PRIOR PRINTER'S NOS. 3730, 3853

PRINTER'S NO.  3916

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2497

Session of

2010

  

  

INTRODUCED BY D. EVANS, BRIGGS, PARKER, WILLIAMS, GALLOWAY, DePASQUALE, KORTZ, W. KELLER, MYERS, SHAPIRO AND SIPTROTH, MAY 11, 2010

  

  

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 15, 2010  

  

  

  

AN ACT

  

1

Amending Titles 24 (Education) and 71 (State Government) of the

2

Pennsylvania Consolidated Statutes, in Title 24, further

3

providing for definitions, for contributions by the

4

Commonwealth, for payments by employers, for actuarial cost

5

method, for additional supplemental annuities, for further

6

additional supplemental annuities, for supplemental annuities

7

commencing 1994, for supplemental annuities commencing 1998,

8

for supplemental annuities commencing 2002, for supplemental

9

annuities commencing 2003, for administrative duties of board

10

and, for payments to school entities by Commonwealth, for

<--

11

eligibility points for retention and reinstatement of service

12

credits and for creditable nonschool service; providing for

13

election to become a Class T-F member; further providing for

14

classes of service, for eligibility for annuities, for

15

eligibility for vesting, for member contributions for

16

creditable school service, for contributions for purchase of

17

credit for creditable nonschool service, for maximum single

18

life annuity, for disability annuities, for member's options,

19

for duties of board regarding applications and elections of

20

members and for rights and duties of school employees and

21

members; in Title 71, providing for definitions; further

22

providing for rights and duties of State employees and

<--

23

members credited State service, for retention and

<--

24

reinstatement of service credits, for creditable NONSTATE

25

service and for classes of service; providing for election to

26

become a Class A-4 member; further providing for eligibility

27

for annuities, for eligibility for vesting, for waiver of

28

regular member contributions and Social Security integration

29

member contributions, for member contributions for purchase

30

of credit for previous State service or to become a full

31

coverage member, for contributions for the purchase of credit

32

for creditable NONSTATE service, for contributions by the

 


1

Commonwealth and other employers, for actuarial cost method, 

2

for maximum single life annuity, for disability annuities and

<--

3

for member's options; providing for payment of accumulated

4

deductions resulting from Class A-3 service; further

5

providing for additional supplemental annuities, for further

6

additional supplemental annuities, for supplemental annuities

7

commencing 1994, for supplemental annuities commencing 1998,

8

for supplemental annuities commencing 2002, for supplemental

9

annuities commencing 2003, for special supplemental

10

postretirement adjustment of 2002, for administrative duties

11

of the board, for duties of board to advise and report to

<--

12

heads of departments and members, for duties of board

13

regarding applications and elections of members, for

14

installment payments of accumulated deductions, for rights

15

and duties of State employees and members, for State

16

accumulation account and, for State Police Benefit Account,

<--

17

for Enforcement Officers' Benefit Account, for supplemental

18

annuity account and for construction of part; and providing

<--

19

for recertification to the Secretary of the Budget and, for

<--

20

holding certain public officials harmless, for construction

<--

21

of calculation or actuarial method and for certain

22

operational provisions.

23

The General Assembly of the Commonwealth of Pennsylvania

24

hereby enacts as follows:

25

Section 1.  The definition of "employer" in section 8102 of

<--

26

Title 24 of the Pennsylvania Consolidated Statutes is amended to

27

read:

28

Section 1.  The definitions of "basic contribution rate,"

<--

29

"class of service multiplier," "employer," "standard single life

30

annuity," "superannuation or normal retirement age" and "vestee"

31

in section 8102 of Title 24 of the Pennsylvania Consolidated

32

Statutes are amended to read:

33

§ 8102.  Definitions.

34

The following words and phrases when used in this part shall

35

have, unless the context clearly indicates otherwise, the

36

meanings given to them in this section:

37

* * *

38

"Basic contribution rate."  For Class T-A, T-B and T-C

<--

39

service, the rate of 6 1/4%. For Class T-D service, the rate of

40

7 1/2%. For all active members on the effective date of this

41

provision who are currently paying 5 1/4% and elect Class T-D

- 2 -

 


1

service, the rate of 6 1/2%. For Class T-E service, the rate of

2

7 1/2%. For Class T-F service, the rate of 10.30%.

3

* * *

4

"Class of service multiplier."

5

Class of service

   Multiplier

6

T-A

     .714

7

T-B

     .625

8

T-C

    1.000

9

T-D

    1.000

10

T-E

    1.000

11

T-F

    1.000

12

* * *

13

"Employer."  Any governmental entity directly responsible for

14

the employment and payment of the school employee and charged

15

with the responsibility of providing public education within

16

this Commonwealth, including but not limited to: State-owned

17

colleges and universities, the Pennsylvania State University,

18

community colleges, area vocational-technical schools,

19

intermediate units, the State Board of Education, Scotland

20

School for Veterans' Children, Thaddeus Stevens [State School] 

<--

21

College of Technology, and the [Pennsylvania State Oral] Western

22

Pennsylvania School for the Deaf.

23

* * *

24

"Standard single life annuity."  For Class T-A, T-B and T-C

<--

25

credited service of a member, an annuity equal to 2% of the

26

final average salary, multiplied by the total number of years

27

and fractional part of a year of credited service of a member.

28

For Class T-D credited service of a member, an annuity equal to

29

2.5% of the final average salary, multiplied by the total number

30

of years and fractional part of a year of credited service. For

- 3 -

 


1

Class T-E credited service of a member, an annuity equal to 2%

2

of the final average salary, multiplied by the total number of

3

years and fractional part of a year of credited service of a

4

member. For Class T-F credited service of a member, an annuity

5

equal to 2.5% of the final average salary, multiplied by the

6

total number of years and fractional part of a year of credited

7

service of a member.

8

* * *

9

"Superannuation or normal retirement age."

10

Class of service

Age

11

12

T-A

  

62 or any age upon accrual of 35 eligibility points

13

T-B

62

14

15

16

17

T-C and T-D

  

  

  

62 or age 60 provided the member has at least 30 eligibility points or any age upon accrual of 35 eligibility points

18

19

20

21

T-E and T-F

  

  

  

65 with accrual of at least three eligibility points or any age upon accrual of 35 eligibility points

22

* * *

23

"Vestee."  A member with five or more eligibility points who

24

has terminated school service, has left his accumulated

25

deductions in the fund and is deferring filing of an application

26

for receipt of an annuity. For Class T-E and Class T-F members,

27

a member with ten or more eligibility points who has terminated

28

school service, has left his accumulated deductions in the fund

29

and is deferring filing of an application for receipt of an

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1

annuity.

2

Section 2.  Sections 8326(a), 8327(a) and (c), 8328,

<--

3

8348.1(f), 8348.2(f), 8348.3(f), 8348.5(f), 8348.6(f),

4

8348.7(f), 8502(k) and 8535(3) 8303(c) and 8304(a) of Title 24

<--

5

are amended to read:

6

§ 8303.  Eligibility points for retention and reinstatement of

<--

7

service credits.

8

* * *

9

(c)  Purchase of previous creditable service.--Every active

10

member of the system or a multiple service member who is an

11

active member of the State Employees' Retirement System on or

12

after the effective date of this part may purchase credit and

13

receive eligibility points:

14

(1)  as a member of Class T-C, Class T-E or Class T-F for

15

previous school service or creditable nonschool service; or

16

(2)  as a member of Class T-D for previous school

17

service, provided the member elects to become a Class T-D

18

member pursuant to section 8305.1 (relating to election to

19

become a Class T-D member);

20

upon written agreement by the member and the board as to the

21

manner of payment of the amount due for credit for such service;

22

except, that any purchase for reinstatement of service credit

23

shall be for all service previously credited.

24

§ 8304.  Creditable nonschool service.

25

(a)  Eligibility.--An active member or a multiple service

26

member who is an active member of the State Employees'

27

Retirement System shall be eligible to receive Class T-C, Class

28

T-E or Class T-F service credit for creditable nonschool service

29

and Class T-D, Class T-E or Class T-F service for intervening

30

military service, provided the member becomes a Class T-D member

- 5 -

 


1

pursuant to section 8305.1 (relating to election to become a

2

Class T-D member) or Class T-F member pursuant to section 8305.2

3

(relating to election to become a Class T-F member) or 8305

4

(relating to classes of service), as set forth in subsection (b)

5

provided that he is not entitled to receive, eligible to receive

6

now or in the future, or is receiving retirement benefits for

7

such service under a retirement system administered and wholly

8

or partially paid for by any other governmental agency or by any

9

private employer, or a retirement program approved by the

10

employer in accordance with section 8301(a)(1) (relating to

11

mandatory and optional membership), and further provided that

12

such service is certified by the previous employer and the

13

manner of payment of the amount due is agreed upon by the

14

member, the employer, and the board.

15

* * *

16

Section 3.  Section 8305 of Title 24 is amended by adding

17

subsections to read:

18

§ 8305.  Classes of service.

19

* * *

20

(d)  Class T-E membership.--Notwithstanding any other

21

provision, a person who first becomes a school employee and an

22

active member, or a person who first becomes a multiple service

23

member who is a State employee and a member of the State

24

Employees' Retirement System, on or after the effective date of

25

this subsection shall be classified as a Class T-E member upon

26

payment of regular member contributions.

27

(e)  Class T-F membership.--Notwithstanding any other

28

provision, a person who first becomes a school employee and an

29

active member, or a person who first becomes a multiple service

30

member who is a State employee and a member of the State

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1

Employees' Retirement System, on or after the effective date of

2

this subsection, and who is eligible to become a Class T-E

3

member, shall have the right to elect into Class T-F membership,

4

provided the person elects to become a Class T-F member pursuant

5

to section 8305.2 (relating to election to become a Class T-F

6

member), upon written election filed with the board and payment

7

of regular member contributions.

8

Section 4.  Title 24 is amended by adding a section to read:

9

§ 8305.2.  Election to become a Class T-F member.

10

(a)  General rule.--A person who first becomes a school

11

employee and an active member, or a person who first becomes a

12

multiple service member who is a State employee and a member of

13

the State Employees' Retirement System, on or after the

14

effective date of this subsection and who is eligible to become

15

a Class T-E member may elect to become a member of Class T-F.

16

(b)  Time for making election.--A member must elect to become

17

a Class T-F member by filing a written election with the board

18

within 45 days of notification by the board that such member is

19

eligible for such election.

20

(c)  Effect of election.--An election to become a Class T-F

21

member shall be irrevocable. A member who elects Class T-F

22

membership shall receive Class T-F service credit on any and all

23

future service, regardless of whether the member terminates

24

service or has a break in service.

25

(d)  Effect of failure to make election.--If a member fails

26

to timely file an election to become a Class T-F member, then

27

the member shall be enrolled as a member of Class T-E and the

28

member shall never be able to elect Class T-F service,

29

regardless of whether the member terminates service or has a

30

break in service.

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1

Section 5.  Sections 8307(b), 8308, 8323(a), (c) and (c.1),

2

8324(a), (b), (d), (e) and (f), 8326(a), 8327(a) and (c), 8328,

3

8342(a), 8344(d), 8345(a), 8348.1(f), 8348.2(f), 8348.3(f),

4

8348.5(f), 8348.6(f), 8348.7(f) and 8502(k) of Title 24 are

5

amended to read:

6

§ 8307.  Eligibility for annuities.

7

* * *

8

(b)  Withdrawal annuity.--A vestee in Class T-C or Class T-D 

9

with five or more eligibility points or an active or inactive

10

Class T-C or Class T-D member who terminates school service

11

having five or more eligibility points shall, upon filing a

12

proper application, be entitled to receive an early annuity. A

13

vestee in Class T-E or Class T-F with ten or more eligibility

14

points or an active or inactive Class T-E or Class T-F member

15

who terminates school service having ten or more eligibility

16

points shall, upon filing a proper application, be entitled to

17

receive an early annuity.

18

* * *

19

§ 8308.  Eligibility for vesting.

20

Any Class T-C or Class T-D member who terminates school

21

service with five or more eligibility points shall be entitled

22

to vest his retirement benefits until attainment of

23

superannuation age. Any Class T-E or Class T-F member who

24

terminates school service with ten or more eligibility points

25

shall be entitled to vest his retirement benefits until

26

attainment of superannuation age.

27

§ 8323.  Member contributions for creditable school service.

28

(a)  Previous school service, sabbatical leave and full

29

coverage.--The contributions to be paid by an active member or

30

an eligible State employee for credit for reinstatement of all

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1

previously credited school service, school service not

2

previously credited, sabbatical leave as if he had been in full-

3

time daily attendance, or full-coverage membership shall be

4

sufficient to provide an amount equal to the accumulated

5

deductions which would have been standing to the credit of the

6

member for such service had regular member contributions been

7

made with full coverage at the rate of contribution necessary to

8

be credited as Class T-C service [or], Class T-D service if the

9

member is a Class T-D member, or Class T-E service if the member

10

is a Class T-E member, or Class T-F service if the member is a

11

Class T-F member, and had such contributions been credited with

12

statutory interest during the period the contributions would

13

have been made and during all periods of subsequent school and

14

State service up to the date of purchase.

15

* * *

16

(c)  Approved leave of absence other than sabbatical leave

17

and activated military service leave.--The contributions to be

18

paid by an active member for credit for an approved leave of

19

absence, other than sabbatical leave and activated military

20

service leave, shall be sufficient to transfer his membership to

21

Class T-C or to Class T-D if the member is a Class T-D member or

22

to Class T-E if the member is a Class T-E member or to Class T-F

23

if the member is a Class T-F member and further to provide an

24

annuity as a Class T-C member or Class T-D member if the member

25

is a Class T-D member or Class T-E if the member is a Class T-E

26

member or to Class T-F if the member is a Class T-F member for 

27

such additional credited service. Such amount shall be the sum

28

of the amount required in accordance with the provisions of

29

subsection (b) and an amount determined as the sum of the

30

member's basic contribution rate and the normal contribution

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1

rate as provided in section 8328 (relating to actuarial cost

2

method) during such period multiplied by the compensation which

3

was received or which would have been received during such

4

period and with statutory interest during all periods of

5

subsequent school and State service up to the date of purchase.

6

(c.1)  Activated military service leave.--The contributions

7

to be paid by an active member for credit for all activated

8

military service leave as if he had been in regular attendance

9

in the duties for which he is employed shall be sufficient to

10

provide an amount equal to the accumulated deductions which

11

would have been standing to the credit of the member for such

12

service had regular member contributions been made with full

13

coverage at the rate of contribution necessary to be credited as

14

Class T-C service or Class T-D service if the member is a Class

15

T-D member or Class T-E service if the member is a Class T-E

16

member or Class T-F if the member is a Class T-F member and had

17

such contributions been credited with statutory interest during

18

the period the contributions would have been made and during all

19

periods of subsequent State and school service up to the date of

20

purchase. In the case of activated military service leave

21

beginning after the date of enactment of this subsection,

22

contributions due from the member shall be made as if he is in

23

regular attendance in the duties for which he is employed.

24

* * *

25

§ 8324.  Contributions for purchase of credit for creditable

26

nonschool service.

27

(a)  Source of contributions.--The total contributions to

28

purchase credit as a member of Class T-C, Class T-E or Class T-F 

29

for creditable nonschool service of an active member or an

30

eligible State employee shall be paid either by the member, the

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1

member's previous employer, the Commonwealth, or a combination

2

thereof, as provided by law.

3

(b)  Nonintervening military service.--The amount due for the

4

purchase of credit for military service other than intervening

5

military service shall be determined by applying the member's

6

basic contribution rate plus the normal contribution rate as

7

provided in section 8328 (relating to actuarial cost method) at

8

the time of entry of the member into school service subsequent

9

to such military service to one-third of his total compensation

10

received during the first three years of such subsequent

11

credited school service and multiplying the product by the

12

number of years and fractional part of a year of creditable

13

nonintervening military service being purchased together with

14

statutory interest during all periods of subsequent school and

15

State service to date of purchase. Upon certification of the

16

amount due, payment may be made in a lump sum within 90 days or

17

in the case of an active member or an eligible State employee

18

who is an active member of the State Employees' Retirement

19

System it may be amortized with statutory interest through

20

salary deductions in amounts agreed upon by the member and the

21

board. The salary deduction amortization plans agreed to by

22

members and the board may include a deferral of payment amounts

23

and statutory interest until the termination of school service

24

or State service as the board in its sole discretion decides to

25

allow. The board may limit salary deduction amortization plans

26

to such terms as the board in its sole discretion determines. In

27

the case of an eligible State employee who is an active member

28

of the State Employees' Retirement System, the agreed upon

29

salary deductions shall be remitted to the State Employees'

30

Retirement Board, which shall certify and transfer to the board

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1

the amounts paid. Application may be filed for all such military

2

service credit upon completion of three years of subsequent

3

credited school service and shall be credited as Class T-C

4

service. In the event that a Class T-E member makes a purchase

5

of credit for such military service, then such service shall be

6

credited as Class T-E service. In the event that a Class T-F

7

member makes a purchase of credit for such military service,

8

then such service shall be credited as Class T-F service.

