SB 1 — An Act amending Titles 24 (Education), 51 (Military Affairs) and 71 (State Government) of the Pennsylvania Consolidated Statutes, extensively revising pension provisions as follows: In Title 24: for retirement for school employees, in the areas of preliminary provisions, of membership, contributions and benefits, of school employees' defined contribution plan and of administration and miscellaneous provisions; and for health insurance for retired school employees, in the area of preliminary provisions. In Title 51: for employment preferences and pensions, in the area of military leave of absence. In Title 71: for boards and offices, in the area of Independent Fiscal Office; and for retirement for State employees and officers, in the areas of preliminary provisions, of membership, credited service, classes of service and eligibility for benefits, of contributions, of benefits, of State employees' defined contribution plan and of administration, funds, accounts, general provisions. Providing, as to the revisions: for construction and administration, for applicability, for liability, for member statements and for suspension of provisions of the Public Employee Retirement Study Commission Act.

* * * "Superannuation or normal retirement age." Class of service Age T-A 62 or any age upon accrual of 35 eligibility points T-B 62 T-C and T-D 62 or age 60 provided the member has at least 30 eligibility points or any age upon accrual of 35 eligibility points T-E and T-F 65 with accrual of at least 20170SB0001PN0853 - 14 - three eligibility points or a combination of age and eligibility points totaling 92, provided the member has accrued at least 35 eligibility points T-G and T-H 67 with accrual of at least 3 eligibility points * * * "Trust." The School Employees' Defined Contribution Trust established under Chapter 84 (relating to School Employees' Defined Contribution Plan).

20170SB0001PN0902 - 15 - * * * "Valuation interest." Interest at 5 1/2% per annum, compounded annually and applied to all accounts of the fund other than the members' savings account.

"Voluntary contributions." Contributions made by a participant to the trust and credited to the participant's individual investment account in excess of the mandatory pickup participant contributions, either by after-tax salary deductions 20170SB0001PN0853 - 15 - paid through the employer or by an eligible rollover or direct trustee-to-trustee transfers.

* * * (f) Exclusive source of rights and benefits.--Regardless of any other provision of law, pension and benefit rights of school employees shall be determined solely by this part or any amendment thereto, or the plan document established by the board, and no collective bargaining agreement nor any arbitration award between the employer and the employer's employees or the employee's collective bargaining 20170SB0001PN0902 - 16 - representatives shall be construed to do any of the following:

3149), including administrative regulations promulgated under the IRC or the Uniformed Services Employment and Reemployment Rights Act of 1994, are intended to include laws and regulations in effect on the effective date of this section and amended, 20170SB0001PN0853 - 16 - supplemented or supplanted on and after the effective date of this section.

(2) That an interpretation or application of a provision of this part or benefits available to members of the Public School Employees' Retirement System was not in accordance with the provisions of this part or other applicable law, 20170SB0001PN0902 - 17 - including the IRC and the Uniformed Services Employment and Reemployment Rights Act of 1994 before the effective date of this section.

XXV (relating to retirement for State employees and officers), shall include a 20170SB0001PN0853 - 17 - reference to the plan, and a reference to the Public School Employees' Retirement Fund shall include a reference to the trust.

20170SB0001PN0902 - 18 - (1) Any officer or employee of the Department of Education, State-owned educational institutions, community colleges, area vocational-technical schools, technical institutes, or [the] The Pennsylvania State University and who is a member of the State Employees' Retirement System or a member of another retirement program approved by the employer.

(3) Any officer or employee of a governmental entity who subsequent to December 22, 1965 and prior to July 1, 1975 administers, supervises, or teaches classes financed wholly or in part by the Federal Government so long as he continues 20170SB0001PN0853 - 18 - in such service.

Once such election is exercised, membership shall commence from the 20170SB0001PN0902 - 19 - original date of eligibility and shall continue until the termination of such 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 to the fund, or for which such contributions otherwise 20170SB0001PN0853 - 19 - required for such service were not made to the fund solely by reason of any provision of this part relating to the limitations under IRC § 401(a)(17) or 415.

If such member was employed and contributions were made to the fund 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 20170SB0001PN0902 - 20 - 1,100 hours, as the case may be.

20170SB0001PN0853 - 20 - (d) Credit for military service.--A school employee who has performed USERRA leave may receive credit in the system as follows:

§ 7301 20170SB0001PN0902 - 21 - (relating to definitions).

If a school employee who is reemployed from USERRA leave as an active member of the system subsequently makes regular member contributions, shared-risk member contributions and any other member 20170SB0001PN0853 - 21 - contributions in the amounts and in the time periods required by 38 U.S.C.

The employee shall have his benefits, rights and obligations determined under this part as if he was an active member who performed creditable school service during the USERRA leave in the job position that he would have held had he not been on USERRA leave and received the compensation on 20170SB0001PN0902 - 22 - which the member contributions to receive school service credit for the USERRA leave were determined.

Upon a subsequent return to school service or to State service as a multiple service member, the required member contributions treated as incomplete payments shall be 20170SB0001PN0853 - 22 - treated as member contributions that were either withdrawn in a lump sum at termination or paid as a lump sum under section 8345(a)(4) (relating to member's options).

(A) Granted credited service for the period of USERRA leave for which the required member 20170SB0001PN0902 - 23 - contributions were not timely made.

(4) [A school employee] An active or inactive member 20170SB0001PN0853 - 23 - who, on or after the effective date of this subsection, is granted a leave of absence under section 1178 of the Public School Code, a leave of absence under 51 Pa.C.S.

(5) If a member dies while performing USERRA leave, the beneficiaries or survivor annuitants of the deceased member shall be entitled to any additional benefits, including 20170SB0001PN0902 - 24 - eligibility points, other than benefit accruals relating to the period of qualified military service, provided under this part as if the member resumed and then terminated employment on account of death.

(e) Military service by a participant.--A participant who has performed USERRA leave shall be treated and may make 20170SB0001PN0853 - 24 - contributions as follows:

43 (relating to employment and reemployment rights of members of the uniformed services) and IRC § 414(u) as if the participant had continued in the participant's school employment and performed school service and been compensated during the period of USERRA leave, then the 20170SB0001PN0902 - 25 - participant's employer shall make the corresponding employer defined contributions.

(2) A participant who is reemployed from USERRA leave and does not make the mandatory pickup participant contributions or makes only part of the mandatory pickup participant contributions within the allowed payment period may not be eligible to make mandatory pickup participant contributions and voluntary contributions at a later date for 20170SB0001PN0853 - 25 - the period of USERRA leave for which the mandatory pickup participant contributions were not timely made.

§ 4102 (relating to 20170SB0001PN0902 - 26 - leaves of absence for certain government employees) or a military leave under 51 Pa.C.S.

(5) If a participant dies while performing USERRA leave, then the beneficiaries or successor payees of the deceased participant are entitled to any additional benefits, other than benefit accruals relating to the period of qualified military service, provided under this part had the 20170SB0001PN0853 - 26 - participant resumed and then terminated employment on account of death.

(1) as a member of Class T-C, Class T-E [or], Class T-F, 20170SB0001PN0902 - 27 - Class T-G or Class T-H for previous creditable school service or creditable nonschool service;

Class T-C and Class T-D members who are not active members on the effective date of this subsection but who become 20170SB0001PN0853 - 27 - active members after the effective date of this subsection and Class T-E [and class T-F], Class T-F, Class T-G and Class T-H members shall have 365 days from entry into the system to file a written application with the board to purchase any previous noncreditable school service.

* * * (c) Class T-D membership.-- (1) A person who becomes a school employee and an active member, or a person who becomes a multiple service member who 20170SB0001PN0902 - 28 - is a State employee and a member of the State Employees' Retirement System, on or after the effective date of this subsection and before July 2011 shall be classified as a Class T-D member upon payment of regular member contributions.

* * * 20170SB0001PN0853 - 28 - (f) Class T-G membership.--A person who first becomes a school employee and an active member on or after July 1, 2018, shall be classified as a Class T-G member upon payment of regular member contributions and the shared-risk contributions.

(1) a Class T-H member, provided the person elects to become a Class T-H member pursuant to section 8305.3 (relating to election to become a Class T-H member), upon written election filed with the board and payment of regular 20170SB0001PN0902 - 29 - member contributions and the shared-risk contributions;

A school employee who is eligible to 20170SB0001PN0853 - 29 - elect to become a Class T-H member who begins USERRA leave during the election period without having elected Class T-H membership may make the election within 90 days after being reemployed from USERRA leave.

(d) Effect of failure to make election.--If a member fails to timely file an election to become a Class T-H member, and does not elect to become a Class DC participant under section 20170SB0001PN0902 - 30 - 8305.4 (relating to election to become a Class DC participant), then the member shall be enrolled as a member of Class T-G, and the member shall never be able to elect Class T-H service, regardless of whether the member terminates service or has a break in service.

A school employee who is eligible to elect to become a Class DC participant who begins USERRA leave during the election period without having elected to become a Class DC participant may make the election within 90 20170SB0001PN0853 - 30 - days after being reemployed from USERRA leave.

(d) Effect of failure to make election.--If a member fails to timely file an election to become a Class DC participant, and does not elect to become a member of Class T-H under section 8305.3 (relating to election to become a Class T-H member), then the member shall be enrolled as a member of Class T-G, and the member shall never be able to elect to become a Class DC 20170SB0001PN0902 - 31 - participant, regardless of whether the member terminates service or has a break in service.

20170SB0001PN0853 - 31 - (a.1) USERRA leave.--A member or participant who is reemployed from USERRA leave or who dies while performing USERRA leave shall be granted the eligibility points that he would have accrued had he continued in his school office or employment instead of performing USERRA leave.

(1) In determining whether a member, other than a disability annuitant who returns to school service after June 30, 2001, upon termination of the disability annuity, who is 20170SB0001PN0902 - 32 - not a school employee or a State employee on June 30, 2001, and July 1, 2001, and who has previous school service, has the five eligibility points required by the definition of "vestee" in sections 8102 (relating to definitions), 8307 (relating to eligibility for annuities), 8308 (relating to eligibility for vesting) and 8345 (relating to member's options), only eligibility points earned by performing credited school service, USERRA leave or credited State service as an active member of the State Employees' Retirement System after June 30, 2001, shall be counted until such member earns one eligibility point by performing credited school service or, if a multiple service member, credited State service after June 30, 2001, at which time all eligibility points as determined under subsection (a) shall be counted.

(2) A member subject to paragraph (1) shall be considered to have satisfied any requirement for five 20170SB0001PN0853 - 32 - eligibility points contained in this part if the member has at least ten eligibility points determined under subsection (a).

(b) Withdrawal annuity.-- (1) A vestee in Class T-C or Class T-D with five or more eligibility points or an active or inactive Class T-C or Class T-D member who terminates school service having five or 20170SB0001PN0902 - 33 - more eligibility points shall, upon filing a proper application, be entitled to receive an early annuity.

(c) Disability annuity.--An active or inactive member who has credit for at least five years of service shall, upon filing of a proper application, be entitled to a disability annuity if he becomes mentally or physically incapable of continuing to 20170SB0001PN0853 - 33 - perform the duties for which he is employed and qualifies for an annuity in accordance with the provisions of section 8505(c)(1) (relating to duties of board regarding applications and elections of members and participants).

Any Class T-E or Class T-F member who terminates school service, or if a multiple service member and an active member of the State Employees' Retirement 20170SB0001PN0902 - 34 - System who terminates State service, with ten or more eligibility points shall be entitled to vest his retirement benefits until his required beginning date.

(b) Class T-E [and], Class T-F, Class T-G and Class T-H shared-risk contributions.-- 20170SB0001PN0853 - 34 - (1) Commencing with the annual actuarial valuation performed under section 8502(j) (relating to administrative duties of board), for the period ending June 30, 2014, and every three years thereafter, the board shall compare the actual investment rate of return, net of fees, to the annual interest rate adopted by the board for the calculation of the normal contribution rate, based on the market value of assets, for the prior ten-year period.

If the actual investment rate of return, net 20170SB0001PN0902 - 35 - of fees, is equal to or exceeds the annual interest rate adopted by the board by less than 1%, the shared-risk contributions rate of Class T-E [and T-F], Class T-F, Class T-G and Class T-H members will decrease by .5%[.

If the actual investment rate of return, net of fees, is equal to or below the annual interest rate adopted by the board by less than 1%, the shared-risk contribution rate of Class T-E, Class T- F, Class T-G and Class T-H members will increase by .5%, 20170SB0001PN0853 - 35 - provided the total member contribution rate on the date of the actuarial valuation is below the member's basic contribution rate.

Notwithstanding this subsection, if the system's actuarial funded status is 100% or more as of the 20170SB0001PN0902 - 36 - date used for the comparison required under this subsection, as determined in the current annual actuarial valuation, the shared-risk contribution rate shall [be] not be greater than zero.

[(2)] (ii) For any fiscal year in which the employer contribution rate is lower than the final contribution 20170SB0001PN0853 - 36 - rate under section 8328(h) (relating to actuarial cost method), the total member contribution rate for Class T-E [and T-F], Class T-F, Class T-G and Class T-H members shall be prospectively reset to the basic contribution rate.

(a) Treatment for purposes of IRC § 414(h).--All contributions to the fund required to be made under sections 8321 (relating to regular member contributions for current 20170SB0001PN0902 - 37 - service), 8322 (relating to joint coverage member contributions) and 8305 (relating to classes of service), 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 for purposes of IRC § 414(h).

(a) Previous school service, sabbatical leave and full coverage.--The contributions to be paid by an active member or an eligible State employee for credit in the system for reinstatement of all previously credited school service, school service not previously credited, sabbatical leave as if he had been in full-time daily attendance, or full-coverage membership shall be sufficient to provide an amount equal to the accumulated deductions which would have been standing to the credit of the member for such service had regular member 20170SB0001PN0853 - 37 - contributions been made with full coverage at the rate of contribution necessary to be credited as Class T-C service, Class T-D service if the member is a Class T-D member, Class T-E service if the member is a Class T-E member [or], Class T-F service if the member is a Class T-F member, Class T-G service if the member is a Class T-G member or Class T-H service if the member is a Class T-H member and had such contributions been credited with statutory interest during the period the contributions would have been made and during all periods of subsequent school and State service up to the date of purchase.

* * * (c) Approved leave of absence other than sabbatical leave and activated military service leave.--The contributions to be 20170SB0001PN0902 - 38 - paid by an active member for credit for an approved leave of absence, other than sabbatical leave and activated military service leave, shall be sufficient to transfer his membership to Class T-C or to Class T-D if the member is a Class T-D member, to Class T-E if the member is a Class T-E member [or], to Class T-F if the member is a Class T-F member, to Class T-G service if the member is a Class T-G member or to Class T-H service if the member is a Class T-H member and further to provide an annuity as a Class T-C member or Class T-D member if the member is a Class T-D member, to Class T-E if the member is a Class T-E member [or], to Class T-F if the member is a Class T-F member, to Class T-G service if the member is a Class T-G member or to Class T-H service if the member is a Class T-H member for such additional credited service.

Such amount shall be the sum of the amount required in accordance with the provisions of subsection (b) and an amount determined as the sum of the member's basic contribution rate and the normal contribution rate as provided 20170SB0001PN0853 - 38 - in section 8328 (relating to actuarial cost method) during such period multiplied by the compensation which was received or which would have been received during such period and with statutory interest during all periods of subsequent school and State service up to the date of purchase.

* * * (d) Certification and payment of contributions.-- (1) In all cases other than for the purchase of credit for sabbatical leave and activated military service leave beginning before the effective date of paragraph (2), the amount payable shall be certified by the board in accordance with methods approved by the actuary and may be paid in a lump sum within 90 days or in the case of an active member or 20170SB0001PN0902 - 39 - an eligible State employee who is an active member of the State Employees' Retirement System it may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

Contributions for purchase of credit for creditable 20170SB0001PN0853 - 39 - nonschool service and noncreditable school service.

(b) Nonintervening military service.--The amount due for the purchase of credit for military service other than intervening military service shall be determined by applying the member's basic contribution rate plus the normal contribution rate as provided in section 8328 (relating to actuarial cost method) at the time of entry of the member into school service subsequent 20170SB0001PN0902 - 40 - to such military service to one-third of his total compensation received during the first three years of such subsequent credited school service and multiplying the product by the number of years and fractional part of a year of creditable nonintervening military service being purchased together with statutory interest during all periods of subsequent school and State service to date of purchase.

The board may limit salary 20170SB0001PN0853 - 40 - deduction amortization plans to such terms as the board in its sole discretion determines.

In the event that a Class T-F member makes a purchase of credit for such military service, then such service shall be 20170SB0001PN0902 - 41 - credited as Class T-F service.

(1) Regular monthly payments during active military 20170SB0001PN0853 - 41 - service.

In the case of an eligible State employee who is an active member of the State Employees' Retirement System, the agreed upon salary 20170SB0001PN0902 - 42 - deductions shall be remitted to the State Employees' Retirement Board, which shall certify and transfer to the board the amounts paid.

(d) Other creditable nonschool service and noncreditable school service.-- (1) Contributions on account of Class T-C credit for creditable nonschool service other than military service shall be determined by applying the member's basic contribution rate plus the normal contribution rate as provided in section 8328 at the time of the member's entry into school service subsequent to such creditable nonschool service to his total compensation received during the first year of subsequent credited school service and multiplying the product by the number of years and fractional part of a year of creditable nonschool service being purchased together with statutory interest during all periods of subsequent school or State service to the date of purchase, except that 20170SB0001PN0853 - 42 - in the case of purchase of credit for creditable nonschool service as set forth in section 8304(b)(5) (relating to creditable nonschool service) the member shall pay only the employee's share unless otherwise provided by law.

The salary deduction amortization plans agreed to by the members and the board may include a deferral of payment amounts and statutory interest until the termination of school service or State 20170SB0001PN0902 - 43 - service as the board in its sole discretion decides to allow.

Upon certification of the amount due, payment may be made in a lump sum within 90 days or, in the case of an active member or an eligible State employee who is an active member of the 20170SB0001PN0853 - 43 - State Employees' Retirement System, it may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

In the case of an eligible State employee who is an active member of the State Employees' Retirement System, the agreed upon salary deductions shall be remitted to the State Employees' Retirement Board, which shall certify and transfer 20170SB0001PN0902 - 44 - to the board the amounts paid.

20170SB0001PN0853 - 44 - The board may limit salary deduction amortization plans to the terms as the board in its sole discretion determines.

