SENATE AMENDED
19990H0295B4177 01809 JS:SH 01/20/99 #24 02/02/99
PRIOR PRINTER'S NOS. 292, 2346 PRINTER'S NO. 4177
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, WOGAN, GRUCELA, M. COHEN AND VAN
HORNE, FEBRUARY 2, 1999
SENATOR CONTI, FINANCE, IN SENATE, AS AMENDED, NOVEMBER 14, 2000
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 membership of the Public School Employees' Retirement
6 Board and the State Employees' Retirement Board, for
7 regulations and procedures, for member contributions, for
8 payroll deductions, for elections of members, for multiple
9 service status, for management of fund and accounts, for
10 duties of employers, for creditable non-State service, for
11 purchase of credit, for incomplete payments, for termination
12 of annuities, for regulations and procedures, for member
13 contributions, for duties of board and heads of departments
14 and for election as multiple service member.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Sections 8323(d), 8324(b) and (d), 8325, 8346,
18 8501(a) and (b), 8502(m) and 8504(b) of Title 24 of the
19 Pennsylvania Consolidated Statutes are amended to read:
20 § 8323. Member contributions for creditable school service.
1 * * *
2 (d) Certification and payment of contributions.--
3 (1) In all cases other than for the purchase of credit
4 for sabbatical leave and activated military service leave
5 beginning before the effective date of paragraph (2), the
6 amount payable shall be certified by the board in accordance
7 with methods approved by the actuary and may be paid in a
8 lump sum within 90 days or, in the case of an active member
9 or eligible State employee who is an active member of the
10 State Employees' Retirement System, may be amortized with
11 statutory interest through salary deductions or by personal
12 checks in amounts agreed upon by the member and the board. In
13 the case of an eligible State employee who is an active
14 member of the State Employees' Retirement System, the agreed
15 upon salary deductions shall be remitted to the State
16 Employees' Retirement Board, which shall certify and transfer
17 to the board the amounts paid.
18 (2) In the case of activated military service leave
19 beginning before the effective date of this paragraph, the
20 amount payable may be paid according to this subsection or
21 subsection (c.1), but all lump sum payments must be made and
22 all amortization payments commenced within one year of the
23 termination of activated military service leave.
24 § 8324. Contributions for purchase of credit for creditable
25 nonschool service.
26 * * *
27 (b) Nonintervening military service.--The amount due for the
28 purchase of credit for military service other than intervening
29 military service shall be determined by applying the member's
30 basic contribution rate plus the normal contribution rate as
19990H0295B4177 - 2 -
1 provided in section 8328 (relating to actuarial cost method) at
2 the time of entry of the member into school service subsequent
3 to such military service to one-third of his total compensation
4 received during the first three years of such subsequent
5 credited school service and multiplying the product by the
6 number of years and fractional part of a year of creditable
7 nonintervening military service being purchased together with
8 statutory interest during all periods of subsequent school and
9 State service to date of purchase. Upon certification of the
10 amount due, payment may be made in a lump sum within 90 days or
11 in the case of an active member or eligible State employee who
12 is an active member of the State Employees' Retirement System it
13 may be amortized with statutory interest through salary
14 deductions or by personal checks in amounts agreed upon by the
15 member and the board. In the case of an eligible State employee
16 who is an active member of the State Employees' Retirement
17 System, the agreed upon salary deductions shall be remitted to
18 the State Employees' Retirement Board, which shall certify and
19 transfer to the board the amounts paid. Application may be filed
20 for all such military service credit upon completion of three
21 years of subsequent credited school service and shall be
22 credited as Class T-C service.
23 * * *
24 (d) Other creditable nonschool service.--Contributions on
25 account of Class T-C credit for creditable nonschool service
26 other than military service shall be determined by applying the
27 member's basic contribution rate plus the normal contribution
28 rate as provided in section 8328 at the time of the member's
29 entry into school service subsequent to such creditable
30 nonschool service to his total compensation received during the
19990H0295B4177 - 3 -
1 first year of subsequent credited school service and multiplying
2 the product by the number of years and fractional part of a year
3 of creditable nonschool service being purchased together with
4 statutory interest during all periods of subsequent school or
5 State service to the date of purchase, except that in the case
6 of purchase of credit for creditable nonschool service as set
7 forth in section 8304(b)(5) (relating to creditable nonschool
8 service) the member shall pay only the employee's share unless
9 otherwise provided by law. Upon certification of the amount due,
10 payment may be made in a lump sum within 90 days or in the case
11 of an active member or eligible State employee who is an active
12 member of the State Employees' Retirement System it may be
13 amortized with statutory interest through salary deductions or
14 by personal checks in amounts agreed upon by the member and the
15 board. In the case of an eligible State employee who is an
16 active member of the State Employees' Retirement System, the
17 agreed upon salary deductions shall be remitted to the State
18 Employees' Retirement Board, which shall certify and transfer to
19 the board the amounts paid.
20 * * *
21 § 8325. Incomplete payments.
22 In the event that a member terminates school service or a
23 multiple service member who is an active member of the State
24 Employees' Retirement System terminates State service before any
25 agreed upon payments or return of benefits on account of
26 returning to school service or entering State service and
27 electing multiple service have been completed the member or
28 multiple service member who is an active member of the State
29 Employees' Retirement System shall have the right to pay within
30 30 days of termination of school service or State service the
19990H0295B4177 - 4 -
1 balance due, including interest, in a lump sum and the annuity
2 shall be calculated including full credit for the previous
3 school service, creditable nonschool service, or full-coverage
4 membership. In the event a member does not pay the balance due
5 within 30 days of termination of school service or in the event
6 a member dies in school service or within 30 days of termination
7 of school service or in the case of a multiple service member
8 who is an active member of the State Employees' Retirement
9 System, does not pay the balance due within 30 days of
10 termination of State service or dies in State service or within
11 30 days of termination of State service and before the agreed
12 upon payments have been completed, the present value of the
13 benefit otherwise payable shall be reduced by the balance due,
14 including interest, and the benefit payable shall be calculated
15 as the actuarial equivalent of such reduced present value.
