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PRIOR PRINTER'S NO. 1450
PRINTER'S NO. 1460
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1082
Session of
2015
INTRODUCED BY BROWNE, CORMAN, SCARNATI, GORDNER AND
EICHELBERGER, DECEMBER 4, 2015
SENATOR BROWNE, APPROPRIATIONS, RE-REPORTED AS AMENDED,
DECEMBER 6, 2015
AN ACT
Amending Titles 24 (Education), 51 (Military Affairs) and 71
(State Government) of the Pennsylvania Consolidated Statutes,
extensively revising pension provisions: for the Public
School Employees' Retirement System, in the areas of
preliminary provisions, of membership, contributions and
benefits, of School Employee's Defined Contribution Plan and
of administration and miscellaneous provisions; for health
insurance for retired school employees, in the area of
preliminary provisions; for military pensions, in the area of
military leave of absence; for boards and offices, in the
area of Independent Fiscal Office; for the State Employees'
Retirement System, in the areas of preliminary provisions, of
membership, credited service, classes of service and
eligibility for benefits, of State Employees' Defined
Contribution Plan, of contributions, of benefits and of
administration, funds, accounts, general provisions; and
providing, as to the revisions, for construction and
administration, for applicability, for funding, for
liability, for State Employee member statements and for State
Employees Retirement Board obligations.
AMENDING TITLES 24 (EDUCATION), 51 (MILITARY AFFAIRS) AND 71
(STATE GOVERNMENT) OF THE PENNSYLVANIA CONSOLIDATED STATUTES,
EXTENSIVELY REVISING PENSION PROVISIONS AS FOLLOWS:
IN TITLE 24:
FOR RETIREMENT FOR SCHOOL EMPLOYEES, IN THE AREAS OF
PRELIMINARY PROVISIONS, OF MEMBERSHIP, CONTRIBUTIONS AND
BENEFITS, OF SCHOOL EMPLOYEES' DEFINED CONTRIBUTION PLAN
AND OF ADMINISTRATION AND MISCELLANEOUS PROVISIONS; AND
FOR HEALTH INSURANCE FOR RETIRED SCHOOL EMPLOYEES, IN
THE AREA OF PRELIMINARY PROVISIONS.
IN TITLE 51:
FOR EMPLOYMENT PREFERENCES AND PENSIONS, IN THE AREA
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OF MILITARY LEAVE OF ABSENCE.
IN TITLE 71:
FOR BOARDS AND OFFICES, IN THE AREA OF INDEPENDENT
FISCAL OFFICE; AND
FOR RETIREMENT FOR STATE EMPLOYEES AND OFFICERS, IN
THE AREAS OF PRELIMINARY PROVISIONS, OF MEMBERSHIP,
CREDITED SERVICE, CLASSES OF SERVICE AND ELIGIBILITY FOR
BENEFITS, OF CONTRIBUTIONS, OF BENEFITS, OF STATE
EMPLOYEES' DEFINED CONTRIBUTION PLAN AND OF
ADMINISTRATION, FUNDS, ACCOUNTS, GENERAL PROVISIONS.
PROVIDING, AS TO THE REVISIONS:
FOR CONSTRUCTION AND ADMINISTRATION, FOR
APPLICABILITY, FOR LIABILITY, FOR MEMBER STATEMENTS AND
FOR SUSPENSION OF PROVISIONS OF THE PUBLIC EMPLOYEE
RETIREMENT STUDY COMMISSION ACT.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
ARTICLE I
Section 101. The General Assembly finds and declares as
follows:
(1) It is the intent of the General Assembly to ensure
the financial health of the Commonwealth and its school
districts by adopting reforms to provide for the
sustainability of our public retirement system.
(2) Pennsylvania's retirement systems, SERS for State
employees and PSERS for school employees, together have an
unfunded liability of $60,121,184,000. The level of payment
by the Commonwealth and school districts required to annually
address these amounts is staggering, particularly when other
state revenues are reduced due to a struggling economy. The
current condition of Pennsylvania's unfunded system combined
with the State's structural deficit threaten the financial
well-being of current and future public employees.
(3) In order to fully fund State pensions systems,
economists estimate that contributions will continue to
require a significant portion of state revenues. In fiscal
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year 2015-2016, pension expenditures are expected to exceed
$4,800,000,000 and $7,300,000,000 by 2025.
