THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GODSHALL, GERBER, EVERETT, GABLER, GINGRICH, HARPER, HESS, HORNAMAN, KOTIK, MILLARD, MURT AND TALLMAN, SEPTEMBER 5, 2012

REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 5, 2012  

AN ACT

Amending Titles 51 (Military Affairs) and 71 (State Government)

of the Pennsylvania Consolidated Statutes, further providing

for the calculation of military members' State Employees'

Retirement System benefits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 7306(a) of Title 51 of the Pennsylvania

Consolidated Statutes is amended and the section is amended by

adding a subsection to read:

§ 7306.  Retirement rights.

(a)  Options available to employees.--Any employee who is a

member of a retirement system other than an active member or

inactive member on leave without pay of the State Employees'

Retirement System at the time he is granted a military leave of

absence shall be entitled to exercise any one of the following

options in regard thereto:

(1)  He may continue to make regular payments into the

fund during the period of his military leave of absence. The

amount of such payments shall be the same as they would have

been, had he not been granted a military leave of absence,

but had instead remained actively in his employment. The time

of making such payments shall be mutually agreed upon by the

employee and the retirement association of which he is a

member, but in no event shall be less frequent than

semiannually. The employer shall make its contributions on

the same basis as is used to compute the employee's

contributions. In this case, his retirement rights shall be

determined on the basis that he was in the active, continuous

and uninterrupted employ of his employer for the period

during which he was on military leave of absence.

(2)  He may discontinue making payments into the fund

during the period of his military leave of absence. In such

event, the employer shall also discontinue making its

contributions during this period. In this case, his

retirement rights shall be determined by completely

disregarding the period of his military leave of absence for

all purposes.

* * *

(d)  Members of State Employees' Retirement System.--An

employee who is an active member or inactive member on leave

without pay of the State Employees' Retirement System at the

time he is granted a military leave of absence shall be entitled

to receive credit in the State Employees' Retirement System for

the leave as provided in 71 Pa.C.S. Pt. XXV (relating to

retirement for State employees and officers).

Section 2.  The definitions of "compensation," "eligibility

points" and "final average salary" in section 5102 of Title 71

are amended and the section is amended by adding definitions to

read:

§ 5102.  Definitions.

The following words and phrases as used in this part, unless

a different meaning is plainly required by the context, shall

have the following meanings:

* * *

"Compensation."  Pickup contributions plus remuneration

actually received as a State employee excluding refunds for

expenses, contingency and accountable expense allowances[, and]; 

excluding any severance payments or payments for unused vacation

or sick leave; and excluding payments for military leave and any

other payments made by an employer while on USERRA leave, leave

of absence granted under 51 Pa.C.S. § 4102 (relating to leaves

of absence for certain government employees), military leave of

absence granted under 51 Pa.C.S. § 7302 (relating to granting

military leaves of absence) or other types of military leave,

including other types of leave payments, stipends, differential

wage payments as defined in IRC § 414(u)(12) and any other

payments: Provided, however, That compensation received prior to

January 1, 1973, shall be subject to the limitations for

retirement purposes in effect December 31, 1972, if any:

Provided further, That the limitation under section 401(a)(17)

of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 401(a)(17)) taken into account for the purpose of

member contributions, including any additional member

contributions in addition to regular or joint coverage member

contributions and Social Security integration contributions,

regardless of class of service, shall apply to each member who

first became a member of the State Employees' Retirement System

on or after January 1, 1996, and who by reason of such fact is a

noneligible member subject to the application of the provisions

of section 5506.1(a) (relating to annual compensation limit

under IRC § 401(a)(17)).

* * *

"Eligibility points."  Points which are accrued by an active

member or a multiple service member who is an active member in

the Public School Employees' Retirement System for credited

service or a member who has been reemployed from USERRA leave or

a member who dies while performing USERRA leave and are used in

the determination of eligibility for benefits.

