Bill Text: PA HB1884 | 2009-2010 | Regular Session | Amended

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Bill Title: Further providing for general provisions, for provisions relating to municipal employees, for provisions relating to municipal firemen and municipal police officers and for optional retirement plans; providing for the Municipal Pension Recovery Program and for the Cooperative Municipal Pension and Security Program; and making editorial changes.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2010-09-20 - Removed from table [HB1884 Detail]

Download: Pennsylvania-2009-HB1884-Amended.html

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PRIOR PRINTER'S NO. 2499 PRINTER'S NO. 2523
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1884 Session of2009
INTRODUCED BY HARHAI, JULY 22, 2009
AS REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, AS AMENDED, JULY 30, 2009
AN ACT
Amending the act of February 1, 1974 (P.L.34, No.15), entitled
"An act creating a Pennsylvania Municipal Retirement System
for the payment of retirement allowances to officers,
employes, firemen and police of political subdivisions and
municipal authorities and of institutions supported and
maintained by political subdivisions and municipal government
associations and providing for the administration of the same
by a board composed of the State Treasurer and others
appointed by the Governor; imposing certain duties on the
Pennsylvania Municipal Retirement Board and the actuary
thereof; providing the procedure whereby political
subdivisions and municipal authorities may join such system,
and imposing certain liabilities and obligations on such
political subdivisions and municipal authorities in
connection therewith, and as to certain existing retirement
and pension systems, and upon officers, employes, firemen and
police of such political subdivisions, institutions supported
and maintained by political subdivisions, and upon municipal
authorities; providing for the continuation of certain
municipal retirement systems now administered by the
Commonwealth; providing certain exemptions from taxation,
execution, attachment, levy and sale and providing for the
repeal of certain related acts," further providing for
general provisions, for provisions relating to municipal
employees, for provisions relating to municipal firemen and
municipal police officers and for optional retirement plans;
providing for the Municipal Pension Recovery Program and for
the Cooperative Municipal Pension and Security Program; and
making editorial changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The title of the act of February 1, 1974 (P.L.34,
No.15), known as the Pennsylvania Municipal Retirement Law, is
amended to read:
AN ACT
Creating a Pennsylvania Municipal Retirement System for the
payment of retirement allowances to officers, [employes]
employees, [firemen] fire fighters and police officers of
political subdivisions and municipal authorities and of
institutions supported and maintained by political
subdivisions and municipal government associations and
providing for the administration of the same by a board
composed of the State Treasurer and others appointed by the
Governor; imposing certain duties on the Pennsylvania
Municipal Retirement Board and the actuary thereof; providing
the procedure whereby political subdivisions and municipal
authorities may join such system, and imposing certain
liabilities and obligations on such political subdivisions
and municipal authorities in connection therewith, and as to
certain existing retirement and pension systems, and upon
officers, [employes, firemen] employees, fire fighters and
police officers of such political subdivisions, institutions
supported and maintained by political subdivisions, and upon
municipal authorities; providing for the continuation of
certain municipal retirement systems now administered by the
Commonwealth; providing certain exemptions from taxation,
execution, attachment, levy and sale and providing for the
Municipal Pension Recovery Program, for the Cooperative
Municipal Pension and Security Program and the repeal of
certain related acts.
Section 2. Section 102 of the act, amended or added December
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19, 1975 (P.L.520, No.153) and May 17, 1980 (P.L.135, No.50), is
amended to read:
Section 102. Definitions.--As used in this act:
"Accumulated [deductions" means the] deductions." Either of
the following:
(1) The total amount deducted from the salary or
compensation of the [contributor] member and paid over by the
municipality or paid by the member or from any existing pension
or retirement system directly into the retirement fund and
credited to the member's account, together with regular interest
thereon, for those member accounts established under the
provisions of a retirement plan established under Article II,
Article III, Article IV or Article IV-A of this act unless
interest is excluded in a contract for an optional retirement
plan entered into under the provisions of clause (11) of section
104 of this act or under the Municipal Pension Recovery Program
established under Article IV-A of this act.
(2) For those member accounts established under the
provisions of a retirement plan established under Article IV-B
of this act, the term shall mean the total amount deducted from
the salary or compensation of the member and paid over by the
municipality or paid by the member or from any existing pension
or retirement system directly into the retirement fund and
credited to the member's account, together with statutory
interest thereon.
"Active member." A municipal employee, municipal fire
fighter, municipal police officer or an employee of a municipal
government association who is earning credited service in a
retirement plan that has been established under the provisions
of this act.
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"Actuarially [sound" means a] sound." A plan which is being
operated under supervision of an actuary and which is being
funded annually at a level not lower than the normal cost of the
plan plus a contribution towards the unfunded accrued liability
sufficient to complete the funding thereof in accordance with
the provisions of the act of December 18, 1984 (P.L.1005,
No.205), known as the "Municipal Pension Funding Standard and
Recovery Act," if the plan is subject to the provisions of that
act and if the plan is not subject to that act, within thirty
years of the effective date of enrollment in the system. If the
unfunded accrued liability is increased subsequent to the
effective date of the system, such additional liability shall be
funded in accordance with the provisions of the "Municipal
Pension Funding Standard and Recovery Act," if the plan is
subject to the provisions of that act and if the plan is not
subject to that act, within a period of thirty years from the
effective date of the increase. [If deemed advisable by the
actuary, the initial liability and any increase thereof, may be
combined and amortized over a period of years, not to exceed
thirty.]
["Actuary" means: (i)] "Actuary." Any of the following:
(1) a member of the American Academy of Actuaries[, or
(ii)];
(2) an individual who has demonstrated to the satisfaction
of the Insurance Commissioner of Pennsylvania that he had the
educational background necessary for the practice of actuarial
science and has had at least seven years of actuarial
experience[, or (iii)]; or
(3) a firm, partnership or corporation of which one or more
members meets the requirements of [subclauses (i) or (ii) above]
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clause (1) or (2).
"Alternate payee." Any spouse, former spouse, child or
dependent of a member who is recognized by an approved domestic
relations order as having a right to receive all or a portion of
the moneys payable to that member under this act.
["Annuitant" means a former contributor in receipt of a
superannuation retirement allowance or other benefit provided by
this act.]
"Annuitant." Any member on or after the effective date of
retirement until the member's annuity is terminated.
"Approved domestic relations order." Any domestic relations
order which has been approved in accordance with this act.
["Beneficiary" means a person] "Beneficiary." A person who
is last designated in writing to the board by a [contributor or
an annuitant] member to receive benefits [after] or the member's
accumulated deductions upon the death of such [contributor or
annuitant] member.
["Board" means the] "Board." The Pennsylvania Municipal
Retirement Board created by this act.
"Compensation." Remuneration actually received for services
rendered as a municipal employee, municipal fire fighter or
municipal police officer, excluding reimbursement for expenses
incidental to employment. Compensation shall be adjusted as
appropriate to comply with the terms of any contract entered
into between the board and the applicable municipality under
Article IV or Article IV-A. For members who are enrolled in a
plan that has adopted the provisions of section 414(h) of the
Internal Revenue Code of 1986, as designated and referred to in
the Federal Tax Reform Act of 1986 (Public Law 99-514, § 2, 100
Stat. 2085, 2095), the term shall also include any such pickup
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contributions so designated. Notwithstanding any provision to
the contrary, a member's compensation shall not exceed the
limitations under Internal Revenue Code § 401(a)(17) as adjusted
in accordance with § 401(a)(17)(B). The adjustment in effect for
a calendar year applies to any period, not exceeding twelve
months, over which compensation is determined (the
"determination period") beginning in such calendar year. If a
determination period consists of fewer than twelve months, the
compensation limit shall be multiplied by a fraction, the
numerator of which is the number of months in the determination
period and the denominator of which is twelve.
["Contributor" means a member who has accumulated deductions
standing to his credit in the member's account of the fund
created by this act.]
"Date of termination of service." For an active member, the
last day of employment in a status covered by the eligibility
requirements of the pension plan or, in the case of an inactive
member on leave without pay, the date of resignation or the date
employment is formally discontinued by the municipality.
"Disability annuitant." A member on or after the effective
date of disability until his disability annuity is terminated.
"Domestic relations order." Any judgment, decree or order,
including approval of a property settlement agreement, entered
on or after the effective date of this definition by a court of
competent jurisdiction pursuant to a domestic relations law
which relates to the marital property rights of the spouse or
former spouse of a member, including the right to receive all or
a portion of the moneys payable to that member under this act in
furtherance of the equitable distribution of marital assets. The
term includes orders of support as that term is defined by 23
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Pa.C.S. § 4302 (relating to definitions) and orders for the
enforcement of arrearages as provided in 23 Pa.C.S. § 3703
(relating to enforcement of arrearages).
"Effective date of retirement." The first day following the
date of termination of service of a member if the member has
properly filed an application for an annuity within 90 days of
such date or, in the case of a member who does not apply for an
annuity within 90 days after the date of termination of service,
the date of filing an application for an annuity or the date
specified on the application, whichever is later. In the case of
a member applying for a disability retirement, the term shall
also mean the date certified by the board as the effective date
of disability.
"Employers account." The account maintained for each plan
established under Article IV-B to which shall be credited
contributions made by participating employers towards the
superannuation retirement, disability retirement and death
benefits of members.
"Equivalent actuarial [value" means benefits] value."
Benefits which have equal present value when computed on the
basis of regular interest and the mortality tables adopted by
the board and in use at the date the benefit becomes effective.
"Excess [interest" means the] interest." The investment
earnings on the fund in excess of that required for allocation
to regular interest and expenses.
"Final [salary" means] salary." Either of the following:
(1) For a retirement plan established under Article II,
Article III or Article IV of this act, the average annual salary
or compensation earned by a member and paid by the municipality
during the highest three, four, or five non-overlapping periods
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of twelve consecutive months as stipulated by the municipality,
or if not so long employed, then the average annual salary or
compensation earned and paid during the whole period of such
employment; or, if applicable, the amount or formula stipulated
between the municipality and the board in a contract for an
optional retirement plan entered into under the provisions of
clause (11) of section 104 of this act.
(2) For a retirement plan established under Article IV-A of
this act, the amount or formula stipulated between the
municipality and the board in the contract establishing the
retirement plan.
(3) For a retirement plan established under Article IV-B of
this act, the average annual compensation earned by a member and
paid by the municipality during the highest three consecutive
nonoverlapping years of credited service or, if not so long
enrolled in credited service, the average annual compensation
earned and paid during the whole period of such credited
service.
["Fund" means the] "Fund." The Pennsylvania Municipal
Retirement Fund created by this act.
"Inactive member." A member who is enrolled in the system
but who is no longer earning credited service and who has
accumulated deductions standing to the member's credit in the
fund.
"Internal Revenue Code." The Internal Revenue Code of 1986,
as designated and referred to in the Federal Tax Reform Act of
1986 (Public Law 99-514, § 2, 100 Stat. 2085, 2095), as amended.
A reference in this part to "Internal Revenue Code § " shall
be deemed to refer to the identically numbered section and
subsection or other subdivision of such section in 26 U.S.C.
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(relating to Internal Revenue Code), as such identically
numbered section may be amended.
"Joint coverage [member" means a member who shall have
become] member." A person who becomes a member of the
retirement system subsequent to the last date permitted by the
municipality employing [him] the person for statement of
preference concerning social security coverage, or who, having
become a member on or before such date, shall have filed with
the municipality a written statement that [he] the person elects
social security coverage [under an agreement with the Federal
Secretary of Health, Education and Welfare entered into by the
Commonwealth].
["Member" means a] "Member." A person who is a municipal
officer, [employe, fireman or policeman] employee, fire fighter
or police officer, or an [employe] employee of a municipal
government association who [has become a member of the
Pennsylvania Municipal Retirement System created by this act] is
an active member, inactive member, annuitant, disability
annuitant or vested member of the system.
"Member's [account" means the] account." The account to
which shall be credited the payroll deductions and other
contributions, plus interest, if any, of the members.
"Member's [annuity" means that] annuity." That portion or
component of the retirement allowance which is of equivalent
actuarial value, at date of retirement, to the accumulated
deductions of the member.
"Member's excess investment [account" means the] account."
The account maintained for each member, to which shall be
credited such excess interest [deemed to be earned on] awarded a
member [contributions].
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"Municipal [account" means the] account." The account
maintained for each municipality that establishes a retirement
plan under Article II, Article III, Article IV or Article IV-A
of this act, to which shall be credited the contributions made
by it toward the superannuation retirement and death benefits of
members.
"Municipal [annuity" means that] annuity." That portion or
component of the retirement allowance computed in accordance
with the formula applicable to each municipality.
"Municipal [employe" means a] employee." A person holding an
office or position, other than that of a municipal [fireman]
fire fighter or municipal [policeman] police officer, under a
municipality or a municipal government association and paid on a
regular salary or per diem basis. The term shall not include
[officers and employes] an officer or employee paid wholly on a
fee basis.
"Municipal [fireman" means a] fire fighter." A person
holding a full-time position in the fire department of a
municipality and who works for a stated salary or compensation.
"Municipal Pension Funding Standard and Recovery Act." The
act of December 18, 1984 (P.L.1005, No.205), known as the
"Municipal Pension Funding Standard and Recovery Act."
"Municipal [policeman" means a] police officer." A person
holding a full-time position in the police department of a
municipality and who works for a stated salary or compensation.
["Municipality" means a] "Municipality." A city, borough,
town, township, county, institution district, or any newly
created governmental unit, or an authority created by a city,
borough, town, township, county or county institution district,
or jointly by any such political subdivisions, or an institution
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supported and maintained by a municipality or a municipal
government association, or an industrial development agency as
defined by the act of May 31, 1956 (P.L.1911, No.635), known as
the "Industrial Development Assistance Law," which has adopted
bylaws and the governing body of which is organized and holds
regular public meetings.
"New [member" means] member." A person who is a municipal
officer, [employe, fireman or policeman] employee, firefighter
or police officer, or an [employe] employee of a municipal
government association and who first becomes a member after the
date the municipality by which [he] the person is employed
joined the retirement system created by this act.
"Optional membership." A category of membership in a
retirement plan that applies to employees authorized by law,
resolution or ordinance to elect to enroll or to refrain from
enrollment in the retirement plan.
"Original [member" means] member." A person who is a
municipal officer, [employe, fireman or policeman] employee,
fire fighter or police officer, or an [employe] employee of a
municipal government association who was employed by the
municipality at the date the municipality joined the system.
"Prior [salary" means the] salary." The annual salary or
compensation earned by a member and paid by the municipality
during the year immediately preceding the date the municipality
by which [he] the member is employed joined the system.
"Prior [service" means all service] service." All service of
a person as a municipal [employe, municipal fireman or municipal
policeman] employee, municipal fire fighter or municipal police
officer completed at the time the municipality by which [he] the
person is or was employed elected to join the system or the same
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municipality under a prior name or classification, unless the
municipality has elected to limit the period of such service for
municipal [employes] employees enrolled in a plan under Article
II [or], Article IV or Article IV-A of this act.
"Regular [interest" means the] interest." The rate fixed by
the board, from time to time, on the basis of earnings on
investments to be applied to the member's accounts, the
municipal accounts established under the provisions of a
retirement plan established under Article II, Article III,
Article IV or Article IV-A of this act, to the retired member's
reserve account, and to the employers' accounts of the plans
established under Article IV-B of this act.
"Retired member's reserve [account" means the] account." The
account from which all retirement allowances shall be paid for
superannuation and total disability retirement and voluntary and
involuntary [withdrawals] retirement.
"Retirement [allowance" means the] allowance." The sum of
the municipal annuity and the member's annuity and, if the
member is entitled to a disability annuity under the provisions
of this act, the disability annuity.
"Service connected [disability" means total] disability."
Total and permanent disability of a member [prior to eligibility
for superannuation retirement] resulting from a condition
arising out of and incurred in the course of [his] the member's
employment, and which is compensable under the applicable
provisions of the act of June 2, 1915 (P.L.736, No.338), known
as "The Pennsylvania [Workmen's] Workers' Compensation Act," or
the act of June 21, 1939 (P.L.566, No.284), known as "The
Pennsylvania Occupational Disease Act."
"Single coverage [member" means a member who shall become]
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member." A person who becomes a member of the retirement system
on or before the last date permitted by the municipality
employing [him] the person for statement of preference
concerning social security coverage and who either shall have
filed with the municipality a written statement that [he] the
person does not elect social security coverage [under any
agreement with the Federal Secretary of Health, Education and
Welfare entered into by the Commonwealth,] or shall not have
filed with the municipality any written statement.
"Statutory interest." Interest at 4% per annum, compounded
annually which is to be applied to a member's account
established under the provisions of Article IV-B of this act.
"Superannuation retirement [age" means sixty-five] age."
Sixty-five years of age for municipal [employes, fifty-five]
employees enrolled in a retirement plan established under
Article II of this act. Fifty-five years of age for municipal
[firemen] fire fighters and municipal police [or such other age]
officers enrolled in a retirement plan established under Article
III of this act. For members enrolled in a retirement plan
established under Article IV of this act, it shall be the age or
service requirement as may be stipulated between the
municipality and the board in a contract for an optional
retirement plan entered into with the municipality under the
provisions of clause (11) of section 104 of this act. For
members enrolled in a retirement plan established under Article
IV-B of this act, it shall be such age or service requirement as
provided in the Municipal Pension Recovery Program contract
entered into between the municipality and the board. For those
members enrolled in a retirement plan established under Article
IV-B of this act, it shall be the age and service as defined in
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Article IV-B of this act.
"Survivor [annuitant" means any] annuitant." Any person who
has been named by a member under a joint and survivor annuity
option to receive an annuity upon the death of such member.
["System" means the] "System." The Pennsylvania Municipal
Retirement System [as established herein] established in this
act.
"Total disability reserve [account" means the] account." The
account to which shall be credited the contributions made by
municipalities toward the disability retirement of members
covered by the disability provisions of Article II, Article III
or Article IV of this act.
"Vested member." A member who, after attaining the
stipulated age or service requirements, or both, based on the
requirements of the plan in which the member is enrolled, has
terminated municipal service and has elected to leave the
member's total accumulated deductions in the system and to defer
receipt of an annuity.
Section 3. Section 103 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 103. Pennsylvania Municipal Retirement Board.--(a)
A Pennsylvania Municipal Retirement Board is hereby created,
which shall consist of the State Treasurer, the Secretary of
[the Commonwealth] Community and Economic Development, six
municipal elected officials or [employes] employees of different
classes of municipalities which have joined the system under the
provisions of Article II, Article III or Article IV of this act,
two municipal elected officials or employees of municipalities
which have joined the system under the provisions of Article IV-
A or Article IV-B of this act, [one retired member] two
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annuitants of the system [who is receiving a retirement
allowance], one municipal [fireman employed by a municipality
which has joined the system] employee who is an active member,
one municipal fire fighter who is an active member and one
municipal [policeman employed by a municipality which has joined
the system] police officer who is an active member. The [nine]
thirteen latter members shall be appointed by the Governor from
among nominations made by the County Commissioners Association,
the Pennsylvania League of Cities, the Pennsylvania Association
of Township Commissioners, the Pennsylvania State Association of
Township Supervisors, the Pennsylvania State Association of
Boroughs and the Pennsylvania Municipal Authorities Association,
and associations representing municipal employees, municipal
[firemen] fire fighters and municipal police officers, to serve
for a term of four years each and until their successors are
appointed and qualified. Appointments of members made by the
Governor shall not require the advice and consent of the Senate.
The [two municipal employe] members of the [Municipal Employes'
Retirement Board, appointed by the Governor from among
nominations made by various associations of county and municipal
officers,] board who are serving on the effective date of this
act, shall continue to serve as members of the [Pennsylvania
Municipal Retirement Board] board until the expiration of their
respective terms.
(b) A chairman and vice chairman of the board shall be
elected by the board every year at the January meeting [of the
board and the chairman and vice-chairman may succeed themselves
for the appointed term of four years].
(c) Vacancies happening from among members appointed from
among the nominations made by the associations shall be filled
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by the appointment of a successor for a full term of four years.
(d) No appointed member shall serve more than two
consecutive full terms.
(e) Each member of the board shall take an oath of office
that he will diligently and honestly administer the affairs of
the board, and that he will not knowingly violate or wilfully
permit to be violated any of the provisions of this act.
(f) A quorum of the board shall consist of [six] eight
members.
Section 3.1. The act is amended by adding a section to read:
Section 103.1. Status of the Board.--(a) Except where
otherwise explicitly designated by act of the General Assembly,
the board shall be an independent board of the Commonwealth.
(b) For purposes of the act of October 15, 1980 (P.L.950,
No.164), known as the "Commonwealth Attorneys Act," the board
shall be considered an executive agency.
(c) For purposes of the act of July 31, 1968 (P.L.769,
No.240), referred to as the Commonwealth Documents Law, and the
act of June 25, 1982 (P.L.633, No.181), known as the "Regulatory
Review Act," the board shall be considered an agency.
