PRINTER'S NO. 3718
No. 2520 Session of 2004
INTRODUCED BY BARD, HARHAI, NICKOL, STERN, LEWIS, BELFANTI,
CAPPELLI, CASORIO, DENLINGER, DeWEESE, GEORGE, GERGELY,
GOODMAN, HARRIS, HORSEY, LAUGHLIN, McCALL, SOLOBAY, THOMAS,
YOUNGBLOOD, YUDICHAK AND MARSICO, APRIL 13, 2004
REFERRED TO COMMITTEE ON FINANCE, APRIL 13, 2004
AN ACT
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, adding and amending
3 certain definitions; prohibiting creation of local government
4 police employee retirement systems; providing for mandatory
5 membership of local government police employees; revising
6 general municipal pension system State aid; and providing for
7 supplemental local government police benefit accumulation
8 plans and for local government contributions and guarantees.
9 The General Assembly finds and declares as follows:
10 (1) A number of police employee retirement systems
11 established and administered by local governments in this
12 Commonwealth are encountering serious problems of rising
13 costs caused, in part, by the lack of sufficient members to
14 provide a sound basis for computing contribution requirements
15 over an extended period of time.
16 (2) Divergent provisions among these systems preclude
17 the opportunity of local government police employees to
18 transfer from one local government employer to another.
19 (3) Similarly situated local government police employees
20 are eligible for dissimilar retirement benefits.
1 (4) There are substantial inefficiencies in the
2 administration of local government police employee retirement
3 systems.
4 (5) The great number of local government police employee
5 retirement systems make adequate monitoring difficult and
6 expensive.
7 (6) The anticipated gains from consolidation are found
8 to exceed expected costs.
9 (7) It is the purpose of this act to provide for the
10 systematic transition of existing individual local government
11 police employee retirement systems into a single State-
12 administered system of a size, scope and structure that will
13 assure:
14 (i) Fiscal and actuarial stability.
15 (ii) An adequate, uniform and certain level of
16 financial security protections for local government
17 police employees.
18 (iii) A properly funded local government police
19 employee retirement system.
20 (iv) An economy of scale in administrative costs.
21 (v) Improved public employee mobility.
22 (vi) A pooled and prudent investment of assets.
23 (vii) Procedures for an orderly and equitable
24 transfer of assets and liabilities from any superseded
25 local government police employee system into the
26 Government Employees' Retirement System.
27 (viii) An adequate and consistent level of
28 membership services for local government police
29 employees.
30 The General Assembly of the Commonwealth of Pennsylvania
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1 hereby enacts as follows:
2 Section 1. The definitions of "eligibility points,"
3 "inactive member," "multiple service," "State Employees'
4 Retirement System" and "State service" in section 8102 of Title
5 24 of the Pennsylvania Consolidated Statutes are amended and the
6 section is amended by adding definitions to read:
7 § 8102. Definitions.
8 The following words and phrases when used in this part shall
9 have, unless the context clearly indicates otherwise, the
10 meanings given to them in this section:
11 * * *
12 "Eligibility points." Points which are accrued by an active
13 member or a multiple service member who is an active member of
14 the [State] Government Employees' Retirement System for credited
15 service and are used in the determination of eligibility for
16 benefits as provided in section 8306 (relating to eligibility
17 points).
18 * * *
19 "Government Employees' Retirement System." The retirement
20 system established under 71 Pa.C.S. (relating to State
21 Government).
22 "Government service." Service rendered as a government
23 employee and credited as service in the Government Employees'
24 Retirement System.
25 * * *
26 "Inactive member." A member for whom no pickup contributions
27 are being made, except in the case of an active member for whom
28 such contributions otherwise required for current school service
29 are not being made solely by reason of any provision of this
30 part relating to the limitations under section 401(a)(17) or
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1 415(b) of the Internal Revenue Code of 1986 (Public Law 99-514,
2 26 U.S.C. § 401(a)(17) or 415(b)), who has accumulated
3 deductions standing to his credit in the fund and for whom
4 contributions have been made within the last two school years or
5 a multiple service member who is active in the [State]
6 Government Employees' Retirement System.
7 * * *
8 "Multiple service." Credited service of a member who has
9 elected to combine his credited service in both the Public
10 School Employees' Retirement System and the [State] Government
11 Employees' Retirement System.
12 * * *
13 ["State Employees' Retirement System." The retirement system
14 established by the act of June 27, 1923 (P.L.858, No.331) and
15 codified by the act of June 1, 1959 (P.L.392, No.78) and by Part
16 XXV of Title 71 (relating to retirement for State employees and
17 officers), added March 1, 1974 (P.L.125, No.31).
18 "State service." Service rendered as a State employee and
19 credited as service in the State Employees' Retirement System.]
20 * * *
21 Section 2. Sections 8301(a)(1), 8303(c), 8306(a), 8346(d),
22 8501(d), 8503(c), 8504, 8505(b), 8506(d), (e), (g) and (h) and
23 8507(a), (c) and (d) of Title 24 are amended to read:
24 § 8301. Mandatory and optional membership.
25 (a) Mandatory membership.--Membership in the system shall be
26 mandatory as of the effective date of employment for all school
27 employees except the following:
28 (1) Any officer or employee of the Department of
29 Education, State-owned educational institutions, community
30 colleges, area vocational-technical schools, technical
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1 institutes, or the Pennsylvania State University and who is a
2 member of the [State] Government Employees' Retirement System
3 or a member of another retirement program approved by the
4 employer.
5 * * *
6 § 8303. Eligibility points for retention and reinstatement of
7 service credits.
8 * * *
9 (c) Purchase of previous creditable service.--Every active
10 member of the system or a multiple service member who is an
11 active member of the [State] Government Employees' Retirement
12 System on or after the effective date of this part may purchase
13 credit and receive eligibility points:
14 (1) as a member of Class T-C for previous school service
15 or creditable nonschool service; or
16 (2) as a member of Class T-D for previous school
17 service, provided the member elects to become a Class T-D
18 member pursuant to section 8305.1 (relating to election to
19 become a class T-D member);
20 upon written agreement by the member and the board as to the
21 manner of payment of the amount due for credit for such service;
22 except, that any purchase for reinstatement of service credit
23 shall be for all service previously credited.
24 § 8306. Eligibility points.
25 (a) General rule.--An active member of the system shall
26 accrue one eligibility point for each year of credited service
27 as a member of the school or [State] government retirement
28 system. A member shall accrue an additional two-thirds of an
29 eligibility point for each year of Class D-3 credited service
30 under the [State] Government Employees' Retirement System. In
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1 the case of a fractional part of a year of credited service, a
2 member shall accrue the corresponding fractional portion of an
3 eligibility point.
4 * * *
5 § 8346. Termination of annuities.
6 * * *
7 (d) Elimination of the effect of frozen present value.--
8 (1) An annuitant who returns to school service and earns
9 three eligibility points by performing credited school
10 service following the most recent period of receipt of an
11 annuity under this part, or an annuitant who enters [State]
12 government service and:
13 (i) is a multiple service member; or
14 (ii) who elects multiple service membership, and
15 earns three eligibility points by performing credited [State]
16 government service or credited school service following the
17 most recent period of receipt of an annuity under this part,
18 and who had the present value of his annuity frozen in
19 accordance with subsection (a), shall qualify to have the
20 effect of the frozen present value resulting from all
21 previous periods of retirement eliminated, provided that all
22 payments under Option 4 and annuity payments payable during
23 previous periods of retirement plus interest as set forth in
24 paragraph (3) shall be returned to the fund in the form of an
25 actuarial adjustment to his subsequent benefits or in such
26 form as the board may otherwise direct.
27 (2) Upon subsequent discontinuance of service and the
28 filing of an application for an annuity, a former annuitant
29 who qualifies to have the effect of a frozen present value
30 eliminated under this subsection shall be entitled to receive
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1 the higher of either:
2 (i) an annuity (prior to optional modification)
3 calculated as if the freezing of the former annuitant's
4 account pursuant to subsection (a) had not occurred,
5 adjusted according to paragraph (3), provided that a
6 former annuitant of the system or a former annuitant of
7 the [State] Government Employees' Retirement System who
8 retired under a provision of law granting additional
9 service credit if termination of school or [State]
10 government service or retirement occurred during a
11 specific period of time shall not be permitted to retain
12 the additional service credit under the prior law when
13 the annuity is computed for his most recent retirement;
14 or
15 (ii) an annuity (prior to optional modification)
16 calculated as if the former annuitant did not qualify to
17 have the effect on the frozen present value eliminated,
18 unless the former annuitant notifies the board in writing
19 by the later of the date the application for annuity is
20 filed or the effective date of retirement that the former
21 annuitant wishes to receive the lower annuity.
22 (3) In addition to any other adjustment to the present
23 value of the maximum single life annuity that a member may be
24 entitled to receive that occurs as a result of any other
25 provision of law, the present value of the maximum single
26 life annuity shall be reduced by all amounts paid or payable
27 to him during all previous periods of retirement plus
28 interest on these amounts until the date of subsequent
29 retirement. The interest for each year shall be calculated
30 based upon the annual interest rate adopted for that school
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1 year by the board for the calculation of the normal
2 contribution rate pursuant to section 8328(b) (relating to
3 actuarial cost method).
4 § 8501. Public School Employees' Retirement Board.
5 * * *
6 (d) Compensation and expenses.--The members of the board who
7 are members of the system shall serve without compensation.
8 Members of the board who are members of the system and who are
9 employed by a governmental entity shall not suffer loss of
10 salary or wages through serving on the board. The board, on
11 request of the employer of any member of the board who is an
12 active professional or nonprofessional member of the system, may
13 reimburse such employer for the salary or wages of the member,
14 or for the cost of employing a substitute for such member, while
15 the member is necessarily absent from employment to execute the
16 duties of the board. The members of the board who are not
17 members of either the school system or the [State] Government
18 Employees' Retirement System may be paid $100 per day when
19 attending meetings and all board members shall be reimbursed for
20 any necessary expenses. However, when the duties of the board as
21 mandated are not executed, no compensation or reimbursement for
22 expenses of board members shall be paid or payable during the
23 period in which such duties are not executed.
24 * * *
25 § 8503. Duties of board to advise and report to employers and
26 members.
27 * * *
28 (c) Purchase of credit for previous service.--Upon receipt
29 of an application from an active member or a [State] government
30 employee with multiple service credit to purchase credit for
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1 previous school or creditable nonschool service, the board shall
2 determine and certify to the member the amount required to be
3 paid by the member. When necessary, the board shall certify to
4 the proper employer the amount which would have been paid
5 together with statutory interest into the State accumulation
6 account had such employee been an active member in the system
7 during said period.
8 * * *
9 § 8504. Duties of board to report to State Employees'
10 Retirement Board and Local Government Police
11 Employees' Retirement Board.
12 (a) Multiple service membership of school employees.--Upon
13 receipt of an application for membership in the system of a
14 school employee who is a former [State] government employee and
15 who has elected multiple service membership, the board shall
16 advise the State Employees' Retirement Board or the Local
17 Government Police Employees' Retirement Board, or both,
18 accordingly.
19 (b) Multiple service membership of [State] government
20 employees.--Upon receipt of notification from the State
21 Employees' Retirement Board or the Local Government Police
22 Employees' Retirement Board that a former school employee has
23 become an active member in the [State] Government Employees'
24 Retirement System and has elected to receive credit for multiple
25 service, the board shall certify to the State Employees'
26 Retirement Board or the Local Government Police Employees'
27 Retirement Board and concurrently to the member:
28 (1) The total credited service in the system and the
29 number of years and fractional part of a year of service
30 credited in each class of service.
20040H2520B3718 - 9 -
1 (2) The annual compensation received each school year by
2 the member for credited school service.
3 (3) The amount of the deductions and the period over
4 which they are to be made if the member has elected payroll
5 deductions pursuant to section 8323 (relating to member
6 contributions for creditable school service) or 8324
7 (relating to contributions for purchase of credit for
8 creditable nonschool service).
9 (c) Applications for benefits for [State] government
10 employees.--Upon receipt of notification and the required data
11 from the State Employees' Retirement Board or the Local
12 Government Police Employees' Retirement Board that a former
13 school employee who elected multiple service has applied for a
14 [State] government employee's retirement benefit or, in the
15 event of his death, his legally constituted representative has
16 applied for such benefit, the board shall:
17 (1) Certify to the State Employees' Retirement Board or
18 the Local Government Police Employees' Retirement Board:
19 (i) The salary history as a member of the Public
20 School Employees' Retirement System and the final average
21 salary as calculated on the basis of the compensation
22 received as a [State] government and school employee.
23 (ii) The annuity or benefit which the member or his
24 beneficiary is entitled to receive under this part and
25 modified according to the option selected.
26 (2) Transfer to the State Employees' Retirement Fund or
27 the Local Government Police Employees' Retirement Fund the
28 accumulated deductions standing to such member's credit and
29 the actuarial reserve required on account of the member's
30 years of credited service in the school system and his final
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1 average salary determined on the basis of his compensation in
2 both systems.
3 § 8505. Duties of board regarding applications and elections of
4 members.
5 * * *
6 (b) [State] Government employees electing multiple service
7 status.--Upon receipt of notification from the State Employees'
8 Retirement Board or the Local Government Police Employees'
9 Retirement Board that a former school employee has become an
10 active member in the [State] Government Employees' Retirement
11 System and has elected to become a member with multiple service
12 status, the board shall:
13 (1) In case of a member who is receiving an annuity from
14 the system:
15 (i) Discontinue payments, transfer the present value
16 of the member's annuity at the time of entering State
17 service, plus the amount withdrawn in a lump sum payment,
18 on or after the date of entering [State] government
19 service, pursuant to section 8345 (relating to member's
20 options), with statutory interest to date of transfer,
21 minus the amount to be returned to the board on account
22 of return to service that the board has determined is to
23 be credited in the members' savings account, from the
24 annuity reserve account to the members' savings account
25 and resume crediting of statutory interest on the amount
26 restored to his credit.
27 (ii) Transfer the balance of the present value of
28 the total annuity, minus the amount to be returned to the
29 board on account of return to service that the board has
30 determined is to be credited in the State accumulation
20040H2520B3718 - 11 -
1 account, from the annuity reserve account to the State
2 accumulation account.
3 (iii) Certify to the member the amount of lump sum
4 and annuity payments with statutory interest the member
5 is to return to the board and, of those amounts, which
6 amount shall be credited to the members' savings account
7 and credited with statutory interest as such payments are
8 returned and which amount shall be credited to the State
9 accumulation account.
10 (2) In case of a member who is not receiving an annuity
11 from the system and who has not withdrawn his accumulated
12 deductions, continue or resume the crediting of statutory
13 interest on his accumulated deductions.
14 (3) In case of a member who is not receiving an annuity
15 from the system and his accumulated deductions were
16 withdrawn, certify to the member the accumulated deductions
17 as they would have been at the time of his separation had he
18 been a full coverage member together with statutory interest
19 for all periods of subsequent [State] government and school
20 service to the date of repayment. Such amount shall be
21 restored by him and shall be credited with statutory interest
22 as such payments are restored.
23 * * *
24 § 8506. Duties of employers.
25 * * *
26 (d) New employees subject to mandatory membership.--Upon the
27 assumption of duties of each new school employee whose
28 membership in the system is mandatory, the employer shall no
29 later than 30 days thereafter cause an application for
30 membership, which application shall include the employee's home
20040H2520B3718 - 12 -
1 address, birthdate certified by the employer, previous school or
2 [State] government service and any other information requested
3 by the board, and a nomination of beneficiary to be made by such
4 employee and filed with the board and shall make pickup
5 contributions from the effective date of school employment.
6 (e) New employees subject to optional membership.--The
7 employer shall inform any eligible school employee whose
8 membership in the system is not mandatory of his opportunity to
9 become a member of the system provided that he elects to
10 purchase credit for all such continuous creditable service. If
11 such employee so elects, the employer shall no later than 30
12 days thereafter cause an application for membership which
13 application shall include the employee's home address, birthdate
14 certified by the employer, previous school or [State] government
15 service and any other information requested by the board, and a
16 nomination of beneficiary to be made by him and filed with the
17 board and shall cause proper contributions to be made from the
18 date of election of membership.
19 * * *
20 (g) Former [State] government employee contributors.--The
21 employer shall, upon the employment of a former member of the
22 [State] Government Employees' Retirement System who is not an
23 annuitant of the [State] Government Employees' Retirement
24 System, advise such employee of his right to elect multiple
25 service membership within 30 days of entry into the system and,
26 in the case any such employee who so elects has withdrawn his
27 accumulated deductions, require him to restore his accumulated
28 deductions as they would have been at the time of his separation
29 had he been a full coverage member, together with statutory
30 interest for all periods of subsequent [State] government and
20040H2520B3718 - 13 -
1 school service to date of repayment. The employer shall advise
2 the board of such election.
3 (h) Former [State] government employee annuitants.--The
4 employer shall, upon the employment of an annuitant of the
5 [State] Government Employees' Retirement System who applies for
6 membership in the system, advise such employee that he may elect
7 multiple service membership within 365 days of entry into the
8 system and that if he so elects his annuity from the [State]
9 Government Employees' Retirement System will be discontinued
10 effective upon the date of his return to school service and,
11 upon termination of school service and application for an
12 annuity, the annuity will be adjusted in accordance with section
13 8346 (relating to termination of annuities). The employer shall
14 advise the board of such election.
15 * * *
16 § 8507. Rights and duties of school employees and members.
17 (a) Information on new employees.--Upon his assumption of
18 duties, each new school employee shall furnish his employer with
19 a complete record of his previous school or [State] government
20 service, or creditable nonschool service, proof of his date of
21 birth, his home address, his current status in the system and in
22 the [State] Government Employees' Retirement System and such
23 other information as the board may require. Willful failure to
24 provide the information required by this subsection to the
25 extent available or the provision of erroneous information upon
26 entrance into the system shall result in the forfeiture of the
27 right of the member to subsequently assert any right to benefits
28 based on erroneous information or on any of the required
29 information which he failed to provide. In any case in which the
30 board finds that a member is receiving an annuity based on false
20040H2520B3718 - 14 -
1 information, the additional amounts received predicated on such
2 false information together with statutory interest doubled and
3 compounded shall be deducted from the present value of any
4 remaining benefits to which the member is legally entitled and
5 such remaining benefits shall be correspondingly decreased.
6 * * *
7 (c) Multiple service membership.--Any active member who was
8 formerly an active member in the [State] Government Employees'
9 Retirement System may elect to become a multiple service member.
10 Such election shall occur no later than 365 days after becoming
11 an active member in this system.
12 (d) Credit for previous service or change in membership
13 status.--Any active member or multiple service member who is a
14 [State] government employee who desires to receive credit for
15 his previous school service or creditable nonschool service to
16 which he is entitled, or a member of Class T-A or Class T-B who
17 desires to become a member of Class T-C, or a joint coverage
18 member who desires to become a full coverage member shall so
19 notify the board. Upon written agreement by the member and the
20 board as to the manner of payment of the amount due, the member
21 shall receive credit for such service as of the date of such
22 agreement subject to the provisions of section 8325 (relating to
23 incomplete payments).
24 * * *
25 Section 3. Section 5101 of Title 71 is amended to read:
26 § 5101. Short title of part.
27 This part shall be known and may be cited as the ["State]
28 Government Employees' Retirement Code.["]
29 Section 4. Section 5102 of Title 71 is amended to read:
30 § 5102. Definitions.
20040H2520B3718 - 15 -
1 The following words and phrases as used in this part, unless
2 a different meaning is plainly required by the context, shall
3 have the following meanings:
4 "Academic administrator." A management employee in the field
5 of public education whose work is directly related to academic
6 instruction, excluding any employee in a position that is
7 nonacademic in nature, such as, without limitation, a position
8 that relates to admissions, financial aid, counseling,
9 secretarial and clerical services, records management, housing,
10 food service, maintenance and security.
11 "Active member." A [State] government employee, or a member
12 on leave without pay, for whom pickup contributions are being
13 made to [the] either fund or for whom such contributions
14 otherwise required for current [State] government service are
15 not being made solely by reason of section 5502.1 (relating to
16 waiver of regular member contributions and Social Security
17 integration member contributions) or any provision of this part
18 relating to the limitations under section 401(a)(17) or section
19 415(b) of the Internal Revenue Code of 1986 (Public Law 99-514,
20 26 U.S.C. § 401(a)(17) or 415(b)).
21 "Actuarial increase factor." A factor calculated at the
22 member's birthday by dividing the cost of a dollar annuity based
23 on the age of the member on the member's immediately previous
24 birthday by the cost of a one-year deferred dollar annuity
25 calculated at that same age. Unless the member terminates State
26 or school service on the member's birthday, the actuarial
27 increase factor for the year of termination shall be adjusted
28 by:
29 (1) subtracting one from the calculated factor; then
30 (2) dividing the difference by twelve; then
20040H2520B3718 - 16 -
1 (3) multiplying the resulting quotient by the number of
2 whole months between the member's immediately previous
3 birthday and the date of termination of service; then
4 (4) adding one to the resulting product.
5 "Actuarially equivalent." Equal present values, computed on
6 the basis of statutory interest and the mortality tables adopted
7 by the board.
8 "Actuary." The consultant to the board who shall be:
9 (1) a member of the American Academy of Actuaries; or
10 (2) an individual who has demonstrated to the
11 satisfaction of the Insurance Commissioner of Pennsylvania
12 that he has the educational background necessary for the
13 practice of actuarial science and has had at least seven
14 years of actuarial experience; or
15 (3) a firm, partnership, or corporation of which at
16 least one member meets the requirements of (1) or (2).
17 "Additional accumulated deductions." The total of the
18 additional member contributions paid into the fund on account of
19 current service or previous [State] government or creditable
20 nonstate service, together with the statutory interest credited
21 thereon until the date of termination of service. In the case of
22 a vestee, statutory interest shall be credited until the
23 effective date of retirement. A member's account shall not be
24 credited with statutory interest for more than two years during
25 a leave without pay.
26 "Alternate payee." Any spouse, former spouse, child or
27 dependent of a member who is recognized by a domestic relations
28 order as having a right to receive all or a portion of the
29 moneys payable to that member under this part.
30 "Annuitant." Any member on or after the effective date of
20040H2520B3718 - 17 -
1 retirement until his annuity is terminated.
2 "Approved domestic relations order." Any domestic relations
3 order which has been determined to be approved in accordance
4 with section 5953.1 (relating to approval of domestic relations
5 orders).
6 "Average noncovered salary." The average of the amounts of
7 compensation received each calendar year since January 1, 1956
8 exclusive of the amount which was or could have been covered by
9 the Federal Social Security Act, 42 U.S.C. § 301 et seq., during
10 that portion of the member's service since January 1, 1956 for
11 which he has received social security integration credit.
12 "Basic contribution rate." Five percent (5%), except that in
13 no case shall any member's rate, excluding the rate for social
14 security integration credit, be greater than his contribution
15 rate on the effective date of this part so long as he does not
16 elect additional coverage or membership in another class of
17 service.
18 "Beneficiary." The person or persons last designated in
19 writing to the board by a member to receive his accumulated
20 deductions or a lump sum benefit upon the death of such member.
21 "Board." The State Employees' Retirement Board [or], the
22 State Employes' Retirement Board or the Local Government Police
23 Employees' Retirement Board.
24 "Boards." The State Employees' Retirement Board and the
25 Local Government Police Employees' Retirement Board.
26 "Class of service multiplier."
27 Class of Service Multiplier
28 A 1
29 AA for all purposes
30 except
20040H2520B3718 - 18 -
1 calculating regular
2 member contributions
3 on compensation
4 paid prior to
5 January 1, 2002 1.25
6 AA for purposes
7 of calculating
8 regular member
9 contributions
10 on compensation
11 paid prior to
12 January 1, 2002 1
13 B .625
14 C 1
15 D 1.25
16 D-1 prior to
17 January 1, 1973 1.875
18 D-1 on and
19 subsequent to
20 January 1, 1973 1.731
21 D-2 prior to
22 January 1, 1973 2.5
23 D-2 on and
24 subsequent to
25 January 1, 1973 1.731
26 D-3 prior to
27 January 1, 1973 3.75
28 D-3 on and
29 subsequent to
30 January 1, 1973 1.731 except prior to December
20040H2520B3718 - 19 -
1 1, 1974 as applied to any
2 additional legislative
3 compensation as an officer
4 of the General Assembly
5 3.75
6 D-4 for all purposes
7 except
8 calculating
9 regular member
10 contributions
11 on compensation
12 paid prior to
13 July 1, 2001 1.5
14 D-4 for purposes of
15 calculating
16 regular member
17 contributions
18 on compensation
19 paid prior to
20 July 1, 2001 1
21 E, E-1 prior to
22 January 1, 1973 2 for each of the first ten
23 years of judicial service,
24 and
25 1.5 for each subsequent year
26 of judicial service
27 E, E-1 on and
28 subsequent to
29 January 1, 1973 1.50 for each of the first
30 ten years of judicial
20040H2520B3718 - 20 -
1 service and
2 1.125 for each subsequent year
3 of judicial service
4 E-2 prior to
5 September 1, 1973 1.5
6 E-2 on and
7 subsequent to
8 September 1, 1973 1.125
9 G 0.417
10 H 0.500
11 I 0.625
12 J 0.714
13 K 0.834
14 L 1.000
15 M 1.100
16 N 1.250
17 T-C (Public School 1
18 Employees'
19 Retirement Code)
20 P-1 1.25 for each of the
21 first 20 years of
22 local government
23 public safety service,
24 and
25 1 for each subsequent
26 year of local
27 government public
28 safety service
29 P-2 1.125 for each year of
30 local government
20040H2520B3718 - 21 -
1 public safety
2 service
3 P-3 1 for each year of local
4 government public
5 safety service
6 P-4 .875 for each year of
7 local government
8 public safety
9 service
10 "Commissioner." The Commissioner of the Internal Revenue
11 Service.
12 "Compensation." Pickup contributions plus remuneration
13 actually received as a [State] government employee excluding
14 refunds for expenses, contingency and accountable expense
15 allowances, and excluding any severance payments or payments for
16 unused vacation or sick leave: Provided, however, That
17 compensation received as a State employee prior to January 1,
18 1973, shall be subject to the limitations for retirement
19 purposes in effect December 31, 1972, if any: Provided further,
20 That the limitation under section 401(a)(17) of the Internal
21 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17))
22 taken into account for the purpose of member contributions,
23 including any additional member contributions in addition to
24 regular or joint coverage member contributions and Social
25 Security integration contributions, regardless of class of
26 service, shall apply to each member who first became a member of
27 the [State] Government Employees' Retirement System on or after
28 January 1, 1996, and who by reason of such fact is a noneligible
29 member subject to the application of the provisions of section
30 5506.1(a) (relating to annual compensation limit under IRC §
20040H2520B3718 - 22 -
1 401(a)(17)).
