1Amending Titles 24 (Education), 51 (Military Affairs) and 71
2(State Government) of the Pennsylvania Consolidated Statutes,
3extensively revising pension provisions: for the Public
4School Employees' Retirement System, in the areas of
5preliminary provisions, of membership, contributions and
6benefits, of School Employees' Defined Contribution Plan and<-,
7of administration and miscellaneous provisions <-and of health 
8insurance for retired school employees; for military
9pensions, in the area of military leave of absence; for the
10State Employees' Retirement System, in the areas of
11preliminary provisions, of membership, credited service,
12classes of service and eligibility for benefits, of School
13Employees' Defined Contribution Plan and of contributions, of
14benefits, administration, funds, accounts, general
15provisions; and providing, as to the revisions, for<-
16construction, applicability, funding, amortization, re-
17amortization, recertification, liability and legal challenge;<- 
18and providing for task force on pension systems.

19The General Assembly of the Commonwealth of Pennsylvania
20hereby enacts as follows:

21ARTICLE I

22Section 101. The definitions of "alternate payee,"<-
23"beneficiary," "compensation," "creditable nonschool service,"
24"credited service," "date of termination of service,"
25"distribution," "domestic relations order," "eligible

1annuitants," "inactive member," "intervening military service,"
2"irrevocable beneficiary," "leave for service with a collective
3bargaining organization," "previous school service," "salary
4deductions," "survivor annuitant" and "valuation interest" in
5section 8102 of Title 24 of the Pennsylvania Consolidated
6Statutes are amended and the section is amended by adding
7definitions to read:

<-8Section 101. Section 8102 of Title 24 of the Pennsylvania
9Consolidated Statutes is amended by adding a definition to read:

10§ 8102. Definitions.

11The following words and phrases when used in this part shall
12have, unless the context clearly indicates otherwise, the
13meanings given to them in this section:

14* * *

<-15"Accumulated employer defined contributions." The total of
16the employer defined contributions paid into the trust on
17account of a participant's school service together with any
18investment earnings and losses and adjustments for fees, costs
19and expenses credited or charged thereon.

20"Accumulated mandatory participant contributions." The total
21of the mandatory pickup participant contributions paid into the
22trust on account of a participant's school service together with
23any investment earnings and losses and adjustments for fees,
24costs and expenses credited or charged thereon.

25"Accumulated total defined contributions." The total of the
26accumulated mandatory participant contributions, accumulated
27employer defined contributions and accumulated voluntary
28contributions, reduced by any distributions, standing to the
29credit of a participant in an individual investment account in
30the trust.

1"Accumulated voluntary contributions." The total of
2voluntary contributions paid into the trust by a participant and
3any amounts rolled over by a participant or transferred by a
4direct trustee-to-trustee transfer into the trust together with
5any investment earnings and losses and adjustments for fees,
6costs and expenses credited or charged thereon.

7"Active participant." A school employee for whom mandatory
8pickup participant contributions are being made to the trust or
9for whom such contributions otherwise required for current
10school service are not being made solely by reason of any
11provision of this part relating to the limitations under section
12401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public
13Law 99-514, 26 U.S.C. § 401(a)(17) or 415) or any provision of
14this part limiting compensation.

15* * *

16"Alternate payee." Any spouse, former spouse, child or
17dependent of a member or participant who is recognized by a
18domestic relations order as having a right to receive all or a
19portion of the moneys payable to that member or participant
20under this part.

21* * *

22"Beneficiary." [The] In the case of the system, the person
23or persons last designated in writing to the board by a member
24to receive his accumulated deductions or a lump sum benefit upon
25the death of such member. In the case of the plan, the spouse of
26a participant. If the participant is not married or the spouse
27consents, then the person or persons last designated in writing
28to the board by the participant to receive the participant's
29vested accumulated total defined contributions or a lump sum
30benefit upon the death of the participant.

1* * *

2"Combined service employee." A current or former school
3employee who is both a member of the system and a participant in
4the plan.

5* * *

6"Compensation." Pickup contributions and mandatory pickup
7participant contributions plus any remuneration received as a
8school employee excluding reimbursements for expenses incidental
9to employment and excluding any bonus, severance payments, any
10other remuneration or other emolument received by a school
11employee during his school service which is not based on the
12standard salary schedule under which he is rendering service,
13payments for unused sick leave or vacation leave, bonuses or
14other compensation for attending school seminars and
15conventions, payments under health and welfare plans based on
16hours of employment or any other payment or emolument which may
17be provided for in a collective bargaining agreement which may
18be determined by the Public School Employees' Retirement Board
19to be for the purpose of enhancing compensation as a factor in
20the determination of final average salary, and for participants,
21excluding payments for military leave, and any other payments
22made by an employer while the participant is on USERRA leave,
23leave of absence granted under 51 Pa.C.S. § 4102 (relating to
24leaves of absence for certain government employees), military
25leave of absence granted under 51 Pa.C.S. § 7302 (relating to
26granting military leaves of absence), military leave of absence
27granted under section 1176 of the act of March 10, 1949 (P.L.30,
28No.14), known as the Public School Code of 1949, or other types
29of military leave, including other types of leave payments,
30stipends, differential wage payments as defined in the Internal

1Revenue Code of 1986 § 414(u)(12) and any other payments,
2provided, however, that the limitation under section 401(a)(17)
3of the Internal Revenue Code of 1986 (Public Law 99-514, 26
4U.S.C. § 401(a)(17)) taken into account for the purpose of
5member contributions, including regular or joint coverage member
6contributions, regardless of class of service, shall apply to
7each member who first became a member of the Public School
8Employes' Retirement System on or after July 1, 1996, and who by
9reason of such fact is a noneligible member subject to the
10application of the provisions of section 8325.1 (relating to
11annual compensation limit under IRC § 401(a)(17))[.] and shall
12apply to each participant.

13* * *

14"Creditable nonschool service." Service other than service
15as a school employee for which an active member may obtain
16credit in the system.

17"Credited service." School or creditable nonschool service
18for which the required contributions have been made to the fund,
19or for which the contributions otherwise required for such
20service were not made solely by reason of any provision of this
21part relating to the limitations under section 401(a)(17) or
22415(b) of the Internal Revenue Code of 1986 (Public Law 99-514,
2326 U.S.C. § 401(a)(17) or 415(b)), or for which salary
24deductions to the system or lump sum payments have been agreed
25upon in writing.

26"Date of termination of service." The last date of service
27for which:

28(1) pickup contributions are made for an active member
29[or,];

30(2) in the case of an inactive member, the effective

1date of his resignation or the date his employment is
2formally discontinued by his employer or two years following
3the last day of service for which contributions were made,
4whichever is earliest[.];

5(3) mandatory pickup participant contributions are made
6for an active participant;

7(4) in the case of an inactive participant, the date of
8his resignation or the date his employment is formally
9discontinued by his employer; or

10(5) in the case of a combined service employee, the
11latest of the dates in paragraph (3) or (4).

12* * *

13"Distribution." Payment of all or any portion of a person's
14interest in either the Public School Employees' Retirement Fund
15or the School Employees' Defined Contribution Trust or both
16which is payable under this part.

17"Domestic relations order." Any judgment, decree or order,
18including approval of a property settlement agreement, entered
19on or after the effective date of this definition by a court of
20competent jurisdiction pursuant to a domestic relations law
21which relates to the marital property rights of the spouse or
22former spouse of a member or participant, including the right to
23receive all or a portion of the moneys payable to that member or
24participant under this part in furtherance of the equitable
25distribution of marital assets. The term includes orders of
26support as that term is defined by 23 Pa.C.S. § 4302 (relating
27to definitions) and orders for the enforcement of arrearages as
28provided in 23 Pa.C.S. § 3703 (relating to enforcement of
29arrearages).

30* * *

1"Eligible annuitants." All current and prospective
2annuitants with 24 1/2 or more eligibility points and all
3current and prospective disability annuitants. Beginning January
41, 1995, ["eligible annuitants" shall include] the term includes
5members with 15 or more eligibility points who terminated or who
6terminate school service on or after attaining superannuation
7retirement age and who are annuitants with an effective date of
8retirement after superannuation age. The term does not include
9participants.

10* * *

11"Employer defined contributions." Contributions equal to 4%
12of an active participant's compensation that are made by an
13employer for current service to the trust to be credited in the
14active participant's individual investment account.

15* * *

16"Inactive member." A member for whom no pickup contributions
17are being made to the fund, except in the case of an active
18member for whom such contributions otherwise required for
19current school service are not being made solely by reason of
20any provision of this part relating to the limitations under
21section 401(a)(17) or 415(b) of the Internal Revenue Code of
221986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)), who
23has accumulated deductions standing to his credit in the fund
24and for whom contributions have been made within the last two
25school years or a multiple service member who is active in the
26State Employees' Retirement System.

27"Inactive participant." A participant for whom no mandatory
28pickup participant contributions are being made to the trust,
29except in the case of an active participant for whom such
30contributions otherwise required for current school service are

1not being made solely by reason of any provision of this part
2relating to limitations under section 401(a)(17) or 415 of the
3Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
4401(a)(17) or 415), who has vested accumulated total defined
5contributions standing to his credit in the trust and who has
6not filed an application for an annuity.

7"Individual investment account." The account in the trust to
8which are credited the amounts of the contributions made by a
9participant and the participant's employer in accordance with
10the provisions of this part, together with all investment
11earnings after deduction for fees, costs and expenses,
12investment losses and charges for distributions.

13"Intervening military service." Active military service of a
14member who was a school employee and an active member of the
15system immediately preceding his induction into the armed
16services or forces of the United States in order to meet a draft
17obligation excluding any voluntary extension of such
18obligational service and who becomes a school employee and an
19active member of the system within 90 days of the expiration of
20such service.

21* * *

22"Irrevocable beneficiary." The person or persons permanently
23designated by a member or participant in writing to the board
24pursuant to an approved domestic relations order to receive all
25or a portion of the accumulated deductions, vested accumulated
26total defined contributions or lump sum benefit payable upon the
27death of such member or participant.

28"Irrevocable successor payee." The person permanently
29designated in writing by a participant receiving vested
30distributions to the board pursuant to an approved domestic

1relations order to receive one or more distributions from the
2plan upon the death of such participant.

3* * *

4"Leave for service with a collective bargaining
5organization." Paid leave granted to an active member or active
6participant by an employer for purposes of working full time for
7or serving full time as an officer of a Statewide employee
8organization or a local collective bargaining representative
9under the act of July 23, 1970 (P.L.563, No.195), known as the
10Public Employe Relations Act: Provided, That greater than one-
11half of the members of the employee organization are active
12members of the system or active participants of the plan; that
13the employer shall fully compensate the member or active
14participant, including, but not limited to, salary, wages,
15pension and retirement contributions and benefits, other
16benefits and seniority, as if he were in full-time active
17service; and that the employee organization shall fully
18reimburse the employer for such salary, wages, pension and
19retirement contributions and benefits and other benefits and
20seniority.

21"Mandatory pickup participant contributions." Contributions
22equal to 7.5% of compensation that are made by the employer for
23active participants for current service.

24* * *

25"Participant." An active participant, inactive participant
26or participant receiving distributions.

27"Participant receiving distributions." A participant in the
28plan who has commenced receiving distributions from his
29individual investment account but who has not received a total
30distribution of his vested interest in the individual investment

1account.

2* * *

3"Plan." The School Employees' Defined Contribution Plan as
4established by the provisions of this part and the board.

5"Plan document." The documents created by the board under
6section 8402 (relating to plan document) that contain the terms
7and provisions of the plan and trust as established by the board
8regarding the establishment, administration and investment of
9the plan and trust.

10"Previous school service." Service [rendered] as a school
11employee, including service in any summer school conducted by a
12school district of the Commonwealth, but excluding service
13rendered during which the school employee was or could have been
14a participant in the plan, prior to the member's most recent
15entrance in the system.

16* * *

17"Reemployed from USERRA leave." Resumption of active
18participation as a school employee after a period of USERRA
19leave, provided the resumption of active participation was
20within the time period and under conditions and circumstances
21such that the school employee was entitled to reemployment
22rights under 38 U.S.C. Ch. 43 (relating to employment and
23reemployment rights of members of the uniformed services).

24* * *

25"Required beginning date." The latest date by which
26distributions of a participant's interest in his individual
27investment account must commence under the Internal Revenue Code
28of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(9)).

29* * *

30"Salary deductions." The amounts certified by the board,

1deducted from the compensation of an active member or active
2participant or the State service compensation of a multiple
3service member who is an active member of the State Employees'
4Retirement System or active participant of the School Employees'
5Defined Contribution Plan and paid into the fund or trust.

6* * *

7"State Employees' Defined Contribution Plan." The defined
8contribution plan for State employees established by 71 Pa.C.S.
9Pt. XXV (relating to retirement for State employees and
10officers).

11* * *

12"Successor payee." The person or persons last designated in
13writing by a participant receiving distributions to the board to
14receive one or more distributions upon the death of such
15participant.

16* * *

17"Survivor annuitant." The person or persons last designated
18by a member under a joint and survivor annuity option to receive
19an annuity upon the death of such member. A combined service
20employee may designate different persons to be survivor
21annuitants for the benefits from the system and beneficiaries or
22successor payees for the benefits from the plan.

23* * *

24"Trust." The School Employees' Defined Contribution Trust
25established under Chapter 84 (relating to School Employees'
26Defined Contribution Plan).

27"USERRA leave." Any period of time for service in the
28uniformed services as defined in 38 U.S.C. Ch. 43 (relating to
29employment and reemployment rights of members of the uniformed
30services) by a participant or former participant who terminated

1school service to perform such service in the uniformed
2services, if such current or former participant is entitled to
3reemployment rights under 38 U.S.C. Ch. 43 with respect to such
4uniformed service.

5"Valuation interest." Interest at 5 1/2% per annum,
6compounded annually and applied to all accounts of the fund
7other than the members' savings account.

8* * *

9"Voluntary contributions." Contributions made by a
10participant to the trust and credited to his individual
11investment account in excess of his mandatory pickup participant
12contributions, either by salary deductions paid through the
13employer or by an eligible rollover or direct trustee-to-trustee
14transfers.

15Section 102. Section 8103 of Title 24 is amended by adding
16subsections to read:

17§ 8103. Construction of part.

18* * *

19(c) Construction regarding inactive member and inactive
20participant.--As used in this part:

21(1) The term "inactive member" does not include a
22combined service employee who is an "inactive participant,"
23unless the combined service employee is concurrently employed
24in a position in which such employee is a member of the
25system.

26(2) The term "inactive participant" does not include a
27combined service employee who is an "inactive member," unless
28the combined service employee is concurrently employed in a
29position in which such employee is a participant in the plan.

30(d) Provisions severable.--The provisions of this part are

1severable and if any of its provisions shall be held to be
2unconstitutional, the decision of the court shall not affect or
3impair any of the remaining provisions. It is hereby declared to
4be the legislative intent that this part would have been adopted
5had such unconstitutional provisions not been included.

6(e) References to certain Federal statutes.--References in
7this part to the IRC or the Uniformed Services Employment and
8Reemployment Rights Act of 1994 (Public Law 103-353, 108 Stat.
93149), including administrative regulations promulgated under
10the IRC or the Uniformed Services Employment and Reemployment
11Rights Act of 1994, are intended to include laws and regulations
12in effect on the effective date of this section and amended,
13supplemented or supplanted on and after the effective date of
14this section.

15(f) Construction.--

16(1) This part may not be construed to mean that the
17limitations on benefits or other requirements under IRC §
18401(a) or other applicable provisions of the IRC that are 
19applicable to participants in the plan do not apply to the
20participants or to the members of the system and the benefits
21payable under Part IV.

22(2) This part may not be construed to mean that an
23interpretation or application of the provisions of Part IV or
24benefits available to members of the Public School Employees'
25Retirement System was not in accordance with the provisions
26of Part IV or other applicable law, including the IRC and the
27Uniformed Services Employment and Reemployment Rights Act of
281994 before the effective date of this section.

29(3) This part may not be construed to mean that the
30release or publicizing of a record, material or data that

1would not constitute a public record under section 8502(e)(2)
2(relating to administrative duties of board) is a violation
3of the fiduciary duties of the board.

4(g) Applicability.--The following shall apply:

5(1) The amendment of Part IV regarding the establishment
6of and participation in the plan shall apply to current and
7former members of the system who have returned to school
8service on or after July 1, 2015, after a termination of
9school service, notwithstanding the following:

10(i) Whether the termination occurred before or after
11July 1, 2015.

12(ii) Whether the school employee was an annuitant,
13inactive member, vestee or special vestee or withdrew
14accumulated deductions during the period of termination.

15(2) A terminated school employee who returns to school
16service on or after July 1, 2015, is subject to the
17provisions of Part IV regarding participation in the plan or
18membership in the system that are in effect on the effective
19date of reemployment, including, but not limited to, benefit
20formulas and accrual rates, eligibility for annuities and
21distributions, contribution rates, definitions, purchase of
22creditable school and nonschool service provisions and
23actuarial and funding assumptions.

24(3) This part shall apply to a record, material or data
25under 8502(e)(2) notwithstanding whether:

26(i) the record, material or data was created,
27generated or stored before the effective date of this
28section;

29(ii) the record, material or data was previously
30released or made public; or

1(iii) a request for the record, material or data was
2made or is pending final response under the former act of
3June 21, 1957 (P.L.390, No.212), referred to as the
4Right-to-Know Law, or the act of February 14, 2008
5(P.L.6, No.3), known as the Right-to-Know Law.

6Section 103. Title 24 is amended by adding a section to
7read:

8§ 8103.1. Reference to Public School Employees' Retirement
9System.

10As of the effective date of this section, unless the context
11clearly indicates otherwise, a reference to the Public School
12Employees' Retirement System in a statutory provision, other
13than this part and 71 Pa.C.S. Pt. XXV (relating to retirement
14for State employees and officers), shall include a reference to
15the plan, and a reference to the Public School Employees'
16Retirement Fund shall include a reference to the trust.

17Section 104. Section 8301 of Title 24 is amended to read:

<-18Section 102. Sections 8301(a), 8346(a) and (d)(1) and
198507(a) of Title 24 are amended to read:

20§ 8301. Mandatory and optional membership.

21(a) Mandatory membership <-in system and participation in 
22plan.--[Membership] Unless an election to be a participant in 
23the plan is made, membership

24(<-a) Mandatory membership.--Membership in the system shall be
25mandatory as of the effective date of employment for all school
26employees except the following:

27(1) Any officer or employee of the Department of
28Education, State-owned educational institutions, community
29colleges, area vocational-technical schools, technical
30institutes, or the Pennsylvania State University and who is a

1member of the State Employees' Retirement System<-, the State 
2Employees' Defined Contribution Plan or a member of another
3retirement program approved by the employer.

4(2) Any school employee who is not a member of the 
5system and who is employed on a per diem or hourly basis for
6less than 80 full-day sessions or 500 hours in any fiscal
7year or annuitant who returns to school service under the
8provisions of section 8346(b) (relating to termination of
9annuities).

10(3) Any officer or employee of a governmental entity who
11subsequent to December 22, 1965, and prior to July 1, 1975,
12administers, supervises, or teaches classes financed wholly
13or in part by the Federal Government so long as he continues
14in such service.

15(4) Any part-time school employee who has an individual
16retirement account pursuant to the Federal act of September
172, 1974 (Public Law 93-406, 88 Stat. 829), known as the
18Employee Retirement Income Security Act of 1974.

<-19(5) Any school employee whose most recent period of
20school service starts on or after July 1, 2015.

21(b) Prohibited membership.--The school employees categorized
22in subsection (a)(1) [and], (2) and (5) shall not have the right
23to elect membership in the system.

24(c) Optional membership in system.--The school employees
25categorized in subsection (a)(3) and, if otherwise eligible,
26subsection (a)(4) shall have the right to elect membership in
27the system on or before July 1, 2015. Once such election is
28exercised, membership shall commence from the original date of
29eligibility and shall continue until the termination of such
30service[.] or until the school employee elects to be a

1participant in the plan.

2(d) Mandatory participation in the plan.--Unless the
3employee is or elects to be a participant in the State Employes'
4Defined Contribution Plan, a member of the State Employees'
5Retirement System or a member of another retirement program
6approved by the employer, a school employee who, on or after
7July 1, 2015, begins school service or returns to school service
8after a break in service shall be a mandatory participant in the
9plan as a result of the school service. A school employee who is
10a nonmember and waived membership under subsection (a)(4) shall
11be a mandatory participant in the plan commencing for the school
12service rendered on or after July 1, 2015.

13(e) Certain agreements.--The agreement of an employer to
14make contributions to the fund or to enroll its employees as
15members in the system shall be deemed to be an agreement to make
16contributions to the trust or to enroll its employees in the
17plan.

18Section 105. Section 8302(a), (b) and (c) of Title 24 are
19amended and the section is amended by adding a subsection to
20read:

21§ 8302. Credited school service.

22(a) Computation of credited service.--In computing credited
23school service of a member for the determination of benefits, a
24full-time salaried school employee shall receive one year of
25credit for each school year or the corresponding fraction
26thereof, in accordance with the proportion of the full school
27year for which the required regular member contributions have
28been made to the fund, or for which such contributions otherwise
29required for such service were not made to the fund solely by
30reason of any provision of this part relating to the limitations

1under IRC § 401(a)(17) or 415(b) or another provision of this
2part limiting compensation. A per diem or hourly school employee
3shall receive one year of credited service for each
4nonoverlapping period of 12 consecutive months in which he is
5employed and for which contributions are made to the fund, or
6would have been made to the fund but for such limitations under
7the IRC, or another provision of this part limiting compensation
8for at least 180 full-day sessions or 1,100 hours of employment.
9If such member was employed and contributions were made to the
10fund for less than 180 full-day sessions or 1,100 hours, he
11shall be credited with a fractional portion of a year determined
12by the ratio of the number of full-day sessions or hours of
13service actually rendered and for which contributions are made
14to the fund to 180 full-day sessions or 1,100 hours, as the case
15may be. A part-time salaried employee shall be credited with the
16fractional portion of the year which corresponds to the service
17actually rendered and for which contributions are or would have
18been made to the fund in relation to the service required as a
19comparable full-time salaried employee. In no case shall a
20member receive more than one year of credited service for any 12
21consecutive months or a member who has elected multiple service
22receive an aggregate in the two systems of more than one year of
23credited service for any 12 consecutive months.

24(b) Approved leaves of absence.--An active member shall
25receive credit, and an active participant shall receive vesting
26credit, for an approved leave of absence provided that:

27(1) the member returns for a period at least equal to
28the length of the leave or one year as a member of the system
29or the participant returns to school service as an active
30participant in the plan, whichever is less, to the school

1district which granted his leave, unless such condition is
2waived by the employer; and

3(2) the proper contributions are made by the member and
4the employer or by the active participant and the employer.

5* * *

6(c) Cancellation of credited service.--All credited service
7in the system shall be cancelled if a member withdraws his
8accumulated deductions. A partial or total distribution of
9accumulated total defined contributions to a combined service
10employee shall not cancel service credited in the system.

11(d) Military service by a participant.--A participant who
12has performed USERRA leave shall be treated and may make
13contributions as follows:

14(1) A participant who is reemployed from USERRA leave
15shall be treated as not having incurred a break in school
16service by reason of the USERRA leave and shall be granted
17vesting credit as if the participant had not been on USERRA
18leave. If a participant who is reemployed from USERRA leave
19subsequently makes mandatory pickup participant contributions
20in the amounts and in the time periods required by 38 U.S.C.
21Ch. 43 (relating to employment and reemployment rights of
22members of the uniformed services) and IRC § 414(u) as if the
23participant had continued in his school employment and
24performed school service and been compensated during the
25period of USERRA leave, then the participant's employer shall
26make the corresponding employer defined contributions. Such
27an employee shall have his contributions, benefits, rights
28and obligations determined under this part as if he was an
29active participant who performed school service during the
30USERRA leave in the job position that he would have held had

1he not been on USERRA leave and received the compensation on
2which the mandatory pickup participant contributions to
3receive school service credit for the USERRA leave were
4determined, including the right to make voluntary
5contributions on such compensation as permitted by law.

6(2) A participant who is reemployed from USERRA leave
7and does not make the mandatory pickup participant
8contributions or makes only part of the mandatory pickup
9participant contributions within the allowed payment period
10shall not be eligible to make mandatory pickup participant
11contributions and voluntary contributions at a later date for
12the period of USERRA leave for which the mandatory pickup
13participant contributions were not timely made.

14(3) A participant who performs USERRA leave from which
15the employee could have been reemployed from USERRA leave had
16the school employee returned to school service in the time
17frames required by 38 U.S.C. Ch. 43 for reemployment rights,
18but did not do so, shall not be eligible to make mandatory
19pickup participant contributions or voluntary contributions
20for the period of USERRA leave should the employee later
21return to school service and be a participant in the plan.

22(4) An active participant or inactive participant who,
23on or after the effective date of this subsection, is granted
24a leave of absence under 51 Pa.C.S. § 4102 (relating to
25leaves of absence for certain government employees) or a
26military leave under 51 Pa.C.S. Ch. 73 (relating to military
27leave of absence) that is not USERRA leave shall not be
28eligible to make mandatory pickup participant contributions
29or voluntary contributions during or for the leave of absence
30or military leave, and shall not have employer defined

1contributions made during such leave, without regard to
2whether or not the participant received salary, wages,
3stipends, differential wage payments or other payments from
4his employer during the leave, notwithstanding any provision
5to the contrary in 51 Pa.C.S. § 4102 or Ch. 73.

6(5) If a participant dies while performing USERRA leave,
7then the beneficiaries or successor payees, as the case may
8be, of the deceased participant are entitled to any
9additional benefits, other than benefit accruals relating to
10the period of qualified military service, provided under this
11part had the participant resumed and then terminated
12employment on account of death.

13Section 106. Section 8303.1 of Title 24 is amended to read:

14§ 8303.1. Waiver of adjustments.

15(a) Allowance.--Upon appeal by an affected member,
16participant, beneficiary or survivor annuitant, the board may
17waive an adjustment or any portion of an adjustment made under
18section 8534(b) (relating to fraud and adjustment of errors) if
19in the opinion of the board or the board's designated
20representative:

21(1) the adjustment or portion of the adjustment will
22cause undue hardship to the member, participant, beneficiary
23or survivor annuitant;

24(2) the adjustment was not the result of erroneous
25information supplied by the member, participant, beneficiary
26or survivor annuitant;

27(3) the member or participant had no knowledge or notice
28of the error before adjustment was made, and the member,
29participant, beneficiary or survivor annuitant took action
30with respect to their benefits based on erroneous information

1provided by the system or plan; and

2(4) the member, participant, beneficiary or survivor
3annuitant had no reasonable grounds to believe the erroneous
4information was incorrect before the adjustment was made.

5(b) Time period.--

6(1) In order to obtain consideration of a waiver under
7this section, the affected member, participant, beneficiary
8or survivor annuitant must appeal to the board in writing
9within 30 days after receipt of notice that benefits have
10been adjusted or, if no notice was given, within 30 days
11after the adjustment was known or should have been known to
12the affected member, participant, beneficiary or survivor
13annuitant.

14(2) For any adjustments made prior to the effective date
15of this subsection for which the member, participant,
16beneficiary or survivor annuitant appealed to the board and
17was denied, an appeal under this section must be filed within
1890 days of the effective date of this subsection.

19(3) For any adjustments made prior to the effective date
20of this paragraph for which the participant appealed to the
21board and was denied, an appeal under this section must be
22filed within 90 days of the effective date of this paragraph.

23Section 107. Title 24 is amended by adding a section to
24read:

25§ 8303.2. Spouses rights, benefits and effect of nomination of
26spouse.

27(a) No rights of participation in spouse.--The spouse of a
28participant does not have any of the rights, options or
29privileges of a participant. The rights of a spouse shall remain
30derivative of those of the participant, including, but not

1limited to, rights under the act of July 8, 1978 (P.L.752,
2No.140), known as the Public Employee Pension Forfeiture Act,
3section 16(b) of Article V of the Constitution of Pennsylvania,
4and a spouse may not compel a participant to take, or prevent a
5participant from taking, any action regarding membership, rights
6or benefits in the plan in which he is a participant other than
7those expressly set forth in this part; nor may a spouse take
8any action on behalf of a participant, except as otherwise duly
9authorized under this part.

10(b) No waiver of benefits without spousal consent.--To the
11extent that the law allows a participant to waive any benefits
12or return of contributions which the participant is entitled to
13receive now or in the future, or is receiving, no such waiver
14will be valid unless the spouse of the participant consents to
15it as provided for in this part.

16(c) Effect of nomination of spouse as beneficiary by law.--
17Whenever the spouse of a participant in the plan is deemed to be
18the beneficiary by operation of law instead of by a written
19nomination of beneficiary filed with the board, then the person
20last nominated as beneficiary in writing filed with the board
21shall become the contingent beneficiary.

22Section 108. Section 8305(b) of Title 24 is amended and the
23section is amended by adding a subsection to read:

24§ 8305. Classes of service.

25* * *

26(b) Other class membership.--A school employee who is a
27member of a class of service other than Class T-C on the
28effective date of this part may elect to become a member of
29Class T-C or Class T-D or may retain his membership in such
30other class until the service is discontinued or he elects to

1become a full coverage member or elects to purchase credit for
2previous school or creditable nonschool service. Any service
3thereafter as a member of the system shall be credited as Class
4T-C or T-D service as applicable.

5* * *

6(f) Ineligibility for active membership and classes of
7service.--An individual who elects to be a participant in the
8plan or who is a school employee on July 1, 2015, but who is not
9a member of the system, or who first becomes a school employee
10on or after July 1, 2015, or who returns to school service on or
11after July 1, 2015, after a termination of school service, shall
12be ineligible for active membership in the system. Instead, any
13such school employee shall be a participant in the plan as a
14result of such school service, subject to the provisions in
15section 8301 (relating to mandatory and optional membership).

16Section 109. Sections 8305.1(c) and 8305.2(d) of Title 24
17are amended to read:

18§ 8305.1. Election to become a Class T-D member.

19* * *

20(c) Effect of election.--An election to become a Class T-D
21member shall remain in effect until the termination of
22employment except as otherwise provided in this part. Those
23members who, on the effective date of this section, contribute
24at the rate of 5 1/4% shall be deemed to have accepted the basic
25contribution rate of 6 1/2% for all Class T-D service performed
26on or after January 1, 2002. Those members who, on the effective
27date of this section, contribute at the rate of 6 1/4% shall be
28deemed to have accepted the basic contribution rate of 7 1/2%
29for all Class T-D service performed on or after January 1, 2002.
30Upon termination and a subsequent reemployment that occurs

1before July 1, 2015, the class of service of the school employee
2shall be credited in the class of service otherwise provided for
3in this part. If the reemployment occurs on or after July 1,
42015, the school employee's eligibility for membership in the
5system or participation in the plan shall be as provided in this
6part.

7* * *

8§ 8305.2. Election to become a Class T-F member.

9* * *

10(d) Effect of failure to make election.--If a member fails
11to timely file an election to become a Class T-F member, then
12the member shall be enrolled as a member of Class T-E, unless
13the school employee elects or is required to be a participant in
14the plan, and the member shall never be able to elect Class T-F
15service, regardless of whether the member terminates service or
16has a break in service.

17Section 110. (Reserved).

18Section 111. (Reserved).

19Section 112. Sections 8306(b), 8307(a) and (b), 8310,
208322.1(a), 8323(a) and (d), 8324(b), (c) and (d), 8325,
218325.1(a), 8326(a) and (c), 8327, 8328(a), (b), (c), (d), (e)
22and (g), 8330 and 8341 of Title 24 are amended to read:

23§ 8306. Eligibility points.

24* * *

25(b) Transitional rule.--For the purposes of the transition:

26(1) In determining whether a member, other than a
27disability annuitant who returns to school service after June
2830, 2001, upon termination of the disability annuity, who is
29not a school employee or a State employee on June 30, 2001,
30and July 1, 2001, and who has previous school service, has

1the five eligibility points required by the definition of
2"vestee" in sections 8102 (relating to definitions), 8307
3(relating to eligibility for annuities), 8308 (relating to
4eligibility for vesting) and 8345 (relating to member's
5options), only eligibility points earned by performing
6credited school service as an active member of the system or
7credited State service as an active member of the State
8Employees' Retirement System after June 30, 2001, shall be
9counted until such member earns one eligibility point by
10performing credited school service or credited State service
11after June 30, 2001, at which time all eligibility points as
12determined under subsection (a) shall be counted.

13(2) A member subject to paragraph (1) shall be
14considered to have satisfied any requirement for five
15eligibility points contained in this part if the member has
16at least ten eligibility points determined under subsection
17(a).

18§ 8307. Eligibility for annuities.

19(a) Superannuation annuity.--An active or an inactive member
20who attains superannuation age shall be entitled to receive a
21superannuation annuity upon termination of service and filing of
22a proper application. A combined service employee who is an
23active or inactive participant and attains superannuation age
24shall be entitled to receive a superannuation annuity upon
25termination of service and filing of a proper application.

26(b) Withdrawal annuity.--A vestee in Class T-C or Class T-D
27with five or more eligibility points or an active or inactive
28Class T-C or Class T-D member or a combined service employee
29with Class T-C or Class T-D service who terminates school
30service having five or more eligibility points shall, upon

1filing a proper application, be entitled to receive an early
2annuity. A vestee in Class T-E or Class T-F with ten or more
3eligibility points or an active or inactive Class T-E or Class
4T-F member or a combined service employee with Class T-E or
5Class T-F service who terminates school service having ten or
6more eligibility points shall, upon filing a proper application,
7be entitled to receive an early annuity.

8* * *

9§ 8310. Eligibility for refunds.

10Upon termination of service any active member, regardless of
11eligibility for benefits, may elect to receive his accumulated
12deductions in lieu of any benefit from the system to which he is
13entitled.

14§ 8322.1. Pickup contributions.

15(a) Treatment for purposes of IRC § 414(h).--All
16contributions to the fund required to be made under sections
178321 (relating to regular member contributions for current
18service) and 8322 (relating to joint coverage member
19contributions), with respect to current school service rendered
20by an active member on or after January 1, 1983, shall be picked
21up by the employer and shall be treated as the employer's
22contribution for purposes of IRC § 414(h).

23* * *

24§ 8323. Member contributions for creditable school service.

25(a) Previous school service, sabbatical leave and full
26coverage.--The contributions to be paid by an active member or
27an eligible State employee for credit in the system for
28reinstatement of all previously credited school service, school
29service not previously credited, sabbatical leave as if he had
30been in full-time daily attendance, or full-coverage membership

1shall be sufficient to provide an amount equal to the
2accumulated deductions which would have been standing to the
3credit of the member for such service had regular member
4contributions been made with full coverage at the rate of
5contribution necessary to be credited as Class T-C service,
6Class T-D service if the member is a Class T-D member, Class T-E
7service if the member is a Class T-E member or Class T-F service
8if the member is a Class T-F member and had such contributions
9been credited with statutory interest during the period the
10contributions would have been made and during all periods of
11subsequent school service as an active member or inactive member
12and State service as an active member or inactive member on
13leave without pay up to the date of purchase.

14* * *

15(d) Certification and payment of contributions.--

16(1) In all cases other than for the purchase of credit
17for sabbatical leave and activated military service leave
18beginning before the effective date of paragraph (2), the
19amount payable shall be certified by the board in accordance
20with methods approved by the actuary and may be paid in a
21lump sum within 90 days or in the case of an active member or
22an eligible State employee who is an active member of the
23State Employees' Retirement System it may be amortized with
24statutory interest through salary deductions to the system
25in amounts agreed upon by the member and the board. The
26salary deduction amortization plans agreed to by members and
27the board may include a deferral of payment amounts and
28statutory interest until the termination of school service or
29State service or becoming a participant and combined service
30employee as the board in its sole discretion decides to

1allow. The board may limit salary deduction amortization
2plans to such terms as the board in its sole discretion
3determines. In the case of an eligible State employee who is
4an active member of the State Employees' Retirement System,
5the agreed upon salary deductions shall be remitted to the
6State Employees' Retirement Board, which shall certify and
7transfer to the board the amounts paid.

8(2) In the case of activated military service leave
9beginning before the effective date of this paragraph, the
10amount payable may be paid according to this subsection or
11subsection (c.1), but all lump sum payments must be made
12within one year of the termination of activated military
13service leave.

14§ 8324. Contributions for purchase of credit for creditable
15nonschool service and noncreditable school service.

16* * *

17(b) Nonintervening military service.--The amount due for the
18purchase of credit for military service other than intervening
19military service shall be determined by applying the member's
20basic contribution rate plus the normal contribution rate as
21provided in section 8328 (relating to actuarial cost method) at
22the time of entry of the member into school service subsequent
23to such military service to one-third of his total compensation
24received during the first three years of such subsequent
25credited school service and multiplying the product by the
26number of years and fractional part of a year of creditable
27nonintervening military service being purchased together with
28statutory interest during all periods of subsequent school
29service as an active member or inactive member and State service
30as an active member or inactive member on leave without pay to

1date of purchase. Upon certification of the amount due, payment
2may be made in a lump sum within 90 days or in the case of an
3active member or an eligible State employee who is an active
4member of the State Employees' Retirement System it may be
5amortized with statutory interest through salary deductions to
6the system in amounts agreed upon by the member and the board.
7The salary deduction amortization plans agreed to by members and
8the board may include a deferral of payment amounts and
9statutory interest until the termination of school service or
10State service or becoming a participant and a combined service
11employee as the board in its sole discretion decides to allow.
12The board may limit salary deduction amortization plans to such
13terms as the board in its sole discretion determines. In the
14case of an eligible State employee who is an active member of
15the State Employees' Retirement System, the agreed upon salary
16deductions shall be remitted to the State Employees' Retirement
17Board, which shall certify and transfer to the board the amounts
18paid. Application may be filed for all such military service
19credit upon completion of three years of subsequent credited
20school service and shall be credited as Class T-C service. In
21the event that a Class T-E member makes a purchase of credit for
22such military service, then such service shall be credited as
23Class T-E service. In the event that a Class T-F member makes a
24purchase of credit for such military service, then such service
25shall be credited as Class T-F service.

26(c) Intervening military service.--Contributions on account
27of credit for intervening military service shall be determined
28by the member's basic contribution rate and compensation at the
29time of entry of the member into active military service,
30together with statutory interest during all periods of

1subsequent school service as an active member or inactive member
2and State service as an active member or inactive member on
3leave without pay to date of purchase. Upon application for such
4credit the amount due shall be certified in the case of each
5member by the board, in accordance with methods approved by the
6actuary, and contributions may be made by one of the following
7methods:

8(1) Regular monthly payments during active military
9service.

10(2) A lump sum payment within 90 days of certification
11of the amount due.

12(3) Salary deductions to the system in amounts agreed
13upon by the member and the board. The salary deduction
14amortization plans agreed to by the members and the board may
15include a deferral of payment amounts and statutory interest
16until the termination of school service or State service or
17becoming a participant and a combined service employee as the
18board in its sole discretion decides to allow. The board may
19limit salary deduction amortization plans to such terms as
20the board in its sole discretion determines. In the case of
21an eligible State employee who is an active member of the
22State Employees' Retirement System, the agreed upon salary
23deductions shall be remitted to the State Employees'
24Retirement Board, which shall certify and transfer to the
25board the amounts paid.

26(d) Other creditable nonschool service and noncreditable
27school service.--

28(1) Contributions on account of Class T-C credit for
29creditable nonschool service other than military service
30shall be determined by applying the member's basic

1contribution rate plus the normal contribution rate as
2provided in section 8328 at the time of the member's entry
3into school service subsequent to such creditable nonschool
4service to his total compensation received during the first
5year of subsequent credited school service and multiplying
6the product by the number of years and fractional part of a
7year of creditable nonschool service being purchased together
8with statutory interest during all periods of subsequent
9school service as an active member or inactive member or
10State service as an active member or inactive member on leave
11without pay to the date of purchase, except that in the case
12of purchase of credit for creditable nonschool service as set
13forth in section 8304(b)(5) (relating to creditable nonschool
14service) the member shall pay only the employee's share
15unless otherwise provided by law. Upon certification of the
16amount due, payment may be made in a lump sum within 90 days
17or in the case of an active member or an eligible State
18employee who is an active member of the State Employees'
19Retirement System it may be amortized with statutory interest
20through salary deductions to the system in amounts agreed
21upon by the member and the board. The salary deduction
22amortization plans agreed to by the members and the board may
23include a deferral of payment amounts and statutory interest
24until the termination of school service or State service or
25becoming a participant and combined service employee as the
26board in its sole discretion decides to allow. The board may
27limit salary deduction amortization plans to such terms as
28the board in its sole discretion determines. In the case of
29an eligible State employee who is an active member of the
30State Employees' Retirement System, the agreed upon salary

1deductions shall be remitted to the State Employees'
2Retirement Board, which shall certify and transfer to the
3board the amounts paid.

4(2) Contributions on account of Class T-E or Class T-F
5credit for creditable nonschool service other than military
6service shall be the present value of the full actuarial cost
7of the increase in the projected superannuation annuity
8caused by the additional service credited on account of the
9purchase. Upon certification of the amount due, payment may
10be made in a lump sum within 90 days or, in the case of an
11active member or an eligible State employee who is an active
12member of the State Employees' Retirement System, it may be
13amortized with statutory interest through salary deductions
14to the system in amounts agreed upon by the member and the
15board. The salary deduction amortization plans agreed to by
16the members and the board may include a deferral of payment
17amounts and statutory interest until the termination of
18school service or State service or becoming a participant and
19combined service employee as the board in its sole discretion
20decides to allow. The board may limit salary deduction
21amortization plans to the terms as the board in its sole
22discretion determines. In the case of an eligible State
23employee who is an active member of the State Employees'
24Retirement System, the agreed upon salary deductions shall be
25remitted to the State Employees' Retirement Board, which
26shall certify and transfer to the board the amounts paid.

27(3) Contributions on account of Class T-E or Class T-F
28credit for noncreditable school service other than military
29service shall be the present value of the full actuarial cost
30of the increase in the projected superannuation annuity

1caused by the additional service credited on account of the
2purchase. Upon certification of the amount due, payment may
3be made in a lump sum within 90 days or, in the case of an
4active member or an eligible State employee who is an active
5member of the State Employees' Retirement System, it may be
6amortized with statutory interest through salary deductions
7to the system in amounts agreed upon by the member and the
8board. The salary deduction amortization plans agreed to by
9the members and the board may include a deferral of payment
10amounts and statutory interest until the termination of
11school service or State service or becoming a participant and
12combined service employee as the board in its sole discretion
13decides to allow. The board may limit salary deduction
14amortization plans to the terms as the board in its sole
15discretion determines. In the case of an eligible State
16employee who is an active member of the State Employees'
17Retirement System, the agreed upon salary deductions shall be
18remitted to the State Employees' Retirement Board, which
19shall certify and transfer to the board the amounts paid.

20* * *

21§ 8325. Incomplete payments.

22(a) Right to pay balance due.--In the event that a member
23terminates school service or becomes a participant or a multiple
24service member who is an active member of the State Employees'
25Retirement System terminates State service before any agreed
26upon payments or return of benefits on account of returning to
27school service or entering State service and electing multiple
28service have been completed, the member or multiple service
29member who is an active member of the State Employees'
30Retirement System shall have the right to pay within 30 days of

1termination of school service or State service or becoming a
2participant the balance due, including interest, in a lump sum,
3and the annuity shall be calculated including full credit for
4the previous school service, creditable nonschool service, or
5full-coverage membership.

6(b) Effect of failure to pay balance due.--In the event a
7member does not pay the balance due within 30 days of
8termination of school service or becoming a participant or in
9the event a member dies in school service or within 30 days of
10termination of school service or in the case of a multiple
11service member who is an active member of the State Employees'
12Retirement System does not pay the balance due within 30 days of
13termination of State service or dies in State service or within
1430 days of termination of State service or becoming a
15participant and before the agreed upon payments have been
16completed, the present value of the benefit otherwise payable
17shall be reduced by the balance due, including interest, and the
18benefit payable shall be calculated as the actuarial equivalent
19of such reduced present value.

20§ 8325.1. Annual compensation limit under IRC § 401(a)(17).

21(a) General rule.--In addition to other applicable
22limitations set forth in this part, and notwithstanding any
23provision of this part to the contrary, the annual compensation
24of each noneligible member and each participant taken into
25account for benefit purposes under this subchapter shall not
26exceed the limitation under IRC § 401(a)(17). On and after July
271, 1996, any reference in this part to the limitation under IRC
28§ 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
291993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
30compensation limit set forth in this subsection. The OBRA '93

1annual compensation limit is $150,000, as adjusted by the
2commissioner for increases in the cost of living in accordance
3with IRC § 401(a)(17)(B). The cost-of-living adjustment in
4effect for a calendar year applies to any determination period
5which is a period, not exceeding 12 months, over which
6compensation is determined, beginning in such calendar year. If
7a determination period consists of fewer than 12 months, the
8OBRA '93 compensation limit will be multiplied by a fraction,
9the numerator of which is the number of months in the
10determination period and the denominator of which is 12.

11* * *

12§ 8326. Contributions by the Commonwealth.

13(a) Contributions on behalf of active members and
14participants.--The Commonwealth shall make contributions into
15the fund on behalf of all active members and participants,
16including members and participants on activated military service
17leave, in an amount equal to one-half the amount certified by
18the board as necessary to provide, together with the members'
19contributions, annuity reserves on account of prospective
20annuities as provided in this part in accordance with section
218328 (relating to actuarial cost method). In case a school
22employee has elected membership in a retirement program approved
23by the employer, the Commonwealth shall contribute to such
24program on account of his membership an amount no greater than
25the amount it would have contributed had the employee been a
26member of the Public School Employees' Retirement System.

27* * *

28(c) Contributions after June 30, 1995.--

29(1) The Commonwealth shall make contributions into the
30fund on behalf of all active members and participants,

1including members and participants on activated military
2service leave, for service performed after June 30, 1995, in
3the following manner:

4(i) For members and participants who are employees
5of employers that are school entities, no Commonwealth
6contributions shall be made.

7(ii) For members and participants who are employees
8of employers that are not school entities, the amount
9computed under subsection (a).

10(2) The Commonwealth shall make contributions into the
11fund on behalf of annuitants for all amounts due to the fund
12after June 30, 1995, including, but not limited to, amounts
13due pursuant to section 8328(d) and (f), in the following
14manner:

15(i) For members and participants who are employees
16of employers who are school entities, no Commonwealth
17contributions shall be made.

18(ii) For members and participants who are employees
19of employers who are not school entities, the amount
20computed under subsection (b).

21§ 8327. Payments by employers.

22(a) General rule.--[Each]

23(1) For payments prior to June 30, 2015, each employer,
24including the Commonwealth as employer of employees of the
25Department of Education, State-owned colleges and
26universities, Thaddeus Stevens College of Technology, Western
27Pennsylvania School for the Deaf, Scotland School for
28Veterans' Children[,] and [the] The Pennsylvania State
29University, shall make payments to the fund each quarter in
30an amount equal to one-half the sum of the percentages, as

1determined under section 8328 (relating to actuarial cost
2method), applied to the total compensation during the pay
3periods in the preceding quarter of all its employees who
4were members of the system during such period, including
5members on activated military service leave. In the event a
6member on activated military service leave does not return to
7service for the necessary time or receives an undesirable,
8bad conduct or dishonorable discharge or does not elect to
9receive credit for activated military service under section
108302(b.1)(3) (relating to credited school service), the
11contributions made by the employer on behalf of such member
12shall be returned with valuation interest upon application by
13the employer.

14(2) For payments after June 30, 2015, each employer,
15including the Commonwealth as employer of employees of the
16Department of Education, State-owned colleges and
17universities, Thaddeus Stevens College of Technology, Western
18Pennsylvania School for the Deaf, Scotland School for
19Veterans' Children and The Pennsylvania State University,
20shall make payments to the fund each quarter in an amount
21equal to one-half the sum of the percentages, as determined
22under section 8328, applied to the total compensation during
23the pay periods in the preceding quarter of all its employees
24who were members of the system during such period, including
25members on activated military service leave, plus the accrued
26liability contribution rate applied to the total compensation
27of all active participants in the plan. In the event a member
28on activated military service leave does not return to
29service for the necessary time or receives an undesirable,
30bad conduct or dishonorable discharge or does not elect to

1receive credit for activated military service under section
28302(b.1)(3), the contributions made by the employer on
3behalf of such member shall be returned with valuation
4interest upon application by the employer.

5(b) Deduction from appropriations.--

6(1) To facilitate the payment of amounts due from any
7employer to the fund and the trust through the State
8Treasurer and to permit the exchange of credits between the
9State Treasurer and any employer, the Secretary of Education
10and the State Treasurer shall cause to be deducted and paid
11into the fund and the trust from the amount of any moneys due
12to any employer on account of any appropriation for schools
13or other purposes amounts equal to the employer and pickup
14contributions which an employer is required to pay to the
15fund and the trust, as certified by the board, and as remains
16unpaid on the date such appropriations would otherwise be
17paid to the employer. Such amount shall be credited to the
18appropriate accounts in the fund and the trust.

19(2) To facilitate the payments of amounts due from any
20charter school, as defined in Article XVII-A of the act of
21March 10, 1949 (P.L.30, No.14), known as the Public School
22Code of 1949, to the fund and the trust through the State
23Treasurer and to permit the exchange of credits between the
24State Treasurer and any employer, the Secretary of Education
25and the State Treasurer shall cause to be deducted and paid
26into the fund and the trust from any funds appropriated to
27the Department of Education for basic education of the
28chartering school district of a charter school and public
29school employees' retirement contributions amounts equal to
30the employer and pickup contributions which a charter school

1is required to pay to the fund and the trust, as certified by
2the board, and as remains unpaid on the date such
3appropriations would otherwise be paid to the chartering
4school district or charter school. Such amounts shall be
5credited to the appropriate accounts in the fund and the
6trust. Any reduction in payments to a chartering school
7district made pursuant to this section shall be deducted from
8the amount due to the charter school district pursuant to the
9Public School Code of 1949.

10(c) Payments by employers after June 30, 1995, and before
11July 1, 2015.--After June 30, 1995, and before July 1, 2015,
12each employer, including the Commonwealth as employer of
13employees of the Department of Education, State-owned colleges
14and universities, Thaddeus Stevens College of Technology,
15Western Pennsylvania School for the Deaf, Scotland School for
16Veterans' Children and The Pennsylvania State University, shall
17make payments to the fund and the trust each quarter in an
18amount computed in the following manner:

19(1) For an employer that is a school entity, the amount
20shall be the sum of the percentages as determined under
21section 8328 applied to the total compensation during the pay
22periods in the preceding quarter of all employees who were
23active members of the system or active participants of the
24plan during such period, including members or active
25participants on activated military service leave. In the
26event a member on activated military service leave does not
27return to service for the necessary time or receives an
28undesirable, bad conduct or dishonorable discharge or does
29not elect to receive credit for activated military service
30under section 8302(b.1)(3), the contribution made by the

1employer on behalf of such member shall be returned with
2valuation interest upon application by the employer.

3(2) For an employer that is not a school entity, the
4amount computed under subsection (a).

5(3) For any employer, whether or not a school entity, in
6computing the amount of payment due each quarter, there shall
7be excluded from the total compensation referred to in this
8subsection and subsection (a) any amount of compensation of a
9noneligible member on the basis of which member or
10participant contributions have not been made by reason of the
11limitation under IRC § 401(a)(17), except as otherwise
12provided in this part. Any amount of contribution to the fund
13or trust paid by the employer on behalf of a noneligible
14member or participant on the basis of compensation which was
15subject to exclusion from total compensation in accordance
16with the provisions of this paragraph shall, upon the board's
17determination or upon application by the employer, be
18returned to the employer with valuation interest.

19(d) Payments by employers after June 30, 2015.--After June
2030, 2015, each employer, including the Commonwealth as employer
21of employees of the Department of Education, State-owned
22colleges and universities, Thaddeus Stevens College of
23Technology, Western Pennsylvania School for the Deaf, Scotland
24School for Veterans' Children and The Pennsylvania State
25University, shall make payments to the fund and the trust each
26quarter in an amount computed in the following manner:

27(1) For an employer that is a school entity, the amount
28shall be the sum of the percentages as determined under
29section 8328 applied to the total compensation during the pay
30periods in the preceding quarter of all employees who were

1active members of the system during such period, including
2members on activated military service leave, plus the accrued
3liability contribution rate applied to the total compensation
4of all active participants in the plan. In the event a member
5on activated military service leave does not return to
6service for the necessary time or receives an undesirable,
7bad conduct or dishonorable discharge or does not elect to
8receive credit for activated military service under section
98302(b.1)(3), the contribution made by the employer on behalf
10of such member shall be returned with valuation interest upon
11application by the employer.

12(2) For an employer that is not a school entity, the
13amount computed under subsection (a).

