act-1995-0-77•Pennsylvania Act 1995-77 — EDUCATION (24 PA.C.S.) AND STATE GOVERNMENT (71 PA.C.S.) - AMEND
Pennsylvania Act 1995-77 — EDUCATION (24 PA.C.S.) AND STATE GOVERNMENT (71 PA.C.S.) - AMEND
act-1995-0-771995 Pa. Act 77Law
Act text
EDUCATION (24 PA.C.S.) AND STATE GOVERNMENT (71 PA.C.S.) - AMEND
Act of Dec. 20, 1995, P.L. 689, No. 77 Cl. 24
Session of 1995
No. 1995-77
HB 1238
AN ACT
Amending Titles 24 (Education) and 71 (State Government) of the
Pennsylvania Consolidated Statutes, amending and adding
certain definitions; amending and adding provisions regarding
the annual compensation limit and other matters under the
Internal Revenue Code of 1986 applicable to the system which
affect member and school employer contributions to the Public
School Employees' Retirement Fund and the State Employees'
Retirement Fund; revising provisions relating to annuitants
of the Public School Employees' Retirement System or the
State Employees' Retirement System who return to school
service or State service; making conforming amendments;
providing for other purposes; and making a repeal.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "active member,"
"compensation," "credited service," "final average salary" and
"inactive member" in section 8102 of Title 24 of the
Pennsylvania Consolidated Statutes are amended and the section
is amended by adding definitions to read:
§ 8102. Definitions.
The following words and phrases when used in this part shall
have, unless the context clearly indicates otherwise, the
meanings given to them in this section:
* * *
"Active member." A school employee for whom pickup
contributions are being made to the fund[.] or for whom such
contributions otherwise required for current school service are
not being made solely by reason of any provision of this part
relating to the limitation under section 401(a)(17) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
401(a)(17)).
* * *
"Commissioner." The Commissioner of the Internal Revenue
Service.
"Compensation." Pickup contributions plus any remuneration
received as a school employee excluding [refunds] reimbursements
for expenses incidental to employment and excluding any bonus,
severance payments[.], any other remuneration or other emolument
received by a school employee during his school service which is
not based on the standard salary schedule under which he is
rendering service, payments for unused sick leave or vacation
leave, bonuses or other compensation for attending school
seminars and conventions, payments under health and welfare
plans based on hours of employment or any other payment or
emolument which may be provided for in a collective bargaining
agreement which may be determined by the Public School
Employees' Retirement Board to be for the purpose of enhancing
compensation as a factor in the determination of final average
salary, provided, however, that the limitation under section
401(a)(17) of the Internal Revenue Code of 1986 (Public Law 99-
514, 26 U.S.C. § 401(a)(17)) taken into account for the purpose
of member contributions, including regular or joint coverage
member contributions, regardless of class of service, shall
apply to each member who first became a member of the Public
School Employes' Retirement System on or after July 1, 1996, and
who by reason of such fact is a noneligible member subject to
the application of the provisions of section 8325.1 (relating to
annual compensation limit under IRC § 401(a)(17)).
* * *
"Credited service." School or creditable nonschool service
for which the required contributions have been made, or for
which the contributions otherwise required for such service were
not made solely by reason of any provision of this part relating
to the limitations under section 401(a)(17) of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
401(a)(17)), or for which salary deductions or lump sum payments
have been agreed upon in writing.
* * *
"Distribution." Payment of all or any portion of a person's
interest in the Public School Employees' Retirement Fund which
is payable under this part.
* * *
"Final average salary." The highest average compensation
received as an active member during any three nonoverlapping
periods of 12 consecutive months with the compensation for part-
time service being annualized on the basis of the fractional
portion of the school year for which credit is received; except,
if the employee was not a member for three such periods, the
total compensation received as an active member annualized in
the case of part-time service divided by the number of such
periods of membership; [and,] in the case of a member with
multiple service credit, the final average salary shall be
determined by reference to compensation received by him as a
school employee or a State employee or both[.]; and, in the case
of a noneligible member, subject to the application of the
provisions of section 8325.1 (relating to annual compensation
limit under IRC § 401(a)(17)).
* * *
"Inactive member." A member for whom no pickup contributions
are being made, except in the case of an active member for whom
such contributions otherwise required for current school service
are not being made solely by reason of any provision of this
part relating to the limitation under section 401(a)(17) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
401(a)(17)), who has accumulated deductions standing to his
credit in the fund and for whom contributions have been made
within the last two school years or a multiple service member
who is active in the State Employees' Retirement System.
* * *
"IRC." The Internal Revenue Code of 1986, as designated and
referred to in the Federal Tax Reform Act of 1986 (Public Law
99-514, § 2, 100 Stat. 2085, 2095). A reference in this part to
"IRC § " shall be deemed to refer to the identically numbered
section and subsection or other subdivision of such section in
26 United States Code (relating to Internal Revenue Code).
* * *
"Noneligible member." For the purposes of section 8325.1
(relating to annual compensation limit under IRC § 401(a)(17)),
a member who first became a member on or after July 1, 1996.
* * *
Section 2. Sections 8302(a), 8321, 8322 and 8322.1 of Title
24 are amended to read:
§ 8302. Credited school service.
(a) Computation of credited service.--In computing credited
school service of a member for the determination of benefits, a
full-time salaried school employee shall receive one year of
credit for each school year or the corresponding fraction
thereof, in accordance with the proportion of the full school
year for which the required regular member contributions have
been made[.], or for which such contributions otherwise required
for such service were not made solely by reason of any provision
of this part relating to the limitation under IRC § 401(a)(17).
A per diem or hourly school employee shall receive one year of
credited service for each nonoverlapping period of 12
consecutive months in which he is employed and for which
contributions are made, or would have been made but for such
limitation under the IRC, for at least 180 full-day sessions or
1,100 hours of employment. If such member was employed and
contributions were made for less than 180 full-day sessions or
1,100 hours, he shall be credited with a fractional portion of a
year determined by the ratio of the number of full-day sessions
or hours of service actually rendered to 180 full-day sessions
or 1,100 hours, as the case may be. A part-time salaried
employee shall be credited with the fractional portion of the
year which corresponds to the service actually rendered in
relation to the service required as a comparable full-time
salaried employee. In no case shall a member receive more than
one year of credited service for any 12 consecutive months or a
member who has elected multiple service receive an aggregate in
the two systems of more than one year of credited service for
any 12 consecutive months.
* * *
§ 8321. Regular member contributions for current service.
Regular member contributions shall be made to the fund on
behalf of each active member for current service[.] except for
any period of current service in which the making of such
contributions has ceased solely by reason of any provision of
this part relating to the limitation under IRC § 401(a)(17).
§ 8322. Joint coverage member contributions.
