AN ACT

 

1Amending Titles 51 (Military Affairs) and 71 (State Government)
2of the Pennsylvania Consolidated Statutes, in Title 51, in
3employment preferences and pensions, further providing for
4military leaves of absence; in Title 71, in retirement for
5State employees and officers, further providing for
6definitions, for preliminary provisions and for membership,
7credited service, classes of service, and eligibility
8benefits, providing for State Employees' Defined Contribution
9Plan, further providing for contributions, for benefits and
10for administration, funds and accounts; and making editorial
11changes.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Section 7306(a) introductory paragraph of Title
1551 of the Pennsylvania Consolidated Statutes, amended October
1624, 2012 (P.L.1436, No.181), is amended and the section is
17amended by adding a subsection to read:

18§ 7306. Retirement rights.

19(a) Options available to employees.--Any employee who is a
20member of a retirement system other than an active member or
 

1inactive member on leave without pay of the State Employees' 
2Retirement System or an active participant or inactive 
3participant on leave without pay of the State Employees' Defined 
4Contribution Plan at the time he is granted a military leave of
5absence shall be entitled to exercise any one of the following
6options in regard thereto:

7* * *

8(e) Participants of the State Employees' Defined
9Contribution Plan.--An employee who is an active participant or
10inactive participant on leave without pay of the State
11Employees' Defined Contribution Plan at the time he is granted a
12military leave of absence shall be entitled to make
13contributions to the State Employees' Defined Contribution Trust
14for such leave as provided in 71 Pa.C.S. Pt. XXV (relating to
15retirement for State employees and officers).

16Section 2. The definitions of "alternate payee," "average
17noncovered salary," "beneficiary," "compensation," "creditable
18nonstate service," "credited service," "date of termination of
19service," "distribution," "domestic relations order," "final
20average salary," "inactive member," "intervening military
21service," "irrevocable beneficiary," "previous State service,"
22"reemployed from USERRA leave," "retirement counselor," "salary
23deductions," "special vestee," "State employee," "superannuation
24age" and "valuation interest" in section 5102 of Title 71,
25amended or added October 24, 2012 (P.L.1436, No.181), are
26amended and the section is amended by adding definitions to
27read:

28§ 5102. Definitions.

29The following words and phrases as used in this part, unless
30a different meaning is plainly required by the context, shall

1have the following meanings:

2* * *

3"Accumulated employer defined contributions." The total of
4the employer defined contributions paid into the trust on
5account of a participant's State service together with any
6investment earnings and losses and adjustment for fees, costs
7and expenses credited or charged thereon.

8"Accumulated mandatory participant contributions." The total
9of the mandatory pickup participant contributions paid into the
10trust on account of a participant's State service together with
11any investment earnings and losses and adjustments for fees,
12costs and expenses credited or charged thereon.

13"Accumulated total defined contributions." The total of the
14accumulated mandatory participant contributions, accumulated
15employer defined contributions and accumulated voluntary
16contributions, reduced by any distributions, standing to the
17credit of a participant in an individual investment account in
18the trust.

19"Accumulated voluntary contributions." The total of
20voluntary contributions paid into the trust by a participant and
21any amounts rolled over by a participant or transferred by a
22direct trustee-to-trustee transfer into the trust together with
23any investment earnings and losses and adjustment for fees,
24costs and expenses credited or charged thereon.

25* * *

26"Active participant." A State employee for whom mandatory 
27pickup participant contributions are being made to the trust or 
28for whom such contributions otherwise required for current State 
29service are not being made solely by reason of any provision of 
30this part relating to the limitations under section 401(a)(17)
 

1or 415 of the Internal Revenue Code of 1986 (Public Law 99-514, 
226 U.S.C. § 401(a)(17) or § 415).

3* * *

4"Alternate payee." Any spouse, former spouse, child or 
5dependent of a member or participant who is recognized by a 
6domestic relations order as having a right to receive all or a 
7portion of the moneys payable to that member or participant 
8under this part.

9* * *

10"Average noncovered salary." The average of the amounts of 
11compensation received by an active member each calendar year 
12since January 1, 1956, exclusive of the amount which was or 
13could have been covered by the Federal Social Security Act[,]
14(42 U.S.C. § 301 et seq.), during that portion of the member's 
15service since January 1, 1956, for which he has received social 
16security integration credit.

17* * *

18"Beneficiary." The person or persons last designated in 
19writing to the board by a member to receive his accumulated 
20deductions or a lump sum benefit upon the death of [such] the 
21member[.] or by a participant to receive the participant's 
22accumulated total defined contributions or a lump sum benefit 
23upon the death of the participant.

24* * *

25"Combined service employee." A current or former State
26employee who is both a member of the system and a participant in
27the plan.

28* * *

29"Compensation." Pickup contributions and mandatory pickup 
30contributions plus remuneration actually received as a State
 

1employee excluding refunds for expenses, contingency and 
2accountable expense allowances; excluding any severance payments 
3or payments for unused vacation or sick leave; and excluding 
4payments for military leave and any other payments made by an 
5employer while on USERRA leave, leave of absence granted under 
651 Pa.C.S. § 4102 (relating to leaves of absence for certain 
7government employees), military leave of absence granted under 
851 Pa.C.S. § 7302 (relating to granting military leaves of 
9absence) or other types of military leave, including other types 
10of leave payments, stipends, differential wage payments as 
11defined in IRC § 414(u)(12) and any other payments: Provided, 
12however, That compensation received prior to January 1, 1973, 
13shall be subject to the limitations for retirement purposes in 
14effect December 31, 1972, if any: Provided further, That the 
15limitation under section 401(a)(17) of the Internal Revenue Code 
16of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17)) taken into 
17account for the purpose of member contributions, including any 
18additional member contributions in addition to regular or joint 
19coverage member contributions and Social Security integration 
20contributions, regardless of class of service, shall apply to 
21each member who first became a member of the State Employees' 
22Retirement System on or after January 1, 1996, and who by reason 
23of such fact is a noneligible member subject to the application 
24of the provisions of section 5506.1(a) (relating to annual 
25compensation limit under IRC § 401(a)(17)) and shall apply to 
26each participant.

27* * *

28"Creditable nonstate service." Service other than:

29(1) service as a State employee;

30(2) service converted to State service pursuant to

1section 5303.1 (relating to election to convert county
2service to State service); or

3(3) school service converted to State service pursuant
4to section 5303.2 (relating to election to convert school
5service to State service)

6for which an active member may obtain credit in the system.

7"Credited service." State or creditable nonstate service for 
8which the required contributions have been made to the fund or 
9for which the contributions otherwise required for such service 
10were not made solely by reason of section 5502.1 (relating to 
11waiver of regular member contributions and Social Security 
12integration member contributions) or any provision of this part 
13relating to the limitations under section 401(a)(17) or 415(b) 
14of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
15U.S.C. § 401(a)(17) or 415(b)), or for which salary deductions 
16to the system or lump sum payments have been agreed upon in 
17writing.

18"Date of termination of service." The last day of service 
19for which:

20(1) pickup contributions are made for an active member 
21[or] ;

22(2) in the case of an inactive member on leave without 
23pay, the date of his resignation or the date his employment 
24is formally discontinued by his employer[.];

25(3) mandatory pickup participant contributions are made 
26for an active participant;

27(4) in the case of an inactive participant on leave 
28without pay, the date of his resignation or the date his 
29employment is formally discontinued by his employer; or

30(5) in the case of a combined service employee, the

1latest of the dates in paragraphs (1), (2), (3) and (4).

2* * *

3"Distribution." Payment of all or any portion of a person's 
4interest in either the State Employees' Retirement Fund or the 
5State Employees' Defined Contribution Trust or both which is 
6payable under this part.

7"Domestic relations order." Any judgment, decree or order, 
8including approval of a property settlement agreement, entered 
9on or after the effective date of this definition by a court of 
10competent jurisdiction pursuant to a domestic relations law 
11which relates to the marital property rights of the spouse or 
12former spouse of a member or participant, including the right to 
13receive all or a portion of the moneys payable to that member or 
14participant under this part in furtherance of the equitable 
15distribution of marital assets. The term includes orders of 
16support as that term is defined by 23 Pa.C.S. § 4302 (relating 
17to definitions) and orders for the enforcement of arrearages as 
18provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
19arrearages).

20* * *

21"Employer defined contributions."

22(1) Unless paragraph (2) applies, contributions equal to
234% of an active participant's compensation which are made by
24the Commonwealth or other employer for current service to the
25trust to be credited in the participant's individual
26investment account.

27(2) (i) For Pennsylvania State Police, contributions
28equal to 12.2% of an active participant's compensation
29which are made by the Commonwealth for current service to
30the trust to be credited in the participant's individual

1investment account.

2(ii) For an enforcement officer, correction officer,
3psychiatric security aide, Delaware River Port Authority
4policeman, park ranger or Capitol police officer,
5contributions equal to 5.5% of an active participant's
6compensation which are made by the Commonwealth or other
7employer for current service to the trust to be credited
8in the participant's individual investment account.

9* * *

<-10"Final average salary." The highest average compensation
11received as a member during any three nonoverlapping periods of
12four consecutive calendar quarters during which the member was a
13State employee, with the compensation for part-time service
14being annualized on the basis of the fractional portion of the
15year for which credit is received; except if the employee was
16not a member for three nonoverlapping periods of four
17consecutive calendar quarters, the total compensation received
18as a member, annualized in the case of part-time service,
19divided by the number of nonoverlapping periods of four
20consecutive calendar quarters of membership; in the case of a
21member with multiple service, the final average salary shall be
22determined on the basis of the compensation received by him as a
23[State employee] member of the system or as a school employee
24other than as a participant in the School Employees' Defined
25Contribution Plan, or both; in the case of a member with Class
26A-3 or Class A-4 service and service in one or more other
27classes of service, the final average salary shall be determined
28on the basis of the compensation received by him in all classes
29of State service credited in the system; and, in the case of a
30member who first became a member on or after January 1, 1996,

1the final average salary shall be determined as hereinabove
2provided but subject to the application of the provisions of
3section 5506.1(a) (relating to annual compensation limit under
4IRC § 401(a)(17)). Final average salary shall be determined by
5including in compensation payments deemed to have been made to a
6member reemployed from USERRA leave to the extent member
7contributions have been made as provided in section 5302(f)(2)
8(relating to credited State service) and payments made to a
9member on leave of absence under 51 Pa.C.S. § 4102 (relating to
10leaves of absence for certain government employees) as provided
11in section 5302(f)(6).

<-12"Final average salary." [The]

13(1)  For members with an effective date of retirement 
14before January 1, 2015, and for purposes of calculating 
15standard single life annuities resulting from credited 
16service other than post-January 2015 service regardless of 
17the effective date of retirement, the highest average 
18compensation received as a member during any three 
19nonoverlapping periods of four consecutive calendar quarters 
20during which the member was a State employee, with the 
21compensation for part-time service being annualized on the 
22basis of the fractional portion of the year for which credit 
23is received; except if the employee was not a member for 
24three nonoverlapping periods of four consecutive calendar 
25quarters, the total compensation received as a member, 
26annualized in the case of part-time service, divided by the 
27number of nonoverlapping periods of four consecutive calendar 
28quarters of membership[;].

29(2) For members with an effective date of retirement on
30or after January 1, 2015, for purposes of calculating

1standard single life annuities resulting from post-January
22015 service, the highest average compensation, as adjusted
3under section 5506.3 (relating to adjustment of compensation
4for calculating final average salary on or after January 1,
52015), received as a member of any class of service during
6any five calendar years during which the member was a State
7employee, except if the employee was not an active member
8during five calendar years, the average of the number of
9calendar years during which the employee was an active
10member.

11(3) For all members and for the calculation of all 
12standard single life annuities without regard to class of 
13membership and credited service, in the case of a member with 
14multiple service, the final average salary shall be 
15determined on the basis of the compensation received by him 
16as a [State employee] member of the system or as a school 
17employee, other than as a participant in the School 
18Employees' Defined Contribution Plan, or both; in the case of 
19a member with Class A-3 or Class A-4 service and service in 
20one or more other classes of service, the final average 
21salary shall be determined on the basis of the compensation 
22received by him in all classes of State service credited in 
23the system; and, in the case of a member who first became a 
24member on or after January 1, 1996, the final average salary 
25shall be determined as hereinabove provided but subject to 
26the application of the provisions of section 5506.1(a) 
27(relating to annual compensation limit under IRC § 401(a)
28(17)). Final average salary shall be determined by including 
29in compensation payments deemed to have been made to a member 
30reemployed from USERRA leave to the extent member
 

1contributions have been made as provided in section 5302(f)
2(2) (relating to credited State service) and payments made to 
3a member on leave of absence under 51 Pa.C.S. § 4102 
4(relating to leaves of absence for certain government 
5employees) as provided in section 5302(f)(6).

6* * *

7"Inactive member." A member for whom no pickup contributions
8are being made to the fund, except in the case of an active
9member for whom such contributions otherwise required for
10current State service are not being made solely by reason of
11section 5502.1 (relating to waiver of regular member
12contributions and Social Security integration member
13contributions) or any provision of this part relating to the
14limitations under section 401(a)(17) or 415(b) of the Internal
15Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17)
16or 415(b)), but who has accumulated deductions standing to his
17credit in the fund and who is not eligible to become or has not
18elected to become a vestee or has not filed an application for
19an annuity.

20"Inactive participant." A participant for whom no mandatory
21pickup participant contributions are being made to the trust,
22except in the case of an active participant for whom such
23contributions otherwise required for current State service are
24not being made solely by reason of any provision of this part
25relating to limitations under section 401(a)(17) or 415 of the
26Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
27401(a)(17) or 415), but who has accumulated total defined
28contributions standing to his credit in the trust and who has
29not filed an application for an annuity.

30"Individual investment account." The account in the trust to

1which are credited the amounts of the contributions made by a
2participant and the participant's employer in accordance with
3the provisions of this part, together with all interest and
4investment earnings after deduction for fees, costs, expenses
5and investment losses and charges for distributions.

6"Intervening military service." Active military service of a 
7member who was a State employee and active member of the system 
8immediately preceding his induction into the armed services or 
9forces of the United States in order to meet a military 
10obligation excluding any voluntary extension of such service and 
11who becomes a State employee within 90 days of the expiration of 
12such service.

13* * *

14"Irrevocable beneficiary." The person or persons permanently 
15designated by a member or a participant in writing to the State 
16Employees' Retirement Board pursuant to an approved domestic 
17relations order to receive all or a portion of the accumulated 
18deductions, accumulated total defined contributions or lump sum 
19benefit payable upon the death of such member or participant.

20"Irrevocable successor payee." The person permanently
21designated by a participant receiving distributions in writing
22to the board pursuant to an approved domestic relations order to
23receive one or more distributions from the plan upon the death
24of such participant.

25* * *

26"Mandatory pickup participant contributions." Contributions
27equal to 4% of compensation that are made by the Commonwealth or
28other employer for active participants for current service which
29are picked up by the employer.

30* * *

1"Participant." An active participant, inactive participant
2or participant receiving distributions.

3"Participant receiving distributions." A participant in the
4plan who has commenced receiving distributions from his
5individual investment account but who has not received a total
6distribution of his interest in the account.

7* * *

8"Plan." The State Employees' Defined Contribution Plan as
9established by the provisions of this part and the board.

10"Plan document." The documents created by the board under
11section 5402 (relating to plan document) that contain the terms
12and provisions of the plan and trust as established by the board
13regarding the establishment, administration and investment of
14the plan and trust.

<-15"Post-January 2015 service." All previously uncredited State
16service and creditable nonstate service that is first credited
17on or after January 1, 2015, and all State service performed on
18or after January 1, 2015, except that any State service credited
19by a member who is reemployed from USERRA leave who has made the
20member contributions under section 5302(f) (relating to credited
21State service) to receive State service credit shall not be
22post-January 2015 service if credited for a period of USERRA
23leave performed before January 1, 2015.

24"Previous State service." Service rendered as a State 
25employee prior to his most recent entrance in the system[.], 
26provided that the State employee was not a participant in the 
27plan, was not eligible to be an optional participant in the plan 
28under section 5301(b.1) (relating to mandatory and optional 
29membership) or was not prohibited from being a participant under 
30section 5301(c.1) during such service.

1* * *

2"Reemployed from USERRA leave." Resumption of active 
3membership or active participation as a State employee after a 
4period of USERRA leave, provided, however, that the resumption 
5of active membership or active participation was within the time 
6period and under conditions and circumstances such that the 
7State employee was entitled to reemployment rights under 38 
8U.S.C. Ch. 43 (relating to employment and reemployment rights of 
9members of the uniformed services).

10* * *

11"Required beginning date." The latest date by which
12distributions of a participant's interest in his individual
13investment account must commence under section 401(a)(9) of the
14Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
15401(a)(9)).

16"Retirement counselor." The State Employees' Retirement 
17System or State Employees' Defined Contribution Plan employee 
18whose duty it shall be to advise each employee of his rights and 
19duties as a member of the system or as a participant of the 
20plan.

21"Salary deductions." The amounts certified by the board, 
22deducted from the compensation of an active member or active 
23participant, or the school service compensation of a multiple 
24service member who is an active member of the Public School 
25Employees' Retirement System, and paid into the fund or trust.

26"School Employees' Defined Contribution Plan." The defined
27contribution plan for school employees established under 24
28Pa.C.S. Pt. IV (relating to retirement for school employees).

29* * *

30"Special vestee." An employee of The Pennsylvania State

1University who is a member of the State Employees' Retirement
2System with five or more but less than ten eligibility points
3and who has a date of termination of service from The
4Pennsylvania State University of June 30, 1997, because of the
5transfer of his job position or duties to a controlled
6organization of the Penn State Geisinger Health System or
7because of the elimination of his job position or duties due to
8the transfer of other job positions or duties to a controlled
9organization of the Penn State Geisinger Health System, provided
10that:

11(1) subsequent to termination of State service as an
12employee of The Pennsylvania State University, the member has
13not returned to State service in any other capacity or
14position as a State employee;

15(2) The Pennsylvania State University certifies to the
16board that the member is eligible to be a special vestee;

17(3) the member files an application to vest the member's
18retirement rights pursuant to section 5907(f) (relating to
19rights and duties of State employees [and], members and 
20participants) on or before September 30, 1997; and

21(4) the member elects to leave the member's total
22accumulated deductions in the fund and to defer receipt of an
23annuity until attainment of superannuation age.

24* * *

25"State employee." Any person holding a State office or
26position under the Commonwealth, employed by the State
27Government of the Commonwealth, in any capacity whatsoever,
28except an independent contractor or any person compensated on a
29fee basis or any person paid directly by an entity other than a
30State Employees' Retirement System employer, and shall include

1members of the General Assembly, and any officer or employee of
2the following:

3(1) (i) The Department of Education.

4(ii) State-owned educational institutions.

5(iii) Community colleges.

6(iv) The Pennsylvania State University, except an 
7employee in the College of Agriculture who is paid wholly 
8from Federal funds or an employee who is participating in 
9the Federal Civil Service Retirement System. The 
10university shall be totally responsible for all employer 
11contributions under [section] sections 5507 (relating to 
12contributions to the system by the Commonwealth and other 
13[employers).] employers before July 1, 2015) and 5507.1 
14(relating to contributions to the system by the 
15Commonwealth and other employers starting July 1, 2015).

16(2) The Pennsylvania Turnpike Commission, the Delaware 
17River Port Authority, the Port Authority Transit Corporation, 
18the Philadelphia Regional Port Authority, the Delaware River 
19Joint Toll Bridge Commission, the State Public School 
20Building Authority, The General State Authority, the State 
21Highway and Bridge Authority, the Delaware Valley Regional 
22Planning Commission, the Interstate Commission of the 
23Delaware River Basin, and the Susquehanna River Basin 
24Commission any time subsequent to its creation, provided the 
25commission or authority agrees to contribute and does 
26contribute to the fund or to the trust, from time to time, 
27the moneys required to build up the reserves necessary for 
28the payment of the annuities or other benefits of such 
29officers and employees without any liability on the part of 
30the Commonwealth to make appropriations for such purposes,
 

1and provided in the case of employees of the Interstate 
2Commission of the Delaware River Basin, that the employee 
3shall have been a member of the system for at least ten years 
4prior to January 1, 1963.

5(3) Any separate independent public corporation created 
6by statute, not including any municipal or quasi-municipal 
7corporation, so long as he remains an officer or employee of 
8such public corporation, and provided that such officer or 
9employee of such public corporation was an employee of the 
10Commonwealth immediately prior to his employment by such 
11corporation, and further provided such public corporation 
12shall agree to contribute and contributes to the fund or to 
13the trust, from time to time, the moneys required to build up 
14the reserves necessary for the payment of the annuities or 
15other benefits of such officers and employees without any 
16liability on the part of the Commonwealth to make 
17appropriations for such purposes.

18* * *

19"Successor payee." The person or persons last designated by
20a participant receiving distributions in writing to the board to
21receive one or more distributions upon the death of such
22participant.

23"Superannuation age." For classes of service in the system 
24other than Class A-3 and Class A-4, any age upon accrual of 35 
25eligibility points or age 60, except for a member of the General 
26Assembly, an enforcement officer, a correction officer, a 
27psychiatric security aide, a Delaware River Port Authority 
28policeman or an officer of the Pennsylvania State Police, age 
2950, and, except for a member with Class G, Class H, Class I, 
30Class J, Class K, Class L, Class M or Class N service, age 55
 

1upon accrual of 20 eligibility points. For Class A-3 and Class 
2A-4 service, any age upon attainment of a superannuation score 
3of 92, provided the member has accrued 35 eligibility points, or 
4age 65, or for park rangers or capitol police officers, age 55 
5with 20 years of service as a park ranger or capitol police 
6officer, except for a member of the General Assembly, an 
7enforcement officer, a correction officer, a psychiatric 
8security aide, a Delaware River Port Authority policeman or an 
9officer of the Pennsylvania State Police, age 55. A vestee with 
10Class A-3 or Class A-4 service credit attains superannuation age 
11on the birthday the vestee attains the age resulting in a 
12superannuation score of 92, provided that the vestee has at 
13least 35 eligibility points, or attains another applicable 
14superannuation age, whichever occurs first.

15* * *

16"Trust." The State Employees' Defined Contribution Trust
17established under Chapter 54 (relating to State Employees'
18Defined Contribution Plan).

19* * *

20"Valuation interest." Interest at 5 1/2% per annum 
21compounded annually and applied to all accounts of the fund 
22other than the members' savings account.

23* * *

24"Voluntary contributions." Contributions made by a
25participant to the trust and credited to his individual
26investment account in excess of his mandatory pickup participant
27contributions, by salary deductions paid through the
28Commonwealth or other employer, or by an eligible rollover or
29direct trustee-to-trustee transfer.

30Section 3. Section 5103 of Title 71 is amended to read:

1§ 5103. Notice to members and participants.

2Notice by publication, including, without being limited to,
3newsletters, newspapers, forms, first class mail, letters,
4manuals and, to the extent authorized by a policy adopted by the
5board, electronically, including, without being limited to, e-
6mail or [World Wide Web] Internet sites, distributed or made
7available to members and participants in a manner reasonably
8calculated to give actual notice of those sections of the State
9Employees' Retirement Code that require notice to members or 
10participants shall be deemed sufficient notice for all purposes.

11Section 4. Title 71 is amended by adding a section to read:

12§ 5104. Reference to State Employees' Retirement System.

13(a) Construction.--As of the effective date of this section,
14unless the context clearly indicates otherwise, any reference to
15the State Employees' Retirement System in a statutory provision
16other than this part and 24 Pa.C.S. Pt. IV (relating to
17retirement for school employees) shall include a reference to
18the State Employees' Defined Contribution Plan and any reference
19to the State Employees' Retirement Fund shall include a
20reference to the State Employees' Defined Contribution Trust.

21(b) Agreement.--The agreement of an employer listed in the
22definition of "State employee" under section 5102 (relating to
23definitions) or any other law to make contributions to the State
24Employees' Retirement Fund or to enroll its employees as members
25in the State Employees' Retirement System shall be deemed to be
26an agreement to make contributions to the State Employees'
27Defined Contribution Trust or to enroll its employees in the
28State Employees' Defined Contribution Plan.

29Section 5. Section 5301 heading, (a), (b), (c) and (d) of
30Title 71 are amended and the section is amended by adding

1subsections to read:

2§ 5301. Mandatory and optional membership in the system and 
3participation in the plan.

4(a) Mandatory membership.--[Membership] Unless an election 
5to be a participant in the plan is made, membership in the
6system shall be mandatory as of the effective date of employment
7for all State employees except the following:

8(1) Governor.

9(2) Lieutenant Governor.

10(3) Members of the General Assembly.

11(4) Heads or deputy heads of administrative departments.

12(5) Members of any independent administrative board or
13commission.

14(6) Members of any departmental board or commission.

15(7) Members of any advisory board or commission.

16(8) Secretary to the Governor.

17(9) Budget Secretary.

18(10) Legislative employees.

19(11) School employees who have elected membership in the
20Public School Employees' Retirement System.

21(12) School employees who have elected membership in an
22independent retirement program approved by the employer,
23provided that in no case, except as hereinafter provided,
24shall the employer contribute on account of such elected
25membership at a rate greater than the employer normal
26contribution rate as determined in section 5508(b) (relating
27to actuarial cost method for fiscal years ending before July 
281, 2015). For the fiscal year 1986-1987 an employer may
29contribute on account of such elected membership at a rate
30which is the greater of 7% or the employer normal

1contribution rate as determined in section 5508(b) and for
2the fiscal year 1992-1993 and all years after that at a rate
3of 9.29%.

4(13) Persons who have elected to retain membership in
5the retirement system of the political subdivision by which
6they were employed prior to becoming eligible for membership
7in the State Employees' Retirement System.

8(14) Persons who are not members of the system and are
9employed on a per diem or hourly basis for less than 100 days
10or 750 hours in a 12-month period.

11(15) Employees of the Philadelphia Regional Port
12Authority who have elected to retain membership in the
13pension plan or retirement system in which they were enrolled
14as employees of the predecessor Philadelphia Port Corporation
15prior to the creation of the Philadelphia Regional Port
16Authority.

17(16) Employees of the Juvenile Court Judges' Commission
18who, before the effective date of this paragraph, were
19transferred from the State System of Higher Education to the
20Juvenile Court Judges' Commission as a result of an
21interagency transfer of staff approved by the Office of
22Administration and who, while employees of the State System
23of Higher Education, had elected membership in an independent
24retirement program approved by the employer.

25(17) State employees whose most recent period of State 
26service starts on or after January 1, 2015. For purposes of 
27this paragraph and section 5955(c) (relating to construction 
28of part), a State employee who is furloughed under section 
29802 of the act of August 5, 1941 (P.L.752, No.286), known as 
30the Civil Service Act, and reemployed pursuant to the Civil
 

1Service Act in any class of service or civil service status 
2which was previously held shall not be treated as having a 
3break in State service.

4(a.1) Mandatory participation in the plan.--State employees
5listed in subsection (a)(17) who are not listed in subsection
6(a)(1) through (13) shall be mandatory participants as of the
7most recent effective date of State service without regard to
8whether or not they are combined service employees.

9(b) Optional membership in the system.--The State employees
10listed in subsection (a)(1) through (11) shall have the right to
11elect membership in the system on or before December 31, 2014;
12once such election is exercised, membership shall continue until
13the termination of State service or until the State employee 
14elects to be a participant of the plan.

15(b.1) Optional participation in the plan.--The State
16employees listed in subsection (a)(17) who also are listed in
17subsection (a)(1) through (10) shall have the right to elect
18participation in the plan; once such election is exercised,
19participation will be effective as of the date of election and
20shall continue until the termination of State service.

21(c) Prohibited membership in the system.--The State
22employees listed in subsection (a)(12), (13), (14) [and], (15) 
23and (17) shall not have the right to elect membership in the
24system.

25(c.1) Prohibited participation in the plan.--The State
26employees listed in subsection (a)(17) who also are listed in
27subsection (a)(13) and (15) or who are employees of The
28Pennsylvania State University, the State System of Higher
29Education, State-owned educational institutions or community
30colleges shall not be eligible to participate in the plan.

