Introduced Version
House Bill 4603 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 4603
(By Delegate Campbell)
[Introduced February 25, 2004; referred to the Committee
on Pensions and Retirement then Finance.]
A BILL to amend and reenact §18-7A-3, §18-7A-14, §18-7A-23a, §18-
7A-25, §18-7A-26 and §18-7A-34 of the code of West Virginia,
1931, as amended, all relating
to providing that rights of
deceased retired participants to interest is to be included in
the calculation of terminal benefits payable; making technical
modifications; deleting the definition of earnable
compensation; adding the definition of gross salary;
clarifying maximum loan amount and making technical
corrections.
Be it enacted by the Legislature of West Virginia:
That §18-7A-3, §18-7A-14, §18-7A-23a, §18-7A-25, §18-7A-26 and
§18-7A-34 of the code of West Virginia, 1931, as amended, be
amended and reenacted, all to read as follows:
ARTICLE 7A. STATE TEACHERS RETIREMENT SYSTEM.
§18-7A-3. Definitions.
"Teacher member" means the following persons, if regularly
employed for full-time service: (a) Any person employed for
instructional service in the public schools of West Virginia; (b)
principals; (c) public school librarians; (d) superintendents of
schools and assistant county superintendents of schools; (e) any
county school attendance director holding a West Virginia teacher's
certificate; (f) the executive secretary of the retirement board;
(g) members of the research, extension, administrative or library
staffs of the public schools; (h) the state superintendent of
schools, heads and assistant heads of the divisions under his or
her supervision, or any other employee under the state
superintendent performing services of an educational nature; (i)
employees of the state board of education who are performing
services of an educational nature; (j) any person employed in a
nonteaching capacity by the state board of education, the West
Virginia board of regents [abolished], any county board of
education, the state department of education or the teachers
retirement board, if that person was formerly employed as a teacher
in the public schools; (k) all classroom teachers, principals and
educational administrators in schools under the supervision of the
division of corrections, the division of health or the division of
human services; and (l) employees of the state board of school
finance, if that person was formerly employed as a teacher in the
public schools. "Nonteaching member" means any person, except a teacher member,
who is regularly employed for full-time service by: (a) Any county
board of education; (b) the state board of education; (c) the West
Virginia board of regents [abolished]; or (d) the teachers
retirement board.
"Members of the administrative staff of the public schools"
means deans of instruction, deans of men, deans of women, and
financial and administrative secretaries.
"Members of the extension staff of the public schools" means
every agricultural agent, boys' and girls' club agent and every
member of the agricultural extension staff whose work is not
primarily stenographic, clerical or secretarial.
"Retirement system" means the state teachers retirement system
provided for in this article.
"Present teacher" means any person who was a teacher within the
thirty-five years beginning the first day of July, one thousand
nine hundred thirty-four, and whose membership in the retirement
system is currently active.
"New entrant" means a teacher who is not a present teacher.
"Regularly employed for full-time service" means employment in a
regular position or job throughout the employment term regardless
of the number of hours worked or the method of pay.
"Employment term" means employment for at least ten months, a
month being defined as twenty employment days. "Present member" means a present teacher who is a member of the
retirement system.
"Total service" means all service as a teacher while a member of
the retirement system since last becoming a member and, in addition
thereto, credit for prior service, if any.
"Prior service" means all service as a teacher completed prior
to the first day of July, one thousand nine hundred forty-one, and
all service of a present member who was employed as a teacher, and
did not contribute to a retirement account because he or she was
legally ineligible for membership during the service.
"Pick-up service" means service that a member was entitled to,
but which the employer has not withheld or paid for.
"Average final salary" means the average of the five highest
fiscal year salaries earned as a member within the last fifteen
fiscal years of total service credit, including military service as
provided in this article, or if total service is less than fifteen
years, the average annual salary for the period on which
contributions were made.
"Accumulated contributions" means all deposits and all
deductions from the earnable compensation gross salary of a
contributor minus the total of all supplemental fees deducted from
his or her compensation.
