AN ACT

 

1Amending Titles 24 (Education) and 71 (State Government) of the
2Pennsylvania Consolidated Statutes, further providing for
3member's options.

4The General Assembly of the Commonwealth of Pennsylvania
5hereby enacts as follows:

6Section 1. Section 8345(a) of Title 24 of the Pennsylvania
7Consolidated Statutes is amended to read:

8§ 8345. Member's options.

9(a) General rule.--Any Class T-C or Class T-D member who is 
10a vestee with five or more eligibility points, any Class T-E or 
11Class T-F member who is a vestee with ten or more eligibility 
12points, or any other eligible member upon termination of school
13service who has not withdrawn his accumulated deductions as
14provided in section 8341 (relating to return of accumulated
15deductions) may apply for and elect to receive either a maximum
16single life annuity, as calculated in accordance with the
17provisions of section 8342 (relating to maximum single life
18annuity), or a reduced annuity certified by the actuary to be
19actuarially equivalent to the maximum single life annuity and in

1accordance with one of the following options, except that no
2member shall elect an annuity payable to one or more survivor
3annuitants other than his spouse or alternate payee of such a
4magnitude that the present value of the annuity payable to him
5for life plus any lump sum payment he may have elected to
6receive is less than 50% of the present value of his maximum
7single life annuity. In no event shall a Class T-E or Class T-F 
8member receive an annual benefit, calculated as of the effective 
9date of retirement, greater than the member's final average 
10salary.

11(1) Option 1.--A life annuity to the member with a
12guaranteed total payment equal to the present value of the
13maximum single life annuity on the effective date of
14retirement with the provision that, if, at his death, he has
15received less than such present value, the unpaid balance
16shall be payable to his beneficiary.

17(2) Option 2.--A joint and survivor annuity payable
18during the lifetime of the member with the full amount of
19such annuity payable thereafter to his survivor annuitant, if
20living at his death.

21(3) Option 3.--A joint and fifty percent (50%) survivor
22annuity payable during the lifetime of the member with one-
23half of such annuity payable thereafter to his survivor
24annuitant, if living at his death.

25(4) Option 4.--Some other benefit which shall be
26certified by the actuary to be actuarially equivalent to the
27maximum single life annuity, subject to the following
28restrictions:

29(i) Any annuity shall be payable without reduction
30during the lifetime of the member.

1(ii) The sum of all annuities payable to the
2designated survivor annuitants shall not be greater than
3one and one-half times the annuity payable to the member.

4(iii) A portion of the benefit may be payable as a 
5lump sum, except that such lump sum payment shall not 
6exceed an amount equal to the accumulated deductions 
7standing to the credit of the member. The balance of the 
8present value of the maximum single life annuity adjusted 
9in accordance with section 8342(b) shall be paid in the 
10form of an annuity with a guaranteed total payment, a 
11single life annuity, or a joint and survivor annuity or 
12any combination thereof but subject to the restrictions 
13of subparagraphs (i) and (ii) of this paragraph. This 
14subparagraph shall not apply to a Class T-E or Class T-F 
15member. For purposes of this subparagraph only, the term 
16"actuarially equivalent," as applied to any lump sum 
17withdrawal attributable to contributions credited to the 
18member's savings account on or after July 1, 2015, 
19together with all interest thereon, shall mean equal 
20present values, computed on the basis of the interest 
21rate and such mortality and other tables as adopted by 
22the board pursuant to section 8328(b) (relating to 
23actuarial cost method) in effect on the effective date of 
24retirement of the member.

25* * *

26Section 2. Section 5705(a) of Title 71 is amended and the
27section is amended by adding a subsection to read:

28§ 5705. Member's options.