(e) Creditable work experience.--Contributions on account of Class T-C, Class T-E [or], Class T-F, Class T-G or Class T-H credit for creditable work experience pursuant to section 8304(b)(6) shall be the present value of the full actuarial cost of the increase in the projected superannuation annuity caused by the additional service credited on account of the purchase of 20170SB0001PN0902 - 45 - creditable work experience.

(f) Creditable maternity leave.--Contributions on account of Class T-C, Class T-E or Class T-F credit for creditable maternity leave pursuant to section 8304(b)(7) shall be determined by applying the member's basic contribution rate plus the normal contribution rate as provided in section 8328 at the time of the member's return to school service to the total compensation received during the first year of subsequent school service and multiplying the product by the number of years and fractional part of a year of creditable service being purchased, 20170SB0001PN0853 - 45 - together with statutory interest during all periods of subsequent school or State service to the date of purchase.

On and after July 1, 1996, any reference in this part to the limitation under IRC 20170SB0001PN0902 - 46 - § 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) (Public Law 103-66, 107 Stat.

(a) Contributions on behalf of active members.--The Commonwealth shall make contributions into the fund on behalf of 20170SB0001PN0853 - 46 - all active members and participants, including members and participants on activated military service leave, in an amount equal to one-half the amount certified by the board as necessary to provide, together with the members' contributions, annuity reserves on account of prospective annuities as provided in this part in accordance with section 8328 (relating to actuarial cost method).

* * * 20170SB0001PN0902 - 47 - (c) Contributions after June 30, 1995.-- (1) The Commonwealth shall make contributions into the fund on behalf of all active members and participants, including members and participants on activated military service leave, for service performed after June 30, 1995, in the following manner:

20170SB0001PN0853 - 47 - (i) For members and participants who are employees of employers who are school entities, no Commonwealth contributions shall be made.

(a) General rule.--Each employer, including the Commonwealth as employer of employees of the Department of Education, State- owned colleges and universities, Thaddeus Stevens College of Technology, Western Pennsylvania School for the Deaf, Scotland School for Veterans' Children[,] and [the] The Pennsylvania 20170SB0001PN0902 - 48 - State University, shall make payments to the fund each quarter in an amount equal to one-half the sum of the percentages, as determined under section 8328 (relating to actuarial cost method), applied to the total compensation during the pay periods in the preceding quarter of all its employees who were members of the system during such period, including members on activated military service leave.

(b) Deduction from appropriations.-- (1) To facilitate the payment of amounts due from any employer to the fund and the trust through the State 20170SB0001PN0853 - 48 - Treasurer and to permit the exchange of credits between the State Treasurer and any employer, the Secretary of Education and the State Treasurer shall cause to be deducted and paid into the fund and the trust from the amount of any moneys due to any employer on account of any appropriation for schools or other purposes amounts equal to the employer contributions, employer defined contributions and pickup contributions which an employer is required to pay to the fund and the trust, as certified by the board, and as remains unpaid on the date such appropriations would otherwise be paid to the employer.

(2) To facilitate the payments of amounts due from any 20170SB0001PN0902 - 49 - charter school, as defined in Article XVII-A of the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, to the fund and the trust through the State Treasurer and to permit the exchange of credits between the State Treasurer and any employer, the Secretary of Education and the State Treasurer shall cause to be deducted and paid into the fund and the trust from any funds appropriated to the Department of Education for basic education of the chartering school district of a charter school and public school employees' retirement contributions amounts equal to the employer contributions, employer defined contributions and pickup contributions which a charter school is required to pay to the fund and the trust, as certified by the board, and as remains unpaid on the date such appropriations would otherwise be paid to the chartering school district or charter school.

Any reduction 20170SB0001PN0853 - 49 - in payments to a chartering school district made pursuant to this section shall be deducted from the amount due to the charter school district pursuant to the Public School Code of 1949.

20170SB0001PN0902 - 50 - (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 or active participants of the plan during such period, including members or active participants on activated military service leave.

(3) For any employer, whether or not a school entity, in 20170SB0001PN0853 - 50 - 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 or participant contributions have not been made by reason of the limitation under IRC § 401(a)(17), except as otherwise provided in this part.

Any amount of contribution to the trust 20170SB0001PN0902 - 51 - paid by the employer on behalf of a noneligible member on the basis of compensation that 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 plus interest and investment gains or losses on such amount but minus investment fees and administrative charges.

(1) For an employer that is a school entity, the amount shall be the sum of the percentages as determined under 20170SB0001PN0853 - 51 - 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 and USERRA leave.

(2) For an employer that is not a school entity, the 20170SB0001PN0902 - 52 - amount computed under subsection (a).

(e) Agreement.--The agreement of an employer listed in the definition of school employee under section 8102 (relating to 20170SB0001PN0853 - 52 - definitions) or any other law to make contributions to the fund or to enroll its employees as members in the system shall be deemed to be an agreement to make contributions to the trust or enroll its employees in the plan.

(g) Reemployed from USERRA leave.--When a school employee reemployed from USERRA leave makes the member contributions required to be granted school service credit for the USERRA leave after June 30, 2018, either by actual payment or by actuarial debt under section 8325 (relating to incomplete payments), the employer that employed the school employee when 20170SB0001PN0902 - 53 - the member contributions are made, or the last employer before termination in the case of payment under section 8325, shall make the employer contributions that would have been made under this section if the employee making the member contributions after he is reemployed from USERRA leave continued to be employed in his school office or position instead of performing USERRA leave.

The total employer contribution rate shall be the sum of the final contribution rate as computed in subsection (h) plus the premium assistance contribution rate as computed in subsection (f), plus the additional contribution rate as computed in 20170SB0001PN0853 - 53 - subsection (j).

Until all accrued liability contributions have been completed, the normal contribution rate shall be determined, on the basis of an annual interest rate and such mortality and other tables as shall be adopted by the board in accordance with generally accepted 20170SB0001PN0902 - 54 - actuarial principles, as a level percentage of the compensation of [the average new active member] all active members, which percentage, if contributed from the start of their employment on the basis of [his] their prospective compensation through [the] their entire period of active school service, would be sufficient to fund the liability for any prospective benefit payable to [him] them, in excess of that portion funded by [his] their prospective member contributions, excluding the shared- risk contributions.

(c) Accrued liability contribution rate.-- (1) For the fiscal years beginning July 1, 2002, and ending June 30, 2011, the accrued liability contribution rate shall be computed as the rate of total compensation of all active members which shall be certified by the actuary as sufficient to fund over a period of ten years from July 1, 2002, the present value of the liabilities for all 20170SB0001PN0853 - 54 - prospective benefits of active members, except for the supplemental benefits provided in sections 8348 (relating to supplemental annuities), 8348.1 (relating to additional supplemental annuities), 8348.2 (relating to further additional supplemental annuities), 8348.3 (relating to supplemental annuities commencing 1994), 8348.4 (relating to special supplemental postretirement adjustment), 8348.5 (relating to supplemental annuities commencing 1998), 8348.6 (relating to supplemental annuities commencing 2002) and 8348.7 (relating to supplemental annuities commencing 2003), in excess of the total assets in the fund (calculated by recognizing the actuarially expected investment return immediately and recognizing the difference between the actual 20170SB0001PN0902 - 55 - investment return and the actuarially expected investment return over a five-year period), excluding the balance in the annuity reserve account, and of the present value of normal contributions and of member contributions payable with respect to all active members on July 1, 2002, during the remainder of their active service.

The amount of each annual accrued liability contribution for such additional legislative liabilities shall be equal to the 20170SB0001PN0853 - 55 - amount of such contribution for the first annual payment.

For fiscal years beginning on or after July 1, 2004, if the accrued liability is increased by 20170SB0001PN0902 - 56 - legislation enacted subsequent to June 30, 2003, such additional liability shall be funded in equal dollar annual contributions over a period of ten years from the first day of July coincident with or next following the effective date of the increase.

(4) For the fiscal year beginning July 1, 2011, the accrued liability contribution rate shall be computed as the rate of total compensation of all active members which shall be certified by the actuary as sufficient to fund as a level percentage of compensation over a period of 24 years from July 1, 2011, the present value of the liabilities for all prospective benefits calculated as of June 30, 2010, including the supplemental benefits as provided in sections 8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and 8348.7, in excess of the actuarially calculated assets in the fund (calculated recognizing all realized and unrealized investment gains and losses each year in level annual 20170SB0001PN0853 - 56 - installments over a ten-year period).

* * * (e) Experience adjustment factor.-- 20170SB0001PN0902 - 57 - (1) For each fiscal year after the establishment of the accrued liability contribution rate for the fiscal year beginning July 1, 2011, any increase or decrease in the unfunded accrued liability, excluding the gains or losses on the assets of the health insurance account, due to actual experience differing from assumed experience, changes in actuarial assumptions, changes in contributions caused by the final contribution rate being different from the actuarially required contribution rate, active members making shared-risk contributions or changes in the terms and conditions of the benefits provided by the system by judicial, administrative or other processes other than legislation, including, but not limited to, reinterpretation of the provisions of this part, shall be amortized as a level percentage of compensation over a period of 24 years beginning with the July 1 second succeeding the actuarial valuation determining said increases or decreases.

20170SB0001PN0853 - 57 - * * * (g) Temporary application of collared contribution rate.-- (1) The collared contribution rate for each fiscal year shall be determined by comparing the actuarially required contribution rate, calculated without regard for the costs added by legislation, to the prior year's final contribution rate.

(2) If, for any of the fiscal years beginning July 1, 2011, July 1, 2012, and on or after July 1, 2013, the actuarially required contribution rate, calculated without regard for the costs added by legislation, is more than 3%, 3.5% and 4.5%, respectively, of the total compensation of all active members greater than the prior year's final 20170SB0001PN0902 - 58 - contribution rate, then the collared contribution rate shall be applied and be equal to the prior year's final contribution rate increased by 3%, 3.5% and 4.5%, respectively, of total compensation of all active members.

20170SB0001PN0853 - 58 - Fiscal year beginning:

July 1, 2027 0.01 July 1, 2028 0.02 July 1, 2029 0.05 July 1, 2030 0.06 July 1, 2031 0.08 July 1, 2032 0.11 July 1, 2033 0.11 July 1, 2034 0.14 July 1, 2035 0.14 July 1, 2036 0.17 July 1, 2037 0.19 July 1, 2038 0.21 20170SB0001PN0902 - 59 - July 1, 2039 0.23 July 1, 2040 0.26 July 1, 2041 0.25 July 1, 2042 0.30 July 1, 2043 0.31 July 1, 2044 0.33 July 1, 2045 0.35 July 1, 2046 0.38 July 1, 2047 0.38 July 1, 2048 0.40 July 1, 2049 0.42 § 8330.

(a) Annual submission of budget.--The board shall prepare and through the Governor submit annually to the General Assembly an itemized budget consisting of the amounts necessary to be appropriated by the Commonwealth out of the General Fund required to meet the separate obligations to the fund and the 20170SB0001PN0853 - 59 - trust accruing during the fiscal period beginning July 1 of the following year.

(a) Limited expansion of contractual right to funding.-- 20170SB0001PN0902 - 60 - Beginning on the July 1 after the actuarial valuation in which the actuary certifies that final contribution rate is the actuarially required contribution, each active member shall have a contractual right to the timely payment of the annual actuarially required contributions under sections 8328 (relating to actuarial cost method) and 8502(k) (relating to administrative duties of board) by such member's employer.

20170SB0001PN0853 - 60 - (b) Jurisdiction of Supreme Court.--Notwithstanding 2 Pa.C.S.

20170SB0001PN0902 - 61 - (c) Sovereign immunity waived.--Sovereign immunity is hereby waived, and the provisions of 42 Pa.C.S.

(f) Employer contributions.--Nothing in this section shall be construed to supersede or conflict with the rights and 20170SB0001PN0853 - 61 - obligations set forth in section 8330 (relating to appropriations by the Commonwealth).

(a) General rule.--Upon termination of service, any full 20170SB0001PN0902 - 62 - coverage member who is eligible to receive an annuity pursuant to the provisions of section 8307(a) or (b) (relating to eligibility for annuities) and has made an application in accordance with the provisions of section 8507(f) (relating to rights and duties of school employees [and members], members and participants) shall be entitled to receive a maximum single life annuity attributable to his credited service and equal to the sum of the following single life annuities beginning at the effective date of retirement and, in case the member on the effective date of retirement is under superannuation age, multiplied by a reduction factor calculated to provide benefits actuarially equivalent to an annuity starting at superannuation age:

Provided however, That on or after July 1, 1976, in the case of any member other than a Class T-G or Class T-H member who has attained age 55 and has 25 or more eligibility points such sum of single life annuities shall be reduced by a percentage determined by multiplying the number of months, 20170SB0001PN0853 - 62 - including a fraction of a month as a full month, by which the effective date of retirement precedes superannuation age by 1/4%:

Further provided, In no event shall a Class T-E [or], Class T-F, Class T-G or Class T-H member receive an annual benefit, calculated as of the effective date of retirement, greater than the member's final average 20170SB0001PN0902 - 63 - salary:

* * * 20170SB0001PN0853 - 63 - (d) Coordination of benefits.--The determination and payment of the maximum single life annuity under this section shall be in addition to any payments a member may be entitled to receive, has received or is receiving as a result of being a participant in the plan.

(a) Amount of annuity.--A member who has made application for a disability annuity as provided in section 8507(k) (relating to rights and duties of school employees [and], members and participants) and has been found to be eligible in accordance with the provisions of sections 8307(c) (relating to eligibility for annuities) and 8505(c)(1) (relating to duties of board regarding applications and elections of members and 20170SB0001PN0902 - 64 - participants) shall receive a disability annuity payable from the effective date of disability and continued until a subsequent determination by the board that the annuitant is no longer entitled to a disability annuity.

For purposes of calculating a disability annuity for a member of Class T-G or Class T-H, the 20170SB0001PN0853 - 64 - standard single life annuity shall equal 2% of the final average salary, multiplied by the total number of years and fractional part of a year of service credited for such class of service.

(b) Reduction on account of earned income.--Payments on account of disability shall be reduced by that amount by which the earned income of the annuitant, as reported in accordance with section 8508(b) (relating to rights and duties of 20170SB0001PN0902 - 65 - annuitants) for the preceding year together with the disability annuity payments for the year, exceeds the greater of $5,000 or the last year's salary of the annuitant as a [school employee] member of the system, provided that the annuitant shall not receive less than his member's annuity or the amount to which he may be entitled under section 8342, whichever is greater.

or (2) is a Class T-E or Class T-F member with less than ten eligibility points and who] does not return to school service may file an application with the board for an amount equal to the accumulated deductions, shared-risk member contributions and 20170SB0001PN0853 - 65 - statutory interest standing to his credit at the effective date of disability less the total payments received on account of his member's annuity.

20170SB0001PN0902 - 66 - (a) General rule.--Any Class T-C [or], Class T-D, Class T-G or Class T-H member who is a vestee with five or more eligibility points, any Class T-E or Class T-F member who is a vestee with ten or more eligibility points, or any [other] eligible member upon termination of school service [who has not withdrawn his accumulated deductions as provided in section 8341 (relating to return of accumulated deductions)] who is eligible to receive an annuity, may apply for and elect to receive either a maximum single life annuity, as calculated in accordance with the provisions of section 8342 (relating to maximum single life annuity), or a reduced annuity certified by the actuary to be actuarially equivalent to the maximum single life annuity and in accordance with one of the following options, except that no member shall elect an annuity payable to one or more survivor annuitants other than his spouse or alternate payee of such a magnitude that the present value of the annuity payable to him for life plus any lump sum payment he may have elected to 20170SB0001PN0853 - 66 - receive is less than 50% of the present value of his maximum single life annuity and no member may elect a payment option that would provide benefits that do not satisfy the minimum distribution requirements or would violate the incidental death benefit rules of IRC § 401(a)(9).

(1) Option 1.--A life annuity to the member with a guaranteed total payment equal to the present value of the maximum single life annuity on the effective date of retirement with the provision that, if, at his death, he has received less than such present value, the unpaid balance 20170SB0001PN0902 - 67 - shall be payable to his beneficiary.

(ii) The sum of all annuities payable to the designated survivor annuitants shall not be greater than 20170SB0001PN0853 - 67 - the annuity payable to the member.

[This subparagraph shall not apply to a Class T-E or Class T-F member.] For purposes of this subparagraph, the term 20170SB0001PN0902 - 68 - "actuarially equivalent," as applied to any lump sum withdrawal attributable to contributions credited to the member's savings account of Class T-E, Class T-F, Class T-G or Class T-H members, together with statutory interest thereon, shall mean equal present values, computed on the basis of the interest rate and such mortality and other tables as adopted by the board pursuant to section 8328(b) (relating to actuarial cost method) in effect on the effective date of retirement of the member.

(a) General rule.--If an annuitant returns to school service or enters or has entered State service and elects multiple service membership, any annuity payable to him under this part shall cease effective upon the date of his return to school service or entering State service without regard to whether he 20170SB0001PN0853 - 68 - is a mandatory, optional or prohibited member of the system or participant in the plan or, if a multiple service member, whether he is a mandatory, optional or prohibited member or participant of the State Employees' Retirement System or State Employees' Defined Contribution Plan;

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 20170SB0001PN0902 - 69 - credited service and shall have his frozen present value adjusted as if his 10% retirement incentive had not been applied to his account.

The amount payable shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 90 days or in the case of an active member or a State employee 20170SB0001PN0853 - 69 - who is an active member of the State Employees' Retirement System may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

In the case of a State employee who is an active member of the State Employees' Retirement System, the agreed upon salary deductions shall be remitted to the State Employees' Retirement Board, which shall certify and transfer to 20170SB0001PN0902 - 70 - the board the amounts paid.

Such service shall not be subject to member or 20170SB0001PN0853 - 70 - participant contributions or be eligible for qualification as creditable school service or for participation in the plan, mandatory pickup participant contributions, voluntary contributions or employer defined contributions.

[Neither the annuitant nor] The annuitant, the 20170SB0001PN0902 - 71 - participant receiving distributions and the employer shall not make contributions to the member's savings account, the individual investment account or State accumulation account respectively for such service.

* * * (d) Elimination of the effect of frozen present value.-- (1) An annuitant who returns to school service as an active member of the system and earns three eligibility points by performing credited school service or reemployment 20170SB0001PN0853 - 71 - from USERRA leave following the most recent period of receipt of an annuity under this part, or an annuitant who enters State service and:

or (ii) who elects multiple service membership, and earns three eligibility points by performing credited State service, reemployment from USERRA leave 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 frozen in accordance with subsection (a), shall qualify to have the effect of the frozen present value resulting from all previous periods of retirement eliminated, provided that all payments under Option 4 and annuity 20170SB0001PN0902 - 72 - payments payable during previous periods of retirement plus interest as set forth in paragraph (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.