Section 4. Section 104 of the act, amended May 17, 1980
(P.L.135, No.50) and February 1, 1984 (P.L.1, No.1), is amended
to read:
Section 104. General Powers of the Board.--The board shall:
(1) Appoint a secretary [and], an assistant secretary and
investment professionals who shall serve at the pleasure of the
board. The compensation of all persons so appointed shall be
fixed by the board and shall be consistent with the standards
established by the Executive Board of the Commonwealth. The
secretary, with the prior approval of the board, shall appoint
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the clerical and other [employes] employees of the board, whose
positions, excluding the secretary's [and], assistant
secretary's and the investment professionals', shall be under
the classified service provisions of the act of August 5, 1941
(P.L.752, No.286), as amended and the secretary shall fill
future vacancies in accordance with such provisions. [The
compensation of all persons so appointed shall be fixed by the
board and shall be consistent with the standards established by
the Executive Board of this Commonwealth;].
(2) Contract for professional services, including but not
limited to actuarial, investment and medical as it deems
advisable[;].
(3) Keep in convenient form such data as shall be deemed
necessary for actuarial valuation purposes[;].
(4) From time to time, through its actuary, make an
actuarial investigation into the mortality and service
experience of the [contributors and annuitants] members and of
the various accounts created by this act[;].
(5) Adopt [for the system] one or more mortality tables and
such other tables as shall be deemed necessary[;].
(7) Certify annually the amount of appropriation which each
municipality shall pay into the [retirement fund, which amounts]
fund. Said obligations shall be based on estimates furnished by
the actuary[, and shall be credited to the municipal account of
the fund;] in accordance with the funding requirements found in
the Municipal Pension Funding Standard and Recovery Act, if
applicable to that municipality and, if not, as determined by
the board.
(8) Prepare and publish annually a financial statement
showing the condition of the fund and the various accounts
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thereof, and setting forth such other facts, recommendations and
data as may be of use in the advancement of knowledge concerning
the Pennsylvania Municipal Retirement System, and furnish a copy
thereof to each municipality which has joined the system, and to
such persons as may request copies thereof[;].
(9) Keep a record of all its proceedings, which will be open
to inspection by the public[;].
(10) From time to time, with the advice of the [Attorney
General] Office of General Counsel and the actuary, adopt and
promulgate such rules and regulations as may be required for the
proper administration of the fund created by this act and the
several accounts thereof, and for the transaction of the
business of the board[;].
(11) Be authorized to approve any optional retirement plan
for municipal [employes] employees, municipal [firemen] fire
fighters or municipal police officers, with any municipality as
long as it is actuarially sound and benefits under the plan are
not in excess of or member's minimum contribution rates are not
less than those provided in other existing retirement laws
pertaining to that class of municipality; except to the extent
that excess investment earnings are allocated to provide for
additional pension benefits or member accruals as otherwise
provided in this law[;].
(12) Prepare and distribute annual statements of accounts to
each of the active members of the system, showing the
contributions made during the year, the interest [earned]
credited to the member's account and the total balance standing
in the member's account at the end of the year[;].
(12.1) From time to time, at the direction of municipalities
under the provisions of Article II, Article III or Article IV of
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this act electing to provide cost-of-living increases from their
share of excess investment earnings, the board shall allocate
excess investment earnings to provide additional "cost-of-
living" pension benefits to those members of such municipalities
who have already retired. Such allocations shall be made, with
the advice of the actuary, on a fully funded basis employing
actuarial assumptions which reflect the nature of the liability.
(12.2) From time to time, at the direction of municipalities
under the provisions of Article II, Article III or Article IV of
this act electing to apply their excess investment earnings to
member contributions, the board shall allocate excess investment
earnings for active members of such municipalities by applying
such allocation to member contributions. To the extent that
additional liabilities may accrue as a result of such
allocation, the actuary shall employ actuarial assumptions, on a
fully funded basis, to accurately reflect the nature of the
liability generated therefrom.
(13) Perform such other functions as are required for the
execution of the provisions of this act and all Federal and
State law and shall administer and interpret the provisions of
this act so as to ensure that the system shall be maintained as
tax qualified under the Internal Revenue Code.
(14) Enter into a contract with one or more third party
administrators for the administration of defined retirement
option plans enrolled under Article IV-A of this act. The board
shall set performance standards and criteria and annually review
all plan and fund managers to determine whether they meet such
standards and criteria.
(15) Possess the powers and privileges of a corporation and
shall operate and conduct business as the Pennsylvania Municipal
20090HB1884PN2523 - 19 -
Retirement System.
Section 5. Section 105 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 105. Preliminary Actuarial Investigation Tables and
Rates.--[As soon as may be after the passage of this act, the]
The actuary shall make an investigation of the mortality,
service and salary experience of municipal [employes, municipal
firemen] employees, municipal fire fighters and municipal police
officers as [he] the actuary shall deem necessary, for the
purpose of determining upon tentative tables and municipal
contributions. On the basis of such investigation and
recommendation, the board shall adopt such tentative tables and
certify such tentative rates for the purpose of giving
municipalities and municipal [employes, municipal firemen]
employees, municipal fire fighters and municipal police officers
estimates of the cost involved in electing to join the
retirement [system] plans established by this act. The actuary
shall make subsequent investigations at least once every five
years in order to enable the board to change such tables when
necessary.
Section 6. Section 107 of the act is amended to read:
Section 107. Election by Municipalities to Join Retirement
System.--(a) Any municipality may elect, by ordinance or
resolution adopted by the tax levying body, or in the case of
municipal authorities by the board of such municipal authority
to join the system: Provided, however, That any municipality
electing coverage under the provisions of Article II of this act
must have first placed its municipal [employes] employees in so
far as they are eligible under the Federal Social Security Act.
(b) Any municipality, by action of its tax levying body, may
20090HB1884PN2523 - 20 -
and upon petition of electors equal to at least five per cent of
the registered electors of the municipality, shall, submit the
question of joining such system to the voters of the
municipality at any municipal or general election, in the same
manner as other questions are submitted to the electors under
the election code of the Commonwealth. If the majority of the
electors voting on the question vote in favor thereof, the tax
levying body shall adopt an ordinance or resolution electing to
join such system. If the electors vote against joining the
system, then no further action shall be taken in the
municipality for a period of two years.
(c) A duly certified copy of any such ordinance or
resolution electing to join the system shall be filed with the
board.
Section 7. The act is amended by adding a section to read:
Section 107.1. Mandatory Enrollment.--(a) Any municipality
maintaining a severely distressed pension plan as determined
pursuant to the provisions of the Municipal Pension Plan Funding
Standard and Recovery Act, shall transfer the administration of
all existing pension plans established by the municipality to
the board, and the board shall enroll all such plans into the
system in accordance with the provisions of Article IV-A of this
act.
(b) Any municipality maintaining a severely distressed
pension plan as determined pursuant to the provisions of the
Municipal Pension Plan Funding Standard and Recovery Act after
the effective date of transferring the administration of all
existing pension plans established by the municipality to the
board under the provisions of Article IV-A shall enroll all
full-time employees as defined in Article IV-B of this act hired
20090HB1884PN2523 - 21 -
subsequent to the effective date of the transfer into the system
in accordance with Article IV-B of this act.
(c) This section shall not apply to cities of the first <--
class.
Section 8. Sections 108 and 109 of the act are amended to
read:
Section 108. Retirement Funds and Accounts.--(a) The
Pennsylvania Municipal Retirement Fund shall consist of the
money received from municipalities arising from contributions by
municipalities, and from payroll deductions from salary or
compensation of members, and other contributions made by members
through the municipality to the system, from transfers made from
municipal retirement or pension systems and credited as provided
in this act, and investment earnings thereon.
(b) The fund shall be a trust, and the assets of the system
shall be held in trust. No part of the assets of the system
shall be used for or diverted to purposes other than for the
exclusive benefit of the members, their spouses or the members'
beneficiaries prior to the satisfaction of all liabilities of
the system with respect to them. The assets of the fund shall be
used only to pay:
(1) benefits to members in accordance with this act; and
(2) necessary expenses of the system as established in this
act.
(c) (1) Contributions made by municipalities enrolled in
plans established under the provisions of Article II, Article
III or Article IV of this act toward superannuation retirement
and death benefits of members shall be credited to the municipal
account of [said] the fund, contributions made by municipalities
toward disability retirement of members shall be credited to the
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total disability reserve account of [said] the fund, and payroll
deductions and other contributions of members shall be credited
to the member's account of [said] the fund. Transfers made from
existing municipal retirement or pension systems shall be
credited as provided in this act.
(2) Contributions made by municipalities enrolled in plans
established under the provisions of Article IV-A of this act
toward superannuation retirement, disability retirement and
death benefits of members shall be credited to the municipal
account of the fund and payroll deductions and other
contributions of members shall be credited to the member's
account of the fund. Transfers made from existing municipal
retirement or pension systems shall be credited as provided in
this act.
(3) Contributions made by municipalities enrolled in plans
established under the provisions of Article IV-B of this act
toward superannuation retirement, disability retirement and
death benefits of members shall be credited to the employers
account of the fund, and payroll deductions and other
contributions of members shall be credited to the member's
account of the fund.
(d) (1) The board shall keep separate accounts of each
municipality and for each separate class of [employes] employees
enrolled by that municipality under [the several articles of
this act, except the total disability reserve account and the
retired member's reserve account which shall be maintained as
pooled accounts] Article II, Article III, Article IV or Article
IV-A of this act. The board shall keep one separate employer's
account for each retirement plan under Article IV-B of this act
and separate members' accounts for each employee enrolled in a
20090HB1884PN2523 - 23 -
plan established under Article IV-B of this act. Each
municipality and the members thereof shall be liable to the
board for the amount of contributions required to cover the cost
of the retirement allowance and other benefits payable to such
members.
(2) The total disability reserve account and the retired
member's reserve account shall be maintained as pooled accounts.
(e) (1) Upon the granting of a superannuation or voluntary
or involuntary [withdrawal] retirement allowance to any
[contributor] member of a plan established under Article II,
Article III, Article IV or Article IV-B of this act, the amount
of [such contributor's] the member's accumulated deductions in
the member's account shall lose their status as accumulated
deductions and shall be transferred to the retired member's
reserve account and the actuarial equivalent of the municipal
annuity shall be similarly transferred from the municipal
account or the employer's account to the retired member's
reserve account.
(2) Upon the granting of a superannuation or voluntary or
involuntary retirement allowance to any member of a plan
enrolled in the system under Article IV-A, the amount of the
member's accumulated deductions in the member's account shall
lose their status as accumulated deductions and shall be
transferred to the municipal account of the plan. A transfer
shall be made monthly from the municipal account to the retired
member's reserve account to fund the retired member's reserve
account for any benefit payment to a retired member, a spouse or
beneficiary of a member who was entitled to a benefit under that
municipal plan's provisions.
(3) Upon the granting of a disability retirement allowance
20090HB1884PN2523 - 24 -
to any [contributor] member of a plan established under Article
II, Article III or Article IV of this act, there shall be
transferred to the retired member's reserve account the amount
of the [contributor's] member's accumulated deductions in the
member's account, the amount of the equivalent actuarial value
[to] of the municipal annuity, and such additional amount from
the total disability reserve account as is needed in addition
thereto to provide the actuarial equivalent of the total
disability allowance to which the [contributor] member is
entitled.
(4) Upon the granting of a disability retirement allowance
to any member of a plan enrolled in the system under Article IV-
A of this act, the amount of the member's accumulated deductions
in the member's account shall lose their status as accumulated
deductions and shall be transferred to the municipal account of
the plan. A transfer shall be made monthly from the municipal
account to the retired member's reserve account to fund the
retired member's reserve account for any benefit payment to a
retired member, a spouse or beneficiary of a member who was
entitled to a benefit under that municipal plan's disability
provisions.
(5) Upon the granting of a disability retirement allowance
to any member of a plan established under Article IV-B of this
act, there shall be transferred to the retired member's reserve
account the amount of the member's accumulated deductions in the
member's account and such additional amount from the employer's
account as is needed in addition thereto to provide the
actuarial equivalent of the total disability allowance to which
the member is entitled.
Section 109. Custody of and Payments from Fund.--All moneys
20090HB1884PN2523 - 25 -
and securities in the fund shall be placed in the custody of the
State Treasurer for safekeeping, and all payments on account of
retirement allowances shall be made on requisition signed by the
[chairman and] secretary of the board.
Section 9. Section 110 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 110. Management and Investment of Fund; Interest
Credits.--(a) The members of the board shall be trustees of the
fund, and shall have the exclusive management of said fund, with
full power to invest the moneys therein, subject to the terms,
conditions, limitations and restrictions imposed by law upon
fiduciaries. The [said] trustees shall have power to hold,
purchase, sell, assign, transfer and dispose of any securities
and investments in [said] the fund, as well as the proceeds of
such investments, and of the money belonging to [such] the fund.
(b) The board shall annually allow regular interest to the
credit [on each contributor's account,] of each member's account
and municipal account established under Article II, Article III,
Article IV and Article IV-A of this act. The board shall also
annually allow regular interest to the retired members reserve
account and [the total disability reserve account] to the
employer accounts of the plans established by Article IV-B of
this act. The board shall credit statutory interest on each
member's account established under Article IV-B of this act. The
board shall annually credit the difference between the statutory
interest awarded to the members' accounts of a plan established
under Article IV-B of this act and the amount of regular
interest that would have been earned on such accounts to the
employer's account of that plan.
[In addition, the] (c) The board shall, after [paying]
20090HB1884PN2523 - 26 -
deducting money to pay for the appropriated expenses, annually
allow such excess interest as each municipality enrolled under
Article II, Article III or Article IV of this act deems
appropriate to the credit of the municipal accounts, member's
accounts, the member's excess investment accounts, retired
members reserve accounts [and total disability reserve
accounts]. Excess interest earned on accounts of a plan
established under Article IV-A of this act shall be credited to
the municipal account of that plan, and excess interest earned
on accounts of a plan created by Article IV-B shall be credited
to the employer's account of such plan.
Section 10. Section 111 of the act is amended to read:
Section 111. Municipal Guarantee.--(a) The regular interest
charges payable and the creation and maintenance of the
necessary reserves for the payment of the municipal and member's
annuities, as to any municipality in accordance with this act,
are hereby made the obligation of that municipality.
(b) In the case of the failure of a municipality to make
payments as required by this act, the Commonwealth shall
withhold payment to the municipality of any funds to which the
municipality may be entitled for pension purposes. The board may
recover any sums due to the fund by suit at law, or other
appropriate remedy.
(c) (1) No liability for a plan enrolled in the system
under the provisions of Article IV-A of this act shall be
assumed by or attached against the system, the board, the
Commonwealth or their officers or employees.
(2) Should the plan have insufficient funds held in the
plan's municipal account to make payment of all or a portion of
a given month's retirement allowance, the system's obligation to
20090HB1884PN2523 - 27 -
make the remaining portion of such payment and any such future
payments shall cease and shall become the direct and immediate
liability of the municipality.
(3) Should the plan have insufficient funds held in the
plan's municipal account to make payment of all or a portion of
any lump sum death benefit, a municipality shall have 60 days
from notification of the deficiency to deposit sufficient funds
to the account to make payment of the death benefit.
(4) If payment is not received within 60 days, the system's
obligation to make the remaining portion of the payment shall
cease and shall become the direct and immediate liability of the
municipality.
Section 11. Section 112 of the act, amended July 5, 2005
(P.L.50, No.16), is amended to read:
Section 112. Annual Estimates to Municipalities;
Administrative Expenses.--(a) The board shall prepare and
submit to each municipality, on or before the first day of the
third month preceding the commencing of each municipality's
fiscal year, an itemized estimate of the amounts necessary to be
appropriated by the municipality to complete the payments of the
obligations of the municipality to the fund during its next
fiscal year.
(b) (1) The board shall annually prepare and approve a
budget covering the administrative expenses of this act. Such
expenses as approved by the board shall be paid from receipts
from assessments made against each municipality for
administrative expenses. This assessment shall be based on the
number of members in each municipality and shall not exceed the
sum of twenty dollars ($20) per member per year. If, in the
calendar years 1995 through [2005] 2015, the amount received
20090HB1884PN2523 - 28 -
from such assessments, when imposed at the maximum rate, is not
sufficient to cover the administrative expenses, then the
balance of such expenses shall be paid from interest earnings on
the fund in excess of the regular interest credited to the
municipal, members' and retired members' reserve accounts and
shall not, in any year, exceed six-tenths of one per cent of the
total asset value of the fund as of the beginning of the
calendar year.
(2) The administration of the Pennsylvania Municipal
Retirement System shall be audited annually and a report of this
audit shall be made annually to the General Assembly.
[The secretary of the board shall submit a proposed budget
for the following fiscal year to the Senate and House Local
Government Committees no later than November 1 of the year
preceding that for which the budget is being prepared. The
respective committees shall meet and review such budget
document. If the committees take no action within sixty days of
said November 1, the budget for the following calendar year
shall be deemed approved.]
(3) All assessments authorized under this section shall
remain authorized assessments for the calendar year they are
imposed. Beginning the first full calendar year after the
effective date of this paragraph, the board shall no longer
impose such assessments, but shall fund the administrative
expenses of the system from the assets of the fund in accordance
with subsection (c).
(c) (1) Effective the first Monday in February after the
effective date of this subsection, and every first Monday in
February thereafter, the board shall submit to the General
Assembly a proposed budget covering the administrative expenses
20090HB1884PN2523 - 29 -
of the system for the coming fiscal year.
(2) Such expenses, as approved by the Governor and the
General Assembly in an appropriation act, shall be paid by the
State Treasurer from the assets of the fund.
Section 12. Section 113 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 113. Existing Local Retirement Systems.--(a) (1)
Where a municipality elects to join the system [established by]
under the provisions of Article II, Article III or Article IV of
this act, and is then maintaining a retirement or pension system
or systems covering its [employes] employees in whole or in
part, those [employes] employees so covered, and [employes]
employees thereafter eligible to join such pension system, shall
not become members of the retirement system established by this
act, unless at the time the municipality elects to join the
system, the members of each such existing retirement or pension
system shall, by the affirmative vote of seventy-five per cent
of all the members of each pension system, elect to be covered
by the retirement system established by this act.
(2) At any time thereafter, within a period of three years
after the municipality has elected to join the system under the
provisions of Article II, Article III or Article IV of this act,
but not thereafter, the members of an existing retirement or
pension system may, in like manner, elect to join the system
established by this act. In any such case, provisions may be
made for the transfer of moneys and securities in its retirement
or pension fund or funds, in whole or in part, to the fund
established by this act. Securities so transferred shall be only
those acceptable to the board. Securities not so acceptable
shall be converted into cash, and said cash transferred to the
20090HB1884PN2523 - 30 -
fund created by this act. In any such transfer, provision shall
be made to credit the accumulated deductions of each member, at
least the amount [he] the member has paid into the retirement or
pension system of the municipality, which moneys shall be
credited against the prior service contributions of [such] the
member, or a municipality may turn over to the retirement system
created by this act any existing local pension system on a
completely funded basis, as to pensioners and pension credits of
members related to prior service to the date of transfer, or on
a partially funded basis if the municipality pays annually into
the retirement system amounts sufficient to completely liquidate
the municipality's liability for prior service within a period
not to exceed thirty years.
(b) No liability, on account of retirement allowances or
pensions being paid from any retirement or pension fund of the
municipality, shall attach against the fund, except as provided
in the contractor agreement, making a transfer of an existing
system in accordance with this section. The liability to
continue payment of pensions not so transferred shall attach
against the municipality, which shall annually make
appropriations from its tax revenues sufficient to pay the same.
In cases where workers covered by an existing retirement or
pension system elect to join the system [created by] under the
provisions of Article II, Article III or Article IV of this act,
the election to join shall be deemed to have been made at the
time the municipality elected to join the system, and the
liabilities of the municipality shall be fixed accordingly.
(c) Notwithstanding any other provision [herein] in this
act, the board may, in its discretion, entertain a request from
a municipality to join the system established by this act for
20090HB1884PN2523 - 31 -
those [employes] employees who are excluded from local pension
plan coverage by virtue of the collective bargaining process or
otherwise. The request to join the system must be accompanied by
an affirmative vote of no less than three-fourths of those
[employes] employees not covered by the local pension plan. The
benefits to be established may be in accordance with the
provisions of this article or to any other relevant pension law
covering that class of municipality. The other requirements of
this section for joining this system shall be observed.
Section 13. Section 114 of the act is amended to read:
Section 114. Monthly Payments.--(a) Any retirement
allowance created under the provisions of this act shall be paid
in equal monthly installments and shall not be increased,
decreased, revoked or repealed, except where specifically
otherwise provided by this act. When the equivalent actuarial
value of the retirement allowance is less than $5,000, the board
may make a single lump sum payment equal to the equivalent
actuarial value.
(b) The annual retirement benefit payable to any member
shall not exceed the annual dollar limitation as set forth in
Internal Revenue Code § 415(b)(1)(A) as may be adjusted pursuant
to Internal Revenue Code § 415(d). To the extent that such
adjustment may be required by operation of the Internal Revenue
Code, regulation or other publications issued by the Internal
Revenue Service, such adjustment shall only apply to the dollar
limitation specified in this section.
