THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY YAW, BAKER, M. WHITE, EARLL AND BRUBAKER, FEBRUARY 3, 2010

REFERRED TO FINANCE, FEBRUARY 3, 2010  

AN ACT

Amending Title 24 (Education) of the Pennsylvania Consolidated

Statutes, in retirement for school employees, further

providing for definitions and for construction of part; in

membership, contributions and benefits, further providing for

eligibility points for retention and reinstatement of service

credits, for creditable nonschool service, for classes of

service, for eligibility for annuities, for eligibility for

vesting, for member contributions for creditable school

service, for contributions for purchase of credit for

creditable nonschool service, for actuarial cost method and

for member's options; in administration and miscellaneous

provisions, establishing the individual annuity savings

account; further providing for payments to school entities by

Commonwealth; and establishing a defined contribution

retirement benefit program.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

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

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

"superannuation or normal retirement age" and "vestee" in

section 8102 of Title 24 of the Pennsylvania Consolidated

Statutes are amended and the section is amended by adding

definitions to read:

§ 8102.  Definitions.

The following words and phrases when used in this part shall

have, unless the context clearly indicates otherwise, the

meanings given to them in this section:

* * *

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

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

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

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

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

3.25%.

* * *

"Class of service multiplier."

* * *

"Funded ratio."  The ratio, expressed as a percentage, of the

actuarial value of assets of the fund divided by the actuarial

accrued liabilities of the system for benefits related to

current members, beneficiaries and survivor annuitants,

excluding any assets and liabilities associated with the premium

assistance program.

* * *

"Individual annuity savings account."  The ledger account to

which are credited the amounts of the contributions made by the

employer and contributions or lump sum payments made by Class

T-E members in accordance with the provisions of Chapter 86

(relating to defined contribution retirement benefit program),

together with all interest and investment earnings.

"Individual annuity savings plan."  The defined contribution

benefit plan established by the board exclusively for the

benefit of Class T-E members in conformity with section 401(a)

of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 401(a)).

* * *

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

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

final average salary, multiplied by the total number of years

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

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

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

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

Class T-E credited service of a member, an annuity equal to 1%

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

years and fractional part of a year of credited service.

* * *

"Superannuation or normal retirement age."

* * *

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

has terminated school service, has left his accumulated

deductions in the fund and is deferring filing of an application

for receipt of an annuity. For Class T-E members, a member with

ten or more eligibility points who has terminated school

service, has left his accumulated deductions in the fund and is

deferring filing of an application for receipt of an annuity.

Section 2.  Section 8103 of Title 24 is amended by adding a

subsection to read:

§ 8103.  Construction of part.

* * *

(c)  Construction of part with regard to pension rights and

rights relating to individual annuity savings plan.--

Notwithstanding any other provision of law, pension benefit

rights of school employees and any rights or benefits of Class

T-E members relating to the individual annuity savings plan

provided for in Chapter 86 (relating to defined contribution

retirement benefit program) shall be determined solely by this

part and regulations hereunder, and no collective bargaining

agreement nor any arbitration award between any school entity or

school employer and its employees or their collective bargaining

representatives shall be construed to change any of the

provisions in this part to require the board to administer

pension or retirement benefits not set forth in this part, nor

otherwise require action by any other government body pertaining

to pension benefits or rights of school employees or benefits or

rights of Class T-E members relating to the individual annuity

savings plan.

Section 3.  Sections 8303(c) and 8304(a) of Title 24 are

amended to read:

§ 8303.  Eligibility points for retention and reinstatement of

service credits.

* * *

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

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

active member of the State Employees' Retirement System on or

after the effective date of this part may purchase credit and

receive eligibility points:

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

previous school service or creditable nonschool service; or

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

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

member pursuant to section 8305.1 (relating to election to

become a Class T-D member);

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

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

except, that any purchase for reinstatement of service credit

shall be for all service previously credited.

§ 8304.  Creditable nonschool service.

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

member who is an active member of the State Employees'

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

as applicable, service credit for creditable nonschool service

and Class T-D service for intervening military service, provided

the member becomes a Class T-D member pursuant to section 8305.1

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

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

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

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

such service under a retirement system administered and wholly

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

private employer, or a retirement program approved by the

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

mandatory and optional membership), and further provided that

such service is certified by the previous employer and the

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

member, the employer, and the board.

* * *

Section 4.  Section 8305(a), (b) and (c)(1) of Title 24 are

amended and the section is amended by adding a subsection to

read:

§ 8305.  Classes of service.

