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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY BROWNE, ORIE, SCARNATI, CORMAN, ROBBINS, YAW, EARLL, BAKER, FOLMER, RAFFERTY, McILHINNEY, VANCE, WAUGH, M. WHITE, D. WHITE, PIPPY, PICCOLA AND EICHELBERGER, MARCH 4, 2009 |
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| REFERRED TO FINANCE, MARCH 4, 2009 |
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| AN ACT |
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1 | Amending Title 71 (State Government) of the Pennsylvania |
2 | Consolidated Statutes, providing for a unified retirement |
3 | system for employees of the Commonwealth and its political |
4 | subdivisions and other employers. |
5 | The General Assembly of the Commonwealth of Pennsylvania |
6 | hereby enacts as follows: |
7 | Section 1. Title 71 of the Pennsylvania Consolidated |
8 | Statutes is amended by adding a part to read: |
9 | PART XXVII |
10 | UNIFIED CONTRIBUTION PENSION PLAN |
11 | Chapter |
12 | 71. Membership, Contributions and Benefits |
13 | CHAPTER 71 |
14 | MEMBERSHIP, CONTRIBUTIONS AND BENEFITS |
15 | Sec. |
16 | 7101. Declaration of purpose. |
17 | 7102. Definitions. |
18 | 7103. Establishment. |
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1 | 7104. Public Employees' Retirement System Board. |
2 | 7105. Duties of board. |
3 | 7106. Administration and investment options. |
4 | 7107. Plan structure. |
5 | 7108. Investments and expenses. |
6 | 7109. Attachment. |
7 | 7110. Investments. |
8 | 7111. Active member contributions. |
9 | 7112. Employer contributions. |
10 | 7113. Vesting. |
11 | 7114. Duties of board to advise and report to heads of |
12 | departments and members. |
13 | 7115. Duties of heads of departments. |
14 | 7116. Administration. |
15 | 7117. Applicability. |
16 | § 7101. Declaration of purpose. |
17 | In order to preserve the long-term fiscal stability and |
18 | viability of this Commonwealth and its political subdivisions, |
19 | the purpose of this chapter is to provide a unified retirement |
20 | system for employees of the Commonwealth, its political |
21 | subdivisions and all other employers to participate in and to |
22 | provide retirement income security through a system of defined |
23 | contribution authorized by the United States Internal Revenue |
24 | Code, permitting the employees to obtain the advantages inherent |
25 | in the plans relative to the income tax treatment of the |
26 | contributions and disbursements made under defined contribution |
27 | plans. |
28 | § 7102. Definitions. |
29 | The following words and phrases when used in this chapter |
30 | shall have the meanings given to them in this section unless the |
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1 | context clearly indicates otherwise: |
2 | "Active member." A public employee, or a member on leave |
3 | without pay, for whom contributions are being made pursuant to |
4 | the system established under this chapter. |
5 | "Board." The Public Employees' Retirement System Board. |
6 | "Compensation." The remuneration actually received as a |
7 | public employee, excluding any of the following: |
8 | (1) Refunds for expenses, contingency and accountable |
9 | expense allowances. |
10 | (2) Severance payments or payments for unused vacation |
11 | or sick leave. |
12 | "Employer." Any governmental entity directly responsible for |
13 | the employment and payment of a public employee. |
14 | "Fund." The Public Employees' Retirement Fund. |
15 | "Head of department." Any of the following: |
16 | (1) The chief administrative officer of a department. |
17 | (2) The chairperson or executive director of an agency, |
18 | authority or independent board or commission. |
19 | (3) The Court Administrator of Pennsylvania. |
20 | (4) The Chief Clerk of the Senate. |
21 | (5) The Chief Clerk of the House of Representatives. |
22 | (6) A designee of any of the individuals listed under |
23 | this definition who otherwise executes duties similar to that |
24 | of a chief administrative officer of an employer or a |
25 | department of any other employer. |
26 | (7) The director or similar person for any entity that |
27 | employs a public employee. |
28 | "IRC." The Internal Revenue Code of 1986 (Public Law 99-514 |
29 | 26 U.S.C. § 1 et seq.). A reference in this part to "IRC § XXX" |
30 | shall be deemed to refer to the identically numbered section and |
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1 | subsection or other subdivision of such section in 26 U.S.C. |
2 | (relating to Internal Revenue Code). |
3 | "Lifestyle funds." An investment fund featuring an asset mix |
4 | determined by the level of risk and return that is appropriate |
5 | for an individual active member. |
6 | "Member contributions." Regular contributions by members |
7 | under section 7111 (relating to active member contributions). |
8 | "Municipal employee." A person holding an office or position |
9 | under a municipality or a municipal government association and |
10 | paid on a regular salary or per diem basis. The term shall not |
11 | include officers and employees paid wholly on a fee basis. |
12 | "Municipality." Any of the following: |
13 | (1) A city, borough, town, township, county, county |
14 | institution district or any newly created governmental unit. |
15 | (2) An authority created solely or jointly by a city, |
16 | borough, town, township, county or county institution |
17 | district. |
18 | (3) An institution supported and maintained by a |
19 | municipality or a municipal government association. |
20 | (4) An industrial development corporation as defined |
