PRIOR PRINTER'S NO. 312 PRINTER'S NO. 616
No. 27 Session of 2001
INTRODUCED BY HERMAN, BENNINGHOFF, NICKOL, ARMSTRONG, M. BAKER,
BASTIAN, BELFANTI, CAPPELLI, COY, DeWEESE, FREEMAN, HARHAI,
HESS, HUTCHINSON, LAUGHLIN, McCALL, McILHATTAN, R. MILLER,
PETRARCA, PHILLIPS, READSHAW, ROSS, RUBLEY, SAINATO, SATHER,
SCHULER, SEMMEL, SHANER, B. SMITH, BARD, BELARDI,
CALTAGIRONE, CORRIGAN, CURRY, FAIRCHILD, GEIST, HENNESSEY,
SOLOBAY, STABACK, STEELMAN, STERN, SURRA, E. Z. TAYLOR,
TIGUE, TRAVAGLIO, TULLI, WANSACZ, WOGAN, WOJNAROSKI AND
YUDICHAK, JANUARY 31, 2001
AS REPORTED FROM COMMITTEE ON STATE GOVERNMENT, HOUSE OF
REPRESENTATIVES, AS AMENDED, FEBRUARY 7, 2001
AN ACT
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, further defining "salary
3 deductions"; and further providing for member contributions
4 for creditable school service, for contributions for purchase
5 of credit for creditable nonschool service, for incomplete
6 payments, for termination of annuities, for administrative
7 duties of board, for reporting requirements of board, for
8 duties of board regarding applications and elections of
9 members, for duties of employers, for creditable non-State <--
10 NONSTATE service, for member contributions for purchase of <--
11 credit for previous State service or to become a full
12 coverage member, for contributions for the purchase of credit
13 for creditable non-State NONSTATE service and for duties of <--
14 heads of departments and for rights and duties of State
15 employees and members.
16 The General Assembly of the Commonwealth of Pennsylvania
17 hereby enacts as follows:
18 Section 1. The definition of "salary deductions" in section
19 8102 of Title 24 of the Pennsylvania Consolidated Statutes is
20 amended to read:
1 § 8102. Definitions.
2 The following words and phrases when used in this part shall
3 have, unless the context clearly indicates otherwise, the
4 meanings given to them in this section:
5 * * *
6 "Salary deductions." The amounts certified by the board,
7 deducted from the compensation of an active member or the State
8 service compensation of a multiple service member who is an
9 active member of the State Employees' Retirement System and paid
10 into the fund.
11 * * *
12 Section 2. Sections 8323(d), 8324(b) and (d) and 8325 of
13 Title 24 are amended to read:
14 § 8323. Member contributions for creditable school service.
15 * * *
16 (d) Certification and payment of contributions.--
17 (1) In all cases other than for the purchase of credit
18 for sabbatical leave and activated military service leave
19 beginning before the effective date of paragraph (2), the
20 amount payable shall be certified by the board in accordance
21 with methods approved by the actuary and may be paid in a
22 lump sum within 90 days or, in the case of an active member
23 or eligible State employee who is an active member of the
24 State Employees' Retirement System, may be amortized with
25 statutory interest through salary deductions [or by personal
26 checks] in amounts agreed upon by the member and the board.
27 The salary deduction amortization plans agreed to by members
28 and the board may include a deferral of payment amounts and
29 statutory interest until the termination of school service or
30 State service, as the board, in its sole discretion, decides
20010H0027B0616 - 2 -
1 to allow. The board may limit salary deduction amortization
2 plans to such terms as the board, in its sole discretion,
3 determines. In the case of an eligible State employee who is
4 an active member of the State Employees' Retirement System,
5 the agreed upon salary deductions shall be remitted to the
6 State Employees' Retirement Board, which shall certify and
7 transfer to the board the amounts paid.
8 (2) In the case of activated military service leave
9 beginning before the effective date of this paragraph, the
10 amount payable may be paid according to this subsection or
11 subsection (c.1), but all lump sum payments must be made and
12 all amortization payments commenced within one year of the
13 termination of activated military service leave.
14 § 8324. Contributions for purchase of credit for creditable
15 nonschool service.
