Upon subsequent discontinuance of service and the 27 filing of an application for an annuity, a former annuitant 28 who qualifies to have the effect of a frozen present value 29 eliminated under this subsection shall be entitled to receive 30 the higher of either: 20010H0026B1905 - 6 -
1 (i) an annuity (prior to optional modification) 2 calculated as if the freezing of the former annuitant's 3 account pursuant to subsection (a) had not occurred, 4 adjusted according to paragraph (3), provided that a 5 former annuitant of the system or a former annuitant of 6 the State Employees' Retirement System who retired under 7 a provision of law granting additional service credit if 8 termination of school or State service or retirement 9 occurred during a specific period of time shall not be 10 permitted to retain the additional service credit under 11 the prior law when the annuity is computed for his most 12 recent retirement; or 13 (ii) an annuity (prior to optional modification) 14 calculated as if the former annuitant did not qualify to 15 have the effect on the frozen present value eliminated, 16 unless the former annuitant notifies the board in writing by 17 the later of the date the application for annuity is filed or 18 the effective date of retirement that the former annuitant 19 wishes to receive the lower annuity. 20 (3) In addition to any other adjustment to the present 21 value of the maximum single life annuity that a member may be 22 entitled to receive that occurs as a result of any other 23 provision of law, the present value of the maximum single 24 life annuity shall be reduced by all amounts paid or payable 25 to him during all previous periods of retirement plus 26 interest on these amounts until the date of subsequent 27 retirement. The interest for each year shall be calculated 28 based upon the annual interest rate adopted for that school 29 year by the board for the calculation of the normal 30 contribution rate pursuant to section 8328(b) (relating to 20010H0026B1905 - 7 -
1 actuarial cost method). 2 § 8501. Public School Employees' Retirement Board. 3 (a) Status and membership.--The board shall be an 4 independent administrative board and shall consist of 15 5 members: the Secretary of Education, ex officio; the State 6 Treasurer, ex officio; two Senators; two members of the House of 7 Representatives; the executive secretary of the Pennsylvania 8 School Boards Association, ex officio; two to be appointed by 9 the Governor, at least one of whom shall not be a school 10 employee or an officer or employee of the State; three to be 11 elected by the active professional members of the system from 12 among their number; one to be elected by annuitants from among 13 their number; one to be elected by the active nonprofessional 14 members of the system from among their number; and one to be 15 elected by members of Pennsylvania public school boards from 16 among their number. The appointments made by the Governor shall 17 be confirmed by the Senate and each election shall be conducted 18 in a manner approved by the board. The terms of the appointed 19 and nonlegislative elected members shall be three years. The 20 members from the Senate shall be appointed by the President pro 21 tempore of the Senate and shall consist of one member from the 22 majority and one member from the minority. The members from the 23 House of Representatives shall be appointed by the Speaker of 24 the House of Representatives and shall consist of one member 25 from the majority and one member from the minority. The 26 legislative members shall serve on the board for the duration of 27 [the terms for which they were elected] their legislative terms 28 and shall continue to serve until 30 days after the convening of 29 the next regular session of the General Assembly after the 30 expiration of their respective legislative terms, or until a 20010H0026B1905 - 8 -
1 successor is appointed for the new term, whichever occurs first. 2 The chairman of the board shall be elected by the board members. 3 Each ex officio member of the board and each legislative member 4 of the board may appoint a duly authorized designee to act in 5 his stead. 6 (b) [Appointment and terms of initial members.--For the 7 purposes of securing an orderly transition and staggered terms, 8 the elected members of the board serving on the effective date 9 of this part shall serve until the expiration of their 10 respective terms. The board member initially elected by members 11 of Pennsylvania public school boards shall serve until January 12 1, 1976. The board member initially elected by the active 13 nonprofessional members of the system shall serve until January 14 1, 1977. One of the initial board members appointed by the 15 Governor after the effective date of this part shall serve until 16 January 1, 1976 and the second appointed board member shall 17 serve until January 1, 1977.] Vacancies.--A vacancy occurring 18 during the term of any member shall be filled for the unexpired 19 term by a successor appointed or elected as the case may be in 20 the same manner as his predecessor. 21 * * * 22 § 8502. Administrative duties of board. 23 * * * 24 (g) Performance of employer duties.--In the event the 25 employer fails to comply with the procedures as mandated in 26 section 8506 (relating to duties of employers), the board shall 27 perform such duties and bill the employer who shall pay for the 28 cost of same. In the event the employer is delinquent in the 29 payment of: 30 (1) the board's bill for the cost of the board to 20010H0026B1905 - 9 -
1 perform the duties of the employer mandated in section 8506; 2 (2) the employer contributions required in accordance 3 with section 8327 (relating to payments by employers)[,]; or 4 (3) the member contributions required in accordance with 5 section 8506, 6 then the board shall notify the Secretary of Education and the 7 State Treasurer of such delinquency and certify the actual or 8 estimated amount thereof. Within 30 days of the receipt of the 9 board's delinquency notice, the Secretary of Education shall pay 10 to the board the amount so certified that remains unpaid as of 11 the date of secretary's payment. All such amounts paid by the 12 Secretary of Education shall be credited by the board to the 13 appropriate account in the fund. The Secretary of Education 14 shall be entitled to exercise the remedy set forth in section 15 8327(b) to recover any amounts paid to the board pursuant to 16 this subsection. In the event the Secretary of Education 17 exercises the remedy set forth in section 8327(b) to recover any 18 amounts paid to the board, as a consequence of a delinquency 19 caused by a charter school, and reduces the amount of funds paid 20 to a chartering school district, as defined in Article XVII-A of 21 the act of March 10, 1949 (P.L.30, No.14), known as the Public 22 School Code of 1949, the chartering school district shall reduce 23 the amount of funds paid to the charter school by any amount 24 deducted by the Secretary of Education that would have otherwise 25 been paid to the chartering school district. 26 * * * 27 § 8521. Management of fund and accounts. 28 * * * 29 (h) Venture capital[.--Venture capital investments shall be 30 limited to not more than 2% of the book value of the total 20010H0026B1905 - 10 -
1 assets of the fund as determined for financial statement 2 purposes as of June 30 next preceding the date of investment. An 3 investment shall be deemed a venture capital investment if it 4 results in the acquisition of equity interests or a combination 5 of debt and equity interests in a business which is expected to 6 grow substantially in the future and in which the expected 7 return on investment is to come predominantly from an increase 8 in value of the equity interests and are not interests in or 9 secured by real estate. A venture capital investment may be made 10 only if, in the judgment of the board, the investment is 11 reasonably likely to enhance the general welfare of this 12 Commonwealth and its citizens and meets the standard of prudence 13 set forth in subsection (a). In determining whether the 14 investment meets the standard of prudence, the board may 15 consider, together with the expected return on and the risk 16 characteristics of the particular investment, the actual and 17 expected future returns and the risk characteristics of the 18 total venture capital investments held by the board at the time 19 and the degree to which the proposed new investment would 20 promote further diversification within the venture capital asset 21 class.], private placement and alternative investments.--The 22 board in its prudent discretion may make any venture capital 23 investment, private placement investment or other alternative 24 investment of any kind, structure or manner which meets the 25 standard of prudence set forth in subsection (a). 26 (i) Vehicles for authorized investments.--The board in its 27 prudent discretion may make any investments which meet the 28 standard of prudence set forth in subsection (a) by [becoming a 29 limited partner in partnerships that will hold such investments, 30 or by acquiring shares or units of participation or otherwise 20010H0026B1905 - 11 -
1 participating beneficially in bank collective trusts or in the 2 separate accounts of any insurance company authorized to do 3 business in this Commonwealth, or by acquiring stocks or shares 4 or units of participation or otherwise participating 5 beneficially in the fund of any corporation or trust organized 6 or created and existing under the laws of the United States or 7 of any state, district or territory thereof which fund is 8 maintained for and consists of assets of employees' benefit 9 trusts, including governmental plans as defined in IRC § 414(d) 10 or which meet the requirements for qualification under IRC § 11 401] acquiring any type of interest in a business organization 12 existing under the laws of any jurisdiction, provided that, in 13 any such case, the liability of the Public School Employees' 14 Retirement Fund shall be limited to the amount of its 15 investment. 16 (j) Legislative declaration concerning certain authorized 17 investments.--The General Assembly finds and declares that 18 authorized investments of the fund made by or on behalf of the 19 board under this section whereby the board becomes a joint owner 20 or stockholder in any company, corporation [or], association or 21 other lawful business organization are outside the scope of the 22 original intent of and therefor do not violate the prohibition 23 set forth in section 8 of Article VIII of the Constitution of 24 Pennsylvania. 25 Section 2. Sections 5901(a) and (b) and 5931(h), (i) and (j) 26 of Title 71 are amended to read: 27 § 5901. The State Employees' Retirement Board. 28 (a) Status and membership.--The board shall be an 29 independent administrative board and consist of 11 members: the 30 State Treasurer, ex officio, two Senators [or former Senators], 20010H0026B1905 - 12 -
1 two members [or former members] of the House of Representatives 2 and six members appointed by the Governor, one of whom shall be 3 an annuitant of the system, for terms of four years, subject to 4 confirmation by the Senate. At least five board members shall be 5 active members of the system, and at least two shall have ten or 6 more years of credited State service. The chairman of the board 7 shall be designated by the Governor from among the members of 8 the board. Each member of the board who is a member of the 9 General Assembly may appoint a duly authorized designee to act 10 in his stead. 11 (b) Appointments and terms.--The two members elected by the 12 board and serving on the effective date of this title shall 13 continue to serve until the expiration of their respective 14 terms. The members [or former members] of the Senate shall be 15 appointed by the President pro tempore of the Senate and shall 16 consist of a majority and a minority member [or former member]. 17 The members [or former members] of the House of Representatives 18 shall be appointed by the Speaker of the House of 19 Representatives and shall consist of a majority and a minority 20 member [or former member]. The legislative members shall serve 21 on the board for the duration of [the terms for which they were 22 elected and former legislative members shall serve a term of two 23 years.] their legislative terms and shall continue to serve 24 until 30 days after the convening of the next regular session of 25 the General Assembly after the expiration of their respective 26 legislative terms, or until a successor is appointed for the new 27 term, whichever occurs first. Of the remaining four appointees, 28 one shall be appointed for an initial term of two years, one for 29 an initial term of three years, and two for an initial term of 30 four years. A vacancy occurring during the term of an appointed 20010H0026B1905 - 13 -
1 member shall be filled for the unexpired term by the appointment 2 and confirmation of a successor in the same manner as his 3 predecessor. 4 * * * 5 § 5931. Management of fund and accounts. 6 * * * 7 (h) Venture capital[.--Venture capital investments shall be 8 limited to not more than 2% of the book value of the total 9 assets of the fund as determined for financial statement 10 purposes as of December 31 next preceding the date of 11 investment. An investment shall be deemed a venture capital 12 investment if it results in the acquisition of equity interests 13 or a combination of debt and equity interests in a business 14 which is expected to grow substantially in the future and in 15 which the expected return on investment is to come predominantly 16 from an increase in value of the equity interests and are not 17 interests in or secured by real estate. A venture capital 18 investment may be made only if, in the judgment of the board, 19 the investment is reasonably likely to enhance the general 20 welfare of this Commonwealth and its citizens and meets the 21 standard of prudence set forth in subsection (a). In determining 22 whether the investment meets the standard of prudence, the board 23 may consider, together with the expected return on and the risk 24 characteristics of the particular investment, the actual and 25 expected future returns and the risk characteristics of the 26 total venture capital investments held by the board at the time 27 and the degree to which the proposed new investment would 28 promote further diversification within the venture capital asset 29 class.], private placement and alternative investments.--The 30 board in its prudent discretion may make any venture capital 20010H0026B1905 - 14 -
1 investment, private placement investment or other alternative 2 investment of any kind, structure or manner which meets the 3 standard of prudence set forth in subsection (a). 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 created and existing under the laws of the United States or 15 of any state, district or territory thereof, which fund is 16 maintained for and consists of assets of employees' benefit 17 trusts, including governmental plans as defined in IRC § 414(d) 18 or which meet the requirements for qualification under IRC § 19 401] acquiring any type of interest in a business organization 20 existing under the laws of any jurisdiction, provided that, in 21 any such case, the liability of the State Employees' Retirement 22 Fund 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 or 28 other lawful business organization are outside the scope of the 29 original intent of and therefore do not violate the prohibition 30 set forth in section 8 of Article VIII of the Constitution of 20010H0026B1905 - 15 -
1 Pennsylvania. 2 Section 3. Any and all investments of the Public School 3 Employees' Retirement Board and of the State Employees' 4 Retirement Board, respectively, which on the effective date of 5 this section are owned or held through a vehicle as described in 6 24 Pa.C.S. § 8521(i) or 71 Pa.C.S. § 5931(i), as applicable, 7 shall be deemed to have been lawfully made through such vehicle 8 at inception. 9 Section 4. All acts and parts of acts are repealed insofar 10 as they are inconsistent with this act. 11 Section 5. This act shall take effect immediately. 12 SECTION 1. THE GENERAL ASSEMBLY FINDS AND DECLARES AS <-- 13 FOLLOWS: 14 (1) THIS ACT CONTAINS BOTH BENEFIT AND ADMINISTRATIVE 15 PENSION CHANGES. THE BENEFIT CHANGES INCLUDE AN ENHANCEMENT 16 TO THE BASIC BENEFIT FORMULA, A REDUCTION IN THE VESTING 17 REQUIREMENT, THE ADDITION OF A NEW CLASS OF BENEFITS FOR 18 LEGISLATORS, AND A CHANGE TO THE CURRENT ARRANGEMENT BY WHICH 19 MEMBERS CAN COMBINE SERVICE CREDIT WITH BOTH THE STATE 20 EMPLOYEES' RETIREMENT SYSTEM AND THE PUBLIC SCHOOL EMPLOYEES' 21 RETIREMENT SYSTEM. 22 (2) OVER THE PAST TWO DECADES, BOTH PENSION FUNDS HAVE 23 EXPERIENCED INVESTMENT RETURNS WELL IN EXCESS OF 24 EXPECTATIONS. AS A RESULT, STATE AND SCHOOL DISTRICT 25 CONTRIBUTIONS HAVE DECREASED DRAMATICALLY TO LESS THAN 1% OF 26 PAYROLL FOR NEXT YEAR. AT THE SAME TIME, EMPLOYEE 27 CONTRIBUTIONS RANGE FROM 5% TO 6.25% OF PAYROLL. THE 28 OUTSTANDING INVESTMENT PERFORMANCE HAS RESULTED IN THE 29 PENSION FUNDS BEING OVER 123% FUNDED, COMPARED TO CURRENT 30 NEEDS. THE 4% STATUTORY INTEREST RATE THE EMPLOYEES RECEIVE 20010H0026B1905 - 16 -
1 ON THEIR PENSION ACCOUNTS HAS CONSISTENTLY BEEN ECLIPSED BY 2 THE ACTUAL AVERAGE RETURNS OF THE FUNDS OVER THE LAST TWO 3 DECADES, AND ALSO HAS BEEN LESS THAN AVAILABLE PRIVATE MARKET 4 INTEREST RATES. THE FACT THAT EMPLOYEES HAVE BEEN AND ARE 5 PROJECTED TO CONTINUE TO CONTRIBUTE AT A RATE THAT IS 6 MATERIALLY GREATER THAN THE EMPLOYERS DUE TO THE MORE THAN 7 100% FUNDED STATUS OF THE PLANS, RAISES THE ISSUE OF THE 8 EXTENT TO WHICH EMPLOYEES SHOULD BE PROVIDED ADDITIONAL 9 BENEFITS. THE INCREASE IN BENEFITS FOR STATE AND SCHOOL 10 EMPLOYEES PROVIDED HEREIN WILL IN EFFECT ALLOW THEM FOR THE 11 FIRST TIME TO SHARE IN THE OUTSTANDING INVESTMENT PERFORMANCE 12 OF THE FUNDS. TO DATE, THAT EXPERIENCE HAS ONLY BENEFITED THE 13 EMPLOYERS THROUGH REDUCED CONTRIBUTIONS TO THE FUNDS. EVEN 14 WITH THE INCREASES IN BENEFITS PROVIDED HEREIN, BOTH PENSION 15 FUNDS ARE PROJECTED TO MAINTAIN MINIMAL EMPLOYER CONTRIBUTION 16 RATES, AND AT THE SAME TIME, MAINTAIN A FULLY FUNDED STATUS. 17 FOR AT LEAST THE NEXT DECADE, MEMBERS ARE PROJECTED TO 18 CONTINUE TO CONTRIBUTE AT A RATE SUBSTANTIALLY IN EXCESS OF 19 THAT REQUIRED FROM THE EMPLOYERS. 20 (3) A MAJOR CHANGE IN THE MANNER IN WHICH BENEFITS ARE 21 FUNDED IS WARRANTED. CURRENTLY, GAINS OR LOSSES RELATED TO 22 THE FUNDING FOR BENEFITS ARE SPREAD OVER A 20-YEAR TIME 23 FRAME. UNDER THIS PROPOSED CHANGE, THESE GAINS OR LOSSES WILL 24 NOW BE SPREAD OVER A SHORTER TIME FRAME, THAT BEING TEN 25 YEARS, INCREASING INTERGENERATIONAL EQUITY, BY REDUCING THE 26 TIME ELAPSED BETWEEN THE SERVICE OF THE MEMBERS OF THE 27 SYSTEMS AND THE RELATED FUNDING. A SIMILAR POLICY WAS ENACTED 28 IN 1991, WHEN 30-YEAR FUNDING FOR THE TWO FUNDS WAS REDUCED 29 TO 20-YEAR FUNDING. 30 (4) PARTICIPATION IN THE ENHANCED BENEFIT ACCRUAL RATE 20010H0026B1905 - 17 -
1 SHOULD NOT BE MANDATORY FOR CURRENT MEMBERS. MEMBERS WHO 2 ELECT TO PARTICIPATE SHOULD HAVE TO AGREE, AS PROVIDED 3 HEREIN, TO INCREASE EMPLOYEE CONTRIBUTIONS AS CONSIDERATION 4 FOR THEIR FUTURE RECEIPT OF ENHANCED BENEFITS AFTER THE 5 TERMINATION OF SERVICE. 6 (5) THE APPROACH SET OUT HERETOFORE WAS CITED AS 7 REASONABLE PUBLIC PENSION POLICY BY THE PUBLIC EMPLOYEE 8 RETIREMENT COMMISSION IN A REPORT RELEASED ON MAY 7 OF THIS 9 YEAR. AS THE COMMISSION FURTHER NOTED, CERTAIN PROVISIONS 10 HEREIN WILL RESULT IN THE SYSTEMS BEING MORE CLOSELY ALIGNED 11 WITH SIMILAR PLANS IN THE PRIVATE SECTOR AND FURTHER 12 STRENGTHEN THE SYSTEMS' POSITIONS RELATIVE TO INTERNAL 13 REVENUE CODE COMPLIANCE. 14 SECTION 1.1. THE DEFINITIONS OF "ACTIVE MEMBER," "BASIC 15 CONTRIBUTION RATE," "CLASS OF SERVICE MULTIPLIER," "CREDITED 16 SERVICE," "INACTIVE MEMBER," "SALARY DEDUCTIONS," "STANDARD 17 SINGLE LIFE ANNUITY," "SUPERANNUATION OR NORMAL RETIREMENT AGE" 18 AND "VESTEE" IN SECTION 8102 OF TITLE 24 OF THE PENNSYLVANIA 19 CONSOLIDATED STATUTES ARE AMENDED TO READ: 20 § 8102. DEFINITIONS. 21 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS PART SHALL 22 HAVE, UNLESS THE CONTEXT CLEARLY INDICATES OTHERWISE, THE 23 MEANINGS GIVEN TO THEM IN THIS SECTION: 24 * * * 25 "ACTIVE MEMBER." A SCHOOL EMPLOYEE FOR WHOM PICKUP 26 CONTRIBUTIONS ARE BEING MADE TO THE FUND OR FOR WHOM SUCH 27 CONTRIBUTIONS OTHERWISE REQUIRED FOR CURRENT SCHOOL SERVICE ARE 28 NOT BEING MADE SOLELY BY REASON OF ANY PROVISION OF THIS PART 29 RELATING TO THE [LIMITATION] LIMITATIONS UNDER SECTION 30 401(A)(17) OR 415(B) OF THE INTERNAL REVENUE CODE OF 1986 20010H0026B1905 - 18 -
1 (PUBLIC LAW 99-514, 26 U.S.C. § 401(A)(17) OR 415(B)). 2 * * * 3 "BASIC CONTRIBUTION RATE." [THE] FOR CLASS T-A, T-B AND T-C 4 SERVICE THE RATE OF 6 1/4%. FOR CLASS T-D SERVICE, THE RATE OF 7 5 1/2%. FOR ALL ACTIVE MEMBERS ON THE EFFECTIVE DATE OF THIS 6 PROVISION WHO ARE CURRENTLY PAYING 5 1/4% AND ELECT CLASS T-D 7 SERVICE, THE RATE OF 6 1/2%. 8 * * * 9 "CLASS OF SERVICE MULTIPLIER." 10 CLASS OF SERVICE MULTIPLIER 11 T-A .714 12 T-B .625 13 T-C 1.000 14 T-D 1.000 15 * * * 16 "CREDITED SERVICE." SCHOOL OR CREDITABLE NONSCHOOL SERVICE 17 FOR WHICH THE REQUIRED CONTRIBUTIONS HAVE BEEN MADE, OR FOR 18 WHICH THE CONTRIBUTIONS OTHERWISE REQUIRED FOR SUCH SERVICE WERE 19 NOT MADE SOLELY BY REASON OF ANY PROVISION OF THIS PART RELATING 20 TO THE LIMITATIONS UNDER SECTION 401(A)(17) OR 415(B) OF THE 21 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 22 401(A)(17) OR 415(B)), OR FOR WHICH SALARY DEDUCTIONS OR LUMP 23 SUM PAYMENTS HAVE BEEN AGREED UPON IN WRITING. 24 * * * 25 "INACTIVE MEMBER." A MEMBER FOR WHOM NO PICKUP CONTRIBUTIONS 26 ARE BEING MADE, EXCEPT IN THE CASE OF AN ACTIVE MEMBER FOR WHOM 27 SUCH CONTRIBUTIONS OTHERWISE REQUIRED FOR CURRENT SCHOOL SERVICE 28 ARE NOT BEING MADE SOLELY BY REASON OF ANY PROVISION OF THIS 29 PART RELATING TO THE [LIMITATION] LIMITATIONS UNDER SECTION 30 401(A)(17) OR 415(B) OF THE INTERNAL REVENUE CODE OF 1986 20010H0026B1905 - 19 -
1 (PUBLIC LAW 99-514, 26 U.S.C. § 401(A)(17) OR 415(B)), WHO HAS 2 ACCUMULATED DEDUCTIONS STANDING TO HIS CREDIT IN THE FUND AND 3 FOR WHOM CONTRIBUTIONS HAVE BEEN MADE WITHIN THE LAST TWO SCHOOL 4 YEARS OR A MULTIPLE SERVICE MEMBER WHO IS ACTIVE IN THE STATE 5 EMPLOYEES' RETIREMENT SYSTEM. 6 * * * 7 "SALARY DEDUCTIONS." THE AMOUNTS CERTIFIED BY THE BOARD, 8 DEDUCTED FROM THE COMPENSATION OF AN ACTIVE MEMBER OR THE STATE 9 SERVICE COMPENSATION OF A MULTIPLE SERVICE MEMBER WHO IS AN 10 ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AND PAID 11 INTO THE FUND. 12 * * * 13 "STANDARD SINGLE LIFE ANNUITY." [AN] FOR CLASS T-A, T-B AND 14 T-C CREDITED SERVICE OF A MEMBER, AN ANNUITY EQUAL TO 2% OF THE 15 FINAL AVERAGE SALARY, MULTIPLIED BY THE TOTAL NUMBER OF YEARS 16 AND FRACTIONAL PART OF A YEAR OF CREDITED SERVICE OF A MEMBER. 17 FOR CLASS T-D CREDITED SERVICE OF A MEMBER, AN ANNUITY EQUAL TO 18 2.5% OF THE FINAL AVERAGE SALARY, MULTIPLIED BY THE TOTAL NUMBER 19 OF YEARS AND FRACTIONAL PART OF A YEAR OF CREDITED SERVICE. 20 * * * 21 "SUPERANNUATION OR NORMAL RETIREMENT AGE." 22 CLASS OF SERVICE AGE 23 T-A 62 OR ANY AGE UPON ACCRUAL 24 OF 35 ELIGIBILITY POINTS 25 T-B 62 26 T-C AND T-D 62 OR AGE 60 PROVIDED THE 27 MEMBER HAS AT LEAST 30 28 ELIGIBILITY POINTS OR 29 ANY AGE UPON ACCRUAL OF 30 35 ELIGIBILITY POINTS 20010H0026B1905 - 20 -
1 * * * 2 "VESTEE." A MEMBER WITH [TEN] FIVE OR MORE ELIGIBILITY 3 POINTS WHO HAS TERMINATED SCHOOL SERVICE, HAS LEFT HIS 4 ACCUMULATED DEDUCTIONS IN THE FUND, AND IS DEFERRING FILING OF 5 AN APPLICATION FOR RECEIPT OF AN ANNUITY. 6 SECTION 1.2. SECTIONS 8302(A), 8303(C), 8304(A) AND 8305 OF 7 TITLE 24 ARE AMENDED TO READ: 8 § 8302. CREDITED SCHOOL SERVICE. 9 (A) COMPUTATION OF CREDITED SERVICE.--IN COMPUTING CREDITED 10 SCHOOL SERVICE OF A MEMBER FOR THE DETERMINATION OF BENEFITS, A 11 FULL-TIME SALARIED SCHOOL EMPLOYEE SHALL RECEIVE ONE YEAR OF 12 CREDIT FOR EACH SCHOOL YEAR OR THE CORRESPONDING FRACTION 13 THEREOF, IN ACCORDANCE WITH THE PROPORTION OF THE FULL SCHOOL 14 YEAR FOR WHICH THE REQUIRED REGULAR MEMBER CONTRIBUTIONS HAVE 15 BEEN MADE, OR FOR WHICH SUCH CONTRIBUTIONS OTHERWISE REQUIRED 16 FOR SUCH SERVICE WERE NOT MADE SOLELY BY REASON OF ANY PROVISION 17 OF THIS PART RELATING TO THE [LIMITATION] LIMITATIONS UNDER IRC 18 § 401(A)(17) OR 415(B). A PER DIEM OR HOURLY SCHOOL EMPLOYEE 19 SHALL RECEIVE ONE YEAR OF CREDITED SERVICE FOR EACH 20 NONOVERLAPPING PERIOD OF 12 CONSECUTIVE MONTHS IN WHICH HE IS 21 EMPLOYED AND FOR WHICH CONTRIBUTIONS ARE MADE, OR WOULD HAVE 22 BEEN MADE BUT FOR SUCH [LIMITATION] LIMITATIONS UNDER THE IRC, 23 FOR AT LEAST 180 FULL-DAY SESSIONS OR 1,100 HOURS OF EMPLOYMENT. 24 IF SUCH MEMBER WAS EMPLOYED AND CONTRIBUTIONS WERE MADE FOR LESS 25 THAN 180 FULL-DAY SESSIONS OR 1,100 HOURS, HE SHALL BE CREDITED 26 WITH A FRACTIONAL PORTION OF A YEAR DETERMINED BY THE RATIO OF 27 THE NUMBER OF FULL-DAY SESSIONS OR HOURS OF SERVICE ACTUALLY 28 RENDERED TO 180 FULL-DAY SESSIONS OR 1,100 HOURS, AS THE CASE 29 MAY BE. A PART-TIME SALARIED EMPLOYEE SHALL BE CREDITED WITH THE 30 FRACTIONAL PORTION OF THE YEAR WHICH CORRESPONDS TO THE SERVICE 20010H0026B1905 - 21 -
1 ACTUALLY RENDERED IN RELATION TO THE SERVICE REQUIRED AS A 2 COMPARABLE FULL-TIME SALARIED EMPLOYEE. IN NO CASE SHALL A 3 MEMBER RECEIVE MORE THAN ONE YEAR OF CREDITED SERVICE FOR ANY 12 4 CONSECUTIVE MONTHS OR A MEMBER WHO HAS ELECTED MULTIPLE SERVICE 5 RECEIVE AN AGGREGATE IN THE TWO SYSTEMS OF MORE THAN ONE YEAR OF 6 CREDITED SERVICE FOR ANY 12 CONSECUTIVE MONTHS. 7 * * * 8 § 8303. ELIGIBILITY POINTS FOR RETENTION AND REINSTATEMENT OF 9 SERVICE CREDITS. 10 * * * 11 (C) PURCHASE OF PREVIOUS CREDITABLE SERVICE.--EVERY ACTIVE 12 MEMBER OF THE SYSTEM OR A MULTIPLE SERVICE MEMBER WHO IS AN 13 ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM ON OR 14 AFTER THE EFFECTIVE DATE OF THIS PART MAY PURCHASE CREDIT AND 15 RECEIVE ELIGIBILITY POINTS: 16 (1) AS A MEMBER OF CLASS T-C FOR PREVIOUS SCHOOL SERVICE 17 OR CREDITABLE NONSCHOOL SERVICE; OR 18 (2) AS A MEMBER OF CLASS T-D FOR PREVIOUS SCHOOL 19 SERVICE, PROVIDED THE MEMBER ELECTS TO BECOME A CLASS T-D 20 MEMBER PURSUANT TO SECTION 8305.1 (RELATING TO ELECTION TO 21 BECOME A CLASS T-D MEMBER); 22 UPON WRITTEN AGREEMENT BY THE MEMBER AND THE BOARD AS TO THE 23 MANNER OF PAYMENT OF THE AMOUNT DUE FOR CREDIT FOR SUCH SERVICE; 24 EXCEPT, THAT ANY PURCHASE FOR REINSTATEMENT OF SERVICE CREDIT 25 SHALL BE FOR ALL SERVICE PREVIOUSLY CREDITED. 26 § 8304. CREDITABLE NONSCHOOL SERVICE. 27 (A) ELIGIBILITY.--AN ACTIVE MEMBER OR A MULTIPLE SERVICE 28 MEMBER WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' 29 RETIREMENT SYSTEM SHALL BE ELIGIBLE TO RECEIVE CLASS T-C SERVICE 30 CREDIT FOR CREDITABLE NONSCHOOL SERVICE AND CLASS T-D SERVICE 20010H0026B1905 - 22 -
