S1071B1481A08206 AJM:JMT 06/10/16 #90 A08206
AMENDMENTS TO SENATE BILL NO. 1071
Sponsor: REPRESENTATIVE TOBASH
Printer's No. 1481
Amend Bill, page 1, lines 21 through 31; page 2, lines 1
through 16; by striking out all of said lines on said pages and
inserting
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 Employees' Defined Contribution Plan, of
administration and miscellaneous provisions and of health
insurance for retired school employees; for military
pensions, in the area of military leave of absence; for the
State Employees' Retirement System, 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, of administration, funds, accounts,
general provisions; providing, as to the revisions, for
reservation of legislative authority, for construction, for
accrued liability, for construction related to Federal law,
for immunity from personal liability, for restoration of
service credit or a retirement benefit, for recertification
of contribution rates, for transfer of assets and for
severability; and making editorial changes.
Amend Bill, page 400, lines 18 through 30; pages 401 through
729, lines 1 through 30; page 730, lines 1 through 18, by
striking out all of said lines on said pages and inserting
ARTICLE I
Section 101. The definitions of "active member," "alternate
payee," "basic contribution rate," "beneficiary," "class of
service multiplier," "compensation," "creditable nonschool
service," "credited service," "date of termination of service,"
"distribution," "domestic relations order," "final average
salary," "inactive member," "intervening military service,"
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"irrevocable beneficiary," "leave for service with a collective
bargaining organization," "member's annuity," "multiple
service," "reemployed from USERRA leave," "required beginning
date," "salary deductions," "shared risk contribution rate,"
"standard single life annuity," "superannuation or normal
retirement age," "valuation interest" and "vestee" in section
8102 of Title 24 of the Pennsylvania Consolidated Statutes,
amended or added December 28, 2015 (P.L.529, No.93), are amended
and the section is amended by adding definitions 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 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 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 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.
* * *
"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
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 limitations on contributions to the
system applicable to Class T-G members when the Class T-G member
is making mandatory pickup participant contributions to the
trust.
"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 school
service required to be credited in the plan are not being made
solely by reason of any provision of this part relating to the
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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).
* * *
"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.
* * *
"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-G
service for members with less than 25 eligibility points accrued
as a Class T-G member, the rate of 6%, up to the defined benefit
compensation limit. For Class T-G service for members with more
than 25 eligibility points accrued as a Class T-G member, the
rate of zero.
"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
persons last designated in writing to the board by a participant
to receive the participant's vested accumulated total defined
contributions or a lump sum benefit upon the death of the
participant.
* * *
"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
T-G 1.000
* * *
"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
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
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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 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 annual compensation
limit under IRC § 401(a)(17)), and shall apply to each
participant pertaining to his participation in the plan.
* * *
"Creditable nonschool service." Service [other than service
as a school employee] for which an active member may obtain
credit in the system other than service as a school employee.
"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 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 limitations on contributions to
the system applicable to Class T-G members when the Class T-G
member is making mandatory pickup participant contributions to
the trust or for which salary deductions or lump sum payments to
the system 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
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 limitations on contributions
applicable to a Class T-G member;
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(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) the last day of service for which mandatory pickup
participant contributions are made for an active participant.
"Defined benefit compensation limit." For fiscal year 2018-
2019, the amount of $50,000. For each subsequent fiscal year,
this amount shall be increased by 3% per year, compounded
annually, rounded to the nearest $100.
* * *
"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).
* * *
"Employer defined contributions." Contributions made to an
active participant's account by an employer to the trust to be
credited in the active participant's individual investment
account as follows:
(1) For participants who have less than 25 eligibility
points credited as a member of Class T-G, or if a multiple
service member in Class A-5 of the State Employees'
Retirement System, contributions shall equal to 0.5% of
compensation up to the defined benefit compensation limit and
4% of compensation above such limit.
(2) For participants who have more than 25 eligibility
points credited as a member of Class T-G, or if a multiple
service member in Class A-5 of the State Employees'
Retirement System, contributions shall equal to 4% of
compensation.
"Final average salary." [The] As follows:
(1) For purposes of calculating all annuities and
benefits from the system attributable to a class of service
other than Class T-G, the highest average compensation
received as an active member during any three nonoverlapping
periods of 12 consecutive months months, excluding
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compensation received from school service credited as a
member of Class T-G, 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 in a class of
service other than Class T-G for three such periods, the
total compensation received as an active member in a class of
service other than Class T-G annualized in the case of part-
time service divided by the number of such periods of
membership in a class of service other than Class T-G; in the
case of a member with multiple service credit, the final
average salary, for purposes of calculating all annuities and
benefits from the system attributable to a class of service
other than Class T-G, shall be determined by reference to
compensation received by him as a school employee or a State
employee or both, excluding compensation received for service
performed as a member of Class T-G or Class A-5 in the State
Employees' Retirement System; 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]
(2) For purposes of calculating all annuities and
benefits from the system attributable to service as a member
of Class T-G, the highest average compensation received as an
active member of Class T-G during any five fiscal years, as
limited each fiscal year by the defined benefit compensation
limit, with the limited 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 of Class T-G for five such periods,
the total compensation received as an active member of Class
T-G annualized in the case of part-time service divided by
the number of such periods of membership in Class T-G; in the
case of a member with multiple service credit, the final
average salary, for purposes of calculating all annuities and
benefits from the system attributable to Class T-G service,
shall be determined by reference to compensation received by
him as a school employee for service credited as Class T-G or
as a State employee for service credited as Class A-5, or
both; and, in the case of a noneligible member, subject to
the application of the provisions of section 8325.1.
(3) For all members, 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).
* * *
"Holding vehicle trust." The School Employees' Defined
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Contribution Holding Vehicle Trust.
"Inactive member." A member for whom no pickup contributions
are being made to the fund, except in the case of an active
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 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415) or because
the member is on USERRA leave, or limitations on contributions
to the system applicable to a Class T-G member who is making
mandatory pickup participant contributions to the trust, but 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), but who has vested accumulated total defined
contributions standing to his credit in the trust and who has
not filed an application for an annuity.
"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
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.
* * *
"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 receiving distributions
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.
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* * *
"Leave for service with a collective bargaining
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 participant,
including, but not limited to, salary, wages, pension and
retirement contributions and benefits, employer defined
contributions, 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, employer
defined contributions, and other benefits and seniority.
"Mandatory pickup participant contributions." Either of the
following:
(1) For participants who have accrued less than 25
eligibility points credited as a member of Class T-G or, if a
multiple service member, of Class A-5 in the State Employees'
Retirement System, contributions shall equal 1.5% of
compensation required to be credited in the plan up to the
defined benefit compensation limit and 7.5% of compensation
above such limit.
(2) For participants who have accrued more than 25
eligibility points credited as a member of Class T-G or, if a
multiple service member, of Class A-5 in the State Employees'
Retirement System, contributions shall equal 7.5% of
compensation required to be credited in the plan.
* * *
"Member's annuity." The single life annuity which is
actuarially equivalent on the effective date of retirement and
taking into account any delay in the receipt of the portion of
the annuity based on Class T-G service, if the effective date of
retirement is under superannuation age applicable to Class T-G
service, 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 members' savings account.
* * *
"Multiple service." Credited service of a member who has
elected to combine his credited service in both the Public
School Employees' Retirement System and the State Employees'
Retirement System. A Class T-G member is eligible to elect
multiple service membership only for service credited as Class
A-5 service in the State Employees' Retirement System.
* * *
"Participant." An active participant, inactive participant
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or participant receiving distributions.
"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.
* * *
"Plan." The School Employees' Defined Contribution Plan as
established by the provisions of this part and the board.
"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.
* * *
"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
entitled to reemployment rights under 38 U.S.C. Ch. 43 (relating
to employment and reemployment rights of members of the
uniformed services).
* * *
"Required beginning date." The [beginning date] latest date
by which distributions of a member's interest or a participant's
interest in his individual investment account must commence
under section 401(a)(9) of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 401(a)(9)).
* * *
"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 and paid into the fund or trust.
* * *
"Shared-risk contribution rate." The additional contribution
rate that is added to the basic contribution rate for Class T-E
[and], T-F and T-G members, as provided for in section 8321(b)
(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.
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. 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
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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 Class T-G 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, except that such total number of
years shall not exceed 25.
"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).
* * *
"Successor payee." The person or persons last designated in
writing by a participant receiving distributions to the board to
receive one or more distributions upon the death of the
participant.
* * *
"Superannuation or normal retirement age."
Class of service Age
T-A 62 or any age upon accrual of
35 eligibility points
T-B 62
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,
excluding any eligibility
points accrued as a
member of Class T-G, and
if a multiple service
member, Class A-5
T-E [and], T-F and T-G 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, excluding any
eligibility points
accrued as a member of
Class T-G, and if a
multiple service member,
Class
* * *
"Trust." The School Employees' Defined Contribution Trust
established under Chapter 84 (relating to School Employees'
Defined Contribution Plan).
* * *
"Valuation interest." Interest at 5 1/2% per annum,
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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, Class T-G or
Class A-5 in the State Employees' Retirement System 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 and Class
T-G 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.
"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 by an eligible rollover or direct trustee-to-
trustee transfer.
Section 102. Section 8103 of Title 24 is amended by adding
subsections to read:
§ 8103. Construction of part.
* * *
(f) Exclusive source of rights and benefits.--Regardless of
any other provision of law, pension and benefit rights of school
employees shall be determined solely by this part, or the plan
document established by the board, and no collective bargaining
agreement nor any arbitration award between the employer and its
employees or their collective bargaining representatives shall
be construed to change any of the provisions in this part, to
require the board to administer pension or retirement benefits
not set forth in this part or not established by the board in
the plan document, to require the board to modify, amend or
change any of the terms and provisions of the plan document or
otherwise require action by any other government body pertaining
to pension or retirement benefits or rights of school employees.
(g) 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
in effect on or after the effective date of this subsection.
(h) 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 this part.
(2) This part may not be construed to mean that an
interpretation or application of a provision of this part or
benefits available to members of the Public School Employees'
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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 subsection.
(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.
(i) Applicability.--The following shall apply:
(1) The provisions of this part regarding the
establishment of and participation in the plan shall apply to
current and former members of the system who return to school
service on or after July 1, 2018, after a termination of
school service, notwithstanding the following:
(i) Whether the termination occurred before, on or
after July 1, 2018.
(ii) Whether the school employee was an annuitant,
inactive member or vestee or withdrew accumulated
deductions during the period of termination.
(2) A terminated school employee who returns to school
service on or after July 1, 2018, is subject to the
provisions of this part regarding participation in the plan
or membership in the system that are in effect on the
effective date of reemployment, including, but not limited
to, benefit formulas and accrual rates, eligibility for
annuities and distributions, contribution rates, definitions,
purchase of creditable school and nonschool service
provisions, purchase of creditable State and nonstate service
provisions, and actuarial and funding assumptions.
Section 102.1. Section 8103.1 of Title 24, added December
28, 2015 (P.L.529, No.93), is amended to read:
§ 8103.1. Notice to members.
Notice by publication, including, but not limited to,
newsletters, newspapers, forms, first class mail, letters,
manuals and electronic notice, including, but not limited to, e-
mail or publicly accessible Internet websites, distributed or
made available to members in a manner reasonably calculated to
give actual notice of the provisions of this part that require
notice to members and participants shall be deemed sufficient
notice for all purposes.
Section 103. Title 24 is amended by adding a section to
read:
§ 8103.2. Reference to Public School Employees' Retirement
System.
(a) General rule.--Unless the context clearly indicates
otherwise, a reference to the Public School Employees'
Retirement System in a statutory provision, other than this part
and 71 Pa.C.S. Pt. XXV (relating to retirement for State
employees and officers), shall include a reference to the plan,
and a reference to the Public School Employees' Retirement Fund
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shall include a reference to the trust.
(b) Certain agreements.--The agreement of an employer to
make contributions to the fund or to enroll its employees as
members in the system shall be deemed to be an agreement to make
contributions to the trust or to enroll its employees in the
plan.
Section 104. Section 8301 of Title 24 is amended to read:
§ 8301. Mandatory and optional membership in the system and
participation in the plan.
(a) Mandatory membership.--Membership in the system shall be
mandatory as of the effective date of employment for all school
employees except the following:
(1) Any officer or employee of the [Department of
Education] department, State-owned educational institutions,
community colleges, area vocational-technical schools,
technical institutes, or [the] The Pennsylvania State
University and who is a member of the State Employees'
Retirement System or a member of another retirement program
approved by the employer.
(2) Any school employee who is not a member of the
system and who is employed on a per diem or hourly basis for
less than 80 full-day sessions or 500 hours in any fiscal
year or annuitant who returns to school service under the
provisions of section 8346(b) (relating to termination of
annuities).
(3) Any officer or employee of a governmental entity who
subsequent to December 22, 1965 and prior to July 1, 1975
administers, supervises, or teaches classes financed wholly
or in part by the Federal Government so long as he continues
in such service.
(4) Any part-time school employee who has an individual
retirement account pursuant to the Federal act of September
2, 1974 (Public Law 93-406, 88 Stat. 829), known as the
Employee Retirement Income Security Act of 1974.
(b) Prohibited membership in system.--The school employees
categorized in subsection (a)(1) and (2) shall not have the
right to elect membership in the system.
(c) Optional membership in system.--The school employees
categorized in subsection (a)(3) and, if otherwise eligible,
subsection (a)(4) shall have the right to elect membership in
the system. Once such election is exercised, membership shall
commence from the original date of eligibility and shall
continue until the termination of such service.
(d) Mandatory participation in plan.--The school employees
who are mandatory members of Class T-G shall be mandatory
participants in the plan as of the effective date of membership
in the system.
(e) Optional participation in plan.--The school employees
who are optional members of the system as members of Class T-G
shall be optional participants in the plan. The school employees
who elect membership in the system as members of Class T-G also
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elect participation in the plan as of the effective date of
membership in the system.
Section 105. Section 8302(a), (b)(1) and (2), (c) and (d) of
Title 24, amended December 28, 2015 (P.L.529, No.93), is amended
and the section is amended by adding a subsection to read:
§ 8302. Credited school service.
(a) Computation of credited service.--In computing credited
school service of a member for the determination of benefits, a
full-time salaried school employee shall receive one year of
credit for each school year or the corresponding fraction
thereof, in accordance with the proportion of the full school
year for which the required regular member contributions have
been made to the fund, or for which such contributions otherwise
required for such service were not made to the fund solely by
reason of any provision of this part relating to the limitations
under IRC § 401(a)(17) or 415 or limitations on contributions
applicable to a Class T-G member. A per diem or hourly school
employee shall receive one year of credited service for each
nonoverlapping period of 12 consecutive months in which he is
employed and for which contributions are made to the fund, or
would have been made to the fund but for such limitations under
the IRC, or limitations on contributions applicable to a Class
T-G member for at least 180 full-day sessions or 1,100 hours of
employment. If such member was employed and contributions were
made to the fund for less than 180 full-day sessions or 1,100
hours, he shall be credited with a fractional portion of a year
determined by the ratio of the number of full-day sessions or
hours of service actually rendered to 180 full-day sessions or
1,100 hours, as the case may be. A part-time salaried employee
shall be credited with the fractional portion of the year which
corresponds to the service actually rendered and for which
contributions are or would have been made to the fund except for
the limitations under the IRC or limitations applicable to a
Class T-G member in relation to the service required as a
comparable full-time salaried employee. In no case shall a
member receive more than one year of credited service for any 12
consecutive months or a member who has elected multiple service
receive an aggregate in the two systems of more than one year of
credited service for any 12 consecutive months.
(b) Approved leaves of absence.--An active member shall
receive credit, and an active participant shall receive
eligibility points, for an approved leave of absence provided
that:
(1) the member returns for a period at least equal to
the length of the leave or one year as a member of the system
and, for Class T-G members, the participant returns to school
service as an active participant in the plan, whichever is
less, to the school district which granted his leave, unless
such condition is waived by the employer; and
(2) the proper contributions are made by the member and
the employer and, for Class T-G members, by the active
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participant and the employer.
* * *
(c) Cancellation of credited service.--
(1) All credited service in the system shall be
[cancelled] canceled if a member withdraws his accumulated
deductions[.] except that:
(i) a member with Class T-G service credit and one
or more other classes of service credit shall not have
his service credit in the classes of service other than
Class T-G canceled when the member receives a lump sum
payment of accumulated deductions relating to the Class
T-G service; and
(ii) a member with Class T-G service credit and one
or more other classes of service credit shall not have
his service credit as a member of Class T-G canceled when
the member receives a lump sum payment of accumulated
deductions resulting from the other classes of service.
(2) A partial or total distribution of accumulated total
defined contributions to a participant who also is a member
shall not cancel service credited in the system.
(d) Credit for military service.--A school employee who has
performed USERRA leave may receive credit in the system as
follows:
(1) For purposes of determining whether a member is
eligible to receive credited service in the system for a
period of active military service, other than active duty
service to meet periodic training requirements, rendered
after August 5, 1991, and that began before the effective
date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73
(relating to military leave of absence) shall apply to all
individuals who were active members of the system when the
period of military service began, notwithstanding if the
member is not defined as an employee under 51 Pa.C.S. § 7301
(relating to definitions).
(1.1) School employees may not receive service credit or
exercise the options under 51 Pa.C.S. § 7306(a), (b) and (c)
(relating to retirement rights) for military leaves that
begin on or after the effective date of this subsection,
except otherwise provided under this subsection.
(2) A school employee who has performed USERRA leave may
receive credit as provided by this paragraph.
(i) A school employee who is reemployed from USERRA
leave as an active member of the system shall be treated
as not having incurred a break in school service by
reason of the USERRA leave and shall be granted
eligibility points as if the school employee had not been
on the USERRA leave. If a school employee who is
reemployed from USERRA leave as an active member of the
system subsequently makes regular member contributions,
shared-risk member contributions and any other member
contributions in the amounts and in the time periods
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required by 38 U.S.C. Ch. 43 (relating to employment and
reemployment rights of members of the uniformed services)
and IRC § 414(u) as if the school employee had continued
in his school office or employment and performed school
service and been compensated during the period of USERRA
leave, then the school employee shall be granted school
service credit for the period of USERRA leave. The
employee shall have his benefits, rights and obligations
determined under this part as if he was an active member
who performed creditable school service during the USERRA
leave in the job position that he would have held had he
not been on USERRA leave and received the compensation on
which the member contributions to receive school service
credit for the USERRA leave were determined.
(ii) For purposes of determining whether a school
employee has made the required employee contributions for
school service credit for USERRA leave, if an employee
who is reemployed from USERRA leave as an active member
of the system terminates school service or dies in school
service before the expiration of the allowed payment
period, school service credit for the USERRA leave shall
be granted as if the required member contributions were
paid the day before termination or death. The amount of
the required member contributions shall be treated as an
incomplete payment subject to the provisions of section
8325 (relating to incomplete payments). Upon a subsequent
return to school service or to State service as a
multiple service member, the required member
contributions treated as incomplete payments shall be
treated as member contributions that were either
withdrawn in a lump sum at termination or paid as a lump
sum under section 8345(a)(4) (relating to member's
options). For this purpose, the exclusion of Class T-E
and Class T-F members from electing a form of payment
under section 8345(a)(4)(iii) shall be ignored.
(iii) A school employee who is reemployed from
USERRA leave as an active member of the system and who
does not make the required member contributions or makes
only part of the required member contributions within the
allowed payment period shall not be:
(A) Granted credited service for the period of
USERRA leave for which the required member
contributions were not timely made.
(B) Eligible to subsequently make contributions.
(C) Granted either school service credit or
nonschool service credit for the period of USERRA
leave for which the required member contributions
were not timely made.
(3) A school employee who is a member of the system and
performs USERRA leave from which the employee could have been
reemployed from USERRA leave had the school employee returned
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to school service in the time frames required by 38 U.S.C.
Ch. 43 for reemployment rights, but did not do so, shall be
able to receive creditable nonschool service as
nonintervening military service for the period of USERRA
leave if the employee later returns to school service and is
otherwise eligible to purchase the service as nonintervening
military service.
(4) [A school employee] An active or inactive member
who, on or after the effective date of this subsection, is
granted a leave of absence under section 1178 of the Public
School Code, a leave of absence under 51 Pa.C.S. § 4102
(relating to leaves of absence for certain government
employees) or a military leave under 51 Pa.C.S. Ch. 73, that
is not USERRA leave shall be able to receive creditable
nonschool service as nonintervening military service should
the employee return to school service as an active member of
the system and is otherwise eligible to purchase the service
as nonintervening military service.
(5) If a member dies while performing USERRA leave, the
beneficiaries or survivor annuitants of the deceased member
shall be entitled to any additional benefits, including
eligibility points, other than benefit accruals relating to
the period of qualified military service, provided under this
part as if the member resumed and then terminated employment
on account of death.
(6) A school employee who is on a leave of absence from
his duties as a school employee and for which 51 Pa.C.S. §
4102 provides that he is not to suffer a loss of pay, time or
efficiency shall not be an active member, receive service
credit or make member contributions for the leave of absence
except as provided for in this part. Notwithstanding this
paragraph, any pay the member receives under section 1178 of
the Public School Code or 51 Pa.C.S. § 4102 shall be included
in the determination of final average salary and other
calculations in the system utilizing compensation as if the
payments were compensation under this part.
(e) Military service by participant.--A participant who has
performed USERRA leave shall be treated and may make
contributions as follows:
(1) A participant who is reemployed from USERRA leave
shall be treated as not having incurred a break in school
service by reason of the USERRA leave and shall be granted
eligibility points as if the participant had not been on
USERRA leave. If a participant who is reemployed from USERRA
leave subsequently makes mandatory pickup participant
contributions in the amounts and in the time periods required
by 38 U.S.C. Ch. 43 and IRC § 414(u) as if the participant
had continued in his school employment and performed school
service and been compensated during the period of USERRA
leave, the participant's employer shall make the
corresponding employer defined contributions. The employee
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shall have his contributions, benefits, rights and
obligations determined under this part as if he was an active
participant who performed school service during the USERRA
leave in the job position that he would have held had he not
been on USERRA leave and received the compensation on which
the mandatory pickup participant contributions to receive
school service credit for the USERRA leave were determined,
including the right to make voluntary contributions as
permitted by law.
(2) A participant who is reemployed from USERRA leave
and does not make the mandatory pickup participant
contributions or makes only part of the mandatory pickup
participant contributions within the allowed payment period
shall not be eligible to make mandatory pickup participant
contributions and voluntary contributions at a later date for
the period of USERRA leave for which the mandatory pickup
participant contributions were not timely made.
(3) A participant who performs USERRA leave from which
the employee could have been reemployed from USERRA leave had
the school employee returned to school service in the time
frames required by 38 U.S.C. Ch. 43 for reemployment rights,
but did not do so, shall not be eligible to make mandatory
pickup participant contributions or voluntary contributions
for the period of USERRA leave should the employee later
return to school service and be a participant in the plan.
(4) An active participant or inactive participant who,
on or after the effective date of this subsection, is granted
a leave of absence under 51 Pa.C.S. § 4102 or a military
leave under 51 Pa.C.S. Ch. 73 that is not USERRA leave shall
not be eligible to make mandatory pickup participant
contributions or voluntary contributions during or for the
leave of absence or military leave and shall not have
employer defined contributions made during such leave,
without regard to whether or not the participant received
salary, wages, stipends, differential wage payments or other
payments from his employer during the leave, notwithstanding
any provision to the contrary in 51 Pa.C.S. § 4102 or Ch. 73.
(5) If a participant dies while performing USERRA leave,
then the beneficiaries or successor payees, as the case may
be, of the deceased participant are entitled to any
additional benefits, other than benefit accruals relating to
the period of qualified military service, provided under this
part had the participant resumed and then terminated
employment on account of death.
Section. 105.1. Section 8303(c) of Title 24 is amended and
the section is amended by adding a subsection to read:
§ 8303. Eligibility points for retention and reinstatement of
service credits.
* * *
(c) Purchase of previous creditable service.--[Every]
Subject to the limitations in subsection (c.1), an active member
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of the system or a multiple service member who is an active
member of the State Employees' Retirement System on or after the
effective date of this part may purchase credit and receive
eligibility points:
(1) as a member of Class T-C, Class T-E or Class T-F for
previous creditable school service or creditable nonschool
service; [or]
(2) as a member of Class T-D for previous creditable
school service, provided the member elects to become a Class
T-D member pursuant to section 8305.1 (relating to election
to become a Class T-D member); or
(3) as a member of Class T-G for previous creditable
school service performed as a Class T-G member;
upon written agreement by the member and the board as to the
manner of payment of the amount due for credit for such service;
except, that any purchase for reinstatement of service credit
shall be for all service previously credited.
(c.1) Ineligibility to purchase previous school service
credit.--An active member of Class T-G, or a multiple service
member who is an active member of Class A-5 in the State
Employees' Retirement System, shall not be eligible to purchase
service credit for previous school service, whether or not
previously credited in the system, except to reinstate
previously credited Class T-G service credit for which
accumulated deductions were withdrawn, and except to the extent
that any other provision of law requires or allows the crediting
of any period of leave to be purchased as school service after
the member returns from the leave to school service.
* * *
Section 106. Section 8304(a) of Title 24 is amended to read:
§ 8304. Creditable nonschool service.
(a) Eligibility.--An active member in a class other than
Class T-G, or a multiple service member who is an active member
of the State Employees' Retirement System in a class other than
Class A-5, shall be eligible to receive Class T-C, Class T-E or
Class T-F service credit for creditable nonschool service and
Class T-D, Class T-E or Class T-F service for intervening
military service, provided the member becomes a Class T-D member
pursuant to section 8305.1 (relating to election to become a
Class T-D member) or Class T-F member pursuant to section 8305.2
(relating to election to become a Class T-F member) or 8305
(relating to classes of service), as set forth in subsection (b)
provided that he is not entitled to receive, eligible to receive
now or in the future, or is receiving retirement benefits for
such service under a retirement system administered and wholly
or partially paid for by any other governmental agency or by any
private employer, or a retirement program approved by the
employer in accordance with section 8301(a)(1) (relating to
mandatory and optional membership), and further provided that
such service is certified by the previous employer and the
manner of payment of the amount due is agreed upon by the
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member, the employer, and the board. An active member who is a
member of Class T-G or a multiple service member who is a State
employee and an active member of the State Employees' Retirement
System as a member of Class A-5 shall be eligible for Class T-G
service credit for creditable nonschool service as set forth in
subsection (b)(2) for which the member makes the required
contributions to the fund.
* * *
Section 107. Section 8305(a), (b), (c)(1) and (4), (d) and
(e) of Title 24 are amended and the section is amended by adding
a subsection to read:
§ 8305. Classes of service.
(a) Class T-C membership.--A school employee who is a member
of Class T-C on the effective date of this part or who becomes a
member of the system subsequent to the effective date of this
part shall be classified as a Class T-C member, provided the
school employee does not become a member of Class T-D pursuant
to subsection (c) and does not become a member of Class T-G
pursuant to subsection (f).
(b) Other class membership.--A school employee who is a
member of a class of service other than Class T-C on the
effective date of this part may elect to become a member of
Class T-C or Class T-D or may retain his membership in such
other class until the service is discontinued or he elects to
become a full coverage member or elects to purchase credit for
previous school or creditable nonschool service. Any service
thereafter as a member of the system shall be credited as Class
T-C [or], T-D or T-G service as applicable.
(c) Class T-D membership.--
(1) A person who becomes a school employee and an active
member, or a person who becomes a multiple service member who
is a State employee and a member of the State Employees'
Retirement System, on or after the effective date of this
subsection shall be classified as a Class T-D member upon
payment of regular member contributions. Any prior school
service credited as Class T-C service shall be credited as
Class T-D service, subject to the limitations contained in
paragraph (4) and section 8303(c.1) (relating to eligibility
points for retention and reinstatement of service credits).
* * *
(4) (i) School service performed as Class T-C service
before the effective date of this subsection shall be
credited as Class T-D service only upon completion of all
acts necessary for the school service to be credited as
Class T-C service had this subsection not been enacted.
(ii) A person who is not a school employee or a
State employee on June 30, 2001, and July 1, 2001, and
who has previous school service shall not receive Class
T-D service credit for school service performed before
July 1, 2001, until the person becomes an active member
or an active member of the State Employees' Retirement
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System and a multiple service member and earns three
eligibility points by performing credited school service
in a class other than Class T-G or State service in a
class other than Class A-5 after June 30, 2001. This
subparagraph does not apply to a disability annuitant who
returns to school service after June 30, 2001, upon
termination of the disability annuity.
(d) Class T-E membership.--Notwithstanding any other
provision, a person who first becomes a school employee and an
active member, or a person who first becomes a multiple service
member who is a State employee and a member of the State
Employees' Retirement System, on or after the effective date of
this subsection shall be classified as a Class T-E member upon
payment of regular member contributions and the shared-risk
contributions, provided the member does not terminate service
and then return to service on or after July 1, 2018.
(e) Class T-F membership.--Notwithstanding any other
provision, a person who first becomes a school employee and an
active member, or a person who first becomes a multiple service
member who is a State employee and a member of the State
Employees' Retirement System, on or after the effective date of
this subsection and who is eligible to become a Class T-E member
shall have the right to elect into Class T-F membership,
provided the person elects to become a Class T-F member pursuant
to section 8305.2 (relating to election to become a Class T-F
member), upon written election filed with the board and payment
of regular member contributions and the shared-risk
contributions, provided the member does not terminate service
and then return to service on or after July 1, 2018.
(f) Class T-G membership.--A person who first becomes a
school employee and an active member, or a person who first
becomes a multiple service member who is a State employee and a
member of the State Employees' Retirement System, on or after
July 1, 2018, shall be classified as a Class T-G member upon
payment of regular member contributions and the shared risk
contributions.
Section 108. Sections 8305.1(c) and 8305.2(c) of Title 24
are amended to read:
§ 8305.1. Election to become a Class T-D member.
* * *
(c) Effect of election.--An election to become a Class T-D
member shall remain in effect until the termination of
employment. Those members who, on the effective date of this
section, contribute at the rate of 5 1/4% shall be deemed to
have accepted the basic contribution rate of 6 1/2% for all
Class T-D service performed on or after January 1, 2002. Those
members who, on the effective date of this section, contribute
at the rate of 6 1/4% shall be deemed to have accepted the basic
contribution rate of 7 1/2% for all Class T-D service performed
on or after January 1, 2002. Upon termination and a subsequent
reemployment that occurs before July 1, 2018, the class of
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service of the school employee shall be credited in the class of
service otherwise provided for in this part. If the reemployment
occurs on or after July 1, 2018, the school employee's
eligibility for membership and class of service in the system or
participation in the plan shall be as provided in this part.
* * *
§ 8305.2. Election to become a Class T-F member.
* * *
(c) Effect of election.--An election to become a Class T-F
member shall be irrevocable and shall commence from the original
date of eligibility[. A member who elects Class T-F membership
shall receive Class T-F service credit on any and all future
service, regardless of whether the member terminates service or
has a break in service.] and shall remain in effect for all
future school service creditable in the system that otherwise
would not be credited as Class T-G service.
* * *
Section 108.1. Title 24 is amended by adding a section to
read:
§ 8305.3. Election to become a Class T-G member.
(a) General rule.--A member who returns to school service on
or after July 1, 2018, may make a one-time election to become a
member of Class T-G.
(b) Time for making election.--A member must elect to become
a Class T-G member by filing a written election with the board
within 45 days of notification by the board of the member's
eligibility to elect Class T-G membership and participation. A
school employee who is eligible to become a Class T-G member who
begins USERRA leave during the election period without having
elected Class T-G membership may make the election within 45
days after being reemployed from USERRA leave.
(c) Effect of election.--An election to become a Class T-G
member shall be irrevocable and shall commence from the original
date of the member's return to service. A member who elects
Class T-G membership shall receive Class T-G service credit on
any and all future service, regardless of whether the member
terminates service or has a break in service.
(d) Effect of failure to make election.--A member who fails
to timely file an election to become a Class T-G member shall
never be able to elect Class T-G service, regardless of whether
the member terminates service or has a break in service.
Section 108.2. Sections 8306 and 8307(b) and (c) of Title 24
are amended to read:
§ 8306. Eligibility points.
(a) General rule.--An active member of the system shall
accrue one eligibility point for each year of credited service
as a member of the [school or State retirement] system or if a
multiple service member, as a member of the State Employees'
Retirement system. A member shall accrue an additional two-
thirds of an eligibility point for each year of Class D-3
credited service under the State Employees' Retirement System.
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In the case of a fractional part of a year of credited service,
a member shall accrue the corresponding fractional portion of an
eligibility point.
(a.1) USERRA leave.--A member or participant who is
reemployed from USERRA leave or who dies while performing USERRA
leave shall be granted the eligibility points that he would have
accrued had he continued in his school office or employment
instead of performing USERRA leave. If a school employee who is
reemployed from USERRA leave makes the member or mandatory
pickup participant contributions to be granted school service
credit for the USERRA leave, no additional eligibility points
may be granted.
(b) Transitional rule.--For the purposes of the transition:
(1) In determining whether a member, other than a
disability annuitant who returns to school service after June
30, 2001, upon termination of the disability annuity, who is
not a school employee or a State employee on June 30, 2001,
and July 1, 2001, and who has previous school service, has
the five eligibility points required by the definition of
"vestee" in sections 8102 (relating to definitions), 8307
(relating to eligibility for annuities), 8308 (relating to
eligibility for vesting) and 8345 (relating to member's
options), only eligibility points earned by performing
credited school service, USERRA leave credited as an active
member of the system in a class of service other than Class
T-G or credited State service as an active member of the
State Employees' Retirement System in a class other than
Class A-5 after June 30, 2001, shall be counted until such
member earns one such eligibility point by performing
credited school service or credited State service after June
30, 2001, at which time all eligibility points, other than
eligibility points in classes of service other than Class T-G
or Class A-5, as determined under subsection (a) shall be
counted.
(2) A member subject to paragraph (1) shall be
considered to have satisfied any requirement for five
eligibility points contained in this part if the member has
at least ten eligibility points determined under subsection
(a).
(c) Transitional rule for members with Class T-G service
credit.--
(1) Any provision of this part pertaining to eligibility
points applicable to the eligibility for or calculation of
annuities or benefits attributable to classes of service
other than Class T-G shall not include any eligibility points
attributable to service credited in Class T-G or as a member
of Class A-5 in the State Employees' Retirement System.
(2) Any provision of this part pertaining to eligibility
points applicable to the eligibility for or calculation of
annuities or benefits attributable to service in Class T-G
shall include only eligibility points attributable to service
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credited in Class T-G or if a multiple service member as a
member of Class A-5 in the State Employees' Retirement
System.
(3) Only eligibility points earned as a member of Class
T-G, or if a multiple service member as a member of Class A-5
in the State Employees' Retirement System, shall be
applicable to any provision in this part requiring
eligibility points for the determination or payment of
benefits from the plan.
§ 8307. Eligibility for annuities.
* * *
(b) Withdrawal annuity.--
(1) A vestee in Class T-C or Class T-D with five or more
eligibility points or an active or inactive Class T-C or
Class T-D member who terminates school service having five or
more eligibility points in classes of service other than
Class T-G, or if a multiple service member, Class A-5, shall,
upon filing a proper application, be entitled to receive an
early annuity based on the service credited as a Class T-C or
T-D member.
(2) A vestee in Class T-E or Class T-F with ten or more
eligibility points or an active or inactive Class T-E or
Class T-F member who terminates school service having ten or
more eligibility points in classes of service other than
Class T-G, or if a multiple service member, Class A-5, shall,
upon filing a proper application, be entitled to receive an
early annuity based on the service credited as a Class T-E or
T-F member.
(3) A vestee in Class T-G with ten or more eligibility
points or an active or inactive Class T-G member who
terminates school service having ten or more eligibility
points credited as a Class T-G member, or if a multiple
service member, as Class A-5, shall, upon filing a proper
application, be entitled to receive an early annuity from the
system based on the eligibility points credited as a Class T-
G or Class A-5 member.
(4) A member who is vested with Class T-C, T-D, T-E, T-F
or T-G credited service, shall, upon filing a proper
application, be entitled to receive an early annuity based on
the credited service in each class.
(c) Disability annuity.--An active or inactive member who
has [credit for at least five years of service] five or more
eligibility points other than eligibility points resulting from
service as a member of Class T-G, or has five or more
eligibility points as a member of Class T-G, shall, upon filing
of a proper application, be entitled to a disability annuity
based on service and compensation in classes other than Class T-
G if he is eligible for a disability annuity on service and
compensation other than Class T-G, and a disability annuity
based on service and compensation as a member of Class T-G if he
is eligible for a disability annuity on service and compensation
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as a member of Class T-G, if he becomes mentally or physically
incapable of continuing to perform the duties for which he is
employed and qualifies for an annuity in accordance with the
provisions of section 8505(c)(1) (relating to duties of board
regarding applications and elections of members).
Section 108.3. Section 8308 of Title 24, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 8308. Eligibility for vesting.
Eligibility for vesting shall be as follows:
(1) Any Class T-C or Class T-D member who terminates
school service with five or more eligibility points shall be
entitled to vest his retirement benefits until the member's
required beginning date. Any Class T-E [or], Class T-F or
Class T-G member who terminates school service with ten or
more eligibility points shall be entitled to vest his
retirement benefits until his required beginning date.
(2) Any member who has Class T-G service credit and
service credited in one or more other classes of service and
terminates school service, or if a multiple service member
and an active member of the State Employees' Retirement
System terminates State service, shall be eligible to vest
his retirement benefits in each class in accordance with the
requirements for that class of service.
Section 108.4. (Reserved).
Section 108.5. Sections 8310, 8321(a) and 8322.1(a) of Title
24, amended December 28, 2015 (P.L.529, No.93), are amended to
read:
§ 8310. Eligibility for refunds.
Upon termination of service any active member, regardless of
eligibility for benefits, may elect to receive his accumulated
deductions by his required beginning date in lieu of any benefit
from the system to which he is entitled.
§ 8321. Regular member contributions for current service.
(a) General.--Regular member contributions shall be made to
the fund on behalf of each active member for current service
except for any period of current service in which the making of
such contributions has ceased solely by reason of any provision
of this part relating to the limitations under IRC § 401(a)(17)
or 415[.] or limitations on contributions to the system
applicable to a Class T-G member when the Class T-G member is
making mandatory pickup participant contributions to the trust.
(b) Class T-E [and], Class T-F and Class T-G shared-risk
contributions.--Commencing with the annual actuarial valuation
performed under section 8502(j) (relating to administrative
duties of board), for the period ending June 30, 2014, and every
three years thereafter, the board shall compare the actual
investment rate of return, net of fees, to the annual interest
rate adopted by the board for the calculation of the normal
contribution rate, based on the market value of assets, for the
prior ten-year period. If the actual investment rate of return,
net of fees, is less than the annual interest rate adopted by
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the board by an amount of 1% or more, the shared-risk
contribution rate of Class T-E [and], Class T-F and Class T-G
members will increase by .5%. If the actual investment rate of
return, net of fees, is equal to or exceeds the annual interest
rate adopted by the board, the shared-risk contributions rate of
Class T-E [and], Class T-F and Class T-G members will decrease
by .5%. Class T-E [and], Class T-F and Class T-G members will
contribute at the total member contribution rate in effect when
they are hired. The total member contribution rate for Class T-E
members shall not be less than 7.5%, nor more than 9.5%. The
total member contribution rate for Class T-F members shall not
be less than 10.3%, nor more than 12.3%. The total member
contribution rate for Class T-G members shall not be less than
6% nor more than 8%. Notwithstanding this subsection, if the
system's actuarial funded status is 100% or more as of the date
used for the comparison required under this subsection, as
determined in the current annual actuarial valuation, the
shared-risk contribution rate shall be zero. In the event that
the annual interest rate adopted by the board for the
calculation of the normal contribution rate is changed during
the period used to determine the shared-risk contribution rate,
the board, with the advice of the actuary, shall determine the
applicable rate during the entire period, expressed as an annual
rate. The following provisions shall apply:
(1) Until the system has a ten-year period of investment
rate of return experience following the effective date of
this subsection, the look-back period shall begin not earlier
than the effective date of this subsection.
(2) For any fiscal year in which the employer
contribution rate is lower than the final contribution rate
under section 8328(h) (relating to actuarial cost method),
the total member contribution rate for Class T-E [and], T-F
and T-G members shall be prospectively reset to the basic
contribution rate.
(3) There shall be no increase in the member
contribution rate if there has not been an equivalent
increase to the employer contribution rate over the previous
three-year period.
§ 8322.1. Pickup contributions.
(a) Treatment for purposes of IRC § 414(h).--All
contributions to the fund required to be made under sections
8321 (relating to regular member contributions for current
service), 8322 (relating to joint coverage member contributions)
and 8305 (relating to classes of service), with respect to
current school service rendered by an active member on or after
January 1, 1983, shall be picked up by the employer and shall be
treated as the employer's contribution for purposes of IRC §
414(h).
* * *
Section 108.6. Sections 8323(a), (c) and (d)(1), 8324(a),
(b), (c) and (d), 8325.1(a), 8326(a) and (c) and 8327 of Title
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24 are amended to read:
§ 8323. Member contributions for creditable school service.
(a) Previous school service, sabbatical leave and full
coverage.--The contributions to be paid by an active member or
an eligible State employee for credit in the system for
reinstatement of [all] the portion of previously credited school
service, school service not previously credited, sabbatical
leave as if he had been in full-time daily attendance that a
member is eligible to have credited, or full-coverage membership
shall be sufficient to provide an amount equal to the
accumulated deductions which would have been standing to the
credit of the member for such service had regular member
contributions been made with full coverage at the rate of
contribution necessary to be credited as Class T-C service,
Class T-D service if the member is a Class T-D member, Class T-E
service if the member is a Class T-E member or Class T-F service
if the member is a Class T-F member and had such contributions
been credited with statutory interest during the period the
contributions would have been made and during all periods of
subsequent school service as an active member or inactive member
and State service as an active member or inactive member on
leave without pay up to the date of purchase.
* * *
(c) Approved leave of absence other than sabbatical leave
and activated military service leave.--The contributions to be
paid by an active member for credit for an approved leave of
absence, other than sabbatical leave and activated military
service leave, shall be sufficient to transfer his membership to
Class T-C or to Class T-D if the member is a Class T-D member,
to Class T-E if the member is a Class T-E member [or], to Class
T-F if the member is a Class T-F member or to Class T-G if the
member is a Class T-G member, and further to provide an annuity
as a Class T-C member or Class T-D member if the member is a
Class T-D member, to Class T-E if the member is a Class T-E
member [or], to Class T-F if the member is a Class T-F member or
to Class T-G if the member is a Class T-G member, for such
additional credited service. Such amount shall be the sum of the
amount required in accordance with the provisions of subsection
(b) and an amount determined as the sum of the member's basic
contribution rate and the normal contribution rate as provided
in section 8328 (relating to actuarial cost method) during such
period multiplied by the compensation which was received or
which would have been received during such period and with
statutory interest during all periods of subsequent school and
State service up to the date of purchase.
* * *
(d) Certification and payment of contributions.--
(1) In all cases other than for the purchase of credit
for sabbatical leave and activated military service leave
beginning before the effective date of paragraph (2), the
amount payable shall be certified by the board in accordance
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with methods approved by the actuary and may be paid in a
lump sum within 90 days or in the case of an active member or
an eligible State employee who is an active member of the
State Employees' Retirement System it may be amortized with
statutory interest through salary deductions to the system in
amounts agreed upon by the member and the board. The salary
deduction amortization plans agreed to by members and the
board may include a deferral of payment amounts and statutory
interest until the termination of school service or State
service as the board in its sole discretion decides to allow.
The board may limit salary deduction amortization plans to
such terms as the board in its sole discretion determines. In
the case of an eligible State employee who is an active
member of the State Employees' Retirement System, the agreed
upon salary deductions shall be remitted to the State
Employees' Retirement Board, which shall certify and transfer
to the board the amounts paid.
* * *
§ 8324. Contributions for purchase of credit for creditable
nonschool service and noncreditable school service.
(a) Source of contributions.--The total contributions to
purchase credit as a member of Class T-C, Class T-E [or], Class
T-F or Class T-G for creditable nonschool service of an active
member or an eligible State employee shall be paid either by the
member, the member's previous employer, the Commonwealth, or a
combination thereof, as provided by law.
(b) Nonintervening military service.--
(1) The amount due for the purchase of credit for
military service other than intervening military service by a
member not in Class T-G shall be determined by applying the
member's basic contribution rate plus the normal contribution
rate as provided in section 8328 (relating to actuarial cost
method) at the time of entry of the member into school
service subsequent to such military service to one-third of
his total compensation received during the first three years
of such subsequent credited school service, excluding
compensation received for Class T-G service, and multiplying
the product by the number of years and fractional part of a
year of creditable nonintervening military service being
purchased together with statutory interest during all periods
of subsequent school service as an active member or inactive
member and State service as an active member or inactive
member on leave without pay to date of purchase.
(2) The amount due for the purchase of credit for
military service other than intervening military service by a
member who is eligible to make the purchase under section
8304 (relating to creditable nonschool service) shall be
determined by applying the member's basic contribution rate,
plus the Commonwealth's normal contribution rate for active
members at the time of entry, subsequent to such military
service, of the member into Class T-G service to his average
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annual rate of compensation received for Class T-G service
subject to any limit each year by the application of the
Class T-G defined benefit compensation limit, over the first
three years of such subsequent Class T-G service and
multiplying the result by the number of years and fractional
part of a year of creditable nonintervening military service
being purchased together with statutory interest during all
periods of subsequent school service as an active member or
inactive member and State service as an active member or
inactive member on leave without pay of the State Employees'
Retirement System to date of purchase.
(3) Upon certification of the amount due, payment may be
made in a lump sum within 90 days or in the case of an active
member or an eligible State employee who is an active member
of the State Employees' Retirement System it may be amortized
with statutory interest through salary deductions to the
system in amounts agreed upon by the member and the board.
The salary deduction amortization plans agreed to by members
and the board may include a deferral of payment amounts and
statutory interest until the termination of school service or
State service as the board in its sole discretion decides to
allow. The board may limit salary deduction amortization
plans to such terms as the board in its sole discretion
determines. In the case of an eligible State employee who is
an active member of the State Employees' Retirement System,
the agreed upon salary deductions shall be remitted to the
State Employees' Retirement Board, which shall certify and
transfer to the board the amounts paid. Application may be
filed for all such military service credit upon completion of
three years of subsequent credited school service and shall
be credited as Class T-C service. In the event that a Class
T-E member makes a purchase of credit for such military
service, then such service shall be credited as Class T-E
service. In the event that a Class T-F member makes a
purchase of credit for such military service, then such
service shall be credited as Class T-F service.
(c) Intervening military service.--Contributions on account
of credit for intervening military service shall be determined
by the member's basic contribution rate and compensation at the
time of entry of the member into active military service,
together with statutory interest during all periods of
subsequent school service as an active member or inactive member
and State service as an active member or inactive member on
leave without pay to date of purchase. Upon application for such
credit the amount due shall be certified in the case of each
member by the board, in accordance with methods approved by the
actuary, and contributions may be made by one of the following
methods:
(1) Regular monthly payments during active military
service.
(2) A lump sum payment within 90 days of certification
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of the amount due.
(3) Salary deductions to the system in amounts agreed
upon by the member and the board. The salary deduction
amortization plans agreed to by the members and the board may
include a deferral of payment amounts and statutory interest
until the termination of school service or State service as
the board in its sole discretion decides to allow. The board
may limit salary deduction amortization plans to such terms
as the board in its sole discretion determines. In the case
of an eligible State employee who is an active member of the
State Employees' Retirement System, the agreed upon salary
deductions shall be remitted to the State Employees'
Retirement Board, which shall certify and transfer to the
board the amounts paid.
(d) Other creditable nonschool service and noncreditable
school service.--
(1) Contributions on account of Class T-C credit for
creditable nonschool service other than military service
shall be determined by applying the member's basic
contribution rate plus the normal contribution rate as
provided in section 8328 at the time of the member's entry
into school service subsequent to such creditable nonschool
service to his total compensation received during the first
year of subsequent credited school service and multiplying
the product by the number of years and fractional part of a
year of creditable nonschool service being purchased together
with statutory interest during all periods of subsequent
school service as an active member or inactive member or
State service service as an active member or inactive member
on leave without pay to the date of purchase, except that in
the case of purchase of credit for creditable nonschool
service as set forth in section 8304(b)(5) (relating to
creditable nonschool service) the member shall pay only the
employee's share unless otherwise provided by law. Upon
certification of the amount due, payment may be made in a
lump sum within 90 days or in the case of an active member or
an eligible State employee who is an active member of the
State Employees' Retirement System it may be amortized with
statutory interest through salary deductions to the system in
amounts agreed upon by the member and the board. The salary
deduction amortization plans agreed to by the members and the
board may include a deferral of payment amounts and statutory
interest until the termination of school service or State
service as the board in its sole discretion decides to allow.
The board may limit salary deduction amortization plans to
such terms as the board in its sole discretion determines. In
the case of an eligible State employee who is an active
member of the State Employees' Retirement System, the agreed
upon salary deductions shall be remitted to the State
Employees' Retirement Board, which shall certify and transfer
to the board the amounts paid.
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(2) Contributions on account of Class T-E or Class T-F
credit for creditable nonschool service other than military
service shall be the present value of the full actuarial cost
of the increase in the projected superannuation annuity
caused by the additional service credited on account of the
purchase. Upon certification of the amount due, payment may
be made in a lump sum within 90 days or, in the case of an
active member or an eligible State employee who is an active
member of the State Employees' Retirement System, it may be
amortized with statutory interest through salary deductions
to the system in amounts agreed upon by the member and the
board. The salary deduction amortization plans agreed to by
the members and the board may include a deferral of payment
amounts and statutory interest until the termination of
school service or State service as the board in its sole
discretion decides to allow. The board may limit salary
deduction amortization plans to the terms as the board in its
sole discretion determines. In the case of an eligible State
employee who is an active member of the State Employees'
Retirement System, the agreed upon salary deductions shall be
remitted to the State Employees' Retirement Board, which
shall certify and transfer to the board the amounts paid.
(3) Contributions on account of Class T-E or Class T-F
credit for noncreditable school service other than military
service shall be the present value of the full actuarial cost
of the increase in the projected superannuation annuity
caused by the additional service credited on account of the
purchase. Upon certification of the amount due, payment may
be made in a lump sum within 90 days or, in the case of an
active member or an eligible State employee who is an active
member of the State Employees' Retirement System, it may be
amortized with statutory interest through salary deductions
to the system in amounts agreed upon by the member and the
board. The salary deduction amortization plans agreed to by
the members and the board may include a deferral of payment
amounts and statutory interest until the termination of
school service or State service as the board in its sole
discretion decides to allow. The board may limit salary
deduction amortization plans to the terms as the board in its
sole discretion determines. In the case of an eligible State
employee who is an active member of the State Employees'
Retirement System, the agreed upon salary deductions shall be
remitted to the State Employees' Retirement Board, which
shall certify and transfer to the board the amounts paid.
* * *
§ 8325.1. Annual compensation limit under IRC § 401(a)(17).