9

* * *

10

(d)  Other creditable nonschool service.--Contributions on

11

account of Class T-C, Class T-E or Class T-F credit for

12

creditable nonschool service other than military service shall

13

be determined by applying the member's basic contribution rate

14

plus the normal contribution rate as provided in section 8328 at

15

the time of the member's entry into school service subsequent to

16

such creditable nonschool service to his total compensation

17

received during the first year of subsequent credited school

18

service and multiplying the product by the number of years and

19

fractional part of a year of creditable nonschool service being

20

purchased together with statutory interest during all periods of

21

subsequent school or State service to the date of purchase,

22

except that in the case of purchase of credit for creditable

23

nonschool service as set forth in section 8304(b)(5) (relating

24

to creditable nonschool service) the member shall pay only the

25

employee's share unless otherwise provided by law. Upon

26

certification of the amount due, payment may be made in a lump

27

sum within 90 days or in the case of an active member or an

28

eligible State employee who is an active member of the State

29

Employees' Retirement System it may be amortized with statutory

30

interest through salary deductions in amounts agreed upon by the

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1

member and the board. The salary deduction amortization plans

2

agreed to by the members and the board may include a deferral of

3

payment amounts and statutory interest until the termination of

4

school service or State service as the board in its sole

5

discretion decides to allow. The board may limit salary

6

deduction amortization plans to such terms as the board in its

7

sole discretion determines. In the case of an eligible State

8

employee who is an active member of the State Employees'

9

Retirement System, the agreed upon salary deductions shall be

10

remitted to the State Employees' Retirement Board, which shall

11

certify and transfer to the board the amounts paid.

12

(e)  Creditable work experience.--Contributions on account of

13

Class T-C, Class T-E or Class T-F credit for creditable work

14

experience pursuant to section 8304(b)(6) shall be the present

15

value of the full actuarial cost of the increase in the

16

projected superannuation annuity caused by the additional

17

service credited on account of the purchase of creditable work

18

experience. The amount paid for the purchase of credit for

19

creditable work experience shall not be payable as a lump sum

20

under section 8345(a)(4)(iii) (relating to member's options).

21

Any individual eligible to receive an annuity, excluding an

22

annuity received under the Federal Social Security Act (42

23

U.S.C. § 301 et seq.), in another pension system, other than a

24

military pension system, shall not be eligible to purchase this

25

service.

26

(f)  Creditable maternity leave.--Contributions on account of

27

Class T-C, Class T-E or Class T-F credit for creditable

28

maternity leave pursuant to section 8304(b)(7) shall be

29

determined by applying the member's basic contribution rate plus

30

the normal contribution rate as provided in section 8328 at the

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1

time of the member's return to school service to the total

2

compensation received during the first year of subsequent school

3

service and multiplying the product by the number of years and

4

fractional part of a year of creditable service being purchased,

5

together with statutory interest during all periods of

6

subsequent school or State service to the date of purchase. The

7

amount paid for the purchase of credit for creditable maternity

8

leave shall not be eligible for withdrawal as a lump sum under

9

section 8345(a)(4)(iii).

10

§ 8326.  Contributions by the Commonwealth.

11

(a)  Contributions on behalf of active members.--The

12

Commonwealth shall make contributions into the fund on behalf of

13

all active members, including members on activated military

14

service leave, in an amount equal to one-half the amount

15

certified by the board as necessary to provide, together with

16

the members' contributions, annuity reserves on account of

17

prospective annuities as provided in this part in accordance

18

with section 8328[(a), (b), (c) and (e)] (relating to actuarial

19

cost method). In case a school employee has elected membership

20

in a retirement program approved by the employer, the

21

Commonwealth shall contribute to such program on account of his

22

membership an amount no greater than the amount it would have

23

contributed had the employee been a member of the Public School

24

Employees' Retirement System.

25

* * *

26

§ 8327.  Payments by employers.

27

(a)  General rule.--Each employer, including the Commonwealth

28

as employer of employees of the Department of Education, State-

29

owned colleges and universities, Thaddeus Stevens [State School] 

30

College of Technology, [Pennsylvania State Oral] Western

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1

Pennsylvania School for the Deaf, Scotland School for Veterans'

2

Children, and the Pennsylvania State University, shall make

3

payments to the fund each quarter in an amount equal to one-half

4

the sum of the percentages, as determined under section 8328

5

(relating to actuarial cost method), applied to the total

6

compensation during the pay periods in the preceding quarter of

7

all its employees who were members of the system during such

8

period, including members on activated military service leave.

9

In the event a member on activated military service leave does

10

not return to service for the necessary time or receives an

11

undesirable, bad conduct or dishonorable discharge or does not

12

elect to receive credit for activated military service under

13

section 8302(b.1)(3) (relating to credited school service), the

14

contributions made by the employer on behalf of such member

15

shall be returned with valuation interest upon application by

16

the employer.

17

* * *

18

(c)  Payments by employers after June 30, 1995.--After June

19

30, 1995, each employer, including the Commonwealth as employer

20

of employees of the Department of Education, State-owned

21

colleges and universities, Thaddeus Stevens [State School] 

<--

22

College of Technology, [Pennsylvania State Oral] Western

23

Pennsylvania School for the Deaf, Scotland School for Veterans'

24

Children and The Pennsylvania State University, shall make

25

payments to the fund each quarter in an amount computed in the

26

following manner:

27

(1)  For an employer that is a school entity, the amount

28

shall be the sum of the percentages as determined under

29

section 8328 applied to the total compensation during the pay

30

periods in the preceding quarter of all employees who were

- 15 -

 


1

active members of the system during such period, including

2

members on activated military service leave. In the event a

3

member on activated military service leave does not return to

4

service for the necessary time or receives an undesirable,

5

bad conduct or dishonorable discharge or does not elect to

6

receive credit for activated military service under section

7

8302(b.1)(3), the contribution made by the employer on behalf

8

of such member shall be returned with valuation interest upon

9

application by the employer.

10

(2)  For an employer that is not a school entity, the

11

amount computed under subsection (a).

12

(3)  For any employer, whether or not a school entity, in

13

computing the amount of payment due each quarter, there shall

14

be excluded from the total compensation referred to in this

15

subsection and subsection (a) any amount of compensation of a

16

noneligible member on the basis of which member contributions

17

have not been made by reason of the limitation under IRC §

18

401(a)(17). Any amount of contribution to the fund paid by

19

the employer on behalf of a noneligible member on the basis

20

of compensation which was subject to exclusion from total

21

compensation in accordance with the provisions of this

22

paragraph shall, upon the board's determination or upon

23

application by the employer, be returned to the employer with

24

valuation interest.

25

§ 8328.  Actuarial cost method.

26

(a)  Employer contribution rate [on behalf of active

27

members].--The amount of the total employer contributions [on

28

behalf of all active members] shall be computed by the actuary

29

as a percentage of the total compensation of all active members

30

during the period for which the amount is determined and shall

- 16 -

 


1

be so certified by the board. The total employer contribution

2

rate shall be the sum of the final contribution rate as computed

3

in subsection (h) plus the premium assistance contribution rate

4

as computed in subsection (f). The [total] actuarially required 

5

contribution rate [on behalf of all active members] shall

6

consist of the normal contribution rate as defined in subsection

7

(b), the accrued liability contribution rate as defined in

8

subsection (c) and the supplemental annuity contribution rate as

9

defined in subsection (d). Beginning July 1, 2004, the [total] 

10

actuarially required contribution rate shall be modified by the

11

experience adjustment factors as calculated in subsection (e)

12

[but in no case shall it be less than 4% plus the premium

13

assistance contribution rate].

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] The 

17

normal contribution rate shall be determined, on the basis of

18

the actuarial cost method, an annual interest rate and such

<--

19

mortality and other tables as shall be adopted by the board in

20

accordance with generally accepted actuarial principles, as a

21

level percentage of the compensation of the average new active

22

member, which percentage, if contributed on the basis of his

23

prospective compensation through the entire period of active

24

school service, would be sufficient to fund the liability for

25

any prospective benefit payable to him, in excess of that

26

portion funded by his prospective member contributions[, except

27

for the supplemental benefits provided in sections 8348

28

(relating to supplemental annuities), 8348.1 (relating to

29

additional supplemental annuities), 8348.2 (relating to further

30

additional supplemental annuities), 8348.3 (relating to

- 17 -

 


1

supplemental annuities commencing 1994), 8348.4 (relating to

2

special supplemental postretirement adjustment), 8348.5

3

(relating to supplemental annuities commencing 1998), 8348.6

4

(relating to supplemental annuities commencing 2002) and 8348.7

5

(relating to supplemental annuities commencing 2003)].

6

(c)  Accrued liability contribution rate.--

7

(1)  For the fiscal [year] years beginning July 1, 2002,

8

and ending June 30, 2011, the accrued liability contribution

9

rate shall be computed as the rate of total compensation of

10

all active members which shall be certified by the actuary as

11

sufficient to fund over a period of ten years from July 1,

12

2002, the present value of the liabilities for all

13

prospective benefits of active members, except for the

14

supplemental benefits provided in sections 8348 (relating to

15

supplemental annuities), 8348.1 (relating to additional

16

supplemental annuities), 8348.2 (relating to further

17

additional supplemental annuities), 8348.3 (relating to

18

supplemental annuities commencing 1994), 8348.4 (relating to

19

special supplemental postretirement adjustment), 8348.5

20

(relating to supplemental annuities commencing 1998), 8348.6

21

(relating to supplemental annuities commencing 2002) and

22

8348.7 (relating to supplemental annuities commencing 2003),

23

in excess of the total assets in the fund (calculated by

24

recognizing the actuarially expected investment return

25

immediately and recognizing the difference between the actual

26

investment return and the actuarially expected investment

27

return over a five-year period), excluding the balance in the

28

annuity reserve account, and of the present value of normal

29

contributions and of member contributions payable with

30

respect to all active members on July 1, 2002, during the

- 18 -

 


1

remainder of their active service.

2

(2)  [Thereafter] For the fiscal years beginning July 1,

3

2003, and ending June 30, 2011, the amount of each annual

4

accrued liability contribution shall be equal to the amount

5

of such contribution for the fiscal year, beginning July 1,

6

2002, except that, if the accrued liability is increased by

7

legislation enacted subsequent to June 30, 2002, but before

8

July 1, 2003, such additional liability shall be funded over

9

a period of ten years from the first day of July, coincident

10

with or next following the effective date of the increase.

11

The amount of each annual accrued liability contribution for

12

such additional legislative liabilities shall be equal to the

13

amount of such contribution for the first annual payment.

14

(3)  Notwithstanding any other provision of law,

15

beginning July 1, 2004, and ending June 30, 2011, the

16

outstanding balance of the increase in accrued liability due

17

to the change in benefits enacted in 2001 and the outstanding

18

balance of the net actuarial loss incurred in fiscal year

19

2000-2001 shall be amortized in equal dollar annual

20

contributions over a period that ends 30 years after July 1,

21

2002, and the outstanding balance of the net actuarial loss

22

incurred in fiscal year 2001-2002 shall be amortized in equal

23

dollar annual contributions over a period that ends 30 years

24

after July 1, 2003. For fiscal years beginning on or after

25

July 1, 2004, if the accrued liability is increased by

26

legislation enacted subsequent to June 30, 2003, such

27

additional liability shall be funded in equal dollar annual

28

contributions over a period of ten years from the first day

29

of July coincident with or next following the effective date

30

of the increase.

- 19 -

 


1

(4)  For the fiscal year beginning July 1, 2011, the

2

accrued liability contribution rate shall be computed as the

3

rate of total compensation of all active members which shall

4

be certified by the actuary as sufficient to fund as a level

5

percentage of compensation over a period of 30 years from

6

July 1, 2011, the present value of the liabilities for all

7

prospective benefits calculated as of June 30, 2010,

8

including the supplemental benefits as provided in sections

9

8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and

10

8348.7, in excess of the actuarially calculated assets in the

11

fund (calculated recognizing all realized and unrealized

12

investment gains and losses each year in level annual

13

installments over a ten-year period). In the event that the

14

accrued liability is increased by legislation enacted

15

subsequent to June 30, 2010, such additional liability shall

16

be funded as a level percentage of compensation over a period

17

of ten years from the July 1 second succeeding the date such

18

legislation is enacted.

19

(d)  Supplemental annuity contribution rate.--[Contributions]

20

(1)  For the period of July 1, 2002, to June 30, 2011,

21

contributions from the Commonwealth and other employers

22

required to provide for the payment of the supplemental

23

annuities provided for in sections 8348, 8348.1, 8348.2,

24

8348.4 and 8348.5 shall be paid over a period of ten years

25

from July 1, 2002. The funding for the supplemental annuities

26

commencing 2002 provided for in section 8348.6 shall be as

27

provided in section 8348.6(f). The funding for the

28

supplemental annuities commencing 2003 provided for in

29

section 8348.7 shall be as provided in section 8348.7(f). The

30

amount of each annual supplemental annuities contribution

- 20 -

 


1

shall be equal to the amount of such contribution for the

2

fiscal year beginning July 1, 2002. [In the event that

3

supplemental annuities are increased by legislation enacted

4

subsequent to June 30, 2002, the additional liability for the

5

increased benefits to be amortized shall be funded in equal

6

dollar annual installments over a period of ten years.]

7

(2)  For fiscal years beginning July 1, 2011,

8

contributions from the Commonwealth and other employers whose

9

employees are members of the system required to provide for

10

the payment of supplemental annuities as provided in sections

11

8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and

12

8348.7 shall be paid as part of the accrued liability

13

contribution rate as provided for in subsection (c)(4), and

14

there shall not be a separate supplemental annuity

15

contribution rate attributable to those supplemental

16

annuities. In the event that supplemental annuities are

17

increased by legislation enacted subsequent to June 30, 2010,

18

the additional liability for the increase in benefits shall

19

be funded as a level percentage of compensation over a period

20

of ten years from the July 1 second succeeding the date such

21

legislation is enacted.

22

(e)  Experience adjustment factor.--

23

(1)  For each year after the establishment of the accrued

24

liability contribution rate for the fiscal year beginning

25

July 1, [2002] 2011, any increase or decrease in the unfunded

26

accrued liability, excluding the gains or losses on the

27

assets of the health insurance account, due to actual

28

experience differing from assumed experience, changes in

29

actuarial assumptions, changes in contributions caused by the

30

final contribution rate being different from the actuarially

- 21 -

 


1

required contribution rate or changes in the terms and

2

conditions of the benefits provided by the system by

3

judicial, administrative or other processes other than

4

legislation, including, but not limited to, reinterpretation

5

of the provisions of this part, shall be amortized [in equal

6

dollar annual contributions] as a level percentage of

7

compensation over a period of [ten] 30 years beginning with

8

the July 1 second succeeding the actuarial valuation

9

determining said increases or decreases.

10

(2)  [Notwithstanding the provisions of paragraph (1),

11

for each year after the establishment of the accrued

12

liability contribution rate for the fiscal year beginning

13

July 1, 2003, any increase or decrease in the unfunded

14

accrued liability, excluding the gains or losses on the

15

assets of the health insurance account, due to actual

16

experience differing from assumed experience, changes in

17

actuarial assumptions, changes in the terms and conditions of

18

the benefits provided by the system by judicial,

19

administrative or other processes other than legislation,

20

including, but not limited to, reinterpretation of the

21

provisions of this part, shall be amortized in equal dollar

22

annual contributions over a period of 30 years beginning with

23

the July 1 second succeeding the actuarial valuation

24

determining said increases and decreases] (Reserved).