21 | under section 2301 of the act of June 29, 1996 (P.L.434, No. |
22 | 67), known as the Job Enhancement Act, which has adopted |
23 | bylaws and the governing body of the industrial development |
24 | corporation is organized and holds regular public meetings. |
25 | "Pensionable earnings." Compensation minus any compensation |
26 | received for the performance of overtime or compensation in the |
27 | form of a bonus, regardless if the bonus is pro rata, lump sum |
28 | or in any other method. |
29 | "Public employee." Any of the following employees that begin |
30 | public service after November 30, 2009: |
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1 | (1) A State employee. |
2 | (2) A school employee. |
3 | (3) A municipal employee. |
4 | (4) An employee of a political subdivision of the |
5 | Commonwealth. |
6 | "Public school." Any classes or schools within this |
7 | Commonwealth conducted under the order and superintendence of |
8 | the Department of Education, including any of the following: |
9 | (1) All educational classes of an employer charged with |
10 | the responsibility of public education within this |
11 | Commonwealth as well as those classes financed wholly or in |
12 | part by the Federal Government. |
13 | (2) State-owned colleges and universities, The |
14 | Pennsylvania State University and community colleges. |
15 | (3) Area vocational-technical schools and intermediate |
16 | units. |
17 | (4) The State Board of Education. |
18 | (5) Scotland School for Veterans' Children, Thaddeus |
19 | Stevens State School of Technology and the Pennsylvania State |
20 | Oral School for the Deaf. |
21 | "Public service." The service of a public employee during |
22 | which the required member contributions have been made. |
23 | "School employee." A person engaged in work relating to a |
24 | public school for any governmental entity and for which work the |
25 | person is receiving regular remuneration as an officer, |
26 | administrator or employee. The term does not include an |
27 | independent contractor or a person compensated on a fee basis. |
28 | "State employee." Any person holding a State office or |
29 | position under the Commonwealth or employed by the Commonwealth |
30 | in any capacity. The term shall not include an independent |
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1 | contractor, a person compensated on a fee basis or a person paid |
2 | directly by an entity other than a State Employees' Retirement |
3 | System employer. The term shall include members of the General |
4 | Assembly and any officer or employee of any of the following: |
5 | (1) The Pennsylvania Turnpike Commission, the Delaware |
6 | River Port Authority, the Port Authority Transit Corporation, |
7 | the Philadelphia Regional Port Authority, the Delaware River |
8 | Joint Toll Bridge Commission, the State Public School |
9 | Building Authority, the General State Authority, the State |
10 | Highway and Bridge Authority, the Delaware Valley Regional |
11 | Planning Commission and the Susquehanna River Basin |
12 | Commission, if the commission or authority makes employer |
13 | contributions on behalf of employees under section 7112 |
14 | (relating to employer contributions). |
15 | (2) The Interstate Commission of the Delaware River |
16 | Basin, if the commission contributes to the fund the money |
17 | required to build up the reserves necessary for the payment |
18 | of the annuities of the officers and employees without any |
19 | liability on the part of the Commonwealth to make |
20 | appropriations for those purposes. |
21 | (3) A separate independent public corporation created by |
22 | statute, except for a municipal or quasi-municipal |
23 | corporation, if the following apply: |
24 | (i) The officer or employee remains an officer or |
25 | employee of the public corporation. |
26 | (ii) The officer or employee of the public |
27 | corporation was an employee of the Commonwealth |
28 | immediately prior to employment by the public |
29 | corporation. |
30 | (iii) The public corporation contributes to the fund |
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1 | the money required to build up the reserves necessary for |
2 | the payment of the annuities of the officers and |
3 | employees without any liability on the part of the |
4 | Commonwealth to make appropriations for those purposes. |
5 | "System." The Public Employee's Retirement System. |
6 | § 7103. Establishment. |
7 | (a) System establishment.--A public employees' retirement |
8 | system is established for public employees. |
9 | (b) Fund establishment.--The Public Employees' Retirement |
10 | Fund is established. |
11 | § 7104. Public Employees' Retirement System Board. |
12 | (a) Establishment.--The Public Employees' Retirement System |
13 | Board is established for the purpose of administering and |
14 | managing the system. |
15 | (b) Status and membership.--The board shall be an |
16 | independent administrative board and shall consist of the |
17 | following members: |
18 | (1) The State Treasurer, who shall be an ex officio |
19 | member. |
20 | (2) Two members of the Senate or a designee. |
21 | (3) Two members of the House of Representatives or a |
22 | designee. |
23 | (4) The Chairman of the State Employees' Retirement |
24 | Board. |
25 | (5) The Chairman of the Public School Employees' |
26 | Retirement Board. |
27 | (6) The Chairman of the Pennsylvania Municipal |
28 | Retirement Board. |
29 | (7) Three members appointed by the Governor. One of the |
30 | members first appointed by the Governor shall be appointed |
