1Amending Title 71 (State Government) of the Pennsylvania
2Consolidated Statutes, further providing for definitions, for
3mandatory and optional membership and for classes of service;
4and providing for State Legislators' Defined Contribution
5Program.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1.  Section 5102 of Title 71 of the Pennsylvania
9Consolidated Statutes is amended by adding a definition to read:

10§ 5102.  Definitions.

11The following words and phrases as used in this part, unless
12a different meaning is plainly required by the context, shall
13have the following meanings:

14* * *

15"State Legislators' Defined Contribution Program."  The 
16defined contribution program established under Ch. 56 (relating 
17to State Legislators' Defined Contribution Program).

18* * *

19Section 2.  Section 5301(a)(3) and (c) of Title 71 are

1amended and subsection (a) is amended by adding paragraphs to
2read:

3§ 5301.  Mandatory and optional membership.

4(a)  Mandatory membership.--Membership in the system shall be
5mandatory as of the effective date of employment for all State
6employees except the following:

7* * *

8(3)  Members of the General Assembly, other than members 
9of the General Assembly described under paragraphs (17) and 
10(18).

11* * *

12(17)  Any person who is not a member of the General
13Assembly on November 30, 2014, and who becomes a member of
14the General Assembly on or after December 1, 2014.

15(18)  Any person who is a member of the General Assembly
16on November 30, 2014, and who is reelected to serve as a
17member of the General Assembly beginning on or after December
181, 2014.

19* * *

20(c)  Prohibited membership.--

21(1)  The State employees listed in subsection (a)(12),
22(13), (14) [and (15)], (15) and (17) shall not have the right
23to elect membership in the system.

24(2)  A member of the General Assembly described under
25subsection (a)(18) shall have no right to be an active member
26of the system and accrue credited service for State service
27as a member of the General Assembly subsequent to November
2830, 2014.

29* * *

30Section 3.  Section 5306(a.2)(1) of Title 71 is amended to

1read:

2§ 5306.  Classes of service.

3* * *

4(a.2)  Class of membership for members of the General
5Assembly.--

6(1)  A person who:

7(i)  becomes a member of the General Assembly and an
8active member of the system after June 30, 2001, and 
9before December 1, 2010; or

10(ii)  is a member of the General Assembly on July 1,
112001, but is not an active member of the system because
12membership in the system is optional pursuant to section
135301 and who becomes an active member after June 30,
142001, and before December 1, 2010;

15and who was not a State police officer on or after July 1,
161989, shall be classified as a Class D-4 member for State 
17service as a member of the General Assembly performed prior 
18to December 1, 2014 and receive credit as a Class D-4 member
19for all State service as a member of the General Assembly
20performed prior to December 1, 2014, upon payment of regular
21member contributions for Class D-4 service and, subject to
22the limitations contained in subsection (a.1)(7), if
23previously a member of Class A or employed in a position for
24which Class A service could have been earned, shall receive
25Class AA service credit for all Class A State service, other
26than State service performed as a State police officer or for
27which a class of service other than Class A or Class D-4 was
28or could have been elected or credited.

29* * *

30Section 4.  Title 71 is amended by adding a chapter to read:

1CHAPTER 56

2STATE LEGISLATORS' DEFINED CONTRIBUTION PROGRAM

3Sec.

45601.  Definitions.

55602.  Establishment.

65603.  State Legislators' Defined Contribution Program.

75604.  Powers and duties of board.

85605.  Prohibited interests.

95606.  Investments and expenses.

105607.  Trust fund.

115608.  Election period.

125609.  Participant contributions.

135610.  Employer contributions.

145611.  Vesting.

155612.  Prohibition.

16§ 5601.  Definitions.

17The following words and phrases when used in this chapter
18shall have the meanings given to them in this section unless the
19context clearly indicates otherwise:

20"Participant."  A qualified employee who elects to
21participate in the State Legislators' Defined Contribution
22Program.

