Bill Text: PA SB1185 | 2009-2010 | Regular Session | Introduced

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Bill Title: In retirement for school employees, further providing for definitions and for construction of part; in membership, contributions and benefits, further providing for eligibility points for retention and reinstatement of service credits, for creditable nonschool service, for classes of service, for eligibility for annuities, for eligibility for vesting, for member contributions for creditable school service, for contributions for purchase of credit for creditable nonschool service, for actuarial cost method and for member's options; in administration and miscellaneous provisions, establishing the individual annuity savings account; further providing for payments to school entities by Commonwealth; and establishing a defined contribution retirement benefit program.

Spectrum: Partisan Bill (Republican 6-0)

Status: (Introduced - Dead) 2010-02-03 - Referred to FINANCE [SB1185 Detail]

Download: Pennsylvania-2009-SB1185-Introduced.html

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PRINTER'S NO. 1672
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1185 Session of2010
INTRODUCED BY YAW, BAKER, M. WHITE, EARLL AND BRUBAKER, FEBRUARY 3, 2010
REFERRED TO FINANCE, FEBRUARY 3, 2010
AN ACT
Amending Title 24 (Education) of the Pennsylvania Consolidated
Statutes, in retirement for school employees, further
providing for definitions and for construction of part; in
membership, contributions and benefits, further providing for
eligibility points for retention and reinstatement of service
credits, for creditable nonschool service, for classes of
service, for eligibility for annuities, for eligibility for
vesting, for member contributions for creditable school
service, for contributions for purchase of credit for
creditable nonschool service, for actuarial cost method and
for member's options; in administration and miscellaneous
provisions, establishing the individual annuity savings
account; further providing for payments to school entities by
Commonwealth; and establishing a defined contribution
retirement benefit program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "basic contribution rate,"
"class of service multiplier," "standard single life annuity,"
"superannuation or normal retirement age" and "vestee" in
section 8102 of Title 24 of the Pennsylvania Consolidated
Statutes are amended and the section is amended by adding
definitions to read:
§ 8102. Definitions.
The following words and phrases when used in this part shall
have, unless the context clearly indicates otherwise, the
meanings given to them in this section:
* * *
"Basic contribution rate." For Class T-A, T-B and T-C
service, the rate of 6 1/4%. For Class T-D service, the rate of
7 1/2%. For all active members on the effective date of this
provision who are currently paying 5 1/4% and elect Class T-D
service, the rate of 6 1/2%. For Class T-E service, the rate of
3.25%.
* * *
"Class of service multiplier."
Class of service Multiplier
T-A .714
T-B .625
T-C 1.000
T-D 1.000
T-E 1.000
* * *
"Funded ratio." The ratio, expressed as a percentage, of the
actuarial value of assets of the fund divided by the actuarial
accrued liabilities of the system for benefits related to
current members, beneficiaries and survivor annuitants,
excluding any assets and liabilities associated with the premium
assistance program.
* * *
"Individual annuity savings account." The ledger account to
which are credited the amounts of the contributions made by the
employer and contributions or lump sum payments made by Class
T-E members in accordance with the provisions of Chapter 86
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(relating to defined contribution retirement benefit program),
together with all interest and investment earnings.
"Individual annuity savings plan." The defined contribution
benefit plan established by the board exclusively for the
benefit of Class T-E members in conformity with section 401(a)
of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. § 401(a)).
* * *
"Standard single life annuity." For Class T-A, T-B and T-C
credited service of a member, an annuity equal to 2% of the
final average salary, multiplied by the total number of years
and fractional part of a year of credited service of a member.
For Class T-D credited service of a member, an annuity equal to
2.5% of the final average salary, multiplied by the total number
of years and fractional part of a year of credited service. For
Class T-E credited service of a member, an annuity equal to 1%
of the final average salary, multiplied by the total number of
years and fractional part of a year of credited service.
* * *
"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 and T-E 62 or age 60 provided the member has at least 30 eligibility points or any age upon accrual of 35 eligibility points
* * *
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"Vestee." A member with five or more eligibility points who
has terminated school service, has left his accumulated
deductions in the fund and is deferring filing of an application
for receipt of an annuity. For Class T-E members, a member with
ten or more eligibility points who has terminated school
service, has left his accumulated deductions in the fund and is
deferring filing of an application for receipt of an annuity.
Section 2. Section 8103 of Title 24 is amended by adding a
subsection to read:
§ 8103. Construction of part.