(a)  Class T-C membership.--A school employee who is a member

of Class T-C on the effective date of this part [or who becomes

a member of the system subsequent to the effective date of this

part] shall be classified as a Class T-C member, provided the

school employee does not become a member of Class T-D pursuant

to subsection (c).

(b)  Other class membership.--[A] Other than those school

employees covered in subsection (d), a school employee who is a

member of a class of service other than Class T-C on the

effective date of this part may elect to become a member of

Class T-C or Class T-D or may retain his membership in such

other class until the service is discontinued or he elects to

become a full coverage member or elects to purchase credit for

previous school or creditable nonschool service. Any service

thereafter shall be credited as Class T-C or T-D service as

applicable.

(c)  Class T-D membership.--

(1)  [A] Other than those persons covered in subsection

(d), a person who becomes a school employee and an active

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

is a State employee and a member of the State Employees'

Retirement System, on or after the effective date of this

subsection shall be classified as a Class T-D member upon

payment of regular member contributions. Any prior school

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

Class T-D service, subject to the limitations contained in

paragraph (4).

* * *

(d)  Class T-E membership.--A school employee who becomes a

member of the system after June 30, 2010, shall be classified as

a Class T-E member.

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

8324, 8328(a) and 8345(a) of Title 24 are amended to read:

§ 8307.  Eligibility for annuities.

* * *

(b)  Withdrawal annuity.--[A] For Class T-E members, any

vestee with ten or more eligibility points or an active or

inactive member who terminates school service having ten or more

eligibility points shall, upon filing a proper application, be

entitled to receive an early annuity. Any other vestee with five

or more eligibility points or an active or inactive member who

terminates school service having five or more eligibility points

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

an early annuity.

* * *

§ 8308.  Eligibility for vesting.

Any Class T-E member who terminates school service with ten

or more eligibility points shall be entitled to vest his

retirement benefits until attainment of superannuation age. Any

other member who terminates school service with five or more

eligibility points shall be entitled to vest his retirement

benefits until attainment of superannuation age.

§ 8323.  Member contributions for creditable school service.

(a)  Previous school service, sabbatical leave and full

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

an eligible State employee for credit for reinstatement of all

previously credited school service, school service not

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

time daily attendance, or full-coverage membership shall be

sufficient to provide an amount equal to the accumulated

deductions which would have been standing to the credit of the

member for such service had regular member contributions been

made with full coverage at the rate of contribution necessary to

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

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

is a Class T-E member and had such contributions been credited

with statutory interest during the period the contributions

would have been made and during all periods of subsequent school

and State service up to the date of purchase.

* * *

(c)  Approved leave of absence other than sabbatical leave

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

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

absence, other than sabbatical leave and activated military

service leave, shall be sufficient to transfer his membership to

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

or to Class T-E if the member is a Class T-E member and further

to provide an annuity as a Class T-C member [or], Class T-D

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

if the member is a Class T-E member for such additional credited

service. Such amount shall be the sum of the amount required in

accordance with the provisions of subsection (b) and an amount

determined as the sum of the member's basic contribution rate

and the normal contribution rate as provided in section 8328

(relating to actuarial cost method) during such period

multiplied by the compensation which was received or which would

have been received during such period and with statutory

interest during all periods of subsequent school and State

service up to the date of purchase.

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

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

military service leave as if he had been in regular attendance

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

provide an amount equal to the accumulated deductions which

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

service had regular member contributions been made with full

coverage at the rate of contribution necessary to be credited as

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

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

T-E member and had such contributions been credited with

statutory interest during the period the contributions would

have been made and during all periods of subsequent State and

school service up to the date of purchase. In the case of

activated military service leave beginning after the date of

enactment of this subsection, contributions due from the member

shall be made as if he is in regular attendance in the duties

for which he is employed.

* * *

§ 8324.  Contributions for purchase of credit for creditable

nonschool service.

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

purchase credit as a member of Class T-C or as a member of Class

T-E for creditable nonschool service of an active member or an

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

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

thereof, as provided by law.

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

purchase of credit for military service other than intervening

military service shall be determined by applying the member's

basic contribution rate plus the normal contribution rate as

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

the time of entry of the member into school service subsequent

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

received during the first three years of such subsequent

credited school service and multiplying the product by the

number of years and fractional part of a year of creditable

nonintervening military service being purchased together with

statutory interest during all periods of subsequent school and

State service to date of purchase. Upon certification of the

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

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

who is an active member of the State Employees' Retirement

System it may be amortized with statutory interest through

salary deductions in amounts agreed upon by the member and the

board. The salary deduction amortization plans agreed to by

members and the board may include a deferral of payment amounts

and statutory interest until the termination of school service

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

allow. The board may limit salary deduction amortization plans

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

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

of the State Employees' Retirement System, the agreed upon

salary deductions shall be remitted to the State Employees'

Retirement Board, which shall certify and transfer to the board

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

service credit upon completion of three years of subsequent

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

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

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

credited as Class T-E service.