(a) General rule.--In addition to other applicable
limitations set forth in this part, and notwithstanding any
provision of this part to the contrary, the annual compensation
of each noneligible member and each participant taken into
account for benefit purposes under this subchapter shall not
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exceed the limitation under IRC § 401(a)(17). On and after July
1, 1996, any reference in this part to the limitation under IRC
§ 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
1993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
compensation limit set forth in this subsection. The OBRA '93
annual compensation limit is $150,000, as adjusted by the
commissioner for increases in the cost of living in accordance
with IRC § 401(a)(17)(B). The cost-of-living adjustment in
effect for a calendar year applies to any determination period
which is a period, not exceeding 12 months, over which
compensation is determined, beginning in such calendar year. If
a determination period consists of fewer than 12 months, the
OBRA '93 compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the
determination period and the denominator of which is 12.
* * *
§ 8326. Contributions by the Commonwealth.
(a) Contributions on behalf of active members.--The
Commonwealth shall make contributions into the fund on behalf of
all active members and participants, including members and
participants on activated military service leave, in an amount
equal to one-half the amount certified by the board as necessary
to provide, together with the members' contributions, annuity
reserves on account of prospective annuities as provided in this
part in accordance with section 8328 (relating to actuarial cost
method). In case a school employee has elected membership in a
retirement program approved by the employer, the Commonwealth
shall contribute to such program on account of his membership an
amount no greater than the amount it would have contributed had
the employee been a member of the Public School Employees'
Retirement System.
* * *
(c) Contributions after June 30, 1995.--
(1) The Commonwealth shall make contributions into the
fund on behalf of all active members and participants,
including members and participants on activated military
service leave, for service performed after June 30, 1995, in
the following manner:
(i) For members and participants who are employees
of employers that are school entities, no Commonwealth
contributions shall be made.
(ii) For members and participants who are employees
of employers that are not school entities, the amount
computed under subsection (a).
(2) The Commonwealth shall make contributions into the
fund on behalf of annuitants for all amounts due to the fund
after June 30, 1995, including, but not limited to, amounts
due pursuant to section 8328(d) and (f), in the following
manner:
(i) For members and participants who are employees
of employers who are school entities, no Commonwealth
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contributions shall be made.
(ii) For members and participants who are employees
of employers who are not school entities, the amount
computed under subsection (b).
* * *
§ 8327. Payments by employers.
(a) [General rule.--Each] Timing of payments.--
(1) For payments prior to June 30, 2018, each employer,
including the Commonwealth as employer of employees of the
[Department of Education] department, State-owned colleges
and universities, Thaddeus Stevens College of Technology,
Western Pennsylvania School for the Deaf, Scotland School for
Veterans' Children, and [the] The Pennsylvania State
University, shall make payments to the fund each quarter in
an amount equal to one-half the sum of the percentages, as
determined under section 8328 (relating to actuarial cost
method), applied to the total compensation during the pay
periods in the preceding quarter of all its employees who
were members of the system during such period, including
members on activated military service leave. In the event a
member on activated military service leave does not return to
service for the necessary time or receives an undesirable,
bad conduct or dishonorable discharge or does not elect to
receive credit for activated military service under section
8302(b.1)(3) (relating to credited school service), the
contributions made by the employer on behalf of such member
shall be returned with valuation interest upon application by
the employer.
(2) For payments after June 30, 2018, each employer,
including the Commonwealth as employer of employees of the
department, State-owned colleges and universities, Thaddeus
Stevens College of Technology, Western Pennsylvania School
for the Deaf and The Pennsylvania State University, shall
make payments to the fund each month in an amount equal to
one-half the sum of the percentages, as determined under
section 8328, applied to the total compensation during the
pay periods in the preceding month of all its employees who
were members of the system during such period, including
members on activated or USERRA military service leave, plus
the accrued liability contribution rate applied to the total
compensation of all active participants in the plan. In the
event a member on activated or USERRA military service leave
does not return to service for the necessary time or receives
an undesirable, bad conduct or dishonorable discharge or does
not elect to receive credit for activated or USERRA military
service under section 8302(b.1)(3), the contributions made by
the employer on behalf of such member shall be returned with
valuation interest upon application by the employer.
(b) Deduction from appropriations.--
(1) To facilitate the payment of amounts due from any
employer to the fund and the trust through the State
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Treasurer and to permit the exchange of credits between the
State Treasurer and any employer, the Secretary of Education
and the State Treasurer shall cause to be deducted and paid
into the fund and the trust from the amount of any moneys due
to any employer on account of any appropriation for schools
or other purposes amounts equal to the employer and pickup
contributions which an employer is required to pay to the
fund and the trust, as certified by the board, and as remains
unpaid on the date such appropriations would otherwise be
paid to the employer. Such amount shall be credited to the
appropriate accounts in the fund and the trust.
(2) To facilitate the payments of amounts due from any
charter school, as defined in Article XVII-A of the act of
March 10, 1949 (P.L.30, No.14), known as the Public School
Code of 1949, to the fund and the trust through the State
Treasurer and to permit the exchange of credits between the
State Treasurer and any employer, the Secretary of Education
and the State Treasurer shall cause to be deducted and paid
into the fund and the trust from any funds appropriated to
the [Department of Education] department for basic education
of the chartering school district of a charter school and
public school employees' retirement contributions amounts
equal to the employer and pickup contributions which a
charter school is required to pay to the fund and the trust,
as certified by the board, and as remains unpaid on the date
such appropriations would otherwise be paid to the chartering
school district or charter school. Such amounts shall be
credited to the appropriate accounts in the fund and the
trust. Any reduction in payments to a chartering school
district made pursuant to this section shall be deducted from
the amount due to the charter school district pursuant to the
Public School Code of 1949.
(c) Payments by employers after June 30, 1995, and before
July 1, 2018.--After June 30, 1995, and before July 1, 2018,
each employer, including the Commonwealth as employer of
employees of the [Department of Education] department, State-
owned colleges and universities, Thaddeus Stevens College of
Technology, Western Pennsylvania School for the Deaf[, Scotland
School for Veterans' Children] and The Pennsylvania State
University, shall make payments to the fund and the trust each
quarter in an amount computed in the following manner:
(1) For an employer that is a school entity, the amount
shall be the sum of the percentages as determined under
section 8328 applied to the total compensation during the pay
periods in the preceding quarter of all employees who were
active members of the system or active participants of the
plan during such period, including members or active
participants on activated military service leave. In the
event a member on activated military service leave does not
return to service for the necessary time or receives an
undesirable, bad conduct or dishonorable discharge or does
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not elect to receive credit for activated military service
under section 8302(b.1)(3), the contribution made by the
employer on behalf of such member shall be returned with
valuation interest upon application by the employer.
(2) For an employer that is not a school entity, the
amount computed under subsection (a).
(3) For any employer, whether or not a school entity, in
computing the amount of payment due each quarter, there shall
be excluded from the total compensation referred to in this
subsection and subsection (a) any amount of compensation of a
noneligible member on the basis of which member
contributions have not been made by reason of the limitation
under IRC § 401(a)(17), except as otherwise provided in this
part. Any amount of contribution to the fund paid by the
employer on behalf of a noneligible member on the basis of
compensation which was subject to exclusion from total
compensation in accordance with the provisions of this
paragraph shall, upon the board's determination or upon
application by the employer, be returned to the employer with
valuation interest.
(d) Payments by employers after June 30, 2018.--After June
30, 2018, each employer, including the Commonwealth as employer
of employees of the department, State-owned colleges and
universities, Thaddeus Stevens College of Technology, Western
Pennsylvania School for the Deaf and The Pennsylvania State
University, shall make payments to the fund and the trust each
month in an amount computed in the following manner:
(1) For an employer that is a school entity, the amount
shall be the sum of the percentages as determined under
section 8328 applied to the total compensation during the pay
periods in the preceding month of all employees who were
active members of the system during such period, including
members on activated or USERRA military service leave, plus
the accrued liability contribution rate applied to the total
compensation of all active participants in the plan. In the
event a member on activated or USERRA military service leave
does not return to service for the necessary time or receives
an undesirable, bad conduct or dishonorable discharge or does
not elect to receive credit for activated or USERRA military
service under section 8302(b.1)(3), the contribution made by
the employer on behalf of such member shall be returned with
valuation interest upon application by the employer.
(2) For an employer that is not a school entity, the
amount computed under subsection (a).
(3) For any employer, whether or not a school entity, in
computing the amount of payment due each month, there shall
be excluded from the total compensation referred to in this
subsection and subsection (a), any amount of compensation of
a noneligible member or participant on the basis of which
member or participant contributions have not been made by
reason of the limitation under IRC § 401(a)(17). Any amount
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of contribution to the fund paid by the employer on behalf of
a noneligible member or participant on the basis of
compensation which was subject to exclusion from total
compensation in accordance with the provisions of this
paragraph shall, upon the board's determination or upon
application by the employer, be returned to the employer with
valuation interest.
(e) Deemed agreed to.--The agreement of an employer listed
in the definition of school employee under section 8102
(relating to definitions) or any other law to make contributions
to the fund or to enroll its employees as members in the system
shall be deemed to be an agreement to make contributions to the
trust or enroll its employees in the plan.
(f) Contributions.--The employer employing a participant
shall pick up the required mandatory participant contributions
by a reduction in the compensation of the participant.
(g) Contributions resulting from members reemployed from
USERRA leave.--When a school employee reemployed from USERRA
leave makes the member contributions required to be granted
school service credit for the USERRA leave after June 30, 2018,
either by actual payment or by actuarial debt under section 8325
(relating to incomplete payments), the employer that employed
the school employee when the member contributions were made or
the last employer before termination in the case of payment
under section 8325 shall make the employer contributions that
would have been made under this section if the employee making
the member contributions after he is reemployed from USERRA
leave continued to be employed in his school office or position
instead of performing USERRA leave.
Section 109. Section 8328(a), (b), (c)(4), (d)(2) and (e) of
Title 24 are amended and subsections (c), (d) and (g) are
amended by adding paragraphs to read:
§ 8328. Actuarial cost method.
(a) Employer contribution rate.--The amount of the total
employer contributions shall be computed by the actuary as a
percentage of the total compensation of all active members and
active participants, as applicable, during the period for which
the amount is determined and shall be so certified by the board.
The total employer contribution rate shall be the sum of the
final contribution rate as computed in subsection (h) plus the
premium assistance contribution rate as computed in subsection
(f). The actuarially required contribution rate shall consist of
the normal contribution rate as defined in subsection (b), the
accrued liability contribution rate as defined in subsection (c)
and the supplemental annuity contribution rate as defined in
subsection (d). Beginning July 1, 2004, the actuarially required
contribution rate shall be modified by the experience adjustment
factors as calculated in subsection (e).
(b) Normal contribution rate.--[The]
(1) For fiscal years ending before July 1, 2018, the
normal contribution rate shall be determined after each
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actuarial valuation. Until all accrued liability
contributions have been completed, the normal contribution
rate shall be determined, on the basis of an annual interest
rate and such mortality and other tables as shall be adopted
by the board in accordance with generally accepted actuarial
principles, as a level percentage of the compensation of the
average new active member, which percentage, if contributed
on the basis of his prospective compensation through the
entire period of active school service, would be sufficient
to fund the liability for any prospective benefit payable to
him, in excess of that portion funded by his prospective
member contributions, excluding the shared-risk
contributions.
(2) For fiscal years beginning on or after July 1, 2018,
the normal contribution rate shall be determined after each
actuarial valuation. Until all accrued liability
contributions have been completed, the normal contribution
rate shall be determined, on the basis of an annual interest
rate and such mortality and other tables as shall be adopted
by the board in accordance with generally accepted actuarial
principles, as a level percentage of the compensation of all
active members in classes of service other than Class T-G,
and for Class T-G members, as limited:
(i) By the defined benefit compensation limit.
(ii) To Class T-G members who have less than 25
eligibility points as a member of Class T-G, or if a
multiple service member, as a member of Class A-5, which
percentage, if contributed on the basis of the member's
prospective compensation through the entire period of
active school service, as limited by the defined benefit
compensation limit, would be sufficient to fund the
liability for any prospective benefit payable to him, in
excess of that portion funded by his prospective member
contributions, excluding the shared-risk contributions.
In no case shall the employer normal cost be less than
zero.
(c) Accrued liability contribution rate.--
* * *
(4) For the fiscal year beginning July 1, 2011, the
accrued liability contribution rate shall be computed as the
rate of total compensation of all active members which shall
be certified by the actuary as sufficient to fund as a level
percentage of compensation over a period of 24 years from
July 1, 2011, the present value of the liabilities for all
prospective benefits calculated as of June 30, 2010,
including the supplemental benefits as provided in sections
8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and
8348.7, in excess of the actuarially calculated assets in the
fund (calculated recognizing all realized and unrealized
investment gains and losses each year in level annual
installments over a ten-year period). In the event that the
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accrued liability is increased by legislation enacted
subsequent to June 30, 2010, but before July 1, 2018, such
additional liability shall be funded as a level percentage of
compensation over a period of ten years from the July 1
second succeeding the date such legislation is enacted.
(5) For fiscal years beginning on or after July 1, 2018,
the actuarially calculated assets in the fund determined in
accordance with paragraph (4) shall be no less than 70% and
no more than 130% of market value. In the event that the
accrued liability is changed by legislation enacted
subsequent to June 30, 2016, such change in liability shall
be funded as a level percentage of compensation of all active
members and active participants, as applicable, over a period
of ten years from the July 1 second succeeding the date such
legislation is enacted.
(d) Supplemental annuity contribution rate.--
* * *
(2) For fiscal years beginning July 1, 2011, and ending
June 30, 2018, contributions from the Commonwealth and other
employers whose employees are members of the system required
to provide for the payment of supplemental annuities as
provided in sections 8348, 8348.1, 8348.2, 8348.3, 8348.4,
8348.5, 8348.6 and 8348.7 shall be paid as part of the
accrued liability contribution rate as provided for in
subsection (c)(4), and there shall not be a separate
supplemental annuity contribution rate attributable to those
supplemental annuities. In the event that supplemental
annuities are increased by legislation enacted subsequent to
June 30, 2010, [the] but before July 1, 2016, such additional
liability for the increase in benefits shall be funded as a
level percentage of compensation over a period of ten years
from the July 1 second succeeding the date such legislation
is enacted.
(3) For fiscal years beginning on or after July 1, 2018,
contributions from employers whose employees are members of
the system required to provide for the payment of
supplemental annuities as provided in sections 8348, 8348.1,
8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 8348.7 shall be
paid as part of the accrued liability contribution rate as
provided for in subsection (c)(4), and there shall not be a
separate supplemental annuity contribution rate attributable
to those supplemental annuities. In the event that
supplemental annuities are increased by legislation enacted
subsequent to June 30, 2016, the additional liability for the
increase in benefits shall be funded as a level percentage of
compensation of all active members and active participants
over a period of ten years from the July 1 second succeeding
the date such legislation is enacted.
(e) Experience adjustment factor.--
(1) For each year after the establishment of the accrued
liability contribution rate for the fiscal year beginning
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July 1, 2011, and ending June 30, 2018, any increase or
decrease in the unfunded accrued liability, excluding the
gains or losses on the assets of the health insurance
account, due to actual experience differing from assumed
experience, changes in actuarial assumptions, changes in
contributions caused by the final contribution rate being
different from the actuarially required contribution rate,
active members making shared-risk contributions or changes in
the terms and conditions of the benefits provided by the
system by judicial, administrative or other processes other
than legislation, including, but not limited to,
reinterpretation of the provisions of this part, shall be
amortized as a level percentage of compensation over a period
of 24 years beginning with the July 1 second succeeding the
actuarial valuation determining said increases or decreases.
(2) [(Reserved).] For fiscal years beginning on or after
July 1, 2018, any increase or decrease in the unfunded
accrued liability, excluding the gains or losses on the
assets of the health insurance account, due to actual
experience differing from assumed experience, changes in
actuarial assumptions, changes in contributions caused by the
final contribution rate being different from the actuarially
required contribution rate, active members making shared-risk
contributions or changes in the terms and conditions of the
benefits provided by the system by judicial, administrative
or other processes other than legislation, including, but not
limited to, reinterpretation of the provisions of this part,
shall be amortized as a level percentage of the compensation
of all active members and active participants over a period
of 24 years beginning with the July 1 second succeeding the
actuarial valuation determining such increases or decreases.
* * *
(g) Temporary application of collared contribution rate.--
* * *
(3) For purposes of applying the collared contribution
rate, compensation for determining the normal contribution
rate shall be defined as the total compensation of all active
members and active participants, as applicable.
* * *
Section 110. Section 8330 of Title 24 is amended to read:
§ 8330. Appropriations by the Commonwealth.
(a) Annual submission of budget.--The board shall prepare
and through the Governor submit annually to the General Assembly
an itemized budget consisting of the amounts necessary to be
appropriated by the Commonwealth out of the General Fund
required to meet the separate obligations to the fund and the
trust accruing during the fiscal period beginning July 1 of the
following year.
(b) Appropriation and payment.--The General Assembly shall
make an appropriation sufficient to provide for the separate
obligations of the Commonwealth to the fund and the trust. Such
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amount shall be paid by the State Treasurer through the
Department of Revenue into the fund or the trust, as the case
may be, within 30 days of receipt of the requisition presented
each quarter by the board.
Section 110.1. Section 8341 of Title 24, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 8341. Return of accumulated deductions.
Any member upon termination of service may, in lieu of all
benefits payable from the system under this chapter to which he
may be entitled, elect to receive his accumulated deductions by
his required beginning date.
Section 111. Sections 8342(a) and 8344(a), (b) and (d) of
Title 24 are amended and the sections are amended by adding
subsections to read:
§ 8342. Maximum single life annuity.
(a) General rule.--Upon termination of service, any full
coverage member who is eligible to receive an annuity pursuant
to the provisions of section 8307(a) or (b) (relating to
eligibility for annuities) and has made an application in
accordance with the provisions of section 8507(f) (relating to
rights and duties of school employees [and members], members and
participants) shall be entitled to receive a maximum single life
annuity attributable to his credited service and equal to the
sum of the following single life annuities beginning at the
effective date of retirement and, in case the member on the
effective date of retirement is under superannuation age,
multiplied by a reduction factor calculated to provide benefits
actuarially equivalent to an annuity starting at superannuation
age: Provided however, That on or after July 1, 1976, in the
case of any member who has attained age 55 and has 25 or more
eligibility points such sum of single life annuities shall be
reduced by a percentage determined by multiplying the number of
months, including a fraction of a month as a full month, by
which the effective date of retirement precedes superannuation
age by 1/4%: Further provided, In no event shall a Class T-E or
Class T-F member receive an annual benefit, calculated as of the
effective date of retirement, greater than the member's final
average salary attributable to Class T-E or T-F service:
(1) A [standard single life annuity multiplied by the]
single life annuity that is the sum of annuities determined
separately for each class of service [multiplier] and
calculated on the basis of the number of years of credited
school service other than concurrent service.
(2) A standard single life annuity multiplied by the
class of service multiplier and calculated on the basis of
the number of years of concurrent service and multiplied by
the ratio of total compensation received in the school system
during the period of concurrent service to the total
compensation received during such period.
(3) A supplemental annuity such that the total annuity
prior to any optional modification or any reduction due to
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retirement prior to superannuation age shall be at least $100
for each full year of credited service.
* * *
(d) Coordination of benefits.--The determination and payment
of the maximum single life annuity under this section shall be
in addition to any payments a member may be entitled to receive,
has received or is receiving as a result of being a participant
in the plan.
§ 8344. Disability annuities.
(a) Amount of annuity.--A member who has made application
for a disability annuity as provided in section 8507(k)
(relating to rights and duties of school employees [and
members], members and participants) and has been found to be
eligible in accordance with the provisions of sections 8307(c)
(relating to eligibility for annuities) and 8505(c)(1) (relating
to duties of board regarding applications and elections of
members) shall receive a disability annuity payable from the
effective date of disability and continued until a subsequent
determination by the board that the annuitant is no longer
entitled to a disability annuity. The disability annuity shall
be a single life annuity that is equal to a sum of the standard
single life [annuity] annuities determined separately for each
class of service if the total number of years of credited
service is greater than 16.667, otherwise [the] each standard
single life annuity shall be multiplied by the lesser of the
following ratios:
Y*/Y or 16.667/Y
where Y = total number of years of credited service and Y* =
total years of credited service if the member were to continue
as a school employee until attaining superannuation age, or if
the member has attained superannuation age then the number of
years of credited service. In no event shall the disability
annuity plus any cost-of-living increases be less than $100 for
each full year of credited service. The member shall be entitled
to the election of a joint and survivor annuity on that portion
of the disability annuity to which he is entitled under section
8342 (relating to maximum single life annuity).
(b) Reduction on account of earned income.--Payments on
account of disability shall be reduced by that amount by which
the earned income of the annuitant, as reported in accordance
with section 8508(b) (relating to rights and duties of
annuitants) for the preceding year together with the disability
annuity payments for the year, exceeds the greater of $5,000 or
the last year's salary of the annuitant as a [school employee]
member of the system, provided that the annuitant shall not
receive less than his member's annuity or the amount to which he
may be entitled under section 8342, whichever is greater.
* * *
(d) Withdrawal of accumulated deductions.--Upon termination
of disability annuity payments in excess of an annuity
calculated in accordance with section 8342, a disability
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annuitant who:
(1) is a Class T-C or Class T-D member; or
(2) is a Class T-E [or], Class T-F or Class T-G member
with less than ten eligibility points and who does not return
to school service may file an application with the board for
an amount equal to the accumulated deductions, shared-risk
member contributions and statutory interest standing to his
credit at the effective date of disability less the total
payments received on account of his member's annuity.
* * *
(f) Coordination of benefits.--The determination and payment
of a disability annuity under this section shall be in addition
to any payments a school employee may be entitled to receive,
has received or is receiving as a result of being a participant
in the plan.
Section 112. Sections 8345(a) and 8346 of Title 24, amended
December 28, 2015 (P.L.529, No.93), are amended to read:
§ 8345. Member's options.
(a) General rule.--Any Class T-C or Class T-D member who is
[a vestee with five or more eligibility points, any Class T-E
or], Class T-F or Class T-G member who is a vestee with ten or
more eligibility points, or any [other] eligible member upon
termination of school service [who has not withdrawn his
accumulated deductions as provided in section 8341 (relating to
return of accumulated deductions)] who is eligible to receive an
annuity may apply for and elect to receive either a maximum
single life annuity, as calculated in accordance with the
provisions of section 8342 (relating to maximum single life
annuity), or a reduced annuity certified by the actuary to be
actuarially equivalent to the maximum single life annuity and in
accordance with one of the following options, except that no
member shall elect an annuity payable to one or more survivor
annuitants other than his spouse or alternate payee of such a
magnitude that the present value of the annuity payable to him
for life plus any lump sum payment he may have elected to
receive is less than 50% of the present value of his maximum
single life annuity and no member may elect a payment option
that would provide benefits that do not satisfy the minimum
distribution requirements or would violate the incidental death
benefit rules of IRC § 401(a)(9). In no event shall a Class T-E
or Class T-F member receive an annual benefit, calculated as of
the effective date of retirement, greater than the member's
final average salary.
(1) Option 1.--A life annuity to the member with:
(i) a guaranteed total payment attributable to
classes of service other than Class T-G equal to the
present value of the maximum single life annuity
attributable to classes of service other than Class T-G
on the effective date of retirement with the provision
that, if, at his death, he has received less than such
present value, the unpaid balance shall be payable to his
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beneficiary[.]; and
(ii) a guaranteed total payment attributable to
Class T-G service equal to the present value of the
maximum single life annuity attributable to Class T-G
service on the effective date of retirement with the
provision that, if, at his death, he has received less
than such present value, the unpaid balance shall be
payable to his beneficiary.
(2) Option 2.--A joint and survivor annuity payable
during the lifetime of the member with the full amount of
such annuity payable thereafter to his survivor annuitant, if
living at his death.
(3) Option 3.--A joint and fifty percent (50%) survivor
annuity payable during the lifetime of the member with one-
half of such annuity payable thereafter to his survivor
annuitant, if living at his death.
(4) Option 4.--Some other benefit which shall be
certified by the actuary to be actuarially equivalent to the
maximum single life annuity, subject to the following
restrictions:
(i) Any annuity shall be payable without reduction
during the lifetime of the member.
(ii) The sum of all annuities payable to the
designated survivor annuitants shall not be greater than
the annuity payable to the member.
(iii) A portion of the benefit may be payable as a
lump sum, except that such lump sum payment shall not
exceed an amount equal to the accumulated deductions
standing to the credit of the member. The balance of the
present value of the maximum single life annuity adjusted
in accordance with section 8342(b) shall be paid in the
form of an annuity with a guaranteed total payment, a
single life annuity, or a joint and survivor annuity or
any combination thereof but subject to the restrictions
of subparagraphs (i) and (ii) of this paragraph. This
subparagraph shall not apply to a Class T-E [or], Class
T-F or Class T-G member.
* * *
§ 8346. Termination of annuities.
(a) General rule.--If an annuitant returns to school service
or enters or has entered State service and elects multiple
service membership, any annuity payable to him under this part
shall cease effective upon the date of his return to school
service or entering State service without regard to whether he
is a mandatory, optional or prohibited member of the system or
participant in the plan or, if a multiple service member,
whether he is a mandatory, optional or prohibited member or
participant of the State Employees' Retirement System or State
Employees' Defined Contribution Plan and in the case of an
annuity other than a disability annuity the present value of
such annuity, adjusted for full coverage in the case of a joint
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coverage member who makes the appropriate back contributions for
full coverage, shall be frozen as of the date such annuity
ceases. An annuitant who is credited with an additional 10% of
membership service as provided in section 8302(b.2) (relating to
credited school service) and who returns to school service,
except as provided in subsection (b), shall forfeit such
credited service and shall have his frozen present value
adjusted as if his 10% retirement incentive had not been applied
to his account. In the event that the cost-of-living increase
enacted December 18, 1979, occurred during the period of such
State or school employment, the frozen present value shall be
increased, on or after the member attains superannuation age, by
the percent applicable had he not returned to service.
(a.1) Return of benefits.--In the event an annuitant whose
annuity from the system ceases pursuant to this section receives
any annuity payment, including a lump sum payment pursuant to
section 8345 (relating to member's options) on or after the date
of his return to school service or entering State service, the
annuitant shall return to the board the amount so received from
the system plus statutory interest. The amount payable shall be
certified in each case by the board in accordance with methods
approved by the actuary and shall be paid in a lump sum within
90 days or in the case of an active member or a State employee
who is an active member of the State Employees' Retirement
System may be amortized with statutory interest through salary
deductions to the system in amounts agreed upon by the member
and the board. The salary deduction amortization plans agreed to
by the member and the board may include a deferral of payment
amounts and statutory interest until the termination of school
service or State service as the board in its sole discretion
decides to allow. The board may limit salary deduction
amortization plans to such terms as the board in its sole
discretion determines. In the case of a State employee who is an
active member of the State Employees' Retirement System, the
agreed upon salary deductions shall be remitted to the State
Employees' Retirement Board, which shall certify and transfer to
the board the amounts paid.
(a.2) Return of benefits paid during USERRA leave.--If a
former school employee is reemployed from USERRA leave who had
received any payments or annuity from the system during the
USERRA leave, the employee shall return to the board the amount
received plus statutory interest. The amount payable shall be
certified by the board in accordance with methods approved by
the actuary and:
(1) shall be paid in a lump sum within 30 days; or
(2) in the case of an active member, may be amortized
with statutory interest through salary deductions in amounts
agreed upon by the member and the board for not longer than a
period that starts with the date of reemployment and
continuing for up to three times the length of the member's
immediate past period of USERRA leave. A repayment period
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under this paragraph may not exceed five years or a longer
time as agreed to between the board and the member.
(b) Return to school service during emergency.--When, in the
judgment of the employer, an emergency creates an increase in
the work load such that there is serious impairment of service
to the public or in the event of a shortage of appropriate
subject certified teachers or other personnel, an annuitant or
participant receiving distributions may be returned to school
service for a period not to extend beyond the school year during
which the emergency or shortage occurs, without loss of his
annuity or distributions, provided that the annuitant meets the
conditions set forth in subsection (b.2). The annuitant shall
not be entitled to earn any credited service, and no
contributions may be made by the annuitant, the employer or the
Commonwealth on account of such employment. Such service shall
not be subject to member contributions or be eligible for
qualification as creditable school service or for participation
in the plan, mandatory pickup participant contributions or
employer defined contributions.
(b.1) Return to school service in an extracurricular
position.--
(1) An annuitant or participant receiving distributions
may be employed under separate contract by a public school or
charter school in an extracurricular position performed
primarily outside regular instructional hours and not part of
mandated curriculum without loss of annuity, provided that
the annuitant meets the conditions set forth in subsection
(b.2). [Neither the annuitant nor] The annuitant, the
participant receiving distribution and the employer shall not
make contributions to the member's savings account, the
individual investment account or State accumulation account
respectively for such service. Further, such contract shall
contain a waiver whereby the annuitant waives any potential
retirement benefits that could arise from the contract and
releases the employer and the board from any liability for
such benefits. Such service shall not be subject to member or
participant contributions or be eligible for qualification as
creditable school service or for participation in the plan,
mandatory pickup participant contributions or employer
defined contributions.
(2) Nothing in this subsection shall be construed to
abridge or limit any rights provided under a collective
bargaining agreement or any rights provided under the act of
July 23, 1970 (P.L.563, No.195), known as the Public Employe
Relations Act.
(3) For purposes of this subsection, the term
"extracurricular position" means a contract position filled
by an annuitant that is separate from the established
academic course structure, including the position of athletic
director.
(b.2) Limitation on return to school service by an annuitant
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during emergency or in an extracurricular position.--
(1) An annuitant may return to school service under
subsection (b) or (b.1), provided the annuitant otherwise
meets the requirements of subsection (b) or (b.1) and has
attained the age set forth in IRC § 401(a)(36) or the
applicable "normal retirement age" in 26 C.F.R. § 1.401(a)-
1(b)(2) (relating to post-ERISA qualified plans and qualified
trusts; in general).
(2) An annuitant who has not reached the age as set
forth in IRC § 401(a)(36), or the applicable "normal
retirement age" under 26 C.F.R. § 1.401(a)-1(b)(2), may
return to service under subsection (b) or (b.1) provided the
annuitant otherwise meets the requirements of subsection (b)
or (b.1) and has had a break in service, as set forth in
paragraph (3).
(3) For purposes of this subsection, a break in service
occurs when a member has a bona fide termination of service.
The following factors will be considered in determining
whether there had been a bona fide termination of service:
(i) whether the change in the employment
relationship is more than a formal or technical change,
requiring the severing of the employment connection with
the employer;
(ii) whether there has been a reasonable
anticipation or prearranged agreement between the member
and the employer that a return to school service under
this section shall take place;
(iii) the amount of time that has elapsed from the
date the member becomes an annuitant and the return to
school service;
(iv) whether the services are a continuation of the
annuitant's previous service with the same employer; and
(v) such other factors as the board may deem
appropriate.
(c) Subsequent discontinuance of service.--Upon subsequent
discontinuance of service, such [member] terminating school
employee other than a former annuitant who had the effect of his
frozen present value eliminated in accordance with subsection
(d) or a former disability annuitant shall be entitled to an
annuity which is actuarially equivalent to [the sum of] the
present value as determined under subsection (a) [and the] to
which shall be added, if the service after reemployment was as a
member of the system:
(1) The present value of a maximum single life annuity
based on years of service credited in classes of service
other than Class T-G subsequent to reentry in the system and
his final average salary computed by reference to his
compensation for service credited in classes of service other
than Class T-G as a member of the system or as Class A-5 as a
member of the State Employees' Retirement System during his
entire period of school and State service.
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(2) If eligible, the present value of a maximum single
life annuity based on years of service credited in Class T-G
subsequent to reentry in the system and his final average
salary computed by reference to his compensation for service
credited in Class T-G and Class A-5 during his entire period
of school and State service.
(d) Elimination of the effect of frozen present value.--
(1) An annuitant who returns to school service as an
active member of the system and earns three eligibility
points by performing credited school service or reemployment
from USERRA leave in a class of service other than Class T-G
following the most recent period of receipt of an annuity
under this part, or an annuitant who enters State service
and:
(i) is a multiple service member; or
(ii) who elects multiple service membership, and
earns three eligibility points by performing credited State
service, reemployment from USERRA leave, in a class of
service other than Class A-5 or credited school service in a
class of service other than Class T-G following the most
recent period of receipt of an annuity under this part, and
who had the present value of his annuity frozen in accordance
with subsection (a), shall qualify to have the effect of the
frozen present value resulting from all previous periods of
retirement eliminated, provided that all payments under
Option 4 and annuity payments payable during previous periods
of retirement plus interest as set forth in paragraph (3)
shall be returned to the fund in the form of an actuarial
adjustment to his subsequent benefits or in such form as the
board may otherwise direct.
(2) Upon subsequent discontinuance of service and the
filing of an application for an annuity, a former annuitant
who qualifies to have the effect of a frozen present value
eliminated under this subsection shall be entitled to receive
the higher of either:
(i) an annuity (prior to optional modification)
calculated as if the freezing of the former annuitant's
account pursuant to subsection (a) had not occurred,
adjusted by crediting Class T-C school service as Class
T-D service as provided for in section 8305(c) (relating
to classes of service) and further adjusted according to
paragraph (3), provided that a former annuitant of the
system or a former annuitant of the State Employees'
Retirement System who retired under a provision of law
granting additional service credit if termination of
school or State service or retirement occurred during a
specific period of time shall not be permitted to retain
the additional service credit under the prior law when
the annuity is computed for his most recent retirement;
or
(ii) an annuity (prior to optional modification)
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calculated as if the former annuitant did not qualify to
have the effect on the frozen present value eliminated,
unless the former annuitant notifies the board in writing by
the later of the date the application for annuity is filed or
the effective date of retirement that the former annuitant
wishes to receive the lower annuity.
(3) In addition to any other adjustment to the present
value of the maximum single life annuity that a member may be
entitled to receive that occurs as a result of any other
provision of law, the present value of the maximum single
life annuity shall be reduced by all amounts paid or payable
to him during all previous periods of retirement plus
interest on these amounts until the date of subsequent
retirement. The interest for each year shall be calculated
based upon the annual interest rate adopted for that school
year by the board for the calculation of the normal
contribution rate pursuant to section 8328(b) (relating to
actuarial cost method).
Section 113. Section 8347(a) and (d) of Title 24 are amended
and the section is amended by adding subsections to read:
§ 8347. Death benefits.
(a) Members eligible for annuities.--
(1) Any member or former member on USERRA leave, other
than an annuitant, who dies and was eligible for an annuity
in accordance with section 8307(a) or (b) (relating to
eligibility for annuities) shall be considered as having
applied for an annuity to become effective the day before his
death; and, in the event he has not elected an option, it
shall be assumed that he elected Option 1 and assigned as
beneficiary that person last designated in writing to the
board.
(2) This subsection shall also apply to a member with at
least ten eligibility points credited as a member of Class T-
G, or if a multiple service member, Class A-5, and who is
under superannuation age.
* * *
(b.1) Members eligible for annuities in some classes of
service and ineligible in other classes of service.--In the
event of the death of a member who is eligible for an annuity
based on service credited in some classes of service and not
eligible for an annuity for service credited in other classes of
service, a benefit shall be paid under subsection (a) based on
the service for which an annuity is deemed payable in addition
to payment under subsection (b) of the accumulated deductions
attributable to service for which the member was not eligible
for an annuity.
* * *
(c.1) Death of disability annuitant.--In the event of the
death of a disability annuitant:
(1) Who has elected to receive a maximum disability
annuity before he has received in annuity payments an amount
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equal to the present value, on the effective date of
disability, of the benefits attributable to classes of
service other than Class T-G to which he would have been
entitled under subsection (a) had he died while in school
service, the balance of such amount shall be paid to his
designated beneficiary, except that, in the event of the
death of a disability annuitant who was not entitled to
receive benefits attributable to classes of service other
than Class T-G under subsection (a), his beneficiary shall be
paid the accumulated deductions standing to his credit on the
effective date of disability less the total payments received
on account of his member's annuity.
(2) Who has elected to receive a maximum disability
annuity before he has received in annuity payments an amount
equal to the present value, on the effective date of
disability, of the benefits attributable to Class T-G service
to which he would have been entitled under subsection (a) had
he died while in school service, the balance of such amount
shall be paid to his designated beneficiary, except that, in
the event of the death of a disability annuitant who was not
entitled to receive benefits attributable to Class T-G
service under subsection (a), his beneficiary shall be paid
the accumulated deductions standing to his credit on the
effective date of disability less the total payments received
on account of his member's annuity.
(d) Other annuitants.--In the event of the death of an
annuitant[who]:
(1) Who has elected to receive the maximum single life
annuity before he has received in total annuity payments an
amount equal to the full amount of the accumulated deductions
on other than Class T-G service standing to his credit on the
effective date of retirement, the difference between the
total payments made to the date of death and the accumulated
deductions shall be paid to his designated beneficiary[.] on
other than Class T-G service.
(2) Who has elected to receive the maximum single life
annuity before he has received in annuity payments the full
amount of the accumulated deductions attributable to Class T-
G service standing to his credit on the effective date of
retirement, the balance shall be paid to his designated
beneficiary.
* * *
Section 113.1. Section 8349(a) and (b) of Title 24, amended
December 28, 2015 (P.L.529, No.93), are amended to read:
§ 8349. Payment of benefits.
(a) Annuities.--Any annuity granted under the provisions of
this part and paid from the fund shall be paid in equal monthly
installments commencing by the required beginning date.
(b) Death benefits.--If the amount of a death benefit
payable from the fund to a beneficiary of a member under section
8347 (relating to death benefits) or under the provisions of
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Option 1 of section 8345(a)(1) (relating to member's options) is
$10,000 or more, such beneficiary may elect to receive payment
according to one of the following options:
(1) A lump sum payment.
(2) An annuity actuarially equivalent to the amount
payable.
(3) A lump sum payment and an annuity such that the
annuity is actuarially equivalent to the amount payable less
the lump sum payment specified by the beneficiary.
* * *
Section 114. Title 24 is amended by adding a chapter to
read:
CHAPTER 84
SCHOOL EMPLOYEES' DEFINED CONTRIBUTION PLAN
Sec.
8401. Establishment.
8402. Plan document.
8403. Individual investment accounts.
8404. Participant contributions.
8405. Mandatory pickup participant contributions.
8406. E mployer defined contributions.
8406.1. Use of plan savings.
8407. Eligibility for benefits.
8408. Death benefits.
8409. Vesting.
8410. Termination of distributions.
8411. Agreements with financial institutions and other
organizations.
8412. Powers and duties of board.
8413. Responsibility for investment loss.
8414. Investments based on participants' investment allocation
choices.
8415. Expenses.
8416. Tax qualification.
8417. Establishment of School Employees' Defined Contribution
Holding Vehicle Trust.
§ 8401. Establishment.
(a) School Employees' Defined Contribution Plan.--The School
Employees' Defined Contribution Plan is established. The board
shall administer and manage the plan, which shall be a defined
contribution plan exclusively for the benefit of those school
employees who participate in the plan and their beneficiaries
within the meaning of and in conformity with IRC § 401(a). The
board shall determine the terms and provisions of the plan not
inconsistent with this part, the IRC and other applicable law
and shall provide for the plan's administration.
(b) School Employees' Defined Contribution Trust.--The
School Employees' Defined Contribution Trust is established as
part of the plan in accordance with this part. The trust shall
be comprised of the individual investment accounts and all
assets and moneys in those accounts. The members of the board
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shall be the trustees of the trust, which shall be administered
exclusively for the benefit of those school employees who
participate in the plan and their beneficiaries within the
meaning of and in conformity with IRC § 401(a). The board shall
determine the terms and provisions of the trust not inconsistent
with this part, the IRC and other applicable law and shall
provide for the investment and administration of the trust.
(c) Assets held in trust.--All assets and income in the plan
that have been or shall be withheld or contributed by the
participants, the Commonwealth and employers in accordance with
this part shall be held in trust in any funding vehicle
permitted by the applicable provisions of IRC for the exclusive
benefit of the plan's participants and their beneficiaries until
such time as the funds are distributed to the participants or
their beneficiaries in accordance with the terms of the plan
document. The assets of the plan held in trust for the exclusive
benefit of the participants and their beneficiaries may be used
for the payment of the fees, costs and expenses related to the
administration and investment of the plan and the trust.
(d) Name for transacting business.--By the name of "The
School Employees' Defined Contribution Plan," all of the
business of the plan shall be transacted, the trust invested,
all requisitions for money drawn and payments made and all of
its cash and securities and other property shall be held, except
that, any other law to the contrary notwithstanding, the board
may establish a nominee registration procedure for the purpose
of registering securities in order to facilitate the purchase,
sale or other disposition of securities pursuant to the
provisions of this part.
§ 8402. Plan document.
The board shall set forth the terms and provisions of the
plan and trust in a document containing the terms and conditions
of the plan and in a trust declaration that shall be published
in the Pennsylvania Bulletin. The creation of the document
containing the terms and conditions of the plan and the trust
declaration and the establishment of the terms and provisions of
the plan and the trust need not be promulgated by regulation or
formal rulemaking and shall not be subject to the act of July
31, 1968 (P.L.769, No.240), referred to as the Commonwealth
Documents Law. A reference in this part or other law to the plan
shall include the plan document unless the context clearly
indicates otherwise.
§ 8403. Individual investment accounts.
The board:
(1) Shall establish in the trust an individual
investment account for each participant in the plan. All
contributions by a participant or an employer for or on
behalf of a participant shall be credited to the
participant's individual investment account, together with
all interest and investment earnings and losses. Investment
and administrative fees, costs and expenses shall be charged
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to the participant's individual investment accounts.
(2) Shall separately track participant contributions,
including investment gains and losses, and employer
contributions, including investment gains and losses, but all
interest, investment gains and losses and administrative
fees, costs and expenses shall be allocated proportionately.
(3) May contract with financial institutions, insurance
companies or other types of third-party providers and other
vendors to allow participants to deposit participant
contributions into the individual investment accounts in a
form and manner as provided by the contract.
§ 8404. Participant contributions.
(a) Mandatory contributions.--A participant shall make
mandatory pickup participant contributions through payroll
deductions to the participant's individual investment account
for required school service. The employer shall cause the pickup
contributions for required service to be made and deducted from
each payroll or on a schedule established by the board.
(b) Voluntary contributions.--A participant may make
voluntary contributions through direct trustee-to-trustee
transfers or through transfers of money received in an eligible
rollover into the trust to the extent allowed by IRC § 402.
Rollovers shall be made in a form and manner as determined by
the board, shall be credited to the participant's individual
investment account and shall be separately accounted for by the
board.
(c) Prohibition on contributions.--No contributions shall be
allowed that would cause a violation of the limitations related
to contributions applicable to governmental plans contained in
IRC § 415 or in other provisions of law. In the event that any
disallowed contributions are made, any participant contributions
in excess of the limitations and investment earnings on those
contributions shall be refunded to the participant by the board.
§ 8405. Mandatory pickup participant contributions.
(a) Treatment for purposes of IRC § 414(h).--The
contributions to the trust required to be made under section
8404(a) (relating to participant contributions) with respect to
required school service rendered by an active participant shall
be picked up by the employer and shall be treated as the
employer's contribution for purposes of IRC § 414(h). After the
effective date of this section, an employer employing a
participant in the plan shall pick up the required mandatory
participant contributions by a reduction in the compensation of
the participant.
(b) Treatment for other purposes.--For all other purposes
under this part and otherwise, mandatory pickup participant
contributions shall be treated as contributions made by a
participant in the same manner and to the same extent as if the
contributions were made directly by the participant and not
picked up.
§ 8406. E mployer defined contributions.
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(a) Contributions for service.--The employer of a
participant shall make employer defined contributions for
service of an active participant that shall be credited to the
active participant's individual investment account. Employer
defined contributions must be recorded and accounted for
separately from participant contributions.
(b) Contributions resulting from participants reemployed
from USERRA leave.--When a school employee reemployed from
USERRA leave makes the mandatory pickup participant
contributions permitted to be made for the USERRA leave, the
employer by whom the school employee is employed at the time the
participant contributions are made shall make whatever employer
defined contributions would have been made under this section
had the employee making the participant contributions after
being reemployed from USERRA leave continued to be employed in
the employee's school position instead of performing USERRA
leave. The employer defined contributions shall be placed in the
participant's individual investment account as otherwise
provided by this part.
(c) Limitations on contributions.--No contributions shall be
allowed that would cause a violation of the limitations related
to contributions applicable to governmental plans contained in
IRC § 415 or in other provisions of law. In the event that any
disallowed contributions are made, any employer defined
contributions in excess of the limitations and investment
earnings thereon shall be refunded to the employer by the board.
§ 8406.1. Use of plan savings.
(a) Determination.--The system shall determine the
difference between:
(1) The current aggregate employer contributions and the
aggregate employer contributions that would have been
required by Act 120 of 2010.
(2) The current plan expenditures and the plan
expenditures that would have been required by Act 120 of
2010.
(b) Utilization.--Any savings realized based on the
implementation of the plan, as determined under subsection (a),
shall be utilized to pay down the accrued unfunded liability.
(c) Intent.--It is the intent of the General Assembly to
make an annual appropriation from the General Fund to the system
in the amount determined under subsection (a)(1).
(d) Definition.--As used in this section, the term "Act 120
of 2010" shall mean the act of November 23, 2010 (P.L.1269,
No.120), entitled, "An act amending Titles 24 (Education) and 71
(State Government) of the Pennsylvania Consolidated Statutes, in
Title 24, further providing for definitions, for mandatory and
optional membership, for contributions by the Commonwealth, for
payments by employers, for actuarial cost method, for additional
supplemental annuities, for further additional supplemental
annuities, for supplemental annuities commencing 1994, for
supplemental annuities commencing 1998, for supplemental
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annuities commencing 2002, for supplemental annuities commencing
2003, for administrative duties of board, for payments to school
entities by Commonwealth, for eligibility points for retention
and reinstatement of service credits and for creditable
nonschool service; providing for election to become a Class T-F
member; further providing for classes of service, for
eligibility for annuities, for eligibility for vesting, for
regular member contributions, for member contributions for
creditable school service, for contributions for purchase of
credit for creditable nonschool service, for maximum single life
annuity, for disability annuities, for member's options, for
duties of board regarding applications and elections of members
and for rights and duties of school employees and members;
providing for Independent Fiscal Office study; in Title 71,
establishing an independent fiscal office and making a related
repeal; further providing for definitions, for credited State
service, for retention and reinstatement of service credits, for
creditable nonstate service and for classes of service;
providing for election to become a Class A-4 member; further
providing for eligibility for annuities and for eligibility for
vesting; providing for shared-risk member contributions for
Class A-3 and Class A-4 service; further providing for waiver of
regular member contributions and Social Security integration
member contributions, for member contributions for purchase of
credit for previous State service or to become a full coverage
member, for contributions for the purchase of credit for
creditable nonstate service, for contributions by the
Commonwealth and other employers, for actuarial cost method, for
maximum single life annuity, for disability annuities and for
member's options; providing for payment of accumulated
deductions resulting from Class A-3 service; further providing
for additional supplemental annuities, for further additional
supplemental annuities, for supplemental annuities commencing
1994, for supplemental annuities commencing 1998, for
supplemental annuities commencing 2002, for supplemental
annuities commencing 2003, for special supplemental
postretirement adjustment of 2002, for administrative duties of
the board, for duties of board to advise and report to heads of
departments and members, for duties of board regarding
applications and elections of members, for installment payments
of accumulated deductions, for rights and duties of State
employees and members, for members' savings account, for State
accumulation account, for State Police Benefit Account, for
Enforcement Officers' Benefit Account, for supplemental annuity
account and for construction of part; and providing for
Independent Fiscal Office study, for retirement eligibility of
Pennsylvania State Police officers or members, for a prohibition
on the issuance of pension obligation bonds, for holding certain
public officials harmless, for construction of calculation or
actuarial method, for applicability and for certain operational
provisions."
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§ 8407. Eligibility for benefits.
(a) Termination of service.--A participant who terminates
school service shall be eligible to withdraw the vested
accumulated total defined contributions standing to the
participant's credit in the participant's individual investment
account or a lesser amount as the participant may request.
Payment shall be made in a lump sum unless the board has
established other forms of distribution in the plan document. A
participant who withdraws the vested accumulated total defined
contributions shall no longer be a participant in the plan,
notwithstanding that the former school employee may continue to
be a member of the system with Class T-G service credit or may
contract to receive an annuity or other form of payment from a
provider retained by the board for such purposes.
(b) Required distributions.--All payments pursuant to this
section shall start and be made in compliance with the minimum
distribution requirements and incidental death benefit rules of
IRC § 401(a)(9). The board shall take any action and make any
distributions it may determine are necessary to comply with
those requirements.
(c) Prohibited distributions.--A school employee must be
terminated from all positions that result in either membership
in the system or participation in the plan to be eligible to
receive a distribution.
(d) Loans.--Loans or other distributions, including hardship
or unforeseeable emergency distributions, from the plan to
school employees who have not terminated school service are not
permitted, except as required by law.
(e) (Reserved).
(f) Small individual investment accounts.--A participant who
terminates school service and whose vested accumulated total
defined contributions are below the threshold established by law
as of the date of termination of service may be paid the vested
accumulated total defined contributions in a lump sum as
provided in IRC § 401(a)(31).
§ 8408. Death benefits.
(a) General rule.--In the event of the death of an active
participant or inactive participant, the board shall pay to the
participant's beneficiary the vested balance in the
participant's individual investment account in a lump sum or in
such other manner as the board may establish in the plan
document.
(b) Death of participant receiving distributions.--In the
event of the death of a participant receiving distributions, the
board shall pay to the participant's beneficiary the vested
balance in the participant's individual investment account in a
lump sum or in such other manner as the board may establish in
the plan document or, if the board has established alternative
methods of distribution in the plan document under which the
participant was receiving distributions, to the participant's
beneficiary or successor payee as provided in the plan document.
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(c) Contracts.--The board may contract with financial
institutions, insurance companies or other types of third-party
providers to allow participants who receive a lump sum
distribution to receive payments and death benefits in a form
and manner as provided by the contract.
§ 8409. Vesting.
(a) Participant and voluntary contributions.--Subject to the
forfeiture and attachment provisions of section 8533 (relating
to taxation, attachment and assignment of funds) or otherwise as
provided by law, a participant shall be vested with respect to
all mandatory pickup participant contributions and voluntary
contributions paid by or on behalf of the participant to the
trust plus interest and investment earnings on the participant
contributions but minus investment fees and administrative
charges.
(b) E mployer defined contributions.--
(1) Subject to the forfeiture and attachment provisions
of section 8533 or otherwise as provided by law, a
participant shall be vested with respect to employer defined
contributions paid plus interest and investment earnings by
or on behalf of the participant to the trust after attaining
three eligibility points.
(2) Nonvested employer defined contributions, including
interest and investment gains and losses that are forfeited
by a participant, shall be applied to the participant's most
recent employer's obligations assessed in future years.
(c) USERRA leave and eligibility points.--A participant in
the plan who is reemployed from USERRA leave or who dies while
performing USERRA leave shall receive eligibility points under
this section for the school service that would have been
performed had the member not performed USERRA leave.
§ 8410. Termination of distributions.
(a) Return to school service.--
(1) A participant receiving distributions or an inactive
participant who returns to school service shall cease
receiving distributions and shall not be eligible to receive
distributions until the participant subsequently terminates
school service, without regard to whether the participant is
a mandatory, optional or prohibited member of the system or
participant in the plan.