14(3) For any employer, whether or not a school entity, in
15computing the amount of payment due each quarter, there shall
16be excluded from the total compensation referred to in this
17subsection and subsection (a) any amount of compensation of a
18noneligible member or participant on the basis of which
19member or participant contributions have not been made by
20reason of the limitation under IRC § 401(a)(17). Any amount
21of contribution to the fund paid by the employer on behalf of
22a noneligible member or participant on the basis of
23compensation which was subject to exclusion from total
24compensation in accordance with the provisions of this
25paragraph shall, upon the board's determination or upon
26application by the employer, be returned to the employer with
27valuation interest.

28(e) Deemed agreed to.--The agreement of an employer listed
29in the definition of school employee under section 8102
30(relating to definitions) or any other law to make contributions

1to the fund or to enroll its employees as members in the system
2shall be deemed to be an agreement to make contributions to the
3trust or enroll its employees in the plan.

4(f) Contributions.--The employer employing a participant
5shall pick up the required mandatory participant contributions
6by a reduction in the compensation of the participant.

7(g) Contributions resulting from members reemployed from
8USERRA leave.--When a school employee reemployed from USERRA
9leave makes the member contributions required to be granted
10school service credit for the USERRA leave after June 30, 2015,
11either by actual payment or by actuarial debt under section 8325
12(relating to incomplete payments), the employer that employed
13the school employee when the member contributions are made or
14the last employer before termination in the case of payment
15under section 8325 shall make the employer contributions that
16would have been made under this section if the employee making
17the member contributions after he is reemployed from USERRA
18leave continued to be employed in his school office or position
19instead of performing USERRA leave.

20§ 8328. Actuarial cost method.

21(a) Employer contribution rate.--The amount of the total
22employer contributions shall be computed by the actuary as a
23percentage of the total compensation of all active members and
24active participants, as applicable, during the period for which
25the amount is determined and shall be so certified by the board.
26The total employer contribution rate shall be the sum of the
27final contribution rate as computed in subsection (h) plus the
28premium assistance contribution rate as computed in subsection
29(f). The actuarially required contribution rate shall consist of
30the normal contribution rate as defined in subsection (b), the

1accrued liability contribution rate as defined in subsection (c)
2and the supplemental annuity contribution rate as defined in
3subsection (d). Beginning July 1, 2004, the actuarially required
4contribution rate shall be modified by the experience adjustment
5factors as calculated in subsection (e).

6(b) Normal contribution rate.--[The]

7(1) For the fiscal year ending June 30, 2014, the normal
8contribution rate shall be determined after each actuarial
9valuation. Until all accrued liability contributions have
10been completed, the normal contribution rate shall be
11determined, on the basis of an annual interest rate and such
12mortality and other tables as shall be adopted by the board
13in accordance with generally accepted actuarial principles,
14as a level percentage of the compensation of the average new
15active member, which percentage, if contributed on the basis
16of his prospective compensation through the entire period of
17active school service, would be sufficient to fund the
18liability for any prospective benefit payable to him, in
19excess of that portion funded by his prospective member
20contributions, excluding the shared-risk contributions.

21(2) For fiscal years beginning on or after July 1, 2014,
22the normal contribution rate shall be determined after each
23actuarial valuation. Until all accrued liability
24contributions have been completed, the normal contribution
25rate shall be determined, on the basis of an annual interest
26rate and such mortality and other tables as shall be adopted
27by the board in accordance with generally accepted actuarial
28principles, as a level percentage of the compensation of all
29active members not limited by the Social Security taxable
30wage base, which percentage, if contributed on the basis of

1the member's prospective compensation through the entire
2period of active school service, would be sufficient to fund
3the liability for any prospective benefit payable to him, in
4excess of that portion funded by his prospective member
5contributions, excluding the shared-risk contributions.

6(c) Accrued liability contribution rate.--

7(1) For the fiscal years beginning July 1, 2002, and
8ending June 30, 2011, the accrued liability contribution rate
9shall be computed as the rate of total compensation of all
10active members which shall be certified by the actuary as
11sufficient to fund over a period of ten years from July 1,
122002, the present value of the liabilities for all
13prospective benefits of active members, except for the
14supplemental benefits provided in sections 8348 (relating to
15supplemental annuities), 8348.1 (relating to additional
16supplemental annuities), 8348.2 (relating to further
17additional supplemental annuities), 8348.3 (relating to
18supplemental annuities commencing 1994), 8348.4 (relating to
19special supplemental postretirement adjustment), 8348.5
20(relating to supplemental annuities commencing 1998), 8348.6
21(relating to supplemental annuities commencing 2002) and
228348.7 (relating to supplemental annuities commencing 2003),
23in excess of the total assets in the fund (calculated by
24recognizing the actuarially expected investment return
25immediately and recognizing the difference between the actual
26investment return and the actuarially expected investment
27return over a five-year period), excluding the balance in the
28annuity reserve account, and of the present value of normal
29contributions and of member contributions payable with
30respect to all active members on July 1, 2002, during the

1remainder of their active service.

2(2) For the fiscal years beginning July 1, 2003, and
3ending June 30, 2011, the amount of each annual accrued
4liability contribution shall be equal to the amount of such
5contribution for the fiscal year, beginning July 1, 2002,
6except that, if the accrued liability is increased by
7legislation enacted subsequent to June 30, 2002, but before
8July 1, 2003, such additional liability shall be funded over
9a period of ten years from the first day of July, coincident
10with or next following the effective date of the increase.
11The amount of each annual accrued liability contribution for
12such additional legislative liabilities shall be equal to the
13amount of such contribution for the first annual payment.

14(3) Notwithstanding any other provision of law,
15beginning July 1, 2004, and ending June 30, 2011, the
16outstanding balance of the increase in accrued liability due
17to the change in benefits enacted in 2001 and the outstanding
18balance of the net actuarial loss incurred in fiscal year
192000-2001 shall be amortized in equal dollar annual
20contributions over a period that ends 30 years after July 1,
212002, and the outstanding balance of the net actuarial loss
22incurred in fiscal year 2001-2002 shall be amortized in equal
23dollar annual contributions over a period that ends 30 years
24after July 1, 2003. For fiscal years beginning on or after
25July 1, 2004, if the accrued liability is increased by
26legislation enacted subsequent to June 30, 2003, such
27additional liability shall be funded in equal dollar annual
28contributions over a period of ten years from the first day
29of July coincident with or next following the effective date
30of the increase.

1(4) For the fiscal year beginning July 1, 2011, the
2accrued liability contribution rate shall be computed as the
3rate of total compensation of all active members which shall
4be certified by the actuary as sufficient to fund as a level
5percentage of compensation over a period of 24 years from
6July 1, 2011, the present value of the liabilities for all
7prospective benefits calculated as of June 30, 2010,
8including the supplemental benefits as provided in sections
98348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and
108348.7, in excess of the actuarially calculated assets in the
11fund (calculated recognizing all realized and unrealized
12investment gains and losses each year in level annual
13installments over a ten-year period, provided that the
14resulting actuarially calculated assets are constrained
15within a range of 70% to 130% of market value). In the event
16that the accrued liability is [increased] changed by
17legislation enacted subsequent to June 30, 2010, such
18[additional] change in liability shall be funded as a level
19percentage of compensation over a period of ten years from
20the July 1 second succeeding the date such legislation is
21enacted.

22(d) Supplemental annuity contribution rate.--

23(1) For the period of July 1, 2002, to June 30, 2011,
24contributions from the Commonwealth and other employers
25required to provide for the payment of the supplemental
26annuities provided for in sections 8348, 8348.1, 8348.2,
278348.4 and 8348.5 shall be paid over a period of ten years
28from July 1, 2002. The funding for the supplemental annuities
29commencing 2002 provided for in section 8348.6 shall be as
30provided in section 8348.6(f). The funding for the

1supplemental annuities commencing 2003 provided for in
2section 8348.7 shall be as provided in section 8348.7(f). The
3amount of each annual supplemental annuities contribution
4shall be equal to the amount of such contribution for the
5fiscal year beginning July 1, 2002.

6(2) For fiscal years beginning July 1, 2011, and ending
7June 30, 2014, contributions from the Commonwealth and other
8employers whose employees are members of the system required
9to provide for the payment of supplemental annuities as
10provided in sections 8348, 8348.1, 8348.2, 8348.3, 8348.4,
118348.5, 8348.6 and 8348.7 shall be paid as part of the
12accrued liability contribution rate as provided for in
13subsection (c)(4), and there shall not be a separate
14supplemental annuity contribution rate attributable to those
15supplemental annuities. In the event that supplemental
16annuities are increased by legislation enacted subsequent to
17June 30, 2010, [the] but before July 1, 2013, such additional
18liability for the increase in benefits shall be funded as a
19level percentage of compensation over a period of ten years
20from the July 1 second succeeding the date such legislation
21is enacted.

22(3) For fiscal years beginning on or after July 1, 2014,
23contributions from employers whose employees are members of
24the system required to provide for the payment of
25supplemental annuities as provided in sections 8348, 8348.1,
268348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 8348.7 shall be
27paid as part of the accrued liability contribution rate as
28provided for in subsection (c)(4), and there shall not be a
29separate supplemental annuity contribution rate attributable
30to those supplemental annuities. In the event that

1supplemental annuities are increased by legislation enacted
2subsequent to June 30, 2013, the additional liability for the
3increase in benefits shall be funded as a level percentage of
4compensation of all active members not limited by the Social
5Security taxable wage base and active participants over a
6period of ten years from the July 1 second succeeding the
7date such legislation is enacted.

8(e) Experience adjustment factor.--

9(1) For each year after the establishment of the accrued
10liability contribution rate for the fiscal year beginning
11July 1, 2011, and ending June 30, 2014, any increase or
12decrease in the unfunded accrued liability, excluding the
13gains or losses on the assets of the health insurance
14account, due to actual experience differing from assumed
15experience, changes in actuarial assumptions, changes in
16contributions caused by the final contribution rate being
17different from the actuarially required contribution rate,
18active members making shared-risk contributions or changes in
19the terms and conditions of the benefits provided by the
20system by judicial, administrative or other processes other
21than legislation, including, but not limited to,
22reinterpretation of the provisions of this part, recognized
23by the actuarial valuations on June 30, 2011, and June 30,
242012, shall be amortized as a level percentage of
25compensation over a period of 24 years beginning with the
26July 1 second succeeding the actuarial valuation determining
27said increases or decreases.

28(2) (Reserved).

29(3) For fiscal years beginning July 1, 2014, any
30increase or decrease in the unfunded accrued liability,

1excluding the gains or losses on the assets of the health
2insurance account, due to actual experience differing from
3assumed experience, changes in actuarial assumptions, changes
4in contributions caused by the final contribution rate being
5different from the actuarially required contribution rate,
6active members making shared-risk contributions or changes in
7the terms and conditions of the benefits provided by the
8system by judicial, administrative or other processes other
9than legislation, including, but not limited to,
10reinterpretation of the provisions of this part, shall be
11amortized as a level percentage of the compensation of all
12active members, not limited by the Social Security taxable
13wage base, and active participants over a period of 24 years
14beginning with the July 1 second succeeding the actuarial
15valuation determining such increases or decreases.

16* * *

17(g) Temporary application of collared contribution rate.--

18(1) The collared contribution rate for each year shall
19be determined by comparing the actuarially required
20contribution rate, calculated without regard for the costs
21added by legislation, to the prior year's final contribution
22rate.

23(2) If, for any of the fiscal years beginning July 1,
242011, and July 1, 2012, [and on or after July 1, 2013,] the
25actuarially required contribution rate, calculated without
26regard for the costs added by legislation, is more than 3%[,]
27or 3.5% [and 4.5%], respectively, of the total compensation
28of all active members greater than the prior year's final
29contribution rate, then the collared contribution rate shall
30be applied and be equal to the prior year's final

1contribution rate increased by 3%[,] or 3.5% [and 4.5%],
2respectively, of total compensation of all active members.
3Otherwise, and for all other fiscal years, the collared
4contribution rate shall not be applicable. In no case shall
5the collared contribution rate be less than 4% of the total
6compensation of all active members.

7(3) If, for any of the fiscal years beginning July 1,
82013, July 1, 2014, July 1, 2015, July 1, 2016, July 1, 2017,
9and on or after July 1, 2018, the actuarially required
10contribution rate, calculated without regard for the costs
11added by legislation, is more than 2.25%, 2.75%, 3.25%,
123.75%, 4.25% and 4.5%, respectively, of the total
13compensation of all active members and active participants
14greater than the prior year's final contribution rate, then
15the collared contribution rate shall be applied and be equal
16to the prior year's final contribution rate increased by
172.25%, 2.75%, 3.25%, 3.75%, 4.25% and 4.5%, respectively, of
18total compensation of all active members, not limited by the
19Social Security taxable wage base, and active participants.

20(4) For purposes of applying the collared contribution
21rate, compensation for determining the normal contribution
22rate shall be defined as the total compensation of all active
23members not limited by the Social Security taxable wage base
24and active participants.

25* * *

26§ 8330. Appropriations by the Commonwealth.

27(a) Annual submission of budget.--The board shall prepare
28and through the Governor submit annually to the General Assembly
29an itemized budget consisting of the amounts necessary to be
30appropriated by the Commonwealth out of the General Fund

1required to meet the separate obligations to the fund and the
2trust accruing during the fiscal period beginning July 1 of the
3following year.

4(b) Appropriation and payment.--The General Assembly shall
5make an appropriation sufficient to provide for the separate
6obligations of the Commonwealth to the fund and the trust. Such
7amount shall be paid by the State Treasurer through the
8Department of Revenue into the fund or the trust, as the case
9may be, within 30 days of receipt of the requisition presented
10each quarter by the board.

11§ 8341. Return of accumulated deductions.

12Any member upon termination of service may, in lieu of all
13benefits payable from the system under this chapter to which he
14may be entitled, elect to receive his accumulated deductions.

15Section 113. Section 8342 of Title 24 is amended by adding a
16subsection to read:

17§ 8342. Maximum single life annuity.

18* * *

19(d) Coordination of benefits.--The determination and payment
20of the maximum single life annuity under this section shall be
21in addition to any payments a combined service employee may be
22entitled to receive, has received or is receiving as a result of
23being a participant in the plan.

24Section 114. Sections 8344, 8346 and 8349 heading, (a) and
25(b) of Title 24 are amended to read:

26§ 8344. Disability annuities.

27(a) Amount of annuity.--A member who has made application
28for a disability annuity as provided in section 8507(k)
29(relating to rights and duties of school employees [and
30members], members and participants) and has been found to be

1eligible in accordance with the provisions of sections 8307(c)
2(relating to eligibility for annuities) and 8505(c)(1) (relating
3to duties of board regarding applications and elections of
4members) shall receive a disability annuity payable from the
5effective date of disability and continued until a subsequent
6determination by the board that the annuitant is no longer
7entitled to a disability annuity. The disability annuity shall
8be a single life annuity that is equal to a sum of the standard
9single life [annuity] annuities determined separately for each
10class of service if the total number of years of credited
11service is greater than 16.667, otherwise [the] each standard
12single life annuity shall be multiplied by the lesser of the
13following ratios:

14Y*/Y or 16.667/Y

15where Y = total number of years of credited service and Y* =
16total years of credited service if the member were to continue
17as a school employee until attaining superannuation age, or if
18the member has attained superannuation age then the number of
19years of credited service. In no event shall the disability
20annuity plus any cost-of-living increases be less than $100 for
21each full year of credited service. The member shall be entitled
22to the election of a joint and survivor annuity on that portion
23of the disability annuity to which he is entitled under section
248342 (relating to maximum single life annuity).

25(b) Reduction on account of earned income.--Payments on
26account of disability shall be reduced by that amount by which
27the earned income of the annuitant, as reported in accordance
28with section 8508(b) (relating to rights and duties of
29annuitants) for the preceding year together with the disability
30annuity payments for the year, exceeds the greater of $5,000 or

1the last year's salary of the annuitant as a [school employee]
2member of the system, provided that the annuitant shall not
3receive less than his member's annuity or the amount to which he
4may be entitled under section 8342, whichever is greater.

5(c) Termination and modification of payments.--Payment of
6that portion of the disability annuity in excess of the annuity
7to which the annuitant was entitled on the effective date of
8disability calculated in accordance with section 8342 shall
9cease if the annuitant is no longer eligible under the
10provisions of section 8505(c)(2) or section 8508(b) or (c) and
11if such annuitant on the date of termination of service was
12eligible for an annuity, he may file an application with the
13board for an election of an optional modification of the annuity
14to which he was entitled in accordance with section 8342.

15(d) Withdrawal of accumulated deductions.--Upon termination
16of disability annuity payments in excess of an annuity
17calculated in accordance with section 8342, a disability
18annuitant who:

19(1) is a Class T-C [or], Class T-D member; or

20(2) is a Class T-E or Class T-F member with less than
21ten eligibility points

22and who does not return to school service may file an
23application with the board for an amount equal to the
24accumulated deductions, shared-risk member contributions and
25statutory interest standing to his credit at the effective date
26of disability less the total payments received on account of his
27member's annuity.

28(e) Limitation regarding annual benefit under IRC §
29415(b).--Notwithstanding any provision of this part to the
30contrary, no benefit shall be payable to the extent that such

1benefit exceeds any limitation under IRC § 415(b) in effect with
2respect to governmental plans, as such term is defined in IRC §
3414(d), on the date the benefit payment becomes effective.

4(f) Coordination of benefits.--The determination and payment
5of a disability annuity under this section shall be in addition
6to any payments a combined service employee may be entitled to
7receive, has received or is receiving as a result of being a
8participant in the plan.

<-9* * *

10§ 8346. Termination of annuities.

11(a) General rule.--If an annuitant returns to school service
12or enters or has entered State service and elects multiple
13service membership, any annuity payable to him under this part
14shall cease effective upon the date of his return to school
15service or entering State service without regard to whether he 
16is a mandatory, optional or prohibited member of the system <-or 
17participant in the plan or, if a multiple service member, 
18whether he is a mandatory, optional or prohibited member or 
19participant of the State Employees' Retirement System or State 
20Employees' Defined Contribution Plan and in the case of an
21annuity other than a disability annuity the present value of
22such annuity, adjusted for full coverage in the case of a joint
23coverage member who makes the appropriate back contributions for
24full coverage, shall be frozen as of the date such annuity
25ceases. An annuitant who is credited with an additional 10% of
26membership service as provided in section 8302(b.2) (relating to
27credited school service) and who returns to school service,
28except as provided in subsection (b), shall forfeit such
29credited service and shall have his frozen present value
30adjusted as if his 10% retirement incentive had not been applied

1to his account. In the event that the cost-of-living increase
2enacted December 18, 1979, occurred during the period of such
3State or school employment, the frozen present value shall be
4increased, on or after the member attains superannuation age, by
5the percent applicable had he not returned to service.

<-6(a.1) Return of benefits.--In the event an annuitant whose
7annuity ceases pursuant to this section receives any annuity
8payment, including a lump sum payment pursuant to section 8345
9(relating to member's options) on or after the date of his
10return to school service or entering State service, the
11annuitant shall return to the board the amount so received plus
12statutory interest. The amount payable shall be certified in
13each case by the board in accordance with methods approved by
14the actuary and shall be paid in a lump sum within 90 days or in
15the case of an active member or a State employee who is an
16active member of the State Employees' Retirement System may be
17amortized with statutory interest through salary deductions to
18the system in amounts agreed upon by the member and the board.
19The salary deduction amortization plans agreed to by the member
20and the board may include a deferral of payment amounts and
21statutory interest until the termination of school service or
22State service as the board in its sole discretion decides to
23allow. The board may limit salary deduction amortization plans
24to such terms as the board in its sole discretion determines. In
25the case of a State employee who is an active member of the
26State Employees' Retirement System, the agreed upon salary
27deductions shall be remitted to the State Employees' Retirement
28Board, which shall certify and transfer to the board the amounts
29paid.

30(b) Return to school service during emergency.--When, in the

1judgment of the employer, an emergency creates an increase in
2the work load such that there is serious impairment of service
3to the public or in the event of a shortage of appropriate
4subject certified teachers or other personnel, an annuitant or
5participant receiving distributions may be returned to school
6service for a period not to extend beyond the school year during
7which the emergency or shortage occurs, without loss of his
8annuity or distributions. The annuitant shall not be entitled to
9earn any credited service, and no contributions may be made by
10the annuitant, the employer or the Commonwealth on account of
11such employment. Such service shall not be subject to member
12contributions or be eligible for qualification as creditable
13school service or for participation in the plan, mandatory
14pickup participant contributions or employer defined
15contributions.

16(b.1) Return to school service in an extracurricular
17position.--

18(1) An annuitant or participant receiving distributions
19may be employed under separate contract by a public school or
20charter school in an extracurricular position performed
21primarily outside regular instructional hours and not part of
22mandated curriculum without loss of annuity. [Neither the]
23The annuitant [nor], the participant receiving distributions
24and the employer shall not make contributions to the member's
25savings account, the individual investment account or State
26accumulation account respectively for such service. Further,
27such contract shall contain a waiver whereby the annuitant
28waives any potential retirement benefits that could arise
29from the contract and releases the employer and the board
30from any liability for such benefits. Such service shall not

1be subject to member or participant contributions or be
2eligible for qualification as creditable school service or
3for participation in the plan, mandatory pickup participant
4contributions or employer defined contributions.

5(2) Nothing in this subsection shall be construed to
6abridge or limit any rights provided under a collective
7bargaining agreement or any rights provided under the act of 
8July 23, 1970 (P.L.563, No.195), known as the Public Employe
9Relations Act.

10(3) For purposes of this subsection, the term
11"extracurricular position" means a contract position filled
12by an annuitant that is separate from the established
13academic course structure, including the position of athletic
14director.

15(c) Subsequent discontinuance of service.--Upon subsequent
16discontinuance of service, such [member] terminating school
17employee other than a former annuitant who had the effect of his
18frozen present value eliminated in accordance with subsection
19(d) or a former disability annuitant shall be entitled to an
20annuity which is actuarially equivalent to [the sum of] the
21present value as determined under subsection (a) [and] to which
22shall be added, if the service after reemployment was as a
23member of the system, the present value of a maximum single life
24annuity based on years of service credited subsequent to reentry
25in the system and his final average salary computed by reference
26to his compensation as a member of the system or as a member of
27the State Employees' Retirement System during his entire period
28of school and State service.

29* * *<-

30(d) Elimination of the effect of frozen present value.--

1(1) An annuitant who returns to school service<- as an 
2active member of the system and earns three eligibility
3points by performing credited school service following the
4most recent period of receipt of an annuity under this part,
5or an annuitant who enters State service other than a 
6participant in the State Employees' Defined Contribution Plan
7and:

8(i) is a multiple service member; or

9(ii) who elects multiple service membership, and 
10earns three eligibility points by performing credited
11State service or credited school service following the
12most recent period of receipt of an annuity under this
13part, and who had the present value of his annuity frozen
14in accordance with subsection (a), shall qualify to have
15the effect of the frozen present value resulting from all
16previous periods of retirement eliminated, provided that
17all payments under Option 4 and annuity payments payable
18during previous periods of retirement plus interest as
19set forth in paragraph (3) shall be returned to the fund
20in the form of an actuarial adjustment to his subsequent
21benefits or in such form as the board may otherwise
22direct.

<-23(2) Upon subsequent discontinuance of service and the
24filing of an application for an annuity, a former annuitant
25who qualifies to have the effect of a frozen present value
26eliminated under this subsection shall be entitled to receive
27the higher of either:

28(i) an annuity (prior to optional modification)
29calculated as if the freezing of the former annuitant's
30account pursuant to subsection (a) had not occurred,

1adjusted by crediting Class T-C school service as Class
2T-D service as provided for in section 8305(c) (relating
3to classes of service) and further adjusted according to
4paragraph (3), provided that a former annuitant of the
5system or a former annuitant of the State Employees'
6Retirement System who retired under a provision of law
7granting additional service credit if termination of
8school or State service or retirement occurred during a
9specific period of time shall not be permitted to retain
10the additional service credit under the prior law when
11the annuity is computed for his most recent retirement;
12or

13(ii) an annuity (prior to optional modification)
14calculated as if the former annuitant did not qualify to
15have the effect on the frozen present value eliminated,

16unless the former annuitant notifies the board in writing by
17the later of the date the application for annuity is filed or
18the effective date of retirement that the former annuitant
19wishes to receive the lower annuity.

20(3) In addition to any other adjustment to the present
21value of the maximum single life annuity that a member may be
22entitled to receive that occurs as a result of any other
23provision of law, the present value of the maximum single
24life annuity shall be reduced by all amounts paid or payable
25to him during all previous periods of retirement plus
26interest on these amounts until the date of subsequent
27retirement. The interest for each year shall be calculated
28based upon the annual interest rate adopted for that school
29year by the board for the calculation of the normal
30contribution rate pursuant to section 8328(b) (relating to

1actuarial cost method).

2§ 8349. Payment of benefits from the system.

3(a) Annuities.--Any annuity granted under the provisions of
4this part and paid from the fund shall be paid in equal monthly
5installments.

6(b) Death benefits.--If the amount of a death benefit
7payable from the fund to a beneficiary of a member under section
88347 (relating to death benefits) or under the provisions of
9Option 1 of section 8345(a)(1) (relating to member's options) is
10$10,000 or more, such beneficiary may elect to receive payment
11according to one of the following options:

12(1) A lump sum payment.

13(2) An annuity actuarially equivalent to the amount
14payable.

15(3) A lump sum payment and an annuity such that the
16annuity is actuarially equivalent to the amount payable less
17the lump sum payment specified by the beneficiary.

18* * *

19Section 115. Title 24 is amended by adding a chapter to
20read:

21CHAPTER 84

22SCHOOL EMPLOYEES' DEFINED CONTRIBUTION PLAN

23Sec.

248401. Establishment.

258402. Plan document.

268403. Individual investment accounts.

278404. Participant contributions.

288405. Mandatory pickup participant contributions.

298406. Employer defined contributions.

308407. Eligibility for benefits.

18408. Death benefits.

28409. Vesting.

38410. Termination of distributions.

48411. Agreements with financial institutions and other
5organizations.

68412. Powers and duties of board.

78413. Responsibility for investment loss.

88414. Investments based on participants' investment allocation
9choices.

108415. Expenses.

118416. Election by members to be participants.

128417. Tax qualification.

13§ 8401. Establishment.

14(a) School Employees' Defined Contribution Plan.--The School
15Employees' Defined Contribution Plan is established. The board
16shall administer and manage the plan, which shall be a defined
17contribution plan exclusively for the benefit of those school
18employees who participate in the plan and their beneficiaries
19within the meaning of and in conformity with IRC § 401(a). The
20board shall determine the terms and provisions of the plan not
21inconsistent with this part, the IRC and other applicable law
22and shall provide for the plan's administration.

23(b) School Employees' Defined Contribution Trust.--The
24School Employees' Defined Contribution Trust is established as
25part of the plan in accordance with this part. The trust shall
26be comprised of the individual investment accounts and all
27assets and moneys in those accounts. The members of the board
28shall be the trustees of the trust, which shall be administered
29exclusively for the benefit of those school employees who
30participate in the plan and their beneficiaries within the

1meaning of and in conformity with IRC § 401(a). The board shall
2determine the terms and provisions of the trust not inconsistent
3with this part, the IRC and other applicable law and shall
4provide for the investment and administration of the trust.

5(c) Assets held in trust.--All assets and income in the plan
6that have been or shall be withheld or contributed by the
7participants, the Commonwealth and employers in accordance with
8this part shall be held in trust in any funding vehicle
9permitted by the applicable provisions of IRC for the exclusive
10benefit of the plan's participants and their beneficiaries until
11such time as the funds are distributed to the participants or
12their beneficiaries in accordance with the terms of the plan
13document. The assets of the plan held in trust for the exclusive
14benefit of the participants and their beneficiaries may be used
15for the payment of the fees, costs and expenses related to the
16administration and investment of the plan and the trust.

17(d) Name for transacting business.--By the name of "The
18School Employees' Defined Contribution Plan," all of the
19business of the plan shall be transacted, the trust invested,
20all requisitions for money drawn and payments made and all of
21its cash and securities and other property shall be held, except
22that, any other law to the contrary notwithstanding, the board
23may establish a nominee registration procedure for the purpose
24of registering securities in order to facilitate the purchase,
25sale or other disposition of securities pursuant to the
26provisions of this part.

27§ 8402. Plan document.

28The board shall set forth the terms and provisions of the
29plan and trust in a document containing the terms and conditions
30of the plan and in a trust declaration that shall be published

1in the Pennsylvania Bulletin. The creation of the document
2containing the terms and conditions of the plan and the trust
3declaration and the establishment of the terms and provisions of
4the plan and the trust need not be promulgated by regulation or
5formal rulemaking and shall not be subject to the act of July
631, 1968 (P.L.769, No.240), referred to as the Commonwealth
7Documents Law. A reference in this part or other law to the plan
8shall include the plan document unless the context clearly
9indicates otherwise.

10§ 8403. Individual investment accounts.

11The board shall:

12(1) establish in the trust an individual investment
13account for each participant in the plan. All contributions
14by a participant or an employer for or on behalf of a
15participant shall be credited to the participant's individual
16investment account, together with all interest and investment
17earnings and losses. Investment and administrative fees,
18costs and expenses shall be charged to the participants'
19individual investment accounts; and

20(2) separately track participant contributions,
21including investment gains and losses, and employer
22contributions, including investment gains and losses, but all
23interest, investment gains and losses and administrative
24fees, costs and expenses shall be allocated proportionately.

25§ 8404. Participant contributions.

26(a) Mandatory contributions.--A participant shall make
27mandatory pickup participant contributions through payroll
28deductions to the participant's individual investment account
29equal to 7.5% of compensation for current school service. The
30employer shall cause such contributions for current service to

1be made and deducted from each payroll or on such schedule as
2established by the board. After the effective date of this
3section, an employer employing a participant in the plan shall
4pick up the required mandatory participant contributions by a
5reduction in the compensation of the participant.

6(b) Voluntary contributions.--A participant may make
7voluntary contributions up to the limits permitted by IRC
8through payroll deductions or through direct trustee-to-trustee
9transfers or through transfers of money received in an eligible
10rollover into the trust to the extent allowed by IRC § 402. Such
11rollovers shall be made in a form and manner as determined by
12the board, shall be credited to the participant's individual
13investment account and shall be separately accounted for by the
14board.

15(c) Prohibition on contributions.--No contributions shall be
16allowed that would cause a violation of the limitations related
17to contributions applicable to governmental plans contained in
18IRC § 415 or in other provisions of law. In the event that any
19disallowed contributions are made, any participant contributions
20in excess of the limitations and investment earnings on those
21contributions shall be refunded to the participant by the board.

22§ 8405. Mandatory pickup participant contributions.

23(a) Treatment for purposes of IRC § 414(h).--The
24contributions to the trust required to be made under section
258404(a) (relating to participant contributions) with respect to
26current school service rendered by an active participant shall
27be picked up by the employer and shall be treated as the
28employer's contribution for purposes of IRC § 414(h). After the
29effective date of this section, an employer employing a
30participant in the plan shall pick up the required mandatory

1participant contributions by a reduction in the compensation of
2the participant.

3(b) Treatment for other purposes.--For all other purposes
4under this part and otherwise, such mandatory pickup participant
5contributions shall be treated as contributions made by a
6participant in the same manner and to the same extent as if the
7contributions were made directly by the participant and not
8picked up.

9§ 8406. Employer defined contributions.

10(a) Contributions for current service.--The employer of a
11participant shall make employer defined contributions for
12current service of an active participant that shall be credited
13to the active participant's individual investment account.
14Employer defined contributions must be recorded and accounted
15for separately from participant contributions.

16(b) Contributions resulting from participants reemployed
17from USERRA leave.--When a school employee reemployed from
18USERRA leave makes the mandatory pickup participant
19contributions permitted to be made for the USERRA leave, the
20employer by whom the school employee is employed at the time the
21participant contributions are made shall make whatever employer
22defined contributions would have been made under this section
23had the employee making the participant contributions after
24being reemployed from USERRA leave continued to be employed in
25the employee's school position instead of performing USERRA
26leave. Such employer defined contributions shall be placed in
27the participant's individual investment account as otherwise
28provided by this part.

29(c) Limitations on contributions.--No contributions shall be
30allowed that would cause a violation of the limitations related

1to contributions applicable to governmental plans contained in
2IRC § 415 or in other provisions of law. In the event that any
3disallowed contributions are made, any employer defined
4contributions in excess of the limitations and investment
5earnings thereon shall be refunded to the employer by the board.

6§ 8407. Eligibility for benefits.

7(a) Termination of service.--A participant who terminates
8school service shall be eligible to withdraw the vested
9accumulated total defined contributions standing to the
10participant's credit in the participant's individual investment
11account or a lesser amount as the participant may request.
12Payment shall be made in a lump sum unless the board has
13established other forms of distribution in the plan document,
14subject to the provisions of subsection (g). A participant who
15withdraws the vested accumulated total defined contributions
16shall no longer be a participant in the plan, notwithstanding
17that the participant may have contracted to receive an annuity
18or other form of payment from a provider retained by the board
19for such purposes.

20(b) Required distributions.--All payments pursuant to this
21section shall start and be made in compliance with the minimum
22distribution requirements and incidental death benefit rules of
23IRC § 401(a)(9). The board shall take any action and make any
24distributions it may determine are necessary to comply with
25those requirements.

26(c) Spousal consent not required.--A participant who is
27married may receive a lump sum distribution or other
28distribution directly from the board without the consent of the
29participant's spouse, unless the plan document provides
30otherwise.

1(d) Combined service employee.--A participant who is a
2combined service employee must be terminated from all positions
3that result in either membership in the system or participation
4in the plan to be eligible to receive a distribution.

5(e) Loans.--Loans or other distributions, including hardship
6or unforeseeable emergency distributions, from the plan to
7school employees who have not terminated school service are not
8permitted, except as required by law.

9(f) Small individual investment accounts.--

10(1) A participant who terminates school service and
11whose vested accumulated total defined contributions are
12below the threshold established by law as of the date of
13termination of service may be paid the vested accumulated
14total defined contributions in a lump sum as provided in IRC
15§ 401(a)(31).

16(2) The board may also provide in the plan document
17that, notwithstanding subsection (g), a participant whose
18vested accumulated employer defined contributions are below
19the thresholds established by the board may receive those
20distributions without the obligation to purchase an annuity.
21The threshold may be established as a dollar amount, an
22annuity amount, in some other form individually or in
23combination as the board determines.

24(g) Requirement to purchase annuity.--Except as prohibited
25by the IRC or as otherwise provided in this part, a participant
26who is eligible and elects to receive a distribution of vested
27accumulated employer defined contributions shall be required to
28purchase an annuity with the distribution under such conditions
29as provided in the plan document. The conditions may include 
30that the board is authorized to make the distribution directly
 

1to the annuity provider.

2§ 8408. Death benefits.

3(a) General rule.--In the event of the death of an active
4participant or inactive participant, the board shall pay to the
5participant's beneficiary the vested balance in the
6participant's individual investment account in a lump sum or in
7such other manner as the board may establish in the plan
8document.

9(b) Death of participant receiving distributions.--In the
10event of the death of a participant receiving distributions, the
11board shall pay to the participant's beneficiary the vested
12balance in the participant's individual investment account in a
13lump sum or in such other manner as the board may establish in
14the plan document or, if the board has established alternative
15methods of distribution in the plan document under which the
16participant was receiving distributions, to the participant's
17beneficiary or successor payee as provided in the plan document.

18(c) Contracts.--The board may contract with financial
19institutions, insurance companies or other types of third-party
20providers to allow participants who receive a lump sum
21distribution to receive payments and death benefits in a form
22and manner as provided by the contract. The contracts may, but
23are not required to, provide that any payment and death benefit
24options for a married former participant be in the form of a
25joint and survivor annuity unless the spouse consents to another
26payment option.

27(d) Spousal consent.--All nomination or change of
28beneficiaries made by a married participant shall be subject to
29the consent of the participant's spouse as provided for in this
30part.

1§ 8409. Vesting.

2(a) Participant and voluntary contributions.--Subject to the
3forfeiture and attachment provisions of section 8533 (relating
4to taxation, attachment and assignment of funds) or otherwise as
5provided by law, a participant shall be fully vested with
6respect to all mandatory pickup participant contributions and
7voluntary contributions paid by or on behalf of the participant
8to the trust plus interest and investment earnings on the
9participant contributions but minus investment fees and
10administrative charges.

11(b) Employer defined contributions.--

12(1) Subject to the forfeiture and attachment provisions
13of section 8533 or otherwise as provided by law, a
14participant shall be vested with respect to employer defined
15contributions paid plus interest and investment earnings by
16or on behalf of the participant to the trust according to the
17following schedule:

18(i) During the first and second year of school
19service as a participant in the plan, 0%.

20(ii) At and after the second year of school service
21as a participant in the plan, 50%.

22(iii) At and after the third year of school service
23as a participant in the plan, 75%.

24(iv) At and after the fourth year of school service
25as a participant in the plan, 100%.

26(2) The board shall establish in the plan document:

27(i) How the required time periods of school service
28in the plan are determined and calculated.

29(ii) The effect of periods that school employees
30spend on paid or unpaid leave on the determination of a

1participant's vested status in the plan.

2(iii) The effect of termination of school service or
3distributions from the plan on a participant's vested
4status in the plan.

5(iv) Other terms and conditions for the
6implementation and administration of this section.

7(3) Nonvested employer defined contributions, including
8interest and investment gains and losses that are forfeited
9by a participant, shall be applied to the participant's most
10recent employer's obligations assessed under this section in
11future years.

12(c) USERRA leave and vesting credit.--A participant in the
13plan who is reemployed from USERRA leave or who dies while
14performing USERRA leave shall receive vesting credit under this
15section for the school service that would have been performed
16had the member not performed USERRA leave.

17§ 8410. Termination of distributions.

18(a) Return to school service.--

19(1) A participant receiving distributions or an inactive
20participant who returns to school service shall cease
21receiving distributions and shall not be eligible to receive
22distributions until the participant subsequently terminates
23school service, without regard to whether the participant is
24a mandatory, optional or prohibited member of the system or
25participant in the plan.

26(2) This subsection shall not apply to a distribution of
27accumulated employer defined contributions or other
28distributions that the participant has received and used to
29purchase an annuity from a provider contracted by the board.

30(b) Return of benefits paid during USERRA leave.--

1(1) If a former school employee is reemployed from
2USERRA leave and received any payments or annuity from the
3plan during the USERRA leave, the employee shall return to
4the board the amount so received plus interest as provided in
5the plan document.

6(2) The amount payable shall be certified in each case
7by the board in accordance with methods approved by the
8actuary and shall be paid in a lump sum within 30 days or, in
9the case of an active participant, may be amortized with
10interest as provided in the plan document through salary
11deductions to the trust in amounts agreed upon by the active
12participant and the board, but not longer than a period that
13starts with the date of reemployment and continuing for up to
14three times the length of the active participant's immediate
15past period of USERRA leave. The repayment period shall not
16exceed five years.

17§ 8411. Agreements with financial institutions and other
18organizations.

19(a) Written agreement.--To establish and administer the
20plan, the board shall enter into a written agreement with one or
21more financial institutions or pension management organizations
22to administer the plan and the investment of funds held pursuant
23to the plan. The administrator shall be selected in accordance
24with the following:

25(1) The board shall solicit proposals from financial
26institutions and pension management organizations.

27(2) The board shall publish the solicitation under
28paragraph (1) in the Pennsylvania Bulletin.

29(3) Proposals received shall be evaluated based on
30specific criteria adopted by the board. The criteria shall

1include experience, customer service history and other
2criteria.

3(b) Rebid.--A contract to administer the plan under
4subsection (a) shall be rebid at least once every ten years.

5§ 8412. Powers and duties of board.

6The board shall have the following powers and duties to
7establish the plan and trust and to administer the provisions of
8this part:

9(1) The board may commingle or pool assets with the
10assets of other persons or entities.

11(2) The board shall pay all administrative fees, costs
12and expenses of managing, investing and administering the
13plan, the trust and the individual investment accounts from
14the balance of such individual investment accounts, except as
15the General Assembly otherwise provides through
16appropriations from the General Fund.

17(3) The board may establish investment guidelines and
18limits on the types of investments that participants may
19make, consistent with the board's fiduciary obligations.

20(4) The board shall have the power to change the terms
21of the plan as may be necessary to maintain the tax-qualified
22status of the plan.

23(5) The board may establish a process for election to
24participate in the plan by those school employees for whom
25participation is not mandatory.

26(6) The board may perform an annual or more frequent
27review of any qualified fund manager for the purpose of
28assuring it continues to meet all standards and criteria
29established.

30(7) The board may allow for eligible rollovers and

1direct trustee-to-trustee transfers into the trust from
2qualified plans of other employers, regardless of whether the
3employers are private employers or public employers.

4(8) The board may allow a former participant to maintain
5the participant's individual investment account within the
6plan.

7(9) The board shall administer or ensure the
8administration of the plan in compliance with the
9qualification and other rules of IRC.

10(10) The board may establish procedures to provide for
11the lawful payment of benefits.

12(11) The board shall determine what constitutes a
13termination of school service.

14(12) The board may establish procedures for
15distributions of small accounts as required or permitted by
16IRC.

17(13) The board may establish procedures in the plan
18document or to promulgate rules and regulations as it deems
19necessary for the administration and management of the plan,
20including, but not limited to, establishing:

21(i) Procedures by which eligible participants may
22change voluntary contribution amounts or their investment
23choices on a periodic basis or make other elections
24regarding their participation in the plan.

25(ii) Procedures for deducting mandatory pickup
26participant contributions and voluntary contributions
27from a participant's compensation.

28(iii) Procedures for rollovers and trustee-to-
29trustee transfers allowed under the IRC and permitted by
30the board as part of the plan.

1(iv) Standards and criteria for providing not less
2than ten options in accordance with three or more
3providers of investment options to eligible individuals
4regarding investment of amounts deferred under the plan.
5The standards and criteria must provide for a variety of
6investment options. One of the available options must
7serve as the default option for participants who do not
8make a timely election and, to the extent commercially
9available, one option must have an annuity.

10(v) Standards and criteria for disclosing to the
11participants the anticipated and actual income
12attributable to amounts invested, property rights and all
13fees, costs and expenses to be made against amounts
14deferred to cover the costs and expenses of administering
15and managing the plan or trust.

16(vi) Procedures, standards and criteria for the
17making of distributions from the plan upon termination
18from employment or death or in other circumstances
19consistent with the purpose of the plan.

20(14) The board may waive any reporting or information
21requirement contained in this part if the board determines
22that the information is not needed for the administration of
23the plan.

24(15) The board may contract any services and duties in
25lieu of staff except final adjudications and as prohibited by
26law. Any duties or responsibilities of the board not required
27by law to be performed by the board may be delegated to a
28third-party provider subject to appeal to the board.

29(16) The board may provide that any duties of the
30employer or information provided by the participant to the

1employer be performed or received directly by the board.

2(17) The provisions and restrictions of the act of July
32, 2010 (P.L.266, No.44), known as Protecting Pennsylvania's
4Investments Act, shall not apply to the plan or trust or the
5investments thereof, but the board may offer to the plan
6participants investment vehicles that would be allowed under
7the Protecting Pennsylvania's Investments Act. The board
8shall also to the extent commercially available provide that
9one option for participants have an annuity investment
10feature.

11(18) The board shall ensure that participants are
12provided with educational materials about investment options
13and choices.

14§ 8413. Responsibility for investment loss.

15The Commonwealth, the board, an employer or a school entity
16or other political subdivision shall not be responsible for any
17investment loss incurred under the plan or for the failure of
18any investment to earn any specific or expected return or to
19earn as much as any other investment opportunity, whether or not
20such other opportunity was offered to participants in the plan.

21§ 8414. Investments based on participants' investment
22allocation choices.

23(a) Investment by participant.--All contributions, interest
24and investment earnings shall be invested based on a
25participant's investment allocation choices. All investment
26allocation choices shall be credited proportionally between
27contributions from the participant and employer defined
28contributions. Each participant shall be credited individually
29with the amount of contributions, interest and investment
30earnings.

1(b) Investment of contributions made by entities other than
2Commonwealth.--Investment of contributions by any corporation,
3institution, insurance company or custodial bank or other entity
4that the board has approved shall not be unreasonably delayed
5and in no case shall the investment of contributions be delayed
6more than 30 days from the date of payroll deduction or
7voluntary contributions are made to the date that funds are
8invested. Any interest earned on the funds pending investment
9shall be allocated to the employers and credited to the
10individual investment accounts of participants who are then
11participating in the plan, unless the interest is used to defray
12administrative costs and fees that would otherwise be required
13to be borne by participants who are then participating in the
14plan.

15§ 8415. Expenses.

16All expenses, fees and costs of administering the plan and
17the trust and investing the assets of the trust shall be borne
18by the participants and paid from assessments against the
19balances of the individual investment accounts as established by
20the board, except that for fiscal years ending before July 1,
212015, the expenses, fees and costs of establishing and
22administering the plan and trust shall be paid by the
23Commonwealth through annual appropriations from the General
24Fund, made on the basis of estimates from the board.

25§ 8416. Election by members to be participants.

26(a) General rule.--Any school employee who is an active
27member or inactive member on or after July 1, 2015, and who is
28employed in a position that would otherwise be eligible for
29participation in the plan may elect to become a participant in
30the plan.

1(b) Time for making election.--An eligible school employee
2may elect to become a participant and a combined service
3employee at any time before termination of school service by
4filing a written election with the board.

5(c) Effect of election.--The following apply:

6(1) An election to become a participant shall be
7irrevocable. Participation shall be effective at the
8beginning of the next pay period commencing after the
9election is filed with the board.

10(2) A member who elects to become a participant shall
11remain a participant for all future school service.

12(3) Any prior school or nonschool service credited in
13the system shall remain in the class of service in which it
14is credited on the effective date of participation.

15(4) A combined service employee shall not be eligible to
16receive an annuity from the system or a withdrawal of
17accumulated deductions until the employee has terminated
18school service.

19(5) A participant shall not be entitled to purchase any
20previous school service or creditable nonschool service.

21(6) The eligibility of a combined service employee for
22an annuity from the system and, if eligible, the amount of
23the annuity shall be as determined under this part.

24§ 8417. Tax qualification.

25(a) Required distributions.--All payments under this chapter
26shall start and be made in compliance with the minimum
27distribution requirements and incidental death benefit rules of
28IRC § 401(a).

29(b) Limitations.--The following shall apply:

30(1) (i) Except as provided under subparagraph (ii) and

1notwithstanding a provision of this part, a contribution
2or benefit related to the plan may not exceed a
3limitation under IRC § 415 with respect to governmental
4plans that is in effect on the date the contribution or
5benefit payment takes effect.

6(ii) An increase in a limitation under IRC § 415
7shall apply to the participants on or after the effective
8date of this section.

9(iii) For the purposes of this paragraph, the term
10"government plans" shall have the same meaning as in IRC
11§ 414(d).

12(2) (i) Except as provided under subparagraph (ii), an
13amendment of this part on or after the effective date of
14this section that increases contributions or benefits for
15active participants, inactive participants or
16participants receiving distributions may not be deemed to 
17provide for a contribution or benefit in excess of a
18limitation, adjusted on or after the effective date of
19this section, under IRC § 415 unless specifically
20provided by legislation.

21(ii) Notwithstanding subparagraph (i), an increase
22in benefits on or after the effective date of this
23section for a participant in the plan shall be authorized
24and apply to the fullest extent allowed by law.

25Section 116. Section 8501(a), (c) and (d) of Title 24 are
26amended to read:

27§ 8501. Public School Employees' Retirement Board.

28(a) Status and membership.--The board shall be an
29independent administrative board and shall consist of 15
30members: the Secretary of Education, ex officio; the State

1Treasurer, ex officio; two Senators; two members of the House of
2Representatives; the executive secretary of the Pennsylvania
3School Boards Association, ex officio; two to be appointed by
4the Governor, at least one of whom shall not be a school
5employee or an officer or employee of the State; three to be
6elected by the active professional members of the system and
7active professional participants of the plan from among their
8number; one to be elected by annuitants or a participant of the
9plan who has terminated school service and is receiving or is
10eligible to receive distributions from among their number; one
11to be elected by the active nonprofessional members of the
12system or active nonprofessional participants of the plan from
13among their number; and one to be elected by members of
14Pennsylvania public school boards from among their number. The
15appointments made by the Governor shall be confirmed by the
16Senate and each election shall be conducted in a manner approved
17by the board. The terms of the appointed and nonlegislative
18elected members shall be three years. The members from the
19Senate shall be appointed by the President pro tempore of the
20Senate and shall consist of one member from the majority and one
21member from the minority. The members from the House of
22Representatives shall be appointed by the Speaker of the House
23of Representatives and shall consist of one member from the
24majority and one member from the minority. The legislative
25members shall serve on the board for the duration of their
26legislative terms and shall continue to serve until 30 days
27after the convening of the next regular session of the General
28Assembly after the expiration of their respective legislative
29terms or until a successor is appointed for the new term,
30whichever occurs first. The chairman of the board shall be

1elected by the board members. Each ex officio member of the
2board and each legislative member of the board may appoint a
3duly authorized designee to act in his stead. In the event that
4a board member, who is designated as an active participant or as
5the participant in the plan who is receiving or is eligible to
6receive distributions, receives a total distribution of the
7board member's interest in the plan, that board member may
8continue to serve on the board for the remainder of the term.

9* * *

10(c) Oath of office.--Each member of the board shall take an
11oath of office that he will, so far as it devolves upon him,
12diligently and honestly administer the affairs of said board,
13the system and the plan and that he will not knowingly violate
14or willfully permit to be violated any of the provisions of law
15applicable to this part. Such oath shall be subscribed by the
16member making it and certified by the officer before whom it is
17taken and shall be immediately filed in the office of the
18Secretary of the Commonwealth.

19(d) Compensation and expenses.--The members of the board who
20are members of the system or participants in the plan shall
21serve without compensation. Members of the board who are members
22of the system or participants in the plan and who are employed
23by a governmental entity shall not suffer loss of salary or
24wages through serving on the board. The board, on request of the
25employer of any member of the board who is an active
26professional or nonprofessional member of the system or active
27professional or nonprofessional participant in the plan, may
28reimburse such employer for the salary or wages of the member or
29participant, or for the cost of employing a substitute for such
30member or participant, while the member or participant is

1necessarily absent from employment to execute the duties of the
2board. The members of the board who are not members of either
3the school system or the State Employees' Retirement System may
4be paid $100 per day when attending meetings and all board
5members shall be reimbursed for any necessary expenses. However,
6when the duties of the board as mandated are not executed, no
7compensation or reimbursement for expenses of board members
8shall be paid or payable during the period in which such duties
9are not executed.

10* * *

11Section 117. Section 8502(b), (c), (e), (h), (i), (j), (k),
12(n) and (o) of Title 24 are amended and the section is amended
13by adding a subsection to read:

14§ 8502. Administrative duties of board.

15* * *

16(b) Professional personnel.--The board shall contract for
17the services of a chief medical examiner, an actuary, investment
18advisors, counselors, an investment coordinator, and such other
19professional personnel as it deems advisable. The board may
20utilize the same individuals and firms contracted under this
21subsection for both the system and the plan but shall allocate
22the fees, costs and expenses incurred under this subsection
23between the system and the plan as appropriate.

24(c) Expenses.--

25(1) The board shall, through the Governor, submit to the
26General Assembly annually a budget covering the
27administrative expenses of [this part.] the system and a
28separate budget covering the administrative expenses of the
29plan. The separate budget shall include those expenses
30necessary to establish the plan and trust.

1(2) Such expenses of the system as approved by the
2General Assembly in an appropriation bill shall be paid from
3investment earnings of the fund.

4(3) For fiscal years ending on or before June 30, 2015,
5such expenses of the plan as approved by the General Assembly
6through an appropriation shall be paid from the General
7Fund. For fiscal years beginning on or after July 1, 2015,
8such expenses of the plan as approved by the General Assembly
9shall be paid from interest, pursuant to section 8414(b)
10(relating to investments based on participant investment
11allocation choices) or assessments on the balances of the
12participants' individual investment accounts.

13(4) Concurrently with its administrative budget, the
14board shall also submit to the General Assembly annually a
15list of proposed expenditures which the board intends to pay
16through the use of directed commissions, together with a list
17of the actual expenditures from the past year actually paid
18by the board through the use of directed commissions. All
19such directed commission expenditures shall be made by the
20board for the exclusive benefit of the system and its members
21and for the exclusive benefit of the plan and its
22participants, respectively.

23* * *

24(e) Records.--

25(1) The board shall keep a record of all its proceedings
26which shall be [open to inspection by] accessible to the
27public, except as otherwise provided in this part or by other
28law.