(c)  Intervening military service.--Contributions on account

of credit for intervening military service shall be determined

by the member's basic contribution rate and compensation at the

time of entry of the member into active military service,

together with statutory interest during all periods of

subsequent school and State service to date of purchase. Upon

application for such credit the amount due shall be certified in

the case of each member by the board, in accordance with methods

approved by the actuary, and contributions may be made by one of

the following methods:

(1)  Regular monthly payments during active military

service.

(2)  A lump sum payment within 90 days of certification

of the amount due.

(3)  Salary deductions in amounts agreed upon by the

member and the board. The salary deduction amortization plans

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

of payment amounts and statutory interest until the

termination of school service or State service as the board

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

salary deduction amortization plans to such terms as the

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

eligible State employee who is an active member of the State

Employees' Retirement System, the agreed upon salary

deductions shall be remitted to the State Employees'

Retirement Board, which shall certify and transfer to the

board the amounts paid.

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

account of Class T-C or Class T-E credit, as applicable, for

creditable nonschool service other than military service shall

be determined by applying the member's basic contribution rate

plus the normal contribution rate as provided in section 8328 at

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

such creditable nonschool service to his total compensation

received during the first year of subsequent credited school

service and multiplying the product by the number of years and

fractional part of a year of creditable nonschool service being

purchased together with statutory interest during all periods of

subsequent school or State service to the date of purchase,

except that in the case of purchase of credit for creditable

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

to creditable nonschool service) the member shall pay only the

employee's share unless otherwise provided by law. Upon

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

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

eligible State employee who is an active member of the State

Employees' Retirement System it may be amortized with statutory

interest through salary deductions in amounts agreed upon by the

member and the board. The salary deduction amortization plans

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

payment amounts and statutory interest until the termination of

school service or State service as the board in its sole

discretion decides to allow. The board may limit salary

deduction amortization plans to such terms as the board in its

sole discretion determines. In the case of an eligible State

employee who is an active member of the State Employees'

Retirement System, the agreed upon salary deductions shall be

remitted to the State Employees' Retirement Board, which shall

certify and transfer to the board the amounts paid.

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

T-C credit or Class T-E credit, as applicable, for creditable

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

present value of the full actuarial cost of the increase in the

projected superannuation annuity caused by the additional

service credited on account of the purchase of creditable work

experience. The amount paid for the purchase of credit for

creditable work experience shall not be payable as a lump sum

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

Any individual eligible to receive an annuity, excluding an

annuity received under the Federal Social Security Act (42

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

military pension system, shall not be eligible to purchase this

service.

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

Class T-C credit or Class T-E credit, as applicable, for

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

be determined by applying the member's basic contribution rate

plus the normal contribution rate as provided in section 8328 at

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

compensation received during the first year of subsequent school

service and multiplying the product by the number of years and

fractional part of a year of creditable service being purchased,

together with statutory interest during all periods of

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

amount paid for the purchase of credit for creditable maternity

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

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

§ 8328.  Actuarial cost method.

(a)  Employer contribution rate on behalf of active

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

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

a percentage of the total compensation of all active members

during the period for which the amount is determined and shall

be so certified by the board. The total contribution rate on

behalf of all active members shall consist of the normal

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

liability contribution rate as defined in subsection (c) and the

supplemental annuity contribution rate as defined in subsection

(d). Beginning July 1, 2004, the total contribution rate shall

be modified by the experience adjustment factors as calculated

in subsection (e) but in no case shall it be less than 4% plus

the premium assistance contribution rate, provided, however,

that in any year in which the funded ratio is 100% or higher,

the total contribution rate shall not be less than 4% plus the

premium assistance contribution rate, minus a percentage amount

equal to the ratio of the employer contributions into the

individual annuity savings plan provided for in Chapter 86

(relating to defined contribution retirement benefit program)

for all active Class T-E members to the total payroll for school

employers for the previous fiscal year.

* * *

§ 8345.  Member's options.

