PRINTER'S NO. 292
No. 295 Session of 1999
INTRODUCED BY HERMAN, CURRY, HUTCHINSON, SEYFERT, STRITTMATTER,
ARMSTRONG, BAKER, BELARDI, BELFANTI, BUNT, CORRIGAN, COY,
GEIST, GEORGE, HARHAI, HORSEY, MAHER, McCALL, MICOZZIE,
NICKOL, RAMOS, READSHAW, ROSS, SAYLOR, SCHULER, SHANER,
B. SMITH, STABACK, STERN, SURRA, E. Z. TAYLOR, TIGUE,
TRAVAGLIO, TULLI, VANCE AND WOGAN, FEBRUARY 2, 1999
REFERRED TO COMMITTEE ON STATE GOVERNMENT, FEBRUARY 2, 1999
AN ACT
1 Amending Titles 24 (Education) and 71 (State Government) of the
2 Pennsylvania Consolidated Statutes, providing for
3 contributions for creditable State service, for nonschool
4 service, for incomplete payments, for annuity termination,
5 for regulations and procedures, for member contributions, for
6 payroll deductions, for elections of members, for multiple
7 service status, for duties of employers, for creditable non-
8 State service, for purchase of credit, for incomplete
9 payments, for termination of annuities, for regulations and
10 procedures, for member contributions, for duties of board and
11 heads of departments and for election as multiple service
12 member.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Sections 8323(d), 8324(b) and (d), 8325, 8346,
16 8502(h) and (m) and 8504(b) of Title 24 of the Pennsylvania
17 Consolidated Statutes are amended to read:
18 § 8323. Member contributions for creditable school service.
19 * * *
20 (d) Certification and payment of contributions.--
21 (1) In all cases other than for the purchase of credit
1 for sabbatical leave and activated military service leave
2 beginning before the effective date of paragraph (2), the
3 amount payable shall be certified by the board in accordance
4 with methods approved by the actuary and may be paid in a
5 lump sum within 90 days or, in the case of an active member
6 or eligible State employee who is an active member of the
7 State Employees' Retirement System, may be amortized with
8 statutory interest through salary deductions or by personal
9 checks in amounts agreed upon by the member and the board. In
10 the case of an eligible State employee who is an active
11 member of the State Employees' Retirement System, the agreed
12 upon salary deductions shall be remitted to the State
13 Employees' Retirement Board, which shall certify and transfer
14 to the board the amounts paid.
15 (2) In the case of activated military service leave
16 beginning before the effective date of this paragraph, the
17 amount payable may be paid according to this subsection or
18 subsection (c.1), but all lump sum payments must be made and
19 all amortization payments commenced within one year of the
20 termination of activated military service leave.
21 § 8324. Contributions for purchase of credit for creditable
22 nonschool service.
23 * * *
24 (b) Nonintervening military service.--The amount due for the
25 purchase of credit for military service other than intervening
26 military service shall be determined by applying the member's
27 basic contribution rate plus the normal contribution rate as
28 provided in section 8328 (relating to actuarial cost method) at
29 the time of entry of the member into school service subsequent
30 to such military service to one-third of his total compensation
19990H0295B0292 - 2 -
1 received during the first three years of such subsequent
2 credited school service and multiplying the product by the
3 number of years and fractional part of a year of creditable
4 nonintervening military service being purchased together with
5 statutory interest during all periods of subsequent school and
6 State service to date of purchase. Upon certification of the
7 amount due, payment may be made in a lump sum within 90 days or
8 in the case of an active member or eligible State employee who
9 is an active member of the State Employees' Retirement System it
10 may be amortized with statutory interest through salary
11 deductions or by personal checks in amounts agreed upon by the
12 member and the board. In the case of an eligible State employee
13 who is an active member of the State Employees' Retirement
14 System, the agreed upon salary deductions shall be remitted to
15 the State Employees' Retirement Board, which shall certify and
16 transfer to the board the amounts paid. Application may be filed
17 for all such military service credit upon completion of three
18 years of subsequent credited school service and shall be
19 credited as Class T-C service.
20 * * *
21 (d) Other creditable nonschool service.--Contributions on
22 account of Class T-C credit for creditable nonschool service
23 other than military service shall be determined by applying the
24 member's basic contribution rate plus the normal contribution
25 rate as provided in section 8328 at the time of the member's
26 entry into school service subsequent to such creditable
27 nonschool service to his total compensation received during the
28 first year of subsequent credited school service and multiplying
29 the product by the number of years and fractional part of a year
30 of creditable nonschool service being purchased together with
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1 statutory interest during all periods of subsequent school or
2 State service to the date of purchase, except that in the case
3 of purchase of credit for creditable nonschool service as set
4 forth in section 8304(b)(5) (relating to creditable nonschool
5 service) the member shall pay only the employee's share unless
6 otherwise provided by law. Upon certification of the amount due,
7 payment may be made in a lump sum within 90 days or in the case
8 of an active member or eligible State employee who is an active
9 member of the State Employees' Retirement System it may be
10 amortized with statutory interest through salary deductions or
11 by personal checks in amounts agreed upon by the member and the
12 board. In the case of an eligible State employee who is an
13 active member of the State Employees' Retirement System, the
14 agreed upon salary deductions shall be remitted to the State
15 Employees' Retirement Board, which shall certify and transfer to
16 the board the amounts paid.
17 * * *
18 § 8325. Incomplete payments.