16 * * *
17 (b) Nonintervening military service.--The amount due for the
18 purchase of credit for military service other than intervening
19 military service shall be determined by applying the member's
20 basic contribution rate plus the normal contribution rate as
21 provided in section 8328 (relating to actuarial cost method) at
22 the time of entry of the member into school service subsequent
23 to such military service to one-third of his total compensation
24 received during the first three years of such subsequent
25 credited school service and multiplying the product by the
26 number of years and fractional part of a year of creditable
27 nonintervening military service being purchased together with
28 statutory interest during all periods of subsequent school and
29 State service to date of purchase. Upon certification of the
30 amount due, payment may be made in a lump sum within 90 days or
20010H0027B0616 - 3 -
1 in the case of an active member or eligible State employee who
2 is an active member of the State Employees' Retirement System it
3 may be amortized with statutory interest through salary
4 deductions [or by personal checks] in amounts agreed upon by the
5 member and the board. The salary deduction amortization plans
6 agreed to by members and the board may include a deferral of
7 payment amounts and statutory interest until the termination of
8 school service or State service, as the board, in its sole
9 discretion, decides to allow. The board may limit salary
10 deduction amortization plans to such terms as the board, in its
11 sole discretion, determines. In the case of an eligible State
12 employee who is an active member of the State Employees'
13 Retirement System, the agreed upon salary deductions shall be
14 remitted to the State Employes' Retirement Board, which shall
15 certify and transfer to the board the amounts paid. Application
16 may be filed for all such military service credit upon
17 completion of three years of subsequent credited school service
18 and shall be credited as Class T-C service.
19 * * *
20 (d) Other creditable nonschool service.--Contributions on
21 account of Class T-C credit for creditable nonschool service
22 other than military service shall be determined by applying the
23 member's basic contribution rate plus the normal contribution
24 rate as provided in section 8328 at the time of the member's
25 entry into school service subsequent to such creditable
26 nonschool service to his total compensation received during the
27 first year of subsequent credited school service and multiplying
28 the product by the number of years and fractional part of a year
29 of creditable nonschool service being purchased together with
30 statutory interest during all periods of subsequent school or
20010H0027B0616 - 4 -
1 State service to the date of purchase, except that in the case
2 of purchase of credit for creditable nonschool service as set
3 forth in section 8304(b)(5) (relating to creditable nonschool
4 service) the member shall pay only the employee's share unless
5 otherwise provided by law. Upon certification of the amount due,
6 payment may be made in a lump sum within 90 days or in the case
7 of an active member or eligible State employee who is an active
8 member of the State Employees' Retirement System it may be
9 amortized with statutory interest through salary deductions [or
10 by personal checks] in amounts agreed upon by the member and the
11 board. The salary deduction amortization plans agreed to by the
12 members and the board may include a deferral of payment amounts
13 and statutory interest until the termination of school service
14 or State service, as the board, in its sole discretion, decides
15 to allow. The board may limit salary deduction amortization
16 plans to such terms as the board, in its sole discretion,
17 determines. In the case of an eligible State employee who is an
18 active member of the State Employes' Retirement System, the
19 agreed upon salary deductions shall be remitted to the State
20 Employees' Retirement Board, which shall certify and transfer to
21 the board the amounts paid.
22 * * *
23 § 8325. Incomplete payments.
24 In the event that a member terminates school service or a
25 multiple service member who is an active member of the State
26 Employees' Retirement System terminates State service before any
27 agreed upon payments or return of benefits on account of
28 returning to school service or entering State service and
29 electing multiple service have been completed the member or
30 multiple service member who is an active member of the State
20010H0027B0616 - 5 -
1 Employees' Retirement System shall have the right to pay within
2 30 days of termination of school service or State service the
3 balance due, including interest, in a lump sum and the annuity
4 shall be calculated including full credit for the previous
5 school service, creditable nonschool service, or full-coverage
6 membership. In the event a member does not pay the balance due
7 within 30 days of termination of school service or in the event
8 a member dies in school service or within 30 days of termination
9 of school service or in the case of a multiple service member
10 who is an active member of the State Employees' Retirement
11 System, does not pay the balance due within 30 days of
12 termination of State service or dies in State service or within
13 30 days of termination of State service and before the agreed
14 upon payments have been completed, the present value of the
15 benefit otherwise payable shall be reduced by the balance due,
16 including interest, and the benefit payable shall be calculated
17 as the actuarial equivalent of such reduced present value.
18 Section 3. Section 8346(a) of Title 24 is amended and the
19 section is amended by adding a subsection to read:
20 § 8346. Termination of annuities.
21 (a) General rule.--If an annuitant returns to school service
22 or enters or has entered State service and elects multiple
23 service membership, any annuity payable to him under this part
24 shall cease effective upon the date of his return to school
25 service or entering State service and in the case of an annuity
26 other than a disability annuity the present value of such
27 annuity, adjusted for full coverage in the case of a joint
28 coverage member who makes the appropriate back contributions for
29 full coverage, shall be frozen as of the date such annuity
30 ceases. An annuitant who is credited with an additional 10% of
20010H0027B0616 - 6 -
1 membership service as provided in section 8302(b.2) (relating to
2 credited school service) and who returns to school service,
3 except as provided in subsection (b), shall forfeit such
4 credited service and shall have his frozen present value
5 adjusted as if his 10% retirement incentive had not been applied
6 to his account. In the event that the cost-of-living increase
7 enacted December 18, 1979, occurred during the period of such
8 State or school employment, the frozen present value shall be
9 increased, on or after the member attains superannuation age, by
10 the percent applicable had he not returned to service.