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1 | for a term which shall expire on June 30, 2014, one member |
2 | for a term which shall expire on June 30, 2014, and one |
3 | member for a term which shall expire on June 30, 2015. |
4 | (c) Terms and qualifications.--Except as provided under |
5 | subsection (d), members shall serve for terms of four years. |
6 | Members appointed by the Governor may not be or have been a |
7 | public employee on or before the effective date of this section, |
8 | nor may be a current or former member of the State Employees' |
9 | Retirement System, the Public School Employees' Retirement |
10 | System, the Pennsylvania Municipal Retirement System or any |
11 | other Pennsylvania public retirement system and shall be subject |
12 | to confirmation by the Senate. |
13 | (d) Legislative members.--The members of the Senate shall be |
14 | appointed by the President pro tempore of the Senate and shall |
15 | consist of a majority member and a minority member. One member |
16 | of the House of Representatives shall be appointed by the |
17 | Majority Leader of the House of Representatives. One member of |
18 | the House of Representatives shall be appointed by the Minority |
19 | Leader of the House of Representatives. The legislative members |
20 | shall serve on the board for the duration of their legislative |
21 | terms and shall continue to serve until 30 days after the |
22 | convening of the next regular session of the General Assembly |
23 | after the expiration of their respective legislative terms or |
24 | until a successor is appointed for the new term, whichever |
25 | occurs first. A vacancy occurring during the term of an |
26 | appointed member shall be filled for the unexpired term by the |
27 | appointment and confirmation of a successor in the same manner |
28 | as the member's predecessor. Legislative members shall be |
29 | precluded from being appointed to the board if they have |
30 | previously or are currently serving in any capacity with any |
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1 | other retirement board or system. |
2 | (e) Oath of office.--Each member of the board shall take an |
3 | oath of office that the member will, so far as it devolves upon |
4 | the member, diligently and honestly administer the affairs of |
5 | the board and will not knowingly violate or willfully permit to |
6 | be violated any of the provisions of law applicable to this |
7 | chapter. The oath shall be subscribed by the member taking it |
8 | and certified by the officer before whom it is taken and shall |
9 | be immediately filed in the Office of the Secretary of the |
10 | Commonwealth. |
11 | (f) Compensation and expenses.--All board members shall be |
12 | reimbursed for any necessary expenses and shall not suffer loss |
13 | of salary or wages through serving on the board, except that, if |
14 | duties the board has mandated are not executed, no compensation |
15 | or reimbursement for necessary expenses of board members shall |
16 | be paid or payable during the period in which the duties are not |
17 | executed. |
18 | (g) Corporate power and legal advisor.--The board shall |
19 | possess the powers and privileges of a corporation. The Attorney |
20 | General shall be the legal advisor of the board. |
21 | § 7105. Duties of board. |
22 | (a) Employees.--The following shall apply: |
23 | (1) The positions of secretary, assistant secretary and |
24 | investment professional shall be placed under the |
25 | unclassified service provisions of the act of August 5, 1941 |
26 | (P.L.752, No.286), known as the Civil Service Act. All other |
27 | positions of the board shall be placed in either the |
28 | classified or unclassified service according to the |
29 | definition of the terms under the Civil Service Act. |
30 | (2) Notwithstanding any other provision of law, the |
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1 | compensation of investment professionals shall be established |
2 | by the board. The compensation of all other officers and |
3 | employees of the board who are not covered by a collective |
4 | bargaining agreement shall be established by the board |
5 | consistent with the standards of compensation established by |
6 | the Executive Board of the Commonwealth. |
7 | (b) Secretary.--The secretary shall act as chief |
8 | administrative officer for the board. In addition to other |
9 | powers and duties conferred upon and delegated to the secretary |
10 | by the board, the secretary shall do all of the following: |
11 | (1) Serve as the administrative agent of the board. |
12 | (2) Serve as liaison between the board and applicable |
13 | legislative committees, the Treasury Department, the |
14 | Department of the Auditor General and between the board and |
15 | the investment counsel and the mortgage supervisor in |
16 | arranging for investments to secure maximum returns to the |
17 | fund. |
18 | (3) Review and analyze proposed legislation and |
19 | legislative developments affecting the system and present |
20 | findings to the board, legislative committees and other |
21 | interested groups or individuals. |
22 | (4) Direct the maintenance of files and records and |
23 | preparations or periodic reports. |
24 | (5) Receive inquiries and requests for information |
25 | concerning the system from the press, Commonwealth officials, |
26 | State employees, the general public, research organizations |
27 | and officials and organizations from other states and provide |
28 | information as authorized by the board. |