2 "Concurrent service." Service credited in more than one
3 class of service during the same period of time.
4 "Correction officer." Any full-time State employee assigned
5 to the Department of Corrections or the Department of Public
6 Welfare whose principal duty is the care, custody and control of
7 inmates or direct therapeutic treatment, care, custody and
8 control of inmates of a penal or correctional institution,
9 community treatment center, forensic unit in a State hospital or
10 secure unit of a youth development center operated by the
11 Department of Corrections or by the Department of Public
12 Welfare.
13 "Creditable nonstate service." Service other than:
14 (1) service as a [State] government employee;
15 (2) service converted to State service pursuant to
16 section 5303.1 (relating to election to convert county
17 service to State service); or
18 (3) school service converted to State service pursuant
19 to section 5303.2 (relating to election to convert school
20 service to State service)
21 for which an active member may obtain credit.
22 "Credited service." State or creditable nonstate service for
23 which the required contributions have been made or for which the
24 contributions otherwise required for such service were not made
25 solely by reason of section 5502.1 (relating to waiver of
26 regular member contributions and Social Security integration
27 member contributions) or any provision of this part relating to
28 the limitations under section 401(a)(17) or 415(b) of the
29 Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
30 401(a)(17) or 415(b)), or for which salary deductions or lump
20040H2520B3718 - 23 -
1 sum payments have been agreed upon in writing.
2 "Date of termination of service." The last day of service
3 for which pickup contributions are made for an active member or
4 in the case of an inactive member on leave without pay the date
5 of his resignation or the date his employment is formally
6 discontinued by his employer.
7 "Department." Any department, agency, authority, independent
8 board or commission or a local government.
9 "Disability annuitant." A member on and after the effective
10 date of disability until his annuity or the portion of his
11 annuity payments in excess of any annuity to which he may
12 otherwise be entitled is terminated.
13 "Distribution." Payment of all or any portion of a person's
14 interest in the Government Employees' Retirement Fund or the
15 State Employees' Retirement Fund which is payable under this
16 part.
17 "Domestic relations order." Any judgment, decree or order,
18 including approval of a property settlement agreement, entered
19 on or after the effective date of this definition by a court of
20 competent jurisdiction pursuant to a domestic relations law
21 which relates to the marital property rights of the spouse or
22 former spouse of a member, including the right to receive all or
23 a portion of the moneys payable to that member under this part
24 in furtherance of the equitable distribution of marital assets.
25 The term includes orders of support as that term is defined by
26 23 Pa.C.S. § 4302 (relating to definitions) and orders for the
27 enforcement of arrearages as provided in 23 Pa.C.S. § 3703
28 (relating to enforcement of arrearages).
29 "Effective date of retirement." The first day following the
30 date of termination of service of a member if he has properly
20040H2520B3718 - 24 -
1 filed an application for an annuity within 90 days of such date;
2 in the case of a vestee or a member who does not apply for an
3 annuity within 90 days after termination of service, the date of
4 filing an application for an annuity or the date specified on
5 the application, whichever is later. In the case of a finding of
6 disability, the date certified by the board as the effective
7 date of disability.
8 "Eligibility points." Points which are accrued by an active
9 member or a multiple service member who is an active member in
10 the Public School Employees' Retirement System for credited
11 service and are used in the determination of eligibility for
12 benefits.
13 "Enforcement officer."
14 (1) Any enforcement officer or investigator of the
15 Pennsylvania Liquor Control Board who is a peace officer
16 vested with police power and authority throughout the
17 Commonwealth and any administrative or supervisory employee
18 of the Pennsylvania Liquor Control Board vested with police
19 power who is charged with the administration or enforcement
20 of the liquor laws of the Commonwealth.
21 (2) Special agents, narcotics agents, asset forfeiture
22 agents, medicaid fraud agents and senior investigators
23 hazardous waste prosecutions unit, classified as such and
24 employed by the Office of Attorney General who have within
25 the scope of their employment as law enforcement officers the
26 power to enforce the law and make arrests under the authority
27 of the act of October 15, 1980 (P.L.950, No.164), known as
28 the Commonwealth Attorneys Act.
29 (3) Parole agents, classified as such by the Executive
30 Board and employed by the Pennsylvania Board of Probation and
20040H2520B3718 - 25 -
1 Parole.
2 (4) Waterways conservation officers and other
3 commissioned law enforcement personnel employed by the
4 Pennsylvania Fish and Boat Commission who have and exercise
5 the same law enforcement powers as waterways conservation
6 officers. This paragraph shall not apply to deputy waterways
7 conservation officers.
8 "Final average salary." The highest average compensation
9 received as a member during any three nonoverlapping periods of
10 four consecutive calendar quarters during which the member was a
11 [State] government employee, with the compensation for part-time
12 service being annualized on the basis of the fractional portion
13 of the year for which credit is received; except if the employee
14 was not a member for three nonoverlapping periods of four
15 consecutive calendar quarters, the total compensation received
16 as a member, annualized in the case of part-time service,
17 divided by the number of nonoverlapping periods of four
18 consecutive calendar quarters of membership; in the case of a
19 member with multiple service, the final average salary shall be
20 determined on the basis of the compensation received by him as a
21 [State] government employee or as a school employee, or both;
22 and, in the case of a member who first became a member of the
23 Government Employees' Retirement System or the State Employees'
24 Retirement System on or after January 1, 1996, the final average
25 salary shall be determined as hereinabove provided but subject
26 to the application of the provisions of section 5506.1(a)
27 (relating to annual compensation limit under IRC § 401(a)(17)).
28 "Full coverage member." Any member for whom member pickup
29 contributions are being picked up or who has paid or has agreed
30 to pay to the fund the actuarial equivalent of regular member
20040H2520B3718 - 26 -
1 contributions due on account of service prior to January 1,
2 1982.
3 "Fund." The State Employees' Retirement Fund[.] or the Local
4 Government Police Employees' Retirement Fund.
5 "Funds." The State Employees' Retirement Fund and the Local
6 Government Police Employees' Retirement Fund.
7 "Government employee." A local government police employee or
8 a State employee.
9 "Government service." Service rendered as a local government
10 police employee or as a State employee.
11 "Head of department." The chief administrative officer of
12 the department, the chairman or executive director of the
13 agency, authority, or independent board or commission, the chief
14 administrative officer of a local government, the Court
15 Administrator of Pennsylvania, and the Chief Clerk of the
16 Senate, or the Chief Clerk of the House of Representatives.
17 "Inactive member." A member for whom no pickup contributions
18 are being made, except in the case of an active member for whom
19 such contributions otherwise required for current [State]
20 government service are not being made solely by reason of
21 section 5502.1 (relating to waiver of regular member
22 contributions and Social Security integration member
23 contributions) or any provision of this part relating to the
24 limitations under section 401(a)(17) or 415(b) of the Internal
25 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17)
26 or 415(b)), but who has accumulated deductions standing to his
27 credit in [the] either fund and who is not eligible to become or
28 has not elected to become a vestee or has not filed an
29 application for an annuity.
30 "Intervening military service." Active military service of a
20040H2520B3718 - 27 -
1 member who was a [State] government employee immediately
2 preceding his induction into the armed services or forces of the
3 United States in order to meet a military obligation excluding
4 any voluntary extension of such service and who becomes a
5 [State] government employee within 90 days of the expiration of
6 such service.
7 "IRC." The Internal Revenue Code of 1986, as designated and
8 referred to in section 2 of the Tax Reform Act of 1986 (Public
9 Law 99-514, 100 Stat. 2085, 2095). A reference in this part to
10 "IRC § " shall be deemed to refer to the identically numbered
11 section and subsection or other subdivision of such section in
12 26 United States Code (relating to Internal Revenue Code).
13 "Irrevocable beneficiary." The person or persons permanently
14 designated by a member in writing to the State Employees'
15 Retirement Board or the Local Government Police Employees'
16 Retirement Board pursuant to an approved domestic relations
17 order to receive all or a portion of the accumulated deductions
18 or lump sum benefit payable upon the death of such member.
19 "Irrevocable survivor annuitant." The person permanently
20 designated by a member in writing to the State Employees'
21 Retirement Board or the Local Government Police Employees'
22 Retirement Board pursuant to an approved domestic relations
23 order to receive an annuity upon the death of such member.
24 "Joint coverage member." Any member who agreed prior to
25 January 1, 1966 to make joint coverage member contributions to
26 the fund and has not elected to become a full coverage member.
27 "Joint coverage member contributions." Regular member
28 contributions reduced for a joint coverage member.
29 "Local government." The term shall mean:
30 (1) a municipality, except a county, however
20040H2520B3718 - 28 -
1 constituted, whether operating under a legislative charter,
2 municipal code, optional charter, home rule charter, optional
3 plan or other arrangement; or
4 (2) an association of these municipalities cooperating
5 under 53 Pa.C.S. Ch. 23 Subch. A (relating to
6 Intergovernmental Cooperation).
7 "Local Government Police Employees' Retirement System." An
8 entity, whether a separate entity or part of a local government
9 entity, that:
10 (1) collects retirement and other employee benefit
11 contributions from local government police employees and
12 local governments;
13 (2) holds and manages the resulting assets as reserves
14 for present and future retirement benefit payments; and
15 (3) makes provisions for these payments to qualified
16 retirees and beneficiaries.
17 The term does not include a county employees' retirement system
18 established under either Article XVII of the act of July 28,
19 1953 (P.L.723, No.230), known as the Second Class County Code,
20 or the act of August 31, 1971 (P.L.398, No.96), known as the
21 County Pension Law. The term does not include a plan, program or
22 arrangement that is financed solely with local government
23 employee earnings or compensation reported to the Internal
24 Revenue Service, United States Department of the Treasury, as
25 local government police employee earnings or compensation on
26 Form W-2, Wage and Tax Statement, or is established under
27 sections 8.1, 8.2 and 8.3 of the act of March 30, 1811 (P.L.145,
28 No.99), entitled "An act to amend and consolidate the several
29 acts relating to the settlement of the public accounts and the
30 payment of the public monies, and for other purposes," or under
20040H2520B3718 - 29 -
1 section 408 or 457 of the Internal Revenue Code of 1986 (Public
2 Law 99-514, 26 U.S.C. § 408 or 457).
3 "Local government police employee." An employee of a local
4 government who holds a full-time position in the police service
5 of a local government and who is a peace officer vested with
6 police power.
7 "Local government police service." Service rendered as a
8 local government police employee.
9 "Member." Active member, inactive member, annuitant, vestee
10 or special vestee.
11 "Member of the judiciary." Any justice of the Supreme Court,
12 any judge of the Superior Court, the Commonwealth Court, any
13 court of common pleas, the Municipal Court and the Traffic Court
14 of Philadelphia, or any community court.
15 "Member's annuity." The single life annuity which is
16 actuarially equivalent, at the effective date of retirement, to
17 the sum of the regular accumulated deductions, the additional
18 accumulated deductions and the social security integration
19 accumulated deductions standing to the member's credit in the
20 members' savings account.
21 "Military service." All active military service for which a
22 member has received a discharge other than an undesirable, bad
23 conduct, or dishonorable discharge.
24 "Multiple service." Credited service of a member who has
25 elected to combine his credited service in both the [State]
26 Government Employees' Retirement System and the Public School
27 Employees' Retirement System.
28 "Noneligible member." For the purposes of section 5506.1
29 (relating to annual compensation limit under IRC § 401(a)(17)),
30 a member who first became a member on or after January 1, 1996.
20040H2520B3718 - 30 -
1 "Nonstudent service." Employment in an educational
2 institution that is not contingent on the employee's enrollment
3 as a student or maintenance of student status at such
4 institution and for which only monetary compensation is
5 received, excluding tuition waivers or reimbursement, academic
6 credit, housing, meals and other in-kind compensation.
7 "Pickup contributions." Regular or joint coverage member
8 contributions, social security integration contributions and
9 additional member contributions which are made by the
10 Commonwealth or other employer for active members for current
11 service on and after January 1, 1982.
12 "Previous [State] government service." Service rendered as a
13 [State] government employee prior to his most recent entrance in
14 the system.
15 "Psychiatric security aide." Any government employee whose
16 principal duty is the care, custody and control of the
17 criminally insane inmates of a maximum security institution for
18 the criminally insane or detention facility operated by the
19 Department of Public Welfare.
20 "Public School Employees' Retirement System." The retirement
21 system established by the act of July 18, 1917 (P.L.1043,
22 No.343), and codified by the act of June 1, 1959 (P.L.350,
23 No.77) and 24 Pa.C.S. Pt. IV (relating to retirement for school
24 employees).
25 "Regular accumulated deductions." The total of the regular
26 or joint coverage member contributions paid into the fund on
27 account of current service or previous [State] government or
28 creditable nonstate service, together with the statutory
29 interest credited thereon until the date of termination of
30 service. In the case of a vestee or a special vestee, statutory
20040H2520B3718 - 31 -
1 interest shall be credited until the effective date of
2 retirement. A member's account shall not be credited with
3 statutory interest for more than two years during a leave
4 without pay.
5 "Regular member contributions." The product of the basic
6 contribution rate, the class of service multiplier if greater
7 than one and the compensation of the member.
8 "Retirement counselor." The [State] Government Employees'
9 Retirement System employee whose duty it shall be to advise each
10 employee of his rights and duties as a member of the system.
11 "Salary deductions." The amounts certified by the board,
12 deducted from the compensation of an active member, or the
13 school service compensation of a multiple service member who is
14 an active member of the Public School Employees' Retirement
15 System, and paid into the fund.
16 "School service." Service rendered as a public school
17 employee and credited as service in the Public School Employees'
18 Retirement System.
19 "Service connected disability." A disability resulting from
20 an injury arising in the course of [State] government
21 employment, and which is compensable under the applicable
22 provisions of the act of June 2, 1915 (P.L.736, No.338), known
23 as ["The Pennsylvania Workmen's Compensation Act,"] the Worker's
24 Compensation Act, or the act of June 21, 1939 (P.L.566, No.284),
25 known as ["]The Pennsylvania Occupational Disease Act.["]
26 "Social security integration accumulated deductions." The
27 total of the member contributions paid into the fund on account
28 of social security integration credit, together with the
29 statutory interest credited thereon until the date of
30 termination of service or until the date of withdrawal thereof,
20040H2520B3718 - 32 -
1 whichever is earlier. In the case of a vestee statutory interest
2 shall be credited until the effective date of retirement. A
3 member's account shall not be credited with statutory interest
4 for more than two years during a leave without pay.
5 "Special vestee." An employee of The Pennsylvania State
6 University who is a member of the [State] Government Employees'
7 Retirement System with five or more but less than ten
8 eligibility points and who has a date of termination of service
9 from The Pennsylvania State University of June 30, 1997, because
10 of the transfer of his job position or duties to a controlled
11 organization of the Penn State Geisinger Health System or
12 because of the elimination of his job position or duties due to
13 the transfer of other job positions or duties to a controlled
14 organization of the Penn State Geisinger Health System, provided
15 that:
16 (1) subsequent to termination of State service as an
17 employee of The Pennsylvania State University, the member has
18 not returned to State service in any other capacity or
19 position as a State employee;
20 (2) The Pennsylvania State University certifies to the
21 board that the member is eligible to be a special vestee;
22 (3) the member files an application to vest the member's
23 retirement rights pursuant to section 5907(f) (relating to
24 rights and duties of State employees and members) on or
25 before September 30, 1997; and
26 (4) the member elects to leave the member's total
27 accumulated deductions in the fund and to defer receipt of an
28 annuity until attainment of superannuation age.
29 "Standard single life annuity." An annuity equal to 2% of
30 the final average salary, multiplied by the total number of
20040H2520B3718 - 33 -
1 years and fractional part of a year of credited service of a
2 member.
3 "State employee." Any person holding a State office or
4 position under the Commonwealth, employed by the State
5 Government of the Commonwealth, in any capacity whatsoever,
6 except an independent contractor or any person compensated on a
7 fee basis or any person paid directly by an entity other than a
8 [State] Government Employees' Retirement System employer, and
9 shall include members of the General Assembly, and any officer
10 or employee of the following:
11 (1) (i) The Department of Education.
12 (ii) State-owned educational institutions.
13 (iii) Community colleges.
14 (iv) The Pennsylvania State University, except an
15 employee in the College of Agriculture who is paid wholly
16 from Federal funds or an employee who is participating in
17 the Federal Civil Service Retirement System. The
18 university shall be totally responsible for all employer
19 contributions under section 5507 (relating to
20 contributions by the Commonwealth and other employers).
21 (2) The Pennsylvania Turnpike Commission, the Delaware
22 River Port Authority, the Port Authority Transit Corporation,
23 the Philadelphia Regional Port Authority, the Delaware River
24 Joint Toll Bridge Commission, the State Public School
25 Building Authority, The General State Authority, the State
26 Highway and Bridge Authority, the Delaware Valley Regional
27 Planning Commission, the Interstate Commission of the
28 Delaware River Basin, and the Susquehanna River Basin
29 Commission any time subsequent to its creation, provided the
30 commission or authority agrees to contribute and does
20040H2520B3718 - 34 -
1 contribute to the fund, from time to time, the moneys
2 required to build up the reserves necessary for the payment
3 of the annuities of such officers and employees without any
4 liability on the part of the Commonwealth to make
5 appropriations for such purposes, and provided in the case of
6 employees of the Interstate Commission of the Delaware River
7 Basin, that the employee shall have been a member of the
8 system for at least ten years prior to January 1, 1963.
9 (3) Any separate independent public corporation created
10 by statute, not including any municipal or quasi-municipal
11 corporation, so long as he remains an officer or employee of
12 such public corporation, and provided that such officer or
13 employee of such public corporation was an employee of the
14 Commonwealth immediately prior to his employment by such
15 corporation, and further provided such public corporation
16 shall agree to contribute and contributes to the fund, from
17 time to time, the moneys required to build up the reserves
18 necessary for the payment of the annuities of such officers
19 and employees without any liability on the part of the
20 Commonwealth to make appropriations for such purposes.
21 "State police officer." Any officer or member of the
22 Pennsylvania State Police who, on or after July 1, 1989, shall
23 have been subject to the terms of a collective bargaining
24 agreement or binding interest arbitration award established
25 pursuant to the act of June 24, 1968 (P.L.237, No.111), referred
26 to as the Policemen and Firemen Collective Bargaining Act.
27 "State service." Service converted from county service
28 pursuant to section 5303.1 (relating to election to convert
29 county service to State service), converted from school service
30 pursuant to section 5303.2 (relating to election to convert
20040H2520B3718 - 35 -
1 school service to State service) or rendered as a State
2 employee.
3 "Statutory interest." Interest at 4% per annum, compounded
4 annually.
5 "Superannuation age."
6 (1) Any age upon accrual of 35 eligibility points or age
7 60, except for a member of the General Assembly, an
8 enforcement officer, a correction officer, a psychiatric
9 security aide, a Delaware River Port Authority policeman, a
10 Class P-2 or P-3 local government police employee or an
11 officer of the Pennsylvania State Police, age 50, and, except
12 for a member with Class G, Class H, Class I, Class J, Class
13 K, Class L, Class M or Class N service, age 55 upon accrual
14 of 20 eligibility points.
15 (2) A Class P-1 local government police officer, any age
16 upon accrual of 20 eligibility points or age 50.
17 (3) A Class P-4 local government police employee, age
18 55.
19 "Superannuation annuitant." An annuitant whose annuity first
20 became payable on or after the attainment of superannuation age
21 and who is not a disability annuitant.
22 "Survivor annuitant." The person or persons last designated
23 by a member under a joint and survivor annuity option to receive
24 an annuity upon the death of such member.
25 "System." The [State] Government Employees' Retirement
26 System of Pennsylvania as established by the act of June 27,
27 1923 (P.L.858, No.331), and codified by the act of June 1, 1959
28 (P.L.392, No.78) and the provisions of this part.
29 "Total accumulated deductions." The sum of the regular
30 accumulated deductions, additional accumulated deductions, the
20040H2520B3718 - 36 -
1 social security integration accumulated deductions, and all
2 other contributions paid into the fund for the purchase,
3 transfer or conversion of credit for service or other coverage
4 together with all statutory interest credited thereon until the
5 date of termination of service. In the case of a vestee or a
6 special vestee, statutory interest shall be credited until the
7 effective date of retirement. A member's account shall not be
8 credited with statutory interest for more than two years during
9 a leave without pay.
10 "Valuation interest." Interest at 5 1/2% per annum
11 compounded annually and applied to all accounts other than the
12 members' savings account.
13 "Vestee." A member with five or more eligibility points, or
14 a member with Class G, Class H, Class I, Class J, Class K, Class
15 L, Class M or Class N service with five or more eligibility
16 points, who has terminated [State] government service and has
17 elected to leave his total accumulated deductions in the fund
18 and to defer receipt of an annuity.
19 Section 5. Section 5301(d) of Title 71 is amended and the
20 section is amended by adding a subsection to read:
21 § 5301. Mandatory and optional membership.
22 * * *
23 (a.1) Mandatory membership for full-time local government
24 police employees.--Membership in the system shall be mandatory
25 as of the effective date of employment for all full-time local
26 government police employees whose effective dates of local
27 government employment are after December 31, 2004, and for whom
28 retirement benefits are provided except those in a particular
29 group who are covered by a collective bargaining agreement in
30 effect on December 31, 2004, that requires all full-time local
20040H2520B3718 - 37 -
1 government police employees hired during the period of the
2 agreement to become members of an existing local government
3 police employee retirement system on their effective dates of
4 local government employment. For all full-time local government
5 police employees in that particular group who are hired after
6 the termination date of the collective bargaining agreement in
7 effect on December 31, 2004, membership in the system shall be
8 mandatory as of the effective date of employment.
9 * * *
10 (d) Return to service.--An annuitant who returns to service
11 as a [State] government employee shall resume active membership
12 in the system as of the effective date of employment, except as
13 otherwise provided in section 5706(a) (relating to termination
14 of annuities), regardless of the optional membership category of
15 the position.
16 * * *
17 Section 6. Sections 5302 heading and (a), 5303(b)(1), (c)
18 and (g), 5304(a) and (c)(2) and 5305(b) of Title 71 are amended
19 to read:
20 § 5302. Credited [State] government service.
21 (a) Computation of credited service.--
22 (1) In computing credited [State] government service of
23 a member for the determination of benefits, a full-time
24 salaried [State] government employee, including any member of
25 the General Assembly, shall receive credit for service in
26 each period for which contributions as required are made, or
27 for which contributions otherwise required for such service
28 were not made solely by reason of section 5502.1 (relating to
29 waiver of regular member contributions and Social Security
30 integration member contributions) or any provision of this
20040H2520B3718 - 38 -
1 part relating to the limitations under IRC § 401(a)(17) or
2 415(b), but in no case shall he receive more than one year's
3 credit for any 12 consecutive months or 26 consecutive
4 biweekly pay periods. A per diem or hourly [State] government
5 employee shall receive one year of credited service for each
6 nonoverlapping period of 12 consecutive months or 26
7 consecutive biweekly pay periods in which he is employed and
8 for which contributions are made or would have been made but
9 for such waiver under section 5502.1 or limitations under the
10 IRC for at least 220 days or 1,650 hours of employment. If
11 the member was employed and contributions were made for less
12 than 220 days or 1,650 hours, he shall be credited with a
13 fractional portion of a year determined by the ratio of the
14 number of days or hours of service actually rendered to 220
15 days or 1,650 hours, as the case may be. A part-time salaried
16 employee shall be credited with the fractional portion of the
17 year which corresponds to the number of hours or days of
18 service actually rendered in relation to 1,650 hours or 220
19 days, as the case may be.