* * *

"Final average salary."  The highest average compensation

received as a member during any three nonoverlapping periods of

four consecutive calendar quarters during which the member was a

State employee, with the compensation for part-time service

being annualized on the basis of the fractional portion of the

year for which credit is received; except if the employee was

not a member for three nonoverlapping periods of four

consecutive calendar quarters, the total compensation received

as a member, annualized in the case of part-time service,

divided by the number of nonoverlapping periods of four

consecutive calendar quarters of membership; in the case of a

member with multiple service, the final average salary shall be

determined on the basis of the compensation received by him as a

State employee or as a school employee, or both ; in the case of

a member with Class A-3 or Class A-4 service and service in one

or more other classes of service, the final average salary shall

be determined on the basis of the compensation received by him

in all classes of State service; and, in the case of a member

who first became a member on or after January 1, 1996, the final

average salary shall be determined as hereinabove provided but

subject to the application of the provisions of section

5506.1(a) (relating to annual compensation limit under IRC § 

401(a)(17)). Final average salary shall be determined by

including in compensation payments deemed to have been made to a

member reemployed from USERRA leave to the extent member

contributions have been made as provided in section 5302(f)(2)

(relating to credited State service) and payments made to a

member on leave of absence under 51 Pa.C.S. § 4102 (relating to

leaves of absence for certain government employees) as provided

in section 5302(f)(6).

* * *

"Reemployed from USERRA leave."  Resumption of active

membership as a State employee after a period of USERRA leave,

provided however, that the resumption of active membership was

within the time period and under conditions and circumstances

such that the State employee was entitled to reemployment rights

under 38 U.S.C. Ch. 43 (relating to employment and reemployment

rights of members of the uniformed services).

* * *

"USERRA leave."  Any period of time for service in the

uniformed services as defined in 38 U.S.C. Ch. 43 (relating to

employment and reemployment rights of members of the uniformed

services) by a State employee or former State employee who

terminated State service to perform such service in the

uniformed services, if the current or former State employee is

entitled to reemployment rights under 38 U.S.C. Ch. 43 with

respect to the uniformed service.

* * *

Section 3.  Section 5302(d) of Title 71 is amended and the

section is amended by adding a subsection to read:

§ 5302.  Credited State service.

* * *

[(d)  Enlargement of coverage of Military Code.--For purposes

of determining whether a member is eligible to receive credited

service for active military service rendered after the date of

this act, other than active duty service to meet periodic

training requirements, the provisions of 51 Pa.C.S. Ch. 73 

(relating to military leave of absence) shall apply to all

individuals who were active members of the system, even if not

defined as an employee pursuant to 51 Pa.C.S. § 7301 (relating

to definitions).]

* * *

(f)  Credit for military service.--

(1)  For purposes of determining whether a member is

eligible to receive credited service for a period of active

military service, other than active duty service to meet

periodic training requirements, rendered after August 5,

1991, and that began before the effective date of this

paragraph, the provisions of 51 Pa.C.S. Ch. 73 (relating to

military leave of absence) shall apply to all individuals who

were active members of the system when the period of military

service began, even if not defined as an employee pursuant to

51 Pa.C.S. § 7301 (relating to definitions). State employees

may not receive service credit or exercise the options under

51 Pa.C.S. § 7306 (relating to retirement rights) for

military leaves that begin on or after the effective date of

this subsection, except as otherwise provided by this

subsection.

(2)  A State employee who has performed USERRA leave may

receive credit as provided by this paragraph. The following

shall apply:

(i)  A State employee who is reemployed from USERRA

leave shall be treated as not having incurred a break in

State service by reason of the USERRA leave and shall be

granted eligibility points as if the State employee had

not been on the USERRA leave. If a State employee who is

reemployed from USERRA leave subsequently makes regular

member contributions, additional member contributions,

Social Security integration member contributions, shared-

risk member contributions and any other member

contributions in the amounts and in the time periods

required by 38 U.S.C. Ch. 43 (relating to employment and

reemployment rights of members of the uniformed services)

and IRC § 414(u) as if the State employee had continued

in State office or employment and performed State service

and was compensated during the period of USERRA leave,

then the State employee shall be granted State service

credit for the period of USERRA leave. The State employee

shall have the State employee's benefits, rights and

obligations determined under this part as if the State

employee was an active member who performed creditable

State service during the USERRA leave in the job position

that the State employee would have held had the State

employee not been on USERRA leave and received the

compensation on which the member contributions to receive

State service credit for the USERRA leave were

determined.

(ii)  For purposes of determining whether a State

employee has made the required employee contributions for

State service credit for USERRA leave, if an employee who

is reemployed from USERRA leave terminates State service

or dies in State service before the expiration of the

allowed payment period, then State service credit for the

USERRA leave will be granted as if the required member

contributions were paid the day before termination or

death. The amount of the required member contributions

will be treated as an incomplete payment subject to the

provisions of section 5506 (relating to incomplete

payments). Upon a subsequent return to State service or

to school service as a multiple service member, the

required member contributions treated as incomplete

payments shall be treated as member contributions that

were either withdrawn in a lump sum at termination or

paid as a lump sum pursuant to section 5705(a)(4)

(relating to member's options), as the case may be.

