71 Pa.C.S. Ch. 55

71 Pa.C.S. Ch. 55
in effect

71 Pa.C.S. § 5501 Regular member contributions for current service.

Regular member contributions shall be made to the fund on behalf of each active member for current service except for any period of current service in which the making of such contributions has ceased solely by reason of section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or any provision of this part relating to the limitations under IRC § 401(a)(17) or 415. (Dec. 14, 1982, P.L.1249, No.284, eff. imd.; Dec. 20, 1995, P.L.689, No.77, eff. Jan. 1, 1996; May 17, 2001, P.L.26, No.9, eff. imd.; Dec. 28, 2015, P.L.529, No.93, eff. imd.) 1982 Amendment. See sections 2, 3 and 4 of Act 284 in the appendix to this title for special provisions relating to required contributions by head of department, nonseverability and retroactivity. References in Text. Section 5502.1, referred to in this section, expired December 31, 2015. Cross References. Section 5501 is referred to in sections 5302, 5303, 5503.1, 5933 of this title.

71 Pa.C.S. § 5501.1 Shared-risk member contributions and shared-gain adjustments to regular member contributions.

(a) General.--Shared-risk member contributions shall be made to the fund on behalf of each member of Class A-3, Class A-4, Class A-5 or Class A-6 for current service credited in each such class of service as provided under this section, except for any period of current service in which the making of the contributions has ceased solely by reason of any provision of this part relating to the limitations under IRC § 401(a)(17) or 415. Shared-risk member contributions shall be credited to the members' savings account. A shared-gain adjustment to regular member contributions for Class A-3, Class A-4, Class A-5 and Class A-6 shall be made as provided under this section. (a.1) Exception for certain members who elected under section 5306.5.--Notwithstanding subsection (a), shared-risk member contributions and shared-gain adjustments to regular member contributions for Class A-5 and Class A-6 service shall not be made for any member who elected Class A-5 or Class A-6 membership under section 5306.5 (relating to election by active members to become a Class A-5 member, Class A-6 member or plan participant) who were members of a class of service other than Class A-3 or Class A-4 before making the election. (b) Determination of shared-risk contribution rate for Class A-3 and Class A-4 service.--The shared-risk contribution for Class A-3 and Class A-4 service shall be determined as follows: (1) For the period from the effective date of this section until June 30, 2014, the shared-risk contribution rate for Class A-3 and Class A-4 shall be zero. (2) For the period from July 1, 2014, to June 30, 2017, if the annual interest rate adopted by the board for use during the period from January 1, 2011, to December 31, 2013, for the calculation of the normal contribution rate is more than 1% greater than the actual rate of return, net of fees, of the investments of the fund based on market value over the period, the shared-risk contribution rate shall be .5%. In all other situations, the shared-risk contribution rate shall be zero. (3) For each subsequent three-year period, if the shared-gain adjustment to regular member contributions is zero, the shared-risk contribution rate shall be increased by .5% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is more than 1% greater than the actual rate of return, net of fees, of the investments of the fund based on market value over the period. The shared-risk contribution rate shall be decreased by .5% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is equal to or less than the actual rate of return, net of fees, of the investments of the fund based on market value over that period. (4) Notwithstanding paragraphs (2) and (3), the shared-risk contribution rate shall not be less than zero and shall not be more than the experience adjustment factor resulting from investment gains or losses during the determination period in effect on the first day when the new rate would be applied, determined without regard to any setoff the Commonwealth or any eligible employer receives for advance payment of accrued liability contributions under section 5507(h) (relating to contributions to the system by the Commonwealth and other employers), and expressed as a percentage of member compensation, and shall not be more than 2%. For the determination of the shared-risk contribution rate to be effective July 1, 2017, the determination period shall be January 1, 2011, through December 31, 2016. For the determination of the shared-risk contribution rate to be effective July 1, 2020, the determination period shall be January 1, 2011, through December 31, 2019. (5) The shared-risk contribution rate and the factors entering into its calculation shall be certified by the actuary as part of the annual valuations and the actuarial investigation and evaluation of the system conducted every five years under section 5902(j) (relating to administrative duties of the board). (6) In the event that the annual interest rate adopted by the board for the calculation is changed during the period used to determine the shared-risk contribution rate, the board, with the advice of the actuary, shall determine the applicable rate during the entire period, expressed as an annual rate. (7) For any fiscal year in which the actual contributions, plus any annual setoff for that fiscal year resulting from advance payment of accrued liability contributions under section 5507(h), by the Commonwealth or an employer are lower than the actuarially required contributions, the prospective shared-risk contribution rate for those employees whose employers are not making the actuarially required contributions shall be zero and shall not subsequently be increased, except as otherwise provided in this section. For purposes of this paragraph, the actuarially required contribution shall be no less than the normal cost plus the cost to fully amortize the unfunded actuarial accrued liability calculated using actuarial methods and assumptions that are consistent with generally accepted actuarial standards and generally accepted accounting principles, including professional actuarial standards of practice. (8) If the actuary certifies that the accrued liability contributions calculated in accordance with the actuarial cost method provided in section 5508(b) (relating to actuarial cost method) and without regard to any setoff the Commonwealth or any eligible employer receives for advance payment of accrued liability contributions under section 5507(h), as adjusted by the experience adjustment factor, are zero or less, then the shared-risk contribution rate for the next fiscal year shall be zero and shall not subsequently be increased, except as otherwise provided in this section. (9) The shared-risk contribution rate for Class A-5 or Class A-6 service performed by State employees who were members of Class A-3 or Class A-4 and who elected to be members of Class A-5 or Class A-6 under section 5306.5 shall be determined under this subsection and not subsection (e). (c) Determination of shared-gain adjustment to regular member contributions for Class A-3 and Class A-4 service.--The regular member contributions for Class A-3 and Class A-4 service shall be determined as follows: (1) For the period from the effective date of this section until June 30, 2017, the regular member contributions for Class A-3 and Class A-4 service shall be determined as otherwise provided in this part. (2) For the period from July 1, 2017, to June 30, 2020, if the shared-risk contribution rate for Class A-3 and Class A-4 service is zero and the annual interest rate adopted by the board for use during the period from January 1, 2011, to December 31, 2016, for the calculation of the normal contribution rate is more than 1% lower than the actual rate of return, net of fees, of the investments of the fund based on market value over the period, then the regular member contribution rate of each member for Class A-3 and Class A-4 service shall be reduced by .5%. In all other situations, the regular member contributions shall be determined as otherwise provided in this part. (3) For each subsequent three-year period, if the shared-risk contribution rate for Class A-3 and Class A-4 is zero, the regular member contribution rate shall be decreased by .5% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is more than 1% lower than the actual rate of return, net of fees, of the investments of the fund based on market value over the period. The regular member contribution rate shall be increased by .5% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is equal to or greater than the actual rate of return, net of fees, of the investments of the fund based on market value over that period. (4) Notwithstanding paragraphs (2) and (3), the regular member contribution rate may not be greater than the product of the basic contribution rate and the class of service multiplier; and the amount of the adjustment to a lower regular member contribution rate may not be greater than the reduction in the actuarially required contribution rate by the experience adjustment factor resulting from investment gains or losses during the determination period in effect on the first day when the new rate would be applied, determined without regard to any setoff the Commonwealth or any eligible employer receives for advance payment of accrued liability contributions under section 5507(h), and expressed as a percentage of member compensation. In no event may the adjustment to the regular member contribution rate be more than 2%. For the determination of the regular member contribution rate to be effective July 1, 2020, the determination period shall be January 1, 2011, through December 31, 2019. (5) The shared-gain adjustment to the regular member contribution rate and the factors entering into its calculation shall be certified by the actuary as part of the annual valuations and the actuarial investigation and evaluation of the system conducted every five years under section 5902(j). (6) If the annual interest rate adopted by the board for the calculation is changed during the period used to determine the shared-gain adjustment to the regular member contribution rate, the board, with the advice of the actuary, shall determine the applicable rate during the entire period, expressed as an annual rate. (7) The shared-gain adjustment to the regular member contribution rate for Class A-5 or Class A-6 service performed by State employees who were members of Class A-3 or Class A-4 and who elected to be members of Class A-5 or Class A-6 under section 5306.5 shall be determined under this subsection and not subsection (f). (d) Calculation of regular member contribution rate.