(4) The tax increases that would be required to address
increasing pension obligations would place a heavy burden on
the citizens of this Commonwealth and hamper the ability to
provide them with services vital to the public's health,
safety and welfare. Therefore, it is imperative that the
Commonwealth adopt reforms that will maintain the financial
health of the Commonwealth and its school districts.
(5) Therefore, the reforms contained in this legislation
are intended to use resources judiciously and enable the
Commonwealth to provide retirement security for Commonwealth
and school employees while reducing the burden on taxpayers.
(6) The reforms of the retirement benefits of
Commonwealth and school district employees contained in this
act are prospective and will not impact benefits earned from
services rendered prior to the effective date of this act.
(7) The General Assembly finds that it is necessary to
advance and maintain the long-term stability of public
employee pension systems by adopting reform relating to
current and to future employees in order to:
(i) Ensure that the Commonwealth and its school
districts will have adequate funds to continue to be able
to provide retirement benefits for their employees.
(ii) To ensure that the cost of current and future
benefits does not jeopardize the ability and obligation
to provide for public education, infrastructure, programs
for the elderly and other vulnerable populations and
public safety.
(8) The General Assembly expressly finds and declares
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that the situation confronting our pensions systems has
reached a critical state and that enactment of this act is
reasonable and necessary to achieve and protect the public
interests. Further, the General Assembly finds that
protecting benefits for services already rendered meets all
legal standards relating to changes in benefits.
ARTICLE II
Section 201. Section 8102 of Title 24 of the Pennsylvania
Consolidated Statutes is amended to read:
§ 8102. Definitions.
The following words and phrases when used in this part shall
have, unless the context clearly indicates otherwise, the
meanings given to them in this section:
"Accumulated deductions." The total of pickup contributions
[and], eligible roll-ins made under section 8507(l) (relating to
rights and duties of school employees, members and
participants), the contributions paid into the fund by the
member on account of current school service, previous school
service, or creditable nonschool service, excess interest
awarded under section 8523(d) (relating to members' savings
account and cash balance account) on member contributions, and
the statutory interest credited on all such contributions.
"Accumulated employer defined contributions." The total of
the employer defined contributions paid into the trust on
account of a participant's school service together with any
investment earnings and losses and adjustments for fees, costs
and expenses credited or charged thereon.
"Accumulated mandatory participant contributions." The total
of the mandatory pickup participant contributions paid into the
trust on account of a participant's school service together with
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any investment earnings and losses and adjustments for fees,
costs and expenses credited or charged thereon.
"Accumulated total defined contributions." The total of the
accumulated mandatory participant contributions, accumulated
employer defined contributions and accumulated voluntary
contributions, reduced by any distributions, standing to the
credit of a participant in an individual investment account in
the trust.
"Accumulated voluntary contributions." The total of
voluntary contributions paid into the trust by a participant and
any amounts rolled over by a participant or transferred by a
direct trustee-to-trustee transfer into the trust together with
any investment earnings and losses and adjustments for fees,
costs and expenses credited or charged thereon.
"Activated military service." Military service by a member
of a reserve component of the armed forces, pursuant to an order
on or after July 1, 1990, and prior to July 1, 2013, to enter
into active military service, other than an order to enter into
active duty to meet periodic training requirements, who was an
active member of the system immediately preceding the order into
active military service and to whom the military leave
provisions of 51 Pa.C.S. Ch. 73 (relating to military leave of
absence) do not apply.
"Active member." A school employee for whom pickup
contributions are being made to the fund or for whom such
contributions otherwise required for current school service are
not being made solely by reason of any provision of this part
limiting compensation or relating to the limitations under
section 401(a)(17) or 415(b) of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)).
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"Active participant." A school employee for whom mandatory
pickup participant contributions are being made to the trust or
for whom such contributions otherwise required for current
school service are not being made solely by reason of any
provision of this part relating to the limitations under section
401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 401(a)(17) or 415) or any provision of
this part limiting compensation.
"Actuarially equivalent." Equal present values, computed on
the basis of statutory interest and the mortality tables adopted
by the board.