The regular member contributions made to the fund as and to
the extent required by section 8321 (relating to regular member
contributions for current service) for current service of a
joint coverage member shall be reduced by 40% of the tax on
taxable wages prescribed by the Federal Insurance Contributions
Act, [26 U.S.C.A.] IRC § 3101 et seq., exclusive of that portion
of such tax attributable to coverage for disability and medical
benefits.
§ 8322.1. Pickup contributions.
(a) Treatment for purposes of IRC § 414(h).--All
contributions required to be made under sections 8321 (relating
to regular member contributions for current service) and 8322
(relating to joint coverage member contributions), with respect
to current school service rendered by an active member on or
after January 1, 1983, shall be picked up by the employer and
shall be treated as the employer's contribution [in determining
tax treatment under the United States Internal Revenue Code for
Federal tax purposes.] for purposes of IRC § 414(h).
(b) Treatment for other purposes.--For all other purposes,
under this part and otherwise, [the] such pickup contributions
shall be treated as contributions made by a member in the same
manner and to the same extent as contributions made by a member
prior to January 1, 1983.
Section 3. Title 24 is amended by adding a section to read:
§ 8325.1. Annual compensation limit under IRC § 401(a)(17).
(a) General rule.--In addition to other applicable
limitations set forth in this part, and notwithstanding any
provision of this part to the contrary, the annual compensation
of each noneligible member taken into account for benefit
purposes under this subchapter shall not exceed the limitation
under IRC § 401(a)(17). On and after July 1, 1996, any reference
in this part to the limitation under IRC § 401(a)(17) shall mean
the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) (Public
Law 103-66, 107 Stat. 312) annual compensation limit set forth
in this subsection. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the commissioner for increases in the
cost of living in accordance with IRC § 401(a)(17)(B). The cost-
of-living adjustment in effect for a calendar year applies to
any determination period which is a period, not exceeding 12
months, over which compensation is determined, beginning in such
calendar year. If a determination period consists of fewer than
12 months, the OBRA '93 compensation limit will be multiplied by
a fraction, the numerator of which is the number of months in
the determination period and the denominator of which is 12.
(b) Grandfather exception.--The limitation under IRC §
401(a)(17) shall not apply to an individual who first became a
member of the system prior to July 1, 1996, to the extent that
the application of such limitation to such member would reduce
the amount of compensation that is allowed to be taken into
account for benefit purposes under this subchapter below the
amount that was allowed to be taken into account under this
subchapter as in effect on July 1, 1993.
Section 4. Sections 8327(c), 8346, 8502(h) and (j), 8503(a),
8506(c), 8521(i) and 8533(b) and (d) of Title 24 are amended to
read:
§ 8327. Payments by employers.
* * *
(c) Payments by employers after June 30, 1995.--After June
30, 1995, each employer, including the Commonwealth as employer
of employees of the Department of Education, State-owned
colleges and universities, Thaddeus Stevens State School of
Technology, Pennsylvania State Oral School for the Deaf,
Scotland School for Veterans' Children and The Pennsylvania
State University, shall make payments to the fund each quarter
in an amount computed in the following manner:
(1) For an employer that is a school entity, the amount
shall be the sum of the percentages as determined under
section 8328 applied to the total compensation during the pay
periods in the preceding quarter of all employees who were
active members of the system during such period, including
members on activated military service leave. In the event a
member on activated military service leave does not return to
service for the necessary time or receives an undesirable,
bad conduct or dishonorable discharge or does not elect to
receive credit for activated military service under section
8302(b.1)(3), the contribution made by the employer on behalf
of such member shall be returned with valuation interest upon
application by the employer.
(2) For an employer that is not a school entity, the
amount computed under subsection (a).
(3) For any employer, whether or not a school entity, in
computing the amount of payment due each quarter, there shall
be excluded from the total compensation referred to in this
subsection and subsection (a) any amount of compensation of a
noneligible member on the basis of which member contributions
have not been made by reason of the limitation under IRC §
401(a)(17). Any amount of contribution to the fund paid by
the employer on behalf of a noneligible member on the basis
of compensation which was subject to exclusion from total
compensation in accordance with the provisions of this
paragraph shall, upon the board's determination or upon
application by the employer, be returned to the employer with
valuation interest.
§ 8346. Termination of annuities.
(a) General rule.--If an annuitant returns to school service
or enters State service and elects multiple service membership,
any annuity payable to him under this part shall cease and in
the case of an annuity other than a disability annuity the
present value of such annuity, adjusted for full coverage in the
case of a joint coverage member who makes the appropriate back
contributions for full coverage, shall be frozen as of the date
such annuity ceases. An annuitant who is credited with an
additional 10% of membership service as provided in section
8302(b.2) (relating to credited school service) and who returns
to school service, except as provided in subsection (b), shall
forfeit such credited service and shall have his frozen present
value adjusted as if his 10% retirement incentive had not been
applied to his account. In the event that the cost-of-living
increase enacted December 18, 1979, occurred during the period
of such State or school employment, the frozen present value
shall be increased, on or after the member attains
superannuation age, by the percent applicable had he not
returned to service.
(b) Return to school service during emergency.--When, in the
judgment of the employer, an emergency creates an increase in
the work load such that there is serious impairment of service
to the public or in the event of a shortage of appropriate
subject certified teachers, an annuitant may be returned to
school service for a period not to exceed 95 full-day sessions
in any school year without loss of his annuity. In computing the
number of days an annuitant has returned to school service, any
amount of time less than one-half of a day shall be counted as
one-half of a day.
(c) Subsequent discontinuance of service.--Upon subsequent
discontinuance of service, such member other than a former
annuitant who [elected to eliminate] had the effect of his
frozen present value eliminated in accordance with subsection
(d) or a former disability annuitant shall be entitled to an
annuity which is actuarially equivalent to the sum of the
present value as determined under subsection (a) and the present
value of a maximum single life annuity based on years of service
credited subsequent to reentry in the system and his final
average salary computed by reference to his compensation during
his entire period of school and State service.
(d) [Election to eliminate] Elimination of the effect of
frozen present value.--
(1) [If an] An annuitant who [has not elected multiple
service] returns to school service and earns three
eligibility points by performing credited school service
following the most recent period of receipt of an annuity
under this part [and], or an annuitant who enters State
service and:
(i) is a multiple service member; or
(ii) who elects multiple service membership, and
earns three eligibility points by performing credited State
service or credited school service following the most recent
period of receipt of an annuity under this part, and who had
the present value of his annuity [has been] frozen in
accordance with subsection (a), [the former annuitant may
elect to eliminate] shall qualify to have the effect of the
frozen present value resulting from all previous periods of
retirement [by agreeing to return to the fund] eliminated,
provided that all payments under Option 4 and annuity
payments payable during previous periods of retirement plus
interest as set forth in paragraph [(4)] (3) shall be
returned to the fund in the form of an actuarial adjustment
to his subsequent benefits or in such form as the board may
otherwise direct.