11 (a.1) Return of benefits.--In the event an annuitant whose
12 annuity ceases pursuant to this section receives any annuity
13 payment, including a lump sum payment pursuant to section 8345
14 (relating to member's options) on or after the date of his
15 return to school service or entering State service, he shall
16 return to the board the amount so received plus statutory
17 interest. The amount payable shall be certified in each case by
18 the board in accordance with methods approved by the actuary and
19 shall be paid in a lump sum within 90 days or in the case of an
20 active member or State employee who is an active member of the
21 State Employees' Retirement System may be amortized with
22 statutory interest through salary deductions in amounts agreed
23 upon by the member and the board. In the case of a State
24 employee who is an active member of the State Employees'
25 Retirement System, the agreed upon salary deductions shall be
26 remitted to the State Employees' Retirement Board, which shall
27 certify and transfer to the board the amounts paid.
28 * * *
29 Section 4. Sections 8502(m) and 8504(b) of Title 24 are
30 amended to read:
20010H0027B0616 - 7 -
1 § 8502. Administrative duties of board.
2 * * *
3 (m) Member contributions and interest.--The board shall
4 cause each member's contributions, including payroll deductions,
5 pickup contributions and all other payments, including, but not
6 limited to, amounts collected by the State Employees' Retirement
7 System for the reinstatement of previous school service or
8 creditable nonschool service, and amounts paid to return
9 benefits paid after the date of return to school service or
10 entering State service representing lump sum payments made
11 pursuant to section 8345(a)(4)(iii) (relating to member's
12 options) and member's annuity payments, but not including other
13 benefits returned pursuant to section 8346(a.1) (relating to
14 termination of annuities) to be credited to the account of such
15 member and shall pay all such amounts into the fund. Such
16 contributions shall be credited with statutory interest until
17 date of termination of service, except in the case of a vestee,
18 who shall have such interest credited until the effective date
19 of retirement or until the return of his accumulated deductions,
20 if he so elects; and in the case of a multiple service member
21 who shall have such interest credited until termination of
22 service in both the school and the State systems.
23 * * *
24 § 8504. Duties of board to report to State Employees'
25 Retirement Board.
26 * * *
27 (b) Multiple service membership of State employees.--Upon
28 receipt of notification from the State Employees' Retirement
29 Board that a former school employee has become an active member
30 in the State Employees' Retirement System and has elected to
20010H0027B0616 - 8 -
1 receive credit for multiple service, the board shall certify to
2 the State Employees' Retirement Board and concurrently to the
3 member:
4 (1) The total credited service in the system and the
5 number of years and fractional part of a year of service
6 credited in each class of service.
7 (2) The annual compensation received each school year by
8 the member for credited school service.
9 (3) If the member has elected payroll deductions
10 pursuant to section 8323 (relating to member contributions
11 for creditable school service) or 8324 (relating to
12 contributions for purchase of credit for creditable nonschool
13 service), the amount of the deductions and the period over
14 which they are to be made.
15 * * *
16 Section 5. Section 8505(b) of Title 24 is amended and the
17 section is amended by adding a subsection to read:
18 § 8505. Duties of board regarding applications and elections of
19 members.
20 * * *
21 (b) State employees electing multiple service status.--Upon
22 receipt of notification from the State Employees' Retirement
23 Board that a former school employee has become an active member
24 in the State Employees' Retirement System and has elected to
25 become a member with multiple service status, the board shall:
26 (1) In case of a member who is receiving an annuity from
27 the system[, discontinue]:
28 (i) Discontinue payments, transfer the present
29 value[, at that time,] of the member's annuity at the
30 time of entering State service, plus the amount withdrawn
20010H0027B0616 - 9 -
1 in a lump sum payment, on or after the date of entering
2 State service, pursuant to section 8345 (relating to
3 member's options), with statutory interest to date of
4 transfer, minus the amount to be returned to the board on
5 account of return to service that the board has
6 determined is to be credited in the member's savings
7 account, from the annuity reserve account to the
8 [members'] member's savings account and resume crediting
9 of statutory interest on the amount restored to his
10 credit [and transfer].
11 (ii) Transfer the balance of the present value of
12 the total annuity, minus the amount to be returned to the
13 board on account of return to service that the board has
14 determined is to be credited in the State accumulation
15 account, from the annuity reserve account to the State
16 accumulation account.
17 (iii) Certify to the member the amount of lump sum
18 and annuity payments with statutory interest to be
19 returned to the board by him, and of those amounts, which
20 amount shall be credited to the member's savings account
21 and credited with statutory interest as such payments are
22 returned and which amount shall be credited to the State
23 accumulation account.
24 (2) In case of a member who is not receiving an annuity
25 from the system and who has not withdrawn his accumulated
26 deductions, continue or resume the crediting of statutory
27 interest on his accumulated deductions.