(a)  General rule.--Any Class T-E member with ten or more

eligibility points, any other vestee with five or more

eligibility points or any other eligible member upon termination

of school service who has not withdrawn his accumulated

deductions as provided in section 8341 (relating to return of

accumulated deductions) may apply for and elect to receive

either a maximum single life annuity, as calculated in

accordance with the provisions of section 8342 (relating to

maximum single life annuity), or a reduced annuity certified by

the actuary to be actuarially equivalent to the maximum single

life annuity and in accordance with one of the following

options, except that no member shall elect an annuity payable to

one or more survivor annuitants other than his spouse or

alternate payee of such a magnitude that the present value of

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

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

value of his maximum single life annuity.

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

guaranteed total payment equal to the present value of the

maximum single life annuity on the effective date of

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

received less than such present value, the unpaid balance

shall be payable to his beneficiary.

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

during the lifetime of the member with the full amount of

such annuity payable thereafter to his survivor annuitant, if

living at his death.

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

annuity payable during the lifetime of the member with one-

half of such annuity payable thereafter to his survivor

annuitant, if living at his death.

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

certified by the actuary to be actuarially equivalent to the

maximum single life annuity, subject to the following

restrictions:

(i)  Any annuity shall be payable without reduction

during the lifetime of the member.

(ii)  The sum of all annuities payable to the

designated survivor annuitants shall not be greater than

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

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

lump sum, except that such lump sum payment shall not

exceed an amount equal to the accumulated deductions

standing to the credit of the member. The balance of the

present value of the maximum single life annuity adjusted

in accordance with section 8342(b) shall be paid in the

form of an annuity with a guaranteed total payment, a

single life annuity, or a joint and survivor annuity or

any combination thereof but subject to the restrictions

of subparagraphs (i) and (ii) of this paragraph.

* * *

Section 6.  Title 24 is amended by adding a section to read:

§ 8523.1.  Individual annuity savings account.

The individual annuity savings account is established as the

ledger account to which shall be credited the amounts of

contributions made by the employer and contributions or lump sum

payments made by Class T-E members in accordance with the

provisions of Chapter 86 (relating to defined contribution

retirement benefit program), together with all interest and

investment earnings.

Section 7.  Section 8535 of Title 24 is amended to read:

§ 8535.  Payments to school entities by Commonwealth.

For each school year beginning with the 1995-1996 school

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

contributions based upon school service of active members of the

system after June 30, 1995, as follows:

(1)  The Commonwealth shall pay each school entity for

contributions made to the Public School Employees' Retirement

Fund based upon school service of all active members,

including members on activated military service leave, whose

effective dates of employment with their school entities are

after June 30, 1994, and who also had not previously been

employed by any school entity within this Commonwealth an

amount equal to the amount certified by the Public School

Employees' Retirement Board as necessary to provide, together

with the members' contributions, reserves on account of

prospective annuities, supplemental annuities and the premium

assistance program as provided in this part in accordance

with section 8328 (relating to actuarial cost method),

multiplied by the market value/income aid ratio of the school

entity. For no school year shall any school entity receive

less than the amount that would result if the market

value/income aid ratio as defined in section 2501(14.1) of

the Public School Code of 1949 was 0.50.

(2)  The Commonwealth shall pay each school entity for

contributions made to the Public School Employees' Retirement

Fund based upon school service of all active members,

including members on activated military service leave, who

are not described in paragraph (1), one-half of the amount

certified by the Public School Employees' Retirement Board as

necessary to provide, together with the members'

contributions, reserves on account of prospective annuities,

supplemental annuities and the premium assistance program as

provided in this part in accordance with section 8328.

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

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

liability to make payment to the Public School Employees'

Retirement Fund.

(4)  Commencing with the 2009-2010 school year, in any

year in which the employer contribution rate certified under

section 8328 increases by a rate exceeding the index defined

in Chapter 3 of the act of June 27, 2006 (1st Sp.Sess.,

P.L.1873, No.1), known as the Taxpayer Relief Act, the

Commonwealth shall pay each school entity a supplemental

amount in addition to the payments described in paragraphs

(1) and (2), sufficient to ensure that the increase in the

amount required to be paid by the school entity under section

8327 (relating to payments by employers) minus payments paid

to the school entity under paragraphs (1) and (2), to the

extent solely attributable to increases in the employer

contribution rate, does not exceed such index.

Section 8.  Title 24 is amended by adding a chapter to read:

CHAPTER 86

DEFINED CONTRIBUTION RETIREMENT BENEFIT PROGRAM

Sec.

8601.  Individual annuity savings plan.

8602.  Agreements with financial institutions and other

organizations.