(2) [A former annuitant who has not elected multiple
service and chooses to eliminate the effect of his frozen
present value must elect to do so in the school year in which
he first becomes eligible or in the following school year.
Only an active or inactive member on leave or a member who
has terminated service but has not yet elected to retire can
elect to eliminate the effect of frozen present value.
(3)] Upon subsequent discontinuance of service [where a
former annuitant has elected to eliminate the effect of the
frozen present value under this subsection, that portion of
the present value of his account upon which his annuity had
been calculated shall no longer be frozen, and he shall be
entitled to an annuity calculated in accordance with the
provisions of this part as then in effect,] and the filing of
an application for an annuity, a former annuitant who
qualifies to have the effect of a frozen present value
eliminated under this subsection shall be entitled to receive
the higher of either:
(i) an annuity (prior to optional modification)
calculated as if the freezing of the former annuitant's
account pursuant to subsection (a) had not occurred,
adjusted according to paragraph [(4)] (3), provided that
a former annuitant of the system or a former annuitant of
the State Employees' Retirement System who retired under
a provision of law granting additional service credit if
termination of school or State service or retirement
occurred during a specific period of time shall not be
permitted to retain the additional service credit under
the prior law when the annuity is computed for his most
recent retirement; or
(ii) an annuity (prior to optional modification)
calculated as if the former annuitant did not qualify to
have the effect on the frozen present value eliminated,
unless the former annuitant notifies the board in writing by
the later of the date the application for annuity is filed or
the effective date of retirement, that the former annuitant
wishes to receive the lower annuity.
[(4)] (3) In addition to any other adjustment to the
present value of the maximum single life annuity that a
member may be entitled to receive that occurs as a result of
any other provision of law, the present value of the maximum
single life annuity shall be reduced by all amounts paid or
payable to him during all previous periods of retirement plus
interest on these amounts until the date of subsequent
retirement. The interest for each year shall be calculated
based upon the annual interest rate adopted for that school
year by the board for the calculation of the normal
contribution rate pursuant to section 8328(b) (relating to
actuarial cost method).
§ 8502. Administrative duties of board.
* * *
(h) Regulations and procedures.--The board shall, with the
advice of the Attorney General and the actuary, adopt and
promulgate rules and regulations for the uniform administration
of the system. The actuary shall approve in writing all
computational procedures used in the calculation of
contributions and benefits, and the board shall by resolution
adopt such computational procedures, prior to their application
by the board. Such rules, regulations and computational
procedures as so adopted from time to time and as in force and
effect at any time, together with such tables as are adopted and
published pursuant to subsection (j) as necessary for the
calculation of annuities and other benefits, shall be as
effective as if fully set forth in this part. Any actuarial
assumption specified in or underlying any such rule, regulation
or computational procedure and utilized as a basis for
determining any benefit shall be applied in a uniform manner.
* * *
(j) Actuarial investigation and valuation.--The board shall
have the actuary make an annual valuation of the various
accounts within six months of the close of each fiscal year. In
the fiscal year 1975 and in every fifth year thereafter, the
board shall have the actuary conduct an actuarial investigation
and evaluation of the system based on data including the
mortality, service, and compensation experience provided by the
board annually during the preceding five years concerning the
members and beneficiaries. The board shall by resolution adopt
such tables as are necessary for the actuarial valuation of the
fund and calculation of contributions, annuities, and other
benefits based on the reports and recommendations of the
actuary. Within 30 days of their adoption, the secretary of the
board shall cause those tables which relate to the calculation
of annuities and other benefits to be published in the
Pennsylvania Bulletin in accordance with the provisions of 45
Pa.C.S. § 725(a) (relating to additional contents of
Pennsylvania Bulletin) and, unless the board specifies therein a
later effective date, such tables shall become effective on such
publication. The board shall include a report on the significant
facts, recommendations and data developed in each five-year
actuarial investigation and evaluation of the system in the
annual financial statement published pursuant to the
requirements of subsection (n) for the fiscal year in which such
investigation and evaluation were concluded.
* * *
§ 8503. Duties of board to advise and report to employers and
members.
(a) Manual of regulations.--The board shall, with the advice
of the Attorney General and the actuary, prepare within 90 days
of the effective date of this part, a manual incorporating rules
and regulations consistent with the provisions of this part for
the employers who shall make information contained therein
available to the general membership. The board shall thereafter
advise the employers within 90 days of any changes in such rules
and regulations due to changes in the law or due to changes in
administrative policies. As soon as practicable after the
commissioner's publication with respect thereto, the board shall
also advise the employers as to any cost-of-living adjustment
for the succeeding calendar year in the amount of the limitation
under IRC § 401(a)(17).
* * *
§ 8506. Duties of employers.
* * *
(c) Member and employer contributions.--The employer shall
certify to its treasurer the required member contributions
picked up and any other contributions deducted from each
payroll. On July 1, 1996, and upon any later effective date of
employment of any noneligible member to whom limitation under
IRC § 401(a)(17) applies or is expected to apply, the employer
shall identify to its treasurer or other payroll administrator
the member or members to whom such limit applies or may apply
and shall cause any such member's contributions deducted from
payroll and the employer's contribution on his behalf to cease
at the limitation under IRC § 401(a)(17) on the payroll date if
and when such limit shall be reached. The treasurer shall remit
to the secretary of the board each month the total of the member
contributions and the amount due from the employer determined in
accordance with section 8327 (relating to payments by
employers). If, upon crediting the remittance of a noneligible
member's contributions to the member's savings account, the
board shall determine that such account shall have been credited
with pickup contributions attributable to compensation which is
in excess of the annual compensation limit under IRC §
401(a)(17), or with total member contributions for such member
which would cause such member's contributions or benefits to
exceed any applicable limitation on contributions or benefits
under IRC § 401(a)(17), the board shall as soon as practicable
refund to the member from his individual member account such
amount, together with the statutory interest thereon, as will
cause the member's total member contributions not to exceed the
applicable limit. The payment of any such refund to the member
shall be charged to the member's savings account.
* * *
§ 8521. Management of fund and accounts.
* * *
(i) Vehicles for authorized investments.--The board in its
prudent discretion may make any investments which meet the
standard of prudence set forth in subsection (a) by becoming a
limited partner in partnerships that will hold such investments,
or by acquiring shares or units of participation or otherwise
participating beneficially in bank collective trusts or in the
separate accounts of any insurance company authorized to do
business in this Commonwealth, or by acquiring stocks or shares
or units of participation or otherwise participating
beneficially in the fund of any corporation or trust organized
or created and existing under the laws of the United States or
of any state, district or territory thereof which fund is
maintained for and consists of assets of employees' benefit
trusts, including governmental plans as defined in [section
414(d) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 414(d))] IRC § 414(d) or which meet the requirements
for qualification under [section 401 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 401)] IRC § 401,
provided that, in any such case, the liability of the Public
School Employees' Retirement Fund shall be limited to the amount
of its investment.