20 (2) In computing credited local government police
21 service of a member for determination of benefits, a full-
22 time salaried local government police employee shall receive
23 credit for service in each period for which contributions as
24 required are made or for which contributions otherwise
25 required for such service were not made solely by reason of
26 any provision of this part relating to the limitation under
27 IRC § 401(a)(17), but in no case shall he receive more than
28 one year's credit for any 12 consecutive months, 26
29 consecutive biweekly pay periods or 52 consecutive weekly pay
30 periods. A full-time per diem or hourly local government
20040H2520B3718 - 39 -
1 police employee shall receive one year of credited service
2 for each nonoverlapping period of 12 consecutive months, 26
3 consecutive biweekly pay periods or 52 consecutive weekly pay
4 periods in which he is employed and for which contributions
5 are made or would have been made but for such limitation
6 under the IRC for at least 220 days of employment in the case
7 of a per diem employee or 1,650 hours of employment in the
8 case of an hourly employee.
9 (3) In no case shall a member who has elected multiple
10 service receive an aggregate in the two systems of more than
11 one year of credited service for any 12 consecutive months.
12 * * *
13 § 5303. Retention and reinstatement of service credits.
14 * * *
15 (b) Eligibility points for prospective credited service.--
16 (1) Every active member of the system or a multiple
17 service member who is a school employee and a member of the
18 Public School Employees' Retirement System on or after the
19 effective date of this part shall receive eligibility points
20 in accordance with section 5307 for current [State]
21 government service, previous [State] government service, or
22 creditable nonstate service upon compliance with sections
23 5501 (relating to regular member contributions for current
24 service), 5504 (relating to member contributions for the
25 purchase of credit for previous [State] government service or
26 to become a full coverage member), 5505 (relating to
27 contributions for the purchase of credit for creditable
28 nonstate service), 5505.1 (relating to additional member
29 contributions) or 5506 (relating to incomplete payments).
30 Subject to the limitations in sections 5306.1 (relating to
20040H2520B3718 - 40 -
1 election to become a Class AA member) and 5306.2 (relating to
2 elections by members of the General Assembly), the class or
3 classes of service in which the member may be credited for
4 previous [State] government service prior to the effective
5 date of this part shall be the class or classes in which he
6 was or could have at any time elected to be credited for such
7 service. The class of service in which a member shall be
8 credited for service subsequent to the effective date of this
9 part shall be determined in accordance with section 5306
10 (relating to classes of service).
11 * * *
12 (c) Election for purchase of certain creditable service.--
13 Every active member of the system or a multiple service member
14 who is a school employee and a member of the Public School
15 Employees' Retirement System who was employed by the Applied
16 Research Laboratory of The Pennsylvania State University prior
17 to June 3, 1984, and did not receive or is not receiving a
18 retirement or pension benefit as a result of that service may
19 elect to have the period of employment with the Applied Research
20 Laboratory treated as previous State service upon compliance
21 with sections 5504 and 5506 upon waiver in writing of any
22 benefit that he is entitled to under any other pension or
23 retirement plan by virtue of that service. If a member elects to
24 receive this previous State service credit, The Pennsylvania
25 State University shall make employer contributions equal to the
26 amount that would have been contributed had employer
27 contributions been made to the system concurrently with the
28 rendering of the service, plus valuation interest to the day of
29 the crediting of the service. Notwithstanding the provisions of
30 section 5504, the amount due as member contributions and
20040H2520B3718 - 41 -
1 interest for an employee who is employed by the Applied Research
2 Laboratory on June 3, 1984, who elects to purchase this credit
3 with the [State] Government Employees' Retirement System shall
4 not exceed the amount of contributions and interest certified as
5 having been made to the pension plan administered by the Applied
6 Research Laboratory during his employment with the Applied
7 Research Laboratory. The Pennsylvania State University shall pay
8 as member contributions the difference between this amount and
9 the amount otherwise due under sections 5504 and 5506. The
10 additional contributions paid by The Pennsylvania State
11 University shall not be considered compensation for purposes of
12 this part.
13 * * *
14 (g) Credit for employees of Juvenile Court Judges'
15 Commission.--An employee of the Juvenile Court Judges'
16 Commission who elects membership in an independent retirement
17 program approved by the employer under section 5301(f) shall
18 have all service credited pursuant to section 5302(a) (relating
19 to credited [State] government service) for State service with
20 the Juvenile Court Judges' Commission on or after the effective
21 date of the interagency transfer canceled and thereafter
22 ineligible to be credited as State service. Additionally, all
23 creditable State service and nonstate service reinstated or
24 purchased while an employee of the Juvenile Court Judges'
25 Commission shall be canceled. Such employees shall be prohibited
26 from receiving credited service for State service performed
27 while a member of an alternate retirement system approved by an
28 employer.
29 * * *
30 § 5304. Creditable nonstate service.
20040H2520B3718 - 42 -
1 (a) Eligibility.--
2 (1) An active member who is a government employee or a
3 multiple service member who is a school employee and an
4 active member of the Public School Employees' Retirement
5 System shall be eligible for Class A service credit for
6 creditable nonstate service as set forth in subsections (b)
7 and (c) except that intervening military service shall be
8 credited in the class of service for which the member was
9 eligible at the time of entering into military service and
10 for which he makes the required contributions and except that
11 a multiple service member who is a school employee and an
12 active member of the Public School Employees' Retirement
13 System shall not be eligible to purchase service credit for
14 creditable nonstate service set forth in subsection (c)(5).
15 (2) An active member who is a local government police
16 employee shall be eligible for service credit for creditable
17 nonstate service as set forth in subsections (b) and (c)(1)
18 provided that the intervening military service shall be
19 credited in the class of service for which the member was
20 eligible at the time of entering into military service and
21 for which he makes the required contributions.
22 * * *
23 (c) Limitations on nonstate service.--Creditable nonstate
24 service credit shall be limited to:
25 * * *
26 (2) military service other than intervening military
27 service and military service purchasable under section
28 5302(d) (relating to credited [State] government service) not
29 exceeding five years, provided that a member with multiple
30 service may not purchase more than a total of five years of
20040H2520B3718 - 43 -
1 military service in both the system and the Public School
2 Employees' Retirement System;
3 * * *
4 § 5305. Social security integration credits.
5 * * *
6 (b) Accrual of subsequent credits.--Any member who has
7 social security integration accumulated deductions to his credit
8 or is receiving a benefit on account of social security
9 integration credits may accrue one social security integration
10 credit for each year of service as a State employee on or
11 subsequent to March 1, 1974 and a fractional credit for a
12 corresponding fractional year of service provided that
13 contributions are made, or would have been made but for section
14 5502.1 (relating to waiver of regular member contributions and
15 Social Security integration member contributions) or the
16 limitations under IRC § 401(a)(17) or 415(b), in accordance with
17 section 5502 (relating to Social Security integration member
18 contributions), and he:
19 (1) continues subsequent to March 1, 1974 as an active
20 member in either the [State] government or school system;
21 (2) terminates such continuous service in the [State]
22 government or school system and returns to active membership
23 in the [State] government system within six months; or
24 (3) terminates his status as a vestee or an annuitant
25 and returns to [State] government service.
26 * * *
27 Section 7. Section 5306 of Title 71, amended December 10,
28 2003 (P.L.228, No.40), is amended to read:
29 § 5306. Classes of service.
30 (a) Class A membership.--A State employee who is a member of
20040H2520B3718 - 44 -
1 Class A on the effective date of this part or who becomes a
2 member of the system subsequent to the effective date of this
3 part shall be classified as a Class A member and receive credit
4 for Class A service upon payment of regular and additional
5 member contributions for Class A service, provided that the
6 State employee does not become a member of Class AA pursuant to
7 subsection (a.1) or a member of Class D-4 pursuant to subsection
8 (a.2).
9 (a.1) Class AA membership.--
10 (1) A person who becomes a State employee and an active
11 member of the system after June 30, 2001, and who is not a
12 State police officer and not employed in a position for which
13 a class of service other than Class A is credited or could be
14 elected shall be classified as a Class AA member and receive
15 credit for Class AA State service upon payment of regular
16 member contributions for Class AA service and, subject to the
17 limitations contained in paragraph (7), if previously a
18 member of Class A or previously employed in a position for
19 which Class A service could have been earned, shall have all
20 Class A State service (other than State service performed as
21 a State police officer or for which a class of service other
22 than Class A was earned or could have been elected)
23 classified as Class AA service.
24 (2) A person who is a State employee on June 30, 2001,
25 and July 1, 2001, but is not an active member of the system
26 because membership in the system is optional or prohibited
27 pursuant to section 5301 (relating to mandatory and optional
28 membership) and who becomes an active member after June 30,
29 2001, and who is not a State police officer and not employed
30 in a position for which a class of service other than Class A
20040H2520B3718 - 45 -
1 is credited or could be elected shall be classified as a
2 Class AA member and receive credit for Class AA State service
3 upon payment of regular member contributions for Class AA
4 service and, subject to the limitations contained in
5 paragraph (7), if previously a member of Class A or
6 previously employed in a position for which Class A service
7 could have been earned, shall have all Class A State service
8 (other than State service performed as a State Police officer
9 or for which a class of service other than Class A was earned
10 or could have been elected) classified as Class AA service.
11 (3) Provided that an election to become a Class AA
12 member is made pursuant to section 5306.1 (relating to
13 election to become a Class AA member), a State employee,
14 other than a State employee who is a State police officer on
15 or after July 1, 1989, who on June 30, 2001, and July 1,
16 2001, is:
17 (i) a member of Class A, other than a member of
18 Class A who could have elected membership in a Class C,
19 Class D-3, Class E-1 or Class E-2; or
20 (ii) an inactive member on a leave without pay from
21 a position in which the State employee would be a Class A
22 active member if the employee was not on leave without
23 pay, other than a position in which the State employee
24 could elect membership in Class C, Class D-3, Class E-1
25 or Class E-2;
26 shall be classified as a Class AA member and receive credit
27 for Class AA State service performed after June 30, 2001,
28 upon payment of regular member contributions for Class AA
29 service and, subject to the limitations contained in
30 paragraph (7), shall receive Class AA service credit for all
20040H2520B3718 - 46 -
1 Class A State service, other than State service performed as
2 a State police officer or as a State employee in a position
3 for which the member could have elected membership in Class
4 C, Class D-3, Class E-1 or Class E-2, performed before July
5 1, 2001.
6 (4) Provided that an election to become a Class AA
7 member is made pursuant to section 5306.1, a former State
8 employee, other than a former State employee who was a State
9 police officer on or after July 1, 1989, who on June 30,
10 2001, and July 1, 2001, is a multiple service member and a
11 school employee and a member of the Public School Employees'
12 Retirement System, subject to the limitations contained in
13 paragraph (7), shall receive Class AA service credit for all
14 Class A State service, other than State service performed as
15 a State police officer or as a State employee in a position
16 in which the former State employee could have elected a class
17 of service other than Class A, performed before July 1, 2001.
18 (5) A former State employee, other than a former State
19 employee who was a State police officer on or after July 1,
20 1989, who is a school employee and who on or after July 1,
21 2001, becomes a multiple service member, subject to the
22 limitations contained in paragraph (7), shall receive Class
23 AA service credit for all Class A State service other than
24 State service performed as a State employee in a position in
25 which the former State employee could have elected a class of
26 service other than Class A.
27 (6) A State employee who after June 30, 2001, becomes a
28 State police officer or who is employed in a position in
29 which the member could elect membership in a class of service
30 other than Class AA or Class D-4 shall retain any Class AA
20040H2520B3718 - 47 -
1 service credited prior to becoming a State police officer or
2 being so employed but shall be ineligible to receive Class AA
3 credit thereafter and instead shall receive Class A credit
4 unless a class of membership other than Class A is elected.
5 (7) (i) State service performed as Class A service
6 before July 1, 2001, and State service for which Class A
7 service could have been credited but was not credited
8 because membership in the system was optional or
9 prohibited pursuant to section 5301 shall be credited as
10 Class AA service only upon the completion of all acts
11 necessary for the State service to be credited as Class A
12 service had this subsection not been enacted and upon
13 payment of required Class AA member contributions as
14 provided in section 5504 (relating to member
15 contributions for the purchase of credit for previous
16 [State] government service or to become a full coverage
17 member).
18 (ii) A person who is not a State employee or a
19 school employee on June 30, 2001, and July 1, 2001, and
20 who has previous State service (except a disability
21 annuitant who returns to State service after June 30,
22 2001, upon termination of the disability annuity) shall
23 not receive Class AA service credit for State service
24 performed before July 1, 2001, until such person becomes
25 an active member, or an active member of the Public
26 School Employees' Retirement System and a multiple
27 service member, and earns three eligibility points by
28 performing credited State service or credited school
29 service after June 30, 2001.
30 (a.2) Class of membership for members of the General
20040H2520B3718 - 48 -
1 Assembly.--
2 (1) A person who:
3 (i) becomes a member of the General Assembly and an
4 active member of the system after June 30, 2001; or
5 (ii) is a member of the General Assembly on July 1,
6 2001, but is not an active member of the system because
7 membership in the system is optional pursuant to section
8 5301 and who becomes an active member after June 30,
9 2001;
10 and who was not a State police officer on or after July 1,
11 1989, shall be classified as a Class D-4 member and receive
12 credit as a Class D-4 member for all State service as a
13 member of the General Assembly upon payment of regular member
14 contributions for Class D-4 service and, subject to the
15 limitations contained in subsection (a.1)(7), if previously a
16 member of Class A or employed in a position for which Class A
17 service could have been earned, shall receive Class AA
18 service credit for all Class A State service, other than
19 State service performed as a State police officer or for
20 which a class of service other than Class A or Class D-4 was
21 or could have been elected or credited.
22 (2) Provided an election to become a Class D-4 member is
23 made pursuant to section 5306.2 (relating to elections by
24 members of the General Assembly), a State employee who was
25 not a State police officer on or after July 1, 1989, who on
26 July 1, 2001, is a member of the General Assembly and an
27 active member of the system and not a member of Class D-3
28 shall be classified as a Class D-4 member and receive credit
29 as a Class D-4 member for all State service performed as a
30 member of the General Assembly not credited as another class
20040H2520B3718 - 49 -
1 other than Class A upon payment of regular member
2 contributions for Class D-4 service and, subject to the
3 limitations contained in paragraph (a.1)(7), shall receive
4 Class AA service credit for all Class A State service, other
5 than State service performed as a State police officer or as
6 a State employee in a position in which the member could have
7 elected a class of service other than Class A, performed
8 before July 1, 2001.
9 (3) A member of the General Assembly who after June 30,
10 2001, becomes a State police officer shall retain any Class
11 AA service or Class D-4 service credited prior to becoming a
12 State police officer or being so employed but shall be
13 ineligible to receive Class AA or Class D-4 credit thereafter
14 and instead shall receive Class A credit.
15 (b) Other State employee class membership.--A State employee
16 who is a member of a class of service other than Class A on the
17 effective date of this part shall retain his membership in that
18 class until such service is discontinued; any service thereafter
19 shall be credited as Class A service, Class AA service or Class
20 D-4 service as provided for in this section. Notwithstanding any
21 other provision of this section, a State employee who is
22 appointed bail commissioner of the Philadelphia Municipal Court
23 under 42 Pa.C.S. § 1123(a)(5) (relating to jurisdiction and
24 venue) may, within 30 days of the effective date of this
25 sentence or within 30 days of his initial appointment as a bail
26 commissioner, whichever is later, elect Class E-2 service credit
27 for service performed as a bail commissioner after the effective
28 date of this sentence. This class of service multiplier for E-2
29 service as a bail commissioner shall be 1.5.
30 (c) Class membership for county service.--Notwithstanding
20040H2520B3718 - 50 -
1 subsection (a), county service that is converted to State
2 service pursuant to section 5303.1 (relating to election to
3 convert county service to State service) shall be credited as
4 the following class of service:
5 Class of service in a county of the
6 second class A, third class, fourth
7 class, fifth class, sixth class,
8 seventh class or eighth class
9 maintaining a retirement system or
10 pension plan under the act of August
11 31, 1971 (P.L.398, No.96), known as
12 the County Pension Law
13 System Class of
14 Service
15 Class 1-120 G
16 Class 1-100 H
17 Class 1-80 I
18 Class 1-70 J
19 Class 1-60 K
20 Rate of accrual of benefit for each
21 year of service in a county of the
22 first class or second class or
23 credited in the Pennsylvania
24 Municipal Retirement System
25 System Class of
26 Service
27 .833% G
28 1.00% H
29 1.250% I
30 1.428% J
20040H2520B3718 - 51 -
1 1.667% K
2 2.000% L
3 2.200% M
4 2.500% N
5 (d) Class of service for converted school service and
6 nonschool service.--If a member elects to convert credited
7 service from the Public School Employees' Retirement System to
8 the system pursuant to section 5303.2 (relating to election to
9 convert school service to State service), then Class T-C school
10 service and all nonschool service credited in the Public School
11 Employees' Retirement System shall be converted to credited
12 service in the system and credited as Class A State service or
13 nonstate service respectively, and Class T-D school service
14 credited in the Public School Employees' Retirement System shall
15 be converted to credited service in the system and credited as
16 Class AA State service.
17 (e) Local government police employee class membership.--A
18 local government police employee who becomes a member of the
19 system after December 31, 2004, shall be classified as a Class
20 P-1, P-2, P-3 or P-4 member as provided in section 5405
21 (relating to designation of class of service multiplier) and
22 receive credit for that class of service upon payment of regular
23 member contributions for that class of service.
24 Section 8. Sections 5307(a), 5308, 5308.1 and 5309 of Title
25 71 are amended to read:
26 § 5307. Eligibility points.
27 (a) General rule.--An active member of the system shall
28 accrue one eligibility point for each year of credited service
29 as a member of the [State] system or the Public School
30 Employees' Retirement System. A member shall accrue an
20040H2520B3718 - 52 -
1 additional two-thirds of an eligibility point for each year of
2 Class D-3 credited service. In the case of a fractional part of
3 a year of credited service, a member shall accrue the
4 corresponding fractional portion of eligibility points to which
5 the class of service entitles him.
6 * * *
7 § 5308. Eligibility for annuities.
8 (a) Superannuation annuity.--Attainment of superannuation
9 age by an active member or an inactive member on leave without
10 pay with three or more years of credited [State] government or
11 school service shall entitle him to receive a superannuation
12 annuity upon termination of [State] government service and
13 compliance with section 5907(f) (relating to rights and duties
14 of [State] government employees and members).
15 (b) Withdrawal annuity.--Any vestee or any active member or
16 inactive member on leave without pay who terminates [State]
17 government service having five or more eligibility points, or
18 who has Class G, Class H, Class I, Class J, Class K, Class L,
19 Class M or Class N service and terminates State service having
20 five or more eligibility points, upon compliance with section
21 5907(f), (g) or (h) shall be entitled to receive an annuity.
22 (c) Disability annuity.--An active member or inactive member
23 on leave without pay who has credit for at least five years of
24 service or any active member or inactive member on leave without
25 pay who is a local government police employee, an officer of the
26 Pennsylvania State Police or an enforcement officer shall, upon
27 compliance with section 5907(k), be entitled to a disability
28 annuity if he becomes mentally or physically incapable of
29 continuing to perform the duties for which he is employed and
30 qualifies in accordance with the provisions of section
20040H2520B3718 - 53 -
1 5905(c)(1) (relating to duties of the [board] boards regarding
2 applications and elections of members).
3 § 5308.1. Eligibility for special early retirement.
4 Notwithstanding any provisions of this title to the contrary,
5 the following special early retirement provisions shall be
6 applicable to specified eligible members who are State employees
7 as follows:
8 (1) During the period of July 1, 1985, to September 30,
9 1991, an active member who has attained the age of at least
10 53 years and has accrued at least 30 eligibility points shall
11 be entitled, upon termination of State service and compliance
12 with section 5907(f) (relating to rights and duties of
13 [State] government employees and members), to receive a
14 maximum single life annuity calculated under section 5702
15 (relating to maximum single life annuity) without a reduction
16 by virtue of an effective date of retirement which is under
17 the superannuation age.
18 (2) During the period of July 1, 1985, to September 30,
19 1991, an active member who is a State employee and has
20 attained the age of at least 50 years but not greater than 53
21 years and has accrued at least 30 eligibility points shall be
22 entitled, upon termination of State service and compliance
23 with section 5907(f), to receive a maximum single life
24 annuity calculated under section 5702 with a reduction by
25 virtue of an effective date of retirement which is under the
26 superannuation age of a percentage factor which shall be
27 determined by multiplying the number of months, including a
28 fraction of a month as a full month, by which the effective
29 date of retirement precedes the attainment of age 53 by
30 0.25%.
20040H2520B3718 - 54 -
1 (3) During the period of October 1, 1991, to June 30,
2 1993, a member who is a State employee and has credit for at
3 least 30 eligibility points shall be entitled, upon
4 termination of service and filing of a proper application, to
5 receive a maximum single life annuity calculated pursuant to
6 section 5702 without any reduction by virtue of an effective
7 date of retirement which is under the superannuation age.
8 (4) During the period of July 1, 1993, to July 1, 1997,
9 a member who is a State employee and has credit for at least
10 30 eligibility points shall be entitled, upon termination of
11 service and filing of a proper application, to receive a
12 maximum single life annuity calculated pursuant to section
13 5702 without any reduction by virtue of an effective date of
14 retirement which is under the superannuation age.
15 § 5309. Eligibility for vesting.
16 Any member who terminates [State] government service with
17 five or more eligibility points, or any member with Class G,
18 Class H, Class I, Class J, Class K, Class L, Class M or Class N
19 service with five or more eligibility points, shall be eligible
20 until attainment of superannuation age to vest his retirement
21 benefits.
22 Section 9. Title 71 is amended by adding a chapter to read:
23 CHAPTER 54
24 LOCAL GOVERNMENT RETIREMENT
25 Subchapter
26 A. Local Government Police Employee Retirement Benefits
27 B. Revision and Continuation of Intergovernmental Revenue
28 C. Supplemental Local Government Benefit Accumulation Plan
29 SUBCHAPTER A
30 LOCAL GOVERNMENT POLICE EMPLOYEE RETIREMENT BENEFITS
20040H2520B3718 - 55 -
1 Sec.
2 5401. Provision of local government police employee retirement
3 benefits.
4 5402. Establishment of local government police employee
5 retirement systems restricted.
6 5403. Continuation of existing local government police employee
7 retirement systems.
8 5404. Application for participation required.
9 5405. Designation of class of service multiplier.
10 5406. Optional transfer of members and beneficiaries.
11 5407. Optional election of membership for certain existing
12 police employees.
13 5408. Service credit for prior government service.
14 5409. Board actions preceding transfer of members and
15 beneficiaries to the local government police employee
16 retirement system.
17 5410. Provision of retirement benefits for part-time local
18 government police employees.
19 § 5401. Provision of local government police employee
20 retirement benefits.
21 (a) General rule.--After December 31, 1996, a local
22 government shall not provide retirement benefits to its local
23 government police employees except as provided in this part.
24 (b) Definition.--As used in this section, the term
25 "retirement benefits" means an annuity, pension, health or
26 welfare benefit, insurance coverage, retirement allowance or
27 other retirement benefit provided to an annuitant or beneficiary
28 after the retirement of the annuitant except benefits provided
29 through participation in a postemployment hospital, medical,
30 surgical or major medical insurance program or a deferred
20040H2520B3718 - 56 -
1 compensation program under sections 8.1 or 8.2 and 8.3 of the
2 act of March 30, 1811 (P.L. 145, No. 99), entitled "An act to
3 amend and consolidate the several acts relating to the
4 settlement of the public accounts and the payment of the public
5 monies, and for other purposes," or section 457 of the Internal
6 Revenue Code of 1986 (Public Law 99-154, 26 U.S.C. § 457).
7 § 5402. Establishment of local government police employee
8 retirement systems restricted.
9 (a) Establishment of new retirement systems for full-time
10 local government police employees prohibited.--After December
11 31, 2004, a local government shall not establish a retirement or
12 pension fund, plan or system for its full-time police employees
13 except through participation in the system as provided by this
14 part.
15 (b) Establishment of retirement systems for part-time local
16 government police employees restricted.--After December 31,
17 2004, a local government shall not establish any retirement or
18 pension fund, plan or system for its part-time police employees
19 except through the establishment of simplified employee pension
20 individual retirement accounts as provided under section 5410
21 (relating to provision of retirement benefits for part-time
22 local government employees).
23 (c) Effective date for new retirement systems.--If a local
24 government establishes a retirement or pension fund, plan or
25 system after December 31, 2004, the local government shall
26 establish the retirement or pension fund, plan or system only as
27 of January 1 of the year in which the resolution or ordinance
28 creating the fund, plan or system is passed in final form.
29 § 5403. Continuation of existing local government police
30 employee retirement systems.
20040H2520B3718 - 57 -
1 A local government police employee retirement system
2 established and maintained by a local government and created
3 before January 1, 2005, may continue to operate until all its
4 members and beneficiaries have been transferred into the system
5 under the terms and conditions set forth in section 5406
6 (relating to optional transfer of members and beneficiaries) or
7 until it has no members or beneficiaries representing actual or
8 potential liabilities, whichever occurs earlier. Upon the
9 occurrence of either circumstance, the local government police
10 employee retirement system shall be terminated under section
11 5406(d).
12 § 5404. Application for participation required.