1(d) Return to service.--An annuitant who returns to service
2as a State employee before January 1, 2015, shall resume active
3membership in the system as of the effective date of employment,
4except as otherwise provided in section 5706(a) (relating to
5termination of annuities), regardless of the optional membership
6category of the position. An annuitant, inactive participant or 
7a participant receiving distributions who returns to service as 
8a State employee on or after January 1, 2015, shall be an active 
9participant of the plan as of the effective date of employment 
10unless the position is eligible for optional participation or is 
11not eligible for participation in the plan, or except as 
12otherwise provided in section 5706(a).

13* * *

14Section 6. Section 5302(a), (b), (e) and (f) of Title 71,
15amended October 24, 2012 (P.L.1436, No.181), are amended to
16read:

17§ 5302. Credited State service.

18(a) Computation of credited service.--In computing credited
19State service of a member for the determination of benefits, a
20full-time salaried State employee, including any member of the
21General Assembly, shall receive credit for service in each
22period for which contributions as required are made to the fund,
23or for which contributions otherwise required for such service
24were not made to the fund solely by reason of section 5502.1
25(relating to waiver of regular member contributions and Social
26Security integration member contributions) or any provision of
27this part relating to the limitations under IRC § 401(a)(17) or
28415(b), but in no case shall he receive more than one year's
29credit for any 12 consecutive months or 26 consecutive biweekly
30pay periods. A per diem or hourly State employee shall receive

1one year of credited service for each nonoverlapping period of
212 consecutive months or 26 consecutive biweekly pay periods in
3which he is employed and for which contributions are made to the 
4fund or would have been made to the fund but for such waiver
5under section 5502.1 or limitations under the IRC for at least
6220 days or 1,650 hours of employment. If the member was
7employed and contributions were made to the fund for less than
8220 days or 1,650 hours, he shall be credited with a fractional
9portion of a year determined by the ratio of the number of days
10or hours of service actually rendered to 220 days or 1,650
11hours, as the case may be. A part-time salaried employee shall
12be credited with the fractional portion of the year which
13corresponds to the number of hours or days of service actually
14rendered and for which contributions are made to the fund in
15relation to 1,650 hours or 220 days, as the case may be. In no
16case shall a member who has elected multiple service receive an
17aggregate in the two systems of more than one year of credited
18service for any 12 consecutive months.

19(b) Creditable leaves of absence.--

20(1) A member on leave without pay who is studying under 
21a Federal grant approved by the head of his department or who 
22is engaged up to a maximum of two years of temporary service 
23with the United States Government, another state or a local 
24government under the Intergovernmental Personnel Act of 1970 
25(5 U.S.C. §§ 1304, 3371-3376; 42 U.S.C. §§ 4701-4772) shall 
26be eligible for credit for such service: Provided, That 
27contributions are made in accordance with sections 5501 
28(relating to regular member contributions for current 
29service), 5501.1 (relating to shared-risk member 
30contributions for Class A-3 and Class A-4 service), 5505.1
 

1(relating to additional member contributions) [and], 5507 
2(relating to contributions to the system by the Commonwealth 
3and other employers before July 1, 2015) and 5507.1 (relating 
4to contributions to the system by the Commonwealth and other 
5employers starting July 1, 2015), the member returns from 
6leave without pay to active State service as a member of the 
7system for a period of at least one year, and he is not 
8entitled to retirement benefits for such service under a 
9retirement system administered by any other governmental 
10agency.

11(2) An active member or active participant on paid leave
12granted by an employer for purposes of serving as an elected
13full-time officer for a Statewide employee organization which
14is a collective bargaining representative under the act of 
15June 24, 1968 (P.L.237, No.111), referred to as the Policemen
16and Firemen Collective Bargaining Act, or the act of July 23, 
171970 (P.L.563, No.195), known as the Public Employe Relations
18Act, and up to 14 full-time business agents appointed by an
19employee organization that represents correction officers
20employed at State correctional institutions: Provided, That
21for elected full-time officers such leave shall not be for
22more than three consecutive terms of the same office and for
23up to 14 full-time business agents appointed by an employee
24organization that represents correction officers employed at
25State correctional institutions no more than three
26consecutive terms of the same office; that the employer shall
27fully compensate the member or the participant, including,
28but not limited to, salary, wages, pension and retirement
29contributions and benefits, other benefits and seniority, as
30if he were in full-time active service; and that the

1Statewide employee organization shall fully reimburse the
2employer for all expenses and costs of such paid leave,
3including, but not limited to, contributions and payment in
4accordance with [sections] section 5404 (relating to 
5participant contributions), 5405 (relating to mandatory 
6pickup participant contributions), 5406 (relating to employer 
7defined contributions), 5501, 5501.1, 5505.1 [and], 5507 or 
85507.1, if the employee organization either directly pays, or
9reimburses the Commonwealth or other employer for,
10contributions made in accordance with [section] sections 
115404, 5405, 5406, 5507 and 5507.1.

12* * *

13(e) Cancellation of credited service.--All credited service 
14in the system shall be cancelled if a member withdraws his total 
15accumulated deductions, except that a member with Class A-3 or 
16Class A-4 service credit and one or more other classes of 
17service credit shall not have his service credit as a member of 
18any classes of service other than as a member of Class A-3 or 
19Class A-4 cancelled when the member receives a lump sum payment 
20of accumulated deductions resulting from Class A-3 or Class A-4 
21service pursuant to section 5705.1 (relating to payment of 
22accumulated deductions resulting from Class A-3 and Class A-4 
23service). A partial or total distribution of accumulated total 
24defined contributions to a combined service employee shall not 
25cancel service credited in the system.

26(f) Credit for military service.--A State employee who has 
27performed USERRA leave may receive credit in the system or 
28participate in the plan as follows:

29(1) For purposes of determining whether a member is
30eligible to receive credited service in the system for a

1period of active military service, other than active duty
2service to meet periodic training requirements, rendered
3after August 5, 1991, and that began before the effective
4date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73
5(relating to military leave of absence) shall apply to all
6individuals who were active members of the system when the
7period of military service began, even if not defined as an
8employee pursuant to 51 Pa.C.S. § 7301 (relating to
9definitions).

10(1.1) State employees may not receive service credit in 
11the system or exercise the options under 51 Pa.C.S. § 7306
12(relating to retirement rights) for military leaves that
13begin on or after the effective date of this subsection,
14except as otherwise provided by this subsection.

15(1.2) State employees may not participate in the plan or
16exercise the options under 51 Pa.C.S. § 7306 (relating to
17retirement rights) for military leaves that begin on or after
18the effective date of this paragraph, except as otherwise
19provided by this subsection.

20(2) A State employee who has performed USERRA leave may
21receive credit in the system as provided by this paragraph.
22The following shall apply:

23(i) A State employee who is reemployed from USERRA
24leave as an active member of the system shall be treated
25as not having incurred a break in State service by reason
26of the USERRA leave and shall be granted eligibility
27points as if the State employee had not been on the
28USERRA leave. If a State employee who is reemployed from
29USERRA leave as an active member of the system
30subsequently makes regular member contributions,

1additional member contributions, Social Security
2integration member contributions, shared-risk member
3contributions and any other member contributions in the
4amounts and in the time periods required by 38 U.S.C. Ch.
543 (relating to employment and reemployment rights of
6members of the uniformed services) and IRC § 414(u) as if
7the State employee had continued in State office or
8employment and performed State service and was
9compensated during the period of USERRA leave, then the
10State employee shall be granted State service credit for
11the period of USERRA leave. The State employee shall have
12the State employee's benefits, rights and obligations
13determined under this part as if the State employee was
14an active member who performed creditable State service
15during the USERRA leave in the job position that the
16State employee would have held had the State employee not
17been on USERRA leave and received the compensation on
18which the member contributions to receive State service
19credit for the USERRA leave were determined.

20(ii) For purposes of determining whether a State
21employee has made the required employee contributions for
22State service credit for USERRA leave, if an employee who
23is reemployed from USERRA leave as an active member of 
24the system terminates State service or dies in State
25service before the expiration of the allowed payment
26period, then State service credit for the USERRA leave
27will be granted as if the required member contributions
28were paid the day before termination or death. The amount
29of the required member contributions will be treated as
30an incomplete payment subject to the provisions of

1section 5506 (relating to incomplete payments). Upon a
2subsequent return to State service or to school service
3as a multiple service member, the required member
4contributions treated as incomplete payments shall be
5treated as member contributions that were either
6withdrawn in a lump sum at termination or paid as a lump
7sum pursuant to section 5705(a)(4) <-or (a.1) (relating to
8member's options), as the case may be.

9(iii) A State employee who is reemployed from USERRA
10leave as an active member of the system who does not make
11the required member contributions or makes only part of
12the required member contributions within the allowed
13payment period shall not be granted credited service for
14the period of USERRA leave for which the required member
15contributions were not timely made, shall not be eligible
16to subsequently make contributions and shall not be
17granted either State service credit or nonstate service
18credit for the period of USERRA leave for which the
19required member contributions were not timely made.

20(2.1) The following shall apply:

21(i) A participant who is reemployed from USERRA
22leave shall be treated as not having incurred a break in
23State service by reason of the USERRA leave. If a
24participant who is reemployed from USERRA leave
25subsequently makes mandatory pickup participant
26contributions in the amounts and in the time periods
27required by 38 U.S.C. Ch. 43 and IRC § 414(u) as if the
28participant had continued in his State office or
29employment and performed State service and been
30compensated during the period of USERRA leave, the

1participant's employer shall make the corresponding
2employer defined contributions. Such an employee shall
3have his contributions, benefits, rights and obligations
4determined under this part as if he were an active
5participant who performed State service during the USERRA
6leave in the job position that he would have held had he
7not been on USERRA leave and received the compensation on
8which the mandatory pickup participant contributions to
9receive State service credit for the USERRA leave were
10determined, including the right to make voluntary
11contributions on such compensation as permitted by law.

12(ii) A participant who is reemployed from USERRA
13leave who does not make the mandatory pickup participant
14contributions or makes only part of the mandatory pickup
15participant contributions within the allowed payment
16period shall not be eligible to make mandatory pickup
17participant contributions or voluntary contributions at a
18later date for the period of USERRA leave for which the
19mandatory pickup participant contributions were not
20timely made.

21(3) A State employee who is a member of the system and
22performs USERRA leave from which the employee could have been
23reemployed from USERRA leave had the State employee returned
24to State service in the time frames required by 38 U.S.C. Ch.
2543 for reemployment rights, but did not do so, shall be able
26to receive creditable nonstate service as nonintervening
27military service for the period of USERRA leave should the
28employee later return to State service as an active member of 
29the system and is otherwise eligible to purchase the service
30as nonintervening military service.

1(3.1) A State employee who is a participant in the plan
2and performs USERRA leave from which the employee could have
3been reemployed from USERRA leave had the employee returned
4to State service in the time frames required by 38 U.S.C. Ch.
543 for reemployment rights, but was not reemployed, shall not
6be eligible to make mandatory pickup participant
7contributions or voluntary contributions for the period of
8USERRA leave should the employee later return to State
9service and be a participant in the plan.

10(4) [A State employee] An active member or inactive 
11member on leave without pay who on or after the effective
12date of this subsection is granted a leave of absence under
1351 Pa.C.S. § 4102 (relating to leaves of absence for certain
14government employees) or a military leave under 51 Pa.C.S.
15Ch. 73, that is not USERRA leave shall be able to receive
16creditable nonstate service as nonintervening military
17service should the employee return to State service as an 
18active member of the system and is otherwise eligible to
19purchase the service as nonintervening military service.

20(4.1) An active participant or inactive participant on
21leave without pay who, on or after the effective date of this
22paragraph, is granted a leave of absence under 51 Pa.C.S. §
234102 or a military leave under 51 Pa.C.S. Ch.73 that is not
24USERRA leave shall not be able to make mandatory pickup
25participant contributions or voluntary contributions during
26or for the leave of absence or military leave and shall not
27have employer defined contributions made during such leave,
28without regard to whether or not the State employee received
29salary, wages, stipends, differential wage payments or other
30payments from his employer during the leave, notwithstanding

1any provision to the contrary in 51 Pa.C.S. § 4102 or 51
2Pa.C.S. Ch. 73.

3(5) If a member dies while performing USERRA leave, then
4the beneficiaries or survivor annuitants, as the case may be,
5of the deceased member are entitled to any additional
6benefits, including eligibility points, other than benefit
7accruals relating to the period of qualified military
8service, provided under this part had the member resumed and
9then terminated employment on account of death.

10(5.1) If a participant dies while performing USERRA
11leave, the beneficiaries or successor payees of the deceased
12participant are entitled to any additional benefits, other
13than benefit accruals relating to the period of qualified
14military service, provided under this part had the
15participant resumed and terminated employment on account of
16death.

17(6) A State employee who is on a leave of absence from
18his duties as a State employee for which 51 Pa.C.S. § 4102
19provides that he is not to suffer a loss of pay, time or
20efficiency rating shall not be an active member, receive
21service credit or make member contributions for the leave of
22absence, except as provided for in this part. Notwithstanding
23this paragraph, any pay the member receives pursuant to 51
24Pa.C.S. § 4102 shall be included in the determination of
25final average salary and other calculations in the system
26utilizing compensation as if the payments were compensation
27under this part.

28Section 7. Sections 5303(b)(2), (d)(1), (e)(1) and (4),
295303.2(a) and (e), 5304(a) and (b), 5305(b) introductory
30paragraph and (3) and 5305.1 of Title 71 are amended to read:

1§ 5303. Retention and reinstatement of service credits.

2* * *

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

4* * *

5(2) A special vestee or person otherwise eligible to be
6a special vestee who returns to State service, other than as 
7a participant in the plan, or withdraws his accumulated
8deductions pursuant to section 5311 (relating to eligibility
9for refunds) or 5701 (relating to return of total accumulated
10deductions) shall receive or retain eligibility points in
11accordance with paragraph (1) but upon subsequent termination
12of State service shall only be eligible to be an annuitant,
13vestee or inactive member without regard to previous status
14as a special vestee and without regard to the provisions of
15this part providing for special vestees.

16* * *

17(d) Transfer of certain pension service credit.--

18(1) Any person who was an employee of any county in this
19Commonwealth on the personal staff of an appellate court
20judge prior to September 9, 1985, and who had that employment
21transferred to the Commonwealth pursuant to 42 Pa.C.S. § 3703
22(relating to local chamber facilities) shall be a member of
23the system for all service rendered as an employee of the
24Commonwealth on the personal staff of an appellate court
25judge subsequent to the date of the transfer unless
26specifically prohibited pursuant to section 5301(c) (relating
27to mandatory and optional membership in the system and 
28participation in the plan). The employee shall be entitled to
29have any prior service credit in that county or other
30municipal pension plan or retirement system transferred to

1the system and deemed to be State service for all purposes
2under this part. However, for those employees who were in
3continuous county employment which commenced prior to July
422, 1983, section 5505.1 shall not apply. The transfer of
5prior service credit to the system shall occur upon the
6transfer, by the member, county or other municipal pension
7plan or retirement system, to the system of the amount of
8accumulated member contributions, pick-up contributions and
9credited interest standing in the employee's county or
10municipal pension plan or retirement system account as of the
11date that these funds are transferred to the system. In the
12event that these funds have been refunded to the member, the
13transfer of service credit shall occur when the member
14transfers an amount equal to either the refund which the
15member received from the county or municipal pension plan or
16retirement system or the amount due under section 5504, if
17less. In the case of a transfer by the member, the transfer
18shall occur by December 31, 1987, in order for the member to
19receive credit for the prior service. In the case of a
20transfer by the county or other municipal pension plan or
21retirement system, the transfer shall also occur by December
2231, 1987. If the amount transferred to the system by the
23member of a county or municipal pension plan or retirement
24system is greater than the amount that would have accumulated
25in the member's account if the employee had been a member of
26the system, all excess funds shall be returned to the
27employee within 90 days of the date on which such funds are
28credited to the member's account in the system. Within 60
29days of receipt of written notice that an employee has
30elected to transfer credits under the provisions of this

1subsection, the county or other municipal pension plans or
2retirement systems shall be required to transfer to the
3system an amount, excluding contributions due under section
45504(a), equal to the liability of the prior service in
5accordance with county or other municipal pension plan or
6retirement system benefit provisions, multiplied by the ratio
7of system actuarial value of assets for active members to the
8system actuarial accrued liability for active members. The
9Public Employee Retirement Study Commission shall determine
10the appropriate amount of employer contributions to be
11transferred to the system by the county or other municipal
12pension plans or retirement systems.

13* * *

14(e) Transfer and purchase of certain pension service credit;
15Philadelphia Regional Port Authority.--

16(1) Any employee of the Philadelphia Regional Port
17Authority who becomes a State employee, as defined in section
185102 (relating to definitions), and an active member of the 
19system shall be eligible to obtain retirement credit for
20prior uncredited service with the Philadelphia Port
21Corporation, a Pennsylvania not-for-profit corporation
22("predecessor corporation"), provided that the Commonwealth
23does not incur any liability for the funding of the annuities
24attributable to the prior, uncredited "predecessor
25corporation" service, the cost of which shall be determined
26according to paragraph (2).

27* * *

28(4) Any person who became employed by the Philadelphia
29Regional Port Authority between July 10, 1989, and passage of
30this act and who becomes a State employee, as defined in

1section 5102, and an active member of the system shall be
2eligible to obtain retirement credit for service from the
3date of employment with the Philadelphia Regional Port
4Authority, provided that the contributions are made in
5accordance with sections 5501, 5504, 5505.1 and 5506.

6* * *

7§ 5303.2. Election to convert school service to State service.

8(a) Eligibility.--An active member or inactive member on
9leave without pay who was an employee transferred from the
10Department of Education to the Department of Corrections
11pursuant to section 908-B of the act of April 9, 1929 (P.L.177,
12No.175), known as The Administrative Code of 1929, and who on
13the effective date of that transfer did not participate in an
14independent retirement program approved by the Department of
15Education under 24 Pa.C.S. § 8301(a)(1) (relating to mandatory
16and optional membership) or section 5301(a)(12) (relating to
17mandatory and optional membership in the system and 
18participation in the plan), notwithstanding any other provision
19of law or any collective bargaining agreement, arbitration
20award, contract or term or conditions of any retirement system
21or pension plan, may make a one-time election to convert all
22service credited in the Public School Employees' Retirement
23System as of June 30, 1999, and transfer to the system all
24accumulated member contributions and statutory interest credited
25in the members' savings account in the Public School Employees'
26Retirement System as of June 30, 1999, plus statutory interest
27on that amount credited by the Public School Employees'
28Retirement System from July 1, 1999, to the date of transfer to
29the system.

30* * *

1(e) Transfer.--Within 180 days after the effective date of
2this subsection, the Public School Employees' Retirement System
3shall transfer to the board for each member electing to convert
4under this section the accumulated member contributions and
5statutory interest credited in the Public School Employees'
6Retirement System, plus an amount equal to the value of all
7annual employer contributions made to the Public School
8Employees' Retirement System with interest at the annual rate
9adopted by the board for the calculation of the normal
10contribution rate under section 5508(b) (relating to actuarial
11cost method for fiscal years ending before July 1, 2015), from
12the date of each contribution to the date of the transfer of the
13funds to the board. Any debt owed by a member to the Public
14School Employees' Retirement System for whatever reason shall be
15transferred to the system and shall be paid in a manner and in
16accordance with conditions prescribed by the board.

17* * *

18§ 5304. Creditable nonstate service.

19(a) Eligibility.--

20(1) An active member who first becomes an active member 
21before January 1, 2011, or before December 1, 2010, as a 
22member of the General Assembly, or a multiple service member
23who first becomes an active member before January 1, 2011, or 
24before December 1, 2010, as a member of the General Assembly, 
25and who is a school employee and an active member of the
26Public School Employees' Retirement System shall be eligible
27for Class A service credit for creditable nonstate service as
28set forth in subsections (b) and (c) except that intervening
29military service shall be credited in the class of service
30for which the member was eligible at the time of entering

1into military service and for which he makes the required
2contributions to the fund and except that a multiple service
3member who is a school employee and an active member of the
4Public School Employees' Retirement System shall not be
5eligible to purchase service credit for creditable nonstate
6service set forth in subsection (c)(5).

7(2) An active member who first becomes an active member
8on or after January 1, 2011, or on or after December 1, 2010,
9as a member of the General Assembly, or a multiple service
10member who first becomes an active member on or after January
111, 2011, or on or after December 1, 2010, as a member of the
12General Assembly, and who is a school employee and an active
13member of the Public School Employees' Retirement System
14shall be eligible for Class A-3 service credit for creditable
15nonstate service as set forth in subsections (b) and (c)
16except that intervening military service shall be credited in
17the class of service for which the member was eligible at the
18time of entering into military service and for which he makes
19the required contributions to the fund and except that a
20multiple service member who is a school employee and an
21active member of the Public School Employees' Retirement
22System shall not be eligible to purchase service credit for
23creditable nonstate service set forth in subsection (c)(5).

24* * *

25(b) Limitations on eligibility.--An active member or a
26multiple service member who is a school employee and an active
27member of the Public School Employees' Retirement System shall
28be eligible to receive credit for nonstate service provided that
29he does not have credit for such service in the system or in the
30school system and is not entitled to receive, eligible to

1receive now or in the future, or is receiving retirement
2benefits for such service in the system or under a retirement
3system administered and wholly or partially paid for by any
4other governmental agency or by any private employer, or a
5retirement program approved by the employer in accordance with
6section 5301(a)(12) (relating to mandatory and optional
7membership in the system and participation in the plan), and
8further provided, that such service is certified by the previous
9employer and contributions are agreed upon and made in
10accordance with section 5505 (relating to contributions for the
11purchase of credit for creditable nonstate service).

12* * *

13§ 5305. Social security integration credits.

14* * *

15(b) Accrual of subsequent credits.--Any active member who
16has social security integration accumulated deductions to his
17credit or is receiving a benefit on account of social security
18integration credits may accrue one social security integration
19credit for each year of service as a State employee on or
20subsequent to March 1, 1974 and a fractional credit for a
21corresponding fractional year of service provided that
22contributions are made to the fund, or would have been made to 
23the fund but for section 5502.1 (relating to waiver of regular
24member contributions and Social Security integration member
25contributions) or the limitations under IRC § 401(a)(17) or
26415(b), in accordance with section 5502 (relating to Social
27Security integration member contributions), and he:

28* * *

29(3) terminates his status as a vestee or an annuitant
30and returns to State service as an active member of the
 

1system.

2* * *

3§ 5305.1. Eligibility for actuarial increase factor.

4A person who is:

5(1) an active member;

6(2) an inactive member on leave without pay; [or]

7(3) a multiple service member who is a school employee
8and an active member of the Public School Employees'
9Retirement System; or

10(4) a combined service employee who is an active
11participant or inactive participant on leave without pay

12who terminates State service or school service, as the case may
13be, after attaining age 70 and who applies for a superannuation
14annuity with an effective date of retirement the day after the
15date of termination of State service or school service shall
16have that person's maximum single life annuity calculated
17pursuant to section 5702(a.1) (relating to maximum single life
18annuity).

19Section 8. Section 5306(a), (a.1)(2) and (6), (a.2)(1) and
20(2) and (b) of Title 71 are amended and the section is amended
21by adding a subsection to read:

22§ 5306. Classes of service.

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

24(1) A State employee who is a member of Class A on the
25effective date of this part or who first becomes a member of
26the system subsequent to the effective date of this part and 
27before January 1, 2011, or before December 1, 2010, as a 
28member of the General Assembly, shall be classified as a
29Class A member and receive credit for Class A service upon
30payment of regular and additional member contributions for

1Class A service, provided that the State employee does not
2become a member of Class AA pursuant to subsection (a.1)
3[or], a member of Class D-4 pursuant to subsection (a.2) or a 
4participant in the plan.

5(2) A State employee who first becomes a member of the 
6system on or after January 1, 2011, or on or after December 
71, 2010, as a member of the General Assembly, shall be 
8classified as a Class A-3 member and receive credit for Class 
9A-3 service upon payment of regular member contributions and 
10shared-risk member contributions for Class A-3 service 
11provided that the State employee does not become a member of 
12Class A-4 pursuant to subsection (a.3), except that a member 
13of the judiciary shall be classified as a member of such 
14other class of service for which the member of the judiciary 
15is eligible, shall elect and make regular member 
16contributions[.] and further provided that the State employee 
17does not become a participant in the plan or is not eligible
18to be an optional participant of the plan under section 5301 
19(relating to mandatory and optional membership in the system 
20and participation in the plan).

21(a.1) Class AA membership.--

22* * *

23(2) A person who is a State employee on June 30, 2001,
24and July 1, 2001, but is not an active member of the system
25because membership in the system is optional or prohibited
26pursuant to section 5301 (relating to mandatory and optional
27membership in the system and participation in the plan) and
28who first becomes an active member after June 30, 2001, and
29before January 1, 2011, or before December 1, 2010, as a
30member of the General Assembly, and who is not a State police

1officer and not employed in a position for which a class of
2service other than Class A is credited or could be elected
3shall be classified as a Class AA member and receive credit
4for Class AA State service upon payment of regular member
5contributions for Class AA service and, subject to the
6limitations contained in paragraph (7), if previously a
7member of Class A or previously employed in a position for
8which Class A service could have been earned, shall have all
9Class A State service (other than State service performed as
10a State Police officer or for which a class of service other
11than Class A was earned or could have been elected)
12classified as Class AA service.

13* * *

14(6) A State employee who after June 30, 2001, becomes a
15State police officer or who is employed in a position in
16which the member could elect membership in the system in a
17class of service other than Class AA or Class D-4 shall
18retain any Class AA service credited prior to becoming a
19State police officer or being so employed but shall be
20ineligible to receive Class AA credit thereafter and instead
21shall receive Class A credit for service as a member of the 
22judiciary if such judicial service begins before January 1, 
232015, or if he first became a member before January 1, 2011, 
24or December 1, 2010, as a member of the General Assembly, or 
25Class A-3 credit for service other than as a member of the 
26judiciary if such nonjudicial service begins before January 
271, 2015, and he first became a member on or after January 1, 
282011, or December 1, 2010, as a member of the General 
29Assembly, unless a class of membership other than Class A is
30elected.

1* * *

2(a.2) Class of membership for members of the General
3Assembly.--

4(1) A person who:

5(i) becomes a member of the General Assembly and an
6active member of the system after June 30, 2001, and 
7before December 1, 2010; or

8(ii) is a member of the General Assembly on July 1,
92001, but is not an active member of the system because
10membership in the system is optional pursuant to section
115301 and who becomes an active member after June 30,
122001, and before December 1, 2010;

13and who was not a State police officer on or after July 1,
141989, shall be classified as a Class D-4 member and receive
15credit as a Class D-4 member for all State service as a 
16member of the system performed as a member of the General
17Assembly upon payment of regular member contributions for
18Class D-4 service and, subject to the limitations contained
19in subsection (a.1)(7), if previously a member of Class A or
20employed in a position for which Class A service could have
21been earned, shall receive Class AA service credit for all
22Class A State service, other than State service performed as
23a State police officer or for which a class of service other
24than Class A or Class D-4 was or could have been elected or
25credited.

26(2) Provided an election to become a Class D-4 member is
27made pursuant to section 5306.2 (relating to elections by
28members of the General Assembly), a State employee who was
29not a State police officer on or after July 1, 1989, who on
30July 1, 2001, is a member of the General Assembly and an

1active member of the system and not a member of Class D-3
2shall be classified as a Class D-4 member and receive credit
3as a Class D-4 member for all State service as a member of 
4the system performed as a member of the General Assembly not
5credited as another class other than Class A upon payment of
6regular member contributions for Class D-4 service and,
7subject to the limitations contained in paragraph (a.1)(7),
8shall receive Class AA service credit for all Class A State
9service, other than State service performed as a State police
10officer or as a State employee in a position in which the
11member could have elected a class of service other than Class
12A, performed before July 1, 2001.