(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 by crediting Class T-C school service as Class T-D service as provided for in section 8305(c) (relating to classes of service) and further adjusted according to paragraph (3), provided that a former annuitant of the 20170SB0001PN0853 - 72 - 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 20170SB0001PN0902 - 73 - the effective date of retirement that the former annuitant wishes to receive the lower annuity.

For purposes of this section, a Class T-G or Class T-H member with five or more eligibility points shall be considered eligible for an annuity under section 8307(a) or (b) (relating to eligibility for annuities) and eligible for a death benefit under section 8309 (relating to 20170SB0001PN0853 - 73 - eligibility for death benefits) even if the member had not attained the age of 62.

(b) Death benefits.--If the amount of a death benefit 20170SB0001PN0902 - 74 - payable from the fund to a beneficiary of a member under section 8347 (relating to death benefits) or under the provisions of Option 1 of section 8345(a)(1) (relating to member's options) is $10,000 or more, such beneficiary may elect to receive payment according to one of the following options:

20170SB0001PN0853 - 74 - 8401.

20170SB0001PN0902 - 75 - 8412.

(b) School Employees' Defined Contribution Trust.--The School Employees' Defined Contribution Trust is established as 20170SB0001PN0853 - 75 - part of the plan in accordance with this part.

(c) Assets held in trust.--All assets and income in the plan 20170SB0001PN0902 - 76 - that have been or shall be withheld or contributed by the participants, the Commonwealth and employers in accordance with this part shall be held in trust in any funding vehicle permitted by the applicable provisions of the IRC for the exclusive benefit of the plan's participants and their beneficiaries until such time as the funds are distributed to the participants or their beneficiaries in accordance with the terms of the plan document.

(d) Name for transacting business.--By the name of "The School Employees' Defined Contribution Plan," all of the business of the plan shall be transacted, the trust invested, all requisitions for money drawn and payments made and all of its cash and securities and other property shall be held, except 20170SB0001PN0853 - 76 - that, any other law to the contrary notwithstanding, the board may establish a nominee registration procedure for the purpose of registering securities to facilitate the purchase, sale or other disposition of securities under the provisions of this part.

The creation of the document containing the terms and conditions of the plan and the trust declaration and the establishment of the terms and provisions of the plan and the trust need not be promulgated by regulation or formal rulemaking and shall not be subject to the 20170SB0001PN0902 - 77 - act of July 31, 1968 (P.L.769, No.240), referred to as the Commonwealth Documents Law.

(2) Shall separately track participant contributions, including investment gains and losses, and employer contributions, including investment gains and losses, but all 20170SB0001PN0853 - 77 - interest, investment gains and losses and administrative fees, costs and expenses shall be allocated proportionately.

The employer shall cause those contributions for service required to 20170SB0001PN0902 - 78 - be credited in the plan to be made and deducted from each payroll or on such schedule as established by the board.

In the event that any disallowed contributions are made, any participant contributions in excess of the limitations and investment earnings on those contributions, minus investment fees and charges, shall be 20170SB0001PN0853 - 78 - refunded to the participant by the board.

(b) Treatment for other purposes.--For all other purposes 20170SB0001PN0902 - 79 - under this part and otherwise, mandatory pickup participant contributions shall be treated as contributions made by a participant in the same manner and to the same extent as if the contributions were made directly by the participant and not picked up.

(b) Contributions resulting from participants reemployed from USERRA leave.--When a school employee reemployed from USERRA leave makes the mandatory pickup participant contributions permitted to be made for the USERRA leave, the employer by whom the school employee is employed at the time the 20170SB0001PN0853 - 79 - participant contributions are made shall make whatever employer defined contributions would have been made under this section had the employee making the participant contributions after being reemployed from USERRA leave continued to be employed in the employee's school position instead of performing USERRA leave.

In the event that any disallowed contributions are made, any employer defined 20170SB0001PN0902 - 80 - contributions in excess of the limitations and investment earnings thereon shall be refunded to the employer by the board.

(b) Required distributions.--All payments under this section 20170SB0001PN0853 - 80 - shall start and be made in compliance with the minimum distribution requirements and incidental death benefit rules of IRC § 401(a)(9).

20170SB0001PN0902 - 81 - (e) Small individual investment accounts.--A participant who terminates school service and whose vested accumulated total defined contributions are below the threshold established by law as of the date of termination of service may be paid the vested accumulated total defined contributions in a lump sum as provided in IRC § 401(a)(31).

(b) Death of participant receiving distributions.--In the event of the death of a participant receiving distributions, the board shall pay to the participant's beneficiary the vested balance in the participant's individual investment account in a 20170SB0001PN0853 - 81 - lump sum or in such other manner as the board may establish in the plan document or, if the board has established alternative methods of distribution in the plan document under which the participant was receiving distributions, to the participant's beneficiary or successor payee as provided in the plan document.

(a) Participant and voluntary contributions.--Subject to the forfeiture and attachment provisions of section 8533 (relating 20170SB0001PN0902 - 82 - to taxation, attachment and assignment of funds) or otherwise as provided by law, a participant shall be immediately vested with respect to all mandatory pickup participant contributions and voluntary contributions paid by or on behalf of the participant to the trust plus interest and investment gains or losses on the participant contributions but minus investment fees and administrative charges.

(i) until such time as the participant has earned 20170SB0001PN0853 - 82 - three eligibility points as a member of the plan, 0%;

(c) USERRA leave and eligibility points.--A participant in 20170SB0001PN0902 - 83 - the plan who is reemployed from USERRA leave or who dies while performing USERRA leave shall receive eligibility points under this section for the school service that would have been performed had the member not performed USERRA leave.

(b) Return of benefits paid during USERRA leave.-- 20170SB0001PN0853 - 83 - (1) If a former school employee is reemployed from USERRA leave and received any payments or annuity from the plan during the USERRA leave, the employee shall return to the board the amount so received plus interest as provided in the plan document.

(2) The amount payable shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 30 days or, in the case of an active participant, may be amortized with interest as provided in the plan document through salary deductions to the trust in amounts agreed upon by the active participant and the board, but not longer than a period that starts with the date of reemployment and continuing for up to 20170SB0001PN0902 - 84 - three times the length of the active participant's immediate past period of USERRA leave.

(2) The board shall pay all administrative fees, costs and expenses of managing, investing and administering the plan, the trust and the individual investment accounts from the balance of such individual investment accounts, except as otherwise provided in this part or as the General Assembly otherwise provides through appropriations from the General 20170SB0001PN0853 - 84 - Fund.

(6) The board may perform an annual or more frequent review of any qualified fund manager for the purpose of assuring it continues to meet all standards and criteria 20170SB0001PN0902 - 85 - established.

(12) The board may establish procedures for distributions of small accounts as required or permitted by 20170SB0001PN0853 - 85 - IRC.

(iii) Procedures for rollovers and trustee-to- 20170SB0001PN0902 - 86 - trustee transfers allowed under the IRC and permitted by the board as part of the plan.

(vi) Procedures, standards and criteria for the making of distributions from the plan upon termination 20170SB0001PN0853 - 86 - from employment or death or in other circumstances consistent with the purpose of the plan.

(16) The board may provide that any duties of the employer or information provided by the participant to the 20170SB0001PN0902 - 87 - employer be performed or received directly by the board.

(a) General rule.--A financial institution or pension management organization entering into a written agreement under section 8411 (relating to powers and duties of board) may offer or provide services to any plan established or maintained by a school district under IRC § 403(b) or 457 if the written 20170SB0001PN0853 - 87 - agreement for the administration of the School Employees' Defined Contribution Plan is not combined with any other written agreement for the administration of a school district's 403(b) plan or 457 plan.

20170SB0001PN0902 - 88 - (1) enter into an agreement with the school district or the school district's independent compliance administrator that shall require the financial institution or pension management organization to provide in an electronic format all data necessary for the administration of the 403(b) plan or 457 plan as determined by the school district or the school district's compliance administrator;

(c) Provider selection.--A school district that establishes or maintains a plan under IRC § 403(b) or 457 shall select a minimum of four financial institutions or pension management organizations, in addition to the financial institution or pension management organization that entered into an agreement 20170SB0001PN0853 - 88 - under section 8411, to provide services to the 403(b) plan or 457 plan.

The Commonwealth, the board, an employer or a school entity 20170SB0001PN0902 - 89 - or other political subdivision shall not be responsible for any investment loss incurred under the plan or for the failure of any investment to earn any specific or expected return or to earn as much as any other investment opportunity or to cost less than any other investment opportunity, whether or not such other opportunity was offered to participants in the plan.

20170SB0001PN0853 - 89 - (b) Investment of contributions made by entities other than Commonwealth.--Investment of contributions by any corporation, institution, insurance company, custodial bank or other entity that the board has approved shall not be unreasonably delayed, and in no case shall the investment of contributions be delayed more than 30 days from the date of payroll deduction or voluntary contributions are made to the date that funds are invested.

20170SB0001PN0902 - 90 - All expenses, fees and costs of administering the plan and the trust and investing the assets of the trust shall be borne by the participants and paid from assessments against the balances of the individual investment accounts as established by the board, except that for fiscal years 2016-2017 and 2017-2018, the expenses, fees and costs of establishing and administering the plan and trust shall be paid by the Commonwealth through annual appropriations.

(1) (i) Except as provided under subparagraph (ii) and notwithstanding a provision of this part, a contribution or benefit related to the plan may not exceed a 20170SB0001PN0853 - 90 - limitation under IRC § 415 with respect to a governmental plan that is in effect on the date the contribution or benefit payment takes effect.

(2) (i) Except as provided under subparagraph (ii), an amendment of this part on or after the effective date of this section that increases contributions or benefits for active participants, inactive participants or 20170SB0001PN0902 - 91 - participants receiving distributions may not be deemed to provide for a contribution or benefit in excess of a limitation, adjusted on or after the effective date of this section, under IRC § 415 unless specifically provided by legislation.

the State 20170SB0001PN0853 - 91 - Treasurer, ex officio;

one to be elected by the active nonprofessional members of the system or active nonprofessional participants of the plan from 20170SB0001PN0902 - 92 - among their number;

The legislative members shall serve on the board for the duration of their legislative terms and shall continue to serve until 30 days after the convening of the next regular session of the General Assembly after the expiration of their respective legislative terms or until a successor is appointed for the new term, 20170SB0001PN0853 - 92 - whichever occurs first.

* * * (c) Oath of office.--Each member of the board shall take an oath of office that he will, so far as it devolves upon him, diligently and honestly administer the affairs of said board, 20170SB0001PN0902 - 93 - the system and the plan and that he will not knowingly violate or willfully permit to be violated any of the provisions of law applicable to this part.

The board, on request of the employer of any member of the board who is an active professional or nonprofessional member of the system or active professional or nonprofessional participant in the plan, may reimburse such employer for the salary or wages of the member or participant, or for the cost of employing a substitute for such 20170SB0001PN0853 - 93 - member or participant, while the member or participant is necessarily absent from employment to execute the duties of the board.

20170SB0001PN0902 - 94 - (e) Corporate power and legal advisor.--For the purposes of this part, the board shall possess the power and privileges of a corporation.

(a) Employees.-- (1) Effective 30 days after the effective date of this paragraph, the positions of secretary, assistant secretary and investment professional shall be placed under the unclassified service provisions of the act of August 5, 1941 (P.L.752, No.286), known as the Civil Service Act, as those 20170SB0001PN0853 - 94 - positions are vacated.

(3) The board may utilize the staff of employees provided for under this subsection for both the system and 20170SB0001PN0902 - 95 - the plan, but shall allocate the fees, costs and expenses incurred under this subsection between the system and the plan as appropriate.

(c) Expenses.-- (1) The board shall, through the Governor, submit to the General Assembly annually a budget covering the administrative expenses of [this part.] the system and a 20170SB0001PN0853 - 95 - separate budget covering the administrative expenses of the plan.

20170SB0001PN0902 - 96 - (4) Concurrently with its administrative budget, the board shall also submit to the General Assembly annually a list of proposed expenditures which the board intends to pay through the use of directed commissions, together with a list of the actual expenditures from the past year actually paid by the board through the use of directed commissions.

(2) Any record, material or data received, prepared, 20170SB0001PN0853 - 96 - used or retained by the board or its employees, investment professionals or agents relating to an investment shall not constitute a public record subject to public [inspection] access under the act of [June 21, 1957 (P.L.390, No.212), referred to] February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law, if, in the reasonable judgment of the board, the [inspection] access would:

20170SB0001PN0902 - 97 - (ii) cause substantial competitive harm to the person from whom sensitive investment or financial information relating to the investment was received;

(ii) The sensitive investment or financial 20170SB0001PN0853 - 97 - information excluded from [inspection] access under paragraph (2)(ii), to the extent not otherwise excluded from [inspection] access, shall constitute a public record subject to public [inspection] access under the Right-to-Know Law once:

(iii) The sensitive investment or financial information excluded from [inspection] access under 20170SB0001PN0902 - 98 - paragraph (2)(iii), to the extent not otherwise excluded from [inspection] access, shall constitute a public record subject to public [inspection] access under the Right-to-Know Law once:

(4) Except for the provisions of paragraph (3), nothing in this subsection shall be construed to designate any record, material or data received, prepared, used or retained by the board or its employees, investment professionals or agents relating to an investment as a public record subject 20170SB0001PN0853 - 98 - to public [inspection] access under the Right-to-Know Law.

(iv) The dollar amount of cash contributions made by the system or plan to the alternative investment vehicle 20170SB0001PN0902 - 99 - since inception.

(vii) The aggregate value of the remaining portfolio assets attributable to the system's or plan's investment in the alternative investment vehicle, provided that the system or plan shall not be required to disclose the 20170SB0001PN0853 - 99 - value under circumstances in which, because of the limited number of portfolio assets remaining in the alternative investment vehicle, the disclosure could reveal the values of specifically identifiable remaining portfolio assets to the detriment of the alternative investment.

(6) Any record, material or data received, prepared, used or retained by the board or its employees or agents relating to the contributions, account value or benefits payable to or on account of a participant shall not 20170SB0001PN0902 - 100 - constitute a public record subject to public access under the Right-to-Know Law, if, in the reasonable judgment of the board, the access would disclose any of the following:

20170SB0001PN0853 - 100 - (i) Nothing in this part shall be construed to mean that the release or publicizing of a record, material or data that would not constitute a public record under this subsection shall be a violation of the board's fiduciary duties.

or 20170SB0001PN0902 - 101 - (C) a request for the record, material or data was made or is pending final response under the former act of June 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know Law, or the Right- to-Know Law.

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 20170SB0001PN0853 - 101 - necessary for the calculation of annuities and other benefits, shall be as effective as if fully set forth in this part.

The board shall have final authority over the means by which data is collected, maintained and stored and in so doing shall protect the rights of its membership as to privacy and 20170SB0001PN0902 - 102 - confidentiality.

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 20170SB0001PN0853 - 102 - in accordance with the provisions of 45 Pa.C.S.

(k) Certification of employer contributions to fund.--The board shall, each year in addition to the itemized budget required under section 8330 (relating to appropriations by the 20170SB0001PN0902 - 103 - Commonwealth), certify to the employers and the Commonwealth the employer contribution rate expressed as a percentage of members' payroll necessary for the funding of prospective annuities for active members and the annuities of annuitants, and certify the rates and amounts of the normal contributions as determined pursuant to section 8328(b) (relating to actuarial cost method), accrued liability contributions as determined pursuant to section 8328(c), supplemental annuities contribution rate as determined pursuant to section 8328(d), the experience adjustment factor as determined pursuant to section 8328(e), premium assistance contributions as determined pursuant to section 8328(f), the costs added by legislation as determined pursuant to section 8328(i), the actuarial required contribution rate as determined pursuant to section 8328(i), the collared contribution rate as determined pursuant to section 8328(g), the final contribution rate as determined pursuant to section 8328(h) and the shared-risk contribution rate as determined 20170SB0001PN0853 - 103 - under section 8321(b) (relating to regular member contributions for current service), which shall be paid to the fund and credited to the appropriate accounts.

* * * (m) Member contributions and interest.--The board shall cause each member's contributions, including payroll deductions, pickup contributions, shared-risk contributions and all other payments, including, but not limited to, amounts collected by the State Employees' Retirement System for the reinstatement of previous school service or creditable nonschool service and amounts paid to return benefits paid after the date of return to 20170SB0001PN0902 - 104 - school service or entering State service representing lump sum payments made pursuant to section 8345(a)(4)(iii) (relating to member's options) and member's annuity payments, but not including other benefits returned pursuant to section 8346(a.1) and (a.2) (relating to termination of annuities), to be credited to the account of such member and shall pay all such amounts into the fund.

(n) Annual financial [statement] statements.--The board shall prepare and have published, on or before January 1 of each year, [a financial statement] financial statements as of the 20170SB0001PN0853 - 104 - fiscal year ending June 30 of the previous year showing the condition of the fund, the trust and the various accounts, including, but not limited to, the board's accrual and expenditure of directed commissions, and setting forth such other facts, recommendations and data as may be of use in the advancement of knowledge concerning annuities and other benefits provided by this part.

The 20170SB0001PN0902 - 105 - audits shall include the board's accrual and expenditure of directed commissions.

20170SB0001PN0853 - 105 - Section 115.

20170SB0001PN0902 - 106 - (3) Determination of enrollment procedures.

* * * (b) Member status statements.--The board shall furnish annually on or before December 31, a statement to each member showing the accumulated deductions standing to the credit of the 20170SB0001PN0853 - 106 - member and the number of years and fractional part of a year of service credited in each class of service, as applicable, as of June 30 of that year.

(b.1) Participant status statements.--The board shall furnish annually to each participant on or before December 31, and more frequently as the board may agree or as required by law, a statement showing the accumulated total defined contributions credited to the participant's individual investment account, the nature and type of investments and the 20170SB0001PN0902 - 107 - investment allocation of future contributions as of June 30 of the current year and shall request the participant to make any necessary correction or revision regarding his designated beneficiary.

* * * (e.1) Certification to participants terminating service.-- The board shall certify to the participant in writing within one year of termination of service of the participants of the vested accumulated total defined contributions credited to the participant's individual investment account as of the date stated in the writing, any notices regarding rollover or other matters required by IRC or other law, the obligation of the participant to commence distributions from the plan by the participant's required beginning date and the ability to receive 20170SB0001PN0853 - 107 - all or part of the vested balance in the participant's individual investment account in a lump sum or in such other form as the board may authorize or as required by law.

* * * 20170SB0001PN0902 - 108 - (g.1) Initial payment to a participant.--The board shall make the initial payment to a participant who has applied for a distribution within 60 days of the filing of the application and receipt of the required data from the employer of the participant and other necessary data.