29(2) Any record, material or data received, prepared,
30used or retained by the board or its employees, investment

1professionals or agents relating to an investment shall not
2constitute a public record subject to public [inspection]
3access under the act of [June 21, 1957 (P.L.390, No.212),
4referred to] February 14, 2008 (P.L.6, No.3), known as the
5Right-to-Know Law, if, in the reasonable judgment of the
6board, the [inspection] access would:

7(i) in the case of an alternative investment or
8alternative investment vehicle involve the release of
9sensitive investment or financial information relating to
10the alternative investment or alternative investment
11vehicle which the fund or trust was able to obtain only
12upon agreeing to maintain its confidentiality;

13(ii) cause substantial competitive harm to the
14person from whom sensitive investment or financial
15information relating to the investment was received; or

16(iii) have a substantial detrimental impact on the
17value of an investment to be acquired, held or disposed
18of by the fund or trust, or would cause a breach of the
19standard of care or fiduciary duty set forth in this
20part.

21(3) (i) The sensitive investment or financial
22information excluded from [inspection] access under
23paragraph (2)(i), to the extent not otherwise excluded
24from [inspection] access, shall constitute a public
25record subject to public [inspection] access under the
26Right-to-Know Law once the board is no longer required by
27its agreement to maintain confidentiality.

28(ii) The sensitive investment or financial
29information excluded from [inspection] access under
30paragraph (2)(ii), to the extent not otherwise excluded

1from [inspection] access, shall constitute a public
2record subject to public [inspection] access under the
3Right-to-Know Law once:

4(A) the [inspection] access no longer causes
5substantial competitive harm to the person from whom
6the information was received; or

7(B) the entity in which the investment was made
8is liquidated;

9whichever is later.

10(iii) The sensitive investment or financial
11information excluded from [inspection] access under
12paragraph (2)(iii), to the extent not otherwise excluded
13from [inspection] access, shall constitute a public
14record subject to public [inspection] access under the
15Right-to-Know Law once:

16(A) the [inspection] access no longer has a
17substantial detrimental impact on the value of an
18investment of the fund or trust and would not cause a
19breach of the standard of care or fiduciary duty set
20forth in this part; or

21(B) the entity in which the investment was made
22is liquidated;

23whichever is later.

24(4) Except for the provisions of paragraph (3), nothing
25in this subsection shall be construed to designate any
26record, material or data received, prepared, used or retained
27by the board or its employees, investment professionals or
28agents relating to an investment as a public record subject
29to public [inspection] access under the Right-to-Know Law.

30(5) Notwithstanding the provisions of this subsection,

1the following information regarding an alternative investment
2vehicle shall be subject to public [inspection] access under
3the Right-to-Know Law:

4(i) The name, address and vintage year of the
5alternative investment vehicle.

6(ii) The identity of the manager of the alternative
7investment vehicle.

8(iii) The dollar amount of the commitment made by
9the system or plan to the alternative investment vehicle.

10(iv) The dollar amount of cash contributions made by
11the system or plan to the alternative investment vehicle
12since inception.

13(v) The dollar amount of cash distributions received
14by the system or plan from the alternative investment
15vehicle since inception.

16(vi) The net internal rate of return of the
17alternative investment vehicle since inception, provided
18that the system or plan shall not be required to disclose
19the net internal rate of return under circumstances in
20which, because of the limited number of portfolio assets
21remaining in the alternative investment vehicle, the
22disclosure could reveal the values of specifically
23identifiable remaining portfolio assets to the detriment
24of the alternative investment.

25(vii) The aggregate value of the remaining portfolio
26assets attributable to the system's or plan's investment
27in the alternative investment vehicle, provided that the
28system or plan shall not be required to disclose the
29value under circumstances in which, because of the
30limited number of portfolio assets remaining in the

1alternative investment vehicle, the disclosure could
2reveal the values of specifically identifiable remaining
3portfolio assets to the detriment of the alternative
4investment.

5(viii) The dollar amount of total management fees
6and costs paid to the alternative investment vehicle by
7the system or plan on an annual fiscal year-end basis.

8(6) Any record, material or data received, prepared,
9used or retained by the board or its employees or agents
10relating to a participant shall not constitute a public
11record subject to public access under the Right-to-Know Law,
12if, in the reasonable judgment of the board, the access would
13disclose any of the following:

14(i) The existence, date, amount and any other
15information pertaining to the voluntary contributions,
16including rollover contributions and trustee-to-trustee
17transfers, of any participant.

18(ii) The investment option selections of any
19participant.

20(iii) The balance of a participant's individual
21investment account, including the amount distributed to
22the participant, and any investment gains or losses, or
23rates of return.

24(iv) The identity of a participant's designated
25beneficiary, successor payee or alternate payee.

26(v) The benefit payment option of a participant.

27(7) Nothing in this part shall be construed to designate
28any record, material or data received, prepared, used or
29retained by the board or its employees or agents relating to
30the contributions, investments, account value or benefits

1payable to or on account of a participant as a public record
2subject to public access under the Right-to-Know Law.

3* * *

4(h) Regulations and procedures.--The board shall, with the
5advice of the Attorney General and the actuary, adopt and
6promulgate rules and regulations for the uniform administration
7of the system. The actuary shall approve in writing all
8computational procedures used in the calculation of
9contributions and benefits pertaining to the system, and the
10board shall by resolution adopt such computational procedures,
11prior to their application by the board. Such rules, regulations
12and computational procedures as so adopted from time to time and
13as in force and effect at any time, together with such tables as
14are adopted and published pursuant to subsection (j) as
15necessary for the calculation of annuities and other benefits,
16shall be as effective as if fully set forth in this part. Any
17actuarial assumption specified in or underlying any such rule,
18regulation or computational procedure and utilized as a basis
19for determining any benefit shall be applied in a uniform
20manner.

21(i) Data.--The board shall keep in convenient form such data
22as are stipulated by the actuary in order that an annual
23actuarial valuation of the various accounts of the fund can be
24completed within six months of the close of each fiscal year.
25The board shall have final authority over the means by which
26data is collected, maintained and stored and in so doing shall
27protect the rights of its membership as to privacy and
28confidentiality.

29(j) Actuarial investigation and valuation.--The board shall
30have the actuary make an annual valuation of the various

1accounts of the fund within six months of the close of each
2fiscal year. In the fiscal year 1975 and in every fifth year
3thereafter, the board shall have the actuary conduct an
4actuarial investigation and evaluation of the system based on
5data including the mortality, service, and compensation
6experience provided by the board annually during the preceding
7five years concerning the members and beneficiaries of the
8system. The board shall by resolution adopt such tables as are
9necessary for the actuarial valuation of the fund and
10calculation of contributions, annuities, and other benefits
11based on the reports and recommendations of the actuary. Within
1230 days of their adoption, the secretary of the board shall
13cause those tables which relate to the calculation of annuities
14and other benefits to be published in the Pennsylvania Bulletin
15in accordance with the provisions of 45 Pa.C.S. § 725(a)
16(relating to additional contents of Pennsylvania Bulletin) and,
17unless the board specifies therein a later effective date, such
18tables shall become effective on such publication. The board
19shall include a report on the significant facts, recommendations
20and data developed in each five-year actuarial investigation and
21evaluation of the system in the annual financial statement
22published pursuant to the requirements of subsection (n) for the
23fiscal year in which such investigation and evaluation were
24concluded.

25(k) Certification of employer contributions to fund.--The
26board shall, each year in addition to the itemized budget
27required under section 8330 (relating to appropriations by the
28Commonwealth), certify to the employers and the Commonwealth the
29employer contribution rate expressed as a percentage of members'
30payroll necessary for the funding of prospective annuities for

1active members and the annuities of annuitants, and certify the
2rates and amounts of the normal contributions as determined
3pursuant to section 8328(b) (relating to actuarial cost method),
4accrued liability contributions as determined pursuant to
5section 8328(c), supplemental annuities contribution rate as
6determined pursuant to section 8328(d), the experience
7adjustment factor as determined pursuant to section 8328(e),
8premium assistance contributions as determined pursuant to
9section 8328(f), the costs added by legislation as determined
10pursuant to section 8328(i), the actuarial required contribution
11rate as determined pursuant to section 8328(i), the collared
12contribution rate as determined pursuant to section 8328(g), the
13final contribution rate as determined pursuant to section
148328(h) and the shared-risk contribution rate as determined
15under section 8321(b) (relating to regular member contributions
16for current service), which shall be paid to the fund and
17credited to the appropriate accounts. These certifications shall
18be regarded as final and not subject to modification by the
19Secretary of the Budget.

20* * *

21(n) Annual financial statement.--The board shall prepare and
22have published, on or before January 1 of each year, [a
23financial statement] financial statements as of the fiscal year
24ending June 30 of the previous year showing the condition of the
25fund, the trust and the various accounts, including, but not
26limited to, the board's accrual and expenditure of directed
27commissions, and setting forth such other facts, recommendations
28and data as may be of use in the advancement of knowledge
29concerning annuities and other benefits provided by this part.
30The board shall submit said financial [statement] statements to

1the Governor and shall make copies available to the employers
2for the use of the school employees and the public.

3(o) Independent [audit] audits.--The board shall provide for
4[an annual audit] annual audits of the system and the plan by an
5independent certified public accounting firm, which [audit]
6audits shall include the board's accrual and expenditure of
7directed commissions. The board may use the same independent
8certified public accounting firm for the audits of both the
9system and the plan.

10* * *

11(q) Participant and employer contributions to trust.--The
12board shall, each year in addition to any fees and itemized
13budget required under section 8330, certify, as a percentage of
14each participant's compensation, the employer defined
15contributions, which shall be paid to the trust and credited to
16each participant's individual investment account. These
17certifications shall be regarded as final and not subject to
18modification by the Secretary of the Budget. The board shall
19cause all mandatory pickup participant contributions made on
20behalf of a participant and all voluntary contributions made by
21a participant to be credited to the participant's individual
22investment account.

23Section 118. Section 8502.2(a) of Title 24 is amended to
24read:

25§ 8502.2. Health insurance.

26(a) Authority.--The board may sponsor a participant-funded
27group health insurance program for annuitants, participants
28receiving distributions, spouses of annuitants and participants
29receiving distributions, survivor annuitants and their
30dependents. The board may promulgate regulations regarding the

1prudent and efficient operation of the program, including, but
2not limited to:

3(1) Establishment of an annual budget and disbursements
4in accordance with the budget.

5(2) Determination of the benefits structure.

6(3) Determination of enrollment procedures.

7(4) Establishment of premium rates sufficient to fully
8fund the program, including administrative expenses.

9(5) Contracting for goods, equipment, services,
10consultants and other professional personnel as needed to
11operate the program.

12* * *

13Section 119. Section 8503 heading and (a) of Title 24 are
14amended and the section is amended by adding a subsection to
15read:

16§ 8503. Duties of board to advise and report to employers [and
17members], members and participants.

18(a) Manual of regulations.--The board shall, with the advice
19of the Attorney General and the actuary, prepare, within 90 days
20of the effective date of this part, a manual incorporating rules
21and regulations consistent with the provisions of this part for
22the employers who shall make information contained therein
23available to the general membership. The board shall thereafter
24advise the employers within 90 days of any changes in such rules
25and regulations due to changes in the law or due to changes in
26administrative policies. As soon as practicable after the
27commissioner's publication with respect thereto, the board shall
28also advise the employers as to any cost-of-living adjustment
29for the succeeding calendar year in the amount of the limitation
30under IRC § 401(a)(17) and the dollar amounts of the limitations

1under IRC § 415[(b)].

2* * *

3(b.1) Participant status statements.--The board shall have
4furnished annually to each participant on or before December 31,
5and more frequently as the board may agree or as required by
6law, a statement showing the accumulated total defined
7contributions credited to the participant's individual
8investment account, the nature and type of investments and the
9investment allocation of future contributions as of June 30 of
10the current year and requesting the participant to make any
11necessary correction or revision regarding his designated
12beneficiary.

13* * *

14Section 120. Section 8504(c) of Title 24 is amended to read:

15§ 8504. Duties of board to report to State Employees'
16Retirement Board.

17* * *

18(c) Applications for benefits for State employees.--Upon
19receipt of notification and the required data from the State
20Employees' Retirement Board that a former school employee who
21elected multiple service has applied for a State employee's
22retirement benefit or, in the event of his death, his legally
23constituted representative has applied for such benefit, the
24board shall:

25(1) Certify to the State Employees' Retirement Board:

26(i) The salary history as a member of the Public
27School Employees' Retirement System and the final average
28salary as calculated on the basis of the compensation
29received as a State and school employee.

30(ii) The annuity or benefit which the member or his

1beneficiary is entitled to receive under this part and
2modified according to the option selected.

3(2) Transfer to the State Employees' Retirement Fund the
4accumulated deductions standing to such member's credit and
5the actuarial reserve required on account of the member's
6years of credited service in the school system and his final
7average salary determined on the basis of his compensation as
8a member in both systems.

9Section 121. Sections 8505 heading, (b), (h) and (i),
108506(a), (d), (e), (g) and (h) and 8507 heading, (a), (e) and
11(f) of Title 24 are amended and the sections are amended by
12adding subsections to read:

13§ 8505. Duties of board regarding applications and elections of
14members and participants.

15* * *

16(b) State employees electing multiple service status.--Upon
17receipt of notification from the State Employees' Retirement
18Board that a former school employee has become an active member
19in the State Employees' Retirement System and has elected to
20become a member with multiple service status, the board shall:

21(1) In case of a member who is receiving an annuity from
22the system:

23(i) Discontinue payments, transfer the present value
24of the member's annuity at the time of entering State
25service, plus the amount withdrawn in a lump sum payment,
26on or after the date of entering State service, pursuant
27to section 8345 (relating to member's options), with
28statutory interest to date of transfer, minus the amount
29to be returned to the board on account of return to
30service that the board has determined is to be credited

1in the members' savings account, from the annuity reserve
2account to the members' savings account and resume
3crediting of statutory interest on the amount restored to
4his credit.

5(ii) Transfer the balance of the present value of
6the total annuity, minus the amount to be returned to the
7board on account of return to service that the board has
8determined is to be credited in the State accumulation
9account, from the annuity reserve account to the State
10accumulation account.

11(iii) Certify to the member the amount of lump sum
12and annuity payments with statutory interest the member
13is to return to the board and, of those amounts, which
14amount shall be credited to the members' savings account
15and credited with statutory interest as such payments are
16returned and which amount shall be credited to the State
17accumulation account.

18(2) In case of a member who is not receiving an annuity
19from the system and who has not withdrawn his accumulated
20deductions, continue or resume the crediting of statutory
21interest on his accumulated deductions.

22(3) In case of a member who is not receiving an annuity
23from the system and his accumulated deductions were
24withdrawn, certify to the member the accumulated deductions
25as they would have been at the time of his separation had he
26been a full coverage member together with statutory interest
27for all periods of subsequent State service eligible for
28membership in the State Employees' Retirement System and
29school service eligible for membership in the system to the
30date of repayment. Such amount shall be restored by him and

1shall be credited with statutory interest as such payments
2are restored.

3* * *

4(e.1) Certification to participants terminating service.--
5The board shall certify to a participant, within one year of
6termination of service of such participant, and, if the
7participant is married, the board is authorized to advise the
8participant's spouse, in writing of the vested accumulated total
9defined contributions credited to the participant's individual
10investment account as of the date stated in the writing, any
11notices regarding rollover or other matters required by IRC or
12other law, the obligation of the participant to commence
13distributions from the plan by the participant's required
14beginning date, and the ability to receive all or part of the
15vested balance in the participant's individual investment
16account in a lump sum or in such other form as the board may
17authorize or as required by law.

18* * *

19(f.1) Notification to inactive participants approaching
20required beginning date.--The board shall notify each inactive
21participant who has terminated school service and for whom
22distribution has not commenced by 90 days before the
23participant's required beginning date, and, if the participant
24is married, the board may advise the participant's spouse, in
25writing, that the inactive participant has an obligation to
26commence distributions by the required beginning date in a form
27and manner required by IRC § 401(a)(9) and other applicable
28provisions of IRC.

29* * *

30(g.1) Initial payment to a participant.--The board shall

1make the initial payment to a participant who has applied for a
2distribution within 60 days of the filing of the application.

3(h) Death benefits.--Upon receipt of notification of the
4death of a member, an active participant, an inactive
5participant or a former participant performing USERRA leave, the
6board shall notify the designated beneficiary or survivor
7annuitant of the benefits to which he is entitled and shall make
8the first payment to the beneficiary under the plan elected by
9the beneficiary within 60 days of receipt of certification of
10death and other necessary data. If no beneficiary designation is
11in effect at the date of the member's or participant's death or
12no notice has been filed with the board to pay the amount of
13such benefits to the member's or participant's estate, the board
14is authorized to pay such benefits to the executor,
15administrator, surviving spouse or next-of-kin of the deceased
16member or participant, and payment pursuant hereto shall fully
17discharge the fund or plan from any further liability to make
18payment of such benefits to any other person. If the surviving
19spouse or next-of-kin of the deceased member or participant
20cannot be found for the purpose of paying such benefits for a
21period of seven years from the date of death of the member or
22participant, then such benefits shall be escheated to the
23Commonwealth for the benefit of the fund or plan.

24(i) Medical insurance coverage.--Upon receipt of
25notification from an insurance carrier offering a health
26insurance program approved by the board that an annuitant of the
27system who has attained age 65 has elected medical, major
28medical, and hospitalization insurance coverage or notification
29that annuitants of the system with less than 24 1/2 eligibility
30points (other than disability annuitants of the system), spouses

1of annuitants and survivor annuitants eligible to elect to
2enroll in the approved health insurance program have elected
3participation in such health insurance program, the board may
4deduct from the annuity payments the appropriate annual charges
5in equal monthly installments. Such deductions shall be
6transmitted to the insurance carrier.

7* * *

8§ 8506. Duties of employers.

9(a) Status of members and participants.--The employer shall,
10each month, notify the board in a manner prescribed by the board
11of the salary changes effective during the past month, the date
12of all removals from the payroll, and the type of leave of any
13member or participant who has been removed from the payroll for
14any time during that month, and:

15(1) if the removal is due to leave without pay, the
16employer shall furnish the board with the date of beginning
17leave, the date of return to service, and the reason for
18leave;

19(2) if the removal is due to a transfer to another
20employer, the former employer shall furnish such employer and
21the board with a complete school service record, including
22credited or creditable nonschool service; or

23(3) if the removal is due to termination of school
24service, the employer shall furnish the board with a complete
25school service record including credited or creditable
26nonschool service and in the case of death of the member the
27employer shall so notify the board.

28* * *

29(c.1) Participant and employer defined contributions.--The
30employer shall cause the mandatory pickup participant

1contributions on behalf of a participant to be made and shall
2cause to be deducted any voluntary contributions authorized by a
3participant. The employer shall also cause the employer defined
4contributions on behalf of a participant to be made. The
5employer shall notify the board at times and in a manner
6prescribed by the board of the compensation of any participant
7to whom the limitation under IRC § 401(a)(17) either applies or
8is expected to apply and shall cause the participant's
9contributions to be deducted from payroll to cease at the
10limitation under IRC § 401(a)(17) on the payroll date if and
11when such limit shall be reached. The employer shall certify to
12the board the amounts picked up and deducted and the employer
13defined contributions being made and shall send the total amount
14picked up, deducted and contributed together with a duplicate of
15such voucher to the secretary of the board every pay period or
16on such schedule as established by the board.

17(d) New employees subject to mandatory membership or
18participation.--Upon the assumption of duties of each new school
19employee whose membership in the system or plan is mandatory,
20the employer shall no later than 30 days thereafter cause an
21application for membership or participation, which application
22shall include the employee's home address, birthdate certified
23by the employer, previous school or State service and any other
24information requested by the board, and a nomination of
25beneficiary to be made by such employee, who shall be the
26participant's spouse if the participant is married, unless the
27spouse consents otherwise, and filed with the board and shall
28make pickup contributions or mandatory pickup participant
29contributions from the effective date of school employment.

30(e) New employees subject to optional membership or

1participation.--The employer shall inform any eligible school
2employee whose membership in the system or participation in the
3plan is not mandatory of his opportunity to become a member of
4the system or participant in the plan provided that he elects to
5purchase credit for all such continuous creditable service. If
6such employee so elects, the employer shall no later than 30
7days thereafter cause an application for membership which
8application shall include the employee's home address, birthdate
9certified by the employer, previous school or State service and
10any other information requested by the board, and a nomination
11of beneficiary, who shall be the participant's spouse if the
12participant is married, unless the spouse consents otherwise, to
13be made by him and filed with the board and shall cause proper
14contributions to be made from the date of election of membership
15or participation.

16* * *

17(g) Former State employee contributors.--

18(1) The employer shall, upon the employment of a former
19member of the State Employees' Retirement System who is not
20an annuitant of the State Employees' Retirement System,
21advise such employee of his right to elect multiple service
22membership within 365 days of entry into the system and, in
23the case any such employee who so elects has withdrawn his
24accumulated deductions, require him to restore his
25accumulated deductions as they would have been at the time of
26his separation had he been a full coverage member, together
27with statutory interest for all periods of subsequent State
28and school service to date of repayment. The employer shall
29advise the board of such election.

30(2) Paragraph (1) shall not apply to a school employee

1who is employed in a position where the school employee is or
2could be a participant in the plan other than a member who
3elects to become a participant in the plan.

4(h) Former State employee annuitants.--

5(1) The employer shall, upon the employment of an
6annuitant of the State Employees' Retirement System who
7applies for membership in the system, advise such employee
8that he may elect multiple service membership within 365 days
9of entry into the system and that if he so elects his annuity
10from the State Employees' Retirement System will be
11discontinued effective upon the date of his return to school
12service and, upon termination of school service and
13application for an annuity, the annuity will be adjusted in
14accordance with section 8346 (relating to termination of
15annuities). The employer shall advise the board of such
16election.

17(2) Paragraph (1) shall not apply to a school employee
18who is employed in a position where the school employee is or
19could be a participant in the plan other than a member who
20elects to become a participant in the plan.

21* * *

22(k) School employees performing USERRA or military related
23leave of absence.--The employer shall report to the board any
24school employee who ceases to be an active participant in order
25to perform USERRA service, or who is granted a leave of absence
26under 51 Pa.C.S. § 4102 (relating to leaves of absences for
27certain government employees) or a military leave of absence
28under 51 Pa.C.S. § 7302 (relating to granting military leaves of
29absence), the date on which such USERRA service, leave of
30absence or military leave of absence began, the date on which

1the school employee is reemployed from USERRA leave or returns
2after the leave of absence or military leave of absence, if such
3event occurs, and any other information the board may require or
4direct.

5(l) Differential wage payments and military leave of absence
6payments.--Notwithstanding the exclusion of differential wage
7payments as defined in IRC § 414(u)(12) from compensation under
8this part, the employer of any school employee on USERRA leave
9shall report differential wage payments made to the employee to
10the board, and the employer of any school employee on leave of
11absence pursuant to 51 Pa.C.S. § 4102 shall report any payment
12made to the employee, in the form and manner established by the
13board.

<-14* * *

15§ 8507. Rights and duties of school employees <-[and members], 
16members and participants.

17(a) Information on new employees.--Upon his assumption of
18duties, each new school employee shall furnish his employer with
19a complete record of his previous school or State service, or
20creditable nonschool service, <-name and address of his spouse, if 
21married and he is or is eligible to be a participant in the 
22plan, proof of his date of birth, his home address, his current
23status in the system<- and the plan and in the State Employees'
24Retirement System and the State Employees' Defined Contribution 
25Plan and such other information as the board may require.
26Willful failure to provide the information required by this
27subsection to the extent available or the provision of erroneous
28information upon entrance into the system shall result in the
29forfeiture of the right of the member to subsequently assert any
30right to benefits based on erroneous information or on any of

1the required information which he failed to provide. In any case
2in which the board finds that a member is receiving an annuity
3based on false information, the additional amounts received
4predicated on such false information together with statutory
5interest doubled and compounded shall be deducted from the
6present value of any remaining benefits to which the member is
7legally entitled and such remaining benefits shall be
8correspondingly decreased.

9* * *

<-10(b.1) Application for participation.--On or after July 1,
112015, in the case of a new employee who is not currently a
12participant in the plan and whose participation is mandatory, or
13in the case of a new employee whose participation is not
14mandatory but is permitted and who desires to become a
15participant in the plan, the new employee shall execute an
16application for participation and a nomination of a beneficiary,
17who shall be the participant's spouse if the participant is
18married, unless the spouse consents otherwise.

19* * *

20(d.1) Voluntary contributions by a participant.--Any
21participant who desires to make voluntary contributions to be
22credited to his individual investment account shall notify the
23board and, upon compliance with the requirements, procedures and
24limitations established by the board in the plan document, may
25do so subject to the limitations under IRC §§ 401(a) and 415 and
26other applicable law.

27(d.2) Contributions for USERRA leave.--Any active
28participant or inactive participant or former participant who
29was reemployed from USERRA leave and who desires to make
30mandatory pickup participant contributions and voluntary

1contributions for his USERRA leave shall so notify the board
2within the time period required under 38 U.S.C. Ch. 43 (relating
3to employment and reemployment rights of members of the
4uniformed services) and IRC § 414(u) of his desire to make such
5contributions. Upon making the permitted mandatory pickup
6participant contributions within the allowed time period, the
7employer shall make the corresponding employer defined
8contributions at the same time.

9(e) Beneficiary for death benefits from system.--Every
10member shall nominate a beneficiary by written designation filed
11with the board to receive the death benefit or the benefit
12payable under the provisions of Option 1. Such nomination may be
13changed at any time by the member by written designation filed
14with the board. A member may also nominate a contingent
15beneficiary or beneficiaries to receive the death benefit or the
16benefit payable under the provisions of Option 1.

17(e.1) Beneficiary for death benefits from plan.--Every
18participant shall nominate a beneficiary by written designation
19filed with the board as provided in section 8506 (relating to
20duties of employers) to receive the death benefit payable under
21section 8347 (relating to death benefits). A participant may
22also nominate a contingent beneficiary or beneficiaries to
23receive the death benefit provided under this section. Such
24nomination may be changed at any time by the participant by
25written designation filed with the board, provided that, if the
26participant is married, the participant's spouse consents to the
27change unless the change is to name the spouse as beneficiary or
28unless the change is limited to contingent beneficiaries and the
29spouse is the primary beneficiary. If the spouse of a
30participant in the plan is deemed to be the beneficiary by

1operation of law, the person last nominated as beneficiary in a
2writing filed with the board shall become the contingent
3beneficiary.

4(e.2) Beneficiary for combined service employee.--A combined
5service employee may designate or nominate different persons to
6be beneficiaries, survivor annuitants and successor payees for
7his benefits from the system and the plan.

8(f) Termination of service by members.--Each member who
9terminates school service and who is not then a disability
10annuitant shall execute on or before the date of termination of
11service a written application, duly attested by the member or
12his legally constituted representative, electing to do one of
13the following:

14(1) Withdraw his accumulated deductions.

15(2) Vest his retirement rights and if he is a joint
16coverage member, and so desires, elect to become a full
17coverage member and agree to pay within 30 days of the date
18of termination of service the lump sum required.

19(3) Receive an immediate annuity, if eligible, and may,
20if he is a joint coverage member, elect to become a full
21coverage member and agree to pay within 30 days of date of
22termination of service the lump sum required.

23* * *

24(g.1) Deferral of retirement rights.--If a participant
25terminates school service and does not commence receiving a
26distribution, he shall nominate a beneficiary, who shall be the
27participant's spouse if the participant is married, unless the
28spouse consents otherwise, by written designation filed with the
29board, and he may anytime thereafter, but no later than his
30required beginning date, withdraw the vested accumulated total

1defined contributions standing to his credit or apply for
2another form of distribution required by law or authorized by
3the board.

4* * *

5(l) Continuing obligation regarding spouses.--A participant
6shall have the continuing obligation to notify the board in
7writing of any change in marital status and, if applicable, the
8name and current address of the participant's spouse.

9Section 122. Sections 8521(b), 8522, 8524, 8525, 8531, 8533,
108533.1, 8533.3 and 8533.4(a) of Title 24 are amended to read:

11§ 8521. Management of fund and accounts.

12* * *

13(b) Crediting of interest.--The board annually shall allow
14statutory interest, excluding the individual investment
15accounts, to the credit of the members' savings account on the
16mean amount of the accumulated deductions of all members for
17whom interest is payable for the preceding year and valuation
18interest on the mean amount of the annuity reserve account for
19the preceding year to the credit of that account. The board
20annually shall allow valuation interest calculated on the mean
21amount for the preceding year of the balance in the State
22accumulation account excluding any earnings of the fund credited
23to the account during that year. In the event the total earnings
24for the year do not exceed 5 1/2% of the mean amount for the
25preceding year of the total assets of the fund less earnings
26credited to the fund during that year plus the administrative
27expenses of the board, the difference required to be
28appropriated from the General Fund shall be credited to the
29State accumulation account.

30* * *

1§ 8522. Public School Employees' Retirement Fund.

2(a) General rule.--The fund shall consist of all moneys in
3the several separate funds in the State Treasury set apart to be
4used under the direction of the board for the benefit of members
5of the system; and the Treasury Department shall credit to the
6fund all moneys received from the Department of Revenue arising
7from the contributions relating to or on behalf of the members
8of the system required under the provisions of Chapter 83
9(relating to membership, contributions and benefits) and all
10earnings from investments or moneys of said fund. There shall be
11established and maintained by the board the several ledger
12accounts specified in sections 8523 (relating to members'
13savings account), 8524 (relating to State accumulation account),
148525 (relating to annuity reserve account) and 8526 (relating to
15health insurance account).

16(b) Individual investment accounts and trust.--The
17individual investment accounts that are part of the trust are
18not part of the fund. Mandatory pickup participant
19contributions, voluntary contributions and employer defined
20contributions made under this part and any income earned by the
21investment of such contributions shall not be paid or credited
22to the fund but instead shall be paid to the trust and credited
23to the individual investment accounts.

24§ 8524. State accumulation account.

25The State accumulation account shall be the ledger account to
26which shall be credited all contributions of the Commonwealth
27and other employers as well as the earnings of the fund, except
28the premium assistance contributions and earnings thereon in the
29health insurance account. Valuation interest shall be allowed on
30the total amount of such account less any earnings of the fund

1credited during the year. The reserves necessary for the payment
2of annuities and death benefits resulting from membership in the
3system as approved by the board and as provided in Chapter 83
4(relating to membership, contributions and benefits) shall be
5transferred from the State accumulation account to the annuity
6reserve account. At the end of each year the required interest
7shall be transferred from the State accumulation account to the
8credit of the members' savings account and the annuity reserve
9account. The administrative expenses of the board shall be
10charged to the State accumulation account.

11§ 8525. Annuity reserve account.

12(a) Credits and charges to account.--The annuity reserve
13account shall be the ledger account to which shall be credited
14the reserves held for the payment of annuities and death
15benefits resulting from membership in the system on account of
16all annuitants and the contributions from the Commonwealth and
17other employers as determined in accordance with section 8328
18(relating to actuarial cost method) for the payment of the
19supplemental annuities provided in sections 8348 (relating to
20supplemental annuities), 8348.1 (relating to additional
21supplemental annuities), 8348.2 (relating to further additional
22supplemental annuities), 8348.3 (relating to supplemental
23annuities commencing 1994), 8348.4 (relating to special
24supplemental postretirement adjustment), 8348.5 (relating to
25supplemental annuities commencing 1998), 8348.6 (relating to
26supplemental annuities commencing 2002) and 8348.7 (relating to
27supplemental annuities commencing 2003). The annuity reserve
28account shall be credited with valuation interest. After the
29transfers provided in sections 8523 (relating to members'
30savings account) and 8524 (relating to State accumulation

1account), all annuity and death benefit payments shall be
2charged to the annuity reserve account and paid from the fund.

3(b) Transfers from account.--Should an annuitant be
4subsequently restored to active service either as a member of
5the system or participant in the plan, the present value of his
6member's annuity at the time of reentry into school service
7shall be transferred from the annuity reserve account and placed
8to his individual credit in the members' savings account. In
9addition, the actuarial reserve for his annuity less the amount
10transferred to the members' savings account shall be transferred
11from the annuity reserve account to the State accumulation
12account.

13§ 8531. State guarantee regarding the system.

14Statutory interest charges payable, the maintenance of
15reserves in the fund, and the payment of all annuities and other
16benefits granted by the board from the system under the
17provisions of this part relating to the establishment and
18administration of the system are hereby made obligations of the
19Commonwealth. All income, interest, and dividends derived from
20deposits and investments of the system authorized by this part
21shall be used for the payment of the said obligations of the
22Commonwealth and shall not be used for any obligations of the
23plan or trust.

24§ 8533. Taxation, attachment and assignment of funds.

25(a) General rule.--Except as provided in subsections (b),
26(c) [and (d)], (d) and (e), the right of a person to a member's
27annuity, a State annuity, or retirement allowance, to the return
28of contributions, any benefit or right accrued or accruing to
29any person under the provisions of this part, and the moneys in
30the fund and the trust are hereby exempt from any State or

1municipal tax, and exempt from levy and sale, garnishment,
2attachment, the provisions of Article XIII.1 of the the act of
3April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, or
4any other process whatsoever, and shall be unassignable.

5(a.1) Individual investment accounts and distributions.--No
6participant or beneficiary, successor payee, spouse or alternate
7payee of a participant shall have the ability to commute, sell,
8assign, alienate, anticipate, mortgage, pledge, hypothecate,
9commutate or otherwise transfer or convey any benefit or
10interest in an individual investment account or rights to
11receive or direct distributions under this part or under
12agreements entered into under this part except as otherwise
13provided in this part and in the case of either a member or a
14participant.

15(b) Forfeiture.--

16(1) Rights under this part shall be subject to
17forfeiture as provided by the act of July 8, 1978 (P.L.752,
18No.140), known as the Public Employee Pension Forfeiture Act.
19Forfeitures under this subsection or under any other
20provision of law may not be applied to increase the benefits
21that any member would otherwise receive under this part.

22(2) Notwithstanding paragraph (1), the act of July 8,
231978 (P.L.752, No.140), known as the Public Employee Pension
24Forfeiture Act, section 16(b) of Article V of the
25Constitution of Pennsylvania and 42 Pa.C.S. § 3352 (relating
26to pension rights), the accumulated mandatory participant
27contributions and accumulated voluntary contributions
28standing to the credit of a participant shall not be
29forfeited but shall be available for payment of fines and
30restitution as provided by law. Furthermore, amounts in the

1trust that have been ordered to be distributed to an
2alternate payee as the result of an equitable distribution of
3marital property as part of an approved domestic relations
4order entered before the date of the order or action in a
5court or other tribunal resulting in a forfeiture of a
6participant's interest in the trust shall not be subject to
7the Public Employee Pension Forfeiture Act, section 16(b) of
8the Article V of the Constitution of Pennsylvania or 42
9Pa.C.S. § 3352. Any accumulated employer defined
10contributions forfeited as a result of this subsection or
11other law shall be retained by the board and used for the
12payment of expenses of the plan.

13(c) Domestic relations order.--Rights under this part shall
14be subject to attachment in favor of an alternate payee as set
15forth in an approved domestic relations order.

16(d) Direct rollover.--Effective with distributions made on
17or after January 1, 1993, and notwithstanding any other
18provision of this part to the contrary, a distributee may elect,
19at the time and in the manner prescribed by the board, to have
20any portion of an eligible rollover distribution paid directly
21to an eligible retirement plan by way of a direct rollover. For
22purposes of this subsection, a "distributee" includes a member
23[and], a participant, a spouse, a member's surviving spouse
24[and], a participant's surviving spouse, a member's former
25spouse who is an alternate payee under an approved domestic
26relations order and a participant's former spouse who is an
27alternate payee under an approved domestic relations order and
28anyone else authorized under IRC and the plan terms approved by
29the board to have an eligible rollover distribution paid
30directly to an eligible retirement plan by way of a direct

1rollover. For purposes of this subsection, the term "eligible
2rollover distribution" has the meaning given such term by IRC §
3402(f)(2)(A) and "eligible retirement plan" has the meaning
4given such term by IRC § 402(c)(8)(B), except that a qualified
5trust shall be considered an eligible retirement plan only if it
6accepts the distributee's eligible rollover distribution;
7however, in the case of an eligible rollover distribution to a
8surviving spouse, an eligible retirement plan is an "individual
9retirement account" or an "individual retirement annuity" as
10those terms are defined in IRC § 408(a) and (b).

11(e) Married participants.--No married participant may take
12an action inconsistent with the spousal consent provisions of
13this part or the plan.

14§ 8533.1. Approval of domestic relations orders.

15(a) Certification regarding members.--A domestic relations
16order pertaining to a member of the system shall be certified as
17an approved domestic relations order by the secretary of the
18board, or his designated representative, only if such order
19meets all of the following:

20(1) Requires the system to provide any type or form of
21benefit or any option applicable to members already provided
22under this part.

23(2) Requires the system to provide no more than the
24total amount of benefits than the member would otherwise
25receive (determined on the basis of actuarial value) unless
26increased benefits are paid to the member or alternate payee
27based upon cost-of-living increases or increases based on
28other than actuarial value.

29(3) Specifies the amount or percentage of the member's
30benefits to be paid by the system to each such alternate

1payee or the manner in which the amount or percentage is to
2be determined.

3(4) Specifies the retirement option to be selected by
4the member upon retirement or states that the member may
5select any retirement option offered by this part upon
6retirement.

7(5) Specifies the name and last known mailing address,
8if any, of the member and the name and last known mailing
9address of each alternate payee covered by the order and
10states that it is the responsibility of each alternate payee
11to keep a current mailing address on file with the system.

12(6) Does not grant an alternate payee any of the rights,
13options or privileges of a member under this part.

14(7) Requires the member to execute an authorization
15allowing each alternate payee to monitor the member's
16compliance with the terms of the domestic relations order
17through access to information concerning the member
18maintained by the system.

19(a.1) Certification regarding participants.--A domestic
20relations order pertaining to a participant shall be certified
21as an approved domestic relations order by the secretary of the
22board, or his designated representative, only if that order
23meets all of the following:

24(1) Does not require the plan to provide any type or
25form of benefit or any option applicable to members of the
26system or participants in the plan.

27(2) Does not require the segregation of the alternate
28payee's share of the participant's individual investment
29account into a subaccount or newly established individual
30account titled in the name of the alternate payee.

1(3) Does not require the plan to recover or distribute
2any funds which were distributed to the participant or at the
3participant's direction prior to the approval of the domestic
4relations order by the secretary of the board or his
5designated representative.

6(4) Requires the plan to pay to the alternate payee no
7more than the lesser of the vested amount of the
8participant's individual investment account specified by the
9domestic relations order or the vested amount of the
10participant's individual investment account as of the date of
11the transfer of the alternate payee's share to the alternate
12payee.

13(5) States that the plan shall not be required to recoup
14or make good for losses in value to the participant's
15individual investment account incurred between the date of
16the valuation of the account used for equitable distribution
17purposes and the date of distribution to the alternate payee.

18(6) Specifies the amount or percentage of the
19participant's individual investment account to be paid to the
20alternate payee and the date upon which such valuation is
21based.

22(7) Specifies the name and last known mailing address,
23if any, of the participant and the name and last known
24mailing address of each alternate payee covered by the order
25and states that it is the responsibility of each alternate
26payee to keep a current mailing address on file with the
27system.

28(8) Does not grant an alternate payee the rights,
29privileges or options available to a participant.

30(9) Requires the participant to execute an authorization

1allowing each alternate payee to monitor the participant's
2compliance with the terms of the domestic relations order
3through access to information concerning the participant
4maintained by the plan. Any authorization granted under this
5section shall be construed only as an authorization for the
6alternate payee to receive information concerning the
7participant which relates to the administration, calculation
8and payment of the alternate payee's share of the
9participant's account and not as an authorization to exercise
10the rights afforded to participants or obtain information
11that is not related to the administration, calculation and
12payment of the alternate payee's share of the participant's
13individual investment account.

14(10) In the case of participants who have not yet begun
15to receive distributions as of the date the domestic
16relations order is approved by the secretary of the board or
17his designated representative, requires the immediate
18distribution of the alternate payee's share of the
19participant's individual investment account, which may be
20made by direct payment, eligible rollover or trustee-to-
21trustee transfer to another eligible plan or qualified
22account owned by the alternate payee, notwithstanding any
23other provision of this part or the plan that would otherwise
24require a distribution of accumulated employer defined
25contributions in the form of an annuity or to require the
26purchase of an annuity.

27(11) In the case of participants who are currently
28receiving distributions from the trust as of the date the
29domestic relations order is approved by the secretary of the
30board or his designated representative, the domestic

1relations order may not order the board to pay the alternate
2payee more than the balance available in the participant's
3individual investment account as of the date the order is
4approved or require that distributions continue to the
5alternate payee after the death of the participant and final
6settlement of the participant's individual investment
7account.

8(b) Determination by secretary.--Within a reasonable period
9of time after receipt of a domestic relations order, the
10secretary of the board, or his designated representative, shall
11determine whether this order is an approved domestic relations
12order and notify the member or participant and each alternate
13payee of this determination. Notwithstanding any other provision
14of law, the exclusive remedy of any member, participant or
15alternate payee aggrieved by a decision of the secretary of the
16board, or his designated representative, shall be the right to
17an adjudication by the board under 2 Pa.C.S. Ch. 5 (relating to
18practice and procedure) with appeal therefrom to the
19Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to judicial
20review) and 42 Pa.C.S. § 763(a)(1) (relating to direct appeals
21from government agencies).

22(c) Other orders.--The requirements for approval identified
23in [subsection (a)] subsections (a) and (a.1) shall not apply to
24any domestic relations order which is an order for support as
25that term is defined in 23 Pa.C.S. § 4302 (relating to
26definitions) or an order for the enforcement of arrearages as
27provided in 23 Pa.C.S. § 3703 (relating to enforcement of
28arrearages). These orders shall be approved to the extent that
29they do not attach moneys in excess of the limits on attachments
30as established by the laws of this Commonwealth and the United

1States[.], require distributions of benefits in a manner that
2would violate the laws of the United States, any other state or
3this Commonwealth or require the distribution of funds for
4support or enforcement of arrearages against any participant who
5is not receiving distributions from the plan at the time such
6order is entered. These orders may be approved notwithstanding
7any other provision of this part or the plan that would
8otherwise require a distribution of accumulated employer defined
9contributions in the form of an annuity or to require the
10purchase of an annuity.

11(d) Obligation discharged.--Only the requirements of this
12part and any regulations promulgated hereunder shall be used to
13govern the approval or disapproval of a domestic relations
14order. Therefore, if the secretary of the board, or his
15designated representative, acts in accordance with the
16provisions of this part and any promulgated regulations in
17approving or disapproving a domestic relations order, then the
18obligations of the system or plan with respect to such approval
19or disapproval shall be discharged.

20§ 8533.3. Irrevocable survivor annuitant.

21Notwithstanding any other provisions of this part, a domestic
22relations order pertaining to a member may provide for an
23irrevocable survivor annuitant. A domestic relations order
24requiring the designation of an irrevocable survivor annuitant
25shall be deemed to be one that requires a member to designate an
26alternate payee as a survivor annuitant and that prohibits the
27removal or change of that survivor annuitant without approval of
28a court of competent jurisdiction, except by operation of law.
29Such a domestic relations order may be certified as an approved
30domestic relations order by the secretary of the board, or his

1designated representative, in which case the irrevocable
2survivor annuitant so ordered by the court cannot be changed by
3the member without approval by the court. A person ineligible to
4be designated as a survivor annuitant may not be designated an
5irrevocable survivor annuitant.

6§ 8533.4. Amendment of approved domestic relations orders.

7(a) Deceased alternate payee.--In the event that the
8alternate payee predeceases the member or participant and there
9are benefits payable to the alternate payee, the divorce court
10may amend the approved domestic relations order to substitute a
11person for the deceased alternate payee to receive any benefits
12payable to the deceased alternate payee.

13* * *

14Section 123. Title 24 is amended by adding sections to read:

15§ 8533.5. Irrevocable successor payee.

16(a) Condition.--Notwithstanding any other provisions of this
17part, a domestic relations order pertaining to a participant may
18provide for an irrevocable successor payee, only if the
19participant is receiving a payment pursuant to a payment option
20provided by the board that allows for a successor payee.

21(b) Determination.--A domestic relations order requiring the
22designation of an irrevocable successor payee shall be deemed to
23be one that requires a participant who is receiving payments
24from an annuity or other distribution option to designate an
25alternate payee as a successor payee and that prohibits the
26removal or change of that successor payee without approval of a
27court of competent jurisdiction, except by operation of law.

28(c) Certification.--A domestic relations order under
29subsection (b) may be certified as an approved domestic
30relations order by the secretary of the board, or his designated

1representative, in which case the irrevocable successor payee so
2ordered by the court cannot be changed by the participant
3without approval by the court.

4(d) Ineligibility.--A person ineligible to be designated as
5a successor payee may not be designated as an irrevocable
6successor payee. A court may not name an irrevocable successor
7payee if the alternate payee is eligible to receive a lump sum
8distribution of the alternate payee's portion of the marital
9portion of the pension benefit.

10§ 8533.6. Exemption from spousal consent.

11If a domestic relations order approved under section 8533.1
12(relating to approval of domestic relations orders) requires any
13nomination of irrevocable beneficiary or irrevocable survivor
14annuitant or the selection of any benefit by a participant, the
15provisions of this part or the plan requiring the spouse of a
16married participant to be nominated as beneficiary or designated
17as survivor annuitant or to grant consent to any action,
18election or application of a participant shall not apply to any
19action or nomination so required by the approved domestic
20relations order to the extent that the required action or
21nomination is inconsistent with the rights of the spouse set
22forth in this part.

23Section 124. Section 8534 of Title 24 is amended to read:

24§ 8534. Fraud and adjustment of errors.

25(a) Penalty for fraud.--Any person who shall knowingly make
26any false statement or shall falsify or permit to be falsified
27any record or records of this system or plan in any attempt to
28defraud the system or plan as a result of such act shall be
29guilty of a misdemeanor of the second degree.

30(b) Adjustment of errors.--Should any change or mistake in

1records result in any member, participant, beneficiary, [or],
2survivor annuitant or successor payee receiving from the system
3or plan more or less than he would have been entitled to receive
4had the records been correct, then regardless of the intentional
5or unintentional nature of the error and upon the discovery of
6such error, the board shall correct the error and if the error
7affects contributions to or payments from the system, then so
8far as practicable shall adjust the payments which may be made
9for and to such person in such a manner that the actuarial
10equivalent of the benefit to which he was correctly entitled
11shall be paid. If the error affects contributions to or payments
12from the plan, the board shall take such action as shall be
13provided for in the plan document.

14Section 125. Title 24 is amended by adding a section to
15read:

16§ 8534.1. Spousal consent and participants.

17(a) General rule.--No married participant may:

18(1) take any action regarding rights in the plan;

19(2) make an election regarding benefits in the plan; or

20(3) file a valid application regarding the consent of
21the participant's spouse unless the participant's spouse
22consents in writing to that action, election or application.
23A consent shall be valid only if the consent is:

24(i) signed after the participant's spouse receives
25counseling or affirmatively waives the right to receive
26counseling;

27(ii) witnessed before a notary public; and

28(iii) filed with the board within 90 days of the
29filing of the application or within 90 days of the date
30the action or election would otherwise be valid. A

1consent or lack thereof shall not affect the effective
2date of any action or election.

3(b) Exceptions to consent.--Spousal consent shall not be
4required where:

5(1) the spouse cannot be located; or

6(2) such other circumstances as the board may establish
7in the plan document.

8(c) Legal guardians and powers of attorney.--A legal
9guardian, even if the participant, may execute a valid spousal
10consent. A participant, as agent under a power of attorney, may
11not execute a valid spousal consent unless the spouse is
12incapacitated and the spouse had executed a valid durable power
13of attorney.

14(d) Spouse of participant.--This part does not grant to the
15spouse of a participant of the plan the rights, options or
16privileges of a participant. The rights of the spouse shall
17remain derivative of the rights of the participant, including
18rights under the act of July 8, 1978 (P.L.752, No.140), known as
19the Public Employee Pension Forfeiture Act, section 16(b) of
20Article V of the Constitution of Pennsylvania and 42 Pa.C.S. §
213352 (relating to pension rights). The spouse may not do the
22following:

23(1) compel the participant to take, or prevent the
24participant from taking, an action regarding membership,
25rights or benefits in the plan other than as provided under
26this part; or

27(2) take any action on behalf of the participant, except
28as provided under this part.

29(e) Waiver.--If a law allows a participant in the plan to
30waive benefits or return of contributions that the participant

1is receiving, entitled to currently receive or receive in the
2future, the waiver is not valid unless the spouse of the
3participant consents to the waiver as provided for under this 
4part.

5Section 126. Section 8535 of Title 24 is amended to read:

6§ 8535. Payments to school entities by Commonwealth.

7For each school year beginning with the 1995-1996 school year
8and ending with the 2014-2015 school year, each school entity
9shall be paid by the Commonwealth for contributions based upon
10school service of active members of the system after June 30,
111995, as follows:

12(1) The Commonwealth shall pay each school entity for
13contributions made to the Public School Employees' Retirement
14Fund based upon school service of all active members,
15including members on activated military service leave, whose
16effective dates of employment with their school entities are
17after June 30, 1994, and who also had not previously been
18employed by any school entity within this Commonwealth an
19amount equal to the amount certified by the Public School
20Employees' Retirement Board as necessary to provide, together
21with the members' contributions, reserves on account of
22prospective annuities, supplemental annuities and the premium
23assistance program as provided in this part in accordance
24with section 8328 (relating to actuarial cost method),
25multiplied by the market value/income aid ratio of the school
26entity. For no school year shall any school entity receive
27less than the amount that would result if the market
28value/income aid ratio as defined in section 2501(14.1) of
29the Public School Code [of 1949] was 0.50.

30(2) The Commonwealth shall pay each school entity for

1contributions made to the Public School Employees' Retirement
2Fund based upon school service of all active members,
3including members on activated military service leave, who
4are not described in paragraph (1), one-half of the amount
5certified by the Public School Employees' Retirement Board as
6necessary to provide, together with the members'
7contributions, reserves on account of prospective annuities,
8supplemental annuities and the premium assistance program as
9provided in this part in accordance with section 8328.

10(3) School entities shall have up to five days after
11receipt of the Commonwealth's portion of the employer's
12liability to make payment to the Public School Employees'
13Retirement Fund. School entities are expected to make the
14full payment to the Public School Employees' Retirement Fund
15in accordance with section 8327 (relating to payments by
16employers) in the event the receipt of the Commonwealth's
17portion of the employer's liability is delayed because of
18delinquent salary reporting or other conduct by the school
19entities.

20Section 127. Title 24 is amended by adding a section to
21read:

22§ 8535.1. Payments to school entities by Commonwealth
23commencing with the 2015-2016 school year.

24For each school year, beginning with the 2015-2016 school
25year, each school entity shall be paid by the Commonwealth for
26contributions based upon school service of active members of the
27system and active participants of the plan after June 30, 2015,
28as follows:

29(1) The Commonwealth shall pay each school entity for
30contributions made to the fund based upon school service of

1all active members, including members on activated military
2service leave, and active participants of the plan whose
3effective dates of employment with their school entities are
4after June 30, 1994, and who also had not previously been
5employed by any school entity within this Commonwealth an
6amount equal to the amount certified by the board as
7necessary to provide, together with the members' and
8participants' contributions, reserves on account of
9prospective annuities, supplemental annuities and the premium
10assistance program as provided in this part in accordance
11with section 8328 (relating to actuarial cost method),
12multiplied by the market value/income aid ratio of the school
13entity. For no school year shall any school entity receive
14less than the amount that would result if the market
15value/income aid ratio as defined in section 2501(14.1) of
16the Public School Code was 0.50.

17(2) The Commonwealth shall pay each school entity for
18contributions made to the fund based upon school service of
19all active members, including members on activated military
20service leave, and active participants of the plan who are
21not described in paragraph (1) one-half of the amount
22certified by the board as necessary to provide, together with
23the members' and participants' contributions, reserves on
24account of prospective annuities, supplemental annuities and
25the premium assistance program as provided in this part in
26accordance with section 8328.

27(3) School entities shall have up to five days after
28receipt of the Commonwealth's portion of the employer's
29liability to make payment to the fund. School entities are
30expected to make the full payment to the fund in accordance

1with section 8327 (relating to payments by employers) in the
2event the receipt of the Commonwealth's portion of the
3employer's liability is delayed because of delinquent salary
4reporting or other conduct by the school entities.

5Section 128. The definition of "eligible person" in section
68702(a) of Title 24 is amended to read:

7§ 8702. Definitions.