13 (a) Submission of application for participation.--After
14 December 31, 2004, a local government shall submit an
15 application for participation in the system no later than 15
16 days after the employment of a local government police employee
17 unless no retirement system exists for previously hired police
18 employees and the local government has no plans to provide
19 retirement benefits for police employees. Where a local
20 government declines to submit an application for participation
21 under the provision of this section and subsequently elects to
22 provide retirement benefits for police employees, the local
23 government shall submit an application for participation in the
24 system to be effective on the following January 1 on a
25 prospective basis for all police employees who were employed
26 after December 31, 2004.
27 (b) Designation of class of service multiplier.--Each
28 application for participation submitted by a local government
29 under this section shall designate the class of service
30 multiplier to be applied to the police employees. A local
20040H2520B3718 - 58 -
1 government may designate a higher class of service multiplier
2 for police employees on any subsequent January 1 by submitting a
3 revised application for participation.
4 (c) Specification of procedures.--Local governments shall
5 adhere to the procedures adopted by the Local Government Police
6 Employees' Retirement Board regarding the content and submission
7 of applications for participation in the system.
8 § 5405. Designation of class of service multiplier.
9 (a) Local government police employee retirement system with
10 defined benefits exists.--When a local government police
11 employee retirement system for the police employees of a local
12 government exists on December 31, 2004, the local government
13 shall designate the class of service multiplier as follows:
14 (1) If the local government transfers the members and
15 beneficiaries of a local government police employee
16 retirement system to the system under section 5406 (relating
17 to optional transfer of member and beneficiaries), the local
18 government shall designate a class of service multiplier in
19 the system for the transferred members and for police
20 employees entering local government service after December
21 31, 2004, that provides aggregate benefits not less than
22 those provided under the local government police employee
23 retirement system as determined under subsection (d), except
24 as provided in paragraph (3).
25 (2) If the local government does not transfer the
26 members and beneficiaries of a local government police
27 employee retirement system to the system under section 5406,
28 the local government may designate any class of service
29 multiplier in the system for employees entering local
30 government service as police employees after December 31,
20040H2520B3718 - 59 -
1 2004, unless a collective bargaining agreement, mediation
2 agreement or arbitration award between the local government
3 and its police employees or their collective bargaining
4 representatives restricts the class of service multiplier
5 that may be designated for police employees entering local
6 government service after December 31, 2004.
7 (3) If the aggregate benefits provided under the local
8 government police employee retirement system exceed the
9 highest applicable class of service multiplier for police
10 employees, the local government shall designate the highest
11 applicable class of service multiplier in the system for
12 police employees entering local government service after
13 December 31, 2004, and for any members in that particular
14 group transferred to the system under section 5406.
15 (b) No local government police employee retirement system or
16 a local government police employee retirement system without
17 defined benefits exists.--When a local government police
18 employee retirement system for police employees of a local
19 government has no defined benefits or does not exist on December
20 31, 2004:
21 (1) The local government may designate any of the four
22 class of service multipliers in the system for police
23 employees entering local government service after December
24 31, 2004.
25 (2) If individuals who are active, full-time police
26 employees of the local government on December 31, 2004, later
27 become members of the system as police employees of that
28 local government, the local government shall designate the
29 same class of service multiplier in the system for those
30 police employees as it designated for police employees
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1 entering local government service after December 31, 2004,
2 under paragraph (1).
3 (c) Subsequent modification of designation of class of
4 service multiplier.--After the designation of a class of service
5 multiplier under subsection (a) or (b), a local government may
6 designate a higher class of service multiplier effective on any
7 subsequent January 1, subject to any collective bargaining
8 agreement, mediation agreement or arbitration award between the
9 local government and its police employees or their collective
10 bargaining representatives, provided that the local government
11 agrees to pay an amount equal to the increase in the actuarial
12 accrued liability over not more that a 20-year period based on a
13 level dollar amortization schedule. The amortization payments so
14 incurred shall be added to the employer contributions of the
15 individual local government determined under section 5508(a.1)
16 (relating to actuarial cost method).
17 (d) Benefit structure.--Before the January 1 transfer date
18 of full-time local government police employees under subsection
19 (a)(1), the Local Government Police Employees' Retirement Board
20 shall cause the actuary of the system to value both the benefit
21 structure of the local government police employee retirement
22 system and the benefit structure of the system using the
23 system's standard methodology and the demographic data for the
24 prospective members to determine actuarial present value of
25 future benefits under each system. The resulting values shall
26 determine the lowest class of service multiplier that may be
27 designated by the local government.
28 § 5406. Optional transfer of members and beneficiaries.
29 (a) Optional transfer of members and beneficiaries
30 permitted.--On any January 1 after December 31, 2005, a local
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1 government may transfer all of the members and beneficiaries of
2 its local government police employee retirement system to the
3 system under the conditions provided in subsections (b) and (c).
4 (b) Conditions for optional transfer.--The optional transfer
5 of members and beneficiaries of a local government police
6 employee retirement system shall require, among other
7 conditions, all of the following:
8 (1) approval by two-thirds majority of active members of
9 the local government police employee retirement system in an
10 election conducted by the Local Government Police Employees'
11 Retirement Board;
12 (2) a duly passed resolution of the governing body of
13 the local government under which the local government police
14 employee retirement system is operating declaring the
15 governing body's desire and intent to transfer all of the
16 members and beneficiaries to and to participate in the
17 system;
18 (3) prepayment to the Local Government Police Employees'
19 Retirement Fund by the local government of the amount equal
20 to the actuarial accrued liabilities attributable to the
21 members and beneficiaries of the local government police
22 employee retirement system on the January 1 the transfer is
23 effective as determined by the actuary;
24 (4) agreement by the local government to pay to the
25 Local Government Police Employees' Retirement Fund the pickup
26 contributions and employer contributions under Chapter 55
27 (relating to contributions); and
28 (5) approval by the Local Government Police Employees'
29 Retirement Board of an application for transfer of the
30 members and beneficiaries to and participation of the local
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1 government and its full-time police employees in the system.
2 (c) Six months limitation of time for civil actions and
3 proceedings.--
4 (1) A civil action or proceeding at law or in equity
5 seeking to prohibit or rescind the optional transfer to or
6 subsequent participation in the system of one or more members
7 or beneficiaries of the local government police employee
8 retirement system shall be commenced within six months of the
9 January 1 the transfer is to be or was effective.
10 (2) If, as a result of a civil action or proceeding, the
11 transfer to or participation in the system of one or more
12 members or beneficiaries of the local government police
13 employee retirement system is prohibited or rescinded before
14 the January 1 the transfer is to be effective, the transfer
15 to and participation in the system by all members and
16 beneficiaries of the local government police employee
17 retirement system shall not occur.
18 (3) If, as a result of a civil action or proceeding, the
19 transfer to or participation in the system of one or more
20 members or beneficiaries of the local government police
21 employee retirement system is prohibited or rescinded on or
22 after the January 1 the transfer was effective, the transfer
23 to and participation in the system by all members and
24 beneficiaries of the local government police employee
25 retirement system shall be permanently rescinded and the
26 assets transferred and contributed by the local government
27 and the members of the local government police employee
28 retirement system shall be refunded with statutory interest
29 to the public employee pension trust fund of the local
30 government police employee retirement system.
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1 (4) If a civil action or proceeding at law or in equity
2 seeking to prohibit or rescind the optional transfer to or
3 subsequent participation in the system of one or more members
4 or beneficiaries of a local government police employee
5 retirement system is not commenced within six months of the
6 January 1 the transfer is effective, any civil action or
7 proceeding commenced against the local government, the local
8 government police employee retirement system, the system, the
9 Commonwealth or their officers or employees shall be
10 dismissed and the person to whom any such cause of action
11 accrued for any injury shall be forever barred from
12 proceeding further thereon within this Commonwealth or
13 elsewhere. As used in this paragraph, the word "commenced"
14 shall have the meaning given it under 42 Pa.C.S. § 5503
15 (relating to commencement of matters).
16 (d) Use of residual assets and termination of local
17 government police employee retirement system.--After the local
18 government police employee retirement system has paid the amount
19 required under subsection (b)(3) and transferred all its members
20 and beneficiaries to the system, the local government police
21 employee retirement system shall use the residual assets of the
22 police pension fund to pay any remaining liabilities and to make
23 future employer contributions to the Local Government Police
24 Employees' Retirement Fund under section 5507 (relating to
25 contributions by the Commonwealth and other employers). When the
26 residual assets of the police pension fund of the municipality
27 are depleted, the local government police employee retirement
28 system shall be then terminated.
29 § 5407. Optional election of membership for certain existing
30 police employees.
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1 (a) Optional election of membership for certain existing
2 police employees permitted.--On any January 1 after December 31,
3 2005, a local government may elect membership in the system for
4 all of its full-time police employees who on December 31, 2005,
5 were active, full-time police employees of the local government
6 and were not members of the local government's local government
7 police employee retirement system.
8 (b) Conditions for optional election of membership.--The
9 optional election of membership in the system by a local
10 government for all the full-time police employees shall require,
11 among other conditions, all of the following:
12 (1) a duly passed resolution of the governing body of
13 the local government declaring the governing body's desire
14 and intent to elect membership in the system for all of the
15 affected local government police employees;
16 (2) designation of the class of service multiplier for
17 its local government police employees under section 5405(b)
18 (relating to designation of class of service multiplier);
19 (3) prepayment to the Local Government Police Employees'
20 Retirement Fund by the local government of the amount equal
21 to the actuarial accrued liabilities attributable to the
22 local government police employees on the January 1 the
23 transfer is effective as determined by the actuary;
24 (4) agreement by the local government to pay to the
25 Local Government Police Employees' Retirement Fund the pickup
26 contributions and employer contributions under Chapter 55
27 (relating to contributions); and
28 (5) approval by the Local Government Police Employees'
29 Retirement Board of an application for participation of the
30 local government and its full-time police employees in the
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1 system. The Local Government Police Employees' Retirement
2 Board may establish any other conditions as it deems
3 appropriate.
4 § 5408. Service credit for prior government service.
5 (a) New local government police employees.--A full-time
6 local government police employee who enters local government
7 service and joins the system after December 31, 2004, shall only
8 receive service credit in the system for local government police
9 service from the date of membership in the system.
10 (b) Existing local government police employee retirement
11 system members.--A full-time local government police employee
12 whose retirement membership is transferred from a local
13 government police employee retirement system to the system under
14 section 5406 (relating to optional transfer of members and
15 beneficiaries) shall only receive service credit in the system
16 for the service credit the employee had in the local government
17 police employee retirement system on the date of transfer.
18 (c) Existing local government police employees not members
19 of a local government police employee retirement system.--A
20 local government electing membership in the system under section
21 5407 (relating to optional election of membership for certain
22 existing police employees) for local government police employees
23 may permit members to receive service credit in the system only
24 for the full-time local government police service the local
25 government police employees had with the local government on the
26 December 31 immediately before joining the system, provided the
27 local government prepays the Local Government Police Employees'
28 Retirement Fund the amount of the resulting actuarial accrued
29 liabilities as required under section 5406(b)(3).
30 § 5409. Board actions preceding transfer of members and
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1 beneficiaries to the local government police employee
2 retirement system.
3 Before the January 1 transfer date of members and
4 beneficiaries of the local government police employee retirement
5 system under section 5406 (relating to optional transfer of
6 members and beneficiaries) or local government police employees
7 under section 5407 (relating to optional election of membership
8 for certain existing police employees), the Local Government
9 Police Employees' Retirement Board shall:
10 (1) Cause its actuary to value the actuarial accrued
11 liabilities that are attributable to members and
12 beneficiaries to be transferred as of the transfer date.
13 (2) Determine the amount of accumulated member
14 contributions and interest for each active member, together
15 with statutory interest during all periods of subsequent
16 local government police service to the date of transfer and
17 credit the resulting amounts to the members' savings account
18 of the Local Government Police Employees' Retirement Fund on
19 the transfer date.
20 § 5410. Provision of retirement benefits for part-time local
21 government police employees.
22 (a) Establishment of simplified employee pension individual
23 retirement account plans for part-time local government police
24 employees permitted.--A local government may establish eligible
25 simplified employee pension individual retirement account plans
26 under section 408 of the Internal Revenue Code of 1986 (Public
27 Law 99-514, 26 U.S.C. § 408) for its part-time local government
28 police employees.
29 (b) Administration by governing body.--Any simplified
30 employee pension individual retirement account plans established
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1 for the part-time local government police employees of a local
2 government shall be established and administered by the
3 governing body of the local government and shall provide for
4 contributions by the local government to be specified as a
5 uniform percentage of compensation.
6 (c) Definitions.--The following words and phrases when in
7 this section shall have, unless the context clearly indicates
8 otherwise, the meanings given to them in this subsection:
9 "Compensation." Remuneration actually received as a local
10 government police employee, excluding refunds for expenses,
11 contingency and accountable expense allowances and severance
12 payments or payments for unused vacation or sick leave.
13 "Part-time local government police employee." Any individual
14 employed and compensated for less than 1,650 hours of employment
15 for each nonoverlapping period of 12 consecutive months, 26
16 consecutive biweekly pay periods or 52 consecutive weekly pay
17 periods. The term shall not mean an independent contractor or
18 any individual compensated on a fee or commission basis.
19 SUBCHAPTER B
20 REVISION AND CONTINUATION OF INTERGOVERNMENTAL REVENUE
21 Sec.
22 5421. Revision of general municipal pension system State aid
23 program.
24 § 5421. Revision of general municipal pension system State aid
25 program.
26 (a) Maximum allocation.--Notwithstanding the provisions of
27 section 402(f)(2) of the act of December 18, 1984 (P.L.1005,
28 No.205), known as the Municipal Pension Plan Funding Standard
29 and Recovery Act, the allocation of each eligible municipality
30 participating in the distribution of general municipal pension
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1 system State aid under Chapter 4 of the Municipal Pension Plan
2 Funding Standard and Recovery Act during calendar year 2006 and
3 thereafter shall not exceed the aggregate actual employer
4 financial requirements of its employee pension plans calculated
5 under section 402(f)(2) of the Municipal Pension Plan Funding
6 Standard and Recovery Act and subsection (b).
7 (b) Adjustment of allocation.--Notwithstanding the
8 provisions of section 402(f)(2) of the Municipal Pension Plan
9 Funding Standard and Recovery Act, the aggregate actual employer
10 financial requirements calculated for each eligible municipality
11 under section 402(f)(2) of the Municipal Pension Plan Funding
12 Standard and Recovery Act for use in the allocation made during
13 calendar year 2006 and thereafter shall not include the actual
14 employer financial requirements of the police pension plan of
15 the municipality if the municipality has elected to transfer
16 members and beneficiaries under section 5406 (relating to
17 optional transfer of members and beneficiaries) and is funding
18 or could be funding its actual employer financial requirements
19 through disbursements from the residual assets of the police
20 pension fund of the municipality under section 5406(d).
21 (c) Reserve for allocation.--Notwithstanding the provisions
22 of section 402(b) of the Municipal Pension Plan Funding Standard
23 and Recovery Act, if in any year the application of the maximum
24 allocation in subsection (a) results in unallocated moneys in
25 the general municipal pension system state aid program, the
26 unallocated moneys shall be held as a reserve for allocation in
27 the subsequent year. In the event that the unallocated moneys in
28 any year exceed 10% of the total moneys available for allocation
29 in that year, the excess moneys shall be paid to the General
30 Fund.
20040H2520B3718 - 69 -
1 (d) Construction of section.--Nothing in this section shall
2 be construed to repeal any of the provisions of Chapters 5 and 6
3 of the Municipal Pension Plan Funding Standard and Recovery Act.
4 (e) Definition.--As used in this section, the term
5 "municipality" has the meaning given such term by section 102 of
6 the act of December 18, 1984 (P.L.1005, No.205), known as the
7 Municipal Pension Plan Funding Standard and Recovery Act.
8 SUBCHAPTER C
9 SUPPLEMENTAL LOCAL GOVERNMENT BENEFIT
10 ACCUMULATION PLAN
11 Sec.
12 5441. Definitions.
13 5442. Supplemental local government retirement benefit
14 accumulation plan.
15 5443. Contributions.
16 5444. Contributions taxable.
17 5445. Losses, expenses and obligations.
18 5446. Prompt investment.
19 5447. No assignment or alienation.
20 5448. Withdrawals.
21 5449. Eligible individual members.
22 5450. Qualified fund managers; payment of commissions.
23 5451. Eligibility for vesting.
24 5452. Benefits.
25 § 5441. Definitions.
26 The following words and phrases when used in this subchapter
27 shall have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 "Compensation." Remuneration actually received as a local
30 government police employee excluding refunds for expenses,
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1 contingency and accountable expense allowances and severance
2 payments or payments for unused vacation or sick leave.
3 "Employee group." All the full-time police employees of a
4 local government classified as local government police
5 employees.
6 § 5442. Supplemental local government retirement benefit
7 accumulation plan.
8 (a) Establishment.--The Local Government Police Employees'
9 Retirement Board shall establish and administer a supplemental
10 local government retirement benefit accumulation plan that
11 provides for the maintenance of individual accounts for eligible
12 members who are employed by a participating local government.
13 (b) Powers and duties of the board.--In order to establish
14 and administer the supplemental local government retirement
15 benefit accumulation plan, the powers and duties of the Local
16 Government Police Employees' Retirement Board shall include, but
17 not be limited to:
18 (1) Entering into written agreements with one or more
19 financial or other organizations to administer the
20 supplemental local government retirement benefit accumulation
21 plan and to invest funds contributed under the plan. Any
22 written agreement and supplemental local government
23 retirement benefit accumulation plan shall conform with the
24 provisions of the Internal Revenue Code of 1986 (Public law
25 99-514, 26 U.S.C. § 1 et seq.).
26 (2) Annually reviewing all plan and fund managers for
27 the purpose of making certain they continue to meet all
28 performance standards and criteria as may be established by
29 the board.
30 (c) Rules and regulations.--In addition to the powers and
20040H2520B3718 - 71 -
1 duties enumerated in subsection (b), the board also may
2 promulgate rules and regulations relating to the following:
3 (1) Establishing procedures whereby local governments
4 may elect or agree to participate in the plan for all the
5 individual members in an employee group, whereby local
6 governments specify for an employee group the uniform
7 percentage of compensation to be contributed by the member
8 and the local government, whereby participating individual
9 members may elect or change their choices of managers and
10 investments on a quarterly basis, and whereby participating
11 local governments may elect to cease participation at any
12 time subject to collective bargaining agreements or
13 arbitration awards.
14 (2) Establishing standards and criteria for the
15 selection by the board of financial institutions, insurance
16 companies or other organizations that may be qualified as
17 managers of the plan and funds contributed under the plan.
18 (3) Establishing standards and criteria for the
19 provision of investment options to individual members and for
20 the disclosure of the options to the individual members.
21 (4) Establishing standards and criteria for the
22 disclosure to participating individual members of the
23 anticipated and actual income on their accounts and all fees,
24 costs and charges to be made against the contributed amounts
25 to cover the costs of administration and fund management.
26 § 5443. Contributions.
27 The contributions to the supplemental local government
28 retirement benefit accumulation plan for an employee group shall
29 be expressed and implemented as a uniform percentage of
30 compensation. The specified contributions shall be deducted from
20040H2520B3718 - 72 -
1 the compensation of participating individual members and matched
2 by the local government. The contributions of a local government
3 to the supplemental local government retirement benefit
4 accumulation plan shall not be included in the financial
5 requirements of the local government that are certified by the
6 system for use in the allocation of general municipal pension
7 system State aid.
8 § 5444. Contributions taxable.
9 All amounts contributed under the supplemental local
10 government retirement benefit accumulation plan shall constitute
11 taxable income for purposes of the act of March 4, 1971 (P.L.6,
12 No.2), known as the Tax Reform Code of 1971, and shall
13 constitute taxable income for State and local earned income
14 taxes.
15 § 5445. Losses, expenses and obligations.
16 Neither the Commonwealth, the Local Government Police
17 Employees' Retirement Board nor any local government shall be
18 responsible for any investment loss incurred in the plan or for
19 the failure of any investment to earn any specific or expected
20 return or to earn as much as any other investment opportunity,
21 whether such other investment opportunity was offered to
22 participants in the plan. The expenses arising from allowing
23 individual members to elect to participate in the supplemental
24 local government retirement benefit accumulation plan, to choose
25 a fund manager, to deduct from compensation amounts contributed
26 under a plan and to transfer to the fund manager amounts to be
27 contributed shall be borne by the participating local
28 government. All other expenses arising from the administration
29 of the supplemental local government retirement benefit
30 accumulation plan shall be assessed against the accounts created
20040H2520B3718 - 73 -
1 on behalf of participating individual members either by the fund
2 managers or by the board. The obligation of the local government
3 police employee shall be a contractual obligation only with no
4 preferred or special interest in contributed funds to such
5 employee.
6 § 5446. Prompt investment.
7 Investment of contributed funds by any corporation,
8 institution, insurance company or custodial bank that the Local
9 Government Police Employees' Retirement Board has approved shall
10 not be unreasonably delayed and in no case shall the investment
11 of contributed funds be delayed more than 30 days from the date
12 that the payroll deductions or local government contributions
13 are received by the system to the date that funds are invested.
14 Any interest earned on such funds pending investment shall be
15 allocated to the Local Government Police Employees' Retirement
16 Board and credited to the accounts of individual members who are
17 then participating in the plan unless such interest is used to
18 defray administrative costs and fees that would otherwise be
19 required to be borne by individual members who are then
20 participating in the plan.
21 § 5447. No assignment or alienation.
22 Except as provided in section 5953 (relating to taxation,
23 attachment and assignment of funds), no participating member or
24 beneficiary shall have the right to commute, sell, assign or
25 otherwise transfer or convey the rights to receive any payments
26 under agreements entered into under this section, and such
27 payments and rights are expressly declared to be nonassignable
28 and nontransferable.
29 § 5448. Withdrawals.
30 A participating individual member may withdraw from the
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1 agreement in accordance with the plan by notice, in writing,
2 signed by the member and chief administrative officer of the
3 local government. Such withdrawal shall discontinue future
4 withholdings from the individual member's compensation by the
5 local government and future contributions by the local
6 government but shall not operate to withdraw any funds
7 theretofore contributed except as provided under section 5452
8 (relating to benefits).
9 § 5449. Eligible individual members.
10 Every full-time police employee of a local government who,
11 upon the effective date of the local government's participation
12 in the plan, either is in office or employed by the local
13 government shall immediately be eligible for participation in
14 the supplemental local government retirement benefit
15 accumulation plan. Thereafter, every full-time police employee
16 of a local government shall become eligible upon employment by a
17 participating local government.
18 § 5450. Qualified fund managers; payment of commissions.
19 For the purposes of this subchapter only, notwithstanding the
20 provisions of the act of April 9, 1929 (P.L.177, No.175), known
21 as The Administrative Code of 1929, or the act of September 26,
22 1961 (P.L.1661, No.692), known as the State Employes Group Life
23 Insurance Law, insurance companies selected as qualified fund
24 managers by eligible individual members may pay commissions to
25 agents or brokers licensed to transact business in this
26 Commonwealth in accordance with their standard practice followed
27 in other similar plans as if the premium had been paid by such
28 eligible individual member.
29 § 5451. Eligibility for vesting.
30 Any participant who terminates local government service with
20040H2520B3718 - 75 -
1 ten or more eligibility points shall be eligible until
2 attainment of superannuation age to vest his supplemental local
3 government benefit accumulation plan benefits.
4 § 5452. Benefits.
5 A participating individual member shall receive the total
6 account value of his individual account in a lump sum upon
7 termination of service or retirement unless the individual
8 member elects to vest his benefits under section 5451 (relating
9 to eligibility for vesting).
10 Section 10. Sections 5504 heading and (a), 5505(c) and (e),
11 5506 and 5507(a) of Title 71 are amended to read:
12 § 5504. Member contributions for the purchase of credit for
13 previous [State] government service or to become a
14 full coverage member.
15 (a) Amount of contributions for service in other than Class
16 G through N.--The contributions to be paid by an active member
17 or eligible school employee for credit for total previous
18 [State] government service other than service in Class G, Class
19 H, Class I, Class J, Class K, Class L, Class M and Class N or to
20 become a full coverage member shall be sufficient to provide an
21 amount equal to the regular and additional accumulated
22 deductions which would have been standing to the credit of the
23 member for such service had regular and additional member
24 contributions been made with full coverage in the class of
25 service and at the rate of contribution applicable during such
26 period of previous service and had his regular and additional
27 accumulated deductions been credited with statutory interest
28 during all periods of subsequent [State] government and school
29 service up to the date of purchase.
30 * * *
20040H2520B3718 - 76 -
1 § 5505. Contributions for the purchase of credit for creditable
2 nonstate service.
3 * * *
4 (c) Intervening military service.--Contributions on account
5 of credit for intervening military service shall be determined
6 by the member's contribution rate, the additional contribution
7 rate which shall be applied only to those members who began
8 service on or after the effective date of this amendatory act
9 and compensation at the time of entry of the member into active
10 military service, together with statutory interest during all
11 periods of subsequent [State] government and school service to
12 date of purchase. Upon application for such credit the amount
13 due shall be certified in the case of each member by the board
14 in accordance with methods approved by the actuary, and
15 contributions may be made by:
16 (1) regular monthly payments during active military
17 service; or
18 (2) a lump sum payment within 30 days of certification;
19 or
20 (3) salary deductions in amounts agreed upon by the
21 member or eligible school employee who is an active member of
22 the Public School Employees' Retirement System and the board.
