Bill Text: PA HB1061 | 2009-2010 | Regular Session | Introduced


Bill Title: Providing for a State Legislators' Defined Contribution Program.

Spectrum: Partisan Bill (Republican 10-0)

Status: (Introduced - Dead) 2009-03-24 - Referred to FINANCE [HB1061 Detail]

Download: Pennsylvania-2009-HB1061-Introduced.html

  

 

    

PRINTER'S NO.  1243

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1061

Session of

2009

  

  

INTRODUCED BY SCHRODER, CREIGHTON, CUTLER, HARRIS, MUSTIO, ROAE, ROCK, TALLMAN AND VULAKOVICH, MARCH 24, 2009

  

  

REFERRED TO COMMITTEE ON FINANCE, MARCH 24, 2009  

  

  

  

AN ACT

  

1

Amending Title 71 (State Government) of the Pennsylvania

2

Consolidated Statutes, providing for a State Legislators'

3

Defined Contribution Program.

4

The General Assembly of the Commonwealth of Pennsylvania

5

hereby enacts as follows:

6

Section 1.  Section 5102 of Title 71 of the Pennsylvania

7

Consolidated Statutes is amended by adding a definition to read:

8

§ 5102.  Definitions.

9

The following words and phrases as used in this part, unless

10

a different meaning is plainly required by the context, shall

11

have the following meanings:

12

* * *

13

"State Legislators' Defined Contribution Program."  The

14

defined contribution program established under Ch. 56 (relating

15

to State Legislators' Defined Contribution Program).

16

* * *

17

Section 2.  Section 5301(a)(3) and (c) are amended and

18

subsection (a) is amended by adding paragraphs to read:

 


1

§ 5301.  Mandatory and optional membership.

2

(a)  Mandatory membership.--Membership in the system shall be

3

mandatory as of the effective date of employment for all State

4

employees except the following:

5

* * *

6

(3)  Members of the General Assembly, except for members

7

of the General Assembly described under paragraphs (17) and

8

(18).

9

* * *

10

(17)  Any person who is not a member of the General

11

Assembly on November 30, 2010, and who becomes a member of

12

the General Assembly on or after December 1, 2010.

13

(18)  Any person who is a member of the General Assembly

14

on November 30, 2010, and who is elected to serve as a member

15

of the General Assembly beginning on or after December 1,

16

2010, who elects to participate in the program in accordance

17

with Ch. 56 (relating to State Legislators’ Defined

18

Contribution Program).

19

* * *

20

(c)  Prohibited membership.--

21

(1)  The State employees listed in subsection (a)(12),

22

(13), (14) [and (15)], (15) and (17) shall not have the right

23

to elect membership in the system.

24

(2)  A member of the General Assembly described under

25

subsection (a)(18) shall have no right to be an active member

26

of the system for service as a member of the General Assembly

27

subsequent to the date on which he or she elects to

28

participate in the program under Ch. 56 (relating to State

29

Legislators’ Defined Contribution Program).

30

* * *

- 2 -

 


1

Section 3.  Section 5306(a.2)(1)(i) of Title 71 of the

2

Pennsylvania Consolidated Statutes is amended to read:

3

§ 5306.  Classes of service.

4

* * *

5

(a.2)  Class of membership for members of the General

6

Assembly.--

7

(1)  A person who:

8

(i)  becomes a member of the General Assembly and an

9

active member of the system after June 30, 2001, and

10

before December 1, 2010; or

11

* * *

12

Section 4.  Title 71 is amended by adding a chapter to read:

13

CHAPTER 56

14

STATE LEGISLATORS' DEFINED CONTRIBUTION PROGRAM

15

Sec.

16

5601.  Definitions.

17

5602.  Establishment.

18

5603.  State Legislators' Defined Contribution Program.

19

5604.  Powers and duties of board.

20

5605.  Prohibited interests.

21

5606.  Investments and expenses.

22

5607.  Trust fund.

23

5608.  Election period.

24

5609.  Participant contributions.

25

5610.  Employer contributions.

26

5611.  Vesting.

27

5612.  Prohibition.

28

§ 5601.  Definitions.

29

The following words and phrases when used in this chapter

30

shall have the meanings given to them in this section unless the

- 3 -

 


1

context clearly indicates otherwise:

2

"Participant."  A qualified employee who elects to

3

participate in the State Legislators' Defined Contribution

4

Program.