28 (3) In case of a member who is not receiving an annuity
29 from the system and his accumulated deductions were
30 withdrawn, certify to the member the accumulated deductions
20010H0027B0616 - 10 -
1 as they would have been at the time of his separation had he
2 been a full coverage member together with statutory interest
3 for all periods of subsequent State and school service to the
4 date of repayment. Such amount shall be restored by him and
5 shall be credited with statutory interest as such payments
6 are restored.
7 * * *
8 (k) School employees electing multiple service status.--Upon
9 receipt of notification from the State Employees' Retirement
10 Board that a member who has elected multiple service membership
11 has elected to restore State service or purchase creditable non- <--
12 State NONSTATE service in the State Employees' Retirement System <--
13 or is obligated to return benefits to the State Employees'
14 Retirement Board on account of electing multiple service
15 membership has elected to pay all or part of the amount due to
16 the State Employees' Retirement Board by salary deductions, the
17 board shall collect from the employee the amounts certified by
18 the State Employees' Retirement Board as due and owing by the
19 member and shall certify and transfer to the State Employees'
20 Retirement Board the amounts so collected.
21 Section 6. Sections 8506(c), (g,) and (h) and 8507(c) of
22 Title 24 are amended to read:
23 § 8506. Duties of employers.
24 * * *
25 (c) Member and employer contributions.--The employer shall
26 certify to its treasurer the required member contributions
27 picked up and any other contributions, including, but not
28 limited too TO, amounts collected for the State Employees' <--
29 Retirement Board for the reinstatement of previous State service
30 or creditable non-State NONSTATE service and amounts paid to <--
20010H0027B0616 - 11 -
1 return benefits paid after the date of return to State service
2 or entering school service, deducted from each payroll. On July
3 1, 1996, and upon any later effective date of employment of any
4 noneligible member to whom limitation under IRC § 401(a)(17)
5 applies or is expected to apply, the employer shall identify to
6 its treasurer or other payroll administrator the member or
7 members to whom such limit applies or may apply and shall cause
8 any such member's contributions deducted from payroll and the
9 employer's contribution on his behalf to cease at the limitation
10 under IRC § 401(a)(17) on the payroll date if and when such
11 limit shall be reached. The treasurer shall remit to the
12 secretary of the board each month the total of the member
13 contributions and the amount due from the employer determined in
14 accordance with section 8327 (relating to payments by
15 employers). If, upon crediting the remittance of a noneligible
16 member's contributions to the member's savings account, the
17 board shall determine that such account shall have been credited
18 with pickup contributions attributable to compensation which is
19 in excess of the annual compensation limit under IRC §
20 401(a)(17), or with total member contributions for such member
21 which would cause such member's contributions or benefits to
22 exceed any applicable limitation on contributions or benefits
23 under IRC § 401(a)(17), the board shall as soon as practicable
24 refund to the member from his individual member account such
25 amount, together with the statutory interest thereon, as will
26 cause the member's total member contributions not to exceed the
27 applicable limit. The payment of any such refund to the member
28 shall be charged to the member's savings account.
29 * * *
30 (g) Former State employee contributors.--The employer shall,
20010H0027B0616 - 12 -
1 upon the employment of a former member of the State Employees'
2 Retirement System who is not an annuitant of the State
3 Employees' Retirement System, advise such employee of his right
4 to elect multiple service membership within [30] 365 days of
5 entry into the system and, in the case any such employee who so
6 elects has withdrawn his accumulated deductions, require him to
7 restore his accumulated deductions as they would have been at
8 the time of his separation had he been a full coverage member,
9 together with statutory interest for all periods of subsequent
10 State and school service to date of repayment. The employer
11 shall advise the board of such election.
12 (h) Former State employee annuitants.--The employer shall,
13 upon the employment of an annuitant of the State Employees'
14 Retirement System who applies for membership in the system,
15 advise such employee that he may elect multiple service
16 membership within [30] 365 days of entry into the system and
17 that if he so elects his annuity from the State Employees'
18 Retirement System will be discontinued effective upon the date
19 of his return to school service and, upon termination of school
20 service and application for an annuity, the annuity will be
21 adjusted in accordance with section 8346 (relating to
22 termination of annuities). The employer shall advise the board
23 of such election.
24 * * *
25 § 8507. Rights and duties of school employees and members.
26 * * *
27 (c) Multiple service membership.--Any active member who was
28 formerly an active member in the State Employees' Retirement
29 System may elect to become a multiple service member. Such
30 election shall occur no later than [30] 365 days after becoming
20010H0027B0616 - 13 -
1 an active member in this system.
2 * * *
3 Section 7. The definition of "salary deductions" in section
4 5102 of Title 71 is amended to read:
5 § 5102. Definitions.
6 The following words and phrases as used in this part, unless
7 a different meaning is plainly required by the context, shall
8 have the following meanings:
9 * * *
10 "Salary deductions." The amounts certified by the board,
11 deducted from the compensation of an active member or the school
12 service compensation of a multiple service member who is an
13 active member of the Public School Employees' Retirement System
14 and paid into the fund.