1 FOR INTERVENING MILITARY SERVICE, PROVIDED THE MEMBER ELECTS TO 2 BECOME A CLASS T-D MEMBER PURSUANT TO SECTION 8305.1 (RELATING 3 TO ELECTION TO BECOME A CLASS T-D MEMBER), AS SET FORTH IN 4 SUBSECTION (B) PROVIDED THAT HE IS NOT ENTITLED TO RECEIVE, 5 ELIGIBLE TO RECEIVE NOW OR IN THE FUTURE, OR IS RECEIVING 6 RETIREMENT BENEFITS FOR SUCH SERVICE UNDER A RETIREMENT SYSTEM 7 ADMINISTERED AND WHOLLY OR PARTIALLY PAID FOR BY ANY OTHER 8 GOVERNMENTAL AGENCY OR BY ANY PRIVATE EMPLOYER, OR A RETIREMENT 9 PROGRAM APPROVED BY THE EMPLOYER IN ACCORDANCE WITH SECTION 10 8301(A)(1) (RELATING TO MANDATORY AND OPTIONAL MEMBERSHIP), AND 11 FURTHER PROVIDED THAT SUCH SERVICE IS CERTIFIED BY THE PREVIOUS 12 EMPLOYER AND THE MANNER OF PAYMENT OF THE AMOUNT DUE IS AGREED 13 UPON BY THE MEMBER, THE EMPLOYER, AND THE BOARD. 14 * * * 15 § 8305. CLASSES OF SERVICE. 16 (A) CLASS T-C MEMBERSHIP.--A SCHOOL EMPLOYEE WHO IS A MEMBER 17 OF CLASS T-C ON THE EFFECTIVE DATE OF THIS PART OR WHO BECOMES A 18 MEMBER OF THE SYSTEM SUBSEQUENT TO THE EFFECTIVE DATE OF THIS 19 PART SHALL BE CLASSIFIED AS A CLASS T-C MEMBER, PROVIDED THE 20 SCHOOL EMPLOYEE DOES NOT BECOME A MEMBER OF CLASS T-D PURSUANT 21 TO SUBSECTION (C). 22 (B) OTHER CLASS MEMBERSHIP.--A SCHOOL EMPLOYEE WHO IS A 23 MEMBER OF A CLASS OF SERVICE OTHER THAN CLASS T-C ON THE 24 EFFECTIVE DATE OF THIS PART MAY ELECT TO BECOME A MEMBER OF 25 CLASS T-C OR CLASS T-D OR MAY RETAIN HIS MEMBERSHIP IN SUCH 26 OTHER CLASS UNTIL THE SERVICE IS DISCONTINUED OR HE ELECTS TO 27 BECOME A FULL COVERAGE MEMBER OR ELECTS TO PURCHASE CREDIT FOR 28 PREVIOUS SCHOOL OR CREDITABLE NONSCHOOL SERVICE. ANY SERVICE 29 THEREAFTER SHALL BE CREDITED AS CLASS T-C OR T-D SERVICE, AS 30 APPLICABLE. 20010H0026B1905 - 23 -
1 (C) CLASS T-D MEMBERSHIP.-- 2 (1) A PERSON WHO BECOMES A SCHOOL EMPLOYEE AND AN ACTIVE 3 MEMBER, OR A PERSON WHO BECOMES A MULTIPLE SERVICE MEMBER WHO 4 IS A STATE EMPLOYEE AND A MEMBER OF THE STATE EMPLOYEES' 5 RETIREMENT SYSTEM, ON OR AFTER THE EFFECTIVE DATE OF THIS 6 SUBSECTION SHALL BE CLASSIFIED AS A CLASS T-D MEMBER UPON 7 PAYMENT OF REGULAR MEMBER CONTRIBUTIONS. ANY PRIOR SCHOOL 8 SERVICE CREDITED AS CLASS T-C SERVICE SHALL BE CREDITED AS 9 CLASS T-D SERVICE, SUBJECT TO THE LIMITATIONS CONTAINED IN 10 PARAGRAPH (4). 11 (2) A SCHOOL EMPLOYEE WHO, ON THE DAY BEFORE AND ON THE 12 EFFECTIVE DATE OF THIS SUBSECTION, IS EITHER AN ACTIVE MEMBER 13 OR AN INACTIVE MEMBER SHALL BE CLASSIFIED AS A CLASS T-D 14 MEMBER AND RECEIVE CREDIT FOR CLASS T-D SERVICE PERFORMED ON 15 OR AFTER THE EFFECTIVE DATE OF THIS SUBSECTION UPON PAYMENT 16 OF REGULAR MEMBER CONTRIBUTIONS, PROVIDED THE SCHOOL EMPLOYEE 17 ELECTS TO BECOME A CLASS T-D MEMBER PURSUANT TO SECTION 18 8305.1 (RELATING TO ELECTION TO BECOME A CLASS T-D MEMBER). A 19 SCHOOL EMPLOYEE WHO BECOMES A CLASS T-D MEMBER SHALL ALSO 20 RECEIVE CLASS T-D SERVICE CREDIT FOR ALL CLASS T-C SCHOOL 21 SERVICE PERFORMED BEFORE THE EFFECTIVE DATE OF THIS 22 SUBSECTION, SUBJECT TO THE LIMITATIONS CONTAINED IN PARAGRAPH 23 (4). 24 (3) A FORMER SCHOOL EMPLOYEE WHO, ON THE EFFECTIVE DATE 25 OF THIS SUBSECTION, IS A MULTIPLE SERVICE MEMBER WHO IS A 26 STATE EMPLOYEE AND A MEMBER OF THE STATE EMPLOYEES' 27 RETIREMENT SYSTEM SHALL RECEIVE CLASS T-D SERVICE CREDIT FOR 28 ALL CLASS T-C SCHOOL SERVICE PERFORMED BEFORE THE EFFECTIVE 29 DATE OF THIS SUBSECTION, SUBJECT TO THE LIMITATIONS CONTAINED 30 IN PARAGRAPH (4), PROVIDED THE FORMER SCHOOL EMPLOYEE ELECTS 20010H0026B1905 - 24 -
1 TO BECOME A CLASS T-D MEMBER PURSUANT TO SECTION 8305.1. 2 (4) (I) SCHOOL SERVICE PERFORMED AS CLASS T-C SERVICE 3 BEFORE THE EFFECTIVE DATE OF THIS SUBSECTION SHALL BE 4 CREDITED AS CLASS T-D SERVICE ONLY UPON COMPLETION OF ALL 5 ACTS NECESSARY FOR THE SCHOOL SERVICE TO BE CREDITED AS 6 CLASS T-C SERVICE HAD THIS SUBSECTION NOT BEEN ENACTED. 7 (II) A PERSON WHO IS NOT A SCHOOL EMPLOYEE OR A 8 STATE EMPLOYEE ON JUNE 30, 2001, AND JULY 1, 2001, AND 9 WHO HAS PREVIOUS SCHOOL SERVICE SHALL NOT RECEIVE CLASS 10 T-D SERVICE CREDIT FOR SCHOOL SERVICE PERFORMED BEFORE 11 JULY 1, 2001, UNTIL THE PERSON BECOMES AN ACTIVE MEMBER 12 OR AN ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT 13 SYSTEM AND A MULTIPLE SERVICE MEMBER AND EARNS THREE 14 ELIGIBILITY POINTS BY PERFORMING CREDITED SCHOOL SERVICE 15 OR STATE SERVICE AFTER JUNE 30, 2001. THIS SUBPARAGRAPH 16 DOES NOT APPLY TO A DISABILITY ANNUITANT WHO RETURNS TO 17 SCHOOL SERVICE AFTER JUNE 30, 2001, UPON TERMINATION OF 18 THE DISABILITY ANNUITY. 19 SECTION 1.3. TITLE 24 IS AMENDED BY ADDING A SECTION TO 20 READ: 21 § 8305.1. ELECTION TO BECOME A CLASS T-D MEMBER. 22 (A) GENERAL RULE.--A PERSON WHO IS: 23 (1) A MEMBER OF THE SYSTEM; OR 24 (2) A MULTIPLE SERVICE MEMBER WHO IS A STATE EMPLOYEE 25 AND A MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM; 26 AND WHO, ON THE EFFECTIVE DATE OF THIS SUBSECTION, IS ELIGIBLE 27 FOR CLASS T-D MEMBERSHIP MAY ELECT TO BECOME A MEMBER OF CLASS 28 T-D. 29 (B) TIME FOR MAKING ELECTION.--THE MEMBER MUST ELECT TO 30 BECOME A CLASS T-D MEMBER BY FILING A WRITTEN NOTICE WITH THE 20010H0026B1905 - 25 -
1 BOARD ON OR BEFORE DECEMBER 31, 2001, OR BEFORE THE TERMINATION 2 OF SCHOOL SERVICE OR STATE SERVICE AS APPLICABLE, WHICHEVER 3 FIRST OCCURS. 4 (C) EFFECT OF ELECTION.--AN ELECTION TO BECOME A CLASS T-D 5 MEMBER SHALL REMAIN IN EFFECT UNTIL THE TERMINATION OF 6 EMPLOYMENT AND SHALL RESULT IN ALL SERVICE WHICH COULD HAVE BEEN 7 CREDITED AS CLASS T-C SERVICE BEING CREDITED AS CLASS T-D 8 SERVICE. THOSE MEMBERS WHO, ON THE EFFECTIVE DATE OF THIS 9 SECTION, CONTRIBUTE AT THE RATE OF 5 1/4% SHALL BE DEEMED TO 10 HAVE ACCEPTED THE BASIC CONTRIBUTION RATE OF 6 1/2% FOR ALL 11 CLASS T-D SERVICE PERFORMED ON OR AFTER JANUARY 1, 2002. THOSE 12 MEMBERS WHO, ON THE EFFECTIVE DATE OF THIS SECTION, CONTRIBUTE 13 AT THE RATE OF 6 1/4% SHALL BE DEEMED TO HAVE ACCEPTED THE BASIC 14 CONTRIBUTION RATE OF 7 1/2% FOR ALL CLASS T-D SERVICE PERFORMED 15 ON OR AFTER JANUARY 1, 2002. 16 (D) EFFECT OF FAILURE TO MAKE ELECTION.--IF THE MEMBER FAILS 17 TO TIMELY FILE AN ELECTION TO BECOME A CLASS T-D MEMBER, THEN 18 ALL OF THE MEMBER'S CLASS T-C SCHOOL SERVICE SHALL BE CREDITED 19 AS CLASS T-C SERVICE, AND SAID SERVICE SHALL NOT BE ELIGIBLE FOR 20 CLASS T-D SERVICE CREDIT UPON TERMINATION OF SERVICE AND 21 SUBSEQUENT EMPLOYMENT AS AN ACTIVE MEMBER. 22 SECTION 2. SECTIONS 8306, 8307(B), 8308, 8321, 8323(A), (C), 23 (C.1) AND (D), 8324(B), (C) AND (D), 8325, 8327(B) AND 8328(B), 24 (C), (D) AND (E) OF TITLE 24 ARE AMENDED TO READ: 25 § 8306. ELIGIBILITY POINTS. 26 (A) GENERAL RULE.--AN ACTIVE MEMBER OF THE SYSTEM SHALL 27 ACCRUE ONE ELIGIBILITY POINT FOR EACH YEAR OF CREDITED SERVICE 28 AS A MEMBER OF THE SCHOOL OR STATE RETIREMENT SYSTEM. A MEMBER 29 SHALL ACCRUE AN ADDITIONAL TWO-THIRDS OF AN ELIGIBILITY POINT 30 FOR EACH YEAR OF CLASS D-3 CREDITED SERVICE UNDER THE STATE 20010H0026B1905 - 26 -
1 EMPLOYEES' RETIREMENT SYSTEM. IN THE CASE OF A FRACTIONAL PART 2 OF A YEAR OF CREDITED SERVICE, A MEMBER SHALL ACCRUE THE 3 CORRESPONDING FRACTIONAL PORTION OF AN ELIGIBILITY POINT. 4 (B) TRANSITIONAL RULE.--FOR THE PURPOSES OF THE TRANSITION: 5 (1) IN DETERMINING WHETHER A MEMBER, OTHER THAN A 6 DISABILITY ANNUITANT WHO RETURNS TO SCHOOL SERVICE AFTER JUNE 7 30, 2001, UPON TERMINATION OF THE DISABILITY ANNUITY, WHO IS 8 NOT A SCHOOL EMPLOYEE OR A STATE EMPLOYEE ON JUNE 30, 2001, 9 AND JULY 1, 2001, AND WHO HAS PREVIOUS SCHOOL SERVICE, HAS 10 THE FIVE ELIGIBILITY POINTS REQUIRED BY THE DEFINITION OF 11 "VESTEE" IN SECTIONS 8102 (RELATING TO DEFINITIONS), 8307 12 (RELATING TO ELIGIBILITY FOR ANNUITIES), 8308 (RELATING TO 13 ELIGIBILITY FOR VESTING) AND 8345 (RELATING TO MEMBER'S 14 OPTIONS), ONLY ELIGIBILITY POINTS EARNED BY PERFORMING 15 CREDITED SCHOOL SERVICE OR CREDITED STATE SERVICE AFTER JUNE 16 30, 2001, SHALL BE COUNTED UNTIL SUCH MEMBER EARNS ONE 17 ELIGIBILITY POINT BY PERFORMING CREDITED SCHOOL SERVICE OR 18 CREDITED STATE SERVICE AFTER JUNE 30, 2001, AT WHICH TIME ALL 19 ELIGIBILITY POINTS AS DETERMINED UNDER SUBSECTION (A) SHALL 20 BE COUNTED. 21 (2) A MEMBER SUBJECT TO PARAGRAPH (1) SHALL BE 22 CONSIDERED TO HAVE SATISFIED ANY REQUIREMENT FOR FIVE 23 ELIGIBILITY POINTS CONTAINED IN THIS PART IF THE MEMBER HAS 24 AT LEAST TEN ELIGIBILITY POINTS DETERMINED UNDER SUBSECTION 25 (A). 26 § 8307. ELIGIBILITY FOR ANNUITIES. 27 * * * 28 (B) WITHDRAWAL ANNUITY.--A VESTEE WITH [TEN] FIVE OR MORE 29 ELIGIBILITY POINTS OR AN ACTIVE OR INACTIVE MEMBER WHO 30 TERMINATES SCHOOL SERVICE HAVING [TEN] FIVE OR MORE ELIGIBILITY 20010H0026B1905 - 27 -
1 POINTS SHALL, UPON FILING A PROPER APPLICATION, BE ENTITLED TO 2 RECEIVE AN EARLY ANNUITY. 3 * * * 4 § 8308. ELIGIBILITY FOR VESTING. 5 ANY MEMBER WHO TERMINATES SCHOOL SERVICE WITH [TEN] FIVE OR 6 MORE ELIGIBILITY POINTS SHALL BE ENTITLED TO VEST HIS RETIREMENT 7 BENEFITS UNTIL ATTAINMENT OF SUPERANNUATION AGE. 8 § 8321. REGULAR MEMBER CONTRIBUTIONS FOR CURRENT SERVICE. 9 REGULAR MEMBER CONTRIBUTIONS SHALL BE MADE TO THE FUND ON 10 BEHALF OF EACH ACTIVE MEMBER FOR CURRENT SERVICE EXCEPT FOR ANY 11 PERIOD OF CURRENT SERVICE IN WHICH THE MAKING OF SUCH 12 CONTRIBUTIONS HAS CEASED SOLELY BY REASON OF ANY PROVISION OF 13 THIS PART RELATING TO THE [LIMITATION] LIMITATIONS UNDER IRC § 14 401(A)(17) OR 415(B). 15 § 8323. MEMBER CONTRIBUTIONS FOR CREDITABLE SCHOOL SERVICE. 16 (A) PREVIOUS SCHOOL SERVICE, SABBATICAL LEAVE AND FULL 17 COVERAGE.--THE CONTRIBUTIONS TO BE PAID BY AN ACTIVE MEMBER OR 18 AN ELIGIBLE STATE EMPLOYEE FOR CREDIT FOR REINSTATEMENT OF ALL 19 PREVIOUSLY CREDITED SCHOOL SERVICE, SCHOOL SERVICE NOT 20 PREVIOUSLY CREDITED, SABBATICAL LEAVE AS IF HE HAD BEEN IN FULL- 21 TIME DAILY ATTENDANCE, OR FULL-COVERAGE MEMBERSHIP SHALL BE 22 SUFFICIENT TO PROVIDE AN AMOUNT EQUAL TO THE ACCUMULATED 23 DEDUCTIONS WHICH WOULD HAVE BEEN STANDING TO THE CREDIT OF THE 24 MEMBER FOR SUCH SERVICE HAD REGULAR MEMBER CONTRIBUTIONS BEEN 25 MADE WITH FULL COVERAGE AT THE RATE OF CONTRIBUTION NECESSARY TO 26 BE CREDITED AS CLASS T-C SERVICE OR CLASS T-D SERVICE IF THE 27 MEMBER IS A CLASS T-D MEMBER AND HAD SUCH CONTRIBUTIONS BEEN 28 CREDITED WITH STATUTORY INTEREST DURING THE PERIOD THE 29 CONTRIBUTIONS WOULD HAVE BEEN MADE AND DURING ALL PERIODS OF 30 SUBSEQUENT SCHOOL AND STATE SERVICE UP TO THE DATE OF PURCHASE. 20010H0026B1905 - 28 -
1 * * * 2 (C) APPROVED LEAVE OF ABSENCE OTHER THAN SABBATICAL LEAVE 3 AND ACTIVATED MILITARY SERVICE LEAVE.--THE CONTRIBUTIONS TO BE 4 PAID BY AN ACTIVE MEMBER FOR CREDIT FOR AN APPROVED LEAVE OF 5 ABSENCE, OTHER THAN SABBATICAL LEAVE AND ACTIVATED MILITARY 6 SERVICE LEAVE, SHALL BE SUFFICIENT TO TRANSFER HIS MEMBERSHIP TO 7 CLASS T-C OR TO CLASS T-D IF THE MEMBER IS A CLASS T-D MEMBER 8 AND FURTHER TO PROVIDE AN ANNUITY AS A CLASS T-C MEMBER OR CLASS 9 T-D MEMBER IF THE MEMBER IS A CLASS T-D MEMBER FOR SUCH 10 ADDITIONAL CREDITED SERVICE. SUCH AMOUNT SHALL BE THE SUM OF THE 11 AMOUNT REQUIRED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION 12 (B) AND AN AMOUNT DETERMINED AS THE SUM OF THE MEMBER'S BASIC 13 CONTRIBUTION RATE AND THE NORMAL CONTRIBUTION RATE AS PROVIDED 14 IN SECTION 8328 (RELATING TO ACTUARIAL COST METHOD) DURING SUCH 15 PERIOD MULTIPLIED BY THE COMPENSATION WHICH WAS RECEIVED OR 16 WHICH WOULD HAVE BEEN RECEIVED DURING SUCH PERIOD AND WITH 17 STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT SCHOOL AND 18 STATE SERVICE UP TO THE DATE OF PURCHASE. 19 (C.1) ACTIVATED MILITARY SERVICE LEAVE.--THE CONTRIBUTIONS 20 TO BE PAID BY AN ACTIVE MEMBER FOR CREDIT FOR ALL ACTIVATED 21 MILITARY SERVICE LEAVE AS IF HE HAD BEEN IN REGULAR ATTENDANCE 22 IN THE DUTIES FOR WHICH HE IS EMPLOYED SHALL BE SUFFICIENT TO 23 PROVIDE AN AMOUNT EQUAL TO THE ACCUMULATED DEDUCTIONS WHICH 24 WOULD HAVE BEEN STANDING TO THE CREDIT OF THE MEMBER FOR SUCH 25 SERVICE HAD REGULAR MEMBER CONTRIBUTIONS BEEN MADE WITH FULL 26 COVERAGE AT THE RATE OF CONTRIBUTION NECESSARY TO BE CREDITED AS 27 CLASS T-C SERVICE OR CLASS T-D SERVICE IF THE MEMBER IS A CLASS 28 T-D MEMBER AND HAD SUCH CONTRIBUTIONS BEEN CREDITED WITH 29 STATUTORY INTEREST DURING THE PERIOD THE CONTRIBUTIONS WOULD 30 HAVE BEEN MADE AND DURING ALL PERIODS OF SUBSEQUENT STATE AND 20010H0026B1905 - 29 -
1 SCHOOL SERVICE UP TO THE DATE OF PURCHASE. IN THE CASE OF 2 ACTIVATED MILITARY SERVICE LEAVE BEGINNING AFTER THE DATE OF 3 ENACTMENT OF THIS SUBSECTION, CONTRIBUTIONS DUE FROM THE MEMBER 4 SHALL BE MADE AS IF HE IS IN REGULAR ATTENDANCE IN THE DUTIES 5 FOR WHICH HE IS EMPLOYED. 6 (D) CERTIFICATION AND PAYMENT OF CONTRIBUTIONS.-- 7 (1) IN ALL CASES OTHER THAN FOR THE PURCHASE OF CREDIT 8 FOR SABBATICAL LEAVE AND ACTIVATED MILITARY SERVICE LEAVE 9 BEGINNING BEFORE THE EFFECTIVE DATE OF PARAGRAPH (2), THE 10 AMOUNT PAYABLE SHALL BE CERTIFIED BY THE BOARD IN ACCORDANCE 11 WITH METHODS APPROVED BY THE ACTUARY AND MAY BE PAID IN A 12 LUMP SUM WITHIN 90 DAYS OR[,] IN THE CASE OF AN ACTIVE 13 MEMBER[,] OR AN ELIGIBLE STATE EMPLOYEE WHO IS AN ACTIVE 14 MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM, IT MAY BE 15 AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS 16 [OR BY PERSONAL CHECKS] IN AMOUNTS AGREED UPON BY THE MEMBER 17 AND THE BOARD. THE SALARY DEDUCTION AMORTIZATION PLANS AGREED 18 TO BY MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL OF PAYMENT 19 AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION OF 20 SCHOOL SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE 21 DISCRETION, DECIDES TO ALLOW. THE BOARD MAY LIMIT SALARY 22 DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN 23 ITS SOLE DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE 24 STATE EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE 25 EMPLOYEES' RETIREMENT SYSTEM, THE AGREED UPON SALARY 26 DEDUCTIONS SHALL BE REMITTED TO THE STATE EMPLOYEES' 27 RETIREMENT BOARD, WHICH SHALL CERTIFY AND TRANSFER TO THE 28 BOARD THE AMOUNTS PAID. 29 (2) IN THE CASE OF ACTIVATED MILITARY SERVICE LEAVE 30 BEGINNING BEFORE THE EFFECTIVE DATE OF THIS PARAGRAPH, THE 20010H0026B1905 - 30 -
1 AMOUNT PAYABLE MAY BE PAID ACCORDING TO THIS SUBSECTION OR 2 SUBSECTION (C.1), BUT ALL LUMP SUM PAYMENTS MUST BE MADE [AND 3 ALL AMORTIZATION PAYMENTS COMMENCED] WITHIN ONE YEAR OF THE 4 TERMINATION OF ACTIVATED MILITARY SERVICE LEAVE. 5 § 8324. CONTRIBUTIONS FOR PURCHASE OF CREDIT FOR CREDITABLE 6 NONSCHOOL SERVICE. 7 * * * 8 (B) NONINTERVENING MILITARY SERVICE.--THE AMOUNT DUE FOR THE 9 PURCHASE OF CREDIT FOR MILITARY SERVICE OTHER THAN INTERVENING 10 MILITARY SERVICE SHALL BE DETERMINED BY APPLYING THE MEMBER'S 11 BASIC CONTRIBUTION RATE PLUS THE NORMAL CONTRIBUTION RATE AS 12 PROVIDED IN SECTION 8328 (RELATING TO ACTUARIAL COST METHOD) AT 13 THE TIME OF ENTRY OF THE MEMBER INTO SCHOOL SERVICE SUBSEQUENT 14 TO SUCH MILITARY SERVICE TO ONE-THIRD OF HIS TOTAL COMPENSATION 15 RECEIVED DURING THE FIRST THREE YEARS OF SUCH SUBSEQUENT 16 CREDITED SCHOOL SERVICE AND MULTIPLYING THE PRODUCT BY THE 17 NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR OF CREDITABLE 18 NONINTERVENING MILITARY SERVICE BEING PURCHASED TOGETHER WITH 19 STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT SCHOOL AND 20 STATE SERVICE TO DATE OF PURCHASE. UPON CERTIFICATION OF THE 21 AMOUNT DUE, PAYMENT MAY BE MADE IN A LUMP SUM WITHIN 90 DAYS OR 22 IN THE CASE OF AN ACTIVE MEMBER OR AN ELIGIBLE STATE EMPLOYEE 23 WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT 24 SYSTEM IT MAY BE AMORTIZED WITH STATUTORY INTEREST THROUGH 25 SALARY DEDUCTIONS [OR BY PERSONAL CHECKS] IN AMOUNTS AGREED UPON 26 BY THE MEMBER AND THE BOARD. THE SALARY DEDUCTION AMORTIZATION 27 PLANS AGREED TO BY MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL 28 OF PAYMENT AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION 29 OF SCHOOL SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE 30 DISCRETION, DECIDES TO ALLOW. THE BOARD MAY LIMIT SALARY 20010H0026B1905 - 31 -
1 DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN ITS 2 SOLE DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE STATE 3 EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' 4 RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE 5 REMITTED TO THE STATE EMPLOYEES' RETIREMENT BOARD, WHICH SHALL 6 CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID. APPLICATION 7 MAY BE FILED FOR ALL SUCH MILITARY SERVICE CREDIT UPON 8 COMPLETION OF THREE YEARS OF SUBSEQUENT CREDITED SCHOOL SERVICE 9 AND SHALL BE CREDITED AS CLASS T-C SERVICE. 10 (C) INTERVENING MILITARY SERVICE.--CONTRIBUTIONS ON ACCOUNT 11 OF CREDIT FOR INTERVENING MILITARY SERVICE SHALL BE DETERMINED 12 BY THE MEMBER'S BASIC CONTRIBUTION RATE AND COMPENSATION AT THE 13 TIME OF ENTRY OF THE MEMBER INTO ACTIVE MILITARY SERVICE, 14 TOGETHER WITH STATUTORY INTEREST DURING ALL PERIODS OF 15 SUBSEQUENT SCHOOL AND STATE SERVICE TO DATE OF PURCHASE. UPON 16 APPLICATION FOR SUCH CREDIT THE AMOUNT DUE SHALL BE CERTIFIED IN 17 THE CASE OF EACH MEMBER BY THE BOARD, IN ACCORDANCE WITH METHODS 18 APPROVED BY THE ACTUARY, AND CONTRIBUTIONS MAY BE MADE BY ONE OF 19 THE FOLLOWING METHODS: 20 (1) REGULAR MONTHLY PAYMENTS DURING ACTIVE MILITARY 21 SERVICE. 22 (2) A LUMP SUM PAYMENT WITHIN 90 DAYS OF CERTIFICATION 23 OF THE AMOUNT DUE. 24 (3) SALARY DEDUCTIONS [OR PERSONAL CHECKS] IN AMOUNTS 25 AGREED UPON BY THE MEMBER AND THE BOARD. THE SALARY DEDUCTION 26 AMORTIZATION PLANS AGREED TO BY THE MEMBERS AND THE BOARD MAY 27 INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND STATUTORY INTEREST 28 UNTIL THE TERMINATION OF SCHOOL SERVICE OR STATE SERVICE, AS 29 THE BOARD, IN ITS SOLE DISCRETION, DECIDES TO ALLOW. THE 30 BOARD MAY LIMIT SALARY DEDUCTION AMORTIZATION PLANS TO SUCH 20010H0026B1905 - 32 -
1 TERMS AS THE BOARD, IN ITS SOLE DISCRETION, DETERMINES. IN 2 THE CASE OF AN ELIGIBLE STATE EMPLOYEE WHO IS AN ACTIVE 3 MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM, THE AGREED 4 UPON SALARY DEDUCTIONS SHALL BE REMITTED TO THE STATE 5 EMPLOYEES' RETIREMENT BOARD, WHICH SHALL CERTIFY AND TRANSFER 6 TO THE BOARD THE AMOUNTS PAID. 7 (D) OTHER CREDITABLE NONSCHOOL SERVICE.--CONTRIBUTIONS ON 8 ACCOUNT OF CLASS T-C CREDIT FOR CREDITABLE NONSCHOOL SERVICE 9 OTHER THAN MILITARY SERVICE SHALL BE DETERMINED BY APPLYING THE 10 MEMBER'S BASIC CONTRIBUTION RATE PLUS THE NORMAL CONTRIBUTION 11 RATE AS PROVIDED IN SECTION 8328 AT THE TIME OF THE MEMBER'S 12 ENTRY INTO SCHOOL SERVICE SUBSEQUENT TO SUCH CREDITABLE 13 NONSCHOOL SERVICE TO HIS TOTAL COMPENSATION RECEIVED DURING THE 14 FIRST YEAR OF SUBSEQUENT CREDITED SCHOOL SERVICE AND MULTIPLYING 15 THE PRODUCT BY THE NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR 16 OF CREDITABLE NONSCHOOL SERVICE BEING PURCHASED TOGETHER WITH 17 STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT SCHOOL OR 18 STATE SERVICE TO THE DATE OF PURCHASE, EXCEPT THAT IN THE CASE 19 OF PURCHASE OF CREDIT FOR CREDITABLE NONSCHOOL SERVICE AS SET 20 FORTH IN SECTION 8304(B)(5) (RELATING TO CREDITABLE NONSCHOOL 21 SERVICE) THE MEMBER SHALL PAY ONLY THE EMPLOYEE'S SHARE UNLESS 22 OTHERWISE PROVIDED BY LAW. UPON CERTIFICATION OF THE AMOUNT DUE, 23 PAYMENT MAY BE MADE IN A LUMP SUM WITHIN 90 DAYS OR IN THE CASE 24 OF AN ACTIVE MEMBER OR AN ELIGIBLE STATE EMPLOYEE WHO IS AN 25 ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM IT MAY 26 BE AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS 27 [OR BY PERSONAL CHECKS] IN AMOUNTS AGREED UPON BY THE MEMBER AND 28 THE BOARD. THE SALARY DEDUCTION AMORTIZATION PLANS AGREED TO BY 29 THE MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL OF PAYMENT 30 AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION OF SCHOOL 20010H0026B1905 - 33 -
1 SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE DISCRETION, 2 DECIDES TO ALLOW. THE BOARD MAY LIMIT SALARY DEDUCTION 3 AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN ITS SOLE 4 DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE STATE 5 EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' 6 RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE 7 REMITTED TO THE STATE EMPLOYEES' RETIREMENT BOARD, WHICH SHALL 8 CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID. 9 * * * 10 § 8325. INCOMPLETE PAYMENTS. 11 IN THE EVENT THAT A MEMBER TERMINATES SCHOOL SERVICE OR A 12 MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE STATE 13 EMPLOYEES' RETIREMENT SYSTEM TERMINATES STATE SERVICE BEFORE ANY 14 AGREED UPON PAYMENTS OR RETURN OF BENEFITS ON ACCOUNT OF 15 RETURNING TO SCHOOL SERVICE OR ENTERING STATE SERVICE AND 16 ELECTING MULTIPLE SERVICE HAVE BEEN COMPLETED THE MEMBER OR 17 MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE STATE 18 EMPLOYEES' RETIREMENT SYSTEM SHALL HAVE THE RIGHT TO PAY WITHIN 19 30 DAYS OF TERMINATION OF SCHOOL SERVICE OR STATE SERVICE THE 20 BALANCE DUE, INCLUDING INTEREST, IN A LUMP SUM AND THE ANNUITY 21 SHALL BE CALCULATED INCLUDING FULL CREDIT FOR THE PREVIOUS 22 SCHOOL SERVICE, CREDITABLE NONSCHOOL SERVICE, OR FULL-COVERAGE 23 MEMBERSHIP. IN THE EVENT A MEMBER DOES NOT PAY THE BALANCE DUE 24 WITHIN 30 DAYS OF TERMINATION OF SCHOOL SERVICE OR IN THE EVENT 25 A MEMBER DIES IN SCHOOL SERVICE OR WITHIN 30 DAYS OF TERMINATION 26 OF SCHOOL SERVICE OR IN THE CASE OF A MULTIPLE SERVICE MEMBER 27 WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT 28 SYSTEM, DOES NOT PAY THE BALANCE DUE WITHIN 30 DAYS OF 29 TERMINATION OF STATE SERVICE OR DIES IN STATE SERVICE OR WITHIN 30 30 DAYS OF TERMINATION OF STATE SERVICE AND BEFORE THE AGREED 20010H0026B1905 - 34 -
1 UPON PAYMENTS HAVE BEEN COMPLETED, THE PRESENT VALUE OF THE 2 BENEFIT OTHERWISE PAYABLE SHALL BE REDUCED BY THE BALANCE DUE, 3 INCLUDING INTEREST, AND THE BENEFIT PAYABLE SHALL BE CALCULATED 4 AS THE ACTUARIAL EQUIVALENT OF SUCH REDUCED PRESENT VALUE. 5 § 8327. PAYMENTS BY EMPLOYERS. 6 * * * 7 (B) DEDUCTION FROM APPROPRIATIONS.-- 8 (1) TO FACILITATE THE PAYMENT OF AMOUNTS DUE FROM ANY 9 EMPLOYER TO THE FUND THROUGH THE STATE TREASURER AND TO 10 PERMIT THE EXCHANGE OF CREDITS BETWEEN THE STATE TREASURER 11 AND ANY EMPLOYER, THE SECRETARY OF EDUCATION AND THE STATE 12 TREASURER SHALL CAUSE TO BE DEDUCTED AND PAID INTO THE FUND 13 FROM THE AMOUNT OF ANY MONEYS DUE TO ANY EMPLOYER ON ACCOUNT 14 OF ANY APPROPRIATION FOR SCHOOLS OR OTHER PURPOSES [SUCH 15 AMOUNT DUE], AMOUNTS EQUAL TO THE EMPLOYER AND PICKUP 16 CONTRIBUTIONS WHICH AN EMPLOYER IS REQUIRED TO PAY TO THE 17 FUND, AS CERTIFIED BY THE BOARD, AND AS REMAINS UNPAID ON THE 18 DATE SUCH APPROPRIATIONS WOULD OTHERWISE BE PAID TO THE 19 EMPLOYER[, AND SUCH]. SUCH AMOUNT SHALL BE CREDITED TO THE 20 [EMPLOYER'S ACCOUNT] APPROPRIATE ACCOUNTS IN THE FUND. 21 (2) TO FACILITATE THE PAYMENTS OF AMOUNTS DUE FROM ANY 22 CHARTER SCHOOL, AS DEFINED IN ARTICLE XVII-A OF THE ACT OF 23 MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL 24 CODE OF 1949, TO THE FUND THROUGH THE STATE TREASURER AND TO 25 PERMIT THE EXCHANGE OF CREDITS BETWEEN THE STATE TREASURER 26 AND ANY EMPLOYER, THE SECRETARY OF EDUCATION AND THE STATE 27 TREASURER SHALL CAUSE TO BE DEDUCTED AND PAID INTO THE FUND 28 FROM ANY FUNDS APPROPRIATED TO THE DEPARTMENT OF EDUCATION 29 FOR BASIC EDUCATION OF THE CHARTERING SCHOOL DISTRICT OF A 30 CHARTER SCHOOL AND PUBLIC SCHOOL EMPLOYEES' RETIREMENT 20010H0026B1905 - 35 -
1 CONTRIBUTIONS, AMOUNTS EQUAL TO THE EMPLOYER AND PICKUP 2 CONTRIBUTIONS WHICH A CHARTER SCHOOL IS REQUIRED TO PAY TO 3 THE FUND, AS CERTIFIED BY THE BOARD, AND AS REMAINS UNPAID ON 4 THE DATE SUCH APPROPRIATIONS WOULD OTHERWISE BE PAID TO THE 5 CHARTERING SCHOOL DISTRICT OR CHARTER SCHOOL. SUCH AMOUNTS 6 SHALL BE CREDITED TO THE APPROPRIATE ACCOUNTS IN THE FUND. 7 ANY REDUCTION IN PAYMENTS TO A CHARTERING SCHOOL DISTRICT 8 MADE PURSUANT TO THIS SECTION SHALL BE DEDUCTED FROM THE 9 AMOUNT DUE TO THE CHARTER SCHOOL DISTRICT PURSUANT TO THE 10 PUBLIC SCHOOL CODE OF 1949. 11 * * * 12 § 8328. ACTUARIAL COST METHOD. 13 * * * 14 (B) NORMAL CONTRIBUTION RATE.--THE NORMAL CONTRIBUTION RATE 15 SHALL BE DETERMINED AFTER EACH ACTUARIAL VALUATION. UNTIL ALL 16 ACCRUED LIABILITY CONTRIBUTIONS HAVE BEEN COMPLETED, THE NORMAL 17 CONTRIBUTION RATE SHALL BE DETERMINED, ON THE BASIS OF AN ANNUAL 18 INTEREST RATE AND SUCH MORTALITY AND OTHER TABLES AS SHALL BE 19 ADOPTED BY THE BOARD IN ACCORDANCE WITH GENERALLY ACCEPTED 20 ACTUARIAL PRINCIPLES, AS A LEVEL PERCENTAGE OF THE COMPENSATION 21 OF THE AVERAGE NEW ACTIVE MEMBER, WHICH PERCENTAGE, IF 22 CONTRIBUTED ON THE BASIS OF HIS PROSPECTIVE COMPENSATION THROUGH 23 THE ENTIRE PERIOD OF ACTIVE SCHOOL SERVICE, WOULD BE SUFFICIENT 24 TO FUND THE LIABILITY FOR ANY PROSPECTIVE BENEFIT PAYABLE TO 25 HIM, IN EXCESS OF THAT PORTION FUNDED BY HIS PROSPECTIVE MEMBER 26 CONTRIBUTIONS, EXCEPT FOR THE SUPPLEMENTAL BENEFITS PROVIDED IN 27 SECTIONS 8348 (RELATING TO SUPPLEMENTAL ANNUITIES), 8348.1 28 (RELATING TO ADDITIONAL SUPPLEMENTAL ANNUITIES), 8348.2 29 (RELATING TO FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES) [AND], 30 8348.3 (RELATING TO SUPPLEMENTAL ANNUITIES COMMENCING 1994), 20010H0026B1905 - 36 -
1 8348.4 (RELATING TO SPECIAL SUPPLEMENTAL POSTRETIREMENT 2 ADJUSTMENT) AND 8348.5 (RELATING TO SUPPLEMENTAL ANNUITIES 3 COMMENCING 1998). 4 (C) ACCRUED LIABILITY CONTRIBUTION RATE.--FOR THE FISCAL 5 YEAR BEGINNING JULY 1, [1991] 2002, THE ACCRUED LIABILITY 6 CONTRIBUTION RATE SHALL BE COMPUTED AS THE RATE OF TOTAL 7 COMPENSATION OF ALL ACTIVE MEMBERS WHICH SHALL BE CERTIFIED BY 8 THE ACTUARY AS SUFFICIENT TO FUND OVER A PERIOD OF [20] TEN 9 YEARS FROM JULY 1, [1991] 2002, THE PRESENT VALUE OF THE 10 LIABILITIES FOR ALL PROSPECTIVE BENEFITS OF ACTIVE MEMBERS, 11 EXCEPT FOR THE SUPPLEMENTAL BENEFITS PROVIDED IN SECTIONS 8348, 12 8348.1, 8348.2 [AND], 8348.3, 8348.4 AND 8348.5, IN EXCESS OF 13 THE TOTAL ASSETS IN THE FUND, EXCLUDING THE BALANCE IN THE 14 ANNUITY RESERVE ACCOUNT, AND OF THE PRESENT VALUE OF NORMAL 15 CONTRIBUTIONS AND OF MEMBER CONTRIBUTIONS PAYABLE WITH RESPECT 16 TO ALL ACTIVE MEMBERS ON JULY 1, [1991] 2002, DURING THE 17 REMAINDER OF THEIR ACTIVE SERVICE. THEREAFTER, THE AMOUNT OF 18 EACH ANNUAL ACCRUED LIABILITY CONTRIBUTION SHALL BE [5% GREATER 19 THAN] EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION FOR THE 20 [PREVIOUS] FISCAL YEAR, BEGINNING JULY 1, 2002, EXCEPT THAT, IF 21 THE ACCRUED LIABILITY IS INCREASED BY LEGISLATION ENACTED 22 SUBSEQUENT TO [JULY 1, 1991] JUNE 30, 2002, SUCH ADDITIONAL 23 LIABILITY SHALL BE FUNDED OVER A PERIOD OF [20] TEN YEARS FROM 24 THE FIRST DAY OF JULY, COINCIDENT WITH OR NEXT FOLLOWING THE 25 EFFECTIVE DATE OF THE INCREASE[, PROVIDED THAT THE LIABILITY FOR 26 ANY ADDITIONAL BENEFITS CREATED BY THIS ACT, EXCEPT FOR THE 27 HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM ESTABLISHED IN 28 SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM ASSISTANCE 29 PROGRAM), SHALL BE FUNDED OVER A PERIOD OF 20 YEARS COMMENCING 30 JULY 1, 1992]. THE AMOUNT OF EACH ANNUAL ACCRUED LIABILITY 20010H0026B1905 - 37 -