"Actuary." The consultant to the board who shall be:
(1) a member of the American Academy of Actuaries;
(2) an individual who has demonstrated to the
satisfaction of the Insurance Commissioner of Pennsylvania
that he has the educational background necessary for the
practice of actuarial science and has had at least seven
years of actuarial experience; or
(3) a firm, partnership, or corporation of which at
least one member meets the requirements of paragraph (1) or
(2).
"Alternate payee." Any spouse, former spouse, child or
dependent of a member or participant who is recognized by a
domestic relations order as having a right to receive all or a
portion of the moneys payable to that member or participant
under this part.
"Alternative investment." An investment in a private equity
fund, private debt fund, venture fund, real estate fund, hedge
fund or absolute return fund.
"Alternative investment vehicle." A limited partnership,
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limited liability company or any other legal vehicle for
authorized investments under section 8521(i) (relating to
management of fund and accounts) through which the system makes
an alternative investment.
"Annuitant." Any member on or after the effective date of
retirement until his annuity is terminated.
"Approved domestic relations order." Any domestic relations
order which has been determined to be approved in accordance
with section 8533.1 (relating to approval of domestic relations
orders).
"Approved leave of absence." [A] As applied to all classes
of membership except Class T-I, a leave of absence for activated
military service or which has been approved by the employer for
sabbatical leave, service as an exchange teacher, service with a
collective bargaining organization or professional study. As
applied to Class T-I members, a leave of absence that has been
approved as a contributory leave by the employer for sabbatical
leave, service as an exchange teacher, service with a collective
bargaining organization or professional study.
"Basic contribution rate." For Class T-A, T-B and T-C
service, the rate of 6 1/4%. For Class T-D service, the rate of
7 1/2%. For all active members on the effective date of this
provision who are currently paying 5 1/4% and elect Class T-D
service, the rate of 6 1/2%. For Class T-E service, the rate of
7 1/2%. For Class T-F service, the rate of 10.30%. For Class T-I
service, the rate of 3%.
"Beneficiary." [The] In the case of the system, the person
or persons last designated in writing to the board by a member
to receive his accumulated deductions or a lump sum benefit upon
the death of such member. In the case of the plan, the person or
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persons last designated in writing to the board by a participant
to receive the participant's vested accumulated total defined
contributions upon the death of the participant.
"Board." The Public School Employees' Retirement Board or
the Public School Employes' Retirement Board.
"Cash balance account." The ledger account into which
members contribute cash balance member contributions, together
with employer contributions, interest and excess interest, as
provided in this part.
"Cash balance member contributions." For members in a class
other than Class T-I, the amount voluntarily contributed by such
member and eligible amounts rolled in to the cash balance
account, as provided in this part.
"Class of service multiplier."
Class of service Multiplier
T-A .714
T-B .625
T-C 1.000
T-D 1.000
T-E 1.000
T-F 1.000
"Combined service employee." A current or former school
employee who is both a member of the system and a participant in
the plan.
"Commissioner." The Commissioner of the Internal Revenue
Service.
"Compensation." Pickup contributions and mandatory pickup
participant contributions plus any remuneration received as a
school employee excluding reimbursements for expenses incidental
to employment and excluding any bonus, severance payments, any
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other remuneration or other emolument received by a school
employee during his school service which is not based on the
standard salary schedule under which he is rendering service,
payments for unused sick leave or vacation leave, bonuses or
other compensation for attending school seminars and
conventions, payments under health and welfare plans based on
hours of employment or any other payment or emolument which may
be provided for in a collective bargaining agreement which may
be determined by the Public School Employees' Retirement Board
to be for the purpose of enhancing compensation as a factor in
the determination of final average salary, and, for
participants, excluding payments for military leave and any
other payments made by an employer while on USERRA leave, leave
of absence granted under 51 Pa.C.S. § 4102 (relating to leaves
of absence for certain government employees), military leave of
absence granted under 51 Pa.C.S. § 7302 (relating to granting
military leaves of absence), leave granted under section 1178 of
the act of March 10, 1949 (P.L.30, No.14), known as the Public
School Code of 1949, or other types of military leave, including
other types of leave payments, stipends, differential wage
payments as defined in IRC § 414(u)(12) and any other payments,
provided, however, that the limitation under section 401(a)(17)
of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. § 401(a)(17)) taken into account for the purpose of
member contributions, including regular or joint coverage member
contributions, regardless of class of service, shall apply to
each member who first became a member of the Public School
Employes' Retirement System on or after July 1, 1996, and who by
reason of such fact is a noneligible member subject to the
application of the provisions of section 8325.1 (relating to
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annual compensation limit under IRC § 401(a)(17))[.] and shall
apply to each participant. Notwithstanding the above, for Class
T-E and Class T-F service performed on or after July 1, 2016,
compensation for each fiscal year, for purposes of determining
final average salary and applying the basic contribution rate,
shall not exceed the Social Security taxable wage base in effect
at the beginning of the fiscal year. The limit shall be applied
separately to each employer of a member.
