1Amending Titles 24 (Education), 51 (Military Affairs) and 71
2(State Government) of the Pennsylvania Consolidated Statutes,
3extensively revising pension provisions: for the Public
4School Employees' Retirement System, in the areas of
5preliminary provisions, of membership, contributions and
6benefits, of School Employees' Defined Contribution Plan, of
7administration and miscellaneous provisions and of health
8insurance for retired school employees; for military
9pensions, in the area of military leave of absence; for the
10State Employees' Retirement System, in the areas of
11preliminary provisions, of membership, credited service,
12classes of service and eligibility for benefits, of School
13Employees' Defined Contribution Plan and of contributions, of
14benefits, administration, funds, accounts, general
15provisions; and providing, as to the revisions, for
16construction, applicability, funding, amortization, re-
17amortization, recertification, liability and legal challenge.

18The General Assembly of the Commonwealth of Pennsylvania
19hereby enacts as follows:

20ARTICLE I

21Section 101. The definitions of <-"active member," "alternate 
22payee," "basic contribution rate," "beneficiary," "class of 
23service multiplier," <-"alternate payee," "beneficiary,"
24"compensation," "creditable nonschool service," "credited
25service," "date of termination of service," "distribution,"

1"domestic relations order," "eligible annuitants," <-"final 
2average salary," "inactive member," "intervening military
3service," "irrevocable beneficiary," "leave for service with a
4collective bargaining organization," "previous school service,"
5"salary deductions," <-"standard single life annuity," 
6"superannuation or normal retirement age," "survivor annuitant"<-
7and "valuation interest" in section 8102 of Title 24 of the
8Pennsylvania Consolidated Statutes are amended and the section
9is amended by adding definitions to read:

10§ 8102. Definitions.

11The following words and phrases when used in this part shall
12have, unless the context clearly indicates otherwise, the
13meanings given to them in this section:

14* * *

15"Accumulated employer defined contributions." The total of
16the employer defined contributions paid into the trust on
17account of a participant's school service together with any
18investment earnings and losses and adjustments for fees, costs
19and expenses credited or charged thereon.

20"Accumulated mandatory participant contributions." The total
21of the mandatory pickup participant contributions paid into the
22trust on account of a participant's school service together with
23any investment earnings and losses and adjustments for fees,
24costs and expenses credited or charged thereon.

25"Accumulated total defined contributions." The total of the
26accumulated mandatory participant contributions, accumulated
27employer defined contributions and accumulated voluntary
28contributions, reduced by any distributions, standing to the
29credit of a participant in an individual investment account in
30the trust.

1"Accumulated voluntary contributions." The total of
2voluntary contributions paid into the trust by a participant and
3any amounts rolled over by a participant or transferred by a
4direct trustee-to-trustee transfer into the trust together with
5any investment earnings and losses and adjustments for fees,
6costs and expenses credited or charged thereon.

<-7"Active member." A school employee for whom pickup
8contributions are being made to the fund or for whom such
9contributions otherwise required for current school service are
10not being made solely by reason of any provision of this part
11relating to the limitations under section 401(a)(17) or 415(b)
12of the Internal Revenue Code of 1986 (Public Law 99-514, 26
13U.S.C. § 401(a)(17) or 415(b)) or any provision of this part
14limiting compensation.

15"Active participant." A school employee for whom mandatory
16pickup participant contributions are being made to the trust or
17for whom such contributions otherwise required for current
18school service are not being made solely by reason of any
19provision of this part relating to the limitations under section
20401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public
21Law 99-514, 26 U.S.C. § 401(a)(17) or 415) or any provision of
22this part limiting compensation.

23* * *

24"Alternate payee." Any spouse, former spouse, child or 
25dependent of a member or participant who is recognized by a 
26domestic relations order as having a right to receive all or a 
27portion of the moneys payable to that member or participant 
28under this part.

29* * *

<-30"Annualized service credit." For purposes of determining

1final average salary, the amount of service credit the member
2would have earned if the member worked the number of months that
3the employer typically expects a full-time employee in the same
4position or with the same contract to work during a fiscal year.
5If the member worked fewer months than the number of months for
6the position or contract, the annualized service credit is equal
7to the ratio of the number of months for the position or
8contract over the number of months the member worked, multiplied
9by the actual service credit for the year. Annualized service
10credit is rounded to two decimals and may not be greater than
111.00.

12* * *

13"Basic contribution rate." For Class T-A, T-B and T-C
14service, the rate of 6 1/4%. For Class T-D service, the rate of
157 1/2%. For all active members on the effective date of this
16provision who are currently paying 5 1/4% and elect Class T-D
17service, the rate of 6 1/2%. For Class T-E service, the rate of
187 1/2%. For Class T-F service, the rate of 10.30%. For Class T-G
19service, the rate of 7.5%. For Class T-H service, the rate of
2012.5%. For service performed by a member of the system in a
21fiscal year beginning on or after July 1, 2015, the basic
22contribution rate and shared risk contribution rate shall be
23applied to an amount that may not exceed the Social Security
24taxable wage base in effect at the beginning of the fiscal year.

25"Beneficiary." [The] In the case of the system, the person 
26or persons last designated in writing to the board by a member 
27to receive his accumulated deductions or a lump sum benefit upon 
28the death of such member. In the case of the plan, the spouse of 
29a participant. If the participant is not married or the spouse 
30consents, then the person or persons last designated in writing
 

1to the board by the participant to receive the participant's 
2vested accumulated total defined contributions or a lump sum 
3benefit upon the death of the participant.

4* * *

<-5"Class of service multiplier."

6Class of service	Multiplier
7T-A	.714
8T-B	.625
9T-C	1.000
10T-D	1.000
11T-E	1.000
12T-F	1.000
13T-G	1.000
14T-H	1.000

15"Combined service employee." A current or former school
16employee who is both a member of the system and a participant in
17the plan.

18* * *

19"Compensation." Pickup contributions and mandatory pickup 
20participant contributions plus any remuneration received as a 
21school employee excluding reimbursements for expenses incidental 
22to employment and excluding any bonus, severance payments, any 
23other remuneration or other emolument received by a school 
24employee during his school service which is not based on the 
25standard salary schedule under which he is rendering service, 
26payments for unused sick leave or vacation leave, bonuses or 
27other compensation for attending school seminars and 
28conventions, payments under health and welfare plans based on 
29hours of employment or any other payment or emolument which may 
30be provided for in a collective bargaining agreement which may
 

1be determined by the Public School Employees' Retirement Board 
2to be for the purpose of enhancing compensation as a factor in 
3the determination of final average salary, and for participants, 
4excluding payments for military leave, and any other payments 
5made by an employer while the participant is on USERRA leave, 
6leave of absence granted under 51 Pa.C.S. § 4102 (relating to 
7leaves of absence for certain government employees), military 
8leave of absence granted under 51 Pa.C.S. § 7302 (relating to 
9granting military leaves of absence), military leave of absence 
10granted under section 1176 of the act of March 10, 1949 (P.L.30, 
11No.14), known as the Public School Code of 1949, or other types 
12of military leave, including other types of leave payments, 
13stipends, differential wage payments as defined in the Internal 
14Revenue Code of 1986 § 414(u)(12) and any other payments, 
15provided, however, that the limitation under section 401(a)(17) 
16of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
17U.S.C. § 401(a)(17)) taken into account for the purpose of 
18member contributions, including regular or joint coverage member 
19contributions, regardless of class of service, shall apply to 
20each member who first became a member of the Public School 
21Employes' Retirement System on or after July 1, 1996, and who by 
22reason of such fact is a noneligible member subject to the 
23application of the provisions of section 8325.1 (relating to 
24annual compensation limit under IRC § 401(a)(17))[.] and shall 
25apply to each participant. <-For purposes of determining final 
26average salary and applying the basic contribution rate, 
27compensation received for service performed in a fiscal year 
28beginning on or after July 1, 2015, as a member of the system, 
29may not exceed the Social Security taxable wage base in effect 
30at the beginning of the fiscal year.

1* * *

2"Creditable nonschool service." Service other than service 
3as a school employee for which an active member may obtain 
4credit in the system.

5"Credited service." School or creditable nonschool service 
6for which the required contributions have been made to the fund, 
7or for which the contributions otherwise required for such 
8service were not made solely by reason of any provision of this 
9part relating to the limitations under section 401(a)(17) or 
10415(b) of the Internal Revenue Code of 1986 (Public Law 99-514, 
1126 U.S.C. § 401(a)(17) or 415(b)) <-or a provision of this part 
12limiting compensation, or for which salary deductions to the 
13system or lump sum payments have been agreed upon in writing.

14"Date of termination of service." The last date of service 
15for which:

16(1) pickup contributions are made for an active member 
17[or,];

18(2) in the case of an inactive member, the effective 
19date of his resignation or the date his employment is 
20formally discontinued by his employer or two years following 
21the last day of service for which contributions were made, 
22whichever is earliest[.];

23(3) mandatory pickup participant contributions are made
24for an active participant;

25(4) in the case of an inactive participant, the date of
26his resignation or the date his employment is formally
27discontinued by his employer; or

28(5) in the case of a combined service employee, the
29latest of the dates in paragraph (3) or (4).

30* * *

1"Distribution." Payment of all or any portion of a person's 
2interest in either the Public School Employees' Retirement Fund 
3or the School Employees' Defined Contribution Trust or both 
4which is payable under this part.

5"Domestic relations order." Any judgment, decree or order, 
6including approval of a property settlement agreement, entered 
7on or after the effective date of this definition by a court of 
8competent jurisdiction pursuant to a domestic relations law 
9which relates to the marital property rights of the spouse or 
10former spouse of a member or participant, including the right to 
11receive all or a portion of the moneys payable to that member or 
12participant under this part in furtherance of the equitable 
13distribution of marital assets. The term includes orders of 
14support as that term is defined by 23 Pa.C.S. § 4302 (relating 
15to definitions) and orders for the enforcement of arrearages as 
16provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
17arrearages).

18* * *

19"Eligible annuitants." All current and prospective 
20annuitants with 24 1/2 or more eligibility points and all 
21current and prospective disability annuitants. Beginning January 
221, 1995, ["eligible annuitants" shall include] the term includes 
23members with 15 or more eligibility points who terminated or who 
24terminate school service on or after attaining superannuation 
25retirement age and who are annuitants with an effective date of 
26retirement after superannuation age. The term does not include 
27participants.

28* * *

29"Employer defined contributions." Contributions equal to 4%
30of an active participant's compensation that are made by an

1employer for current service to the trust to be credited in the
2active participant's individual investment account.

<-3"Final average salary." [The]

4(1) As applied to service performed and service credit
5purchased before July 1, 2015, as a member of the system, the
6highest average compensation received as an active member,
7not limited by the Social Security taxable wage base, during
8any three nonoverlapping periods of 12 consecutive months
9with the compensation for part-time service being annualized
10on the basis of the fractional portion of the school year for
11which credit is received; except, if the employee was not a
12member for three such periods, the total compensation
13received as an active member annualized in the case of part-
14time service divided by the number of such periods of
15membership; in the case of a member with multiple service
16credit, the final average salary shall be determined by
17reference to compensation received by him as a [school
18employee] member of the system or a State employee, other
19than as a participant in the State Employees' Defined
20Contribution Plan, or both; and, in the case of a noneligible
21member, subject to the application of the provisions of
22section 8325.1 (relating to annual compensation limit under
23IRC § 401(a)(17)).

24(2) As applied to service performed and service credit
25purchased on or after July 1, 2015, as a member of the
26system, the highest average compensation received as an
27active member, as limited by the Social Security taxable wage
28base, during any five fiscal years, with the compensation for
29part-time service being annualized on the basis of the
30fractional portion of the school year for which credit is

1received, provided that if the compensation received during a
2fiscal year included in the period used to determine final
3average salary exceeds that of the average of the previous
4four fiscal years, as limited by the Social Security taxable
5wage base, with the compensation for part-time service being
6annualized on the basis of the fractional portion of the
7school year for which credit is received, and with
8compensation for a partial year of service being annualized,
9by more than 10%, the amount in excess of 10% shall be
10excluded from the computation of final average salary. If the
11employee was not a member for five fiscal years, the formula
12under this definition shall be applied to the extent
13practicable. In the case of a member with multiple service
14credit, the salary shall be determined by reference to
15include compensation received as a school employee or State
16employee or both. In the case of a noneligible member, the
17salary shall be subject to the application of the provisions
18of section 8325.1 (relating to annual compensation limit
19under IRC § 401(a)(17)).

20* * *

21"Inactive member." A member for whom no pickup contributions 
22are being made to the fund, except in the case of an active 
23member for whom such contributions otherwise required for 
24current school service are not being made solely by reason of 
25any provision of this part relating to the limitations under 
26section 401(a)(17) or 415(b) of the Internal Revenue Code of 
271986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)) <-or 
28any provision of this part limiting compensation, who has 
29accumulated deductions standing to his credit in the fund and 
30for whom contributions have been made within the last two school
 

1years or a multiple service member who is active in the State 
2Employees' Retirement System.

3"Inactive participant." A participant for whom no mandatory
4pickup participant contributions are being made to the trust,
5except in the case of an active participant for whom such
6contributions otherwise required for current school service are
7not being made solely by reason of any provision of this part
8relating to limitations under section 401(a)(17) or 415 of the
9Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
10401(a)(17) or 415), who has vested accumulated total defined
11contributions standing to his credit in the trust and who has
12not filed an application for an annuity.

13"Individual investment account." The account in the trust to
14which are credited the amounts of the contributions made by a
15participant and the participant's employer in accordance with
16the provisions of this part, together with all investment
17earnings after deduction for fees, costs and expenses,
18investment losses and charges for distributions.

19"Intervening military service." Active military service of a 
20member who was a school employee and an active member of the 
21system immediately preceding his induction into the armed 
22services or forces of the United States in order to meet a draft 
23obligation excluding any voluntary extension of such 
24obligational service and who becomes a school employee and an 
25active member of the system within 90 days of the expiration of 
26such service.

27* * *

28"Irrevocable beneficiary." The person or persons permanently 
29designated by a member or participant in writing to the board 
30pursuant to an approved domestic relations order to receive all
 

1or a portion of the accumulated deductions, vested accumulated 
2total defined contributions or lump sum benefit payable upon the 
3death of such member or participant.

4"Irrevocable successor payee." The person permanently
5designated in writing by a participant receiving vested
6distributions to the board pursuant to an approved domestic
7relations order to receive one or more distributions from the
8plan upon the death of such participant.

9* * *

10"Leave for service with a collective bargaining 
11organization." Paid leave granted to an active member or active 
12participant by an employer for purposes of working full time for 
13or serving full time as an officer of a Statewide employee 
14organization or a local collective bargaining representative 
15under the act of July 23, 1970 (P.L.563, No.195), known as the 
16Public Employe Relations Act: Provided, That greater than one-
17half of the members of the employee organization are active 
18members of the system or active participants of the plan; that 
19the employer shall fully compensate the member or active 
20participant, including, but not limited to, salary, wages, 
21pension and retirement contributions and benefits, other 
22benefits and seniority, as if he were in full-time active 
23service; and that the employee organization shall fully 
24reimburse the employer for such salary, wages, pension and 
25retirement contributions and benefits and other benefits and 
26seniority.

27"Mandatory pickup participant contributions." Contributions
28equal to 7.5% of compensation that are made by the employer for
29active participants for current service.

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 vested interest in the individual investment
7account.

<-8"Part-time service." For the purposes of calculating final
9average salary, the determination of whether service for a
10fiscal year is part time is based on annualized service credit
11for the year. If the annualized service credit is 1.00, the
12service rendered during the fiscal year is full time. If the
13annualized service credit is less than 1.00, the service
14rendered during the fiscal year is part time.

15* * *

16"Plan." The School Employees' Defined Contribution Plan as
17established by the provisions of this part and the board.

18"Plan document." The documents created by the board under
19section 8402 (relating to plan document) that contain the terms
20and provisions of the plan and trust as established by the board
21regarding the establishment, administration and investment of
22the plan and trust.

23"Previous school service." Service [rendered] as a school 
24employee,<- including service in any summer school conducted by a 
25school district of the Commonwealth, but excluding service 
26rendered during which the school employee was or could have been 
27a participant in the plan, prior to the member's most recent 
28entrance in the system.

29* * *

30"Reemployed from USERRA leave." Resumption of active

1participation as a school employee after a period of USERRA
2leave, provided the resumption of active participation was
3within the time period and under conditions and circumstances
4such that the school employee was entitled to reemployment
5rights under 38 U.S.C. Ch. 43 (relating to employment and
6reemployment rights of members of the uniformed services).

7* * *

8"Required beginning date." The latest date by which
9distributions of a participant's interest in his individual
10investment account must commence under the Internal Revenue Code
11of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(9)).

12* * *

13"Salary deductions." The amounts certified by the board, 
14deducted from the compensation of an active member or active 
15participant or the State service compensation of a multiple 
16service member who is an active member of the State Employees' 
17Retirement System or active participant of the School Employees' 
18Defined Contribution Plan and paid into the fund or trust.

19* * *

<-20"Standard single life annuity." For Class T-A, T-B and T-C
21credited service of a member, an annuity equal to 2% of the
22final average salary, multiplied by the total number of years
23and fractional part of a year of credited service of a member in
24that class. For Class T-D credited service of a member, an
25annuity equal to 2.5% of the final average salary, multiplied by
26the total number of years and fractional part of a year of
27credited service in that class. For Class T-E credited service
28of a member, an annuity equal to 2% of the final average salary,
29multiplied by the total number of years and fractional part of a
30year of credited service of a member in that class. For Class T-

1F credited service of a member, an annuity equal to 2.5% of the
2final average salary, multiplied by the total number of years
3and fractional part of a year of credited service of a member[.]
4in that class. For Class T-G credited service of a member, an
5annuity equal to 2% of the final average salary, multiplied by
6the total number of years and fractional part of a year of
7credited service of a member in the class. For Class T-H
8credited service of a member, an annuity equal to 2.5% of the
9final average salary that is multiplied by the total number of
10years and fractional part of a year of credited service of a
11member in the class.

12"State Employees' Defined Contribution Plan." The defined
13contribution plan for State employees established by 71 Pa.C.S.
14Pt. XXV (relating to retirement for State employees and
15officers).

16* * *

17"Successor payee." The person or persons last designated in
18writing by a participant receiving distributions to the board to
19receive one or more distributions upon the death of such
20participant.

21* * *

<-22"Superannuation or normal retirement age."

23Class of service	Age
24T-A 25	62 or any age upon accrual of 35 eligibility points
26T-B	62
27T-C [and], T-D, T-G 28and T-H 29  30  20130SB0922PN1252 -15-     1	62 or age 60 provided the member has at least 30 eligibility points or any age upon accrual of 35 eligibility points
2T-E and T-F 3  4  5  6  7  8  9	65 with accrual of at least three eligibility points or a combination of age and eligibility points totaling 92, provided the member has accrued at least 35 eligibility points

<-10"Survivor annuitant." The person or persons last designated
11by a member under a joint and survivor annuity option to receive
12an annuity upon the death of such member. A combined service 
13employee may designate different persons to be survivor 
14annuitants for the benefits from the system and beneficiaries or 
15successor payees for the benefits from the plan.

16* * *

17"Trust." The School Employees' Defined Contribution Trust
18established under Chapter 84 (relating to School Employees'
19Defined Contribution Plan).

20"USERRA leave." Any period of time for service in the
21uniformed services as defined in 38 U.S.C. Ch. 43 (relating to
22employment and reemployment rights of members of the uniformed
23services) by a participant or former participant who terminated
24school service to perform such service in the uniformed
25services, if such current or former participant is entitled to
26reemployment rights under 38 U.S.C. Ch. 43 with respect to such
27uniformed service.

28"Valuation interest." Interest at 5 1/2% per annum,
29compounded annually and applied to all accounts of the fund
30other than the members' savings account.

1* * *

2"Voluntary contributions." Contributions made by a
3participant to the trust and credited to his individual
4investment account in excess of his mandatory pickup participant
5contributions, either by salary deductions paid through the
6employer or by an eligible rollover or direct trustee-to-trustee
7transfers.

8Section 102. Section 8103 of Title 24 is amended by adding
9subsections to read:

10§ 8103. Construction of part.

11* * *

12(c) Construction regarding inactive member and inactive
13participant.--As used in this part:

14(1) The term "inactive member" does not include a
15combined service employee who is an "inactive participant,"
16unless the combined service employee is concurrently employed
17in a position in which such employee is a member of the
18system.

19(2) The term "inactive participant" does not include a
20combined service employee who is an "inactive member," unless
21the combined service employee is concurrently employed in a
22position in which such employee is a participant in the plan.

23(d) Provisions severable.--The provisions of this part are
24severable and if any of its provisions shall be held to be
25unconstitutional, the decision of the court shall not affect or
26impair any of the remaining provisions. It is hereby declared to
27be the legislative intent that this part would have been adopted
28had such unconstitutional provisions not been included.

29(e) References to certain Federal statutes.--References in
30this part to the IRC or the Uniformed Services Employment and

1Reemployment Rights Act of 1994 (Public Law 103-353, 108 Stat.
23149), including administrative regulations promulgated under
3the IRC or the Uniformed Services Employment and Reemployment
4Rights Act of 1994, are intended to include laws and regulations
5in effect on the effective date of this section and amended,
6supplemented or supplanted on and after the effective date of
7this section.

8(f) Construction.--

9(1) This part may not be construed to mean that the
10limitations on benefits or other requirements under IRC §
11401(a) or other applicable provisions of the IRC that are 
12applicable to participants in the plan do not apply to the
13participants or to the members of the system and the benefits
14payable under Part IV.

15(2) This part may not be construed to mean that an 
16interpretation or application of the provisions of Part IV or 
17benefits available to members of the Public School Employees' 
18Retirement System was not in accordance with the provisions 
19of Part IV or other applicable law, including the IRC and the 
20Uniformed Services Employment and Reemployment Rights Act of 
211994 before the effective date of this section.

22(3) This part may not be construed to mean that the
23release or publicizing of a record, material or data that
24would not constitute a public record under section 8502(e)(2)
25(relating to administrative duties of board) is a violation
26of the fiduciary duties of the board.

27(g) Applicability.--The following shall apply:

28(1) The amendment of Part IV regarding the establishment
29of and participation in the plan shall apply to current and
30former members of the system who have returned to school

1service on or after July 1, 2015, after a termination of
2school service, notwithstanding the following:

3(i) Whether the termination occurred before or after
4July 1, 2015.

5(ii) Whether the school employee was an annuitant,
6inactive member, vestee or special vestee or withdrew
7accumulated deductions during the period of termination.

8(2) A terminated school employee who returns to school
9service on or after July 1, 2015, is subject to the
10provisions of Part IV regarding participation in the plan or
11membership in the system that are in effect on the effective
12date of reemployment, including, but not limited to, benefit
13formulas and accrual rates, eligibility for annuities and
14distributions, contribution rates, definitions, purchase of
15creditable school and nonschool service provisions and
16actuarial and funding assumptions.

17(3) This part shall apply to a record, material or data
18under 8502(e)(2) notwithstanding whether:

19(i) the record, material or data was created,
20generated or stored before the effective date of this
21section;

22(ii) the record, material or data was previously
23released or made public; or

24(iii) a request for the record, material or data was
25made or is pending final response under the former act of
26June 21, 1957 (P.L.390, No.212), referred to as the
27Right-to-Know Law, or the act of February 14, 2008
28(P.L.6, No.3), known as the Right-to-Know Law.

29Section 103. Title 24 is amended by adding a section to
30read:

1§ 8103.1. Reference to Public School Employees' Retirement
2System.

3As of the effective date of this section, unless the context
4clearly indicates otherwise, a reference to the Public School
5Employees' Retirement System in a statutory provision, other
6than this part and 71 Pa.C.S. Pt. XXV (relating to retirement
7for State employees and officers), shall include a reference to
8the plan, and a reference to the Public School Employees'
9Retirement Fund shall include a reference to the trust.

10Section 104. Section 8301 of Title 24 is amended to read:

11§ 8301. Mandatory and optional membership.

12(a) Mandatory membership in system and participation in 
13plan.--[Membership] Unless an election to be a participant in 
14the plan is made, membership in the system shall be mandatory as
15of the effective date of employment for all school employees
16except the following:

17(1) Any officer or employee of the Department of
18Education, State-owned educational institutions, community
19colleges, area vocational-technical schools, technical
20institutes, or the Pennsylvania State University and who is a
21member of the State Employees' Retirement System or a member
22of another retirement program approved by the employer.

23(2) Any school employee who is not a member of the 
24system and who is employed on a per diem or hourly basis for
25less than 80 full-day sessions or 500 hours in any fiscal
26year or annuitant who returns to school service under the
27provisions of section 8346(b) (relating to termination of
28annuities).

29(3) Any officer or employee of a governmental entity who
30subsequent to December 22, 1965<-, and prior to July 1, 1975,

1administers, supervises, or teaches classes financed wholly
2or in part by the Federal Government so long as he continues
3in such service.

4(4) Any part-time school employee who has an individual
5retirement account pursuant to the Federal act of September
62, 1974 (Public Law 93-406, 88 Stat. 829), known as the
7Employee Retirement Income Security Act of 1974.

8(5) Any school employee whose most recent period of
9school service starts on or after July 1, 2015.

10(b) Prohibited membership.--The school employees categorized
11in subsection (a)(1) [and], (2) and (5) shall not have the right
12to elect membership in the system.

13(c) Optional membership in system.--The school employees
14categorized in subsection (a)(3) and, if otherwise eligible,
15subsection (a)(4) shall have the right to elect membership in
16the system on or before July 1, 2015. Once such election is
17exercised, membership shall commence from the original date of
18eligibility and shall continue until the termination of such
19service[.] or until the school employee elects to be a
20participant in the plan.

21(d) Mandatory participation in the plan.--Unless the
22employee is or elects to be a participant in the State Employes'
23Defined Contribution Plan, a member of the State Employees'
24Retirement System or a member of another retirement program
25approved by the employer, a school employee who, on or after
26July 1, 2015, begins school service or returns to school service
27after a break in service shall be a mandatory participant in the
28plan as a result of the school service. A school employee who is
29a nonmember and waived membership under subsection (a)(4) shall
30be a mandatory participant in the plan commencing for the school

1service rendered on or after July 1, 2015.

2(e) Certain agreements.--The agreement of an employer to
3make contributions to the fund or to enroll its employees as
4members in the system shall be deemed to be an agreement to make
5contributions to the trust or to enroll its employees in the
6plan.

7Section 105. Section 8302(a), (b) and (c) of Title 24 are
8amended and the section is amended by adding a subsection to
9read:

10§ 8302. Credited school service.

11(a) Computation of credited service.--In computing credited
12school service of a member for the determination of benefits, a
13full-time salaried school employee shall receive one year of
14credit for each school year or the corresponding fraction
15thereof, in accordance with the proportion of the full school
16year for which the required regular member contributions have
17been made to the fund, or for which such contributions otherwise
18required for such service were not made to the fund solely by
19reason of any provision of this part relating to the limitations
20under IRC § 401(a)(17) or 415(b) or another provision of this 
21part limiting compensation. A per diem or hourly school employee
22shall receive one year of credited service for each
23nonoverlapping period of 12 consecutive months in which he is
24employed and for which contributions are made to the fund, or
25would have been made to the fund but for such limitations under
26the IRC, or another provision of this part limiting compensation
27for at least 180 full-day sessions or 1,100 hours of employment.
28If such member was employed and contributions were made to the 
29fund for less than 180 full-day sessions or 1,100 hours, he
30shall be credited with a fractional portion of a year determined

1by the ratio of the number of full-day sessions or hours of
2service actually rendered and for which contributions are made 
3to the fund to 180 full-day sessions or 1,100 hours, as the case
4may be. A part-time salaried employee shall be credited with the
5fractional portion of the year which corresponds to the service
6actually rendered and for which contributions are or would have 
7been made to the fund in relation to the service required as a
8comparable full-time salaried employee. In no case shall a
9member receive more than one year of credited service for any 12
10consecutive months or a member who has elected multiple service
11receive an aggregate in the two systems of more than one year of
12credited service for any 12 consecutive months.

13(b) Approved leaves of absence.--An active member shall
14receive credit, and an active participant shall receive vesting 
15credit, for an approved leave of absence provided that:

16(1) the member returns for a period at least equal to
17the length of the leave or one year as a member of the system 
18or the participant returns to school service as an active 
19participant in the plan, whichever is less, to the school
20district which granted his leave, unless such condition is
21waived by the employer; and

22(2) the proper contributions are made by the member and
23the employer or by the active participant and the employer.

24* * *

25(c) Cancellation of credited service.--All credited service 
26in the system shall be cancelled if a member withdraws his
27accumulated deductions. A partial or total distribution of 
28accumulated total defined contributions to a combined service 
29employee shall not cancel service credited in the system.

30(d) Military service by a participant.--A participant who

1has performed USERRA leave shall be treated and may make
2contributions as follows:

3(1) A participant who is reemployed from USERRA leave
4shall be treated as not having incurred a break in school
5service by reason of the USERRA leave and shall be granted
6vesting credit as if the participant had not been on USERRA
7leave. If a participant who is reemployed from USERRA leave
8subsequently makes mandatory pickup participant contributions
9in the amounts and in the time periods required by 38 U.S.C.
10Ch. 43 (relating to employment and reemployment rights of
11members of the uniformed services) and IRC § 414(u) as if the
12participant had continued in his school employment and
13performed school service and been compensated during the
14period of USERRA leave, then the participant's employer shall
15make the corresponding employer defined contributions. Such
16an employee shall have his contributions, benefits, rights
17and obligations determined under this part as if he was an
18active participant who performed school service during the
19USERRA leave in the job position that he would have held had
20he not been on USERRA leave and received the compensation on
21which the mandatory pickup participant contributions to
22receive school service credit for the USERRA leave were
23determined, including the right to make voluntary
24contributions on such compensation as permitted by law.

25(2) A participant who is reemployed from USERRA leave
26and does not make the mandatory pickup participant
27contributions or makes only part of the mandatory pickup
28participant contributions within the allowed payment period
29shall not be eligible to make mandatory pickup participant
30contributions and voluntary contributions at a later date for

1the period of USERRA leave for which the mandatory pickup
2participant contributions were not timely made.

3(3) A participant who performs USERRA leave from which
4the employee could have been reemployed from USERRA leave had
5the school employee returned to school service in the time
6frames required by 38 U.S.C. Ch. 43 for reemployment rights,
7but did not do so, shall not be eligible to make mandatory
8pickup participant contributions or voluntary contributions
9for the period of USERRA leave should the employee later
10return to school service and be a participant in the plan.

11(4) An active participant or inactive participant who,
12on or after the effective date of this subsection, is granted
13a leave of absence under 51 Pa.C.S. § 4102 (relating to
14leaves of absence for certain government employees) or a
15military leave under 51 Pa.C.S. Ch. 73 (relating to military
16leave of absence) that is not USERRA leave shall not be
17eligible to make mandatory pickup participant contributions
18or voluntary contributions during or for the leave of absence
19or military leave, and shall not have employer defined
20contributions made during such leave, without regard to
21whether or not the participant received salary, wages,
22stipends, differential wage payments or other payments from
23his employer during the leave, notwithstanding any provision
24to the contrary in 51 Pa.C.S. § 4102 or Ch. 73.

25(5) If a participant dies while performing USERRA leave,
26then the beneficiaries or successor payees, as the case may
27be, of the deceased participant are entitled to any
28additional benefits, other than benefit accruals relating to
29the period of qualified military service, provided under this
30part had the participant resumed and then terminated

1employment on account of death.

<-2Section 106. Sections 8303(c) and 8303.1 of Title 24 are
3amended to read:

4§ 8303. Eligibility points for retention and reinstatement of
5service credits.

6* * *

7(c) Purchase of previous creditable service.--Every active
8member of the system or a multiple service member who is an
9active member of the State Employees' Retirement System on or
10after the effective date of this part may purchase credit and
11receive eligibility points:

12(1) as a member of Class T-C, Class T-D, Class T-E [or],
13Class T-F, Class T-G or Class T-H for previous creditable
14school service [or creditable nonschool service] of the same
15class; [or]

16(2) as a member of Class [T-D for previous creditable
17school service, provided the member elects to become a Class
18T-D member pursuant to section 8305.1 (relating to election
19to become a Class T-D member);] T-C, Class T-D, Class T-G or
20Class T-H for creditable nonschool service as Class T-C,
21except as otherwise provided in this part; or

22(3) as a member of Class T-E or Class T-F for creditable
23nonschool service as the same class;

24upon written agreement by the member and the board as to the
25manner of payment of the amount due for credit for such service;
26except, that any purchase for reinstatement of service credit
27shall be for all service previously credited.

28* * *

<-29Section 106. Section 8303.1 of Title 24 is amended to read:

30§ 8303.1. Waiver of adjustments.

1(a) Allowance.--Upon appeal by an affected member, 
2participant, beneficiary or survivor annuitant, the board may
3waive an adjustment or any portion of an adjustment made under
4section 8534(b) (relating to fraud and adjustment of errors) if
5in the opinion of the board or the board's designated
6representative:

7(1) the adjustment or portion of the adjustment will
8cause undue hardship to the member, participant, beneficiary
9or survivor annuitant;

10(2) the adjustment was not the result of erroneous
11information supplied by the member, participant, beneficiary
12or survivor annuitant;

13(3) the member or participant had no knowledge or notice
14of the error before adjustment was made, and the member, 
15participant, beneficiary or survivor annuitant took action
16with respect to their benefits based on erroneous information
17provided by the system or plan; and

18(4) the member, participant, beneficiary or survivor
19annuitant had no reasonable grounds to believe the erroneous
20information was incorrect before the adjustment was made.

21(b) Time period.--

22(1) In order to obtain consideration of a waiver under
23this section, the affected member, participant, beneficiary
24or survivor annuitant must appeal to the board in writing
25within 30 days after receipt of notice that benefits have
26been adjusted or, if no notice was given, within 30 days
27after the adjustment was known or should have been known to
28the affected member, participant, beneficiary or survivor
29annuitant.

30(2) For any adjustments made prior to the effective date

1of this subsection for which the member, participant,
2beneficiary or survivor annuitant appealed to the board and
3was denied, an appeal under this section must be filed within
490 days of the effective date of this subsection.

<-5(3) For any adjustments made prior to the effective date
6of this paragraph for which the participant appealed to the
7board and was denied, an appeal under this section must be
8filed within 90 days of the effective date of this paragraph.

9Section 107. Title 24 is amended by adding a section to
10read:

11§ 8303.2. Spouses rights, benefits and effect of nomination of
12spouse.

13(a) No rights of participation in spouse.--The spouse of a
14participant does not have any of the rights, options or
15privileges of a participant. The rights of a spouse shall remain
16derivative of those of the participant, including, but not
17limited to, rights under the act of July 8, 1978 (P.L.752,
18No.140), known as the Public Employee Pension Forfeiture Act,
19section 16(b) of Article V of the Constitution of Pennsylvania,
20and a spouse may not compel a participant to take, or prevent a
21participant from taking, any action regarding membership, rights
22or benefits in the plan in which he is a participant other than
23those expressly set forth in this part; nor may a spouse take
24any action on behalf of a participant, except as otherwise duly
25authorized under this part.

26(b) No waiver of benefits without spousal consent.--To the
27extent that the law allows a participant to waive any benefits
28or return of contributions which the participant is entitled to
29receive now or in the future, or is receiving, no such waiver
30will be valid unless the spouse of the participant consents to

1it as provided for in this part.

2(c) Effect of nomination of spouse as beneficiary by law.--
3Whenever the spouse of a participant in the plan is deemed to be
4the beneficiary by operation of law instead of by a written
5nomination of beneficiary filed with the board, then the person
6last nominated as beneficiary in writing filed with the board
7shall become the contingent beneficiary.

8Section 108. Section 8305(b) of Title 24 is amended and the
9section is amended by adding subsections a subsection<- to read:

10§ 8305. Classes of service.

11* * *

12(b) Other class membership.--A school employee who is a
13member of a class of service other than Class T-C on the
14effective date of this part may elect to become a member of
15Class T-C or Class T-D or may retain his membership in such
16other class until the service is discontinued or he elects to
17become a full coverage member or elects to purchase credit for
18previous school or creditable nonschool service. Any service
19thereafter as a member of the system shall be credited as Class
20T-C or T-D service as applicable.

21* * *

22(f) Ineligibility for active membership and classes of
23service.--An individual who elects to be a participant in the
24plan or who is a school employee on July 1, 2015, but who is not
25a member of the system, or who first becomes a school employee
26on or after July 1, 2015, or who returns to school service on or
27after July 1, 2015, after a termination of school service, shall
28be ineligible for active membership in the system. Instead, any
29such school employee shall be a participant in the plan as a
30result of such school service, subject to the provisions in

1section 8301 (relating to mandatory and optional membership).

<-2(g) Class T-G membership.--Notwithstanding any other
3provision of law, a member who is, becomes, or is eligible to
4become, a Class T-D member and who performs school service on or
5after July 1, 2015, shall perform the service as a Class T-G
6member and shall be classified as a Class T-G member for all
7school service performed on or after July 1, 2015, upon payment
8of regular member contributions.

9(h) Class T-H membership.--Notwithstanding any other
10provision of law, any Class T-G member shall have the right to
11elect into Class T-H membership, provided the member elects to
12become a Class T-H member pursuant to section 8305.3 (relating
13to election to become a Class T-H member), upon written election
14filed with the board and payment of regular member
15contributions.

16Section 109. Sections 8305.1(c) and <-8305.2(c) and (d) 
<-178305.2(d) of Title 24 are amended to read:

18§ 8305.1. Election to become a Class T-D member.

19* * *

20(c) Effect of election.--An election to become a Class T-D
21member shall remain in effect until the termination of
22employment except as otherwise provided in this part. Those
23members who, on the effective date of this section, contribute
24at the rate of 5 1/4% shall be deemed to have accepted the basic
25contribution rate of 6 1/2% for all Class T-D service performed
26on or after January 1, 2002. Those members who, on the effective
27date of this section, contribute at the rate of 6 1/4% shall be
28deemed to have accepted the basic contribution rate of 7 1/2%
29for all Class T-D service performed on or after January 1, 2002.
30Upon termination and a subsequent reemployment that occurs
 

1before July 1, 2015, the class of service of the school employee 
2shall be credited in the class of service otherwise provided for 
3in this part. If the reemployment occurs on or after July 1, 
42015, the school employee's eligibility for membership in the 
5system or participation in the plan shall be as provided in this 
6part.

7* * *

8§ 8305.2. Election to become a Class T-F member.

9* * *

<-10(c) Effect of election.--An election to become a Class T-F
11member shall be irrevocable and shall commence from the original
12date of eligibility[. A member who elects Class T-F membership
13shall receive Class T-F service credit on any and all future
14service, regardless of whether the member terminates service or
15has a break in service.] and shall remain in effect for all
16future school service creditable in the system except as
17otherwise provided in this part.

18(d) Effect of failure to make election.--If a member fails 
19to timely file an election to become a Class T-F member, then 
20the member shall be enrolled as a member of Class T-E, unless 
21the school employee elects or is required to be a participant in 
22the plan, and the member shall never be able to elect Class T-F 
23service, regardless of whether the member terminates service or 
24has a break in service.

<-25Section 110. Title 24 is amended by adding a section to
26read:

27§ 8305.3.  Election to become a Class T-H member.

28(a)  General rule.--A school employee who first becomes a
29Class T-G member on or after July 1, 2015, and who is eligible
30to become a Class T-H member may elect to become a member of

1Class T-H.

2(b)  Time for making election.--

3(1) Except as otherwise provided in paragraph (2), a
4member must elect to become a Class T-H member by filing a
5written election with the board within 60 days of
6notification by the board that the member is eligible for the
7election.

8(2) A Class T-G member, who is eligible to elect to
9become a Class T-H member but who begins USERRA leave during
10the election period without having elected Class T-H, may
11make the election within 60 days after returning to school
12service from the USERRA leave.

13(c)  Effect of election.--An election to become a Class T-H
14member shall be irrevocable, commence from the original date of
15eligibility and remain in effect for all future school service
16creditable in the system, except as otherwise provided in this
17part. A member who elects Class T-H membership shall receive
18Class T-H service credit on any and all future service, except
19as otherwise provided in this part.

20(d)  Effect of failure to make election.--If a member fails
21to timely file an election to become a Class T-H member, then
22the member shall be enrolled as a member of Class T-G and the
23member shall never be able to elect Class T-H service,
24regardless of whether the member terminates service or has a
25break in service.

<-26Section 110. (Reserved).

27Section 111. (Reserved).

<-28Section 112. Sections 8306(b), 8307(a) and (b), 8308, 8310,
298321(a), 8322.1(a), 8323(a), (c) and (d), 8324(a), (b), (c) and
30(d), 8325, 8325.1(a), 8326(a) and (c), 8327, 8328(a), (b), (c),

1(d), (e) and (g), 8330 and 8341 of Title 24 are amended to read:

<-2Section 112. Sections 8306(b), 8307(a) and (b), 8310,
38322.1(a), 8323(a) and (d), 8324(b), (c) and (d), 8325,
48325.1(a), 8326(a) and (c), 8327, 8328(a), (b), (c), (d), (e)
5and (g), 8330 and 8341 of Title 24 are amended to read:

6§ 8306. Eligibility points.

7* * *

8(b) Transitional rule.--For the purposes of the transition:

9(1) In determining whether a member, other than a
10disability annuitant who returns to school service after June
1130, 2001, upon termination of the disability annuity, who is
12not a school employee or a State employee on June 30, 2001,
13and July 1, 2001, and who has previous school service, has
14the five eligibility points required by the definition of
15"vestee" in sections 8102 (relating to definitions), 8307
16(relating to eligibility for annuities), 8308 (relating to
17eligibility for vesting) and 8345 (relating to member's
18options), only eligibility points earned by performing
19credited school service as an active member of the system or
20credited State service as an active member of the State 
21Employees' Retirement System after June 30, 2001, shall be
22counted until such member earns one eligibility point by
23performing credited school service or credited State service
24after June 30, 2001, at which time all eligibility points as
25determined under subsection (a) shall be counted.

26(2) A member subject to paragraph (1) shall be
27considered to have satisfied any requirement for five
28eligibility points contained in this part if the member has
29at least ten eligibility points determined under subsection
30(a).

1§ 8307. Eligibility for annuities.

2(a) Superannuation annuity.--An active or an inactive member
3who attains superannuation age shall be entitled to receive a
4superannuation annuity upon termination of service and filing of
5a proper application. A combined service employee who is an 
6active or inactive participant and attains superannuation age 
7shall be entitled to receive a superannuation annuity upon 
8termination of service and filing of a proper application.

9(b) Withdrawal annuity.--A vestee in Class T-C <-[or], Class
10T-D<-, Class T-G or Class T-H with five or more eligibility points
11or an active or inactive Class T-C or Class T-D member or a 
12combined service employee with Class T-C or Class T-D service
13who terminates school service having five or more eligibility
14points shall, upon filing a proper application, be entitled to
15receive an early annuity. A vestee in Class T-E or Class T-F
16with ten or more eligibility points or an active or inactive
17Class T-E or Class T-F member or a combined service employee 
18with Class T-E or Class T-F service who terminates school
19service having ten or more eligibility points shall, upon filing
20a proper application, be entitled to receive an early annuity.

21* * *

<-22§ 8308. Eligibility for vesting.

23Any Class T-C [or], Class T-D, Class T-G or Class T-H member
24who terminates school service with five or more eligibility
25points shall be entitled to vest his retirement benefits until
26attainment of superannuation age. Any Class T-E or Class T-F
27member who terminates school service with ten or more
28eligibility points shall be entitled to vest his retirement
29benefits until attainment of superannuation age.

30§ 8310. Eligibility for refunds.

1Upon termination of service any active member, regardless of
2eligibility for benefits, may elect to receive his accumulated
3deductions in lieu of any benefit from the system to which he is
4entitled.

<-5§ 8321. Regular member contributions for current service.

6(a) General.--Regular member contributions shall be made to
7the fund on behalf of each active member for current service
8except for any period of current service in which the making of
9such contributions has ceased solely by reason of any provision
10of this part relating to the limitations under IRC § 401(a)(17)
11or 415(b) or any provision of this part limiting compensation.

12* * *

13§ 8322.1. Pickup contributions.

14(a) Treatment for purposes of IRC § 414(h).--All
15contributions to the fund required to be made under sections
168321 (relating to regular member contributions for current
17service) and 8322 (relating to joint coverage member
18contributions), with respect to current school service rendered
19by an active member on or after January 1, 1983, shall be picked
20up by the employer and shall be treated as the employer's
21contribution for purposes of IRC § 414(h).

22* * *

23§ 8323. Member contributions for creditable school service.

24(a) Previous school service, sabbatical leave and full
25coverage.--The contributions to be paid by an active member or
26an eligible State employee for credit in the system for
27reinstatement of all previously credited school service, school
28service not previously credited, sabbatical leave as if he had
29been in full-time daily attendance, or full-coverage membership
30shall be sufficient to provide an amount equal to the

1accumulated deductions which would have been standing to the
2credit of the member for such service had regular member
3contributions been made with full coverage at the rate of
4contribution necessary to be credited as Class T-C service,
5Class T-D service if the member is a Class T-D member, Class T-E 
6service if the member is a Class T-E member <-[or], Class T-F 
7service if the member is a Class T-F member<-, Class T-G service 
8if the member is a Class T-G member or Class T-H service if the 
9member is a Class T-H member and had such contributions been
10credited with statutory interest during the period the
11contributions would have been made and during all periods of
12subsequent school service as an active member or inactive member
13and State service as an active member or inactive member on 
14leave without pay up to the date of purchase.

15* * *

<-16(c) Approved leave of absence other than sabbatical leave
17and activated military service leave.--The contributions to be
18paid by an active member for credit for an approved leave of
19absence, other than sabbatical leave and activated military
20service leave, shall be sufficient to transfer his membership to
21Class T-C or to Class T-D if the member is a Class T-D member,
22to Class T-E if the member is a Class T-E member or to Class T-F
23if the member is a Class T-F member or to Class T-G service if
24the member is a Class T-G member, or to Class T-H service if the
25member is a Class T-H member and further to provide an annuity
26as a Class T-C member or Class T-D member if the member is a
27Class T-D member, to Class T-E if the member is a Class T-E
28member or to Class T-F if the member is a Class T-F member or to
29Class T-G service if the member is a Class T-G member, or to
30Class T-H service if the member is a Class T-H member for such

1additional credited service. Such amount shall be the sum of the
2amount required in accordance with the provisions of subsection
3(b) and an amount determined as the sum of the member's basic
4contribution rate and the normal contribution rate as provided
5in section 8328 (relating to actuarial cost method) during such
6period multiplied by the compensation which was received or
7which would have been received during such period and with
8statutory interest during all periods of subsequent school and
9State service up to the date of purchase.

10* * *

11(d) Certification and payment of contributions.--

12(1) In all cases other than for the purchase of credit
13for sabbatical leave and activated military service leave
14beginning before the effective date of paragraph (2), the
15amount payable shall be certified by the board in accordance
16with methods approved by the actuary and may be paid in a
17lump sum within 90 days or in the case of an active member or
18an eligible State employee who is an active member of the
19State Employees' Retirement System it may be amortized with
20statutory interest through salary deductions to the system 
21in amounts agreed upon by the member and the board. The
22salary deduction amortization plans agreed to by members and
23the board may include a deferral of payment amounts and
24statutory interest until the termination of school service or
25State service or becoming a participant and combined service 
26employee as the board in its sole discretion decides to
27allow. The board may limit salary deduction amortization
28plans to such terms as the board in its sole discretion
29determines. In the case of an eligible State employee who is
30an active member of the State Employees' Retirement System,

1the agreed upon salary deductions shall be remitted to the
2State Employees' Retirement Board, which shall certify and
3transfer to the board the amounts paid.

4(2) In the case of activated military service leave
5beginning before the effective date of this paragraph, the
6amount payable may be paid according to this subsection or
7subsection (c.1), but all lump sum payments must be made
8within one year of the termination of activated military
9service leave.

10§ 8324. Contributions for purchase of credit for creditable 
11nonschool service and noncreditable school service.

<-12(a) Source of contributions.--The total contributions to
13purchase credit as a member of Class T-C, Class T-E [or], Class
14T-F, Class T-G or Class T-H for creditable nonschool service of
15an active member or an eligible State employee shall be paid
16either by the member, the member's previous employer, the
17Commonwealth, or a combination thereof, as provided by law.

18* * *<-

19(b) Nonintervening military service.--The amount due for the 
20purchase of credit for military service other than intervening 
21military service shall be determined by applying the member's 
22basic contribution rate plus the normal contribution rate as 
23provided in section 8328 (relating to actuarial cost method) at 
24the time of entry of the member into school service subsequent 
25to such military service to one-third of his total compensation 
26received during the first three years of such subsequent 
27credited school service and multiplying the product by the 
28number of years and fractional part of a year of creditable 
29nonintervening military service being purchased together with 
30statutory interest during all periods of subsequent school
 

1service as an active member or inactive member and State service 
2as an active member or inactive member on leave without pay to 
3date of purchase. Upon certification of the amount due, payment 
4may be made in a lump sum within 90 days or in the case of an 
5active member or an eligible State employee who is an active 
6member of the State Employees' Retirement System it may be 
7amortized with statutory interest through salary deductions to 
8the system in amounts agreed upon by the member and the board. 
9The salary deduction amortization plans agreed to by members and 
10the board may include a deferral of payment amounts and 
11statutory interest until the termination of school service or 
12State service or becoming a participant and a combined service 
13employee as the board in its sole discretion decides to allow. 
14The board may limit salary deduction amortization plans to such 
15terms as the board in its sole discretion determines. In the 
16case of an eligible State employee who is an active member of 
17the State Employees' Retirement System, the agreed upon salary 
18deductions shall be remitted to the State Employees' Retirement 
19Board, which shall certify and transfer to the board the amounts 
20paid. Application may be filed for all such military service 
21credit upon completion of three years of subsequent credited 
22school service and shall be credited as Class T-C service. In 
23the event that a Class T-E member makes a purchase of credit for 
24such military service, then such service shall be credited as 
25Class T-E service. In the event that a Class T-F member makes a 
26purchase of credit for such military service, then such service 
27shall be credited as Class T-F service.

28(c) Intervening military service.--Contributions on account
29of credit for intervening military service shall be determined
30by the member's basic contribution rate and compensation at the

1time of entry of the member into active military service,
2together with statutory interest during all periods of
3subsequent school service as an active member or inactive member 
4and State service as an active member or inactive member on 
5leave without pay to date of purchase. Upon application for such
6credit the amount due shall be certified in the case of each
7member by the board, in accordance with methods approved by the
8actuary, and contributions may be made by one of the following
9methods:

10(1) Regular monthly payments during active military
11service.

12(2) A lump sum payment within 90 days of certification
13of the amount due.

14(3) Salary deductions to the system in amounts agreed
15upon by the member and the board. The salary deduction
16amortization plans agreed to by the members and the board may
17include a deferral of payment amounts and statutory interest
18until the termination of school service or State service or 
19becoming a participant and a combined service employee as the
20board in its sole discretion decides to allow. The board may
21limit salary deduction amortization plans to such terms as
22the board in its sole discretion determines. In the case of
23an eligible State employee who is an active member of the
24State Employees' Retirement System, the agreed upon salary
25deductions shall be remitted to the State Employees'
26Retirement Board, which shall certify and transfer to the
27board the amounts paid.

28(d) Other creditable nonschool service and noncreditable 
29school service.--

30(1) Contributions on account of Class T-C credit for
 

1creditable nonschool service other than military service 
2shall be determined by applying the member's basic 
3contribution rate plus the normal contribution rate as 
4provided in section 8328 at the time of the member's entry 
5into school service subsequent to such creditable nonschool 
6service to his total compensation received during the first 
7year of subsequent credited school service and multiplying 
8the product by the number of years and fractional part of a 
9year of creditable nonschool service being purchased together 
10with statutory interest during all periods of subsequent 
11school service as an active member or inactive member or 
12State service as an active member or inactive member on leave 
13without pay to the date of purchase, except that in the case 
14of purchase of credit for creditable nonschool service as set 
15forth in section 8304(b)(5) (relating to creditable nonschool 
16service) the member shall pay only the employee's share 
17unless otherwise provided by law. Upon certification of the 
18amount due, payment may be made in a lump sum within 90 days 
19or in the case of an active member or an eligible State 
20employee who is an active member of the State Employees' 
21Retirement System it may be amortized with statutory interest 
22through salary deductions to the system in amounts agreed 
23upon by the member and the board. The salary deduction 
24amortization plans agreed to by the members and the board may 
25include a deferral of payment amounts and statutory interest 
26until the termination of school service or State service or 
27becoming a participant and combined service employee as the 
28board in its sole discretion decides to allow. The board may 
29limit salary deduction amortization plans to such terms as 
30the board in its sole discretion determines. In the case of
 

1an eligible State employee who is an active member of the 
2State Employees' Retirement System, the agreed upon salary 
3deductions shall be remitted to the State Employees' 
4Retirement Board, which shall certify and transfer to the 
5board the amounts paid.

6(2) Contributions on account of Class T-E or Class T-F
7credit for creditable nonschool service other than military
8service shall be the present value of the full actuarial cost
9of the increase in the projected superannuation annuity
10caused by the additional service credited on account of the
11purchase. Upon certification of the amount due, payment may
12be made in a lump sum within 90 days or, in the case of an
13active member or an eligible State employee who is an active
14member of the State Employees' Retirement System, it may be
15amortized with statutory interest through salary deductions
16to the system in amounts agreed upon by the member and the
17board. The salary deduction amortization plans agreed to by
18the members and the board may include a deferral of payment
19amounts and statutory interest until the termination of
20school service or State service or becoming a participant and 
21combined service employee as the board in its sole discretion
22decides to allow. The board may limit salary deduction
23amortization plans to the terms as the board in its sole
24discretion determines. In the case of an eligible State
25employee who is an active member of the State Employees'
26Retirement System, the agreed upon salary deductions shall be
27remitted to the State Employees' Retirement Board, which
28shall certify and transfer to the board the amounts paid.

29(3) Contributions on account of Class T-E or Class T-F 
30credit for noncreditable school service other than military
 

1service shall be the present value of the full actuarial cost 
2of the increase in the projected superannuation annuity 
3caused by the additional service credited on account of the 
4purchase. Upon certification of the amount due, payment may 
5be made in a lump sum within 90 days or, in the case of an 
6active member or an eligible State employee who is an active 
7member of the State Employees' Retirement System, it may be 
8amortized with statutory interest through salary deductions 
9to the system in amounts agreed upon by the member and the 
10board. The salary deduction amortization plans agreed to by 
11the members and the board may include a deferral of payment 
12amounts and statutory interest until the termination of 
13school service or State service or becoming a participant and 
14combined service employee as the board in its sole discretion 
15decides to allow. The board may limit salary deduction 
16amortization plans to the terms as the board in its sole 
17discretion determines. In the case of an eligible State 
18employee who is an active member of the State Employees' 
19Retirement System, the agreed upon salary deductions shall be 
20remitted to the State Employees' Retirement Board, which 
21shall certify and transfer to the board the amounts paid.

