Bill Text: PA HB418 | 2011-2012 | Regular Session | Introduced


Bill Title: Further providing for mandatory and optional membership; and providing for State Legislators' Defined Contribution Program.

Spectrum: Strong Partisan Bill (Republican 33-2)

Status: (Introduced - Dead) 2011-02-03 - Referred to STATE GOVERNMENT [HB418 Detail]

Download: Pennsylvania-2011-HB418-Introduced.html

  

 

    

PRINTER'S NO.  384

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

418

Session of

2011

  

  

INTRODUCED BY KRIEGER, VULAKOVICH, CUTLER, EVANKOVICH, MUSTIO, QUIGLEY, SCHRODER, METCALFE, AUMENT, ROAE, HAHN, TALLMAN, DUNBAR, HUTCHINSON, REESE, MARSHALL, MULLERY, GROVE, CHRISTIANA, MURT, HARHART, SIMMONS, BLOOM, BARRAR, EVERETT, SACCONE, GABLER, BENNINGHOFF AND PYLE, FEBRUARY 3, 2011

  

  

REFERRED TO COMMITTEE ON STATE GOVERNMENT, FEBRUARY 3, 2011  

  

  

  

AN ACT

  

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Amending Title 71 (State Government) of the Pennsylvania

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Consolidated Statutes, further providing for mandatory and

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optional membership; and providing for State Legislators'

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Defined Contribution Program.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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Section 1.  Section 5102 of Title 71 of the Pennsylvania

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Consolidated Statutes is amended by adding a definition to read:

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§ 5102.  Definitions.

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The following words and phrases as used in this part, unless

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a different meaning is plainly required by the context, shall

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have the following meanings:

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* * *

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"State Legislators' Defined Contribution Program."  The

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defined contribution program established under Ch. 56 (relating

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to State Legislators' Defined Contribution Program).

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* * *

 


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Section 2.  Section 5301(a)(3) and (c) of Title 71 are

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amended and subsection (a) is amended by adding paragraphs to

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read:

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§ 5301.  Mandatory and optional membership.

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(a)  Mandatory membership.--Membership in the system shall be

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mandatory as of the effective date of employment for all State

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employees except the following:

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* * *

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(3)  Members of the General Assembly, other than members

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of the General Assembly described under paragraphs (17) and

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(18).

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* * *

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(17)  Any person who is not a member of the General

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Assembly on November 30, 2012, and who becomes a member of

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the General Assembly on or after December 1, 2012.

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(18)  Any person who is a member of the General Assembly

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on November 30, 2012, and who is reelected to serve as a

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member of the General Assembly beginning on or after December

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1, 2012.

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* * *

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(c)  Prohibited membership.--

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(1)  The State employees listed in subsection (a)(12),

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(13), (14) [and (15)], (15) and (17) shall not have the right

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to elect membership in the system.

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(2)  A member of the General Assembly described under

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subsection (a)(18) shall have no right to be an active member

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of the system and accrue credited service for State service

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as a member of the General Assembly subsequent to November

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30, 2012.

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* * *

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Section 3.  Title 71 is amended by adding a chapter to read:

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CHAPTER 56

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STATE LEGISLATORS' DEFINED CONTRIBUTION PROGRAM

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Sec.

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5601.  Definitions.

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5602.  Establishment.

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5603.  State Legislators' Defined Contribution Program.

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5604.  Powers and duties of board.

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5605.  Prohibited interests.

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5606.  Investments and expenses.

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5607.  Trust fund.

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5608.  Election period.

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5609.  Participant contributions.

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5610.  Employer contributions.

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5611.  Vesting.

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5612.  Prohibition.

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§ 5601.  Definitions.

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The following words and phrases when used in this chapter

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shall have the meanings given to them in this section unless the

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context clearly indicates otherwise:

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"Participant."  A qualified employee who elects to

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participate in the State Legislators' Defined Contribution

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Program.