16 § 8346. Termination of annuities.
17 (a) General rule.--If an annuitant returns to school service
18 or enters or has entered State service and elects multiple
19 service membership, any annuity payable to him under this part
20 shall cease effective upon the date of his return to school
21 service or entering State service and in the case of an annuity
22 other than a disability annuity the present value of such
23 annuity, adjusted for full coverage in the case of a joint
24 coverage member who makes the appropriate back contributions for
25 full coverage, shall be frozen as of the date such annuity
26 ceases. An annuitant who is credited with an additional 10% of
27 membership service as provided in section 8302(b.2) (relating to
28 credited school service) and who returns to school service,
29 except as provided in subsection (b), shall forfeit such
30 credited service and shall have his frozen present value
19990H0295B4177 - 5 -
1 adjusted as if his 10% retirement incentive had not been applied
2 to his account. In the event that the cost-of-living increase
3 enacted December 18, 1979, occurred during the period of such
4 State or school employment, the frozen present value shall be
5 increased, on or after the member attains superannuation age, by
6 the percent applicable had he not returned to service.
7 (a.1) Return of benefits.--In the event an annuitant whose
8 annuity ceases pursuant to this section receives any annuity
9 payment, including a lump sum payment pursuant to section 8345
10 (relating to member's options) on or after the date of his
11 return to school service or entering State service, he shall
12 return to the board the amount so received plus statutory
13 interest. The amount payable shall be certified in each case by
14 the board in accordance with methods approved by the actuary and
15 shall be paid in a lump sum within 90 days or in the case of an
16 active member or State employee who is an active member of the
17 State Employees' Retirement System may be amortized with
18 statutory interest through salary deductions in amounts agreed
19 upon by the member and the board. In the case of a State
20 employee who is an active member of the State Employees'
21 Retirement System, the agreed upon salary deductions shall be
22 remitted to the State Employees' Retirement Board, which shall
23 certify and transfer to the board the amounts paid.
24 (b) Return to school service during emergency.--When, in the
25 judgment of the employer, an emergency creates an increase in
26 the work load such that there is serious impairment of service
27 to the public or in the event of a shortage of appropriate
28 subject certified teachers, an annuitant may be returned to
29 school service for a period not to exceed 95 full-day sessions
30 in any school year without loss of his annuity. In computing the
19990H0295B4177 - 6 -
1 number of days an annuitant has returned to school service, any
2 amount of time less than one-half of a day shall be counted as
3 one-half of a day.
4 (c) Subsequent discontinuance of service.--Upon subsequent
5 discontinuance of service, such member other than a former
6 annuitant who had the effect of his frozen present value
7 eliminated in accordance with subsection (d) or a former
8 disability annuitant shall be entitled to an annuity which is
9 actuarially equivalent to the sum of the present value as
10 determined under subsection (a) and the present value of a
11 maximum single life annuity based on years of service credited
12 subsequent to reentry in the system and his final average salary
13 computed by reference to his compensation during his entire
14 period of school and State service.
15 (d) Elimination of the effect of frozen present value.--
16 (1) An annuitant who returns to school service and earns
17 three eligibility points by performing credited school
18 service following the most recent period of receipt of an
19 annuity under this part, or an annuitant who enters State
20 service and:
21 (i) is a multiple service member; or
22 (ii) who elects multiple service membership, and
23 earns three eligibility points by performing credited State
24 service or credited school service following the most recent
25 period of receipt of an annuity under this part, and who had
26 the present value of his annuity frozen in accordance with
27 subsection (a), shall qualify to have the effect of the
28 frozen present value resulting from all previous periods of
29 retirement eliminated, provided that all payments under
30 Option 4 and annuity payments payable during previous periods
19990H0295B4177 - 7 -
1 of retirement plus interest as set forth in paragraph (3)
2 shall be returned to the fund in the form of an actuarial
3 adjustment to his subsequent benefits or in such form as the
4 board may otherwise direct.
5 (2) Upon subsequent discontinuance of service and the
6 filing of an application for an annuity, a former annuitant
7 who qualifies to have the effect of a frozen present value
8 eliminated under this subsection shall be entitled to receive
9 the higher of either:
10 (i) an annuity (prior to optional modification)
11 calculated as if the freezing of the former annuitant's
12 account pursuant to subsection (a) had not occurred,
13 adjusted according to paragraph (3), provided that a
14 former annuitant of the system or a former annuitant of
15 the State Employees' Retirement System who retired under
16 a provision of law granting additional service credit if
17 termination of school or State service or retirement
18 occurred during a specific period of time shall not be
19 permitted to retain the additional service credit under
20 the prior law when the annuity is computed for his most
21 recent retirement; or
22 (ii) an annuity (prior to optional modification)
23 calculated as if the former annuitant did not qualify to
24 have the effect on the frozen present value eliminated,
25 unless the former annuitant notifies the board in writing by
26 the later of the date the application for annuity is filed or
27 the effective date of retirement that the former annuitant
28 wishes to receive the lower annuity.
29 (3) In addition to any other adjustment to the present
30 value of the maximum single life annuity that a member may be
19990H0295B4177 - 8 -
1 entitled to receive that occurs as a result of any other
2 provision of law, the present value of the maximum single
3 life annuity shall be reduced by all amounts paid or payable
4 to him during all previous periods of retirement plus
5 interest on these amounts until the date of subsequent
6 retirement. The interest for each year shall be calculated
7 based upon the annual interest rate adopted for that school
8 year by the board for the calculation of the normal
9 contribution rate pursuant to section 8328(b) (relating to
10 actuarial cost method).
11 § 8501. Public School Employees' Retirement Board.