15 * * *
16 Section 8. Sections 5304(a), 5504((b), 5505(b) and (d) and
17 5506 of Title 71 are amended to read:
18 § 5304. Creditable nonstate service.
19 (a) Eligibility.--An active member or a multiple service
20 member who is a school employee and an active member of the
21 Public School Employees' Retirement System shall be eligible for
22 Class A service credit for creditable nonstate service as set
23 forth in subsections (b) and (c) except that intervening
24 military service shall be credited in the class of service for
25 which the member was eligible at the time of entering into
26 military service and for which he makes the required
27 contributions and except that a multiple service member who is a
28 school employee and an active member of the Public School
29 Employees' Retirement System shall not be eligible to purchase
30 service credit for creditable non-State NONSTATE service set <--
20010H0027B0616 - 14 -
1 forth in subsection (c)(5).
2 * * *
3 § 5504. Member contributions for the purchase of credit for
4 previous State service or to become a full coverage
5 member.
6 * * *
7 (b) Certification and method of payment.--The amount payable
8 shall be certified in each case by the board in accordance with
9 methods approved by the actuary and shall be paid in a lump sum
10 within 30 days or in the case of an active member or eligible
11 school employee who is an active member of the Public School
12 Employees' Retirement System may be amortized with statutory
13 interest through salary deductions in amounts agreed upon by the
14 member and the board. The salary deduction amortization plans
15 agreed to by members and the board may include a deferral of
16 payment amounts and statutory interest until the termination of
17 school service or State service, as the board, in its sole
18 discretion, decides to allow. The board may limit salary
19 deduction amortization plans to such terms as the board, in its
20 sole discretion, determines. In the case of an eligible school
21 employee who is an active member of the Public School Employees'
22 Retirement System, the agreed upon salary deductions shall be
23 remitted to the Public School Employees' Retirement Board, which
24 shall certify and transfer to the board the amounts paid.
25 § 5505. Contributions for the purchase of credit for creditable
26 nonstate service.
27 * * *
28 (b) Nonintervening military service.--
29 (1) The amount due for the purchase of credit for
30 military service other than intervening military service
20010H0027B0616 - 15 -
1 shall be determined by applying the member's basic
2 contribution rate, the additional contribution rate plus the
3 Commonwealth normal contribution rate for active members at
4 the time of entry, subsequent to such military service, of
5 the member into State service to his average annual rate of
6 compensation over the first three years of such subsequent
7 State service and multiplying the result by the number of
8 years and fractional part of a year of creditable
9 nonintervening military service being purchased together with
10 statutory interest during all periods of subsequent State and
11 school service to date of purchase. Upon application for
12 credit for such service, payment shall be made in a lump sum
13 within 30 days or in the case of an active member or eligible
14 school employee who is an active member of the Public School
15 Employees' Retirement System it may be amortized with
16 statutory interest through salary deductions in amounts
17 agreed upon by the member and the board. The salary deduction
18 amortization plans agreed to by members and the board may
19 include a deferral of payment amounts and statutory interest
20 until the termination of school service or State service, as
21 the board, in its sole discretion, decides to allow. The
22 board may limit salary deduction amortization plans to such
23 terms as the board, in its sole discretion, determines. In
24 the case of an eligible school employee who is an active
25 member of the Public School Employees' Retirement System, the
26 agreed upon salary deductions shall be remitted to the Public
27 School Employees' Retirement Board, which shall certify and
28 transfer to the board the amounts paid. Application may be
29 filed for all such military service credit upon completion of
30 three years of subsequent State service and shall be credited
20010H0027B0616 - 16 -
1 as Class A service.
2 (2) Applicants may purchase credit as follows:
3 (i) one purchase of the total amount of creditable
4 nonintervening military service; or
5 (ii) one purchase per 12-month period of a portion
6 of creditable nonintervening military service.
7 The amount of each purchase shall be not less than one year
8 of creditable nonintervening military service.
9 * * *
10 (d) Nonmilitary and nonmagisterial service.--Contributions
11 on account of credit for creditable nonstate service other than
12 military and magisterial service shall be determined by applying
13 the member's basic contribution rate, the additional
14 contribution rate plus the Commonwealth normal contribution rate
15 for active members at the time of entry subsequent to such
16 creditable nonstate service of the member into State service to
17 his compensation at the time of entry into State service and
18 multiplying the result by the number of years and fractional
19 part of a year of creditable nonstate service being purchased
20 together with statutory interest during all periods of
21 subsequent State and school service to the date of purchase.
