15101211D
HOUSE BILL NO. 1890
House Amendments in [ ] -- February 5, 2015
A BILL to amend and reenact §§51.1-142.2 and 51.1-142.3 of
the Code of Virginia, relating to the Virginia Retirement System; prior service
or membership credit.
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Patron Prior to Engrossment--Delegate Jones
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Referred to Committee on Appropriations
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Be it enacted by the General Assembly of Virginia:
1. That §§51.1-142.2 and 51.1-142.3 of the Code of Virginia are
amended and reenacted as follows:
§51.1-142.2. Prior service or membership credit for certain
members; service credit for accumulated sick leave.
Certain members may purchase credit for service as provided in
this section.
A. Except as provided in subdivisions 1 and 2, in order to
receive credit for the service made available in subsection B, a member in
service shall be required to make a payment for each year, or portion thereof,
to be credited at the time of purchase, equal to five percent of his creditable
compensation or five percent of his average final compensation, whichever is
greater, unless the member in service is purchasing the service made available
in subsection B through a pre-tax or post-tax deduction, in which case the cost
to purchase each year, or portion thereof, of such service shall be five
percent of his creditable compensation.
1. A person who becomes a member on or after July 1, 2010,
or a member who does not have at least 60 months of creditable service as of
January 1, 2013, shall pay an amount equal to a rate approximating the normal
cost for the retirement program under which the member is covered, with such
rate for each retirement program to be determined by the Board, and reviewed by
the Board no less than every six years. However, if the member does not
purchase, or enter into a purchase of service contract for the service made
available in subsection B within one year from his first date of hire or within
one year of the final day of any leave of absence under subdivision B 2, as
applicable, then, for each year or portion thereof to be credited at the time
of purchase, the member shall pay an amount equal to the actuarial equivalent
cost.
2. If a member other than a member described in subdivision
1 does not purchase, or enter into a purchase of service contract for, the service
made available in subsection B within three years from his first date of hire
or within three years of the final day of any leave of absence under
subdivision B 2, as applicable, then, for each year or portion thereof to be
credited at the time of purchase, the member shall pay an amount equal to the
actuarial equivalent cost.
3. When a member requests credit for a portion of the
period, the most recent portion shall be credited. Payment may be made in a
lump sum at the time of purchase or by an additional payroll deduction. Any
number of additional deductions may be permitted at any time. Should any
additional deduction be terminated prior to purchasing the entire period that
might otherwise be credited, the member shall be credited with the number of
additional full or partial months of service for which full payment is made. If
any additional deduction is continued beyond the point at which the entire
period has been purchased, the member shall be credited with no more than the
entire period that might otherwise have been credited and the excess amount
deducted shall be refunded to the member.
Any employer may elect to pay an equivalent amount in lieu
of all member contributions required of its employees for the purpose of
service credit pursuant to this section. These contributions shall not be
considered wages for purposes of Chapter 7 (§51.1-700 et seq.), nor shall they
be considered to be salary for purposes of this chapter.
B. 1. Any member in service may purchase prior service
credit for from the following categories of service or leave: (i)
active duty military service in the armed forces of the United States,
provided that the discharge from a period of active duty status with the armed
forces was not dishonorable; (ii) creditable leave of absence for
educational purposes that was previously approved by the member's employer;
(ii) leave of absence for a serious health condition of the member or of an
immediate family member, all as defined in the Family and Medical Leave Act of
1993, 29 U.S.C. §2601 et seq., as amended, and previously certified by the
member's employer; (iii) up to one year of service credit per occurrence
of leave for any unpaid leave of absence due to the birth or adoption of a
child; (iv) service as a full-time employee of another state or of,
a public school system of another state, or a political subdivision or
public school system of this the Commonwealth or
another state, as certified by such state, public school system, or political
subdivision or public school system (iii) creditable; (v) full-time
service of a political subdivision of this state not credited to the member
under an agreement as provided for in §51.1-143.1, as certified by such
political subdivision; (iv) (vi) civilian service of the United
States; (v) creditable (vii) full-time service at a private
institution of higher education if the private institution is merged with a
public institution of higher education and graduates of the private institution
are then issued new degrees from the public institution; or (vi)
(viii) any period of time when the member was employed part time or in a
wage position by a participating employer and not otherwise eligible to
participate in the retirement system because the member was not an employee as
defined in §51.1-124.3. However, no member in service shall be allowed to
purchase more than a total of four years of service credit pursuant to this
subdivision.
2. In addition to the service credit that may be purchased
under subdivision 1, any member in service may purchase up to four years of
service credit for prior active duty military service in the armed forces of
the United States, provided that the discharge from a period of active duty
status with the armed forces was not dishonorable.