23 The salary deduction amortization plans agreed to by members and
24 the board may include a deferral of payment amounts and
25 statutory interest until the termination of school service or
26 State service as the board in its sole discretion decides to
27 allow. The board may limit salary deduction amortization plans
28 to such terms as the board in its sole discretion determines. In
29 the case of an eligible school employee who is an active member
30 of the Public School Employees' Retirement System, the agreed
20040H2520B3718 - 77 -
1 upon salary deductions shall be remitted to the Public School
2 Employees' Retirement Board, which shall certify and transfer to
3 the board the amounts paid.
4 * * *
5 (e) Philadelphia magisterial service.--Contributions on
6 account of credit for service as a magistrate of the City of
7 Philadelphia shall be determined by the board to be equal to the
8 amount he would have paid as employee contributions together
9 with statutory interest to date of purchase had he been a State
10 employee during his period of service as a magistrate of the
11 City of Philadelphia. The amount so determined by the State
12 Employees' Retirement Board or the Local Government Police
13 Employees' Retirement Board to be paid into the [State
14 Employees' Retirement System] system shall be the obligation of
15 the judge who requested credit for previous service as a
16 magistrate of the City of Philadelphia; in no event shall such
17 amount be an obligation of the City of Philadelphia or the City
18 of Philadelphia retirement system.
19 * * *
20 § 5506. Incomplete payments.
21 In the event that a member terminates [State] government
22 service or a multiple service member who is an active member of
23 the Public School Employees' Retirement System terminates school
24 service before the agreed upon payments for credit for previous
25 [State] government service, creditable nonstate service, social
26 security integration, full coverage membership or return of
27 benefits on account of returning to [State] government service
28 or entering school service and electing multiple service have
29 been completed, the member or multiple service member who is an
30 active member of the Public School Employees' Retirement System
20040H2520B3718 - 78 -
1 shall have the right to pay within 30 days of termination of
2 [State] government service or school service the balance due,
3 including interest, in a lump sum and the annuity shall be
4 calculated including full credit for the previous [State]
5 government service, creditable nonstate service, [social
6 security] Social Security integration, or full coverage
7 membership. In the event a member does not pay the balance due
8 within 30 days of termination of [State] government service or
9 in the event a member dies in [State] government service or
10 within 30 days of termination of [State] government service or
11 in the case of a multiple service member who is an active member
12 of the Public School Employees' Retirement System does not pay
13 the balance due within 30 days of termination of school service
14 or dies in school service or within 30 days of termination of
15 school service and before the agreed upon payments have been
16 completed, the present value of the benefit otherwise payable
17 shall be reduced by the balance due, including interest, and the
18 benefit payable shall be calculated as the actuarial equivalent
19 of such reduced present value.
20 § 5507. Contributions by the Commonwealth and other employers.
21 (a) Contributions on behalf of active members.--The
22 Commonwealth and other employers whose employees are members of
23 the system shall make contributions to the fund on behalf of all
24 active members in such amounts as shall be certified by the
25 board as necessary to provide, together with the members' total
26 accumulated deductions, annuity reserves on account of
27 prospective annuities other than those provided in section 5708
28 (relating to supplemental annuities) in accordance with the
29 actuarial cost method provided in section 5508(a), (a.1), (b),
30 (c), (d) and (f) (relating to actuarial cost method).
20040H2520B3718 - 79 -
1 * * *
2 Section 11. Section 5508(a) and (b) of Title 71, amended
3 December 10, 2003 (P.L.228, No.40), are amended and the section
4 is amended by adding a subsection to read:
5 § 5508. Actuarial cost method.
6 (a) Employer contribution rate on behalf of active members
7 in State service.--The amount of the Commonwealth and other
8 employer contributions on behalf of all active members in State
9 service shall be computed by the actuary as a percentage of the
10 total compensation of all active members during the period for
11 which the amount is determined and shall be so certified by the
12 [board] State Employees' Retirement Board. The total employer
13 contribution rate on behalf of all active members in State
14 service shall consist of the employer normal contribution rate,
15 as defined in subsection (b), and the accrued liability
16 contribution rate as defined in subsection (c). The total
17 employer contribution rate for the Commonwealth and other
18 employers, except for local governments, shall be modified by
19 the experience adjustment factor as calculated in subsection (f)
20 but in no case shall it be less than zero. The total employer
21 contribution rate shall be modified by the experience adjustment
22 factor as calculated in subsection (f), but in no case shall it
23 be less than:
24 (1) 2% for the fiscal year beginning July 1, 2004;
25 (2) 3% for the fiscal year beginning July 1, 2005; and
26 (3) 4% for the fiscal year beginning July 1, 2006.
27 (a.1) Employer contribution rate on behalf of active members
28 in local government service.--The amount of the local government
29 employer contributions on behalf of all active members in local
30 government service shall be computed by the actuary as a
20040H2520B3718 - 80 -
1 percentage of the total compensation of all active members
2 during the period for which the amount is determined and shall
3 be so certified by the Local Government Police Employees'
4 Retirement Board. The total employer contribution rate on behalf
5 of all active members in local government service shall consist
6 of the employer normal contribution rate, as defined in
7 subsection (b) and the accrued liability contribution rate as
8 defined in subsection (c). The total employer contribution rate
9 for local governments shall be modified by the experience
10 adjustment factor as calculated in subsection (f) for
11 amortization payments beginning after December 31, 1996, but in
12 no case shall it be less than zero.
13 (b) Employer normal contribution [rate] rates.--The employer
14 normal contribution [rate] rates shall be determined after each
15 actuarial valuation on the basis of an annual interest rate and
16 such mortality and other tables as shall be adopted by the
17 [board] boards in accordance with generally accepted actuarial
18 principles. The employer normal contribution [rate] rates shall
19 be determined as a level percentage of the compensation of the
20 average [new] active member, which percentage, if contributed on
21 the basis of his [prospective] compensation through his entire
22 period of active [State] government service, would be sufficient
23 to fund the liability for any [prospective] benefit payable to
24 him, except for the supplemental benefits provided for in
25 sections 5708 (relating to supplemental annuities), 5708.1
26 (relating to additional supplemental annuities), 5708.2
27 (relating to further additional supplemental annuities), 5708.3
28 (relating to supplemental annuities commencing 1994), 5708.4
29 (relating to special supplemental postretirement adjustment),
30 5708.5 (relating to supplemental annuities commencing 1998),
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1 5708.6 (relating to supplemental annuities commencing 2002),
2 5708.7 (relating to supplemental annuities commencing 2003) and
3 5708.8 (relating to special supplemental postretirement
4 adjustment of 2002), in excess of that portion funded by his
5 [prospective] member contributions.
6 * * *
7 Section 12. Section 5509 of Title 71 is amended to read:
8 § 5509. Appropriations and assessments by the Commonwealth.
9 (a) Annual submission of budget.--The [board] boards shall
10 prepare and submit annually an itemized budget consisting of the
11 amounts necessary to be appropriated by the Commonwealth out of
12 the General Fund and special operating funds and the amounts to
13 be assessed the other employers required to meet the obligations
14 accruing during the fiscal period beginning the first day of
15 July of the following year.
16 (b) Appropriation and payment.--The General Assembly shall
17 make an appropriation sufficient to provide for the obligations
18 of the Commonwealth. Such amount shall be paid by the State
19 Treasurer through the Department of Revenue into the [fund]
20 State Employees' Retirement Fund in accordance with requisitions
21 presented by the [board] State Employees' Retirement Board. The
22 contributions by the Commonwealth on behalf of active members
23 who are officers of the Pennsylvania State Police shall be
24 charged to the General Fund and to the Motor License Fund in the
25 same ratios as used to apportion the appropriations for salaries
26 of members of the Pennsylvania State Police. The contributions
27 by the Commonwealth on behalf of active members who are
28 enforcement officers and investigators of the Pennsylvania
29 Liquor Control Board shall be charged to the General Fund and to
30 the State Stores Fund.
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1 (c) Contributions from funds other than General Fund.--The
2 amounts assessed other employers, except for local governments,
3 who are required to make the necessary contributions out of
4 funds other than the General Fund shall be paid by such
5 employers into the [fund] State Employees' Retirement Fund in
6 accordance with requisitions presented by the [board] State
7 Employees' Retirement Board. The General Fund of the
8 Commonwealth shall not be held liable to appropriate the moneys
9 required to build up the reserves necessary for the payment of
10 benefits to employees of such other employers. In case any such
11 other employer shall fail to provide the moneys necessary for
12 such purpose, then the service of such members for such period
13 for which money is not so provided shall be credited and pickup
14 contributions with respect to such members shall continue to be
15 credited to the members' savings account. The annuity to which
16 such member is entitled shall be determined as actuarially
17 equivalent to the present value of the maximum single life
18 annuity of each such member reduced by the amount of employer
19 contributions payable on account and attributable to his
20 compensation during such service.
21 Section 13. Title 71 is amended by adding sections to read:
22 § 5510. Payments by local governments.
23 (a) General rule.--Not later than 30 days after the end of
24 the quarter, each local government shall make payments to the
25 Local Government Police Employees' Retirement Fund each quarter
26 in an amount equal to the percentages, as determined under
27 section 5508 (relating to actuarial cost method), applied to the
28 total compensation during the pay periods in the preceding
29 quarter of all its employees who were members of the system
30 during such period.
20040H2520B3718 - 83 -
1 (b) Deduction from intergovernmental revenue.--To facilitate
2 the payment of amounts due from any local government to the
3 Local Government Police Employees' Retirement Fund through the
4 State Treasurer and to permit the exchange of credits between
5 the State Treasurer and any local government, the Local
6 Government Police Employees' Retirement Board and the State
7 Treasurer shall cause to be deducted and paid into the Local
8 Government Police Employees' Retirement Fund from any moneys due
9 to any local government from the Commonwealth such amount due to
10 the Local Government Police Employees' Retirement Fund adjusted
11 at the valuation interest rate as certified by the Local
12 Government Police Employees' Retirement Board and as remains
13 unpaid for a period of 90 days on the date such
14 intergovernmental revenue would otherwise be paid to the local
15 government, and such amount shall be credited to the local
16 government's account in the Local Government Police Employees'
17 Retirement Fund. The General Fund shall not be held liable to
18 appropriate the moneys required to build up the reserves
19 necessary for the payment of benefits to employees of such local
20 governments.
21 (c) Exceptions to the deductions from Commonwealth
22 intergovernmental revenue.--Notwithstanding the provisions of
23 subsection (b), deductions shall not be made from the following
24 intergovernmental revenues due to a local government:
25 (1) Capital projects under contract in progress.
26 (2) Moneys received by a local government from an agency
27 of the Commonwealth or the Federal Government under a
28 declaration of a disaster resulting from a catastrophe.
29 § 5511. Enforcement of local government contributions or
30 payments by mandamus action.
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1 (a) Legislative finding and declaration.--The General
2 Assembly finds and declares that any actual or potential failure
3 by a local government to make contributions or payments
4 established by section 5405 (relating to designation of class of
5 service multiplier), 5501 (relating to regular member
6 contributions for current service), 5502 (relating to Social
7 Security integration member contributions), 5503 (relating to
8 joint coverage member contributions), 5503.1 (relating to pickup
9 contributions), 5504 (relating to member contributions for the
10 purchase of credit for previous government service or to become
11 a full coverage member), 5505 (relating to contributions for the
12 purchase of credit for creditable nonstate service), 5505.1
13 (relating to additional member contributions), 5507 (relating to
14 contributions by the Commonwealth and other employers), 5508
15 (relating to actuarial cost method), 5509 (relating to
16 appropriations and assessments by the Commonwealth) or 5510
17 (relating to payments by local governments) threatens serious
18 injury to the affected local government police employees, the
19 system and the Commonwealth itself. By expressly authorizing the
20 remedy of mandamus in this section, the General Assembly intends
21 to assist all persons with a beneficial or special interest in
22 the system in addition to all persons or entities with a special
23 responsibility or duty in relation to the system in securing
24 that compliance.
25 (b) Generally.--In the event that a local government fails
26 to comply with its duty to pay the full amount of the
27 contributions or payments as specified in Chapter 54 (relating
28 to local government retirement) or this chapter, the failure may
29 be remedied by the institution of legal proceedings for
30 mandamus. Every local government is by this part on notice as to
20040H2520B3718 - 85 -
1 its duty to make its contributions or payments to the system.
2 The provisions of this part shall be deemed to be sufficient
3 demand to the local government for it to comply with its duty,
4 and the failure by the local government to pay the full amount
5 of the contribution or payment to the system shall be deemed to
6 be sufficient refusal by the local government to comply with its
7 duty antecedent to the commencement of the action. No other
8 remedy at law shall be deemed to be sufficiently adequate and
9 appropriate to bar the commencement of this action. The system
10 shall be deemed to have been damaged by the failure of the local
11 government to comply with its legal duty to make its
12 contribution or payment to the system and that damage shall be
13 deemed to be immediate. No issuance of mandamus in connection
14 with the legal duty of a local government to make its
15 contribution or payment to the system shall be deemed to
16 threaten the creation of confusion, disorder or excessive burden
17 on the local government or to threaten a result that is
18 detrimental to the public interest.
19 (c) Boards beneficially interested.--The boards are
20 beneficially interested in the affairs of the system and either
21 or both shall have standing to institute a legal proceeding for
22 mandamus as provided in this section.
23 (d) Scope of remedy.--Any mandamus under this section shall
24 compel the payment of any delinquent contribution or payment to
25 the system with interest at the applicable compound rate.
26 Section 14. Sections 5702(a)(1), 5704(a), (c) and (e),
27 5705(a), 5706, 5707(c), 5708.1(a) and (f), 5708.2(f), 5708.3(g)
28 and 5901(a) of Title 71 are amended to read:
29 § 5702. Maximum single life annuity.
30 (a) General rule.--Any full coverage member who is eligible
20040H2520B3718 - 86 -
1 to receive an annuity pursuant to the provisions of section
2 5308(a) or (b) (relating to eligibility for annuities) who
3 terminates State service, or if a multiple service member who is
4 a school employee who is an active member of the Public School
5 Employees' Retirement System who terminates school service,
6 before attaining age 70 shall be entitled to receive a maximum
7 single life annuity attributable to his credited service and
8 equal to the sum of the following single life annuities
9 beginning at the effective date of retirement:
10 (1) A standard single life annuity multiplied by the sum
11 of the products, determined separately for each class of
12 service, obtained by multiplying the appropriate class of
13 service multiplier by the ratio of years of service credited
14 in that class to the total credited service. In case the
15 member on the effective date of retirement is under
16 superannuation age for any service, a reduction factor
17 calculated to provide benefits actuarially equivalent to an
18 annuity starting at superannuation age shall be applied to
19 the product determined for that service. The class of service
20 multiplier for any period of concurrent service shall be
21 multiplied by the proportion of total [State] government and
22 school compensation during such period attributable to
23 [State] government service. In the event a member has two
24 multipliers for one class of service the class of service
25 multiplier to be used for calculating benefits for that class
26 shall be the average of the two multipliers weighted by the
27 proportion of compensation attributable to each multiplier
28 during the three years of highest annual compensation in that
29 class of service: Provided, That in the case of a member of
30 Class E-1, a portion but not all of whose three years of
20040H2520B3718 - 87 -
1 highest annual judicial compensation is prior to January 1,
2 1973, two class of service multipliers shall be calculated on
3 the basis of his entire judicial service, the one applying
4 the judicial class of service multipliers effective prior to
5 January 1, 1973 and the second applying the class of service
6 multipliers effective subsequent to January 1, 1973. The
7 average class of service multiplier to be used for
8 calculating benefits for his judicial service shall be the
9 average of the two calculated multipliers weighted by the
10 proportion of compensation attributable to each of the
11 calculated multipliers during the three years of highest
12 annual compensation in that class of service.
13 * * *
14 § 5704. Disability annuities.
15 (a) Amount of annuity.--A member who has made application
16 for a disability annuity and has been found to be eligible in
17 accordance with the provisions of section 5905(c)(1) (relating
18 to duties of the [board] boards regarding applications and
19 elections of members) shall receive a disability annuity payable
20 from the effective date of disability as determined by the board
21 and continued until a subsequent determination by the board that
22 the annuitant is no longer entitled to a disability annuity. The
23 disability annuity shall be equal to a standard single life
24 annuity multiplied by the class of service multiplier applicable
25 to the class of service at the time of disability if the product
26 of such class of service multiplier and the total number of
27 years of credited service is greater than 16.667, otherwise the
28 standard single life annuity shall be multiplied by the lesser
29 of the following ratios:
30 MY*/Y or 16.667/Y
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1 where Y = number of years of credited service, Y* = total years
2 of credited service if the member were to continue as a [State]
3 government employee until attaining superannuation age as
4 applicable at the time of disability, or if the member has
5 attained superannuation age, as applicable at the time of
6 disability, then the number of years of credited service and M =
7 the class of service multiplier as applicable at the effective
8 date of disability. A member of Class C shall receive, in
9 addition, any annuity to which he may be eligible under section
10 5702(a)(3) (relating to maximum single life annuity). The member
11 shall be entitled to the election of a joint and survivor
12 annuity on that portion of the disability annuity to which he is
13 entitled under section 5702.
14 * * *
15 (c) Reduction on account of earned income.--Subsequent to
16 January 1, 1972, payments on account of disability shall be
17 reduced by that amount by which the earned income of the
18 annuitant, as reported in accordance with section 5908(b)
19 (relating to rights and duties of annuitants), for the preceding
20 calendar year together with the disability annuity payments
21 provided in this section other than subsection (b), for the
22 year, exceeds the product of:
23 (i) the last year's salary of the annuitant as a
24 [State] government employee; and
25 (ii) the ratio of the current monthly payment to the
26 monthly payment at the effective date of disability;
27 Provided, That the annuitant shall not receive less than his
28 member's annuity or the amount to which he may be entitled under
29 section 5702 whichever is greater.
30 * * *
20040H2520B3718 - 89 -
1 (e) Termination of [State] government service.--Upon
2 termination of disability annuity payments in excess of an
3 annuity calculated in accordance with section 5702, a disability
4 annuitant who does not return to [State] government service may
5 file an application with the board for an amount equal to the
6 excess, if any, of the sum of the regular and additional
7 accumulated deductions standing to his credit at the effective
8 date of disability over one-third of the total disability
9 annuity payments received. If the annuitant on the date of
10 termination of service was eligible for an annuity as provided
11 in section 5308(b) (relating to eligibility for annuities), he
12 may file an application with the board for an election of an
13 optional modification of his annuity.
14 * * *
15 § 5705. Member's options.
16 (a) General rule.--Any special vestee who has attained
17 superannuation age, any vestee having five or more eligibility
18 points, any member with Class G, Class H, Class I, Class J,
19 Class K, Class L, Class M or Class N service having five or more
20 eligibility points or any other eligible member upon termination
21 of [State] government service who has not withdrawn his total
22 accumulated deductions as provided in section 5701 (relating to
23 return of total accumulated deductions) may apply for and elect
24 to receive either a maximum single life annuity, as calculated
25 in accordance with the provisions of section 5702 (relating to
26 maximum single life annuity), or a reduced annuity certified by
27 the actuary to be actuarially equivalent to the maximum single
28 life annuity and in accordance with one of the following
29 options; except that no member shall elect an annuity payable to
30 one or more survivor annuitants other than his spouse or
20040H2520B3718 - 90 -
1 alternate payee of such a magnitude that the present value of
2 the annuity payable to him for life plus any lump sum payment he
3 may have elected to receive is less than 50% of the present
4 value of his maximum single life annuity:
5 (1) Option 1.--A life annuity to the member with a
6 guaranteed total payment equal to the present value of the
7 maximum single life annuity on the effective date of
8 retirement with the provision that, if, at his death, he has
9 received less than such present value, the unpaid balance
10 shall be payable to his beneficiary.
11 (2) Option 2.--A joint and survivor annuity payable
12 during the lifetime of the member with the full amount of
13 such annuity payable thereafter to his survivor annuitant, if
14 living at his death.
15 (3) Option 3.--A joint and fifty percent (50%) survivor
16 annuity payable during the lifetime of the member with one-
17 half of such annuity payable thereafter to his survivor
18 annuitant, if living at his death.
19 (4) Option 4.--Some other benefit which shall be
20 certified by the actuary to be actuarially equivalent to the
21 maximum single life annuity, subject to the following
22 restrictions:
23 (i) any annuity shall be payable without reduction
24 during the lifetime of the member;
25 (ii) the sum of all annuities payable to the
26 designated survivor annuitants shall not be greater than
27 one and one-half times the annuity payable to the member;
28 and
29 (iii) a portion of the benefit may be payable as a
30 lump sum, except that such lump sum payment shall not
20040H2520B3718 - 91 -
1 exceed an amount equal to the total accumulated
2 deductions standing to the credit of the member. The
3 balance of the present value of the maximum single life
4 annuity adjusted in accordance with section 5702(b) shall
5 be paid in the form of an annuity with a guaranteed total
6 payment, a single life annuity, or a joint and survivor
7 annuity or any combination thereof but subject to the
8 restrictions of subparagraphs (i) and (ii) under this
9 option.
10 * * *
11 § 5706. Termination of annuities.
12 (a) General rule.--If the annuitant returns to [State]
13 government service or enters or has entered school service and
14 elects multiple service membership, any annuity payable to him
15 under this part shall cease effective upon the date of his
16 return to [State] government service or entering school service
17 and in the case of an annuity other than a disability annuity
18 the present value of such annuity, adjusted for full coverage in
19 the case of a joint coverage member who makes the appropriate
20 back contributions for full coverage, shall be frozen as of the
21 date such annuity ceases. An annuitant who is credited with an
22 additional 10% of Class A and Class C service as provided in
23 section 5302(c) (relating to credited [State] government
24 service) and who returns to [State] government service shall
25 forfeit such credited service and shall have his frozen present
26 value adjusted as if his 10% retirement incentive had not been
27 applied to his account. In the event that the cost-of-living
28 increase enacted December 18, 1979 occurred during the period of
29 such [State] government or school employment, the frozen present
30 value shall be increased, on or after the member attains
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1 superannuation age, by the percent applicable had he not
2 returned to service. This subsection shall not apply in the case
3 of any annuitant who may render services to the Commonwealth or
4 a local government in the capacity of an independent contractor
5 or as a member of an independent board or commission or as a
6 member of a departmental administrative or advisory board or
7 commission when such members of independent or departmental
8 boards or commissions are compensated on a per diem basis for
9 not more than 150 days per calendar year or as a member of an
10 independent board or commission requiring appointment by the
11 Governor, with advice and consent of the Senate, where the
12 annual salary payable to the member does not exceed $35,000 and
13 where the member has been an annuitant for at least six months
14 immediately preceding the appointment. Such service shall not be
15 subject to member contributions or be eligible for qualification
16 as creditable State service.
17 (a.1) Return to [State] government service during
18 emergency.--When, in the judgment of the employer, an emergency
19 creates an increase in the work load such that there is serious
20 impairment of service to the public, an annuitant may be
21 returned to [State] government service for a period not to
22 exceed 95 days in any calendar year without loss of his annuity.
23 In computing the number of days an annuitant has returned to
24 [State] government service, any amount of time less than one-
25 half of a day shall be counted as one-half of a day. For
26 agencies, boards and commissions under the Governor's
27 jurisdiction, the approval of the Governor that an emergency
28 exists shall be required before an annuitant may be returned to
29 [State] government service.
30 (a.2) Return of benefits.--In the event an annuitant whose
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1 annuity ceases pursuant to this section receives any annuity
2 payment, including a lump sum payment pursuant to section 5705
3 (relating to member's options) on or after the date of his
4 return to [State] government service or entering school service,
5 the annuitant shall return to the board the amount so received
6 plus statutory interest. The amount payable shall be certified
7 in each case by the board in accordance with methods approved by
8 the actuary and shall be paid in a lump sum within 30 days or in
9 the case of an active member or school employee who is an active
10 member of the Public School Employees' Retirement System may be
11 amortized with statutory interest through salary deductions in
12 amounts agreed upon by the member and the board. The salary
13 deduction amortization plans agreed to by the member and the
14 board may include a deferral of payment amounts and statutory
15 interest until the termination of school service or [State]
16 government service as the board in its sole discretion decides
17 to allow. The board may limit salary deduction amortization
18 plans to such terms as the board in its sole discretion
19 determines. In the case of a school employee who is an active
20 member of the Public School Employees' Retirement System, the
21 agreed upon salary deductions shall be remitted to the Public
22 School Employees' Retirement Board, which shall certify and
23 transfer to the board the amounts paid.
24 (b) Subsequent discontinuance of service.--Upon subsequent
25 discontinuance of service, such member other than a former
26 annuitant who had the effect of his frozen present value
27 eliminated in accordance with subsection (c) or a former
28 disability annuitant shall be entitled to an annuity which is
29 actuarially equivalent to the sum of the present value as
30 determined under subsection (a) and the present value of a
20040H2520B3718 - 94 -
1 maximum single life annuity based on years of service credited
2 subsequent to reentry in the system and his final average salary
3 computed by reference to his compensation during his entire
4 period of [State] government and school service.