8(a) General rule.--Subject to additional definitions
9contained in subsequent provisions of this part which are
10applicable to specific provisions of this part, the following
11words and phrases when used in this part shall have the meanings
12given to them in this section unless the context clearly
13indicates otherwise:

14"Eligible person." An individual who is:

15(1) an annuitant or survivor annuitant or the spouse or
16dependent of an annuitant or survivor annuitant; or

17(2) a participant receiving distributions or a successor
18payee, or the spouse or dependent of a participant receiving
19distributions or successor payee.

20* * *

21ARTICLE II

22Section 201. Section 7306(a) introductory paragraph of Title 
2351, amended October 24, 2012 (P.L.1436, No.181)<- July 1, 2013 
24(P.L.174, No.32), is amended and the section is amended by 
25adding a subsection to read:

26§ 7306. Retirement rights.

27(a) Options available to employees.--Any employee who is a
28member of a retirement system other than an active member or 
29inactive member on leave without pay of the State Employees' 
30Retirement System<-, an active or inactive participant of the
 

1School Employees' Defined Contribution Plan or an active <-[or], 
2an active or inactive member of the Public School Employees' 
3Retirement System or an active participant or inactive 
4participant on leave without pay of the State Employees' Defined 
5Contribution Plan, at the time he is granted a military leave of
6absence shall be entitled to exercise any one of the following
7options in regard thereto:

8* * *

<-9(e) Participant of a defined contribution plan.--

10(1) An employee who is an active or inactive participant
11of the School Employees' Defined Contribution Plan at the
12time the employee is granted a military leave of absence
13shall be entitled to make contributions to the Public School
14Employees' Defined Contribution Trust for the leave as
15provided in 24 Pa.C.S. Pt. IV (relating to retirement for
16school employees).

17(2) An employee who is an active participant or inactive

<-18(f) Participant of a defined contribution plan.--An employee 
19who is an active participant or inactive participant on leave
20without pay of the State Employees' Defined Contribution Plan at
21the time he is granted a military leave of absence shall be
22entitled to make contributions to the State Employees' Defined
23Contribution Trust for the leave as provided in 71 Pa.C.S. Pt.
24XXV (relating to retirement for State employees and officers).

25ARTICLE III

26Section 301. Section 5102 of Title 71, amended October 24,
272012 (P.L.1436, No.181), is amended to read:

28§ 5102. Definitions.

29The following words and phrases as used in this part, unless
30a different meaning is plainly required by the context, shall

1have the following meanings:

2"Academic administrator." A management employee in the field 
3of public education whose work is directly related to academic 
4instruction, excluding any employee in a position that is 
5nonacademic in nature, such as, without limitation, a position 
6that relates to admissions, financial aid, counseling, 
7secretarial and clerical services, records management, housing, 
8food service, maintenance and security.

9"Accumulated employer defined contributions."  The total of
10the employer defined contributions paid into the trust on
11account of a participant's State service together with any
12investment earnings and losses and adjustment for fees, costs
13and expenses credited or charged thereon.

14"Accumulated mandatory participant contributions."  The total
15of the mandatory pickup participant contributions paid into the
16trust on account of a participant's State service together with
17any investment earnings and losses and adjustments for fees,
18costs and expenses credited or charged thereon.

19"Accumulated total defined contributions."  The total of the
20accumulated mandatory participant contributions, accumulated
21employer defined contributions and accumulated voluntary
22contributions, reduced by any distributions, standing to the
23credit of a participant in an individual investment account in
24the trust.

25"Accumulated voluntary contributions."  The total of
26voluntary contributions paid into the trust by a participant and
27any amounts rolled over by a participant or transferred by a
28direct trustee-to-trustee transfer into the trust together with
29any investment earnings and losses and adjustment for fees,
30costs and expenses credited or charged thereon.

1"Active member." A State employee, or a member on leave 
2without pay, for whom pickup contributions are being made to the 
3fund or for whom such contributions otherwise required for 
4current State service are not being made solely by reason of 
5section 5502.1 (relating to waiver of regular member 
6contributions and Social Security integration member 
7contributions) or any provision of this part relating to the 
8limitations under section 401(a)(17) or section 415(b) of the 
9Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 
10401(a)(17) or 415(b)).

11"Active participant."  A State employee for whom mandatory
12pickup participant contributions are being made to the trust or
13for whom such contributions otherwise required for current State
14service are not being made solely by reason of any provision of
15this part relating to the limitations under section 401(a)(17)
16or 415 of the Internal Revenue Code of 1986 (Public Law 99-514,
1726 U.S.C. § 401(a)(17) or § 415). <-The term does not include a
18sworn member of the Pennsylvania State Police or a correction
19officer.

20"Actuarial increase factor." A factor calculated at the 
21member's birthday by dividing the cost of a dollar annuity based 
22on the age of the member on the member's immediately previous 
23birthday by the cost of a one-year deferred dollar annuity 
24calculated at that same age. Unless the member terminates State 
25or school service on the member's birthday, the actuarial 
26increase factor for the year of termination shall be adjusted 
27by:

28(1) subtracting one from the calculated factor; then

29(2) dividing the difference by twelve; then

30(3) multiplying the resulting quotient by the number of

1whole months between the member's immediately previous
2birthday and the date of termination of service; then

3(4) adding one to the resulting product.

4"Actuarially equivalent." Equal present values, computed on 
5the basis of statutory interest and the mortality tables adopted 
6by the board.

7"Actuary." The consultant to the board who shall be:

8(1) a member of the American Academy of Actuaries; or

9(2) an individual who has demonstrated to the
10satisfaction of the Insurance Commissioner of Pennsylvania
11that he has the educational background necessary for the
12practice of actuarial science and has had at least seven
13years of actuarial experience; or

14(3) a firm, partnership, or corporation of which at
15least one member meets the requirements of (1) or (2).

16"Additional accumulated deductions." The total of the 
17additional member contributions paid into the fund on account of 
18current service or previous State or creditable nonstate 
19service, together with the statutory interest credited thereon 
20until the date of termination of service. In the case of a 
21vestee, statutory interest shall be credited until the effective 
22date of retirement. A member's account shall not be credited 
23with statutory interest for more than two years during a leave 
24without pay.

25"Alternative investment." An investment in a private equity
26fund, private debt fund, venture fund, real estate fund, hedge
27fund or absolute return fund.

28"Alternative investment vehicle." A limited partnership,
29limited liability company or any other legal vehicle for 
30authorized investments under section 5931(i) (relating to
 

1management of fund and accounts) through which the system makes 
2an alternative investment.

3"Alternate payee." Any spouse, former spouse, child or 
4dependent of a member or participant who is recognized by a 
5domestic relations order as having a right to receive all or a 
6portion of the moneys payable to that member or participant 
7under this part.

8"Annuitant." Any member on or after the effective date of
9retirement until his annuity is terminated.

10"Approved domestic relations order." Any domestic relations
11order which has been determined to be approved in accordance
12with section 5953.1 (relating to approval of domestic relations
13orders).

14"Average noncovered salary." The average of the amounts of 
15compensation received by an active member each calendar year 
16since January 1, 1956, exclusive of the amount which was or 
17could have been covered by the Federal Social Security Act[,]
18(42 U.S.C. § 301 et seq.), during that portion of the member's 
19service since January 1, 1956, for which he has received social 
20security integration credit.

21"Basic contribution rate." Five percent (5%), except that in 
22no case shall any member's rate, excluding the rate for social 
23security integration credit, be greater than his contribution 
24rate on the effective date of this part so long as he does not 
25elect additional coverage or membership in another class of 
26service.

27"Beneficiary." [The] In the case of the system, the person 
28or persons last designated in writing to the board by a member 
29to receive his accumulated deductions or a lump sum benefit upon 
30the death of such member. In the case of the plan, the spouse of
 

1a participant. If the participant is not married or the spouse 
2consents, then the person or persons last designated in writing 
3to the board by the participant to receive the participant's 
4vested accumulated total defined contributions or a lump sum 
5benefit upon the death of the participant.

6"Board." The State Employees' Retirement Board or the State
7Employes' Retirement Board.

8"Class of service multiplier."

9Class of Service		Multiplier
10A		1
11AA 12  13  14  15  16  17	for all purposes except calculating regular member contributions on compensation paid prior to January 1, 2002	1.25
18AA 19  20  21  22  23  24	for purposes of calculating regular member contributions on compensation paid prior to January 1, 2002	1
25A-3 26  27  28  29  30  20130SB0922PN2227 -131-     1  2	for all purposes except the calculation of regular member contributions and contributions for creditable nonstate service	1
3A-3 4  5  6  7  8  9	for purposes of calculating regular member contributions and contributions for creditable nonstate service	1.25
10A-4 11  12  13  14	for all purposes except the calculation of regular member contributions	1.25
15A-4 16  17  18	for purposes of calculating regular member contributions	1.86
19B		.625
20C		1
21D		1.25
22D-1 23	prior to January 1, 1973	1.875
24D-1 25	on and subsequent to January 1, 1973	1.731
26D-2 27	prior to January 1, 1973	2.5
28D-2 29	on and subsequent to January 1, 1973	1.731
30D-3 20130SB0922PN2227 -132-     1	prior to January 1, 1973	3.75
2D-3 3  4  5  6  7  8  9  10  11  12  13  14  15	on and subsequent to January 1, 1973	1.731	except prior to December 1, 1974 as applied to any additional legislative compensation as an officer of the General Assembly
16		3.75
17D-4 18  19  20  21  22  23	for all purposes except calculating regular member contributions on compensation paid prior to July 1, 2001	1.5
24D-4 25  26  27  28  29  30	for purposes of calculating regular member contributions on compensation paid prior to July 1, 2001	1

20130SB0922PN2227 -133-
1E, E-1 2  3  4  5  6	prior to January 1, 1973	2	for each of the first ten years of judicial service, and
7  8  9  10  11		1.5	for each subsequent year of judicial service
12E, E-1 13  14  15  16  17	on and subsequent to January 1, 1973	1.50	for each of the first ten years of judicial service and
18  19  20  21  22		1.125	for each subsequent year of judicial service
23E-2 24  25	on and subsequent to September 1,  1973	1.125
26G		0.417
27H		0.500
28I		0.625
29J		0.714
30K		0.834
20130SB0922PN2227 -134-
1L		1.000
2M		1.100
3N		1.250

4T-C (Public School 5Employees' 6Retirement Code)	1
7T-E (Public School 8Employees' 9Retirement Code)	1
10T-F (Public School 11Employees' 12Retirement Code)	1

13"Combined service employee."  A current or former State
14employee who is both a member of the system and a participant in
15the plan.

16"Commissioner." The Commissioner of the Internal Revenue
17Service.

18"Compensation." Pickup contributions and mandatory 
19participant pickup contributions plus remuneration actually 
20received as a State employee excluding refunds for expenses, 
21contingency and accountable expense allowances; excluding any 
22severance payments or payments for unused vacation or sick 
23leave; and excluding payments for military leave and any other 
24payments made by an employer while on USERRA leave, leave of 
25absence granted under 51 Pa.C.S. § 4102 (relating to leaves of 
26absence for certain government employees), military leave of 
27absence granted under 51 Pa.C.S. § 7302 (relating to granting 
28military leaves of absence) or other types of military leave, 
29including other types of leave payments, stipends, differential 
30wage payments as defined in IRC § 414(u)(12) and any other
 

1payments: Provided, however, That compensation received prior to 
2January 1, 1973, shall be subject to the limitations for 
3retirement purposes in effect December 31, 1972, if any: 
4Provided further, That the limitation under section 401(a)(17) 
5of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
6U.S.C. § 401(a)(17)) taken into account for the purpose of 
7member contributions, including any additional member 
8contributions in addition to regular or joint coverage member 
9contributions and Social Security integration contributions, 
10regardless of class of service, shall apply to each member who 
11first became a member of the State Employees' Retirement System 
12on or after January 1, 1996, and who by reason of such fact is a 
13noneligible member subject to the application of the provisions 
14of section 5506.1(a) (relating to annual compensation limit 
15under IRC § 401(a)(17)) and shall apply to each participant.

16"Concurrent service." Service credited in more than one 
17class of service during the same period of time.

18"Correction officer." Any full-time employee assigned to the 
19Department of Corrections or the Department of Public Welfare 
20whose principal duty is the care, custody and control of inmates 
21or direct therapeutic treatment, care, custody and control of 
22inmates of a penal or correctional institution, community 
23treatment center, forensic unit in a State hospital or secure 
24unit of a youth development center operated by the Department of 
25Corrections or by the Department of Public Welfare.

26"County service." Service credited in a retirement system or 
27pension plan established or maintained by a county to provide 
28retirement benefits for its employees to the account of county 
29employees who are transferred to State employment and become 
30State employees pursuant to 42 Pa.C.S. § 1905 (relating to
 

1county-level court administrators) regardless of whether the 
2service was performed for the county or another employer or 
3allowed to be purchased in the county retirement system or 
4pension plan.

5"Creditable nonstate service." Service <-for which an active 
6member may obtain credit in the system, other than:

7(1) service as a State employee;

8(2) service converted to State service pursuant to
9section 5303.1 (relating to election to convert county
10service to State service); or

11(3) school service converted to State service pursuant
12to section 5303.2 (relating to election to convert school
13service to State service) [for which an active member may
14obtain credit] <-for which an active member may obtain credit 
15in the system.

16"Credited service." State or creditable nonstate service for 
17which the required contributions have been made to the fund<- or 
18for which the contributions otherwise required for such service 
19were not made solely by reason of section 5502.1 (relating to 
20waiver of regular member contributions and Social Security 
21integration member contributions) or any provision of this part 
22relating to the limitations under section 401(a)(17) or 415(b) 
23of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
24U.S.C. § 401(a)(17) or 415(b)), or for which salary deductions 
25to the system or lump sum payments have been agreed upon in 
26writing.

27"Date of termination of service." The last day of service 
28for which:

29(1) pickup contributions are made for an active member
30[or];

1(2) in the case of an inactive member on leave without 
2pay, the date of his resignation or the date his employment 
3is formally discontinued by his employer[.];

4(3)  mandatory pickup participant contributions are made
5for an active participant;

6(4)  in the case of an inactive participant on leave
7without pay, the date of his resignation or the date his
8employment is formally discontinued by his employer; or

9(5)  in the case of a combined service employee, the
10latest of the dates in paragraphs (1), (2), (3) and (4).

<-11"DC plan exempt employee." A State employee other than the
12Governor, Lieutenant Governor, Attorney General, Auditor
13General, State Treasurer, a member of the General Assembly or a
14member of the judiciary.

15"Disability annuitant." A member on and after the effective
16date of disability until his annuity or the portion of his
17annuity payments in excess of any annuity to which he may
18otherwise be entitled is terminated.

19"Distribution." Payment of all or any portion of a person's 
20interest in either the State Employees' Retirement Fund or the 
21State Employees' Defined Contribution Trust or both which is 
22payable under this part.

23"Domestic relations order." Any judgment, decree or order, 
24including approval of a property settlement agreement, entered 
25on or after the effective date of this definition by a court of 
26competent jurisdiction pursuant to a domestic relations law 
27which relates to the marital property rights of the spouse or 
28former spouse of a member or participant, including the right to 
29receive all or a portion of the moneys payable to that member or 
30participant under this part in furtherance of the equitable
 

1distribution of marital assets. The term includes orders of 
2support as that term is defined by 23 Pa.C.S. § 4302 (relating 
3to definitions) and orders for the enforcement of arrearages as 
4provided in 23 Pa.C.S. § 3703 (relating to enforcement of 
5arrearages).

6"Effective date of retirement." The first day following the 
7date of termination of service of a member if he has properly 
8filed an application for an annuity within 90 days of such date; 
9in the case of a vestee or a member who does not apply for an 
10annuity within 90 days after termination of service, the date of 
11filing an application for an annuity or the date specified on 
12the application, whichever is later. In the case of a finding of 
13disability, the date certified by the board as the effective 
14date of disability.

<-15"Elected officer." An individual who is elected, reelected
16or retained in a retention election to a term of office that
17begins after November 30, 2014, as Governor, Lieutenant
18Governor, Attorney General, Auditor General, State Treasurer, a
19member of the General Assembly or a member of the judiciary.

20"Eligibility points." Points which are accrued by an active
21member or a multiple service member who is an active member in
22the Public School Employees' Retirement System for credited
23service or a member who has been reemployed from USERRA leave or 
24a member who dies while performing USERRA leave and are used in
25the determination of eligibility for benefits.

<-26"Employer defined contributions."

27(1)  Unless paragraph (2) applies, contributions equal to

28"Employer defined contributions." Contributions equal to<- 4%
29of an active participant's compensation which that<- are made by
30the Commonwealth or other employer for current service to the

1trust to be credited in the active participant's individual
2investment account.

<-3(2)  For an enforcement officer, psychiatric security
4aide, Delaware River Port Authority policeman, park
5ranger or Capitol Police officer, contributions equal to
65.5% of an active participant's compensation which are
7made by the Commonwealth or other employer for current
8service to the trust to be credited in the active
9participant's individual investment account.

10"Enforcement officer."

11(1) Any enforcement officer or investigator of the
12Pennsylvania Liquor Control Board who is a peace officer
13vested with police power and authority throughout the
14Commonwealth and any administrative or supervisory employee
15of the Pennsylvania Liquor Control Board vested with police
16power who is charged with the administration or enforcement
17of the liquor laws of the Commonwealth.

18(2) Special agents, narcotics agents, asset forfeiture 
19agents, medicaid fraud agents and senior investigators 
20hazardous waste prosecutions unit, classified as such and 
21employed by the Office of Attorney General who have within 
22the scope of their employment as law enforcement officers the 
23power to enforce the law and make arrests under the authority 
24of the act of October 15, 1980 (P.L.950, No.164), known as 
25the Commonwealth Attorneys Act.

26(3) Parole agents, classified as such by the Executive
27Board and employed by the Pennsylvania Board of Probation and
28Parole.

29(4) Waterways conservation officers and other
30commissioned law enforcement personnel employed by the

1Pennsylvania Fish and Boat Commission who have and exercise
2the same law enforcement powers as waterways conservation
3officers. This paragraph shall not apply to deputy waterways
4conservation officers.

5"Final average salary." The highest average compensation 
6received as a member during any three nonoverlapping periods of 
7four consecutive calendar quarters during which the member was a 
8State employee, with the compensation for part-time service 
9being annualized on the basis of the fractional portion of the 
10year for which credit is received; except if the employee was 
11not a member for three nonoverlapping periods of four 
12consecutive calendar quarters, the total compensation received 
13as a member, annualized in the case of part-time service, 
14divided by the number of nonoverlapping periods of four 
15consecutive calendar quarters of membership; in the case of a 
16member with multiple service, the final average salary shall be 
17determined on the basis of the compensation received by him as a 
18[State employee] member of the system or as a school employee<-, 
19other than as a participant in the School Employees' Defined 
20Contribution Plan, or both; in the case of a member with Class 
21A-3 or Class A-4 service and service in one or more other 
22classes of service, the final average salary shall be determined 
23on the basis of the compensation received by him in all classes 
24of State service credited in the system; and, in the case of a 
25member who first became a member on or after January 1, 1996, 
26the final average salary shall be determined as hereinabove 
27provided but subject to the application of the provisions of 
28section 5506.1(a) (relating to annual compensation limit under 
29IRC § 401(a)(17)). Final average salary shall be determined by 
30including in compensation payments deemed to have been made to a
 

1member reemployed from USERRA leave to the extent member 
2contributions have been made as provided in section 5302(f)(2) 
3(relating to credited State service) and payments made to a 
4member on leave of absence under 51 Pa.C.S. § 4102 (relating to 
5leaves of absence for certain government employees) as provided 
6in section 5302(f)(6).

7"Full coverage member." Any member for whom member pickup 
8contributions are being picked up or who has paid or has agreed 
9to pay to the fund the actuarial equivalent of regular member 
10contributions due on account of service prior to January 1, 
111982.

12"Fund." The State Employees' Retirement Fund.

13"Head of department." The chief administrative officer of
14the department, the chairman or executive director of the
15agency, authority, or independent board or commission, the Court
16Administrator of Pennsylvania, and the Chief Clerk of the
17Senate, or the Chief Clerk of the House of Representatives.

18"Inactive member." A member for whom no pickup contributions 
19are being made to the fund, except in the case of an active 
20member for whom such contributions otherwise required for 
21current State service are not being made solely by reason of 
22section 5502.1 (relating to waiver of regular member 
23contributions and Social Security integration member 
24contributions) or any provision of this part relating to the 
25limitations under section 401(a)(17) or 415(b) of the Internal 
26Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) 
27or 415(b)), but who has accumulated deductions standing to his 
28credit in the fund and who is not eligible to become or has not 
29elected to become a vestee or has not filed an application for 
30an annuity.

1"Inactive member on leave without pay." The term does not
2include a combined service employee who is an inactive
3participant on leave without pay.<- unless the combined service
4employee concurrently is employed in an office or a position in
5which the combined service employee is a member of the system.

6"Inactive participant."  A participant for whom no mandatory
7pickup participant contributions are being made to the trust,
8except in the case of an active participant for whom such
9contributions otherwise required for current State service are
10not being made solely by reason of any provision of this part
11relating to limitations under section 401(a)(17) or 415 of the
12Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
13401(a)(17) or 415), but who has vested accumulated total defined
14contributions standing to his credit in the trust and who has
15not filed an application for an annuity.

16"Inactive participant on leave without pay." The term does
17not include a combined service employee who is an inactive
18member on leave without pay.<- unless the combined service
19employee concurrently is employed in an office or a position in
20which the combined service employee is a participant in the
21plan.

22"Individual investment account."  The account in the trust to
23which are credited the amounts of the contributions made by a
24participant and the participant's employer in accordance with
25the provisions of this part, together with all interest and
26investment earnings after deduction for fees, costs, expenses
27and investment losses and charges for distributions.

28"Intervening military service." Active military service of a 
29member who was a State employee and active member of the system 
30immediately preceding his induction into the armed services or
 

1forces of the United States in order to meet a military 
2obligation excluding any voluntary extension of such service and 
3who becomes a State employee within 90 days of the expiration of 
4such service.

5"IRC." The Internal Revenue Code of 1986, as designated and
6referred to in section 2 of the Tax Reform Act of 1986 (Public
7Law 99-514, 100 Stat. 2085, 2095). A reference in this part to
8"IRC § " shall be deemed to refer to the identically numbered
9section and subsection or other subdivision of such section in
1026 United States Code (relating to Internal Revenue Code).

11"Irrevocable beneficiary." The person or persons permanently 
12designated by a member or participant in writing to the State 
13Employees' Retirement Board pursuant to an approved domestic 
14relations order to receive all or a portion of the accumulated 
15deductions, vested accumulated total defined contributions or 
16lump sum benefit payable upon the death of such member or 
17participant.

18"Irrevocable successor payee."  The person permanently
19designated by a participant receiving distributions in writing
20to the board pursuant to an approved domestic relations order to
21receive one or more distributions from the plan upon the death
22of such participant.

23"Irrevocable survivor annuitant." The person permanently 
24designated by a member in writing to the State Employees' 
25Retirement Board pursuant to an approved domestic relations 
26order to receive an annuity upon the death of such member.

27"Joint coverage member." Any member who agreed prior to 
28January 1, 1966 to make joint coverage member contributions to 
29the fund and has not elected to become a full coverage member.

30"Joint coverage member contributions." Regular member

1contributions reduced for a joint coverage member.

2"Mandatory pickup participant contributions."  Contributions
3equal to 6.25% of compensation that are made by the Commonwealth
4or other employer for active participants for current service.

5"Member." Active member, inactive member, annuitant, vestee 
6or special vestee.

7"Member of the judiciary." Any justice of the Supreme Court, 
8any judge of the Superior Court, the Commonwealth Court, any 
9court of common pleas, the Municipal Court and the Traffic Court
10of Philadelphia, or any community court.

11"Member's annuity." The single life annuity which is
12actuarially equivalent, at the effective date of retirement, to
13the sum of the regular accumulated deductions, shared-risk 
14accumulated deductions, the additional accumulated deductions
15and the social security integration accumulated deductions
16standing to the member's credit in the members' savings account.

17"Military service." All active military service for which a 
18member has received a discharge other than an undesirable, bad 
19conduct, or dishonorable discharge.

20"Multiple service." Credited service of a member who has 
21elected to combine his credited service in both the State 
22Employees' Retirement System and the Public School Employees' 
23Retirement System.

24"Noneligible member." For the purposes of section 5506.1 
25(relating to annual compensation limit under IRC § 401(a)(17)), 
26a member who first became a member on or after January 1, 1996.

27"Nonstudent service." Employment in an educational
28institution that is not contingent on the employee's enrollment
29as a student or maintenance of student status at such
30institution and for which only monetary compensation is

1received, excluding tuition waivers or reimbursement, academic
2credit, housing, meals and other in-kind compensation.

3"Participant."  An active participant, inactive participant
4or participant receiving distributions.

5"Participant receiving distributions."  A participant in the
6plan who has commenced receiving distributions from his
7individual investment account but who has not received a total
8distribution of his vested interest in the individual investment
9account.

10"Pickup contributions." Regular or joint coverage member 
11contributions, shared risk member contributions, social security 
12integration contributions and additional member contributions 
13which are made by the Commonwealth or other employer for active
14members for current service on and after January 1, 1982.

15"Plan."  The State Employees' Defined Contribution Plan as
16established by the provisions of this part and the board.

17"Plan document."  The documents created by the board under
18section 5402 (relating to plan document) that contain the terms
19and provisions of the plan and trust as established by the board
20regarding the establishment, administration and investment of
21the plan and trust.

22"Previous State service." Service rendered as a State 
23employee prior to his most recent entrance in the system[.], 
24provided that the State employee was not a participant in the 
25plan, was not eligible to be an optional participant in the plan 
26under section 5301(b.1) (relating to mandatory and optional 
27membership in the system and participation in the plan) or was 
28not prohibited from being a participant under section 5301(c.1) 
29during such service.

30"Psychiatric security aide." Any employee whose principal
 

1duty is the care, custody and control of the criminally insane 
2inmates of a maximum security institution for the criminally 
3insane or detention facility operated by the Department of 
4Public Welfare.

5"Public School Employees' Retirement System." The retirement
6system established by the act of July 18, 1917 (P.L.1043,
7No.343), and codified by the act of June 1, 1959 (P.L.350,
8No.77).

9"Reemployed from USERRA leave." Resumption of active 
10membership or active participation as a State employee after a 
11period of USERRA leave, provided, however, that the resumption 
12of active membership or active participation was within the time 
13period and under conditions and circumstances such that the 
14State employee was entitled to reemployment rights under 38 
15U.S.C. Ch. 43 (relating to employment and reemployment rights of 
16members of the uniformed services).

17"Regular accumulated deductions." The total of the regular 
18or joint coverage member contributions paid into the fund on 
19account of current service or previous State or creditable 
20nonstate service, together with the statutory interest credited 
21thereon until the date of termination of service. In the case of 
22a vestee or a special vestee, statutory interest shall be 
23credited until the effective date of retirement. A member's 
24account shall not be credited with statutory interest for more 
25than two years during a leave without pay.

26"Regular member contributions." The product of the basic
27contribution rate, the class of service multiplier if greater
28than one and the compensation of the member.

29"Required beginning date."  The latest date by which
30distributions of a participant's interest in his individual

1investment account must commence under section 401(a)(9) of the
2Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
3401(a)(9)).

4"Retirement counselor." The State Employees' Retirement
5System employee whose duty it shall be to advise each employee
6of his rights and duties as a member of the system.

7"Salary deductions." The amounts certified by the board, 
8deducted from the compensation of an active member or active 
9participant, or the school service compensation of a multiple 
10service member who is an active member of the Public School 
11Employees' Retirement System, and paid into the fund or trust.

<-12"School Employees' Defined Contribution Plan."  The defined
13contribution plan for school employees established under 24
14Pa.C.S. Pt. IV (relating to retirement for school employees).

15"School service." Service rendered as a public school
16employee and credited as service in the Public School Employees' 
17Retirement System.

18"Service connected disability." A disability resulting from 
19an injury arising in the course of State employment, and which 
20is compensable under the applicable provisions of the act of
21June 2, 1915 (P.L.736, No.338), known as "The Pennsylvania 
22Workmen's Compensation Act," or the act of June 21, 1939 
23(P.L.566, No.284), known as "The Pennsylvania Occupational 
24Disease Act."

25"Shared-risk accumulated deductions." The total of the
26shared-risk member contributions paid into the fund on account
27of current service or previous State service or creditable
28nonstate service, together with the statutory interest credited
29on the contributions until the date of termination of service.
30In the case of a vestee, statutory interest shall be credited

1until the effective date of retirement. A member's account shall
2not be credited with statutory interest for more than two years
3during a leave without pay.

4"Shared-risk member contributions." The product of the 
5shared-risk contribution rate and the compensation of a member
6for service credited as Class A-3 or Class A-4.

7"Social security integration accumulated deductions." The
8total of the member contributions paid into the fund on account
9of social security integration credit, together with the
10statutory interest credited thereon until the date of
11termination of service or until the date of withdrawal thereof,
12whichever is earlier. In the case of a vestee statutory interest
13shall be credited until the effective date of retirement. A
14member's account shall not be credited with statutory interest
15for more than two years during a leave without pay.

16"Special vestee." An employee of The Pennsylvania State 
17University who is a member of the State Employees' Retirement 
18System with five or more but less than ten eligibility points 
19and who has a date of termination of service from The 
20Pennsylvania State University of June 30, 1997, because of the 
21transfer of his job position or duties to a controlled 
22organization of the Penn State Geisinger Health System or 
23because of the elimination of his job position or duties due to 
24the transfer of other job positions or duties to a controlled 
25organization of the Penn State Geisinger Health System, provided 
26that:

27(1) subsequent to termination of State service as an
28employee of The Pennsylvania State University, the member has
29not returned to State service in any other capacity or
30position as a State employee;

1(2) The Pennsylvania State University certifies to the
2board that the member is eligible to be a special vestee;

3(3) the member files an application to vest the member's
4retirement rights pursuant to section 5907(f) (relating to
5rights and duties of State employees [and], members and 
6participants) on or before September 30, 1997; and

7(4) the member elects to leave the member's total
8accumulated deductions in the fund and to defer receipt of an
9annuity until attainment of superannuation age.

10"Standard single life annuity." An annuity equal to 2% of 
11the final average salary, multiplied by the total number of 
12years and fractional part of a year of credited service of a 
13member.

14"State employee." Any person holding a State office or 
15position under the Commonwealth, employed by the State
16Government of the Commonwealth, in any capacity whatsoever, 
17except an independent contractor or any person compensated on a 
18fee basis or any person paid directly by an entity other than a 
19State Employees' Retirement System employer, and shall include 
20members of the General Assembly, and any officer or employee of 
21the following:

22(1) (i) The Department of Education.

23(ii) State-owned educational institutions.

24(iii) Community colleges.

25(iv) The Pennsylvania State University, except an
26employee in the College of Agriculture who is paid wholly
27from Federal funds or an employee who is participating in
28the Federal Civil Service Retirement System. The
29university shall be totally responsible for all employer
30contributions under [section] sections 5507 (relating to

1contributions to the system by the Commonwealth and other
2[employers).] employers before July 1, 2015) and 5507.1 
3(relating to contributions to the system by the 
4Commonwealth and other employers commencing July 1, 
52015).

6(2) The Pennsylvania Turnpike Commission, the Delaware
7River Port Authority, the Port Authority Transit Corporation,
8the Philadelphia Regional Port Authority, the Delaware River
9Joint Toll Bridge Commission, the State Public School
10Building Authority, The General State Authority, the State
11Highway and Bridge Authority, the Delaware Valley Regional
12Planning Commission, the Interstate Commission of the
13Delaware River Basin, and the Susquehanna River Basin
14Commission any time subsequent to its creation, provided the
15commission or authority agrees to contribute and does
16contribute to the fund or trust<-, from time to time, the
17moneys required to build up the reserves necessary for the
18payment of the annuities or other benefits of such officers
19and employees without any liability on the part of the
20Commonwealth to make appropriations for such purposes, and
21provided in the case of employees of the Interstate
22Commission of the Delaware River Basin, that the employee
23shall have been a member of the system for at least ten years
24prior to January 1, 1963.

25(3) Any separate independent public corporation created
26by statute, not including any municipal or quasi-municipal
27corporation, so long as he remains an officer or employee of
28such public corporation, and provided that such officer or
29employee of such public corporation was an employee of the
30Commonwealth immediately prior to his employment by such

1corporation, and further provided such public corporation
2shall agree to contribute and contributes to the fund <-or 
3trust, from time to time, the moneys required to build up the
4reserves necessary for the payment of the annuities or other 
5benefits of such officers and employees without any liability
6on the part of the Commonwealth to make appropriations for
7such purposes.

8"State police officer." Any officer or member of the 
9Pennsylvania State Police who, on or after July 1, 1989, shall 
10have been subject to the terms of a collective bargaining 
11agreement or binding interest arbitration award established 
12pursuant to the act of June 24, 1968 (P.L.237, No.111), referred 
13to as the Policemen and Firemen Collective Bargaining Act.

14"State service." Service converted from county service 
15pursuant to section 5303.1 (relating to election to convert 
16county service to State service), converted from school service 
17pursuant to section 5303.2 (relating to election to convert 
18school service to State service) or rendered as a State 
19employee.

20"Statutory interest." Interest at 4% per annum, compounded
21annually.

22"Successor payee."  The person or persons last designated in
23writing to the board by a participant receiving distributions to
24receive one or more distributions upon the death of the
25participant.

26"Superannuation age." For classes of service in the system 
27other than Class A-3 and Class A-4, any age upon accrual of 35 
28eligibility points or age 60, except for a member of the General 
29Assembly, an enforcement officer, a correction officer, a 
30psychiatric security aide, a Delaware River Port Authority
 

1policeman or an officer of the Pennsylvania State Police, age 
250, and, except for a member with Class G, Class H, Class I, 
3Class J, Class K, Class L, Class M or Class N service, age 55 
4upon accrual of 20 eligibility points. For Class A-3 and Class 
5A-4 service, any age upon attainment of a superannuation score 
6of 92, provided the member has accrued 35 eligibility points, or 
7age 65, or for park rangers or capitol police officers, age 55 
8with 20 years of service as a park ranger or capitol police 
9officer, except for a member of the General Assembly, an 
10enforcement officer, a correction officer, a psychiatric 
11security aide, a Delaware River Port Authority policeman or an 
12officer of the Pennsylvania State Police, age 55. A vestee with 
13Class A-3 or Class A-4 service credit attains superannuation age 
14on the birthday the vestee attains the age resulting in a 
15superannuation score of 92, provided that the vestee has at 
16least 35 eligibility points, or attains another applicable 
17superannuation age, whichever occurs first.

18"Superannuation annuitant." An annuitant whose annuity first
19became payable on or after the attainment of superannuation age
20and who is not a disability annuitant.

21"Superannuation score." The sum of the member's age in whole 
22years on his last birthday and the amount of the member's total 
23eligibility points on the member's effective date of retirement, 
24expressed in whole years and whole eligibility points and 
25disregarding fractions of a year and fractions of total
26eligibility points.

27"Survivor annuitant." The person or persons last designated
28by a member under a joint and survivor annuity option to receive
29an annuity upon the death of such member.

30"System." The State Employees' Retirement System of
 

1Pennsylvania as established by the act of June 27, 1923 
2(P.L.858, No.331), and codified by the act of June 1, 1959 
3(P.L.392, No.78) and the provisions of this part.

4"Total accumulated deductions." The sum of the regular
5accumulated deductions, additional accumulated deductions, the
6social security integration accumulated deductions, shared-risk
7member contributions and all other contributions paid into the
8fund for the purchase, transfer or conversion of credit for
9service or other coverage together with all statutory interest
10credited thereon until the date of termination of service. In
11the case of a vestee or a special vestee, statutory interest
12shall be credited until the effective date of retirement. A
13member's account shall not be credited with statutory interest
14for more than two years during a leave without pay.

15"Trust."  The State Employees' Defined Contribution Trust
16established under Chapter 54 (relating to State Employees'
17Defined Contribution Plan).

18"USERRA leave." Any period of time for service in the
19uniformed services as defined in 38 U.S.C. Ch. 43 (relating to
20employment and reemployment rights of members of the uniformed
21services) by a State employee or former State employee who
22terminated State service to perform such service in the
23uniformed services, if the current or former State employee is
24entitled to reemployment rights under 38 U.S.C. Ch. 43 with
25respect to the uniformed service.

26"Valuation interest." Interest at 5 1/2% per annum 
27compounded annually and applied to all accounts of the fund 
28other than the members' savings account.

29"Vestee." A member<- [with five or more eligibility points in 
30a class of service other than Class A-3 or Class A-4 or Class T-

1E or Class T-F in the Public School Employees' Retirement 
2System, a member with Class G, Class H, Class I, Class J, Class 
3K, Class L, Class M or Class N service with five or more 
4eligibility points, or a member with Class A-3 or Class A-4 
5service with ten or more eligibility points who has terminated 
6State service and has elected to leave his total accumulated 
7deductions in the fund and to defer receipt of an annuity.] <-who 
8meets all of the following:

9(1) The member has:

10(i) five or more eligibility points in a class of
11service other than:

12(A) Class A-3 or Class A-4; or

13(B) Class T-E or Class T-F in the Public School
14Employees' Retirement System;

15(ii) five or more eligibility points if the member
16has any Class G, Class H, Class I, Class J, Class K,
17Class L, Class M or Class N service; or

18(iii) ten or more eligibility points if the member
19has any Class A-3 or Class A-4 service.

20(2) The member meets one of the following:

21(i) The member has:

22(A) terminated State service; and

23(B) elected to:

24(I) leave his total accumulated deductions
25in the fund; and

26(II) defer receipt of an annuity.

27(ii) The member is a combined service employee who:

28(A) is not an active member or an inactive
29participant on leave without pay; and

30(B) is an active participant or an inactive
 

1participant on leave without pay, who is not 
2receiving an annuity.

3"Voluntary contributions."  Contributions made by a
4participant to the trust and credited to his individual
5investment account in excess of his mandatory pickup participant
6contributions, by salary deductions paid through the
7Commonwealth or other employer, or by an eligible rollover or
8direct trustee-to-trustee transfer.

9Section 302. Section 5103 of Title 71 is amended to read:

10§ 5103. Notice to members and participants.

11Notice by publication, including, without being limited to,
12newsletters, newspapers, forms, first class mail, letters,
13manuals and, to the extent authorized by a policy adopted by the
14board, electronically, including, without being limited to, e-
15mail or [World Wide Web] Internet sites, distributed or made
16available to members and participants in a manner reasonably
17calculated to give actual notice of those sections of the State
18Employees' Retirement Code that require notice to members or 
19participants shall be deemed sufficient notice for all purposes.

20Section 303. Title 71 is amended by adding a section to
21read:

22§ 5104.  Reference to State Employees' Retirement System.

<-23(a) Construction.--As of the effective date of this section,
24unless the context clearly indicates otherwise, any reference to
25the State Employees' Retirement System in a statutory provision
26other than this part and 24 Pa.C.S. Pt. IV (relating to
27retirement for school employees) shall include a reference to
28the State Employees' Defined Contribution Plan and any reference
29to the State Employees' Retirement Fund shall include a
30reference to the State Employees' Defined Contribution Trust.

<-1(b) Agreement.--The agreement of an employer listed in the
2definition of "State employee" or any other law to make
3contributions to the fund or to enroll its employees as members
4in the system shall be deemed to be an agreement to make
5contributions to the trust or to enroll its employees in the
6plan.

7Section 304. Section 5301 heading, (a), (b), (c) and (d) of
8Title 71 are amended and the section is amended by adding
9subsections to read:

10§ 5301. Mandatory and optional membership in the system and 
11participation in the plan.

12(a) Mandatory membership.--[Membership] Unless an election 
13to be a participant in the plan is made, membership in the
14system shall be mandatory as of the effective date of employment
15for all State employees except the following:

16(1) Governor.

17(2) Lieutenant Governor.

18(3) Members of the General Assembly.

19(4) Heads or deputy heads of administrative departments.

20(5) Members of any independent administrative board or
21commission.

22(6) Members of any departmental board or commission.

23(7) Members of any advisory board or commission.

24(8) Secretary to the Governor.

25(9) Budget Secretary.

26(10) Legislative employees.

27(11) School employees who have elected membership in the
28Public School Employees' Retirement System.

29(12) School employees who have elected membership in an
30independent retirement program approved by the employer,

1provided that in no case, except as hereinafter provided,
2shall the employer contribute on account of such elected
3membership at a rate greater than the employer normal
4contribution rate as determined in section 5508(b) (relating
5to actuarial cost method for fiscal years ending before July 
61, 2015). For the fiscal year 1986-1987 an employer may
7contribute on account of such elected membership at a rate
8which is the greater of 7% or the employer normal
9contribution rate as determined in section 5508(b) and for
10the fiscal year 1992-1993 and all fiscal years after that at
11a rate of 9.29%.

12(13) Persons who have elected to retain membership in
13the retirement system of the political subdivision by which
14they were employed prior to becoming eligible for membership
15in the State Employees' Retirement System.

16(14) Persons who are not members of the system and are
17employed on a per diem or hourly basis for less than 100 days
18or 750 hours in a 12-month period.

19(15) Employees of the Philadelphia Regional Port
20Authority who have elected to retain membership in the
21pension plan or retirement system in which they were enrolled
22as employees of the predecessor Philadelphia Port Corporation
23prior to the creation of the Philadelphia Regional Port
24Authority.

25(16) Employees of the Juvenile Court Judges' Commission
26who, before the effective date of this paragraph, were
27transferred from the State System of Higher Education to the
28Juvenile Court Judges' Commission as a result of an
29interagency transfer of staff approved by the Office of
30Administration and who, while employees of the State System

1of Higher Education, had elected membership in an independent
2retirement program approved by the employer.

3(17)  State employees<-, other than DC plan exempt
4employees, whose most recent period of State service starts
5on or after January 1, 2015. For purposes of this paragraph
6and section 5955(c) and (e)<- 5955(e) (relating to construction
7of part), a State employee who is furloughed under section
8802 of the act of August 5, 1941 (P.L.752, No.286), known as
9the Civil Service Act, and reemployed pursuant to the Civil
10Service Act in any class of service or civil service status
11which was previously held shall not be treated as having a
12break in State service.

<-13(18) Elected officers. This paragraph shall not apply
14for the period prior to January 1, 2015, to an elected
15officer who is a member of the system at the time he or she
16becomes an elected officer.

17(a.1)  Mandatory participation in the plan.--

18(1) State employees listed in subsection (a)(17) who are
19not listed in subsection (a)(1) through (13) shall be
20mandatory participants as of the most recent effective date
21of State service without regard to whether or not they are
22combined service employees.

<-23(2) State employees listed in subsection (a)(17) who are
24employees of The Pennsylvania State University, the State
25System of Higher Education, State-owned educational
26institutions or community colleges and who are members of the
27system or participants in the plan shall be mandatory
28participants as of the most recent effective date of State
29service.

<-30(2) (Reserved).

1(3) An elected officer who is not listed in subsection
2(a)(1) through (4), or who is listed in subsection (a)(1)
3through (4) and is a member of the system or a participant in
4the plan, shall be a mandatory participant for his or her
5service as an elected officer as of the start of the first
6term of office beginning after November 30, 2014,
7notwithstanding that either immediately or at any time prior
8to the start of that term he or she was an active member of
9the system or an inactive member on leave without pay.

10(4) A State employee who is a mandatory participant in
11the plan shall be a participant for all State service, other
12than service performed as a DC plan exempt employee, until
13the termination of State service.

14(b) Optional membership in the system.--The State employees
15listed in subsection (a)(1) through (11) <-who are not elected 
16officers shall have the right to elect membership in the system
17before January 1, 2015; once such election is exercised,
18membership shall continue until the termination of State service
19or until the State employee elects is required<- to be a 
20participant in the plan as an elected officer<-.

21(b.1)  Optional participation in the plan.--The Individuals<-
22who become elected officers after December 31, 2014, who are not
23mandatory participants in the plan, State employees listed in
24subsection (b) who do not elect membership in the system before
25January 1, 2015, and State employees listed in subsection (a)
26(17) who also are listed in subsection (a)(1) through (10) <-or
27who also are employees of The Pennsylvania State University, the
28State System of Higher Education, State-owned educational
29institutions or community colleges and who are not members of
30the system or participants in the plan shall have the right to

1elect participation in the plan; once such election is
2exercised, participation shall be effective as of the date of
3election <-for all State service other than service performed as a
4DC plan exempt employee and shall continue until the termination
5of State service.

6(c) Prohibited membership in the system.--The State
7employees listed in subsection (a)(12), (13), (14) [and], (15)
8and (17)<-, (17) and (18) shall not have the right to elect
9membership in the system. Elected officers who are members of<- 
10the system prior to January 1, 2015, shall have any active 
11membership in the system terminated and shall not be eligible 
12for active membership after December 31, 2014, except for 
13service as a DC plan exempt employee.

14(c.1)  Prohibited participation in the plan.--The State
15employees listed in subsection (a)(17) who also are listed in
16subsection (a)(13) and (15) shall not be eligible to participate
17in the plan. <-A DC plan exempt employee shall not be eligible to 
18participate in the plan for service performed as a DC plan 
19exempt employee.

20(d) Return to service.--

21(1) An annuitant who returns to service as a State
22employee before January 1, 2015<-, or as a DC plan exempt 
23employee after December 31, 2014, shall resume active
24membership in the system as of the effective date of
25employment, except as otherwise provided in section 5706(a)
26(relating to termination of annuities), regardless of the
27optional membership category of the position.

28(2) An annuitant, inactive participant or a participant
29receiving distributions who returns to service as a State
30employee on or after January 1, 2015, shall be an active

1participant in the plan as of the effective date of
2employment unless the position is eligible for optional
3participation or is not eligible for participation in the
4plan, or except as otherwise provided in section 5706(a).

5* * *

6Section 305. Sections 5302(a), (b), (e) and (f) and 5303(b),
7(d)(1) and (e)(1) and (4) of Title 71, amended or added October
824, 2012 (P.L.1436, No.181), are amended to read:

9§ 5302. Credited State service.

10(a) Computation of credited service.--In computing credited
11State service of a member for the determination of benefits, a
12full-time salaried State employee, including any member of the
13General Assembly, shall receive credit for service in each
14period for which contributions as required are made to the fund,
15or for which contributions otherwise required for such service
16were not made to the fund solely by reason of section 5502.1
17(relating to waiver of regular member contributions and Social
18Security integration member contributions) or any provision of
19this part relating to the limitations under IRC § 401(a)(17) or
20415(b), but in no case shall he receive more than one year's
21credit for any 12 consecutive months or 26 consecutive biweekly
22pay periods. A per diem or hourly State employee shall receive
23one year of credited service for each nonoverlapping period of
2412 consecutive months or 26 consecutive biweekly pay periods in
25which he is employed and for which contributions are made to the 
26fund or would have been made to the fund but for such waiver
27under section 5502.1 or limitations under the IRC for at least
28220 days or 1,650 hours of employment. If the member was
29employed and contributions were made to the fund for less than
30220 days or 1,650 hours, he shall be credited with a fractional

1portion of a year determined by the ratio of the number of days
2or hours of service actually rendered to 220 days or 1,650
3hours, as the case may be. A part-time salaried employee shall
4be credited with the fractional portion of the year which
5corresponds to the number of hours or days of service actually
6rendered and for which contributions are or would have been made 
7to the fund in relation to 1,650 hours or 220 days, as the case
8may be. In no case shall a member who has elected multiple
9service receive an aggregate in the two systems of more than one
10year of credited service for any 12 consecutive months.

11(b) Creditable leaves of absence.--

12(1) A member on leave without pay who is studying under
13a Federal grant approved by the head of his department or who
14is engaged up to a maximum of two years of temporary service
15with the United States Government, another state or a local
16government under the Intergovernmental Personnel Act of 1970
17(5 U.S.C. §§ 1304, 3371-3376; 42 U.S.C. §§ 4701-4772) shall
18be eligible for credit for such service: Provided, That
19contributions are made in accordance with sections 5501
20(relating to regular member contributions for current
21service), 5501.1 (relating to shared-risk member 
22contributions for Class A-3 and Class A-4 service), 5505.1
23(relating to additional member contributions) [and], 5507
24(relating to contributions to the system by the Commonwealth
25and other employers before July 1, 2015) and 5507.1 (relating 
26to contributions to the system by the Commonwealth and other 
27employers commencing July 1, 2015), the member returns from
28leave without pay to active State service as a member of the 
29system for a period of at least one year, and he is not
30entitled to retirement benefits for such service under a

1retirement system administered by any other governmental
2agency.

3(2) An active member or active participant on paid leave
4granted by an employer for purposes of serving as an elected
5full-time officer for a Statewide employee organization which
6is a collective bargaining representative under the act of 
7June 24, 1968 (P.L.237, No.111), referred to as the Policemen
8and Firemen Collective Bargaining Act, or the act of July 23, 
91970 (P.L.563, No.195), known as the Public Employe Relations
10Act, and up to 14 full-time business agents appointed by an
11employee organization that represents correction officers
12employed at State correctional institutions: Provided, That
13for elected full-time officers such leave shall not be for
14more than three consecutive terms of the same office and for
15up to 14 full-time business agents appointed by an employee
16organization that represents correction officers employed at
17State correctional institutions no more than three
18consecutive terms of the same office; that the employer shall
19fully compensate the member or active participant<-, including,
20but not limited to, salary, wages, pension and retirement
21contributions and benefits, other benefits and seniority, as
22if he were in full-time active service; and that the
23Statewide employee organization shall fully reimburse the
24employer for all expenses and costs of such paid leave,
25including, but not limited to, contributions and payment in
26accordance with [<-sections] section 5404 (relating to 
27participant contributions), 5405 (relating to mandatory 
28pickup participant contributions), 5406 (relating to employer 
29defined contributions), 5501, 5501.1, 5505.1 [and], 5507 or 
305507.1, if the employee organization either directly pays, or

1reimburses the Commonwealth or other employer for,
2contributions made in accordance with [section] sections 
35404, 5405, 5406,<- 5507 and 5507.1.

4* * *

5(e) Cancellation of credited service.--All credited service
6in the system shall be cancelled if a member withdraws his total
7accumulated deductions, except that a member with Class A-3 or 
8Class A-4 service credit and one or more other classes of 
9service credit shall not have his service credit as a member of 
10any classes of service other than as a member of Class A-3 or 
11Class A-4 cancelled when the member receives a lump sum payment 
12of accumulated deductions resulting from Class A-3 or Class A-4 
13service pursuant to section 5705.1 (relating to payment of 
14accumulated deductions resulting from Class A-3 and Class A-4 
15service). A partial or total distribution of accumulated total 
16defined contributions to a combined service employee shall not 
17cancel service credited in the system.

18(f) Credit for military service.--A State employee who has 
19performed USERRA leave may receive credit in the system or 
20participate in the plan as follows:

21(1) For purposes of determining whether a member is
22eligible to receive credited service in the system for a
23period of active military service, other than active duty
24service to meet periodic training requirements, rendered
25after August 5, 1991, and that began before the effective
26date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73
27(relating to military leave of absence) shall apply to all
28individuals who were active members of the system when the
29period of military service began, even if not defined as an
30employee pursuant to 51 Pa.C.S. § 7301 (relating to

1definitions).

2(1.1) State employees may not receive service credit in 
3the system or exercise the options under 51 Pa.C.S. § 7306
4(relating to retirement rights) for military leaves that
5begin on or after the effective date of this subsection,
6except as otherwise provided by this subsection.

7(1.2) State employees may not participate in the plan or
8exercise the options under 51 Pa.C.S. § 7306 for military
9leaves that begin on or after the effective date of this
10paragraph, except as otherwise provided by this subsection.

11(2) A State employee who has performed USERRA leave may
12receive credit in the system as provided by this paragraph.
13The following shall apply:

14(i) A State employee who is reemployed from USERRA
15leave as an active member of the system shall be treated
16as not having incurred a break in State service by reason
17of the USERRA leave and shall be granted eligibility
18points as if the State employee had not been on the
19USERRA leave. If a State employee who is reemployed from
20USERRA leave as an active member of the system
21subsequently makes regular member contributions,
22additional member contributions, Social Security
23integration member contributions, shared-risk member
24contributions and any other member contributions in the
25amounts and in the time periods required by 38 U.S.C. Ch.
2643 (relating to employment and reemployment rights of
27members of the uniformed services) and IRC § 414(u) as if
28the State employee had continued in State office or
29employment and performed State service and was
30compensated during the period of USERRA leave, then the

1State employee shall be granted State service credit for
2the period of USERRA leave. The State employee shall have
3the State employee's benefits, rights and obligations
4determined under this part as if the State employee was
5an active member who performed creditable State service
6during the USERRA leave in the job position that the
7State employee would have held had the State employee not
8been on USERRA leave and received the compensation on
9which the member contributions to receive State service
10credit for the USERRA leave were determined.

