PRINTER'S NO. 831
No. 740 Session of 2005
INTRODUCED BY DALLY, BELARDI, BOYD, BUNT, CALTAGIRONE, DENLINGER, DeWEESE, GINGRICH, GOODMAN, GRUCELA, HARHART, HERMAN, HESS, O'NEILL, PAYNE, PHILLIPS, READSHAW, REICHLEY, ROBERTS, SAINATO, SCAVELLO, STERN, R. STEVENSON, THOMAS, TIGUE, WILT AND YOUNGBLOOD, MARCH 1, 2005
REFERRED TO COMMITTEE ON FINANCE, MARCH 1, 2005
AN ACT 1 Amending the act of February 1, 1974 (P.L.34, No.15), entitled 2 "An act creating a Pennsylvania Municipal Retirement System 3 for the payment of retirement allowances to officers, 4 employes, firemen and police of political subdivisions and 5 municipal authorities and of institutions supported and 6 maintained by political subdivisions and municipal government 7 associations and providing for the administration of the same 8 by a board composed of the State Treasurer and others 9 appointed by the Governor; imposing certain duties on the 10 Pennsylvania Municipal Retirement Board and the actuary 11 thereof; providing the procedure whereby political 12 subdivisions and municipal authorities may join such system, 13 and imposing certain liabilities and obligations on such 14 political subdivisions and municipal authorities in 15 connection therewith, and as to certain existing retirement 16 and pension systems, and upon officers, employes, firemen and 17 police of such political subdivisions, institutions supported 18 and maintained by political subdivisions, and upon municipal 19 authorities; providing for the continuation of certain 20 municipal retirement systems now administered by the 21 Commonwealth; providing certain exemptions from taxation, 22 execution, attachment, levy and sale and providing for the 23 repeal of certain related acts," further providing for 24 service allowance, change of employment and military service 25 relating to municipal employees, municipal firemen and 26 municipal police. 27 The General Assembly of the Commonwealth of Pennsylvania 28 hereby enacts as follows:
1 Section 1. Sections 204 and 305 of the act of February 1, 2 1974 (P.L.34, No.15), known as the Pennsylvania Municipal 3 Retirement Law, amended May 17, 1980 (P.L.135, No.50), are 4 amended to read: 5 Section 204. Service Allowance; Change of Employment; 6 Military Service.--In computing the length of service of a 7 contributor for retirement purposes, full credit shall be given 8 to each original member for each year of service rendered to the 9 municipality prior to the time the municipality joined the 10 system, whether or not such service was continuous. 11 As soon as practicable, the board shall issue to each 12 original member a certificate certifying the aggregate length of 13 service rendered to the municipality prior to the time it joined 14 the system. Such certificate shall be final and conclusive as to 15 his prior service unless thereafter modified by the board, upon 16 application of the member. 17 The time during which a member was absent from service 18 without pay shall not be counted in computing the service of a 19 contributor in his certificate, or upon retirement, unless 20 specifically allowed by the municipality, with the approval of 21 the board. 22 When a contributor leaves the employ of a municipality which 23 has joined the system, and enters into the employ of another 24 municipality which has also joined the system, his service 25 credits shall remain unimpaired, but in such cases the unpaid 26 municipal liability for prior service shall be prorated by the 27 board between the municipalities on an equitable basis. Such 28 basis will be determined, with the advice of the actuary, 29 according to the number of years of service performed by the 30 contributor for each municipality. 20050H0740B0831 - 2 -
1 A contributor who has been employed by a municipality for a 2 period of at least six months and is an active member of the 3 system and who thereafter, heretofore, or hereafter, shall be 4 inducted into the military service of the United States [in 5 times of war, armed conflict, or National emergency, so 6 proclaimed by the President of the United States,] shall have 7 credited to his employment record, for pension or retirement 8 benefits, all of the time spent by him in such military service 9 [during the continuance of such war, armed conflict, or National 10 emergency] if such person returns or has heretofore returned to 11 his employment within six months after his separation from the 12 service. The municipality shall, during the period of the 13 member's intervening military service, continue to make current 14 service contributions toward the municipal annuity of the 15 member. An active member may file an application with the board 16 for permission to purchase credit toward his member's share of 17 the annuity for intervening military service. These 18 contributions shall be computed by applying the member's 19 contribution rate to his annual rate of compensation at the time 20 of entry of the member into active military service, and 21 multiplying the result by the number of years and fractional 22 part of a year of creditable intervening military service, 23 together with interest from date of return to employment to date 24 of purchase. The amount due from the member shall be certified 25 by the board in accordance with methods approved by the actuary, 26 and may be paid by (1) regular monthly payments during active 27 military service, or (2) a lump sum payment within thirty days 28 or (3) it may be amortized with additional interest through 29 salary deductions in amounts agreed upon by the member of the 30 board. 20050H0740B0831 - 3 -