Section 14. Section 115 of the act, repealed in part April
28, 1978 (P.L.202, No.53), is amended to read:
Section 115. Exemption of Retirement Allowance and
Exceptions.--(a) The retirement allowance and the contributions
20090HB1884PN2523 - 32 -
of members to the fund, all contributions returned to
[contributors] members under the provisions of this act and the
moneys in the fund created by this act, shall be exempt from any
State or municipal tax and shall be unassignable except to a
beneficiary.
(b) Rights under this act shall be subject to:
(1) Attachment in favor of an alternate payee as set forth
in an approved domestic relations order.
(2) Forfeiture as provided by the act of July 8, 1978
(P.L.752, No.140), known as the "Public Employee Pension
Forfeiture Act." Forfeitures under this subsection or under any
other provision of law may not be applied to increase the
benefits that any member would otherwise receive under this
part.
(c) Effective with distributions made on or after January 1,
1993, and notwithstanding any other provision of this section to
the contrary, a distributee may elect, at the time and in the
manner prescribed by the board, to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan by way of a direct rollover.
(d) For purposes of this section, the following words shall
have the following meanings:
"Distributee." A member, a member's surviving spouse or a
member's former spouse who is an alternate payee under an
approved domestic relations order.
"Eligible retirement plan." The term shall have the meaning
given to it under the Internal Revenue Code § 402(c)(8)(B),
except that a qualified trust shall be considered an eligible
retirement plan only if it accepts the distributee's eligible
rollover distribution, however, in the case of an eligible
20090HB1884PN2523 - 33 -
rollover distribution to a nonspousal beneficiary, an eligible
retirement plan is an "individual retirement account" or an
"individual retirement annuity" as those terms are defined in
the Internal Revenue Code § 408(a) and (b).
"Eligible rollover distribution." The term shall have the
meaning given to it under the Internal Revenue Code § 402(f)(2)
(A).
Section 15. Section 117 of the act, added November 29, 2004
(P.L.1331, No.169), is amended to read:
Section 117. Part-Time [Employes] Employees.--(a) (1) All
existing part-time [employes] employees not enrolled in the
pension plan shall have the right to elect to participate in the
pension plan. A member's election to participate in the pension
plan under this subsection must be made in writing and received
by the municipality before July 1, 2005, and shall be
irrevocable.
(2) Existing part-time [employes] employees not enrolled
in the pension plan who elect to participate in the pension
plan under this subsection must pay into the system all
member contributions plus the regular interest that would
have been credited to those contributions had they
participated in the system from their date of hire. Failure
of the part-time [employe] employee to make such
contributions and regular interest payments as determined by
the administrator of the system shall be considered the same
as if the part-time [employe] employee had chosen not to
participate in the system. All other amounts required to be
contributed to the pension plan as a result of their election
to participate shall be paid by the municipality.
(b) Where a municipality determines to change the membership
20090HB1884PN2523 - 34 -
requirements to prohibit part-time [employes] employees from
participating in the system established by this act, all
existing part-time [employes] employees enrolled in the pension
plan shall remain members of the pension plan unless they elect
to withdraw from the pension plan. A member election to withdraw
from the pension plan under this subsection must be made in
writing and received by the municipality before July 1, 2005,
and shall be irrevocable.
Section 16. The act is amended by adding sections to read:
Section 118. Approval of Domestic Relation Orders.--(a) A
domestic relations order shall be certified as an approved
domestic relations order by the secretary of the board or the
secretary's designated representative only if the order meets
all of the following:
(1) Requires the system to provide any type or form of
benefit or any option already provided under this act.
(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 increased
benefits are paid to the member or alternate payee based upon
cost-of-living increases or increases based on other than
actuarial value.
(3) Specifies the amount or percentage of the member's
benefits to be paid by the system to each such alternate payee
or the manner in which the amount or percentage is to be
determined.
(4) Specifies the retirement option to be selected by the
member upon retirement or states that the member may select any
retirement option offered by this act upon retirement.
(5) Specifies the name and last known mailing address, if
20090HB1884PN2523 - 35 -
any, of the member and the name and last known mailing address
of each alternate payee covered by the order and states that it
is the responsibility of each alternate payee to keep a current
mailing address on file with the system.
(6) Does not grant an alternate payee any of the rights,
options or privileges of a member under this act.
(7) Requires the member to execute an authorization allowing
each alternate payee to monitor the member's compliance with the
terms of the domestic relations order through access to
information concerning the member maintained by the system.
(b) (1) Upon receipt of a proposed domestic relations
order, the secretary of the board or the secretary's designated
representative shall determine whether the proposed order shall
be deemed an approved domestic relations order and shall notify
the member and each alternate payee of this determination.
(2) Notwithstanding any other provision of law, the
exclusive remedy of any member or alternate payee aggrieved by a
decision of the secretary of the board or the secretary's
designated representative shall be the right to an adjudication
by the board under 2 Pa.C.S. Ch. 5 (relating to practice and
procedure) with appeal therefrom to the Commonwealth Court under
2 Pa.C.S. Ch. 7 (relating to judicial review) and 42 Pa.C.S. §
763(a)(1) (relating to direct appeals from government agencies).
(c) (1) The requirements for approval identified in
subsection (a) shall not apply to any domestic relations order
which is an order for support as that term is defined in 23
Pa.C.S. § 4302 (relating to definitions) or an order for the
enforcement of arrearages as provided in 23 Pa.C.S. § 3703
(relating to enforcement of arrearages).
(2) These orders shall be approved to the extent that they
20090HB1884PN2523 - 36 -
do not attach moneys in excess of the limits on attachments as
established by the laws of this Commonwealth and the United
States.
(d) Only the requirements of this section and any
regulations promulgated under this act shall be used to govern
the approval or disapproval of a domestic relations order. If
the secretary of the board or the secretary's designated
representative acts in accordance with the provisions of this
act and any promulgated regulations in approving or disapproving
a domestic relations order, then the obligations of the system
with respect to such approval or disapproval shall be
discharged.
Section 119. Amendment of Approved Domestic Relations
Orders.--(a) In the event that an alternate payee of an
approved domestic relations order predeceases the member and
there are benefits payable to the alternate payee, the court 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) If a court amends an approved domestic relations order
for any reason, then the amended order must be submitted for
recertification as an approved domestic relations order as
provided in this act.
Section 120. Irrevocable Beneficiary.--Notwithstanding any
other provision of this act, a domestic relations order may
provide for an irrevocable beneficiary. A domestic relations
order requiring the nomination of an irrevocable beneficiary
shall be deemed to be one that requires a member to nominate an
alternate payee as a beneficiary and that prohibits the removal
or change of that beneficiary without approval of a court of
20090HB1884PN2523 - 37 -
competent jurisdiction, except by operation of law. Such a
domestic relations order may be certified as an approved
domestic relations order by the secretary of the board or the
secretary's designated representative after the member makes
such nomination, in which case the irrevocable beneficiary so
ordered by the court cannot be changed by the member without
approval by the court.
Section 121. Irrevocable Survivor Annuitant.--
Notwithstanding any other provision of this act, a domestic
relations order may provide for an irrevocable survivor
annuitant. A domestic relations order requiring the designation
of an irrevocable survivor annuitant 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 annuitant without approval of a court of competent
jurisdiction, except by operation of law. Such a domestic
relations order may be certified as an approved domestic
relations order by the secretary of the board or the secretary's
designated representative, in which case the irrevocable
survivor annuitant so ordered by the court cannot be changed by
the member without approval by the court. A person ineligible to
be designated as a survivor annuitant may not be designated an
irrevocable survivor annuitant.
Section 17. Article II heading and section 201 of the act
are amended to read:
ARTICLE II
PROVISIONS RELATING TO MUNICIPAL [EMPLOYES] EMPLOYEES
Section 201. Purpose.--This article [shall provide] provides
for the uninterrupted continuation of retirement plans
established under the act of June 4, 1943 (P.L.886, No.371),
20090HB1884PN2523 - 38 -
known as the "Municipal Employes' Retirement Law." It shall also
provide for the enrollment of municipal [employes] employees of
new municipalities joining the system, at the contribution rates
and benefit rates outlined in this article of the act.
Section 18. Section 203 of the act, amended November 29,
2004 (P.L.1331, No.169), is amended to read:
Section 203. Existing Local Retirement Systems and
Compulsory and Optional Membership.--(a) (1) Where a
municipality elects to join the system established by this act,
and is then maintaining a retirement or pension system or
systems covering its [employes] employees in whole or in part,
those [employes] employees so covered, and [employes] employees
thereafter eligible to join [such] the pension system, shall not
become members of the retirement system established by this act,
unless at the time the municipality elects to join the system,
the members of each [such] existing retirement or pension system
shall, by the affirmative vote of seventy-five per cent of all
the members of each pension system, elect to be covered by the
retirement system established by this act.
(2) At any time thereafter, within a period of three years
after the municipality has elected to join the system, but not
thereafter, the members of an existing retirement or pension
system may, in like manner, elect to join the system established
by this act.
(3) In any such case, provisions may be made for the
transfer of moneys and securities in its retirement or pension
fund or funds, in whole or in part, to the fund established by
this act. Securities so transferred shall be only those
acceptable to the board. Securities not so acceptable shall be
converted into cash, and [said] the cash transferred to the fund
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created by this act.
(4) In any such transfer, provision shall be made to credit
the accumulated deductions of each member, at least the amount
[he] the member has paid into the retirement or pension system
of the municipality, which moneys shall be credited against the
prior service contributions of [such] the member, or a
municipality may turn over to the retirement system created by
this act any existing local pension system on a completely
funded basis, as to pensioners and pension credits of members
related to prior service to the date of transfer, or on a
partially funded basis if the municipality pays annually into
the retirement system amounts sufficient to completely liquidate
the municipality's liability for prior service within a period
not to exceed thirty years.
(b) (1) No liability, on account of retirement allowances
or pensions being paid from any retirement or pension fund of
the municipality, shall attach against the fund, except as
provided in the agreement, making a transfer of an existing
system in accordance with this section. The liability to
continue payment of pensions not so transferred shall attach
against the municipality, which shall annually make
appropriations from its tax revenues sufficient to pay the same.
(2) In cases where workers covered by an existing retirement
or pension system elect to join the system created by this act,
the election to join shall be deemed to have been made at the
time the municipality elected to join the system, and the
liabilities of the municipality shall be fixed accordingly.
(c) (1) If a municipality elects to join the system under
the provisions of this [Article II] article, then each officer
other than elected officers, and each municipal [employe]
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employee employed on a full-time basis, except one who is not
eligible for Federal Social Security coverage and except one who
is covered by an existing retirement or pension system and is
exempted as outlined above, shall be required to become a member
of the system.
(2) Each municipality shall determine whether membership in
[said] the system for elected officials and [employes] employees
hired on a temporary, seasonal or part-time basis shall be
compulsory, optional or prohibited.
(3) Where membership may be optional with an elected officer
or an [employe] employee hired on a temporary, seasonal or part-
time basis, an election to join the system must be made within
one year after the municipality elected to join the system or
within one year after the officer or temporary, seasonal or
part-time [employe] employee first entered the service of the
municipality.
(4) For those employees who choose not to enroll, the
declination of membership shall apply for the period of time the
employee serves continuously in that optional category. If there
is a break in service and the employee returns, the employee
shall not be permitted to purchase optional membership time
previously declined, but may be enrolled as a member for future
optional service, if the employee so chooses. If the employee
returns to service where membership is mandatory, the member
shall be required to join the plan, on a prospective basis only.
(5) Officers and [employes] employees paid only on a fee
basis shall not be eligible to join the system.
(d) When a municipality has established a policy of placing
new [employes] employees on a probationary status it may elect
to refrain from enrolling such [employes] employees into the
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system for a period of up to one year from the date the
probationary [employe] employee first entered the service of the
municipality. In such cases service credits shall not be earned
by the [employe] employee for probationary time served prior to
enrollment.
(e) Notwithstanding any other provision [herein] of this
act, the board may, in its discretion, entertain a request from
a municipality to join the system established by this act for
those [employes] employees who are excluded from local pension
plan coverage by virtue of the collective bargaining process or
otherwise. The request to join the system must be accompanied by
an affirmative vote of no less than three-fourths of those
[employes] employees not covered by the local pension plan. The
benefits to be established may be in accordance with the
provisions of this article or any other relevant pension law
covering that class of municipality. The other requirements of
this section for joining this system shall be observed.
Section 19. Sections 204, 205 and 206 of the act, amended
May 17, 1980 (P.L.135, No.50), are amended to read:
Section 204. Service Allowance; Change of Employment;
Military Service.--(a) In computing the length of service of a
[contributor] member for retirement purposes, full credit shall
be given to each original member for each year of service
rendered to the municipality prior to the time the municipality
joined the system, whether or not such service was continuous.
(b) As soon as practicable, the board shall issue to each
original member a certificate certifying the aggregate length of
service rendered to the municipality prior to the time it joined
the system. Such certificate shall be final and conclusive as to
his prior service unless thereafter modified by the board, upon
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application of the member.
(c) The time during which a member was absent from service
without pay shall not be counted in computing the service of a
[contributor] member in his certificate, or upon retirement,
unless specifically allowed by the municipality, with the
approval of the board.
(d) When a [contributor] member leaves the employ of a
municipality which has joined the system, and enters into the
employ of another municipality which has also joined the system,
his service credits shall remain unimpaired, but in such cases
the unpaid municipal liability for prior service shall be
prorated by the board between the municipalities on an equitable
basis. Such basis will be determined, with the advice of the
actuary, according to the number of years of service performed
by the [contributor] member for each municipality.
(e) A [contributor] member who has been employed by a
municipality for a period of at least six months and is an
active member of the system and who thereafter, heretofore, or
hereafter, shall be inducted into the military service of the
United States in times of war, armed conflict, or National
emergency, so proclaimed by the President of the United States,
shall have credited to his employment record, for pension or
retirement benefits, all of the time spent by him in such
military service during the continuance of such war, armed
conflict, or National emergency if such person returns or has
heretofore returned to his employment within six months after
his separation from the service. The municipality shall, during
the period of the member's intervening military service,
continue to make current service contributions toward the
municipal annuity of the member. An active member may file an
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application with the board for permission to purchase credit
toward his member's share of the annuity for intervening
military service. These contributions shall be computed by
applying the member's contribution rate to his annual rate of
compensation at the time of entry of the member into active
military service, and multiplying the result by the number of
years and fractional part of a year of creditable intervening
military service, together with interest from date of return to
employment to date of purchase. The amount due from the member
shall be certified by the board in accordance with methods
approved by the actuary, and may be paid by (1) regular monthly
payments during active military service, or (2) a lump sum
payment within thirty days or (3) it may be amortized with
additional interest through salary deductions in amounts agreed
upon by the member of the board.
(f) An active member may also purchase credit for other than
intervening military service performed for the United States in
times of war, armed conflict or National emergency, so
proclaimed by the President of the United States, for a period
not to exceed five years: Provided, That the member has
completed five years of service to the municipality subsequent
to such military service. An active member may file an
application with the board for permission to purchase credit for
nonintervening military service upon completion of five years of
subsequent service to the municipality. The type of service
credit for such service shall be determined by the date of entry
of the municipality into the system. If the date of the member's
separation from military service is prior to the date on which
the municipality joined the system, then the credit purchased
shall be considered as prior service credit. In this case the
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amount due from the member shall be computed by applying the
member's basic contribution rate plus the rate of contribution
the municipality paid for current service during its first year
of entry into the system to his prior salary and multiplying the
result by the number of years and fractional part of a year of
creditable nonintervening military service, plus interest from
the date of the member's employment by the municipality to the
date of purchase. If, on the other hand, the date of the
member's separation from military service is later than the date
of entry of the municipality into the system, then the credit
purchased shall be considered as current service credit. In this
case the amount due from the member shall be computed by
applying the member's basic contribution rate plus the
municipality's normal contribution rate for current service
which was in effect on the date of the member's entry into
employment with the municipality to his average annual rate of
compensation over the first five years of his subsequent
employment and multiplying the result by the number of years and
fractional part of a year of creditable nonintervening military
service being purchased, plus interest from the date of
employment by the municipality to date of purchase.
(g) The amount due from the member shall be certified by the
board in accordance with methods approved by the actuary, and
may be paid in a lump sum within thirty days or it may be
amortized with additional interest through salary deductions in
amounts agreed upon by the member and the board.
(h) The rate of interest to be charged to members on their
purchase of credit for intervening or nonintervening military
service shall be the rate being credited by the system to
member's contribution accounts in effect on the date of the
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member's application, compounded annually.
(i) A member may purchase credit for intervening or
nonintervening military service only if his discharge or
separation from the service was granted under other than
dishonorable conditions.
(j) A member may not purchase credit for any military
service for which he is 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
or partially paid for by any other governmental agency, or
private employer.
(k) Applications for permission to purchase credit for
military service must be accompanied by proof of the nature of
his discharge or separation from the military service.
Section 205. Determination of Municipal Liability.--(a) The
board shall as soon as may be, determine the present value of
the liability of each municipality for the prior service credits
to its original members, and shall establish an amount payable
annually over a period not exceeding thirty years, through which
payments such prior service liability may be funded. Each
municipality shall have the option to spread the payment of such
prior service liability over such period of years.
(b) The municipal liability shall be based upon credit for
all years of prior service toward the municipal annuity of each
original member, subject to such of the following options as the
municipality may elect:
(1) [The] the municipality may limit to ten years the credit
for prior service toward the municipal annuity of each original
member; or
(2) [The] the municipality may assume the liability for
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payment of the member's contributions for the prior service or
any portion thereof of each original member.
(c) The board shall also determine, from time to time, the
amount which shall be contributed annually by each municipality
for service credits of original and new members subsequent to
the time the municipality joined the system, and the additional
amount which shall be contributed annually by each municipality
toward a reserve account for disability allowances payable to
original or new members, in order that all future service
liability may be fully funded on an actuarial basis.
(d) The amounts so determined by the board may be expressed
in a percentage of the payroll of the municipality covering its
contributing members.
(e) The cost of making the valuations required by this
section and in the transfer of any existing pension system of
any municipality, shall be part of the costs of administration
of this act.
Section 206. Contributions by Members; Consolidation of
Credits; Change of Employment.--(a) Each member of the system
shall be required to contribute to the fund three per cent of
that portion of their actual salary or compensation, including
fees where paid in part on a fee basis, on which social security
benefits are payable, and six per cent of any salary,
compensation or fees in excess of the amount on which social
security benefits are payable. However, in the event of a
[contributor] member who became a member prior to January 1,
1979, the required rate of contribution shall be the lesser of
the rate herein provided and the rate applicable to [said] the
member upon his entry into the system.
(b) In order to increase his member's annuity, each member
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shall also have the option to make contributions for his prior
service. [Such contributions] Contributions for prior service
may be anticipated in whole or in part at the time the
municipality joins the system, or payment thereof or such part
thereof as is not anticipated may be spread over a period of
time by increasing the payroll deduction of the member by at
least one-third. When a member elects to contribute on account
of all of his unpaid prior service, his rate of contribution
shall be calculated as of his age at the time he first entered
the service of the municipality: Provided, however, That any
municipality may, at the time it elects to join the system, or
at any time thereafter, agree with the board to pay into the
fund as part of its liability under and in accordance with
section 205 [hereof], the moneys necessary to provide the
member's contributions for prior service, and in such case no
contributions for prior service shall be made by the members.
(c) Member's contributions shall be paid into the fund by
the municipality through payroll deductions in such manner and
at such time as the board may by rule and regulation determine.
(d) When a municipal [employe] employee is employed by more
than one municipality, he shall be required to make
contributions on account of his salary paid by each
municipality. In such cases the board shall provide for the
consolidation of credits of the [contributor] member and, upon
his retirement, for a consolidated retirement allowance.
Section 20. Section 207 of the act, amended May 17, 1980
(P.L.135, No.50) and November 29, 2004 (P.L.1331, No.169), is
amended to read:
Section 207. Withdrawal; Return to Service; Death in
Service.--(a) Should a [contributor] member, before reaching
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superannuation retirement age, for any reason cease to be a
municipal employe, he shall be paid by the board the full amount
of the accumulated deductions standing to his credit in the
member's account, unless he is entitled to vesting rights or to
a retirement allowance for retirement not voluntarily, and
elects to exercise such vesting rights or take such retirement
allowance. Should [such] the former [contributor] member
thereafter return to the service of the same municipality and
restore to the fund, in such manner as may be agreed upon by
[such] the person and the board, his withdrawn accumulated
deductions as they were at the time of his separation from
service, his annuity rights as they existed at the time of
separation from service shall be restored and his obligations as
a member shall begin again. The rate of contribution of [such]
the returning member shall be the same as it was at the time he
separated from service.
(b) Should a [contributor] member, having attained or passed
superannuation age, elect, upon leaving the service of the
municipality, not to claim the retirement allowance to which he
is entitled, he shall, upon written application, be paid by the
board the full amount of the accumulated deductions standing to
his credit in the member's account and the balance in the
member's excess investment account.