8603.  Rules and regulations.

8604.  Responsibility for investment loss.

8605.  Nonassignment and nontransferability.

8606.  Powers and duties of board.

8607.  Rights and duties of Class T-E members.

8608.  Employer contributions.

8609.  Investments based on members' investment allocation

choices.

§ 8601.  Individual annuity savings plan.

In addition to the benefits provided to Class T-E members in

this part, the board shall establish and serve as trustee of a

defined contribution benefit plan exclusively for Class T-E

members within the meaning of and in conformity with section

401(a) of the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 401(a) et seq.), which shall be known as the

individual annuity savings plan. The board shall determine all

of the terms and provisions of the plan not inconsistent with

this part or the Internal Revenue Code of 1986, including, but

not limited to, standards and procedures for its funding, and

shall provide for the plan's administration.

§ 8602.  Agreements with financial institutions and other

organizations.

To establish and administer the individual annuity savings

plan, the board shall have the power to enter into written

agreements with one or more financial institutions or other

organizations relating to the plan's administration and

investment of funds held pursuant to the plan.

§ 8603.  Rules and regulations.

The board shall have the power to promulgate rules and

regulations necessary for the administration and management of

the individual annuity savings plan, including, but not limited

to, establishing:

(1)  Procedures whereby eligible Class T-E members may

change optional election amounts or their investment choices

on a periodic basis or make other elections regarding their

participation in the plan.

(2)  Procedures for deducting amounts to be deferred from

members' compensation.

(3)  Standards or criteria for the selection of financial

institutions or other organizations that may be qualified as

managers of funds deferred under the plan or to provide other

services relating to the administration and management of the

plan.

(4)  Standards and criteria for disclosing and providing

options to eligible individuals regarding investments of

amounts deferred under the plan, provided that one of the

available options must serve as the default option for

members who do not make a timely election.

(5)  Standards and criteria for disclosing the

anticipated and actual income attributable to amounts

invested, property rights and all fees, costs and charges to

be made against amounts deferred to cover the costs and

expenses of administering and managing the plan or funds.

(6)  Procedures, standards and criteria for the making of

withdrawals from the plan upon separation from employment or

death or in other circumstances consistent with the purpose

of the plan.

§ 8604.  Responsibility for investment loss.

Neither the board, the Commonwealth, an employer nor any

school entity or other political subdivision shall be

responsible for any investment loss incurred under this plan, or

for the failure of any investment to earn any specific or

expected return, or to earn as much as any other investment

opportunity, whether or not such other opportunity was offered

to participants in the plan.

§ 8605.  Nonassignment and nontransferability.

Except as may be provided under section 8533(b) and (c)

(relating to taxation, attachment and assignment of funds), no

participant or beneficiary shall have the right to commute,

sell, assign or otherwise transfer or convey the rights to

receive payments under agreements entered into under this

chapter, and such payments and rights are expressly declared to

be exempt from any State or municipal tax and exempt from levy

and sale, garnishment, attachment or any other process

whatsoever and shall be nonassignable and nontransferable.

§ 8606.  Powers and duties of board.

The board shall have the following powers and duties to

administer the provisions of this chapter:

(1)  The board may commingle or pool assets with the

assets of other persons or entities.

(2)  The board shall pay all administrative costs of

managing and administering the individual savings account

plans from the contributions and earnings of such individual

accounts.

(3)  The board may establish investment guidelines and

limits on the types of investments that Class T-E members can

make, consistent with the board's fiduciary obligations.

(4)  The board shall at all times have the power to

change the terms of the plan as may be necessary to maintain

the tax-qualified status of the plan.

§ 8607.  Rights and duties of Class T-E members.

Class T-E members shall have the following rights and duties

under the provisions of this chapter:

(1)  Each Class T-E member shall contribute 3% of

compensation to the member's individual annuity savings

account.

(2)  Each Class T-E member may, at the member's option,

make additional contributions to the extent permitted by

Federal law and subject to such rules and requirements for

the making of elections as may be imposed by Federal law and

rules and regulations of the board.

(3)  Upon termination of service, a Class T-E member

shall withdraw the moneys in the account if and to the extent

required or permitted by regulations established by the

board.

§ 8608.  Employer contributions.

The employer of each Class T-E member shall make a

contribution to the member's individual annuity savings account

equal to 2% of the member's compensation. No further

contributions by employers shall be permitted.

§ 8609.  Investments based on members' investment allocation

choices.

All contributions, interest and investment earnings shall be

100% vested and shall be invested based on the Class T-E

member's investment allocation choices. Each Class T-E member

shall be credited individually with the amount of contributions,

interest and investment earnings.

Section 9.  This act shall take effect immediately.