13* * *

14(b) Other class membership.--

15(1) A State employee who is a member of a class of
16service other than Class A on the effective date of this part
17shall retain his membership in that class until such service
18is discontinued; any service as a member of the system 
19thereafter shall be credited as Class A service, Class AA
20service or Class D-4 service as provided for in this section.

21(2) Notwithstanding any other provision of this section,
22a State employee who is appointed bail commissioner of the
23Philadelphia Municipal Court under 42 Pa.C.S. § 1123(a)(5)
24(relating to jurisdiction and venue) and is eligible to be a 
25member of the system as a bail commissioner may, within 30
26days of the effective date of this sentence or within 30 days
27of his initial appointment as a bail commissioner, whichever
28is later, elect Class E-2 service credit for service
29performed as a bail commissioner. This class of service
30multiplier for E-2 service as a bail commissioner shall be

11.5.

2* * *

3(e) Ineligibility for active membership and classes of
4service.--An individual who elects to be a participant in the
5plan or who is a State employee on January 1, 2015, but is not a
6member of the system or who first becomes a State employee on or
7after January 1, 2015, or who returns to State service after a
8termination of State service, without regard to whether the
9termination occurred before or after January 1, 2015, shall be
10ineligible for active membership in the system or the several
11classes of State service as otherwise provided for under this
12section. Any such State employee, if eligible, may be a
13participant in the plan as a result of such State service.

14Section 9. Sections 5306.1(c), 5306.2(b) and 5306.3(c) and
15(d) of Title 71 are amended to read:

16§ 5306.1. Election to become a Class AA member.

17* * *

18(c) Effect of election.--An election to become a Class AA
19member shall become effective the later of July 1, 2001, or the
20date when the election is filed with the board and shall remain
21in effect until the termination of employment or election to be 
22a participant in the plan. Upon termination and a subsequent
23reemployment that occurs before January 1, 2015, the member's
24class of service shall be credited in the class of service
25otherwise provided for in this part. If the reemployment occurs 
26on or after January 1, 2015, the State employee's eligibility 
27for membership in the system or participation in the plan shall 
28be as provided in this part.

29* * *

30§ 5306.2. Elections by members of the General Assembly.

1* * *

2(b) Effect of election.--Membership as a Class D-4 member
3shall become effective on July 1, 2001, and shall remain in
4effect until the termination of service as a member of the
5General Assembly or election to be a participant in the plan.
6Upon termination and a subsequent reemployment that occurs 
7before January 1, 2015, the member's class of service shall be
8credited in the class of service otherwise provided for in this
9part. If the reemployment occurs on or after January 1, 2015, 
10the State employee's eligibility for membership in the system or 
11participation in the plan shall be as provided in this part.

12* * *

13§ 5306.3. Election to become a Class A-4 member.

14* * *

15(c) Effect of election.--An election to become a Class A-4 
16member shall be irrevocable and shall become effective on the 
17effective date of membership in the system and shall remain in 
18effect for all future [creditable] State service creditable in 
19the system, other than service performed as a member of the 
20judiciary and service performed after a termination and a 
21reemployment when the reemployment occurs on or after January 1, 
222015. Payment of regular member contributions for Class A-4 
23State service performed prior to the election of Class A-4 
24membership shall be made in a form, manner and time determined 
25by the board. Upon termination and a subsequent reemployment 
26before January 1, 2015, a member who elected Class A-4 
27membership shall be credited as a Class A-4 member for 
28creditable State service performed after reemployment and before 
29the next termination of State service or election to be a 
30participant, except as a member of the judiciary, regardless of
 

1termination of employment, termination of membership by 
2withdrawal of accumulated deductions or status as an annuitant, 
3vestee or inactive member after the termination of service and 
4before reemployment occurring before January 1, 2015.

5(d) Effect of failure to make election.--Failure to elect to 
6become a Class A-4 member within the election period set forth 
7in subsection (b) shall result in all of the member's State 
8service, other than service performed as a member of the 
9judiciary, being credited as Class A-3 service, unless the State 
10employee elects or is required to be a participant in the plan, 
11and not subject to further election or crediting as Class A-4 
12service. Upon termination and subsequent employment, a member 
13who failed to elect to become a Class A-4 member shall not be 
14eligible to make another election to become a Class A-4 member 
15for either past or future State service.

16Section 10. Sections 5307(b)(1) and 5308(a) and (b) of Title
1771, amended October 24, 2012 (P.L.1436, No.181), are amended and
18the sections are amended by adding subsections to read:

19§ 5307. Eligibility points.

20* * *

21(b) Transitional rule.--

22(1) In determining whether a member who is not a State 
23employee or school employee on June 30, 2001, and July 1, 
242001, and who has previous State service (except a disability 
25annuitant who returns to State service after June 30, 2001, 
26upon termination of the disability annuity) has the five 
27eligibility points required by sections 5102 (relating to 
28definitions), 5308(b) (relating to eligibility for 
29annuities), 5309 (relating to eligibility for vesting), 
305704(b) (relating to disability annuities) and 5705(a)
 

1(relating to member's options), only eligibility points 
2earned by performing credited State service as an active 
3member of the system, USERRA leave or credited school service 
4as an active member of the Public School Employees' 
5Retirement System after June 30, 2001, shall be counted until 
6such member earns one eligibility point by performing 
7credited State service or credited school service after June 
830, 2001, at which time all eligibility points as determined 
9pursuant to subsection (a) shall be counted.

10* * *

11(c) Transitional rule for members electing participation.--
12In determining whether a State employee who is an active member
13or an inactive member on leave without pay on January 1, 2015,
14and who elects to become a participant in the plan under section
155416 (relating to election by members to be participants) has
16the five eligibility points required by sections 5102, 5308(b)
17(1), 5309(1) and 5705(a) or the ten eligibility points required
18by sections 5102, 5308(b)(2), 5309(2) and 5705(a), any such
19combined service employee shall be considered to have satisfied
20any requirement for five or ten eligibility points, as the case
21may be, if the combined service employee does not terminate
22State service for three or more years after the effective date
23of participation in the plan.

24§ 5308. Eligibility for annuities.

25(a) Superannuation annuity.--Attainment of superannuation 
26age by an active member [or], an inactive member on leave 
27without pay or a combined service employee who is an active 
28participant or inactive participant on leave without pay with 
29three or more eligibility points other than eligibility points 
30resulting from nonstate service or nonschool service shall
 

1entitle him to receive a superannuation annuity upon termination 
2of State service and compliance with section 5907(f) (relating 
3to rights and duties of State employees [and], members and 
4participants).

5(b) Withdrawal annuity.--

6(1) Any vestee or any active member [or], inactive
7member on leave without pay or a combined service employee 
8who is an active participant or inactive participant on leave 
9without pay who terminates State service having five or more
10eligibility points and who does not have Class A-3 or Class 
11A-4 service credit or Class T-E or Class T-F service credit 
12in the Public School Employees' Retirement System, or who has
13Class G, Class H, Class I, Class J, Class K, Class L, Class M
14or Class N service and terminates State service having five
15or more eligibility points, upon compliance with section
165907(f), (g) or (h) shall be entitled to receive an annuity.

17(2) Any vestee, active member [or], inactive member on 
18leave without pay or combined service employee who is an 
19active participant or inactive participant on leave without 
20pay who has Class A-3 or Class A-4 service credit or Class T-
21E or Class T-F service credit in the Public School Employees' 
22Retirement System who terminates State service having ten or 
23more eligibility points, upon compliance with section 
245907(f), (g) or (h), shall be entitled to receive an annuity.

25(3) Any vestee, active member [or], inactive member on 
26leave without pay or combined service employee who is an 
27active participant or inactive participant on leave without 
28pay who has either Class A-3 or Class A-4 service credit or 
29Class T-E or Class T-F service credit in the Public School 
30Employees' Retirement System and also has service credited in
 

1the system in one or more other classes of service who has 
2five or more, but fewer than ten, eligibility points, upon 
3compliance with section 5907(f), (g) or (h), shall be 
4eligible to receive an annuity calculated on his service 
5credited in classes of service other than Class A-3 or Class 
6A-4, provided that the member has five or more eligibility 
7points resulting from service in classes other than Class A-3 
8or Class A-4 or Class T-E or Class T-F service in the Public 
9School Employees' Retirement System.

10* * *

11(d) Eligibility of combined service employees for
12superannuation annuity.--A State employee who is an active
13member or inactive member on leave without pay on January 1,
142015, and who elects to become a participant under section 5416
15(relating to election by members to be participants) will be
16deemed to have satisfied the requirement of three or more years
17of credited State or school service under subsection (a) if the
18State employee does not terminate State service before three
19years after the effective date of the election to be a
20participant. Nothing in this subsection amends or waives any
21other requirement to be eligible for a superannuation annuity.

22Section 11. Sections 5308.1(1) and 5311(a) of Title 71 are
23amended to read:

24§ 5308.1. Eligibility for special early retirement.

25Notwithstanding any provisions of this title to the contrary,
26the following special early retirement provisions shall be
27applicable to specified eligible members as follows:

28(1) During the period of July 1, 1985, to September 30,
291991, an active member who has attained the age of at least
3053 years and has accrued at least 30 eligibility points shall

1be entitled, upon termination of State service and compliance
2with section 5907(f) (relating to rights and duties of State
3employees [and], members and participants), to receive a
4maximum single life annuity calculated under section 5702
5(relating to maximum single life annuity) without a reduction
6by virtue of an effective date of retirement which is under
7the superannuation age.

8* * *

9§ 5311. Eligibility for refunds.

10(a) Total accumulated deductions.--Any active member,
11regardless of eligibility for benefits, may elect to receive his
12total accumulated deductions upon termination of service in lieu
13of any benefit from the system to which he is entitled.

14* * *

15Section 12. Title 71 is amended by adding a chapter to read:

16CHAPTER 54

17STATE EMPLOYEES' DEFINED CONTRIBUTION PLAN

18Sec.

195401. Establishment.

205402. Plan document.

215403. Individual investment accounts.

225404. Participant contributions.

235405. Mandatory pickup participant contributions.

245406. Employer defined contributions.

255407. Eligibility for benefits.

265408. Death benefits.

275409. Vesting.

285410. Termination of distributions.

295411. Agreements with financial institutions and other
30organizations.

15412. Powers and duties of board.

25413. Responsibility for investment loss.

35414. Investments based on participants' investment allocation
4choices.

55415. Expenses.

65416. Election by members to be participants.

75417. Required distributions.

8§ 5401. Establishment.

9(a) State Employees' Defined Contribution Plan.--The State
10Employees' Defined Contribution Plan is established. The board
11shall administer and manage the plan which shall be a defined
12contribution plan exclusively for the benefit of those State
13employees who participate in the plan and their beneficiaries
14within the meaning of and in conformity with IRC § 401(a). The
15board shall determine the terms and provisions of the plan not
16inconsistent with this part, IRC or other applicable law and
17shall provide for the plan's administration.

18(b) State Employees' Defined Contribution Trust.--The State
19Employees' Defined Contribution Trust is established as part of
20the State Employees' Defined Contribution Plan. The trust shall
21be comprised of the individual investment accounts and all
22assets and moneys in those accounts. The members of the board
23shall be the trustees of the trust established under this
24section which shall be administered exclusively for the benefit
25of those State employees who participate in the plan and their
26beneficiaries within the meaning of and conformity with IRC §
27401(a). The board shall determine the terms and provisions of
28the trust not inconsistent with this part, IRC or other
29applicable law and shall provide for the investment and
30administration of the trust.

1(c) Holding of assets.--All assets and income in the plan
2that have been or shall be withheld or contributed by the
3participants, the Commonwealth and other employers in accordance
4with this part shall be held in trust in any funding vehicle
5permitted by the applicable provisions of IRC for the exclusive
6benefit of the plan's participants and their beneficiaries until
7such time as the funds are distributed to the participants or
8their beneficiaries in accordance with the terms of the plan
9document. The assets of the plan held in trust for the exclusive
10benefit of the plan's participants and their beneficiaries may
11be used for the payment of the fees, costs and expenses related
12to the administration and investment of the plan and the trust.

13(d) Name for transacting business.--All of the business of
14the plan shall be transacted, the trust invested, all
15requisitions for money drawn and payments made and all of its
16cash and securities and other property shall be held by the name
17of the "State Employees' Defined Contribution Plan," except
18that, any other law to the contrary notwithstanding, the board
19may establish a nominee registration procedure for the purpose
20of registering securities in order to facilitate the purchase,
21sale or other disposition of securities pursuant to the
22provisions of this part.

23§ 5402. Plan document.

24The board shall set forth the terms and provisions of the
25plan and trust in a document containing the terms and conditions
26of the plan and in a trust declaration that shall be published
27in the Pennsylvania Bulletin. The creation of the document
28containing the terms and conditions of the plan and the trust
29declaration and the establishment of the terms and provisions of
30the plan and the trust need not be promulgated by regulation or

1formal rulemaking and shall not be subject to the act of July
231, 1968 (P.L.769, No.240), referred to as the Commonwealth
3Documents Law. A reference in this part or other law to the plan
4shall include the plan document unless the context clearly
5indicates otherwise.

6§ 5403. Individual investment accounts.

7The board shall establish in the trust an individual
8investment account for each participant in the plan. All
9contributions by a participant or an employer for or on behalf
10of a participant shall be credited to the participant's
11individual investment account, together with all interest and
12investment earnings and losses. Investment and administrative
13fees, costs and expenses shall be charged to the participants'
14individual investment accounts. Employer defined contributions 
15shall be recorded and accounted for separately from participant 
16contributions, but all interest, investment earnings and losses, 
17and investment and administrative fees, costs and expenses shall 
18be allocated proportionately.

19§ 5404. Participant contributions.

20(a) Mandatory contributions.--Each participant shall make
21mandatory pickup participant contributions through payroll
22deductions to the participant's individual investment account
23equal to 4% of compensation for current State service. The
24employer shall cause such contributions for current service to
25be made and deducted from each payroll or on such schedule as
26established by the board.

27(b) Voluntary contributions.--A participant may make 
28voluntary contributions through payroll deductions or through 
29direct trustee-to-trustee transfers or through transfers of 
30money received in an eligible rollover into the trust to the
 

1extent allowed by IRC § 402. Such rollovers shall be made in a 
2form and manner as determined by the board, shall be credited to 
3the participant's individual investment account and shall be 
4separately accounted for by the board.

5(c) Prohibited contributions.--No contributions shall be
6allowed which would cause a violation of the limitations related
7to contributions applicable to governmental plans contained in
8IRC § 415 or in other provisions of law. In the event that any
9disallowed contributions are made, any participant contributions
10in excess of the limitations and investment earnings thereon
11shall be refunded to the participant by the board.

12§ 5405. Mandatory pickup participant contributions.

13(a) Treatment for purposes of IRC § 414(h).--All
14contributions to the trust required to be made under section
155404(a) (relating to participant contributions) with respect to
16current State service rendered by an active participant shall be
17picked up by the Commonwealth or other employer and shall be
18treated as the employer's contribution for purposes of IRC §
19414(h). After the effective date of this section, an employer 
20employing a participant in the plan shall pick up the required 
21mandatory participant contributions by a reduction in the 
22compensation of the participant.

23(b) Treatment for other purposes.--For all purposes other
24than the IRC, such mandatory pickup participant contributions
25shall be treated as contributions made by a participant in the
26same manner and to the same extent as if the contributions were
27made directly by the participant and not picked up.

28§ 5406. Employer defined contributions.

29(a) Contributions for current service.--The Commonwealth or
30other employer of a participant shall make employer defined

1contributions for current service of each active participant
2which shall be credited to each respective participant's
3individual investment account.

4(b) Contributions resulting from participants reemployed
5from USERRA leave.--When a State employee reemployed from USERRA
6leave makes the mandatory pickup participant contributions
7permitted to be made for the USERRA leave, the Commonwealth or
8other employer by whom the State employee is employed at the
9time the participant contributions are made shall make whatever
10employer defined contributions would have been made under this
11section had the employee making the participant contributions
12continued to be employed in the employee's State office or
13position instead of performing USERRA leave. Such employer
14defined contributions shall be placed in the participant's
15individual investment account as otherwise provided by this
16part.

17(c) Limitations on contributions.--No contributions shall be
18allowed which would cause a violation of the limitations related
19to contributions applicable to governmental plans contained in
20IRC § 415 or in other provisions of law. In the event that any
21disallowed contributions are made, any employer defined
22contributions in excess of the limitations and investment
23earnings thereon shall be refunded to the employer by the board.

24§ 5407. Eligibility for benefits.

25(a) Termination of service.--A participant who terminates
26State service shall be eligible to withdraw the accumulated
27total defined contributions standing to his credit in the
28participant's individual investment account or such lesser
29amount as the participant may request. Payment shall be made in
30a lump sum unless the board has established other forms of

1distribution in the plan document. A participant who withdraws
2his accumulated total defined contributions shall no longer be a
3participant in the plan, notwithstanding that the participant
4may have contracted to receive an annuity or other form of
5payment from a provider retained by the board for such purposes.

6(b) Required distributions.--All payments pursuant to this
7section shall start and be made in compliance with the minimum
8distribution requirements and incidental death benefit rules of
9IRC § 401(a)(9). The board shall take any action and make any
10distributions it may determine are necessary to comply with such
11requirements.

12(c) Combined service participant.--A participant who is a
13combined service employee must be terminated from all positions
14that result in either membership in the system or participation
15in the plan to be eligible to receive a distribution.

16(d) Loans.--Loans or other distributions from the plan to
17State employees who have not terminated State service are not
18permitted, except as required by law.

19(e) Small individual investment accounts.--A participant who
20terminates State service and whose accumulated total defined
21contributions are below the threshold established by law as of
22the date of termination of service may be paid the accumulated
23total defined contributions in a lump sum as provided in IRC §
24401(a)(31).

25§ 5408. Death benefits.

26(a) General rule.--In the event of the death of an active
27participant or inactive participant, the board shall pay to the
28participant's beneficiary the balance in the participant's
29individual investment account in a lump sum or in such other
30manner as the board may establish in the plan document.

1(b) Death of participant receiving distributions.--In the
2event of the death of a participant receiving distributions, the
3board shall pay to the participant's beneficiary the balance in
4the participant's individual investment account in a lump sum or
5in such other manner as the board may establish in the plan
6document or, if the board has established alternative methods of
7distribution in the plan document under which the participant
8was receiving distributions, to the participant's beneficiary or
9successor payee, as the case may be, as provided in the plan
10document.

11(c) Contracts.--The board may contract with financial
12institutions, insurance companies or other types of third-party
13providers to allow participants who receive a lump sum
14distribution to receive payments and death benefits in a form
15and manner as provided by the contract.

16§ 5409. Vesting.

17Subject to the forfeiture and attachment provisions of
18section 5953 (relating to taxation, attachment and assignment of
19funds) or otherwise as provided by law, a participant shall be
20100% vested with respect to all mandatory pickup participant
21contributions, voluntary contributions and employer defined
22contributions paid by or on behalf of the participant to the
23trust in addition to interest and earnings on the participant
24and employer contributions but not including investment fees and
25administrative charges.

26§ 5410. Termination of distributions.

27(a) Return to State service.--A participant receiving
28distributions or an inactive participant who returns to State
29service shall cease receiving distributions and shall not be
30eligible to receive distributions until the participant

1subsequently terminates State service, without regard to whether
2the participant is a mandatory, optional or prohibited member of
3the system or participant in the plan.

4(b) Return of benefits paid during USERRA leave.--If a
5former State employee is reemployed from USERRA leave and has
6previously received any payments or annuity from the plan during
7the USERRA leave, the employee shall return to the board the
8amount so received plus interest as provided in the plan
9document. The amount payable shall be certified in each case by
10the board in accordance with methods approved by the actuary and
11shall be paid in a lump sum within 30 days, or in the case of an
12active participant, may be amortized with interest as provided
13in the plan document through salary deductions to the trust in
14amounts agreed upon by the participant and the board, but for
15not longer than a period that starts with the date of
16reemployment and continues for up to three times the length of
17the participant's immediate past period of USERRA leave. The
18repayment period shall not exceed five years.

19§ 5411. Agreements with financial institutions and other
20organizations.

21To establish and administer the State Employees' Defined
22Contribution Plan, the board shall have the power to enter into
23written agreements with one or more financial institutions or
24other organizations relating to the plan's administration and
25investment of funds held pursuant to the plan.

26§ 5412. Powers and duties of board.

27The board shall have the following powers and duties to
28establish the plan and trust and administer the provisions of
29this chapter and part:

30(1) The board may commingle or pool assets with the

1assets of other persons or entities.

2(2) The board shall pay all administrative fees, costs
3and expenses of managing, investing and administering the
4plan, the trust and the individual investment accounts from
5the balance of such individual investment accounts except as
6may be provided otherwise by law.

7(3) The board may establish investment guidelines and
8limits on the types of investments that participants may
9make, consistent with the board's fiduciary obligations.

10(4) The board shall at all times have the power to
11change the terms of the plan as may be necessary to maintain
12the tax-qualified status of the plan.

13(5) The board may establish a process for election to
14participate in the plan by those State employees for whom
15participation is not mandatory.

16(6) The board may perform an annual review of any
17qualified fund manager for the purpose of assuring that the
18fund manager continues to meet all standards and criteria
19established.

20(7) The board may allow for eligible rollovers and
21direct trustee-to-trustee transfers into the trust from
22qualified plans of other employers, regardless of whether the
23employers are private employers or public employers.

24(8) The board may allow a former participant to maintain
25his or her individual investment account within the plan.

26(9) The board shall administer the program in compliance
27with the qualifications and other rules of the IRC.

28(10) The board may establish procedures to provide for
29the lawful payment of benefits.

30(11) The board shall determine what constitutes a

1termination of State service.

2(12) The board may establish procedures for
3distributions of small accounts as required or permitted by
4the IRC.

5(13) The board shall have the power to establish
6procedures in the plan document or to promulgate rules and
7regulations as it deems necessary for the administration and
8management of the plan, including, but not limited to,
9establishing:

10(i) Procedures whereby eligible participants may
11change voluntary contribution amounts or their investment
12choices on a periodic basis or make other elections
13regarding their participation in the plan.

14(ii) Procedures for deducting mandatory pickup
15participant contributions and voluntary contributions
16from a participant's compensation.

17(iii) Procedures for rollovers and trustee-to-
18trustee transfers allowed under the IRC and permitted as
19part of the plan.

20(iv) Standards and criteria for disclosing and
21providing options to eligible individuals regarding
22investments of amounts deferred under the plan, provided
23that one of the available options must serve as the
24default option for participants who do not make a timely
25election and that, to the extent commercially available,
26one option must have an annuity investment feature.

27(v) Standards and criteria for disclosing to the
28participants the anticipated and actual income
29attributable to amounts invested, property rights and all
30fees, costs and charges to be made against amounts

1deferred to cover the fees, costs and expenses of
2administering and managing the plan or trust.

3(vi) Procedures, standards and criteria for the
4making of distributions from the plan upon termination
5from employment or death or in other circumstances
6consistent with the purpose of the plan.

7(14) The board may waive any reporting or information
8requirement contained in this part if the board determines
9that the information is not needed for the administration of
10the plan.

11(15) The board may contract any services and duties in
12lieu of staff, except final adjudications or if prohibited by
13law. Any duties or responsibilities of the board not required
14by law to be performed by the board can be delegated to a
15third-party provider subject to appeal to the board.

16(16) The board may provide that any duties of the
17employer or information provided by the participant to the
18employer can be performed or received directly by the board.

19(17) The provisions and restrictions of the act of July
202, 2010 (P.L.266, No.44), known as the Protecting
21Pennsylvania's Investments Act, shall not apply to the plan
22or trust or the investments thereof, but the board is
23authorized to offer to the plan participants investment
24vehicles that would be permitted under the Protecting
25Pennsylvania's Investments Act.

26§ 5413. Responsibility for investment loss.

27The board, the Commonwealth, an employer or other political
28subdivision shall not be responsible for any investment loss
29incurred under the plan, or for the failure of any investment to
30earn any specific or expected return or to earn as much as any

1other investment opportunity, whether or not such other
2opportunity was offered to participants in the plan.

3§ 5414. Investments based on participants' investment
4allocation choices.

5(a) General rule.--All contributions, interest and
6investment earnings shall be 100% vested and shall be invested
7based on the participant's investment allocation choices. All 
8investment allocation choices shall be credited proportionally 
9between participant contributions and employer defined 
10contributions. Each participant shall be credited individually
11with the amount of contributions, interest and investment
12earnings.

13(b) Investment of contributions made by entities other than
14the Commonwealth.--Investment of contributions by any
15corporation, institution, insurance company or custodial bank
16that the board has approved shall not be unreasonably delayed,
17and in no case shall the investment of contributions be delayed
18more than 30 days from the date of payroll deduction or the date
19voluntary contributions are made to the date that funds are
20invested. Any interest earned on the funds pending investment
21shall be allocated to the Commonwealth and credited to the
22individual investment accounts of participants who are then
23participating in the plan unless the interest is used to defray
24administrative costs and fees that would otherwise be required
25to be borne by participants who are then participating in the
26plan.

27§ 5415. Expenses.

28All fees, costs and expenses of administering the plan and
29the trust and investing the assets of the trust shall be borne
30by the participants and paid from assessments against the

1balances of the individual investment accounts as established by
2the board, except as may be provided otherwise by law.

3§ 5416. Election by members to be participants.

4(a) General rule.--Any State employee who is an active
5member or inactive member on leave without pay of the system on
6or after January 1, 2015, and who is employed in a position
7which would otherwise be eligible for participation in the plan
8may elect to become a participant in the plan.

9(b) Time for making the election.--An eligible State
10employee may elect to become a participant and a combined
11service employee at any time before termination of State service
12by filing a written election with the board.

13(c) Effect of election.--An election to become a participant
14shall be irrevocable. Participation shall be effective at the
15beginning of the next pay period starting after the election is
16filed with the board. A member who elects to become a
17participant shall remain a participant for all future State
18service. Any prior State or nonstate service credited in the
19system shall remain in the class of service in which it is
20credited on the effective date of participation. A combined
21service employee shall not be eligible to receive an annuity
22from the system or a withdrawal of accumulated deductions until
23the employee has terminated State service. A participant shall
24not be entitled to purchase any previous State service or
25creditable nonstate service. The eligibility of a combined
26service employee for an annuity from the system and, if
27eligible, the amount of such annuity shall be as determined
28under this part.

29§ 5417. Required distributions.

30All payments pursuant to this chapter shall start and be made

1in compliance with the minimum distribution requirements and
2incidental death benefit rules of IRC § 401(a).

3Section 13. Section 5501.1(b)(7) and (8) of Title 71 are
4amended and the subsection is amended by adding a paragraph to
5read:

6§ 5501.1. Shared-risk member contributions for Class A-3 and
7Class A-4 service.

8* * *

9(b) Determination of shared-risk contribution rate.--

10* * *

11(7) For any fiscal year in which the actual 
12contributions by the Commonwealth or an employer are lower 
13than those required to be made under section 5507(d) 
14[(relating to contributions by the Commonwealth and other 
15employers)] (relating to contributions to the system by the 
16Commonwealth and other employers before July 1, 2015) or 
175507.1 (relating to contributions to the system by the 
18Commonwealth and other employers starting July 1, 2015), the 
19prospective shared-risk contribution rate for those employees 
20whose employers are not making the contributions required by 
21section 5507(d) shall be zero and shall not subsequently be 
22increased, except as otherwise provided in this section.

23(8) If the actuary certifies that the accrued liability
24contributions calculated in accordance with the actuarial
25cost method provided in [section 5508(b)] section 5508
26(relating to actuarial cost method for fiscal years ending 
27before July 1, 2015) or 5508.1 (relating to actuarial cost 
28method for fiscal years beginning July 1, 2015, or later), as
29adjusted by the experience adjustment factor, are zero or
30less, then the shared-risk contribution rate for the next

1fiscal year shall be zero and shall not subsequently be
2increased, except as otherwise provided in this section.

3(9) For periods commencing on or after July 1, 2015, the
4determination of shared-risk member contribution rate shall
5be based on the annual interest rate adopted by the board for
6the calculation of the accrued liability contribution rate
7under section 5508.1(c).

