PRINTER'S NO. 3259
No. 2479 Session of 1996
INTRODUCED BY STERN, GEIST, BAKER, HESS, SATHER, LYNCH, NICKOL,
SHANER, OLASZ, TRELLO, COLAFELLA, ITKIN, BELARDI, SAYLOR,
STETLER, TRUE AND E. Z. TAYLOR, MARCH 15, 1996
REFERRED TO COMMITTEE ON EDUCATION, MARCH 15, 1996
AN ACT
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, further providing for
3 multiple service members.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Sections 8323(d), 8324(b) and (d) and 8325 of
7 Title 24 of the Pennsylvania Consolidated Statutes are amended
8 to read:
9 § 8323. Member contributions for creditable school service.
10 * * *
11 (d) Certification and payment of contributions.--
12 (1) In all cases other than for the purchase of credit
13 for sabbatical leave and activated military service leave
14 beginning before the effective date of paragraph (2), the
15 amount payable shall be certified by the board in accordance
16 with methods approved by the actuary and may be paid in a
17 lump sum within 90 days or, in the case of an active member
18 or an eligible State employee who is an active member of the
1 State Employees' Retirement System, may be amortized with
2 statutory interest through salary deductions or by personal
3 checks in amounts agreed upon by the member and the board. In
4 the case of an eligible State employee who is an active
5 member of the State Employees' Retirement System, the agreed
6 upon salary deductions shall be remitted to the State
7 Employees' Retirement Board, which shall certify and transfer
8 to the board the amounts paid.
9 (2) In the case of activated military service leave
10 beginning before the effective date of this paragraph, the
11 amount payable may be paid according to this subsection or
12 subsection (c.1), but all lump sum payments must be made and
13 all amortization payments commenced within one year of the
14 termination of activated military service leave.
15 § 8324. Contributions for purchase of credit for creditable
16 nonschool service.
17 * * *
18 (b) Nonintervening military service.--The amount due for the
19 purchase of credit for military service other than intervening
20 military service shall be determined by applying the member's
21 basic contribution rate plus the normal contribution rate as
22 provided in section 8328 (relating to actuarial cost method) at
23 the time of entry of the member into school service subsequent
24 to such military service to one-third of his total compensation
25 received during the first three years of such subsequent
26 credited school service and multiplying the product by the
27 number of years and fractional part of a year of creditable
28 nonintervening military service being purchased together with
29 statutory interest during all periods of subsequent school and
30 State service to date of purchase. Upon certification of the
19960H2479B3259 - 2 -
1 amount due, payment may be made in a lump sum within 90 days or,
2 in the case of an active member [it] or an eligible State
3 employee who is an active member of the State Employees'
4 Retirement System, the payment may be amortized with statutory
5 interest through salary deductions or by personal checks in
6 amounts agreed upon by the member and the board. In the case of
7 an eligible State employee who is an active member of the State
8 Employees' Retirement System, the agreed upon salary deductions
9 shall be remitted to the State Employees' Retirement Board,
10 which shall certify and transfer to the board the amounts paid.
11 Application may be filed for all such military service credit
12 upon completion of three years of subsequent credited school
13 service and shall be credited as Class T-C service.
14 * * *
15 (d) Other creditable nonschool service.--Contributions on
16 account of Class T-C credit for creditable nonschool service
17 other than military service shall be determined by applying the
18 member's basic contribution rate plus the normal contribution
19 rate as provided in section 8328 at the time of the member's
20 entry into school service subsequent to such creditable
21 nonschool service to his total compensation received during the
22 first year of subsequent credited school service and multiplying
23 the product by the number of years and fractional part of a year
24 of creditable nonschool service being purchased together with
25 statutory interest during all periods of subsequent school or
26 State service to the date of purchase, except that in the case
27 of purchase of credit for creditable nonschool service as set
28 forth in section 8304(b)(5) (relating to creditable nonschool
29 service) the member shall pay only the employee's share unless
30 otherwise provided by law. Upon certification of the amount due,
19960H2479B3259 - 3 -
1 payment may be made in a lump sum within 90 days or, in the case
2 of an active member [it] or an eligible State employee who is an
3 active member of the State Employees' Retirement System, the
4 payment may be amortized with statutory interest through salary
5 deductions or by personal checks in amounts agreed upon by the
6 member and the board. In the case of an eligible State employee
7 who is an active member of the State Employees' Retirement
8 System, the agreed upon salary deductions shall be remitted to
9 the State Employees' Retirement Board, which shall certify and
10 transfer to the board the amounts paid.
11 * * *
12 § 8325. Incomplete payments.