1 CONTRIBUTION FOR SUCH ADDITIONAL LEGISLATIVE LIABILITIES SHALL 2 BE [5% GREATER THAN] EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION 3 FOR THE [PREVIOUS FISCAL YEAR] FIRST ANNUAL PAYMENT. 4 (D) SUPPLEMENTAL ANNUITY CONTRIBUTION RATE.--CONTRIBUTIONS 5 FROM THE COMMONWEALTH AND OTHER EMPLOYERS REQUIRED TO PROVIDE 6 FOR THE PAYMENT OF THE SUPPLEMENTAL ANNUITIES PROVIDED FOR IN 7 SECTIONS 8348, 8348.1 [AND], 8348.2, 8348.4 AND 8348.5 SHALL BE 8 PAID OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 2002. 9 THE AMOUNT OF EACH ANNUAL SUPPLEMENTAL ANNUITIES CONTRIBUTION 10 SHALL BE [5% GREATER THAN] EQUAL TO THE AMOUNT OF SUCH 11 CONTRIBUTION FOR THE [PREVIOUS] FISCAL YEAR BEGINNING JULY 1, 12 2002. IN THE EVENT THAT SUPPLEMENTAL ANNUITIES ARE INCREASED BY 13 LEGISLATION ENACTED SUBSEQUENT TO [JULY 1, 1991] JUNE 30, 2002, 14 THE ADDITIONAL LIABILITY FOR THE INCREASED BENEFITS SHALL BE 15 FUNDED IN EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% 16 EACH YEAR] OVER A PERIOD OF [20] TEN YEARS FROM THE JULY 1, 17 COINCIDENT WITH OR NEXT FOLLOWING THE EFFECTIVE DATE OF SUCH 18 LEGISLATION. [NOTWITHSTANDING THE PRECEDING, THE FUNDING FOR THE 19 SUPPLEMENTAL ANNUITIES COMMENCING 1994 PROVIDED FOR IN SECTION 20 8348.3 SHALL BE AS PROVIDED IN SECTION 8348.3(F).] 21 (E) EXPERIENCE ADJUSTMENT FACTOR.--FOR EACH YEAR AFTER THE 22 ESTABLISHMENT OF THE ACCRUED LIABILITY CONTRIBUTION RATE FOR THE 23 FISCAL YEAR BEGINNING JULY 1, [1991] 2002, ANY INCREASE OR 24 DECREASE IN THE ACCRUED LIABILITY (INCLUDING LIABILITY FOR 25 SUPPLEMENTAL ANNUITIES) DUE TO ACTUAL EXPERIENCE DIFFERING FROM 26 ASSUMED EXPERIENCE, CHANGES IN ACTUARIAL ASSUMPTIONS, CHANGES IN 27 THE TERMS AND CONDITIONS OF THE BENEFITS PROVIDED BY THE SYSTEM 28 BY JUDICIAL, ADMINISTRATIVE OR OTHER PROCESSES OTHER THAN 29 LEGISLATION, INCLUDING, BUT NOT LIMITED TO, REINTERPRETATION OF 30 THE PROVISIONS OF THIS PART, SHALL BE AMORTIZED IN EQUAL DOLLAR 20010H0026B1905 - 38 -
1 ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] OVER A PERIOD 2 OF [20] TEN YEARS BEGINNING WITH THE JULY 1 SECOND SUCCEEDING 3 THE ACTUARIAL VALUATION. 4 * * * 5 SECTION 2.1. SECTIONS 8342 AND 8344 OF TITLE 24 ARE AMENDED 6 BY ADDING SUBSECTIONS TO READ: 7 § 8342. MAXIMUM SINGLE LIFE ANNUITY. 8 * * * 9 (C) LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC § 10 415(B).--NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE 11 CONTRARY, NO BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH 12 BENEFIT EXCEEDS ANY LIMITATION UNDER IRC § 415(B) IN EFFECT WITH 13 RESPECT TO GOVERNMENTAL PLANS, AS SUCH TERM IS DEFINED IN IRC § 14 414(D), ON THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE. 15 § 8344. DISABILITY ANNUITIES. 16 * * * 17 (E) LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC § 18 415(B).--NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE 19 CONTRARY, NO BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH 20 BENEFIT EXCEEDS ANY LIMITATION UNDER IRC § 415(B) IN EFFECT WITH 21 RESPECT TO GOVERNMENTAL PLANS, AS SUCH TERM IS DEFINED IN IRC § 22 414(D), ON THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE. 23 SECTION 2.2. SECTION 8345(A) OF TITLE 24 IS AMENDED TO READ: 24 § 8345. MEMBER'S OPTIONS. 25 (A) GENERAL RULE.--ANY VESTEE WITH [TEN] FIVE OR MORE 26 ELIGIBILITY POINTS OR ANY OTHER ELIGIBLE MEMBER UPON TERMINATION 27 OF SCHOOL SERVICE WHO HAS NOT WITHDRAWN HIS ACCUMULATED 28 DEDUCTIONS AS PROVIDED IN SECTION 8341 (RELATING TO RETURN OF 29 ACCUMULATED DEDUCTIONS) MAY APPLY FOR AND ELECT TO RECEIVE 30 EITHER A MAXIMUM SINGLE LIFE ANNUITY, AS CALCULATED IN 20010H0026B1905 - 39 -
1 ACCORDANCE WITH THE PROVISIONS OF SECTION 8342 (RELATING TO 2 MAXIMUM SINGLE LIFE ANNUITY), OR A REDUCED ANNUITY CERTIFIED BY 3 THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE MAXIMUM SINGLE 4 LIFE ANNUITY AND IN ACCORDANCE WITH ONE OF THE FOLLOWING 5 OPTIONS, EXCEPT THAT NO MEMBER SHALL ELECT AN ANNUITY PAYABLE TO 6 ONE OR MORE SURVIVOR ANNUITANTS OTHER THAN HIS SPOUSE OR 7 ALTERNATE PAYEE OF SUCH A MAGNITUDE THAT THE PRESENT VALUE OF 8 THE ANNUITY PAYABLE TO HIM FOR LIFE PLUS ANY LUMP SUM PAYMENT HE 9 MAY HAVE ELECTED TO RECEIVE IS LESS THAN 50% OF THE PRESENT 10 VALUE OF HIS MAXIMUM SINGLE LIFE ANNUITY. 11 (1) OPTION 1.--A LIFE ANNUITY TO THE MEMBER WITH A 12 GUARANTEED TOTAL PAYMENT EQUAL TO THE PRESENT VALUE OF THE 13 MAXIMUM SINGLE LIFE ANNUITY ON THE EFFECTIVE DATE OF 14 RETIREMENT WITH THE PROVISION THAT, IF, AT HIS DEATH, HE HAS 15 RECEIVED LESS THAN SUCH PRESENT VALUE, THE UNPAID BALANCE 16 SHALL BE PAYABLE TO HIS BENEFICIARY. 17 (2) OPTION 2.--A JOINT AND SURVIVOR ANNUITY PAYABLE 18 DURING THE LIFETIME OF THE MEMBER WITH THE FULL AMOUNT OF 19 SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR ANNUITANT, IF 20 LIVING AT HIS DEATH. 21 (3) OPTION 3.--A JOINT AND FIFTY PERCENT (50%) SURVIVOR 22 ANNUITY PAYABLE DURING THE LIFETIME OF THE MEMBER WITH ONE- 23 HALF OF SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR 24 ANNUITANT, IF LIVING AT HIS DEATH. 25 (4) OPTION 4.--SOME OTHER BENEFIT WHICH SHALL BE 26 CERTIFIED BY THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE 27 MAXIMUM SINGLE LIFE ANNUITY, SUBJECT TO THE FOLLOWING 28 RESTRICTIONS: 29 (I) ANY ANNUITY SHALL BE PAYABLE WITHOUT REDUCTION 30 DURING THE LIFETIME OF THE MEMBER. 20010H0026B1905 - 40 -
1 (II) THE SUM OF ALL ANNUITIES PAYABLE TO THE 2 DESIGNATED SURVIVOR ANNUITANTS SHALL NOT BE GREATER THAN 3 ONE AND ONE-HALF TIMES THE ANNUITY PAYABLE TO THE MEMBER. 4 (III) A PORTION OF THE BENEFIT MAY BE PAYABLE AS A 5 LUMP SUM, EXCEPT THAT SUCH LUMP SUM PAYMENT SHALL NOT 6 EXCEED AN AMOUNT EQUAL TO THE ACCUMULATED DEDUCTIONS 7 STANDING TO THE CREDIT OF THE MEMBER. THE BALANCE OF THE 8 PRESENT VALUE OF THE MAXIMUM SINGLE LIFE ANNUITY ADJUSTED 9 IN ACCORDANCE WITH SECTION 8342(B) SHALL BE PAID IN THE 10 FORM OF AN ANNUITY WITH A GUARANTEED TOTAL PAYMENT, A 11 SINGLE LIFE ANNUITY, OR A JOINT AND SURVIVOR ANNUITY OR 12 ANY COMBINATION THEREOF BUT SUBJECT TO THE RESTRICTIONS 13 OF SUBPARAGRAPHS (I) AND (II) OF THIS PARAGRAPH. 14 * * * 15 SECTION 3. SECTION 8346(A) AND (D) OF TITLE 24 IS AMENDED 16 AND THE SECTION IS AMENDED BY ADDING A SUBSECTION TO READ: 17 § 8346. TERMINATION OF ANNUITIES. 18 (A) GENERAL RULE.--IF AN ANNUITANT RETURNS TO SCHOOL SERVICE 19 OR ENTERS OR HAS ENTERED STATE SERVICE AND ELECTS MULTIPLE 20 SERVICE MEMBERSHIP, ANY ANNUITY PAYABLE TO HIM UNDER THIS PART 21 SHALL CEASE EFFECTIVE UPON THE DATE OF HIS RETURN TO SCHOOL 22 SERVICE OR ENTERING STATE SERVICE AND IN THE CASE OF AN ANNUITY 23 OTHER THAN A DISABILITY ANNUITY THE PRESENT VALUE OF SUCH 24 ANNUITY, ADJUSTED FOR FULL COVERAGE IN THE CASE OF A JOINT 25 COVERAGE MEMBER WHO MAKES THE APPROPRIATE BACK CONTRIBUTIONS FOR 26 FULL COVERAGE, SHALL BE FROZEN AS OF THE DATE SUCH ANNUITY 27 CEASES. AN ANNUITANT WHO IS CREDITED WITH AN ADDITIONAL 10% OF 28 MEMBERSHIP SERVICE AS PROVIDED IN SECTION 8302(B.2) (RELATING TO 29 CREDITED SCHOOL SERVICE) AND WHO RETURNS TO SCHOOL SERVICE, 30 EXCEPT AS PROVIDED IN SUBSECTION (B), SHALL FORFEIT SUCH 20010H0026B1905 - 41 -
1 CREDITED SERVICE AND SHALL HAVE HIS FROZEN PRESENT VALUE 2 ADJUSTED AS IF HIS 10% RETIREMENT INCENTIVE HAD NOT BEEN APPLIED 3 TO HIS ACCOUNT. IN THE EVENT THAT THE COST-OF-LIVING INCREASE 4 ENACTED DECEMBER 18, 1979, OCCURRED DURING THE PERIOD OF SUCH 5 STATE OR SCHOOL EMPLOYMENT, THE FROZEN PRESENT VALUE SHALL BE 6 INCREASED, ON OR AFTER THE MEMBER ATTAINS SUPERANNUATION AGE, BY 7 THE PERCENT APPLICABLE HAD HE NOT RETURNED TO SERVICE. 8 (A.1) RETURN OF BENEFITS.--IN THE EVENT AN ANNUITANT WHOSE 9 ANNUITY CEASES PURSUANT TO THIS SECTION RECEIVES ANY ANNUITY 10 PAYMENT, INCLUDING A LUMP SUM PAYMENT PURSUANT TO SECTION 8345 11 (RELATING TO MEMBER'S OPTIONS) ON OR AFTER THE DATE OF HIS 12 RETURN TO SCHOOL SERVICE OR ENTERING STATE SERVICE, THE 13 ANNUITANT SHALL RETURN TO THE BOARD THE AMOUNT SO RECEIVED PLUS 14 STATUTORY INTEREST. THE AMOUNT PAYABLE SHALL BE CERTIFIED IN 15 EACH CASE BY THE BOARD IN ACCORDANCE WITH METHODS APPROVED BY 16 THE ACTUARY AND SHALL BE PAID IN A LUMP SUM WITHIN 90 DAYS OR IN 17 THE CASE OF AN ACTIVE MEMBER OR A STATE EMPLOYEE WHO IS AN 18 ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM MAY BE 19 AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN 20 AMOUNTS AGREED UPON BY THE MEMBER AND THE BOARD. IN THE CASE OF 21 A STATE EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' 22 RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE 23 REMITTED TO THE STATE EMPLOYEES' RETIREMENT BOARD, WHICH SHALL 24 CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID. 25 * * * 26 (D) ELIMINATION OF THE EFFECT OF FROZEN PRESENT VALUE.-- 27 (1) AN ANNUITANT WHO RETURNS TO SCHOOL SERVICE AND EARNS 28 THREE ELIGIBILITY POINTS BY PERFORMING CREDITED SCHOOL 29 SERVICE FOLLOWING THE MOST RECENT PERIOD OF RECEIPT OF AN 30 ANNUITY UNDER THIS PART, OR AN ANNUITANT WHO ENTERS STATE 20010H0026B1905 - 42 -
1 SERVICE AND: 2 (I) IS A MULTIPLE SERVICE MEMBER; OR 3 (II) WHO ELECTS MULTIPLE SERVICE MEMBERSHIP, AND 4 EARNS THREE ELIGIBILITY POINTS BY PERFORMING CREDITED STATE 5 SERVICE OR CREDITED SCHOOL SERVICE FOLLOWING THE MOST RECENT 6 PERIOD OF RECEIPT OF AN ANNUITY UNDER THIS PART, AND WHO HAD 7 THE PRESENT VALUE OF HIS ANNUITY FROZEN IN ACCORDANCE WITH 8 SUBSECTION (A), SHALL QUALIFY TO HAVE THE EFFECT OF THE 9 FROZEN PRESENT VALUE RESULTING FROM ALL PREVIOUS PERIODS OF 10 RETIREMENT ELIMINATED, PROVIDED THAT ALL PAYMENTS UNDER 11 OPTION 4 AND ANNUITY PAYMENTS PAYABLE DURING PREVIOUS PERIODS 12 OF RETIREMENT PLUS INTEREST AS SET FORTH IN PARAGRAPH (3) 13 SHALL BE RETURNED TO THE FUND IN THE FORM OF AN ACTUARIAL 14 ADJUSTMENT TO HIS SUBSEQUENT BENEFITS OR IN SUCH FORM AS THE 15 BOARD MAY OTHERWISE DIRECT. 16 (2) UPON SUBSEQUENT DISCONTINUANCE OF SERVICE AND THE 17 FILING OF AN APPLICATION FOR AN ANNUITY, A FORMER ANNUITANT 18 WHO QUALIFIES TO HAVE THE EFFECT OF A FROZEN PRESENT VALUE 19 ELIMINATED UNDER THIS SUBSECTION SHALL BE ENTITLED TO RECEIVE 20 THE HIGHER OF EITHER: 21 (I) AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION) 22 CALCULATED AS IF THE FREEZING OF THE FORMER ANNUITANT'S 23 ACCOUNT PURSUANT TO SUBSECTION (A) HAD NOT OCCURRED, 24 ADJUSTED BY CREDITING CLASS T-C SCHOOL SERVICE AS CLASS 25 T-D SERVICE AS PROVIDED FOR IN SECTION 8305(C) (RELATING 26 TO CLASSES OF SERVICE) AND FURTHER ADJUSTED ACCORDING TO 27 PARAGRAPH (3), PROVIDED THAT A FORMER ANNUITANT OF THE 28 SYSTEM OR A FORMER ANNUITANT OF THE STATE EMPLOYEES' 29 RETIREMENT SYSTEM WHO RETIRED UNDER A PROVISION OF LAW 30 GRANTING ADDITIONAL SERVICE CREDIT IF TERMINATION OF 20010H0026B1905 - 43 -
1 SCHOOL OR STATE SERVICE OR RETIREMENT OCCURRED DURING A 2 SPECIFIC PERIOD OF TIME SHALL NOT BE PERMITTED TO RETAIN 3 THE ADDITIONAL SERVICE CREDIT UNDER THE PRIOR LAW WHEN 4 THE ANNUITY IS COMPUTED FOR HIS MOST RECENT RETIREMENT; 5 OR 6 (II) AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION) 7 CALCULATED AS IF THE FORMER ANNUITANT DID NOT QUALIFY TO 8 HAVE THE EFFECT ON THE FROZEN PRESENT VALUE ELIMINATED, 9 UNLESS THE FORMER ANNUITANT NOTIFIES THE BOARD IN WRITING BY 10 THE LATER OF THE DATE THE APPLICATION FOR ANNUITY IS FILED OR 11 THE EFFECTIVE DATE OF RETIREMENT THAT THE FORMER ANNUITANT 12 WISHES TO RECEIVE THE LOWER ANNUITY. 13 (3) IN ADDITION TO ANY OTHER ADJUSTMENT TO THE PRESENT 14 VALUE OF THE MAXIMUM SINGLE LIFE ANNUITY THAT A MEMBER MAY BE 15 ENTITLED TO RECEIVE THAT OCCURS AS A RESULT OF ANY OTHER 16 PROVISION OF LAW, THE PRESENT VALUE OF THE MAXIMUM SINGLE 17 LIFE ANNUITY SHALL BE REDUCED BY ALL AMOUNTS PAID OR PAYABLE 18 TO HIM DURING ALL PREVIOUS PERIODS OF RETIREMENT PLUS 19 INTEREST ON THESE AMOUNTS UNTIL THE DATE OF SUBSEQUENT 20 RETIREMENT. THE INTEREST FOR EACH YEAR SHALL BE CALCULATED 21 BASED UPON THE ANNUAL INTEREST RATE ADOPTED FOR THAT SCHOOL 22 YEAR BY THE BOARD FOR THE CALCULATION OF THE NORMAL 23 CONTRIBUTION RATE PURSUANT TO SECTION 8328(B) (RELATING TO 24 ACTUARIAL COST METHOD). 25 SECTION 4. SECTIONS 8348.1(F), 8348.2(F), 8348.3(F), 26 8348.5(F), 8501(A) AND (B), 8502(M) AND 8502.1 OF TITLE 24 ARE 27 AMENDED TO READ: 28 § 8348.1. ADDITIONAL SUPPLEMENTAL ANNUITIES. 29 * * * 30 (F) FUNDING.--THE ACTUARY SHALL ANNUALLY CERTIFY THE AMOUNT 20010H0026B1905 - 44 -
1 OF COMMONWEALTH APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED 2 TO FUND, OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 3 2002, THE ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR 4 IN THIS SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S 5 CERTIFICATION TO THE SECRETARY OF THE BUDGET ON OR BEFORE 6 NOVEMBER 1 OF EACH YEAR. IF, IN ANY YEAR AFTER 1984, THE AMOUNT 7 CERTIFIED IS DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 8 9, 1929 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 9 1929, AS INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS 10 SUBSECTION OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE 11 ADDITIONAL SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION 12 SHALL BE SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND 13 APPROVED AS SUFFICIENT IS APPROPRIATED. 14 * * * 15 § 8348.2. FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES. 16 * * * 17 (F) FUNDING.--THE ACTUARY SHALL ANNUALLY ESTIMATE THE AMOUNT 18 OF COMMONWEALTH APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED 19 TO FUND, OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 20 2002, THE ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR 21 IN THIS SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S ESTIMATION 22 TO THE SECRETARY OF THE BUDGET ON OR BEFORE NOVEMBER 1 OF EACH 23 YEAR. IF, IN ANY YEAR AFTER 1988, THE AMOUNT ESTIMATED IS 24 DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 9, 1929 25 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, AS 26 INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS SUBSECTION 27 OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE ADDITIONAL 28 SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION SHALL BE 29 SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND APPROVED AS 30 SUFFICIENT IS APPROPRIATED. 20010H0026B1905 - 45 -
1 * * * 2 § 8348.3. SUPPLEMENTAL ANNUITIES COMMENCING 1994. 3 * * * 4 (F) FUNDING.--[NOTWITHSTANDING SECTION 8328(D) (RELATING TO 5 ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE 6 INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN 7 EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] 8 OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1995] 2002. 9 * * * 10 § 8348.5. SUPPLEMENTAL ANNUITIES COMMENCING 1998. 11 * * * 12 (F) FUNDING.--[NOTWITHSTANDING SECTION 8328 (RELATING TO 13 ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE 14 INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN 15 EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] 16 OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1998] 2002. 17 NOTWITHSTANDING THE PROVISIONS OF SECTION 212 OF THE ACT OF 18 APRIL 22, 1998 [(P.L. , NO.6A)] (P.L.1341, NO.6A), KNOWN AS THE 19 GENERAL APPROPRIATION ACT OF 1998, REGARDING PAYMENT FOR COST- 20 OF-LIVING INCREASES FOR ANNUITANTS, PAYMENTS FOR COST-OF-LIVING 21 INCREASES FOR ANNUITANTS SHALL BE MADE UNDER SECTION 8535 22 (RELATING TO PAYMENTS TO SCHOOL ENTITIES BY COMMONWEALTH). 23 * * * 24 § 8501. PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD. 25 (A) STATUS AND MEMBERSHIP.--THE BOARD SHALL BE AN 26 INDEPENDENT ADMINISTRATIVE BOARD AND SHALL CONSIST OF 15 27 MEMBERS: THE SECRETARY OF EDUCATION, EX OFFICIO; THE STATE 28 TREASURER, EX OFFICIO; TWO SENATORS; TWO MEMBERS OF THE HOUSE OF 29 REPRESENTATIVES; THE EXECUTIVE SECRETARY OF THE PENNSYLVANIA 30 SCHOOL BOARDS ASSOCIATION, EX OFFICIO; TWO TO BE APPOINTED BY 20010H0026B1905 - 46 -
1 THE GOVERNOR, AT LEAST ONE OF WHOM SHALL NOT BE A SCHOOL 2 EMPLOYEE OR AN OFFICER OR EMPLOYEE OF THE STATE; THREE TO BE 3 ELECTED BY THE ACTIVE PROFESSIONAL MEMBERS OF THE SYSTEM FROM 4 AMONG THEIR NUMBER; ONE TO BE ELECTED BY ANNUITANTS FROM AMONG 5 THEIR NUMBER; ONE TO BE ELECTED BY THE ACTIVE NONPROFESSIONAL 6 MEMBERS OF THE SYSTEM FROM AMONG THEIR NUMBER; AND ONE TO BE 7 ELECTED BY MEMBERS OF PENNSYLVANIA PUBLIC SCHOOL BOARDS FROM 8 AMONG THEIR NUMBER. THE APPOINTMENTS MADE BY THE GOVERNOR SHALL 9 BE CONFIRMED BY THE SENATE AND EACH ELECTION SHALL BE CONDUCTED 10 IN A MANNER APPROVED BY THE BOARD. THE TERMS OF THE APPOINTED 11 AND NONLEGISLATIVE ELECTED MEMBERS SHALL BE THREE YEARS. THE 12 MEMBERS FROM THE SENATE SHALL BE APPOINTED BY THE PRESIDENT PRO 13 TEMPORE OF THE SENATE AND SHALL CONSIST OF ONE MEMBER FROM THE 14 MAJORITY AND ONE MEMBER FROM THE MINORITY. THE MEMBERS FROM THE 15 HOUSE OF REPRESENTATIVES SHALL BE APPOINTED BY THE SPEAKER OF 16 THE HOUSE OF REPRESENTATIVES AND SHALL CONSIST OF ONE MEMBER 17 FROM THE MAJORITY AND ONE MEMBER FROM THE MINORITY. THE 18 LEGISLATIVE MEMBERS SHALL SERVE ON THE BOARD FOR THE DURATION OF 19 [THE TERMS FOR WHICH THEY WERE ELECTED.] THEIR LEGISLATIVE TERMS 20 AND SHALL CONTINUE TO SERVE UNTIL 30 DAYS AFTER THE CONVENING OF 21 THE NEXT REGULAR SESSION OF THE GENERAL ASSEMBLY AFTER THE 22 EXPIRATION OF THEIR RESPECTIVE LEGISLATIVE TERMS, OR UNTIL A 23 SUCCESSOR IS APPOINTED FOR THE NEW TERM, WHICHEVER OCCURS FIRST. 24 THE CHAIRMAN OF THE BOARD SHALL BE ELECTED BY THE BOARD MEMBERS. 25 EACH EX OFFICIO MEMBER OF THE BOARD AND EACH LEGISLATIVE MEMBER 26 OF THE BOARD MAY APPOINT A DULY AUTHORIZED DESIGNEE TO ACT IN 27 HIS STEAD. 28 (B) [APPOINTMENT AND TERMS OF INITIAL MEMBERS.--FOR THE 29 PURPOSES OF SECURING AN ORDERLY TRANSITION AND STAGGERED TERMS, 30 THE ELECTED MEMBERS OF THE BOARD SERVING ON THE EFFECTIVE DATE 20010H0026B1905 - 47 -
1 OF THIS PART SHALL SERVE UNTIL THE EXPIRATION OF THEIR 2 RESPECTIVE TERMS. THE BOARD MEMBER INITIALLY ELECTED BY MEMBERS 3 OF PENNSYLVANIA PUBLIC SCHOOL BOARDS SHALL SERVE UNTIL JANUARY 4 1, 1976. THE BOARD MEMBER INITIALLY ELECTED BY THE ACTIVE 5 NONPROFESSIONAL MEMBERS OF THE SYSTEM SHALL SERVE UNTIL JANUARY 6 1, 1977. ONE OF THE INITIAL BOARD MEMBERS APPOINTED BY THE 7 GOVERNOR AFTER THE EFFECTIVE DATE OF THIS PART SHALL SERVE UNTIL 8 JANUARY 1, 1976 AND THE SECOND APPOINTED BOARD MEMBER SHALL 9 SERVE UNTIL JANUARY 1, 1977.] VACANCIES.--A VACANCY OCCURRING 10 DURING THE TERM OF ANY MEMBER SHALL BE FILLED FOR THE UNEXPIRED 11 TERM BY A SUCCESSOR APPOINTED OR ELECTED AS THE CASE MAY BE IN 12 THE SAME MANNER AS HIS PREDECESSOR. 13 * * * 14 § 8502. ADMINISTRATIVE DUTIES OF BOARD. 15 * * * 16 (M) MEMBER CONTRIBUTIONS AND INTEREST.--THE BOARD SHALL 17 CAUSE EACH MEMBER'S CONTRIBUTIONS, INCLUDING PAYROLL DEDUCTIONS, 18 PICKUP CONTRIBUTIONS AND ALL OTHER PAYMENTS, INCLUDING, BUT NOT 19 LIMITED TO, AMOUNTS COLLECTED BY THE STATE EMPLOYEES' RETIREMENT 20 SYSTEM FOR THE REINSTATEMENT OF PREVIOUS SCHOOL SERVICE OR 21 CREDITABLE NONSCHOOL SERVICE, AND AMOUNTS PAID TO RETURN 22 BENEFITS PAID AFTER THE DATE OF RETURN TO SCHOOL SERVICE OR 23 ENTERING STATE SERVICE REPRESENTING LUMP SUM PAYMENTS MADE 24 PURSUANT TO SECTION 8345(A)(4)(III) (RELATING TO MEMBER'S 25 OPTIONS) AND MEMBER'S ANNUITY PAYMENTS, BUT NOT INCLUDING OTHER 26 BENEFITS RETURNED PURSUANT TO SECTION 8346(A.1) (RELATING TO 27 TERMINATION OF ANNUITIES) TO BE CREDITED TO THE ACCOUNT OF SUCH 28 MEMBER AND SHALL PAY ALL SUCH AMOUNTS INTO THE FUND. SUCH 29 CONTRIBUTIONS SHALL BE CREDITED WITH STATUTORY INTEREST UNTIL 30 DATE OF TERMINATION OF SERVICE, EXCEPT IN THE CASE OF A VESTEE, 20010H0026B1905 - 48 -
1 WHO SHALL HAVE SUCH INTEREST CREDITED UNTIL THE EFFECTIVE DATE 2 OF RETIREMENT OR UNTIL THE RETURN OF HIS ACCUMULATED DEDUCTIONS, 3 IF HE SO ELECTS; AND IN THE CASE OF A MULTIPLE SERVICE MEMBER 4 WHO SHALL HAVE SUCH INTEREST CREDITED UNTIL TERMINATION OF 5 SERVICE IN BOTH THE SCHOOL AND THE STATE SYSTEMS. 6 * * * 7 [§ 8502.1. HEALTH INSURANCE. 8 (A) AUTHORITY.--THE BOARD MAY SPONSOR A PARTICIPANT-FUNDED 9 GROUP HEALTH INSURANCE PROGRAM FOR ANNUITANTS, SPOUSES OF 10 ANNUITANTS, SURVIVOR ANNUITANTS AND THEIR DEPENDENTS. THE BOARD 11 MAY PROMULGATE REGULATIONS REGARDING THE PRUDENT AND EFFICIENT 12 OPERATION OF THE PROGRAM, INCLUDING, BUT NOT LIMITED TO: 13 (1) ESTABLISHMENT OF AN ANNUAL BUDGET AND DISBURSEMENTS 14 IN ACCORDANCE WITH THE BUDGET. 15 (2) DETERMINATION OF THE BENEFITS STRUCTURE. 16 (3) DETERMINATION OF ENROLLMENT PROCEDURES. 17 (4) ESTABLISHMENT OF PREMIUM RATES SUFFICIENT TO FULLY 18 FUND THE PROGRAM, INCLUDING ADMINISTRATIVE EXPENSES. 19 (5) CONTRACTING FOR GOODS, EQUIPMENT, SERVICES, 20 CONSULTANTS AND OTHER PROFESSIONAL PERSONNEL AS NEEDED TO 21 OPERATE THE PROGRAM. 22 (B) SEPARATE ACCOUNT.--ALL FUNDS RELATED TO THE HEALTH 23 INSURANCE PROGRAM SHALL BE MAINTAINED AND ACCOUNTED FOR 24 SEPARATELY FROM THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND. 25 (C) OPERATION.--THE BOARD MAY ESTABLISH AND OPERATE THE 26 PROGRAM THROUGH A LAWFULLY AUTHORIZED ENTITY. 27 (D) ADDITIONAL REQUIREMENTS.--THE ASSETS OF THE FUND SHALL 28 NOT BE LIABLE OR UTILIZED FOR PAYMENT OF ANY EXPENSES OR CLAIMS 29 INCURRED BY THE HEALTH INSURANCE PROGRAM. THE PROGRAM SHALL BE 30 AN APPROVED HEALTH INSURANCE PROGRAM FOR PURPOSES OF SECTION 20010H0026B1905 - 49 -
1 8505(I) (RELATING TO DUTIES OF BOARD REGARDING APPLICATIONS AND 2 ELECTIONS OF MEMBERS) AND AN APPROVED INSURANCE CARRIER FOR 3 PURPOSES OF SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM 4 ASSISTANCE PROGRAM). THE PROGRAM SHALL NOT BE SUBJECT TO THE 5 PROVISIONS OF SECTION 8531 (RELATING TO STATE GUARANTEE).] 6 SECTION 4.1. TITLE 24 IS AMENDED BY ADDING A SECTION TO 7 READ: 8 § 8502.2. HEALTH INSURANCE. 9 (A) AUTHORITY.--THE BOARD MAY SPONSOR A PARTICIPANT-FUNDED 10 GROUP HEALTH INSURANCE PROGRAM FOR ANNUITANTS, SPOUSES OF 11 ANNUITANTS, SURVIVOR ANNUITANTS AND THEIR DEPENDENTS. THE BOARD 12 MAY PROMULGATE REGULATIONS REGARDING THE PRUDENT AND EFFICIENT 13 OPERATION OF THE PROGRAM, INCLUDING, BUT NOT LIMITED TO: 14 (1) ESTABLISHMENT OF AN ANNUAL BUDGET AND DISBURSEMENTS 15 IN ACCORDANCE WITH THE BUDGET. 16 (2) DETERMINATION OF THE BENEFITS STRUCTURE. 17 (3) DETERMINATION OF ENROLLMENT PROCEDURES. 18 (4) ESTABLISHMENT OF PREMIUM RATES SUFFICIENT TO FULLY 19 FUND THE PROGRAM, INCLUDING ADMINISTRATIVE EXPENSES. 20 (5) CONTRACTING FOR GOODS, EQUIPMENT, SERVICES, 21 CONSULTANTS AND OTHER PROFESSIONAL PERSONNEL AS NEEDED TO 22 OPERATE THE PROGRAM. 23 (B) SEPARATE ACCOUNT.--ALL FUNDS RELATED TO THE HEALTH 24 INSURANCE PROGRAM SHALL BE MAINTAINED AND ACCOUNTED FOR 25 SEPARATELY FROM THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND. 26 (C) OPERATION.--THE BOARD MAY ESTABLISH AND OPERATE THE 27 PROGRAM THROUGH A LAWFULLY AUTHORIZED ENTITY. 28 (D) ADDITIONAL REQUIREMENTS.--THE ASSETS OF THE FUND SHALL 29 NOT BE LIABLE OR UTILIZED FOR PAYMENT OF ANY EXPENSES OR CLAIMS 30 INCURRED BY THE HEALTH INSURANCE PROGRAM. THE PROGRAM SHALL BE 20010H0026B1905 - 50 -
1 AN APPROVED HEALTH INSURANCE PROGRAM FOR PURPOSES OF SECTION 2 8505(I) (RELATING TO DUTIES OF BOARD REGARDING APPLICATIONS AND 3 ELECTIONS OF MEMBERS) AND AN APPROVED INSURANCE CARRIER FOR 4 PURPOSES OF SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM 5 ASSISTANCE PROGRAM). THE PROGRAM SHALL NOT BE SUBJECT TO THE 6 PROVISIONS OF SECTION 8531 (RELATING TO STATE GUARANTEE). 7 SECTION 4.2. SECTIONS 8503(A) AND 8504(B) OF TITLE 24 ARE 8 AMENDED TO READ: 9 § 8503. DUTIES OF BOARD TO ADVISE AND REPORT TO EMPLOYERS AND 10 MEMBERS. 11 (A) MANUAL OF REGULATIONS.--THE BOARD SHALL, WITH THE ADVICE 12 OF THE ATTORNEY GENERAL AND THE ACTUARY, PREPARE WITHIN 90 DAYS 13 OF THE EFFECTIVE DATE OF THIS PART, A MANUAL INCORPORATING RULES 14 AND REGULATIONS CONSISTENT WITH THE PROVISIONS OF THIS PART FOR 15 THE EMPLOYERS WHO SHALL MAKE INFORMATION CONTAINED THEREIN 16 AVAILABLE TO THE GENERAL MEMBERSHIP. THE BOARD SHALL THEREAFTER 17 ADVISE THE EMPLOYERS WITHIN 90 DAYS OF ANY CHANGES IN SUCH RULES 18 AND REGULATIONS DUE TO CHANGES IN THE LAW OR DUE TO CHANGES IN 19 ADMINISTRATIVE POLICIES. AS SOON AS PRACTICABLE AFTER THE 20 COMMISSIONER'S PUBLICATION WITH RESPECT THERETO, THE BOARD SHALL 21 ALSO ADVISE THE EMPLOYERS AS TO ANY COST-OF-LIVING ADJUSTMENT 22 FOR THE SUCCEEDING CALENDAR YEAR IN THE AMOUNT OF THE LIMITATION 23 UNDER IRC § 401(A)(17) AND THE DOLLAR AMOUNTS OF THE LIMITATIONS 24 UNDER IRC § 415(B). 25 * * * 26 § 8504. DUTIES OF BOARD TO REPORT TO STATE EMPLOYEES' 27 RETIREMENT BOARD. 28 * * * 29 (B) MULTIPLE SERVICE MEMBERSHIP OF STATE EMPLOYEES.--UPON 30 RECEIPT OF NOTIFICATION FROM THE STATE EMPLOYEES' RETIREMENT 20010H0026B1905 - 51 -
1 BOARD THAT A FORMER SCHOOL EMPLOYEE HAS BECOME AN ACTIVE MEMBER 2 IN THE STATE EMPLOYEES' RETIREMENT SYSTEM AND HAS ELECTED TO 3 RECEIVE CREDIT FOR MULTIPLE SERVICE, THE BOARD SHALL CERTIFY TO 4 THE STATE EMPLOYEES' RETIREMENT BOARD AND CONCURRENTLY TO THE 5 MEMBER: 6 (1) THE TOTAL CREDITED SERVICE IN THE SYSTEM AND THE 7 NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR OF SERVICE 8 CREDITED IN EACH CLASS OF SERVICE. 9 (2) THE ANNUAL COMPENSATION RECEIVED EACH SCHOOL YEAR BY 10 THE MEMBER FOR CREDITED SCHOOL SERVICE. 11 (3) THE AMOUNT OF THE DEDUCTIONS AND THE PERIOD OVER 12 WHICH THEY ARE TO BE MADE. IF THE MEMBER HAS ELECTED PAYROLL 13 DEDUCTIONS PURSUANT TO SECTION 8323 (RELATING TO MEMBER 14 CONTRIBUTIONS FOR CREDITABLE SCHOOL SERVICE) OR 8324 15 (RELATING TO CONTRIBUTIONS FOR PURCHASE OF CREDIT FOR 16 CREDITABLE NONSCHOOL SERVICE). 17 * * * 18 SECTION 5. SECTION 8505(B) OF TITLE 24 IS AMENDED AND THE 19 SECTION IS AMENDED BY ADDING A SUBSECTION TO READ: 20 § 8505. DUTIES OF BOARD REGARDING APPLICATIONS AND ELECTIONS OF 21 MEMBERS. 22 * * * 23 (B) STATE EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON 24 RECEIPT OF NOTIFICATION FROM THE STATE EMPLOYEES' RETIREMENT 25 BOARD THAT A FORMER SCHOOL EMPLOYEE HAS BECOME AN ACTIVE MEMBER 26 IN THE STATE EMPLOYEES' RETIREMENT SYSTEM AND HAS ELECTED TO 27 BECOME A MEMBER WITH MULTIPLE SERVICE STATUS, THE BOARD SHALL: 28 (1) IN CASE OF A MEMBER WHO IS RECEIVING AN ANNUITY FROM 29 THE SYSTEM[, DISCONTINUE]: 30 (I) DISCONTINUE PAYMENTS, TRANSFER THE PRESENT 20010H0026B1905 - 52 -