19 In the event that a member terminates school service or a
20 multiple service member who is an active member of the State
21 Employees' Retirement System terminates State service before any
22 agreed upon payments or return of benefits on account of
23 returning to school service or entering State service and
24 electing multiple service have been completed the member or
25 multiple service member who is an active member of the State
26 Employees' Retirement System shall have the right to pay within
27 30 days of termination of school service or State service the
28 balance due, including interest, in a lump sum and the annuity
29 shall be calculated including full credit for the previous
30 school service, creditable nonschool service, or full-coverage
19990H0295B0292 - 4 -
1 membership. In the event a member does not pay the balance due
2 within 30 days of termination of school service or in the event
3 a member dies in school service or within 30 days of termination
4 of school service or in the case of a multiple service member
5 who is an active member of the State Employees' Retirement
6 System, does not pay the balance due within 30 days of
7 termination of State service or dies in State service or within
8 30 days of termination of State service and before the agreed
9 upon payments have been completed, the present value of the
10 benefit otherwise payable shall be reduced by the balance due,
11 including interest, and the benefit payable shall be calculated
12 as the actuarial equivalent of such reduced present value.
13 § 8346. Termination of annuities.
14 (a) General rule.--If an annuitant returns to school service
15 or enters or has entered State service and elects multiple
16 service membership, any annuity payable to him under this part
17 shall cease effective upon the date of his return to school
18 service or entering State service and in the case of an annuity
19 other than a disability annuity the present value of such
20 annuity, adjusted for full coverage in the case of a joint
21 coverage member who makes the appropriate back contributions for
22 full coverage, shall be frozen as of the date such annuity
23 ceases. An annuitant who is credited with an additional 10% of
24 membership service as provided in section 8302(b.2) (relating to
25 credited school service) and who returns to school service,
26 except as provided in subsection (b), shall forfeit such
27 credited service and shall have his frozen present value
28 adjusted as if his 10% retirement incentive had not been applied
29 to his account. In the event that the cost-of-living increase
30 enacted December 18, 1979, occurred during the period of such
19990H0295B0292 - 5 -
1 State or school employment, the frozen present value shall be
2 increased, on or after the member attains superannuation age, by
3 the percent applicable had he not returned to service.
4 (a.1) Return of benefits.--In the event an annuitant whose
5 annuity ceases pursuant to this section receives any annuity
6 payment, including a lump sum payment pursuant to section 8345
7 (relating to member's options) on or after the date of his
8 return to school service or entering State service, he shall
9 return to the board the amount so received plus statutory
10 interest. The amount payable shall be certified in each case by
11 the board in accordance with methods approved by the actuary and
12 shall be paid in a lump sum within 90 days or in the case of an
13 active member or State employee who is an active member of the
14 State Employees' Retirement System may be amortized with
15 statutory interest through salary deductions in amounts agreed
16 upon by the member and the board. In the case of a State
17 employee who is an active member of the State Employees'
18 Retirement System, the agreed upon salary deductions shall be
19 remitted to the State Employees' Retirement Board, which shall
20 certify and transfer to the board the amounts paid.
21 (b) Return to school service during emergency.--When, in the
22 judgment of the employer, an emergency creates an increase in
23 the work load such that there is serious impairment of service
24 to the public or in the event of a shortage of appropriate
25 subject certified teachers, an annuitant may be returned to
26 school service for a period not to exceed 95 full-day sessions
27 in any school year without loss of his annuity. In computing the
28 number of days an annuitant has returned to school service, any
29 amount of time less than one-half of a day shall be counted as
30 one-half of a day.
19990H0295B0292 - 6 -
1 (c) Subsequent discontinuance of service.--Upon subsequent
2 discontinuance of service, such member other than a former
3 annuitant who had the effect of his frozen present value
4 eliminated in accordance with subsection (d) or a former
5 disability annuitant shall be entitled to an annuity which is
6 actuarially equivalent to the sum of the present value as
7 determined under subsection (a) and the present value of a
8 maximum single life annuity based on years of service credited
9 subsequent to reentry in the system and his final average salary
10 computed by reference to his compensation during his entire
11 period of school and State service.
12 (d) Elimination of the effect of frozen present value.--
13 (1) An annuitant who returns to school service and earns
14 three eligibility points by performing credited school
15 service following the most recent period of receipt of an
16 annuity under this part, or an annuitant who enters State
17 service and:
18 (i) is a multiple service member; or
19 (ii) who elects multiple service membership, and
20 earns three eligibility points by performing credited State
21 service or credited school service following the most recent
22 period of receipt of an annuity under this part, and who had
23 the present value of his annuity frozen in accordance with
24 subsection (a), shall qualify to have the effect of the
25 frozen present value resulting from all previous periods of
26 retirement eliminated, provided that all payments under
27 Option 4 and annuity payments payable during previous periods
28 of retirement plus interest as set forth in paragraph (3)
29 shall be returned to the fund in the form of an actuarial
30 adjustment to his subsequent benefits or in such form as the
19990H0295B0292 - 7 -
1 board may otherwise direct.
2 (2) Upon subsequent discontinuance of service and the
3 filing of an application for an annuity, a former annuitant
4 who qualifies to have the effect of a frozen present value
5 eliminated under this subsection shall be entitled to receive
6 the higher of either:
7 (i) an annuity (prior to optional modification)
8 calculated as if the freezing of the former annuitant's
9 account pursuant to subsection (a) had not occurred,
10 adjusted according to paragraph (3), provided that a
11 former annuitant of the system or a former annuitant of
12 the State Employees' Retirement System who retired under
13 a provision of law granting additional service credit if
14 termination of school or State service or retirement
15 occurred during a specific period of time shall not be
16 permitted to retain the additional service credit under
17 the prior law when the annuity is computed for his most
18 recent retirement; or
19 (ii) an annuity (prior to optional modification)
20 calculated as if the former annuitant did not qualify to
21 have the effect on the frozen present value eliminated,
22 unless the former annuitant notifies the board in writing by
23 the later of the date the application for annuity is filed or
24 the effective date of retirement that the former annuitant
25 wishes to receive the lower annuity.