13 In the event that a member terminates school service or a
14 multiple service member who is an active member of the State
15 Employees' Retirement System terminates State service before any
16 agreed upon payments or return of benefits on account of
17 returning to school service or entering State service and
18 electing multiple service have been completed, the member or
19 multiple service member who is an active member of the State
20 Employees' Retirement System shall have the right to pay within
21 30 days of termination of school service or State service the
22 balance due, including interest, in a lump sum and the annuity
23 shall be calculated including full credit for the previous
24 school service, creditable nonschool service, or full-coverage
25 membership. In the event a member does not pay the balance due
26 within 30 days of termination of school service or in the event
27 a member dies in school service or within 30 days of termination
28 of school service or, in the case of a multiple service member
29 who is an active member of the State Employees' Retirement
30 System, does not pay the balance due within 30 days of
19960H2479B3259 - 4 -
1 termination of State service or dies in State service or within
2 30 days of termination of State service and before the agreed
3 upon payments have been completed, the present value of the
4 benefit otherwise payable shall be reduced by the balance due,
5 including interest, and the benefit payable shall be calculated
6 as the actuarial equivalent of such reduced present value.
7 Section 2. Section 8346(a) and (d)(1) of Title 24, amended
8 December 20, 1995 (P.L.689, No.77), are amended and the section
9 is amended by adding a subsection to read:
10 § 8346. Termination of annuities.
11 (a) General rule.--If an annuitant returns to school service
12 or enters or has entered State service and elects multiple
13 service membership, any annuity payable to him under this part
14 shall cease effective upon the date of the annuitant's return to
15 school service or entering State service and in the case of an
16 annuity other than a disability annuity the present value of
17 such annuity, adjusted for full coverage in the case of a joint
18 coverage member who makes the appropriate back contributions for
19 full coverage, shall be frozen as of the date such annuity
20 ceases. An annuitant who is credited with an additional 10% of
21 membership service as provided in section 8302(b.2) (relating to
22 credited school service) and who returns to school service,
23 except as provided in subsection (b), shall forfeit such
24 credited service and shall have his frozen present value
25 adjusted as if his 10% retirement incentive had not been applied
26 to his account. In the event that the cost-of-living increase
27 enacted December 18, 1979, occurred during the period of such
28 State or school employment, the frozen present value shall be
29 increased, on or after the member attains superannuation age, by
30 the percent applicable had he not returned to service.
19960H2479B3259 - 5 -
1 (a.1) Return of benefits.--In the event an annuitant whose
2 annuity ceases under this section receives any annuity payment,
3 including a lump sum payment under section 8345 (relating to
4 member's options), on or after the date of the annuitant's
5 return to school service or entering State service, the
6 annuitant shall return to the board the amount so received plus
7 statutory interest. The amount payable shall be certified in
8 each case by the board in accordance with methods approved by
9 the actuary and shall be paid in a lump sum within 90 days or by
10 such other method as the board by regulation shall authorize,
11 which may include, but is not limited to, an actuarial
12 adjustment to the annuity the member may receive upon subsequent
13 retirement, calculated using the annual interest rate adopted
14 for that fiscal year by the board for the calculation of the
15 normal contribution rate pursuant to section 8328(b) (relating
16 to actuarial cost method). In the event the board by regulation
17 allows an active member or a State employee who is an active
18 member of the State Employees' Retirement System to amortize the
19 amounts payable with statutory interest through salary
20 deductions, the agreed upon salary deductions may be remitted to
21 the State Employees' Retirement Board, which shall certify and
22 transfer to the board the amounts paid.
23 * * *
24 (d) Elimination of the effect of frozen present value.--
25 (1) An annuitant who returns to school service and earns
26 three eligibility points by performing credited school
27 service following the most recent period of receipt of an
28 annuity under this part, or an annuitant who enters State
29 service and:
30 (i) is a multiple service member; or
19960H2479B3259 - 6 -
1 (ii) who elects multiple service membership, and
2 earns three eligibility points by performing credited State
3 service or credited school service following the most recent
4 period of receipt of an annuity under this part, and who had
5 the present value of his annuity frozen in accordance with
6 subsection (a), shall qualify to have the effect of the
7 frozen present value resulting from all previous periods of
8 retirement eliminated, provided that all payments under
9 Option 4 and annuity payments payable during previous periods
10 of retirement plus interest as set forth in paragraph (3)
11 shall be returned to the fund in the form of an actuarial
12 adjustment to his subsequent benefits or in such form as the
13 board may otherwise direct. In the case of an annuitant who
14 elects multiple service membership after commencing State
15 service, eligibility points earned after the commencing of
16 State service, but before the election of multiple service,
17 shall be included in the earning of the three eligibility
18 points required by this paragraph.
19 * * *
20 Section 3. Section 8502 (h) and (m) of Title 24, amended
21 December 20, 1995 (P.L.689, No.77), are amended to read:
22 § 8502. Administrative duties of board.