--For purposes of this section, the regular member contribution rate for each member is the product of the basic contribution rate and the class of service multiplier used to determine the regular member contributions for each member. (e) Determination of shared-risk contribution rate for Class A-5 and Class A-6 service.--The shared-risk contribution for Class A-5 or Class A-6 service shall be determined as follows: (1) For the period from the effective date of this section until June 30, 2023, the shared-risk contribution rate shall be zero. (2) For the period from July 1, 2023, to June 30, 2026, if the annual interest rate adopted by the board for use during the period from January 1, 2020, to December 31, 2022, for the calculation of the normal contribution rate is more than 1% greater than the actual rate of return, net of fees, of the investments of the fund based on market value over the period, the shared-risk contribution rate shall be 0.75%. In all other situations, the shared-risk contribution rate shall be zero. (3) For each subsequent three-year period, if the shared-gain adjustment to regular member contributions is zero, the shared-risk contribution rate shall be increased by .75% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is more than 1% greater than the actual rate of return, net of fees, of the investments of the fund based on market value over the period. The shared-risk contribution rate shall be decreased by .75% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is equal to or less than the actual rate of return, net of fees, of the investments of the fund based on market value over that period. (4) Notwithstanding paragraphs (2) and (3), the shared-risk contribution rate may not be less than zero and may not be more than the experience adjustment factor resulting from investment gains or losses during the determination period in effect on the first day when the new rate would be applied, determined without regard to any setoff the Commonwealth or any eligible employer receives for advance payment of accrued liability contributions under section 5507(h), and expressed as a percentage of member compensation, and shall not be more than 3%. For the determination of the shared-risk contribution rate to be effective July 1, 2026, the determination period shall be January 1, 2020, through December 31, 2025. For the determination of the shared-risk contribution rate to be effective July 1, 2029, the determination period shall be January 1, 2020, through December 31, 2028. (5) The shared-risk contribution rate and the factors entering into its calculation shall be certified by the actuary as part of the annual valuations and the actuarial investigation and evaluation of the system conducted every five years under section 5902(j). (6) In the event that the annual interest rate adopted by the board for the calculation is changed during the period used to determine the shared-risk contribution rate, the board, with the advice of the actuary, shall determine the applicable rate during the entire period, expressed as an annual rate. (7) For any fiscal year in which the actual contributions, plus any annual setoff for that fiscal year resulting from advance payment of accrued liability contributions under section 5507(h), by the Commonwealth or an employer are lower than the actuarially required contributions, the prospective shared-risk contribution rate for those employees whose employers are not making the actuarially required contributions shall be zero and shall not subsequently be increased, except as otherwise provided in this section. For purposes of this paragraph, the actuarially required contribution shall be no less than the normal cost plus the cost to fully amortize the unfunded actuarial accrued liability calculated using actuarial methods and assumptions that are consistent with generally accepted actuarial standards and generally accepted accounting principles, including professional actuarial standards of practice. (8) If the actuary certifies that the accrued liability contributions calculated in accordance with the actuarial cost method provided in section 5508(b) and without regard to any setoff the Commonwealth or any eligible employer receives for advance payment of accrued liability contributions under section 5507(h), as adjusted by the experience adjustment factor, are zero or less, then the shared-risk contribution rate for the next fiscal year shall be zero and shall not subsequently be increased, except as otherwise provided in this section. (9) The shared-risk contribution rate for Class A-5 or Class A-6 service performed by State employees who were members of Class A-3 or Class A-4 and who elected to be members of Class A-5 or Class A-6 under section 5306.5 shall be determined under subsection (b) and not this subsection. (f) Determination of shared-gain adjustment to regular member contributions for Class A-5 or Class A-6 service.--The regular member contributions for Class A-5 or Class A-6 service shall be determined as follows: (1) For the period from the effective date of this section until June 30, 2023, the regular member contributions shall be determined as otherwise provided in this part. (2) For the period from July 1, 2023, to June 30, 2026, if the annual interest rate adopted by the board for use during the period from January 1, 2020, to December 31, 2022, for the calculation of the normal contribution rate is more than 1% lower than the actual rate of return, net of fees, of the investments of the fund based on market value over the period, then the regular member contribution rate of each member for Class A-5 and Class A-6 service shall be reduced by .75%. In all other situations, the regular member contributions shall be determined as otherwise provided in this part. (3) For each subsequent three-year period, if the shared-risk contribution rate for Class A-5 and Class A-6 service is zero, the regular member contribution rate shall be decreased by .75% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is more than 1% lower than the actual rate of return, net of fees, of the investments of the fund based on market value over the period. The regular member contribution rate shall be increased by .75% if the annual interest rate adopted by the board for use during the previous ten-year period for the calculation of the normal contribution rate is equal to or greater than the actual rate of return, net of fees, of the investments of the fund based on market value over that period. (4) Notwithstanding paragraphs (2) and (3), the regular member contribution rate may not be greater than the product of the basic contribution rate and the class of service multiplier; and the amount of the adjustment to a lower regular member contribution rate may not be greater than the reduction in the actuarially required contribution rate by the experience adjustment factor resulting from investment gains or losses during the determination period in effect on the first day when the new rate would be applied, determined without regard to any setoff the Commonwealth or any eligible employer receives for advance payment of accrued liability contributions under section 5507(h), expressed as a percentage of member compensation. In no event may the adjustment to the regular member contribution rate be more than 3%. For the determination of the regular member contribution rate to be effective July 1, 2026, the determination period shall be January 1, 2020, through December 31, 2025. For the determination of the regular member contribution rate to be effective July 1, 2029, the determination period shall be January 1, 2020, through December 31, 2028. (5) The shared-gain adjustment to the regular member contribution rate and the factors entering into its calculation must be certified by the actuary as part of the annual valuations and the actuarial investigation and evaluation of the system conducted every five years under section 5902(j). (6) If the annual interest rate adopted by the board for the calculation is changed during the period used to determine the shared-gain adjustment to the regular member contribution rate, the board, with the advice of the actuary, shall determine the applicable rate during the entire period, expressed as an annual rate. (7) The shared-gain adjustment to the regular member contribution rate for Class A-5 or Class A-6 service performed by State employees who were members of Class A-3 or Class A-4 and who elected to be members of Class A-5 or Class A-6 under section 5306.5 shall be determined under subsection (c) and not this subsection. (Nov. 23, 2010, P.L.1269, No.120, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.; Nov. 27, 2019, P.L.723, No.105, eff. imd.) 2019 Amendment. Act 105 amended subsecs. (b)(4), (7) and (8), (c)(4), (e)(4), (7) and (8) and (f)(4). See section 9 of Act 105 in the appendix to this title for special provisions relating to applicability. Cross References. Section 5501.1 is referred to in sections 5102, 5302, 5303, 5503.1, 5505, 5933, 5957 of this title.