(2) This subsection shall not apply to a distribution of
accumulated employer defined contributions or other
distributions that the participant has received or used to
purchase an annuity from a provider contracted by the board.
(b) Return of benefits paid during USERRA leave.--
(1) If a former school employee is reemployed from
USERRA leave and received any payments or annuity from the
plan during the USERRA leave, the employee shall return to
the board the amount so received plus interest as provided in
the plan document.
(2) The amount payable shall be certified in each case
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by the board in accordance with methods approved by the
actuary and shall be paid in a lump sum within 30 days or, in
the case of an active participant, may be amortized with
interest as provided in the plan document through salary
deductions to the trust in amounts agreed upon by the active
participant and the board, but not longer than a period that
starts with the date of reemployment and continuing for up to
three times the length of the active participant's immediate
past period of USERRA leave. The repayment period shall not
exceed five years.
§ 8411. Agreements with financial institutions and other
organizations.
(a) Written agreement.--To establish and administer the
plan, the board shall enter into a written agreement with one or
more financial institutions or pension management organizations
to administer the plan and the investment of funds held pursuant
to the plan. The administrator shall be selected in accordance
with the following:
(1) The board shall solicit proposals from financial
institutions and pension management organizations.
(2) The board shall publish the solicitation in the
Pennsylvania Bulletin.
(3) Proposals received shall be evaluated based on
specific criteria adopted by the board. The criteria shall
include experience, customer service history and other
criteria.
(b) Rebid.--A contract to administer the plan under
subsection (a) shall be rebid at least once every ten years.
§ 8411.1. Relation of administrators of School Employees'
Defined Contribution Plan to providers of 403(b)
plans.
(a) General rule.--A financial institution or pension
management organization entering into a written agreement
pursuant to section 8411 (relating to agreements with financial
institutions and other organizations) may offer or provide
services to any plan established or maintained by a school
district under IRC § 403(b) or 457 if the written agreement for
the administration of the School Employees' Defined Contribution
Plan is not combined with any other written agreement for the
administration of a school district's 403(b) plan or 457 plan.
Each school district that provides a 403(b) plan shall make
available, in the manner provided by subsection (c), to
participants, multiple financial institutions or pension
management organizations that have not entered into a written
agreement pursuant to section 8411 and which provide services to
the school district's 403(b) plan or 457 plan.
(b) Plan transparency and administration.--A financial
institution or pension management organization providing
services for any plan established or maintained by a school
district under IRC § 403(b) or 457 shall:
(1) enter into an agreement with the school district or
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the school district's independent compliance administrator
that shall require the financial institution or pension
management organization to provide in an electronic format
all data necessary for the administration of the 403(b) plan
or 457 plan as determined by the school district or the
school district's compliance administrator; and
(2) provide all data required by the school district or
a school district's compliance administrator to facilitate
disclosure of all fees, charges, expenses, commissions,
compensation and payments to third parties related to
investments offered under the 403(b) plan or 457 plan.
(c) Provider selection.--A school district that establishes
or maintains a plan under IRC § 403(b) or 457 shall select a
minimum of four financial institutions or pension management
organizations, in addition to the financial institution or
pension management organization that entered into an agreement
pursuant to section 8411, to provide services to the 403(b) plan
or 457 plan. If fewer than four such additional financial
institutions or pension management organizations are determined
to be available or able to meet the requirements established in
this section, then the school district shall select the number
of available providers able to meet the school district's
requirements. A financial institution or pension management
organization shall be designated a 403(b) plan or 457 plan
provider if the financial institution or pension management
organization enters into an agreement in accordance with
subsection (b).
§ 8412. Powers and duties of board.
The board shall have the following powers and duties to
establish the plan and trust and to administer the provisions of
this part:
(1) The board may commingle or pool assets with the
assets of other persons or entities.
(2) The board shall pay all administrative fees, costs
and expenses of managing, investing and administering the
plan, the trust and the individual investment accounts from
the balance of the individual investment accounts, except as
the General Assembly otherwise provides through
appropriations from the General Fund.
(3) The board may establish investment guidelines and
limits on the types of investments that participants may
make, consistent with the board's fiduciary obligations.
(4) The board shall have the power to change the terms
of the plan as may be necessary to maintain the tax-qualified
status of the plan.
(5) The board may establish a process for election to
participate in the plan by those school employees for whom
participation is not mandatory.
(6) The board may perform an annual or more frequent
review of any qualified fund manager for the purpose of
assuring it continues to meet all standards and criteria
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established.
(7) The board may allow for eligible rollovers and
direct trustee-to-trustee transfers into the trust from
qualified plans of other employers, regardless of whether the
employers are private employers or public employers.
(8) The board may allow a former participant to maintain
the participant's individual investment account within the
plan.
(9) The board shall administer or ensure the
administration of the plan in compliance with the
qualifications and other rules of the IRC.
(10) The board may establish procedures to provide for
the lawful payment of benefits.
(11) The board shall determine what constitutes a
termination of school service.
(12) The board may establish procedures for
distributions of small accounts as required or permitted by
IRC.
(13) The board may establish procedures in the plan
document or to promulgate rules and regulations as it deems
necessary for the administration and management of the plan,
including, but not limited to, establishing:
(i) Procedures by which eligible participants may
change their investment choices on a periodic basis or
make other elections regarding their participation in the
plan.
(ii) Procedures for deducting mandatory pickup
participant contributions from a participant's
compensation.
(iii) Procedures for rollovers and trustee-to-
trustee transfers allowed under the IRC and permitted by
the board as part of the plan.
(iv) Standards and criteria for providing not less
than ten options in accordance with three or more
providers of investment options to eligible individuals
regarding investment of amounts deferred under the plan.
The standards and criteria must provide for a variety of
investment options and shall be reviewed in accordance
with criteria established by the board. One of the
available options must serve as the default option for
participants who do not make a timely election and, to
the extent commercially available, one option must have
an annuity.
(v) Standards and criteria for disclosing to the
participants the anticipated and actual income
attributable to amounts invested, property rights and all
fees, costs and expenses to be made against amounts
deferred to cover the costs and expenses of administering
and managing the plan or trust.
(vi) Procedures, standards and criteria for the
making of distributions from the plan upon termination
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from employment or death or in other circumstances
consistent with the purpose of the plan.
(14) The board may waive any reporting or information
requirement contained in this part if the board determines
that the information is not needed for the administration of
the plan.
(15) The board may contract any services and duties in
lieu of staff except final adjudications and as prohibited by
law. Any duties or responsibilities of the board not required
by law to be performed by the board may be delegated to a
third-party provider subject to appeal to the board.
(16) The board may provide that any duties of the
employer or information provided by the participant to the
employer be performed or received directly by the board.
(17) The board shall ensure that participants are
provided with educational materials about investment options
and choices.
§ 8413. Responsibility for investment loss.
The Commonwealth, the board, an employer or a school entity
or other political subdivision shall not be responsible for any
investment loss incurred under the plan or for the failure of
any investment to earn any specific or expected return or to
earn as much as any other investment opportunity, whether or not
such other opportunity was offered to participants in the plan.
§ 8414. Investments based on participants' investment
allocation choices.
(a) Investment by participant.--All contributions, interest
and investment earnings shall be invested based on a
participant's investment allocation choices. All investment
allocation choices shall be credited proportionally between
contributions from the participant and employer defined
contributions. Each participant shall be credited individually
with the amount of contributions, interest and investment
earnings.
(b) Investment of contributions made by entities other than
the Commonwealth.--Investment of contributions by any
corporation, institution, insurance company or custodial bank or
other entity that the board has approved shall not be
unreasonably delayed, and in no case shall the investment of
contributions be delayed more than 30 days from the date each
payroll deduction is made to the date that the funds are
invested. Any interest earned on the funds pending investment
shall be allocated to the employers and credited to the
individual investment accounts of participants who are then
participating in the plan, unless the interest is used to defray
administrative costs and fees that would otherwise be required
to be borne by participants who are then participating in the
plan.
§ 8415. Expenses.
All expenses, fees and costs of administering the plan and
the trust and investing the assets of the trust shall be borne
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by the participants and paid from assessments against the
balances of the individual investment accounts as established by
the board, except that, for fiscal years ending before July 1,
2020, the expenses, fees and costs of establishing and
administering the plan and trust shall be paid by the
Commonwealth through annual appropriations from the General
Fund, made on the basis of estimates from the board.
§ 8416. Tax qualification.
(a) Required distributions.--All payments under this chapter
shall start and be made in compliance with the minimum
distribution requirements and incidental death benefit rules of
IRC § 401(a).
(b) Limitations.--The following shall apply:
(1) (i) Except as provided under subparagraph (ii) and
notwithstanding a provision of this part, a contribution
or benefit related to the plan may not exceed a
limitation under IRC § 415 with respect to governmental
plans that is in effect on the date the contribution or
benefit payment takes effect.
(ii) An increase in a limitation under IRC § 415
shall apply to the participants on or after the effective
date of this section.
(iii) For the purposes of this paragraph, the term
"government plans" shall have the same meaning as in IRC
§ 414(d).
(2) (i) Except as provided under subparagraph (ii), an
amendment of this part on or after the effective date of
this section that increases contributions or benefits for
active participants, inactive participants or
participants receiving distributions may not be deemed to
provide for a contribution or benefit in excess of a
limitation, adjusted on or after the effective date of
this section under IRC § 415 unless specifically provided
by legislation.
(ii) Notwithstanding subparagraph (i), an increase
in benefits on or after the effective date of this
section for a participant in the plan shall be authorized
and apply to the fullest extent allowed by law.
§ 8417. Establishment of School Employees' Defined Contribution
Holding Vehicle Trust.
(a) School Employees' Defined Contribution Holding Vehicle
Trust.--The School Employees' Defined Contribution Holding
Vehicle Trust is established as part of the plan. The holding
vehicle trust shall be comprised of the individual investment
accounts and all assets and moneys in those accounts from July
1, 2018, until the earlier of the date the board certifies that
the School Employees' Defined Contribution Trust is operational
and able to accept participant and employer contributions or
December 31, 2018. The members of the board shall be the
trustees of the holding vehicle trust, which shall be held in a
separate account, established by the Treasury Department and
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shall not be inconsistent with this part, the IRC or other
applicable law. The holding vehicle trust shall be administered
exclusively for the benefit of those school employees who
participate in the plan and their beneficiaries within the
meaning of and in conformity with IRC § 401(a) subject to the
requirements of Chapter 85 (relating to administration and
miscellaneous provisions).
(b) Assets held in trust.--All assets and income in the
holding vehicle trust that are withheld or contributed by the
participants, the Commonwealth and other employers in accordance
with this part shall be held in trust as permitted by the
applicable provisions of the IRC for the exclusive benefit of
the participants and their beneficiaries until such time as the
funds are transferred to the School Employees' Defined
Contribution Trust in accordance with the terms of the plan
document. The assets of the holding vehicle trust may be used
for the payment of the fees, costs and expenses related to the
administration and investment of the holding vehicle trust and
transfer of assets to the School Employees' Defined Contribution
Trust.
(c) Mandatory pickup participant contributions.--All
mandatory pickup participant contributions and employer defined
contributions that will be required under sections 8404
(relating to participant contributions), 8405 (relating to
mandatory pickup participant contributions) and 8406 (relating
to employer defined contributions) to be made to the School
Employees' Defined Contribution Trust upon certification of such
trust shall be made to the holding vehicle trust prior to the
date the board certifies the School Employees' Defined
Contribution Trust. The employer shall cause those contributions
for service required to be credited in the plan to be made and
deducted from each payroll or on a schedule as established by
the board, and participant contributions shall be picked up by
the Commonwealth or other employer and shall be treated as the
employer's contribution for purposes of IRC § 414(h). After the
effective date of this section, an employer employing a
participant in the plan shall pick up the required mandatory
participant contributions by a reduction in the compensation of
the participant. No participant is permitted to make voluntary
contributions to the holding vehicle trust.
(d) Treatment for other purposes.--For all purposes other
than the IRC, the mandatory pickup participant contributions
shall be treated as contributions made by a participant in the
same manner and to the same extent as if the contributions were
made directly by the participant and not picked up.
(e) Limitations on contributions.--No contributions may be
allowed that would cause a violation of the limitations related
to contributions applicable to governmental plans contained in
IRC § 415 or in other provisions of law. In the event that any
disallowed contributions are made, any employer defined
contributions in excess of the limitations and investment
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earnings on the contributions shall be refunded to the employer
by the board.
(f) Death benefits.--In the event of the death of an active
participant or inactive participant, the board shall pay to the
participant's beneficiary the vested balance in the
participant's individual investment account in a lump sum.
(g) Interest.--Upon the disbursement of a return of
accumulated deductions to a participant who has terminated
school service or of a death benefit to a participant's
designated beneficiaries or upon the transfer of all assets in
the holding vehicle trust to the School Employees' Defined
Contribution Trust or December 31, 2018, whichever occurs first,
the Commonwealth shall make an interest payment to the holding
vehicle trust. The interest payment shall be equal to 4% annual
rate of return on the mandatory pickup participant contributions
and employer defined contributions made for the participant,
increased or decreased for any investment losses or earnings
while in the holding vehicle trust, but in no case shall the
interest payment be less than zero.
(h) Responsibility for loss of investment opportunity.--The
board, the Commonwealth, an employer or other political
subdivision shall not be responsible for the failure of any
investment in the holding vehicle trust to earn any specific or
expected return greater than the 4% interest rate paid under
subsection (g) or to earn as much as any other investment
opportunity, whether or not the other opportunity was offered to
participants in the holding vehicle trust.
(i) Termination of holding vehicle trust.--After the
disbursement or transfer of all assets in the holding vehicle
trust and the certification by the board that no further
liabilities from the holding vehicle trust exist, the holding
vehicle trust shall be closed.
(j) Expiration.--The board shall publish the certification
under subsection (i) in the Pennsylvania Bulletin. Subsections
(a), (b), (c), (d), (e), (f), (g) and (i) and this subsection
shall expire on the date of publication of the certification.
Section 115. Section 8501(a), (c), (d) and (e) of Title 24
are amended to read:
§ 8501. Public School Employees' Retirement Board.
(a) Status and membership.--The board shall be an
independent administrative board and shall consist of 15
members: the Secretary of Education, ex officio; the State
Treasurer, ex officio; two Senators; two members of the House of
Representatives; the executive secretary of the Pennsylvania
School Boards Association, ex officio; two to be appointed by
the Governor, at least one of whom shall not be a school
employee or an officer or employee of the State; three to be
elected by the active professional members of the system and
active professional participants of the plan from among their
number; one to be elected by annuitants or a participant of the
plan who has terminated school service and is receiving or is
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eligible to receive distributions from among their number; one
to be elected by the active nonprofessional members of the
system or active nonprofessional participants of the plan from
among their number; and one to be elected by members of
Pennsylvania public school boards from among their number. The
appointments made by the Governor shall be confirmed by the
Senate and each election shall be conducted in a manner approved
by the board. The terms of the appointed and nonlegislative
elected members shall be three years. The members from the
Senate shall be appointed by the President pro tempore of the
Senate and shall consist of one member from the majority and one
member from the minority. The members from the House of
Representatives shall be appointed by the Speaker of the House
of Representatives and shall consist of one member from the
majority and one member from the minority. The legislative
members shall serve on the board for the duration of their
legislative terms and shall continue to serve until 30 days
after the convening of the next regular session of the General
Assembly after the expiration of their respective legislative
terms or until a successor is appointed for the new term,
whichever occurs first. The chairman of the board shall be
elected by the board members. Each ex officio member of the
board and each legislative member of the board may appoint a
duly authorized designee to act in his stead. In the event that
a board member, who is designated as an active participant or as
the participant in the plan who is receiving or is eligible to
receive distributions, receives a total distribution of the
board member's interest in the plan, that board member may
continue to serve on the board for the remainder of the term.
* * *
(c) Oath of office.--Each member of the board shall take an
oath of office that he will, so far as it devolves upon him,
diligently and honestly administer the affairs of said board,
the system and the plan and that he will not knowingly violate
or willfully permit to be violated any of the provisions of law
applicable to this part. Such oath shall be subscribed by the
member making it and certified by the officer before whom it is
taken and shall be immediately filed in the office of the
Secretary of the Commonwealth.
(d) Compensation and expenses.--The members of the board who
are members of the system or participants in the plan shall
serve without compensation. Members of the board who are members
of the system or participants in the plan and who are employed
by a governmental entity shall not suffer loss of salary or
wages through serving on the board. The board, on request of the
employer of any member of the board who is an active
professional or nonprofessional member of the system or active
professional or nonprofessional participant in the plan, may
reimburse such employer for the salary or wages of the member or
participant, or for the cost of employing a substitute for such
member or participant, while the member or participant is
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necessarily absent from employment to execute the duties of the
board. The members of the board who are not members of either
the school system or the State Employees' Retirement System may
be paid $100 per day when attending meetings and all board
members shall be reimbursed for any necessary expenses. However,
when the duties of the board as mandated are not executed, no
compensation or reimbursement for expenses of board members
shall be paid or payable during the period in which such duties
are not executed.
(e) Corporate power and legal advisor.--For the purposes of
this part, the board shall possess the power and privileges of a
corporation. [The Attorney General of the Commonwealth shall be
the legal advisor of the board.] Legal counsel to the board
shall serve independently from the Governor's Office of General
Counsel, the Attorney General and the General Assembly.
Section 116. Section 8502(b), (c), (e), (h), (i), (j), (k),
(n) and (o) of Title 24 are amended and the section is amended
by adding a subsection to read:
§ 8502. Administrative duties of board.
* * *
(b) Professional personnel.--
(1) The board shall contract for the services of a chief
medical examiner, an actuary, investment advisors,
counselors, an investment coordinator, and such other
professional personnel as it deems advisable.
(2) The board may utilize the same individuals and firms
contracted under this subsection for both the system and the
plan but shall allocate the fees, costs and expenses incurred
under this subsection between the system and the plan as
appropriate.
(c) Expenses.--
(1) The board shall, through the Governor, submit to the
General Assembly annually a budget covering the
administrative expenses of [this part.] the system and a
separate budget covering the administrative expenses of the
plan. The separate budget shall include those expenses
necessary to establish the plan and trust.
(2) Such expenses of the system as approved by the
General Assembly in an appropriation bill shall be paid from
investment earnings of the fund.
(3) For fiscal years ending on or before June 30, 2020,
such expenses of the plan as approved by the General Assembly
through an appropriation shall be paid from the General Fund.
For fiscal years beginning on or after July 1, 2020, such
expenses of the plan as approved by the General Assembly
shall be paid from interest, pursuant to section 8414(b)
(relating to investments based on participant investment
allocation choices) or assessments on the balances of the
participants' individual investment accounts.
(4) Concurrently with its administrative budget, the
board shall also submit to the General Assembly annually a
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list of proposed expenditures which the board intends to pay
through the use of directed commissions, together with a list
of the actual expenditures from the past year actually paid
by the board through the use of directed commissions. All
such directed commission expenditures shall be made by the
board for the exclusive benefit of the system and its members
and for the exclusive benefit of the plan and its
participants, respectively.
* * *
(e) Records.--
(1) The board shall keep a record of all its proceedings
which shall be [open to inspection by] accessible to the
public, except as otherwise provided in this part or by other
law.
(2) Any record, material or data received, prepared,
used or retained by the board or its employees, investment
professionals or agents relating to an investment shall not
constitute a public record subject to public [inspection]
access under the act of [June 21, 1957 (P.L.390, No.212),
referred to] February 14, 2008 (P.L.6, No.3), known as the
Right-to-Know Law, if, in the reasonable judgment of the
board, the [inspection] access would:
(i) in the case of an alternative investment or
alternative investment vehicle involve the release of
sensitive investment or financial information relating to
the alternative investment or alternative investment
vehicle which the fund or trust was able to obtain only
upon agreeing to maintain its confidentiality;
(ii) cause substantial competitive harm to the
person from whom sensitive investment or financial
information relating to the investment was received; or
(iii) have a substantial detrimental impact on the
value of an investment to be acquired, held or disposed
of by the fund or trust, or would cause a breach of the
standard of care or fiduciary duty set forth in this
part.
(3) (i) The sensitive investment or financial
information excluded from [inspection] access under
paragraph (2)(i), to the extent not otherwise excluded
from [inspection] access, shall constitute a public
record subject to public [inspection] access under the
Right-to-Know Law once the board is no longer required by
its agreement to maintain confidentiality.
(ii) The sensitive investment or financial
information excluded from [inspection] access under
paragraph (2)(ii), to the extent not otherwise excluded
from [inspection] access, shall constitute a public
record subject to public [inspection] access under the
Right-to-Know Law once:
(A) the [inspection] access no longer causes
substantial competitive harm to the person from whom
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the information was received; or
(B) the entity in which the investment was made
is liquidated;
whichever is later.
(iii) The sensitive investment or financial
information excluded from [inspection] access under
paragraph (2)(iii), to the extent not otherwise excluded
from [inspection] access, shall constitute a public
record subject to public [inspection] access under the
Right-to-Know Law once:
(A) the [inspection] access no longer has a
substantial detrimental impact on the value of an
investment of the fund or trust and would not cause a
breach of the standard of care or fiduciary duty set
forth in this part; or
(B) the entity in which the investment was made
is liquidated;
whichever is later.
(4) Except for the provisions of paragraph (3), nothing
in this subsection shall be construed to designate any
record, material or data received, prepared, used or retained
by the board or its employees, investment professionals or
agents relating to an investment as a public record subject
to public [inspection] access under the Right-to-Know Law.
(5) Notwithstanding the provisions of this subsection,
the following information regarding an alternative investment
vehicle shall be subject to public [inspection] access under
the Right-to-Know Law:
(i) The name, address and vintage year of the
alternative investment vehicle.
(ii) The identity of the manager of the alternative
investment vehicle.
(iii) The dollar amount of the commitment made by
the system or plan to the alternative investment vehicle.
(iv) The dollar amount of cash contributions made by
the system or plan to the alternative investment vehicle
since inception.
(v) The dollar amount of cash distributions received
by the system or plan from the alternative investment
vehicle since inception.
(vi) The net internal rate of return of the
alternative investment vehicle since inception, provided
that the system or plan shall not be required to disclose
the net internal rate of return under circumstances in
which, because of the limited number of portfolio assets
remaining in the alternative investment vehicle, the
disclosure could reveal the values of specifically
identifiable remaining portfolio assets to the detriment
of the alternative investment.
(vii) The aggregate value of the remaining portfolio
assets attributable to the system's or plan's investment
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in the alternative investment vehicle, provided that the
system or plan shall not be required to disclose the
value under circumstances in which, because of the
limited number of portfolio assets remaining in the
alternative investment vehicle, the disclosure could
reveal the values of specifically identifiable remaining
portfolio assets to the detriment of the alternative
investment.
(viii) The dollar amount of total management fees
and costs paid to the alternative investment vehicle by
the system or plan on an annual fiscal year-end basis.
(6) Any record, material or data received, prepared,
used or retained by the board or its employees or agents
relating to a participant shall not constitute a public
record subject to public access under the Right-to-Know Law,
if, in the reasonable judgment of the board, the access would
disclose any of the following:
(i) The existence, date, amount and any other
information pertaining to the voluntary contributions,
including rollover contributions and trustee-to-trustee
transfers, of any participant.
(ii) The investment option selections of any
participant.
(iii) The balance of a participant's individual
investment account, including the amount distributed to
the participant, and any investment gains or losses or
rates of return.
(iv) The identity of a participant's designated
beneficiary, successor payee or alternate payee.
(v) The benefit payment option of a participant.
(7) (i) Nothing in this part shall be construed to
designate any record, material or data received,
prepared, used or retained by the board or its employees
or agents relating to the contributions, investments,
account value or benefits payable to or on account of a
participant as a public record subject to public access
under the Right-to-Know Law.
(ii) This paragraph shall apply to a record,
material or data under this subsection notwithstanding
whether:
(A) the record, material or data was created,
generated or stored before the effective date of this
paragraph;
(B) the record, material or data was previously
released or made public; or
(C) a request for the record, material or data
was made or is pending final response under the
former act of June 21, 1957 (P.L.390, No.212),
referred to as the Right-to-Know Law, or the act of
February 14, 2008 (P.L.6, No.3), known as the Right-
to-Know Law.
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* * *
(h) Regulations and procedures.--The board shall, with the
advice of the Attorney General and the actuary, adopt and
promulgate rules and regulations for the uniform administration
of the system. The actuary shall approve in writing all
computational procedures used in the calculation of
contributions and benefits pertaining to the system, and the
board shall by resolution adopt such computational procedures,
prior to their application by the board. Such rules, regulations
and computational procedures as so adopted from time to time and
as in force and effect at any time, together with such tables as
are adopted and published pursuant to subsection (j) as
necessary for the calculation of annuities and other benefits,
shall be as effective as if fully set forth in this part. Any
actuarial assumption specified in or underlying any such rule,
regulation or computational procedure and utilized as a basis
for determining any benefit shall be applied in a uniform
manner.
(i) Data.--The board shall keep in convenient form such data
as are stipulated by the actuary in order that an annual
actuarial valuation of the various accounts of the fund can be
completed within six months of the close of each fiscal year.
The board shall have final authority over the means by which
data is collected, maintained and stored and in so doing shall
protect the rights of its membership as to privacy and
confidentiality.
(j) Actuarial investigation and valuation.--The board shall
have the actuary make an annual valuation of the various
accounts of the fund within six months of the close of each
fiscal year. In the fiscal year 1975 and in every fifth year
thereafter, the board shall have the actuary conduct an
actuarial investigation and evaluation of the system based on
data including the mortality, service, and compensation
experience provided by the board annually during the preceding
five years concerning the members and beneficiaries of the
system. The board shall by resolution adopt such tables as are
necessary for the actuarial valuation of the fund and
calculation of contributions, annuities, and other benefits
based on the reports and recommendations of the actuary. Within
30 days of their adoption, the secretary of the board shall
cause those tables which relate to the calculation of annuities
and other benefits to be published in the Pennsylvania Bulletin
in accordance with the provisions of 45 Pa.C.S. § 725(a)
(relating to additional contents of Pennsylvania Bulletin) and,
unless the board specifies therein a later effective date, such
tables shall become effective on such publication. The board
shall include a report on the significant facts, recommendations
and data developed in each five-year actuarial investigation and
evaluation of the system in the annual financial statement
published pursuant to the requirements of subsection (n) for the
fiscal year in which such investigation and evaluation were
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concluded.
(k) Certification of employer contributions to the fund.--
The board shall, each year in addition to the itemized budget
required under section 8330 (relating to appropriations by the
Commonwealth), certify to the employers and the Commonwealth the
employer contribution rate expressed as a percentage of members'
payroll necessary for the funding of prospective annuities for
active members and the annuities of annuitants, and certify the
rates and amounts of the normal contributions as determined
pursuant to section 8328(b) (relating to actuarial cost method),
accrued liability contributions as determined pursuant to
section 8328(c), supplemental annuities contribution rate as
determined pursuant to section 8328(d), the experience
adjustment factor as determined pursuant to section 8328(e),
premium assistance contributions as determined pursuant to
section 8328(f), the costs added by legislation as determined
pursuant to section 8328(i), the actuarial required contribution
rate as determined pursuant to section 8328(i), the collared
contribution rate as determined pursuant to section 8328(g), the
final contribution rate as determined pursuant to section
8328(h) and the shared-risk contribution rate as determined
under section 8321(b) (relating to regular member contributions
for current service), which shall be paid to the fund and
credited to the appropriate accounts. These certifications shall
be regarded as final and not subject to modification by the
Secretary of the Budget.
* * *
(n) Annual financial statement.--The board shall prepare and
have published, on or before January 1 of each year, [a
financial statement] financial statements as of the fiscal year
ending June 30 of the previous year showing the condition of the
fund, the trust and the various accounts, including, but not
limited to, the board's accrual and expenditure of directed
commissions, and setting forth such other facts, recommendations
and data as may be of use in the advancement of knowledge
concerning annuities and other benefits provided by this part.
The board shall submit said financial [statement] statements to
the Governor and shall make copies available to the employers
for the use of the school employees and the public.
(o) Independent [audit] audits.--The board shall provide for
[an annual audit] annual audits of the system and the plan by an
independent certified public accounting firm, which [audit]
audits shall include the board's accrual and expenditure of
directed commissions. The board may use the same independent
certified public accounting firm for the audits of both the
system and the plan.
* * *
(q) Participant and employer contributions to trust.--The
board shall, each year in addition to any fees and itemized
budget required under section 8330, certify, as a percentage of
each participant's compensation, the employer defined
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contributions, which shall be paid to the trust and credited to
each participant's individual investment account. These
certifications shall be regarded as final and not subject to
modification by the Secretary of the Budget. The board shall
cause all mandatory pickup participant contributions made on
behalf of a participant and all voluntary contributions made by
a participant to be credited to the participant's individual
investment account.
Section 117. Section 8502.2(a) of Title 24 is amended to
read:
§ 8502.2. Health insurance.
(a) Authority.--The board may sponsor a participant-funded
group health insurance program for annuitants, participants
receiving distributions, spouses of annuitants and participants
receiving distributions, survivor annuitants and their
dependents. The board may promulgate regulations regarding the
prudent and efficient operation of the program, including, but
not limited to:
(1) Establishment of an annual budget and disbursements
in accordance with the budget.
(2) Determination of the benefits structure.
(3) Determination of enrollment procedures.
(4) Establishment of premium rates sufficient to fully
fund the program, including administrative expenses.
(5) Contracting for goods, equipment, services,
consultants and other professional personnel as needed to
operate the program.
* * *
Section 117.1. Section 8503 heading of Title 24 is amended
and the section is amended by adding a subsection to read:
§ 8503. Duties of board to advise and report to employers [and
members], members and participants.
* * *
(b.1) Participant status statements.--The board shall
furnish annually to each participant on or before December 31,
and more frequently as the board may agree or as required by
law, a statement showing the accumulated total defined
contributions credited to the participant's individual
investment account, the nature and type of investments and the
investment allocation of future contributions as of June 30 of
the current year and requesting the participant to make any
necessary correction or revision regarding his designated
beneficiary.
* * *
Section 118. Section 8505 heading, (h) and (i) of Title 24,
amended December 28, 2015 (P.L.529, No.93), is amended and the
section is amended by adding a subsections to read:
§ 8505. Duties of board regarding applications and elections of
members and participants.
* * *
(e.1) Certification to participants terminating service.--In
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the case of a participant terminating service, the board shall
certify to a participant in writing of the vested accumulated
total defined contributions credited to the participant's
individual investment account as of the date stated in the
writing, any notices regarding rollover or other matters
required by IRC or other law, the obligation of the participant
to commence distributions from the plan by the participant's
required beginning date and the ability to receive all or part
of the vested balance in the participant's individual investment
account in a lump sum or in such other form as the board may
authorize or as required by law.
* * *
(f.1) Notification to inactive participants approaching
required beginning date.--The board shall notify each inactive
participant who has terminated school service and for whom
distribution has not commenced by 90 days before the
participant's required beginning date, in writing, that the
inactive participant has an obligation to commence distributions
by the required beginning date in a form and manner required by
IRC § 401(a)(9) and other applicable provisions of IRC.
* * *
(g.1) Initial payment to participants.--The board shall make
the initial payment to a participant who has applied for a
distribution within 60 days of the filing of the application and
receipt of the required data from the employer of the
participant and other necessary data.
(h) Death benefits.--Upon receipt of notification of the
death of a member or former member on USERRA leave, an active
participant, an inactive participant or a former participant on
USERRA leave, the board shall notify the designated beneficiary
or survivor annuitant of the benefits to which he is entitled
and shall make the first payment to the beneficiary under the
plan elected by the beneficiary within 60 days of receipt of
certification of death and other necessary data. If no
beneficiary designation is in effect at the date of the member's
or participant's death or no notice has been filed with the
board to pay the amount of such benefits to the member's or
participant's estate, the board is authorized to pay such
benefits to the executor, administrator, surviving spouse or
next-of-kin of the deceased member or participant, and payment
pursuant hereto shall fully discharge the fund or plan from any
further liability to make payment of such benefits to any other
person.
(i) Medical insurance coverage.--Upon receipt of
notification from an insurance carrier offering a health
insurance program approved by the board that an annuitant who
has attained age 65 has elected medical, major medical, and
hospitalization insurance coverage or notification that
annuitants with less than 24 1/2 eligibility points (other than
disability annuitants), spouses of annuitants and survivor
annuitants eligible to elect to enroll in the approved health
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insurance program have elected participation in such health
insurance program, the board may deduct from the annuity
payments, from payments to a participant receiving
distributions, or from a successor payee the appropriate annual
charges in equal monthly installments. Such deductions shall be
transmitted to the insurance carrier.
* * *
Section 118.1. Sections 8506(a), (d), (e), (g), (h), (i) and
(k) and 8507(a), (c), (e) and (f) of Title 24 are amended and
the section is amended by adding subsections to read:
§ 8506. Duties of employers.
(a) Status of members and participants.--The employer shall,
each month, notify the board in a manner prescribed by the board
of the salary changes effective during the past month, the date
of all removals from the payroll, and the type of leave of any
member or participant who has been removed from the payroll for
any time during that month, and:
(1) if the removal is due to leave without pay, the
employer shall furnish the board with the date of beginning
leave, the date of return to service, and the reason for
leave;
(2) if the removal is due to a transfer to another
employer, the former employer shall furnish such employer and
the board with a complete school service record, including
credited or creditable nonschool service; or
(3) if the removal is due to termination of school
service, the employer shall furnish the board with a complete
school service record including credited or creditable
nonschool service and in the case of death of the member or
participant the employer shall so notify the board.
* * *
(c.1) Participant and employer defined contributions.--The
employer shall cause the mandatory pickup participant
contributions on behalf of a participant to be made. The
employer shall also cause the employer defined contributions on
behalf of a participant to be made. The employer shall notify
the board at times and in a manner prescribed by the board of
the compensation of any participant to whom the limitation under
IRC § 401(a)(17) either applies or is expected to apply and
shall cause the participant's contributions to be deducted from
payroll to cease at the limitation under IRC § 401(a)(17) on the
payroll date if and when such limit shall be reached. The
employer shall certify to the board the amounts picked up and
deducted and the employer defined contributions being made and
shall send the total amount picked up, deducted and contributed
together with a duplicate of such voucher to the secretary of
the board every pay period or on such schedule as established by
the board.
(d) New employees subject to mandatory membership or
participation.--Upon the assumption of duties of each new school
employee whose membership in the system or plan is mandatory,
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the employer shall no later than 30 days thereafter cause an
application for membership or participation, which application
shall include the employee's home address, birthdate certified
by the employer, previous school or State service and any other
information requested by the board, and a nomination of
beneficiary to be made by such employee and filed with the board
and shall make pickup contributions or mandatory pickup
participant contributions from the effective date of school
employment.
(e) New employees subject to optional membership or
participation.--The employer shall inform any eligible school
employee whose membership in the system or participation in the
plan is not mandatory of his opportunity to become a member of
the system or a participant in the plan provided that he elects
to purchase credit for all such continuous creditable service.
If such employee so elects, the employer shall no later than 30
days thereafter cause an application for membership or
participation which application shall include the employee's
home address, birthdate certified by the employer, previous
school or State service and any other information requested by
the board, and a nomination of beneficiary to be made by him and
filed with the board and shall cause proper contributions to be
made from the date of election of membership or participation.
* * *
(g) Former State employee contributors.--The employer shall,
upon the employment of a former member of the State Employees'
Retirement System who is not an annuitant of the State
Employees' Retirement System, advise such employee [of his] if
he has a right to elect multiple service membership within 365
days of entry into the system or, for a member of Class T-G, if
he has a right to elect within 45 days of entry into the system
and, in the case any such employee who so elects has withdrawn
his accumulated deductions, require him to restore his
accumulated deductions as they would have been at the time of
his separation had he been a full coverage member, together with
statutory interest for all periods of subsequent State and
school service to date of repayment. The employer shall advise
the board of such election.
(h) Former State employee annuitants.--The employer shall,
upon the employment of an annuitant of the State Employees'
Retirement System who applies for membership in the system,
advise such employee [that] if he may elect multiple service
membership within 365 days of entry into the system or, for a
member of Class T-G, if he has a right to elect within 45 days
of entry into the system and that if he so elects his annuity
from the State Employees' Retirement System will be discontinued
effective upon the date of his return to school service and,
upon termination of school service and application for an
annuity, the annuity will be adjusted in accordance with section
8346 (relating to termination of annuities). The employer shall
advise the board of such election.
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(i) Termination of service.--The employer shall, in the case
of any member terminating school service, advise such member in
writing of any benefits to which he may be entitled under the
provisions of this part and shall have the member prepare, on or
before the date of termination of school service, one or more of
the following three forms, a copy of which shall be given to the
member and the original of which shall be filed with the board:
(1) An application for the return of accumulated
deductions, if eligible.
(2) An election to vest his retirement rights, if
eligible, and, if he is a joint coverage member and so
desires, an election to become a full coverage member and an
agreement to pay within 30 days of the date of termination of
service the lump sum required.
(3) An application for an immediate annuity, if
eligible, and, if he is a joint coverage member and so
desires, an election to become a full coverage member and an
agreement to pay within 30 days of date of termination of
service the lump sum required.
* * *
(k) School employees performing USERRA or military-related
leave of absence.--The employer shall report to the board all of
the following:
(1) Any school employee who:
(i) ceases to be an active member or active
participant to perform USERRA service; or
(ii) is granted a leave of absence under 51 Pa.C.S.
§ 4102 (relating to leaves of absence for certain
government employees) or a military leave of absence
under 51 Pa.C.S. § 7302 (relating to granting military
leaves of absence).
(2) The date on which the USERRA service, leave of
absence or military leave of absence began.
(3) The date on which the school employee is reemployed
from USERRA leave or returns after the leave of absence or
military leave of absence, if applicable.
(4) Any other information the board may require.
(l) Differential wage payments and military leave of absence
payments.--Notwithstanding the exclusion of differential wage
payments as defined in IRC § 414(u)(12) from compensation under
this part, the employer of any school employee on USERRA leave
shall report differential wage payments made to the employee to
the board, and the employer of any school employee on leave of
absence pursuant to 51 Pa.C.S. § 4102 shall report any payment
made to the employee, in the form and manner established by the
board.
§ 8507. Rights and duties of school employees [and members],
members and participants.
(a) Information on new employees.--Upon his assumption of
duties, each new school employee shall furnish his employer with
a complete record of his previous school or State service, or
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creditable nonschool service, proof of his date of birth, his
home address, his current status in the system and the plan and
in the State Employees' Retirement System and the State
Employees' Defined Contribution Plan and such other information
as the board may require. Willful failure to provide the
information required by this subsection to the extent available
or the provision of erroneous information upon entrance into the
system shall result in the forfeiture of the right of the member
to subsequently assert any right to benefits based on erroneous
information or on any of the required information which he
failed to provide. In any case in which the board finds that a
member is receiving an annuity based on false information, the
additional amounts received predicated on such false information
together with statutory interest doubled and compounded shall be
deducted from the present value of any remaining benefits to
which the member is legally entitled and such remaining benefits
shall be correspondingly decreased.
* * *
(b.1) Application for participation.--On or after July 1,
2018, in the case of a new employee who is not currently a
participant in the plan and whose participation is mandatory,
the new employee shall execute an application for participation
and a nomination of a beneficiary.
(c) Multiple service membership.--
(1) Any [active member] school employee who is an active
member in a class of service other than Class T-G and who was
formerly an active member in the State Employees' Retirement
System in a class of service other than Class A-5 may elect
to become a multiple service member. Such election for a
member in other than Class T-G shall occur no later than 365
days after becoming an active member in a class of service
other than Class T-G in this system.
(2) Any school employee who is an active member of Class
T-G and who was formerly an active member in the State
Employees' Retirement System in Class A-5 may elect to become
a multiple service member. Such election shall occur no later
than 45 days after becoming an active member of Class T-G.
(3) A school employee who is eligible to elect to become
a multiple service member and who begins USERRA leave during
the election period without having elected multiple service
membership may make the election within 365 days, or 45 days
if a member of Class T-G, after being reemployed from USERRA
leave.
* * *
(d.2) Contributions for USERRA leave.--Any active
participant or inactive participant or former participant who
was reemployed from USERRA leave and who desires to make
mandatory pickup participant contributions for his USERRA leave
shall so notify the board within the time period required under
38 U.S.C. Ch. 43 (relating to employment and reemployment rights
of members of the uniformed services) and IRC § 414(u) of his
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desire to make such contributions. Upon making the permitted
mandatory pickup participant contributions within the allowed
time period, the employer shall make the corresponding employer
defined contributions at the same time.
(d.3) Voluntary contributions by a participant.--Any
participant who desires to make voluntary contributions to be
credited to his individual investment account shall notify the
board and, upon compliance with the requirements, procedures and
limitations established by the board in the plan document, may
do so subject to the limitations under IRC §§ 401(a) and 415 and
other applicable law.
(e) Beneficiary for death benefits from system.--Every
member shall nominate a beneficiary by written designation filed
with the board to receive the death benefit or the benefit
payable from the system under the provisions of Option 1. Such
nomination may be changed at any time by the member by written
designation filed with the board. A member may also nominate a
contingent beneficiary or beneficiaries to receive the death
benefit or the benefit payable under the provisions of Option 1.
(e.1) Beneficiary for death benefits from plan.--Every
participant shall nominate a beneficiary by written designation
filed with the board as provided in section 8506 (relating to
duties of employers) to receive the death benefit payable under
section 8347 (relating to death benefits). A participant may
also nominate a contingent beneficiary or beneficiaries to
receive the death benefit provided under section 8408 (relating
to death benefits). Such nomination may be changed at any time
by the participant by written designation filed with the board.
(e.2) Beneficiary designation.--A school employee may
designate or nominate different persons to be beneficiaries,
survivor annuitants and successor payees for his benefits from
the system and the plan.
(f) Termination of service by members.--Each member who
terminates school service and who is not then a disability
annuitant shall execute on or before the date of termination of
service a written application, duly attested by the member or
his legally constituted representative, electing to do one or
more of the following:
(1) Withdraw his accumulated deductions, if eligible.
(2) Vest his retirement rights, if eligible, and if he
is a joint coverage member, and so desires, elect to become a
full coverage member and agree to pay within 30 days of the
date of termination of service the lump sum required.
(3) Receive an immediate annuity, if eligible, and may,
if he is a joint coverage member, elect to become a full
coverage member and agree to pay within 30 days of date of
termination of service the lump sum required.
* * *
(g.1) Deferral of retirement rights.--If a participant
terminates school service and does not commence receiving a
distribution, he shall nominate a beneficiary by written
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designation filed with the board, and he may anytime thereafter,
but no later than his required beginning date, withdraw the
vested accumulated total defined contributions standing to his
credit or apply for another form of distribution required by law
or authorized by the board.
* * *
Section 119. Sections 8521(b), 8522, 8524, 8525 and 8531 of
Title 24 are amended to read:
§ 8521. Management of fund and accounts.
* * *
(b) Crediting of interest.--The board annually shall allow
statutory interest, excluding the individual investment
accounts, to the credit of the members' savings account on the
mean amount of the accumulated deductions of all members for
whom interest is payable for the preceding year and valuation
interest on the mean amount of the annuity reserve account for
the preceding year to the credit of that account. The board
annually shall allow valuation interest calculated on the mean
amount for the preceding year of the balance in the State
accumulation account excluding any earnings of the fund credited
to the account during that year. In the event the total earnings
for the year do not exceed 5 1/2% of the mean amount for the
preceding year of the total assets of the fund less earnings
credited to the fund during that year plus the administrative
expenses of the board, the difference required to be
appropriated from the General Fund shall be credited to the
State accumulation account.
* * *
§ 8522. Public School Employees' Retirement Fund.
(a) General rule.--The fund shall consist of all moneys in
the several separate funds in the State Treasury set apart to be
used under the direction of the board for the benefit of members
of the system; and the Treasury Department shall credit to the
fund all moneys received from the Department of Revenue arising
from the contributions relating to or on behalf of the members
of the system required under the provisions of Chapter 83
(relating to membership, contributions and benefits) and all
earnings from investments or moneys of said fund. There shall be
established and maintained by the board the several ledger
accounts specified in sections 8523 (relating to members'
savings account), 8524 (relating to State accumulation account),
8525 (relating to annuity reserve account) and 8526 (relating to
health insurance account).
(b) Individual investment accounts and trust.--The
individual investment accounts that are part of the trust shall
not be part of the fund. Mandatory pickup participant
contributions, voluntary contributions and employer defined
contributions made under this part and any income earned by the
investment of such contributions shall not be paid or credited
to the fund but instead shall be paid to the trust and credited
to the individual investment accounts.
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§ 8524. State accumulation account.
The State accumulation account shall be the ledger account to
which shall be credited all contributions of the Commonwealth
and other employers as well as the earnings of the fund, except
the premium assistance contributions and earnings thereon in the
health insurance account. Valuation interest shall be allowed on
the total amount of such account less any earnings of the fund
credited during the year. The reserves necessary for the payment
of annuities and death benefits resulting from membership in the
system as approved by the board and as provided in Chapter 83
(relating to membership, contributions and benefits) shall be
transferred from the State accumulation account to the annuity
reserve account. At the end of each year the required interest
shall be transferred from the State accumulation account to the
credit of the members' savings account and the annuity reserve
account. The administrative expenses of the board shall be
charged to the State accumulation account. Employer defined
contributions, mandatory pickup contributions and a
participant's voluntary contributions, together with any income
or interest earned thereon, may be temporarily placed into the
State accumulation account pending allocation or distribution
to the participant's individual investment account.
§ 8525. Annuity reserve account.
(a) Credits and charges to account.--The annuity reserve
account shall be the ledger account to which shall be credited
the reserves held for the payment of annuities and death
benefits resulting from membership in the system on account of
all annuitants and the contributions from the Commonwealth and
other employers as determined in accordance with section 8328
(relating to actuarial cost method) for the payment of the
supplemental annuities provided in sections 8348 (relating to
supplemental annuities), 8348.1 (relating to additional
supplemental annuities), 8348.2 (relating to further additional
supplemental annuities), 8348.3 (relating to supplemental
annuities commencing 1994), 8348.4 (relating to special
supplemental postretirement adjustment), 8348.5 (relating to
supplemental annuities commencing 1998), 8348.6 (relating to
supplemental annuities commencing 2002) and 8348.7 (relating to
supplemental annuities commencing 2003). The annuity reserve
account shall be credited with valuation interest. After the
transfers provided in sections 8523 (relating to members'
savings account) and 8524 (relating to State accumulation
account), all annuity and death benefit payments shall be
charged to the annuity reserve account and paid from the fund.
(b) Transfers from account.--Should an annuitant be
subsequently restored to active service either as a member of
the system or participant in the plan, the present value of his
member's annuity at the time of reentry into school service
shall be transferred from the annuity reserve account and placed
to his individual credit in the members' savings account. In
addition, the actuarial reserve for his annuity less the amount
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transferred to the members' savings account shall be transferred
from the annuity reserve account to the State accumulation
account.
§ 8531. State guarantee regarding the system.
Statutory interest charges payable, the maintenance of
reserves in the fund, and the payment of all annuities and other
benefits granted by the board from the system under the
provisions of this part relating to the establishment and
administration of the system are hereby made obligations of the
Commonwealth. All income, interest, and dividends derived from
deposits and investments of the system authorized by this part
shall be used for the payment of the said obligations of the
Commonwealth and shall not be used for any obligations of the
plan or trust.
Section 120. Section 8533(a), (b) and (d) of Title 24 are
amended and the section is amended by adding a subsection to
read:
§ 8533. Taxation, attachment and assignment of funds.
(a) General rule.--Except as provided in subsections (b),
(c) and (d), the right of a person to a member's annuity, a
State annuity, or retirement allowance, to the return of
contributions, any benefit or right accrued or accruing to any
person under the provisions of this part, and the moneys in the
fund and the trust are hereby exempt from any State or municipal
tax, [and exempt from] levy and sale, garnishment, attachment,
or any other process whatsoever, and the provisions of Article
XIII.1 of the the act of April 9, 1929 (P.L.343, No.176), known
as The Fiscal Code, and shall be unassignable.
(a.1) Individual investment accounts and distributions.--No
participant or beneficiary, successor payee or alternate payee
of a participant shall have the ability to commute, sell,
assign, alienate, anticipate, mortgage, pledge, hypothecate,
commutate or otherwise transfer or convey any benefit or
interest in an individual investment account or rights to
receive or direct distributions under this part or under
agreements entered into under this part except as otherwise
provided in this part and in the case of either a member or a
participant.
(b) Forfeiture.--
(1) Rights under this part shall be subject to
forfeiture as provided by the act of July 8, 1978 (P.L.752,
No.140), known as the Public Employee Pension Forfeiture Act.
Forfeitures under this subsection or under any other
provision of law may not be applied to increase the benefits
that any member would otherwise receive under this part.
(2) Notwithstanding paragraph (1) and the provisions of
section 16(b) of Article V of the Constitution of
Pennsylvania, the act of July 8, 1978 (P.L.752, No.140),
known as the Public Employee Pension Forfeiture Act and 42
Pa.C.S. § 3352 (relating to pension rights), the accumulated
mandatory participant contributions and accumulated voluntary
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contributions standing to the credit of a participant shall
not be forfeited but shall be available for payment of fines
and restitution as provided by law. Amounts in the trust that
have been ordered to be distributed to an alternate payee as
the result of an equitable distribution of marital property
as part of an approved domestic relations order entered
before the date of the order or action in a court or other
tribunal resulting in a forfeiture of a participant's
interest in the trust shall not be subject to the provisions
of section 16(b) of the Article V of the Constitution of
Pennsylvania, the Public Employee Pension Forfeiture Act or
42 Pa.C.S. § 3352. Any accumulated employer defined
contributions forfeited as a result of this subsection or
other law shall be retained by the board and used for the
payment of expenses of the plan.
* * *
(d) Direct rollover.--Effective with distributions made on
or after January 1, 1993, and notwithstanding any other
provision of this part to the contrary, a distributee may elect,
at the time and in the manner prescribed by the board, to have
any portion of an eligible rollover distribution paid directly
to an eligible retirement plan by way of a direct rollover. For
purposes of this subsection, a "distributee" includes a member
[and], a participant, a member's surviving spouse [and], a
participant's surviving spouse, a member's former spouse who is
an alternate payee under an approved domestic relations order[.]
and a participant's former spouse who is an alternate payee
under an approved domestic relations order and anyone else
authorized under IRC and the plan terms approved by the board to
have an eligible rollover distribution paid directly to an
eligible retirement plan by way of a direct rollover. For
purposes of this subsection, the term "eligible rollover
distribution" has the meaning given such term by IRC § 402(f)(2)
(A) and "eligible retirement plan" has the meaning given such
term by IRC § 402(c)(8)(B), except that a qualified trust shall
be considered an eligible retirement plan only if it accepts the
distributee's eligible rollover distribution; however, in the
case of an eligible rollover distribution to a surviving spouse,
an eligible retirement plan is an "individual retirement
account" or an "individual retirement annuity" as those terms
are defined in IRC § 408(a) and (b).
Section 121. Sections 8533.1, 8533.2, 8533.3 and 8533.4(a)
of Title 24 are amended to read:
§ 8533.1. Approval of domestic relations orders.
(a) Certification regarding members.--A domestic relations
order pertaining to a member of the system shall be certified as
an approved domestic relations order by the secretary of the
board, or his designated representative, only if [such] the
order meets all of the following:
(1) Requires the system to provide any type or form of
benefit or any option applicable to members already provided
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under this part.