"Gross salary" means the fixed amount or periodic cash wages
paid by a participating public employer to a member for performing duties for the participating public employer for which the member
was hired. Gross salary also includes retroactive payments made to
a member to correct a clerical error, or pursuant to a court order
or final order of an administrative agency charged with enforcing
federal or state law pertaining to the member's rights to
employment or wages, with all such retroactive salary payments to
be allocated to and deemed paid in the periods in which the work
was or would have been done. Gross salary does not include lump
sum payments for bonuses, early retirement incentives, severance
pay or any other fringe benefit of any kind, including, but not
limited to, transportation allowances, automobiles or automobile
allowances, or lump sum payments for unused leave of any type.
"Regular interest" means interest at four percent compounded
annually, or a higher earnable rate if set forth in the formula
established in legislative rules, series seven of the consolidated
public retirement board.
"Refund interest" means interest compounded, according to the
formula established in legislative rules, series seven of the
consolidated public retirement board.
"Employer" means the agency of and within the state which has
employed or employs a member.
"Contributor" means a member of the retirement system who has an
account in the teachers accumulation fund.
"Beneficiary" means the recipient of annuity payments made under the retirement system.
"Refund beneficiary" means the estate of a deceased contributor
or a person he or she has nominated as beneficiary of his or her
contributions by written designation duly executed and filed with
the retirement board.
"Earnable compensation" means the full compensation actually
received by members for service as teachers whether or not a part
of the compensation is received from other funds, federal or
otherwise, than those provided by the state or its subdivisions.
Allowances from employers for maintenance of members shall be
considered a part of earnable compensation for those members whose
allowances were approved by the teachers retirement board and
contributions to the teachers retirement system were made, in
accordance therewith, on or before the first day of July, one
thousand nine hundred eighty.
"Annuities" means the annual retirement payments for life
granted beneficiaries in accordance with this article.
"Member" means a member of the retirement system.
"Public schools" means all publicly supported schools, including
normal schools, colleges and universities in this state.
"Deposit" means a voluntary payment to his or her account by a
member.
"Plan year" means the twelve-month period commencing on the
first day of July and ending the following thirtieth day of June of any designated year.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as it has been amended.
"Required beginning date" means the first day of April of the
calendar year following the later of: (a) The calendar year in
which the member attains age seventy and one-half; or (b) the
calendar year in which the member retires or ceases covered
employment under the system.
The masculine gender shall be construed so as to include the
feminine.
Age in excess of seventy years shall be considered to be seventy
years.
§18-7A-14. Contributions by members.
At the end of each month every member of the retirement system
shall contribute six percent of that member's monthly earnable
compensation gross salary to the retirement board: Provided, That
any member employed by the West Virginia board of directors of the
state college system or the board of trustees of the university
system at an institution of higher education under its control
shall contribute on the member's full earnable compensation, unless
otherwise provided in section fourteen-a of this article.
Annually, the contributions of each member shall be credited
to the member's account in the teachers accumulation fund. The contributions shall be deducted from the salaries of the members as
herein prescribed, and every member shall be deemed to have given
consent to such deductions. No deductions, however, shall be made
from the earnable compensation of any member who retired because of
age or service, and then resumed service unless as provided in
section thirteen-a of this article.
The aggregate of employer contributions, due and payable under
this article, shall equal annually the total deductions from the
earnable compensation of members required by this section.
Beginning the first day of July, one thousand nine hundred ninety-
four, the rate shall be seven and one-half percent; beginning on
the first day of July, one thousand nine hundred ninety-five, the
rate shall be nine percent; beginning on the first day of July, one
thousand nine hundred ninety-six, the rate shall be ten and one-
half percent; beginning on the first day of July, one thousand nine
hundred ninety-seven, the rate shall be twelve percent; beginning
on the first day of July, one thousand nine hundred ninety-eight,
the rate shall be thirteen and one-half percent; and beginning on
the first day of July, one thousand nine hundred ninety-nine and
thereafter, the rate shall be fifteen percent. Payment by an
employer to a member of the sum specified in the employment
contract minus the amount of the employee's deductions shall be
deemed to be a full discharge of the employer's contractual
obligation as to earnable compensation.
Each contributor shall file with the retirement board or with
the employer to be forwarded to the retirement board an enrollment
form showing the contributor's date of birth and other data needed
by the retirement board.
§18-7A-23a. Terminal benefits.