23 * * *
24 (h) Regulations and procedures.--The board shall, with the
25 advice of the Attorney General and the actuary, adopt and
26 promulgate rules and regulations for the uniform administration
27 of the system. No regulation establishing a period of time to
28 elect multiple service shall allow any such election more than
29 one year after entry into the system as an active member. The
30 actuary shall approve in writing all computational procedures
19960H2479B3259 - 7 -
1 used in the calculation of contributions and benefits, and the
2 board shall by resolution adopt such computational procedures,
3 prior to their application by the board. Such rules, regulations
4 and computational procedures as so adopted from time to time and
5 as in force and effect at any time, together with such tables as
6 are adopted and published pursuant to subsection (j) as
7 necessary for the calculation of annuities and other benefits,
8 shall be as effective as if fully set forth in this part. Any
9 actuarial assumption specified in or underlying any such rule,
10 regulation or computational procedure and utilized as a basis
11 for determining any benefit shall be applied in a uniform
12 manner.
13 * * *
14 (m) Member contributions and interest.--The board shall
15 cause each member's contributions, including payroll deductions,
16 pickup contributions and all other payments, including, but not
17 limited to, amounts collected by the State Employees' Retirement
18 System for the reinstatement of previous school service or
19 creditable nonschool service and amounts paid to return benefits
20 paid after the date of return to school service or entering
21 State service representing lump sum payments made pursuant to 71
22 Pa.C.S. § 5705(a)(4)(iii) (relating to member's options) and
23 member's annuity payments, but not including other benefits
24 returned pursuant to 71 Pa.C.S. § 5706(a.1) (relating to
25 termination of annuities), to be credited to the account of such
26 member and shall pay all such amounts into the fund. Such
27 contributions shall be credited with statutory interest until
28 date of termination of service, except in the case of a vestee,
29 who shall have such interest credited until the effective date
30 of retirement or until the return of his accumulated deductions,
19960H2479B3259 - 8 -
1 if he so elects; and in the case of a multiple service member
2 who shall have such interest credited until termination of
3 service in both the school and the State systems.
4 * * *
5 Section 4. Section 8504(b) of Title 24 is amended to read:
6 § 8504. Duties of board to report to State Employees'
7 Retirement Board.
8 * * *
9 (b) Multiple service membership of State employees.--Upon
10 receipt of notification from the State Employees' Retirement
11 Board that a former school employee has become an active member
12 in the State Employees' Retirement System and has elected to
13 receive credit for multiple service, the board shall certify to
14 the State Employees' Retirement Board and concurrently to the
15 member:
16 (1) The total credited service in the system and the
17 number of years and fractional part of a year of service
18 credited in each class of service.
19 (2) The annual compensation received each school year by
20 the member for credited school service.
21 (3) If the member has elected payroll deductions under
22 section 8323 (relating to member contributions for creditable
23 school service) or 8324 (relating to contributions for
24 purchase of credit for creditable nonschool service), the
25 amount of the deductions and the period over which they are
26 to be made.
27 * * *
28 Section 5. Section 8505(b) of Title 24 is amended and the
29 section is amended by adding a subsection to read:
30 § 8505. Duties of board regarding applications and elections of
19960H2479B3259 - 9 -
1 members.
2 * * *
3 (b) State employees electing multiple service status.--Upon
4 receipt of notification from the State Employees' Retirement
5 Board that a former school employee has become an active member
6 in the State Employees' Retirement System and has elected to
7 become a member with multiple service status, the board shall:
8 (1) In case of a member who is receiving an annuity from
9 the system, discontinue payments, transfer the present
10 value[, at that time,] of the member's annuity at the time of
11 entering State service, plus the amount withdrawn in a lump
12 sum payment on or after the date of entering State service
13 under 71 Pa.C.S. § 5705 (relating to member's options), with
14 statutory interest to date of transfer, minus the amount to
15 be returned to the board on account of return to service,
16 that the board has determined is to be credited in the
17 member's savings account, from the annuity reserve account to
18 the members' savings account and resume crediting of
19 statutory interest on the amount restored to his credit
20 [and], transfer the balance of the present value of the total
21 annuity, minus the amount to be returned to the board on
22 account of return to service that the board has determined is
23 to be credited in the State accumulation account, from the
24 annuity reserve account to the State accumulation account,
25 and certify to the member the amount of lump sum and annuity
26 payments with statutory interest to be returned to the board
27 by him, and of those amounts, which amount shall be credited
28 to the members' savings account and credited with statutory
29 interest as such payments are returned and which amount shall
30 be credited to the State accumulation account.
19960H2479B3259 - 10 -
1 (2) In case of a member who is not receiving an annuity
2 from the system and who has not withdrawn his accumulated
3 deductions, continue or resume the crediting of statutory
4 interest on his accumulated deductions.
5 (3) In case of a member who is not receiving an annuity
6 from the system and his accumulated deductions were
7 withdrawn, certify to the member the accumulated deductions
8 as they would have been at the time of his separation had he
9 been a full coverage member together with statutory interest
10 for all periods of subsequent State and school service to the
11 date of repayment. Such amount shall be restored by him and
12 shall be credited with statutory interest as such payments
13 are restored.