"Concurrent service." Simultaneously credited school and
State service.
"Creditable nonschool service." Service other than service
as a school employee for which an active member may obtain
credit in the system.
"Credited service." School or creditable nonschool service
for which the required contributions have been made to the fund,
or for which the contributions otherwise required for such
service were not made solely by reason of any provision of this
part limiting compensation or relating to the limitations under
section 401(a)(17) or 415(b) of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)), or
for which salary deductions to the system or lump sum payments
have been agreed upon in writing.
"Date of termination of service." The latest of the
following dates:
(1) the last [date] day of service for which pickup
contributions are made for an active member or[,] for which
the contributions otherwise required for such service were
not made solely by reason of any provision of this part
limiting compensation or relating to the limitations under
section 401(a)(17) or 415 of the Internal Revenue Code of
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1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415;
(2) in the case of an inactive member or an inactive
participant, the effective date of his resignation or the
date his employment is formally discontinued by his employer
or two years following the last day of service for which
contributions were made, whichever is earliest[.]; or
(3) in the case of a combined service employee, the
latest of the dates in paragraph (1) or (2).
"Disability annuitant." A member on or after the effective
date of disability until his disability annuity or the portion
of his disability annuity payments in excess of any annuity to
which he may otherwise be entitled is terminated.
"Distribution." Payment of all or any portion of a person's
interest in either the Public School Employees' Retirement Fund
or the School Employees' Defined Contribution Trust, or both,
which is payable under this part.
"Domestic relations order." Any judgment, decree or order,
including approval of a property settlement agreement, entered
on or after the effective date of this definition by a court of
competent jurisdiction pursuant to a domestic relations law
which relates to the marital property rights of the spouse or
former spouse of a member or participant, including the right to
receive all or a portion of the moneys payable to that member or
participant under this part in furtherance of the equitable
distribution of marital assets. The term includes orders of
support as that term is defined by 23 Pa.C.S. § 4302 (relating
to definitions) and orders for the enforcement of arrearages as
provided in 23 Pa.C.S. § 3703 (relating to enforcement of
arrearages).
"Effective date of retirement." The first day following the
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date of termination of service of a member if he has properly
filed an application for an annuity within 90 days of such date
or:
(1) In the case of a member who applies for an annuity
subsequent to 90 days after termination of service, the date
of filing such application or the date specified on the
application, whichever is later.
(2) In the case of a vestee who files an application for
an annuity within 90 days of his superannuation age, the
attainment of such age.
(3) In the case of a vestee who defers the filing of an
application for an annuity to a date later than 90 days
following attainment of superannuation age, the date of
filing or the date specified on the application, whichever is
later.
(4) In the case of a finding of disability, the date
certified by the board as the effective date of disability.
"Eligible annuitants." All current and prospective
annuitants with 24 1/2 or more eligibility points and all
current and prospective disability annuitants. Beginning January
1, 1995, "eligible annuitants" shall include members other than
Class T-I members with 15 or more eligibility points who
terminated or who terminate school service on or after attaining
superannuation retirement age and who are annuitants with an
effective date of retirement after superannuation age.
"Eligibility points." Points which are accrued by an active
member, a multiple service member who is an active member of the
State Employees' Retirement System for credited service or by a
member who has been reemployed from USERRA leave or dies while
performing USERRA leave and are used in the determination of
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eligibility for benefits as provided in section 8306 (relating
to eligibility points). Class T-I members shall be deemed to
accrue one eligibility point for each fiscal year in which
contributions have been made to the fund.