11(ii) For purposes of determining whether a State
12employee has made the required employee contributions for
13State service credit for USERRA leave, if an employee who
14is reemployed from USERRA leave as an active member of 
15the system terminates State service or dies in State
16service before the expiration of the allowed payment
17period, then State service credit for the USERRA leave
18will be granted as if the required member contributions
19were paid the day before termination or death. The amount
20of the required member contributions will be treated as
21an incomplete payment subject to the provisions of
22section 5506 (relating to incomplete payments). Upon a
23subsequent return to State service or to school service
24as a multiple service member, the required member
25contributions treated as incomplete payments shall be
26treated as member contributions that were either
27withdrawn in a lump sum at termination or paid as a lump
28sum pursuant to section 5705(a)(4) (relating to member's
29options), as the case may be.

30(iii) A State employee who is reemployed from USERRA

1leave as an active member of the system who does not make
2the required member contributions or makes only part of
3the required member contributions within the allowed
4payment period shall not be granted credited service for
5the period of USERRA leave for which the required member
6contributions were not timely made, shall not be eligible
7to subsequently make contributions and shall not be
8granted either State service credit or nonstate service
9credit for the period of USERRA leave for which the
10required member contributions were not timely made.

11(2.1) (i) A participant who is reemployed from USERRA
12leave shall be treated as not having incurred a break in
13State service by reason of the USERRA leave and shall be
14granted vesting credit as if the participant had not been
15on USERRA leave. If a participant who is reemployed from
16USERRA leave subsequently makes mandatory pickup
17participant contributions in the amounts and in the time
18periods required by 38 U.S.C. Ch. 43 and IRC § 414(u) as
19if the participant had continued in his State office or
20employment and performed State service and been
21compensated during the period of USERRA leave, the
22participant's employer shall make the corresponding
23employer defined contributions. Such an employee shall
24have his contributions, benefits, rights and obligations
25determined under this part as if he were an active
26participant who performed State service during the USERRA
27leave in the job position that he would have held had he
28not been on USERRA leave and received the compensation on
29which the mandatory pickup participant contributions to
30receive State service credit for the USERRA leave were

1determined, including the right to make voluntary
2contributions on such compensation as permitted by law.

3(ii)  A participant who is reemployed from USERRA
4leave who does not make the mandatory pickup participant
5contributions or makes only part of the mandatory pickup
6participant contributions within the allowed payment
7period shall not be eligible to make mandatory pickup
8participant contributions or voluntary contributions at a
9later date for the period of USERRA leave for which the
10mandatory pickup participant contributions were not
11timely made.

12(3) A State employee who is a member of the system and
13performs USERRA leave from which the employee could have been
14reemployed from USERRA leave had the State employee returned
15to State service in the time frames required by 38 U.S.C. Ch.
1643 for reemployment rights, but did not do so, shall be able
17to receive creditable nonstate service as nonintervening
18military service for the period of USERRA leave should the
19employee later return to State service as an active member of 
20the system and is otherwise eligible to purchase the service
21as nonintervening military service.

22(3.1)  A State employee who is a participant in the plan
23and performs USERRA leave from which the employee could have
24been reemployed from USERRA leave had the employee returned
25to State service in the time frames required by 38 U.S.C. Ch.
2643 for reemployment rights, but did not do so, shall not be
27eligible to make mandatory pickup participant contributions
28or voluntary contributions for the period of USERRA leave
29should the employee later return to State service and be a
30participant in the plan.

1(4) [A State employee] An active member or inactive 
2member on leave without pay who on or after the effective
3date of this subsection is granted a leave of absence under
451 Pa.C.S. § 4102 (relating to leaves of absence for certain
5government employees) or a military leave under 51 Pa.C.S.
6Ch. 73, that is not USERRA leave shall be able to receive
7creditable nonstate service as nonintervening military
8service should the employee return to State service as an 
9active member of the system and is otherwise eligible to
10purchase the service as nonintervening military service.

11(4.1) An active participant or inactive participant on
12leave without pay who on or after the effective date of this
13paragraph is granted a leave of absence under 51 Pa.C.S. §
144102 or a military leave under 51 Pa.C.S. Ch. 73 that is not
15USERRA leave shall not be able to make mandatory pickup
16participant contributions or voluntary contributions during
17or for the leave of absence or military leave and shall not
18have employer defined contributions made during such leave,
19without regard to whether or not the State employee received
20salary, wages, stipends, differential wage payments or other
21payments from his employer during the leave, notwithstanding
22any provision to the contrary under 51 Pa.C.S. § 4102 or 51
23Pa.C.S. Ch. 73.

24(5) If a member dies while performing USERRA leave, then
25the beneficiaries or survivor annuitants, as the case may be,
26of the deceased member are entitled to any additional
27benefits, including eligibility points, other than benefit
28accruals relating to the period of qualified military
29service, provided under this part had the member resumed and
30then terminated employment on account of death.

1(5.1)  If a participant dies while performing USERRA
2leave, the beneficiaries or successor payees of the deceased
3participant are entitled to any additional benefits, other
4than benefit accruals relating to the period of qualified
5military service, provided under this part had the
6participant resumed and then terminated employment on account
7of death.

8(6) A State employee who is on a leave of absence from 
9his duties as a State employee for which 51 Pa.C.S. § 4102 
10provides that he is not to suffer a loss of pay, time or 
11efficiency rating shall not be an active member, receive 
12service credit or make member contributions for the leave of 
13absence, except as provided for in this part. Notwithstanding 
14this paragraph, any pay the member receives pursuant to 51 
15Pa.C.S. § 4102 shall be included in the determination of 
16final average salary and other calculations in the system 
17utilizing compensation as if the payments were compensation 
18under this part.

19§ 5303. Retention and reinstatement of service credits.

20* * *

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

22(1) Every active member of the system or a multiple
23service member who is a school employee and a member of the
24Public School Employees' Retirement System on or after the
25effective date of this part shall receive eligibility points
26in accordance with section 5307 for current State service,
27previous State service, or creditable nonstate service upon
28compliance with sections 5501 (relating to regular member
29contributions for current service), 5501.1 (relating to 
30shared-risk contributions for Class A-3 and Class A-4
 

1service), 5504 (relating to member contributions for the
2purchase of credit for previous State service or to become a
3full coverage member), 5505 (relating to contributions for
4the purchase of credit for creditable nonstate service),
55505.1 (relating to additional member contributions) or 5506
6(relating to incomplete payments). Subject to the limitations
7in sections 5306.1 (relating to election to become a Class AA
8member) and 5306.2 (relating to elections by members of the
9General Assembly), the class or classes of service in which
10the member may be credited for previous State service prior
11to the effective date of this part shall be the class or
12classes in which he was or could have at any time elected to
13be credited for such service, except that a State employee 
14who first becomes a member of the system on or after January 
151, 2011, or on or after December 1, 2010, as a member of the 
16General Assembly and:

17(i) is credited with Class A-3 service for such
18membership, shall be credited only with Class A-3 service
19for previous State service performed before January 1,
202011, that was not previously credited in the system; or

21(ii) is credited with Class A-4 service for such 
22membership, shall be credited only with Class A-4 service 
23for previous State service performed before January 1, 
242011, that was not previously credited in the system.

25The class of service in which a member shall be credited for
26service subsequent to the effective date of this part shall
27be determined in accordance with section 5306 (relating to
28classes of service).

29(1.1) Every active member of the system who elects to
30convert county service to State service pursuant to section

15303.1 (relating to election to convert county service to
2State service) shall receive eligibility points in accordance
3with section 5307 for converted county service upon
4compliance with section 5303.1(b). The class or classes of
5service in which the member may be credited for converted
6county service shall be determined in accordance with section
75306(c).

8(1.2) Every member of the system who elects to convert
9school service to State service pursuant to section 5303.2
10(relating to election to convert school service to State
11service) shall receive eligibility points in accordance with
12section 5307 for converted school service. The class or
13classes of service in which the member may be credited for
14converted school service shall be determined in accordance
15with section 5306(d).

16(1.3) A member of the system who is reemployed from
17USERRA leave or who dies while performing USERRA leave shall
18receive eligibility points in accordance with section 5307
19for the State service that would have been performed had the
20member not performed USERRA leave.

21(2) A special vestee or person otherwise eligible to be
22a special vestee who returns to State service, other than as 
23a participant in the plan, or withdraws his accumulated
24deductions pursuant to section 5311 (relating to eligibility
25for refunds) or 5701 (relating to return of total accumulated
26deductions) shall receive or retain eligibility points in
27accordance with paragraph (1) but upon subsequent termination
28of State service shall only be eligible to be an annuitant,
29vestee or inactive member without regard to previous status
30as a special vestee and without regard to the provisions of

1this part providing for special vestees.

2(3) A special vestee or person otherwise eligible to be
3a special vestee who becomes an active member of the Public
4School Employees' Retirement System and elects multiple
5service shall receive or retain eligibility points as
6otherwise provided for in this part and 24 Pa.C.S. Pt. IV
7(relating to retirement for school employees) but upon
8subsequent termination of school service shall only be
9eligible to be an annuitant, vestee or inactive member as
10otherwise eligible as a multiple service member without
11regard to previous status as a special vestee and without
12regard to the provisions of this part providing for special
13vestees.

14* * *

15(d) Transfer of certain pension service credit.--

16(1) Any person who was an employee of any county in this
17Commonwealth on the personal staff of an appellate court
18judge prior to September 9, 1985, and who had that employment
19transferred to the Commonwealth pursuant to 42 Pa.C.S. § 3703
20(relating to local chamber facilities) shall be a member of
21the system for all service rendered as an employee of the
22Commonwealth on the personal staff of an appellate court
23judge subsequent to the date of the transfer unless
24specifically prohibited pursuant to section 5301(c) (relating
25to mandatory and optional membership in the system and 
26participation in the plan). The employee shall be entitled to
27have any prior service credit in that county or other
28municipal pension plan or retirement system transferred to
29the system and deemed to be State service for all purposes
30under this part. However, for those employees who were in

1continuous county employment which commenced prior to July
222, 1983, section 5505.1 shall not apply. The transfer of
3prior service credit to the system shall occur upon the
4transfer, by the member, county or other municipal pension
5plan or retirement system, to the system of the amount of
6accumulated member contributions, pick-up contributions and
7credited interest standing in the employee's county or
8municipal pension plan or retirement system account as of the
9date that these funds are transferred to the system. In the
10event that these funds have been refunded to the member, the
11transfer of service credit shall occur when the member
12transfers an amount equal to either the refund which the
13member received from the county or municipal pension plan or
14retirement system or the amount due under section 5504, if
15less. In the case of a transfer by the member, the transfer
16shall occur by December 31, 1987, in order for the member to
17receive credit for the prior service. In the case of a
18transfer by the county or other municipal pension plan or
19retirement system, the transfer shall also occur by December
2031, 1987. If the amount transferred to the system by the
21member of a county or municipal pension plan or retirement
22system is greater than the amount that would have accumulated
23in the member's account if the employee had been a member of
24the system, all excess funds shall be returned to the
25employee within 90 days of the date on which such funds are
26credited to the member's account in the system. Within 60
27days of receipt of written notice that an employee has
28elected to transfer credits under the provisions of this
29subsection, the county or other municipal pension plans or
30retirement systems shall be required to transfer to the

1system an amount, excluding contributions due under section
25504(a), equal to the liability of the prior service in
3accordance with county or other municipal pension plan or
4retirement system benefit provisions, multiplied by the ratio
5of system actuarial value of assets for active members to the
6system actuarial accrued liability for active members. The
7Public Employee Retirement Study Commission shall determine
8the appropriate amount of employer contributions to be
9transferred to the system by the county or other municipal
10pension plans or retirement systems.

11* * *

12(e) Transfer and purchase of certain pension service credit;
13Philadelphia Regional Port Authority.--

14(1) Any employee of the Philadelphia Regional Port
15Authority who becomes a State employee, as defined in section
165102 (relating to definitions), and an active member of the 
17system shall be eligible to obtain retirement credit for
18prior uncredited service with the Philadelphia Port
19Corporation, a Pennsylvania not-for-profit corporation
20("predecessor corporation"), provided that the Commonwealth
21does not incur any liability for the funding of the annuities
22attributable to the prior, uncredited "predecessor
23corporation" service, the cost of which shall be determined
24according to paragraph (2).

25* * *

26(4) Any person who became employed by the Philadelphia
27Regional Port Authority between July 10, 1989, and passage of
28this act and who becomes a State employee, as defined in
29section 5102, and an active member of the system shall be
30eligible to obtain retirement credit for service from the

1date of employment with the Philadelphia Regional Port
2Authority, provided that the contributions are made in
3accordance with sections 5501, 5504, 5505.1 and 5506.

4* * *

5Section 306. Sections 5303.2(a) and (e), 5304(a) and (b),
65305(b)(3) and 5305.1 of Title 71 are amended to read:

7§ 5303.2. Election to convert school service to State service.

8(a) Eligibility.--An active member or inactive member on
9leave without pay who was an employee transferred from the
10Department of Education to the Department of Corrections
11pursuant to section 908-B of the act of April 9, 1929 (P.L.177,
12No.175), known as The Administrative Code of 1929, and who on
13the effective date of that transfer did not participate in an
14independent retirement program approved by the Department of
15Education under 24 Pa.C.S. § 8301(a)(1) (relating to mandatory
16and optional membership) or section 5301(a)(12) (relating to
17mandatory and optional membership in the system and 
18participation in the plan), notwithstanding any other provision
19of law or any collective bargaining agreement, arbitration
20award, contract or term or conditions of any retirement system
21or pension plan, may make a one-time election to convert all
22service credited in the Public School Employees' Retirement
23System as of June 30, 1999, and transfer to the system all
24accumulated member contributions and statutory interest credited
25in the members' savings account in the Public School Employees'
26Retirement System as of June 30, 1999, plus statutory interest
27on that amount credited by the Public School Employees'
28Retirement System from July 1, 1999, to the date of transfer to
29the system.

30* * *

1(e) Transfer.--Within 180 days after the effective date of
2this subsection, the Public School Employees' Retirement System
3shall transfer to the board for each member electing to convert
4under this section the accumulated member contributions and
5statutory interest credited in the Public School Employees'
6Retirement System, plus an amount equal to the value of all
7annual employer contributions made to the Public School
8Employees' Retirement System with interest at the annual rate
9adopted by the board for the calculation of the normal
10contribution rate under section 5508(b) (relating to actuarial
11cost method for fiscal years ending before July 1, 2015), from
12the date of each contribution to the date of the transfer of the
13funds to the board. Any debt owed by a member to the Public
14School Employees' Retirement System for whatever reason shall be
15transferred to the system and shall be paid in a manner and in
16accordance with conditions prescribed by the board.

17* * *

18§ 5304. Creditable nonstate service.

19(a) Eligibility.--

20(1) An active member who first becomes an active member 
21before January 1, 2011, or before December 1, 2010, as a 
22member of the General Assembly, or a multiple service member
23who first becomes an active member before January 1, 2011, or 
24before December 1, 2010, as a member of the General Assembly, 
25and who is a school employee and an active member of the
26Public School Employees' Retirement System shall be eligible
27for Class A service credit for creditable nonstate service as
28set forth in subsections (b) and (c) except that intervening
29military service shall be credited in the class of service
30for which the member was eligible at the time of entering

1into military service and for which he makes the required
2contributions to the fund and except that a multiple service
3member who is a school employee and an active member of the
4Public School Employees' Retirement System shall not be
5eligible to purchase service credit for creditable nonstate
6service set forth in subsection (c)(5).

7(2) An active member who first becomes an active member
8on or after January 1, 2011, or on or after December 1, 2010,
9as a member of the General Assembly, or a multiple service
10member who first becomes an active member on or after January
111, 2011, or on or after December 1, 2010, as a member of the
12General Assembly, and who is a school employee and an active
13member of the Public School Employees' Retirement System
14shall be eligible for Class A-3 service credit for creditable
15nonstate service as set forth in subsections (b) and (c)
16except that intervening military service shall be credited in
17the class of service for which the member was eligible at the
18time of entering into military service and for which he makes
19the required contributions to the fund and except that a
20multiple service member who is a school employee and an
21active member of the Public School Employees' Retirement
22System shall not be eligible to purchase service credit for
23creditable nonstate service set forth in subsection (c)(5).

24* * *

25(b) Limitations on eligibility.--An active member or a
26multiple service member who is a school employee and an active
27member of the Public School Employees' Retirement System shall
28be eligible to receive credit for nonstate service provided that
29he does not have credit for such service in the system or in the
30school system and is not entitled to receive, eligible to

1receive now or in the future, or is receiving retirement
2benefits for such service in the system or under a retirement
3system administered and wholly or partially paid for by any
4other governmental agency or by any private employer, or a
5retirement program approved by the employer in accordance with
6section 5301(a)(12) (relating to mandatory and optional
7membership in the system and participation in the plan), and
8further provided, that such service is certified by the previous
9employer and contributions are agreed upon and made in
10accordance with section 5505 (relating to contributions for the
11purchase of credit for creditable nonstate service).

12* * *

13§ 5305. Social security integration credits.

14* * *

15(b) Accrual of subsequent credits.--Any active member who
16has social security integration accumulated deductions to his
17credit or is receiving a benefit on account of social security
18integration credits may accrue one social security integration
19credit for each year of service as a State employee on or
20subsequent to March 1, 1974 and a fractional credit for a
21corresponding fractional year of service provided that
22contributions are made to the fund, or would have been made to 
23the fund but for section 5502.1 (relating to waiver of regular
24member contributions and Social Security integration member
25contributions) or the limitations under IRC § 401(a)(17) or
26415(b), in accordance with section 5502 (relating to Social
27Security integration member contributions), and he:

28* * *

29(3) terminates his status as a vestee or an annuitant
30and returns to State service as an active member of the
 

1system.

2* * *

3§ 5305.1. Eligibility for actuarial increase factor.

4A person who is:

5(1) an active member;

6(2) an inactive member on leave without pay; [or]

7(3) a multiple service member who is a school employee
8and an active member of the Public School Employees'
9Retirement System; or

10(4)  a combined service employee who is an active
11participant or inactive participant on leave without pay:

12who terminates State service or school service, as the case may
13be, after attaining age 70 and who applies for a superannuation
14annuity with an effective date of retirement the day after the
15date of termination of State service or school service shall
16have that person's maximum single life annuity calculated
17pursuant to section 5702(a.1) (relating to maximum single life
18annuity).

19Section 307. Section 5306(a), (a.1)(2) and (6), (a.2), (a.3)<-
20and (b) of Title 71 are amended and the section is amended by
21adding a subsection to read:

22§ 5306. Classes of service.

23(a) Class A and Class A-3 membership.--

24(1) A State employee who is a member of Class A on the
25effective date of this part or who first becomes a member of
26the system subsequent to the effective date of this part and 
27before January 1, 2011, or before December 1, 2010, as a 
28member of the General Assembly, shall be classified as a
29Class A member and receive credit for Class A service upon
30payment of regular and additional member contributions for

1Class A service, provided that the State employee does not
2become a member of Class AA pursuant to subsection (a.1) or a
3member of Class D-4 pursuant to subsection (a.2) or a 
4participant in the plan.

5(2) A State employee who first becomes a member of the
6system on or after January 1, 2011, or on or after December
71, 2010, as a member of the General Assembly, shall be
8classified as a Class A-3 member and receive credit for Class
9A-3 service upon payment of regular member contributions and
10shared-risk member contributions for Class A-3 service
11provided that the State employee does not become a member of
12Class A-4 pursuant to subsection (a.3), except that a member
13of the judiciary shall be classified as a member of such
14other class of service for which the member of the judiciary
15is eligible, shall elect and make regular member
16contributions and further provided that the State employee 
17does not become a participant in the plan or is not eligible 
18to be an optional participant of the plan under section 5301 
19(relating to mandatory and optional membership in the system 
20and participation in the plan).

21(a.1) Class AA membership.--

22* * *

23(2) A person who is a State employee on June 30, 2001,
24and July 1, 2001, but is not an active member of the system
25because membership in the system is optional or prohibited
26pursuant to section 5301 (relating to mandatory and optional
27membership in the system and participation in the plan) and
28who first becomes an active member after June 30, 2001, and 
29before January 1, 2011, or before December 1, 2010, as a 
30member of the General Assembly, and who is not a State police

1officer and not employed in a position for which a class of
2service other than Class A is credited or could be elected
3shall be classified as a Class AA member and receive credit
4for Class AA State service upon payment of regular member
5contributions for Class AA service and, subject to the
6limitations contained in paragraph (7), if previously a
7member of Class A or previously employed in a position for
8which Class A service could have been earned, shall have all
9Class A State service (other than State service performed as
10a State Police officer or for which a class of service other
11than Class A was earned or could have been elected)
12classified as Class AA service.

13* * *

14(6) A State employee who after June 30, 2001, becomes a
15State police officer or who is employed in a position in
16which the member could elect membership in the system in a
17class of service other than Class AA or Class D-4 shall
18retain any Class AA service credited prior to becoming a
19State police officer or being so employed but shall be
20ineligible to receive Class AA credit thereafter and instead
21shall receive Class A credit for service as a member of the 
22judiciary<-, unless and until the member of the judiciary 
23becomes an elected officer, if such judicial service begins 
24before January 1, 2015, or if he first became a member before 
25January 1, 2011, or December 1, 2010, as a member of the 
26General Assembly, or Class A-3 credit for service other than 
27as a member of the judiciary if the nonjudicial service <-is as 
28a DC plan exempt employee or begins before January 1, 2015, 
<-29and is not service as an elected officer and he first became 
30a member on or after January 1, 2011, or December 1, 2010, as
 

1a member of the General Assembly, unless a class of
2membership other than Class A is elected.

3(a.2) Class of membership for members of the General
4Assembly.--

5(1) A person who:

6(i) becomes a member of the General Assembly and an
7active member of the system after June 30, 2001, and 
8before December 1, 2010; or

9(ii) is a member of the General Assembly on July 1,
102001, but is not an active member of the system because
11membership in the system is optional pursuant to section
125301 and who becomes an active member after June 30,
132001, and before December 1, 2010;

14and who was not a State police officer on or after July 1,
151989, shall be classified as a Class D-4 member and receive
16credit as a Class D-4 member for all State service as a 
17member of the system performed as a member of the General
18Assembly upon payment of regular member contributions for
19Class D-4 service and, subject to the limitations contained
20in subsection (a.1)(7), if previously a member of Class A or
21employed in a position for which Class A service could have
22been earned, shall receive Class AA service credit for all
23Class A State service, other than State service performed as
24a State police officer or for which a class of service other
25than Class A or Class D-4 was or could have been elected or
26credited.

27(2) Provided an election to become a Class D-4 member is
28made pursuant to section 5306.2 (relating to elections by
29members of the General Assembly), a State employee who was
30not a State police officer on or after July 1, 1989, who on

1July 1, 2001, is a member of the General Assembly and an
2active member of the system and not a member of Class D-3
3shall be classified as a Class D-4 member and receive credit
4as a Class D-4 member for all State service as a member of 
5the system performed as a member of the General Assembly not
6credited as another class other than Class A upon payment of
7regular member contributions for Class D-4 service and,
8subject to the limitations contained in paragraph (a.1)(7),
9shall receive Class AA service credit for all Class A State
10service, other than State service performed as a State police
11officer or as a State employee in a position in which the
12member could have elected a class of service other than Class
13A, performed before July 1, 2001.

14(3) A member of the General Assembly who after June 30,
152001, becomes a State police officer shall retain any Class
16AA service or Class D-4 service credited prior to becoming a
17State police officer or being so employed but shall be
18ineligible to receive Class AA or Class D-4 credit thereafter
19and instead shall receive Class A credit or Class A-3 credit 
20if he first becomes a member of the system on or after 
21January 1, 2011.

22(4) Notwithstanding the provisions of this subsection,
23no service as a member of the General Assembly performed
24before December 1, 2010, that is not credited as Class D-4
25service on November 30, 2010, shall be credited as Class D-4
26service, unless such service was previously credited in the
27system as Class D-4 service and the member withdrew his total
28accumulated deductions as provided in section 5311 (relating
29to eligibility for refunds) or 5701 (relating to return of
30total accumulated deductions). No service as a member of the

1General Assembly performed on or after December 1, 2010,
2shall be credited as Class D-4 service unless the member
3previously was credited with Class D-4 service credits.

<-4(a.3) Class A-4 membership.--Provided that an election to
5become a Class A-4 member is made pursuant to section 5306.3
6(relating to election to become a Class A-4 member), a State
7employee who otherwise would be a member of Class A-3 shall be
8classified as a Class A-4 member and receive Class A-4 credit
9for all creditable State service performed as a member of the 
10system after the effective date of membership in the system,
11except as a member of the judiciary, upon payment of regular
12member contributions and shared-risk member contributions for
13Class A-4 service.

14(b) Other class membership.--

15(1) A State employee who is a member of a class of
16service other than Class A on the effective date of this part
17shall retain his membership in that class until such service
18is discontinued <-or until the member becomes a participant in 
19the plan; any service as a member of the system thereafter
20shall be credited as Class A service, Class AA service or
21Class D-4 service as provided for in this section.

22(2) Notwithstanding any other provision of this section,
23a State employee who is appointed<- [bail commissioner]
24arraignment court magistrate of the Philadelphia Municipal
25Court under 42 Pa.C.S. § 1123(a)(5) (relating to jurisdiction
26and venue) and is eligible to be a member of the system as <-a 
27bail commissioner an arraignment court magistrate may, within
2830 days of the effective date of this sentence or within 30
29days of his initial appointment as [a bail commissioner]<- an 
30arraignment court magistrate, whichever is later, elect Class

1E-2 service credit for service performed as [<-a bail
2commissioner] <-an arraignment court magistrate. This class of
3service multiplier for E-2 service as [<-a bail commissioner] 
4an arraignment court magistrate shall be 1.5.]<-

5* * *

6(e) Ineligibility for active membership and classes of 
7service.--An individual who <-elects to be a participant in the 
8plan is an elected officer<- or who is a State employee on January 
91, 2015, but is not a member of the system or who first becomes 
10a State employee on or after January 1, 2015, <-other than as a DC 
11plan exempt employee, or who returns to State service after a 
12termination of State service, other than as a DC plan exempt 
13employee, without regard to whether the termination occurred 
14before or after January 1, 2015, shall be ineligible for active 
15membership in the system or the several classes of State service 
16as otherwise provided for under this section. Any such State 
17employee, if eligible, may be a participant in the plan as a 
18result of such State service.

19Section 308. Sections 5306.1(c), 5306.2(b) and 5306.3(c) and
20(d) of Title 71 are amended to read:

21§ 5306.1. Election to become a Class AA member.

22* * *

23(c) Effect of election.--An election to become a Class AA
24member shall become effective the later of July 1, 2001, or the
25date when the election is filed with the board and shall remain
26in effect until the termination of employment or election to be<- 
27becoming a participant in the plan. Upon termination and a<-
28subsequent reemployment that occurs before January 1, 2015<-, 
29except as an elected officer, the member's class of service
30shall be credited in the class of service otherwise provided for

1in this part. If the reemployment occurs on or after January 1, 
22015, or December 1, 2014, if as an elected officer,<- the State 
3employee's eligibility for membership in the system or 
4participation in the plan shall be as provided in this part.

5* * *

6§ 5306.2. Elections by members of the General Assembly.

7* * *

8(b) Effect of election.--Membership as a Class D-4 member
9shall become effective on July 1, 2001, and shall remain in
10effect until the termination of service as a member of the
11General Assembly or election to be<- becoming a participant in the 
12plan. Upon termination and a subsequent reemployment that occurs 
13before January 1, 2015, the member's class of service shall be
14credited in the class of service otherwise provided for in this
15part. If the reemployment occurs on or after January 1, 2015,<- or 
16December 1, 2014, if as an elected officer, then the State 
17employee's eligibility for membership in the system or 
18participation in the plan shall be as provided in this part.

19* * *

20§ 5306.3. Election to become a Class A-4 member.

21* * *

22(c) Effect of election.--An election to become a Class A-4 
23member shall be irrevocable and shall become effective on the 
24effective date of membership in the system and shall remain in 
25effect for all future [creditable] State service creditable in 
26the system, other than service performed as a member of the 
27judiciary, but shall not apply to service performed after a 
28termination of State service and a reemployment when the 
29reemployment occurs on or after January 1, 2015<-, unless the 
30reemployment occurs as a DC plan exempt employee. Payment of
 

1regular member contributions for Class A-4 State service 
2performed prior to the election of Class A-4 membership shall be 
3made in a form, manner and time determined by the board. Upon 
4termination of State service and a subsequent reemployment 
5before January 1, 2015<-, or as a DC plan exempt employee on or 
6after January 1, 2015, a member who elected Class A-4 membership 
7shall be credited as a Class A-4 member for creditable State 
8service performed after reemployment and before the next 
9termination of State service or election to be<- becoming a 
10participant, except as a member of the judiciary, regardless of 
11termination of employment, termination of membership by 
12withdrawal of accumulated deductions or status as an annuitant, 
13vestee or inactive member after the termination of service and<-, 
14for employees who are not DC plan exempt employees, before 
15reemployment occurring before January 1, 2015.

16(d) Effect of failure to make election.--Failure to elect to 
17become a Class A-4 member within the election period set forth 
18in subsection (b) shall result in all of the member's State 
19service, other than service performed as a member of the 
20judiciary, being credited as Class A-3 service, unless the State 
21employee elects or is required to be a participant in the plan, 
22and not subject to further election or crediting as Class A-4 
23service. Upon termination and subsequent employment, a member 
24who failed to elect to become a Class A-4 member shall not be 
25eligible to make another election to become a Class A-4 member 
26for either past or future State service.

<-27Section 309. (Reserved).

28Section 310. Sections 5307(b) and 5308(a) and (b) of Title
2971, amended October 24, 2012 (P.L.1436, No.181), are amended to
30read:

<-1Section 309. Section 5307(b) of Title 71, amended October
224, 2012 (P.L.1436, No.181), is amended and the section is
3amended by adding a subsection to read:

4§ 5307. Eligibility points.

5* * *

6(b) Transitional rule.--

7(1) In determining whether a member who is not a State
8employee or school employee on June 30, 2001, and July 1,
92001, and who has previous State service (except a disability
10annuitant who returns to State service after June 30, 2001,
11upon termination of the disability annuity) has the five
12eligibility points required by sections 5102 (relating to
13definitions), 5308(b) (relating to eligibility for
14annuities), 5309 (relating to eligibility for vesting),
155704(b) (relating to disability annuities) and 5705(a)
16(relating to member's options), only eligibility points
17earned by performing credited State service as an active 
18member of the system, USERRA leave or credited school service
19as an active member of the Public School Employees' 
20Retirement System after June 30, 2001, shall be counted until
21such member earns one eligibility point by performing
22credited State service or credited school service after June
2330, 2001, at which time all eligibility points as determined
24pursuant to subsection (a) shall be counted.

25(2) Any member to whom paragraph (1) applies shall be
26considered to have satisfied any requirement for five
27eligibility points contained in this part if the member:

28(i) has ten or more eligibility points as determined
29pursuant to subsection (a); or

30(ii) has Class G, Class H, Class I, Class J, Class

1L, Class M or Class N service and has eight or more
2eligibility points as determined pursuant to subsection
3(a).

<-4(c) Transitional rule for elected officers.--

5(1) In determining whether an elected officer who is
6required to terminate active membership in the system and
7become a participant in the plan solely by reason of being an
8elected officer has the five eligibility points required by
9sections 5102, 5308(b)(1), 5309(1) and 5705(a) or the ten
10eligibility points required by sections 5102, 5308(b)(2),
115309(2) and 5705(a), the elected officer shall be considered
12to have satisfied any requirement for five or ten eligibility
13points once the elected officer becomes a participant in the
14plan on or after beginning the new term of office that
15required plan participation.

16(2) In determining whether an elected officer who is
17required to cease being an active member of the system and to
18become a participant in the plan solely by reason of being an
19elected officer is eligible for payment of benefits from the
20plan, the State service credit on which eligibility points
21were earned prior to becoming a participant in the plan and
22credited in the system when the elected officer becomes a
23participant in the plan shall be included in determining the
24vested status of a participant under section 5409.

25Section 310. Section 5308 of Title 71 is amended to read:

26§ 5308. Eligibility for annuities.

27(a) Superannuation annuity.--Attainment of superannuation
28age by an active member [or], an inactive member on leave
29without pay or a combined service employee who is an active 
30participant or inactive participant on leave without pay with

1three or more eligibility points other than eligibility points 
2resulting from nonstate service or nonschool service shall
3entitle him to receive a superannuation annuity upon termination
4of State service and compliance with section 5907(f) (relating
5to rights and duties of State employees [and], members and 
6participants).

7(b) Withdrawal annuity.--

8(1) Any vestee or any active member [or], inactive
9member on leave without pay or a combined service employee 
10who is an active participant or inactive participant on leave 
11without pay who terminates State service having five or more
12eligibility points and who does not have Class A-3 or Class 
13A-4 service credit or Class T-E or Class T-F service credit 
14in the Public School Employees' Retirement System, or who has
15Class G, Class H, Class I, Class J, Class K, Class L, Class M
16or Class N service and terminates State service having five
17or more eligibility points, upon compliance with section
185907(f), (g) or (h) shall be entitled to receive an annuity.

19(2) Any vestee, active member [or], inactive member on
20leave without pay or combined service employee who is an 
21active participant or inactive participant on leave without 
22pay who has Class A-3 or Class A-4 service credit or Class T-
23E or Class T-F service credit in the Public School Employees'
24Retirement System who terminates State service having ten or
25more eligibility points, upon compliance with section
265907(f), (g) or (h), shall be entitled to receive an annuity.

27(3) Any vestee, active member [or], inactive member on
28leave without pay or combined service employee who is an 
29active participant or inactive participant on leave without 
30pay who has either Class A-3 or Class A-4 service credit or

1Class T-E or Class T-F service credit in the Public School
2Employees' Retirement System and also has service credited in
3the system in one or more other classes of service who has
4five or more, but fewer than ten, eligibility points, upon
5compliance with section 5907(f), (g) or (h), shall be
6eligible to receive an annuity calculated on his service
7credited in classes of service other than Class A-3 or Class
8A-4, provided that the member has five or more eligibility
9points resulting from service in classes other than Class A-3
10or Class A-4 or Class T-E or Class T-F service in the Public
11School Employees' Retirement System.

12* * *<-

<-13(c) Disability annuity.--An active member or inactive member
14on leave without pay who has five or more eligibility points 
15other than eligibility points resulting from membership in the 
16Public School Employees' Retirement System or any active member
17or inactive member on leave without pay who is an officer of the
18Pennsylvania State Police or an enforcement officer shall, upon
19compliance with section 5907(k), be entitled to a disability
20annuity if he becomes mentally or physically incapable of
21continuing to perform the duties for which he is employed and
22qualifies in accordance with the provisions of section 5905(c)
23(1) (relating to duties of the board regarding applications and
24elections of members)[.]; provided, that no disability annuity 
25shall be paid to a combined service employee who is an active 
26participant.

27(d) Eligibility of an elected officer for superannuation
28annuity.--An elected officer who is required to terminate active
29membership in the system and become a participant in the plan
30solely by reason of being an elected officer will be deemed to

1have satisfied the requirement of three or more eligibility
2points other than eligibility points resulting from nonstate
3service or nonschool service under subsection (a) once the
4elected officer becomes a participant in the plan on or after
5beginning the new term of office that required plan
6participation. Nothing under this subsection shall amend or
7waive any other requirement to be eligible for a superannuation
8annuity.

9Section 311. Sections 5308.1(1), 5309<- and 5311(a) of Title
1071 are amended to read:

11§ 5308.1. Eligibility for special early retirement.

12Notwithstanding any provisions of this title to the contrary,
13the following special early retirement provisions shall be
14applicable to specified eligible members as follows:

15(1) During the period of July 1, 1985, to September 30,
161991, an active member who has attained the age of at least
1753 years and has accrued at least 30 eligibility points shall
18be entitled, upon termination of State service and compliance
19with section 5907(f) (relating to rights and duties of State
20employees [and], members and participants), to receive a
21maximum single life annuity calculated under section 5702
22(relating to maximum single life annuity) without a reduction
23by virtue of an effective date of retirement which is under
24the superannuation age.

25* * *

<-26§ 5309. Eligibility for vesting.

27Any member who:

28(1) Does not have Class A-3 or Class A-4 service credit 
29or Class T-E or Class T-F service credit in the Public School 
30Employees' Retirement System and terminates State service as
 

1an active member or inactive member on leave without pay with
2five or more eligibility points, or any member with Class G,
3Class H, Class I, Class J, Class K, Class L, Class M or Class
4N service with five or more eligibility points, shall be
5eligible until attainment of superannuation age to vest his
6retirement benefits.

7(2) Has Class A-3 or Class A-4 service credit or Class
8T-E or Class T-F service credit in the Public School
9Employees' Retirement System and terminates State service as 
10an active member or inactive member on leave without pay with
11ten or more eligibility points shall be eligible until
12attainment of superannuation age to vest his retirement
13benefits.

14(3) Has either Class A-3 or Class A-4 service credit or
15Class T-E or Class T-F service credit in the Public School
16Employees' Retirement System, also has service credited in
17the system in one or more other classes of service and has
18five or more, but fewer than ten, eligibility points shall be
19eligible until the attainment of superannuation age to vest
20his retirement benefits calculated on his service credited in
21classes of service other than Class A-3 or Class A-4 and to
22be credited with statutory interest on total accumulated
23deductions, regardless of whether or not any part of his
24accumulated deductions are a result of Class A-3 or Class A-4
25service credit.

26§ 5311. Eligibility for refunds.

27(a) Total accumulated deductions.--Any active member,
28regardless of eligibility for benefits, may elect to receive his
29total accumulated deductions upon termination of service in lieu
30of any benefit from the system to which he is entitled.

1* * *

2Section 312. Title 71 is amended by adding a chapter to
3read:

4CHAPTER 54

5STATE EMPLOYEES' DEFINED CONTRIBUTION PLAN

6Sec.

75401.  Establishment.

85402.  Plan document.

95403.  Individual investment accounts.

105404.  Participant contributions.

115405.  Mandatory pickup participant contributions.

125406.  Employer defined contributions.

135407.  Eligibility for benefits.

145408.  Death benefits.

155409.  Vesting.

165410.  Termination of distributions.

175411.  Agreements with financial institutions and other
18organizations.

195412.  Powers and duties of board.

205413.  Responsibility for investment loss.

215414.  Investments based on participants' investment allocation
22choices.

235415.  Expenses.

24541<-6.  Election by members to be participants.

<-255416. (Reserved).

265417.  Tax qualification.

27§ 5401.  Establishment.

28(a) State Employees' Defined Contribution Plan.--The State
29Employees' Defined Contribution Plan is established. The board
30shall administer and manage the plan which shall be a defined

1contribution plan exclusively for the benefit of those State
2employees who participate in the plan and their beneficiaries
3within the meaning of and in conformity with IRC § 401(a). The
4board shall determine the terms and provisions of the plan not
5inconsistent with this part, IRC or other applicable law and
6shall provide for the plan's administration.

7(b) State Employees' Defined Contribution Trust.--The State
8Employees' Defined Contribution Trust is established as part of
9the plan. The trust shall be comprised of the individual
10investment accounts and all assets and moneys in those accounts.
11The members of the board shall be the trustees of the trust,
12which shall be administered exclusively for the benefit of those
13State employees who participate in the plan and their
14beneficiaries within the meaning of and in conformity with IRC §
15401(a). The board shall determine the terms and provisions of
16the trust not inconsistent with this part, IRC or other
17applicable law and shall provide for the investment and
18administration of the trust.

19(c)  Assets held in trust.--All assets and income in the plan
20that have been or shall be withheld or contributed by the
21participants, the Commonwealth and other employers in accordance
22with this part shall be held in trust in any funding vehicle
23permitted by the applicable provisions of IRC for the exclusive
24benefit of the participants and their beneficiaries until such
25time as the funds are distributed to the participants or their
26beneficiaries in accordance with the terms of the plan document.
27The assets of the plan held in trust for the exclusive benefit
28of the participants and their beneficiaries may be used for the
29payment of the fees, costs and expenses related to the
30administration and investment of the plan and the trust.

1(d)  Name for transacting business.--All of the business of
2the plan shall be transacted, the trust invested, all
3requisitions for money drawn and payments made and all of its
4cash and securities and other property shall be held by the name
5of the "State Employees' Defined Contribution Plan."
6Notwithstanding any other law to the contrary, the board may
7establish a nominee registration procedure for the purpose of
8registering securities in order to facilitate the purchase, sale
9or other disposition of securities pursuant to the provisions of
10this part.

11§ 5402.  Plan document.

12The board shall set forth the terms and provisions of the
13plan and trust in a document containing the terms and conditions
14of the plan and in a trust declaration that shall be published
15in the Pennsylvania Bulletin. The creation of the document
16containing the terms and conditions of the plan and the trust
17declaration and the establishment of the terms and provisions of
18the plan and the trust need not be promulgated by regulation or
19formal rulemaking and shall not be subject to the act of July
2031, 1968 (P.L.769, No.240), referred to as the Commonwealth
21Documents Law. A reference in this part or other law to the plan
22shall include the plan document unless the context clearly
23indicates otherwise.

24§ 5403.  Individual investment accounts.

25The board shall establish in the trust an individual
26investment account for each participant in the plan. All
27contributions by a participant or an employer for or on behalf
28of a participant shall be credited to the participant's
29individual investment account, together with all interest and
30investment earnings and losses. Investment and administrative

1fees, costs and expenses shall be charged to the participants'
2individual investment accounts. Employer defined contributions
3shall be recorded and accounted for separately from participant
4contributions, but all interest, investment earnings and losses,
5and investment and administrative fees, costs and expenses shall
6be allocated proportionately.

7§ 5404.  Participant contributions.

8(a) Mandatory contributions.--A participant shall make
9mandatory pickup participant contributions through payroll
10deductions to the participant's individual investment account
11equal to 6.25% of compensation for current State service. The
12employer shall cause those contributions for current service to
13be made and deducted from each payroll or on such schedule as
14established by the board.

15(b)  Voluntary contributions.--A participant may make
16voluntary contributions through payroll deductions or through
17direct trustee-to-trustee transfers or through transfers of
18money received in an eligible rollover into the trust to the
19extent allowed by IRC § 402. The rollovers shall be made in a
20form and manner as determined by the board, shall be credited to
21the participant's individual investment account and shall be
22separately accounted for by the board.

23(c)  Prohibited contributions.--No contributions may be
24allowed that would cause a violation of the limitations related
25to contributions applicable to governmental plans contained in
26IRC § 415 or in other provisions of law. In the event that any
27disallowed contributions are made, any participant contributions
28in excess of the limitations and investment earnings on those
29contributions shall be refunded to the participant by the board.

30§ 5405.  Mandatory pickup participant contributions.

1(a)  Treatment for purposes of IRC § 414(h).--The
2contributions to the trust required to be made under section
35404(a) (relating to participant contributions) with respect to
4current State service rendered by an active participant shall be
5picked up by the Commonwealth or other employer and shall be
6treated as the employer's contribution for purposes of IRC §
7414(h). After the effective date of this section, an employer 
8employing a participant in the plan shall pick up the required 
9mandatory participant contributions by a reduction in the 
10compensation of the participant.

11(b)  Treatment for other purposes.--For all purposes other
12than the IRC, the mandatory pickup participant contributions
13shall be treated as contributions made by a participant in the
14same manner and to the same extent as if the contributions were
15made directly by the participant and not picked up.

16§ 5406.  Employer defined contributions.

17(a)  Contributions for current service.--The Commonwealth or
18other employer of an active participant shall make employer
19defined contributions for current service of an active
20participant that shall be credited to the active participant's
21individual investment account. Employer defined contributions
22shall be recorded and accounted for separately from participant
23contributions.

24(b)  Contributions resulting from participants reemployed
25from USERRA leave.--When a State employee reemployed from USERRA
26leave makes the mandatory pickup participant contributions
27permitted to be made for the USERRA leave, the Commonwealth or
28other employer by whom the State employee is employed at the
29time the participant contributions are made shall make whatever
30employer defined contributions would have been made under this

1section had the employee making the participant contributions
2continued to be employed in the participant's State office or
3position instead of performing USERRA leave. The employer
4defined contributions shall be placed in the participant's
5individual investment account as otherwise provided by this
6part.

7(c)  Limitations on contributions.--No contributions may be
8allowed that would cause a violation of the limitations related
9to contributions applicable to governmental plans contained in
10IRC § 415 or in other provisions of law. In the event that any
11disallowed contributions are made, any employer defined
12contributions in excess of the limitations and investment
13earnings on the contributions shall be refunded to the employer
14by the board.

15§ 5407.  Eligibility for benefits.

16(a)  Termination of service.--A participant who terminates
17State service shall be eligible to withdraw the vested
18accumulated total defined contributions standing to the
19participant's credit in the participant's individual investment
20account or a lesser amount as the participant may request.
21Payment shall be made in a lump sum unless the board has
22established other forms of distribution in the plan document,
23subject to the provisions of subsection (g). A participant who
24withdraws his vested accumulated total defined contributions
25shall no longer be a participant in the plan, notwithstanding
26that the participant<- former State employee may continue to be a
27member of the system or may have contracted to receive an
28annuity or other form of payment from a provider retained by the
29board for such purposes.

30(b)  Required distributions.--All payments pursuant to this

1section shall start and be made in compliance with the minimum
2distribution requirements and incidental death benefit rules of
3IRC § 401(a)(9). The board shall take any action and make any
4distributions it may determine are necessary to comply with
5those requirements.

6(c)  Married participant.--A participant who is married may
7receive a lump sum distribution or other distribution directly
8from the board without the consent of the participant's spouse
9unless the plan document provides otherwise.

10(d)  Combined service employee.--A participant who is a
11combined service employee must be terminated from all positions
12that result in either membership in the system or participation
13in the plan to be eligible to receive a distribution.

14(e)  Loans.--Loans or other distributions, including hardship
15or unforeseeable emergency distributions, from the plan to State
16employees who have not terminated State service are not
17permitted, except as required by law.

18(f)  Small individual investment accounts.--

19(1) A participant who terminates State service and whose
20vested accumulated total defined contributions are below the
21threshold established by law as of the date of termination of
22service may be paid the vested accumulated total defined
23contributions in a lump sum as provided in IRC § 401(a)(31).

24(2) The board may also provide in the plan document
25that, notwithstanding subsection (g), a participant whose
26vested accumulated employer defined contributions are below
27the thresholds established by the board may receive those
28distributions without the obligation to purchase an annuity.
29The threshold may be established as a dollar amount, an
30annuity amount, in some other form individually or in

1combination as the board determines.

2(g) Requirement to purchase annuity.--Except as prohibited
3by the IRC or as otherwise provided in this part, a participant
4who is eligible and elects to receive a distribution or vested
5accumulated employer defined contributions shall be required to
6purchase an annuity with that distribution from an annuity
7provider contracted by the board under section 5408(c) (relating
8to death benefits) and under such conditions as provided in the
9plan document. The conditions may include that the board is
10authorized to make the distribution directly to the annuity
11provider.

12§ 5408.  Death benefits.

13(a)  General rule.--In the event of the death of an active
14participant or inactive participant, the board shall pay to the
15participant's beneficiary the vested balance in the
16participant's individual investment account in a lump sum or in
17such other manner as the board may establish in the plan
18document.

19(b)  Death of participant receiving distributions.--In the
20event of the death of a participant receiving distributions, the
21board shall pay to the participant's beneficiary the vested
22balance in the participant's individual investment account in a
23lump sum or in such other manner as the board may establish in
24the plan document or, if the board has established alternative
25methods of distribution in the plan document under which the
26participant was receiving distributions, to the participant's
27beneficiary or successor payee, as the case may be, as provided
28in the plan document.

29(c)  Contracts.--The board may contract with financial
30institutions, insurance companies or other types of third-party

1providers to allow participants who receive a lump sum
2distribution to receive payments and death benefits in a form
3and manner as provided by the contract. These contracts may, but
4are not required to, provide that any payment and death benefit
5options for a married former participant be in the form of a
6joint and survivor annuity unless the spouse consents to another
7payment option.

8(d)  Spousal consent.--All nomination or change of
9beneficiaries or successor payees made by a married participant
10shall be subject to the consent of the participant's spouse as
11provided for in this part.

12§ 5409.  Vesting.

13(a) Participant and voluntary contributions.--Subject to the
14forfeiture and attachment provisions of section 5953 (relating
15to taxation, attachment and assignment of funds) or otherwise as
16provided by law, a participant shall be vested with respect to
17all mandatory pickup participant contributions and voluntary
18contributions paid by or on behalf of the participant to the
19trust in addition to interest and investment gains or losses on
20the participant contributions but not including investment fees
21and administrative charges.

22(b) Employer defined contributions.--

23(1) Subject to the forfeiture and attachment provisions
24of section 5953 or otherwise as provided by law, a
25participant shall be vested with respect to all employer
26defined contributions paid to the participant's individual
27investment account in the trust in addition to interest and
28investment gains and losses on the employer defined
29contributions but not including investment fees and
30administrative charges according to the following schedule:

1(i)  during the first and second year of State
2service as a participant in the plan, 0%;

3(ii)  at the second year until the third year of
4State service as a participant in the plan, 50%;

5(iii)  at the third year until the fourth year of
6State service as a participant in the plan, 75%;

7(iv)  at and after the fourth year of State service
8as a participant in the plan, 100%.

9(2) The board shall establish in the plan document:

10(i) How the required time periods of State service
11in the plan are determined and calculated.

12(ii) The effect of periods that State employees
13spend on paid leave or leave without pay on the
14determination of a participant's vested status in the
15plan.

16(iii) The effect of termination of State service or
17distributions from the plan on a participant's vested
18status in the plan.

19(iv) Other terms and conditions for the
20implementation and administration of this section.

21(3) Nonvested employer defined contributions and the
22interest and investment gains and losses on the nonvested
23employer defined contributions that are not distributable to
24a participant are credited to the participant's most recent
25employer's future obligation assessed under section 5509
26(relating to appropriations and assessments by the
27Commonwealth).

<-28(4) Transition rules shall be as follows:

29(i) An elected officer who solely by reason of being
30an elected officer is required to be a participant in the

1plan and who has sufficient eligibility points to be
2eligible to be a superannuation or withdrawal annuitant
3if the elected officer had terminated State service on
4the date the elected officer begins participation in the
5plan shall be 100% vested with respect to all employer
6defined contributions paid to the elected officer's
7individual investment account in addition to interest and
8investment gains and losses on the employer defined
9contributions, but not including investment fees and
10administrative charges.

11(ii) An elected officer who begins a term of office
12on and after December 1, 2014, and before January 1,
132015, shall have eligibility for vesting under this
14subsection determined as if the elected officer began
15State service and became a participant of the plan on the
16date the term of office begins, notwithstanding that the
17plan does not become operational and actual participation
18does not begin until January 1, 2015.

19(c) USERRA leave and vesting credit.--A participant in the
20plan who is reemployed from USERRA leave or who dies while
21performing USERRA leave shall receive vesting credit under this
22section for the State service that would have been performed had
23the member not performed USERRA leave.

24§ 5410.  Termination of distributions.

25(a)  Return to State service.--

26(1) A participant receiving distributions or an inactive
27participant who returns to State service shall cease
28receiving distributions and shall not be eligible to receive
29distributions until the participant subsequently terminates
30State service, without regard to whether the participant is a

1mandatory, optional or prohibited member of the system or
2participant in the plan.

3(2) This subsection shall not apply to a distribution of
4accumulated employer defined contributions or other
5distributions that the participant has received and used to
6purchase an annuity from a provider contracted by the board.

7(b)  Return of benefits paid during USERRA leave.--

8(1) If a former State employee is reemployed from USERRA
9leave and received any payments or annuity from the plan
10during the USERRA leave, the employee shall return to the
11board the amount so received plus interest as provided in the
12plan document.

13(2) The amount payable shall be certified in each case
14by the board in accordance with methods approved by the
15actuary and shall be paid in a lump sum within 30 days or in
16the case of an active participant may be amortized with
17interest as provided in the plan document through salary
18deductions to the trust in amounts agreed upon by the active
19participant and the board, but for not longer than a period
20that starts with the date of reemployment and continues for
21up to three times the length of the active participant's
22immediate past period of USERRA leave. The repayment period
23shall not exceed five years.

24§ 5411.  Agreements with financial institutions and other
25organizations.

26(a) Written agreement.--To establish and administer the
27plan, the board shall enter into a written agreement with one or
28more financial institutions or pension management other<-
29organizations to administer the plan and the investment of funds
30held pursuant to the plan. The administrator shall be selected

1in accordance with the following:

2(1) The board shall solicit proposals from financial
3institutions and pension management <-other organizations.