71 Pa.C.S. § 5501.2 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: "Actuarially required contribution rate." The employer contribution rate as calculated pursuant to section 5508(a), (b), (c), (e) and (f) (relating to actuarial cost method). "Costs added by legislation." The sum, if positive, of all changes in the actuarially required contribution rate resulting from legislation enacted in the year since the last actuarial valuation and not included in the determination of the prior year's final contribution rate, computed as the rate of total compensation of all active members certified by the actuary as sufficient to make the employer normal contributions and sufficient to amortize legislatively created changes in the unfunded actuarial liability in equal dollar annual installments over a period of ten years from the July 1 following the valuation date. (Nov. 23, 2010, P.L.1269, No.120, eff. imd.) 2010 Amendment. Act 120 added section 5501.2. See section 27 of Act 120 in the appendix to this title for special provisions relating to changes in accrued liability of State Employees' Retirement System.

71 Pa.C.S. § 5502 Social Security integration member contributions.

Except for any period of current service in which the making of regular member contributions has ceased solely by reason of section 5502.1 (relating to waiver of regular member contributions and Social Security integration member contributions) or any provision of this part relating to limitations under IRC § 401(a)(17) or 415, contributions shall be made on behalf of an active member of any class who prior to March 1, 1974, has elected Social Security integration coverage. The amount of such contributions shall be 6 1/4% of that portion of his compensation as an active member in excess of the maximum wages taxable under the provisions of the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), in addition to the regular member contributions which, after such election, shall be determined on the basis of the basic contribution rate of 5% and the additional member contribution of 1 1/4%: Provided, That a member may elect to discontinue Social Security integration coverage and shall thereafter be ineligible to accrue any further Social Security integration credits or any additional benefits on account of Social Security integration membership. (Oct. 7, 1975, P.L.348, No.101, eff. imd.; Dec. 14, 1982, P.L.1249, No.284, eff. imd.; July 22, 1983, P.L.104, No.31, eff. imd.; Dec. 20, 1995, P.L.689, No.77, eff. Jan. 1, 1996; May 17, 2001, P.L.26, No.9, eff. imd.; Dec. 28, 2015, P.L.529, No.93, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.) 1983 Amendment. See section 10 of Act 31 in the appendix to this title for special provisions relating to waiver of actuarial note requirement for retirement bills. 1982 Amendment. See sections 2, 3 and 4 of Act 284 in the appendix to this title for special provisions relating to required contributions by head of department, nonseverability and retroactivity. References in Text. Section 5502.1, referred to in this section, expired December 31, 2015. Cross References. Section 5502 is referred to in sections 5305, 5503.1, 5933 of this title.

71 Pa.C.S. § 5502.1 Waiver of regular member contributions and Social Security integration member contributions (Expired).

2015 Expiration. Section 5502.1 expired December 31, 2015, in accordance with subsection (c): "This section shall expire December 31 of the year coincident with or next following the effective date of this subsection." See Act 93 of 2015.