25

(f)  Premium assistance contribution rate.--For each fiscal

26

year beginning with July 1, 1991, the total contribution rate as

27

calculated according to this section shall be increased annually

28

in the full amount certified by the board as necessary to fund

29

the premium assistance program in accordance with section 8509

30

(relating to health insurance premium assistance program),

- 22 -

 


1

notwithstanding any other provisions of this section.

2

(g)  Temporary application of collared contribution rate.--

3

(1)  The collared contribution rate for each year shall

4

be determined by comparing the actuarially required

5

contribution rate, calculated without regard for the costs

6

added by legislation, to the prior year's final contribution

7

rate.

8

(2)  If, for any of the fiscal years beginning July 1,

9

2011, July 1, 2012, and on or after July 1, 2013, the

10

actuarially required contribution rate, calculated without

11

regard for the costs added by legislation, is more than 3%,

12

3.5% and 4.5%, respectively, of the total compensation of all

13

active members greater than the prior year's final

14

contribution rate, then the collared contribution rate shall

15

be applied and be equal to the prior year's final

16

contribution rate increased by 3%, 3.5% and 4.5%,

17

respectively, of total compensation of all active members.

18

Otherwise, and for all other fiscal years, the collared

19

contribution rate shall not be applicable. In no case shall

20

the collared contribution rate be less than 4% of the total

21

compensation of all active members.

22

(h)  Final contribution rate.--

23

(1)  For the fiscal year beginning July 1, 2010, the

24

final contribution rate shall be 5% of the total compensation

25

of all active members. For each subsequent fiscal year for

26

which the collared contribution rate is applicable, the final

27

contribution rate shall be the collared contribution rate as

28

calculated in subsection (g), plus the costs added by

29

legislation.

30

(2)  For all other fiscal years, the final contribution

- 23 -

 


1

rate shall be the actuarially required contribution rate,

2

provided that the final contribution rate shall not be less

3

than the normal contribution rate as provided in subsection

4

(b).

5

(i)  Definitions.--As used in this section, the following

6

words and phrases shall have the meanings given to them in this

7

subsection unless the context clearly indicates otherwise:

8

"Actuarially required contribution rate."  The sum of the

9

following:

10

(1)  the normal contribution rate as calculated in

11

subsection (b);

12

(2)  the accrued liability contribution rate as

13

calculated in subsection (c);

14

(3)  the supplemental annuity contribution rate as

15

calculated in subsection (d);

16

(4)  the experience adjustment factor as calculated in

17

subsection (e); and

18

(5)  any costs added by legislation enacted prior to the

19

last actuarial valuation.

20

"Costs added by legislation."  The sum, if positive, of all

21

changes in the actuarially required contribution rate resulting

22

from legislation enacted in the year since the last actuarial

23

valuation and not included in the determination of the prior

24

year's final contribution rate, computed as the rate of total

25

compensation of all active members certified by the actuary as

26

sufficient to make the employer normal contributions and

27

sufficient to amortize legislatively created changes in the

28

unfunded actuarial liability as a level percentage of

29

compensation over a period of ten years from the July 1 second

30

succeeding the date of enactment.

- 24 -

 


1

§ 8342.  Maximum single life annuity.

<--

2

(a)  General rule.--Upon termination of service, any full

3

coverage member who is eligible to receive an annuity pursuant

4

to the provisions of section 8307(a) or (b) (relating to

5

eligibility for annuities) and has made an application in

6

accordance with the provisions of section 8507(f) (relating to

7

rights and duties of school employees and members) shall be

8

entitled to receive a maximum single life annuity attributable

9

to his credited service and equal to the sum of the following

10

single life annuities beginning at the effective date of

11

retirement and, in case the member on the effective date of

12

retirement is under superannuation age, multiplied by a

13

reduction factor calculated to provide benefits actuarially

14

equivalent to an annuity starting at superannuation age:

15

Provided however, That on or after July 1, 1976, in the case of

16

any Class T-C, T-D, T-E or T-F member who has attained age 55

17

and has 25 or more eligibility points such sum of single life

18

annuities shall be reduced by a percentage determined by

19

multiplying the number of months, including a fraction of a

20

month as a full month, by which the effective date of retirement

21

precedes superannuation age by 1/4%:

22

(1)  A standard single life annuity multiplied by the

23

class of service multiplier and calculated on the basis of

24

the number of years of credited school service other than

25

concurrent service.

26

(2)  A standard single life annuity multiplied by the

27

class of service multiplier and calculated on the basis of

28

the number of years of concurrent service and multiplied by

29

the ratio of total compensation received in the school system

30

during the period of concurrent service to the total

- 25 -

 


1

compensation received during such period.

2

(3)  A supplemental annuity such that the total annuity

3

prior to any optional modification or any reduction due to

4

retirement prior to superannuation age shall be at least $100

5

for each full year of credited service.

6

* * *

7

§ 8344.  Disability annuities.

8

* * *

9

(d)  Withdrawal of accumulated deductions.--Upon termination

10

of disability annuity payments in excess of an annuity

11

calculated in accordance with section 8342, a disability

12

annuitant who:

13

(1)  is a Class T-C or Class T-D member; or

14

(2)  is a Class T-E or Class T-F member with less than

15

ten eligibility points

16

and who does not return to school service may file an

17

application with the board for an amount equal to the

18

accumulated deductions standing to his credit at the effective

19

date of disability less the total payments received on account

20

of his member's annuity.

21

* * *

22

§ 8345.  Member's options.

23

(a)  General rule.--Any Class T-C or Class T-D member who is

24

a vestee with five or more eligibility points, any Class T-E or

25

Class T-F member who is a vestee with ten or more eligibility

26

points, or any other eligible member upon termination of school

27

service who has not withdrawn his accumulated deductions as

28

provided in section 8341 (relating to return of accumulated

29

deductions) may apply for and elect to receive either a maximum

30

single life annuity, as calculated in accordance with the

- 26 -

 


1

provisions of section 8342 (relating to maximum single life

2

annuity), or a reduced annuity certified by the actuary to be

3

actuarially equivalent to the maximum single life annuity and in

4

accordance with one of the following options, except that no

5

member shall elect an annuity payable to one or more survivor

6

annuitants other than his spouse or alternate payee of such a

7

magnitude that the present value of the annuity payable to him

8

for life plus any lump sum payment he may have elected to

9

receive is less than 50% of the present value of his maximum

10

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.

- 27 -

 


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. This

14

subparagraph shall not apply to a Class T-E or Class T-F

15

member.

16

* * *

17

§ 8348.1.  Additional supplemental annuities.

18

* * *

19

(f)  Funding.--The actuary shall annually certify the amount

20

of Commonwealth appropriations for the next fiscal year needed

21

to fund, over a period of ten years from July 1, 2002, the

22

additional monthly supplemental annuity provided for in this

23

section[. The board shall submit the actuary's certification to

24

the Secretary of the Budget on or before November 1 of each

25

year. If, in any year after 1984, the amount certified is

26

disapproved under section 610 of the act of April 9, 1929

27

(P.L.177, No.175), known as The Administrative Code of 1929, as

28

insufficient to meet the funding requirements of this subsection

29

or is not appropriated on or before July 1, the additional

30

supplemental annuity provided for in this section shall be

- 28 -

 


1

suspended until such time as an amount certified and approved as

2

sufficient is appropriated], which amounts shall be paid during

3

the period beginning July 1, 2002, and ending June 30, 2011. For

4

fiscal years beginning on or after July 1, 2011, the additional

5

liability provided in this section shall be funded as part of

6

the actuarial accrued liability as provided in section 8328

7

(relating to actuarial cost method).

8

* * *

9

§ 8348.2.  Further additional supplemental annuities.

10

* * *

11

(f)  Funding.--The actuary shall annually estimate the amount

12

of Commonwealth appropriations for the next fiscal year needed

13

to fund, over a period of ten years from July 1, 2002, the

14

additional monthly supplemental annuity provided for in this

15

section[. The board shall submit the actuary's estimation to the

16

Secretary of the Budget on or before November 1 of each year.

17

If, in any year after 1988, the amount estimated is disapproved

18

under section 610 of the act of April 9, 1929 (P.L.177, No.175),

19

known as The Administrative Code of 1929, as insufficient to

20

meet the funding requirements of this subsection or is not

21

appropriated on or before July 1, the additional supplemental

22

annuity provided for in this section shall be suspended until

23

such time as an amount certified and approved as sufficient is

24

appropriated], which amounts shall be paid during the period

25

beginning July 1, 2002, and ending June 30, 2011. For fiscal

26

years beginning on or after July 1, 2011, the additional

27

liability provided in this section shall be funded as part of

28

the actuarial accrued liability as provided in section 8328

29

(relating to actuarial cost method).

30

* * *

- 29 -

 


1

§ 8348.3.  Supplemental annuities commencing 1994.

2

* * *

3

(f)  Funding.--[The]

4

(1)  For the period beginning July 1, 2002, and ending

5

June 30, 2011, the additional liability for the increase in

6

benefits provided in this section shall be funded in equal

7

dollar annual installments over a period of ten years

8

beginning July 1, 2002.

9

(2)  For fiscal years beginning on or after July 1, 2011,

10

the additional liability provided in this section shall be

11

funded as part of the actuarial accrued liability as provided

12

in section 8328 (relating to actuarial cost method).

13

* * *

14

§ 8348.5.  Supplemental annuities commencing 1998.

15

* * *

16

(f)  Funding.--[The]

17

(1)  For the period beginning July 1, 2002, and ending

18

June 30, 2011, the additional liability for the increase in

19

benefits provided in this section shall be funded in equal

20

dollar annual installments over a period of ten years

21

beginning July 1, 2002.

22

(2)  For fiscal years beginning on or after July 1, 2011,

23

the additional liability provided in this section shall be

24

funded as part of the actuarial accrued liability as provided

25

in section 8328 (relating to actuarial cost method).

26

(3)  Notwithstanding the provisions of section 212 of the

27

act of April 22, 1998 (P.L.1341, No.6A), known as the General

28

Appropriation Act of 1998, regarding payment for cost-of-

29

living increases for annuitants, payments for cost-of-living

30

increases for annuitants shall be made under section 8535

- 30 -

 


1

(relating to payments to school entities by Commonwealth).

2

* * *

3

§ 8348.6.  Supplemental annuities commencing 2002.

4

* * *

5

(f)  Funding.--[The]

6

(1)  For the period beginning July 1, 2002, and ending

7

June 30, 2011, the additional liability for the increase in

8

benefits provided in this section shall be funded in equal

9

dollar annual installments over a period of ten years

10

beginning July 1, 2003.

11

(2)  For fiscal years beginning on or after July 1, 2011,

12

the additional liability provided in this section shall be

13

funded as part of the actuarial accrued liability as provided

14

in section 8328 (relating to actuarial cost method).

15

* * *

16

§ 8348.7.  Supplemental annuities commencing 2003.

17

* * *

18

(f)  Funding.--[The]

19

(1)  For the period beginning July 1, 2002, and ending

20

June 30, 2011, the additional liability for the increase in

21

benefits provided in this section shall be funded in equal

22

dollar annual installments over a period of ten years

23

beginning July 1, 2004.

24

(2)  For fiscal years beginning on or after July 1, 2011,

25

the additional liability provided in this section shall be

26

funded as part of the actuarial accrued liability as provided

27

in section 8328 (relating to actuarial cost method).

28

* * *

29

§ 8502.  Administrative duties of board.

30

* * *

- 31 -

 


1

(k)  Certification of employer contributions.--The board

2

shall, each year in addition to the itemized budget required

3

under section 8330 (relating to appropriations by the

4

Commonwealth), certify to the employers and the Commonwealth the

5

employer contribution rate expressed as a percentage of members'

6

payroll necessary for the funding of prospective annuities for

7

active members and the annuities of annuitants, and certify the

8

rates and amounts of the normal contributions as determined

9

pursuant to section 8328(b) (relating to actuarial cost method),

10

accrued liability contributions as determined pursuant to

11

section 8328(c), supplemental annuities contribution rate as

12

determined pursuant to section 8328(d) [and], the experience

13

adjustment factor as determined pursuant to section 8328(e)

14

[and], premium assistance contributions as determined pursuant

15

to section 8328(f), the costs added by legislation as determined

16

pursuant to section 8328(i), the actuarial required contribution

17

rate as determined pursuant to section 8328(i), the collared

18

contribution rate as determined pursuant to section 8328(g) and

19

the final contribution rate as determined pursuant to section

20

8328(h), which shall be paid to the fund and credited to the

21

appropriate accounts. These certifications shall be regarded as

22

final and not subject to modification by the [Budget Secretary] 

23

Secretary of the Budget.

24

* * *

25

Section 6.  Section 8505 of Title 24 is amended by adding a

<--

26

subsection to read:

27

§ 8505.  Duties of board regarding applications and elections of

28

members.

29

* * *

30

(l)  Notification of Class T-F membership.--The board shall

- 32 -

 


1

inform any eligible school employee of the right to elect Class

2

T-F membership.

3

Section 7.  Sections 8507(f) and (g) and 8535(3) of Title 24

4

are amended to read:

5

§ 8507.  Rights and duties of school employees and members.

6

* * *

7

(f)  Termination of service.--Each member who terminates

8

school service and who is not then a disability annuitant shall

9

execute on or before the date of termination of service a

10

written application, duly attested by the member or his legally

11

constituted representative, electing to do one of the following:

12

(1)  Withdraw his accumulated deductions.

13

(2)  Vest his retirement rights and if he is a joint

14

coverage member, and so desires, elect to become a full

15

coverage member and agree to pay within 30 days of the date

16

of termination of service the lump sum required.

17

(3)  Receive an immediate annuity, if eligible, and may,

18

if he is a joint coverage member, elect to become a full

19

coverage member and agree to pay within 30 days of date of

20

termination of service the lump sum required.

21

(g)  Vesting of retirement rights.--If a member elects to

22

vest his retirement rights, he shall nominate a beneficiary by

23

written designation filed with the board and he may anytime

24

thereafter withdraw the accumulated deductions standing to his

25

credit or[, if he has five or more eligibility points,] apply

26

for an annuity if eligible as provided in section 8307(a) or (b)  

27

(relating to eligibility for annuitants).

28

* * *

29

§ 8535.  Payments to school entities by Commonwealth.

30

For each school year beginning with the 1995-1996 school

- 33 -

 


1

year, each school entity shall be paid by the Commonwealth for

2

contributions based upon school service of active members of the

3

system after June 30, 1995, as follows:

4

* * *

5

(3)  School entities shall have up to five days after

6

receipt of the Commonwealth's portion of the employer's

7

liability to make payment to the Public School Employees'

8

Retirement Fund. School entities are expected to make the

9

full payment to the Public School Employees' Retirement Fund

10

in accordance with section 8327 (relating to payments by

11

employers) in the event the receipt of the Commonwealth's

12

portion of the employer's liability is delayed because of

13

delinquent salary reporting or other conduct by the school

14

entities.

15

Section 7.1.  The definitions of "class of service

<--

16

multiplier," "final average salary," "superannuation age" and

17

"vestee" in section 5102 of Title 71 are amended to read:

18

§ 5102.  Definitions.

19

The following words and phrases as used in this part, unless

20

a different meaning is plainly required by the context, shall

21

have the following meanings:

22

* * *

23

"Class of service multiplier."