(2) Requires the system to provide no more than the
total amount of benefits than the member would otherwise
receive (determined on the basis of actuarial value) unless
increased benefits are paid to the member or alternate payee
based upon cost-of-living increases or increases based on
other than actuarial value.
(3) Specifies the amount or percentage of the member's
benefits to be paid by the system to each such alternate
payee or the manner in which the amount or percentage is to
be determined.
(4) Specifies the retirement option to be selected by
the member upon retirement or states that the member may
select any retirement option offered by this part upon
retirement.
(5) Specifies the name and last known mailing address,
if any, of the member and the name and last known mailing
address of each alternate payee covered by the order and
states that it is the responsibility of each alternate payee
to keep a current mailing address on file with the system.
(6) Does not grant an alternate payee any of the rights,
options or privileges of a member under this part.
(7) Requires the member to execute an authorization
allowing each alternate payee to monitor the member's
compliance with the terms of the domestic relations order
through access to information concerning the member
maintained by the system.
(a.1) Certification regarding participants.--A domestic
relations order pertaining to a participant shall be certified
as an approved domestic relations order by the secretary of the
board, or his designated representative, only if the order meets
all of the following:
(1) Does not require the segregation of the alternate
payee's share of the participant's individual investment
account into a subaccount or newly established individual
account titled in the name of the alternate payee.
(2) Does not require the plan to recover or distribute
any funds which were distributed to the participant or at the
participant's direction prior to the approval of the domestic
relations order by the secretary of the board or his
designated representative.
(3) Requires the plan to pay to the alternate payee no
more than the lesser of the vested amount of the
participant's individual investment account specified by the
domestic relations order or the vested amount of the
participant's individual investment account as of the date of
the transfer of the alternate payee's share to the alternate
payee.
(4) States that the plan shall not be required to recoup
or make good for losses in value to the participant's
individual investment account incurred between the date of
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the valuation of the account used for equitable distribution
purposes and the date of distribution to the alternate payee.
(5) Specifies the amount or percentage of the
participant's individual investment account to be paid to the
alternate payee and the date upon which such valuation is
based.
(6) Specifies the name and last known mailing address,
if any, of the participant and the name and last known
mailing address of each alternate payee covered by the order
and states that it is the responsibility of each alternate
payee to keep a current mailing address on file with the
plan.
(7) Does not grant an alternate payee the rights,
privileges or options available to a participant.
(8) In the case of a participant who has not yet begun
to receive distributions as of the date the domestic
relations order is approved by the secretary of the board or
his designated representative, requires the immediate
distribution of the alternate payee's share of the
participant's individual investment account, which may be
made by direct payment, eligible rollover or trustee-to-
trustee transfer to another eligible plan or qualified
account owned by the alternate payee.
(9) In the case of a participant who is currently
receiving distributions from the plan as of the date the
domestic relations order is approved by the secretary of the
board or his designated representative, may not order the
board to pay the alternate payee more than the balance
available in the participant's individual investment account
as of the date the order is approved or require that
distributions continue to the alternate payee after the death
of the participant and final settlement of the participant's
individual investment account.
(b) Determination by secretary.--Within a reasonable period
of time after receipt of a domestic relations order, the
secretary of the board, or his designated representative, shall
determine whether this order is an approved domestic relations
order and notify the member or participant and each alternate
payee of this determination. Notwithstanding any other provision
of law, the exclusive remedy of any member, participant or
alternate payee aggrieved by a decision of the secretary of the
board, or his designated representative, shall be the right to
an adjudication by the board under 2 Pa.C.S. Ch. 5 (relating to
practice and procedure) with appeal therefrom to the
Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to judicial
review) and 42 Pa.C.S. § 763(a)(1) (relating to direct appeals
from government agencies).
(c) Other orders.--The requirements for approval identified
in [subsection (a)] subsections (a) and (a.1) shall not apply to
any domestic relations order which is an order for support as
that term is defined in 23 Pa.C.S. § 4302 (relating to
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definitions) or an order for the enforcement of arrearages as
provided in 23 Pa.C.S. § 3703 (relating to enforcement of
arrearages). These orders shall be approved to the extent that
they do not attach moneys in excess of the limits on attachments
as established by the laws of this Commonwealth and the United
States[.], require distributions of benefits in a manner that
would violate the laws of the United States, any other state or
this Commonwealth or require the distribution of funds for
support or enforcement of arrearages against any participant who
is not receiving distributions from the plan at the time such
order is entered. These orders may be approved notwithstanding
any other provision of this part or the plan that would
otherwise require a distribution of accumulated employer defined
contributions in the form of an annuity or to require the
purchase of an annuity.
(d) Obligation discharged.--Only the requirements of this
part and any regulations promulgated hereunder shall be used to
govern the approval or disapproval of a domestic relations
order. Therefore, if the secretary of the board, or his
designated representative, acts in accordance with the
provisions of this part and any promulgated regulations in
approving or disapproving a domestic relations order, then the
obligations of the system or plan with respect to such approval
or disapproval shall be discharged.
§ 8533.2. Irrevocable beneficiary.
Notwithstanding any other provision of this part, a domestic
relations order may provide for an irrevocable beneficiary. A
domestic relations order requiring the nomination of an
irrevocable beneficiary shall be deemed to be one that requires
a member or participant to nominate an alternate payee as a
beneficiary and that prohibits the removal or change of that
beneficiary without approval of a court of competent
jurisdiction, except by operation of law. Such a domestic
relations order may be certified as an approved domestic
relations order by the secretary of the board, or his designated
representative, after the member or participant makes such
nomination, in which case the irrevocable beneficiary so ordered
by the court cannot be changed by the member or participant
without approval by the court.
§ 8533.3. Irrevocable survivor annuitant.
Notwithstanding any other provisions of this part, a domestic
relations order may provide for an irrevocable survivor
annuitant pertaining to a member. A domestic relations order
requiring the designation of an irrevocable survivor annuitant
shall be deemed to be one that requires a member to designate an
alternate payee as a survivor annuitant and that prohibits the
removal or change of that survivor annuitant without approval of
a court of competent jurisdiction, except by operation of law.
Such a domestic relations order may be certified as an approved
domestic relations order by the secretary of the board, or his
designated representative, in which case the irrevocable
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survivor annuitant so ordered by the court cannot be changed by
the member without approval by the court. A person ineligible to
be designated as a survivor annuitant may not be designated an
irrevocable survivor annuitant.
§ 8533.4. Amendment of approved domestic relations orders.
(a) Deceased alternate payee.--In the event that the
alternate payee predeceases the member or participant and there
are benefits payable to the alternate payee, the divorce court
may amend the approved domestic relations order to substitute a
person for the deceased alternate payee to receive any benefits
payable to the deceased alternate payee.
* * *
Section 122. Title 24 is amended by adding a section to
read:
§ 8533.5. Irrevocable successor payee.
(a) Condition.--Notwithstanding any other provisions of this
part, a domestic relations order pertaining to a participant may
provide for an irrevocable successor payee, only if the
participant is receiving a payment pursuant to a payment option
provided by the board that allows for a successor payee.
(b) Determination.--A domestic relations order requiring the
designation of an irrevocable successor payee shall be deemed to
be one that requires a participant who is receiving payments
from an annuity or other distribution option to designate an
alternate payee as a successor payee and that prohibits the
removal or change of that successor payee without approval of a
court of competent jurisdiction, except by operation of law.
(c) Certification.--A domestic relations order under
subsection (b) may be certified as an approved domestic
relations order by the secretary of the board, or his designated
representative, in which case the irrevocable successor payee
ordered by the court cannot be changed by the participant
without approval by the court.
(d) Ineligibility.--A person ineligible to be designated as
a successor payee may not be designated as an irrevocable
successor payee. A court may not name an irrevocable successor
payee if the alternate payee is eligible to receive a lump sum
distribution of the alternate payee's portion of the marital
portion of the pension benefit.
Section 123. Sections 8534 and 8535 of Title 24 are amended
to read:
§ 8534. Fraud and adjustment of errors.
(a) Penalty for fraud.--Any person who shall knowingly make
any false statement or shall falsify or permit to be falsified
any record or records of this system or plan in any attempt to
defraud the system or plan as a result of such act shall be
guilty of a misdemeanor of the second degree.
(b) Adjustment of errors.--Should any change or mistake in
records result in any member, participant, beneficiary, [or],
survivor annuitant or successor payee receiving from the system
or plan more or less than he would have been entitled to receive
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had the records been correct, then regardless of the intentional
or unintentional nature of the error and upon the discovery of
such error, the board shall correct the error and if the error
affects contributions to or payments from the system, then so
far as practicable shall adjust the payments which may be made
for and to such person in such a manner that the actuarial
equivalent of the benefit to which he was correctly entitled
shall be paid. If the error affects contributions to or payments
from the plan, the board shall take such action as shall be
provided for in the plan document.
§ 8535. Payments to school entities by Commonwealth.
For each school year beginning with the 1995-1996 school year
and ending with the 2017-2018 school year, each school entity
shall be paid by the Commonwealth for contributions based upon
school service of active members of the system after June 30,
1995, as follows:
(1) The Commonwealth shall pay each school entity for
contributions made to the Public School Employees' Retirement
Fund based upon school service of all active members,
including members on activated military service leave, whose
effective dates of employment with their school entities are
after June 30, 1994, and who also had not previously been
employed by any school entity within this Commonwealth an
amount equal to the amount certified by the Public School
Employees' Retirement Board as necessary to provide, together
with the members' contributions, reserves on account of
prospective annuities, supplemental annuities and the premium
assistance program as provided in this part in accordance
with section 8328 (relating to actuarial cost method),
multiplied by the market value/income aid ratio of the school
entity. For no school year shall any school entity receive
less than the amount that would result if the market
value/income aid ratio as defined in section 2501(14.1) of
the Public School Code [of 1949] was 0.50.
(2) The Commonwealth shall pay each school entity for
contributions made to the Public School Employees' Retirement
Fund based upon school service of all active members,
including members on activated military service leave, who
are not described in paragraph (1), one-half of the amount
certified by the Public School Employees' Retirement Board as
necessary to provide, together with the members'
contributions, reserves on account of prospective annuities,
supplemental annuities and the premium assistance program as
provided in this part in accordance with section 8328.
(3) School entities shall have up to five days after
receipt of the Commonwealth's portion of the employer's
liability to make payment to the Public School Employees'
Retirement Fund. School entities are expected to make the
full payment to the Public School Employees' Retirement Fund
in accordance with section 8327 (relating to payments by
employers) in the event the receipt of the Commonwealth's
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portion of the employer's liability is delayed because of
delinquent salary reporting or other conduct by the school
entities.
Section 124. Title 24 is amended by adding sections to read:
§ 8535.1. Payments to school entities by Commonwealth
commencing with the 2018-2019 school year.
For each school year, beginning with the 2018-2019 school
year, each school entity shall be paid by the Commonwealth for
contributions based upon school service of active members of the
system and active participants of the plan after June 30, 2018,
as follows:
(1) The Commonwealth shall pay each school entity for
contributions made to the fund or the trust based upon school
service of all active members or active participants,
including members or participants on activated or USERRA
military service leave, whose effective dates of employment
with their school entities are after June 30, 1994, and who
also had not previously been employed by any school entity
within this Commonwealth, an amount equal to the amount
certified by the board as necessary to provide, together with
the members' and participants' contributions, reserves on
account of prospective annuities, supplemental annuities and
the premium assistance program as provided in this part in
accordance with section 8328 (relating to actuarial cost
method), multiplied by the market value/income aid ratio of
the school entity. For no school year shall any school entity
receive less than the amount that would result if the market
value/income aid ratio as defined in section 2501(14.1) of
the Public School Code was 0.50.
(2) The Commonwealth shall pay each school entity for
contributions made to the fund or the trust based upon school
service of all active members or active participants,
including members or participants on activated military
service leave, and active participants of the plan who are
not described in paragraph (1) one-half of the amount
certified by the board as necessary to provide, together with
the members' and participants' contributions, reserves on
account of prospective annuities, supplemental annuities and
the premium assistance program as provided in this part in
accordance with section 8328.
(3) School entities shall have up to five days after
receipt of the Commonwealth's portion of the employer's
liability to make payment to the fund or the trust. School
entities are expected to make the full payment to the fund or
the trust in accordance with section 8327 (relating to
payments by employers) in the event the receipt of the
Commonwealth's portion of the employer's liability is delayed
because of delinquent salary reporting or other conduct by
the school entities.
§ 8537. Internal Revenue Code limitations.
Notwithstanding any provisions of this part to the contrary,
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no contribution or benefit related to the School Employees'
Defined Contribution Plan shall be made or payable to the extent
that the contribution or benefit exceeds a limitation under IRC
§ 415 in effect with respect to a "governmental plan," as
defined in IRC § 414(d) on the date the contribution or benefit
payment becomes effective. An increase in a limitation under IRC
§ 415 shall be applicable to all current and future
participants.
Section 125. Section 8702(a) of Title 24 is amended to read:
§ 8702. Definitions.
(a) General rule.--Subject to additional definitions
contained in subsequent provisions of this part which are
applicable to specific provisions of this part, the following
words and phrases when used in this part shall have the meanings
given to them in this section unless the context clearly
indicates otherwise:
"Eligible person." An individual who is:
(1) an annuitant or survivor annuitant or the spouse or
dependent of an annuitant or survivor annuitant[.]; or
(2) a participant receiving distributions or a successor
payee, or the spouse or dependent of a participant receiving
distributions or successor payee.
"Fund." The Public School Retirees' Health Insurance Fund.
"Plan year." The period July 1, 2001, through December 31,
2001, shall be the first plan year. After December 31, 2001, the
plan year shall be the calendar year.
"Program." The group health insurance program that may be
sponsored by the Public School Employees' Retirement Board under
this part.
"Reserve account." The restricted receipt account
established in section 8902(b) (relating to Public School
Retirees' Health Insurance Fund).
* * *
ARTICLE II
Section 201. Section 7306(a) introductory paragraph of Title
51 is amended and the section is amended by adding a subsection
to read:
§ 7306. Retirement rights.
(a) Options available to employees.--Any employee who is a
member of a retirement system other than an active member or
inactive member on leave without pay of the State Employees'
Retirement System [or], an active participant or inactive
participant on leave without pay of the State Employees' Defined
Contribution Plan, an active or inactive member of the Public
School Employees' Retirement System or an active or inactive
participant of the School Employees' Defined Contribution Plan
at the time he is granted a military leave of absence shall be
entitled to exercise any one of the following options in regard
thereto:
* * *
(f) Participant of a defined contribution plan.--
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(1) An employee who is an active or inactive participant
of the School Employees' Defined Contribution Plan at the
time the employee is granted a military leave of absence
shall be entitled to make contributions to the Public School
Employees' Defined Contribution Trust for the leave as
provided in 24 Pa.C.S. Pt. IV (relating to retirement for
school employees).
(2) An employee who is an active participant or inactive
participant on leave without pay of the State Employees'
Defined Contribution Plan at the time he is granted a
military leave of absence shall be entitled to make
contributions to the State Employees' Defined Contribution
Trust for the leave as provided in 71 Pa.C.S. Pt. XXV
(relating to retirement for State employees and officers).
ARTICLE III
Section 301. Section 4104(a)(7) of Title 71 is amended to
read:
§ 4104. Duties of office.
(a) Mandatory.--The office shall:
* * *
(7) Study and analyze the impact of shared-risk
contributions under 24 Pa.C.S. § 8321(b) (relating to regular
member contributions for current service) and section 5501.1
(relating to shared-risk member contributions for Class A-3
[and], Class A-4 and Class A-5 service).
* * *
Section 302. The definitions of "active member," "alternate
payee," "average noncovered salary," "beneficiary," "class of
service multiplier," "compensation," "creditable nonstate
service," "credited service," "date of termination of service,"
"distribution," "domestic relations order," "final average
salary," "inactive member," "intervening military service,"
"irrevocable beneficiary," "member's annuity," "reemployed from
USERRA leave," "regular membership contributions," "required
beginning date," "retirement counselor," "salary deductions,"
"shared-risk member contributions," "special vestee," "standard
single life annuity," "State employee," "superannuation age,"
"superannuation score," "total accumulated deductions,"
"valuation interest" and "vestee" in section 5102 of Title 71,
amended or added December 28, 2015 (P.L.529, No.93), are amended
and the section is amended by adding definitions to read:
§ 5102. Definitions.
The following words and phrases as used in this part, unless
a different meaning is plainly required by the context, shall
have the following meanings:
* * *
"Accumulated employer defined contributions." The total of
the employer defined contributions paid into the trust on
account of a participant's State service, together with any
investment earnings and losses and adjustment for fees, costs
and expenses credited or charged thereon.
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"Accumulated mandatory participant contributions." The total
of the mandatory pickup participant contributions paid into the
trust on account of a participant's State service, together with
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 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 adjustment for fees, costs
and expenses credited or charged thereon.
"Active member." A State employee, or a member on leave
without pay, for whom pickup contributions are being made to the
fund or for whom such contributions otherwise required for
current State service are not being made solely by reason of
section 5502.1 (relating to waiver of regular member
contributions and Social Security integration member
contributions) or 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 limitations on contributions to the system
applicable to a Class A-5 member who is making mandatory pickup
participant contributions to the trust.
"Active participant." A State employee for whom mandatory
pickup participant contributions are being made to the trust or
for whom such contributions otherwise required for State service
required to be credited in the plan 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).
* * *
"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.
* * *
"Average noncovered salary." The average of the amounts of
compensation received by an active member, other than
compensation attributable to service as a Class A-5 member, each
calendar year since January 1, 1956, exclusive of the amount
which was or could have been covered by the Federal Social
Security Act[, 42 U.S.C. § 301 et seq.] (42 U.S.C. § 301 et
seq.), during that portion of the member's service since January
1, 1956, for which he has received social security integration
credit.
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* * *
"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
persons last designated in writing to the board by the
participant to receive the participant's vested accumulated
total defined contributions or a lump sum benefit upon the death
of the participant.
* * *
"Class A-5 accumulated deductions." The sum of the regular
accumulated deductions, shared-risk member contributions and all
other contributions paid into the fund for the purchase,
transfer or conversion of credit for service or other coverage
in Class A-5 together with all statutory interest credited
thereon until the date of termination of service. In the case of
a vestee, statutory interest shall be credited until the
effective date of retirement. A member's account shall not be
credited with statutory interest for more than two years during
a leave without pay.
"Class A-5 annual compensation limit." For calendar year
2018, the amount of $50,000. For each subsequent calendar year,
the limit shall be 3% greater than the previous year's amount,
rounded to the nearest hundred dollars.
"Class A-5 exempt employee." A sworn police officer.
"Class of service multiplier."
Class of Service Multiplier
A 1
AA
for all purposes
except
calculating
regular member
contributions on
compensation
paid prior to
January 1, 2002 1.25
AA
for purposes of
calculating
regular member
contributions
on compensation
paid prior to
January 1, 2002 1
A-3
for all purposes
except the
calculation of
regular member
contributions
and
contributions
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41
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49
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for creditable
nonstate service 1
A-3
for purposes of
calculating
regular member
contributions
and
contributions
for creditable
nonstate service 1.25
A-4
for all purposes
except the
calculation of
regular member
contributions 1.25
A-4
for purposes of
calculating
regular member
contributions 1.86
A-5 for all purposes
except the
calculation of
regular member
contributions 1
A-5 for purposes of
calculating
regular member
contributions on
compensation up
to the Class A-5
annual
compensation
limit for
members who have
less than 25
eligibility
points credited
as a member of
Class A-5 or, if
a multiple
service member,
as a member of
Class T-G in the
Public School
Employees'
Retirement
System 1.2
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A-5 for purposes of
calculating
regular member
contributions on
compensation
over the Class
A-5 annual
compensation
limit or for
members who have
25 or more
eligibility
points credited
as a member of
Class A-5 or, if
a multiple
service member,
as a member of
Class T-G in the
Public School
Employees'
Retirement
System 0
B .625
C 1
D 1.25
D-1
prior to January
1, 1973 1.875
D-1
on and
subsequent to
January 1, 1973 1.731
D-2
prior to January
1, 1973 2.5
D-2
on and
subsequent to
January 1, 1973 1.731
D-3
prior to January
1, 1973 3.75
D-3
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
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3.75
D-4
for all purposes
except
calculating
regular member
contributions
on compensation
paid prior to
July 1, 2001 1.5
D-4
for purposes of
calculating
regular member
contributions on
compensation
paid prior to
July 1, 2001 1
E, E-1
prior to January
1, 1973 2 for each of the
first ten years
of judicial
service, and
1.5 for each
subsequent year
of judicial
service
E, E-1 on and
subsequent to
January 1, 1973 1.50 for each of the
first ten years
of judicial
service and
1.125 for each
subsequent year
of judicial
service
E-2 prior to
September 1,
1973 1.5
E-2
on and
subsequent to
September 1,
1973 1.125
G 0.417
H 0.500
I 0.625
J 0.714
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K 0.834
L 1.000
M 1.100
N 1.250
T-C (Public School
Employees'
Retirement Code)
1
T-E (Public School
Employees'
Retirement Code)
1
T-F (Public School
Employees'
Retirement Code)
1
T-G (Public School
Employees' Retirement
Code)
1
* * *
"Compensation." Pickup contributions and mandatory pickup
participant contributions plus remuneration actually received as
a State employee excluding refunds for expenses, contingency and
accountable expense allowances; excluding any severance payments
or payments for unused vacation or sick leave; and 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) 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[:]; and for a
member who first becomes an officer of the State police on or
after January 1, 2018, excluding remuneration received in any
pay period for voluntary overtime service for service as an
officer of the State police that exceeds 10% of the member's
base salary as an officer of the State police in that pay
period , notwithstanding the provisions of a binding arbitration
award issued before July 1, 1989, under the act of June 24, 1968
(P.L.237, No.111), referred to as the Policemen and Firemen
Collective Bargaining Act, and implemented by the board:
Provided, however, That compensation received prior to January
1, 1973, shall be subject to the limitations for retirement
purposes in effect December 31, 1972, if any: Provided further,
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 any additional member contributions in addition to
regular or joint coverage member contributions and Social
Security integration contributions, regardless of class of
service, shall apply to each member who first became a member of
the State Employees' Retirement System on or after January 1,
1996, and who by reason of such fact is a noneligible member
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subject to the application of the provisions of section
5506.1(a) (relating to annual compensation limit under IRC §
401(a)(17)) and shall apply to each participant pertaining to
his participation in the plan.
* * *
"Creditable nonstate service." Service for which an active
member may obtain credit in the system, other than:
(1) service as a State employee;
(2) service converted to State service pursuant to
section 5303.1 (relating to election to convert county
service to State service); or
(3) school service converted to State service pursuant
to section 5303.2 (relating to election to convert school
service to State service) [for which an active member may
obtain credit].
"Credited service." State or creditable nonstate 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 section 5502.1 (relating to
waiver of regular member contributions and Social Security
integration member contributions) or 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 limitations on contributions to the
system applicable to a Class A-5 member who is making mandatory
pickup participant contributions to the trust, except as
otherwise provided in this part, or for which salary deductions
or lump sum payments to the system have been agreed upon in
writing.
"Date of termination of service." The latest of the
following dates:
(1) the last 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 section 5502.1 (relating to waiver
of regular member contributions and social security
integration member contributions) or 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 limitations on
contributions to the system applicable to a Class A-5 member;
(2) the last day of service for which mandatory pickup
participant contributions are made for an active participant;
or
(3) in the case of an inactive member on leave without
pay or an inactive participant on leave without pay, the date
of his resignation or the date his employment is formally
discontinued by his employer.
* * *
"Distribution." Payment of all or any portion of a person's
interest in either the State Employees' Retirement Fund or the
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State 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).
* * *
"Employer defined contributions." Contributions that are
made by the Commonwealth or other employer to the trust to be
credited in an active participant's individual investment
account as follows:
(1) Except as provided under paragraph (2),
contributions equal to 4% of an active participant's
compensation.
(2) For participants who have less than 25 eligibility
points credited as a member of Class A-5 or, if a multiple
service member, in Class T-G in the Public School Employees'
Retirement System, contributions equal to 0.5% of an active
participant's compensation up to the Class A-5 annual
compensation limit and for other compensation contributions
as set forth in paragraph (1).
* * *
"Final average salary." [The] As follows:
(1) For purposes of calculating all annuities and
benefits from the system attributable to a class of service
other than Class A-5, the highest average compensation
received as a member during any three nonoverlapping periods
of four consecutive calendar quarters during which the member
was a State employee, excluding compensation received from
State service credited as a member of Class A-5, with the
compensation for part-time service being annualized on the
basis of the fractional portion of the year for which credit
is received; except if the employee was not a member in
classes of service other than Class A-5 for three
nonoverlapping periods of four consecutive calendar quarters,
the total compensation received as a member for State service
credited other than as a member of Class A-5, annualized in
the case of part-time service, divided by the number of
nonoverlapping periods of four consecutive calendar quarters
of membership in classes of service other than Class A-5; in
the case of a member with multiple service, the final average
salary for purposes of calculating all annuities and benefits
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from the system attributable to a class of service other than
Class A-5 shall be determined on the basis of the
compensation received by him as a [State employee] member of
the system or as a school employee, or both[;], excluding
compensation received for service performed as a member of
Class A-5 or Class T-G in the Public School Employees'
Retirement System; and, in the case of a member with Class A-
3 or Class A-4 service and service in one or more other
classes of service other than Class A-5, the final average
salary shall be determined on the basis of the compensation
received by him in all classes of State service[; and] other
than Class A-5.
(2) For purposes of calculating all annuities and
benefits from the system attributable to service as a member
of Class A-5, the highest average compensation received for
service as a member of Class A-5 during any five calendar
years; except, if the employee was not a member of Class A-5
during five calendar years, the total compensation received
as a member of Class A-5, divided by the number of calendar
years of membership in Class A-5; in the case of a member
with multiple service, the final average salary for purposes
of calculating all annuities and benefits from the system
attributable to Class A-5 service shall be determined on the
basis of the compensation received by him as a State employee
for service credited Class A-5 or as a school employee for
service credited in Class T-G in the Public School Employees'
Retirement System, or both. For the purpose of calculating
final average salary under the paragraph, compensation for
service as a member of Class A-5 shall be adjusted as set
forth in section 5506.2 (relating to application of Class A-5
annual compensation limit).
(3) For all members, in the case of a member who first
became a member on or after January 1, 1996, the final
average salary shall be determined as hereinabove provided
but subject to the application of the provisions of section
5506.1(a) (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 5302(f)
(2) (relating to credited State 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 5302(f)(6).
* * *
"Holding vehicle trust." The State Employees' Defined
Contribution Holding Vehicle Trust.
"Inactive member." A member for whom no pickup contributions
are being made to the fund, except in the case of an active
member for whom such contributions otherwise required for
current State service are not being made solely by reason of
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section 5502.1 (relating to waiver of regular member
contributions and Social Security integration member
contributions) or 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 limitations on contributions to the system applicable
to a Class A-5 member who is making mandatory pickup participant
contributions to the trust, but who has accumulated deductions
standing to his credit in the fund and who is not eligible to
become or has not elected to become a vestee or has not filed an
application for an annuity.
"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 State 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), but who has vested accumulated total defined
contributions standing to his credit in the trust and who has
not filed an application for an annuity.
"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 interest and
investment earnings after deduction for fees, costs, expenses
and investment losses and charges for distributions.
"Intervening military service." Active military service of a
member who was a State employee and active member of the system
immediately preceding his induction into the armed services or
forces of the United States in order to meet a military
obligation excluding any voluntary extension of such service and
who becomes a State employee within 90 days of the expiration of
such service.
* * *
"Irrevocable beneficiary." The person or persons permanently
designated by a member or participant in writing to the State
Employees' Retirement 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 by a participant receiving distributions in writing
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.
* * *
"Mandatory pickup participant contributions." Contributions
that are made by the Commonwealth or other employer for active
participants for State service required to be credited in the
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plan as follows:
(1) Except as provided under paragraph (2),
contributions equal to 7.5% of compensation.
(2) For participants who have less than 25 eligibility
points credited as a member of Class A-5 or, if a multiple
service member, in Class T-G in the Public School Employees'
Retirement System, contributions equal to 1.5% of an active
participant's compensation for State service required to be
credited in the plan up to the Class A-5 annual compensation
limit and for other compensation contributions as set forth
in paragraph (1).
* * *
"Member's annuity." The single life annuity which is
actuarially equivalent, at the effective date of retirement and
taking into account any delay in the receipt of the portion of
the annuity based on Class A-5 service, if the effective date of
retirement is under the superannuation age applicable to Class
A-5 service, to the sum of the regular accumulated deductions,
shared-risk accumulated deductions, the additional accumulated
deductions and the social security integration accumulated
deductions standing to the member's credit in the members'
savings account.
* * *
"Participant." An active participant, inactive participant
or participant receiving distributions.
"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.
* * *
"Plan." The State Employees' Defined Contribution Plan as
established by the provisions of this part and the board.
"Plan document." The documents created by the board under
section 5802 (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.
* * *
"Reemployed from USERRA leave." Resumption of active
membership or active participation as a State employee after a
period of USERRA leave, provided, however, that the resumption
of active membership or active participation was within the time
period and under conditions and circumstances such that the
State employee was 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, the class of service multiplier [if greater
than one] and the compensation of the member.
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"Required beginning date." The latest date by which
distributions of a member's interest or a participant's interest
in his individual investment account must commence under section
401(a)(9) of the Internal Revenue Code of 1986 (Public Law 99-
514, 26 U.S.C. § 401(a)(9)).
"Retirement counselor." The State Employees' Retirement
System or State Employees' Defined Contribution Plan employee
whose duty it shall be to advise each employee of his rights and
duties as a member of the system or as a participant of the
plan.
"Salary deductions." The amounts certified by the board,
deducted from the compensation of an active member or active
participant, or the school service compensation of a multiple
service member who is an active member of the Public School
Employees' Retirement System, and paid into the fund or trust.
"School Employees' Defined Contribution Plan." The defined
contribution plan for school employees established under 24
Pa.C.S. Pt. IV (relating to retirement for school employees).
* * *
"Shared-risk member contributions." The product of the
applicable shared-risk contribution rate and the compensation of
a member for service credited as Class A-3 or Class A-4 or the
compensation of a member up to the Class A-5 annual compensation
limit for service credited as Class A-5.
* * *
"Special vestee." An employee of The Pennsylvania State
University who is a member of the State Employees' Retirement
System with five or more but less than ten eligibility points
and who has a date of termination of service from The
Pennsylvania State University of June 30, 1997, because of the
transfer of his job position or duties to a controlled
organization of the Penn State Geisinger Health System or
because of the elimination of his job position or duties due to
the transfer of other job positions or duties to a controlled
organization of the Penn State Geisinger Health System, provided
that:
(1) subsequent to termination of State service as an
employee of The Pennsylvania State University, the member has
not returned to State service in any other capacity or
position as a State employee;
(2) The Pennsylvania State University certifies to the
board that the member is eligible to be a special vestee;
(3) the member files an application to vest the member's
retirement rights under section 5907(f) (relating to rights
and duties of State employees [and], members and
participants) on or before September 30, 1997; and
(4) the member elects to leave the member's total
accumulated deductions in the fund and to defer receipt of an
annuity until attainment of superannuation age or the
member's required beginning date.
"Standard single life annuity." An annuity equal to 2% of
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the final average salary, multiplied by the total number of
years and fractional part of a year of credited service of a
member in each class service, limited in the case of Class A-5
service to 25 years.
"State employee." Any person holding a State office or
position under the Commonwealth, employed by the State
Government of the Commonwealth, in any capacity whatsoever,
except an independent contractor or any person compensated on a
fee basis or any person paid directly by an entity other than a
State Employees' Retirement System employer, and shall include
members of the General Assembly, and any officer or employee of
the following:
(1) (i) The Department of Education.
(ii) State-owned educational institutions.
(iii) Community colleges.
(iv) The Pennsylvania State University, except an
employee in the College of Agriculture who is paid wholly
from Federal funds or an employee who is participating in
the Federal Civil Service Retirement System. The
university shall be totally responsible for all employer
contributions under section 5507 (relating to
contributions to the system by the Commonwealth and other
employers).
(2) The Pennsylvania Turnpike Commission, the Delaware
River Port Authority, the Port Authority Transit Corporation,
the Philadelphia Regional Port Authority, the Delaware River
Joint Toll Bridge Commission, the State Public School
Building Authority, The General State Authority, the State
Highway and Bridge Authority, the Delaware Valley Regional
Planning Commission, the Interstate Commission of the
Delaware River Basin, and the Susquehanna River Basin
Commission any time subsequent to its creation, provided the
commission or authority agrees to contribute and does
contribute to the fund or trust, from time to time, the
moneys required to build up the reserves necessary for the
payment of the annuities or other benefits of such officers
and employees without any liability on the part of the
Commonwealth to make appropriations for such purposes, and
provided in the case of employees of the Interstate
Commission of the Delaware River Basin, that the employee
shall have been a member of the system for at least ten years
prior to January 1, 1963.
(3) Any separate independent public corporation created
by statute, not including any municipal or quasi-municipal
corporation, so long as he remains an officer or employee of
such public corporation, and provided that such officer or
employee of such public corporation was an employee of the
Commonwealth immediately prior to his employment by such
corporation, and further provided such public corporation
shall agree to contribute and contributes to the fund or
trust, from time to time, the moneys required to build up the
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reserves necessary for the payment of the annuities or other
benefits of such officers and employees without any liability
on the part of the Commonwealth to make appropriations for
such purposes.
* * *
"Successor payee." The person or persons last designated in
writing to the board by a participant receiving distributions to
receive one or more distributions upon the death of the
participant.
"Superannuation age." For classes of service in the system
other than Class A-3 [and], Class A-4 and Class A-5, any age
upon accrual of 35 eligibility points or age 60, except for a
member of the General Assembly, an enforcement officer, a
correction officer, a psychiatric security aide, a Delaware
River Port Authority policeman or an officer of the Pennsylvania
State Police, age 50, and, except for a member with Class G,
Class H, Class I, Class J, Class K, Class L, Class M or Class N
service, age 55 upon accrual of 20 eligibility points. For Class
A-3 [and], Class A-4 and Class A-5 service, any age upon
attainment of a superannuation score of 92 , provided the member
has accrued 35 eligibility points, or age 65, or for park
rangers or capitol police officers, age 55 with 20 years of
service as a park ranger or capitol police officer in classes of
service other than Class A-5, except for a member of the General
Assembly, an enforcement officer, a correction officer, a
psychiatric security aide, a Delaware River Port Authority
policeman or an officer of the Pennsylvania State Police, age
55. A vestee with Class A-3 [or], Class A-4 or Class A-5 service
credit attains superannuation age on the birthday the vestee
attains the age resulting in a superannuation score of 92,
provided that the vestee has at least 35 eligibility points, or
attains another applicable superannuation age, whichever occurs
first.
* * *
"Superannuation score." The sum of the member's age in whole
years on his last birthday and the amount of the member's total
eligibility points, other than eligibility points resulting from
Class A-5 service credit or, if a multiple service member, in
Class T-G on the member's effective date of retirement,
expressed in whole years and whole eligibility points and
disregarding fractions of a year and fractions of total
eligibility points.
"Sworn police officer." A State police officer who is
employed and serving as an officer of the Pennsylvania State
Police.
* * *
"Total accumulated deductions." The sum of the regular
accumulated deductions, additional accumulated deductions, the
social security integration accumulated deductions, shared-risk
member contributions and all other contributions other than
Class A-5 accumulated deductions paid into the fund for the
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purchase, transfer or conversion of credit for service or other
coverage other than service or coverage in Class A-5 together
with all statutory interest credited thereon until the date of
termination of service. In the case of a vestee or a special
vestee, statutory interest shall be credited until the effective
date of retirement. A member's account shall not be credited
with statutory interest for more than two years during a leave
without pay.
"Trust." The State Employees' Defined Contribution Trust
established under Chapter 58 (relating to State Employees'
Defined Contribution Plan).
* * *
"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." Any of the following:
(1) A member with:
(i) five or more eligibility points in a class of
service other than Class A-3 [or], Class A-4, Class A-5
or Class T-E [or], Class T-F or Class T-G in the Public
School Employees' Retirement System[, a member with];
(ii) Class G, Class H, Class I, Class J, Class K,
Class L, Class M or Class N service with five or more
eligibility points [, or a member with] in classes of
service other than Class A-5 or Class T-G in the Public
School Employees' Retirement System ; or
(iii) Class A-3 or Class A-4 service with ten or
more eligibility points in classes of service other than
Class A-5 or Class T-G in the Public School Employees'
Retirement System ; or
(iv) Class A-5 service with ten or more eligibility
points for service in Class A-5 or, if a multiple service
member , Class T-G service in the Public School Employees'
Retirement System and
who has terminated State service and has elected to leave his
total accumulated deductions in the fund and to defer receipt
of an 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 by an eligible rollover or direct trustee-to-
trustee transfer.
Section 303. Section 5103 of Title 71 is amended to read:
§ 5103. Notice to members and participants.
Notice by publication, including, without being limited to,
newsletters, newspapers, forms, first class mail, letters,
manuals and, to the extent authorized by a policy adopted by the
board, electronically, including, without being limited to, e-
mail or [World Wide Web sites] Internet websites, distributed or
made available to members and participants in a manner
reasonably calculated to give actual notice of [those sections
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of the State Employees' Retirement Code] the provisions of this
part that require notice to members or participants shall be
deemed sufficient notice for all purposes.
Section 304. Title 71 is amended by adding a section to
read:
§ 5104. Reference to State Employees' Retirement System.
(a) Construction.--Unless the context clearly indicates
otherwise, any reference to the State Employees' Retirement
System in a statutory provision other than this part and 24
Pa.C.S. Pt. IV (relating to retirement for school employees)
shall include a reference to the State Employees' Defined
Contribution Plan and any reference to the State Employees'
Retirement Fund shall include a reference to the State
Employees' Defined Contribution Trust.
(b) Agreement.--The agreement of an employer listed in the
definition of "State employee" or any other law to make
contributions to the fund or to enroll its employees as members
in the system shall be deemed to be an agreement to make
contributions to the trust or to enroll its employees in the
plan.
Section 305. Section 5301(a), (b), (c) and (d) of Title 71
are amended and the section is amended by adding subsections to
read:
§ 5301. Mandatory and optional membership in the system and
participation in the plan.
(a) Mandatory membership.--Membership in the system shall be
mandatory as of the effective date of employment for all State
employees except the following:
(1) Governor.
(2) Lieutenant Governor.
(3) Members of the General Assembly.
(4) Heads or deputy heads of administrative departments.
(5) Members of any independent administrative board or
commission.
(6) Members of any departmental board or commission.
(7) Members of any advisory board or commission.
(8) Secretary to the Governor.
(9) Budget Secretary.
(10) Legislative employees.
(11) School employees who have elected membership in the
Public School Employees' Retirement System.
(12) School employees who have elected membership in an
independent retirement program approved by the employer,
provided that in no case, except as hereinafter provided,
shall the employer contribute on account of such elected
membership at a rate greater than the employer normal
contribution rate as determined in section 5508(b) (relating
to actuarial cost method). For the fiscal year 1986-1987 an
employer may contribute on account of such elected membership
at a rate which is the greater of 7% or the employer normal
contribution rate as determined in section 5508(b) and for
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the fiscal year 1992-1993 and all years after that at a rate
of 9.29%.
(13) Persons who have elected to retain membership in
the retirement system of the political subdivision by which
they were employed prior to becoming eligible for membership
in the State Employees' Retirement System.
(14) Persons who are not members of the system and are
employed on a per diem or hourly basis for less than 100 days
or 750 hours in a [12-month period] calendar year.
(15) Employees of the Philadelphia Regional Port
Authority who have elected to retain membership in the
pension plan or retirement system in which they were enrolled
as employees of the predecessor Philadelphia Port Corporation
prior to the creation of the Philadelphia Regional Port
Authority.
(16) Employees of the Juvenile Court Judges' Commission
who, before the effective date of this paragraph, were
transferred from the State System of Higher Education to the
Juvenile Court Judges' Commission as a result of an
interagency transfer of staff approved by the Office of
Administration and who, while employees of the State System
of Higher Education, had elected membership in an independent
retirement program approved by the employer.
(a.1) Mandatory participation in the plan.--A State employee
who is a mandatory member of the system as a member of Class A-5
shall be a mandatory participant in the plan as of the effective
date of membership in the system except for service as a Class
A-5 exempt employee.
(b) Optional membership in the system.--The State employees
listed in subsection (a)(1) through [(11)] (10) whose first
period of State service begins before January 1, 2018, shall
have the right to elect membership in the system[; once such
election is] before January 1, 2018, or the termination of State
service, whichever occurs first. The State employees listed in
subsection (a)(1) through (10) who first become State employees
on or after January 1, 2018, shall be members of the system
effective as of the date of their employment unless they elect
not to be members within 30 days after beginning State service.
Once such elections are exercised, membership or nonmembership,
as the case may be, shall continue until the termination of
State service. The State employees listed under subsection (a)
(11) shall have the right to elect membership in the system.
Once the election is exercised, membership shall continue until
the termination of State service.
(b.1) Optional participation in the plan.--The State
employees who are optional members of the system as a member of
Class A-5 also are optional participants in the plan. The State
employees who elect membership in the system as members of Class
A-5 also automatically elect participation in the plan as of the
effective date of membership in the system except for service as
a Class A-5 exempt employee.
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(c) Prohibited membership in the system.--The State
employees listed in subsection (a)(12), (13), (14) and (15)
shall not have the right to elect membership in the system.
(c.1) Prohibited participation in the plan.--The State
employees who are listed in subsection (a)(11), (12), (13), (14)
and (15) or who are not members of Class A-5 shall not be
eligible to participate in the plan.
(d) Return to service.--
(1) An annuitant who returns to service as a State
employee before January 1, 2018, or as a Class A-5 exempt
employee after December 31, 2017, shall resume active
membership in the system as of the effective date of
employment, except as otherwise provided in section 5706(a)
(relating to termination of annuities), regardless of the
optional membership category of the position.
(2) An annuitant, inactive participant or a participant
receiving distributions who returns to service as a State
employee on or after January 1, 2018, shall resume active
membership in the system, if an active member of Class A-5
shall, and be an active participant in the plan as of the
effective date of employment, except as otherwise provided in
section 5706(a), regardless of the optional membership or
participation category of the position.
* * *
Section 306. Section 5302(a), (b), (e) and (f) of Title 71,
amended December 28, 2015 (P.L.529, No.93), are amended to read:
§ 5302. Credited State service.
(a) Computation of credited service.--In computing credited
State service of a member for the determination of benefits, a
full-time salaried State employee, including any member of the
General Assembly, shall receive credit for service in each
period for which contributions as required are made to the fund,
or for which contributions otherwise required for such service
were not made to the fund solely by reason of section 5502.1
(relating to waiver of regular member contributions and Social
Security integration member contributions) or any provision of
this part relating to the limitations under IRC § 401(a)(17) or
415, or limitations on contributions applicable to a Class A-5
member, except as otherwise provided in this part, but in no
case shall he receive more than one year's credit for any 12
consecutive months or 26 consecutive biweekly pay periods. A per
diem or hourly State employee shall receive one year of credited
service for each nonoverlapping period of 12 consecutive months
or 26 consecutive biweekly pay periods in which he is employed
and for which contributions are made to the fund or would have
been made to the fund but for such waiver under section 5502.1
or limitations under the IRC or limitations on contributions
applicable to a Class A-5 member for at least 220 days or 1,650
hours of employment. If the member was employed and
contributions were made to the fund for less than 220 days or
1,650 hours, he shall be credited with a fractional portion of a
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year determined by the ratio of the number of days or hours of
service actually rendered to 220 days or 1,650 hours, as the
case may be. A part-time salaried employee shall be credited
with the fractional portion of the year which corresponds to the
number of hours or days of service actually rendered and for
which contributions are or would have been made to the fund
except for the waiver under section 5502.1, limitations under
the IRC or limitations on contributions applicable to a Class A-
5 member in relation to 1,650 hours or 220 days, as the case may
be. In no case shall a member who has elected multiple service
receive an aggregate in the two systems of more than one year of
credited service for any 12 consecutive months.
(b) Creditable leaves of absence.--
(1) A member on leave without pay who is studying under
a Federal grant approved by the head of his department or who
is engaged up to a maximum of two years of temporary service
with the United States Government, another state or a local
government under the Intergovernmental Personnel Act of 1970
(5 U.S.C. §§ 1304, 3371-3376; 42 U.S.C. §§ 4701-4772) shall
be eligible for credit for such service: Provided, That
contributions are made in accordance with sections 5501
(relating to regular member contributions for current
service), 5501.1 (relating to shared-risk member
contributions for Class A-3 [and], Class A-4 and Class A-5
service), 5505.1 (relating to additional member
contributions) and 5507 (relating to contributions to the
system by the Commonwealth and other employers), the member
returns from leave without pay to active State service as a
member of the system for a period of at least one year, and
he is not entitled to retirement benefits for such service
under a retirement system administered by any other
governmental agency.
(2) An active member or active participant on paid leave
granted by an employer for purposes of serving as an elected
full-time officer for a Statewide employee organization which
is a collective bargaining representative under the act of
June 24, 1968 (P.L.237, No.111), referred to as the Policemen
and Firemen Collective Bargaining Act, or the act of July 23,
1970 (P.L.563, No.195), known as the Public Employe Relations
Act, and up to 14 full-time business agents appointed by an
employee organization that represents correction officers
employed at State correctional institutions: Provided, That
for elected full-time officers such leave shall not be for
more than three consecutive terms of the same office and for
up to 14 full-time business agents appointed by an employee
organization that represents correction officers employed at
State correctional institutions no more than three
consecutive terms of the same office; that the employer shall
fully compensate the member or participant, including, but
not limited to, salary, wages, pension and retirement
contributions and benefits, other benefits and seniority, as
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if he were in full-time active service; and that the
Statewide employee organization shall fully reimburse the
employer for all expenses and costs of such paid leave,
including, but not limited to, contributions and payment in
accordance with sections 5501, 5501.1, 5505.1 and 5507, 5804
(relating to participant contributions), 5805 (relating to
mandatory pickup participant contributions) and 5806
(relating to employer defined contributions), if the employee
organization either directly pays, or reimburses the
Commonwealth or other employer for, contributions made in
accordance with [section 5507] sections 5507, 5804, 5805 and
5806.
* * *
(e) Cancellation of credited service.--
(1) All credited service in the system shall be
cancelled if a member withdraws his total accumulated
deductions and Class A-5 accumulated deductions, except that:
(i) a member with Class A-3 or Class A-4 service
credit and one or more other classes of service credit
shall not have his service credit as a member of any
classes of service other than as a member of Class A-3 or
Class A-4 cancelled when the member receives a lump sum
payment of accumulated deductions resulting from Class A-
3 or Class A-4 service pursuant to section [5705.1]
5705.1(a) (relating to payment of accumulated deductions
resulting from [Class A-3 and Class A-4] more than one
class of service)[.];
(ii) a member with Class A-5 service credit and one
or more other classes of service credit shall not have
his service credit in the classes of service other than
Class A-5 canceled when the member receives a lump sum
payment of Class A-5 accumulated deductions pursuant to
section 5705.1(b)(1); and
(iii) a member with Class A-5 service credit and one
or more other classes of service credit shall not have
his service credit as a member of Class A-5 canceled when
the member receives a lump sum payment of total
accumulated deductions resulting from the other classes
of service pursuant to section 5705.1(b)(2).
(2) A partial or total distribution of accumulated total
defined contributions to a participant who also is a member
shall not cancel service credited in the system.
(f) Credit for military service.--A State employee who has
performed USERRA leave may receive credit in the system or
participate in the plan as follows:
(1) For purposes of determining whether a member is
eligible to receive credited service in the system for a
period of active military service, other than active duty
service to meet periodic training requirements, rendered
after August 5, 1991, and that began before the effective
date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73
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(relating to military leave of absence) shall apply to all
individuals who were active members of the system when the
period of military service began, even if not defined as an
employee pursuant to 51 Pa.C.S. § 7301 (relating to
definitions).
(1.1) State employees may not receive service credit in
the system or exercise the options under 51 Pa.C.S. § 7306
(relating to retirement rights) for military leaves that
begin on or after the effective date of this subsection,
except as otherwise provided by this subsection.
(1.2) State employees may not participate in the plan or
exercise the options under 51 Pa.C.S. § 7306 for military
leaves that begin on or after the effective date of this
paragraph, except as otherwise provided by this subsection.
(2) A State employee who has performed USERRA leave may
receive credit in the system as provided by this paragraph.
The following shall apply:
(i) A State employee who is reemployed from USERRA
leave as an active member of the system shall be treated
as not having incurred a break in State service by reason
of the USERRA leave and shall be granted eligibility
points as if the State employee had not been on the
USERRA leave. If a State employee who is reemployed from
USERRA leave as an active member of the system
subsequently makes regular member contributions,
additional member contributions, Social Security
integration member contributions, shared-risk member
contributions and any other member contributions in the
amounts and in the time periods required by 38 U.S.C. Ch.
43 (relating to employment and reemployment rights of
members of the uniformed services) and IRC § 414(u) as if
the State employee had continued in State office or
employment and performed State service and was
compensated during the period of USERRA leave, then the
State employee shall be granted State service credit for
the period of USERRA leave. The State employee shall have
the State employee's benefits, rights and obligations
determined under this part as if the State employee was
an active member who performed creditable State service
during the USERRA leave in the job position that the
State employee would have held had the State employee not
been on USERRA leave and received the compensation on
which the member contributions to receive State service
credit for the USERRA leave were determined.
(ii) For purposes of determining whether a State
employee has made the required employee contributions for
State service credit for USERRA leave, if an employee who
is reemployed from USERRA leave as an active member of
the system terminates State service or dies in State
service before the expiration of the allowed payment
period, then State service credit for the USERRA leave
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will be granted as if the required member contributions
were paid the day before termination or death. The amount
of the required member contributions will be treated as
an incomplete payment subject to the provisions of
section 5506 (relating to incomplete payments). Upon a
subsequent return to State service or to school service
as a multiple service member, the required member
contributions treated as incomplete payments shall be
treated as member contributions that were either
withdrawn in a lump sum at termination or paid as a lump
sum pursuant to section 5705(a)(4) (relating to member's
options), as the case may be.
(iii) A State employee who is reemployed from USERRA
leave as an active member of the system who does not make
the required member contributions or makes only part of
the required member contributions within the allowed
payment period shall not be granted credited service for
the period of USERRA leave for which the required member
contributions were not timely made, shall not be eligible
to subsequently make contributions and shall not be
granted either State service credit or nonstate service
credit for the period of USERRA leave for which the
required member contributions were not timely made.
(2.1) (i) A participant who is reemployed from USERRA
leave shall be treated as not having incurred a break in
State service by reason of the USERRA leave and shall be
granted eligibility points as if the participant had not
been on USERRA leave. If a participant who is reemployed
from USERRA leave subsequently makes mandatory pickup
participant contributions in the amounts and in the time
periods required by 38 U.S.C. Ch. 43 and IRC § 414(u) as
if the participant had continued in his State office or
employment and performed State service and been
compensated during the period of USERRA leave, the
participant's employer shall make the corresponding
employer defined contributions. The employee shall have
his contributions, benefits, rights and obligations
determined under this part as if he were an active
participant who performed State service during the USERRA
leave in the job position that he would have held had he
not been on USERRA leave and received the compensation on
which the mandatory pickup participant contributions to
receive State service credit for the USERRA leave were
determined.