12 (a) Status and membership.--The board shall be an
13 independent administrative board and shall consist of 15
14 members: the Secretary of Education, ex officio; the State
15 Treasurer, ex officio; two Senators; two members of the House of
16 Representatives; the executive secretary of the Pennsylvania
17 School Boards Association, ex officio; two to be appointed by
18 the Governor, at least one of whom shall not be a school
19 employee or an officer or employee of the State; three to be
20 elected by the active professional members of the system from
21 among their number; one to be elected by annuitants from among
22 their number; one to be elected by the active nonprofessional
23 members of the system from among their number; and one to be
24 elected by members of Pennsylvania public school boards from
25 among their number. The appointments made by the Governor shall
26 be confirmed by the Senate and each election shall be conducted
27 in a manner approved by the board. The terms of the appointed
28 and nonlegislative elected members shall be three years. The
29 members from the Senate shall be appointed by the President pro
30 tempore of the Senate and shall consist of one member from the
19990H0295B4177 - 9 -
1 majority and one member from the minority. The members from the
2 House of Representatives shall be appointed by the Speaker of
3 the House of Representatives and shall consist of one member
4 from the majority and one member from the minority. [The <--
5 legislative members shall serve on the board for the duration of
6 [the terms for which they were elected] The term of each <--
7 legislative member shall run from the date of his respective
8 appointment THEIR LEGISLATIVE TERMS AND SHALL CONTINUE TO SERVE <--
9 until 30 days after the convening of the next regular session of
10 the General Assembly in odd numbered years or until his <--
11 successor is appointed and qualified AFTER THE EXPIRATION OF <--
12 THEIR RESPECTIVE LEGISLATIVE TERMS, OR UNTIL A SUCCESSOR IS
13 APPOINTED FOR THE NEW TERM, WHICHEVER OCCURS FIRST. The chairman
14 of the board shall be elected by the board members. Each ex
15 officio member of the board and each legislative member of the
16 board may appoint a duly authorized designee to act in his
17 stead.
18 (b) [Appointment and terms of initial members.--For the
19 purposes of securing an orderly transition and staggered terms,
20 the elected members of the board serving on the effective date
21 of this part shall serve until the expiration of their
22 respective terms. The board member initially elected by members
23 of Pennsylvania public school boards shall serve until January
24 1, 1976. The board member initially elected by the active
25 nonprofessional members of the system shall serve until January
26 1, 1977. One of the initial board members appointed by the
27 Governor after the effective date of this part shall serve until
28 January 1, 1976 and the second appointed board member shall
29 serve until January 1, 1977.] Vacancies.--A vacancy occurring
30 during the term of any member shall be filled for the unexpired
19990H0295B4177 - 10 -
1 term by a successor appointed or elected as the case may be in
2 the same manner as his predecessor.
3 * * *
4 § 8502. Administrative duties of board.
5 * * *
6 (m) Member contributions and interest.--The board shall
7 cause each member's contributions, including payroll deductions,
8 pickup contributions and all other payments, including, but not
9 limited to, amounts collected by the State Employees' Retirement
10 System for the reinstatement of previous school service or
11 creditable nonschool service, and amounts paid to return
12 benefits paid after the date of return to school service or
13 entering State service representing lump sum payments made
14 pursuant to section 8345(a)(4)(iii) (relating to member's
15 options) and member's annuity payments, but not including other
16 benefits returned pursuant to section 8346(a.1) (relating to
17 termination of annuities) to be credited to the account of such
18 member and shall pay all such amounts into the fund. Such
19 contributions shall be credited with statutory interest until
20 date of termination of service, except in the case of a vestee,
21 who shall have such interest credited until the effective date
22 of retirement or until the return of his accumulated deductions,
23 if he so elects; and in the case of a multiple service member
24 who shall have such interest credited until termination of
25 service in both the school and the State systems.
26 * * *
27 § 8504. Duties of board to report to State Employees'
28 Retirement Board.
29 * * *
30 (b) Multiple service membership of State employees.--Upon
19990H0295B4177 - 11 -
1 receipt of notification from the State Employees' Retirement
2 Board that a former school employee has become an active member
3 in the State Employees' Retirement System and has elected to
4 receive credit for multiple service, the board shall certify to
5 the State Employees' Retirement Board and concurrently to the
6 member:
7 (1) The total credited service in the system and the
8 number of years and fractional part of a year of service
9 credited in each class of service.
10 (2) The annual compensation received each school year by
11 the member for credited school service.
12 (3) If the member has elected payroll deductions
13 pursuant to section 8323 (relating to member contributions
14 for creditable school service) or 8324 (relating to
15 contributions for purchase of credit for creditable nonschool
16 service), the amount of the deductions and the period over
17 which they are to be made.
18 * * *
19 Section 2. Section 8505(b) of Title 24 is amended and the
20 section is amended by adding a subsection to read:
21 § 8505. Duties of board regarding applications and elections of
22 members.
23 * * *
24 (b) State employees electing multiple service status.--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 become a member with multiple service status, the board shall:
29 (1) In case of a member who is receiving an annuity from
30 the system, discontinue payments, transfer the present
19990H0295B4177 - 12 -
1 value[, at that time,] of the member's annuity at the time of
2 entering State service, plus the amount withdrawn in a lump
3 sum payment, on or after the date of entering State service,
4 pursuant to section 8345 (relating to member's options), with
5 statutory interest to date of transfer, minus the amount to
6 be returned to the board on account of return to service that
7 the board has determined is to be credited in the member's
8 savings account, from the annuity reserve account to the
9 [members'] member's savings account and resume crediting of
10 statutory interest on the amount restored to his credit
11 [and], transfer the balance of the present value of the total
12 annuity, minus the amount to be returned to the board on
13 account of return to service that the board has determined is
14 to be credited in the State accumulation account, from the
15 annuity reserve account to the State accumulation account,
16 and certify to the member the amount of lump sum and annuity
17 payments with statutory interest to be returned to the board
18 by him, and of those amounts, which amount shall be credited
19 to the member's savings account and credited with statutory
20 interest as such payments are returned and which amount shall
21 be credited to the State accumulation account.