1 VALUE[, AT THAT TIME,] OF THE MEMBER'S ANNUITY AT THE 2 TIME OF ENTERING STATE SERVICE, PLUS THE AMOUNT WITHDRAWN 3 IN A LUMP SUM PAYMENT, ON OR AFTER THE DATE OF ENTERING 4 STATE SERVICE, PURSUANT TO SECTION 8345 (RELATING TO 5 MEMBER'S OPTIONS), WITH STATUTORY INTEREST TO DATE OF 6 TRANSFER, MINUS THE AMOUNT TO BE RETURNED TO THE BOARD ON 7 ACCOUNT OF RETURN TO SERVICE THAT THE BOARD HAS 8 DETERMINED IS TO BE CREDITED IN THE MEMBERS' SAVINGS 9 ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE MEMBERS' 10 SAVINGS ACCOUNT AND RESUME CREDITING OF STATUTORY 11 INTEREST ON THE AMOUNT RESTORED TO HIS CREDIT [AND 12 TRANSFER]. 13 (II) TRANSFER THE BALANCE OF THE PRESENT VALUE OF 14 THE TOTAL ANNUITY, MINUS THE AMOUNT TO BE RETURNED TO THE 15 BOARD ON ACCOUNT OF RETURN TO SERVICE THAT THE BOARD HAS 16 DETERMINED IS TO BE CREDITED IN THE STATE ACCUMULATION 17 ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE STATE 18 ACCUMULATION ACCOUNT. 19 (III) CERTIFY TO THE MEMBER THE AMOUNT OF LUMP SUM 20 AND ANNUITY PAYMENTS WITH STATUTORY INTEREST THE MEMBER 21 IS TO RETURN TO THE BOARD, AND OF THOSE AMOUNTS, WHICH 22 AMOUNT SHALL BE CREDITED TO THE MEMBERS' SAVINGS ACCOUNT 23 AND CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS ARE 24 RETURNED AND WHICH AMOUNT SHALL BE CREDITED TO THE STATE 25 ACCUMULATION ACCOUNT. 26 (2) IN CASE OF A MEMBER WHO IS NOT RECEIVING AN ANNUITY 27 FROM THE SYSTEM AND WHO HAS NOT WITHDRAWN HIS ACCUMULATED 28 DEDUCTIONS, CONTINUE OR RESUME THE CREDITING OF STATUTORY 29 INTEREST ON HIS ACCUMULATED DEDUCTIONS. 30 (3) IN CASE OF A MEMBER WHO IS NOT RECEIVING AN ANNUITY 20010H0026B1905 - 53 -
1 FROM THE SYSTEM AND HIS ACCUMULATED DEDUCTIONS WERE 2 WITHDRAWN, CERTIFY TO THE MEMBER THE ACCUMULATED DEDUCTIONS 3 AS THEY WOULD HAVE BEEN AT THE TIME OF HIS SEPARATION HAD HE 4 BEEN A FULL COVERAGE MEMBER TOGETHER WITH STATUTORY INTEREST 5 FOR ALL PERIODS OF SUBSEQUENT STATE AND SCHOOL SERVICE TO THE 6 DATE OF REPAYMENT. SUCH AMOUNT SHALL BE RESTORED BY HIM AND 7 SHALL BE CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS 8 ARE RESTORED. 9 * * * 10 (K) SCHOOL EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON 11 RECEIPT OF NOTIFICATION FROM THE STATE EMPLOYEES' RETIREMENT 12 BOARD THAT A MEMBER WHO HAS ELECTED MULTIPLE SERVICE MEMBERSHIP 13 HAS ELECTED TO RESTORE STATE SERVICE OR PURCHASE CREDITABLE 14 NONSTATE SERVICE IN THE STATE EMPLOYEES' RETIREMENT SYSTEM OR IS 15 OBLIGATED TO RETURN BENEFITS TO THE STATE EMPLOYEES' RETIREMENT 16 BOARD ON ACCOUNT OF ELECTING MULTIPLE SERVICE MEMBERSHIP HAS 17 ELECTED TO PAY ALL OR PART OF THE AMOUNT DUE TO THE STATE 18 EMPLOYEES' RETIREMENT BOARD BY SALARY DEDUCTIONS, THE BOARD 19 SHALL COLLECT FROM THE EMPLOYEE THE AMOUNTS CERTIFIED BY THE 20 STATE EMPLOYEES' RETIREMENT BOARD AS DUE AND OWING BY THE MEMBER 21 AND SHALL CERTIFY AND TRANSFER TO THE STATE EMPLOYEES' 22 RETIREMENT BOARD THE AMOUNTS SO COLLECTED. 23 SECTION 6. SECTIONS 8506(C), (G) AND (H), 8507(C) AND (G), 24 8509(B), 8521(H), (I) AND (J) AND 8525(A) OF TITLE 24 ARE 25 AMENDED TO READ: 26 § 8506. DUTIES OF EMPLOYERS. 27 * * * 28 (C) MEMBER AND EMPLOYER CONTRIBUTIONS.--THE EMPLOYER SHALL 29 CERTIFY TO ITS TREASURER THE REQUIRED MEMBER CONTRIBUTIONS 30 PICKED UP AND ANY OTHER CONTRIBUTIONS, INCLUDING, BUT NOT 20010H0026B1905 - 54 -
1 LIMITED TO, AMOUNTS COLLECTED FOR THE STATE EMPLOYEES' 2 RETIREMENT BOARD FOR THE REINSTATEMENT OF PREVIOUS STATE SERVICE 3 OR CREDITABLE NONSTATE SERVICE AND AMOUNTS PAID TO RETURN 4 BENEFITS PAID AFTER THE DATE OF RETURN TO STATE SERVICE OR 5 ENTERING SCHOOL SERVICE, DEDUCTED FROM EACH PAYROLL. ON JULY 1, 6 1996, AND UPON ANY LATER EFFECTIVE DATE OF EMPLOYMENT OF ANY 7 NONELIGIBLE MEMBER TO WHOM [LIMITATION] LIMITATIONS UNDER IRC § 8 401(A)(17) OR 415(B) APPLIES OR IS EXPECTED TO APPLY, THE 9 EMPLOYER SHALL IDENTIFY TO ITS TREASURER OR OTHER PAYROLL 10 ADMINISTRATOR THE MEMBER OR MEMBERS TO WHOM SUCH LIMIT APPLIES 11 OR MAY APPLY AND SHALL CAUSE ANY SUCH MEMBER'S CONTRIBUTIONS 12 DEDUCTED FROM PAYROLL AND THE EMPLOYER'S CONTRIBUTION ON HIS 13 BEHALF TO CEASE AT THE [LIMITATION] LIMITATIONS UNDER IRC § 14 401(A)(17) OR 415(B) ON THE PAYROLL DATE IF AND WHEN SUCH LIMIT 15 SHALL BE REACHED. THE TREASURER SHALL REMIT TO THE SECRETARY OF 16 THE BOARD EACH MONTH THE TOTAL OF THE MEMBER CONTRIBUTIONS AND 17 THE AMOUNT DUE FROM THE EMPLOYER DETERMINED IN ACCORDANCE WITH 18 SECTION 8327 (RELATING TO PAYMENTS BY EMPLOYERS). IF, UPON 19 CREDITING THE REMITTANCE OF A NONELIGIBLE MEMBER'S CONTRIBUTIONS 20 TO THE MEMBER'S SAVINGS ACCOUNT, THE BOARD SHALL DETERMINE THAT 21 SUCH ACCOUNT SHALL HAVE BEEN CREDITED WITH PICKUP CONTRIBUTIONS 22 ATTRIBUTABLE TO COMPENSATION WHICH IS IN EXCESS OF THE ANNUAL 23 COMPENSATION LIMIT UNDER IRC § 401(A)(17) OR 415(B), OR WITH 24 TOTAL MEMBER CONTRIBUTIONS FOR SUCH MEMBER WHICH WOULD CAUSE 25 SUCH MEMBER'S CONTRIBUTIONS OR BENEFITS TO EXCEED ANY APPLICABLE 26 LIMITATION ON CONTRIBUTIONS OR BENEFITS UNDER IRC § 401(A)(17) 27 OR 415(B), THE BOARD SHALL AS SOON AS PRACTICABLE REFUND TO THE 28 MEMBER FROM HIS INDIVIDUAL MEMBER ACCOUNT SUCH AMOUNT, TOGETHER 29 WITH THE STATUTORY INTEREST THEREON, AS WILL CAUSE THE MEMBER'S 30 TOTAL MEMBER CONTRIBUTIONS NOT TO EXCEED THE APPLICABLE LIMIT. 20010H0026B1905 - 55 -
1 THE PAYMENT OF ANY SUCH REFUND TO THE MEMBER SHALL BE CHARGED TO 2 THE MEMBER'S SAVINGS ACCOUNT. 3 * * * 4 (G) FORMER STATE EMPLOYEE CONTRIBUTORS.--THE EMPLOYER SHALL, 5 UPON THE EMPLOYMENT OF A FORMER MEMBER OF THE STATE EMPLOYEES' 6 RETIREMENT SYSTEM WHO IS NOT AN ANNUITANT OF THE STATE 7 EMPLOYEES' RETIREMENT SYSTEM, ADVISE SUCH EMPLOYEE OF HIS RIGHT 8 TO ELECT MULTIPLE SERVICE MEMBERSHIP WITHIN [30] 365 DAYS OF 9 ENTRY INTO THE SYSTEM AND, IN THE CASE ANY SUCH EMPLOYEE WHO SO 10 ELECTS HAS WITHDRAWN HIS ACCUMULATED DEDUCTIONS, REQUIRE HIM TO 11 RESTORE HIS ACCUMULATED DEDUCTIONS AS THEY WOULD HAVE BEEN AT 12 THE TIME OF HIS SEPARATION HAD HE BEEN A FULL COVERAGE MEMBER, 13 TOGETHER WITH STATUTORY INTEREST FOR ALL PERIODS OF SUBSEQUENT 14 STATE AND SCHOOL SERVICE TO DATE OF REPAYMENT. THE EMPLOYER 15 SHALL ADVISE THE BOARD OF SUCH ELECTION. 16 (H) FORMER STATE EMPLOYEE ANNUITANTS.--THE EMPLOYER SHALL, 17 UPON THE EMPLOYMENT OF AN ANNUITANT OF THE STATE EMPLOYEES' 18 RETIREMENT SYSTEM WHO APPLIES FOR MEMBERSHIP IN THE SYSTEM, 19 ADVISE SUCH EMPLOYEE THAT HE MAY ELECT MULTIPLE SERVICE 20 MEMBERSHIP WITHIN [30] 365 DAYS OF ENTRY INTO THE SYSTEM AND 21 THAT IF HE SO ELECTS HIS ANNUITY FROM THE STATE EMPLOYEES' 22 RETIREMENT SYSTEM WILL BE DISCONTINUED EFFECTIVE UPON THE DATE 23 OF HIS RETURN TO SCHOOL SERVICE AND, UPON TERMINATION OF SCHOOL 24 SERVICE AND APPLICATION FOR AN ANNUITY, THE ANNUITY WILL BE 25 ADJUSTED IN ACCORDANCE WITH SECTION 8346 (RELATING TO 26 TERMINATION OF ANNUITIES). THE EMPLOYER SHALL ADVISE THE BOARD 27 OF SUCH ELECTION. 28 * * * 29 § 8507. RIGHTS AND DUTIES OF SCHOOL EMPLOYEES AND MEMBERS. 30 * * * 20010H0026B1905 - 56 -
1 (C) MULTIPLE SERVICE MEMBERSHIP.--ANY ACTIVE MEMBER WHO WAS 2 FORMERLY AN ACTIVE MEMBER IN THE STATE EMPLOYEES' RETIREMENT 3 SYSTEM MAY ELECT TO BECOME A MULTIPLE SERVICE MEMBER. SUCH 4 ELECTION SHALL OCCUR NO LATER THAN [30] 365 DAYS AFTER BECOMING 5 AN ACTIVE MEMBER IN THIS SYSTEM. 6 * * * 7 (G) VESTING OF RETIREMENT RIGHTS.--IF A MEMBER ELECTS TO 8 VEST HIS RETIREMENT RIGHTS, HE SHALL NOMINATE A BENEFICIARY BY 9 WRITTEN DESIGNATION FILED WITH THE BOARD AND HE MAY ANYTIME 10 THEREAFTER WITHDRAW THE ACCUMULATED DEDUCTIONS STANDING TO HIS 11 CREDIT OR, IF HE HAS [TEN] FIVE OR MORE ELIGIBILITY POINTS, 12 APPLY FOR AN ANNUITY. 13 * * * 14 § 8509. HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM. 15 * * * 16 (B) AMOUNT OF PREMIUM ASSISTANCE.--[EFFECTIVE JULY 1, 1992, 17 PARTICIPATING] PARTICIPATING ELIGIBLE ANNUITANTS SHALL RECEIVE 18 PREMIUM ASSISTANCE PAYMENTS [OF $55 PER MONTH OR THE ACTUAL 19 MONTHLY PREMIUM, WHICHEVER IS LESS] AS PROVIDED IN PARAGRAPHS 20 (1) AND (2). SUCH PAYMENTS SHALL BE MADE BY THE BOARD TO THE 21 PARTICIPATING ELIGIBLE ANNUITANTS FOR THEIR PAYMENT DIRECTLY TO 22 THEIR APPROVED INSURANCE CARRIERS. SUCH PAYMENTS MAY ALSO BE 23 PAID BY THE BOARD, AT THE BOARD'S DISCRETION, DIRECTLY TO THE 24 PARTICIPATING ELIGIBLE ANNUITANTS' APPROVED INSURANCE CARRIERS. 25 THE BOARD SHALL HAVE THE RIGHT TO VERIFY THE APPLICATION AND 26 RECEIPT OF THE PAYMENTS BY THE PARTICIPATING ELIGIBLE ANNUITANTS 27 AND THEIR APPROVED INSURANCE CARRIERS. THE PREMIUM ASSISTANCE 28 PAYMENTS ARE AS FOLLOWS: 29 (1) EFFECTIVE JULY 1, 1992, $55 PER MONTH OR THE ACTUAL 30 MONTHLY PREMIUM, WHICHEVER IS LESS. 20010H0026B1905 - 57 -
1 (2) EFFECTIVE JANUARY 1, 2002, $100 PER MONTH OR THE 2 ACTUAL MONTHLY PREMIUM, WHICHEVER IS LESS. 3 * * * 4 § 8521. MANAGEMENT OF FUND AND ACCOUNTS. 5 * * * 6 (H) VENTURE CAPITAL[.--VENTURE CAPITAL INVESTMENTS SHALL BE 7 LIMITED TO NOT MORE THAN 2% OF THE BOOK VALUE OF THE TOTAL 8 ASSETS OF THE FUND AS DETERMINED FOR FINANCIAL STATEMENT 9 PURPOSES AS OF JUNE 30 NEXT PRECEDING THE DATE OF INVESTMENT. AN 10 INVESTMENT SHALL BE DEEMED A VENTURE CAPITAL INVESTMENT IF IT 11 RESULTS IN THE ACQUISITION OF EQUITY INTERESTS OR A COMBINATION 12 OF DEBT AND EQUITY INTERESTS IN A BUSINESS WHICH IS EXPECTED TO 13 GROW SUBSTANTIALLY IN THE FUTURE AND IN WHICH THE EXPECTED 14 RETURN ON INVESTMENT IS TO COME PREDOMINANTLY FROM AN INCREASE 15 IN VALUE OF THE EQUITY INTERESTS AND ARE NOT INTERESTS IN OR 16 SECURED BY REAL ESTATE. A VENTURE CAPITAL INVESTMENT MAY BE MADE 17 ONLY IF, IN THE JUDGMENT OF THE BOARD, THE INVESTMENT IS 18 REASONABLY LIKELY TO ENHANCE THE GENERAL WELFARE OF THIS 19 COMMONWEALTH AND ITS CITIZENS AND MEETS THE STANDARD OF PRUDENCE 20 SET FORTH IN SUBSECTION (A). IN DETERMINING WHETHER THE 21 INVESTMENT MEETS THE STANDARD OF PRUDENCE, THE BOARD MAY 22 CONSIDER, TOGETHER WITH THE EXPECTED RETURN ON AND THE RISK 23 CHARACTERISTICS OF THE PARTICULAR INVESTMENT, THE ACTUAL AND 24 EXPECTED FUTURE RETURNS AND THE RISK CHARACTERISTICS OF THE 25 TOTAL VENTURE CAPITAL INVESTMENTS HELD BY THE BOARD AT THE TIME 26 AND THE DEGREE TO WHICH THE PROPOSED NEW INVESTMENT WOULD 27 PROMOTE FURTHER DIVERSIFICATION WITHIN THE VENTURE CAPITAL ASSET 28 CLASS.], PRIVATE PLACEMENT AND ALTERNATIVE INVESTMENTS.--THE 29 BOARD IN ITS PRUDENT DISCRETION MAY MAKE ANY VENTURE CAPITAL 30 INVESTMENT, PRIVATE PLACEMENT INVESTMENT OR OTHER ALTERNATIVE 20010H0026B1905 - 58 -
1 INVESTMENT OF ANY KIND, STRUCTURE OR MANNER WHICH MEETS THE 2 STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A). 3 (I) VEHICLES FOR AUTHORIZED INVESTMENTS.--THE BOARD IN ITS 4 PRUDENT DISCRETION MAY MAKE ANY INVESTMENTS WHICH MEET THE 5 STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A) BY [BECOMING A 6 LIMITED PARTNER IN PARTNERSHIPS THAT WILL HOLD SUCH INVESTMENTS, 7 OR BY ACQUIRING SHARES OR UNITS OF PARTICIPATION OR OTHERWISE 8 PARTICIPATING BENEFICIALLY IN BANK COLLECTIVE TRUSTS OR IN THE 9 SEPARATE ACCOUNTS OF ANY INSURANCE COMPANY AUTHORIZED TO DO 10 BUSINESS IN THIS COMMONWEALTH, OR BY ACQUIRING STOCKS OR SHARES 11 OR UNITS OF PARTICIPATION OR OTHERWISE PARTICIPATING 12 BENEFICIALLY IN THE FUND OF ANY CORPORATION OR TRUST ORGANIZED 13 OR CREATED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OR 14 OF ANY STATE, DISTRICT OR TERRITORY THEREOF WHICH FUND IS 15 MAINTAINED FOR AND CONSISTS OF ASSETS OF EMPLOYEES' BENEFIT 16 TRUSTS, INCLUDING GOVERNMENTAL PLANS AS DEFINED IN IRC § 414(D) 17 OR WHICH MEET THE REQUIREMENTS FOR QUALIFICATION UNDER IRC § 18 401] ACQUIRING ANY TYPE OF INTEREST IN A BUSINESS ORGANIZATION 19 EXISTING UNDER THE LAWS OF ANY JURISDICTION, PROVIDED THAT, IN 20 ANY SUCH CASE, THE LIABILITY OF THE PUBLIC SCHOOL EMPLOYEES' 21 RETIREMENT FUND SHALL BE LIMITED TO THE AMOUNT OF ITS 22 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 OR 28 OTHER LAWFUL BUSINESS ORGANIZATION ARE OUTSIDE THE SCOPE OF THE 29 ORIGINAL INTENT OF AND [THEREFOR] THEREFORE DO NOT VIOLATE THE 30 PROHIBITION SET FORTH IN SECTION 8 OF ARTICLE VIII OF THE 20010H0026B1905 - 59 -
1 CONSTITUTION OF PENNSYLVANIA. 2 § 8525. ANNUITY RESERVE ACCOUNT. 3 (A) CREDITS AND CHARGES TO ACCOUNT.--THE ANNUITY RESERVE 4 ACCOUNT SHALL BE THE LEDGER ACCOUNT TO WHICH SHALL BE CREDITED 5 THE RESERVES HELD FOR THE PAYMENT OF ANNUITIES AND DEATH 6 BENEFITS ON ACCOUNT OF ALL ANNUITANTS AND THE CONTRIBUTIONS FROM 7 THE COMMONWEALTH AND OTHER EMPLOYERS AS DETERMINED IN ACCORDANCE 8 WITH SECTION 8328 (RELATING TO ACTUARIAL COST METHOD) FOR THE 9 PAYMENT OF THE SUPPLEMENTAL ANNUITIES PROVIDED IN SECTIONS 8348 10 (RELATING TO SUPPLEMENTAL ANNUITIES), 8348.1 (RELATING TO 11 ADDITIONAL SUPPLEMENTAL ANNUITIES) [AND], 8348.2 (RELATING TO 12 FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES), 8348.3 (RELATING TO 13 SUPPLEMENTAL ANNUITIES COMMENCING 1994), 8348.4 (RELATING TO 14 SPECIAL SUPPLEMENTAL POSTRETIREMENT ADJUSTMENT) AND 8348.5 15 (RELATING TO SUPPLEMENTAL ANNUITIES COMMENCING 1998). THE 16 ANNUITY RESERVE ACCOUNT SHALL BE CREDITED WITH VALUATION 17 INTEREST. AFTER THE TRANSFERS PROVIDED IN SECTIONS 8523 18 (RELATING TO MEMBERS' SAVINGS ACCOUNT) AND 8524 (RELATING TO 19 STATE ACCUMULATION ACCOUNT), ALL ANNUITY AND DEATH BENEFIT 20 PAYMENTS SHALL BE CHARGED TO THE ANNUITY RESERVE ACCOUNT AND 21 PAID FROM THE FUND. 22 * * * 23 SECTION 7. TITLE 24 IS AMENDED BY ADDING A PART TO READ: 24 PART V 25 HEALTH INSURANCE FOR RETIRED SCHOOL EMPLOYEES 26 CHAPTER 27 87. PRELIMINARY PROVISIONS 28 89. GROUP HEALTH INSURANCE PROGRAM 29 91. MISCELLANEOUS PROVISIONS 30 CHAPTER 87 20010H0026B1905 - 60 -
1 PRELIMINARY PROVISIONS 2 SEC. 3 8701. SHORT TITLE OF PART. 4 8702. DEFINITIONS. 5 § 8701. SHORT TITLE OF PART. 6 THIS PART SHALL BE KNOWN AND MAY BE CITED AS THE PUBLIC 7 SCHOOL RETIREES' HEALTH INSURANCE ACT. 8 § 8702. DEFINITIONS. 9 (A) GENERAL RULE.--SUBJECT TO ADDITIONAL DEFINITIONS 10 CONTAINED IN SUBSEQUENT PROVISIONS OF THIS PART WHICH ARE 11 APPLICABLE TO SPECIFIC PROVISIONS OF THIS PART, THE FOLLOWING 12 WORDS AND PHRASES WHEN USED IN THIS PART SHALL HAVE THE MEANINGS 13 GIVEN TO THEM IN THIS SECTION UNLESS THE CONTEXT CLEARLY 14 INDICATES OTHERWISE: 15 "ELIGIBLE PERSON." AN INDIVIDUAL WHO IS AN ANNUITANT OR 16 SURVIVOR ANNUITANT, OR THE SPOUSE OR DEPENDENT OF AN ANNUITANT 17 OR SURVIVOR ANNUITANT. 18 "FUND." THE PUBLIC SCHOOL RETIREES' HEALTH INSURANCE FUND. 19 "PLAN YEAR." THE PERIOD JULY 1, 2001, THROUGH DECEMBER 31, 20 2001, SHALL BE THE FIRST PLAN YEAR. AFTER DECEMBER 31, 2001, THE 21 PLAN YEAR SHALL BE THE CALENDAR YEAR. 22 "PROGRAM." THE GROUP HEALTH INSURANCE PROGRAM THAT MAY BE 23 SPONSORED BY THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD UNDER 24 THIS PART. 25 "RESERVE ACCOUNT." THE RESTRICTED RECEIPT ACCOUNT 26 ESTABLISHED IN SECTION 8902(B) (RELATING TO PUBLIC SCHOOL 27 RETIREES' HEALTH INSURANCE FUND). 28 (B) ADDITIONAL TERMS.--ANY TERM USED IN THIS PART NOT 29 DEFINED IN SUBSECTION (A) SHALL BE GOVERNED BY THE DEFINITIONS 30 GIVEN IN PART IV (RELATING TO RETIREMENT FOR SCHOOL EMPLOYEES) 20010H0026B1905 - 61 -
1 AND THE DEFINITIONS SET FORTH IN PART IV SHALL BE DEEMED TO BE 2 INCORPORATED INTO THIS PART. 3 CHAPTER 89 4 GROUP HEALTH INSURANCE PROGRAM 5 SEC. 6 8901. ADMINISTRATION. 7 8902. PUBLIC SCHOOL RETIREES' HEALTH INSURANCE FUND. 8 8903. MANAGEMENT OF FUND. 9 § 8901. ADMINISTRATION. 10 THE BOARD MAY SPONSOR A GROUP HEALTH INSURANCE PROGRAM TO BE 11 FUNDED BY AND FOR ELIGIBLE PERSONS. THE BOARD MAY ADMINISTER THE 12 PROGRAM ITSELF OR THROUGH ANY LEGAL ENTITY AUTHORIZED BY LAW TO 13 DO SO. THE PROGRAM MAY ALSO BE ADMINISTERED IN WHOLE OR IN PART 14 ON A FULLY INSURED OR SELF-FUNDED BASIS AT THE BOARD'S SOLE 15 DISCRETION. IN ADDITION TO THE POWERS GRANTED BY OTHER 16 PROVISIONS OF THIS PART, THE BOARD SHALL HAVE THE POWERS 17 NECESSARY OR CONVENIENT TO CARRY OUT THIS PART, INCLUDING, BUT 18 NOT LIMITED TO, THE POWER TO: 19 (1) SET AND ADJUST PREMIUM RATES SUFFICIENT TO MAINTAIN 20 THE ADEQUACY OF THE RESERVE ESTABLISHED BY THIS PART AND TO 21 FULLY FUND THE BENEFITS OFFERED BY AND TO PAY FOR THE 22 ADMINISTRATIVE EXPENSES RELATED TO THE PROGRAM. 23 (2) DETERMINE AND MAKE NECESSARY CHANGES TO THE BENEFIT 24 STRUCTURE FOR THE PROGRAM. 25 (3) DETERMINE ENROLLMENT PROCEDURES. 26 (4) IMPOSE AND COLLECT NECESSARY FEES AND CHARGES. 27 (5) ESTABLISH AN ANNUAL BUDGET FOR THE PROGRAM AND MAKE 28 DISBURSEMENTS FROM THE FUND THAT ARE CONSISTENT WITH THE 29 BUDGET. 30 (6) CONTRACT FOR GOODS, EQUIPMENT, SERVICES, CONSULTANTS 20010H0026B1905 - 62 -
1 AND OTHER PROFESSIONAL PERSONNEL AS NEEDED TO OPERATE THE 2 PROGRAM. 3 (7) PROVIDE FOR AN ANNUAL AUDIT OF THE FUND AND THE 4 PROGRAM BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM. 5 (8) TERMINATE THE PROGRAM OR ANY PORTION OF THE PROGRAM, 6 AT ANY TIME IF, IN THE BOARD'S DISCRETION, IT IS PRUDENT TO 7 DO SO. 8 (9) SOLICIT AND ACCEPT GIFTS, GRANTS, LOANS AND OTHER 9 AID FROM ANY PERSON, CORPORATION OR OTHER LEGAL ENTITY OR 10 FROM THE FEDERAL, STATE OR LOCAL GOVERNMENT AND PARTICIPATE 11 IN ANY FEDERAL, STATE OR LOCAL GOVERNMENT PROGRAM IF 12 NECESSARY FOR PRUDENT MANAGEMENT OF THE PROGRAM. 13 (10) HEAR AND DETERMINE ANY CLAIMS AND CONTROVERSIES 14 UNDER THIS PART UNDER 2 PA.C.S. CH. 5 SUBCH. A (RELATING TO 15 PRACTICE AND PROCEDURE OF COMMONWEALTH AGENCIES) AND CH. 7 16 SUBCH. A (RELATING TO JUDICIAL REVIEW OF COMMONWEALTH AGENCY 17 ACTION). THE BOARD'S JURISDICTION UNDER THIS PARAGRAPH SHALL 18 BE EXCLUSIVE. 19 (11) PROMULGATE RULES AND REGULATIONS REGARDING THE 20 PROGRAM. 21 § 8902. PUBLIC SCHOOL RETIREES' HEALTH INSURANCE FUND. 22 (A) ESTABLISHMENT OF FUND.--THE PUBLIC SCHOOL RETIREES' 23 HEALTH INSURANCE FUND IS ESTABLISHED IN THE STATE TREASURY. THE 24 MONEYS OF THE FUND ARE APPROPRIATED ON A CONTINUING BASIS AND 25 SHALL BE USED EXCLUSIVELY FOR THE PURPOSES SET FORTH IN THIS 26 PART. ALL OF THE ASSETS OF THE FUND SHALL BE MAINTAINED AND 27 ACCOUNTED FOR, SEPARATE FROM ALL OTHER FUNDS AND MONEYS OF THE 28 COMMONWEALTH AND THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND 29 IDENTIFIED IN SECTION 8522 (RELATING TO PUBLIC SCHOOL EMPLOYEES' 30 RETIREMENT FUND). 20010H0026B1905 - 63 -
1 (B) RESERVE ACCOUNT.-- 2 (1) A RESTRICTED RESERVE ACCOUNT IS ESTABLISHED WITHIN 3 THE FUND FOR THE PURPOSE OF ESTABLISHING AND MAINTAINING A 4 RESERVE SUFFICIENT TO PAY THE EXPECTED CLAIMS EXPERIENCE OF 5 THE PROGRAM IN THE EVENT THE BOARD ELECTS TO SELF-FUND ALL OR 6 A PORTION OF THE PROGRAM FOR ANY PLAN YEARS. FOR THE PLAN 7 YEAR 2002 AND EACH PLAN YEAR THEREAFTER, THE BOARD SHALL 8 ANNUALLY ESTABLISH THROUGH AN ACTUARY RETAINED BY THE BOARD 9 THE AMOUNT NECESSARY, IF ANY, TO MAINTAIN THIS RESERVE IN THE 10 EVENT THE BOARD ELECTS TO SELF-FUND ALL OR A PORTION OF THE 11 PROGRAM FOR ANY PLAN YEARS. ANY MONEYS NEEDED TO MAINTAIN THE 12 RESERVE ESTABLISHED BY THIS SUBSECTION SHALL BE COLLECTED 13 THROUGH THE ADJUSTMENT OF PREMIUM RATES OR THROUGH OTHER 14 AVAILABLE SOURCES. 15 (2) THE MONEYS IN THE RESERVE ACCOUNT MAY BE INVESTED BY 16 THE BOARD SEPARATE FROM OTHER MONEYS OF THE FUND. ALL 17 EARNINGS DERIVED FROM INVESTMENT OF THE ASSETS OF THE RESERVE 18 ACCOUNT SHALL BE CREDITED TO THE RESERVE ACCOUNT. 19 (C) TRANSFERS.--THE BOARD MAY TRANSFER MONEYS AMONG THE 20 VARIOUS ACCOUNTS OF THE FUND, INCLUDING THE RESERVE ACCOUNT 21 ESTABLISHED BY THE SUBSECTION (B), AS MAY BE NECESSARY TO 22 SATISFY THE PROVISIONS OF THIS PART. TRANSFERS FROM THE RESERVE 23 ACCOUNT MAY BE MADE ONLY FOR THE PAYMENT OF CLAIMS OR EXPECTED 24 CLAIMS AS DETERMINED BY THE ACTUARY RETAINED BY THE BOARD. 25 (D) ADMINISTRATION.--THE ASSETS OF THE FUND SHALL BE 26 PRESERVED, INVESTED AND EXPENDED SOLELY PURSUANT TO AND FOR THE 27 PURPOSES SET FORTH IN THIS PART. 28 (E) COMPOSITION.--THE FUND SHALL CONSIST OF: 29 (1) ALL PAYMENTS MADE BY ELIGIBLE PERSONS OR RECEIVED 30 FROM THE HEALTH INSURANCE ACCOUNT ESTABLISHED BY SECTION 8526 20010H0026B1905 - 64 -
1 (RELATING TO HEALTH INSURANCE ACCOUNT) AND ALL INTEREST, 2 EARNINGS AND ADDITIONS THERETO. 3 (2) ANY OTHER MONEY, PUBLIC OR PRIVATE, APPROPRIATED OR 4 MADE AVAILABLE TO THE BOARD FOR THE FUND OR THE RESERVE 5 ACCOUNT FROM ANY SOURCE AND ALL INTEREST, EARNINGS AND 6 ADDITIONS THERETO. 7 § 8903. MANAGEMENT OF FUND. 8 (A) CONTROL AND MANAGEMENT OF FUND.--THE MEMBERS OF THE 9 BOARD SHALL BE THE TRUSTEES OF THE FUND. REGARDLESS OF ANY OTHER 10 PROVISIONS OF LAW GOVERNING THE INVESTMENT OF FUNDS UNDER THE 11 CONTROL OF AN ADMINISTRATIVE BOARD OF THE STATE GOVERNMENT, THE 12 TRUSTEES SHALL HAVE EXCLUSIVE CONTROL AND MANAGEMENT OF THE FUND 13 AND FULL POWER TO INVEST THE FUND IN ACCORDANCE WITH THE 14 PROVISIONS OF THIS SECTION, SUBJECT, HOWEVER, TO THE EXERCISE OF 15 THAT DEGREE OF JUDGMENT, SKILL AND CARE UNDER THE CIRCUMSTANCES 16 THEN PREVAILING WHICH PERSONS OF PRUDENCE, DISCRETION AND 17 INTELLIGENCE WHO ARE FAMILIAR WITH SUCH MATTERS EXERCISE IN THE 18 MANAGEMENT OF THEIR OWN AFFAIRS NOT IN REGARD TO SPECULATION, 19 BUT IN REGARD TO THE PERMANENT DISPOSITION OF THE FUND, 20 CONSIDERING THE PROBABLE INCOME TO BE DERIVED THEREFROM AS WELL 21 AS THE PROBABLE SAFETY OF THEIR CAPITAL. THE TRUSTEES SHALL HAVE 22 THE POWER TO HOLD, PURCHASE, SELL, LEND, ASSIGN, TRANSFER OR 23 DISPOSE OF ANY OF THE SECURITIES AND INVESTMENTS IN WHICH ANY OF 24 THE MONEYS IN THE FUND SHALL HAVE BEEN INVESTED, AS WELL AS OF 25 THE PROCEEDS OF THE INVESTMENTS, INCLUDING, BUT NOT LIMITED TO, 26 DIRECTED COMMISSIONS WHICH HAVE ACCRUED TO THE BENEFIT OF THE 27 FUND AS A CONSEQUENCE OF THE INVESTMENTS AND OF THE MONEYS 28 BELONGING TO THE FUND, SUBJECT IN EVERY CASE TO MEETING THE 29 STANDARD OF PRUDENCE SET FORTH IN THIS SECTION. 30 (B) CUSTODIAN OF FUND.--THE STATE TREASURER SHALL BE THE 20010H0026B1905 - 65 -
1 CUSTODIAN OF THE FUND. 2 (C) PAYMENT FROM FUND.--ALL PAYMENTS FROM THE FUND SHALL BE 3 MADE BY THE STATE TREASURER IN ACCORDANCE WITH REQUISITIONS 4 SIGNED BY THE SECRETARY OF THE BOARD OR THE SECRETARY'S 5 DESIGNEES AND RATIFIED BY RESOLUTION OF THE BOARD. THE BOARD 6 SHALL REIMBURSE THE STATE TREASURER FOR THE COST OF MAKING 7 DISBURSEMENTS FROM THE FUND IN THE MANNER PROVIDED BY LAW. 8 CHAPTER 91 9 MISCELLANEOUS PROVISIONS 10 SEC. 11 9101. STATUS OF PROGRAM RELATIVE TO PUBLIC SCHOOL EMPLOYEES' 12 RETIREMENT CODE. 13 9102. CONSTRUCTION OF PART. 14 § 9101. STATUS OF PROGRAM RELATIVE TO PUBLIC SCHOOL EMPLOYEES' 15 RETIREMENT CODE. 16 (A) GENERAL RULE.--THE PROGRAM SHALL BE AN APPROVED HEALTH 17 INSURANCE PROGRAM FOR PURPOSES OF SECTION 8505(I) (RELATING TO 18 DUTIES OF BOARD REGARDING APPLICATIONS AND ELECTIONS OF MEMBERS) 19 AND SHALL BE AN APPROVED INSURANCE CARRIER FOR PURPOSES OF 20 SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM ASSISTANCE 21 PROGRAM). 22 (B) STATE GUARANTEE.--THE PROGRAM SHALL NOT BE SUBJECT TO 23 THE PROVISIONS OF SECTION 8531 (RELATING TO STATE GUARANTEE). 24 (C) HOLD HARMLESS.--NEITHER THE COMMONWEALTH NOR THE BOARD, 25 INCLUDING THEIR RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES, 26 SHALL BE LIABLE FOR ANY CLAIMS, DEMANDS, ACTIONS OR LIABILITY OF 27 ANY NATURE, INCLUDING, BUT NOT LIMITED TO, ATTORNEY FEES AND 28 COURT COSTS, BASED UPON OR ARISING OUT OF THE OPERATION OF THE 29 PROGRAM, WHETHER INCURRED DIRECTLY OR INDIRECTLY. THE ELIGIBLE 30 PARTICIPANTS WHO ENROLL AND PARTICIPATE IN THE PROGRAM SHALL BE 20010H0026B1905 - 66 -
1 DEEMED TO AGREE, ON BEHALF OF THEMSELVES AND THEIR HEIRS, 2 SUCCESSORS AND ASSIGNS, TO HOLD HARMLESS THE COMMONWEALTH AND 3 THE BOARD, INCLUDING THEIR RESPECTIVE OFFICERS, DIRECTORS AND 4 EMPLOYEES, FROM ANY CLAIMS, DEMANDS, ACTIONS OR LIABILITY OF ANY 5 NATURE, WHETHER DIRECTLY OR INDIRECTLY, INCLUDING ATTORNEY FEES 6 AND COURT COSTS, BASED UPON OR ARISING OUT OF THE OPERATION OF 7 THE PROGRAM. 8 (D) NO RECOURSE.--UNDER NO CIRCUMSTANCES SHALL THE ASSETS OF 9 THE COMMONWEALTH OR THOSE THAT COMPRISE THE PUBLIC SCHOOL 10 EMPLOYEES' RETIREMENT FUND AS SET FORTH IN SECTION 8522 11 (RELATING TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND), BE 12 LIABLE FOR OR USED TO PAY ANY CLAIMS, DEMANDS, ACTIONS OR 13 LIABILITY OF ANY NATURE, WHETHER DIRECTLY OR INDIRECTLY, 14 INCLUDING, BUT NOT LIMITED TO, ATTORNEY FEES AND COURT COSTS, 15 BASED UPON OR ARISING OUT OF THE OPERATION OF THE PROGRAM. 16 (E) RESERVATION OF IMMUNITIES.--NOTHING CONTAINED IN THIS 17 ACT SHALL BE CONSTRUED AS A WAIVER OF THE COMMONWEALTH'S OR 18 BOARD'S IMMUNITIES, DEFENSES, RIGHTS OR ACTIONS ARISING OUT OF 19 THEIR SOVEREIGN STATUS OR FROM THE ELEVENTH AMENDMENT TO THE 20 CONSTITUTION OF THE UNITED STATES. 21 § 9102. CONSTRUCTION OF PART. 22 (A) GENERAL RULE.--NO PROVISION OF THIS PART SHALL BE 23 CONSTRUED AS A CANCELLATION OF ANY EXISTING HEALTH INSURANCE 24 PROGRAM OPERATED BY THE BOARD OR REFERENCED IN SECTION 32 OF THE 25 ACT OF AUGUST 5, 1991 (P.L.183, NO.23), ENTITLED "AN ACT 26 AMENDING TITLES 24 (EDUCATION) AND 71 (STATE GOVERNMENT) OF THE 27 PENNSYLVANIA CONSOLIDATED STATUTES, FURTHER PROVIDING FOR THE 28 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND THE STATE 29 EMPLOYEES' RETIREMENT SYSTEM; ADDING AND AMENDING CERTAIN 30 DEFINITIONS; FURTHER PROVIDING FOR MEMBERSHIP IN THE SYSTEMS, 20010H0026B1905 - 67 -
1 FOR CREDITABLE NONSCHOOL AND NONSTATE SERVICE AND THE PURCHASE
2 OF CREDIT, FOR INCENTIVES FOR SPECIAL EARLY RETIREMENT, FOR
3 CONTRIBUTIONS TO THE RETIREMENT FUNDS, FOR ANNUITIES AND THE
4 RIGHTS AND DUTIES OF ANNUITANTS, FOR HEALTH INSURANCE PREMIUM
5 ASSISTANCE, FOR BOARD MEMBERSHIP AND FOR THE RE-AMORTIZATION AND
6 MANAGEMENT OF THE RETIREMENT FUNDS."
7 (B) NATURE OF RIGHTS.--ANY TERMINATION OR OTHER MODIFICATION
8 OF THE PROGRAM, INCLUDING, BUT NOT LIMITED TO, A CHANGE IN
9 PREMIUM RATES, BENEFIT OPTIONS OR STRUCTURE OR INSURANCE
10 PROVIDERS, SHALL NOT GIVE RISE TO ANY CONTRACTUAL RIGHTS OR
11 CLAIMS BY ANY ELIGIBLE PERSONS OR ANY OTHER PERSON CLAIMING AN
12 INTEREST, EITHER DIRECTLY OR INDIRECTLY, IN THE PROGRAM. NO
13 PROVISION OF THIS PART, NOR ANY RULE OR REGULATION ADOPTED
14 PURSUANT TO THIS PART, SHALL CREATE IN ANY PERSON A CONTRACTUAL
15 RIGHT IN THAT PROVISION.
16 SECTION 8. THE DEFINITIONS OF "ACTIVE MEMBER," "CLASS OF
17 SERVICE MULTIPLIER," "CREDITED SERVICE," "INACTIVE MEMBER,"
18 "SALARY DEDUCTIONS" AND "VESTEE" IN SECTION 5102 OF TITLE 71 ARE
19 AMENDED AND THE SECTION IS AMENDED BY ADDING DEFINITIONS TO
20 READ:
21 § 5102. DEFINITIONS.