22* * *

23§ 8325. Incomplete payments.

24(a) Right to pay balance due.--In the event that a member
25terminates school service or becomes a participant or a multiple
26service member who is an active member of the State Employees'
27Retirement System terminates State service before any agreed
28upon payments or return of benefits on account of returning to
29school service or entering State service and electing multiple
30service have been completed, the member or multiple service

1member who is an active member of the State Employees'
2Retirement System shall have the right to pay within 30 days of
3termination of school service or State 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 school service, creditable nonschool service, or
7full-coverage membership.

8(b) Effect of failure to pay balance due.--In the event a
9member does not pay the balance due within 30 days of
10termination of school service or becoming a participant or in
11the event a member dies in school service or within 30 days of
12termination of school service or in the case of a multiple
13service member who is an active member of the State Employees'
14Retirement System does not pay the balance due within 30 days of
15termination of State service or dies in State service or within
1630 days of termination of State service or becoming a 
17participant and before the agreed upon payments have been
18completed, the present value of the benefit otherwise payable
19shall be reduced by the balance due, including interest, and the
20benefit payable shall be calculated as the actuarial equivalent
21of such reduced present value.

22§ 8325.1. Annual compensation limit under IRC § 401(a)(17).

23(a) General rule.--In addition to other applicable
24limitations set forth in this part, and notwithstanding any
25provision of this part to the contrary, the annual compensation
26of each noneligible member and each participant taken into
27account for benefit purposes under this subchapter shall not
28exceed the limitation under IRC § 401(a)(17). On and after July
291, 1996, any reference in this part to the limitation under IRC
30§ 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of

11993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
2compensation limit set forth in this subsection. The OBRA '93
3annual compensation limit is $150,000, as adjusted by the
4commissioner for increases in the cost of living in accordance
5with IRC § 401(a)(17)(B). The cost-of-living adjustment in
6effect for a calendar year applies to any determination period
7which is a period, not exceeding 12 months, over which
8compensation is determined, beginning in such calendar year. If
9a determination period consists of fewer than 12 months, the
10OBRA '93 compensation limit will be multiplied by a fraction,
11the numerator of which is the number of months in the
12determination period and the denominator of which is 12.

13* * *

14§ 8326. Contributions by the Commonwealth.

15(a) Contributions on behalf of active members and 
16participants.--The Commonwealth shall make contributions into
17the fund on behalf of all active members and participants,
18including members and participants on activated military service
19leave, in an amount equal to one-half the amount certified by
20the board as necessary to provide, together with the members'
21contributions, annuity reserves on account of prospective
22annuities as provided in this part in accordance with section
238328 (relating to actuarial cost method). In case a school
24employee has elected membership in a retirement program approved
25by the employer, the Commonwealth shall contribute to such
26program on account of his membership an amount no greater than
27the amount it would have contributed had the employee been a
28member of the Public School Employees' Retirement System.

29* * *

30(c) Contributions after June 30, 1995.--

1(1) The Commonwealth shall make contributions into the
2fund on behalf of all active members and participants,
3including members and participants on activated military
4service leave, for service performed after June 30, 1995, in
5the following manner:

6(i) For members and participants who are employees
7of employers that are school entities, no Commonwealth
8contributions shall be made.

9(ii) For members and participants who are employees
10of employers that are not school entities, the amount
11computed under subsection (a).

12(2) The Commonwealth shall make contributions into the
13fund on behalf of annuitants for all amounts due to the fund
14after June 30, 1995, including, but not limited to, amounts
15due pursuant to section 8328(d) and (f), in the following
16manner:

17(i) For members and participants who are employees
18of employers who are school entities, no Commonwealth
19contributions shall be made.

20(ii) For members and participants who are employees
21of employers who are not school entities, the amount
22computed under subsection (b).

23§ 8327. Payments by employers.

24(a) General rule.--[Each]

25(1) For payments prior to June 30, 2015, each employer,
26including the Commonwealth as employer of employees of the
27Department of Education, State-owned colleges and
28universities, Thaddeus Stevens College of Technology, Western 
29Pennsylvania School for the Deaf, Scotland School for
30Veterans' Children[,] and [the] The Pennsylvania State

1University, shall make payments to the fund each quarter in
2an amount equal to one-half the sum of the percentages, as
3determined under section 8328 (relating to actuarial cost
4method), applied to the total compensation during the pay
5periods in the preceding quarter of all its employees who
6were members of the system during such period, including
7members on activated military service leave. In the event a
8member on activated military service leave does not return to
9service for the necessary time or receives an undesirable,
10bad conduct or dishonorable discharge or does not elect to
11receive credit for activated military service under section
128302(b.1)(3) (relating to credited school service), the
13contributions made by the employer on behalf of such member
14shall be returned with valuation interest upon application by
15the employer.

16(2) For payments after June 30, 2015, each employer,
17including the Commonwealth as employer of employees of the
18Department of Education, State-owned colleges and
19universities, Thaddeus Stevens College of Technology, Western
20Pennsylvania School for the Deaf, Scotland School for
21Veterans' Children and The Pennsylvania State University,
22shall make payments to the fund each quarter in an amount
23equal to one-half the sum of the percentages, as determined
24under section 8328, applied to the total compensation during
25the pay periods in the preceding quarter of all its employees
26who were members of the system during such period, including
27members on activated military service leave, plus the accrued
28liability contribution rate applied to the total compensation
29of all active participants in the plan. In the event a member
30on activated military service leave does not return to

1service for the necessary time or receives an undesirable,
2bad conduct or dishonorable discharge or does not elect to
3receive credit for activated military service under section
48302(b.1)(3), the contributions made by the employer on
5behalf of such member shall be returned with valuation
6interest upon application by the employer.

7(b) Deduction from appropriations.--

8(1) To facilitate the payment of amounts due from any
9employer to the fund and the trust through the State
10Treasurer and to permit the exchange of credits between the
11State Treasurer and any employer, the Secretary of Education
12and the State Treasurer shall cause to be deducted and paid
13into the fund and the trust from the amount of any moneys due
14to any employer on account of any appropriation for schools
15or other purposes amounts equal to the employer and pickup
16contributions which an employer is required to pay to the
17fund and the trust, as certified by the board, and as remains
18unpaid on the date such appropriations would otherwise be
19paid to the employer. Such amount shall be credited to the
20appropriate accounts in the fund and the trust.

21(2) To facilitate the payments of amounts due from any
22charter school, as defined in Article XVII-A of the act of 
23March 10, 1949 (P.L.30, No.14), known as the Public School
24Code of 1949, to the fund and the trust through the State
25Treasurer and to permit the exchange of credits between the
26State Treasurer and any employer, the Secretary of Education
27and the State Treasurer shall cause to be deducted and paid
28into the fund and the trust from any funds appropriated to
29the Department of Education for basic education of the
30chartering school district of a charter school and public

1school employees' retirement contributions amounts equal to
2the employer and pickup contributions which a charter school
3is required to pay to the fund and the trust, as certified by
4the board, and as remains unpaid on the date such
5appropriations would otherwise be paid to the chartering
6school district or charter school. Such amounts shall be
7credited to the appropriate accounts in the fund and the 
8trust. Any reduction in payments to a chartering school
9district made pursuant to this section shall be deducted from
10the amount due to the charter school district pursuant to the
11Public School Code of 1949.

12(c) Payments by employers after June 30, 1995, and before 
13July 1, 2015.--After June 30, 1995, and before July 1, 2015,
14each employer, including the Commonwealth as employer of
15employees of the Department of Education, State-owned colleges
16and universities, Thaddeus Stevens College of Technology,
17Western Pennsylvania School for the Deaf, Scotland School for
18Veterans' Children and The Pennsylvania State University, shall
19make payments to the fund and the trust each quarter in an
20amount computed in the following manner:

21(1) For an employer that is a school entity, the amount
22shall be the sum of the percentages as determined under
23section 8328 applied to the total compensation during the pay
24periods in the preceding quarter of all employees who were
25active members of the system or active participants of the 
26plan during such period, including members or active 
27participants on activated military service leave. In the
28event a member on activated military service leave does not
29return to service for the necessary time or receives an
30undesirable, bad conduct or dishonorable discharge or does

1not elect to receive credit for activated military service
2under section 8302(b.1)(3), the contribution made by the
3employer on behalf of such member shall be returned with
4valuation interest upon application by the employer.

5(2) For an employer that is not a school entity, the
6amount computed under subsection (a).

7(3) For any employer, whether or not a school entity, in
8computing the amount of payment due each quarter, there shall
9be excluded from the total compensation referred to in this
10subsection and subsection (a) any amount of compensation of a
11noneligible member on the basis of which member or 
12participant contributions have not been made by reason of the
13limitation under IRC § 401(a)(17), except as otherwise 
14provided in this part. Any amount of contribution to the fund
15or trust paid by the employer on behalf of a noneligible
16member or participant on the basis of compensation which was
17subject to exclusion from total compensation in accordance
18with the provisions of this paragraph shall, upon the board's
19determination or upon application by the employer, be
20returned to the employer with valuation interest.

21(d) Payments by employers after June 30, 2015.--After June
2230, 2015, each employer, including the Commonwealth as employer
23of employees of the Department of Education, State-owned
24colleges and universities, Thaddeus Stevens College of
25Technology, Western Pennsylvania School for the Deaf, Scotland
26School for Veterans' Children and The Pennsylvania State
27University, shall make payments to the fund and the trust each
28quarter in an amount computed in the following manner:

29(1) For an employer that is a school entity, the amount
30shall be the sum of the percentages as determined under

1section 8328 applied to the total compensation during the pay
2periods in the preceding quarter of all employees who were
3active members of the system during such period, including
4members on activated military service leave, plus the accrued
5liability contribution rate applied to the total compensation
6of all active participants in the plan. In the event a member
7on activated military service leave does not return to
8service for the necessary time or receives an undesirable,
9bad conduct or dishonorable discharge or does not elect to
10receive credit for activated military service under section
118302(b.1)(3), the contribution made by the employer on behalf
12of such member shall be returned with valuation interest upon
13application by the employer.

14(2) For an employer that is not a school entity, the
15amount computed under subsection (a).

16(3) For any employer, whether or not a school entity, in
17computing the amount of payment due each quarter, there shall
18be excluded from the total compensation referred to in this
19subsection and subsection (a) any amount of compensation of a
20noneligible member or participant on the basis of which
21member or participant contributions have not been made by
22reason of the limitation under IRC § 401(a)(17). Any amount
23of contribution to the fund paid by the employer on behalf of
24a noneligible member or participant on the basis of
25compensation which was subject to exclusion from total
26compensation in accordance with the provisions of this
27paragraph shall, upon the board's determination or upon
28application by the employer, be returned to the employer with
29valuation interest.

30(e) Deemed agreed to.--The agreement of an employer listed

1in the definition of school employee under section 8102
2(relating to definitions) or any other law to make contributions
3to the fund or to enroll its employees as members in the system
4shall be deemed to be an agreement to make contributions to the
5trust or enroll its employees in the plan.

6(f) Contributions.--The employer employing a participant
7shall pick up the required mandatory participant contributions
8by a reduction in the compensation of the participant.

9(g) Contributions resulting from members reemployed from
10USERRA leave.--When a school employee reemployed from USERRA
11leave makes the member contributions required to be granted
12school service credit for the USERRA leave after June 30, 2015,
13either by actual payment or by actuarial debt under section 8325
14(relating to incomplete payments), the employer that employed
15the school employee when the member contributions are made or
16the last employer before termination in the case of payment
17under section 8325 shall make the employer contributions that
18would have been made under this section if the employee making
19the member contributions after he is reemployed from USERRA
20leave continued to be employed in his school office or position
21instead of performing USERRA leave.

22§ 8328. Actuarial cost method.

23(a) Employer contribution rate.--The amount of the total
24employer contributions shall be computed by the actuary as a
25percentage of the total compensation of all active members and 
26active participants, as applicable, during the period for which
27the amount is determined and shall be so certified by the board.
28The total employer contribution rate shall be the sum of the 
29final contribution rate as computed in subsection (h) plus the 
30premium assistance contribution rate as computed in subsection
 

1(f). The actuarially required contribution rate shall consist of
2the normal contribution rate as defined in subsection (b), the
3accrued liability contribution rate as defined in subsection (c)
4and the supplemental annuity contribution rate as defined in
5subsection (d). Beginning July 1, 2004, the actuarially required
6contribution rate shall be modified by the experience adjustment
7factors as calculated in subsection (e).

8(b) Normal contribution rate.--[The]

9(1) For the fiscal year ending June 30, 2014, the normal
10contribution rate shall be determined after each actuarial
11valuation. Until all accrued liability contributions have
12been completed, the normal contribution rate shall be
13determined, on the basis of an annual interest rate and such
14mortality and other tables as shall be adopted by the board
15in accordance with generally accepted actuarial principles,
16as a level percentage of the compensation of the average new
17active member, which percentage, if contributed on the basis
18of his prospective compensation through the entire period of
19active school service, would be sufficient to fund the
20liability for any prospective benefit payable to him, in
21excess of that portion funded by his prospective member
22contributions, excluding the shared-risk contributions.

23(2) For fiscal years beginning on or after July 1, 2014,
24the normal contribution rate shall be determined after each
25actuarial valuation. Until all accrued liability
26contributions have been completed, the normal contribution
27rate shall be determined, on the basis of an annual interest
28rate and such mortality and other tables as shall be adopted
29by the board in accordance with generally accepted actuarial
30principles, as a level percentage of the compensation of all

1active members not limited by the Social Security taxable
2wage base, which percentage, if contributed on the basis of
3the member's prospective compensation through the entire
4period of active school service, would be sufficient to fund
5the liability for any prospective benefit payable to him, in
6excess of that portion funded by his prospective member
7contributions, excluding the shared-risk contributions.

8(c) Accrued liability contribution rate.--

9(1) For the fiscal years beginning July 1, 2002, and 
10ending June 30, 2011, the accrued liability contribution rate
11shall be computed as the rate of total compensation of all
12active members which shall be certified by the actuary as
13sufficient to fund over a period of ten years from July 1,
142002, the present value of the liabilities for all
15prospective benefits of active members, except for the
16supplemental benefits provided in sections 8348 (relating to 
17supplemental annuities), 8348.1 (relating to additional 
18supplemental annuities), 8348.2 (relating to further 
19additional supplemental annuities), 8348.3 (relating to 
20supplemental annuities commencing 1994), 8348.4 (relating to 
21special supplemental postretirement adjustment), 8348.5
22(relating to supplemental annuities commencing 1998), 8348.6
23(relating to supplemental annuities commencing 2002) and
248348.7 (relating to supplemental annuities commencing 2003),
25in excess of the total assets in the fund (calculated by
26recognizing the actuarially expected investment return
27immediately and recognizing the difference between the actual
28investment return and the actuarially expected investment
29return over a five-year period), excluding the balance in the
30annuity reserve account, and of the present value of normal

1contributions and of member contributions payable with
2respect to all active members on July 1, 2002, during the
3remainder of their active service.

4(2) For the fiscal years beginning July 1, 2003, and 
5ending June 30, 2011, the amount of each annual accrued
6liability contribution shall be equal to the amount of such
7contribution for the fiscal year, beginning July 1, 2002,
8except that, if the accrued liability is increased by
9legislation enacted subsequent to June 30, 2002, but before
10July 1, 2003, such additional liability shall be funded over
11a period of ten years from the first day of July, coincident
12with or next following the effective date of the increase.
13The amount of each annual accrued liability contribution for
14such additional legislative liabilities shall be equal to the
15amount of such contribution for the first annual payment.

16(3) Notwithstanding any other provision of law,
17beginning July 1, 2004, and ending June 30, 2011, the
18outstanding balance of the increase in accrued liability due
19to the change in benefits enacted in 2001 and the outstanding
20balance of the net actuarial loss incurred in fiscal year
212000-2001 shall be amortized in equal dollar annual
22contributions over a period that ends 30 years after July 1,
232002, and the outstanding balance of the net actuarial loss
24incurred in fiscal year 2001-2002 shall be amortized in equal
25dollar annual contributions over a period that ends 30 years
26after July 1, 2003. For fiscal years beginning on or after
27July 1, 2004, if the accrued liability is increased by
28legislation enacted subsequent to June 30, 2003, such
29additional liability shall be funded in equal dollar annual
30contributions over a period of ten years from the first day

1of July coincident with or next following the effective date
2of the increase.

3(4) For the fiscal year beginning July 1, 2011, the 
4accrued liability contribution rate shall be computed as the 
5rate of total compensation of all active members which shall 
6be certified by the actuary as sufficient to fund as a level 
7percentage of compensation over a period of 24 years from 
8July 1, 2011, the present value of the liabilities for all 
9prospective benefits calculated as of June 30, 2010, 
10including the supplemental benefits as provided in sections 
118348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 
128348.7, in excess of the actuarially calculated assets in the 
13fund (calculated recognizing all realized and unrealized 
14investment gains and losses each year in level annual 
15installments over a ten-year period<-, provided that the 
16resulting actuarially calculated assets are constrained 
17within a range of 70% to 130% of market value). In the event 
18that the accrued liability is [increased] changed by 
19legislation enacted subsequent to June 30, 2010, such 
20[additional] change in liability shall be funded as a level 
21percentage of compensation over a period of ten years from 
22the July 1 second succeeding the date such legislation is 
23enacted.

<-24(5) Notwithstanding the above, for the fiscal years
25beginning July 1, 2014, compensation shall be defined as the
26total compensation of all active members not limited by the
27Social Security taxable wage base and active participants.

28(d) Supplemental annuity contribution rate.--

29(1) For the period of July 1, 2002, to June 30, 2011, 
30contributions from the Commonwealth and other employers

1required to provide for the payment of the supplemental
2annuities provided for in sections 8348, 8348.1, 8348.2,
38348.4 and 8348.5 shall be paid over a period of ten years
4from July 1, 2002. The funding for the supplemental annuities
5commencing 2002 provided for in section 8348.6 shall be as
6provided in section 8348.6(f). The funding for the
7supplemental annuities commencing 2003 provided for in
8section 8348.7 shall be as provided in section 8348.7(f). The
9amount of each annual supplemental annuities contribution
10shall be equal to the amount of such contribution for the
11fiscal year beginning July 1, 2002.

12(2) For fiscal years beginning July 1, 2011, and ending 
13June 30, 2014, contributions from the Commonwealth and other 
14employers whose employees are members of the system required 
15to provide for the payment of supplemental annuities as 
16provided in sections 8348, 8348.1, 8348.2, 8348.3, 8348.4, 
178348.5, 8348.6 and 8348.7 shall be paid as part of the 
18accrued liability contribution rate as provided for in 
19subsection (c)(4), and there shall not be a separate 
20supplemental annuity contribution rate attributable to those 
21supplemental annuities. In the event that supplemental 
22annuities are increased by legislation enacted subsequent to 
23June 30, 2010, [the] but before July 1, 2013, such additional 
24liability for the increase in benefits shall be funded as a 
25level percentage of compensation over a period of ten years 
26from the July 1 second succeeding the date such legislation 
27is enacted.

28(3) For fiscal years beginning on or after July 1, 2014,
29contributions from employers whose employees are members of
30the system required to provide for the payment of

1supplemental annuities as provided in sections 8348, 8348.1,
28348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 8348.7 shall be
3paid as part of the accrued liability contribution rate as
4provided for in subsection (c)(4), and there shall not be a
5separate supplemental annuity contribution rate attributable
6to those supplemental annuities. In the event that
7supplemental annuities are increased by legislation enacted
8subsequent to June 30, 2013, the additional liability for the
9increase in benefits shall be funded as a level percentage of
10compensation of all active members not limited by the Social
11Security taxable wage base and active participants over a
12period of ten years from the July 1 second succeeding the
13date such legislation is enacted.

14(e) Experience adjustment factor.--

15(1) For each year after the establishment of the accrued
16liability contribution rate for the fiscal year beginning
17July 1, 2011, and ending June 30, 2014, any increase or
18decrease in the unfunded accrued liability, excluding the
19gains or losses on the assets of the health insurance
20account, due to actual experience differing from assumed
21experience, changes in actuarial assumptions, changes in 
22contributions caused by the final contribution rate being 
23different from the actuarially required contribution rate, 
24active members making shared-risk contributions or changes in
25the terms and conditions of the benefits provided by the
26system by judicial, administrative or other processes other
27than legislation, including, but not limited to,
28reinterpretation of the provisions of this part, recognized 
29by the actuarial valuations on June 30, 2011, and June 30, 
302012, shall be amortized as a level percentage of
 

1compensation over a period of 24 years beginning with the
2July 1 second succeeding the actuarial valuation determining 
3said increases or decreases.

4(2) (Reserved).

5(3) For fiscal years beginning July 1, 2014, any
6increase or decrease in the unfunded accrued liability,
7excluding the gains or losses on the assets of the health
8insurance account, due to actual experience differing from
9assumed experience, changes in actuarial assumptions, changes
10in contributions caused by the final contribution rate being
11different from the actuarially required contribution rate,
12active members making shared-risk contributions or changes in
13the terms and conditions of the benefits provided by the
14system by judicial, administrative or other processes other
15than legislation, including, but not limited to,
16reinterpretation of the provisions of this part, shall be
17amortized as a level percentage of the compensation of all
18active members, not limited by the Social Security taxable
19wage base, and active participants over a period of 24 years
20beginning with the July 1 second succeeding the actuarial
21valuation determining such increases or decreases.

22* * *

23(g) Temporary application of collared contribution rate.--

24(1) The collared contribution rate for each year shall
25be determined by comparing the actuarially required
26contribution rate, calculated without regard for the costs
27added by legislation, to the prior year's final contribution
28rate.

29(2) If, for any of the fiscal years beginning July 1,
302011, and July 1, 2012, [and on or after July 1, 2013,] the

1actuarially required contribution rate, calculated without
2regard for the costs added by legislation, is more than 3%[,]
3or 3.5% [and 4.5%], respectively, of the total compensation
4of all active members greater than the prior year's final
5contribution rate, then the collared contribution rate shall
6be applied and be equal to the prior year's final
7contribution rate increased by 3%[,] or 3.5% [and 4.5%],
8respectively, of total compensation of all active members.
9Otherwise, and for all other fiscal years, the collared
10contribution rate shall not be applicable. In no case shall
11the collared contribution rate be less than 4% of the total
12compensation of all active members.

13(3) If, for any of the fiscal years beginning July 1,
142013, July 1, 2014, July 1, 2015, July 1, 2016, July 1, 2017,
15and on or after July 1, 2018, the actuarially required
16contribution rate, calculated without regard for the costs
17added by legislation, is more than 2.25%, 2.75%, 3.25%,
183.75%, 4.25% and 4.5%, respectively, of the total
19compensation of all active members and active participants
20greater than the prior year's final contribution rate, then
21the collared contribution rate shall be applied and be equal
22to the prior year's final contribution rate increased by
232.25%, 2.75%, 3.25%, 3.75%, 4.25% and 4.5%, respectively, of
24total compensation of all active members, not limited by the
25Social Security taxable wage base, and active participants.

26(4) For purposes of applying the collared contribution
27rate, compensation for determining the normal contribution
28rate shall be defined as the total compensation of all active
29members not limited by the Social Security taxable wage base
30and active participants.

1* * *

2§ 8330. Appropriations by the Commonwealth.

3(a) Annual submission of budget.--The board shall prepare
4and through the Governor submit annually to the General Assembly
5an itemized budget consisting of the amounts necessary to be
6appropriated by the Commonwealth out of the General Fund
7required to meet the separate obligations to the fund and the 
8trust accruing during the fiscal period beginning July 1 of the
9following year.

10(b) Appropriation and payment.--The General Assembly shall
11make an appropriation sufficient to provide for the separate
12obligations of the Commonwealth to the fund and the trust. Such
13amount shall be paid by the State Treasurer through the
14Department of Revenue into the fund or the trust, as the case 
15may be, within 30 days of receipt of the requisition presented
16each quarter by the board.

17§ 8341. Return of accumulated deductions.

18Any member upon termination of service may, in lieu of all
19benefits payable from the system under this chapter to which he
20may be entitled, elect to receive his accumulated deductions.

21Section 113. Section 8342 of Title 24 is amended by adding a
22subsection to read:

23§ 8342. Maximum single life annuity.

24* * *

25(d) Coordination of benefits.--The determination and payment
26of the maximum single life annuity under this section shall be
27in addition to any payments a combined service employee may be
28entitled to receive, has received or is receiving as a result of
29being a participant in the plan.

30Section 114. Sections 8344, <-8345(a), 8346 and 8349 heading,

1(a) and (b) of Title 24 are amended to read:

2§ 8344. Disability annuities.

3(a) Amount of annuity.--A member who has made application
4for a disability annuity as provided in section 8507(k)
5(relating to rights and duties of school employees [and
6members], members and participants) and has been found to be
7eligible in accordance with the provisions of sections 8307(c)
8(relating to eligibility for annuities) and 8505(c)(1) (relating
9to duties of board regarding applications and elections of
10members) shall receive a disability annuity payable from the
11effective date of disability and continued until a subsequent
12determination by the board that the annuitant is no longer
13entitled to a disability annuity. The disability annuity shall
14be a single life annuity that is equal to a sum of the standard
15single life [annuity] annuities determined separately for each 
16class of service if the total number of years of credited
17service is greater than 16.667, otherwise [the] each standard
18single life annuity shall be multiplied by the lesser of the
19following ratios:

20Y*/Y or 16.667/Y

21where Y = total number of years of credited service and Y* =
22total years of credited service if the member were to continue
23as a school employee until attaining superannuation age, or if
24the member has attained superannuation age then the number of
25years of credited service. In no event shall the disability
26annuity plus any cost-of-living increases be less than $100 for
27each full year of credited service. The member shall be entitled
28to the election of a joint and survivor annuity on that portion
29of the disability annuity to which he is entitled under section
308342 (relating to maximum single life annuity).

1(b) Reduction on account of earned income.--Payments on
2account of disability shall be reduced by that amount by which
3the earned income of the annuitant, as reported in accordance
4with section 8508(b) (relating to rights and duties of
5annuitants) for the preceding year together with the disability
6annuity payments for the year, exceeds the greater of $5,000 or
7the last year's salary of the annuitant as a [school employee]
8member of the system, provided that the annuitant shall not
9receive less than his member's annuity or the amount to which he
10may be entitled under section 8342, whichever is greater.

11(c) Termination and modification of payments.--Payment of
12that portion of the disability annuity in excess of the annuity
13to which the annuitant was entitled on the effective date of
14disability calculated in accordance with section 8342 shall
15cease if the annuitant is no longer eligible under the
16provisions of section 8505(c)(2) or section 8508(b) or (c) and
17if such annuitant on the date of termination of service was
18eligible for an annuity, he may file an application with the
19board for an election of an optional modification of the annuity
20to which he was entitled in accordance with section 8342.

21(d) Withdrawal of accumulated deductions.--Upon termination
22of disability annuity payments in excess of an annuity
23calculated in accordance with section 8342, a disability
24annuitant who:

25(1) is a Class T-C [or], Class T-D<-, Class T-G or Class 
26T-H member; or

27(2) is a Class T-E or Class T-F member with less than
28ten eligibility points

29and who does not return to school service may file an 
30application with the board for an amount equal to the
 

1accumulated deductions, shared-risk member contributions and 
2statutory interest standing to his credit at the effective date 
3of disability less the total payments received on account of his 
4member's annuity.

5(e) Limitation regarding annual benefit under IRC §
6415(b).--Notwithstanding any provision of this part to the
7contrary, no benefit shall be payable to the extent that such
8benefit exceeds any limitation under IRC § 415(b) in effect with
9respect to governmental plans, as such term is defined in IRC §
10414(d), on the date the benefit payment becomes effective.

11(f) Coordination of benefits.--The determination and payment
12of a disability annuity under this section shall be in addition
13to any payments a combined service employee may be entitled to
14receive, has received or is receiving as a result of being a
15participant in the plan.

<-16§ 8345. Member's options.

17(a) General rule.--Any Class T-C [or], Class T-D, Class T-G
18or Class T-H member who is a vestee with five or more
19eligibility points, any Class T-E or Class T-F member who is a
20vestee with ten or more eligibility points, or any other
21eligible member upon termination of school service who has not
22withdrawn his accumulated deductions as provided in section 8341
23(relating to return of accumulated deductions) may apply for and
24elect to receive either a maximum single life annuity, as
25calculated in accordance with the provisions of section 8342
26(relating to maximum single life annuity), or a reduced annuity
27certified by the actuary to be actuarially equivalent to the
28maximum single life annuity and in accordance with one of the
29following options, except that no member shall elect an annuity
30payable to one or more survivor annuitants other than his spouse

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

8(1) Option 1.--A life annuity to the member with a
9guaranteed total payment equal to the present value of the
10maximum single life annuity on the effective date of
11retirement with the provision that, if, at his death, he has
12received less than such present value, the unpaid balance
13shall be payable to his beneficiary.

14(2) Option 2.--A joint and survivor annuity payable
15during the lifetime of the member with the full amount of
16such annuity payable thereafter to his survivor annuitant, if
17living at his death.

18(3) Option 3.--A joint and fifty percent (50%) survivor
19annuity payable during the lifetime of the member with one-
20half of such annuity payable thereafter to his survivor
21annuitant, if living at his death.

22(4) Option 4.--Some other benefit which shall be
23certified by the actuary to be actuarially equivalent to the
24maximum single life annuity, subject to the following
25restrictions:

26(i) Any annuity shall be payable without reduction
27during the lifetime of the member.

28(ii) The sum of all annuities payable to the
29designated survivor annuitants shall not be greater than
30one and one-half times the annuity payable to the member.

1(iii) A portion of the benefit may be payable as a
2lump sum, except that such lump sum payment shall not
3exceed an amount equal to the accumulated deductions
4standing to the credit of the member. The balance of the
5present value of the maximum single life annuity adjusted
6in accordance with section 8342(b) shall be paid in the
7form of an annuity with a guaranteed total payment, a
8single life annuity, or a joint and survivor annuity or
9any combination thereof but subject to the restrictions
10of subparagraphs (i) and (ii) of this paragraph. This
11subparagraph shall not apply to a Class T-E or Class T-F
12member. For purposes of this subparagraph only, the term
13"actuarially equivalent," as applied to any lump sum
14withdrawal attributable to contributions credited to the
15member's savings account on or after July 1, 2015,
16together with all interest thereon, shall mean equal
17present values, computed on the basis of the interest
18rate and such mortality and other tables as adopted by
19the board pursuant to section 8328(b) (relating to
20actuarial cost method) in effect on the effective date of
21retirement of the member.

22* * *

23§ 8346. Termination of annuities.

24(a) General rule.--If an annuitant returns to school service
25or enters or has entered State service and elects multiple
26service membership, any annuity payable to him under this part
27shall cease effective upon the date of his return to school
28service or entering State service without regard to whether he 
29is a mandatory, optional or prohibited member of the system or 
30participant in the plan or, if a multiple service member,
 

1whether he is a mandatory, optional or prohibited member or 
2participant of the State Employees' Retirement System or State 
3Employees' Defined Contribution Plan and in the case of an
4annuity other than a disability annuity the present value of
5such annuity, adjusted for full coverage in the case of a joint
6coverage member who makes the appropriate back contributions for
7full coverage, shall be frozen as of the date such annuity
8ceases. An annuitant who is credited with an additional 10% of
9membership service as provided in section 8302(b.2) (relating to
10credited school service) and who returns to school service,
11except as provided in subsection (b), shall forfeit such
12credited service and shall have his frozen present value
13adjusted as if his 10% retirement incentive had not been applied
14to his account. In the event that the cost-of-living increase
15enacted December 18, 1979, occurred during the period of such
16State or school employment, the frozen present value shall be
17increased, on or after the member attains superannuation age, by
18the percent applicable had he not returned to service.

19(a.1) Return of benefits.--In the event an annuitant whose
20annuity ceases pursuant to this section receives any annuity
21payment, including a lump sum payment pursuant to section 8345
22(relating to member's options) on or after the date of his
23return to school service or entering State service, the
24annuitant shall return to the board the amount so received plus
25statutory interest. The amount payable shall be certified in
26each case by the board in accordance with methods approved by
27the actuary and shall be paid in a lump sum within 90 days or in
28the case of an active member or a State employee who is an
29active member of the State Employees' Retirement System may be
30amortized with statutory interest through salary deductions to
 

1the system in amounts agreed upon by the member and the board.
2The salary deduction amortization plans agreed to by the member
3and the board may include a deferral of payment amounts and
4statutory interest until the termination of school service or
5State service 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 a State employee who is an active member of the
9State Employees' Retirement System, the agreed upon salary
10deductions shall be remitted to the State Employees' Retirement
11Board, which shall certify and transfer to the board the amounts
12paid.

13(b) Return to school service during emergency.--When, in the
14judgment of the employer, an emergency creates an increase in
15the work load such that there is serious impairment of service
16to the public or in the event of a shortage of appropriate
17subject certified teachers or other personnel, an annuitant or 
18participant receiving distributions may be returned to school
19service for a period not to extend beyond the school year during
20which the emergency or shortage occurs, without loss of his
21annuity or distributions. The annuitant shall not be entitled to
22earn any credited service, and no contributions may be made by
23the annuitant, the employer or the Commonwealth on account of
24such employment. Such service shall not be subject to member 
25contributions or be eligible for qualification as creditable 
26school service or for participation in the plan, mandatory 
27pickup participant contributions or employer defined 
28contributions.

29(b.1) Return to school service in an extracurricular
30position.--

1(1) An annuitant or participant receiving distributions
2may be employed under separate contract by a public school or
3charter school in an extracurricular position performed
4primarily outside regular instructional hours and not part of
5mandated curriculum without loss of annuity. [Neither the]
6The annuitant [nor], the participant receiving distributions 
7and the employer shall not make contributions to the member's
8savings account, the individual investment account or State
9accumulation account respectively for such service. Further,
10such contract shall contain a waiver whereby the annuitant
11waives any potential retirement benefits that could arise
12from the contract and releases the employer and the board
13from any liability for such benefits. Such service shall not 
14be subject to member or participant contributions or be 
15eligible for qualification as creditable school service or 
16for participation in the plan, mandatory pickup participant 
17contributions or employer defined contributions.

18(2) Nothing in this subsection shall be construed to
19abridge or limit any rights provided under a collective
20bargaining agreement or any rights provided under the act of 
21July 23, 1970 (P.L.563, No.195), known as the Public Employe
22Relations Act.

23(3) For purposes of this subsection, the term
24"extracurricular position" means a contract position filled
25by an annuitant that is separate from the established
26academic course structure, including the position of athletic
27director.

28(c) Subsequent discontinuance of service.--Upon subsequent
29discontinuance of service, such [member] terminating school 
30employee other than a former annuitant who had the effect of his

1frozen present value eliminated in accordance with subsection
2(d) or a former disability annuitant shall be entitled to an
3annuity which is actuarially equivalent to [the sum of] the
4present value as determined under subsection (a) [and] to which 
5shall be added, if the service after reemployment was as a 
6member of the system, the present value of a maximum single life
7annuity based on years of service credited subsequent to reentry
8in the system and his final average salary computed by reference
9to his compensation as a member of the system or as a member of 
10the State Employees' Retirement System during his entire period
11of school and State service.

12(d) Elimination of the effect of frozen present value.--

13(1) An annuitant who returns to school service as an 
14active member of the system and earns three eligibility
15points by performing credited school service following the
16most recent period of receipt of an annuity under this part,
17or an annuitant who enters State service other than a 
18participant in the State Employees' Defined Contribution Plan
19and:

20(i) is a multiple service member; or

21(ii) who elects multiple service membership, and 
22earns three eligibility points by performing credited
23State service or credited school service following the
24most recent period of receipt of an annuity under this
25part, and who had the present value of his annuity frozen
26in accordance with subsection (a), shall qualify to have
27the effect of the frozen present value resulting from all
28previous periods of retirement eliminated, provided that
29all payments under Option 4 and annuity payments payable
30during previous periods of retirement plus interest as

1set forth in paragraph (3) shall be returned to the fund
2in the form of an actuarial adjustment to his subsequent
3benefits or in such form as the board may otherwise
4direct.

5(2) Upon subsequent discontinuance of service and the
6filing of an application for an annuity, a former annuitant
7who qualifies to have the effect of a frozen present value
8eliminated under this subsection shall be entitled to receive
9the higher of either:

10(i) an annuity (prior to optional modification)
11calculated as if the freezing of the former annuitant's
12account pursuant to subsection (a) had not occurred,
13adjusted by crediting Class T-C school service as Class
14T-D service as provided for in section 8305(c) (relating
15to classes of service) and further adjusted according to
16paragraph (3), provided that a former annuitant of the
17system or a former annuitant of the State Employees'
18Retirement System who retired under a provision of law
19granting additional service credit if termination of
20school or State service or retirement occurred during a
21specific period of time shall not be permitted to retain
22the additional service credit under the prior law when
23the annuity is computed for his most recent retirement;
24or

25(ii) an annuity (prior to optional modification)
26calculated as if the former annuitant did not qualify to
27have the effect on the frozen present value eliminated,

28unless the former annuitant notifies the board in writing by
29the later of the date the application for annuity is filed or
30the effective date of retirement that the former annuitant

1wishes to receive the lower annuity.

2(3) In addition to any other adjustment to the present
3value of the maximum single life annuity that a member may be
4entitled to receive that occurs as a result of any other
5provision of law, the present value of the maximum single
6life annuity shall be reduced by all amounts paid or payable
7to him during all previous periods of retirement plus
8interest on these amounts until the date of subsequent
9retirement. The interest for each year shall be calculated
10based upon the annual interest rate adopted for that school
11year by the board for the calculation of the normal
12contribution rate pursuant to section 8328(b) (relating to
13actuarial cost method).

14§ 8349. Payment of benefits from the system.

15(a) Annuities.--Any annuity granted under the provisions of
16this part and paid from the fund shall be paid in equal monthly
17installments.

18(b) Death benefits.--If the amount of a death benefit
19payable from the fund to a beneficiary of a member under section
208347 (relating to death benefits) or under the provisions of
21Option 1 of section 8345(a)(1) (relating to member's options) is
22$10,000 or more, such beneficiary may elect to receive payment
23according to one of the following options:

24(1) A lump sum payment.

25(2) An annuity actuarially equivalent to the amount
26payable.

27(3) A lump sum payment and an annuity such that the
28annuity is actuarially equivalent to the amount payable less
29the lump sum payment specified by the beneficiary.

30* * *

1Section 115. Title 24 is amended by adding a chapter to
2read:

3CHAPTER 84

4SCHOOL EMPLOYEES' DEFINED CONTRIBUTION PLAN

5Sec.

68401. Establishment.

78402. Plan document.

88403. Individual investment accounts.

98404. Participant contributions.

108405. Mandatory pickup participant contributions.

118406. Employer defined contributions.

128407. Eligibility for benefits.

138408. Death benefits.

148409. Vesting.

158410. Termination of distributions.

168411. Agreements with financial institutions and other
17organizations.

188412. Powers and duties of board.

198413. Responsibility for investment loss.

208414. Investments based on participants' investment allocation
21choices.

228415. Expenses.

238416. Election by members to be participants.

248417. Tax qualification.

25§ 8401. Establishment.

26(a) School Employees' Defined Contribution Plan.--The School
27Employees' Defined Contribution Plan is established. The board
28shall administer and manage the plan, which shall be a defined
29contribution plan exclusively for the benefit of those school
30employees who participate in the plan and their beneficiaries

1within the meaning of and in conformity with IRC § 401(a). The
2board shall determine the terms and provisions of the plan not
3inconsistent with this part, the IRC and other applicable law
4and shall provide for the plan's administration.

5(b) School Employees' Defined Contribution Trust.--The
6School Employees' Defined Contribution Trust is established as
7part of the plan in accordance with this part. The trust shall
8be comprised of the individual investment accounts and all
9assets and moneys in those accounts. The members of the board
10shall be the trustees of the trust, which shall be administered
11exclusively for the benefit of those school employees who
12participate in the plan and their beneficiaries within the
13meaning of and in conformity with IRC § 401(a). The board shall
14determine the terms and provisions of the trust not inconsistent
15with this part, the IRC and other applicable law and shall
16provide for the investment and administration of the trust.

17(c) Assets held in trust.--All assets and income in the plan
18that have been or shall be withheld or contributed by the
19participants, the Commonwealth and employers in accordance with
20this part shall be held in trust in any funding vehicle
21permitted by the applicable provisions of IRC for the exclusive
22benefit of the plan's participants and their beneficiaries until
23such time as the funds are distributed to the participants or
24their beneficiaries in accordance with the terms of the plan
25document. The assets of the plan held in trust for the exclusive
26benefit of the participants and their beneficiaries may be used
27for the payment of the fees, costs and expenses related to the
28administration and investment of the plan and the trust.

29(d) Name for transacting business.--By the name of "The
30School Employees' Defined Contribution Plan," all of the

1business of the plan shall be transacted, the trust invested,
2all requisitions for money drawn and payments made and all of
3its cash and securities and other property shall be held, except
4that, any other law to the contrary notwithstanding, the board
5may establish a nominee registration procedure for the purpose
6of registering securities in order to facilitate the purchase,
7sale or other disposition of securities pursuant to the
8provisions of this part.

9§ 8402. Plan document.

10The board shall set forth the terms and provisions of the
11plan and trust in a document containing the terms and conditions
12of the plan and in a trust declaration that shall be published
13in the Pennsylvania Bulletin. The creation of the document
14containing the terms and conditions of the plan and the trust
15declaration and the establishment of the terms and provisions of
16the plan and the trust need not be promulgated by regulation or
17formal rulemaking and shall not be subject to the act of July
1831, 1968 (P.L.769, No.240), referred to as the Commonwealth
19Documents Law. A reference in this part or other law to the plan
20shall include the plan document unless the context clearly
21indicates otherwise.

22§ 8403. Individual investment accounts.

23The board shall:

24(1) establish in the trust an individual investment
25account for each participant in the plan. All contributions
26by a participant or an employer for or on behalf of a
27participant shall be credited to the participant's individual
28investment account, together with all interest and investment
29earnings and losses. Investment and administrative fees,
30costs and expenses shall be charged to the participants'

1individual investment accounts; and

2(2) separately track participant contributions,
3including investment gains and losses, and employer
4contributions, including investment gains and losses, but all
5interest, investment gains and losses and administrative
6fees, costs and expenses shall be allocated proportionately.

7§ 8404. Participant contributions.

8(a) Mandatory contributions.--A participant shall make
9mandatory pickup participant contributions through payroll
10deductions to the participant's individual investment account
11equal to 7.5% of compensation for current school service. The
12employer shall cause such contributions for current service to
13be made and deducted from each payroll or on such schedule as
14established by the board. After the effective date of this
15section, an employer employing a participant in the plan shall
16pick up the required mandatory participant contributions by a
17reduction in the compensation of the participant.

18(b) Voluntary contributions.--A participant may make
19voluntary contributions up to the limits permitted by IRC
20through payroll deductions or through direct trustee-to-trustee
21transfers or through transfers of money received in an eligible
22rollover into the trust to the extent allowed by IRC § 402. Such
23rollovers shall be made in a form and manner as determined by
24the board, shall be credited to the participant's individual
25investment account and shall be separately accounted for by the
26board.

27(c) Prohibition on contributions.--No contributions shall be
28allowed that would cause a violation of the limitations related
29to contributions applicable to governmental plans contained in
30IRC § 415 or in other provisions of law. In the event that any

1disallowed contributions are made, any participant contributions
2in excess of the limitations and investment earnings on those
3contributions shall be refunded to the participant by the board.

4§ 8405. Mandatory pickup participant contributions.

5(a) Treatment for purposes of IRC § 414(h).--The
6contributions to the trust required to be made under section
78404(a) (relating to participant contributions) with respect to
8current school service rendered by an active participant shall
9be picked up by the employer and shall be treated as the
10employer's contribution for purposes of IRC § 414(h). After the
11effective date of this section, an employer employing a
12participant in the plan shall pick up the required mandatory
13participant contributions by a reduction in the compensation of
14the participant.

15(b) Treatment for other purposes.--For all other purposes
16under this part and otherwise, such mandatory pickup participant
17contributions shall be treated as contributions made by a
18participant in the same manner and to the same extent as if the
19contributions were made directly by the participant and not
20picked up.

21§ 8406. Employer defined contributions.

22(a) Contributions for current service.--The employer of a
23participant shall make employer defined contributions for
24current service of an active participant that shall be credited
25to the active participant's individual investment account.
26Employer defined contributions must be recorded and accounted
27for separately from participant contributions.

28(b) Contributions resulting from participants reemployed
29from USERRA leave.--When a school employee reemployed from
30USERRA leave makes the mandatory pickup participant

1contributions permitted to be made for the USERRA leave, the
2employer by whom the school employee is employed at the time the
3participant contributions are made shall make whatever employer
4defined contributions would have been made under this section
5had the employee making the participant contributions after
6being reemployed from USERRA leave continued to be employed in
7the employee's school position instead of performing USERRA
8leave. Such employer defined contributions shall be placed in
9the participant's individual investment account as otherwise
10provided by this part.

11(c) Limitations on contributions.--No contributions shall be
12allowed that would cause a violation of the limitations related
13to contributions applicable to governmental plans contained in
14IRC § 415 or in other provisions of law. In the event that any
15disallowed contributions are made, any employer defined
16contributions in excess of the limitations and investment
17earnings thereon shall be refunded to the employer by the board.

18§ 8407. Eligibility for benefits.

19(a) Termination of service.--A participant who terminates
20school service shall be eligible to withdraw the vested
21accumulated total defined contributions standing to the
22participant's credit in the participant's individual investment
23account or a lesser amount as the participant may request.
24Payment shall be made in a lump sum unless the board has
25established other forms of distribution in the plan document,
26subject to the provisions of subsection (g). A participant who
27withdraws the vested accumulated total defined contributions
28shall no longer be a participant in the plan, notwithstanding
29that the participant may have contracted to receive an annuity
30or other form of payment from a provider retained by the board

1for such purposes.

2(b) Required distributions.--All payments pursuant to this
3section shall start and be made in compliance with the minimum
4distribution requirements and incidental death benefit rules of
5IRC § 401(a)(9). The board shall take any action and make any
6distributions it may determine are necessary to comply with
7those requirements.

8(c) Spousal consent not required.--A participant who is
9married may receive a lump sum distribution or other
10distribution directly from the board without the consent of the
11participant's spouse, unless the plan document provides
12otherwise.

13(d) Combined service employee.--A participant who is a
14combined service employee must be terminated from all positions
15that result in either membership in the system or participation
16in the plan to be eligible to receive a distribution.

17(e) Loans.--Loans or other distributions, including hardship
18or unforeseeable emergency distributions, from the plan to
19school employees who have not terminated school service are not
20permitted, except as required by law.

21(f) Small individual investment accounts.--

22(1) A participant who terminates school service and
23whose vested accumulated total defined contributions are
24below the threshold established by law as of the date of
25termination of service may be paid the vested accumulated
26total defined contributions in a lump sum as provided in IRC
27§ 401(a)(31).

28(2) The board may also provide in the plan document
29that, notwithstanding subsection (g), a participant whose
30vested accumulated employer defined contributions are below

1the thresholds established by the board may receive those
2distributions without the obligation to purchase an annuity.
3The threshold may be established as a dollar amount, an
4annuity amount, in some other form individually or in
5combination as the board determines.

6(g) Requirement to purchase annuity.--Except as prohibited
7by the IRC or as otherwise provided in this part, a participant
8who is eligible and elects to receive a distribution of vested
9accumulated employer defined contributions shall be required to
10purchase an annuity with the distribution under such conditions
11as provided in the plan document. The conditions may include 
12that the board is authorized to make the distribution directly 
13to the annuity provider.

14§ 8408. Death benefits.

15(a) General rule.--In the event of the death of an active
16participant or inactive participant, the board shall pay to the
17participant's beneficiary the vested balance in the
18participant's individual investment account in a lump sum or in
19such other manner as the board may establish in the plan
20document.

21(b) Death of participant receiving distributions.--In the
22event of the death of a participant receiving distributions, the
23board shall pay to the participant's beneficiary the vested
24balance in the participant's individual investment account in a
25lump sum or in such other manner as the board may establish in
26the plan document or, if the board has established alternative
27methods of distribution in the plan document under which the
28participant was receiving distributions, to the participant's
29beneficiary or successor payee as provided in the plan document.

30(c) Contracts.--The board may contract with financial

1institutions, insurance companies or other types of third-party
2providers to allow participants who receive a lump sum
3distribution to receive payments and death benefits in a form
4and manner as provided by the contract. The contracts may, but
5are not required to, provide that any payment and death benefit
6options for a married former participant be in the form of a
7joint and survivor annuity unless the spouse consents to another
8payment option.

9(d) Spousal consent.--All nomination or change of
10beneficiaries made by a married participant shall be subject to
11the consent of the participant's spouse as provided for in this
12part.

13§ 8409. Vesting.

14(a) Participant and voluntary contributions.--Subject to the
15forfeiture and attachment provisions of section 8533 (relating
16to taxation, attachment and assignment of funds) or otherwise as
17provided by law, a participant shall be fully vested with
18respect to all mandatory pickup participant contributions and
19voluntary contributions paid by or on behalf of the participant
20to the trust plus interest and investment earnings on the
21participant contributions but minus investment fees and
22administrative charges.

23(b) Employer defined contributions.--

24(1) Subject to the forfeiture and attachment provisions
25of section 8533 or otherwise as provided by law, a
26participant shall be vested with respect to employer defined
27contributions paid plus interest and investment earnings by
28or on behalf of the participant to the trust according to the
29following schedule:

30(i) During the first and second year of school

1service as a participant in the plan, 0%.

2(ii) At and after the second year of school service
3as a participant in the plan, 50%.

4(iii) At and after the third year of school service
5as a participant in the plan, 75%.

6(iv) At and after the fourth year of school service
7as a participant in the plan, 100%.

8(2) The board shall establish in the plan document:

9(i) How the required time periods of school service
10in the plan are determined and calculated.

11(ii) The effect of periods that school employees
12spend on paid or unpaid leave on the determination of a
13participant's vested status in the plan.

14(iii) The effect of termination of school service or
15distributions from the plan on a participant's vested
16status in the plan.

17(iv) Other terms and conditions for the
18implementation and administration of this section.

19(3) Nonvested employer defined contributions, including
20interest and investment gains and losses that are forfeited
21by a participant, shall be applied to the participant's most
22recent employer's obligations assessed under this section in
23future years.

24(c) USERRA leave and vesting credit.--A participant in the
25plan who is reemployed from USERRA leave or who dies while
26performing USERRA leave shall receive vesting credit under this
27section for the school service that would have been performed
28had the member not performed USERRA leave.

29§ 8410. Termination of distributions.

30(a) Return to school service.--

1(1) A participant receiving distributions or an inactive
2participant who returns to school service shall cease
3receiving distributions and shall not be eligible to receive
4distributions until the participant subsequently terminates
5school service, without regard to whether the participant is
6a mandatory, optional or prohibited member of the system or
7participant in the plan.

8(2) This subsection shall not apply to a distribution of
9accumulated employer defined contributions or other
10distributions that the participant has received and used to
11purchase an annuity from a provider contracted by the board.

12(b) Return of benefits paid during USERRA leave.--

13(1) If a former school employee is reemployed from
14USERRA leave and received any payments or annuity from the
15plan during the USERRA leave, the employee shall return to
16the board the amount so received plus interest as provided in
17the plan document.

18(2) The amount payable shall be certified in each case
19by the board in accordance with methods approved by the
20actuary and shall be paid in a lump sum within 30 days or, in
21the case of an active participant, may be amortized with
22interest as provided in the plan document through salary
23deductions to the trust in amounts agreed upon by the active
24participant and the board, but not longer than a period that
25starts with the date of reemployment and continuing for up to
26three times the length of the active participant's immediate
27past period of USERRA leave. The repayment period shall not
28exceed five years.

29§ 8411. Agreements with financial institutions and other
30organizations.

<-1To establish and administer the plan, the board may enter
2into written agreements with one or more financial institutions
3or other organizations relating to the plan's administration and
4investment of funds held pursuant to the plan.

<-5(a) Written agreement.--To establish and administer the
6plan, the board shall enter into a written agreement with one or
7more financial institutions or pension management organizations
8to administer the plan and the investment of funds held pursuant
9to the plan. The administrator shall be selected in accordance
10with the following:

11(1) The board shall solicit proposals from financial
12institutions and pension management organizations.

13(2) The board shall publish the solicitation under
14paragraph (1) in the Pennsylvania Bulletin.

15(3) Proposals received shall be evaluated based on
16specific criteria adopted by the board. The criteria shall
17include experience, customer service history and other
18criteria.

19(b) Rebid.--A contract to administer the plan under
20subsection (a) shall be rebid at least once every ten years.

21§ 8412. Powers and duties of board.

22The board shall have the following powers and duties to
23establish the plan and trust and to administer the provisions of
24this part:

25(1) The board may commingle or pool assets with the
26assets of other persons or entities.

27(2) The board shall pay all administrative fees, costs
28and expenses of managing, investing and administering the
29plan, the trust and the individual investment accounts from
30the balance of such individual investment accounts, except as

1the General Assembly otherwise provides through
2appropriations from the General Fund.

3(3) The board may establish investment guidelines and
4limits on the types of investments that participants may
5make, consistent with the board's fiduciary obligations.

6(4) The board shall have the power to change the terms
7of the plan as may be necessary to maintain the tax-qualified
8status of the plan.

9(5) The board may establish a process for election to
10participate in the plan by those school employees for whom
11participation is not mandatory.

12(6) The board may perform an annual or more frequent
13review of any qualified fund manager for the purpose of
14assuring it continues to meet all standards and criteria
15established.

16(7) The board may allow for eligible rollovers and
17direct trustee-to-trustee transfers into the trust from
18qualified plans of other employers, regardless of whether the
19employers are private employers or public employers.

20(8) The board may allow a former participant to maintain
21the participant's individual investment account within the
22plan.

23(9) The board shall administer <-or ensure the 
24administration of the plan in compliance with the
25qualification and other rules of IRC.

26(10) The board may establish procedures to provide for
27the lawful payment of benefits.

28(11) The board shall determine what constitutes a
29termination of school service.

30(12) The board may establish procedures for

1distributions of small accounts as required or permitted by
2IRC.

3(13) The board may establish procedures in the plan
4document or to promulgate rules and regulations as it deems
5necessary for the administration and management of the plan,
6including, but not limited to, establishing:

7(i) Procedures by which eligible participants may
8change voluntary contribution amounts or their investment
9choices on a periodic basis or make other elections
10regarding their participation in the plan.

11(ii) Procedures for deducting mandatory pickup
12participant contributions and voluntary contributions
13from a participant's compensation.

14(iii) Procedures for rollovers and trustee-to-
15trustee transfers allowed under the IRC and permitted by
16the board as part of the plan.