(c) (1) Should a person who has been retired on a
retirement under this act, return to employment on a regular
full-time basis in the same municipality, his retirement
allowance shall cease, and in the case of an annuity, other than
a disability annuity, the present value of such annuity shall be
frozen as of the date such annuity ceases. Upon subsequent
discontinuance of service, [such] the member, other than a
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former disability annuitant, shall be entitled to an annuity
which is [actuarially equivalent to the sum of the present
value] of an equivalent actuarial value as the annuity
previously being paid and the present value of the annuity
earned by further service and further deductions added upon
reemployment.
(2) For the purposes of this section if a person is
reemployed [on a temporary, seasonal or part-time basis and his
gross post-retirement earnings from such reemployment during the
calendar year are less than five thousand dollars ($5,000) or
such other maximum as the board may establish, he shall not be
deemed reemployed, but if and when his gross post-retirement
earnings exceed five thousand dollars ($5,000) or such other
maximum as the board may establish in any calendar year he shall
not be entitled to receive his retirement allowance for that
month or any subsequent month in the calendar year in which he
continues in service.] following commencement of his retirement
allowance, he shall not be entitled to receive his retirement
allowance for that month or any subsequent month in which he
continues in service.
(3) Notwithstanding the provisions of paragraph (2), if such
person is otherwise eligible to receive an in-service
distribution of his retirement benefit by (i) attainment of
normal retirement age as defined in the Internal Revenue Code,
(ii) operation of Internal Revenue Code § 401(a)(36) or (iii)
operation of any other provision as may be adopted by the board
and consistent with the tax-qualification provisions of the
Internal Revenue Code, his retirement allowance shall continue
to be paid through such period of reemployment.
(4) The municipality [is required to] shall notify the board
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immediately of the reemployment status of any retired former
[employe and file separate monthly reports of his gross earnings
as prescribed by the board] employee.
(d) Should a [contributor] member die while in service,
prior to becoming eligible for a retirement allowance, his
accumulated deductions shall be paid to his estate, or to such
person, if living, as he shall have designated in writing, filed
with the board as his beneficiary. In case any [contributor]
member has failed to designate a beneficiary, or if the named
beneficiary has predeceased the member and no such successor
beneficiary has been named, and upon the death in service shall
have less than one hundred dollars ($100) in accumulated
deductions standing to his credit, the board may, if letters
testamentary or of administration have not been taken out on his
estate within six months after death, pay such accumulated
deductions on the claim of the undertaker, or to any person or
municipality which shall have paid the claim of the undertaker.
Section 21. Section 208 of the act, amended May 17, 1980
(P.L. 135, No.50), is amended to read:
Section 208. Superannuation Retirement.--(a.1) Retirement
for superannuation shall be [as follows:] provided in this
section.
[(a)] (a.2) Any [contributor] member who has reached
superannuation retirement age may retire for superannuation by
filing with the board a written statement, duly attested,
setting forth on what date he desires to be retired. [Said] The
application shall make the superannuation retirement allowance
effective on the date so specified, if [such] the application
was filed in the office of the board or deposited in the United
States mail, addressed to the board, before the date specified
20090HB1884PN2523 - 51 -
in the application and before the death of the [contributor]
member, but the date so specified in the application shall not
be more than ninety days after the date of filing, or the date
the application was deposited in the mail.
(b) On retirement for superannuation, a [contributor] member
shall be entitled to a retirement allowance throughout his life,
which shall consist of:
(1) A member's annuity of equivalent actuarial value of his
accumulated deductions; and
(2) A municipal annuity which shall be equal to (i) for
current service, one two-hundred-fiftieth of that portion of his
final salary on which social security benefits are payable plus
one one-hundred-twenty-fifth of any portion of his final salary
in excess of the amount on which social security benefits are
payable for each year of service while a member, and in addition
thereto, (ii) for prior service in case of an original member,
one two-hundred-fiftieth of that portion of his prior salary on
which social security benefits are payable plus one one-hundred-
twenty-fifth of any portion of his prior salary in excess of the
amount on which social security benefits are payable for each
year of prior service or for a maximum of ten years if the
municipality has so limited the period of prior service, and in
addition thereto, one two-hundred-fiftieth of his prior salary
on which social security benefits are payable plus one one-
hundred-twenty-fifth of any portion of his prior salary in
excess of the amount on which social security benefits are
payable for each year of prior service for which the
municipality has paid or has obligated itself to pay the
member's contributions. For the purposes of calculating the
current service benefit, an average of the social security wage
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base will be determined for the period of time over which final
salary is taken, and this average will be the basis for
calculating the amount of salary on which social security
benefits are payable. For the purposes of calculating the prior
service benefit, the social security wage base in effect on the
date of the municipality's entry into the system will be used as
the basis for calculating the amount of prior salary on which
social security benefits are payable.
(c) In no event shall the municipal annuity at the time of
retirement exceed fifty per cent of the final salary.
Section 22. Section 209 of the act is amended to read:
Section 209. Death Benefits.--(a) The provisions of
subsection (b) and (c) of this section shall not apply to any
member unless the municipality by which he is employed has
elected by ordinance or resolution, to extend the provisions of
this section to its employes. A duly certified copy of such
ordinance or resolution shall be filed with the board.
(b) A [contributor] member to the system who is entitled to
a superannuation retirement allowance by reason of having
reached superannuation retirement age or who is entitled to a
withdrawal allowance by reason of having completed twenty-four
years of total service, may file with the board a written
application for retirement, in the form required for [such] the
application, but requesting that [such] the retirement shall
become effective as of the time of his death, electing one of
the options provided in section 211 and nominating a person
having an insurable interest in his life under [said] the option
as required in [said] that section. In all such cases, the
application shall be held by the board until the [contributor]
member shall file a later application in the usual manner for a
20090HB1884PN2523 - 53 -
superannuation retirement allowance or until the death of the
[contributor] member occurring while in municipal service, at
which time his retirement shall become effective with the same
benefits to the person designated as if the [contributor] member
had retired on the day immediately preceding his death.
(c) A [contributor] member to the system who is entitled to
a superannuation retirement allowance by reason of having
reached superannuation retirement age or who is entitled to a
withdrawal allowance by reason of having completed twenty-four
years of total service and who has died in municipal service
before filing with the board a written application for a
superannuation retirement allowance as provided in subsection
(b) of this section shall be considered as having elected Option
1 as provided in section 211 as of the date of his death. In
such event, payment under Option 1 shall be made to the
beneficiary designated in the nomination of beneficiary form on
file with the board, or if [said] the beneficiary has
predeceased the [contributor] member, to the legal
representative of [said contributor] the member.
Section 23. Section 210 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 210. Early Retirement.--Should a [contributor]
member be discontinued from service not voluntarily, after
having completed eight years of total service, or voluntarily
after having completed twenty-four years of total service, but
in either event before reaching superannuation retirement age,
he shall be paid as he may elect, as follows:
(1) [The] the full amount of the accumulated deductions plus
the balance in the member's excess investment account standing
to his credit in the member's account of the fund; [or]
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(2) [Upon] upon the filing of an application in the manner
outlined in subsection (a) of section 208, a retirement
allowance which shall consist of (i) a member's annuity of
equivalent actuarial value to his accumulated deductions plus
the balance in the member's excess investment account; and (ii)
a municipal annuity of equivalent actuarial value to the present
value of a municipal annuity, beginning at superannuation
retirement age, calculated in accordance with the provisions of
section 208; or
(3) [If] if qualified, a deferred retirement allowance as
provided in section 213.
Section 24. Section 211 of the act, amended June 10, 1982
(P.L.446, No.131), is amended to read:
Section 211. Options on Superannuation or Early
Retirement.--At the time of his superannuation or early
retirement, a [contributor] member may elect to receive his
benefits in a retirement allowance payable throughout his life,
which shall be known as a single life annuity. In the event of
the death of an annuitant who has elected to receive the maximum
single life annuity before he has received in annuity payments
the full amount of the total accumulated deductions standing to
his credit on the effective date of retirement, the balance
shall be paid to his designated beneficiary, or instead, he may
elect to receive the equivalent actuarial value at that time of
his retirement allowance in a lesser allowance, payable
throughout life with provisions that:
(1) Option 1. If he shall die before receiving in payments
the present value of his retirement allowance as it was at the
time of his retirement, the balance, if less than five thousand
dollars ($5,000), shall be paid in a lump sum to his legal
20090HB1884PN2523 - 55 -
representative, or to or in trust for his beneficiary. If the
balance is five thousand dollars ($5,000) or more, the
beneficiary may elect by application duly acknowledged and filed
with the board to receive payment of [such] the balance
according to any one of the following provisions: (i) a lump sum
payment; (ii) an annuity having a present value equal to the
balance payable; (iii) a lump sum payment and an annuity. [Such]
The annuity shall be of equivalent actuarial value to the
balance payable less the amount of the lump sum payment
specified by the beneficiary.
(2) Option 2. Upon his death, his retirement allowance
shall be continued throughout the life of and paid to his
survivor annuitant, if then living.
(3) Option 3. Upon his death, one-half of his retirement
allowance shall be continued throughout the life of and paid to
his survivor annuitant, if then living.
Section 25. Section 212 of the act, amended May 17, 1980
(P.L.135, No.50) and June 10, 1982 (P.L.446, No.131), is amended
to read:
Section 212. Disability Retirement.--(a) After a
[contributor] member has had ten or more years of total service,
he may, upon application or on the application of one acting in
his behalf, or upon application of a head of the department of
the municipality by which he is employed, be retired by the
board on a disability allowance [if he is under superannuation
retirement age, and on a superannuation retirement allowance if
he has attained or passed such age,] if the physician designated
by the board, after medical examination of the [contributor]
member made at the place of residence of the [contributor]
member or at a place mutually agreed upon, shall certify to the
20090HB1884PN2523 - 56 -
board that the [contributor] member is unable to engage in any
gainful employment and that [said contributor] the member ought
to be retired. When the disability of a [contributor] member is
determined to be service-connected, as defined in this act, no
minimum period of service shall be required for eligibility.
Application filing requirements shall be identical to those
outlined in subsection (a) of section 208.
(b) On retirement for disability a member shall receive a
retirement allowance which shall consist of:
(1) A member's annuity of the equivalent actuarial value to
his accumulated deductions, plus the balance in the member's
excess investment account[;].
(2) A municipal annuity of the equivalent actuarial value to
the present value of a municipal annuity, beginning at
superannuation retirement age, calculated in accordance with the
provision of section 208[; and].
(3) A disability annuity payable from the total disability
reserve account which, together with the member's annuity and
the municipal annuity, shall be sufficient to produce a
retirement allowance of thirty per cent of the final salary.
Where the disability of the member is determined to be service-
connected, as defined in this act, the retirement allowance
shall equal fifty per cent of his final salary. The disability
annuity shall be reduced by the amount of any payments for which
the member shall be eligible under the act of June 2, 1915
(P.L.736, No.338), known as "The Pennsylvania [Workmen's]
Workers' Compensation Act," or the act of June 21, 1939
(P.L.566, No.284), known as "The Pennsylvania Occupational
Disease Act."
(c) Once every year the board may require any disability
20090HB1884PN2523 - 57 -
annuitant, while still under superannuation retirement age, to
undergo medical examination by a physician designated by the
board. [Such] The examination shall be made at the place of
residence of the beneficiary or other place mutually agreed
upon. Should the physician report and certify to the board that
[such] the disability beneficiary is no longer physically or
mentally incapacitated for the performance of duty and is able
to engage in a gainful occupation, then his disability
retirement allowance shall be discontinued, and in lieu thereof
an early involuntary retirement allowance shall at that time be
granted as if [such] the person had been retired not
voluntarily, if [such] the person shall have had eight or more
years of total service.
(d) Should a disability annuitant, while under
superannuation retirement age, refuse to submit to at least one
medical examination in any year by a physician designated by the
board, his disability retirement allowance shall be discontinued
until the withdrawal of [such] the refusal, and should [such]
the refusal continue for one year, then all his rights in and to
any disability retirement allowance or for early involuntary
retirement allowance provided for by this act, shall be
forfeited.
(e) Any [contributor] member entitled to retire for
disability may, in lieu of [such] retirement, if he has eight or
more years of total service, elect to retire not voluntarily
under the provisions of this act.
(f) Should a disability annuitant die before the total
disability retirement allowance received shall be at least equal
to the amount of his accumulated deductions plus the balance in
the member's excess investment account at the time of disability
20090HB1884PN2523 - 58 -
retirement, then the board shall pay to the named beneficiary,
if living, or if the beneficiary predeceased the annuitant, or
no beneficiary was named, then to the annuitant's estate, an
amount equal to the difference between [such] the total
retirement allowance received and the annuitant's accumulated
deductions plus excess interest, and if [such] the difference is
less than one hundred dollars ($100) and no letters have been
taken out on the estate within six months after death, then
[such] the difference may be paid to the undertaker or to any
person or municipality who or which shall have paid the claim of
the undertaker.
Section 26. Sections 213, 214 and 215 of the act, amended
May 17, 1980 (P.L.135, No.50), are amended to read:
Section 213. Vesting.--(a) Should a [contributor] member,
before reaching superannuation retirement age and after having
completed twelve years of total service, for any reason cease to
be a municipal employe, he shall be entitled to vest his
retirement benefits until he attains superannuation retirement
age, by filing with the board a written notice of his intentions
to vest, within ninety days of the date of his termination of
employment. Accumulated deductions will include interest from
date of termination until the earlier of the date of the
commencement of the annuity or the date of payment of member
contributions.
(b) A [contributor] member, who was terminated by the
municipality not voluntarily, may elect, after he has vested, to
be paid as follows:
(1) [The] the full amount of the accumulated deductions,
including interest; [or]
(2) [An] an early retirement allowance as computed under the
20090HB1884PN2523 - 59 -
provisions of clause (2) of section 210; or
(3) [Upon] upon reaching superannuation retirement age, a
superannuation retirement allowance as computed under the
provisions of section 208.
(c) A [contributor] member, who voluntarily terminated his
employment, may elect, after he has vested, to be paid as
follows:
(1) [The] the full amount of the accumulated deductions,
including interest; [or]
(2) [If] if the [contributor] member has completed twenty-
four years or more of total service, a voluntary withdrawal
allowance computed in accordance with the provisions of section
210; or
(3) [Upon] upon reaching superannuation retirement age, a
superannuation retirement allowance as computed under the
provisions of section 208.
(d) Should a [contributor] member, who has vested, die
before he becomes eligible for a retirement allowance, the full
amount of the accumulated deductions plus the balance in the
member's excess investment account, including interest to the
date of his death, standing to his credit in the member's
account of the fund shall be paid to his estate or to his named
beneficiary in accordance with the provisions of subsection (d)
of section 207.
(e) Upon the termination of the retirement plan, all
members, regardless of credited service, shall be deemed fully
vested in their accrued benefit to the extent the benefits
provided under the plan are funded as of the date of
termination.
Section 214. Withdrawal Provisions.--(a) A municipality
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which has joined the retirement system created or continued
under this [Article II] article may, for good and stated cause,
file an application with the board for permission to withdraw
from the system if it meets all of the following requirements:
(1) The municipality has been enrolled in the system for a
period of at least five years.
(2) The municipality has met all of its financial
obligations to the system.
(3) The legislative body of the municipality has passed an
ordinance or resolution signifying its intention to withdraw
from the system.
(4) The municipality has certified to the board that an
affirmative vote approving withdrawal from the system had been
obtained from at least seventy-five per cent of all of the
municipal [employes] employees affected by the ordinance or
resolution.
(b) The board shall within ninety days of its receipt, take
action on an application filed by a municipality for permission
to withdraw from the system. If the application is approved the
withdrawing municipality shall be entitled to receive a net
refund of the amounts then standing to the credit of the
municipality in the member's account, the member's excess
investment account, the municipal account and the retired
member's reserve accounts of the system. In no event shall the
total amount of the net refund to the municipality exceed the
pro rata interest of the withdrawing municipality in the net
assets of the entire fund based on the market value of the
investments of the fund as of the date of receipt of the
application for permission to withdraw. The liability for the
continuation of retirement or disability allowances being paid
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from the fund shall attach against the withdrawing municipality
and be paid from funds transferred to a retirement system
established subsequent to its withdrawal from the system or from
moneys appropriated annually from tax revenues sufficient to pay
the same. If the board disapproves the application of the
municipality for permission to withdraw from the system the
board shall promptly notify the municipality of its decision and
advise the municipality of the board's reason or reasons for
disapproval. The board shall establish rules and regulations, in
accordance with the provisions of clause (10) of section 104 of
this act, governing the details of the procedures to be followed
in the withdrawal of municipalities from the system.
Section 215. Procedures for Amending Contracts.--Any
municipality which has joined the system under the provisions of
this [Article II] article may, with the approval of the board,
enter into a contract with the board as outlined in Article IV
of this act, to increase any of the benefits enumerated in
Article IV. The board shall not enter into any contract with any
municipality which decreases benefits, nor shall it enter into
any contract with a municipality which provides for benefits in
excess of or minimum member's contribution rates less than those
available to it under any other existing law pertaining to the
establishment of retirement systems for that class of
municipality, except to the extent that excess investment
earnings are allocated to provide for additional pension
benefits or member accruals as otherwise provided in this [law]
act. Before the board approves any such contract it shall first
determine, through its actuary, that the plan outlined in the
contract is actuarially sound. Any municipality which elects to
enter into a contract for increased benefits which would result
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in an increase in its [employes] employees contribution rates
shall first obtain the written consent of at least seventy-five
per cent of its then member [employes] employees. Additional
costs for contracted increases in benefits shall become the
responsibility of the municipality and/or the members as
specified in the contract.
Section 27. Article III heading and section 301 of the act
are amended to read:
ARTICLE III
PROVISIONS RELATING TO MUNICIPAL [FIREMEN] FIRE FIGHTERS AND
MUNICIPAL POLICE OFFICERS
Section 301. Purpose.--This article [shall provide] provides
for the uninterrupted continuation of retirement plans
established under the act of July 31, 1968 (P.L.944, No.291),
known as the "Municipal Police Retirement Law." It shall also
provide for the enrollment of municipal [firemen] fire fighters
and municipal police officers of new municipalities joining the
system at the contribution rates and benefit rates outlined in
this article of the act.
Section 28. Section 303 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 303. Existing Local Retirement Systems and
Compulsory Membership.--(a) Where a municipality elects to join
the system established by this act, and is then maintaining a
retirement or pension system or systems covering its [employes]
employees in whole or in part, those [employes] employees so
covered, and [employes] employees thereafter eligible to join
such pension system, shall not become members of the retirement
system established by this act, unless at the time the
municipality elects to join the system, the members of each such
20090HB1884PN2523 - 63 -
existing retirement or pension system shall, by the affirmative
vote of seventy-five per cent of all the members of each pension
system, elect to be covered by the retirement system established
by this act. At any time thereafter, within a period of three
years after the municipality has elected to join the system, but
not thereafter, the members of an existing retirement or pension
system may, in like manner, elect to join the system established
by this act. In any such case, provisions may be made for the
transfer of moneys and securities in its retirement or pension
fund or funds, in whole or in part, to the fund established by
this act. Securities so transferred shall be only those
acceptable to the board. Securities not so acceptable shall be
converted into cash, and [said] the cash transferred to the fund
created by this act. In any such transfer, provision shall be
made to credit the accumulated deductions of each member, at
least the amount he has paid into the retirement or pension
system of the municipality, which moneys shall be credited
against the prior service contributions of such member, or a
municipality may turn over to the retirement system created by
this act any existing local pension system on a completely
funded basis, as to pensioners and pension credits of members
related to prior service to the date of transfer, or on a
partially funded basis if the municipality pays annually into
the retirement system amounts sufficient to completely liquidate
the municipality's liability for prior service within a period
not to exceed thirty years.
(b) No liability, on account of retirement allowances or
pensions being paid from any retirement or pension fund of the
municipality, shall attach against the fund, except as provided
in the agreement, making a transfer of an existing system in
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accordance with this section. The liability to continue payment
of pensions not so transferred shall attach against the
municipality, which shall annually make appropriations from its
tax revenues sufficient to pay the same. In cases where workers
covered by an existing retirement or pension system elect to
join the system created by this act, the election to join shall
be deemed to have been made at the time the municipality elected
to join the system, and the liabilities of the municipality
shall be fixed accordingly.
(c) If a municipality elects to cover its municipal
[firemen] fire fighters under the provisions of the system
created by this [Article III] article, then each municipal
[fireman] fire fighter shall be required to become a member of
the system.
(d) If a municipality elects to cover its municipal police
officers under the provisions of the system created by this
[Article III] article, then each municipal [policeman] police
officer shall be required to become a member of the system.
(e) When a municipality has established a policy of placing
new [employes] employees on a probationary status it may elect
to refrain from enrolling [such employes] the employees into the
system for a period of up to one year from the date the
probationary [employe] employee first entered the service of the
municipality. In such cases service credits shall not be earned
by the [employe] employee for probationary time served prior to
enrollment. Notwithstanding any other provision herein, the
board may, in its discretion, entertain a request from a
municipality to join the system established by this act for
those [employes] employees who are excluded from local pension
plan coverage by virtue of the collective bargaining process or
20090HB1884PN2523 - 65 -
otherwise. The request to join the system must be accompanied by
an affirmative vote of no less than three-fourths of those
[employes] employees not covered by the local pension plan. The
benefits to be established may be in accordance with the
provisions of this article or any other relevant pension law
covering that class of municipality. The other requirements of
this section for joining this system shall be observed.