29 | (6) Supervise a staff of administrative, technical and |
30 | clerical employees engaged in recordkeeping and clerical |
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1 | processing activities in maintaining files of members, |
2 | accounting for contributions, processing payments to |
3 | annuitants, preparing required reports and retirement |
4 | counseling. |
5 | (c) Specific duties.--In order to establish and administer |
6 | the system, the powers and duties of the board shall include the |
7 | following: |
8 | (1) Providing to active members a defined contribution |
9 | retirement plan that is compliant with the IRC and the |
10 | requirements of this chapter. |
11 | (2) Entering into written agreements with financial or |
12 | other organizations to administer the system for an active |
13 | member and to invest funds held pursuant to the system. The |
14 | system and any written agreement shall comply with the IRC. |
15 | (3) Establishing procedures whereby public employees |
16 | shall participate in the system and may change their |
17 | investment choices on a periodic basis, as determined by the |
18 | board, which shall not be less frequently than once per |
19 | calendar month. |
20 | (4) Arranging for a deduction, from the compensation of |
21 | public employees, of employee contributions to the system. |
22 | (5) Establishing criteria for selection by the board of |
23 | the financial institutions, insurance companies or other |
24 | organizations that may be qualified as managers, on behalf of |
25 | the board, of funds accumulated under the system on behalf of |
26 | any active member. |
27 | (6) Establishing standards or criteria for the providing |
28 | of options to an active member concerning the method of |
29 | investing amounts accumulated under the system if the options |
30 | include a diversified mix of low-cost investment products |
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1 | that span the risk-return spectrum. |
2 | (7) Establishing standards or criteria for informing |
3 | active members of specific options offered by qualified |
4 | managers. |
5 | (8) Designing a comprehensive, balanced and impartial |
6 | educational program to assist active members in their choice |
7 | of investment options under the system, which shall include |
8 | retirement planning education and financial planning guidance |
9 | on matters such as investment diversification, investment |
10 | risks, investment costs and asset allocation. |
11 | (9) Establishing standards and criteria for the |
12 | disclosure to active members of the anticipated and actual |
13 | income attributable to the amounts, property and rights and |
14 | all fees, costs and charges to be made against the amounts |
15 | accumulated to cover the costs of administering and managing |
16 | the funds. |
17 | (10) Establishing processes for participation in the |
18 | system. The election period shall begin on the date that an |
19 | individual becomes a qualified employee and shall end 90 days |
20 | from that date. |
21 | (11) Performing an annual review of any qualified fund |
22 | manager for the purpose of assuring it continues to meet all |
23 | standards and criteria established. |
24 | (12) Establishing procedures whereby any active member |
25 | may do one of the following: |
26 | (i) Withdraw accumulated amounts in cases of |
27 | financial hardship or separation of an active member from |
28 | State service or as otherwise permitted under the IRC. |
29 | (ii) Dispose of an active member's account pursuant |
30 | to a domestic relations order unless in conflict with the |
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1 | IRC. |
2 | (13) Administering the system in compliance with the |
3 | IRC. |
4 | (14) Promulgating regulations necessary to administer |
5 | this chapter. |
6 | (d) Prohibited interests.--No member or employee of the |
7 | board shall have any direct or indirect interest in the gains or |
8 | profits of any investment made by the board. |
9 | (e) Professional personnel.--The board shall contract for |
10 | the services of investment advisors and counselors and any other |
11 | professional personnel as it deems advisable. The board may, |
12 | with the approval of the Attorney General, contract for legal |
13 | services. |
14 | (f) Expenses.--The board shall, through the Governor, submit |
15 | to the General Assembly annually a budget covering the |
16 | administrative expenses of this part. The expenses as approved |
17 | by the General Assembly in an appropriation bill shall be paid |
18 | in whole or in part from nonvested forfeitures. Concurrently |
19 | with its administrative budget, the board shall also submit to |
20 | the General Assembly annually a list of proposed expenditures |
21 | which the board intends to pay through the use of directed |
22 | commissions, together with a list of actual expenditures from |
23 | the past year actually paid by the board through the use of |
24 | directed commissions. All directed commission expenditures shall |
25 | be made by the board for the exclusive benefit of the system and |
26 | its members. |
27 | (g) Meetings.--The board shall hold at least six regular |
28 | public meetings annually and any other public meetings as it may |
29 | deem necessary. A majority of the board shall constitute a |
30 | quorum for the transaction of business at a public meeting of |
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1 | the board. |
2 | (h) Records.--The following shall apply: |
3 | (1) The board shall keep a record of all its proceedings |