* * *
(c) Construction of part with regard to pension rights and
rights relating to individual annuity savings plan.--
Notwithstanding any other provision of law, pension benefit
rights of school employees and any rights or benefits of Class
T-E members relating to the individual annuity savings plan
provided for in Chapter 86 (relating to defined contribution
retirement benefit program) shall be determined solely by this
part and regulations hereunder, and no collective bargaining
agreement nor any arbitration award between any school entity or
school employer and its employees or their collective bargaining
representatives shall be construed to change any of the
provisions in this part to require the board to administer
pension or retirement benefits not set forth in this part, nor
otherwise require action by any other government body pertaining
to pension benefits or rights of school employees or benefits or
rights of Class T-E members relating to the individual annuity
savings plan.
Section 3. Sections 8303(c) and 8304(a) of Title 24 are
amended to read:
20100SB1185PN1672 - 4 -
§ 8303. Eligibility points for retention and reinstatement of
service credits.
* * *
(c) Purchase of previous creditable service.--Every active
member of the system or a multiple service member who is an
active member of the State Employees' Retirement System on or
after the effective date of this part may purchase credit and
receive eligibility points:
(1) as a member of Class T-C or T-E, as applicable, for
previous school service or creditable nonschool service; or
(2) as a member of Class T-D for previous school
service, provided the member elects to become a Class T-D
member pursuant to section 8305.1 (relating to election to
become a Class T-D member);
upon written agreement by the member and the board as to the
manner of payment of the amount due for credit for such service;
except, that any purchase for reinstatement of service credit
shall be for all service previously credited.
§ 8304. Creditable nonschool service.
(a) Eligibility.--An active member or a multiple service
member who is an active member of the State Employees'
Retirement System shall be eligible to receive Class T-C or T-E,
as applicable, service credit for creditable nonschool service
and Class T-D service for intervening military service, provided
the member becomes a Class T-D member pursuant to section 8305.1
(relating to election to become a Class T-D member) or 8305
(relating to classes of service), as set forth in subsection (b)
provided that he is not entitled to receive, eligible to receive
now or in the future, or is receiving retirement benefits for
such service under a retirement system administered and wholly
20100SB1185PN1672 - 5 -
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 8301(a)(1) (relating to
mandatory and optional membership), and further provided that
such service is certified by the previous employer and the
manner of payment of the amount due is agreed upon by the
member, the employer, and the board.
* * *
Section 4. Section 8305(a), (b) and (c)(1) of Title 24 are
amended and the section is amended by adding a subsection to
read:
§ 8305. Classes of service.
(a) Class T-C membership.--A school employee who is a member
of Class T-C on the effective date of this part [or who becomes
a member of the system subsequent to the effective date of this
part] shall be classified as a Class T-C member, provided the
school employee does not become a member of Class T-D pursuant
to subsection (c).
(b) Other class membership.--[A] Other than those school
employees covered in subsection (d), a school employee who is a
member of a class of service other than Class T-C on the
effective date of this part may elect to become a member of
Class T-C or Class T-D or may retain his membership in such
other class until the service is discontinued or he elects to
become a full coverage member or elects to purchase credit for
previous school or creditable nonschool service. Any service
thereafter shall be credited as Class T-C or T-D service as
applicable.
(c) Class T-D membership.--
(1) [A] Other than those persons covered in subsection
20100SB1185PN1672 - 6 -
(d), a person who becomes a school employee and an active
member, or a person who becomes a multiple service member who
is a State employee and a member of the State Employees'
Retirement System, on or after the effective date of this
subsection shall be classified as a Class T-D member upon
payment of regular member contributions. Any prior school
service credited as Class T-C service shall be credited as
Class T-D service, subject to the limitations contained in
paragraph (4).
* * *
(d) Class T-E membership.--A school employee who becomes a
member of the system after June 30, 2010, shall be classified as
a Class T-E member.
Section 5. Sections 8307(b), 8308, 8323(a), (c) and (c.1),
8324, 8328(a) and 8345(a) of Title 24 are amended to read:
§ 8307. Eligibility for annuities.
* * *
(b) Withdrawal annuity.--[A] For Class T-E members, any
vestee with ten or more eligibility points or an active or
inactive member who terminates school service having ten or more
eligibility points shall, upon filing a proper application, be
entitled to receive an early annuity. Any other vestee with five
or more eligibility points or an active or inactive member who
terminates school service having five or more eligibility points
shall, upon filing a proper application, be entitled to receive
an early annuity.
* * *
§ 8308. Eligibility for vesting.