8Section 14. The definition of "actuarially required
9contribution rate" in section 5501.2 of Title 71 is amended to
10read:

11§ 5501.2. Definitions.

12The following words and phrases when used in this chapter
13shall have the meanings given to them in this section unless the
14context clearly indicates otherwise:

15"Actuarially required contribution rate." The employer 
16contribution rate as calculated pursuant to section 5508(a), 
17(b), (c), (e) and (f) (relating to actuarial cost method for 
18fiscal years ending before July 1, 2015) or 5508.1(a), (b), (c), 
19(e) and (f) (relating to actuarial cost method for fiscal years 
20beginning July 1, 2015, or later).

21* * *

22Section 15. Sections 5502, 5503.1(a) and 5504(a)(1), (a.1)
23and (b) of Title 71 are amended to read:

24§ 5502. Social Security integration member contributions.

25Except for any period of current service in which the making 
26of regular member contributions has ceased solely by reason of 
27section 5502.1 (relating to waiver of regular member 
28contributions and Social Security integration member 
29contributions) or any provision of this part relating to 
30limitations under IRC § 401(a)(17) or 415(b), contributions
 

1shall be made on behalf of [a] an active member of any class who 
2prior to March 1, 1974, has elected Social Security integration 
3coverage. The amount of such contributions shall be 6 1/4% of 
4that portion of his compensation as an active member in excess 
5of the maximum wages taxable under the provisions of the Social 
6Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), in 
7addition to the regular member contributions which, after such 
8election, shall be determined on the basis of the basic 
9contribution rate of 5% and the additional member contribution 
10of 1 1/4%: Provided, That a member may elect to discontinue 
11Social Security integration coverage and shall thereafter be 
12ineligible to accrue any further Social Security integration 
13credits or any additional benefits on account of Social Security 
14integration membership.

15§ 5503.1. Pickup contributions.

16(a) Treatment for purposes of IRC § 414(h).--All
17contributions to the fund required to be made under sections
185501 (relating to regular member contributions for current
19service), 5501.1 (relating to shared-risk member contributions 
20for Class A-3 and Class A-4 service), 5502 (relating to Social
21Security integration member contributions), 5503 (relating to
22joint coverage member contributions) and [section] 5505.1
23(relating to additional member contributions), with respect to
24current State service rendered by an active member on or after
25January 1, 1982, shall be picked up by the Commonwealth or other
26employer and shall be treated as the employer's contribution for
27purposes of IRC § 414(h).

28* * *

29§ 5504. Member contributions for the purchase of credit for
30previous State service or to become a full coverage

1member.

2(a) Amount of contributions for service in other than Class
3G through N.--

4(1) The contributions to be paid by an active member or
5eligible school employee for credit in the system for total
6previous State service other than service in Class G, Class
7H, Class I, Class J, Class K, Class L, Class M and Class N or
8to become a full coverage member shall be sufficient to
9provide an amount equal to the regular and additional
10accumulated deductions which would have been standing to the
11credit of the member for such service had regular and
12additional member contributions been made with full coverage
13in the class of service and at the rate of contribution
14applicable during such period of previous service and had his
15regular and additional accumulated deductions been credited
16with statutory interest during all periods of subsequent
17State service as an active member or inactive member on leave 
18without pay and school service as an active member or 
19inactive member on leave without pay of the Public School 
20Employees' Retirement System up to the date of purchase.

21* * *

22(a.1) Converted county service.--No contributions shall be
23required to restore credit for previously credited State service
24in Class G, Class H, Class I, Class J, Class K, Class L, Class M
25and Class N. Such service shall be restored upon the
26commencement of payment of the contributions required to restore
27credit in the system for all other previous State service.

28(b) Certification and method of payment.--The amount payable 
29shall be certified in each case by the board in accordance with 
30methods approved by the actuary and shall be paid in a lump sum
 

1within 30 days or in the case of an active member or eligible 
2school employee who is an active member of the Public School 
3Employees' Retirement System may be amortized with statutory 
4interest through salary deductions to the system in amounts 
5agreed upon by the member and the board. The salary deduction 
6amortization plans agreed to by members and the board may 
7include a deferral of payment amounts and statutory interest 
8until the termination of school service or State service or 
9beginning service as a participant as the board in its sole 
10discretion decides to allow. The board may limit the salary 
11deduction amortization plans to such terms as the board in its 
12sole discretion determines. In the case of an eligible school 
13employee who is an active member of the Public School Employees' 
14Retirement System, the agreed upon salary deductions shall be 
15remitted to the Public School Employees' Retirement Board, which 
16shall certify and transfer to the board the amounts paid.

17Section 16. Section 5505(b)(1), (c), (d) and (i)(4) of Title
1871, amended October 24, 2012 (P.L.1436, No.181), are amended to
19read:

20§ 5505. Contributions for the purchase of credit for creditable
21nonstate service.

22* * *

23(b) Nonintervening military service.--

24(1) The amount due for the purchase of credit for 
25military service other than intervening military service 
26shall be determined by applying the member's basic 
27contribution rate, the additional contribution rate plus the 
28Commonwealth normal contribution rate for active members at 
29the time of entry, subsequent to such military service, of 
30the member into State service to his average annual rate of
 

1compensation over the first three years of such subsequent 
2State service and multiplying the result by the number of 
3years and fractional part of a year of creditable 
4nonintervening military service being purchased together with 
5statutory interest during all periods of subsequent State 
6service as an active member or inactive member on leave 
7without pay and school service as an active member or 
8inactive member on leave without pay of the Public School 
9Employees' Retirement System to date of purchase. Upon 
10application for credit for such service, payment shall be 
11made in a lump sum within 30 days or in the case of an active 
12member or eligible school employee who is an active member of 
13the Public School Employees' Retirement System it may be 
14amortized with statutory interest through salary deductions 
15to the system in amounts agreed upon by the member and the 
16board. The salary deduction amortization plans agreed to by 
17members and the board may include a deferral of payment 
18amounts and statutory interest until the termination of 
19school service or State service or beginning service as a 
20participant as the board in its sole discretion decides to 
21allow. The board may limit salary deduction amortization 
22plans to such terms as the board in its sole discretion 
23determines. In the case of an eligible school employee who is 
24an active member of the Public School Employees' Retirement 
25System, the agreed upon salary deductions shall be remitted 
26to the Public School Employees' Retirement Board, which shall 
27certify and transfer to the board the amounts paid. 
28Application may be filed for all such military service credit 
29upon completion of three years of subsequent State service 
30and shall be credited as Class A service.

1* * *

2(c) Intervening military service.--Contributions on account
3of credit for intervening military service shall be determined
4by the member's regular contribution rate, shared-risk 
5contribution rate, Social Security integration contribution 
6rate, the additional contribution rate which shall be applied
7only to those members who began service on or after the
8effective date of this amendatory act and compensation at the
9time of entry of the member into active military service,
10together with statutory interest during all periods of
11subsequent State service as an active member or inactive member 
12on leave without pay and school service as an active member or 
13inactive member on leave without pay of the Public School 
14Employees' Retirement System to date of purchase. Upon
15application for such credit the amount due shall be certified in
16the case of each member by the board in accordance with methods
17approved by the actuary, and contributions may be made by:

18(1) regular monthly payments during active military
19service; or

20(2) a lump sum payment within 30 days of certification;
21or

22(3) salary deductions to the system in amounts agreed
23upon by the member or eligible school employee who is an
24active member of the Public School Employees' Retirement
25System and the board.

26The salary deduction amortization plans agreed to by members and
27the board may include a deferral of payment amounts and
28statutory interest until the termination of school service or
29State service or beginning service as a participant as the board
30in its sole discretion decides to allow. The board may limit

1salary deduction amortization plans to such terms as the board
2in its sole discretion determines. In the case of an eligible
3school employee who is an active member of the Public School
4Employees' Retirement System, the agreed upon salary deductions
5shall be remitted to the Public School Employees' Retirement
6Board, which shall certify and transfer to the board the amounts
7paid.

8(d) Nonmilitary and nonmagisterial service.--Contributions 
9on account of credit for creditable nonstate service other than 
10military and magisterial service by State employees who first 
11become members of the system before January 1, 2011, or before 
12December 1, 2010, as a member of the General Assembly shall be 
13determined by applying the member's basic contribution rate, the 
14additional contribution rate plus the Commonwealth normal 
15contribution rate for active members at the time of entry 
16subsequent to such creditable nonstate service of the member 
17into State service to his compensation at the time of entry into 
18State service as a member of the system and multiplying the 
19result by the number of years and fractional part of a year of 
20creditable nonstate service being purchased together with 
21statutory interest during all periods of subsequent State 
22service as an active member or inactive member on leave without 
23pay and school service as an active member or inactive member on 
24leave without pay of the Public School Employees' Retirement 
25System to the date of purchase. Upon application for credit for 
26such service payment shall be made in a lump sum within 30 days 
27or in the case of an active member or eligible school employee 
28who is an active member of the Public School Employees' 
29Retirement System it may be amortized with statutory interest 
30through salary deductions to the system in amounts agreed upon
 

1by the member and the board. The salary deduction amortization 
2plans agreed to by members and the board may include a deferral 
3of payment amounts and statutory interest until the termination 
4of school service or State service or beginning service as a 
5participant as the board in its sole discretion decides to 
6allow. The board may limit salary deduction amortization plans 
7to such terms as the board in its sole discretion determines. In 
8the case of an eligible school employee who is an active member 
9of the Public School Employees' Retirement System, the agreed 
10upon salary deduction shall be remitted to the Public School 
11Employees' Retirement Board, which shall certify and transfer to 
12the board the amounts paid.

13* * *

14(i) Purchases of nonstate service credit by State employees
15who first became members of the system on or after December 1,
162010.--

17* * *

18(4) The payment for credit purchased under this 
19subsection shall be certified in each case by the board in 
20accordance with methods approved by the actuary and shall be 
21paid in a lump sum within 30 days or in the case of an active 
22member or eligible school employee who is an active member of 
23the Public School Employees' Retirement System may be 
24amortized with statutory interest through salary deductions 
25to the system in amounts agreed upon by the member and the 
26board. The salary deduction amortization plans agreed to by 
27members and the board may include a deferral of payment 
28amounts and interest until the termination of school service 
29or State service or beginning service as a participant as the 
30board in its sole discretion decides to allow. The board may
 

1limit the salary deduction amortization plans to such terms 
2as the board in its sole discretion determines. In the case 
3of an eligible school employee who is an active member of the 
4Public School Employees' Retirement System, the agreed upon 
5salary deductions shall be remitted to the Public School 
6Employees' Retirement Board, which shall certify and transfer 
7to the board the amounts paid.

8Section 17. Section 5505.1 of Title 71 is amended to read:

9§ 5505.1. Additional member contributions.

10In addition to regular or joint coverage member contributions
11and social security integration contributions, contributions
12shall be made on behalf of each active member, regardless of
13class of service, at the rate of 1 1/4% of compensation until
14such time as the actuary certifies that all accrued liability
15contributions have been completed in accordance with the
16actuarial cost method provided in section 5508(b) (relating to
17actuarial cost method for fiscal years ending before July 1, 
182015).

19Section 18. Section 5506 of Title 71, amended October 24,
202012 (P.L.1436, No.181), is amended to read:

21§ 5506. Incomplete payments.

22In the event that a member terminates State service or 
23becomes a participant or a multiple service member who is an 
24active member of the Public School Employees' Retirement System 
25terminates school service before the agreed upon payments for 
26credit for previous State service, USERRA leave, creditable 
27nonstate service, social security integration, full coverage 
28membership or return of benefits on account of returning to 
29State service or entering school service and electing multiple 
30service have been completed, the member or multiple service
 

1member who is an active member of the Public School Employees' 
2Retirement System shall have the right to pay within 30 days of 
3termination of State service or school service or becoming a 
4participant the balance due, including interest, in a lump sum 
5and the annuity shall be calculated including full credit for 
6the previous State service, creditable nonstate service, social 
7security integration, or full coverage membership. In the event 
8a member does not pay the balance due within 30 days of 
9termination of State service or becoming a participant or in the 
10event a member dies in State service or within 30 days of 
11termination of State service or becoming a participant or in the 
12case of a multiple service member who is an active member of the 
13Public School Employees' Retirement System does not pay the 
14balance due within 30 days of termination of school service or 
15dies in school service or within 30 days of termination of 
16school service and before the agreed upon payments have been 
17completed, the present value of the benefit otherwise payable 
18shall be reduced by the balance due, including interest, and the 
19benefit payable shall be calculated as the actuarial equivalent 
20of such reduced present value.

21Section 19. Section 5506.1(a) of Title 71 is amended to
22read:

23§ 5506.1. Annual compensation limit under IRC § 401(a)(17).

24(a) General rule.--In addition to other applicable
25limitations set forth in this part, and notwithstanding any
26provision of this part to the contrary, the annual compensation
27of each noneligible member and each participant taken into
28account for benefit purposes under this part shall not exceed
29the limitation under IRC § 401(a)(17). On and after January 1,
301996, any reference in this part to the limitation under IRC §

1401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
21993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
3compensation limit set forth in this subsection. The OBRA '93
4annual compensation limit is $150,000, as adjusted by the
5commissioner for increases in the cost of living in accordance
6with IRC § 401(a)(17)(B). The cost-of-living adjustment in
7effect for a calendar year applies to any determination period
8which is a period, not exceeding 12 months, over which
9compensation is determined, beginning in such calendar year. If
10a determination period consists of fewer than 12 months, the
11OBRA '93 compensation limit will be multiplied by a fraction,
12the numerator of which is the number of months in the
13determination period and the denominator of which is 12.

14* * *

<-15Section 19.1. Title 71 is amended by adding a section to
16read:

17§ 5506.3.  Adjustment of compensation for calculating final
18average salary on or after January 1, 2015.

19For purposes of calculating final average salary for the
20determination of standard single life annuities resulting from
21post-January 2015 service, the compensation received each
22calendar year as a member of the system or, if a multiple
23service member, received as both a member of the system and as a
24school employee and member of the Public School Employees'
25Retirement System shall be adjusted first by annualizing the
26compensation received for any part-time service or for any
27partial year of credit on the basis of the fractional portion of
28the year for which credit is received. After annualization, the
29amount of compensation in any calendar year shall be further
30adjusted downward if necessary so as not to exceed 110% of the

1average of the annualized compensation of the four immediately
2previous calendar years in which the State employee was an
3active member, or, if a multiple service member, an active
4member of the system or Public School Employees' Retirement
5System. If for any calendar year there are one or more, but less
6than four, preceding calendar years in which the State employee
7was an active member of the system or, if a multiple service
8member, also an active member of the Public School Employees'
9Retirement System, then the adjusted compensation may not exceed
10110% of the average of the annualized compensation of the number
11of preceding years of active membership in the system or the
12Public School Employees' Retirement System.

13Section 20. Section 5507(a), (b), (d), (e) and (f) of Title
1471, amended October 24, 2012 (P.L.1436, No.181), are amended to
15read:

16§ 5507. Contributions to the system by the Commonwealth and
17other employers before July 1, 2015.

18(a) Contributions on behalf of active members.--[The] Until 
19June 30, 2015, the Commonwealth and other employers whose
20employees are members of the system, and from January 1, 2015, 
21to June 30, 2015, the Commonwealth and other employers whose 
22employees are participants in the plan, shall make contributions
23to the fund on behalf of all active members in such amounts as
24shall be certified by the board as necessary to provide,
25together with the members' total accumulated deductions, annuity
26reserves on account of prospective annuities other than those
27provided in sections 5708 (relating to supplemental annuities), 
285708.1 (relating to additional supplemental annuities), 5708.2 
29(relating to further additional supplemental annuities), 5708.3 
30(relating to supplemental annuities commencing 1994), 5708.4
 

1(relating to special supplemental postretirement adjustment), 
25708.5 (relating to supplemental annuities commencing 1998), 
35708.6 (relating to supplemental annuities commencing 2002), 
45708.7 (relating to supplemental annuities commencing 2003) and 
55708.8 (relating to special supplemental postretirement 
6adjustment of 2002), in accordance with the actuarial cost
7method provided in section 5508(a), (b), (c), (d) and (f)
8(relating to actuarial cost method for fiscal years ending 
9before July 1, 2015).

10(b) Contributions on behalf of annuitants.--[The] Until June 
1130, 2015, the Commonwealth and other employers whose employees 
12are members of the system shall make contributions on behalf of
13annuitants in such amounts as shall be certified by the board as
14necessary to fund the liabilities for supplemental annuities in
15accordance with the actuarial cost method provided in section
165508(e) [(relating to actuarial cost method)].

17* * *

18(d) Payment of final contribution rate.--Notwithstanding the
19calculation of the actuarially required contribution rate and
20the provisions of subsections (a) and (b), until June 30, 2015,
21the Commonwealth and other employers whose employees are members
22of the system shall make contributions to the fund on behalf of
23all active members and annuitants in such amounts as shall be
24certified by the board in accordance with section 5508(i).

25(e) Benefits completion plan contributions.--In addition to 
26all other contributions required under this section and section 
275508, until June 30, 2015, the Commonwealth and other employers 
28whose employees are members of the system shall make 
29contributions as certified by the board pursuant to section 5941 
30(relating to benefits completion plan).

1(f) Contributions resulting from members reemployed from 
2USERRA leave.--When a State employee reemployed from USERRA 
3leave makes the member contributions required to be granted 
4State service credit for the USERRA leave before July 1, 2015, 
5either by actual payment or by actuarial debt under section 5506 
6(relating to incomplete payments), then the Commonwealth 
7employer or other employer by whom the State employee is 
8employed at the time the member contributions are made, or the 
9last employer before termination in the case of payment under 
10section 5506, shall make whatever employer contributions would 
11have been made under this section had the employee making the 
12member contributions after being reemployed from USERRA leave 
13continued to be employed in his State office or position instead 
14of performing USERRA leave.

15Section 21. Title 71 is amended by adding a section to read:

16§ 5507.1. Contributions to the system by the Commonwealth and
17other employers starting July 1, 2015.

18(a) Contributions on behalf of members.--For fiscal years 
19beginning on or after July 1, 2015, the Commonwealth and other 
20employers whose employees are or were members of the system 
21shall make contributions to the fund on behalf of all members in 
22such amounts as shall be certified by the board as necessary to 
23provide, together with the members' total accumulated 
24deductions, annuity reserves on account of annuities including 
25those provided in sections 5708 (relating to supplemental 
26annuities), 5708.1 (relating to additional supplemental 
27annuities), 5708.2 (relating to further additional supplemental 
28annuities), 5708.3 (relating to supplemental annuities 
29commencing 1994), 5708.4 (relating to special supplemental 
30postretirement adjustment), 5708.5 (relating to supplemental

1annuities commencing 1998), 5708.6 (relating to supplemental 
2annuities commencing 2002), 5708.7 (relating to supplemental 
3annuities commencing 2003) and 5708.8 (relating to special 
4supplemental postretirement adjustment of 2002), in accordance 
5with the actuarial cost method provided in section 5508.1 
6(relating to actuarial cost method for fiscal years beginning 
7July 1, 2015, or later).

8(b) Payment of employer contributions to the system.--

9(1) Payment of employer normal contributions shall be as
10a percentage of compensation of active members.

11(2) Payment of accrued liability contributions as
12modified by the experience adjustment factor shall be as a
13percentage of compensation of active members and active
14participants.

15(3) Payment of the additional accrued liability
16contributions determined under section 5508.1(d) shall be in
17equal monthly payments during the fiscal year on the first
18day of each month, or in such other time and manner as the
19board may establish.

20(c) Payment of final contribution rate.--Notwithstanding the
21calculation of the actuarially required contribution rate and
22the provisions of subsections (a) and (b)(1) and (2), after June
2330, 2015, the Commonwealth and other employers whose employees
24are members of the system shall make contributions to the fund
25on behalf of all active members and annuitants in such amounts
26as shall be certified by the board in accordance with section
275508.1(h).

28(d) Benefits completion plan contributions.--In addition to
29all other contributions required under this section and section
305508.1, after June 30, 2015, the Commonwealth and other

1employers whose employees are active members of the system shall
2make contributions as certified by the board pursuant to section
35941 (relating to benefits completion plan).

4(e) Contributions resulting from members reemployed from
5USERRA leave.--When a State employee reemployed from USERRA
6leave makes the member contributions required to be granted
7State service credit for the USERRA leave after June 30, 2015,
8either by actual payment or by actuarial debt under section 5506
9(relating to incomplete payments), the Commonwealth employer or
10other employer that employed the State employee when the member
11contributions are made or the last employer before termination
12in the case of payment under section 5506 shall make the
13employer contributions that would have been made under this
14section if the employee making the member contributions after
15the employee is reemployed from USERRA leave continued to be
16employed in the employee's State office or position instead of
17performing USERRA leave.

18Section 22. Section 5508 heading, (a), (b), (c)(3), (e)(2),
19(f)(1), (h) and (i) of Title 71 are amended and subsection (c)
20is amended by adding a paragraph to read:

21§ 5508. Actuarial cost method for fiscal years ending before 
22July 1, 2015.

23(a) Employer contribution rate on behalf of active
24members.--[The] For the fiscal years ending before July 1, 2015, 
25the amount of the Commonwealth and other employer contributions
26on behalf of all active members shall be computed by the actuary
27as a percentage of the total compensation of all active members
28during the period for which the amount is determined and shall
29be so certified by the board. The actuarially required
30contribution rate on behalf of all active members shall consist

1of the employer normal contribution rate, as defined in
2subsection (b), and the accrued liability contribution rate as
3defined in subsection (c). The actuarially required contribution
4rate on behalf of all active members shall be modified by the
5experience adjustment factor as calculated in subsection (f).

6(b) Employer normal contribution rate.--[The] For the fiscal 
7years ending before July 1, 2015, the employer normal
8contribution rate shall be determined after each actuarial
9valuation on the basis of an annual interest rate and such
10mortality and other tables as shall be adopted by the board in
11accordance with generally accepted actuarial principles. The
12employer normal contribution rate shall be determined as a level
13percentage of the compensation of the average new active member,
14which percentage, if contributed on the basis of his prospective
15compensation through his entire period of active State service,
16would be sufficient to fund the liability for any prospective
17benefit payable to him in excess of that portion funded by his
18prospective member contributions, excluding shared-risk member 
19contributions.

20(c) Accrued liability contribution rate.--

21* * *

22(3) For the fiscal year beginning July 1, 2010, the 
23accrued liability contribution rate shall be computed as the 
24rate of total compensation of all active members which shall 
25be certified by the actuary as sufficient to fund in equal 
26dollar installments over a period of 30 years from July 1, 
272010, the present value of the liabilities for all 
28prospective benefits calculated as of the immediately prior 
29valuation date, including the supplemental benefits as 
30provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4,
 

15708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits 
2payable from the retirement benefit plan established pursuant 
3to section 5941 (relating to benefits completion plan), in 
4excess of the actuarially calculated assets in the fund 
5(calculated recognizing all realized and unrealized 
6investment gains and losses each year in level annual 
7installments over five years), including the balance in the 
8supplemental annuity account, and the present value of 
9employer normal contributions and of member contributions 
10payable with respect to all active members, inactive members 
11on leave without pay, vestees and special vestees on December 
1231, 2009. If the accrued liability is changed by legislation 
13enacted subsequent to December 31, 2009, and before January 
141, 2014, such change in liability shall be funded in equal 
15dollar installments over a period of ten years from the first 
16day of July following the valuation date coincident with or 
17next following the date such legislation is enacted.

18(4) For the fiscal year beginning July 1, 2014, the
19accrued liability contribution rate shall be computed as
20provided for under this section, except that the rate shall
21be computed as a rate of total compensation of all active
22members and active participants for the fiscal year. In
23addition to any employer defined contributions made to the
24trust, the Commonwealth and other employers of participants
25shall make the accrued liability contributions to the fund
26certified by the board.

27* * *

28(e) Supplemental annuity contribution rate.--

29* * *

30(2) For fiscal years beginning on or after July 1, 2010,
 

1and ending on or before June 30, 2015, contributions from the 
2Commonwealth and other employers whose employees are members 
3of the system required to provide for the payment of 
4supplemental annuities as provided in sections 5708, 5708.1, 
55708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8 
6shall be paid as part of the accrued liability contribution 
7rate as provided for in subsection (c)(3), and there shall 
8not be a separate supplemental annuity contribution rate 
9attributable to those supplemental annuities. In the event 
10that supplemental annuities are increased by legislation 
11enacted subsequent to December 31, 2009, and before January 
121, 2014, the additional liability for the increase in 
13benefits shall be funded in equal dollar installments over a 
14period of ten years from the first day of July following the 
15valuation date coincident with or next following the date 
16such legislation is enacted.

17(f) Experience adjustment factor.--

18(1) For each [year] fiscal year ending before July 1, 
192015, after the establishment of the accrued liability
20contribution rate and the supplemental annuity contribution 
21rate for the fiscal year beginning July 1, 2010, any increase
22or decrease in the unfunded accrued liability and any 
23increase or decrease in the liabilities and funding for
24supplemental annuities, due to actual experience differing
25from assumed experience (recognizing all realized and 
26unrealized investment gains and losses over a five-year 
27period), changes in contributions caused by the final 
28contribution rate being different from the actuarially 
29required contribution rate, State employees making shared-
30risk member contributions, changes in actuarial assumptions

1or changes in the terms and conditions of the benefits
2provided by the system by judicial, administrative or other
3processes other than legislation, including, but not limited
4to, reinterpretation of the provisions of this part
5recognized by the actuarial valuations on December 31, 2010, 
6and through December 31, 2013, shall be amortized in equal
7dollar annual contributions over a period of 30 years
8beginning with the July 1 succeeding the actuarial valuation
9determining said increases or decreases.

10* * *

11(h) Temporary application of collared contribution rate.--
12The collared contribution rate for each [year] fiscal year 
13ending on or before June 30, 2015, shall be determined by
14comparing the actuarially required contribution rate calculated
15without regard for costs added by legislation to the prior
16year's final contribution rate. If, for any of the fiscal years
17beginning July 1, 2011, July 1, 2012, [and on or after] July 1,
182013, and July 1, 2014, the actuarially required contribution
19rate calculated without regard for costs added by legislation is
20more than 3%, 3.5%, 4.5% and 4.5%, respectively, of the total
21compensation of all active members greater than the prior year's
22final contribution rate, then the collared contribution rate
23shall be applied and be equal to the prior year's final
24contribution rate increased by the respective percentage above
25of total compensation of all active members. Otherwise, and for
26all subsequent fiscal years, the collared contribution rate
27shall not be applicable. In no case shall the collared
28contribution rate be less than 4% of total compensation of all
29active members.

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

1July 1, 2010, the final contribution rate shall be 5% of total
2compensation of all active members. For each subsequent fiscal
3year for which the collared contribution rate is applicable, the
4final contribution rate shall be the collared contribution rate
5plus the costs added by legislation. For all other fiscal years
6ending before July 1, 2015, the final contribution rate shall be
7the actuarially required contribution rate, provided that the
8final contribution rate shall not be less than the employer
9normal contribution rate, as defined in subsection (b).

10Section 23. Title 71 is amended by adding a section to read:

11§ 5508.1. Actuarial cost method for fiscal years beginning July
121, 2015, or later.

13(a) Employer contributions on behalf of members.--For fiscal
14years beginning on or after July 1, 2015, the amount of the
15Commonwealth and other employer contributions on behalf of all
16members shall be computed by the actuary and certified by the
17board as an employer normal contribution rate as defined in
18subsection (b) and the accrued liability contribution amount as
19defined in subsection (c). The accrued liability contribution
20amount shall be modified by the experience adjustment factor as
21calculated in subsection (f).

22(b) Employer normal contribution rate.--For fiscal years
23beginning on or after July 1, 2015, the employer normal
24contribution rate for all active members of the system shall be
25the employer normal contribution rate that would have been
26applicable if the employer normal contribution rate was
27determined as part of the December 31, 2014, actuarial valuation
28under section 5508(b) (relating to actuarial cost method for
29fiscal years ending before July 1, 2015) without regard to the
30provisions of this section and the inapplicability of that rate

1to periods on or after July 1, 2015.