3. The service credit to be credited to a member under this
subsection shall be calculated at the ratio of one year, or portion thereof, of
service credit to one year, or portion thereof, of service purchased, except
for employment service purchased under clause (viii) of subdivision 1, which
shall be calculated at the ratio of one month of service credit for each 173
hours of service as certified by the employer.
For each year or portion thereof to be credited at the time
of purchase under this subsection, the member shall pay the approximate normal
cost of the retirement plan under which the member is covered at the time of
such purchase, as determined by the Board in its sole discretion. If the member
does not purchase, or enter into a purchase of service credit contract for, the
service made available in this subsection within the first 24 months of the
member's active service following his first date of hire or the final day of
any applicable leave of absence, as applicable, then, for each year or portion
thereof to be credited at the time of purchase, the member shall pay the
actuarial equivalent cost. To the extent the member becomes inactive during the
24 months following his first date of hire or the final day of any applicable
leave of absence, such periods shall not be included in the 24 months of active
service.
Except as otherwise required by Chapter 1223 of Title 10 of
the United States Code, as amended, no service credit may be purchased under
this section if it is included in the calculation of any retirement allowance
received or to be received by the member from this or another retirement
system, or if there is a balance in a defined contribution account that serves
as a primary retirement account related to such service.
For purposes of this subsection section,
"active duty military service" means full-time service of at least
180 consecutive days in the United States Army, Navy, Air Force, Marines, Coast
Guard, or reserve components thereof.
2. Any member (i) granted a leave of absence for
educational purposes may purchase service credit for such leave of absence, or
(ii) granted any unpaid leave of absence due to the birth or adoption of a
child may purchase up to one year of service credit per occurrence of leave.
C. B. Any member in service may purchase all
prior service credit for creditable service lost from ceasing to be a
member under this chapter, as provided in §51.1-128, because of the withdrawal
of his accumulated contributions. Notwithstanding any other provision in
this section, the cost to purchase such service shall be five percent of his
creditable compensation or five percent of his average final compensation,
whichever is greater, unless the member in service is purchasing such service
through a pre-tax or post-tax deduction, in which case the cost to purchase
each year, or portion thereof, of such service shall be five percent of his
creditable compensation, provided, however, that the applicable cost for a
person enrolled in the hybrid retirement program described in §51.1-169 shall
be four percent. If the member purchases or enters into a contract to purchase
such service within three years of the date he became eligible to purchase the
service, then the service may be purchased in a lump sum at the time of
purchase or through an additional payroll deduction. Any purchase of such
service made at a time later than such period shall be made in a lump sum at
the time of purchase. For each year or portion thereof to be credited at
the time of purchase under this subsection, the member shall pay the withdrawn
amount to be purchased plus interest accrued daily and compounded annually from
the date of withdrawal to the date of payment at the assumed rate of return
established by the Board for the actuarial valuation of the retirement system
that is in effect at the time of the purchase. The Board shall develop
guidelines and procedures for administering this subsection.
D. C. Any member in service may purchase service
credit for accumulated sick leave on his effective date of retirement based
upon such sums as the employer may provide as payment for any unused sick leave
balances. The cost of service credit purchased under this subsection shall be
the actuarial equivalent cost of such service.
E. D. Any member receiving benefits under the
Virginia Workers' Compensation Act (§65.2-100 et seq.) may, in a manner
prescribed by the Board and prior to the effective date of retirement, purchase
service credit for service that is not reported to the retirement system
by the member's employer while the member is receiving such benefits.
Notwithstanding any other provision in this section, the cost to purchase such
service shall be five percent of the member's creditable compensation.
For each year or portion thereof to be credited at the time
of purchase under this subsection, the member shall pay the approximate normal
cost of the retirement plan under which the member is covered, as determined by
the Board in its sole discretion. If the member does not purchase, or enter
into a purchase of service credit contract for, any service made available in
this subsection within the first 24 months of the member's active service
following his first date of hire or the final day of any applicable leave of
absence, then for each year or portion thereof to be credited at the time of
purchase, the member shall pay the actuarial equivalent cost. To the extent the
member becomes inactive during the 24 months following his first date of hire
or the final day of any applicable leave of absence, such periods shall not be
included in the 24 months of active service.
E. Payment may be made in a lump sum at the time of
purchase or by payroll deduction. Any number of additional deductions may be
permitted at any time. Should any deduction be terminated before the member
purchases the entire period contracted for, the member shall be credited with
the number of full or partial months of service for which full payment has been
made. If any deduction is continued after the entire period has been purchased,
the member shall be credited with no more than the amount of service for which
he was eligible and for which he paid, and the excess amount deducted shall be
refunded to the member.
F. Any employer may elect to pay an equivalent amount in
lieu of all member contributions required of its employees for the purchase of
service credit pursuant to this section. These contributions shall not be
considered wages for purposes of Chapter 7 (§51.1-700 et seq.), nor shall they
be considered salary for purposes of this chapter.