<-17(iv) Standards and criteria for disclosing and
18providing not less than ten options to eligible
19individuals regarding investments of amounts deferred
20under the plan, provided that one of the available
21options must serve as the default option for participants
22who do not make a timely election and that, to the extent
23commercially available, one option must have an annuity
24investment feature.

<-25(iv) Standards and criteria for providing not less
26than ten options in accordance with three or more
27providers of investment options to eligible individuals
28regarding investment of amounts deferred under the plan.
29The standards and criteria must provide for a variety of
30investment options. One of the available options must

1serve as the default option for participants who do not
2make a timely election and, to the extent commercially
3available, one option must have an annuity.

4(v) Standards and criteria for disclosing to the
5participants the anticipated and actual income
6attributable to amounts invested, property rights and all
7fees, costs and expenses to be made against amounts
8deferred to cover the costs and expenses of administering
9and managing the plan or trust.

10(vi) Procedures, standards and criteria for the
11making of distributions from the plan upon termination
12from employment or death or in other circumstances
13consistent with the purpose of the plan.

14(14) The board may waive any reporting or information
15requirement contained in this part if the board determines
16that the information is not needed for the administration of
17the plan.

18(15) The board may contract any services and duties in
19lieu of staff except final adjudications and as prohibited by
20law. Any duties or responsibilities of the board not required
21by law to be performed by the board may be delegated to a
22third-party provider subject to appeal to the board.

23(16) The board may provide that any duties of the
24employer or information provided by the participant to the
25employer be performed or received directly by the board.

26(17) The provisions and restrictions of the act of July
272, 2010 (P.L.266, No.44), known as Protecting Pennsylvania's
28Investments Act, shall not apply to the plan or trust or the
29investments thereof, but the board may offer to the plan
30participants investment vehicles that would be allowed under

1the Protecting Pennsylvania's Investments Act. The board
2shall also to the extent commercially available provide that
3one option for participants have an annuity investment
4feature.

5(18) The board shall ensure that participants are
6provided with educational materials about investment options
7and choices.

8§ 8413. Responsibility for investment loss.

9The Commonwealth, the board, an employer or a school entity
10or other political subdivision shall not be responsible for any
11investment loss incurred under the plan or for the failure of
12any investment to earn any specific or expected return or to
13earn as much as any other investment opportunity, whether or not
14such other opportunity was offered to participants in the plan.

15§ 8414. Investments based on participants' investment
16allocation choices.

17(a) Investment by participant.--All contributions, interest
18and investment earnings shall be invested based on a
19participant's investment allocation choices. All investment
20allocation choices shall be credited proportionally between
21contributions from the participant and employer defined
22contributions. Each participant shall be credited individually
23with the amount of contributions, interest and investment
24earnings.

25(b) Investment of contributions made by entities other than
26Commonwealth.--Investment of contributions by any corporation,
27institution, insurance company or custodial bank or other entity
28that the board has approved shall not be unreasonably delayed
29and in no case shall the investment of contributions be delayed
30more than 30 days from the date of payroll deduction or

1voluntary contributions are made to the date that funds are
2invested. Any interest earned on the funds pending investment
3shall be allocated to the employers and credited to the
4individual investment accounts of participants who are then
5participating in the plan, unless the interest is used to defray
6administrative costs and fees that would otherwise be required
7to be borne by participants who are then participating in the
8plan.

9§ 8415. Expenses.

10All expenses, fees and costs of administering the plan and
11the trust and investing the assets of the trust shall be borne
12by the participants and paid from assessments against the
13balances of the individual investment accounts as established by
14the board, except that for fiscal years ending before July 1,
152015, the expenses, fees and costs of establishing and
16administering the plan and trust shall be paid by the
17Commonwealth through annual appropriations from the General
18Fund, made on the basis of estimates from the board.

19§ 8416. Election by members to be participants.

20(a) General rule.--Any school employee who is an active
21member or inactive member on or after July 1, 2015, and who is
22employed in a position that would otherwise be eligible for
23participation in the plan may elect to become a participant in
24the plan.

25(b) Time for making election.--An eligible school employee
26may elect to become a participant and a combined service
27employee at any time before termination of school service by
28filing a written election with the board.

29(c) Effect of election.--The following apply:

30(1) An election to become a participant shall be

1irrevocable. Participation shall be effective at the
2beginning of the next pay period commencing after the
3election is filed with the board.

4(2) A member who elects to become a participant shall
5remain a participant for all future school service.

6(3) Any prior school or nonschool service credited in
7the system shall remain in the class of service in which it
8is credited on the effective date of participation.

9(4) A combined service employee shall not be eligible to
10receive an annuity from the system or a withdrawal of
11accumulated deductions until the employee has terminated
12school service.

13(5) A participant shall not be entitled to purchase any
14previous school service or creditable nonschool service.

15(6) The eligibility of a combined service employee for
16an annuity from the system and, if eligible, the amount of
17the annuity shall be as determined under this part.

18§ 8417. Tax qualification.

19(a) Required distributions.--All payments under this chapter
20shall start and be made in compliance with the minimum
21distribution requirements and incidental death benefit rules of
22IRC § 401(a).

23(b) Limitations.--The following shall apply:

24(1) (i) Except as provided under subparagraph (ii) and
25notwithstanding a provision of this part, a contribution
26or benefit related to the plan may not exceed a
27limitation under IRC § 415 with respect to governmental
28plans that is in effect on the date the contribution or
29benefit payment takes effect.

30(ii) An increase in a limitation under IRC § 415

1shall apply to the participants on or after the effective
2date of this section.

3(iii) For the purposes of this paragraph, the term
4"government plans" shall have the same meaning as in IRC
5§ 414(d).

6(2) (i) Except as provided under subparagraph (ii), an
7amendment of this part on or after the effective date of
8this section that increases contributions or benefits for
9active participants, inactive participants or
10participants receiving distributions may not be deemed to 
11provide for a contribution or benefit in excess of a
12limitation, adjusted on or after the effective date of
13this section, under IRC § 415 unless specifically
14provided by legislation.

15(ii) Notwithstanding subparagraph (i), an increase
16in benefits on or after the effective date of this
17section for a participant in the plan shall be authorized
18and apply to the fullest extent allowed by law.

19Section 116. Section 8501(a), (c) and (d) of Title 24 are
20amended to read:

21§ 8501. Public School Employees' Retirement Board.

22(a) Status and membership.--The board shall be an
23independent administrative board and shall consist of 15
24members: the Secretary of Education, ex officio; the State
25Treasurer, ex officio; two Senators; two members of the House of
26Representatives; the executive secretary of the Pennsylvania
27School Boards Association, ex officio; two to be appointed by
28the Governor, at least one of whom shall not be a school
29employee or an officer or employee of the State; three to be
30elected by the active professional members of the system and
 

1active professional participants of the plan from among their
2number; one to be elected by annuitants or a participant of the 
3plan who has terminated school service and is receiving or is 
4eligible to receive distributions from among their number; one
5to be elected by the active nonprofessional members of the
6system or active nonprofessional participants of the plan from
7among their number; and one to be elected by members of
8Pennsylvania public school boards from among their number. The
9appointments made by the Governor shall be confirmed by the
10Senate and each election shall be conducted in a manner approved
11by the board. The terms of the appointed and nonlegislative
12elected members shall be three years. The members from the
13Senate shall be appointed by the President pro tempore of the
14Senate and shall consist of one member from the majority and one
15member from the minority. The members from the House of
16Representatives shall be appointed by the Speaker of the House
17of Representatives and shall consist of one member from the
18majority and one member from the minority. The legislative
19members shall serve on the board for the duration of their
20legislative terms and shall continue to serve until 30 days
21after the convening of the next regular session of the General
22Assembly after the expiration of their respective legislative
23terms or until a successor is appointed for the new term,
24whichever occurs first. The chairman of the board shall be
25elected by the board members. Each ex officio member of the
26board and each legislative member of the board may appoint a
27duly authorized designee to act in his stead. In the event that 
28a board member, who is designated as an active participant or as 
29the participant in the plan who is receiving or is eligible to 
30receive distributions, receives a total distribution of the
 

1board member's interest in the plan, that board member may 
2continue to serve on the board for the remainder of the term.

3* * *

4(c) Oath of office.--Each member of the board shall take an
5oath of office that he will, so far as it devolves upon him,
6diligently and honestly administer the affairs of said board, 
7the system and the plan and that he will not knowingly violate
8or willfully permit to be violated any of the provisions of law
9applicable to this part. Such oath shall be subscribed by the
10member making it and certified by the officer before whom it is
11taken and shall be immediately filed in the office of the
12Secretary of the Commonwealth.

13(d) Compensation and expenses.--The members of the board who
14are members of the system or participants in the plan shall
15serve without compensation. Members of the board who are members
16of the system or participants in the plan and who are employed
17by a governmental entity shall not suffer loss of salary or
18wages through serving on the board. The board, on request of the
19employer of any member of the board who is an active
20professional or nonprofessional member of the system or active 
21professional or nonprofessional participant in the plan, may
22reimburse such employer for the salary or wages of the member or 
23participant, or for the cost of employing a substitute for such
24member or participant, while the member or participant is
25necessarily absent from employment to execute the duties of the
26board. The members of the board who are not members of either
27the school system or the State Employees' Retirement System may
28be paid $100 per day when attending meetings and all board
29members shall be reimbursed for any necessary expenses. However,
30when the duties of the board as mandated are not executed, no

1compensation or reimbursement for expenses of board members
2shall be paid or payable during the period in which such duties
3are not executed.

4* * *

5Section 117. Section 8502(b), (c), (e), (h), (i), (j), (k),
6(n) and (o) of Title 24 are amended and the section is amended
7by adding a subsection to read:

8§ 8502. Administrative duties of board.

9* * *

10(b) Professional personnel.--The board shall contract for
11the services of a chief medical examiner, an actuary, investment
12advisors, counselors, an investment coordinator, and such other
13professional personnel as it deems advisable. 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.--

19(1) The board shall, through the Governor, submit to the
20General Assembly annually a budget covering the
21administrative expenses of [this part.] the system and a 
22separate budget covering the administrative expenses of the 
23plan. The separate budget shall include those expenses 
24necessary to establish the plan and trust.

25(2) Such expenses of the system as approved by the
26General Assembly in an appropriation bill shall be paid from
27investment earnings of the fund.

28(3) For fiscal years ending on or before June 30, 2015,
29such expenses of the plan as approved by the General Assembly
30through an appropriation shall be paid from the General

1Fund. For fiscal years beginning on or after July 1, 2015,
2such expenses of the plan as approved by the General Assembly
3shall be paid from interest, pursuant to section 8414(b)
4(relating to investments based on participant investment
5allocation choices) or assessments on the balances of the
6participants' individual investment accounts.

7(4) Concurrently with its administrative budget, the
8board shall also submit to the General Assembly annually a
9list of proposed expenditures which the board intends to pay
10through the use of directed commissions, together with a list
11of the actual expenditures from the past year actually paid
12by the board through the use of directed commissions. All
13such directed commission expenditures shall be made by the
14board for the exclusive benefit of the system and its members
15and for the exclusive benefit of the plan and its 
16participants, respectively.

17* * *

18(e) Records.--

19(1) The board shall keep a record of all its proceedings
20which shall be [open to inspection by] accessible to the
21public, except as otherwise provided in this part or by other
22law.

23(2) Any record, material or data received, prepared,
24used or retained by the board or its employees, investment
25professionals or agents relating to an investment shall not
26constitute a public record subject to public [inspection] 
27access under the act of [June 21, 1957 (P.L.390, No.212),
28referred to] February 14, 2008 (P.L.6, No.3), known as the
29Right-to-Know Law, if, in the reasonable judgment of the
30board, the [inspection] access would:

1(i) in the case of an alternative investment or
2alternative investment vehicle involve the release of
3sensitive investment or financial information relating to
4the alternative investment or alternative investment
5vehicle which the fund or trust was able to obtain only
6upon agreeing to maintain its confidentiality;

7(ii) cause substantial competitive harm to the
8person from whom sensitive investment or financial
9information relating to the investment was received; or

10(iii) have a substantial detrimental impact on the
11value of an investment to be acquired, held or disposed
12of by the fund or trust, or would cause a breach of the
13standard of care or fiduciary duty set forth in this
14part.

15(3) (i) The sensitive investment or financial
16information excluded from [inspection] access under
17paragraph (2)(i), to the extent not otherwise excluded
18from [inspection] access, shall constitute a public
19record subject to public [inspection] access under the
20Right-to-Know Law once the board is no longer required by
21its agreement to maintain confidentiality.

22(ii) The sensitive investment or financial
23information excluded from [inspection] access under
24paragraph (2)(ii), to the extent not otherwise excluded
25from [inspection] access, shall constitute a public
26record subject to public [inspection] access under the
27Right-to-Know Law once:

28(A) the [inspection] access no longer causes
29substantial competitive harm to the person from whom
30the information was received; or

1(B) the entity in which the investment was made
2is liquidated;

3whichever is later.

4(iii) The sensitive investment or financial
5information excluded from [inspection] access under
6paragraph (2)(iii), to the extent not otherwise excluded
7from [inspection] access, shall constitute a public
8record subject to public [inspection] access under the
9Right-to-Know Law once:

10(A) the [inspection] access no longer has a
11substantial detrimental impact on the value of an
12investment of the fund or trust and would not cause a
13breach of the standard of care or fiduciary duty set
14forth in this part; or

15(B) the entity in which the investment was made
16is liquidated;

17whichever is later.

18(4) Except for the provisions of paragraph (3), nothing
19in this subsection shall be construed to designate any
20record, material or data received, prepared, used or retained
21by the board or its employees, investment professionals or
22agents relating to an investment as a public record subject
23to public [inspection] access under the Right-to-Know Law.

24(5) Notwithstanding the provisions of this subsection,
25the following information regarding an alternative investment
26vehicle shall be subject to public [inspection] access under
27the Right-to-Know Law:

28(i) The name, address and vintage year of the
29alternative investment vehicle.

30(ii) The identity of the manager of the alternative

1investment vehicle.

2(iii) The dollar amount of the commitment made by
3the system or plan to the alternative investment vehicle.

4(iv) The dollar amount of cash contributions made by
5the system or plan to the alternative investment vehicle
6since inception.

7(v) The dollar amount of cash distributions received
8by the system or plan from the alternative investment
9vehicle since inception.

10(vi) The net internal rate of return of the
11alternative investment vehicle since inception, provided
12that the system or plan shall not be required to disclose
13the net internal rate of return under circumstances in
14which, because of the limited number of portfolio assets
15remaining in the alternative investment vehicle, the
16disclosure could reveal the values of specifically
17identifiable remaining portfolio assets to the detriment
18of the alternative investment.

19(vii) The aggregate value of the remaining portfolio
20assets attributable to the system's or plan's investment
21in the alternative investment vehicle, provided that the
22system or plan shall not be required to disclose the
23value under circumstances in which, because of the
24limited number of portfolio assets remaining in the
25alternative investment vehicle, the disclosure could
26reveal the values of specifically identifiable remaining
27portfolio assets to the detriment of the alternative
28investment.

29(viii) The dollar amount of total management fees
30and costs paid to the alternative investment vehicle by

1the system or plan on an annual fiscal year-end basis.

2(6) Any record, material or data received, prepared,
3used or retained by the board or its employees or agents
4relating to a participant shall not constitute a public
5record subject to public access under the Right-to-Know Law,
6if, in the reasonable judgment of the board, the access would
7disclose any of the following:

8(i) The existence, date, amount and any other
9information pertaining to the voluntary contributions,
10including rollover contributions and trustee-to-trustee
11transfers, of any participant.

12(ii) The investment option selections of any
13participant.

14(iii) The balance of a participant's individual
15investment account, including the amount distributed to
16the participant, and any investment gains or losses, or
17rates of return.

18(iv) The identity of a participant's designated
19beneficiary, successor payee or alternate payee.

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

21(7) Nothing in this part shall be construed to designate
22any record, material or data received, prepared, used or
23retained by the board or its employees or agents relating to
24the contributions, investments, account value or benefits
25payable to or on account of a participant as a public record
26subject to public access under the Right-to-Know Law.

27* * *

28(h) Regulations and procedures.--The board shall, with the
29advice of the Attorney General and the actuary, adopt and
30promulgate rules and regulations for the uniform administration

1of the system. The actuary shall approve in writing all
2computational procedures used in the calculation of
3contributions and benefits pertaining to the system, and the
4board shall by resolution adopt such computational procedures,
5prior to their application by the board. Such rules, regulations
6and computational procedures as so adopted from time to time and
7as in force and effect at any time, together with such tables as
8are adopted and published pursuant to subsection (j) as
9necessary for the calculation of annuities and other benefits,
10shall be as effective as if fully set forth in this part. Any
11actuarial assumption specified in or underlying any such rule,
12regulation or computational procedure and utilized as a basis
13for determining any benefit shall be applied in a uniform
14manner.

15(i) Data.--The board shall keep in convenient form such data
16as are stipulated by the actuary in order that an annual
17actuarial valuation of the various accounts of the fund can be
18completed within six months of the close of each fiscal year.
19The board shall have final authority over the means by which
20data is collected, maintained and stored and in so doing shall
21protect the rights of its membership as to privacy and
22confidentiality.

23(j) Actuarial investigation and valuation.--The board shall
24have the actuary make an annual valuation of the various
25accounts of the fund within six months of the close of each
26fiscal year. In the fiscal year 1975 and in every fifth year
27thereafter, the board shall have the actuary conduct an
28actuarial investigation and evaluation of the system based on
29data including the mortality, service, and compensation
30experience provided by the board annually during the preceding

1five years concerning the members and beneficiaries of the 
2system. The board shall by resolution adopt such tables as are
3necessary for the actuarial valuation of the fund and
4calculation of contributions, annuities, and other benefits
5based on the reports and recommendations of the actuary. Within
630 days of their adoption, the secretary of the board shall
7cause those tables which relate to the calculation of annuities
8and other benefits to be published in the Pennsylvania Bulletin
9in accordance with the provisions of 45 Pa.C.S. § 725(a)
10(relating to additional contents of Pennsylvania Bulletin) and,
11unless the board specifies therein a later effective date, such
12tables shall become effective on such publication. The board
13shall include a report on the significant facts, recommendations
14and data developed in each five-year actuarial investigation and
15evaluation of the system in the annual financial statement
16published pursuant to the requirements of subsection (n) for the
17fiscal year in which such investigation and evaluation were
18concluded.

19(k) Certification of employer contributions to fund.--The
20board shall, each year in addition to the itemized budget
21required under section 8330 (relating to appropriations by the
22Commonwealth), certify to the employers and the Commonwealth the
23employer contribution rate expressed as a percentage of members'
24payroll necessary for the funding of prospective annuities for
25active members and the annuities of annuitants, and certify the
26rates and amounts of the normal contributions as determined
27pursuant to section 8328(b) (relating to actuarial cost method),
28accrued liability contributions as determined pursuant to
29section 8328(c), supplemental annuities contribution rate as
30determined pursuant to section 8328(d), the experience

1adjustment factor as determined pursuant to section 8328(e),
2premium assistance contributions as determined pursuant to
3section 8328(f), the costs added by legislation as determined 
4pursuant to section 8328(i), the actuarial required contribution 
5rate as determined pursuant to section 8328(i), the collared 
6contribution rate as determined pursuant to section 8328(g), the 
7final contribution rate as determined pursuant to section 
88328(h) and the shared-risk contribution rate as determined 
9under section 8321(b) (relating to regular member contributions 
10for current service), which shall be paid to the fund and
11credited to the appropriate accounts. These certifications shall
12be regarded as final and not subject to modification by the
13Secretary of the Budget.

14* * *

15(n) Annual financial statement.--The board shall prepare and
16have published, on or before January 1 of each year, [a
17financial statement] financial statements as of the fiscal year
18ending June 30 of the previous year showing the condition of the
19fund, the trust and the various accounts, including, but not
20limited to, the board's accrual and expenditure of directed
21commissions, and setting forth such other facts, recommendations
22and data as may be of use in the advancement of knowledge
23concerning annuities and other benefits provided by this part.
24The board shall submit said financial [statement] statements to
25the Governor and shall make copies available to the employers
26for the use of the school employees and the public.

27(o) Independent [audit] audits.--The board shall provide for
28[an annual audit] annual audits of the system and the plan by an
29independent certified public accounting firm, which [audit]
30audits shall include the board's accrual and expenditure of

1directed commissions. The board may use the same independent 
2certified public accounting firm for the audits of both the 
3system and the plan.

4* * *

5(q) Participant and employer contributions to trust.--The
6board shall, each year in addition to any fees and itemized
7budget required under section 8330, certify, as a percentage of
8each participant's compensation, the employer defined
9contributions, which shall be paid to the trust and credited to
10each participant's individual investment account. These
11certifications shall be regarded as final and not subject to
12modification by the Secretary of the Budget. The board shall
13cause all mandatory pickup participant contributions made on
14behalf of a participant and all voluntary contributions made by
15a participant to be credited to the participant's individual
16investment account.

17Section 118. Section 8502.2(a) of Title 24 is amended to
18read:

19§ 8502.2. Health insurance.

20(a) Authority.--The board may sponsor a participant-funded
21group health insurance program for annuitants, participants 
22receiving distributions, spouses of annuitants and participants 
23receiving distributions, survivor annuitants and their
24dependents. The board may promulgate regulations regarding the
25prudent and efficient operation of the program, including, but
26not limited to:

27(1) Establishment of an annual budget and disbursements
28in accordance with the budget.

29(2) Determination of the benefits structure.

30(3) Determination of enrollment procedures.

1(4) Establishment of premium rates sufficient to fully
2fund the program, including administrative expenses.

3(5) Contracting for goods, equipment, services,
4consultants and other professional personnel as needed to
5operate the program.

6* * *

7Section 119. Section 8503 heading and (a) of Title 24 are
8amended and the section is amended by adding a subsection to
9read:

10§ 8503. Duties of board to advise and report to employers [and
11members], members and participants.

12(a) Manual of regulations.--The board shall, with the advice
13of the Attorney General and the actuary, prepare, within 90 days
14of the effective date of this part, a manual incorporating rules
15and regulations consistent with the provisions of this part for
16the employers who shall make information contained therein
17available to the general membership. The board shall thereafter
18advise the employers within 90 days of any changes in such rules
19and regulations due to changes in the law or due to changes in
20administrative policies. As soon as practicable after the
21commissioner's publication with respect thereto, the board shall
22also advise the employers as to any cost-of-living adjustment
23for the succeeding calendar year in the amount of the limitation
24under IRC § 401(a)(17) and the dollar amounts of the limitations
25under IRC § 415[(b)].

26* * *

27(b.1) Participant status statements.--The board shall have
28furnished annually to each participant on or before December 31,
29and more frequently as the board may agree or as required by
30law, a statement showing the accumulated total defined

1contributions credited to the participant's individual
2investment account, the nature and type of investments and the
3investment allocation of future contributions as of June 30 of
4the current year and requesting the participant to make any
5necessary correction or revision regarding his designated
6beneficiary.

7* * *

8Section 120. Section 8504(c) of Title 24 is amended to read:

9§ 8504. Duties of board to report to State Employees'
10Retirement Board.

11* * *

12(c) Applications for benefits for State employees.--Upon
13receipt of notification and the required data from the State
14Employees' Retirement Board that a former school employee who
15elected multiple service has applied for a State employee's
16retirement benefit or, in the event of his death, his legally
17constituted representative has applied for such benefit, the
18board shall:

19(1) Certify to the State Employees' Retirement Board:

20(i) The salary history as a member of the Public
21School Employees' Retirement System and the final average
22salary as calculated on the basis of the compensation
23received as a State and school employee.

24(ii) The annuity or benefit which the member or his
25beneficiary is entitled to receive under this part and
26modified according to the option selected.

27(2) Transfer to the State Employees' Retirement Fund the
28accumulated deductions standing to such member's credit and
29the actuarial reserve required on account of the member's
30years of credited service in the school system and his final

1average salary determined on the basis of his compensation as 
2a member in both systems.

3Section 121. Sections 8505 heading, (b), (h)<-, (i) and (l) 
<-4and (i), 8506(a), (d), (e), (g) and (h) and 8507 heading, (a),
5(e) and (f) of Title 24 are amended and the sections are amended
6by adding subsections to read:

7§ 8505. Duties of board regarding applications and elections of
8members and participants.

9* * *

10(b) State employees electing multiple service status.--Upon
11receipt of notification from the State Employees' Retirement
12Board that a former school employee has become an active member
13in the State Employees' Retirement System and has elected to
14become a member with multiple service status, the board shall:

15(1) In case of a member who is receiving an annuity from
16the system:

17(i) Discontinue payments, transfer the present value
18of the member's annuity at the time of entering State
19service, plus the amount withdrawn in a lump sum payment,
20on or after the date of entering State service, pursuant
21to section 8345 (relating to member's options), with
22statutory interest to date of transfer, minus the amount
23to be returned to the board on account of return to
24service that the board has determined is to be credited
25in the members' savings account, from the annuity reserve
26account to the members' savings account and resume
27crediting of statutory interest on the amount restored to
28his credit.

29(ii) Transfer the balance of the present value of
30the total annuity, minus the amount to be returned to the

1board on account of return to service that the board has
2determined is to be credited in the State accumulation
3account, from the annuity reserve account to the State
4accumulation account.

5(iii) Certify to the member the amount of lump sum
6and annuity payments with statutory interest the member
7is to return to the board and, of those amounts, which
8amount shall be credited to the members' savings account
9and credited with statutory interest as such payments are
10returned and which amount shall be credited to the State
11accumulation account.

12(2) In case of a member who is not receiving an annuity
13from the system and who has not withdrawn his accumulated
14deductions, continue or resume the crediting of statutory
15interest on his accumulated deductions.

16(3) In case of a member who is not receiving an annuity
17from the system and his accumulated deductions were
18withdrawn, certify to the member the accumulated deductions
19as they would have been at the time of his separation had he
20been a full coverage member together with statutory interest
21for all periods of subsequent State service eligible for 
22membership in the State Employees' Retirement System and
23school service eligible for membership in the system to the
24date of repayment. Such amount shall be restored by him and
25shall be credited with statutory interest as such payments
26are restored.

27* * *

28(e.1) Certification to participants terminating service.--
29The board shall certify to a participant, within one year of
30termination of service of such participant, and, if the

1participant is married, the board is authorized to advise the
2participant's spouse, in writing of the vested accumulated total
3defined contributions credited to the participant's individual
4investment account as of the date stated in the writing, any
5notices regarding rollover or other matters required by IRC or
6other law, the obligation of the participant to commence
7distributions from the plan by the participant's required
8beginning date, and the ability to receive all or part of the
9vested balance in the participant's individual investment
10account in a lump sum or in such other form as the board may
11authorize or as required by law.

12* * *

13(f.1) Notification to inactive participants approaching
14required beginning date.--The board shall notify each inactive
15participant who has terminated school service and for whom
16distribution has not commenced by 90 days before the
17participant's required beginning date, and, if the participant
18is married, the board may advise the participant's spouse, in
19writing, that the inactive participant has an obligation to
20commence distributions by the required beginning date in a form
21and manner required by IRC § 401(a)(9) and other applicable
22provisions of IRC.

23* * *

24(g.1) Initial payment to a participant.--The board shall
25make the initial payment to a participant who has applied for a
26distribution within 60 days of the filing of the application.

27(h) Death benefits.--Upon receipt of notification of the
28death of a member, an active participant, an inactive 
29participant or a former participant performing USERRA leave, the
30board shall notify the designated beneficiary or survivor

1annuitant of the benefits to which he is entitled and shall make
2the first payment to the beneficiary under the plan elected by
3the beneficiary within 60 days of receipt of certification of
4death and other necessary data. If no beneficiary designation is
5in effect at the date of the member's or participant's death or
6no notice has been filed with the board to pay the amount of
7such benefits to the member's or participant's estate, the board
8is authorized to pay such benefits to the executor,
9administrator, surviving spouse or next-of-kin of the deceased
10member or participant, and payment pursuant hereto shall fully
11discharge the fund or plan from any further liability to make
12payment of such benefits to any other person. If the surviving
13spouse or next-of-kin of the deceased member or participant 
14cannot be found for the purpose of paying such benefits for a
15period of seven years from the date of death of the member or 
16participant, then such benefits shall be escheated to the
17Commonwealth for the benefit of the fund or plan.

18(i) Medical insurance coverage.--Upon receipt of
19notification from an insurance carrier offering a health
20insurance program approved by the board that an annuitant of the 
21system who has attained age 65 has elected medical, major
22medical, and hospitalization insurance coverage or notification
23that annuitants of the system with less than 24 1/2 eligibility
24points (other than disability annuitants of the system), spouses
25of annuitants and survivor annuitants eligible to elect to
26enroll in the approved health insurance program have elected
27participation in such health insurance program, the board may
28deduct from the annuity payments the appropriate annual charges
29in equal monthly installments. Such deductions shall be
30transmitted to the insurance carrier.

1* * *

<-2(l) Notification of Class T-F or Class T-G membership.--The
3board shall inform any eligible school employee of the right to
4elect Class T-F membership or the right to elect Class T-H
5membership, as applicable.

6§ 8506. Duties of employers.

7(a) Status of members and participants.--The employer shall,
8each month, notify the board in a manner prescribed by the board
9of the salary changes effective during the past month, the date
10of all removals from the payroll, and the type of leave of any
11member or participant who has been removed from the payroll for
12any time during that month, and:

13(1) if the removal is due to leave without pay, the
14employer shall furnish the board with the date of beginning
15leave, the date of return to service, and the reason for
16leave;

17(2) if the removal is due to a transfer to another
18employer, the former employer shall furnish such employer and
19the board with a complete school service record, including
20credited or creditable nonschool service; or

21(3) if the removal is due to termination of school
22service, the employer shall furnish the board with a complete
23school service record including credited or creditable
24nonschool service and in the case of death of the member the
25employer shall so notify the board.

26* * *

27(c.1) Participant and employer defined contributions.--The
28employer shall cause the mandatory pickup participant
29contributions on behalf of a participant to be made and shall
30cause to be deducted any voluntary contributions authorized by a

1participant. The employer shall also cause the employer defined
2contributions on behalf of a participant to be made. The
3employer shall notify the board at times and in a manner
4prescribed by the board of the compensation of any participant
5to whom the limitation under IRC § 401(a)(17) either applies or
6is expected to apply and shall cause the participant's
7contributions to be deducted from payroll to cease at the
8limitation under IRC § 401(a)(17) on the payroll date if and
9when such limit shall be reached. The employer shall certify to
10the board the amounts picked up and deducted and the employer
11defined contributions being made and shall send the total amount
12picked up, deducted and contributed together with a duplicate of
13such voucher to the secretary of the board every pay period or
14on such schedule as established by the board.

15(d) New employees subject to mandatory membership or 
16participation.--Upon the assumption of duties of each new school
17employee whose membership in the system or plan is mandatory,
18the employer shall no later than 30 days thereafter cause an
19application for membership or participation, which application
20shall include the employee's home address, birthdate certified
21by the employer, previous school or State service and any other
22information requested by the board, and a nomination of
23beneficiary to be made by such employee, who shall be the 
24participant's spouse if the participant is married, unless the 
25spouse consents otherwise, and filed with the board and shall
26make pickup contributions or mandatory pickup participant 
27contributions from the effective date of school employment.

28(e) New employees subject to optional membership or 
29participation.--The employer shall inform any eligible school
30employee whose membership in the system or participation in the
 

1plan is not mandatory of his opportunity to become a member of
2the system or participant in the plan provided that he elects to
3purchase credit for all such continuous creditable service. If
4such employee so elects, the employer shall no later than 30
5days thereafter cause an application for membership which
6application shall include the employee's home address, birthdate
7certified by the employer, previous school or State service and
8any other information requested by the board, and a nomination
9of beneficiary, who shall be the participant's spouse if the 
10participant is married, unless the spouse consents otherwise, to
11be made by him and filed with the board and shall cause proper
12contributions to be made from the date of election of membership 
13or participation.

14* * *

15(g) Former State employee contributors.--

16(1) The employer shall, upon the employment of a former
17member of the State Employees' Retirement System who is not
18an annuitant of the State Employees' Retirement System,
19advise such employee of his right to elect multiple service
20membership within 365 days of entry into the system and, in
21the case any such employee who so elects has withdrawn his
22accumulated deductions, require him to restore his
23accumulated deductions as they would have been at the time of
24his separation had he been a full coverage member, together
25with statutory interest for all periods of subsequent State
26and school service to date of repayment. The employer shall
27advise the board of such election.

28(2) Paragraph (1) shall not apply to a school employee
29who is employed in a position where the school employee is or
30could be a participant in the plan other than a member who

1elects to become a participant in the plan.

2(h) Former State employee annuitants.--

3(1) The employer shall, upon the employment of an
4annuitant of the State Employees' Retirement System who
5applies for membership in the system, advise such employee
6that he may elect multiple service membership within 365 days
7of entry into the system and that if he so elects his annuity
8from the State Employees' Retirement System will be
9discontinued effective upon the date of his return to school
10service and, upon termination of school service and
11application for an annuity, the annuity will be adjusted in
12accordance with section 8346 (relating to termination of
13annuities). The employer shall advise the board of such
14election.

15(2) Paragraph (1) shall not apply to a school employee
16who is employed in a position where the school employee is or
17could be a participant in the plan other than a member who
18elects to become a participant in the plan.

19* * *

20(k) School employees performing USERRA or military related
21leave of absence.--The employer shall report to the board any
22school employee who ceases to be an active participant in order
23to perform USERRA service, or who is granted a leave of absence
24under 51 Pa.C.S. § 4102 (relating to leaves of absences for
25certain government employees) or a military leave of absence
26under 51 Pa.C.S. § 7302 (relating to granting military leaves of
27absence), the date on which such USERRA service, leave of
28absence or military leave of absence began, the date on which
29the school employee is reemployed from USERRA leave or returns
30after the leave of absence or military leave of absence, if such

1event occurs, and any other information the board may require or
2direct.

3(l) Differential wage payments and military leave of absence
4payments.--Notwithstanding the exclusion of differential wage
5payments as defined in IRC § 414(u)(12) from compensation under
6this part, the employer of any school employee on USERRA leave
7shall report differential wage payments made to the employee to
8the board, and the employer of any school employee on leave of
9absence pursuant to 51 Pa.C.S. § 4102 shall report any payment
10made to the employee, in the form and manner established by the
11board.

12§ 8507. Rights and duties of school employees [and members], 
13members and participants.

14(a) Information on new employees.--Upon his assumption of
15duties, each new school employee shall furnish his employer with
16a complete record of his previous school or State service, or
17creditable nonschool service, name and address of his spouse, if 
18married and he is or is eligible to be a participant in the 
19plan, proof of his date of birth, his home address, his current
20status in the system and the plan and in the State Employees'
21Retirement System and the State Employees' Defined Contribution 
22Plan and such other information as the board may require.
23Willful failure to provide the information required by this
24subsection to the extent available or the provision of erroneous
25information upon entrance into the system shall result in the
26forfeiture of the right of the member to subsequently assert any
27right to benefits based on erroneous information or on any of
28the required information which he failed to provide. In any case
29in which the board finds that a member is receiving an annuity
30based on false information, the additional amounts received

1predicated on such false information together with statutory
2interest doubled and compounded shall be deducted from the
3present value of any remaining benefits to which the member is
4legally entitled and such remaining benefits shall be
5correspondingly decreased.

6* * *

7(b.1) Application for participation.--On or after July 1,
82015, in the case of a new employee who is not currently a
9participant in the plan and whose participation is mandatory, or
10in the case of a new employee whose participation is not
11mandatory but is permitted and who desires to become a
12participant in the plan, the new employee shall execute an
13application for participation and a nomination of a beneficiary,
14who shall be the participant's spouse if the participant is
15married, unless the spouse consents otherwise.

16* * *

17(d.1) Voluntary contributions by a participant.--Any
18participant who desires to make voluntary contributions to be
19credited to his individual investment account shall notify the
20board and, upon compliance with the requirements, procedures and
21limitations established by the board in the plan document, may
22do so subject to the limitations under IRC §§ 401(a) and 415 and
23other applicable law.

24(d.2) Contributions for USERRA leave.--Any active
25participant or inactive participant or former participant who
26was reemployed from USERRA leave and who desires to make
27mandatory pickup participant contributions and voluntary
28contributions for his USERRA leave shall so notify the board
29within the time period required under 38 U.S.C. Ch. 43 (relating
30to employment and reemployment rights of members of the

1uniformed services) and IRC § 414(u) of his desire to make such
2contributions. Upon making the permitted mandatory pickup
3participant contributions within the allowed time period, the
4employer shall make the corresponding employer defined
5contributions at the same time.

6(e) Beneficiary for death benefits from system.--Every
7member shall nominate a beneficiary by written designation filed
8with the board to receive the death benefit or the benefit
9payable under the provisions of Option 1. Such nomination may be
10changed at any time by the member by written designation filed
11with the board. A member may also nominate a contingent
12beneficiary or beneficiaries to receive the death benefit or the
13benefit payable under the provisions of Option 1.

14(e.1) Beneficiary for death benefits from plan.--Every
15participant shall nominate a beneficiary by written designation
16filed with the board as provided in section 8506 (relating to
17duties of employers) to receive the death benefit payable under
18section 8347 (relating to death benefits). A participant may
19also nominate a contingent beneficiary or beneficiaries to
20receive the death benefit provided under this section. Such
21nomination may be changed at any time by the participant by
22written designation filed with the board, provided that, if the
23participant is married, the participant's spouse consents to the
24change unless the change is to name the spouse as beneficiary or
25unless the change is limited to contingent beneficiaries and the
26spouse is the primary beneficiary. If the spouse of a
27participant in the plan is deemed to be the beneficiary by
28operation of law, the person last nominated as beneficiary in a
29writing filed with the board shall become the contingent
30beneficiary.

1(e.2) Beneficiary for combined service employee.--A combined
2service employee may designate or nominate different persons to
3be beneficiaries, survivor annuitants and successor payees for
4his benefits from the system and the plan.

5(f) Termination of service by members.--Each member who
6terminates school service and who is not then a disability
7annuitant shall execute on or before the date of termination of
8service a written application, duly attested by the member or
9his legally constituted representative, electing to do one of
10the following:

11(1) Withdraw his accumulated deductions.

12(2) Vest his retirement rights and if he is a joint
13coverage member, and so desires, elect to become a full
14coverage member and agree to pay within 30 days of the date
15of termination of service the lump sum required.

16(3) Receive an immediate annuity, if eligible, and may,
17if he is a joint coverage member, elect to become a full
18coverage member and agree to pay within 30 days of date of
19termination of service the lump sum required.

20* * *

21(g.1) Deferral of retirement rights.--If a participant
22terminates school service and does not commence receiving a
23distribution, he shall nominate a beneficiary, who shall be the
24participant's spouse if the participant is married, unless the
25spouse consents otherwise, by written designation filed with the
26board, and he may anytime thereafter, but no later than his
27required beginning date, withdraw the vested accumulated total
28defined contributions standing to his credit or apply for
29another form of distribution required by law or authorized by
30the board.

1* * *

2(l) Continuing obligation regarding spouses.--A participant
3shall have the continuing obligation to notify the board in
4writing of any change in marital status and, if applicable, the
5name and current address of the participant's spouse.

6Section 122. Sections 8521(b), 8522, 8524, 8525, 8531, 8533,
78533.1, 8533.3 and 8533.4(a) of Title 24 are amended to read:

8§ 8521. Management of fund and accounts.

9* * *

10(b) Crediting of interest.--The board annually shall allow
11statutory interest, excluding the individual investment 
12accounts, to the credit of the members' savings account on the
13mean amount of the accumulated deductions of all members for
14whom interest is payable for the preceding year and valuation
15interest on the mean amount of the annuity reserve account for
16the preceding year to the credit of that account. The board
17annually shall allow valuation interest calculated on the mean
18amount for the preceding year of the balance in the State
19accumulation account excluding any earnings of the fund credited
20to the account during that year. In the event the total earnings
21for the year do not exceed 5 1/2% of the mean amount for the
22preceding year of the total assets of the fund less earnings
23credited to the fund during that year plus the administrative
24expenses of the board, the difference required to be
25appropriated from the General Fund shall be credited to the
26State accumulation account.

27* * *

28§ 8522. Public School Employees' Retirement Fund.

29(a) General rule.--The fund shall consist of all moneys in
30the several separate funds in the State Treasury set apart to be

1used under the direction of the board for the benefit of members
2of the system; and the Treasury Department shall credit to the
3fund all moneys received from the Department of Revenue arising
4from the contributions relating to or on behalf of the members 
5of the system required under the provisions of Chapter 83
6(relating to membership, contributions and benefits) and all
7earnings from investments or moneys of said fund. There shall be
8established and maintained by the board the several ledger
9accounts specified in sections 8523 (relating to members'
10savings account), 8524 (relating to State accumulation account),
118525 (relating to annuity reserve account) and 8526 (relating to
12health insurance account).

13(b) Individual investment accounts and trust.--The
14individual investment accounts that are part of the trust are
15not part of the fund. Mandatory pickup participant
16contributions, voluntary contributions and employer defined
17contributions made under this part and any income earned by the
18investment of such contributions shall not be paid or credited
19to the fund but instead shall be paid to the trust and credited
20to the individual investment accounts.

21§ 8524. State accumulation account.

22The State accumulation account shall be the ledger account to
23which shall be credited all contributions of the Commonwealth
24and other employers as well as the earnings of the fund, except
25the premium assistance contributions and earnings thereon in the
26health insurance account. Valuation interest shall be allowed on
27the total amount of such account less any earnings of the fund
28credited during the year. The reserves necessary for the payment
29of annuities and death benefits resulting from membership in the 
30system as approved by the board and as provided in Chapter 83

1(relating to membership, contributions and benefits) shall be
2transferred from the State accumulation account to the annuity
3reserve account. At the end of each year the required interest
4shall be transferred from the State accumulation account to the
5credit of the members' savings account and the annuity reserve
6account. The administrative expenses of the board shall be
7charged to the State accumulation account.

8§ 8525. Annuity reserve account.

9(a) Credits and charges to account.--The annuity reserve
10account shall be the ledger account to which shall be credited
11the reserves held for the payment of annuities and death
12benefits resulting from membership in the system on account of
13all annuitants and the contributions from the Commonwealth and
14other employers as determined in accordance with section 8328
15(relating to actuarial cost method) for the payment of the
16supplemental annuities provided in sections 8348 (relating to
17supplemental annuities), 8348.1 (relating to additional
18supplemental annuities), 8348.2 (relating to further additional
19supplemental annuities), 8348.3 (relating to supplemental
20annuities commencing 1994), 8348.4 (relating to special
21supplemental postretirement adjustment), 8348.5 (relating to
22supplemental annuities commencing 1998), 8348.6 (relating to
23supplemental annuities commencing 2002) and 8348.7 (relating to
24supplemental annuities commencing 2003). The annuity reserve
25account shall be credited with valuation interest. After the
26transfers provided in sections 8523 (relating to members'
27savings account) and 8524 (relating to State accumulation
28account), all annuity and death benefit payments shall be
29charged to the annuity reserve account and paid from the fund.

30(b) Transfers from account.--Should an annuitant be

1subsequently restored to active service either as a member of 
2the system or participant in the plan, the present value of his
3member's annuity at the time of reentry into school service
4shall be transferred from the annuity reserve account and placed
5to his individual credit in the members' savings account. In
6addition, the actuarial reserve for his annuity less the amount
7transferred to the members' savings account shall be transferred
8from the annuity reserve account to the State accumulation
9account.

10§ 8531. State guarantee regarding the system.

11Statutory interest charges payable, the maintenance of
12reserves in the fund, and the payment of all annuities and other
13benefits granted by the board from the system under the
14provisions of this part relating to the establishment and 
15administration of the system are hereby made obligations of the
16Commonwealth. All income, interest, and dividends derived from
17deposits and investments of the system authorized by this part
18shall be used for the payment of the said obligations of the
19Commonwealth and shall not be used for any obligations of the 
20plan or trust.

21§ 8533. Taxation, attachment and assignment of funds.

22(a) General rule.--Except as provided in subsections (b),
23(c) [and (d)], (d) and (e), the right of a person to a member's
24annuity, a State annuity, or retirement allowance, to the return
25of contributions, any benefit or right accrued or accruing to
26any person under the provisions of this part, and the moneys in
27the fund and the trust are hereby exempt from any State or
28municipal tax, and exempt from levy and sale, garnishment,
29attachment, the provisions of Article XIII.1 of the the act of 
30April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, or

1any other process whatsoever, and shall be unassignable.

2(a.1) Individual investment accounts and distributions.--No
3participant or beneficiary, successor payee, spouse or alternate
4payee of a participant shall have the ability to commute, sell,
5assign, alienate, anticipate, mortgage, pledge, hypothecate,
6commutate or otherwise transfer or convey any benefit or
7interest in an individual investment account or rights to
8receive or direct distributions under this part or under
9agreements entered into under this part except as otherwise
10provided in this part and in the case of either a member or a
11participant.

12(b) Forfeiture.--

13(1) Rights under this part shall be subject to
14forfeiture as provided by the act of July 8, 1978 (P.L.752, 
15No.140), known as the Public Employee Pension Forfeiture Act. 
16Forfeitures under this subsection or under any other
17provision of law may not be applied to increase the benefits
18that any member would otherwise receive under this part.

19(2) Notwithstanding paragraph (1), the act of July 8,
201978 (P.L.752, No.140), known as the Public Employee Pension
21Forfeiture Act, section 16(b) of Article V of the
22Constitution of Pennsylvania and 42 Pa.C.S. § 3352 (relating
23to pension rights), the accumulated mandatory participant
24contributions and accumulated voluntary contributions
25standing to the credit of a participant shall not be
26forfeited but shall be available for payment of fines and
27restitution as provided by law. Furthermore, amounts in the
28trust that have been ordered to be distributed to an
29alternate payee as the result of an equitable distribution of
30marital property as part of an approved domestic relations

1order entered before the date of the order or action in a
2court or other tribunal resulting in a forfeiture of a
3participant's interest in the trust shall not be subject to
4the Public Employee Pension Forfeiture Act, section 16(b) of
5the Article V of the Constitution of Pennsylvania or 42
6Pa.C.S. § 3352. Any accumulated employer defined
7contributions forfeited as a result of this subsection or
8other law shall be retained by the board and used for the
9payment of expenses of the plan.

10(c) Domestic relations order.--Rights under this part shall
11be subject to attachment in favor of an alternate payee as set
12forth in an approved domestic relations order.

13(d) Direct rollover.--Effective with distributions made on
14or after January 1, 1993, and notwithstanding any other
15provision of this part to the contrary, a distributee may elect,
16at the time and in the manner prescribed by the board, to have
17any portion of an eligible rollover distribution paid directly
18to an eligible retirement plan by way of a direct rollover. For
19purposes of this subsection, a "distributee" includes a member
20[and], a participant, a spouse, a member's surviving spouse
21[and], a participant's surviving spouse, a member's former
22spouse who is an alternate payee under an approved domestic
23relations order and a participant's former spouse who is an 
24alternate payee under an approved domestic relations order and 
25anyone else authorized under IRC and the plan terms approved by 
26the board to have an eligible rollover distribution paid 
27directly to an eligible retirement plan by way of a direct 
28rollover. For purposes of this subsection, the term "eligible
29rollover distribution" has the meaning given such term by IRC §
30402(f)(2)(A) and "eligible retirement plan" has the meaning

1given such term by IRC § 402(c)(8)(B), except that a qualified
2trust shall be considered an eligible retirement plan only if it
3accepts the distributee's eligible rollover distribution;
4however, in the case of an eligible rollover distribution to a
5surviving spouse, an eligible retirement plan is an "individual
6retirement account" or an "individual retirement annuity" as
7those terms are defined in IRC § 408(a) and (b).

8(e) Married participants.--No married participant may take
9an action inconsistent with the spousal consent provisions of
10this part or the plan.

11§ 8533.1. Approval of domestic relations orders.

12(a) Certification regarding members.--A domestic relations
13order pertaining to a member of the system shall be certified as
14an approved domestic relations order by the secretary of the
15board, or his designated representative, only if such order
16meets all of the following:

17(1) Requires the system to provide any type or form of
18benefit or any option applicable to members already provided
19under this part.

20(2) Requires the system to provide no more than the
21total amount of benefits than the member would otherwise
22receive (determined on the basis of actuarial value) unless
23increased benefits are paid to the member or alternate payee
24based upon cost-of-living increases or increases based on
25other than actuarial value.

26(3) Specifies the amount or percentage of the member's
27benefits to be paid by the system to each such alternate
28payee or the manner in which the amount or percentage is to
29be determined.

30(4) Specifies the retirement option to be selected by

1the member upon retirement or states that the member may
2select any retirement option offered by this part upon
3retirement.

4(5) Specifies the name and last known mailing address,
5if any, of the member and the name and last known mailing
6address of each alternate payee covered by the order and
7states that it is the responsibility of each alternate payee
8to keep a current mailing address on file with the system.

9(6) Does not grant an alternate payee any of the rights,
10options or privileges of a member under this part.

11(7) Requires the member to execute an authorization
12allowing each alternate payee to monitor the member's
13compliance with the terms of the domestic relations order
14through access to information concerning the member
15maintained by the system.

16(a.1) Certification regarding participants.--A domestic
17relations order pertaining to a participant shall be certified
18as an approved domestic relations order by the secretary of the
19board, or his designated representative, only if that order
20meets all of the following:

21(1) Does not require the plan to provide any type or
22form of benefit or any option applicable to members of the
23system or participants in the plan.

24(2) Does not require the segregation of the alternate
25payee's share of the participant's individual investment
26account into a subaccount or newly established individual
27account titled in the name of the alternate payee.

28(3) Does not require the plan to recover or distribute
29any funds which were distributed to the participant or at the
30participant's direction prior to the approval of the domestic

1relations order by the secretary of the board or his
2designated representative.

3(4) Requires the plan to pay to the alternate payee no
4more than the lesser of the vested amount of the
5participant's individual investment account specified by the
6domestic relations order or the vested amount of the
7participant's individual investment account as of the date of
8the transfer of the alternate payee's share to the alternate
9payee.

10(5) States that the plan shall not be required to recoup
11or make good for losses in value to the participant's
12individual investment account incurred between the date of
13the valuation of the account used for equitable distribution
14purposes and the date of distribution to the alternate payee.

15(6) Specifies the amount or percentage of the
16participant's individual investment account to be paid to the
17alternate payee and the date upon which such valuation is
18based.

19(7) Specifies the name and last known mailing address,
20if any, of the participant and the name and last known
21mailing address of each alternate payee covered by the order
22and states that it is the responsibility of each alternate
23payee to keep a current mailing address on file with the
24system.

25(8) Does not grant an alternate payee the rights,
26privileges or options available to a participant.

27(9) Requires the participant to execute an authorization
28allowing each alternate payee to monitor the participant's
29compliance with the terms of the domestic relations order
30through access to information concerning the participant

1maintained by the plan. Any authorization granted under this
2section shall be construed only as an authorization for the
3alternate payee to receive information concerning the
4participant which relates to the administration, calculation
5and payment of the alternate payee's share of the
6participant's account and not as an authorization to exercise
7the rights afforded to participants or obtain information
8that is not related to the administration, calculation and
9payment of the alternate payee's share of the participant's
10individual investment account.

11(10) In the case of participants who have not yet begun
12to receive distributions as of the date the domestic
13relations order is approved by the secretary of the board or
14his designated representative, requires the immediate
15distribution of the alternate payee's share of the
16participant's individual investment account, which may be
17made by direct payment, eligible rollover or trustee-to-
18trustee transfer to another eligible plan or qualified
19account owned by the alternate payee, notwithstanding any
20other provision of this part or the plan that would otherwise
21require a distribution of accumulated employer defined
22contributions in the form of an annuity or to require the
23purchase of an annuity.

24(11) In the case of participants who are currently
25receiving distributions from the trust as of the date the
26domestic relations order is approved by the secretary of the
27board or his designated representative, the domestic
28relations order may not order the board to pay the alternate
29payee more than the balance available in the participant's
30individual investment account as of the date the order is

1approved or require that distributions continue to the
2alternate payee after the death of the participant and final
3settlement of the participant's individual investment
4account.

5(b) Determination by secretary.--Within a reasonable period
6of time after receipt of a domestic relations order, the
7secretary of the board, or his designated representative, shall
8determine whether this order is an approved domestic relations
9order and notify the member or participant and each alternate
10payee of this determination. Notwithstanding any other provision
11of law, the exclusive remedy of any member, participant or
12alternate payee aggrieved by a decision of the secretary of the
13board, or his designated representative, shall be the right to
14an adjudication by the board under 2 Pa.C.S. Ch. 5 (relating to 
15practice and procedure) with appeal therefrom to the 
16Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to judicial 
17review) and 42 Pa.C.S. § 763(a)(1) (relating to direct appeals 
18from government agencies).

19(c) Other orders.--The requirements for approval identified 
20in [subsection (a)] subsections (a) and (a.1) shall not apply to 
21any domestic relations order which is an order for support as 
22that term is defined in 23 Pa.C.S. § 4302 (relating to 
23definitions) or an order for the enforcement of arrearages as 
24provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
25arrearages). These orders shall be approved to the extent that
26they do not attach moneys in excess of the limits on attachments
27as established by the laws of this Commonwealth and the United
28States[.], require distributions of benefits in a manner that 
29would violate the laws of the United States, any other state or 
30this Commonwealth or require the distribution of funds for
 

1support or enforcement of arrearages against any participant who 
2is not receiving distributions from the plan at the time such 
3order is entered. These orders may be approved notwithstanding 
4any other provision of this part or the plan that would 
5otherwise require a distribution of accumulated employer defined 
6contributions in the form of an annuity or to require the 
7purchase of an annuity.

8(d) Obligation discharged.--Only the requirements of this
9part and any regulations promulgated hereunder shall be used to
10govern the approval or disapproval of a domestic relations
11order. Therefore, if the secretary of the board, or his
12designated representative, acts in accordance with the
13provisions of this part and any promulgated regulations in
14approving or disapproving a domestic relations order, then the
15obligations of the system or plan with respect to such approval
16or disapproval shall be discharged.

17§ 8533.3. Irrevocable survivor annuitant.

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

1be designated as a survivor annuitant may not be designated an
2irrevocable survivor annuitant.

3§ 8533.4. Amendment of approved domestic relations orders.

4(a) Deceased alternate payee.--In the event that the
5alternate payee predeceases the member or participant and there
6are benefits payable to the alternate payee, the divorce court
7may amend the approved domestic relations order to substitute a
8person for the deceased alternate payee to receive any benefits
9payable to the deceased alternate payee.

10* * *

11Section 123. Title 24 is amended by adding sections to read:

12§ 8533.5. Irrevocable successor payee.

13(a) Condition.--Notwithstanding any other provisions of this
14part, a domestic relations order pertaining to a participant may
15provide for an irrevocable successor payee, only if the
16participant is receiving a payment pursuant to a payment option
17provided by the board that allows for a successor payee.