1 An active member may also purchase credit for other than 2 intervening military service performed for the United States [in 3 times of war, armed conflict or National emergency, so 4 proclaimed by the President of the United States,] for a period 5 not to exceed five years: Provided, That the member has 6 completed five years of service to the municipality subsequent 7 to such military service. An active member may file an 8 application with the board for permission to purchase credit for 9 nonintervening military service upon completion of five years of 10 subsequent service to the municipality. The type of service 11 credit for such service shall be determined by the date of entry 12 of the municipality into the system. If the date of the member's 13 separation from military service is prior to the date on which 14 the municipality joined the system, then the credit purchased 15 shall be considered as prior service credit. In this case the 16 amount due from the member shall be computed by applying the 17 member's basic contribution rate plus the rate of contribution 18 the municipality paid for current service during its first year 19 of entry into the system to his prior salary and multiplying the 20 result by the number of years and fractional part of a year of 21 creditable nonintervening military service, plus interest from 22 the date of the member's employment by the municipality to the 23 date of purchase. If, on the other hand, the date of the 24 member's separation from military service is later than the date 25 of entry of the municipality into the system, then the credit 26 purchased shall be considered as current service credit. In this 27 case the amount due from the member shall be computed by 28 applying the member's basic contribution rate plus the 29 municipality's normal contribution rate for current service 30 which was in effect on the date of the member's entry into 20050H0740B0831 - 4 -
1 employment with the municipality to his average annual rate of 2 compensation over the first five years of his subsequent 3 employment and multiplying the result by the number of years and 4 fractional part of a year of creditable nonintervening military 5 service being purchased, plus interest from the date of 6 employment by the municipality to date of purchase. 7 The amount due from the member shall be certified by the 8 board in accordance with methods approved by the actuary, and 9 may be paid in a lump sum within thirty days or it may be 10 amortized with additional interest through salary deductions in 11 amounts agreed upon by the member and the board. 12 The rate of interest to be charged to members on their 13 purchase of credit for intervening or nonintervening military 14 service shall be the rate being credited by the system to 15 member's contribution accounts in effect on the date of the 16 member's application, compounded annually. 17 A member may purchase credit for intervening or 18 nonintervening military service only if his discharge or 19 separation from the service was granted under other than 20 dishonorable conditions. 21 A member may not purchase credit for any military service for 22 which he is entitled to receive, eligible to receive now or in 23 the future, or is receiving retirement benefits for such service 24 under a retirement system administered and wholly or partially 25 paid for by any other governmental agency, or private employer. 26 Applications for permission to purchase credit for military 27 service must be accompanied by proof of the nature of his 28 discharge or separation from the military service. 29 Section 305. Service Allowance; Change of Employment; 30 Military Service.--In computing the length of service of a 20050H0740B0831 - 5 -
1 contributor for retirement purposes, full credit shall be given 2 to each original member for each year of service rendered to the 3 municipality prior to the time the municipality joined the 4 system. 5 As soon as practicable, the board shall issue to each 6 original member a certificate certifying the aggregate length of 7 service rendered to the municipality prior to the time it joined 8 the system. Such certificate shall be final and conclusive as to 9 his prior service unless thereafter modified by the board, upon 10 application of the member. 11 The time during which a member was absent from service 12 without pay, except for military service, shall not be counted 13 in computing the service of a contributor in his certificate, or 14 upon retirement unless specially allowed by the municipality, 15 with the approval of the board. 16 When a contributor leaves the employ of a municipality which 17 has joined the system, and enters into the employ of another 18 municipality which has also joined the system, his service 19 credits shall remain unimpaired, but in such cases the unpaid 20 municipal liability for prior service shall be prorated by the 21 board between the municipalities on an equitable basis. The 22 basis will be determined, with the advice of the actuary, 23 according to the number of years of service performed by the 24 contributor for each municipality. 25 Any municipal fireman or municipal policeman employed by a 26 municipality who has been a regularly appointed fireman or 27 policeman for a period of at least six months and is an active 28 member of the system and who thereafter, heretofore, or 29 hereafter, shall be inducted into the military service of the 30 United States [in times of war, armed conflict, or National 20050H0740B0831 - 6 -