* * *
§ 8533. Taxation, attachment and assignment of funds.
* * *
(b) Forfeiture.--Rights under this part shall be subject to
forfeiture as provided by the act of July 8, 1978 (P.L. 752, No.
140), known as the Public Employee Pension Forfeiture Act.
Forfeitures under this subsection or under any other provision
of law may not be applied to increase the benefits that any
member would otherwise receive under this part.
* * *
(d) Direct rollover.--Effective with distributions made on
or after January 1, 1993, and notwithstanding any other
provision of this part to the contrary, a distributee may elect,
at the time and in the manner prescribed by the board, to have
any portion of an eligible rollover distribution paid directly
to an eligible retirement plan by way of a direct rollover. For
purposes of this subsection, a "distributee" includes a member
and a member's surviving spouse and a member's former spouse who
is an alternate payee under an approved domestic relations
order. For purposes of this subsection, the term "eligible
rollover distribution" has the meaning given such term by
[section 402(f)(2)(A) of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 402(f)(2)(A))] IRC §
402(f)(2)(A) and "eligible retirement plan" has the meaning
given such term by [section 402(c)(8)(B) of the Internal Revenue
Code of 1986] IRC § 402(c)(8)(B), except that a qualified trust
shall be considered an eligible retirement plan only if it
accepts the distributee's eligible rollover distribution;
however, in the case of an eligible rollover distribution to a
surviving spouse, an eligible retirement plan is an "individual
retirement account" or an "individual retirement annuity" as
those terms are defined in [section 408(a) and (b) of the
Internal Revenue Code of 1986] IRC § 408(a) and (b).
Section 5. The definitions of "active member,"
"compensation," "credited service," "final average salary" and
"inactive member" in section 5102 of Title 71 are amended and
the section is amended by adding definitions to read:
§ 5102. Definitions.
The following words and phrases as used in this part, unless
a different meaning is plainly required by the context, shall
have the following meanings:
* * *
"Active member." A State employee, or a member on leave
without pay, for whom pickup contributions are being made to the
fund[.] or for whom such contributions otherwise required for
current State service are not being made solely by reason of any
provision of this part relating to the limitation under section
401(a)(17) of the Internal Revenue Code of 1986 (Public Law 99-
514, 26 U.S.C. § 401(a)(17)).
* * *
"Commissioner." The Commissioner of the Internal Revenue
Service.
"Compensation." Pickup contributions plus remuneration
actually received as a State employee excluding refunds for
expenses, contingency and accountable expense allowances, and
excluding any severance payments or payments for unused vacation
or sick leave: Provided, however, That compensation received
prior to January 1, 1973, shall be subject to the limitations
for retirement purposes in effect December 31, 1972, if any[.]:
Provided further, That the limitation under section 401(a)(17)
of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. § 401(a)(17)) taken into account for the purpose of
member contributions, including any additional member
contributions in addition to regular or joint coverage member
contributions and Social Security integration contributions,
regardless of class of service, shall apply to each member who
first became a member of the State Employees' Retirement System
on or after January 1, 1996, and who by reason of such fact is a
noneligible member subject to the application of the provisions
of section 5506.1(a) (relating to annual compensation limit
under IRC § 401(a)(17)).
* * *
"Credited service." State or creditable nonstate service for
which the required contributions have been made, or for which
the contributions otherwise required for such service were not
made solely by reason of any provision of this part relating to
the limitation under section 401(a)(17) of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17)), or for
which salary deductions or lump sum payments have been agreed
upon in writing.
* * *
"Distribution." Payment of all or any portion of a person's
interest in the State Employees' Retirement Fund which is
payable under this part.
* * *
"Final average salary." The highest average compensation
received as a member during any three nonoverlapping periods of
four consecutive calendar quarters during which the member was a
State employee, with the compensation for part-time service
being annualized on the basis of the fractional portion of the
year for which credit is received; except if the employee was
not a member for three nonoverlapping periods of four
consecutive calendar quarters, the total compensation received
as a member, annualized in the case of part-time service,
divided by the number of nonoverlapping periods of four
consecutive calendar quarters of membership; [and] in the case
of a member with multiple service, the final average salary
shall be determined on the basis of the compensation received by
him as a State employee or as a school employee, or both[.];
and, in the case of a member who first became a member on or
after January 1, 1996, the final average salary shall be
determined as hereinabove provided but subject to the
application of the provisions of section 5506.1(a) (relating to
annual compensation limit under IRC § 401(a)(17)).
* * *
"Inactive member." A member for whom no pickup contributions
are being made, except in the case of an active member for whom
such contributions otherwise required for current State service
are not being made solely by reason of any provision of this
part relating to the limitation under section 401(a)(17) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. §
401(a)(17)), but who has accumulated deductions standing to his
credit in the fund and who is not eligible to become or has not
elected to become a vestee or has not filed an application for
an annuity.
* * *
"IRC." The Internal Revenue Code of 1986, as designated and
referred to in the Federal Tax Reform Act of 1986 (Public Law
99-514, § 2, 100 Stat. 2085, 2095). A reference in this part to
"IRC § " shall be deemed to refer to the identically numbered
section and subsection or other subdivision of such section in
26 United States Code (relating to Internal Revenue Code).
* * *
"Noneligible member." For the purposes of section 5506.1
(relating to annual compensation limit under IRC § 401(a)(17)),
a member who first became a member on or after January 1, 1996.
* * *
Section 6. Sections 5302(a), 5501, 5502, 5503 and 5503.1 of
Title 71 are amended to read:
§ 5302. Credited State service.
(a) Computation of credited service.--In computing credited
State service of a member for the determination of benefits, a
full-time salaried State employee including any member of the
General Assembly, shall receive credit for service in each
period for which contributions as required are made, or for
which contributions otherwise required for such service were not
made solely by reason of any provision of this part relating to
the limitation under IRC § 401(a)(17), but in no case shall he
receive more than one year's credit for any 12 consecutive
months or 26 consecutive biweekly pay periods. A per diem or
hourly State employee shall receive one year of credited service
for each nonoverlapping period of 12 consecutive months or 26
consecutive biweekly pay periods in which he is employed and for
which contributions are made or would have been made but for
such limitation under the IRC for at least 220 days or 1,650
hours of employment. If the member was employed and
contributions were made for less than 220 days or 1,650 hours,
he shall be credited with a fractional portion of a year
determined by the ratio of the number of days or hours of
service actually rendered to 220 days or 1,650 hours, as the
case may be. A part-time salaried employee shall be credited
with the fractional portion of the year which corresponds to the
number of hours or days of service actually rendered in relation
to 1,650 hours or 220 days, as the case may be. In no case shall
a member who has elected multiple service receive an aggregate
in the two systems of more than one year of credited service for
any 12 consecutive months.
