THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY EVANKOVICH, TRUITT, AUMENT, BARRAR, BEAR, BENNINGHOFF, BLOOM, BOYD, BROOKS, R. BROWN, CAUSER, CHRISTIANA, CLYMER, COX, CREIGHTON, CUTLER, DENLINGER, DePASQUALE, DONATUCCI, EMRICK, EVERETT, FARRY, FLECK, GABLER, GERGELY, GILLEN, GINGRICH, GODSHALL, GROVE, HACKETT, HARHART, HELM, HENNESSEY, HUTCHINSON, KAMPF, KAUFFMAN, F. KELLER, KILLION, KORTZ, LAWRENCE, MAHER, MALONEY, MARSHALL, MASSER, METCALFE, MILNE, MULLERY, MURT, OBERLANDER, PERRY, PETRI, PICKETT, PYLE, RAPP, REED, REESE, ROCK, SACCONE, SANTARSIERO, SAYLOR, CULVER, SCHRODER, SIMMONS, STEPHENS, STEVENSON, TALLMAN, TAYLOR, TOBASH, TOEPEL, TOOHIL, TURZAI, VEREB AND VULAKOVICH, FEBRUARY 29, 2012

REFERRED TO COMMITTEE ON STATE GOVERNMENT, FEBRUARY 29, 2012  

AN ACT

Amending Title 71 (State Government) of the Pennsylvania

Consolidated Statutes, further providing for definitions and

for classes of service; providing for election to become a

Class D-C member; and establishing the Legislative Agency

Official and Employee Defined Contribution Benefit Program

and the Individual Annuity Savings Account.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 5102 of Title 71 of the Pennsylvania

Consolidated Statutes is amended by adding definitions to read:

§ 5102.  Definitions.

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

a different meaning is plainly required by the context, shall

have the following meanings:

* * *

"Individual annuity savings plan."  The defined contribution

benefit plan established by the board exclusively for the

benefit of Class D-C members in conformity with section 401(a)

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

U.S.C. § 401(a)).

* * *

"Legislative agency."  Any of the following:

(1)  The Senate.

(2)  The House of Representatives.

(3)  The Capitol Preservation Committee.

(4)  The Center for Rural Pennsylvania.

(5)  The Joint Legislative Air and Water Pollution

Control and Conservation Committee.

(6)  The Joint State Government Commission.

(7)  The Legislative Budget and Finance Committee.

(8)  The Legislative Data Processing Committee.

(9)  The Independent Regulatory Review Commission.

(10)  The Legislative Reference Bureau.

(11)  The Local Government Commission.

(12)  The Pennsylvania Commission on Sentencing.

(13)  The Legislative Reapportionment Commission.

(14)  The Legislative Office for Research Liaison.

(15)  The Legislative Audit Advisory Commission.

"Legislative Agency Official and Employee Defined

Contribution Benefit Program."  The defined contribution benefit

program established under Chapter 56 (relating to Legislative

Agency Official and Employee Defined Contribution Benefit

Program).

* * *

Section 2.  Section 5306(a)(2) of Title 71 is amended and the

section is amended by adding a subsection to read:

§ 5306.  Classes of service.

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

* * *

(2)  [A] Except as provided under subsection (a.4), a 

State employee who first becomes a member of the system on or

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

member of the General Assembly, shall be classified as a

Class A-3 member and receive credit for Class A-3 service

upon payment of regular member contributions and shared-risk

member contributions for Class A-3 service provided that the

State employee does not become a member of Class A-4 pursuant

to subsection (a.3), except that a member of the judiciary

shall be classified as a member of such other class of

service for which the member of the judiciary is eligible,

shall elect and make regular member contributions.

* * *

(a.4)  Class D-C membership.--

(1)  A person who does any of the following shall be

classified as a Class D-C member upon payment of member

contributions under section 5607 (relating to rights and

duties of Class D-C members):

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

active member of the system after November 30, 2012.

(ii)  Enters State service as an employee of a

legislative agency and becomes an active member of the

system after November 30, 2012.