14 * * *
15 (k) School employees electing multiple service status.--Upon
16 receipt of notification from the State Employees' Retirement
17 Board that a member who has elected multiple service membership
18 has elected to restore State service or purchase creditable
19 nonstate service in the State Employees' Retirement System or is
20 obligated to return benefits to the State Employees' Retirement
21 Board on account of electing multiple service membership has
22 elected to pay all or part of the amount due to the State
23 Employees' Retirement Board by salary deductions, the board
24 shall collect from the employee the amounts certified by the
25 State Employees' Retirement Board as due and owing by the member
26 and certify and transfer to the State Employees' Retirement
27 Board the amounts so collected.
28 Section 6. Section 8506(c), (g) and (h) of Title 24, amended
29 December 20, 1995 (P.L.689, No.77), are amended to read:
30 § 8506. Duties of employers.
19960H2479B3259 - 11 -
1 * * *
2 (c) Member and employer contributions.--The employer shall
3 certify to its treasurer the required member contributions
4 picked up and any other contributions, including, but not
5 limited to, amounts collected for the State Employees'
6 Retirement Board for the reinstatement of previous State service
7 or creditable nonstate service and amounts paid to return
8 benefits paid after the date of return to State service or
9 entering school service deducted from each payroll. On July 1,
10 1996, and upon any later effective date of employment of any
11 noneligible member to whom limitation under IRC § 401(a)(17)
12 applies or is expected to apply, the employer shall identify to
13 its treasurer or other payroll administrator the member or
14 members to whom such limit applies or may apply and shall cause
15 any such member's contribution on his behalf to cease at the
16 limitation under IRC § 401(a)(17) on the payroll date if and
17 when such limit shall be reached. The treasurer shall remit to
18 the secretary of the board each month the total of the member
19 contributions and the amount due from the employer determined in
20 accordance with section 8327 (relating to payments by
21 employers). If upon crediting the remittance of a noneligible
22 member's contributions to the member's savings account, the
23 board shall determine that such account shall have been credited
24 with pickup contributions attributable to compensation which is
25 in excess of the annual compensation limit under IRC §
26 401(a)(17), or with total member contributions for such member
27 which would cause such member's contributions or benefits to
28 exceed any applicable limitation on contributions or benefits
29 under IRC § 401(a)(17), the board shall as soon as practicable
30 refund to the member from his individual member account such
19960H2479B3259 - 12 -
1 amount, together with the statutory interest thereon, as will
2 cause the member's total member contributions not to exceed the
3 applicable limit. The payment of any such refund to the member
4 shall be charged to the member's savings account.
5 * * *
6 (g) Former State employee contributors.--The employer shall,
7 upon the employment of a former member of the State Employees'
8 Retirement System who is not an annuitant of the State
9 Employees' Retirement System, advise such employee of his right
10 to elect multiple service membership within [30] 365 days of
11 entry into the system or such other period as the board may by
12 regulation establish and, in the case any such employee who so
13 elects has withdrawn his accumulated deductions, require him to
14 restore his accumulated deductions as they would have been at
15 the time of his separation had he been a full coverage member,
16 together with statutory interest for all periods of subsequent
17 State and school service to date of repayment. The employer
18 shall advise the board of such election.
19 (h) Former State employee annuitants.--The employer shall,
20 upon the employment of an annuitant of the State Employees'
21 Retirement System who applies for membership in the system,
22 advise such employee that he may elect multiple service
23 membership within [30] 365 days of entry into the system or such
24 other period as the board may by regulation establish and that
25 if he so elects his annuity from the State Employees' Retirement
26 System will be discontinued effective upon the date of his
27 return to school service and, upon termination of school service
28 and application for an annuity, the annuity will be adjusted in
29 accordance with section 8346 (relating to termination of
30 annuities). The employer shall advise the board of such
19960H2479B3259 - 13 -
1 election.
2 * * *
3 Section 7. Section 8507(c) of Title 24 is amended to read:
4 § 8507. Rights and duties of school employees and members.
5 * * *
6 (c) Multiple service membership.--Any active member who was
7 formerly an active member in the State Employees' Retirement
8 System may elect to become a multiple service member. Such
9 election shall occur no later than [30] 365 days after becoming
10 an active member in this system or such other period as the
11 board may by regulation establish.
12 * * *
13 Section 8. Sections 5304(a), 5504(b), 5505(b) and (d) and
14 5506 of Title 71 are amended to read:
15 § 5304. Creditable nonstate service.
16 (a) Eligibility.--An active member or a multiple service
17 member who is a school employee and an active member of the
18 Public School Employees' Retirement System shall be eligible for
19 Class A service credit for creditable nonstate service as set
20 forth in subsections (b) and (c) except that intervening
21 military service shall be credited in the class of service for
22 which the member was eligible at the time of entering into
23 military service and for which he makes the required
24 contributions and except that a multiple service member who is a
25 school employee and an active member of the Public School
26 Employees' Retirement System shall not be eligible to purchase
27 service credit for creditable nonstate service as set forth in
28 subsection (c)(5).
29 * * *
30 § 5504. Member contributions for the purchase of credit for
19960H2479B3259 - 14 -
1 previous State service or to become a full coverage
2 member.