22 Upon application for credit for such service payment shall be
23 made in a lump sum within 30 days or in the case of an active
24 member or eligible school employee who is an active member of
25 the Public School Employees' Retirement System it may be
26 amortized with statutory interest through salary deductions in
27 amounts agreed upon by the member and the board. The salary
28 deduction amortization plans agreed to by members and the board
29 may include a deferral of payment amounts and statutory interest
30 until the termination of school service or State service, as the
20010H0027B0616 - 17 -
1 board, in its sole discretion, decides to allow. The board may
2 limit salary deduction amortization plans to such terms as the
3 board, in its sole discretion, determines. In the case of an
4 eligible school employee who is an active member of the Public
5 School Employees' Retirement System, the agreed upon salary
6 deductions shall be remitted to the Public School Employees'
7 Retirement Board, which shall certify and transfer to the board
8 the amounts paid.
9 * * *
10 § 5506. Incomplete payments.
11 In the event that a member terminates State service or a
12 multiple service member who is an active member of the Public
13 School Employees' Retirement System terminates school service
14 before the agreed upon payments for credit for previous State
15 service, creditable nonstate service, social security
16 integration, [or] full coverage membership or return of benefits
17 on account of returning to State service or entering school
18 service and electing multiple service have been completed, the
19 member or multiple service member who is an active member of the
20 Public School Employees' Retirement System shall have the right
21 to pay within 30 days of termination of State service or school
22 service the balance due, including interest, in a lump sum and
23 the annuity shall be calculated including full credit for the
24 previous State service, creditable nonstate service, social
25 security integration, or full coverage membership. In the event
26 a member does not pay the balance due within 30 days of
27 termination of State service or in the event a member dies in
28 State service or within 30 days of termination of State service
29 or in the case of a multiple service member who is an active
30 member of the Public School Employees' Retirement System, does
20010H0027B0616 - 18 -
1 not pay the balance due within 30 days of termination of school
2 service or dies in school service or within 30 days of
3 termination of school service and before the agreed upon
4 payments have been completed, the present value of the benefit
5 otherwise payable shall be reduced by the balance due, including
6 interest, and the benefit payable shall be calculated as the
7 actuarial equivalent of such reduced present value.
8 Section 9. Section 5706(a) of Title 71 is amended and the
9 section is amended by adding a subsection to read:
10 § 5706. Termination of annuities.
11 (a) General rule.--If the annuitant returns to State service
12 or enters or has entered school service and elects multiple
13 service membership, any annuity payable to him under this part
14 shall cease effective upon the date of his return to State
15 service or entering school service and in the case of an annuity
16 other than a disability annuity the present value of such
17 annuity, adjusted for full coverage in the case of a joint
18 coverage member who makes the appropriate back contributions for
19 full coverage, shall be frozen as of the date such annuity
20 ceases. An annuitant who is credited with an additional 10% of
21 Class A and Class C service as provided in section 5302(c)
22 (relating to credited State service) and who returns to State
23 service shall forfeit such credited service and shall have his
24 frozen present value adjusted as if his 10% retirement incentive
25 had not been applied to his account. In the event that the cost-
26 of-living increase enacted December 18, 1979 occurred during the
27 period of such State or school employment, the frozen present
28 value shall be increased, on or after the member attains
29 superannuation age, by the percent applicable had he not
30 returned to service. This subsection shall not apply in the case
20010H0027B0616 - 19 -
1 of any annuitant who may render services to the Commonwealth in
2 the capacity of an independent contractor or as a member of an
3 independent board or commission or as a member of a departmental
4 administrative or advisory board or commission when such members
5 of independent or departmental boards or commissions are
6 compensated on a per diem basis for not more than 150 days per
7 calendar year.
8 * * *
9 (a.2) Return of benefits.--In the event an annuitant whose
10 annuity ceases pursuant to this section receives any annuity
11 payment, including a lump sum payment pursuant to section 5705
12 (relating to member's options) on or after the date of his
13 return to State service or entering school service, he shall
14 return to the board the amount so received plus statutory
15 interest. The amount payable shall be certified in each case by
16 the board in accordance with methods approved by the actuary and
17 shall be paid in a lump sum within 30 days or in the case of an
18 active member or school employee who is an active member of the
19 Public School Employees' Retirement System may be amortized with
20 statutory interest through salary deductions in amounts agreed
21 upon by the member and the board. In the case of a school
22 employee who is an active member of the Public School Employees'
23 Retirement System, the agreed upon salary deductions shall be
24 remitted to the Public School Employees' Retirement Board, which
25 shall certify and transfer to the board the amounts paid.
26 * * *
27 Section 10. Sections 5902(l) and 5904(b) of Title 71 are
28 amended to read:
29 § 5902. Administrative duties of the board.