18(b) Determination.--A domestic relations order requiring the
19designation of an irrevocable successor payee shall be deemed to
20be one that requires a participant who is receiving payments
21from an annuity or other distribution option to designate an
22alternate payee as a successor payee and that prohibits the
23removal or change of that successor payee without approval of a
24court of competent jurisdiction, except by operation of law.

25(c) Certification.--A domestic relations order under
26subsection (b) may be certified as an approved domestic
27relations order by the secretary of the board, or his designated
28representative, in which case the irrevocable successor payee so
29ordered by the court cannot be changed by the participant
30without approval by the court.

1(d) Ineligibility.--A person ineligible to be designated as
2a successor payee may not be designated as an irrevocable
3successor payee. A court may not name an irrevocable successor
4payee if the alternate payee is eligible to receive a lump sum
5distribution of the alternate payee's portion of the marital
6portion of the pension benefit.

7§ 8533.6. Exemption from spousal consent.

8If a domestic relations order approved under section 8533.1
9(relating to approval of domestic relations orders) requires any
10nomination of irrevocable beneficiary or irrevocable survivor
11annuitant or the selection of any benefit by a participant, the
12provisions of this part or the plan requiring the spouse of a
13married participant to be nominated as beneficiary or designated
14as survivor annuitant or to grant consent to any action,
15election or application of a participant shall not apply to any
16action or nomination so required by the approved domestic
17relations order to the extent that the required action or
18nomination is inconsistent with the rights of the spouse set
19forth in this part.

20Section 124. Section 8534 of Title 24 is amended to read:

21§ 8534. Fraud and adjustment of errors.

22(a) Penalty for fraud.--Any person who shall knowingly make
23any false statement or shall falsify or permit to be falsified
24any record or records of this system or plan in any attempt to
25defraud the system or plan as a result of such act shall be
26guilty of a misdemeanor of the second degree.

27(b) Adjustment of errors.--Should any change or mistake in
28records result in any member, participant, beneficiary, [or],
29survivor annuitant or successor payee receiving from the system 
30or plan more or less than he would have been entitled to receive

1had the records been correct, then regardless of the intentional
2or unintentional nature of the error and upon the discovery of
3such error, the board shall correct the error and if the error 
4affects contributions to or payments from the system, then so
5far as practicable shall adjust the payments which may be made
6for and to such person in such a manner that the actuarial
7equivalent of the benefit to which he was correctly entitled
8shall be paid. If the error affects contributions to or payments 
9from the plan, the board shall take such action as shall be 
10provided for in the plan document.

11Section 125. Title 24 is amended by adding a section to
12read:

13§ 8534.1. Spousal consent and participants.

14(a) General rule.--No married participant may:

15(1) take any action regarding rights in the plan;

16(2) make an election regarding benefits in the plan; or

17(3) file a valid application regarding the consent of
18the participant's spouse unless the participant's spouse
19consents in writing to that action, election or application.
20A consent shall be valid only if the consent is:

21(i) signed after the participant's spouse receives
22counseling or affirmatively waives the right to receive
23counseling;

24(ii) witnessed before a notary public; and

25(iii) filed with the board within 90 days of the
26filing of the application or within 90 days of the date
27the action or election would otherwise be valid. A
28consent or lack thereof shall not affect the effective
29date of any action or election.

30(b) Exceptions to consent.--Spousal consent shall not be

1required where:

2(1) the spouse cannot be located; or

3(2) such other circumstances as the board may establish
4in the plan document.

5(c) Legal guardians and powers of attorney.--A legal
6guardian, even if the participant, may execute a valid spousal
7consent. A participant, as agent under a power of attorney, may
8not execute a valid spousal consent unless the spouse is
9incapacitated and the spouse had executed a valid durable power
10of attorney.

11(d) Spouse of participant.--This part does not grant to the
12spouse of a participant of the plan the rights, options or
13privileges of a participant. The rights of the spouse shall
14remain derivative of the rights of the participant, including
15rights under the act of July 8, 1978 (P.L.752, No.140), known as
16the Public Employee Pension Forfeiture Act, section 16(b) of
17Article V of the Constitution of Pennsylvania and 42 Pa.C.S. §
183352 (relating to pension rights). The spouse may not do the
19following:

20(1) compel the participant to take, or prevent the
21participant from taking, an action regarding membership,
22rights or benefits in the plan other than as provided under
23this part; or

24(2) take any action on behalf of the participant, except
25as provided under this part.

26(e) Waiver.--If a law allows a participant in the plan to
27waive benefits or return of contributions that the participant
28is receiving, entitled to currently receive or receive in the
29future, the waiver is not valid unless the spouse of the
30participant consents to the waiver as provided for under this
 

1part.

2Section 126. Section 8535 of Title 24 is amended to read:

3§ 8535. Payments to school entities by Commonwealth.

4For each school year beginning with the 1995-1996 school year
5and ending with the 2014-2015 school year, each school entity
6shall be paid by the Commonwealth for contributions based upon
7school service of active members of the system after June 30,
81995, as follows:

9(1) The Commonwealth shall pay each school entity for
10contributions made to the Public School Employees' Retirement
11Fund based upon school service of all active members,
12including members on activated military service leave, whose
13effective dates of employment with their school entities are
14after June 30, 1994, and who also had not previously been
15employed by any school entity within this Commonwealth an
16amount equal to the amount certified by the Public School
17Employees' Retirement Board as necessary to provide, together
18with the members' contributions, reserves on account of
19prospective annuities, supplemental annuities and the premium
20assistance program as provided in this part in accordance
21with section 8328 (relating to actuarial cost method),
22multiplied by the market value/income aid ratio of the school
23entity. For no school year shall any school entity receive
24less than the amount that would result if the market
25value/income aid ratio as defined in section 2501(14.1) of
26the Public School Code [of 1949] was 0.50.

27(2) The Commonwealth shall pay each school entity for
28contributions made to the Public School Employees' Retirement
29Fund based upon school service of all active members,
30including members on activated military service leave, who

1are not described in paragraph (1), one-half of the amount
2certified by the Public School Employees' Retirement Board as
3necessary to provide, together with the members'
4contributions, reserves on account of prospective annuities,
5supplemental annuities and the premium assistance program as
6provided in this part in accordance with section 8328.

7(3) School entities shall have up to five days after
8receipt of the Commonwealth's portion of the employer's
9liability to make payment to the Public School Employees'
10Retirement Fund. School entities are expected to make the 
11full payment to the Public School Employees' Retirement Fund 
12in accordance with section 8327 (relating to payments by 
13employers) in the event the receipt of the Commonwealth's 
14portion of the employer's liability is delayed because of 
15delinquent salary reporting or other conduct by the school 
16entities.

17Section 127. Title 24 is amended by adding a section to
18read:

19§ 8535.1. Payments to school entities by Commonwealth
20commencing with the 2015-2016 school year.

21For each school year, beginning with the 2015-2016 school
22year, each school entity shall be paid by the Commonwealth for
23contributions based upon school service of active members of the
24system and active participants of the plan after June 30, 2015,
25as follows:

26(1) The Commonwealth shall pay each school entity for
27contributions made to the fund based upon school service of
28all active members, including members on activated military
29service leave, and active participants of the plan whose
30effective dates of employment with their school entities are

1after June 30, 1994, and who also had not previously been
2employed by any school entity within this Commonwealth an
3amount equal to the amount certified by the board as
4necessary to provide, together with the members' and
5participants' contributions, reserves on account of
6prospective annuities, supplemental annuities and the premium
7assistance program as provided in this part in accordance
8with section 8328 (relating to actuarial cost method),
9multiplied by the market value/income aid ratio of the school
10entity. For no school year shall any school entity receive
11less than the amount that would result if the market
12value/income aid ratio as defined in section 2501(14.1) of
13the Public School Code was 0.50.

14(2) The Commonwealth shall pay each school entity for
15contributions made to the fund based upon school service of
16all active members, including members on activated military
17service leave, and active participants of the plan who are
18not described in paragraph (1) one-half of the amount
19certified by the board as necessary to provide, together with
20the members' and participants' contributions, reserves on
21account of prospective annuities, supplemental annuities and
22the premium assistance program as provided in this part in
23accordance with section 8328.

24(3) School entities shall have up to five days after
25receipt of the Commonwealth's portion of the employer's
26liability to make payment to the fund. School entities are
27expected to make the full payment to the fund in accordance
28with section 8327 (relating to payments by employers) in the
29event the receipt of the Commonwealth's portion of the
30employer's liability is delayed because of delinquent salary

1reporting or other conduct by the school entities.

2Section 128. The definition of "eligible person" in section
38702(a) of Title 24 is amended to read:

4§ 8702. Definitions.

5(a) General rule.--Subject to additional definitions
6contained in subsequent provisions of this part which are
7applicable to specific provisions of this part, the following
8words and phrases when used in this part shall have the meanings
9given to them in this section unless the context clearly
10indicates otherwise:

11"Eligible person." An individual who is:

12(1) an annuitant or survivor annuitant or the spouse or
13dependent of an annuitant or survivor annuitant; or

14(2) a participant receiving distributions or a successor 
15payee, or the spouse or dependent of a participant receiving 
16distributions or successor payee.

17* * *

18ARTICLE II

19Section 201. Section 7306(a) introductory paragraph of Title 
2051, amended October 24, 2012 (P.L.1436, No.181), is amended and 
21the section is amended by adding a subsection to read:

22§ 7306. Retirement rights.

23(a) Options available to employees.--Any employee who is a
24member of a retirement system other than an active member or 
25inactive member on leave without pay of the State Employees' 
26Retirement System, an active or inactive participant of the 
27School Employees' Defined Contribution Plan or an active 
28participant or inactive participant on leave without pay of the 
29State Employees' Defined Contribution Plan, at the time he is
30granted a military leave of absence shall be entitled to

1exercise any one of the following options in regard thereto:

2* * *

3(e) Participant of a defined contribution plan.--

4(1) An employee who is an active or inactive participant
5of the School Employees' Defined Contribution Plan at the
6time the employee is granted a military leave of absence
7shall be entitled to make contributions to the Public School
8Employees' Defined Contribution Trust for the leave as
9provided in 24 Pa.C.S. Pt. IV (relating to retirement for
10school employees).

11(2) An employee who is an active participant or inactive
12participant on leave without pay of the State Employees'
13Defined Contribution Plan at the time he is granted a
14military leave of absence shall be entitled to make
15contributions to the State Employees' Defined Contribution
16Trust for the leave as provided in 71 Pa.C.S. Pt. XXV
17(relating to retirement for State employees and officers).

18ARTICLE III

19Section 301. Section 5102 of Title 71, amended October 24,
202012 (P.L.1436, No.181), is amended to read:

21§ 5102. Definitions.

22The following words and phrases as used in this part, unless
23a different meaning is plainly required by the context, shall
24have the following meanings:

25"Academic administrator." A management employee in the field 
26of public education whose work is directly related to academic 
27instruction, excluding any employee in a position that is 
28nonacademic in nature, such as, without limitation, a position 
29that relates to admissions, financial aid, counseling, 
30secretarial and clerical services, records management, housing,
 

1food service, maintenance and security.

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

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

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

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

24"Active member." A State employee, or a member on leave 
25without pay, for whom pickup contributions are being made to the 
26fund or for whom such contributions otherwise required for 
27current State service are not being made solely by reason of 
28section 5502.1 (relating to waiver of regular member 
29contributions and Social Security integration member 
30contributions) or any provision of this part relating to the
 

1limitations under section 401(a)(17) or section 415(b) of the 
2Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
3401(a)(17) or 415(b)) <-or any provision of this part limiting 
4compensation or contributions applicable to a Subclass X member, 
5Subclass Y member or Subclass Z member.

6"Active participant."  A State employee for whom mandatory
7pickup participant contributions are being made to the trust or
8for whom such contributions otherwise required for current State
9service are not being made solely by reason of any provision of
10this part relating to the limitations under section 401(a)(17)
11or 415 of the Internal Revenue Code of 1986 (Public Law 99-514,
1226 U.S.C. § 401(a)(17) or § 415). <-The term does not include a 
13sworn member of the Pennsylvania State Police or a correction 
14officer.

15"Actuarial increase factor." A factor calculated at the 
16member's birthday by dividing the cost of a dollar annuity based 
17on the age of the member on the member's immediately previous 
18birthday by the cost of a one-year deferred dollar annuity 
19calculated at that same age. Unless the member terminates State 
20or school service on the member's birthday, the actuarial 
21increase factor for the year of termination shall be adjusted 
22by:

23(1) subtracting one from the calculated factor; then

24(2) dividing the difference by twelve; then

25(3) multiplying the resulting quotient by the number of
26whole months between the member's immediately previous
27birthday and the date of termination of service; then

28(4) adding one to the resulting product.

29"Actuarially equivalent." Equal present values, computed on 
30the basis of statutory interest and the mortality tables adopted
 

1by the board.

2"Actuary." The consultant to the board who shall be:

3(1) a member of the American Academy of Actuaries; or

4(2) an individual who has demonstrated to the
5satisfaction of the Insurance Commissioner of Pennsylvania
6that he has the educational background necessary for the
7practice of actuarial science and has had at least seven
8years of actuarial experience; or

9(3) a firm, partnership, or corporation of which at
10least one member meets the requirements of (1) or (2).

11"Additional accumulated deductions." The total of the 
12additional member contributions paid into the fund on account of 
13current service or previous State or creditable nonstate 
14service, together with the statutory interest credited thereon 
15until the date of termination of service. In the case of a 
16vestee, statutory interest shall be credited until the effective 
17date of retirement. A member's account shall not be credited 
18with statutory interest for more than two years during a leave 
19without pay.

20"Alternative investment." An investment in a private equity
21fund, private debt fund, venture fund, real estate fund, hedge
22fund or absolute return fund.

23"Alternative investment vehicle." A limited partnership,
24limited liability company or any other legal vehicle for 
25authorized investments under section 5931(i) (relating to 
26management of fund and accounts) through which the system makes 
27an alternative investment.

28"Alternate payee." Any spouse, former spouse, child or 
29dependent of a member or participant who is recognized by a 
30domestic relations order as having a right to receive all or a
 

1portion of the moneys payable to that member or participant 
2under this part.

3"Annuitant." Any member on or after the effective date of
4retirement until his annuity is terminated.

5"Approved domestic relations order." Any domestic relations
6order which has been determined to be approved in accordance
7with section 5953.1 (relating to approval of domestic relations
8orders).

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

16"Basic contribution rate." Five percent (5%), except that in 
17no case shall any member's rate, excluding the rate for social 
18security integration credit, be greater than his contribution 
19rate on the effective date of this part so long as he does not 
20elect additional coverage or membership in another class <-or 
21subclass of service.

22"Beneficiary." [The] In the case of the system, the person 
23or persons last designated in writing to the board by a member 
24to receive his accumulated deductions or a lump sum benefit upon 
25the death of such member. In the case of the plan, the spouse of 
26a participant. If the participant is not married or the spouse 
27consents, then the person or persons last designated in writing 
28to the board by the participant to receive the participant's 
29vested accumulated total defined contributions or a lump sum 
30benefit upon the death of the participant.

1"Board." The State Employees' Retirement Board or the State
2Employes' Retirement Board.

3"Class of service multiplier."

4Class of Service		Multiplier
5A		1
<-6[AA 7  8  9  10  11  12	for all purposes except calculating regular member contributions on compensation paid prior to January 1, 2002	1.25
13AA 14  15  16  17  18  19	for purposes of calculating regular member contributions on compensation paid prior to January 1, 2002	1<-]
20Subclass AA-W 21  22  23  24  25  26	for all purposes except calculating regular member contributions on compensation paid prior to  January 1, 2002	1.25
27Subclass AA-W 28  29  30  20130SB0922PN1252 -143-     1  2  3	for purposes of calculating regular member contributions on compensation paid prior to  January 1, 2002	1
4Subclass AA-Y 5  6  7  8	for all purposes except calculating regular member contributions	1
9Subclass AA-Y 10  11  12	for purposes of calculating regular member contributions	1.25
13Subclass AA-Z 14  15  16  17	for all purposes except calculating regular member contributions	1.25
18Subclass AA-Z 19  20  21	for purposes of calculating regular member contributions	1.95
22A-3 23  24  25  26  27  28  29	for all purposes except the calculation of regular member contributions and contributions for creditable nonstate service	1
30A-3 20130SB0922PN1252 -144-     1  2  3  4  5  6	for purposes of calculating regular member contributions and contributions for creditable nonstate service	1.25
7A-4 8  9  10  11	for all purposes except the calculation of regular member contributions	1.25
12A-4 13  14  15	for purposes of calculating regular member contributions	1.86
16B		.625
17C		1
18D		1.25
19D-1 20	prior to January 1, 1973	1.875
21D-1 22	on and subsequent to January 1, 1973	1.731
23D-2 24	prior to January 1, 1973	2.5
25D-2 26	on and subsequent to January 1, 1973	1.731
27D-3 28	prior to January 1, 1973	3.75
29D-3 30  20130SB0922PN1252 -145-     1  2  3  4  5  6  7  8  9  10  11  12	on and subsequent to January 1, 1973	1.731	except prior to December 1, 1974 as applied to any additional legislative compensation as an officer of the General Assembly
13		3.75
<-14[D-4 15  16  17  18  19  20	for all purposes except calculating regular member contributions on compensation paid prior to July 1, 2001	1.5
21D-4 22  23  24  25  26  27	for purposes of calculating regular member contributions on compensation paid prior to July 1, 2001	1<-]
28Subclass D-4W 29  30  20130SB0922PN1252 -146-     1  2  3  4	for all purposes except calculating regular member contributions on compensation paid prior to July  1, 2001	1.5
5Subclass D-4W 6  7  8  9  10  11	for purposes of calculating regular member contributions on compensation paid prior to July  1, 2001	1
12Subclass D-4Y 13  14  15	for all purposes except calculating regular member contributions	1.25
16Subclass D-4Y 17  18  19	for purposes of calculating regular member contributions	1.5
20Subclass D-4Z 21  22  23	for all purposes except calculating regular member contributions	1.5

24Subclass D-4Z 25  26  27	for purposes of calculating regular member contributions	2.2
28E, E-1 29  30  20130SB0922PN1252 -147-     1  2  3	prior to January 1, 1973	2	for each of the first ten years of judicial service, and
4  5  6  7  8		1.5	for each subsequent year of judicial service
9E, <-[E-1]  <-10Subclass E-1W 11  12  13  14	on and subsequent to January 1, 1973	1.50	for each of the first ten years of judicial service and
15  16  17  18  19		1.125	for each subsequent year of judicial service
<-20Subclass E-1Y 21  22  23  24  25  26  27  28  29  30  20130SB0922PN1252 -148-     1  2  3	for all purposes except calculating regular member contributions	1.75	for each of the first ten years of judicial service unless those years are credited in another subclass of service
4  5  6  7  8  9  10  11  12  13  14		1.25	for each subsequent year of judicial service unless that year is credited in another subclass of service
15Subclass E-1Y 16  17  18  19  20  21  22  23  24  25  26  27  28	for purposes of calculating regular member contributions	2	for each of the first ten years of judicial service unless those years are credited in another subclass of service
29  30  20130SB0922PN1252 -149-     1  2  3  4  5  6  7  8  9		1.5	for each subsequent year of judicial service unless that year is credited in another subclass of service
10Subclass E-1Z 11  12  13  14  15  16  17  18  19  20  21  22  23	for all purposes except calculating regular member contributions	2	for each of the first ten years of judicial service unless those years are credited in another subclass of service
24  25  26  27  28  29  30  20130SB0922PN1252 -150-     1  2  3  4		1.5	for each subsequent year of judicial service unless that year is credited in another subclass of service
5Subclass E-1Z 6  7  8  9  10  11  12  13  14  15  16  17  18	for purposes of calculating regular member contributions	2.7	for each of the first ten years of judicial service unless those years are credited in another subclass of service
19  20  21  22  23  24  25  26  27  28  29		2.2	for each subsequent year of judicial service unless that year is credited in another subclass of service
<-30[E-2] Subclass  <- 20130SB0922PN1252 -151-     1E-2W 2	on and subsequent to September 1,  1973	1.125
<-3Subclass E-2Y 4  5  6	for all purposes except calculating regular member contributions	1.25
7Subclass E-2Y 8  9  10	for purposes of calculating regular member contributions	1.5
11Subclass E-2Z 12  13  14	for all purposes except calculating regular member contributions	1.5
15Subclass E-2Z 16  17  18	for purposes of calculating regular member contributions	2.2
19G		0.417
20H		0.500
21I		0.625
22J		0.714
23K		0.834
24L		1.000
25M		1.100
26N		1.250

27T-C (Public School 28Employees' 29Retirement Code)	1
30T-E (Public School 20130SB0922PN1252 -152-     1Employees' 2Retirement Code)	1
3T-F (Public School 4Employees' 5Retirement Code)	1

6"Combined service employee."  A current or former State
7employee who is both a member of the system and a participant in
8the plan.

9"Commissioner." The Commissioner of the Internal Revenue
10Service.

11"Compensation." Pickup contributions and mandatory 
12participant pickup contributions plus remuneration actually 
13received as a State employee excluding refunds for expenses, 
14contingency and accountable expense allowances; excluding any 
15severance payments or payments for unused vacation or sick 
16leave; and excluding payments for military leave and any other 
17payments made by an employer while on USERRA leave, leave of 
18absence granted under 51 Pa.C.S. § 4102 (relating to leaves of 
19absence for certain government employees), military leave of 
20absence granted under 51 Pa.C.S. § 7302 (relating to granting 
21military leaves of absence) or other types of military leave, 
22including other types of leave payments, stipends, differential 
23wage payments as defined in IRC § 414(u)(12) and any other 
24payments: Provided, however, That compensation received prior to 
25January 1, 1973, shall be subject to the limitations for 
26retirement purposes in effect December 31, 1972, if any: 
27Provided further, That the limitation under section 401(a)(17) 
28of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
29U.S.C. § 401(a)(17)) taken into account for the purpose of 
30member contributions, including any additional member
 

1contributions in addition to regular or joint coverage member 
2contributions and Social Security integration contributions, 
3regardless of class of service, shall apply to each member who 
4first became a member of the State Employees' Retirement System 
5on or after January 1, 1996, and who by reason of such fact is a 
6noneligible member subject to the application of the provisions 
7of section 5506.1(a) (relating to annual compensation limit 
8under IRC § 401(a)(17))and shall apply to each participant<-; and 
9Provided further, That the compensation applicable to Subclass X 
10members, Subclass Y members and Subclass Z members shall be 
11subject to the limitations under section 5506.2 (relating to 
12annual compensation limit for Subclass X, Subclass Y and 
13Subclass Z members).

14"Concurrent service." Service credited in more than one 
15class of service during the same period of time.

16"Correction officer." Any full-time employee assigned to the 
17Department of Corrections or the Department of Public Welfare 
18whose principal duty is the care, custody and control of inmates 
19or direct therapeutic treatment, care, custody and control of 
20inmates of a penal or correctional institution, community 
21treatment center, forensic unit in a State hospital or secure 
22unit of a youth development center operated by the Department of 
23Corrections or by the Department of Public Welfare.

24"County service." Service credited in a retirement system or 
25pension plan established or maintained by a county to provide 
26retirement benefits for its employees to the account of county 
27employees who are transferred to State employment and become 
28State employees pursuant to 42 Pa.C.S. § 1905 (relating to 
29county-level court administrators) regardless of whether the 
30service was performed for the county or another employer or
 

1allowed to be purchased in the county retirement system or 
2pension plan.

3"Creditable nonstate service." Service other than:

4(1) service as a State employee;

5(2) service converted to State service pursuant to
6section 5303.1 (relating to election to convert county
7service to State service); or

8(3) school service converted to State service pursuant
9to section 5303.2 (relating to election to convert school
10service to State service) [for which an active member may
11obtain credit] for which an active member may obtain credit 
12in the system.

13"Credited service." State or creditable nonstate service for 
14which the required contributions have been made or for which the 
15contributions otherwise required for such service were not made 
16solely by reason of section 5502.1 (relating to waiver of 
17regular member contributions and Social Security integration 
18member contributions) or any provision of this part relating to 
19the limitations under section 401(a)(17) or 415(b) of the 
20Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
21401(a)(17) or 415(b)) <-or any provision of this part limiting 
22compensation or contributions applicable to a Subclass X member, 
23Subclass Y member or Subclass Z member, or for which salary 
24deductions to the system or lump sum payments have been agreed 
25upon in writing.

26"Date of termination of service." The last day of service 
27for which:

28(1) pickup contributions are made for an active member
<-29or for which the contributions otherwise required for such 
30service were not made solely by reason of section 5502.1
 

1(relating to waiver of regular member contributions and 
2Social Security integration member contributions) or any 
3provision of this part relating to the limitations under 
4section 401(a)(17) or 415(b) of the Internal Revenue Code of 
51986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)) or 
6any provision of this part limiting compensation or 
7contributions applicable to a Subclass X member, Subclass Y 
8member or Subclass Z member [or];

9(2) in the case of an inactive member on leave without 
10pay, the date of his resignation or the date his employment 
11is formally discontinued by his employer[.];

12(3)  mandatory pickup participant contributions are made
13for an active participant;

14(4)  in the case of an inactive participant on leave
15without pay, the date of his resignation or the date his
16employment is formally discontinued by his employer; or

17(5)  in the case of a combined service employee, the
18latest of the dates in paragraphs (1), (2), (3) and (4).

19"Disability annuitant." A member on and after the effective
20date of disability until his annuity or the portion of his
21annuity payments in excess of any annuity to which he may
22otherwise be entitled is terminated.

23"Distribution." Payment of all or any portion of a person's 
24interest in either the State Employees' Retirement Fund or the 
25State Employees' Defined Contribution Trust or both which is 
26payable under this part.

27"Domestic relations order." Any judgment, decree or order, 
28including approval of a property settlement agreement, entered 
29on or after the effective date of this definition by a court of 
30competent jurisdiction pursuant to a domestic relations law
 

1which relates to the marital property rights of the spouse or 
2former spouse of a member or participant, including the right to 
3receive all or a portion of the moneys payable to that member or 
4participant under this part in furtherance of the equitable 
5distribution of marital assets. The term includes orders of 
6support as that term is defined by 23 Pa.C.S. § 4302 (relating 
7to definitions) and orders for the enforcement of arrearages as 
8provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
9arrearages).

10"Effective date of retirement." The first day following the 
11date of termination of service of a member if he has properly 
12filed an application for an annuity within 90 days of such date; 
13in the case of a vestee or a member who does not apply for an 
14annuity within 90 days after termination of service, the date of 
15filing an application for an annuity or the date specified on 
16the application, whichever is later. In the case of a finding of 
17disability, the date certified by the board as the effective 
18date of disability.

19"Eligibility points." Points which are accrued by an active
20member or a multiple service member who is an active member in
21the Public School Employees' Retirement System for credited
22service or a member who has been reemployed from USERRA leave or 
23a member who dies while performing USERRA leave and are used in
24the determination of eligibility for benefits.

25"Employer defined contributions."

26(1)  Unless paragraph (2) applies, contributions equal to
274% of an active participant's compensation which are made by
28the Commonwealth or other employer for current service to the
29trust to be credited in the active participant's individual
30investment account.

1(2)  <-(i)  For Pennsylvania State Police, contributions
2equal to 12.2% of an active participant's compensation
3which are made by the Commonwealth for current service to
4the trust to be credited in the active participant's
5individual investment account.

6(ii)  For an enforcement officer, <-correction officer, 
7psychiatric security aide, Delaware River Port Authority 
8policeman, park ranger or Capitol Police officer, 
9contributions equal to 5.5% of an active participant's 
10compensation which are made by the Commonwealth or other 
11employer for current service to the trust to be credited 
12in the active participant's individual investment 
13account.

14"Enforcement officer."

15(1) Any enforcement officer or investigator of the
16Pennsylvania Liquor Control Board who is a peace officer
17vested with police power and authority throughout the
18Commonwealth and any administrative or supervisory employee
19of the Pennsylvania Liquor Control Board vested with police
20power who is charged with the administration or enforcement
21of the liquor laws of the Commonwealth.

22(2) Special agents, narcotics agents, asset forfeiture 
23agents, medicaid fraud agents and senior investigators 
24hazardous waste prosecutions unit, classified as such and 
25employed by the Office of Attorney General who have within 
26the scope of their employment as law enforcement officers the 
27power to enforce the law and make arrests under the authority 
28of the act of October 15, 1980 (P.L.950, No.164), known as 
29the Commonwealth Attorneys Act.

30(3) Parole agents, classified as such by the Executive

1Board and employed by the Pennsylvania Board of Probation and
2Parole.

3(4) Waterways conservation officers and other
4commissioned law enforcement personnel employed by the
5Pennsylvania Fish and Boat Commission who have and exercise
6the same law enforcement powers as waterways conservation
7officers. This paragraph shall not apply to deputy waterways
8conservation officers.

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

<-10(1)  For members with an effective date of retirement 
11before January 1, 2015, and for purposes of calculating 
12standard single life annuities resulting from Subclass W 
13service regardless of the effective date of retirement, the 
14highest average compensation received as a member during any 
15three nonoverlapping periods of four consecutive calendar 
16quarters during which the member was a State employee, with 
17the compensation for part-time service being annualized on 
18the basis of the fractional portion of the year for which 
19credit is received; except if the employee was not a member 
20for three nonoverlapping periods of four consecutive calendar 
21quarters, the total compensation received as a member, 
22annualized in the case of part-time service, divided by the 
23number of nonoverlapping periods of four consecutive calendar 
24quarters of membership<-[;].

25(2) For members with an effective date of retirement on
26or after January 1, 2015, for purposes of calculating
27standard single life annuities resulting from Subclass X
28service, Subclass Y service or Subclass Z service, the
29highest average compensation, as adjusted under section
305506.3 (relating to adjustment of compensation for

1calculating final average salary on or after January 1,
22015), received as a member of any subclass of service during
3any five calendar years during which the member was a State
4employee, except if the employee was not an active member
5during five calendar years, the average of the number of
6calendar years during which the employee was an active
7member.

8(3) For all members and for the calculation of all 
9standard single life annuities without regard to class or 
10subclass of membership and credited service, in the case of a 
11member with multiple service, the final average salary shall 
12be determined on the basis of the compensation received by 
13him as a [State employee] member of the system or as a school 
14employee, other than as a participant in the School 
15Employees' Defined Contribution Plan, or both; in the case of 
16a member with Class A-3 or Class A-4 service and service in 
17one or more other classes of service, the final average 
18salary shall be determined on the basis of the compensation 
19received by him in all classes of State service credited in 
20the system; and, in the case of a member who first became a 
21member on or after January 1, 1996, the final average salary 
22shall be determined as hereinabove provided but subject to 
23the application of the provisions of section 5506.1(a) 
24(relating to annual compensation limit under IRC § 401(a)
25(17)). Final average salary shall be determined by including 
26in compensation payments deemed to have been made to a member 
27reemployed from USERRA leave to the extent member 
28contributions have been made as provided in section 5302(f)
29(2) (relating to credited State service) and payments made to 
30a member on leave of absence under 51 Pa.C.S. § 4102
 

1(relating to leaves of absence for certain government 
2employees) as provided in section 5302(f)(6).

3"Full coverage member." Any member for whom member pickup 
4contributions are being picked up or who has paid or has agreed 
5to pay to the fund the actuarial equivalent of regular member 
6contributions due on account of service prior to January 1, 
71982.

8"Fund." The State Employees' Retirement Fund.

9"Head of department." The chief administrative officer of
10the department, the chairman or executive director of the
11agency, authority, or independent board or commission, the Court
12Administrator of Pennsylvania, and the Chief Clerk of the
13Senate, or the Chief Clerk of the House of Representatives.

14"Inactive member." A member for whom no pickup contributions 
15are being made to the fund, except in the case of an active 
16member for whom such contributions otherwise required for 
17current State service are not being made solely by reason of 
18section 5502.1 (relating to waiver of regular member 
19contributions and Social Security integration member 
20contributions) or any provision of this part relating to the 
21limitations under section 401(a)(17) or 415(b) of the Internal 
22Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) 
23or 415(b)) <-or any provision of this part limiting compensation 
24or contributions applicable to a Subclass X member, Subclass Y 
25member or Subclass Z member, but who has accumulated deductions 
26standing to his credit in the fund and who is not eligible to 
27become or has not elected to become a vestee or has not filed an 
28application for an annuity.

29"Inactive member on leave without pay." The term does not 
30include a combined service employee who is an inactive
 

1participant on leave without pay.

2"Inactive participant."  A participant for whom no mandatory
3pickup participant contributions are being made to the trust,
4except in the case of an active participant for whom such
5contributions otherwise required for current State service are
6not being made solely by reason of any provision of this part
7relating to limitations under section 401(a)(17) or 415 of the
8Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
9401(a)(17) or 415), but who has vested accumulated total defined
10contributions standing to his credit in the trust and who has
11not filed an application for an annuity.

12"Inactive participant on leave without pay." The term does
13not include a combined service employee who is an inactive
14member on leave without pay.

15"Individual investment account."  The account in the trust to
16which are credited the amounts of the contributions made by a
17participant and the participant's employer in accordance with
18the provisions of this part, together with all interest and
19investment earnings after deduction for fees, costs, expenses
20and investment losses and charges for distributions.

21"Intervening military service." Active military service of a 
22member who was a State employee and active member of the system 
23immediately preceding his induction into the armed services or 
24forces of the United States in order to meet a military 
25obligation excluding any voluntary extension of such service and 
26who becomes a State employee within 90 days of the expiration of 
27such service.

28"IRC." The Internal Revenue Code of 1986, as designated and
29referred to in section 2 of the Tax Reform Act of 1986 (Public
30Law 99-514, 100 Stat. 2085, 2095). A reference in this part to

1"IRC § " shall be deemed to refer to the identically numbered
2section and subsection or other subdivision of such section in
326 United States Code (relating to Internal Revenue Code).

4"Irrevocable beneficiary." The person or persons permanently 
5designated by a member or participant in writing to the State 
6Employees' Retirement Board pursuant to an approved domestic 
7relations order to receive all or a portion of the accumulated 
8deductions, vested accumulated total defined contributions or 
9lump sum benefit payable upon the death of such member or 
10participant.

11"Irrevocable successor payee."  The person permanently
12designated by a participant receiving distributions in writing
13to the board pursuant to an approved domestic relations order to
14receive one or more distributions from the plan upon the death
15of such participant.

16"Irrevocable survivor annuitant." The person permanently 
17designated by a member in writing to the State Employees' 
18Retirement Board pursuant to an approved domestic relations 
19order to receive an annuity upon the death of such member.

20"Joint coverage member." Any member who agreed prior to 
21January 1, 1966 to make joint coverage member contributions to 
22the fund and has not elected to become a full coverage member.

23"Joint coverage member contributions." Regular member
24contributions reduced for a joint coverage member.

25"Mandatory pickup participant contributions."  Contributions
26equal to 6.25% of compensation that are made by the Commonwealth
27or other employer for active participants for current service.

28"Member." Active member, inactive member, annuitant, vestee 
29or special vestee.

30"Member of the judiciary." Any justice of the Supreme Court,
 

1any judge of the Superior Court, the Commonwealth Court, any 
2court of common pleas, the Municipal Court and the Traffic Court
3of Philadelphia, or any community court.

4"Member's annuity." The single life annuity which is
5actuarially equivalent, at the effective date of retirement, to
6the sum of the regular accumulated deductions, shared-risk 
7accumulated deductions, the additional accumulated deductions
8and the social security integration accumulated deductions
9standing to the member's credit in the members' savings account.

10"Military service." All active military service for which a 
11member has received a discharge other than an undesirable, bad 
12conduct, or dishonorable discharge.

13"Multiple service." Credited service of a member who has 
14elected to combine his credited service in both the State 
15Employees' Retirement System and the Public School Employees' 
16Retirement System.

17"Noneligible member." For the purposes of section 5506.1 
18(relating to annual compensation limit under IRC § 401(a)(17)), 
19a member who first became a member on or after January 1, 1996.

20"Nonstudent service." Employment in an educational
21institution that is not contingent on the employee's enrollment
22as a student or maintenance of student status at such
23institution and for which only monetary compensation is
24received, excluding tuition waivers or reimbursement, academic
25credit, housing, meals and other in-kind compensation.

26"Participant."  An active participant, inactive participant
27or participant receiving distributions.

28"Participant receiving distributions."  A participant in the
29plan who has commenced receiving distributions from his
30individual investment account but who has not received a total

1distribution of his vested interest in the individual investment
2account.

3"Pickup contributions." Regular or joint coverage member 
4contributions, shared risk member contributions, social security 
5integration contributions and additional member contributions 
6which are made by the Commonwealth or other employer for active
7members for current service on and after January 1, 1982.

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"Previous State service." Service rendered as a State 
16employee prior to his most recent entrance in the system[.], 
17provided that the State employee was not a participant in the 
18plan, was not eligible to be an optional participant in the plan 
19under section 5301(b.1) (relating to mandatory and optional 
20membership in the system and participation in the plan) or was 
21not prohibited from being a participant under section 5301(c.1) 
22during such service.

23"Psychiatric security aide." Any employee whose principal 
24duty is the care, custody and control of the criminally insane 
25inmates of a maximum security institution for the criminally 
26insane or detention facility operated by the Department of 
27Public Welfare.

28"Public School Employees' Retirement System." The retirement
29system established by the act of July 18, 1917 (P.L.1043,
30No.343), and codified by the act of June 1, 1959 (P.L.350,

1No.77).

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"Regular accumulated deductions." The total of the regular 
11or joint coverage member contributions paid into the fund on 
12account of current service or previous State or creditable 
13nonstate service, together with the statutory interest credited 
14thereon until the date of termination of service. In the case of 
15a vestee or a special vestee, statutory interest shall be 
16credited until the effective date of retirement. A member's 
17account shall not be credited with statutory interest for more 
18than two years during a leave without pay.

19"Regular member contributions." The product of the basic
20contribution rate, the class of service multiplier if greater
21than one and the compensation of the member.

22"Required beginning date."  The latest date by which
23distributions of a participant's interest in his individual
24investment account must commence under section 401(a)(9) of the
25Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
26401(a)(9)).

27"Retirement counselor." The State Employees' Retirement
28System employee whose duty it shall be to advise each employee
29of his rights and duties as a member of the system.

30"Salary deductions." The amounts certified by the board,
 

1deducted from the compensation of an active member or active 
2participant, or the school service compensation of a multiple 
3service member who is an active member of the Public School 
4Employees' Retirement System, and paid into the fund or trust.

5"School Employees' Defined Contribution Plan."  The defined 
6contribution plan for school employees established under 24 
7Pa.C.S. Pt. IV (relating to retirement for school employees).

8"School service." Service rendered as a public school
9employee and credited as service in the Public School Employees' 
10Retirement System.

11"Service connected disability." A disability resulting from 
12an injury arising in the course of State employment, and which 
13is compensable under the applicable provisions of the act of
14June 2, 1915 (P.L.736, No.338), known as "The Pennsylvania 
15Workmen's Compensation Act," or the act of June 21, 1939 
16(P.L.566, No.284), known as "The Pennsylvania Occupational 
17Disease Act."

18"Shared-risk accumulated deductions." The total of the
19shared-risk member contributions paid into the fund on account
20of current service or previous State service or creditable
21nonstate service, together with the statutory interest credited
22on the contributions until the date of termination of service.
23In the case of a vestee, statutory interest shall be credited
24until the effective date of retirement. A member's account shall
25not be credited with statutory interest for more than two years
26during a leave without pay.

27"Shared-risk member contributions." The product of the 
28shared-risk contribution rate and the compensation of a member
29for service credited as Class A-3 or Class A-4.

30"Social security integration accumulated deductions." The

1total of the member contributions paid into the fund on account
2of social security integration credit, together with the
3statutory interest credited thereon until the date of
4termination of service or until the date of withdrawal thereof,
5whichever is earlier. In the case of a vestee statutory interest
6shall be credited until the effective date of retirement. A
7member's account shall not be credited with statutory interest
8for more than two years during a leave without pay.

<-9"Social security wage base."  The amount which was or could
10have been covered as the contribution and wage base for old age
11and survivors insurance benefits under the Federal Social
12Security Act (42 U.S.C. § 301 et seq.).

13"Special vestee." An employee of The Pennsylvania State 
14University who is a member of the State Employees' Retirement 
15System with five or more but less than ten eligibility points 
16and who has a date of termination of service from The 
17Pennsylvania State University of June 30, 1997, because of the 
18transfer of his job position or duties to a controlled 
19organization of the Penn State Geisinger Health System or 
20because of the elimination of his job position or duties due to 
21the transfer of other job positions or duties to a controlled 
22organization of the Penn State Geisinger Health System, provided 
23that:

24(1) subsequent to termination of State service as an
25employee of The Pennsylvania State University, the member has
26not returned to State service in any other capacity or
27position as a State employee;

28(2) The Pennsylvania State University certifies to the
29board that the member is eligible to be a special vestee;

30(3) the member files an application to vest the member's

1retirement rights pursuant to section 5907(f) (relating to
2rights and duties of State employees [and], members and 
3participants) on or before September 30, 1997; and

4(4) the member elects to leave the member's total
5accumulated deductions in the fund and to defer receipt of an
6annuity until attainment of superannuation age.

7"Standard single life annuity." An annuity equal to 2% of 
8the final average salary, multiplied by the total number of 
9years and fractional part of a year of credited service of a 
10member <-in each class or subclass of service.

11"State employee." Any person holding a State office or 
12position under the Commonwealth, employed by the State
13Government of the Commonwealth, in any capacity whatsoever, 
14except an independent contractor or any person compensated on a 
15fee basis or any person paid directly by an entity other than a 
16State Employees' Retirement System employer, and shall include 
17members of the General Assembly, and any officer or employee of 
18the following:

19(1) (i) The Department of Education.

20(ii) State-owned educational institutions.

21(iii) Community colleges.

22(iv) The Pennsylvania State University, except an
23employee in the College of Agriculture who is paid wholly
24from Federal funds or an employee who is participating in
25the Federal Civil Service Retirement System. The
26university shall be totally responsible for all employer
27contributions under [section] sections 5507 (relating to
28contributions to the system by the Commonwealth and other
29[employers).] employers before July 1, 2015) and 5507.1 
30(relating to contributions to the system by the
 

1Commonwealth and other employers commencing July 1, 
22015).

3(2) The Pennsylvania Turnpike Commission, the Delaware
4River Port Authority, the Port Authority Transit Corporation,
5the Philadelphia Regional Port Authority, the Delaware River
6Joint Toll Bridge Commission, the State Public School
7Building Authority, The General State Authority, the State
8Highway and Bridge Authority, the Delaware Valley Regional
9Planning Commission, the Interstate Commission of the
10Delaware River Basin, and the Susquehanna River Basin
11Commission any time subsequent to its creation, provided the
12commission or authority agrees to contribute and does
13contribute to the fund or trust, from time to time, the
14moneys required to build up the reserves necessary for the
15payment of the annuities or other benefits of such officers
16and employees without any liability on the part of the
17Commonwealth to make appropriations for such purposes, and
18provided in the case of employees of the Interstate
19Commission of the Delaware River Basin, that the employee
20shall have been a member of the system for at least ten years
21prior to January 1, 1963.

22(3) Any separate independent public corporation created
23by statute, not including any municipal or quasi-municipal
24corporation, so long as he remains an officer or employee of
25such public corporation, and provided that such officer or
26employee of such public corporation was an employee of the
27Commonwealth immediately prior to his employment by such
28corporation, and further provided such public corporation
29shall agree to contribute and contributes to the fund or 
30trust, from time to time, the moneys required to build up the

1reserves necessary for the payment of the annuities or other 
2benefits of such officers and employees without any liability
3on the part of the Commonwealth to make appropriations for
4such purposes.

5"State police officer." Any officer or member of the 
6Pennsylvania State Police who, on or after July 1, 1989, shall 
7have been subject to the terms of a collective bargaining 
8agreement or binding interest arbitration award established 
9pursuant to the act of June 24, 1968 (P.L.237, No.111), referred 
10to as the Policemen and Firemen Collective Bargaining Act.

11"State service." Service converted from county service 
12pursuant to section 5303.1 (relating to election to convert 
13county service to State service), converted from school service 
14pursuant to section 5303.2 (relating to election to convert 
15school service to State service) or rendered as a State 
16employee.

17"Statutory interest." Interest at 4% per annum, compounded
18annually.

<-19"Subclass W member."  A State employee who is a member of
20Subclass A-W, Subclass AA-W, Subclass A-3W, Subclass A-4W,
21Subclass D-4W, Subclass E-1W or Subclass E-2W.

22"Subclass W service."  Service performed or credited as a
23member of Subclass A-W, Subclass AA-W, Subclass A-3W, Subclass
24A-4W, Subclass D-4W, Subclass E-1W or Subclass E-2W.

25"Subclass X member."  A State employee who is a member of
26Subclass A-X, Subclass A-3X or Subclass A-4X.

27"Subclass X service."  Service performed or credited as a
28member of Subclass A-X, Subclass A-3X or Subclass A-4X.

29"Subclass Y member."  A State employee who is a member of
30Subclass AA-Y, Subclass D-4Y, Subclass E-1Y or Subclass E-2Y.

1"Subclass Y service."  Service performed or credited as a
2member of Subclass AA-Y, Subclass D-4Y, Subclass E-1Y or
3Subclass E-2Y.

4"Subclass Z member."  A State employee who is a member of
5Subclass AA-Z, Subclass D-4Z, Subclass E-1Z or Subclass E-2Z.

6"Subclass Z service."  Service performed or credited as a
7member of Subclass AA-Z, Subclass D-4Z, Subclass E-1Z or
8Subclass E-2Z.

9"Successor payee."  The person or persons last designated in
10writing to the board by a participant receiving distributions to
11receive one or more distributions upon the death of the
12participant.

13"Superannuation age." For classes of service in the system 
14other than Class A-3 and Class A-4, any age upon accrual of 35 
15eligibility points or age 60, except for a member of the General 
16Assembly, an enforcement officer, a correction officer, a 
17psychiatric security aide, a Delaware River Port Authority 
18policeman or an officer of the Pennsylvania State Police, age 
1950, and, except for a member with Class G, Class H, Class I, 
20Class J, Class K, Class L, Class M or Class N service, age 55 
21upon accrual of 20 eligibility points. For Class A-3 and Class 
22A-4 service, any age upon attainment of a superannuation score 
23of 92, provided the member has accrued 35 eligibility points, or 
24age 65, or for park rangers or capitol police officers, age 55 
25with 20 years of service as a park ranger or capitol police 
26officer, except for a member of the General Assembly, an 
27enforcement officer, a correction officer, a psychiatric 
28security aide, a Delaware River Port Authority policeman or an 
29officer of the Pennsylvania State Police, age 55. A vestee with 
30Class A-3 or Class A-4 service credit attains superannuation age
 

1on the birthday the vestee attains the age resulting in a 
2superannuation score of 92, provided that the vestee has at 
3least 35 eligibility points, or attains another applicable 
4superannuation age, whichever occurs first.

5"Superannuation annuitant." An annuitant whose annuity first
6became payable on or after the attainment of superannuation age
7and who is not a disability annuitant.

8"Superannuation score." The sum of the member's age in whole 
9years on his last birthday and the amount of the member's total 
10eligibility points on the member's effective date of retirement, 
11expressed in whole years and whole eligibility points and 
12disregarding fractions of a year and fractions of total
13eligibility points.

14"Survivor annuitant." The person or persons last designated
15by a member under a joint and survivor annuity option to receive
16an annuity upon the death of such member.

17"System." The State Employees' Retirement System of 
18Pennsylvania as established by the act of June 27, 1923 
19(P.L.858, No.331), and codified by the act of June 1, 1959 
20(P.L.392, No.78) and the provisions of this part.

21"Total accumulated deductions." The sum of the regular
22accumulated deductions, additional accumulated deductions, the
23social security integration accumulated deductions, shared-risk
24member contributions and all other contributions paid into the
25fund for the purchase, transfer or conversion of credit for
26service or other coverage together with all statutory interest
27credited thereon until the date of termination of service. In
28the case of a vestee or a special vestee, statutory interest
29shall be credited until the effective date of retirement. A
30member's account shall not be credited with statutory interest

1for more than two years during a leave without pay.

2"Trust."  The State Employees' Defined Contribution Trust
3established under Chapter 54 (relating to State Employees'
4Defined Contribution Plan).

5"USERRA leave." Any period of time for service in the
6uniformed services as defined in 38 U.S.C. Ch. 43 (relating to
7employment and reemployment rights of members of the uniformed
8services) by a State employee or former State employee who
9terminated State service to perform such service in the
10uniformed services, if the current or former State employee is
11entitled to reemployment rights under 38 U.S.C. Ch. 43 with
12respect to the uniformed service.

13"Valuation interest." Interest at 5 1/2% per annum 
14compounded annually and applied to all accounts of the fund 
15other than the members' savings account.

16"Vestee." A member with five or more eligibility points in a 
17class of service other than Class A-3 or Class A-4 or Class T-E 
18or Class T-F in the Public School Employees' Retirement System, 
19a member with Class G, Class H, Class I, Class J, Class K, Class 
20L, Class M or Class N service with five or more eligibility 
21points, or a member with Class A-3 or Class A-4 service with ten 
22or more eligibility points who has terminated State service and 
23has elected to leave his total accumulated deductions in the
24fund and to defer receipt of an annuity.

25"Voluntary contributions."  Contributions made by a
26participant to the trust and credited to his individual
27investment account in excess of his mandatory pickup participant
28contributions, by salary deductions paid through the
29Commonwealth or other employer, or by an eligible rollover or
30direct trustee-to-trustee transfer.

1Section 302. Section 5103 of Title 71 is amended to read:

2§ 5103. Notice to members and participants.

3Notice by publication, including, without being limited to,
4newsletters, newspapers, forms, first class mail, letters,
5manuals and, to the extent authorized by a policy adopted by the
6board, electronically, including, without being limited to, e-
7mail or [World Wide Web] Internet sites, distributed or made
8available to members and participants in a manner reasonably
9calculated to give actual notice of those sections of the State
10Employees' Retirement Code that require notice to members or 
11participants shall be deemed sufficient notice for all purposes.

12Section 303. Title 71 is amended by adding a section to
13read:

14§ 5104.  Reference to State Employees' Retirement System.

15(a) Construction.--As of the effective date of this section,
16unless the context clearly indicates otherwise, any reference to
17the State Employees' Retirement System in a statutory provision
18other than this part and 24 Pa.C.S. Pt. IV (relating to
19retirement for school employees) shall include a reference to
20the State Employees' Defined Contribution Plan and any reference
21to the State Employees' Retirement Fund shall include a
22reference to the State Employees' Defined Contribution Trust.

23(b) Agreement.--The agreement of an employer listed in the
24definition of "State employee" or any other law to make
25contributions to the fund or to enroll its employees as members
26in the system shall be deemed to be an agreement to make
27contributions to the trust or to enroll its employees in the
28plan.

29Section 304. 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 fiscal years after that at
3a rate of 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) and (e) (relating to
28construction of part), a State employee who is furloughed
29under section 802 of the act of August 5, 1941 (P.L.752,
30No.286), known as the Civil Service Act, and reemployed

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

4(a.1)  Mandatory participation in the plan.--

5(1) State employees listed in subsection (a)(17) who are
6not listed in subsection (a)(1) through (13) shall be
7mandatory participants as of the most recent effective date
8of State service without regard to whether or not they are
9combined service employees.

10(2) State employees listed in subsection (a)(17) who are
11employees of The Pennsylvania State University, the State 
12System of Higher Education, State-owned educational 
13institutions or community colleges and who are members of the 
14system or participants in the plan shall be mandatory 
15participants as of the most recent effective date of State 
16service.

17(b) Optional membership in the system.--The State employees
18listed in subsection (a)(1) through (11) shall have the right to
19elect membership in the system before January 1, 2015; once such
20election is exercised, membership shall continue until the
21termination of State service or until the State employee elects 
22to be a participant in the plan.

23(b.1)  Optional participation in the plan.--The State
24employees listed in subsection (b) who do not elect membership
25in the system before January 1, 2015, and State employees listed
26in subsection (a)(17) who also are listed in subsection (a)(1)
27through (10) or who also are employees of The Pennsylvania State
28University, the State System of Higher Education, State-owned
29educational institutions or community colleges and who are not
30members of the system or participants in the plan shall have the

1right to elect participation in the plan; once such election is
2exercised, participation shall be effective as of the date of
3election and shall continue until the termination of State
4service.

5(c) Prohibited membership in the system.--The State
6employees listed in subsection (a)(12), (13), (14) [and], (15)
7and (17) shall not have the right to elect membership in the
8system.

9(c.1)  Prohibited participation in the plan.--The State
10employees listed in subsection (a)(17) who also are listed in
11subsection (a)(13) and (15) shall not be eligible to participate
12in the plan.

13(d) Return to service.--

14(1) An annuitant who returns to service as a State
15employee before January 1, 2015, shall resume active
16membership in the system as of the effective date of
17employment, except as otherwise provided in section 5706(a)
18(relating to termination of annuities), regardless of the
19optional membership category of the position.

20(2) An annuitant, inactive participant or a participant
21receiving distributions who returns to service as a State
22employee on or after January 1, 2015, shall be an active
23participant in the plan as of the effective date of
24employment unless the position is eligible for optional
25participation or is not eligible for participation in the
26plan, or except as otherwise provided in section 5706(a).

27* * *

28Section 305. Sections 5302(a), (b), (e) and (f) and 5303(b),
29(d)(1) and (e)(1) and (4) of Title 71, amended or added October
3024, 2012 (P.L.1436, No.181), are amended to read:

1§ 5302. Credited State service.

2(a) Computation of credited service.--In computing credited
3State service of a member for the determination of benefits, a
4full-time salaried State employee, including any member of the
5General Assembly, shall receive credit for service in each
6period for which contributions as required are made to the fund,
7or for which contributions otherwise required for such service
8were not made to the fund solely by reason of section 5502.1
9(relating to waiver of regular member contributions and Social
10Security integration member contributions) or any provision of
11this part relating to the limitations under IRC § 401(a)(17) or
12415(b) <-or a provision of this part limiting compensation or 
13contributions applicable to a Subclass X member, Subclass Y 
14member or Subclass Z member, but in no case shall he receive
15more than one year's credit for any 12 consecutive months or 26
16consecutive biweekly pay periods. A per diem or hourly State
17employee shall receive one year of credited service for each
18nonoverlapping period of 12 consecutive months or 26 consecutive
19biweekly pay periods in which he is employed and for which
20contributions are made to the fund or would have been made to 
21the fund but for such waiver under section 5502.1 or limitations
22under the IRC <-or limitations on compensation or contributions 
23applicable to a Subclass X member, Subclass Y member or Subclass 
24Z member for at least 220 days or 1,650 hours of employment. If
25the member was employed and contributions were made to the fund
26for less than 220 days or 1,650 hours, he shall be credited with
27a fractional portion of a year determined by the ratio of the
28number of days or hours of service actually rendered to 220 days
29or 1,650 hours, as the case may be. A part-time salaried
30employee shall be credited with the fractional portion of the

1year which corresponds to the number of hours or days of service
2actually rendered and for which contributions are or would have 
3been made to the fund in relation to 1,650 hours or 220 days, as
4the case may be. In no case shall a member who has elected
5multiple service receive an aggregate in the two systems of more
6than one year of credited service for any 12 consecutive months.