Any Class T-E member who terminates school service with ten
or more eligibility points shall be entitled to vest his
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retirement benefits until attainment of superannuation age. Any
other member who terminates school service with five or more
eligibility points shall be entitled to vest his retirement
benefits until attainment of superannuation age.
§ 8323. Member contributions for creditable school service.
(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 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 contributions been
made with full coverage at the rate of contribution necessary to
be credited as Class T-C service [or], Class T-D service if the
member is a Class T-D member or Class T-E service if the member
is a Class T-E 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
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
or to Class T-E if the member is a Class T-E member and further
to provide an annuity as a Class T-C member [or], Class T-D
20100SB1185PN1672 - 8 -
member if the member is a Class T-D member or Class T-E member
if the member is a Class T-E 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 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.
(c.1) Activated military service leave.--The contributions
to be paid by an active member for credit for all activated
military service leave as if he had been in regular attendance
in the duties for which he is employed 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 contributions been made with full
coverage at the rate of contribution necessary to be credited as
Class T-C service [or], Class T-D service if the member is a
Class T-D member or Class T-E service if the member is a Class
T-E 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 State and
school service up to the date of purchase. In the case of
activated military service leave beginning after the date of
enactment of this subsection, contributions due from the member
shall be made as if he is in regular attendance in the duties
for which he is employed.
* * *
20100SB1185PN1672 - 9 -
§ 8324. Contributions for purchase of credit for creditable
nonschool service.
(a) Source of contributions.--The total contributions to
purchase credit as a member of Class T-C or as a member of Class
T-E for creditable nonschool service of an active member or an
eligible State employee shall be paid either by the member, the
member's previous employer, the Commonwealth, or a combination
thereof, as provided by law.
(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
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. 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 State Employees' Retirement
System it may be amortized with statutory interest through
salary deductions in amounts agreed upon by the member and the
board. The salary deduction amortization plans agreed to by
members and the board may include a deferral of payment amounts
and statutory interest until the termination of school service
or State service as the board in its sole discretion decides to
20100SB1185PN1672 - 10 -
allow. The board may limit salary deduction amortization plans
to such terms as the board in its sole discretion determines. 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 to the board
the amounts paid. Application may be filed for all such military
service credit upon completion of three years of subsequent
credited school service and shall be credited as Class T-C
service. In the event that a Class T-E member makes a purchase
of credit for such military service, then such service shall be
credited as Class T-E service.
(c) Intervening military service.--Contributions on account
of credit for intervening military service shall be determined
by the member's basic contribution rate and compensation at the
time of entry of the member into active military service,
together with statutory interest during all periods of
subsequent school and State service to date of purchase. Upon
application for such credit the amount due shall be certified in
the case of each member by the board, in accordance with methods
approved by the actuary, and contributions may be made by one of
the following methods:
(1) Regular monthly payments during active military
service.
(2) A lump sum payment within 90 days of certification
of the amount due.
(3) Salary deductions in amounts agreed upon by the
member and the board. 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
20100SB1185PN1672 - 11 -
termination of school service or State service as the board
in its sole discretion decides to allow. The board may limit
salary deduction amortization plans to such terms as the
board in its sole discretion determines. 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 to the
board the amounts paid.
(d) Other creditable nonschool service.--Contributions on
account of Class T-C or Class T-E credit, as applicable, 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 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. 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 State
Employees' Retirement System it may be amortized with statutory
interest through salary deductions in amounts agreed upon by the
20100SB1185PN1672 - 12 -
member and the board. 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 service as the board in its sole
discretion decides to allow. The board may limit salary
deduction amortization plans to such terms as the board in its
sole discretion determines. 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 to the board the amounts paid.
(e) Creditable work experience.--Contributions on account of
T-C credit or Class T-E credit, as applicable, 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 creditable work
experience. The amount paid for the purchase of credit for
creditable work experience shall not be payable as a lump sum
under section 8345(a)(4)(iii) (relating to member's options).
Any individual eligible to receive an annuity, excluding an
annuity received under the Federal Social Security Act (42
U.S.C. § 301 et seq.), in another pension system, other than a
military pension system, shall not be eligible to purchase this
service.
(f) Creditable maternity leave.--Contributions on account of
Class T-C credit or Class T-E credit, as applicable, 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
20100SB1185PN1672 - 13 -
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,
together with statutory interest during all periods of
subsequent school or State service to the date of purchase. The
amount paid for the purchase of credit for creditable maternity
leave shall not be eligible for withdrawal as a lump sum under
section 8345(a)(4)(iii).