Section 29. Section 304 of the act is amended to read:
Section 304. Separate Ordinances or Resolutions; Separate
Accounts.--(a) Any municipality electing to cover both its
municipal [firemen] fire fighters and municipal police officers
under the system created by this [Article III] article shall be
required to pass separate ordinances or resolutions covering
each class of [employes] employees.
(b) The board shall maintain separate accounting records for
municipal [firemen] fire fighters and for municipal police
officers. However, in the interest of good investment practice,
the board may, in its discretion, comingle moneys received from
municipalities, municipal [employes] employees, municipal
[firemen] fire fighters and municipal police officers.
Section 30. Sections 305, 306 and 307 of the act, amended
May 17, 1980 (P.L.135, No.50), are amended to read:
Section 305. Service Allowance; Change of Employment;
Military Service.--(a) In computing the length of service of a
[contributor] member for retirement purposes, full credit shall
be given to each original member for each year of service
rendered to the municipality prior to the time the municipality
joined the system.
(b) As soon as practicable, the board shall issue to each
original member a certificate certifying the aggregate length of
20090HB1884PN2523 - 66 -
service rendered to the municipality prior to the time it joined
the system. [Such] The certificate shall be final and conclusive
as to his prior service unless thereafter modified by the board,
upon application of the member.
(c) The time during which a member was absent from service
without pay, except for military service, shall not be counted
in computing the service of a [contributor] member in his
certificate, or upon retirement unless specially allowed by the
municipality, with the approval of the board.
(d) When a [contributor] member leaves the employ of a
municipality which has joined the system, and enters into the
employ of another municipality which has also joined the system,
his service credits shall remain unimpaired, but in such cases
the unpaid municipal liability for prior service shall be
prorated by the board between the municipalities on an equitable
basis. The basis will be determined, with the advice of the
actuary, according to the number of years of service performed
by the [contributor] member for each municipality.
(e) Any municipal [fireman] fire fighter or municipal
[policeman] police officer employed by a municipality who has
been a regularly appointed [fireman] fire fighter or [policeman]
police officer for a period of at least six months and is an
active member of the system and who thereafter, heretofore, or
hereafter, shall be inducted into the military service of the
United States in times of war, armed conflict, or National
emergency, so proclaimed by the President of the United States,
shall have credited to his employment record, for pension or
retirement benefits, all of the time spent by him in [such] that
military service during the continuance of such war, armed
conflict, or National emergency if such person returns or has
20090HB1884PN2523 - 67 -
heretofore returned to his employment within six months after
his separation from the service. The municipality shall, during
the period of the member's intervening military service,
continue to make current service contributions toward the
municipal annuity of the member. An active member may file an
application with the board for permission to purchase credit
toward his member's share of the annuity for intervening
military service. These contributions shall be computed by
applying the member's contribution rate to his annual rate of
compensation at the time of entry of the member into active
military service, and multiplying the result by the number of
years and fractional part of a year of creditable intervening
military service, together with interest from date of return to
employment to date of purchase. The amount due from the member
shall be certified by the board in accordance with methods
approved by the actuary, and may be paid by (1) regular monthly
payments during active military service, or (2) a lump sum
payment within thirty days, or (3) it may be amortized with
additional interest through salary deductions in amounts agreed
upon by the member and the board.
(f) An active member may also purchase credit for other than
intervening military service performed for the United States in
times of war, armed conflict or National emergency, so
proclaimed by the President of the United States, for a period
not to exceed five years: Provided, That the member has
completed five years of service to the municipality subsequent
to [such] the military service. An active member may file an
application with the board for permission to purchase credit for
nonintervening military service upon completion of five years of
subsequent service to the municipality. The type of service
20090HB1884PN2523 - 68 -
credit for [such] the service shall be determined by the date of
entry of the municipality into the system. If the date of the
member's separation from military service is prior to the date
on which the municipality joined the system, then the credit
purchased shall be considered as prior service credit. In this
case the amount due from the member shall be computed by
applying the member's basic contribution rate plus the rate of
contribution the municipality paid for current service during
its first year of entry into the system to his prior salary and
multiplying the result by the number of years and fractional
part of a year of creditable nonintervening military service,
plus interest from the later of the date of entry into the
system and the date of the member's employment by the
municipality to the date of purchase. The amount due from the
member shall be certified by the board in accordance with
methods approved by the actuary, and may be paid in a lump sum
within thirty days or it may be amortized with additional
interest through salary deductions in amounts agreed upon by the
member and the board. If, on the other hand, the date of the
member's separation from military service is later than the date
of entry of the municipality into the system, then the credit
purchased shall be considered as current service credit. In this
case the amount due from the member shall be computed by
applying the member's basic contribution rate plus the
municipality's normal contribution rate for current service
which was in effect on the date of the member's entry into
employment with the municipality to his average annual rate of
compensation over the first five years of his subsequent
employment and multiplying the result by the number of years and
fractional part of a year of creditable nonintervening military
20090HB1884PN2523 - 69 -
service being purchased, plus interest from the date of
employment by the municipality to date of purchase.
(g) The amount due from the member shall be certified by the
board in accordance with methods approved by the actuary, and
may be paid in a lump sum within thirty days or it may be
amortized with additional interest through salary deductions in
amounts agreed upon by the member and the board.
(h) The rate of interest to be charged to members on their
purchase of credit for intervening or nonintervening military
service shall be the rate being credited by the system to
member's contribution accounts in effect on the date of the
member's application, compounded annually.
(i) A member may purchase credit for intervening or
nonintervening military service only if his discharge or
separation from the service was granted under other than
dishonorable conditions.
(j) A member may not purchase credit for any military
service for which he is entitled to receive a retirement
allowance from the United States Government.
(k) Applications for permission to purchase credit for
military service must be accompanied by proof of the nature of
his discharge or separation from the military service.
Section 306. Determination of Municipal Liability.--(a) The
board shall, as soon as may be, determine the present value of
the liability of each municipality for the prior service credits
to its original members, and shall establish an amount payable
annually over a period not exceeding thirty years, through which
payments [such] the prior service liability may be funded. Each
municipality shall have the option to spread the payment of
[such] the prior service liability over such period of years.
20090HB1884PN2523 - 70 -
(b) The municipal liability shall be based upon credit for
all years of prior service toward the municipal annuity of each
original member.
(c) The board shall also determine, from time to time, the
amount which shall be contributed annually by each municipality,
for service credits of original and new members subsequent to
the time the municipality joined the system, and the additional
amount which shall be contributed annually by each municipality
toward a reserve account for disability allowances payable to
original and new members, in order that all future service
liability may be fully funded on an actuarial basis.
(d) The amounts so determined by the board may be expressed
in a percentage of payroll of the municipality covering its
contributing members.
(e) The payments made by the State Treasurer to the
treasurer of the municipality from moneys received from taxes
paid upon premiums by foreign fire insurance companies for
purposes of pension, retirement or disability benefits for
municipal [firemen] fire fighters shall be used as follows: (i)
to reduce the unfunded liability or, after such liability has
been funded, (ii) to apply against the annual obligation of the
municipality for future service and disability reserve costs.
[It shall be the duty of the] The governing body [to] shall
apply [such] the payments in accordance with the provisions of
this act.
(f) The payments made by the State Treasurer to the
treasurer of the municipality from the moneys received from
taxes paid upon premiums by foreign casualty insurance companies
for purposes of pension, retirement or disability benefits for
municipal policemen shall be used as follows: (i) to reduce the
20090HB1884PN2523 - 71 -
unfunded liability or, after such liability has been funded,
(ii) to apply against the annual obligation of the municipality
for future service and disability reserve costs. [It shall be
the duty of the] The governing body [to] shall apply [such] the
payments in accordance with the provisions of this act.
(g) The cost of making the valuations required by this
section and in the transfer of any existing pension system of
any municipality, shall be part of the costs of administration
of this act.
Section 307. Contributions by Members; Consolidation of
Credits.--(a) Each single coverage member of the system created
under this [Article III] article, shall be required to
contribute no more than eight per cent of his salary or
compensation to the fund based on a uniform contribution rate as
determined by the actuary to provide the benefit under this
article.
(b) The amount of contribution by each joint coverage member
shall be computed in the manner described [above] in subsection
(a) for a single coverage member, except that the amount of
[such] the deductions from salary or compensation shall be
reduced with respect to wages (as defined in the Federal
Insurance Contributions Act (68A Stat. 417, 26 U.S.C. § 3121))
by forty per cent of the tax on [employes] employees prescribed
by the Federal Insurance Contributions Act exclusive of that
portion of such tax attributable to disability coverage.
(c) Members' contributions shall be paid into the fund by
the municipality through payroll deductions in such manner and
at such time as the board may by rule and regulation determine.
Section 31. Section 308 of the act, amended May 17, 1980
(P.L.135, No.50) and June 10, 1982 (P.L.446, No.131), is amended
20090HB1884PN2523 - 72 -
to read:
Section 308. Withdrawal; Return to Service; Death in
Service.--(a) Should a [contributor] member, before reaching
superannuation retirement age, for any reason cease to be a
municipal [fireman] fire fighter or a municipal [policeman]
police officer, he shall be paid by the board the full amount of
the accumulated deductions standing to his credit in the
member's account, unless he is entitled to vesting rights or to
a retirement allowance for retirement not voluntarily, and
elects to exercise such vesting rights or take such retirement
allowance. Should such former [contributor] member thereafter
return to the service of the same municipality and restore to
the fund, in such manner as may be agreed upon by [such] the
person and the board, his withdrawn accumulated deductions as
they were at the time of his separation from service, his
annuity rights as they existed at the time of separation from
service shall be restored and his obligations as a member shall
begin again.
(b) Should a [contributor] member, having attained or passed
superannuation age, elect, upon leaving the service of the
municipality, not to claim the retirement allowance to which he
is entitled, he shall, upon written application, be paid by the
board the full amount of the accumulated deductions standing to
his credit in the member's account, and the balance in the
member's excess investment account.
(c) (1) Should a person who has been retired on a
retirement allowance under this act, return to employment on a
regular full-time basis in the same municipality, his retirement
allowance shall cease, and in the case of an annuity, other than
a disability annuity, the present value of [such] the annuity
20090HB1884PN2523 - 73 -
shall be frozen as of the date such annuity ceases. Upon
subsequent discontinuance of service, such member, other than a
former disability annuitant, shall be entitled to an annuity
which is [actuarially equivalent to the sum of the present
value] of an equivalent actuarial value as the annuity
previously being paid and the present value of the annuity
earned by further service and further deductions added upon
reemployment.
(2) For the purposes of this section if a person is
reemployed [on a temporary or seasonal basis and his gross post-
retirement earnings from such reemployment during the calendar
year are less than five thousand dollars ($5,000) or such other
maximum as the board may establish, he shall not be deemed
reemployed, but if and when his gross post-retirement earnings
exceed five thousand dollars ($5,000) or such other maximum as
the board may establish in any calendar year he shall not be
entitled to receive his retirement allowance for that month or
any subsequent month in the calendar year in which he continues
in service] following commencement of his retirement allowance,
he shall not be entitled to receive his retirement allowance for
that month or any subsequent month in which he continues in
service.
(3) Notwithstanding the provisions of paragraph (2), if such
person is otherwise eligible to receive an in-service
distribution of his retirement benefit by (i) attainment of
normal retirement age as defined in the Internal Revenue Code,
(ii) operation of Internal Revenue Code § 401(a)(36) or (iii)
operation of any other provision as may be adopted by the board
and consistent with the tax-qualification provisions of the
Internal Revenue Code, his retirement allowance shall continue
20090HB1884PN2523 - 74 -
to be paid through such period of reemployment. The municipality
is required to notify the board immediately of the reemployment
status of any retired former [employe and file separate monthly
reports of his gross earnings as prescribed by the board]
employee.
(d) Should a [contributor] member die while in service,
prior to becoming eligible for a retirement allowance, his
accumulated deductions shall be paid to his estate, or to such
person, if living, as he shall have designated, in writing,
filed with the board as his beneficiary. In case any
[contributor] member has failed to designate a beneficiary, or
if the named beneficiary has predeceased the member and no
successor beneficiary has been named, and upon the death in
service shall have less than one hundred dollars ($100) in
accumulated deductions standing to his credit, the board may, if
letters testamentary or of administration have not been taken
out on his estate within six months after his death, pay [such]
the accumulated deductions on the claim of the undertaker, or to
such person or municipality which shall have paid the claim of
the undertaker.
Section 32. Section 309 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 309. Superannuation Retirement.--Retirement for
superannuation shall be as follows:
(1) Any [contributor] member who has reached superannuation
retirement age may retire for superannuation by filing with the
board a written statement, duly attested, setting forth on what
date he desires to be retired. [Said] The application shall make
the superannuation retirement allowance effective on the date so
specified, if such application was filed in the office of the
20090HB1884PN2523 - 75 -
board or deposited in the United States mail, addressed to the
board, before the date specified in the application and before
the death of the [contributor] member, but the date so specified
in the application shall not be more than ninety days after the
date of filing, or the date the application was deposited in the
mail.
(2) On retirement for superannuation, a [contributor] member
shall be entitled to a retirement allowance throughout his life,
which shall consist of (i) a member's annuity of equivalent
actuarial value to his accumulated deductions, and the balance
in the member's excess investment account, and (ii) a municipal
annuity which shall be equal to, for current service, one one-
hundredth of his final salary for each year of service while a
member, and, in addition thereto for prior service in the case
of an original member, one one-hundredth of his prior salary for
each year of prior service.
(3) The superannuation retirement allowance provided in this
section or the withdrawal allowance provided in section 311, as
the case may be, payable to a joint coverage member after the
age at which social security old age insurance benefits become
payable shall be reduced by an amount equal to forty per cent of
the primary insurance amount of social security paid or payable
to him. [Such] The reduction shall be subject to the following
provisions: (i) the reduction in benefits in accordance with
this clause [(3)] shall not be applied in the case of an
annuitant until age sixty-five, unless such annuitant shall have
elected to receive social security benefits prior to age sixty-
five, (ii) the eligibility of such member for the old age
insurance benefit (primary insurance amount) and the amount of
such old age insurance benefit upon which the reduction in his
20090HB1884PN2523 - 76 -
allowance shall be based, shall be determined by the board in
accordance with the provisions of the [Federal] Social Security
Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), in effect on the
effective date of superannuation retirement, or withdrawal, of
the member, except that in determining such eligibility and such
amount only wages or compensation for service covered by the
system shall be included, (iii) the reduction in benefits in
accordance with this clause [(3)] shall apply only to that
portion of benefits based on wages as defined in the Federal
Insurance Contribution Act (68A Stat. 417, 26 U.S.C. § 3121),
(iv) the reduction of benefits in accordance with this clause
[(3)] shall be limited to the municipal annuity calculated in
accordance with clause (2) of this section, (v) the total sum
including social security old age insurance benefits to be
received upon superannuation retirement or withdrawal by a joint
coverage member shall not be less than the allowance that he
would be paid as a single coverage member, (vi) whenever the
amount of the reduction from the superannuation retirement
allowance or the withdrawal allowance shall have been once
determined, it shall remain fixed for the duration of the
allowance, except that any decrease in the old age insurance
benefit under the Federal Social Security Act shall result in a
corresponding decrease in the amount of the reduction in the
allowance, (vii) the reduction provided for in this clause [(3)]
shall not apply to disability allowances payable under section
313 of this act.
(4) In no event shall the municipal annuity at the time of
retirement exceed fifty per cent of the [contributor's] member's
final salary.
(5) Other provisions of this act notwithstanding, any member
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of a police force who was a member of a pension fund created
under the provisions of the former act of May 29, 1956
(P.L.1804, No.600), and who was entitled to retire at the age of
fifty-five or sixty years after twenty years of total service,
or at the age of fifty or fifty-five after twenty-five years of
service, and to receive the pension provided by that act, shall
have the same entitlement under the system created pursuant to
this act. The municipal annuity, computed under subclause (ii)
of clause (3) above, shall be increased as needed, in addition
to the member's annuity, in order to pay any increased
retirement allowance resulting from the provisions of the act.
Section 33. Section 310 of the act is amended to read:
Section 310. Death Benefits.--(a) A [contributor] member to
the system who is entitled to a superannuation retirement
allowance by reason of having reached superannuation retirement
age or who is entitled to a withdrawal allowance by reason of
having completed twenty-four years of total service, may file
with the board a written application for retirement in the form
required for [such] the application, but requesting that such
retirement shall become effective as of the time of his death,
electing one of the options provided in section 312 of this act
and nominating a person having an insurable interest in his life
under [said] that option as required in said section. In all
such cases, the application shall be held by the board until the
[contributor shall file] member files a later application in the
usual manner for a superannuation retirement allowance or until
the death of the [contributor] member occurring while in the
municipal service, at which time his retirement shall become
effective with the same benefits to the person designated as if
the [contributor] member had retired on the day immediately
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preceding his death.
(b) A [contributor] member to the system who is entitled to
a superannuation retirement allowance by reason of having
reached superannuation retirement age or who is entitled to a
withdrawal allowance by reason of having completed twenty-four
years of service and who has died in municipal service before
filing with the board a written application for a superannuation
retirement allowance as provided in subsection (a) of this
section shall be considered as having elected Option 1 as
provided in section 312 as of the date of his death. In such
event, payment under Option 1 shall be made to the beneficiary
designated in the nomination of beneficiary form on file with
the board, or if said beneficiary has predeceased the
[contributor] member, to the legal representative of [said
contributor] the member.
Section 34. Section 311 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 311. Early Retirement.--Should a [contributor]
member be discontinued from service not voluntarily after having
completed eight years of total service, or voluntarily after
having completed twenty-four years of total service, but in
either event before reaching superannuation retirement age, he
shall be paid as he may elect, as follows:
(1) [The] the full amount of his accumulated deductions plus
the balance in the member's excess investment account standing
to his credit in the member's account of the fund; [or]
(2) [Upon] upon the filing of an application in the manner
outlined in section 309(1) a retirement allowance which shall
consist of: (i) a member's annuity of equivalent actuarial value
to his accumulated deductions, plus the balance in the member's
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excess investment account, and (ii) a municipal annuity of
equivalent actuarial value to the present value of a municipal
annuity, beginning at superannuation retirement age, calculated
in accordance with the provisions of section 309; or
(3) [If] if qualified, a deferred retirement allowance as
provided in section 314.
Section 35. Section 312 of the act, amended June 10, 1982
(P.L.446, No.131), is amended to read:
Section 312. Options on Superannuation or Early
Retirement.--At the time of his superannuation or early
retirement, a [contributor] member may elect to receive his
benefits in a retirement allowance payable throughout his life,
which shall be known as a single life annuity. In the event of
the death of an annuitant who has elected to receive the maximum
single life annuity before he has received in annuity payments
the full amount of the total accumulated deductions standing to
his credit on the effective date of retirement, the balance
shall be paid to his designated beneficiary, or instead, he may
elect, to receive the actuarial equivalent value at that time of
his retirement allowance in a lesser allowance, payable
throughout life with provisions that:
(1) Option 1. If he [shall die] dies before receiving in
payments the present value of his retirement allowance as it was
at the time of his retirement, the balance, if less than five
thousand dollars ($5,000) shall be paid in a lump sum to his
legal representative, or to or in trust for his beneficiary. If
the balance is five thousand dollars ($5,000) or more, the
beneficiary may elect by application duly acknowledged and filed
with the board to receive payment of [such] the balance
according to any of the following provisions: (i) a lump sum
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payment, (ii) an annuity having a present value equal to the
balance payable, (iii) a lump sum payment and an annuity. [Such]
The annuity shall be of equivalent actuarial value to the
balance payable less the amount of the lump sum payment
specified by the beneficiary.
(2) Option 2. Upon his death his retirement allowance shall
be continued throughout the life of and paid to his survivor
annuitant, if then living.
(3) Option 3. Upon his death, one-half of his retirement
allowance shall be continued throughout the life of and paid to
his survivor annuitant, if then living.
Section 36. Section 313 of the act, amended May 17, 1980
(P.L.135, No.50) and June 10, 1982 (P.L.446, No.131), is amended
to read:
Section 313. Disability Retirement.--(a) After a
[contributor] member has had ten or more years of total service,
he may, upon application or on application of one acting in his
behalf, or upon application of a head of the department of the
municipality by which he is employed, be retired by the board on
a disability allowance [if he is under superannuation retirement
age, and on a superannuation retirement allowance if he has
attained or passed such age,] if the physician designated by the
board, after medical examination of the [contributor] member
made at the place of residence of the [contributor] member or at
a place mutually agreed upon, [shall certify] certifies to the
board that the [contributor] member is unable to engage in any
gainful employment and that [said contributor] the member ought
to be retired. When the disability of a [contributor] member is
determined to be service-connected, as defined in this act, no
minimum period of service shall be required for eligibility.