71 Pa.C.S. § 5503 Joint coverage member contributions.

The regular member contributions for current service of a joint coverage member in any class shall be reduced by 40% of the tax on taxable wages prescribed by the Federal Insurance Contributions Act, IRC § 3101 et seq., exclusive of that portion of such tax attributable to coverage for hospital insurance benefits. (Dec. 20, 1995, P.L.689, No.77, eff. Jan. 1, 1996) Cross References. Section 5503 is referred to in sections 5503.1, 5933 of this title.

71 Pa.C.S. § 5503.1 Pickup contributions.

(a) Treatment for purposes of IRC § 414(h).--All contributions to the fund required to be made under sections 5501 (relating to regular member contributions for current service), 5501.1 (relating to shared-risk member contributions and shared-gain adjustments to regular member contributions), 5502 (relating to Social Security integration member contributions), 5503 (relating to joint coverage member contributions) and 5505.1 (relating to additional member contributions), with respect to current State service rendered by an active member on or after January 1, 1982, shall be picked up by the Commonwealth or other employer and shall be treated as the employer's contribution for purposes of IRC § 414(h). (b) Treatment for other purposes.--For all other purposes, under this part and otherwise, such pickup contributions shall be treated as contributions made by a member in the same manner and to the same extent as contributions made by a member prior to January 1, 1982. (Dec. 14, 1982, P.L.1249, No.284, eff. imd.; July 22, 1983, P.L.104, No.31, eff. imd.; Dec. 20, 1995, P.L.689, No.77, eff. imd.; Nov. 23, 2010, P.L.1269, No.120, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.) 2017 Amendment. Act 5 amended subsec. (a). 1995 Amendment. Section 15(6) of Act 77 provided that the amendment shall be retroactive to January 1, 1982, but shall be deemed a clarifying amendment and declaratory of original intent. 1983 Amendment. See section 10 of Act 31 in the appendix to this title for special provisions relating to waiver of actuarial note requirement for retirement bills. 1982 Amendment. See sections 2, 3 and 4 of Act 284 in the appendix to this title for special provisions relating to required contributions by head of department, nonseverability and retroactivity.

71 Pa.C.S. § 5504 Member contributions for the purchase of credit for previous State service or to become a full coverage member.

(a) Amount of contributions for service in other than Class G through N.-- (1) The contributions to be paid by an active member or eligible school employee for credit in the system for the portion of total previous State service other than service in Class G, Class H, Class I, Class J, Class K, Class L, Class M and Class N that a member is eligible to have credited or to become a full coverage member shall be sufficient to provide an amount equal to the regular accumulated deductions, shared-risk accumulated deductions and additional accumulated deductions which would have been standing to the credit of the member for such service had regular accumulated deductions, shared-risk accumulated deductions and additional member contributions been made with full coverage in the class of service and at the rate of contribution applicable during such period of previous service and had his regular and additional accumulated deductions been credited with statutory interest during all periods of subsequent State and school service up to the date of purchase. (2) Notwithstanding paragraph (1), members who are performing State service credited in Class A-3, Class A-4, Class A-5 or Class A-6 shall make contributions and receive credit as if the previously uncredited State service was performed in the class in which they are an active member at the time the service is credited, even if it would have been credited as a different class of service had the State employee been a member of the system at the time the service was performed unless it was mandatory that the State employee be an active member of the system and the previous State service is being credited as the result of a mandatory active membership requirement. Notwithstanding section 5303(b) (relating to retention and reinstatement of service credits), a State employee who is an active member of the system as a result of concurrently performing service in more than one position or office at the time previously uncredited State service is credited shall elect which position or office is used for the determination of required contributions and crediting and classification of the previously uncredited service. (a.1) Converted county service.--No contributions shall be required to restore credit for previously credited State service in Class G, Class H, Class I, Class J, Class K, Class L, Class M and Class N. Such service shall be restored upon the commencement of payment of the contributions required to restore credit in the system for all other previous State service. (b) Certification and method of payment.-- (1) The amount payable shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 30 days or in the case of an active member or eligible school employee who is an active member of the Public School Employees' Retirement System may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board. The salary deduction amortization plans agreed to by members and the board may include a deferral of payment amounts and statutory interest until the termination of school service or State service as the board in its sole discretion decides to allow. The board may limit the salary deduction amortization plans to such terms as the board in its sole discretion determines. In the case of an eligible school employee who is an active member of the Public School Employees' Retirement System, the agreed upon salary deductions shall be remitted to the Public School Employees' Retirement Board, which shall certify and transfer to the board the amounts paid. (2) No payments for service or coverage shall be allowed for which the required contributions would cause a violation of the limitation related to contributions applicable to governmental plans contained in IRC § 415. In the event that any service credit or coverage based on such disallowed contributions is granted after the effective date of this paragraph, then such service credit shall be canceled and benefits calculated without regard to such service or contributions and any member contributions in excess of the limitations and statutory interest credited on those contributions shall be refunded to the member by the board. (Oct. 7, 1975, P.L.348, No.101, eff. imd.; Dec. 14, 1982, P.L.1249, No.284, eff. imd.; July 22, 1983, P.L.104, No.31, eff. imd.; June 22, 1999, P.L.75, No.12, eff. imd.; May 17, 2001, P.L.26, No.9, eff. July 1, 2001; Nov. 23, 2010, P.L.1269, No.120, eff. imd.; Dec. 28, 2015, P.L.529, No.93, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.) 1999 Amendment. See section 26 of Act 12 in the appendix to this title for special provisions relating to Federal, State and local tax laws. 1983 Amendment. See section 10 of Act 31 in the appendix to this title for special provisions relating to waiver of actuarial note requirement for retirement bills. Cross References. Section 5504 is referred to in sections 5303, 5306, 5903, 5904, 5933 of this title.