23"Program."  The State Legislators' Defined Contribution
24Program.

25"Qualified employee."  Any of the following:

26(1)  A person who is not a member of the General Assembly
27on November 30, 2014, and who becomes a member of the General
28Assembly on or after December 1, 2014.

29(2)  A person who is a member of the General Assembly on
30November 30, 2014, and who is reelected to serve as a member

1of the General Assembly beginning on or after December 1,
22014.

3"Trust fund."  The trust created under section 5607 (relating
4to trust fund).

5§ 5602.  Establishment.

6The State Legislators' Defined Contribution Program is
7established in accordance with this chapter.

8§ 5603.  State Legislators' Defined Contribution Program.

9The board shall administer the program, which shall be a
10defined contribution retirement program for participants. The
11board shall permit qualified employees to elect to participate
12in the program. The benefits to be provided for or on behalf of
13participants in the program shall be provided through
14participant-directed investments, in accordance with IRC §
15401(a). Participants and employers shall contribute to the
16program in accordance with sections 5609 (relating to
17participant contributions) and 5610 (relating to employer
18contributions).

19§ 5604.  Powers and duties of board.

20In order to administer the program, the powers and duties of
21the board shall include all of the following:

22(1)  Entering into written agreements with financial or
23other organizations to administer the program for
24participants and to invest funds held under the program. The
25program and any written agreement shall comply with the IRC,
26including the plan qualification requirements imposed on
27governmental plans under IRC § 401(a).

28(2)  Establishing procedures whereby qualified employees
29may elect to participate in the program and participants may
30change their investment choices on a periodic basis, as

1determined by the board, which shall not be less frequently
2than quarterly.

3(3)  Arranging for a deduction, from the compensation of
4participants, of participant contributions to the program.

5(4)  Establishing standards and criteria for selection by
6the board of the financial institutions, insurance companies
7or other organizations that may be qualified as managers, on
8behalf of the board, of funds accumulated under the program
9on behalf of any participant.

10(5)  Establishing standards and criteria for providing
11options to qualified employees and participants concerning
12the method of investing amounts accumulated under the
13program. The investment options shall represent a broad cross
14section of asset classes and risk profiles and shall include
15lifestyle funds that are based upon age and projected
16retirement date.

17(6)  Establishing procedures for informing qualified
18employees and participants of specific options offered by
19qualified managers.

20(7)  Designing a comprehensive, balanced and impartial
21educational program to assist qualified employees and
22participants in their choice of investment options under the
23program, which shall include retirement planning education
24and financial planning guidance on matters such as investment
25diversification, investment risks, investment costs and asset
26allocation.

27(8)  Establishing standards and criteria for the
28disclosure to qualified employees and participants of the
29anticipated and actual income attributable to the amounts,
30property and rights and all fees, costs and charges to be

1made against the amounts accumulated to cover the costs of
2administering and managing the funds.

3(9)  Establishing a process for election to participate
4in the program.

5(10)  Performing an annual review of any qualified fund
6manager for the purpose of assuring it continues to meet all
7standards and criteria established.

8(11)  Allowing for rollovers into the program from plans
9of other employers, regardless of the employer being a
10private employer or a public employer.

11(12)  Allowing a former participant to maintain his or
12her account within the program.

13(13)  Establishing procedures whereby any participant may
14do one of the following:

15(i)  Withdraw accumulated amounts in cases of
16financial hardship or separation of a participant from
17State service or as otherwise permitted under the IRC.

18(ii)  Dispose of a participant's account under a
19domestic relations order unless in conflict with the IRC.

20(14)  Administering the program in compliance with the
21IRC.

22(15)  Promulgating regulations necessary to administer
23this chapter.

24(16)  Establishing procedures to provide for the lawful
25payment of benefits.

26§ 5605.  Prohibited interests.

27No member or employee of the board shall have any direct or
28indirect financial interest in any of the investment products
29that are made available to participants under the program.