22 (2) In case of a member who is not receiving an annuity
23 from the system and who has not withdrawn his accumulated
24 deductions, continue or resume the crediting of statutory
25 interest on his accumulated deductions.
26 (3) In case of a member who is not receiving an annuity
27 from the system and his accumulated deductions were
28 withdrawn, certify to the member the accumulated deductions
29 as they would have been at the time of his separation had he
30 been a full coverage member together with statutory interest
19990H0295B4177 - 13 -
1 for all periods of subsequent State and school service to the
2 date of repayment. Such amount shall be restored by him and
3 shall be credited with statutory interest as such payments
4 are restored.
5 * * *
6 (k) School employees electing multiple service status.--Upon
7 receipt of notification from the State Employees' Retirement
8 Board that a member who has elected multiple service membership
9 has elected to restore State service or purchase creditable non-
10 State service in the State Employees' Retirement System or is
11 obligated to return benefits to the State Employees' Retirement
12 Board on account of electing multiple service membership has
13 elected to pay all or part of the amount due to the State
14 Employees' Retirement Board by salary deductions, the board
15 shall collect from the employee the amounts certified by the
16 State Employees' Retirement Board as due and owing by the member
17 and certify and transfer to the State Employees' Retirement
18 Board the amounts so collected.
19 Section 3. Sections 8506(c), (g) and (h), 8507(c) and
20 8521(i) of Title 24 are amended to read:
21 § 8506. Duties of employers.
22 * * *
23 (c) Member and employer contributions.--The employer shall
24 certify to its treasurer the required member contributions
25 picked up and any other contributions, including, but not
26 limited to, amounts collected for the State Employees'
27 Retirement Board for the reinstatement of previous State service
28 or creditable non-State service and amounts paid to return
29 benefits paid after the date of return to State service or
30 entering school service, deducted from each payroll. On July 1,
19990H0295B4177 - 14 -
1 1996, and upon any later effective date of employment of any
2 noneligible member to whom limitation under IRC § 401(a)(17)
3 applies or is expected to apply, the employer shall identify to
4 its treasurer or other payroll administrator the member or
5 members to whom such limit applies or may apply and shall cause
6 any such member's contributions deducted from payroll and the
7 employer's contribution on his behalf to cease at the limitation
8 under IRC § 401(a)(17) on the payroll date if and when such
9 limit shall be reached. The treasurer shall remit to the
10 secretary of the board each month the total of the member
11 contributions and the amount due from the employer determined in
12 accordance with section 8327 (relating to payments by
13 employers). If, upon crediting the remittance of a noneligible
14 member's contributions to the member's savings account, the
15 board shall determine that such account shall have been credited
16 with pickup contributions attributable to compensation which is
17 in excess of the annual compensation limit under IRC §
18 401(a)(17), or with total member contributions for such member
19 which would cause such member's contributions or benefits to
20 exceed any applicable limitation on contributions or benefits
21 under IRC § 401(a)(17), the board shall as soon as practicable
22 refund to the member from his individual member account such
23 amount, together with the statutory interest thereon, as will
24 cause the member's total member contributions not to exceed the
25 applicable limit. The payment of any such refund to the member
26 shall be charged to the member's savings account.
27 * * *
28 (g) Former State employee contributors.--The employer shall,
29 upon the employment of a former member of the State Employees'
30 Retirement System who is not an annuitant of the State
19990H0295B4177 - 15 -
1 Employees' Retirement System, advise such employee of his right
2 to elect multiple service membership within [30] 365 days of
3 entry into the system and, in the case any such employee who so
4 elects has withdrawn his accumulated deductions, require him to
5 restore his accumulated deductions as they would have been at
6 the time of his separation had he been a full coverage member,
7 together with statutory interest for all periods of subsequent
8 State and school service to date of repayment. The employer
9 shall advise the board of such election.
10 (h) Former State employee annuitants.--The employer shall,
11 upon the employment of an annuitant of the State Employees'
12 Retirement System who applies for membership in the system,
13 advise such employee that he may elect multiple service
14 membership within [30] 365 days of entry into the system and
15 that if he so elects his annuity from the State Employees'
16 Retirement System will be discontinued effective upon the date
17 of his return to school service and, upon termination of school
18 service and application for an annuity, the annuity will be
19 adjusted in accordance with section 8346 (relating to
20 termination of annuities). The employer shall advise the board
21 of such election.
22 * * *
23 § 8507. Rights and duties of school employees and members.
24 * * *
25 (c) Multiple service membership.--Any active member who was
26 formerly an active member in the State Employees' Retirement
27 System may elect to become a multiple service member. Such
28 election shall occur no later than [30] 365 days after becoming
29 an active member in this system.
30 * * *
19990H0295B4177 - 16 -
1 § 8521. Management of fund and accounts.
2 * * *
3 (i) Vehicles for authorized investments.--The board in its
4 prudent discretion may make any investments which meet the
5 standard of prudence set forth in subsection (a) by [becoming a
6 limited partner in partnerships that will hold such investments,
7 or by acquiring shares or units of participation or otherwise
8 participating beneficially in bank collective trusts or in the
9 separate accounts of any insurance company authorized to do
10 business in this Commonwealth, or by acquiring stocks or shares
11 or units of participation or otherwise participating
12 beneficially in the fund of any corporation or trust organized
13 or created and existing under the laws of the United States or
14 of any state, district or territory thereof which fund is
15 maintained for and consists of assets of employees' benefit
16 trusts, including governmental plans as defined in IRC § 414(d)
17 or which meet the requirements for qualification under IRC §
18 401] acquiring any type of interest in a business organization
19 existing under the laws of any jurisdiction, provided that, in
20 any such case, the liability of the Public School Employees'
21 Retirement Fund shall be limited to the amount of its
22 investment.
