Bill Text: PA HB2666 | 2009-2010 | Regular Session | Introduced

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Bill Title: Further providing for mandatory and optional membership and for classes of service; and providing for State Legislators' Defined Contribution Program.

Spectrum: Moderate Partisan Bill (Republican 20-3)

Status: (Introduced - Dead) 2010-08-23 - Referred to FINANCE [HB2666 Detail]

Download: Pennsylvania-2009-HB2666-Introduced.html

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PRINTER'S NO. 4152
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2666 Session of2010
INTRODUCED BY KRIEGER, VULAKOVICH, REESE, METCALFE, MURT, GABLER, TURZAI, CHRISTIANA, CREIGHTON, CUTLER, EVERETT, METZGAR, MUSTIO, PALLONE, ROAE, SCHRODER AND STEVENSON, AUGUST 23, 2010
REFERRED TO COMMITTEE ON FINANCE, AUGUST 23, 2010
AN ACT
Amending Title 71 (State Government) of the Pennsylvania
Consolidated Statutes, further providing for mandatory and
optional membership and for classes of service; and providing
for State Legislators' Defined Contribution Program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 5102 of Title 71 of the Pennsylvania
Consolidated Statutes is amended by adding a definition to read:
§ 5102. Definitions.
The following words and phrases as used in this part, unless
a different meaning is plainly required by the context, shall
have the following meanings:
* * *
"State Legislators' Defined Contribution Program." The
defined contribution program established under Ch. 56 (relating
to State Legislators' Defined Contribution Program).
* * *
Section 2. Section 5301(a)(3) and (c) of Title 71 are
amended and subsection (a) is amended by adding paragraphs to
read:
§ 5301. Mandatory and optional membership.
(a) Mandatory membership.--Membership in the system shall be
mandatory as of the effective date of employment for all State
employees except the following:
* * *
(3) Members of the General Assembly, other than members
of the General Assembly described under paragraphs (17) and
(18).
* * *
(17) Any person who is not a member of the General
Assembly on November 30, 2010, and who becomes a member of
the General Assembly on or after December 1, 2010.
(18) Any person who is a member of the General Assembly
on November 30, 2010, and who is reelected to serve as a
member of the General Assembly beginning on or after December
1, 2010.
* * *
(c) Prohibited membership.--
(1) The State employees listed in subsection (a)(12),
(13), (14) [and (15)], (15) and (17) shall not have the right
to elect membership in the system.
(2) A member of the General Assembly described under
subsection (a)(18) shall have no right to be an active member
of the system and accrue credited service for State service
as a member of the General Assembly subsequent to November
30, 2010.
* * *
Section 3. Section 5306(a.2)(1) of Title 71 is amended to
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read:
§ 5306. Classes of service.
* * *
(a.2) Class of membership for members of the General
Assembly.--
(1) A person who:
(i) becomes a member of the General Assembly and an
active member of the system after June 30, 2001, and
before December 1, 2010; or
(ii) is a member of the General Assembly on July 1,
2001, but is not an active member of the system because
membership in the system is optional pursuant to section
5301 and who becomes an active member after June 30,
2001, and before December 1, 2010;
and who was not a State police officer on or after July 1,
1989, shall be classified as a Class D-4 member for State
service as a member of the General Assembly performed prior
to December 1, 2010 and receive credit as a Class D-4 member
for all State service as a member of the General Assembly
performed prior to December 1, 2010, upon payment of regular
member contributions for Class D-4 service and, subject to
the limitations contained in subsection (a.1)(7), if
previously a member of Class A or employed in a position for
which Class A service could have been earned, shall receive
Class AA service credit for all Class A State service, other
than State service performed as a State police officer or for
which a class of service other than Class A or Class D-4 was
or could have been elected or credited.
* * *
Section 4. Title 71 is amended by adding a chapter to read:
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CHAPTER 56
STATE LEGISLATORS' DEFINED CONTRIBUTION PROGRAM
Sec.
5601. Definitions.
5602. Establishment.
5603. State Legislators' Defined Contribution Program.
5604. Powers and duties of board.
5605. Prohibited interests.
5606. Investments and expenses.
5607. Trust fund.
5608. Election period.
5609. Participant contributions.
5610. Employer contributions.
5611. Vesting.
5612. Prohibition.
§ 5601. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Participant." A qualified employee who elects to
participate in the State Legislators' Defined Contribution
Program.
"Program." The State Legislators' Defined Contribution
Program.
"Qualified employee." Any of the following:
(1) A person who is not a member of the General Assembly
on November 30, 2010, and who becomes a member of the General
Assembly on or after December 1, 2010.
(2) A person who is a member of the General Assembly on
November 30, 2010, and who is reelected to serve as a member
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of the General Assembly beginning on or after December 1,
2010.
"Trust fund." The trust created under section 5607 (relating
to trust fund).
§ 5602. Establishment.
The State Legislators' Defined Contribution Program is
established in accordance with this chapter.
§ 5603. State Legislators' Defined Contribution Program.
The board shall administer the program, which shall be a
defined contribution retirement program for participants. The
board shall permit qualified employees to elect to participate
in the program. The benefits to be provided for or on behalf of
participants in the program shall be provided through
participant-directed investments, in accordance with IRC §
401(a). Participants and employers shall contribute to the
program in accordance with sections 5609 (relating to
participant contributions) and 5610 (relating to employer
contributions).
§ 5604. Powers and duties of board.
In order to administer the program, the powers and duties of
the board shall include all of the following:
(1) Entering into written agreements with financial or
other organizations to administer the program for
participants and to invest funds held under the program. The
program and any written agreement shall comply with the IRC,
including the plan qualification requirements imposed on
governmental plans under IRC § 401(a).
(2) Establishing procedures whereby qualified employees
may elect to participate in the program and participants may
change their investment choices on a periodic basis, as
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determined by the board, which shall not be less frequently
than quarterly.
(3) Arranging for a deduction, from the compensation of
participants, of participant contributions to the program.
(4) Establishing standards and criteria for selection by
the board of the financial institutions, insurance companies
or other organizations that may be qualified as managers, on
behalf of the board, of funds accumulated under the program
on behalf of any participant.