(iii)  A State employee who is reemployed from USERRA

leave who does not make the required member contributions

or makes only part of the required member contributions

within the allowed payment period shall not be granted

credited service for the period of USERRA leave for which

the required member contributions were not timely made,

shall not be eligible to subsequently make contributions

and shall not be granted either State service credit or

nonstate service credit for the period of USERRA leave

for which the required member contributions were not

timely made.

(3)  A State employee who performs USERRA leave from

which the employee could have been reemployed from USERRA

leave had the State employee returned to State service in the

time frames required by 38 U.S.C. Ch. 43 for reemployment

rights, but did not do so, shall be able to receive

creditable nonstate service as nonintervening military

service for the period of USERRA leave should the employee

later return to State service and is otherwise eligible to

purchase the service as nonintervening military service.

(4)  A State employee who on or after the effective date

of this subsection is granted a leave of absence under 51

Pa.C.S. § 4102 (relating to leaves of absence for certain

government employees) or a military leave under the 51

Pa.C.S. Ch. 73, that is not USERRA leave shall be able to

receive creditable nonstate service as nonintervening

military service should the employee return to State service

and is otherwise eligible to purchase the service as

nonintervening military service.

(5)  If a member dies while performing USERRA leave, then

the beneficiaries or survivor annuitants, as the case may be,

of the deceased member are entitled to any additional

benefits, including eligibility points, other than benefit

accruals relating to the period of qualified military

service, provided under this part had the member resumed and

then terminated employment on account of death.

(6)  A State employee who is on a leave of absence from

his duties as a State employee for which 51 Pa.C.S. § 4102

provides that he is not to suffer a loss of pay, time or

efficiency rating shall not be an active member, receive

service credit or make member contributions for the leave of

absence, except as provided for in this part. Notwithstanding

this paragraph, any pay the member receives pursuant to 51

Pa.C.S. § 4102 shall be included in the determination of

final average salary and other calculations utilizing

compensation as if the payments were compensation under this

part.

Section 3.1.  Section 5303(b) of Title 71 is amended by

adding a paragraph to read:

§ 5303.  Retention and reinstatement of service credits.

* * *

(b)  Eligibility points for prospective credited service.--

* * *

(1.3)  A member of the system who is reemployed from

USERRA leave or who dies while performing USERRA leave shall

receive eligibility points in accordance with section 5307

for the State service that would have been performed had the

member not performed USERRA leave.

* * *

Section 3.2.  Sections 5304(c) and 5306.3(b) of Title 71 are

amended to read:

§ 5304.  Creditable nonstate service.

* * *

(c)  Limitations on nonstate service.--Creditable nonstate

service credit shall be limited to:

[(1)  intervening military service;

(2)  military service other than intervening military

service and military service purchasable under section

5302(d) (relating to credited State service) not exceeding

five years, provided that a member with multiple service may

not purchase more than a total of five years of military

service in both the system and the Public School Employees'

Retirement System;]

(1)  intervening military service if the member returned

to State service before January 1, 2012;

(2)  (i)  military service other than:

(A)  intervening military service;

(B)  military service purchasable under section

5302(d) (relating to credited State service) or

5302(f)(1); and

(C)  military service performed during USERRA

leave if the member was reemployed from USERRA leave.

(ii)  the total creditable nonstate service under

this paragraph may not exceed five years, provided that a

member with multiple service may not purchase more than a

total of five years of military service in both the

system and the Public School Employees' Retirement

System;

(3)  in the case of an academic administrator, teacher or

instructor employed in the Department of Education, the State

System of Higher Education, any State-owned educational

institution or The Pennsylvania State University, provided

that the total amount of service creditable under this

paragraph shall not exceed the lesser of ten years or the

number of years of active membership in the system as an

academic administrator, teacher or instructor in the

Department of Education, State System of Higher Education,

any State-owned educational institution or The Pennsylvania

State University:

(i)  nonstudent service as an academic administrator,

teacher or instructor in any public school or public

educational institution in any state other than this

Commonwealth; or

(ii)  nonstudent service as an academic

administrator, teacher or instructor in the field of

education for any agency or department of the Federal

Government, whether or not such area was under the

jurisdiction of the United States;

(4)  previous service with a governmental agency other

than the Commonwealth which employment with said agency was

terminated because of the transfer by statute of the

administration of such service or of the entire agency to the

Commonwealth;