If no beneficiary designation is in effect at the date of the member's or participant's death or no notice has been filed with the board to pay the amount of such benefits to the member's or participant's estate, the board is authorized to pay 20170SB0001PN0853 - 108 - such benefits to the executor, administrator, surviving spouse or next-of-kin of the deceased member or participant, and payment pursuant hereto shall fully discharge the fund or plan from any further liability to make payment of such benefits to any other person.

(i) Medical insurance coverage.--Upon receipt of notification from an insurance carrier offering a health insurance program approved by the board that an annuitant or participant who has attained age 65 has elected medical, major medical, and hospitalization insurance coverage or notification that annuitants with less than 24 1/2 eligibility points (other than disability annuitants), spouses of annuitants and survivor annuitants eligible to elect to enroll in the approved health 20170SB0001PN0902 - 109 - insurance program have elected participation in such health insurance program, the board may deduct from the annuity payments, from payments to a participant receiving distributions or from a successor payee, the appropriate annual charges in equal monthly installments.

(1) if the removal is due to leave without pay, the employer shall furnish the board with the date of beginning leave, the date of return to service, and the reason for 20170SB0001PN0853 - 109 - leave;

* * * (c.1) Participant and employer defined contributions.--The employer shall cause the mandatory pickup participant 20170SB0001PN0902 - 110 - contributions on behalf of a participant to be made and shall cause to be deducted any voluntary contributions authorized by a participant.

(d) New employees subject to mandatory membership or 20170SB0001PN0853 - 110 - participation.--Upon the assumption of duties of each new school employee whose membership in the system or plan is mandatory, the employer shall no later than 30 days thereafter cause an application for membership or participation, which application shall include the employee's home address, birthdate certified by the employer, previous school or State service and any other information requested by the board, and a nomination of beneficiary to be made by such employee and filed with the board and shall make pickup contributions or mandatory pickup participant contributions from the effective date of school employment.

(e) New employees subject to optional membership or participation.--The employer shall inform any eligible school 20170SB0001PN0902 - 111 - employee whose membership in the system or participation in the plan is not mandatory of his opportunity to become a member of the system or participant in the plan provided that he elects to purchase credit for all such continuous creditable service.

* * * 20170SB0001PN0853 - 111 - (i) Termination of service by members.--The employer shall, in the case of any member terminating school service, advise such member in writing of any benefits from the system to which he may be entitled under the provisions of this part and shall have the member prepare, on or before the date of termination of school service, one of the following three forms, a copy of which shall be given to the member and the original of which shall be filed with the board:

(2) An election to vest his retirement rights, if eligible, and, if he is a joint coverage member and so desires, an election to become a full coverage member and an 20170SB0001PN0902 - 112 - agreement to pay within 30 days of the date of termination of service the lump sum required.

§ 4102 (relating to leaves of absence for certain government employees) or a military leave of absence 20170SB0001PN0853 - 112 - under 51 Pa.C.S.

(l) Differential wage payments and military leave of absence payments.--Notwithstanding the exclusion of differential wage payments as defined in IRC § 414(u)(12) from compensation under this part, the employer of any school employee on USERRA leave shall report differential wage payments made to the employee to 20170SB0001PN0902 - 113 - the board, and the employer of any school employee on leave of absence under 51 Pa.C.S.

Willful failure to provide the information required by this subsection to the extent available or the provision of erroneous information upon entrance into the system or plan shall result in the forfeiture of the right of the member or participant to subsequently assert any right to 20170SB0001PN0853 - 113 - benefits based on erroneous information or on any of the required information which he failed to provide.

* * * (d.2) Contributions for USERRA leave.--Any active participant or inactive participant or former participant who was reemployed from USERRA leave and who desires to make 20170SB0001PN0902 - 114 - mandatory pickup participant contributions and voluntary contributions for his USERRA leave shall so notify the board within the time period required under 38 U.S.C.

(e) Beneficiary for death benefits from system.--Every 20170SB0001PN0853 - 114 - member shall nominate a beneficiary by written designation filed with the board to receive the death benefit or the benefit payable from the system under the provisions of Option 1.

A participant may also nominate a contingent beneficiary or beneficiaries to 20170SB0001PN0902 - 115 - receive the death benefit provided under section 8408.

(2) Vest his retirement rights, if eligible, and if he is a joint coverage member, and so desires, elect to become a full coverage member and agree to pay within 30 days of the 20170SB0001PN0853 - 115 - date of termination of service the lump sum required.

* * * (g.1) Deferral of retirement rights.--If a participant terminates school service and does not commence receiving a distribution, he shall nominate a beneficiary by written designation filed with the board, and he may anytime thereafter, but no later than his required beginning date, withdraw the vested accumulated total defined contributions standing to his credit or apply for another form of distribution required by law 20170SB0001PN0902 - 116 - or authorized by the board.

* * * (b) Crediting of interest.--The board annually shall allow statutory interest, excluding the individual investment 20170SB0001PN0853 - 116 - accounts, to the credit of the members' savings account on the mean amount of the accumulated deductions of all members for whom interest is payable for the preceding year and valuation interest on the mean amount of the annuity reserve account for the preceding year to the credit of that account.

In the event the total earnings for the year do not exceed 5 1/2% of the mean amount for the preceding year of the total assets of the fund less earnings credited to the fund during that year plus the administrative expenses of the board, the difference required to be 20170SB0001PN0902 - 117 - appropriated from the General Fund shall be credited to the State accumulation account.

There shall be established and maintained by the board the several ledger accounts specified in sections 8523 (relating to members' savings account), 8524 (relating to State accumulation account), 8525 (relating to annuity reserve account) and 8526 (relating to 20170SB0001PN0853 - 117 - health insurance account).

The State accumulation account shall be the ledger account to which shall be credited all contributions of the Commonwealth and other employers as well as the earnings of the fund, except 20170SB0001PN0902 - 118 - the premium assistance contributions and earnings thereon in the health insurance account.

Employer defined contributions, mandatory pickup contributions and a participant's voluntary contributions, together with any income or interest earned thereon, may be temporarily placed into the State accumulation account pending allocation or distribution 20170SB0001PN0853 - 118 - to the participant's individual investment account.

(a) Credits and charges to account.--The annuity reserve account shall be the ledger account to which shall be credited the reserves held for the payment of annuities and death benefits resulting from membership in the system on account of all annuitants and the contributions from the Commonwealth and other employers as determined in accordance with section 8328 (relating to actuarial cost method) for the payment of the supplemental annuities provided in sections 8348 (relating to supplemental annuities), 8348.1 (relating to additional supplemental annuities), 8348.2 (relating to further additional supplemental annuities), 8348.3 (relating to supplemental 20170SB0001PN0902 - 119 - annuities commencing 1994), 8348.4 (relating to special supplemental postretirement adjustment), 8348.5 (relating to supplemental annuities commencing 1998), 8348.6 (relating to supplemental annuities commencing 2002) and 8348.7 (relating to supplemental annuities commencing 2003).

In addition, the actuarial reserve for his annuity less the amount 20170SB0001PN0853 - 119 - transferred to the members' savings account shall be transferred from the annuity reserve account to the State accumulation account.

All income, interest, and dividends derived from deposits and investments of the system authorized by this part shall be used for the payment of the said obligations of the Commonwealth and shall not be used for any obligations of the 20170SB0001PN0902 - 120 - plan or trust.

(a.1) Individual investment accounts and distributions.--No participant or beneficiary, successor payee or alternate payee 20170SB0001PN0853 - 120 - of a participant shall have the ability to commute, sell, assign, alienate, anticipate, mortgage, pledge, hypothecate, commutate or otherwise transfer or convey any benefit or interest in an individual investment account or rights to receive or direct distributions under this part or under agreements entered into under this part except as otherwise provided in this part and in the case of either a member or a participant.

Forfeitures under this subsection or under any other 20170SB0001PN0902 - 121 - provision of law may not be applied to increase the benefits that any member would otherwise receive under this part.

Any 20170SB0001PN0853 - 121 - accumulated employer defined contributions forfeited as a result of this subsection or other law shall be retained by the board and used for the payment of expenses of the plan.

For purposes of this subsection, a "distributee" includes a member [and], a participant, a member's surviving spouse [and], a participant's surviving spouse, a member's former spouse who is 20170SB0001PN0902 - 122 - an alternate payee under an approved domestic relations order[.], a participant's former spouse who is an alternate payee under an approved domestic relations order and anyone else authorized under IRC and the plan terms approved by the board to have an eligible rollover distribution paid directly to an eligible retirement plan by way of a direct rollover.

Sections 8533.1, 8533.2, 8533.3 and 8533.4(a) 20170SB0001PN0853 - 122 - of Title 24 are amended to read:

(2) Requires the system to provide no more than the total amount of benefits than the member would otherwise receive (determined on the basis of actuarial value) unless 20170SB0001PN0902 - 123 - increased benefits are paid to the member or alternate payee based upon cost-of-living increases or increases based on other than actuarial value.

(6) Does not grant an alternate payee any of the rights, 20170SB0001PN0853 - 123 - options or privileges of a member under this part.

An authorization granted under this section shall be construed as an authorization for the alternate payee to receive information concerning the administration, calculation and payment of the alternate payee's share of the benefits payable under this part and not as an authorization to exercise the rights afforded to members or obtain information that is not related to the administration, calculation and payment of alternate payee's 20170SB0001PN0902 - 124 - share of the benefits payable under this part.

(3) Does not require the plan to recover or distribute any funds that were distributed to the participant or at the participant's direction prior to the approval of the domestic relations order by the secretary of the board or his 20170SB0001PN0853 - 124 - designated representative.

20170SB0001PN0902 - 125 - (6) Specifies the amount or percentage of the participant's individual investment account to be paid to the alternate payee and the date upon which such valuation is based.

Any authorization granted under this 20170SB0001PN0853 - 125 - section shall be construed as an authorization for the alternate payee to receive information concerning the participant that relates to the administration, calculation and payment of the alternate payee's share of the participant's account and not as an authorization to exercise the rights afforded to participants or obtain information that is not related to the administration, calculation and payment of alternate payee's share of the participant's individual investment account.

(10) Requires the immediate distribution of the alternate payee's share of the participant's individual investment account, which may be made by direct payment, eligible rollover or trustee-to-trustee transfer to another 20170SB0001PN0902 - 126 - eligible plan or qualified account owned by the alternate payee.

(b) Determination by secretary.--Within a reasonable period of time after receipt of a domestic relations order, the secretary of the board, or his designated representative, shall determine whether this order is an approved domestic relations order and notify the member or participant and each alternate 20170SB0001PN0853 - 126 - payee of this determination.

§ 4302 (relating to 20170SB0001PN0902 - 127 - definitions) or an order for the enforcement of arrearages as provided in 23 Pa.C.S.

(d) Obligation discharged.--Only the requirements of this part and any regulations promulgated hereunder shall be used to 20170SB0001PN0853 - 127 - govern the approval or disapproval of a domestic relations order.

A domestic relations order requiring the nomination of an irrevocable beneficiary shall be deemed to be one that requires a member or participant to nominate an alternate payee as a 20170SB0001PN0902 - 128 - beneficiary and that prohibits the removal or change of that beneficiary without approval of a court of competent jurisdiction, except by operation of law.

A domestic relations order requiring the designation of an irrevocable survivor annuitant of a member of the fund shall be deemed to be one that requires a member to designate an alternate payee as a survivor annuitant and that prohibits the removal or change of that survivor 20170SB0001PN0853 - 128 - annuitant for benefits payable from the fund without approval of a court of competent jurisdiction, except by operation of law.

(a) Deceased alternate payee.--In the event that the alternate payee predeceases the member or participant and there are benefits payable to the alternate payee, the divorce court 20170SB0001PN0902 - 129 - may amend the approved domestic relations order to substitute a person for the deceased alternate payee to receive any benefits payable to the deceased alternate payee.

(b) Determination.--A domestic relations order requiring the designation of an irrevocable successor payee shall be deemed to be one that requires a participant who is receiving payments from an annuity or other distribution option to designate an alternate payee as a successor payee and that prohibits the 20170SB0001PN0853 - 129 - removal or change of that successor payee without approval of a court of competent jurisdiction, except by operation of law.

A court may not name an irrevocable successor payee if the alternate payee is eligible to receive a lump sum distribution of the alternate payee's portion of the marital 20170SB0001PN0902 - 130 - portion of the pension benefit.

(b) Adjustment of errors.--Should any change or mistake in records result in any member, participant, beneficiary, [or] survivor annuitant or successor payee receiving from the system or plan more or less than he would have been entitled to receive had the records been correct, then regardless of the intentional or unintentional nature of the error and upon the discovery of such error, the board shall correct the error and if the error affects contributions to or payments from the system, then so 20170SB0001PN0853 - 130 - far as practicable shall adjust the payments which may be made for and to such person in such a manner that the actuarial equivalent of the benefit to which he was correctly entitled shall be paid.

(1) The Commonwealth shall pay each school entity for 20170SB0001PN0902 - 131 - contributions made to the Public School Employees' Retirement Fund based upon school service of all active members, including members on activated military service leave, whose effective dates of employment with their school entities are after June 30, 1994, and who also had not previously been employed by any school entity within this Commonwealth an amount equal to the amount certified by the Public School Employees' Retirement Board as necessary to provide, together with the members' contributions, reserves on account of prospective annuities, supplemental annuities and the premium assistance program as provided in this part in accordance with section 8328 (relating to actuarial cost method), multiplied by the market value/income aid ratio of the school entity.

20170SB0001PN0853 - 131 - (2) The Commonwealth shall pay each school entity for contributions made to the Public School Employees' Retirement Fund based upon school service of all active members, including members on activated military service leave, who are not described in paragraph (1), one-half of the amount certified by the Public School Employees' Retirement Board as necessary to provide, together with the members' contributions, reserves on account of prospective annuities, supplemental annuities and the premium assistance program as provided in this part in accordance with section 8328.

(3) School entities shall have up to five days after receipt of the Commonwealth's portion of the employer's liability to [make] forward the payment to the Public School 20170SB0001PN0902 - 132 - Employees' Retirement Fund.

(1) The Commonwealth shall pay each school entity for contributions made to the fund or the trust based upon school 20170SB0001PN0853 - 132 - service of all active members or active participants, including members or participants on activated or USERRA military service leave, whose effective dates of employment with their school entities are after June 30, 1994, and who also had not previously been employed by any school entity within this Commonwealth, an amount equal to the amount certified by the board as necessary to provide, together with the members' and participants' contributions, reserves on account of prospective annuities, supplemental annuities and the premium assistance program as provided in this part in accordance with section 8328 (relating to actuarial cost method), multiplied by the market value/income aid ratio of the school entity.

For no school year shall any school entity 20170SB0001PN0902 - 133 - receive less than the amount that would result if the market value/income aid ratio as defined in section 2501(14.1) of the Public School Code was 0.50.

20170SB0001PN0853 - 133 - School entities are expected to make the full payment to the fund or the trust in accordance with section 8327 (relating to payments by employers) in the event the receipt of the Commonwealth's portion of the employer's liability is delayed because of delinquent salary reporting or other conduct by the school entities.

20170SB0001PN0902 - 134 - Notwithstanding any provisions of this part to the contrary, no contribution or benefit related to the School Employees' Defined Contribution Plan may be made or payable to the extent that the contribution or benefit exceeds a limitation under IRC § 415 in effect with respect to a "governmental plan" as defined in IRC § 414(d) on the date the contribution or benefit payment becomes effective.

20170SB0001PN0853 - 134 - (4) The Speaker of the House of Representatives.

(2) Study the costs and benefits of both active and 20170SB0001PN0902 - 135 - passive investment strategies in relation to future investment activities of the Public School Employees' Retirement System.

20170SB0001PN0853 - 135 - (4) Publish extensive and detailed findings online, including findings about:

(c) Quorum.--A majority of appointed members shall 20170SB0001PN0902 - 136 - constitute a quorum for the purpose of conducting business.

(e) Information gathering.--The Public Pension Management and Asset Investment Review Commission may conduct hearings and otherwise gather pertinent information and analysis that it 20170SB0001PN0853 - 136 - considers appropriate and necessary to fulfill its duties.

The definition of "eligible person" in section 20170SB0001PN0902 - 137 - 8702(a) of Title 24 is amended to read:

Section 7306(a) introductory paragraph of Title 20170SB0001PN0853 - 137 - 51 is amended and the section is amended by adding a subsection to read:

(a) Options available to employees.--Any employee who is a member of a retirement system other than an active member or inactive member on leave without pay of the State Employees' Retirement System [or], an active participant or inactive participant on leave without pay of the State Employees' Defined Contribution Plan, an active or inactive member of the Public School Employees' Retirement System or an active or inactive participant of the School Employees' Defined Contribution Plan at the time he is granted a military leave of absence shall be entitled to exercise any one of the following options in regard 20170SB0001PN0902 - 138 - thereto:

20170SB0001PN0853 - 138 - ARTICLE III Section 301.

The definitions of "alternate payee," "average noncovered salary," "beneficiary," "class of service multiplier," "compensation," "creditable nonstate service," "credited service," "date of termination of service," "distribution," "domestic relations order," "eligibility points," "final average salary," "inactive member," "intervening military service," "irrevocable beneficiary," "reemployed from USERRA leave," "regular member contributions," "required beginning date," "retirement counselor," "salary deductions," "shared-risk member contributions," "special vestee," "standard single life annuity," "State employee," "superannuation age," 20170SB0001PN0902 - 139 - "valuation interest" and "vestee" in section 5102 of Title 71 are amended and the section is amended by adding definitions to read:

"Accumulated mandatory participant contributions." The total of the mandatory pickup participant contributions paid into the trust on account of a participant's State service together with 20170SB0001PN0853 - 139 - any investment earnings and losses and adjustments for fees, costs and expenses credited or charged thereon and reduced by any distributions.

"Accumulated voluntary contributions." The total of voluntary contributions paid into the trust by a participant and any amounts rolled over by a participant or transferred by a direct trustee-to-trustee transfer into the trust together with any investment earnings and losses and adjustment for fees, 20170SB0001PN0902 - 140 - costs and expenses credited or charged thereon and reduced by any distributions.

* * * 20170SB0001PN0853 - 140 - "Average noncovered salary." The average of the amounts of compensation received as an active member each calendar year since January 1, 1956, exclusive of the amount which was or could have been covered by the Federal Social Security Act[, 42 U.S.C.

In the case of the plan, the person or persons last designated in writing to the board by the 20170SB0001PN0902 - 141 - participant to receive the participant's vested accumulated total defined contributions or a lump sum benefit upon the death of the participant.