F. G. In any case where member and employer
contributions, as required under this chapter, were not made because of an
error in the payroll, personnel, or other classification system of an employer
participating in the retirement system, service that has not been credited
because of such error may be purchased on the following basis:
1. The most recent three years of service credit shall
be purchased, using applicable member and employer contribution rates and
creditable compensation in effect for such period, in a manner and at the cost
prescribed by the Board; and
2. All other years of service credit shall be
purchased by the employer shall purchase at an actuarial equivalent
cost.
G. The service credit to be credited to a member under this
section shall be calculated at the ratio of one year, or portion thereof, of
service credit to one year, or portion thereof, of service purchased, except
for part-time service purchased under clause (vi) of subdivision B 1 which
shall be calculated at the ratio of one month of service credit for each 173
hours of service as certified by the employer and as purchased by the member.
Up to a maximum of four years of service credit may be purchased for each of
clauses (i) through (vi) of subdivision B 1 and clauses (i) and (ii) of
subdivision B 2. In addition, a member in service may purchase service credit
for every year or portion thereof for service lost from cessation of membership
as described in subsection C.
Except as otherwise required by Chapter 1223 of Title 10 of
the United States Code, the service credit made available under this section
may not be purchased if, before being purchased or at the time of such purchase
pursuant to this section, the service to be purchased is service that is
included in the calculation of any retirement allowance received or to be
received by the member from this or another retirement system.
H. Any member may receive credit at no cost for service
rendered in the armed forces of the United States provided (i) the member was
on leave of absence from a covered position, (ii) the discharge from a period
of active duty with the armed forces was not dishonorable, (iii) the member has
not withdrawn his accumulated contributions, (iv) the member is not disabled or
killed while on leave without pay while performing active duty military service
in the armed forces of the United States, and (v) the member reenters service
in a covered position within one year after discharge from the armed forces. In
order to receive such service, the member must complete such forms and other
requirements as are required by the Board and the retirement system.
§51.1-142.3. Purchase of additional prior service credit by
certain school division superintendents.
A. In addition to the four years of prior service credit that
may be purchased under clause (ii) (iv) of subdivision B A
1 of §51.1-142.2, a school division superintendent appointed by a school
board pursuant to §22.1-60, with at least five years of creditable service in
the Retirement System, may purchase up to a maximum of 10 additional years of
prior service credit for creditable service of another state or of a political
subdivision, or public school system of this or another state, as certified by
such state, political subdivision, or public school system. Except as otherwise
required by Chapter 1223 of Title 10 of the United States Code, the service
credit made available under this section may not be purchased if, before being
purchased or at the time of such purchase pursuant to this section, the service
to be purchased is service that is included in the calculation of any
retirement allowance received or to be received by the member from this or any
other retirement system.
The school board that has appointed such school division
superintendent may purchase such prior service credit on behalf of the school
division superintendent.
B. The cost at the time of purchase for each additional year
of service credit (or portion thereof) pursuant to this section, shall be 10
percent of the school division superintendent's creditable compensation or 10
percent of the school division superintendent's average final compensation,
whichever is greater, provided that the service credit to be purchased is paid
for in one lump-sum payment within one year after the school division
superintendent first became eligible to purchase such service credit or by July
1, 2004, whichever is later.
A school division superintendent shall first become eligible
to purchase prior service credit under this section as follows:
1. For members in service on June 30, 2003, and July 1, 2003,
upon attaining five years of creditable service as a school division
superintendent in the Retirement System;
2. For members in service on June 30, 2003, and July 1, 2003,
who become a school division superintendent on or after July 1, 2003, upon
attaining five years of creditable service as a school division superintendent
in the Retirement System; and
3. For members not in service on June 30, 2003, upon the
member earning five years of creditable service as a school division
superintendent in the Retirement System for service performed after June 30,
2003.
C. In any case in which prior service credit pursuant to this
section has been purchased by or on behalf of a school division superintendent,
if the school division superintendent, subsequent to the date of such purchase,
does not remain in such position with the local school board for at least the
number of years purchased: (i) the Retirement System shall reduce the
creditable service credited to the school division superintendent by an amount
equivalent to the number of years of prior service purchased less the number of
years served by the person as a school division superintendent with the local
school board subsequent to the date of such purchase. Such reduction in
creditable service shall be deemed to be forfeited by the school division
superintendent for purposes of this chapter and the contributions representing
that forfeited service shall be refunded to the school division superintendent;
and (ii) the school division superintendent shall be liable to the local school
board for the amount paid by the local school board for purchasing the
forfeited prior service credit.
D. If a school division superintendent does not purchase the
prior service credit described in subsection A within the timeframe provided in
subsection B, such prior service credit may be purchased at the actuarial
equivalent cost, provided that in no case shall any person purchase more than
10 years of such prior service credit under this section.
2. That the provisions of this act shall become effective on
[ July January ] 1, 2017.
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