(5)  service as a temporary Federal employee assigned to

an air quality control complement for the Pennsylvania

Department of Environmental Resources at any time during the

period of 1970 through 1975. This service time may be

purchased only if the member makes an election to purchase

within one year of the effective date of this paragraph, and

the member shall pay an amount which is equal to the full

actuarial cost of the increased benefit obtained by virtue of

the purchase as provided in section 5505(f);

(6)  service in the Cadet Nurse Corps with respect to any

period of training as a student or graduate nurse under a

plan approved under section 2 of the act of June 15, 1943

(Public Law 78-73, 57 Stat. 153), if the total period of

training under such plan was at least two years, the credit

for such service not to exceed three years;

(7)  service prior to July 1, 1971, at a community

college established under the act of August 24, 1963 

(P.L.1132, No.484), known as the Community College Act of

1963; or

(8)  service as a justice of the peace prior to January

1970.

* * *

§ 5306.3.  Election to become a Class A-4 member.

* * *

(b)  Time for making election.--The election to become a

Class A-4 member must be made by the member filing written

notice with the board in a form and manner determined by the

board no later than 45 days after notice from the board of the

member's eligibility to elect Class A-4 membership. A State

employee who is eligible to elect to become a Class A-4 member

who begins USERRA leave during the election period without

having elected Class A-4 membership may make the election within

45 days after being reemployed from USERRA leave.

* * *

Section 4.  Section 5307(b)(1) of Title 71 is amended and the

section is amended by adding a subsection to read:

§ 5307.  Eligibility points.

* * *

(a.1)  USERRA leave.--A member of the system who is

reemployed from USERRA leave or who dies while performing USERRA

leave shall be granted the eligibility points that he would have

accrued had he continued in his State office or employment

instead of performing USERRA leave. In the event that a State

employee who is reemployed from USERRA leave makes the member

contributions to be granted State service credit for the USERRA

leave, no additional eligibility points will be granted.

(b)  Transitional rule.--

(1)  In determining whether a member who is not a State

employee or school employee on June 30, 2001, and July 1,

2001, and who has previous State service (except a disability

annuitant who returns to State service after June 30, 2001,

upon termination of the disability annuity) has the five

eligibility points required by sections 5102 (relating to

definitions), 5308(b) (relating to eligibility for

annuities), 5309 (relating to eligibility for vesting),

5704(b) (relating to disability annuities) and 5705(a)

(relating to member's options), only eligibility points

earned by performing credited State service, USERRA leave or

credited school service after June 30, 2001, shall be counted

until such member earns one eligibility point by performing

credited State service or credited school service after June

30, 2001, at which time all eligibility points as determined

pursuant to subsection (a) shall be counted.

* * *

Section 5.  Sections 5308(a) and (c), 5505(b) and (i) and

5506 of Title 71 are amended to read:

§ 5308.  Eligibility for annuities.

(a)  Superannuation annuity.--Attainment of superannuation

age by an active member or an inactive member on leave without

pay with three or more [years of credited State or school

service] eligibility points other than eligibility points

resulting from nonstate service or nonschool service shall

entitle him to receive a superannuation annuity upon termination

of State service and compliance with section 5907(f) (relating

to rights and duties of State employees and members).

* * *

(c)  Disability annuity.--An active member or inactive member

on leave without pay who has [credit for at least five years of

service] five or more eligibility points other than eligibility

points resulting from membership in the Public School Employees' 

Retirement System or any active member or inactive member on

leave without pay who is an officer of the Pennsylvania State

Police or an enforcement officer shall, upon compliance with

section 5907(k), be entitled to a disability annuity if he

becomes mentally or physically incapable of continuing to

perform the duties for which he is employed and qualifies in

accordance with the provisions of section 5905(c)(1) (relating

to duties of the board regarding applications and elections of

members).

§ 5505.  Contributions for the purchase of credit for creditable

nonstate service.

* * *

(b)  Nonintervening military service.--

(1)  The amount due for the purchase of credit for

military service other than intervening military service [by

State employees who first become members of the system before

January 1, 2011, or before December 1, 2010, as a member of

the General Assembly] shall be determined by applying the

member's basic contribution rate, the additional contribution

rate plus the Commonwealth normal contribution rate for

active members at the time of entry, subsequent to such

military service, of the member into State service to his

average annual rate of compensation over the first three

years of such subsequent State service and multiplying the

result by the number of years and fractional part of a year

of creditable nonintervening military service being purchased

together with statutory interest during all periods of

subsequent State and school service to date of purchase. Upon

application for credit for such service, payment shall be

made in a lump sum within 30 days or in the case of an active

member or eligible school employee who is an active member of

the Public School Employees' Retirement System it may be

amortized with statutory interest through salary deductions

in amounts agreed upon by the member and the board. The

salary deduction amortization plans agreed to by members and

the board may include a deferral of payment amounts and

statutory interest until the termination of school service or

State service as the board in its sole discretion decides to

allow. The board may limit salary deduction amortization

plans to such terms as the board in its sole discretion

determines. In the case of an eligible school employee who is

an active member of the Public School Employees' Retirement

System, the agreed upon salary deductions shall be remitted

to the Public School Employees' Retirement Board, which shall

certify and transfer to the board the amounts paid.

