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Introduced Version Senate Bill 528 History

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Key: Green = existing Code. Red = new code to be enacted
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Senate Bill No. 528

(By Senators Hall, Prezioso, Hunter, Deem, Minard, Plymale, Unger, Bowman, Green and White)

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[Introduced January 31, 2008; referred to the Committee on Pensions; and then to the Committee on Finance.]

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A BILL to repeal §18-7C-8 of the Code of West Virginia, 1931, as amended; and to amend and reenact §18-7C-6 of said code, all relating to the merging of the Defined Contribution Retirement System into the State Teachers Retirement System by repealing the merger provision; and permitting certain members a one- time option to transfer between the systems.

Be it enacted by the Legislature of West Virginia:
That §18-7C-8 of the Code of West Virginia, 1931, as amended, be repealed; and that §18-7C-6 of said code be amended and reenacted, to read as follows:
ARTICLE 7C. MERGER OF TEACHERS' DEFINED CONTRIBUTION RETIREMENT
SYSTEM WITH STATE TEACHERS' RETIREMENT SYSTEM.

§18-7C-6. Conversion of assets from Defined Contribution Retirement System to State Teachers' Retirement System; contributions; loans.

(a) If a majority of members voting elect to merge the Defined Contribution Retirement System into the State Teachers Retirement System:
(1) The consolidation and merger is governed by the provisions of this article;
(2) The Defined Contribution Retirement System does not exist after the thirtieth day of June, two thousand six; and
(3) All members of that system become members of the state Teachers Retirement System as provided in this article. Notwithstanding any provision in section 28, article seven-a, chapter eight of this code to the contrary, on or before the first day of October, two thousand eight, each member of the Defined Contribution Retirement System may exercise a one-time option to transfer from the Defined Contribution Retirement System into the State Teachers' Retirement System. If a member's option is not exercised, that member will continue to participate in the Defined Contribution Retirement System. After the first day of October, two thousand eight, plan members will permanently remain in his or her chosen system.
(b) Following the election, if the vote is in favor of the merger, the board shall transfer all properties held in the Defined Contribution Retirement System's Trust Fund to the State Teachers Retirement System.
(c) (b) To receive full credit in the State Teachers' Retirement System for service in the Defined Contribution Retirement System for which assets are transferred, members shall pay into the State Teachers' Retirement System a one and one-half percent contribution. This contribution shall be calculated as one and one-half percent of the member's estimated total earnings for which assets are transferred. Except as otherwise provided in this section, each member shall pay the contribution required no later than the thirtieth day of June, two thousand seven nine.
(1) For a member contributing to the Defined Contribution Retirement System at any time during the two thousand five seven fiscal year and commencing membership in the State Teachers' Retirement System on the first day of July, two thousand six eight:
(A) The estimated total earnings shall be calculated based on the member's salary and the member's age nearest birthday on the thirtieth day of June, two thousand five seven;
(B) This calculation shall apply both an annual backward salary scale from that date for prior years' salaries and a forward salary scale for the salary for the two thousand six eight fiscal year.
(2) For a member not contributing to the Defined Contribution Retirement System during the two thousand five seven fiscal year:
(A) The estimated total earnings shall be calculated based on the member's salary and the member's age nearest birthday on the member's date of rehire.
(B) This calculation shall apply a backward salary scale from the member's date of rehire for prior years' salaries.
(3) The calculations in subdivisions (1) and (2) of this subsection are based upon the salary scale assumption applied in the West Virginia Teachers' Retirement System Actuarial Valuation as of the first day of July, two thousand four six, prepared for the Consolidated Public Retirement Board. This salary scale shall be applied regardless of breaks in service.
(d) (c) The board shall make available to each member a loan for the purpose of paying all or part of the one and one-half percent contribution required in this section. The loan shall be offered in accordance with the provisions of section thirty-four, article seven-a of this chapter.
(1) Notwithstanding any provision of this code, rule or policy of the board to the contrary, the interest rate on any such loan may not exceed seven and one-half percent per annum. The amount total borrowed may not exceed twelve thousand dollars.
(2) In the event a loan made pursuant to this section is used to pay the one and one-half percent, the board shall make any necessary adjustments at the time the loan is made.
(3) Subject to the provisions of subdivision (4) of this section, the board shall make this loan available for members until the thirtieth day of June, two thousand seven nine.
(4) Upon returning to employment, a member who has left employment but not withdrawn his or her funds shall pay the one and one-half percent contribution within one year of being rehired. The member is eligible for one year following the date of rehire to obtain a loan for paying the contribution.
(e) (d) The board shall develop and institute a payroll deduction program for repayment of the loan established in this section.
(f) If the merger and consolidation is duly elected (e) If a member elects to transfer into the State Teachers' Retirement System:
(1) As of the first day of July, two thousand six eight, the members' contribution rate becomes six percent of his or her salary or wages; and
(2) All members who make a contribution into the State Teachers' Retirement System on or after the first day of July, two thousand six eight, are governed by the provisions of article seven-a of this chapter, subject to the provisions of this article.
(g) (e) Subject to the provisions of subdivision (1) of this subsection, if a member has withdrawn or cashed out part of his or her assets, that member will not receive credit for those moneys cashed out or withdrawn. The board shall make a determination as to the amount of credit a member loses based on the periods of time and the amounts he or she has withdrawn or cashed out, which shall be expressed as a loss of service credit.
(1) A member may repay those amounts he or she previously cashed out or withdrew, along with interest as determined by the board, and receive the same credit as if the withdrawal or cash-out never occurred. Such a member also shall pay the one and one-half percent contribution to receive full credit for the cashed-out or withdrawn amounts being repaid to the State Teachers' Retirement System.
(2) The loan provided in this section is not available to members to repay previously cashed-out or withdrawn moneys.
(3) If the repayment occurs five or more years following the cash-out or withdrawal, the member also shall repay any forfeited employer contribution account balance along with interest determined by the board.
(h) (f) Notwithstanding any provision of subsection (g) (e) to the contrary, if a member has cashed-out or withdrawn any of his or her assets after the last day of June, two thousand one, and that member chooses to repurchase that service after the thirtieth day of June, two thousand six eight, the member shall repay the previously distributed amounts and any applicable interest to the State Teachers' Retirement System.
(I) (g) Any service in the State Teachers' Retirement System a member has before the date of the merger is not affected by the provisions of this article.

NOTE: The purpose of this bill is to provide members of the Defined Contribution Retirement System
a one-time option to transfer into the State Teachers' Retirement System.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.



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