22 THE FOLLOWING WORDS AND PHRASES AS USED IN THIS PART, UNLESS
23 A DIFFERENT MEANING IS PLAINLY REQUIRED BY THE CONTEXT, SHALL
24 HAVE THE FOLLOWING MEANINGS:
25 * * *
26 "ACTIVE MEMBER." A STATE EMPLOYEE, OR A MEMBER ON LEAVE
27 WITHOUT PAY, FOR WHOM PICKUP CONTRIBUTIONS ARE BEING MADE TO THE
28 FUND OR FOR WHOM SUCH CONTRIBUTIONS OTHERWISE REQUIRED FOR
29 CURRENT STATE SERVICE ARE NOT BEING MADE SOLELY BY REASON OF
30 SECTION 5502.1 (RELATING TO WAIVER OF REGULAR MEMBER
20010H0026B1905 - 68 -
1 CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION MEMBER 2 CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO THE 3 [LIMITATION] LIMITATIONS UNDER SECTION 401(A)(17) OR SECTION 4 415(B) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 5 26 U.S.C. § 401(A)(17) OR § 415(B)). 6 * * * 7 "ACTUARIAL INCREASE FACTOR." A FACTOR CALCULATED AT THE 8 MEMBER'S BIRTHDAY BY DIVIDING THE COST OF A DOLLAR ANNUITY BASED 9 ON THE AGE OF THE MEMBER ON THE MEMBER'S IMMEDIATELY PREVIOUS 10 BIRTHDAY BY THE COST OF A ONE-YEAR DEFERRED DOLLAR ANNUITY 11 CALCULATED AT THAT SAME AGE. UNLESS THE MEMBER TERMINATES STATE 12 OR SCHOOL SERVICE ON THE MEMBER'S BIRTHDAY, THE ACTUARIAL 13 INCREASE FACTOR FOR THE YEAR OF TERMINATION SHALL BE ADJUSTED 14 BY: 15 (1) SUBTRACTING ONE FROM THE CALCULATED FACTOR; THEN 16 (2) DIVIDING THE DIFFERENCE BY TWELVE; THEN 17 (3) MULTIPLYING THE RESULTING QUOTIENT BY THE NUMBER OF 18 WHOLE MONTHS BETWEEN THE MEMBER'S IMMEDIATELY PREVIOUS 19 BIRTHDAY AND THE DATE OF TERMINATION OF SERVICE; THEN 20 (4) ADDING ONE TO THE RESULTING PRODUCT. 21 * * * 22 "CLASS OF SERVICE MULTIPLIER." 23 CLASS OF SERVICE MULTIPLIER 24 A 1 25 AA FOR ALL PURPOSES 26 EXCEPT 27 CALCULATING REGULAR 28 MEMBER CONTRIBUTIONS 29 ON COMPENSATION 30 PAID PRIOR TO 20010H0026B1905 - 69 -
1 JANUARY 1, 2002 1.25 2 AA FOR PURPOSES 3 OF CALCULATING 4 REGULAR MEMBER 5 CONTRIBUTIONS 6 ON COMPENSATION 7 PAID PRIOR TO 8 JANUARY 1, 2002 1 9 B .625 10 C 1 11 D 1.25 12 D-1 PRIOR TO 13 JANUARY 1, 1973 1.875 14 D-1 ON AND 15 SUBSEQUENT TO 16 JANUARY 1, 1973 1.731 17 D-2 PRIOR TO 18 JANUARY 1, 1973 2.5 19 D-2 ON AND 20 SUBSEQUENT TO 21 JANUARY 1, 1973 1.731 22 D-3 PRIOR TO 23 JANUARY 1, 1973 3.75 24 D-3 ON AND 25 SUBSEQUENT TO 26 JANUARY 1, 1973 1.731 EXCEPT PRIOR TO DECEMBER 27 1, 1974 AS APPLIED TO ANY 28 ADDITIONAL LEGISLATIVE 29 COMPENSATION AS AN OFFICER 30 OF THE GENERAL ASSEMBLY 20010H0026B1905 - 70 -
1 3.75 2 D-4 FOR ALL PURPOSES 3 EXCEPT 4 CALCULATING 5 REGULAR MEMBER 6 CONTRIBUTIONS 7 ON COMPENSATION 8 PAID PRIOR TO 9 JULY 1, 2001 1.5 10 D-4 FOR PURPOSES OF 11 CALCULATING 12 REGULAR MEMBER 13 CONTRIBUTIONS 14 ON COMPENSATION 15 PAID PRIOR TO 16 JULY 1, 2001 1 17 E, E-1 PRIOR TO 18 JANUARY 1, 1973 2 FOR EACH OF THE FIRST TEN 19 YEARS OF JUDICIAL SERVICE, 20 AND 21 1.5 FOR EACH SUBSEQUENT YEAR 22 OF JUDICIAL SERVICE 23 E, E-1 ON AND 24 SUBSEQUENT TO 25 JANUARY 1, 1973 1.50 FOR EACH OF THE FIRST 26 TEN YEARS OF JUDICIAL 27 SERVICE AND 28 1.125 FOR EACH SUBSEQUENT YEAR 29 OF JUDICIAL SERVICE 30 E-2 PRIOR TO 20010H0026B1905 - 71 -
1 SEPTEMBER 1, 1973 1.5 2 E-2 ON AND 3 SUBSEQUENT TO 4 SEPTEMBER 1, 1973 1.125 5 G 0.417 6 H 0.500 7 I 0.625 8 J 0.714 9 K 0.834 10 L 1.000 11 M 1.100 12 N 1.250 13 T-C (PUBLIC SCHOOL 1 14 EMPLOYEES' 15 RETIREMENT CODE) 16 * * * 17 "CREDITED SERVICE." STATE OR CREDITABLE NONSTATE SERVICE FOR 18 WHICH THE REQUIRED CONTRIBUTIONS HAVE BEEN MADE, OR FOR WHICH 19 THE CONTRIBUTIONS OTHERWISE REQUIRED FOR SUCH SERVICE WERE NOT 20 MADE SOLELY BY REASON OF SECTION 5502.1 (RELATING TO WAIVER OF 21 REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION 22 MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO 23 THE [LIMITATION] LIMITATIONS UNDER SECTION 401(A)(17) OR 415(B) 24 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 25 U.S.C. § 401(A)(17) OR § 415(B)), OR FOR WHICH SALARY DEDUCTIONS 26 OR LUMP SUM PAYMENTS HAVE BEEN AGREED UPON IN WRITING. 27 * * * 28 "INACTIVE MEMBER." A MEMBER FOR WHOM NO PICKUP CONTRIBUTIONS 29 ARE BEING MADE, EXCEPT IN THE CASE OF AN ACTIVE MEMBER FOR WHOM 30 SUCH CONTRIBUTIONS OTHERWISE REQUIRED FOR CURRENT STATE SERVICE 20010H0026B1905 - 72 -
1 ARE NOT BEING MADE SOLELY BY REASON OF SECTION 5502.1 (RELATING 2 TO WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY 3 INTEGRATION MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART 4 RELATING TO THE [LIMITATION] LIMITATIONS UNDER SECTION 5 401(A)(17) OR 415(B) OF THE INTERNAL REVENUE CODE OF 1986 6 (PUBLIC LAW 99-514, 26 U.S.C. § 401(A)(17) OR § 415(B)), BUT WHO 7 HAS ACCUMULATED DEDUCTIONS STANDING TO HIS CREDIT IN THE FUND 8 AND WHO IS NOT ELIGIBLE TO BECOME OR HAS NOT ELECTED TO BECOME A 9 VESTEE OR HAS NOT FILED AN APPLICATION FOR AN ANNUITY. 10 * * * 11 "SALARY DEDUCTIONS." THE AMOUNTS CERTIFIED BY THE BOARD, 12 DEDUCTED FROM THE COMPENSATION OF AN ACTIVE MEMBER OR THE SCHOOL 13 SERVICE COMPENSATION OF A MULTIPLE SERVICE MEMBER WHO IS AN 14 ACTIVE MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM 15 AND PAID INTO THE FUND. 16 * * * 17 "STATE POLICE OFFICER." ANY OFFICER OR MEMBER OF THE 18 PENNSYLVANIA STATE POLICE WHO, ON OR AFTER JULY 1, 1989, SHALL 19 HAVE BEEN SUBJECT TO THE TERMS OF A COLLECTIVE BARGAINING 20 AGREEMENT OR BINDING INTEREST ARBITRATION AWARD ESTABLISHED 21 PURSUANT TO THE ACT OF JUNE 24, 1968 (P.L. 237, NO. 111), 22 REFERRED TO AS THE POLICEMEN AND FIREMEN COLLECTIVE BARGAINING 23 ACT. 24 * * * 25 "VESTEE." A MEMBER WITH [TEN] FIVE OR MORE ELIGIBILITY 26 POINTS, OR A MEMBER WITH CLASS G, CLASS H, CLASS I, CLASS J, 27 CLASS K, CLASS L, CLASS M OR CLASS N SERVICE WITH [EIGHT] FIVE 28 OR MORE ELIGIBILITY POINTS, WHO HAS TERMINATED STATE SERVICE AND 29 HAS ELECTED TO LEAVE HIS TOTAL ACCUMULATED DEDUCTIONS IN THE 30 FUND AND TO DEFER RECEIPT OF AN ANNUITY. 20010H0026B1905 - 73 -
1 SECTION 9. SECTIONS 5302(A), 5303(B), 5304(A) AND 5305(B) OF 2 TITLE 71 ARE AMENDED TO READ: 3 § 5302. CREDITED STATE SERVICE. 4 (A) COMPUTATION OF CREDITED SERVICE.--IN COMPUTING CREDITED 5 STATE SERVICE OF A MEMBER FOR THE DETERMINATION OF BENEFITS, A 6 FULL-TIME SALARIED STATE EMPLOYEE INCLUDING ANY MEMBER OF THE 7 GENERAL ASSEMBLY, SHALL RECEIVE CREDIT FOR SERVICE IN EACH 8 PERIOD FOR WHICH CONTRIBUTIONS AS REQUIRED ARE MADE, OR FOR 9 WHICH CONTRIBUTIONS OTHERWISE REQUIRED FOR SUCH SERVICE WERE NOT 10 MADE SOLELY BY REASON OF SECTION 5502.1 (RELATING TO WAIVER OF 11 REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION 12 MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO 13 THE [LIMITATION] LIMITATIONS UNDER IRC § 401(A)(17) OR § 415(B), 14 BUT IN NO CASE SHALL HE RECEIVE MORE THAN ONE YEAR'S CREDIT FOR 15 ANY 12 CONSECUTIVE MONTHS OR 26 CONSECUTIVE BIWEEKLY PAY 16 PERIODS. A PER DIEM OR HOURLY STATE EMPLOYEE SHALL RECEIVE ONE 17 YEAR OF CREDITED SERVICE FOR EACH NONOVERLAPPING PERIOD OF 12 18 CONSECUTIVE MONTHS OR 26 CONSECUTIVE BIWEEKLY PAY PERIODS IN 19 WHICH HE IS EMPLOYED AND FOR WHICH CONTRIBUTIONS ARE MADE OR 20 WOULD HAVE BEEN MADE BUT FOR SUCH [LIMITATION] WAIVER UNDER 21 SECTION 5502.1 OR LIMITATIONS UNDER THE IRC FOR AT LEAST 220 22 DAYS OR 1,650 HOURS OF EMPLOYMENT. IF THE MEMBER WAS EMPLOYED 23 AND CONTRIBUTIONS WERE MADE FOR LESS THAN 220 DAYS OR 1,650 24 HOURS, HE SHALL BE CREDITED WITH A FRACTIONAL PORTION OF A YEAR 25 DETERMINED BY THE RATIO OF THE NUMBER OF DAYS OR HOURS OF 26 SERVICE ACTUALLY RENDERED TO 220 DAYS OR 1,650 HOURS, AS THE 27 CASE MAY BE. A PART-TIME SALARIED EMPLOYEE SHALL BE CREDITED 28 WITH THE FRACTIONAL PORTION OF THE YEAR WHICH CORRESPONDS TO THE 29 NUMBER OF HOURS OR DAYS OF SERVICE ACTUALLY RENDERED IN RELATION 30 TO 1,650 HOURS OR 220 DAYS, AS THE CASE MAY BE. IN NO CASE SHALL 20010H0026B1905 - 74 -
1 A MEMBER WHO HAS ELECTED MULTIPLE SERVICE RECEIVE AN AGGREGATE 2 IN THE TWO SYSTEMS OF MORE THAN ONE YEAR OF CREDITED SERVICE FOR 3 ANY 12 CONSECUTIVE MONTHS. 4 * * * 5 § 5303. RETENTION AND REINSTATEMENT OF SERVICE CREDITS. 6 * * * 7 (B) ELIGIBILITY POINTS FOR PROSPECTIVE CREDITED SERVICE.-- 8 (1) EVERY ACTIVE MEMBER OF THE SYSTEM OR A MULTIPLE 9 SERVICE MEMBER WHO IS A SCHOOL EMPLOYEE AND A MEMBER OF THE 10 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM ON OR AFTER THE 11 EFFECTIVE DATE OF THIS PART SHALL RECEIVE ELIGIBILITY POINTS 12 IN ACCORDANCE WITH SECTION 5307 FOR CURRENT STATE SERVICE, 13 PREVIOUS STATE SERVICE, OR CREDITABLE NONSTATE SERVICE UPON 14 COMPLIANCE WITH SECTIONS 5501 (RELATING TO REGULAR MEMBER 15 CONTRIBUTIONS FOR CURRENT SERVICE), 5504 (RELATING TO MEMBER 16 CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR PREVIOUS STATE 17 SERVICE OR TO BECOME A FULL COVERAGE MEMBER), 5505 (RELATING 18 TO CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR CREDITABLE 19 NONSTATE SERVICE), 5505.1 (RELATING TO ADDITIONAL MEMBER 20 CONTRIBUTIONS) OR 5506 (RELATING TO INCOMPLETE PAYMENTS). 21 [THE] SUBJECT TO THE LIMITATIONS IN SECTIONS 5306.1 (RELATING 22 TO ELECTION TO BECOME A CLASS AA MEMBER) AND 5306.2 (RELATING 23 TO ELECTIONS BY MEMBERS OF THE GENERAL ASSEMBLY), THE CLASS 24 OR CLASSES OF SERVICE IN WHICH THE MEMBER MAY BE CREDITED FOR 25 PREVIOUS STATE SERVICE PRIOR TO THE EFFECTIVE DATE OF THIS 26 PART SHALL BE THE CLASS OR CLASSES IN WHICH HE WAS OR COULD 27 HAVE AT ANY TIME ELECTED TO BE CREDITED FOR SUCH SERVICE. THE 28 CLASS OF SERVICE IN WHICH A MEMBER SHALL BE CREDITED FOR 29 SERVICE SUBSEQUENT TO THE EFFECTIVE DATE OF THIS PART SHALL 30 BE DETERMINED IN ACCORDANCE WITH SECTION 5306 (RELATING TO 20010H0026B1905 - 75 -
1 CLASSES OF SERVICE). 2 (1.1) EVERY ACTIVE MEMBER OF THE SYSTEM WHO ELECTS TO 3 CONVERT COUNTY SERVICE TO STATE SERVICE PURSUANT TO SECTION 4 5303.1 (RELATING TO ELECTION TO CONVERT COUNTY SERVICE TO 5 STATE SERVICE) SHALL RECEIVE ELIGIBILITY POINTS IN ACCORDANCE 6 WITH SECTION 5307 FOR CONVERTED COUNTY SERVICE UPON 7 COMPLIANCE WITH SECTION 5303.1(B). THE CLASS OR CLASSES OF 8 SERVICE IN WHICH THE MEMBER MAY BE CREDITED FOR CONVERTED 9 COUNTY SERVICE SHALL BE DETERMINED IN ACCORDANCE WITH SECTION 10 5306(C). 11 (2) A SPECIAL VESTEE OR PERSON OTHERWISE ELIGIBLE TO BE 12 A SPECIAL VESTEE WHO RETURNS TO STATE SERVICE OR WITHDRAWS 13 HIS ACCUMULATED DEDUCTIONS PURSUANT TO SECTION 5311 (RELATING 14 TO ELIGIBILITY FOR REFUNDS) OR 5701 (RELATING TO RETURN OF 15 TOTAL ACCUMULATED DEDUCTIONS) SHALL RECEIVE OR RETAIN 16 ELIGIBILITY POINTS IN ACCORDANCE WITH PARAGRAPH (1) BUT UPON 17 SUBSEQUENT TERMINATION OF STATE SERVICE SHALL ONLY BE 18 ELIGIBLE TO BE AN ANNUITANT VESTEE OR INACTIVE MEMBER WITHOUT 19 REGARD TO PREVIOUS STATUS AS A SPECIAL VESTEE AND WITHOUT 20 REGARD TO THE PROVISIONS OF THIS PART PROVIDING FOR SPECIAL 21 VESTEES. 22 (3) A SPECIAL VESTEE OR PERSON OTHERWISE ELIGIBLE TO BE 23 A SPECIAL VESTEE WHO BECOMES AN ACTIVE MEMBER OF THE PUBLIC 24 SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND ELECTS MULTIPLE 25 SERVICE SHALL RECEIVE OR RETAIN ELIGIBILITY POINTS AS 26 OTHERWISE PROVIDED FOR IN THIS PART AND 24 PA.C.S. PT. IV 27 (RELATING TO RETIREMENT FOR SCHOOL EMPLOYEES) BUT UPON 28 SUBSEQUENT TERMINATION OF SCHOOL SERVICE SHALL ONLY BE 29 ELIGIBLE TO BE AN ANNUITANT, VESTEE OR INACTIVE MEMBER AS 30 OTHERWISE ELIGIBLE AS A MULTIPLE SERVICE MEMBER WITHOUT 20010H0026B1905 - 76 -
1 REGARD TO PREVIOUS STATUS AS A SPECIAL VESTEE AND WITHOUT 2 REGARD TO THE PROVISIONS OF THIS PART PROVIDING FOR SPECIAL 3 VESTEES. 4 * * * 5 § 5304. CREDITABLE NONSTATE SERVICE. 6 (A) ELIGIBILITY.--AN ACTIVE MEMBER OR A MULTIPLE SERVICE 7 MEMBER WHO IS A SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE 8 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM SHALL BE ELIGIBLE FOR 9 CLASS A SERVICE CREDIT FOR CREDITABLE NONSTATE SERVICE AS SET 10 FORTH IN SUBSECTIONS (B) AND (C) EXCEPT THAT INTERVENING 11 MILITARY SERVICE SHALL BE CREDITED IN THE CLASS OF SERVICE FOR 12 WHICH THE MEMBER WAS ELIGIBLE AT THE TIME OF ENTERING INTO 13 MILITARY SERVICE AND FOR WHICH HE MAKES THE REQUIRED 14 CONTRIBUTIONS AND EXCEPT THAT A MULTIPLE SERVICE MEMBER WHO IS A 15 SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE PUBLIC SCHOOL 16 EMPLOYEES' RETIREMENT SYSTEM SHALL NOT BE ELIGIBLE TO PURCHASE 17 SERVICE CREDIT FOR CREDITABLE NONSTATE SERVICE SET FORTH IN 18 SUBSECTION (C)(5). 19 * * * 20 § 5305. SOCIAL SECURITY INTEGRATION CREDITS. 21 * * * 22 (B) ACCRUAL OF SUBSEQUENT CREDITS.--ANY MEMBER WHO HAS 23 SOCIAL SECURITY INTEGRATION ACCUMULATED DEDUCTIONS TO HIS CREDIT 24 OR IS RECEIVING A BENEFIT ON ACCOUNT OF SOCIAL SECURITY 25 INTEGRATION CREDITS MAY ACCRUE ONE SOCIAL SECURITY INTEGRATION 26 CREDIT FOR EACH YEAR OF SERVICE AS A STATE EMPLOYEE ON OR 27 SUBSEQUENT TO MARCH 1, 1974 AND A FRACTIONAL CREDIT FOR A 28 CORRESPONDING FRACTIONAL YEAR OF SERVICE PROVIDED THAT 29 CONTRIBUTIONS ARE MADE, OR WOULD HAVE BEEN MADE BUT FOR SECTION 30 5502.1 (RELATING TO WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND 20010H0026B1905 - 77 -
1 SOCIAL SECURITY INTEGRATION MEMBER CONTRIBUTIONS) OR THE 2 LIMITATIONS UNDER IRC § 401(A)(17) OR § 415(B), IN ACCORDANCE 3 WITH SECTION 5502 (RELATING TO [SOCIAL SECURITY] SOCIAL SECURITY 4 INTEGRATION MEMBER CONTRIBUTIONS), AND HE: 5 (1) CONTINUES SUBSEQUENT TO MARCH 1, 1974 AS AN ACTIVE 6 MEMBER IN EITHER THE STATE OR SCHOOL SYSTEM; 7 (2) TERMINATES SUCH CONTINUOUS SERVICE IN THE STATE OR 8 SCHOOL SYSTEM AND RETURNS TO ACTIVE MEMBERSHIP IN THE STATE 9 SYSTEM WITHIN SIX MONTHS; OR 10 (3) TERMINATES HIS STATUS AS A VESTEE OR AN ANNUITANT 11 AND RETURNS TO STATE SERVICE. 12 * * * 13 SECTION 10. TITLE 71 IS AMENDED BY ADDING A SECTION TO READ: 14 § 5305.1. ELIGIBILITY FOR ACTUARIAL INCREASE FACTOR. 15 A PERSON WHO IS: 16 (1) AN ACTIVE MEMBER; 17 (2) AN INACTIVE MEMBER ON LEAVE WITHOUT PAY; OR 18 (3) A MULTIPLE SERVICE MEMBER WHO IS A SCHOOL EMPLOYEE 19 AND AN ACTIVE MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' 20 RETIREMENT SYSTEM, 21 WHO TERMINATES STATE SERVICE OR SCHOOL SERVICE, AS THE CASE MAY 22 BE, AFTER ATTAINING AGE 70 AND WHO APPLIES FOR A SUPERANNUATION 23 ANNUITY WITH AN EFFECTIVE DATE OF RETIREMENT THE DAY AFTER THE 24 DATE OF TERMINATION OF STATE SERVICE OR SCHOOL SERVICE, SHALL 25 HAVE THAT PERSON'S MAXIMUM SINGLE LIFE ANNUITY CALCULATED 26 PURSUANT TO SECTION 5702(A.1) (RELATING TO MAXIMUM SINGLE LIFE 27 ANNUITY). 28 SECTION 11. SECTION 5306(A) AND (B) OF TITLE 71 ARE AMENDED 29 AND THE SECTION IS AMENDED BY ADDING SUBSECTIONS TO READ: 30 § 5306. CLASSES OF SERVICE. 20010H0026B1905 - 78 -
1 (A) CLASS A MEMBERSHIP.--A STATE EMPLOYEE WHO IS A MEMBER OF 2 CLASS A ON THE EFFECTIVE DATE OF THIS PART OR WHO BECOMES A 3 MEMBER OF THE SYSTEM SUBSEQUENT TO THE EFFECTIVE DATE OF THIS 4 PART SHALL BE CLASSIFIED AS A CLASS A MEMBER AND RECEIVE CREDIT 5 FOR CLASS A SERVICE UPON PAYMENT OF REGULAR AND ADDITIONAL 6 MEMBER CONTRIBUTIONS FOR CLASS A SERVICE[.], PROVIDED THAT THE 7 STATE EMPLOYEE DOES NOT BECOME A MEMBER OF CLASS AA PURSUANT TO 8 SUBSECTION (A.1) OR A MEMBER OF CLASS D-4 PURSUANT TO SUBSECTION 9 (A.2). 10 (A.1) CLASS AA MEMBERSHIP.-- 11 (1) A PERSON WHO BECOMES A STATE EMPLOYEE AND AN ACTIVE 12 MEMBER OF THE SYSTEM AFTER JUNE 30, 2001, AND WHO IS NOT A 13 STATE POLICE OFFICER AND NOT EMPLOYED IN A POSITION FOR WHICH 14 A CLASS OF SERVICE OTHER THAN CLASS A IS CREDITED OR COULD BE 15 ELECTED, SHALL BE CLASSIFIED AS A CLASS AA MEMBER AND RECEIVE 16 CREDIT FOR CLASS AA STATE SERVICE UPON PAYMENT OF REGULAR 17 MEMBER CONTRIBUTIONS FOR CLASS AA SERVICE AND, SUBJECT TO THE 18 LIMITATIONS CONTAINED IN PARAGRAPH (7), IF PREVIOUSLY A 19 MEMBER OF CLASS A, OR PREVIOUSLY EMPLOYED IN A POSITION FOR 20 WHICH CLASS A SERVICE COULD HAVE BEEN EARNED, SHALL HAVE ALL 21 CLASS A STATE SERVICE (OTHER THAN STATE SERVICE PERFORMED AS 22 A STATE POLICE OFFICER OR FOR WHICH A CLASS OF SERVICE OTHER 23 THAN CLASS A WAS EARNED OR COULD HAVE BEEN ELECTED) 24 CLASSIFIED AS CLASS AA SERVICE. 25 (2) A PERSON WHO IS A STATE EMPLOYEE ON JUNE 30, 2001, 26 AND JULY 1, 2001, BUT IS NOT AN ACTIVE MEMBER OF THE SYSTEM 27 BECAUSE MEMBERSHIP IN THE SYSTEM IS OPTIONAL OR PROHIBITED 28 PURSUANT TO SECTION 5301 (RELATING TO MANDATORY AND OPTIONAL 29 MEMBERSHIP) AND WHO BECOMES AN ACTIVE MEMBER AFTER JUNE 30, 30 2001, AND WHO IS NOT A STATE POLICE OFFICER AND NOT EMPLOYED 20010H0026B1905 - 79 -
1 IN A POSITION FOR WHICH A CLASS OF SERVICE OTHER THAN CLASS A 2 IS CREDITED OR COULD BE ELECTED, SHALL BE CLASSIFIED AS A 3 CLASS AA MEMBER AND RECEIVE CREDIT FOR CLASS AA STATE SERVICE 4 UPON PAYMENT OF REGULAR MEMBER CONTRIBUTIONS FOR CLASS AA 5 SERVICE AND, SUBJECT TO THE LIMITATIONS CONTAINED IN 6 PARAGRAPH (7), IF PREVIOUSLY A MEMBER OF CLASS A, OR 7 PREVIOUSLY EMPLOYED IN A POSITION FOR WHICH CLASS A SERVICE 8 COULD HAVE BEEN EARNED, SHALL HAVE ALL CLASS A STATE SERVICE 9 (OTHER THAN STATE SERVICE PERFORMED AS A STATE POLICE OFFICER 10 OR FOR WHICH A CLASS OF SERVICE OTHER THAN CLASS A WAS EARNED 11 OR COULD HAVE BEEN ELECTED) CLASSIFIED AS CLASS AA SERVICE. 12 (3) PROVIDED THAT AN ELECTION TO BECOME A CLASS AA 13 MEMBER IS MADE PURSUANT TO SECTION 5306.1 (RELATING TO 14 ELECTION TO BECOME A CLASS AA MEMBER), A STATE EMPLOYEE, 15 OTHER THAN A STATE EMPLOYEE WHO IS A STATE POLICE OFFICER ON 16 OR AFTER JULY 1, 1989, WHO ON JUNE 30, 2001, AND JULY 1, 17 2001, IS: 18 (I) A MEMBER OF CLASS A, OTHER THAN A MEMBER OF 19 CLASS A WHO COULD HAVE ELECTED MEMBERSHIP IN A CLASS C, 20 CLASS D-3, CLASS E-1 OR CLASS E-2; OR 21 (II) AN INACTIVE MEMBER ON A LEAVE WITHOUT PAY FROM 22 A POSITION IN WHICH THE STATE EMPLOYEE WOULD BE A CLASS A 23 ACTIVE MEMBER IF THE EMPLOYEE WAS NOT ON LEAVE WITHOUT 24 PAY, OTHER THAN A POSITION IN WHICH THE STATE EMPLOYEE 25 COULD ELECT MEMBERSHIP IN CLASS C, CLASS D-3, CLASS E-1 26 OR CLASS E-2, 27 SHALL BE CLASSIFIED AS A CLASS AA MEMBER AND RECEIVE CREDIT 28 FOR CLASS AA STATE SERVICE PERFORMED AFTER JUNE 30, 2001, 29 UPON PAYMENT OF REGULAR MEMBER CONTRIBUTIONS FOR CLASS AA 30 SERVICE AND, SUBJECT TO THE LIMITATIONS CONTAINED IN 20010H0026B1905 - 80 -
1 PARAGRAPH (7), SHALL RECEIVE CLASS AA SERVICE CREDIT FOR ALL 2 CLASS A STATE SERVICE, OTHER THAN STATE SERVICE PERFORMED AS 3 A STATE POLICE OFFICER OR AS A STATE EMPLOYEE IN A POSITION 4 FOR WHICH THE MEMBER COULD HAVE ELECTED MEMBERSHIP IN CLASS 5 C, CLASS D-3, CLASS E-1 OR CLASS E-2, PERFORMED BEFORE JULY 6 1, 2001. 7 (4) PROVIDED THAT AN ELECTION TO BECOME A CLASS AA 8 MEMBER IS MADE PURSUANT TO SECTION 5306.1 (RELATING TO 9 ELECTION TO BECOME A CLASS AA MEMBER), A FORMER STATE 10 EMPLOYEE, OTHER THAN A FORMER STATE EMPLOYEE WHO WAS A STATE 11 POLICE OFFICER ON OR AFTER JULY 1, 1989, WHO ON JUNE 30, 12 2001, AND JULY 1, 2001, IS A MULTIPLE SERVICE MEMBER AND A 13 SCHOOL EMPLOYEE AND A MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' 14 RETIREMENT SYSTEM, SUBJECT TO THE LIMITATIONS CONTAINED IN 15 PARAGRAPH (7), SHALL RECEIVE CLASS AA SERVICE CREDIT FOR ALL 16 CLASS A STATE SERVICE, OTHER THAN STATE SERVICE PERFORMED AS 17 A STATE POLICE OFFICER OR AS A STATE EMPLOYEE IN A POSITION 18 IN WHICH THE FORMER STATE EMPLOYEE COULD HAVE ELECTED A CLASS 19 OF SERVICE OTHER THAN CLASS A, PERFORMED BEFORE JULY 1, 2001. 20 (5) A FORMER STATE EMPLOYEE, OTHER THAN A FORMER STATE 21 EMPLOYEE WHO WAS A STATE POLICE OFFICER ON OR AFTER JULY 1, 22 1989, WHO IS A SCHOOL EMPLOYEE AND WHO ON OR AFTER JULY 1, 23 2001, BECOMES A MULTIPLE SERVICE MEMBER, SUBJECT TO THE 24 LIMITATIONS CONTAINED IN PARAGRAPH (7), SHALL RECEIVE CLASS 25 AA SERVICE CREDIT FOR ALL CLASS A STATE SERVICE OTHER THAN 26 STATE SERVICE PERFORMED AS A STATE EMPLOYEE IN A POSITION IN 27 WHICH THE FORMER STATE EMPLOYEE COULD HAVE ELECTED A CLASS OF 28 SERVICE OTHER THAN CLASS A. 29 (6) A STATE EMPLOYEE WHO AFTER JUNE 30, 2001, BECOMES A 30 STATE POLICE OFFICER OR WHO IS EMPLOYED IN A POSITION IN 20010H0026B1905 - 81 -
1 WHICH THE MEMBER COULD ELECT MEMBERSHIP IN A CLASS OF SERVICE 2 OTHER THAN CLASS AA OR CLASS D-4 SHALL RETAIN ANY CLASS AA 3 SERVICE CREDITED PRIOR TO BECOMING A STATE POLICE OFFICER OR 4 BEING SO EMPLOYED, BUT SHALL BE INELIGIBLE TO RECEIVE CLASS 5 AA CREDIT THEREAFTER, AND INSTEAD SHALL RECEIVE CLASS A 6 CREDIT UNLESS A CLASS OF MEMBERSHIP OTHER THAN CLASS A IS 7 ELECTED. 8 (7) (I) STATE SERVICE PERFORMED AS CLASS A SERVICE 9 BEFORE JULY 1, 2001, AND STATE SERVICE FOR WHICH CLASS A 10 SERVICE COULD HAVE BEEN CREDITED BUT WAS NOT CREDITED 11 BECAUSE MEMBERSHIP IN THE SYSTEM WAS OPTIONAL OR 12 PROHIBITED PURSUANT TO SECTION 5301, SHALL BE CREDITED AS 13 CLASS AA SERVICE ONLY UPON THE COMPLETION OF ALL ACTS 14 NECESSARY FOR THE STATE SERVICE TO BE CREDITED AS CLASS A 15 SERVICE HAD THIS SUBSECTION NOT BEEN ENACTED AND UPON 16 PAYMENT OF REQUIRED CLASS AA MEMBER CONTRIBUTIONS AS 17 PROVIDED IN SECTION 5504 (RELATING TO MEMBER 18 CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR PREVIOUS 19 STATE SERVICE OR TO BECOME A FULL COVERAGE MEMBER). 20 (II) A PERSON WHO IS NOT A STATE EMPLOYEE OR A 21 SCHOOL EMPLOYEE ON JUNE 30, 2001, AND JULY 1, 2001, AND 22 WHO HAS PREVIOUS STATE SERVICE (EXCEPT A DISABILITY 23 ANNUITANT WHO RETURNS TO STATE SERVICE AFTER JUNE 30, 24 2001, UPON TERMINATION OF THE DISABILITY ANNUITY) SHALL 25 NOT RECEIVE CLASS AA SERVICE CREDIT FOR STATE SERVICE 26 PERFORMED BEFORE JULY 1, 2001, UNTIL SUCH PERSON BECOMES 27 AN ACTIVE MEMBER, OR AN ACTIVE MEMBER OF THE PUBLIC 28 SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND A MULTIPLE 29 SERVICE MEMBER, AND EARNS THREE ELIGIBILITY POINTS BY 30 PERFORMING CREDITED STATE SERVICE OR CREDITED SCHOOL 20010H0026B1905 - 82 -
1 SERVICE AFTER JUNE 30, 2001. 2 (A.2) CLASS OF MEMBERSHIP FOR MEMBERS OF THE GENERAL 3 ASSEMBLY.-- 4 (1) A PERSON WHO: 5 (I) BECOMES A MEMBER OF THE GENERAL ASSEMBLY AND AN 6 ACTIVE MEMBER OF THE SYSTEM AFTER JUNE 30, 2001; OR 7 (II) IS A MEMBER OF THE GENERAL ASSEMBLY ON JULY 1, 8 2001, BUT IS NOT AN ACTIVE MEMBER OF THE SYSTEM BECAUSE 9 MEMBERSHIP IN THE SYSTEM IS OPTIONAL PURSUANT TO SECTION 10 5301 AND WHO BECOMES AN ACTIVE MEMBER AFTER JUNE 30, 11 2001, 12 AND WHO WAS NOT A STATE POLICE OFFICER ON OR AFTER JULY 1, 13 1989, SHALL BE CLASSIFIED AS A CLASS D-4 MEMBER AND RECEIVE 14 CREDIT AS A CLASS D-4 MEMBER FOR ALL STATE SERVICE AS A 15 MEMBER OF THE GENERAL ASSEMBLY UPON PAYMENT OF REGULAR MEMBER 16 CONTRIBUTIONS FOR CLASS D-4 SERVICE AND, SUBJECT TO THE 17 LIMITATIONS CONTAINED IN SUBSECTION (A.1)(7), IF PREVIOUSLY A 18 MEMBER OF CLASS A, OR EMPLOYED IN A POSITION FOR WHICH CLASS 19 A SERVICE COULD HAVE BEEN EARNED, SHALL RECEIVE CLASS AA 20 SERVICE CREDIT FOR ALL CLASS A STATE SERVICE, OTHER THAN 21 STATE SERVICE PERFORMED AS A STATE POLICE OFFICER OR FOR 22 WHICH A CLASS OF SERVICE OTHER THAN CLASS A OR CLASS D-4 WAS 23 OR COULD HAVE BEEN ELECTED OR CREDITED. 24 (2) PROVIDED AN ELECTION TO BECOME A CLASS D-4 MEMBER IS 25 MADE PURSUANT TO SECTION 5306.2, A STATE EMPLOYEE WHO WAS NOT 26 A STATE POLICE OFFICER ON OR AFTER JULY 1, 1989, WHO ON JULY 27 1, 2001, IS A MEMBER OF THE GENERAL ASSEMBLY AND AN ACTIVE 28 MEMBER OF THE SYSTEM, AND NOT A MEMBER OF CLASS D-3, SHALL BE 29 CLASSIFIED AS A CLASS D-4 MEMBER AND RECEIVE CREDIT AS A 30 CLASS D-4 MEMBER FOR ALL STATE SERVICE PERFORMED AS A MEMBER 20010H0026B1905 - 83 -
1 OF THE GENERAL ASSEMBLY NOT CREDITED AS ANOTHER CLASS OTHER 2 THAN CLASS A UPON PAYMENT OF REGULAR MEMBER CONTRIBUTIONS FOR 3 CLASS D-4 SERVICE AND, SUBJECT TO THE LIMITATIONS CONTAINED 4 IN PARAGRAPH (A.1)(7), SHALL RECEIVE CLASS AA SERVICE CREDIT 5 FOR ALL CLASS A STATE SERVICE, OTHER THAN STATE SERVICE 6 PERFORMED AS A STATE POLICE OFFICER OR AS A STATE EMPLOYEE IN 7 A POSITION IN WHICH THE MEMBER COULD HAVE ELECTED A CLASS OF 8 SERVICE OTHER THAN CLASS A, PERFORMED BEFORE JULY 1, 2001. 9 (3) A MEMBER OF THE GENERAL ASSEMBLY WHO AFTER JUNE 30, 10 2001, BECOMES A STATE POLICE OFFICER SHALL RETAIN ANY CLASS 11 AA SERVICE OR CLASS D-4 SERVICE CREDITED PRIOR TO BECOMING A 12 STATE POLICE OFFICER OR BEING SO EMPLOYED, BUT SHALL BE 13 INELIGIBLE TO RECEIVE CLASS AA OR CLASS D-4 CREDIT 14 THEREAFTER, AND INSTEAD SHALL RECEIVE CLASS A CREDIT. 15 (B) OTHER CLASS MEMBERSHIP.--A STATE EMPLOYEE WHO IS A 16 MEMBER OF A CLASS SERVICE OTHER THAN CLASS A ON THE EFFECTIVE 17 DATE OF THIS PART SHALL RETAIN HIS MEMBERSHIP IN THAT CLASS 18 UNTIL SUCH SERVICE IS DISCONTINUED; ANY SERVICE THEREAFTER SHALL 19 BE CREDITED AS CLASS A SERVICE, CLASS AA SERVICE OR CLASS D-4 20 SERVICE AS PROVIDED FOR IN THIS SECTION. 21 * * * 22 SECTION 12. TITLE 71 IS AMENDED BY ADDING SECTIONS TO READ: 23 § 5306.1. ELECTION TO BECOME A CLASS AA MEMBER. 24 (A) GENERAL RULE.--A PERSON WHO IS: 25 (1) A MEMBER OF THE SYSTEM; OR 26 (2) A MULTIPLE SERVICE MEMBER WHO IS A SCHOOL EMPLOYEE 27 AND A MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT 28 SYSTEM 29 WHO ON JULY 1, 2001, IS ELIGIBLE FOR CLASS AA MEMBERSHIP MAY 30 ELECT TO BECOME A MEMBER OF CLASS AA. 20010H0026B1905 - 84 -
1 (B) TIME FOR MAKING ELECTION.--THE ELECTION TO BECOME A 2 CLASS AA MEMBER MUST BE MADE BY THE MEMBER FILING WRITTEN NOTICE 3 WITH THE BOARD BEFORE JANUARY 1, 2002, OR BEFORE THE MEMBER 4 TERMINATES STATE SERVICE, OR, IF A SCHOOL EMPLOYEE, TERMINATES 5 SCHOOL SERVICE, WHICHEVER OCCURS FIRST. 6 (C) EFFECT OF ELECTION.--AN ELECTION TO BECOME A CLASS AA 7 MEMBER SHALL BECOME EFFECTIVE THE LATER OF JULY 1, 2001, OR THE 8 DATE WHEN THE ELECTION IS FILED WITH THE BOARD AND SHALL REMAIN 9 IN EFFECT UNTIL THE TERMINATION OF EMPLOYMENT. UPON TERMINATION 10 AND SUBSEQUENT REEMPLOYMENT, THE MEMBER'S CLASS OF SERVICE SHALL 11 BE CREDITED IN THE CLASS OF SERVICE OTHERWISE PROVIDED FOR IN 12 THIS PART. 13 (D) EFFECT OF FAILURE TO MAKE ELECTION.--FAILURE TO ELECT TO 14 BECOME A CLASS AA MEMBER WITHIN THE ELECTION PERIOD SET FORTH IN 15 SUBSECTION (B) SHALL RESULT IN ALL OF THE MEMBER'S CLASS A STATE 16 SERVICE OTHER THAN SERVICE PERFORMED AS A STATE POLICE OFFICER 17 OR IN A POSITION IN WHICH THE MEMBER COULD ELECT A CLASS OF 18 MEMBERSHIP OTHER THAN CLASS A BEING CREDITED AS CLASS A SERVICE 19 AND NOT SUBJECT TO FURTHER ELECTION OR CREDITING AS CLASS AA 20 SERVICE UPON TERMINATION AND SUBSEQUENT EMPLOYMENT. 21 § 5306.2. ELECTIONS BY MEMBERS OF THE GENERAL ASSEMBLY. 22 (A) GENERAL RULE.--A MEMBER OF THE GENERAL ASSEMBLY WHO ON 23 THE EFFECTIVE DATE OF THIS SECTION, IS ELIGIBLE FOR CLASS D-4 24 MEMBERSHIP MAY ELECT TO BECOME A MEMBER OF CLASS D-4. THE 25 ELECTION TO BECOME A CLASS D-4 MEMBER MUST BE MADE BY THE MEMBER 26 OF THE GENERAL ASSEMBLY BY FILING WRITTEN NOTICE WITH THE BOARD 27 BEFORE JULY 1, 2001, OR BEFORE THE MEMBER TERMINATES STATE 28 SERVICE AS A MEMBER OF THE GENERAL ASSEMBLY, WHICHEVER OCCURS 29 FIRST. 30 (B) EFFECT OF ELECTION.--MEMBERSHIP AS A CLASS D-4 MEMBER 20010H0026B1905 - 85 -
1 SHALL BECOME EFFECTIVE ON JULY 1, 2001, AND SHALL REMAIN IN 2 EFFECT UNTIL THE TERMINATION OF SERVICE AS A MEMBER OF THE 3 GENERAL ASSEMBLY. UPON TERMINATION AND SUBSEQUENT REEMPLOYMENT, 4 THE MEMBER'S CLASS OF SERVICE SHALL BE CREDITED IN THE CLASS OF 5 SERVICE OTHERWISE PROVIDED FOR IN THIS PART. 6 (C) EFFECT OF FAILURE TO MAKE ELECTION.--A MEMBER OF THE 7 GENERAL ASSEMBLY WHO IS A MEMBER OF CLASS A AS A RESULT OF 8 FAILURE TO ELECT TO BECOME A MEMBER OF ANOTHER CLASS OR WHO IS A 9 MEMBER OF ANOTHER CLASS OTHER THAN CLASS D-4 AS A RESULT OF 10 ELECTING MEMBERSHIP IN SUCH CLASS FOR LEGISLATIVE SERVICE, SHALL 11 NOT BE ELIGIBLE TO RECEIVE OR ELECT A DIFFERENT CLASS OF SERVICE 12 FOR SUCH LEGISLATIVE SERVICE EITHER DURING THE PERIOD OF 13 LEGISLATIVE SERVICE, OR UPON TERMINATION AND SUBSEQUENT 14 EMPLOYMENT. 15 SECTION 13. SECTIONS 5307, 5308(B), 5309, 5501 AND 5502 OF 16 TITLE 71 ARE AMENDED TO READ: 17 § 5307. ELIGIBILITY POINTS. 18 (A) GENERAL RULE.--AN ACTIVE MEMBER OF THE SYSTEM SHALL 19 ACCRUE ONE ELIGIBILITY POINT FOR EACH YEAR OF CREDITED SERVICE 20 AS A MEMBER OF THE STATE OR THE PUBLIC SCHOOL EMPLOYEES' 21 RETIREMENT SYSTEM. A MEMBER SHALL ACCRUE AN ADDITIONAL TWO- 22 THIRDS OF AN ELIGIBILITY POINT FOR EACH YEAR OF CLASS D-3 23 CREDITED SERVICE. IN THE CASE OF A FRACTIONAL PART OF A YEAR OF 24 CREDITED SERVICE, A MEMBER SHALL ACCRUE THE CORRESPONDING 25 FRACTIONAL PORTION OF ELIGIBILITY POINTS TO WHICH THE CLASS OF 26 SERVICE ENTITLES HIM. 27 (B) TRANSITIONAL RULE.-- 28 (1) IN DETERMINING WHETHER A MEMBER WHO IS NOT A STATE 29 EMPLOYEE OR SCHOOL EMPLOYEE ON JUNE 30, 2001, AND JULY 1, 30 2001, AND WHO HAS PREVIOUS STATE SERVICE (EXCEPT A DISABILITY 20010H0026B1905 - 86 -