Application may be filed for all such military service credit

upon completion of three years of subsequent State service

and shall be credited as Class A service.

(2)  Applicants may purchase credit as follows:

(i)  one purchase of the total amount of creditable

nonintervening military service; or

(ii)  one purchase per 12-month period of a portion

of creditable nonintervening military service.

The amount of each purchase shall be not less than one year

of creditable nonintervening military service.

* * *

(i)  Purchases of nonstate service credit by State employees

who first became members of the system on or after December 1,

2010.--

(1)  Contributions on account of credit for creditable

nonstate service other than intervening military service,

nonintervening military service and magisterial service by

State employees who first become members of the system on or

after January 1, 2011, or on or after December 1, 2010, as a

member of the General Assembly shall be equal to the full

actuarial cost of the increased benefit obtained by virtue of

such service.

(2)  The full actuarial cost of the increased benefit

attributable to the purchased nonstate service credit shall

be the difference between:

(i)  the present value of a standard single life

annuity, beginning at the earliest possible

superannuation age assuming Class A-3 service credit for

the nonstate service to be purchased; and

(ii)  the present value of a standard single life

annuity, beginning at the earliest possible

superannuation age, excluding the nonstate service credit

to be purchased.

(3)  The full actuarial cost under paragraph (2) shall be

calculated using future salary increases, mortality tables,

interest rates and other actuarial assumptions as adopted by

the board with the advice of the actuary. The earliest

possible superannuation age shall be the current attained age

of the member if the member has attained superannuation age

for his current class of service or, if the member has not

attained superannuation age, the age upon which the member

would attain superannuation age as a member in the current

class of service assuming continued full-time State service

through the attainment of superannuation age and credit for

the amount of service which the member has elected to

purchase.

(4)  The payment for credit purchased under this

subsection shall be certified in each case by the board in

accordance with methods approved by the actuary and shall be

paid in a lump sum within 30 days or in the case of an active

member or eligible school employee who is an active member of

the Public School Employees' Retirement System may be

amortized with statutory interest through salary deductions

in amounts agreed upon by the member and the board. The

salary deduction amortization plans agreed to by members and

the board may include a deferral of payment amounts and

interest until the termination of school service or State

service as the board in its sole discretion decides to allow.

The board may limit the salary deduction amortization plans

to such terms as the board in its sole discretion determines.

In the case of an eligible school employee who is an active

member of the Public School Employees' Retirement System, the

agreed upon salary deductions shall be remitted to the Public

School Employees' Retirement Board, which shall certify and

transfer to the board the amounts paid.

§ 5506.  Incomplete payments.

In the event that a member terminates State service or a

multiple service member who is an active member of the Public

School Employees' Retirement System terminates school service

before the agreed upon payments for credit for previous State

service, USERRA leave, creditable nonstate service, social

security integration, full coverage membership or return of

benefits on account of returning to State service or entering

school service and electing multiple service have been

completed, the member or multiple service member who is an

active member of the Public School Employees' Retirement

System shall have the right to pay within 30 days of

termination of State service or school service the balance

due, including interest, in a lump sum and the annuity shall

be calculated including full credit for the previous State

service, creditable nonstate service, social security

integration, or full coverage membership. In the event a

member does not pay the balance due within 30 days of

termination of State service or in the event a member dies in

State service or within 30 days of termination of State

service or in the case of a multiple service member who is an

active member of the Public School Employees' Retirement

System does not pay the balance due within 30 days of

termination of school service or dies in school service or

within 30 days of termination of school service and before

the agreed upon payments have been completed, the present

value of the benefit otherwise payable shall be reduced by

the balance due, including interest, and the benefit payable

shall be calculated as the actuarial equivalent of such

reduced present value.

Section 6.  Section 5507 of Title 71 is amended by adding a

subsection to read:

§ 5507.  Contributions by the Commonwealth and other employers.