* * *
§ 5501. Regular member contributions for current service.
Regular member contributions shall be made to the fund on
behalf of each active member for current service[.] except for
any period of current service in which the making of such
contributions has ceased solely by reason of any provision of
this part relating to the annual compensation limit under IRC §
401(a)(17).
§ 5502. Social [security] Security integration member
contributions.
Contributions shall be made on behalf of a member of any
class who prior to March 1, 1974, has elected [social security]
Social Security integration coverage [and the]. The amount of
such [contribution] contributions shall be 6 1/4% of that
portion of his compensation in excess of the maximum wages
taxable under the provisions of the [Federal] Social Security
Act[, 42 U.S.C.A. § 301 et seq.] (49 Stat. 620, 42 U.S.C. § 301
et seq.), in addition to the regular member contributions which,
after such election, shall be determined on the basis of the
basic contribution rate of 5% and the additional member
contribution of 1 1/4%: Provided, That a member may elect to
discontinue [social security] Social Security integration
coverage and shall thereafter be ineligible to accrue any
further [social security] Social Security integration credits or
any additional benefits on account of [social security] Social
Security integration membership.
§ 5503. Joint coverage member contributions.
The regular member contributions for current service of a
joint coverage member in any class shall be reduced by 40% of
the tax on taxable wages prescribed by the Federal Insurance
Contributions Act, [26 U.S.C. §§ 3101-3125] IRC § 3101 et seq.,
exclusive of that portion of such tax attributable to coverage
for [disability and medical] hospital insurance benefits.
§ 5503.1. Pickup contributions.
(a) Treatment for purposes of IRC § 414(h).--All
contributions required to be made under sections 5501 (relating
to regular member contributions for current service), 5502
(relating to [social security] Social Security integration
member contributions), 5503 (relating to joint coverage member
contributions) and section 5505.1 (relating to additional member
contributions), with respect to current State service rendered
by an active member on or after January 1, 1982, shall be picked
up by the Commonwealth or other employer and shall be treated as
the employer's contribution [in determining tax treatment under
the United States Internal Revenue Code for Federal tax
purposes.] for purposes of IRC § 414(h).
(b) Treatment for other purposes.--For all other purposes,
under this part and otherwise, such pickup contributions shall
be treated as contributions made by a member in the same manner
and to the same extent as contributions made by a member prior
to January 1, 1982.
Section 7. Title 71 is amended by adding a section to read:
§ 5506.1. Annual compensation limit under IRC § 401(a)(17).
(a) General rule.--In addition to other applicable
limitations set forth in this part, and notwithstanding any
provision of this part to the contrary, the annual compensation
of each noneligible member taken into account for benefit
purposes under this part shall not exceed the limitation under
IRC § 401(a)(17). On and after January 1, 1996, any reference in
this part to the limitation under IRC § 401(a)(17) shall mean
the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) (Public
Law 103-66, 107 Stat. 312) annual compensation limit set forth
in this subsection. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the commissioner for increases in the
cost of living in accordance with IRC § 401(a)(17)(B). The cost-
of-living adjustment in effect for a calendar year applies to
any determination period which is a period, not exceeding 12
months, over which compensation is determined, beginning in such
calendar year. If a determination period consists of fewer than
12 months, the OBRA '93 compensation limit will be multiplied by
a fraction, the numerator of which is the number of months in
the determination period and the denominator of which is 12.
(b) Grandfather exception.--The limitation under IRC §
401(a)(17) shall not apply to a member who first became a member
prior to January 1, 1996, to the extent that the application of
such limitation to such member would reduce the amount of
compensation that is allowed to be taken into account for
benefit purposes under this chapter below the amount that was
allowed to be taken into account under this chapter as in effect
on July 1, 1993.
Section 8. Sections 5706, 5902(h) and (j), 5903(a), 5906(c),
5931(i) and 5953(a) of Title 71 are amended to read:
§ 5706. Termination of annuities.
(a) General rule.--If the annuitant returns to State service
or enters school service and elects multiple service membership,
any annuity payable to him under this part shall cease and in
the case of an annuity other than a disability annuity the
present value of such annuity, adjusted for full coverage in the
case of a joint coverage member who makes the appropriate back
contributions for full coverage, shall be frozen as of the date
such annuity ceases. An annuitant who is credited with an
additional 10% of Class A and Class C service as provided in
section 5302(c) (relating to credited State service) and who
returns to State service shall forfeit such credited service and
shall have his frozen present value adjusted as if his 10%
retirement incentive had not been applied to his account. In the
event that the cost-of-living increase enacted December 18, 1979
occurred during the period of such State or school employment,
the frozen present value shall be increased, on or after the
member attains superannuation age, by the percent applicable had
he not returned to service. This subsection shall not apply in
the case of any annuitant who may render services to the
Commonwealth in the capacity of an independent contractor or as
a member of an independent board or commission or as a member of
a departmental administrative or advisory board or commission
when such members of independent or departmental boards or
commissions are compensated on a per diem basis for not more
than 150 days per calendar year.
(a.1) Return to State service during emergency.--When, in
the judgment of the employer, an emergency creates an increase
in the work load such that there is serious impairment of
service to the public, an annuitant may be returned to State
service for a period not to exceed 95 days in any fiscal year
without loss of his annuity. In computing the number of days an
annuitant has returned to State service, any amount of time less
than one-half of a day shall be counted as one-half of a day.
For agencies, boards and commissions under the Governor's
jurisdiction, the approval of the Governor that an emergency
exists shall be required before an annuitant may be returned to
State service.
(b) Subsequent discontinuance of service.--Upon subsequent
discontinuance of service, such member other than a former
annuitant who [elected to eliminate] had the effect of his
frozen present value eliminated in accordance with subsection
(c) or a former disability annuitant shall be entitled to an
annuity which is actuarially equivalent to the sum of the
present value as determined under subsection (a) and the present
value of a maximum single life annuity based on years of service
credited subsequent to reentry in the system and his final
average salary computed by reference to his compensation during
his entire period of State and school service.
(c) [Election to eliminate] Elimination of the effect of
frozen present value.--
(1) [If an] An annuitant who [has not elected multiple
service] returns to State service and earns three eligibility
points by performing credited State service following the
most recent period of receipt of an annuity under this part
[and], or an annuitant who enters school service and:
(i) is a multiple service member; or
(ii) who elects multiple service membership, and
earns three eligibility points by performing credited State
service or credited school service following the most recent
period of receipt of an annuity under this part, and who had
the present value of his annuity [has been] frozen in
accordance with subsection (a), [the former annuitant may
elect to eliminate] shall qualify to have the effect of the
frozen present value resulting from all previous periods of
retirement [by agreeing to return to the fund] eliminated,
provided that all payments under Option 4 and annuity
payments payable during previous periods of retirement plus
interest as set forth in paragraph [(4)] (3) shall be
returned to the fund in the form of an actuarial adjustment
to his subsequent benefits or in such form as the board may
otherwise direct.