2(c) Accrued liability contribution amount.--

3(1) For fiscal years beginning July 1, 2015, the accrued 
4liability contribution rate shall be computed as the rate of 
5total compensation of all active members and active 
6participants which shall be determined by the actuary as 
7sufficient to fund in equal dollar installments over a period 
8of 30 years from July 1, 2015, the present value of all the 
9liabilities for all prospective benefits of members of the 
10system calculated as of the immediately prior valuation date, 
11including the supplemental benefits as provided in sections 
125708 (relating to supplemental annuities), 5708.1 (relating 
13to additional supplemental annuities), 5708.2 (relating to 
14further additional supplemental annuities), 5708.3 (relating 
15to supplemental annuities commencing 1994), 5708.4 (relating 
16to special supplemental postretirement adjustment), 5708.5 
17(relating to supplemental annuities commencing 1998), 5708.6 
18(relating to supplemental annuities commencing 2002), 5708.7 
19(relating to supplemental annuities commencing 2003) and 
205708.8 (relating to special supplemental postretirement 
21adjustment of 2002), but excluding the benefits payable from 
22the retirement benefit plan established pursuant to section 
235941 (relating to benefits completion plan), in excess of the 
24actuarially calculated assets in the fund, calculated 
25recognizing all realized and unrealized investment gains and 
26losses each year in level annual installments over five 
27years, including the balance in the supplemental annuity 
28account, and the present value of employer normal 
29contributions and of member contributions payable with 
30respect to all active members, inactive members on leave
 

1without pay, vestees and special vestees on December 31, 
22014. If the accrued liability is changed by legislation 
3enacted subsequent to December 31, 2014, such change in 
4liability shall be funded in equal dollar installments as a 
5percentage of compensation of all active members and active 
6participants over a period of ten years from the first day of 
7July following the valuation date coincident with or next 
8following the date such legislation is enacted. The accrued 
9liability contribution rate shall be determined after each 
10actuarial valuation on the basis of an annual interest rate 
11and such mortality and other tables as shall be adopted by 
12the board in accordance with generally accepted actuarial 
13principles.

14(2) For purposes of determining the accrued liability
15contribution rate in paragraph (1) and subsection (e) and the
16experience adjustment factor in subsection (f), the term
17"compensation of all active members and active participants"
18shall include an additional amount equal to the difference
19between:

20(i) The actual compensation of all active members
21and active participants of The Pennsylvania State
22University, the State System of Higher Education, State-
23owned educational institutions and community colleges.

24(ii) The compensation of all employees of The
25Pennsylvania State University, the State System of Higher
26Education, State-owned educational institutions and
27community colleges who are active members, active
28participants, active members of the Public School
29Employees' Retirement System, active participants of the
30School Employees' Defined Contribution Plan and employees

1who are members or participants of an independent
2retirement program approved by the employer multiplied by
3a fraction equal to the amount determined under
4subparagraph (i) as part of the December 31, 2014,
5actuarial valuation divided by the amount determined
6under this subparagraph as of December 31, 2014.

7(d) Allocation of accrued liability contribution amount.--
8For the fiscal year beginning July 1, 2015, and all subsequent
9fiscal years, The Pennsylvania State University, the State
10System of Higher Education, each State-owned educational
11institution and each community college shall make such
12additional actuarial accrued liability contributions as shall be
13certified by the board. The additional actuarial accrued
14liability contributions shall be the product of:

15(1) the amount by which the final contribution rate
16exceeds the employer normal contribution rate determined
17under subsection (b)(1); multiplied by

18(2) the difference between:

19(i) the actual compensation of all active members
20and active participants of each such educational
21institution; and

22(ii) the compensation of all active members, active
23participants, active members of the Public School
24Employees' Retirement System, active participants of the
25School Employees' Defined Contribution Plan and employees
26who are members or participants of an independent
27retirement program approved by the employer of each such
28educational institution multiplied by a fraction equal to
29the amount determined under subparagraph (i) as part of
30the December 31, 2014, actuarial valuation divided by the

1amount of compensation of all active members, active
2participants, active members of the Public School
3Employees' Retirement System, active participants of the
4School Employees' Defined Contribution Plan and employees
5who are members or participants of an independent
6retirement program approved by the employer of each such
7educational institution determined as of December 31,
82014.

9(e) Supplemental annuity contribution amounts.--For fiscal
10years beginning on or after July 1, 2015, contributions from the
11Commonwealth and other employers whose employees are members of
12the system required to provide for the payment of supplemental
13annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3,
145708.4, 5708.5, 5708.6, 5708.7 and 5708.8 shall be paid as part
15of the accrued liability contribution rate as provided for in
16subsection (c) and there shall not be a separate supplemental
17annuity contribution amount attributable to those supplemental
18annuities. In the event that supplemental annuities are
19increased by legislation enacted subsequent to December 31,
202014, the additional liability for the increase in benefits
21shall be funded in equal dollar installments as a percentage of
22compensation of all active members and active participants over
23a period of ten years from the first day of July following the
24valuation date coincident with or next following the date such
25legislation is enacted as part of the accrued liability amount
26and not as a separate supplemental annuity contribution amount.

27(f) Experience adjustment factor.--

28(1) For each year after the establishment of the accrued
29liability contribution amount for the fiscal year beginning
30July 1, 2015, any increase or decrease in the unfunded

1accrued liability and any increase or decrease in the
2liabilities and funding for supplemental annuities, due to
3actual experience differing from assumed experience,
4recognizing all realized and unrealized investment gains and
5losses over a five-year period, changes in contributions
6caused by the final contribution rate being different from
7the actuarially required contribution rate, State employees
8making shared-risk member contributions, changes in actuarial
9assumptions or changes in the terms and conditions of the
10benefits provided by the system by judicial, administrative
11or other processes other than legislation, including, but not
12limited to, reinterpretation of the provisions of this part,
13shall be amortized in equal dollar installments expressed as
14a level percentage of compensation of all active members and
15active participants over a period of 30 years beginning with
16the July 1 succeeding the actuarial valuation determining
17said increases or decreases.

18(2) The actuarially required contribution rate shall be
19the sum of the normal contribution rate determined under
20subsection (b)(2), the accrued liability contribution rate
21and the supplemental annuity contribution rate modified by
22the experience adjustment factor as calculated in paragraph
23(1).

24(g) Temporary application of collared contribution rate.--
25The collared contribution rate for each fiscal year beginning on
26or after July 1, 2015, shall be determined by comparing the
27actuarially required contribution rate calculated without regard
28for costs added by legislation to the prior year's final
29contribution rate. If the actuarially required contribution rate
30calculated without regard for costs added by legislation is more

1than 4.5% of the total compensation of all active members
2greater than the prior year's final contribution rate, then the
3collared contribution rate shall be applied and be equal to the
4prior year's final contribution rate increased by 4.5% of total
5compensation of all active members. Otherwise, and for all
6subsequent fiscal years, the collared contribution rate shall
7not be applicable. In no case shall the collared contribution
8rate be less than 4% of total compensation of all active
9members.

10(h) Final contribution rate.--For the fiscal year beginning
11July 1, 2015, if the collared contribution rate is applicable,
12the final contribution rate shall be the collared contribution
13rate plus the costs added by legislation. For each subsequent
14fiscal year for which the collared contribution rate is
15applicable, the final contribution rate shall be the collared
16contribution rate plus the costs added by legislation. For all
17other fiscal years beginning on or after July 1, 2015, the final
18contribution rate shall be the actuarially required contribution
19rate, provided that the final contribution rate shall not be
20less than the employer normal contribution rate, as provided
21under subsection (b).

22Section 24. Section 5509 of Title 71, amended October 24,
232012 (P.L.1436, No.181), is amended to read:

24§ 5509. Appropriations and assessments by the Commonwealth.

25(a) Annual submission of budget.--The board shall prepare
26and submit annually an itemized budget consisting of the amounts
27necessary to be appropriated by the Commonwealth out of the
28General Fund and special operating funds and the amounts to be
29assessed the other employers required to meet the separate
30obligations to both the fund and the trust accruing during the

1fiscal period beginning the first day of July of the following
2year.

3(b) Appropriation and payment.--The General Assembly shall
4make an appropriation sufficient to provide for the separate 
5obligations of the Commonwealth to both the fund and the trust. 
6Such amount shall be paid by the State Treasurer through the
7Department of Revenue into the fund or the trust, as the case 
8may be, in accordance with requisitions presented by the board.
9The contributions to the system by the Commonwealth on behalf of
10active members who are officers of the Pennsylvania State Police
11shall be charged to the General Fund and to the Motor License
12Fund in the same ratios as used to apportion the appropriations
13for salaries of members of the Pennsylvania State Police. The
14contributions to the system by the Commonwealth on behalf of
15active members who are enforcement officers and investigators of
16the Pennsylvania Liquor Control Board shall be charged to the
17General Fund and to the State Stores Fund.

18(c) Contributions from funds other than General Fund.--The
19amounts assessed other employers who are required to make the
20necessary separate contributions to both the fund and the trust
21out of funds other than the General Fund shall be paid by such
22employers into the fund or the trust, as the case may be, in
23accordance with requisitions presented by the board. The General
24Fund of the Commonwealth shall not be held liable to appropriate
25the moneys required to build up the reserves in the fund 
26necessary for the payment of benefits from the system to
27employees or to make the employer defined contributions for 
28employees of such other employers. In case any such other
29employer shall fail to provide to the fund the moneys necessary
30for such purpose, then the service of such members of the system

1for such period for which money is not so provided shall be
2credited and pickup contributions with respect to such members
3shall continue to be credited to the members' savings account.
4The annuity to which such member is entitled shall be determined
5as actuarially equivalent to the present value of the maximum
6single life annuity of each such member reduced by the amount of
7employer contributions to the system payable on account and
8attributable to his compensation during such service, except 
9that no reduction shall be made as a result of the failure of an 
10employer to make contributions required for a period of USERRA 
11leave.

12Section 25. Sections 5701 and 5701.1 of Title 71 are amended
13to read:

14§ 5701. Return of total accumulated deductions.

15Any member upon termination of service may, in lieu of all
16benefits payable from the system under this chapter to which he
17may be entitled, elect to receive his total accumulated
18deductions.

19§ 5701.1. Transfer of accumulated deductions.

20When an employee of the Juvenile Court Judges' Commission
21elects membership in an independent retirement program pursuant
22to section 5301(f) (relating to mandatory and optional
23membership in the system and participation in the plan), the
24board shall transfer directly to the trustee or administrator of
25the independent retirement program all accumulated deductions
26resulting from service credited while an employee of the
27Juvenile Court Judges' Commission.

28Section 26. Sections 5702(a)(1) <-and 5704(c), 5704(c) and (F) 
29and 5705(a) of Title 71 are amended and the sections are amended
30by adding subsections to read:

1§ 5702. Maximum single life annuity.

2(a) General rule.--Any full coverage member who is eligible
3to receive an annuity pursuant to the provisions of section
45308(a) or (b) (relating to eligibility for annuities) who
5terminates State service, or if a multiple service member who is
6a school employee who is an active member of the Public School
7Employees' Retirement System who terminates school service,
8before attaining age 70 shall be entitled to receive a maximum
9single life annuity attributable to his credited service and
10equal to the sum of the following single life annuities
11beginning at the effective date of retirement:

12(1) A standard single life annuity multiplied by the sum
13of the products, determined separately for each class of
14service, obtained by multiplying the appropriate class of
15service multiplier by the ratio of years of service credited
16in that class to the total credited service. In case the
17member on the effective date of retirement is under
18superannuation age for any service, a reduction factor
19calculated to provide benefits actuarially equivalent to an
20annuity starting at superannuation age shall be applied to
21the product determined for that service. The class of service
22multiplier for any period of concurrent service shall be
23multiplied by the proportion of total State and school
24compensation during such period attributable to State service
25as a member of the system. In the event a member has two
26multipliers for one class of service the class of service
27multiplier to be used for calculating benefits for that class
28shall be the average of the two multipliers weighted by the
29proportion of compensation attributable to each multiplier
30during the three years of highest annual compensation in that

1class of service: Provided, That in the case of a member of
2Class E-1, a portion but not all of whose three years of
3highest annual judicial compensation is prior to January 1,
41973, two class of service multipliers shall be calculated on
5the basis of his entire judicial service, the one applying
6the judicial class of service multipliers effective prior to
7January 1, 1973 and the second applying the class of service
8multipliers effective subsequent to January 1, 1973. The
9average class of service multiplier to be used for
10calculating benefits for his judicial service shall be the
11average of the two calculated multipliers weighted by the
12proportion of compensation attributable to each of the
13calculated multipliers during the three years of highest
14annual compensation in that class of service.

15* * *

16(e) Coordination of benefits.--The determination and payment
17of the maximum single life annuity under this section shall be
18in addition to any payments a combined service employee may be
19entitled to receive, has received or is receiving as a result of
20being a participant in the plan.

21§ 5704. Disability annuities.

22* * *

23(c) Reduction on account of earned income.--Subsequent to
24January 1, 1972, payments on account of disability shall be
25reduced by that amount by which the earned income of the
26annuitant, as reported in accordance with section 5908(b)
27(relating to rights and duties of annuitants), for the preceding
28calendar year together with the disability annuity payments
29provided in this section other than subsection (b), for the
30year, exceeds the product of:

1[(i)] (1)  the last year's salary of the annuitant as
2a [State employee] member of the system; and

3[(ii)] (2) the ratio of the current monthly payment
4to the monthly payment at the effective date of
5disability;

6Provided, That the annuitant shall not receive less than his
7member's annuity or the amount to which he may be entitled under
8section 5702 whichever is greater.

9* * *

<-10(f) Supplement for service connected disability.--

11(1) If a member has been found to be eligible for a
12disability annuity and if the disability has been found to be
13a service connected disability and if the member is receiving
14workers' compensation payments for other than medical
15benefits, such member shall receive a supplement equal to
16[70% of his final average salary] the amount determined under 
17paragraph (2) less the sum of the annuity as determined under
18subsection (a) and any payments paid or payable on account of
19such disability under the act of June 2, 1915 (P.L.736, 
20No.338), known as the Workers' Compensation Act, the act of
21June 21, 1939 (P.L.566, No.284), known as The Pennsylvania
22Occupational Disease Act, and the Social Security Act (49 
23Stat. 620, 42 U.S.C. § 301 et seq.). Such supplement shall
24continue as long as he is determined to be disabled and is
25receiving workers' compensation payments for other than
26medical benefits on account of his service connected
27disability in accordance with the Workers' Compensation Act
28or The Pennsylvania Occupational Disease Act. If the member
29has received a lump sum workers' compensation payment in lieu
30of future weekly compensation payments, the length in weeks

1and calculation of the service connected disability
2supplement shall be determined by dividing the lump sum
3payment by the average weekly wage as determined by the
4Workers' Compensation Board.

5(2)  For a member who does not have post-January 2015
6service, the amount to be used to determine eligibility for
7the supplement under paragraph (1) shall be 70% of his final
8average salary. For a member who has post-January 2015
9service, the amount to be used to determine eligibility for
10the supplement under paragraph (1) shall be calculated
11according to the following formula: 

12A = .7[( YW multiplied by FASW)+(YXYZ  multiplied by FASXYZ)]
13                  YT                       YT

14(3) The following apply to the formula in paragraph (2):

15(i) A equals the amount used to determine the
16supplement;

17(ii) YT equals total years of credited service;

18(iii) YW equals years of credited service that are
19not post-January 2015 service;

20(iv) FASW equals final average salary calculated for
21credited service other than post-January 2015 service;

22(v) YXYZ equals years of service credited as post-
23January 2015 service; and

24(vi) FASXYZ equals final average salary calculated 
25for service credited as post-January 2015 service.

26* * *

27(h) Coordination of benefits.--The determination and payment
28of a disability annuity under this section shall be in addition
29to any payments a combined service employee may be entitled to
30receive, has received or is receiving as a result of being a

1participant in the plan.

<-2§ 5705. Member's options.

3(a) General rule.--Any special vestee who has attained
4superannuation age, any vestee who does not have Class A-3 or 
5Class A-4 service credit having five or more eligibility points
6for service other than Class T-E or Class T-F service in the 
7Public School Employees' Retirement System, or vestee who has 
8Class A-3 or Class A-4 service credit having ten or more 
9eligibility points, any member with Class G, Class H, Class I,
10Class J, Class K, Class L, Class M or Class N service having
11five or more eligibility points or any other eligible member
12upon termination of State service who has not withdrawn his
13total accumulated deductions as provided in section 5701
14(relating to return of total accumulated deductions) may apply
15for and elect to receive either a maximum single life annuity,
16as calculated in accordance with the provisions of section 5702
17(relating to maximum single life annuity), or a reduced annuity
18certified by the actuary to be actuarially equivalent to the
19maximum single life annuity payable after reduction under 
20subsection (a.1) and in accordance with one of the following
21options; except that no member shall elect an annuity payable to
22one or more survivor annuitants other than his spouse or
23alternate payee of such a magnitude that the present value of
24the annuity payable to him for life plus any lump sum payment
25under this subsection and subsection (a.1) he may have elected
26to receive is less than 50% of the present value of his maximum
27single life annuity before reduction under subsection (a.1):

28(1) Option 1.--A life annuity to the member with a
29guaranteed total payment equal to the present value of the
30maximum single life annuity on the effective date of

1retirement with the provision that, if, at his death, he has
2received less than such present value, the unpaid balance
3shall be payable to his beneficiary.

4(2) Option 2.--A joint and survivor annuity payable
5during the lifetime of the member with the full amount of
6such annuity payable thereafter to his survivor annuitant, if
7living at his death.

8(3) Option 3.--A joint and fifty percent (50%) survivor
9annuity payable during the lifetime of the member with one-
10half of such annuity payable thereafter to his survivor
11annuitant, if living at his death.

12(4) Option 4.--Some other benefit which shall be
13certified by the actuary to be actuarially equivalent to the
14maximum single life annuity, subject to the following
15restrictions:

16(i) any annuity shall be payable without reduction
17during the lifetime of the member;

18(ii) the sum of all annuities payable to the
19designated survivor annuitants shall not be greater than
20one and one-half times the annuity payable to the member;
21and

22(iii) a portion of the benefit may be payable as a
23lump sum, except that such lump sum payment shall not
24exceed an amount equal to the total accumulated
25deductions standing to the credit of the member that are 
26not the result of contributions and statutory interest 
27made or credited as a result of Class A-3 or Class A-4 
28service. The balance of the present value of the maximum
29single life annuity adjusted in accordance with section
305702(b) shall be paid in the form of an annuity with a

1guaranteed total payment, a single life annuity, or a
2joint and survivor annuity or any combination thereof but
3subject to the restrictions of subparagraphs (i) and (ii)
4under this option. If a member's effective date of 
5retirement is on or after January 1, 2015, then the 
6portion of the benefit payable under this subparagraph 
7shall be further limited to the total accumulated 
8deductions standing to the credit of the member on 
9December 31, 2014, that are not the result of 
10contributions and statutory interest made or credited as 
11a result of Class A-3 or Class A-4 service, plus any 
12statutory interest credited on those accumulated 
13deductions before the effective date of retirement.

14(a.1) Additional lump sum withdrawal.--The following shall
15apply:

16(1) On or after January 1, 2015, if a member has elected
17to have the full amount allowed under subsection (a)(4)(iii)
18paid in lump sum, then the member may elect to receive an
19additional amount payable in a lump sum at the same time as
20the payment elected under subsection (a)(4)(iii).

21(2) The additional amount payable in a lump sum may not
22exceed the amount equal to the excess of the total
23accumulated deductions standing to the credit of the member
24on the effective date of retirement that are not the result
25of contributions and statutory interest made or credited as a
26result of Class A-3 or Class A-4 service over the amount
27payable under subsection (a)(4)(iii).

28(3) If a member elects to be paid an additional lump sum
29amount under this subsection, then the maximum single life
30annuity calculated under section 5702 and payable under

1subsection (a) shall be reduced by the additional amount
2withdrawn divided by the cost of a dollar annuity on the
3effective date of retirement computed on the basis of the
4annual interest rate adopted for that fiscal year by the
5board for the calculation of the accrued liability
6contribution rate under section 5508.1(c) (relating to
7actuarial cost method for fiscal years beginning July 1,
82015, or later) and the mortality tables adopted by the board
9for the determination of actuarially equivalent benefits
10under this part. The reduction in the maximum single life
11annuity under this subsection shall apply before the election
12and calculation of any reduced annuities payable under
13subsection (a).

14* * *

15Section 27. Section 5706(a), (a.1), (a.2), (b) and (c)(1)
16and (3) of Title 71 are amended to read:

17§ 5706. Termination of annuities.

18(a) General rule.--If the annuitant returns to State service
19or enters or has entered school service and elects multiple
20service membership, any annuity payable to him under this part
21shall cease effective upon the date of his return to State
22service or entering school service without regard to whether he 
23is a mandatory, optional or prohibited member of the system or 
24participant in the plan, or if a multiple service member, 
25whether he is a mandatory, optional or prohibited member or 
26participant of the Public School Employees' Retirement System or 
27School Employees' Defined Contribution Plan and in the case of
28an annuity other than a disability annuity the present value of
29such annuity, adjusted for full coverage in the case of a joint
30coverage member who makes the appropriate back contributions for

1full coverage, shall be frozen as of the date such annuity
2ceases. An annuitant who is credited with an additional 10% of
3Class A and Class C service as provided in section 5302(c)
4(relating to credited State service) and who returns to State
5service shall forfeit such credited service and shall have his
6frozen present value adjusted as if his 10% retirement incentive
7had not been applied to his account. In the event that the cost-
8of-living increase enacted December 18, 1979 occurred during the
9period of such State or school employment, the frozen present
10value shall be increased, on or after the member attains
11superannuation age, by the percent applicable had he not
12returned to service. This subsection shall not apply in the case
13of any annuitant who may render services to the Commonwealth in
14the capacity of an independent contractor or as a member of an
15independent board or commission or as a member of a departmental
16administrative or advisory board or commission when such members
17of independent or departmental boards or commissions are
18compensated on a per diem basis for not more than 150 days per
19calendar year or as a member of an independent board or
20commission requiring appointment by the Governor, with advice
21and consent of the Senate, where the annual salary payable to
22the member does not exceed $35,000 and where the member has been
23an annuitant for at least six months immediately preceding the
24appointment. Such service shall not be subject to member
25contributions or be eligible for qualification as creditable
26State service or for participation in the plan, mandatory pickup 
27participant contributions or employer defined contributions.

28(a.1) Return to State service during emergency.--When, in
29the judgment of the employer, an emergency creates an increase
30in the work load such that there is serious impairment of

1service to the public, an annuitant may be returned to State
2service for a period not to exceed 95 days in any calendar year
3without loss of his annuity. In computing the number of days an
4annuitant has returned to State service, any amount of time less
5than one-half of a day shall be counted as one-half of a day.
6For agencies, boards and commissions under the Governor's
7jurisdiction, the approval of the Governor that an emergency
8exists shall be required before an annuitant may be returned to
9State service. Such service shall not be subject to member 
10contributions or be eligible for qualification as creditable 
11State service or for participation in the plan, mandatory pickup 
12participant contributions or employer defined contributions.

13(a.2) Return of benefits.--In the event an annuitant whose
14annuity ceases pursuant to this section receives any annuity
15payment, including a lump sum payment pursuant to section 5705
16(relating to member's options) on or after the date of his
17return to State service or entering school service, the
18annuitant shall return to the board the amount so received plus
19statutory interest. The amount payable shall be certified in
20each case by the board in accordance with methods approved by
21the actuary and shall be paid in a lump sum within 30 days or in
22the case of an active member or school employee who is an active
23member of the Public School Employees' Retirement System may be
24amortized with statutory interest through salary deductions to 
25the system in amounts agreed upon by the member and the board.
26The salary deduction amortization plans agreed to by the member
27and the board may include a deferral of payment amounts and
28statutory interest until the termination of school service or
29State service or beginning service as a participant as the board
30in its sole discretion decides to allow. The board may limit

1salary deduction amortization plans to such terms as the board
2in its sole discretion determines. In the case of a school
3employee who is an active member of the Public School Employees'
4Retirement System, the agreed upon salary deductions shall be
5remitted to the Public School Employees' Retirement Board, which
6shall certify and transfer to the board the amounts paid.

7(b) Subsequent discontinuance of service.--Upon subsequent
8discontinuance of service, such [member] terminating State 
9employee other than a former annuitant who had the effect of his
10frozen present value eliminated in accordance with subsection
11(c) or a former disability annuitant shall be entitled to an
12annuity which is actuarially equivalent to [the sum of] the
13present value as determined under subsection (a) [and] to which 
14shall be added, if the service after reemployment was as a 
15member of the system, the present value of a maximum single life
16annuity based on years of service credited subsequent to reentry
17in the system and his final average salary computed by reference
18to his compensation as a member of the system or as a member of 
19the Public School Employees' Retirement System during his entire
20period of State and school service.

21(c) Elimination of the effect of frozen present value.--

22(1) An annuitant who returns to State service as an 
23active member of the system and earns three eligibility
24points by performing credited State service following the
25most recent period of receipt of an annuity under this part,
26or an annuitant who enters school service other than as a 
27participant in the School Employees' Defined Contribution 
28Plan and:

29(i) is a multiple service member; or

30(ii) who elects multiple service membership, and

1earns three eligibility points by performing credited State
2service or credited school service following the most recent
3period of receipt of an annuity under this part, and who had
4the present value of his annuity frozen in accordance with
5subsection (a), shall qualify to have the effect of the
6frozen present value resulting from all previous periods of
7retirement eliminated, provided that all payments under
8Option 4 and annuity payments payable during previous periods
9of retirement plus interest as set forth in paragraph (3)
10shall be returned to the fund in the form of an actuarial
11adjustment to his subsequent benefits or in such form as the
12board may otherwise direct.

13* * *

14(3) In addition to any other adjustment to the present 
15value of the maximum single life annuity that a member may be 
16entitled to receive that occurs as a result of any other 
17provision of law, the present value of the maximum single 
18life annuity shall be reduced by all amounts paid or payable 
19to him during all previous periods of retirement plus 
20interest on these amounts until the date of subsequent 
21retirement. The interest for each year shall be calculated 
22based upon the annual interest rate adopted for that fiscal 
23year by the board for the calculation of the normal 
24contribution rate pursuant to section 5508(b) (relating to 
25actuarial cost method[).] for fiscal years ending before July 
261, 2015) or for the calculation of the accrued liability 
27contribution rate under section 5508.1(c) (relating to 
28actuarial cost method for fiscal years beginning July 1, 
292015, or later) for fiscal years starting on or after July 1, 
302015.

1Section 28. Section 5707(a), (b) and (f) of Title 71,
2amended October 24, 2012 (P.L.1436, No.181), are amended to
3read:

4§ 5707. Death benefits.

5(a) Members eligible for annuities.--Any active member,
6inactive member on leave without pay, combined service employee 
7who is an active participant or inactive participant on leave 
8without pay, vestee or current or former State employee 
9performing USERRA leave who dies and was eligible for an annuity
10in accordance with section 5308(a) or (b) (relating to
11eligibility for annuities) or special vestee who has attained
12superannuation age and dies before applying for a superannuation
13annuity shall be considered as having applied for an annuity to
14become effective the day before his death and in the event he
15has not elected an option or such election has not been approved
16prior to his death, it shall be assumed that he elected Option
171.

18(b) Members ineligible for annuities.--In the event of the
19death of a special vestee, an active member, an inactive member
20on leave without pay, combined service employee who is an active 
21participant or inactive participant on leave without pay, or a 
22current or former State employee performing USERRA leave who is
23not entitled to a death benefit as provided in subsection (a),
24his designated beneficiary shall be paid the full amount of his
25total accumulated deductions.

26* * *

27(f) Members subject to limitations under section 5702(c).--
28Subject to the limitations contained in section 401(a)(9) of the
29Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
30401(a)(9)), the present value of any annuity in excess of that

1payable under section 5702 (relating to maximum single life
2annuity) that is not subject to the limitations under section
3415(b) of the Internal Revenue Code of 1986 shall be paid in a
4lump sum to the beneficiary designated by the member after the
5death of the member. A beneficiary receiving a benefit under
6this subsection shall not be able to elect a payment method
7otherwise allowed under section 5709(b)(2) and (3) (relating to
8payment of benefits from the system).