* * *

(f)  Contributions resulting from members reemployed from

USERRA leave.--When a State employee reemployed from USERRA

leave makes the member contributions required to be granted

State service credit for the USERRA leave, either by actual

payment or by actuarial debt under section 5506 (relating to

incomplete payments), then the Commonwealth employer or other

employer by whom the State employee is employed at the time the

member contributions are made, or the last employer before

termination in the case of payment under section 5506, shall

make whatever employer contributions would have been made under

this section had the employee making the member contributions

after being reemployed from USERRA leave continued to be

employed in his State office or position instead of performing

USERRA leave.

Section 7.  Section 5509(c) of Title 71 is amended to read:

§ 5509.  Appropriations and assessments by the Commonwealth.

* * *

(c)  Contributions from funds other than General Fund.--The

amounts assessed other employers who are required to make the

necessary contributions out of funds other than the General Fund

shall be paid by such employers into the fund in accordance with

requisitions presented by the board. The General Fund of the

Commonwealth shall not be held liable to appropriate the moneys

required to build up the reserves necessary for the payment of

benefits to employees of such other employers. In case any such

other employer shall fail to provide the moneys necessary for

such purpose, then the service of such members for such period

for which money is not so provided shall be credited and pickup

contributions with respect to such members shall continue to be

credited to the members' savings account. The annuity to which

such member is entitled shall be determined as actuarially

equivalent to the present value of the maximum single life

annuity of each such member reduced by the amount of employer

contributions payable on account and attributable to his

compensation during such service, except that no reduction shall

be made as a result of the failure of an employer to make

contributions required for a period of USERRA leave.

Section 8.  Section 5706 of Title 71 is amended by adding a

subsection to read:

§ 5706.  Termination of annuities.

* * *

(a.3)  Return of benefits paid during USERRA leave.--In the

event that a former State employee is reemployed from USERRA

leave who had received any payments or annuity from the system

during the USERRA leave, the employee shall return to the board

the amount so received plus statutory interest. The amount

payable shall be certified in each case by the board in

accordance with methods approved by the actuary and shall be

paid in a lump sum within 30 days or in the case of an active

member may be amortized with statutory interest through salary

deductions in amounts agreed upon by the member and the board,

but not longer than a period that starts with the date of

reemployment and continuing for up to three times the length of

the member's immediate past period of USERRA leave, with the

repayment period not to exceed five years or such longer time as

may be agreed to between the board and the member.

* * *

Section 9.  Sections 5707(a) and (b) of Title 71 are amended

to read:

§ 5707.  Death benefits.

(a)  Members eligible for annuities.--Any active member,

inactive member on leave without pay [or], vestee or current or

former State employee performing USERRA leave who dies and was

eligible for an annuity in accordance with section 5308(a) or

(b) (relating to eligibility for annuities) or special vestee

who has attained superannuation age and dies before applying for

a superannuation annuity shall be considered as having applied

for an annuity to become effective the day before his death and

in the event he has not elected an option or such election has

not been approved prior to his death, it shall be assumed that

he elected Option 1.

(b)  Members ineligible for annuities.--In the event of the

death of a special vestee, an active member [or], an inactive

member on leave without pay or a current or former State

employee performing USERRA leave who is not entitled to a death

benefit as provided in subsection (a), his designated

beneficiary shall be paid the full amount of his total

accumulated deductions.

* * *

Section 9.1.  Section 5902(l) of Title 71 is amended and the

section is amended by adding a subsection to read:

§ 5902.  Administrative duties of the board.

* * *

(l)  Member contributions.--The board shall cause all pickup

contributions made on behalf of a member to be credited to the

account of the member and credit to his account any other

payment made by such member, including, but not limited to,

amounts collected by the Public School Employees' Retirement

System for the reinstatement of previous State service or

creditable nonstate service and amounts paid to return benefits

paid after the date of return to State service or entering

school service representing lump sum payments made pursuant to

section 5705(a)(4)(iii) (relating to member's options) and

member's annuity payments, but not including other benefits

returned pursuant to section 5706(a.2) or (a.3) (relating to

termination of annuities), and shall pay all such amounts into

the fund.

* * *

(o)  USERRA leave.--The board shall have the authority to

take whatever action is necessary for the implementation of the

requirements of this part pertaining to State employees on

USERRA leave or who have been granted a leave of absence under

51 Pa.C.S. § 4102 (relating to leaves of absence for certain

government employees) or a military leave of absence under 51

Pa.C.S. § 7302 (relating to granting military leaves of absence)

and to establish administrative, reporting and payment

requirements and processes pertaining to the leaves applicable

to heads of departments and members.