(7) A campus police officer employed by a State-owned 20170SB0001PN0853 - 141 - educational institution, community college or The Pennsylvania State University.

"Class of service multiplier." Class of Service Multiplier A 1 AA for all purposes 20170SB0001PN0902 - 142 - except calculating regular member contributions on compensation paid prior to January 1, 2002 1.25 AA for purposes of calculating regular member contributions on compensation paid prior to January 1, 2002 1 A-3 for all purposes except the calculation of 20170SB0001PN0853 - 142 - regular member contributions and contributions for creditable nonstate service 1 A-3 for purposes of calculating regular member contributions and contributions for creditable 20170SB0001PN0902 - 143 - nonstate service 1.25 A-4 for all purposes except the calculation of regular member contributions 1.25 A-4 for purposes of calculating regular member contributions 1.86 A-5 for all purposes except the calculation of regular member contributions .625 A-5 for purposes of calculating 20170SB0001PN0853 - 143 - regular member contributions 1 A-6 for all purposes except the calculation of regular member contributions .5 A-6 for purposes of calculating regular member contributions .8 B .625 C 1 20170SB0001PN0902 - 144 - D 1.25 D-1 prior to January 1, 1973 1.875 D-1 on and subsequent to January 1, 1973 1.731 D-2 prior to January 1, 1973 2.5 D-2 on and subsequent to January 1, 1973 1.731 D-3 prior to January 1, 1973 3.75 D-3 on and subsequent to January 1, 1973 1.731 except prior to December 1, 1974 20170SB0001PN0853 - 144 - as applied to any additional legislative compensation as an officer of the General Assembly 3.75 D-4 for all purposes except calculating regular member contributions 20170SB0001PN0902 - 145 - on compensation paid prior to July 1, 2001 1.5 D-4 for purposes of calculating regular member contributions on compensation paid prior to July 1, 2001 1 E, E-1 prior to January 1, 1973 2 for each of the first ten years of judicial service, and 1.5 for each subsequent year 20170SB0001PN0853 - 145 - of judicial service E, E-1 on and subsequent to January 1, 1973 1.50 for each of the first ten years of judicial service and 1.125 for each subsequent year of judicial service E-2 prior to 20170SB0001PN0902 - 146 - September 1, 1973 1.5 E-2 on and subsequent to September 1, 1973 1.125 G 0.417 H 0.500 I 0.625 J 0.714 K 0.834 L 1.000 M 1.100 N 1.250 T-C (Public School Employees' Retirement Code) 1 20170SB0001PN0853 - 146 - T-E (Public School Employees' Retirement Code) 1 T-F (Public School Employees' Retirement Code) 1 T-G (Public School Employees' Retirement Code) 1 T-H (Public School Employees' Retirement Code) 1 * * * 20170SB0001PN0902 - 147 - "Compensation." Pickup contributions and mandatory pickup participant contributions plus remuneration actually received as a State employee excluding refunds for expenses, contingency and accountable expense allowances;

Provided, however, That for purposes of determining member and employer contributions to the system and for calculating annuities and benefits from the system resulting from service performed as a Class A-5 exempt employee who first became a member on or after 20170SB0001PN0853 - 147 - January 1, 2018, compensation shall not include remuneration received in any pay period for voluntary overtime service or duty that exceeds 10% of a Class A-5 exempt employee's base salary or wages in that pay period:

§ 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 20170SB0001PN0902 - 148 - 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)) and shall apply to each participant pertaining to his participation in the plan.

20170SB0001PN0853 - 148 - "Credited service." State or creditable nonstate service for which the required contributions have been made to the fund or for which the contributions otherwise required for such service were not made solely by reason of section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or any provision of this part relating to the limitations under section 401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.

20170SB0001PN0902 - 149 - (1) the last day of service for which pickup contributions are made for an active member or for which the contributions otherwise required for such service are not made solely by reason of any provision of this part relating to the limitations under section 401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.

* * * "Distribution." Payment of all or any portion of a person's interest in either the State Employees' Retirement Fund or the State Employees' Defined Contribution Trust, or both, which is 20170SB0001PN0853 - 149 - payable under this part.

§ 3703 (relating to enforcement of 20170SB0001PN0902 - 150 - arrearages).

(2) 2% of compensation for service credited as a Class 20170SB0001PN0853 - 150 - A-6 member;

(1) For members with an effective date of retirement before January 1, 2018, and for purposes of calculating standard single life annuities and benefits resulting from credited service other than Class A-5 service and Class A-6 service regardless of the effective date of retirement, 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 20170SB0001PN0902 - 151 - 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 during five calendar 20170SB0001PN0853 - 151 - years, the average of the number of calendar years during which the employee was an active member.

(3) For all members and for the calculation of all standard single life annuities without regard to class of membership and credited service, 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] member of the system or as a member of the Public School Employees' Retirement System, or both[;], and, in the case of a member with [Class A-3 or Class A-4 service and] service in more than one [or more other classes] class of service, the final average salary for purposes of calculating annuities and 20170SB0001PN0902 - 152 - benefits from all classes of service shall be determined on the basis of the compensation received by him in all classes of State service credited in the system;

* * * 20170SB0001PN0853 - 152 - "Inactive member." A member for whom no pickup contributions are being made to the fund, 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 section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or any provision of this part relating to the limitations under section 401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.

20170SB0001PN0902 - 153 - "Inactive member on leave without pay." The term does not include a State employee who is performing service solely as a participant in the plan unless the participant concurrently is employed as a Class A-5 exempt employee and on leave without pay.

"Inactive participant on leave without pay." The term does not include a Class A-5 exempt employee who is an active member 20170SB0001PN0853 - 153 - on leave without pay unless the Class A-5 exempt employee concurrently is employed in an office or position in which the Class A-5 exempt employee is a participant in the plan and on leave without pay.

"Intervening military service." Active military service of a member who was a State employee and active member of the system immediately preceding his induction into the armed services or 20170SB0001PN0902 - 154 - forces of the United States in order to meet a military obligation excluding any voluntary extension of such service and who becomes a State employee within 90 days of the expiration of such service.

20170SB0001PN0853 - 154 - * * * "Mandatory pickup participant contributions." Contributions equal to a percentage of compensation that are made by the Commonwealth or other employer for active participants for current State service that are picked up by the employer and credited in the plan as follows:

* * * 20170SB0001PN0902 - 155 - "Member's annuity." The single life annuity which is actuarially equivalent, at the effective date of retirement and taking into account any delay in the receipt of the portion of the annuity based on Class A-5 service or Class A-6 service, if the effective date of retirement is under the age at which the member can receive a withdrawal annuity based on Class A-5 service or Class A-6 service, to the sum of the regular accumulated deductions, shared-risk accumulated deductions, the additional accumulated deductions and the social security integration accumulated deductions standing to the member's credit in the members' savings account.

"Participant receiving distributions." A participant in the plan who has commenced receiving distributions from his individual investment account but who has not received a total 20170SB0001PN0853 - 155 - distribution of his vested interest in the individual investment account.

* * * "Reemployed from USERRA leave." Resumption of active membership or active participation as a State employee after a 20170SB0001PN0902 - 156 - period of USERRA leave, provided, however, that the resumption of active membership or active participation was within the time period and under conditions and circumstances such that the State employee was entitled to reemployment rights under 38 U.S.C.

"Required beginning date." The latest date by which distributions of a member's interest or a participant's interest in his individual investment account must commence under section 401(a)(9) of the Internal Revenue Code of 1986 (Public Law 99- 20170SB0001PN0853 - 156 - 514, 26 U.S.C.

20170SB0001PN0902 - 157 - * * * "Shared-risk member contributions." The product of the applicable shared-risk contribution rate and the compensation of a member [for service credited as Class A-3 or Class A-4] who is required to make shared-risk member contributions.

20170SB0001PN0853 - 157 - (1) subsequent to termination of State service as an employee of The Pennsylvania State University, the member has not returned to State service in any other capacity or position as a State employee;

and (4) the member elects to leave the member's total accumulated deductions in the fund and to defer receipt of an annuity until attainment of superannuation age or the 20170SB0001PN0902 - 158 - member's required beginning date.

(iv) The Pennsylvania State University, except an 20170SB0001PN0853 - 158 - employee in the College of Agriculture who is paid wholly from Federal funds or an employee who is participating in the Federal Civil Service Retirement System.

(2) The Pennsylvania Turnpike Commission, the Delaware River Port Authority, the Port Authority Transit Corporation, the Philadelphia Regional Port Authority, the Delaware River Joint Toll Bridge Commission, the State Public School 20170SB0001PN0902 - 159 - Building Authority, The General State Authority, the State Highway and Bridge Authority, the Delaware Valley Regional Planning Commission, the Interstate Commission of the Delaware River Basin, and the Susquehanna River Basin Commission any time subsequent to its creation, provided the commission or authority agrees to contribute and does contribute to the fund or trust, from time to time, the moneys required to build up the reserves necessary for the payment of the annuities or other benefits of such officers and employees without any liability on the part of the Commonwealth to make appropriations for such purposes, and provided in the case of employees of the Interstate Commission of the Delaware River Basin, that the employee shall have been a member of the system for at least ten years prior to January 1, 1963.

(3) Any separate independent public corporation created by statute, not including any municipal or quasi-municipal 20170SB0001PN0853 - 159 - corporation, so long as he remains an officer or employee of such public corporation, and provided that such officer or employee of such public corporation was an employee of the Commonwealth immediately prior to his employment by such corporation, and further provided such public corporation shall agree to contribute and contributes to the fund or trust, from time to time, the moneys required to build up the reserves necessary for the payment of the annuities or other benefits of such officers and employees without any liability on the part of the Commonwealth to make appropriations for such purposes.

* * * "Successor payee." The person or persons last designated in 20170SB0001PN0902 - 160 - writing to the board by a participant receiving distributions to receive one or more distributions upon the death of the participant.

For Class A-3 and Class A-4 service, any age upon attainment of a superannuation score of 92, provided the member has accrued 35 eligibility points, or age 65, or for park rangers or capitol police officers, age 55 20170SB0001PN0853 - 160 - with 20 years of service as a park ranger or capitol police officer, except for a member of the General Assembly whose service as a member of the General Assembly is rendered as a Class A-3 or Class A-4 member, an enforcement officer, a correction officer, a psychiatric security aide, a Delaware River Port Authority policeman or an officer of the Pennsylvania State Police, age 55.

* * * 20170SB0001PN0902 - 161 - "Sworn police officer." A State police officer who is employed and serving as an officer of the Pennsylvania State Police.

(2) Class G, Class H, Class I, Class J, Class K, Class 20170SB0001PN0853 - 161 - L, Class M or Class N service with five or more eligibility points[, or a member with];

20170SB0001PN0902 - 162 - Section 303.

(a) Construction.--As of the effective date of this section, unless the context clearly indicates otherwise, any reference to 20170SB0001PN0853 - 162 - the State Employees' Retirement System in a statutory provision other than this part and 24 Pa.C.S.

Section 5301 heading, (a), (b), (c) and (d) of 20170SB0001PN0902 - 163 - Title 71 are amended and the section is amended by adding subsections to read:

20170SB0001PN0853 - 163 - (10) Legislative employees.

For the fiscal year 1986-1987 an employer may contribute on account of such elected membership at a rate which is the greater of 7% or the employer normal contribution rate as determined in section 5508(b) and for 20170SB0001PN0902 - 164 - the fiscal year 1992-1993 and all fiscal years after that at a rate of 9.29%.

(16) Employees of the Juvenile Court Judges' Commission who, before the effective date of this paragraph, were 20170SB0001PN0853 - 164 - transferred from the State System of Higher Education to the Juvenile Court Judges' Commission as a result of an interagency transfer of staff approved by the Office of Administration and who, while employees of the State System of Higher Education, had elected membership in an independent retirement program approved by the employer.

(a.1) Mandatory participation in the plan.--A State employee who is a member of the system as a member of Class A-5 or Class A-6 shall be a mandatory participant in the plan for that same 20170SB0001PN0902 - 165 - service as of the effective date of Class A-5 or Class A-6 membership in the system except for service as a Class A-5 exempt employee.

(b.1) Optional participation in the plan.--The State employees who are optional members of the system as a member of Class A-5 or Class A-6 also are optional participants in the 20170SB0001PN0853 - 165 - plan.

(c.1) Prohibited participation in the plan.--The State employees listed in subsection (a)(11), (12), (13), (14) and 20170SB0001PN0902 - 166 - (15) or who first become a member of the system before January 1, 2018, or who could have elected membership in the system but did not do so in the required time period shall not be eligible to be active participants in the plan.

(d) Return to service.-- (1) An annuitant who returns to service as a State employee before January 1, 2018, or returns to State service as a Class A-5 exempt employee after December 31, 2017, shall resume active membership in the system as of the effective date of employment, except as otherwise provided in section 5706(a) (relating to termination of annuities), regardless of 20170SB0001PN0853 - 166 - the optional membership category of the position.

20170SB0001PN0902 - 167 - * * * Section 306.

(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 to the fund, or for which contributions otherwise required for such service were not made to the fund solely by reason of section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or any provision of this part relating to the limitations under IRC § 401(a)(17) or 415, except as otherwise provided in this part, but in no case shall he receive more than one year's credit for any 12 20170SB0001PN0853 - 167 - consecutive months or 26 consecutive biweekly pay periods.

If the member was employed and contributions were made to the fund 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 and for which contributions are or would have been made to the fund except for the waiver under 20170SB0001PN0902 - 168 - section 5502.1 or limitations under the IRC to 220 days or 1,650 hours, as the case may be.

Provided, That contributions are made in accordance with sections 5501 20170SB0001PN0853 - 168 - (relating to regular member contributions for current service), 5501.1 (relating to shared-risk member contributions [for Class A-3 and Class A-4 service] and shared-gain adjustments to regular member contributions), 5505.1 (relating to additional member contributions) and 5507 (relating to contributions to the system by the Commonwealth and other employers), the member returns from leave without pay to active State service as a member of the system for a period of at least one year, and he is not entitled to retirement benefits for such service under a retirement system administered by any other governmental agency.

(2) An active member or active participant on paid leave granted by an employer for purposes of serving as an elected 20170SB0001PN0902 - 169 - full-time officer for a Statewide employee organization which is a collective bargaining representative under the act of June 24, 1968 (P.L.237, No.111), referred to as the Policemen and Firemen Collective Bargaining Act, or the act of July 23, 1970 (P.L.563, No.195), known as the Public Employe Relations Act, and up to 14 full-time business agents appointed by an employee organization that represents correction officers employed at State correctional institutions:

that the employer shall fully compensate the member or participant, including, but not limited to, salary, wages, pension and retirement contributions and benefits, other benefits and seniority, as 20170SB0001PN0853 - 169 - if he were in full-time active service;

* * * 20170SB0001PN0902 - 170 - (e) Cancellation of credited service.-- (1) All credited service in the system shall be cancelled if a member withdraws his total accumulated deductions, except that a member with Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit and one or more other classes of service credit shall not have his service credit as a member of any classes of service other than as a member of Class A-3 [or], Class A-4, Class A-5 or Class A-6 cancelled when the member receives a lump sum payment of accumulated deductions resulting from Class A-3 [or], Class A-4, Class A-5 or Class A-6 service pursuant to section 5705.1 (relating to payment of accumulated deductions resulting from [Class A-3 and Class A-4] more than one class of service).

20170SB0001PN0853 - 170 - (f) Credit for military service.--A State employee who has performed USERRA leave may receive credit in the system or participate in the plan as follows:

§ 7301 (relating to 20170SB0001PN0902 - 171 - definitions).

(i) A State employee who is reemployed from USERRA leave as an active member of the system shall be treated as not having incurred a break in State service by reason of the USERRA leave and shall be granted eligibility 20170SB0001PN0853 - 171 - points as if the State employee had not been on the USERRA leave.

43 (relating to employment and reemployment rights of members of the uniformed services) and IRC § 414(u) as if the State employee had continued in State office or employment and performed State service and was compensated during the period of USERRA leave, then the 20170SB0001PN0902 - 172 - State employee shall be granted State service credit for the period of USERRA leave.

(ii) For purposes of determining whether a State employee has made the required employee contributions for State service credit for USERRA leave, if an employee who is reemployed from USERRA leave as an active member of the system terminates State service or dies in State service before the expiration of the allowed payment period, then State service credit for the USERRA leave 20170SB0001PN0853 - 172 - will be granted as if the required member contributions were paid the day before termination or death.

(iii) A State employee who is reemployed from USERRA 20170SB0001PN0902 - 173 - leave as an active member of the system who does not make the required member contributions or makes only part of the required member contributions within the allowed payment period shall not be granted credited service for the period of USERRA leave for which the required member contributions were not timely made, shall not be eligible to subsequently make contributions and shall not be granted either State service credit or nonstate service credit for the period of USERRA leave for which the required member contributions were not timely made.

If a participant who is reemployed from USERRA leave subsequently makes mandatory pickup participant contributions in the amounts and in the time 20170SB0001PN0853 - 173 - periods required by 38 U.S.C.

The employee shall have his contributions, benefits, rights and obligations determined under this part as if he were an active participant who performed State service during the USERRA leave in the job position that he would have held had he not been on USERRA leave and received the compensation on which the mandatory pickup participant contributions to receive State service credit for the USERRA leave were 20170SB0001PN0902 - 174 - determined.

43 for reemployment rights, but did not do so, shall be able to receive creditable nonstate service as nonintervening military service for the period of USERRA leave should the 20170SB0001PN0853 - 174 - employee later return to State service as an active member of the system and is otherwise eligible to purchase the service as nonintervening military service.

(4) [A State employee] An active member or inactive 20170SB0001PN0902 - 175 - member on leave without pay who on or after the effective date of this subsection is granted a leave of absence under 51 Pa.C.S.

73 that is not USERRA leave shall not be able to make mandatory pickup participant contributions or voluntary contributions during or for the leave of absence or military leave and shall not have employer defined contributions made during such leave, 20170SB0001PN0853 - 175 - without regard to whether or not the State employee received salary, wages, stipends, differential wage payments or other payments from his employer during the leave, notwithstanding any provision to the contrary under 51 Pa.C.S.

(5.1) If a participant dies while performing USERRA 20170SB0001PN0902 - 176 - leave, the beneficiaries or successor payees of the deceased participant are entitled to any additional benefits, other than benefit accruals relating to the period of qualified military service, provided under this part had the participant resumed and then terminated employment on account of death.

20170SB0001PN0853 - 176 - § 5303.