(2) [A former annuitant who has not elected multiple
service and chooses to eliminate the effect of his frozen
present value must elect to do so in the fiscal year in which
he first becomes eligible or in the following fiscal year.
Only an active or inactive member on leave can elect to
eliminate the effect of frozen present value.
(3)] Upon subsequent discontinuance of service [where a
former annuitant has elected to eliminate the effect of the
frozen present value under this subsection, that portion of
the present value of his account upon which his annuity had
been calculated shall no longer be frozen, and he shall be
entitled to an annuity calculated in accordance with the
provisions of this part as then in effect] and the filing of
an application for an annuity, a former annuitant who
qualifies to have the effect of a frozen present value
eliminated under this subsection shall be entitled to receive
the higher of either:
(i) an annuity (prior to optional modification)
calculated as if the freezing of the former annuitant's
account pursuant to subsection (a) had not occurred,
adjusted according to paragraph [(4)] (3), provided that
a former annuitant of the system or a former annuitant of
the Public School Employees' Retirement System who
retired under a provision of law granting additional
service credit if termination of State or school service
or retirement occurred during a specific period of time
shall not be permitted to retain the additional service
credit under the prior law when the annuity is computed
for his most recent retirement; or
(ii) an annuity (prior to optional modification)
calculated as if the former annuitant did not qualify to
have the effect of the frozen present value eliminated,
unless the former annuitant notifies the board in writing by
the later of the date the application for annuity is filed or
the effective date of retirement, that the former annuitant
wishes to receive the lower annuity.
[(4)] (3) In addition to any other adjustment to the
present value of the maximum single life annuity that a
member may be entitled to receive that occurs as a result of
any other provision of law, the present value of the maximum
single life annuity shall be reduced by all amounts paid or
payable to him during all previous periods of retirement plus
interest on these amounts until the date of subsequent
retirement. The interest for each year shall be calculated
based upon the annual interest rate adopted for that fiscal
year by the board for the calculation of the normal
contribution rate pursuant to section 5508(b) (relating to
actuarial cost method).
§ 5902. Administrative duties of the board.
* * *
(h) Regulations and procedures.--The board shall, with the
advice of the Attorney General and the actuary, adopt and
promulgate rules and regulations for the uniform administration
of the system. The actuary shall approve in writing all
computational procedures used in the calculation of
contributions and benefits, and the board shall by resolution
adopt such computational procedures, prior to their application
by the board. Such rules, regulations and computational
procedures as so adopted from time to time and as in force and
effect at any time, together with such tables as are adopted
pursuant to subsection (j) as necessary for the calculation of
annuities and other benefits, shall be as effective as if fully
set forth in this part. Any actuarial assumption specified in or
underlying any such rule, regulation or computational procedure
and utilized as a basis for determining any benefit shall be
applied in a uniform manner.
* * *
(j) Actuarial investigation and valuation.--The board shall
have the actuary make an annual valuation of the various
accounts within six months of the close of each calendar year.
In the year 1975 and in every fifth year thereafter the board
shall have the actuary conduct an actuarial investigation and
evaluation of the system based on data including the mortality,
service, and compensation experience provided by the board
annually during the preceding five years concerning the members
and beneficiaries. The board shall by resolution adopt such
tables as are necessary for the actuarial valuation of the fund
and calculation of contributions, annuities and other benefits
based on the reports and recommendations of the actuary. Within
30 days of their adoption, the secretary of the board shall
cause those tables which relate to the calculation of annuities
and other benefits to be published in the Pennsylvania Bulletin
in accordance with the provisions of 45 Pa.C.S. § 725(a)
(relating to additional contents of Pennsylvania Bulletin) and,
unless the board specifies therein a later effective date, such
tables shall become effective on such publication. The board
shall include a report on the significant facts, recommendations
and data developed in each five-year actuarial investigation and
evaluation of the system in the annual financial statement
published pursuant to the requirements of subsection (m) for the
fiscal year in which such investigation and evaluation were
concluded.
* * *
§ 5903. Duties of the board to advise and report to heads of
departments and members.
(a) Manual of regulations.--The board shall, with the advice
of the Attorney General and the actuary, prepare and provide,
within 90 days of the effective date of this part, a manual
incorporating rules and regulations consistent with the
provisions of this part to the heads of departments who shall
make the information contained therein available to the general
membership. The board shall thereafter advise the heads of
departments within 90 days of any changes in such rules and
regulations due to changes in the law or due to changes in
administrative policies. As soon as practicable after the
commissioner's announcement with respect thereto, the board
shall also advise the heads of departments as to any cost-of-
living adjustment for the succeeding calendar year in the amount
of the limitation under IRC § 401(a)(17).
* * *
§ 5906. Duties of heads of departments.
* * *
(c) Member contributions.--The head of department shall
cause the required pickup contributions for current service to
be made and shall cause to be deducted any other required member
contributions from each payroll. The head of department shall
notify the board at times and in a manner prescribed by the
board of the compensation of any noneligible member to whom the
limitation under IRC § 401(a)(17) either applies or is expected
to apply and shall cause such member's contributions deducted
from payroll to cease at the limitation under IRC § 401(a)(17)
on the payroll date if and when such limit shall be reached. The
head of department shall certify to the State Treasurer the
amounts picked up and deducted and shall send the total amount
picked up and deducted together with a duplicate of such voucher
to the secretary of the board every pay period. The head of
department shall pay pickup contributions from the same source
of funds which is used to pay other compensation to the
employee. On or before January 31, [1983] 1997, and on or before
January 31 of each year thereafter, the head of department
shall, at the time when the income and withholding information
required by law is furnished to each member, also furnish the
amount of pickup contributions made on his behalf[.] and notify
the board, if it has not been previously notified, of any
noneligible member whose compensation in the preceding year
exceeded the annual compensation limit under IRC § 401(a)(17).
If the board shall determine that the member's savings account
shall have been credited with pickup contributions for a
noneligible member in the preceding year which are attributable
to compensation in excess of the limitation under IRC §
401(a)(17), or with total member contributions for such member
which would cause such member's contributions or benefits to
exceed any applicable limitation under IRC § 401(a)(17), the
board shall as soon as practicable refund to the member from his
individual member account such amount, together with the
statutory interest thereon, as will cause the member's total
member contributions in the preceding year not to exceed the
applicable limit. The payment of any such refund to the member
shall be charged to the member's savings account.
* * *
§ 5931. Management of fund and accounts.
