RULES AND REGULATIONS
Title 4--ADMINISTRATION
STATE EMPLOYEES' RETIREMENT BOARD
[4 PA. CODE CHS. 243 AND 249]
Optional Alternate Retirement Plans
[35 Pa.B. 2275] The State Employees' Retirement Board (Board) amends §§ 243.3 and 249.58 (relating to optional alternate retirement program). The final-form rulemaking deletes the transitional provisions for electing to participate in an optional alternate retirement program or plan in §§ 243.3 and 249.58. The transitional provisions are no longer needed, read broadly and may conflict with 24 Pa.C.S. Part IV (relating to Public School Employees' Retirement Code) (Retirement Code), because the Retirement Code (Retirement Code) does not allow current members to opt out of the State Employees' Retirement System (SERS).
A. Effective Date
The final-form rulemaking will go into effect upon publication in the Pennsylvania Bulletin.
B. Contact Person
For further information, contact Sean Sanderson, Director of Communications, State Employees' Retirement System, 30 North Third Street, P. O. Box 1147, Harrisburg, PA 17108, (717) 787-9657; or M. Catherine Nolan, Assistant Counsel, State Employees' Retirement System, 30 North Third Street, P. O. Box 1147, Harrisburg, PA 17108, (717) 783-7317.
C. Statutory Authority
This final-form rulemaking is being made under the authority of 71 Pa.C.S. § 5902(h) (relating to administrative duties of the board).
D. Background and Purpose
When amended in 1974, the Retirement Code, for the first time, permitted certain school employees to choose an alternate retirement plan. The Retirement Code applies to new employees. The Board promulgated §§ 243.3 and 249.58 to implement this Retirement Code provision. Sections 243.3 and 249.58, among other things, contained transitional provisions, granting to existing employees an opportunity to elect an alternate retirement plan. Section 249.58 provided that vested members make an election on or before November 1, 1975. Active members who had not vested as of November 1, 1975, had 60 days from becoming eligible to vest to elect. The transitional provisions of §§ 243.3 and 249.58 were added because the existing employees never had the opportunity to select an alternate plan. At the time of enactment of §§ 243.3 and 249.58, the only alternate plan allowed was Teachers Insurance and Annuity Association-College Retirement Equities Fund.
The act of June 22, 2001 (P. L. 530, No. 35) allowed the State System of Higher Education (SSHE) to add insurance companies or mutual funds as additional alternate plans for its employees. Sections 243.3 and 249.58, as written, could be interpreted to allow existing employees, who already had a choice under the Retirement Code to elect an alternate retirement plan, to make an additional election and to opt out of SERS each time a new alternate plan is approved by SSHE. The Board, however, has always interpreted §§ 243.3 and 249.58 as providing a one-time opportunity for these employees, not a continual choice each time a new alternate plan is approved by the employer. Deleting the language clarifies the intent of the Board and eliminates a potential conflict between §§ 243.3 and 249.58 and the Retirement Code, because the Retirement Code does not allow current members to opt out of the system.
The Public School Employees' Retirement System (PSERS) is proposing a similar revision of its regulation that parallels § 249.58. This amendment will harmonize the regulations of the SERS and PSERS with regard to election of alternate retirement plans. SSHE supports the final-form rulemaking.
E. Benefits, Costs and Compliance
Benefits
This final-form rulemaking removes expired transitional provisions, clarifies the Board's intent regarding the election of alternate retirement plans and eliminates a potential conflict between the Retirement Code and the regulations.
Costs
The final-form rulemaking formalizes the Board's long-standing interpretation that the transitional provisions of §§ 243.3 and 249.58 have expired. The final-form rulemaking, therefore, maintains the status quo, and has no associated cost.
Compliance Costs
The final-form rulemaking will not impose any additional compliance costs on State employees or employers.
F. Sunset Review
Not applicable.
G. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 3, 2003, the Board submitted a copy of the notice of proposed rulemaking, published at 33 Pa.B. 892 (February 15, 2003), to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House State Government Committee and the Senate Finance Committee for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.
On April 17, 2003, IRRC identified several sentences or phrases that could be deleted or reformatted to improve clarity. The Board has complied with the comments identified by IRRC.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on February 9, 2005, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, the final-form rulemaking was deemed approved by IRRC on February 10, 2005.
H. Public Comments
The Board received no public comments.
I. Findings
The Board finds that:
(1) Public notice of the proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The amendments to the rules and procedures herein are necessary and appropriate for the administration of the code.
J. Order
The Board, acting under the Retirement Code and the act of July 31, 1968 (P. L. 769, No. 240) known as the Commonwealth Documents Law, including particularly those sections specified in the several authority sections herein specified with respect to each provision of the rules and procedures of SERS modified by this order, orders:
(a) The regulations of the Board, 4 Pa. Code Chapters 243 and 249, are amended by amending §§ 243.3 and 249.58 to read as set forth in Annex A.
(b) The amendments shall be submitted to the Office of Attorney General for approval as to legality as required by law.
(c) The Secretary of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect immediately upon publication in the Pennsylvania Bulletin.
ERIC HENRY,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 35 Pa.B. 1487 (February 26, 2005).)
Fiscal Note: Fiscal Note 31-2 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 4. ADMINISTRATION
PART X. STATE EMPLOYEES' RETIREMENT BOARD
CHAPTER 243. MEMBERSHIP, CREDITED SERVICE, CLASSES OF SERVICE AND ELIGIBILITY FOR BENEFITS § 243.3. Optional alternate retirement program.
School employees, limited to certain designated employees and officers of the Pennsylvania State University, Indiana University of Pennsylvania, the State System of Higher Education and the Department of Education, shall be permitted to join an optional alternate retirement program in lieu of membership in the system. The program shall be an independent retirement program approved by the employing agency head, provided that the employer is not contributing at a rate greater than that provided in section 5508(b) of the code (relating to actuarial cost method).
CHAPTER 249. ADMINISTRATION, FUNDS, ACCOUNTS, GENERAL PROVISIONS
Subchapter E. GENERAL PROVISIONS § 249.58. Optional Alternate Retirement Program.
Under section 5301 of the code (relating to mandatory and optional membership), certain school employees may elect not to join the System in favor of an optional alternate retirement program approved by the employer.
(1) Every employee, who is eligible for membership in the optional alternate retirement program, shall make the election within 30 days of the first date of active employment. Employees not exercising the option to join the optional alternate retirement program shall be deemed to have chosen to commence active membership in the System, unless they have elected membership in the Public School Employees' Retirement System.
(2) When an eligible employee elected to participate in the optional alternate retirement program in accordance with the provisions of paragraph (2) as it existed on April 15, 2005, or paragraph (4) as it existed on April 15, 2005, or elects to participate in the optional alternate retirement program in accordance with current paragraph (1), the election shall be final and binding so long as the employee remains eligible to remain in the optional alternate retirement program. If the employee later becomes employed by the Commonwealth in a capacity which does not qualify him for membership in the optional alternate retirement program, the employee shall, upon meeting the qualifications for membership in this System, make contributions to the fund, and if eligible, the employee may reinstate former credited service for which contributions had been withdrawn. Remittance of contributions or reinstatement of former credited service shall be made in accordance with the applicable provisions of the code. Service, salary or other compensation paid to an employee while a member of the optional alternate retirement program will not be credited toward membership in or retirement benefit from this System.
(3) Each year, the Board will certify to the Secretary of Education or the governing bodies of employing institutions the percentage rate of the employer normal contribution as determined in accordance with section 5508(b) of the code.
[Pa.B. Doc. No. 05-700. Filed for public inspection April 15, 2005, 9:00 a.m.]
No part of the information on this site may be reproduced for profit or sold for profit.This material has been drawn directly from the official Pennsylvania Bulletin full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.