* * * (b) Eligibility points for prospective credited service.-- (1) Every active member of the system or a multiple service member who is a school employee and a member of the Public School Employees' Retirement System on or after the effective date of this part shall receive eligibility points in accordance with section 5307 for current State service, previous State service, or creditable nonstate service upon compliance with sections 5501 (relating to regular member contributions for current service), 5501.1 (relating to shared-risk member contributions [for Class A-3 and Class A-4 service] and shared-gain adjustments to regular member 20170SB0001PN0902 - 177 - contributions), 5504 (relating to member contributions for the purchase of credit for previous State service or to become a full coverage member), 5505 (relating to contributions for the purchase of credit for creditable nonstate service), 5505.1 (relating to additional member contributions) or 5506 (relating to incomplete payments).

(i) is credited with Class A-3 service for such 20170SB0001PN0853 - 177 - membership and is not a member of Class A-5, shall be credited only with Class A-3 service for previous State service performed before January 1, 2011, that was not previously credited in the system;

(iii) is credited with Class A-5 service for such membership, shall be credited only with Class A-5 service for previous State service, performed before January 1, 2018, other than service as a Class A-5 exempt employee, 20170SB0001PN0902 - 178 - that was not previously credited in the system;

* * * (2) A special vestee or person otherwise eligible to be a special vestee who returns to State service, other than solely as a participant in the plan, or withdraws his accumulated deductions pursuant to section 5311 (relating to eligibility for refunds) or 5701 (relating to return of total accumulated deductions) shall receive or retain eligibility 20170SB0001PN0853 - 178 - points in accordance with paragraph (1) but upon subsequent termination of State service shall only be eligible to be an annuitant vestee or inactive member without regard to previous status as a special vestee and without regard to the provisions of this part providing for special vestees.

§ 3703 (relating to local chamber facilities) shall be a member of the system for all service rendered as an employee of the 20170SB0001PN0902 - 179 - Commonwealth on the personal staff of an appellate court judge subsequent to the date of the transfer unless specifically prohibited pursuant to section 5301(c) (relating to mandatory and optional membership in the system and participation in the plan).

The transfer of prior service credit to the system shall occur upon the transfer, by the member, county or other municipal pension plan or retirement system, to the system of the amount of accumulated member contributions, pick-up contributions and credited interest standing in the employee's county or municipal pension plan or retirement system account as of the 20170SB0001PN0853 - 179 - date that these funds are transferred to the system.

If the amount transferred to the system by the member of a county or municipal pension plan or retirement 20170SB0001PN0902 - 180 - system is greater than the amount that would have accumulated in the member's account if the employee had been a member of the system, all excess funds shall be returned to the employee within 90 days of the date on which such funds are credited to the member's account in the system.

The Public Employee Retirement Study Commission shall determine the appropriate amount of employer contributions to be 20170SB0001PN0853 - 180 - transferred to the system by the county or other municipal pension plans or retirement systems.

Philadelphia Regional Port Authority.-- (1) Any employee of the Philadelphia Regional Port Authority who becomes a State employee, as defined in section 5102 (relating to definitions), and an active member of the system shall be eligible to obtain retirement credit for prior uncredited service with the Philadelphia Port Corporation, a Pennsylvania not-for-profit corporation ("predecessor corporation"), provided that the Commonwealth does not incur any liability for the funding of the annuities 20170SB0001PN0902 - 181 - attributable to the prior, uncredited "predecessor corporation" service, the cost of which shall be determined according to paragraph (2).

(a) Eligibility.--An active member or inactive member on leave without pay who was an employee transferred from the Department of Education to the Department of Corrections 20170SB0001PN0853 - 181 - pursuant to section 908-B of the act of April 9, 1929 (P.L.177, No.175), known as The Administrative Code of 1929, and who on the effective date of that transfer did not participate in an independent retirement program approved by the Department of Education under 24 Pa.C.S.

§ 8301(a)(1) (relating to mandatory and optional membership in the system and participation in the plan) or section 5301(a)(12) (relating to mandatory and optional membership in the system and participation in the plan), notwithstanding any other provision of law or any collective bargaining agreement, arbitration award, contract or term or conditions of any retirement system or pension plan, may make a one-time election to convert all service credited in the Public School Employees' Retirement System as of June 30, 1999, and 20170SB0001PN0902 - 182 - transfer to the system all accumulated member contributions and statutory interest credited in the members' savings account in the Public School Employees' Retirement System as of June 30, 1999, plus statutory interest on that amount credited by the Public School Employees' Retirement System from July 1, 1999, to the date of transfer to the system.

(a) Eligibility.-- (1) An active member who first becomes an active member before January 1, 2011, or before December 1, 2010, as a member of the General Assembly, or a multiple service member who first becomes an active member before January 1, 2011, or before December 1, 2010, as a member of the General Assembly, and who is a school employee and an active member of the Public School Employees' Retirement System shall be eligible for Class A service credit for creditable nonstate service as 20170SB0001PN0853 - 182 - set forth in subsections (b) and (c) except that intervening military service shall be credited in the class of service for which the member was eligible at the time of entering into military service and for which he makes the required contributions to the fund and except that a multiple service member who is a school employee and an active member of the Public School Employees' Retirement System shall not be eligible to purchase service credit for creditable nonstate service set forth in subsection (c)(5).

(2) An active member who first becomes an active member on or after January 1, 2011, or on or after December 1, 2010, as a member of the General Assembly and is an active member of a class of service other than Class A-5 or Class A-6, or a 20170SB0001PN0902 - 183 - multiple service member who first becomes an active member on or after January 1, 2011, or on or after December 1, 2010, as a member of the General Assembly in a class of service other than Class A-5 or Class A-6, and [who] is a school employee and an active member of the Public School Employees' Retirement System shall be eligible for Class A-3 service credit for creditable nonstate service as set forth in subsections (b) and (c) except that intervening military service shall be credited in the class of service for which the member was eligible at the time of entering into military service and for which he makes the required contributions to the fund and except that a multiple service member who is a school employee and an active member of the Public School Employees' Retirement System shall not be eligible to purchase service credit for creditable nonstate service set forth in subsection (c)(5).

(3) An active member of Class A-5 or Class A-6 or a 20170SB0001PN0853 - 183 - multiple service member who has service credited only as Class A-5 or Class A-6 and is a school employee and an active member of the Public School Employees' Retirement System shall be eligible for Class A-5 service credit if a Class A-5 member and Class A-6 service credit if a Class A-6 member for creditable nonstate service as set forth in subsections (b) and (c) for which the member makes the required contributions to the fund.

* * * (b) Limitations on eligibility.--An active member or a multiple service member who is a school employee and an active member of the Public School Employees' Retirement System shall be eligible as provided under subsection (a) to receive credit 20170SB0001PN0902 - 184 - for nonstate service provided that he does not have credit for such service in the system or in the [school system] Public School Employees' Retirement System and is not entitled to receive, eligible to receive now or in the future, or is receiving retirement benefits for such service in the system or under a retirement system administered and wholly or partially paid for by any other governmental agency or by any private employer, or a retirement program approved by the employer in accordance with section 5301(a)(12) (relating to mandatory and optional membership in the system and participation in the plan), and further provided, that such service is certified by the previous employer and contributions are agreed upon and made in accordance with section 5505 (relating to contributions for the purchase of credit for creditable nonstate service).

* * * 20170SB0001PN0853 - 184 - (b) Accrual of subsequent credits.--Any active member who has social security integration accumulated deductions to his credit or is receiving a benefit on account of social security integration credits may accrue one social security integration credit for each year of service as a State employee on or subsequent to March 1, 1974, and a fractional credit for a corresponding fractional year of service provided that contributions are made to the fund, or would have been made to the fund but for section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or the limitations under IRC § 401(a)(17) or 415, except as otherwise provided in this part, in accordance with section 5502 (relating to Social Security integration member 20170SB0001PN0902 - 185 - contributions), and he:

[or] 20170SB0001PN0853 - 185 - (3) a multiple service member who is a school employee and an active member of the Public School Employees' Retirement System;

Section 5306(a), (a.1), (a.2), (a.3) and (b)(2) 20170SB0001PN0902 - 186 - of Title 71 are amended, subsection (a) is amended by adding a paragraph and the section is amended by adding subsections to read:

(2) A State employee who first becomes a member of the system on or after January 1, 2011, or on or after December 20170SB0001PN0853 - 186 - 1, 2010, as a member of the General Assembly and before January 1, 2018, shall be classified as a Class A-3 member and receive credit for Class A-3 service upon payment of regular member contributions and shared-risk member contributions for Class A-3 service provided that the State employee does not become a member of Class A-4 pursuant to subsection (a.3), except that a member of the judiciary shall be classified as a member of such other class of service for which the member of the judiciary is eligible, shall elect and make regular member contributions.

(3) A State employee who first becomes a member of the system on or after January 1, 2011, or on or after December 1, 2010, as a member of the General Assembly, and a Class A-5 20170SB0001PN0902 - 187 - exempt employee on or after January 1, 2018, shall receive credit for all service as a Class A-5 exempt employee as a member of Class A-3 upon payment of the required member contributions and shall not be eligible to be a member of Class A-5 or Class A-6 or a participant in the plan for such service.

(a.1) Class AA membership.-- (1) A person who becomes a State employee and an active member of the system after June 30, 2001, and who first became an active member before January 1, 2011, or before December 1, 2010, as a member of the General Assembly, and who is not a State police officer and not employed in a 20170SB0001PN0853 - 187 - position for which a class of service other than Class A is credited or could be elected shall be classified as a Class AA member and receive credit for Class AA State service upon payment of regular member contributions for Class AA service and, subject to the limitations contained in paragraph (7), if previously a member of Class A or previously employed in a position for which Class A service could have been earned, shall have all Class A State service (other than State service performed as a State police officer or for which a class of service other than Class A was earned or could have been elected) classified as Class AA service.

(2) A person who is a State employee on June 30, 2001, and July 1, 2001, but is not an active member of the system 20170SB0001PN0902 - 188 - because membership in the system is optional or prohibited pursuant to section 5301 (relating to mandatory and optional membership in the system and participation in the plan) and who first becomes an active member after June 30, 2001, and before January 1, 2011, or before December 1, 2010, as a member of the General Assembly, and who is not a State police officer and not employed in a position for which a class of service other than Class A is credited or could be elected shall be classified as a Class AA member and receive credit for Class AA State service upon payment of regular member contributions for Class AA service and, subject to the limitations contained in paragraph (7), if previously a member of Class A or previously employed in a position for which Class A service could have been earned, shall have all Class A State service (other than State service performed as a State Police officer or for which a class of service other than Class A was earned or could have been elected) 20170SB0001PN0853 - 188 - classified as Class AA service.

or (ii) an inactive member on a leave without pay from a position in which the State employee would be a Class A active member if the employee was not on leave without 20170SB0001PN0902 - 189 - pay, other than a position in which the State employee could elect membership in Class C, Class D-3, Class E-1 or Class E-2;

(4) Provided that an election to become a Class AA member is made pursuant to section 5306.1, a former State employee, other than a former State employee who was a State police officer on or after July 1, 1989, who on June 30, 20170SB0001PN0853 - 189 - 2001, and July 1, 2001, is a multiple service member and a school employee and a member of the Public School Employees' Retirement System, subject to the limitations contained in paragraph (7), shall receive Class AA service credit for all Class A State service, other than State service performed as a State police officer or as a State employee in a position in which the former State employee could have elected a class of service other than Class A, performed before July 1, 2001.

(5) A former State employee who first becomes a member before January 1, 2011, or before December 1, 2010, as a member of the General Assembly, other than a former State employee who was a State police officer on or after July 1, 1989, who is a school employee and who on or after July 1, 20170SB0001PN0902 - 190 - 2001, becomes a multiple service member, subject to the limitations contained in paragraph (7), shall receive Class AA service credit for all Class A State service other than State service performed as a State employee in a position in which the former State employee could have elected a class of service other than Class A.

(6) A State employee who after June 30, 2001, becomes a State police officer or [who is employed in a position in which the member could elect membership in a class of service other than Class AA or Class D-4] a member of the judiciary shall retain any Class AA service credited prior to becoming a State police officer or being so employed but shall be ineligible to receive Class AA credit thereafter and instead shall receive Class A credit for service as a member of the judiciary if the State employee first becomes a member of the system before January 1, 2018, or if he first became a member before January 1, 2011, or December 1, 2010, as a member of 20170SB0001PN0853 - 190 - the General Assembly, or Class A-3 credit for service other than as a member of the judiciary and he first became a member on or after January 1, 2011, or December 1, 2010, as a member of the General Assembly, if the nonjudicial service is service as a Class A-5 exempt employee, or Class A-5 service credit, Class A-6 service credit or solely as a participant in the plan if the State employee first became a member on or after January 1, 2018, and the service is not as a Class A-5 exempt employee, unless a class of membership other than Class A is elected.

(7) (i) State service performed as Class A service before July 1, 2001, and State service for which Class A service could have been credited but was not credited 20170SB0001PN0902 - 191 - because membership in the system was optional or prohibited pursuant to section 5301 shall be credited as Class AA service only upon the completion of all acts necessary for the State service to be credited as Class A service had this subsection not been enacted and upon payment of required Class AA member contributions as provided in section 5504 (relating to member contributions for the purchase of credit for previous State service or to become a full coverage member).

(ii) A person who is not a State employee or a school employee on June 30, 2001, and July 1, 2001, and who has previous State service (except a disability annuitant who returns to State service after June 30, 2001, upon termination of the disability annuity) shall not receive Class AA service credit for State service performed before July 1, 2001, until such person becomes an active member, or an active member of the Public 20170SB0001PN0853 - 191 - School Employees' Retirement System and a multiple service member, and earns three eligibility points by performing credited State service or credited school service after June 30, 2001.

or (ii) is a member of the General Assembly on July 1, 2001, but is not an active member of the system because membership in the system is optional pursuant to section 20170SB0001PN0902 - 192 - 5301 and who becomes an active member after June 30, 2001, and before December 1, 2010;

(2) Provided an election to become a Class D-4 member is made pursuant to section 5306.2 (relating to elections by members of the General Assembly), a State employee who was 20170SB0001PN0853 - 192 - not a State police officer on or after July 1, 1989, who on July 1, 2001, is a member of the General Assembly and an active member of the system and not a member of Class D-3 shall be classified as a Class D-4 member and receive credit as a Class D-4 member for all State service as a member of the system performed as a member of the General Assembly not credited as another class other than Class A upon payment of regular member contributions for Class D-4 service and, subject to the limitations contained in paragraph (a.1)(7), shall receive Class AA service credit for all Class A State service, other than State service performed as a State police officer or as a State employee in a position in which the member could have elected a class of service other than Class 20170SB0001PN0902 - 193 - A, performed before July 1, 2001.

(4) Notwithstanding the provisions of this subsection, no service as a member of the General Assembly performed before December 1, 2010, that is not credited as Class D-4 service on November 30, 2010, shall be credited as Class D-4 service, unless such service was previously credited in the 20170SB0001PN0853 - 193 - system as Class D-4 service and the member withdrew his total accumulated deductions as provided in section 5311 (relating to eligibility for refunds) or 5701 (relating to return of total accumulated deductions).

(a.3) Class A-4 membership.--Provided that an election to become a Class A-4 member is made pursuant to section 5306.3 (relating to election to become a Class A-4 member), a State employee who first becomes a member before January 1, 2018, or is a Class A-5 exempt employee who otherwise would be a member of Class A-3 shall be classified as a Class A-4 member and 20170SB0001PN0902 - 194 - receive Class A-4 credit for all creditable State service performed after the effective date of membership in the system, except as a member of the judiciary, and for all creditable State service performed as a Class A-5 exempt employee if the employee first becomes a member on or after January 1, 2018, upon payment of regular member contributions and shared-risk member contributions for Class A-4 service.

(a.4) Class A-5 membership.--A State employee who first becomes a member of the system on or after January 1, 2018, other than as a Class A-5 exempt employee, and who does not make an election to be a member of Class A-6 or an election to be solely a participant in the plan under section 5306.4 (relating to election to become a Class A-6 member or solely a participant in the plan), shall be classified as a Class A-5 member and receive credit for Class A-5 service for service other than as a Class A-5 exempt employee upon payment of regular member contributions and shared-risk member contributions for Class A-5 20170SB0001PN0853 - 194 - service.

(a.5) Class A-6 membership.--Provided that an election to become a Class A-6 member is made pursuant to section 5306.4, a State employee who otherwise would be a member of Class A-5 shall be classified as a Class A-6 member and receive Class A-6 credit for all creditable State service performed after the effective date of membership in the system, except as a Class A- 5 exempt employee, upon payment of regular member contributions 20170SB0001PN0902 - 195 - and shared-risk member contributions for Class A-6 service.

[This] The class of service multiplier for E-2 service as [a bail commissioner] 20170SB0001PN0853 - 195 - an arraignment court magistrate shall be 1.5.

20170SB0001PN0902 - 196 - § 5306.1.

Upon termination and a subsequent 20170SB0001PN0853 - 196 - reemployment, the member's class of service shall be credited in the class of service otherwise provided for in this part and the State employee's eligibility for participation in the plan shall be as provided in this part.

A State employee who is eligible to elect to become a Class A-4 member 20170SB0001PN0902 - 197 - who begins USERRA leave during the election period without having elected Class A-4 membership [may make the election within 45 days after being reemployed from] shall have the election period extended by the number of days on USERRA leave.

Upon termination of State service and subsequent reemployment, a member who elected Class 20170SB0001PN0853 - 197 - A-4 membership shall be credited as a Class A-4 member for creditable State service performed after reemployment, except as a member of the judiciary, provided that if the State employee first becomes a member of the system on or after January 1, 2018, the reemployment is as a Class A-5 exempt employee, regardless of termination of employment, termination of membership by withdrawal of accumulated deductions or status as an annuitant, vestee or inactive member after the termination of service.

(d) Effect of failure to make election.--Failure to elect to become a Class A-4 member within the election period set forth in subsection (b) shall result in all of the member's State service, other than service performed as a member of the 20170SB0001PN0902 - 198 - judiciary, or if the State employee first becomes a member of the system on or after January 1, 2018, all service as a Class A-5 exempt employee, being credited as Class A-3 service and not subject to further election or crediting as Class A-4 service.

20170SB0001PN0853 - 198 - (b) Time for making election.--The election to become a Class A-6 member or solely a participant in the plan must be made by the member filing written notice with the board in a form and manner determined by the board no later than 45 days after notice from the board of the member's eligibility to elect Class A-6 membership or to be solely a participant in the plan.

A State employee who is eligible to elect to become a Class A-6 member or solely a participant in the plan who begins USERRA leave during the election period without having elected Class A-6 membership or to be solely a participant in the plan will have 20170SB0001PN0902 - 199 - the election period extended by the number of days on USERRA leave.