71 Pa.C.S. § 5505 Contributions for the purchase of credit for creditable nonstate service.

(a) Source of contributions.--The total contributions to purchase credit for creditable nonstate service of an active member or eligible school employee shall be paid either by the member, the member's previous employer, or by some agreed upon combination of the member, his previous employer, and, if specifically provided, the Commonwealth. (b) Nonintervening military service.-- (1) The amount due for the purchase of credit for military service other than intervening military service shall be determined by applying the member's basic contribution rate, the additional contribution rate plus the Commonwealth normal contribution rate for active members at the time of entry, subsequent to such military service, of the member into State service to his average annual rate of compensation as a member of the system over the first three years of such subsequent State service and multiplying the result by the number of years and fractional part of a year of creditable nonintervening military service being purchased together with statutory interest during all periods of subsequent State and school service to date of purchase. Upon application for credit for such service, payment shall be made in a lump sum within 30 days or in the case of an active member or eligible school employee who is an active member of the Public School Employees' Retirement System it may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board. The salary deduction amortization plans agreed to by members and the board may include a deferral of payment amounts and statutory interest until the termination of school service or State service as the board in its sole discretion decides to allow. The board may limit salary deduction amortization plans to such terms as the board in its sole discretion determines. In the case of an eligible school employee who is an active member of the Public School Employees' Retirement System, the agreed upon salary deductions shall be remitted to the Public School Employees' Retirement Board, which shall certify and transfer to the board the amounts paid. Application may be filed for all such military service credit upon completion of three years of subsequent State service as a member of the system and shall be credited as Class A service except as provided in section 5304(a) (relating to creditable nonstate service). (1.1) In the case of an active member who is purchasing the military service as Class A-3 service, for purposes of paragraph (1), the Commonwealth normal contribution rate for active members at the time of entry, subsequent to the military service, shall be determined using only the average new Class A-3 member. (1.2) In the case of an active member who is purchasing the military service as Class A-5 service, for purposes of paragraph (1), the Commonwealth normal contribution rate for active members at the time of entry, subsequent to the military service, shall be determined using only the average new Class A-5 member, and the member's basic contribution rate shall be multiplied by the class of service multiplier used to calculate regular member contributions for Class A-5 service. (1.3) In the case of an active member who is purchasing the military service as Class A-6 service, for purposes of paragraph (1), the Commonwealth normal contribution rate for active members at the time of entry, subsequent to the military service, shall be determined using only the average new Class A-6 member, and the member's basic contribution rate shall be multiplied by the class of service multiplier used to calculate regular member contributions for Class A-6 service. (2) Applicants may purchase credit as follows: (i) one purchase of the total amount of creditable nonintervening military service; or (ii) one purchase per 12-month period of a portion of creditable nonintervening military service. The amount of each purchase shall be not less than one year of creditable nonintervening military service. (c) Intervening military service.--Contributions on account of credit for intervening military service shall be determined by the member's regular contribution rate, shared-risk contribution rate, Social Security integration contribution rate, the additional contribution rate which shall be applied only to those members who began service on or after the effective date of this amendatory act and compensation as a member of the system at the time of entry of the member into active military service, together with statutory interest during all periods of subsequent State and school service to date of purchase. Upon application for such credit the amount due shall be certified in the case of each member by the board in accordance with methods approved by the actuary, and contributions may be made by: (1) regular monthly payments during active military service; or (2) a lump sum payment within 30 days of certification; or (3) salary deductions to the system in amounts agreed upon by the member or eligible school employee who is an active member of the Public School Employees' Retirement System and the board. The salary deduction amortization plans agreed to by members and the board may include a deferral of payment amounts and statutory interest until the termination of school service or State service as the board in its sole discretion decides to allow. The board may limit salary deduction amortization plans to such terms as the board in its sole discretion determines. In the case of an eligible school employee who is an active member of the Public School Employees' Retirement System, the agreed upon salary deductions shall be remitted to the Public School Employees' Retirement Board, which shall certify and transfer to the board the amounts paid. (d) Nonmilitary and nonmagisterial service.--Contributions on account of credit for creditable nonstate service other than military and magisterial service by State employees who first become members of the system before January 1, 2011, or before December 1, 2010, as a member of the General Assembly shall be determined by applying the member's basic contribution rate, the additional contribution rate plus the Commonwealth normal contribution rate for active members at the time of entry subsequent to such creditable nonstate service of the member into State service to his compensation as a member of the system at the time of entry into State service and multiplying the result by the number of years and fractional part of a year of creditable nonstate service being purchased together with statutory interest during all periods of subsequent State and school service to the date of purchase. Upon application for credit for such service payment shall be made in a lump sum within 30 days or in the case of an active member or eligible school employee who is an active member of the Public School Employees' Retirement System it may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board. The salary deduction amortization plans agreed to by members and the board may include a deferral of payment amounts and statutory interest until the termination of school service or State service as the board in its sole discretion decides to allow. The board may limit salary deduction amortization plans to such terms as the board in its sole discretion determines. In the case of an eligible school employee who is an active member of the Public School Employees' Retirement System, the agreed upon salary deduction shall be remitted to the Public School Employees' Retirement Board, which shall certify and transfer to the board the amounts paid. (e) Philadelphia magisterial service.--Contributions on account of credit for service as a magistrate of the City of Philadelphia shall be determined by the board to be equal to the amount he would have paid as employee contributions together with statutory interest to date of purchase had he been a State employee during his period of service as a magistrate of the City of Philadelphia. The amount so determined by the State Employees' Retirement Board to be paid into the State Employees' Retirement System shall be the obligation of the judge who requested credit for previous service as a magistrate of the City of Philadelphia; in no event shall such amount be an obligation of the City of Philadelphia or the City of Philadelphia retirement system. (f) Temporary Federal service.--Contributions on account of credit for service as a temporary Federal employee assigned to an air quality control complement for the Department of Environmental Resources during the period of 1970 through 1975, as authorized in section 5304(c)(5) (relating to creditable nonstate service), shall be equal to the full actuarial cost of the increased benefit obtained by virtue of the purchase. The increased benefit attributable to the purchased service shall be the difference between: (1) the annual amount of a standard single life annuity, beginning at the earliest possible superannuation age, calculated assuming no future salary increases, assuming credit for the service to be purchased; and (2) the annual amount of a standard single life annuity, calculated on the same basis, but excluding credit for the service to be purchased. The earliest possible superannuation age shall be the age at which the member becomes first eligible for superannuation retirement assuming continued full-time service and credit for the amount of service which the member has elected to purchase, or the current attained age of the member, whichever is later. The full actuarial cost of the increased benefit attributable to the purchased service shall be the actuarial present value of a deferred annuity equal to the amount of the increased benefit determined above, beginning at the earliest possible superannuation age and payable for life, calculated using a preretirement interest assumption of 1.5%, a postretirement interest assumption of 4%, no preretirement mortality assumption and standard postretirement mortality assumptions. The purchase payment shall be made in lump sum by the member within 30 days of certification by the board of the required purchase amount or may be amortized through salary deductions in amounts agreed upon by the member and the board with interest payable on the unpaid balance at the rate applicable to the most recently issued 30-year bonds of the United States Treasury Department. (g) Justice of the peace service.--Contributions on account of credit for service as a justice of the peace shall be determined by the board to be equal to the amount he would have paid as employee contributions together with statutory interest to date of purchase had he been a State employee during his period of service as a justice of the peace for the Commonwealth plus the amount determined by applying the Commonwealth normal contribution rate for active members at the beginning of the district justice system as of January 1970 to the starting salary of the district justice for the magisterial district in which the member was elected dating from the beginning of the district justice system as of January 1970 and multiplying the result by the number of years and fractional part of a year of creditable service being purchased together with statutory interest from entry into State service as a district justice to the date of purchase. The amount so determined by board to be paid into the system shall be the obligation of the justice who requested credit for previous service as a justice of the peace for the Commonwealth prior to 1970. A justice of the peace desiring to purchase his or her service time prior to 1970 shall have been elected or appointed a district justice any time during or after 1970. The class of service credit a member shall receive upon entry into the system shall be determined by the time of his entry into the district justice system. It shall be incumbent upon the district justice to certify to the board with a copy of his commission or commissions the amount of time that he served the Commonwealth as a justice of the peace. The salary dollar amount that shall be used in the formula for determining the member's contributions shall be equal to the starting salary of the district justice for the magisterial district in which he was elected, dating from the beginning of the district justice system as of January 1970. In no event shall such an amount be the obligation of the Commonwealth or the county in which the justice served. (h) County service.--For purposes of this section, Class G, Class H, Class I, Class J, Class K, Class L, Class M and Class N service shall be disregarded in determining when a member enters State service or the period of subsequent State service. (i) Purchases of nonstate service credit by State employees who first became members of the system on or after December 1, 2010.-- (1) Contributions on account of credit for creditable nonstate service other than intervening military service, nonintervening military service and magisterial service by State employees who first become members of the system on or after January 1, 2011, or on or after December 1, 2010, as a member of the General Assembly shall be equal to the full actuarial cost of the increased benefit obtained by virtue of such service. (2) The full actuarial cost of the increased benefit attributable to the purchased nonstate service credit shall be the difference between: (i) the present value of a standard single life annuity, beginning at the earliest possible superannuation age assuming Class A-3 service credit for the nonstate service to be purchased by an active member of Class A-3 or Class A-4 and assuming Class A-5 service credit for the nonstate service to be purchased by an active member of Class A-5 and assuming Class A-6 service credit for the nonstate service to be purchased by an active member of Class A-6; and (ii) the present value of a standard single life annuity, beginning at the earliest possible superannuation age, excluding the nonstate service credit to be purchased. (3) The full actuarial cost under paragraph (2) shall be calculated using future salary increases, mortality tables, interest rates and other actuarial assumptions as adopted by the board with the advice of the actuary. The earliest possible superannuation age shall be the current attained age of the member if the member has attained superannuation age for his current class of service or, if the member has not attained superannuation age, the age upon which the member would attain superannuation age as a member in the current class of service assuming continued full-time State service through the attainment of superannuation age and credit for the amount of service which the member has elected to purchase. (4) The payment for credit purchased under this subsection shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 30 days or in the case of an active member or eligible school employee who is an active member of the Public School Employees' Retirement System may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board. The salary deduction amortization plans agreed to by members and the board may include a deferral of payment amounts and interest until the termination of school service or State service as the board in its sole discretion decides to allow. The board may limit the salary deduction amortization plans to such terms as the board in its sole discretion determines. In the case of an eligible school employee who is an active member of the Public School Employees' Retirement System, the agreed upon salary deductions shall be remitted to the Public School Employees' Retirement Board, which shall certify and transfer to the board the amounts paid. (j) Disallowed contributions.--No payments for service shall be allowed for which the required contributions would cause a violation of the limitation related to contributions applicable to governmental plans contained in IRC § 415. In the event that any service credit based on such disallowed contributions is granted after the effective date of this subsection, then such service credit shall be canceled and benefits calculated without regard to such service or contributions and any member contributions in excess of the limitations and statutory interest credited on those contributions shall be refunded to the member by the board. (k) Inapplicability of election and adjustments.--If a member is purchasing creditable nonstate service, the regular member contribution rate used to determine the contributions necessary to purchase such credit shall be determined without regard to any adjustments applicable under section 5501.1(c) (relating to shared-risk member contributions and shared-gain adjustments to regular member contributions). (Oct. 7, 1975, P.L.348, No.101, eff. imd.; July 22, 1983, P.L.104, No.31, eff. imd.; June 13, 1985, P.L.40, No.19, eff. imd.; Oct. 21, 1988, P.L.844, No.112, eff. Jan. 1, 1989; Aug. 5, 1991, P.L.183, No.23, eff. imd.; Apr. 29, 1994, P.L.159, No.29, eff. 60 days; June 22, 1999, P.L.75, No.12, eff. imd.; May 17, 2001, P.L.26, No.9, eff. July 1, 2001; Nov. 23, 2010, P.L.1269, No.120, eff. imd.; Oct. 24, 2012, P.L.1436, No.181, eff. Dec. 31, 2012; Dec. 28, 2015, P.L.529, No.93, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.) 2017 Amendment. Act 5 amended subsecs. (b), (c), (d) and (i)(2) and (4) and added subsec. (k). 2015 Amendment. Act 93 added subsec. (j). Amendment . Act 181 amended subsecs. (b) and (i). 1999 Amendment. See section 26 of Act 12 in the appendix to this title for special provisions relating to Federal, State and local tax laws. 1983 Amendment. See section 10 of Act 31 in the appendix to this title for special provisions relating to waiver of actuarial note requirement for retirement bills. References in Text. The Department of Environmental Resources, referred to in subsec. (f), was abolished by Act 18 of 1995. Its functions were transferred to the Department of Conservation and Natural Resources and the Department of Environmental Protection. Cross References. Section 5505 is referred to in sections 5303, 5304, 5903, 5904, 5933 of this title.