9Section 29. Sections 5708.1(f), 5708.2(f), 5708.3(f),
105708.5(f), 5708.6(f), 5708.7(f), 5708.8(g), 5709 heading, (a)
11and (b) and 5901(a), (c) and (d) of Title 71 are amended to
12read:

13§ 5708.1. Additional supplemental annuities.

14* * *

15(f) Funding.--The actuary shall annually certify the amount
16of appropriations for the next fiscal year needed to fund, over
17a period of ten years from July 1, 2002, the additional monthly
18supplemental annuity provided for in this section, which amounts 
19shall be paid during the period beginning July 1, 2002, and 
20ending June 30, 2010. For fiscal years beginning on or after 
21July 1, 2010, the additional liability provided in this section 
22shall be funded as part of the actuarial accrued liability as 
23provided in [section 5508 (relating to actuarial cost method).] 
24sections 5508 (relating to actuarial cost method for fiscal 
25years ending before July 1, 2015) and 5508.1 (relating to 
26actuarial cost method for fiscal years beginning July 1, 2015, 
27or later).

28* * *

29§ 5708.2. Further additional supplemental annuities.

30* * *

1(f) Funding.--The actuary shall annually estimate the amount
2of Commonwealth appropriations for the next fiscal year needed
3to fund, over a period of ten years from July 1, 2002, the
4additional monthly supplemental annuity provided for in this
5section, which amounts shall be paid during the period beginning 
6July 1, 2002, and ending June 30, 2010. For fiscal years 
7beginning on or after July 1, 2010, the additional liability 
8provided in this section shall be funded as part of the 
9actuarial accrued liability as provided in [section 5508 
10(relating to actuarial cost method).] sections 5508 (relating to 
11actuarial cost method for fiscal years ending before July 1, 
122015) and 5508.1 (relating to actuarial cost method for fiscal 
13years beginning July 1, 2015, or later).

14* * *

15§ 5708.3. Supplemental annuities commencing 1994.

16* * *

17(f) Funding.--For the period beginning July 1, 2002, and 
18ending June 30, 2010, the additional liability for the increase
19in benefits provided in this section shall be funded in equal
20dollar annual installments over a period of ten years beginning
21July 1, 2002. For fiscal years beginning on or after July 1, 
222010, the additional liability for the increase in benefits 
23provided in this section shall be funded as part of the 
24actuarial accrued liability as provided in [section 5508 
25(relating to actuarial cost method).] sections 5508 (relating to 
26actuarial cost method for fiscal years ending before July 1, 
272015) and 5508.1 (relating to actuarial cost method for fiscal 
28years beginning July 1, 2015, or later).

29* * *

30§ 5708.5. Supplemental annuities commencing 1998.

1* * *

2(f) Funding.--For the period beginning July 1, 2002, and 
3ending June 30, 2010, the additional liability for the increase
4in benefits provided in this section shall be funded in equal
5dollar annual installments over a period of ten years beginning
6July 1, 2002. For fiscal years beginning on or after July 1, 
72010, the additional liability for the increase in benefits 
8provided in this section shall be funded as part of the 
9actuarial accrued liability as provided in [section 5508 
10(relating to actuarial cost method).] sections 5508 (relating to 
11actuarial cost method for fiscal years ending before July 1, 
122015) and 5508.1 (relating to actuarial cost method for fiscal 
13years beginning July 1, 2015, or later).

14* * *

15§ 5708.6. Supplemental annuities commencing 2002.

16* * *

17(f) Funding.--For the period beginning July 1, 2003, and 
18ending June 30, 2010, the additional liability for the increase
19in benefits provided in this section shall be funded in equal
20dollar annual installments over a period of ten years beginning
21July 1, 2003. For fiscal years beginning on or after July 1, 
222010, the additional liability for the increase in benefits 
23provided in this section shall be funded as part of the 
24actuarial accrued liability as provided in [section 5508 
25(relating to actuarial cost method).] sections 5508 (relating to 
26actuarial cost method for fiscal years ending before July 1, 
272015) and 5508.1 (relating to actuarial cost method for fiscal 
28years beginning July 1, 2015, or later).

29* * *

30§ 5708.7. Supplemental annuities commencing 2003.

1* * *

2(f) Funding.--For the period beginning July 1, 2004, and 
3ending June 30, 2010, the additional liability for the increase
4in benefits provided in this section shall be funded in equal
5dollar annual installments over a period of ten years beginning
6July 1, 2004. For fiscal years beginning on or after July 1, 
72010, the additional liability for the increase in benefits 
8provided in this section shall be funded as part of the 
9actuarial accrued liability as provided in [section 5508 
10(relating to actuarial cost method).] sections 5508 (relating to 
11actuarial cost method for fiscal years ending before July 1, 
122015) and 5508.1 (relating to actuarial cost method for fiscal 
13years beginning July 1, 2015, or later).

14* * *

15§ 5708.8. Special supplemental postretirement adjustment of
162002.

17* * *

18(g) Funding.--For the period beginning July 1, 2003, and 
19ending June 30, 2010, the additional liability for the increase
20in benefits provided in this section shall be funded in equal
21dollar annual installments over a period of ten years beginning
22July 1, 2003. For fiscal years beginning on or after July 1, 
232010, the additional liability for the increase in benefits 
24provided in this section shall be funded as part of the 
25actuarial accrued liability as provided in [section 5508 
26(relating to actuarial cost method).] sections 5508 (relating to 
27actuarial cost method for fiscal years ending before July 1, 
282015) and 5508.1 (relating to actuarial cost method for fiscal 
29years beginning July 1, 2015, or later).

30* * *

1§ 5709. Payment of benefits from the system.

2(a) Annuities.--Any annuity granted under the provisions of
3this part and paid from the fund shall be paid in equal monthly
4installments.

5(b) Death benefits.--If the amount of a death benefit
6payable from the fund to a beneficiary of a member under section
75707 (relating to death benefits) or under the provisions of
8Option 1 of section 5705(a)(1) (relating to member's options) is
9$10,000 or more, such beneficiary may elect to receive payment
10according to one of the following options:

11(1) a lump sum payment;

12(2) an annuity actuarially equivalent to the amount
13payable; or

14(3) a lump sum payment and an annuity such that the
15annuity is actuarially equivalent to the amount payable less
16the lump sum payment specified by the beneficiary.

17* * *

18§ 5901. The State Employees' Retirement Board.

19(a) Status and membership.--The board shall be an
20independent administrative board and consist of 11 members: the
21State Treasurer, ex officio, two Senators, two members of the
22House of Representatives and six members appointed by the
23Governor, one of whom shall be an annuitant of the system or a 
24participant of the plan who has terminated State service and is 
25receiving or is eligible to receive distributions, for terms of
26four years, subject to confirmation by the Senate. At least five
27board members shall be active members of the system or active 
28participants of the plan, and at least two shall have ten or
29more years of credited State service or shall have been active 
30participants of the plan for ten calendar years. The chairman of

1the board shall be designated by the Governor from among the
2members of the board. Each member of the board who is a member
3of the General Assembly may appoint a duly authorized designee
4to act in his stead. In the event that a board member, who is 
5designated as an active participant or as the participant in the 
6plan who is receiving or is eligible to receive distributions, 
7receives a total distribution of his interest in the plan, that 
8board member may continue to serve on the board for the 
9remainder of his term.

10* * *

11(c) Oath of office.--Each member of the board shall take an
12oath of office that he will, so far as it devolves upon him,
13diligently and honestly, administer the affairs of said board, 
14the system and the plan and that he will not knowingly violate
15or willfully permit to be violated any of the provisions of law
16applicable to this part. Such oath shall be subscribed by the
17member taking it and certified by the officer before whom it is
18taken and shall be immediately filed in the Office of the
19Secretary of the Commonwealth.

20(d) Compensation and expenses.--The members of the board who
21are members of the system or participants in the plan shall
22serve without compensation but shall not suffer loss of salary
23or wages through serving on the board. The members of the board
24who are not members of the system or participants in the plan
25shall receive $100 per day when attending meetings and all board
26members shall be reimbursed for any necessary expenses. However,
27when the duties of the board as mandated are not executed, no
28compensation or reimbursement for expenses of board members
29shall be paid or payable during the period in which such duties
30are not executed.

1* * *

2Section 30. <-Sections Section 5902(a.1) introductory
3paragraph, (3), (5) and (6), (b), (c), (e), (h), (i), (j), (k), 
4(l), (m) and (n) <-and 5903 heading and (a) of Title 71 are 
5amended and the sections are amended by adding subsections to 
6read: <-of Title 71, amended October 24, 2012 (P.L.1436, No.181), 
7are amended and the section is amended by adding a subsection to 
8read:

9§ 5902. Administrative duties of the board.

10* * *

11(a.1) Secretary.--The secretary shall act as chief
12administrative officer for the board with respect to both the 
13system and the plan. In addition to other powers and duties
14conferred upon and delegated to the secretary by the board, the
15secretary shall:

16* * *

17(3) Review and analyze proposed legislation and
18legislative developments affecting the system or the plan and
19present findings to the board, legislative committees, and
20other interested groups or individuals.

21* * *

22(5) Receive inquiries and requests for information
23concerning the system or the plan from the press,
24Commonwealth officials, State employees, the general public,
25research organizations, and officials and organizations from
26other states, and provide information as authorized by the
27board.

28(6) Supervise a staff of administrative, technical, and
29clerical employees engaged in record-keeping and clerical
30processing activities for both the system and the plan in

1maintaining files of members and participants, accounting for
2contributions, processing payments to annuitants and 
3terminated participants, preparing required reports, and
4retirement counseling. The board may utilize the staff of 
5employees provided for under this subsection for both the 
6system and the plan but shall allocate the fees, costs and 
7expenses incurred under this subsection between the system 
8and the plan as appropriate.

9(b) Professional personnel.--The board shall contract for
10the services of a chief medical examiner, an actuary, investment
11advisors and counselors, and such other professional personnel
12as it deems advisable. The board may, with the approval of the
13Attorney General, contract for legal services. The board may 
14utilize the same individuals and firms contracted under this 
15subsection for both the system and the plan but shall allocate 
16the fees, costs and expenses incurred under this subsection 
17between the system and the plan as appropriate.

18(c) Expenses.--The board shall, through the Governor, submit
19to the General Assembly annually a budget covering the
20administrative expenses of [this part] the system and a separate 
21budget covering the administrative expenses of the plan. Such
22expenses of the system as approved by the General Assembly in an
23appropriation bill shall be paid from investment earnings of the
24fund. Such expenses of the plan as approved by the General 
25Assembly shall be paid from interest, pursuant to section 
265414(b) (relating to investments based on members' investment 
27allocation choices), or assessments on the balances of the 
28participants' individual investment accounts except as may be 
29provided otherwise by law. Concurrently with its administrative
30budget, the board shall also submit to the General Assembly

1annually a list of proposed expenditures which the board intends
2to pay through the use of directed commissions, together with a
3list of the actual expenditures from the past year actually paid
4by the board through the use of directed commissions. All such
5directed commission expenditures shall be made by the board for
6the exclusive benefit of the system and its members.

7* * *

8(e) Records.--

9(1) The board shall keep a record of all its proceedings
10which shall be open to [inspection] access by the public,
11except as otherwise provided in this part or by other law.

12(2) Any record, material or data received, prepared,
13used or retained by the board or its employees, investment
14professionals or agents relating to an investment shall not
15constitute a public record subject to public [inspection]
16access under the act of [June 21, 1957 (P.L.390, No.212),
17referred to as the Right-to-Know Law,] February 14, 2008 
18(P.L.6, No.3), known as the Right-to-Know Law, if, in the
19reasonable judgment of the board, the [inspection] access 
20would:

21(i) in the case of an alternative investment or
22alternative investment vehicle, involve the release of
23sensitive investment or financial information relating to
24the alternative investment or alternative investment
25vehicle which the fund or trust was able to obtain only
26upon agreeing to maintain its confidentiality;

27(ii) cause substantial competitive harm to the
28person from whom sensitive investment or financial
29information relating to the investment was received; or

30(iii) have a substantial detrimental impact on the

1value of an investment to be acquired, held or disposed
2of by the fund or trust or would cause a breach of the
3standard of care or fiduciary duty set forth in this
4part.

5(3) (i) The sensitive investment or financial
6information excluded from [inspection] access under
7paragraph (2)(i), to the extent not otherwise excluded
8from [inspection] access, shall constitute a public
9record subject to public [inspection] access under the
10Right-to-Know Law once the board is no longer required by
11its agreement to maintain confidentiality.

12(ii) The sensitive investment or financial
13information excluded from [inspection] access under
14paragraph (2)(ii), to the extent not otherwise excluded
15from [inspection] access, shall constitute a public
16record subject to public [inspection] access under the
17Right-to-Know Law once:

18(A) the [inspection] access no longer causes
19substantial competitive harm to the person from whom
20the information was received; or

21(B) the entity in which the investment was made
22is liquidated;

23whichever is later.

24(iii) The sensitive investment or financial
25information excluded from [inspection] access under
26paragraph (2)(iii), to the extent not otherwise excluded
27from [inspection] access, shall constitute a public
28record subject to public [inspection] access under the
29Right-to-Know Law once:

30(A) the [inspection] access no longer has a

1substantial detrimental impact on the value of an
2investment of the fund or trust and would not cause a
3breach of the standard of care or fiduciary duty set
4forth in this part; or

5(B) the entity in which the investment was made
6is liquidated;

7whichever is later.

8(4) Except for the provisions of paragraph (3), nothing
9in this subsection shall be construed to designate any
10record, material or data received, prepared, used or retained
11by the board or its employees, investment professionals or
12agents relating to an investment as a public record subject
13to public [inspection] access under the Right-to-Know Law.

14(5) Any record, material or data received, prepared,
15used or retained by the board or its employees, or agents
16relating to the contributions, account value or benefits
17payable to or on account of a participant shall not
18constitute a public record subject to public access under the
19Right-to-Know Law, if, in the reasonable judgment of the
20board, the access would disclose any of the following:

21(i) The existence, date, amount and any other
22information pertaining to the voluntary contributions,
23including rollover contributions or trustee-to-trustee
24transfers, of any participant.

25(ii) The investment options selections of any
26participant.

27(iii) The balance of a participant's account,
28including the amount distributed to the participant
29investment gains or losses or rates of return.

30(iv) The identity of a participant's designated

1beneficiary, successor payee or alternate payee.

2(v) The benefit payment option of a participant.

3(6) Nothing in this subsection shall be construed to
4designate any record, material or data received, prepared,
5used or retained by the board or its employees, or agents
6relating to the contributions, account value or benefits
7payable to or on account of a participant as a public record
8subject to public access under the Right-to-Know Law.

9* * *

10(h) Regulations and procedures.--The board shall, with the
11advice of the Attorney General and the actuary, adopt and
12promulgate rules and regulations for the uniform administration
13of the system. The actuary shall approve in writing all
14computational procedures used in the calculation of
15contributions and benefits pertaining to the system, and the
16board shall by resolution adopt such computational procedures,
17prior to their application by the board. Such rules, regulations
18and computational procedures as so adopted from time to time and
19as in force and effect at any time, together with such tables as
20are adopted pursuant to subsection (j) as necessary for the
21calculation of annuities and other benefits, shall be as
22effective as if fully set forth in this part. Any actuarial
23assumption specified in or underlying any such rule, regulation
24or computational procedure and utilized as a basis for
25determining any benefit shall be applied in a uniform manner.

26(i) Data.--The board shall keep in convenient form such data
27as are stipulated by the actuary in order that an annual
28actuarial valuation of the various accounts of the fund can be
29completed within six months of the close of each calendar year.

30(j) Actuarial investigation and valuation.--The board shall

1have the actuary make an annual valuation of the various
2accounts of the fund within six months of the close of each
3calendar year. In the year 1975 and in every fifth year
4thereafter the board shall have the actuary conduct an actuarial
5investigation and evaluation of the system based on data
6including the mortality, service, and compensation experience
7provided by the board annually during the preceding five years
8concerning the members and beneficiaries of the system. The
9board shall by resolution adopt such tables as are necessary for
10the actuarial valuation of the fund and calculation of
11contributions, annuities and other benefits based on the reports
12and recommendations of the actuary. Within 30 days of their
13adoption, the secretary of the board shall cause those tables
14which relate to the calculation of annuities and other benefits
15to be published in the Pennsylvania Bulletin in accordance with
16the provisions of 45 Pa.C.S. § 725(a) (relating to additional
17contents of Pennsylvania Bulletin) and, unless the board
18specifies therein a later effective date, such tables shall
19become effective on such publication. The board shall include a
20report on the significant facts, recommendations and data
21developed in each five-year actuarial investigation and
22evaluation of the system in the annual financial statement
23published pursuant to the requirements of subsection (m) for the
24fiscal year in which such investigation and evaluation were
25concluded.

26(k) Certification of employer contributions to the fund.--
27The board shall, each year in addition to the itemized budget
28required under section 5509 (relating to appropriations and
29assessments by the Commonwealth), certify, as a percentage of
30the members' payroll, the shared-risk contribution rate, the

1employers' contributions as determined pursuant to [section 5508
2(relating to actuarial cost method)] sections 5508 (relating to 
3actuarial cost method for fiscal years ending before July 1, 
42015) and 5508.1 (relating to actuarial cost method for fiscal 
5years beginning July 1, 2015, or later) necessary for the
6funding of prospective annuities for active members and the
7annuities of annuitants and certify the rates and amounts of the
8employers' normal contributions as determined pursuant to
9[section] sections 5508(b) and 5508.1(b), accrued liability
10contributions as determined pursuant to [section] sections
115508(c) and 5508.1(c) and (d), supplemental annuities
12contribution rate as determined pursuant to section 5508(e), the
13experience adjustment factor as determined pursuant to [section]
14sections 5508(f) and 5508.1(f), the collared contribution rate 
15pursuant to section 5508(h) and the final contribution rate 
16pursuant to section 5508(i), which shall be paid to the fund and
17credited to the appropriate accounts. The board may allocate the 
18final contribution rate and certify various employer 
19contribution rates and amounts based upon the different benefit 
20eligibility, class of service multiplier, superannuation age<-, 
21final average salary calculations and other benefit differences 
22resulting from State service credited for individual members 
23even though such allocated employer contribution rate on behalf 
24of any given member may be more or less than 5% of the member's 
25compensation for the period from July 1, 2010, to June 30, 2011, 
26or may differ from the prior year's contribution for that member 
27by more or less than the percentages used to calculate the 
28collared contribution rate for that year and may be below any 
29minimum contribution rate established for the collared 
30contribution rate or final contribution rate. These

1certifications shall be regarded as final and not subject to
2modification by the Secretary of the Budget.

<-3* * *

<-4(l) Member contributions.--The board shall cause all pickup 
5contributions made on behalf of a member to be credited to the 
6account of the member and credit to his account any other 
7payment made by such member, including, but not limited to, 
8amounts collected by the Public School Employees' Retirement 
9System for the reinstatement of previous State service or 
10creditable nonstate service and amounts paid to return benefits 
11paid after the date of return to State service or entering 
12school service representing lump sum payments made pursuant to 
13section 5705(a)(4)(iii) or (a.1) (relating to member's options) 
14and member's annuity payments, but not including other benefits 
15returned pursuant to section 5706(a.2) or (a.3) (relating to 
16termination of annuities), and shall pay all such amounts into 
17the fund.

18(m) Annual financial statement.--The board shall prepare and
19have published, on or before July 1 of each year, [a financial
20statement] financial statements as of the calendar year ending
21December 31 of the previous year showing the condition of the
22fund and the trust and the various accounts, including, but not
23limited to, the board's accrual and expenditure of directed
24commissions, and setting forth such other facts,
25recommendations, and data as may be of use in the advancement of
26knowledge concerning annuities and other benefits provided by
27this part. The board shall submit said financial [statement]
28statements to the Governor and shall file copies with the head
29of each department for the use of the State employees and the
30public.

1(n) Independent [audit] audits.--The board shall provide for 
2[an annual audit] annual audits of the system and the plan by 
3[an] independent certified public [accountant] accountants, 
4which [audit] audits shall include the board's accrual and 
5expenditure of directed commissions. The board may use the same 
6independent certified public accountant for the audits of both 
7the system and the plan.

8* * *

9(p) Participant and employer contributions to the trust.-- 
10The board shall, each year in addition to any fees and itemized 
11budget required under section 5509 (relating to appropriations 
12and assessments by the Commonwealth), certify, as a percentage 
13of each participant's compensation, the employer defined 
14contributions, which shall be paid to the trust and credited to 
15each participant's individual investment account. These 
16certifications shall be regarded as final and not subject to 
17modification by the Secretary of the Budget. The board shall 
18cause all mandatory pickup participant contributions made on 
19behalf of a participant and all voluntary contributions made by 
20a participant to be credited to the participant's individual 
21investment account.

<-22Section 30.1. Section 5903 heading and (a) of Title 71 are
23amended and the section is amended by adding a subsection to
24read:

25§ 5903. Duties of the board to advise and report to heads of
26departments [and], members and participants.

27(a) Manual of regulations.--The board shall, with the advice
28of the Attorney General and the actuary, prepare and provide,
29within 90 days of the effective date of this part, a manual
30incorporating rules and regulations consistent with the

1provisions of this part to the heads of departments who shall
2make the information contained therein available to the general
3membership. The board shall thereafter advise the heads of
4departments within 90 days of any changes in such rules and
5regulations due to changes in the law or due to changes in
6administrative policies. As soon as practicable after the
7commissioner's announcement with respect thereto, the board
8shall also advise the heads of departments as to any cost-of-
9living adjustment for the succeeding calendar year in the amount
10of the limitation under IRC § 401(a)(17) and the dollar amounts
11of the limitations under IRC § 415[(b)]. As soon as practicable
12after January 1 of each year, the board shall also advise the
13heads of departments of the employees for whom, pursuant to
14section 5502.1 (relating to waiver of regular member
15contributions and Social Security integration member
16contributions), pickup contributions are not to be made.

17* * *

18(b.1) Participant status statements.--The board shall have
19furnished annually to each participant, on or before April 1 and
20more frequently as the board may agree or as required by law, a
21statement for each participant in the plan showing the
22accumulated total defined contributions credited to the
23participant's individual investment account, the nature and type
24of investments and the investment allocation of future
25contributions as of December 31 of the previous year and
26requesting the participant to make any necessary correction or
27revision regarding his designated beneficiary.

28* * *

29Section 31. Section 5904(c)(2) of Title 71 is amended to
30read:

1§ 5904. Duties of the board to report to the Public School
2Employees' Retirement Board.

3* * *

4(c) Applications for benefits for school employees.--Upon
5receipt of notification and the required data from the Public
6School Employees' Retirement Board that a former State employee
7who elected multiple service has applied for a public school
8employees' retirement benefit or, in the event of his death, his
9legally constituted representative has applied for such benefit,
10the board shall:

11* * *

12(2) transfer to the Public School Employees' Retirement
13Fund the total accumulated deductions standing to such
14member's credit and the actuarial reserve required on account
15of years of credited service in the State system, final
16average salary determined on the basis of his compensation as 
17a member in both systems and the average noncovered salary to
18be charged to the State accumulation account, the State
19Police benefit account or the enforcement officers' benefit
20account, as each case may require.

21* * *

22Section 32. Section 5905 heading, (b)(3), (c.1) and (g) of
23Title 71, amended October 24, 2012 (P.L.1436, No.181), are
24amended and the section is amended by adding subsections to
25read:

26§ 5905. Duties of the board regarding applications and
27elections of members and participants.

28* * *

29(b) School employees electing multiple service status.--Upon
30receipt of notification from the Public School Employees'

1Retirement Board that a former State employee has become an
2active member in the Public School Employees' Retirement System
3and has elected to become a member with multiple service status
4the board shall:

5* * *

6(3) in case of a former State employee who is not
7receiving an annuity from the system and his total
8accumulated deductions were withdrawn, certify to the former
9State employee the accumulated deductions as they would have
10been at the time of his separation had he been a full
11coverage member together with statutory interest for all
12periods of subsequent State service eligible for membership 
13in the system and school service as a member of the Public 
14School Employees' Retirement System to the date of repayment.
15Such amount shall be restored by him and shall be credited
16with statutory interest as such payments are restored.

17* * *

18(c.1) Termination of service by a member.--In the case of
19any member terminating State service who is entitled to an
20annuity and who is not then a disability annuitant, the board
21shall advise such member in writing of any benefits from the 
22system to which he may be entitled under the provisions of this
23part and shall have the member prepare, on or before the date of
24termination of State service, one of the following three forms,
25a copy of which shall be given to the member and the original of
26which shall be filed with the board:

27(1) an application for the return of total accumulated
28deductions;

29(2) an election to vest his retirement rights and, if he
30is a joint coverage member and so desires, elect to become a

1full coverage member and agree to pay within 30 days of the
2date of termination of service the lump sum required; or

3(3) an application for an immediate annuity and, if he
4desires:

5(i) an election to convert his medical, major
6medical and hospitalization insurance coverage to the
7plan for State annuitants; and

8(ii) if he is a joint coverage member, an election
9to become a full coverage member and an agreement to pay
10within 30 days of date of termination of service the lump
11sum required.

12(c.2) Termination of service by a participant.--In the case
13of any participant terminating State service, the board shall
14advise the participant in writing of the accumulated total
15defined contributions credited to the participant's individual
16investment account as of the date stated in the writing, any
17notices regarding rollover or other matters required by IRC or
18other law, the obligation of the participant to commence
19distributions from the plan by the participant's required
20beginning date and the ability to receive all or part of the
21balance in the participant's individual investment account in a
22lump sum or in such other form as the board may authorize or is
23required by law.

24* * *

25(e.2) Notification to inactive participants approaching
26required beginning date.--The board shall notify each inactive
27participant who has terminated State service and had not
28commenced distribution by 90 days before the participant's
29required beginning date in writing that the participant has an
30obligation to commence distributions by his required beginning

1date in a form and manner required by IRC § 401(a)(9) and other
2applicable provisions of the IRC.

3* * *

4(f.1) Initial payment to a participant.--The board shall
5make the initial payment to a participant who has applied for a
6distribution within 60 days of the filing of his application.

7(g) Death benefits.--Upon receipt of notification from the
8head of a department of the death of an active member, a member
9performing USERRA leave [or], a member on leave without pay, an 
10active participant, an inactive participant on leave without pay 
11or a former participant performing USERRA leave, the board shall
12advise the designated beneficiary of the benefits to which he is
13entitled, and shall make the first payment to the beneficiary
14within 60 days of receipt of certification of death and other
15necessary data. If no beneficiary designation is in effect at
16the date of the member's death or no notice has been filed with
17the board to pay the amount of the benefits to the member's
18estate, the board is authorized to pay the benefits to the
19executor, administrator, surviving spouse or next of kin of the
20deceased member, and payment pursuant hereto shall fully
21discharge the fund from any further liability to make payment of
22such benefits to any other person. If the surviving spouse or
23next of kin of the deceased member cannot be found for the
24purpose of paying the benefits for a period of seven years from
25the date of death of the member, then the benefits shall be
26escheated to the Commonwealth for the benefit of the fund. If no 
27beneficiary designation is in effect at the date of a 
28participant's death or no notice has been filed with the board 
29to pay the amount of the benefits to the participant's estate, 
30the board is authorized to pay the benefits to the surviving
 

1spouse, executor, administrator or next of kin of the deceased 
2participant and payment pursuant hereto shall fully discharge 
3the fund from any further liability to make payment of such 
4benefits to any other person.

5* * *

<-6Section 32.1. Section 5905.1(a) and (b)(2) and (3) of Title
771 are amended to read:

8§ 5905.1. Installment payments of accumulated deductions.

9(a) General rule.--Notwithstanding any other provision of
10this part, whenever a member elects to withdraw his total
11accumulated deductions pursuant to section 5311(a) (relating to
12eligibility for refunds) or 5701 (relating to return of total
13accumulated deductions) or elects to receive a portion of his
14benefit payable as a lump sum pursuant to section
155705(a)(4)(iii) or (a.1) (relating to member's options), the
16member may elect to receive the amount in not more than four
17installments.