26 (3) In addition to any other adjustment to the present
27 value of the maximum single life annuity that a member may be
28 entitled to receive that occurs as a result of any other
29 provision of law, the present value of the maximum single
30 life annuity shall be reduced by all amounts paid or payable
19990H0295B0292 - 8 -
1 to him during all previous periods of retirement plus
2 interest on these amounts until the date of subsequent
3 retirement. The interest for each year shall be calculated
4 based upon the annual interest rate adopted for that school
5 year by the board for the calculation of the normal
6 contribution rate pursuant to section 8328(b) (relating to
7 actuarial cost method).
8 § 8502. Administrative duties of board.
9 * * *
10 (h) Regulations and procedures.--The board shall, with the
11 advice of the Attorney General and the actuary, adopt and
12 promulgate rules and regulations for the uniform administration
13 of the system. No regulation establishing a period of time to
14 elect multiple service shall allow any such election more than
15 365 days after entry into the system as an active member. The
16 actuary shall approve in writing all computational procedures
17 used in the calculation of contributions and benefits, and the
18 board shall by resolution adopt such computational procedures,
19 prior to their application by the board. Such rules, regulations
20 and computational procedures as so adopted from time to time and
21 as in force and effect at any time, together with such tables as
22 are adopted and published pursuant to subsection (j) as
23 necessary for the calculation of annuities and other benefits,
24 shall be as effective as if fully set forth in this part. Any
25 actuarial assumption specified in or underlying any such rule,
26 regulation or computational procedure and utilized as a basis
27 for determining any benefit shall be applied in a uniform
28 manner.
29 * * *
30 (m) Member contributions and interest.--The board shall
19990H0295B0292 - 9 -
1 cause each member's contributions, including payroll deductions,
2 pickup contributions and all other payments, including, but not
3 limited to, amounts collected by the State Employees' Retirement
4 System for the reinstatement of previous school service or
5 creditable nonschool service, and amounts paid to return
6 benefits paid after the date of return to school service or
7 entering State service representing lump sum payments made
8 pursuant to section 8345(a)(4)(iii) (relating to member's
9 options) and member's annuity payments, but not including other
10 benefits returned pursuant to section 8346(a.1) (relating to
11 termination of annuities) to be credited to the account of such
12 member and shall pay all such amounts into the fund. Such
13 contributions shall be credited with statutory interest until
14 date of termination of service, except in the case of a vestee,
15 who shall have such interest credited until the effective date
16 of retirement or until the return of his accumulated deductions,
17 if he so elects; and in the case of a multiple service member
18 who shall have such interest credited until termination of
19 service in both the school and the State systems.
20 * * *
21 § 8504. Duties of board to report to State Employees'
22 Retirement Board.
23 * * *
24 (b) Multiple service membership of State employees.--Upon
25 receipt of notification from the State Employees' Retirement
26 Board that a former school employee has become an active member
27 in the State Employees' Retirement System and has elected to
28 receive credit for multiple service, the board shall certify to
29 the State Employees' Retirement Board and concurrently to the
30 member:
19990H0295B0292 - 10 -
1 (1) The total credited service in the system and the
2 number of years and fractional part of a year of service
3 credited in each class of service.
4 (2) The annual compensation received each school year by
5 the member for credited school service.
6 (3) If the member has elected payroll deductions
7 pursuant to section 8323 (relating to member contributions
8 for creditable school service) or 8324 (relating to
9 contributions for purchase of credit for creditable nonschool
10 service), the amount of the deductions and the period over
11 which they are to be made.
12 * * *
13 Section 2. Section 8505(b) of Title 24 is amended and the
14 section is amended by adding a subsection to read:
15 § 8505. Duties of board regarding applications and elections of
16 members.
17 * * *
18 (b) State employees electing multiple service status.--Upon
19 receipt of notification from the State Employees' Retirement
20 Board that a former school employee has become an active member
21 in the State Employees' Retirement System and has elected to
22 become a member with multiple service status, the board shall:
23 (1) In case of a member who is receiving an annuity from
24 the system, discontinue payments, transfer the present
25 value[, at that time,] of the member's annuity at the time of
26 entering State service, plus the amount withdrawn in a lump
27 sum payment, on or after the date of entering State service,
28 pursuant to section 8345 (relating to member's options), with
29 statutory interest to date of transfer, minus the amount to
30 be returned to the board on account of return to service that
19990H0295B0292 - 11 -
1 the board has determined is to be credited in the member's
2 savings account, from the annuity reserve account to the
3 [members'] member's savings account and resume crediting of
4 statutory interest on the amount restored to his credit
5 [and], transfer the balance of the present value of the total
6 annuity, minus the amount to be returned to the board on
7 account of return to service that the board has determined is
8 to be credited in the State accumulation account, from the
9 annuity reserve account to the State accumulation account,
10 and certify to the member the amount of lump sum and annuity
11 payments with statutory interest to be returned to the board
12 by him, and of those amounts, which amount shall be credited
13 to the member's savings account and credited with statutory
14 interest as such payments are returned and which amount shall
15 be credited to the State accumulation account.