Section 9.2.  Section 5905(g) of Title 71 is amended to read:

§ 5905.  Duties of the board regarding applications and

elections of members.

* * *

(g)  Death benefits.--Upon receipt of notification from the

head of a department of the death of an active member, a member

performing USERRA leave or a member on leave without pay, the

board shall advise the designated beneficiary of the benefits to

which he is entitled, and shall make the first payment to the

beneficiary within 60 days of receipt of certification of death

and other necessary data. If no beneficiary designation is in

effect at the date of the member's death or no notice has been

filed with the board to pay the amount of the benefits to the

member's estate, the board is authorized to pay the benefits to

the executor, administrator, surviving spouse or next of kin of

the deceased member, and payment pursuant hereto shall fully

discharge the fund from any further liability to make payment of

such benefits to any other person. If the surviving spouse or

next of kin of the deceased member cannot be found for the

purpose of paying the benefits for a period of seven years from

the date of death of the member, then the benefits shall be

escheated to the Commonwealth for the benefit of the fund.

* * *

Section 10.  Section 5906 of Title 71 is amended by adding

subsections to read:

§ 5906.  Duties of heads of departments.

* * *

(l)  State employees performing USERRA or military-related

leave of absence.--The head of department shall report to the

board any State employee who ceases to be an active member to

perform USERRA service, or who is granted a leave of absence

under 51 Pa.C.S. § 4102 (relating to leaves of absence for

certain government employees) or a military leave of absence

under 51 Pa.C.S. § 7302 (relating to granting military leaves of

absence), the date on which the USERRA service, leave of absence

or military leave of absence began, the date on which the State

employee is reemployed from USERRA leave or returns after the

leave of absence or military leave of absence, if the event

occurs, and any other information the board may require or

direct.

(m)  Differential wage payments and military leave of absence

payments.--Notwithstanding the exclusion of differential wage

payments as defined in IRC § 414(u)(12) from compensation under

this part, the head of department of any State employee on

USERRA leave shall report differential wage payments made to the

employee to the board, and the head of department of any State

employee on leave of absence pursuant to 51 Pa.C.S. § 4102 shall

report any payment made to the employee, in the form and manner

established by the board.

Section 11.  Section 5907(c) of Title 71 is amended and the

section is amended by adding a subsection to read:

§ 5907.  Rights and duties of State employees and members.

* * *

(c)  Multiple service membership.--Any active member who was

formerly an active member in the Public School Employees'

Retirement System may elect to become a multiple service member.

Such election shall occur no later than 365 days after becoming

an active member in this system. A State employee who is

eligible to elect to become a multiple service member who begins

USERRA leave during the election period without having elected

multiple service membership may make the election within 365

days after being reemployed from USERRA leave.

* * *

(d.1)  State service for USERRA leave.--Any active member or

inactive member on leave without pay who was reemployed from

USERRA leave who desires to receive State service credit for his

USERRA leave shall so notify the board within the time period

required under 38 U.S.C. Ch. 43 (relating to employment and

reemployment rights of members of the uniformed services) and

IRC § 414(u) of his desire to make the required member

contributions. Upon making the required member contributions

within the allowed time period, the member shall receive credit

for such service as of the date the contributions are made.

* * *

Section 12.  This act shall apply as follows:

(1)  The amendment or addition of 51 Pa.C.S. § 7306(a)

and (d) shall apply only to leaves of absence or military

leaves of absence that are granted on or after the effective

date of this section.

(2)  The amendment of 71 Pa.C.S. Pt. XXV shall apply only

to leaves of absence, military leaves of absence and leaves

pursuant to 38 U.S.C. Ch. 43 (relating to employment and

reemployment rights of members of the uniformed services)

that are granted on or after the effective date of this act,

except in the case of a member who died performing uniformed

service under 38 U.S.C. Ch. 43, which shall be retroactive to

January 1, 2007.

Section 13.  Upon the effective date of this section, the

State Employees' Retirement Board shall recompute the retirement

benefits of former State employees who died before the effective

date of this section and on or after January 1, 2007, while

performing uniformed service pursuant to 38 U.S.C. Ch. 43

(relating to employment and reemployment rights of members of

the uniformed services).

Section 14.  Notwithstanding the provisions of 71 Pa.C.S. §

5903(b), the statement for each member prepared by the State

Employees' Retirement Board for the period ending December 31,

2012, and any other statements or estimates of benefits prepared

by the board pursuant to the provisions of 71 Pa.C.S. Pt. XXV

from the effective date of this section to June 30, 2013, need

not reflect the provisions of this act.