23 * * *
24 Section 4. Sections 5304(a), 5504(b), 5505(b) and (d), 5506,
25 5706, 5901(b), 5902(l) and 5904(b) of Title 71 are amended to
26 read:
27 § 5304. Creditable nonstate service.
28 (a) Eligibility.--An active member or a multiple service
29 member who is a school employee and an active member of the
30 Public School Employees' Retirement System shall be eligible for
19990H0295B4177 - 17 -
1 Class A service credit for creditable nonstate service as set
2 forth in subsections (b) and (c) except that intervening
3 military service shall be credited in the class of service for
4 which the member was eligible at the time of entering into
5 military service and for which he makes the required
6 contributions and except that a multiple service member who is a
7 school employee and an active member of the Public School
8 Employees' Retirement System shall not be eligible to purchase
9 service credit for creditable nonstate service set forth in
10 subsection (c)(5).
11 * * *
12 § 5504. Member contributions for the purchase of credit for
13 previous State service or to become a full coverage
14 member.
15 * * *
16 (b) Certification and method of payment.--The amount payable
17 shall be certified in each case by the board in accordance with
18 methods approved by the actuary and shall be paid in a lump sum
19 within 30 days or in the case of an active member or eligible
20 school employee who is an active member of the Public School
21 Employees' Retirement System may be amortized with statutory
22 interest through salary deductions in amounts agreed upon by the
23 member and the board. In the case of an eligible school employee
24 who is an active member of the Public School Employees'
25 Retirement System, the agreed upon salary deductions shall be
26 remitted to the Public School Employees' Retirement Board, which
27 shall certify and transfer to the board the amounts paid.
28 § 5505. Contributions for the purchase of credit for creditable
29 nonstate service.
30 * * *
19990H0295B4177 - 18 -
1 (b) Nonintervening military service.--
2 (1) The amount due for the purchase of credit for
3 military service other than intervening military service
4 shall be determined by applying the member's basic
5 contribution rate, the additional contribution rate plus the
6 Commonwealth normal contribution rate for active members at
7 the time of entry, subsequent to such military service, of
8 the member into State service to his average annual rate of
9 compensation over the first three years of such subsequent
10 State service and multiplying the result by the number of
11 years and fractional part of a year of creditable
12 nonintervening military service being purchased together with
13 statutory interest during all periods of subsequent State and
14 school service to date of purchase. Upon application for
15 credit for such service, payment shall be made in a lump sum
16 within 30 days or in the case of an active member or eligible
17 school employee who is an active member of the Public School
18 Employees' Retirement System it may be amortized with
19 statutory interest through salary deductions in amounts
20 agreed upon by the member and the board. In the case of an
21 eligible school employee who is an active member of the
22 Public School Employees' Retirement System, the agreed upon
23 salary deductions shall be remitted to the Public School
24 Employees' Retirement Board, which shall certify and transfer
25 to the board the amounts paid. Application may be filed for
26 all such military service credit upon completion of three
27 years of subsequent State service and shall be credited as
28 Class A service.
29 (2) Applicants may purchase credit as follows:
30 (i) one purchase of the total amount of creditable
19990H0295B4177 - 19 -
1 nonintervening military service; or
2 (ii) one purchase per 12-month period of a portion
3 of creditable nonintervening military service.
4 The amount of each purchase shall be not less than one year
5 of creditable nonintervening military service.
6 * * *
7 (d) Nonmilitary and nonmagisterial service.--Contributions
8 on account of credit for creditable nonstate service other than
9 military and magisterial service shall be determined by applying
10 the member's basic contribution rate, the additional
11 contribution rate plus the Commonwealth normal contribution rate
12 for active members at the time of entry subsequent to such
13 creditable nonstate service of the member into State service to
14 his compensation at the time of entry into State service and
15 multiplying the result by the number of years and fractional
16 part of a year of creditable nonstate service being purchased
17 together with statutory interest during all periods of
18 subsequent State and school service to the date of purchase.
19 Upon application for credit for such service payment shall be
20 made in a lump sum within 30 days or in the case of an active
21 member or eligible school employee who is an active member of
22 the Public School Employees' Retirement System it may be
23 amortized with statutory interest through salary deductions in
24 amounts agreed upon by the member and the board. In the case of
25 an 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 to
29 the board the amounts paid.
30 * * *
19990H0295B4177 - 20 -
1 § 5506. Incomplete payments.
2 In the event that a member terminates State service or a
3 multiple service member who is an active member of the Public
4 School Employees' Retirement System terminates school service
5 before the agreed upon payments for credit for previous State
6 service, creditable nonstate service, social security
7 integration, [or] full coverage membership or return of benefits
8 on account of returning to State service or entering school
9 service and electing multiple service have been completed, the
10 member or multiple service member who is an active member of the
11 Public School Employees' Retirement System shall have the right
12 to pay within 30 days of termination of State service or school
13 service the balance due, including interest, in a lump sum and
14 the annuity shall be calculated including full credit for the
15 previous State service, creditable nonstate service, social
16 security integration, or full coverage membership. In the event
17 a member does not pay the balance due within 30 days of
18 termination of State service or in the event a member dies in
19 State service or within 30 days of termination of State service
20 or in the case of a multiple service member who is an active
21 member of the Public School Employees' Retirement System, does
22 not pay the balance due within 30 days of termination of school
23 service or dies in school service or within 30 days of
24 termination of school service and before the agreed upon
25 payments have been completed, the present value of the benefit
26 otherwise payable shall be reduced by the balance due, including
27 interest, and the benefit payable shall be calculated as the
28 actuarial equivalent of such reduced present value.
29 § 5706. Termination of annuities.