1 emergency, so proclaimed by the President of the United States,] 2 shall have credited to his employment record, for pension or 3 retirement benefits, all of the time spent by him in such 4 military service [during the continuance of such war, armed 5 conflict, or National emergency] if such person returns or has 6 heretofore returned to his employment within six months after 7 his separation from the service. The municipality shall, during 8 the period of the member's intervening military service, 9 continue to make current service contributions toward the 10 municipal annuity of the member. An active member may file an 11 application with the board for permission to purchase credit 12 toward his member's share of the annuity for intervening 13 military service. These contributions shall be computed by 14 applying the member's contribution rate to his annual rate of 15 compensation at the time of entry of the member into active 16 military service, and multiplying the result by the number of 17 years and fractional part of a year of creditable intervening 18 military service, together with interest from date of return to 19 employment to date of purchase. The amount due from the member 20 shall be certified by the board in accordance with methods 21 approved by the actuary, and may be paid by (1) regular monthly 22 payments during active military service, or (2) a lump sum 23 payment within thirty days, or (3) it may be amortized with 24 additional interest through salary deductions in amounts agreed 25 upon by the member and the board. 26 An active member may also purchase credit for other than 27 intervening military service performed for the United States [in 28 times of war, armed conflict or National emergency, so 29 proclaimed by the President of the United States,] for a period 30 not to exceed five years: Provided, That the member has 20050H0740B0831 - 7 -
1 completed five years of service to the municipality subsequent 2 to such military service. An active member may file an 3 application with the board for permission to purchase credit for 4 nonintervening military service upon completion of five years of 5 subsequent service to the municipality. The type of service 6 credit for such service shall be determined by the date of entry 7 of the municipality into the system. If the date of the member's 8 separation from military service is prior to the date on which 9 the municipality joined the system, then the credit purchased 10 shall be considered as prior service credit. In this case the 11 amount due from the member shall be computed by applying the 12 member's basic contribution rate plus the rate of contribution 13 the municipality paid for current service during its first year 14 of entry into the system to his prior salary and multiplying the 15 result by the number of years and fractional part of a year of 16 creditable nonintervening military service, plus interest from 17 the later of the date of entry into the system and the date of 18 the member's employment by the municipality to the date of 19 purchase. The amount due from the member shall be certified by 20 the board in accordance with methods approved by the actuary, 21 and may be paid in a lump sum within thirty days or it may be 22 amortized with additional interest through salary deductions in 23 amounts agreed upon by the member and the board. If, on the 24 other hand, the date of the member's separation from military 25 service is later than the date of entry of the municipality into 26 the system, then the credit purchased shall be considered as 27 current service credit. In this case the amount due from the 28 member shall be computed by applying the member's basic 29 contribution rate plus the municipality's normal contribution 30 rate for current service which was in effect on the date of the 20050H0740B0831 - 8 -
1 member's entry into employment with the municipality to his 2 average annual rate of compensation over the first five years of 3 his subsequent employment and multiplying the result by the 4 number of years and fractional part of a year of creditable 5 nonintervening military service being purchased, plus interest 6 from the date of employment by the municipality to date of 7 purchase. 8 The amount due from the member shall be certified by the 9 board in accordance with methods approved by the actuary, and 10 may be paid in a lump sum within thirty days or it may be 11 amortized with additional interest through salary deductions in 12 amounts agreed upon by the member and the board. 13 The rate of interest to be charged to members on their 14 purchase of credit for intervening or nonintervening military 15 service shall be the rate being credited by the system to 16 member's contribution accounts in effect on the date of the 17 member's application, compounded annually. 18 A member may purchase credit for intervening or 19 nonintervening military service only if his discharge or 20 separation from the service was granted under other than 21 dishonorable conditions. 22 A member may not purchase credit for any military service for 23 which he is entitled to receive a retirement allowance from the 24 United States Government. 25 Applications for permission to purchase credit for military 26 service must be accompanied by proof of the nature of his 27 discharge or separation from the military service. 28 Section 2. This act shall take effect in 60 days. L21L53JS/20050H0740B0831 - 9 -