4 | which shall be open to inspection by the public. |
5 | (2) Any record, material or data received, prepared, |
6 | used or retained by the board or its employees, investment |
7 | professionals or agents relating to an investment shall not |
8 | constitute a public record subject to public inspection under |
9 | the act of February 14, 2008 (P.L.6, No.3), known as the |
10 | Right-to-Know Law, if, in the reasonable judgment of the |
11 | board, the inspection would do one of the following: |
12 | (i) In the case of an alternative investment or |
13 | alternative investment vehicle, involve the release of |
14 | sensitive investment or financial information relating to |
15 | the alternative investment or alternative investment |
16 | vehicle which the fund was able to obtain only upon |
17 | agreeing to maintain its confidentiality. |
18 | (ii) Cause substantial competitive harm to the |
19 | person from whom sensitive investment or financial |
20 | information relating to the investment was received. |
21 | (iii) Have a substantial detrimental impact on the |
22 | value of an investment to be acquired, held or disposed |
23 | of by the fund or would cause a breach of the standard of |
24 | care or fiduciary duty set forth under this chapter. |
25 | (3) The following shall apply: |
26 | (i) The sensitive investment or financial |
27 | information excluded from inspection under paragraph (2) |
28 | (i), to the extent not otherwise excluded from |
29 | inspection, shall constitute a public record subject to |
30 | public inspection under the Right-to-Know Law once the |
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1 | board is no longer required by its agreement to maintain |
2 | confidentiality. |
3 | (ii) The sensitive investment or financial |
4 | information excluded from inspection under paragraph (2) |
5 | (ii), to the extent not otherwise excluded from |
6 | inspection, shall constitute a public record subject to |
7 | public inspection under the Right-to-Know Law once the |
8 | latter of one of the following occurs: |
9 | (A) The inspection no longer causes substantial |
10 | competitive harm to the person from whom the |
11 | information was received. |
12 | (B) The entity in which the investment was made |
13 | is liquidated. |
14 | (iii) The sensitive investment or financial |
15 | information excluded from inspection under paragraph (2) |
16 | (iii), to the extent not otherwise excluded from |
17 | inspection, shall constitute a public record subject to |
18 | public inspection under the Right-to-Know Law once the |
19 | latter of one of the following occurs: |
20 | (A) The inspection no longer has a substantial |
21 | detrimental impact on the value of an investment of |
22 | the fund and would not cause a breach of the standard |
23 | of care or fiduciary duty under this chapter. |
24 | (B) The entity in which the investment was made |
25 | is liquidated. |
26 | (i) Functions.--The board shall perform any other functions |
27 | as are required for the execution of the provisions of this |
28 | chapter. |
29 | (j) Performance of departmental duties.--In the event the |
30 | head of department fails to comply with the procedures mandated |
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1 | under section 7115 (relating to duties of heads of departments), |
2 | the board shall perform the duties and bill the department for |
3 | the cost of the same. |
4 | (k) Regulations and procedures.--The board shall, with the |
5 | advice of the Attorney General, adopt and promulgate rules and |
6 | regulations for the uniform administration of the system. |
7 | (l) Annual financial statement.--The board shall prepare and |
8 | have published, on or before July 1 of each year, a financial |
9 | statement as of the calendar year ending December 31 of the |
10 | previous year showing the condition of the fund and the various |
11 | accounts, including the board's accrual and expenditure of |
12 | directed commissions, and setting forth any other facts, |
13 | recommendations and data as may be of use in the advancement of |
14 | knowledge concerning annuities and other benefits provided under |
15 | this chapter. The board shall submit the financial statement to |
16 | the Governor and the General Assembly and shall file copies with |
17 | the head of each department for the use of the State employees |
18 | and the public. |
19 | (m) Independent audit.--The board shall provide for an |
20 | annual audit of the system by an independent certified public |
21 | accountant, which shall include the board's accrual and |
22 | expenditure of directed commissions. |
23 | § 7106. Administration and investment options. |
24 | (a) Administration.--The board shall administer the system |
25 | as a defined contribution retirement system under the IRC under |
26 | which benefits will be provided for active members. The benefits |
27 | to be provided for or on behalf of active members in the system |
28 | shall be provided through active member-directed investments in |
29 | accordance with IRC § 401(a). Active members and employers shall |
30 | contribute to the system in accordance with sections 7111 |
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1 | (relating to active member contributions) and 7112 (relating to |
2 | employer contributions). |
3 | (b) Investment options.--The system shall provide a variety |
4 | of investment options. The investment options shall include |
5 | lifestyle funds that are based upon age and projected |
6 | retirement. |
7 | (c) Additional investment options.--The system shall make |
8 | available investment options that represent a broad cross |