"Employer." Any governmental entity directly responsible for
the employment and payment of the school employee and charged
with the responsibility of providing public education within
this Commonwealth, including but not limited to: State-owned
colleges and universities, the Pennsylvania State University,
community colleges, area vocational-technical schools,
intermediate units, the State Board of Education, Scotland
School for Veterans' Children, Thaddeus Stevens College of
Technology, and the Western Pennsylvania School for the Deaf.
"Employer defined contributions." Contributions equal to
2.59% of an active participant's compensation that are made by
an employer for current service to the trust to be credited in
the active participant's individual investment account.
"Excess interest." The investment earnings of the fund
attributable to Class T-I members and members who have elected
to contribute to the cash balance account, calculated in
accordance with section 8523(d) (relating to members' savings
account and cash balance account).
"Final average salary." The highest average compensation
received as an active member during any three nonoverlapping
periods of 12 consecutive months with the compensation for part-
time service being annualized on the basis of the fractional
portion of the school year for which credit is received; except,
if the employee was not a member for three such periods, the
total compensation received as an active member annualized in
the case of part-time service divided by the number of such
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periods of membership; in the case of a member with multiple
service credit, the final average salary shall be determined by
reference to compensation received by him as a school employee
or a State employee or both; and, in the case of a noneligible
member, subject to the application of the provisions of section
8325.1 (relating to annual compensation limit under IRC § 401(a)
(17)). Final average salary shall be determined by including in
compensation, payments deemed to have been made to a member
reemployed from USERRA leave to the extent member contributions
have been made as provided in section 8302(d)(2) (relating to
credited school service) and payments made to a member on leave
of absence under 51 Pa.C.S. § 4102 (relating to leaves of
absence for certain government employees) as provided in section
8302(d)(6). Notwithstanding the above, for Class T-E and Class
T-F service performed on or after July 1, 2016, compensation to
be used for final average salary calculation shall not exceed
the Social Security taxable wage base in effect at the beginning
of the fiscal year.
"Full coverage member." Any member for whom regular member
pickup contributions are being picked up or who has paid or has
agreed to pay to the fund the actuarial equivalent of regular
member contributions due on account of service prior to January
1, 1983.
"Fund." The Public School Employees' Retirement Fund.
"Governmental entity." Board of school directors, board of
public education, intermediate unit board of directors, area
vocational-technical board, any governing board of any agency or
authority created by them, and the Commonwealth.
"Inactive member." A member for whom no pickup contributions
are being made to the fund, except in the case of an active
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member for whom such contributions otherwise required for
current school service are not being made solely by reason of
any provision of this part relating to the limitations under
section 401(a)(17) or 415(b) of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)) or
because the member is on USERRA leave, who has accumulated
deductions standing to his credit in the fund and for whom
contributions have been made within the last two school years or
a multiple service member who is active in the State Employees'
Retirement System.
"Inactive participant." A participant for whom no mandatory
pickup participant contributions are being made to the trust,
except in the case of an active participant for whom such
contributions otherwise required for current school service are
not being made solely by reason of any provision of this part
relating to limitations under section 401(a)(17) or 415 of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
401(a)(17) or 415), who has vested accumulated total defined
contributions standing to his credit in the trust and who has
not filed an application for a distribution.
"Individual investment account." The account in the trust to
which are credited the amounts of the contributions made by a
participant and the participant's employer in accordance with
the provisions of this part, together with all investment
earnings after deduction for fees, costs and expenses,
investment losses and charges for distributions.
"Intervening military service." Active military service of a
member who was a school employee and an active member of the
system immediately preceding his induction into the armed
services or forces of the United States in order to meet a draft
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obligation excluding any voluntary extension of such
obligational service and who becomes a school employee and an
active member of the system within 90 days of the expiration of
such service.
"IRC." The Internal Revenue Code of 1986, as designated and
referred to in section 2 of the Tax Reform Act of 1986 (Public
Law 99-514, 100 Stat. 2085, 2095). A reference in this part to
"IRC § " shall be deemed to refer to the identically numbered
section and subsection or other subdivision of such section in
26 United States Code (relating to Internal Revenue Code).
"Irrevocable beneficiary." The person or persons permanently
designated by a member or participant in writing to the board
pursuant to an approved domestic relations order to receive all
or a portion of the accumulated deductions, vested accumulated
total defined contributions or lump sum benefit payable upon the
death of such member or participant.