29(a) General rule.--Any special vestee who has attained
30superannuation age, any vestee who does not have Class A-3 or
 

1Class A-4 service credit having five or more eligibility points
2for service other than Class T-E or Class T-F service in the 
3Public School Employees' Retirement System, or vestee who has 
4Class A-3 or Class A-4 service credit having ten or more 
5eligibility points, any member with Class G, Class H, Class I,
6Class J, Class K, Class L, Class M or Class N service having
7five or more eligibility points or any other eligible member
8upon termination of State service who has not withdrawn his
9total accumulated deductions as provided in section 5701
10(relating to return of total accumulated deductions) may apply
11for and elect to receive either a maximum single life annuity,
12as calculated in accordance with the provisions of section 5702
13(relating to maximum single life annuity), or a reduced annuity
14certified by the actuary to be actuarially equivalent to the
15maximum single life annuity payable after reduction under 
16subsection (a.1) and in accordance with one of the following
17options; except that no member shall elect an annuity payable to
18one or more survivor annuitants other than his spouse or
19alternate payee of such a magnitude that the present value of
20the annuity payable to him for life plus any lump sum payment
21under this subsection and subsection (a.1) he may have elected
22to receive is less than 50% of the present value of his maximum
23single life annuity before reduction under subsection (a.1):

24(1) Option 1.--A life annuity to the member with a
25guaranteed total payment equal to the present value of the
26maximum single life annuity on the effective date of
27retirement with the provision that, if, at his death, he has
28received less than such present value, the unpaid balance
29shall be payable to his beneficiary.

30(2) Option 2.--A joint and survivor annuity payable

1during the lifetime of the member with the full amount of
2such annuity payable thereafter to his survivor annuitant, if
3living at his death.

4(3) Option 3.--A joint and fifty percent (50%) survivor
5annuity payable during the lifetime of the member with one-
6half of such annuity payable thereafter to his survivor
7annuitant, if living at his death.

8(4) Option 4.--Some other benefit which shall be
9certified by the actuary to be actuarially equivalent to the
10maximum single life annuity, subject to the following
11restrictions:

12(i) any annuity shall be payable without reduction
13during the lifetime of the member;

14(ii) the sum of all annuities payable to the
15designated survivor annuitants shall not be greater than
16one and one-half times the annuity payable to the member;
17and

18(iii) a portion of the benefit may be payable as a
19lump sum, except that such lump sum payment shall not
20exceed an amount equal to the total accumulated
21deductions standing to the credit of the member that are 
22not the result of contributions and statutory interest 
23made or credited as a result of Class A-3 or Class A-4 
24service. The balance of the present value of the maximum
25single life annuity adjusted in accordance with section
265702(b) shall be paid in the form of an annuity with a
27guaranteed total payment, a single life annuity, or a
28joint and survivor annuity or any combination thereof but
29subject to the restrictions of subparagraphs (i) and (ii)
30under this option. If a member's effective date of
 

1retirement is on or after January 1, 2015, then the 
2portion of the benefit payable under this subparagraph 
3shall be further limited to the total accumulated 
4deductions standing to the credit of the member on 
5December 31, 2014, that are not the result of 
6contributions and statutory interest made or credited as 
7a result of Class A-3 or Class A-4 service, plus any 
8statutory interest credited on those accumulated 
9deductions before the effective date of retirement.

10(a.1) Additional lump sum withdrawal.--The following shall
11apply:

12(1) On or after January 1, 2015, if a member has elected
13to have the full amount allowed under subsection (a)(4)(iii)
14paid in a lump sum, then the member may elect to receive an
15additional amount payable in a lump sum at the same time as
16the payment elected under subsection (a)(4)(iii).

17(2) The additional amount payable in a lump sum may not
18exceed the amount equal to the excess of the total
19accumulated deductions standing to the credit of the member
20on the effective date of retirement that are not the result
21of contributions and statutory interest made or credited as a
22result of Class A-3 or Class A-4 service over the amount
23payable under subsection (a)(4)(iii).

24(3) If a member elects to be paid an additional lump sum
25amount under this subsection, then the maximum single life
26annuity calculated under section 5702 and payable under
27subsection (a) shall be reduced by the additional amount
28withdrawn divided by the cost of a dollar annuity on the
29effective date of retirement computed on the basis of the
30annual interest rate adopted for that fiscal year by the

1board for the calculation of the accrued liability
2contribution rate and the mortality tables adopted by the
3board for the determination of actuarially equivalent
4benefits under this part. The reduction in the maximum single
5life annuity under this subsection shall apply before the
6election and calculation of any reduced annuities payable
7under subsection (a).

8* * *

9Section 3. This act shall take effect immediately.