§ 8328. Actuarial cost method.
(a) Employer contribution rate on behalf of active
members.--The amount of the total 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 total contribution rate on
behalf of all active members shall consist of the normal
contribution rate as defined in subsection (b), the accrued
liability contribution rate as defined in subsection (c) and the
supplemental annuity contribution rate as defined in subsection
(d). Beginning July 1, 2004, the total contribution rate shall
be modified by the experience adjustment factors as calculated
in subsection (e) but in no case shall it be less than 4% plus
the premium assistance contribution rate, provided, however,
that in any year in which the funded ratio is 100% or higher,
the total contribution rate shall not be less than 4% plus the
premium assistance contribution rate, minus a percentage amount
equal to the ratio of the employer contributions into the
individual annuity savings plan provided for in Chapter 86
(relating to defined contribution retirement benefit program)
20100SB1185PN1672 - 14 -
for all active Class T-E members to the total payroll for school
employers for the previous fiscal year.
* * *
§ 8345. Member's options.
(a) General rule.--Any Class T-E member with ten or more
eligibility points, any other vestee with five 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) 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 receive is less than 50% of the present
value of his maximum single life annuity.
(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
shall be payable to his beneficiary.
(2) Option 2.--A joint and survivor annuity payable
during the lifetime of the member with the full amount of
such annuity payable thereafter to his survivor annuitant, if
20100SB1185PN1672 - 15 -
living at his death.
(3) Option 3.--A joint and fifty percent (50%) survivor
annuity payable during the lifetime of the member with one-
half of such annuity payable thereafter to his survivor
annuitant, if living at his death.
(4) Option 4.--Some other benefit which shall be
certified by the actuary to be actuarially equivalent to the
maximum single life annuity, subject to the following
restrictions:
(i) Any annuity shall be payable without reduction
during the lifetime of the member.
(ii) The sum of all annuities payable to the
designated survivor annuitants shall not be greater than
one and one-half times the annuity payable to the member.
(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 accumulated deductions
standing to the credit of the member. The balance of the
present value of the maximum single life annuity adjusted
in accordance with section 8342(b) shall be paid in the
form of an annuity with a guaranteed total payment, a
single life annuity, or a joint and survivor annuity or
any combination thereof but subject to the restrictions
of subparagraphs (i) and (ii) of this paragraph.
* * *
Section 6. Title 24 is amended by adding a section to read:
§ 8523.1. Individual annuity savings account.
The individual annuity savings account is established as the
ledger account to which shall be credited the amounts of
contributions made by the employer and contributions or lump sum
20100SB1185PN1672 - 16 -
payments made by Class T-E members in accordance with the
provisions of Chapter 86 (relating to defined contribution
retirement benefit program), together with all interest and
investment earnings.
Section 7. Section 8535 of Title 24 is amended to read:
§ 8535. Payments to school entities by Commonwealth.
For each school year beginning with the 1995-1996 school
year, each school entity shall be paid by the Commonwealth for
contributions based upon school service of active members of the
system after June 30, 1995, as follows:
(1) 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, 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. For no school year shall any school entity 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 of 1949 was 0.50.
(2) The Commonwealth shall pay each school entity for
contributions made to the Public School Employees' Retirement
20100SB1185PN1672 - 17 -
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 payment to the Public School Employees'
Retirement Fund.
(4) Commencing with the 2009-2010 school year, in any
year in which the employer contribution rate certified under
section 8328 increases by a rate exceeding the index defined
in Chapter 3 of the act of June 27, 2006 (1st Sp.Sess.,
P.L.1873, No.1), known as the Taxpayer Relief Act, the
Commonwealth shall pay each school entity a supplemental
amount in addition to the payments described in paragraphs
(1) and (2), sufficient to ensure that the increase in the
amount required to be paid by the school entity under section
8327 (relating to payments by employers) minus payments paid
to the school entity under paragraphs (1) and (2), to the
extent solely attributable to increases in the employer
contribution rate, does not exceed such index.
Section 8. Title 24 is amended by adding a chapter to read:
CHAPTER 86
DEFINED CONTRIBUTION RETIREMENT BENEFIT PROGRAM
Sec.
8601. Individual annuity savings plan.
20100SB1185PN1672 - 18 -
8602. Agreements with financial institutions and other
organizations.
8603. Rules and regulations.
8604. Responsibility for investment loss.
8605. Nonassignment and nontransferability.
8606. Powers and duties of board.
8607. Rights and duties of Class T-E members.
8608. Employer contributions.
8609. Investments based on members' investment allocation
choices.