"Irrevocable successor payee." The person permanently
designated in writing by a participant to the board pursuant to
an approved domestic relations order to receive one or more
distributions from the plan upon the death of such participant.
"Irrevocable survivor annuitant." The person permanently
designated by a member in writing to the board pursuant to an
approved domestic relations order to receive an annuity upon the
death of such member.
"Joint coverage member." Any member who agreed prior to
January 1, 1966 to make joint coverage member contributions to
the fund and has not elected to become a full coverage member.
"Joint coverage member contributions." Regular member
contributions reduced for a joint coverage member.
"Leave for service with a collective bargaining
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organization." Paid leave granted to an active member or active
participant by an employer for purposes of working full time for
or serving full time as an officer of a Statewide employee
organization or a local collective bargaining representative
under the act of July 23, 1970 (P.L.563, No.195), known as the
Public Employe Relations Act: Provided, That greater than one-
half of the members of the employee organization are active
members of the system or active participants of the plan; that
the employer shall fully compensate the member or active
participant, including, but not limited to, salary, wages,
pension and retirement contributions and benefits, other
benefits and seniority, as if he were in full-time active
service; and that the employee organization shall fully
reimburse the employer for such salary, wages, pension and
retirement contributions and benefits and other benefits and
seniority.
"Mandatory pickup participant contributions." Contributions
equal to 3% of compensation that are made by the employer for
active participants for current service that are picked up by
the employer and credited in the trust.
"Maternity leave of absence." An involuntary leave of
absence required by the employer because of the pregnancy of the
member and commencing prior to May 17, 1975.
"Member." Active member, inactive member, annuitant, or
vestee.
"Member's annuity." The single life annuity which is
actuarially equivalent on the effective date of retirement to
the sum of the accumulated deductions and the shared-risk member
contributions and statutory interest credited on the deductions
and contributions standing to the member's credit in the
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members' savings account.
"Military service." All active military service for which a
member has received a discharge other than an undesirable, bad
conduct, or dishonorable discharge.
"Multiple service." Credited service of a member other than
a Class T-I member or Class TDB member in the State Employees'
Retirement System who has elected to combine his credited
service in both the Public School Employees' Retirement System
and the State Employees' Retirement System.
"Noneligible member." For the purposes of section 8325.1
(relating to annual compensation limit under IRC § 401(a)(17)),
a member who first became a member on or after July 1, 1996.
"Participant." An active participant, inactive participant
or participant receiving distributions.
"Participating eligible annuitants." All eligible annuitants
who are enrolled or elect to enroll in a health insurance
program approved by the Public School Employees' Retirement
Board.
"Participant receiving distributions." A participant in the
plan who has commenced receiving distributions from his
individual investment account but who has not received a total
distribution of his vested interest in the individual investment
account.
"Pickup contributions." Regular or joint coverage member
contributions and shared-risk member contributions and mandatory
cash balance account contributions which are made by the
employer for active members for current service on and after
January 1, 1983.
"Plan." The School Employees' Defined Contribution Plan as
established by the provisions of this part and the board.
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"Plan document." The documents created by the board under
section 8402 (relating to plan document) that contain the terms
and provisions of the plan and trust as established by the board
regarding the establishment, administration and investment of
the plan and trust.
"Previous school service." Service [rendered] as a school
employee including service in any summer school conducted by a
school district of the Commonwealth, but excluding service
rendered during which the school employee was or could have been
a participant in the plan, prior to the member's most recent
entrance in the system.
"Public school." Any or all classes or schools within this
Commonwealth conducted under the order and superintendence of
the Department of Education including, but not limited to: all
educational classes of any employer charged with the
responsibility of public education within this Commonwealth as
well as those classes financed wholly or in part by the Federal
Government, State-owned colleges and universities, the
Pennsylvania State University, community colleges, area
vocational-technical schools, intermediate units, the State
Board of Education, Scotland School for Veterans' Children,
Thaddeus Stevens State School of Technology, and the
Pennsylvania State Oral School for the Deaf.
"Public School Code." The act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
"Reemployed from USERRA leave." Resumption of active
membership or active participation as a school employee after a
period of USERRA leave, if the resumption of active membership
or active participation was within the time period and under
conditions and circumstances such that the school employee was
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entitled to reemployment rights under 38 U.S.C. Ch. 43 (relating
to employment and reemployment rights of members of the
uniformed services).