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Application filing requirements shall be identical to those
outlined in clause (1) of section 309.
(b) On retirement for disability, a member shall receive a
retirement allowance which shall consist of:
(1) A member's annuity of equivalent actuarial value to his
accumulated deductions, plus the balance in the member's excess
investment account[;].
(2) A municipal annuity of equivalent actuarial value to the
present value of a municipal annuity, beginning at
superannuation retirement age, calculated in accordance with the
provisions of section 309[; and].
(3) A disability annuity payable from the total disability
reserve account which, together with the member's annuity and
the municipal annuity, shall be sufficient to produce a
retirement allowance of thirty per cent of the [contributor's]
member's final salary. Where the disability of the member is
determined to be service-connected, as defined in this act, the
retirement allowance shall equal fifty per cent of his final
salary. The disability annuity shall be reduced by the amount of
any payments for which the member shall be eligible under the
act of June 2, 1915 (P.L.736, No.338), known as "The
Pennsylvania [Workmen's] Workers' Compensation Act," or the act
of June 21, 1939 (P.L.566, No.284), known as "The Pennsylvania
Occupational Disease Act."
(c) Once every year the board may require any disability
annuitant, while still under superannuation retirement age, to
undergo medical examination by a physician designated by the
board, and [such] the examination shall be made at the place of
residence of the annuitant or other place mutually agreed upon.
Should the physician report and certify to the board that [such]
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the disabled annuitant is no longer physically or mentally
incapacitated for the performance of duty and is able to engage
in a gainful occupation, then his disability retirement
allowance shall be discontinued, and in lieu thereof an early
involuntary retirement allowance shall at that time be granted
as if [such] the person had been retired not voluntarily, if
[such] the person [shall have] has eight or more years of total
service.
(d) Should a disability annuitant, while under
superannuation retirement age, refuse to submit to at least one
medical examination in any year by a physician designated by the
board, his disability retirement allowance shall be discontinued
until withdrawal of [such] the refusal, and should [such] the
refusal continue for one year, then all his rights in and to any
disability retirement allowance or for early involuntary
retirement allowance provided by this act shall be forfeited.
(e) Any [contributor] member entitled to retire for
disability may, in lieu of such retirement, if he has eight or
more years of total service, elect to retire not voluntarily
under the provisions of this act.
(f) Should a disability annuitant die before the total
disability retirement allowance received [shall be] is at least
equal to the amount of his accumulated deductions plus the
balance in the member's excess investment account at the time of
disability retirement, then the board shall pay to the named
beneficiary, if living, or if the named beneficiary predeceased
the annuitant, or no beneficiary was named, then to the
annuitant's estate, an amount equal to the difference between
[such] the total retirement allowance received and the
annuitant's accumulated deductions, and if [such] the difference
20090HB1884PN2523 - 83 -
is less than one hundred dollars ($100) and no letters have been
taken out on the estate within six months after death, then
[such] the difference may be paid to the undertaker or to any
person or municipality who or which [shall have] paid the claim
of the undertaker.
Section 37. Section 314 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 314. Vesting.--(a) Should a [contributor] member,
before reaching superannuation retirement age and after having
completed twelve years of total service, for any reason cease to
be a municipal [fireman] fire fighter or a municipal [policeman]
police officer, he shall be entitled to vest his retirement
benefits until he attains superannuation retirement age, by
filing with the board a written notice of his intentions to
vest, within ninety days of the date of his termination of
employment. Accumulated deductions will include interest from
date of termination until the earlier of the date of the
commencement of the annuity or the date of payment of member
contributions.
(b) A [contributor] member, who was terminated by the
municipality not voluntarily, may elect, after he has vested, to
be paid as follows:
(1) [The] the full amount of the accumulated deductions plus
the balance in the member's excess investment account, including
interest; [or]
(2) [An] an early retirement allowance as computed under the
provisions of clause (2) of section 311; or
(3) [Upon] upon reaching superannuation retirement age, a
superannuation retirement allowance as computed under the
provisions of section 309.
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(c) A [contributor] member, who voluntarily terminated his
employment, may elect, after he has vested, to be paid as
follows:
(1) [The] the full amount of the accumulated deductions plus
the balance in the member's excess investment account, including
interest; [or]
(2) [If the contributor] if the member has completed twenty-
four years or more of total service, a voluntary withdrawal
allowance computed in accordance with the provisions of section
311; or
(3) [Upon] upon reaching superannuation retirement age, a
superannuation retirement allowance as computed under the
provisions of section 309.
(d) Should a [contributor] member, who has vested, die
before he becomes eligible for a retirement allowance, the full
amount of the accumulated deductions plus the balance in the
member's excess investment account, including interest to the
date of his death, standing to his credit in the member's
account of the fund shall be paid to his estate or to his named
beneficiary in accordance with the provisions of subsection (d)
of section 308.
(e) Upon the termination of the retirement plan, all
members, regardless of credited service, shall be deemed fully
vested in their accrued benefit to the extent the benefits
provided under the plan are funded as of the date of
termination.
Section 38. Section 315 of the act is amended to read:
Section 315. Compliance.--When a municipality joins the
system, its action shall be construed as compliance with the
provisions of the former act of May 29, 1956 (P.L.1804, No.600),
20090HB1884PN2523 - 85 -
or any other statute requiring the creation of a pension or
retirement system for [firemen] fire fighters or police
officers.
Section 39. Sections 316 and 317 of the act, amended May 17,
1980 (P.L.135, No.50), are amended to read:
Section 316. Withdrawal Provisions.--(a) A municipality
which has joined the retirement system created or continued
under this [Article III] article may, for good and stated cause,
file an application with the board for permission to withdraw
from the system if it meets all of the following requirements:
(1) The municipality has been enrolled in the system for a
period of at least five years.
(2) The municipality has met all of its financial
obligations to the system.
(3) The legislative body of the municipality has passed an
ordinance or resolution signifying its intention to withdraw
from the system.
(4) The municipality has certified to the board that an
affirmative vote approving withdrawal from the system had been
obtained from at least seventy-five per cent of all of the
municipal [employes] employees affected by the ordinance or
resolution.
(b) The board shall within ninety days of its receipt, take
action on an application filed by a municipality for permission
to withdraw from the system. If the application is approved the
withdrawing municipality shall be entitled to receive a net
refund of the amounts then standing to the credit of the
municipality in the member's account, member's excess investment
account, the municipal account and the retired member's reserve
accounts of the system. In no event shall the total amount of
20090HB1884PN2523 - 86 -
the net refund to the municipality exceed the pro rata interest
of the withdrawing municipality in the net assets of the entire
fund based on the market value of the investments of the fund as
of the date of receipt of the application for permission to
withdraw. The liability for the continuation of retirement or
disability allowances being paid from the fund shall attach
against the withdrawing municipality and be paid from funds
transferred to a retirement system established subsequent to its
withdrawal from the system or from moneys appropriated annually
from tax revenues sufficient to pay the same. If the board
disapproves the application of the municipality for permission
to withdraw from the system the board shall promptly notify the
municipality of its decision and advise the municipality of the
board's reason or reasons for disapproval. The board shall
establish rules and regulations, in accordance with the
provisions of clause (10) of section 104 of this act, governing
the details of the procedures to be followed in the withdrawal
of municipalities from the system.
Section 317. Procedures for Amending Contracts.--Any
municipality which has joined the system under the provisions of
this [Article III] article may, with the approval of the board,
enter into a contract with the board as outlined in Article IV
of this act, to increase any of the benefits enumerated in
Article IV. The board shall not enter into any contract with any
municipality which decreases benefits, nor shall it enter into
any contract with a municipality which provides for benefits in
excess of or minimum members contribution rates less than those
available to it under any other existing law pertaining to the
establishment of retirement systems for that class of
municipality, except to the extent that excess investment
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earnings are allocated to provide for additional pension
benefits or member accruals as otherwise provided in this law.
Before the board approves any such contract it shall first
determine, through its actuary, that the plan outlined in the
contract is actuarially sound. Any member municipality which
elects to enter into a contract for increased benefits which
would result in an increase in its [employes] employees
contribution rates shall first obtain the written consent of at
least seventy-five per cent of its then member [employes]
employees. Additional costs for contracted increases in benefits
shall become the responsibility of the municipality and/or the
members as specified in the contract.
Section 40. Section 401 of the act is amended to read:
Section 401. Purpose.--This article [shall provide] provides
for the optional enrollment of those municipalities in the
Pennsylvania Municipal Retirement System which want to offer
retirement benefits to their [employes] employees different from
those available under Article II and Article III of this act. It
shall also provide for increasing member benefits for
municipalities formerly enrolled under the provisions of Article
II and Article III of this act.
Section 41. Section 402 of the act, amended November 29,
2004 (P.L.1331, No.169), is amended to read:
Section 402. Existing Local Retirement Systems and
Compulsory and Optional Membership.--(a) Where a municipality
elects to join the system [established by this act] under the
provisions of this article, and is then maintaining a retirement
or pension system or systems covering its [employes] employees
in whole or in part, those [employes] employees so covered, and
[employes] employees thereafter eligible to join such pension
20090HB1884PN2523 - 88 -
system, shall not become members of the retirement system
established by this act, unless at the time the municipality
elects to join the system, the members of each such existing
retirement or pension system shall, by the affirmative vote of
seventy-five per cent of all the members of each pension system,
elect to be covered by the retirement system established by this
act. At any time thereafter, within a period of three years
after the municipality has elected to join the system, but not
thereafter, the members of an existing retirement or pension
system may, in like manner, elect to join the system established
by this act. In any such case, provisions may be made for the
transfer of moneys and securities in its retirement or pension
fund or funds, in whole or in part, to the fund established by
this act. Securities so transferred shall be only those
acceptable to the board. Securities not so acceptable shall be
converted into cash, and [said] the cash transferred to the fund
created by this act. In any such transfer, provision shall be
made to credit the accumulated deductions of each member, at
least the amount he has paid into the retirement or pension
system of the municipality, which moneys shall be credited
against the prior service contributions of [such] the member, or
a municipality may turn over to the retirement system created by
this act any existing local pension system on a completely
funded basis, as to pensioners and pension credits of members
related to prior service to the date of transfer, or on a
partially funded basis if the municipality pays annually into
the retirement system amounts sufficient to completely liquidate
the municipality's liability for prior service within a period
not to exceed thirty years.
(b) No liability, on account of retirement allowances or
20090HB1884PN2523 - 89 -
pensions being paid from any retirement or pension fund of the
municipality, shall attach against the fund, except as provided
in the agreement, making a transfer of an existing system in
accordance with this section. The liability to continue payment
of pensions not so transferred shall attach against the
municipality, which shall annually make appropriations from its
tax revenues sufficient to pay the same. In cases where workers
covered by an existing retirement or pension system elect to
join the system created by this act, the election to join shall
be deemed to have been made at the time the municipality elected
to join the system, and the liabilities of the municipality
shall be fixed accordingly.
(c) If a municipality elects to join the system under the
provisions of this [Article IV] article, it shall first
negotiate a contract with the board, acceptable to both the
municipality and the board, which shall set forth all the
specific details of municipal and member contribution rates and
benefits. The municipality shall then pass an ordinance or
resolution electing to join the system, and confirming the terms
of the contract by reference thereto. Separate contracts and
separate resolutions shall be executed for each class of
[employes] employees, namely municipal [employes] employees,
municipal [firemen] fire fighters and municipal police officers
in those cases where the municipality elects to bring more than
one class of its [employes] employees into the system.
(d) When a municipality elects to enroll its municipal
[employes] employees into the system, then each officer other
than elected officers, and each municipal [employe] employee
thereof, employed on a full-time basis, shall be required to
become a member of the system. Each municipality shall determine
20090HB1884PN2523 - 90 -
whether membership in [said] the system for elected officials
and [employes] employees hired on a temporary, seasonal or part-
time basis shall be compulsory, optional or prohibited. Where
membership may be optional with an elected officer or an
[employe] employee hired on a temporary, seasonal or part-time
basis, an election to join the system must be made within one
year after the municipality elected to join the system or within
one year after the officer or temporary, seasonal or part-time
[employe] employee first entered the service of the
municipality. For an employee who chooses not to enroll, the
declination of membership shall apply for the period of time the
employee serves continuously in that optional category. If there
is a break in service and the employee returns, the employee
shall not be permitted to purchase optional membership time
previously declined, but may be enrolled as a member for future
optional service, if the employee so chooses. If the employee
returns to service where membership is mandatory, the member
shall be required to join the plan, on a prospective basis only.
Officers and [employes] employees paid only on a fee basis shall
not be eligible to join the system.
(e) When a municipality elects to enroll its municipal
[firemen] fire fighters or its municipal police officers into
the system, then each municipal [fireman] fire fighter or each
municipal [policeman] police officer, as defined in section 102
of this act, shall be required to become a member of the system.
(f) When a municipality has established a policy of placing
new [employes] employees on a probationary status it may elect
to refrain from enrolling such [employes] employees into the
system for a period of up to one year from the date the
probationary [employe] employee first entered the service of the
20090HB1884PN2523 - 91 -
municipality. In such cases service credits shall not be earned
by the [employe] employee for probationary time served prior to
enrollment. Notwithstanding any other provision [herein] in this
act, the board may, in its discretion, entertain a request from
a municipality to join the system established by this act for
those [employes] employees who are excluded from local pension
plan coverage by virtue of the collective bargaining process or
otherwise. The request to join the system must be accompanied by
an affirmative vote of no less than three-fourths of those
[employes] employees not covered by the local pension plan. The
benefits to be established may be in accordance with the
provisions of this article or any other relevant pension law
covering that class of municipality. The other requirements of
this section for joining this system shall be observed.
Section 42. Sections 403 and 404 of the act, amended May 17,
1980 (P.L.135, No.50), are amended to read:
Section 403. Contract Provisions.--(a) Any contract for an
optional retirement plan entered into between a municipality and
the board shall not provide for any benefits in excess of or
minimum member's contribution rates less than those available to
that municipality for that class of [employes] employees under
any existing law pertaining to the establishment of a retirement
or pension system, except to the extent that excess investment
earnings are allocated to provide for additional pension
benefits or member accruals as otherwise provided in this law.
(b) The contract shall specifically state the following
terms and conditions:
(1) The superannuation retirement age at which a member
shall become eligible for a full normal retirement allowance in
accordance with the formula specified in the contract.
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(2) Length of service requirements which must be met before
a member becomes eligible for either a superannuation retirement
allowance, an early retirement allowance and the method of
determining any reduction factors involved in the computation of
the amount of the allowance because of retirement prior to
attaining superannuation age.
(3) Provisions for the refunding of accumulated deductions
plus excess interest to [employes] employees who leave the
service of the municipality before they become eligible for any
type of retirement benefit and whether or not the [employe]
employee shall be entitled to interest earned on contributions.
(4) Provisions relating to the types and amounts of
disability retirement benefits for which a member may become
eligible, and the qualifications therefore.
(5) The availability of any vesting or deferred benefits to
which a member may become entitled.
(6) A description of the amount and the manner in which a
member may qualify for any death benefits, both before and after
retirement, including any prescribed payments to widows or
children under eighteen years of age.
(7) The formula used to determine the amount of normal
retirement benefits, including an explanation of the salary or
compensation to be used in the computations, and a statement
concerning any social security offset provisions included in the
contract.
(8) A description of any optional methods of payment of
retirement allowances available to a member.
(9) Any provisions for cost-of-living increases, and
limitations thereon, which may be included.
(10) The manner in which the rate or rates of [employe]
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employee contributions shall be determined, together with any
provisions for additional voluntary contributions.
(11) The manner in which the rates of contribution from the
municipalities shall be determined.
(12) The manner in which costs for prior service for which
the municipality is willing to assume liability shall be
determined, with respect to both the municipality's share and
the member's share, if any.
(13) The manner in which credit for any allowable military
service shall be determined and the manner in which costs of
service shall be paid.
(14) Any other information which might have a bearing on the
costs or benefits of the retirement plan which might be required
by the board in the administration of the plan.
Section 404. Determination of Municipal Liability.--(a) The
board shall, as soon as may be, determine the present value of
the liability of each municipality for any prior service credits
it has elected to extend to its original members, and shall
establish an amount payable [annually] in accordance with the
"Municipal Pension Funding Standard and Recovery Act," where
applicable and where inapplicable over a period not exceeding
thirty years, through which payments [such] the prior service
liability may be funded. Each municipality shall have the option
to spread the payment of [such] the prior service liability over
[such] the period of years.
(b) The municipal liability shall be based upon credit for
those years of prior service toward the municipal annuity of
each original member, for which the municipality has agreed to
pay, plus any liability for payment of the member's
contributions for the prior service or any portion thereof of
20090HB1884PN2523 - 94 -
each original member which the municipality has agreed to pay.
(c) The board shall also determine, from time to time, the
amount which shall be contributed annually by each municipality
for service credits of original and new members subsequent to
the time the municipality joined the system, and the additional
amount which shall be contributed annually by each municipality
toward a reserve account for disability allowance payable to
original and new members, in order that all future service
liability may be fully funded on an actuarial basis.
(d) The amounts so determined by the board may be expressed
in a percentage of the payroll of the municipality covering its
contributing members.
[The payments made by the State Treasurer to the treasurer of
the municipality from moneys received from taxes paid upon
premiums by foreign fire insurance companies for purposes of
pension, retirement or disability benefits for municipal firemen
shall be used as follows: (i) to reduce the unfunded liability
or, after such liability has been funded, (ii) to apply against
the annual obligation of the municipality for future service and
disability reserve costs, and (iii) to reduce member
contributions. It shall be the duty of the governing body to
apply such payments in accordance with the provisions of this
act.
The payments made by the State Treasurer to the treasurer of
the municipality from the moneys received from taxes paid upon
premiums by foreign casualty insurance companies for purposes of
pension, retirement or disability benefits for municipal
policemen shall be used as follows: (i) to reduce the unfunded
liability or, after such liability has been funded, (ii) to
apply against the annual obligation of the municipality for
20090HB1884PN2523 - 95 -
future service and disability reserve costs, and (iii) to reduce
member contributions. It shall be the duty of the governing body
to apply such payments in accordance with the provisions of this
act.]
(e) The cost of making the valuations required by this
section and in the transfer of any existing pension system of
any municipality, shall be part of the costs of administration
of this act.
Section 43. Section 405 of the act is amended to read:
Section 405. Contributions by Members; Consolidation of
Credits; Change of Employment.--(a) Each member of the system
shall be required to contribute to the fund such per cent of his
actual salary or compensation, including fees where paid in part
on a fee basis, as specified in the contract, which
contributions shall be paid into the fund by the municipality
through payroll deductions in such manner and at such time as
the board may by rule and regulation determine.
(b) If such provision is contained in the contract between
the municipality and the board, each member may increase his
member's annuity by electing to make such additional voluntary
contributions as prescribed [therein] in the contract.
(c) When a member is employed by more than one municipality,
he shall be required to make contributions on account of his
salary paid by each municipality. In such cases the board shall
provide for the consolidation of credits of the [contributor]
member, and upon his retirement, for a consolidated retirement
allowance.
(d) When a [contributor] member leaves the employ of a
municipality which has joined the system, and enters into the
employ of another municipality which has also joined the system,
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his service credits shall remain unimpaired, but in such cases
any unpaid municipal liability for prior service shall be
prorated by the board between the municipalities on an equitable
basis.
Section 44. Section 406 of the act, amended May 17, 1980
(P.L.135, No.50) and November 29, 2004 (P.L.1331, No.169), is
amended to read:
Section 406. Withdrawal; Return to Service; Death in
Service.--(a) Should a [contributor] member, before reaching
superannuation retirement age, for any reason terminate his
employment with the municipality, he shall receive a refund of
his contributions in full, either with or without interest and
excess interest earned as specified in the contract, unless he
may be entitled to a retirement allowance for early retirement,
and elects to take [such] the retirement allowance. Should
[such] the former [contributor] member thereafter return to the
service of the same municipality and restore to the fund in such
manner as may be agreed upon by [such] the person and the board,
his withdrawn contributions as they were at the time of his
separation from service, his annuity rights as they existed at
the time of separation from service, shall be restored and his
obligations as a member shall begin again. [The rate of
contribution of such returning member shall be the same as it
was at the time he separated from service.]
(b) Should a [contributor] member, having attained or passed
superannuation age, elect, upon leaving the service of the
member municipality, not to claim the retirement allowance to
which he is entitled, he shall, upon written application, be
paid by the board the full amount of his contributions standing
to his credit in the member's account, either with or without
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interest earned and the amount in his excess investment account
as stipulated in the contract.
(c) (1) Should a person who has been retired on a
retirement allowance under this act, return to employment on a
regular full-time basis in the same municipality, his retirement
allowance shall cease, and in the case of an annuity, other than
a disability annuity, the present value of [such] the annuity
shall be frozen as of the date [such] the annuity ceases. Upon
subsequent discontinuance of service, [such] the member, other
than a former disability annuitant, shall be entitled to an
annuity which is [actuarially equivalent to the sum of the
present value] of an equivalent actuarial value as the annuity
previously being paid and the present value of the annuity
earned by further service and further deductions added upon
reemployment.