1 ANNUITANT WHO RETURNS TO STATE SERVICE AFTER JUNE 30, 2001, 2 UPON TERMINATION OF THE DISABILITY ANNUITY) HAS THE FIVE 3 ELIGIBILITY POINTS REQUIRED BY SECTION 5102 (RELATING TO 4 DEFINITIONS), 5308(B) (RELATING TO ELIGIBILITY FOR 5 ANNUITIES), 5309 (RELATING TO ELIGIBILITY FOR VESTING), 6 5704(B) (RELATING TO DISABILITY ANNUITIES) AND 5705(A) 7 (RELATING TO MEMBER'S OPTIONS), ONLY ELIGIBILITY POINTS 8 EARNED BY PERFORMING CREDITED STATE SERVICE OR CREDITED 9 SCHOOL SERVICE AFTER JUNE 30, 2001, SHALL BE COUNTED UNTIL 10 SUCH MEMBER EARNS ONE ELIGIBILITY POINT BY PERFORMING 11 CREDITED STATE SERVICE OR CREDITED SCHOOL SERVICE AFTER JUNE 12 30, 2001, AT WHICH TIME ALL ELIGIBILITY POINTS AS DETERMINED 13 PURSUANT TO SUBSECTION (A) SHALL BE COUNTED. 14 (2) ANY MEMBER TO WHOM PARAGRAPH (1) APPLIES SHALL BE 15 CONSIDERED TO HAVE SATISFIED ANY REQUIREMENT FOR FIVE 16 ELIGIBILITY POINTS CONTAINED IN THIS PART IF THE MEMBER: 17 (I) HAS TEN OR MORE ELIGIBILITY POINTS AS DETERMINED 18 PURSUANT TO SUBSECTION (A); OR 19 (II) HAS CLASS G, CLASS H, CLASS I, CLASS J, CLASS 20 L, CLASS M OR CLASS N SERVICE AND HAS EIGHT OR MORE 21 ELIGIBILITY POINTS AS DETERMINED PURSUANT TO SUBSECTION 22 (A). 23 § 5308. ELIGIBILITY FOR ANNUITIES. 24 * * * 25 (B) WITHDRAWAL ANNUITY.--ANY VESTEE OR ANY ACTIVE MEMBER OR 26 INACTIVE MEMBER ON LEAVE WITHOUT PAY WHO TERMINATES STATE 27 SERVICE HAVING [TEN] FIVE OR MORE ELIGIBILITY POINTS, OR WHO HAS 28 CLASS G, CLASS H, CLASS I, CLASS J, CLASS K, CLASS L, CLASS M OR 29 CLASS N SERVICE AND TERMINATES STATE SERVICE HAVING [EIGHT] FIVE 30 OR MORE ELIGIBILITY POINTS, UPON COMPLIANCE WITH SECTION 20010H0026B1905 - 87 -
1 5907(F), (G) OR (H) SHALL BE ENTITLED TO RECEIVE AN ANNUITY. 2 * * * 3 § 5309. ELIGIBILITY FOR VESTING. 4 ANY MEMBER WHO TERMINATES STATE SERVICE WITH [TEN] FIVE OR 5 MORE ELIGIBILITY POINTS, OR ANY MEMBER WITH CLASS G, CLASS H, 6 CLASS I, CLASS J, CLASS K, CLASS L, CLASS M OR CLASS N SERVICE 7 WITH [EIGHT] FIVE OR MORE ELIGIBILITY POINTS, SHALL BE ELIGIBLE 8 UNTIL ATTAINMENT OF SUPERANNUATION AGE TO VEST HIS RETIREMENT 9 BENEFITS. 10 § 5501. REGULAR MEMBER CONTRIBUTIONS FOR CURRENT SERVICE. 11 REGULAR MEMBER CONTRIBUTIONS SHALL BE MADE TO THE FUND ON 12 BEHALF OF EACH ACTIVE MEMBER FOR CURRENT SERVICE EXCEPT FOR ANY 13 PERIOD OF CURRENT SERVICE IN WHICH THE MAKING OF SUCH 14 CONTRIBUTIONS HAS CEASED SOLELY BY REASON OF SECTION 5502.1 15 (RELATING TO WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND SOCIAL 16 SECURITY INTEGRATION MEMBER CONTRIBUTIONS) OR ANY PROVISION OF 17 THIS PART RELATING TO THE [ANNUAL COMPENSATION LIMIT UNDER IRC § 18 401(A)(17)] LIMITATIONS UNDER IRC § 401(A)(17) OR 415(B). 19 § 5502. SOCIAL SECURITY INTEGRATION MEMBER CONTRIBUTIONS. 20 [CONTRIBUTIONS] EXCEPT FOR ANY PERIOD OF CURRENT SERVICE IN 21 WHICH THE MAKING OF REGULAR MEMBER CONTRIBUTIONS HAS CEASED 22 SOLELY BY REASON OF SECTION 5502.1 (RELATING TO WAIVER OF 23 REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION 24 MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO 25 LIMITATIONS UNDER IRC § 401(A)(17) OR 415(B), CONTRIBUTIONS 26 SHALL BE MADE ON BEHALF OF A MEMBER OF ANY CLASS WHO PRIOR TO 27 MARCH 1, 1974, HAS ELECTED SOCIAL SECURITY INTEGRATION COVERAGE. 28 THE AMOUNT OF SUCH CONTRIBUTIONS SHALL BE 6 1/4% OF THAT PORTION 29 OF HIS COMPENSATION IN EXCESS OF THE MAXIMUM WAGES TAXABLE UNDER 30 THE PROVISIONS OF THE SOCIAL SECURITY ACT (49 STAT. 620, 42 20010H0026B1905 - 88 -
1 U.S.C. § 301 ET SEQ.), IN ADDITION TO THE REGULAR MEMBER 2 CONTRIBUTIONS WHICH, AFTER SUCH ELECTION, SHALL BE DETERMINED ON 3 THE BASIS OF THE BASIC CONTRIBUTION RATE OF 5% AND THE 4 ADDITIONAL MEMBER CONTRIBUTION OF 1 1/4%: PROVIDED, THAT A 5 MEMBER MAY ELECT TO DISCONTINUE SOCIAL SECURITY INTEGRATION 6 COVERAGE AND SHALL THEREAFTER BE INELIGIBLE TO ACCRUE ANY 7 FURTHER SOCIAL SECURITY INTEGRATION CREDITS OR ANY ADDITIONAL 8 BENEFITS ON ACCOUNT OF SOCIAL SECURITY INTEGRATION MEMBERSHIP. 9 SECTION 14. TITLE 71 IS AMENDED BY ADDING A SECTION TO READ: 10 § 5502.1. WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND SOCIAL 11 SECURITY INTEGRATION MEMBER CONTRIBUTIONS. 12 NOTWITHSTANDING THE PROVISIONS OF SECTIONS 5501 (RELATING TO 13 REGULAR MEMBER CONTRIBUTIONS FOR CURRENT SERVICE) AND 5502 14 (RELATING TO SOCIAL SECURITY INTEGRATION MEMBER CONTRIBUTIONS), 15 NO REGULAR MEMBER CONTRIBUTIONS OR SOCIAL SECURITY INTEGRATION 16 MEMBER CONTRIBUTIONS SHALL BE MADE BY AN ACTIVE MEMBER FOR THE 17 PERIOD FROM JULY 1 TO THE FOLLOWING JUNE 30 IF THE MAXIMUM 18 SINGLE LIFE ANNUITY TO WHICH THE MEMBER WOULD HAVE BEEN ENTITLED 19 TO RECEIVE HAD THE MEMBER RETIRED WITH AN EFFECTIVE DATE OF 20 RETIREMENT ON THE PRECEDING JANUARY 1 IS GREATER THAN 110% OF 21 THE HIGHEST CALENDAR YEAR COMPENSATION OF THE MEMBER, PROVIDED 22 THE MEMBER FILES A WRITTEN ELECTION AS PRESCRIBED BY THE BOARD. 23 SECTION 15. SECTIONS 5504(B), 5505(B), (C) AND (D), 5506, 24 5507(B) AND 5508(B), (C), (E) AND (F) OF TITLE 71 ARE AMENDED TO 25 READ: 26 § 5504. MEMBER CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR 27 PREVIOUS STATE SERVICE OR TO BECOME A FULL COVERAGE 28 MEMBER. 29 * * * 30 (B) CERTIFICATION AND METHOD OF PAYMENT.--THE AMOUNT PAYABLE 20010H0026B1905 - 89 -
1 SHALL BE CERTIFIED IN EACH CASE BY THE BOARD IN ACCORDANCE WITH 2 METHODS APPROVED BY THE ACTUARY AND SHALL BE PAID IN A LUMP SUM 3 WITHIN 30 DAYS OR IN THE CASE OF AN ACTIVE MEMBER OR ELIGIBLE 4 SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL 5 EMPLOYEES' RETIREMENT SYSTEM MAY BE AMORTIZED WITH STATUTORY 6 INTEREST THROUGH SALARY DEDUCTIONS IN AMOUNTS AGREED UPON BY THE 7 MEMBER AND THE BOARD. THE SALARY DEDUCTION AMORTIZATION PLANS 8 AGREED TO BY MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL OF 9 PAYMENT AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION OF 10 SCHOOL SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE 11 DISCRETION, DECIDES TO ALLOW. THE BOARD MAY LIMIT THE SALARY 12 DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN ITS 13 SOLE DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE SCHOOL 14 EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' 15 RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE 16 REMITTED TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD, WHICH 17 SHALL CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID. 18 § 5505. CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR CREDITABLE 19 NONSTATE SERVICE. 20 * * * 21 (B) NONINTERVENING MILITARY SERVICE.-- 22 (1) THE AMOUNT DUE FOR THE PURCHASE OF CREDIT FOR 23 MILITARY SERVICE OTHER THAN INTERVENING MILITARY SERVICE 24 SHALL BE DETERMINED BY APPLYING THE MEMBER'S BASIC 25 CONTRIBUTION RATE, THE ADDITIONAL CONTRIBUTION RATE PLUS THE 26 COMMONWEALTH NORMAL CONTRIBUTION RATE FOR ACTIVE MEMBERS AT 27 THE TIME OF ENTRY, SUBSEQUENT TO SUCH MILITARY SERVICE, OF 28 THE MEMBER INTO STATE SERVICE TO HIS AVERAGE ANNUAL RATE OF 29 COMPENSATION OVER THE FIRST THREE YEARS OF SUCH SUBSEQUENT 30 STATE SERVICE AND MULTIPLYING THE RESULT BY THE NUMBER OF 20010H0026B1905 - 90 -
1 YEARS AND FRACTIONAL PART OF A YEAR OF CREDITABLE 2 NONINTERVENING MILITARY SERVICE BEING PURCHASED TOGETHER WITH 3 STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT STATE AND 4 SCHOOL SERVICE TO DATE OF PURCHASE. UPON APPLICATION FOR 5 CREDIT FOR SUCH SERVICE, PAYMENT SHALL BE MADE IN A LUMP SUM 6 WITHIN 30 DAYS OR IN THE CASE OF AN ACTIVE MEMBER OR ELIGIBLE 7 SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL 8 EMPLOYEES' RETIREMENT SYSTEM IT MAY BE AMORTIZED WITH 9 STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN AMOUNTS 10 AGREED UPON BY THE MEMBER AND THE BOARD. THE SALARY DEDUCTION 11 AMORTIZATION PLANS AGREED TO BY MEMBERS AND THE BOARD MAY 12 INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND STATUTORY INTEREST 13 UNTIL THE TERMINATION OF SCHOOL SERVICE OR STATE SERVICE, AS 14 THE BOARD, IN ITS SOLE DISCRETION, DECIDES TO ALLOW. THE 15 BOARD MAY LIMIT SALARY DEDUCTION AMORTIZATION PLANS TO SUCH 16 TERMS AS THE BOARD, IN ITS SOLE DISCRETION, DETERMINES. IN 17 THE CASE OF AN ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE 18 MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, THE 19 AGREED UPON SALARY DEDUCTIONS SHALL BE REMITTED TO THE PUBLIC 20 SCHOOL EMPLOYEES' RETIREMENT BOARD WHICH SHALL CERTIFY AND 21 TRANSFER TO THE BOARD THE AMOUNTS PAID. APPLICATION MAY BE 22 FILED FOR ALL SUCH MILITARY SERVICE CREDIT UPON COMPLETION OF 23 THREE YEARS OF SUBSEQUENT STATE SERVICE AND SHALL BE CREDITED 24 AS CLASS A SERVICE. 25 (2) APPLICANTS MAY PURCHASE CREDIT AS FOLLOWS: 26 (I) ONE PURCHASE OF THE TOTAL AMOUNT OF CREDITABLE 27 NONINTERVENING MILITARY SERVICE; OR 28 (II) ONE PURCHASE PER 12-MONTH PERIOD OF A PORTION 29 OF CREDITABLE NONINTERVENING MILITARY SERVICE. 30 THE AMOUNT OF EACH PURCHASE SHALL BE NOT LESS THAN ONE YEAR 20010H0026B1905 - 91 -
1 OF CREDITABLE NONINTERVENING MILITARY SERVICE. ANNUITY 2 RESERVE ACCOUNT). 3 (C) INTERVENING MILITARY SERVICE.--CONTRIBUTIONS ON ACCOUNT 4 OF CREDIT FOR INTERVENING MILITARY SERVICE SHALL BE DETERMINED 5 BY THE MEMBER'S CONTRIBUTION RATE, THE ADDITIONAL CONTRIBUTION 6 RATE WHICH SHALL BE APPLIED ONLY TO THOSE MEMBERS WHO BEGAN 7 SERVICE ON OR AFTER THE EFFECTIVE DATE OF THIS AMENDATORY ACT 8 AND COMPENSATION AT THE TIME OF ENTRY OF THE MEMBER INTO ACTIVE 9 MILITARY SERVICE, TOGETHER WITH STATUTORY INTEREST DURING ALL 10 PERIODS OF SUBSEQUENT STATE AND SCHOOL SERVICE TO DATE OF 11 PURCHASE. UPON APPLICATION FOR SUCH CREDIT THE AMOUNT DUE SHALL 12 BE CERTIFIED IN THE CASE OF EACH MEMBER BY THE BOARD IN 13 ACCORDANCE WITH METHODS APPROVED BY THE ACTUARY, AND 14 CONTRIBUTIONS MAY BE MADE BY: 15 (1) REGULAR MONTHLY PAYMENTS DURING ACTIVE MILITARY 16 SERVICE; OR 17 (2) A LUMP SUM PAYMENT WITHIN 30 DAYS OF CERTIFICATION; 18 OR 19 (3) SALARY DEDUCTIONS IN AMOUNTS AGREED UPON BY THE 20 MEMBER OR ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF 21 THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND THE BOARD. 22 THE SALARY DEDUCTION AMORTIZATION PLANS AGREED TO BY MEMBERS AND 23 THE BOARD MAY INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND 24 STATUTORY INTEREST UNTIL THE TERMINATION OF SCHOOL SERVICE OR 25 STATE SERVICE, AS THE BOARD, IN ITS SOLE DISCRETION, DECIDES TO 26 ALLOW. THE BOARD MAY LIMIT SALARY DEDUCTION AMORTIZATION PLANS 27 TO SUCH TERMS AS THE BOARD, IN ITS SOLE DISCRETION, DETERMINES. 28 IN THE CASE OF AN ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE 29 MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, THE 30 AGREED UPON SALARY DEDUCTIONS SHALL BE REMITTED TO THE PUBLIC 20010H0026B1905 - 92 -
1 SCHOOL EMPLOYEES' RETIREMENT BOARD, WHICH SHALL CERTIFY AND 2 TRANSFER TO THE BOARD THE AMOUNTS PAID. 3 (D) NONMILITARY AND NONMAGISTERIAL SERVICE.--CONTRIBUTIONS 4 ON ACCOUNT OF CREDIT FOR CREDITABLE NONSTATE SERVICE OTHER THAN 5 MILITARY AND MAGISTERIAL SERVICE SHALL BE DETERMINED BY APPLYING 6 THE MEMBER'S BASIC CONTRIBUTION RATE, THE ADDITIONAL 7 CONTRIBUTION RATE PLUS THE COMMONWEALTH NORMAL CONTRIBUTION RATE 8 FOR ACTIVE MEMBERS AT THE TIME OF ENTRY SUBSEQUENT TO SUCH 9 CREDITABLE NONSTATE SERVICE OF THE MEMBER INTO STATE SERVICE TO 10 HIS COMPENSATION AT THE TIME OF ENTRY INTO STATE SERVICE AND 11 MULTIPLYING THE RESULT BY THE NUMBER OF YEARS AND FRACTIONAL 12 PART OF A YEAR OF CREDITABLE NONSTATE SERVICE BEING PURCHASED 13 TOGETHER WITH STATUTORY INTEREST DURING ALL PERIODS OF 14 SUBSEQUENT STATE AND SCHOOL SERVICE TO THE DATE OF PURCHASE. 15 UPON APPLICATION FOR CREDIT FOR SUCH SERVICE PAYMENT SHALL BE 16 MADE IN A LUMP SUM WITHIN 30 DAYS OR IN THE CASE OF AN ACTIVE 17 MEMBER OR ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF 18 THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM IT MAY BE 19 AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN 20 AMOUNTS AGREED UPON BY THE MEMBER AND THE BOARD. THE SALARY 21 DEDUCTION AMORTIZATION PLANS AGREED TO BY MEMBERS AND THE BOARD 22 MAY INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND STATUTORY INTEREST 23 UNTIL THE TERMINATION OF SCHOOL SERVICE OR STATE SERVICE AS THE 24 BOARD, IN ITS SOLE DISCRETION, DECIDES TO ALLOW. THE BOARD MAY 25 LIMIT SALARY DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE 26 BOARD, IN ITS SOLE DISCRETION, DETERMINES. IN THE CASE OF AN 27 ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC 28 SCHOOL EMPLOYEES' RETIREMENT SYSTEM, THE AGREED UPON SALARY 29 DEDUCTION SHALL BE REMITTED TO THE PUBLIC SCHOOL EMPLOYEES' 30 RETIREMENT BOARD, WHICH SHALL CERTIFY AND TRANSFER TO THE BOARD 20010H0026B1905 - 93 -
1 THE AMOUNTS PAID. 2 * * * 3 § 5506. INCOMPLETE PAYMENTS. 4 IN THE EVENT THAT A MEMBER TERMINATES STATE SERVICE OR A 5 MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE PUBLIC 6 SCHOOL EMPLOYEES' RETIREMENT SYSTEM TERMINATES SCHOOL SERVICE 7 BEFORE THE AGREED UPON PAYMENTS FOR CREDIT FOR PREVIOUS STATE 8 SERVICE, CREDITABLE NONSTATE SERVICE, SOCIAL SECURITY 9 INTEGRATION, [OR] FULL COVERAGE MEMBERSHIP OR RETURN OF BENEFITS 10 ON ACCOUNT OF RETURNING TO STATE SERVICE OR ENTERING SCHOOL 11 SERVICE AND ELECTING MULTIPLE SERVICE HAVE BEEN COMPLETED, THE 12 MEMBER OR MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE 13 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM SHALL HAVE THE RIGHT 14 TO PAY WITHIN 30 DAYS OF TERMINATION OF STATE SERVICE OR SCHOOL 15 SERVICE THE BALANCE DUE, INCLUDING INTEREST, IN A LUMP SUM AND 16 THE ANNUITY SHALL BE CALCULATED INCLUDING FULL CREDIT FOR THE 17 PREVIOUS STATE SERVICE, CREDITABLE NONSTATE SERVICE, SOCIAL 18 SECURITY INTEGRATION, OR FULL COVERAGE MEMBERSHIP. IN THE EVENT 19 A MEMBER DOES NOT PAY THE BALANCE DUE WITHIN 30 DAYS OF 20 TERMINATION OF STATE SERVICE OR IN THE EVENT A MEMBER DIES IN 21 STATE SERVICE OR WITHIN 30 DAYS OF TERMINATION OF STATE SERVICE 22 OR IN THE CASE OF A MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE 23 MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, DOES 24 NOT PAY THE BALANCE DUE WITHIN 30 DAYS OF TERMINATION OF SCHOOL 25 SERVICE OR DIES IN SCHOOL SERVICE OR WITHIN 30 DAYS OF 26 TERMINATION OF SCHOOL SERVICE AND BEFORE THE AGREED UPON 27 PAYMENTS HAVE BEEN COMPLETED, THE PRESENT VALUE OF THE BENEFIT 28 OTHERWISE PAYABLE SHALL BE REDUCED BY THE BALANCE DUE, INCLUDING 29 INTEREST, AND THE BENEFIT PAYABLE SHALL BE CALCULATED AS THE 30 ACTUARIAL EQUIVALENT OF SUCH REDUCED PRESENT VALUE. 20010H0026B1905 - 94 -
1 § 5507. CONTRIBUTIONS BY THE COMMONWEALTH AND OTHER EMPLOYERS. 2 * * * 3 (B) CONTRIBUTIONS ON BEHALF OF ANNUITANTS.--THE COMMONWEALTH 4 SHALL MAKE CONTRIBUTIONS ON BEHALF OF ANNUITANTS IN SUCH AMOUNTS 5 AS SHALL BE CERTIFIED BY THE BOARD AS NECESSARY TO FUND THE 6 LIABILITIES FOR SUPPLEMENTAL ANNUITIES IN ACCORDANCE WITH THE 7 ACTUARIAL COST METHOD PROVIDED IN [SECTIONS] SECTION 5508(E) 8 (RELATING TO ACTUARIAL COST METHOD)[, 5708.3(F) (RELATING TO 9 SUPPLEMENTAL ANNUITIES COMMENCING 1994) AND 5708.5(F) (RELATING 10 TO SUPPLEMENTAL ANNUITIES COMMENCING 1998)]. 11 * * * 12 § 5508. ACTUARIAL COST METHOD. 13 * * * 14 (B) EMPLOYER NORMAL CONTRIBUTION RATE.--THE EMPLOYER NORMAL 15 CONTRIBUTION RATE SHALL BE DETERMINED AFTER EACH ACTUARIAL 16 VALUATION ON THE BASIS OF AN ANNUAL INTEREST RATE AND SUCH 17 MORTALITY AND OTHER TABLES AS SHALL BE ADOPTED BY THE BOARD IN 18 ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL PRINCIPLES. THE 19 EMPLOYER NORMAL CONTRIBUTION RATE SHALL BE DETERMINED AS A LEVEL 20 PERCENTAGE OF THE COMPENSATION OF THE AVERAGE NEW ACTIVE MEMBER, 21 WHICH PERCENTAGE, IF CONTRIBUTED ON THE BASIS OF HIS PROSPECTIVE 22 COMPENSATION THROUGH HIS ENTIRE PERIOD OF ACTIVE STATE SERVICE, 23 WOULD BE SUFFICIENT TO FUND THE LIABILITY FOR ANY PROSPECTIVE 24 BENEFIT PAYABLE TO HIM, EXCEPT FOR THE SUPPLEMENTAL BENEFITS 25 PROVIDED FOR IN SECTIONS 5708 (RELATING TO SUPPLEMENTAL 26 ANNUITIES), 5708.1 (RELATING TO ADDITIONAL SUPPLEMENTAL 27 ANNUITIES), 5708.2 (RELATING TO FURTHER ADDITIONAL SUPPLEMENTAL 28 ANNUITIES) [AND], 5708.3 (RELATING TO SUPPLEMENTAL ANNUITIES 29 COMMENCING 1994), 5708.4 (RELATING TO SPECIAL SUPPLEMENTAL 30 POSTRETIREMENT ADJUSTMENT) AND 5708.5 (RELATING TO SUPPLEMENTAL 20010H0026B1905 - 95 -
1 ANNUITIES COMMENCING 1998) IN EXCESS OF THAT PORTION FUNDED BY 2 HIS PROSPECTIVE MEMBER CONTRIBUTIONS. 3 (C) ACCRUED LIABILITY CONTRIBUTION RATE.--FOR THE FISCAL 4 YEAR BEGINNING JULY 1, [1991] 2002, THE ACCRUED LIABILITY 5 CONTRIBUTION RATE SHALL BE COMPUTED AS THE RATE OF TOTAL 6 COMPENSATION OF ALL ACTIVE MEMBERS WHICH SHALL BE CERTIFIED BY 7 THE ACTUARY AS SUFFICIENT TO FUND OVER A PERIOD OF [20] 10 YEARS 8 FROM JULY 1, [1991] 2002, THE PRESENT VALUE OF THE LIABILITIES 9 FOR ALL PROSPECTIVE BENEFITS, EXCEPT FOR THE SUPPLEMENTAL 10 BENEFITS AS PROVIDED IN SECTIONS 5708, 5708.1, 5708.2 [AND], 11 5708.3, 5708.4 (RELATING TO SPECIAL SUPPLEMENTAL POSTRETIREMENT 12 ADJUSTMENT) AND 5708.5 (RELATING TO SUPPLEMENTAL ANNUITIES 13 COMMENCING 1998), IN EXCESS OF THE TOTAL ASSETS IN THE FUND 14 (CALCULATED RECOGNIZING ALL INVESTMENT GAINS AND LOSSES OVER A 15 FIVE-YEAR PERIOD), EXCLUDING THE BALANCE IN THE SUPPLEMENTAL 16 ANNUITY ACCOUNT, AND THE PRESENT VALUE OF EMPLOYER NORMAL 17 CONTRIBUTIONS AND OF MEMBER CONTRIBUTIONS PAYABLE WITH RESPECT 18 TO ALL ACTIVE MEMBERS ON JULY 1, [1991,] 2002, AND EXCLUDING 19 CONTRIBUTION TO BE TRANSFERRED BY COUNTY RETIREMENT SYSTEMS OR 20 PENSION PLANS PURSUANT SECTION 5507(C). THE AMOUNT OF EACH 21 ANNUAL ACCRUED LIABILITY CONTRIBUTION SHALL BE [5% GREATER THAN] 22 EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION FOR THE [PREVIOUS] 23 FISCAL YEAR BEGINNING JULY 1, 2002, EXCEPT THAT, IF THE ACCRUED 24 LIABILITY IS INCREASED BY LEGISLATION ENACTED SUBSEQUENT TO 25 [JULY 1, 1991] JUNE 30, 2002, SUCH ADDITIONAL LIABILITY SHALL BE 26 FUNDED OVER A PERIOD OF [20] 10 YEARS FROM THE FIRST DAY OF 27 JULY, COINCIDENT WITH OR NEXT FOLLOWING THE EFFECTIVE DATE OF 28 THE INCREASE[, PROVIDED THAT THE LIABILITY FOR ANY ADDITIONAL 29 BENEFITS CREATED BY THIS ACT SHALL BE FUNDED OVER A PERIOD OF 20 30 YEARS COMMENCING JULY 1, 1992]. THE AMOUNT OF EACH ANNUAL 20010H0026B1905 - 96 -
1 ACCRUED LIABILITY CONTRIBUTION FOR SUCH ADDITIONAL LEGISLATIVE 2 LIABILITIES SHALL BE [5% GREATER THAN] EQUAL TO THE AMOUNT OF 3 SUCH CONTRIBUTION FOR THE [PREVIOUS FISCAL YEAR] FIRST ANNUAL 4 PAYMENT. 5 * * * 6 (E) SUPPLEMENTAL ANNUITY CONTRIBUTION RATE.--CONTRIBUTIONS 7 FROM THE COMMONWEALTH REQUIRED TO PROVIDE FOR THE PAYMENT OF 8 SUPPLEMENTAL ANNUITIES AS PROVIDED IN SECTIONS 5708, 5708.1 9 [AND], 5708.2, 5708.3, 5708.4 AND 5708.5 SHALL BE PAID OVER A 10 PERIOD OF [20] 10 YEARS FROM JULY 1, [1991] 2002. THE AMOUNT OF 11 EACH ANNUAL SUPPLEMENTAL ANNUITIES CONTRIBUTION SHALL BE [5% 12 GREATER THAN] EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION FOR THE 13 [PREVIOUS] FISCAL YEAR BEGINNING JULY 1, 2002. IN THE EVENT THAT 14 SUPPLEMENTAL ANNUITIES ARE INCREASED BY LEGISLATION ENACTED 15 SUBSEQUENT TO [JULY 1, 1991] JUNE 30, 2002, THE ADDITIONAL 16 LIABILITY FOR THE INCREASE IN BENEFITS SHALL BE FUNDED IN EQUAL 17 DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] OVER A 18 PERIOD OF [20] 10 YEARS FROM THE JULY FIRST, COINCIDENT WITH OR 19 NEXT FOLLOWING THE EFFECTIVE DATE OF SUCH LEGISLATION. 20 [NOTWITHSTANDING THE PRECEDING, THE FUNDING FOR THE SUPPLEMENTAL 21 ANNUITIES COMMENCING 1994 PROVIDED FOR IN SECTION 5708.3 SHALL 22 BE AS PROVIDED IN SECTION 5708.3(F).] 23 (F) EXPERIENCE ADJUSTMENT FACTOR.--FOR EACH YEAR AFTER THE 24 ESTABLISHMENT OF THE ACCRUED LIABILITY CONTRIBUTION RATE FOR THE 25 FISCAL YEAR BEGINNING JULY 1, [1991] 2002, ANY INCREASE OR 26 DECREASE IN THE ACCRUED LIABILITY, INCLUDING LIABILITY FOR 27 SUPPLEMENTAL ANNUITIES, DUE TO ACTUAL EXPERIENCE DIFFERING FROM 28 ASSUMED EXPERIENCE, CHANGES IN ACTUARIAL ASSUMPTIONS, CHANGES IN 29 THE TERMS AND CONDITIONS OF THE BENEFITS PROVIDED BY THE SYSTEM 30 BY JUDICIAL, ADMINISTRATIVE OR OTHER PROCESSES OTHER THAN 20010H0026B1905 - 97 -
1 LEGISLATION, INCLUDING, BUT NOT LIMITED TO, REINTERPRETATION OF 2 THE PROVISIONS OF THIS PART, SHALL BE AMORTIZED IN EQUAL DOLLAR 3 ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] OVER A PERIOD 4 OF [20] 10 YEARS BEGINNING WITH THE JULY 1 SUCCEEDING THE 5 ACTUARIAL VALUATION. 6 * * * 7 SECTION 16. SECTIONS 5702(A) AND (C) AND 5704(B) AND (F) OF 8 TITLE 71 ARE AMENDED AND THE SECTIONS ARE AMENDED BY ADDING 9 SUBSECTIONS TO READ: 10 § 5702. MAXIMUM SINGLE LIFE ANNUITY. 11 (A) GENERAL RULE.--ANY FULL COVERAGE MEMBER WHO IS ELIGIBLE 12 TO RECEIVE AN ANNUITY PURSUANT TO THE PROVISIONS OF SECTION 13 5308(A) OR (B) (RELATING TO ELIGIBILITY FOR ANNUITIES) WHO 14 TERMINATES STATE SERVICE, OR IF A MULTIPLE SERVICE MEMBER WHO IS 15 A SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL 16 EMPLOYEES' RETIREMENT SYSTEM WHO TERMINATES SCHOOL SERVICE, 17 BEFORE ATTAINING AGE 70 SHALL BE ENTITLED TO RECEIVE A MAXIMUM 18 SINGLE LIFE ANNUITY ATTRIBUTABLE TO HIS CREDITED SERVICE AND 19 EQUAL TO THE SUM OF THE FOLLOWING SINGLE LIFE ANNUITIES 20 BEGINNING AT THE EFFECTIVE DATE OF RETIREMENT: 21 (1) A STANDARD SINGLE LIFE ANNUITY MULTIPLIED BY THE SUM 22 OF THE PRODUCTS, DETERMINED SEPARATELY FOR EACH CLASS OF 23 SERVICE, OBTAINED BY MULTIPLYING THE APPROPRIATE CLASS OF 24 SERVICE MULTIPLIER BY THE RATIO OF YEARS OF SERVICE CREDITED 25 IN THAT CLASS TO THE TOTAL CREDITED SERVICE. IN CASE THE 26 MEMBER ON THE EFFECTIVE DATE OF RETIREMENT IS UNDER 27 SUPERANNUATION AGE FOR ANY SERVICE, A REDUCTION FACTOR 28 CALCULATED TO PROVIDE BENEFITS ACTUARIALLY EQUIVALENT TO AN 29 ANNUITY STARTING AT SUPERANNUATION AGE SHALL BE APPLIED TO 30 THE PRODUCT DETERMINED FOR THAT SERVICE. THE CLASS OF SERVICE 20010H0026B1905 - 98 -
1 MULTIPLIER FOR ANY PERIOD OF CONCURRENT SERVICE SHALL BE 2 MULTIPLIED BY THE PROPORTION OF TOTAL STATE AND SCHOOL 3 COMPENSATION DURING SUCH PERIOD ATTRIBUTABLE TO STATE 4 SERVICE. IN THE EVENT A MEMBER HAS TWO MULTIPLIERS FOR ONE 5 CLASS OF SERVICE THE CLASS OF SERVICE MULTIPLIER TO BE USED 6 FOR CALCULATING BENEFITS FOR THAT CLASS SHALL BE THE AVERAGE 7 OF THE TWO MULTIPLIERS WEIGHTED BY THE PROPORTION OF 8 COMPENSATION ATTRIBUTABLE TO EACH MULTIPLIER DURING THE THREE 9 YEARS OF HIGHEST ANNUAL COMPENSATION IN THAT CLASS OF 10 SERVICE: PROVIDED, THAT IN THE CASE OF A MEMBER OF CLASS E-1, 11 A PORTION BUT NOT ALL OF WHOSE THREE YEARS OF HIGHEST ANNUAL 12 JUDICIAL COMPENSATION IS PRIOR TO JANUARY 1, 1973, TWO CLASS 13 OF SERVICE MULTIPLIERS SHALL BE CALCULATED ON THE BASIS OF 14 HIS ENTIRE JUDICIAL SERVICE, THE ONE APPLYING THE JUDICIAL 15 CLASS OF SERVICE MULTIPLIERS EFFECTIVE PRIOR TO JANUARY 1, 16 1973 AND THE SECOND APPLYING THE CLASS OF SERVICE MULTIPLIERS 17 EFFECTIVE SUBSEQUENT TO JANUARY 1, 1973. THE AVERAGE CLASS OF 18 SERVICE MULTIPLIER TO BE USED FOR CALCULATING BENEFITS FOR 19 HIS JUDICIAL SERVICE SHALL BE THE AVERAGE OF THE TWO 20 CALCULATED MULTIPLIERS WEIGHTED BY THE PROPORTION OF 21 COMPENSATION ATTRIBUTABLE TO EACH OF THE CALCULATED 22 MULTIPLIERS DURING THE THREE YEARS OF HIGHEST ANNUAL 23 COMPENSATION IN THAT CLASS OF SERVICE. 24 (2) IF ELIGIBLE, A SINGLE LIFE ANNUITY OF 2% OF HIS 25 AVERAGE NONCOVERED SALARY FOR EACH YEAR OF SOCIAL SECURITY 26 INTEGRATION CREDIT AS PROVIDED FOR IN SECTION 5305 (RELATING 27 TO SOCIAL SECURITY INTEGRATION CREDITS) MULTIPLIED, IF ON THE 28 EFFECTIVE DATE OF RETIREMENT THE MEMBER IS UNDER 29 SUPERANNUATION AGE FOR ANY SERVICE, BY THE ACTUARIALLY 30 DETERMINED REDUCTION FACTOR FOR THAT SERVICE. 20010H0026B1905 - 99 -
1 (3) IF ELIGIBLE, A SINGLE LIFE ANNUITY WHICH IS 2 ACTUARIALLY EQUIVALENT TO THE REGULAR AND ADDITIONAL 3 ACCUMULATED DEDUCTIONS ATTRIBUTABLE TO CONTRIBUTIONS AS A 4 MEMBER OF CLASS C, BUT NOT LESS THAN SUCH ANNUITY DETERMINED 5 AS IF THE MEMBER WERE AGE 60 ON THE EFFECTIVE DATE OF 6 RETIREMENT, ACTUARIALLY REDUCED IN THE EVENT THE MEMBER IS 7 UNDER SUPERANNUATION AGE ON THE EFFECTIVE DATE OF RETIREMENT. 8 (4) IF ELIGIBLE, A SINGLE LIFE ANNUITY WHICH IS 9 ACTUARIALLY EQUIVALENT TO THE AMOUNT BY WHICH HIS REGULAR AND 10 ADDITIONAL ACCUMULATED DEDUCTIONS ATTRIBUTABLE TO ANY 11 CREDITED SERVICE OTHER THAN AS A MEMBER OF CLASS C ARE 12 GREATER THAN ONE-HALF OF THE ACTUARIALLY EQUIVALENT VALUE ON 13 THE EFFECTIVE DATE OF RETIREMENT OF THE ANNUITY AS PROVIDED 14 IN PARAGRAPH (1) ATTRIBUTABLE TO SERVICE OTHER THAN CLASS C 15 FOR WHICH REGULAR OR JOINT COVERAGE MEMBER CONTRIBUTIONS WERE 16 MADE. 17 (5) IF ELIGIBLE, A SINGLE LIFE ANNUITY WHICH IS 18 ACTUARIALLY EQUIVALENT TO THE AMOUNT BY WHICH HIS SOCIAL 19 SECURITY INTEGRATION ACCUMULATED DEDUCTIONS ARE GREATER THAN 20 ONE-HALF OF THE ACTUARIALLY EQUIVALENT VALUE ON THE EFFECTIVE 21 DATE OF RETIREMENT OF THE ANNUITY PROVIDED FOR UNDER 22 PARAGRAPH (2). 23 (6) IF ELIGIBLE, A SINGLE LIFE ANNUITY SUFFICIENT 24 TOGETHER WITH THE ANNUITY PROVIDED FOR IN PARAGRAPH (1) AS A 25 CLASS A AND CLASS AA MEMBER AND THE HIGHEST ANNUITY PROVIDED 26 FOR IN PARAGRAPH (2) TO WHICH HE IS ENTITLED, OR AT HIS 27 OPTION COULD HAVE BEEN ENTITLED, TO PRODUCE THAT PERCENTAGE 28 OF A STANDARD SINGLE LIFE ANNUITY ON THE EFFECTIVE DATE OF 29 RETIREMENT AS DETERMINED BY HIS TOTAL YEARS OF CREDITED 30 SERVICE AS A MEMBER OF CLASS A AND CLASS AA AND BY THE 20010H0026B1905 - 100 -
1 FOLLOWING TABLE: 2 TOTAL YEARS OF PERCENTAGE OF 3 CREDITED SERVICE STANDARD 4 AS A MEMBER OF SINGLE LIFE 5 CLASS A AND ANNUITY 6 CLASS AA 7 35-40 100% 8 41 102% 9 42 104% 10 43 106% 11 44 108% 12 45 OR MORE 110% 13 (A.1) RULE FOR TERMINATIONS AFTER ATTAINING AGE 70.-- 14 (1) ANY FULL COVERAGE MEMBER WHO IS ELIGIBLE TO RECEIVE 15 AN ANNUITY PURSUANT TO THE PROVISIONS OF SECTION 5308(A) WHO 16 TERMINATES STATE SERVICE, OR IF A MULTIPLE SERVICE MEMBER WHO 17 IS A SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE PUBLIC 18 SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO TERMINATES SCHOOL 19 SERVICE, ON OR AFTER ATTAINING AGE 70 AND WHO APPLIES FOR A 20 SUPERANNUATION ANNUITY TO BE EFFECTIVE THE DAY AFTER THE 21 TERMINATION OF STATE SERVICE OR SCHOOL SERVICE, AS THE CASE 22 MAY BE, SHALL BE ENTITLED TO RECEIVE A MAXIMUM SINGLE LIFE 23 ANNUITY AS OF A DETERMINATION DATE THAT IS EQUAL TO THE 24 GREATER OF SUBPARAGRAPH (I) OR (II): 25 (I) THE SUM OF THE ANNUITIES PROVIDED IN SUBSECTION 26 (A)(1) THROUGH (6) CALCULATED AS OF THE DETERMINATION 27 DATE; AND 28 (II) THE GREATER OF CLAUSE (A) OR (B): 20010H0026B1905 - 101 -
1 (A) THE SUM OF THE ANNUITIES PROVIDED IN 2 SUBSECTION (A)(1), (3), (4) AND (6) AS OF THE 3 PRECEDING DETERMINATION DATE ADJUSTED BY THE 4 ACTUARIAL INCREASE FACTOR, PLUS THE ANNUITIES 5 PROVIDED IN SUBSECTION (A)(2) AND (5) AS OF THE 6 DETERMINATION DATE; AND 7 (B) THE MAXIMUM SINGLE LIFE ANNUITY AS OF THE 8 PRECEDING DETERMINATION DATE ADJUSTED BY THE 9 ACTUARIAL INCREASE FACTOR. 10 THE MAXIMUM SINGLE LIFE ANNUITY SHALL BE CALCULATED FOR EACH 11 DETERMINATION DATE. 12 (2) FOR PURPOSES OF THIS SUBSECTION, THE DETERMINATION 13 DATE SHALL BE: 14 (I) THE MEMBER'S BIRTHDAY, PROVIDED THAT AS OF SUCH 15 DATE THE MEMBER QUALIFIES FOR A MAXIMUM SINGLE LIFE 16 ANNUITY UNDER THIS SUBSECTION; OR 17 (II) IF THE MEMBER'S MAXIMUM SINGLE LIFE ANNUITY IS 18 BEING DETERMINED AS OF THE MEMBER'S EFFECTIVE DATE OF 19 RETIREMENT, THEN THE DETERMINATION DATE SHALL BE THE 20 MEMBER'S EFFECTIVE DATE OF RETIREMENT. 21 (3) IN THE EVENT AN ACTIVE MEMBER, AN INACTIVE MEMBER ON 22 LEAVE WITHOUT PAY OR A MULTIPLE SERVICE MEMBER WHO IS A 23 SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE PUBLIC SCHOOL 24 EMPLOYEES' RETIREMENT SYSTEM HAS ATTAINED AGE 70 BEFORE THE 25 EFFECTIVE DATE OF THIS SUBSECTION, OR ENTERS STATE SERVICE OR 26 SCHOOL SERVICE, AS THE CASE MAY BE, AFTER ATTAINING AGE 70, 27 THEN SECTION 5305.1 AND SUBSECTIONS (A) AND (A.1) SHALL BE 28 EFFECTIVE PROSPECTIVELY WITH RESPECT TO SUCH MEMBER AT THE 29 MEMBER'S NEXT BIRTHDAY AFTER THE EFFECTIVE DATE OF THIS 30 SUBSECTION, ENTRY INTO STATE SERVICE, OR SCHOOL SERVICE. 20010H0026B1905 - 102 -
1 NOTHING IN THIS SUBSECTION SHALL BE CONSTRUED TO PROVIDE AN 2 ACTUARIAL INCREASE FACTOR FOR ANY PERIOD OF SERVICE PRIOR TO THE 3 EFFECTIVE DATE OF THIS SUBSECTION. 4 * * * 5 (C) LIMITATION ON AMOUNT OF ANNUITY.--THE ANNUITY PAID TO A 6 MEMBER UNDER SUBSECTION (A) AND REDUCED IN ACCORDANCE WITH THE 7 OPTION ELECTED UNDER SECTION 5705 (RELATING TO MEMBER'S OPTIONS) 8 SHALL NOT EXCEED THE HIGHEST COMPENSATION RECEIVED DURING ANY 9 PERIOD OF TWELVE CONSECUTIVE MONTHS OF CREDITED SERVICE[: 10 PROVIDED, THAT THE PORTION OF ANY ANNUITY PAID TO A MEMBER ON 11 ACCOUNT OF CLASS D-3 SERVICE UNDER SUBSECTION (A)(1) AND REDUCED 12 IN ACCORDANCE WITH THE OPTION ELECTED UNDER SECTION 5705 SHALL 13 NOT EXCEED THE GREATER OF $12,000 OR HIS HIGHEST ANNUAL 14 COMPENSATION AS A MEMBER OF THE GENERAL ASSEMBLY]. NO LIMIT ON 15 THE TOTAL ANNUITY PAID TO A MEMBER WITH CLASS D-3 SERVICE SHALL 16 BE APPLIED IN THE CASE OF A MEMBER WHO SERVED AS A 17 CONSTITUTIONAL OFFICER OF THE GENERAL ASSEMBLY [PRIOR TO JANUARY 18 1, 1973]. 19 (D) LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC SECTION 20 415.--NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE 21 CONTRARY, INCLUDING, BUT NOT LIMITED TO, SUBSECTION (C), NO 22 BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH BENEFIT EXCEEDS 23 ANY LIMITATIONS UNDER IRC § 415(B) IN EFFECT WITH RESPECT TO 24 GOVERNMENTAL PLANS AS SUCH TERM IS DEFINED IN IRC § 414(D) ON 25 THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE. 26 § 5704. DISABILITY ANNUITIES. 27 * * * 28 (B) BENEFIT ATTRIBUTABLE TO SOCIAL SECURITY INTEGRATION 29 CREDIT.--IF THE MEMBER HAS BEEN FOUND TO BE ELIGIBLE FOR A 30 DISABILITY ANNUITY AND HAS SOCIAL SECURITY INTEGRATION CREDITS 20010H0026B1905 - 103 -