3 * * *
4 (b) Certification and method of payment.--The amount payable
5 shall be certified in each case by the board in accordance with
6 methods approved by the actuary and shall be paid in a lump sum
7 within 30 days or in the case of an active member or eligible
8 school employee who is an active member of the Public School
9 Employees' Retirement System may be amortized with statutory
10 interest through salary deductions in amounts agreed upon by the
11 member and the board. In the case of an eligible school employee
12 who is an active member of the Public School Employees'
13 Retirement System, the agreed upon salary deductions shall be
14 remitted to the Public School Employees' Retirement Board, which
15 shall certify and transfer to the board the amounts paid.
16 § 5505. Contributions for the purchase of credit for creditable
17 nonstate service.
18 * * *
19 (b) Nonintervening military service.--
20 (1) The amount due for the purchase of credit for
21 military service other than intervening military service
22 shall be determined by applying the member's basic
23 contribution rate, the additional contribution rate plus the
24 Commonwealth normal contribution rate for active members at
25 the time of entry, subsequent to such military service, of
26 the member into State service to his average annual rate of
27 compensation over the first three years of such subsequent
28 State service and multiplying the result by the number of
29 years and fractional part of a year of creditable
30 nonintervening military service being purchased together with
19960H2479B3259 - 15 -
1 statutory interest during all periods of subsequent State and
2 school service to date of purchase. Upon application for
3 credit for such service, payment shall be made in a lump sum
4 within 30 days or, in the case of an active member [it] or
5 eligible school employee who is an active member of the
6 Public School Employees' Retirement System, the payment may
7 be amortized with statutory interest through salary
8 deductions in amounts agreed upon by the member and the
9 board. In the case of an eligible school employee who is an
10 active member of the Public School Employees' Retirement
11 System, the agreed upon salary deductions shall be remitted
12 to the Public School Employees' Retirement Board, which shall
13 certify and transfer to the board the amounts paid.
14 Application may be filed for all such military service credit
15 upon completion of three years of subsequent State service
16 and shall be credited as Class A service.
17 (2) Applicants may purchase credit as follows:
18 (i) one purchase of the total amount of creditable
19 nonintervening military service; or
20 (ii) one purchase per 12-month period of a portion
21 of creditable nonintervening military service.
22 The amount of each purchase shall be not less than one year
23 of creditable nonintervening military service.
24 * * *
25 (d) Nonmilitary and nonmagisterial service.--Contributions
26 on account of credit for creditable nonstate service other than
27 military and magisterial service shall be determined by applying
28 the member's basic contribution rate, the additional
29 contribution rate plus the Commonwealth normal contribution rate
30 for active members at the time of entry subsequent to such
19960H2479B3259 - 16 -
1 creditable nonstate service of the member into State service to
2 his compensation at the time of entry into State service and
3 multiplying the result by the number of years and fractional
4 part of a year of creditable nonstate service being purchased
5 together with statutory interest during all periods of
6 subsequent State and school service to the date of purchase.
7 Upon application for credit for such service payment shall be
8 made in a lump sum within 30 days or, in the case of an active
9 member [it] or eligible school employee who is an active member
10 of the Public School Employees' Retirement System, the payment
11 may be amortized with statutory interest through salary
12 deductions in amounts agreed upon by the member and the board.
13 In the case of an eligible school employee who is an active
14 member of the Public School Employees' Retirement System, the
15 agreed upon salary deductions shall be remitted to the Public
16 School Employees' Board, which shall certify and transfer to the
17 board the amounts paid.
18 * * *
19 § 5506. Incomplete payments.
20 In the event that a member terminates State service or a
21 multiple service member who is an active member of the Public
22 School Employees' Retirement System terminates school service
23 before the agreed upon payments for credit for previous State
24 service, creditable nonstate service, social security
25 integration, [or] full coverage membership or return of benefits
26 on account of returning to State service or entering school
27 service and electing multiple service have been completed, the
28 member or multiple service member who is an active member of the
29 Public School Employees' Retirement System shall have the right
30 to pay within 30 days of termination of State service or school
19960H2479B3259 - 17 -
1 service the balance due, including interest, in a lump sum and
2 the annuity shall be calculated including full credit for the
3 previous State service, creditable nonstate service, social
4 security integration, or full coverage membership. In the event
5 a member does not pay the balance due within 30 days of
6 termination of State service or in the event a member dies in
7 State service or within 30 days of termination of State service
8 or, in the case of a multiple service member who is an active
9 member of the Public School Employees' Retirement System, does
10 not pay the balance due within 30 days of termination of school
11 service or dies in school service or within 30 days of
12 termination of school service and before the agreed upon
13 payments have been completed, the present value of the benefit
14 otherwise payable shall be reduced by the balance due, including
15 interest, and the benefit payable shall be calculated as the
16 actuarial equivalent of such reduced present value.
17 Section 9. Section 5706(a) and (c)(1) of Title 71, amended
18 December 20, 1995 (P.L.689, No.77), are amended and the section
19 is amended by adding a subsection to read:
20 § 5706. Termination of annuities.