(2) For the purposes of this section if a person is
reemployed [on a temporary, seasonal or part-time basis and his
gross post-retirement earnings from such reemployment during the
calendar year are less than five thousand dollars ($5,000) or
such other maximum as the board may establish, he shall not be
deemed reemployed, but if and when his gross post-retirement
earnings exceed five thousand dollars ($5,000) or such other
maximum as the board may establish in any calendar year he shall
not be entitled to receive his retirement allowance for that
month or any subsequent month in the calendar year in which he
continues in service] following commencement of his retirement
allowance, he shall not be entitled to receive his retirement
allowance for that month or any subsequent month in which he
continues in service.
(3) Notwithstanding the provisions of paragraph (2), if such
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person is otherwise eligible to receive an in-service
distribution of his retirement benefit by, (i) attainment of
normal retirement age as defined in the Internal Revenue Code,
(ii) operation of Internal Revenue Code § 401(a)(36) or (iii)
operation of any other provision as may be adopted by the board
and consistent with the tax-qualification provisions of the
Internal Revenue Code, his retirement allowance shall continue
to be paid through such period of reemployment. The municipality
[is required to] shall notify the board immediately of the
reemployment status of any retired former [employe and file
separate monthly reports of his gross earnings as prescribed by
the board] employee.
(d) Should a [contributor] member die while in service, any
death or survivor benefits for which he may be eligible under
the provisions of the contract shall be paid in accordance with
the terms of the contract.
(e) Should a [contributor] member die while in service, and
before becoming eligible for any other benefits contained in the
contract, the full amount of his contributions, either with or
without interest and excess interest earned as stipulated in the
contract, shall be paid to his estate, or to such person, if
living, as he shall have designated in writing, filed with the
board as his beneficiary. In case any [contributor] member has
failed to designate a beneficiary, or if the named beneficiary
has predeceased the member and no such successor beneficiary has
been named, and upon the death in service shall have less than
one hundred dollars ($100) in accumulated deductions standing to
his credit, the board may, if letters testamentary or of
administration have not been taken out on his estate within six
months after death, pay [such] the accumulated deductions on the
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claim of the undertaker, or to any person or municipality which
[shall have] has paid the claim of the undertaker.
Section 45. Section 407 of the act is amended to read:
Section 407. Superannuation Retirement.--Retirement for
superannuation shall be as follows:
(1) Any [contributor] member who has reached superannuation
retirement age may retire for superannuation by filing with the
board a written statement, duly attested, setting forth on what
date he desires to be retired. [Said] The application shall make
the superannuation retirement allowance effective on the date so
specified, if [such] the application was filed in the office of
the board or deposited in the United States mail, addressed to
the board, before the date specified in the application and
before the death of the [contributor] member, but the date so
specified in the application shall not be more than ninety days
after the date of filing, or the date the application was
deposited in the mail.
(2) On retirement for superannuation, a [contributor] member
shall be entitled to a retirement allowance throughout his life,
which shall consist of an amount computed in accordance with the
formula specified in the contract.
Section 46. Section 408 of the act, amended May 17, 1980
(P.L.135, No.50), is amended to read:
Section 408. Early Retirement.--Should a member be
discontinued from service not voluntarily, after having
completed a required number of years of total service, or
voluntarily after having completed a required number of years of
total service, but in either event before reaching
superannuation retirement age, he shall be paid, as he may
elect, as follows:
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(1) [The] the full amount of the accumulated deductions
standing to his credit in the member's account of the fund, plus
the balance in the member's excess investment account; or
(2) [The] the early retirement allowance, if any, specified
in the contract.
Section 47. Section 409 of the act, amended June 10, 1982
(P.L.446, No.131), is amended to read:
Section 409. Options on Superannuation or Early
Retirement.--At the time of his superannuation or early
retirement, a [contributor] member may elect to receive his
benefits in a retirement allowance payable throughout his life,
which shall be known as a single life annuity. In the event of
the death of an annuitant who has elected to receive the maximum
single life annuity before he has received in annuity payments
the full amount of the total accumulated deductions standing to
his credit on the effective date of retirement, the balance
shall be paid to his designated beneficiary, or instead, he may
elect to receive the actuarial equivalent at that time of his
retirement allowance in a lesser allowance, payable throughout
life with provisions that:
(1) Option 1. If he shall die before receiving in payments
the present value of his retirement allowance as it was at the
time of his retirement, the balance, if less than five thousand
dollars ($5,000), shall be paid in a lump sum to his legal
representative, or to or in trust for his beneficiary. If the
balance is five thousand dollars ($5,000) or more, the
beneficiary may elect by application duly acknowledged and filed
with the board to receive payment of [such] the balance
according to any one of the following provisions: (i) a lump sum
payment, (ii) an annuity having a present value equal to the
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balance payable, (iii) a lump sum payment and an annuity. [Such]
The annuity shall be of equivalent actuarial value to the
balance payable less the amount of the lump sum payment
specified by the beneficiary.
(2) Option 2. Upon his death, his retirement allowance
shall be continued throughout the life of and paid to his
survivor annuitant, if then living.
(3) Option 3. Upon his death, one-half of his retirement
allowance shall be continued throughout the life of and paid to
his survivor annuitant, if then living.
(4) Option 4. Any other optional form of payment contained
in the contract.
Section 48. Section 410 of the act, amended January 4, 1978
(P.L.1, No.1), is amended to read:
Section 410. Vesting.--(a) Provisions for vesting may be
included in the contract between the municipality and the board.
When such provision is made it shall mean that a [contributor]
member who terminates his employment with the municipality after
a stipulated age or length of service, or both, may, if he so
elects in writing, leave his contributions, plus interest, as
credited to his account, in the fund, and, upon reaching
superannuation retirement age, receive a superannuation
retirement allowance and accumulated deductions would include
interest from date of termination until the earlier of the date
of commencement of the annuity or the date of payment of member
contributions.
(b) Upon the termination of the retirement plan, all
members, regardless of credited service, shall be deemed fully
vested in their accrued benefit to the extent the benefits
provided under the plan are funded as of the date of
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termination.
Section 49. Sections 411, 412 and 413 of the act, amended
May 17, 1980 (P.L.135, No.50), are amended to read:
Section 411. Disability Retirement.--(a) After a member has
had the required number of years of total service as stated in
the contract, he may, upon application or on the application of
one acting in his behalf, or upon application of a head of the
department of the municipality by which he is employed, be
retired by the board on a disability allowance [if he is under
superannuation retirement age, and on a superannuation
retirement allowance if he has attained or passed such age,] if
the physician designated by the board, after medical examination
of the member made at the place of residence of the member or at
a place mutually agreed upon, shall certify to the board that
the member is unable to engage in any gainful employment and
that [said] the member ought to be retired. Where the disability
of a member is determined to be service-connected, as defined in
this act, no minimum period of service shall be required for
eligibility. Requirements for filing applications shall be
identical to those outlined in clause (1) of section 407.
(b) On retirement for disability a member shall receive a
retirement allowance which shall consist of an amount computed
in accordance with the formula specified in the contract.
(c) Once every year the board may require any disability
annuitant, while still under superannuation retirement age, to
undergo medical examination by a physician designated by the
board. [Such] The examination shall be made at the place of
residence of the beneficiary or other place mutually agreed
upon. Should the physician report and certify to the board that
[such] the disability beneficiary is no longer physically or
20090HB1884PN2523 - 103 -
mentally incapacitated for the performance of duty and is able
to engage in a gainful occupation, then his disability
retirement allowance shall be discontinued, and in lieu thereof
an early involuntary retirement allowance shall at that time be
granted as if [such] the person had been retired not
voluntarily, if such a provision is included in the contract and
if [such] the person [shall have had] has the required number of
years of total service as stated in the contract.
(d) Should a disability annuitant, while under
superannuation retirement age, refuse to submit to at least one
medical examination in any year by a physician designated by the
board, his disability retirement allowance shall be discontinued
until the withdrawal of [such] the refusal, and should [such]
the refusal continue for one year, then all his right in and to
any disability retirement allowance or for early involuntary
retirement allowance provided for by this act, shall be
forfeited.
(e) Any [contributor] member entitled to retire for
disability may, in lieu of such retirement, if he has a required
number of years of total service, elect to retire not
voluntarily under the provisions of this act if such provisions
are included in the contract.
(f) Should a disability annuitant die before the total
disability retirement allowance received shall be at least equal
to the amount of the credit in his member's account plus the
balance in the member's excess investment account at the time of
disability retirement, then the board shall pay to the named
beneficiary, if living, or if the beneficiary predeceased the
annuitant, or no beneficiary was named, then to the annuitant's
estate, an amount equal to the difference between [such] the
20090HB1884PN2523 - 104 -
total retirement allowance received and the annuitant's
accumulated deductions plus excess interest, and if [such] the
difference is less than one hundred dollars ($100) and no
letters have been taken out on the estate within six months
after death, then [such] the difference may be paid to the
undertaker or to any person or municipality who or which [shall
have] has paid the claim of the undertaker. If the contract
between the municipality and the board provides that upon the
death of a disability annuitant payments in a specific amount
shall be continued to certain beneficiaries, then the provisions
of [subsection (f)] this subsection shall not apply and payments
shall be made in accordance with the terms of the contract.
Section 412. Withdrawal Provisions.--(a) A municipality
which has joined the retirement system created or continued
under this [Article IV] article may, for good and stated cause,
file an application with the board for permission to withdraw
from the system if it meets all of the following requirements:
(1) The municipality has been enrolled in the system for a
period of at least five years.
(2) The municipality has met all of its financial
obligations to the system.
(3) The legislative body of the municipality has passed an
ordinance or resolution signifying its intention to withdraw
from the system.
(4) The municipality has certified to the board that an
affirmative vote approving withdrawal from the system had been
obtained from at least seventy-five per cent of all of the
municipal [employes] employees affected by the ordinance or
resolution.
(b) The board shall within ninety days of its receipt, take
20090HB1884PN2523 - 105 -
action on an application filed by a municipality for permission
to withdraw from the system. If the application is approved the
withdrawing municipality shall be entitled to receive a net
refund of the amounts then standing to the credit of the
municipality in the member's account, the member's excess
investment account, the municipal account and the retired
member's reserve accounts of the system. In no event shall the
total amount of the net refund to the municipality exceed the
pro rata interest of the withdrawing municipality in the net
assets of the entire fund based on the market value of the
investments of the fund as of the date of receipt of the
application for permission to withdraw. The liability for the
continuation of retirement or disability allowances being paid
from the fund shall attach against the withdrawing municipality
and be paid from funds transferred to a retirement system
established subsequent to its withdrawal from the system or from
moneys appropriated annually from tax revenues sufficient to pay
the same. If the board disapproves the application of the
municipality for permission to withdraw from the system the
board shall promptly notify the municipality of its decision and
advise the municipality of the board's reason or reasons for
disapproval. The board shall establish rules and regulations, in
accordance with the provisions of clause (10) of section 104 of
this act, governing the details of the procedures to be followed
in the withdrawal of municipalities from the system.
Section 413. Procedures for Amending Contracts.--Any
municipality which has joined the system under the provisions of
this [Article IV] article may, with the approval of the board,
amend the contract with the board to increase any of the
benefits enumerated in [Article IV] this article to its members.
20090HB1884PN2523 - 106 -
The board shall not enter into any amended contract with any
municipality which decreases benefits, nor shall it enter into
any amended contract with a municipality which provides for
benefits in excess of or minimum member's contribution rates
less than those available to it under any other existing law
pertaining to the establishment of retirement systems for that
class of municipality except to the extent that excess
investment earnings are allocated to provide for additional
pension benefits or members accruals as otherwise provided in
this law. Before the board approves any such amended contract it
shall first determine, through its actuary, that the plan
outlined is actuarially sound. Any member municipality which
elects to enter into an amended contract for increased benefits
which would result in an increase in its [employes] employees'
contribution rates shall first obtain the written consent of at
least seventy-five per cent of its then member [employes]
employees. Additional costs for increases in benefits shall
become the responsibility of the municipality and/or the member
as specified in the contract.
Section 50. The act is amended by adding articles to read:
ARTICLE IV-A
MUNICIPAL PENSION RECOVERY PROGRAM
Section 401-A. Purpose.--This article provides for the
mandatory enrollment of pension plans maintained by those
municipalities which have pension plans that have been
determined to be severely distressed pursuant to the Municipal
Pension Plan Funding Standard and Recovery Act, into the
Municipal Pension Recovery Program established by this article.
Section 402-A. Mandatory Plan Enrollment.--(a) Every
municipality that is determined to be severely distressed
20090HB1884PN2523 - 107 -
pursuant to the Municipal Pension Plan Funding Standard and
Recovery Act shall join the system under the provisions of this
article. If a municipality is required to join the system under
this article, it shall enter into a contract with the board for
each separately established retirement plan then being
maintained by the municipality stating the provisions of each
retirement plan and transferring the responsibility to
administer each retirement plan to the board. Employees
participating in a multiemployer retirement, joint trusted,
Taft-Hartley collectively bargained pension plan shall not be
subject to the provisions of this article.
(b) All members of a retirement plan enrolled into the
Municipal Pension Recovery Program under the provisions of this
article shall become members of the system and shall earn and
receive their retirement benefits in accordance with the
contract entered into under the provisions of this article.
(c) No employee of a municipality that has entered into a
contract under the provisions of this article who is hired on or
after the date of certification as a severely distressed
retirement plan or who returns to service on or after that date
shall be enrolled under the provisions of this article but shall
be subject to the provisions of Article IV-B.
(d) No liability, on account of retirement allowances or
pensions being paid from any retirement or pension fund of the
municipality, shall attach against the fund, except as provided
in the contract, making a transfer of an existing system in
accordance with this section. The liability to continue payment
of pensions not so transferred shall attach against the
municipality, which shall annually make appropriations from its
tax revenues sufficient to pay the same.
20090HB1884PN2523 - 108 -
Section 403-A. Municipal Pension Recovery Program
Contract.--(a) The Municipal Pension Recovery Program contract,
as required by section 402-A, shall comport with the existing
plan documents as may be evidenced by the statutory provisions,
municipal charters, ordinances or resolutions, collective
bargaining agreements, arbitration awards and other written
documentation in full force and effect as of the date of
certification as a severely distressed retirement plan. All the
existing plan documents shall be provided to the board within 30
days of the date of the certification. The system shall then
prepare and provide to the municipality a Municipal Pension
Recovery Program contract that shall contain all retirement
benefits and obligations to be administered by the system for
each pension plan established by the municipality.
(b) Should a municipality fail to provide plan documents
within the 30-day period, the system shall prepare a Municipal
Pension Recovery Program contract in accordance with the
benefits stated in the most recently filed valuation report
under the Municipal Pension Funding Standards and Recovery Act.
(c) The administration of the Municipal Pension Recovery
Program contract shall be subject to Federal and State laws
relating to tax qualified pension programs. In the event that
any provision of the existing plan documents is not in
compliance with Federal and State laws relating to tax qualified
pension programs, the board may elect to pursue any remedial
measures it deems appropriate, the cost of which shall be
absorbed by the municipality. Until such time as the remedial
measures can be implemented or if such plan provision cannot be
remediated, such provision shall not be administered by the
board and shall remain the obligation of the municipality.
20090HB1884PN2523 - 109 -
(d) Within 30 days from the date the Municipal Pension
Recovery Program contract was mailed to the municipality, the
municipality shall execute the Municipal Pension Recovery
Program contract or file an appeal and request for an
administrative hearing before the board. Notwithstanding any
other provision of law, the exclusive remedy of any municipality
under this article aggrieved by a decision of the board in
finalizing the terms of the Municipal Pension Recovery Program
contract shall be the right to an adjudication by the board in
accordance with 2 Pa.C.S. Ch. 5 (relating to practice and
procedure) with appeal therefrom to the Commonwealth Court under
2 Pa.C.S. Ch. 7 (relating to judicial review) and 42 Pa.C.S. §
763(a)(1) (relating to direct appeals from government agencies).
If an appeal is not filed within the prescribed time, the
Municipal Pension Recovery Program contract shall be deemed a
final and binding contract between the board and the
municipality for the administration of the benefit structure
provided in the contract.
(e) From and after the date of certification as a severely
distressed retirement plan under the Municipal Pension Plan
Funding Standard and Recovery Act and notwithstanding any other
provision of law, pension benefits shall not be subject to
collective bargaining or arbitration between municipalities
subject to this article and their employees. No statute,
ordinance, contract, arbitration award or practice shall permit
or authorize any deviation from or alteration of the terms of
the Municipal Pension Recovery Program contract by which the
benefit plan is administered and no amendment thereof shall be
permitted. A municipality may not establish, create or
contribute to a retirement plan for employees enrolled in the
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Municipal Pension Recovery Program other than the plan created
in accordance with this article.
Section 404-A. Required Terms and Conditions.--The Municipal
Pension Recovery Program contract entered into between a
municipality and the board shall specifically state the
following terms and conditions:
(1) The superannuation retirement age at which a member
becomes eligible for a full normal retirement allowance in
accordance with the formula specified in the contract.
(2) Length of service requirements, if any, which must be
met before a member becomes eligible for either a superannuation
retirement allowance or an early retirement allowance and the
method of determining any reduction factors involved in the
computation of the amount of the allowance because of retirement
prior to attaining superannuation age.
(3) Provisions for the refunding of accumulated deductions
plus interest to an employee who leaves the service of the
municipality before the employee becomes eligible for any type
of retirement benefit and whether or not the employee shall be
entitled to interest earned on contributions.
(4) Provisions relating to the types and amounts of
disability retirement benefits for which a member may become
eligible and the qualifications therefor.
(5) The availability of any vesting or deferred benefits to
which a member may become entitled.
(6) A description of the amount and the manner in which a
member may qualify for any death benefits, both before and after
retirement, including any prescribed payments to spouses or
children.
(7) The formula used to determine the amount of normal
20090HB1884PN2523 - 111 -
retirement benefits, including an explanation of the salary or
compensation to be used in the computations, and a statement
concerning any Social Security offset provisions included in the
contract.
(8) A description of any optional methods of payment of
retirement allowances available to a member.
(9) Any provisions for cost-of-living increases and
limitations thereon, which may be included.
(10) The manner in which the rate or rates of employee
contributions shall be determined, together with any provisions
for additional voluntary contributions.
(11) The manner in which credit for any allowable military
service shall be determined and the manner in which costs of
service shall be paid.
(12) Any other information which might have a bearing on the
costs or benefits of the retirement plan which might be required
by the board in the administration of the plan.
Section 405-A. Determination of Municipal Liability.--(a)
(1) The board shall value the liability of each municipal plan
enrolling under this article and that liability shall attach to
the municipality upon the effective date of the Municipal
Pension Recovery Program contract. The obligations shall be
calculated in accordance with the funding requirements found in
the Municipal Pension Funding Standard and Recovery Act.
(2) The transfer of all plan assets to the Pennsylvania
Municipal Retirement Fund shall be made effective as of the
effective date of the Municipal Pension Recovery Program
contract. The value of said assets shall be determined at market
value but shall be adjusted by multiplying the market value of
the plan's assets by the ratio of the system's actuarial value
20090HB1884PN2523 - 112 -
of assets as of January 1 of the year the plan enrolls in the
system divided by the system's market value of assets as of
January 1 of the year the plan enrolls in the system.
(3) As of the effective date of the Municipal Pension
Recovery Program contract, the board shall pay a plan's existing
retirement allowance obligations. All the benefits shall be paid
on a month-to-month basis from the retired members reserve
account, but the cost of the benefit payments shall not attach
to the retired member's reserve account.
(4) The plan's benefit liability shall be deducted from the
plan's assets held in the municipal account maintained by the
system on behalf of the plan and transferred to the retired
members reserve account.
(5) Upon the retirement or the establishment of a benefit
payment to a plan member, that plan member's member account and
all accumulated contributions held in the member account shall
be transferred to that plan's municipal account, and the benefit
shall be a liability attaching to the municipal account.
(b) The cost of making the valuations required by this
section and in the transfer of any existing pension system of
any municipality shall be part of the costs of administration of
this act.
Section 406-A. Contributions by Members.--Each member of the
system shall contribute to the fund such percent of his actual
salary or compensation, including fees where paid in part on a
fee basis, as required in the contract. The contributions shall
be paid into the fund by the municipality through payroll
deductions in such manner and at such time as the board may, by
rule and regulation, determine. The contributions shall be held
in a member account established and maintained on behalf of each
20090HB1884PN2523 - 113 -
contributing member.
Section 407-A. Nonportability.--There shall be no
portability of service credits or contributions provided for in
any Municipal Pension Recovery Program contract established in
accordance with the provision of this article.
Section 408-A. Plan Termination and Residual Assets.--(a)
The board shall operate and administer each Municipal Pension
Recovery Program contract established under this article until
such time as all present and future obligations thereof have
been fully satisfied, and no retired member or beneficiary
remains to claim benefits under the contract, at which time the
board shall terminate the plan and the Municipal Pension
Recovery Program contract established for the plan shall expire.