* * *
(i) Vehicles for authorized investments.--The board in its
prudent discretion may make any investments which meet the
standard of prudence set forth in subsection (a) by becoming a
limited partner in partnerships that will hold such investments;
or by acquiring shares or units of participation or otherwise
participating beneficially in bank collective trusts or in the
separate accounts of any insurance company authorized to do
business in this Commonwealth; or by acquiring stocks or shares
or units of participation or otherwise participating
beneficially in the fund of any corporation or trust organized
or created and existing under the laws of the United States or
of any state, district or territory thereof, which fund is
maintained for and consists of assets of employees' benefit
trusts, including governmental plans as defined in [section
414(d) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 414(d))] IRC § 414(d) or which meet the requirements
for qualification under [section 401 of the Internal Revenue
Code of 1986] IRC § 401, provided that, in any such case, the
liability of the State Employees' Retirement Fund shall be
limited to the amount of its investment.
* * *
§ 5953. Taxation, attachment and assignment of funds.
(a) General rule.--
(1) Except as provided in paragraphs (2), (3) and (4),
the right of a person to any benefit or right accrued or
accruing under the provisions of this part and the moneys in
the fund are hereby exempt from any State or municipal tax,
levy and sale, garnishment, attachment, spouse's election, or
any other process whatsoever except for a set-off by the
Commonwealth in the case provided in subparagraph (i), and
shall be unassignable except:
(i) To the Commonwealth in the case of a member who
is terminating State service and has been determined to
be obligated to the Commonwealth for the repayment of
money owed on account of his employment or to the fund on
account of a loan from a credit union which has been
satisfied by the board from the fund.
(ii) To a credit union as security for a loan not to
exceed $750 and interest not to exceed 6% per annum
discounted and/or fines thereon if the credit union is
now or hereafter organized and incorporated under the
laws of this Commonwealth and the membership of such
credit union is limited solely to officials and employees
of the Commonwealth and if such credit union has paid to
the fund $3 for each such assignment.
(2) Rights under this part shall be subject to
forfeiture as provided by the act of July 8, 1978 (P.L.752,
No.140), known as the Public Employee Pension Forfeiture
Act[.], and by or pursuant to section 16(b) of Article V of
the Constitution of Pennsylvania. Forfeitures under this
subsection or under any other provision of law may not be
applied to increase the benefits that any member would
otherwise receive under this part.
(3) Rights under this part shall be subject to
attachment in favor of an alternate payee as set forth in an
approved domestic relations order.
(4) Effective with distributions made on or after
January 1, 1993, and notwithstanding any other provision of
this part to the contrary, a distributee may elect, at the
time and in the manner prescribed by the board, to have any
portion of an eligible rollover distribution paid directly to
an eligible retirement plan by way of a direct rollover. For
purposes of this [subsection] paragraph, a "distributee"
includes a member and a member's surviving spouse and a
member's former spouse who is an alternate payee under an
approved domestic relations order. For purposes of this
[subsection] paragraph, the term "eligible rollover
distribution" has the meaning given such term by [section
402(f)(2)(A) of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 402(f)(2)(A))] IRC § 402(f)(2)(A), and
"eligible retirement plan" has the meaning given such term by
[section 402(c)(8)(B) of the Internal Revenue Code of 1986]
IRC § 402(c)(8)(B), except that a qualified trust shall be
considered an eligible retirement plan only if it accepts the
distributee's eligible rollover distribution; however, in the
case of an eligible rollover distribution to a surviving
spouse, an eligible retirement plan is an "individual
retirement account" or an "individual retirement annuity" as
those terms are defined in [section 408(a) and (b) of the
Internal Revenue Code of 1986.] IRC § 408(a) and (b).
* * *
Section 9. This act shall be construed and administered in
such manner that the Public School Employees' Retirement System
will satisfy the requirements necessary to qualify as a
qualified pension plan under section 401(a)(8), (a)(17) and
(a)(25) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 1 et seq.). The rules, regulations and procedures
adopted and promulgated by the Public School Employees'
Retirement Board under 24 Pa.C.S. § 8502(h) shall include those
necessary to accomplish the purpose of this section.
Section 10. This act shall be construed and administered in
such manner that the State Employees' Retirement System will
satisfy the requirements necessary to qualify as a qualified
pension plan under section 401(a)(8), (a)(17) and (a)(25) of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
et seq.). The rules, regulations and procedures adopted and
promulgated by the State Employees' Retirement Board under 71
Pa.C.S. § 5902(h) shall include those necessary to accomplish
the purpose of this section.
Section 11. Except as may be otherwise specifically
provided, references in this act to provisions of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.),
including for this purpose administrative regulations
promulgated thereunder, are intended to include such laws and
regulations as in effect on the effective date of this section
and as they may hereafter be amended or supplemented or
supplanted by successor provisions.
Section 12. Section 20 of the act of April 29, 1994
(P.L.159, No.29), entitled "An act amending Titles 24
(Education) and 71 (State Government) of the Pennsylvania
Consolidated Statutes, further providing for the Public School
Employees' Retirement System and the State Employees' Retirement
System; adding and amending certain definitions; and further
providing for older workers, for nonintervening military
service, for eligibility for and the computation of annuities
and other retirement benefits, for contributions and other
payments made by employers, for certain credited service, for
the powers and duties of the Public School Employees' Retirement
Board and the State Employees' Retirement Board, for the rights
and duties of members, for the management of funds and accounts,
for taxation, attachment and assignment of funds and for certain
domestic relations matters," is repealed.
Section 13. (a) Nothing in this act which amends or
supplements provisions of 24 Pa.C.S. Pt. IV in relation to
requirements for qualification of the Public School Employees'
Retirement System as a qualified pension plan under 26 U.S.C. §
401(a), nor any construction of such provisions as so amended or
supplemented or any rules or regulations adopted under such
part, shall create in any member of the system or in any other
person claiming an interest in the account of any such member a
contractual right, either express or implied, in such
provisions. Such provisions shall remain subject to the Internal
Revenue Code of 1986, as amended, and regulations thereunder as
the same may hereafter be amended, and the General Assembly
reserves to itself such further exercise of its legislative
power to amend or supplement such provisions as may from time to
time be required in order to maintain the qualification of such
system as a qualified pension plan under 26 U.S.C. § 401(a).
(b) Nothing in this act which amends or supplements
provisions of 71 Pa.C.S. Pt. XXV in relation to requirements for
qualification of the State Employees' Retirement System as a
qualified pension plan under 26 U.S.C. § 401(a), nor any
construction of such provisions as so amended or supplemented or
any rules or regulations adopted under such part, shall create
in any member of the system or in any other person claiming an
interest in the account of any such member a contractual right,
either express or implied, in such provisions. Such provisions
shall remain subject to the Internal Revenue Code of 1986, as
amended, and regulations thereunder as the same may hereafter be
amended, and the General Assembly reserves to itself such
further exercise of its legislative power to amend or supplement
such provisions as may from time to time be required in order to
maintain the qualification of such system as a qualified pension
plan under 26 U.S.C. § 401(a).