21 (a) General rule.--If the annuitant returns to State service
22 or enters or has entered school service and elects multiple
23 service membership, any annuity payable to him under this part
24 shall cease effective upon the date of the annuitant's return to
25 State service or entering school service and in the case of an
26 annuity other than a disability annuity the present value of
27 such annuity, adjusted for full coverage in the case of a joint
28 coverage member who makes the appropriate back contributions for
29 full coverage, shall be frozen as of the date such annuity
30 ceases. An annuitant who is credited with an additional 10% of
19960H2479B3259 - 18 -
1 Class A and Class C service as provided in section 5302(c)
2 (relating to credited State service) and who returns to State
3 service shall forfeit such credited service and shall have his
4 frozen present value adjusted as if his 10% retirement incentive
5 had not been applied to his account. In the event that the cost-
6 of-living increase enacted December 18, 1979, occurred during
7 the period of such State or school employment, the frozen
8 present value shall be increased, on or after the member attains
9 superannuation age, by the percent applicable had he not
10 returned to service. This subsection shall not apply in the case
11 of any annuitant who may render services to the Commonwealth in
12 the capacity of an independent contractor or as a member of an
13 independent board or commission or as a member of a departmental
14 administrative or advisory board or commission when such members
15 of independent or departmental boards or commissions are
16 compensated on a per diem basis for not more than 150 days per
17 calendar year.
18 * * *
19 (a.2) Return of benefits.--In the event an annuitant whose
20 annuity ceases under this section receives any annuity payment,
21 including a lump sum payment under section 5705 (relating to
22 member's options) on or after the date of the annuitant's return
23 to State service or entering school service, the annuitant shall
24 return to the board the amount so received plus statutory
25 interest. The amount payable shall be certified in each case by
26 the board in accordance with methods approved by the actuary and
27 shall be paid in a lump sum within 90 days or by such other
28 method as the board by regulation shall authorize, which may
29 include, but is not limited to, an actuarial adjustment to the
30 annuity the member may receive upon subsequent retirement,
19960H2479B3259 - 19 -
1 calculated using the annual interest rate adopted for that
2 fiscal year by the board for the calculation of the normal
3 contribution rate pursuant to section 5508(b) (relating to
4 actuarial cost method). In the event the board by regulation
5 allows an active member or a school employee who is an active
6 member of the Public School Employees' Retirement System to
7 amortize the amounts payable with statutory interest through
8 salary deductions, the agreed upon salary deductions may be
9 remitted to the Public School Employees' Retirement Board, which
10 shall certify and transfer to the board the amounts paid.
11 * * *
12 (c) Elimination of the effect of frozen present value.--
13 (1) An annuitant who returns to State service and earns
14 three eligibility points by performing credited State service
15 following the most recent period of receipt of an annuity
16 under this part, or an annuitant who enters school service
17 and:
18 (i) is a multiple service member; or
19 (ii) who elects multiple service membership, and
20 earns three eligibility points by performing credited State
21 service or credited school service following the most recent
22 period of receipt of an annuity under this part, and who had
23 the present value of his annuity frozen in accordance with
24 subsection (a), shall qualify to have the effect of the
25 frozen present value resulting from all previous periods of
26 retirement eliminated, provided that all payments under
27 Option 4 and annuity payments payable during previous periods
28 of retirement plus interest as set forth in paragraph (3)
29 shall be returned to the fund in the form of an actuarial
30 adjustment to his subsequent benefits or in such form as the
19960H2479B3259 - 20 -
1 board may otherwise direct. In the case of an annuitant who
2 elects multiple service membership after commencing school
3 service, eligibility points earned after the commencing of
4 school service, but before the election of multiple service,
5 shall be included in the earning of the three eligibility
6 points required by this paragraph.
7 * * *
8 Section 10. Section 5902 (h) and (l) of Title 71, amended
9 December 20, 1995 (P.L.689, No.77), are amended to read:
10 § 5902. Administrative duties of the board.
11 * * *
12 (h) Regulations and procedures.--The board shall, with the
13 advice of the Attorney General and the actuary, adopt and
14 promulgate rules and regulations for the uniform administration
15 of the system. No regulation establishing a period of time to
16 elect multiple service shall allow any such election more than
17 one year after entry into the system as an active member. The
18 actuary shall approve in writing all computational procedures
19 used in the calculation of contributions and benefits, and the
20 board shall by resolution adopt such computational procedures,
21 prior to their application by the board. Such rules, regulations
22 and computational procedures as so adopted from time to time and
23 as in force and effect at any time, together with such tables as
24 are adopted pursuant to subsection (j) as necessary for the
25 calculation of annuities and other benefits, shall be as
26 effective as if fully set forth in this part. Any actuarial
27 assumption specified in or underlying any such rule, regulation
28 or computational procedure and utilized as a basis for
29 determining any benefit shall be applied in a uniform manner.