7(b) Creditable leaves of absence.--

8(1) A member on leave without pay who is studying under 
9a Federal grant approved by the head of his department or who 
10is engaged up to a maximum of two years of temporary service 
11with the United States Government, another state or a local 
12government under the Intergovernmental Personnel Act of 1970 
13(5 U.S.C. §§ 1304, 3371-3376; 42 U.S.C. §§ 4701-4772) shall 
14be eligible for credit for such service: Provided, That 
15contributions are made in accordance with sections 5501 
16(relating to regular member contributions for current 
17service), 5501.1 (relating to shared-risk member 
18contributions for Class A-3 and Class A-4 service), 5505.1 
19(relating to additional member contributions) [and], 5507 
20(relating to contributions to the system by the Commonwealth 
21and other employers before July 1, 2015) and 5507.1 (relating 
22to contributions to the system by the Commonwealth and other 
23employers commencing July 1, 2015), the member returns from 
24leave without pay to active State service as a member of the 
25system for a period of at least one year, and he is not 
26entitled to retirement benefits for such service under a 
27retirement system administered by any other governmental 
28agency.

29(2) An active member or active participant on paid leave
30granted by an employer for purposes of serving as an elected

1full-time officer for a Statewide employee organization which
2is a collective bargaining representative under the act of 
3June 24, 1968 (P.L.237, No.111), referred to as the Policemen
4and Firemen Collective Bargaining Act, or the act of July 23, 
51970 (P.L.563, No.195), known as the Public Employe Relations
6Act, and up to 14 full-time business agents appointed by an
7employee organization that represents correction officers
8employed at State correctional institutions: Provided, That
9for elected full-time officers such leave shall not be for
10more than three consecutive terms of the same office and for
11up to 14 full-time business agents appointed by an employee
12organization that represents correction officers employed at
13State correctional institutions no more than three
14consecutive terms of the same office; that the employer shall
15fully compensate the member or active participant, including,
16but not limited to, salary, wages, pension and retirement
17contributions and benefits, other benefits and seniority, as
18if he were in full-time active service; and that the
19Statewide employee organization shall fully reimburse the
20employer for all expenses and costs of such paid leave,
21including, but not limited to, contributions and payment in
22accordance with [sections] section 5404 (relating to 
23participant contributions), 5405 (relating to mandatory 
24pickup participant contributions), 5406 (relating to employer 
25defined contributions), 5501, 5501.1, 5505.1 [and], 5507 or 
265507.1, if the employee organization either directly pays, or
27reimburses the Commonwealth or other employer for,
28contributions made in accordance with [section] sections 
295404, 5405, 5406, 5507 and 5507.1.

30* * *

1(e) Cancellation of credited service.--All credited service 
2in the system shall be cancelled if a member withdraws his total 
3accumulated deductions, except that a member with Class A-3 or 
4Class A-4 service credit and one or more other classes of 
5service credit shall not have his service credit as a member of 
6any classes of service other than as a member of Class A-3 or 
7Class A-4 cancelled when the member receives a lump sum payment 
8of accumulated deductions resulting from Class A-3 or Class A-4 
9service pursuant to section 5705.1 (relating to payment of 
10accumulated deductions resulting from Class A-3 and Class A-4 
11service). A partial or total distribution of accumulated total 
12defined contributions to a combined service employee shall not 
13cancel service credited in the system.

14(f) Credit for military service.--A State employee who has 
15performed USERRA leave may receive credit in the system or 
16participate in the plan as follows:

17(1) For purposes of determining whether a member is
18eligible to receive credited service in the system for a
19period of active military service, other than active duty
20service to meet periodic training requirements, rendered
21after August 5, 1991, and that began before the effective
22date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73
23(relating to military leave of absence) shall apply to all
24individuals who were active members of the system when the
25period of military service began, even if not defined as an
26employee pursuant to 51 Pa.C.S. § 7301 (relating to
27definitions).

28(1.1) State employees may not receive service credit in 
29the system or exercise the options under 51 Pa.C.S. § 7306
30(relating to retirement rights) for military leaves that

1begin on or after the effective date of this subsection,
2except as otherwise provided by this subsection.

3(1.2) State employees may not participate in the plan or
4exercise the options under 51 Pa.C.S. § 7306 for military
5leaves that begin on or after the effective date of this
6paragraph, except as otherwise provided by this subsection.

7(2) A State employee who has performed USERRA leave may
8receive credit in the system as provided by this paragraph.
9The following shall apply:

10(i) A State employee who is reemployed from USERRA
11leave as an active member of the system shall be treated
12as not having incurred a break in State service by reason
13of the USERRA leave and shall be granted eligibility
14points as if the State employee had not been on the
15USERRA leave. If a State employee who is reemployed from
16USERRA leave as an active member of the system
17subsequently makes regular member contributions,
18additional member contributions, Social Security
19integration member contributions, shared-risk member
20contributions and any other member contributions in the
21amounts and in the time periods required by 38 U.S.C. Ch.
2243 (relating to employment and reemployment rights of
23members of the uniformed services) and IRC § 414(u) as if
24the State employee had continued in State office or
25employment and performed State service and was
26compensated during the period of USERRA leave, then the
27State employee shall be granted State service credit for
28the period of USERRA leave. The State employee shall have
29the State employee's benefits, rights and obligations
30determined under this part as if the State employee was

1an active member who performed creditable State service
2during the USERRA leave in the job position that the
3State employee would have held had the State employee not
4been on USERRA leave and received the compensation on
5which the member contributions to receive State service
6credit for the USERRA leave were determined.

7(ii) For purposes of determining whether a State
8employee has made the required employee contributions for
9State service credit for USERRA leave, if an employee who
10is reemployed from USERRA leave as an active member of 
11the system terminates State service or dies in State
12service before the expiration of the allowed payment
13period, then State service credit for the USERRA leave
14will be granted as if the required member contributions
15were paid the day before termination or death. The amount
16of the required member contributions will be treated as
17an incomplete payment subject to the provisions of
18section 5506 (relating to incomplete payments). Upon a
19subsequent return to State service or to school service
20as a multiple service member, the required member
21contributions treated as incomplete payments shall be
22treated as member contributions that were either
23withdrawn in a lump sum at termination or paid as a lump
24sum pursuant to section 5705(a)(4) <-or (a.1) (relating to
25member's options), as the case may be.

26(iii) A State employee who is reemployed from USERRA
27leave as an active member of the system who does not make
28the required member contributions or makes only part of
29the required member contributions within the allowed
30payment period shall not be granted credited service for

1the period of USERRA leave for which the required member
2contributions were not timely made, shall not be eligible
3to subsequently make contributions and shall not be
4granted either State service credit or nonstate service
5credit for the period of USERRA leave for which the
6required member contributions were not timely made.

7(2.1) (i) A participant who is reemployed from USERRA
8leave shall be treated as not having incurred a break in
9State service by reason of the USERRA leave and shall be
10granted vesting credit as if the participant had not been
11on USERRA leave. If a participant who is reemployed from
12USERRA leave subsequently makes mandatory pickup
13participant contributions in the amounts and in the time
14periods required by 38 U.S.C. Ch. 43 and IRC § 414(u) as
15if the participant had continued in his State office or
16employment and performed State service and been
17compensated during the period of USERRA leave, the
18participant's employer shall make the corresponding
19employer defined contributions. Such an employee shall
20have his contributions, benefits, rights and obligations
21determined under this part as if he were an active
22participant who performed State service during the USERRA
23leave in the job position that he would have held had he
24not been on USERRA leave and received the compensation on
25which the mandatory pickup participant contributions to
26receive State service credit for the USERRA leave were
27determined, including the right to make voluntary
28contributions on such compensation as permitted by law.

29(ii)  A participant who is reemployed from USERRA
30leave who does not make the mandatory pickup participant

1contributions or makes only part of the mandatory pickup
2participant contributions within the allowed payment
3period shall not be eligible to make mandatory pickup
4participant contributions or voluntary contributions at a
5later date for the period of USERRA leave for which the
6mandatory pickup participant contributions were not
7timely made.

8(3) A State employee who is a member of the system and
9performs USERRA leave from which the employee could have been
10reemployed from USERRA leave had the State employee returned
11to State service in the time frames required by 38 U.S.C. Ch.
1243 for reemployment rights, but did not do so, shall be able
13to receive creditable nonstate service as nonintervening
14military service for the period of USERRA leave should the
15employee later return to State service as an active member of 
16the system and is otherwise eligible to purchase the service
17as nonintervening military service.

18(3.1)  A State employee who is a participant in the plan
19and performs USERRA leave from which the employee could have
20been reemployed from USERRA leave had the employee returned
21to State service in the time frames required by 38 U.S.C. Ch.
2243 for reemployment rights, but did not do so, shall not be
23eligible to make mandatory pickup participant contributions
24or voluntary contributions for the period of USERRA leave
25should the employee later return to State service and be a
26participant in the plan.

27(4) [A State employee] An active member or inactive 
28member on leave without pay who on or after the effective
29date of this subsection is granted a leave of absence under
3051 Pa.C.S. § 4102 (relating to leaves of absence for certain

1government employees) or a military leave under 51 Pa.C.S.
2Ch. 73, that is not USERRA leave shall be able to receive
3creditable nonstate service as nonintervening military
4service should the employee return to State service as an 
5active member of the system and is otherwise eligible to
6purchase the service as nonintervening military service.

7(4.1) An active participant or inactive participant on
8leave without pay who on or after the effective date of this
9paragraph is granted a leave of absence under 51 Pa.C.S. §
104102 or a military leave under 51 Pa.C.S. Ch. 73 that is not
11USERRA leave shall not be able to make mandatory pickup
12participant contributions or voluntary contributions during
13or for the leave of absence or military leave and shall not
14have employer defined contributions made during such leave,
15without regard to whether or not the State employee received
16salary, wages, stipends, differential wage payments or other
17payments from his employer during the leave, notwithstanding
18any provision to the contrary under 51 Pa.C.S. § 4102 or 51
19Pa.C.S. Ch. 73.

20(5) If a member dies while performing USERRA leave, then
21the beneficiaries or survivor annuitants, as the case may be,
22of the deceased member are entitled to any additional
23benefits, including eligibility points, other than benefit
24accruals relating to the period of qualified military
25service, provided under this part had the member resumed and
26then terminated employment on account of death.

27(5.1)  If a participant dies while performing USERRA
28leave, the beneficiaries or successor payees of the deceased
29participant are entitled to any additional benefits, other
30than benefit accruals relating to the period of qualified

1military service, provided under this part had the
2participant resumed and then terminated employment on account
3of death.

4(6) A State employee who is on a leave of absence from 
5his duties as a State employee for which 51 Pa.C.S. § 4102 
6provides that he is not to suffer a loss of pay, time or 
7efficiency rating shall not be an active member, receive 
8service credit or make member contributions for the leave of 
9absence, except as provided for in this part. Notwithstanding 
10this paragraph, any pay the member receives pursuant to 51 
11Pa.C.S. § 4102 shall be included in the determination of 
12final average salary and other calculations in the system 
13utilizing compensation as if the payments were compensation 
14under this part.

15§ 5303. Retention and reinstatement of service credits.

16* * *

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

18(1) Every active member of the system or a multiple 
19service member who is a school employee and a member of the 
20Public School Employees' Retirement System on or after the 
21effective date of this part shall receive eligibility points 
22in accordance with section 5307 for current State service, 
23previous State service, or creditable nonstate service upon 
24compliance with sections 5501 (relating to regular member 
25contributions for current service), 5501.1 (relating to 
26shared-risk contributions for Class A-3 and Class A-4 
27service), 5504 (relating to member contributions for the 
28purchase of credit for previous State service or to become a 
29full coverage member), 5505 (relating to contributions for 
30the purchase of credit for creditable nonstate service),
 

15505.1 (relating to additional member contributions) or 5506 
2(relating to incomplete payments). Subject to the limitations 
3in sections 5306.1 (relating to election to become a Class AA 
4member) and 5306.2 (relating to elections by members of the 
5General Assembly), the class or classes of service in which 
6the member may be credited for previous State service prior 
7to the effective date of this part shall be the class or 
8classes in which he was or could have at any time elected to 
9be credited for such service, except that a State employee 
10who first becomes a member of the system on or after January 
111, 2011, or on or after December 1, 2010, as a member of the 
12General Assembly and:

13(i) is credited with Class A-3 service for such
14membership, shall be credited only with Class A-3 service
15for previous State service performed before January 1,
162011, that was not previously credited in the system; or

17(ii) is credited with Class A-4 service for such 
18membership, shall be credited only with Class A-4 service 
19for previous State service performed before January 1, 
202011, that was not previously credited in the system.

21The class of service in which a member shall be credited for
22service subsequent to the effective date of this part shall
23be determined in accordance with section 5306 (relating to
24classes of service).

25(1.1) Every active member of the system who elects to
26convert county service to State service pursuant to section
275303.1 (relating to election to convert county service to
28State service) shall receive eligibility points in accordance
29with section 5307 for converted county service upon
30compliance with section 5303.1(b). The class or classes of

1service in which the member may be credited for converted
2county service shall be determined in accordance with section
35306(c).

4(1.2) Every member of the system who elects to convert
5school service to State service pursuant to section 5303.2
6(relating to election to convert school service to State
7service) shall receive eligibility points in accordance with
8section 5307 for converted school service. The class or
9classes of service in which the member may be credited for
10converted school service shall be determined in accordance
11with section 5306(d).

12(1.3) A member of the system who is reemployed from
13USERRA leave or who dies while performing USERRA leave shall
14receive eligibility points in accordance with section 5307
15for the State service that would have been performed had the
16member not performed USERRA leave.

<-17(1.4)  Notwithstanding paragraph (1):

18(i) If previous State service is being credited, then
19the previous State service shall be credited as Subclass
20W service of the appropriate class if it was previously
21credited, or is being credited, before January 1, 2015.

22(ii) If previous State service is first credited in
23the system on or after January 1, 2015, then it shall be
24credited as either Subclass X service or Subclass Y
25service unless the member elects to be a member of
26Subclass Z of the appropriate class of service.

27(2) A special vestee or person otherwise eligible to be
28a special vestee who returns to State service, other than as 
29a participant in the plan, or withdraws his accumulated
30deductions pursuant to section 5311 (relating to eligibility

1for refunds) or 5701 (relating to return of total accumulated
2deductions) shall receive or retain eligibility points in
3accordance with paragraph (1) but upon subsequent termination
4of State service shall only be eligible to be an annuitant,
5vestee or inactive member without regard to previous status
6as a special vestee and without regard to the provisions of
7this part providing for special vestees.

8(3) A special vestee or person otherwise eligible to be 
9a special vestee who becomes an active member of the Public 
10School Employees' Retirement System and elects multiple 
11service shall receive or retain eligibility points as 
12otherwise provided for in this part and 24 Pa.C.S. Pt. IV 
13(relating to retirement for school employees) but upon 
14subsequent termination of school service shall only be 
15eligible to be an annuitant, vestee or inactive member as 
16otherwise eligible as a multiple service member without 
17regard to previous status as a special vestee and without 
18regard to the provisions of this part providing for special 
19vestees.

20* * *

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

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

1to mandatory and optional membership in the system and 
2participation in the plan). The employee shall be entitled to
3have any prior service credit in that county or other
4municipal pension plan or retirement system transferred to
5the system and deemed to be State service for all purposes
6under this part. However, for those employees who were in
7continuous county employment which commenced prior to July
822, 1983, section 5505.1 shall not apply. The transfer of
9prior service credit to the system shall occur upon the
10transfer, by the member, county or other municipal pension
11plan or retirement system, to the system of the amount of
12accumulated member contributions, pick-up contributions and
13credited interest standing in the employee's county or
14municipal pension plan or retirement system account as of the
15date that these funds are transferred to the system. In the
16event that these funds have been refunded to the member, the
17transfer of service credit shall occur when the member
18transfers an amount equal to either the refund which the
19member received from the county or municipal pension plan or
20retirement system or the amount due under section 5504, if
21less. In the case of a transfer by the member, the transfer
22shall occur by December 31, 1987, in order for the member to
23receive credit for the prior service. In the case of a
24transfer by the county or other municipal pension plan or
25retirement system, the transfer shall also occur by December
2631, 1987. If the amount transferred to the system by the
27member of a county or municipal pension plan or retirement
28system is greater than the amount that would have accumulated
29in the member's account if the employee had been a member of
30the system, all excess funds shall be returned to the

1employee within 90 days of the date on which such funds are
2credited to the member's account in the system. Within 60
3days of receipt of written notice that an employee has
4elected to transfer credits under the provisions of this
5subsection, the county or other municipal pension plans or
6retirement systems shall be required to transfer to the
7system an amount, excluding contributions due under section
85504(a), equal to the liability of the prior service in
9accordance with county or other municipal pension plan or
10retirement system benefit provisions, multiplied by the ratio
11of system actuarial value of assets for active members to the
12system actuarial accrued liability for active members. The
13Public Employee Retirement Study Commission shall determine
14the appropriate amount of employer contributions to be
15transferred to the system by the county or other municipal
16pension plans or retirement systems.

17* * *

18(e) Transfer and purchase of certain pension service credit;
19Philadelphia Regional Port Authority.--

20(1) Any employee of the Philadelphia Regional Port
21Authority who becomes a State employee, as defined in section
225102 (relating to definitions), and an active member of the 
23system shall be eligible to obtain retirement credit for
24prior uncredited service with the Philadelphia Port
25Corporation, a Pennsylvania not-for-profit corporation
26("predecessor corporation"), provided that the Commonwealth
27does not incur any liability for the funding of the annuities
28attributable to the prior, uncredited "predecessor
29corporation" service, the cost of which shall be determined
30according to paragraph (2).

1* * *

2(4) Any person who became employed by the Philadelphia
3Regional Port Authority between July 10, 1989, and passage of
4this act and who becomes a State employee, as defined in
5section 5102, and an active member of the system shall be
6eligible to obtain retirement credit for service from the
7date of employment with the Philadelphia Regional Port
8Authority, provided that the contributions are made in
9accordance with sections 5501, 5504, 5505.1 and 5506.

10* * *

11Section 306. Sections 5303.2(a) and (e), 5304(a)<-, (b) and 
12(c.1) <-and (b), 5305(b)(3) and 5305.1 of Title 71 are amended to
13read:

14§ 5303.2. Election to convert school service to State service.

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

1accumulated member contributions and statutory interest credited
2in the members' savings account in the Public School Employees'
3Retirement System as of June 30, 1999, plus statutory interest
4on that amount credited by the Public School Employees'
5Retirement System from July 1, 1999, to the date of transfer to
6the system.

7* * *

8(e) Transfer.--Within 180 days after the effective date of
9this subsection, the Public School Employees' Retirement System
10shall transfer to the board for each member electing to convert
11under this section the accumulated member contributions and
12statutory interest credited in the Public School Employees'
13Retirement System, plus an amount equal to the value of all
14annual employer contributions made to the Public School
15Employees' Retirement System with interest at the annual rate
16adopted by the board for the calculation of the normal
17contribution rate under section 5508(b) (relating to actuarial
18cost method for fiscal years ending before July 1, 2015), from
19the date of each contribution to the date of the transfer of the
20funds to the board. Any debt owed by a member to the Public
21School Employees' Retirement System for whatever reason shall be
22transferred to the system and shall be paid in a manner and in
23accordance with conditions prescribed by the board.

24* * *

25§ 5304. Creditable nonstate service.

26(a) Eligibility.--

27(1) An active member who first becomes an active member 
28before January 1, 2011, or before December 1, 2010, as a 
29member of the General Assembly, or a multiple service member
30who first becomes an active member before January 1, 2011, or
 

1before December 1, 2010, as a member of the General Assembly, 
2and who is a school employee and an active member of the
3Public School Employees' Retirement System shall be eligible
4for Class A service credit for creditable nonstate service as
5set forth in subsections (b) and (c) except that intervening
6military service shall be credited in the class of service
7for which the member was eligible at the time of entering
8into military service and for which he makes the required
9contributions to the fund and except that a multiple service
10member who is a school employee and an active member of the
11Public School Employees' Retirement System shall not be
12eligible to purchase service credit for creditable nonstate
13service set forth in subsection (c)(5).

14(2) An active member who first becomes an active member
15on or after January 1, 2011, or on or after December 1, 2010,
16as a member of the General Assembly, or a multiple service
17member who first becomes an active member on or after January
181, 2011, or on or after December 1, 2010, as a member of the
19General Assembly, and who is a school employee and an active
20member of the Public School Employees' Retirement System
21shall be eligible for Class A-3 service credit for creditable
22nonstate service as set forth in subsections (b) and (c)
23except that intervening military service shall be credited in
24the class of service for which the member was eligible at the
25time of entering into military service and for which he makes
26the required contributions to the fund and except that a
27multiple service member who is a school employee and an
28active member of the Public School Employees' Retirement
29System shall not be eligible to purchase service credit for
30creditable nonstate service set forth in subsection (c)(5).

1* * *

2(b) Limitations on eligibility.--An active member or a
3multiple service member who is a school employee and an active
4member of the Public School Employees' Retirement System shall
5be eligible to receive credit for nonstate service provided that
6he does not have credit for such service in the system or in the
7school system and is not entitled to receive, eligible to
8receive now or in the future, or is receiving retirement
9benefits for such service in the system or under a retirement
10system administered and wholly or partially paid for by any
11other governmental agency or by any private employer, or a
12retirement program approved by the employer in accordance with
13section 5301(a)(12) (relating to mandatory and optional
14membership in the system and participation in the plan), and
15further provided, that such service is certified by the previous
16employer and contributions are agreed upon and made in
17accordance with section 5505 (relating to contributions for the
18purchase of credit for creditable nonstate service).

19* * *

<-20(c.1) Nonstate service exception.--Notwithstanding the
21limitations on eligibility enumerated in subsection (c)(3), any
22person who was an officer or employee in the Office of the
23Chancellor of the State System of Higher Education at any time
24between July 1, 1983, and August 4, 1991, inclusive, and was an
25active member during that period or has continued as an active
26member without interruption of service since August 4, 1991,
27shall be eligible to purchase creditable nonstate service under
28this section, subject to the same terms, conditions and
29limitations, including the calculation of the amount and method
30of paying for the purchase, as was enjoyed by officers and

1employees of the Department of Education between July 1, 1983,
2and August 4, 1991, except that any purchase made on or after
3January 1, 2015, shall be in the subclass of service provided
4under section 5306 (relating to classes of service). Service
5rendered in the Chancellor's Office for purposes of the purchase
6of creditable nonstate service under this subsection shall be
7deemed to be service as an officer or employee in the Department
8of Education.

9* * *

10§ 5305. Social security integration credits.

11* * *

12(b) Accrual of subsequent credits.--Any active member who
13has social security integration accumulated deductions to his
14credit or is receiving a benefit on account of social security
15integration credits may accrue one social security integration
16credit for each year of service as a State employee on or
17subsequent to March 1, 1974 and a fractional credit for a
18corresponding fractional year of service provided that
19contributions are made to the fund, or would have been made to 
20the fund but for section 5502.1 (relating to waiver of regular
21member contributions and Social Security integration member
22contributions) or the limitations under IRC § 401(a)(17) or
23415(b), in accordance with section 5502 (relating to Social
24Security integration member contributions), and he:

25* * *

26(3) terminates his status as a vestee or an annuitant
27and returns to State service as an active member of the 
28system.

29* * *

30§ 5305.1. Eligibility for actuarial increase factor.

1A person who is:

2(1) an active member;

3(2) an inactive member on leave without pay; [or]

4(3) a multiple service member who is a school employee
5and an active member of the Public School Employees'
6Retirement System; or

7(4)  a combined service employee who is an active
8participant or inactive participant on leave without pay:

9who terminates State service or school service, as the case may
10be, after attaining age 70 and who applies for a superannuation
11annuity with an effective date of retirement the day after the
12date of termination of State service or school service shall
13have that person's maximum single life annuity calculated
14pursuant to section 5702(a.1) (relating to maximum single life
15annuity).

<-16Section 307. Section 5306(a), (a.1)(2), (6) and (7), (a.2),
17(a.3) and (b) of Title 71 are amended, (a.1) is amended by
18adding a paragraph and the section is amended by adding a
19subsection to read:

<-20Section 307. Section 5306(a), (a.1)(2) and (6), (a.2) and
21(b) of Title 71 are amended and the section is amended by adding
22a subsection to read:

23§ 5306. Classes of service.

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

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

1payment of regular and additional member contributions for
2Class A service, provided that the State employee does not
3become a member of Class AA pursuant to subsection (a.1) or a
4member of Class D-4 pursuant to subsection (a.2) or a 
5participant in the plan.

6(2) A State employee who first becomes a member of the
7system on or after January 1, 2011, or on or after December
81, 2010, as a member of the General Assembly, shall be
9classified as a Class A-3 member and receive credit for Class
10A-3 service upon payment of regular member contributions and
11shared-risk member contributions for Class A-3 service
12provided that the State employee does not become a member of
13Class A-4 pursuant to subsection (a.3), except that a member
14of the judiciary shall be classified as a member of such
15other class of service for which the member of the judiciary
16is eligible, shall elect and make regular member
17contributions and further provided that the State employee 
18does not become a participant in the plan or is not eligible 
19to be an optional participant of the plan under section 5301 
20(relating to mandatory and optional membership in the system 
21and participation in the plan).

<-22(3) (i) On the effective date of this paragraph Class A
23service credit and membership shall be divided into and
24comprised of the following subclasses: Subclass A-W
25service credit and membership and Subclass A-X service
26credit and membership.

27(ii) All Class A State service performed before
28January 1, 2015, for which member contributions are made
29and all Class A nonstate service credit shall be credited
30as Subclass A-W service, except that previous State

1service and creditable non-State service that were not
2first credited before January 1, 2015, shall not be
3credited as Subclass A-W service if first credited on or
4after January 1, 2015. State service and non-State
5service previously credited as Class A before January 1,
62015, but not credited on December 31, 2014, because a
7member withdrew accumulated deductions under sections
85311 (relating to eligibility for refunds) or 5701
9(relating to return of total accumulated deductions)
10shall be credited as Subclass A-W if the credit is
11reinstated under section 5303 (relating to retention and
12reinstatement of service credits) on or after January 1,
132015.

14(iii) All previously uncredited State service and
15creditable non-State service that is first credited on or
16after January 1, 2015, as Class A service and all Class A
17service performed on or after January 1, 2015, shall be
18credited as Subclass A-X service, except that any State
19service credited as Class A service by a member who is
20reemployed from USERRA leave who has made the member
21contributions under section 5302(f) (relating to credited
22State service) to receive State service credit for the
23USERRA leave shall be credited as Subclass A-W if
24credited for a period of USERRA leave performed before
25January 1, 2015.

26(4) (i) On the effective date of this paragraph Class
27A-3 service credit and membership shall be divided into
28and comprised of the following subclasses: Subclass A-3W
29service credit and membership and Subclass A-3X service
30credit and membership.

1(ii) All Class A-3 State service performed before
2January 1, 2015, for which member contributions are made
3and all Class A-3 non-State service credit shall be
4credited as Subclass A-3W service, except that previous
5State service and creditable non-State service that was
6not first credited before January 1, 2015, shall not be
7credited as Subclass A-3W service if first credited on or
8after January 1, 2015. State service and non-State
9service previously credited as Class A-3 before January
101, 2015, but not credited on December 31, 2014, because a
11member withdrew accumulated deductions under sections
125311 or 5701 shall be credited as Subclass A-3W if the
13credit is reinstated under section 5303 on or after
14January 1, 2015.

15(iii) All previously uncredited State service and
16creditable non-State service that is first credited on or
17after January 1, 2015, as Class A-3 service, and all
18Class A-3 service performed on or after January 1, 2015,
19shall be credited as Subclass A-3X service, except that
20any State service credited as Class A-3 service by a
21member who is reemployed from USERRA leave who has made
22the member contributions under section 5302(f) to receive
23State service credit for the USERRA leave shall be
24credited as Subclass A-3W if credited for a period of
25USERRA leave performed before January 1, 2015.

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

27* * *

28(2) A person who is a State employee on June 30, 2001,
29and July 1, 2001, but is not an active member of the system
30because membership in the system is optional or prohibited

1pursuant to section 5301 (relating to mandatory and optional
2membership in the system and participation in the plan) and
3who first becomes an active member after June 30, 2001, and 
4before January 1, 2011, or before December 1, 2010, as a 
5member of the General Assembly, and who is not a State police
6officer and not employed in a position for which a class of
7service other than Class A is credited or could be elected
8shall be classified as a Class AA member and receive credit
9for Class AA State service upon payment of regular member
10contributions for Class AA service and, subject to the
11limitations contained in paragraph (7), if previously a
12member of Class A or previously employed in a position for
13which Class A service could have been earned, shall have all
14Class A State service (other than State service performed as
15a State Police officer or for which a class of service other
16than Class A was earned or could have been elected)
17classified as Class AA service.

18* * *

19(6) A State employee who after June 30, 2001, becomes a
20State police officer or who is employed in a position in
21which the member could elect membership in the system in a
22class of service other than Class AA or Class D-4 shall
23retain any Class AA service credited prior to becoming a
24State police officer or being so employed but shall be
25ineligible to receive Class AA credit thereafter and instead
26shall receive Class A credit for service as a member of the 
27judiciary if such judicial service begins before January 1, 
282015, or if he first became a member before January 1, 2011, 
29or December 1, 2010, as a member of the General Assembly, or 
30Class A-3 credit for service other than as a member of the
 

1judiciary if the nonjudicial service begins before January 1, 
22015, and he first became a member on or after January 1, 
32011, or December 1, 2010, as a member of the General 
4Assembly, unless a class of membership other than Class A is
5elected.

<-6(7) (i) State service performed as Class A service
7before July 1, 2001, and State service for which Class A
8service could have been credited but was not credited
9because membership in the system was optional or
10prohibited pursuant to section 5301 shall be credited as
11Class AA service only upon the completion of all acts
12necessary for the State service to be credited as Class A
13service had this subsection not been enacted and upon
14payment of required Class AA member contributions as
15provided in section 5504 (relating to member
16contributions for the purchase of credit for previous
17State service or to become a full coverage member).

18(ii) A person who is not a State employee or a
19school employee on June 30, 2001, and July 1, 2001, and
20who has previous State service (except a disability
21annuitant who returns to State service after June 30,
222001, upon termination of the disability annuity) shall
23not receive Class AA service credit for State service
24performed before July 1, 2001, until such person becomes
25an active member, or an active member of the Public
26School Employees' Retirement System and a multiple
27service member, and earns three eligibility points by
28performing credited State service or credited school
29service after June 30, 2001. This Class AA service credit
30shall be credited as Subclass AA-W service credit

1regardless of the date the required three eligibility
2points are finally earned unless it is first credited on
3or after January 1, 2015.

4(8) (i) On the effective date of this paragraph Class
5AA service credit and membership shall be divided into
6and comprised of the following subclasses: Subclass AA-W
7service credit and membership, Subclass AA-Y service
8credit and membership and Subclass AA-Z service credit
9and membership.

10(ii)  All Class AA service performed before January
111, 2015, for which member contributions are made shall be
12credited as Subclass AA-W service, except that previous
13State service that was not first credited before January
141, 2015, shall not be credited as Subclass AA-W service
15if first credited on or after January 1, 2015. State
16service previously credited as Class AA before January 1,
172015, but not credited on December 31, 2014, because a
18member withdrew accumulated deductions under sections
195311 or 5701 shall be credited as Subclass AA-W if the
20credit is reinstated under section 5303 on or after
21January 1, 2015.

22(iii)  All previously uncredited State service that
23is first credited on or after January 1, 2015, as Class
24AA service, and all Class AA service performed on or
25after January 1, 2015, shall be credited as Subclass AA-Y
26service provided that the Class AA member has not elected
27to be a member of Subclass AA-Z under section 5306.4
28(relating to election to become a Subclass Z member),
29except that any State service credited as Class AA
30service by a member who is reemployed from USERRA leave

1who has made the member contributions under section
25302(f) to receive State service credit for the USERRA
3leave shall be credited as Class AA-W if credited for a
4period of USERRA leave performed before January 1, 2015.

5(iv)  A Class AA member who elects to be a member of
6Subclass AA-Z under section 5306.4 shall have all Class
7AA service that otherwise would be credited as Subclass
8AA-Y service credited as Subclass AA-Z service.

9(a.2) Class of membership for members of the General
10Assembly.--

11(1) A person who:

12(i) becomes a member of the General Assembly and an
13active member of the system after June 30, 2001, and 
14before December 1, 2010; or

15(ii) is a member of the General Assembly on July 1,
162001, but is not an active member of the system because
17membership in the system is optional pursuant to section
185301 and who becomes an active member after June 30,
192001, and before December 1, 2010;

20and who was not a State police officer on or after July 1,
211989, shall be classified as a Class D-4 member and receive
22credit as a Class D-4 member for all State service as a 
23member of the system performed as a member of the General
24Assembly upon payment of regular member contributions for
25Class D-4 service and, subject to the limitations contained
26in subsection (a.1)(7), if previously a member of Class A or
27employed in a position for which Class A service could have
28been earned, shall receive Class AA service credit for all
29Class A State service, other than State service performed as
30a State police officer or for which a class of service other

1than Class A or Class D-4 was or could have been elected or
2credited.

3(2) Provided an election to become a Class D-4 member is
4made pursuant to section 5306.2 (relating to elections by
5members of the General Assembly), a State employee who was
6not a State police officer on or after July 1, 1989, who on
7July 1, 2001, is a member of the General Assembly and an
8active member of the system and not a member of Class D-3
9shall be classified as a Class D-4 member and receive credit
10as a Class D-4 member for all State service as a member of 
11the system performed as a member of the General Assembly not
12credited as another class other than Class A upon payment of
13regular member contributions for Class D-4 service and,
14subject to the limitations contained in paragraph (a.1)(7),
15shall receive Class AA service credit for all Class A State
16service, other than State service performed as a State police
17officer or as a State employee in a position in which the
18member could have elected a class of service other than Class
19A, performed before July 1, 2001.

20(3) A member of the General Assembly who after June 30,
212001, becomes a State police officer shall retain any Class
22AA service or Class D-4 service credited prior to becoming a
23State police officer or being so employed but shall be
24ineligible to receive Class AA or Class D-4 credit thereafter
25and instead shall receive Class A credit or Class A-3 credit 
26if he first becomes a member of the system on or after 
27January 1, 2011.

28(4) Notwithstanding the provisions of this subsection,
29no service as a member of the General Assembly performed
30before December 1, 2010, that is not credited as Class D-4

1service on November 30, 2010, shall be credited as Class D-4
2service, unless such service was previously credited in the
3system as Class D-4 service and the member withdrew his total
4accumulated deductions as provided in section 5311 (relating
5to eligibility for refunds) or 5701 (relating to return of
6total accumulated deductions). No service as a member of the
7General Assembly performed on or after December 1, 2010,
8shall be credited as Class D-4 service unless the member
9previously was credited with Class D-4 service credits.

<-10(5) (i) On the effective date of this paragraph, Class
11D-4 service credit and membership shall be divided into
12and comprised of the following subclasses: Subclass D-4W
13service credit and membership, Subclass D-4Y service
14credit and membership and Subclass D-4Z service credit
15and membership.

16(ii) All Class D-4 service performed before January
171, 2015, for which member contributions are made shall be
18credited as Subclass D-4W service, except that previous
19State service that was not first credited before January
201, 2015, shall not be credited as Subclass D-4W service
21if first credited on or after January 1, 2015. State
22service previously credited as Class D-4 before January
231, 2015, but not credited on December 31, 2014, because a
24member withdrew accumulated deductions under sections
255311 or 5701 shall be credited as Subclass D-4W if the
26credit is reinstated under section 5303 on or after
27January 1, 2015.

28(iii)  All previously uncredited State service that
29is first credited on or after January 1, 2015, as Class
30D-4 service, and all Class D-4 service performed on or

1after January 1, 2015, shall be credited as Subclass D-4Y
2service provided that the Class D-4 member has not
3elected to be a member of Subclass D-4Z under section
45306.4, except that any State service credited as Class
5D-4 service by a member who is reemployed from USERRA
6leave who has made the member contributions under section
75302(f) to receive State service credit for the USERRA
8leave shall be credited as Class D-4W if credited for a
9period of USERRA leave performed before January 1, 2015.

10(iv)  A Class D-4 member who elects to be a member of
11Subclass D-4Z under section 5306.4 shall have all Class
12D-4 service that otherwise would be credited as Subclass
13D-4Y service credited as Subclass D-4Z service.

14(a.3) Class A-4 membership.--

15(1) Provided that an election to become a Class A-4
16member is made pursuant to section 5306.3 (relating to
17election to become a Class A-4 member), a State employee who
18otherwise would be a member of Class A-3 shall be classified
19as a Class A-4 member and receive Class A-4 credit for all
20creditable State service performed after the effective date
21of membership in the system, except as a member of the
22judiciary, upon payment of regular member contributions and
23shared-risk member contributions for Class A-4 service.

24(2) (i) On the effective date of this paragraph, Class
25A-4 service credit and membership shall be divided into
26and comprised of the following subclasses: Subclass A-4W
27service credit and membership and Subclass A-4X service
28credit and membership.

29(ii) All Class A-4 State service performed before
30January 1, 2015, for which member contributions are made

1shall be credited as Subclass A-4W service, except that
2previous State service that was not first credited before
3January 1, 2015, shall not be credited as Subclass A-4W
4service if first credited on or after January 1, 2015.
5State service previously credited as Class A-4 before
6January 1, 2015, but not credited on December 31, 2014,
7because a member withdrew accumulated deductions under
8sections 5311 or 5701 shall be credited as Subclass A-4W
9if the credit is reinstated under section 5303 on or
10after January 1, 2015.

11(iii) All previously uncredited State service that
12is first credited on or after January 1, 2015, as Class
13A-4 service, and all Class A-4 service performed on or
14after January 1, 2015, shall be credited as Subclass A-4X
15service, except that any State service credited as Class
16A-4 service by a member who is reemployed from USERRA
17leave who has made the member contributions under section
185302(f) to receive State service credit for the USERRA
19leave shall be credited as Subclass A-4W if credited for
20a period of USERRA leave performed before January 1,
212015.

22(b) Other class membership.--

23(1) A State employee who is a member of a class of
24service other than Class A on the effective date of this part
25shall retain his membership in that class until such service
26is discontinued; any service as a member of the system
27thereafter shall be credited as Class A service, Class AA
28service or Class D-4 service as provided for in this section.

29(2) Notwithstanding any other provision of this section,
30a State employee who is appointed bail commissioner of the

1Philadelphia Municipal Court under 42 Pa.C.S. § 1123(a)(5)
2(relating to jurisdiction and venue) and is eligible to be a 
3member of the system as a bail commissioner may, within 30
4days of the effective date of this sentence or within 30 days
5of his initial appointment as a bail commissioner, whichever
6is later, elect Class E-2 service credit for service
7performed as a bail commissioner. This class of service
8multiplier for E-2 service as a bail commissioner shall be
91.5<-[.] until December 31, 2014, and thereafter shall be as 
10provided in this part.

11(3) (i) On the effective date of this paragraph, Class
12E-1 service credit and membership shall be divided into
13and comprised of the following subclasses: Subclass E-1W
14service credit and membership, Subclass E-1Y service
15credit and membership and Subclass E-1Z service credit
16and membership.

17(ii)  All Class E-1 service performed before January
181, 2015, for which member contributions are made shall be
19credited as Subclass E-1W service, except that previous
20State service that was not first credited before January
211, 2015, shall not be credited as Subclass E-1W service
22if first credited on or after January 1, 2015. State
23service previously credited as Class E-1 before January
241, 2015, but not credited on December 31, 2014, because a
25member withdrew accumulated deductions under sections
265311 or 5701 shall be credited as Subclass E-1W if the
27credit is reinstated under section 5303 on or after
28January 1, 2015.

29(iii)  All previously uncredited State service that
30is first credited on or after January 1, 2015, as Class

1E-1 service, and all Class E-1 service performed on or
2after January 1, 2015, shall be credited as Subclass E-1Y
3service provided that the Class E-1 member has not
4elected to be a member of Subclass E-1Z under section
55306.4, except that any State service credited as Class
6E-1 service by a member who is reemployed from USERRA
7leave who has made the member contributions under section
85302(f) to receive State service credit for the USERRA
9leave shall be credited as Class E-1W if credited for a
10period of USERRA leave performed before January 1, 2015.

11(iv) A Class E-1 member who elects to be a member of
12Subclass E-1Z under section 5306.4 shall have all Class
13E-1 service that otherwise would be credited as Subclass
14E-1Y service credited as Subclass E-1Z service.

15(4) (i) On the effective date of this paragraph, Class
16E-2 service credit and membership shall be divided into
17and comprised of the following subclasses: Subclass E-2W
18service credit and membership, Subclass E-2Y service
19credit and membership and Subclass E-2Z service credit
20and membership.

21(ii) All Class E-2 service performed before January
221, 2015, for which member contributions are made shall be
23credited as Subclass E-2W service, except that previous
24State service that was not first credited before January
251, 2015, shall not be credited as Subclass E-2W service
26if first credited on or after January 1, 2015. State
27service previously credited as Class E-2 before January
281, 2015, but not credited on December 31, 2014, because a
29member withdrew accumulated deductions under sections
305311 or 5701 shall be credited as Subclass E-2W if the

1credit is reinstated under section 5303 on or after
2January 1, 2015.

3(iii) All previously uncredited State service that
4is first credited on or after January 1, 2015, as Class
5E-2 service, and all Class E-2 service performed on or
6after January 1, 2015, shall be credited as Subclass E-2Y
7service provided that the Class E-2 member has not
8elected to be a member of Subclass E-2Z under section
95306.4, except that any State service credited as Class
10E-2 service by a member who is reemployed from USERRA
11leave who has made the member contributions under section
125302(f) to receive State service credit for the USERRA
13leave shall be credited as Class E-2W if credited for a
14period of USERRA leave performed before January 1, 2015.

15(iv) A Class E-2 member who elects to be a member of
16Subclass E-2Z under section 5306.4 shall have all Class
17E-2 service that otherwise would be credited as Subclass
18E-2Y service credited as Subclass E-2Z service.

19(5) A member of the judiciary who is a member of Class A
20on January 1, 2015, and subsequently elects to be a Class E-1
21member or Class E-2 member for service as a member of the
22judiciary shall have Subclass A-W State service performed as
23a member of the judiciary credited as either Class E-1W
24service or Class E-2W service as applicable, upon making the
25required member contributions. Any Subclass A-X State service
26performed as a member of the judiciary shall be credited as
27Subclass E-1Y or Subclass E-2Y service upon making the
28required member contributions unless the member of the
29judiciary elects to be a member of Subclass Z.

30* * *

1(e) Ineligibility for active membership and classes of 
2service.--An individual who elects to be a participant in the 
3plan or who is a State employee on January 1, 2015, but is not a 
4member of the system or who first becomes a State employee on or 
5after January 1, 2015, or who returns to State service after a 
6termination of State service, without regard to whether the 
7termination occurred before or after January 1, 2015, shall be 
8ineligible for active membership in the system or the several 
9classes of State service as otherwise provided for under this 
10section. Any such State employee, if eligible, may be a 
11participant in the plan as a result of such State service.

12Section 308. Sections 5306.1(c), 5306.2(b) and 5306.3(c) and
13(d) of Title 71 are amended to read:

14§ 5306.1. Election to become a Class AA member.

15* * *

16(c) Effect of election.--An election to become a Class AA
17member shall become effective the later of July 1, 2001, or the
18date when the election is filed with the board and shall remain
19in effect until the termination of employment or election to be 
20a participant in the plan. Upon termination and a subsequent
21reemployment that occurs before January 1, 2015, the member's
22class of service shall be credited in the class of service
23otherwise provided for in this part. If the reemployment occurs 
24on or after January 1, 2015, the State employee's eligibility 
25for membership in the system or participation in the plan shall 
26be as provided in this part.

27* * *

28§ 5306.2. Elections by members of the General Assembly.

29* * *

30(b) Effect of election.--Membership as a Class D-4 member

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

10* * *

11§ 5306.3. Election to become a Class A-4 member.

12* * *

13(c) Effect of election.--An election to become a Class A-4 
14member shall be irrevocable and shall become effective on the 
15effective date of membership in the system and shall remain in 
16effect for all future [creditable] State service creditable in 
17the system, other than service performed as a member of the 
18judiciary, but shall not apply to service performed after a 
19termination of State service and a reemployment when the 
20reemployment occurs on or after January 1, 2015. Payment of 
21regular member contributions for Class A-4 State service 
22performed prior to the election of Class A-4 membership shall be 
23made in a form, manner and time determined by the board. Upon 
24termination of State service and a subsequent reemployment 
25before January 1, 2015, a member who elected Class A-4 
26membership shall be credited as a Class A-4 member for 
27creditable State service performed after reemployment and before 
28the next termination of State service or election to be a 
29participant, except as a member of the judiciary, regardless of 
30termination of employment, termination of membership by
 

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

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

<-15Section 309. Title 71 is amended by adding a section to
16read:

17§ 5306.4. Election to become a Subclass Z member.

18(a) General rule.--An active member or inactive member on
19leave without pay who otherwise would be a Subclass Y member may
20make a one-time and irrevocable election to become a Subclass Z
21member of his applicable class of service instead of a Subclass
22Y member of his applicable class of service.

23(b) Time for making election.--The election by a State
24employee who is an active member or inactive member on leave
25without pay of Class AA, Class D-4, Class E-1 or Class E-2 on
26January 1, 2015, to become a Subclass Z member of his applicable
27class of service must be made by the member filing written
28notice with the board in a form and manner determined by the
29board before July 1, 2015, before the member terminates State
30service or elects to be a participant in the plan, whichever

1occurs first. The election period for a State employee who was
2not an active member or inactive member on leave without pay of
3Class AA, Class D-4, Class E-1 or Class E-2 on January 1, 2015,
4who later becomes an active member of one of those classes of
5service shall end on the later of June 30, 2015, or 45 days
6after first becoming an active member of Class AA, Class D-4,
7Class E-1 or Class E-2 but not later than the earlier of the
8employee's date of termination of service or election to be a
9participant in the plan. A State employee who is eligible to
10elect to become a Subclass Z member who begins USERRA leave
11during the election period without having elected Subclass Z
12membership may make the election by the later of July 1, 2015,
13or 181 days after being reemployed from USERRA leave.

14(c) Effect of election.--

15(1) An election to become a Subclass Z member shall be
16effective on the following date:

17(i) January 1, 2015, if filed before January 1,
182015;

19(ii) January 1, 2015, if filed on or after January
201, 2015, by a State employee who was an active member or
21inactive member on leave without pay on January 1, 2015;
22or

23(iii) The date the member was first eligible to file
24the election, if filed on or after January 1, 2015, by a
25member who was not an active member or inactive member on
26leave without pay of Class AA, Class D-4, Class E-1 or
27Class E-2 on January 1, 2015, but later becomes a member
28of one of those classes.

29(2) An election to become a Subclass Z member shall
30result in the member paying an additional 6.05% of

1compensation as regular member contributions if the member is
2an active member performing service as a State police officer
3after December 31, 2014.

4(d) Election irrevocable.--An election to be a Subclass Z
5member shall be irrevocable, even if filed before January 1,
62015, and shall remain in effect for all subsequent State
7service creditable in the system as Class AA, Class D-4, Class
8E-1 and Class E-2 service without regard to the member's class
9of service when the election was filed. Payment of regular
10member contributions for Subclass Z State service performed
11prior to the election of Subclass Z membership plus statutory
12interest from the effective date of Subclass Z membership to the
13date of payment shall be made in a form, manner and time
14determined by the board under section 5504(b) (relating to
15member contributions for the purchase of credit for previous
16State service or to become a full coverage member).

17(e) Effect of failure to make election.--Failure to elect to
18become a Subclass Z member within the election period set forth
19in subsection (b) shall result in all of the member's Class AA
20service, Class D-4 service, Class E-1 service and Class E-2
21service not credited as Subclass W service being credited as
22Subclass Y service and not subject to further election or
23crediting as Subclass Z service and shall result in the member 
24not being able to elect to pay an additional 6.05% of 
25compensation as regular member contributions for any service as 
26a State police officer after December 31, 2014. Upon leaving
27employment as a Class AA member, Class D-4 member, Class E-1
28member or Class E-2 member and subsequent employment as a member
29of any of those classes of service, a member who failed to elect
30to become a Subclass Z member shall not be eligible to make

1another election to become a Subclass Z member for either past
2or future State service.

<-3Section 309. (Reserved).

4Section 310. Sections 5307(b) and 5308(a) and (b) of Title
571, amended October 24, 2012 (P.L.1436, No.181), are amended to
6read:

7§ 5307. Eligibility points.

8* * *

9(b) Transitional rule.--

10(1) In determining whether a member who is not a State 
11employee or school employee on June 30, 2001, and July 1, 
122001, and who has previous State service (except a disability 
13annuitant who returns to State service after June 30, 2001, 
14upon termination of the disability annuity) has the five 
15eligibility points required by sections 5102 (relating to 
16definitions), 5308(b) (relating to eligibility for 
17annuities), 5309 (relating to eligibility for vesting), 
185704(b) (relating to disability annuities) and 5705(a) 
19(relating to member's options), only eligibility points 
20earned by performing credited State service as an active 
21member of the system, USERRA leave or credited school service
22as an active member of the Public School Employees' 
23Retirement System after June 30, 2001, shall be counted until 
24such member earns one eligibility point by performing 
25credited State service or credited school service after June 
2630, 2001, at which time all eligibility points as determined 
27pursuant to subsection (a) shall be counted.

28(2) Any member to whom paragraph (1) applies shall be
29considered to have satisfied any requirement for five
30eligibility points contained in this part if the member:

1(i) has ten or more eligibility points as determined
2pursuant to subsection (a); or

3(ii) has Class G, Class H, Class I, Class J, Class
4L, Class M or Class N service and has eight or more
5eligibility points as determined pursuant to subsection
6(a).

7§ 5308. Eligibility for annuities.

8(a) Superannuation annuity.--Attainment of superannuation
9age by an active member [or], an inactive member on leave
10without pay or a combined service employee who is an active 
11participant or inactive participant on leave without pay with
12three or more eligibility points other than eligibility points 
13resulting from nonstate service or nonschool service shall
14entitle him to receive a superannuation annuity upon termination
15of State service and compliance with section 5907(f) (relating
16to rights and duties of State employees [and], members and 
17participants).

18(b) Withdrawal annuity.--

19(1) Any vestee or any active member [or], inactive
20member on leave without pay or a combined service employee 
21who is an active participant or inactive participant on leave 
22without pay who terminates State service having five or more
23eligibility points and who does not have Class A-3 or Class 
24A-4 service credit or Class T-E or Class T-F service credit 
25in the Public School Employees' Retirement System, or who has
26Class G, Class H, Class I, Class J, Class K, Class L, Class M
27or Class N service and terminates State service having five
28or more eligibility points, upon compliance with section
295907(f), (g) or (h) shall be entitled to receive an annuity.

30(2) Any vestee, active member [or], inactive member on

1leave without pay or combined service employee who is an 
2active participant or inactive participant on leave without 
3pay who has Class A-3 or Class A-4 service credit or Class T-
4E or Class T-F service credit in the Public School Employees'
5Retirement System who terminates State service having ten or
6more eligibility points, upon compliance with section
75907(f), (g) or (h), shall be entitled to receive an annuity.

8(3) Any vestee, active member [or], inactive member on
9leave without pay or combined service employee who is an 
10active participant or inactive participant on leave without 
11pay who has either Class A-3 or Class A-4 service credit or
12Class T-E or Class T-F service credit in the Public School
13Employees' Retirement System and also has service credited in
14the system in one or more other classes of service who has
15five or more, but fewer than ten, eligibility points, upon
16compliance with section 5907(f), (g) or (h), shall be
17eligible to receive an annuity calculated on his service
18credited in classes of service other than Class A-3 or Class
19A-4, provided that the member has five or more eligibility
20points resulting from service in classes other than Class A-3
21or Class A-4 or Class T-E or Class T-F service in the Public
22School Employees' Retirement System.

23* * *

24Section 311. Sections 5308.1(1) and 5311(a) of Title 71 are
25amended to read:

26§ 5308.1. Eligibility for special early retirement.

27Notwithstanding any provisions of this title to the contrary,
28the following special early retirement provisions shall be
29applicable to specified eligible members as follows:

30(1) During the period of July 1, 1985, to September 30,

11991, an active member who has attained the age of at least
253 years and has accrued at least 30 eligibility points shall
3be entitled, upon termination of State service and compliance
4with section 5907(f) (relating to rights and duties of State
5employees [and], members and participants), to receive a
6maximum single life annuity calculated under section 5702
7(relating to maximum single life annuity) without a reduction
8by virtue of an effective date of retirement which is under
9the superannuation age.

10* * *

11§ 5311. Eligibility for refunds.

12(a) Total accumulated deductions.--Any active member,
13regardless of eligibility for benefits, may elect to receive his
14total accumulated deductions upon termination of service in lieu
15of any benefit from the system to which he is entitled.

16* * *

17Section 312. Title 71 is amended by adding a chapter to
18read:

19CHAPTER 54

20STATE EMPLOYEES' DEFINED CONTRIBUTION PLAN

21Sec.

225401.  Establishment.

235402.  Plan document.

245403.  Individual investment accounts.

255404.  Participant contributions.

265405.  Mandatory pickup participant contributions.

275406.  Employer defined contributions.

285407.  Eligibility for benefits.

295408.  Death benefits.

305409.  Vesting.

15410.  Termination of distributions.

25411.  Agreements with financial institutions and other
3organizations.

45412.  Powers and duties of board.

55413.  Responsibility for investment loss.

65414.  Investments based on participants' investment allocation
7choices.

85415.  Expenses.

95416.  Election by members to be participants.

105417.  Tax qualification.

11§ 5401.  Establishment.

12(a) State Employees' Defined Contribution Plan.--The State
13Employees' Defined Contribution Plan is established. The board
14shall administer and manage the plan which shall be a defined
15contribution plan exclusively for the benefit of those State
16employees who participate in the plan and their beneficiaries
17within the meaning of and in conformity with IRC § 401(a). The
18board shall determine the terms and provisions of the plan not
19inconsistent with this part, IRC or other applicable law and
20shall provide for the plan's administration.