(5) Establishing standards and criteria for providing
options to qualified employees and participants concerning
the method of investing amounts accumulated under the
program. The investment options shall represent a broad cross
section of asset classes and risk profiles and shall include
lifestyle funds that are based upon age and projected
retirement date.
(6) Establishing procedures for informing qualified
employees and participants of specific options offered by
qualified managers.
(7) Designing a comprehensive, balanced and impartial
educational program to assist qualified employees and
participants in their choice of investment options under the
program, which shall include retirement planning education
and financial planning guidance on matters such as investment
diversification, investment risks, investment costs and asset
allocation.
(8) Establishing standards and criteria for the
disclosure to qualified employees and participants of the
anticipated and actual income attributable to the amounts,
property and rights and all fees, costs and charges to be
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made against the amounts accumulated to cover the costs of
administering and managing the funds.
(9) Establishing a process for election to participate
in the program.
(10) Performing an annual review of any qualified fund
manager for the purpose of assuring it continues to meet all
standards and criteria established.
(11) Allowing for rollovers into the program from plans
of other employers, regardless of the employer being a
private employer or a public employer.
(12) Allowing a former participant to maintain his or
her account within the program.
(13) Establishing procedures whereby any participant may
do one of the following:
(i) Withdraw accumulated amounts in cases of
financial hardship or separation of a participant from
State service or as otherwise permitted under the IRC.
(ii) Dispose of a participant's account under a
domestic relations order unless in conflict with the IRC.
(14) Administering the program in compliance with the
IRC.
(15) Promulgating regulations necessary to administer
this chapter.
(16) Establishing procedures to provide for the lawful
payment of benefits.
§ 5605. Prohibited interests.
No member or employee of the board shall have any direct or
indirect financial interest in any of the investment products
that are made available to participants under the program.
§ 5606. Investments and expenses.
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(a) Loss.--The board shall not be responsible for any
investment loss incurred in the program or for failure of any
investment to earn any specific or expected return or to earn as
much as any other investment opportunity, whether or not the
other investment opportunity was offered to participants in the
program. The expenses arising from allowing qualified employees
to elect to participate in the program and participants to
choose a fund manager, deduct from compensation amounts
contributed under the program and transfer to the fund manager
amounts so deducted shall be borne by the board. All other
expenses arising from the administration of the program shall be
assessed against the accounts created on behalf of participants
either by the fund managers or by the board.
(b) Investment.--Investment of contributions by any
corporation, institution, insurance company or custodial bank
that the board has approved shall not be unreasonably delayed
and the investment of contributions shall not be delayed more
than 30 days from the date of payroll deduction to the date that
funds are invested. Any interest earned on the funds pending
investment shall be allocated to the Commonwealth and credited
to the accounts of participants who are then participating in
the program unless the interest is used to defray administrative
costs and fees that would otherwise be required to be borne by
participants who are then participating in the program.
§ 5607. Trust fund.
(a) Establishment.--All assets and income that have been or
shall be withheld by the employer in accordance with this
chapter shall be held in trust in any funding vehicle permitted
by applicable provisions of the IRC for the exclusive benefit of
the program's participants and their beneficiaries until the
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time when the funds are distributed to the participant or the
participant's beneficiary in accordance with the terms of the
agreement between the participant and the board. All such assets
and income withheld by the employer shall be held in trust as
set forth in this subsection in a special fund created within
the State Treasury of which the State Treasurer shall be
custodian. The assets of the program shall be held in trust for
the exclusive benefit of the program's participants and
beneficiaries and for the payment of reasonable expenses of the
program in accordance with section 5606 (relating to investments
and expenses) and IRC § 401.
(b) Trustees.--The members of the board shall be the
trustees of the trust established under subsection (a).
(c) Attachment.--Notwithstanding any other provision of law,
any benefit or interest available under the program, any right
to receive or direct payments under the program or any
distribution of payment made under the program shall not, except
as expressly specified by the program, be subject to assignment,
alienation, garnishment, attachment, transfer, anticipation,
sale, mortgage, pledge, hypothecation, commutation, execution or
levy, whether by voluntary or involuntary act of any interested
person.
§ 5608. Election period.
A qualified employee may elect to participate in the program
by filing written notice with the board, in accordance with
procedures established by the board under section 5604(2)
(relating to powers and duties of board) within 90 days after
the date on which he or she become a qualified employee.
§ 5609. Participant contributions.
Regular participant contributions shall be made to the
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program on behalf of each participant for current service in an
amount equal to a percentage of the participant's pensionable
compensation. The employer shall cause participant contributions
for current service to be made and deducted from each payroll.
Participants may elect to contribute to the program on their
behalf to the extent permitted by law.
§ 5610. Employer contributions.
The General Assembly shall make payments to the trust fund on
behalf of the participant. The amount of the payments shall
match the contribution made by the participant under section
5609 (relating to participant contributions dollar for dollar,
but shall not exceed 4% of the participant's pensionable
earnings.
§ 5611. Vesting.
A participant shall be vested after completing three years of
service as a member of the General Assembly during which he or
she is a participant in the program with respect to employer
contributions paid on behalf of the participant to the program
plus interest and earnings on the employer contributions but
minus investment fees and administrative charges.
§ 5612. Prohibition.
No qualified employee may make an election to participate in
the program prior to December 1, 2010.
Section 5. This act shall take effect in 60 days.
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