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"Program."  The State Legislators' Defined Contribution

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Program.

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"Qualified employee."  Any of the following:

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(1)  A person who is not a member of the General Assembly

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on November 30, 2012, and who becomes a member of the General

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Assembly on or after December 1, 2012.

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(2)  A person who is a member of the General Assembly on

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November 30, 2012, and who is reelected to serve as a member

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of the General Assembly beginning on or after December 1,

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2012.

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"Trust fund."  The trust created under section 5607 (relating

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to trust fund).

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§ 5602.  Establishment.

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The State Legislators' Defined Contribution Program is

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established in accordance with this chapter.

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§ 5603.  State Legislators' Defined Contribution Program.

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The board shall administer the program, which shall be a

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defined contribution retirement program for participants. The

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board shall permit qualified employees to elect to participate

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in the program. The benefits to be provided for or on behalf of

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participants in the program shall be provided through

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participant-directed investments, in accordance with IRC §

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401(a). Participants and employers shall contribute to the

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program in accordance with sections 5609 (relating to

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participant contributions) and 5610 (relating to employer

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contributions).

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§ 5604.  Powers and duties of board.

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In order to administer the program, the powers and duties of

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the board shall include all of the following:

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(1)  Entering into written agreements with financial or

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other organizations to administer the program for

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participants and to invest funds held under the program. The

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program and any written agreement shall comply with the IRC,

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including the plan qualification requirements imposed on

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governmental plans under IRC § 401(a).

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(2)  Establishing procedures whereby qualified employees

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may elect to participate in the program and participants may

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change their investment choices on a periodic basis, as

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determined by the board, which shall not be less frequently

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than quarterly.

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(3)  Arranging for a deduction, from the compensation of

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participants, of participant contributions to the program.

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(4)  Establishing standards and criteria for selection by

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the board of the financial institutions, insurance companies

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or other organizations that may be qualified as managers, on

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behalf of the board, of funds accumulated under the program

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on behalf of any participant.

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(5)  Establishing standards and criteria for providing

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options to qualified employees and participants concerning

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the method of investing amounts accumulated under the

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program. The investment options shall represent a broad cross

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section of asset classes and risk profiles and shall include

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lifestyle funds that are based upon age and projected

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retirement date.

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(6)  Establishing procedures for informing qualified

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employees and participants of specific options offered by

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qualified managers.

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(7)  Designing a comprehensive, balanced and impartial

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educational program to assist qualified employees and

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participants in their choice of investment options under the

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program, which shall include retirement planning education

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and financial planning guidance on matters such as investment

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diversification, investment risks, investment costs and asset

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allocation.

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(8)  Establishing standards and criteria for the

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disclosure to qualified employees and participants of the

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anticipated and actual income attributable to the amounts,

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property and rights and all fees, costs and charges to be

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made against the amounts accumulated to cover the costs of

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administering and managing the funds.

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(9)  Establishing a process for election to participate

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in the program.

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(10)  Performing an annual review of any qualified fund

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manager for the purpose of assuring it continues to meet all

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standards and criteria established.

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(11)  Allowing for rollovers into the program from plans

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of other employers, regardless of the employer being a

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private employer or a public employer.

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(12)  Allowing a former participant to maintain his or

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her account within the program.

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(13)  Establishing procedures whereby any participant may

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do one of the following:

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(i)  Withdraw accumulated amounts in cases of

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financial hardship or separation of a participant from

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State service or as otherwise permitted under the IRC.

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(ii)  Dispose of a participant's account under a

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domestic relations order unless in conflict with the IRC.

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(14)  Administering the program in compliance with the

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IRC.

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(15)  Promulgating regulations necessary to administer

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this chapter.

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(16)  Establishing procedures to provide for the lawful

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payment of benefits.

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§ 5605.  Prohibited interests.

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No member or employee of the board shall have any direct or

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indirect financial interest in any of the investment products

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that are made available to participants under the program. 