(2)  If an election to become a Class D-C member is made

under section 5306.4 (relating to election to become a Class

D-C member), a person who, on November 30, 2012, is an

employee of a legislative agency or a member of the General

Assembly and is not an active member of the system because

membership in the system is optional under section 5301,

shall be classified as a Class D-C member upon payment of

member contributions under section 5607.

* * *

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

§ 5306.4.  Election to become a Class D-C member.

(a)  General rule.--A person eligible for Class D-C

membership under section 5306(a.4) (relating to classes of

service) may elect to become a member of Class D-C.

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

Class D-C member under subsection (a) must be made by the member

filing written notice with the board in a form and manner

determined by the board under Chapter 56 (relating to

Legislative Agency Official and Employee Defined Contribution

Benefit Program) no later than 45 days after notice from the

board of the member's eligibility to elect Class D-C membership.

(c)  Effect of election.--An election to become a Class D-C

member shall be irrevocable and shall become effective on the

effective date of membership in the system and shall remain in

effect during subsequent periods of State service.

Section 4.  Title 71 is amended by adding a chapter to read:

CHAPTER 56

LEGISLATIVE AGENCY OFFICIAL

AND EMPLOYEE DEFINED CONTRIBUTION

BENEFIT PROGRAM

Sec.

5601.  Individual annuity savings plan.

5602.  Agreements with financial institutions and other

organizations.

5603.  Rules and regulations.

5604.  Responsibility for investment loss.

5605.  Nonassignment and nontransferability.

5606.  Powers and duties of board.

5607.  Rights and duties of Class D-C members.

5608.  Employer contributions.

5609.  Investments based on members' investment allocation

choices.

§ 5601.  Individual annuity savings plan.

The board shall establish and serve as trustee of a defined

contribution benefit plan exclusively for Class D-C 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.

§ 5602.  Agreements with financial institutions and other

organizations.

The board shall, to establish and administer the individual

annuity savings plan, 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.

§ 5603.  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 D-C 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. One of the available options

must serve as the default option for members who do not make

a timely election. The investment options shall represent a

broad cross section of asset classes and risk profiles.

(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.

§ 5604.  Responsibility for investment loss.

Neither the board nor the Commonwealth shall be responsible

for:

(1)  Any investment loss incurred under the plan.

(2)  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 the other opportunity was offered

to participants in the plan.

§ 5605.  Nonassignment and nontransferability.

Except as provided under section 5953 (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. Payments and

rights shall be exempt from any State or municipal tax and

exempt from levy and sale, garnishment, attachment or any other

process and shall be nonassignable and nontransferable.

§ 5606.  Powers and duties of board.

The board shall have the following powers and duties to

administer 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 the individual

accounts.

(3)  The board may establish investment guidelines and

limits on the types of investments that Class D-C 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.

§ 5607.  Rights and duties of Class D-C members.

Class D-C members shall have the following rights and duties

under this chapter:

(1)  Each Class D-C member may make contributions to the

member's individual annuity savings account.

(2)  Each Class D-C member may make contributions to the

extent permitted by Federal law and subject to 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 D-C member

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

required or permitted by regulations established by the

board.

§ 5608.  Employer contributions.

The employer of each Class D-C member shall make

contributions to the member's individual annuity savings account

which shall match the contribution made by the Class D-C member

under section 5607 (relating to rights and duties of Class D-C

members), but may not exceed 6% of the member's compensation. No

further contributions by employers shall be permitted.

§ 5609.  Investments based on members' investment allocation

choices.

All contributions, interest and investment earnings shall be

entirely vested based on the Class D-C member's investment

allocation choices. Each Class D-C member shall be credited

individually with the amount of contributions, interest and

investment earnings.

Section 5.  Title 71 is amended by adding a section to read:

§ 5942.  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 D-C members in accordance with Chapter 56

(relating to Legislative Agency Official and Employee Defined

Contribution Benefit Program), together with all interest and

investment earnings.

Section 6.  This act shall take effect as follows:

(1)  The addition of 71 Pa.C.S. § 5306(a.4)(2) shall take

effect December 1, 2012, or immediately, whichever is later.

(2)  The remainder of this act shall take effect

immediately.