30 * * *
19960H2479B3259 - 21 -
1 (l) Member contributions.--The board shall cause all pickup
2 contributions made on behalf of a member to be credited to the
3 account of the member and credit to his account any other
4 payment made by such member, including, but not limited to,
5 amounts collected by the Public School Employees' Retirement
6 System for the reinstatement of previous State service or
7 creditable nonstate service and amounts paid to return benefits
8 paid after the date of return to State service or entering
9 school service representing lump sum payments made pursuant to
10 24 Pa.C.S. § 8345(a)(4)(iii) (relating to member's options) and
11 member's annuity payments, but not including other benefits
12 returned pursuant to 24 Pa.C.S. § 8346(a.1) (relating to
13 termination of annuities), and shall pay all such amounts into
14 the fund.
15 * * *
16 Section 11. Section 5904(b) of Title 71 is amended to read:
17 § 5904. Duties of the board to report to the Public School
18 Employees' Retirement Board.
19 * * *
20 (b) Multiple service membership of school employees.--Upon
21 receipt of notification from the Public School Employees'
22 Retirement Board that a former State employee has become an
23 active member in the Public School Employees' Retirement System
24 and has elected to receive credit for multiple service, the
25 board shall certify to the Public School Employees' Retirement
26 Board and concurrently to the member:
27 (1) the total credited service in the system and the
28 number of years and fractional part of a year of service
29 credited in each class of service;
30 (2) the annual compensation received each calendar year
19960H2479B3259 - 22 -
1 by the member for credited State service; [and]
2 (3) the social security integration credited service to
3 which the member is entitled and the average noncovered
4 salary upon which the single life annuity attributable to
5 such service will be computed[.]; and
6 (4) if the member has elected payroll deductions under
7 section 5504 (relating to member contributions for the
8 purchase of credit for previous State service or to become a
9 full coverage member) or 5505 (relating to contributions for
10 the purchase of credit for creditable nonstate service), the
11 amount of the deductions and the period over which they are
12 to be made.
13 * * *
14 Section 12. Section 5905(b) of Title 71 is amended and the
15 section is amended by adding a subsection to read:
16 § 5905. Duties of the board regarding applications and
17 elections of members.
18 * * *
19 (b) School employees electing multiple service status.--Upon
20 receipt of notification from the Public School Employees'
21 Retirement Board that a former State employee has become an
22 active member in the Public School Employees' Retirement System
23 and has elected to become a member with multiple service status
24 the board shall:
25 (1) in the case of a member receiving an annuity from
26 the system, discontinue payments, transfer the present
27 value[, at that time,] of the member's annuity at the time of
28 entering school service, plus amounts withdrawn in a lump sum
29 payment on or after the date of entering school service under
30 24 Pa.C.S. § 8345 (relating to member's options), with
19960H2479B3259 - 23 -
1 statutory interest to date of transfer, minus the amount to
2 be returned to the board on account of return to service,
3 that the board has determined is to be credited in the
4 members' savings account, from the annuity reserve account to
5 the members' savings account and resume crediting of
6 statutory interest on the amount restored to his credit
7 [and], transfer the balance of the present value of the total
8 annuity, minus the amount to be returned to the board on
9 account of return to service that the board has determined is
10 to be credited in the State accumulation account, from the
11 annuity reserve account to the State accumulation account and
12 certify to the member the amount of lump sum and annuity
13 payments with statutory interest to be returned to the board
14 by him and of those amounts which amount shall be credited to
15 the members' savings account and credited with statutory
16 interest as such payments are returned and which amount shall
17 be credited to the State accumulation account; or
18 (2) in case of a member who is not receiving an annuity
19 and has not withdrawn his total accumulated deductions,
20 continue or resume the crediting of statutory interest on his
21 total accumulated deductions during the period his total
22 accumulated deductions remain in the fund; or
23 (3) in case of a former State employee who is not
24 receiving an annuity from the system and his total
25 accumulated deductions were withdrawn, certify to the former
26 State employee the accumulated deductions as they would have
27 been at the time of his separation had he been a full
28 coverage member together with statutory interest for all
29 periods of subsequent State and school service to the date of
30 repayment. Such amount shall be restored by him and shall be
19960H2479B3259 - 24 -
1 credited with statutory interest as such payments are
2 restored.
3 * * *
4 (j) State employees electing multiple service status.--Upon
5 receipt of notification from the Public School Employees'
6 Retirement Board that a member who has elected multiple service
7 membership has elected to restore school service or purchase
8 creditable nonschool service in the Public School Employees'
9 Retirement System or is obligated to return benefits to the
10 Public School Employees' Retirement Board on account of electing
11 multiple service membership has elected to pay all or part of
12 the amount due to the Public School Employees' Retirement Board
13 by salary deductions, the board shall collect from the employee
14 the amounts certified by the Public School Employees' Retirement
15 Board as due and owing by the member and certify and transfer to
16 the Public School Employees' Retirement Board the amounts so
17 collected.