71 Pa.C.S. § 5505.1 Additional member contributions.

In addition to regular or joint coverage member contributions and social security integration contributions, contributions shall be made on behalf of each active member, regardless of class of service, at the rate of 1 1/4% of compensation until such time as the actuary certifies that all accrued liability contributions have been completed in accordance with the actuarial cost method provided in section 5508(b) (relating to actuarial cost method). (July 22, 1983, P.L.104, No.31, eff. imd.) 1983 Amendment. Act 31 added section 5505.1. See section 10 of Act 31 in the appendix to this title for special provisions relating to waiver of actuarial note requirement for retirement bills. Cross References. Section 5505.1 is referred to in sections 5302, 5303, 5503.1, 5933 of this title.

71 Pa.C.S. § 5506 Incomplete payments.

(a) General rule.--In the event that a member terminates State service or a multiple service member who is an active member of the Public School Employees' Retirement System terminates school service before the agreed upon payments for credit for previous State service, USERRA leave, creditable nonstate service, social security integration, full coverage membership or return of benefits on account of returning to State service or entering school service and electing multiple service have been completed, the member or multiple service member who is an active member of the Public School Employees' Retirement System shall have the right to pay within 30 days of termination of State service or school service the balance due, including interest, in a lump sum and the annuity shall be calculated including full credit for the previous State service, creditable nonstate service, social security integration, or full coverage membership. In the event a member does not pay the balance due within 30 days of termination of State service or in the event a member dies in State service or within 30 days of termination of State service or in the case of a multiple service member who is an active member of the Public School Employees' Retirement System does not pay the balance due within 30 days of termination of school service or dies in school service or within 30 days of termination of school service and before the agreed upon payments have been completed, the present value of the benefit otherwise payable shall be reduced by the balance due, including interest, and the benefit payable shall be calculated as the actuarial equivalent of such reduced present value. (b) Disallowed contributions.--No payments for service or coverage shall be allowed for which the required contributions would cause a violation of the limitation related to contributions applicable to governmental plans contained in IRC § 415. In the event that any service credit or coverage based on such disallowed contributions is granted after the effective date of this subsection, then such service credit or coverage shall be canceled and benefits calculated without regard to such service, coverage or contributions and any member contributions in excess of the limitations and statutory interest credited on those contributions shall be refunded to the member by the board. (Oct. 7, 1975, P.L.348, No.101, eff. imd.; May 17, 2001, P.L.26, No.9, eff. July 1, 2001; Oct. 24, 2012, P.L.1436, No.181, eff. Dec. 31, 2012; Dec. 28, 2015, P.L.529, No.93, eff. imd.) Cross References. Section 5506 is referred to in sections 5302, 5303, 5507, 5702 of this title.

71 Pa.C.S. § 5506.1 Annual compensation limit under IRC § 401(a)(17).

(a) General rule.--In addition to other applicable limitations set forth in this part, and notwithstanding any provision of this part to the contrary, the annual compensation of each noneligible member and each participant, both before and after any annualization, taken into account for benefit purposes under this part shall not exceed the limitation under IRC § 401(a)(17). On and after January 1, 1996, any reference in this part to the limitation under IRC § 401(a)(17) shall mean the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) (Public Law 103-66, 107 Stat. 312) annual compensation limit set forth in this subsection. The OBRA '93 annual compensation limit is $150,000, as adjusted by the commissioner for increases in the cost of living in accordance with IRC § 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period which is a period, not exceeding 12 months, over which compensation is determined, beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA '93 compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is 12. (b) Grandfather exception.--The limitation under IRC § 401(a)(17) shall not apply to a member who first became a member prior to January 1, 1996, to the extent that the application of such limitation to such member would reduce the amount of compensation that is allowed to be taken into account for benefit purposes under this chapter below the amount that was allowed to be taken into account under this chapter as in effect on July 1, 1993. (Dec. 20, 1995, P.L.689, No.77, eff. Jan. 1, 1996; June 12, 2017, P.L.11, No.5, eff. imd.) 2017 Amendment. Act 5 amended subsec. (a). 1995 Amendment. Act 77 added section 5506.1. Cross References. Section 5506.1 is referred to in section 5102 of this title.

71 Pa.C.S. § 5507 Contributions to the system by the Commonwealth and other employers.

(a) Contributions on behalf of active members.--The Commonwealth and other employers whose employees are members of the system or participants in the plan shall make contributions to the fund on behalf of all active members in such amounts as shall be certified by the board as necessary to provide, together with the members' total accumulated deductions, annuity reserves on account of prospective annuities other than those provided in sections 5708 (relating to supplemental annuities), 5708.1 (relating to additional supplemental annuities), 5708.2 (relating to further additional supplemental annuities), 5708.3 (relating to supplemental annuities commencing 1994), 5708.4 (relating to special supplemental postretirement adjustment), 5708.5 (relating to supplemental annuities commencing 1998), 5708.6 (relating to supplemental annuities commencing 2002), 5708.7 (relating to supplemental annuities commencing 2003) and 5708.8 (relating to special supplemental postretirement adjustment of 2002), in accordance with the actuarial cost method provided in section 5508(a), (b), (c), (d) and (f) (relating to actuarial cost method). (b) Contributions on behalf of annuitants.--The Commonwealth and other employers whose employees are members of the system or participants in the plan shall make contributions on behalf of annuitants in such amounts as shall be certified by the board as necessary to fund the liabilities for supplemental annuities in accordance with the actuarial cost method provided in section 5508(e). (b.1) Payment of employer contributions to the system.-- (1) Payment of employer normal contributions shall be as a percentage of compensation of active members. (2) Payment of accrued liability contributions as modified by the experience adjustment factor and supplemental annuity contributions shall be as a percentage of compensation of active members and active participants. (3) The amount of employer contributions determined and payable as a percentage of compensation under this subsection may be offset by a dollar amount as established in an agreement between the board and the head of department that is an eligible employer as a result of advance payment of accrued liability contributions under subsection (h). (c) Contributions transferred by county retirement systems.-- (1) Each county retirement system or pension plan which is notified by certification from the board that a former contributor who was transferred to State employment pursuant to 42 Pa.C.S. § 1905 (relating to county-level court administrators) has elected to convert county service to State service in accordance with section 5303.1 (relating to election to convert county service to State service) shall transfer to the board an amount equal to the actuarial liability for the additional benefits that result in the system as a result of the conversion as certified by the board. This amount shall be calculated in such a manner and using such actuarial factors and assumptions as the board, after obtaining the advice of its actuary, shall determine and shall be calculated by determining the present value of the future benefits for the former county contributors and subtracting from that present value the present value of future employee contributions and future employer normal cost contributions. (2) The transfer shall occur no later than 180 days after the certification by the board of the actuarial liability for the additional benefits or 30 days following the date of termination of service if the member terminates State service after making the election to convert service, whichever occurs first. (3) If any county retirement system or pension plan fails to transfer, within the required time, the money certified by the board under this subsection, then the service of such members for the period of converted service shall be credited, and the board shall notify the county which employed the employee who is converting the county service and the State Treasurer of the amount due. The State Treasurer shall withhold out of any grants, subsidies or other payments from the State General Fund appropriation or appropriations next due such county an amount equal to the amount which the county retirement system or pension plan failed to pay and shall pay the amount so withheld to the board for the payment of the amount due from that county's retirement system or pension plan for the converted service. (d) Payment of final contribution rate.--Notwithstanding the calculation of the actuarially required contribution rate and the provisions of subsections (a) and (b), the Commonwealth and other employers whose employees are members of the system or participants in the plan shall make contributions to the fund on behalf of all active members and annuitants in such amounts as shall be certified by the board in accordance with section 5508(i). The certified amount and actual contributions may include any setoff for advance payment of accrued liability contributions. (e) Benefits completion plan contributions.--In addition to all other contributions required under this section and section 5508, the Commonwealth and other employers whose employees are members of the system shall make contributions as certified by the board pursuant to section 5941 (relating to benefits completion plan). (f) Contributions resulting from members reemployed from USERRA leave.--When a State employee reemployed from USERRA leave makes the member contributions required to be granted State service credit for the USERRA leave, either by actual payment or by actuarial debt under section 5506 (relating to incomplete payments), then the Commonwealth employer or other employer by whom the State employee is employed at the time the member contributions are made, or the last employer before termination in the case of payment under section 5506, shall make whatever employer contributions would have been made under this section had the employee making the member contributions after being reemployed from USERRA leave continued to be employed in his State office or position instead of performing USERRA leave. (g) Payment of additional accrued liability contributions.--In addition to all other contributions required or made under this section and section 5508, 5508.1 (relating to advance payment of accrued liability contributions) or 5941, the Commonwealth and other employers whose employees are members of the system or participants in the plan shall make contributions as certified by the board as a percentage of the compensation of each active member and each active participant as provided in this subsection, unless the actuary certifies that the accrued liability contribution rate determined under section 5508(c) is zero or less for that fiscal year. Additional accrued liability contributions received by the board as a result of this subsection shall be recognized as part of the experience adjustment factor under section 5508(f). Additional accrued liability contribution rate Fiscal year beginning date 0.00% July 1, 2018 0.71% July 1, 2019 0.66% July 1, 2020 0.62% July 1, 2021 0.00% July 1, 2022 0.00% July 1, 2023 0.00% July 1, 2024 0.00% July 1, 2025 0.00% July 1, 2026 0.00% July 1, 2027 0.00% July 1, 2028 0.00% July 1, 2029 0.00% July 1, 2030 0.00% July 1, 2031 0.10% July 1, 2032 0.22% July 1, 2033 0.33% July 1, 2034 0.43% July 1, 2035 0.53% July 1, 2036 0.62% July 1, 2037 0.71% July 1, 2038 0.79% July 1, 2039 0.86% July 1, 2040 0.93% July 1, 2041 (h) Advance payment of accrued liability contributions.--In addition to all other contributions required under this section and sections 5508 and 5941, the Commonwealth and other eligible employers whose employees are members of the system may make, and the board may accept, advance payment of accrued liability contributions in a lump sum as agreed by the board and the head of department as provided under section 5508.1. Advance payment of accrued liability contributions received by the board as a result of this subsection shall be recognized as a setoff against future accrued liability contributions as provided under section 5508.1. (Aug. 5, 1991, P.L.183, No.23, eff. imd.; June 18, 1998, P.L.685, No.88, eff. imd.; June 22, 1999, P.L.75, No.12, eff. imd.; May 17, 2001, P.L.26, No.9, eff. July 1, 2002; Nov. 23, 2010, P.L.1269, No.120, eff. imd.; Oct. 24, 2012, P.L.1436, No.181, eff. Dec. 31, 2012; June 12, 2017, P.L.11, No.5, eff. imd.; Nov. 27, 2019, P.L.723, No.105, eff. imd.) 2019 Amendment. Act 105 amended subsecs. (d) and (g) and added subsecs. (b.1)(3) and (h). See section 9 of Act 105 in the appendix to this title for special provisions relating to applicability. 2017 Amendment. Act 5 amended the section heading and subsecs. (a), (b) and (d) and added subsecs. (b.1) and (g). Amendment . Act 181 added subsec. (f). 2010 Amendment. See section 27 of Act 120 in the appendix to this title for special provisions relating to changes in accrued liability of State Employees' Retirement System. 1999 Amendment. See sections 26 and 29 of Act 12 in the appendix to this title for special provisions relating to Federal, State and local tax laws and calculation of contributions. Special Provisions in Appendix. See section 6.1 of Act 72 of 2019 in the appendix to this title for special provisions relating to accrued liability. Cross References. Section 5507 is referred to in sections 5102, 5302, 5501.1, 5508, 5508.1, 5902, 5934, 5936, 5937, 5938 of this title.