5 (c) Elimination of the effect of frozen present value.--
6 (1) An annuitant who returns to [State] government
7 service and earns three eligibility points by performing
8 credited [State] government service following the most recent
9 period of receipt of an annuity under this part, or an
10 annuitant who enters school service and:
11 (i) is a multiple service member; or
12 (ii) who elects multiple service membership, and
13 earns three eligibility points by performing credited [State]
14 government service or credited school service following the
15 most recent period of receipt of an annuity under this part,
16 and who had the present value of his annuity frozen in
17 accordance with subsection (a), shall qualify to have the
18 effect of the frozen present value resulting from all
19 previous periods of retirement eliminated, provided that all
20 payments under Option 4 and annuity payments payable during
21 previous periods of retirement plus interest as set forth in
22 paragraph (3) shall be returned to the fund from which they
23 were paid in the form of an actuarial adjustment to his
24 subsequent benefits or in such form as the board may
25 otherwise direct.
26 (2) Upon subsequent discontinuance of service and the
27 filing of an application for an annuity, a former annuitant
28 who qualifies to have the effect of a frozen present value
29 eliminated under this subsection shall be entitled to receive
30 the higher of either:
20040H2520B3718 - 95 -
1 (i) an annuity (prior to optional modification)
2 calculated as if the freezing of the former annuitant's
3 account pursuant to subsection (a) had not occurred,
4 adjusted by crediting Class A [State] government service
5 as Class AA service as provided for in section 5306(a.1)
6 (relating to classes of service) and further adjusted
7 according to paragraph (3), provided that a former
8 annuitant of the system or a former annuitant of the
9 Public School Employees' Retirement System who retired
10 under a provision of law granting additional service
11 credit if termination of [State] government or school
12 service or retirement occurred during a specific period
13 of time shall not be permitted to retain the additional
14 service credit under the prior law when the annuity is
15 computed for his most recent retirement; or
16 (ii) an annuity (prior to optional modification)
17 calculated as if the former annuitant did not qualify to
18 have the effect of the frozen present value eliminated,
19 unless the former annuitant notifies the board in writing by
20 the later of the date the application for annuity is filed or
21 the effective date of retirement that the former annuitant
22 wishes to receive the lower annuity.
23 (3) In addition to any other adjustment to the present
24 value of the maximum single life annuity that a member may be
25 entitled to receive that occurs as a result of any other
26 provision of law, the present value of the maximum single
27 life annuity shall be reduced by all amounts paid or payable
28 to him during all previous periods of retirement plus
29 interest on these amounts until the date of subsequent
30 retirement. The interest for each year shall be calculated
20040H2520B3718 - 96 -
1 based upon the annual interest rate adopted for that fiscal
2 year by the board for the calculation of the normal
3 contribution rate pursuant to section 5508(b) (relating to
4 actuarial cost method).
5 § 5707. Death benefits.
6 * * *
7 (c) Disability annuitants eligible for withdrawal annuity.--
8 In the event of the death of a disability annuitant who has
9 elected to receive a maximum disability annuity before he has
10 received in annuity payments an amount equal to the present
11 value, on the effective date of disability, of the benefits to
12 which he would have been entitled under subsection (a) had he
13 died while in [State] government service, the balance of such
14 amount shall be paid to his designated beneficiary.
15 * * *
16 § 5708.1. Additional supplemental annuities.
17 (a) Benefits.--Commencing with the first monthly annuity
18 payment after July 1, 1984, any eligible benefit recipient shall
19 be entitled to receive an additional monthly supplemental
20 annuity from the [State] Government Employees' Retirement
21 System.
22 * * *
23 (f) Funding.--The actuary shall annually certify the amount
24 of appropriations for the next fiscal year needed to fund, over
25 a period of ten years from July 1, 2002, the additional monthly
26 supplemental annuity provided for in this section. The [board]
27 State Employees' Retirement Board shall submit the actuary's
28 certification to the Secretary of the Budget on or before
29 November 1 of each year. If, in any year after 1984, the amount
30 certified is disapproved under section 610 of the act of April
20040H2520B3718 - 97 -
1 9, 1929 (P.L.177, No.175), known as The Administrative Code of
2 1929, as insufficient to meet the funding requirements of this
3 subsection or is not appropriated on or before July 1, the
4 additional supplemental annuity provided for in this section
5 shall be suspended until such time as an amount certified and
6 approved as sufficient is appropriated.
7 * * *
8 § 5708.2. Further additional supplemental annuities.
9 * * *
10 (f) Funding.--The actuary shall annually estimate the amount
11 of Commonwealth appropriations for the next fiscal year needed
12 to fund, over a period of ten years from July 1, 2002, the
13 additional monthly supplemental annuity provided for in this
14 section. The [board] State Employees' Retirement Board shall
15 submit the actuary's estimation to the Secretary of the Budget
16 on or before November 1 of each year. If, in any year after
17 1988, the amount estimated is disapproved under section 610 of
18 the act of April 9, 1929 (P.L.177, No.175), known as The
19 Administrative Code of 1929, as insufficient to meet the funding
20 requirements of this subsection or is not appropriated on or
21 before July 1, the additional supplemental annuity provided for
22 in this section shall be suspended until such time as an amount
23 certified and approved as sufficient is appropriated.
24 * * *
25 § 5708.3. Supplemental annuities commencing 1994.
26 * * *
27 (g) Definitions.--As used in this section, the following
28 words and phrases shall have the meanings given to them in this
29 subsection:
30 "Eligible benefit recipient." A person who is receiving a
20040H2520B3718 - 98 -
1 superannuation, withdrawal or disability annuity and who
2 commenced receipt of that annuity on or prior to June 30, 1992,
3 but the supplemental annuities shall not be payable to an
4 annuitant receiving a withdrawal annuity prior to the first day
5 of July coincident with or following the annuitant's attainment
6 of superannuation age. Notwithstanding the preceding, the term
7 "eligible benefit recipient" shall not include those annuitants
8 who were and currently are credited with an additional 10% of
9 their Class A or Class C service under section 5302(c) (relating
10 to credited [State] government service).
11 "Years on retirement." The number of full years as of July
12 1, 1989, which have elapsed since the eligible benefit recipient
13 most recently commenced the receipt of an annuity and during
14 which the eligible benefit recipient received an annuity.
15 § 5901. The State Employees' Retirement Board.
16 (a) Status and membership.--The [board] State Employees'
17 Retirement Board shall be an independent administrative board
18 and consist of 11 members: the State Treasurer, ex officio, two
19 Senators, two members of the House of Representatives and six
20 members appointed by the Governor, one of whom shall be an
21 annuitant of the system, for terms of four years, subject to
22 confirmation by the Senate. At least five board members shall be
23 active members of the system, and at least two shall have ten or
24 more years of credited State service. The chairman of the board
25 shall be designated by the Governor from among the members of
26 the board. Each member of the board who is a member of the
27 General Assembly may appoint a duly authorized designee to act
28 in his stead.
29 * * *
30 Section 15. Title 71 is amended by adding a section to read:
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1 § 5901.1. Local Government Police Employees' Retirement Board.
2 (a) Status and membership.--The Local Government Police
3 Employees' Retirement Board shall be an independent
4 administrative board and consist of the following members:
5 (1) Three local government officials or employees.
6 (2) Three active or retired local government police
7 employees.
8 The board shall elect its officers every year at the first board
9 meeting of the year, and the officers may succeed themselves.
10 Each member of the board may formally designate one duly
11 authorized designee to act in the member's stead.
12 (b) Local government officer or employee members.--
13 (1) With the advice and consent of a majority of the
14 Senate under section 207.1 of the act of April 9, 1929
15 (P.L.177, No.175), known as The Administrative Code of 1929,
16 the Governor shall appoint three members who are local
17 government officers or employees, one nominated by the
18 Pennsylvania League of Cities and Municipalities, one
19 nominated by the Pennsylvania State Association of Boroughs
20 and one nominated by the Pennsylvania State Association of
21 Township Supervisors.
22 (2) The members appointed by the Governor under this
23 subsection shall serve terms of three years each and until
24 their successors are appointed and qualified, except those
25 members initially appointed, one of whom shall serve for one
26 year, one of whom shall serve for two years and one of whom
27 shall serve for three years.
28 (c) Local government police employee members.--
29 (1) With the advice and consent of a majority of the
30 Senate under section 207.1 of The Administrative Code of
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1 1929, the Governor shall appoint three members who are active
2 or retired local government police employees, one nominated
3 by the Pennsylvania Chiefs of Police Association and two
4 nominated by the Pennsylvania Fraternal Order of Police.
5 (2) The members appointed by the Governor under this
6 subsection shall serve terms of three years each and until
7 their successors are appointed and qualified, except those
8 members initially appointed, one of whom shall serve for one
9 year, one of whom shall serve for two years and one of whom
10 shall serve for three years.
11 (d) Vacancies.--Vacancies in office shall be filled by the
12 appointing authority for the balance of the unexpired term.
13 (e) Oath of office.--Each member of the board and each
14 designee shall take an oath of office that he will, so far as it
15 devolves upon him, diligently and honestly administer the
16 affairs of the board and that he will not knowingly violate or
17 willfully permit to be violated any of the provisions of law
18 applicable to this part. The oath shall be subscribed by the
19 individual taking it and certified by the officer before whom it
20 is taken and shall be immediately filed in the Office of the
21 Secretary of the Commonwealth.
22 (f) Compensation and expenses.--The members of the board or
23 their designees who are active members of the Government
24 Employees' Retirement System shall serve without compensation
25 but shall not suffer loss of salary or wages through serving on
26 the board. The members of the board or their designees who are
27 not active members of the Government Employees' Retirement
28 System shall be entitled to receive $100 a day when attending
29 meetings, and all board members or their designees shall be
30 reimbursed for any necessary expenses. When the duties of the
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1 board as mandated are not executed, however, no compensation or
2 reimbursement for expenses of board members or their designees
3 shall be paid or payable during the period in which such duties
4 are not executed.
5 (g) Corporate power and legal advisor.--For purposes of this
6 part, the board shall possess the power and privileges of a
7 corporation. The Attorney General of the Commonwealth shall be
8 the legal advisor of the board.
9 Section 16. Sections 5902, 5903, 5904, 5905, 5905.1(b),
10 5906, 5907(a), (d), (e), (f), (g), (h), (i) and (j), 5908(a),
11 (b) and (c), 5931 and 5932 of Title 71 are amended to read:
12 § 5902. Administrative duties of the [board] boards.
13 (a) Employees.--
14 (1) Effective 30 days after the effective date of this
15 paragraph, the positions of secretary, assistant secretary
16 and investment professional shall be placed under the
17 unclassified service provisions of the act of August 5, 1941
18 (P.L.752, No.286), known as the Civil Service Act, as those
19 positions are vacated. All other positions of the [board]
20 boards shall be placed in either the classified or
21 unclassified service according to the definition of the terms
22 under the Civil Service Act.
23 (2) Notwithstanding any other provisions of law, the
24 compensation of investment professionals shall be established
25 by the [board] boards. The compensation of all other officers
26 and employees of the [board] boards who are not covered by a
27 collective bargaining agreement shall be established by the
28 [board] boards consistent with the standards of compensation
29 established by the Executive Board of the Commonwealth.
30 (a.1) Secretary.--The secretary shall act as chief
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1 administrative officer for the [board] boards. In addition to
2 other powers and duties conferred upon and delegated to the
3 secretary by the [board] boards, the secretary shall:
4 (1) Serve as the administrative agent of the [board]
5 boards.
6 (2) Serve as liaison between the [board] boards and
7 applicable legislative committees, the Treasury Department,
8 the Department of the Auditor General, and between the
9 [board] boards and the investment counsel and the mortgage
10 supervisor in arranging for investments to secure maximum
11 returns to the fund.
12 (3) Review and analyze proposed legislation and
13 legislative developments affecting the system and present
14 findings to the [board] boards, legislative committees, and
15 other interested groups or individuals.
16 (4) Direct the maintenance of files and records and
17 preparation of periodic reports required for actuarial
18 evaluation studies.
19 (5) Receive inquiries and requests for information
20 concerning the system from the press, Commonwealth officials,
21 local government officials, State employees, local government
22 police employees, the general public, research organizations,
23 and officials and organizations from other states, and
24 provide information as authorized by the [board] boards.
25 (6) Supervise a staff of administrative, technical, and
26 clerical employees engaged in record-keeping and clerical
27 processing activities in maintaining files of members,
28 accounting for contributions, processing payments to
29 annuitants, preparing required reports, and retirement
30 counseling.
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1 (b) Professional personnel.--The [board] boards shall
2 contract for the services of a chief medical examiner, an
3 actuary, investment advisors and counselors, and such other
4 professional personnel as [it deems] they deem advisable. The
5 [board] boards may, with the approval of the Attorney General,
6 contract for legal services.
7 (c) Expenses.--The [board] boards shall, through the
8 Governor, submit to the General Assembly annually a budget
9 covering the administrative expenses of this part. Such expenses
10 as approved by the General Assembly in an appropriation bill
11 shall be paid from investment earnings of the [fund] funds.
12 Concurrently with its administrative budget, the [board] boards
13 shall also submit to the General Assembly annually a list of
14 proposed expenditures which the [board intends] boards intend to
15 pay through the use of directed commissions, together with a
16 list of the actual expenditures from the past year actually paid
17 by the [board] boards through the use of directed commissions.
18 All such directed commission expenditures shall be made by the
19 [board] boards for the exclusive benefit of the system and its
20 members.
21 (d) Meetings.--[The] Each board shall hold at least six
22 regular meetings annually and such other meetings as it may deem
23 necessary.
24 (e) Records.--[The] Each board shall keep a record of all
25 its proceedings which shall be open to inspection by the public.
26 (f) Functions.--The [board] boards shall perform such other
27 functions as are required for the execution of the provisions of
28 this part.
29 (g) Performance of departmental duties.--In the event the
30 head of the department fails to comply with the procedures as
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1 mandated in section 5906 (relating to duties of heads of
2 departments), the appropriate board shall perform such duties
3 and bill the department for the cost of same.
4 (h) Regulations and procedures.--The [board] boards shall,
5 with the advice of the [Attorney] General Counsel and the
6 actuary, adopt and promulgate rules and regulations for the
7 uniform administration of the system. The actuary shall approve
8 in writing all computational procedures used in the calculation
9 of contributions and benefits, and the [board] boards shall by
10 resolution adopt such computational procedures, prior to their
11 application by the [board] boards. Such rules, regulations and
12 computational procedures as so adopted from time to time and as
13 in force and effect at any time, together with such tables as
14 are adopted pursuant to subsection (j) as necessary for the
15 calculation of annuities and other benefits, shall be as
16 effective as if fully set forth in this part. Any actuarial
17 assumption specified in or underlying any such rule, regulation
18 or computational procedure and utilized as a basis for
19 determining any benefit shall be applied in a uniform manner.
20 (i) Data.--The [board] boards shall keep in convenient form
21 such data as are stipulated by the actuary in order that an
22 annual actuarial valuation of the various accounts can be
23 completed within six months of the close of each calendar year.
24 (j) Actuarial investigation and valuation.--The [board]
25 boards shall have the actuary make an annual valuation of the
26 various accounts within six months of the close of each calendar
27 year. In the year 1975 and in every fifth year thereafter the
28 board shall have the actuary conduct an actuarial investigation
29 and evaluation of the system based on data including the
30 mortality, service, and compensation experience provided by the
20040H2520B3718 - 105 -
1 [board] boards annually during the preceding five years
2 concerning the members and beneficiaries. The boards shall have
3 a separate annual valuation and a separate five-year actuarial
4 investigation made for each fund by the actuary. The [board]
5 boards shall by resolution adopt such tables as are necessary
6 for the actuarial valuation of the [fund] funds and calculation
7 of contributions, annuities and other benefits based on the
8 reports and recommendations of the actuary. Within 30 days of
9 their adoption, the secretary of [the] each board shall cause
10 those tables which relate to the calculation of annuities and
11 other benefits to be published in the Pennsylvania Bulletin in
12 accordance with the provisions of 45 Pa.C.S. § 725(a) (relating
13 to additional contents of Pennsylvania Bulletin) and, unless
14 [the] a board specifies therein a later effective date, such
15 tables shall become effective on such publication. [The] A board
16 shall include a report on the significant facts, recommendations
17 and data developed in each five-year actuarial investigation and
18 evaluation of the system in the annual financial statement
19 published pursuant to the requirements of subsection (m) for the
20 fiscal year in which such investigation and evaluation were
21 concluded.
22 (k) Certification of employer contributions.--The [board]
23 boards shall, each year in addition to the itemized budget
24 required under section 5509 (relating to appropriations and
25 assessments by the Commonwealth), certify to the Commonwealth,
26 local governments and other employers, as a percentage of the
27 members' payroll, the employers' contributions as determined
28 pursuant to section 5508 (relating to actuarial cost method)
29 necessary for the funding of prospective annuities for active
30 members and the annuities of annuitants and certify the rates
20040H2520B3718 - 106 -
1 and amounts of the employers' normal contributions as determined
2 pursuant to section 5508(b), accrued liability contributions as
3 determined pursuant to section 5508(c), supplemental annuities
4 contribution rate as determined pursuant to section 5508(e) and
5 the experience adjustment factor as determined pursuant to
6 section 5508(f), which shall be paid to the [fund] funds and
7 credited to the appropriate accounts. These certifications shall
8 be regarded as final and not subject to modification by the
9 Budget Secretary or local governments.
10 (l) Member contributions.--The [board] boards shall cause
11 all pickup contributions made on behalf of a member to be
12 credited to the account of the member and credit to his account
13 any other payment made by such member, including, but not
14 limited to, amounts collected by the Public School Employees'
15 Retirement System for the reinstatement of previous State
16 service or creditable nonstate service and amounts paid to
17 return benefits paid after the date of return to State service
18 or entering school service representing lump sum payments made
19 pursuant to section 5705(a)(4)(iii) (relating to member's
20 options) and member's annuity payments, but not including other
21 benefits returned pursuant to section 5706(a.2) (relating to
22 termination of annuities), and shall pay all such amounts into
23 the [fund] funds.
24 (m) Annual financial statement.--The [board] boards shall
25 prepare and have published, on or before July 1 of each year, a
26 financial statement as of the calendar year ending December 31
27 of the previous year showing the condition of the [fund] funds
28 and the various accounts, including, but not limited to, the
29 board's accrual and expenditure of directed commissions, and
30 setting forth such other facts, recommendations, and data as may
20040H2520B3718 - 107 -
1 be of use in the advancement of knowledge concerning annuities
2 and other benefits provided by this part. The [board] boards
3 shall submit said financial statement to the Governor and shall
4 file copies with the head of each department for the use of the
5 [State] government employees and the public.
6 (n) Independent audit.--The [board] boards shall provide for
7 an annual audit of the system by an independent certified public
8 accountant, which audit shall include the [board's] boards'
9 accrual and expenditure of directed commissions.
10 § 5903. Duties of [the board] boards to advise and report to
11 heads of departments and members.
12 (a) Manual of regulations.--The [board] boards shall, with
13 the advice of the Attorney General and the actuary, prepare and
14 provide, within 90 days of the effective date of this part, or,
15 in the case of a local government, within 90 days of a local
16 government police employee becoming a member, a manual
17 incorporating rules and regulations consistent with the
18 provisions of this part to the heads of departments who shall
19 make the information contained therein available to the general
20 membership. The [board] boards shall thereafter advise the heads
21 of departments within 90 days of any changes in such rules and
22 regulations due to changes in the law or due to changes in
23 administrative policies. As soon as practicable after the
24 commissioner's announcement with respect thereto, [the] a board
25 shall also advise the heads of departments as to any cost-of-
26 living adjustment for the succeeding calendar year in the amount
27 of the limitation under IRC § 401(a)(17) and the dollar amounts
28 of the limitations under IRC § 415(b). As soon as practicable
29 after January 1 of each year, the [board] boards shall also
30 advise the heads of departments of the employees for whom,
20040H2520B3718 - 108 -
1 pursuant to section 5502.1 (relating to waiver of regular member
2 contributions and Social Security integration member
3 contributions), pickup contributions are not to be made.
4 (b) Member status statements and certifications.--The
5 [board] boards shall furnish annually to the head of each
6 department on or before April 1, a statement for each member
7 employed in such department showing the total accumulated
8 deductions standing to his credit as of December 31 of the
9 previous year and requesting the member to make any necessary
10 corrections or revisions regarding his designated beneficiary.
11 In addition, for each member employed in any department and for
12 whom the department has furnished the necessary information, the
13 [board] boards shall certify the number of years and fractional
14 part of a year of credited service attributable to each class of
15 service, the number of years and fractional part of a year
16 attributable to social security integration credits in each
17 class of service and, in the case of a member eligible to
18 receive an annuity, the benefit to which he is entitled upon the
19 attainment of superannuation age.
20 (c) Purchase of credit and full coverage membership
21 certifications.--Upon receipt of an application from an active
22 member or eligible school employee to purchase credit for
23 previous [State] government or creditable nonstate service, or
24 an election to become a full coverage member, the appropriate
25 board shall determine and certify to the member the amount
26 required to be paid by the member. When necessary, the
27 appropriate board shall certify to the previous employer the
28 amount due in accordance with sections 5504 (relating to member
29 contributions for the purchase of credit for previous [State]
30 government service or to become a full coverage member) and 5505
20040H2520B3718 - 109 -
1 (relating to contributions for the purchase of credit for
2 creditable nonstate service).
3 (d) Transfer from joint coverage membership
4 certifications.--Upon receipt of an application from a joint
5 coverage member who elects to become a full coverage member, the
6 appropriate board shall certify to the member the effective date
7 of such transfer and the prospective rate for regular and
8 additional member contributions.
9 (e) Former county employees.--Upon receipt of an election by
10 a county employee transferred to [State] government employment
11 pursuant to 42 Pa.C.S. § 1905 (relating to county-level court
12 administrators) to convert county service to [State] government
13 service, the appropriate board shall certify to the member the
14 amount of service so converted and the class at which such
15 service is credited.
16 (f) Former school employees.--Upon receipt of an election by
17 a former employee of the Department of Education transferred to
18 the Department of Corrections pursuant to section 908-B of the
19 act of April 9, 1929 (P.L.177, No.175), known as The
20 Administrative Code of 1929, to convert school service to
21 [State] government service, the appropriate board shall certify
22 to the member the amount of service so converted and the class
23 at which such service is credited.
24 § 5904. Duties of [the board] boards to report to the Public
25 School Employees' Retirement Board.
26 (a) Multiple service membership of [State] government
27 employees.--Upon receipt of an application for membership in the
28 system of a [State] government employee who is a former public
29 school employee and who has elected multiple service membership,
30 the appropriate board shall advise the Public School Employees'
20040H2520B3718 - 110 -
1 Retirement Board accordingly.
2 (b) Multiple service membership of school employees.--Upon
3 receipt of notification from the Public School Employees'
4 Retirement Board that a former [State] government employee has
5 become an active member in the Public School Employees'
6 Retirement System and has elected to receive credit for multiple
7 service, the appropriate board shall certify to the Public
8 School Employees' Retirement Board and concurrently to the
9 member:
10 (1) the total credited service in the system and the
11 number of years and fractional part of a year of service
12 credited in each class of service;
13 (2) the annual compensation received each calendar year
14 by the member for credited State service;
15 (3) the social security integration credited service to
16 which the member is entitled and the average noncovered
17 salary upon which the single life annuity attributable to
18 such service will be computed; and
19 (4) the amount of the deductions and the period over
20 which they are to be made if the member has elected payroll
21 deductions pursuant to section 5504 (relating to member
22 contributions for the purchase of credit for previous [State]
23 government service or to become a full coverage member) or
24 5505 (relating to contributions for the purchase of credit
25 for creditable nonstate service).
26 (c) Applications for benefits for school employees.--Upon
27 receipt of notification and the required data from the Public
28 School Employees' Retirement Board that a former [State]
29 government employee who elected multiple service has applied for
30 a public school employees' retirement benefit or, in the event
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1 of his death, his legally constituted representative has applied
2 for such benefit, the appropriate board shall:
3 (1) certify to the Public School Employees' Retirement
4 Board;
5 (i) the salary history as a member of the [State]
6 Government Employees' Retirement System and the final
7 average salary as calculated on the basis of the
8 compensation received as a [State] government and school
9 employee; and
10 (ii) the annuity or benefit to which the member or
11 his beneficiary is entitled as modified according to the
12 option selected; and
13 (2) transfer to the Public School Employees' Retirement
14 Fund the total accumulated deductions standing to such
15 member's credit and the actuarial reserve required on account
16 of years of credited service in the [State] government
17 system, final average salary determined on the basis of his
18 compensation in both systems and the average noncovered
19 salary to be charged to the State accumulation account, the
20 State Police benefit account or the enforcement officers'
21 benefit account, as each case may require.
22 (d) Election to convert school service to State service.--
23 Upon receipt of an election by a former employee of the
24 Department of Education to convert school service to State
25 service pursuant to section 5303.2 (relating to election to
26 convert school service to State service), the board shall
27 certify the information necessary for the Public School
28 Employees' Retirement System to transfer the funds and credit
29 required to the board.
30 § 5905. Duties of [the board] boards regarding applications and
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1 elections of members.
2 (a) Statement to new members.--As soon as practicable after
3 each member shall have become an active member in the system,
4 the appropriate board shall issue to the member a statement
5 certifying his class of service, his member contribution rate,
6 and the aggregate length of total previous [State] government
7 service and creditable nonstate service for which he may receive
8 credit.