(ii) A participant who is reemployed from USERRA
leave who does not make the mandatory pickup participant
contributions or makes only part of the mandatory pickup
participant contributions within the allowed payment
period shall not be eligible to make mandatory pickup
participant contributions at a later date for the period
of USERRA leave for which the mandatory pickup
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participant contributions were not timely made.
(3) A State employee who is a member of the system and
performs USERRA leave from which the employee could have been
reemployed from USERRA leave had the State employee returned
to State service in the time frames required by 38 U.S.C. Ch.
43 for reemployment rights, but did not do so, shall be able
to receive creditable nonstate service as nonintervening
military service for the period of USERRA leave should the
employee later return to State service as an active member of
the system and is otherwise eligible to purchase the service
as nonintervening military service.
(3.1) A State employee who is a participant in the plan
and performs USERRA leave from which the employee could have
been reemployed from USERRA leave had the employee returned
to State service in the time frames required by 38 U.S.C. Ch.
43 for reemployment rights, but did not do so, shall not be
eligible to make mandatory pickup participant contributions
for the period of USERRA leave should the employee later
return to State service and be a participant in the plan.
(4) [A State employee] An active member or inactive
member on leave without pay who on or after the effective
date of this subsection is granted a leave of absence under
51 Pa.C.S. § 4102 (relating to leaves of absence for certain
government employees) or a military leave under 51 Pa.C.S.
Ch. 73, that is not USERRA leave shall be able to receive
creditable nonstate service as nonintervening military
service should the employee return to State service as an
active member of the system and is otherwise eligible to
purchase the service as nonintervening military service.
(4.1) An active participant or inactive participant on
leave without pay who on or after the effective date of this
paragraph is granted a leave of absence under 51 Pa.C.S. §
4102 or a military leave under 51 Pa.C.S. Ch. 73 that is not
USERRA leave shall not be able to make mandatory pickup
participant contributions during or for the leave of absence
or military leave and shall not have employer defined
contributions made during such leave, without regard to
whether or not the State employee received salary, wages,
stipends, differential wage payments or other payments from
his employer during the leave, notwithstanding any provision
to the contrary under 51 Pa.C.S. § 4102 or Ch. 73.
(5) If a member dies while performing USERRA leave, then
the beneficiaries or survivor annuitants, as the case may be,
of the deceased member are entitled to any additional
benefits, including eligibility points, other than benefit
accruals relating to the period of qualified military
service, provided under this part had the member resumed and
then terminated employment on account of death.
(5.1) If a participant dies while performing USERRA
leave, the beneficiaries or successor payees of the deceased
participant are entitled to any additional benefits, other
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than benefit accruals relating to the period of qualified
military service, provided under this part had the
participant resumed and then terminated employment on account
of death.
(6) A State employee who is on a leave of absence from
his duties as a State employee for which 51 Pa.C.S. § 4102
provides that he is not to suffer a loss of pay, time or
efficiency rating shall not be an active member, receive
service credit or make member contributions for the leave of
absence, except as provided for in this part. Notwithstanding
this paragraph, any pay the member receives pursuant to 51
Pa.C.S. § 4102 shall be included in the determination of
final average salary and other calculations in the system
utilizing compensation as if the payments were compensation
under this part.
Section 307. Section 5303(b) and (d)(1) of Title 71 are
amended and the section is amended by adding a subsection to
read:
§ 5303. Retention and reinstatement of service credits.
* * *
(b) Eligibility points for prospective credited service.--
(1) [Every] Subject to the limitations in subsection
(i), an active member of the system or a multiple service
member who is a school employee and a member of the Public
School Employees' Retirement System on or after the effective
date of this part shall receive eligibility points in
accordance with section 5307 for current State service,
previous State service, or creditable nonstate service upon
compliance with sections 5501 (relating to regular member
contributions for current service), 5501.1 (relating to
shared-risk contributions for Class A-3 [and], Class A-4 and
Class A-5 service), 5504 (relating to member contributions
for the purchase of credit for previous State service or to
become a full coverage member), 5505 (relating to
contributions for the purchase of credit for creditable
nonstate service), 5505.1 (relating to additional member
contributions) or 5506 (relating to incomplete payments).
Subject to the limitations in subsection (i) and sections
5306.1 (relating to election to become a Class AA member) and
5306.2 (relating to elections by members of the General
Assembly), the class or classes of service in which the
member may be credited for previous State service prior to
the effective date of this part shall be the class or classes
in which he was or could have at any time elected to be
credited for such service, except that a State employee who
first becomes a member of the system on or after January 1,
2011, or on or after December 1, 2010, as a member of the
General Assembly and:
(i) is credited with Class A-3 service for such
membership, shall be credited only with Class A-3 service
for previous State service performed before January 1,
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2011, that was not previously credited in the system; or
(ii) is credited with Class A-4 service for such
membership, shall be credited only with Class A-4 service
for previous State service performed before January 1,
2011, that was not previously credited in the system.
The class of service in which a member shall be credited for
service subsequent to the effective date of this part shall
be determined in accordance with subsection (i) and section
5306 (relating to classes of service).
(1.1) Every active member of the system who elects to
convert county service to State service pursuant to section
5303.1 (relating to election to convert county service to
State service) shall receive eligibility points in accordance
with section 5307 for converted county service upon
compliance with section 5303.1(b). The class or classes of
service in which the member may be credited for converted
county service shall be determined in accordance with section
5306(c).
(1.2) Every member of the system who elects to convert
school service to State service pursuant to section 5303.2
(relating to election to convert school service to State
service) shall receive eligibility points in accordance with
section 5307 for converted school service. The class or
classes of service in which the member may be credited for
converted school service shall be determined in accordance
with section 5306(d).
(1.3) A member of the system who is reemployed from
USERRA leave or who dies while performing USERRA leave shall
receive eligibility points in accordance with section 5307
for the State service that would have been performed had the
member not performed USERRA leave.
(2) A special vestee or person otherwise eligible to be
a special vestee who returns to State service or withdraws
his accumulated deductions pursuant to section 5311 (relating
to eligibility for refunds) or 5701 (relating to return of
[total] accumulated deductions) shall receive or retain
eligibility points in accordance with paragraph (1) but upon
subsequent termination of State service shall only be
eligible to be an annuitant vestee or inactive member without
regard to previous status as a special vestee and without
regard to the provisions of this part providing for special
vestees.
(3) A special vestee or person otherwise eligible to be
a special vestee who becomes an active member of the Public
School Employees' Retirement System and elects multiple
service shall receive or retain eligibility points as
otherwise provided for in this part and 24 Pa.C.S. Pt. IV
(relating to retirement for school employees) but upon
subsequent termination of school service shall only be
eligible to be an annuitant, vestee or inactive member as
otherwise eligible as a multiple service member without
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regard to previous status as a special vestee and without
regard to the provisions of this part providing for special
vestees.
* * *
(d) Transfer of certain pension service credit.--
(1) Any person who was an employee of any county in this
Commonwealth on the personal staff of an appellate court
judge prior to September 9, 1985, and who had that employment
transferred to the Commonwealth pursuant to 42 Pa.C.S. § 3703
(relating to local chamber facilities) shall be a member of
the system for all service rendered as an employee of the
Commonwealth on the personal staff of an appellate court
judge subsequent to the date of the transfer unless
specifically prohibited pursuant to section 5301(c) (relating
to mandatory and optional membership in the system and
participation in the plan). The employee shall be entitled to
have any prior service credit in that county or other
municipal pension plan or retirement system transferred to
the system and deemed to be State service for all purposes
under this part. However, for those employees who were in
continuous county employment which commenced prior to July
22, 1983, section 5505.1 shall not apply. The transfer of
prior service credit to the system shall occur upon the
transfer, by the member, county or other municipal pension
plan or retirement system, to the system of the amount of
accumulated member contributions, pick-up contributions and
credited interest standing in the employee's county or
municipal pension plan or retirement system account as of the
date that these funds are transferred to the system. In the
event that these funds have been refunded to the member, the
transfer of service credit shall occur when the member
transfers an amount equal to either the refund which the
member received from the county or municipal pension plan or
retirement system or the amount due under section 5504, if
less. In the case of a transfer by the member, the transfer
shall occur by December 31, 1987, in order for the member to
receive credit for the prior service. In the case of a
transfer by the county or other municipal pension plan or
retirement system, the transfer shall also occur by December
31, 1987. If the amount transferred to the system by the
member of a county or municipal pension plan or retirement
system is greater than the amount that would have accumulated
in the member's account if the employee had been a member of
the system, all excess funds shall be returned to the
employee within 90 days of the date on which such funds are
credited to the member's account in the system. Within 60
days of receipt of written notice that an employee has
elected to transfer credits under the provisions of this
subsection, the county or other municipal pension plans or
retirement systems shall be required to transfer to the
system an amount, excluding contributions due under section
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5504(a), equal to the liability of the prior service in
accordance with county or other municipal pension plan or
retirement system benefit provisions, multiplied by the ratio
of system actuarial value of assets for active members to the
system actuarial accrued liability for active members. The
Public Employee Retirement Study Commission shall determine
the appropriate amount of employer contributions to be
transferred to the system by the county or other municipal
pension plans or retirement systems.
* * *
(i) Ineligibility to purchase previous State service
credit.--An active member of Class A-5 or a multiple service
member who is an active member of Class T-G in the Public School
Employees' Retirement System shall not be eligible to purchase
service credit for previous State service, whether or not
previously credited in the system, except to reinstate
previously credited Class A-5 service credit for which Class A-5
accumulated deductions were withdrawn under section 5311 or
5701, and except to the extent that any other provision of law
requires or allows any period of leave to be credited as State
service after the member returns from the leave to State
service.
Section 308. Sections 5303.2(a) and 5304(a) and (b) of Title
71 are amended to read:
§ 5303.2. Election to convert school service to State service.
(a) Eligibility.--An active member or inactive member on
leave without pay who was an employee transferred from the
Department of Education to the Department of Corrections
pursuant to section 908-B of the act of April 9, 1929 (P.L.177,
No.175), known as The Administrative Code of 1929, and who on
the effective date of that transfer did not participate in an
independent retirement program approved by the Department of
Education under 24 Pa.C.S. § 8301(a)(1) (relating to mandatory
and optional membership) or section 5301(a)(12) (relating to
mandatory and optional membership in the system and
participation in the plan), notwithstanding any other provision
of law or any collective bargaining agreement, arbitration
award, contract or term or conditions of any retirement system
or pension plan, may make a one-time election to convert all
service credited in the Public School Employees' Retirement
System as of June 30, 1999, and transfer to the system all
accumulated member contributions and statutory interest credited
in the members' savings account in the Public School Employees'
Retirement System as of June 30, 1999, plus statutory interest
on that amount credited by the Public School Employees'
Retirement System from July 1, 1999, to the date of transfer to
the system.
* * *
§ 5304. Creditable nonstate service.
(a) Eligibility.--
(1) An active member who first becomes an active member
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before January 1, 2011, or before December 1, 2010, as a
member of the General Assembly and who is an active member of
a class of service other than Class A-5, or a multiple
service member who first becomes an active member before
January 1, 2011, or before December 1, 2010, as a member of
the General Assembly, and who is a school employee and an
active member of the Public School Employees' Retirement
System in a class of service other than Class T-G shall be
eligible for Class A service credit for creditable nonstate
service as set forth in subsections (b) and (c) except that
intervening military service shall be credited in the class
of service for which the member was eligible at the time of
entering into military service and for which he makes the
required contributions to the fund and except that a multiple
service member who is a school employee and an active member
of the Public School Employees' Retirement System shall not
be eligible to purchase service credit for creditable
nonstate service set forth in subsection (c)(5).
(2) An active member who first becomes an active member
on or after January 1, 2011, or on or after December 1, 2010,
as a member of the General Assembly and is an active member
of a class of service other than Class A-5, or a multiple
service member who first becomes an active member on or after
January 1, 2011, or on or after December 1, 2010, as a member
of the General Assembly, [and who] is a school employee and
an active member of the Public School Employees' Retirement
System in a class of service other than Class T-G and is not
a member of Class A-5 shall be eligible for Class A-3 service
credit for creditable nonstate service as set forth in
subsections (b) and (c) except that intervening military
service shall be credited in the class of service for which
the member was eligible at the time of entering into military
service and for which he makes the required contributions to
the fund and except that a multiple service member who is a
school employee and an active member of the Public School
Employees' Retirement System shall not be eligible to
purchase service credit for creditable nonstate service set
forth in subsection (c)(5).
(3) An active member of Class A-5 or a multiple service
member who is a school employee and an active member of the
Public School Employees' Retirement System as a member of
Class T-G shall be eligible for Class A-5 service credit for
creditable nonstate service as set forth in subsections (b)
and (c)(2) for which the member makes the required
contributions to the fund.
* * *
(b) Limitations on eligibility.--An active member or a
multiple service member who is a school employee and an active
member of the Public School Employees' Retirement System shall
be eligible as set forth in subsection (a) to receive credit for
nonstate service provided that he does not have credit for such
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service in the system or in the [school system] Public School
Employees' Retirement System and is not entitled to receive,
eligible to receive now or in the future, or is receiving
retirement benefits for such service in the system or under a
retirement system administered and wholly or partially paid for
by any other governmental agency or by any private employer, or
a retirement program approved by the employer in accordance with
section 5301(a)(12) (relating to mandatory and optional
membership in the system and participation in the plan), and
further provided, that such service is certified by the previous
employer and contributions are agreed upon and made in
accordance with section 5505 (relating to contributions for the
purchase of credit for creditable nonstate service).
* * *
Section 309. Section 5305(b) of Title 71, amended December
28, 2015 (P.L.529, No.93), is amended and the section is amended
by adding a subsection to read:
§ 5305. Social security integration credits.
* * *
(b) Accrual of subsequent credits.--Any active member who
has social security integration accumulated deductions to his
credit or is receiving a benefit on account of social security
integration credits may accrue one social security integration
credit for each year of service as a State employee on or
subsequent to March 1, 1974 and a fractional credit for a
corresponding fractional year of service provided that
contributions are made to the fund, or would have been made to
the fund but for section 5502.1 (relating to waiver of regular
member contributions and Social Security integration member
contributions) or the limitations under IRC § 401(a)(17) or 415,
except as otherwise provided in this part, in accordance with
section 5502 (relating to Social Security integration member
contributions), and he:
(1) continues subsequent to March 1, 1974 as an active
member in either the [State or school system;] system in a
class of service other than Class A-5 or, if a multiple
service member, as an active member in the Public School
Employees' Retirement System in a class of service other than
Class T-G;
(2) terminates such continuous service in the [State or
school] system or the Public School Employees' Retirement
System and returns to active membership in the [State] system
within six months in a class of service other than Class A-5;
or
(3) terminates his status as a vestee or an annuitant
and returns to State service as an active member of the
system in a class of service other than Class A-5.
* * *
(e) Class A-5 service ineligible for credit.--No social
security integration credits shall accrue for any service
performed or credited as Class A-5 service.
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Section 310. Section 5305.1 of Title 71 is amended to read:
§ 5305.1. Eligibility for actuarial increase factor.
A person who has credit for a class of service other than
Class A-5 and is:
(1) an active member;
(2) an inactive member on leave without pay; or
(3) a multiple service member who is a school employee
and an active member of the Public School Employees'
Retirement System;
who terminates State service or school service, as the case
may be, after attaining age 70 and who applies for a
superannuation annuity with an effective date of retirement the
day after the date of termination of State service or school
service shall have that person's maximum single life annuity
calculated pursuant to section 5702(a.1) (relating to maximum
single life annuity).
Section 311. Section 5306(a), (a.1), (a.2), (a.3) and (b) of
Title 71 are amended and the section is amended by adding a
subsection to read:
§ 5306. Classes of service.
(a) Class A and Class A-3 membership.--
(1) A State employee who is a member of Class A on the
effective date of this part or who first becomes a member of
the system subsequent to the effective date of this part and
before January 1, 2011, or before December 1, 2010, as a
member of the General Assembly, shall be classified as a
Class A member and receive credit for Class A service upon
payment of regular and additional member contributions for
Class A service, provided that the State employee does not
become a member of Class AA pursuant to subsection (a.1) or a
member of Class D-4 pursuant to subsection (a.2) or a member
of Class A-5.
(2) A State employee who first becomes a member of the
system on or after January 1, 2011, or on or after December
1, 2010, as a member of the General Assembly, and, unless a
Class A-5 exempt employee, before January 1, 2018, shall be
classified as a Class A-3 member and receive credit for Class
A-3 service upon payment of regular member contributions and
shared-risk member contributions for Class A-3 service
provided that the State employee does not become a member of
Class A-4 pursuant to subsection (a.3) or a member of Class
A-5, except that a member of the judiciary shall be
classified as a member of such other class of service for
which the member of the judiciary is eligible[,] and shall
elect and make regular member contributions unless the member
of the judiciary subsequently becomes a member of Class A-5.
(3) A Class A-5 exempt employee who is a member of Class
A-3 shall have all other State service performed concurrently
with being a Class A-5 exempt employee classed as Class A-3
service instead of any other class of service the service
might otherwise be credited as. This paragraph shall apply
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only to service performed concurrently with Class A-5 exempt
service. Notwithstanding the provisions of a binding
arbitration award issued before July 1, 1989, under the act
of June 24, 1968 (P.L.237, No.111), referred to as the
Policemen and Firemen Collective Bargaining Act, and
implemented by the board, for a member who first becomes an
officer of the Pennsylvania State Police on or after January
1, 2018, other service performed before or after service as a
State police officer shall be credited in the class of
service as provided under this part.
(a.1) Class AA membership.--
(1) A person who becomes a State employee and an active
member of the system after June 30, 2001, and who first
became an active member before January 1, 2011, or before
December 1, 2010, as a member of the General Assembly, and
who is not a State police officer and not employed in a
position for which a class of service other than Class A is
credited or could be elected shall be classified as a Class
AA member and receive credit for Class AA State service upon
payment of regular member contributions for Class AA service
and, subject to the limitations contained in paragraph (7)
and section 5303(i) (relating to retention and reinstatement
of service credits), if previously a member of Class A or
previously employed in a position for which Class A service
could have been earned, shall have all Class A State service
(other than State service performed as a State police officer
or for which a class of service other than Class A was earned
or could have been elected) classified as Class AA service.
(2) A person who is a State employee on June 30, 2001,
and July 1, 2001, but is not an active member of the system
because membership in the system is optional or prohibited
pursuant to section 5301 (relating to mandatory and optional
membership in the system and participation in the plan) and
who first becomes an active member after June 30, 2001, and
before January 1, 2011, or before December 1, 2010, as a
member of the General Assembly, and who is not a State police
officer and not employed in a position for which a class of
service other than Class A is credited or could be elected
shall be classified as a Class AA member and receive credit
for Class AA State service upon payment of regular member
contributions for Class AA service and, subject to the
limitations contained in paragraph (7) and section 5303(i),
if previously a member of Class A or previously employed in a
position for which Class A service could have been earned,
shall have all Class A State service (other than State
service performed as a State Police officer or for which a
class of service other than Class A was earned or could have
been elected) classified as Class AA service.
(3) Provided that an election to become a Class AA
member is made pursuant to section 5306.1 (relating to
election to become a Class AA member), a State employee,
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other than a State employee who is a State police officer on
or after July 1, 1989, who on June 30, 2001, and July 1,
2001, is:
(i) a member of Class A, other than a member of
Class A who could have elected membership in a Class C,
Class D-3, Class E-1 or Class E-2; or
(ii) an inactive member on a leave without pay from
a position in which the State employee would be a Class A
active member if the employee was not on leave without
pay, other than a position in which the State employee
could elect membership in Class C, Class D-3, Class E-1
or Class E-2;
shall be classified as a Class AA member and receive
credit for Class AA State service performed after June 30,
2001, upon payment of regular member contributions for Class
AA service and, subject to the limitations contained in
paragraph (7) and section 5303(i), shall receive Class AA
service credit for all Class A State service, other than
State service performed as a State police officer or as a
State employee in a position for which the member could have
elected membership in Class C, Class D-3, Class E-1 or Class
E-2, performed before July 1, 2001.
(4) Provided that an election to become a Class AA
member is made pursuant to section 5306.1, a former State
employee, other than a former State employee who was a State
police officer on or after July 1, 1989, who on June 30,
2001, and July 1, 2001, is a multiple service member and a
school employee and a member of the Public School Employees'
Retirement System, subject to the limitations contained in
paragraph (7) and section 5303(i), shall receive Class AA
service credit for all Class A State service, other than
State service performed as a State police officer or as a
State employee in a position in which the former State
employee could have elected a class of service other than
Class A, performed before July 1, 2001.
(5) A former State employee who first becomes a member
before January 1, 2011, or before December 1, 2010, as a
member of the General Assembly, other than a former State
employee who was a State police officer on or after July 1,
1989, who is a school employee and who on or after July 1,
2001, becomes a multiple service member, subject to the
limitations contained in paragraph (7) and section 5303(i),
shall receive Class AA service credit for all Class A State
service other than State service performed as a State
employee in a position in which the former State employee
could have elected a class of service other than Class A.
(6) A State employee who after June 30, 2001, becomes a
State police officer or who is employed in a position in
which the member could elect membership in the system in a
class of service other than Class AA or Class D-4 shall
retain any Class AA service credited prior to becoming a
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State police officer or being so employed but shall be
ineligible to receive Class AA credit thereafter and instead
shall receive Class A credit for service as a member of the
judiciary if the judicial service begins before January 1,
2018 , and the State employee first becomes a member of the
system before January 1, 2018 , or if he first became a member
before January 1, 2011, or December 1, 2010, as a member of
the General Assembly, or Class A-3 credit for service other
than as a member of the judiciary and other than service as a
Class A-5 exempt employee before January 1, 2018 , and he
first became a member on or after January 1, 2011, or
December 1, 2010, as a member of the General Assembly, unless
a class of membership other than Class A is elected.
(7) (i) State service performed as Class A service
before July 1, 2001, and State service for which Class A
service could have been credited but was not credited
because membership in the system was optional or
prohibited pursuant to section 5301 shall be credited as
Class AA service only upon the completion of all acts
necessary for the State service to be credited as Class A
service had this subsection not been enacted and upon
payment of required Class AA member contributions as
provided in section 5504 (relating to member
contributions for the purchase of credit for previous
State service or to become a full coverage member).
(ii) A person who is not a State employee or a
school employee on June 30, 2001, and July 1, 2001, and
who has previous State service (except a disability
annuitant who returns to State service after June 30,
2001, upon termination of the disability annuity) shall
not receive Class AA service credit for State service
performed before July 1, 2001, until such person becomes
an active member, or an active member of the Public
School Employees' Retirement System and a multiple
service member, and earns three eligibility points by
performing credited State service in a class of service
other than Class A-5 or credited school service in a
class of service other than Class T-G after June 30,
2001.
(iii) Nothing in this paragraph shall be construed
to authorize a member of Class A-5 or a multiple service
member who is a member of Class T-G in the Public School
Employees' Retirement System to reinstate or purchase
credit for previously credited or uncredited State
service other than as allowed under section 5303(i).
(a.2) Class of membership for members of the General
Assembly.--
(1) A person who:
(i) becomes a member of the General Assembly and an
active member of the system after June 30, 2001, and
before December 1, 2010; or
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(ii) is a member of the General Assembly on July 1,
2001, but is not an active member of the system because
membership in the system is optional pursuant to section
5301 and who becomes an active member after June 30,
2001, and before December 1, 2010;
and who was not a State police officer on or after July 1,
1989, shall be classified as a Class D-4 member and unless he
later becomes a member of Class A-5 receive credit as a Class
D-4 member for all State service as a member of the system
performed as a member of the General Assembly upon payment of
regular member contributions for Class D-4 service and,
subject to the limitations contained in subsection (a.1)(7)
and section 5303(i), if previously a member of Class A or
employed in a position for which Class A service could have
been earned, shall receive Class AA service credit for all
Class A State service, other than State service performed as
a State police officer or for which a class of service other
than Class A or Class D-4 was or could have been elected or
credited.
(2) Provided an election to become a Class D-4 member is
made pursuant to section 5306.2 (relating to elections by
members of the General Assembly), a State employee who was
not a State police officer on or after July 1, 1989, who on
July 1, 2001, is a member of the General Assembly and an
active member of the system and not a member of Class D-3
shall be classified as a Class D-4 member and, unless he
later becomes a member of Class A-5, receive credit as a
Class D-4 member for all State service performed as a member
of the General Assembly not credited as another class other
than Class A upon payment of regular member contributions for
Class D-4 service and, subject to the limitations contained
in paragraph (a.1)(7), shall receive Class AA service credit
for all Class A State service, other than State service
performed as a State police officer or as a State employee in
a position in which the member could have elected a class of
service other than Class A, performed before July 1, 2001.
(3) A member of the General Assembly who after June 30,
2001, becomes a State police officer shall retain any Class
AA service or Class D-4 service credited prior to becoming a
State police officer or being so employed but shall be
ineligible to receive Class AA or Class D-4 credit thereafter
and instead shall receive Class A credit or Class A-3 credit
if he first becomes a member of the system on or after
January 1, 2011, and before January 1, 2018 , or Class A-5
credit if his most recent period of State service begins on
or after January 1, 2018 .
(4) Notwithstanding the provisions of this subsection,
no service as a member of the General Assembly performed
before December 1, 2010, that is not credited as Class D-4
service on November 30, 2010, shall be credited as Class D-4
service, unless such service was previously credited in the
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system as Class D-4 service and the member withdrew his total
accumulated deductions as provided in section 5311 (relating
to eligibility for refunds) or 5701 (relating to return of
total accumulated deductions). No service as a member of the
General Assembly performed on or after December 1, 2010,
shall be credited as Class D-4 service unless the member
previously was credited with Class D-4 service credits.
(a.3) Class A-4 membership.--Provided that an election to
become a Class A-4 member is made pursuant to section 5306.3
(relating to election to become a Class A-4 member), a State
employee who otherwise would be a member of Class A-3 shall be
classified as a Class A-4 member and receive Class A-4 credit
for all creditable State service performed after the effective
date of membership in the system, except as a member of the
judiciary, upon payment of regular member contributions and
shared-risk member contributions for Class A-4 service[.],
provided that the member does not terminate service and then, on
or after January 1, 2018 , returns to the State service in a
position other than a Class A-5 exempt employee and elects to be
a member of Class A-5 under section 5306.4 (relating to election
to become a Class A-5 member and participant).
(a.4) Class A-5 membership.--
(1) A State employee who begins State service or becomes
a member of the system on or after January 1, 2018 , other
than as a Class A-5 exempt employee, shall be classified as a
Class A-5 member without regard to position or office held or
class of service that the employee would have been a member
of or benefits that the member would have been eligible to
accrue and receive but for this subsection and shall receive
credit for Class A-5 service upon payment of regular member
contributions for Class A-5 service.
(2) The provisions of this part regarding the
establishment of and membership in Class A-5 shall apply to
all current and former members of the State Employees'
Retirement System who have returned to State service on or
after January 1, 2018 , other than as a Class A-5 exempt
employee, after a termination of State service and who have
elected to be a member of Class A-5 under section 5306.4.
(3) A terminated State employee who is a member of Class
A-5 or who elects to be a member of Class A-5 under section
5306.4 who returns to State service on or after January 1,
2018 , shall be subject to the provisions of this part
regarding membership in Class A-5 that are in effect on the
effective date of reemployment, including benefit formulas
and accrual rates, eligibility for annuities and
distributions, contribution rates, definitions, purchase of
creditable school, nonschool, State and nonstate service
provisions and actuarial and funding assumptions.
(4) An individual who is a State employee on January 1,
2018 , but is not a member of the system or who first becomes
a State employee on or after January 1, 2018 , other than as a
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Class A-5 exempt employee, shall be ineligible for active
membership in any of the several classes of State service as
otherwise provided for under this section other than Class A-
5. Any such State employee, if eligible, may be a member of
Class A-5 as a result of such State service.
(5) Notwithstanding this subsection the following shall
apply:
(i) A current or former Class A-5 exempt employee
who has service as a Class A-5 exempt employee credited
as Class A service shall receive Class A service credit
for any State service that otherwise would be credited as
Class A-5 and shall not be eligible to be an active
participant in the plan for the service.
(ii) A current or former Class A-5 exempt employee
who has service as a Class A-5 exempt employee credited
as Class A-3 or Class A-4 service before January 1, 2018 ,
shall receive Class A-3 or Class A-4 service credit, as
the case may be, for any State service that otherwise
would be credited as Class A-5 and shall not be eligible
to be an active participant in the plan for the service.
(iii) A person who first becomes a Class A-5 exempt
employee on or after January 1, 2018 , shall receive
credit for service as a State police officer as a member
of Class A-3, unless the member would otherwise be
eligible to receive Class A credit for service as a Class
A-5 exempt employee, upon payment of the required member
contributions and shall not be eligible to be an active
participant in the plan for such service. All other
creditable State service shall be credited as otherwise
provided under this part, including as Class A-5 service,
except that any State service performed concurrently with
service as an active or inactive member on leave without
pay as a Class A-5 exempt employee shall be credited as
Class A-3 service and shall not be eligible for active
participation in the plan. Class A-3 service provided for
under this subparagraph shall be subject to an election
to be credited as Class A-4 service.
(iv) N otwithstanding the provisions of a binding
arbitration award issued before July 1, 1989, under the
act of June 24, 1968 (P.L.237, No.111), referred to as
the Policemen and Firemen Collective Bargaining Act, and
implemented by the board, for a member who first becomes
an officer of the Pennsylvania State Police on or after
January 1, 2018, other service performed before or after
service as a officer of the Pennsylvania State Police
shall be credited in the class of service provided under
this part.
(b) Other class membership.--
(1) A State employee who is a member of a class of
service other than Class A on the effective date of this part
shall retain his membership in that class until such service
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is discontinued; any service thereafter shall be credited as
Class A service, Class AA service, Class A-5 or Class D-4
service as provided for in this section.
(2) Notwithstanding any other provision of this section,
a State employee [who] whose first period of State service
began before January 1, 2018 , is appointed [bail
commissioner] arraignment court magistrate of the
Philadelphia Municipal Court under 42 Pa.C.S. § 1123(a)(5)
(relating to jurisdiction and venue) and is eligible to be a
member of the system as an arraignment court magistrate may,
within 30 days of the effective date of this sentence or
within 30 days of his initial appointment as a [bail
commissioner] arraignment court magistrate, whichever is
later, elect Class E-2 service credit for service performed
as [a bail commissioner] an arraignment court magistrate
until the termination of State service. This class of service
multiplier for E-2 service as a bail commissioner shall be
1.5.
* * *
Section 312. Sections 5306.1(c), 5306.2(b) and 5306.3(c) and
(d) of Title 71 are amended to read:
§ 5306.1. Election to become a Class AA member.
* * *
(c) Effect of election.--An election to become a Class AA
member shall become effective the later of July 1, 2001, or the
date when the election is filed with the board and shall remain
in effect until the termination of employment. Upon termination
and a subsequent reemployment that occurs before January 1,
2018, the member's class of service shall be credited in the
class of service otherwise provided for in this part. If the
reemployment occurs on or after January 1, 2018 , the State
employee's eligibility for membership and class of service in
the system or participation in the plan shall be as provided in
this part.
* * *
§ 5306.2. Elections by members of the General Assembly.
* * *
(b) Effect of election.--Membership as a Class D-4 member
shall become effective on July 1, 2001, and shall remain in
effect until the termination of service as a member of the
General Assembly. Upon termination and a subsequent reemployment
that occurs before January 1, 2018 , unless the reemployment is
as a Class A-5 exempt employee the member's class of service
shall be credited in the class of service otherwise provided for
in this part. If the reemployment occurs on or after January 1,
2018 , the State employee's eligibility for membership and class
of service in the system or participation in the plan shall be
as provided in this part.
* * *
§ 5306.3. Election to become a Class A-4 member.
* * *
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(c) Effect of election.--An election to become a Class A-4
member shall be irrevocable and shall become effective on the
effective date of membership in the system and shall remain in
effect for all future [creditable] State service[.] creditable
in the system that otherwise is not credited as Class A-5
service, other than service performed as a member of the
judiciary, but shall not apply to service performed after a
termination of State service and a reemployment when the
reemployment occurs on or after January 1, 2018 , and the member
elects to be a member of Class A-5 under section 5306.4
(relating to election to become a Class A-5 member and
participant). Payment of regular member contributions for Class
A-4 State service performed prior to the election of Class A-4
membership shall be made in a form, manner and time determined
by the board. Upon termination of State service and a subsequent
reemployment, a member who elected Class A-4 membership shall be
credited as a Class A-4 member for creditable State service
performed after reemployment, except as a member of the
judiciary, regardless of termination of employment, termination
of membership by withdrawal of accumulated deductions or status
as an annuitant, vestee or inactive member after the termination
of service; provided that the member does not elect to be a
member of Class A-5.
(d) Effect of failure to make election.--Failure to elect to
become a Class A-4 member within the election period set forth
in subsection (b) shall result in all of the member's State
service, other than service performed as a member of the
judiciary or that would otherwise be credited as Class A-5 after
a termination and return to State service, being credited as
Class A-3 service and not subject to further election or
crediting as Class A-4 service. Upon termination and subsequent
employment, a member who failed to elect to become a Class A-4
member shall not be eligible to make another election to become
a Class A-4 member for either past or future State service.
Section 312.1. Title 71 is amended by adding a section to
read:
§ 5306.4. Election to become a Class A-5 member and
participant.
(a) General rule.--A person who returns to State service on
or after January 1, 2018 , and becomes a member of a class of
service other than Class A-5 who has not previously declined to
elect Class A-5 membership under this section may elect to
become a member of Class A-5 and a participant in the plan.
(b) Time for making election.--The election to become a
Class A-5 member and participant must be made by the member
filing written notice with the board in a form and manner
determined by the board no later than 45 days after notice from
the board of the member's eligibility to elect Class A-5
membership and participation. A State employee who is eligible
to elect to become a Class A-5 member and participant who begins
USERRA leave during the election period without having elected
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Class A-5 membership and participation may make the election
within 45 days after being reemployed from USERRA leave.
(c) Effect of election.--An election to become a Class A-5
member and participant shall be irrevocable and shall become
effective on the effective date of active membership in the
system resulting from the member's return to service. Payment of
regular member contributions and shared-risk member
contributions for Class A-5 State service performed prior to the
election of Class A-5 membership shall be made in a form, manner
and time determined by the board. Payment of employer defined
contributions and mandatory participant contributions to the
plan for State service performed prior to the election of
participation in the plan shall be as established in the plan
document. Upon termination and subsequent reemployment, a member
who elected Class A-5 membership and participation in the plan
shall be credited as a Class A-5 member and participant for
creditable State service performed after reemployment,
regardless of termination of employment, termination of
membership or participation by withdrawal of total accumulated
deductions, Class A-5 accumulated deductions or distribution of
all or part of accumulated total defined contributions or status
as an annuitant, vestee, inactive member, participant receiving
distributions or inactive participant after the termination of
service.
(d) Effect of failure to make election.--Failure to elect to
become a Class A-5 member and participant within the election
period set forth in subsection (b) shall result in all of the
member's State service being credited in the class of membership
otherwise provided for under this part and not subject to
further election or crediting as Class A-5 service or eligible
for participation in the plan. Upon termination and subsequent
employment, a member who failed to elect to become a Class A-5
member and participant shall not be eligible to make another
election to become a Class A-5 member or participant for either
past or future State service.
Section 312.2. Section 5307 of Title 71 is amended to read:
§ 5307. Eligibility points.
(a) General rule.--An active member of the system shall
accrue one eligibility point for each year of credited service
as a member of the [State or] system and if a multiple service
member as a member of the Public School Employees' Retirement
System. A member shall accrue an additional two-thirds of an
eligibility point for each year of Class D-3 credited service.
In the case of a fractional part of a year of credited service,
a member shall accrue the corresponding fractional portion of
eligibility points to which the class of service entitles him.
(a.1) USERRA leave.--A member of the system or participant
in the plan who is reemployed from USERRA leave or who dies
while performing USERRA leave shall be granted the eligibility
points that he would have accrued had he continued in his State
office or employment instead of performing USERRA leave. In the
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event that a State employee who is reemployed from USERRA leave
makes the member contributions or mandatory pickup participant
contributions to be granted State service credit for the USERRA
leave, no additional eligibility points will be granted.
(b) Transitional rule.--
(1) In determining whether a member who is not a State
employee or school employee on June 30, 2001, and July 1,
2001, and who has previous State service (except a disability
annuitant who returns to State service after June 30, 2001,
upon termination of the disability annuity) has the five
eligibility points required by sections 5102 (relating to
definitions), 5308(b) (relating to eligibility for
annuities), 5309 (relating to eligibility for vesting),
5704(b) (relating to disability annuities) and 5705(a)
(relating to member's options), only eligibility points
earned by performing credited State service[,] or USERRA
leave in a class of service other than Class A-5, or credited
school service as an active member of the Public School
Employees' Retirement System in a class of service other than
Class T-G after June 30, 2001, shall be counted until such
member earns one such eligibility point by performing
credited State service or credited school service after June
30, 2001, at which time all eligibility points other than
eligibility points in classes of service other than Class A-5
or Class T-G as determined pursuant to subsection (a) shall
be counted.
(2) Any member to whom paragraph (1) applies shall be
considered to have satisfied any requirement for five
eligibility points contained in this part if the member:
(i) has ten or more eligibility points of the
applicable class of service as determined pursuant to
subsection (a); or
(ii) has Class G, Class H, Class I, Class J, Class
L, Class M or Class N service and has eight or more
eligibility points of a class of service other than Class
A-5 or Class T-G as determined pursuant to subsection
(a).
(c) Transitional rule for members with Class A-5 service
credit.--
(1) Any provision of this part pertaining to eligibility
points applicable to the eligibility for or calculation of
annuities or benefits attributable to classes of service
other than Class A-5 shall not include any eligibility points
attributable to service credited in Class A-5 or as a member
of Class T-G in the Public School Employees' Retirement
System.
(2) Any provision of this part pertaining to eligibility
points applicable to the eligibility for or calculation of
annuities or benefits attributable to service in Class A-5
shall include only eligibility points attributable to service
credited in Class A-5 or if a multiple service member as a
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member of Class T-G in the Public School Employees'
Retirement System.
(3) Only eligibility points earned as a member of Class
A-5, or if a multiple service member, as a member of Class T-
G in the Public School Employees' Retirement System, shall be
applicable to any provision in this part requiring
eligibility points for the determination or payment of
benefits from the plan.
Section 312.3. Section 5308 of Title 71, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 5308. Eligibility for annuities.
(a) Superannuation annuity.--Attainment of superannuation
age by an active member or an inactive member on leave without
pay with three or more eligibility points other than eligibility
points resulting from nonstate service or nonschool service
shall entitle him to receive a superannuation annuity upon
termination of State service and compliance with section 5907(f)
(relating to rights and duties of State employees [and
members).], members and participants); provided that only
eligibility points earned in classes of service other than Class
A-5 or, if a multiple service member, in Class T-G shall be used
to determine if a member has the three eligibility points
necessary to be eligible to receive a superannuation annuity
attributable to classes of service other than Class A-5; and
further provided, that only eligibility points earned in Class
A-5 or, if a multiple service member, in Class T-G shall be used
to determine if a member has the three eligibility points
necessary to be eligible to receive a superannuation annuity
attributable to Class A-5 service.
(b) Withdrawal annuity.--
(1) Any vestee or any active member or inactive member
on leave without pay who terminates State service having five
or more eligibility points and who does not have Class A-3
[or], Class A-4 or Class A-5 service credit or Class T-E
[or], Class T-F or Class T-G service credit in the Public
School Employees' Retirement System, or who has Class G,
Class H, Class I, Class J, Class K, Class L, Class M or Class
N service and terminates State service having five or more
eligibility points, upon compliance with section 5907(f), (g)
or (h) shall be entitled to receive an annuity.
(2) Any vestee, active member or inactive member on
leave without pay who has Class A-3 or Class A-4 service
credit or, if a multiple service member, Class T-E or Class
T-F service credit in the Public School Employees' Retirement
System who terminates State service having ten or more
eligibility points in classes of service other than Class A-5
or Class T-G in the Public School Employees' Retirement
System, upon compliance with section 5907(f), (g) or (h),
shall be entitled to receive an annuity based on service and
compensation in classes of service other than Class A-5 or
Class T-G.
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(3) Any vestee, active member or inactive member on
leave without pay who has either Class A-3 [or], Class A-4 or
Class A-5 service credit or, if a multiple service member,
Class T-E [or], Class T-F or Class T-G service credit in the
Public School Employees' Retirement System and also has
service credited in the system in one or more other classes
of service who has five or more, but fewer than ten,
eligibility points from classes of service other than Class
A-5 or Class T-G, upon compliance with section 5907(f), (g)
or (h), shall be eligible to receive an annuity calculated on
his service credited in classes of service other than Class
A-3 [or], Class A-4 or Class A-5, provided that the member
has five or more eligibility points resulting from service in
classes other than Class A-3 [or], Class A-4 or Class A-5 or
Class T-E [or], Class T-F or Class T-G service in the Public
School Employees' Retirement System.
(4) In addition to any withdrawal annuity payable under
paragraph (2) or (3), any vestee, active member or inactive
member on leave without pay who terminates State service
having ten or more eligibility points resulting from Class A-
5 service credit or, if a multiple service member, Class T-G
service credit in the Public School Employees' Retirement
System, upon compliance with section 5907 (f), (g) or (h)
shall be entitled to receive an annuity based on service and
compensation as a member of Class A-5 and Class T-G in
addition to any annuity the member is eligible to receive
from other classes of service.
(c) Disability annuity.--An active member or inactive member
on leave without pay who:
(1) has five or more eligibility points other than
eligibility points resulting from service as a member of
Class A-5 or membership in the Public School Employees'
Retirement System [or any active member or inactive member on
leave without pay who];
(2) is an officer of the Pennsylvania State Police or an
enforcement officer; or
(3) has five or more eligibility points resulting from
service as a member of Class A-5;
shall, upon compliance with section 5907(k), be entitled to a
disability annuity based on service and compensation in classes
other than Class A-5 if he is eligible for a disability annuity
on service other than as a member of Class A-5 and a disability
annuity based on service and compensation in Class A-5 if he is
eligible for a disability annuity based on service and
compensation as a member of Class A-5 if he becomes mentally or
physically incapable of continuing to perform the duties for
which he is employed and qualifies in accordance with the
provisions of section 5905(c)(1) (relating to duties of the
board regarding applications and elections of members).
(d) Required beginning date.--Members eligible for an
annuity must commence receiving the annuity by the member's
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required beginning date.
Section 312.4. Section 5308.1 introductory paragraph and (1)
of Title 71 are amended to read:
§ 5308.1. Eligibility for special early retirement.
Notwithstanding any provisions of this title to the contrary,
the following special early retirement provisions shall be
applicable to specified eligible members [as follows]:
(1) During the period of July 1, 1985, to September 30,
1991, an active member who has attained the age of at least
53 years and has accrued at least 30 eligibility points shall
be entitled, upon termination of State service and compliance
with section 5907(f) (relating to rights and duties of State
employees [and], members and participants), to receive a
maximum single life annuity calculated under section 5702
(relating to maximum single life annuity) without a reduction
by virtue of an effective date of retirement which is under
the superannuation age.
* * *
Section 312.5. Section 5309 of Title 71, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 5309. Eligibility for vesting.
Any member who:
(1) Does not have Class A-3 [or], Class A-4 or Class A-5
service credit or if a multiple service member, Class T-E
[or], Class T-F or Class T-G service credit in the Public
School Employees' Retirement System and terminates State
service, or if a multiple service member and an active member
of the Public School Employees' Retirement System terminates
school service, with five or more eligibility points, or any
member with Class G, Class H, Class I, Class J, Class K,
Class L, Class M or Class N service with five or more
eligibility points, shall be eligible until his required
beginning date to vest his retirement benefits.
(2) Has only Class A-3 [or] and, if a multiple service
member, only Class A-4 service credit or Class T-E or Class
T-F service credit in the Public School Employees' Retirement
System and terminates State service, or if a multiple service
member and an active member of the Public School Employees'
Retirement System terminates school service, with ten or more
eligibility points shall be eligible until his required
beginning date to vest his retirement benefits.
(3) Has either Class A-3 [or] and, if a multiple service
member, Class A-4 service credit or Class T-E or Class T-F
service credit in the Public School Employees' Retirement
System, also has service other than Class A-5 credited in the
system in one or more other classes of service and has five
or more, but fewer than ten, eligibility points resulting
from service in classes other than Class A-5 or Class T-G and
terminates State service, or if a multiple service member and
an active member of the Public School Employees' Retirement
System terminates school service, shall be eligible until his
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required beginning date to vest his retirement benefits
calculated on his service credited in classes of service
other than Class A-3 [or], Class A-4 or Class A-5 and to be
credited with statutory interest on total accumulated
deductions, regardless of whether or not any part of his
accumulated deductions are a result of Class A-3 or Class A-4
service credit.
(4) Has only Class A-5 service credit and, if a multiple
service member, only Class T-G service credit in the Public
School Employees' Retirement System and terminates State
service, or, if a multiple service member and an active
member of the Public School Employees' Retirement System,
terminates school service with ten or more eligibility points
shall be eligible until his required beginning date to vest
his retirement benefits resulting from Class A-5 service.
(5) Has Class A-5 service credit and service credited in
one or more other classes of service and terminates State
service, or if a multiple service member and an active member
of the Public School Employees' Retirement System terminates
school service, shall be eligible to vest his retirement
benefits based on Class A-5 service until the attainment of
the applicable superannuation age if he would be required or
eligible to vest his retirement benefits based on Class A-5
service under paragraph (4) disregarding all classes of
service other than Class A-5 and Class T-G and shall be
eligible to vest his retirement benefits in each other class
of service other than Class A-5 in accordance with the
requirements of each class of service until the attainment of
the applicable superannuation ages for each class of service
for which he would be able to vest his retirement benefits
under paragraph (1), (2) or (3) disregarding service in Class
A-5 and Class T-G.
Section 312.6. Section 5310 of Title 71 is amended to read:
§ 5310. Eligibility for death benefits.
In the event of the death of a member who is eligible for an
annuity in accordance with section 5308(a) or (b) (relating to
eligibility for annuities), his beneficiary shall be entitled to
a death benefit. For purposes of this section, a member with ten
or more but less than 25 eligibility points resulting from Class
A-5 service credit or, if a multiple service member, Class T-G
service credit in the Public School Employees ' Retirement System
shall be considered eligible for an annuity based on Class A-5
service even if under superannuation age.
Section 312.7. Sections 5311 and 5501 of Title 71, amended
December 28, 2015 (P.L.529, No.93), are amended to read:
§ 5311. Eligibility for refunds.
(a) Total accumulated deductions.--Any active member,
regardless of eligibility for benefits, may elect to receive his
total accumulated deductions by his required beginning date upon
termination of service in lieu of any benefit from the system to
which he is entitled.
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(b) Social security integration accumulated deductions.--Any
active member at any time after the attainment of normal
retirement age may elect to receive his social security
integration accumulated deductions and thereby to have all his
social security integration credits and benefits therefor
cancelled, and shall not be entitled to accrue any further
social security integration credits or benefits; except that a
disability annuitant who returns to State service in a class of
service other than Class A-5 shall have the right to reinstate
his social security integration accumulated deductions and
credits therefor.
§ 5501. Regular member contributions for current service.
Regular member contributions shall be made to the fund on
behalf of each active member for current service except for any
period of current service in which the making of such
contributions has ceased solely by reason of section 5502.1
(relating to waiver of regular member contributions and Social
Security integration member contributions) or any provision of
this part relating to the limitations under IRC § 401(a)(17) or
415 or limitations on contributions to the system applicable to
a Class A-5 member who is making mandatory pickup participant
contributions to the trust.
Section 313. Section 5501.1(a) and (b)(1) and (7) of Title
71 are amended and the section is amended by adding a subsection
to read:
§ 5501.1. Shared-risk member contributions for Class A-3 [and],
Class A-4 and Class A-5 service.
(a) General.--Shared-risk member contributions shall be made
to the fund on behalf of each member of Class A-3 [or], Class A-
4 or Class A-5 for current service credited as Class A-3 [or],
Class A-4 or Class A-5 as provided under this section, except
for any period of current service in which the making of the
contributions has ceased solely by reason of any provision of
this part relating to the limitations under IRC § 401(a)(17) or
415 or any provision of this part limiting contributions
applicable to a Class A-5 member. Shared-risk member
contributions shall be credited to the members' savings account.
(b) Determination of shared-risk contribution rate[.--] for
Class A-3 and Class A-4 service.--The shared-risk contribution
for Class A-3 and Class A-4 service shall be determined as
follows:
(1) For the period from the effective date of this
section until June 30, 2014, the shared-risk contribution
rate for Class A-3 and Class A-4 service shall be zero.
* * *
(7) For any fiscal year in which the actual
contributions by the Commonwealth or an employer are lower
than those required to be made under section 5507(d)
(relating to contributions to the system by the Commonwealth
and other employers), the prospective shared-risk
contribution rate for those employees whose employers are not
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making the contributions required by section 5507(d) shall be
zero and shall not subsequently be increased, except as
otherwise provided in this section.
* * *
(c) Determination of shared-risk contribution rate for Class
A-5 service.--The shared risk contribution for Class A-5 service
shall be determined as follows:
(1) For the period from the effective date of this
section until June 30, 2020, the shared-risk contribution
rate for Class A-5 service shall be zero.
(2) For the period from July 1, 2020, to June 30, 2023,
if the annual interest rate adopted by the board for use
during the period from January 1, 2017, to December 31, 2019,
for the calculation of the normal contribution rate is more
than 1% greater than the actual rate of return, net of fees,
of the investments of the fund based on market value over the
period, the shared-risk contribution rate shall be 0.5%. In
all other situations, the shared-risk contribution rate shall
be zero.
(3) For each subsequent three-year period, the shared-
risk contribution rate shall be increased by 0.5% if the
annual interest rate adopted by the board for use during the
previous ten-year period for the calculation of the normal
contribution rate is more than 1% greater than the actual
rate of return, net of fees, of the investments of the fund
based on market value over the period. The shared-risk
contribution rate shall be decreased by 0.5% if the annual
interest rate adopted by the board for use during the
previous ten-year period for the calculation of the normal
contribution rate is equal to or less than the actual rate of
return, net of fees, of the investments of the fund based on
market value over that period.
(4) Notwithstanding paragraphs (2) and (3), the shared-
risk contribution rate may not be less than zero and may not
be more than the experience adjustment factor resulting from
investment gains or losses in effect on the first day when
the new rate would be applied, expressed as a percentage of
member compensation, provided that in no event may the
shared-risk contribution rate be more than 2%. For the
determination of the shared-risk contribution rate to be
effective July 1, 2023, the determination period shall be
January 1, 2017, through December 31, 2022. For the
determination of the shared-risk contribution rate to be
effective July 1, 2026, the determination period shall be
January 1, 2020, through December 31, 2025.
(5) The shared-risk contribution rate and the factors
entering into its calculation shall be certified by the
actuary as part of the annual valuations and the actuarial
investigation and evaluation of the system conducted every
five years under section 5902(j) (relating to administrative
duties of the board).