16 (2) In case of a member who is not receiving an annuity
17 from the system and who has not withdrawn his accumulated
18 deductions, continue or resume the crediting of statutory
19 interest on his accumulated deductions.
20 (3) In case of a member who is not receiving an annuity
21 from the system and his accumulated deductions were
22 withdrawn, certify to the member the accumulated deductions
23 as they would have been at the time of his separation had he
24 been a full coverage member together with statutory interest
25 for all periods of subsequent State and school service to the
26 date of repayment. Such amount shall be restored by him and
27 shall be credited with statutory interest as such payments
28 are restored.
29 * * *
30 (k) School employees electing multiple service status.--Upon
19990H0295B0292 - 12 -
1 receipt of notification from the State Employees' Retirement
2 Board that a member who has elected multiple service membership
3 has elected to restore State service or purchase creditable non-
4 State service in the State Employees' Retirement System or is
5 obligated to return benefits to the State Employees' Retirement
6 Board on account of electing multiple service membership has
7 elected to pay all or part of the amount due to the State
8 Employees' Retirement Board by salary deductions, the board
9 shall collect from the employee the amounts certified by the
10 State Employees' Retirement Board as due and owing by the member
11 and certify and transfer to the State Employees' Retirement
12 Board the amounts so collected.
13 Section 3. Sections 8506(c), (g) and (h) and 8507(c) of
14 Title 24 are amended to read:
15 § 8506. Duties of employers.
16 * * *
17 (c) Member and employer contributions.--The employer shall
18 certify to its treasurer the required member contributions
19 picked up and any other contributions, including, but not
20 limited to, amounts collected for the State Employees'
21 Retirement Board for the reinstatement of previous State service
22 or creditable non-State service and amounts paid to return
23 benefits paid after the date of return to State service or
24 entering school service, deducted from each payroll. On July 1,
25 1996, and upon any later effective date of employment of any
26 noneligible member to whom limitation under IRC § 401(a)(17)
27 applies or is expected to apply, the employer shall identify to
28 its treasurer or other payroll administrator the member or
29 members to whom such limit applies or may apply and shall cause
30 any such member's contributions deducted from payroll and the
19990H0295B0292 - 13 -
1 employer's contribution on his behalf to cease at the limitation
2 under IRC § 401(a)(17) on the payroll date if and when such
3 limit shall be reached. The treasurer shall remit to the
4 secretary of the board each month the total of the member
5 contributions and the amount due from the employer determined in
6 accordance with section 8327 (relating to payments by
7 employers). If, upon crediting the remittance of a noneligible
8 member's contributions to the member's savings account, the
9 board shall determine that such account shall have been credited
10 with pickup contributions attributable to compensation which is
11 in excess of the annual compensation limit under IRC §
12 401(a)(17), or with total member contributions for such member
13 which would cause such member's contributions or benefits to
14 exceed any applicable limitation on contributions or benefits
15 under IRC § 401(a)(17), the board shall as soon as practicable
16 refund to the member from his individual member account such
17 amount, together with the statutory interest thereon, as will
18 cause the member's total member contributions not to exceed the
19 applicable limit. The payment of any such refund to the member
20 shall be charged to the member's savings account.
21 * * *
22 (g) Former State employee contributors.--The employer shall,
23 upon the employment of a former member of the State Employees'
24 Retirement System who is not an annuitant of the State
25 Employees' Retirement System, advise such employee of his right
26 to elect multiple service membership within [30] 365 days of
27 entry into the system or such other period as the board may by
28 regulation establish and, in the case any such employee who so
29 elects has withdrawn his accumulated deductions, require him to
30 restore his accumulated deductions as they would have been at
19990H0295B0292 - 14 -
1 the time of his separation had he been a full coverage member,
2 together with statutory interest for all periods of subsequent
3 State and school service to date of repayment. The employer
4 shall advise the board of such election.
5 (h) Former State employee annuitants.--The employer shall,
6 upon the employment of an annuitant of the State Employees'
7 Retirement System who applies for membership in the system,
8 advise such employee that he may elect multiple service
9 membership within [30] 365 days of entry into the system or such
10 other period as the board may by regulation establish and that
11 if he so elects his annuity from the State Employees' Retirement
12 System will be discontinued effective upon the date of his
13 return to school service and, upon termination of school service
14 and application for an annuity, the annuity will be adjusted in
15 accordance with section 8346 (relating to termination of
16 annuities). The employer shall advise the board of such
17 election.
18 * * *
19 § 8507. Rights and duties of school employees and members.
20 * * *
21 (c) Multiple service membership.--Any active member who was
22 formerly an active member in the State Employees' Retirement
23 System may elect to become a multiple service member. Such
24 election shall occur no later than [30] 365 days after becoming
25 an active member in this system or such other period as the
26 board may by regulation establish.
27 * * *
28 Section 4. Sections 5304(a), 5504(b), 5505(b) and (d), 5506,
29 5706, 5902(h) and (l) and 5904(b) of Title 71 are amended to
30 read:
19990H0295B0292 - 15 -
1 § 5304. Creditable nonstate service.
2 (a) Eligibility.--An active member or a multiple service
3 member who is a school employee and an active member of the
4 Public School Employees' Retirement System shall be eligible for
5 Class A service credit for creditable nonstate service as set
6 forth in subsections (b) and (c) except that intervening
7 military service shall be credited in the class of service for
8 which the member was eligible at the time of entering into
9 military service and for which he makes the required
10 contributions and except that a multiple service member who is a
11 school employee and an active member of the Public School
12 Employees' Retirement System shall not be eligible to purchase
13 service credit for creditable nonstate service set forth in
14 subsection (c)(5).