18(b) Payment of first installment.--The payment of the first
19installment shall be made in the amount and within seven days of
20the date specified by the member, except as follows:

21* * *

22(2) In the case of an election as provided in section
235705(a)(4)(iii) or (a.1) by a member terminating service
24within 60 days prior to the end of a calendar year and upon
25receipt of all required data from the head of the department
26and, if the member has Class G, Class H, Class I, Class J,
27Class K, Class L, Class M or Class N service, any data
28required from the county retirement system or pension plan to
29which the member was a contributor before being transferred
30to State employment, the board shall not be required to pay

1the first installment prior to 21 days after the later of the
2filing of the application and the receipt of the data or the
3date of termination of service, but, unless otherwise
4directed by the member, the payment shall be made no later
5than 45 days after the filing of the application and the
6receipt of the data or the date of termination of service,
7whichever is later.

8(3) In the case of an election as provided in section
95705(a)(4)(iii) or (a.1) by a member who is not terminating
10service within 60 days prior to the end of a calendar year
11and upon receipt of all required data from the head of the
12department and, if the member has Class G, Class H, Class I,
13Class J, Class K, Class L, Class M or Class N service, any
14data required from the county retirement system or pension
15plan to which the member was a contributor before being
16transferred to State employment, the board shall not be
17required to pay the first installment prior to 45 days after
18the filing of the application and the receipt of the data or
19the date of termination of service, whichever is later.

20* * *

21Section 33. Section 5906(a) introductory paragraph and (3),
22(b), (d), (e), (g), (h), (i) and (l) of Title 71, amended
23October 24, 2012 (P.L.1436, No.181), are amended and the section
24is amended by adding subsections to read:

25§ 5906. Duties of heads of departments.

26(a) Status of members and participants.--The head of
27department shall, at the end of each pay period, notify the
28board in a manner prescribed by the board of salary changes
29effective during that period for any members and participants of
30the department, the date of all removals from the payroll, and

1the type of leave of any members and participants of the
2department who have been removed from the payroll for any time
3during that period, and:

4* * *

5(3) if the removal is due to termination of State
6service, he shall furnish the board with a complete State
7service record, including service in other departments or
8agencies, or creditable nonstate service and;

9(i) in the case of death of the member or 
10participant the head of the department shall so notify
11the board;

12(ii) in the case of a service connected disability
13of a member the head of department shall, to the best of
14his ability, investigate the circumstances surrounding
15the disablement of the member and submit in writing to
16the board information which shall include but not
17necessarily be limited to the following: date, place and
18time of disablement to the extent ascertainable; nature
19of duties being performed at such time; and whether or
20not the duties being performed were authorized and
21included among the member's regular duties. In addition,
22the head of department shall furnish in writing to the
23board all such other information as may be related to the
24member's disablement;

25(iii) in the case of a member terminating from The
26Pennsylvania State University who is a member of the
27system with five or more but less than ten eligibility
28points and who has terminated State service on June 30,
291997, because of the transfer of his job position or
30duties to a controlled organization of the Penn State

1Geisinger Health System or because of the elimination of
2his job position or duties due to the transfer of other
3job positions or duties to a controlled organization of
4the Penn State Geisinger Health System, the head of the
5department shall so certify to the board.

6(b) Records and information.--At any time at the request of
7the board and at termination of service of a member or a 
8participant, the head of department shall furnish service and
9compensation records and such other information as the board may
10require and shall maintain and preserve such records as the
11board may direct for the expeditious discharge of its duties.

12* * *

13(c.1) Participant and employer defined contributions.--The
14head of the department shall:

15(1) Cause the mandatory pickup participant contributions
16on behalf of a participant to be made and cause to be
17deducted any voluntary contributions authorized by a
18participant.

19(2) Cause the employer defined contributions on behalf
20of a participant to be made.

21(3) Notify the board at times and in a manner prescribed
22by the board of the compensation of any participant to whom
23the limitation under IRC § 401(a)(17) either applies or is
24expected to apply and cause such participant's contributions
25to be deducted from payroll to cease at the limitation under
26IRC § 401(a)(17) on the payroll date if and when such limit
27shall be reached.

28(4) Certify to the State Treasurer the amounts picked up
29and deducted and the employer defined contributions being
30made and send the total amount picked up, deducted and

1contributed together with a duplicate of such voucher to the
2secretary of the board every pay period or on such schedule
3as established by the board.

4(d) New employees subject to mandatory membership or 
5participation.--Upon the assumption of duties of each new State
6employee whose membership in the system or plan is mandatory,
7the head of department shall cause an application for membership
8or participation and a nomination of beneficiary to be made by
9such employee and filed with the board and shall make pickup
10contributions or mandatory pickup participant contributions from
11the effective date of State employment.

12(e) New employees subject to optional membership or 
13participation.--The head of department shall, upon the
14employment or entering into office of any State employee whose
15membership in the system or participation in the plan is not
16mandatory, inform such employee of his opportunity to become a
17member of the system or participant in the plan. If such
18employee so elects, the head of department shall cause an
19application for membership and a nomination of beneficiary to be
20made by him and filed with the board and shall cause proper
21contributions to be made from the effective date of membership
22or participation.

23* * *

24(g) Former school employee contributors.--The head of
25department shall, upon the employment of a former contributor to
26the Public School Employees' Retirement System who is not an
27annuitant of the Public School Employees' Retirement System,
28advise such employee of his right to elect within 365 days of
29entry into the system to become a multiple service member, and
30in the case of any such employee who so elects and has withdrawn

1his accumulated deductions, require him to reinstate his credit
2in the Public School Employees' Retirement System. The head of
3the department shall advise the board of such election. This 
4subsection shall not apply to a State employee who is employed 
5in a position where he is or may be a participant in the plan 
6other than by an election under section 5416 (relating to 
7election by members to be participants).

8(h) Former school employee annuitants.--The head of
9department shall, upon the employment of an annuitant of the
10Public School Employees' Retirement System who applies for
11membership in the system, advise such employee that he may elect
12multiple service membership within 365 days of entry into the
13system and if he so elects his public school employee's annuity
14will be discontinued effective upon the date of his return to
15State service and, upon termination of State service and
16application for an annuity, the annuity will be adjusted in
17accordance with section 5706 (relating to termination of
18annuities). The head of department shall advise the board of
19such election. This subsection shall not apply to a State 
20employee who is employed in a position where he is or may be a 
21participant in the plan other than by an election under section 
225416.

23(i) Annual statement to members.--Annually, upon receipt
24from the board, the head of department shall furnish to each
25member the statement specified in section 5903(b) (relating to
26duties of the board to advise and report to heads of departments
27[and], members and participants).

28* * *

29(l) State employees performing USERRA or military-related 
30leave of absence.--The head of department shall report to the
 

1board any State employee who ceases to be an active member or 
2active participant to perform USERRA service, or who is granted 
3a leave of absence under 51 Pa.C.S. § 4102 (relating to leaves 
4of absence for certain government employees) or a military leave 
5of absence under 51 Pa.C.S. § 7302 (relating to granting 
6military leaves of absence), the date on which the USERRA 
7service, leave of absence or military leave of absence began, 
8the date on which the State employee is reemployed from USERRA 
9leave or returns after the leave of absence or military leave of 
10absence, if the event occurs, and any other information the 
11board may require or direct.

12* * *

13(n) Obligation of educational institutions to report
14participation and compensation of employees in independent
15retirement programs.--The Pennsylvania State University, the
16State System of Higher Education, State-owned educational
17institutions and community colleges shall report to the board
18the compensation and other information as the board may request
19for the application and administration of sections 5507.1
20(relating to contributions to the system by the Commonwealth and
21other employers starting July 1, 2015) and 5508.1(c) and (d)
22(relating to actuarial cost method for fiscal years beginning
23July 1, 2015, or later) of employees who are participants or
24members in the Public School Employees' Retirement System,
25School Employees' Defined Contribution Plan or independent
26retirement programs approved by the employer.

27Section 34. Section 5907 heading, (a), (e) and (f) of Title
2871 are amended and the section is amended by adding subsections
29to read:

30§ 5907. Rights and duties of State employees [and], members and
 

1participants.

2(a) Information on new employees.--Upon his assumption of
3duties each new State employee shall furnish the head of
4department with a complete record of his previous State service,
5his school service or creditable nonstate service, and proof of
6his date of birth and current status in the system and the plan
7and in the Public School Employees' Retirement System and the 
8School Employees' Defined Contribution Plan. Willful failure to
9provide the information required by this subsection to the
10extent available upon entrance into the system shall result in
11the forfeiture of the right of the member to subsequently assert
12any right to benefits based on any of the required information
13which he failed to provide. In any case in which the board finds
14that a member is receiving an annuity based on false
15information, the total amount received predicated on such false
16information together with statutory interest doubled and
17compounded shall be deducted from the present value of any
18remaining benefits to which the member is legally entitled.

19* * *

20(b.1) Application for participation.--On or after January 1,
212015, in the case of a new employee who is not currently a
22participant in the plan and whose participation is mandatory or
23in the case of a new employee whose participation is not
24mandatory but is permitted and who desires to become a
25participant in the plan, the new employee shall execute an
26application for participation and a nomination of a beneficiary.

27* * *

28(d.2) Contributions for USERRA leave.--Any active
29participant or inactive participant on leave without pay or
30former participant who was reemployed from USERRA leave who

1desires to make mandatory pickup participant contributions and
2voluntary contributions for his USERRA leave shall so notify the
3board within the time period required under 38 U.S.C. Ch. 43
4(relating to employment and reemployment rights of members of
5the uniformed services) and IRC § 414(u) of his desire to make
6such contributions. Upon making the permitted mandatory pickup
7participant contributions within the allowed time period, the
8head of the department shall make the corresponding employer
9defined contributions at the same time.

10(d.3) Voluntary contributions by participant.--Any active
11participant who desires to make voluntary contributions to be
12credited to his individual investment account shall notify the
13board and, upon compliance with the requirements, procedures and
14limitations established by the board in the plan document, may
15do so subject to the limitation under IRC §§ 401(a) and 415 and 
16other applicable law.

17(e) Beneficiary for death benefits from the system.--Every
18member shall nominate a beneficiary by written designation filed
19with the board as provided in section 5906(d) or (e) (relating
20to duties of heads of departments) to receive the death benefit
21payable under section 5707 (relating to death benefits) or the
22benefit payable under the provisions of Option 1 of section
235705(a)(1) (relating to member's options). Such nomination may
24be changed at any time by the member by written designation
25filed with the board. A member may also nominate a contingent
26beneficiary or beneficiaries to receive the death benefit
27provided under section 5707 or the benefit payable under the
28provisions of Option 1 of section 5705(a)(1).

29(e.1) Beneficiary for death benefits from the plan.--Every
30participant shall nominate a beneficiary by written designation

1filed with the board as provided in section 5906(d) or (e) to
2receive the death benefit payable under section 5408 (relating
3to death benefits). A participant may also nominate a contingent
4beneficiary or beneficiaries to receive the death benefit
5provided under section 5408. Such nomination may be changed at
6any time by the participant by written designation filed with
7the board.

8(e.2) Beneficiary for combined service employee.--A combined
9service employee may designate or nominate different persons to
10be beneficiaries, survivor annuitants and successor payees for
11his benefits from the system and the plan.

12(f) Termination of service by members.--Each member who
13terminates State service and who is not then a disability
14annuitant shall execute on or before the date of termination of
15service the appropriate application, duly attested by the member
16or his legally constituted representative, electing to:

17(1) withdraw his total accumulated deductions; or

18(2) vest his retirement rights; and if he is a joint
19coverage member, and so desires, elect to become a full
20coverage member and agree to pay within 30 days of the date
21of termination of service the lump sum required; or

22(3) receive an immediate annuity and may,

23(i) if eligible, elect to convert his medical, major
24medical, and hospitalization coverage to the plan for
25State annuitants; and

26(ii) if he is a joint coverage member, elect to
27become a full coverage member and agree to pay within 30
28days of date of termination of service the lump sum
29required.

30* * *

1(g.1) Deferral of retirement rights.--If a participant
2terminates State service and does not commence receiving a
3distribution, he shall nominate a beneficiary, and he may
4anytime thereafter, but no later than his required beginning
5date, withdraw the accumulated total defined contributions
6standing to his credit or apply for another form of distribution
7required by law or authorized by the board.

8* * *

9Section 35. Sections 5931(b), 5932, 5934, 5935, 5936, 5937,
105938, 5939, 5951 and 5953 of Title 71 are amended to read:

11§ 5931. Management of fund and accounts.

12* * *

13(b) Crediting of interest.--The board, annually, shall allow
14the required interest on the mean amount for the preceding year
15to the credit of each of the accounts other than the individual 
16investment accounts. The amount so allowed shall be credited
17thereto by the board and transferred from the interest reserve
18account.

19* * *

20§ 5932. State Employees' Retirement Fund.

21The fund shall consist of all balances in the several
22separate accounts set apart to be used under the direction of
23the board for the benefit of members of the system; and the
24Treasury Department shall credit to the fund all moneys received
25from the Department of Revenue arising from the contributions
26relating to or on behalf of members of the system required under
27the provisions of Chapter 55 (relating to contributions), and
28any income earned by the investments or moneys of said fund.
29There shall be established and maintained by the board the
30several ledger accounts specified in sections 5933 (relating to

1members' savings account), 5934 (relating to State accumulation
2account), 5935 (relating to annuity reserve account), 5936
3(relating to State Police benefit account), 5937 (relating to
4enforcement officers' benefit account), 5938 (relating to
5supplemental annuity account) and 5939 (relating to interest
6reserve account). The individual investment accounts that are 
7part of the trust shall not be part of the fund. Mandatory 
8pickup participant contributions, voluntary contributions and 
9employer defined contributions made under this part and any 
10income earned by the investment of such contributions shall not 
11be paid or credited to the fund but shall be paid to the trust 
12and credited to the individual investment accounts.

13§ 5934. State accumulation account.

14The State accumulation account shall be the ledger account to 
15which shall be credited all contributions of the Commonwealth or 
16other employers whose employees are members of the system and 
17made in accordance with the provisions of [section 5507(a) or 
18(d) (relating to contributions by the Commonwealth and other 
19employers)] sections 5507(a) or (d) (relating to contributions 
20to the system by the Commonwealth before July 1, 2015) and 
215507.1 (relating to contributions to the system by the 
22Commonwealth and other employers starting July 1, 2015) except 
23that the amounts received under the provisions of the act of May 
2412, 1943 (P.L.259, No.120), and the amounts received under the 
25provisions of the Liquor Code, act of April 12, 1951 (P.L.90, 
26No.21), shall be credited to the State Police benefit account or 
27the enforcement officers' benefit account as the case may be. 
28All amounts transferred to the fund by county retirement systems 
29or pension plans in accordance with the provisions of section 
305507(c) also shall be credited to the State accumulation
 

1account. All amounts transferred to the fund by the Public 
2School Employees' Retirement System in accordance with section 
35303.2(e) (relating to election to convert school service to 
4State service), except amounts credited to the members' savings 
5account, and all amounts paid by the Department of Corrections 
6in accordance with section 5303.2(f) also shall be credited to 
7the State accumulation account. The State accumulation account 
8shall be credited with valuation interest. The reserves 
9necessary for the payment of annuities and death benefits 
10resulting from membership in the system as approved by the board 
11and as provided in Chapter 57 (relating to benefits) shall be 
12transferred from the State accumulation account to the annuity 
13reserve account provided for in section 5935 (relating to 
14annuity reserve account), except that the reserves necessary on 
15account of a member who is an officer of the Pennsylvania State 
16Police or an enforcement officer shall be transferred from the 
17State accumulation account to the State Police benefit account 
18provided for in section 5936 (relating to State Police benefit 
19account) or to the enforcement officers' benefit account as 
20provided for in section 5937 (relating to enforcement officers' 
21benefit account) as the case may be. The reserves necessary for 
22the payment of supplemental annuities in excess of those 
23reserves credited to the supplemental annuity account on June 
2430, 2010, shall be transferred from the State accumulation 
25account to the supplemental annuity account. In the event that 
26supplemental annuities are increased by legislation enacted 
27after December 31, 2009, the necessary reserves shall be 
28transferred from the State accumulation account to the 
29supplemental annuity account.

30§ 5935. Annuity reserve account.

1(a) Credits and charges to account.--The annuity reserve
2account shall be the ledger account to which shall be credited
3the reserves held for payment of annuities and death benefits on
4account of all annuitants except in the case of members who are
5officers of the Pennsylvania State Police or enforcement
6officers. The annuity reserve account shall be credited with
7valuation interest. After the transfers provided in sections
85933 (relating to members' savings account), 5934 (relating to
9State accumulation account) and 5938 (relating to supplemental
10annuity account), all annuity and death benefit payments
11resulting from membership in the system except those payable to
12any member who retires as an officer of the Pennsylvania State
13Police or an enforcement officer shall be charged to the annuity
14reserve account and paid from the fund.

15(b) Transfers from account.--Should an annuitant other than 
16a member who was retired as an officer of the Pennsylvania State 
17Police or an enforcement officer be subsequently restored to 
18active service as a member of the system or as a participant in 
19the plan, the present value of his member's annuity at the time 
20of reentry into State service shall be transferred from the 
21annuity reserve account and placed to his individual credit in 
22the members' savings account. In addition, the actuarial reserve 
23for his annuity less the amount transferred to the members' 
24savings account shall be transferred from the annuity reserve 
25account to the State accumulation account.

26§ 5936. State Police benefit account.

27(a) Credits and charges to account.--The State Police
28benefit account shall be the ledger account to which shall be
29credited all contributions received under the provisions of the
30act of May 12, 1943 (P.L.259, No.120), and any additional

1Commonwealth or other employer contributions provided for in
2[section 5507 (relating to contributions by the Commonwealth and
3other employers)] sections 5507 (relating to contributions to 
4the system by the Commonwealth and other employers before July 
51, 2015) and 5507.1 (relating to contributions to the system by 
6the Commonwealth and other employers starting July 1, 2015) 
7which are creditable to the State Police benefit account. The
8State Police benefit account shall be credited with the required
9interest. In addition, upon the filing of an application for an
10annuity by a member who is an officer of the Pennsylvania State
11Police, the total accumulated deductions standing to the credit
12of the member in the members' savings account and the necessary
13reserves from the State accumulation account shall be
14transferred to the State Police benefit account. Thereafter, the
15total annuity of such annuitant shall be charged to the State
16Police benefit account and paid from the fund.

17(b) Transfers from account.--Should the said annuitant be 
18subsequently restored to active service as a member of the 
19system or as a participant in the plan, the present value of the 
20member's annuity at the time of reentry into State service shall 
21be transferred from the State Police benefit account and placed 
22to his individual credit in the members' savings account. In 
23addition, the actuarial reserve for his annuity calculated as if 
24he had been a member of Class A if he has Class A or Class C 
25service credited; as if he had been a member of Class A-3 if the 
26annuitant has Class A-3 State service credited; or as if he had 
27been a member of Class A-4 if the annuitant has Class A-4 
28service credited, less the amount transferred to the members' 
29savings account shall be transferred from the State Police 
30benefit account to the State accumulation account. Upon
 

1subsequent retirement other than as an officer of the 
2Pennsylvania State Police the actuarial reserve remaining in the 
3State Police benefit account shall be transferred to the 
4appropriate reserve account.

5§ 5937. Enforcement officers' benefit account.

6(a) Credits and charges to account.--The enforcement 
7officers' benefit account shall be the ledger account to which 
8shall be credited moneys transferred from the enforcement 
9officers' retirement account in the State Stores Fund according 
10to the provisions of the act of April 12, 1951 (P.L.90, No.21), 
11known as the Liquor Code, and any additional Commonwealth or 
12other employer contributions provided for in [section 5507 
13(relating to contributions by the Commonwealth and other 
14employers)] sections 5507 (relating to contributions to the 
15system by the Commonwealth and other employers before July 1, 
162015) and 5507.1 (relating to contributions to the system by the 
17Commonwealth and other employers starting July 1, 2015) which 
18are creditable to the enforcement officers' benefit account. The 
19enforcement officers' benefit account shall be credited with the 
20required interest. In addition, upon the filing of an 
21application for an annuity by a member who is an enforcement 
22officer of the Pennsylvania Liquor Control Board, the total 
23accumulated deductions standing to the credit of the member in 
24the members' savings account and the necessary reserves from the 
25State accumulation account shall be transferred to the 
26enforcement officers' benefit account. Thereafter, the total 
27annuity of such annuitant shall be charged to the enforcement 
28officers' benefit account and paid from the fund.

29(b) Transfers from account.--Should the said annuitant be 
30subsequently restored to active service as a member of the
 

1system or as a participant in the plan, the present value of the 
2member's annuity at the time of reentry into State service shall 
3be transferred from the enforcement officers' benefit account 
4and placed to his individual credit in the members' savings 
5account. In addition, the actuarial reserve for his annuity 
6calculated as if he had been a member of Class A if the 
7annuitant does not have any Class AA, Class A-3 or Class A-4 
8service credited; as if he had been a member of Class AA if the 
9annuitant does have Class AA service credited; as if he had been 
10a member of Class A-3 if the annuitant has Class A-3 State 
11service credited; or as if he had been a member of Class A-4 if 
12the annuitant has Class A-4 service credited, less the amount 
13transferred to the members' savings account shall be transferred 
14from the enforcement officers' benefit account to the State 
15accumulation account. Upon subsequent retirement other than as 
16an enforcement officer the actuarial reserve remaining in the 
17enforcement officers' benefit account shall be transferred to 
18the appropriate reserve account.

19§ 5938. Supplemental annuity account.

20The supplemental annuity account shall be the ledger account
21to which shall be credited all contributions from the
22Commonwealth and other employers in accordance with section
235507(b) [(relating to contributions by the Commonwealth and
24other employers)] (relating to contributions to the system by 
25the Commonwealth and other employers before July 1, 2015) for
26the payment of the supplemental annuities provided in sections
275708 (relating to supplemental annuities), 5708.1 (relating to
28additional supplemental annuities), 5708.2 (relating to further
29additional supplemental annuities), 5708.3 (relating to
30supplemental annuities commencing 1994), 5708.4 (relating to

1special supplemental postretirement adjustment), 5708.5
2(relating to supplemental annuities commencing 1998), 5708.6
3(relating to supplemental annuities commencing 2002), 5708.7
4(relating to supplemental annuities commencing 2003) and 5708.8
5(relating to special supplemental postretirement adjustment of
62002) made before July 1, 2010, the amount transferred from the
7State accumulation account to provide all additional reserves
8necessary as of June 30, 2010, to pay such supplemental
9annuities and adjustments, and the amounts transferred from the
10State accumulation account to provide all additional reserves
11necessary as a result of supplemental annuities enacted after
12December 31, 2009. The supplemental annuity account shall be
13credited with valuation interest. The reserves necessary for the
14payment of such supplemental annuities shall be transferred from
15the supplemental annuity account to the annuity reserve account
16as provided in section 5935 (relating to annuity reserve
17account).

18§ 5939. Interest reserve account.

19The interest reserve account shall be the ledger account to 
20which shall be credited all income earned by the fund and to 
21which shall be charged all administrative and investment 
22expenses incurred by the fund. At the end of each year the 
23required interest shall be transferred from the interest reserve 
24account to the credit of each of the accounts of the fund in 
25accordance with the provisions of this subchapter. In addition, 
26at the end of each accounting period, the interest reserve 
27account shall be credited or charged with all recognized changes 
28in the market valuation of the investments of the fund. The 
29administrative and investment expenses of the board relating to 
30the administration of the system and investments of the fund
 

1shall be paid from the fund out of earnings. Any surplus or 
2deficit in the interest reserve account at the end of each year 
3shall be transferred to the State accumulation account.

4§ 5951. State guarantee regarding the State Employees' 
5Retirement System.

6The required interest charges payable, the maintenance of 
7reserves in the fund, and the payment of all annuities and other 
8benefits granted by the board from the system under the 
9provisions of this part relating to the establishment and 
10administration of the system are hereby made obligations of the 
11Commonwealth. All income, interest, and dividends derived from 
12deposits and investments of the system authorized by this part 
13shall be used for the payment of the said obligations of the 
14Commonwealth and shall not be used for any obligations of the 
15plan or trust.

16§ 5953. Taxation, attachment and assignment of funds.

17(a) General rule.--

18(1) Except as provided in paragraphs (2), (3) [and], (4)
19and (5), the right of a person to any benefit or right
20accrued or accruing under the provisions of this part and the
21moneys in the fund and the trust are hereby exempt from any
22State or municipal tax, levy and sale, garnishment,
23attachment, spouse's election, the provisions of Article 
24XIII.1 of the act of April 9, 1929 (P.L.343, No.176), known 
25as The Fiscal Code, or any other process whatsoever, and no 
26participant or beneficiary, successor payee or alternate 
27payee of a participant shall have the ability to commute, 
28sell, assign, alienate, anticipate, mortgage, pledge, 
29hypothecate, commutate or otherwise transfer or convey any 
30benefit or interest in an individual investment account or
 

1rights to receive or direct distributions under this part or 
2under agreements entered into under this part except as 
3otherwise provided in this part and in the case of either a 
4member or a participant except for a set-off by the
5Commonwealth in the case provided in subparagraph (i), and
6shall be unassignable except:

7(i) To the Commonwealth in the case of a member or 
8participant who is terminating State service and has been
9determined to be obligated to the Commonwealth for the
10repayment of money owed on account of his employment or
11to the fund on account of a loan from a credit union to a 
12member which has been satisfied by the board from the
13fund.

14(ii) To a credit union as security for a loan to a 
15member not to exceed $750 and interest not to exceed 6%
16per annum discounted and/or fines thereon if the credit
17union is now or hereafter organized and incorporated
18under the laws of this Commonwealth and the membership of
19such credit union is limited solely to officials and
20employees of the Commonwealth and if such credit union
21has paid to the fund $3 for each such assignment.

22(2) Rights under this part shall be subject to
23forfeiture as provided by the act of July 8, 1978 (P.L.752,
24No.140), known as the Public Employee Pension Forfeiture Act,
25and by or pursuant to section 16(b) of Article V of the
26Constitution of Pennsylvania. Forfeitures under this
27subsection or under any other provision of law may not be
28applied to increase the benefits that any member would
29otherwise receive under this part. Notwithstanding this 
30paragraph, 42 Pa.C.S. § 3352 (relating to pension rights),
 

1the Public Employee Pension Forfeiture Act or section 16(b) 
2of Article V of the Constitution of Pennsylvania, the 
3accumulated mandatory participant contributions and 
4accumulated voluntary contributions standing to the credit of 
5a participant shall not be forfeited but shall be available 
6for payment of fines and restitution as provided by law. 
7Furthermore, amounts in the trust that have been ordered to 
8be distributed to an alternate payee as the result of an 
9equitable distribution of marital property as part of an 
10approved domestic relations order entered before the date of 
11the order or action in a court or other tribunal resulting in 
12a forfeiture of a participant's interest in the trust shall 
13not be subject to 42 Pa.C.S. § 3352, the Public Employee 
14Pension Forfeiture Act or section 16(b) of Article V of the 
15Constitution of Pennsylvania. Any accumulated employer 
16defined contributions forfeited as a result of this paragraph 
17or other law shall be retained by the board and used for the 
18payment of expenses of the plan.

19(3) Rights under this part shall be subject to
20attachment in favor of an alternate payee as set forth in an
21approved domestic relations order.