For the purposes of this section, the term "accumulated net
benefit" means the aggregate amount of all benefits paid to or on
behalf of a member. This includes, without limitation: (a) Benefits
paid to the member as an annuity; (b) any lump sum distributions
paid to the member or to any other person on account of the
member's rights to benefits from the plan; (c) survivor benefits
paid to any person or persons on account of the member's rights to
benefits from the plan; and (d) any other distributions on account
of the member's rights to benefits from the plan whether they are
paid in the nature of a refund of contributions, interest on
contributions, lump sum distributions, or annuity type benefits.
The amounts counted will be the amounts actually paid without
regard to any optional form of any annuity benefit.
For the purposes of this section, the term "accumulated
employee contributions" means all money the member has contributed
to the plan, whether the form of the contribution was after tax
deductions from wages, before tax deductions from wages, direct
remittance by the member to repay contributions and interest
previously distributed and direct remittance by the member to pay imputed contributions for period which were not subject to
contributions but may be counted for benefit purposes under the
plan. The term accumulated employee contributions does not include
any amount credited under the provisions of the plan as interest on
member contributions.
For the purposes of this section, the term "member's account"
means the excess of the accumulated employee contributions over the
accumulated net benefit payments at any point in time and the term
"member" includes each individual who has contributed, or will
contribute in the future, to the teachers retirement system,
including each retirant. This section provides for the payment of
the balance in the a retired member's account to be paid in the
manner described herein in the event that all claims to benefits
payable to, or on behalf of, a member expire before his or her
member account has been fully exhausted. The expiration of such
rights to benefits would be on the occasion of later of either the
death of the retired member and any and all beneficiaries who might
have a claim to regular benefit payments under the plan, for any
form of benefit. Without limitation, this would include the demise
of beneficiaries of survivor annuities and beneficiaries of any
lump sum distributions drawing benefits under a straight life
annuity, or the death of a survivor annuitant drawing benefits
under any optional form of benefit selected by the retired member.
In the event that all claims to benefits payable to, or on behalf of, a retired member expire, and the accumulated employee
contributions exceed his or her the accumulated net benefit
payments paid to or on behalf of the retired member, the balance in
the retired member's account shall be paid to the person or persons
as the retired member has nominated by written designation duly
executed and filed with the board of trustees. If there be no
designated person or persons surviving the retired member following
the expiration of such claims, the excess of the accumulated
employee contributions over the accumulated net benefit, if any,
shall be paid to his or her the retired member's estate. In no case
may the plan retain any amount of the accumulated employee
contributions remaining in the member's account, but it shall
retain interest earned on the same accumulated employee
contributions in the instance of a member's or beneficiary's post-
retirement death. Provided, That the provisions of this section
shall be retroactive to all members who entered retirement status
on or after the ninth day of June, two thousand.
§18-7A-25. Eligibility for retirement allowance.
Any member who has attained the age of sixty years or who has
had thirty-five years of total service as a teacher in West
Virginia, regardless of age, shall be eligible for an annuity. No
new entrant nor present member shall be eligible for an annuity,
however, if either has less than five years of service to his or
her credit.
Any member who has attained the age of fifty-five years and
who has served thirty years as a teacher in West Virginia shall be
eligible for an annuity.
Any member who has served at least thirty but less than
thirty-five years as a teacher or nonteaching member in West
Virginia and is less than fifty-five years of age shall be eligible
for an annuity, but the same shall be the reduced actuarial
equivalent of the annuity the member would have received if such
member were age fifty-five at the time such annuity was applied
for.
The request for any annuity shall be made by the member in
writing to the retirement board, but in case of retirement for
disability, the written request may be made by either the member or
the employer.
A member shall be eligible for annuity for disability if he or
she satisfies the conditions in either subdivision (a) or
subdivision (b) and meets the conditions of subdivision (c) as
follows:
(a) His or her service as a teacher or nonteaching member in
West Virginia must total at least ten years, and service as a
teacher or nonteaching member must have been terminated because of
disability, which disability must have caused absence from service
for at least six months before his or her application for
disability annuity is approved.
(b) His or her service as a teacher or nonteaching member in
West Virginia must total at least five years, and service as a
teacher or nonteaching member must have been terminated because of
disability, which disability must have caused absence from service
for at least six months before his or her application for
disability annuity is approved and said disability is a direct and
total result of an act of student violence directed toward the
member.