4(2) The board shall publish the solicitation in the
5Pennsylvania Bulletin.

6(3) Proposals received shall be evaluated based on
7specific criteria adopted by the board. The criteria shall
8include experience, customer service history and other
9criteria.

10(b) Rebid.--A contract to administer the plan under
11subsection (a) shall be rebid at least once every ten years.

12§ 5412.  Powers and duties of board.

13The board shall have the following powers and duties to
14establish the plan and trust and administer the provisions of
15this chapter and part:

16(1)  The board may commingle or pool assets with the
17assets of other persons or entities.

18(2)  The board shall pay all administrative fees, costs
19and expenses of managing, investing and administering the
20plan, the trust and the individual investment accounts from
21the balance of such individual investment accounts except as
22the General Assembly otherwise provides by appropriations
23from the General Fund.

24(3)  The board may establish investment guidelines and
25limits on the types of investments that participants may
26make, consistent with the board's fiduciary obligations.

27(4)  The board shall have the power to change the terms
28of the plan as may be necessary to maintain the tax-qualified
29status of the plan.

30(5)  The board may establish a process for election to

1participate in the plan by those State employees <-eligible to 
2do so for whom participation is not mandatory.

3(6)  The board may perform an annual or more frequent
4review of any qualified fund manager for the purpose of
5assuring that the fund manager continues to meet all
6standards and criteria established.

7(7)  The board may allow for eligible rollovers and
8direct trustee-to-trustee transfers into the trust from
9qualified plans of other employers, regardless of whether the
10employers are a private employers or public employers.

11(8)  The board may allow a former participant to maintain
12the participant's individual investment account within the
13plan.

14(9)  The board shall administer or ensure the
15administration of the plan in compliance with the
16qualifications and other rules of the IRC.

17(10)  The board may establish procedures to provide for
18the lawful payment of benefits.

19(11)  The board shall determine what constitutes a
20termination of State service.

21(12)  The board may establish procedures for
22distributions of small accounts as required or permitted by
23the IRC.

24(13)  The board may establish procedures in the plan
25document or to promulgate rules and regulations as it deems
26necessary for the administration and management of the plan,
27including, but not limited to, establishing:

28(i) Procedures for eligible participants to change
29voluntary contribution amounts or their investment
30choices on a periodic basis or make other elections

1regarding their participation in the plan.

2(ii) Procedures for deducting mandatory pickup
3participant contributions and voluntary contributions
4from a participant's compensation.

5(iii) Procedures for rollovers and trustee-to-
6trustee transfers allowed under the IRC and permitted as
7part of the plan.

8(iv) Standards and criteria for providing not less
9than ten options in accordance with three or more
10providers of investment options to eligible individuals
11regarding investments of amounts deferred under the plan.
12The standards and criteria must provide for a variety of
13investment options and shall be reviewed in accordance
14with criteria established by the board. One of the
15available options must serve as the default option for
16participants who do not make a timely election and, to
17the extent commercially available, one option must have
18an annuity.

19(v) Standards and criteria for disclosing to the
20participants the anticipated and actual income
21attributable to amounts invested, property rights and all
22fees, costs and expenses to be made against amounts
23deferred to cover the fees, costs and expenses of
24administering and managing the plan or trust.

25(vi)  Procedures, standards and criteria for the
26making of distributions from the plan upon termination
27from employment or death or in other circumstances
28consistent with the purpose of the plan.

29(14)  The board may waive any reporting or information
30requirement contained in this part if the board determines

1that the information is not needed for the administration of
2the plan.

3(15)  The board may contract any services and duties in
4lieu of staff, except final adjudications and as prohibited
5by law. Any duties or responsibilities of the board not
6required by law to be performed by the board can be delegated
7to a third-party provider subject to appeal to the board.

8(16)  The board may provide that any duties of the
9employer or information provided by the participant to the
10employer be performed or received directly by the board.

11(17)  The provisions and restrictions of the act of July
122, 2010 (P.L.266, No.44), known as the Protecting
13Pennsylvania's Investments Act, shall not apply to the plan
14or trust or the investments of the plan or trust, but the
15board may offer to the plan participants investment vehicles
16that would be allowed under the Protecting Pennsylvania's
17Investments Act.

18(18) The board shall ensure that participants are
19provided with educational materials about investment options
20and choices.

21§ 5413.  Responsibility for investment loss.

22The board, the Commonwealth, an employer or other political
23subdivision shall not be responsible for any investment loss
24incurred under the plan or for the failure of any investment to
25earn any specific or expected return or to earn as much as any
26other investment opportunity, whether or not the other
27opportunity was offered to participants in the plan.

28§ 5414.  Investments based on participants' investment
29allocation choices.

30(a) Investment by participant.--All contributions, interest

1and investment earnings shall be invested based on a
2participant's investment allocation choices. All investment
3allocation choices shall be credited proportionally between
4participant contributions and employer defined contributions.
5Each participant shall be credited individually with the amount
6of contributions, interest and investment earnings.

7(b)  Investment of contributions made by entities other than
8the Commonwealth.--Investment of contributions by any
9corporation, institution, insurance company or custodial bank
10that the board has approved shall not be unreasonably delayed
11and in no case may the investment of contributions be delayed
12more than 30 days from the date of payroll deduction or the date
13voluntary contributions are made to the date that funds are
14invested. Any interest earned on the funds pending investment
15shall be allocated to the Commonwealth and credited to the
16individual investment accounts of participants who are then
17participating in the plan unless the interest is used to defray
18administrative costs and fees that would otherwise be required
19to be borne by participants who are then participating in the
20plan.

21§ 5415.  Expenses.

22All fees, costs and expenses of administering the plan and
23the trust and investing the assets of the trust shall be borne
24by the participants and paid from assessments against the
25balances of the individual investment accounts as established by
26the board, except that for fiscal years ending before July 1,
272015, the fees, costs and expenses of establishing and
28administering the plan and the trust shall be paid by the
29Commonwealth through annual appropriations from the General
30Fund, made on the basis of estimates from the board.

<-1§ 5416.  Election by members to be participants.

2(a)  General rule.--A State employee who is an active member
3or inactive member on leave without pay of the system on or
4after January 1, 2015, and who is employed in a position that
5would otherwise be eligible for participation in the plan may
6elect to become a participant in the plan.

7(b)  Time for making election.--An eligible State employee
8may elect to become a participant and a combined service
9employee at any time before termination of State service by
10filing a written election with the board.

11(c)  Effect of election.--The following apply:

12(1) An election to become a participant shall be
13irrevocable. Participation shall be effective at the
14beginning of the next pay period commencing after the
15election is filed with the board.

16(2) A member who elects to become a participant shall
17remain a participant for all future State service.

18(3) Any prior State or nonstate service credited in the
19system shall remain in the class or subclass of service in
20which it is credited on the effective date of participation.

21(4) A combined service employee shall not be eligible to
22receive an annuity from the system or a withdrawal of
23accumulated deductions until the employee has terminated
24State service.

25(5) A participant shall not be entitled to purchase any
26previous State service or creditable nonstate service.

27(6) The eligibility of a combined service employee for
28an annuity from the system and, if eligible, the amount of
29the annuity shall be as determined under this part.

<-30§ 5416. (Reserved).

1§ 5417.  Tax qualification.

2(a) Required distributions.--All payments pursuant to this 
3chapter shall start and be made in compliance with the minimum 
4distribution requirements and incidental death benefit rules of 
5IRC § 401(a).

6(b) Limitations.--The following shall apply:

7(1) (i) Except as provided under subparagraph (ii) and
8notwithstanding a provision of this part, a contribution
9or benefit related to the plan may not exceed any
10limitation under IRC § 415 with respect to governmental
11plans which is in effect on the date the contribution or
12benefit payment takes effect.

13(ii) An increase in a limitation under IRC § 415
14shall apply to all participants on and after the
15effective date of this section.

16(iii) For the purposes of this paragraph, the term
17"government plans" shall have the same meaning as the
18term has in IRC § 414(d).

19(2) (i) Except as provided under subparagraph (ii), an
20amendment of this part on or after the effective date of
21this section that increases contributions or benefits for
22active participants, inactive participants or
23participants receiving distributions shall not be deemed
24to provide for a contribution or benefit in excess of any
25limitation, adjusted on or after the effective date of
26this section, under IRC § 415 unless specifically
27provided by legislation.

28(ii) Notwithstanding subparagraph (i), an increase
29in benefits on or after the effective date of this
30section for a participant in the plan shall be authorized

1and apply to the fullest extent allowed by law.

2Section 313. (Reserved).

3Section 314. Section 5501.1(b)(7) and (8) of Title 71 are
4amended and subsection (b) is amended by adding a paragraph to
5read:

6§ 5501.1. Shared-risk member contributions for Class A-3 and
7Class A-4 service.

8* * *

9(b) Determination of shared-risk contribution rate.--

10* * *

11(7) For any fiscal year in which the actual
12contributions by the Commonwealth or an employer are lower
13than those required to be made under section 5507(d)
14[(relating to contributions by the Commonwealth and other
15employers)] (relating to contributions to the system by the 
16Commonwealth and other employers before July 1, 2015) or 
175507.1 (relating to contributions to the system by the 
18Commonwealth and other employers commencing July 1, 2015),
19the prospective shared-risk contribution rate for those
20employees whose employers are not making the contributions
21required by section 5507(d) shall be zero and shall not
22subsequently be increased, except as otherwise provided in
23this section.

24(8) If the actuary certifies that the accrued liability
25contributions calculated in accordance with the actuarial
26cost method provided in [section 5508(b)] section 5508
27(relating to actuarial cost method for fiscal years ending 
28before July 1, 2015) or 5508.1 (relating to actuarial cost 
29method for fiscal years beginning on or after July 1, 2015),
30as adjusted by the experience adjustment factor, are zero or

1less, then the shared-risk contribution rate for the next
2fiscal year shall be zero and shall not subsequently be
3increased, except as otherwise provided in this section.

4(9) For periods commencing on or after July 1, 2015, the
5determination of shared-risk member contribution rate shall
6be based on the annual interest rate adopted by the board for
7the calculation of the accrued liability contribution rate
8under section 5508.1(c) (relating to actuarial cost method 
9for fiscal years beginning on or after July 1, 2015).

10Section 315. The definition of "actuarially required
11contribution rate" in section 5501.2 of Title 71 is amended to
12read:

13§ 5501.2. Definitions.

14The following words and phrases when used in this chapter
15shall have the meanings given to them in this section unless the
16context clearly indicates otherwise:

17"Actuarially required contribution rate." The employer
18contribution rate as calculated pursuant to section 5508(a),
19(b), (c), (e) and (f) (relating to actuarial cost method for 
20fiscal years ending before July 1, 2015) or 5508.1(a), (b), (c), 
21(e) and (f) (relating to actuarial cost method for fiscal years 
22beginning on or after July 1, 2015).

23* * *

24Section 316. Sections 5502, 5503.1(a) and 5504 of Title 71
25are amended to read:

26§ 5502. Social Security integration member contributions.

27Except for any period of current service in which the making
28of regular member contributions has ceased solely by reason of
29section 5502.1 (relating to waiver of regular member
30contributions and Social Security integration member

1contributions) or any provision of this part relating to
2limitations under IRC § 401(a)(17) or 415(b), contributions
3shall be made on behalf of [a] an active member of any class who
4prior to March 1, 1974, has elected Social Security integration
5coverage. The amount of such contributions shall be 6 1/4% of
6that portion of his compensation as an active member in excess
7of the maximum wages taxable under the provisions of the Social
8Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), in
9addition to the regular member contributions which, after such
10election, shall be determined on the basis of the basic
11contribution rate of 5% and the additional member contribution
12of 1 1/4%: Provided, That a member may elect to discontinue
13Social Security integration coverage and shall thereafter be
14ineligible to accrue any further Social Security integration
15credits or any additional benefits on account of Social Security
16integration membership.

17§ 5503.1. Pickup contributions.

18(a) Treatment for purposes of IRC § 414(h).--All
19contributions to the fund required to be made under sections
205501 (relating to regular member contributions for current
21service), 5501.1 (relating to shared-risk member contributions 
22for Class A-3 and Class A-4 service), 5502 (relating to Social
23Security integration member contributions), 5503 (relating to
24joint coverage member contributions) and [section] 5505.1
25(relating to additional member contributions), with respect to
26current State service rendered by an active member on or after
27January 1, 1982, shall be picked up by the Commonwealth or other
28employer and shall be treated as the employer's contribution for
29purposes of IRC § 414(h).

30* * *

1§ 5504. Member contributions for the purchase of credit for
2previous State service or to become a full coverage
3member.

4(a) Amount of contributions for service in other than Class
5G through N.--

6(1) The contributions to be paid by an active member or
7eligible school employee for credit in the system for total
8previous State service other than service in Class G, Class
9H, Class I, Class J, Class K, Class L, Class M and Class N or
10to become a full coverage member shall be sufficient to
11provide an amount equal to the regular and additional
12accumulated deductions which would have been standing to the
13credit of the member for such service had regular and
14additional member contributions been made with full coverage
15in the class of service and at the rate of contribution
16applicable during such period of previous service and had his
17regular and additional accumulated deductions been credited
18with statutory interest during all periods of subsequent
19State service as an active member or inactive member on leave 
20without pay and school service as an active member or 
21inactive member on leave without pay of the Public School 
22Employees' Retirement System up to the date of purchase.

23(2) Notwithstanding paragraph (1), members with Class A-
243 State service shall make contributions and receive credit
25as if the previous State service was Class A-3 service, and
26members with Class A-4 State service shall make contributions
27and receive credit as if the previous State service was Class
28A-4 service, even if it would have been credited as a
29different class of service had the State employee been a
30member of the system at the time the service was performed

1unless it was mandatory that the State employee be an active
2member of the system and the previous State service is being
3credited as the result of a mandatory active membership
4requirement.

5(a.1) Converted county service.--No contributions shall be
6required to restore credit for previously credited State service
7in Class G, Class H, Class I, Class J, Class K, Class L, Class M
8and Class N. Such service shall be restored upon the
9commencement of payment of the contributions required to restore
10credit in the system for all other previous State service.

11(b) Certification and method of payment.--The amount payable
12shall be certified in each case by the board in accordance with
13methods approved by the actuary and shall be paid in a lump sum
14within 30 days or in the case of an active member or eligible
15school employee who is an active member of the Public School
16Employees' Retirement System may be amortized with statutory
17interest through salary deductions to the system in amounts
18agreed upon by the member and the board. The salary deduction
19amortization plans agreed to by members and the board may
20include a deferral of payment amounts and statutory interest
21until the termination of school service or State service or 
22beginning service as a participant <-without concurrently being an 
23active member or inactive member on leave without pay as the
24board in its sole discretion decides to allow. The board may
25limit the salary deduction amortization plans to such terms as
26the board in its sole discretion determines. In the case of an
27eligible school employee who is an active member of the Public
28School Employees' Retirement System, the agreed upon salary
29deductions shall be remitted to the Public School Employees'
30Retirement Board, which shall certify and transfer to the board

1the amounts paid.

2Section 317. Section 5505(b)(1), (c), (d) and (i)(4) of
3Title 71 are amended to read:

4§ 5505. Contributions for the purchase of credit for creditable
5nonstate service.

6* * *

7(b) Nonintervening military service.--

8(1) The amount due for the purchase of credit for
9military service other than intervening military service
10shall be determined by applying the member's basic
11contribution rate, the additional contribution rate plus the
12Commonwealth normal contribution rate for active members at
13the time of entry, subsequent to such military service, of
14the member into State service to his average annual rate of
15compensation over the first three years of such subsequent
16State service and multiplying the result by the number of
17years and fractional part of a year of creditable
18nonintervening military service being purchased together with
19statutory interest during all periods of subsequent State
20service as an active member or inactive member on leave 
21without pay and school service as an active member or 
22inactive member on leave without pay of the Public School 
23Employees' Retirement System to date of purchase. Upon
24application for credit for such service, payment shall be
25made in a lump sum within 30 days or in the case of an active
26member or eligible school employee who is an active member of
27the Public School Employees' Retirement System it may be
28amortized with statutory interest through salary deductions
29to the system in amounts agreed upon by the member and the
30board. The salary deduction amortization plans agreed to by

1members and the board may include a deferral of payment
2amounts and statutory interest until the termination of
3school service or State service or beginning service as a 
4participant<- without concurrently being an active member or 
5inactive member on leave without pay as the board in its sole
6discretion decides to allow. The board may limit salary
7deduction amortization plans to such terms as the board in
8its sole discretion determines. In the case of an eligible
9school employee who is an active member of the Public School
10Employees' Retirement System, the agreed upon salary
11deductions shall be remitted to the Public School Employees'
12Retirement Board, which shall certify and transfer to the
13board the amounts paid. Application may be filed for all such
14military service credit upon completion of three years of
15subsequent State service and shall be credited as Class A
16service.

17* * *

18(c) Intervening military service.--Contributions on account
19of credit for intervening military service shall be determined
20by the member's regular contribution rate, shared-risk 
21contribution rate, Social Security integration contribution 
22rate, the additional contribution rate which shall be applied
23only to those members who began service on or after the
24effective date of this amendatory act and compensation at the
25time of entry of the member into active military service,
26together with statutory interest during all periods of
27subsequent State service as an active member or inactive member 
28on leave without pay and school service as an active member or 
29inactive member on leave without pay of the Public School 
30Employees' Retirement System to date of purchase. Upon

1application for such credit the amount due shall be certified in
2the case of each member by the board in accordance with methods
3approved by the actuary, and contributions may be made by:

4(1) regular monthly payments during active military
5service; or

6(2) a lump sum payment within 30 days of certification;
7or

8(3) salary deductions to the system in amounts agreed
9upon by the member or eligible school employee who is an
10active member of the Public School Employees' Retirement
11System and the board.

12The salary deduction amortization plans agreed to by members and
13the board may include a deferral of payment amounts and
14statutory interest until the termination of school service or
15State service or beginning service as a participant <-without 
16concurrently being an active member or inactive member on leave 
17without pay as the board in its sole discretion decides to
18allow. The board may limit salary deduction amortization plans
19to such terms as the board in its sole discretion determines. In
20the case of an eligible school employee who is an active member
21of the Public School Employees' Retirement System, the agreed
22upon salary deductions shall be remitted to the Public School
23Employees' Retirement Board, which shall certify and transfer to
24the board the amounts paid.

25(d) Nonmilitary and nonmagisterial service.--Contributions
26on account of credit for creditable nonstate service other than
27military and magisterial service by State employees who first 
28become members of the system before January 1, 2011, or before 
29December 1, 2010, as a member of the General Assembly shall be
30determined by applying the member's basic contribution rate, the

1additional contribution rate plus the Commonwealth normal
2contribution rate for active members at the time of entry
3subsequent to such creditable nonstate service of the member
4into State service to his compensation at the time of entry into
5State service as a member of the system and multiplying the
6result by the number of years and fractional part of a year of
7creditable nonstate service being purchased together with
8statutory interest during all periods of subsequent State
9service as an active member or inactive member on leave without 
10pay and school service as an active member or inactive member on 
11leave without pay of the Public School Employees' Retirement 
12System to the date of purchase. Upon application for credit for
13such service payment shall be made in a lump sum within 30 days
14or in the case of an active member or eligible school employee
15who is an active member of the Public School Employees'
16Retirement System it may be amortized with statutory interest
17through salary deductions to the system in amounts agreed upon
18by the member and the board. The salary deduction amortization
19plans agreed to by members and the board may include a deferral
20of payment amounts and statutory interest until the termination
21of school service or State service or beginning service as a 
22participant as the board in its sole discretion decides to
23allow. The board may limit salary deduction amortization plans
24to such terms as the board in its sole discretion determines. In
25the case of an eligible school employee who is an active member
26of the Public School Employees' Retirement System, the agreed
27upon salary deduction shall be remitted to the Public School
28Employees' Retirement Board, which shall certify and transfer to
29the board the amounts paid.

30* * *

1(i) Purchases of nonstate service credit by State employees
2who first became members of the system on or after December 1,
32010.--

4* * *

5(4) The payment for credit purchased under this 
6subsection shall be certified in each case by the board in 
7accordance with methods approved by the actuary and shall be 
8paid in a lump sum within 30 days or in the case of an active 
9member or eligible school employee who is an active member of 
10the Public School Employees' Retirement System may be 
11amortized with statutory interest through salary deductions 
12to the system in amounts agreed upon by the member and the 
13board. The salary deduction amortization plans agreed to by 
14members and the board may include a deferral of payment 
15amounts and interest until the termination of school service 
16or State service or beginning service as a participant 
<-17without concurrently being an active member or inactive 
18member on leave without pay as the board in its sole 
19discretion decides to allow. The board may limit the salary 
20deduction amortization plans to such terms as the board in 
21its sole discretion determines. In the case of an eligible 
22school employee who is an active member of the Public School 
23Employees' Retirement System, the agreed upon salary 
24deductions shall be remitted to the Public School Employees' 
25Retirement Board, which shall certify and transfer to the 
26board the amounts paid.

27Section 318. (Reserved).

28Section 319. (Reserved).

29Section 320. Section 5505.1 of Title 71 is amended to read:

30§ 5505.1. Additional member contributions.

1In addition to regular or joint coverage member contributions
2and social security integration contributions, contributions
3shall be made on behalf of each active member, regardless of
4class of service, at the rate of 1 1/4% of compensation until
5such time as the actuary certifies that all accrued liability
6contributions have been completed in accordance with the
7actuarial cost method provided in section 5508(b) (relating to
8actuarial cost method for fiscal years ending before July 1, 
92015).

10Section 321. Section 5506 of Title 71, amended October 24,
112012 (P.L.1436, No.181), is amended to read:

12§ 5506. Incomplete payments.

13In the event that a member terminates State service or begins 
14service as a participant <-without concurrently being an active 
15member or inactive member on leave without pay or a multiple
16service member who is an active member of the Public School
17Employees' Retirement System terminates school service before
18the agreed upon payments for credit for previous State service,
19USERRA leave, creditable nonstate service, social security
20integration, full coverage membership or return of benefits on
21account of returning to State service or entering school service
22and electing multiple service have been completed, the member or
23multiple service member who is an active member of the Public
24School Employees' Retirement System shall have the right to pay
25within 30 days of termination of State service or school service
26or beginning service as a participant the balance due, including
27interest, in a lump sum and the annuity shall be calculated
28including full credit for the previous State service, creditable
29nonstate service, social security integration, or full coverage
30membership. In the event a member does not pay the balance due

1within 30 days of termination of State service or beginning 
2service as a participant or in the event a member dies in State
3service or within 30 days of termination of State service or 
4beginning service as a participant or in the case of a multiple
5service member who is an active member of the Public School
6Employees' Retirement System does not pay the balance due within
730 days of termination of school service or dies in school
8service or within 30 days of termination of school service and
9before the agreed upon payments have been completed, the present
10value of the benefit otherwise payable shall be reduced by the
11balance due, including interest, and the benefit payable shall
12be calculated as the actuarial equivalent of such reduced
13present value.

14Section 322. Section 5506.1(a) of Title 71 is amended to
15read:

16§ 5506.1. Annual compensation limit under IRC § 401(a)(17).

17(a) General rule.--In addition to other applicable
18limitations set forth in this part, and notwithstanding any
19provision of this part to the contrary, the annual compensation
20of each noneligible member and each participant taken into
21account for benefit purposes under this part shall not exceed
22the limitation under IRC § 401(a)(17). On and after January 1,
231996, any reference in this part to the limitation under IRC §
24401(a)(17) shall mean the Omnibus Budget Reconciliation Act of
251993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual
26compensation limit set forth in this subsection. The OBRA '93
27annual compensation limit is $150,000, as adjusted by the
28commissioner for increases in the cost of living in accordance
29with IRC § 401(a)(17)(B). The cost-of-living adjustment in
30effect for a calendar year applies to any determination period

1which is a period, not exceeding 12 months, over which
2compensation is determined, beginning in such calendar year. If
3a determination period consists of fewer than 12 months, the
4OBRA '93 compensation limit will be multiplied by a fraction,
5the numerator of which is the number of months in the
6determination period and the denominator of which is 12.

7* * *

8Section 323. (Reserved).

9Section 324. Section 5507(a), (b), (d), (e) and (f) of Title
1071, amended October 24, 2012 (P.L.1436, No.181), are amended to
11read:

12§ 5507. Contributions to the system by the Commonwealth and
13other employers before July 1, 2015.

14(a) Contributions on behalf of active members.--[The] Until 
15June 30, 2015, the Commonwealth and other employers whose
16employees are members of the system, and from January 1, 2015, 
17to June 30, 2015, the Commonwealth and other employers whose 
18employees are participants in the plan shall make contributions
19to the fund on behalf of all active members in such amounts as
20shall be certified by the board as necessary to provide,
21together with the members' total accumulated deductions, annuity
22reserves on account of prospective annuities other than those
23provided in sections 5708 (relating to supplemental annuities), 
245708.1 (relating to additional supplemental annuities), 5708.2 
25(relating to further additional supplemental annuities), 5708.3 
26(relating to supplemental annuities commencing 1994), 5708.4 
27(relating to special supplemental postretirement adjustment), 
285708.5 (relating to supplemental annuities commencing 1998), 
295708.6 (relating to supplemental annuities commencing 2002), 
305708.7 (relating to supplemental annuities commencing 2003) and
 

15708.8 (relating to special supplemental postretirement 
2adjustment of 2002), in accordance with the actuarial cost
3method provided in section 5508(a), (b), (c), (d) and (f)
4(relating to actuarial cost method for fiscal years ending 
5before July 1, 2015).

6(b) Contributions on behalf of annuitants.--[The] Until June 
730, 2015, the Commonwealth and other employers whose employees 
8are members of the system shall make contributions on behalf of
9annuitants in such amounts as shall be certified by the board as
10necessary to fund the liabilities for supplemental annuities in
11accordance with the actuarial cost method provided in section
125508(e) [(relating to actuarial cost method)].

13* * *

14(d) Payment of final contribution rate.--Notwithstanding the
15calculation of the actuarially required contribution rate and
16the provisions of subsections (a) and (b), the Commonwealth and
17other employers whose employees are members of the system shall
18make contributions to the fund on behalf of all active members
19and annuitants until June 30, 2015, in such amounts as shall be
20certified by the board in accordance with section 5508(i).

21(e) Benefits completion plan contributions.--In addition to 
22all other contributions required under this section and section 
235508, the Commonwealth and other employers whose employees are 
24members of the system shall make contributions until June 30, 
252015, as certified by the board pursuant to section 5941 
26(relating to benefits completion plan).

27(f) Contributions resulting from members reemployed from
28USERRA leave.--When a State employee reemployed from USERRA
29leave makes the member contributions required to be granted
30State service credit for the USERRA leave before July 1, 2015,

1either by actual payment or by actuarial debt under section 5506
2(relating to incomplete payments), then the Commonwealth
3employer or other employer by whom the State employee is
4employed at the time the member contributions are made, or the
5last employer before termination in the case of payment under
6section 5506, shall make whatever employer contributions would
7have been made under this section had the employee making the
8member contributions after being reemployed from USERRA leave
9continued to be employed in his State office or position instead
10of performing USERRA leave.

11Section 325. Title 71 is amended by adding a section to
12read:

13§ 5507.1. Contributions to the system by the Commonwealth and
14other employers commencing July 1, 2015.

15(a)  Contributions on behalf of members.--For fiscal years 
16beginning on or after July 1, 2015, the Commonwealth and other 
17employers whose employees are or were members of the system 
18shall make contributions to the fund on behalf of all members in 
19such amounts as shall be certified by the board as necessary to 
20provide, together with the members' total accumulated 
21deductions, annuity reserves on account of annuities including 
22those provided in sections 5708 (relating to supplemental 
23annuities), 5708.1 (relating to additional supplemental 
24annuities), 5708.2 (relating to further additional supplemental 
25annuities), 5708.3 (relating to supplemental annuities 
26commencing 1994), 5708.4 (relating to special supplemental 
27postretirement adjustment), 5708.5 (relating to supplemental
28annuities commencing 1998), 5708.6 (relating to supplemental 
29annuities commencing 2002), 5708.7 (relating to supplemental 
30annuities commencing 2003) and 5708.8 (relating to special
 

1supplemental postretirement adjustment of 2002), in accordance 
2with the actuarial cost method provided in section 5508.1 
3(relating to actuarial cost method for fiscal years beginning on 
4or after July 1, 2015).

5(b) Payment of employer contributions to the system.--

6(1)  Payment of employer normal contributions shall be as
7a percentage of compensation of active members.

8(2)  Payment of accrued liability contributions as
9modified by the experience adjustment factor shall be as a
10percentage of compensation of active members and active
11participants.

12(c)  Payment of final contribution rate.--Notwithstanding the
13calculation of the actuarially required contribution rate and
14the provisions of subsections (a) and (b), the Commonwealth and
15other employers whose employees are members of the system shall
16make contributions to the fund on behalf of all active members
17and annuitants after June 30, 2015, in such amounts as shall be
18certified by the board in accordance with section 5508.1(h).

19(d)  Benefits completion plan contributions.--In addition to
20the other contributions required under this section and section
215508.1, the Commonwealth and other employers whose employees are
22active members of the system shall make contributions after June
2330, 2015, as certified by the board under section 5941 (relating
24to benefits completion plan).

25(e) Contributions resulting from members reemployed from
26USERRA leave.--When a State employee reemployed from USERRA
27leave makes the member contributions required to be granted
28State service credit for the USERRA leave after June 30, 2015,
29either by actual payment or by actuarial debt under section 5506
30(relating to incomplete payments), the Commonwealth employer or

1other employer that employed the State employee when the member
2contributions are made or the last employer before termination
3in the case of payment under section 5506 shall make the
4employer contributions that would have been made under this
5section if the employee making the member contributions after he
6is reemployed from USERRA leave continued to be employed in his
7State office or position instead of performing USERRA leave.

8Section 326. Section 5508(a), (b), (c)(3), (e)(2), (f)(1),
9(h) and (i) of Title 71 are amended and subsection (c) is
10amended by adding a paragraph to read:

11§ 5508. Actuarial cost method for fiscal years ending before 
12July 1, 2015.

13(a) Employer contribution rate on behalf of active
14members.--[The] For the fiscal years ending before July 1, 2015, 
15the amount of the Commonwealth and other employer contributions
16on behalf of all active members shall be computed by the actuary
17as a percentage of the total compensation of all active members
18during the period for which the amount is determined and shall
19be so certified by the board. The actuarially required
20contribution rate on behalf of all active members shall consist
21of the employer normal contribution rate, as defined in
22subsection (b), and the accrued liability contribution rate as
23defined in subsection (c). The actuarially required contribution
24rate on behalf of all active members shall be modified by the
25experience adjustment factor as calculated in subsection (f).

26(b) Employer normal contribution rate.--[The] For the fiscal 
27years ending before July 1, 2015, the employer normal
28contribution rate shall be determined after each actuarial
29valuation on the basis of an annual interest rate and such
30mortality and other tables as shall be adopted by the board in

1accordance with generally accepted actuarial principles. The
2employer normal contribution rate shall be determined as a level
3percentage of the compensation of the average new active member,
4which percentage, if contributed on the basis of his prospective
5compensation through his entire period of active State service,
6would be sufficient to fund the liability for any prospective
7benefit payable to him in excess of that portion funded by his
8prospective member contributions, excluding shared-risk member 
9contributions.

10(c) Accrued liability contribution rate.--

11* * *

12(3) For the fiscal year beginning July 1, 2010, the 
13accrued liability contribution rate shall be computed as the 
14rate of total compensation of all active members which shall 
15be certified by the actuary as sufficient to fund in equal 
16dollar installments over a period of 30 years from July 1, 
172010, the present value of the liabilities for all 
18prospective benefits calculated as of the immediately prior 
19valuation date, including the supplemental benefits as 
20provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4, 
215708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits 
22payable from the retirement benefit plan established pursuant 
23to section 5941 (relating to benefits completion plan), in 
24excess of the actuarially calculated assets in the fund 
25(calculated recognizing all realized and unrealized 
26investment gains and losses each year in level annual 
27installments over five years), including the balance in the 
28supplemental annuity account, and the present value of 
29employer normal contributions and of member contributions 
30payable with respect to all active members, inactive members
 

1on leave without pay, vestees and special vestees on December 
231, 2009. If the accrued liability is changed by legislation 
3enacted subsequent to December 31, 2009, and before January 
41, 2014, such change in liability shall be funded in equal 
5dollar installments over a period of ten years from the first 
6day of July following the valuation date coincident with or 
7next following the date such legislation is enacted.

8(4) For the fiscal year beginning July 1, 2014, the
9accrued liability contribution rate shall be computed as
10provided for under this section, except that the rate shall
11be computed as a rate of total compensation of the active
12members and active participants for the fiscal year. In
13addition to any employer defined contributions made to the
14trust, the Commonwealth and other employers of participants
15shall make the accrued liability contributions to the fund
16certified by the board.

17* * *

18(e) Supplemental annuity contribution rate.--

19* * *

20(2) For fiscal years beginning on or after July 1, 2010, 
21and ending on or before June 30, 2015, contributions from the 
22Commonwealth and other employers whose employees are members 
23of the system required to provide for the payment of 
24supplemental annuities as provided in sections 5708, 5708.1, 
255708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8 
26shall be paid as part of the accrued liability contribution 
27rate as provided for in subsection (c)(3), and there shall 
28not be a separate supplemental annuity contribution rate 
29attributable to those supplemental annuities. In the event 
30that supplemental annuities are increased by legislation
 

1enacted subsequent to December 31, 2009, and before January 
21, 2014, the additional liability for the increase in 
3benefits shall be funded in equal dollar installments over a 
4period of ten years from the first day of July following the 
5valuation date coincident with or next following the date 
6such legislation is enacted.

7(f) Experience adjustment factor.--

8(1) For each [year] fiscal year ending before July 1, 
92015, after the establishment of the accrued liability
10contribution rate and the supplemental annuity contribution 
11rate for the fiscal year beginning July 1, 2010, any increase
12or decrease in the unfunded accrued liability and any 
13increase or decrease in the liabilities and funding for
14supplemental annuities, due to actual experience differing
15from assumed experience (recognizing all realized and 
16unrealized investment gains and losses over a five-year 
17period), changes in contributions caused by the final 
18contribution rate being different from the actuarially 
19required contribution rate, State employees making shared-
20risk member contributions, changes in actuarial assumptions
21or changes in the terms and conditions of the benefits
22provided by the system by judicial, administrative or other
23processes other than legislation, including, but not limited
24to, reinterpretation of the provisions of this part
25recognized by the actuarial valuations on December 31, 2010, 
26and through December 31, 2013, shall be amortized in equal
27dollar annual contributions over a period of 30 years
28beginning with the July 1 succeeding the actuarial valuation
29determining said increases or decreases.

30* * *

1(h) Temporary application of collared contribution rate.--
2The collared contribution rate for each [year] fiscal year 
3ending on or before June 30, 2015, shall be determined by
4comparing the actuarially required contribution rate calculated
5without regard for costs added by legislation to the prior
6year's final contribution rate. If, for any of the fiscal years
7beginning July 1, 2011, July 1, 2012, [and on or after] July 1,
82013, and July 1, 2014, the actuarially required contribution
9rate calculated without regard for costs added by legislation is
10more than 3%, 3.5%, 4.5% and 4.5% respectively, of the total<-
11compensation of all active members greater than the prior year's
12final contribution rate, then the collared contribution rate
13shall be applied and be equal to the prior year's final
14contribution rate increased by the respective percentage above
15of total compensation of all active members. Otherwise, and for
16all subsequent fiscal years, the collared contribution rate
17shall not be applicable. In no case shall the collared
18contribution rate be less than 4% of total compensation of all
19active members.

20(i) Final contribution rate.--For the fiscal year beginning
21July 1, 2010, the final contribution rate shall be 5% of total
22compensation of all active members. For each subsequent fiscal
23year for which the collared contribution rate is applicable, the
24final contribution rate shall be the collared contribution rate
25plus the costs added by legislation. For all other fiscal years
26ending before July 1, 2015, the final contribution rate shall be
27the actuarially required contribution rate, provided that the
28final contribution rate shall not be less than the employer
29normal contribution rate, as defined in subsection (b).

30Section 327. Title 71 is amended by adding a section to

1read:

2§ 5508.1.  Actuarial cost method for fiscal years beginning on
3or after July 1, 2015.

4(a)  Employer contributions on behalf of members.--For fiscal
5years beginning on or after July 1, 2015, the amount of the
6Commonwealth and other employer contributions on behalf of all
7members shall be computed by the actuary and certified by the
8board as an employer normal contribution rate as provided under
9subsection (b) and the accrued liability contribution amount as
10provided under subsection (c). The accrued liability
11contribution amount shall be modified by the experience
12adjustment factor as calculated in subsection (f).

13(b)  Employer normal contribution rate.--For fiscal years
14beginning on or after July 1, 2015, the employer normal
15contribution rate for all active members of the system shall be
16the employer normal contribution rate that would have been
17applicable if the employer normal contribution rate was
18determined as part of the December 31, 2014, actuarial valuation
19under section 5508(b) (relating to actuarial cost method for
20fiscal years ending before July 1, 2015) without regard to the
21provisions of this section and the inapplicability of the rate
22to a period on or after July 1, 2015.

23(c) Accrued liability contribution amount.--

24(1) For fiscal years beginning on or after July 1, 2015,
25the accrued liability contribution rate shall be computed as
26the rate of total compensation of all active members and
27active participants that shall be determined by the actuary
28as sufficient to fund <-the remaining amortization payments of
29the present value of the net liabilities calculated each year
30under section 5508(c)(3) and (4) and 5508(f) in equal dollar

1installments as a percentage of compensation of all active
2members and active <-participants over a period of 30 years
3from July 1, 2015, the present value of the liabilities for
4all prospective benefits of members of the system calculated
5as of the immediately prior valuation date, including the
6supplemental benefits as provided in sections 5708 (relating
7to supplemental annuities), 5708.1 (relating to additional
8supplemental annuities), 5708.2 (relating to further
9additional supplemental annuities), 5708.3 (relating to
10supplemental annuities commencing 1994), 5708.4 (relating to
11special supplemental postretirement adjustment), 5708.5
12(relating to supplemental annuities commencing 1998), 5708.6
13(relating to supplemental annuities commencing 2002), 5708.7
14(relating to supplemental annuities commencing 2003) and
155708.8 (relating to special supplemental postretirement
16adjustment of 2002), but excluding the benefits payable from
17the retirement benefit plan established under section 5941
18(relating to benefits completion plan) in excess of the
19actuarially calculated assets in the fund calculated
20recognizing the realized and unrealized investment gains and
21losses each year in level annual installments over five
22years, including the balance in the supplemental annuity
23account and the present value of employer normal
24contributions and of member contributions payable with
25respect to all active members, inactive members on leave
26without pay, vestees and special vestees on December 31,
272014. <-participants over the remaining funding period of each
28component part of those net liabilities from July 1, 2015.

29(2) If the accrued liability is changed by legislation
30enacted subsequent to December 31, 2014, the change in

1liability shall be funded in equal dollar installments as a
2percentage of compensation of all active members and active
3participants over a period of ten years from the first day of
4July following the valuation date coincident with or next
5following the date such legislation is enacted. The accrued
6liability contribution rate shall be determined after each
7actuarial valuation on the basis of an annual interest rate
8and the mortality and other tables adopted by the board in
9accordance with generally accepted actuarial principles.

10(d)  (Reserved).

11(e)  Supplemental annuity contribution amounts.--For fiscal
12years beginning on or after July 1, 2015, contributions from the
13Commonwealth and other employers whose employees are members of
14the system required to provide for the payment of supplemental
15annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3,
165708.4, 5708.5, 5708.6, 5708.7 and 5708.8 shall be paid as part
17of the accrued liability contribution rate as provided for in
18subsection (c), and there shall not be a separate supplemental
19annuity contribution amount attributable to those supplemental
20annuities. In the event that supplemental annuities are
21increased by legislation enacted subsequent to December 31,
222014, the additional liability for the increase in benefits
23shall be funded in equal dollar installments as a percentage of
24compensation of all active members and active participants over
25a period of ten years from the first day of July following the
26valuation date coincident with or next following the date such
27legislation is enacted as part of the accrued liability amount
28and not as a separate supplemental annuity contribution amount.

29(f)  Experience adjustment factor.--

30(1)  For each year after the establishment of the accrued

1liability contribution amount for the fiscal year beginning
2July 1, 2015, any increase or decrease in the unfunded
3accrued liability and any increase or decrease in the
4liabilities and funding for supplemental annuities due to
5actual experience differing from assumed experience,
6recognizing all realized and unrealized investment gains and
7losses over a five-year period, changes in contributions
8caused by the final contribution rate being different from
9the actuarially required contribution rate, State employees
10making shared-risk member contributions, changes in actuarial
11assumptions or changes in the terms and conditions of the
12benefits provided by the system by judicial, administrative
13or other processes other than legislation, including, but not
14limited to, reinterpretation of the provisions of this part,
15shall be amortized in equal dollar installments as a
16percentage of compensation of all active members and active
17participants over a period of 30 years beginning with the
18July 1 succeeding the actuarial valuation determining said
19increases or decreases.

20(2) The actuarially required contribution rate shall be
21the sum of the normal contribution rate determined under
22subsection (b)(2), the accrued liability contribution rate
23and the supplemental annuity contribution rate modified by
24the experience adjustment factor as calculated in paragraph
25(1).

26(g)  Temporary application of collared contribution rate.--
27The collared contribution rate for each fiscal year beginning on 
28or after July 1, 2015, shall be determined by comparing the 
29actuarially required contribution rate calculated without regard 
30for costs added by legislation to the prior year's final
 

1contribution rate. If, for any of the fiscal years beginning on 
2or after July 1, 2015, the actuarially required contribution 
3rate calculated without regard for costs added by legislation is 
4more than 4.5% of the total compensation of all active members 
5greater than the prior year's final contribution rate, the 
6collared contribution rate shall be applied and be equal to the 
7prior year's final contribution rate increased by 4.5% of total 
8compensation of active members. Otherwise and for all subsequent 
9fiscal years, the collared contribution rate shall not apply. 
10The collared contribution rate may not be less than 4% of total 
11compensation of all active members.

12(h)  Final contribution rate.--For the fiscal year beginning
13July 1, 2015, if the collared contribution rate is applicable,
14the final contribution rate shall be the collared contribution
15rate plus the costs added by legislation. For each subsequent
16fiscal year for which the collared contribution rate is
17applicable, the final contribution rate shall be the collared
18contribution rate plus the costs added by legislation. For all
19other fiscal years beginning on or after July 1, 2015, the final
20contribution rate shall be the actuarially required contribution
21rate provided the final contribution rate is not less than the
22employer normal contribution rate as provided under subsection
23(b).

24Section 328. Section 5509 of Title 71, amended October 24, 
252012 (P.L.1436, No.181), is amended to read:

26§ 5509. Appropriations and assessments by the Commonwealth.

27(a) Annual submission of budget.--The board shall prepare
28and submit annually an itemized budget consisting of the amounts
29necessary to be appropriated by the Commonwealth out of the
30General Fund and special operating funds and the amounts to be

1assessed the other employers required to meet the separate
2obligations to the fund and the trust accruing during the fiscal
3period beginning the first day of July of the following year.

4(b) Appropriation and payment.--The General Assembly shall
5make an appropriation sufficient to provide for the separate
6obligations of the Commonwealth to the fund and the trust. Such
7amount shall be paid by the State Treasurer through the
8Department of Revenue into the fund or trust, as the case may 
9be, in accordance with requisitions presented by the board. The
10contributions to the system by the Commonwealth on behalf of
11active members who are officers of the Pennsylvania State Police
12shall be charged to the General Fund and to the Motor License
13Fund in the same ratios as used to apportion the appropriations
14for salaries of members of the Pennsylvania State Police. The
15contributions to the system by the Commonwealth on behalf of
16active members who are enforcement officers and investigators of
17the Pennsylvania Liquor Control Board shall be charged to the
18General Fund and to the State Stores Fund.

19(c) Contributions from funds other than General Fund.--The
20amounts assessed other employers who are required to make the
21necessary separate contributions to the fund and the trust out
22of funds other than the General Fund shall be paid by such
23employers into the fund or trust, as the case may be, in
24accordance with requisitions presented by the board. The General
25Fund of the Commonwealth shall not be held liable to appropriate
26the moneys required to build up the reserves in the fund
27necessary for the payment of benefits from the system to
28employees or to make the employer defined contributions for 
29employees of such other employers. In case any such other
30employer shall fail to provide to the fund the moneys necessary

1for such purpose, then the service of such members of the system
2for such period for which money is not so provided shall be
3credited and pickup contributions with respect to such members
4shall continue to be credited to the members' savings account.
5The annuity to which such member is entitled shall be determined
6as actuarially equivalent to the present value of the maximum
7single life annuity of each such member reduced by the amount of
8employer contributions to the system payable on account and
9attributable to his compensation during such service, except 
10that no reduction shall be made as a result of the failure of an 
11employer to make contributions required for a period of USERRA 
12leave.

13Section 329. Sections 5701 and 5701.1 of Title 71 are
14amended to read:

15§ 5701. Return of total accumulated deductions.

16Any member upon termination of service may, in lieu of all
17benefits payable from the system under this chapter to which he
18may be entitled, elect to receive his total accumulated
19deductions.

20§ 5701.1. Transfer of accumulated deductions.

21When an employee of the Juvenile Court Judges' Commission
22elects membership in an independent retirement program pursuant
23to section 5301(f) (relating to mandatory and optional
24membership in the system and participation in the plan), the
25board shall transfer directly to the trustee or administrator of
26the independent retirement program all accumulated deductions
27resulting from service credited while an employee of the
28Juvenile Court Judges' Commission.

29Section 330. Sections 5702(a)(1) and 5704(c) of Title 71 are
30amended and the sections are amended by adding subsections to

1read:

2§ 5702. Maximum single life annuity.

3(a) General rule.--Any full coverage member who is eligible
4to receive an annuity pursuant to the provisions of section
55308(a) or (b) (relating to eligibility for annuities) who
6terminates State service, or if a multiple service member who is
7a school employee who is an active member of the Public School
8Employees' Retirement System who terminates school service,
9before attaining age 70 shall be entitled to receive a maximum
10single life annuity attributable to his credited service and
11equal to the sum of the following single life annuities
12beginning at the effective date of retirement:

13(1) A standard single life annuity multiplied by the sum
14of the products, determined separately for each class of
15service, obtained by multiplying the appropriate class of
16service multiplier by the ratio of years of service credited
17in that class to the total credited service. In case the
18member on the effective date of retirement is under
19superannuation age for any service, a reduction factor
20calculated to provide benefits actuarially equivalent to an
21annuity starting at superannuation age shall be applied to
22the product determined for that service. The class of service
23multiplier for any period of concurrent service shall be
24multiplied by the proportion of total State and school
25compensation during such period attributable to State service
26as a member of the system. In the event a member has two
27multipliers for one class of service the class of service
28multiplier to be used for calculating benefits for that class
29shall be the average of the two multipliers weighted by the
30proportion of compensation attributable to each multiplier

1during the three years of highest annual compensation in that
2class of service: Provided, That in the case of a member of
3Class E-1, a portion but not all of whose three years of
4highest annual judicial compensation is prior to January 1,
51973, two class of service multipliers shall be calculated on
6the basis of his entire judicial service, the one applying
7the judicial class of service multipliers effective prior to
8January 1, 1973 and the second applying the class of service
9multipliers effective subsequent to January 1, 1973. The
10average class of service multiplier to be used for
11calculating benefits for his judicial service shall be the
12average of the two calculated multipliers weighted by the
13proportion of compensation attributable to each of the
14calculated multipliers during the three years of highest
15annual compensation in that class of service.

16* * *

17(e) Coordination of benefits.--The determination and payment 
18of the maximum single life annuity under this section shall be 
19in addition to any payments a combined service employee may be 
20entitled to receive, has received or is receiving as a result of 
21being a participant in the plan.

22§ 5704. Disability annuities.

23* * *

24(c) Reduction on account of earned income.--Subsequent to
25January 1, 1972, payments on account of disability shall be
26reduced by that amount by which the earned income of the
27annuitant, as reported in accordance with section 5908(b)
28(relating to rights and duties of annuitants), for the preceding
29calendar year together with the disability annuity payments
30provided in this section other than subsection (b), for the

1year, exceeds the product of:

2[(i)] (1) the last year's salary of the annuitant as a
3[State employee] member of the system; and

4[(ii)] (2) the ratio of the current monthly payment to
5the monthly payment at the effective date of disability;

6Provided, That the annuitant shall not receive less than his
7member's annuity or the amount to which he may be entitled under
8section 5702 whichever is greater.

9* * *

10(h)  Coordination of benefits.--The determination and payment 
11of a disability annuity under this section is in addition to any 
12payments a combined service employee may be entitled to receive, 
13has received or is receiving as a result of being a participant 
14in the plan.<- A disability annuity may not be paid to a combined 
15service employee who is an active participant.

16Section 331. Section 5706(a), (a.1), (a.2), (b) and (c)(1)
17and (3) of Title 71 are amended to read:

18§ 5706. Termination of annuities.

19(a) General rule.--If the annuitant returns to State service
20or enters or has entered school service and elects multiple
21service membership, any annuity payable to him under this part
22shall cease effective upon the date of his return to State
23service or entering school service without regard to whether he 
24is a mandatory, optional or prohibited member of the system or 
25participant in the plan or, if a multiple service member, 
26without regard to whether he is a mandatory, optional or 
27prohibited member or participant<- of the Public School Employees' 
28Retirement System or School Employees' Defined Contribution Plan<-
29and in the case of an annuity other than a disability annuity
30the present value of such annuity, adjusted for full coverage in

1the case of a joint coverage member who makes the appropriate
2back contributions for full coverage, shall be frozen as of the
3date such annuity ceases. An annuitant who is credited with an
4additional 10% of Class A and Class C service as provided in
5section 5302(c) (relating to credited State service) and who
6returns to State service shall forfeit such credited service and
7shall have his frozen present value adjusted as if his 10%
8retirement incentive had not been applied to his account. In the
9event that the cost-of-living increase enacted December 18, 1979
10occurred during the period of such State or school employment,
11the frozen present value shall be increased, on or after the
12member attains superannuation age, by the percent applicable had
13he not returned to service. This subsection shall not apply in
14the case of any annuitant who may render services to the
15Commonwealth in the capacity of an independent contractor or as
16a member of an independent board or commission or as a member of
17a departmental administrative or advisory board or commission
18when such members of independent or departmental boards or
19commissions are compensated on a per diem basis for not more
20than 150 days per calendar year or as a member of an independent
21board or commission requiring appointment by the Governor, with
22advice and consent of the Senate, where the annual salary
23payable to the member does not exceed $35,000 and where the
24member has been an annuitant for at least six months immediately
25preceding the appointment. Such service shall not be subject to
26member contributions or be eligible for qualification as
27creditable State service or for participation in the plan, 
28mandatory pickup participant contributions or employer defined 
29contributions.

30(a.1) Return to State service during emergency.--When, in

1the judgment of the employer, an emergency creates an increase
2in the work load such that there is serious impairment of
3service to the public, an annuitant may be returned to State
4service for a period not to exceed 95 days in any calendar year
5without loss of his annuity. In computing the number of days an
6annuitant has returned to State service, any amount of time less
7than one-half of a day shall be counted as one-half of a day.
8For agencies, boards and commissions under the Governor's
9jurisdiction, the approval of the Governor that an emergency
10exists shall be required before an annuitant may be returned to
11State service. This service shall not be subject to member 
12contributions or be eligible for qualification as creditable 
13State service or for participation in the plan, mandatory pickup 
14participant contributions or employer defined contributions.

15(a.2) Return of benefits.--In the event an annuitant whose
16annuity ceases pursuant to this section receives any annuity
17payment, including a lump sum payment pursuant to section 5705
18(relating to member's options) on or after the date of his
19return to State service or entering school service, the
20annuitant shall return to the board the amount so received plus
21statutory interest. The amount payable shall be certified in
22each case by the board in accordance with methods approved by
23the actuary and shall be paid in a lump sum within 30 days or in
24the case of an active member or school employee who is an active
25member of the Public School Employees' Retirement System may be
26amortized with statutory interest through salary deductions to 
27the system in amounts agreed upon by the member and the board.
28The salary deduction amortization plans agreed to by the member
29and the board may include a deferral of payment amounts and
30statutory interest until the termination of school service or

1State service or beginning of service as a participant <-without 
2concurrently being an active member or inactive member on leave 
3without pay as the board in its sole discretion decides to
4allow. The board may limit salary deduction amortization plans
5to such terms as the board in its sole discretion determines. In
6the case of a school employee who is an active member of the
7Public School Employees' Retirement System, the agreed upon
8salary deductions shall be remitted to the Public School
9Employees' Retirement Board, which shall certify and transfer to
10the board the amounts paid.