30 (a) General rule.--If the annuitant returns to State service
19990H0295B4177 - 21 -
1 or enters or has entered school service and elects multiple
2 service membership, any annuity payable to him under this part
3 shall cease effective upon the date of his return to State
4 service or entering school service and in the case of an annuity
5 other than a disability annuity the present value of such
6 annuity, adjusted for full coverage in the case of a joint
7 coverage member who makes the appropriate back contributions for
8 full coverage, shall be frozen as of the date such annuity
9 ceases. An annuitant who is credited with an additional 10% of
10 Class A and Class C service as provided in section 5302(c)
11 (relating to credited State service) and who returns to State
12 service shall forfeit such credited service and shall have his
13 frozen present value adjusted as if his 10% retirement incentive
14 had not been applied to his account. In the event that the cost-
15 of-living increase enacted December 18, 1979 occurred during the
16 period of such State or school employment, the frozen present
17 value shall be increased, on or after the member attains
18 superannuation age, by the percent applicable had he not
19 returned to service. This subsection shall not apply in the case
20 of any annuitant who may render services to the Commonwealth in
21 the capacity of an independent contractor or as a member of an
22 independent board or commission or as a member of a departmental
23 administrative or advisory board or commission when such members
24 of independent or departmental boards or commissions are
25 compensated on a per diem basis for not more than 150 days per
26 calendar year.
27 (a.1) Return to State service during emergency.--When, in
28 the judgment of the employer, an emergency creates an increase
29 in the work load such that there is serious impairment of
30 service to the public, an annuitant may be returned to State
19990H0295B4177 - 22 -
1 service for a period not to exceed 95 days in any fiscal year
2 without loss of his annuity. In computing the number of days an
3 annuitant has returned to State service, any amount of time less
4 than one-half of a day shall be counted as one-half of a day.
5 For agencies, boards and commissions under the Governor's
6 jurisdiction, the approval of the Governor that an emergency
7 exists shall be required before an annuitant may be returned to
8 State service.
9 (a.2) Return of benefits.--In the event an annuitant whose
10 annuity ceases pursuant to this section receives any annuity
11 payment, including a lump sum payment pursuant to section 5705
12 (relating to member's options) on or after the date of his
13 return to State service or entering school service, he shall
14 return to the board the amount so received plus statutory
15 interest. The amount payable shall be certified in each case by
16 the board in accordance with methods approved by the actuary and
17 shall be paid in a lump sum within 30 days or in the case of an
18 active member or school employee who is an active member of the
19 Public School Employees' Retirement System may be amortized with
20 statutory interest through salary deductions in amounts agreed
21 upon by the member and the board. In the case of a school
22 employee who is an active member of the Public School Employees'
23 Retirement System, the agreed upon salary deductions shall be
24 remitted to the Public School Employees' Retirement Board, which
25 shall certify and transfer to the board the amounts paid.
26 (b) Subsequent discontinuance of service.--Upon subsequent
27 discontinuance of service, such member other than a former
28 annuitant who had the effect of his frozen present value
29 eliminated in accordance with subsection (c) or a former
30 disability annuitant shall be entitled to an annuity which is
19990H0295B4177 - 23 -
1 actuarially equivalent to the sum of the present value as
2 determined under subsection (a) and the present value of a
3 maximum single life annuity based on years of service credited
4 subsequent to reentry in the system and his final average salary
5 computed by reference to his compensation during his entire
6 period of State and school service.
7 (c) Elimination of the effect of frozen present value.--
8 (1) An annuitant who returns to State service and earns
9 three eligibility points by performing credited State service
10 following the most recent period of receipt of an annuity
11 under this part, or an annuitant who enters school service
12 and:
13 (i) is a multiple service member; or
14 (ii) who elects multiple service membership, and
15 earns three eligibility points by performing credited State
16 service or credited school service following the most recent
17 period of receipt of an annuity under this part, and who had
18 the present value of his annuity frozen in accordance with
19 subsection (a), shall qualify to have the effect of the
20 frozen present value resulting from all previous periods of
21 retirement eliminated, provided that all payments under
22 Option 4 and annuity payments payable during previous periods
23 of retirement plus interest as set forth in paragraph (3)
24 shall be returned to the fund in the form of an actuarial
25 adjustment to his subsequent benefits or in such form as the
26 board may otherwise direct.
27 (2) Upon subsequent discontinuance of service and the
28 filing of an application for an annuity, a former annuitant
29 who qualifies to have the effect of a frozen present value
30 eliminated under this subsection shall be entitled to receive
19990H0295B4177 - 24 -
1 the higher of either:
2 (i) an annuity (prior to optional modification)
3 calculated as if the freezing of the former annuitant's
4 account pursuant to subsection (a) had not occurred,
5 adjusted according to paragraph (3), provided that a
6 former annuitant of the system or a former annuitant of
7 the Public School Employees' Retirement System who
8 retired under a provision of law granting additional
9 service credit if termination of State or school service
10 or retirement occurred during a specific period of time
11 shall not be permitted to retain the additional service
12 credit under the prior law when the annuity is computed
13 for his most recent retirement; or
14 (ii) an annuity (prior to optional modification)
15 calculated as if the former annuitant did not qualify to
16 have the effect of the frozen present value eliminated,
17 unless the former annuitant notifies the board in writing by
18 the later of the date the application for annuity is filed or
19 the effective date of retirement that the former annuitant
20 wishes to receive the lower annuity.
21 (3) In addition to any other adjustment to the present
22 value of the maximum single life annuity that a member may be
23 entitled to receive that occurs as a result of any other
24 provision of law, the present value of the maximum single
25 life annuity shall be reduced by all amounts paid or payable
26 to him during all previous periods of retirement plus
27 interest on these amounts until the date of subsequent
28 retirement. The interest for each year shall be calculated
29 based upon the annual interest rate adopted for that fiscal
30 year by the board for the calculation of the normal
19990H0295B4177 - 25 -
1 contribution rate pursuant to section 5508(b) (relating to
2 actuarial cost method).
3 § 5901. The State Employees' Retirement Board.