24

Class of Service

  

Multiplier

  

25

A

  

1

  

26

27

28

29

30

AA

  

  

  

  

for all purposes

except calculating regular member contributions on

   1.25

  

- 34 -

 


1

2

3

  

  

  

compensation

paid prior to January 1, 2002

4

5

6

7

8

9

10

AA

  

  

  

  

  

  

for purposes of calculating regular member contributions   on compensation paid prior to January 1, 2002

  

  

  

  

  

  

1

  

11

12

13

14

15

16

17

18

19

A-3

  

  

  

  

  

  

  

  

for all purposes except the calculation of regular member contributions and contributions for creditable nonstate service

  

  

  

  

  

  

  

  

1

  

20

21

22

23

24

25

26

27

A-3

  

  

  

  

  

  

  

for purposes of calculating regular member contributions and contributions for creditable nonstate service

  

  

  

  

  

  

  

   1.25

  

28

29

30

A-4

  

  

for all purposes

except the calculation of

  

  

  

  

- 35 -

 


1

2

  

  

regular member

contributions

  

   1.25

3

4

5

6

A-4

  

  

  

for purposes of calculating regular member contributions

  

  

  

   1.86

  

7

B

  

    .625

  

8

C

  

1

  

9

D

  

   1.25

  

10

11

D-1

  

prior to January 1, 1973

  

   1.875

  

12

13

14

D-1

  

  

on and subsequent to January 1, 1973

  

  

   1.731

  

15

16

D-2

  

prior to January 1, 1973

  

 2.5

  

17

18

19

D-2

  

  

on and subsequent to   January 1, 1973

  

  

   1.731

  

20

21

D-3

  

prior to January 1, 1973

  

  3.75

  

22

23

24

25

26

27

28

29

30

D-3

  

  

  

  

  

  

  

  

on and   subsequent to   January 1, 1973

  

  

   1.731

except prior to December 1, 1974 as applied to any additional legislative   compensation as an officer of the General Assembly

- 36 -

 


1

  

  

  3.75

  

2

3

4

5

6

7

8

9

D-4

  

  

  

  

  

  

  

for all purposes except calculating regular member contributions   on compensation paid prior to July 1, 2001

  

  

  

  

  

  

  

  1.5

  

10

11

12

13

14

15

16

D-4

  

  

  

  

  

  

for purposes of   calculating regular member   contributions on compensation   paid prior to  July 1, 2001

  

  

  

  

  

  

1

  

17

18

19

20

E, E-1

  

  

  

prior to January 1, 1973

  

2

for each of the first ten years of judicial service, and

21

22

23

24

  

  

  

  

  

  1.5

for each subsequent year  of judicial service

25

26

27

28

E, E-1

  

  

  

on and  subsequent to   January 1, 1973

  

  

   1.50

for each of the first ten years of judicial  service and

29

30

E-2

  

prior to September 1 1973

  

  1.5

  

- 37 -

 


1

2

3

4

E-2

  

  

  

on and subsequent to 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

14

15

16

T-C (Public

School

Employees'

Retirement Code)

  

1

  

17

18

19

20

T-E (Public 

School

Employees'

Retirement Code)

  

1

  

21

22

23

24

T-F (Public 

School

Employees'

Retirement Code)

  

1

  

25

* * * 

26

"Final average salary."  The highest average compensation

27

received as a member during any three nonoverlapping periods of

28

four consecutive calendar quarters during which the member was a

29

State employee, with the compensation for part-time service

30

being annualized on the basis of the fractional portion of the

- 38 -

 


1

year for which credit is received; except if the employee was

2

not a member for three nonoverlapping periods of four

3

consecutive calendar quarters, the total compensation received

4

as a member, annualized in the case of part-time service,

5

divided by the number of nonoverlapping periods of four

6

consecutive calendar quarters of membership; in the case of a

7

member with multiple service, the final average salary shall be

8

determined on the basis of the compensation received by him as a

9

State employee or as a school employee, or both; in the case of

10

a member with Class A-3 or Class A-4 service and service in one

11

or more other classes of service, the final average salary shall

12

be determined on the basis of the compensation received by him

13

in all classes of State service; and, in the case of a member

14

who first became a member on or after January 1, 1996, the final

15

average salary shall be determined as hereinabove provided but

16

subject to the application of the provisions of section

17

5506.1(a) (relating to annual compensation limit under IRC §

18

401(a)(17)).

19

* * *

20

"Superannuation age."  [Any] For classes of service other

21

than Class A-3 and Class A-4, any age upon accrual of 35

22

eligibility points or age 60, except for a member of the General

23

Assembly, an enforcement officer, a correction officer, a

24

psychiatric security aide, a Delaware River Port Authority

25

policeman or an officer of the Pennsylvania State Police, age

26

50, and, except for a member with Class G, Class H, Class I,

27

Class J, Class K, Class L, Class M or Class N service, age 55

28

upon accrual of 20 eligibility points. For Class A-3 and Class

29

A-4 service, any age upon accrual of 35 eligibility points or

30

age 65, or for park rangers or capitol police officers, age 55

- 39 -

 


1

with 20 years of service as a park ranger or capitol police

2

officer, except for a member of the General Assembly, an

3

enforcement officer, a correction officer, a psychiatric

4

security aide, a Delaware River Port Authority policeman or an

5

officer of the Pennsylvania State Police, age 55.

6

* * *

7

"Vestee."  A member with five or more eligibility points[,

8

or] in a class of service other than Class A-3 or Class A-4 or

9

Class T-E or Class T-F in the Public School Employees'

10

Retirement System, a member with Class G, Class H, Class I,

11

Class J, Class K, Class L, Class M or Class N service with five

12

or more eligibility points, or a member with Class A-3 or Class

13

A-4 service with ten or more eligibility points who has

14

terminated State service and has elected to leave his total

15

accumulated deductions in the fund and to defer receipt of an

16

annuity.

17

Section 7.2.  Sections 5302(e), 5303(b)(1) and 5304(a) of

18

Title 71 are amended to read:

19

§ 5302.  Credited State service.

20

* * *

21

(e)  Cancellation of credited service.--All credited service

22

shall be cancelled if a member withdraws his total accumulated

23

deductions except that a member with Class A-3 or Class A-4

24

service credit and one or more other classes of service credit

25

shall not have his service as a member of any classes of service

26

other than as a member of Class A-3 or Class A-4 cancelled when

27

the member receives a lump sum payment of accumulated deductions

28

resulting from Class A-3 or Class A-4 service pursuant to

29

section 5705.1 (relating to payment of accumulated deductions

30

resulting from Class A-3 and Class A-4 service).

- 40 -

 


1

§ 5303.  Retention and reinstatement of service credits.

2

* * *

3

(b)  Eligibility points for prospective credited service.--

4

(1)  Every active member of the system or a multiple

5

service member who is a school employee and a member of the

6

Public School Employees' Retirement System on or after the

7

effective date of this part shall receive eligibility points

8

in accordance with section 5307 for current State service,

9

previous State service, or creditable nonstate service upon

10

compliance with sections 5501 (relating to regular member

11

contributions for current service), 5504 (relating to member

12

contributions for the purchase of credit for previous State

13

service or to become a full coverage member), 5505 (relating

14

to contributions for the purchase of credit for creditable

15

nonstate service), 5505.1 (relating to additional member

16

contributions) or 5506 (relating to incomplete payments).

17

Subject to the limitations in sections 5306.1 (relating to

18

election to become a Class AA member) and 5306.2 (relating to

19

elections by members of the General Assembly), the class or

20

classes of service in which the member may be credited for

21

previous State service prior to the effective date of this

22

part shall be the class or classes in which he was or could

23

have at any time elected to be credited for such service,

24

except that a State employee who first becomes a member of

25

the system on or after January 1, 2011, or on or after

26

December 1, 2010, as a member of the General Assembly and:

27

(i)  is credited with Class A-3 service for such

28

membership, shall be credited only with Class A-3 service

29

for previous State service performed before January 1,

30

2011, that was not previously credited in the system; or

- 41 -

 


1

(ii)  is credited with Class A-4 service for such

2

membership, shall be credited only with Class A-3 service

3

for previous State service performed before January 1,

4

2011, that was not previously credited in the system. The

5

class of service in which a member shall be credited for

6

service subsequent to the effective date of this part

7

shall be determined in accordance with section 5306

8

(relating to classes of service).

9

* * *

10

§ 5304.  Creditable nonstate service.

11

(a)  Eligibility.--

12

(1)  An active member who first becomes an active member

13

before January 1, 2011, or before December 1, 2010, as a

14

member of the General Assembly, or a multiple service member

15

who first becomes an active member before January 1, 2011, or

16

before December 1, 2010, as a member of the General Assembly,

17

and who is a school employee and an active member of the

18

Public School Employees' Retirement System shall be eligible

19

for Class A service credit for creditable nonstate service as

20

set forth in subsections (b) and (c) except that intervening

21

military service shall be credited in the class of service

22

for which the member was eligible at the time of entering

23

into military service and for which he makes the required

24

contributions and except that a multiple service member who

25

is a school employee and an active member of the Public

26

School Employees' Retirement System shall not be eligible to

27

purchase service credit for creditable nonstate service set

28

forth in subsection (c)(5).

29

(2)  An active member who first becomes an active member

30

on or after January 1, 2011, or on or after December 1, 2010,

- 42 -

 


1

as a member of the General Assembly, or a multiple service

2

member who first becomes an active member on or after January

3

1, 2011, or on or after December 1, 2010, as a member of the

4

General Assembly, and who is a school employee and an active

5

member of the Public School Employees' Retirement System

6

shall be eligible for Class A-3 service credit for creditable

7

nonstate service as set forth in subsections (b) and (c)

8

except that intervening military service shall be credited in

9

the class of service for which the member was eligible at the

10

time of entering into military service and for which he makes

11

the required contributions and except that a multiple service

12

member who is a school employee and an active member of the

13

Public School Employees' Retirement System shall not be

14

eligible to purchase service credit for creditable nonstate

15

service set forth in subsection (c)(5).

16

* * *

17

Section 7.3.  Section 5306(a), (a.1)(1), (2), (5) and (6) and

18

(a.2) of Title 71 are amended and the section is amended by

19

adding a subsection to read:

20

§ 5306.  Classes of service.

21

(a)  Class A and Class A-3 membership.--

22

(1)  A State employee who is a member of Class A on the

23

effective date of this part or who first becomes a member of

24

the system subsequent to the effective date of this part and

25

before January 1, 2011, or before December 1, 2010, as a

26

member of the General Assembly, shall be classified as a

27

Class A member and receive credit for Class A service upon

28

payment of regular and additional member contributions for

29

Class A service, provided that the State employee does not

30

become a member of Class AA pursuant to subsection (a.1) or a

- 43 -

 


1

member of Class D-4 pursuant to subsection (a.2).

2

(2)  A State employee who first becomes a member of the

3

system on or after January 1, 2011, or on or after December

4

1, 2010, as a member of the General Assembly, shall be

5

classified as a Class A-3 member and receive credit for Class

6

A-3 service upon payment of regular member contributions for

7

Class A-3 service provided that the State employee does not

8

become a member of Class A-4 pursuant to subsection (a.3),

9

except that a member of the judiciary shall be classified as

10

a member of such other class of service for which the member

11

of the judiciary is eligible, shall elect, and make regular

12

member contributions.

13

(a.1)  Class AA membership.--

14

(1)  A person who becomes a State employee and an active

15

member of the system after June 30, 2001, and who first

16

became an active member before January 1, 2011, or before

17

December 1, 2010, as a member of the General Assembly, and

18

who is not a State police officer and not employed in a

19

position for which a class of service other than Class A is

20

credited or could be elected shall be classified as a Class

21

AA member and receive credit for Class AA State service upon

22

payment of regular member contributions for Class AA service

23

and, subject to the limitations contained in paragraph (7),

24

if previously a member of Class A or previously employed in a

25

position for which Class A service could have been earned,

26

shall have all Class A State service (other than State

27

service performed as a State police officer or for which a

28

class of service other than Class A was earned or could have

29

been elected) classified as Class AA service.

30

(2)  A person who is a State employee on June 30, 2001,

- 44 -

 


1

and July 1, 2001, but is not an active member of the system

2

because membership in the system is optional or prohibited

3

pursuant to section 5301 (relating to mandatory and optional

4

membership) and who first becomes an active member after June

5

30, 2001, and before January 1, 2011, or before December 1,

6

2010, as a member of the General Assembly, and who is not a

7

State police officer and not employed in a position for which

8

a class of service other than Class A is credited or could be

9

elected shall be classified as a Class AA member and receive

10

credit for Class AA State service upon payment of regular

11

member contributions for Class AA service and, subject to the

12

limitations contained in paragraph (7), if previously a

13

member of Class A or previously employed in a position for

14

which Class A service could have been earned, shall have all

15

Class A State service (other than State service performed as

16

a State Police officer or for which a class of service other

17

than Class A was earned or could have been elected)

18

classified as Class AA service.

19

* * *

20

(5)  A former State employee who first becomes a member

21

before January 1, 2011, or before December 1, 2010, as a

22

member of the General Assembly, other than a former State

23

employee who was a State police officer on or after July 1,

24

1989, who is a school employee and who on or after July 1,

25

2001, becomes a multiple service member, subject to the

26

limitations contained in paragraph (7), shall receive Class

27

AA service credit for all Class A State service other than

28

State service performed as a State employee in a position in

29

which the former State employee could have elected a class of

30

service other than Class A.

- 45 -

 


1

(6)  A State employee who after June 30, 2001, becomes a

2

State police officer or who is employed in a position in

3

which the member could elect membership in a class of service

4

other than Class AA or Class D-4 shall retain any Class AA

5

service credited prior to becoming a State police officer or

6

being so employed but shall be ineligible to receive Class AA

7

credit thereafter and instead shall receive Class A credit

8

for service as a member of the judiciary or if he first

9

became a member before January 1, 2011, or December 1, 2010,

10

as a member of the General Assembly, or Class A-3 credit for

11

service other than as a member of the judiciary and he first

12

became a member on or after January 1, 2011, or December 1,

13

2010, as a member of the General Assembly, unless a class of

14

membership other than Class A is elected.

15

* * *

16

(a.2)  Class of membership for members of the General

17

Assembly.--

18

(1)  A person who:

19

(i)  becomes a member of the General Assembly and an

20

active member of the system after June 30, 2001, and

21

before December 1, 2010; or

22

(ii)  is a member of the General Assembly on July 1,

23

2001, but is not an active member of the system because

24

membership in the system is optional pursuant to section

25

5301 and who becomes an active member after June 30,

26

2001, and before December 1, 2010;

27

and who was not a State police officer on or after July 1,

28

1989, shall be classified as a Class D-4 member and receive

29

credit as a Class D-4 member for all State service as a

30

member of the General Assembly upon payment of regular member

- 46 -

 


1

contributions for Class D-4 service and, subject to the

2

limitations contained in subsection (a.1)(7), if previously a

3

member of Class A or employed in a position for which Class A

4

service could have been earned, shall receive Class AA

5

service credit for all Class A State service, other than

6

State service performed as a State police officer or for

7

which a class of service other than Class A or Class D-4 was

8

or could have been elected or credited.

9

(2)  Provided an election to become a Class D-4 member is

10

made pursuant to section 5306.2 (relating to elections by

11

members of the General Assembly), a State employee who was

12

not a State police officer on or after July 1, 1989, who on

13

July 1, 2001, is a member of the General Assembly and an

14

active member of the system and not a member of Class D-3

15

shall be classified as a Class D-4 member and receive credit

16

as a Class D-4 member for all State service performed as a

17

member of the General Assembly not credited as another class

18

other than Class A upon payment of regular member

19

contributions for Class D-4 service and, subject to the

20

limitations contained in paragraph (a.1)(7), shall receive

21

Class AA service credit for all Class A State service, other

22

than State service performed as a State police officer or as

23

a State employee in a position in which the member could have

24

elected a class of service other than Class A, performed

25

before July 1, 2001.

26

(3)  A member of the General Assembly who after June 30,

27

2001, becomes a State police officer shall retain any Class

28

AA service or Class D-4 service credited prior to becoming a

29

State police officer or being so employed but shall be

30

ineligible to receive Class AA or Class D-4 credit thereafter

- 47 -

 


1

and instead shall receive Class A credit or Class A-3 credit

2

if he first becomes a member of the system on or after

3

January 1, 2011.

4

(4)  Notwithstanding the provisions of this subsection,

5

no service as a member of the General Assembly performed

6

before December 1, 2010, that is not credited as Class D-4

7

service on November 30, 2010, shall be credited as Class D-4

8

service, unless such service was previously credited in the

9

system as Class D-4 service and the member withdrew his total

10

accumulated deductions as provided in section 5311 (relating

11

to eligibility for refunds) or 5701 (relating to return of

12

total accumulated deductions). No service as a member of the

13

General Assembly performed on or after December 1, 2010,

14

shall be credited as Class D-4 service unless the member

15

previously was credited with Class D-4 service credits.

16

(a.3)  Class A-3 membership.--Provided that an election to

17

become a Class A-4 member is made pursuant to section 5306.3

18

(relating to election to become a Class A-4 member), a State

19

employee who otherwise would be a member of Class A-3 shall be

20

classified as a Class A-4 member and receive credit for all

21

creditable State service performed after the effective date of

22

membership in the system, except as a member of the judiciary,

23

upon payment of regular member contributions for Class A-4

24

service.

25

* * *

26

Section 7.4.  Title 71 is amended by adding a section to

27

read:

28

§ 5306.3.  Election to become a class A-4 member.