1 AS PROVIDED IN SECTION 5305 (RELATING TO SOCIAL SECURITY 2 INTEGRATION CREDITS), HE MAY ELECT TO WITHDRAW HIS SOCIAL 3 SECURITY INTEGRATION ACCUMULATED DEDUCTIONS OR IF HE HAS [TEN] 4 FIVE OR MORE ELIGIBILITY POINTS TO HIS CREDIT AND DOES NOT 5 WITHDRAW HIS SOCIAL SECURITY INTEGRATION ACCUMULATED DEDUCTIONS 6 HE MAY EXECUTE AN APPLICATION TO BE FILED WITH THE BOARD TO 7 RECEIVE, IN ADDITION TO HIS DISABILITY ANNUITY, AN ANNUITY 8 CALCULATED IN ACCORDANCE WITH SECTION 5702(A)(2). 9 * * * 10 (F) SUPPLEMENT FOR SERVICE CONNECTED DISABILITY.--IF A 11 MEMBER HAS BEEN FOUND TO BE ELIGIBLE FOR A DISABILITY ANNUITY 12 AND IF THE DISABILITY HAS BEEN FOUND TO BE A SERVICE CONNECTED 13 DISABILITY, SUCH MEMBER SHALL RECEIVE A SUPPLEMENT EQUAL TO 70% 14 OF HIS FINAL AVERAGE SALARY LESS THE SUM OF THE ANNUITY AS 15 DETERMINED UNDER SUBSECTION (A) AND ANY PAYMENTS PAID OR PAYABLE 16 ON ACCOUNT OF SUCH DISABILITY UNDER THE ACT OF JUNE 2, 1915 17 (P.L.736, NO.338), KNOWN AS ["THE PENNSYLVANIA WORKMEN'S 18 COMPENSATION ACT"] THE WORKERS' COMPENSATION ACT, THE ACT OF 19 JUNE 21, 1939 (P.L.566, NO.284), KNOWN AS ["]THE PENNSYLVANIA 20 OCCUPATIONAL DISEASE ACT["] AND THE [FEDERAL] SOCIAL SECURITY 21 ACT[, 42 U.S.C.A. § 301 ET SEQ.] (49 STAT. 620, 42 U.S.C. § 301 22 ET SEQ.). SUCH SUPPLEMENT SHALL CONTINUE AS LONG AS HE IS 23 DETERMINED TO BE DISABLED ON ACCOUNT OF HIS SERVICE CONNECTED 24 DISABILITY IN ACCORDANCE WITH ["THE PENNSYLVANIA WORKMEN'S] THE 25 WORKERS' COMPENSATION ACT["], OR ["]THE PENNSYLVANIA 26 OCCUPATIONAL DISEASE ACT["]. 27 (G) LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC § 415.-- 28 NOTWITHSTANDING ANY PROVISIONS OF THIS PART TO THE CONTRARY, NO 29 BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH BENEFIT EXCEEDS 30 ANY LIMITATION UNDER IRC § 415(B) AS IN EFFECT WITH RESPECT TO 20010H0026B1905 - 104 -
1 GOVERNMENTAL PLANS, AS SUCH TERM IS DEFINED IN IRC § 414(D), ON 2 THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE. 3 SECTION 17. SECTION 5705(A) OF TITLE 71 IS AMENDED TO READ: 4 § 5705. MEMBER'S OPTIONS. 5 (A) GENERAL RULE.--ANY SPECIAL VESTEE WHO HAS ATTAINED 6 SUPERANNUATION AGE, ANY VESTEE HAVING [TEN] FIVE OR MORE 7 ELIGIBILITY POINTS, ANY MEMBER WITH CLASS G, CLASS H, CLASS I, 8 CLASS J, CLASS K, CLASS L, CLASS M OR CLASS N SERVICE HAVING 9 [EIGHT] FIVE OR MORE ELIGIBILITY POINTS OR ANY OTHER ELIGIBLE 10 MEMBER UPON TERMINATION OF STATE SERVICE WHO HAS NOT WITHDRAWN 11 HIS TOTAL ACCUMULATED DEDUCTIONS AS PROVIDED IN SECTION 5701 12 (RELATING TO RETURN OF TOTAL ACCUMULATED DEDUCTIONS) MAY APPLY 13 FOR AND ELECT TO RECEIVE EITHER A MAXIMUM SINGLE LIFE ANNUITY, 14 AS CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5702 15 (RELATING TO MAXIMUM SINGLE LIFE ANNUITY), OR A REDUCED ANNUITY 16 CERTIFIED BY THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE 17 MAXIMUM SINGLE LIFE ANNUITY AND IN ACCORDANCE WITH ONE OF THE 18 FOLLOWING OPTIONS; EXCEPT THAT NO MEMBER SHALL ELECT AN ANNUITY 19 PAYABLE TO ONE OR MORE SURVIVOR ANNUITANTS OTHER THAN HIS SPOUSE 20 OR ALTERNATE PAYEE OF SUCH A MAGNITUDE THAT THE PRESENT VALUE OF 21 THE ANNUITY PAYABLE TO HIM FOR LIFE PLUS ANY LUMP SUM PAYMENT HE 22 MAY HAVE ELECTED TO RECEIVE IS LESS THAN 50% OF THE PRESENT 23 VALUE OF HIS MAXIMUM SINGLE LIFE ANNUITY: 24 (1) OPTION 1.--A LIFE ANNUITY TO THE MEMBER WITH A 25 GUARANTEED TOTAL PAYMENT EQUAL TO THE PRESENT VALUE OF THE 26 MAXIMUM SINGLE LIFE ANNUITY ON THE EFFECTIVE DATE OF 27 RETIREMENT WITH THE PROVISION THAT, IF, AT HIS DEATH, HE HAS 28 RECEIVED LESS THAN SUCH PRESENT VALUE, THE UNPAID BALANCE 29 SHALL BE PAYABLE TO HIS BENEFICIARY. 30 (2) OPTION 2.--A JOINT AND SURVIVOR ANNUITY PAYABLE 20010H0026B1905 - 105 -
1 DURING THE LIFETIME OF THE MEMBER WITH THE FULL AMOUNT OF 2 SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR ANNUITANT, IF 3 LIVING AT HIS DEATH. 4 (3) OPTION 3.--A JOINT AND FIFTY PERCENT (50%) SURVIVOR 5 ANNUITY PAYABLE DURING THE LIFETIME OF THE MEMBER WITH ONE- 6 HALF OF SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR 7 ANNUITANT, IF LIVING AT HIS DEATH. 8 (4) OPTION 4.--SOME OTHER BENEFIT WHICH SHALL BE 9 CERTIFIED BY THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE 10 MAXIMUM SINGLE LIFE ANNUITY, SUBJECT TO THE FOLLOWING 11 RESTRICTIONS: 12 (I) ANY ANNUITY SHALL BE PAYABLE WITHOUT REDUCTION 13 DURING THE LIFETIME OF THE MEMBER; 14 (II) THE SUM OF ALL ANNUITIES PAYABLE TO THE 15 DESIGNATED SURVIVOR ANNUITANTS SHALL NOT BE GREATER THAN 16 ONE AND ONE-HALF TIMES THE ANNUITY PAYABLE TO THE MEMBER; 17 AND 18 (III) A PORTION OF THE BENEFIT MAY BE PAYABLE AS A 19 LUMP SUM, EXCEPT THAT SUCH LUMP SUM PAYMENT SHALL NOT 20 EXCEED AN AMOUNT EQUAL TO THE TOTAL ACCUMULATED 21 DEDUCTIONS STANDING TO THE CREDIT OF THE MEMBER. THE 22 BALANCE OF THE PRESENT VALUE OF THE MAXIMUM SINGLE LIFE 23 ANNUITY ADJUSTED IN ACCORDANCE WITH SECTION 5702(B) SHALL 24 BE PAID IN THE FORM OF AN ANNUITY WITH A GUARANTEED TOTAL 25 PAYMENT, A SINGLE LIFE ANNUITY, OR A JOINT AND SURVIVOR 26 ANNUITY OR ANY COMBINATION THEREOF BUT SUBJECT TO THE 27 RESTRICTIONS OF SUBPARAGRAPHS (I) AND (II) UNDER THIS 28 OPTION. 29 * * * 30 SECTION 18. SECTION 5706(A), (A.1) AND (C) OF TITLE 71 ARE 20010H0026B1905 - 106 -
1 AMENDED AND THE SECTION IS AMENDED BY A ADDING A SUBSECTION TO 2 READ: 3 § 5706. TERMINATION OF ANNUITIES. 4 (A) GENERAL RULE.--IF THE ANNUITANT RETURNS TO STATE SERVICE 5 OR ENTERS OR HAS ENTERED SCHOOL SERVICE AND ELECTS MULTIPLE 6 SERVICE MEMBERSHIP, ANY ANNUITY PAYABLE TO HIM UNDER THIS PART 7 SHALL CEASE EFFECTIVE UPON THE DATE OF HIS RETURN TO STATE 8 SERVICE OR ENTERING SCHOOL SERVICE AND IN THE CASE OF AN ANNUITY 9 OTHER THAN A DISABILITY ANNUITY THE PRESENT VALUE OF SUCH 10 ANNUITY, ADJUSTED FOR FULL COVERAGE IN THE CASE OF A JOINT 11 COVERAGE MEMBER WHO MAKES THE APPROPRIATE BACK CONTRIBUTIONS FOR 12 FULL COVERAGE, SHALL BE FROZEN AS OF THE DATE SUCH ANNUITY 13 CEASES. AN ANNUITANT WHO IS CREDITED WITH AN ADDITIONAL 10% OF 14 CLASS A AND CLASS C SERVICE AS PROVIDED IN SECTION 5302(C) 15 (RELATING TO CREDITED STATE SERVICE) AND WHO RETURNS TO STATE 16 SERVICE SHALL FORFEIT SUCH CREDITED SERVICE AND SHALL HAVE HIS 17 FROZEN PRESENT VALUE ADJUSTED AS IF HIS 10% RETIREMENT INCENTIVE 18 HAD NOT BEEN APPLIED TO HIS ACCOUNT. IN THE EVENT THAT THE COST- 19 OF-LIVING INCREASE ENACTED DECEMBER 18, 1979 OCCURRED DURING THE 20 PERIOD OF SUCH STATE OR SCHOOL EMPLOYMENT, THE FROZEN PRESENT 21 VALUE SHALL BE INCREASED, ON OR AFTER THE MEMBER ATTAINS 22 SUPERANNUATION AGE, BY THE PERCENT APPLICABLE HAD HE NOT 23 RETURNED TO SERVICE. THIS SUBSECTION SHALL NOT APPLY IN THE CASE 24 OF ANY ANNUITANT WHO MAY RENDER SERVICES TO THE COMMONWEALTH IN 25 THE CAPACITY OF AN INDEPENDENT CONTRACTOR OR AS A MEMBER OF AN 26 INDEPENDENT BOARD OR COMMISSION OR AS A MEMBER OF A DEPARTMENTAL 27 ADMINISTRATIVE OR ADVISORY BOARD OR COMMISSION WHEN SUCH MEMBERS 28 OF INDEPENDENT OR DEPARTMENTAL BOARDS OR COMMISSIONS ARE 29 COMPENSATED ON A PER DIEM BASIS FOR NOT MORE THAN 150 DAYS PER 30 CALENDAR YEAR[.] OR AS A MEMBER OF AN INDEPENDENT BOARD OR 20010H0026B1905 - 107 -
1 COMMISSION REQUIRING APPOINTMENT BY THE GOVERNOR, WITH ADVICE 2 AND CONSENT OF THE SENATE, WHERE THE ANNUAL SALARY PAYABLE TO 3 THE MEMBER DOES NOT EXCEED $35,000 AND WHERE THE MEMBER HAS BEEN 4 AN ANNUITANT FOR AT LEAST SIX MONTHS IMMEDIATELY PRECEDING THE 5 APPOINTMENT. SUCH SERVICE SHALL NOT BE SUBJECT TO MEMBER 6 CONTRIBUTIONS OR BE ELIGIBLE FOR QUALIFICATION AS CREDITABLE 7 STATE SERVICE. 8 (A.1) RETURN TO STATE SERVICE DURING EMERGENCY.--WHEN, IN 9 THE JUDGMENT OF THE EMPLOYER, AN EMERGENCY CREATES AN INCREASE 10 IN THE WORK LOAD SUCH THAT THERE IS SERIOUS IMPAIRMENT OF 11 SERVICE TO THE PUBLIC, AN ANNUITANT MAY BE RETURNED TO STATE 12 SERVICE FOR A PERIOD NOT TO EXCEED 95 DAYS IN ANY [FISCAL] 13 CALENDAR YEAR WITHOUT LOSS OF HIS ANNUITY. IN COMPUTING THE 14 NUMBER OF DAYS AN ANNUITANT HAS RETURNED TO STATE SERVICE, ANY 15 AMOUNT OF TIME LESS THAN ONE-HALF OF A DAY SHALL BE COUNTED AS 16 ONE-HALF OF A DAY. FOR AGENCIES, BOARDS AND COMMISSIONS UNDER 17 THE GOVERNOR'S JURISDICTION, THE APPROVAL OF THE GOVERNOR THAT 18 AN EMERGENCY EXISTS SHALL BE REQUIRED BEFORE AN ANNUITANT MAY BE 19 RETURNED TO STATE SERVICE. 20 (A.2) RETURN OF BENEFITS.--IN THE EVENT AN ANNUITANT WHOSE 21 ANNUITY CEASES PURSUANT TO THIS SECTION RECEIVES ANY ANNUITY 22 PAYMENT, INCLUDING A LUMP SUM PAYMENT PURSUANT TO SECTION 5705 23 (RELATING TO MEMBER'S OPTIONS) ON OR AFTER THE DATE OF HIS 24 RETURN TO STATE SERVICE OR ENTERING SCHOOL SERVICE, THE 25 ANNUITANT SHALL RETURN TO THE BOARD THE AMOUNT SO RECEIVED PLUS 26 STATUTORY INTEREST. THE AMOUNT PAYABLE SHALL BE CERTIFIED IN 27 EACH CASE BY THE BOARD IN ACCORDANCE WITH METHODS APPROVED BY 28 THE ACTUARY AND SHALL BE PAID IN A LUMP SUM WITHIN 30 DAYS OR IN 29 THE CASE OF AN ACTIVE MEMBER OR SCHOOL EMPLOYEE WHO IS AN ACTIVE 30 MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM MAY BE 20010H0026B1905 - 108 -
1 AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN 2 AMOUNTS AGREED UPON BY THE MEMBER AND THE BOARD. IN THE CASE OF 3 A SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL 4 EMPLOYEES' RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS 5 SHALL BE REMITTED TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT 6 BOARD, WHICH SHALL CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS 7 PAID. 8 * * * 9 (C) ELIMINATION OF THE EFFECT OF FROZEN PRESENT VALUE.-- 10 (1) AN ANNUITANT WHO RETURNS TO STATE SERVICE AND EARNS 11 THREE ELIGIBILITY POINTS BY PERFORMING CREDITED STATE SERVICE 12 FOLLOWING THE MOST RECENT PERIOD OF RECEIPT OF AN ANNUITY 13 UNDER THIS PART, OR AN ANNUITANT WHO ENTERS SCHOOL SERVICE 14 AND: 15 (I) IS A MULTIPLE SERVICE MEMBER; OR 16 (II) WHO ELECTS MULTIPLE SERVICE MEMBERSHIP, AND 17 EARNS THREE ELIGIBILITY POINTS BY PERFORMING CREDITED STATE 18 SERVICE OR CREDITED SCHOOL SERVICE FOLLOWING THE MOST RECENT 19 PERIOD OF RECEIPT OF AN ANNUITY UNDER THIS PART, AND WHO HAD 20 THE PRESENT VALUE OF HIS ANNUITY FROZEN IN ACCORDANCE WITH 21 SUBSECTION (A), SHALL QUALIFY TO HAVE THE EFFECT OF THE 22 FROZEN PRESENT VALUE RESULTING FROM ALL PREVIOUS PERIODS OF 23 RETIREMENT ELIMINATED, PROVIDED THAT ALL PAYMENTS UNDER 24 OPTION 4 AND ANNUITY PAYMENTS PAYABLE DURING PREVIOUS PERIODS 25 OF RETIREMENT PLUS INTEREST AS SET FORTH IN PARAGRAPH (3) 26 SHALL BE RETURNED TO THE FUND IN THE FORM OF AN ACTUARIAL 27 ADJUSTMENT TO HIS SUBSEQUENT BENEFITS OR IN SUCH FORM AS THE 28 BOARD MAY OTHERWISE DIRECT. 29 (2) UPON SUBSEQUENT DISCONTINUANCE OF SERVICE AND THE 30 FILING OF AN APPLICATION FOR AN ANNUITY, A FORMER ANNUITANT 20010H0026B1905 - 109 -
1 WHO QUALIFIES TO HAVE THE EFFECT OF A FROZEN PRESENT VALUE 2 ELIMINATED UNDER THIS SUBSECTION SHALL BE ENTITLED TO RECEIVE 3 THE HIGHER OF EITHER: 4 (I) AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION) 5 CALCULATED AS IF THE FREEZING OF THE FORMER ANNUITANT'S 6 ACCOUNT PURSUANT TO SUBSECTION (A) HAD NOT OCCURRED, 7 ADJUSTED BY CREDITING CLASS A STATE SERVICE AS CLASS AA 8 SERVICE AS PROVIDED FOR IN SECTION 5306(A.1) (RELATING TO 9 CLASSES OF SERVICE) AND FURTHER ADJUSTED ACCORDING TO 10 PARAGRAPH (3), PROVIDED THAT A FORMER ANNUITANT OF THE 11 SYSTEM OR A FORMER ANNUITANT OF THE PUBLIC SCHOOL 12 EMPLOYEES' RETIREMENT SYSTEM WHO RETIRED UNDER A 13 PROVISION OF LAW GRANTING ADDITIONAL SERVICE CREDIT IF 14 TERMINATION OF STATE OR SCHOOL SERVICE OR RETIREMENT 15 OCCURRED DURING A SPECIFIC PERIOD OF TIME SHALL NOT BE 16 PERMITTED TO RETAIN THE ADDITIONAL SERVICE CREDIT UNDER 17 THE PRIOR LAW WHEN THE ANNUITY IS COMPUTED FOR HIS MOST 18 RECENT RETIREMENT; OR 19 (II) AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION) 20 CALCULATED AS IF THE FORMER ANNUITANT DID NOT QUALIFY TO 21 HAVE THE EFFECT OF THE FROZEN PRESENT VALUE ELIMINATED, 22 UNLESS THE FORMER ANNUITANT NOTIFIES THE BOARD IN WRITING BY 23 THE LATER OF THE DATE THE APPLICATION FOR ANNUITY IS FILED OR 24 THE EFFECTIVE DATE OF RETIREMENT THAT THE FORMER ANNUITANT 25 WISHES TO RECEIVE THE LOWER ANNUITY. 26 (3) IN ADDITION TO ANY OTHER ADJUSTMENT TO THE PRESENT 27 VALUE OF THE MAXIMUM SINGLE LIFE ANNUITY THAT A MEMBER MAY BE 28 ENTITLED TO RECEIVE THAT OCCURS AS A RESULT OF ANY OTHER 29 PROVISION OF LAW, THE PRESENT VALUE OF THE MAXIMUM SINGLE 30 LIFE ANNUITY SHALL BE REDUCED BY ALL AMOUNTS PAID OR PAYABLE 20010H0026B1905 - 110 -
1 TO HIM DURING ALL PREVIOUS PERIODS OF RETIREMENT PLUS 2 INTEREST ON THESE AMOUNTS UNTIL THE DATE OF SUBSEQUENT 3 RETIREMENT. THE INTEREST FOR EACH YEAR SHALL BE CALCULATED 4 BASED UPON THE ANNUAL INTEREST RATE ADOPTED FOR THAT FISCAL 5 YEAR BY THE BOARD FOR THE CALCULATION OF THE NORMAL 6 CONTRIBUTION RATE PURSUANT TO SECTION 5508(B) (RELATING TO 7 ACTUARIAL COST METHOD). 8 SECTION 18.1. SECTION 5707 OF TITLE 71 IS AMENDED BY ADDING 9 A SUBSECTION TO READ: 10 § 5707. DEATH BENEFITS. 11 * * * 12 (F) MEMBERS SUBJECT TO LIMITATIONS UNDER SECTION 5702(C).-- 13 SUBJECT TO THE LIMITATIONS CONTAINED IN SECTION 401(A)(9) OF THE 14 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 15 401(A)(9)) THE PRESENT VALUE OF ANY ANNUITY IN EXCESS OF THAT 16 PAYABLE UNDER SECTION 5702 (RELATING TO MAXIMUM SINGLE LIFE 17 ANNUITY) THAT IS NOT SUBJECT TO THE LIMITATIONS UNDER SECTION 18 415(B) OF THE INTERNAL REVENUE CODE OF 1986 SHALL BE PAID IN A 19 LUMP SUM TO THE BENEFICIARY DESIGNATED BY THE MEMBER AFTER THE 20 DEATH OF THE MEMBER. A BENEFICIARY RECEIVING A BENEFIT UNDER 21 THIS SUBSECTION SHALL NOT BE ABLE TO ELECT A PAYMENT METHOD 22 OTHERWISE ALLOWED UNDER SECTION 5709(B)(2) AND (3) (RELATING TO 23 PAYMENT OF BENEFITS). 24 SECTION 19. SECTIONS 5708.1(F), 5708.2(F), 5708.3(F), 25 5708.5(F), 5901(A) AND (B), 5902(L), 5903(A) AND 5904(B) OF 26 TITLE 71 ARE AMENDED TO READ: 27 § 5708.1. ADDITIONAL SUPPLEMENTAL ANNUITIES. 28 * * * 29 (F) FUNDING.--THE ACTUARY SHALL ANNUALLY CERTIFY THE AMOUNT 30 OF APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED TO FUND, OVER 20010H0026B1905 - 111 -
1 A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 2002, THE 2 ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS 3 SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S CERTIFICATION TO 4 THE SECRETARY OF THE BUDGET ON OR BEFORE NOVEMBER 1 OF EACH 5 YEAR. IF, IN ANY YEAR AFTER 1984, THE AMOUNT CERTIFIED IS 6 DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 9, 1929 7 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, AS 8 INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS SUBSECTION 9 OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE ADDITIONAL 10 SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION SHALL BE 11 SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND APPROVED AS 12 SUFFICIENT IS APPROPRIATED. 13 * * * 14 § 5708.2. FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES. 15 * * * 16 (F) FUNDING.--THE ACTUARY SHALL ANNUALLY ESTIMATE THE AMOUNT 17 OF COMMONWEALTH APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED 18 TO FUND, OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 19 2002, THE ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR 20 IN THIS SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S ESTIMATION 21 TO THE SECRETARY OF THE BUDGET ON OR BEFORE NOVEMBER 1 OF EACH 22 YEAR. IF, IN ANY YEAR AFTER 1988, THE AMOUNT ESTIMATED IS 23 DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 9, 1929 24 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, AS 25 INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS SUBSECTION 26 OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE ADDITIONAL 27 SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION SHALL BE 28 SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND APPROVED AS 29 SUFFICIENT IS APPROPRIATED. 30 * * * 20010H0026B1905 - 112 -
1 § 5708.3. SUPPLEMENTAL ANNUITIES COMMENCING 1994. 2 * * * 3 (F) FUNDING.--[NOTWITHSTANDING SECTION 5508(E) (RELATING TO 4 ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE 5 INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN 6 EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] 7 OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1995] 2002. 8 * * * 9 § 5708.5. SUPPLEMENTAL ANNUITIES COMMENCING 1998. 10 * * * 11 (F) FUNDING.--[NOTWITHSTANDING SECTION 5508(E) (RELATING TO 12 ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE 13 INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN 14 EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] 15 OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1998] 2002. 16 * * * 17 § 5901. THE STATE EMPLOYEES' RETIREMENT BOARD. 18 (A) STATUS AND MEMBERSHIP.--THE BOARD SHALL BE AN 19 INDEPENDENT ADMINISTRATIVE BOARD AND CONSIST OF 11 MEMBERS: THE 20 STATE TREASURER, EX OFFICIO, TWO SENATORS [OR FORMER SENATORS], 21 TWO MEMBERS [OR FORMER MEMBERS] OF THE HOUSE OF REPRESENTATIVES 22 AND SIX MEMBERS APPOINTED BY THE GOVERNOR, ONE OF WHOM SHALL BE 23 AN ANNUITANT OF THE SYSTEM, FOR TERMS OF FOUR YEARS, SUBJECT TO 24 CONFIRMATION BY THE SENATE. AT LEAST FIVE BOARD MEMBERS SHALL BE 25 ACTIVE MEMBERS OF THE SYSTEM, AND AT LEAST TWO SHALL HAVE TEN OR 26 MORE YEARS OF CREDITED STATE SERVICE. THE CHAIRMAN OF THE BOARD 27 SHALL BE DESIGNATED BY THE GOVERNOR FROM AMONG THE MEMBERS OF 28 THE BOARD. EACH MEMBER OF THE BOARD WHO IS A MEMBER OF THE 29 GENERAL ASSEMBLY MAY APPOINT A DULY AUTHORIZED DESIGNEE TO ACT 30 IN HIS STEAD. 20010H0026B1905 - 113 -
1 (B) APPOINTMENTS AND TERMS.--THE TWO MEMBERS ELECTED BY THE 2 BOARD AND SERVING ON THE EFFECTIVE DATE OF THIS TITLE SHALL 3 CONTINUE TO SERVE UNTIL THE EXPIRATION OF THEIR RESPECTIVE 4 TERMS. THE MEMBERS [OR FORMER MEMBERS] OF THE SENATE SHALL BE 5 APPOINTED BY THE PRESIDENT PRO TEMPORE OF THE SENATE AND SHALL 6 CONSIST OF A MAJORITY AND A MINORITY MEMBER [OR FORMER MEMBER]. 7 THE MEMBERS [OR FORMER MEMBERS] OF THE HOUSE OF REPRESENTATIVES 8 SHALL BE APPOINTED BY THE SPEAKER OF THE HOUSE OF 9 REPRESENTATIVES AND SHALL CONSIST OF A MAJORITY AND A MINORITY 10 MEMBER [OR FORMER MEMBER]. THE LEGISLATIVE MEMBERS SHALL SERVE 11 ON THE BOARD FOR THE DURATION OF [THE TERMS FOR WHICH THEY WERE 12 ELECTED AND FORMER LEGISLATIVE MEMBERS SHALL SERVE A TERM OF TWO 13 YEARS.] THEIR LEGISLATIVE TERMS AND SHALL CONTINUE TO SERVE 14 UNTIL 30 DAYS AFTER THE CONVENING OF THE NEXT REGULAR SESSION OF 15 THE GENERAL ASSEMBLY AFTER THE EXPIRATION OF THEIR RESPECTIVE 16 LEGISLATIVE TERMS, OR UNTIL A SUCCESSOR IS APPOINTED FOR THE NEW 17 TERM, WHICHEVER OCCURS FIRST. OF THE REMAINING FOUR APPOINTEES, 18 ONE SHALL BE APPOINTED FOR AN INITIAL TERM OF TWO YEARS, ONE FOR 19 AN INITIAL TERM OF THREE YEARS, AND TWO FOR AN INITIAL TERM OF 20 FOUR YEARS. A VACANCY OCCURRING DURING THE TERM OF AN APPOINTED 21 MEMBER SHALL BE FILLED FOR THE UNEXPIRED TERM BY THE APPOINTMENT 22 AND CONFIRMATION OF A SUCCESSOR IN THE SAME MANNER AS HIS 23 PREDECESSOR. 24 * * * 25 § 5902. ADMINISTRATIVE DUTIES OF THE BOARD. 26 * * * 27 (L) MEMBER CONTRIBUTIONS.--THE BOARD SHALL CAUSE ALL PICKUP 28 CONTRIBUTIONS MADE ON BEHALF OF A MEMBER TO BE CREDITED TO THE 29 ACCOUNT OF THE MEMBER AND CREDIT TO HIS ACCOUNT ANY OTHER 30 PAYMENT MADE BY SUCH MEMBER, INCLUDING, BUT NOT LIMITED TO, 20010H0026B1905 - 114 -
1 AMOUNTS COLLECTED BY THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT 2 SYSTEM FOR THE REINSTATEMENT OF PREVIOUS STATE SERVICE OR 3 CREDITABLE NONSTATE SERVICE, AND AMOUNTS PAID TO RETURN BENEFITS 4 PAID AFTER THE DATE OF RETURN TO STATE SERVICE OR ENTERING 5 SCHOOL SERVICE REPRESENTING LUMP SUM PAYMENTS MADE PURSUANT TO 6 SECTION 5705(A)(4)(III) (RELATING TO MEMBER'S OPTIONS) AND 7 MEMBER'S ANNUITY PAYMENTS, BUT NOT INCLUDING OTHER BENEFITS 8 RETURNED PURSUANT TO SECTION 5706(A.2) (RELATING TO TERMINATION 9 OF ANNUITIES) AND SHALL PAY ALL SUCH AMOUNTS INTO THE FUND. 10 * * * 11 § 5903. DUTIES OF THE BOARD TO ADVISE AND REPORT TO HEADS OF 12 DEPARTMENTS AND MEMBERS. 13 (A) MANUAL OF REGULATIONS.--THE BOARD SHALL, WITH THE ADVICE 14 OF THE ATTORNEY GENERAL AND THE ACTUARY, PREPARE AND PROVIDE, 15 WITHIN 90 DAYS OF THE EFFECTIVE DATE OF THIS PART, A MANUAL 16 INCORPORATING RULES AND REGULATIONS CONSISTENT WITH THE 17 PROVISIONS OF THIS PART TO THE HEADS OF DEPARTMENTS WHO SHALL 18 MAKE THE INFORMATION CONTAINED THEREIN AVAILABLE TO THE GENERAL 19 MEMBERSHIP. THE BOARD SHALL THEREAFTER ADVISE THE HEADS OF 20 DEPARTMENTS WITHIN 90 DAYS OF ANY CHANGES IN SUCH RULES AND 21 REGULATIONS DUE TO CHANGES IN THE LAW OR DUE TO CHANGES IN 22 ADMINISTRATIVE POLICIES. AS SOON AS PRACTICABLE AFTER THE 23 COMMISSIONER'S ANNOUNCEMENT WITH RESPECT THERETO, THE BOARD 24 SHALL ALSO ADVISE THE HEADS OF DEPARTMENTS AS TO ANY COST-OF- 25 LIVING ADJUSTMENT FOR THE SUCCEEDING CALENDAR YEAR IN THE AMOUNT 26 OF THE LIMITATION UNDER IRC § 401(A)(17)[.] AND THE DOLLAR 27 AMOUNTS OF THE LIMITATIONS UNDER IRC § 415(B). AS SOON AS 28 PRACTICABLE AFTER JANUARY 1 OF EACH YEAR, THE BOARD SHALL ALSO 29 ADVISE THE HEADS OF DEPARTMENTS OF THE EMPLOYEES FOR WHOM, 30 PURSUANT TO SECTION 5502.1 (RELATING TO WAIVER OF REGULAR MEMBER 20010H0026B1905 - 115 -
1 CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION MEMBER 2 CONTRIBUTIONS), PICKUP CONTRIBUTIONS ARE NOT TO BE MADE. 3 * * * 4 § 5904. DUTIES OF THE BOARD TO REPORT TO THE PUBLIC SCHOOL 5 EMPLOYEES' RETIREMENT BOARD. 6 * * * 7 (B) MULTIPLE SERVICE MEMBERSHIP OF SCHOOL EMPLOYEES.--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 RECEIVE CREDIT FOR MULTIPLE SERVICE, THE 12 BOARD SHALL CERTIFY TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT 13 BOARD AND CONCURRENTLY TO THE MEMBER: 14 (1) THE TOTAL CREDITED SERVICE IN THE SYSTEM AND THE 15 NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR OF SERVICE 16 CREDITED IN EACH CLASS OF SERVICE; 17 (2) THE ANNUAL COMPENSATION RECEIVED EACH CALENDAR YEAR 18 BY THE MEMBER FOR CREDITED STATE SERVICE; [AND] 19 (3) THE SOCIAL SECURITY INTEGRATION CREDITED SERVICE TO 20 WHICH THE MEMBER IS ENTITLED AND THE AVERAGE NONCOVERED 21 SALARY UPON WHICH THE SINGLE LIFE ANNUITY ATTRIBUTABLE TO 22 SUCH SERVICE WILL BE COMPUTED[.]; AND 23 (4) THE AMOUNT OF THE DEDUCTIONS AND THE PERIOD OVER 24 WHICH THEY ARE TO BE MADE, IF THE MEMBER HAS ELECTED PAYROLL 25 DEDUCTIONS PURSUANT TO SECTION 5504 (RELATING TO MEMBER 26 CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR PREVIOUS STATE 27 SERVICE OR TO BECOME A FULL COVERAGE MEMBER) OR 5505 28 (RELATING TO CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR 29 CREDITABLE NONSTATE SERVICE). 30 * * * 20010H0026B1905 - 116 -
1 SECTION 20. SECTION 5905(B) OF TITLE 71 IS AMENDED AND THE 2 SECTION IS AMENDED BY ADDING A SUBSECTION TO READ: 3 § 5905. DUTIES OF THE BOARD REGARDING APPLICATIONS AND 4 ELECTIONS OF MEMBERS. 5 * * * 6 (B) SCHOOL EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON 7 RECEIPT OF NOTIFICATION FROM THE PUBLIC SCHOOL EMPLOYEES' 8 RETIREMENT BOARD THAT A FORMER STATE EMPLOYEE HAS BECOME AN 9 ACTIVE MEMBER IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM 10 AND HAS ELECTED TO BECOME A MEMBER WITH MULTIPLE SERVICE STATUS 11 THE BOARD SHALL: 12 (1) IN CASE OF A MEMBER RECEIVING AN ANNUITY FROM THE 13 SYSTEM[, DISCONTINUE]: 14 (I) DISCONTINUE PAYMENTS, TRANSFER THE PRESENT 15 VALUE[, AT THAT TIME,] OF THE MEMBER'S ANNUITY AT THE 16 TIME OF ENTERING SCHOOL SERVICE, PLUS THE AMOUNT 17 WITHDRAWN IN A LUMP SUM PAYMENT, ON OR AFTER THE DATE OF 18 ENTERING SCHOOL SERVICE, PURSUANT TO SECTION 5705 19 (RELATING TO MEMBER'S OPTIONS), WITH STATUTORY INTEREST 20 TO DATE OF TRANSFER, MINUS THE AMOUNT TO BE RETURNED TO 21 THE BOARD ON ACCOUNT OF RETURN TO SERVICE, THAT THE BOARD 22 HAS DETERMINED IS TO BE CREDITED IN THE MEMBERS' SAVINGS 23 ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE MEMBERS' 24 SAVINGS ACCOUNT AND RESUME CREDITING OF STATUTORY 25 INTEREST ON THE AMOUNT RESTORED TO HIS CREDIT [AND 26 TRANSFER]; 27 (II) TRANSFER THE BALANCE OF THE PRESENT VALUE OF 28 THE TOTAL ANNUITY, MINUS THE AMOUNT TO BE RETURNED TO THE 29 BOARD ON ACCOUNT OF RETURN TO SERVICE THAT THE BOARD HAS 30 DETERMINED IS TO BE CREDITED IN THE STATE ACCUMULATION 20010H0026B1905 - 117 -
1 ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE STATE 2 ACCUMULATION ACCOUNT; [OR] AND 3 (III) CERTIFY TO THE MEMBER THE AMOUNT OF LUMP SUM 4 AND ANNUITY PAYMENTS WITH STATUTORY INTEREST THE MEMBER 5 IS TO RETURN TO THE BOARD, AND OF THOSE AMOUNTS, WHICH 6 AMOUNT SHALL BE CREDITED TO THE MEMBERS' SAVINGS ACCOUNT 7 AND CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS ARE 8 RETURNED AND WHICH AMOUNT SHALL BE CREDITED TO THE STATE 9 ACCUMULATION ACCOUNT; OR 10 (2) IN CASE OF A MEMBER WHO IS NOT RECEIVING AN ANNUITY 11 AND HAS NOT WITHDRAWN HIS TOTAL ACCUMULATED DEDUCTIONS, 12 CONTINUE OR RESUME THE CREDITING OF STATUTORY INTEREST ON HIS 13 TOTAL ACCUMULATED DEDUCTIONS DURING THE PERIOD HIS TOTAL 14 ACCUMULATED DEDUCTIONS REMAIN IN THE FUND; OR 15 (3) IN CASE OF A FORMER STATE EMPLOYEE WHO IS NOT 16 RECEIVING AN ANNUITY FROM THE SYSTEM AND HIS TOTAL 17 ACCUMULATED DEDUCTIONS WERE WITHDRAWN, CERTIFY TO THE FORMER 18 STATE EMPLOYEE THE ACCUMULATED DEDUCTIONS AS THEY WOULD HAVE 19 BEEN AT THE TIME OF HIS SEPARATION HAD HE BEEN A FULL 20 COVERAGE MEMBER TOGETHER WITH STATUTORY INTEREST FOR ALL 21 PERIODS OF SUBSEQUENT STATE AND SCHOOL SERVICE TO THE DATE OF 22 REPAYMENT. SUCH AMOUNT SHALL BE RESTORED BY HIM AND SHALL BE 23 CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS ARE 24 RESTORED. 25 * * * 26 (J) STATE EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON 27 RECEIPT OF NOTIFICATION FROM THE PUBLIC SCHOOL EMPLOYEES' 28 RETIREMENT BOARD THAT A MEMBER WHO HAS ELECTED MULTIPLE SERVICE 29 MEMBERSHIP HAS ELECTED TO RESTORE SCHOOL SERVICE OR PURCHASE 30 CREDITABLE NONSCHOOL SERVICE IN THE PUBLIC SCHOOL EMPLOYEES' 20010H0026B1905 - 118 -
1 RETIREMENT SYSTEM OR IS OBLIGATED TO RETURN BENEFITS TO THE 2 PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD ON ACCOUNT OF ELECTING 3 MULTIPLE SERVICE MEMBERSHIP HAS ELECTED TO PAY ALL OR PART OF 4 THE AMOUNT DUE TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD 5 BY SALARY DEDUCTIONS, THE BOARD SHALL COLLECT FROM THE EMPLOYEE 6 THE AMOUNTS CERTIFIED BY THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT 7 BOARD AS DUE AND OWING BY THE MEMBER AND CERTIFY AND TRANSFER TO 8 THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD THE AMOUNTS SO 9 COLLECTED. 10 SECTION 21. SECTIONS 5906(C), (G) AND (H), 5931(H), (I) AND 11 (J), 5937 AND 5938 OF TITLE 71 ARE AMENDED TO READ: 12 § 5906. DUTIES OF HEADS OF DEPARTMENTS. 13 * * * 14 (C) MEMBER CONTRIBUTIONS.--THE HEAD OF DEPARTMENT SHALL 15 CAUSE THE REQUIRED PICKUP CONTRIBUTIONS FOR CURRENT SERVICE TO 16 BE MADE AND SHALL CAUSE TO BE DEDUCTED ANY OTHER REQUIRED MEMBER 17 CONTRIBUTIONS, INCLUDING, BUT NOT LIMITED TO, CONTRIBUTIONS OWED 18 BY AN ACTIVE MEMBER WITH MULTIPLE SERVICE MEMBERSHIP FOR SCHOOL 19 SERVICE AND CREDITABLE NONSCHOOL SERVICE IN THE PUBLIC SCHOOL 20 EMPLOYEES' RETIREMENT SYSTEM, AND AMOUNTS CERTIFIED BY THE 21 PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD AS DUE AND OWING ON 22 ACCOUNT OF TERMINATION OF ANNUITIES FROM EACH PAYROLL. THE HEAD 23 OF DEPARTMENT SHALL NOTIFY THE BOARD AT TIMES AND IN A MANNER 24 PRESCRIBED BY THE BOARD OF THE COMPENSATION OF ANY NONELIGIBLE 25 MEMBER TO WHOM THE LIMITATION UNDER IRC § 401(A)(17) EITHER 26 APPLIES OR IS EXPECTED TO APPLY AND SHALL CAUSE SUCH MEMBER'S 27 CONTRIBUTIONS DEDUCTED FROM PAYROLL TO CEASE AT THE LIMITATION 28 UNDER IRC § 401(A)(17) ON THE PAYROLL DATE IF AND WHEN SUCH 29 LIMIT SHALL BE REACHED. THE HEAD OF DEPARTMENT SHALL CERTIFY TO 30 THE STATE TREASURER THE AMOUNTS PICKED UP AND DEDUCTED AND SHALL 20010H0026B1905 - 119 -