5

"Program."  The State Legislators' Defined Contribution

6

Program.

7

"Qualified employee."  Any of the following:

8

(1)  A person who is not a member of the General Assembly

9

on November 30, 2010, and who becomes a member of the General

10

Assembly on or after December 1, 2010.

11

(2)  A person who is a member of the General Assembly on

12

November 30, 2010, and who is elected to serve as a member of

13

the General Assembly beginning on or after December 1, 2010.

14

"Trust fund."  The trust created under section 5607 (relating

15

to trust fund).

16

§ 5602.  Establishment.

17

The State Legislators’ Defined Contribution Program is

18

established in accordance with this chapter.

19

§ 5603.  State Legislators' Defined Contribution Program.

20

The board shall administer the program, which shall be a

21

defined contribution retirement program for participants. The

22

benefits to be provided for or on behalf of participants in the

23

program shall be provided through participant-directed

24

investments, in accordance with IRC § 401(a). Participants and

25

employers shall contribute to the program in accordance with

26

sections 5609 (relating to participant contributions) and 5610

27

(relating to employer contributions).

28

§ 5604.  Powers and duties of board.

29

In order to administer the program, the powers and duties of

30

the board shall include all of the following:

- 4 -

 


1

(1)  Entering into written agreements with financial or

2

other organizations to administer the program for

3

participants and to invest funds held under the program. The

4

program and any written agreement shall comply with the IRC,

5

including the plan qualification requirements imposed on

6

governmental plans under IRC § 401(a).

7

(2)  Establishing procedures whereby qualified employees

8

may elect to participate in the program and participants may

9

change their investment choices on a periodic basis, as

10

determined by the board, which shall not be less frequently

11

than quarterly.

12

(3)  Arranging for a deduction, from the compensation of

13

participants, of participant contributions to the program.

14

(4)  Establishing standards and criteria for selection by

15

the board of the financial institutions, insurance companies

16

or other organizations that may be qualified as managers, on

17

behalf of the board, of funds accumulated under the program

18

on behalf of any participant.

19

(5)  Establishing standards and criteria for providing

20

options to qualified employees and participants concerning

21

the method of investing amounts accumulated under the

22

program. The investment options shall represent a broad cross

23

section of asset classes and risk profiles and shall include

24

lifestyle funds that are based upon age and projected

25

retirement date.

26

(6)  Establishing procedures for informing qualified

27

employees and participants of specific options offered by

28

qualified managers.

29

(7)  Designing a comprehensive, balanced and impartial

30

educational program to assist qualified employees and

- 5 -

 


1

participants in their choice of investment options under the

2

program, which shall include retirement planning education

3

and financial planning guidance on matters such as investment

4

diversification, investment risks, investment costs and asset

5

allocation.

6

(8)  Establishing standards and criteria for the

7

disclosure to qualified employees and participants of the

8

anticipated and actual income attributable to the amounts,

9

property and rights and all fees, costs and charges to be

10

made against the amounts accumulated to cover the costs of

11

administering and managing the funds.

12

(9)  Establishing a process for election to participate

13

in the program.

14

(10)  Performing an annual review of any qualified fund

15

manager for the purpose of assuring it continues to meet all

16

standards and criteria established.

17

(11)  Allowing for rollovers into the program from plans

18

of other employers, regardless of the employer being a

19

private employer or a public employer.

20

(12)  Allowing a former participant to maintain his or

21

her account within the program.

22

(13)  Establishing procedures whereby any participant may

23

do one of the following:

24

(i)  Withdraw accumulated amounts in cases of

25

financial hardship or separation of a participant from

26

State service or as otherwise permitted under the IRC.

27

(ii)  Dispose of a participant's account under a

28

domestic relations order unless in conflict with the IRC.

29

(14)  Administering the program in compliance with the

30

IRC.

- 6 -

 


1

(15)  Promulgating regulations necessary to administer

2

this chapter.

3

(16)  Establish procedures to provide for the lawful

4

payment of benefits.

5

§ 5605.  Prohibited interests.

6

No member or employee of the board shall have any direct or

7

indirect financial interest in any of the investment products

8

that are made available to participants under the program.

9

§ 5606.  Investments and expenses.