Section 15.  Notwithstanding the provisions of 71 Pa.C.S. Pt.

XXV, the obligation of the State Employees' Retirement Board to

make payments to any individual whose rights, benefits and

obligations are affected by this act within specified time

periods of the receipt of applications for benefits or other

information shall not apply from the effective date of this

section to June 30, 2013.

Section 16.  Nothing in this act shall be deemed to permit

the restoration of service credit or retirement benefits which

were or are subject to section 16 of Article V of the

Constitution of Pennsylvania or 42 Pa.C.S. § 3352 or the subject

of an order of forfeiture pursuant to the act of July 8, 1978

(P.L.752, No.140), known as the Public Employee Pension

Forfeiture Act.

Section 17.  To the extent that any officer or member of the

Pennsylvania State Police is eligible to retire after June 30,

1989, as provided in a binding arbitration award issued before

July 1, 1989, pursuant to the act of June 24, 1968 (P.L.237,

No.111), referred to as the Policemen and Firemen Collective

Bargaining Act, as implemented by the State Employees'

Retirement Board based on accruing 20 or more years of credited

State service or nonstate service in the State Employees' 

Retirement System, the eligibility shall be based on 20 or more

eligibility points granted as a result of State service,

nonstate service or reemployment as a State employee from

uniformed service pursuant to 38 U.S.C. Ch. 43 (relating to

employment and reemployment rights of members of the uniformed

services).

Section 18.  Nothing in this act shall be construed or deemed

to imply that any interpretation or application of the

provisions of 71 Pa.C.S. Pt. XXV or benefits available to

members of the State Employees' Retirement System was not in

accordance with the provisions of 71 Pa.C.S. Pt. XXV or other

applicable law, including the Internal Revenue Code of 1986

(Public Law 99-514, 26 U.S.C. § 1 et seq.) prior to the

effective date of this section. It is the express intent of the

General Assembly that nothing in this act shall be construed to

grant to or be deemed to imply that this act expands, contracts

or otherwise affects any contractual rights, either expressed or

implied, or any other constitutionally protected rights, in the

terms and conditions of the State Employees' Retirement System

or other pension or retirement benefits as a State employee,

including, but not limited to, benefits, options, rights or

privileges established by 71 Pa.C.S. Pt. XXV for any current or

former State employees.

Section 19.  This act shall be construed and administered in

such a manner that the State Employees' Retirement System will

satisfy the requirements necessary to qualify as a qualified

pension plan under section 401(a) and other applicable

provisions of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 1 et seq.) and 38 U.S.C. Ch. 43 (relating to

employment and reemployment rights of members of the uniformed

services). The rules, regulations and procedures adopted and

promulgated by the State Employees' Retirement Board under 71

Pa.C.S. § 5902(h) may include those necessary to accomplish the

purpose of this section.

Section 20.  Nothing in this act which amends or supplements

provisions of 51 Pa.C.S. or 71 Pa.C.S. Pt. XXV shall create in

any member of the State Employees' Retirement System or in any

other person claiming an interest in the account of any member a

contractual right, either expressed or implied, in relation to

requirements for qualification of the State Employees'

Retirement System as a qualified pension plan under the Internal

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),

compliance with nor any construction of 38 U.S.C. Ch. 43

(relating to employment and reemployment rights of members of

the uniformed services), known as the Uniformed Services

Employment and Reemployment Rights Act or 71 Pa.C.S. Pt. XXV, as

amended or supplemented, or any rules or regulations adopted

under 71 Pa.C.S. Pt. XXV. The provisions of 71 Pa.C.S. Pt. XXV

shall remain subject to the Internal Revenue Code of 1986, and

the General Assembly reserves to itself the further exercise of

its legislative power to amend or supplement the provisions as

may from time to time be required in order to maintain the

qualification of the system as a qualified pension plan under

section 401(a) and other applicable provisions of the Internal

Revenue Code of 1986 and 38 U.S.C. Ch. 43.

Section 21.  References in this act to the Internal Revenue

Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et. Seq.) or 38

U.S.C. Ch. 43 (relating to employment and reemployment rights of

members of the uniformed services), including for this purpose

administrative regulations promulgated under those acts, are

intended to include laws and regulations in effect on the

effective date of this section and as they may be amended or

supplemented or supplanted by successor provisions after the

effective date of this section.

Section 22.  This act shall take effect December 31, 2012.