Upon termination and subsequent reemployment, a member who elected Class A-6 membership shall be credited as a Class A-6 member for creditable State service performed after reemployment, except as a Class A-5 exempt employee, regardless of termination of employment, termination of membership by withdrawal of accumulated deductions or status as an annuitant, vestee or inactive member after the termination 20170SB0001PN0853 - 199 - of service.

Upon termination and subsequent reemployment, a State employee who elected to be solely a participant in the plan shall resume active 20170SB0001PN0902 - 200 - participation for State service performed after reemployment, except as a Class A-5 exempt employee, regardless of termination of employment, termination of participation by a partial or total distribution of vested total defined contributions or status as an annuitant, vestee or inactive member of the system as a Class A-5 exempt employee after the termination of service.

20170SB0001PN0853 - 200 - Section 310.

A 20170SB0001PN0902 - 201 - State employee who is performing State service solely as a participant in the plan shall accrue eligibility points at the same rate and manner as if the State employee was performing State service credited as a member of Class A-5.

(b) Transitional rule.-- 20170SB0001PN0853 - 201 - (1) In determining whether a member who is not a State employee or school employee on June 30, 2001, and July 1, 2001, and who has previous State service (except a disability annuitant who returns to State service after June 30, 2001, upon termination of the disability annuity) has the five eligibility points required by sections 5102 (relating to definitions), 5308(b) (relating to eligibility for annuities), 5309 (relating to eligibility for vesting), 5704(b) (relating to disability annuities) and 5705(a) (relating to member's options), only eligibility points earned by performing credited State service, USERRA leave or credited school service as an active member of the Public School Employees' Retirement System after June 30, 2001, 20170SB0001PN0902 - 202 - shall be counted until such member earns one eligibility point by performing credited State service or, if a multiple service member, credited school service after June 30, 2001, at which time all eligibility points as determined pursuant to subsection (a) shall be counted.

(c) Application of eligibility points.--Eligibility points accrued for service as either member of the system or participant in the plan may be used to determine the eligibility 20170SB0001PN0853 - 202 - for benefits from either the system or the plan unless the provision is restricted to eligibility points accrued from specific types of State service.

20170SB0001PN0902 - 203 - (a) Superannuation annuity.--Attainment of superannuation age by an active member [or], an inactive member on leave without pay or a participant with service credited as a member of the system with three or more eligibility points other than eligibility points resulting from nonstate service or nonschool service shall entitle him to receive a superannuation annuity upon termination of State service and compliance with section 5907(f) (relating to rights and duties of State employees [and members], members and participants).

(b) Withdrawal annuity.-- (1) Any vestee or any active member [or], inactive member on leave without pay or participant with service credited as a member of the system who terminates State service having five or more eligibility points and who does not have Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit or, if a multiple service member, Class T-E or Class T-F service credit in the Public School Employees' 20170SB0001PN0853 - 203 - Retirement System, or who has Class G, Class H, Class I, Class J, Class K, Class L, Class M or Class N service and terminates State service having five or more eligibility points, upon compliance with section 5907(f), (g) or (h) shall be entitled to receive an annuity.

(2) Any vestee, active member [or], inactive member on leave without pay or participant with service credited as a member of the system who has Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit or, if a multiple service member, Class T-E or Class T-F service credit in the Public School Employees' Retirement System who terminates State service having ten or more eligibility points, upon compliance with section 5907(f), (g) or (h), shall be 20170SB0001PN0902 - 204 - entitled to receive an annuity.

20170SB0001PN0853 - 204 - (4) Notwithstanding paragraphs (2) and (3), no single life annuity determined on service credited as Class A-5 or Class A-6 shall be paid before a member attains age 62.

(c) Disability annuity.--An active member or inactive member 20170SB0001PN0902 - 205 - on leave without pay who has five or more eligibility points other than eligibility points resulting from membership in the Public School Employees' Retirement System or any active member or inactive member on leave without pay who is an officer of the Pennsylvania State Police or an enforcement officer shall, upon compliance with section 5907(k), be entitled to a disability annuity if he becomes mentally or physically incapable of continuing to perform the duties for which he is employed and qualifies in accordance with the provisions of section 5905(c) (1) (relating to duties of the board regarding applications and elections of members and participants).

Notwithstanding any provisions of this title to the contrary, the following special early retirement provisions shall be 20170SB0001PN0853 - 205 - applicable to specified eligible members [as follows]:

20170SB0001PN0902 - 206 - Any member who:

(2) Has only Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit [or] and, if a multiple service member, only Class T-E or Class T-F service credit in the Public School Employees' Retirement System and terminates State service, or if a multiple service member and an active 20170SB0001PN0853 - 206 - member of the Public School Employees' Retirement System terminates school service, with ten or more eligibility points shall be eligible until his required beginning date to vest his retirement benefits.

(3) Has either Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit [or] and, if a multiple service member, Class T-E or Class T-F service credit in the Public School Employees' Retirement System, also has service credited in the system in one or more other classes of service and has five or more, but fewer than ten, eligibility points and terminates State service, or if a multiple service member and an active member of the Public School Employees' Retirement System terminates school service, shall be 20170SB0001PN0902 - 207 - eligible until his required beginning date to vest his retirement benefits calculated on his service credited in classes of service other than Class A-3 [or], Class A-4, Class A-5 or Class A-6 and to be credited with statutory interest on total accumulated deductions, regardless of whether or not any part of his accumulated deductions are a result of Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit.

20170SB0001PN0853 - 207 - (a) Total accumulated deductions.--Any active member, regardless of eligibility for benefits, may elect to receive his total accumulated deductions by his required beginning date upon termination of service in lieu of any benefit from the system to which he is entitled.

(a) General.--Shared-risk member contributions shall be made to the fund on behalf of each member of Class A-3 [or], Class A- 4, Class A-5 or Class A-6 for current service credited [as Class A-3 or Class A-4] in each such class of service as provided 20170SB0001PN0902 - 208 - under this section, except for any period of current service in which the making of the contributions has ceased solely by reason of any provision of this part relating to the limitations under IRC § 401(a)(17) or 415.

(2) For the period from July 1, 2014, to June 30, 2017, 20170SB0001PN0853 - 208 - if the annual interest rate adopted by the board for use during the period from January 1, 2011, to December 31, 2013, for the calculation of the normal contribution rate is more than 1% greater than the actual rate of return, net of fees, of the investments of the fund based on market value over the period, the shared-risk contribution rate shall be .5%.

(3) For each subsequent three-year period, if the shared-gain adjustment to regular member contributions is zero, the shared-risk contribution rate shall be increased by .5% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of 20170SB0001PN0902 - 209 - the normal contribution rate is more than 1% greater than the actual rate of return, net of fees, of the investments of the fund based on market value over the period.

For the determination of the shared-risk contribution rate to be effective July 1, 2017, 20170SB0001PN0853 - 209 - the determination period shall be January 1, 2011, through December 31, 2016.

(6) In the event that the annual interest rate adopted by the board for the calculation is changed during the period 20170SB0001PN0902 - 210 - used to determine the shared-risk contribution rate, the board, with the advice of the actuary, shall determine the applicable rate during the entire period, expressed as an annual rate.

(8) If the actuary certifies that the accrued liability contributions calculated in accordance with the actuarial cost method provided in section 5508(b) (relating to actuarial cost method), as adjusted by the experience 20170SB0001PN0853 - 210 - adjustment factor, are zero or less, then the shared-risk contribution rate for the next fiscal year shall be zero and shall not subsequently be increased, except as otherwise provided in this section.

20170SB0001PN0902 - 211 - (2) For the period from July 1, 2017, to June 30, 2020, if the shared-risk contribution rate for Class A-3, Class A- 4, Class A-5 and Class A-6 service is zero and annual interest rate adopted by the board for use during the period from January 1, 2011, to December 31, 2016, for the calculation of the normal contribution rate is more than 1% lower than the actual rate of return, net of fees, of the investments of the fund based on market value over the period, then the regular member contribution rate of each member for Class A-3, Class A-4, Class A-5 or Class A-6 service shall be reduced by .5%.

(3) For each subsequent three-year period, the regular member contribution rate shall be decreased by .5% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal 20170SB0001PN0853 - 211 - contribution rate is more than 1% lower than the actual rate of return, net of fees, of the investments of the fund based on market value over the period.

and the amount of the adjustment to a lower 20170SB0001PN0902 - 212 - regular member contribution rate may not be greater than the reduction in the actuarially required contribution rate by the experience adjustment factor resulting from investment gains or losses during the determination period in effect on the first day when the new rate would be applied, expressed as a percentage of member compensation.

20170SB0001PN0853 - 212 - (6) If the annual interest rate adopted by the board for the calculation is changed during the period used to determine the shared-gain adjustment to the regular member contribution rate, the board, with the advice of the actuary, shall determine the applicable rate during the entire period, expressed as an annual rate.

Except for any period of current service in which the making 20170SB0001PN0902 - 213 - of regular member contributions has ceased solely by reason of section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or any provision of this part relating to limitations under IRC § 401(a)(17) or 415, contributions shall be made on behalf of [a] an active member of any class who prior to March 1, 1974, has elected Social Security integration coverage.

Provided, That a member may elect to discontinue Social Security integration coverage and shall thereafter be ineligible to accrue any further Social Security integration 20170SB0001PN0853 - 213 - credits or any additional benefits on account of Social Security integration membership.

(a) Treatment for purposes of IRC § 414(h).--All contributions to the fund required to be made under sections 5501 (relating to regular member contributions for current service), 5501.1 (relating to shared-risk member contributions [for Class A-3 and Class A-4 service] and shared-gain adjustments to regular member contributions), 5502 (relating to 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 20170SB0001PN0902 - 214 - or after January 1, 1982, shall be picked up by the Commonwealth or other employer and shall be treated as the employer's contribution for purposes of IRC § 414(h).

(a) Amount of contributions for service in other than Class G through N.-- (1) The contributions to be paid by an active member or eligible school employee for credit in the system for the portion of total previous State service other than service in Class G, Class H, Class I, Class J, Class K, Class L, Class M and Class N that a member is eligible to have credited or to become a full coverage member shall be sufficient to provide an amount equal to the regular accumulated deductions, shared-risk accumulated deductions and additional accumulated 20170SB0001PN0853 - 214 - deductions which would have been standing to the credit of the member for such service had regular accumulated deductions, shared-risk accumulated deductions and additional member contributions been made with full coverage in the class of service and at the rate of contribution applicable during such period of previous service and had his regular and additional accumulated deductions been credited with statutory interest during all periods of subsequent State and school service up to the date of purchase.

(2) Notwithstanding paragraph (1), members [with Class A-3 State service] who are performing State service credited in Class A-3, Class A-4, Class A-5 or Class A-6 shall make contributions and receive credit as if [the previous] 20170SB0001PN0902 - 215 - previously uncredited State service was [Class A-3 service, and members with Class A-4 State service shall make contributions and receive credit as if the previous State service was Class A-4 service,] performed in the class in which they are an active member at the time the service is credited even if it would have been credited as a different class of service had the State employee been a member of the system at the time the service was performed unless it was mandatory that the State employee be an active member of the system and the previous State service is being credited as the result of a mandatory active membership requirement.

Notwithstanding section 5303(b) (relating to retention and reinstatement of service credits) a State employee who is an active member of the system as a result of concurrently performing service in more than one position or office at the time previously uncredited State service is credited shall elect which position or office is used for the determination 20170SB0001PN0853 - 215 - of required contributions and crediting and classification of the previously uncredited service.

(b) Certification and method of payment.-- (1) The amount payable shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 30 days or in the case of an active member or eligible school employee who 20170SB0001PN0902 - 216 - is an active member of the Public School Employees' Retirement System may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

(2) No payments for service or coverage shall be allowed for which the required contributions would cause a violation 20170SB0001PN0853 - 216 - of the limitation related to contributions applicable to governmental plans contained in IRC § 415.

Contributions for the purchase of credit for creditable 20170SB0001PN0902 - 217 - nonstate service.

Upon application for credit for such service, payment shall be 20170SB0001PN0853 - 217 - made in a lump sum within 30 days or in the case of an active member or eligible school employee who is an active member of the Public School Employees' Retirement System it may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

In the case of an eligible school employee who is an active member of the Public School 20170SB0001PN0902 - 218 - Employees' Retirement System, the agreed upon salary deductions shall be remitted to the Public School Employees' Retirement Board, which shall certify and transfer to the board the amounts paid.

(1.2) In the case of an active member who is purchasing the military service as Class A-5 service, for purposes of paragraph (1), the Commonwealth normal contribution rate for 20170SB0001PN0853 - 218 - active members at the time of entry, subsequent to the military service, shall be determined using only the average new Class A-5 member, and the member's basic contribution rate shall be multiplied by the class of service multiplier used to calculated regular member contributions for Class A-5 service.

(1.3) In the case of an active member who is purchasing the military service as Class A-6 service, for purposes of paragraph (1), the Commonwealth normal contribution rate for active members at the time of entry, subsequent to the military service, shall be determined using only the average new Class A-6 member, and the member's basic contribution rate shall be multiplied by the class of service multiplier 20170SB0001PN0902 - 219 - used to calculate regular member contributions for Class A-6 service.

(c) Intervening military service.--Contributions on account of credit for intervening military service shall be determined by the member's regular contribution rate, shared-risk contribution rate, Social Security integration contribution rate, the additional contribution rate which shall be applied only to those members who began service on or after the effective date of this amendatory act and compensation as a member of the system at the time of entry of the member into 20170SB0001PN0853 - 219 - active military service, together with statutory interest during all periods of subsequent State and school service to date of purchase.

or (3) salary deductions to the system in amounts agreed upon by the member or eligible school employee who is an active member of the Public School Employees' Retirement 20170SB0001PN0902 - 220 - System and the board.

(d) Nonmilitary and nonmagisterial service.--Contributions on account of credit for creditable nonstate service other than military and magisterial service by State employees who first become members of the system before January 1, 2011, or before December 1, 2010, as a member of the General Assembly shall be 20170SB0001PN0853 - 220 - determined by applying the member's basic contribution rate, the additional contribution rate plus the Commonwealth normal contribution rate for active members at the time of entry subsequent to such creditable nonstate service of the member into State service to his compensation as a member of the system at the time of entry into State service and multiplying the result by the number of years and fractional part of a year of creditable nonstate service being purchased together with statutory interest during all periods of subsequent State and school service to the date of purchase.

Upon application for credit for such service payment shall be made in a lump sum within 30 days or in the case of an active member or eligible school employee who is an active member of the Public School 20170SB0001PN0902 - 221 - Employees' Retirement System it may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

* * * (i) Purchases of nonstate service credit by State employees who first became members of the system on or after December 1, 20170SB0001PN0853 - 221 - 2010.-- * * * (2) The full actuarial cost of the increased benefit attributable to the purchased nonstate service credit shall be the difference between:

and] by a member of Class A-3 or Class A-4 who first becomes a member of the system before January 1, 2018, and assuming Class A-5 service credit for the nonstate service to be purchased by a member of Class A-5 and assuming Class A-6 service 20170SB0001PN0902 - 222 - credit for the nonstate service to be purchased by a member of Class A-6;

The salary deduction amortization plans agreed to by members and the board may include a deferral of payment 20170SB0001PN0853 - 222 - amounts and interest until the termination of school service or State service as the board in its sole discretion decides to allow.

* * * (k) Inapplicability of election and adjustments.--If a member is purchasing creditable nonstate service, the regular 20170SB0001PN0902 - 223 - member contribution rate used to determine the contributions necessary to purchase such credit shall be determined without regard to any adjustments applicable under section 5501.1(c) (relating to shared-risk member contributions and shared-gain adjustments to regular member contributions).

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 20170SB0001PN0853 - 223 - 103-66, 107 Stat.

Section 5507(a), (b) and (d) of Title 71 are 20170SB0001PN0902 - 224 - amended and the section is amended by adding subsections to read:

(a) Contributions on behalf of active members.--The Commonwealth and other employers whose employees are members of the system or participants in the plan shall make contributions to the fund on behalf of all active members in such amounts as shall be certified by the board as necessary to provide, together with the members' total accumulated deductions, annuity reserves on account of prospective annuities other than those provided in sections 5708 (relating to supplemental annuities), 5708.1 (relating to additional supplemental annuities), 5708.2 (relating to further additional supplemental annuities), 5708.3 (relating to supplemental annuities commencing 1994), 5708.4 (relating to special supplemental postretirement adjustment), 5708.5 (relating to supplemental annuities commencing 1998), 20170SB0001PN0853 - 224 - 5708.6 (relating to supplemental annuities commencing 2002), 5708.7 (relating to supplemental annuities commencing 2003) and 5708.8 (relating to special supplemental postretirement adjustment of 2002), in accordance with the actuarial cost method provided in section 5508(a), (b), (c), (d) and (f) (relating to actuarial cost method).

20170SB0001PN0902 - 225 - (b.1) Payment of employer contributions to the system.-- (1) Payment of employer normal contributions shall be as a percentage of compensation of active members.

* * * 20170SB0001PN0853 - 225 - (g) Payment of additional accrued liability contributions.-- In addition to all other contributions required under this section and sections 5508 and 5941, the Commonwealth and other employers whose employees are members of the system or participants in the plan shall make contributions as certified by the board as a percentage of the compensation of each member and each participant as provided in this subsection, unless the actuary certifies that the accrued liability contribution rate determined under section 5508(c) is zero or less for that fiscal year.

Fiscal year Additional accrued liability 20170SB0001PN0902 - 226 - beginning date contribution rate July 1, 2017 0.00% July 1, 2018 0.68% July 1, 2019 0.64% July 1, 2020 0.61% July 1, 2021 0.58% July 1, 2022 0.00% July 1, 2023 0.00% July 1, 2024 0.00% July 1, 2025 0.00% July 1, 2026 0.00% July 1, 2027 0.00% July 1, 2028 0.00% July 1, 2029 0.00% July 1, 2030 0.06% July 1, 2031 0.19% July 1, 2032 0.31% 20170SB0001PN0853 - 226 - July 1, 2033 0.42% July 1, 2034 0.53% July 1, 2035 0.63% July 1, 2036 0.73% July 1, 2037 0.82% July 1, 2038 0.90% July 1, 2039 0.98% July 1, 2040 1.05% Section 314.

(a) Employer contribution rate on behalf of active 20170SB0001PN0902 - 227 - members.--[The] For each fiscal year, the amount of the Commonwealth and other employer contributions on behalf of all active members shall be computed by the actuary as a percentage of the total compensation of all active members during the period for which the amount is determined and shall be so certified by the board.