9 | section of asset classes and risk profiles. To the extent |
10 | practical, a composite fund may be offered to participants which |
11 | represents the entire portfolio return under management within |
12 | the Public School Employees' Retirement System or the State |
13 | Employees' Retirement System. |
14 | (d) Default investment option.--The system shall provide a |
15 | default investment option to an active member who does not |
16 | affirmatively elect a specific investment option. The default |
17 | investment option shall be the lifestyle fund which most closely |
18 | represents the current demographic of the active member and the |
19 | projected retirement of the active member. The active member |
20 | contribution in the default investment option shall be 6% of the |
21 | active member's total pensionable earnings. |
22 | (e) Investment guidance.--The system shall make available |
23 | investment guidance in accordance with pension industry |
24 | standards. |
25 | (f) Membership.--Membership in the system shall consist of |
26 | public employees occupying permanent positions with an employer. |
27 | § 7107. Plan structure. |
28 | (a) Duties.--In developing and making available the system, |
29 | the board shall do all of the following: |
30 | (1) Implement competitive bidding practices for |
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1 | processes that govern the daily operations of the system. |
2 | (2) Provide consistency in the plan for all active |
3 | members. |
4 | (3) Effectively leverage the existing administrative and |
5 | financial capabilities of the State Employees' Retirement |
6 | System and the Public School Employees' Retirement System, |
7 | provided that this requirement shall not implicitly preclude |
8 | the board from contracting with or utilizing the services of |
9 | existing entities providing retirement or financial services. |
10 | (4) Provide participants with a broad range of low-cost |
11 | investment alternatives. |
12 | (5) Allow for online administration and daily |
13 | valuations. |
14 | (6) Allow for rollovers into this plan from plans of |
15 | other public employers. |
16 | (7) Provide active members with the necessary financial |
17 | planning resources to allow active members to make adequate |
18 | portfolio allocation decisions. |
19 | (8) Allow an active member who is no longer a public |
20 | employee to maintain their account within the system. |
21 | (9) Benchmark the system continually against the best |
22 | demonstrated practices within the entire industry. |
23 | (b) Prohibitions.--In developing and making available the |
24 | system, the board shall not do any of the following: |
25 | (1) Provide any additional benefit beyond that provided |
26 | under this chapter that results in an increased cost to any |
27 | taxpayer of this Commonwealth. |
28 | (2) Implement or administer any loan provisions unless |
29 | required by law. |
30 | (c) Costs.--Any administrative costs, overhead costs or |
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1 | nonrecurring, start-up costs shall be paid by the board with an |
2 | annual appropriation to the board for administrative costs. Any |
3 | other costs may be charged against participant accounts. |
4 | § 7108. Investments and expenses. |
5 | The board shall not be responsible for any investment loss |
6 | incurred in the system or for failure of any investment to earn |
7 | any specific or expected return or to earn as much as any other |
8 | investment opportunity, whether or not the other investment |
9 | opportunity was offered to active members in the system. The |
10 | board shall bear the expenses arising from allowing public |
11 | employees to elect to participate in the system and active |
12 | members to choose a fund manager which are deducted from |
13 | compensation amounts contributed under the system and |
14 | transferred to the fund manager. All other expenses arising from |
15 | the administration of the system shall be assessed against the |
16 | accounts created on behalf of active members either by the fund |
17 | managers or by the board. |
18 | § 7109. Attachment. |
19 | Notwithstanding any other provision of law, any benefit or |
20 | interest available under the system, any right to receive or |
21 | direct payments under the system or any distribution of payment |
22 | made under the system shall not, except as expressly specified |
23 | by the system, be subject to assignment, alienation, |
24 | garnishment, attachment, transfer, anticipation, sale, mortgage, |
25 | pledge, hypothecation, commutation, execution or levy, whether |
26 | by voluntary or involuntary act of any interested person. |
27 | § 7110. Investments. |
28 | Investment of contributions by any corporation, institution, |
29 | insurance company or custodial bank that the board has approved |
30 | shall not be unreasonably delayed, and in no case shall the |
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1 | investment of contributions be delayed more than 30 days from |
2 | the date of payroll deduction to the date that funds are |
3 | invested. Any interest earned on the funds pending investment |
4 | shall be allocated to the Commonwealth and credited to the |
5 | accounts of active members who are then participating in the |
6 | system unless the interest is used to defray administrative |
7 | costs and fees that would otherwise be required to be borne by |
8 | active members who are then participating in the system. |
9 | § 7111. Active member contributions. |