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(6) In the event that the annual interest rate adopted
by the board for the calculation is changed during the period
used to determine the shared-risk contribution rate, the
board, with the advice of the actuary, shall determine the
applicable rate during the entire period, expressed as an
annual rate.
(7) For any fiscal year in which the actual
contributions by the Commonwealth or an employer are lower
than those required to be made under section 5507(d)
(relating to contributions to the system by the Commonwealth
and other employers), the prospective shared-risk
contribution rate for those employees whose employers are not
making the contributions required by section 5507(d) shall be
zero and shall not subsequently be increased, except as
otherwise provided in this section.
(8) If the actuary certifies that the accrued liability
contributions calculated in accordance with the actuarial
cost method provided in section 5508(b), as adjusted by the
experience adjustment factor, are zero or less, then the
shared-risk contribution rate for the next fiscal year shall
be zero and shall not subsequently be increased, except as
otherwise provided in this section.
Section 314. Section 5502 of Title 71, amended December 28,
2015 (P.L.529, No.93), is amended to read:
§ 5502. Social Security integration member contributions.
Except for any period of current service in which the making
of regular member contributions has ceased solely by reason of
section 5502.1 (relating to waiver of regular member
contributions and Social Security integration member
contributions) or any provision of this part relating to
limitations under IRC § 401(a)(17) or 415, contributions shall
be made on behalf of [a] an active member of any class other
than Class A-5 who prior to March 1, 1974, has elected Social
Security integration coverage. The amount of such contributions
shall be 6 1/4% of that portion of his compensation as an active
member in excess of the maximum wages taxable under the
provisions of the Social Security Act (49 Stat. 620, 42 U.S.C. §
301 et seq.), in addition to the regular member contributions
which, after such election, shall be determined on the basis of
the basic contribution rate of 5% and the additional member
contribution of 1 1/4%: Provided, That a member may elect to
discontinue Social Security integration coverage and shall
thereafter be ineligible to accrue any further Social Security
integration credits or any additional benefits on account of
Social Security integration membership.
Section 314.1. Sections 5502.1(b) and 5503.1(a) of Title 71
are amended to read:
§ 5502.1. Waiver of regular member contributions and Social
Security integration member contributions.
* * *
(b) Applicability.--This section shall not apply to any
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member who has Class A-3 [or], Class A-4 or Class A-5 service
credit.
* * *
§ 5503.1. Pickup contributions.
(a) Treatment for purposes of IRC § 414(h).--All
contributions to the fund required to be made under sections
5501 (relating to regular member contributions for current
service), 5501.1 (relating to shared-risk member contributions
for Class A-3 [and], Class A-4 and Class A-5 service), 5502
(relating to Social Security integration member contributions),
5503 (relating to joint coverage member contributions) and
[section] 5505.1 (relating to additional member contributions),
with respect to current State service rendered by an active
member on or after January 1, 1982, shall be picked up by the
Commonwealth or other employer and shall be treated as the
employer's contribution for purposes of IRC § 414(h).
* * *
Section 314.2. Section 5504 of Title 71, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 5504. Member contributions for the purchase of credit for
previous State service or to become a full coverage
member.
(a) Amount of contributions for service in other than Class
G through N.--
(1) The contributions to be paid by an active member or
eligible school employee for credit [for] in the system for
the portion of total previous State service other than
service in Class G, Class H, Class I, Class J, Class K, Class
L, Class M and Class N that a member is eligible to have
credited or to become a full coverage member shall be
sufficient to provide an amount equal to the regular and
additional accumulated deductions which would have been
standing to the credit of the member for such service had
regular and additional member contributions been made with
full coverage in the class of service and at the rate of
contribution applicable during such period of previous
service and had his regular and additional accumulated
deductions been credited with statutory interest during all
periods of subsequent State service as an active member or
inactive member on leave without pay and school service as an
active member or inactive member of the Public School
Employees' Retirement System up to the date of purchase.
(2) Notwithstanding paragraph (1), active members [with]
who perform State service credited as Class A-3 [State]
service shall make contributions and receive credit as if the
previous State service was Class A-3 service, and active
members [with] who perform State service credited as Class A-
4 [State] service shall make contributions and receive credit
as if the previous State service was Class A-4 service, even
if it would have been credited as a different class of
service had the State employee been a member of the system at
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the time the service was performed unless it was mandatory
that the State employee be an active member of the system and
the previous State service is being credited as the result of
a mandatory active membership requirement.
(a.1) Converted county service.--No contributions shall be
required to restore credit for previously credited State service
in Class G, Class H, Class I, Class J, Class K, Class L, Class M
and Class N. Such service shall be restored upon the
commencement of payment of the contributions by an active member
of a class of service other than Class A-5 required to restore
credit in the system for all other previous State service other
than Class A-5 service.
(b) Certification and method of payment.--
(1) The amount payable shall be certified in each case
by the board in accordance with methods approved by the
actuary and shall be paid in a lump sum within 30 days or in
the case of an active member or eligible school employee who
is an active member of the Public School Employees'
Retirement System may be amortized with statutory interest
through salary deductions to the system in amounts agreed
upon by the member and the board. The salary deduction
amortization plans agreed to by members and the board may
include a deferral of payment amounts and statutory interest
until the termination of school service or State service as
the board in its sole discretion decides to allow. The board
may limit the salary deduction amortization plans to such
terms as the board in its sole discretion determines. In the
case of an eligible school employee who is an active member
of the Public School Employees' Retirement System, the agreed
upon salary deductions shall be remitted to the Public School
Employees' Retirement Board, which shall certify and transfer
to the board the amounts paid.
(2) No payments for service or coverage shall be allowed
for which the required contributions would cause a violation
of the limitation related to contributions applicable to
governmental plans contained in IRC § 415. In the event that
any service credit or coverage based on such disallowed
contributions is granted after the effective date of this
paragraph, then such service credit shall be canceled and
benefits calculated without regard to such service or
contributions and any member contributions in excess of the
limitations and statutory interest credited on those
contributions shall be refunded to the member by the board.
Section 314.3. Sections 5505(b)(1), (c), (d) and (i)(4) and
5506.1(a) of Title 71 are amended to read:
§ 5505. Contributions for the purchase of credit for creditable
nonstate service.
* * *
(b) Nonintervening military service.--
(1) (i) The amount due for the purchase of credit for
military service other than intervening military service
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by a member who is eligible to make the purchase under
section 5304(a)(1) or (2) (relating to creditable
nonstate service) shall be determined by applying the
member's basic contribution rate, the additional
contribution rate plus the Commonwealth normal
contribution rate for active members at the time of
entry, subsequent to such military service, of the member
into State service to his average annual rate of
compensation, excluding compensation received for Class
A-5 service, over the first three years of such
subsequent State service and multiplying the result by
the number of years and fractional part of a year of
creditable nonintervening military service being
purchased together with statutory interest during all
periods of subsequent State service as an active member
or inactive member on leave without pay and school
service as an active member or inactive member of the
Public School Employees' Retirement System to date of
purchase.
(ii) The amount due for the purchase of credit for
military service other than intervening military service
by a member who is eligible to make the purchase under
section 5304(a)(3) shall be determined by applying the
member's basic contribution rate, plus the Commonwealth
normal contribution rate for active members at the time
of entry, subsequent to such military service, of the
member into Class A-5 State service to his average annual
rate of compensation received for Class A-5 service
subject to any limit each year by the application of the
Class A-5 annual compensation limit, over the first three
years of such subsequent Class A-5 State service and
multiplying the result by the number of years and
fractional part of a year of creditable nonintervening
military service being purchased, together with statutory
interest during all periods of subsequent State service
as an active member or inactive member on leave without
pay and school service as an active member or inactive
member of the Public School Employees' Retirement System
to date of purchase.
(iii) Upon application for credit for such service,
payment shall be made in a lump sum within 30 days or in
the case of an active member or eligible school employee
who is an active member of the Public School Employees'
Retirement System it may be amortized with statutory
interest through salary deductions in amounts agreed upon
by the member and the board. The salary deduction
amortization plans agreed to by members and the board may
include a deferral of payment amounts and statutory
interest until the termination of school service or State
service as the board in its sole discretion decides to
allow. The board may limit salary deduction amortization
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plans to such terms as the board in its sole discretion
determines. In the case of an eligible school employee
who is an active member of the Public School Employees'
Retirement System, the agreed upon salary deductions
shall be remitted to the Public School Employees'
Retirement Board, which shall certify and transfer to the
board the amounts paid. Application may be filed for all
such military service credit upon completion of three
years of subsequent State service and shall be credited
as Class A service.
* * *
(c) Intervening military service.--Contributions on account
of credit for intervening military service shall be determined
by the member's regular contribution rate, shared-risk
contribution rate, Social Security integration contribution
rate, the additional contribution rate which shall be applied
only to those members who began service on or after the
effective date of this amendatory act and compensation at the
time of entry of the member into active military service,
together with statutory interest during all periods of
subsequent State service as an active member or inactive member
on leave without pay and school service as an active member or
inactive member of the Public School Employees' Retirement
System to date of purchase. Upon application for such credit the
amount due shall be certified in the case of each member by the
board in accordance with methods approved by the actuary, and
contributions may be made by:
(1) regular monthly payments during active military
service; or
(2) a lump sum payment within 30 days of certification;
or
(3) salary deductions to the system in amounts agreed
upon by the member or eligible school employee who is an
active member of the Public School Employees' Retirement
System and the board.
The salary deduction amortization plans agreed to by members and
the board may include a deferral of payment amounts and
statutory interest until the termination of school service or
State service as the board in its sole discretion decides to
allow. The board may limit salary deduction amortization plans
to such terms as the board in its sole discretion determines. In
the case of an eligible school employee who is an active member
of the Public School Employees' Retirement System, the agreed
upon salary deductions shall be remitted to the Public School
Employees' Retirement Board, which shall certify and transfer to
the board the amounts paid.
(d) Nonmilitary and nonmagisterial service.--Contributions
on account of credit for creditable nonstate service other than
military and magisterial service by State employees who first
become members of the system before January 1, 2011, or before
December 1, 2010, as a member of the General Assembly shall be
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determined by applying the member's basic contribution rate, the
additional contribution rate plus the Commonwealth normal
contribution rate for active members at the time of entry
subsequent to such creditable nonstate service of the member
into State service to his compensation at the time of entry into
State service as a member of the system and multiplying the
result by the number of years and fractional part of a year of
creditable nonstate service being purchased together with
statutory interest during all periods of subsequent State
service as an active member or inactive member on leave without
pay and school service as an active member or inactive member of
the Public School Employees' Retirement System to the date of
purchase. Upon application for credit for such service payment
shall be made in a lump sum within 30 days or in the case of an
active member or eligible school employee who is an active
member of the Public School Employees' Retirement System it may
be amortized with statutory interest through salary deductions
to the system in amounts agreed upon by the member and the
board. The salary deduction amortization plans agreed to by
members and the board may include a deferral of payment amounts
and statutory interest until the termination of school service
or State service as the board in its sole discretion decides to
allow. The board may limit salary deduction amortization plans
to such terms as the board in its sole discretion determines. In
the case of an eligible school employee who is an active member
of the Public School Employees' Retirement System, the agreed
upon salary deduction shall be remitted to the Public School
Employees' Retirement Board, which shall certify and transfer to
the board the amounts paid.
* * *
(i) Purchases of nonstate service credit by State employees
who first became members of the system on or after December 1,
2010.--
* * *
(4) The payment for credit purchased under this
subsection shall be certified in each case by the board in
accordance with methods approved by the actuary and shall be
paid in a lump sum within 30 days or in the case of an active
member or eligible school employee who is an active member of
the Public School Employees' Retirement System may be
amortized with statutory interest through salary deductions
to the system in amounts agreed upon by the member and the
board. The salary deduction amortization plans agreed to by
members and the board may include a deferral of payment
amounts and interest until the termination of school service
or State service as the board in its sole discretion decides
to allow. The board may limit the salary deduction
amortization plans to such terms as the board in its sole
discretion determines. In the case of an eligible school
employee who is an active member of the Public School
Employees' Retirement System, the agreed upon salary
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deductions shall be remitted to the Public School Employees'
Retirement Board, which shall certify and transfer to the
board the amounts paid.
* * *
§ 5506.1. Annual compensation limit under IRC § 401(a)(17).
(a) General rule.--In addition to other applicable
limitations set forth in this part, and notwithstanding any
provision of this part to the contrary, the annual compensation
of each noneligible member and each participant taken into
account for benefit purposes under this part shall not exceed
the limitation under IRC § 401(a)(17). On and after January 1,
1996, any reference in this part to the limitation under IRC §
401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
1993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
compensation limit set forth in this subsection. The OBRA '93
annual compensation limit is $150,000, as adjusted by the
commissioner for increases in the cost of living in accordance
with IRC § 401(a)(17)(B). The cost-of-living adjustment in
effect for a calendar year applies to any determination period
which is a period, not exceeding 12 months, over which
compensation is determined, beginning in such calendar year. If
a determination period consists of fewer than 12 months, the
OBRA '93 compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the
determination period and the denominator of which is 12.
* * *
Section 315. Title 71 is amended by adding a section to
read:
§ 5506.2. Application of Class A-5 annual compensation limit.
(a) General rule.--The Class A-5 annual compensation limit
shall be applied to the total compensation received each
calendar year for service as a member of Class A-5 and, if a
multiple service member, for service in Class T-G in the Public
School Employees' Retirement System.
(b) Adjustment required.--For purposes of calculating final
average salary for the determination of standard single life
annuities and other benefits resulting from Class A-5 service,
compensation received each calendar year for Class A-5 service
and, if a multiple service member, as a school employee for
service as a Class T-G member of the Public School Employees'
Retirement System shall be adjusted by first limiting the
compensation to the Class A-5 annual compensation limit for that
year. The limited Class A-5 service compensation shall then be
annualized for any part-time service on the basis of the
fractional portion of the year for which credit is received.
Section 316. Section 5507(a), (b), (d) and (e) of Title 71
are amended and the section is amended by adding a subsection to
read:
§ 5507. Contributions to the system by the Commonwealth and
other employers.
(a) Contributions on behalf of active members.--The
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Commonwealth and other employers whose employees are members of
the system or participants in the plan shall make contributions
to the fund on behalf of all active members in such amounts as
shall be certified by the board as necessary to provide,
together with the members' total accumulated deductions and
Class A-5 accumulated deductions, annuity reserves on account of
prospective annuities other than those provided in sections 5708
(relating to supplemental annuities), 5708.1 (relating to
additional supplemental annuities), 5708.2 (relating to further
additional supplemental annuities), 5708.3 (relating to
supplemental annuities commencing 1994), 5708.4 (relating to
special supplemental postretirement adjustment), 5708.5
(relating to supplemental annuities commencing 1998), 5708.6
(relating to supplemental annuities commencing 2002), 5708.7
(relating to supplemental annuities commencing 2003) and 5708.8
(relating to special supplemental postretirement adjustment of
2002), in accordance with the actuarial cost method provided in
section 5508(a), (b), (c), (d) and (f) (relating to actuarial
cost method).
(b) Contributions on behalf of annuitants.--The Commonwealth
and other employers whose employees are members of the system or
participants in the plan shall make contributions on behalf of
annuitants in such amounts as shall be certified by the board as
necessary to fund the liabilities for supplemental annuities in
accordance with the actuarial cost method provided in section
5508(e) [(relating to actuarial cost method)].
(b.1) Payment of employer contributions to the system.--
(1) Payment of employer normal contributions shall be as
a percentage of:
(i) the compensation of active members in classes of
service other than Class A-5; and
(ii) the compensation of active members of Class A-5
who have 25 or fewer eligibility points resulting from
Class A-5 service or, if a multiple service member, Class
T-G service up to each employee's Class A-5 annual
compensation limit.
(2) Payment of accrued liability contributions as
modified by the experience adjustment factor shall be as a
percentage of compensation of active members and active
participants.
* * *
(d) Payment of final contribution rate.--Notwithstanding the
calculation of the actuarially required contribution rate and
the provisions of subsections (a) and (b), the Commonwealth and
other employers whose employees are members of the system or
participants in the plan shall make contributions to the fund on
behalf of all active members and annuitants in such amounts as
shall be certified by the board in accordance with section
5508(i).
(e) Benefits completion plan contributions.--In addition to
all other contributions required under this section and section
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5508, the Commonwealth and other employers whose employees are
members of the system shall make contributions as certified by
the board pursuant to section 5941 (relating to benefits
completion plan). Payment of contributions under this subsection
shall be as a percentage of the compensation of active members
in classes of service other than Class A-5 and the compensation
of active members of Class A-5 who have 25 or fewer eligibility
points resulting from Class A-5 service or, if a multiple
service member, Class T-G up to each employee's Class A-5 annual
compensation limit.
* * *
Section 317. Section 5508(a), (b), (c)(1) and (3), (e)(2),
(f) and (h) of Title 71 are amended and subsection (c) is
amended by adding a paragraph to read:
§ 5508. Actuarial cost method.
(a) Employer contribution rate on behalf of active
members.--The amount of the Commonwealth and other employer
contributions on behalf of all active members shall be computed
by the actuary as a percentage of the total compensation of all
active members and participants, subject to the limitations in
section 5507(b.1) (relating to contributions to the system by
the Commonwealth and other employees), during the period for
which the amount is determined and shall be so certified by the
board. The actuarially required contribution rate on behalf of
all active members shall consist of the employer normal
contribution rate, as defined in subsection (b), and the accrued
liability contribution rate as defined in subsection (c). The
actuarially required contribution rate on behalf of all active
members shall be modified by the experience adjustment factor as
calculated in subsection (f).
(b) Employer normal contribution rate.--The employer normal
contribution rate shall be determined after each actuarial
valuation on the basis of an annual interest rate and such
mortality and other tables as shall be adopted by the board in
accordance with generally accepted actuarial principles. The
employer normal contribution rate shall be determined as a level
percentage of the compensation of the average new active member
on which employer normal contributions are made under section
5507(b.1), which percentage, if contributed on the basis of his
prospective compensation on which employer normal contributions
are made under section 5507(b.1) through his entire period of
active State service, would be sufficient to fund the liability
for any prospective benefit payable to him in excess of that
portion funded by his prospective member contributions,
excluding shared-risk member contributions. In no case shall the
employer normal contribution rate be less than zero.
(c) Accrued liability contribution rate.--
(1) For the fiscal years beginning July 1, 2002, and
July 1, 2003, the accrued liability contribution rate shall
be computed as the rate of total compensation of all active
members which shall be certified by the actuary as sufficient
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to fund over a period of ten years from July 1, 2002, the
present value of the liabilities for all prospective
benefits, except for the supplemental benefits as provided in
sections 5708 (relating to supplemental annuities), 5708.1
(relating to additional supplemental annuities), 5708.2
(relating to further additional supplemental annuities),
5708.3 (relating to supplemental annuities commencing 1994),
5708.4 (relating to special supplemental postretirement
adjustment), 5708.5 (relating to supplemental annuities
commencing 1998), 5708.6 (relating to supplemental annuities
commencing 2002), 5708.7 (relating to supplemental annuities
commencing 2003) and 5708.8 (relating to special supplemental
postretirement adjustment of 2002), in excess of the total
assets in the fund (calculated recognizing all investment
gains and losses over a five-year period), excluding the
balance in the supplemental annuity account, and the present
value of employer normal contributions and of member
contributions payable with respect to all active members on
December 31, 2001, and excluding contributions to be
transferred by county retirement systems or pension plans
pursuant to section 5507(c) (relating to contributions to the
system by the Commonwealth and other employers). The amount
of each annual accrued liability contribution shall be equal
to the amount of such contribution for the fiscal year
beginning July 1, 2002, except that, if the accrued liability
is increased by legislation enacted subsequent to June 30,
2002, but before July 1, 2003, such additional liability
shall be funded over a period of ten years from the first day
of July, coincident with or next following the effective date
of the increase. The amount of each annual accrued liability
contribution for such additional legislative liabilities
shall be equal to the amount of such contribution for the
first annual payment.
* * *
(3) For the fiscal year beginning July 1, 2010, the
accrued liability contribution rate shall be computed as the
rate of total compensation of all active members which shall
be certified by the actuary as sufficient to fund in equal
dollar installments over a period of 30 years from July 1,
2010, the present value of the liabilities for all
prospective benefits calculated as of the immediately prior
valuation date, including the supplemental benefits as
provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4,
5708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits
payable from the retirement benefit plan established pursuant
to section 5941 (relating to benefits completion plan), in
excess of the actuarially calculated assets in the fund
(calculated recognizing all realized and unrealized
investment gains and losses each year in level annual
installments over five years), including the balance in the
supplemental annuity account, and the present value of
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employer normal contributions and of member contributions
payable with respect to all active members, inactive members
on leave without pay, vestees and special vestees on December
31, 2009. If the accrued liability is changed by legislation
enacted subsequent to December 31, 2009, and before January
1, 2017, such change in liability shall be funded in equal
dollar installments over a period of ten years from the first
day of July following the valuation date coincident with or
next following the date such legislation is enacted.
(4) For fiscal years beginning on or after July 1, 2017,
the accrued liability contribution rate shall be computed as
provided for under paragraph (3), except that the rate shall
be computed as a rate of total compensation of all active
members and active participants. In addition to any employer
defined contributions made to the trust, the Commonwealth and
other employers of participants shall make the accrued
liability contributions to the fund certified by the board.
If the accrued liability is changed by legislation enacted
subsequent to December 31, 2016, the change in liability
shall be funded in equal dollar installments as a percentage
of compensation of all active members and active participants
over a period of ten years from the first day of July
following the valuation date coincident with or next
following the date such legislation is enacted. The accrued
liability contribution rate shall be determined after each
actuarial valuation on the basis of an annual interest rate
and the mortality and other tables adopted by the board in
accordance with generally accepted actuarial principles.
* * *
(e) Supplemental annuity contribution rate.--
* * *
(2) For fiscal years beginning on or after July 1, 2010,
contributions from the Commonwealth and other employers whose
employees are members of the system required to provide for
the payment of supplemental annuities as provided in sections
5708, 5708.1, 5708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7
and 5708.8 shall be paid as part of the accrued liability
contribution rate as provided for in subsection (c)(3), and
there shall not be a separate supplemental annuity
contribution rate attributable to those supplemental
annuities. In the event that supplemental annuities are
increased by legislation enacted subsequent to December 31,
2009, the additional liability for the increase in benefits
shall be funded in equal dollar installments as a percentage
of compensation of all active members and active participants
over a period of ten years from the first day of July
following the valuation date coincident with or next
following the date such legislation is enacted.
(f) Experience adjustment factor.--
(1) For each year after the establishment of the accrued
liability contribution rate and the supplemental annuity
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contribution rate for the fiscal year beginning July 1, 2010,
any increase or decrease in the unfunded accrued liability
and any increase or decrease in the liabilities and funding
for supplemental annuities, due to actual experience
differing from assumed experience (recognizing all realized
and unrealized investment gains and losses over a five-year
period), changes in contributions caused by the final
contribution rate being different from the actuarially
required contribution rate, State employees making shared-
risk member contributions, changes in actuarial assumptions
or changes in the terms and conditions of the benefits
provided by the system by judicial, administrative or other
processes other than legislation, including, but not limited
to, reinterpretation of the provisions of this part, shall be
amortized in equal dollar annual contributions as a
percentage of compensation of all active members and active
participants over a period of 30 years beginning with the
July 1 succeeding the actuarial valuation determining said
increases or decreases.
(2) The actuarially required contribution rate shall be
the sum of the normal contribution rate, the accrued
liability contribution rate and the supplemental annuity
contribution rate, modified by the experience adjustment
factor as calculated in paragraph (1).
* * *
(h) Temporary application of collared contribution rate.--
The collared contribution rate for each fiscal year shall be
determined by comparing the actuarially required contribution
rate calculated without regard for costs added by legislation to
the prior year's final contribution rate. If, for any of the
fiscal years beginning July 1, 2011, July 1, 2012, and on or
after July 1, 2013, the actuarially required contribution rate
calculated without regard for costs added by legislation is more
than 3%, 3.5% and 4.5%, respectively, of the total compensation
of all active members greater than the prior year's final
contribution rate, then the collared contribution rate shall be
applied and be equal to the prior year's final contribution rate
increased by the respective percentage above of total
compensation of all active members. Otherwise, and for all
subsequent fiscal years, the collared contribution rate shall
not be applicable. In no case shall the collared contribution
rate be less than 4% of total compensation of all active
members.
* * *
Section 318. Section 5509 of Title 71 is amended to read:
§ 5509. Appropriations and assessments by the Commonwealth.
(a) Annual submission of budget.--The board shall prepare
and submit annually an itemized budget consisting of the amounts
necessary to be appropriated by the Commonwealth out of the
General Fund and special operating funds and the amounts to be
assessed the other employers required to meet the separate
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obligations to the fund and the trust accruing during the fiscal
period beginning the first day of July of the following year.
(b) Appropriation and payment.--The General Assembly shall
make an appropriation sufficient to provide for the separate
obligations of the Commonwealth to the fund and the trust. Such
amount shall be paid by the State Treasurer through the
Department of Revenue into the fund or trust, as the case may
be, in accordance with requisitions presented by the board. The
contributions to the system by the Commonwealth on behalf of
active members who are officers of the Pennsylvania State Police
shall be charged to the General Fund and to the Motor License
Fund in the same ratios as used to apportion the appropriations
for salaries of members of the Pennsylvania State Police. The
contributions to the system by the Commonwealth on behalf of
active members who are enforcement officers and investigators of
the Pennsylvania Liquor Control Board shall be charged to the
General Fund and to the State Stores Fund.
(c) Contributions from funds other than General Fund.--The
amounts assessed other employers who are required to make the
necessary separate contributions to the fund and the trust out
of funds other than the General Fund shall be paid by such
employers into the fund or trust, as the case may be, in
accordance with requisitions presented by the board. The General
Fund of the Commonwealth shall not be held liable to appropriate
the moneys required to build up the reserves in the fund
necessary for the payment of benefits from the system to
employees or to make the employer defined contributions for
employees of such other employers. In case any such other
employer shall fail to provide to the fund the moneys necessary
for such purpose, then the service of such members of the system
for such period for which money is not so provided shall be
credited and pickup contributions with respect to such members
shall continue to be credited to the members' savings account.
The annuity to which such member is entitled shall be determined
as actuarially equivalent to the present value of the maximum
single life annuity of each such member reduced by the amount of
employer contributions to the system payable on account and
attributable to his compensation during such service, except
that no reduction shall be made as a result of the failure of an
employer to make contributions required for a period of USERRA
leave.
Section 318.1. Section 5701 of Title 71, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 5701. Return of total accumulated deductions.
Any member upon termination of service may, in lieu of all
benefits payable from the system under this chapter to which he
may be entitled, elect to receive his total accumulated
deductions by his required beginning date.
Section 318.2. Section 5701.1 of Title 71 is amended to
read:
§ 5701.1. Transfer of accumulated deductions.
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When an employee of the Juvenile Court Judges' Commission
elects membership in an independent retirement program pursuant
to section 5301(f) (relating to mandatory and optional
membership in the system and participation in the plan), the
board shall transfer directly to the trustee or administrator of
the independent retirement program all accumulated deductions
resulting from service credited while an employee of the
Juvenile Court Judges' Commission.
Section 319. Section 5702(a), (a.1), (b) and (c) and
5704(a), (c), (e) and (f) of Title 71 are amended and the
sections are amended by adding subsections to read:
§ 5702. Maximum single life annuity.
(a) General rule.--Any full coverage member who is eligible
to receive an annuity pursuant to the provisions of section
5308(a) or (b) (relating to eligibility for annuities) who
terminates State service, or if a multiple service member who is
a school employee who is an active member of the Public School
Employees' Retirement System who terminates school service,
before attaining age 70 shall be entitled to receive a maximum
single life annuity attributable to his credited service and
equal to the sum of the following single life annuities
beginning at the effective date of retirement:
(1) A single life annuity that is the sum of the
standard single life [annuity multiplied by the sum of the
products,] annuities determined separately for each class of
service[, obtained by multiplying] multiplied by the
appropriate class of service multiplier [by the ratio of
years of service credited in that class to the total credited
service] applicable to each standard single life annuity. In
case the member on the effective date of retirement is under
superannuation age for any service, a reduction factor
calculated to provide benefits actuarially equivalent to an
annuity starting at superannuation age shall be applied to
the product determined for that service. The class of service
multiplier for any period of concurrent service shall be
multiplied by the proportion of total State and school
compensation during such period attributable to State service
as a member of the system. In the event a member has two
multipliers for one class of service [the class of service
multiplier to be used for calculating benefits for that class
shall be the average of the two multipliers weighted by the
proportion of compensation attributable to each multiplier
during the three years of highest annual compensation in that
class of service: Provided, That in the case of a member of
Class E-1, a portion but not all of whose three years of
highest annual judicial compensation is prior to January 1,
1973, two class of service multipliers shall be calculated on
the basis of his entire judicial service, the one applying
the judicial class of service multipliers effective prior to
January 1, 1973 and the second applying the class of service
multipliers effective subsequent to January 1, 1973. The
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average class of service multiplier to be used for
calculating benefits for his judicial service shall be the
average of the two calculated multipliers weighted by the
proportion of compensation attributable to each of the
calculated multipliers during the three years of highest
annual compensation in that class of service.] separate
standard single life annuities shall be calculated for the
portion of service in such class applicable to each class of
service multiplier.
(2) If eligible, a single life annuity of 2% of his
average noncovered salary for each year of social security
integration credit as provided for in section 5305 (relating
to social security integration credits) multiplied, if on the
effective date of retirement the member is under
superannuation age for any service, by the actuarially
determined reduction factor for that service.
(3) If eligible, a single life annuity which is
actuarially equivalent to the regular and additional
accumulated deductions attributable to contributions as a
member of Class C, but not less than such annuity determined
as if the member were age 60 on the effective date of
retirement, actuarially reduced in the event the member is
under superannuation age on the effective date of retirement.
(4) If eligible, a single life annuity which is
actuarially equivalent to the amount by which his regular and
additional accumulated deductions attributable to any
credited service other than as a member of Class A-3, Class
A-4, Class A-5 and Class C are greater than one-half of the
actuarially equivalent value on the effective date of
retirement of the annuity as provided in paragraph (1)
attributable to service other than Class A-3, Class A-4,
Class A-5 and Class C for which regular or joint coverage
member contributions were made. [This paragraph shall not
apply to any member with State service credited as Class A-3
or Class A-4.]
(5) If eligible, a single life annuity which is
actuarially equivalent to the amount by which his social
security integration accumulated deductions are greater than
one-half of the actuarially equivalent value on the effective
date of retirement of the annuity provided for under
paragraph (2).
(6) If eligible, a single life annuity sufficient
together with the annuity provided for in paragraph (1) as a
Class A, Class AA, Class A-3 and Class A-4 member and the
highest annuity provided for in paragraph (2) to which he is
entitled, or at his option could have been entitled, to
produce that percentage of [a] the sums of the standard
single life [annuity] annuities adjusted by the application
of the class of service multiplier for Class A, Class AA,
Class A-3 or Class A-4 as set forth in paragraph (1) in the
case where any service is credited as a member of Class A,
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Class AA, Class A-3 or Class A-4 on the effective date of
retirement as determined by his total years of credited
service as a member of Class A, Class AA, Class A-3 and Class
A-4 and by the following table:
Total Years of
Credited Service
as a Member of
Class A,
Class AA, Class A-3
and 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
35-40 100%
41 102%
42 104%
43 106%
44 108%
45 or more 110%
(a.1) Rule for terminations after attaining age 70.--
(1) Any full coverage member who is eligible to receive
an annuity pursuant to the provisions of section 5308(a) who
terminates State service, or if a multiple service member who
is a school employee and an active member of the Public
School Employees' Retirement System who terminates school
service, on or after attaining age 70 and who applies for a
superannuation annuity to be effective the day after the
termination of State service or school service, as the case
may be, shall be entitled to receive a maximum single life
annuity as of a determination date that is equal to the
greater of subparagraph (i) or (ii), plus any annuity he may
be eligible to receive attributable to Class A-5 service
credit:
(i) the sum of the annuities provided in subsection
(a)(1) through (6) calculated without including any
annuity attributable to Class A-5 service credit as of
the determination date; and
(ii) the greater of clause (A) or (B):
(A) the sum of the annuities provided in
subsection (a)(1), (3), (4) and (6) as of the
preceding determination date without including any
annuity attributable to Class A-5 service credit
adjusted by the actuarial increase factor, plus the
annuities provided in subsection (a)(2) and (5) as of
the determination date; and
(B) the maximum single life annuity calculated
without including any annuity attributable to Class
A-5 service credit as of the preceding determination
date adjusted by the actuarial increase factor.
The maximum single life annuity calculated without
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including any annuity attributable to Class A-5 service
credit shall be calculated for each determination date.
(2) For purposes of this subsection, the determination
date shall be:
(i) the member's birthday, provided that as of such
date the member qualifies for a maximum single life
annuity under this subsection, determined excluding
eligibility for any annuity attributable to Class A-5
service credit; or
(ii) if the member's maximum single life annuity is
being determined as of the member's effective date of
retirement, then the determination date shall be the
member's effective date of retirement.
(3) In the event an active member, an inactive member on
leave without pay or a multiple service member who is a
school employee and an active member of the Public School
Employees' Retirement System has attained age 70 before the
effective date of this subsection, or enters State service or
school service, as the case may be, after attaining age 70,
then section 5305.1 (relating to eligibility for actuarial
increase factor) and subsections (a) and (a.1) shall be
effective prospectively with respect to such member at the
member's next birthday after the effective date of this
subsection, entry into State service, or school service.
Nothing in this subsection shall be construed to provide an
actuarial increase factor for any period of service prior to the
effective date of this subsection.
(b) Present value of annuity.--The present value of the
maximum single life annuity as calculated in accordance with
subsection (a) of this section shall be determined by
multiplying the maximum single life annuity by the cost of a
dollar annuity on the effective date of retirement, which shall
take into account any delay in the receipt of the portion of the
annuity based on Class A-5 if the effective date of retirement
is under the superannuation age applicable to Class A-5 service.
Such present value shall be decreased only as required under the
provisions of section 5506 (relating to incomplete payments),
5509(c) (relating to appropriations and assessments by the
Commonwealth) or 5703 (relating to reduction of annuities on
account of social security old-age insurance benefits).
(c) Limitation on amount of annuity.--The annuity paid to a
member under subsection (a) attributable to any credited service
other than as a member of Class A-5 and reduced in accordance
with the option elected under section 5705 (relating to member's
options) shall not exceed the highest compensation received for
any credited service other than service credited as Class A-5
during any period of twelve consecutive months of credited
service. No limit on the total annuity paid to a member with
Class D-3 service shall be applied in the case of a member who
served as a constitutional officer of the General Assembly.
* * *
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(e) Coordination of benefits.--The determination and payment
of the maximum single life annuity under this section shall be
in addition to any payments a member may be entitled to receive,
has received or is receiving as a result of being a participant
in the plan.
§ 5704. Disability annuities.
(a) Amount of annuity.--A member who has made application
for a disability annuity and has been found to be eligible in
accordance with the provisions of section 5905(c)(1) (relating
to duties of the board regarding applications and elections of
members) shall receive a disability annuity payable from the
effective date of disability as determined by the board and
continued until a subsequent determination by the board that the
annuitant is no longer entitled to a disability annuity. [The]
If the sum of the products of the number of years and fractional
part of a year of credited service in each class and the
appropriate class of service multiplier is greater than 16.667,
then the disability annuity shall be a single life annuity that
is equal to [a] the sum of the standard single life [annuity]
annuities determined separately for each class of service
multiplied by the appropriate class of service multiplier
[applicable to the class of service at the time of disability if
the product of such class of service multiplier and the total
number of years of credited service is greater than 16.667,
otherwise the], otherwise each standard single life annuity
shall be multiplied by the lesser of the following ratios:
MY*/Y or 16.667/Y
where Y = total number of years of credited service, Y* = total
years of credited service if the member were to continue as a
State employee until attaining superannuation age as applicable
to that class of service at the time of disability, or if the
member has attained superannuation age, as applicable to that
class of service at the time of disability, then the number of
years of credited service and M = the class of service
multiplier as applicable to that class of service at the
effective date of disability. A member of Class C shall receive,
in addition, any annuity to which he may be eligible under
section 5702(a)(3) (relating to maximum single life annuity).
The member shall be entitled to the election of a joint and
survivor annuity on that portion of the disability annuity to
which he is entitled under section 5702.
* * *
(c) Reduction on account of earned income.--Subsequent to
January 1, 1972, payments on account of disability shall be
reduced by that amount by which the earned income of the
annuitant, as reported in accordance with section 5908(b)
(relating to rights and duties of annuitants), for the preceding
calendar year together with the disability annuity payments
provided in this section other than subsection (b), for the
year, exceeds the product of:
[(i)] (1) the last year's salary of the annuitant as a
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[State employee] member of the system; and
[(ii)] (2) the ratio of the current monthly payment to
the monthly payment at the effective date of disability;
Provided, That the annuitant shall not receive less than his
member's annuity or the amount to which he may be entitled under
section 5702 whichever is greater.
* * *
(e) Termination of State service.--Upon termination of
disability annuity payments in excess of an annuity calculated
in accordance with section 5702, a disability annuitant who:
(1) does not have Class A-3 [or], Class A-4 or Class A-5
service credit; or
(2) has Class A-3 [or], Class A-4 or Class A-5 service
credit and fewer than ten eligibility points;
and who does not return to State service may file an application
with the board for an amount equal to the excess, if any, of the
sum of the shared-risk accumulated deductions plus the regular
and additional accumulated deductions standing to his credit at
the effective date of disability over one-third of the total
disability annuity payments received. If the annuitant on the
date of termination of service was eligible for an annuity as
provided in section 5308(a) or (b) (relating to eligibility for
annuities), he may file an application with the board for an
election of an optional modification of his annuity.
(f) Supplement for service connected disability.--
(1) If a member has been found to be eligible for a
disability annuity and if the disability has been found to be
a service connected disability and if the member is receiving
workers' compensation payments for other than medical
benefits, such member shall receive a supplement equal to
[70% of his final average salary] the amount determined under
paragraph (2) less the sum of the annuity as determined under
subsection (a) and any payments paid or payable on account of
such disability under the act of June 2, 1915 (P.L.736,
No.338), known as the Workers' Compensation Act, the act of
June 21, 1939 (P.L.566, No.284), known as The Pennsylvania
Occupational Disease Act, and the Social Security Act (49
Stat. 620, 42 U.S.C. § 301 et seq.). Such supplement shall
continue as long as he is determined to be disabled and is
receiving workers' compensation payments for other than
medical benefits on account of his service connected
disability in accordance with the Workers' Compensation Act
or The Pennsylvania Occupational Disease Act. If the member
has received a lump sum workers' compensation payment in lieu
of future weekly compensation payments, the length in weeks
and calculation of the service connected disability
supplement shall be determined by dividing the lump sum
payment by the average weekly wage as determined by the
Workers' Compensation Board.
(2) For a member who does not have Class A-5 service or
has only Class A-5 service, the amount to be used to
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determine eligibility for the supplement under paragraph (1)
shall be 70% of his final average salary. For a member who
has Class A-5 service and other classes of service, the
amount to be used to determine eligibility for the supplement
under paragraph (1) shall be determined using the following
formula:
A = 0.7 [(FAS
A-5
multiplied by Y
A-5
/Y
T
) +
(FAS
W
multiplied by Y
W
/Y
T
)].
(3) The following apply to the formula in paragraph (2):
(i) A equals the amount used to determine the
supplement;
(ii) Y
T
equals total years of credited service;
(iii) Y
W
equals years of service credited in classes
of service other than Class A-5;
(iv) FAS
W
equals final average salary calculated for
classes of service other than Class A-5;
(v) Y
A-5
equals years of service credited in Class A-
5; and
(vi) FAS
A-5
equals final average salary calculated
for service credited in Class A-5.
* * *
(h) Coordination of benefits.--The determination and payment
of a disability annuity under this section is in addition to any
payments a member may be entitled to receive, has received or is
receiving as a result of being a participant in the plan.
Section 320. Section 5705(a) of Title 71, amended December
28, 2015 (P.L.529, No.93), is amended to read:
§ 5705. Member's options.
(a) General rule.--Any special vestee [who has attained
superannuation age, any vestee who does not have Class A-3 or
Class A-4 service credit having five or more eligibility points
for service other than Class T-E or Class T-F service in the
Public School Employees' Retirement System, or vestee who has
Class A-3 or Class A-4 service credit having ten or more
eligibility points, any member with Class G, Class H, Class I,
Class J, Class K, Class L, Class M or Class N service having
five or more eligibility points or any other eligible member
upon termination of State service who has not withdrawn his
total accumulated deductions as provided in section 5701
(relating to return of total accumulated deductions)] , vestee
or any other member upon termination of State service who is
eligible to receive an annuity as provided in section 5308(a) or
(b) (relating to eligibility for annuities) may apply for and
elect to receive either a maximum single life annuity, as
calculated in accordance with the provisions of section 5702
(relating to maximum single life annuity), or a reduced annuity
certified by the actuary to be actuarially equivalent to the
maximum single life annuity and in accordance with one of the
following options; except that no member shall elect an annuity
payable to one or more survivor annuitants other than his spouse
or alternate payee of such a magnitude that the present value of
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the annuity payable to him for life plus any lump sum payment he
may have elected to receive is less than 50% of the present
value of his maximum single life annuity and no member may elect
a payment option that would provide benefits that do not satisfy
the minimum distribution requirements or would violate the
incidental death benefit rules of IRC § 401(a)(9):
(1) Option 1.--A life annuity to the member with:
(i) a guaranteed total payment attributable to all
classes of service other than Class A-5 equal to the
present value of the maximum single life annuity
attributable to all classes of service other than Class
A-5 on the effective date of retirement with the
provision that, if, at his death, he has received less
than such present value, the unpaid balance shall be
payable to his beneficiary[.]; and
(ii) a guaranteed total payment attributable to
Class A-5 service equal to the present value of the
maximum single life annuity attributable to Class A-5
service on the effective date of retirement with the
provision that, if, at his death, he has received less
than such present value, the unpaid balance shall be
payable to his beneficiary.
(2) Option 2.--A joint and survivor annuity payable
during the lifetime of the member with the full amount of
such annuity payable thereafter to his survivor annuitant, if
living at his death.
(3) Option 3.--A joint and fifty percent (50%) survivor
annuity payable during the lifetime of the member with one-
half of such annuity payable thereafter to his survivor
annuitant, if living at his death.
(4) Option 4.--Some other benefit which shall be
certified by the actuary to be actuarially equivalent to the
maximum single life annuity, subject to the following
restrictions:
(i) any annuity shall be payable without reduction
during the lifetime of the member;
(ii) the sum of all annuities payable to the
designated survivor annuitants shall not be greater than
one and one-half times the annuity payable to the member;
and
(iii) a portion of the benefit may be payable as a
lump sum, except that such lump sum payment shall not
exceed an amount equal to the total accumulated
deductions standing to the credit of the member that are
not the result of contributions and statutory interest
made or credited as a result of Class A-3 or Class A-4
service. The balance of the present value of the maximum
single life annuity adjusted in accordance with section
5702(b) shall be paid in the form of an annuity with a
guaranteed total payment, a single life annuity, or a
joint and survivor annuity or any combination thereof but
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subject to the restrictions of subparagraphs (i) and (ii)
under this option.
* * *
Section 320.1. Section 5705.1 of Title 71 is amended to
read:
§ 5705.1. Payment of accumulated deductions resulting from
Class A-3 [and], Class A-4 and Class A-5 service.
Any superannuation or withdrawal annuitant who:
(1) has Class A-3 [or], Class A-4 or Class A-5 service
credit;
(2) has service credited in one or more classes of
service; and
(3) because he has five or more, but fewer than ten,
eligibility points is not eligible to receive an annuity on
his Class A-3 [or], Class A-4 and Class A-5 service
shall receive in a lump sum at the time of his retirement, in
addition to any other annuity or lump sum payment which he may
elect, his accumulated deductions resulting from his Class A-3
or Class A-4 service credit. Payment of these accumulated
deductions resulting from Class A-3 [or], Class A-4 and Class A-
5 service credit shall not be eligible for installment payments
pursuant to section 5905.1 (relating to installment payments of
accumulated deductions) but shall be considered a lump sum
payment for purposes of section 5905.1(d).
Section 320.2 Section 5706(a), (a.1), (a.2), (b) and (c)(1)
of Title 71, amended December 28, 2015 (P.L.529, No.93), are
amended to read:
§ 5706. Termination of annuities.
(a) General rule.--
(1) If the annuitant returns to State service or enters
or has entered school service and elects multiple service
membership, any annuity payable to him under this part shall
cease effective upon the date of his return to State service
or entering school service without regard to whether he is a
mandatory, optional or prohibited member of the system or
participant in the plan or, if a multiple service member,
whether he is a mandatory, optional or prohibited member or
participant of the Public School Employees' Retirement System
or School Employees' Defined Contribution Plan and in the
case of an annuity other than a disability annuity the
present value of such annuity, adjusted for full coverage in
the case of a joint coverage member who makes the appropriate
back contributions for full coverage, shall be frozen as of
the date such annuity ceases. An annuitant who is credited
with an additional 10% of Class A and Class C service as
provided in section 5302(c) (relating to credited State
service) and who returns to State service shall forfeit such
credited service and shall have his frozen present value
adjusted as if his 10% retirement incentive had not been
applied to his account. In the event that the cost-of-living
increase enacted December 18, 1979 occurred during the period
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of such State or school employment, the frozen present value
shall be increased, on or after the member attains
superannuation age, by the percent applicable had he not
returned to service.
(2) This subsection shall not apply in the case of any
annuitant who:
(i) may render services to the Commonwealth in the
capacity of an independent contractor; or
(ii) is over normal retirement age or who has been
an annuitant for more than one year and who may render
service to the Commonwealth:
(A) as a member of an independent board or
commission or as a member of a departmental
administrative or advisory board or commission when
such members of independent or departmental boards or
commissions are compensated on a per diem basis for
not more than 150 days per calendar year; or
(B) as a member of an independent board or
commission requiring appointment by the Governor,
with advice and consent of the Senate, where the
annual salary payable to the member does not exceed
$35,000 and where the member has been an annuitant
for at least six months immediately preceding the
appointment.
Such service shall not be eligible for participation in the
plan, mandatory pickup participant contributions or employer
defined contributions.
(a.1) Return to State service during emergency.--When, in
the judgment of the employer, an emergency creates an increase
in the work load such that there is serious impairment of
service to the public, an annuitant who is over normal
retirement age or who has been an annuitant for more than one
year may be returned to State service for a period not to exceed
95 days in any calendar year without loss of his annuity. In
computing the number of days an annuitant has returned to State
service, any amount of time less than one-half of a day shall be
counted as one-half of a day. For agencies, boards and
commissions under the Governor's jurisdiction, the approval of
the Governor that an emergency exists shall be required before
an annuitant may be returned to State service his service shall
not be subject to member contributions or be eligible for
qualification as creditable State service or for participation
in the plan, mandatory pickup participant contributions or
employer defined contributions.
(a.2) Return of benefits.--In the event an annuitant whose
annuity from the system ceases pursuant to this section receives
any annuity payment, including a lump sum payment pursuant to
section 5705 (relating to member's options) on or after the date
of his return to State service or entering school service, the
annuitant shall return to the board the amount so received from
the system plus statutory interest. The amount payable shall be
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certified in each case by the board in accordance with methods
approved by the actuary and shall be paid in a lump sum within
30 days or in the case of an active member or school employee
who is an active member of the Public School Employees'
Retirement System may be amortized with statutory interest
through salary deductions to the system in amounts agreed upon
by the member and the board. The salary deduction amortization
plans agreed to by the member and the board may include a
deferral of payment amounts and statutory interest until the
termination of school service or State service as the board in
its sole discretion decides to allow. The board may limit salary
deduction amortization plans to such terms as the board in its
sole discretion determines. In the case of a school employee who
is an active member of the Public School Employees' Retirement
System, the agreed upon salary deductions shall be remitted to
the Public School Employees' Retirement Board, which shall
certify and transfer to the board the amounts paid.
* * *
(b) Subsequent discontinuance of service.--Upon subsequent
discontinuance of service, such member other than a former
annuitant who had the effect of his frozen present value
eliminated in accordance with subsection (c) or a former
disability annuitant shall be entitled to an annuity which is
actuarially equivalent to the sum of:
(1) the present value as determined under subsection (a)
[and];
(2) the present value of a maximum single life annuity
based on years of service credited in classes of service
other than Class A-5 subsequent to reentry in the system and
his final average salary computed by reference to his
compensation for service credited in classes of service other
than Class A-5 and Class T-G during his entire period of
State and school service[.]; and
(3) if eligible, the present value of a maximum single
life annuity based on years of service credited in Class A-5
subsequent to reentry in the system and his final average
salary computed by reference to his compensation for service
credited in Class A-5 and Class T-G during his entire period
of State and school service.
(c) Elimination of the effect of frozen present value.--
(1) An annuitant who returns to State service as an
active member of the system and earns three eligibility
points by performing credited State service in a class of
service other than Class A-5 following the most recent period
of receipt of an annuity under this part, or an annuitant who
enters school service and:
(i) is a multiple service member; or
(ii) who elects multiple service membership, and
earns three eligibility points by performing credited State
service or credited school service in classes of service
other than Class A-5 or Class T-G following the most recent
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period of receipt of an annuity under this part, and who had
the present value of his annuity frozen in accordance with
subsection (a), shall qualify to have the effect of the
frozen present value resulting from all previous periods of
retirement eliminated, provided that all payments under
Option 4 and annuity payments payable during previous periods
of retirement plus interest as set forth in paragraph (3)
shall be returned to the fund in the form of an actuarial
adjustment to his subsequent benefits or in such form as the
board may otherwise direct.
* * *
Section 321. Section 5707(b), (e) and (f) of Title 71 are
amended and the section is amended by adding a subsection to
read:
§ 5707. Death benefits.
* * *
(b) Members ineligible for annuities.--In the event of the
death of a special vestee, an active member, an inactive member
on leave without pay or a current or former State employee
performing USERRA leave who is not entitled to a death benefit
as provided in subsection (a), his designated beneficiary shall
be paid the full amount of his total accumulated deductions and
Class A-5 accumulated deductions.
(b.1) Members eligible for annuities in some classes of
service and ineligible in other classes of service.--In the
event of the death of a member who is eligible for an annuity
based on service credited in some classes of service and
ineligible for an annuity for service credited in other classes
of service, a benefit shall be paid under subsection (a) based
on the service for which an annuity is deemed payable in
addition to payment under subsection (b) of the accumulated
deductions attributable to service for which the member was not
eligible for an annuity.
* * *
(e) Annuitants electing maximum single life annuity.--
(1) In the event of the death of an annuitant who has
elected to receive the maximum single life annuity before he
has received in annuity payments based on his service
credited in classes other than Class A-5 the full amount of
the total accumulated deductions standing to his credit on
the effective date of retirement, the balance shall be paid
to his designated beneficiary.
(2) In the event of the death of an annuitant who has
elected to receive the maximum single life annuity before he
has received in annuity payments based on his service
credited in Class A-5 the full amount of the Class A-5
accumulated deductions standing to his credit on the
effective date of retirement, the balance shall be paid to
his designated beneficiary.
