Senate Bill No. 454
(By Senator Browning)
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[Introduced February 3, 2010; referred to the Committee on
Pensions; and then to the Committee on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §5-13A-1, §5-13A-2,
§5-13A-3, §5-13A-4, §5-13A-5, §5-13A-6 and §5-13A-7, all
relating to transfer from Higher Education Retirement Plan to
the Public Employees Retirement System; definitions; voluntary
transfers; converting assets from Higher Education Retirement
Plan to Public Employees Retirement System; service credit in
Public Employees Retirement System following transfer;
converting assets; vesting; minimum guarantees; and
transferees' eligibility to retire.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §5-13A-1, §5-13A-2,
§5-13A-3, §5-13A-4, §5-13A-5, §5-13A-6 and §5-13A-7, all to read as follows:
ARTICLE 13A. TRANSFER FROM HIGHER EDUCATION RETIREMENT PLAN TO
WEST VIRGINIA PUBLIC EMPLOYEES RETIREMENT SYSTEM.
§5-13A-1. Definitions.
As used in this article, unless the context clearly requires
a different meaning:
(1) "Actuarial Reserve" means the Actuarial Reserve Lump Sum
Value of the additional service credit being purchased by a member
so electing in accordance with the provisions of section four of
this article.
(2) "Actuarial Reserve Adjusted Salary" means either:
(A) For a member with a full year service credit in the fiscal
year ending June 30, 2010, the member's 2010 fiscal year salary
increased by seven percent;
(B) For a member with less than a full year service credit in
the fiscal year ending June 30, 2010, the member's 2010 fiscal year
salary annualized to a full year based on the partial year service
credit increased by seven percent; or
(C) For a member without service credit in the fiscal year
ending the June 30, 2010, the member's annualized contract salary
in effect on December 31, 2010, increased by seven percent, or the
member's annual contract salary on the date of rehire if after
December 31, 2010.
(3) "Actuarial Reserve Benefit Date" means the first day of
the month coincident with or next following the date at which the
member attains the age of sixty, or June 30, 2011, whichever is
later.
(4) "Actuarial Reserve Benefit Date Factors" mean the
actuarial lump sum value factors based on a life only annuity
starting on the Actuarial Reserve Benefit Date applying the 1983
Group Annuity Mortality Tables on a seventy-five percent female and
a twenty-five percent male blended Unisex basis and interest at
seven and one-half percent.
(5) "Actuarial Reserve Discount Factor" means the annual
discount factor applied for the period between June 30, 2010, and
the Actuarial Reserve Benefit Date, if any. Such factor based on
the Public Employees Retirement System actuarial valuation
assumptions shall estimate the impact of mortality, disability, and
economic factors for such discount period by application of a net
four percent discount rate.
(6) "Actuarial Reserve Lump Sum Value" means a single sum
amount calculated as: A benefit of two percent multiplied by the
Higher Education Retirement Plan service credit being purchased
multiplied by the Actuarial Reserve Adjusted Salary; such benefit
multiplied by the Actuarial Reserve Benefit Date Factors to
determine the lump sum value multiplied by the Actuarial Reserve Discount Factor.
(7) "Affirmatively elect to transfer" means the voluntary
execution and delivery to the Consolidated Public Retirement Board,
by a member of the Higher Education Retirement Plan of a document
in a form prescribed by the board that irrevocably authorizes the
board to transfer the member and all the member's assets in the
Higher Education Retirement Plan to the Public Employees Retirement
System.
(8) "Assets" means all member contributions and employer
contributions made on the member's behalf to the Higher Education
Retirement Plan and earnings thereon, less any applicable fees:
Provided, That if a member has withdrawn or cashed out any amounts,
the amounts must have been repaid.
(9) "Board" means the Consolidated Public Retirement Board
established in article ten-d of this chapter, and its employees.
(10) "Higher Education Retirement Plan" means the Higher
Education Retirement Plan established in section four-a, article
twenty-three, chapter eighteen of this code.