1 SEND THE TOTAL AMOUNT PICKED UP AND DEDUCTED TOGETHER WITH A
2 DUPLICATE OF SUCH VOUCHER TO THE SECRETARY OF THE BOARD EVERY
3 PAY PERIOD. THE HEAD OF DEPARTMENT SHALL PAY PICKUP
4 CONTRIBUTIONS FROM THE SAME SOURCE OF FUNDS WHICH IS USED TO PAY
5 OTHER COMPENSATION TO THE EMPLOYEE. ON OR BEFORE JANUARY 31,
6 1997, AND ON OR BEFORE JANUARY 31 OF EACH YEAR THEREAFTER, THE
7 HEAD OF DEPARTMENT SHALL, AT THE TIME WHEN THE INCOME AND
8 WITHHOLDING INFORMATION REQUIRED BY LAW IS FURNISHED TO EACH
9 MEMBER, ALSO FURNISH THE AMOUNT OF PICKUP CONTRIBUTIONS MADE ON
10 HIS BEHALF AND NOTIFY THE BOARD, IF IT HAS NOT BEEN PREVIOUSLY
11 NOTIFIED, OF ANY NONELIGIBLE MEMBER WHOSE COMPENSATION IN THE
12 PRECEDING YEAR EXCEEDED THE ANNUAL COMPENSATION LIMIT UNDER IRC
13 § 401(A)(17). IF THE BOARD SHALL DETERMINE THAT THE MEMBER'S
14 SAVINGS ACCOUNT SHALL HAVE BEEN CREDITED WITH PICKUP
15 CONTRIBUTIONS FOR A NONELIGIBLE MEMBER IN THE PRECEDING YEAR
16 WHICH ARE ATTRIBUTABLE TO COMPENSATION IN EXCESS OF THE
17 LIMITATION UNDER IRC § 401(A)(17), OR WITH TOTAL MEMBER
18 CONTRIBUTIONS FOR SUCH MEMBER WHICH WOULD CAUSE SUCH MEMBER'S
19 CONTRIBUTIONS OR BENEFITS TO EXCEED ANY APPLICABLE LIMITATION
20 UNDER IRC § 401(A)(17) OR 415(B), THE BOARD SHALL AS SOON AS
21 PRACTICABLE REFUND TO THE MEMBER FROM HIS INDIVIDUAL MEMBER
22 ACCOUNT SUCH AMOUNT, TOGETHER WITH THE STATUTORY INTEREST
23 THEREON, AS WILL CAUSE THE MEMBER'S TOTAL MEMBER CONTRIBUTIONS
24 IN THE PRECEDING YEAR NOT TO EXCEED THE APPLICABLE LIMIT. THE
25 PAYMENT OF ANY SUCH REFUND TO THE MEMBER SHALL BE CHARGED TO THE
26 MEMBER'S SAVINGS ACCOUNT.
27 * * *
28 (G) FORMER SCHOOL EMPLOYEE CONTRIBUTORS.--THE HEAD OF
29 DEPARTMENT SHALL, UPON THE EMPLOYMENT OF A FORMER CONTRIBUTOR TO
30 THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO IS NOT AN
20010H0026B1905 - 120 -
1 ANNUITANT OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, 2 ADVISE SUCH EMPLOYEE OF HIS RIGHT TO ELECT WITHIN [30] 365 DAYS 3 OF ENTRY INTO THE SYSTEM TO BECOME A MULTIPLE SERVICE MEMBER, 4 AND IN THE CASE OF ANY SUCH EMPLOYEE WHO SO ELECTS AND HAS 5 WITHDRAWN HIS ACCUMULATED DEDUCTIONS, REQUIRE HIM TO REINSTATE 6 HIS CREDIT IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM. 7 THE HEAD OF THE DEPARTMENT SHALL ADVISE THE BOARD OF SUCH 8 ELECTION. 9 (H) FORMER SCHOOL EMPLOYEE ANNUITANTS.--THE HEAD OF 10 DEPARTMENT SHALL, UPON THE EMPLOYMENT OF AN ANNUITANT OF THE 11 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO APPLIES FOR 12 MEMBERSHIP IN THE SYSTEM, ADVISE SUCH EMPLOYEE THAT HE MAY ELECT 13 MULTIPLE SERVICE MEMBERSHIP WITHIN [30] 365 DAYS OF ENTRY INTO 14 THE SYSTEM AND IF HE SO ELECTS HIS PUBLIC SCHOOL EMPLOYEE'S 15 ANNUITY WILL BE DISCONTINUED EFFECTIVE UPON THE DATE OF HIS 16 RETURN TO STATE SERVICE AND, UPON TERMINATION OF STATE SERVICE 17 AND APPLICATION FOR AN ANNUITY, THE ANNUITY WILL BE ADJUSTED IN 18 ACCORDANCE WITH SECTION 5706 (RELATING TO TERMINATION OF 19 ANNUITIES). THE HEAD OF DEPARTMENT SHALL ADVISE THE BOARD OF 20 SUCH ELECTION. 21 * * * 22 § 5931. MANAGEMENT OF FUND AND ACCOUNTS. 23 * * * 24 (H) VENTURE CAPITAL[.--VENTURE CAPITAL INVESTMENTS SHALL BE 25 LIMITED TO NOT MORE THAN 2% OF THE BOOK VALUE OF THE TOTAL 26 ASSETS OF THE FUND AS DETERMINED FOR FINANCIAL STATEMENT 27 PURPOSES AS OF DECEMBER 31 NEXT PRECEDING THE DATE OF 28 INVESTMENT. AN INVESTMENT SHALL BE DEEMED A VENTURE CAPITAL 29 INVESTMENT IF IT RESULTS IN THE ACQUISITION OF EQUITY INTERESTS 30 OR A COMBINATION OF DEBT AND EQUITY INTERESTS IN A BUSINESS 20010H0026B1905 - 121 -
1 WHICH IS EXPECTED TO GROW SUBSTANTIALLY IN THE FUTURE AND IN 2 WHICH THE EXPECTED RETURN ON INVESTMENT IS TO COME PREDOMINANTLY 3 FROM AN INCREASE IN VALUE OF THE EQUITY INTERESTS AND ARE NOT 4 INTERESTS IN OR SECURED BY REAL ESTATE. A VENTURE CAPITAL 5 INVESTMENT MAY BE MADE ONLY IF, IN THE JUDGMENT OF THE BOARD, 6 THE INVESTMENT IS REASONABLY LIKELY TO ENHANCE THE GENERAL 7 WELFARE OF THIS COMMONWEALTH AND ITS CITIZENS AND MEETS THE 8 STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A). IN DETERMINING 9 WHETHER THE INVESTMENT MEETS THE STANDARD OF PRUDENCE, THE BOARD 10 MAY CONSIDER, TOGETHER WITH THE EXPECTED RETURN ON AND THE RISK 11 CHARACTERISTICS OF THE PARTICULAR INVESTMENT, THE ACTUAL AND 12 EXPECTED FUTURE RETURNS AND THE RISK CHARACTERISTICS OF THE 13 TOTAL VENTURE CAPITAL INVESTMENTS HELD BY THE BOARD AT THE TIME 14 AND THE DEGREE TO WHICH THE PROPOSED NEW INVESTMENT WOULD 15 PROMOTE FURTHER DIVERSIFICATION WITHIN THE VENTURE CAPITAL ASSET 16 CLASS.], PRIVATE PLACEMENT AND ALTERNATIVE INVESTMENTS.--THE 17 BOARD IN ITS PRUDENT DISCRETION MAY MAKE ANY VENTURE CAPITAL 18 INVESTMENT, PRIVATE PLACEMENT INVESTMENT OR OTHER ALTERNATIVE 19 INVESTMENT OF ANY KIND, STRUCTURE OR MANNER WHICH MEETS THE 20 STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A). 21 (I) VEHICLES FOR AUTHORIZED INVESTMENTS.--THE BOARD IN ITS 22 PRUDENT DISCRETION MAY MAKE ANY INVESTMENTS WHICH MEET THE 23 STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A) BY [BECOMING A 24 LIMITED PARTNER IN PARTNERSHIPS THAT WILL HOLD SUCH INVESTMENTS; 25 OR BY ACQUIRING SHARES OR UNITS OF PARTICIPATION OR OTHERWISE 26 PARTICIPATING BENEFICIALLY IN BANK COLLECTIVE TRUSTS OR IN THE 27 SEPARATE ACCOUNTS OF ANY INSURANCE COMPANY AUTHORIZED TO DO 28 BUSINESS IN THIS COMMONWEALTH; OR BY ACQUIRING STOCKS OR SHARES 29 OR UNITS OF PARTICIPATION OR OTHERWISE PARTICIPATING 30 BENEFICIALLY IN THE FUND OF ANY CORPORATION OR TRUST ORGANIZED 20010H0026B1905 - 122 -
1 OR CREATED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OR 2 OF ANY STATE, DISTRICT OR TERRITORY THEREOF, WHICH FUND IS 3 MAINTAINED FOR AND CONSISTS OF ASSETS OF EMPLOYEES' BENEFIT 4 TRUSTS, INCLUDING GOVERNMENTAL PLANS AS DEFINED IN IRC § 414(D) 5 OR WHICH MEET THE REQUIREMENTS FOR QUALIFICATION UNDER IRC § 6 401] ACQUIRING ANY TYPE OF INTEREST IN A BUSINESS ORGANIZATION 7 EXISTING UNDER THE LAWS OF ANY JURISDICTION, PROVIDED THAT, IN 8 ANY SUCH CASE, THE LIABILITY OF THE STATE EMPLOYEES' RETIREMENT 9 FUND SHALL BE LIMITED TO THE AMOUNT OF ITS INVESTMENT. 10 (J) LEGISLATIVE DECLARATION CONCERNING CERTAIN AUTHORIZED 11 INVESTMENTS.--THE GENERAL ASSEMBLY FINDS AND DECLARES THAT 12 AUTHORIZED INVESTMENTS OF THE FUND MADE BY OR ON BEHALF OF THE 13 BOARD UNDER THIS SECTION WHEREBY THE BOARD BECOMES A JOINT OWNER 14 OR STOCKHOLDER IN ANY COMPANY, CORPORATION [OR], ASSOCIATION OR 15 OTHER LAWFUL BUSINESS ORGANIZATION ARE OUTSIDE THE SCOPE OF THE 16 ORIGINAL INTENT OF AND THEREFORE DO NOT VIOLATE THE PROHIBITION 17 SET FORTH IN SECTION 8 OF ARTICLE VIII OF THE CONSTITUTION OF 18 PENNSYLVANIA. 19 § 5937. ENFORCEMENT OFFICERS' BENEFIT ACCOUNT. 20 (A) CREDITS AND CHARGES TO ACCOUNT.--THE ENFORCEMENT 21 OFFICERS' BENEFIT ACCOUNT SHALL BE THE LEDGER ACCOUNT TO WHICH 22 SHALL BE CREDITED MONEYS TRANSFERRED FROM THE ENFORCEMENT 23 OFFICERS' RETIREMENT ACCOUNT IN THE STATE STORES FUND ACCORDING 24 TO THE PROVISIONS OF THE [LIQUOR CODE,] ACT OF APRIL 12, 1951 25 (P.L.90, NO.21) KNOWN AS THE LIQUOR CODE, AND ANY ADDITIONAL 26 COMMONWEALTH OR OTHER EMPLOYER CONTRIBUTIONS PROVIDED FOR IN 27 SECTION 5507 (RELATING TO CONTRIBUTIONS BY THE COMMONWEALTH AND 28 OTHER EMPLOYERS) WHICH ARE CREDITABLE TO THE ENFORCEMENT 29 OFFICERS' BENEFIT ACCOUNT. THE ENFORCEMENT OFFICERS' BENEFIT 30 ACCOUNT SHALL BE CREDITED WITH THE REQUIRED INTEREST. IN 20010H0026B1905 - 123 -
1 ADDITION, UPON THE FILING OF AN APPLICATION FOR AN ANNUITY BY A 2 MEMBER WHO IS AN ENFORCEMENT OFFICER OF THE PENNSYLVANIA LIQUOR 3 CONTROL BOARD, THE TOTAL ACCUMULATED DEDUCTIONS STANDING TO THE 4 CREDIT OF THE MEMBER IN THE MEMBERS' SAVINGS ACCOUNT AND THE 5 NECESSARY RESERVES FROM THE STATE ACCUMULATION ACCOUNT SHALL BE 6 TRANSFERRED TO THE ENFORCEMENT OFFICERS' BENEFIT ACCOUNT. 7 THEREAFTER, THE TOTAL ANNUITY OF SUCH ANNUITANT SHALL BE CHARGED 8 TO THE ENFORCEMENT OFFICERS' BENEFIT ACCOUNT AND PAID FROM THE 9 FUND. 10 (B) TRANSFERS FROM ACCOUNT.--SHOULD THE SAID ANNUITANT BE 11 SUBSEQUENTLY RESTORED TO ACTIVE SERVICE, THE PRESENT VALUE OF 12 THE MEMBER'S ANNUITY AT THE TIME OF REENTRY INTO STATE SERVICE 13 SHALL BE TRANSFERRED FROM THE ENFORCEMENT OFFICERS' BENEFIT 14 ACCOUNT AND PLACED TO HIS INDIVIDUAL CREDIT IN THE MEMBERS' 15 SAVINGS ACCOUNT. IN ADDITION, THE ACTUARIAL RESERVE FOR HIS 16 ANNUITY CALCULATED AS IF HE HAD BEEN A MEMBER OF CLASS A IF THE 17 ANNUITANT DOES NOT HAVE ANY CLASS AA SERVICE CREDITED AND 18 CALCULATED AS IF HE HAD BEEN A MEMBER OF CLASS AA IF THE 19 ANNUITANT DOES HAVE CLASS AA SERVICE CREDITED LESS THE AMOUNT 20 TRANSFERRED TO THE MEMBERS' SAVINGS ACCOUNT SHALL BE TRANSFERRED 21 FROM THE ENFORCEMENT OFFICERS' BENEFIT ACCOUNT TO THE STATE 22 ACCUMULATION ACCOUNT. UPON SUBSEQUENT RETIREMENT OTHER THAN AS 23 AN ENFORCEMENT OFFICER THE ACTUARIAL RESERVE REMAINING IN THE 24 ENFORCEMENT OFFICERS' BENEFIT ACCOUNT SHALL BE TRANSFERRED TO 25 THE APPROPRIATE RESERVE ACCOUNT. 26 § 5938. SUPPLEMENTAL ANNUITY ACCOUNT. 27 THE SUPPLEMENTAL ANNUITY ACCOUNT SHALL BE THE LEDGER ACCOUNT 28 TO WHICH SHALL BE CREDITED ALL CONTRIBUTIONS FROM THE 29 COMMONWEALTH IN ACCORDANCE WITH [SECTIONS] SECTION 5507(B) 30 (RELATING TO CONTRIBUTIONS BY THE COMMONWEALTH AND OTHER 20010H0026B1905 - 124 -
1 EMPLOYERS)[, 5708.3(F) (RELATING TO FUNDING FOR SUPPLEMENTAL 2 ANNUITIES COMMENCING 1994) AND 5708.5(F) (RELATING TO FUNDING 3 FOR SUPPLEMENTAL ANNUITIES COMMENCING 1998)] FOR THE PAYMENT OF 4 THE SUPPLEMENTAL ANNUITIES PROVIDED IN SECTIONS 5708 (RELATING 5 TO SUPPLEMENTAL ANNUITIES), 5708.1 (RELATING TO ADDITIONAL 6 SUPPLEMENTAL ANNUITIES), 5708.2 (RELATING TO FURTHER ADDITIONAL 7 SUPPLEMENTAL ANNUITIES), 5708.3 (RELATING TO SUPPLEMENTAL 8 ANNUITIES COMMENCING 1994), 5708.4 (RELATING TO SPECIAL 9 SUPPLEMENTAL POSTRETIREMENT ADJUSTMENT) AND 5708.5 (RELATING TO 10 SUPPLEMENTAL ANNUITIES COMMENCING 1998). THE SUPPLEMENTAL 11 ANNUITY ACCOUNT SHALL BE CREDITED WITH VALUATION INTEREST. THE 12 RESERVES NECESSARY FOR THE PAYMENT OF SUCH SUPPLEMENTAL 13 ANNUITIES SHALL BE TRANSFERRED FROM THE SUPPLEMENTAL ANNUITY 14 ACCOUNT TO THE ANNUITY RESERVE ACCOUNT AS PROVIDED IN SECTION 15 5935 (RELATING TO ANNUITY RESERVE ACCOUNT). 16 SECTION 22. (A) SERVICE PERFORMED BY A MEMBER OF THE PUBLIC 17 SCHOOL EMPLOYEES' RETIREMENT SYSTEM PRIOR TO DECEMBER 31, 2001, 18 SHALL NOT BE INCLUDED WHEN CALCULATING THE 95 DAYS AN ANNUITANT 19 MAY RETURN TO SERVICE UNDER 24 PA.C.S. § 8346(B). 20 (B) SERVICE PERFORMED BY A MEMBER OF THE STATE EMPLOYEES' 21 RETIREMENT SYSTEM PRIOR TO JULY 1, 2001, SHALL NOT BE INCLUDED 22 WHEN CALCULATING THE 95 DAYS AN ANNUITANT MAY RETURN TO SERVICE 23 IN A CALENDAR YEAR WITHOUT LOSS OF ANNUITY PURSUANT TO 71 24 PA.C.S. § 5706. 25 SECTION 23. (A) A MEMBER WHOSE MOST RECENT PERIOD OF 26 EMPLOYMENT BEGAN BEFORE THE EFFECTIVE DATE OF THIS SECTION SHALL 27 NOT HAVE BENEFITS FROM THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT 28 SYSTEM REDUCED BY THE LIMITATIONS ON BENEFITS UNDER SECTION 415 29 OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 30 U.S.C. § 415), AS AMENDED, TO LESS THAN THE MEMBER OTHERWISE 20010H0026B1905 - 125 -
1 WOULD HAVE RECEIVED HAD THIS ACT NOT BEEN ENACTED. 2 (B) A MEMBER WHOSE MOST RECENT PERIOD OF EMPLOYMENT BEGAN 3 BEFORE THE EFFECTIVE DATE OF THIS SECTION SHALL NOT HAVE HIS OR 4 HER BENEFITS FROM THE STATE EMPLOYEES' RETIREMENT SYSTEM REDUCED 5 BY THE LIMITATIONS ON BENEFITS UNDER SECTION 415 OF THE INTERNAL 6 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 415), AS 7 AMENDED, TO LESS THAN HE OR SHE OTHERWISE WOULD HAVE RECEIVED 8 HAD THIS ACT NOT BEEN ENACTED. 9 SECTION 24. ANY AND ALL INVESTMENTS OF THE PUBLIC SCHOOL 10 EMPLOYEES' RETIREMENT BOARD AND THE STATE EMPLOYEES' RETIREMENT 11 BOARD, WHICH ON THE EFFECTIVE DATE OF THIS SECTION ARE OWNED OR 12 HELD THROUGH A VEHICLE AS DESCRIBED IN 24 PA.C.S § 8521(I) OR 71 13 PA.C.S § 5931(I), AS APPLICABLE, SHALL BE DEEMED TO HAVE BEEN 14 LAWFULLY MADE THROUGH SUCH VEHICLE AT INCEPTION. 15 SECTION 25. IF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD 16 DETERMINES THAT ITS AUTHORITY OVER HEALTH INSURANCE IS IMPAIRED 17 BECAUSE OF A JUDICIAL DECISION RELATING TO 24 PA.C.S. PART V, 18 WHICH HAS BECOME FINAL, THE BOARD SHALL TRANSMIT NOTICE OF ITS 19 DETERMINATION TO THE LEGISLATIVE REFERENCE BUREAU FOR 20 PUBLICATION IN THE PENNSYLVANIA BULLETIN. 21 SECTION 26. EXCEPT AS MAY BE OTHERWISE SPECIFICALLY 22 PROVIDED, REFERENCES IN THIS ACT TO PROVISIONS OF THE INTERNAL 23 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.), 24 INCLUDING FOR THIS PURPOSE ADMINISTRATIVE REGULATIONS 25 PROMULGATED THEREUNDER, ARE INTENDED TO INCLUDE SUCH LAWS AND 26 REGULATIONS IN EFFECT ON THE EFFECTIVE DATE OF THIS SECTION AND 27 AS THEY MAY HEREAFTER BE AMENDED OR SUPPLEMENTED OR SUPPLANTED 28 BY SUCCESSOR PROVISIONS. 29 SECTION 27. (A) NOTWITHSTANDING THE PROVISIONS OF 24 30 PA.C.S. § 8503(B), THE STATEMENT FOR EACH MEMBER PREPARED BY THE 20010H0026B1905 - 126 -
1 PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD FOR THE PERIODS ENDING 2 JUNE 30, 2001, AND JUNE 30, 2002, AND ANY OTHER STATEMENTS OR 3 ESTIMATES OF BENEFITS PREPARED BY THE BOARD PURSUANT TO THE 4 PUBLIC SCHOOL EMPLOYEES' RETIREMENT CODE FROM THE EFFECTIVE DATE 5 OF THIS SECTION TO JUNE 30, 2002, NEED NOT REFLECT PROVISIONS OF 6 THIS ACT. 7 (B) NOTWITHSTANDING THE PROVISIONS OF 71 PA.C.S. § 5903(B), 8 THE STATEMENT FOR EACH MEMBER PREPARED BY THE STATE EMPLOYEES' 9 RETIREMENT BOARD FOR THE PERIOD ENDING DECEMBER 31, 2001, AND 10 ANY OTHER STATEMENTS OR ESTIMATES OF BENEFITS PREPARED BY THE 11 BOARD PURSUANT TO THE STATE EMPLOYEES' RETIREMENT CODE FROM THE 12 EFFECTIVE DATE OF THIS SECTION TO JUNE 30, 2002, NEED NOT 13 REFLECT PROVISIONS OF THIS ACT. 14 SECTION 28. (A) NOTWITHSTANDING THE PROVISIONS OF 24 15 PA.C.S. PT. IV, THE OBLIGATION OF THE PUBLIC SCHOOL EMPLOYEES' 16 RETIREMENT BOARD TO MAKE PAYMENTS WITHIN SPECIFIED TIME PERIODS 17 OF THE RECEIPT OF APPLICATIONS FOR BENEFITS OR OTHER INFORMATION 18 SHALL NOT APPLY FROM THE EFFECTIVE DATE OF THIS SECTION TO JULY 19 2, 2002. 20 (B) NOTWITHSTANDING THE PROVISIONS OF 71 PA.C.S. PT. XXV, 21 THE OBLIGATION OF THE STATE EMPLOYEES' RETIREMENT BOARD TO MAKE 22 PAYMENTS WITHIN SPECIFIED TIME PERIODS OF THE RECEIPT OF 23 APPLICATIONS FOR BENEFITS OR OTHER INFORMATION SHALL NOT APPLY 24 FROM THE EFFECTIVE DATE OF THIS SECTION TO JUNE 30, 2002. 25 SECTION 29. NOTWITHSTANDING THE LIMITATION CONTAINED IN 24 26 PA.C.S. § 8507(C), ANY ACTIVE MEMBER OF THE PUBLIC SCHOOL 27 EMPLOYEES' RETIREMENT SYSTEM WHO WAS FORMERLY AN ACTIVE MEMBER 28 IN THE STATE EMPLOYEES' RETIREMENT SYSTEM AND WHOSE SERVICE 29 CREDIT IN THE STATE EMPLOYEES' RETIREMENT SYSTEM HAS NOT BEEN 30 CONVERTED TO SERVICE CREDITED IN ANOTHER PUBLIC PENSION PLAN OR 20010H0026B1905 - 127 -
1 RETIREMENT SYSTEM IN THIS COMMONWEALTH MAY ELECT TO BECOME A 2 MULTIPLE SERVICE MEMBER ON OR BEFORE DECEMBER 31, 2003. 3 SECTION 30. NOTWITHSTANDING THE LIMITATION CONTAINED IN 71 4 PA.C.S. § 5907(C), ANY ACTIVE MEMBER OF THE STATE EMPLOYEES' 5 RETIREMENT SYSTEM WHO WAS FORMERLY AN ACTIVE MEMBER OF THE 6 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND WHOSE SERVICE 7 CREDIT IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM HAS NOT 8 BEEN CONVERTED TO SERVICE CREDITED IN ANOTHER PUBLIC PENSION 9 PLAN OR RETIREMENT SYSTEM IN THIS COMMONWEALTH MAY ELECT TO 10 BECOME A MULTIPLE SERVICE MEMBER ON OR BEFORE DECEMBER 31, 2003. 11 SECTION 31. NOTWITHSTANDING ANY OTHER PROVISIONS OF LAW, THE 12 PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD SHALL, EFFECTIVE FOR 13 THE FISCAL YEAR BEGINNING JULY 1, 2001, RECERTIFY TO THE 14 SECRETARY OF THE BUDGET AND THE EMPLOYERS, WITHIN 15 DAYS OF THE 15 EFFECTIVE DATE OF THIS SECTION, THE CONTRIBUTIONS, RATES, 16 FACTORS AND AMOUNTS SET FORTH IN 24 PA.C.S. § 8502(K) TO REFLECT 17 THE IMPACT OF THE AMENDMENT OF 24 PA.C.S. § 8509(B). THE BOARD'S 18 RECERTIFICATION SHALL REFLECT ALL CHANGES IN THE CONTRIBUTIONS, 19 RATES AND AMOUNTS PREVIOUSLY CERTIFIED BY THE BOARD PRIOR TO THE 20 EFFECTIVE DATE OF THIS SECTION FOR THE FISCAL YEAR BEGINNING 21 JULY 1, 2001, REQUIRED TO COMPLY WITH 24 PA.C.S § 8328 CAUSED BY 22 THE AMENDMENT OF 24 PA.C.S. § 8509(B). THIS RECERTIFICATION 23 SHALL SUPERSEDE THE PRIOR CERTIFICATION FOR ALL PURPOSES. 24 SECTION 32. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE 25 LIABILITY FOR ANY ADDITIONAL BENEFITS ESTABLISHED BY THIS ACT 26 SHALL BE FUNDED IN EQUAL DOLLAR ANNUAL PAYMENTS OVER A PERIOD OF 27 TEN YEARS COMMENCING JULY 1, 2002. 28 SECTION 33. (A) NOTHING IN THIS ACT WHICH AMENDS OR 29 SUPPLEMENTS PROVISIONS OF 24 PA.C.S. PT. IV IN RELATION TO 30 REQUIREMENTS FOR QUALIFICATION OF THE PUBLIC SCHOOL EMPLOYEES' 20010H0026B1905 - 128 -
1 RETIREMENT SYSTEM AS A QUALIFIED PENSION PLAN UNDER THE INTERNAL 2 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 401(A) OR 3 415(B)), AS AMENDED, NOR ANY CONSTRUCTION OF SUCH PROVISIONS AS 4 SO AMENDED OR SUPPLEMENTED OR ANY RULES OR REGULATIONS ADOPTED 5 UNDER SUCH PART SHALL CREATE IN ANY MEMBER OF THE SYSTEM OR IN 6 ANY OTHER PERSON CLAIMING AN INTEREST IN THE ACCOUNT OF ANY 7 MEMBER A CONTRACTUAL RIGHT, EITHER EXPRESS OR IMPLIED IN SUCH 8 PROVISION. SUCH PROVISION SHALL REMAIN SUBJECT TO THE INTERNAL 9 REVENUE CODE OF 1986, AS AMENDED, AND REGULATIONS THEREUNDER AS 10 THE SAME MAY HEREAFTER BE AMENDED, AND THE GENERAL ASSEMBLY 11 RESERVES TO ITSELF SUCH FURTHER EXERCISE OF ITS LEGISLATIVE 12 POWER TO AMEND OR SUPPLEMENT SUCH PROVISIONS AS MAY FROM TIME TO 13 TIME BE REQUIRED TO MAINTAIN THE QUALIFICATION OF SUCH SYSTEM AS 14 A QUALIFIED PENSION PLAN UNDER SECTION 401(A) OF THE INTERNAL 15 REVENUE CODE OF 1986. 16 (B) NOTHING IN THIS ACT WHICH AMENDS OR SUPPLEMENTS 17 PROVISIONS OF 71 PA.C.S. PT. XXV IN RELATION TO REQUIREMENTS FOR 18 QUALIFICATION OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AS A 19 QUALIFIED PENSION PLAN UNDER THE INTERNAL REVENUE CODE OF 1986 20 (PUBLIC LAW 99-514, 26 U.S.C. § 401(A) AND § 415(B)) NOR ANY 21 CONSTRUCTION OF 71 PA.C.S. PT. XXV, AS SO AMENDED OR 22 SUPPLEMENTED OR ANY RULES OR REGULATIONS ADOPTED UNDER 71 23 PA.C.S. PT. XXV SHALL CREATE IN ANY MEMBER OF THE SYSTEM OR IN 24 OF ANY OTHER PERSON CLAIMING AN INTEREST IN THE ACCOUNT OF ANY 25 SUCH MEMBER A CONTRACTUAL RIGHT, EITHER EXPRESS OR IMPLIED. THE 26 PROVISIONS OF 71 PA.C.S. PT. XXV SHALL REMAIN SUBJECT TO THE 27 INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND REGULATIONS 28 THEREUNDER AS THE SAME MAY HEREAFTER BE AMENDED, AND THE GENERAL 29 ASSEMBLY RESERVES TO ITSELF SUCH FURTHER EXERCISE OF ITS 30 LEGISLATIVE POWER TO AMEND OR SUPPLEMENT SUCH PROVISIONS AS MAY 20010H0026B1905 - 129 -
1 FROM TIME TO TIME BE REQUIRED IN ORDER TO MAINTAIN THE 2 QUALIFICATION OF SUCH SYSTEM AS A QUALIFIED PENSION PLAN UNDER 3 SECTION 401(A) OF THE INTERNAL REVENUE CODE OF 1986. 4 SECTION 34. (A) NOTHING IN THIS ACT SHALL BE CONSTRUED OR 5 DEEMED TO IMPLY THAT, BUT FOR THE EXPRESSED APPLICATIONS OF THE 6 LIMITATIONS ON BENEFITS UNDER SECTION 415 OF THE INTERNAL 7 REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 415), AS 8 AMENDED, THOSE LIMITATIONS WOULD NOT OTHERWISE APPLY TO MEMBERS 9 OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND THE 10 BENEFITS PAYABLE PURSUANT TO 24 PA.C.S. PT. IV. 11 (B) NOTHING IN THIS ACT SHALL BE CONSTRUED OR DEEMED TO 12 IMPLY THAT, BUT FOR THE EXPRESSED APPLICATIONS OF THE 13 LIMITATIONS ON BENEFITS UNDER SECTION 401(A) OR 415 OF THE 14 INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 15 401 OR 415), THOSE LIMITATIONS WOULD NOT OTHERWISE APPLY TO 16 MEMBERS OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AND THE 17 BENEFITS PAYABLE PURSUANT TO 71 PA.C.S. PT. XXV. 18 SECTION 35. (A) EXCEPT AS PROVIDED IN SECTION 23(A), THIS 19 ACT SHALL BE CONSTRUED AND ADMINISTERED IN SUCH MANNER THAT THE 20 PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM WILL SATISFY THE 21 REQUIREMENTS NECESSARY TO QUALIFY AS A QUALIFIED PENSION PLAN 22 UNDER SECTION 415(B) OF THE INTERNAL REVENUE CODE OF 1986 23 (PUBLIC LAW 99-514, 26 U.S.C. § 415(B)). 24 (B) EXCEPT AS PROVIDED IN SECTION 23(B), THIS ACT SHALL BE 25 CONSTRUED AND ADMINISTERED IN SUCH MANNER THAT THE STATE 26 EMPLOYEES' RETIREMENT SYSTEM WILL SATISFY THE REQUIREMENTS 27 NECESSARY TO QUALIFY AS A QUALIFIED PENSION PLAN UNDER SECTION 28 415(B) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 29 26 U.S.C. §415(B)). 30 SECTION 36. SEVERABILITY OF THIS ACT SHALL BE AS FOLLOWS: 20010H0026B1905 - 130 -
1 (1) EXCEPT AS SET FORTH IN PARAGRAPH (2), IF ANY 2 PROVISION OF THIS ACT OR ITS APPLICATION TO ANY PERSON OR 3 CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT 4 OTHER PROVISIONS OR APPLICATIONS OF THIS ACT WHICH CAN BE 5 GIVEN EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION. 6 (2) IF ANY OF THE FOLLOWING PROVISIONS OF THIS ACT IS 7 HELD INVALID, INDEPENDENT OF ITS APPLICATION TO ANY PERSON OR 8 CIRCUMSTANCE, ALL OF THE FOLLOWING PROVISIONS OF THIS ACT ARE 9 VOID: 10 (I) THE AMENDMENT OF THE DEFINITIONS OF "BASIC 11 CONTRIBUTION RATE," "CLASS OF SERVICE MULTIPLIER," 12 "STANDARD SINGLE LIFE ANNUITY" AND "SUPERANNUATION OR 13 NORMAL RETIREMENT AGE" IN 24 PA.C.S. § 8102. 14 (II) THE AMENDMENT OR ADDITION OF 24 PA.C.S. §§ 15 8303; 8304; 8305, EXCEPT FOR SUBSECTION (C)(4)(II); 16 8305.1; 8323(A), (C) AND (C.1); 8328; 8346(D)(2)(I); 17 8348.1; 8348.2; 8348.3; 8348.5; AND 8525. 18 (III) EXCEPT INSOFAR AS RELATES TO SECTION 415(B) OF 19 THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 20 U.S.C. § 1 ET SEQ.), THE AMENDMENT OF THE DEFINITIONS OF 21 "ACTIVE MEMBER," "CLASS OF SERVICE MULTIPLIER," "CREDITED 22 SERVICE" AND "INACTIVE MEMBER" IN 71 PA.C.S. § 5102. 23 (IV) EXCEPT INSOFAR AS RELATES TO SECTION 415(B) OF 24 THE INTERNAL REVENUE CODE OF 1986, THE AMENDMENT OF 71 25 PA.C.S. §§ 5302, 5305, 5501 AND 5502. 26 (V) THE AMENDMENT OR ADDITION OF 71 PA.C.S. §§ 5303; 27 5306, EXCEPT FOR SUBSECTION (A.1)(7)(II); 5306.1; 5306.2; 28 5502.1; 5507; 5508; 5702(C); 5706(C)(2)(I); 5707(F); 29 5708.1; 5708.2; 5708.3; 5708.5; 5937; AND 5938. 30 SECTION 36.1. THE AMENDMENT OF THE DEFINITION OF "VESTEE" IN 20010H0026B1905 - 131 -
1 24 PA.C.S. §§ 8102, 8307, 8308, 8345(A) AND 8507(G) SHALL APPLY 2 TO ALL MEMBERS OF THE SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO 3 ARE ACTIVE OR INACTIVE ON LEAVE WITHOUT PAY ON THE EFFECTIVE 4 DATE OF THIS SECTION, AND TO ANY FORMER SCHOOL EMPLOYEE WHO IS A 5 MULTIPLE SERVICE MEMBER, IS A STATE EMPLOYEE AND IS A MEMBER OF 6 THE STATE EMPLOYEES' RETIREMENT SYSTEM ON THE EFFECTIVE DATE OF 7 THIS SECTION. 8 SECTION 37. THE AMENDMENT OF THE DEFINITION OF "VESTEE" IN 9 71 PA.C.S. § 5102 AND 71 PA.C.S. §§ 5308(B), 5309, 5704(B) AND 10 5705(A) SHALL APPLY TO ALL MEMBERS OF THE STATE EMPLOYEES' 11 RETIREMENT SYSTEM WHO ARE ACTIVE OR INACTIVE ON LEAVE WITHOUT 12 PAY ON JULY 1, 2001, AND TO ANY FORMER STATE EMPLOYEE WHO IS A 13 MULTIPLE SERVICE MEMBER, IS A SCHOOL EMPLOYEE AND IS A MEMBER OF 14 THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM ON JULY 1, 2001. 15 SECTION 38. (A) ELECTIONS TO BECOME A CLASS T-D MEMBER MAY 16 BE FILED WITH THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD 17 BEFORE JULY 1, 2001, BUT WILL NOT BE EFFECTIVE UNTIL JULY 1, 18 2001, AND WILL BE EFFECTIVE ONLY IF THE MEMBER IS ELIGIBLE TO 19 MAKE THE ELECTION ON JULY 1, 2001. 20 (B) ELECTIONS TO BECOME A CLASS AA MEMBER MAY BE FILED WITH 21 THE STATE EMPLOYEES' RETIREMENT BOARD BEFORE JULY 1, 2001, BUT 22 WILL NOT BE EFFECTIVE UNTIL JULY 1, 2001, AND WILL BE EFFECTIVE 23 ONLY IF THE MEMBER IS ELIGIBLE TO MAKE THE ELECTION ON JULY 1, 24 2001. 25 SECTION 39. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: 26 (1) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT 27 IMMEDIATELY: 28 (I) SECTION 1 OF THIS ACT. 29 (II) THE AMENDMENT OF THE DEFINITIONS OF "ACTIVE 30 MEMBER," "CREDITED SERVICE" AND "INACTIVE MEMBER" IN 24 20010H0026B1905 - 132 -
1 PA.C.S. § 8102. 2 (III) THE AMENDMENT OF 24 PA.C.S. § 8302(A). 3 (IV) THE AMENDMENT OF 24 PA.C.S. § 8321. 4 (V) THE AMENDMENT OR ADDITION OF 24 PA.C.S. § 5 8327(B)(1) AND (2). 6 (VI) THE ADDITION OF 24 PA.C.S. § 8342(C). 7 (VII) THE ADDITION OF 24 PA.C.S. § 8344(E). 8 (VIII) THE AMENDMENT OF 24 PA.C.S. § 8501(A) AND 9 (B). 10 (IX) THE REPEAL OF 24 PA.C.S. § 8502.1. 11 (X) THE AMENDMENT OF 24 PA.C.S. § 8503(A). 12 (XI) THE AMENDMENT OF 24 PA.C.S. § 8506(C). 13 (XII) THE AMENDMENT OF 24 PA.C.S. § 8509(B). 14 (XIII) THE AMENDMENT OF 24 PA.C.S. § 8521(H), (I) 15 AND (J). 16 (XIV) THE ADDITION OF 24 PA.C.S. PT. V. 17 (XV) THE AMENDMENT OF THE DEFINITIONS OF "ACTIVE 18 MEMBER," "CREDITED SERVICE" AND "INACTIVE MEMBER" IN 71 19 PA.C.S. § 5102. 20 (XVI) THE AMENDMENT OF 71 PA.C.S. § 5302(A). 21 (XVII) THE AMENDMENT OF 71 PA.C.S. § 5304(A). 22 (XVIII) THE AMENDMENT OF 71 PA.C.S. § 5305(B). 23 (XIX) THE ADDITION OF 71 PA.C.S. § 5306.2. 24 (XX) THE AMENDMENT OF 71 PA.C.S. § 5501. 25 (XXI) THE AMENDMENT OF 71 PA.C.S. § 5502. 26 (XXII) THE ADDITION OF 71 PA.C.S. § 5502.1. 27 (XXIII) THE AMENDMENT OR ADDITION OF 71 PA.C.S. § 28 5702(C) AND (D). 29 (XXIV) THE AMENDMENT OR ADDITION OF 71 PA.C.S. § 30 5704(F) AND (G). 20010H0026B1905 - 133 -
1 (XXV) THE ADDITION OF 71 PA.C.S § 5707(F). 2 (XXVI) THE AMENDMENT OF 71 PA.C.S. § 5901(A) AND 3 (B). 4 (XXVII) THE AMENDMENT OF 71 PA.C.S. § 5903(A). 5 (XXVIII) AS MUCH OF THE AMENDMENT OF 71 PA.C.S. § 6 5906(C) AS RELATES TO SECTION 415 OF THE INTERNAL REVENUE 7 CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 415). 8 (XXIX) THE AMENDMENT OF 71 PA.C.S. § 5931(H), (I) 9 AND (J). 10 (XXX) THE AMENDMENT OF 71 PA.C.S. § 5937. 11 (XXXI) SECTION 23 OF THIS ACT. 12 (XXXII) SECTION 24 OF THIS ACT. 13 (XXXIII) SECTION 25 OF THIS ACT. 14 (XXXIV) SECTION 26 OF THIS ACT. 15 (XXXV) SECTION 27 OF THIS ACT. 16 (XXXVI) SECTION 28 OF THIS ACT. 17 (XXXVII) SECTION 31 OF THIS ACT. 18 (XXXVIII) SECTION 32 OF THIS ACT. 19 (XXXIX) SECTION 33 OF THIS ACT. 20 (XL) SECTION 34 OF THIS ACT. 21 (XLI) SECTION 35 OF THIS ACT. 22 (XLII) SECTION 36 OF THIS ACT. 23 (XLIII) SECTION 38 OF THIS ACT. 24 (XLIV) THIS SECTION. 25 (2) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT SEPTEMBER 26 1, 2001: 27 (I) THE ADDITION OF THE DEFINITION OF "ACTUARIAL 28 INCREASE FACTOR" IN 71 PA.C.S. § 5102. 29 (II) THE ADDITION OF 71 PA.C.S. § 5305.1. 30 (III) THE AMENDMENT OR ADDITION OF 71 PA.C.S. § 20010H0026B1905 - 134 -
1 5702(A) INTRODUCTORY PARAGRAPH AND (A.1). 2 (3) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT JULY 1, 3 2002: 4 (I) THE AMENDMENT OF 71 PA.C.S. § 5507(B). 5 (II) THE AMENDMENT OF 71 PA.C.S. § 5508(B), (C), (E) 6 AND (F). 7 (III) THE AMENDMENT OF 71 PA.C.S. § 5708.1(F). 8 (IV) THE AMENDMENT OF 71 PA.C.S. § 5708.2(F). 9 (V) THE AMENDMENT OF 71 PA.C.S. § 5708.3(F). 10 (VI) THE AMENDMENT OF 71 PA.C.S. § 5708.5(F). 11 (VII) THE AMENDMENT OF 71 PA.C.S. § 5938. 12 (4) THE ADDITION OF 24 PA.C.S § 8502.2 SHALL TAKE EFFECT 13 UPON PUBLICATION OF THE NOTICE UNDER SECTION 25. 14 (5) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JULY 1, 15 2001, OR IMMEDIATELY, WHICHEVER IS LATER. A9L24DMS/20010H0026B1905 - 135 -