(f) Members subject to limitations under section 5702(c).--
Subject to the limitations contained in section 401(a)(9) of the
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Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
401(a)(9)), the present value of any annuity in excess of that
payable under section 5702 (relating to maximum single life
annuity) that is not subject to the limitations under section
415(b) of the Internal Revenue Code of 1986 shall be paid in a
lump sum to the beneficiary designated by the member after the
death of the member. A beneficiary receiving a benefit under
this subsection shall not be able to elect a payment method
otherwise allowed under section 5709(b)(2) and (3) (relating to
payment of benefits from the system).
* * *
Section 321.1. Section 5709(a) of Title 71 is amended to
read:
§ 5709. Payment of benefits from the system.
(a) Annuities.--Any annuity granted under the provisions of
this part and paid from the fund shall be paid in equal monthly
installments.
(b) Death benefits.--If the amount of a death benefit
payable from the fund to a beneficiary of a member under section
5707 (relating to death benefits) or under the provisions of
Option 1 of section 5705(a)(1) (relating to member's options) is
$10,000 or more, such beneficiary may elect to receive payment
according to one of the following options:
(1) a lump sum payment;
(2) an annuity actuarially equivalent to the amount
payable; or
(3) a lump sum payment and an annuity such that the
annuity is actuarially equivalent to the amount payable less
the lump sum payment specified by the beneficiary.
* * *
Section 322. Title 71 is amended by adding a chapter to
read:
CHAPTER 58
STATE EMPLOYEES' DEFINED CONTRIBUTION PLAN
Sec.
5801. Establishment.
5802. Plan document.
5803. Individual investment accounts.
5804. Participant contributions.
5805. Mandatory pickup participant contributions.
5806. Employer defined contributions.
5806.1. Use of plan savings.
5807. Eligibility for benefits.
5808. Death benefits.
5809. Vesting.
5810. Termination of distributions.
5811. Agreements with financial institutions and other
organizations.
5812. Powers and duties of board.
5813. Responsibility for investment loss.
5814. Investments based on participants' investment allocation
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choices.
5815. Expenses.
5816. (Reserved).
5817. Tax qualification.
5818. State Employees' Defined Contribution Holding Vehicle
Trust.
§ 5801. Establishment.
(a) State Employees' Defined Contribution Plan.--The State
Employees' Defined Contribution Plan is established. The board
shall administer and manage the plan which shall be a defined
contribution plan exclusively for the benefit of those State
employees who participate in the plan and their beneficiaries
within the meaning of and in conformity with IRC § 401(a). The
board shall determine the terms and provisions of the plan not
inconsistent with this part, IRC or other applicable law and
shall provide for the plan's administration.
(b) State Employees' Defined Contribution Trust.--The State
Employees' Defined Contribution Trust is established as part of
the plan. The trust shall be comprised of the individual
investment accounts and all assets and moneys in those accounts.
The members of the board shall be the trustees of the trust,
which shall be administered exclusively for the benefit of those
State employees who participate in the plan and their
beneficiaries within the meaning of and in conformity with IRC §
401(a). The board shall determine the terms and provisions of
the trust not inconsistent with this part, IRC or other
applicable law and shall provide for the investment and
administration of the trust.
(c) Assets held in trust.--All assets and income in the plan
that have been or shall be withheld or contributed by the
participants, the Commonwealth and other employers in accordance
with this part shall be held in trust in any funding vehicle
permitted by the applicable provisions of IRC for the exclusive
benefit of the participants and their beneficiaries until such
time as the funds are distributed to the participants or their
beneficiaries in accordance with the terms of the plan document.
The assets of the plan held in trust for the exclusive benefit
of the participants and their beneficiaries may be used for the
payment of the fees, costs and expenses related to the
administration and investment of the plan and the trust.
(d) Name for transacting business.--All of the business of
the plan shall be transacted, the trust invested, all
requisitions for money drawn and payments made and all of its
cash and securities and other property shall be held by the name
of the "State Employees' Defined Contribution Plan."
Notwithstanding any other law to the contrary, the board may
establish a nominee registration procedure for the purpose of
registering securities in order to facilitate the purchase, sale
or other disposition of securities pursuant to the provisions of
this part.
§ 5802. Plan document.
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The board shall set forth the terms and provisions of the
plan and trust in a document containing the terms and conditions
of the plan and in a trust declaration that shall be published
in the Pennsylvania Bulletin. The creation of the document
containing the terms and conditions of the plan and the trust
declaration and the establishment of the terms and provisions of
the plan and the trust need not be promulgated by regulation or
formal rulemaking and shall not be subject to the act of July
31, 1968 (P.L.769, No.240), referred to as the Commonwealth
Documents Law. A reference in this part or other law to the plan
shall include the plan document unless the context clearly
indicates otherwise.
§ 5803. Individual investment accounts.
The board shall establish in the trust an individual
investment account for each participant in the plan. All
contributions by a participant or an employer for or on behalf
of a participant shall be credited to the participant's
individual investment account, together with all interest and
investment earnings and losses. Investment and administrative
fees, costs and expenses shall be charged to the participants'
individual investment accounts. Employer defined contributions
shall be recorded and accounted for separately from participant
contributions, but all interest, investment earnings and losses,
and investment and administrative fees, costs and expenses shall
be allocated proportionately.
§ 5804. Participant contributions.
(a) Mandatory contributions.--A participant shall make
mandatory pickup participant contributions through payroll
deductions to the participant's individual investment account
for State service required to be credited in the plan. The
employer shall cause those contributions for service required to
be credited in the plan to be made and deducted from each
payroll or on such schedule as established by the board.
(b) Voluntary contributions.--A participant may make
voluntary contributions through direct trustee-to-trustee
transfers or through transfers of money received in an eligible
rollover into the trust to the extent allowed by IRC § 402. The
rollovers shall be made in a form and manner as determined by
the board, shall be credited to the participant's individual
investment account and shall be separately accounted for by the
board.
(c) Prohibited contributions.--No contributions may be
allowed that would cause a violation of the limitations related
to contributions applicable to governmental plans contained in
IRC § 415 or in other provisions of law. In the event that any
disallowed contributions are made, any participant contributions
in excess of the limitations and investment earnings on those
contributions shall be refunded to the participant by the board.
§ 5805. Mandatory pickup participant contributions.
(a) Treatment for purposes of IRC § 414(h).--The
contributions to the trust required to be made under section
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5804(a) (relating to participant contributions) with respect to
State service rendered by an active participant shall be picked
up by the Commonwealth or other employer and shall be treated as
the employer's contribution for purposes of IRC § 414(h). After
the effective date of this section, an employer employing a
participant in the plan shall pick up the required mandatory
participant contributions by a reduction in the compensation of
the participant.
(b) Treatment for other purposes.--For all purposes other
than the IRC, the mandatory pickup participant contributions
shall be treated as contributions made by a participant in the
same manner and to the same extent as if the contributions were
made directly by the participant and not picked up.
§ 5806. Employer defined contributions.
(a) Contributions for service.--The Commonwealth or other
employer of an active participant shall make employer defined
contributions for service of an active participant that shall be
credited to the active participant's individual investment
account. Employer defined contributions shall be recorded and
accounted for separately from participant contributions.
(b) Contributions resulting from participants reemployed
from USERRA leave.--When a State employee reemployed from USERRA
leave makes the mandatory pickup participant contributions
permitted to be made for the USERRA leave, the Commonwealth or
other employer by whom the State employee is employed at the
time the participant contributions are made shall make whatever
employer defined contributions would have been made under this
section had the employee making the participant contributions
continued to be employed in the participant's State office or
position instead of performing USERRA leave. The employer
defined contributions shall be placed in the participant's
individual investment account as otherwise provided by this
part.
(c) Limitations on contributions.--No contributions may be
allowed that would cause a violation of the limitations related
to contributions applicable to governmental plans contained in
IRC § 415 or in other provisions of law. In the event that any
disallowed contributions are made, any employer defined
contributions in excess of the limitations and investment
earnings on the contributions shall be refunded to the employer
by the board.
§ 5806.1. Use of plan savings.
(a) Determination.--The system shall determine the
difference between:
(1) The current aggregate employer contributions and the
aggregate employer contributions that would have been
required by Act 120 of 2010.
(2) The current plan expenditures and the plan
expenditures that would have been required by Act 120 of
2010.
(b) Utilization.--Any savings realized based on the
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implementation of the plan, as determined under subsection (a),
shall be utilized to pay down the accrued unfunded liability.
(c) Intent.--It is the intent of the General Assembly to
make an annual appropriation from the General Fund to the system
in the amount determined under subsection (a)(1).
(d) Definition.--As used in this section, the term "Act 120
of 2010" shall mean the act of November 23, 2010 (P.L.1269,
No.120), entitled, "An act amending Titles 24 (Education) and 71
(State Government) of the Pennsylvania Consolidated Statutes, in
Title 24, further providing for definitions, for mandatory and
optional membership, for contributions by the Commonwealth, for
payments by employers, for actuarial cost method, for additional
supplemental annuities, for further additional supplemental
annuities, for supplemental annuities commencing 1994, for
supplemental annuities commencing 1998, for supplemental
annuities commencing 2002, for supplemental annuities commencing
2003, for administrative duties of board, for payments to school
entities by Commonwealth, for eligibility points for retention
and reinstatement of service credits and for creditable
nonschool service; providing for election to become a Class T-F
member; further providing for classes of service, for
eligibility for annuities, for eligibility for vesting, for
regular member contributions, for member contributions for
creditable school service, for contributions for purchase of
credit for creditable nonschool service, for maximum single life
annuity, for disability annuities, for member's options, for
duties of board regarding applications and elections of members
and for rights and duties of school employees and members;
providing for Independent Fiscal Office study; in Title 71,
establishing an independent fiscal office and making a related
repeal; further providing for definitions, for credited State
service, for retention and reinstatement of service credits, for
creditable nonstate service and for classes of service;
providing for election to become a Class A-4 member; further
providing for eligibility for annuities and for eligibility for
vesting; providing for shared-risk member contributions for
Class A-3 and Class A-4 service; further providing for waiver of
regular member contributions and Social Security integration
member contributions, for member contributions for purchase of
credit for previous State service or to become a full coverage
member, for contributions for the purchase of credit for
creditable nonstate service, for contributions by the
Commonwealth and other employers, for actuarial cost method, for
maximum single life annuity, for disability annuities and for
member's options; providing for payment of accumulated
deductions resulting from Class A-3 service; further providing
for additional supplemental annuities, for further additional
supplemental annuities, for supplemental annuities commencing
1994, for supplemental annuities commencing 1998, for
supplemental annuities commencing 2002, for supplemental
annuities commencing 2003, for special supplemental
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postretirement adjustment of 2002, for administrative duties of
the board, for duties of board to advise and report to heads of
departments and members, for duties of board regarding
applications and elections of members, for installment payments
of accumulated deductions, for rights and duties of State
employees and members, for members' savings account, for State
accumulation account, for State Police Benefit Account, for
Enforcement Officers' Benefit Account, for supplemental annuity
account and for construction of part; and providing for
Independent Fiscal Office study, for retirement eligibility of
Pennsylvania State Police officers or members, for a prohibition
on the issuance of pension obligation bonds, for holding certain
public officials harmless, for construction of calculation or
actuarial method, for applicability and for certain operational
provisions."
§ 5807. Eligibility for benefits.
(a) Termination of service.--A participant who terminates
State service shall be eligible to withdraw the vested
accumulated total defined contributions standing to the
participant's credit in the participant's individual investment
account or a lesser amount as the participant may request.
Payment shall be made in a lump sum unless the board has
established other forms of distribution in the plan document. A
participant who withdraws his vested accumulated total defined
contributions shall no longer be a participant in the plan,
notwithstanding that the former State employee may continue to
be a member of the system with Class A-5 service credit or may
have contracted to receive an annuity or other form of payment
from a provider retained by the board for such purposes.
(b) Required distributions.--All payments pursuant to this
section shall start and be made in compliance with the minimum
distribution requirements and incidental death benefit rules of
IRC § 401(a)(9). The board shall take any action and make any
distributions it may determine are necessary to comply with
those requirements.
(c) (Reserved).
(d) Prohibited distributions.--A participant who also is a
member of the system must be terminated from all positions that
result in either membership in the system or participation in
the plan to be eligible to receive a distribution.
(e) Loans.--Loans or other distributions, including hardship
or unforeseeable emergency distributions, from the plan to State
employees who have not terminated State service are not
permitted, except as required by law.
(f) Small individual investment accounts.--A participant who
terminates State service and whose vested accumulated total
defined contributions are below the threshold established by law
as of the date of termination of service may be paid the vested
accumulated total defined contributions in a lump sum as
provided in IRC § 401(a)(31).
§ 5808. Death benefits.
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(a) General rule.--In the event of the death of an active
participant or inactive participant, the board shall pay to the
participant's beneficiary the vested balance in the
participant's individual investment account in a lump sum or in
such other manner as the board may establish in the plan
document.
(b) Death of participant receiving distributions.--In the
event of the death of a participant receiving distributions, the
board shall pay to the participant's beneficiary the vested
balance in the participant's individual investment account in a
lump sum or in such other manner as the board may establish in
the plan document or, if the board has established alternative
methods of distribution in the plan document under which the
participant was receiving distributions, to the participant's
beneficiary or successor payee, as the case may be, as provided
in the plan document.
(c) Contracts.--The board may contract with financial
institutions, insurance companies or other types of third-party
providers to allow participants who receive a lump sum
distribution to receive payments and death benefits in a form
and manner as provided by the contract.
§ 5809. Vesting.
(a) Participant and voluntary contributions.--Subject to the
forfeiture and attachment provisions of section 5953 (relating
to taxation, attachment and assignment of funds) or otherwise as
provided by law, a participant shall be vested with respect to
all mandatory pickup participant contributions and voluntary
contributions paid by or on behalf of the participant to the
trust in addition to interest and investment gains or losses on
the participant contributions but not including investment fees
and administrative charges.
(b) Employer defined contributions.--
(1) Subject to the forfeiture and attachment provisions
of section 5953 or otherwise as provided by law, a
participant with three eligibility points as provided under
section 5307(c)(3) (relating to eligibility points) shall be
vested with respect to all employer defined contributions
paid to the participant's individual investment account in
the trust in addition to interest and investment gains and
losses on the employer defined contributions but not
including investment fees and administrative charges.
(2) Nonvested employer defined contributions and the
interest and investment gains and losses on the nonvested
employer defined contributions that are forfeited when a
participant terminates State service before accruing three
eligibility points as provided under section 5307(c)(3) are
credited to the participant's most recent employer's future
obligation assessed under section 5509 (relating to
appropriations and assessments by the Commonwealth).
(c) USERRA leave and eligibility points.--A participant in
the plan who is reemployed from USERRA leave or who dies while
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performing USERRA leave shall receive eligibility points under
this section for the State service that would have been
performed had the member not performed USERRA leave.
§ 5810. Termination of distributions.
(a) Return to State service.--
(1) A participant receiving distributions or an inactive
participant who returns to State service shall cease
receiving distributions and shall not be eligible to receive
distributions until the participant subsequently terminates
State service, without regard to whether the participant is a
mandatory, optional or prohibited member of the system or
participant in the plan.
(2) This subsection shall not apply to a distribution of
accumulated employer defined contributions or other
distributions that the participant has received or used to
purchase an annuity from a provider contracted by the board.
(b) Return of benefits paid during USERRA leave.--
(1) If a former State employee is reemployed from USERRA
leave and received any payments or annuity from the plan
during the USERRA leave, the employee shall return to the
board the amount so received plus interest as provided in the
plan document.
(2) The amount payable shall be certified in each case
by the board in accordance with methods approved by the
actuary and shall be paid in a lump sum within 30 days or in
the case of an active participant may be amortized with
interest as provided in the plan document through salary
deductions to the trust in amounts agreed upon by the active
participant and the board, but for not longer than a period
that starts with the date of reemployment and continues for
up to three times the length of the active participant's
immediate past period of USERRA leave. The repayment period
shall not exceed five years.
§ 5811. Agreements with financial institutions and other
organizations.
(a) Written agreement.--To establish and administer the
plan, the board shall enter into a written agreement with one or
more financial institutions or pension management organizations
to administer the plan and the investment of funds held pursuant
to the plan. The administrator shall be selected in accordance
with the following:
(1) The board shall solicit proposals from financial
institutions and pension management organizations.
(2) The board shall publish the solicitation in the
Pennsylvania Bulletin.
(3) Proposals received shall be evaluated based on
specific criteria adopted by the board. The criteria shall
include experience, customer service history and other
criteria.
(b) Rebid.--A contract to administer the plan under
subsection (a) shall be rebid at least once every ten years.
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§ 5812. Powers and duties of board.
The board shall have the following powers and duties to
establish the plan and trust and administer the provisions of
this chapter and part:
(1) The board may commingle or pool assets with the
assets of other persons or entities.
(2) The board shall pay all administrative fees, costs
and expenses of managing, investing and administering the
plan, the trust and the individual investment accounts from
the balance of such individual investment accounts except as
the General Assembly otherwise provides by appropriations
from the General Fund.
(3) The board may establish investment guidelines and
limits on the types of investments that participants may
make, consistent with the board's fiduciary obligations.
(4) The board shall have the power to change the terms
of the plan as may be necessary to maintain the tax-qualified
status of the plan.
(5) The board may establish a process for election to
participate in the plan by those State employees for whom
participation is not mandatory.
(6) The board may perform an annual or more frequent
review of any qualified fund manager for the purpose of
assuring that the fund manager continues to meet all
standards and criteria established.
(7) The board may allow for eligible rollovers and
direct trustee-to-trustee transfers into the trust from
qualified plans of other employers, regardless of whether the
employers are private employers or public employers.
(8) The board may allow a former participant to maintain
the participant's individual investment account within the
plan.
(9) The board shall administer or ensure the
administration of the plan in compliance with the
qualifications and other rules of the IRC.
(10) The board may establish procedures to provide for
the lawful payment of benefits.
(11) The board shall determine what constitutes a
termination of State service.
(12) The board may establish procedures for
distributions of small accounts as required or permitted by
the IRC.
(13) The board may establish procedures in the plan
document or promulgate rules and regulations as it deems
necessary for the administration and management of the plan,
including, but not limited to, establishing:
(i) Procedures for eligible participants to change
their investment choices on a periodic basis or make
other elections regarding their participation in the
plan.
(ii) Procedures for deducting mandatory pickup
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participant contributions from a participant's
compensation.
(iii) Procedures for rollovers and trustee-to-
trustee transfers allowed under the IRC and permitted as
part of the plan.
(iv) Standards and criteria for providing not less
than ten options in accordance with three or more
providers of investment options to eligible individuals
regarding investments of amounts deferred under the plan.
The standards and criteria must provide for variety of
investment options and shall be reviewed in accordance
with criteria established by the board. One of the
available options must serve as the default option for
participants who do not make a timely election and, to
the extent commercially available, one option must have
an annuity.
(v) Standards and criteria for disclosing to the
participants the anticipated and actual income
attributable to amounts invested, property rights and all
fees, costs and expenses to be made against amounts
deferred to cover the fees, costs and expenses of
administering and managing the plan or trust.
(vi) Procedures, standards and criteria for the
making of distributions from the plan upon termination
from employment or death or in other circumstances
consistent with the purpose of the plan.
(14) The board may waive any reporting or information
requirement contained in this part if the board determines
that the information is not needed for the administration of
the plan.
(15) The board may contract any services and duties in
lieu of staff, except final adjudications and as prohibited
by law. Any duties or responsibilities of the board not
required by law to be performed by the board can be delegated
to a third-party provider subject to appeal to the board.
(16) The board may provide that any duties of the
employer or information provided by the participant to the
employer be performed or received directly by the board.
(17) The board shall ensure that participants are
provided with educational materials about investment options
and choices.
§ 5813. Responsibility for investment loss.
The board, the Commonwealth, an employer or other political
subdivision shall not be responsible for any investment loss
incurred under the plan or for the failure of any investment to
earn any specific or expected return or to earn as much as any
other investment opportunity, whether or not the other
opportunity was offered to participants in the plan.
§ 5814. Investments based on participants' investment
allocation choices.
(a) Investment by participant.--All contributions, interest
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and investment earnings shall be invested based on a
participant's investment allocation choices. All investment
allocation choices shall be credited proportionally between
participant contributions and employer defined contributions.
Each participant shall be credited individually with the amount
of contributions, interest and investment earnings.
(b) Investment of contributions made by entities other than
the Commonwealth.--Investment of contributions by any
corporation, institution, insurance company or custodial bank
that the board has approved shall not be unreasonably delayed,
and in no case may the investment of contributions be delayed
more than 30 days from the date of payroll deduction or the date
voluntary contributions are made to the date that funds are
invested. Any interest earned on the funds pending investment
shall be allocated to the Commonwealth and credited to the
individual investment accounts of participants who are then
participating in the plan unless the interest is used to defray
administrative costs and fees that would otherwise be required
to be borne by participants who are then participating in the
plan.
§ 5815. Expenses.
All fees, costs and expenses of administering the plan and
the trust and investing the assets of the trust shall be borne
by the participants and paid from assessments against the
balances of the individual investment accounts as established by
the board, except that for fiscal years ending before July 1,
2020, and for any additional fiscal years as the General
Assembly may provide, the fees, costs and expenses of
establishing and administering the plan and the trust shall be
paid by the Commonwealth through annual appropriations from the
General Fund, made on the basis of estimates from the board.
§ 5816. (Reserved).
§ 5817. Tax qualification.
(a) Required distributions.--All payments pursuant to this
chapter shall start and be made in compliance with the minimum
distribution requirements and incidental death benefit rules of
IRC § 401(a).
(b) Limitations.--The following shall apply:
(1) (i) Except as provided under subparagraph (ii) and
notwithstanding a provision of this part, a contribution
or benefit related to the plan may not exceed any
limitation under IRC § 415 with respect to governmental
plans which is in effect on the date the contribution or
benefit payment takes effect.
(ii) An increase in a limitation under IRC § 415
shall apply to all participants on and after the
effective date of this section.
(iii) For the purposes of this paragraph, the term
"government plans" shall have the same meaning as the
term has in IRC § 414(d).
(2) (i) Except as provided under subparagraph (ii), an
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amendment of this part on or after the effective date of
this section that increases contributions or benefits for
active participants, inactive participants or
participants receiving distributions shall not be deemed
to provide for a contribution or benefit in excess of any
limitation, adjusted on or after the effective date of
this section, under IRC § 415 unless specifically
provided by legislation.
(ii) Notwithstanding subparagraph (i), an increase
in benefits on or after the effective date of this
section for a participant in the plan shall be authorized
and apply to the fullest extent allowed by law.
§ 5818. State Employees' Defined Contribution Holding Vehicle
Trust.
(a) Establishment.--The State Employees' Defined
Contribution Holding Vehicle Trust is established as part of the
plan. The holding vehicle trust shall be comprised of the
individual investment accounts and all assets and moneys in
those accounts from January 1, 2018, until the earlier of the
date the board certifies that the State Employees' Defined
Contribution Trust is operational and able to accept participant
and employer contributions or December 31, 2018, unless the
board so certifies on or before January 1, 2018. The members of
the board shall be the trustees of the holding vehicle trust,
which shall be held in a separate account, established by the
Treasury Department and shall not be inconsistent with this
part, the IRC or other applicable law. The holding vehicle trust
shall be administered exclusively for the benefit of those State
employees who participate in the plan and their beneficiaries
within the meaning of and in conformity with IRC § 401(a)
subject to the requirements of Chapter 59 (relating to
administration, funds, accounts, general provisions).
(b) Assets held in trust.--All assets and income in the
holding vehicle trust that are withheld or contributed by the
participants, the Commonwealth and other employers in accordance
with this part shall be held in trust as permitted by the
applicable provisions of the IRC for the exclusive benefit of
the participants and their beneficiaries until such time as the
funds are transferred to the State Employees' Defined
Contribution Trust in accordance with the terms of the plan
document. The assets of the holding vehicle trust may be used
for the payment of the fees, costs and expenses related to the
administration and investment of the holding vehicle trust and
transfer of assets to the State Employees' Defined Contribution
Trust.
(c) Mandatory pickup participant contributions.--All
mandatory pickup participant contributions and employer defined
contributions that are required under sections 5804 (relating to
participant contributions), 5805 (relating to mandatory pickup
participant contributions) and 5806 (relating to employer
defined contributions) to be made to the State Employees'
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Defined Contribution Trust upon certification of such trust
shall be made to the holding vehicle trust prior to the date the
board certifies the State Employees' Defined Contribution Trust.
The employer shall cause those contributions for service
required to be credited in the plan to be made and deducted from
each payroll or on such schedule as established by the board and
such participant contributions shall be picked up by the
Commonwealth or other employer and shall be treated as the
employer's contribution for purposes of IRC § 414(h). On and
after the effective date of this section, an employer employing
a participant in the plan shall pick up the required mandatory
participant contributions by a reduction in the compensation of
the participant. No participant is permitted to make voluntary
contributions to the holding vehicle trust.
(d) Treatment for other purposes.--For all purposes other
than the IRC, the mandatory pickup participant contributions
shall be treated as contributions made by a participant in the
same manner and to the same extent as if the contributions were
made directly by the participant and not picked up.
(e) Limitations on contributions.--No contributions may be
allowed that would cause a violation of the limitations related
to contributions applicable to governmental plans contained in
IRC § 415 or in other provisions of law. In the event that any
disallowed contributions are made, any employer defined
contributions in excess of the limitations and investment
earnings on the contributions shall be refunded to the employer
by the board.
(f) Death benefits.--In the event of the death of an active
participant or inactive participant, the board shall pay to the
participant's beneficiary the vested balance in the
participant's individual investment account in a lump sum.
(g) Interest.--Upon the disbursement of a return of Class A-
5 accumulated deductions to a participant who has terminated
State service or of a death benefit to a participant's
designated beneficiaries or upon the transfer of all assets in
the holding vehicle trust to the State Employees' Defined
Contribution Trust or December 31, 2017, whichever occurs first,
the Commonwealth shall make an interest payment to the holding
vehicle trust. The interest payment shall be equal to 4% annual
rate of return on the mandatory pickup participant contributions
and employer defined contributions made for the participant,
increased or decreased for any investment losses or earnings
while in the holding vehicle trust, but in no case shall the
interest payment be less than zero.
(h) Responsibility for loss of investment opportunity.--The
board, the Commonwealth, an employer or other political
subdivision shall not be responsible for the failure of any
investment in the holding vehicle trust to earn any specific or
expected return greater than the 4% interest rate paid under
subsection (g) or to earn as much as any other investment
opportunity, whether or not the other opportunity was offered to
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participants in the holding vehicle trust.
(i) Termination of holding vehicle trust.--After the
disbursement or transfer of all assets in the holding vehicle
trust and the certification by the board that no further
liabilities from the holding vehicle trust exist, the holding
vehicle trust shall be closed, and this section, except for
subsection (h), shall become inoperative.
Section 323. Section 5901(a), (c), (d) and (e) of Title 71
are amended to read:
§ 5901. The State Employees' Retirement Board.
(a) Status and membership.--The board shall be an
independent administrative board and consist of 11 members: the
State Treasurer, ex officio, two Senators, two members of the
House of Representatives and six members appointed by the
Governor, one of whom shall be an annuitant of the system or a
participant in the plan who has terminated State service and is
receiving or is eligible to receive distributions, for terms of
four years, subject to confirmation by the Senate. At least five
board members shall be active members of the system or active
participants in the plan, and at least two shall have ten or
more years of credited State service or shall have been active
participants in the plan for ten calendar years. The chairman of
the board shall be designated by the Governor from among the
members of the board. Each member of the board who is a member
of the General Assembly may appoint a duly authorized designee
to act in his stead. In the event that a board member, who is
designated as an active participant or as a participant in the
plan who is receiving or is eligible to receive distributions,
receives a total distribution of his interest in the plan, that
board member may continue to serve on the board for the
remainder of his term.
* * *
(c) Oath of office.--Each member of the board shall take an
oath of office that he will, so far as it devolves upon him,
diligently and honestly, administer the affairs of said board,
the system and the plan and that he will not knowingly violate
or willfully permit to be violated any of the provisions of law
applicable to this part. Such oath shall be subscribed by the
member taking it and certified by the officer before whom it is
taken and shall be immediately filed in the Office of the
Secretary of the Commonwealth.
(d) Compensation and expenses.--The members of the board who
are members of the system or participants in the plan shall
serve without compensation but shall not suffer loss of salary
or wages through serving on the board. The members of the board
who are not members of the system or participants in the plan
shall receive $100 per day when attending meetings and all board
members shall be reimbursed for any necessary expenses. However,
when the duties of the board as mandated are not executed, no
compensation or reimbursement for expenses of board members
shall be paid or payable during the period in which such duties
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are not executed.
(e) Corporate power and legal advisor.--For the purposes of
this part, the board shall possess the power and privileges of a
corporation. [The Attorney General of the Commonwealth shall be
the legal advisor of the board.] The board shall be considered
to be an independent agency under the act of October 15, 1980
(P.L.950, No.164), known as the Commonwealth Attorneys Act.
Legal counsel to the board shall serve independently from the
Governor's Office of General Counsel, the Attorney General and
the General Assembly.
Section 324. Sections 5902(a)(2), (a.1), (b), (c), (e), (h),
(i), (j), (k), (m) and (n) and 5903 heading and (b) of Title 71
are amended and the sections are amended by adding subsections
to read:
§ 5902. Administrative duties of the board.
(a) Employees.--
* * *
(2) Notwithstanding any other provisions of law, the
compensation of investment professionals and legal counsel
shall be established by the board. The compensation of all
other officers and employees of the board who are not covered
by a collective bargaining agreement shall be established by
the board consistent with the standards of compensation
established by the Executive Board of the Commonwealth.
(a.1) Secretary.--The secretary shall act as chief
administrative officer for the board with respect to both the
system and the plan. In addition to other powers and duties
conferred upon and delegated to the secretary by the board, the
secretary shall:
(1) Serve as the administrative agent of the board.
(2) Serve as liaison between the board and applicable
legislative committees, the Treasury Department, the
Department of the Auditor General, and between the board and
the investment counsel and the mortgage supervisor in
arranging for investments to secure maximum returns to the
fund.
(3) Review and analyze proposed legislation and
legislative developments affecting the system or the plan and
present findings to the board, legislative committees, and
other interested groups or individuals.
(4) Direct the maintenance of files and records and
preparation of periodic reports required for actuarial
evaluation studies.
(5) Receive inquiries and requests for information
concerning the system or the plan from the press,
Commonwealth officials, State employees, the general public,
research organizations, and officials and organizations from
other states, and provide information as authorized by the
board.
(6) (i) Supervise a staff of administrative, technical,
and clerical employees engaged in record-keeping and
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clerical processing activities for both the system and
the plan in maintaining files of members and
participants, accounting for contributions, processing
payments to annuitants and terminated participants,
preparing required reports, and retirement counseling.
(ii) The board may utilize the staff of employees
provided for under this paragraph for both the system and
the plan but shall allocate the fees, costs and expenses
incurred under this paragraph between the system and the
plan as appropriate.
(b) Professional personnel.--
(1) The board shall contract for the services of a chief
medical examiner, an actuary, investment advisors and
counselors, and such other professional personnel as it deems
advisable. The board may, with the approval of the Attorney
General, contract for legal services.
(2) The board may utilize the same individuals and firms
contracted under this subsection for both the system and the
plan but shall allocate the fees, costs and expenses incurred
under this subsection between the system and the plan as
appropriate.
(c) Expenses.--
(1) The board shall, through the Governor, submit to the
General Assembly annually a budget covering the
administrative expenses of [this part] the system and a
separate budget covering the administrative expenses of the
plan which budgets shall include those expenses necessary to
establish the plan and trust.
(2) Such expenses of the system as approved by the
General Assembly in an appropriation bill shall be paid from
investment earnings of the fund.
(3) For fiscal years ending on or before June 30, 2019,
such expenses of the plan and the holding vehicle trust as
approved by the General Assembly in an appropriation bill
shall be paid from the General Fund. For fiscal years
beginning on or after July 1, 2019, such expenses of the plan
and the holding vehicle trust as approved by the General
Assembly shall be paid from interest, pursuant to section
5814(b) (relating to investments based on participants'
investment allocation choices), assessments on the balances
of the participants' individual investment accounts or as
otherwise provided in this part except as the General
Assembly provides by appropriations from the General Fund.
(4) Concurrently with its administrative budget, the
board shall also submit to the General Assembly annually a
list of proposed expenditures which the board intends to pay
through the use of directed commissions, together with a list
of the actual expenditures from the past year actually paid
by the board through the use of directed commissions. All
such directed commission expenditures shall be made by the
board for the exclusive benefit of the system and its
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members.
* * *
(e) Records.--
(1) The board shall keep a record of all its proceedings
which shall be open to [inspection] access by the public,
except as otherwise provided in this part or by other law.
(2) Any record, material or data received, prepared,
used or retained by the board or its employees, investment
professionals or agents relating to an investment shall not
constitute a public record subject to public [inspection]
access under the act of [June 21, 1957 (P.L.390, No.212),
referred to as the Right-to-Know Law] February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law, if, in the
reasonable judgment of the board, the [inspection] access
would:
(i) in the case of an alternative investment or
alternative investment vehicle, involve the release of
sensitive investment or financial information relating to
the alternative investment or alternative investment
vehicle which the fund or trust was able to obtain only
upon agreeing to maintain its confidentiality;
(ii) cause substantial competitive harm to the
person from whom sensitive investment or financial
information relating to the investment was received; or
(iii) have a substantial detrimental impact on the
value of an investment to be acquired, held or disposed
of by the fund or trust or would cause a breach of the
standard of care or fiduciary duty set forth in this
part.
(3) (i) The sensitive investment or financial
information excluded from [inspection] access under
paragraph (2)(i), to the extent not otherwise excluded
from [inspection] access, shall constitute a public
record subject to public [inspection] access under the
Right-to-Know Law once the board is no longer required by
its agreement to maintain confidentiality.
(ii) The sensitive investment or financial
information excluded from [inspection] access under
paragraph(2)(ii), to the extent not otherwise excluded
from [inspection] access, shall constitute a public
record subject to public [inspection] access under the
Right-to-Know Law once:
(A) the [inspection] access no longer causes
substantial competitive harm to the person from whom
the information was received; or
(B) the entity in which the investment was made
is liquidated;
whichever is later.
(iii) The sensitive investment or financial
information excluded from [inspection] access under
paragraph(2)(iii), to the extent not otherwise excluded
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from [inspection] access, shall constitute a public
record subject to public [inspection] access under the
Right-to-Know Law once:
(A) the [inspection] access no longer has a
substantial detrimental impact on the value of an
investment of the fund or trust and would not cause a
breach of the standard of care or fiduciary duty set
forth in this part; or
(B) the entity in which the investment was made
is liquidated;
whichever is later.
(4) Except for the provisions of paragraph (3), nothing
in this subsection shall be construed to designate any
record, material or data received, prepared, used or retained
by the board or its employees, investment professionals or
agents relating to an investment as a public record subject
to public [inspection] access under the Right-to-Know Law.
(5) Any record, material or data received, prepared,
used or retained by the board or its employees, or agents
relating to the contributions, account value or benefits
payable to or on account of a participant shall not
constitute a public record subject to public access under the
Right-to-Know Law if, in the reasonable judgment of the
board, the access would disclose any of the following:
(i) The existence, date, amount and any other
information pertaining to the rollover contributions or
trustee-to-trustee transfers, of any participant.
(ii) The investment options selections of any
participant.
(iii) The balance of a participant's individual
investment account, including the amount distributed to
the participant, investment gains or losses or rates of
return.
(iv) The identity of a participant's designated
beneficiary, successor payee or alternate payee.
(v) The benefit payment option of a participant.
(6) Nothing in this subsection shall be construed to
designate any record, material or data received, prepared,
used or retained by the board or its employees, or agents
relating to the contributions, account value or benefits
payable to or on account of a participant as a public record
subject to public access under the Right-to-Know Law.
(7) The following shall apply:
(i) Nothing in this part shall be construed to mean
that the release or publicizing of a record, material or
data which would not constitute a public record under
this subsection shall be a violation of the board's
fiduciary duties.
(ii) This paragraph shall apply to a record,
material or data under this subsection, notwithstanding
any of the following:
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(A) Whether the record, material or data was
created, generated or stored before the effective
date of this paragraph.
(B) Whether the record, material or data was
previously released or made public.
(C) Whether a request for the record, material
or data was made or is pending final response under
the Right-to-Know Law.
* * *
(h) Regulations and procedures.--The board shall, with the
advice of the Attorney General, legal counsel and the actuary,
adopt and promulgate rules and regulations for the uniform
administration of the system. The actuary shall approve in
writing all computational procedures used in the calculation of
contributions and benefits pertaining to the system, and the
board shall by resolution adopt such computational procedures,
prior to their application by the board. Such rules, regulations
and computational procedures as so adopted from time to time and
as in force and effect at any time, together with such tables as
are adopted pursuant to subsection (j) as necessary for the
calculation of annuities and other benefits, shall be as
effective as if fully set forth in this part. Any actuarial
assumption specified in or underlying any such rule, regulation
or computational procedure and utilized as a basis for
determining any benefit shall be applied in a uniform manner.
(i) Data.--The board shall keep in convenient form such data
as are stipulated by the actuary in order that an annual
actuarial valuation of the various accounts of the fund can be
completed within six months of the close of each calendar year.
(j) Actuarial investigation and valuation.--The board shall
have the actuary make an annual valuation of the various
accounts of the fund within six months of the close of each
calendar year. In the year 1975 and in every fifth year
thereafter the board shall have the actuary conduct an actuarial
investigation and evaluation of the system based on data
including the mortality, service, and compensation experience
provided by the board annually during the preceding five years
concerning the members and beneficiaries of the system. The
board shall by resolution adopt such tables as are necessary for
the actuarial valuation of the fund and calculation of
contributions, annuities and other benefits based on the reports
and recommendations of the actuary. Within 30 days of their
adoption, the secretary of the board shall cause those tables
which relate to the calculation of annuities and other benefits
to be published in the Pennsylvania Bulletin in accordance with
the provisions of 45 Pa.C.S. § 725(a) (relating to additional
contents of Pennsylvania Bulletin) and, unless the board
specifies therein a later effective date, such tables shall
become effective on such publication. The board shall include a
report on the significant facts, recommendations and data
developed in each five-year actuarial investigation and
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evaluation of the system in the annual financial statement
published pursuant to the requirements of subsection (m) for the
fiscal year in which such investigation and evaluation were
concluded.
(k) Certification of employer contributions to fund.--The
board shall, each year in addition to the itemized budget
required under section 5509 (relating to appropriations and
assessments by the Commonwealth), certify, as a percentage of
the members' payroll, the shared-risk contribution rate, the
employers' contributions as determined pursuant to section 5508
(relating to actuarial cost method) necessary for the funding of
prospective annuities for active members and the annuities of
annuitants and certify the rates and amounts of the employers'
normal contributions as determined pursuant to section 5508(b),
accrued liability contributions as determined pursuant to
section 5508(c), supplemental annuities contribution rate as
determined pursuant to section 5508(e), the experience
adjustment factor as determined pursuant to section 5508(f), the
collared contribution rate pursuant to section 5508(h) and the
final contribution rate pursuant to section 5508(i), which shall
be paid to the fund and credited to the appropriate accounts.
The board may allocate the final contribution rate and certify
various employer contribution rates and amounts based upon the
different benefit eligibility, class of service multiplier,
superannuation age, final average salary calculation,
compensation limits and other benefit differences resulting from
State service credited for individual members even though such
allocated employer contribution rate on behalf of any given
member may be more or less than 5% of the member's compensation
for the period from July 1, 2010, to June 30, 2011, or may
differ from the prior year's contribution for that member by
more or less than the percentages used to calculate the collared
contribution rate for that year and may be below any minimum
contribution rate established for the collared contribution rate
or final contribution rate. These certifications shall be
regarded as final and not subject to modification by the
Secretary of the Budget.
* * *
(m) Annual financial statement.--The board shall prepare and
have published, on or before July 1 of each year, [a financial
statement] financial statements as of the calendar year ending
December 31 of the previous year showing the condition of the
fund, the trust and the various accounts, including, but not
limited to, the board's accrual and expenditure of directed
commissions, and setting forth such other facts,
recommendations, and data as may be of use in the advancement of
knowledge concerning annuities and other benefits provided by
this part. The board shall submit said financial [statement]
statements to the Governor and shall file copies with the head
of each department for the use of the State employees and the
public.
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(n) Independent [audit] audits.--The board shall provide for
[an annual audit] annual audits of the system and the plan by
[an] independent certified public [accountant] accountants,
which [audit] audits shall include the board's accrual and
expenditure of directed commissions. The board may use the same
independent certified public accountant for the audits of both
the system and the plan.
* * *
(p) Participant and employer contributions to trust.--The
board shall, each year in addition to any fees and itemized
budget required under section 5509 (relating to appropriations
and assessments by the Commonwealth), certify, as a percentage
of each participant's compensation, the employer defined
contributions, which shall be paid to the trust and credited to
each participant's individual investment account. These
certifications shall be regarded as final and not subject to
modification by the Secretary of the Budget. The board shall
cause all mandatory pickup participant contributions made on
behalf of a participant and all voluntary contributions made by
a participant to be credited to the participant's individual
investment account.
§ 5903. Duties of the board to advise and report to heads of
departments [and], members and participants.
* * *
(b) Member status statements and certifications.--The board
shall furnish annually to the head of each department on or
before April 1, a statement for each member employed in such
department showing the total accumulated deductions and Class A-
5 accumulated deductions standing to his credit as of December
31 of the previous year and requesting the member to make any
necessary corrections or revisions regarding his designated
beneficiary. In addition, for each member employed in any
department and for whom the department has furnished the
necessary information, the board shall certify the number of
years and fractional part of a year of credited service
attributable to each class of service, the number of years and
fractional part of a year attributable to social security
integration credits in each class of service and, in the case of
a member eligible to receive an annuity, the benefit to which he
is entitled upon the attainment of superannuation age.
(b.1) Participant status statements.--The board shall
furnish annually to each participant, on or before April 1 and
more frequently as the board may agree or as required by law, a
statement showing the accumulated total defined contributions
credited to the participant's individual investment account, the
nature and type of investments and the investment allocation of
future contributions as of December 31 of the previous year and
requesting the participant to make any necessary correction or
revision regarding his designated beneficiary.
* * *
Section 325. Section 5904(c) of Title 71 is amended to read:
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§ 5904. Duties of the board to report to the Public School
Employees' Retirement Board.
* * *
(c) Applications for benefits for school employees.--Upon
receipt of notification and the required data from the Public
School Employees' Retirement Board that a former State employee
who elected multiple service has applied for a public school
employees' retirement benefit or, in the event of his death, his
legally constituted representative has applied for such benefit,
the board shall:
(1) certify to the Public School Employees' Retirement
Board;
(i) the salary history as a member of the State
Employees' Retirement System and the final average salary
as calculated on the basis of the compensation received
as a State and school employee; and
(ii) the annuity or benefit to which the member or
his beneficiary is entitled as modified according to the
option selected; and
(2) transfer to the Public School Employees' Retirement
Fund the total accumulated deductions or Class A-5
accumulated deductions standing to such member's credit and
the actuarial reserve required on account of years of
credited service in the State system, final average salary
determined on the basis of his compensation in both systems
and the average noncovered salary to be charged to the State
accumulation account, the State Police benefit account or the
enforcement officers' benefit account, as each case may
require.
* * *
Section 326. Section 5905(b), (c.1), (f) and (g) of Title
71, amended December 28, 2015 (P.L.529, No.93), are amended and
the section is amended by adding subsections to read:
§ 5905. Duties of the board regarding applications and
elections of members and participants.
* * *
(b) School employees electing multiple service status.--Upon
receipt of notification from the Public School Employees'
Retirement Board that a former State employee has become an
active member in the Public School Employees' Retirement System
and has elected to become a member with multiple service status
the board shall:
(1) in case of a member receiving an annuity from the
system:
(i) discontinue payments, transfer the present value
of the member's annuity at the time of entering school
service, plus the amount withdrawn in a lump sum payment,
on or after the date of entering school service, pursuant
to section 5705 (relating to member's options), with
statutory interest to date of transfer, minus the amount
to be returned to the board on account of return to
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service, that the board has determined is to be credited
in the members' savings account, from the annuity reserve
account to the members' savings account and resume
crediting of statutory interest on the amount restored to
his credit;
(ii) transfer the balance of the present value of
the total annuity, minus the amount to be returned to the
board on account of return to service that the board has
determined is to be credited in the State accumulation
account, from the annuity reserve account to the State
accumulation account; and
(iii) certify to the member the amount of lump sum
and annuity payments with statutory interest the member
is to return to the board and, of those amounts, which
amount shall be credited to the members' savings account
and credited with statutory interest as such payments are
returned and which amount shall be credited to the State
accumulation account; or
(2) in case of a member who is not receiving an annuity
and has not withdrawn his total accumulated deductions or
Class A-5 accumulated deductions, continue or resume the
crediting of statutory interest on his total accumulated
deductions and Class A-5 accumulated deductions during the
period his total accumulated deductions and Class A-5
accumulated deductions remain in the fund; or
(3) in case of a former State employee who is not
receiving an annuity from the system and his total
accumulated deductions or Class A-5 accumulated deductions
were withdrawn, certify to the former State employee the
accumulated deductions as they would have been at the time of
his separation had he been a full coverage member together
with statutory interest for all periods of subsequent State
and school service to the date of repayment and the amount of
such total accumulated deductions or Class A-5 accumulated
deduction he is eligible to restore. Such amount shall be
restored by him and shall be credited with statutory interest
as such payments are restored.
* * *
(c.1) Termination of service by members.--In the case of any
member terminating State service who is entitled to an annuity
and who is not then a disability annuitant, the board shall
advise such member in writing of any benefits from the system to
which he may be entitled under the provisions of this part and
shall have the member prepare, on or before the date of
termination of State service, one or more of the following three
forms, a copy of which shall be given to the member and the
original of which shall be filed with the board:
(1) an application for the return of total accumulated
deductions and if eligible, for the return of Class A-5
accumulated deductions;
(2) if eligible, an election to vest his retirement
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rights and, if he is a joint coverage member and so desires,
elect to become a full coverage member and agree to pay
within 30 days of the date of termination of service the lump
sum required; or
(3) if eligible, an application for an immediate annuity
and, if he desires:
(i) an election to convert his medical, major
medical and hospitalization insurance coverage to the
plan for State annuitants; and
(ii) if he is a joint coverage member, an election
to become a full coverage member and an agreement to pay
within 30 days of date of termination of service the lump
sum required.
(c.2) Termination of service by participants.--In the case
of a participant terminating State service, the board shall
advise the participant in writing of the vested accumulated
total defined contributions credited to the participant's
individual investment account as of the date stated in the
writing, any notices regarding rollover or other matters
required by IRC or other law, the obligation of the participant
to commence distributions from the plan by the participant's
required beginning date and the ability to receive all or part
of the vested balance in the participant's individual investment
account in a lump sum or in such other form as the board may
authorize or as required by law.
* * *
(e.2) Notification to inactive participants approaching
required beginning date.--The board shall notify in writing each
inactive participant who has terminated State service and has
not commenced distribution by 90 days before the participant's
required beginning date that the inactive participant has an
obligation to commence distributions by the required beginning
date in a form and manner required by IRC § 401(a)(9) and other
applicable provisions of the IRC.
(f) Initial annuity payment and certification.--The board
shall make the first monthly payment to a member who is eligible
for an annuity within 60 days of the filing of his application
for an annuity or, in the case of a vestee or special vestee who
has deferred the filing of his application to a date later than
90 days following attainment of superannuation age, within 60
days of the effective date of retirement, and receipt of the
required data from the head of the department and, if the member
has Class G, Class H, Class I, Class J, Class K, Class L, Class
M or Class N service, any data required from the county
retirement system or pension plan to which the member was a
contributor before being a State employee. Concurrently, the
board shall certify to such member:
(1) the total accumulated deductions and Class A-5
accumulated deductions standing to his credit showing
separately the amount contributed by the member, the pickup
contribution and the interest credited to the date of
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termination of service;
(2) the number of years and fractional part of a year
credited in each class of service;
(3) the final average salary on which his annuity is
based as well as any applicable reduction factors due to age
and/or election of an option; and
(4) the total annuity payable under the option elected
and the amount and effective date of any future reduction
under section 5703 (relating to reduction of annuities on
account of social security old-age insurance benefits).
(f.1) Initial payment to participants.--The board shall make
the initial payment to a participant who has applied for a
distribution within 60 days of the filing of the application.
(g) Death benefits.--Upon receipt of notification from the
head of a department of the death of an active member, a member
performing USERRA leave [or], a member on leave without pay, an
active participant, an inactive participant on leave without pay
or a former participant performing USERRA leave, the board shall
advise the designated beneficiary of the benefits to which he is
entitled, and shall make the first payment to the beneficiary
within 60 days of receipt of certification of death and other
necessary data. If no beneficiary designation is in effect at
the date of the member's death or no notice has been filed with
the board to pay the amount of the benefits to the member's
estate, the board is authorized to pay the benefits to the
executor, administrator, surviving spouse or next of kin of the
deceased member, and payment pursuant [hereto] to this section
shall fully discharge the fund from any further liability to
make payment of such benefits to any other person. If no
beneficiary designation is in effect at the date of a
participant's death or no notice has been filed with the board
to pay the amount of the benefits to the participant's estate,
the board may pay the benefits to the surviving spouse,
executor, administrator or next of kin of the deceased
participant, and payment pursuant to this subsection shall fully
discharge the fund from any further liability to make payment of
such benefits to any other person.
* * *
Section 327. Section 5905.1(a), (b) and (d) of Title 71 are
amended to read:
§ 5905.1. Installment payments of accumulated deductions.
(a) General rule.--Notwithstanding any other provision of
this part, whenever a member elects to withdraw his total
accumulated deductions or Class A-5 accumulated deductions
pursuant to section 5311(a) (relating to eligibility for
refunds) or 5701 (relating to return of [total] accumulated
deductions) or elects to receive a portion of his benefit
payable as a lump sum pursuant to section 5705(a)(4)(iii)
(relating to member's options), the member may elect to receive
the amount in not more than four installments.
(b) Payment of first installment.--The payment of the first
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installment shall be made in the amount and within seven days of
the date specified by the member, except as follows:
(1) Upon receipt of a member's application to withdraw
his total accumulated deductions or Class A-5 accumulated
deductions as provided in section 5311(a) or 5701 and upon
receipt of all required data from the head of the department
and, if the member has Class G, Class H, Class I, Class J,
Class K, Class L, Class M or Class N service, any data
required from the county retirement system or pension plan to
which the member was a contributor before being transferred
to State employment, the board shall not be required to pay
the first installment prior to 45 days after the filing of
the application and the receipt of the data or the date of
termination of service, whichever is later.
(2) In the case of an election as provided in section
5705(a)(4)(iii) by a member terminating service within 60
days prior to the end of a calendar year and upon receipt of
all required data from the head of the department and, if the
member has Class G, Class H, Class I, Class J, Class K, Class
L, Class M or Class N service, any data required from the
county retirement system or pension plan to which the member
was a contributor before being transferred to State
employment, the board shall not be required to pay the first
installment prior to 21 days after the later of the filing of
the application and the receipt of the data or the date of
termination of service, but, unless otherwise directed by the
member, the payment shall be made no later than 45 days after
the filing of the application and the receipt of the data or
the date of termination of service, whichever is later.