15 * * *
16 § 5504. Member contributions for the purchase of credit for
17 previous State service or to become a full coverage
18 member.
19 * * *
20 (b) Certification and method of payment.--The amount payable
21 shall be certified in each case by the board in accordance with
22 methods approved by the actuary and shall be paid in a lump sum
23 within 30 days or in the case of an active member or eligible
24 school employee who is an active member of the Public School
25 Employees' Retirement System may be amortized with statutory
26 interest through salary deductions in amounts agreed upon by the
27 member and the board. In the case of an eligible school employee
28 who is an active member of the Public School Employees'
29 Retirement System, the agreed upon salary deductions shall be
30 remitted to the Public School Employees' Retirement Board, which
19990H0295B0292 - 16 -
1 shall certify and transfer to the board the amounts paid.
2 § 5505. Contributions for the purchase of credit for creditable
3 nonstate service.
4 * * *
5 (b) Nonintervening military service.--
6 (1) The amount due for the purchase of credit for
7 military service other than intervening military service
8 shall be determined by applying the member's basic
9 contribution rate, the additional contribution rate plus the
10 Commonwealth normal contribution rate for active members at
11 the time of entry, subsequent to such military service, of
12 the member into State service to his average annual rate of
13 compensation over the first three years of such subsequent
14 State service and multiplying the result by the number of
15 years and fractional part of a year of creditable
16 nonintervening military service being purchased together with
17 statutory interest during all periods of subsequent State and
18 school service to date of purchase. Upon application for
19 credit for such service, payment shall be made in a lump sum
20 within 30 days or in the case of an active member or eligible
21 school employee who is an active member of the Public School
22 Employees' Retirement System it may be amortized with
23 statutory interest through salary deductions in amounts
24 agreed upon by the member and the board. In the case of an
25 eligible school employee who is an active member of the
26 Public School Employees' Retirement System, the agreed upon
27 salary deductions shall be remitted to the Public School
28 Employees' Retirement Board, which shall certify and transfer
29 to the board the amounts paid. Application may be filed for
30 all such military service credit upon completion of three
19990H0295B0292 - 17 -
1 years of subsequent State service and shall be credited as
2 Class A service.
3 (2) Applicants may purchase credit as follows:
4 (i) one purchase of the total amount of creditable
5 nonintervening military service; or
6 (ii) one purchase per 12-month period of a portion
7 of creditable nonintervening military service.
8 The amount of each purchase shall be not less than one year
9 of creditable nonintervening military service.
10 * * *
11 (d) Nonmilitary and nonmagisterial service.--Contributions
12 on account of credit for creditable nonstate service other than
13 military and magisterial service shall be determined by applying
14 the member's basic contribution rate, the additional
15 contribution rate plus the Commonwealth normal contribution rate
16 for active members at the time of entry subsequent to such
17 creditable nonstate service of the member into State service to
18 his compensation at the time of entry into State service and
19 multiplying the result by the number of years and fractional
20 part of a year of creditable nonstate service being purchased
21 together with statutory interest during all periods of
22 subsequent State and school service to the date of purchase.
23 Upon application for credit for such service payment shall be
24 made in a lump sum within 30 days or in the case of an active
25 member or eligible school employee who is an active member of
26 the Public School Employees' Retirement System it may be
27 amortized with statutory interest through salary deductions in
28 amounts agreed upon by the member and the board. In the case of
29 an eligible school employee who is an active member of the
30 Public School Employees' Retirement System, the agreed upon
19990H0295B0292 - 18 -
1 salary deductions shall be remitted to the Public School
2 Employees' Retirement Board, which shall certify and transfer to
3 the board the amounts paid.
4 * * *
5 § 5506. Incomplete payments.
6 In the event that a member terminates State service or a
7 multiple service member who is an active member of the Public
8 School Employees' Retirement System terminates school service
9 before the agreed upon payments for credit for previous State
10 service, creditable nonstate service, social security
11 integration, [or] full coverage membership or return of benefits
12 on account of returning to State service or entering school
13 service and electing multiple service have been completed, the
14 member or multiple service member who is an active member of the
15 Public School Employees' Retirement System shall have the right
16 to pay within 30 days of termination of State service or school
17 service the balance due, including interest, in a lump sum and
18 the annuity shall be calculated including full credit for the
19 previous State service, creditable nonstate service, social
20 security integration, or full coverage membership. In the event
21 a member does not pay the balance due within 30 days of
22 termination of State service or in the event a member dies in
23 State service or within 30 days of termination of State service
24 or in the case of a multiple service member who is an active
25 member of the Public School Employees' Retirement System, does
26 not pay the balance due within 30 days of termination of school
27 service or dies in school service or within 30 days of
28 termination of school service and before the agreed upon
29 payments have been completed, the present value of the benefit
30 otherwise payable shall be reduced by the balance due, including
19990H0295B0292 - 19 -
1 interest, and the benefit payable shall be calculated as the
2 actuarial equivalent of such reduced present value.
3 § 5706. Termination of annuities.