4 * * *
5 (b) Appointments and terms.--The two members elected by the
6 board and serving on the effective date of this title shall
7 continue to serve until the expiration of their respective
8 terms. The members or former members of the Senate shall be
9 appointed by the President pro tempore of the Senate and shall
10 consist of a majority and a minority member or former member.
11 The members or former members of the House of Representatives
12 shall be appointed by the Speaker of the House of
13 Representatives and shall consist of a majority and a minority
14 member or former member. [The legislative members shall serve on
15 the board for the duration of the terms for which they were
16 elected and former legislative members shall serve a term of two
17 years] The term of each legislative member shall run from the
18 date of his respective appointment until 30 days after the
19 convening of the next regular session of the General Assembly in
20 odd numbered years or until his successor is appointed and
21 qualified. Of the remaining four appointees, one shall be
22 appointed for an initial term of two years, one for an initial
23 term of three years, and two for an initial term of four years.
24 A vacancy occurring during the term of an appointed member shall
25 be filled for the unexpired term by the appointment and
26 confirmation of a successor in the same manner as his
27 predecessor.
28 * * *
29 § 5902. Administrative duties of the board.
30 * * *
19990H0295B4177 - 26 -
1 (l) Member contributions.--The board shall cause all pickup
2 contributions made on behalf of a member to be credited to the
3 account of the member and credit to his account any other
4 payment made by such member including, but not limited to,
5 amounts collected by the Public School Employees' Retirement
6 System for the reinstatement of previous State service or
7 creditable nonstate service, and amounts paid to return benefits
8 paid after the date of return to State service or entering
9 school service representing lump sum payments made pursuant to
10 section 5705(a)(4)(iii) (relating to member's options) and
11 member's annuity payments, but not including other benefits
12 returned pursuant to section 5706(a.2) (relating to termination
13 of annuities) and shall pay all such amounts into the fund.
14 * * *
15 § 5904. Duties of the board to report to the Public School
16 Employees' Retirement Board.
17 * * *
18 (b) Multiple service membership of school employees.--Upon
19 receipt of notification from the Public School Employees'
20 Retirement Board that a former State employee has become an
21 active member in the Public School Employees' Retirement System
22 and has elected to receive credit for multiple service, the
23 board shall certify to the Public School Employees' Retirement
24 Board and concurrently to the member:
25 (1) the total credited service in the system and the
26 number of years and fractional part of a year of service
27 credited in each class of service;
28 (2) the annual compensation received each calendar year
29 by the member for credited State service; [and]
30 (3) the social security integration credited service to
19990H0295B4177 - 27 -
1 which the member is entitled and the average noncovered
2 salary upon which the single life annuity attributable to
3 such service will be computed[.]; and
4 (4) if the member has elected payroll deductions
5 pursuant to section 5504 (relating to member contributions
6 for the purchase of credit for previous State service or to
7 become a full coverage member) or 5505 (relating to
8 contributions for the purchase of credit for creditable
9 nonstate service), the amount of the deductions and the
10 period over which they are to be made.
11 * * *
12 Section 5. Section 5905(b) of Title 71 is amended and the
13 section is amended by adding a subsection to read:
14 § 5905. Duties of the board regarding applications and
15 elections of members.
16 * * *
17 (b) School employees electing multiple service status.--Upon
18 receipt of notification from the Public School Employees'
19 Retirement Board that a former State employee has become an
20 active member in the Public School Employees' Retirement System
21 and has elected to become a member with multiple service status
22 the board shall:
23 (1) in case of a member receiving an annuity from the
24 system, discontinue payments, transfer the present value[, at
25 that time,] of the member's annuity at the time of entering
26 school service, plus the amount withdrawn in a lump sum
27 payment, on or after the date of entering school service,
28 pursuant to section 5705 (relating to member's option), with
29 statutory interest to date of transfer, minus the amount to
30 be returned to the board on account of return to service,
19990H0295B4177 - 28 -
1 that the board has determined is to be credited in the
2 member's savings account, from the annuity reserve account to
3 the [members'] member's savings account and resume crediting
4 of 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; or
16 (2) in case of a member who is not receiving an annuity
17 and has not withdrawn his total accumulated deductions,
18 continue or resume the crediting of statutory interest on his
19 total accumulated deductions during the period his total
20 accumulated deductions remain in the fund; or
21 (3) in case of a former State employee who is not
22 receiving an annuity from the system and his total
23 accumulated deductions were withdrawn, certify to the former
24 State employee the accumulated deductions as they would have
25 been at the time of his separation had he been a full
26 coverage member together with statutory interest for all
27 periods of subsequent State and school service to the date of
28 repayment. Such amount shall be restored by him and shall be
29 credited with statutory interest as such payments are
30 restored.
19990H0295B4177 - 29 -
1 * * *
2 (j) State employees' electing multiple service status.--Upon
3 receipt of notification from the Public School Employees'
4 Retirement Board that a member who has elected multiple service
5 membership has elected to restore school service or purchase
6 creditable nonschool service in the Public School Employees'
7 Retirement System or is obligated to return benefits to the
8 Public School Employees' Retirement Board on account of electing
9 multiple service membership has elected to pay all or part of
10 the amount due to the Public School Employees' Retirement Board
11 by salary deductions, the board shall collect from the employee
12 the amounts certified by the Public School Employees' Retirement
13 Board as due and owing by the member and certify and transfer to
14 the Public School Employees' Retirement Board the amounts so
15 collected.
16 Section 6. Sections 5906(c), (g) and (h), 5907(c) and
17 5931(i) of Title 71 are amended to read:
18 § 5906. Duties of heads of departments.