11* * *

12(b) Subsequent discontinuance of service.--Upon subsequent
13discontinuance of service, such [member] terminating State 
14employee other than a former annuitant who had the effect of his
15frozen present value eliminated in accordance with subsection
16(c) or a former disability annuitant shall be entitled to an
17annuity which is actuarially equivalent to [the sum of] the
18present value as determined under subsection (a) [and] to which 
19shall be added, if the service after reemployment was as a 
20member of the system, the present value of a maximum single life
21annuity based on years of service credited subsequent to reentry
22in the system and his final average salary computed by reference
23to his compensation as a member of the system or as a member of 
24the Public School Employees' Retirement System during his entire
25period of State and school service.

26(c) Elimination of the effect of frozen present value.--

27(1) An annuitant who returns to State service as an 
28active member of the system and earns three eligibility
29points by performing credited State service following the
30most recent period of receipt of an annuity under this part,

1or an annuitant who enters school service <-other than as a 
2participant in the School Employees' Defined Contribution 
3Plan and:

4(i) is a multiple service member; or

5(ii) who elects multiple service membership, and

6earns three eligibility points by performing credited State
7service or credited school service following the most recent
8period of receipt of an annuity under this part, and who had
9the present value of his annuity frozen in accordance with
10subsection (a), shall qualify to have the effect of the
11frozen present value resulting from all previous periods of
12retirement eliminated, provided that all payments under
13Option 4 and annuity payments payable during previous periods
14of retirement plus interest as set forth in paragraph (3)
15shall be returned to the fund in the form of an actuarial
16adjustment to his subsequent benefits or in such form as the
17board may otherwise direct.

18* * *

19(3) In addition to any other adjustment to the present
20value of the maximum single life annuity that a member may be
21entitled to receive that occurs as a result of any other
22provision of law, the present value of the maximum single
23life annuity shall be reduced by all amounts paid or payable
24to him during all previous periods of retirement plus
25interest on these amounts until the date of subsequent
26retirement. The interest for each year shall be calculated
27based upon the annual interest rate adopted for that fiscal
28year by the board for the calculation of the normal
29contribution rate pursuant to section 5508(b) (relating to
30actuarial cost [method).] method for fiscal years ending
 

1before July 1, 2015) or for the calculation of the accrued 
2liability contribution rate under section 5508.1(c) (relating 
3to actuarial cost method for fiscal years beginning on or 
4after July 1, 2015) for fiscal years beginning on or after 
5July 1, 2015.

6Section 332. Section 5707(a), (b) and (f) of Title 71,
7amended October 24, 2012 (P.L.1436, No.181), are amended to
8read:

9§ 5707. Death benefits.

10(a) Members eligible for annuities.--Any active member,
11inactive member on leave without pay, combined service employee 
12who is an active participant or inactive participant on leave 
13without pay, vestee or current or former State employee 
14performing USERRA leave who dies and was eligible for an annuity
15in accordance with section 5308(a) or (b) (relating to
16eligibility for annuities) or special vestee who has attained
17superannuation age and dies before applying for a superannuation
18annuity shall be considered as having applied for an annuity to
19become effective the day before his death and in the event he
20has not elected an option or such election has not been approved
21prior to his death, it shall be assumed that he elected Option
221.

23(b) Members ineligible for annuities.--In the event of the
24death of a special vestee, an active member, an inactive member
25on leave without pay, combined service employee who is an active 
26participant or inactive participant on leave without pay or a 
27current or former State employee performing USERRA leave who is
28not entitled to a death benefit as provided in subsection (a),
29his designated beneficiary shall be paid the full amount of his
30total accumulated deductions.

1* * *

2(f) Members subject to limitations under section 5702(c).--
3Subject to the limitations contained in section 401(a)(9) of the
4Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
5401(a)(9)), the present value of any annuity in excess of that
6payable under section 5702 (relating to maximum single life
7annuity) that is not subject to the limitations under section
8415(b) of the Internal Revenue Code of 1986 shall be paid in a
9lump sum to the beneficiary designated by the member after the
10death of the member. A beneficiary receiving a benefit under
11this subsection shall not be able to elect a payment method
12otherwise allowed under section 5709(b)(2) and (3) (relating to
13payment of benefits from the system).

14Section 333. Sections 5708.1(f), 5708.2(f), 5708.3(f),
155708.5(f), 5708.6(f), 5708.7(f), 5708.8(g), 5709 heading, (a)
16and (b) and 5901(a), (c) and (d) of Title 71 are amended to
17read:

18§ 5708.1. Additional supplemental annuities.

19* * *

20(f) Funding.--The actuary shall annually certify the amount
21of appropriations for the next fiscal year needed to fund, over
22a period of ten years from July 1, 2002, the additional monthly
23supplemental annuity provided for in this section, which amounts 
24shall be paid during the period beginning July 1, 2002, and 
25ending June 30, 2010. For fiscal years beginning on or after 
26July 1, 2010, the additional liability provided in this section 
27shall be funded as part of the actuarial accrued liability as 
28provided in [section 5508 (relating to actuarial cost method).]
29sections 5508 (relating to actuarial cost method for fiscal 
30years ending before July 1, 2015) and 5508.1 (relating to
 

1actuarial cost method for fiscal years beginning on or after 
2July 1, 2015).

3* * *

4§ 5708.2. Further additional supplemental annuities.

5* * *

6(f) Funding.--The actuary shall annually estimate the amount
7of Commonwealth appropriations for the next fiscal year needed
8to fund, over a period of ten years from July 1, 2002, the
9additional monthly supplemental annuity provided for in this
10section, which amounts shall be paid during the period beginning 
11July 1, 2002, and ending June 30, 2010. For fiscal years 
12beginning on or after July 1, 2010, the additional liability 
13provided in this section shall be funded as part of the 
14actuarial accrued liability as provided in [section 5508 
15(relating to actuarial cost method).] sections 5508 (relating to 
16actuarial cost method for fiscal years ending before July 1, 
172015) and 5508.1 (relating to actuarial cost method for fiscal 
18years beginning on or after July 1, 2015).

19* * *

20§ 5708.3. Supplemental annuities commencing 1994.

21* * *

22(f) Funding.--For the period beginning July 1, 2002, and 
23ending June 30, 2010, the additional liability for the increase
24in benefits provided in this section shall be funded in equal
25dollar annual installments over a period of ten years beginning
26July 1, 2002. For fiscal years beginning on or after July 1, 
272010, the additional liability for the increase in benefits 
28provided in this section shall be funded as part of the 
29actuarial accrued liability as provided in [section 5508 
30(relating to actuarial cost method).] sections 5508 (relating to
 

1actuarial cost method for fiscal years ending before July 1, 
22015) and 5508.1 (relating to actuarial cost method for fiscal 
3years beginning on or after July 1, 2015).

4* * *

5§ 5708.5. Supplemental annuities commencing 1998.

6* * *

7(f) Funding.--For the period beginning July 1, 2002, and 
8ending June 30, 2010, the additional liability for the increase
9in benefits provided in this section shall be funded in equal
10dollar annual installments over a period of ten years beginning
11July 1, 2002. For fiscal years beginning on or after July 1, 
122010, the additional liability for the increase in benefits 
13provided in this section shall be funded as part of the 
14actuarial accrued liability as provided in [section 5508 
15(relating to actuarial cost method).] sections 5508 (relating to 
16actuarial cost method for fiscal years ending before July 1, 
172015) and 5508.1 (relating to actuarial cost method for fiscal 
18years beginning on or after July 1, 2015).

19* * *

20§ 5708.6. Supplemental annuities commencing 2002.

21* * *

22(f) Funding.--For the period beginning July 1, 2003, and 
23ending June 30, 2010, the additional liability for the increase
24in benefits provided in this section shall be funded in equal
25dollar annual installments over a period of ten years beginning
26July 1, 2003. For fiscal years beginning on or after July 1, 
272010, the additional liability for the increase in benefits 
28provided in this section shall be funded as part of the 
29actuarial accrued liability as provided in [section 5508 
30(relating to actuarial cost method).] sections 5508 (relating to
 

1actuarial cost method for fiscal years ending before July 1, 
22015) and 5508.1 (relating to actuarial cost method for fiscal 
3years beginning on or after July 1, 2015).

4* * *

5§ 5708.7. Supplemental annuities commencing 2003.

6* * *

7(f) Funding.--For the period beginning July 1, 2004, and 
8ending June 30, 2010, the additional liability for the increase
9in benefits provided in this section shall be funded in equal
10dollar annual installments over a period of ten years beginning
11July 1, 2004. For fiscal years beginning on or after July 1, 
122010, the additional liability for the increase in benefits 
13provided in this section shall be funded as part of the 
14actuarial accrued liability as provided in [section 5508 
15(relating to actuarial cost method).] sections 5508 (relating to 
16actuarial cost method for fiscal years ending before July 1, 
172015) and 5508.1 (relating to actuarial cost method for fiscal 
18years beginning on or after July 1, 2015).

19* * *

20§ 5708.8. Special supplemental postretirement adjustment of
212002.

22* * *

23(g) Funding.--For the period beginning July 1, 2003, and 
24ending June 30, 2010, the additional liability for the increase
25in benefits provided in this section shall be funded in equal
26dollar annual installments over a period of ten years beginning
27July 1, 2003. For fiscal years beginning on or after July 1, 
282010, the additional liability for the increase in benefits 
29provided in this section shall be funded as part of the 
30actuarial accrued liability as provided in [section 5508
 

1(relating to actuarial cost method).] sections 5508 (relating to 
2actuarial cost method for fiscal years ending before July 1, 
32015) and 5508.1 (relating to actuarial cost method for fiscal 
4years beginning on or after July 1, 2015).

5* * *

6§ 5709. Payment of benefits from the system.

7(a) Annuities.--Any annuity granted under the provisions of
8this part and paid from the fund shall be paid in equal monthly
9installments.

10(b) Death benefits.--If the amount of a death benefit
11payable from the fund to a beneficiary of a member under section
125707 (relating to death benefits) or under the provisions of
13Option 1 of section 5705(a)(1) (relating to member's options) is
14$10,000 or more, such beneficiary may elect to receive payment
15according to one of the following options:

16(1) a lump sum payment;

17(2) an annuity actuarially equivalent to the amount
18payable; or

19(3) a lump sum payment and an annuity such that the
20annuity is actuarially equivalent to the amount payable less
21the lump sum payment specified by the beneficiary.

22* * *

23§ 5901. The State Employees' Retirement Board.

24(a) Status and membership.--The board shall be an
25independent administrative board and consist of 11 members: the
26State Treasurer, ex officio, two Senators, two members of the
27House of Representatives and six members appointed by the
28Governor, one of whom shall be an annuitant of the system or a 
29participant in the plan who has terminated State service and is 
30receiving or is eligible to receive distributions, for terms of

1four years, subject to confirmation by the Senate. At least five
2board members shall be active members of the system or active 
3participants in the plan, and at least two shall have ten or
4more years of credited State service or shall have been active 
5participants in the plan for ten calendar years <-or have a 
6combination of years of credited State service in the system and 
7calendar years as active participants in the plan equal to ten 
8or more years. The chairman of the board shall be designated by
9the Governor from among the members of the board. Each member of
10the board who is a member of the General Assembly may appoint a
11duly authorized designee to act in his stead. In the event that 
12a board member, who is designated as an active participant or as 
13a participant in the plan who is receiving or is eligible to 
14receive distributions, receives a total distribution of his 
15interest in the plan, that board member may continue to serve on 
16the board for the remainder of his term.

17* * *

18(c) Oath of office.--Each member of the board shall take an
19oath of office that he will, so far as it devolves upon him,
20diligently and honestly, administer the affairs of said board, 
21the system and the plan and that he will not knowingly violate
22or willfully permit to be violated any of the provisions of law
23applicable to this part. Such oath shall be subscribed by the
24member taking it and certified by the officer before whom it is
25taken and shall be immediately filed in the Office of the
26Secretary of the Commonwealth.

27(d) Compensation and expenses.--The members of the board who
28are members of the system or participants in the plan shall
29serve without compensation but shall not suffer loss of salary
30or wages through serving on the board. The members of the board

1who are not members of the system or participants in the plan 
2shall receive $100 per day when attending meetings and all board
3members shall be reimbursed for any necessary expenses. However,
4when the duties of the board as mandated are not executed, no
5compensation or reimbursement for expenses of board members
6shall be paid or payable during the period in which such duties
7are not executed.

8* * *

9Section 334. Section 5902(a.1) introductory paragraph, (3),
10(5) and (6), (b), (c), (e), (h), (i), (j), (k), (l), (m) and (n)
11of Title 71, amended October 24, 2012 (P.L.1436, No.181), are
12amended and the section is amended by adding a subsection to
13read:

14§ 5902. Administrative duties of the board.

15* * *

16(a.1) Secretary.--The secretary shall act as chief
17administrative officer for the board with respect to both the 
18system and the plan. In addition to other powers and duties
19conferred upon and delegated to the secretary by the board, the
20secretary shall:

21* * *

22(3) Review and analyze proposed legislation and
23legislative developments affecting the system or the plan and
24present findings to the board, legislative committees, and
25other interested groups or individuals.

26* * *

27(5) Receive inquiries and requests for information
28concerning the system or the plan from the press,
29Commonwealth officials, State employees, the general public,
30research organizations, and officials and organizations from

1other states, and provide information as authorized by the
2board.

3(6) Supervise a staff of administrative, technical, and
4clerical employees engaged in record-keeping and clerical
5processing activities for both the system and the plan in
6maintaining files of members and participants, accounting for
7contributions, processing payments to annuitants and 
8terminated participants, preparing required reports, and
9retirement counseling. The board may utilize the staff of 
10employees provided for under this paragraph for both the 
11system and the plan but shall allocate the fees, costs and 
12expenses incurred under this paragraph between the system and 
13the plan as appropriate.

14(b) Professional personnel.--The board shall contract for
15the services of a chief medical examiner, an actuary, investment
16advisors and counselors, and such other professional personnel
17as it deems advisable. The board may, with the approval of the
18Attorney General, contract for legal services. The board may 
19utilize the same individuals and firms contracted under this 
20subsection for both the system and the plan but shall allocate 
21the fees, costs and expenses incurred under this subsection 
22between the system and the plan as appropriate.

23(c) Expenses.--

24(1) The board shall, through the Governor, submit to the
25General Assembly annually a budget covering the
26administrative expenses of [this part.] the system and a 
27separate budget covering the administrative expenses of the 
28plan which budgets shall include those expenses necessary to 
29establish the plan and trust.

30(2) Such expenses of the system as approved by the

1General Assembly in an appropriation bill shall be paid from
2investment earnings of the fund.

3(3) For fiscal years ending on or before June 30, 2015,
4such expenses of the plan as approved by the General Assembly
5in an appropriation bill shall be paid from the General Fund.
6For fiscal years beginning on or after July 1, 2015, such
7expenses of the plan as approved by the General Assembly
8shall be paid from interest, pursuant to section 5414(b)
9(relating to investments based on participants' investment
10allocation choices), or assessments on the balances of the
11participants' individual investment accounts.

12(4) Concurrently with its administrative budget, the
13board shall also submit to the General Assembly annually a
14list of proposed expenditures which the board intends to pay
15through the use of directed commissions, together with a list
16of the actual expenditures from the past year actually paid
17by the board through the use of directed commissions. All
18such directed commission expenditures shall be made by the
19board for the exclusive benefit of the system and its
20members.

21* * *

22(e) Records.--

23(1) The board shall keep a record of all its proceedings
24which shall be open to [inspection] access by the public,
25except as otherwise provided in this part or by other law.

26(2) Any record, material or data received, prepared,
27used or retained by the board or its employees, investment
28professionals or agents relating to an investment shall not
29constitute a public record subject to public [inspection] 
30access under the act of [June 21, 1957 (P.L.390, No.212),

1referred to as the Right-to-Know Law,] February 14, 2008 
2(P.L.6, No.3), known as the Right-to-Know Law, if, in the
3reasonable judgment of the board, the [inspection] access
4would:

5(i) in the case of an alternative investment or
6alternative investment vehicle, involve the release of
7sensitive investment or financial information relating to
8the alternative investment or alternative investment
9vehicle which the fund or trust was able to obtain only
10upon agreeing to maintain its confidentiality;

11(ii) cause substantial competitive harm to the
12person from whom sensitive investment or financial
13information relating to the investment was received; or

14(iii) have a substantial detrimental impact on the
15value of an investment to be acquired, held or disposed
16of by the fund or trust or would cause a breach of the
17standard of care or fiduciary duty set forth in this
18part.

19(3) (i) The sensitive investment or financial
20information excluded from [inspection] access under
21paragraph (2)(i), to the extent not otherwise excluded
22from [inspection] access, shall constitute a public
23record subject to public [inspection] access under the
24Right-to-Know Law once the board is no longer required by
25its agreement to maintain confidentiality.

26(ii) The sensitive investment or financial
27information excluded from [inspection] access under
28paragraph (2)(ii), to the extent not otherwise excluded
29from [inspection] access, shall constitute a public
30record subject to public [inspection] access under the

1Right-to-Know Law once:

2(A) the [inspection] access no longer causes
3substantial competitive harm to the person from whom
4the information was received; or

5(B) the entity in which the investment was made
6is liquidated;

7whichever is later.

8(iii) The sensitive investment or financial
9information excluded from [inspection] access under
10paragraph (2)(iii), to the extent not otherwise excluded
11from [inspection] access, shall constitute a public
12record subject to public [inspection] access under the
13Right-to-Know Law once:

14(A) the [inspection] access no longer has a
15substantial detrimental impact on the value of an
16investment of the fund or trust and would not cause a
17breach of the standard of care or fiduciary duty set
18forth in this part; or

19(B) the entity in which the investment was made
20is liquidated;

21whichever is later.

22(4) Except for the provisions of paragraph (3), nothing
23in this subsection shall be construed to designate any
24record, material or data received, prepared, used or retained
25by the board or its employees, investment professionals or
26agents relating to an investment as a public record subject
27to public [inspection] access under the Right-to-Know Law.

28(5)  Any record, material or data received, prepared,
29used or retained by the board or its employees, or agents
30relating to the contributions, account value or benefits

1payable to or on account of a participant shall not
2constitute a public record subject to public access under the
3Right-to-Know Law if, in the reasonable judgment of the
4board, the access would disclose any of the following:

5(i)  The existence, date, amount and any other
6information pertaining to the voluntary contributions,
7including rollover contributions or trustee-to-trustee
8transfers, of any participant.

9(ii)  The investment options selections of any
10participant.

11(iii)  The balance of a participant's individual
12investment account, including the amount distributed to
13the participant, investment gains or losses or rates of
14return.

15(iv)  The identity of a participant's designated
16beneficiary, successor payee or alternate payee.

17(v)  The benefit payment option of a participant.

18(6)  Nothing in this subsection shall be construed to
19designate any record, material or data received, prepared,
20used or retained by the board or its employees, or agents
21relating to the contributions, account value or benefits
22payable to or on account of a participant as a public record
23subject to public access under the Right-to-Know Law.

24(7) The following shall apply:

25(i) Nothing in this part shall be construed to mean
26that the release or publicizing of a record, material or
27data which would not constitute a public record under 
28this subsection shall be a violation of the board's
29fiduciary duties.

30(ii) This subsection shall apply to a record,

1material or data under this subsection, notwithstanding
2any of the following:

3(A) Whether the record, material or data was
4created, generated or stored before the effective
5date of this paragraph.

6(B) Whether the record, material or data was
7previously released or made public.

8(C) Whether a request for the record, material
9or data was made or is pending final response under
10the Right-to-Know Law.

11* * *

12(h) Regulations and procedures.--The board shall, with the
13advice of the Attorney General and the actuary, adopt and
14promulgate rules and regulations for the uniform administration
15of the system. The actuary shall approve in writing all
16computational procedures used in the calculation of
17contributions and benefits pertaining to the system, and the
18board shall by resolution adopt such computational procedures,
19prior to their application by the board. Such rules, regulations
20and computational procedures as so adopted from time to time and
21as in force and effect at any time, together with such tables as
22are adopted pursuant to subsection (j) as necessary for the
23calculation of annuities and other benefits, shall be as
24effective as if fully set forth in this part. Any actuarial
25assumption specified in or underlying any such rule, regulation
26or computational procedure and utilized as a basis for
27determining any benefit shall be applied in a uniform manner.

28(i) Data.--The board shall keep in convenient form such data
29as are stipulated by the actuary in order that an annual
30actuarial valuation of the various accounts of the fund can be

1completed within six months of the close of each calendar year.

2(j) Actuarial investigation and valuation.--The board shall
3have the actuary make an annual valuation of the various
4accounts of the fund within six months of the close of each
5calendar year. In the year 1975 and in every fifth year
6thereafter the board shall have the actuary conduct an actuarial
7investigation and evaluation of the system based on data
8including the mortality, service, and compensation experience
9provided by the board annually during the preceding five years
10concerning the members and beneficiaries of the system. The
11board shall by resolution adopt such tables as are necessary for
12the actuarial valuation of the fund and calculation of
13contributions, annuities and other benefits based on the reports
14and recommendations of the actuary. Within 30 days of their
15adoption, the secretary of the board shall cause those tables
16which relate to the calculation of annuities and other benefits
17to be published in the Pennsylvania Bulletin in accordance with
18the provisions of 45 Pa.C.S. § 725(a) (relating to additional
19contents of Pennsylvania Bulletin) and, unless the board
20specifies therein a later effective date, such tables shall
21become effective on such publication. The board shall include a
22report on the significant facts, recommendations and data
23developed in each five-year actuarial investigation and
24evaluation of the system in the annual financial statement
25published pursuant to the requirements of subsection (m) for the
26fiscal year in which such investigation and evaluation were
27concluded.

28(k) Certification of employer contributions to fund.--The
29board shall, each year in addition to the itemized budget
30required under section 5509 (relating to appropriations and

1assessments by the Commonwealth), certify, as a percentage of
2the members' payroll, the shared-risk contribution rate, the
3employers' contributions as determined pursuant to [section 5508
4(relating to actuarial cost method)] sections 5508 (relating to 
5actuarial cost method for fiscal years ending before July 1, 
62015) and 5508.1 (relating to actuarial cost method for fiscal 
7years beginning on or after July 1, 2015) necessary for the
8funding of prospective annuities for active members and the
9annuities of annuitants and certify the rates and amounts of the
10employers' normal contributions as determined pursuant to
11[section] sections 5508(b) and 5508.1(b), accrued liability
12contributions as determined pursuant to [section] sections
135508(c) and 5508.1(c) and (d), supplemental annuities
14contribution rate as determined pursuant to section 5508(e), the
15experience adjustment factor as determined pursuant to [section] 
16sections 5508(f) and 5508.1(f), the collared contribution rate 
17pursuant to section 5508(h) and the final contribution rate 
18pursuant to section 5508(i), which shall be paid to the fund and
19credited to the appropriate accounts. The board may allocate the 
20final contribution rate and certify various employer 
21contribution rates and amounts based upon the different benefit 
22eligibility, class of service multiplier, superannuation age and 
23other benefit differences resulting from State service credited 
24for individual members even though such allocated employer 
25contribution rate on behalf of any given member may be more or 
26less than 5% of the member's compensation for the period from 
27July 1, 2010, to June 30, 2011, or may differ from the prior 
28year's contribution for that member by more or less than the 
29percentages used to calculate the collared contribution rate for 
30that year and may be below any minimum contribution rate
 

1established for the collared contribution rate or final 
2contribution rate. These certifications shall be regarded as
3final and not subject to modification by the Secretary of the 
4Budget.

5(l) Member contributions.--The board shall cause all pickup
6contributions made on behalf of a member to be credited to the
7account of the member and credit to his account any other
8payment made by such member, including, but not limited to,
9amounts collected by the Public School Employees' Retirement
10System for the reinstatement of previous State service or
11creditable nonstate service and amounts paid to return benefits
12paid after the date of return to State service or entering
13school service representing lump sum payments made pursuant to
14section 5705(a)(4)(iii) (relating to member's options) and
15member's annuity payments, but not including other benefits
16returned pursuant to section 5706(a.2) or (a.3) (relating to
17termination of annuities), and shall pay all such amounts into
18the fund.

19(m) Annual financial statement.--The board shall prepare and
20have published, on or before July 1 of each year, [a financial
21statement] financial statements as of the calendar year ending
22December 31 of the previous year showing the condition of the
23fund, the trust and the various accounts, including, but not
24limited to, the board's accrual and expenditure of directed
25commissions, and setting forth such other facts,
26recommendations, and data as may be of use in the advancement of
27knowledge concerning annuities and other benefits provided by
28this part. The board shall submit said financial [statement] 
29statements to the Governor and shall file copies with the head
30of each department for the use of the State employees and the

1public.

2(n) Independent [audit] audits.--The board shall provide for
3[an annual audit] annual audits of the system and the plan by
4[an] independent certified public [accountant] accountants,
5which [audit] audits shall include the board's accrual and
6expenditure of directed commissions. The board may use the same 
7independent certified public accountant for the audits of both 
8the system and the plan.

9* * *

10(p)  Participant and employer contributions to the trust.--
11The board shall, each year in addition to any fees and itemized
12budget required under section 5509 (relating to appropriations
13and assessments by the Commonwealth), certify, as a percentage
14of each participant's compensation, the employer defined
15contributions, which shall be paid to the trust and credited to
16each participant's individual investment account. These
17certifications shall be regarded as final and not subject to
18modification by the Secretary of the Budget. The board shall
19cause all mandatory pickup participant contributions made on
20behalf of a participant and all voluntary contributions made by
21a participant to be credited to the participant's individual
22investment account.

23Section 335. Section 5903 heading, (a) and (c) of Title 71
24are amended and the section is amended by adding a subsection to
25read:

26§ 5903. Duties of the board to advise and report to heads of
27departments [and], members and participants.

28(a) Manual of regulations.--The board shall, with the advice
29of the Attorney General and the actuary, prepare and provide,
30within 90 days of the effective date of this part, a manual

1incorporating rules and regulations consistent with the
2provisions of this part to the heads of departments who shall
3make the information contained therein available to the general
4membership. The board shall thereafter advise the heads of
5departments within 90 days of any changes in such rules and
6regulations due to changes in the law or due to changes in
7administrative policies. As soon as practicable after the
8commissioner's announcement with respect thereto, the board
9shall also advise the heads of departments as to any cost-of-
10living adjustment for the succeeding calendar year in the amount
11of the limitation under IRC § 401(a)(17) and the dollar amounts
12of the limitations under IRC § [415(b)] 415. As soon as
13practicable after January 1 of each year, the board shall also
14advise the heads of departments of the employees for whom,
15pursuant to section 5502.1 (relating to waiver of regular member
16contributions and Social Security integration member
17contributions), pickup contributions are not to be made.

18* * *

19(b.1)  Participant status statements.--The board shall
20furnish annually to each participant, on or before April 1 and
21more frequently as the board may agree or as required by law, a
22statement for each participant in the plan showing the
23accumulated total defined contributions credited to the
24participant's individual investment account, the nature and type
25of investments and the investment allocation of future
26contributions as of December 31 of the previous year and
27requesting the participant to make any necessary correction or
28revision regarding his designated beneficiary.

29(c) Purchase of credit and full coverage membership
30certifications.--Upon receipt of an application from an active

1member or eligible school employee to purchase credit for
2previous State or creditable nonstate service, an election for 
3membership in a specific class of service, or an election to
4become a full coverage member, the board shall determine and
5certify to the member the amount required to be paid by the
6member. When necessary, the board shall certify to the previous
7employer the amount due in accordance with sections 5504
8(relating to member contributions for the purchase of credit for
9previous State service or to become a full coverage member) and
105505 (relating to contributions for the purchase of credit for
11creditable nonstate service).

12* * *

13Section 336. Section 5904(c)(2) of Title 71 is amended to
14read:

15§ 5904. Duties of the board to report to the Public School
16Employees' Retirement Board.

17* * *

18(c) Applications for benefits for school employees.--Upon
19receipt of notification and the required data from the Public
20School Employees' Retirement Board that a former State employee
21who elected multiple service has applied for a public school
22employees' retirement benefit or, in the event of his death, his
23legally constituted representative has applied for such benefit,
24the board shall:

25* * *

26(2) transfer to the Public School Employees' Retirement
27Fund the total accumulated deductions standing to such
28member's credit and the actuarial reserve required on account
29of years of credited service in the State system, final
30average salary determined on the basis of his compensation as
 

1a member in both systems and the average noncovered salary to
2be charged to the State accumulation account, the State
3Police benefit account or the enforcement officers' benefit
4account, as each case may require.

5* * *

6Section 337. Section 5905 heading, (b)(3), (c.1), (e.1)<- and
7(g) of Title 71, amended October 24, 2012 (P.L.1436, No.181),<-
8are amended and the section is amended by adding subsections to
9read:

10§ 5905. Duties of the board regarding applications and
11elections of members and participants.

12* * *

13(b) School employees electing multiple service status.--Upon
14receipt of notification from the Public School Employees'
15Retirement Board that a former State employee has become an
16active member in the Public School Employees' Retirement System
17and has elected to become a member with multiple service status
18the board shall:

19* * *

20(3) in case of a former State employee who is not
21receiving an annuity from the system and his total
22accumulated deductions were withdrawn, certify to the former
23State employee the accumulated deductions as they would have
24been at the time of his separation had he been a full
25coverage member together with statutory interest for all
26periods of subsequent State service eligible for membership 
27in the system and school service as a member of the Public 
28School Employees' Retirement System to the date of repayment.
29Such amount shall be restored by him and shall be credited
30with statutory interest as such payments are restored.

1* * *

2(c.1) Termination of service by a member.--In the case of
3any member terminating State service who is entitled to an
4annuity and who is not then a disability annuitant, the board
5shall advise such member in writing of any benefits from the 
6system to which he may be entitled under the provisions of this
7part and shall have the member prepare, on or before the date of
8termination of State service, one of the following three forms,
9a copy of which shall be given to the member and the original of
10which shall be filed with the board:

11(1) an application for the return of total accumulated
12deductions;

13(2) an election to vest his retirement rights and, if he
14is a joint coverage member and so desires, elect to become a
15full coverage member and agree to pay within 30 days of the
16date of termination of service the lump sum required; or

17(3) an application for an immediate annuity and, if he
18desires:

19(i) an election to convert his medical, major
20medical and hospitalization insurance coverage to the
21plan for State annuitants; and

22(ii) if he is a joint coverage member, an election
23to become a full coverage member and an agreement to pay
24within 30 days of date of termination of service the lump
25sum required.

26(c.2) Termination of service by a participant.--In the case
27of a participant terminating State service, the board shall
28advise the participant and, if the participant is married, the
29board may advise the participant's spouse, in writing, of the
30vested accumulated total defined contributions credited to the

1participant's individual investment account as of the date
2stated in the writing, any notices regarding rollover or other
3matters required by IRC or other law, the obligation of the
4participant to commence distributions from the plan by the
5participant's required beginning date and the ability to receive
6all or part of the vested balance in the participant's
7individual investment account in a lump sum or in such other
8form as the board may authorize or as required by law.

9* * *

<-10(e.1) Notification to vestees and special vestees 
11approaching superannuation age.--The board shall notify each 
12vestee and special vestee who is not an active participant or 
13inactive participant on leave without pay in writing 90 days 
14prior to his attainment of superannuation age that he shall 
15apply for his annuity within 90 days of attainment of 
16superannuation age; that, if he does so apply, his effective 
17date of retirement will be the date of attainment of 
18superannuation age; that, if he does not so apply but defers his 
19application to a later date, his effective date of retirement 
20will be the date of filing such application or the date 
21specified on the application, whichever is later; and that, if 
22he does not file an application within seven years after 
23attaining superannuation age, he shall be deemed to have elected 
24to receive his total accumulated deductions upon attainment of 
25superannuation age.

26(e.2)  Notification to inactive participants approaching
27required beginning date.--The board shall notify each inactive
28participant who has terminated State service and had not
29commenced distribution by 90 days before the participant's
30required beginning date and, if the participant is married, the

1board may advise the participant's spouse, in writing, that the
2inactive participant has an obligation to commence distributions
3by the required beginning date in a form and manner required by
4IRC § 401(a)(9) and other applicable provisions of the IRC.

5* * *

6(f.1)  Initial payment to a participant.--The board shall
7make the initial payment to a participant who has applied for a
8distribution within 60 days of the filing of his application.

9(g) Death benefits.--Upon receipt of notification from the
10head of a department of the death of an active member, a member 
11performing USERRA leave [or], a member on leave without pay, an 
12active participant, an inactive participant on leave without pay 
13or a former participant performing USERRA leave, the board shall
14advise the designated beneficiary of the benefits to which he is
15entitled, and shall make the first payment to the beneficiary
16within 60 days of receipt of certification of death and other
17necessary data. If no beneficiary designation is in effect at
18the date of the member's death or no notice has been filed with
19the board to pay the amount of the benefits to the member's
20estate, the board is authorized to pay the benefits to the
21executor, administrator, surviving spouse or next of kin of the
22deceased member, and payment pursuant hereto shall fully
23discharge the fund from any further liability to make payment of
24such benefits to any other person. If the surviving spouse or
25next of kin of the deceased member cannot be found for the
26purpose of paying the benefits for a period of seven years from
27the date of death of the member, then the benefits shall be
28escheated to the Commonwealth for the benefit of the fund. If no 
29beneficiary designation is in effect at the date of a 
30participant's death or no notice has been filed with the board
 

1to pay the amount of the benefits to the participant's estate, 
2the board may pay the benefits to the surviving spouse, 
3executor, administrator or next of kin of the deceased 
4participant and payment pursuant hereto shall fully discharge 
5the fund from any further liability to make payment of such 
6benefits to any other person.

7* * *

8Section 338. (Reserved).

9Section 339. Section 5906(a)(3), (b), (d), (e), (g), (h),
10(i) and (l) of Title 71<-, amended October 24, 2012 (P.L.1436, 
11No.181), are amended and the section is amended by adding a
12subsection to read:

13§ 5906. Duties of heads of departments.

14(a) Status of members and participants.--The head of
15department shall, at the end of each pay period, notify the
16board in a manner prescribed by the board of salary changes
17effective during that period for any members and participants
18of the department, the date of all removals from the payroll,
19and the type of leave of any members and participants of the
20department who have been removed from the payroll for any time
21during that period, and:

22* * *

23(3) if the removal is due to termination of State
24service, he shall furnish the board with a complete State
25service record, including service in other departments or
26agencies, or creditable nonstate service and;

27(i) in the case of death of the member or 
28participant the head of the department shall so notify
29the board;

30(ii) in the case of a service connected disability

1of a member the head of department shall, to the best of
2his ability, investigate the circumstances surrounding
3the disablement of the member and submit in writing to
4the board information which shall include but not
5necessarily be limited to the following: date, place and
6time of disablement to the extent ascertainable; nature
7of duties being performed at such time; and whether or
8not the duties being performed were authorized and
9included among the member's regular duties. In addition,
10the head of department shall furnish in writing to the
11board all such other information as may be related to the
12member's disablement;

13(iii) in the case of a member terminating from The
14Pennsylvania State University who is a member of the
15system with five or more but less than ten eligibility
16points and who has terminated State service on June 30,
171997, because of the transfer of his job position or
18duties to a controlled organization of the Penn State
19Geisinger Health System or because of the elimination of
20his job position or duties due to the transfer of other
21job positions or duties to a controlled organization of
22the Penn State Geisinger Health System, the head of the
23department shall so certify to the board.

24(b) Records and information.--At any time at the request of
25the board and at termination of service of a member or a 
26participant, the head of department shall furnish service and
27compensation records and such other information as the board may
28require and shall maintain and preserve such records as the
29board may direct for the expeditious discharge of its duties.

30* * *

1(c.1) Participant and employer defined contributions.--The
2head of the department shall:

3(1) Cause the mandatory pickup participant contributions
4on behalf of a participant to be made and cause to be
5deducted any voluntary contributions authorized by a
6participant.

7(2) Cause the employer defined contributions on behalf
8of a participant to be made.

9(3) Notify the board at times and in a manner prescribed
10by the board of the compensation of any participant to whom
11the limitation under IRC § 401(a)(17) either applies or is
12expected to apply and cause the participant's contributions
13to be deducted from payroll to cease at the limitation under
14IRC § 401(a)(17) on the payroll date if and when such limit
15shall be reached.

16(4) Certify to the State Treasurer the amounts picked up
17and deducted and the employer defined contributions being
18made and send the total amount picked up, deducted and
19contributed together with a duplicate of the voucher to the
20secretary of the board every pay period or on such schedule
21as established by the board.

22(d) New employees subject to mandatory membership or 
23participation.--Upon the assumption of duties of each new State
24employee whose membership in the system or participation in the<- 
25plan is mandatory, the head of department shall cause an
26application for membership or participation and a nomination of
27beneficiary, who shall be the participant's spouse if the 
28participant is married, unless the spouse otherwise consents, to
29be made by such employee and filed with the board and shall make
30pickup contributions or mandatory pickup participant
 

1contributions from the effective date of State employment.

2(e) New employees subject to optional membership or 
3participation.--The head of department shall, upon the
4employment or entering into office of any State employee whose
5membership in the system or participation in the plan is not
6mandatory, inform such employee of his opportunity to become a
7member of the system or participant in the plan. If such
8employee so elects, the head of department shall cause an
9application for membership and a nomination of beneficiary, who 
10shall be the participant's spouse if the participant is married, 
11unless the spouse otherwise consents, to be made by him and
12filed with the board and shall cause proper contributions to be
13made from the effective date of membership or participation.

14* * *

15(g) Former school employee contributors.--

16(1) The head of department shall, upon the employment of
17a former contributor to the Public School Employees'
18Retirement System who is not an annuitant of the Public
19School Employees' Retirement System, advise such employee of
20his right to elect within 365 days of entry into the system
21to become a multiple service member, and in the case of any
22such employee who so elects and has withdrawn his accumulated
23deductions, require him to reinstate his credit in the Public
24School Employees' Retirement System. The head of the
25department shall advise the board of such election.

26(2) Paragraph (1) shall not apply to a State employee
27who is employed in a position where he is or may be a
28participant in the plan <-other than by an election under
29section 5416 (relating to election by members to be
30participants).

1(h) Former school employee annuitants.--

2(1) The head of department shall, upon the employment of
3an annuitant of the Public School Employees' Retirement
4System who applies for membership in the system, advise such
5employee that he may elect multiple service membership within
6365 days of entry into the system and if he so elects his
7public school employee's annuity will be discontinued
8effective upon the date of his return to State service and,
9upon termination of State service and application for an
10annuity, the annuity will be adjusted in accordance with
11section 5706 (relating to termination of annuities). The head
12of department shall advise the board of such election.

13(2) Paragraph (1) shall not apply to a State employee
14who is employed in a position where he is or may be a
15participant in the plan <-other than by an election under
16section 5416.

17(i) Annual statement to members.--Annually, upon receipt
18from the board, the head of department shall furnish to each
19member the statement specified in section 5903(b) (relating to
20duties of the board to advise and report to heads of departments
21[and], members and participants).

22* * *

23(l) State employees performing USERRA or military-related
24leave of absence.--The head of department shall report to the
25board any State employee who ceases to be an active member or 
26active participant to perform USERRA service, or who is granted
27a leave of absence under 51 Pa.C.S. § 4102 (relating to leaves
28of absence for certain government employees) or a military leave
29of absence under 51 Pa.C.S. § 7302 (relating to granting
30military leaves of absence), the date on which the USERRA

1service, leave of absence or military leave of absence began,
2the date on which the State employee is reemployed from USERRA
3leave or returns after the leave of absence or military leave of
4absence, if the event occurs, and any other information the
5board may require or direct.

6* * *

7Section 340. Section 5907 heading, (a), (e) and (f)<-, (f), 
8(g) and (h) of Title 71 are amended and the section is amended
9by adding subsections to read:

10§ 5907. Rights and duties of State employees [and], members and 
11participants.

12(a) Information on new employees.--Upon his assumption of
13duties or becoming a participant<- each new State employee or 
14participant shall furnish the head of department with a complete
15record of his previous State service, his school service or
16creditable nonstate service, the name and address of his spouse, 
17if applicable, if he is, or is eligible to be, a participant in 
18the plan and proof of his date of birth and current status in
19the system and the plan and in the Public School Employees'
20Retirement System <-and the School Employees' Defined Contribution 
21Plan. Willful failure to provide the information required by
22this subsection to the extent available upon entrance into the
23system shall result in the forfeiture of the right of the member
24to subsequently assert any right to benefits based on any of the
25required information which he failed to provide. In any case in
26which the board finds that a member is receiving an annuity
27based on false information, the total amount received predicated
28on such false information together with statutory interest
29doubled and compounded shall be deducted from the present value
30of any remaining benefits to which the member is legally

1entitled.

2* * *

3(b.1) Application for participation.--On or after January 1, 
42015, in the case of a new<- an employee who is not currently a 
5participant in the plan and whose participation is mandatory, or 
6in the case of a new an<- employee whose participation is not 
7mandatory but is permitted and who desires to become a 
8participant in the plan, the new<- employee shall execute an 
9application for participation and a nomination of a beneficiary, 
10who shall be the participant's spouse if the participant is 
11married, unless the spouse otherwise consents.

12* * *

13(d.2)  Contributions for USERRA leave.--Any active
14participant or inactive participant on leave without pay or
15former participant who was reemployed from USERRA leave who
16desires to make mandatory pickup participant contributions and
17voluntary contributions for his USERRA leave shall so notify the
18board within the time period required under 38 U.S.C. Ch. 43
19(relating to employment and reemployment rights of members of
20the uniformed services) and IRC § 414(u) of his desire to make
21such contributions. Upon making the permitted mandatory pickup
22participant contributions within the allowed time period, the
23head of the department shall make the corresponding employer
24defined contributions at the same time.

25(d.3) Voluntary contributions by a participant.--Any
26participant who desires to make voluntary contributions to be
27credited to his individual investment account shall notify the
28board and, upon compliance with the requirements, procedures and
29limitations established by the board in the plan document, may
30do so subject to the limitations under IRC §§ 401(a) and 415 and

1other applicable law.

2(e) Beneficiary for death benefits from system.--Every
3member shall nominate a beneficiary by written designation filed
4with the board as provided in section 5906(d) or (e) (relating
5to duties of heads of departments) to receive the death benefit
6payable under section 5707 (relating to death benefits) or the
7benefit payable under the provisions of Option 1 of section
85705(a)(1) (relating to member's options). Such nomination may
9be changed at any time by the member by written designation
10filed with the board. A member may also nominate a contingent
11beneficiary or beneficiaries to receive the death benefit
12provided under section 5707 or the benefit payable under the
13provisions of Option 1 of section 5705(a)(1).

14(e.1) Beneficiary for death benefits from plan.--Every
15participant shall nominate a beneficiary by written designation
16filed with the board as provided in section 5906(d) or (e) to
17receive the death benefit payable under section 5408 (relating
18to death benefits). A participant may also nominate a contingent
19beneficiary or beneficiaries to receive the death benefit
20provided under section 5408. The nomination may be changed at
21any time by the participant by written designation filed with
22the board, provided that, if the participant is married, the
23participant's spouse consents to the change unless the change is
24to name the spouse as beneficiary or is limited to contingent
25beneficiaries. If the spouse of a participant in the plan is 
26deemed to be the beneficiary by operation of law, the person 
27last nominated as beneficiary in writing filed with the board 
28shall become the contingent beneficiary.

29(e.2) Beneficiary for combined service employee.--A combined
30service employee may designate or nominate different persons to

1be beneficiaries, survivor annuitants and successor payees for
2his benefits from the system and the plan.

3(f)  Termination of service by members.--Each member who
4terminates State service and who is not then a disability
5annuitant shall execute on or before the date of termination of
6service the appropriate application, duly attested by the member
7or his legally constituted representative, electing to:

8(1)  withdraw his total accumulated deductions; or

9(2)  vest his retirement rights; and if he is a joint
10coverage member, and so desires, elect to become a full
11coverage member and agree to pay within 30 days of the date
12of termination of service the lump sum required; or

13(3)  receive an immediate annuity and may,

14(i)  if eligible, elect to convert his medical, major
15medical, and hospitalization coverage to the plan for
16State annuitants; and

17(ii)  if he is a joint coverage member, elect to
18become a full coverage member and agree to pay within 30
19days of date of termination of service the lump sum
20required.

21* * *<-

<-22(g) Vesting of retirement rights.--If a member elects to
23vest his retirement rights he shall nominate a beneficiary by
24written designation filed with the board and; if the member is 
25not an active participant or inactive participant on leave 
26without pay, he may anytime thereafter, withdraw the total
27accumulated deductions standing to his credit or apply for an
28annuity.

29(g.1) Deferral of retirement rights.--If a participant
30terminates State service and does not commence receiving a

1distribution, the participant shall nominate a beneficiary, who
2shall be the participant's spouse if the participant is married,
3unless the spouse otherwise consents by written designation
4filed with the board, and the participant may any time
5thereafter, but no later than the participant's required
6beginning date, withdraw the vested accumulated total defined
7contributions standing to the participant's credit or apply for
8another form of distribution required by law or authorized by
9the board.

<-10(h) Vestees and special vestees attaining superannuation
11age.--Upon attainment of superannuation age a vestee or special
12vestee who is not an active participant or inactive participant
13on leave without pay shall execute and file an application for
14an annuity. Any such application filed within 90 days after
15attaining superannuation age shall be effective as of the date
16of attainment of superannuation age. Any application filed after
17such period shall be effective as of the date it is filed with
18the board, subject to the provisions of section 5905(f)
19(relating to duties of the board regarding applications and
20elections of members). If a vestee or special vestee who is not
21an active participant or inactive participant on leave without
22pay does not file an application within seven years after
23attaining superannuation age, he shall be deemed to have elected
24to receive his total accumulated deductions upon attainment of
25superannuation age.

26* * *

27(l) Continuing obligation regarding spouses.--A participant
28shall have the continuing obligation to notify the board in
29writing of any change in marital status and, if applicable, the
30name and current address of the participant's spouse.

1* * *

2Section 341. Sections 5931(b), 5932, 5934, 5935, 5936, 5937,
35938, 5939, 5951 and 5953 of Title 71 are amended to read:

4§ 5931. Management of fund and accounts.

5* * *

6(b) Crediting of interest.--The board, annually, shall allow
7the required interest on the mean amount for the preceding year
8to the credit of each of the accounts other than the individual 
9investment accounts. The amount so allowed shall be credited
10thereto by the board and transferred from the interest reserve
11account.

12* * *

13§ 5932. State Employees' Retirement Fund.

14(a) General rule.--The fund shall consist of all balances in
15the several separate accounts set apart to be used under the
16direction of the board for the benefit of members of the system;
17and the Treasury Department shall credit to the fund all moneys
18received from the Department of Revenue arising from the
19contributions relating to or on behalf of members of the system
20required under the provisions of Chapter 55 (relating to
21contributions), and any income earned by the investments or
22moneys of said fund. There shall be established and maintained
23by the board the several ledger accounts specified in sections
245933 (relating to members' savings account), 5934 (relating to
25State accumulation account), 5935 (relating to annuity reserve
26account), 5936 (relating to State Police benefit account), 5937
27(relating to enforcement officers' benefit account), 5938
28(relating to supplemental annuity account) and 5939 (relating to
29interest reserve account).

30(b) Individual investment accounts and trust.--The
 

1individual investment accounts that are part of the trust shall 
2not be part of the fund. Mandatory pickup participant 
3contributions, voluntary contributions and employer defined 
4contributions made under this part and any income earned by the 
5investment of such contributions shall not be paid or credited 
6to the fund but shall be paid to the trust and credited to the 
7individual investment accounts.

8§ 5934. State accumulation account.

9The State accumulation account shall be the ledger account to 
10which shall be credited all contributions of the Commonwealth or 
11other employers whose employees are members of the system and 
12made in accordance with the provisions of [section 5507(a) or 
13(d) (relating to contributions by the Commonwealth and other 
14employers)] sections 5507(a) or (d) (relating to contributions 
15to the system by the Commonwealth and other employers before 
16July 1, 2015) and 5507.1 (relating to contributions to the 
17system by the Commonwealth and other employers commencing July 
181, 2015) except that the amounts received under the provisions 
19of the act of May 12, 1943 (P.L.259, No.120), and the amounts 
20received under the provisions of the Liquor Code, act of April 
2112, 1951 (P.L.90, No.21), shall be credited to the State Police 
22benefit account or the enforcement officers' benefit account as 
23the case may be. All amounts transferred to the fund by county 
24retirement systems or pension plans in accordance with the 
25provisions of section 5507(c) also shall be credited to the 
26State accumulation account. All amounts transferred to the fund 
27by the Public School Employees' Retirement System in accordance 
28with section 5303.2(e) (relating to election to convert school 
29service to State service), except amounts credited to the 
30members' savings account, and all amounts paid by the Department
 

1of Corrections in accordance with section 5303.2(f) also shall 
2be credited to the State accumulation account. The State 
3accumulation account shall be credited with valuation interest. 
4The reserves necessary for the payment of annuities and death 
5benefits resulting from membership in the system as approved by 
6the board and as provided in Chapter 57 (relating to benefits) 
7shall be transferred from the State accumulation account to the 
8annuity reserve account provided for in section 5935 (relating 
9to annuity reserve account), except that the reserves necessary 
10on account of a member who is an officer of the Pennsylvania 
11State Police or an enforcement officer shall be transferred from 
12the State accumulation account to the State Police benefit 
13account provided for in section 5936 (relating to State Police 
14benefit account) or to the enforcement officers' benefit account 
15as provided for in section 5937 (relating to enforcement 
16officers' benefit account) as the case may be. The reserves 
17necessary for the payment of supplemental annuities in excess of 
18those reserves credited to the supplemental annuity account on 
19June 30, 2010, shall be transferred from the State accumulation 
20account to the supplemental annuity account. In the event that 
21supplemental annuities are increased by legislation enacted 
22after December 31, 2009, the necessary reserves shall be 
23transferred from the State accumulation account to the 
24supplemental annuity account.

25§ 5935. Annuity reserve account.

26(a) Credits and charges to account.--The annuity reserve
27account shall be the ledger account to which shall be credited
28the reserves held for payment of annuities and death benefits on
29account of all annuitants except in the case of members who are
30officers of the Pennsylvania State Police or enforcement

1officers. The annuity reserve account shall be credited with
2valuation interest. After the transfers provided in sections
35933 (relating to members' savings account), 5934 (relating to
4State accumulation account) and 5938 (relating to supplemental
5annuity account), all annuity and death benefit payments
6resulting from membership in the system except those payable to
7any member who retires as an officer of the Pennsylvania State
8Police or an enforcement officer shall be charged to the annuity
9reserve account and paid from the fund.

10(b) Transfers from account.--Should an annuitant other than
11a member who was retired as an officer of the Pennsylvania State
12Police or an enforcement officer be subsequently restored to
13active service as a member of the system or as a participant in 
14the plan, the present value of his member's annuity at the time
15of reentry into State service shall be transferred from the
16annuity reserve account and placed to his individual credit in
17the members' savings account. In addition, the actuarial reserve
18for his annuity less the amount transferred to the members'
19savings account shall be transferred from the annuity reserve
20account to the State accumulation account.

21§ 5936. State Police benefit account.

22(a) Credits and charges to account.--The State Police
23benefit account shall be the ledger account to which shall be
24credited all contributions received under the provisions of the
25act of May 12, 1943 (P.L.259, No.120), and any additional
26Commonwealth or other employer contributions provided for in
27[section 5507 (relating to contributions by the Commonwealth and
28other employers)] sections 5507 (relating to contributions to 
29the system by the Commonwealth and other employers before July 
301, 2015) and 5507.1 (relating to contributions to the system by
 

1the Commonwealth and other employers commencing July 1, 2015) 
2which are creditable to the State Police benefit account. The
3State Police benefit account shall be credited with the required
4interest. In addition, upon the filing of an application for an
5annuity by a member who is an officer of the Pennsylvania State
6Police, the total accumulated deductions standing to the credit
7of the member in the members' savings account and the necessary
8reserves from the State accumulation account shall be
9transferred to the State Police benefit account. Thereafter, the
10total annuity of such annuitant shall be charged to the State
11Police benefit account and paid from the fund.

12(b) Transfers from account.--Should the said annuitant be
13subsequently restored to active service as a member of the 
14system or as a participant in the plan, the present value of the
15member's annuity at the time of reentry into State service shall
16be transferred from the State Police benefit account and placed
17to his individual credit in the members' savings account. In
18addition, the actuarial reserve for his annuity calculated as if
19he had been a member of Class A if he has Class A or Class C 
20service credited; as if he had been a member of Class A-3 if the 
21annuitant has Class A-3 State service credited; or as if he had 
22been a member of Class A-4 if the annuitant has Class A-4 
23service credited, less the amount transferred to the members'
24savings account shall be transferred from the State Police
25benefit account to the State accumulation account. Upon
26subsequent retirement other than as an officer of the
27Pennsylvania State Police the actuarial reserve remaining in the
28State Police benefit account shall be transferred to the
29appropriate reserve account.