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§ 5606.  Investments and expenses.

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(a)  Loss.--The board shall not be responsible for any

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investment loss incurred in the program or for failure of any

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investment to earn any specific or expected return or to earn as

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much as any other investment opportunity, whether or not the

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other investment opportunity was offered to participants in the

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program. The expenses arising from allowing qualified employees

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to elect to participate in the program and participants to

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choose a fund manager, deduct from compensation amounts

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contributed under the program and transfer to the fund manager

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amounts so deducted shall be borne by the board. All other

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expenses arising from the administration of the program shall be

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assessed against the accounts created on behalf of participants

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either by the fund managers or by the board.

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(b)  Investment.--Investment of contributions by any

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corporation, institution, insurance company or custodial bank

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that the board has approved shall not be unreasonably delayed

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and the investment of contributions shall not be delayed more

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than 30 days from the date of payroll deduction to the date that

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funds are invested. Any interest earned on the funds pending

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investment shall be allocated to the Commonwealth and credited

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to the accounts of participants who are then participating in

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the program unless the interest is used to defray administrative

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costs and fees that would otherwise be required to be borne by

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participants who are then participating in the program.

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§ 5607.  Trust fund.

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(a)  Establishment.--All assets and income that have been or

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shall be withheld by the employer in accordance with this

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chapter shall be held in trust in any funding vehicle permitted

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by applicable provisions of the IRC for the exclusive benefit of

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the program's participants and their beneficiaries until the

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time when the funds are distributed to the participant or the

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participant's beneficiary in accordance with the terms of the

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agreement between the participant and the board. All such assets

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and income withheld by the employer shall be held in trust as

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set forth in this subsection in a special fund created within

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the State Treasury of which the State Treasurer shall be

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custodian. The assets of the program shall be held in trust for

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the exclusive benefit of the program's participants and

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beneficiaries and for the payment of reasonable expenses of the

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program in accordance with section 5606 (relating to investments

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and expenses) and IRC § 401.

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(b)  Trustees.--The members of the board shall be the

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trustees of the trust established under subsection (a).

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(c)  Attachment.--Notwithstanding any other provision of law,

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any benefit or interest available under the program, any right

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to receive or direct payments under the program or any

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distribution of payment made under the program shall not, except

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as expressly specified by the program, be subject to assignment,

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alienation, garnishment, attachment, transfer, anticipation,

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sale, mortgage, pledge, hypothecation, commutation, execution or

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levy, whether by voluntary or involuntary act of any interested

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person.

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§ 5608.  Election period.

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A qualified employee may elect to participate in the program

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by filing written notice with the board, in accordance with

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procedures established by the board under section 5604(2)

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(relating to powers and duties of board) within 90 days after

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the date on which he or she become a qualified employee.

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§ 5609.  Participant contributions.

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1

Regular participant contributions shall be made to the

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program on behalf of each participant for current service in an

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amount equal to a percentage of the participant's pensionable

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compensation. The employer shall cause participant contributions

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for current service to be made and deducted from each payroll.

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Participants may elect to contribute to the program on their

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behalf to the extent permitted by law.

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§ 5610.  Employer contributions.

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The General Assembly shall make payments to the trust fund on

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behalf of the participant. The amount of the payments shall

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match the contribution made by the participant under section

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5609 (relating to participant contributions) dollar for dollar,

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but shall not exceed 4% of the participant's pensionable

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earnings.

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§ 5611.  Vesting.

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A participant shall be vested after completing three years of

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service as a member of the General Assembly during which he or

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she is a participant in the program with respect to employer

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contributions paid on behalf of the participant to the program

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plus interest and earnings on the employer contributions but

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minus investment fees and administrative charges.

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§ 5612.  Prohibition.

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No qualified employee may make an election to participate in

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the program prior to December 1, 2012.

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Section 4.  This act shall take effect in 60 days.

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