(3) In the case of an election as provided in section
5705(a)(4)(iii) by a member who is not terminating service
within 60 days prior to the end of a calendar year and upon
receipt of all required data from the head of the department
and, if the member has Class G, Class H, Class I, Class J,
Class K, Class L, Class M or Class N service, any data
required from the county retirement system or pension plan to
which the member was a contributor before being transferred
to State employment, the board shall not be required to pay
the first installment prior to 45 days after the filing of
the application and the receipt of the data or the date of
termination of service, whichever is later.
* * *
(d) Statutory interest.--Any lump sum, including a lump sum
payable pursuant to section 5705.1 (relating to payment of
accumulated deductions resulting from [Class A-3 and Class A-4]
more than one class of service), or installment payable shall
include statutory interest credited to the date of payment,
except in the case of a member, other than a vestee or special
vestee, who has not filed his application prior to 90 days
following his termination of service.
Section 328. Section 5906(a), (b), (d), (e), (g), (h), (i),
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(j) and (l) of Title 71 are amended and the section is amended
by adding a subsection to read:
§ 5906. Duties of heads of departments.
(a) Status of members and participants.--The head of
department shall, at the end of each pay period, notify the
board in a manner prescribed by the board of salary changes
effective during that period for any members and participants of
the department, the date of all removals from the payroll, and
the type of leave of any members and participants of the
department who have been removed from the payroll for any time
during that period, and:
(1) if the removal is due to leave without pay, he shall
furnish the board with the date of beginning leave and the
date of return to service, and the reason for leave; or
(2) if the removal is due to a transfer to another
department, he shall furnish such department and the board
with a complete State service record, including past State
service in other departments or agencies, or creditable
nonstate service; or
(3) if the removal is due to termination of State
service, he shall furnish the board with a complete State
service record, including service in other departments or
agencies, or creditable nonstate service and;
(i) in the case of death of the member or
participant, the head of the department shall so notify
the board;
(ii) in the case of a service connected disability
of a member, the head of department shall, to the best of
his ability, investigate the circumstances surrounding
the disablement of the member and submit in writing to
the board information which shall include but not
necessarily be limited to the following: date, place and
time of disablement to the extent ascertainable; nature
of duties being performed at such time; and whether or
not the duties being performed were authorized and
included among the member's regular duties. In addition,
the head of department shall furnish in writing to the
board all such other information as may be related to the
member's disablement;
(iii) in the case of a member terminating from The
Pennsylvania State University who is a member of the
system with five or more but less than ten eligibility
points and who has terminated State service on June 30,
1997, because of the transfer of his job position or
duties to a controlled organization of the Penn State
Geisinger Health System or because of the elimination of
his job position or duties due to the transfer of other
job positions or duties to a controlled organization of
the Penn State Geisinger Health System, the head of the
department shall so certify to the board.
(b) Records and information.--At any time at the request of
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the board and at termination of service of a member or a
participant, the head of department shall furnish service and
compensation records and such other information as the board may
require and shall maintain and preserve such records as the
board may direct for the expeditious discharge of its duties.
* * *
(c.1) Participant and employer defined contributions.--The
head of department shall:
(1) Cause the mandatory pickup participant contributions
on behalf of a participant to be made.
(2) Cause the employer defined contributions on behalf
of a participant to be made.
(3) Notify the board at times and in a manner prescribed
by the board of the compensation of any participant to whom
the limitation under IRC § 401(a)(17) either applies or is
expected to apply and cause the participant's contributions
to be deducted from payroll to cease at the limitation under
IRC § 401(a)(17) on the payroll date if and when such limit
shall be reached.
(4) Certify to the State Treasurer the amounts picked up
and deducted and the employer defined contributions being
made and send the total amount picked up, deducted and
contributed together with a duplicate of the voucher to the
secretary of the board every pay period or on such schedule
as established by the board.
(d) New employees subject to mandatory membership or
participation.--Upon the assumption of duties of each new State
employee whose membership in the system or plan is mandatory,
the head of department shall cause an application for membership
or participation and a nomination of beneficiary to be made by
such employee and filed with the board and shall make pickup
contributions or mandatory pickup participant contributions from
the effective date of State employment.
(e) New employees subject to optional membership or
participation.--The head of department shall, upon the
employment or entering into office of any State employee whose
membership in the system or participation in the plan is not
mandatory, inform such employee of his opportunity to become a
member of the system or participant in the plan. If such
employee so elects, the head of department shall cause an
application for membership or participation and a nomination of
beneficiary to be made by him and filed with the board and shall
cause proper contributions to be made from the effective date of
membership or participation.
* * *
(g) Former school employee contributors.--The head of
department shall, upon the employment of a former contributor to
the Public School Employees' Retirement System who is not an
annuitant of the Public School Employees' Retirement System,
advise such employee [of his] if he has a right to elect within
365 days of entry into the system or, for a member of Class A-5,
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if he has a right to elect within 45 days of entry into the
system, to become a multiple service member, and in the case of
any such employee who so elects and has withdrawn his
accumulated deductions, require him to reinstate his credit in
the Public School Employees' Retirement System. The head of the
department shall advise the board of such election.
(h) Former school employee annuitants.--The head of
department shall, upon the employment of an annuitant of the
Public School Employees' Retirement System who applies for
membership in the system, advise such employee [that] if he may
elect multiple service membership within 365 days of entry into
the system or, for a member of Class A-5, if he has a right to
elect multiple service within 45 days of entry into the system,
and if he so elects his public school employee's annuity will be
discontinued effective upon the date of his return to State
service and, upon termination of State service and application
for an annuity, the annuity will be adjusted in accordance with
section 5706 (relating to termination of annuities). The head of
department shall advise the board of such election.
(i) Annual statement to members.--Annually, upon receipt
from the board, the head of department shall furnish to each
member the statement specified in section 5903(b) (relating to
duties of the board to advise and report to heads of departments
[and], members and participants).
(j) Termination of service.--The head of department shall,
in the case of any member terminating State service who is
ineligible for an annuity before attainment of superannuation
age, advise such member in writing of any benefits to which he
may be entitled under the provisions of this part and shall have
the member prepare, on or before the date of termination of
State service, an application for the return of total
accumulated deductions and Class A-5 accumulated deductions or,
on or before September 30, 1997, an application to be vested as
a special vestee, if eligible.
* * *
(l) State employees performing USERRA or military-related
leave of absence.--The head of department shall report to the
board any State employee who ceases to be an active member or
active participant to perform USERRA service, or who is granted
a leave of absence under 51 Pa.C.S. § 4102 (relating to leaves
of absence for certain government employees) or a military leave
of absence under 51 Pa.C.S. § 7302 (relating to granting
military leaves of absence), the date on which the USERRA
service, leave of absence or military leave of absence began,
the date on which the State employee is reemployed from USERRA
leave or returns after the leave of absence or military leave of
absence, if the event occurs, and any other information the
board may require or direct.
* * *
Section 328.1. Section 5907(a), (c), (d), (e) and (f) of
Title 71, amended December 28, 2015 (P.L.529, No.93), are
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amended and the section is amended by adding subsections to
read:
§ 5907. Rights and duties of State employees [and], members and
participants.
(a) Information on new employees.--Upon his assumption of
duties each new State employee shall furnish the head of
department with a complete record of his previous State service,
his school service or creditable nonstate service, and proof of
his date of birth and current status in the system and the plan
and in the Public School Employees' Retirement System and the
School Employees' Defined Contribution Plan. Willful failure to
provide the information required by this subsection to the
extent available upon entrance into the system shall result in
the forfeiture of the right of the member to subsequently assert
any right to benefits based on any of the required information
which he failed to provide. In any case in which the board finds
that a member is receiving an annuity based on false
information, the total amount received predicated on such false
information together with statutory interest doubled and
compounded shall be deducted from the present value of any
remaining benefits to which the member is legally entitled.
* * *
(b.1) Application for participation.--On or after January 1,
2018, in the case of an employee who is not currently a
participant in the plan and whose participation is mandatory, or
in the case of an employee whose participation is not mandatory
but is permitted and who desires to become a participant in the
plan, the new employee shall execute an application for
participation and a nomination of a beneficiary.
(c) Multiple service membership.--Any [active member] State
employee who is an active member in a class of service other
than Class A-5 who was formerly an active member in the Public
School Employees' Retirement System in a class of service other
than Class T-G may elect to become a multiple service member.
Such election shall occur no later than 365 days after becoming
an active member in a class of service other than Class A-5 in
this system. Any State employee who is an active member of Class
A-5 who was formerly an active member in Public School
Employees' Retirement System in Class T-G may elect to become a
multiple service member. Such election shall occur no later than
45 days after becoming an active member of Class A-5. A State
employee who is eligible to elect to become a multiple service
member who begins USERRA leave during the election period
without having elected multiple service membership may make the
election within 365 days, or 45 days if a member of Class A-5,
after being reemployed from USERRA leave.
(d) Credit for previous service or change in membership
status.--Any active member or eligible school employee who
desires to receive credit for the portion of his total previous
State service or creditable nonstate service to which he is
entitled, or a joint coverage member who desires to become a
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full coverage member, shall so notify the board and upon written
agreement by the member and the board as to the manner of
payment of the amount due, the member shall receive credit for
such service as of the date of such agreement subject to the
provisions in this part relating to the limitations under IRC §
415.
* * *
(d.2) Contributions for USERRA leave.--Any active
participant or inactive participant on leave without pay or
former participant who was reemployed from USERRA leave who
desires to make mandatory pickup participant contributions for
his USERRA leave shall so notify the board within the time
period required under 38 U.S.C. Ch. 43 (relating to employment
and reemployment rights of members of the uniformed services)
and IRC § 414(u) of his desire to make such contributions. Upon
making the permitted mandatory pickup participant contributions
within the allowed time period, the head of department shall
make the corresponding employer defined contributions at the
same time.
(d.3) Voluntary contributions by a participant.--Any
participant who desires to make voluntary contributions to be
credited to his individual investment account shall notify the
board and, upon compliance with the requirements, procedures and
limitations established by the board in the plan document, may
do so subject to the limitations under IRC §§ 401(a) and 415 and
other applicable law.
(e) Beneficiary for death benefits from system.--Every
member shall nominate a beneficiary by written designation filed
with the board as provided in section 5906(d) or (e) (relating
to duties of heads of departments) to receive the death benefit
payable under section 5707 (relating to death benefits) or the
benefit payable under the provisions of Option 1 of section
5705(a)(1) (relating to member's options). Such nomination may
be changed at any time by the member by written designation
filed with the board. A member may also nominate a contingent
beneficiary or beneficiaries to receive the death benefit
provided under section 5707 or the benefit payable under the
provisions of Option 1 of section 5705(a)(1).
(e.1) Beneficiary for death benefits from the plan.--Every
participant shall nominate a beneficiary by written designation
filed with the board as provided in section 5906(d) or (e) to
receive the death benefit payable under section 5808 (relating
to death benefits). A participant may also nominate a contingent
beneficiary or beneficiaries to receive the death benefit
provided under section 5808. Such nomination may be changed at
any time by the participant by written designation filed with
the board.
(e.2) Beneficiaries for employees who are members and
participants.--A State employee who is both a member of the
system and a participant in the plan may designate or nominate
different persons to be beneficiaries, survivor annuitants and
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successor payees for his benefits from the system and the plan.
(f) Termination of service by members.--Each member who
terminates State service and who is not then a disability
annuitant shall execute on or before the date of termination of
service one or more of the appropriate [application]
applications, duly attested by the member or his legally
constituted representative, electing to:
(1) withdraw his total accumulated deductions and if
eligible withdraw his Class A-5 accumulated deductions; or
(2) if eligible, vest his retirement rights; and if he
is a joint coverage member, and so desires, elect to become a
full coverage member and agree to pay within 30 days of the
date of termination of service the lump sum required; or
(3) if eligible, receive an immediate annuity and may,
(i) if eligible, elect to convert his medical, major
medical, and hospitalization coverage to the plan for
State annuitants; and
(ii) if he is a joint coverage member, elect to
become a full coverage member and agree to pay within 30
days of date of termination of service the lump sum
required.
* * *
(g.1) Deferral of retirement rights.--If a participant
terminates State service and does not commence receiving a
distribution, he shall nominate a beneficiary, and he may
anytime thereafter, but no later than his required beginning
date, withdraw the accumulated total defined contributions
standing to his credit or apply for another form of distribution
required by law or authorized by the board.
* * *
Section 329. Sections 5931(b), 5932, 5933, 5934, 5935, 5936,
5937, 5938, 593 and 5951 of Title 71 are amended to read:
§ 5931. Management of fund and accounts.
* * *
(b) Crediting of interest.--The board, annually, shall allow
the required interest on the mean amount for the preceding year
to the credit of each of the accounts other than the individual
investment accounts. The amount so allowed shall be credited
thereto by the board and transferred from the interest reserve
account.
* * *
§ 5932. State Employees' Retirement Fund.
(a) General rule.--The fund shall consist of all balances in
the several separate accounts set apart to be used under the
direction of the board for the benefit of members of the system;
and the Treasury Department shall credit to the fund all moneys
received from the Department of Revenue arising from the
contributions relating to or on behalf of members of the system
required under the provisions of Chapter 55 (relating to
contributions), and any income earned by the investments or
moneys of said fund. There shall be established and maintained
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by the board the several ledger accounts specified in sections
5933 (relating to members' savings account), 5934 (relating to
State accumulation account), 5935 (relating to annuity reserve
account), 5936 (relating to State Police benefit account), 5937
(relating to enforcement officers' benefit account), 5938
(relating to supplemental annuity account) and 5939 (relating to
interest reserve account).
(b) Individual investment accounts and trust.--The
individual investment accounts that are part of the trust shall
not be part of the fund. Mandatory pickup participant
contributions, voluntary contributions and employer defined
contributions made under this part and any income earned by the
investment of such contributions shall not be paid or credited
to the fund but shall be paid to the trust and credited to the
individual investment accounts.
§ 5933. Members' savings account.
(a) Credits to account.--The members' savings account shall
be the ledger account to which shall be credited the amounts of
the pickup contributions made by the Commonwealth or other
employer and contributions or lump sum payments made by active
members in accordance with the provisions of sections 5501
(relating to regular member contributions for current service),
5501.1 (relating to shared-risk member contributions for Class
A-3 [and], Class A-4 and Class A-5 service), 5502 (relating to
social security integration member contributions), 5503
(relating to joint coverage member contributions), 5504
(relating to member contributions for the purchase of credit for
previous State service or to become a full coverage member),
5505.1 (relating to additional member contributions) and 5505
(relating to contributions for the purchase of credit for
creditable nonstate service) and transferred from the members'
savings account of the Public School Employees' Retirement
System in accordance with the provisions of section 5303.2
(relating to election to convert school service to State
service).
(b) Interest and transfers from account.--The members'
savings account in total and the individual member accounts
shall be credited with statutory interest. The total accumulated
deductions and Class A-5 accumulated deductions credited to a
member whose application for an annuity has been approved shall
be transferred from the members' savings account to the annuity
reserve account provided for in section 5935 (relating to
annuity reserve account), except in the case of a member who is
an officer of the Pennsylvania State Police or an enforcement
officer the total accumulated deductions and Class A-5
accumulated deductions to his credit shall be transferred from
the members' savings account to the State Police benefit account
provided for in section 5936 (relating to State Police benefit
account) or to the enforcement officers benefit account provided
for in section 5937 (relating to enforcement officers' benefit
account), as the case may be.
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(c) Charges to account.--Upon the election of a member to
withdraw his total accumulated deductions or Class A-5
accumulated deductions or upon the transfer of accumulated
deductions pursuant to section 5701.1 (relating to transfer of
accumulated deductions), the payment of such amount shall be
charged to the members' savings account.
§ 5934. State accumulation account.
The State accumulation account shall be the ledger account to
which shall be credited all contributions of the Commonwealth or
other employers whose employees are members of the system and
made in accordance with the provisions of section 5507(a) or (d)
(relating to contributions to the system by the Commonwealth and
other employers) except that the amounts received under the
provisions of the act of May 12, 1943 (P.L.259, No.120), and the
amounts received under the provisions of the Liquor Code, act of
April 12, 1951 (P.L.90, No.21), shall be credited to the State
Police benefit account or the enforcement officers' benefit
account as the case may be. All amounts transferred to the fund
by county retirement systems or pension plans in accordance with
the provisions of section 5507(c) also shall be credited to the
State accumulation account. All amounts transferred to the fund
by the Public School Employees' Retirement System in accordance
with section 5303.2(e) (relating to election to convert school
service to State service), except amounts credited to the
members' savings account, and all amounts paid by the Department
of Corrections in accordance with section 5303.2(f) also shall
be credited to the State accumulation account. The State
accumulation account shall be credited with valuation interest.
The reserves necessary for the payment of annuities and death
benefits resulting from membership in the system as approved by
the board and as provided in Chapter 57 (relating to benefits)
shall be transferred from the State accumulation account to the
annuity reserve account provided for in section 5935 (relating
to annuity reserve account), except that the reserves necessary
on account of a member who is an officer of the Pennsylvania
State Police or an enforcement officer shall be transferred from
the State accumulation account to the State Police benefit
account provided for in section 5936 (relating to State Police
benefit account) or to the enforcement officers' benefit account
as provided for in section 5937 (relating to enforcement
officers' benefit account) as the case may be. The reserves
necessary for the payment of supplemental annuities in excess of
those reserves credited to the supplemental annuity account on
June 30, 2010, shall be transferred from the State accumulation
account to the supplemental annuity account. In the event that
supplemental annuities are increased by legislation enacted
after December 31, 2009, the necessary reserves shall be
transferred from the State accumulation account to the
supplemental annuity account.
§ 5935. Annuity reserve account.
(a) Credits and charges to account.--The annuity reserve
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account shall be the ledger account to which shall be credited
the reserves held for payment of annuities and death benefits on
account of all annuitants except in the case of members who are
officers of the Pennsylvania State Police or enforcement
officers. The annuity reserve account shall be credited with
valuation interest. After the transfers provided in sections
5933 (relating to members' savings account), 5934 (relating to
State accumulation account) and 5938 (relating to supplemental
annuity account), all annuity and death benefit payments
resulting from membership in the system except those payable to
any member who retires as an officer of the Pennsylvania State
Police or an enforcement officer shall be charged to the annuity
reserve account and paid from the fund.
(b) Transfers from account.--Should an annuitant other than
a member who was retired as an officer of the Pennsylvania State
Police or an enforcement officer be subsequently restored to
active service as a member of the system or as a participant in
the plan, the present value of his member's annuity at the time
of reentry into State service shall be transferred from the
annuity reserve account and placed to his individual credit in
the members' savings account. In addition, the actuarial reserve
for his annuity less the amount transferred to the members'
savings account shall be transferred from the annuity reserve
account to the State accumulation account.
§ 5936. State Police benefit account.
(a) Credits and charges to account.--The State Police
benefit account shall be the ledger account to which shall be
credited all contributions received under the provisions of the
act of May 12, 1943 (P.L.259, No.120), and any additional
Commonwealth or other employer contributions provided for in
section 5507 (relating to contributions to the system by the
Commonwealth and other employers) which are creditable to the
State Police benefit account. The State Police benefit account
shall be credited with the required interest. In addition, upon
the filing of an application for an annuity by a member who is
an officer of the Pennsylvania State Police, the total
accumulated deductions and Class A-5 accumulated deductions
standing to the credit of the member in the members' savings
account and the necessary reserves from the State accumulation
account shall be transferred to the State Police benefit
account. Thereafter, the total annuity of such annuitant shall
be charged to the State Police benefit account and paid from the
fund.
(b) Transfers from account.--Should the said annuitant be
subsequently restored to active service as a member of the
system or as a participant in the plan, the present value of the
member's annuity at the time of reentry into State service shall
be transferred from the State Police benefit account and placed
to his individual credit in the members' savings account. In
addition, the actuarial reserve for his annuity calculated as if
he had been a member of Class A if he has Class A or Class C
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service credited; as if he had been a member of Class A-3 if the
annuitant has Class A-3 State service credited; or as if he had
been a member of Class A-4 if the annuitant has Class A-4
service credited, less the amount transferred to the members'
savings account shall be transferred from the State Police
benefit account to the State accumulation account. Upon
subsequent retirement other than as an officer of the
Pennsylvania State Police the actuarial reserve remaining in the
State Police benefit account shall be transferred to the
appropriate reserve account.
§ 5937. Enforcement officers' benefit account.
(a) Credits and charges to account.--The enforcement
officers' benefit account shall be the ledger account to which
shall be credited moneys transferred from the enforcement
officers' retirement account in the State Stores Fund according
to the provisions of the act of April 12, 1951 (P.L.90, No.21),
known as the Liquor Code, and any additional Commonwealth or
other employer contributions provided for in section 5507
(relating to contributions to the system by the Commonwealth and
other employers) which are creditable to the enforcement
officers' benefit account. The enforcement officers' benefit
account shall be credited with the required interest. In
addition, upon the filing of an application for an annuity by a
member who is an enforcement officer of the Pennsylvania Liquor
Control Board, the total accumulated deductions and Class A-5
accumulated deductions standing to the credit of the member in
the members' savings account and the necessary reserves from the
State accumulation account shall be transferred to the
enforcement officers' benefit account. Thereafter, the total
annuity of such annuitant shall be charged to the enforcement
officers' benefit account and paid from the fund.
(b) Transfers from account.--Should the said annuitant be
subsequently restored to active service as a member of the
system or as a participant in the plan, the present value of the
member's annuity at the time of reentry into State service shall
be transferred from the enforcement officers' benefit account
and placed to his individual credit in the members' savings
account. In addition, the actuarial reserve for his annuity
calculated as if he had been a member of Class A if the
annuitant does not have any Class AA, Class A-3 or Class A-4
service credited; as if he had been a member of Class AA if the
annuitant does have Class AA service credited; as if he had been
a member of Class A-3 if the annuitant has Class A-3 State
service credited; or as if he had been a member of Class A-4 if
the annuitant has Class A-4 service credited, less the amount
transferred to the members' savings account shall be transferred
from the enforcement officers' benefit account to the State
accumulation account. Upon subsequent retirement other than as
an enforcement officer the actuarial reserve remaining in the
enforcement officers' benefit account shall be transferred to
the appropriate reserve account.
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§ 5938. Supplemental annuity account.
The supplemental annuity account shall be the ledger account
to which shall be credited all contributions from the
Commonwealth and other employers in accordance with section
5507(b) (relating to contributions to the system by the
Commonwealth and other employers) for the payment of the
supplemental annuities provided in sections 5708 (relating to
supplemental annuities), 5708.1 (relating to additional
supplemental annuities), 5708.2 (relating to further additional
supplemental annuities), 5708.3 (relating to supplemental
annuities commencing 1994), 5708.4 (relating to special
supplemental postretirement adjustment), 5708.5 (relating to
supplemental annuities commencing 1998), 5708.6 (relating to
supplemental annuities commencing 2002), 5708.7 (relating to
supplemental annuities commencing 2003) and 5708.8 (relating to
special supplemental postretirement adjustment of 2002) made
before July 1, 2010, the amount transferred from the State
accumulation account to provide all additional reserves
necessary as of June 30, 2010, to pay such supplemental
annuities and adjustments, and the amounts transferred from the
State accumulation account to provide all additional reserves
necessary as a result of supplemental annuities enacted after
December 31, 2009. The supplemental annuity account shall be
credited with valuation interest. The reserves necessary for the
payment of such supplemental annuities shall be transferred from
the supplemental annuity account to the annuity reserve account
as provided in section 5935 (relating to annuity reserve
account).
§ 5939. Interest reserve account.
The interest reserve account shall be the ledger account to
which shall be credited all income earned by the fund and to
which shall be charged all administrative and investment
expenses incurred by the fund. At the end of each year the
required interest shall be transferred from the interest reserve
account to the credit of each of the accounts of the fund in
accordance with the provisions of this subchapter. In addition,
at the end of each accounting period, the interest reserve
account shall be credited or charged with all recognized changes
in the market valuation of the investments of the fund. The
administrative and investment expenses of the board relating to
the administration of the system and investments of the fund
shall be paid from the fund out of earnings. Any surplus or
deficit in the interest reserve account at the end of each year
shall be transferred to the State accumulation account.
§ 5951. State guarantee regarding the system.
The required interest charges payable, the maintenance of
reserves in the fund, and the payment of all annuities and other
benefits granted by the board from the system under the
provisions of this part relating to the establishment and
administration of the system are hereby made obligations of the
Commonwealth. All income, interest, and dividends derived from
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deposits and investments of the system authorized by this part
shall be used for the payment of the said obligations of the
Commonwealth and shall not be used for any obligations of the
plan or trust.
Section 329.1. Section 5953 of Title 71, amended December
29, 2015 (P.L.529, No.93), is amended to read:
§ 5953. Taxation, attachment and assignment of funds.
(a) General rule.--
(1) Except as provided in paragraphs (2), (3) and (4),
the right of a person to any benefit or right accrued or
accruing under the provisions of this part and the moneys in
the fund and the trust are hereby exempt from any State or
municipal tax, levy and sale, garnishment, attachment,
spouse's election, the provisions of Article XIII.1 of the
act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
Code, or any other process whatsoever and no participant or
beneficiary, successor payee, or alternate payee of a
participant shall have the ability to commute, sell, assign,
alienate, anticipate, mortgage, pledge, hypothecate,
commutate or otherwise transfer or convey any benefit or
interest in an individual investment account or rights to
receive or direct distributions under this part or under
agreements entered into under this part except as otherwise
provided in this part and in the case of either a member or a
participant except for a set-off by the Commonwealth in the
case provided in this paragraph, and shall be unassignable
except to the Commonwealth in the case of a member or
participant who is terminating State service and has been
determined to be obligated to the Commonwealth for the
repayment of money owed on account of his employment.
(2) (i) Rights under this part shall be subject to
forfeiture as provided by the act of July 8, 1978 (P.L.752,
No.140), known as the Public Employee Pension Forfeiture Act,
and by or pursuant to section 16(b) of Article V of the
Constitution of Pennsylvania. Forfeitures under this
subsection or under any other provision of law may not be
applied to increase the benefits that any member would
otherwise receive under this part.
(ii) Notwithstanding this paragraph and the
provisions of section 16(b) of Article V of the
Constitution of Pennsylvania, the act of July 8, 1978
(P.L.752, No.140), known as the Public Employee Pension
Forfeiture Act, or 42 Pa.C.S. § 3352 (relating to pension
rights), the accumulated mandatory participant
contributions and accumulated voluntary contributions
standing to the credit of a participant shall not be
forfeited but shall be available for payment of fines and
restitution as provided by law. Amounts in the trust that
have been ordered to be distributed to an alternate payee
as the result of an equitable distribution of marital
property as part of an approved domestic relations order
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entered before the date of the order or action in a court
or other tribunal resulting in a forfeiture of a
participant's interest in the trust shall not be subject
to the provisions of section 16(b) of Article V of the
Constitution of Pennsylvania, the Public Employee Pension
Forfeiture Act, or 42 Pa.C.S. § 3352. Any accumulated
employer defined contributions forfeited as a result of
this paragraph or other law shall be retained by the
board and notwithstanding sections 5812(2) (relating to
powers and duties of board), 5815 (relating to expenses)
and 5902(c) (relating to administrative duties of the
board) used for the payment of expenses of the plan.
(3) Rights under this part shall be subject to
attachment in favor of an alternate payee as set forth in an
approved domestic relations order.
(4) Effective with distributions made on or after
January 1, 1993, and notwithstanding any other provision of
this part to the contrary, a distributee may elect, at the
time and in the manner prescribed by the board, to have any
portion of an eligible rollover distribution paid directly to
an eligible retirement plan by way of a direct rollover. For
purposes of this paragraph, a "distributee" includes a member
[and], a participant, a member's surviving spouse [and], a
participant's surviving spouse, a member's former spouse who
is an alternate payee under an approved domestic relations
order[.], a participant's former spouse who is an alternate
payee under an approved domestic relations order and anyone
else authorized under the IRC and the plan terms approved by
the board to have an eligible rollover distribution paid
directly to an eligible retirement plan by way of a direct
rollover. For purposes of this paragraph, the term "eligible
rollover distribution" has the meaning given such term by IRC
§ 402(f)(2)(A), and "eligible retirement plan" has the
meaning given such term by IRC § 402(c)(8)(B), except that a
qualified trust shall be considered an eligible retirement
plan only if it accepts the distributee's eligible rollover
distribution; however, in the case of an eligible rollover
distribution to a surviving spouse, an eligible retirement
plan is an "individual retirement account" or an "individual
retirement annuity" as those terms are defined in IRC §
408(a) and (b).
(b) Authorized payments from fund.--The board shall be
authorized to pay from the fund [in]:
(1) In the case of a member or participant who is
terminating service, the amount determined after
certification by the head of the department that the member
or participant is so obligated, and after review and approval
by the department or agency's legal representative or upon
receipt of an assignment from the member or participant in
the amount so certified[.], except that no payment shall be
made from the individual investment account of a participant
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until the participant otherwise applies for and receives a
distribution and shall not exceed the amount of the
distribution.
(2) In the case of a participant whose former spouse is
an alternate payee of an equitable distribution of marital
assets under an approved domestic relations order, a lump sum
of the alternate payee's interest in the participant's
accumulated total defined contributions. This paragraph shall
apply without regard to whether the participant has not
terminated, is terminating or has terminated State service.
Section 329.2. Sections 5953.1, 5953.2, 5953.3 and 5953.4(a)
of Title 71 are amended to read:
§ 5953.1. Approval of domestic relations orders.
(a) Certification regarding members.--A domestic relations
order pertaining to a member of the system shall be certified as
an approved domestic relations order by the secretary of the
board, or his designated representative, only if that order
meets all of the following:
(1) Requires the system to provide any type or form of
benefit or any option applicable to members already provided
under this part.
(2) Requires the system to provide no more than the
total amount of benefits than the member would otherwise
receive (determined on the basis of actuarial value) unless
increased benefits are paid to the member or alternate payee
based upon cost-of-living increases or increases based on
other than actuarial value.
(3) Specifies the amount or percentage of the member's
benefits to be paid by the system to each such alternate
payee or the manner in which such amount or percentage is to
be determined.
(4) Specifies the retirement option to be selected by
the member upon retirement or states that the member may
select any retirement option offered by this part upon
retirement.
(5) Specifies the name and last known mailing address,
if any, of the member and the name and last known mailing
address of each alternate payee covered by the order and
states that it is the responsibility of each alternate payee
to keep a current mailing address on file with the system.
(6) Does not grant an alternate payee any of the rights,
options or privileges of a member under this part.
(7) Requires the member to execute an authorization
allowing each alternate payee to monitor the member's
compliance with the terms of the domestic relations order
through access to information concerning the member
maintained by the system.
(a.1) Certification regarding participants.--A domestic
relations order pertaining to a participant shall be certified
as an approved domestic relations order by the secretary of the
board, or his designated representative, only if the order meets
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all of the following:
(1) Does not require the segregation of the alternate
payee's share of the participant's individual investment
account into a subaccount or newly established individual
account titled in the name of the alternate payee.
(2) Does not require the plan to recover or distribute
any funds which were distributed to the participant or at the
participant's direction prior to the approval of the domestic
relations order by the secretary of the board or his
designated representative.
(3) Requires the plan to pay to the alternate payee no
more than the lesser of the vested amount of the
participant's individual investment account specified by the
domestic relations order or the vested amount of the
participant's individual investment account as of the date of
the transfer of the alternate payee's share to the alternate
payee.
(4) States that the plan shall not be required to recoup
or make good for losses in value to the participant's
individual investment account incurred between the date of
the valuation of the account used for equitable distribution
purposes and the date of distribution to the alternate payee.
(5) Specifies the amount or percentage of the
participant's individual investment account to be paid to the
alternate payee and the date upon which the valuation is
based.
(6) Specifies the name and last known mailing address,
if any, of the participant and the name and last known
mailing address of each alternate payee covered by the order
and states that it is the responsibility of each alternate
payee to keep a current mailing address on file with the
plan.
(7) Does not grant an alternate payee the rights,
privileges or options available to a participant.
(8) Includes provisions for the deferred distribution of
the equitable distribution share of benefits payable from any
defined benefit pension program administered by the system in
which the participant may have an interest as a member of the
system or states that the alternate payee may not receive any
portion or any benefits payable to the participant as a
result of his membership in the system.
(9) Requires the immediate distribution of the alternate
payee's share of the participant's individual investment
account, which may be made by direct payment, eligible
rollover or trustee-to-trustee transfer to another eligible
plan or qualified account owned by the alternate payee.
(10) In the case of a participant who is currently
receiving distributions from the plan as of the date the
domestic relations order is approved by the secretary of the
board or his designated representative, may not order the
board to pay the alternate payee more than the balance
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available in the participant's individual investment account
as of the date the order is approved.
(b) Determination by secretary.--Within a reasonable period
after receipt of a domestic relations order, the secretary of
the board, or his designated representative, shall determine
whether this order is an approved domestic relations order and
notify the member or participant and each alternate payee of
this determination. Notwithstanding any other provision of law,
the exclusive remedy of any member, participant or alternate
payee aggrieved by a decision of the secretary of the board, or
his designated representative, shall be the right to an
adjudication by the board under 2 Pa.C.S. Ch. 5 Subch. A
(relating to practice and procedure) with appeal therefrom to
the Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to
judicial review) and 42 Pa.C.S. § 763(a)(1) (relating to direct
appeals from government agencies).
(c) Other orders.--The requirements for approval identified
in [subsection (a)] subsections (a) and (a.1) shall not apply to
any domestic relations order which is an order for support as
the term is defined at 23 Pa.C.S. § 4302 (relating to
definitions) or an order for the enforcement of arrearages as
provided in 23 Pa.C.S. § 3703 (relating to enforcement of
arrearages). These orders shall be approved to the extent that
they do not attach moneys in excess of the limits on attachments
as established by the laws of the United States and this
Commonwealth[.], require distributions of benefits in a manner
which would violate the laws of the United States, any other
state or this Commonwealth or require the distribution of funds
for support or enforcement of arrearages against a participant
who is not receiving distributions from the plan at the time the
order is entered. These orders may be approved notwithstanding
any other provision of this part or the plan that would require
a distribution of accumulated employer defined contributions in
the form of an annuity or to require the purchase of an annuity.
(d) Obligation discharged.--Only the requirements of this
part and any regulations promulgated hereunder shall be used to
govern the approval or disapproval of a domestic relations
order. Therefore, if the secretary of the board, or his
designated representative, acts in accordance with the
provisions of this part and any promulgated regulations in
approving or disapproving a domestic relations order, then the
obligations of the system or the plan with respect to such
approval or disapproval shall be discharged.
§ 5953.2. Irrevocable beneficiary.
Notwithstanding any other provision of this part, a domestic
relations order may provide for an irrevocable beneficiary. A
domestic relations order requiring the nomination of an
irrevocable beneficiary shall be deemed to be one that requires
a member or participant to nominate an alternate payee as a
beneficiary and that prohibits the removal or change of that
beneficiary without approval of a court of competent
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jurisdiction, except by operation of law. Such a domestic
relations order may be certified as an approved domestic
relations order by the secretary of the board, or his designated
representative, after the member or participant makes such
nomination, in which case the irrevocable beneficiary so ordered
by the court cannot be changed by the member or participant
without approval by the court.
§ 5953.3. Irrevocable survivor annuitant.
Notwithstanding any other provisions of this part, a domestic
relations order pertaining to a member may provide for an
irrevocable survivor annuitant. A domestic relations order
requiring the designation of an irrevocable survivor annuitant
shall be deemed to be one that requires a member to designate an
alternate payee as a survivor annuitant and that prohibits the
removal or change of that survivor annuitant without approval of
a court of competent jurisdiction, except by operation of law.
Such a domestic relations order may be certified as an approved
domestic relations order by the secretary of the board, or his
designated representative, in which case the irrevocable
survivor annuitant so ordered by the court cannot be changed by
the member without approval by the court. A person ineligible to
be designated as a survivor annuitant may not be designated as
an irrevocable survivor annuitant.
§ 5953.4. Amendment of approved domestic relations orders.
(a) Deceased alternate payee.--In the event that the
alternate payee predeceases the member or the participant and
there are benefits payable to the alternate payee, the divorce
court may amend the approved domestic relations order to
substitute a person for the deceased alternate payee to receive
any benefits payable to the deceased alternate payee.
* * *
Section 330. Title 71 is amended by adding a section to
read:
§ 5953.6. Irrevocable successor payee.
(a) Condition.--Notwithstanding any other provision of this
part, a domestic relations order pertaining to a participant may
provide for an irrevocable successor payee if the participant is
receiving a payment pursuant to a payment option provided by the
board that allows for a successor payee.
(b) Determination.--A domestic relations order requiring the
designation of an irrevocable successor payee shall be deemed to
be one that requires a participant who is receiving payments
from an annuity or other distribution option to designate an
alternate payee as a successor payee and that prohibits the
removal or change of the successor payee without approval of a
court of competent jurisdiction, except by operation of law.
(c) Certification.--A domestic relations order under
subsection (b) may be certified as an approved domestic
relations order by the secretary of the board or his designated
representative. If a domestic relations order is certified under
this subsection, the irrevocable successor payee ordered by the
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court shall not be changed by the participant without approval
by the court.
(d) Ineligibility.--A person ineligible to be designated as
a successor payee shall not be designated as an irrevocable
successor payee. A court shall not name an irrevocable successor
payee if the alternate payee is eligible to receive a lump sum
distribution of the alternate payee's portion of the marital
portion of the pension benefit.
Section 331. Sections 5954, 5955 and 5957 of Title 71 are
amended to read:
§ 5954. Fraud and adjustment of errors.
(a) Penalty for fraud.--Any person who shall knowingly make
any false statement or shall falsify or permit to be falsified
any record or records of this system or plan in any attempt to
defraud the system or plan as a result of such act shall be
guilty of a misdemeanor of the second degree.
(b) Adjustment of errors.--Should any change or mistake in
records result in any member, participant, beneficiary [or],
survivor annuitant or successor payee receiving from the system
or plan more or less than he would have been entitled to receive
had the records been correct, then regardless of the intentional
or unintentional nature of the error and upon the discovery of
such error, the board shall correct the error and if the error
affects contributions to or payments from the system, then so
far as practicable shall adjust the payments which may be made
for and to such person in such a manner that the actuarial
equivalent of the benefit to which he was correctly entitled
shall be paid. If the error affects contributions to or payments
from the plan, the board shall take action as provided for in
the plan document.
§ 5955. Construction of part.
(a) Exclusive source of rights and benefits.--Regardless of
any other provision of law, pension and benefit rights of State
employees shall be determined solely by this part or any
amendment thereto or the plan document established by the board,
and no collective bargaining agreement nor any arbitration award
between the Commonwealth and [its] other employers and the
Commonwealth's and other employers' employees or their
collective bargaining representatives shall be construed to
change any of the provisions herein, to require the board to
administer pension or retirement benefits not set forth in this
part or not established by the board in the plan document, to
require the board to modify, amend or change any of the terms
and provisions of the plan document, or otherwise require action
by any other government body pertaining to pension or retirement
benefits or rights of State employees. Notwithstanding the
foregoing, any pension or retirement benefits or rights
previously so established by or as a result of an arbitration
award shall remain in effect after the expiration of the current
collective bargaining agreement between the State employees so
affected and the Commonwealth until the expiration of each of
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the collective bargaining agreements in effect on January 1,
2011, at which time the classes of membership and resulting
member contribution rates and contributions for creditable
nonstate service, eligibility for vesting, withdrawal and
superannuation annuities, optional modification of annuities and
other terms and conditions related to class of membership shall
be as determined by this part for employees covered by those and
successor collective bargaining agreements. For purposes of
administering this part, for those State employees who are
members of each such collective bargaining unit, the date
January 1, 2011, contained in this part, except in this section,
shall be replaced with the date of the day immediately following
the expiration of each such collective bargaining agreement. The
provisions of this part insofar as they are the same as those of
existing law are intended as a continuation of such laws and not
as new enactments. The provisions of this part shall not affect
any act done, liability incurred, right accrued or vested, or
any suit or prosecution pending or to be instituted to enforce
any right or penalty or to punish any offense under the
authority of any repealed laws.
(b) (Reserved).
(c) (Reserved).
(d) (Reserved).
(e) Adverse inference.--Nothing in this part shall be
construed to mean that the limitations on benefits or other
requirements under IRC § 401(a) or other applicable provisions
of the IRC which are applicable to participants in the plan do
not apply to the participants or to members of the system and
the benefits payable under this part.
(f) Applicability.--A terminated State employee who has
Class A-5 service credit and who returns to State service on or
after January 1, 2018, shall be subject to the provisions of
this part regarding participation in the plan or membership in
the system that are in effect on the effective date of
reemployment, including, but not limited to, benefit formulas
and accrual rates, eligibility for annuities and distributions,
contribution rates, definitions, purchase of creditable school,
nonschool, State and nonstate service provisions and actuarial
and funding assumptions.
(g) Furloughs.--For purposes of sections 5302 (relating to
credited State service), 5306 (relating to classes of service)
and this section, a State employee who is furloughed under
section 802 of the act of August 5, 1941 (P.L. 752, No. 286),
known as the Civil Service Act, and reemployed pursuant to the
Civil Service Act in any class of service or civil service
status which was previously held, shall not be treated as having
been terminated from State service and beginning a new period of
State service.
§ 5957. Independent Fiscal Office study.
The Independent Fiscal Office shall study and analyze the
implementation of shared-risk contributions under section 5501.1
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(relating to shared-risk member contributions for Class A-3
[and], Class A-4 and Class A-5 service) and its impact on the
system. The study shall be completed by December 31, 2015, and
shall be transmitted to the Appropriations Committee and the
Finance Committee of the Senate, the Appropriations Committee
and the Finance Committee of the House of Representatives and to
the Governor.
ARTICLE IV
Section 401. The following words and phrases when used in
this article shall have the meanings given to them in this
section unless the context clearly indicates otherwise:
"School Retirement Board." The Public School Employees'
Retirement Board.
"School System." The Public School Employees' Retirement
System.
"State Retirement Board." The State Employees' Retirement
Board.
"State System." The State Employees' Retirement System.
Section 402. The following apply to reservation of
legislative authority:
(1) In regard to the School System:
(i) The following provisions shall not create an
express or implied contractual right in a member of the
School System, a participant in the School Employees'
Defined Contribution Plan or another person claiming an
interest in the account of a member or participant:
(A) A provision of this act which amends 24
Pa.C.S. Pt. IV or 51 Pa.C.S. Ch. 77, in relation to
requirements for any of the following:
(I) Qualification of the School Employees'
Defined Contribution Plan as a qualified pension
plan under sections 401(a) and 415(b) of the
Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. §§ 401(a) and 415(b)).
(II) Compliance with the Uniformed Services
Employment and Reemployment Rights Act of 1994
(Public Law 103-353, 108 Stat. 3149).
(III) A domestic relations order regarding
an alternate payee of a participant in the School
Employees' Defined Contribution Plan.
(B) (Reserved).
(ii) The provisions of 24 Pa.C.S. Pt. IV shall
remain subject to the Internal Revenue Code of 1986 and
the Uniformed Services Employment and Reemployment Rights
Act of 1994 and regulations promulgated under those
statutes.
(iii) The General Assembly reserves to itself the
further exercise of its legislative power to amend or
supplement the provisions of 24 Pa.C.S. Pt. IV solely in
order to maintain the qualification of the system as a
qualified pension plan under section 401(a) of the
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Internal Revenue Code of 1986 (26 U.S.C. § 401(a)) and
other applicable provisions of the Internal Revenue Code
of 1986 and the Uniformed Services Employment and
Reemployment Rights Act of 1994.
(2) In regard to the State System:
(i) The following provisions shall not create an
express or implied contractual right in a member of the
State System, a participant in the State Employees'
Defined Contribution Plan or another person claiming an
interest in the account of a member or participant:
(A) A provision of this act which amends 51
Pa.C.S. § 7306 or 71 Pa.C.S. Pt. XXV, in relation to
requirements for any of the following:
(I) Qualification of the State Employees'
Defined Contribution Plan as a qualified pension
plan under sections 401(a) and 415(b) of the
Internal Revenue Code of 1986 (26 U.S.C. §§
401(a) and 415(b)).
(II) Compliance with the Uniformed Services
Employment and Reemployment Rights Act of 1994.
(III) A domestic relations order regarding
an alternate payee of a participant in the State
Employees' Defined Contribution Plan.
(B) (Reserved).
(ii) The provisions of 71 Pa.C.S. Pt. XXV shall
remain subject to the Internal Revenue Code of 1986 and
the Uniformed Services Employment and Reemployment Rights
Act of 1994 and regulations promulgated under those
statutes.
(iii) The General Assembly reserves to itself the
further exercise of its legislative power to amend or
supplement the provisions of 71 Pa.C.S. Pt. XXV solely
in order to maintain the qualification of the State
System as a qualified pension plan under section 401(a)
of the Internal Revenue Code of 1986 (26 U.S.C. § 401)
and other applicable provisions of the Internal Revenue
Code of 1986 and the Uniformed Services Employment and
Reemployment Rights Act of 1994.
Section 403. Nothing in this act shall be construed to mean
that:
(1) a calculation or actuarial method used by the School
Retirement Board, its actuaries or the School System was not
in accordance with the provisions of 24 Pa.C.S. Pt. IV or
other applicable law prior to the effective date of this
paragraph; or
(2) a calculation or actuarial method used by the State
Retirement Board, its actuaries or the State System was not
in accordance with the provisions of 71 Pa.C.S. Pt. XXV or
other applicable law prior to the effective date of this
paragraph.
Section 404. The following apply to accrued liability:
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(1) In regard to the School System:
(i) (Reserved).
(ii) Payments required to fund a change in accrued
liability resulting from this act shall be subject to
limits imposed under this act on employer contributions
to the School System.
(iii) For purposes of 24 Pa.C.S. §§ 8326, 8327 and
8328, changes under this paragraph shall not be
considered to be costs added by legislation.
(2) In regard to the State System:
(i) Notwithstanding any other provision of law, a
change in accrued liability of the State System created
under this act as a result of changes in benefits shall
be funded in equal dollar installments over a period of
20 years beginning July 1, 2018.
(ii) (Reserved).
(iii) Payments required to fund a change in accrued
liability resulting from this act shall be subject to
limits imposed under this act on employer contributions
to the State System.
(iv) For purposes of 71 Pa.C.S. §§ 5501.2, 5507 and
5508, changes under this paragraph shall not be
considered to be costs added by legislation.
Section 405. The following shall apply to construction
related to Federal law:
(1) In regard to the School System:
(i) This act shall be construed and administered in
such a manner that the School System and the School
Employees' Defined Contribution Plan satisfy the
requirements necessary to qualify as a qualified pension
plan under section 401(a) of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 401(a)), other
applicable provisions of the Internal Revenue Code of
1986 and the Uniformed Services Employment and
Reemployment Rights Act of 1994 (Public Law 103-353, 108
Stat. 3149). Regulations promulgated by the School
Retirement Board and terms and conditions of the plan
document and trust declaration adopted by the School
Retirement Board may include provisions necessary to
accomplish the purpose of this subparagraph.
(ii) Nothing in this act shall be construed to
require a member of Class T-G to make contributions to
the School System in excess of the limits established by
section 415(n)(3)(A)(iii) of the Internal Revenue Code of
1986 (26 U.S.C. § 415(n)(3)(A)(iii)). A contribution made
by a member of Class T-G which is determined to be in
excess of the limits shall be refunded to the member in a
lump sum subject to withholding for all applicable taxes
and penalties as soon as administratively possible after
the determination is made. A refund under this
subparagraph shall not affect the benefit payable to the
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member and shall not be treated as or deemed to be a
withdrawal of the member's accumulated deductions.
(2) As to the State System:
(i) This act shall be construed and administered in
a manner that the State System and the State Employees'
Defined Contribution Plan shall satisfy the requirements
necessary to qualify as a qualified pension plan under
section 401(a) of the Internal Revenue Code of 1986 (26
U.S.C. § 401(a)), other applicable provisions of the
Internal Revenue Code of 1986 and the Uniformed Services
Employment and Reemployment Rights Act of 1994. The
regulations promulgated by the State Retirement Board and
the terms and conditions of the plan document and trust
declaration adopted by the State Retirement Board may
include provisions necessary to accomplish the purpose of
this subparagraph.
(ii) Nothing in this act shall be construed or
deemed to imply that any member of Class A-5 shall be
required to make contributions to the State System in
excess of the limits established by section 415(n)(3)(A)
(iii) of the Internal Revenue Code of 1986 (26 U.S.C. §
415(n)(3)(A)(iii)). A contribution made by a member of
Class A-5 which is determined to be in excess of the
limits shall be refunded to the member in a lump sum
subject to withholding for all applicable taxes and
penalties as soon as administratively possible after the
determination is made. A refund under this subparagraph
shall not affect the benefit payable to the member and
shall not be treated as or deemed to be a withdrawal of
the member's accumulated deductions.
(iii) Nothing in this act shall be construed to mean
that an interpretation or application of 71 Pa.C.S. Pt.
XXV or benefits available to members of the State System
was not in accordance with 71 Pa.C.S. Pt. XXV or other
applicable law, including the Internal Revenue Code of
1986 and the Uniformed Services Employment and
Reemployment Rights Act of 1994, before the effective
date of this subparagraph.
Section 406. The following shall apply to immunity from
personal liability:
(1) Notwithstanding any other provision of law,
fiduciary requirement, actuarial standard of practice or
other requirement, no member of the School Retirement Board
nor an actuary, employee or official of the School System
shall be held liable or in breach or violation of a law or
standard, as an individual, in an official capacity or as a
governmental or corporate entity, for an action or
calculation related to calculating and certifying a final
contribution rate as provided under this act that is
different from the actuarially required contribution rate as
appropriately calculated under 24 Pa.C.S. Pt. IV.
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(2) Notwithstanding any other provision of law,
fiduciary requirement, actuarial standard of practice or
other requirement, no member of the State Retirement Board
nor an actuary employee or official of the State System shall
be held liable or in breach or violation of a law or
standard, as an individual, in an official capacity or as a
governmental or corporate entity, for an action or
calculation related to calculating and certifying a final
contribution rate as provided under this act that is
different from the actuarially required contribution rate as
appropriately calculated under 71 Pa.C.S. Pt. XXV.
Section 407. Notwithstanding the amendment of 71 Pa.C.S. §
5901(e), the Governor's Office of General Counsel shall continue
to provide legal counsel and legal services to the board until
such time as the board appoints a chief counsel and such other
counsel as it deems necessary to provide it with legal services.
Section 408. Notwithstanding the amendment of 24 Pa.C.S. §
8501(e), the Governor's Office of General Counsel shall continue
to provide legal counsel and legal services to the board until
such time as the board appoints a chief counsel and such other
counsel as it deems necessary to provide it with legal services.
Section 409. Nothing in this act shall be deemed to permit
the restoration of service credit or a retirement benefit which:
(1) was or is subject to section 16 of Article V of the
Constitution of Pennsylvania or 42 Pa.C.S. § 3352; or
(2) the subject of an order of forfeiture under the act
of July 8, 1978 (P.L.752, No.140), known as the Public
Employee Pension Forfeiture Act.
Section 410. If a provision of this act or its application
to any person or circumstance is held invalid, the invalidity
shall not affect other provisions or applications of this act
that can be given effect without the invalid provision or
application.
Section 411. This act shall take effect immediately.
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See A08206 in
the context
of SB1071