30§ 5606.  Investments and expenses.

1(a)  Loss.--The board shall not be responsible for any
2investment loss incurred in the program or for failure of any
3investment to earn any specific or expected return or to earn as
4much as any other investment opportunity, whether or not the
5other investment opportunity was offered to participants in the
6program. The expenses arising from allowing qualified employees
7to elect to participate in the program and participants to
8choose a fund manager, deduct from compensation amounts
9contributed under the program and transfer to the fund manager
10amounts so deducted shall be borne by the board. All other
11expenses arising from the administration of the program shall be
12assessed against the accounts created on behalf of participants
13either by the fund managers or by the board.

14(b)  Investment.--Investment of contributions by any
15corporation, institution, insurance company or custodial bank
16that the board has approved shall not be unreasonably delayed
17and the investment of contributions shall not be delayed more
18than 30 days from the date of payroll deduction to the date that
19funds are invested. Any interest earned on the funds pending
20investment shall be allocated to the Commonwealth and credited
21to the accounts of participants who are then participating in
22the program unless the interest is used to defray administrative
23costs and fees that would otherwise be required to be borne by
24participants who are then participating in the program.

25§ 5607.  Trust fund.

26(a)  Establishment.--All assets and income that have been or
27shall be withheld by the employer in accordance with this
28chapter shall be held in trust in any funding vehicle permitted
29by applicable provisions of the IRC for the exclusive benefit of
30the program's participants and their beneficiaries until the

1time when the funds are distributed to the participant or the
2participant's beneficiary in accordance with the terms of the
3agreement between the participant and the board. All such assets
4and income withheld by the employer shall be held in trust as
5set forth in this subsection in a special fund created within
6the State Treasury of which the State Treasurer shall be
7custodian. The assets of the program shall be held in trust for
8the exclusive benefit of the program's participants and
9beneficiaries and for the payment of reasonable expenses of the
10program in accordance with section 5606 (relating to investments
11and expenses) and IRC § 401.

12(b)  Trustees.--The members of the board shall be the
13trustees of the trust established under subsection (a).

14(c)  Attachment.--Notwithstanding any other provision of law,
15any benefit or interest available under the program, any right
16to receive or direct payments under the program or any
17distribution of payment made under the program shall not, except
18as expressly specified by the program, be subject to assignment,
19alienation, garnishment, attachment, transfer, anticipation,
20sale, mortgage, pledge, hypothecation, commutation, execution or
21levy, whether by voluntary or involuntary act of any interested
22person.

23§ 5608.  Election period.

24A qualified employee may elect to participate in the program
25by filing written notice with the board, in accordance with
26procedures established by the board under section 5604(2)
27(relating to powers and duties of board) within 90 days after
28the date on which he or she become a qualified employee.

29§ 5609.  Participant contributions.

30Regular participant contributions shall be made to the

1program on behalf of each participant for current service in an
2amount equal to a percentage of the participant's pensionable
3compensation. The employer shall cause participant contributions
4for current service to be made and deducted from each payroll.
5Participants may elect to contribute to the program on their
6behalf to the extent permitted by law.

7§ 5610.  Employer contributions.

8The General Assembly shall make payments to the trust fund on
9behalf of the participant. The amount of the payments shall
10match the contribution made by the participant under section
115609 (relating to participant contributions) dollar for dollar,
12but shall not exceed 4% of the participant's pensionable
13earnings.

14§ 5611.  Vesting.

15A participant shall be vested after completing three years of
16service as a member of the General Assembly during which he or
17she is a participant in the program with respect to employer
18contributions paid on behalf of the participant to the program
19plus interest and earnings on the employer contributions but
20minus investment fees and administrative charges.

21§ 5612.  Prohibition.

22No qualified employee may make an election to participate in
23the program prior to December 1, 2014.

24Section 5.  This act shall take effect in 60 days.