19 * * *
20 (c) Member contributions.--The head of department shall
21 cause the required pickup contributions for current service to
22 be made and shall cause to be deducted any other required member
23 contributions including, but not limited to, contributions owed
24 by an active member with multiple service membership for school
25 service and creditable nonschool service in the Public School
26 Employees' Retirement System, and amounts certified by the
27 Public School Employees' Retirement Board as due and owing on
28 account of termination of annuities from each payroll. The head
29 of department shall notify the board at times and in a manner
30 prescribed by the board of the compensation of any noneligible
19990H0295B4177 - 30 -
1 member to whom the limitation under IRC § 401(a)(17) either
2 applies or is expected to apply and shall cause such member's
3 contributions deducted from payroll to cease at the limitation
4 under IRC § 401(a)(17) on the payroll date if and when such
5 limit shall be reached. The head of department shall certify to
6 the State Treasurer the amounts picked up and deducted and shall
7 send the total amount picked up and deducted together with a
8 duplicate of such voucher to the secretary of the board every
9 pay period. The head of department shall pay pickup
10 contributions from the same source of funds which is used to pay
11 other compensation to the employee. On or before January 31,
12 1997, and on or before January 31 of each year thereafter, the
13 head of department shall, at the time when the income and
14 withholding information required by law is furnished to each
15 member, also furnish the amount of pickup contributions made on
16 his behalf and notify the board, if it has not been previously
17 notified, of any noneligible member whose compensation in the
18 preceding year exceeded the annual compensation limit under IRC
19 § 401(a)(17). If the board shall determine that the member's
20 savings account shall have been credited with pickup
21 contributions for a noneligible member in the preceding year
22 which are attributable to compensation in excess of the
23 limitation under IRC § 401(a)(17), or with total member
24 contributions for such member which would cause such member's
25 contributions or benefits to exceed any applicable limitation
26 under IRC § 401(a)(17), the board shall as soon as practicable
27 refund to the member from his individual member account such
28 amount, together with the statutory interest thereon, as will
29 cause the member's total member contributions in the preceding
30 year not to exceed the applicable limit. The payment of any such
19990H0295B4177 - 31 -
1 refund to the member shall be charged to the member's savings
2 account.
3 * * *
4 (g) Former school employee contributors.--The head of
5 department shall, upon the employment of a former contributor to
6 the Public School Employees' Retirement System who is not an
7 annuitant of the Public School Employees' Retirement System,
8 advise such employee of his right to elect within [30] 365 days
9 of entry into the system to become a multiple service member,
10 and in the case of any such employee who so elects and has
11 withdrawn his accumulated deductions, require him to reinstate
12 his credit in the Public School Employees' Retirement System.
13 The head of the department shall advise the board of such
14 election.
15 (h) Former school employee annuitants.--The head of
16 department shall, upon the employment of an annuitant of the
17 Public School Employees' Retirement System who applies for
18 membership in the system, advise such employee that he may elect
19 multiple service membership within [30] 365 days of entry into
20 the system and if he so elects his public school employee's
21 annuity will be discontinued effective upon the date of his
22 return to State service and, upon termination of State service
23 and application for an annuity, the annuity will be adjusted in
24 accordance with section 5706 (relating to termination of
25 annuities). The head of department shall advise the board of
26 such election.
27 * * *
28 § 5907. Rights and duties of State employees and members.
29 * * *
30 (c) Multiple service membership.--Any active member who was
19990H0295B4177 - 32 -
1 formerly an active member in the Public School Employees'
2 Retirement System may elect to become a multiple service member.
3 Such election shall occur no later than [30] 365 days after
4 becoming an active member in this system.
5 * * *
6 § 5931. Management of fund and accounts.
7 * * *
8 (i) Vehicles for authorized investments.--The board in its
9 prudent discretion may make any investments which meet the
10 standard of prudence set forth in subsection (a) by [becoming a
11 limited partner in partnerships that will hold such investments;
12 or by acquiring shares or units of participation or otherwise
13 participating beneficially in bank collective trusts or in the
14 separate accounts of any insurance company authorized to do
15 business in this Commonwealth; or by acquiring stocks or shares
16 or units of participation or otherwise participating
17 beneficially in the fund of any corporation or trust organized
18 or created and existing under the laws of the United States or
19 of any state, district or territory thereof, which fund is
20 maintained for and consists of assets of employees' benefit
21 trusts, including governmental plans as defined in IRC § 414(d)
22 or which meet the requirements for qualification under IRC §
23 401] acquiring any type of interest in a business organization
24 existing under the laws of any jurisdiction, provided that, in
25 any such case, the liability of the State Employees' Retirement
26 Fund shall be limited to the amount of its investment.
27 * * *
28 Section 7. (a) Notwithstanding the limitation contained in
29 24 Pa.C.S. § 8507(c), any active member of the Public School
30 Employees' Retirement System who was formerly an active member
19990H0295B4177 - 33 -
1 in the State Employees' Retirement System and whose service
2 credit in the State Employees' Retirement System has not been
3 converted to service credited in another public pension plan or
4 retirement system in this Commonwealth may elect to become a
5 multiple service member on or before December 31, 2002.
6 (b) Notwithstanding the limitation contained in 71 Pa.C.S. §
7 5907(c), any active member of the State Employees' Retirement
8 System who was formerly an active member of the Public School
9 Employees' Retirement System and whose service credit in the
10 Public School Employees' Retirement System has not been
11 converted to service credited in another public pension plan or
12 retirement system in this Commonwealth may elect to become a
13 multiple service member on or before December 31, 2002.
14 Section 8. Upon becoming effective this act shall be
15 effective retroactive to the date of enactment, except that
16 deceased members of the State Employees' Retirement System or
17 Public School Employees' Retirement System with a date of death
18 on or before 180 days after the enactment of this act, or their
19 personal representatives, may not elect multiple service
20 membership pursuant to this act.
21 Section 9. This act shall take effect as follows:
22 (1) The amendment of 24 Pa.C.S. § 8521(i) and 71 Pa.C.S.
23 § 5931(i) shall take effect in 60 days.
24 (2) This section shall take effect immediately.
25 (3) The remainder of this act shall take effect in 180
26 days.
A20L24JS/19990H0295B4177 - 34 -