10

(a)  Loss.--The board shall not be responsible for any

11

investment loss incurred in the program or for failure of any

12

investment to earn any specific or expected return or to earn as

13

much as any other investment opportunity, whether or not the

14

other investment opportunity was offered to participants in the

15

program. The expenses arising from allowing qualified employees

16

to elect to participate in the program and participants to

17

choose a fund manager, deduct from compensation amounts

18

contributed under the program and transfer to the fund manager

19

amounts so deducted shall be borne by the board. All other

20

expenses arising from the administration of the program shall be

21

assessed against the accounts created on behalf of participants

22

either by the fund managers or by the board.

23

(b)  Investment.--Investment of contributions by any

24

corporation, institution, insurance company or custodial bank

25

that the board has approved shall not be unreasonably delayed

26

and the investment of contributions shall not be delayed more

27

than 30 days from the date of payroll deduction to the date that

28

funds are invested. Any interest earned on the funds pending

29

investment shall be allocated to the Commonwealth and credited

30

to the accounts of participants who are then participating in

- 7 -

 


1

the program unless the interest is used to defray administrative

2

costs and fees that would otherwise be required to be borne by

3

participants who are then participating in the program.

4

§ 5607.  Trust fund.

5

(a)  Establishment.--All assets and income that have been or

6

shall be withheld by the employer in accordance with this

7

chapter shall be held in trust in any funding vehicle permitted

8

by applicable provisions of the IRC for the exclusive benefit of

9

the program's participants and their beneficiaries until the

10

time when the funds are distributed to the participant or the

11

participant's beneficiary in accordance with the terms of the

12

agreement between the participant and the board. All such assets

13

and income withheld by the employer shall be held in trust as

14

set forth in this subsection in a special fund created within

15

the State Treasury of which the State Treasurer shall be

16

custodian. The assets of the program shall be held in trust for

17

the exclusive benefit of the program's participants and

18

beneficiaries and for the payment of reasonable expenses of the

19

program in accordance with section 5606 (relating to investments

20

and expenses) and IRC § 401.

21

(b)  Trustees.--The members of the board shall be the

22

trustees of the trust established under subsection (a).

23

(c)  Attachment.--Notwithstanding any other provision of law,

24

any benefit or interest available under the program, any right

25

to receive or direct payments under the program or any

26

distribution of payment made under the program shall not, except

27

as expressly specified by the program, be subject to assignment,

28

alienation, garnishment, attachment, transfer, anticipation,

29

sale, mortgage, pledge, hypothecation, commutation, execution or

30

levy, whether by voluntary or involuntary act of any interested

- 8 -

 


1

person.

2

§ 5608.  Election period.

3

The election period for a qualified employee who is not a

4

member of the General Assembly on November 30, 2010, and who

5

becomes a member of the General Assembly on or after December 1,

6

2010, shall begin on the date that the person becomes a

7

qualified employee and shall end 90 days after that date. The

8

election period for a qualified employee who is not a member of

9

the General Assembly on November 30, 2010, and is elected to

10

serve as a member of the General Assembly beginning on or after

11

December 1, 2010, shall begin on the first day of service as a

12

member of the General Assembly and shall end 90 days after that

13

date.

14

§ 5609.  Participant contributions.

15

Regular participant contributions shall be made to the

16

program on behalf of each participant for current service in an

17

amount equal to a percentage of the participant's pensionable

18

compensation. The employer shall cause participant contributions

19

for current service to be made and deducted from each payroll.

20

Participants may elect to contribute to the program on their

21

behalf to the extent permitted by law.

22

§ 5610.  Employer contributions.

23

The General Assembly shall make payments to the trust fund on

24

behalf of the participant. The amount of the payments shall

25

match the contribution made by the participant under section

26

5609 (relating to participant contribution) dollar for dollar,

27

but shall not exceed 4% of the participant’s pensionable

28

earnings.

29

§ 5611.  Vesting.

30

A participant shall be vested after completing three years of

- 9 -

 


1

service as a member of the General Assembly during which he or

2

she is a participant in the program with respect to employer

3

contributions paid on behalf of the participant to the program

4

plus interest and earnings on the employer contributions but

5

minus investment fees and administrative charges.

6

§ 5612.  Prohibition.

7

No qualified employee may make an election to participate in

8

the program prior to December 1, 2010.

9

Section 5.  This act shall take effect in 60 days.

- 10 -

 


feedback