(c) An examination by a physician or physicians selected by
the retirement board must show that the member is at the time
mentally or physically incapacitated for service as a teacher, that
for such service the disability is total and likely to be
permanent, and that he or she should be retired in consequence
thereof.
Continuance of the disability of the retired teacher member
shall be established by medical examination, as prescribed in the
preceding paragraph, annually for five years after retirement, and
thereafter at such times as the retirement board may require.
Effective the first day of July, one thousand nine hundred ninety-
eight, a member who has retired because of a disability may select
an option of payment under the provisions of section twenty-eight
of this article: Provided, That any option selected under the
provisions of section twenty-eight of this article shall be in all
respects the actuarial equivalent of the straight life annuity benefit the disability retiree receives or would receive if the
options under section twenty-eight of this article were not
available and that no beneficiary or beneficiaries of the
disability annuitant may receive a greater benefit, nor receive any
benefit for a greater length of time, than such beneficiary or
beneficiaries would have received had the disability retiree not
made any election of the options available under said section
twenty-eight. In determining the actuarial equivalence, the board
shall take into account the life expectancies of the member and the
beneficiary: Provided, however, That the life expectancies may at
the discretion of the board be established by an underwriting
medical director of a competent insurance company offering
annuities. Payment of the disability annuity provided in this
article shall cease immediately if the retirement board finds that
the disability of the retired teacher no longer exists, or if the
retired teacher refuses to submit to medical examination as
required by this section.
§18-7A-26. Computation of annuities.
Annuitants whose annuities were approved by the retirement
board effective before the first day of July, one thousand nine
hundred eighty, shall be paid the annuities which were approved by
the retirement board.
Annuities approved by the board effective after the thirtieth
day of June, one thousand nine hundred eighty, shall be computed as provided herein.
Upon establishment of eligibility for a retirement allowance,
a member shall be granted an annuity which shall be the sum of the
following:
(a) Two percent of the member's average salary multiplied by
his or her total service credit as a teacher. In this paragraph
"average salary" shall mean the average of the highest annual
salaries received by the member during any five years contained
within his or her last fifteen years of total service credit:
Provided, That the highest annual salary used in this calculation
for certain members employed by the West Virginia higher education
policy commission under its control shall be four thousand eight
hundred dollars, as provided by section fourteen-a of this article
and chapter;
(b) The actuarial equivalent of the voluntary deposits of the
member in his or her individual account up to the time of his or
her retirement, with regular interest.
The disability annuities of all teachers retired for
disability shall be based upon a disability table prepared by a
competent actuary approved by the retirement board.
Upon the death of an annuitant who qualified for an annuity as
the surviving spouse of an active member or because of permanent
disability, the estate of the deceased or beneficiary designated
for such purpose, shall be paid the difference, if any, between the member's contributions with regular interest thereon, and the sum
of the annuity payments. Upon the death of a spouse who was named
as the member's survivor, a retirant may elect an annuity option
approved by the retirement board in an amount adjusted on a fair
basis to be of equal actuarial value as the annuity prospectively
in effect relative to the surviving member at the time the new
option is elected.
All annuities shall be paid in twelve monthly payments. In
computing the monthly payments, fractions of a cent shall be deemed
a cent. The monthly payments shall cease with the payment for the
month within which the beneficiary dies, and shall begin with the
payment for the month succeeding the month within which the
annuitant became eligible under this article for the annuity
granted; in no case, however, shall an annuitant receive more than
four monthly payments which are retroactive after the board
receives his or her application for annuity. Beginning with the
first day of July, one thousand nine hundred ninety-four, the
monthly payments shall be made on the twenty-fifth day of each
month, except the month of December, when the payment shall be made
on the eighteenth day of December. If the date of payment falls on
a holiday, Saturday or Sunday, then the payment shall be made on
the preceding workday.
In case the retirement board receives data affecting the
approved annuity of a retired teacher, the annuity shall be changed in accordance with the data, the change being effective with the
payment for the month within which the board received the new data.