"Regular member contributions." The product of the basic
contribution rate and the compensation of the member.
"Required beginning date." The latest date by which
distributions of a participant's interest in his individual
investment account must commence under the Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(9)).
"Reserve component of the armed forces." The United States
Army Reserve, United States Navy Reserve, United States Marine
Corps Reserve, United States Coast Guard Reserve, United States
Air Force Reserve, Pennsylvania Army National Guard and
Pennsylvania Air National Guard.
"Salaried employee." A school employee who is compensated on
the basis of an annual salary.
"Salary deductions." The amounts certified by the board,
deducted from the compensation of an active member or active
participant or the State service compensation of a multiple
service member who is an active member of the State Employees'
Retirement System or active participant of the School Employees'
Defined Contribution Plan and paid into the fund or trust.
"School employee." Any person engaged in work relating to a
public school for any governmental entity and for which work he
is receiving regular remuneration as an officer, administrator
or employee excluding, however, any independent contractor or a
person compensated on a fee basis.
"School entity." A school district of any class,
intermediate unit or an area vocational-technical school, as
provided for under the act of March 10, 1949 (P.L.30, No.14),
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known as the Public School Code of 1949.
"School service." Service rendered as a school employee.
"School year." The 12-month period which the governmental
entity uses for purposes of administration regardless of the
actual time during which a member renders service.
"Severance payments." Any payments for unused vacation or
sick leave and any additional compensation contingent upon
retirement including payments in excess of the scheduled or
customary salaries provided for members within the same
governmental entity with the same educational and experience
qualifications who are not terminating service.
"Shared-risk contribution rate." The [additional]
contribution rate that is [added] applied to the basic
contribution rate for Class T-D, T-E and T-F members, as
provided for in section 8321(b) and (c) (relating to regular
member contributions for current service).
"Standard single life annuity." For Class T-A, T-B and T-C
credited service of a member, an annuity equal to 2% of the
final average salary, multiplied by the total number of years
and fractional part of a year of credited service of a member in
that class. For Class T-D credited service of a member, an
annuity equal to 2.5% of the final average salary, multiplied by
the total number of years and fractional part of a year of
credited service in that class. For Class T-E credited service
of a member, an annuity equal to 2% of the final average salary,
multiplied by the total number of years and fractional part of a
year of credited service of a member. For Class T-F credited
service of a member, an annuity equal to 2.5% of the final
average salary, multiplied by the total number of years and
fractional part of a year of credited service of a member. For
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Class T-I members, and for monies in the cash balance account of
members of other classes, an annuity that is actuarially
equivalent to the balance of the member's savings account or the
cash balance account, as applicable, calculated using 120% of
the mid-term Treasury note rate in effect on the effective date
of retirement of the member.
"State Employees' Defined Contribution Plan." The defined
contribution plan for State employees established by 71 Pa.C.S.
Pt. XXV (relating to retirement for State employees and
officers).
"State Employees' Retirement System." The retirement system
established by the act of June 27, 1923 (P.L.858, No.331) and
codified by the act of June 1, 1959 (P.L.392, No.78) and by Part
XXV of Title 71 (relating to retirement for State employees and
officers), added March 1, 1974 (P.L.125, No.31).
"State service." Service rendered as a State employee and
credited as service in the State Employees' Retirement System.
"Statutory interest." Interest at 4% per annum, compounded
annually.
"Successor payee." The person or persons last designated in
writing by a participant to the board to receive one or more
distributions upon the death of such participant.
"Superannuation annuitant." An annuitant whose annuity first
became payable on or after the attainment of superannuation age
and who is not a disability annuitant.
"Superannuation or normal retirement age."
Class of service Age
T-A
62 or any age upon accrual of
35 eligibility points
T-B 62
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T-C and T-D
62 or age 60 provided the
member has at least 30
eligibility points or any
age upon accrual of 35
eligibility points
T-E and T-F
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
"Survivor annuitant." The person or persons last designated
by a member or participant under a joint and survivor annuity
option to receive an annuity upon the death of such member. A
combined service employee may designate different persons to be
survivor annuitants for the benefits from the system and
beneficiaries or successor payees for the benefits from the
plan.