29

(a)  General rule.--A person who otherwise is eligible for

30

Class A-3 membership who has not previously elected or declined

- 48 -

 


1

to elect Class A-4 membership may elect to become a member of

2

Class A-4.

3

(b)  Time for making election.--The election to become a

4

Class A-4 member must be made by the member filing written

5

notice with the board in a form and manner determined by the

6

board no later than 45 days after notice from the board of the

7

member's eligibility to elect Class A-4 membership.

8

(c)  Effect of election.--An election to become a Class A-4

9

member shall be irrevocable and shall become effective on the

10

effective date of membership in the system and shall remain in

11

effect for all future creditable State service, other than

12

service performed as a member of the judiciary. Payment of

13

regular member contributions for Class A-4 State service

14

performed prior to the election of Class A-4 service shall be

15

made in a form, manner and time determined by the board. Upon

16

termination and subsequent reemployment, a member who elected

17

Class A-4 membership shall be credited as a Class A-4 member for

18

creditable State service performed after reemployment, except as

19

a member of the judiciary, regardless of termination of

20

employment, termination of membership by withdrawal of

21

accumulated deductions or status as an annuitant, vestee or

22

inactive member after the termination of service.

23

(d)  Effect of failure to make election.--Failure to elect to

24

become a Class A-4 member within the election period set forth

25

in subsection (b) shall result in all of the member's State

26

service, other than service performed as a member of the

27

judiciary, being credited as Class A-3 service and not subject

28

to further election or crediting as Class A-4 service. Upon

29

termination and subsequent employment, a member who failed to

30

elect to become a Class A-4 member shall not be eligible to make

- 49 -

 


1

another election to become a Class A-4 member for either past or

2

future State service.

3

Section 7.5.  Sections 5308(b) and 5309 of Title 71 are

4

amended to read:

5

§ 5308.  Eligibility for annuities.

6

* * *

7

(b)  Withdrawal annuity.--

8

(1)  Any vestee or any active member or inactive member

9

on leave without pay who terminates State service having five

10

or more eligibility points and who does not have Class A-3 or

11

Class A-4 service credit or Class T-E or Class T-F service

12

credit in the Public School Employees' Retirement System, or

13

who has Class G, Class H, Class I, Class J, Class K, Class L,

14

Class M or Class N service and terminates State service

15

having five or more eligibility points, upon compliance with

16

section 5907(f), (g) or (h) shall be entitled to receive an

17

annuity.

18

(2)  Any vestee, active member or inactive member on

19

leave without pay who has Class A-3 or Class A-4 service

20

credit or Class T-E or Class T-F service credit in the Public

21

School Employees' Retirement System who terminates State

22

service having ten or more eligibility points, upon

23

compliance with section 5907(f), (g) or (h), shall be

24

entitled to receive an annuity.

25

(3)  Any vestee, active member or inactive member on

26

leave without pay who has either Class A-3 or Class A-4

27

service credit or Class T-E or Class T-F service credit in

28

the Public School Employees' Retirement System and also has

29

service credited in the system in one or more other classes

30

of service who has five or more, but fewer than ten,

- 50 -

 


1

eligibility points, upon compliance with section 5907(f), (g)

2

or (h) shall be eligible to receive an annuity calculated on

3

his service credited in classes of service other than Class

4

A-3 or Class A-4, provided that the member has five or more

5

eligibility points resulting from service in classes other

6

than Class A-3 or Class A-4 or Class T-E or Class T-F service

7

in the Public School Employees' Retirement System.

8

* * *

9

§ 5309.  Eligibility for vesting.

10

Any member who:

11

(1)  Does not have Class A-3 or Class A-4 service credit

12

or Class T-E or Class T-F service credit in the Public School

13

Employees' Retirement System and terminates State service

14

with five or more eligibility points, or any member with

15

Class G, Class H, Class I, Class J, Class K, Class L, Class M

16

or Class N service with five or more eligibility points,

17

shall be eligible until attainment of superannuation age to

18

vest his retirement benefits.

19

(2)  Has Class A-3 or Class A-4 service credit or Class

20

T-E or Class T-F service credit in the Public School

21

Employees' Retirement System and terminates State service

22

with ten or more eligibility points shall be eligible until

23

attainment of superannuation age to vest his retirement

24

benefits.

25

(3)  Has either Class A-3 or Class A-4 service credit or

26

Class T-E or Class T-F service credit in the Public School

27

Employees' Retirement System, also has service credited in

28

the system in one or more other classes of service and has

29

five or more, but fewer than ten, eligibility points shall be

30

eligible until the attainment of superannuation age to vest

- 51 -

 


1

his retirement benefits calculated on his service credited in

2

classes of service other than Class A-3 or Class A-4 and to

3

be credited with statutory interest on total accumulated

4

deductions, regardless of whether or not any part of his

5

accumulated deductions are a result of Class A-3 or Class A-4

6

service credit.

7

Section 3 8.  Title 71 is amended by adding a section to

<--

8

read:

9

§ 5501.1.  Definitions.

10

The following words and phrases when used in this chapter

11

shall have the meanings given to them in this section unless the

12

context clearly indicates otherwise:

13

"Actuarially required contribution rate."  The employer

14

contribution rate as calculated pursuant to section 5508(a),

15

(b), (c), (e) and (f) (relating to actuarial cost method).

16

"Costs added by legislation."  The sum, if positive, of all

17

changes in the actuarially required contribution rate resulting

18

from legislation enacted in the year since the last actuarial

19

valuation and not included in the determination of the prior

20

year's final contribution rate, computed as the rate of total

21

compensation of all active members certified by the actuary as

22

sufficient to make the employer normal contributions and

23

sufficient to amortize legislatively created changes in the

24

unfunded actuarial liability as a level percentage of

25

compensation over a period of ten years from the July 1

26

following the valuation date.

27

Section 4.  Sections 5507, 5508, 5708.1(f), 5708.2(f),

<--

28

5708.3(f), 5708.5(f), 5708.6(f), 5708.7(f), 5708.8(g), 5902(k), 

29

5907(c), 5934 and 5938 of Title 71 are amended to read:

30

Section 9.  Sections 5502.1, 5504(a), 5505(b) and (d), 5507,

<--

- 52 -

 


1

5508, 5702(a)(4) and (6), 5704(e) and 5705(a) of Title 71 are

2

amended to read:

3

§ 5502.1.  Waiver of regular member contributions and Social

4

Security integration member contributions.

5

(a)  General rule.--Notwithstanding the provisions of

6

sections 5501 (relating to regular member contributions for

7

current service) and 5502 (relating to Social Security

8

integration member contributions), no regular member

9

contributions or Social Security integration member

10

contributions shall be made by an active member for the period

11

from July 1 to the following June 30 if the maximum single life

12

annuity to which the member would have been entitled to receive

13

had the member retired with an effective date of retirement on

14

the preceding January 1 is greater than 110% of the highest

15

calendar year compensation of the member, provided the member

16

files a written election as prescribed by the board.

17

(b)  Applicability.--This section shall not apply to any

18

member who has Class A-3 or Class A-4 service credit.

19

§ 5504.  Member contributions for the purchase of credit for

20

previous State service or to become a full coverage

21

member.

22

(a)  Amount of contributions for service in other than Class

23

G through N.--

24

(1)  The contributions to be paid by an active member or

25

eligible school employee for credit for total previous State

26

service other than service in Class G, Class H, Class I,

27

Class J, Class K, Class L, Class M and Class N or to become a

28

full coverage member shall be sufficient to provide an amount

29

equal to the regular and additional accumulated deductions

30

which would have been standing to the credit of the member

- 53 -

 


1

for such service had regular and additional member

2

contributions been made with full coverage in the class of

3

service and at the rate of contribution applicable during

4

such period of previous service and had his regular and

5

additional accumulated deductions been credited with

6

statutory interest during all periods of subsequent State and

7

school service up to the date of purchase.

8

(2)  Notwithstanding paragraph (1), members with Class

9

A-3 State service shall make contributions and receive credit

10

as if the previous State service was Class A-3 service, and

11

members with Class A-4 State service shall make contributions

12

and receive credit as if the previous State service was Class

13

A-4 service, even if it would have been credited as a

14

different class of service had the State employee been a

15

member of the system at the time the service was performed

16

unless it was mandatory that the State employee be an active

17

member of the system and the previous State service is being

18

credited as the result of a mandatory active membership

19

requirement.

20

* * *

21

§ 5505.  Contributions for the purchase of credit for creditable

22

nonstate service.

23

* * *

24

(b)  Nonintervening military service.--

25

(1)  The amount due for the purchase of credit for

26

military service other than intervening military service

27

shall be determined by applying the product of the member's

28

basic contribution rate and the class of service multiplier

29

applicable to contributions for the class of service to which

30

the military service will be credited, the additional

- 54 -

 


1

contribution rate plus the Commonwealth normal contribution

2

rate for active members at the time of entry, subsequent to

3

such military service, of the member into State service to

4

his average annual rate of compensation over the first three

5

years of such subsequent State service and multiplying the

6

result by the number of years and fractional part of a year

7

of creditable nonintervening military service being purchased

8

together with statutory interest during all periods of

9

subsequent State and school service to date of purchase. Upon

10

application for credit for such service, payment shall be

11

made in a lump sum within 30 days or in the case of an active

12

member or eligible school employee who is an active member of

13

the Public School Employees' Retirement System it may be

14

amortized with statutory interest through salary deductions

15

in amounts agreed upon by the member and the board. The

16

salary deduction amortization plans agreed to by members and

17

the board may include a deferral of payment amounts and

18

statutory interest until the termination of school service or

19

State service as the board in its sole discretion decides to

20

allow. The board may limit salary deduction amortization

21

plans to such terms as the board in its sole discretion

22

determines. In the case of an eligible school employee who is

23

an active member of the Public School Employees' Retirement

24

System, the agreed upon salary deductions shall be remitted

25

to the Public School Employees' Retirement Board, which shall

26

certify and transfer to the board the amounts paid.

27

Application may be filed for all such military service credit

28

upon completion of three years of subsequent State service

29

and shall be credited as Class A-3 service for State

30

employees who first become members of the system on or after

- 55 -

 


1

January 1, 2011, or on or after December 1, 2010, as a member

2

of the General Assembly, and as Class A service for all other

3

members.

4

(2)  Applicants may purchase credit as follows:

5

(i)  one purchase of the total amount of creditable

6

nonintervening military service; or

7

(ii)  one purchase per 12-month period of a portion

8

of creditable nonintervening military service.

9

The amount of each purchase shall be not less than one year

10

of creditable nonintervening military service.

11

* * *

12

(d)  Nonmilitary and nonmagisterial service.--Contributions

13

on account of credit for creditable nonstate service other than

14

military and magisterial service shall be determined by applying

15

the product of the member's basic contribution rate and the

16

class of service multiplier applicable to contributions for the

17

class of service to which such nonstate service will be

18

credited, the additional contribution rate plus the Commonwealth

19

normal contribution rate for active members at the time of entry

20

subsequent to such creditable nonstate service of the member

21

into State service to his compensation at the time of entry into

22

State service and multiplying the result by the number of years

23

and fractional part of a year of creditable nonstate service

24

being purchased together with statutory interest during all

25

periods of subsequent State and school service to the date of

26

purchase. Upon application for credit for such service payment

27

shall be made in a lump sum within 30 days or in the case of an

28

active member or eligible school employee who is an active

29

member of the Public School Employees' Retirement System it may

30

be amortized with statutory interest through salary deductions

- 56 -

 


1

in amounts agreed upon by the member and the board. The salary

2

deduction amortization plans agreed to by members and the board

3

may include a deferral of payment amounts and statutory interest

4

until the termination of school service or State service as the

5

board in its sole discretion decides to allow. The board may

6

limit salary deduction amortization plans to such terms as the

7

board in its sole discretion determines. In the case of an

8

eligible school employee who is an active member of the Public

9

School Employees' Retirement System, the agreed upon salary

10

deduction shall be remitted to the Public School Employees'

11

Retirement Board, which shall certify and transfer to the board

12

the amounts paid.

13

* * *

14

§ 5507.  Contributions by the Commonwealth and other employers.

15

(a)  Contributions on behalf of active members.--The

16

Commonwealth and other employers whose employees are members of

17

the system shall make contributions to the fund on behalf of all

18

active members in such amounts as shall be certified by the

19

board as necessary to provide, together with the members' total

20

accumulated deductions, annuity reserves on account of

21

prospective annuities other than those provided in section 5708

22

(relating to supplemental annuities), 5708.1 (relating to

23

additional supplemental annuities), 5708.2 (relating to further

24

additional supplemental annuities), 5708.3 (relating to

25

supplemental annuities commencing 1994), 5708.4 (relating to

26

special supplemental postretirement adjustment), 5708.5

27

(relating to supplemental annuities commencing 1998), 5708.6

28

(relating to supplemental annuities commencing 2002), 5708.7

29

(relating to supplemental annuities commencing 2003) and 5708.8

30

(relating to special supplemental postretirement adjustment of

- 57 -

 


1

2002), in accordance with the actuarial cost method provided in

2

section 5508(a), (b), (c), (d) and (f) (relating to actuarial

3

cost method).

4

(b)  Contributions on behalf of annuitants.--The Commonwealth

5

and other employers whose employees are members of the system 

6

shall make contributions on behalf of annuitants in such amounts

7

as shall be certified by the board as necessary to fund the

8

liabilities for supplemental annuities in accordance with the

9

actuarial cost method provided in section 5508(e) (relating to

10

actuarial cost method).

11

(c)  Contributions transferred by county retirement

12

systems.--

13

(1)  Each county retirement system or pension plan which

14

is notified by certification from the board that a former

15

contributor who was transferred to State employment pursuant

16

to 42 Pa.C.S. § 1905 (relating to county-level court

17

administrators) has elected to convert county service to

18

State service in accordance with section 5303.1 (relating to

19

election to convert county service to State service) shall

20

transfer to the board an amount equal to the actuarial

21

liability for the additional benefits that result in the

22

system as a result of the conversion as certified by the

23

board. This amount shall be calculated in such a manner and

24

using such actuarial factors and assumptions as the board,

25

after obtaining the advice of its actuary, shall determine

26

and shall be calculated by determining the present value of

27

the future benefits for the former county contributors and

28

subtracting from that present value the present value of

29

future employee contributions and future employer normal cost

30

contributions.

- 58 -

 


1

(2)  The transfer shall occur no later than 180 days

2

after the certification by the board of the actuarial

3

liability for the additional benefits or 30 days following

4

the date of termination of service if the member terminates

5

State service after making the election to convert service,

6

whichever occurs first.

7

(3)  If any county retirement system or pension plan

8

fails to transfer, within the required time, the money

9

certified by the board under this subsection, then the

10

service of such members for the period of converted service

11

shall be credited, and the board shall notify the county

12

which employed the employee who is converting the county

13

service and the State Treasurer of the amount due. The State

14

Treasurer shall withhold out of any grants, subsidies or

15

other payments from the State General Fund appropriation or

16

appropriations next due such county an amount equal to the

17

amount which the county retirement system or pension plan

18

failed to pay and shall pay the amount so withheld to the

19

board for the payment of the amount due from that county's

20

retirement system or pension plan for the converted service.

21

(d)  Payment of final contribution rate.--Notwithstanding the

22

calculation of the actuarially required contribution rate and

23

the provisions of subsections (a) and (b), the Commonwealth and

24

other employers whose employees are members of the system shall

25

make contributions to the fund on behalf of all active members

26

and annuitants in such amounts as shall be certified by the

27

board in accordance with section 5508(i).

28

(e)  Benefits completion plan contributions.--In addition to

29

all other contributions required under this section and section

30

5508, the Commonwealth and other employers shall make

- 59 -

 


1

contributions as certified by the board pursuant to section 5941

2

(relating to benefits completion plan).

3

§ 5508.  Actuarial cost method.

4

(a)  Employer contribution rate on behalf of active

5

members.--The amount of the Commonwealth and other employer

6

contributions on behalf of all active members shall be computed

7

by the actuary as a percentage of the total compensation of all

8

active members during the period for which the amount is

9

determined and shall be so certified by the board. The [total

10

employer] actuarially required contribution rate on behalf of

11

all active members shall consist of the employer normal

12

contribution rate, as defined in subsection (b), and the accrued

13

liability contribution rate as defined in subsection (c). The

14

[total employer] actuarially required contribution rate on

15

behalf of all active members shall be modified by the experience

16

adjustment factor as calculated in subsection (f) [but in no

17

case shall it be less than zero. The total employer contribution

18

rate shall be modified by the experience adjustment factor as

19

calculated in subsection (f), but in no case shall it be less

20

than:

21

(1)  2% for the fiscal year beginning July 1, 2004;

22

(2)  3% for the fiscal year beginning July 1, 2005; and

23

(3)  4% for the fiscal year beginning July 1, 2006, and

24

thereafter].