9 (b) School employees electing multiple service status.--Upon
10 receipt of notification from the Public School Employees'
11 Retirement Board that a former [State] government employee has
12 become an active member in the Public School Employees'
13 Retirement System and has elected to become a member with
14 multiple service status the appropriate board shall:
15 (1) in case of a member receiving an annuity from the
16 system:
17 (i) discontinue payments, transfer the present value
18 of the member's annuity at the time of entering school
19 service, plus the amount withdrawn in a lump sum payment,
20 on or after the date of entering school service, pursuant
21 to section 5705 (relating to member's options), with
22 statutory interest to date of transfer, minus the amount
23 to be returned to the appropriate board on account of
24 return to service, that the appropriate board has
25 determined is to be credited in the members' savings
26 account, from the annuity reserve account to the members'
27 savings account and resume crediting of statutory
28 interest on the amount restored to his credit;
29 (ii) transfer the balance of the present value of
30 the total annuity, minus the amount to be returned to the
20040H2520B3718 - 113 -
1 appropriate board on account of return to service that
2 the appropriate board has determined is to be credited in
3 the State accumulation account, from the annuity reserve
4 account to the State accumulation account; and
5 (iii) certify to the member the amount of lump sum
6 and annuity payments with statutory interest the member
7 is to return to the appropriate board and, of those
8 amounts, which amount shall be credited to the members'
9 savings account and credited with statutory interest as
10 such payments are returned and which amount shall be
11 credited to the State accumulation account; or
12 (2) in case of a member who is not receiving an annuity
13 and has not withdrawn his total accumulated deductions,
14 continue or resume the crediting of statutory interest on his
15 total accumulated deductions during the period his total
16 accumulated deductions remain in the fund; or
17 (3) in case of a former [State] government employee who
18 is not receiving an annuity from the system and his total
19 accumulated deductions were withdrawn, certify to the former
20 [State] government employee the accumulated deductions as
21 they would have been at the time of his separation had he
22 been a full coverage member together with statutory interest
23 for all periods of subsequent [State] government and school
24 service to the date of repayment. Such amount shall be
25 restored by him and shall be credited with statutory interest
26 as such payments are restored.
27 (c) Disability annuities.--In every case where the
28 appropriate board has received an application duly executed by
29 the member or by a person legally authorized to act in his
30 behalf for a disability annuity based upon the member's physical
20040H2520B3718 - 114 -
1 or mental incapacity for the performance of the job for which he
2 is employed, with or without a supplement for a service-
3 connected disability, taking into account relevant decisions by
4 The Pennsylvania Workmen's Compensation Board, the board shall:
5 (1) through the medical examiner, have the application
6 and any supporting medical records and other documentation
7 submitted with the application reviewed and on the basis of
8 said review, and the subsequent recommendation by the medical
9 examiner regarding the applicant's medical qualification for
10 a disability annuity along with such other recommendations
11 which he may make with respect to the permanency of
12 disability or the need for subsequent reviews, make a finding
13 of disability and whether or not the disability is service
14 connected or nondisability and in the case of disability
15 establish an effective date of disability and the terms and
16 conditions regarding subsequent reviews;
17 (2) upon the recommendation of the medical examiner on
18 the basis of a review of subsequent medical reports submitted
19 with an application for continuance of disability, make a
20 finding of continued disability and whether or not the
21 disability continues to be service connected, or a finding of
22 nondisability; and in the case of a finding that the
23 disability is no longer service connected, discontinue any
24 supplemental payments on account of such service connected
25 disability as of the date of the finding; and in the case of
26 a finding of nondisability establish the date of termination
27 of disability and at that time discontinue any annuity
28 payments in excess of an annuity calculated in accordance
29 with section 5702 (relating to maximum single life annuity);
30 and
20040H2520B3718 - 115 -
1 (3) upon receipt of a written statement from a
2 disability annuitant of his earned income of the previous
3 quarter, adjust the payments of the disability annuity for
4 the following quarter in accordance with the provisions of
5 section 5704(c) (relating to disability annuities).
6 (c.1) Termination of service.--In the case of any member
7 terminating [State] government service who is entitled to an
8 annuity and who is not then a disability annuitant, the
9 appropriate board shall advise such member in writing of any
10 benefits to which he may be entitled under the provisions of
11 this part and shall have the member prepare, on or before the
12 date of termination of [State] government service, one of the
13 following three forms, a copy of which shall be given to the
14 member and the original of which shall be filed with the
15 appropriate board:
16 (1) an application for the return of total accumulated
17 deductions;
18 (2) an election to vest his retirement rights and, if he
19 is a joint coverage member and so desires, elect to become a
20 full coverage member and agree to pay within 30 days of the
21 date of termination of service the lump sum required; or
22 (3) an application for an immediate annuity and, if he
23 desires:
24 (i) if he is a State employee, an election to
25 convert his medical, major medical and hospitalization
26 insurance coverage to the plan for State annuitants; and
27 (ii) if he is a joint coverage member, an election
28 to become a full coverage member and an agreement to pay
29 within 30 days of date of termination of service the lump
30 sum required.
20040H2520B3718 - 116 -
1 (e) Certification to vestees and special vestees terminating
2 service.--The appropriate board shall certify to a vestee or to
3 a special vestee within one year of termination of [State]
4 government service of such member:
5 (1) the total accumulated deductions standing to his
6 credit at the date of termination of service;
7 (2) the number of years and fractional part of a year of
8 credit in each class of service; and
9 (3) the maximum single life annuity to which the vestee
10 or special vestee shall become entitled upon the attainment
11 of superannuation age and the filing of an application for
12 such annuity.
13 (e.1) Notification to vestees and special vestees
14 approaching superannuation age.--The appropriate board shall
15 notify each vestee and special vestee in writing 90 days prior
16 to his attainment of superannuation age that he shall apply for
17 his annuity within 90 days of attainment of superannuation age;
18 that, if he does so apply, his effective date of retirement will
19 be the date of attainment of superannuation age; that, if he
20 does not so apply but defers his application to a later date,
21 his effective date of retirement will be the date of filing such
22 application or the date specified on the application, whichever
23 is later; and that, if he does not file an application within
24 seven years after attaining superannuation age, he shall be
25 deemed to have elected to receive his total accumulated
26 deductions upon attainment of superannuation age.
27 (f) Initial annuity payment and certification.--The
28 appropriate board shall make the first monthly payment to a
29 member who is eligible for an annuity within 60 days of the
30 filing of his application for an annuity or, in the case of a
20040H2520B3718 - 117 -
1 vestee or special vestee who has deferred the filing of his
2 application to a date later than 90 days following attainment of
3 superannuation age, within 60 days of the effective date of
4 retirement, and receipt of the required data from the head of
5 the department and, if the member has Class G, Class H, Class I,
6 Class J, Class K, Class L, Class M or Class N service, any data
7 required from the county retirement system or pension plan to
8 which the member was a contributor before being a State
9 employee. Concurrently, the board shall certify to such member:
10 (1) the total accumulated deductions standing to his
11 credit showing separately the amount contributed by the
12 member, the pickup contribution and the interest credited to
13 the date of termination of service;
14 (2) the number of years and fractional part of a year
15 credited in each class of service;
16 (3) the final average salary on which his annuity is
17 based as well as any applicable reduction factors due to age
18 and/or election of an option; and
19 (4) the total annuity payable under the option elected
20 and the amount and effective date of any future reduction
21 under section 5703 (relating to reduction of annuities on
22 account of social security old-age insurance benefits).
23 (g) Death benefits.--Upon receipt of notification from the
24 head of a department of the death of an active member or a
25 member on leave without pay, the appropriate board shall advise
26 the designated beneficiary of the benefits to which he is
27 entitled, and shall make the first payment to the beneficiary
28 within 60 days of receipt of certification of death and other
29 necessary data. If no beneficiary designation is in effect at
30 the date of the member's death or no notice has been filed with
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1 the board to pay the amount of the benefits to the member's
2 estate, the board is authorized to pay the benefits to the
3 executor, administrator, surviving spouse or next of kin of the
4 deceased member, and payment pursuant hereto shall fully
5 discharge the fund from any further liability to make payment of
6 such benefits to any other person. If the surviving spouse or
7 next of kin of the deceased member cannot be found for the
8 purpose of paying the benefits for a period of seven years from
9 the date of death of the member, then the benefits shall be
10 escheated to the Commonwealth for the benefit of the fund.
11 (h) Medical insurance coverage.--Upon receipt of the
12 election by an eligible member to convert his medical, major
13 medical, and hospitalization insurance coverage to the plan for
14 State annuitants, the [board] State Employees' Retirement Board
15 shall notify the insurance carrier of such election and shall
16 deduct the appropriate annual charges in equal monthly
17 installments. Such deductions shall be transmitted to the
18 designated fiscal officer of the Commonwealth having
19 jurisdiction over the payment of such group charges on behalf of
20 the annuitant.
21 (i) Joint coverage annuitants.--The [board] State Employees'
22 Retirement Board shall notify in writing each joint coverage
23 annuitant who retired prior to July 1, 1962 that he may elect
24 any time prior to July 1, 1974 to receive his annuity without
25 reduction attributable to social security coverage upon payment
26 in a lump sum of the amount which shall be certified by the
27 board within 60 days of such election. Upon receipt of such
28 payment the board shall recompute the annuity payable to such
29 annuitant and the annuity and/or lump sum, if any, payable upon
30 his death to his beneficiary or survivor annuitant as though he
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1 had been a full coverage member on the effective date of
2 retirement. Such recomputed annuity shall be paid beginning with
3 the second monthly payment next following the month in which the
4 lump sum payment is received.
5 (j) [State] Government employees electing multiple service
6 status.--Upon receipt of notification from the Public School
7 Employees' Retirement Board that a member who has elected
8 multiple service membership has elected to restore school
9 service or purchase creditable nonschool service in the Public
10 School Employees' Retirement System or is obligated to return
11 benefits to the Public School Employees' Retirement Board on
12 account of electing multiple service membership has elected to
13 pay all or part of the amount due to the Public School
14 Employees' Retirement Board by salary deductions, the
15 appropriate board shall collect from the employee the amounts
16 certified by the Public School Employees' Retirement Board as
17 due and owing by the member and certify and transfer to the
18 Public School Employees' Retirement Board the amounts so
19 collected.
20 § 5905.1. Installment payments of accumulated deductions.
21 * * *
22 (b) Payment of first installment.--The payment of the first
23 installment shall be made in the amount and within seven days of
24 the date specified by the member, except as follows:
25 (1) Upon receipt of a member's application to withdraw
26 his total accumulated deductions as provided in section
27 5311(a) or 5701 and upon receipt of all required data from
28 the head of the department and, if the member has Class G,
29 Class H, Class I, Class J, Class K, Class L, Class M or Class
30 N service, any data required from the county retirement
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1 system or pension plan to which the member was a contributor
2 before being transferred to State employment, the appropriate
3 board shall not be required to pay the first installment
4 prior to 45 days after the filing of the application and the
5 receipt of the data or the date of termination of service,
6 whichever is later.
7 (2) In the case of an election as provided in section
8 5705(a)(4)(iii) by a member terminating service within 60
9 days prior to the end of a calendar year and upon receipt of
10 all required data from the head of the department and, if the
11 member has Class G, Class H, Class I, Class J, Class K, Class
12 L, Class M or Class N service, any data required from the
13 county retirement system or pension plan to which the member
14 was a contributor before being transferred to State
15 employment, the appropriate board shall not be required to
16 pay the first installment prior to 21 days after the later of
17 the filing of the application and the receipt of the data or
18 the date of termination of service, but, unless otherwise
19 directed by the member, the payment shall be made no later
20 than 45 days after the filing of the application and the
21 receipt of the data or the date of termination of service,
22 whichever is later.
23 (3) In the case of an election as provided in section
24 5705(a)(4)(iii) by a member who is not terminating service
25 within 60 days prior to the end of a calendar year and upon
26 receipt of all required data from the head of the department
27 and, if the member has Class G, Class H, Class I, Class J,
28 Class K, Class L, Class M or Class N service, any data
29 required from the county retirement system or pension plan to
30 which the member was a contributor before being transferred
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1 to State employment, the appropriate board shall not be
2 required to pay the first installment prior to 45 days after
3 the filing of the application and the receipt of the data or
4 the date of termination of service, whichever is later.
5 * * *
6 § 5906. Duties of heads of departments.
7 (a) Status of members.--The head of department shall, at the
8 end of each pay period, notify the appropriate board in a manner
9 prescribed by the board of salary changes effective during that
10 period for any members of the department, the date of all
11 removals from the payroll, and the type of leave of any members
12 of the department who have been removed from the payroll for any
13 time during that period, and:
14 (1) if the removal is due to leave without pay, he shall
15 furnish the board with the date of beginning leave and the
16 date of return to service, and the reason for leave; or
17 (2) if the removal is due to a transfer to another
18 department, he shall furnish such department and the board
19 with a complete [State] government service record, including
20 past [State] government service in other departments or
21 agencies, or creditable nonstate service; or
22 (3) if the removal is due to termination of [State]
23 government service, he shall furnish the board with a
24 complete [State] government service record, including service
25 in other departments or agencies, or creditable nonstate
26 service and;
27 (i) in the case of death of the member the head of
28 the department shall so notify the board;
29 (ii) in the case of a service connected disability
30 the head of department shall, to the best of his ability,
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1 investigate the circumstances surrounding the disablement
2 of the member and submit in writing to the board
3 information which shall include but not necessarily be
4 limited to the following: date, place and time of
5 disablement to the extent ascertainable; nature of duties
6 being performed at such time; and whether or not the
7 duties being performed were authorized and included among
8 the member's regular duties. In addition, the head of
9 department shall furnish in writing to the board all such
10 other information as may be related to the member's
11 disablement;
12 (iii) in the case of a member terminating from The
13 Pennsylvania State University who is a member of the
14 system with five or more but less than ten eligibility
15 points and who has terminated State service on June 30,
16 1997, because of the transfer of his job position or
17 duties to a controlled organization of the Penn State
18 Geisinger Health System or because of the elimination of
19 his job position or duties due to the transfer of other
20 job positions or duties to a controlled organization of
21 the Penn State Geisinger Health System, the head of the
22 department shall so certify to the board.
23 (b) Records and information.--At any time at the request of
24 the appropriate board and at termination of service of a member,
25 the head of department shall furnish service and compensation
26 records and such other information as the board may require and
27 shall maintain and preserve such records as the board may direct
28 for the expeditious discharge of its duties.
29 (c) Member contributions.--The head of department shall
30 cause the required pickup contributions for current service to
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1 be made and shall cause to be deducted any other required member
2 contributions, including, but not limited to, contributions owed
3 by an active member with multiple service membership for school
4 service and creditable nonschool service in the Public School
5 Employees' Retirement System and amounts certified by the Public
6 School Employees' Retirement Board as due and owing on account
7 of termination of annuities, from each payroll. The head of
8 department shall notify the appropriate board at times and in a
9 manner prescribed by the board of the compensation of any
10 noneligible member to whom the limitation under IRC § 401(a)(17)
11 either applies or is expected to apply and shall cause such
12 member's contributions deducted from payroll to cease at the
13 limitation under IRC § 401(a)(17) on the payroll date if and
14 when such limit shall be reached. The head of department shall
15 certify to the State Treasurer the amounts picked up and
16 deducted and shall send the total amount picked up and deducted
17 together with a duplicate of such voucher to the secretary of
18 the [board] appropriate board every quarter when the employer is
19 a local government and every pay period when the employer is not
20 a local government. The head of department shall pay pickup
21 contributions from the same source of funds which is used to pay
22 other compensation to the employee. On or before January 31,
23 1997, and on or before January 31 of each year thereafter, the
24 head of department shall, at the time when the income and
25 withholding information required by law is furnished to each
26 member, also furnish the amount of pickup contributions made on
27 his behalf and notify the appropriate board, if it has not been
28 previously notified, of any noneligible member whose
29 compensation in the preceding year exceeded the annual
30 compensation limit under IRC § 401(a)(17). If [the] a board
20040H2520B3718 - 124 -
1 shall determine that the member's savings account shall have
2 been credited with pickup contributions for a noneligible member
3 in the preceding year which are attributable to compensation in
4 excess of the limitation under IRC § 401(a)(17), or with total
5 member contributions for such member which would cause such
6 member's contributions or benefits to exceed any applicable
7 limitation under IRC § 401(a)(17) or 415(b), the board shall as
8 soon as practicable refund to the member from his individual
9 member account such amount, together with the statutory interest
10 thereon, as will cause the member's total member contributions
11 in the preceding year not to exceed the applicable limit. The
12 payment of any such refund to the member shall be charged to the
13 member's savings account.
14 (d) New employees subject to mandatory membership.--Upon the
15 assumption of duties of each new [State] government employee
16 whose membership in the system is mandatory, the head of
17 department shall cause an application for membership and a
18 nomination of beneficiary to be made by such employee and filed
19 with the appropriate board and shall make pickup contributions
20 from the effective date of [State] government employment.
21 (e) New employees subject to optional membership.--The head
22 of department shall, upon the employment or entering into office
23 of any [State] government employee whose membership in the
24 system is not mandatory, inform such employee of his opportunity
25 to become a member of the system. If such employee so elects,
26 the head of department shall cause an application for membership
27 and a nomination of beneficiary to be made by him and filed with
28 the board and shall cause proper contributions to be made from
29 the effective date of membership.
30 (e.1) Former county-level judicial employees transferred to
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1 [State] government employment.--In addition to the duties set
2 forth in subsections (d) and (e), the Court Administrator of
3 Pennsylvania, upon the transfer of county employees to [State]
4 government employment pursuant to 42 Pa.C.S. § 1905 (relating to
5 county-level court administrators), shall advise such
6 transferred county employees of their opportunity to elect to
7 convert county service to [State] government service in
8 accordance with section 5303.1 (relating to election to convert
9 county service to State service), and, if such employee so
10 elects, the Court Administrator of Pennsylvania shall cause an
11 election to be made and filed with the appropriate board within
12 90 days after the transfer to State employment.
13 (g) Former school employee contributors.--The head of
14 department shall, upon the employment of a former contributor to
15 the Public School Employees' Retirement System who is not an
16 annuitant of the Public School Employees' Retirement System,
17 advise such employee of his right to elect within 365 days of
18 entry into the system to become a multiple service member, and
19 in the case of any such employee who so elects and has withdrawn
20 his accumulated deductions, require him to reinstate his credit
21 in the Public School Employees' Retirement System. The head of
22 the department shall advise the appropriate board of such
23 election.
24 (h) Former school employee annuitants.--The head of
25 department shall, upon the employment of an annuitant of the
26 Public School Employees' Retirement System who applies for
27 membership in the system, advise such employee that he may elect
28 multiple service membership within 365 days of entry into the
29 system and if he so elects his public school employee's annuity
30 will be discontinued effective upon the date of his return to
20040H2520B3718 - 126 -
1 [State] government service and, upon termination of [State]
2 government service and application for an annuity, the annuity
3 will be adjusted in accordance with section 5706 (relating to
4 termination of annuities). The head of department shall advise
5 the appropriate board of such election.
6 (i) Annual statement to members.--Annually, upon receipt
7 from the appropriate board, the head of department shall furnish
8 to each member the statement specified in section 5903(b)
9 (relating to duties of [the board] boards to advise and report
10 to heads of departments and members).
11 (j) Termination of service.--The head of department shall,
12 in the case of any member terminating [State] government service
13 who is ineligible for an annuity before attainment of
14 superannuation age, advise such member in writing of any
15 benefits to which he may be entitled under the provisions of
16 this part and shall have the member prepare, on or before the
17 date of termination of [State] government service, an
18 application for the return of total accumulated deductions or,
19 on or before September 30, 1997, an application to be vested as
20 a special vestee, if eligible.
21 (k) Date of application for benefits.--Any application
22 properly executed and filed under subsection (j) with the
23 department and not filed with the appropriate board within 30
24 days shall be deemed to have been filed with the board on the
25 date filed with the department and in such case all required
26 data shall be furnished to the board immediately.
27 § 5907. Rights and duties of State employees and members.
28 (a) Information on new employees.--Upon his assumption of
29 duties each new [State] government employee shall furnish the
30 head of department with a complete record of his previous
20040H2520B3718 - 127 -
1 [State] government service, his school service or creditable
2 nonstate service, and proof of his date of birth and current
3 status in the system and in the Public School Employees'
4 Retirement System. Willful failure to provide the information
5 required by this subsection to the extent available upon
6 entrance into the system shall result in the forfeiture of the
7 right of the member to subsequently assert any right to benefits
8 based on any of the required information which he failed to
9 provide. In any case in which the appropriate board finds that a
10 member is receiving an annuity based on false information, the
11 total amount received predicated on such false information
12 together with statutory interest doubled and compounded shall be
13 deducted from the present value of any remaining benefits to
14 which the member is legally entitled.
15 * * *
16 (d) Credit for previous service or change in membership
17 status.--Any active member or eligible school employee who
18 desires to receive credit for his total previous [State]
19 government service or creditable nonstate service to which he is
20 entitled, or a joint coverage member who desires to become a
21 full coverage member, shall so notify the appropriate board and
22 upon written agreement by the member and the appropriate board
23 as to the manner of payment of the amount due, the member shall
24 receive credit for such service as of the date of such
25 agreement.
26 (e) Beneficiary for death benefits.--Every member shall
27 nominate a beneficiary by written designation filed with the
28 appropriate board as provided in section 5906(d) or (e)
29 (relating to duties of heads of departments) to receive the
30 death benefit payable under section 5707 (relating to death
20040H2520B3718 - 128 -
1 benefits) or the benefit payable under the provisions of Option
2 1 of section 5705(a)(1) (relating to member's options). Such
3 nomination may be changed at any time by the member by written
4 designation filed with the board. A member may also nominate a
5 contingent beneficiary or beneficiaries to receive the death
6 benefit provided under section 5707 or the benefit payable under
7 the provisions of Option 1 of section 5705(a)(1).
8 (f) Termination of service.--Each member who terminates
9 [State] government service and who is not then a disability
10 annuitant shall execute on or before the date of termination of
11 service the appropriate application, duly attested by the member
12 or his legally constituted representative, electing to:
13 (1) withdraw his total accumulated deductions; or
14 (2) vest his retirement rights; and if he is a joint
15 coverage member, and so desires, elect to become a full
16 coverage member and agree to pay within 30 days of the date
17 of termination of service the lump sum required; or
18 (3) receive an immediate annuity and may,
19 (i) if eligible, elect to convert his medical, major
20 medical, and hospitalization coverage to the plan for
21 State annuitants; and
22 (ii) if he is a joint coverage member, elect to
23 become a full coverage member and agree to pay within 30
24 days of date of termination of service the lump sum
25 required.
26 (g) Vesting of retirement rights.--If a member elects to
27 vest his retirement rights he shall nominate a beneficiary by
28 written designation filed with the appropriate board and he may
29 anytime thereafter, withdraw the total accumulated deductions
30 standing to his credit or apply for an annuity.
20040H2520B3718 - 129 -
1 (h) Vestees and special vestees attaining superannuation
2 age.--Upon attainment of superannuation age a vestee or special
3 vestee shall execute and file an application for an annuity. Any
4 such application filed within 90 days after attaining
5 superannuation age shall be effective as of the date of
6 attainment of superannuation age. Any application filed after
7 such period shall be effective as of the date it is filed with
8 the appropriate board, subject to the provisions of section
9 5905(f) (relating to duties of [the board] boards regarding
10 applications and elections of members). If a vestee or special
11 vestee does not file an application within seven years after
12 attaining superannuation age, he shall be deemed to have elected
13 to receive his total accumulated deductions upon attainment of
14 superannuation age.
15 (i) Failure to apply for annuity.--If a member is eligible
16 to receive an annuity and does not file a proper application
17 within 90 days of termination of service, his annuity will
18 become effective as of the date the application is filed with
19 the appropriate board or the date designated on the application
20 whichever is later.
21 (j) Nomination of beneficiary or survivor annuitant.--A
22 member who is eligible and elects to receive a reduced annuity
23 under Option 1, 2, 3, or 4, shall nominate a beneficiary or a
24 survivor annuitant, as the case may be, by written designation
25 filed with the appropriate board at the time of his retirement.
26 A member who has elected Option 1 may change his designated
27 beneficiary at any time. A member having designated a survivor
28 annuitant at the time of retirement shall not be permitted to
29 nominate a new survivor annuitant unless such survivor annuitant
30 predeceases him or unless the member is awarded a divorce or
20040H2520B3718 - 130 -
1 becomes married subsequent to the election of the option. In
2 such cases, the annuitant shall have the right to reelect an
3 option and to nominate a beneficiary or a new survivor annuitant
4 and to have his annuity recomputed to be actuarially equivalent
5 as of the date of recomputation to the annuity in effect
6 immediately prior to the recomputation. In no other case shall a
7 benefit plan be changed by an annuitant.
8 * * *
9 § 5908. Rights and duties of annuitants.
10 (a) Election by joint coverage annuitants.--Any annuitant
11 who is a joint coverage member who was receiving an annuity
12 prior to July 1, 1962, may elect to receive his annuity without
13 reduction on account of social security old-age insurance
14 benefits: Provided, That he shall file such election with the
15 [board] State Employees' Retirement Board prior to July 1, 1974
16 and shall make a lump sum payment within 60 days of receipt of
17 the certification of the amount due.