The 20170SB0001PN0853 - 227 - employer normal contribution rate shall be determined as [a level percentage of the compensation of the average new active member, which percentage, if contributed on the basis of his prospective compensation through his entire period of active State service, would be sufficient to fund the liability for any prospective benefit payable to him in excess of that portion funded by his prospective member contributions, excluding shared-risk member contributions.] follows:

(1) For fiscal years through fiscal year 2021-2022, as a level percentage of the compensation of the average new active member, which percentage, if contributed on the basis of his prospective compensation through his entire period of active State service, would be sufficient to fund the 20170SB0001PN0902 - 228 - liability for any prospective benefit payable to him in excess of that portion funded by his prospective member contributions, excluding shared-risk member contributions and shared-gain adjustments to regular member contributions.

In no case shall the 20170SB0001PN0853 - 228 - employer normal contribution rate in the aggregate or for each class of service separately be less than zero.

(c) Accrued liability contribution rate.-- (1) For the fiscal years beginning July 1, 2002, and July 1, 2003, the accrued liability contribution rate shall be computed as the rate of total compensation of all active members which shall be certified by the actuary as sufficient to fund over a period of ten years from July 1, 2002, the present value of the liabilities for all prospective benefits, except for the supplemental benefits as provided in sections 5708 (relating to supplemental annuities), 5708.1 (relating to additional supplemental annuities), 5708.2 (relating to further additional supplemental annuities), 20170SB0001PN0902 - 229 - 5708.3 (relating to supplemental annuities commencing 1994), 5708.4 (relating to special supplemental postretirement adjustment), 5708.5 (relating to supplemental annuities commencing 1998), 5708.6 (relating to supplemental annuities commencing 2002), 5708.7 (relating to supplemental annuities commencing 2003) and 5708.8 (relating to special supplemental postretirement adjustment of 2002), in excess of the total assets in the fund (calculated recognizing all investment gains and losses over a five-year period), excluding the balance in the supplemental annuity account, and the present value of employer normal contributions and of member contributions payable with respect to all active members on December 31, 2001, and excluding contributions to be transferred by county retirement systems or pension plans pursuant to section 5507(c) (relating to contributions to the system by the Commonwealth and other employers).

The amount of each annual accrued liability contribution shall be equal 20170SB0001PN0853 - 229 - to the amount of such contribution for the fiscal year beginning July 1, 2002, except that, if the accrued liability is increased by legislation enacted subsequent to June 30, 2002, but before July 1, 2003, such additional liability shall be funded over a period of ten years from the first day of July, coincident with or next following the effective date of the increase.

* * * (4) For fiscal years beginning on or after July 1, 2017, the accrued liability contribution rate shall be computed as 20170SB0001PN0902 - 230 - provided for under this section, except that the rate shall be computed as a rate of total compensation of all active members and active participants for the applicable period.

* * * (e) Supplemental annuity contribution rate.-- * * * 20170SB0001PN0853 - 230 - (2) For fiscal years beginning on or after July 1, 2010, contributions from the Commonwealth and other employers whose employees are members of the system required to provide for the payment of supplemental annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8 shall be paid as part of the accrued liability contribution rate as provided for in subsection (c)(3), and there shall not be a separate supplemental annuity contribution rate attributable to those supplemental annuities.

In the event that supplemental annuities are increased by legislation enacted subsequent to December 31, 2009, the additional liability for the increase in benefits shall be funded in equal dollar installments as a percentage 20170SB0001PN0902 - 231 - of compensation of all active members and active participants over a period of ten years from the first day of July following the valuation date coincident with or next following the date such legislation is enacted.

(f) Experience adjustment factor.-- (1) For each fiscal year after the establishment of the accrued liability contribution rate and the supplemental annuity contribution rate for the fiscal year beginning July 1, 2010, any increase or decrease in the unfunded accrued liability and any increase or decrease in the liabilities and funding for supplemental annuities, due to actual experience differing from assumed experience (recognizing all realized and unrealized investment gains and losses over a five-year period), changes in contributions caused by the final contribution rate being different from the actuarially required contribution rate, State employees making shared- risk member contributions or having shared-gain adjustments 20170SB0001PN0853 - 231 - to their regular member contributions, payment of additional accrued liability contributions under section 5507 (g), changes in actuarial assumptions or changes in the terms and conditions of the benefits provided by the system by judicial, administrative or other processes other than legislation, including, but not limited to, reinterpretation of the provisions of this part, shall be amortized in equal dollar annual contributions as a percentage of compensation of all active members and active participants over a period of 30 years beginning with the July 1 succeeding the actuarial valuation determining said increases or decreases.

(2) The actuarially required contribution rate shall be the sum of the normal contribution rate, the accrued 20170SB0001PN0902 - 232 - liability contribution rate and the supplemental annuity contribution rate, modified by the experience adjustment factor as calculated in paragraph (1).

If, for any of the fiscal years beginning July 1, 2011, July 1, 2012, and on or after July 1, 2013, the actuarially required contribution rate calculated without regard for costs added by legislation is more than 3%, 3.5% and 4.5%, respectively, of the total compensation of all active members greater than the prior year's final contribution rate, then the collared contribution rate shall be applied and be equal to the prior year's final contribution rate increased by the respective percentage above of total 20170SB0001PN0853 - 232 - compensation of all active members.

(a) Annual submission of budget.--The board shall prepare and submit annually an itemized budget consisting of the amounts necessary to be appropriated by the Commonwealth out of the General Fund and special operating funds and the amounts to be assessed the other employers required to meet the separate 20170SB0001PN0902 - 233 - obligations to the fund and the trust accruing during the fiscal period beginning the first day of July of the following year.

20170SB0001PN0853 - 233 - (c) Contributions from funds other than General Fund.--The amounts assessed other employers who are required to make the necessary separate contributions to the fund and the trust out of funds other than the General Fund shall be paid by such employers into the fund or trust in accordance with requisitions presented by the board.

In case any such other employer shall fail to provide to the fund the moneys necessary for such purpose, then the service of such members of the system for such period for which money is not so 20170SB0001PN0902 - 234 - provided shall be credited and pickup contributions with respect to such members shall continue to be credited to the members' savings account.

(a) Limited expansion of contractual right to funding.-- Commencing on the July 1 following the actuarial valuation in which the actuary certifies that the final contribution rate is the actuarially required contribution, each active member shall 20170SB0001PN0853 - 234 - have a contractual right to the timely payment of the annual actuarially required contributions under sections 5508 (relating to actuarial cost method) and 5902(k) (relating to administrative duties of the board) by such member's employer.

(2) Any claim of contract impairment shall be brought against the employer of the member for whom contributions were not paid, and neither the board nor the system or their employees or agents shall be a defendant in any such action or liable for any payments or damages arising from such 20170SB0001PN0902 - 235 - impairment.

85 (relating to 20170SB0001PN0853 - 235 - matters affecting government units) or lack of jurisdiction by the Supreme Court shall not be raised as a defense against a claim brought against an employer under this section.

20170SB0001PN0902 - 236 - (f) Employer contributions.--Nothing in this section shall be deemed to supersede or conflict with the rights and obligations set forth in section 5509 (relating to appropriations and assessments by the Commonwealth).

When an employee of the Juvenile Court Judges' Commission elects membership in an independent retirement program pursuant to section 5301(f) (relating to mandatory and optional membership in the system and participation in the plan), the board shall transfer directly to the trustee or administrator of 20170SB0001PN0853 - 236 - the independent retirement program all accumulated deductions resulting from service credited while an employee of the Juvenile Court Judges' Commission.

(a) General rule.--Any full coverage member who is eligible to receive an annuity pursuant to the provisions of section 5308(a) or (b) (relating to eligibility for annuities) who terminates State service, or if a multiple service member who is a school employee who is an active member of the Public School Employees' Retirement System who terminates school service, 20170SB0001PN0902 - 237 - before attaining age 70 shall be entitled to receive a maximum single life annuity attributable to his credited service and equal to the sum of the following single life annuities beginning at the effective date of retirement:

Provided, however, That any standard single life annuity resulting from 20170SB0001PN0853 - 237 - Class A-5 service or Class A-6 service shall be reduced by a percentage determined by multiplying the number of months, including a fraction of a month as a full month, by which the effective date of retirement precedes superannuation age by 0.25% if the effective date of retirement is on or after the date the member has attained age 62 and the member has 25 or more eligibility points.

In the event a member has two multipliers for one class of service [the class of service multiplier to be used for calculating benefits for that class shall be the average 20170SB0001PN0902 - 238 - of the two multipliers weighted by the proportion of compensation attributable to each multiplier during the three years of highest annual compensation in that class of service:

The average class of service multiplier to be used for calculating benefits for his judicial service shall be the average of the two calculated multipliers weighted by the proportion of compensation attributable to each of the calculated multipliers during the three years of highest annual compensation in that class of service.], separate standard 20170SB0001PN0853 - 238 - single life annuities shall be calculated for the portion of service in such class applicable to each class of service multiplier.

* * * 20170SB0001PN0902 - 239 - (4) If eligible, a single life annuity which is actuarially equivalent to the amount by which his regular and additional accumulated deductions attributable to any credited service other than as a member of Class A-3, Class A-4, Class A-5, Class A-6 and Class C are greater than one- half of the actuarially equivalent value on the effective date of retirement of the annuity as provided in paragraph (1) attributable to service other than Class A-3, Class A-4, Class A-5, Class A-6 and Class C for which regular or joint coverage member contributions were made.

[This paragraph shall not apply to any member with State service credited as Class A-3 or Class A-4.] * * * (6) If eligible, a single life annuity sufficient together with the annuity provided for in paragraph (1) as a Class A, Class AA, Class A-3 [and], Class A-4, Class A-5 or Class A-6 member and the highest annuity provided for in 20170SB0001PN0853 - 239 - paragraph (2) to which he is entitled, or at his option could have been entitled, to produce that percentage of [a] the sums of the standard single life [annuity] annuities adjusted by the application of the class of service multiplier for Class A, Class AA, Class A-3 [or], Class A-4, Class A-5 or Class A-6 as set forth in paragraph (1) in the case where any service is credited as a member of Class A, Class AA, Class A-3 [or], Class A-4, Class A-5 or Class A-6 on the effective date of retirement as determined by his total years of credited service as a member of Class A, Class AA, Class A-3 [and], Class A-4, Class A-5 or Class A-6 and by the following table:

Total Years of Percentage of Sums of 20170SB0001PN0902 - 240 - Credited Service Standard as a Member of Single Life Class A, [Annuity] Annuities Adjusted for Class AA, Class A-3 Class A, Class AA, [and], Class A-4, Class A-5 Class A-3 [and], Class A-4, and Class A-6 Class A-5 and Class A-6 Class of Service Multipliers 35-40 100% 41 102% 42 104% 43 106% 44 108% 45 or more 110% * * * (b) Present value of annuity.--The present value of the maximum single life annuity as calculated in accordance with 20170SB0001PN0853 - 240 - subsection (a) of this section shall be determined by multiplying the maximum single life annuity by the cost of a dollar annuity on the effective date of retirement[.], which shall take into account any delay in the receipt of the portion of the annuity based on Class A-5 service or Class A-6 service if the effective date of retirement is before the member attains age 62.

(c) Limitation on amount of annuity.--The annuity paid to a member under subsection (a) and reduced in accordance with the 20170SB0001PN0902 - 241 - option elected under section 5705 (relating to member's options) shall not exceed the highest compensation received as a member of the system during any period of twelve consecutive months of credited service.

(a) Amount of annuity.--A member who has made application for a disability annuity and has been found to be eligible in accordance with the provisions of section 5905(c)(1) (relating to duties of the board regarding applications and elections of 20170SB0001PN0853 - 241 - members and participants) shall receive a disability annuity payable from the effective date of disability as determined by the board and continued until a subsequent determination by the board that the annuitant is no longer entitled to a disability annuity.

[The] If the sum of the products of the number of years and fractional part of a year of credited service in each class and the appropriate class of service multiplier is greater than 16.667, the disability annuity shall be a single life annuity that is equal to [a] the sum of the standard single life [annuity] annuities determined separately for each class of service multiplied by the appropriate class of service multiplier [applicable to the class of service at the time of disability if the product of such class of service multiplier 20170SB0001PN0902 - 242 - and the total number of years of credited service is greater than 16.667, otherwise the], otherwise each standard single life annuity shall be multiplied by the lesser of the following ratios:

The member shall be entitled to the election of a 20170SB0001PN0853 - 242 - joint and survivor annuity on that portion of the disability annuity to which he is entitled under section 5702.

and 20170SB0001PN0902 - 243 - [(ii)] (2) the ratio of the current monthly payment to the monthly payment at the effective date of disability;

and who] does not return to State service may file an application with the board for an amount equal to the excess, if any, of the sum of the shared-risk accumulated deductions plus the regular and additional accumulated deductions standing to 20170SB0001PN0853 - 243 - his credit at the effective date of disability over one-third of the total disability annuity payments received.

(f) Supplement for service connected disability.-- (1) If a member has been found to be eligible for a disability annuity and if the disability has been found to be a service connected disability and if the member is receiving workers' compensation payments for other than medical benefits, such member shall receive a supplement equal to 20170SB0001PN0902 - 244 - [70% of his final average salary] the amount determined under paragraph (2) less the sum of the annuity as determined under subsection (a) and any payments paid or payable on account of such disability under the act of June 2, 1915 (P.L.736, No.338), known as the Workers' Compensation Act, the act of June 21, 1939 (P.L.566, No.284), known as The Pennsylvania Occupational Disease Act, and the Social Security Act (49 Stat.

If the member has received a lump sum workers' compensation payment in lieu of future weekly compensation payments, the length in weeks and calculation of the service connected disability supplement shall be determined by dividing the lump sum 20170SB0001PN0853 - 244 - payment by the average weekly wage as determined by the Workers' Compensation Board.

(i) A equals the amount used to determine the 20170SB0001PN0902 - 245 - supplement;

W (iv) FAS equals final average salary calculated for credited service other than Class A-5 or Class A-6 service;

P (v) Y equals years of service credited as Class A-5 or Class A-6 service;

and P (vi) FAS equals final average salary calculated for service credited as Class A-5 or Class A-6 service.

20170SB0001PN0853 - 245 - (a) General rule.--Any special vestee [who has attained superannuation age, any vestee who does not have Class A-3 or Class A-4 service credit having five or more eligibility points for service other than Class T-E or Class T-F service in the Public School Employees' Retirement System, or vestee who has Class A-3 or Class A-4 service credit having ten or more eligibility points, any member with Class G, Class H, Class I, Class J, Class K, Class L, Class M or Class N service having five or more eligibility points or any other eligible member upon termination of State service who has not withdrawn his total accumulated deductions as provided in section 5701 (relating to return of total accumulated deductions)], vestee or any other member upon termination of State service who is 20170SB0001PN0902 - 246 - eligible to receive an annuity as provided in section 5308(a) or (b) (relating to eligibility for annuities) may apply for and elect to receive either a maximum single life annuity, as calculated in accordance with the provisions of section 5702 (relating to maximum single life annuity), or a reduced annuity certified by the actuary to be actuarially equivalent to the maximum single life annuity payable after reduction under subsection (a.1) and in accordance with one of the following options;

except that no member shall elect an annuity payable to one or more survivor annuitants other than his spouse or alternate payee of such a magnitude that the present value of the annuity payable to him for life plus any lump sum payment under this subsection and subsection (a.1) he may have elected to receive is less than 50% of the present value of his maximum single life annuity and no member may elect a payment option that would provide benefits that do not satisfy the minimum distribution requirements or would violate the incidental death 20170SB0001PN0853 - 246 - benefit rules of IRC § 401(a)(9):

(3) Option 3.--A joint and fifty percent (50%) survivor annuity payable during the lifetime of the member with one- 20170SB0001PN0902 - 247 - half of such annuity payable thereafter to his survivor annuitant, if living at his death.

and (iii) a portion of the benefit may be payable as a lump sum, except that such lump sum payment shall not exceed an amount equal to the total accumulated deductions standing to the credit of the member that are not the result of contributions and statutory interest 20170SB0001PN0853 - 247 - made or credited as a result of Class A-3 [or], Class A- 4, Class A-5 or Class A-6 service.

(1) If a member has an effective date of retirement after December 31, 2017, and has elected to have the full amount allowed under subsection (a)(4)(iii) paid in lump sum, 20170SB0001PN0902 - 248 - or is not eligible to have any money paid under subsection (a)(4)(iii), then the member may elect to receive an additional amount payable in a lump sum at the same time as the payment elected under subsection (a)(4)(iii), if any.

(3) If a member elects to be paid an additional lump sum amount under this subsection, then the maximum single life annuity calculated under section 5702 and payable under subsection (a) shall be reduced by the additional amount withdrawn divided by the cost of a dollar annuity on the effective date of retirement computed on the basis of the annual interest rate adopted for that fiscal year by the board for the calculation of the employer normal contribution 20170SB0001PN0853 - 248 - rate under section 5508(b) (relating to actuarial cost method) and the mortality tables adopted by the board for the determination of actuarially equivalent benefits under this part.

20170SB0001PN0902 - 249 - Any superannuation or withdrawal annuitant who:

Payment of these accumulated deductions resulting from Class A-3 [or], Class A-4, Class A-5 or Class A-6 service credit shall not be eligible for installment payments pursuant to section 5905.1 (relating to installment payments of accumulated deductions) but shall be considered a lump sum payment for purposes of section 20170SB0001PN0853 - 249 - 5905.1(d).

and, in the 20170SB0001PN0902 - 250 - 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.

(2) This subsection shall not apply in the case of any 20170SB0001PN0853 - 250 - annuitant who:

or (B) as a member of an independent board or 20170SB0001PN0902 - 251 - commission requiring appointment by the Governor, with advice and consent of the Senate, where the annual salary payable to the member does not exceed $35,000 and where the member has been an annuitant for at least six months immediately preceding the appointment.

The amount payable shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 30 days or in the case of an active member or school employee 20170SB0001PN0853 - 251 - who is an active member of the Public School Employees' Retirement System may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board.

In the case of a school employee who is an active member of the Public School Employees' Retirement System, the agreed upon salary deductions shall be remitted to the Public School Employees' Retirement Board, which shall 20170SB0001PN0902 - 252 - certify and transfer to the board the amounts paid.

(b) Subsequent discontinuance of service.--Upon subsequent discontinuance of service, such [member] terminating State employee other than a former annuitant who 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] to which shall be added, if the service after reemployment was as a 20170SB0001PN0853 - 252 - member of the system, 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 as a member of the system or as a member of the Public School Employees' Retirement System during his entire period of State and school service.