71 Pa.C.S. § 5508 Actuarial cost method.

(a) Employer contribution rate on behalf of active members.--For each fiscal year, the amount of the Commonwealth and other employer contributions on behalf of all active members shall be computed by the actuary as a percentage of the total compensation of all active members during the period for which the amount is determined and shall be so certified by the board. The actuarially required contribution rate on behalf of all active members shall consist of the employer normal contribution rate, as defined in subsection (b), and the accrued liability contribution rate as defined in subsection (c). The actuarially required contribution rate on behalf of all active members shall be modified by the experience adjustment factor as calculated in subsection (f). (b) Employer normal contribution rate.--The employer normal contribution rate shall be determined after each actuarial valuation on the basis of an annual interest rate and such mortality and other tables as shall be adopted by the board in accordance with generally accepted actuarial principles. The employer normal contribution rate shall be determined as follows: (1) From the effective date of this paragraph through fiscal year 2021-2022, as a level percentage of the compensation of the average new active member, which percentage, if contributed on the basis of his prospective compensation through his entire period of active State service, would be sufficient to fund the liability for any prospective benefit payable to him in excess of that portion funded by his prospective member contributions, excluding shared-risk member contributions and shared-gain adjustments to regular member contributions. In no case shall the employer normal contribution rate in the aggregate or for each class of service separately be less than zero. (2) For fiscal year 2022-2023 and each fiscal year thereafter, as a level percentage of the compensation of all active members, which percentage, if contributed from the start of their employment on the basis of their prospective compensation through their entire period of active State service, would be sufficient to fund the liability for any prospective benefit payable to them in excess of that portion funded by their prospective member contributions, excluding shared-risk member contributions and shared-gain adjustments to regular member contributions. In no case shall the employer normal contribution rate in the aggregate or for each class of service separately be less than zero. (c) Accrued liability contribution rate.-- (1) For the fiscal years beginning July 1, 2002, and July 1, 2003, the accrued liability contribution rate shall be computed as the rate of total compensation of all active members which shall be certified by the actuary as sufficient to fund over a period of ten years from July 1, 2002, the present value of the liabilities for all prospective benefits, except for the supplemental benefits as provided in sections 5708 (relating to supplemental annuities), 5708.1 (relating to additional supplemental annuities), 5708.2 (relating to further additional supplemental annuities), 5708.3 (relating to supplemental annuities commencing 1994), 5708.4 (relating to special supplemental postretirement adjustment), 5708.5 (relating to supplemental annuities commencing 1998), 5708.6 (relating to supplemental annuities commencing 2002), 5708.7 (relating to supplemental annuities commencing 2003) and 5708.8 (relating to special supplemental postretirement adjustment of 2002), in excess of the total assets in the fund (calculated recognizing all investment gains and losses over a five-year period), excluding the balance in the supplemental annuity account, and the present value of employer normal contributions and of member contributions payable with respect to all active members on December 31, 2001, and excluding contributions to be transferred by county retirement systems or pension plans pursuant to section 5507(c) (relating to contributions to the system by the Commonwealth and other employers). The amount of each annual accrued liability contribution shall be equal to the amount of such contribution for the fiscal year beginning July 1, 2002, except that, if the accrued liability is increased by legislation enacted subsequent to June 30, 2002, but before July 1, 2003, such additional liability shall be funded over a period of ten years from the first day of July, coincident with or next following the effective date of the increase. The amount of each annual accrued liability contribution for such additional legislative liabilities shall be equal to the amount of such contribution for the first annual payment. (2) Notwithstanding any other provision of law, beginning July 1, 2004, and ending June 30, 2010, the outstanding balance of the increase in accrued liability due to the change in benefits enacted in 2001 shall be amortized in equal dollar annual contributions over a period that ends 30 years after July 1, 2002, and the outstanding balance of the net actuarial loss incurred in calendar year 2002 shall be amortized in equal dollar annual contributions over a period that ends 30 years after July 1, 2003. For fiscal years beginning on or after July 1, 2004, and ending June 30, 2010, if the accrued liability is increased by legislation enacted subsequent to June 30, 2003, but before January 1, 2009, such additional liability shall be funded in equal dollar annual contributions over a period of ten years from the first day of July coincident with or next following the effective date of the increase. (3) For the fiscal year beginning July 1, 2010, the accrued liability contribution rate shall be computed as the rate of total compensation of all active members which shall be certified by the actuary as sufficient to fund in equal dollar installments over a period of 30 years from July 1, 2010, the present value of the liabilities for all prospective benefits calculated as of the immediately prior valuation date, including the supplemental benefits as provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8, but excluding the benefits payable from the retirement benefit plan established pursuant to section 5941 (relating to benefits completion plan), in excess of the actuarially calculated assets in the fund (calculated recognizing all realized and unrealized investment gains and losses each year in level annual installments over five years), including the balance in the supplemental annuity account, and the present value of employer normal contributions determined without regard to any setoff the Commonwealth or any eligible employer will receive for advance payment of accrued liability contributions under section 5507(h), and of member contributions payable with respect to all active members, inactive members on leave without pay, vestees and special vestees on December 31, 2009. If the accrued liability is changed by legislation enacted subsequent to December 31, 2009, such change in liability shall be funded in equal dollar installments over a period of ten years from the first day of July following the valuation date coincident with or next following the date such legislation is enacted. (4) For fiscal years beginning on or after July 1, 2018, the accrued liability contribution rate shall be computed as provided for under this section, except that the rate shall be computed as a rate of total compensation of all active members and active participants for the applicable period and the accrued liability shall be determined and the rate shall be computed without regard to the portion of any advance payment of accrued liability contributions made by the Commonwealth or any eligible employer under section 5507(h) for which an annual setoff has not been credited or recognized in a prior fiscal year. If the accrued liability is changed by legislation enacted subsequent to December 31, 2016, such change in liability shall be funded in equal dollar installments as a percentage of compensation of all active members and active participants over a period of ten years from the first day of July following the valuation date coincident with or next following the date such legislation is enacted. In addition to any employer defined contributions made to the trust, the Commonwealth and other employers of participants shall make the accrued liability contributions to the fund certified by the board. (d) Special provisions on calculating contributions.--In calculating the contributions required by subsections (a), (b) and (c), the active members of Class C shall be considered to be members of Class A. In addition, the actuary shall determine the Commonwealth or other employer contributions required for active members of Class C and officers of the Pennsylvania State Police and enforcement officers and investigators of the Pennsylvania Liquor Control Board who are members of Class A to finance their benefits in excess of those to which other members of Class A are entitled. Such additional contributions shall be determined separately for officers and employees of the Pennsylvania State Police and for enforcement officers and investigators of the Pennsylvania Liquor Control Board. Such contributions payable on behalf of officers and employees of the Pennsylvania State Police shall include the amounts received by the system under the provisions of the act of May 12, 1943 (P.L.259, No.120), referred to as the Foreign Casualty Insurance Premium Tax Allocation Law, and on behalf of enforcement officers or investigators of the Pennsylvania Liquor Control Board, the amounts received by the system under the provisions of the act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code. (e) Supplemental annuity contribution rate.-- (1) For the period July 1, 2002, to June 30, 2010, contributions from the Commonwealth and other employers whose employees are members of the system required to provide for the payment of supplemental annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4 and 5708.5 shall be paid over a period of ten years from July 1, 2002. The funding for the supplemental annuities commencing 2002 provided for in section 5708.6 shall be as provided in section 5708.6(f). The funding for the supplemental annuities commencing 2003 provided for in section 5708.7 shall be as provided in section 5708.7(f). The funding for the special supplemental postretirement adjustment of 2002 under section 5708.8 shall be as provided in section 5708.8(g). The amount of each annual supplemental annuities contribution shall be equal to the amount of such contribution for the fiscal year beginning July 1, 2002. (2) For fiscal years beginning on or after July 1, 2010, contributions from the Commonwealth and other employers whose employees are members of the system required to provide for the payment of supplemental annuities as provided in sections 5708, 5708.1, 5708.2, 5708.3, 5708.4, 5708.5, 5708.6, 5708.7 and 5708.8 shall be paid as part of the accrued liability contribution rate as provided for in subsection (c)(3), and there shall not be a separate supplemental annuity contribution rate attributable to those supplemental annuities. In the event that supplemental annuities are increased by legislation enacted subsequent to December 31, 2009, the additional liability for the increase in benefits shall be funded in equal dollar installments as a percentage of compensation of all active members and active participants over a period of ten years from the first day of July following the valuation date coincident with or next following the date such legislation is enacted. (f) Experience adjustment factor.-- (1) For each fiscal year after the establishment of the accrued liability contribution rate and the supplemental annuity contribution rate for the fiscal year beginning July 1, 2010, any increase or decrease in the unfunded accrued liability and any increase or decrease in the liabilities and funding for supplemental annuities, due to actual experience differing from assumed experience (recognizing all realized and unrealized investment gains and losses over a five-year period), changes in contributions caused by the final contribution rate being different from the actuarially required contribution rate, State employees making shared-risk member contributions or having shared-gain adjustments to their regular member contributions, payment of additional accrued liability contributions under section 5507(g), changes in actuarial assumptions or changes in the terms and conditions of the benefits provided by the system by judicial, administrative or other processes other than legislation, including, but not limited to, reinterpretation of the provisions of this part, shall be amortized in equal dollar annual contributions as a percentage of compensation of all active members and active participants over a period of 30 years beginning with the July 1 succeeding the actuarial valuation determining said increases or decreases. The experience adjustment factor calculated under this paragraph shall be determined without regard to any advance payment of accrued liability contributions made by the Commonwealth or any eligible employer under section 5507(h). (2) The actuarially required contribution rate shall be the sum of the normal contribution rate, the accrued liability contribution rate and the supplemental annuity contribution rate, modified by the experience adjustment factor as calculated in paragraph (1). (g) Determination of liability for special vestee.--Notwithstanding any other provision of this part or other law, the total additional accrued actuarial liability resulting from eligibility of special vestees for benefits upon the attainment of superannuation age shall be determined by the actuary as part of the first annual valuation made after June 30, 1997. The resulting additional accrued actuarial liability shall be paid by The Pennsylvania State University to the board in one lump sum payment within 90 days of the board's certification of the amount to The Pennsylvania State University. (h) Temporary application of collared contribution rate.--The collared contribution rate for each fiscal year shall be determined by comparing the actuarially required contribution rate calculated without regard for costs added by legislation to the prior year's final contribution rate. If, for any of the fiscal years beginning July 1, 2011, July 1, 2012, and on or after July 1, 2013, the actuarially required contribution rate calculated without regard for costs added by legislation is more than 3%, 3.5% and 4.5%, respectively, of the total compensation of all active members greater than the prior year's final contribution rate, then the collared contribution rate shall be applied and be equal to the prior year's final contribution rate increased by the respective percentage above of total compensation of all active members. Otherwise, and for all subsequent fiscal years, the collared contribution rate shall not apply. In no case shall the collared contribution rate be less than 4% of total compensation of all active members. (i) Final contribution rate.--For the fiscal year beginning July 1, 2010, the final contribution rate shall be 5% of total compensation of all active members. For each subsequent fiscal year for which the collared contribution rate is applicable, the final contribution rate shall be the collared contribution rate plus the costs added by legislation. For all other fiscal years, the final contribution rate shall be the actuarially required contribution rate, provided that the final contribution rate shall not be less than the employer normal contribution rate, as defined in subsection (b). (June 29, 1984, P.L.450, No.95, eff. imd.; Oct. 21, 1988, P.L.844, No.112, eff. Jan. 1, 1989; Aug. 5, 1991, P.L.183, No.23, eff. imd.; Apr. 29, 1994, P.L.159, No.29, eff. 60 days; June 25, 1997, P.L.369, No.41, eff. imd.; May 17, 2001, P.L.26, No.9, eff. July 1, 2002; Apr. 23, 2002, P.L.272, No.38, eff. imd.; Dec. 10, 2003, P.L.228, No.40, eff. imd.; June 27, 2007, P.L.32, No.8, eff. imd.; Nov. 23, 2010, P.L.1269, No.120, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.; Nov. 27, 2019, P.L.723, No.105, eff. imd.) 2019 Amendment. Act 105 amended subsecs. (c)(3) and (4) and (f)(1). See section 9 of Act 105 in the appendix to this title for special provisions relating to applicability. 2017 Amendment. Act 5 amended subsecs. (a), (b), (c)(1), (e)(2), (f) and (h) and added subsec. (c)(4). See section 404 of Act 5 in the appendix to this title for special provisions relating to accrued liability funding. 2010 Amendment. See section 27 of Act 120 in the appendix to this title for special provisions relating to changes in accrued liability of State Employees' Retirement System. 2007 Amendment. See section 2 of Act 8 in the appendix to this title for special provisions relating to recertification of employer contribution rates. 1997 Amendment. See section 6 of Act 41 in the appendix to this title for special provisions relating to limitation of special vestee status. Special Provisions in Appendix. See section 6.1 of Act 72 of 2019 in the appendix to this title for special provisions relating to accrued liability. Cross References. Section 5508 is referred to in sections 5301, 5303.2, 5501.1, 5501.2, 5505.1, 5507, 5508.1, 5705, 5706, 5708.1, 5708.2, 5708.3, 5708.5, 5708.6, 5708.7, 5708.8, 5902 of this title.