30§ 5937. Enforcement officers' benefit account.

1(a) Credits and charges to account.--The enforcement 
2officers' benefit account shall be the ledger account to which 
3shall be credited moneys transferred from the enforcement 
4officers' retirement account in the State Stores Fund according 
5to the provisions of the act of April 12, 1951 (P.L.90, No.21), 
6known as the Liquor Code, and any additional Commonwealth or 
7other employer contributions provided for in [section 5507 
8(relating to contributions by the Commonwealth and other 
9employers)] sections 5507 (relating to contributions to the 
10system by the Commonwealth and other employers before July 1, 
112015) and 5507.1 (relating to contributions to the system by the 
12Commonwealth and other employers commencing July 1, 2015) which 
13are creditable to the enforcement officers' benefit account. The 
14enforcement officers' benefit account shall be credited with the 
15required interest. In addition, upon the filing of an 
16application for an annuity by a member who is an enforcement 
17officer of the Pennsylvania Liquor Control Board, the total 
18accumulated deductions standing to the credit of the member in 
19the members' savings account and the necessary reserves from the 
20State accumulation account shall be transferred to the 
21enforcement officers' benefit account. Thereafter, the total 
22annuity of such annuitant shall be charged to the enforcement 
23officers' benefit account and paid from the fund.

24(b) Transfers from account.--Should the said annuitant be 
25subsequently restored to active service as a member of the 
26system or as a participant in the plan, the present value of the 
27member's annuity at the time of reentry into State service shall 
28be transferred from the enforcement officers' benefit account 
29and placed to his individual credit in the members' savings 
30account. In addition, the actuarial reserve for his annuity
 

1calculated as if he had been a member of Class A if the 
2annuitant does not have any Class AA, Class A-3 or Class A-4 
3service credited; as if he had been a member of Class AA if the 
4annuitant does have Class AA service credited; as if he had been 
5a member of Class A-3 if the annuitant has Class A-3 State 
6service credited; or as if he had been a member of Class A-4 if 
7the annuitant has Class A-4 service credited, less the amount 
8transferred to the members' savings account shall be transferred 
9from the enforcement officers' benefit account to the State 
10accumulation account. Upon subsequent retirement other than as 
11an enforcement officer the actuarial reserve remaining in the 
12enforcement officers' benefit account shall be transferred to 
13the appropriate reserve account.

14§ 5938. Supplemental annuity account.

15The supplemental annuity account shall be the ledger account
16to which shall be credited all contributions from the
17Commonwealth and other employers in accordance with section
185507(b) [(relating to contributions by the Commonwealth and
19other employers)] (relating to contributions to the system by 
20the Commonwealth and other employers before July 1, 2015) for
21the payment of the supplemental annuities provided in sections
225708 (relating to supplemental annuities), 5708.1 (relating to
23additional supplemental annuities), 5708.2 (relating to further
24additional supplemental annuities), 5708.3 (relating to
25supplemental annuities commencing 1994), 5708.4 (relating to
26special supplemental postretirement adjustment), 5708.5
27(relating to supplemental annuities commencing 1998), 5708.6
28(relating to supplemental annuities commencing 2002), 5708.7
29(relating to supplemental annuities commencing 2003) and 5708.8
30(relating to special supplemental postretirement adjustment of

12002) made before July 1, 2010, the amount transferred from the 
2State accumulation account to provide all additional reserves 
3necessary as of June 30, 2010, to pay such supplemental 
4annuities and adjustments, and the amounts transferred from the 
5State accumulation account to provide all additional reserves 
6necessary as a result of supplemental annuities enacted after 
7December 31, 2009. The supplemental annuity account shall be
8credited with valuation interest. The reserves necessary for the
9payment of such supplemental annuities shall be transferred from
10the supplemental annuity account to the annuity reserve account
11as provided in section 5935 (relating to annuity reserve
12account).

13§ 5939. Interest reserve account.

14The interest reserve account shall be the ledger account to
15which shall be credited all income earned by the fund and to
16which shall be charged all administrative and investment
17expenses incurred by the fund. At the end of each year the
18required interest shall be transferred from the interest reserve
19account to the credit of each of the accounts of the fund in
20accordance with the provisions of this subchapter. In addition,
21at the end of each accounting period, the interest reserve
22account shall be credited or charged with all recognized changes
23in the market valuation of the investments of the fund. The
24administrative and investment expenses of the board relating to 
25the administration of the system and investments of the fund
26shall be paid from the fund out of earnings. Any surplus or
27deficit in the interest reserve account at the end of each year
28shall be transferred to the State accumulation account.

29§ 5951. State guarantee regarding the State Employees' 
30Retirement System.

1The required interest charges payable, the maintenance of
2reserves in the fund, and the payment of all annuities and other
3benefits granted by the board from the system under the
4provisions of this part relating to the establishment and 
5administration of the system are hereby made obligations of the
6Commonwealth. All income, interest, and dividends derived from
7deposits and investments of the system authorized by this part
8shall be used for the payment of the said obligations of the
9Commonwealth and shall not be used for any obligations of the 
10plan or trust.

11§ 5953. Taxation, attachment and assignment of funds.

12(a) General rule.--

13(1) Except as provided in paragraphs (2), (3) [and], (4)
14and (5), the right of a person to any benefit or right
15accrued or accruing under the provisions of this part and the
16moneys in the fund and the trust are hereby exempt from any
17State or municipal tax, levy and sale, garnishment,
18attachment, spouse's election, the provisions of Article 
19XIII.1 of the act of April 9, 1929 (P.L.343, No.176), known 
20as The Fiscal Code, or any other process whatsoever, and no 
21participant or beneficiary, successor payee, spouse or 
22alternate payee of a participant shall have the ability to 
23commute, sell, assign, alienate, anticipate, mortgage, 
24pledge, hypothecate, commutate or otherwise transfer or 
25convey any benefit or interest in an individual investment 
26account or rights to receive or direct distributions under 
27this part or under agreements entered into under this part 
28except as otherwise provided in this part and in the case of 
29either a member or a participant except for a set-off by the
30Commonwealth in the case provided in subparagraph (i), and

1shall be unassignable except:

2(i) To the Commonwealth in the case of a member or
3participant who is terminating State service and has been
4determined to be obligated to the Commonwealth for the
5repayment of money owed on account of his employment or
6to the fund on account of a loan from a credit union to a 
7member which has been satisfied by the board from the
8fund.

9(ii) To a credit union as security for a loan to a 
10member not to exceed $750 and interest not to exceed 6%
11per annum discounted and/or fines thereon if the credit
12union is now or hereafter organized and incorporated
13under the laws of this Commonwealth and the membership of
14such credit union is limited solely to officials and
15employees of the Commonwealth and if such credit union
16has paid to the fund $3 for each such assignment.

17(2) (i) Rights under this part shall be subject to
18forfeiture as provided by the act of July 8, 1978 
19(P.L.752, No.140), known as the Public Employee Pension
20Forfeiture Act, and by or pursuant to section 16(b) of
21Article V of the Constitution of Pennsylvania.
22Forfeitures under this subsection or under any other
23provision of law may not be applied to increase the
24benefits that any member would otherwise receive under
25this part.

26(ii) Notwithstanding this paragraph, the act of July 
278, 1978 (P.L.752, No.140), known as the Public Employee 
28Pension Forfeiture Act, and section 16(b) of Article V of 
29the Constitution of Pennsylvania or 42 Pa.C.S. § 3352 
30(relating to pension rights), the accumulated mandatory
 

1participant contributions and accumulated voluntary 
2contributions standing to the credit of a participant 
3shall not be forfeited but shall be available for payment 
4of fines and restitution as provided by law. Furthermore, 
5amounts in the trust that have been ordered to be 
6distributed to an alternate payee as the result of an 
7equitable distribution of marital property as part of an 
8approved domestic relations order entered before the date 
9of the order or action in a court or other tribunal 
10resulting in a forfeiture of a participant's interest in 
11the trust shall not be subject to the Public Employee 
12Pension Forfeiture Act or section 16(b) of Article V of 
13the Constitution of Pennsylvania or 42 Pa.C.S. § 3352. 
14Any accumulated employer defined contributions forfeited 
15as a result of this paragraph or other law shall be 
16retained by the board and notwithstanding sections 
175412(2) (relating to powers and duties of board), 5415 
18(relating to expenses) and 5902(c) (relating to 
19administrative duties of the board) used for the payment 
20of expenses of the plan.

21(3) Rights under this part shall be subject to
22attachment in favor of an alternate payee as set forth in an
23approved domestic relations order.

24(4) Effective with distributions made on or after
25January 1, 1993, and notwithstanding any other provision of
26this part to the contrary, a distributee may elect, at the
27time and in the manner prescribed by the board, to have any
28portion of an eligible rollover distribution paid directly to
29an eligible retirement plan by way of a direct rollover. For
30purposes of this paragraph, a "distributee" includes a member

1[and], a participant, a member's surviving spouse [and], a 
2participant's surviving spouse, a member's former spouse who
3is an alternate payee under an approved domestic relations
4order[.], a participant's former spouse who is an alternate 
5payee under an approved domestic relations order and anyone 
6else authorized under the IRC and the plan terms approved by 
7the board to have an eligible rollover distribution paid 
8directly to an eligible retirement plan by way of a direct 
9rollover. For purposes of this paragraph, the term "eligible 
10rollover distribution" has the meaning given such term by IRC
11§ 402(f)(2)(A), and "eligible retirement plan" has the
12meaning given such term by IRC § 402(c)(8)(B), except that a
13qualified trust shall be considered an eligible retirement
14plan only if it accepts the distributee's eligible rollover
15distribution; however, in the case of an eligible rollover
16distribution to a surviving spouse, an eligible retirement
17plan is an "individual retirement account" or an "individual
18retirement annuity" as those terms are defined in IRC §
19408(a) and (b).

20(5) No married participant may take an action
21inconsistent with the spousal consent provisions of this part
22or the plan.

23(b) Authorized payments from fund.--The board shall be
24authorized to pay from the fund:

25(1) In the case of a member or participant who is
26terminating service, the amount determined after
27certification by the head of the department that the member
28or participant is so obligated, and after review and approval
29by the department or agency's legal representative or upon
30receipt of an assignment from the member or participant in

1the amount so certified[.], except that no payment shall be 
2made from the individual investment account of a participant 
3until the participant otherwise applies for and receives a 
4distribution and shall not exceed the amount of the 
5distribution.

6(2) In the case of a loan to a member the amount of the
7loan and any fine or interest due thereon to the credit union
8except 5% of the total amount due which is to be retained in
9the fund as a collection fee:

10(i) if the member obtaining the loan shall have been
11in default in required payments for a period of not less
12than two years; or

13(ii) at such time as the Department of Banking shall
14require the credit union to charge the amount of the loan
15against the reserve fund of such credit union.

16Any member who shall have pledged such rights as
17security for a loan from a credit union and, on whose
18behalf the board shall have made any payment by reason of
19that member's default, may not thereafter pledge or
20assign such rights to a credit union.

21(3) In the case of a participant whose former spouse is
22an alternate payee of an equitable distribution of marital
23assets under an approved domestic relations order, a lump sum
24of the alternate payee's interest in the participant's
25accumulated total defined contributions. This paragraph shall
26apply without regard to whether the participant has not
27terminated, is terminating or has terminated State service.

28Section 342. (Reserved).

29Section 343. Section 5953.1(a) heading, introductory
30paragraph and (1), (b), (c) and (d) of Title 71 are amended and

1the section is amended by adding a subsection to read:

2§ 5953.1. Approval of domestic relations orders.

3(a) Certification regarding members.--A domestic relations
4order pertaining to a member of the system shall be certified as
5an approved domestic relations order by the secretary of the
6board, or his designated representative, only if that order
7meets all of the following:

8(1) Requires the system to provide any type or form of
9benefit or any option applicable to members already provided
10under this part.

11* * *

12(a.1) Certification regarding participants.--A domestic
13relations order pertaining to a participant shall be certified
14as an approved domestic relations order by the secretary of the
15board or his designated representative if that order meets all
16of the following:

17(1)  Does not require the plan to provide a type or form
18of benefit or an option applicable to members of the system
19or participants in the plan.

20(2)  Does not require the segregation of the alternate
21payee's share of the participant's individual investment
22account into a subaccount or newly established individual
23account titled in the name of the alternate payee.

24(3)  Does not require the plan to recover or distribute
25funds which were distributed to the participant or at the
26participant's direction prior to the approval of the domestic
27relations order by the secretary of the board or his
28designated representative.

29(4)  Requires the plan to pay to the alternate payee no
30more than the lesser of the vested amount of the

1participant's individual investment account specified by the
2domestic relations order or the vested amount of the
3participant's individual investment account as of the date of
4the transfer of the alternate payee's share to the alternate
5payee.

6(5)  States that the plan shall not be required to recoup
7or make good for losses in value to the participant's
8individual investment account incurred between the date of
9the valuation of the account used for equitable distribution
10purposes and the date of distribution to the alternate payee.

11(6)  Specifies the amount or percentage of the
12participant's individual investment account to be paid to the
13alternate payee and the date upon which such valuation is
14based.

15(7)  Specifies the name and last known mailing address,
16if any, of the participant and the name and last known
17mailing address of each alternate payee covered by the order
18and states that it is the responsibility of each alternate
19payee to keep a current mailing address on file with the
20plan.

21(8)  Does not grant an alternate payee the rights,
22privileges or options available to a participant.

23(9)  Requires the participant to execute an authorization
24allowing each alternate payee to monitor the participant's
25compliance with the terms of the domestic relations order
26through access to information concerning the participant
27maintained by the plan. An authorization granted pursuant to
28this section shall be construed as an authorization for the
29alternate payee to receive information concerning the
30participant which relates to the administration, calculation

1and payment of the alternate payee's share of the
2participant's account and not as an authorization to exercise
3the rights afforded to participants or obtain information
4which is not related to the administration, calculation and
5payment of alternate payee's share of the participant's
6individual investment account.

7(10)  In the case of a participant who has not yet begun
8to receive distributions, or who is receiving distributions,<-
9as of the date the domestic relations order is approved by
10the secretary of the board or his designated representative,
11requires the immediate distribution of the alternate payee's
12share of the participant's individual investment account,
13which may be by direct payment, eligible rollover or trustee-
14to-trustee transfer to another eligible plan or qualified
15account owned by the alternate payee, notwithstanding any
16other provision of this part or the plan that would require a
17distribution of accumulated employer defined contributions in
18the form of an annuity or to require the purchase of an
19annuity.

20(11)  In the case of a participant who is currently
21receiving distributions from the trust as of the date the
22domestic relations order is approved by the secretary of the
23board or his designated representative, may not order the
24board to pay the alternate payee more than the balance
25available in the participant's individual investment account
26as of the date the order is approved or require that
27distributions continue to the alternate payee after the death
28of the participant and final settlement of the participant's
29individual investment account.

30(b) Determination by secretary.--Within a reasonable period

1after receipt of a domestic relations order, the secretary of
2the board, or his designated representative, shall determine
3whether this order is an approved domestic relations order and
4notify the member or participant and each alternate payee of
5this determination. Notwithstanding any other provision of law,
6the exclusive remedy of any member, participant or alternate
7payee aggrieved by a decision of the secretary of the board, or
8his designated representative, shall be the right to an
9adjudication by the board under 2 Pa.C.S. Ch. 5 Subch. A
10(relating to practice and procedure) with appeal therefrom to
11the Commonwealth Court under 2 Pa.C.S. Ch. 7 (relating to
12judicial review) and 42 Pa.C.S. § 763(a)(1) (relating to direct
13appeals from government agencies).

14(c) Other orders.--The requirements for approval identified
15in [subsection (a)] subsections (a) and (a.1) shall not apply to
16any domestic relations order which is an order for support as
17the term is defined at 23 Pa.C.S. § 4302 (relating to
18definitions) or an order for the enforcement of arrearages as
19provided in 23 Pa.C.S. § 3703 (relating to enforcement of
20arrearages). These orders shall be approved to the extent that
21they do not attach moneys in excess of the limits on attachments
22as established by the laws of the United States and this
23Commonwealth[.], require distributions of benefits in a manner 
24which would violate the laws of the United States, any other 
25state or this Commonwealth or require the distribution of funds 
26for support or enforcement of arrearages against a participant 
27who is not receiving distributions from the plan at the time the 
28order is entered. These orders may be approved notwithstanding 
29any other provision of this part or the plan that would require 
30a distribution of accumulated employer defined contributions in
 

1the form of an annuity or to require the purchase of an annuity.

2(d) Obligation discharged.--Only the requirements of this
3part and any regulations promulgated hereunder shall be used to
4govern the approval or disapproval of a domestic relations
5order. Therefore, if the secretary of the board, or his
6designated representative, acts in accordance with the
7provisions of this part and any promulgated regulations in
8approving or disapproving a domestic relations order, then the
9obligations of the system or the plan with respect to such
10approval or disapproval shall be discharged.

11Section 344. Sections 5953.2, 5953.3 and 5953.4(a) of Title
1271 are amended to read:

13§ 5953.2. Irrevocable beneficiary.

14Notwithstanding any other provision of this part, a domestic
15relations order may provide for an irrevocable beneficiary. A
16domestic relations order requiring the nomination of an
17irrevocable beneficiary shall be deemed to be one that requires
18a member or participant to nominate an alternate payee as a
19beneficiary and that prohibits the removal or change of that
20beneficiary without approval of a court of competent
21jurisdiction, except by operation of law. Such a domestic
22relations order may be certified as an approved domestic
23relations order by the secretary of the board, or his designated
24representative, after the member or participant makes such
25nomination, in which case the irrevocable beneficiary so ordered
26by the court cannot be changed by the member or participant
27without approval by the court.

28§ 5953.3. Irrevocable survivor annuitant.

29Notwithstanding any other provisions of this part, a domestic
30relations order pertaining to a member may provide for an

1irrevocable survivor annuitant. A domestic relations order
2requiring the designation of an irrevocable survivor annuitant
3shall be deemed to be one that requires a member to designate an
4alternate payee as a survivor annuitant and that prohibits the
5removal or change of that survivor annuitant without approval of
6a court of competent jurisdiction, except by operation of law.
7Such a domestic relations order may be certified as an approved
8domestic relations order by the secretary of the board, or his
9designated representative, in which case the irrevocable
10survivor annuitant so ordered by the court cannot be changed by
11the member without approval by the court. A person ineligible to
12be designated as a survivor annuitant may not be designated as
13an irrevocable survivor annuitant.

14§ 5953.4. Amendment of approved domestic relations orders.

15(a) Deceased alternate payee.--In the event that the
16alternate payee predeceases the member or the participant and
17there are benefits payable to the alternate payee, the divorce
18court may amend the approved domestic relations order to
19substitute a person for the deceased alternate payee to receive
20any benefits payable to the deceased alternate payee.

21* * *

22Section 345. Title 71 is amended by adding sections to read:

23§ 5953.6. Irrevocable successor payee.

24(a) Condition.--Notwithstanding any other provision of this
25part, a domestic relations order pertaining to a participant may
26provide for an irrevocable successor payee if the participant is
27receiving a payment pursuant to a payment option provided by the
28board that allows for a successor payee.

29(b) Determination.--A domestic relations order requiring the
30designation of an irrevocable successor payee shall be deemed to

1be one that requires a participant who is receiving payments
2from an annuity or other distribution option to designate an
3alternate payee as a successor payee and that prohibits the
4removal or change of the successor payee without approval of a
5court of competent jurisdiction, except by operation of law.

6(c) Certification.--A domestic relations order under
7subsection (b) may be certified as an approved domestic
8relations order by the secretary of the board or his designated
9representative. If a domestic relations order is certified under
10this subsection, the irrevocable successor payee ordered by the
11court shall not be changed by the participant without approval
12by the court.

13(d) Ineligibility.--A person ineligible to be designated as
14a successor payee shall not be designated as an irrevocable
15successor payee. A court shall not name an irrevocable successor
16payee if the alternate payee is eligible to receive a lump sum
17distribution of the alternate payee's portion of the marital
18portion of the pension benefit.

19§ 5953.7. Exemption from spousal consent.

20If a domestic relations order approved pursuant to section
215953.1 (relating to approval of domestic relations orders)
22requires a nomination by a participant of an irrevocable
23beneficiary or irrevocable successor payee or the selection of
24any benefit by a participant, the provisions of this part or the
25plan requiring the spouse of a married participant to be
26nominated as beneficiary, designated as successor payee or to
27grant consent to an action, election or application of a
28participant shall not apply to an action or nomination required
29by the approved domestic relations order to the extent that the
30required action or nomination is inconsistent with the rights of

1the spouse under this part.

2Section 346. Section 5954 of Title 71 is amended to read:

3§ 5954. Fraud and adjustment of errors.

4(a) Penalty for fraud.--Any person who shall knowingly make
5any false statement or shall falsify or permit to be falsified
6any record or records of this system or plan in any attempt to
7defraud the system or plan as a result of such act shall be
8guilty of a misdemeanor of the second degree.

9(b) Adjustment of errors.--Should any change or mistake in
10records result in any member, participant, beneficiary [or],
11survivor annuitant or successor payee receiving from the system
12or plan more or less than he would have been entitled to receive
13had the records been correct, then regardless of the intentional
14or unintentional nature of the error and upon the discovery of
15such error, the board shall correct the error and if the error 
16affected contributions to or payments from the system, then so
17far as practicable shall adjust the payments which may be made
18for and to such person in such a manner that the actuarial
19equivalent of the benefit to which he was correctly entitled
20shall be paid. If the error affected contributions to or 
21payments from the plan, the board shall take action as provided 
22for in the plan document.

23Section 347. Title 71 is amended by adding a section to
24read:

25§ 5954.1. Spousal consent.

26(a) General rule.--No married participant may:

27(1) take an action regarding rights in the plan;

28(2) make an election regarding benefits in the plan; or

29(3) file a valid application which requires the consent
30of the participant's spouse, unless the participant's spouse

1consents in writing to that action, election or application.
2A consent or lack of consent shall not affect the effective
3date of an action or election. A consent shall be valid only
4if the consent is:

5(i)  signed after the participant's spouse receives
6counseling or affirmatively waives the right to receive
7counseling;

8(ii)  witnessed before a notary public; and

9(iii)  filed with the board within 90 days of the
10filing of the application or within 90 days of the date
11the action or election would otherwise be valid.

12(b)  Exceptions to consent.--Spousal consent shall not be
13required if:

14(1)  The spouse cannot be located.

15(2)  Other circumstances occur as established by the
16board in the plan document.

17(c)  Legal guardians and powers of attorney.--A legal
18guardian, including the participant, may execute a valid spousal
19consent. A participant as agent under a power of attorney may
20not execute a valid spousal consent unless the spouse is
21incapacitated and had executed a valid durable power of
22attorney.

23(d) Rights, options or privileges.--This part shall not
24grant to the spouse of a participant of the plan the rights,
25options or privileges of the participant. The rights of the
26spouse shall remain derivative of the rights of the participant,
27including rights under the act of July 8, 1978 (P.L.752,
28No.140), known as the Public Employee Pension Forfeiture Act,
29and section 16(b) of Article V of the Constitution of
30Pennsylvania. The spouse may not do any of the following:

1(1) Compel the participant to take, or prevent a
2participant from taking, an action regarding membership,
3rights or benefits in the plan other than as provided under
4this part.

5(2) Take any action on behalf of the participant, except
6as provided under this part.

7(e) Waiver.--If a law allows a participant in the plan to
8waive benefits or return of contributions that the participant
9is receiving, entitled to currently receive or receive in the
10future, the waiver shall not be valid unless the spouse of the
11participant consents to the waiver as provided for under this
12part.

13Section 347.1. Section 5955 of Title 71 is amended to read:

14§ 5955. Construction of part.

15(a)  Exclusive source of rights and benefits.--Regardless of
16any other provision of law, pension and benefit rights of State
17employees shall be determined solely by this part or any
18amendment thereto, and no collective bargaining agreement nor
19any arbitration award between the Commonwealth and [its] other 
20employers and the Commonwealth's and other employer's employees
21or their collective bargaining representatives shall be
22construed to change any of the provisions herein, to require the
23board to administer pension or retirement benefits not set forth
24in this part or not established by the board in the plan 
25document, to require the board to modify, amend or change any of 
26the terms and provisions of the plan document, or otherwise
27require action by any other government body pertaining to
28pension or retirement benefits or rights of State employees.
29Notwithstanding the foregoing, any pension or retirement
30benefits or rights previously so established by or as a result

1of an arbitration award shall remain in effect after the
2expiration of the current collective bargaining agreement
3between the State employees so affected and the Commonwealth
4until the expiration of each of the collective bargaining 
5agreements in effect on January 1, 2011, at which time the 
6classes of membership and resulting member contribution rates 
7and contributions for creditable nonstate service, eligibility 
8for vesting, withdrawal and superannuation annuities, optional 
9modification of annuities and other terms and conditions related 
10to class of membership shall be as determined by this part for 
11employees covered by those and successor collective bargaining 
12agreements. For purposes of administering this part, for those 
13State employees who are members of each such collective 
14bargaining unit, the date January 1, 2011, contained in this 
15part, except in this section, shall be replaced with the date of 
16the day immediately following the expiration of each such 
17collective bargaining agreement. The provisions of this part
18insofar as they are the same as those of existing law are
19intended as a continuation of such laws and not as new
20enactments. The provisions of this part shall not affect any act
21done, liability incurred, right accrued or vested, or any suit
22or prosecution pending or to be instituted to enforce any right
23or penalty or to punish any offense under the authority of any
24repealed laws.

25(b) References.--References in this part to the Internal
26Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.)
27or the Uniformed Services Employment and Reemployment Rights Act
28of 1994 (Public Law 103-353, 108 Stat. 3149), including
29administrative regulations promulgated under the Internal
30Revenue Code of 1986 or the Uniformed Services Employment and

1Reemployment Rights Act of 1994, are intended to include laws
2and regulations:

3(1) In effect on the effective date of this subsection.

4(2) Amended, supplemented or supplanted on and after the
5effective date of this subsection.

<-6(c)  Officer or member of the Pennsylvania State Police.--

7(1)  Notwithstanding a provision of subsection (a) or
8section 12.1 of Act 120 of 2010, regarding the continued
9effectiveness of pension or retirement benefits or rights
10previously established by or as a result of a binding
11arbitration award issued before July 1, 1989, pursuant to the
12act of June 24, 1968 (P.L.237, No.111), referred to as the
13Policemen and Firemen Collective Bargaining Act, and
14implemented by the board, the pension or retirement benefits
15or rights of a State employee who is a current or former
16State police officer shall be as provided in this part as if
17the binding arbitration award was not issued, except as
18provided under this subsection.

19(2)  A State employee who meets the following shall be
20eligible to receive the maximum single life annuity, before
21optional modification under section 5705 (relating to
22member's options), that the State employee would have been
23eligible to receive if this subsection not been enacted:

24(i) Is a current or former State police officer.

25(ii) Has 20 or more qualifying eligibility points on
26or before December 31, 2014.

27(iii) Terminates State service.

<-28(3) (Reserved).

29(4) (Reserved).

30(5) (Reserved).

1(6) For the purposes of this subsection, the following
2terms shall have the meanings given to them in this
3paragraph:

4"Act 120 of 2010" shall mean the act of November 23, 2010
5(P.L. 1269, No. 120), entitled, "An act amending Titles 24
6(Education) and 71 (State Government) of the Pennsylvania
7Consolidated Statutes, in Title 24, further providing for
8definitions, for mandatory and optional membership, for
9contributions by the Commonwealth, for payments by employers,
10for actuarial cost method, for additional supplemental
11annuities, for further additional supplemental annuities, for
12supplemental annuities commencing 1994, for supplemental
13annuities commencing 1998, for supplemental annuities
14commencing 2002, for supplemental annuities commencing 2003,
15for administrative duties of board, for payments to school
16entities by Commonwealth, for eligibility points for
17retention and reinstatement of service credits and for
18creditable nonschool service; providing for election to
19become a Class T-F member; further providing for classes of
20service, for eligibility for annuities, for eligibility for
21vesting, for regular member contributions, for member
22contributions for creditable school service, for
23contributions for purchase of credit for creditable nonschool
24service, for maximum single life annuity, for disability
25annuities, for member's options, for duties of board
26regarding applications and elections of members and for
27rights and duties of school employees and members; providing
28for Independent Fiscal Office study; in Title 71,
29establishing an independent fiscal office and making a
30related repeal; further providing for definitions, for

1credited State service, for retention and reinstatement of
2service credits, for creditable nonstate service and for
3classes of service; providing for election to become a Class
4A-4 member; further providing for eligibility for annuities
5and for eligibility for vesting; providing for shared-risk
6member contributions for Class A-3 and Class A-4 service;
7further providing for waiver of regular member contributions
8and Social Security integration member contributions, for
9member contributions for purchase of credit for previous
10State service or to become a full coverage member, for
11contributions for the purchase of credit for creditable
12nonstate service, for contributions by the Commonwealth and
13other employers, for actuarial cost method, for maximum
14single life annuity, for disability annuities and for
15member's options; providing for payment of accumulated
16deductions resulting from Class A-3 service; further
17providing for additional supplemental annuities, for further
18additional supplemental annuities, for supplemental annuities
19commencing 1994, for supplemental annuities commencing 1998,
20for supplemental annuities commencing 2002, for supplemental
21annuities commencing 2003, for special supplemental
22postretirement adjustment of 2002, for administrative duties
23of the board, for duties of board to advise and report to
24heads of departments and members, for duties of board
25regarding applications and elections of members, for
26installment payments of accumulated deductions, for rights
27and duties of State employees and members, for members'
28savings account, for State accumulation account, for State
29Police Benefit Account, for Enforcement Officers' Benefit
30Account, for supplemental annuity account and for

1construction of part; and providing for Independent Fiscal
2Office study, for retirement eligibility of Pennsylvania
3State Police officers or members, for a prohibition on the
4issuance of pension obligation bonds, for holding certain
5public officials harmless, for construction of calculation or
6actuarial method, for applicability and for certain
7operational provisions."

8"Binding arbitration award." A binding arbitration award
9issued before July 1, 1989, pursuant to the act of June 24,
101968 (P.L.237, No.111), referred to as the Policemen and
11Firemen Collective Bargaining Act, and was implemented by the
12State Employees' Retirement Board.

<-13(c) Officer or member of the Pennsylvania State Police.--

14(1) To the extent that any officer or member of the
15Pennsylvania State Police who is eligible to retire after
16June 30, 1989, as provided in a binding arbitration award
17issued before July 1, 1989, under the act of June 24, 1968 
18(P.L.237, No.111), referred to as the Policemen and Firemen 
19Collective Bargaining Act, as implemented by the board, with
20a benefit based on 50% of highest year salary upon accruing
21at least 20 years of credited State service or nonstate
22service in the system or based on 75% of highest year salary
23upon accruing at least 25 years of credited State or nonstate
24service in the system, the eligibility shall be determined
25solely on service credited, compensation paid and
26contributions made as a member of the system.

27(2) Service as a State police officer credited in the
28system shall not operate to prevent any State employee from
29being a participant in the plan for any State service that
30would otherwise result in participation in the plan. Any

1State service performed, compensation paid and contributions
2made as a participant in the plan shall not be included in
3determining eligibility for and the amount of benefits
4provided from the system as long as entitlement to actual
5receipt of benefits is subject to the provisions of this part
6regarding employment and termination as a State employee. Any
7benefit resulting from participation in the plan shall be in
8addition to any benefit a State police officer may be
9eligible to receive as a member of the system.

10(d) Adverse inference.--Nothing in this part shall be
11construed to mean that the limitations on benefits or other
12requirements under IRC § 401(a) or other applicable provisions
13of the IRC which are applicable to participants in the plan do
14not apply to the participants or to members of the system and
15the benefits payable under this part.

16(e) Applicability.--The following shall apply:

17(1) The amendment of this part regarding the
18establishment of and participation in the plan shall apply to
19current and former members of the State Employees' Retirement
20System who have returned to State service on or after July<-
21January<- 1, 2015, or, if as an elected officer, December 1,
222014, after a termination of State service, notwithstanding
23the following:

24(i) Whether the termination occurred before or after
25July<- January 1, 2015.

26(ii) Whether the State employee was an annuitant,
27inactive member, vestee or special vestee or withdrew
28accumulated deductions during the period of termination.

29(2) A terminated State employee who returns to State
30service on or after January 1, 2015,<- or, if as an elected
 

1officer, December 1, 2014, shall be subject to this part
2regarding participation in the plan or membership in the
3system which are in effect on the effective date of
4reemployment, including benefit formulas and accrual rates,
5eligibility for annuities and distributions, contribution
6rates, definitions, purchase of creditable school, nonschool,
7State and non-State service provisions and actuarial and
8funding assumptions.

9(3) The amendment of this part regarding the
10establishment of and participation in the plan shall apply to
11a person who:<-

12(i) is a member of the General Assembly and an
13active member of the system on the effective date of this
14paragraph and is reelected as a member of the General
15Assembly after the effective date of this paragraph;

16(ii) is a member of the judiciary and an active
17member of the system on the effective date of this
18paragraph and is retained as a member of the judiciary
19after the effective date of this paragraph; or

20(iii) is elected as Governor, Lieutenant Governor,
21Attorney General, Auditor General or Treasurer, is an
22active member of the system on the effective date of this
23paragraph and is reelected as Governor, Lieutenant
24Governor, Attorney General, Auditor General or Treasurer
25after the effective date of this paragraph.<- an elected
26officer who is elected, reelected or retained in a
27retention election to a term of office that begins on or
28after December 1, 2014, notwithstanding that either
29immediately or at any time prior to beginning a term of
30office on or after December 1, 2014, the elected officer

1was an active member of the system or inactive member on
2leave without pay. An individual who is elected,
3reelected or retained in a retention election to a term
4of office as Governor, Lieutenant Governor, Attorney
5General, Auditor General, State Treasurer, member of the
6General Assembly or member of the judiciary that begins
7on or after December 1, 2014:

8(i) does so with the knowledge of the provisions,
9terms and conditions of this part, including those
10provisions, terms and conditions establishing the plan
11and determining participation in the plan and membership
12in the system; and

13(ii) expressly consents to those provisions, terms
14and conditions and the resulting contributions,
15obligations, benefits and rights, or lack of
16contributions, obligations, benefits and rights in the
17system and the plan.

18ARTICLE IV

19Section 401. The following shall apply:

20(1) The following provisions shall not create in a
21member of the Public School Employees' Retirement System, a
22participant in the School Employees' Defined Contribution
23Plan or another person claiming an interest in the account of
24a member or participant an express or implied contractual
25right in the provisions nor in a construction of 24 Pa.C.S.
26Pt. IV, 51 Pa.C.S. or rules or regulations adopted under 24
27Pa.C.S. Pt. IV or 51 Pa.C.S.:

28(i) A provision of this act which amends 51 Pa.C.S.
29or 24 Pa.C.S. Pt. IV in relation to requirements for any
30of the following:

1(A) Spousal consent.

2(B) Qualification of the School Employees'
3Defined Contribution Plan as a qualified pension plan
4under the Internal Revenue Code of 1986 (Public Law
599-514, 26 U.S.C. §§ 401(a) and 415(b)), or
6compliance with the Uniformed Services Employment and
7Reemployment Rights Act of 1994 (Public Law 103-353,
8108 Stat. 3149).

9(C) Contributions to, participation in or
10benefits from the School Employees' Defined
11Contribution Plan or School Employees' Defined
12Contribution Trust.

13(D) Domestic relations orders regarding
14alternate payees of participants in the School
15Employees' Defined Contribution Plan.

16(ii) A construction of 24 Pa.C.S. Pt. IV or 51
17Pa.C.S. or rules or regulations adopted under 24 Pa.C.S.
18Pt. IV or 51 Pa.C.S. or a term or provision of the School
19Employees' Defined Contribution Plan or School Employees'
20Defined Contribution Trust, established by statute or in
21the plan document or trust declaration.

22(2) The provisions of 24 Pa.C.S. Pt. IV shall remain
23subject to the Internal Revenue Code of 1986 and the
24Uniformed Services Employment and Reemployment Rights Act of
251994 (Public Law 103-353, 108 Stat. 3149), and regulations
26under those statutes, and the General Assembly reserves to
27itself the further exercise of its legislative power to amend
28or supplement the provisions as may be required in order to
29maintain the qualification of the system as a qualified
30pension plan under section 401(a) and other applicable

1provisions of the Internal Revenue Code of 1986 and the
2Uniformed Services Employment and Reemployment Rights Act of
31994 (Public Law 103-353, 108 Stat. 3149).

4(3) The following provisions shall not create in a
5member of the State Employees' Retirement System, a
6participant in the State Employees' Defined Contribution Plan
7or another person claiming an interest in the account of a
8member or participant an express or implied contractual right
9in the provisions nor in a construction of 51 Pa.C.S. § 7306,
1071 Pa.C.S. Pt. XXV, or rules or regulations adopted under 51
11Pa.C.S. § 7306 or 71 Pa.C.S. Pt. XXV:

12(i) A provision of this act which amends 51 Pa.C.S.
13§ 7306 or 71 Pa.C.S. Pt. XXV in relation to requirements
14for any of the following:

15(A) Spousal consent.

16(B) Qualification of the State Employees'
17Defined Contribution Plan as a qualified pension plan
18under the Internal Revenue Code of 1986 (Public Law
1999-514, 26 U.S.C. §§ 401(a) and 415(b)) or compliance
20with the Uniformed Services Employment and
21Reemployment Rights Act of 1994 (Public Law 103-353,
22108 Stat. 3149).

23(C) Contributions to, participation in or
24benefits from the State Employees' Defined
25Contribution Plan or State Employees' Defined
26Contribution Trust.

27(D) Domestic relations orders regarding
28alternate payees of participants in the State
29Employees' Defined Contribution Plan.

30(ii) A construction of 51 Pa.C.S. or 71 Pa.C.S. Pt.

1XXV or rules or regulations adopted under 51 Pa.C.S. or
271 Pa.C.S. Pt. XXV or a term or provision of the State
3Employees' Defined Contribution Plan or State Employees'
4Defined Contribution Trust, established by statute or in
5the plan document or trust declaration.

6(4) The provisions of 71 Pa.C.S. Pt. XXV shall remain
7subject to the Internal Revenue Code of 1986 and the
8Uniformed Services Employment and Reemployment Rights Act of
91994 (Public Law 103-353, 108 Stat. 3149), and regulations
10under those statutes, and the General Assembly reserves to
11itself the further exercise of its legislative power to amend
12or supplement the provisions as may be required in order to
13maintain the qualification of the system as a qualified
14pension plan under section 401(a) and other applicable
15provisions of the Internal Revenue Code of 1986 and the
16Uniformed Services Employment and Reemployment Rights Act of
171994 (Public Law 103-353, 108 Stat. 3149).

18Section 402. The following shall apply:

19(1) Nothing in this act shall be construed to mean that
20a calculation or actuarial method used by the School
21Employees' Retirement Board, its actuaries or the Public
22School Employees' Retirement System was not in accordance
23with the provisions of 24 Pa.C.S. Pt. IV or other applicable
24law prior to the effective date of this section.

25(2) Nothing in this act shall be construed to mean that
26a calculation or actuarial method used by the State
27Employees' Retirement Board, its actuaries or the State
28Employees' Retirement System was not in accordance with the
29provisions of 71 Pa.C.S. Pt. XXV or other applicable law
30prior to the effective date of this section.

1Section 403. The following shall apply:

2(1) (Reserved).

3(2) Notwithstanding any other provision of law, a change
4in accrued liability of the State Employees' Retirement
5System created under this act as a result of changes in
6benefits shall be funded in equal dollar installments over a
7period of 20 years beginning July 1, 2014.

8(3) A change in accrued liability as a result of
9amendments to 71 Pa.C.S. §§ 5507 and 5508 or the addition of
1071 Pa.C.S. §§ 5507.1 and 5508.1 shall be funded in equal
11dollar installments over a period of 30 years beginning July
121, 2014.

<-13(4) Payments required to fund a change in accrued
14liability resulting from this act shall be subject to limits
15imposed under this act on employer contributions to the State
16Employees' Retirement System and shall not be subject to
17reamortization for 30 years under 71 Pa.C.S. § 5508.1(c).

18(5) For purposes of 71 Pa.C.S. §§ 5501.2, 5507 and 5508,
19changes under this section shall not be considered to be
20costs added by legislation.

21Section 404. The following shall apply:

22(1) This act shall be construed and administered in such
23a manner that the Public School Employees' Retirement System
24and the School Employees' Defined Contribution Plan shall
25satisfy the requirements necessary to qualify as a qualified
26pension plan under section 401(a) of the Internal Revenue
27Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)), other
28applicable provisions of the Internal Revenue Code of 1986
29and the Uniformed Services Employment and Reemployment Rights
30Act of 1994 (Public Law 103-353, 108 Stat. 3149). The rules,

1regulations and procedures adopted and promulgated by the
2Public School Employees' Retirement Board and the terms and
3conditions of the plan document and trust declaration adopted
4by the Public School Employees' Retirement Board may include
5provisions necessary to accomplish the purpose of this
6section.

7(2) This act shall be construed and administered in a 
8manner that the State Employees' Retirement System and the 
9State Employees' Defined Contribution Plan shall satisfy the 
10requirements necessary to qualify as a qualified pension plan 
11under section 401(a) of the Internal Revenue Code of 1986 
12(Public Law 99-514, 26 U.S.C. § 401(a)), other applicable 
13provisions of the Internal Revenue Code of 1986 and the 
14Uniformed Services Employment and Reemployment Rights Act of 
151994 (Public Law 103-353, 108 Stat. 3149). The rules, 
16regulations and procedures adopted and promulgated by the 
17State Employees' Retirement Board and the terms and 
18conditions of the plan document and trust declaration adopted 
19by the State Employees' Retirement Board may include 
20provisions necessary to accomplish the purpose of this 
21section.

22Section 405. (Reserved).

23Section 406. The following shall apply:

24(1) Notwithstanding any other provision of law,
25fiduciary requirement, actuarial standard of practice or
26other requirement, the members of the Public School
27Employees' Retirement Board, the actuary and employees and
28officials of the Public School Employees' Retirement System
29may not be held liable or in breach or violation of a law or
30standard as individuals, in their official capacity or as a

1governmental or corporate entity, for an action or
2calculation related to calculating and certifying a final
3contribution rate as provided under this act that is
4different from the actuarially required contribution rate as
5appropriately calculated under 24 Pa.C.S. Pt. IV.

6(2) Notwithstanding any other provision of law,
7fiduciary requirement, actuarial standard of practice or
8other requirement, the members of the State Employees'
9Retirement Board, the actuary and other employees and
10officials of the State Employees' Retirement System may not
11be held liable or in breach or violation of a law or standard
12as individuals, in their official capacity or as a
13governmental or corporate entity, for an action or
14calculation related to calculating and certifying a final
15contribution rate as provided under this act that is
16different from the actuarially required contribution rate as
17appropriately calculated under 71 Pa.C.S. Pt. XXV.

18Section 407. Nothing in this act shall be deemed to permit
19the restoration of service credit or retirement benefits which:

20(1) were or are subject to section 16 of Article V of
21the Constitution of Pennsylvania or 42 Pa.C.S. § 3352; or

22(2) the subject of an order of forfeiture under the act
23of July 8, 1978 (P.L.752, No.140), known as the Public
24Employee Pension Forfeiture Act.

25Section 408. Legal challenges to this act shall be subject
26to review as follows:

27(1) Notwithstanding 42 Pa.C.S., all legal challenges to
28the constitutionality of this act shall be filed with the
29prothonotary of the Supreme Court.

30(2) The Supreme Court shall empanel a special tribunal

1composed of seven senior judges chosen at random by lot from
2a list of the senior judges currently serving the Superior,
3Commonwealth and Common Pleas Courts.

4(3) The special tribunal under paragraph (2) shall hear
5and decide a legal challenge to the constitutionality of this
6act in the same manner in which the Supreme Court would hear
7and decide a legal challenge within its original
8jurisdiction.

9Section 409. If a provision of this act or its application
10to any person or circumstance is held invalid, the invalidity
11shall not affect other provisions or applications of this act
12that can be given effect without the invalid provision or
13application.

14Section 410. Nothing in this act shall be construed to mean
15that an interpretation or application of 71 Pa.C.S. Pt. XXV or
16benefits available to members of the State Employees' Retirement
17System was not in accordance with 71 Pa.C.S. Pt. XXV or other
18applicable law, including the Internal Revenue Code of 1986
19(Public Law 99-514, 26 U.S.C. § 1 et seq.) and the Uniformed
20Services Employment and Reemployment Rights Act of 1994 (Public
21Law 103-353, 108 Stat. 3149) before the effective date of this
22subsection.

23Section 411. This act shall take effect immediately.<-

24ARTICLE V<-

25Section 501. The following shall apply:

26(a) The Joint State Government Commission shall establish a
27task force in accordance with this section to develop and make
28recommendations to the General Assembly and the Governor related
29to statutory or other changes that may be implemented to address
30the unfunded liability of the State Employees' Retirement System

1and the Public School Employees' Retirement System in fiscal
2year 2014-2015 and thereafter. At a minimum, the task force
3shall:

4(1) Study factors that will lead to an efficient,
5effective, sustainable and fair retirement system for public
6employers and employees.

7(2) Explore possible reforms to control the escalating
8costs and put the systems on a path to sustainability.

9(3) Conduct an analysis of recent legislative changes in
10this Commonwealth, including the act of November 23, 2010
11(P.L.1269, No.120), entitled "An act amending Titles 24
12(Education) and 71 (State Government) of the Pennsylvania
13Consolidated Statutes, in Title 24, further providing for
14definitions, for mandatory and optional membership, for
15contributions by the Commonwealth, for payments by employers,
16for actuarial cost method, for additional supplemental
17annuities, for further additional supplemental annuities, for
18supplemental annuities commencing 1994, for supplemental
19annuities commencing 1998, for supplemental annuities
20commencing 2002, for supplemental annuities commencing 2003,
21for administrative duties of board, for payments to school
22entities by Commonwealth, for eligibility points for
23retention and reinstatement of service credits and for
24creditable nonschool service; providing for election to
25become a Class T-F member; further providing for classes of
26service, for eligibility for annuities, for eligibility for
27vesting, for regular member contributions, for member
28contributions for creditable school service, for
29contributions for purchase of credit for creditable nonschool
30service, for maximum single life annuity, for disability

1annuities, for member's options, for duties of board
2regarding applications and elections of members and for
3rights and duties of school employees and members; providing
4for Independent Fiscal Office study; in Title 71,
5establishing an independent fiscal office and making a
6related repeal; further providing for definitions, for
7credited State service, for retention and reinstatement of
8service credits, for creditable nonstate service and for
9classes of service; providing for election to become a Class
10A-4 member; further providing for eligibility for annuities
11and for eligibility for vesting; providing for shared-risk
12member contributions for Class A-3 and Class A-4 service;
13further providing for waiver of regular member contributions
14and Social Security integration member contributions, for
15member contributions for purchase of credit for previous
16State service or to become a full coverage member, for
17contributions for the purchase of credit for creditable
18nonstate service, for contributions by the Commonwealth and
19other employers, for actuarial cost method, for maximum
20single life annuity, for disability annuities and for
21member's options; providing for payment of accumulated
22deductions resulting from Class A-3 service; further
23providing for additional supplemental annuities, for further
24additional supplemental annuities, for supplemental annuities
25commencing 1994, for supplemental annuities commencing 1998,
26for supplemental annuities commencing 2002, for supplemental
27annuities commencing 2003, for special supplemental
28postretirement adjustment of 2002, for administrative duties
29of the board, for duties of board to advise and report to
30heads of departments and members, for duties of board

1regarding applications and elections of members, for
2installment payments of accumulated deductions, for rights
3and duties of State employees and members, for members'
4savings account, for State accumulation account, for State
5Police Benefit Account, for Enforcement Officers' Benefit
6Account, for supplemental annuity account and for
7construction of part; and providing for Independent Fiscal
8Office study, for retirement eligibility of Pennsylvania
9State Police officers or members, for a prohibition on the
10issuance of pension obligation bonds, for holding certain
11public officials harmless, for construction of calculation or
12actuarial method, for applicability and for certain
13operational provisions," to assess the impact those changes
14have had or will have on the pension systems.

15(4) Conduct an analysis of recent legislative changes to
16peer public retirement systems in other states with unfunded
17liability issues similar to those facing this Commonwealth.

18(5) Conduct an analysis of changes of utilization in
19State-funded assistance programs after recent legislative
20changes to peer public retirement systems in other states
21with unfunded liability issues similar to those facing this
22Commonwealth.

23(6) Provide recommendations and analyze implications of
24potential changes to plan design, benefits to employees,
25administrative costs, adequacy of funding for the systems,
26contribution rates and individual benefits.

27(7) Consider all sources of revenue, including revenue
28raising measures and pension obligation bonds as a means to
29fund unfunded actuarial liability costs.

30(8) Develop guiding principles for plan design and

1selection taking into consideration recruitment, retention
2and retirement security.

3(9) Develop recommendations to restore the State and
4school pension plans to full funding.

5(b) The task force shall be composed of the following 30
6individuals:

7(1) The Secretary of Budget or a designee.

8(2) The State Treasurer or a designee.

9(3) The Auditor General or a designee.

10(4) Four individuals appointed by the Governor.

11(5) Four members of the General Assembly, one each
12appointed by the Majority Leader of the Senate, the Minority
13Leader of the Senate, the Majority Leader of the House of
14Representatives and the Minority Leader of the House of
15Representatives respectively.

16(6) Four members of the general public with experience
17in public and private pension systems, one each appointed by
18the Majority Leader of the Senate, the Minority Leader of the
19Senate, the Majority Leader of the House of Representatives
20and the Minority Leader of the House of Representatives
21respectively.

22(7) The chairman of the Public School Employees'
23Retirement Board or a designee.

24(8) The chairman of the State Employees' Retirement
25Board or a designee.

26(9) The director of the Independent Fiscal Office or a
27designee.

28(10) The chair of the Public Employees' Retirement
29Commission or a designee.

30(11) One individual selected by the Governor based on

1the recommendation of the Pennsylvania Association of School
2Business Officials.

3(12) One individual selected by the Governor based on
4the recommendation of the Pennsylvania School Board
5Association.

6(13) One individual selected by the Governor based on
7the recommendation of the Pennsylvania Association of School
8Superintendents.

9(14) One individual selected by the Governor based on
10the recommendation of the Pennsylvania State Education
11Association.

12(15) One individual selected by the Governor based on
13the recommendation of the Pennsylvania chapter of the
14American Federation of Teachers.

15(16) One individual selected by the Governor based on
16the recommendation of the American Federation of State,
17County and Municipal Employees.

18(17) One individual selected by the Governor based on
19the recommendation of the Pennsylvania chapter of the Service
20Employees International Union.

21(18) One individual selected by the Governor based on
22the recommendation of the labor organization representing
23Pennsylvania State Police troopers.

24(19) One individual appointed by the Governor
25representing the taxpayer groups of this Commonwealth.

26(20) One individual selected by the Governor based on
27the recommendation of the Pennsylvania Chamber of Business
28and Industry.

29(21) One individual selected by the Governor based on
30the recommendation of the Pennsylvania Chapter of the

1National Federation of Independent Business.

2(c) The chairman of the Public School Employees' Retirement
3Board and the chairman of the State Employees' Retirement Board
4shall jointly serve as cochairs of the task force.

5(d) Appointments to the task force shall be completed within
620 days of the effective date of this act.

7(e) The task force shall hold an organizational meeting no
8later than 15 days after the appointments to the task force have
9been made under subsection (d)(2) and shall meet at least bi-
10monthly. The following shall apply to task force meetings:

11(1) Meetings may be conducted via teleconference.

12(2) Working groups or committees may be established to
13address specific issues.

14(3) 65 Pa.C.S. Ch. 7 (relating to open meetings).

15(4) Reasonable public comment period shall be provided.

16(5) Official action of the task force shall be by
17majority vote.

18(f) On or before March 31, 2015, the task force shall
19present its report and recommendations to the Governor, the
20chairperson and minority chairperson of the Finance Committee of
21the Senate, the chairperson and minority chairperson of the
22Finance Committee of the House of Representatives, the
23chairperson and minority chairperson of the Appropriations
24Committee of the Senate and the chairperson and minority
25chairperson of the Appropriations Committee of the House of
26Representatives. Upon request by members of the task force, the
27cochairs of the task force shall submit a minority report.
28Nothing in this subsection shall be construed to prohibit the
29task force from making interim reports as it deems necessary.

30(g) The task force shall expire on July 1, 2015.

1Section 502. This act shall take effect immediately.