18 (b) Periodic earnings statements by disability annuitants.--
19 It shall be the duty of an annuitant receiving a disability
20 annuity prior to the attainment of superannuation age to furnish
21 a written statement within 30 days of the close of each calendar
22 year of all earned income during that year and information
23 showing whether or not he is able to engage in a gainful
24 occupation and such other information as may be required by the
25 appropriate board. On failure, neglect, or refusal to furnish
26 such information for the period of the preceding year, the board
27 may refuse to make further payments due to disability to such
28 annuitant until he has furnished such information to the
29 satisfaction of the board. Should such refusal continue for six
30 months, all of his rights to the disability annuity payments in
20040H2520B3718 - 131 -
1 excess of any annuity to which he is otherwise entitled shall be
2 forfeited from the date of his last written statement to the
3 board. Any moneys received in excess of those to which he was
4 entitled shall be deducted from the present value of the annuity
5 to which he is otherwise entitled.
6 (c) Medical examinations of disability annuitants.--Should
7 any disability annuitant refuse to submit to a medical
8 examination by a physician or physicians at the request of the
9 appropriate board, his payments due to disability shall be
10 discontinued until the withdrawal of such refusal. Should such
11 refusal continue for a period of six months, all of his rights
12 to the disability annuity payments in excess of any annuity to
13 which he is otherwise entitled shall be forfeited.
14 * * *
15 § 5931. Management of [fund] funds and accounts.
16 (a) Control and management of [fund.--The members of the
17 board shall be the trustees of the fund.] funds.--The members of
18 the Local Government Police Employees' Retirement Board shall be
19 the trustees of the Local Government Police Employees'
20 Retirement Fund and the members of the State Employees'
21 Retirement Board shall be the trustees of the State Employees'
22 Retirement Fund. Regardless of any other provision of law
23 governing the investments of funds under the control of an
24 administrative board of the State government, the trustees shall
25 have exclusive control and management of the said fund and full
26 power to invest the same in accordance with the provisions of
27 this section, subject, however, to the exercise of that degree
28 of judgment, skill and care under the circumstances then
29 prevailing which persons of prudence, discretion and
30 intelligence, who are familiar with such matters, exercise in
20040H2520B3718 - 132 -
1 the management of their own affairs not in regard to
2 speculation, but in regard to the permanent disposition of the
3 funds, considering the probable income to be derived therefrom
4 as well as the probable safety of their capital. The trustees
5 shall have the power to hold, purchase, sell, lend, assign,
6 transfer or dispose of any of the securities and investments in
7 which any of the moneys in the [fund] funds shall have been
8 invested as well as of the proceeds of said investments,
9 including any directed commissions which have accrued to the
10 benefit of the [fund] funds as a consequence of the investments,
11 and of any moneys belonging to said [fund] funds, subject in
12 every case to meeting the standard of prudence set forth in this
13 subsection.
14 (b) Crediting of interest.--The [board] boards, annually,
15 shall allow the required interest on the mean amount for the
16 preceding year to the credit of each of the accounts. The amount
17 so allowed shall be credited thereto by the [board] boards and
18 transferred from the interest reserve account.
19 (c) Custodian of [fund] funds.--The State Treasurer shall be
20 the custodian of the [fund] funds.
21 (d) Payments from [fund] funds.--All payments from the
22 [fund] funds shall be made by the State Treasurer in accordance
23 with requisitions signed by the secretary of the appropriate
24 board, or his designee, and ratified by resolution of the
25 appropriate board.
26 (e) Fiduciary status of [board] boards.--The members of the
27 board, employees of [the] a board and agents thereof shall stand
28 in a fiduciary relationship to the members of the system
29 regarding the investments and disbursements of any of the moneys
30 of the fund and shall not profit either directly or indirectly
20040H2520B3718 - 133 -
1 with respect thereto. [The] A board may, when possible and
2 consistent with its fiduciary duties imposed by this subsection
3 or other law, including its obligation to invest and manage the
4 fund for the exclusive benefit of the members of the system,
5 consider whether an investment in any project or business
6 enhances and promotes the general welfare of this Commonwealth
7 and its citizens, including, but not limited to, investments
8 that increase and enhance the employment of Commonwealth
9 residents, encourage the construction and retention of adequate
10 housing and stimulate further investment and economic activity
11 in this Commonwealth. The [board] boards shall, through the
12 Governor, submit to the General Assembly annually, at the same
13 time the [board submits its] boards submit their budget covering
14 administrative expenses, a report identifying the nature and
15 amount of all existing investments made pursuant to this
16 subsection.
17 (f) Name for transacting business.--By the name of ["The
18 State] the "Local Government Police Employees' Retirement
19 System" [or "The State Employes' Retirement System"], all of the
20 business of the system shall be transacted, its [fund] funds
21 invested, all requisitions for money drawn and payments made,
22 and all of its cash and securities and other property shall be
23 held, except that, any other law to the contrary
24 notwithstanding, the board may establish a nominee registration
25 procedure for the purpose of registering securities in order to
26 facilitate the purchase, sale or other disposition of securities
27 pursuant to the provisions of this law.
28 (g) Deposits in banks and trust companies.--For the purpose
29 of meeting disbursements for annuities and other payments in
30 excess of the receipts, there shall be kept available by the
20040H2520B3718 - 134 -
1 State Treasurer an amount, not exceeding 10% of the total amount
2 in [the] a fund, on deposit in any bank or banks in this
3 Commonwealth organized under the laws thereof or under the laws
4 of the United States or with any trust company or companies
5 incorporated by any law of this Commonwealth, provided any of
6 such banks or trust companies shall furnish adequate security
7 for said deposit, and provided that the sum so deposited in any
8 one bank or trust company shall not exceed 25% of the paid-up
9 capital and surplus of said bank or trust company.
10 (h) Venture capital, private placement and alternative
11 investments.--The board in its prudent discretion may make any
12 venture capital investment, private placement investment or
13 other alternative investment of any kind, structure or manner
14 which meets the standard of prudence set forth in subsection
15 (a).
16 (i) Vehicles for authorized investments.--[The] A board in
17 its prudent discretion may make any investments which meet the
18 standard of prudence set forth in subsection (a) by acquiring
19 any type of interest in a business organization existing under
20 the laws of any jurisdiction, provided that, in any such case,
21 the liability of the Local Government Police Employees'
22 Retirement Fund or the State Employees' Retirement Fund shall be
23 limited to the amount of its investment.
24 (j) Legislative declaration concerning certain authorized
25 investments.--The General Assembly finds and declares that
26 authorized investments of [the] a fund made by or on behalf of
27 the board under this section whereby [the] a board becomes a
28 joint owner or stockholder in any company, corporation,
29 association or other lawful business organization are outside
30 the scope of the original intent of and therefore do not violate
20040H2520B3718 - 135 -
1 the prohibition set forth in section 8 of Article VIII of the
2 Constitution of Pennsylvania.
3 § 5932. State Employees' Retirement Fund.
4 The [fund] State Employees' Retirement Fund shall consist of
5 all balances in the several separate accounts set apart to be
6 used under the direction of the [board] State Employees'
7 Retirement Board for the benefit of members of the system; and
8 the Treasury Department shall credit to the fund all moneys
9 received from the Department of Revenue arising from the
10 contributions required under the provisions of Chapter 55
11 (relating to contributions), and any income earned by the
12 investments or moneys of said fund. There shall be established
13 and maintained by the board the several ledger accounts
14 specified in sections 5933 (relating to members' savings
15 account), 5934 (relating to State accumulation account), 5935
16 (relating to annuity reserve account), 5936 (relating to State
17 Police benefit account), 5937 (relating to enforcement officers'
18 benefit account), 5938 (relating to supplemental annuity
19 account) and 5939 (relating to interest reserve account).
20 Section 17. Title 71 is amended by adding a section to read:
21 § 5932.1. Local Government Police Employees' Retirement Fund.
22 The Local Government Police Employees' Retirement Fund shall
23 be a pension trust fund comprising a fiscal and accounting
24 entity with a self-balancing set of accounts recording cash and
25 other financial resources, together with all related
26 liabilities, and residual equities or balances, and changes
27 therein segregated for the purpose of accounting for assets held
28 by and used under the direction of the Local Government Police
29 Employees' Retirement Board in a trustee capacity for the
30 members and beneficiaries of the system. The Treasury Department
20040H2520B3718 - 136 -
1 shall credit to the fund all moneys received from the Department
2 of Revenue arising from the contributions required under the
3 provisions of Chapter 55 (relating to contributions) and any
4 income earned by the investments or moneys of said fund. There
5 shall be established and maintained in the fund by the board the
6 several ledger accounts specified in sections 5933 (relating to
7 members' savings account), 5934(b) (relating to employers
8 accumulation accounts), 5935 (relating to annuity reserve
9 account), 5938 (relating to supplemental annuity account) and
10 5939 (relating to interest reserve account).
11 Section 18. Sections 5933(a), 5934, 5935(b), 5936(b),
12 5937(b), 5939, 5940, 5951, 5952, 5953, 5955 and 5955.1 of Title
13 71 are amended to read:
14 § 5933. Members' savings account.
15 (a) Credits to account.--The members' savings account shall
16 be the ledger account to which shall be credited the amounts of
17 the pickup contributions made by the Commonwealth or other
18 employer and contributions or lump sum payments made by active
19 members in accordance with the provisions of sections 5501
20 (relating to regular member contributions for current service),
21 5502 (relating to social security integration member
22 contributions), 5503 (relating to joint coverage member
23 contributions), 5504 (relating to member contributions for the
24 purchase of credit for previous [State] government service or to
25 become a full coverage member), 5505.1 (relating to additional
26 member contributions) and 5505 (relating to contributions for
27 the purchase of credit for creditable nonstate service) and
28 transferred from the members' savings account of the Public
29 School Employees' Retirement System in accordance with the
30 provisions of section 5303.2 (relating to election to convert
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1 school service to State service).
2 * * *
3 § 5934. [State accumulation account] Employers' accumulation
4 accounts.
5 (a) State accumulation account.--The State accumulation
6 account shall be the ledger account to which shall be credited
7 all contributions of the Commonwealth or other employers other
8 than local governments whose employees are members of the system
9 and made in accordance with the provisions of section 5507(a)
10 (relating to contributions by the Commonwealth and other
11 employers) except that the amounts received under the provisions
12 of the act of May 12, 1943 (P.L.259, No.120), and the amounts
13 received under the provisions of the Liquor Code, act of April
14 12, 1951 (P.L.90, No.21), shall be credited to the State Police
15 benefit account or the enforcement officers' benefit account as
16 the case may be. All amounts transferred to the fund by county
17 retirement systems or pension plans in accordance with the
18 provisions of section 5507(c) also shall be credited to the
19 State accumulation account. All amounts transferred to the fund
20 by the Public School Employees' Retirement System in accordance
21 with section 5303.2(e) (relating to election to convert school
22 service to State service), except amounts credited to the
23 members' savings account, and all amounts paid by the Department
24 of Corrections in accordance with section 5303.2(f) also shall
25 be credited to the State accumulation account. The State
26 accumulation account shall be credited with valuation interest.
27 The reserves necessary for the payment of annuities and death
28 benefits as approved by the [board] State Employees' Retirement
29 Board and as provided in Chapter 57 (relating to benefits) shall
30 be transferred from the State accumulation account to the
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1 annuity reserve account provided for in section 5935 (relating
2 to annuity reserve account), except that the reserves necessary
3 on account of a member who is an officer of the Pennsylvania
4 State Police or an enforcement officer shall be transferred from
5 the State accumulation account to the State Police benefit
6 account provided for in section 5936 (relating to State Police
7 benefit account) or to the enforcement officers' benefit account
8 as provided for in section 5937 (relating to enforcement
9 officers' benefit account) as the case may be.
10 (b) Local government accumulation account.--The local
11 government accumulation account shall be the ledger account to
12 which shall be credited all contributions of local government
13 employers whose police employees are members of the system and
14 made in accordance with the provisions of section 5507(a). The
15 local government accumulation account shall be credited with
16 valuation interest. The reserves necessary for the payment of
17 annuities and death benefits as approved by the Local Government
18 Police Employees' Retirement Board and as provided in Chapter 57
19 shall be transferred from the local government accumulation
20 account to the annuity reserve account provided for in section
21 5935.
22 § 5935. Annuity reserve account.
23 * * *
24 (b) Transfers from account.--Should an annuitant other than
25 a member who was retired as an officer of the Pennsylvania State
26 Police or an enforcement officer be subsequently restored to
27 active service, the present value of his member's annuity at the
28 time of reentry into [State] government service shall be
29 transferred from the annuity reserve account and placed to his
30 individual credit in the members' savings account. In addition,
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1 the actuarial reserve for his annuity less the amount
2 transferred to the members' savings account shall be transferred
3 from the annuity reserve account to the State accumulation
4 account.
5 § 5936. State Police benefit account.
6 * * *
7 (b) Transfers from account.--Should the said annuitant be
8 subsequently restored to active service, the present value of
9 the member's annuity at the time of reentry into [State]
10 government service shall be transferred from the State Police
11 benefit account and placed to his individual credit in the
12 members' savings account. In addition, the actuarial reserve for
13 his annuity calculated as if he had been a member of Class A
14 less the amount transferred to the members' savings account
15 shall be transferred from the State Police benefit account to
16 the State accumulation account. Upon subsequent retirement other
17 than as an officer of the Pennsylvania State Police the
18 actuarial reserve remaining in the State Police benefit account
19 shall be transferred to the appropriate reserve account.
20 § 5937. Enforcement officers' benefit account.
21 * * *
22 (b) Transfers from account.--Should the said annuitant be
23 subsequently restored to active service, the present value of
24 the member's annuity at the time of reentry into [State]
25 government service shall be transferred from the enforcement
26 officers' benefit account and placed to his individual credit in
27 the members' savings account. In addition, the actuarial reserve
28 for his annuity calculated as if he had been a member of Class A
29 if the annuitant does not have any Class AA service credited and
30 calculated as if he had been a member of Class AA if the
20040H2520B3718 - 140 -
1 annuitant does have Class AA service credited less the amount
2 transferred to the members' savings account shall be transferred
3 from the enforcement officers' benefit account to the State
4 accumulation account. Upon subsequent retirement other than as
5 an enforcement officer the actuarial reserve remaining in the
6 enforcement officers' benefit account shall be transferred to
7 the appropriate reserve account.
8 § 5939. Interest reserve account.
9 The interest reserve account shall be the ledger account to
10 which shall be credited all income earned by the fund and to
11 which shall be charged all administrative and investment
12 expenses incurred by [the] a fund. At the end of each year the
13 required interest shall be transferred from the interest reserve
14 account to the credit of each of the accounts in accordance with
15 the provisions of this subchapter. In addition, at the end of
16 each accounting period, the interest reserve account shall be
17 credited or charged with all recognized changes in the market
18 valuation of the investments of [the] a fund. The administrative
19 and investment expenses of the board shall be paid from the fund
20 out of earnings. Any surplus or deficit in the interest reserve
21 account at the end of each year shall be transferred to the
22 State accumulation account.
23 § 5940. Northern Ireland-related investments.
24 (a) General rule.--Notwithstanding any other provision of
25 law, on and after the effective date of this section, any moneys
26 or assets of the [fund] funds which shall remain or be invested
27 in the stocks, securities or other obligations of any
28 institution or company doing business in or with Northern
29 Ireland or with agencies or instrumentalities thereof shall be
30 invested subject to the provisions of subsection (c).
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1 (b) Annual review.--On or before January 1 of each year,
2 [the] each board shall determine the existence of affirmative
3 action taken by institutions or companies doing business in
4 Northern Ireland to eliminate ethnic or religious discrimination
5 based on actions taken for:
6 (1) Increasing the representation of individuals from
7 underrepresented religious groups in the work force,
8 including managerial, supervisory, administrative, clerical
9 and technical jobs.
10 (2) Providing adequate security for the protection of
11 minority employees, both at the workplace and while traveling
12 to and from work.
13 (3) The banning of provocative religious or political
14 emblems from the workplace.
15 (4) Publicly advertising all job openings and making
16 special recruitment efforts to attract applicants from
17 underrepresented religious groups.
18 (5) Providing that layoff, recall and termination
19 procedures should not in practice favor particular religious
20 groupings.
21 (6) The abolition of job reservations, apprenticeship
22 restrictions and differential employment criteria which
23 discriminate on the basis of religion or ethnic origin.
24 (7) The development of training programs that will
25 prepare substantial numbers of current minority employees for
26 skilled jobs, including the expansion of existing programs
27 and the creation of new programs to train, upgrade and
28 improve the skills of minority employees.
29 (8) The establishment of procedures to assess, identify
30 and actively recruit minority employees with potential for
20040H2520B3718 - 142 -
1 further advancement.
2 (9) The appointment of senior management staff members
3 to oversee affirmative action efforts and the setting up of
4 timetables to carry out affirmative action principles.
5 (c) Investments.--Consistent with sound investment policy,
6 [the] each board shall invest the assets of the fund in such a
7 manner that the investments in institutions doing business in or
8 with Northern Ireland shall reflect the advances made by such
9 institutions in eliminating discrimination as established
10 pursuant to subsection (b).
11 § 5951. State guarantee.
12 (a) General rule.--The required interest charges payable,
13 the maintenance of reserves in the [fund] State Employees'
14 Retirement Fund, and the payment of all annuities and other
15 benefits granted by the [board] State Employees' Retirement
16 Board under the provisions of this part are hereby made
17 obligations of the Commonwealth.
18 (b) Local government guarantee.--The required interest
19 charges payable, the maintenance of reserves in the Local
20 Government Police Employees' Retirement Fund and the payment of
21 all annuities and other benefits granted by the Local Government
22 Police Employees' Retirement Board under the provisions of this
23 part, as to local government service in accordance with this
24 part, are hereby made obligations of the local government.
25 (c) Use of income interest and dividends.--All income,
26 interest, and dividends derived from deposits and investments
27 authorized by this part as to State service shall be used for
28 the payment of the said obligations of the Commonwealth and
29 local governments.
30 § 5952. State supervision.
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1 The [fund] funds and ledger accounts provided for by this
2 part shall be subject to the supervision of the [State]
3 Insurance Department.
4 § 5953. Taxation, attachment and assignment of funds.
5 (a) General rule.--
6 (1) Except as provided in paragraphs (2), (3) and (4),
7 the right of a person to any benefit or right accrued or
8 accruing under the provisions of this part and the moneys in
9 the [fund] funds are hereby exempt from any State or
10 municipal tax, levy and sale, garnishment, attachment,
11 spouse's election, or any other process whatsoever except for
12 a set-off by the Commonwealth in the case provided in
13 subparagraph (i) or by a local government in the case
14 provided in subparagraph (ii), and shall be unassignable
15 except:
16 (i) To the Commonwealth in the case of a member who
17 is terminating State service and has been determined to
18 be obligated to the Commonwealth for the repayment of
19 money owed on account of his employment or to the fund on
20 account of a loan from a credit union which has been
21 satisfied by the board from the fund.
22 (ii) To a credit union as security for a loan not to
23 exceed $750 and interest not to exceed 6% per annum
24 discounted and/or fines thereon if the credit union is
25 now or hereafter organized and incorporated under the
26 laws of this Commonwealth and the membership of such
27 credit union is limited solely to officials and employees
28 of the Commonwealth and a local government and if such
29 credit union has paid to the fund $3 for each such
30 assignment.
20040H2520B3718 - 144 -
1 (iii) To a local government in the case of a member
2 who is terminating local government service and has been
3 determined to be obligated to the local government for
4 the repayment of money owed on account of his employment
5 or to either fund on account of a loan from a credit
6 union which has been satisfied by the board from the
7 fund.
8 (2) Rights under this part shall be subject to
9 forfeiture as provided by the act of July 8, 1978 (P.L.752,
10 No.140), known as the Public Employee Pension Forfeiture Act,
11 and by or pursuant to section 16(b) of Article V of the
12 Constitution of Pennsylvania. Forfeitures under this
13 subsection or under any other provision of law may not be
14 applied to increase the benefits that any member would
15 otherwise receive under this part.
16 (3) Rights under this part shall be subject to
17 attachment in favor of an alternate payee as set forth in an
18 approved domestic relations order.
19 (4) Effective with distributions made on or after
20 January 1, 1993, and notwithstanding any other provision of
21 this part to the contrary, a distributee may elect, at the
22 time and in the manner prescribed by the appropriate board,
23 to have any portion of an eligible rollover distribution paid
24 directly to an eligible retirement plan by way of a direct
25 rollover. For purposes of this paragraph, a "distributee"
26 includes a member and a member's surviving spouse and a
27 member's former spouse who is an alternate payee under an
28 approved domestic relations order. For purposes of this
29 paragraph, the term "eligible rollover distribution" has the
30 meaning given such term by IRC § 402(f)(2)(A), and "eligible
20040H2520B3718 - 145 -
1 retirement plan" has the meaning given such term by IRC §
2 402(c)(8)(B), except that a qualified trust shall be
3 considered an eligible retirement plan only if it accepts the
4 distributee's eligible rollover distribution; however, in the
5 case of an eligible rollover distribution to a surviving
6 spouse, an eligible retirement plan is an "individual
7 retirement account" or an "individual retirement annuity" as
8 those terms are defined in IRC § 408(a) and (b).
9 (b) Authorized payments from [fund.--The] funds.--A board
10 shall be authorized to pay from [the] its fund:
11 (1) In the case of a member who is terminating service,
12 the amount determined after certification by the head of the
13 department that the member is so obligated, and after review
14 and approval by the department or agency's legal
15 representative or upon receipt of an assignment from the
16 member in the amount so certified.
17 (2) In the case of a loan the amount of the loan and any
18 fine or interest due thereon to the credit union except 5% of
19 the total amount due which is to be retained in the fund as a
20 collection fee:
21 (i) if the member obtaining the loan shall have been
22 in default in required payments for a period of not less
23 than two years; or
24 (ii) at such time as the Department of Banking shall
25 require the credit union to charge the amount of the loan
26 against the reserve fund of such credit union.
27 Any member who shall have pledged such rights as security for
28 a loan from a credit union and, on whose behalf the board
29 shall have made any payment by reason of that member's
30 default, may not thereafter pledge or assign such rights to a
20040H2520B3718 - 146 -
1 credit union.
2 § 5955. Construction of part.
3 Regardless of any other provision of law, pension rights of
4 [State] government employees shall be determined solely by this
5 part or any amendment thereto, and no collective bargaining
6 agreement nor any arbitration award between the Commonwealth and
7 its employees or their collective bargaining representatives or
8 between a local government and its employees or their collective
9 bargaining representatives shall be construed to change any of
10 the provisions herein, to require the board to administer
11 pension or retirement benefits not set forth in this part, or
12 otherwise require action by any other government body pertaining
13 to pension or retirement benefits or rights of [State]
14 government employees. Notwithstanding the foregoing, any pension
15 or retirement benefits or rights previously so established by or
16 as a result of an arbitration award shall remain in effect after
17 the expiration of the current collective bargaining agreement
18 between the State employees so affected and the Commonwealth.
19 The provisions of this part insofar as they are the same as
20 those of existing law are intended as a continuation of such
21 laws and not as new enactments. The provisions of this part
22 shall not affect any act done, liability incurred, right accrued
23 or vested, or any suit or prosecution pending or to be
24 instituted to enforce any right or penalty or to punish any
25 offense under the authority of any repealed laws.
26 § 5955.1. Construction of part with respect to older workers
27 protection.
28 It is hereby found and declared that the provisions of this
29 part constitute a bona fide retirement or pension plan within
30 the meaning of the Age Discrimination in Employment Act of 1967
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1 (Public Law 90-202, 29 U.S.C. § 621 et seq.) and the act of
2 October 27, 1955 (P.L.744, No.222), known as the Pennsylvania
3 Human Relations Act, and that the intent of section 5955
4 (relating to construction of part) as originally enacted and as
5 subsequently amended is to require the pension rights of [State]
6 government employees to be determined solely by this part and
7 any amendments thereto, regardless of any other provision of
8 State law, subject only to such further requirements, exceptions
9 or limitations as may be set forth in section 5955 or as may be
10 imposed by reason of any provision of the Federal or State
11 Constitution. Any provision of this part which is not
12 inconsistent with the provisions of the Age Discrimination in
13 Employment Act of 1967 as amended by the Older Workers Benefit
14 Protection Act (Public Law 101-433, 104 Stat. 978) and the rules
15 and regulations of the Federal Equal Employment Opportunity
16 Commission under such Federal laws shall be deemed not
17 inconsistent with such provisions of the Pennsylvania Human
18 Relations Commission Act as relate to discrimination on the
19 basis of age with respect to the terms, conditions or privileges
20 of employment.
21 Section 19. This act shall be construed and administered in
22 such manner that the Local Government Police Employees'
23 Retirement System will satisfy the requirements necessary to
24 qualify as a qualified pension plan under section 401(a)(8),
25 (17) and (25) of the Internal Revenue Code of 1986 (Public Law
26 99-514, 26 U.S.C. § 401(a)(8), (17) and (25). The rules,
27 regulations and procedures adopted and promulgated by the Local
28 Government Police Employees' Retirement Board and the State
29 Employees' Retirement Board under 71 Pa.C.S. § 5902(h) shall
30 include those necessary to accomplish the purpose of this
20040H2520B3718 - 148 -
1 section.
2 Section 20. This act shall take effect in 60 days.
C9L71MRD/20040H2520B3718 - 149 -