4 (a) General rule.--If the annuitant returns to State service
5 or enters or has entered school service and elects multiple
6 service membership, any annuity payable to him under this part
7 shall cease effective upon the date of his return to State
8 service or entering school service and in the case of an annuity
9 other than a disability annuity the present value of such
10 annuity, adjusted for full coverage in the case of a joint
11 coverage member who makes the appropriate back contributions for
12 full coverage, shall be frozen as of the date such annuity
13 ceases. An annuitant who is credited with an additional 10% of
14 Class A and Class C service as provided in section 5302(c)
15 (relating to credited State service) and who returns to State
16 service shall forfeit such credited service and shall have his
17 frozen present value adjusted as if his 10% retirement incentive
18 had not been applied to his account. In the event that the cost-
19 of-living increase enacted December 18, 1979 occurred during the
20 period of such State or school employment, the frozen present
21 value shall be increased, on or after the member attains
22 superannuation age, by the percent applicable had he not
23 returned to service. This subsection shall not apply in the case
24 of any annuitant who may render services to the Commonwealth in
25 the capacity of an independent contractor or as a member of an
26 independent board or commission or as a member of a departmental
27 administrative or advisory board or commission when such members
28 of independent or departmental boards or commissions are
29 compensated on a per diem basis for not more than 150 days per
30 calendar year.
19990H0295B0292 - 20 -
1 (a.1) Return to State service during emergency.--When, in
2 the judgment of the employer, an emergency creates an increase
3 in the work load such that there is serious impairment of
4 service to the public, an annuitant may be returned to State
5 service for a period not to exceed 95 days in any fiscal year
6 without loss of his annuity. In computing the number of days an
7 annuitant has returned to State service, any amount of time less
8 than one-half of a day shall be counted as one-half of a day.
9 For agencies, boards and commissions under the Governor's
10 jurisdiction, the approval of the Governor that an emergency
11 exists shall be required before an annuitant may be returned to
12 State service.
13 (a.2) Return of benefits.--In the event an annuitant whose
14 annuity ceases pursuant to this section receives any annuity
15 payment, including a lump sum payment pursuant to section 5705
16 (relating to member's options) on or after the date of his
17 return to State service or entering school service, he shall
18 return to the board the amount so received plus statutory
19 interest. The amount payable shall be certified in each case by
20 the board in accordance with methods approved by the actuary and
21 shall be paid in a lump sum within 30 days or in the case of an
22 active member or school employee who is an active member of the
23 Public School Employees' Retirement System may be amortized with
24 statutory interest through salary deductions in amounts agreed
25 upon by the member and the board. In the case of a school
26 employee who is an active member of the Public School Employees'
27 Retirement System, the agreed upon salary deductions shall be
28 remitted to the Public School Employees' Retirement Board, which
29 shall certify and transfer to the board the amounts paid.
30 (b) Subsequent discontinuance of service.--Upon subsequent
19990H0295B0292 - 21 -
1 discontinuance of service, such member other than a former
2 annuitant who had the effect of his frozen present value
3 eliminated in accordance with subsection (c) or a former
4 disability annuitant shall be entitled to an annuity which is
5 actuarially equivalent to the sum of the present value as
6 determined under subsection (a) and the present value of a
7 maximum single life annuity based on years of service credited
8 subsequent to reentry in the system and his final average salary
9 computed by reference to his compensation during his entire
10 period of State and school service.
11 (c) Elimination of the effect of frozen present value.--
12 (1) An annuitant who returns to State service and earns
13 three eligibility points by performing credited State service
14 following the most recent period of receipt of an annuity
15 under this part, or an annuitant who enters school service
16 and:
17 (i) is a multiple service member; or
18 (ii) who elects multiple service membership, and
19 earns three eligibility points by performing credited State
20 service or credited school service following the most recent
21 period of receipt of an annuity under this part, and who had
22 the present value of his annuity frozen in accordance with
23 subsection (a), shall qualify to have the effect of the
24 frozen present value resulting from all previous periods of
25 retirement eliminated, provided that all payments under
26 Option 4 and annuity payments payable during previous periods
27 of retirement plus interest as set forth in paragraph (3)
28 shall be returned to the fund in the form of an actuarial
29 adjustment to his subsequent benefits or in such form as the
30 board may otherwise direct.
19990H0295B0292 - 22 -
1 (2) Upon subsequent discontinuance of service and the
2 filing of an application for an annuity, a former annuitant
3 who qualifies to have the effect of a frozen present value
4 eliminated under this subsection shall be entitled to receive
5 the higher of either:
6 (i) an annuity (prior to optional modification)
7 calculated as if the freezing of the former annuitant's
8 account pursuant to subsection (a) had not occurred,
9 adjusted according to paragraph (3), provided that a
10 former annuitant of the system or a former annuitant of
11 the Public School Employees' Retirement System who
12 retired under a provision of law granting additional
13 service credit if termination of State or school service
14 or retirement occurred during a specific period of time
15 shall not be permitted to retain the additional service
16 credit under the prior law when the annuity is computed
17 for his most recent retirement; or
18 (ii) an annuity (prior to optional modification)
19 calculated as if the former annuitant did not qualify to
20 have the effect of the frozen present value eliminated,
21 unless the former annuitant notifies the board in writing by
22 the later of the date the application for annuity is filed or
23 the effective date of retirement that the former annuitant
24 wishes to receive the lower annuity.
25 (3) In addition to any other adjustment to the present
26 value of the maximum single life annuity that a member may be
27 entitled to receive that occurs as a result of any other
28 provision of law, the present value of the maximum single
29 life annuity shall be reduced by all amounts paid or payable
30 to him during all previous periods of retirement plus
19990H0295B0292 - 23 -
1 interest on these amounts until the date of subsequent
2 retirement. The interest for each year shall be calculated
3 based upon the annual interest rate adopted for that fiscal
4 year by the board for the calculation of the normal
5 contribution rate pursuant to section 5508(b) (relating to
6 actuarial cost method).