30 * * *
20010H0027B0616 - 20 -
1 (l) Member contributions.--The board shall cause all pickup
2 contributions made on behalf of a member to be credited to the
3 account of the member and credit to his account any other
4 payment made by such member, including, but not limited to,
5 amounts collected by the Public School Employees' Retirement
6 System for the reinstatement of previous State service or
7 creditable non-State NONSTATE service, and amounts paid to <--
8 return benefits paid after the date of return to State service
9 or entering school service representing lump sum payments made
10 pursuant to section 5705(a)(4)(iii) (relating to member's
11 options) and member's annuity payments, but not including other
12 benefits returned pursuant to section 5706(a.2) (relating to
13 termination of annuities) and shall pay all such amounts into
14 the fund.
15 * * *
16 § 5904. Duties of the board to report to the Public School
17 Employees' Retirement Board.
18 * * *
19 (b) Multiple service membership of school employees.--Upon
20 receipt of notification from the Public School Employees'
21 Retirement Board that a former State employee has become an
22 active member in the Public School Employees' Retirement System
23 and has elected to receive credit for multiple service, the
24 board shall certify to the Public School Employees' Retirement
25 Board and concurrently to the member:
26 (1) the total credited service in the system and the
27 number of years and fractional part of a year of service
28 credited in each class of service;
29 (2) the annual compensation received each calendar year
30 by the member for credited State service; [and]
20010H0027B0616 - 21 -
1 (3) the social security integration credited service to
2 which the member is entitled and the average noncovered
3 salary upon which the single life annuity attributable to
4 such service will be computed[.]; and
5 (4) if the member has elected payroll deductions
6 pursuant to section 5504 (relating to member contributions
7 for the purchase of credit for previous State service or to
8 become a full coverage member) or 5505 (relating to
9 contributions for the purchase of credit for creditable
10 nonstate service), the amount of the deductions and the
11 period over which they are to be made.
12 * * *
13 Section 11. Section 5905(b) of Title 71 is amended and the
14 section is amended by adding a subsection to read:
15 § 5905. Duties of the board regarding applications and
16 elections of members.
17 * * *
18 (b) School employees electing multiple service status.--Upon
19 receipt of notification from the Public School Employees'
20 Retirement Board that a former State employee has become an
21 active member in the Public School Employees' Retirement System
22 and has elected to become a member with multiple service status
23 the board shall:
24 (1) in case of a member receiving an annuity from the
25 system[, discontinue]:
26 (i) discontinue payments, transfer the present
27 value[, at that time,] of the member's annuity at the
28 time of entering school service, plus the amount
29 withdrawn in a lump sum payment, on or after the date of
30 entering school service, pursuant to section 5705
20010H0027B0616 - 22 -
1 (relating to member's options), with statutory interest
2 to date of transfer, minus the amount to be returned to
3 the board on account of return to service, that the board
4 has determined is to be credited in the member's savings
5 account, from the annuity reserve account to the
6 [members'] member's savings account and resume crediting
7 of statutory interest on the amount restored to his
8 credit [and transfer];
9 (ii) transfer the balance of the present value of
10 the total annuity, minus the amount to be returned to the
11 board on account of return to service that the board has
12 determined is to be credited in the State accumulation
13 account, from the annuity reserve account to the State
14 accumulation account; and
15 (iii) certify to the member the amount of lump sum
16 and annuity payments with statutory interest to be
17 returned to the board by him, and of those amounts, which
18 amount shall be credited to the member's savings account
19 and credited with statutory interest as such payments are
20 returned and which amount shall be credited to the State
21 accumulation account; or
22 (2) in case of a member who is not receiving an annuity
23 and has not withdrawn his total accumulated deductions,
24 continue or resume the crediting of statutory interest on his
25 total accumulated deductions during the period his total
26 accumulated deductions remain in the fund; or
27 (3) in case of a former State employee who is not
28 receiving an annuity from the system and his total
29 accumulated deductions were withdrawn, certify to the former
30 State employee the accumulated deductions as they would have
20010H0027B0616 - 23 -
1 been at the time of his separation had he been a full
2 coverage member together with statutory interest for all
3 periods of subsequent State and school service to the date of
4 repayment. Such amount shall be restored by him and shall be
5 credited with statutory interest as such payments are
6 restored.
7 * * *
8 (j) State employees' electing multiple service status.--
9 Upon receipt of notification from the Public School Employees'
10 Retirement Board that a member who has elected multiple service
11 membership has elected to restore school service or purchase
12 creditable nonschool service in the Public School Employees'
13 Retirement System or is obligated to return benefits to the
14 Public School Employees' Retirement Board on account of electing
15 multiple service membership has elected to pay all or part of
16 the amount due to the Public School Employees' Retirement Board
17 by salary deductions, the board shall collect from the employee
18 the amounts certified by the Public School Employees' Retirement
19 Board as due and owing by the member and shall certify and
20 transfer to the Public School Employees' Retirement Board the
21 amounts so collected.
22 Section 12. Sections 5906(c), (g) and (h) and 5907(c) of
23 Title 71 are amended to read:
24 § 5906. Duties of heads of departments.