Any person who has attained the age of sixty-five and who has
served at least twenty-five years as a teacher prior to the first
day of July, one thousand nine hundred forty-one, shall be eligible
for prior service credit and for prior service pensions as
prescribed in this section.
§18-7A-34. Loans to members.
A member of the retirement system upon written application may
borrow from his or her individual account in the teachers
accumulation fund, subject to these restrictions:
(1) Loans shall be made in multiples of ten dollars, the
minimal loan being one hundred dollars and the maximum being eight
thousand dollars: Provided, That the maximum amount of any loan
when added to the outstanding balance of all other loans shall not
exceed the lesser of the following: (a) Fifty Eight thousand
dollars reduced by the excess (if any) of the highest outstanding
balance of loans during the one-year period ending on the day
before the date on which the loan is made, over the outstanding
balance of loans to the member on the date on which the loan is
made; or (b) fifty percent of the member's contributions to his or
her individual account in the teachers accumulations fund:
Provided, however, That if the total amount of loaned money
outstanding exceeds forty million dollars, the maximum shall not exceed three thousand dollars until the retirement board determines
that loans outstanding have been reduced to an extent that
additional loan amounts are again authorized.
(2) Interest charged on the amount of the loan shall be six
percent per annum, or a higher rate as set by the retirement board:
Provided, That interest charged shall be commercially reasonable in
accordance with the provisions of section 72(p)(2) of the Internal
Revenue Code, and the federal regulations issued thereunder. If
repayable in installments, the interest shall not exceed the annual
rate so established upon the principal amount of the loan, for the
entire period of the loan, and such charge shall be added to the
principal amount of the loan. The minimal interest charge shall be
for six months.
(3) No member shall be eligible for more than one outstanding
loan at any time.
(4) If a refund is payable to the borrower or his or her
beneficiary before he or she repays the loan with interest, the
balance due with interest to date shall be deducted from such refund.
(5) From his or her monthly salary as a teacher the member
shall pay the loan and interest by deductions which will pay the
loan and interest in substantially level payments in not more than
sixty nor less than six months. Upon notice of loan granted and
payment due, the employer shall be responsible for making such
salary deductions and reporting them to the retirement board. At the option of the retirement board, loan deductions may be
collected as prescribed herein for the collection of members'
contribution, or may be collected through issuance of warrant by
employer. If the borrower decides to make loan payments while not
paid for service as a teacher, the retirement board must accept
such payments.
(6) The entire unpaid balance of any loan, and interest due
thereon, shall, at the option of the retirement board, become due
and payable without further notice or demand upon the occurrence
with respect to the borrowing member of any of the following events
of default: (A) Any payment of principal and accrued interest on a
loan remains unpaid after the same becomes due and payable under
the terms of the loan or after such grace period as may be
established in the discretion of the retirement board; (B) the
borrowing member attempts to make an assignment for the benefit of
creditors of his or her refund or benefit under the retirement
system; or (C) any other event of default set forth in rules
promulgated by the retirement board in accordance with the
authority granted pursuant to section one, article ten-d, chapter
five of this code: Provided, That any refund or offset of an unpaid
loan balance shall be made only at the time the member is entitled
to receive a distribution under the retirement system.
(7) Loans shall be evidenced by such form of obligations and
shall be made upon such additional terms as to default, prepayment, security, and otherwise as the retirement board may determine.
(8) Notwithstanding anything herein to the contrary, the loan
program authorized by this section shall comply with the provisions
of section 72(p)(2) and section 401 of the Internal Revenue Code,
and the federal regulations issued thereunder, and accordingly, the
retirement board is authorized to: (a) Apply and construe the
provisions of this section and administer the plan loan program in
such a manner as to comply with the provisions of section 72(p)(2)
and section 401 of the Internal Revenue Code and the federal
regulations issued thereunder; (b) adopt plan loan policies or
procedures consistent with these federal law provisions; and (c)
take such actions as it deems necessary or appropriate to
administer the plan loan program created hereunder in accordance
with these federal law provisions. The retirement board is further
authorized in connection with the plan loan program to take any
actions that may at any time be required by the Internal Revenue
Service regarding compliance with the requirements of section
72(p)(2) or section 401 of the Internal Revenue Code, and the
federal regulations issued thereunder, notwithstanding any
provision in this article to the contrary.
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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