§ 8601. Individual annuity savings plan.
In addition to the benefits provided to Class T-E members in
this part, the board shall establish and serve as trustee of a
defined contribution benefit plan exclusively for Class T-E
members within the meaning of and in conformity with section
401(a) of the Internal Revenue Code of 1986 (Public Law 99-514,
26 U.S.C. § 401(a) et seq.), which shall be known as the
individual annuity savings plan. The board shall determine all
of the terms and provisions of the plan not inconsistent with
this part or the Internal Revenue Code of 1986, including, but
not limited to, standards and procedures for its funding, and
shall provide for the plan's administration.
§ 8602. Agreements with financial institutions and other
organizations.
To establish and administer the individual annuity savings
plan, the board shall have the power to enter into written
agreements with one or more financial institutions or other
organizations relating to the plan's administration and
investment of funds held pursuant to the plan.
§ 8603. Rules and regulations.
20100SB1185PN1672 - 19 -
The board shall have the power to promulgate rules and
regulations necessary for the administration and management of
the individual annuity savings plan, including, but not limited
to, establishing:
(1) Procedures whereby eligible Class T-E members may
change optional election amounts or their investment choices
on a periodic basis or make other elections regarding their
participation in the plan.
(2) Procedures for deducting amounts to be deferred from
members' compensation.
(3) Standards or criteria for the selection of financial
institutions or other organizations that may be qualified as
managers of funds deferred under the plan or to provide other
services relating to the administration and management of the
plan.
(4) Standards and criteria for disclosing and providing
options to eligible individuals regarding investments of
amounts deferred under the plan, provided that one of the
available options must serve as the default option for
members who do not make a timely election.
(5) Standards and criteria for disclosing the
anticipated and actual income attributable to amounts
invested, property rights and all fees, costs and charges to
be made against amounts deferred to cover the costs and
expenses of administering and managing the plan or funds.
(6) Procedures, standards and criteria for the making of
withdrawals from the plan upon separation from employment or
death or in other circumstances consistent with the purpose
of the plan.
§ 8604. Responsibility for investment loss.
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Neither the board, the Commonwealth, an employer nor any
school entity or other political subdivision shall be
responsible for any investment loss incurred under this 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, whether or not such other opportunity was offered
to participants in the plan.
§ 8605. Nonassignment and nontransferability.
Except as may be provided under section 8533(b) and (c)
(relating to taxation, attachment and assignment of funds), no
participant or beneficiary shall have the right to commute,
sell, assign or otherwise transfer or convey the rights to
receive payments under agreements entered into under this
chapter, and such payments and rights are expressly declared to
be exempt from any State or municipal tax and exempt from levy
and sale, garnishment, attachment or any other process
whatsoever and shall be nonassignable and nontransferable.
§ 8606. Powers and duties of board.
The board shall have the following powers and duties to
administer the provisions of this chapter:
(1) The board may commingle or pool assets with the
assets of other persons or entities.
(2) The board shall pay all administrative costs of
managing and administering the individual savings account
plans from the contributions and earnings of such individual
accounts.
(3) The board may establish investment guidelines and
limits on the types of investments that Class T-E members can
make, consistent with the board's fiduciary obligations.
(4) The board shall at all times have the power to
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change the terms of the plan as may be necessary to maintain
the tax-qualified status of the plan.
§ 8607. Rights and duties of Class T-E members.
Class T-E members shall have the following rights and duties
under the provisions of this chapter:
(1) Each Class T-E member shall contribute 3% of
compensation to the member's individual annuity savings
account.
(2) Each Class T-E member may, at the member's option,
make additional contributions to the extent permitted by
Federal law and subject to such rules and requirements for
the making of elections as may be imposed by Federal law and
rules and regulations of the board.
(3) Upon termination of service, a Class T-E member
shall withdraw the moneys in the account if and to the extent
required or permitted by regulations established by the
board.
§ 8608. Employer contributions.
The employer of each Class T-E member shall make a
contribution to the member's individual annuity savings account
equal to 2% of the member's compensation. No further
contributions by employers shall be permitted.
§ 8609. Investments based on members' investment allocation
choices.
All contributions, interest and investment earnings shall be
100% vested and shall be invested based on the Class T-E
member's investment allocation choices. Each Class T-E member
shall be credited individually with the amount of contributions,
interest and investment earnings.
Section 9. This act shall take effect immediately.
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