21(b) State Employees' Defined Contribution Trust.--The State
22Employees' Defined Contribution Trust is established as part of
23the plan. The trust shall be comprised of the individual
24investment accounts and all assets and moneys in those accounts.
25The members of the board shall be the trustees of the trust,
26which shall be administered exclusively for the benefit of those
27State employees who participate in the plan and their
28beneficiaries within the meaning of and in conformity with IRC §
29401(a). The board shall determine the terms and provisions of
30the trust not inconsistent with this part, IRC or other

1applicable law and shall provide for the investment and
2administration of the trust.

3(c)  Assets held in trust.--All assets and income in the plan
4that have been or shall be withheld or contributed by the
5participants, the Commonwealth and other employers in accordance
6with this part shall be held in trust in any funding vehicle
7permitted by the applicable provisions of IRC for the exclusive
8benefit of the participants and their beneficiaries until such
9time as the funds are distributed to the participants or their
10beneficiaries in accordance with the terms of the plan document.
11The assets of the plan held in trust for the exclusive benefit
12of the participants and their beneficiaries may be used for the
13payment of the fees, costs and expenses related to the
14administration and investment of the plan and the trust.

15(d)  Name for transacting business.--All of the business of
16the plan shall be transacted, the trust invested, all
17requisitions for money drawn and payments made and all of its
18cash and securities and other property shall be held by the name
19of the "State Employees' Defined Contribution Plan."
20Notwithstanding any other law to the contrary, the board may
21establish a nominee registration procedure for the purpose of
22registering securities in order to facilitate the purchase, sale
23or other disposition of securities pursuant to the provisions of
24this part.

25§ 5402.  Plan document.

26The board shall set forth the terms and provisions of the
27plan and trust in a document containing the terms and conditions
28of the plan and in a trust declaration that shall be published
29in the Pennsylvania Bulletin. The creation of the document
30containing the terms and conditions of the plan and the trust

1declaration and the establishment of the terms and provisions of
2the plan and the trust need not be promulgated by regulation or
3formal rulemaking and shall not be subject to the act of July
431, 1968 (P.L.769, No.240), referred to as the Commonwealth
5Documents Law. A reference in this part or other law to the plan
6shall include the plan document unless the context clearly
7indicates otherwise.

8§ 5403.  Individual investment accounts.

9The board shall establish in the trust an individual
10investment account for each participant in the plan. All
11contributions by a participant or an employer for or on behalf
12of a participant shall be credited to the participant's
13individual investment account, together with all interest and
14investment earnings and losses. Investment and administrative
15fees, costs and expenses shall be charged to the participants'
16individual investment accounts. Employer defined contributions
17shall be recorded and accounted for separately from participant
18contributions, but all interest, investment earnings and losses,
19and investment and administrative fees, costs and expenses shall
20be allocated proportionately.

21§ 5404.  Participant contributions.

22(a) Mandatory contributions.--A participant shall make
23mandatory pickup participant contributions through payroll
24deductions to the participant's individual investment account
25equal to 6.25% of compensation for current State service. The
26employer shall cause those contributions for current service to
27be made and deducted from each payroll or on such schedule as
28established by the board.

29(b)  Voluntary contributions.--A participant may make
30voluntary contributions through payroll deductions or through

1direct trustee-to-trustee transfers or through transfers of
2money received in an eligible rollover into the trust to the
3extent allowed by IRC § 402. The rollovers shall be made in a
4form and manner as determined by the board, shall be credited to
5the participant's individual investment account and shall be
6separately accounted for by the board.

7(c)  Prohibited contributions.--No contributions may be
8allowed that would cause a violation of the limitations related
9to contributions applicable to governmental plans contained in
10IRC § 415 or in other provisions of law. In the event that any
11disallowed contributions are made, any participant contributions
12in excess of the limitations and investment earnings on those
13contributions shall be refunded to the participant by the board.

14§ 5405.  Mandatory pickup participant contributions.

15(a)  Treatment for purposes of IRC § 414(h).--The
16contributions to the trust required to be made under section
175404(a) (relating to participant contributions) with respect to
18current State service rendered by an active participant shall be
19picked up by the Commonwealth or other employer and shall be
20treated as the employer's contribution for purposes of IRC §
21414(h). After the effective date of this section, an employer 
22employing a participant in the plan shall pick up the required 
23mandatory participant contributions by a reduction in the 
24compensation of the participant.

25(b)  Treatment for other purposes.--For all purposes other
26than the IRC, the mandatory pickup participant contributions
27shall be treated as contributions made by a participant in the
28same manner and to the same extent as if the contributions were
29made directly by the participant and not picked up.

30§ 5406.  Employer defined contributions.

1(a)  Contributions for current service.--The Commonwealth or
2other employer of an active participant shall make employer
3defined contributions for current service of an active
4participant that shall be credited to the active participant's
5individual investment account. Employer defined contributions
6shall be recorded and accounted for separately from participant
7contributions.

8(b)  Contributions resulting from participants reemployed
9from USERRA leave.--When a State employee reemployed from USERRA
10leave makes the mandatory pickup participant contributions
11permitted to be made for the USERRA leave, the Commonwealth or
12other employer by whom the State employee is employed at the
13time the participant contributions are made shall make whatever
14employer defined contributions would have been made under this
15section had the employee making the participant contributions
16continued to be employed in the participant's State office or
17position instead of performing USERRA leave. The employer
18defined contributions shall be placed in the participant's
19individual investment account as otherwise provided by this
20part.

21(c)  Limitations on contributions.--No contributions may be
22allowed that would cause a violation of the limitations related
23to contributions applicable to governmental plans contained in
24IRC § 415 or in other provisions of law. In the event that any
25disallowed contributions are made, any employer defined
26contributions in excess of the limitations and investment
27earnings on the contributions shall be refunded to the employer
28by the board.

29§ 5407.  Eligibility for benefits.

30(a)  Termination of service.--A participant who terminates

1State service shall be eligible to withdraw the vested
2accumulated total defined contributions standing to the
3participant's credit in the participant's individual investment
4account or a lesser amount as the participant may request.
5Payment shall be made in a lump sum unless the board has
6established other forms of distribution in the plan document,
7subject to the provisions of subsection (g). A participant who
8withdraws his vested accumulated total defined contributions
9shall no longer be a participant in the plan, notwithstanding
10that the participant may have contracted to receive an annuity
11or other form of payment from a provider retained by the board
12for such purposes.

13(b)  Required distributions.--All payments pursuant to this
14section shall start and be made in compliance with the minimum
15distribution requirements and incidental death benefit rules of
16IRC § 401(a)(9). The board shall take any action and make any
17distributions it may determine are necessary to comply with
18those requirements.

19(c)  Married participant.--A participant who is married may
20receive a lump sum distribution or other distribution directly
21from the board without the consent of the participant's spouse
22unless the plan document provides otherwise.

23(d)  Combined service employee.--A participant who is a
24combined service employee must be terminated from all positions
25that result in either membership in the system or participation
26in the plan to be eligible to receive a distribution.

27(e)  Loans.--Loans or other distributions, including hardship 
28or unforeseeable emergency distributions, from the plan to State
29employees who have not terminated State service are not
30permitted, except as required by law.

1(f)  Small individual investment accounts.--

2(1) A participant who terminates State service and whose
3vested accumulated total defined contributions are below the
4threshold established by law as of the date of termination of
5service may be paid the vested accumulated total defined
6contributions in a lump sum as provided in IRC § 401(a)(31).

7(2) The board may also provide in the plan document
8that, notwithstanding subsection (g), a participant whose
9vested accumulated employer defined contributions are below
10the thresholds established by the board may receive those
11distributions without the obligation to purchase an annuity.
12The threshold may be established as a dollar amount, an
13annuity amount, in some other form individually or in
14combination as the board determines.

15(g) Requirement to purchase annuity.--Except as prohibited
16by the IRC or as otherwise provided in this part, a participant
17who is eligible and elects to receive a distribution or vested
18accumulated employer defined contributions shall be required to
19purchase an annuity with that distribution from an annuity
20provider contracted by the board under section 5408(c) (relating
21to death benefits) and under such conditions as provided in the
22plan document. The conditions may include that the board is
23authorized to make the distribution directly to the annuity
24provider.

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 vested balance in the
29participant's individual investment account in a lump sum or in
30such other manner as the board may establish in the plan

1document.

2(b)  Death of participant receiving distributions.--In the
3event of the death of a participant receiving distributions, the
4board shall pay to the participant's beneficiary the vested
5balance in the participant's individual investment account in a
6lump sum or in such other manner as the board may establish in
7the plan document or, if the board has established alternative
8methods of distribution in the plan document under which the
9participant was receiving distributions, to the participant's
10beneficiary or successor payee, as the case may be, as provided
11in the plan document.

12(c)  Contracts.--The board may contract with financial
13institutions, insurance companies or other types of third-party
14providers to allow participants who receive a lump sum
15distribution to receive payments and death benefits in a form
16and manner as provided by the contract. These contracts may, but
17are not required to, provide that any payment and death benefit
18options for a married former participant be in the form of a
19joint and survivor annuity unless the spouse consents to another
20payment option.

21(d)  Spousal consent.--All nomination or change of
22beneficiaries or successor payees made by a married participant
23shall be subject to the consent of the participant's spouse as
24provided for in this part.

25§ 5409.  Vesting.

26(a) Participant and voluntary contributions.--Subject to the
27forfeiture and attachment provisions of section 5953 (relating
28to taxation, attachment and assignment of funds) or otherwise as
29provided by law, a participant shall be vested with respect to
30all mandatory pickup participant contributions and voluntary

1contributions paid by or on behalf of the participant to the
2trust in addition to interest and investment gains or losses on
3the participant contributions but not including investment fees
4and administrative charges.

5(b) Employer defined contributions.--

6(1) Subject to the forfeiture and attachment provisions
7of section 5953 or otherwise as provided by law, a
8participant shall be vested with respect to all employer
9defined contributions paid to the participant's individual
10investment account in the trust in addition to interest and
11investment gains and losses on the employer defined
12contributions but not including investment fees and
13administrative charges according to the following schedule:

14(i)  during the first and second year of State
15service as a participant in the plan, 0%;

16(ii)  at the second year until the third year of
17State service as a participant in the plan, 50%;

18(iii)  at the third year until the fourth year of
19State service as a participant in the plan, 75%;

20(iv)  at and after the fourth year of State service
21as a participant in the plan, 100%.

22(2) The board shall establish in the plan document:

23(i) How the required time periods of State service
24in the plan are determined and calculated.

25(ii) The effect of periods that State employees
26spend on paid leave or leave without pay on the
27determination of a participant's vested status in the
28plan.

29(iii) The effect of termination of State service or
30distributions from the plan on a participant's vested

1status in the plan.

2(iv) Other terms and conditions for the
3implementation and administration of this section.

4(3) Nonvested employer defined contributions and the
5interest and investment gains and losses on the nonvested
6employer defined contributions that are not distributable to
7a participant are credited to the participant's most recent
8employer's future obligation assessed under section 5509
9(relating to appropriations and assessments by the
10Commonwealth).

11(c) USERRA leave and vesting credit.--A participant in the
12plan who is reemployed from USERRA leave or who dies while
13performing USERRA leave shall receive vesting credit under this
14section for the State service that would have been performed had
15the member not performed USERRA leave.

16§ 5410.  Termination of distributions.

17(a)  Return to State service.--

18(1) A participant receiving distributions or an inactive
19participant who returns to State service shall cease
20receiving distributions and shall not be eligible to receive
21distributions until the participant subsequently terminates
22State service, without regard to whether the participant is a
23mandatory, optional or prohibited member of the system or
24participant in the plan.

25(2) This subsection shall not apply to a distribution of
26accumulated employer defined contributions or other
27distributions that the participant has received and used to
28purchase an annuity from a provider contracted by the board.

29(b)  Return of benefits paid during USERRA leave.--

30(1) If a former State employee is reemployed from USERRA

1leave and received any payments or annuity from the plan
2during the USERRA leave, the employee shall return to the
3board the amount so received plus interest as provided in the
4plan document.

5(2) The amount payable shall be certified in each case
6by the board in accordance with methods approved by the
7actuary and shall be paid in a lump sum within 30 days or in
8the case of an active participant may be amortized with
9interest as provided in the plan document through salary
10deductions to the trust in amounts agreed upon by the active
11participant and the board, but for not longer than a period
12that starts with the date of reemployment and continues for
13up to three times the length of the active participant's
14immediate past period of USERRA leave. The repayment period
15shall not exceed five years.

16§ 5411.  Agreements with financial institutions and other
17organizations.

<-18To establish and administer the plan, the board may enter
19into written agreements with one or more financial institutions
20or other organizations relating to the plan's administration and
21investment of funds held pursuant to the plan.

<-22(a) Written agreement.--To establish and administer the
23plan, the board shall enter into a written agreement with one or
24more financial institutions or pension management organizations
25to administer the plan and the investment of funds held pursuant
26to the plan. The administrator shall be selected in accordance
27with the following:

28(1) The board shall solicit proposals from financial
29institutions and pension management organizations.

30(2) The board shall publish the solicitation in the

1Pennsylvania Bulletin.

2(3) Proposals received shall be evaluated based on
3specific criteria adopted by the board. The criteria shall
4include experience, customer service history and other
5criteria.

6(b) Rebid.--A contract to administer the plan under
7subsection (a) shall be rebid at least once every ten years.

8§ 5412.  Powers and duties of board.

9The board shall have the following powers and duties to
10establish the plan and trust and administer the provisions of
11this chapter and part:

12(1)  The board may commingle or pool assets with the
13assets of other persons or entities.

14(2)  The board shall pay all administrative fees, costs
15and expenses of managing, investing and administering the
16plan, the trust and the individual investment accounts from
17the balance of such individual investment accounts except as
18the General Assembly otherwise provides by appropriations
19from the General Fund.

20(3)  The board may establish investment guidelines and
21limits on the types of investments that participants may
22make, consistent with the board's fiduciary obligations.

23(4)  The board shall have the power to change the terms
24of the plan as may be necessary to maintain the tax-qualified
25status of the plan.

26(5)  The board may establish a process for election to
27participate in the plan by those State employees for whom
28participation is not mandatory.

29(6)  The board may perform an annual or more frequent
30review of any qualified fund manager for the purpose of

1assuring that the fund manager continues to meet all
2standards and criteria established.

3(7)  The board may allow for eligible rollovers and
4direct trustee-to-trustee transfers into the trust from
5qualified plans of other employers, regardless of whether the
6employers are a private employers or public employers.

7(8)  The board may allow a former participant to maintain
8the participant's individual investment account within the
9plan.

10(9)  The board shall administer <-or ensure the 
11administration of the plan in compliance with the
12qualifications and other rules of the IRC.

13(10)  The board may establish procedures to provide for
14the lawful payment of benefits.

15(11)  The board shall determine what constitutes a
16termination of State service.

17(12)  The board may establish procedures for
18distributions of small accounts as required or permitted by
19the IRC.

20(13)  The board may establish procedures in the plan
21document or to promulgate rules and regulations as it deems
22necessary for the administration and management of the plan,
23including, but not limited to, establishing:

24(i) Procedures for eligible participants to change
25voluntary contribution amounts or their investment
26choices on a periodic basis or make other elections
27regarding their participation in the plan.

28(ii) Procedures for deducting mandatory pickup
29participant contributions and voluntary contributions
30from a participant's compensation.

1(iii) Procedures for rollovers and trustee-to-
2trustee transfers allowed under the IRC and permitted as
3part of the plan.

<-4(iv) Standards and criteria for disclosing and
5providing not less than ten options to eligible
6individuals regarding investments of amounts deferred
7under the plan, provided that one of the available
8options must serve as the default option for participants
9who do not make a timely election and that, to the extent
10commercially available, one option must have an annuity
11investment feature.

<-12(iv) Standards and criteria for providing not less
13than ten options in accordance with three or more
14providers of investment options to eligible individuals
15regarding investments of amounts deferred under the plan.
16The standards and criteria must provide for a variety of
17investment options and shall be reviewed in accordance
18with criteria established by the board. One of the
19available options must serve as the default option for
20participants who do not make a timely election and, to
21the extent commercially available, one option must have
22an annuity.

23(v) Standards and criteria for disclosing to the
24participants the anticipated and actual income
25attributable to amounts invested, property rights and all
26fees, costs and expenses to be made against amounts
27deferred to cover the fees, costs and expenses of
28administering and managing the plan or trust.

29(vi)  Procedures, standards and criteria for the
30making of distributions from the plan upon termination

1from employment or death or in other circumstances
2consistent with the purpose of the plan.

3(14)  The board may waive any reporting or information
4requirement contained in this part if the board determines
5that the information is not needed for the administration of
6the plan.

7(15)  The board may contract any services and duties in
8lieu of staff, except final adjudications and as prohibited
9by law. Any duties or responsibilities of the board not
10required by law to be performed by the board can be delegated
11to a third-party provider subject to appeal to the board.

12(16)  The board may provide that any duties of the
13employer or information provided by the participant to the
14employer be performed or received directly by the board.

15(17)  The provisions and restrictions of the act of July
162, 2010 (P.L.266, No.44), known as the Protecting
17Pennsylvania's Investments Act, shall not apply to the plan
18or trust or the investments of the plan or trust, but the
19board may offer to the plan participants investment vehicles
20that would be allowed under the Protecting Pennsylvania's
21Investments Act.

22(18) The board shall ensure that participants are
23provided with educational materials about investment options
24and choices.

25§ 5413.  Responsibility for investment loss.

26The board, the Commonwealth, an employer or other political
27subdivision shall not be responsible for any investment loss
28incurred under the plan or for the failure of any investment to
29earn any specific or expected return or to earn as much as any
30other investment opportunity, whether or not the other

1opportunity was offered to participants in the plan.

2§ 5414.  Investments based on participants' investment
3allocation choices.

4(a) Investment by participant.--All contributions, interest
5and investment earnings shall be invested based on a
6participant's investment allocation choices. All investment
7allocation choices shall be credited proportionally between
8participant contributions and employer defined contributions.
9Each participant shall be credited individually with the amount
10of contributions, interest and investment earnings.

11(b)  Investment of contributions made by entities other than
12the Commonwealth.--Investment of contributions by any
13corporation, institution, insurance company or custodial bank
14that the board has approved shall not be unreasonably delayed
15and in no case may the investment of contributions be delayed
16more than 30 days from the date of payroll deduction or the date
17voluntary contributions are made to the date that funds are
18invested. Any interest earned on the funds pending investment
19shall be allocated to the Commonwealth and credited to the
20individual investment accounts of participants who are then
21participating in the plan unless the interest is used to defray
22administrative costs and fees that would otherwise be required
23to be borne by participants who are then participating in the
24plan.

25§ 5415.  Expenses.

26All fees, costs and expenses of administering the plan and
27the trust and investing the assets of the trust shall be borne
28by the participants and paid from assessments against the
29balances of the individual investment accounts as established by
30the board, except that for fiscal years ending before July 1,

12015, the fees, costs and expenses of establishing and
2administering the plan and the trust shall be paid by the
3Commonwealth through annual appropriations from the General
4Fund, made on the basis of estimates from the board.

5§ 5416.  Election by members to be participants.

6(a)  General rule.--A State employee who is an active member
7or inactive member on leave without pay of the system on or
8after January 1, 2015, and who is employed in a position that
9would otherwise be eligible for participation in the plan may
10elect to become a participant in the plan.

11(b)  Time for making election.--An eligible State employee
12may elect to become a participant and a combined service
13employee at any time before termination of State service by
14filing a written election with the board.

15(c)  Effect of election.--The following apply:

16(1) An election to become a participant shall be
17irrevocable. Participation shall be effective at the
18beginning of the next pay period commencing after the
19election is filed with the board.

20(2) A member who elects to become a participant shall
21remain a participant for all future State service.

22(3) Any prior State or nonstate service credited in the
23system shall remain in the class or subclass of service in
24which it is credited on the effective date of participation.

25(4) A combined service employee shall not be eligible to
26receive an annuity from the system or a withdrawal of
27accumulated deductions until the employee has terminated
28State service.

29(5) A participant shall not be entitled to purchase any
30previous State service or creditable nonstate service.

1(6) The eligibility of a combined service employee for
2an annuity from the system and, if eligible, the amount of
3the annuity shall be as determined under this part.

4§ 5417.  Tax qualification.

5(a) Required distributions.--All payments pursuant to this 
6chapter shall start and be made in compliance with the minimum 
7distribution requirements and incidental death benefit rules of 
8IRC § 401(a).

9(b) Limitations.--The following shall apply:

10(1) (i) Except as provided under subparagraph (ii) and
11notwithstanding a provision of this part, a contribution
12or benefit related to the plan may not exceed any
13limitation under IRC § 415 with respect to governmental
14plans which is in effect on the date the contribution or
15benefit payment takes effect.

16(ii) An increase in a limitation under IRC § 415
17shall apply to all participants on and after the
18effective date of this section.

19(iii) For the purposes of this paragraph, the term
20"government plans" shall have the same meaning as the
21term has in IRC § 414(d).

22(2) (i) Except as provided under subparagraph (ii), an
23amendment of this part on or after the effective date of
24this section that increases contributions or benefits for
25active participants, inactive participants or
26participants receiving distributions shall not be deemed
27to provide for a contribution or benefit in excess of any
28limitation, adjusted on or after the effective date of
29this section, under IRC § 415 unless specifically
30provided by legislation.

1(ii) Notwithstanding subparagraph (i), an increase
2in benefits on or after the effective date of this
3section for a participant in the plan shall be authorized
4and apply to the fullest extent allowed by law.

<-5Section 313. Section 5501 of Title 71 is amended to read:

6§ 5501. Regular member contributions for current service.

7Regular member contributions shall be made to the fund on
8behalf of each active member for current service except for any
9period of current service in which the making of such
10contributions has ceased solely by reason of section 5502.1
11(relating to waiver of regular member contributions and Social
12Security integration member contributions) or any provision of
13this part relating to the limitations under IRC § 401(a)(17) or
14415(b) or any provision of this part limiting compensation or
15contributions applicable to a Subclass X member, Subclass Y
16member or Subclass Z member.

<-17Section 313. (Reserved).

18Section 314. Section <-5501.1(a) and (b)(7) 5501.1(b)(7) and
19(8) of Title 71 are amended and subsection (b) is amended by
20adding a paragraph to read:

21§ 5501.1. Shared-risk member contributions for Class A-3 and
22Class A-4 service.

<-23(a) General.--Shared-risk member contributions shall be made
24to the fund on behalf of each member of Class A-3 or Class A-4
25for current service credited as Class A-3 or Class A-4 as
26provided under this section, except for any period of current
27service in which the making of the contributions has ceased
28solely by reason of any provision of this part relating to the
29limitations under IRC § 401(a)(17) or 415 or any provision of
30this part limiting compensation or contributions applicable to a

1Subclass X member, Subclass Y member or Subclass Z member.
2Shared-risk member contributions shall be credited to the
3members' savings account.

<-4* * *

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

6* * *

7(7) For any fiscal year in which the actual
8contributions by the Commonwealth or an employer are lower
9than those required to be made under section 5507(d)
10[(relating to contributions by the Commonwealth and other
11employers)] (relating to contributions to the system by the 
12Commonwealth and other employers before July 1, 2015) or 
135507.1 (relating to contributions to the system by the 
14Commonwealth and other employers commencing July 1, 2015),
15the prospective shared-risk contribution rate for those
16employees whose employers are not making the contributions
17required by section 5507(d) shall be zero and shall not
18subsequently be increased, except as otherwise provided in
19this section.

20(8) If the actuary certifies that the accrued liability
21contributions calculated in accordance with the actuarial
22cost method provided in [section 5508(b)] section 5508
23(relating to actuarial cost method for fiscal years ending 
24before July 1, 2015) or 5508.1 (relating to actuarial cost 
25method for fiscal years beginning on or after July 1, 2015),
26as adjusted by the experience adjustment factor, are zero or
27less, then the shared-risk contribution rate for the next
28fiscal year shall be zero and shall not subsequently be
29increased, except as otherwise provided in this section.

30(9) For periods commencing on or after July 1, 2015, the

1determination of shared-risk member contribution rate shall
2be based on the annual interest rate adopted by the board for
3the calculation of the accrued liability contribution rate
4under section 5508.1(c) (relating to actuarial cost method 
5for fiscal years beginning on or after July 1, 2015).

6Section 315. The definition of "actuarially required
7contribution rate" in section 5501.2 of Title 71 is amended to
8read:

9§ 5501.2. Definitions.

10The following words and phrases when used in this chapter
11shall have the meanings given to them in this section unless the
12context clearly indicates otherwise:

13"Actuarially required contribution rate." The employer
14contribution rate as calculated pursuant to section 5508(a),
15(b), (c), (e) and (f) (relating to actuarial cost method for 
16fiscal years ending before July 1, 2015) or 5508.1(a), (b), (c), 
17(e) and (f) (relating to actuarial cost method for fiscal years 
18beginning on or after July 1, 2015).

19* * *

20Section 316. Sections 5502, 5503.1(a) and 5504 of Title 71
21are amended to read:

22§ 5502. Social Security integration member contributions.

23Except for any period of current service in which the making
24of regular member contributions has ceased solely by reason of
25section 5502.1 (relating to waiver of regular member
26contributions and Social Security integration member
27contributions) or any provision of this part relating to
28limitations under IRC § 401(a)(17) or 415(b), contributions
29shall be made on behalf of [a] an active member of any class who
30prior to March 1, 1974, has elected Social Security integration

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

13§ 5503.1. Pickup contributions.

14(a) Treatment for purposes of IRC § 414(h).--All
15contributions to the fund required to be made under sections
165501 (relating to regular member contributions for current
17service), 5501.1 (relating to shared-risk member contributions 
18for Class A-3 and Class A-4 service), 5502 (relating to Social
19Security integration member contributions), 5503 (relating to
20joint coverage member contributions) and [section] 5505.1
21(relating to additional member contributions), with respect to
22current State service rendered by an active member on or after
23January 1, 1982, shall be picked up by the Commonwealth or other
24employer and shall be treated as the employer's contribution for
25purposes of IRC § 414(h).

26* * *

27§ 5504. Member contributions for the purchase of credit for
28previous State service or to become a full coverage
29member.

30(a) Amount of contributions for service in other than Class

1G through N.--

2(1) The contributions to be paid by an active member or
3eligible school employee for credit in the system for total
4previous State service other than service in Class G, Class
5H, Class I, Class J, Class K, Class L, Class M and Class N or
6to become a full coverage member shall be sufficient to
7provide an amount equal to the regular and additional
8accumulated deductions which would have been standing to the
9credit of the member for such service had regular and
10additional member contributions been made with full coverage
11in the class of service and at the rate of contribution
12applicable during such period of previous service and had his
13regular and additional accumulated deductions been credited
14with statutory interest during all periods of subsequent
15State service as an active member or inactive member on leave 
16without pay and school service as an active member or 
17inactive member on leave without pay of the Public School 
18Employees' Retirement System up to the date of purchase.

<-19(1.1)  Notwithstanding paragraph (1), any previous State
20service credited on or after January 1, 2015, under paragraph
21(1) shall have contributions made for and be credited as
22Subclass X or Subclass Y service of the appropriate class of
23service, subject to any election made by the State employee
24to be a Subclass Z member, unless previously credited before
25January 1, 2015, in which case it shall be credited as
26Subclass W service.

27(2) Notwithstanding paragraph (1), members with Class A-
283 State service shall make contributions and receive credit
29as if the previous State service was Class A-3 service, and
30members with Class A-4 State service shall make contributions

1and receive credit as if the previous State service was Class
2A-4 service, even if it would have been credited as a
3different class of service had the State employee been a
4member of the system at the time the service was performed
5unless it was mandatory that the State employee be an active
6member of the system and the previous State service is being
7credited as the result of a mandatory active membership
8requirement.

9(a.1) Converted county service.--No contributions shall be
10required to restore credit for previously credited State service
11in Class G, Class H, Class I, Class J, Class K, Class L, Class M
12and Class N. Such service shall be restored upon the
13commencement of payment of the contributions required to restore
14credit in the system for all other previous State service.

15(b) Certification and method of payment.--The amount payable
16shall be certified in each case by the board in accordance with
17methods approved by the actuary and shall be paid in a lump sum
18within 30 days or in the case of an active member or eligible
19school employee who is an active member of the Public School
20Employees' Retirement System may be amortized with statutory
21interest through salary deductions to the system in amounts
22agreed upon by the member and the board. The salary deduction
23amortization plans agreed to by members and the board may
24include a deferral of payment amounts and statutory interest
25until the termination of school service or State service or 
26beginning service as a participant as the board in its sole
27discretion decides to allow. The board may limit the salary
28deduction amortization plans to such terms as the board in its
29sole discretion determines. In the case of an eligible school
30employee who is an active member of the Public School Employees'

1Retirement System, the agreed upon salary deductions shall be
2remitted to the Public School Employees' Retirement Board, which
3shall certify and transfer to the board the amounts paid.

4Section 317. Section 5505(b)(1), (c), (d) and (i)(4) of
5Title 71 are amended <-and the section is amended by adding a 
6subsection to read:

7§ 5505. Contributions for the purchase of credit for creditable
8nonstate service.

9* * *

10(b) Nonintervening military service.--

11(1) The amount due for the purchase of credit for
12military service other than intervening military service
13shall be determined by applying the member's basic
14contribution rate, the additional contribution rate plus the
15Commonwealth normal contribution rate for active members at
16the time of entry, subsequent to such military service, of
17the member into State service to his average annual rate of
18compensation over the first three years of such subsequent
19State service and multiplying the result by the number of
20years and fractional part of a year of creditable
21nonintervening military service being purchased together with
22statutory interest during all periods of subsequent State
23service as an active member or inactive member on leave 
24without pay and school service as an active member or 
25inactive member on leave without pay of the Public School 
26Employees' Retirement System to date of purchase. Upon
27application for credit for such service, payment shall be
28made in a lump sum within 30 days or in the case of an active
29member or eligible school employee who is an active member of
30the Public School Employees' Retirement System it may be

1amortized with statutory interest through salary deductions
2to the system in amounts agreed upon by the member and the
3board. The salary deduction amortization plans agreed to by
4members and the board may include a deferral of payment
5amounts and statutory interest until the termination of
6school service or State service or beginning service as a 
7participant as the board in its sole discretion decides to
8allow. The board may limit salary deduction amortization
9plans to such terms as the board in its sole discretion
10determines. In the case of an eligible school employee who is
11an active member of the Public School Employees' Retirement
12System, the agreed upon salary deductions shall be remitted
13to the Public School Employees' Retirement Board, which shall
14certify and transfer to the board the amounts paid.
15Application may be filed for all such military service credit
16upon completion of three years of subsequent State service
17and shall be credited as Class A service.

18* * *

19(c) Intervening military service.--Contributions on account
20of credit for intervening military service shall be determined
21by the member's regular contribution rate, shared-risk 
22contribution rate, Social Security integration contribution 
23rate, the additional contribution rate which shall be applied
24only to those members who began service on or after the
25effective date of this amendatory act and compensation at the
26time of entry of the member into active military service,
27together with statutory interest during all periods of
28subsequent State service as an active member or inactive member 
29on leave without pay and school service as an active member or 
30inactive member on leave without pay of the Public School
 

1Employees' Retirement System to date of purchase. Upon
2application for such credit the amount due shall be certified in
3the case of each member by the board in accordance with methods
4approved by the actuary, and contributions may be made by:

5(1) regular monthly payments during active military
6service; or

7(2) a lump sum payment within 30 days of certification;
8or

9(3) salary deductions to the system in amounts agreed
10upon by the member or eligible school employee who is an
11active member of the Public School Employees' Retirement
12System and the board.

13The salary deduction amortization plans agreed to by members and
14the board may include a deferral of payment amounts and
15statutory interest until the termination of school service or
16State service or beginning service as a participant as the board
17in its sole discretion decides to allow. The board may limit
18salary deduction amortization plans to such terms as the board
19in its sole discretion determines. In the case of an eligible
20school employee who is an active member of the Public School
21Employees' Retirement System, the agreed upon salary deductions
22shall be remitted to the Public School Employees' Retirement
23Board, which shall certify and transfer to the board the amounts
24paid.

25(d) Nonmilitary and nonmagisterial service.--Contributions 
26on account of credit for creditable nonstate service other than 
27military and magisterial service by State employees who first 
28become members of the system before January 1, 2011, or before 
29December 1, 2010, as a member of the General Assembly shall be 
30determined by applying the member's basic contribution rate, the
 

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

30* * *

1(i) Purchases of nonstate service credit by State employees
2who first became members of the system on or after December 1,
32010.--

4* * *

5(4) The payment for credit purchased under this 
6subsection shall be certified in each case by the board in 
7accordance with methods approved by the actuary and shall be 
8paid in a lump sum within 30 days or in the case of an active 
9member or eligible school employee who is an active member of 
10the Public School Employees' Retirement System may be 
11amortized with statutory interest through salary deductions 
12to the system in amounts agreed upon by the member and the 
13board. The salary deduction amortization plans agreed to by 
14members and the board may include a deferral of payment 
15amounts and interest until the termination of school service 
16or State service or beginning service as a participant as the 
17board in its sole discretion decides to allow. The board may 
18limit the salary deduction amortization plans to such terms 
19as the board in its sole discretion determines. In the case 
20of an eligible school employee who is an active member of the 
21Public School Employees' Retirement System, the agreed upon 
22salary deductions shall be remitted to the Public School 
23Employees' Retirement Board, which shall certify and transfer 
24to the board the amounts paid.

<-25(j)  Notwithstanding any other provision of this section, any
26creditable non-State service credited on or after January 1,
272015, shall have contributions made for and be credited as
28Subclass X or Subclass Y service of the appropriate class of
29service, subject to any election made by the State employee to
30be a Subclass Z member, unless previously credited before

1January 1, 2015, in which case it shall be credited as Subclass
2W service.

3Section 318. (Reserved).

4Section 319. (Reserved).

5Section 320. Section 5505.1 of Title 71 is amended to read:

6§ 5505.1. Additional member contributions.

7In addition to regular or joint coverage member contributions
8and social security integration contributions, contributions
9shall be made on behalf of each active member, regardless of
10class of service, at the rate of 1 1/4% of compensation until
11such time as the actuary certifies that all accrued liability
12contributions have been completed in accordance with the
13actuarial cost method provided in section 5508(b) (relating to
14actuarial cost method for fiscal years ending before July 1, 
152015).

16Section 321. Section 5506 of Title 71, amended October 24,
172012 (P.L.1436, No.181), is amended to read:

18§ 5506. Incomplete payments.

19In the event that a member terminates State service or begins 
20service as a participant or a multiple service member who is an
21active member of the Public School Employees' Retirement System
22terminates school service before the agreed upon payments for
23credit for previous State service, USERRA leave, creditable
24nonstate service, social security integration, full coverage
25membership<-, election of class or subclass of membership or
26return of benefits on account of returning to State service or
27entering school service and electing multiple service have been
28completed, the member or multiple service member who is an
29active member of the Public School Employees' Retirement System
30shall have the right to pay within 30 days of termination of

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

20Section 322. Section 5506.1(a) of Title 71 is amended to
21read:

22§ 5506.1. Annual compensation limit under IRC § 401(a)(17).

23(a) General rule.--In addition to other applicable
24limitations set forth in this part, and notwithstanding any
25provision of this part to the contrary, the annual compensation
26of each noneligible member and each participant taken into
27account for benefit purposes under this part shall not exceed
28the limitation under IRC § 401(a)(17). On and after January 1,
291996, any reference in this part to the limitation under IRC §
30401(a)(17) shall mean the Omnibus Budget Reconciliation Act of

11993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
2compensation limit set forth in this subsection. The OBRA '93
3annual compensation limit is $150,000, as adjusted by the
4commissioner for increases in the cost of living in accordance
5with IRC § 401(a)(17)(B). The cost-of-living adjustment in
6effect for a calendar year applies to any determination period
7which is a period, not exceeding 12 months, over which
8compensation is determined, beginning in such calendar year. If
9a determination period consists of fewer than 12 months, the
10OBRA '93 compensation limit will be multiplied by a fraction,
11the numerator of which is the number of months in the
12determination period and the denominator of which is 12.

13* * *

<-14Section 323. Title 71 is amended by adding sections to read:

15§ 5506.2.  Annual compensation limit for Subclass X, Subclass Y
16and Subclass Z members.

17For the following purposes, compensation of a Subclass X,
18Subclass Y or Subclass Z member each calendar year is limited to
19the Social Security wage base for the year without regard to
20whether the year commences before 2015 and whether the member
21made contributions or earned benefits under the Social Security
22Act (49 Stat. 620, 42 U.S.C. § 301 et seq.):

23(1) Determining regular member contributions for
24Subclass X service, Subclass Y service and Subclass Z
25service.

26(2) Determining shared-risk member contributions for
27Subclass A-3X and A-4X service.

28(3) Determining final average salary for purposes of
29calculating standard single life annuities resulting from
30Subclass X service, Subclass Y service or Subclass Z service.

1(4) Determining the member contributions to be made when
2previously uncredited State service is to be credited as
3Subclass X service, Subclass Y service or Subclass Z service.

4(5) Determining the contributions to be made for
5creditable nonstate service to be credited as Subclass X
6service, Subclass Y service or Subclass Z service.

7(6) Determining the compensation to be used for Subclass
8X service, Subclass Y service and Subclass Z service as part
9of the allocation of concurrent service between classes under
10section 5702(a)(1) (relating to maximum single life annuity).

11(7) Calculating the final average salary for the
12portions of a disability annuity calculation resulting from
13Subclass X service, Subclass Y service or Subclass Z service
14under section 5704 (relating to disability annuities).

15(8) Calculating final average salary for the portions of
16the maximum single life annuity under section 5706(b)
17(relating to termination of annuities) resulting from
18Subclass X service, Subclass Y service or Subclass Z service
19when an annuitant who has returned to service subsequently
20discontinues service.

21(9) Determining the portions of the benefit of a State
22police officer resulting from Subclass X service, Subclass Y
23service or Subclass Z service, unless the State police
24officer has 20 or more qualifying eligibility points and has
25elected to pay an additional 6.05% of compensation as regular
26member contributions.

27§ 5506.3.  Adjustment of compensation for calculating final
28average salary on or after January 1, 2015.

29For purposes of calculating final average salary for the
30determination of standard single life annuities resulting from

1Subclass X service, Subclass Y service or Subclass Z service,
2the compensation received each calendar year as a member of the
3system or, if a multiple service member, received as both a
4member of the system and as a school employee and member of the
5Public School Employees' Retirement System shall be adjusted
6first by annualizing the compensation received for any part-time
7service or for any partial year of credit on the basis of the
8fractional portion of the year for which credit is received. The
9annualized compensation and, in the case of a multiple service
10member, the combined compensation, may not exceed the Social
11Security wage base for the year. After annualization, the amount
12of compensation not exceeding the Social Security wage base in
13any calendar year shall be further adjusted downward if
14necessary so as not to exceed 110% of the average of the
15annualized compensation not exceeding the Social Security wage
16bases of the four immediately previous calendar years in which
17the State employee was an active member, or, if a multiple
18service member, an active member of the system or Public School
19Employees' Retirement System. If for any calendar year there are
20one or more, but less than four, preceding calendar years in
21which the State employee was an active member of the system or,
22if a multiple service member, also an active member of the
23Public School Employees' Retirement System, then the adjusted
24compensation may not exceed 110% of the average of the
25annualized compensation not exceeding the Social Security wage
26base of the number of preceding years of active membership in
27the system or the Public School Employees' Retirement System.

<-28Section 323. (Reserved).

29Section 324. Section 5507(a), (b), (d), (e) and (f) of Title
3071, amended October 24, 2012 (P.L.1436, No.181), are amended to

1read:

2§ 5507. Contributions to the system by the Commonwealth and
3other employers before July 1, 2015.

4(a) Contributions on behalf of active members.--[The] Until 
5June 30, 2015, the Commonwealth and other employers whose
6employees are members of the system, and from January 1, 2015, 
7to June 30, 2015, the Commonwealth and other employers whose 
8employees are participants in the plan shall make contributions
9to the fund on behalf of all active members in such amounts as
10shall be certified by the board as necessary to provide,
11together with the members' total accumulated deductions, annuity
12reserves on account of prospective annuities other than those
13provided in sections 5708 (relating to supplemental annuities), 
145708.1 (relating to additional supplemental annuities), 5708.2 
15(relating to further additional supplemental annuities), 5708.3 
16(relating to supplemental annuities commencing 1994), 5708.4 
17(relating to special supplemental postretirement adjustment), 
185708.5 (relating to supplemental annuities commencing 1998), 
195708.6 (relating to supplemental annuities commencing 2002), 
205708.7 (relating to supplemental annuities commencing 2003) and 
215708.8 (relating to special supplemental postretirement 
22adjustment of 2002), in accordance with the actuarial cost
23method provided in section 5508(a), (b), (c), (d) and (f)
24(relating to actuarial cost method for fiscal years ending 
25before July 1, 2015).

26(b) Contributions on behalf of annuitants.--[The] Until June 
2730, 2015, the Commonwealth and other employers whose employees 
28are members of the system shall make contributions on behalf of
29annuitants in such amounts as shall be certified by the board as
30necessary to fund the liabilities for supplemental annuities in

1accordance with the actuarial cost method provided in section
25508(e) [(relating to actuarial cost method)].

3* * *

4(d) Payment of final contribution rate.--Notwithstanding the
5calculation of the actuarially required contribution rate and
6the provisions of subsections (a) and (b), the Commonwealth and
7other employers whose employees are members of the system shall
8make contributions to the fund on behalf of all active members
9and annuitants until June 30, 2015, in such amounts as shall be
10certified by the board in accordance with section 5508(i).

11(e) Benefits completion plan contributions.--In addition to 
12all other contributions required under this section and section 
135508, the Commonwealth and other employers whose employees are 
14members of the system shall make contributions until June 30, 
152015, as certified by the board pursuant to section 5941 
16(relating to benefits completion plan).

17(f) Contributions resulting from members reemployed from
18USERRA leave.--When a State employee reemployed from USERRA
19leave makes the member contributions required to be granted
20State service credit for the USERRA leave before July 1, 2015,
21either by actual payment or by actuarial debt under section 5506
22(relating to incomplete payments), then the Commonwealth
23employer or other employer by whom the State employee is
24employed at the time the member contributions are made, or the
25last employer before termination in the case of payment under
26section 5506, shall make whatever employer contributions would
27have been made under this section had the employee making the
28member contributions after being reemployed from USERRA leave
29continued to be employed in his State office or position instead
30of performing USERRA leave.

1Section 325. Title 71 is amended by adding a section to
2read:

3§ 5507.1. Contributions to the system by the Commonwealth and
4other employers commencing July 1, 2015.

5(a)  Contributions on behalf of members.--For fiscal years 
6beginning on or after July 1, 2015, the Commonwealth and other 
7employers whose employees are or were members of the system 
8shall make contributions to the fund on behalf of all members in 
9such amounts as shall be certified by the board as necessary to 
10provide, together with the members' total accumulated 
11deductions, annuity reserves on account of annuities including 
12those provided in sections 5708 (relating to supplemental 
13annuities), 5708.1 (relating to additional supplemental 
14annuities), 5708.2 (relating to further additional supplemental 
15annuities), 5708.3 (relating to supplemental annuities 
16commencing 1994), 5708.4 (relating to special supplemental 
17postretirement adjustment), 5708.5 (relating to supplemental
18annuities commencing 1998), 5708.6 (relating to supplemental 
19annuities commencing 2002), 5708.7 (relating to supplemental 
20annuities commencing 2003) and 5708.8 (relating to special 
21supplemental postretirement adjustment of 2002), in accordance 
22with the actuarial cost method provided in section 5508.1 
23(relating to actuarial cost method for fiscal years beginning on 
24or after July 1, 2015).

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

26(1)  Payment of employer normal contributions shall be as
27a percentage of compensation of active members.

28(2)  Payment of accrued liability contributions as
29modified by the experience adjustment factor shall be as a
30percentage of compensation of active members and active

1participants.

2(c)  Payment of final contribution rate.--Notwithstanding the
3calculation of the actuarially required contribution rate and
4the provisions of subsections (a) and (b), the Commonwealth and
5other employers whose employees are members of the system shall
6make contributions to the fund on behalf of all active members
7and annuitants after June 30, 2015, in such amounts as shall be
8certified by the board in accordance with section 5508.1(h).

9(d)  Benefits completion plan contributions.--In addition to
10the other contributions required under this section and section
115508.1, the Commonwealth and other employers whose employees are
12active members of the system shall make contributions after June
1330, 2015, as certified by the board under section 5941 (relating
14to benefits completion plan).

15(e) Contributions resulting from members reemployed from
16USERRA leave.--When a State employee reemployed from USERRA
17leave makes the member contributions required to be granted
18State service credit for the USERRA leave after June 30, 2015,
19either by actual payment or by actuarial debt under section 5506
20(relating to incomplete payments), the Commonwealth employer or
21other employer that employed the State employee when the member
22contributions are made or the last employer before termination
23in the case of payment under section 5506 shall make the
24employer contributions that would have been made under this
25section if the employee making the member contributions after he
26is reemployed from USERRA leave continued to be employed in his
27State office or position instead of performing USERRA leave.

28Section 326. Section 5508(a), (b), (c)(3), (e)(2), (f)(1),
29(h) and (i) <-of Title 71 are amended and subsection (c) is
30amended by adding a paragraph to read:

1§ 5508. Actuarial cost method for fiscal years ending before 
2July 1, 2015.

3(a) Employer contribution rate on behalf of active
4members.--[The] For the fiscal years ending before July 1, 2015, 
5the amount of the Commonwealth and other employer contributions
6on behalf of all active members shall be computed by the actuary
7as a percentage of the total compensation of all active members
8during the period for which the amount is determined and shall
9be so certified by the board. The actuarially required
10contribution rate on behalf of all active members shall consist
11of the employer normal contribution rate, as defined in
12subsection (b), and the accrued liability contribution rate as
13defined in subsection (c). The actuarially required contribution
14rate on behalf of all active members shall be modified by the
15experience adjustment factor as calculated in subsection (f).

16(b) Employer normal contribution rate.--[The] For the fiscal 
17years ending before July 1, 2015, the employer normal
18contribution rate shall be determined after each actuarial
19valuation on the basis of an annual interest rate and such
20mortality and other tables as shall be adopted by the board in
21accordance with generally accepted actuarial principles. The
22employer normal contribution rate shall be determined as a level
23percentage of the compensation of the average new active member,
24which percentage, if contributed on the basis of his prospective
25compensation through his entire period of active State service,
26would be sufficient to fund the liability for any prospective
27benefit payable to him in excess of that portion funded by his
28prospective member contributions, excluding shared-risk member 
29contributions.

30(c) Accrued liability contribution rate.--

1* * *

2(3) For the fiscal year beginning July 1, 2010, the 
3accrued liability contribution rate shall be computed as the 
4rate of total compensation of all active members which shall 
5be certified by the actuary as sufficient to fund in equal 
6dollar installments over a period of 30 years from July 1, 
72010, the present value of the liabilities for all 
8prospective benefits calculated as of the immediately prior 
9valuation date, including the supplemental benefits as 
10provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4, 
115708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits 
12payable from the retirement benefit plan established pursuant 
13to section 5941 (relating to benefits completion plan), in 
14excess of the actuarially calculated assets in the fund 
15(calculated recognizing all realized and unrealized 
16investment gains and losses each year in level annual 
17installments over five years), including the balance in the 
18supplemental annuity account, and the present value of 
19employer normal contributions and of member contributions 
20payable with respect to all active members, inactive members 
21on leave without pay, vestees and special vestees on December 
2231, 2009. If the accrued liability is changed by legislation 
23enacted subsequent to December 31, 2009, and before January 
241, 2014, such change in liability shall be funded in equal 
25dollar installments over a period of ten years from the first 
26day of July following the valuation date coincident with or 
27next following the date such legislation is enacted.

28(4) For the fiscal year beginning July 1, 2014, the
29accrued liability contribution rate shall be computed as
30provided for under this section, except that the rate shall

1be computed as a rate of total compensation of the active
2members and active participants for the fiscal year. In
3addition to any employer defined contributions made to the
4trust, the Commonwealth and other employers of participants
5shall make the accrued liability contributions to the fund
6certified by the board.

7* * *

8(e) Supplemental annuity contribution rate.--

9* * *

10(2) For fiscal years beginning on or after July 1, 2010, 
11and ending on or before June 30, 2015, contributions from the 
12Commonwealth and other employers whose employees are members 
13of the system required to provide for the payment of 
14supplemental annuities as provided in sections 5708, 5708.1, 
155708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8 
16shall be paid as part of the accrued liability contribution 
17rate as provided for in subsection (c)(3), and there shall 
18not be a separate supplemental annuity contribution rate 
19attributable to those supplemental annuities. In the event 
20that supplemental annuities are increased by legislation 
21enacted subsequent to December 31, 2009, and before January 
221, 2014, the additional liability for the increase in 
23benefits shall be funded in equal dollar installments over a 
24period of ten years from the first day of July following the 
25valuation date coincident with or next following the date 
26such legislation is enacted.

27(f) Experience adjustment factor.--

28(1) For each [year] fiscal year ending before July 1, 
292015, after the establishment of the accrued liability
30contribution rate and the supplemental annuity contribution
 

1rate for the fiscal year beginning July 1, 2010, any increase
2or decrease in the unfunded accrued liability and any 
3increase or decrease in the liabilities and funding for
4supplemental annuities, due to actual experience differing
5from assumed experience (recognizing all realized and 
6unrealized investment gains and losses over a five-year 
7period), changes in contributions caused by the final 
8contribution rate being different from the actuarially 
9required contribution rate, State employees making shared-
10risk member contributions, changes in actuarial assumptions
11or changes in the terms and conditions of the benefits
12provided by the system by judicial, administrative or other
13processes other than legislation, including, but not limited
14to, reinterpretation of the provisions of this part
15recognized by the actuarial valuations on December 31, 2010, 
16and through December 31, 2013, shall be amortized in equal
17dollar annual contributions over a period of 30 years
18beginning with the July 1 succeeding the actuarial valuation
19determining said increases or decreases.

20* * *

21(h) Temporary application of collared contribution rate.--
22The collared contribution rate for each [year] fiscal year 
23ending on or before June 30, 2015, shall be determined by
24comparing the actuarially required contribution rate calculated
25without regard for costs added by legislation to the prior
26year's final contribution rate. If, for any of the fiscal years
27beginning July 1, 2011, July 1, 2012, [and on or after] July 1,
282013, and July 1, 2014, the actuarially required contribution
29rate calculated without regard for costs added by legislation is
30more than 3%, 3.5% <-[and 4.5%], 2.25% and 2.75%, respectively, of

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

10(i) Final contribution rate.--For the fiscal year beginning
11July 1, 2010, the final contribution rate shall be 5% of total
12compensation of all active members. For each subsequent fiscal
13year for which the collared contribution rate is applicable, the
14final contribution rate shall be the collared contribution rate
15plus the costs added by legislation. For all other fiscal years
16ending before July 1, 2015, the final contribution rate shall be
17the actuarially required contribution rate, provided that the
18final contribution rate shall not be less than the employer
19normal contribution rate, as defined in subsection (b).

20Section 327. Title 71 is amended by adding a section to
21read:

22§ 5508.1.  Actuarial cost method for fiscal years beginning on
23or after July 1, 2015.

24(a)  Employer contributions on behalf of members.--For fiscal
25years beginning on or after July 1, 2015, the amount of the
26Commonwealth and other employer contributions on behalf of all
27members shall be computed by the actuary and certified by the
28board as an employer normal contribution rate as provided under
29subsection (b) and the accrued liability contribution amount as
30provided under subsection (c). The accrued liability

1contribution amount shall be modified by the experience
2adjustment factor as calculated in subsection (f).

3(b)  Employer normal contribution rate.--For fiscal years
4beginning on or after July 1, 2015, the employer normal
5contribution rate for all active members of the system shall be
6the employer normal contribution rate that would have been
7applicable if the employer normal contribution rate was
8determined as part of the December 31, 2014, actuarial valuation
9under section 5508(b) (relating to actuarial cost method for
10fiscal years ending before July 1, 2015) without regard to the
11provisions of this section and the inapplicability of the rate
12to a period on or after July 1, 2015.

13(c) Accrued liability contribution amount.--

14(1) For fiscal years beginning on or after July 1, 2015,
15the accrued liability contribution rate shall be computed as
16the rate of total compensation of all active members and
17active participants that shall be determined by the actuary
18as sufficient to fund in equal dollar installments as a
19percentage of compensation of all active members and active
20participants over a period of 30 years from July 1, 2015, the
21present value of the liabilities for all prospective benefits
22of members of the system calculated as of the immediately
23prior valuation date, including the supplemental benefits as
24provided in sections 5708 (relating to supplemental
25annuities), 5708.1 (relating to additional supplemental
26annuities), 5708.2 (relating to further additional
27supplemental annuities), 5708.3 (relating to supplemental
28annuities commencing 1994), 5708.4 (relating to special
29supplemental postretirement adjustment), 5708.5 (relating to
30supplemental annuities commencing 1998), 5708.6 (relating to

1supplemental annuities commencing 2002), 5708.7 (relating to
2supplemental annuities commencing 2003) and 5708.8 (relating
3to special supplemental postretirement adjustment of 2002),
4but excluding the benefits payable from the retirement
5benefit plan established under section 5941 (relating to
6benefits completion plan) in excess of the actuarially
7calculated assets in the fund calculated recognizing the
8realized and unrealized investment gains and losses each year
9in level annual installments over five years, including the
10balance in the supplemental annuity account and the present
11value of employer normal contributions and of member
12contributions payable with respect to all active members,
13inactive members on leave without pay, vestees and special
14vestees on December 31, 2014.

15(2) If the accrued liability is changed by legislation
16enacted subsequent to December 31, 2014, the change in
17liability shall be funded in equal dollar installments as a
18percentage of compensation of all active members and active
19participants over a period of ten years from the first day of
20July following the valuation date coincident with or next
21following the date such legislation is enacted. The accrued
22liability contribution rate shall be determined after each
23actuarial valuation on the basis of an annual interest rate
24and the mortality and other tables adopted by the board in
25accordance with generally accepted actuarial principles.

26(d)  (Reserved).

27(e)  Supplemental annuity contribution amounts.--For fiscal
28years beginning on or after July 1, 2015, contributions from the
29Commonwealth and other employers whose employees are members of
30the system required to provide for the payment of supplemental

1annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3,
25708.4, 5708.5, 5708.6, 5708.7 and 5708.8 shall be paid as part
3of the accrued liability contribution rate as provided for in
4subsection (c), and there shall not be a separate supplemental
5annuity contribution amount attributable to those supplemental
6annuities. In the event that supplemental annuities are
7increased by legislation enacted subsequent to December 31,
82014, the additional liability for the increase in benefits
9shall be funded in equal dollar installments as a percentage of
10compensation of all active members and active participants over
11a period of ten years from the first day of July following the
12valuation date coincident with or next following the date such
13legislation is enacted as part of the accrued liability amount
14and not as a separate supplemental annuity contribution amount.