25

(b)  Employer normal contribution rate.--The employer normal

26

contribution rate shall be determined after each actuarial

27

valuation on the basis of an annual interest rate and such

28

mortality and other tables as shall be adopted by the board in

29

accordance with generally accepted actuarial principles. The

30

employer normal contribution rate shall be determined as a level

- 60 -

 


1

percentage of the compensation of the average new active member,

2

which percentage, if contributed on the basis of his prospective

3

compensation through his entire period of active State service,

4

would be sufficient to fund the liability for any prospective

5

benefit payable to him[, except for the supplemental benefits

6

provided for in sections 5708 (relating to supplemental

7

annuities), 5708.1 (relating to additional supplemental

8

annuities), 5708.2 (relating to further additional supplemental

9

annuities), 5708.3 (relating to supplemental annuities

10

commencing 1994), 5708.4 (relating to special supplemental

11

postretirement adjustment), 5708.5 (relating to supplemental

12

annuities commencing 1998), 5708.6 (relating to supplemental

13

annuities commencing 2002), 5708.7 (relating to supplemental

14

annuities commencing 2003) and 5708.8 (relating to special

15

supplemental postretirement adjustment of 2002),] in excess of

16

that portion funded by his prospective member contributions.

17

(c)  Accrued liability contribution rate.--

18

(1)  For the fiscal [year] years beginning July 1, 2002, 

19

and July 1, 2003, the accrued liability contribution rate

20

shall be computed as the rate of total compensation of all

21

active members which shall be certified by the actuary as

22

sufficient to fund over a period of ten years from July 1,

23

2002, the present value of the liabilities for all

24

prospective benefits, except for the supplemental benefits as

25

provided in sections 5708 (relating to supplemental

26

annuities), 5708.1 (relating to additional supplemental

27

annuities), 5708.2 (relating to further additional

28

supplemental annuities), 5708.3 (relating to supplemental

29

annuities commencing 1994), 5708.4 (relating to special

30

supplemental postretirement adjustment), 5708.5 (relating to

- 61 -

 


1

supplemental annuities commencing 1998), 5708.6 (relating to

2

supplemental annuities commencing 2002), 5708.7 (relating to

3

supplemental annuities commencing 2003) and 5708.8 (relating

4

to special supplemental postretirement adjustment of 2002),

5

in excess of the total assets in the fund (calculated

6

recognizing all investment gains and losses over a five-year

7

period), excluding the balance in the supplemental annuity

8

account, and the present value of employer normal

9

contributions and of member contributions payable with

10

respect to all active members on December 31, 2001, and

11

excluding contributions to be transferred by county

12

retirement systems or pension plans pursuant to section

13

5507(c) (relating to contributions by the Commonwealth and

14

other employers). The amount of each annual accrued liability

15

contribution shall be equal to the amount of such

16

contribution for the fiscal year beginning July 1, 2002,

17

except that, if the accrued liability is increased by

18

legislation enacted subsequent to June 30, 2002, but before

19

July 1, 2003, such additional liability shall be funded over

20

a period of ten years from the first day of July, coincident

21

with or next following the effective date of the increase.

22

The amount of each annual accrued liability contribution for

23

such additional legislative liabilities shall be equal to the

24

amount of such contribution for the first annual payment.

25

(2)  Notwithstanding any other provision of law,

26

beginning July 1, 2004, and ending June 30, 2010, the

27

outstanding balance of the increase in accrued liability due

28

to the change in benefits enacted in 2001 shall be amortized

29

in equal dollar annual contributions over a period that ends

30

30 years after July 1, 2002, and the outstanding balance of

- 62 -

 


1

the net actuarial loss incurred in calendar year 2002 shall

2

be amortized in equal dollar annual contributions over a

3

period that ends 30 years after July 1, 2003. For fiscal

4

years beginning on or after July 1, 2004, and ending June 30,

5

2010, if the accrued liability is increased by legislation

6

enacted subsequent to June 30, 2003, but before January 1,

7

2009, such additional liability shall be funded in equal

8

dollar annual contributions over a period of ten years from

9

the first day of July coincident with or next following the

10

effective date of the increase.

11

(3)  For the fiscal year beginning July 1, 2010, the

12

accrued liability contribution rate shall be computed as the

13

rate of total compensation of all active members which shall

14

be certified by the actuary as sufficient to fund as a level

15

percentage of compensation over a period of 30 years from

16

July 1, 2010, the present value of the liabilities for all

17

prospective benefits calculated as of the immediately prior

18

valuation date, including the supplemental benefits as

19

provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4,

20

5708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits

21

payable from the retirement benefit plan established pursuant

22

to section 5941 (relating to benefits completion plan), in

23

excess of the actuarially calculated assets in the fund

24

(calculated recognizing all realized and unrealized

25

investment gains and losses each year in level annual

26

installments over five years), including the balance in the

27

supplemental annuity account, and the present value of

28

employer normal contributions and of member contributions

29

payable with respect to all active members, inactive members

30

on leave without pay, vestees and special vestees on December

- 63 -

 


1

31, 2009. If the accrued liability is changed by legislation

2

enacted subsequent to December 31, 2009, such change in

3

liability shall be funded as a level percentage of

4

compensation over a period of ten years from the first day of

5

July following the valuation date coincident with or next

6

following the date such legislation is enacted.

7

(d)  Special provisions on calculating contributions.--In

8

calculating the contributions required by subsections (a), (b)

9

and (c), the active members of Class C shall be considered to be

10

members of Class A. In addition, the actuary shall determine the

11

Commonwealth or other employer contributions required for active

12

members of Class C and officers of the Pennsylvania State Police

13

and enforcement officers and investigators of the Pennsylvania

14

Liquor Control Board who are members of Class A to finance their

15

benefits in excess of those to which other members of Class A

16

are entitled. Such additional contributions shall be determined

17

separately for officers and employees of the Pennsylvania State

18

Police and for enforcement officers and investigators of the

19

Pennsylvania Liquor Control Board. Such contributions payable on

20

behalf of officers and employees of the Pennsylvania State

21

Police shall include the amounts received by the system under

22

the provisions of the act of May 12, 1943 (P.L.259, No.120),

23

referred to as the Foreign Casualty Insurance Premium Tax

24

Allocation Law, and on behalf of enforcement officers or

25

investigators of the Pennsylvania Liquor Control Board, the

26

amounts received by the system under the provisions of the act

27

of April 12, 1951 (P.L.90, No.21), known as the Liquor Code.

28

(e)  Supplemental annuity contribution rate.--[Contributions]

29

(1)  For the period July 1, 2002, to June 30, 2010,

30

contributions from the Commonwealth and other employers whose

- 64 -

 


1

employees are members of the system required to provide for

2

the payment of supplemental annuities as provided in sections

3

5708, 5708.1, 5708.2, 5708.3, 5708.4 and 5708.5 shall be paid

4

over a period of ten years from July 1, 2002. The funding for

5

the supplemental annuities commencing 2002 provided for in

6

section 5708.6 shall be as provided in section 5708.6(f). The

7

funding for the supplemental annuities commencing 2003

8

provided for in section 5708.7 shall be as provided in

9

section 5708.7(f). The funding for the special supplemental

10

postretirement adjustment of 2002 under section 5708.8 shall

11

be as provided in section 5708.8(g). The amount of each

12

annual supplemental annuities contribution shall be equal to

13

the amount of such contribution for the fiscal year beginning

14

July 1, 2002. [In the event that supplemental annuities are

15

increased by legislation enacted subsequent to June 30, 2002,

16

the additional liability for the increase in benefits shall

17

be funded in equal dollar annual installments over a period

18

of ten years from the July first, coincident with or next

19

following the effective date of such legislation.]

20

(2)  For fiscal years beginning on or after July 1, 2010,

21

contributions from the Commonwealth and other employers whose

22

employees are members of the system required to provide for

23

the payment of supplemental annuities as provided in sections

24

5708, 5708.1, 5708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7

25

and 5708.8 shall be paid as part of the accrued liability

26

contribution rate as provided for in subsection (c)(3) and

27

there shall not be a separate supplemental annuity

28

contribution rate attributable to those supplemental

29

annuities. In the event that supplemental annuities are

30

increased by legislation enacted subsequent to December 31,

- 65 -

 


1

2009, the additional liability for the increase in benefits

2

shall be funded as a level percentage of compensation over a

3

period of ten years from the first day of July following the

4

valuation date coincident with or next following the date

5

such legislation is enacted.

6

(f)  Experience adjustment factor.--

7

(1)  For each year after the establishment of the accrued

8

liability contribution rate and the supplemental annuity

9

contribution rate for the fiscal year beginning July 1,

10

[2002] 2010, any increase or decrease in the unfunded accrued 

11

liability[, including liability] and any increase or decrease

12

in the liabilities and funding for supplemental annuities,

13

due to actual experience differing from assumed experience[,] 

14

(recognizing all realized and unrealized investment gains and

15

losses over a five-year period), changes in contributions

16

caused by the final contribution rate being different from

17

the actuarially required contribution rate, changes in

18

actuarial assumptions[,] or changes in the terms and

19

conditions of the benefits provided by the system by

20

judicial, administrative or other processes other than

21

legislation, including, but not limited to, reinterpretation

22

of the provisions of this part, shall be amortized [in equal

23

dollar annual contributions] as a level percentage of

24

compensation over a period of [ten] 30 years beginning with

25

the July 1 succeeding the actuarial valuation determining

26

said increases or decreases.

27

(2)  [Notwithstanding the provisions of paragraph (1),

28

for each year after the establishment of the accrued

29

liability contribution rate for the fiscal year beginning

30

July 1, 2003, any increase or decrease in the unfunded

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1

accrued liability due to actual experience differing from

2

assumed experience, changes in actuarial assumptions, changes

3

in the terms and conditions of the benefits provided by the

4

system by judicial, administrative or other processes other

5

than legislation, including, but not limited to,

6

reinterpretation of the provisions of this part, shall be

7

amortized in equal dollar annual contributions over a period

8

of 30 years beginning with the July 1 succeeding the

9

actuarial valuation determining said increases and decreases] 

10

The actuarially required contribution rate shall be the sum

11

of the normal contribution rate, the accrued liability

12

contribution rate and the supplemental annuity contribution

13

rate, modified by the experience adjustment factor as

14

calculated in paragraph (1).

15

(g)  Determination of liability for special vestee.--

16

Notwithstanding any other provision of this part or other law,

17

the total additional accrued actuarial liability resulting from

18

eligibility of special vestees for benefits upon the attainment

19

of superannuation age shall be determined by the actuary as part

20

of the first annual valuation made after June 30, 1997. The

21

resulting additional accrued actuarial liability shall be paid

22

by The Pennsylvania State University to the board in one lump

23

sum payment within 90 days of the board's certification of the

24

amount to The Pennsylvania State University.

25

(h)  Temporary application of collared contribution rate.--

26

The collared contribution rate for each year shall be determined

27

by comparing the actuarially required contribution rate

28

calculated without regard for costs added by legislation to the

29

prior year's final contribution rate. If for any of the fiscal

30

years beginning July 1, 2011, July 1, 2012 and on or after July

- 67 -

 


1

1, 2013, the actuarially required contribution rate calculated

2

without regard for costs added by legislation is more than 3%,

3

3.5% and 4.5%, respectively, of the total compensation of all

4

active members greater than the prior year's final contribution

5

rate, then the collared contribution rate shall be applied and

6

be equal to the prior year's final contribution rate increased

7

by the respective percentage above of total compensation of all

8

active members. Otherwise, and for all subsequent fiscal years,

9

the collared contribution rate shall not be applicable. In no

10

case shall the collared contribution rate be less than 4% of

11

total compensation of all active members.

12

(i)  Final contribution rate.--For the fiscal year beginning

13

July 1, 2010, the final contribution rate shall be 5% of total

14

compensation of all active members. For each subsequent fiscal

15

year for which the collared contribution rate is applicable, the

16

final contribution rate shall be the collared contribution rate

17

plus the costs added by legislation. For all other fiscal years,

18

the final contribution rate shall be the actuarially required

19

contribution rate, provided that the final contribution rate

20

shall not be less than the employer normal contribution rate, as

21

defined in subsection (b).

22

§ 5702.  Maximum single life annuity.

<--

23

(a)  General rule.--Any full coverage member who is eligible

24

to receive an annuity pursuant to the provisions of section

25

5308(a) or (b) (relating to eligibility for annuities) who

26

terminates State service, or if a multiple service member who is

27

a school employee who is an active member of the Public School

28

Employees' Retirement System who terminates school service,

29

before attaining age 70 shall be entitled to receive a maximum

30

single life annuity attributable to his credited service and

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1

equal to the sum of the following single life annuities

2

beginning at the effective date of retirement:

3

* * *

4

(4)  If eligible, a single life annuity which is

5

actuarially equivalent to the amount by which his regular and

6

additional accumulated deductions attributable to any

7

credited service other than as a member of Class C are

8

greater than one-half of the actuarially equivalent value on

9

the effective date of retirement of the annuity as provided

10

in paragraph (1) attributable to service other than Class C

11

for which regular or joint coverage member contributions were

12

made. This paragraph shall not apply to any member with State

13

service credited as Class A-3 or Class A-4.

14

* * *

15

(6)  If eligible, a single life annuity sufficient

16

together with the annuity provided for in paragraph (1) as a

17

Class A [and], Class AA, Class A-3 and Class A-4 member and

18

the highest annuity provided for in paragraph (2) to which he

19

is entitled, or at his option could have been entitled, to

20

produce that percentage of a standard single life annuity

21

adjusted by the application of the class of service

22

multiplier for Class A, Class AA, Class A-3 or Class A-4 as

23

set forth in paragraph (1) in the case where any service is

24

credited as a member of Class A, Class AA, Class A-3 or Class

25

A-4 on the effective date of retirement as determined by his

26

total years of credited service as a member of Class A [and], 

27

Class AA, Class A-3 and Class A-4 and by the following table:

28

29

30

Total Years of

Credited Service

as a Member of

Percentage of

Standard

Single Life

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1

2

3

4

5

Class A [and],

Class AA, Class A-3

and Class A-4

  

  

Annuity Adjusted for

Class A, Class AA,

Class A-3 and Class A-4

 Class of

Service Multipliers

6

35-40

100%

7

41

102%

8

42

104%

9

43

106%

10

44

108%

11

45 or more

110%

12

* * *

13

§ 5704.  Disability annuities.

14

* * *

15

(e)  Termination of State service.--Upon termination of

16

disability annuity payments in excess of an annuity calculated

17

in accordance with section 5702, a disability annuitant who:

18

(1)  does not have Class A-3 or Class A-4 service credit;

19

or

20

(2)  has Class A-3 or Class A-4 service credit and fewer

21

than ten eligibility points;

22

and who does not return to State service may file an application

23

with the board for an amount equal to the excess, if any, of the

24

sum of the regular and additional accumulated deductions

25

standing to his credit at the effective date of disability over

26

one-third of the total disability annuity payments received. If

27

the annuitant on the date of termination of service was eligible

28

for an annuity as provided in section [5308(b)] 5308(a) or (b) 

29

(relating to eligibility for annuities), he may file an

30

application with the board for an election of an optional

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1

modification of his annuity.

2

* * *

3

§ 5705.  Member's options.

4

(a)  General rule.--Any special vestee who has attained

5

superannuation age, any vestee who does not have Class A-3 or

6

Class A-4 service credit having five or more eligibility points

7

for service other than Class T-E or Class T-F service in the

8

Public School Employees' Retirement System, or vestee who has

9

Class A-3 or Class A-4 service credit having ten or more

10

eligibility points, any member with Class G, Class H, Class I,

11

Class J, Class K, Class L, Class M or Class N service having

12

five or more eligibility points or any other eligible member

13

upon termination of State service who has not withdrawn his

14

total accumulated deductions as provided in section 5701

15

(relating to return of total accumulated deductions) may apply

16

for and elect to receive either a maximum single life annuity,

17

as calculated in accordance with the provisions of section 5702

18

(relating to maximum single life annuity), or a reduced annuity

19

certified by the actuary to be actuarially equivalent to the

20

maximum single life annuity and in accordance with one of the

21

following options; except that no member shall elect an annuity

22

payable to one or more survivor annuitants other than his spouse

23

or alternate payee of such a magnitude that the present value of

24

the annuity payable to him for life plus any lump sum payment he

25

may have elected to receive is less than 50% of the present

26

value of his maximum single life annuity:

27

(1)  Option 1.--A life annuity to the member with a

28

guaranteed total payment equal to the present value of the

29

maximum single life annuity on the effective date of

30

retirement with the provision that, if, at his death, he has

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1

received less than such present value, the unpaid balance

2

shall be payable to his beneficiary.