71 Pa.C.S. § 5508.1 Advance payment of accrued liability contributions.

(a) Authorization.--The board and the head of department of an eligible employer of members of the system may enter into an agreement by which the eligible employer agrees to make one lump sum payment of all or a part of the eligible employer's portion of the present value of future accrued liability contributions determined under section 5508(c)(4) (relating to actuarial cost method) as modified by the cumulative experience adjustment factors calculated under section 5508(f)(1). The amount shall be calculated by the actuary in a manner and using actuarial factors and assumptions as the board, after obtaining the advice of the board's actuary, shall determine, and shall be certified by the board. (b) Terms of lump sum payment.--The terms of an advance payment of accrued liability contributions shall be set forth in the agreement between the board and the head of department and subject to the following restrictions: (1) Each eligible employer may make only one lump sum advance payment of accrued liability contributions. (2) The lump sum may be based on not less than 75% and not more than 100% of the portion of the unfunded actuarial accrued liability of the system allocated to the eligible employer. (3) The calculation of the unfunded actuarial accrued liability of the system and the portion allocated to the eligible employer shall be made by the actuary and approved by the board. (4) The allocation of the unfunded actuarial accrued liability to the eligible employer must be made using a methodology, and the setoff schedule and other terms and conditions of the agreement must be such that if all eligible employers that employ members of the system simultaneously enter into agreements to make 100% advance payments of accrued liability contributions using the same date to calculate and allocate the unfunded actuarial accrued liability contributions and the same date to make lump sum payments, the total of the lump sum payments would equal the unfunded actuarial accrued liability on the calculation date. (5) The agreement must establish a schedule of dollar-denominated annual setoffs against the future contributions of the eligible employer to amortize the lump sum advance payment of actuarial accrued liability contributions. (6) The following shall apply: (i) The agreement must provide a schedule of annual setoffs to provide for not less than 75% and not more than 100% of the anticipated future accrued liability contributions of the eligible employer as determined by the actuary and approved by the board as of the determination date. The schedule of setoffs of anticipated future accrued liability contributions: (A) must be in dollar amounts that are consistent with the system's amortization bases that exist as of the determination date; and (B) cannot be for a time period longer than the longest remaining amortization period for any initial actuarial accrued liability or experience adjustment factor included in the calculation of the advance payment of accrued liability contributions. (ii) A good faith determination, calculation and payment of the lump sum that produces an annual setoff that is less than 75% or more than 100% of the anticipated future accrued liability contribution by a de minimis amount shall not be a violation of this subsection. (7) The agreement shall provide a mechanism or method of recognizing or crediting the setoff against the actual contributions of the eligible employer, which may include recognizing or crediting the setoff in monthly, semi-monthly, biweekly or other periodic or reconciling increments to correspond to the schedule by which the eligible employer makes employer contributions to and to account for and reflect changes in the schedule of compensation payments to the members. (8) After the lump sum payment is made, the annual setoff schedule and amounts established in the agreement cannot be changed except that: (i) in no fiscal year can the recognized setoff be larger than the contributions by the eligible employer that are eligible for the setoff. If in any fiscal year the available setoff amount is larger than the actual contributions by the eligible employer that are eligible to be setoff, the excess setoff for that fiscal year shall be added to the next fiscal year's setoff amount as provided under subsection (c); and (ii) if the General Assembly changes the actuarial cost method under section 5508, the board may change the schedule or amount of annual setoffs to conform to the amended actuarial cost method, as determined actuarially by the board, with the agreement of the head of the department. (9) The board may not be involved in the issuance, service or administration of any bonds or financial instruments or any obligations of an eligible employer, the proceeds of which are used in total or in part to make any part of the lump sum advance payment of accrued liability contributions. The board may not provide financial advice or in any way act as a broker, banker, financial advisor, investment manager or in a similar capacity to the eligible employer. Any money received as a result of a lump sum payment of advance payment of accrued liability contributions shall be part of the general assets of the funds and may not be segregated or invested separately for the account of or benefit of the eligible employer that made the payment. (10) An amount paid into the fund as an advance payment of accrued liability contributions may not be refunded or repaid to any eligible employer except as a setoff against future employer contributions. (11) Advance payment of accrued liability contributions made prior to the execution of an agreement that, in the sole determination of the board or in the determination of the commissioner, could result in the system failing to satisfy the requirements necessary to be a qualified pension plan under IRC § 401(a) and other applicable provisions of the IRC, shall not be permitted. (c) Effect of payment.--The effect of a payment shall be as follows: (1) Any eligible employer that makes a lump sum payment of advance accrued liability contributions shall receive an annual setoff on a fiscal year basis against the payment of future accrued liability contributions in an amount and for the time period provided in the agreement. If the amount of the annual setoff exceeds the accrued liability contributions of the eligible employer for that fiscal year, the remaining setoff amount shall be applied against any supplemental annuity contributions determined under section 5508(e)(2). If no supplemental annuity contributions are due, or if the remaining annual setoff exceeds the amount of the supplemental annuity contributions, any remaining annual setoff shall be applied against the employer normal contributions of the eligible employer. Any annual setoff amount in excess of the actual accrued liability contributions, supplemental annuity contributions and employer normal contributions for that fiscal year shall be deferred without interest and made part of the scheduled annual setoff amount of the eligible employer for the next subsequent year as determined by the actuary and certified by the board. In no event shall a setoff for advance payments reduce or be used to pay additional accrued liability contributions under section 5507(g) (relating to contributions to the system by the Commonwealth and other employers), benefits completion plan contributions under section 5507(e), employer defined contributions paid into the trust on account of a participant's State service or any member or participant contributions to the system or the plan. A lump sum amount or annual excess setoff of advance accrued liability contributions may not be paid from the fund by the board to the eligible employer. (2) Advance payment of accrued liability contributions results only in a dollar amount setoff against actual future contributions as set forth in the agreement between the board and eligible employer and determined by the actuary and certified by the board. An eligible employer shall be subject to all changes in employer contribution rates and actual contribution amounts caused by any reason, including actual recognition of investment returns, changes in economic or demographic actuarial assumptions, including the assumed rate of investment return, actual experience being different from the economic or demographic assumptions, including the number of State employees who are members of the system and their compensation, changes in benefits and changes in the actuarial cost method. (d) Payment of costs and fees.-- (1) The costs incurred by the board after the effective date of this section, including any fees charged by the actuary, to estimate, determine, calculate or administer the amount of any lump sum payment and annual setoff potentially or actually resulting from advance payment of accrued liability contributions shall be paid by the eligible employer on whose behalf the costs were incurred, in amounts certified by the board. Notwithstanding this paragraph, costs may not be paid by the eligible employer until the board provides a written estimate of the costs to the eligible employer and receives written approval from the eligible employer to incur the costs on the eligible employer's behalf. (2) Payment of fees and costs incurred by the board at the request of the head of a department shall be paid by the corresponding eligible employer without regard to whether an agreement is entered into between the board and the head of department of an eligible employer under subsection (a) and without regard to whether the costs and fees are incurred before or after an agreement is entered into under subsection (a). (3) The board may require advance payment of costs and fees before performing any estimate, determination, calculation or administrative work under this section. (4) The board may setoff the payment of costs and fees against either the lump sum payment or annual setoffs. (5) Notwithstanding this subsection, the board may waive all or part of the reimbursement due by an eligible employer if the board in its sole discretion determines that it is in the best interests of the fund and the members of the system to do so. (e) Limitation of time.-- (1) A lump sum payment for advance payment of accrued liability contributions made on or after July 1 and on or before the following May 1 will be recognized by annual setoffs beginning the next fiscal year. A lump sum payment for advance payment of accrued liability contributions made on or after May 2 and before July 1 will be recognized by annual setoffs beginning the second following fiscal year. (2) Any agreement under this section must be entered into by December 31, 2024. Any lump sum payment under this section must be made by May 1, 2025. (Nov. 27, 2019, P.L.723, No.105, eff. imd.) 2019 Amendment. Act 105 added section 5508.1. See section 9 of Act 105 in the appendix to this title for special provisions relating to applicability. Cross References. Section 5508.1 is referred to in section 5507 of this title.

71 Pa.C.S. § 5509 Appropriations and assessments by the Commonwealth.

(a) Annual submission of budget.--The board shall prepare and submit annually an itemized budget consisting of the amounts necessary to be appropriated by the Commonwealth out of the General Fund and special operating funds and the amounts to be assessed the other employers required to meet the separate obligations to the fund and the trust accruing during the fiscal period beginning the first day of July of the following year. (b) Appropriation and payment.--The General Assembly shall make an appropriation sufficient to provide for the separate obligations of the Commonwealth to the fund and the trust. Such amount shall be paid by the State Treasurer through the Department of Revenue into the fund or trust in accordance with requisitions presented by the board. The contributions to the system by the Commonwealth on behalf of active members who are officers of the Pennsylvania State Police shall be charged to the General Fund and to the Motor License Fund in the same ratios as used to apportion the appropriations for salaries of members of the Pennsylvania State Police. The contributions to the system by the Commonwealth on behalf of active members who are enforcement officers and investigators of the Pennsylvania Liquor Control Board shall be charged to the General Fund and to the State Stores Fund. (c) Contributions from funds other than General Fund.--The amounts assessed other employers who are required to make the necessary separate contributions to the fund and the trust out of funds other than the General Fund shall be paid by such employers into the fund or trust in accordance with requisitions presented by the board. The General Fund of the Commonwealth shall not be held liable to appropriate the moneys required to build up the reserves in the fund necessary for the payment of benefits from the system to employees or to make the employer defined contributions for employees of such other employers. In case any such other employer shall fail to provide to the fund the moneys necessary for such purpose, then the service of such members of the system for such period for which money is not so provided shall be credited and pickup contributions with respect to such members shall continue to be credited to the members' savings account. The annuity to which such member is entitled shall be determined as actuarially equivalent to the present value of the maximum single life annuity of each such member reduced by the amount of employer contributions to the system payable on account and attributable to his compensation during such service, except that no reduction shall be made as a result of the failure of an employer to make contributions required for a period of USERRA leave. (Dec. 14, 1982, P.L.1249, No.284, eff. imd.; Oct. 24, 2012, P.L.1436, No.181, eff. Dec. 31, 2012; June 12, 2017, P.L.11, No.5, eff. imd.) 1982 Amendment. See sections 2, 3 and 4 of Act 284 in the appendix to this title for special provisions relating to required contributions by head of department, nonseverability and retroactivity. Cross References. Section 5509 is referred to in sections 5702, 5902 of this title.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=71Fetched: 10/16/2026