15(f)  Experience adjustment factor.--

16(1)  For each year after the establishment of the accrued
17liability contribution amount for the fiscal year beginning
18July 1, 2015, any increase or decrease in the unfunded
19accrued liability and any increase or decrease in the
20liabilities and funding for supplemental annuities due to
21actual experience differing from assumed experience,
22recognizing all realized and unrealized investment gains and
23losses over a five-year period, changes in contributions
24caused by the final contribution rate being different from
25the actuarially required contribution rate, State employees
26making shared-risk member contributions, changes in actuarial
27assumptions or changes in the terms and conditions of the
28benefits provided by the system by judicial, administrative
29or other processes other than legislation, including, but not
30limited to, reinterpretation of the provisions of this part,

1shall be amortized in equal dollar installments as a
2percentage of compensation of all active members and active
3participants over a period of 30 years beginning with the
4July 1 succeeding the actuarial valuation determining said
5increases or decreases.

6(2) The actuarially required contribution rate shall be
7the sum of the normal contribution rate determined under
8subsection (b)(2), the accrued liability contribution rate
9and the supplemental annuity contribution rate modified by
10the experience adjustment factor as calculated in paragraph
11(1).

12(g)  Temporary application of collared contribution rate.--
13The collared contribution rate for each fiscal year beginning on 
14or after July 1, 2015, shall be determined by comparing the 
15actuarially required contribution rate calculated without regard 
16for costs added by legislation to the prior year's final 
17contribution rate. <-If, for fiscal years beginning July 1, 2015, 
18July 1, 2016, July 1, 2017, and on or after July 1, 2018, the 
19actuarially required contribution rate calculated without regard 
20for costs added by legislation is more than 3.25%, 3.75%, 4.25% 
21and 4.5%, respectively, of the total compensation of all active 
22members greater than the prior year's final contribution rate, 
23then the collared contribution rate shall be applied and be 
24equal to the prior year's final contribution rate increased by 
25the respective percentage above of total compensation of all <-If, 
26for any of the fiscal years beginning on or after July 1, 2015, 
27the actuarially required contribution rate calculated without 
28regard for costs added by legislation is more than 4.5% of the 
29total compensation of all active members greater than the prior 
30year's final contribution rate, the collared contribution rate
 

1shall be applied and be equal to the prior year's final 
2contribution rate increased by 4.5% of total compensation of 
3active members. Otherwise and for all subsequent fiscal years, 
4the collared contribution rate shall not apply. The collared 
5contribution rate may not be less than 4% of total compensation 
6of all active members.

7(h)  Final contribution rate.--For the fiscal year beginning
8July 1, 2015, if the collared contribution rate is applicable,
9the final contribution rate shall be the collared contribution
10rate plus the costs added by legislation. For each subsequent
11fiscal year for which the collared contribution rate is
12applicable, the final contribution rate shall be the collared
13contribution rate plus the costs added by legislation. For all
14other fiscal years beginning on or after July 1, 2015, the final
15contribution rate shall be the actuarially required contribution
16rate provided the final contribution rate is not less than the
17employer normal contribution rate as provided under subsection
18(b).

19Section 328. Section 5509 of Title 71, amended October 24, 
202012 (P.L.1436, No.181), is amended to read:

21§ 5509. Appropriations and assessments by the Commonwealth.

22(a) Annual submission of budget.--The board shall prepare
23and submit annually an itemized budget consisting of the amounts
24necessary to be appropriated by the Commonwealth out of the
25General Fund and special operating funds and the amounts to be
26assessed the other employers required to meet the separate
27obligations to the fund and the trust accruing during the fiscal
28period beginning the first day of July of the following year.

29(b) Appropriation and payment.--The General Assembly shall
30make an appropriation sufficient to provide for the separate

1obligations of the Commonwealth to the fund and the trust. Such
2amount shall be paid by the State Treasurer through the
3Department of Revenue into the fund or trust, as the case may 
4be, in accordance with requisitions presented by the board. The
5contributions to the system by the Commonwealth on behalf of
6active members who are officers of the Pennsylvania State Police
7shall be charged to the General Fund and to the Motor License
8Fund in the same ratios as used to apportion the appropriations
9for salaries of members of the Pennsylvania State Police. The
10contributions to the system by the Commonwealth on behalf of
11active members who are enforcement officers and investigators of
12the Pennsylvania Liquor Control Board shall be charged to the
13General Fund and to the State Stores Fund.

14(c) Contributions from funds other than General Fund.--The 
15amounts assessed other employers who are required to make the 
16necessary separate contributions to the fund and the trust out 
17of funds other than the General Fund shall be paid by such 
18employers into the fund or trust, as the case may be, in 
19accordance with requisitions presented by the board. The General 
20Fund of the Commonwealth shall not be held liable to appropriate 
21the moneys required to build up the reserves in the fund 
22necessary for the payment of benefits from the system to 
23employees or to make the employer defined contributions for 
24employees of such other employers. In case any such other 
25employer shall fail to provide to the fund the moneys necessary 
26for such purpose, then the service of such members of the system 
27for such period for which money is not so provided shall be 
28credited and pickup contributions with respect to such members 
29shall continue to be credited to the members' savings account. 
30The annuity to which such member is entitled shall be determined
 

1as actuarially equivalent to the present value of the maximum 
2single life annuity of each such member reduced by the amount of 
3employer contributions to the system payable on account and 
4attributable to his compensation during such service, except 
5that no reduction shall be made as a result of the failure of an 
6employer to make contributions required for a period of USERRA 
7leave.

8Section 329. Sections 5701 and 5701.1 of Title 71 are
9amended to read:

10§ 5701. Return of total accumulated deductions.

11Any member upon termination of service may, in lieu of all
12benefits payable from the system under this chapter to which he
13may be entitled, elect to receive his total accumulated
14deductions.

15§ 5701.1. Transfer of accumulated deductions.

16When an employee of the Juvenile Court Judges' Commission
17elects membership in an independent retirement program pursuant
18to section 5301(f) (relating to mandatory and optional
19membership in the system and participation in the plan), the
20board shall transfer directly to the trustee or administrator of
21the independent retirement program all accumulated deductions
22resulting from service credited while an employee of the
23Juvenile Court Judges' Commission.

<-24Section 330. Sections 5702(a)(1) and (6), 5704(a), (c) and
25(f) and 5705(a) of Title 71 are amended and the sections are
26amended by adding subsections to read:

<-27Section 330. Sections 5702(a)(1) and 5704(c) of Title 71 are
28amended and the sections are amended by adding subsections to
29read:

30§ 5702. Maximum single life annuity.

1(a) General rule.--Any full coverage member who is eligible
2to receive an annuity pursuant to the provisions of section
35308(a) or (b) (relating to eligibility for annuities) who
4terminates State service, or if a multiple service member who is
5a school employee who is an active member of the Public School
6Employees' Retirement System who terminates school service,
7before attaining age 70 shall be entitled to receive a maximum
8single life annuity attributable to his credited service and
9equal to the sum of the following single life annuities
10beginning at the effective date of retirement:

11(1) A <-single life annuity that is the sum of the
12standard single life <-[annuity multiplied by the sum of the
13products,<-] annuities determined separately for each class
<-14and subclass of service[, obtained by multiplying] multiplied 
15by the appropriate class of service multiplier <-[by the ratio
16of years of service credited in that class to the total
17credited service<-] applicable to each standard single life 
18annuity. In case the member on the effective date of
19retirement is under superannuation age for any service, a
20reduction factor calculated to provide benefits actuarially
21equivalent to an annuity starting at superannuation age shall
22be applied to the product determined for that service. The
23class of service multiplier for any period of concurrent
24service shall be multiplied by the proportion of total State
25and school compensation during such period attributable to
26State service as a member of the system. <-[In the event a
27member has two multipliers for one class of service the class
28of service multiplier to be used for calculating benefits for
29that class shall be the average of the two multipliers
30weighted by the proportion of compensation attributable to

1each multiplier during the three years of highest annual
2compensation in that class of service: Provided, That in the
3case of a member of Class E-1, a portion but not all of whose
4three years of highest annual judicial compensation is prior
5to January 1, 1973, two class of service multipliers shall be
6calculated on the basis of his entire judicial service, the
7one applying the judicial class of service multipliers
8effective prior to January 1, 1973 and the second applying
9the class of service multipliers effective subsequent to
10January 1, 1973. The average class of service multiplier to
11be used for calculating benefits for his judicial service
12shall be the average of the two calculated multipliers
13weighted by the proportion of compensation attributable to
14each of the calculated multipliers during the three years of
15highest annual compensation in that class of service.<-]

16* * *

<-17(6) If eligible, a single life annuity sufficient
18together with the annuity provided for in paragraph (1) as a
19Class A, Class AA, Class A-3 and Class A-4 member and the
20highest annuity provided for in paragraph (2) to which he is
21entitled, or at his option could have been entitled, to
22produce that percentage of [a] the sums of the standard
23single life [annuity] annuities adjusted by the application
24of the class of service multiplier for Class A, Class AA,
25Class A-3 or Class A-4 as set forth in paragraph (1) in the
26case where any service is credited as a member of Class A,
27Class AA, Class A-3 or Class A-4 on the effective date of
28retirement as determined by his total years of credited
29service as a member of Class A, Class AA, Class A-3 and Class
30A-4 and by the following table:

20130SB0922PN1252 -275-
1  2  3Total Years of 4Credited Service 5as a Member of 6Class A, 7Class AA, Class A-3 8and Class A-4	Percentage of sums of Standard Single Life [Annuity] Annuities Adjusted for Class A, Class AA, Class A-3 and Class A-4 Class of Service Multipliers
935-40	100%
1041	102%
1142	104%
1243	106%
1344	108%
1445 or more	110%

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(a) Amount of annuity.--A member who has made application
23for a disability annuity and has been found to be eligible in
24accordance with the provisions of section 5905(c)(1) (relating
25to duties of the board regarding applications and elections of
26members) shall receive a disability annuity payable from the
27effective date of disability as determined by the board and
28continued until a subsequent determination by the board that the
29annuitant is no longer entitled to a disability annuity. The
30disability annuity shall be a single life annuity that is equal

1to [a] the sum of the standard single life [annuity] annuities
2determined separately for each class and subclass of service
3multiplied by the appropriate class of service multiplier
4applicable to [the class of service] each standard single life
5annuity at the time of disability if the [product of] sums of
6the products of each such class of service multiplier and the
7[total] number of years and fractional part of a year of
8credited service in each class and subclass is greater than
916.667, otherwise [the] each standard single life annuity shall
10be multiplied by the lesser of the following ratios:

11MY*/Y or 16.667/Y

12where Y = total number of years of credited service, Y* = total
13years of credited service if the member were to continue as a
14State employee until attaining superannuation age as applicable
15at the time of disability, or if the member has attained
16superannuation age, as applicable at the time of disability,
17then the number of years of credited service and M = the class
18of service multiplier as applicable to that class or subclass of
19service at the effective date of disability. A member of Class C
20shall receive, in addition, any annuity to which he may be
21eligible under section 5702(a)(3) (relating to maximum single
22life annuity). The member shall be entitled to the election of a
23joint and survivor annuity on that portion of the disability
24annuity to which he is entitled under section 5702.

25* * *

26(c) Reduction on account of earned income.--Subsequent to
27January 1, 1972, payments on account of disability shall be
28reduced by that amount by which the earned income of the
29annuitant, as reported in accordance with section 5908(b)
30(relating to rights and duties of annuitants), for the preceding

1calendar year together with the disability annuity payments
2provided in this section other than subsection (b), for the
3year, exceeds the product of:

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

6[(ii)] (2) the ratio of the current monthly payment to
7the monthly payment at the effective date of disability;

8Provided, That the annuitant shall not receive less than his
9member's annuity or the amount to which he may be entitled under
10section 5702 whichever is greater.

11* * *

<-12(f) Supplement for service connected disability.--

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

1has received a lump sum workers' compensation payment in lieu
2of future weekly compensation payments, the length in weeks
3and calculation of the service connected disability
4supplement shall be determined by dividing the lump sum
5payment by the average weekly wage as determined by the
6Workers' Compensation Board.

7(2)  For a member who does not have Subclass X, Subclass
8Y or Subclass Z service, the amount to be used to determine
9eligibility for the supplement under paragraph (1) shall be
1070% of his final average salary. For a member who has
11Subclass X, Subclass Y or Subclass Z service, the amount to
12be used to determine eligibility for the supplement under
13paragraph (1) shall be calculated according to the following
14formula: 

15A = .7[( YW  multiplied by FASW)+(YXYZ  multiplied by FASXYZ)]
16 YTYT

17(3) The following apply to the formula in paragraph (2):

18(i) A equals the amount used to determine the
19supplement;

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

21(iii) YW equals years of service credited in classes
22or subclasses of service other than Subclass X, Subclass
23Y or Subclass Z;

24(iv) FASW equals final average salary calculated for
25classes or subclasses of service other than Subclass X,
26Subclass Y or Subclass Z;

27(v) YXYZ equals years of service credited in Subclass
28X, Subclass Y and Subclass Z; and

29(vi) FASXYZ equals final average salary calculated
30for service credited in Subclass X, Subclass Y and

1Subclass Z.

2* * *

3(h)  Coordination of benefits.--The determination and payment
4of a disability annuity under this section is in addition to any
5payments a combined service employee may be entitled to receive,
6has received or is receiving as a result of being a participant
7in the plan.

<-8§ 5705. Member's options.

9(a) General rule.--Any special vestee who has attained
10superannuation age, any vestee who does not have Class A-3 or
11Class A-4 service credit having five or more eligibility points
12for service other than Class T-E or Class T-F service in the
13Public School Employees' Retirement System, or vestee who has
14Class A-3 or Class A-4 service credit having ten or more
15eligibility points, any member with Class G, Class H, Class I,
16Class J, Class K, Class L, Class M or Class N service having
17five or more eligibility points or any other eligible member
18upon termination of State service who has not withdrawn his
19total accumulated deductions as provided in section 5701
20(relating to return of total accumulated deductions) may apply
21for and elect to receive either a maximum single life annuity,
22as calculated in accordance with the provisions of section 5702
23(relating to maximum single life annuity), or a reduced annuity
24certified by the actuary to be actuarially equivalent to the
25maximum single life annuity payable after reduction under
26subsection (a.1) and in accordance with one of the following
27options; except that no member shall elect an annuity payable to
28one or more survivor annuitants other than his spouse or
29alternate payee of such a magnitude that the present value of
30the annuity payable to him for life plus any lump sum payment

1under this subsection and subsection (a.1) he may have elected
2to receive is less than 50% of the present value of his maximum
3single life annuity before reduction under subsection (a.1):

4(1) Option 1.--A life annuity to the member with a
5guaranteed total payment equal to the present value of the
6maximum single life annuity on the effective date of
7retirement with the provision that, if, at his death, he has
8received less than such present value, the unpaid balance
9shall be payable to his beneficiary.

10(2) Option 2.--A joint and survivor annuity payable
11during the lifetime of the member with the full amount of
12such annuity payable thereafter to his survivor annuitant, if
13living at his death.

14(3) Option 3.--A joint and fifty percent (50%) survivor
15annuity payable during the lifetime of the member with one-
16half of such annuity payable thereafter to his survivor
17annuitant, if living at his death.

18(4) Option 4.--Some other benefit which shall be
19certified by the actuary to be actuarially equivalent to the
20maximum single life annuity, subject to the following
21restrictions:

22(i) any annuity shall be payable without reduction
23during the lifetime of the member;

24(ii) the sum of all annuities payable to the
25designated survivor annuitants shall not be greater than
26one and one-half times the annuity payable to the member;
27and

28(iii) a portion of the benefit may be payable as a
29lump sum, except that such lump sum payment shall not
30exceed an amount equal to the total accumulated

1deductions standing to the credit of the member that are
2not the result of contributions and statutory interest
3made or credited as a result of Class A-3 or Class A-4
4service. The balance of the present value of the maximum
5single life annuity adjusted in accordance with section
65702(b) shall be paid in the form of an annuity with a
7guaranteed total payment, a single life annuity, or a
8joint and survivor annuity or any combination thereof but
9subject to the restrictions of subparagraphs (i) and (ii)
10under this option. If a member's effective date of
11retirement is on or after January 1, 2015, then the
12portion of the benefit payable under this subparagraph is
13further limited to the total accumulated deductions
14standing to the credit of the member on December 31,
152014, that are not the result of contributions and
16statutory interest made or credited as a result of Class
17A-3 or Class A-4 service, plus any statutory interest
18credited on those accumulated deductions before the
19effective date of retirement.

20(a.1) Additional lump sum withdrawal.--The following shall
21apply:

22(1) On or after January 1, 2015, if a member has elected
23to have the full amount allowed under subsection (a)(4)(iii)
24paid in lump sum, then the member may elect to receive an
25additional amount payable in a lump sum at the same time as
26the payment elected under subsection (a)(4)(iii).

27(2) The additional amount payable in a lump sum may not
28exceed an amount equal to the excess of the total accumulated
29deductions standing to the credit of the member on the
30effective date of retirement that are not the result of

1contributions and statutory interest made or credited as a
2result of Class A-3 or Class A-4 service over the amount
3payable under subsection (a)(4)(iii).

4(3) If a member elects to be paid an additional lump sum
5amount under this subsection, then the maximum single life
6annuity calculated under section 5702 and payable under
7subsection (a) shall be reduced by the additional amount
8withdrawn divided by the cost of a dollar annuity on the
9effective date of retirement computed on the basis of the
10annual interest rate adopted for that fiscal year by the
11board for the calculation of the accrued liability
12contribution rate under section 5508.1(c) (relating to
13actuarial cost method for fiscal years beginning on or after
14July 1, 2015) and the mortality tables adopted by the board
15for the determination of actuarially equivalent benefits
16under this part. The reduction in the maximum single life
17annuity under this subsection shall apply before the election
18and calculation of any reduced annuities payable under
19subsection (a).

20* * *

21Section 331. Section 5706(a), (a.1), (a.2), (b) and (c)(1)
22and (3) of Title 71 are amended to read:

23§ 5706. Termination of annuities.

24(a) General rule.--If the annuitant returns to State service
25or enters or has entered school service and elects multiple
26service membership, any annuity payable to him under this part
27shall cease effective upon the date of his return to State
28service or entering school service without regard to whether he 
29is a mandatory, optional or prohibited member of the system or 
30participant in the plan or, if a multiple service member,
 

1without regard to whether he is a mandatory, optional or 
2prohibited member or participant of the Public School Employees' 
3Retirement System or School Employees' Defined Contribution Plan
4and in the case of an annuity other than a disability annuity
5the present value of such annuity, adjusted for full coverage in
6the case of a joint coverage member who makes the appropriate
7back contributions for full coverage, shall be frozen as of the
8date such annuity ceases. An annuitant who is credited with an
9additional 10% of Class A and Class C service as provided in
10section 5302(c) (relating to credited State service) and who
11returns to State service shall forfeit such credited service and
12shall have his frozen present value adjusted as if his 10%
13retirement incentive had not been applied to his account. In the
14event that the cost-of-living increase enacted December 18, 1979
15occurred during the period of such State or school employment,
16the frozen present value shall be increased, on or after the
17member attains superannuation age, by the percent applicable had
18he not returned to service. This subsection shall not apply in
19the case of any annuitant who may render services to the
20Commonwealth in the capacity of an independent contractor or as
21a member of an independent board or commission or as a member of
22a departmental administrative or advisory board or commission
23when such members of independent or departmental boards or
24commissions are compensated on a per diem basis for not more
25than 150 days per calendar year or as a member of an independent
26board or commission requiring appointment by the Governor, with
27advice and consent of the Senate, where the annual salary
28payable to the member does not exceed $35,000 and where the
29member has been an annuitant for at least six months immediately
30preceding the appointment. Such service shall not be subject to

1member contributions or be eligible for qualification as
2creditable State service or for participation in the plan, 
3mandatory pickup participant contributions or employer defined 
4contributions.

5(a.1) Return to State service during emergency.--When, in
6the judgment of the employer, an emergency creates an increase
7in the work load such that there is serious impairment of
8service to the public, an annuitant may be returned to State
9service for a period not to exceed 95 days in any calendar year
10without loss of his annuity. In computing the number of days an
11annuitant has returned to State service, any amount of time less
12than one-half of a day shall be counted as one-half of a day.
13For agencies, boards and commissions under the Governor's
14jurisdiction, the approval of the Governor that an emergency
15exists shall be required before an annuitant may be returned to
16State service. This service shall not be subject to member 
17contributions or be eligible for qualification as creditable 
18State service or for participation in the plan, mandatory pickup 
19participant contributions or employer defined contributions.

20(a.2) Return of benefits.--In the event an annuitant whose
21annuity ceases pursuant to this section receives any annuity
22payment, including a lump sum payment pursuant to section 5705
23(relating to member's options) on or after the date of his
24return to State service or entering school service, the
25annuitant shall return to the board the amount so received plus
26statutory interest. The amount payable shall be certified in
27each case by the board in accordance with methods approved by
28the actuary and shall be paid in a lump sum within 30 days or in
29the case of an active member or school employee who is an active
30member of the Public School Employees' Retirement System may be

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

14* * *

15(b) Subsequent discontinuance of service.--Upon subsequent
16discontinuance of service, such [member] terminating State 
17employee other than a former annuitant who had the effect of his
18frozen present value eliminated in accordance with subsection
19(c) or a former disability annuitant shall be entitled to an
20annuity which is actuarially equivalent to [the sum of] the
21present value as determined under subsection (a) [and] to which 
22shall be added, if the service after reemployment was as a 
23member of the system, the present value of a maximum single life
24annuity based on years of service credited subsequent to reentry
25in the system and his final average salary computed by reference
26to his compensation as a member of the system or as a member of 
27the Public School Employees' Retirement System during his entire
28period of State and school service.

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

30(1) An annuitant who returns to State service as an
 

1active member of the system and earns three eligibility
2points by performing credited State service following the
3most recent period of receipt of an annuity under this part,
4or an annuitant who enters school service other than as a 
5participant in the School Employees' Defined Contribution 
6Plan and:

7(i) is a multiple service member; or

8(ii) who elects multiple service membership, and

9earns three eligibility points by performing credited State
10service or credited school service following the most recent
11period of receipt of an annuity under this part, and who had
12the present value of his annuity frozen in accordance with
13subsection (a), shall qualify to have the effect of the
14frozen present value resulting from all previous periods of
15retirement eliminated, provided that all payments under
16Option 4 and annuity payments payable during previous periods
17of retirement plus interest as set forth in paragraph (3)
18shall be returned to the fund in the form of an actuarial
19adjustment to his subsequent benefits or in such form as the
20board may otherwise direct.

21* * *

22(3) In addition to any other adjustment to the present
23value of the maximum single life annuity that a member may be
24entitled to receive that occurs as a result of any other
25provision of law, the present value of the maximum single
26life annuity shall be reduced by all amounts paid or payable
27to him during all previous periods of retirement plus
28interest on these amounts until the date of subsequent
29retirement. The interest for each year shall be calculated
30based upon the annual interest rate adopted for that fiscal

1year by the board for the calculation of the normal
2contribution rate pursuant to section 5508(b) (relating to
3actuarial cost [method).] method for fiscal years ending 
4before July 1, 2015) or for the calculation of the accrued 
5liability contribution rate under section 5508.1(c) (relating 
6to actuarial cost method for fiscal years beginning on or 
7after July 1, 2015) for fiscal years beginning on or after 
8July 1, 2015.

9Section 332. Section 5707(a), (b) and (f) of Title 71,
10amended October 24, 2012 (P.L.1436, No.181), are amended to
11read:

12§ 5707. Death benefits.

13(a) Members eligible for annuities.--Any active member,
14inactive member on leave without pay, combined service employee 
15who is an active participant or inactive participant on leave 
16without pay, vestee or current or former State employee 
17performing USERRA leave who dies and was eligible for an annuity
18in accordance with section 5308(a) or (b) (relating to
19eligibility for annuities) or special vestee who has attained
20superannuation age and dies before applying for a superannuation
21annuity shall be considered as having applied for an annuity to
22become effective the day before his death and in the event he
23has not elected an option or such election has not been approved
24prior to his death, it shall be assumed that he elected Option
251.

26(b) Members ineligible for annuities.--In the event of the
27death of a special vestee, an active member, an inactive member
28on leave without pay, combined service employee who is an active 
29participant or inactive participant on leave without pay or a 
30current or former State employee performing USERRA leave who is

1not entitled to a death benefit as provided in subsection (a),
2his designated beneficiary shall be paid the full amount of his
3total accumulated deductions.

4* * *

5(f) Members subject to limitations under section 5702(c).--
6Subject to the limitations contained in section 401(a)(9) of the
7Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
8401(a)(9)), the present value of any annuity in excess of that
9payable under section 5702 (relating to maximum single life
10annuity) that is not subject to the limitations under section
11415(b) of the Internal Revenue Code of 1986 shall be paid in a
12lump sum to the beneficiary designated by the member after the
13death of the member. A beneficiary receiving a benefit under
14this subsection shall not be able to elect a payment method
15otherwise allowed under section 5709(b)(2) and (3) (relating to
16payment of benefits from the system).

17Section 333. Sections 5708.1(f), 5708.2(f), 5708.3(f),
185708.5(f), 5708.6(f), 5708.7(f), 5708.8(g), 5709 <-heading, (a)
19and (b) and 5901(a), (c) and (d) of Title 71 are amended to
20read:

21§ 5708.1. Additional supplemental annuities.

22* * *

23(f) Funding.--The actuary shall annually certify the amount
24of appropriations for the next fiscal year needed to fund, over
25a period of ten years from July 1, 2002, the additional monthly
26supplemental annuity provided for in this section, which amounts 
27shall be paid during the period beginning July 1, 2002, and 
28ending June 30, 2010. For fiscal years beginning on or after 
29July 1, 2010, the additional liability provided in this section 
30shall be funded as part of the actuarial accrued liability as
 

1provided in [section 5508 (relating to actuarial cost method).]
2sections 5508 (relating to actuarial cost method for fiscal 
3years ending before July 1, 2015) and 5508.1 (relating to 
4actuarial cost method for fiscal years beginning on or after 
5July 1, 2015).

6* * *

7§ 5708.2. Further additional supplemental annuities.

8* * *

9(f) Funding.--The actuary shall annually estimate the amount
10of Commonwealth appropriations for the next fiscal year needed
11to fund, over a period of ten years from July 1, 2002, the
12additional monthly supplemental annuity provided for in this
13section, which amounts shall be paid during the period beginning 
14July 1, 2002, and ending June 30, 2010. For fiscal years 
15beginning on or after July 1, 2010, the additional liability 
16provided in this section shall be funded as part of the 
17actuarial accrued liability as provided in [section 5508 
18(relating to actuarial cost method).] sections 5508 (relating to 
19actuarial cost method for fiscal years ending before July 1, 
202015) and 5508.1 (relating to actuarial cost method for fiscal 
21years beginning on or after July 1, 2015).

22* * *

23§ 5708.3. Supplemental annuities commencing 1994.

24* * *

25(f) Funding.--For the period beginning July 1, 2002, and 
26ending June 30, 2010, the additional liability for the increase
27in benefits provided in this section shall be funded in equal
28dollar annual installments over a period of ten years beginning
29July 1, 2002. For fiscal years beginning on or after July 1, 
302010, the additional liability for the increase in benefits
 

1provided in this section shall be funded as part of the 
2actuarial accrued liability as provided in [section 5508 
3(relating to actuarial cost method).] sections 5508 (relating to 
4actuarial cost method for fiscal years ending before July 1, 
52015) and 5508.1 (relating to actuarial cost method for fiscal 
6years beginning on or after July 1, 2015).

7* * *

8§ 5708.5. Supplemental annuities commencing 1998.

9* * *

10(f) Funding.--For the period beginning July 1, 2002, and 
11ending June 30, 2010, the additional liability for the increase
12in benefits provided in this section shall be funded in equal
13dollar annual installments over a period of ten years beginning
14July 1, 2002. For fiscal years beginning on or after July 1, 
152010, the additional liability for the increase in benefits 
16provided in this section shall be funded as part of the 
17actuarial accrued liability as provided in [section 5508 
18(relating to actuarial cost method).] sections 5508 (relating to 
19actuarial cost method for fiscal years ending before July 1, 
202015) and 5508.1 (relating to actuarial cost method for fiscal 
21years beginning on or after July 1, 2015).

22* * *

23§ 5708.6. Supplemental annuities commencing 2002.

24* * *

25(f) Funding.--For the period beginning July 1, 2003, and 
26ending June 30, 2010, the additional liability for the increase
27in benefits provided in this section shall be funded in equal
28dollar annual installments over a period of ten years beginning
29July 1, 2003. For fiscal years beginning on or after July 1, 
302010, the additional liability for the increase in benefits
 

1provided in this section shall be funded as part of the 
2actuarial accrued liability as provided in [section 5508 
3(relating to actuarial cost method).] sections 5508 (relating to 
4actuarial cost method for fiscal years ending before July 1, 
52015) and 5508.1 (relating to actuarial cost method for fiscal 
6years beginning on or after July 1, 2015).

7* * *

8§ 5708.7. Supplemental annuities commencing 2003.

9* * *

10(f) Funding.--For the period beginning July 1, 2004, and 
11ending June 30, 2010, the additional liability for the increase
12in benefits provided in this section shall be funded in equal
13dollar annual installments over a period of ten years beginning
14July 1, 2004. For fiscal years beginning on or after July 1, 
152010, the additional liability for the increase in benefits 
16provided in this section shall be funded as part of the 
17actuarial accrued liability as provided in [section 5508 
18(relating to actuarial cost method).] sections 5508 (relating to 
19actuarial cost method for fiscal years ending before July 1, 
202015) and 5508.1 (relating to actuarial cost method for fiscal 
21years beginning on or after July 1, 2015).

22* * *

23§ 5708.8. Special supplemental postretirement adjustment of
242002.

25* * *

26(g) Funding.--For the period beginning July 1, 2003, and 
27ending June 30, 2010, the additional liability for the increase
28in benefits provided in this section shall be funded in equal
29dollar annual installments over a period of ten years beginning
30July 1, 2003. For fiscal years beginning on or after July 1,
 

12010, the additional liability for the increase in benefits 
2provided in this section shall be funded as part of the 
3actuarial accrued liability as provided in [section 5508 
4(relating to actuarial cost method).] sections 5508 (relating to 
5actuarial cost method for fiscal years ending before July 1, 
62015) and 5508.1 (relating to actuarial cost method for fiscal 
7years beginning on or after July 1, 2015).

8* * *

9§ 5709. Payment of benefits from the system.

10(a) Annuities.--Any annuity granted under the provisions of
11this part and paid from the fund shall be paid in equal monthly
12installments.

13(b) Death benefits.--If the amount of a death benefit
14payable from the fund to a beneficiary of a member under section
155707 (relating to death benefits) or under the provisions of
16Option 1 of section 5705(a)(1) (relating to member's options) is
17$10,000 or more, such beneficiary may elect to receive payment
18according to one of the following options:

19(1) a lump sum payment;

20(2) an annuity actuarially equivalent to the amount
21payable; or

22(3) a lump sum payment and an annuity such that the
23annuity is actuarially equivalent to the amount payable less
24the lump sum payment specified by the beneficiary.

25* * *

26§ 5901. The State Employees' Retirement Board.

27(a) Status and membership.--The board shall be an
28independent administrative board and consist of 11 members: the
29State Treasurer, ex officio, two Senators, two members of the
30House of Representatives and six members appointed by the

1Governor, one of whom shall be an annuitant of the system or a 
2participant in the plan who has terminated State service and is 
3receiving or is eligible to receive distributions, for terms of
4four years, subject to confirmation by the Senate. At least five
5board members shall be active members of the system or active 
6participants in the plan, and at least two shall have ten or
7more years of credited State service or shall have been active 
8participants in the plan for ten calendar years. The chairman of
9the board shall be designated by the Governor from among the
10members of the board. Each member of the board who is a member
11of the General Assembly may appoint a duly authorized designee
12to act in his stead. In the event that a board member, who is 
13designated as an active participant or as a participant in the 
14plan who is receiving or is eligible to receive distributions, 
15receives a total distribution of his interest in the plan, that 
16board member may continue to serve on the board for the 
17remainder of his term.

18* * *

19(c) Oath of office.--Each member of the board shall take an
20oath of office that he will, so far as it devolves upon him,
21diligently and honestly, administer the affairs of said board, 
22the system and the plan and that he will not knowingly violate
23or willfully permit to be violated any of the provisions of law
24applicable to this part. Such oath shall be subscribed by the
25member taking it and certified by the officer before whom it is
26taken and shall be immediately filed in the Office of the
27Secretary of the Commonwealth.

28(d) Compensation and expenses.--The members of the board who
29are members of the system or participants in the plan shall
30serve without compensation but shall not suffer loss of salary

1or wages through serving on the board. The members of the board
2who are not members of the system or participants in the plan 
3shall receive $100 per day when attending meetings and all board
4members shall be reimbursed for any necessary expenses. However,
5when the duties of the board as mandated are not executed, no
6compensation or reimbursement for expenses of board members
7shall be paid or payable during the period in which such duties
8are not executed.

9* * *

10Section 334. Section 5902(a.1) introductory paragraph, (3),
11(5) and (6), (b), (c), (e), (h), (i), (j), (k), (l), (m) and (n)
12of Title 71, amended October 24, 2012 (P.L.1436, No.181), are
13amended and the section is amended by adding a subsection to
14read:

15§ 5902. Administrative duties of the board.

16* * *

17(a.1) Secretary.--The secretary shall act as chief
18administrative officer for the board with respect to both the 
19system and the plan. In addition to other powers and duties
20conferred upon and delegated to the secretary by the board, the
21secretary shall:

22* * *

23(3) Review and analyze proposed legislation and
24legislative developments affecting the system or the plan and
25present findings to the board, legislative committees, and
26other interested groups or individuals.

27* * *

28(5) Receive inquiries and requests for information
29concerning the system or the plan from the press,
30Commonwealth officials, State employees, the general public,

1research organizations, and officials and organizations from
2other states, and provide information as authorized by the
3board.

4(6) Supervise a staff of administrative, technical, and
5clerical employees engaged in record-keeping and clerical
6processing activities for both the system and the plan in
7maintaining files of members and participants, accounting for
8contributions, processing payments to annuitants and 
9terminated participants, preparing required reports, and
10retirement counseling. The board may utilize the staff of 
11employees provided for under this paragraph for both the 
12system and the plan but shall allocate the fees, costs and 
13expenses incurred under this paragraph between the system and 
14the plan as appropriate.

15(b) Professional personnel.--The board shall contract for
16the services of a chief medical examiner, an actuary, investment
17advisors and counselors, and such other professional personnel
18as it deems advisable. The board may, with the approval of the
19Attorney General, contract for legal services. The board may 
20utilize the same individuals and firms contracted under this 
21subsection for both the system and the plan but shall allocate 
22the fees, costs and expenses incurred under this subsection 
23between the system and the plan as appropriate.

24(c) Expenses.--

25(1) The board shall, through the Governor, submit to the
26General Assembly annually a budget covering the
27administrative expenses of [this part.] the system and a 
28separate budget covering the administrative expenses of the 
29plan which budgets shall include those expenses necessary to 
30establish the plan and trust.

1(2) Such expenses of the system as approved by the
2General Assembly in an appropriation bill shall be paid from
3investment earnings of the fund.

4(3) For fiscal years ending on or before June 30, 2015,
5such expenses of the plan as approved by the General Assembly
6in an appropriation bill shall be paid from the General Fund.
7For fiscal years beginning on or after July 1, 2015, such
8expenses of the plan as approved by the General Assembly
9shall be paid from interest, pursuant to section 5414(b)
10(relating to investments based on participants' investment
11allocation choices), or assessments on the balances of the
12participants' individual investment accounts.

13(4) Concurrently with its administrative budget, the
14board shall also submit to the General Assembly annually a
15list of proposed expenditures which the board intends to pay
16through the use of directed commissions, together with a list
17of the actual expenditures from the past year actually paid
18by the board through the use of directed commissions. All
19such directed commission expenditures shall be made by the
20board for the exclusive benefit of the system and its
21members.

22* * *

23(e) Records.--

24(1) The board shall keep a record of all its proceedings
25which shall be open to [inspection] access by the public,
26except as otherwise provided in this part or by other law.

27(2) Any record, material or data received, prepared,
28used or retained by the board or its employees, investment
29professionals or agents relating to an investment shall not
30constitute a public record subject to public [inspection]
 

1access under the act of [June 21, 1957 (P.L.390, No.212),
2referred to as the Right-to-Know Law,] February 14, 2008 
3(P.L.6, No.3), known as the Right-to-Know Law, if, in the
4reasonable judgment of the board, the [inspection] access
5would:

6(i) in the case of an alternative investment or
7alternative investment vehicle, involve the release of
8sensitive investment or financial information relating to
9the alternative investment or alternative investment
10vehicle which the fund or trust was able to obtain only
11upon agreeing to maintain its confidentiality;

12(ii) cause substantial competitive harm to the
13person from whom sensitive investment or financial
14information relating to the investment was received; or

15(iii) have a substantial detrimental impact on the
16value of an investment to be acquired, held or disposed
17of by the fund or trust or would cause a breach of the
18standard of care or fiduciary duty set forth in this
19part.

20(3) (i) The sensitive investment or financial
21information excluded from [inspection] access under
22paragraph (2)(i), to the extent not otherwise excluded
23from [inspection] access, shall constitute a public
24record subject to public [inspection] access under the
25Right-to-Know Law once the board is no longer required by
26its agreement to maintain confidentiality.

27(ii) The sensitive investment or financial
28information excluded from [inspection] access under
29paragraph (2)(ii), to the extent not otherwise excluded
30from [inspection] access, shall constitute a public

1record subject to public [inspection] access under the
2Right-to-Know Law once:

3(A) the [inspection] access no longer causes
4substantial competitive harm to the person from whom
5the information was received; or

6(B) the entity in which the investment was made
7is liquidated;

8whichever is later.

9(iii) The sensitive investment or financial
10information excluded from [inspection] access under
11paragraph (2)(iii), to the extent not otherwise excluded
12from [inspection] access, shall constitute a public
13record subject to public [inspection] access under the
14Right-to-Know Law once:

15(A) the [inspection] access no longer has a
16substantial detrimental impact on the value of an
17investment of the fund or trust and would not cause a
18breach of the standard of care or fiduciary duty set
19forth in this part; or

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

22whichever is later.

23(4) Except for the provisions of paragraph (3), nothing
24in this subsection shall be construed to designate any
25record, material or data received, prepared, used or retained
26by the board or its employees, investment professionals or
27agents relating to an investment as a public record subject
28to public [inspection] access under the Right-to-Know Law.

29(5)  Any record, material or data received, prepared,
30used or retained by the board or its employees, or agents

1relating to the contributions, account value or benefits
2payable to or on account of a participant shall not
3constitute a public record subject to public access under the
4Right-to-Know Law if, in the reasonable judgment of the
5board, the access would disclose any of the following:

6(i)  The existence, date, amount and any other
7information pertaining to the voluntary contributions,
8including rollover contributions or trustee-to-trustee
9transfers, of any participant.

10(ii)  The investment options selections of any
11participant.

12(iii)  The balance of a participant's individual
13investment account, including the amount distributed to
14the participant, investment gains or losses or rates of
15return.

16(iv)  The identity of a participant's designated
17beneficiary, successor payee or alternate payee.

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

19(6)  Nothing in this subsection shall be construed to
20designate any record, material or data received, prepared,
21used or retained by the board or its employees, or agents
22relating to the contributions, account value or benefits
23payable to or on account of a participant as a public record
24subject to public access under the Right-to-Know Law.

25(7) The following shall apply:

26(i) Nothing in this part shall be construed to mean
27that the release or publicizing of a record, material or
28data which would not constitute a public record under 
29this subsection shall be a violation of the board's
30fiduciary duties.

1(ii) This subsection shall apply to a record,
2material or data under this subsection, notwithstanding
3any of the following:

4(A) Whether the record, material or data was
5created, generated or stored before the effective
6date of this paragraph.

7(B) Whether the record, material or data was
8previously released or made public.

9(C) Whether a request for the record, material
10or data was made or is pending final response under
11the Right-to-Know Law.

12* * *

13(h) Regulations and procedures.--The board shall, with the
14advice of the Attorney General and the actuary, adopt and
15promulgate rules and regulations for the uniform administration
16of the system. The actuary shall approve in writing all
17computational procedures used in the calculation of
18contributions and benefits pertaining to the system, and the
19board shall by resolution adopt such computational procedures,
20prior to their application by the board. Such rules, regulations
21and computational procedures as so adopted from time to time and
22as in force and effect at any time, together with such tables as
23are adopted pursuant to subsection (j) as necessary for the
24calculation of annuities and other benefits, shall be as
25effective as if fully set forth in this part. Any actuarial
26assumption specified in or underlying any such rule, regulation
27or computational procedure and utilized as a basis for
28determining any benefit shall be applied in a uniform manner.

29(i) Data.--The board shall keep in convenient form such data
30as are stipulated by the actuary in order that an annual

1actuarial valuation of the various accounts of the fund can be
2completed within six months of the close of each calendar year.

3(j) Actuarial investigation and valuation.--The board shall
4have the actuary make an annual valuation of the various
5accounts of the fund within six months of the close of each
6calendar year. In the year 1975 and in every fifth year
7thereafter the board shall have the actuary conduct an actuarial
8investigation and evaluation of the system based on data
9including the mortality, service, and compensation experience
10provided by the board annually during the preceding five years
11concerning the members and beneficiaries of the system. The
12board shall by resolution adopt such tables as are necessary for
13the actuarial valuation of the fund and calculation of
14contributions, annuities and other benefits based on the reports
15and recommendations of the actuary. Within 30 days of their
16adoption, the secretary of the board shall cause those tables
17which relate to the calculation of annuities and other benefits
18to be published in the Pennsylvania Bulletin in accordance with
19the provisions of 45 Pa.C.S. § 725(a) (relating to additional
20contents of Pennsylvania Bulletin) and, unless the board
21specifies therein a later effective date, such tables shall
22become effective on such publication. The board shall include a
23report on the significant facts, recommendations and data
24developed in each five-year actuarial investigation and
25evaluation of the system in the annual financial statement
26published pursuant to the requirements of subsection (m) for the
27fiscal year in which such investigation and evaluation were
28concluded.

29(k) Certification of employer contributions to fund.--The
30board shall, each year in addition to the itemized budget

1required under section 5509 (relating to appropriations and
2assessments by the Commonwealth), certify, as a percentage of
3the members' payroll, the shared-risk contribution rate, the
4employers' contributions as determined pursuant to [section 5508
5(relating to actuarial cost method)] sections 5508 (relating to 
6actuarial cost method for fiscal years ending before July 1, 
72015) and 5508.1 (relating to actuarial cost method for fiscal 
8years beginning on or after July 1, 2015) necessary for the
9funding of prospective annuities for active members and the
10annuities of annuitants and certify the rates and amounts of the
11employers' normal contributions as determined pursuant to
12[section] sections 5508(b) and 5508.1(b), accrued liability
13contributions as determined pursuant to [section] sections
145508(c) and 5508.1(c) and (d), supplemental annuities
15contribution rate as determined pursuant to section 5508(e), the
16experience adjustment factor as determined pursuant to [section] 
17sections 5508(f) and 5508.1(f), the collared contribution rate 
18pursuant to section 5508(h) and the final contribution rate 
19pursuant to section 5508(i), which shall be paid to the fund and
20credited to the appropriate accounts. The board may allocate the 
21final contribution rate and certify various employer 
22contribution rates and amounts based upon the different benefit 
23eligibility, class of service multiplier, superannuation age<-, 
24final average salary calculation and other benefit differences 
25resulting from State service credited for individual members 
26even though such allocated employer contribution rate on behalf 
27of any given member may be more or less than 5% of the member's 
28compensation for the period from July 1, 2010, to June 30, 2011, 
29or may differ from the prior year's contribution for that member 
30by more or less than the percentages used to calculate the
 

1collared contribution rate for that year and may be below any 
2minimum contribution rate established for the collared 
3contribution rate or final contribution rate. These
4certifications shall be regarded as final and not subject to
5modification by the Secretary of the Budget.

6(l) Member contributions.--The board shall cause all pickup
7contributions made on behalf of a member to be credited to the
8account of the member and credit to his account any other
9payment made by such member, including, but not limited to,
10amounts collected by the Public School Employees' Retirement
11System for the reinstatement of previous State service or
12creditable nonstate service and amounts paid to return benefits
13paid after the date of return to State service or entering
14school service representing lump sum payments made pursuant to
15section 5705(a)(4)(iii) <-or (a.1) (relating to member's options)
16and member's annuity payments, but not including other benefits
17returned pursuant to section 5706(a.2) or (a.3) (relating to
18termination of annuities), and shall pay all such amounts into
19the fund.

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

1of each department for the use of the State employees and the
2public.

3(n) Independent [audit] audits.--The board shall provide for
4[an annual audit] annual audits of the system and the plan by
5[an] independent certified public [accountant] accountants,
6which [audit] audits shall include the board's accrual and
7expenditure of directed commissions. The board may use the same 
8independent certified public accountant for the audits of both 
9the system and the plan.

10* * *

11(p)  Participant and employer contributions to the trust.--
12The board shall, each year in addition to any fees and itemized
13budget required under section 5509 (relating to appropriations
14and assessments by the Commonwealth), certify, as a percentage
15of each participant's compensation, the employer defined
16contributions, which shall be paid to the trust and credited to
17each participant's individual investment account. These
18certifications shall be regarded as final and not subject to
19modification by the Secretary of the Budget. The board shall
20cause all mandatory pickup participant contributions made on
21behalf of a participant and all voluntary contributions made by
22a participant to be credited to the participant's individual
23investment account.

24Section 335. Section 5903 heading, (a) and (c) of Title 71
25are amended and the section is amended by adding a subsection to
26read:

27§ 5903. Duties of the board to advise and report to heads of
28departments [and], members and participants.

29(a) Manual of regulations.--The board shall, with the advice
30of the Attorney General and the actuary, prepare and provide,

1within 90 days of the effective date of this part, a manual
2incorporating rules and regulations consistent with the
3provisions of this part to the heads of departments who shall
4make the information contained therein available to the general
5membership. The board shall thereafter advise the heads of
6departments within 90 days of any changes in such rules and
7regulations due to changes in the law or due to changes in
8administrative policies. As soon as practicable after the
9commissioner's announcement with respect thereto, the board
10shall also advise the heads of departments as to any cost-of-
11living adjustment for the succeeding calendar year in the amount
12of the limitation under IRC § 401(a)(17) and the dollar amounts
13of the limitations under IRC § [415(b)] 415. As soon as
14practicable after January 1 of each year, the board shall also
15advise the heads of departments of the employees for whom,
16pursuant to section 5502.1 (relating to waiver of regular member
17contributions and Social Security integration member
18contributions), pickup contributions are not to be made.

19* * *

20(b.1)  Participant status statements.--The board shall
21furnish annually to each participant, on or before April 1 and
22more frequently as the board may agree or as required by law, a
23statement for each participant in the plan showing the
24accumulated total defined contributions credited to the
25participant's individual investment account, the nature and type
26of investments and the investment allocation of future
27contributions as of December 31 of the previous year and
28requesting the participant to make any necessary correction or
29revision regarding his designated beneficiary.

30(c) Purchase of credit and full coverage membership

1certifications.--Upon receipt of an application from an active
2member or eligible school employee to purchase credit for
3previous State or creditable nonstate service, an election for 
4membership in a specific class <-or subclass of service, or an
5election to become a full coverage member, the board shall
6determine and certify to the member the amount required to be
7paid by the member. When necessary, the board shall certify to
8the previous employer the amount due in accordance with sections
95504 (relating to member contributions for the purchase of
10credit for previous State service or to become a full coverage
11member) and 5505 (relating to contributions for the purchase of
12credit for creditable nonstate service).

13* * *

14Section 336. Section 5904(c)(2) of Title 71 is amended to
15read:

16§ 5904. Duties of the board to report to the Public School
17Employees' Retirement Board.

18* * *

19(c) Applications for benefits for school employees.--Upon
20receipt of notification and the required data from the Public
21School Employees' Retirement Board that a former State employee
22who elected multiple service has applied for a public school
23employees' retirement benefit or, in the event of his death, his
24legally constituted representative has applied for such benefit,
25the board shall:

26* * *

27(2) transfer to the Public School Employees' Retirement
28Fund the total accumulated deductions standing to such
29member's credit and the actuarial reserve required on account
30of years of credited service in the State system, final

1average salary determined on the basis of his compensation as 
2a member in both systems and the average noncovered salary to
3be charged to the State accumulation account, the State
4Police benefit account or the enforcement officers' benefit
5account, as each case may require.

6* * *

7Section 337. Section 5905 heading, (b)(3), (c.1) and (g) of
8Title 71, amended October 24, 2012 (P.L.1436, No.181), are
9amended and the section is amended by adding subsections to
10read:

11§ 5905. Duties of the board regarding applications and
12elections of members and participants.

13* * *

14(b) School employees electing multiple service status.--Upon
15receipt of notification from the Public School Employees'
16Retirement Board that a former State employee has become an
17active member in the Public School Employees' Retirement System
18and has elected to become a member with multiple service status
19the board shall:

20* * *

21(3) in case of a former State employee who is not
22receiving an annuity from the system and his total
23accumulated deductions were withdrawn, certify to the former
24State employee the accumulated deductions as they would have
25been at the time of his separation had he been a full
26coverage member together with statutory interest for all
27periods of subsequent State service eligible for membership 
28in the system and school service as a member of the Public 
29School Employees' Retirement System to the date of repayment.
30Such amount shall be restored by him and shall be credited

1with statutory interest as such payments are restored.

2* * *

3(c.1) Termination of service by a member.--In the case of
4any member terminating State service who is entitled to an
5annuity and who is not then a disability annuitant, the board
6shall advise such member in writing of any benefits from the 
7system to which he may be entitled under the provisions of this
8part and shall have the member prepare, on or before the date of
9termination of State service, one of the following three forms,
10a copy of which shall be given to the member and the original of
11which shall be filed with the board:

12(1) an application for the return of total accumulated
13deductions;

14(2) an election to vest his retirement rights and, if he
15is a joint coverage member and so desires, elect to become a
16full coverage member and agree to pay within 30 days of the
17date of termination of service the lump sum required; or

18(3) an application for an immediate annuity and, if he
19desires:

20(i) an election to convert his medical, major
21medical and hospitalization insurance coverage to the
22plan for State annuitants; and

23(ii) if he is a joint coverage member, an election
24to become a full coverage member and an agreement to pay
25within 30 days of date of termination of service the lump
26sum required.

27(c.2) Termination of service by a participant.--In the case
28of a participant terminating State service, the board shall
29advise the participant and, if the participant is married, the
30board may advise the participant's spouse, in writing, of the

1vested accumulated total defined contributions credited to the
2participant's individual investment account as of the date
3stated in the writing, any notices regarding rollover or other
4matters required by IRC or other law, the obligation of the
5participant to commence distributions from the plan by the
6participant's required beginning date and the ability to receive
7all or part of the vested balance in the participant's
8individual investment account in a lump sum or in such other
9form as the board may authorize or as required by law.

10* * *

11(e.2)  Notification to inactive participants approaching
12required beginning date.--The board shall notify each inactive
13participant who has terminated State service and had not
14commenced distribution by 90 days before the participant's
15required beginning date and, if the participant is married, the
16board may advise the participant's spouse, in writing, that the
17inactive participant has an obligation to commence distributions
18by the required beginning date in a form and manner required by
19IRC § 401(a)(9) and other applicable provisions of the IRC.

20* * *

21(f.1)  Initial payment to a participant.--The board shall
22make the initial payment to a participant who has applied for a
23distribution within 60 days of the filing of his application.

24(g) Death benefits.--Upon receipt of notification from the
25head of a department of the death of an active member, a member 
26performing USERRA leave [or], a member on leave without pay, an 
27active participant, an inactive participant on leave without pay 
28or a former participant performing USERRA leave, the board shall
29advise the designated beneficiary of the benefits to which he is
30entitled, and shall make the first payment to the beneficiary

1within 60 days of receipt of certification of death and other
2necessary data. If no beneficiary designation is in effect at
3the date of the member's death or no notice has been filed with
4the board to pay the amount of the benefits to the member's
5estate, the board is authorized to pay the benefits to the
6executor, administrator, surviving spouse or next of kin of the
7deceased member, and payment pursuant hereto shall fully
8discharge the fund from any further liability to make payment of
9such benefits to any other person. If the surviving spouse or
10next of kin of the deceased member cannot be found for the
11purpose of paying the benefits for a period of seven years from
12the date of death of the member, then the benefits shall be
13escheated to the Commonwealth for the benefit of the fund. If no 
14beneficiary designation is in effect at the date of a 
15participant's death or no notice has been filed with the board 
16to pay the amount of the benefits to the participant's estate, 
17the board may pay the benefits to the surviving spouse, 
18executor, administrator or next of kin of the deceased 
19participant and payment pursuant hereto shall fully discharge 
20the fund from any further liability to make payment of such 
21benefits to any other person.

22* * *

<-23Section 338. Section 5905.1(a) and (b)(2) and (3) of Title
2471 are amended to read:

25§ 5905.1. Installment payments of accumulated deductions.

26(a) General rule.--Notwithstanding any other provision of
27this part, whenever a member elects to withdraw his total
28accumulated deductions pursuant to section 5311(a) (relating to
29eligibility for refunds) or 5701 (relating to return of total
30accumulated deductions) or elects to receive a portion of his

1benefit payable as a lump sum pursuant to section 5705(a)(4)
2(iii) or (a.1) (relating to member's options), the member may
3elect to receive the amount in not more than four installments.

4(b) Payment of first installment.--The payment of the first
5installment shall be made in the amount and within seven days of
6the date specified by the member, except as follows:

7* * *

8(2) In the case of an election as provided in section
95705(a)(4)(iii) or (a.1) by a member terminating service
10within 60 days prior to the end of a calendar year and upon
11receipt of all required data from the head of the department
12and, if the member has Class G, Class H, Class I, Class J,
13Class K, Class L, Class M or Class N service, any data
14required from the county retirement system or pension plan to
15which the member was a contributor before being transferred
16to State employment, the board shall not be required to pay
17the first installment prior to 21 days after the later of the
18filing of the application and the receipt of the data or the
19date of termination of service, but, unless otherwise
20directed by the member, the payment shall be made no later
21than 45 days after the filing of the application and the
22receipt of the data or the date of termination of service,
23whichever is later.

24(3) In the case of an election as provided in section
255705(a)(4)(iii) or (a.1) by a member who is not terminating
26service within 60 days prior to the end of a calendar year
27and upon receipt of all required data from the head of the
28department and, if the member has Class G, Class H, Class I,
29Class J, Class K, Class L, Class M or Class N service, any
30data required from the county retirement system or pension

1plan to which the member was a contributor before being
2transferred to State employment, the board shall not be
3required to pay the first installment prior to 45 days after
4the filing of the application and the receipt of the data or
5the date of termination of service, whichever is later.

6* * *

<-7Section 338. (Reserved).