3

(2)  Option 2.--A joint and survivor annuity payable

4

during the lifetime of the member with the full amount of

5

such annuity payable thereafter to his survivor annuitant, if

6

living at his death.

7

(3)  Option 3.--A joint and fifty percent (50%) survivor

8

annuity payable during the lifetime of the member with one-

9

half of such annuity payable thereafter to his survivor

10

annuitant, if living at his death.

11

(4)  Option 4.--Some other benefit which shall be

12

certified by the actuary to be actuarially equivalent to the

13

maximum single life annuity, subject to the following

14

restrictions:

15

(i)  any annuity shall be payable without reduction

16

during the lifetime of the member;

17

(ii)  the sum of all annuities payable to the

18

designated survivor annuitants shall not be greater than

19

one and one-half times the annuity payable to the member;

20

and

21

(iii)  a portion of the benefit may be payable as a

22

lump sum, except that such lump sum payment shall not

23

exceed an amount equal to the total accumulated

24

deductions standing to the credit of the member that are

25

not the result of contributions and statutory interest

26

made or credited as a result of Class A-3 or Class A-4

27

service. The balance of the present value of the maximum

28

single life annuity adjusted in accordance with section

29

5702(b) shall be paid in the form of an annuity with a

30

guaranteed total payment, a single life annuity, or a

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1

joint and survivor annuity or any combination thereof but

2

subject to the restrictions of subparagraphs (i) and (ii)

3

under this option.

4

* * *

5

Section 10.  Title 71 is amended by adding a section to read:

6

§ 5705.1.  Payment of accumulated deductions resulting from

7

Class A-3 and Class A-4 service.

8

Any superannuation or withdrawal annuitant who:

9

(1)  has Class A-3 or Class A-4 service credit;

10

(2)  has service credited in one or more classes of

11

service; and

12

(3)  because he has five or more, but fewer than ten,

13

eligibility points is not eligible to receive an annuity on

14

his Class A-3 or Class A-4 service

15

shall receive in a lump sum at the time of his retirement, in

16

addition to any other annuity or lump sum payment which he may

17

elect, his accumulated deductions resulting from his Class A-3

18

or Class A-4 service credit. Payment of these accumulated

19

deductions resulting from Class A-3 or Class A-4 service credit

20

shall not be eligible for installment payments pursuant to

21

section 5905.1 (relating to installment payments of accumulated

22

deductions) but shall be considered a lump sum payment for

23

purposes of section 5905.1(d).

24

Section 11.  Sections 5708.1(f), 5708.2(f), 5708.3(f),

25

5708.5(f), 5708.6(f), 5708.7(f), 5708.8(g), 5902(k), 5903(c),

26

5905(a), 5905.1(d), 5907(c), 5934, 5936(b), 5937(b), 5938 and

27

5955 of Title 71 are amended to read:

28

§ 5708.1.  Additional supplemental annuities.

29

* * *

30

(f)  Funding.--The actuary shall annually certify the amount

- 73 -

 


1

of appropriations for the next fiscal year needed to fund, over

2

a period of ten years from July 1, 2002, the additional monthly

3

supplemental annuity provided for in this section[. The board

4

shall submit the actuary's certification to the Secretary of the

5

Budget on or before November 1 of each year. If, in any year

6

after 1984, the amount certified is disapproved under section

7

610 of the act of April 9, 1929 (P.L.177, No.175), known as The

8

Administrative Code of 1929, as insufficient to meet the funding

9

requirements of this subsection or is not appropriated on or

10

before July 1, the additional supplemental annuity provided for

11

in this section shall be suspended until such time as an amount

12

certified and approved as sufficient is appropriated], which

13

amounts shall be paid during the period beginning July 1, 2002,

14

and ending June 30, 2010. For fiscal years beginning on or after

15

July 1, 2010, the additional liability provided in this section

16

shall be funded as part of the actuarial accrued liability as

17

provided in section 5508 (relating to actuarial cost method).

18

* * *

19

§ 5708.2.  Further additional supplemental annuities.

20

* * *

21

(f)  Funding.--The actuary shall annually estimate the amount

22

of Commonwealth appropriations for the next fiscal year needed

23

to fund, over a period of ten years from July 1, 2002, the

24

additional monthly supplemental annuity provided for in this

25

section[. The board shall submit the actuary's estimation to the

26

Secretary of the Budget on or before November 1 of each year.

27

If, in any year after 1988, the amount estimated is disapproved

28

under section 610 of the act of April 9, 1929 (P.L.177, No.175),

29

known as The Administrative Code of 1929, as insufficient to

30

meet the funding requirements of this subsection or is not

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1

appropriated on or before July 1, the additional supplemental

2

annuity provided for in this section shall be suspended until

3

such time as an amount certified and approved as sufficient is

4

appropriated], which amounts shall be paid during the period

5

beginning July 1, 2002, and ending June 30, 2010. For fiscal

6

years beginning on or after July 1, 2010, the additional

7

liability provided in this section shall be funded as part of

8

the actuarial accrued liability as provided in section 5508

9

(relating to actuarial cost method).

10

* * *

11

§ 5708.3.  Supplemental annuities commencing 1994.

12

* * *

13

(f)  Funding.--[The] For the period beginning July 1, 2002,

14

and ending June 30, 2010, the additional liability for the

15

increase in benefits provided in this section shall be funded in

16

equal dollar annual installments over a period of ten years

17

beginning July 1, 2002. For fiscal years beginning on or after

18

July 1, 2010, the additional liability for the increase in

19

benefits provided in this section shall be funded as part of the

20

actuarial accrued liability as provided in section 5508

21

(relating to actuarial cost method).

22

* * *

23

§ 5708.5.  Supplemental annuities commencing 1998.

24

* * *

25

(f)  Funding.--[The] For the period beginning July 1, 2002,

26

and ending June 30, 2010, the additional liability for the

27

increase in benefits provided in this section shall be funded in

28

equal dollar annual installments over a period of ten years

29

beginning July 1, 2002. For fiscal years beginning on or after

30

July 1, 2010, the additional liability for the increase in

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1

benefits provided in this section shall be funded as part of the

2

actuarial accrued liability as provided in section 5508

3

(relating to actuarial cost method).

4

* * *

5

§ 5708.6.  Supplemental annuities commencing 2002.

6

* * *

7

(f)  Funding.--[The] For the period beginning July 1, 2003,

8

and ending June 30, 2010, the additional liability for the

9

increase in benefits provided in this section shall be funded in

10

equal dollar annual installments over a period of ten years

11

beginning July 1, 2003. For fiscal years beginning on or after

12

July 1, 2010, the additional liability for the increase in

13

benefits provided in this section shall be funded as part of the

14

actuarial accrued liability as provided in section 5508

15

(relating to actuarial cost method).

16

* * *

17

§ 5708.7.  Supplemental annuities commencing 2003.

18

* * *

19

(f)  Funding.--[The] For the period beginning July 1, 2004,

20

and ending June 30, 2010, the additional liability for the

21

increase in benefits provided in this section shall be funded in

22

equal dollar annual installments over a period of ten years

23

beginning July 1, 2004. For fiscal years beginning on or after

24

July 1, 2010, the additional liability for the increase in

25

benefits provided in this section shall be funded as part of the

26

actuarial accrued liability as provided in section 5508

27

(relating to actuarial cost method).

28

* * *

29

§ 5708.8.  Special supplemental postretirement adjustment of

30

2002.

- 76 -

 


1

* * *

2

(g)  Funding.--[The] For the period beginning July 1, 2003,

3

and ending June 30, 2010, the additional liability for the

4

increase in benefits provided in this section shall be funded in

5

equal dollar annual installments over a period of ten years

6

beginning July 1, 2003. For fiscal years beginning on or after

7

July 1, 2010, the additional liability for the increase in

8

benefits provided in this section shall be funded as part of the

9

actuarial accrued liability as provided in section 5508

10

(relating to actuarial cost method).

11

* * *

12

§ 5902.  Administrative duties of the board.

13

* * *

14

(k)  Certification of employer contributions.--The board

15

shall, each year in addition to the itemized budget required

16

under section 5509 (relating to appropriations and assessments

17

by the Commonwealth), certify, as a percentage of the members'

18

payroll, the employers' contributions as determined pursuant to

19

section 5508 (relating to actuarial cost method) necessary for

20

the funding of prospective annuities for active members and the

21

annuities of annuitants and certify the rates and amounts of the

22

employers' normal contributions as determined pursuant to

23

section 5508(b), accrued liability contributions as determined

24

pursuant to section 5508(c), supplemental annuities contribution

25

rate as determined pursuant to section 5508(e) [and], the

26

experience adjustment factor as determined pursuant to section

27

5508(f), the collared contribution rate pursuant to section

28

5508(h) and the final contribution rate pursuant to section

29

5508(i), which shall be paid to the fund and credited to the

30

appropriate accounts. The board may allocate the final

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1

contribution rate and certify various employer contribution

2

rates based upon the different benefit eligibility, class of

3

service multiplier, superannuation age and other benefit

4

differences resulting from State service credited for individual

5

members even though such allocated employer contribution rate on

6

behalf of any given member may be more or less than 5% of the

7

member's compensation for the period from July 1, 2010, to June

8

30, 2011, or may differ from the prior year's contribution for

9

that member by more or less than the percentages used to

10

calculate the collared contribution rate for that year and may

11

be below any minimum contribution rate established for the

12

collared contribution rate or final contribution rate. These

13

certifications shall be regarded as final and not subject to

14

modification by the [Budget Secretary] Secretary of the Budget.

15

* * *

16

§ 5903.  Duties of the board to advise and report to heads of

<--

17

departments and members.

18

* * *

19

(c)  Purchase of credit and full coverage membership

20

certifications.--Upon receipt of an application from an active

21

member or eligible school employee to purchase credit for

22

previous State or creditable nonstate service, an election for

23

membership in a specific class of service, or an election to

24

become a full coverage member, the board shall determine and

25

certify to the member the amount required to be paid by the

26

member. When necessary, the board shall certify to the previous

27

employer the amount due in accordance with sections 5504

28

(relating to member contributions for the purchase of credit for

29

previous State service or to become a full coverage member) and

30

5505 (relating to contributions for the purchase of credit for

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1

creditable nonstate service).

2

* * *

3

§ 5905.  Duties of the board regarding applications and

4

elections of members.

5

(a)  Statement to new members.--As soon as practicable after

6

each member shall have become an active member in the system,

7

the board shall issue to the member notice of any election of

8

class of service membership he may be eligible to make, a

9

statement certifying his class of service, his member

10

contribution rate, and the aggregate length of total previous

11

State service and creditable nonstate service for which he may

12

receive credit.

13

* * *

14

§ 5905.1.  Installment payments of accumulated deductions.

15

* * *

16

(d)  Statutory interest.--Any lump sum, including a lump sum

17

payable pursuant to section 5705.1 (relating to payment of

18

accumulated deductions resulting from Class A-3 and Class A-4

19

service), or installment payable shall include statutory

20

interest credited to the date of payment, except in the case of

21

a member, other than a vestee or special vestee, who has not

22

filed his application prior to 90 days following his termination

23

of service.

24

§ 5907.  Rights and duties of State employees and members.

25

* * *

26

(c)  Multiple service membership.--Any active member who was

27

formerly an active member in the Public School Employees'

28

Retirement System may elect to become a multiple service member.

29

Such election shall occur no later than [30] 365 days after

30

becoming an active member in this system.

- 79 -

 


1

* * *

2

§ 5934.  State accumulation account.

3

The State accumulation account shall be the ledger account to

4

which shall be credited all contributions of the Commonwealth or

5

other employers whose employees are members of the system and

6

made in accordance with the provisions of section 5507(a) or (d) 

7

(relating to contributions by the Commonwealth and other

8

employers) except that the amounts received under the provisions

9

of the act of May 12, 1943 (P.L.259, No.120), and the amounts

10

received under the provisions of the Liquor Code, act of April

11

12, 1951 (P.L.90, No.21), shall be credited to the State Police

12

benefit account or the enforcement officers' benefit account as

13

the case may be. All amounts transferred to the fund by county

14

retirement systems or pension plans in accordance with the

15

provisions of section 5507(c) also shall be credited to the

16

State accumulation account. All amounts transferred to the fund

17

by the Public School Employees' Retirement System in accordance

18

with section 5303.2(e) (relating to election to convert school

19

service to State service), except amounts credited to the

20

members' savings account, and all amounts paid by the Department

21

of Corrections in accordance with section 5303.2(f) also shall

22

be credited to the State accumulation account. The State

23

accumulation account shall be credited with valuation interest.

24

The reserves necessary for the payment of annuities and death

25

benefits as approved by the board and as provided in Chapter 57

26

(relating to benefits) shall be transferred from the State

27

accumulation account to the annuity reserve account provided for

28

in section 5935 (relating to annuity reserve account), except

29

that the reserves necessary on account of a member who is an

30

officer of the Pennsylvania State Police or an enforcement

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1

officer shall be transferred from the State accumulation account

2

to the State Police benefit account provided for in section 5936

3

(relating to State Police benefit account) or to the enforcement

4

officers' benefit account as provided for in section 5937

5

(relating to enforcement officers' benefit account) as the case

6

may be. The reserves necessary for the payment of supplemental

7

annuities in excess of those reserves credited to the

8

supplemental annuity account on June 30, 2010, shall be

9

transferred from the State accumulation account to the

10

supplemental annuity account. In the event that supplemental

11

annuities are increased by legislation enacted subsequent to

12

December 31, 2009, the necessary reserves shall be transferred

13

from the State accumulation account to the supplemental annuity

14

account.

15

§ 5936.  State Police benefit account.

<--

16

* * *

17

(b)  Transfers from account.--Should the said annuitant be

18

subsequently restored to active service, the present value of

19

the member's annuity at the time of reentry into State service

20

shall be transferred from the State Police benefit account and

21

placed to his individual credit in the members' savings account.

22

In addition, the actuarial reserve for his annuity calculated as

23

if he had been a member of Class A if he has Class A or Class C

24

service credited; as if he had been a member of Class A-3 if the

25

annuitant has Class A-3 State service credited; or as if he had

26

been a member of Class A-4 if the annuitant has Class A-4

27

service credited, less the amount transferred to the members'

28

savings account shall be transferred from the State Police

29

benefit account to the State accumulation account. Upon

30

subsequent retirement other than as an officer of the

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1

Pennsylvania State Police the actuarial reserve remaining in the

2

State Police benefit account shall be transferred to the

3

appropriate reserve account.

4

§ 5937.  Enforcement officers' benefit account.

5

* * *

6

(b)  Transfers from account.--Should the said annuitant be

7

subsequently restored to active service, the present value of

8

the member's annuity at the time of reentry into State service

9

shall be transferred from the enforcement officers' benefit

10

account and placed to his individual credit in the members'

11

savings account. In addition, the actuarial reserve for his

12

annuity calculated as if he had been a member of Class A if the

13

annuitant does not have any Class AA, Class A-3 or Class A-4 

14

service credited [and calculated]; as if he had been a member of

15

Class AA if the annuitant does have Class AA service credited;

16

as if he had been a member of Class A-3 if the annuitant has

17

Class A-3 State service credited; or as if he had been a member

18

of Class A-4 if the annuitant has Class A-4 service credited, 

19

less the amount transferred to the members' savings account

20

shall be transferred from the enforcement officers' benefit

21

account to the State accumulation account. Upon subsequent

22

retirement other than as an enforcement officer the actuarial

23

reserve remaining in the enforcement officers' benefit account

24

shall be transferred to the appropriate reserve account.

25

§ 5938.  Supplemental annuity account.