22(4) Effective with distributions made on or after
23January 1, 1993, and notwithstanding any other provision of
24this part to the contrary, a distributee may elect, at the
25time and in the manner prescribed by the board, to have any
26portion of an eligible rollover distribution paid directly to
27an eligible retirement plan by way of a direct rollover. For
28purposes of this paragraph, a "distributee" includes a member
29[and], a participant, a member's surviving spouse [and], a 
30participant's surviving spouse, a member's former spouse who

1is an alternate payee under an approved domestic relations
2order, a participant's former spouse who is an alternate 
3payee under an approved domestic relations order and anyone 
4else authorized under the IRC and the plan terms approved by 
5the board to have an eligible rollover distribution paid 
6directly to an eligible retirement plan by way of a direct 
7rollover. For purposes of this paragraph, the term "eligible 
8rollover distribution" has the meaning given such term by IRC
9§ 402(f)(2)(A), and "eligible retirement plan" has the
10meaning given such term by IRC § 402(c)(8)(B), except that a
11qualified trust shall be considered an eligible retirement
12plan only if it accepts the distributee's eligible rollover
13distribution; however, in the case of an eligible rollover
14distribution to a surviving spouse, an eligible retirement
15plan is an "individual retirement account" or an "individual
16retirement annuity" as those terms are defined in IRC §
17408(a) and (b).

18(b) Authorized payments from fund.--The board shall be
19authorized to pay from the fund:

20(1) In the case of a member or participant who is
21terminating service, the amount determined after
22certification by the head of the department that the member
23or participant is so obligated, and after review and approval
24by the department or agency's legal representative or upon
25receipt of an assignment from the member or participant in
26the amount so certified[.], except that no payment shall be 
27made from the individual investment account of a participant 
28until the participant otherwise applies for and receives a 
29distribution and shall not exceed the amount of the 
30distribution.

1(2) In the case of a loan to a member the amount of the
2loan and any fine or interest due thereon to the credit union
3except 5% of the total amount due which is to be retained in
4the fund as a collection fee:

5(i) if the member obtaining the loan shall have been
6in default in required payments for a period of not less
7than two years; or

8(ii) at such time as the Department of Banking shall
9require the credit union to charge the amount of the loan
10against the reserve fund of such credit union.

11Any member who shall have pledged such rights as security for
12a loan from a credit union and, on whose behalf the board
13shall have made any payment by reason of that member's
14default, may not thereafter pledge or assign such rights to a
15credit union.

16(3) In the case of a participant whose former spouse is
17an alternate payee of an equitable distribution of marital
18assets under an approved domestic relations order, a lump sum
19of the alternate payee's interest in the participant's
20accumulated total defined contributions. This paragraph
21applies without regard to whether the participant has not
22terminated, is terminating or has terminated State service.

23Section 36. Section 5953.1(a) introductory paragraph and
24(1), (b), (c) and (d) of Title 71 are amended and the section is
25amended by adding a subsection to read:

26§ 5953.1. Approval of domestic relations orders.

27(a) Certification regarding members.--A domestic relations
28order pertaining to a member of the system shall be certified as
29an approved domestic relations order by the secretary of the
30board, or his designated representative, only if that order

1meets all of the following:

2(1) Requires the system to provide any type or form of
3benefit or any option applicable to members already provided
4under this part.

5* * *

6(a.1) Certification regarding participants.--A domestic
7relations order pertaining to a participant shall be certified
8as an approved domestic relations order by the secretary of the
9board or his designated representative only if that order meets
10all of the following:

11(1) Does not require the plan to provide any type or
12form of benefit or any option applicable to members of the
13system or participants in the plan.

14(2) Does not require the segregation of the alternate
15payee's share of the participant's individual investment
16account into a subaccount or newly established individual
17account titled in the name of the alternate payee.

18(3) Does not require the plan to recover or distribute
19any funds which were distributed to the participant or at the
20participant's direction prior to the approval of the domestic
21relations order by the secretary of the board or his
22designated representative.

23(4) Requires the plan to pay to the alternate payee no
24more than the lesser of the amount of the participant's
25individual investment account specified by the domestic
26relations order or the amount of the participant's individual
27investment account as of the date of the transfer of the
28alternate payee's share to the alternate payee.

29(5) States that the plan shall not be required to recoup
30or make good for losses in value to the participant's

1individual investment account incurred between the date of
2the valuation of the account used for equitable distribution
3purposes and the date of distribution to the alternate payee.

4(6) Specifies the amount or percentage of the
5participant's individual investment account to be paid to the
6alternate payee and the date upon which such valuation is
7based.

8(7) Specifies the name and last known mailing address,
9if any, of the participant and the name and last known
10mailing address of each alternate payee covered by the order
11and states that it is the responsibility of each alternate
12payee to keep a current mailing address on file with the
13plan.

14(8) Does not grant an alternate payee the rights,
15privileges or options available to a participant.

16(9) Requires the participant to execute an authorization
17allowing each alternate payee to monitor the participant's
18compliance with the terms of the domestic relations order
19through access to information concerning the participant
20maintained by the plan. Any authorization granted pursuant to
21this section shall be construed only as an authorization for
22the alternate payee to receive information concerning the
23participant which relates to the administration, calculation
24and payment of the alternate payee's share of the
25participant's account and not as an authorization to exercise
26the rights afforded to participants or obtain information
27which is not related to the administration, calculation and
28payment of alternate payee's share of the participant's
29individual investment account.

30(10) In the case of a participant who has not yet begun

1to receive distributions as of the date the domestic
2relations order is approved by the secretary of the board or
3his designated representative, requires the immediate
4distribution of the alternate payee's share of the
5participant's individual investment account, which may be by
6direct payment, eligible rollover or trustee-to-trustee
7transfer to another eligible plan or qualified account owned
8by the alternate payee.

9(11) In the case of a participant who is currently
10receiving distributions from the trust as of the date the
11domestic relations order is approved by the secretary of the
12board or his designated representative, the domestic
13relations order may not order the board to pay the alternate
14payee more than the balance available in the participant's
15individual investment account as of the date the order is
16approved or require that distributions continue to the
17alternate payee after the death of the participant and final
18settlement of the participant's individual investment
19account.

20(b) Determination by secretary.--Within a reasonable period
21after receipt of a domestic relations order, the secretary of
22the board, or his designated representative, shall determine
23whether this order is an approved domestic relations order and
24notify the member or participant and each alternate payee of
25this determination. Notwithstanding any other provision of law,
26the exclusive remedy of any member, participant or alternate
27payee aggrieved by a decision of the secretary of the board, or
28his designated representative, shall be the right to an
29adjudication by the board under 2 Pa.C.S. Ch. 5 Subch. A
30(relating to practice and procedure) with appeal therefrom to

1the Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to
2judicial review) and 42 Pa.C.S. § 763(a)(1) (relating to direct
3appeals from government agencies).

4(c) Other orders.--The requirements for approval identified
5in [subsection (a)] subsections (a) and (a.1) shall not apply to
6any domestic relations order which is an order [for] of support
7as the term is defined at 23 Pa.C.S. § 4302 (relating to
8definitions) or an order for the enforcement of arrearages as
9provided in 23 Pa.C.S. § 3703 (relating to enforcement of
10arrearages). These orders shall be approved to the extent that
11they do not attach moneys in excess of the limits on attachments
12as established by the laws of the United States and this
13Commonwealth[.], require distributions of benefits in a manner 
14which would violate the laws of the United States, any other 
15state or this Commonwealth or require the distribution of funds 
16for support or enforcement of arrearages against any participant 
17who is not receiving distributions from the plan at the time 
18such order is entered.

19(d) Obligation discharged.--Only the requirements of this
20part and any regulations promulgated hereunder shall be used to
21govern the approval or disapproval of a domestic relations
22order. Therefore, if the secretary of the board, or his
23designated representative, acts in accordance with the
24provisions of this part and any promulgated regulations in
25approving or disapproving a domestic relations order, then the
26obligations of the system or the plan with respect to such
27approval or disapproval shall be discharged.

28Section 37. Sections 5953.2, 5953.3 and 5953.4(a) of Title
2971 are amended to read:

30§ 5953.2. Irrevocable beneficiary.

1Notwithstanding any other provision of this part, a domestic
2relations order may provide for an irrevocable beneficiary. A
3domestic relations order requiring the nomination of an
4irrevocable beneficiary shall be deemed to be one that requires
5a member or participant to nominate an alternate payee as a
6beneficiary and that prohibits the removal or change of that
7beneficiary without approval of a court of competent
8jurisdiction, except by operation of law. Such a domestic
9relations order may be certified as an approved domestic
10relations order by the secretary of the board, or his designated
11representative, after the member or participant makes such
12nomination, in which case the irrevocable beneficiary so ordered
13by the court cannot be changed by the member or participant
14without approval by the court.

15§ 5953.3. Irrevocable survivor annuitant.

16Notwithstanding any other provisions of this part, a domestic
17relations order pertaining to a member may provide for an
18irrevocable survivor annuitant. A domestic relations order
19requiring the designation of an irrevocable survivor annuitant
20shall be deemed to be one that requires a member to designate an
21alternate payee as a survivor annuitant and that prohibits the
22removal or change of that survivor annuitant without approval of
23a court of competent jurisdiction, except by operation of law.
24Such a domestic relations order may be certified as an approved
25domestic relations order by the secretary of the board, or his
26designated representative, in which case the irrevocable
27survivor annuitant so ordered by the court cannot be changed by
28the member without approval by the court. A person ineligible to
29be designated as a survivor annuitant may not be designated as
30an irrevocable survivor annuitant.

1§ 5953.4. Amendment of approved domestic relations orders.

2(a) Deceased alternate payee.--In the event that the
3alternate payee predeceases the member or the participant and
4there are benefits payable to the alternate payee, the divorce
5court may amend the approved domestic relations order to
6substitute a person for the deceased alternate payee to receive
7any benefits payable to the deceased alternate payee.

8* * *

9Section 38. Title 71 is amended by adding a section to read:

10§ 5953.6. Irrevocable successor payee.

11Notwithstanding any other provisions of this part, a domestic 
12relations order pertaining to a participant may provide for an 
13irrevocable successor payee only if the participant is receiving 
14a payment pursuant to a payment option provided by the board 
15that allows for a successor payee. A domestic relations order 
16requiring the designation of an irrevocable successor payee 
17shall be deemed to be one that requires a participant who is 
18receiving payments from an annuity or other distribution option 
19to designate an alternate payee as a successor payee and that 
20prohibits the removal or change of that successor payee without 
21approval of a court of competent jurisdiction, except by 
22operation of law. Such a domestic relations order may be 
23certified as an approved domestic relations order by the 
24secretary of the board or his designated representative, in
25which case the irrevocable successor payee so ordered by the 
26court shall not be changed by the participant without approval 
27by the court. A person ineligible to be designated as a 
28successor payee shall not be designated as an irrevocable 
29successor payee. A court shall not name an irrevocable successor 
30payee if the alternate payee is eligible to receive a lump sum
 

1distribution of the alternate payee's portion of the marital 
2portion of the pension benefit.

3Section 39. Sections 5954 and 5955 of Title 71 are amended
4to read:

5§ 5954. Fraud and adjustment of errors.

6(a) Penalty for fraud.--Any person who shall knowingly make
7any false statement or shall falsify or permit to be falsified
8any record or records of this system or plan in any attempt to
9defraud the system or plan as a result of such act shall be
10guilty of a misdemeanor of the second degree.

11(b) Adjustment of errors.--Should any change or mistake in 
12records result in any member, participant, beneficiary [or], 
13survivor annuitant or successor payee receiving from the system 
14or plan more or less than he would have been entitled to receive 
15had the records been correct, then regardless of the intentional 
16or unintentional nature of the error and upon the discovery of 
17such error, the board shall correct the error and if the error 
18affected contributions to or payments from the system, then so 
19far as practicable shall adjust the payments which may be made 
20for and to such person in such a manner that the actuarial 
21equivalent of the benefit to which he was correctly entitled 
22shall be paid. If the error affected contributions to or 
23payments from the plan, then the board shall take such action as 
24shall be provided for in the plan document.

25§ 5955. Construction of part.

26(a) Exclusive source of rights and benefits.--Regardless of 
27any other provision of law, pension and benefit rights of State 
28employees shall be determined solely by this part or any 
29amendment thereto, and no collective bargaining agreement nor 
30any arbitration award between the Commonwealth and [its] other
 

1employers and their employees or their collective bargaining 
2representatives shall be construed to change any of the 
3provisions herein, to require the board to administer pension or 
4retirement benefits not set forth in this part or not 
5established by the board in the plan document, to require the 
6board to modify, amend or change any of the terms and provisions 
7of the plan document, or otherwise require action by any other 
8government body pertaining to pension or retirement benefits or 
9rights of State employees. Notwithstanding the foregoing, any 
10pension or retirement benefits or rights previously so 
11established by or as a result of an arbitration award shall 
12remain in effect after the expiration of the current collective 
13bargaining agreement between the State employees so affected and 
14the Commonwealth until the expiration of each of the collective 
15bargaining agreements in effect on January 1, 2011, at which 
16time the classes of membership and resulting member contribution 
17rates and contributions for creditable nonstate service, 
18eligibility for vesting, withdrawal and superannuation 
19annuities, optional modification of annuities and other terms 
20and conditions related to class of membership shall be as 
21determined by this part for employees covered by those and 
22successor collective bargaining agreements. For purposes of 
23administering this part, for those State employees who are 
24members of each such collective bargaining unit, the date 
25January 1, 2011, contained in this part, except in this section, 
26shall be replaced with the date of the day immediately following 
27the expiration of each such collective bargaining agreement. The 
28provisions of this part insofar as they are the same as those of 
29existing law are intended as a continuation of such laws and not 
30as new enactments. The provisions of this part shall not affect
 

1any act done, liability incurred, right accrued or vested, or 
2any suit or prosecution pending or to be instituted to enforce 
3any right or penalty or to punish any offense under the 
4authority of any repealed laws.

5(b) State employee on leave without pay.--As used within
6this part, the term "inactive member on leave without pay" does
7not include a combined service employee who is an inactive
8participant on leave without pay.

9(c) Officer or member of the Pennsylvania State Police.--The 
10following shall apply:

11(1) Notwithstanding a provision of subsection (a) or
12section 12.1 of the act of November 23, 2010 (P.L.1269,
13No.120) regarding the continued effectiveness of pension or
14retirement benefits or rights previously established by or as
15a result of a binding arbitration award issued before July 1,
161989, pursuant to the act of June 24, 1968 (P.L.237, No.111),
17referred to as the Policemen and Firemen Collective
18Bargaining Act, and implemented by the board, the pension or
19retirement benefits or rights of a State employee who on
20January 1, 2015, is a current or former State police officer,
21shall be <-a as provided in this part as if the binding
22arbitration award was not issued, except as provided under
23this subsection.

<-24(2) A State employee who on January 1, 2015, is a
25current or former State police officer shall be eligible to
26accrue benefits pursuant to the binding arbitration as
27implemented by the board until the termination of State
28service or election to be a participant in the plan. Any
29State service performed after a termination of State service
30or election to participate in the plan shall not accrue

1benefits under the binding arbitration award or in the
2system, but may, if eligible, result in participation in the
3plan.

4(3) A State employee who on January 1, 2015, is not a
5current or former State police officer who subsequently
6becomes a State police officer shall be eligible to accrue
7benefits pursuant to the binding arbitration award until the
8termination of State service or election to be a participant
9in the plan, provided that the State employee has not
10terminated State service or elected to be a participant in
11the plan prior to becoming a State police officer.

<-12(2)  A State employee who meets the following shall be
13eligible to receive the maximum single life annuity, before
14optional modification under section 5705 (relating to
15member's options), that the State employee would have been
16eligible to receive if this subsection not been enacted:

17(i) Is a current or former State police officer.

18(ii) Has 20 or more qualifying eligibility points on
19or before December 31, 2014.

20(iii) Terminates State service.

21(3) (i)  A State employee who on December 31, 2014, is a
22current or former State police officer who has less than
2320 qualifying eligibility points and who terminates State
24service with 20 or more qualifying eligibility points
25shall be eligible to receive a maximum single life
26annuity, before optional modification under section 5705.

27(ii) The maximum single life annuity under
28subparagraph (i) shall be calculated with the benefit
29provided under section 5702(a)(1) replaced by an annuity
30calculated according to the formula specified in this

1subparagraph and explained by subparagraph (iii):

2(A) Divide:

3(I) YW; by

4(II) YT.

5(B) Multiply:

6(I) the quotient under clause (A); by

7(II) SH.

8(C) Multiply:

9(I) the product under clause (B); by

10(II) P.

11(D) Subtract:

12(I) YW; from

13(II) YT.

14(E) Divide:

15(I) the difference under clause (D); by

16(II) YT.

17(F) Multiply:

18(I) the quotient under clause (E); by

19(II) P.

20(G) Multiply:

21(I) the product under clause (F); by

22(II) FAS.

23(H) Add:

24(I) the product under clause (C); to

25(II) the product under clause (G).

26(iii) For the purposes of subparagraph (ii), the
27following shall apply:

28(A) P shall equal:

29(I) .5 if the member has 20 but less than 25
30qualifying eligibility points; or

1(II) .75 if the member has 25 or more
2qualifying eligibility points.

3(B) YT shall equal:

4(I) 20 if the member has 20 but less than 25
5qualifying eligibility points; or

6(II) 25 if the member has 25 or more
7qualifying eligibility points.

8(C) YW shall equal years of credited service 
9that are not post-January 2015 service.

10(D) SH shall equal the member's highest year 
11compensation excluding the year in which the member 
12terminates.

13(E) FAS shall equal final average salary
14calculated for service credited as post-January 2015
15service.

16(4) An individual who is not a State employee on January
171, 2015, or who is a State employee but not a member of the
18system on January 1, 2015, who subsequently becomes a State
19police officer shall not be eligible to accrue benefits
20pursuant to the binding arbitration award, but instead shall
21be eligible to be a participant in the plan. This paragraph
22shall apply without regard to prior service as a State police
23officer or whether service was performed or benefits accrued
24under this binding arbitration award.

25(5) To the extent that any officer or member of the 
26Pennsylvania State Police who is eligible to retire after 
27June 30, 1989, <-with benefits in whole or in part as provided 
28in a binding arbitration award issued before July 1, 1989, 
29pursuant to the act of June 24, 1968 (P.L.237, No.111), 
30referred to as the Policemen and Firemen Collective
 

1Bargaining Act, as implemented by the board with a benefit 
2based on 50% of highest year salary upon accruing 20 or more 
3years of credited State service or nonstate service in the 
4system, or based on 75% of highest year salary upon accruing 
525 or more years of credited State or nonstate service in the 
6system, such eligibility shall be determined solely on 
7service credited, compensation paid and contributions made as 
8a member of the system. Service as a State police officer 
9credited in the system shall not operate to prevent any State 
10employee from being a participant in the plan for any State 
11service that would otherwise result in participation in the 
12plan. Any State service performed, compensation paid and 
13contributions made as a participant in the plan shall not be 
14included in determining eligibility for and the amount of 
15benefits provided from the system, provided however, that 
16entitlement to actual receipt of benefits are subject to the 
17provisions of this part regarding employment and termination 
18as a State employee. Any benefit resulting from participation 
19in the plan shall be in addition to any benefit a State 
20police officer may be eligible to receive as a member of the 
21system.

<-22(6) For the purposes of this subsection, the term
23"qualifying eligibility points" shall mean eligibility points
24as a result of State service, nonstate service or being
25reemployed from USERRA leave.

26Section 40. Nothing in this act shall be construed or deemed
27to imply that the release or making public of any record,
28material or data described in 71 Pa.C.S. § 5902(e)(2) as not
29being a public record is a violation of the State Employees'
30Retirement Board's fiduciary duties.

1Section 41. Notwithstanding any regulation promulgated by
2the State Employees' Retirement Board, application or
3interpretation of 71 Pa.C.S. Pt. XXV, or administrative practice
4to the contrary, a combined service employee's eligibility for a
5superannuation annuity or other rights and benefits based on
6attaining superannuation age or a superannuation score of 92
7shall be determined by including only those eligibility points
8actually accrued.

9Section 42. (a) Nothing in this act which amends or
10supplements provisions of 51 Pa.C.S. § 7306 or 71 Pa.C.S. Pt.
11XXV in relation to requirements:

12(1) for qualification of the State Employees' Defined
13Contribution Plan as a qualified pension plan under the
14Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
151 et seq.) or compliance with 38 U.S.C. Ch. 43 (relating to
16employment and reemployment rights of members of the
17uniformed services);

18(2) for contributions to, participation in or benefits
19from the State Employees' Defined Contribution Plan or State
20Employees' Defined Contribution Trust; or

21(3) for domestic relations orders regarding alternate
22payees of participants in the State Employees' Defined
23Contribution Plan;

24nor any construction of 51 Pa.C.S. or 71 Pa.C.S. Pt. XXV, as so
25amended or supplemented, or any rules or regulations adopted
26under 51 Pa.C.S. or 71 Pa.C.S. Pt. XXV, or any term or provision
27of the State Employees' Defined Contribution Plan or State
28Employees' Defined Contribution Trust, whether established by
29statute or in the plan document or trust declaration, shall
30create in any member of the State Employees' Retirement System

1or participant in the State Employees' Defined Contribution Plan
2or in any other person claiming an interest in the account of
3any such member or participant a contractual right, either
4express or implied, in such provisions nor in any construction
5of 51 Pa.C.S. § 7306 or 71 Pa.C.S. Pt. XXV, as so amended or
6supplemented, or any rules or regulations adopted under 51
7Pa.C.S. or 71 Pa.C.S. Pt. XXV. The provisions of 71 Pa.C.S. Pt.
8XXV shall remain subject to the Internal Revenue Code of 1986
9and 38 U.S.C. Ch. 43 and regulations thereunder, and the General
10Assembly reserves to itself such further exercise of its
11legislative power to amend or supplement such provisions as may
12from time to time be required in order to maintain the
13qualification of such system as a qualified pension plan under
14section 401(a) and other applicable provisions of the Internal
15Revenue Code of 1986 and 38 U.S.C. Ch. 43.

16(b) References in this act to the Internal Revenue Code of
171986 or 38 U.S.C. Ch. 43, or administrative regulations
18promulgated thereunder, are intended to include such laws and
19regulations in effect on the effective date of this act and as
20they may hereafter be amended or supplemented or supplanted by
21successor provisions.

22Section 43. Nothing in this act shall be construed or deemed
23to imply that, but for the expressed applications of the
24limitations on benefits or other requirements under section
25401(a) or other applicable provisions of the Internal Revenue
26Code of 1986 (Public Law 99-514, 26 U.S.C. § 401 et seq.), those
27limitations would not otherwise apply to such participants or to
28members of the State Employees' Retirement System and the
29benefits payable under 71 Pa.C.S. Pt. XXV.

30Section 44. (a) Notwithstanding any provisions of this part

1to the contrary, no contributions or benefit related to the
2State Employees' Defined Contribution Plan shall be made or
3payable to the extent that such contributions or benefits exceed
4any limitation under section 415 of the Internal Revenue Code of
51986 (Public Law 99-514, 26 U.S.C. § 1 et seq.) as in effect
6with respect to governmental plans as such term is defined in
7section 414(d) of the Internal Revenue Code of 1986 on the date
8the contributions or benefit payment becomes effective. Any
9increase in any limitation under section 415 of the Internal
10Revenue Code of 1986 shall be applicable to all current and
11future participants.

12(b) No future amendment of this part that increases
13contributions or benefits for active participants, inactive
14participants or participants receiving distributions shall be
15deemed by the rules of statutory construction or otherwise to
16provide for contributions or benefits in excess of any
17limitation, as adjusted or subsequently increased, provided for
18under section 415 of the Internal Revenue Code of 1986 unless
19specifically so provided by legislation. Notwithstanding this
20section, any future increase in benefits for any participants in
21the plan are intended to be applicable to the fullest extent
22allowed by law and this section authorizes any such increases in
23limitations or allowable benefits.

24Section 45. The amendment of 71 Pa.C.S. Pt. XXV relating to
25the establishment of and participation in the State Employees'
26Defined Contribution Plan shall apply to all current and former
27members of the State Employees' Retirement System who have
28returned to State service on or after January 1, 2015, after a
29termination of State service, without regard to whether the
30termination occurred before or after January 1, 2015, and

1without regard to whether the State employee was an annuitant,
2inactive member, vestee or special vestee or withdrew
3accumulated deductions during the period of termination. A
4terminated State employee who returns to State service on or
5after January 1, 2015, does so with the expressed and specific
6understanding that he is subject to and accepts the terms and
7provisions of 71 Pa.C.S. Pt. XXV as they exist regarding
8participation in the plan or membership in the system on the
9effective date of reemployment, including, but not limited to,
10benefit formulas and accrual rates, eligibility for annuities
11and distributions, contribution rates, definitions, purchase of
12creditable school, nonschool, State and nonstate service
13provisions and actuarial and funding assumptions.

14Section 46. Nothing in this act shall be construed or deemed
15to imply that any calculation or actuarial method used by the
16State Employees' Retirement Board, its actuaries or the State
17Employees' Retirement System was not in accordance with the
18provisions of the State Employees' Retirement Code or other
19applicable law prior to the effective date of this section.

20Section 47. (a) Notwithstanding any other provision of law,
21any change in accrued liability of the State Employees'
22Retirement System created by this act as a result of changes in
23benefits shall be funded in equal dollar installments over a 
24period of 20 years beginning July 1, 2014. Any change in accrued 
25liability as a result of the amendment of 71 Pa.C.S. §§ 5507 and 
265508 or the addition of 71 Pa.C.S. §§ 5507.1 and 5508.1 shall be 
27funded in equal dollar installments over a period of 30 years 
28beginning July 1, 2014. Payments required to fund any changes in 
29accrued liability resulting from this act shall be subject to 
30any limits imposed by this act on employer contributions to the
 

1State Employees' Retirement System, and shall not be subject to 
2re-amortization for 30 years under 71 Pa.C.S. § 5508.1(c). For 
3purposes of 71 Pa.C.S. §§ 5501.2, 5507 and 5508, any such 
4changes shall not be considered to be costs added by 
5legislation.

6(b) For purposes of this section, the provisions of 71
7Pa.C.S. §§ 5507.1(b)(3) and 5508.1(c)(2) and (d) shall apply.

8Section 48. Nothing in this act shall be construed or deemed
9to imply that any interpretation or application of the
10provisions of 71 Pa.C.S. Pt. XXV or benefits available to
11members of the State Employees' Retirement System was not in
12accordance with the provisions of 71 Pa.C.S. Pt. XXV or other
13applicable law, including the Internal Revenue Code of 1986
14(Public Law 99-514, 26 U.S.C. § 1 et seq.) and 38 U.S.C. Ch. 43
15(relating to employment and reemployment rights of members of
16the uniformed services), prior to the effective date of this
17section.

18Section 49. This act shall be construed and administered in
19such a manner that the State Employees' Retirement System and
20the State Employees' Defined Contribution Plan will satisfy the
21requirements necessary to qualify as a qualified pension plan
22under section 401(a) and other applicable provisions of the
23Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
24et seq.) and 38 U.S.C. Ch. 43 (relating to employment and
25reemployment rights of members of the uniformed services). The
26rules, regulations and procedures adopted and promulgated by the
27State Employees' Retirement Board and the terms and conditions
28of the plan document and trust declaration adopted by the State
29Employees' Retirement Board may include those necessary to
30accomplish the purpose of this section.

1Section 50. If the application of any provision of this act 
2to any person is held invalid, the invalidity shall not affect 
3the application of this act to any other person, but the entire 
4act shall be invalid as to the person to whom part of it was 
5invalid. In the event that a State employee's participation in 
6the State Employees' Defined Contribution Plan is declared 
7invalid, the affected State employee shall return to the State 
8Employees' Defined Contribution Trust any distributions and 
9shall be granted the status and service credit in the State 
10Employees' Retirement System and shall be required to make all 
11contributions to the State Employees' Retirement Fund as if this 
12act had not been enacted. The affected State employee's
13accumulated mandatory participant contributions and accumulated
14voluntary contributions shall be transferred to the affected
15employee's member savings account to the extent necessary to
16fund that account with the member contributions and interest
17that would have been standing to the member's account had this
18act not been enacted. Any remaining balance shall be refunded to
19the State employee, who shall be responsible for paying to the
20fund in a manner and time determined by the State Employees'
21Retirement Board any additional funds required if the
22accumulated mandatory participant contributions and accumulated
23voluntary contributions were not sufficient. The accumulated
24employer defined contributions shall be transferred to the State
25accumulation account and no further amount shall be due from the
26employer or refund paid.

27Section 51. This act shall take effect immediately.