7 § 5902. Administrative duties of the board.
8 * * *
9 (h) Regulations and procedures.--The board shall, with the
10 advice of the Attorney General and the actuary, adopt and
11 promulgate rules and regulations for the uniform administration
12 of the system. No regulation establishing a period of time to
13 elect multiple service shall allow any such election more than
14 365 days after entry into the system as an active member. The
15 actuary shall approve in writing all computational procedures
16 used in the calculation of contributions and benefits, and the
17 board shall by resolution adopt such computational procedures,
18 prior to their application by the board. Such rules, regulations
19 and computational procedures as so adopted from time to time and
20 as in force and effect at any time, together with such tables as
21 are adopted pursuant to subsection (j) as necessary for the
22 calculation of annuities and other benefits, shall be as
23 effective as if fully set forth in this part. Any actuarial
24 assumption specified in or underlying any such rule, regulation
25 or computational procedure and utilized as a basis for
26 determining any benefit shall be applied in a uniform manner.
27 * * *
28 (l) Member contributions.--The board shall cause all pickup
29 contributions made on behalf of a member to be credited to the
30 account of the member and credit to his account any other
19990H0295B0292 - 24 -
1 payment made by such member including, but not limited to,
2 amounts collected by the Public School Employees' Retirement
3 System for the reinstatement of previous State service or
4 creditable nonstate service, and amounts paid to return benefits
5 paid after the date of return to State service or entering
6 school service representing lump sum payments made pursuant to
7 section 5705(a)(4)(iii) (relating to member's options) and
8 member's annuity payments, but not including other benefits
9 returned pursuant to section 5706(a.2) (relating to termination
10 of annuities) and shall pay all such amounts into the fund.
11 * * *
12 § 5904. Duties of the board to report to the Public School
13 Employees' Retirement Board.
14 * * *
15 (b) Multiple service membership of school employees.--Upon
16 receipt of notification from the Public School Employees'
17 Retirement Board that a former State employee has become an
18 active member in the Public School Employees' Retirement System
19 and has elected to receive credit for multiple service, the
20 board shall certify to the Public School Employees' Retirement
21 Board and concurrently to the member:
22 (1) the total credited service in the system and the
23 number of years and fractional part of a year of service
24 credited in each class of service;
25 (2) the annual compensation received each calendar year
26 by the member for credited State service; [and]
27 (3) the social security integration credited service to
28 which the member is entitled and the average noncovered
29 salary upon which the single life annuity attributable to
30 such service will be computed[.]; and
19990H0295B0292 - 25 -
1 (4) if the member has elected payroll deductions
2 pursuant to section 5504 (relating to member contributions
3 for the purchase of credit for previous State service or to
4 become a full coverage member) or 5505 (relating to
5 contributions for the purchase of credit for creditable
6 nonstate service), the amount of the deductions and the
7 period over which they are to be made.
8 * * *
9 Section 5. Section 5905(b) of Title 71 is amended and the
10 section is amended by adding a subsection to read:
11 § 5905. Duties of the board regarding applications and
12 elections of members.
13 * * *
14 (b) School employees electing multiple service status.--Upon
15 receipt of notification from the Public School Employees'
16 Retirement Board that a former State employee has become an
17 active member in the Public School Employees' Retirement System
18 and has elected to become a member with multiple service status
19 the board shall:
20 (1) in case of a member receiving an annuity from the
21 system, discontinue payments, transfer the present value[, at
22 that time,] of the member's annuity at the time of entering
23 school service, plus the amount withdrawn in a lump sum
24 payment, on or after the date of entering school service,
25 pursuant to section 5705 (relating to member's option), with
26 statutory interest to date of transfer, minus the amount to
27 be returned to the board on account of return to service,
28 that the board has determined is to be credited in the
29 member's savings account, from the annuity reserve account to
30 the [members'] member's savings account and resume crediting
19990H0295B0292 - 26 -
1 of statutory interest on the amount restored to his credit
2 [and], transfer the balance of the present value of the total
3 annuity, minus the amount to be returned to the board on
4 account of return to service that the board has determined is
5 to be credited in the State accumulation account, from the
6 annuity reserve account to the State accumulation account,
7 and certify to the member the amount of lump sum and annuity
8 payments with statutory interest to be returned to the board
9 by him, and of those amounts, which amount shall be credited
10 to the member's savings account and credited with statutory
11 interest as such payments are returned and which amount shall
12 be credited to the State accumulation account; or
13 (2) in case of a member who is not receiving an annuity
14 and has not withdrawn his total accumulated deductions,
15 continue or resume the crediting of statutory interest on his
16 total accumulated deductions during the period his total
17 accumulated deductions remain in the fund; or
18 (3) in case of a former State employee who is not
19 receiving an annuity from the system and his total
20 accumulated deductions were withdrawn, certify to the former
21 State employee the accumulated deductions as they would have
22 been at the time of his separation had he been a full
23 coverage member together with statutory interest for all
24 periods of subsequent State and school service to the date of
25 repayment. Such amount shall be restored by him and shall be
26 credited with statutory interest as such payments are
27 restored.