(c) In relation to the amendments of 24 Pa.C.S. § 8346 and
71 Pa.C.S. § 5706 the following shall apply:
(1) Nothing in the amendments of 24 Pa.C.S. § 8346 and
71 Pa.C.S. § 5706 shall be deemed to permit the restoration
of service credit or retirement benefits which were the
subject of an order of forfeiture pursuant to the act of July
8, 1978 (P.L.752, No.140), known as the Public Employee
Pension Forfeiture Act.
(2) Former annuitants who have the effect of frozen
present value eliminated pursuant to 24 Pa.C.S. § 8346(d)(2)
and 71 Pa.C.S. § 5706(c)(2) do so with the specific
understanding that they accept the terms and conditions of 24
Pa.C.S. Pt. IV and 71 Pa.C.S. Pt. XXV as they are upon their
most recent return to school service or State service as the
case may be and do not retain any contractual rights to terms
and conditions of 24 Pa.C.S. Pt. IV and 71 Pa.C.S. Pt. XXV,
including, but not limited to, benefit formulas, accrual
rates and eligibility, contribution rates, definitions,
purchase of creditable school, nonschool, State and non-State
provisions and actuarial and funding assumptions or
provisions arising from any period of employment prior to
their final period of employment.
(3) The amendments of 24 Pa.C.S. § 8346 and 71 Pa.C.S. §
5706 shall apply to former annuitants of the State Employees'
Retirement System, and former annuitants of the Public School
Employees' Retirement System, who have elected multiple
service and who are:
(i) inactive members on leave or active members of
the State Employees' Retirement System;
(ii) annuitants who were inactive members on leave
or active members of the State Employees' Retirement
System on or after July 1, 1994, who terminated State
service before the effective date of this act; or
(iii) who terminated their most recent period of
State service prior to the effective date of this act but
have not yet elected to apply for an annuity; and
who have earned at least three eligibility points due to the
performance of State service, or if a member who has elected
multiple service at least three eligibility points due to the
performance of State service or school service, since the
most recent period of annuity.
(4) The amendments of 24 Pa.C.S. § 8346 and 71 Pa.C.S. §
5706 shall apply to former annuitants of the Public School
Employees' Retirement System, and former annuitants of the
State Employees' Retirement System, who have elected multiple
service and who are:
(i) inactive members on leave or active members of
the Public School Employees' Retirement System;
(ii) annuitants who were inactive members on leave
or active members of the Public School Employees'
Retirement System on or after July 1, 1994, who
terminated school service before the effective date of
this act; or
(iii) who terminated their most recent period of
school service prior to the effective date of this act
but have not yet elected to apply for an annuity; and
who have earned at least three eligibility points due to the
performance of school service, or if a member who has elected
multiple service at least three eligibility points due to the
performance of State service or school service, since their
most recent period of annuity.
Section 14. The provisions of section 7 of the act of July
9, 1981 (P.L.208, No.66), known as the Public Employee
Retirement Commission Act, shall not apply to this act.
Section 15. This act shall be retroactive as follows:
(1) The addition of the definitions of "commissioner,"
"distribution" and "IRC" in 24 Pa.C.S. § 8102 shall be
retroactive to the date of enactment of the Federal Tax
Reform Act of 1986 (Public Law 99-514, 100 Stat. 2085,
approved October 22, 1986).
(2) The amendment of 24 Pa.C.S. § 8322.1 shall be
retroactive to January 1, 1983, but shall be deemed a
clarifying amendment and declaratory of original intent.
(3) The amendment of 24 Pa.C.S. § 8346 shall be
retroactive to July 1, 1994. No annuities or other benefits
greater than those payable shall be payable to the
beneficiary or survivor annuitant of a deceased member of the
Public School Employees' Retirement System if the death of
the member is on or before 60 days after the enactment of
this act.
(4) The amendment of 24 Pa.C.S. § 8533(b) shall be
retroactive to the effective date of the act of July 8, 1978
(P.L.752, No.140), known as the Public Employee Pension
Forfeiture Act.
(5) The addition of the definitions of "commissioner,"
"distribution" and "IRC" in 71 Pa.C.S. § 5102 shall be
retroactive to October 22, 1986, the date of enactment of the
Federal Tax Reform Act of 1986 (Public Law 99-514, 100 Stat.
2085).
(6) The amendment of 71 Pa.C.S. § 5503.1 shall be
retroactive to January 1, 1982, but shall be deemed a
clarifying amendment and declaratory of original intent.
(7) The amendment of 71 Pa.C.S. § 5706 shall be
retroactive to July 1, 1994. No annuities or other benefits
greater than those payable shall be payable to the
beneficiary or survivor annuitant of a deceased member of the
State Employees' Retirement System if the death of the member
is on or before 60 days after the enactment of this act.
(8) The amendment of 71 Pa.C.S. § 5953(a)(2) shall be
retroactive to the effective date of the act of July 8, 1978
(P.L.752, No.140), known as the Public Employee Pension
Forfeiture Act.
Section 16. This act shall take effect as follows:
(1) The amendment or addition of the definitions of
"active member," "compensation," "credited service," "final
average salary," "inactive member" and "noneligible member"
in 24 Pa.C.S. § 8102 and the amendment or addition of 24
Pa.C.S. §§ 8302(a), 8321, 8322, 8325.1, 8327(c), 8503(a) and
8506(c) shall take effect July 1, 1996.
(2) Section 9 of this act shall take effect in 60 days
with respect to the duties of the Public School Employees'
Retirement Board in regard to the adoption and promulgation
of rules, regulations and computational procedures by such
board but in all other respects shall be deemed declaratory
of the intent of the General Assembly upon the original
enactment of 24 Pa.C.S. Pt. IV and to have been in effect
from the date of enactment of such part.
(3) The amendment of 24 Pa.C.S. §§ 8346 and 8502(h) and
(j) shall take effect in 60 days.
(4) The amendment or addition of the definitions of
"active member," "compensation," "credited service," "final
average salary," "inactive member" and "noneligible member"
in 71 Pa.C.S. § 5102 and the amendment or addition of 71
Pa.C.S. §§ 5302(a), 5501, 5502, 5503, 5506.1, 5903(a) and
5906(c) shall take effect January 1, 1996.
(5) The amendment of 71 Pa.C.S. §§ 5706 and 5902(h) and
(j) shall take effect in 60 days.
(6) Section 10 of this act shall take effect in 60 days
with respect to the duties of the State Employees' Retirement
Board in regard to the adoption and promulgation of rules,
regulations and computational procedures by such board but in
all other respects shall be deemed declaratory of the intent
of the General Assembly upon the original enactment of 71
Pa.C.S. Pt. XXV and to have been in effect from the date of
enactment of such part.
(7) The remainder of this act shall take effect
immediately.
APPROVED--The 20th day of December, A. D. 1995.
THOMAS J. RIDGE
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