10 | Regular active member contributions shall be made to the |
11 | system on behalf of each active member for current service in an |
12 | amount equal to a percentage of the active member's pensionable |
13 | earnings. The employer shall cause active member contributions |
14 | for current service to be made and deducted from each payroll. |
15 | Active members may elect to contribute to the system on their |
16 | behalf to the extent permitted by law. |
17 | § 7112. Employer contributions. |
18 | (a) Contributions.--The Commonwealth or any other employer |
19 | shall make payments to the trust fund on behalf of the active |
20 | member. The amount of the payments shall match the contribution |
21 | made by an active member dollar for dollar under section 7111 |
22 | (relating to active member contributions) but shall not exceed |
23 | 6% of the active member's pensionable earnings. |
24 | (b) Disability.--In the event an active member becomes |
25 | totally and permanently disabled, the employer shall continue to |
26 | make employer contributions in the same amount as the employer's |
27 | previous contribution on behalf of the active member as provided |
28 | under subsection (a) until the active member has attained 65 |
29 | years of age. A contribution under this subsection shall be made |
30 | regardless of the level of the active member's contributions or |
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1 | the absence thereof. |
2 | § 7113. Vesting. |
3 | (a) Forfeiture.--The following shall apply: |
4 | (1) Except as provided under paragraph (2), an active |
5 | member shall be vested after completing three years of |
6 | service during which the person is an active member in the |
7 | system with respect to employer contributions paid on behalf |
8 | of the active member to the system plus interest and earnings |
9 | on the employer contributions but minus investment fees and |
10 | administrative charges. |
11 | (2) An active member that is considered part time shall |
12 | only be vested if the member is compensated for at least |
13 | 1,000 hours per year. |
14 | (b) Forfeiture.--The following shall apply: |
15 | (1) If an active member or a beneficiary entitled to a |
16 | payment cannot be located, the related accounts shall be |
17 | forfeited as of the date the active member or the beneficiary |
18 | cannot be located. The active member's vested account balance |
19 | that is so forfeited shall be restored to the active member's |
20 | account if the active member or beneficiary entitled to the |
21 | payment later submits a written election of method of |
22 | payment. |
23 | (2) Any unvested portion of an active member's accounts |
24 | shall be forfeited and may be applied as provided under |
25 | section 7105(f) (relating to duties of board) upon the death |
26 | or other termination of public service of the active member. |
27 | § 7114. Duties of board to advise and report to heads of |
28 | departments and members. |
29 | (a) Manual of regulations.--The board shall, with the advice |
30 | of the Attorney General, prepare and provide, within 90 days of |
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1 | the effective date of this section, a manual incorporating rules |
2 | and regulations consistent with the provisions of this chapter |
3 | to the heads of departments who shall provide the information to |
4 | newly hired public employees who are active members and shall |
5 | make the information contained in the manual available to the |
6 | general membership. The board shall thereafter advise the heads |
7 | of departments within 90 days of any changes in the rules and |
8 | regulations due to changes in the law or due to changes in |
9 | administrative policies. |
10 | (b) Member status statements and certifications.--The board |
11 | shall furnish annually to the head of each department, on or |
12 | before April 1, a statement for each member employed in such |
13 | department showing the total accumulated deductions standing to |
14 | his credit as of December 31 of the previous year and requesting |
15 | the member to make any necessary corrections or revisions |
16 | regarding his designated beneficiary. In addition, for each |
17 | member employed in any department and for whom the department |
18 | has furnished the necessary information, the board shall certify |
19 | the number of years and fractional part of a year of credited |
20 | service. |
21 | § 7115. Duties of heads of departments. |
22 | (a) Status of members.--The head of department shall, at the |
23 | end of each pay period, notify the board in a manner prescribed |
24 | by the board of salary changes effective during that period for |
25 | any members of the department, the date of all removals from the |
26 | payroll and the type of leave of any members of the department |
27 | who have been removed from the payroll for any time during that |
28 | period. The following shall apply: |
29 | (1) If the removal is due to leave without pay, the head |
30 | of department shall furnish the board with the date of |
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1 | beginning of leave and of return to service and the reason |
2 | for leave. |
3 | (2) If the removal is due to a transfer to another |
4 | department, the head of department shall furnish the |
5 | department and the board with a complete public service |
6 | record, including past public service. |
7 | (3) If the removal is due to termination of public |
8 | service, the head of department shall furnish the board with |
9 | a complete public service record. The following shall apply: |