26

The supplemental annuity account shall be the ledger account

27

to which shall be credited all contributions from the

28

Commonwealth and other employers in accordance with section

29

5507(b) (relating to contributions by the Commonwealth and other

30

employers) for the payment of the supplemental annuities

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1

provided in sections 5708 (relating to supplemental annuities),

2

5708.1 (relating to additional supplemental annuities), 5708.2

3

(relating to further additional supplemental annuities), 5708.3

4

(relating to supplemental annuities commencing 1994), 5708.4

5

(relating to special supplemental postretirement adjustment),

6

5708.5 (relating to supplemental annuities commencing 1998),

7

5708.6 (relating to supplemental annuities commencing 2002),

8

5708.7 (relating to supplemental annuities commencing 2003) and

9

5708.8 (relating to special supplemental postretirement

10

adjustment of 2002) made before July 1, 2010, the amount

11

transferred from the State accumulation account to provide all

12

additional reserves necessary as of June 30, 2010, to pay such

13

supplemental annuities and adjustments, and the amounts

14

transferred from the State accumulation account to provide all

15

additional reserves necessary as a result of supplemental

16

annuities enacted after December 31, 2009. The supplemental

17

annuity account shall be credited with valuation interest. The

18

reserves necessary for the payment of such supplemental

19

annuities shall be transferred from the supplemental annuity

20

account to the annuity reserve account as provided in section

21

5935 (relating to annuity reserve account).

22

§ 5955.  Construction of part.

<--

23

Regardless of any other provision of law, pension rights of

24

State employees shall be determined solely by this part or any

25

amendment thereto, and no collective bargaining agreement nor

26

any arbitration award between the Commonwealth and its employees

27

or their collective bargaining representatives shall be

28

construed to change any of the provisions herein, to require the

29

board to administer pension or retirement benefits not set forth

30

in this part, or otherwise require action by any other

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1

government body pertaining to pension or retirement benefits or

2

rights of State employees. Notwithstanding the foregoing, any

3

pension or retirement benefits or rights previously so

4

established by or as a result of an arbitration award shall

5

remain in effect after the expiration of the current collective

6

bargaining agreement between the State employees so affected and

7

the Commonwealth until the expiration of each of the collective

8

bargaining agreements in effect on January 1, 2011, at which

9

time the classes of membership and resulting member contribution

10

rates, eligibility for vesting, withdrawal and superannuation

11

annuities, optional modification of annuities and other terms

12

and conditions related to class of membership shall be as

13

determined by this part for employees covered by those and

14

successor collective bargaining agreements. For purposes of

15

administering this part, for those State employees who are

16

members of each such collective bargaining unit, the date

17

January 1, 2011, contained in this part, except in this section,

18

shall be replaced with the date of the day immediately following

19

the expiration of each such collective bargaining agreement. The

20

provisions of this part insofar as they are the same as those of

21

existing law are intended as a continuation of such laws and not

22

as new enactments. The provisions of this part shall not affect

23

any act done, liability incurred, right accrued or vested, or

24

any suit or prosecution pending or to be instituted to enforce

25

any right or penalty or to punish any offense under the

26

authority of any repealed laws.

27

Section 5 12.  Contribution rates shall remain in effect

<--

28

until June 30, 2010, as follows:

29

(1)  Notwithstanding the provisions of this act, the

30

employer contribution rates certified by the Public School

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1

Employees' Retirement Board for fiscal year 2009-2010 shall

2

remain in effect until June 30, 2010.

3

(2)  Notwithstanding the provisions of this act, the

4

employer contribution rates certified by the State Employees'

5

Retirement Board for fiscal year 2009-2010 shall remain in

6

effect until June 30, 2010.

7

Section 6 13.  Recertification to the Secretary of the Budget

<--

8

shall be as follows:

9

(1)  Notwithstanding Within 15 days of the later of:

<--

10

(i)  the effective date of this section; or

11

(ii)  the date of the passage of this Commonwealth's

12

budget for fiscal year 2010-2011, the Secretary of the

13

Budget shall certify to the Public School Employees'

14

Retirement Board the amount of money appropriated for

15

public school employees' retirement.

16

Notwithstanding any other provisions of law to the contrary,

17

the Public School Employees' Retirement Board shall,

18

effective for the fiscal year beginning July 1, 2010,

19

recertify to the Secretary of the Budget, within 15 days of

20

the effective date of this act, the Secretary of the Budget's

<--

21

certification to the Public School Employees' Retirement

22

Board of the amount of money appropriated for public school

23

employees' retirement, the employer contributions, rates,

24

factors and amounts set forth in 24 Pa.C.S. § 8502(k), as

25

amended by this act. The recertification rate shall be not

<--

26

less than 5% nor more than 7.58%, plus the premium assistance

27

contribution rate. The recertification shall supersede the

28

prior certification for all purposes. This recertified rate

<--

29

shall not affect the application of the collared contribution

30

rate as set forth in 24 Pa.C.S. § 8328(g).

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1

(2)  Notwithstanding any other provision of law to the

2

contrary, the State Employees' Retirement Board shall,

3

effective for the fiscal year beginning July 1, 2010,

4

recertify to the Secretary of the Budget and heads of

<--

5

departments, within 15 days of the effective date of this act 

<--

6

section, the contributions, rates, factors and amounts set

<--

7

forth in 71 Pa.C.S. § 5902(k), as amended by this act. The

8

recertification shall supersede the prior certification for

9

all purposes.

10

Section 7 14.  Certain public officials shall be held

<--

11

harmless, as follows:

12

(1)  Notwithstanding any other provision of law,

13

fiduciary requirement, actuarial standard of practice or

14

other requirement to the contrary, the members of the Public

15

School Employees' Retirement Board, the actuary and other

16

employees and officials of the Public School Employees'

17

Retirement System shall not be held liable or in breach or

18

violation of any law or standard either as individuals or in

19

their official capacity or as a governmental or corporate

20

entity for any action or calculation related to calculating

21

and certifying a final contribution rate as provided for in

22

this act that is different from the actuarially required

23

contribution rate as otherwise appropriately calculated under

24

the provisions of the Public School Employees' Retirement

25

Code.

26

(2)  Notwithstanding any other provision of law,

27

fiduciary requirement, actuarial standard of practice or

28

other requirement to the contrary, the members of the State

29

Employees' Retirement Board, the actuary and other employees

30

and officials of the State Employees' Retirement System shall

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1

not be held liable or in breach or violation of any law or

2

standard either as individuals or in their official capacity

3

or as a governmental or corporate entity for any action or

4

calculation related to calculating and certifying a final

5

contribution rate as provided for in this act that is

6

different from the actuarially required contribution rate as

7

otherwise appropriately calculated under the provisions of

8

the State Employees' Retirement Code.

9

Section 8 15.  Construction of a calculation or actuarial

<--

10

method shall be as follows:

11

(1)  Nothing in this act shall be construed or deemed to

12

imply that any calculation or actuarial method used by the

13

Public School Employees' Retirement Board, its actuaries or

14

the Public School Employees' Retirement System was not in

15

accordance with the provisions of the Public School

16

Employees' Retirement Code or other applicable law prior to

17

the enactment effective date of this act section.

<--

18

(2)  Nothing in this act shall be construed or deemed to

19

imply that any calculation or actuarial method used by the

20

State Employees' Retirement Board, its actuaries or the State

21

Employees' Retirement System was not in accordance with the

22

provisions of the State Employees' Retirement Code or other

23

applicable law prior to the enactment of this act effective

<--

24

date of this section.

25

Section 9.  This act shall take effect immediately.

<--

26

Section 16.  Nothing in this act shall be deemed to permit

<--

27

the restoration of service credit or retirement benefits which

28

were the subject of an order of forfeiture pursuant to the act

29

of July 8, 1978 (P.L.752, No.140), known as the Public Employee

30

Pension Forfeiture Act, or subject to section 16 of Article V of

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1

the Constitution of Pennsylvania or 42 Pa.C.S. § 3352.

2

Section 17.  Nothing in this act shall be construed or deemed

3

to imply that any interpretation or application of the

4

provisions of 24 Pa.C.S. Pt. IV or benefits available to members

5

of the Public School Employees' Retirement System was not in

6

accordance with the provisions of 24 Pa.C.S. Pt. IV or other

7

applicable law prior to the effective date of this section.

8

Nothing in this act shall be construed to grant to or deemed to

9

imply that any current or former school employees on the

10

effective date of this section possessed any contractual rights,

11

either expressed or implied, or any other constitutionally

12

protected rights, in the terms and conditions of the Public

13

School Employees' Retirement System or other pension or

14

retirement benefits as a school employee, including, but not

15

limited to, benefits, option rights or privileges established by

16

24 Pa.C.S. Pt. IV.

17

Section 18.  This act shall be construed and administered in

18

such a manner that the Public School Employees' Retirement

19

System will satisfy the requirements necessary to qualify as a

20

qualified pension plan under section 401(a) and other applicable

21

provisions of the Internal Revenue Code of 1986 (Public Law

22

99-514, 26 U.S.C. § 1 et seq.). The rules, regulations and

23

procedures adopted and promulgated by the Public School

24

Employees' Retirement Board under 24 Pa.C.S. § 8502(h) may

25

include those necessary to accomplish the purpose of this

26

section.

27

Section 19.  (a)  Nothing in this act which amends or

28

supplements provisions of 24 Pa.C.S. Pt. IV shall create in any

29

member of the system or in any other person claiming an interest

30

in the account of any such member a contractual right, either

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1

express or implied, in relation to requirements for

2

qualification of the Public School Employees' Retirement System

3

as a qualified pension plan under the Internal Revenue Code of

4

1986 (Public Law 99-514, 26 U.S.C. § 401(a)) nor any

5

construction of 24 Pa.C.S. Pt. IV, as so amended or

6

supplemented, or any rules or regulations adopted under 24

7

Pa.C.S. Pt. IV. The provisions of 24 Pa.C.S. Pt. IV shall remain

8

subject to the Internal Revenue Code of 1986, and the General

9

Assembly reserves to itself such further exercise of its

10

legislative power to amend or supplement such provisions as may

11

from time to time be required in order to maintain the

12

qualification of such system as a qualified pension plan under

13

section 401(a) and other applicable provisions of the Internal

14

Revenue Code of 1986. 

15

(b)  References in this act to the Internal Revenue Code of

16

1986, including for this purpose administrative regulations

17

promulgated thereunder, are intended to include such laws and

18

regulations in effect on the effective date of this section and

19

as they may hereafter be amended or supplemented or supplanted

20

by successor provisions.

21

Section 20.  No school employee otherwise a member of,

22

eligible to be a member of, or having school or nonschool

23

service credited in a class of service other than Class T-E or

24

Class T-F may cancel, decline or waive membership in such other

25

class of service in order to obtain Class T-E or Class T-F

26

service credit, become a member of Class T-E or Class T-F or

27

elect Class T-E or Class T-F membership.

28

Section 21.  Notwithstanding any other provision of law, any

29

change in accrued liability of the Public School Employees'

30

Retirement System created by this act shall be funded as a level

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1

percentage of compensation over a period of 30 years beginning

2

July 1, 2012, subject to any limits imposed on employer

3

contributions to the Public School Employees' Retirement System.

4

For purposes of 24 Pa.C.S. §§ 8321, 8326 and 8328, such changes

5

shall not be considered to be costs added by legislation.

6

Section 22.  Notwithstanding any regulation promulgated by

7

the Public School Employees' Retirement Board, application or

8

interpretation of 24 Pa.C.S. Pt. IV, or administrative practice

9

to the contrary, a member's eligibility deriving from Class T-E

10

or Class T-F service credit for a superannuation annuity or

11

other rights and benefits based upon attaining superannuation

12

age shall require the actual accrual of 35 eligibility points.

13

Section 23.  Nothing in this act shall be construed or deemed

14

to imply that any interpretation or application of the

15

provisions of 71 Pa.C.S. Pt. XXV or benefits available to

16

members of the State Employees' Retirement System was not in

17

accordance with the provisions of 71 Pa.C.S. Pt. XXV or other

18

applicable law prior to the effective date of this section.

19

Nothing in this act shall be construed to grant to or deemed to

20

imply that any current or former State employees on the

21

effective date of this section possessed any contractual rights,

22

either expressed or implied, or any other constitutionally

23

protected rights, in the terms and conditions of the State

24

Employees' Retirement System or other pension or retirement

25

benefits as a State employee, including, but not limited to,

26

benefits, options, rights or privileges established by 71

27

Pa.C.S. Pt. XXV.

28

Section 24.  This act shall be construed and administered in

29

such a manner that the State Employees' Retirement System will

30

satisfy the requirements necessary to qualify as a qualified

- 90 -

 


1

pension plan under section 401(a) and other applicable

2

provisions of the Internal Revenue Code of 1986 (Public Law

3

99-514, 26 U.S.C. § 1 et seq.). The rules, regulations and

4

procedures adopted and promulgated by the State Employees'

5

Retirement Board under 71 Pa.C.S. § 5902(h) may include those

6

necessary to accomplish the purpose of this section.

7

Section 25.  (a)  Nothing in this act which amends or

8

supplements provisions of 71 Pa.C.S. Pt. XXV shall create in any

9

member of the system or in any other person claiming an interest

10

in the account of any such member a contractual right, either

11

express or implied, in relation to requirements for

12

qualification of the State Employees' Retirement System as a

13

qualified pension plan under the Internal Revenue Code of 1986

14

(Public Law 99-514, 26 U.S.C. § 401(a)) nor any construction of

15

71 Pa.C.S. Pt. XXV, as so amended or supplemented, or any rules

16

or regulations adopted under 71 Pa.C.S. Pt. XXV. The provisions

17

of 71 Pa.C.S. Pt. XXV shall remain subject to the Internal

18

Revenue Code of 1986, and the General Assembly reserves to

19

itself such further exercise of its legislative power to amend

20

or supplement such provisions as may from time to time be

21

required in order to maintain the qualification of such system

22

as a qualified pension plan under section 401(a) and other

23

applicable provisions of the Internal Revenue Code of 1986. 

24

(b)  References in this act to the Internal Revenue Code of

25

1986, including for this purpose administrative regulations

26

promulgated thereunder, are intended to include such laws and

27

regulations in effect on the effective date of this section and

28

as they may hereafter be amended or supplemented or supplanted

29

by successor provisions.

30

Section 26.  No State employee otherwise a member of,

- 91 -

 


1

eligible to be a member of, or having State or nonstate service

2

credited in, a class of service other than Class A-3 may cancel,

3

decline or waive membership in such other class of service in

4

order to obtain Class A-3 or Class A-4 service credit, become a

5

member of Class A-3 or Class A-4 or elect Class A-3 or Class A-4

6

membership.

7

Section 27.  Notwithstanding any other provision of law, any

8

change in accrued liability of the State Employees' Retirement

9

System created by this act as a result of changes in benefits

10

shall be funded as a level percentage of compensation over a

11

period of 30 years beginning July 1, 2012, subject to any limits

12

imposed on employer contributions to the State Employees'

13

Retirement System. For purposes of 71 Pa.C.S. §§ 5501.1, 5507

14

and 5508, any such changes shall not be considered to be costs

15

added by legislation.

16

Section 28.  Notwithstanding any regulation promulgated by

17

the State Employees' Retirement Board, application or

18

interpretation of 71 Pa.C.S. Pt. XXV, or administrative practice

19

to the contrary, a member's eligibility deriving from Class A-3

20

or Class A-4 service credit for a superannuation annuity or

21

other rights and benefits based upon attaining superannuation

22

age shall require the actual accrual of 35 eligibility points.

23

Section 29.  This act shall take effect as follows:

24

(1)  The amendment or addition of the following

25

provisions of 24 Pa.C.S. shall take effect July 1, 2011:

26

section 8102;

27

section 8303(c);

28

section 8304(a);

29

section 8305(d) and (e);

30

section 8305.2;

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1

section 8307(b);

2

section 8308;

3

section 8323(a), (c) and (c.1);

4

section 8324(a), (d), (e) and (f);

5

section 8326(a);

6

section 8327(a) and (c);

7

section 8328

8

section 8342(a);

9

section 8344(d);

10

section 8345(a);

11

section 8348.1(f);

12

section 8348.2(f);

13

section 8348.3(f);

14

section 8348.5(f);

15

section 8348.6(f);

16

section 8348.7(f);

17

section 8502(k)

18

section 8505(l); and

19

section 8535(3).

20

(2)  Sections 17, 18, 19, 20, 21 and 22 of this act shall

21

take effect July 1, 2011.

22

(3)  The remainder of this act shall take effect

23

immediately.

- 93 -