"System." The Public School Employes' Retirement System of
Pennsylvania as established by the act of July 18, 1917
(P.L.1043, No.343), and codified by the act of June 1, 1959
(P.L.350, No.77).
"Total member contribution rate." The sum of the basic
contribution rate and the shared-risk contribution rate.
"Trust." The School Employees' Defined Contribution Trust
established under Chapter 84 (relating to School Employees'
Defined Contribution Plan).
"USERRA." The Uniformed Services Employment and Reemployment
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Rights Act, 38 U.S.C. Ch. 43 (relating to employment and
reemployment rights of members of the uniformed services).
"USERRA leave." Any period of time for service in the
uniformed services as defined in 38 U.S.C. Ch. 43 (relating to
employment and reemployment rights of members of the uniformed
services) by a school employee or former school employee or
participant who terminated school service to perform the service
in the uniformed services, if the current or former school
employee or participant is entitled to reemployment rights under
38 U.S.C. Ch. 43 with respect to the uniformed service.
"Valuation interest." Interest at 5 1/2% per annum,
compounded annually and applied to all accounts of the fund
other than the members' savings account.
"Vestee." A member with five or more eligibility points in a
class of service other than Class T-E, Class T-F or Class T-I
who has terminated school service, has left his accumulated
deductions in the fund and is deferring filing of an application
for receipt of an annuity. For Class T-E and Class T-F members,
a member with ten or more eligibility points who has terminated
school service, has left his accumulated deductions in the fund
and is deferring filing of an application for receipt of an
annuity. For Class T-I members, a member who has terminated
school service, has left his accumulated deductions in the fund
and is deferring filing of an application for receipt of
annuity.
"Voluntary contributions." Contributions made by a
participant to the trust and credited to his individual
investment account in excess of his mandatory pickup participant
contributions, and contributions made by a member to the system
and credited to his cash balance account in excess of his
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mandatory pickup contributions, either by salary deductions paid
through the employer or by an eligible rollover or direct
trustee-to-trustee transfers.
Section 202. Section 8103 of Title 24 is amended by adding
subsections to read:
§ 8103. Construction of part.
* * *
(c) Construction regarding inactive member and inactive
participant.--As used in this part:
(1) The term "inactive member" does not include a
combined service employee who is an "inactive participant,"
unless the combined service employee is concurrently employed
in a position in which such employee is a member of the
system.
(2) The term "inactive participant" does not include a
combined service employee who is an "inactive member," unless
the combined service employee is concurrently employed in a
position in which such employee is a participant in the plan.
(d) Provisions severable.--The provisions of this part are
severable and if any of its provisions shall be held to be
unconstitutional, the decision of the court shall not affect or
impair any of the remaining provisions. It is hereby declared to
be the legislative intent that this part would have been adopted
had such unconstitutional provisions not been included.
(e) References to certain Federal statutes.--References in
this part to the IRC or the Uniformed Services Employment and
Reemployment Rights Act of 1994 (Public Law 103-353, 108 Stat.
3149), including administrative regulations promulgated under
the IRC or the Uniformed Services Employment and Reemployment
Rights Act of 1994, are intended to include laws and regulations
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in effect on the effective date of this section and amended,
supplemented or supplanted on and after the effective date of
this section.
(f) Construction.--
(1) This part may not be construed to mean that the
limitations on benefits or other requirements under IRC §
401(a) or other applicable provisions of the IRC that are
applicable to participants in the plan do not apply to the
participants or to the members of the system and the benefits
payable under Part IV.
(2) This part may not be construed to mean that an
interpretation or application of the provisions of Part IV or
benefits available to members of the Public School Employees'
Retirement System was not in accordance with the provisions
of Part IV or other applicable law, including the IRC and the
Uniformed Services Employment and Reemployment Rights Act of
1994 before the effective date of this section.
(3) This part may not be construed to mean that the
release or publicizing of a record, material or data that
would not constitute a public record under section 8502(e)(2)
(relating to administrative duties of board) is a violation
of the fiduciary duties of the board.
(g) Applicability.--This part shall apply to a record,
material or data under section 8502(e)(2) notwithstanding
whether:
(1) the record, material or data was created, generated
or stored before the effective date of this section;
(2) the record, material or data was previously released
or made public; or
(3) a request for the record, material or data was made
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