10 | (i) In the case of death of the member the head of |
11 | department shall notify the board. |
12 | (ii) In the case of a service-connected disability |
13 | the head of department shall, to the best of his or her |
14 | ability, investigate the circumstances surrounding the |
15 | disablement of the member and submit in writing to the |
16 | board information which shall include the date, place and |
17 | time of disablement to the extent ascertainable, the |
18 | nature of duties being performed at the time and whether |
19 | or not the duties being performed were authorized and |
20 | included among the member's regular duties. The head of |
21 | department shall furnish in writing to the board any |
22 | other information as may be related to the member's |
23 | disablement. |
24 | (b) Records and information.--At any time at the request of |
25 | the board and at termination of service of a member, the head of |
26 | department shall furnish service and compensation records and |
27 | any other information as the board may require and shall |
28 | maintain and preserve the records as the board may direct for |
29 | the expeditious discharge of its duties. |
30 | (c) Employer contributions.--The head of department shall |
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1 | cause the required employer contributions to be made and |
2 | deducted under section 7110 (relating to investments). The head |
3 | of department shall certify to the State Treasurer the amounts |
4 | deducted and shall send the total amount picked up and deducted, |
5 | together with a duplicate of the voucher to the secretary of the |
6 | board every pay period. On or before January 31, 2010, and on or |
7 | before each January 31 thereafter, the head of department shall, |
8 | at the time when the income and withholding information required |
9 | by law is furnished to each member, also furnish the amount of |
10 | employer contributions made on his behalf. |
11 | (d) Mandatory membership.--Each public employee who enters |
12 | into public service for the first time after November 30, 2009, |
13 | shall be subject to mandatory membership in the system. Upon the |
14 | assumption of public service of each new public employee whose |
15 | membership in the system is mandatory, the head of department |
16 | shall cause an application for membership and a nomination of |
17 | beneficiary to be made by such public employee and filed with |
18 | the board and shall make employer contributions from the |
19 | effective date of public service. |
20 | (e) Annual statement to active members.--Annually, upon |
21 | receipt from the board, the head of department shall furnish to |
22 | each active member the statement specified under section 7114(b) |
23 | (relating to duties of board to advise and report to heads of |
24 | departments and members). |
25 | (f) Termination of service.--The head of department shall, |
26 | in the case of any active member terminating public service who |
27 | is ineligible for an annuity before attainment of superannuation |
28 | age, advise the member in writing of any benefits to which the |
29 | member may be entitled under this chapter and shall have the |
30 | member prepare, on or before the date of termination of public |
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1 | service, an application for the return of total accumulated |
2 | deductions. |
3 | (g) Date of application for benefits.--Any application |
4 | properly executed and filed under subsection (f) with the |
5 | department and not filed with the board within 30 days shall be |
6 | deemed to have been filed with the board on the date filed with |
7 | the department, and in such case all required data shall be |
8 | furnished to the board immediately. |
9 | § 7116. Administration. |
10 | For purposes of administering the system an individual |
11 | account shall be maintained in the name of each public employee. |
12 | § 7117. Applicability. |
13 | (1) Except as provided in paragraph (2), this chapter |
14 | shall apply to public employees entering into public service |
15 | after November 30, 2009, or upon the expiration of any |
16 | collective bargaining agreement an employer has entered |
17 | providing retirement benefits to a public employee, whichever |
18 | is later, and shall not be construed to affect any person who |
19 | is a public school employee, State employee or municipal |
20 | employee on or before November 30, 2009. |
21 | (2) This chapter shall apply to any person who is a |
22 | public school employee, State employee or municipal employee |
23 | before November 30, 2009, and who is not a public employee on |
24 | November 30, 2009, but reenters public service after November |
25 | 30, 2009. |
26 | Section 2. The following shall apply: |
27 | (1) The provisions of the act of February 1, 1974 (P.L. |
28 | 34, No.15), known as the Pennsylvania Municipal Retirement |
29 | Law, shall not apply to municipal employees employed after |
30 | November 30, 2009. |
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1 | (2) The provisions of 24 Pa.C.S. Pt. IV shall not apply |
2 | to public school employees employed after November 30, 2009. |
3 | (3) The provisions of 71 Pa.C.S. Pt. XXV shall not apply |
4 | to State employees employed after November 30, 2009. |
5 | (4) The provisions of any statute that provides for |
6 | local retirement benefits shall not apply to a public |
7 | employee employed after November 30, 2009. |
8 | Section 3. This act shall take effect in 60 days. |
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