18 Section 13. Sections 5906(c), (g) and (h) of Title 71,
19 amended December 20, 1995 (P.L.689, No.77), are amended to read:
20 § 5906. Duties of heads of departments.
21 * * *
22 (c) Member contributions.--The head of department shall
23 cause the required pickup contributions for current service to
24 be made and shall cause to be deducted any other required member
25 contributions, including, but not limited to, contributions owed
26 by an active member with multiple service membership for school
27 service and creditable nonschool service in the Public School
28 Employees' Retirement System and amounts certified by the Public
29 School Employees' Retirement Board as due and owing on account
30 of termination of annuities, from each payroll. The head of
19960H2479B3259 - 25 -
1 department shall notify the board at times and in a manner
2 prescribed by the board of the compensation of any noneligible
3 member to whom the limitation under IRC § 401(a)(17) either
4 applies or is expected to apply and shall cause such member's
5 contributions deducted from payroll to cease at the limitation
6 under IRC § 401(a)(17) on the payroll date if and when such
7 limit shall be reached. The head of department shall certify to
8 the State Treasurer the amounts picked up and deducted and shall
9 send the total amount picked up and deducted together with a
10 duplicate of such voucher to the secretary of the board every
11 pay period. The head of department shall pay pickup
12 contributions from the same source of funds which is used to pay
13 other compensation to the employee. On or before January 31,
14 1997, and on or before January 31 of each year thereafter, the
15 head of department shall, at the time when the income and
16 withholding information required by law is furnished to each
17 member, also furnish the amount of pickup contributions made on
18 his behalf and notify the board, if it has not been previously
19 notified, of any noneligible member whose compensation in the
20 preceding year exceeded the annual compensation limit under IRC
21 § 401(a)(17). If the board shall determine that the member's
22 savings account shall have been credited with pickup
23 contributions for a noneligible member in the preceding year
24 which are attributable to compensation in excess of the
25 limitation under IRC § 401(a)(17), or with total member
26 contributions for such member which would cause such member's
27 contributions or benefits to exceed any applicable limitation
28 under IRC § 401(a)(17), the board shall as soon as practicable
29 refund to the member from his individual member account such
30 amount, together with the statutory interest thereon, as will
19960H2479B3259 - 26 -
1 cause the member's total member contributions in the preceding
2 year not to exceed the applicable limit. The payment of any such
3 refund to the member shall be charged to the member's savings
4 account.
5 * * *
6 (g) Former school employee contributors.--The head of
7 department shall, upon the employment of a former contributor to
8 the Public School Employees' Retirement System who is not an
9 annuitant of the Public School Employees' Retirement System,
10 advise such employee of his right to elect within [30] 365 days
11 of entry into the system or such other period as the board may
12 by regulation establish to become a multiple service member, and
13 in the case of any such employee who so elects and has withdrawn
14 his accumulated deductions, require him to reinstate his credit
15 in the Public School Employees' Retirement System. The head of
16 the department shall advise the board of such election.
17 (h) Former school employee annuitants.--The head of
18 department shall, upon the employment of an annuitant of the
19 Public School Employees' Retirement System who applies for
20 membership in the system, advise such employee that he may elect
21 multiple service membership within [30] 365 days of entry into
22 the system or such other period as the board may by regulation
23 establish and if he so elects his public school employee's
24 annuity will be discontinued effective upon the date of his
25 return to State service and, upon termination of State service
26 and application for an annuity, the annuity will be adjusted in
27 accordance with section 5706 (relating to termination of
28 annuities). The head of department shall advise the board of
29 such election.
30 * * *
19960H2479B3259 - 27 -
1 Section 14. Section 5907(c) of Title 71 is amended to read:
2 § 5907. Rights and duties of State employees and members.
3 * * *
4 (c) Multiple service membership.--Any active member who was
5 formerly an active member in the Public School Employees'
6 Retirement System may elect to become a multiple service member.
7 Such election shall occur no later than [30] 365 days after
8 becoming an active member in this system or such other period as
9 the board may by regulation establish.
10 * * *
11 Section 15. (a) This act shall be retroactive to the date
12 of enactment, except that deceased members of the State
13 Employees' Retirement System or Public School Employees'
14 Retirement System with a date of death on or before 180 days
15 after the enactment of this act, or their personal
16 representatives, may not elect multiple service membership
17 pursuant to this act.
18 (b) Notwithstanding the limitation contained in 24 Pa.C.S. §
19 8507(c), any active member of the Public School Employees'
20 Retirement System who was formerly an active member in the State
21 Employees' Retirement System may elect to become a multiple
22 service member on or before the fourth December 31 coincident
23 with or following the effective date of this act.
24 (c) Notwithstanding the limitation contained in 71 Pa.C.S. §
25 5907(c), any active member of the State Employees' Retirement
26 System who was formerly an active member in the Public School
27 Employees' Retirement System may elect to become a multiple
28 service member on or before the fourth December 31 coincident
29 with or following the effective date of this act.
30 Section 16. This act shall take effect in 180 days.
B20L24RZ/19960H2479B3259 - 28 -