25 * * *
26 (c) Member contributions.--The head of department shall
27 cause the required pickup contributions for current service to
28 be made and shall cause to be deducted any other required member
29 contributions, including, but not limited to, contributions owed
30 by an active member with multiple service membership for school
20010H0027B0616 - 24 -
1 service and creditable nonschool service in the Public School
2 Employees' Retirement System, and amounts certified by the
3 Public School Employees' Retirement Board as due and owning on
4 account of termination of annuities from each payroll. The head
5 of department shall notify the board at times and in a manner
6 prescribed by the board of the compensation of any noneligible
7 member to whom the limitation under IRC § 401(a)(17) either
8 applies or is expected to apply and shall cause such member's
9 contributions deducted from payroll to cease at the limitation
10 under IRC § 401(a)(17) on the payroll date if and when such
11 limit shall be reached. The head of department shall certify to
12 the State Treasurer the amounts picked up and deducted and shall
13 send the total amount picked up and deducted together with a
14 duplicate of such voucher to the secretary of the board every
15 pay period. The head of department shall pay pickup
16 contributions from the same source of funds which is used to pay
17 other compensation to the employee. On or before January 31,
18 1997, and on or before January 31 of each year thereafter, the
19 head of department shall, at the time when the income and
20 withholding information required by law is furnished to each
21 member, also furnish the amount of pickup contributions made on
22 his behalf and notify the board, if it has not been previously
23 notified, of any noneligible member whose compensation in the
24 preceding year exceeded the annual compensation limit under IRC
25 § 401(a)(17). If the board shall determine that the member's
26 savings account shall have been credited with pickup
27 contributions for a noneligible member in the preceding year
28 which are attributable to compensation in excess of the
29 limitation under IRC § 401(a)(17), or with total member
30 contributions for such member which would cause such member's
20010H0027B0616 - 25 -
1 contributions or benefits to exceed any applicable limitation
2 under IRC § 401(a)(17), the board shall as soon as practicable
3 refund to the member from his individual member account such
4 amount, together with the statutory interest thereon, as will
5 cause the member's total member contributions in the preceding
6 year not to exceed the applicable limit. The payment of any such
7 refund to the member shall be charged to the member's savings
8 account.
9 * * *
10 (g) Former school employee contributors.--The head of
11 department shall, upon the employment of a former contributor to
12 the Public School Employees' Retirement System who is not an
13 annuitant of the Public School Employees' Retirement System,
14 advise such employee of his right to elect within [30] 365 days
15 of entry into the system to become a multiple service member,
16 and in the case of any such employee who so elects and has
17 withdrawn his accumulated deductions, require him to reinstate
18 his credit in the Public School Employees' Retirement System.
19 The head of the department shall advise the board of such
20 election.
21 (h) Former school employee annuitants.--The head of
22 department shall, upon the employment of an annuitant of the
23 Public School Employees' Retirement System who applies for
24 membership in the system, advise such employee that he may elect
25 multiple service membership within [30] 365 days of entry into
26 the system and if he so elects his public school employee's
27 annuity will be discontinued effective upon the date of his
28 return to State service and, upon termination of State service
29 and application for an annuity, the annuity will be adjusted in
30 accordance with section 5706 (relating to termination of
20010H0027B0616 - 26 -
1 annuities). The head of department shall advise the board of
2 such election.
3 * * *
4 § 5907. Rights and duties of State employees and members.
5 * * *
6 (c) Multiple service membership.--Any active member who was
7 formerly an active member in the Public School Employees'
8 Retirement System may elect to become a multiple service member.
9 Such election shall occur no later than [30] 365 days after
10 becoming an active member in this system.
11 * * *
12 Section 13. (a) Notwithstanding the limitation contained in
13 24 Pa.C.S. § 8507(c), any active member of the Public School
14 Employees' Retirement System who was formerly an active member
15 in the State Employees' Retirement System and whose service
16 credit in the State Employees' Retirement System has not been
17 converted to service credited in another public pension plan or
18 retirement system in this Commonwealth may elect to become a
19 multiple service member on or before December 31, 2003.
20 (b) Notwithstanding the limitation contained in 71 Pa.C.S. §
21 5907(c), any active member of the State Employees' Retirement
22 System who was formerly an active member of the Public School
23 Employees' Retirement System and whose service credit in the
24 Public School Employees' Retirement System has not been
25 converted to service credited in another public pension plan or
26 retirement system in this Commonwealth may elect to become a
27 multiple service member on or before December 31, 2003.
28 Section 14. (a) Except as provided in subsection (b), this
29 act shall apply retroactively to the date of enactment.
30 (b) Deceased members of the State Employees' Retirement
20010H0027B0616 - 27 -
1 System or Public School Employees' Retirement System with a date
2 of death on or before 180 days after the enactment of this act,
3 or their personal representatives, may not elect multiple
4 service membership pursuant to this act.
5 Section 15. This act shall take effect on the first day of
6 the month next following 180 days after the date of enactment.
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