(11) "Member" means any person who has an account balance
standing to his or her credit in the Higher Education Retirement
Plan. The term "member" shall not include any person who has
retired under the Higher Education Retirement Plan.
(12) "Public Employees Retirement System" means the Public Employees Retirement System established in article ten of this
chapter.
(13) "Salary" means:
(A) For a member contributing to the Higher Education
Retirement Plan during the 2010 fiscal year, the actual salary
earned for the 2010 fiscal year divided by the employment service
earned in the 2010 fiscal year.
(B) For a member not contributing to the Higher Education
Retirement Plan during the 2010 fiscal year, the contract salary on
the date of rehire.
§5-13A-2. Voluntary transfers.
Notwithstanding the provisions of law governing the Higher
Education Retirement Plan, in the event a member leaves a position
covered by the Higher Education Retirement Plan and becomes
employed in a position covered by the Public Employees Retirement
System, and in accordance with the provisions of this article, the
board shall effect the voluntary transfer of members of the Higher
Education Retirement Plan to the Public Employees Retirement
System:
Provided, That he or she returns to the Higher Education
Retirement Plan the amount of assets he or she might have withdrawn
or cashed out:
Provided, however, That he or she has not retired
under either the Public Employees Retirement System or the Higher
Education Retirement Plan:
Provided further, That after the effective date of this article the subsequent employment in a
position covered by the Public Employees Retirement System must
occur within a period of five years from and after the date on
which the person left a position covered by the Higher Education
Retirement Plan.
§5-13A-3. Conversion of assets from Higher Education Retirement
Plan to Public Employees Retirement System;
contributions.
(a) 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. To receive full credit for the cashed out or
withdrawn amounts being repaid to the Public Employees Retirement
System, the member also shall pay the actuarial reserve, or the one
and one-half percent contribution, as the case may be, pursuant to
section four of this article.
(2) 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.
(b) Notwithstanding any provision of subsection (a) to the
contrary, if a member has cashed out or withdrawn any of his or her
assets after June 30, 2004, and that member chooses to repurchase
that service after June 30, 2011, the member shall repay the
previously distributed amounts and any applicable interest to the
Public Employees Retirement System.
(c) Any service in the Public Employees Retirement System a
member has before the date of the transfer is not affected by the
provisions of this article.
(d) The board shall take all necessary steps to see that the
voluntary transfers of persons and assets authorized by this
article do not affect the qualified status with the Internal
Revenue Service of either retirement plan.
§5-13A-4. Service credit in Public Employees Retirement System
following transfer; conversion of assets;
adjustments.
(a) Any member who has affirmatively elected to transfer to
the Public Employees Retirement System whose assets have been
transferred from the Higher Education Retirement Plan to the Public Employees Retirement System pursuant to the provisions of this
article and who has not made any withdrawals or cash outs from his
or her assets is, entitled to service credit in the Public
Employees Retirement System in accordance with the provisions of
subsection (c) of this section.
(b) Any member who has made withdrawals or cash outs will
receive service credit based upon the amounts transferred. The
board shall make the appropriate adjustment to the service credit
the member will receive.
(c) For any former member of the Higher Education Retirement
Plan who elects to transfer to the Public Employees Retirement
System based on the provisions of this article, his or her service
credit in the Public Employees Retirement System is determined as
follows:
(1) The member's Public Employees Retirement System credit
shall be seventy-five percent of the member's Higher Education
Retirement Plan service credit, less any service previously
withdrawn by the member;
(2) To receive full credit in the Public Employees Retirement
System for service in the Higher Education Retirement Plan for
which assets are transferred, members who transfer shall pay into
the Public Employees 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, plus interest of four percent per annum
accumulated from the date of the member's initial participation in
the Higher Education Retirement Plan.
(A) For a member contributing to the Higher Education
Retirement Plan at any time during the 2011 fiscal year and
commencing membership in the Public Employees Retirement System on
July 1, 2011:
(i) The estimated total earnings shall be calculated based on
the member's salary and the member's age nearest birthday on June
30, 2011;
(ii) 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 2011 fiscal year.