(b) Any residual assets remaining to the credit of a
terminated pension plan held by the system in the municipal
account shall be used to satisfy future pension obligations of
that municipal employer to the Municipal Pension Recovery
Program established pursuant to Article IV-B, or, if the
municipality has no employees participating in that retirement
program, the residual funds shall be paid into the Cooperative
Municipal Pension and Security Program established under the
provisions of Article IV-B without restriction.
(c) Upon the termination of the retirement plan, all
members, regardless of credited service, shall be deemed fully
vested in their accrued benefit to the extent the benefits
provided under the plan are funded as of the date of
termination.
ARTICLE IV-B
COOPERATIVE MUNICIPAL PENSION AND SECURITY PROGRAM
Section 401-B. Purpose.--This article provides for the
20090HB1884PN2523 - 114 -
establishment and operation of the Cooperative Municipal Pension
and Security Program and the mandatory enrollment of certain
municipal employees, municipal police officers and municipal
fire fighters into the retirement plans established under the
provisions of this program.
Section 402-B. Cooperative Municipal Pension and Security
Program.--(a) The Cooperative Municipal Pension and Security
Program is established for the purpose of providing retirement
benefits to the employees of municipalities that are determined
to be severely distressed as defined by the Municipal Pension
Plan Funding Standard and Recovery Act. This article shall be
applicable to all full-time employees hired by a municipality
after the determination that the municipality is severely
distressed. A municipality determined to be subject to the
provisions of this article shall not, after such finding,
establish or participate in a retirement or pension fund, plan
or system for its full-time employees except as provided by this
article. For purposes of this article "full-time employee" means
an individual employed by a municipality who is scheduled to
work an average of at least 35 hours per week during a period of
at least six consecutive months. The term does not include an
independent contractor or any individual compensated on a fee or
commission basis.
(b) The Cooperative Municipal Pension and Security Program
shall be composed of the following retirement plans which shall
be maintained as tax-qualified pension plans established for the
exclusive benefit of the members and their beneficiaries:
(1) Municipal employees retirement plan A.
(2) Municipal employees retirement plan B.
(3) Public safety officers retirement plan A.
20090HB1884PN2523 - 115 -
(4) Public safety officers retirement plan B.
(c) The Cooperative Municipal Pension and Security Program
shall be administered by the board in accordance with the
provisions of this article.
Section 403-B. Membership in a Retirement Plan.--(a) Each
municipality subject to the provisions of this article shall
enroll their municipal employees, municipal police officers and
municipal fire fighters in the Cooperative Municipal Pension and
Security Program by making application on behalf of the
employees to the board. Each application for participation
submitted by an employer under this section shall be enrolled in
the retirement plan applicable to their employment as follows:
(1) Municipal employees employed by a city shall be enrolled
in the municipal employees retirement plan A.
(2) Municipal employees employed by a municipality other
than a city shall be enrolled in the municipal employees
retirement plan B.
(3) Municipal police officers and municipal fire fighters
employed by a city shall be enrolled in the public safety
officers retirement plan A.
(4) Municipal police officers and municipal fire fighters
employed by a municipality other than a city shall be enrolled
in the public safety officers retirement plan B.
(b) Municipalities shall comply with the procedures
specified by the board regarding the content and submission of
applications for participation in the Cooperative Municipal
Pension and Security Program.
Section 404-B. Service Allowance; Change of Employment; and
Military Service.--(a) In computing the length of service of a
member for retirement purposes, full credit shall be given to
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each member for each full or partial year of service rendered to
the municipality as a full-time employee. Except as otherwise
required by applicable law, in no event shall a member receive
service credit for any period during which the member is on
leave of absence without pay.
(b) An active member who has been employed by a municipality
that is covered by the provisions of the Cooperative Municipal
Pension and Security Program and thereafter enters the uniformed
services as defined by 38 U.S.C. § 4303 (relating to
definitions) and returns to the municipality to again be a
member of the plan within the authorized time period of the law,
shall have the authorized time spent in such service credited to
the member's employment record for pension or retirement
benefits, if the individual makes the required employee
contributions.
(c) An active member may also purchase credit for
nonintervening military service for a period not to exceed five
years. An active member may file an application with the board
to purchase credit for periods of nonintervening military
service upon completion of five years of subsequent service to
the municipality. The amount due from the member shall be
computed by applying the member's basic contribution rate plus
the applicable normal cost rate which was in effect on the date
of the member's entry into Cooperative Municipal Pension and
Security Program times the member’s average annual rate of
compensation over the first five years of his subsequent
employment and multiplying the result by the number of years and
fractional part of a year of creditable nonintervening military
service being purchased, plus statutory interest from the date
of enrollment in the plan to date of purchase.
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(d) The amount due from the member for the purchase of
military service credit shall be certified by the board in
accordance with methods approved by the actuary and may be paid
in a lump sum within 30 days or may be amortized with additional
interest through deductions in amounts agreed upon by the member
and the board. The rate of interest to be charged to members on
their purchase of credit for nonintervening military service
shall be the statutory interest rate.
(e) A member may purchase credit for intervening or
nonintervening military service only if his discharge or
separation from the service was granted under other than
dishonorable conditions. A member may not purchase credit for
any military service for which he is entitled to receive,
eligible to receive now or in the future or is receiving
retirement benefits for the service under a retirement system
administered and wholly or partially paid for by any other
governmental agency or private employer. Applications to
purchase credit for military service must be accompanied by
proof of the nature of discharge or separation from the military
service.
Section 405-B. Determination of Municipal Liability.--The
board shall determine the amount which shall be contributed in
accordance with the Municipal Pension Funding Standard and
Recovery Act, by each municipality for service credits of
members subsequent to the time the municipality joined the
system in order that all service liability may be fully funded
on an actuarial basis. The amounts so determined by the board
shall be expressed as a percentage of the payroll of the
municipality covering its members. Each contribution shall be
deposited to the employers account of the applicable retirement
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plan.
Section 406-B. Contributions by Members; Consolidation of
Credits; and Change of Employment.--(a) All plans in the
Cooperative Municipal Pension and Security Program shall be
treated as having adopted the provisions of IRC § 414(h)
relating to pickup contributions. Each municipality shall cause
the required pickup contributions to be made and shall cause to
be deducted any other required member contributions from each
payroll. The pickup rate required to be contributed to the
retirement plan shall be as follows:
(1) Members of municipal employees retirement plan A shall
contribute 6.00% of their compensation.
(2) Members of municipal employees retirement plan B shall
contribute 4.50% of their compensation.
(3) Members of public safety officers retirement plan A
shall contribute 6.75% of their compensation.
(4) Members of public safety officers retirement plan B
shall contribute 6.00% of their compensation.
(b) The municipality shall notify the board at times and in
a manner prescribed by the board of the compensation of any
noneligible member to whom the limitation under IRC § 401(a)(17)
either applies or is expected to apply and shall cause the
member's contributions deducted from payroll to cease at the
limitation under IRC § 401(a)(17) on the payroll date if and
when the limit is reached. The municipality shall certify to the
board the amounts picked up and deducted and shall send the
total amount picked up and deducted in such manner and at such
time as the board may by rule and regulation determine. The
employer shall pay pickup contributions from the same source of
funds which is used to pay other compensation to the employee.
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Section 407-B. Withdrawal; Return to Service; and Death in
Service.--(a) Should a member before reaching superannuation
retirement eligibility for any reason cease to be employed, he
shall be paid by the board the full amount of the accumulated
deductions standing to his credit in the member's account,
unless he is entitled to vesting rights or a disability
retirement allowance and elects to exercise the vesting rights
or disability allowance. Should the former member thereafter
return to the service of any municipality subject to the
provisions of this article and restore to the fund, in such
manner as may be agreed upon by the person and the board, his
withdrawn accumulated deductions as they were at the time of his
separation from service, his annuity rights as they existed at
the time of separation from service shall be restored and his
obligations as a member shall begin again.
(b) Should a member, having attained or passed
superannuation eligibility, elect, upon leaving the service of
the municipality, not to claim the retirement allowance to which
he is entitled, he shall, upon written application, be paid by
the board the full amount of the accumulated deductions standing
to his credit in the member's account.
(c) Should a person who has been retired on a retirement
allowance under this act return to employment on a regular full-
time basis with a municipality required to enroll its employees
into the Cooperative Municipal Pension and Security Program, his
retirement allowance shall cease, and in the case of an annuity,
other than a disability annuity, the present value of the
annuity shall be frozen as of the date the annuity ceases. Upon
subsequent discontinuance of service, the member, other than a
former disability annuitant, shall be entitled to an annuity
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which is of equivalent actuarially value equivalent as the
present value of the annuity earned by further service and
further deductions added upon reemployment.
Section 408-B. Superannuation Age and Service
Requirements.--Eligibility for superannuation retirement shall
be as follows:
(1) For members of the municipal employees retirement plan A
and municipal employees retirement plan B the attainment of at
least 30 years of credited service and the attainment of 65
years of age.
(2) For members of the public safety officers retirement
plan A the attainment of at least 20 years of credited service
and the attainment of 50 years of age.
(3) For members of the public safety officers retirement
plan B the attainment of at least 25 years of credited service
and the attainment of 55 years of age.
Section 409-B. Superannuation Retirement Benefit.--
Retirement for superannuation shall be as follows:
(1) Any member who has attained eligibility for a
superannuation retirement may retire by filing with the board a
written statement, duly attested, setting forth on what date he
desires to be retired. The application shall make the
superannuation retirement allowance effective on the date so
specified, if the application was filed in the office of the
board or deposited in the United States mail, addressed to the
board, before the date specified in the application and before
the death of the member, but the date stated in the application
shall not be more than 90 days after the date of filing or the
date the application was deposited in the mail.
(2) A member eligible for superannuation retirement shall be
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entitled to an annual retirement allowance throughout his life,
which shall be calculated as follows:
(i) For members of the municipal employees retirement plan A
the annual annuity shall equal the member's years of credited
service times the member's final salary times 2.00%.
(ii) For members of the municipal employees retirement plan
B the annual annuity shall equal the member's years of credited
service times the member's final salary times 1.50%.
(iii) For members of the public safety officers retirement
plan A the annual annuity shall equal the member's years of
credited service times the member's final salary times 2.25%.
(iv) For members of the public safety officers retirement
plan B the annual annuity shall equal the member's years of
credited service times the member's final salary times 2.00%.
(3) The board shall make the first payment to a member who
is eligible for an annuity within 60 days of the filing of an
application for an annuity or, in the case of a vested member
who has deferred the filing of an application to a date later
than 90 days following attainment of eligibility for
superannuation, within 60 days of the effective date of
retirement, and receipt of the required data from the employer.
Concurrently the board shall certify to such member:
(i) The total accumulated deductions standing to the
member's credit showing separately the amount contributed by the
member, the pickup contributions and the interest credited to
the date of termination of service.
(ii) The number of years and fractional parts of a year
credited in each class of service.
(iii) The final average salary on which the annuity is based
as well as any applicable reduction factors due to election of a
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retirement option.
(iv) The total annual annuity payable under the option
elected.
(4) Any annuity granted under the provisions of this section
or section 410-B shall be paid in equal monthly installments.
(5) Notwithstanding any other provision of this section, in
no event shall a member elect, nor shall the board permit, a
form of benefit that is payable over a period that fails to
satisfy the required distribution provisions of the Internal
Revenue Code § 401(a)(9).
Section 410-B. Options on Retirement.--(a) At the time of
his retirement, a member may elect to receive his benefits in a
retirement allowance payable throughout his life, which shall be
known as a single life annuity. In the event of the death of an
annuitant who has elected to receive the single life annuity
before he has received in annuity payments the full amount of
the total accumulated deductions standing to his credit on the
effective date of retirement, the balance shall be paid to his
designated beneficiary. Instead of receiving a single life
annuity the member may elect to receive the equivalent actuarial
value at the time of his retirement in a lesser allowance,
payable throughout life with provisions that:
(1) Option 1. If he shall die before receiving in payments
the present value of his retirement allowance as it was at the
time of his retirement, the balance, if less than $5,000, shall
be paid in a lump sum to his legal representative or to or in
trust for his beneficiary. If the balance is $5,000 or more, the
beneficiary may elect by application duly acknowledged and filed
with the board to receive payment of such balance according to
any one of the following provisions:
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(i) a lump sum payment;
(ii) an annuity having a present value equal to the balance
payable; or
(iii) a lump sum payment and an annuity. The annuity shall
be of equivalent actuarial value to the balance payable less the
amount of the lump sum payment specified by the beneficiary.
(2) Option 2. Upon his death, his retirement allowance
shall be continued throughout the life of and paid to his
survivor annuitant, if then living. In the event of both the
deaths of an annuitant and the survivor annuitant before they
combined have received in annuity payments the full amount of
the total accumulated deductions standing to the member's credit
on the effective date of the member's retirement, the balance
shall be paid to the designated beneficiary.
(3) Option 3. Upon his death, one-half of his retirement
allowance shall be continued throughout the life of and paid to
his survivor annuitant, if then living. In the event of both the
deaths of an annuitant and the survivor annuitant before they
combined have received in annuity payments the full amount of
the total accumulated deductions standing to the member's credit
on the effective date of the member's retirement, the balance
shall be paid to the designated beneficiary.
Section 411-B. Death Benefits.--(a) A member who is
eligible to receive a superannuation retirement allowance may
file with the board a written application for retirement, in the
form required for the application, but requesting that the
retirement shall become effective as of the time of his death,
electing one of the options provided in section 410-B and
nominating a beneficiary or survivor annuitant under the
applicable option. In all such cases, the application shall be
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held by the board until the member shall file a later
application in the usual manner for a superannuation retirement
allowance or until the death of the member occurring while in
municipal service, at which time his retirement shall become
effective with the same benefits to the person designated as if
the member had retired on the day immediately preceding his
death.
(b) A member who is eligible to receive a superannuation
retirement allowance at the time of death and who has not filed
with the board a written application for a superannuation
retirement allowance as provided in subsection (a) shall be
considered as having elected Option 1 as provided in section
410-B as of the date of his death. In such event, payment under
Option 1 shall be made to the beneficiary designated in the
nomination of beneficiary form on file with the board, or if the
beneficiary has predeceased the member, to the legal
representative of the member.
(c) A member who dies as a result of injury or illness
incurred in the performance of official duties shall be deemed
to have met all requirements for superannuation retirement and
considered to have elected Option 1.
(d) Should a member die prior to becoming eligible for a
superannuation retirement allowance, his accumulated deductions
shall be paid to his estate, or to such person, if living, as he
shall have designated in writing, filed with the board as his
beneficiary. In case any member has failed to designate a
beneficiary, or if the named beneficiary has predeceased the
member and no such successor beneficiary has been named, and
upon the death in service shall have less than $100 in
accumulated deductions standing to his credit, the board may, if
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letters testamentary or of administration have not been taken
out on his estate within six months after death, pay the
accumulated deductions on the claim of the undertaker, or to any
person or municipality which shall have paid the claim of the
undertaker.
Section 412-B. Disability Retirement.--(a) An active
municipal employee who has accumulated five or more years of
total credited service, or an active municipal police officer or
municipal fire fighter regardless of their credited years of
service, may, upon application or on the application of one
acting in his behalf, or upon application of the municipality by
which he is employed, be retired by the board on a disability
allowance if the physician designated by the board, after
medical examination of the member shall certify to the board
that the member is mentally or physically incapable of
continuing to perform the duties for which the member is
employed and that the member ought to be retired.
(b) A member electing to retire under the disability
provisions of this article 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 disability annuity shall be equal to a standard
single life annuity multiplied by the benefit accrual rate
applicable to the member's retirement plan, if the product of
such benefit accrual rate and the total number of years of
credited service is greater than 16.667, otherwise the standard
single life annuity shall be multiplied by the lesser of the
following ratios:
MY*/Y or 16.667/Y
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where M equals the accrual rate applicable to the member on the
effective date of the disability, Y equals the number of years
and partial years of credited service earned by the member as of
the effective date of the disability, and Y* equals the total
years and partial years of credited service the member would
have earned if he were to continue as an employee until
attaining eligibility for a superannuation retirement allowance,
or if the member has attained eligibility for a superannuation
retirement allowance at the time of the disability, then the
number of years of credited service. In lieu of a full
disability annuity the member may elect to receive the
equivalent actuarial value at the time of his retirement in a
lesser allowance, payable throughout life in accordance with the
provisions of either section 410-B(2) or (3).
(c) 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, the member shall receive a
supplement equal to 70% of his final average salary less the sum
of the annuity as determined under subsection (b) and any
payments paid or payable on account of the 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. 620, 42 U.S.C. § 301 et seq.). 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 payment
by the average weekly wage as determined by the Workers'
Compensation Board.
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(d) Once every year the board may require any disability
annuitant, while still under superannuation retirement age, to
undergo medical examination by a physician designated by the
board. Should the physician report and certify to the board that
the disability beneficiary is no longer physically or mentally
incapacitated for the performance of duty, then his disability
retirement allowance shall be discontinued.
(e) Should a disability annuitant, while under
superannuation retirement age, refuse to submit to at least one
medical examination in any year by a physician designated by the
board, his disability retirement allowance shall be discontinued
until the withdrawal of the refusal, and should the refusal
continue for one year, then all his rights in and to any
disability retirement allowance or for early involuntary
retirement allowance provided for by this article, shall be
forfeited.
(f) In the event of the death of a disability annuitant who
has elected to receive a maximum disability annuity before the
member has received in annuity payments an amount equal to the
present value, on the effective date of disability, of the
benefits to which the member would have been entitled under
subsection (b) had the member died while in service, the balance
of the amount shall be paid to the member's designated
beneficiary.
Section 413-B. Vesting.--(a) A member who ceases to be an
active member for any reason after having completed at least ten
years of credited service but before meeting the superannuation
retirement service requirement shall be entitled to vest his
retirement benefits until he attains superannuation retirement
age, by filing with the board a written notice of his intentions
20090HB1884PN2523 - 128 -
to vest, within 90 days of the date of his termination of
employment. Accumulated deductions will include statutory
interest from date of termination until the earlier of the date
of the commencement of the annuity or the date of payment of
member contributions.
(b) A member who has separated from employment may elect,
after he has vested, to be paid as follows:
(1) the full amount of the accumulated deductions, including
statutory interest; or
(2) upon reaching superannuation retirement age, a
retirement allowance computed under the provisions of section
408-B multiplied by a reduction factor equal to the ratio of the
member's actual years of credited service divided by the
required years of credited service for eligibility for a
superannuation retirement benefit.
(c) Should a vested member die before he becomes eligible
for a retirement allowance, the full amount of the accumulated
deductions, including statutory interest credited to the date of
his death, standing to his credit in the member's account of the
fund shall be paid to his estate or to his named beneficiary,
pursuant to section 411-B(d).
(d) Upon the termination of the retirement plan, all
members, regardless of credited service, shall be deemed fully
vested in their accrued benefit to the extent the benefits
provided under the plan are funded as of the date of
termination.
Section 414-B. Portability.--(a) There shall be no
portability of service credits for a member enrolled under the
Cooperative Municipal Pension and Security Program who leaves
the employ of a municipality required to enroll their employees
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into one of the retirement plans created under this article and
becomes employed by a municipality that has established a
pension plan with the system under the provisions of Article II,
III or IV. Nor shall there be portability of service credits for
a member enrolled in a pension plan that was established under
the provisions of Article II, III or IV who leaves that
municipality's employ and becomes employed by a municipality
required to enroll their employees into one of the retirement
plans created under the Cooperative Municipal Pension and
Security Program.
(b) There shall be full portability of service credits among
the four plans created by this article, without regard to the
identity of the municipal employer. When a member enrolled in a
plan established under this article has a change in employment
that would no longer allow him to be eligible to earn credited
service with that municipality but the member becomes eligible
within a year of his separation from the plan for enrollment in
another plan established under this article, the member may
elect to transfer his credited service to his new plan provided
he restores his accumulated contributions to the system. A
member electing to institute the portability provisions found in
this section shall have any retirement benefit he becomes
eligible to receive calculated based upon a prorated formula
reflecting the years of credited service under each retirement
plan multiplied by the appropriate accrual formula applicable to
that service time. The benefit shall be based upon the final
salary of the member as determined under the provisions of the
retirement plan from which he is to receive the benefit. The
board shall ensure that the funding of the benefit is prorated
between the retirement plans based upon an equitable
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distribution of the liability.
Section 51. Article V heading of the act is amended to read:
ARTICLE V
[REPEALS AND EFFECTIVE DATE]
MISCELLANEOUS PROVISIONS
Section 52. The Secretary of the Commonwealth shall publish
a notice in the Pennsylvania Bulletin stating the enactment of
an act of the General Assembly that both amends the act of
December 18, 1984 (P.L.1005, No.205), known as the Municipal
Pension Plan Funding Standard and Recovery Act, and provides for
the Municipal Pension Recovery Program and for the Cooperative
Municipal Pension and Security Program. The publication shall
occur within ten days of the effective date of this section or
the enactment of such amendatory act, whichever is later.
Section 53. This act shall take effect as follows:
(1) This section shall take effect immediately.
(2) Section 52 of this act shall take effect in 60 days.
(3) The remainder of this act shall take effect upon
publication of the notice under section 52 of this act.
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