28 * * *
29 (j) State employees' electing multiple service status.--Upon
30 receipt of notification from the Public School Employees'
19990H0295B0292 - 27 -
1 Retirement Board that a member who has elected multiple service
2 membership has elected to restore school service or purchase
3 creditable nonschool service in the Public School Employees'
4 Retirement System or is obligated to return benefits to the
5 Public School Employees' Retirement Board on account of electing
6 multiple service membership has elected to pay all or part of
7 the amount due to the Public School Employees' Retirement Board
8 by salary deductions, the board shall collect from the employee
9 the amounts certified by the Public School Employees' Retirement
10 Board as due and owing by the member and certify and transfer to
11 the Public School Employees' Retirement Board the amounts so
12 collected.
13 Section 6. Sections 5906(c), (g) and (h) and 5907(c) of
14 Title 71 are amended to read:
15 § 5906. Duties of heads of departments.
16 * * *
17 (c) Member contributions.--The head of department shall
18 cause the required pickup contributions for current service to
19 be made and shall cause to be deducted any other required member
20 contributions including, but not limited to, contributions owed
21 by an active member with multiple service membership for school
22 service and creditable nonschool service in the Public School
23 Employees' Retirement System, and amounts certified by the
24 Public School Employees' Retirement Board as due and owing on
25 account of termination of annuities from each payroll. The head
26 of department shall notify the board at times and in a manner
27 prescribed by the board of the compensation of any noneligible
28 member to whom the limitation under IRC § 401(a)(17) either
29 applies or is expected to apply and shall cause such member's
30 contributions deducted from payroll to cease at the limitation
19990H0295B0292 - 28 -
1 under IRC § 401(a)(17) on the payroll date if and when such
2 limit shall be reached. The head of department shall certify to
3 the State Treasurer the amounts picked up and deducted and shall
4 send the total amount picked up and deducted together with a
5 duplicate of such voucher to the secretary of the board every
6 pay period. The head of department shall pay pickup
7 contributions from the same source of funds which is used to pay
8 other compensation to the employee. On or before January 31,
9 1997, and on or before January 31 of each year thereafter, the
10 head of department shall, at the time when the income and
11 withholding information required by law is furnished to each
12 member, also furnish the amount of pickup contributions made on
13 his behalf and notify the board, if it has not been previously
14 notified, of any noneligible member whose compensation in the
15 preceding year exceeded the annual compensation limit under IRC
16 § 401(a)(17). If the board shall determine that the member's
17 savings account shall have been credited with pickup
18 contributions for a noneligible member in the preceding year
19 which are attributable to compensation in excess of the
20 limitation under IRC § 401(a)(17), or with total member
21 contributions for such member which would cause such member's
22 contributions or benefits to exceed any applicable limitation
23 under IRC § 401(a)(17), the board shall as soon as practicable
24 refund to the member from his individual member account such
25 amount, together with the statutory interest thereon, as will
26 cause the member's total member contributions in the preceding
27 year not to exceed the applicable limit. The payment of any such
28 refund to the member shall be charged to the member's savings
29 account.
30 * * *
19990H0295B0292 - 29 -
1 (g) Former school employee contributors.--The head of
2 department shall, upon the employment of a former contributor to
3 the Public School Employees' Retirement System who is not an
4 annuitant of the Public School Employees' Retirement System,
5 advise such employee of his right to elect within [30] 365 days
6 of entry into the system or such other period as the board may
7 by regulation establish to become a multiple service member, and
8 in the case of any such employee who so elects and has withdrawn
9 his accumulated deductions, require him to reinstate his credit
10 in the Public School Employees' Retirement System. The head of
11 the department shall advise the board of such election.
12 (h) Former school employee annuitants.--The head of
13 department shall, upon the employment of an annuitant of the
14 Public School Employees' Retirement System who applies for
15 membership in the system, advise such employee that he may elect
16 multiple service membership within [30] 365 days of entry into
17 the system or such other period as the board may by regulation
18 establish and if he so elects his public school employee's
19 annuity will be discontinued effective upon the date of his
20 return to State service and, upon termination of State service
21 and application for an annuity, the annuity will be adjusted in
22 accordance with section 5706 (relating to termination of
23 annuities). The head of department shall advise the board of
24 such election.
25 * * *
26 § 5907. Rights and duties of State employees and members.
27 * * *
28 (c) Multiple service membership.--Any active member who was
29 formerly an active member in the Public School Employees'
30 Retirement System may elect to become a multiple service member.
19990H0295B0292 - 30 -
1 Such election shall occur no later than [30] 365 days after
2 becoming an active member in this system or such other period as
3 the board may by regulation establish.
4 * * *
5 Section 7. (a) Notwithstanding the limitation contained in
6 24 Pa.C.S. § 8507(c), any active member of the Public School
7 Employees' Retirement System who was formerly an active member
8 in the State Employees' Retirement System may elect to become a
9 multiple service member on or before the fourth December 31,
10 coincident with or following the effective date of this act.
11 (b) Notwithstanding the limitation contained in 71 Pa.C.S. §
12 5907(c), any active member of the State Employees' Retirement
13 System who was formerly an active member of the Public School
14 Employees' Retirement System may elect to become a multiple
15 service member on or before the fourth December 31, coincident
16 with or following the effective date of this act.
17 Section 8. Upon becoming effective this act shall be
18 effective retroactive to the date of enactment, except that
19 deceased members of the State Employees' Retirement System or
20 Public School Employees' Retirement System with a date of death
21 on or before 180 days after the enactment of this act, or their
22 personal representatives, may not elect multiple service
23 membership pursuant to this act.
24 Section 9. This act shall take effect in 180 days.
A20L24JS/19990H0295B0292 - 31 -