(B) The calculations in paragraph (A) of this subdivision are
based upon the salary scale assumption applied in the West Virginia
Public Employees System Actuarial Valuation as of July 1, 2010,
prepared for the board. This salary scale shall be applied
regardless of breaks in service.
(d) Notwithstanding any provision of this code to the
contrary, the retirement of a member who becomes eligible to retire
after the member's assets are transferred to the Public Employees
Retirement System pursuant to the provisions of this article may not commence prior to September 1, 2011:
Provided, That the board
may not retire any member who is eligible to retire during the
calendar year 2011 unless the member has provided a written notice
to his or her employer by July 1, 2011, of his or her intent to
retire.
§5-13A-5. Vesting.
Any member who works one hour or more after his or her assets
are transferred to the Public Employees Retirement System pursuant
to this article is subject to the vesting schedule set forth in
article ten of this chapter.
§5-13A-6. Minimum guarantees.
(a) Any former member of the Higher Education Retirement Plan
who works one hour or more and who has made a contribution to the
Public Employees Retirement System after his or her assets are
transferred to the Public Employees Retirement System pursuant to
this article, is guaranteed a minimum benefit equal to his or her
member contributions plus the vested portion of employer
contributions made on his or her behalf to the Higher Education
Retirement Plan, plus any earnings thereon, as of June 30, 2011, as
stated by the board.
(b) A former member of the Higher Education Retirement Plan
who works one hour or more and who has made contributions to the
Public Employees Retirement System after his or her assets are transferred to the Public Employees Retirement System, upon
eligibility to receive a distribution under article ten of this
chapter, shall have at a minimum the following three options:
(1) The right to receive an annuity from the Public Employees
Retirement System based upon the provisions of article ten of this
chapter;
(2) The right to withdraw from the Public Employees Retirement
System and receive his or her member accumulated contributions in
the Public Employees Retirement System, plus refund interest
thereon, as set forth in article ten of this chapter; or
(3) The right to withdraw and receive his or her member
contributions plus the vested portion of employer contributions
made on his or her behalf to the Higher Education Retirement Plan,
plus any earnings thereon as of the date his or her assets are
transferred to the Public Employees Retirement System pursuant to
this article, as determined by the board pursuant to the vesting
provisions of article ten of this chapter. This amount shall be
distributed in a lump sum.
(c) Any former member of the Higher Education Retirement Plan
who does not work one hour or more and who makes no contribution to
the Public Employees Retirement System after his or her assets are
transferred to the Public Employees Retirement System pursuant to
this article, is guaranteed the receipt of the amount in his or her total vested account in the Higher Education Retirement Plan on the
date of the transfer, plus interest thereon, at four percent
accruing from the date of the transfer. This amount shall be
distributed in a lump sum:
Provided, That no benefits may be
obtained under this subsection solely by the reciprocity provisions
of sections three, four, and six, article thirteen of this chapter.
§5-13A-7. Transferees' eligibility to retire.
(a) For purposes of determining a transferring member's
eligibility for retirement in accordance with section twenty-two,
article ten of this chapter, any member who has elected to transfer
to the Public Employees Retirement System pursuant to the
provisions of this article shall be fully credited for his or her
years of service in the Higher Education Retirement Plan:
Provided, That the calculation of any transferring member's service
credit in the Public Employees Retirement System following the
transfer shall be determined in accordance with the provisions of
section four of this article.
(b) For purposes of this section, "years of service" shall
mean all years as a member of the Higher Education Retirement Plan
and, in addition thereto, credits for any prior service, if any:
Provided, That service previously withdrawn by a member may not be
included in "years of service" unless repaid.
NOTE: The purpose of this bill is to provide that any former
state higher education employees who become members of the Public
Employees Retirement System may transfer credit in their Higher
Education Retirement Plan to the Public Employees Retirement
System. The bill provides definitions; provisions for conversion
of assets; service credit in the Public Employees Retirement System
following transfer, vesting and minimum guarantees.
The article is new; therefore, strike-throughs and
underscoring have been omitted.