8Section 339. Section 5906(a)(3), (b), (d), (e), (g), (h),
9(i) and (l) of Title 71, amended October 24, 2012 (P.L.1436,
10No.181), are amended and the section is amended by adding a
11subsection to read:

12§ 5906. Duties of heads of departments.

13(a) Status of members and participants.--The head of
14department shall, at the end of each pay period, notify the
15board in a manner prescribed by the board of salary changes
16effective during that period for any members and participants
17of the department, the date of all removals from the payroll,
18and the type of leave of any members and participants of the
19department who have been removed from the payroll for any time
20during that period, and:

21* * *

22(3) if the removal is due to termination of State
23service, he shall furnish the board with a complete State
24service record, including service in other departments or
25agencies, or creditable nonstate service and;

26(i) in the case of death of the member or 
27participant the head of the department shall so notify
28the board;

29(ii) in the case of a service connected disability
30of a member the head of department shall, to the best of

1his ability, investigate the circumstances surrounding
2the disablement of the member and submit in writing to
3the board information which shall include but not
4necessarily be limited to the following: date, place and
5time of disablement to the extent ascertainable; nature
6of duties being performed at such time; and whether or
7not the duties being performed were authorized and
8included among the member's regular duties. In addition,
9the head of department shall furnish in writing to the
10board all such other information as may be related to the
11member's disablement;

12(iii) in the case of a member terminating from The
13Pennsylvania State University who is a member of the
14system with five or more but less than ten eligibility
15points and who has terminated State service on June 30,
161997, because of the transfer of his job position or
17duties to a controlled organization of the Penn State
18Geisinger Health System or because of the elimination of
19his job position or duties due to the transfer of other
20job positions or duties to a controlled organization of
21the Penn State Geisinger Health System, the head of the
22department shall so certify to the board.

23(b) Records and information.--At any time at the request of
24the board and at termination of service of a member or a 
25participant, the head of department shall furnish service and
26compensation records and such other information as the board may
27require and shall maintain and preserve such records as the
28board may direct for the expeditious discharge of its duties.

29* * *

30(c.1) Participant and employer defined contributions.--The

1head of the department shall:

2(1) Cause the mandatory pickup participant contributions
3on behalf of a participant to be made and cause to be
4deducted any voluntary contributions authorized by a
5participant.

6(2) Cause the employer defined contributions on behalf
7of a participant to be made.

8(3) Notify the board at times and in a manner prescribed
9by the board of the compensation of any participant to whom
10the limitation under IRC § 401(a)(17) either applies or is
11expected to apply and cause the participant's contributions
12to be deducted from payroll to cease at the limitation under
13IRC § 401(a)(17) on the payroll date if and when such limit
14shall be reached.

15(4) Certify to the State Treasurer the amounts picked up
16and deducted and the employer defined contributions being
17made and send the total amount picked up, deducted and
18contributed together with a duplicate of the voucher to the
19secretary of the board every pay period or on such schedule
20as established by the board.

21(d) New employees subject to mandatory membership or 
22participation.--Upon the assumption of duties of each new State
23employee whose membership in the system or plan is mandatory,
24the head of department shall cause an application for membership
25or participation and a nomination of beneficiary, who shall be 
26the participant's spouse if the participant is married, unless 
27the spouse otherwise consents, to be made by such employee and
28filed with the board and shall make pickup contributions or 
29mandatory pickup participant contributions from the effective
30date of State employment.

1(e) New employees subject to optional membership or 
2participation.--The head of department shall, upon the
3employment or entering into office of any State employee whose
4membership in the system or participation in the plan is not
5mandatory, inform such employee of his opportunity to become a
6member of the system or participant in the plan. If such
7employee so elects, the head of department shall cause an
8application for membership and a nomination of beneficiary, who 
9shall be the participant's spouse if the participant is married, 
10unless the spouse otherwise consents, to be made by him and
11filed with the board and shall cause proper contributions to be
12made from the effective date of membership or participation.

13* * *

14(g) Former school employee contributors.--

15(1) The head of department shall, upon the employment of
16a former contributor to the Public School Employees'
17Retirement System who is not an annuitant of the Public
18School Employees' Retirement System, advise such employee of
19his right to elect within 365 days of entry into the system
20to become a multiple service member, and in the case of any
21such employee who so elects and has withdrawn his accumulated
22deductions, require him to reinstate his credit in the Public
23School Employees' Retirement System. The head of the
24department shall advise the board of such election.

25(2) Paragraph (1) shall not apply to a State employee
26who is employed in a position where he is or may be a
27participant in the plan other than by an election under
28section 5416 (relating to election by members to be
29participants).

30(h) Former school employee annuitants.--

1(1) The head of department shall, upon the employment of
2an annuitant of the Public School Employees' Retirement
3System who applies for membership in the system, advise such
4employee that he may elect multiple service membership within
5365 days of entry into the system and if he so elects his
6public school employee's annuity will be discontinued
7effective upon the date of his return to State service and,
8upon termination of State service and application for an
9annuity, the annuity will be adjusted in accordance with
10section 5706 (relating to termination of annuities). The head
11of department shall advise the board of such election.

12(2) Paragraph (1) shall not apply to a State employee
13who is employed in a position where he is or may be a
14participant in the plan other than by an election under
15section 5416.

16(i) Annual statement to members.--Annually, upon receipt
17from the board, the head of department shall furnish to each
18member the statement specified in section 5903(b) (relating to
19duties of the board to advise and report to heads of departments
20[and], members and participants).

21* * *

22(l) State employees performing USERRA or military-related
23leave of absence.--The head of department shall report to the
24board any State employee who ceases to be an active member or 
25active participant to perform USERRA service, or who is granted
26a leave of absence under 51 Pa.C.S. § 4102 (relating to leaves
27of absence for certain government employees) or a military leave
28of absence under 51 Pa.C.S. § 7302 (relating to granting
29military leaves of absence), the date on which the USERRA
30service, leave of absence or military leave of absence began,

1the date on which the State employee is reemployed from USERRA
2leave or returns after the leave of absence or military leave of
3absence, if the event occurs, and any other information the
4board may require or direct.

5* * *

6Section 340. Section 5907 heading, (a), (e) and (f) of Title
771 are amended and the section is amended by adding subsections
8to read:

9§ 5907. Rights and duties of State employees [and], members and 
10participants.

11(a) Information on new employees.--Upon his assumption of
12duties each new State employee shall furnish the head of
13department with a complete record of his previous State service,
14his school service or creditable nonstate service, the name and 
15address of his spouse, if applicable, if he is, or is eligible 
16to be, a participant in the plan and proof of his date of birth
17and current status in the system and the plan and in the Public
18School Employees' Retirement System and the School Employees' 
19Defined Contribution Plan. Willful failure to provide the
20information required by this subsection to the extent available
21upon entrance into the system shall result in the forfeiture of
22the right of the member to subsequently assert any right to
23benefits based on any of the required information which he
24failed to provide. In any case in which the board finds that a
25member is receiving an annuity based on false information, the
26total amount received predicated on such false information
27together with statutory interest doubled and compounded shall be
28deducted from the present value of any remaining benefits to
29which the member is legally entitled.

30* * *

1(b.1) Application for participation.--On or after January 1, 
22015, in the case of a new employee who is not currently a 
3participant in the plan and whose participation is mandatory, or 
4in the case of a new employee whose participation is not 
5mandatory but is permitted and who desires to become a 
6participant in the plan, the new employee shall execute an 
7application for participation and a nomination of a beneficiary, 
8who shall be the participant's spouse if the participant is 
9married, unless the spouse otherwise consents.

10* * *

11(d.2)  Contributions for USERRA leave.--Any active
12participant or inactive participant on leave without pay or
13former participant who was reemployed from USERRA leave who
14desires to make mandatory pickup participant contributions and
15voluntary contributions for his USERRA leave shall so notify the
16board within the time period required under 38 U.S.C. Ch. 43
17(relating to employment and reemployment rights of members of
18the uniformed services) and IRC § 414(u) of his desire to make
19such contributions. Upon making the permitted mandatory pickup
20participant contributions within the allowed time period, the
21head of the department shall make the corresponding employer
22defined contributions at the same time.

23(d.3) Voluntary contributions by a participant.--Any
24participant who desires to make voluntary contributions to be
25credited to his individual investment account shall notify the
26board and, upon compliance with the requirements, procedures and
27limitations established by the board in the plan document, may
28do so subject to the limitations under IRC §§ 401(a) and 415 and
29other applicable law.

30(e) Beneficiary for death benefits from system.--Every

1member shall nominate a beneficiary by written designation filed
2with the board as provided in section 5906(d) or (e) (relating
3to duties of heads of departments) to receive the death benefit
4payable under section 5707 (relating to death benefits) or the
5benefit payable under the provisions of Option 1 of section
65705(a)(1) (relating to member's options). Such nomination may
7be changed at any time by the member by written designation
8filed with the board. A member may also nominate a contingent
9beneficiary or beneficiaries to receive the death benefit
10provided under section 5707 or the benefit payable under the
11provisions of Option 1 of section 5705(a)(1).

12(e.1) Beneficiary for death benefits from plan.--Every
13participant shall nominate a beneficiary by written designation
14filed with the board as provided in section 5906(d) or (e) to
15receive the death benefit payable under section 5408 (relating
16to death benefits). A participant may also nominate a contingent
17beneficiary or beneficiaries to receive the death benefit
18provided under section 5408. The nomination may be changed at
19any time by the participant by written designation filed with
20the board, provided that, if the participant is married, the
21participant's spouse consents to the change unless the change is
22to name the spouse as beneficiary or is limited to contingent
23beneficiaries. If the spouse of a participant in the plan is 
24deemed to be the beneficiary by operation of law, the person 
25last nominated as beneficiary in writing filed with the board 
26shall become the contingent beneficiary.

27(e.2) Beneficiary for combined service employee.--A combined
28service employee may designate or nominate different persons to
29be beneficiaries, survivor annuitants and successor payees for
30his benefits from the system and the plan.

1(f)  Termination of service by members.--Each member who
2terminates State service and who is not then a disability
3annuitant shall execute on or before the date of termination of
4service the appropriate application, duly attested by the member
5or his legally constituted representative, electing to:

6(1)  withdraw his total accumulated deductions; or

7(2)  vest his retirement rights; and if he is a joint
8coverage member, and so desires, elect to become a full
9coverage member and agree to pay within 30 days of the date
10of termination of service the lump sum required; or

11(3)  receive an immediate annuity and may,

12(i)  if eligible, elect to convert his medical, major
13medical, and hospitalization coverage to the plan for
14State annuitants; and

15(ii)  if he is a joint coverage member, elect to
16become a full coverage member and agree to pay within 30
17days of date of termination of service the lump sum
18required.

19* * *

20(g.1) Deferral of retirement rights.--If a participant
21terminates State service and does not commence receiving a
22distribution, the participant shall nominate a beneficiary, who
23shall be the participant's spouse if the participant is married,
24unless the spouse otherwise consents by written designation
25filed with the board, and the participant may any time
26thereafter, but no later than the participant's required
27beginning date, withdraw the vested accumulated total defined
28contributions standing to the participant's credit or apply for
29another form of distribution required by law or authorized by
30the board.

1* * *

2(l) Continuing obligation regarding spouses.--A participant
3shall have the continuing obligation to notify the board in
4writing of any change in marital status and, if applicable, the
5name and current address of the participant's spouse.

6* * *

7Section 341. Sections 5931(b), 5932, 5934, 5935, 5936, 5937,
85938, 5939, 5951 and 5953 of Title 71 are amended to read:

9§ 5931. Management of fund and accounts.

10* * *

11(b) Crediting of interest.--The board, annually, shall allow
12the required interest on the mean amount for the preceding year
13to the credit of each of the accounts other than the individual 
14investment accounts. The amount so allowed shall be credited
15thereto by the board and transferred from the interest reserve
16account.

17* * *

18§ 5932. State Employees' Retirement Fund.

19(a) General rule.--The fund shall consist of all balances in
20the several separate accounts set apart to be used under the
21direction of the board for the benefit of members of the system;
22and the Treasury Department shall credit to the fund all moneys
23received from the Department of Revenue arising from the
24contributions relating to or on behalf of members of the system
25required under the provisions of Chapter 55 (relating to
26contributions), and any income earned by the investments or
27moneys of said fund. There shall be established and maintained
28by the board the several ledger accounts specified in sections
295933 (relating to members' savings account), 5934 (relating to
30State accumulation account), 5935 (relating to annuity reserve

1account), 5936 (relating to State Police benefit account), 5937
2(relating to enforcement officers' benefit account), 5938
3(relating to supplemental annuity account) and 5939 (relating to
4interest reserve account).

5(b) Individual investment accounts and trust.--The 
6individual investment accounts that are part of the trust shall 
7not be part of the fund. Mandatory pickup participant 
8contributions, voluntary contributions and employer defined 
9contributions made under this part and any income earned by the 
10investment of such contributions shall not be paid or credited 
11to the fund but shall be paid to the trust and credited to the 
12individual 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 and other employers before 
21July 1, 2015) and 5507.1 (relating to contributions to the 
22system by the Commonwealth and other employers commencing July 
231, 2015) except that the amounts received under the provisions 
24of the act of May 12, 1943 (P.L.259, No.120), and the amounts 
25received under the provisions of the Liquor Code, act of April 
2612, 1951 (P.L.90, No.21), shall be credited to the State Police 
27benefit account or the enforcement officers' benefit account as 
28the case may be. All amounts transferred to the fund by county 
29retirement systems or pension plans in accordance with the 
30provisions of section 5507(c) also shall be credited to the
 

1State accumulation account. All amounts transferred to the fund 
2by the Public School Employees' Retirement System in accordance 
3with section 5303.2(e) (relating to election to convert school 
4service to State service), except amounts credited to the 
5members' savings account, and all amounts paid by the Department 
6of Corrections in accordance with section 5303.2(f) also shall 
7be credited to the State accumulation account. The State 
8accumulation account shall be credited with valuation interest. 
9The reserves necessary for the payment of annuities and death 
10benefits resulting from membership in the system as approved by 
11the board and as provided in Chapter 57 (relating to benefits) 
12shall be transferred from the State accumulation account to the 
13annuity reserve account provided for in section 5935 (relating 
14to annuity reserve account), except that the reserves necessary 
15on account of a member who is an officer of the Pennsylvania 
16State Police or an enforcement officer shall be transferred from 
17the State accumulation account to the State Police benefit 
18account provided for in section 5936 (relating to State Police 
19benefit account) or to the enforcement officers' benefit account 
20as provided for in section 5937 (relating to enforcement 
21officers' benefit account) as the case may be. The reserves 
22necessary for the payment of supplemental annuities in excess of 
23those reserves credited to the supplemental annuity account on 
24June 30, 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 commencing 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 commencing 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, spouse or 
27alternate payee of a participant shall have the ability to 
28commute, sell, assign, alienate, anticipate, mortgage, 
29pledge, hypothecate, commutate or otherwise transfer or 
30convey any benefit or interest in an individual investment
 

1account or rights to receive or direct distributions under 
2this part or under agreements entered into under this part 
3except as otherwise provided in this part and in the case of 
4either a member 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) (i) Rights under this part shall be subject to
23forfeiture as provided by the act of July 8, 1978 
24(P.L.752, No.140), known as the Public Employee Pension
25Forfeiture Act, and by or pursuant to section 16(b) of
26Article V of the Constitution of Pennsylvania.
27Forfeitures under this subsection or under any other
28provision of law may not be applied to increase the
29benefits that any member would otherwise receive under
30this part.

1(ii) Notwithstanding this paragraph, the act of July 
28, 1978 (P.L.752, No.140), known as the Public Employee 
3Pension Forfeiture Act, and section 16(b) of Article V of 
4the Constitution of Pennsylvania or 42 Pa.C.S. § 3352 
5(relating to pension rights), the accumulated mandatory 
6participant contributions and accumulated voluntary 
7contributions standing to the credit of a participant 
8shall not be forfeited but shall be available for payment 
9of fines and restitution as provided by law. Furthermore, 
10amounts in the trust that have been ordered to be 
11distributed to an alternate payee as the result of an 
12equitable distribution of marital property as part of an 
13approved domestic relations order entered before the date 
14of the order or action in a court or other tribunal 
15resulting in a forfeiture of a participant's interest in 
16the trust shall not be subject to the Public Employee 
17Pension Forfeiture Act or section 16(b) of Article V of 
18the Constitution of Pennsylvania or 42 Pa.C.S. § 3352. 
19Any accumulated employer defined contributions forfeited 
20as a result of this paragraph or other law shall be 
21retained by the board and notwithstanding sections 
225412(2) (relating to powers and duties of board), 5415 
23(relating to expenses) and 5902(c) (relating to 
24administrative duties of the board) used for the payment 
25of expenses of the plan.

26(3) Rights under this part shall be subject to
27attachment in favor of an alternate payee as set forth in an
28approved domestic relations order.

29(4) Effective with distributions made on or after
30January 1, 1993, and notwithstanding any other provision of

1this part to the contrary, a distributee may elect, at the
2time and in the manner prescribed by the board, to have any
3portion of an eligible rollover distribution paid directly to
4an eligible retirement plan by way of a direct rollover. For
5purposes of this paragraph, a "distributee" includes a member
6[and], a participant, a member's surviving spouse [and], a 
7participant's surviving spouse, a member's former spouse who
8is an alternate payee under an approved domestic relations
9order[.], a participant's former spouse who is an alternate 
10payee under an approved domestic relations order and anyone 
11else authorized under the IRC and the plan terms approved by 
12the board to have an eligible rollover distribution paid 
13directly to an eligible retirement plan by way of a direct 
14rollover. For purposes of this paragraph, the term "eligible 
15rollover distribution" has the meaning given such term by IRC
16§ 402(f)(2)(A), and "eligible retirement plan" has the
17meaning given such term by IRC § 402(c)(8)(B), except that a
18qualified trust shall be considered an eligible retirement
19plan only if it accepts the distributee's eligible rollover
20distribution; however, in the case of an eligible rollover
21distribution to a surviving spouse, an eligible retirement
22plan is an "individual retirement account" or an "individual
23retirement annuity" as those terms are defined in IRC §
24408(a) and (b).

25(5) No married participant may take an action
26inconsistent with the spousal consent provisions of this part
27or the plan.

28(b) Authorized payments from fund.--The board shall be
29authorized to pay from the fund:

30(1) In the case of a member or participant who is

1terminating service, the amount determined after
2certification by the head of the department that the member
3or participant is so obligated, and after review and approval
4by the department or agency's legal representative or upon
5receipt of an assignment from the member or participant in
6the amount so certified[.], except that no payment shall be 
7made from the individual investment account of a participant 
8until the participant otherwise applies for and receives a 
9distribution and shall not exceed the amount of the 
10distribution.

11(2) In the case of a loan to a member the amount of the
12loan and any fine or interest due thereon to the credit union
13except 5% of the total amount due which is to be retained in
14the fund as a collection fee:

15(i) if the member obtaining the loan shall have been
16in default in required payments for a period of not less
17than two years; or

18(ii) at such time as the Department of Banking shall
19require the credit union to charge the amount of the loan
20against the reserve fund of such credit union.

21Any member who shall have pledged such rights as
22security for a loan from a credit union and, on whose
23behalf the board shall have made any payment by reason of
24that member's default, may not thereafter pledge or
25assign such rights to a credit union.

26(3) In the case of a participant whose former spouse is
27an alternate payee of an equitable distribution of marital
28assets under an approved domestic relations order, a lump sum
29of the alternate payee's interest in the participant's
30accumulated total defined contributions. This paragraph shall

1apply without regard to whether the participant has not
2terminated, is terminating or has terminated State service.

3Section 342. (Reserved).

4Section 343. Section 5953.1(a) heading, introductory
5paragraph and (1), (b), (c) and (d) of Title 71 are amended and
6the section is amended by adding a subsection to read:

7§ 5953.1. Approval of domestic relations orders.

8(a) Certification regarding members.--A domestic relations
9order pertaining to a member of the system shall be certified as
10an approved domestic relations order by the secretary of the
11board, or his designated representative, only if that order
12meets all of the following:

13(1) Requires the system to provide any type or form of
14benefit or any option applicable to members already provided
15under this part.

16* * *

17(a.1) Certification regarding participants.--A domestic
18relations order pertaining to a participant shall be certified
19as an approved domestic relations order by the secretary of the
20board or his designated representative if that order meets all
21of the following:

22(1)  Does not require the plan to provide a type or form
23of benefit or an option applicable to members of the system
24or participants in the plan.

25(2)  Does not require the segregation of the alternate
26payee's share of the participant's individual investment
27account into a subaccount or newly established individual
28account titled in the name of the alternate payee.

29(3)  Does not require the plan to recover or distribute
30funds which were distributed to the participant or at the

1participant's direction prior to the approval of the domestic
2relations order by the secretary of the board or his
3designated representative.

4(4)  Requires the plan to pay to the alternate payee no
5more than the lesser of the vested amount of the
6participant's individual investment account specified by the
7domestic relations order or the vested amount of the
8participant's individual investment account as of the date of
9the transfer of the alternate payee's share to the alternate
10payee.

11(5)  States that the plan shall not be required to recoup
12or make good for losses in value to the participant's
13individual investment account incurred between the date of
14the valuation of the account used for equitable distribution
15purposes and the date of distribution to the alternate payee.

16(6)  Specifies the amount or percentage of the
17participant's individual investment account to be paid to the
18alternate payee and the date upon which such valuation is
19based.

20(7)  Specifies the name and last known mailing address,
21if any, of the participant and the name and last known
22mailing address of each alternate payee covered by the order
23and states that it is the responsibility of each alternate
24payee to keep a current mailing address on file with the
25plan.

26(8)  Does not grant an alternate payee the rights,
27privileges or options available to a participant.

28(9)  Requires the participant to execute an authorization
29allowing each alternate payee to monitor the participant's
30compliance with the terms of the domestic relations order

1through access to information concerning the participant
2maintained by the plan. An authorization granted pursuant to
3this section shall be construed as an authorization for the
4alternate payee to receive information concerning the
5participant which relates to the administration, calculation
6and payment of the alternate payee's share of the
7participant's account and not as an authorization to exercise
8the rights afforded to participants or obtain information
9which is not related to the administration, calculation and
10payment of alternate payee's share of the participant's
11individual investment account.

12(10)  In the case of a participant who has not yet begun
13to receive distributions as of the date the domestic
14relations order is approved by the secretary of the board or
15his designated representative, requires the immediate
16distribution of the alternate payee's share of the
17participant's individual investment account, which may be by
18direct payment, eligible rollover or trustee-to-trustee
19transfer to another eligible plan or qualified account owned
20by the alternate payee, notwithstanding any other provision
21of this part or the plan that would require a distribution of
22accumulated employer defined contributions in the form of an
23annuity or to require the purchase of an annuity.

24(11)  In the case of a participant who is currently
25receiving distributions from the trust as of the date the
26domestic relations order is approved by the secretary of the
27board or his designated representative, may not order the
28board to pay the alternate payee more than the balance
29available in the participant's individual investment account
30as of the date the order is approved or require that

1distributions continue to the alternate payee after the death
2of the participant and final settlement of the participant's
3individual investment account.

4(b) Determination by secretary.--Within a reasonable period
5after receipt of a domestic relations order, the secretary of
6the board, or his designated representative, shall determine
7whether this order is an approved domestic relations order and
8notify the member or participant and each alternate payee of
9this determination. Notwithstanding any other provision of law,
10the exclusive remedy of any member, participant or alternate
11payee aggrieved by a decision of the secretary of the board, or
12his designated representative, shall be the right to an
13adjudication by the board under 2 Pa.C.S. Ch. 5 Subch. A
14(relating to practice and procedure) with appeal therefrom to
15the Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to
16judicial review) and 42 Pa.C.S. § 763(a)(1) (relating to direct
17appeals from government agencies).

18(c) Other orders.--The requirements for approval identified
19in [subsection (a)] subsections (a) and (a.1) shall not apply to
20any domestic relations order which is an order for support as
21the term is defined at 23 Pa.C.S. § 4302 (relating to
22definitions) or an order for the enforcement of arrearages as
23provided in 23 Pa.C.S. § 3703 (relating to enforcement of
24arrearages). These orders shall be approved to the extent that
25they do not attach moneys in excess of the limits on attachments
26as established by the laws of the United States and this
27Commonwealth[.], require distributions of benefits in a manner 
28which would violate the laws of the United States, any other 
29state or this Commonwealth or require the distribution of funds 
30for support or enforcement of arrearages against a participant
 

1who is not receiving distributions from the plan at the time the 
2order is entered. These orders may be approved notwithstanding 
3any other provision of this part or the plan that would require 
4a distribution of accumulated employer defined contributions in 
5the form of an annuity or to require the purchase of an annuity.

6(d) Obligation discharged.--Only the requirements of this
7part and any regulations promulgated hereunder shall be used to
8govern the approval or disapproval of a domestic relations
9order. Therefore, if the secretary of the board, or his
10designated representative, acts in accordance with the
11provisions of this part and any promulgated regulations in
12approving or disapproving a domestic relations order, then the
13obligations of the system or the plan with respect to such
14approval or disapproval shall be discharged.

15Section 344. Sections 5953.2, 5953.3 and 5953.4(a) of Title
1671 are amended to read:

17§ 5953.2. Irrevocable beneficiary.

18Notwithstanding any other provision of this part, a domestic
19relations order may provide for an irrevocable beneficiary. A
20domestic relations order requiring the nomination of an
21irrevocable beneficiary shall be deemed to be one that requires
22a member or participant to nominate an alternate payee as a
23beneficiary and that prohibits the removal or change of that
24beneficiary without approval of a court of competent
25jurisdiction, except by operation of law. Such a domestic
26relations order may be certified as an approved domestic
27relations order by the secretary of the board, or his designated
28representative, after the member or participant makes such
29nomination, in which case the irrevocable beneficiary so ordered
30by the court cannot be changed by the member or participant

1without approval by the court.

2§ 5953.3. Irrevocable survivor annuitant.

3Notwithstanding any other provisions of this part, a domestic
4relations order pertaining to a member may provide for an
5irrevocable survivor annuitant. A domestic relations order
6requiring the designation of an irrevocable survivor annuitant
7shall be deemed to be one that requires a member to designate an
8alternate payee as a survivor annuitant and that prohibits the
9removal or change of that survivor annuitant without approval of
10a court of competent jurisdiction, except by operation of law.
11Such a domestic relations order may be certified as an approved
12domestic relations order by the secretary of the board, or his
13designated representative, in which case the irrevocable
14survivor annuitant so ordered by the court cannot be changed by
15the member without approval by the court. A person ineligible to
16be designated as a survivor annuitant may not be designated as
17an irrevocable survivor annuitant.

18§ 5953.4. Amendment of approved domestic relations orders.

19(a) Deceased alternate payee.--In the event that the
20alternate payee predeceases the member or the participant and
21there are benefits payable to the alternate payee, the divorce
22court may amend the approved domestic relations order to
23substitute a person for the deceased alternate payee to receive
24any benefits payable to the deceased alternate payee.

25* * *

26Section 345. Title 71 is amended by adding sections to read:

27§ 5953.6. Irrevocable successor payee.

28(a) Condition.--Notwithstanding any other provision of this
29part, a domestic relations order pertaining to a participant may
30provide for an irrevocable successor payee if the participant is

1receiving a payment pursuant to a payment option provided by the
2board that allows for a successor payee.

3(b) Determination.--A domestic relations order requiring the
4designation of an irrevocable successor payee shall be deemed to
5be one that requires a participant who is receiving payments
6from an annuity or other distribution option to designate an
7alternate payee as a successor payee and that prohibits the
8removal or change of the successor payee without approval of a
9court of competent jurisdiction, except by operation of law.

10(c) Certification.--A domestic relations order under
11subsection (b) may be certified as an approved domestic
12relations order by the secretary of the board or his designated
13representative. If a domestic relations order is certified under
14this subsection, the irrevocable successor payee ordered by the
15court shall not be changed by the participant without approval
16by the court.

17(d) Ineligibility.--A person ineligible to be designated as
18a successor payee shall not be designated as an irrevocable
19successor payee. A court shall not name an irrevocable successor
20payee if the alternate payee is eligible to receive a lump sum
21distribution of the alternate payee's portion of the marital
22portion of the pension benefit.

23§ 5953.7. Exemption from spousal consent.

24If a domestic relations order approved pursuant to section
255953.1 (relating to approval of domestic relations orders)
26requires a nomination by a participant of an irrevocable
27beneficiary or irrevocable successor payee or the selection of
28any benefit by a participant, the provisions of this part or the
29plan requiring the spouse of a married participant to be
30nominated as beneficiary, designated as successor payee or to

1grant consent to an action, election or application of a
2participant shall not apply to an action or nomination required
3by the approved domestic relations order to the extent that the
4required action or nomination is inconsistent with the rights of
5the spouse under this part.

6Section 346. Section 5954 of Title 71 is amended to read:

7§ 5954. Fraud and adjustment of errors.

8(a) Penalty for fraud.--Any person who shall knowingly make
9any false statement or shall falsify or permit to be falsified
10any record or records of this system or plan in any attempt to
11defraud the system or plan as a result of such act shall be
12guilty of a misdemeanor of the second degree.

13(b) Adjustment of errors.--Should any change or mistake in
14records result in any member, participant, beneficiary [or],
15survivor annuitant or successor payee receiving from the system
16or plan more or less than he would have been entitled to receive
17had the records been correct, then regardless of the intentional
18or unintentional nature of the error and upon the discovery of
19such error, the board shall correct the error and if the error 
20affected contributions to or payments from the system, then so
21far as practicable shall adjust the payments which may be made
22for and to such person in such a manner that the actuarial
23equivalent of the benefit to which he was correctly entitled
24shall be paid. If the error affected contributions to or 
25payments from the plan, the board shall take action as provided 
26for in the plan document.

27Section 347. Title 71 is amended by adding a section to
28read:

29§ 5954.1. Spousal consent.

30(a) General rule.--No married participant may:

1(1) take an action regarding rights in the plan;

2(2) make an election regarding benefits in the plan; or

3(3) file a valid application which requires the consent
4of the participant's spouse, unless the participant's spouse
5consents in writing to that action, election or application.
6A consent or lack of consent shall not affect the effective
7date of an action or election. A consent shall be valid only
8if the consent is:

9(i)  signed after the participant's spouse receives
10counseling or affirmatively waives the right to receive
11counseling;

12(ii)  witnessed before a notary public; and

13(iii)  filed with the board within 90 days of the
14filing of the application or within 90 days of the date
15the action or election would otherwise be valid.

16(b)  Exceptions to consent.--Spousal consent shall not be
17required if:

18(1)  The spouse cannot be located.

19(2)  Other circumstances occur as established by the
20board in the plan document.

21(c)  Legal guardians and powers of attorney.--A legal
22guardian, including the participant, may execute a valid spousal
23consent. A participant as agent under a power of attorney may
24not execute a valid spousal consent unless the spouse is
25incapacitated and had executed a valid durable power of
26attorney.

27(d) Rights, options or privileges.--This part shall not
28grant to the spouse of a participant of the plan the rights,
29options or privileges of the participant. The rights of the
30spouse shall remain derivative of the rights of the participant,

1including rights under the act of July 8, 1978 (P.L.752,
2No.140), known as the Public Employee Pension Forfeiture Act,
3and section 16(b) of Article V of the Constitution of
4Pennsylvania. The spouse may not do any of the following:

5(1) Compel the participant to take, or prevent a
6participant from taking, an action regarding membership,
7rights or benefits in the plan other than as provided under
8this part.

9(2) Take any action on behalf of the participant, except
10as provided under this part.

11(e) Waiver.--If a law allows a participant in the plan to
12waive benefits or return of contributions that the participant
13is receiving, entitled to currently receive or receive in the
14future, the waiver shall not be valid unless the spouse of the
15participant consents to the waiver as provided for under this
16part.

17Section 347.1. Section 5955 of Title 71 is amended to read:

18§ 5955. Construction of part.

19(a)  Exclusive source of rights and benefits.--Regardless of 
20any other provision of law, pension and benefit rights of State 
21employees shall be determined solely by this part or any 
22amendment thereto, and no collective bargaining agreement nor 
23any arbitration award between the Commonwealth and [its] other 
24employers and the Commonwealth's and other employer's employees 
25or their collective bargaining representatives shall be 
26construed to change any of the provisions herein, to require the 
27board to administer pension or retirement benefits not set forth 
28in this part or not established by the board in the plan 
29document, to require the board to modify, amend or change any of 
30the terms and provisions of the plan document, or otherwise
 

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

29(b) References.--References in this part to the Internal
30Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.)

1or the Uniformed Services Employment and Reemployment Rights Act
2of 1994 (Public Law 103-353, 108 Stat. 3149), including
3administrative regulations promulgated under the Internal
4Revenue Code of 1986 or the Uniformed Services Employment and
5Reemployment Rights Act of 1994, are intended to include laws
6and regulations:

7(1) In effect on the effective date of this subsection.

8(2) Amended, supplemented or supplanted on and after the
9effective date of this subsection.

10(c)  Officer or member of the Pennsylvania State Police.--

11(1)  Notwithstanding a provision of subsection (a) or
12section 12.1 of Act 120 of 2010, regarding the continued
13effectiveness of pension or retirement benefits or rights
14previously established by or as a result of a binding
15arbitration award issued before July 1, 1989, pursuant to the
16act of June 24, 1968 (P.L.237, No.111), referred to as the
17Policemen and Firemen Collective Bargaining Act, and
18implemented by the board, the pension or retirement benefits
19or rights of a State employee who is a current or former
20State police officer shall be as provided in this part as if
21the binding arbitration award was not issued, except as
22provided under this subsection.

23(2)  A State employee who meets the following shall be
24eligible to receive the maximum single life annuity, before
25optional modification under section 5705 (relating to
26member's options), that the State employee would have been
27eligible to receive if this subsection not been enacted:

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

29(ii) Has 20 or more qualifying eligibility points on
30or before December 31, 2014.

1(iii) Terminates State service.

<-2(3) (i)  A State employee who on December 31, 2014, is a
3current or former State police officer who has less than
420 qualifying eligibility points, who has not elected to
5pay an additional 6.05% regular member contribution and
6who terminates State service with 20 or more qualifying
7eligibility points shall be eligible to receive a maximum
8single life annuity, before optional modification under
9section 5705.

10(ii) The maximum single life annuity under
11subparagraph (i) shall be calculated with the benefit
12provided under section 5702(a)(1) replaced by an annuity
13calculated according to the formula specified in this
14subparagraph and explained by subparagraph (iii):

15(A) Divide:

16(I) YW; by

17(II) YT.

18(B) Multiply:

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

20(II) SH.

21(C) Multiply:

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

23(II) P.

24(D) Subtract:

25(I) YW; from

26(II) YT.

27(E) Divide:

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

29(II) YT.

30(F) Multiply:

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

2(II) P.

3(G) Subtract:

4(I) YW; from

5(II) YT.

6(H) Multiply:

7(I) the difference under clause (G); by

8(II) .005.

9(I) Subtract

10(I) the product under clause (H); from

11(II) the product under clause (F).

12(J) Multiply:

13(I) the difference under clause (I); by

14(II) FASXYZ.

15(K) Add:

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

17(II) the product under clause (J).

18(iii) For the purposes of subparagraph (ii), the
19following shall apply:

20(A) P shall equal:

21(I) .5 if the member has 20 but less than 25
22qualifying eligibility points; or

23(II) .75 if the member has 25 or more
24qualifying eligibility points.

25(B) YT shall equal:

26(I) 20 if the member has 20 but less than 25
27qualifying eligibility points; or

28(II) 25 if the member has 25 or more
29qualifying eligibility points.

30(C) YW shall equal years of service credited in

1classes or subclasses of service other than Subclass
2X, Subclass Y or Subclass Z.

3(D) SH shall equal the member's highest year
4compensation excluding the year in which the member
5terminates.

6(E) FASXYZ shall equal final average salary
7calculated for service credited in Subclass X,
8Subclass Y and Subclass Z.

9(4) A State employee who on January 1, 2015, is a
10current or former State police officer who has less than 20
11qualifying eligibility points, who elects to pay an
12additional 6.05% regular member contributions and who
13terminates State service on or after January 1, 2015, with 20
14or more qualifying eligibility points shall be eligible to
15receive the maximum single life annuity, before optional
16modification under section 5705, that the State employee
17would have been eligible to receive if this subsection had
18not been enacted.

19(5) (i) A State employee who on January 1, 2015, is a
20State police officer who has less than 20 qualifying
21eligibility points may elect to pay an additional 6.05%
22of compensation as regular member contributions in
23addition to what otherwise would be paid by the employer
24as an active member of the system as a State police
25officer by filing written notice with the board in a form
26and manner determined by the board before July 1, 2015,
27before the member terminates State service or elects to
28be a participant in the plan, whichever occurs first. A
29State police officer who is on USERRA leave on January 1,
302015, or begins USERRA leave during the election period

1without having elected to pay an additional 6.05% of
2compensation as regular member contributions may make the
3election within 181 days after being reemployed from
4USERRA leave.

5(ii) An election to pay an additional 6.05% of
6compensation as regular member contributions shall be
7effective on January 1, 2015. Payment of the additional
8regular member contributions for service performed as a
9State police officer before the election, plus statutory
10interest from January 1, 2015, to the date of payment
11shall be made in a form, manner and time determined by
12the board under section 5504(b) (relating to member
13contributions for the purchase of credit for previous
14State service or to become a full coverage member).

15(iii) An election to pay an additional 6.05% of
16compensation as regular member contributions shall result
17in the member being a member of Subclass Z for any
18service as a Class AA member, Class D-4 member, Class E-1
19member or Class E-2 member on or after January 1, 2015.

<-20(3) (Reserved).

21(4) (Reserved).

22(5) (Reserved).

23(6) For the purposes of this subsection, the following
24terms shall have the meanings given to them in this
25paragraph:

26"Act 120 of 2010" shall mean the act of November 23, 2010 
27(P.L. 1269, No. 120), entitled, "An act amending Titles 24 
28(Education) and 71 (State Government) of the Pennsylvania 
29Consolidated Statutes, in Title 24, further providing for 
30definitions, for mandatory and optional membership, for
 

1contributions by the Commonwealth, for payments by employers, 
2for actuarial cost method, for additional supplemental 
3annuities, for further additional supplemental annuities, for 
4supplemental annuities commencing 1994, for supplemental 
5annuities commencing 1998, for supplemental annuities 
6commencing 2002, for supplemental annuities commencing 2003, 
7for administrative duties of board, for payments to school 
8entities by Commonwealth, for eligibility points for 
9retention and reinstatement of service credits and for 
10creditable nonschool service; providing for election to 
11become a Class T-F member; further providing for classes of 
12service, for eligibility for annuities, for eligibility for 
13vesting, for regular member contributions, for member 
14contributions for creditable school service, for 
15contributions for purchase of credit for creditable nonschool 
16service, for maximum single life annuity, for disability 
17annuities, for member's options, for duties of board 
18regarding applications and elections of members and for 
19rights and duties of school employees and members; providing 
20for Independent Fiscal Office study; in Title 71, 
21establishing an independent fiscal office and making a 
22related repeal; further providing for definitions, for 
23credited State service, for retention and reinstatement of 
24service credits, for creditable nonstate service and for 
25classes of service; providing for election to become a Class 
26A-4 member; further providing for eligibility for annuities 
27and for eligibility for vesting; providing for shared-risk 
28member contributions for Class A-3 and Class A-4 service; 
29further providing for waiver of regular member contributions 
30and Social Security integration member contributions, for
 

1member contributions for purchase of credit for previous 
2State service or to become a full coverage member, for 
3contributions for the purchase of credit for creditable 
4nonstate service, for contributions by the Commonwealth and 
5other employers, for actuarial cost method, for maximum 
6single life annuity, for disability annuities and for 
7member's options; providing for payment of accumulated 
8deductions resulting from Class A-3 service; further 
9providing for additional supplemental annuities, for further 
10additional supplemental annuities, for supplemental annuities 
11commencing 1994, for supplemental annuities commencing 1998, 
12for supplemental annuities commencing 2002, for supplemental 
13annuities commencing 2003, for special supplemental 
14postretirement adjustment of 2002, for administrative duties 
15of the board, for duties of board to advise and report to 
16heads of departments and members, for duties of board 
17regarding applications and elections of members, for 
18installment payments of accumulated deductions, for rights 
19and duties of State employees and members, for members' 
20savings account, for State accumulation account, for State 
21Police Benefit Account, for Enforcement Officers' Benefit 
22Account, for supplemental annuity account and for 
23construction of part; and providing for Independent Fiscal 
24Office study, for retirement eligibility of Pennsylvania 
25State Police officers or members, for a prohibition on the 
26issuance of pension obligation bonds, for holding certain 
27public officials harmless, for construction of calculation or 
28actuarial method, for applicability and for certain 
29operational provisions."

30"Binding arbitration award." A binding arbitration award

1issued before July 1, 1989, pursuant to the act of June 24,
21968 (P.L.237, No.111), referred to as the Policemen and
3Firemen Collective Bargaining Act, and was implemented by the
4State Employees' Retirement Board.

<-5"Qualifying eligibility points." Eligibility points as a
6result of State service, non-State service or being
7reemployed from USERRA leave.

8(d) Adverse inference.--Nothing in this part shall be
9construed to mean that the limitations on benefits or other
10requirements under IRC § 401(a) or other applicable provisions
11of the IRC which are applicable to participants in the plan do
12not apply to the participants or to members of the system and
13the benefits payable under this part.

14(e) Applicability.--The following shall apply:

15(1) The amendment of this part regarding the
16establishment of and participation in the plan shall apply to
17current and former members of the State Employees' Retirement
18System who have returned to State service on or after July 1,
192015, after a termination of State service, notwithstanding
20the following:

21(i) Whether the termination occurred before or after
22July 1, 2015.

23(ii) Whether the State employee was an annuitant,
24inactive member, vestee or special vestee or withdrew
25accumulated deductions during the period of termination.

26(2) A terminated State employee who returns to State
27service on or after January 1, 2015, shall be subject to this
28part regarding participation in the plan or membership in the
29system which are in effect on the effective date of
30reemployment, including benefit formulas and accrual rates,

1eligibility for annuities and distributions, contribution
2rates, definitions, purchase of creditable school, nonschool,
3State and non-State service provisions and actuarial and
4funding assumptions.

<-5(3) The amendment of this part regarding the
6establishment of and participation in the plan shall apply to
7a person who:

8(i) is a member of the General Assembly and an
9active member of the system on the effective date of this
10paragraph and is reelected as a member of the General
11Assembly after the effective date of this paragraph;

12(ii) is a member of the judiciary and an active
13member of the system on the effective date of this
14paragraph and is retained as a member of the judiciary
15after the effective date of this paragraph; or

16(iii) is elected as Governor, Lieutenant Governor,
17Attorney General, Auditor General or Treasurer, is an
18active member of the system on the effective date of this
19paragraph and is reelected as Governor, Lieutenant
20Governor, Attorney General, Auditor General or Treasurer
21after the effective date of this paragraph.

22ARTICLE IV

23Section 401. The following shall apply:

24(1) The following provisions shall not create in a
25member of the Public School Employees' Retirement System, a
26participant in the School Employees' Defined Contribution
27Plan or another person claiming an interest in the account of
28a member or participant an express or implied contractual
29right in the provisions nor in a construction of 24 Pa.C.S.
30Pt. IV, 51 Pa.C.S. or rules or regulations adopted under 24

1Pa.C.S. Pt. IV or 51 Pa.C.S.:

2(i) A provision of this act which amends 51 Pa.C.S.
3or 24 Pa.C.S. Pt. IV in relation to requirements for any
4of the following:

5(A) Spousal consent.

6(B) Qualification of the School Employees'
7Defined Contribution Plan as a qualified pension plan
8under the Internal Revenue Code of 1986 (Public Law
999-514, 26 U.S.C. §§ 401(a) and 415(b)), or
10compliance with the Uniformed Services Employment and
11Reemployment Rights Act of 1994 (Public Law 103-353,
12108 Stat. 3149).

13(C) Contributions to, participation in or
14benefits from the School Employees' Defined
15Contribution Plan or School Employees' Defined
16Contribution Trust.

17(D) Domestic relations orders regarding
18alternate payees of participants in the School
19Employees' Defined Contribution Plan.

20(ii) A construction of 24 Pa.C.S. Pt. IV or 51
21Pa.C.S. or rules or regulations adopted under 24 Pa.C.S.
22Pt. IV or 51 Pa.C.S. or a term or provision of the School
23Employees' Defined Contribution Plan or School Employees'
24Defined Contribution Trust, established by statute or in
25the plan document or trust declaration.

26(2) The provisions of 24 Pa.C.S. Pt. IV shall remain
27subject to the Internal Revenue Code of 1986 and the
28Uniformed Services Employment and Reemployment Rights Act of
291994 (Public Law 103-353, 108 Stat. 3149), and regulations
30under those statutes, and the General Assembly reserves to

1itself the further exercise of its legislative power to amend
2or supplement the provisions as may be required in order to
3maintain the qualification of the system as a qualified
4pension plan under section 401(a) and other applicable
5provisions of the Internal Revenue Code of 1986 and the
6Uniformed Services Employment and Reemployment Rights Act of
71994 (Public Law 103-353, 108 Stat. 3149).

8(3) The following provisions shall not create in a
9member of the State Employees' Retirement System, a
10participant in the State Employees' Defined Contribution Plan
11or another person claiming an interest in the account of a
12member or participant an express or implied contractual right
13in the provisions nor in a construction of 51 Pa.C.S. § 7306,
1471 Pa.C.S. Pt. XXV, or rules or regulations adopted under 51
15Pa.C.S. § 7306 or 71 Pa.C.S. Pt. XXV:

16(i) A provision of this act which amends 51 Pa.C.S.
17§ 7306 or 71 Pa.C.S. Pt. XXV in relation to requirements
18for any of the following:

19(A) Spousal consent.

20(B) Qualification of the State Employees'
21Defined Contribution Plan as a qualified pension plan
22under the Internal Revenue Code of 1986 (Public Law
2399-514, 26 U.S.C. §§ 401(a) and 415(b)) or compliance
24with the Uniformed Services Employment and
25Reemployment Rights Act of 1994 (Public Law 103-353,
26108 Stat. 3149).

27(C) Contributions to, participation in or
28benefits from the State Employees' Defined
29Contribution Plan or State Employees' Defined
30Contribution Trust.

1(D) Domestic relations orders regarding
2alternate payees of participants in the State
3Employees' Defined Contribution Plan.

4(ii) A construction of 51 Pa.C.S. or 71 Pa.C.S. Pt.
5XXV or rules or regulations adopted under 51 Pa.C.S. or
671 Pa.C.S. Pt. XXV or a term or provision of the State
7Employees' Defined Contribution Plan or State Employees'
8Defined Contribution Trust, established by statute or in
9the plan document or trust declaration.

10(4) The provisions of 71 Pa.C.S. Pt. XXV shall remain
11subject to the Internal Revenue Code of 1986 and the
12Uniformed Services Employment and Reemployment Rights Act of
131994 (Public Law 103-353, 108 Stat. 3149), and regulations
14under those statutes, and the General Assembly reserves to
15itself the further exercise of its legislative power to amend
16or supplement the provisions as may be required in order to
17maintain the qualification of the system as a qualified
18pension plan under section 401(a) and other applicable
19provisions of the Internal Revenue Code of 1986 and the
20Uniformed Services Employment and Reemployment Rights Act of
211994 (Public Law 103-353, 108 Stat. 3149).

22Section 402. The following shall apply:

23(1) Nothing in this act shall be construed to mean that
24a calculation or actuarial method used by the School
25Employees' Retirement Board, its actuaries or the Public
26School Employees' Retirement System was not in accordance
27with the provisions of 24 Pa.C.S. Pt. IV or other applicable
28law prior to the effective date of this section.

29(2) Nothing in this act shall be construed to mean that
30a calculation or actuarial method used by the State

1Employees' Retirement Board, its actuaries or the State
2Employees' Retirement System was not in accordance with the
3provisions of 71 Pa.C.S. Pt. XXV or other applicable law
4prior to the effective date of this section.

5Section 403. The following shall apply:

<-6(1) Notwithstanding any other provision of law, a change
7in the accrued liability of the Public School Employees'
8Retirement System created under this act shall not be
9considered to be costs added by legislation.

<-10(1) (Reserved).

11(2) Notwithstanding any other provision of law, a change
12in accrued liability of the State Employees' Retirement
13System created under this act as a result of changes in
14benefits shall be funded in equal dollar installments over a
15period of 20 years beginning July 1, 2014.

<-16(3) (i) Except as provided under subparagraph (ii), a

<-17(3) A change in accrued liability as a result of
18amendments to 71 Pa.C.S. §§ 5507 and 5508 or the addition of
1971 Pa.C.S. §§ 5507.1 and 5508.1 shall be funded in equal
20dollar installments over a period of 30 years beginning July
211, 2014.

<-22(ii) A change in accrued liability as a result of
23changes under this act to the collared contribution rates
24shall be amortized as part of the experience adjustment
25factor as provided under 71 Pa.C.S. §§ 5508(f) and
265508.1(e).

27(4) Payments required to fund a change in accrued
28liability resulting from this act shall be subject to limits
29imposed under this act on employer contributions to the State
30Employees' Retirement System and shall not be subject to

1reamortization for 30 years under 71 Pa.C.S. § 5508.1(c).

2(5) For purposes of 71 Pa.C.S. §§ 5501.2, 5507 and 5508,
3changes under this section shall not be considered to be
4costs added by legislation.

5Section 404. The following shall apply:

6(1) This act shall be construed and administered in such
7a manner that the Public School Employees' Retirement System
8and the School Employees' Defined Contribution Plan shall
9satisfy the requirements necessary to qualify as a qualified
10pension plan under section 401(a) of the Internal Revenue
11Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)), other
12applicable provisions of the Internal Revenue Code of 1986
13and the Uniformed Services Employment and Reemployment Rights
14Act of 1994 (Public Law 103-353, 108 Stat. 3149). The rules,
15regulations and procedures adopted and promulgated by the
16Public School Employees' Retirement Board and the terms and
17conditions of the plan document and trust declaration adopted
18by the Public School Employees' Retirement Board may include
19provisions necessary to accomplish the purpose of this
20section.

21(2) This act shall be construed and administered in a 
22manner that the State Employees' Retirement System and the 
23State Employees' Defined Contribution Plan shall satisfy the 
24requirements necessary to qualify as a qualified pension plan 
25under section 401(a) of the Internal Revenue Code of 1986 
26(Public Law 99-514, 26 U.S.C. § 401(a)), other applicable 
27provisions of the Internal Revenue Code of 1986 and the 
28Uniformed Services Employment and Reemployment Rights Act of 
291994 (Public Law 103-353, 108 Stat. 3149). The rules, 
30regulations and procedures adopted and promulgated by the
 

1State Employees' Retirement Board and the terms and 
2conditions of the plan document and trust declaration adopted 
3by the State Employees' Retirement Board may include 
4provisions necessary to accomplish the purpose of this 
5section.

<-6Section 405. The following shall apply:

7(1) Notwithstanding any other provision of law, the
8Public School Employees' Retirement Board shall, within 15
9days of the effective date of this section, recertify to the
10Secretary of the Budget and employers for the fiscal year
11beginning July 1, 2013, the contributions, rates, factors and
12amounts under 24 Pa.C.S. § 8502(k) to reflect the impact of
13this act. The recertification shall supersede the prior
14certification.

15(2) If, prior to the effective date of this section, the 
16board certifies employer contribution rates for the fiscal 
17year beginning July 1, 2013, the board shall, notwithstanding 
18any other provision of law, recertify to the Secretary of the 
19Budget the contributions, rates, factors and amounts under 71 
20Pa.C.S. § 5902(k). The board's recertification shall reflect 
21all changes in the contributions, rates, factors and amounts 
22previously certified by the board prior to the effective date 
23of this section for the fiscal year beginning July 1, 2013, 
24which are required to comply with 71 Pa.C.S. § 5508. The 
25recertification shall occur within 15 days of the effective 
26date of this section and shall supersede the prior 
27certification.

<-28Section 405. (Reserved).

29Section 406. The following shall apply:

30(1) Notwithstanding any other provision of law,

1fiduciary requirement, actuarial standard of practice or
2other requirement, the members of the Public School
3Employees' Retirement Board, the actuary and employees and
4officials of the Public School Employees' Retirement System
5may not be held liable or in breach or violation of a law or
6standard as individuals, in their official capacity or as a
7governmental or corporate entity, for an action or
8calculation related to calculating and certifying a final
9contribution rate as provided under this act that is
10different from the actuarially required contribution rate as
11appropriately calculated under 24 Pa.C.S. Pt. IV.

12(2) Notwithstanding any other provision of law,
13fiduciary requirement, actuarial standard of practice or
14other requirement, the members of the State Employees'
15Retirement Board, the actuary and other employees and
16officials of the State Employees' Retirement System may not
17be held liable or in breach or violation of a law or standard
18as individuals, in their official capacity or as a
19governmental or corporate entity, for an action or
20calculation related to calculating and certifying a final
21contribution rate as provided under this act that is
22different from the actuarially required contribution rate as
23appropriately calculated under 71 Pa.C.S. Pt. XXV.

24Section 407. Nothing in this act shall be deemed to permit
25the restoration of service credit or retirement benefits which:

26(1) were or are subject to section 16 of Article V of
27the Constitution of Pennsylvania or 42 Pa.C.S. § 3352; or

28(2) the subject of an order of forfeiture under the act
29of July 8, 1978 (P.L.752, No.140), known as the Public
30Employee Pension Forfeiture Act.

1Section 408. Legal challenges to this act shall be subject
2to review as follows:

3(1) Notwithstanding 42 Pa.C.S., all legal challenges to
4the constitutionality of this act shall be filed with the
5prothonotary of the Supreme Court.

6(2) The Supreme Court shall empanel a special tribunal
7composed of seven senior judges chosen at random by lot from
8a list of the senior judges currently serving the Superior,
9Commonwealth and Common Pleas Courts.

10(3) The special tribunal under paragraph (2) shall hear
11and decide a legal challenge to the constitutionality of this
12act in the same manner in which the Supreme Court would hear
13and decide a legal challenge within its original
14jurisdiction.

15Section 409. If a provision of this act or its application
16to any person or circumstance is held invalid, the invalidity
17shall not affect other provisions or applications of this act
18that can be given effect without the invalid provision or
19application.

20Section 410. Nothing in this act shall be construed to mean
21that an interpretation or application of 71 Pa.C.S. Pt. XXV or
22benefits available to members of the State Employees' Retirement
23System was not in accordance with 71 Pa.C.S. Pt. XXV or other
24applicable law, including the Internal Revenue Code of 1986
25(Public Law 99-514, 26 U.S.C. § 1 et seq.) and the Uniformed
26Services Employment and Reemployment Rights Act of 1994 (Public
27Law 103-353, 108 Stat. 3149) before the effective date of this
28subsection.

29Section 411. This act shall take effect immediately.