SB 97 Text

Introduced Version Senate Bill 97 History

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sb97 intr Senate Bill No. 97
(By Senators Jenkins, Edgell and Bowman)
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[Introduced February 9, 2005; referred to the Committee
on Pensions; and then to the Committee on Finance.]
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A BILL to amend and reenact §18-7B-7, §18-7B-9, §18-7B-11 and §18-7B-16 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new section, designated §18-7B-20, all relating to the rights of members of the Teachers Defined Contribution Retirement System; clarifying membership; permitting periodic payment distributions; prohibiting involuntary distributions; clarifying service credit for vesting and suspension account; and clarifying forfeiture money payment.

Be it enacted by the Legislature of West Virginia:
That §18-7B-7, §18-7B-9, §18-7B-11 and §18-7B-16 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code be amended by adding thereto a new section, designated §18-7B-20, all to read as follows:
ARTICLE 7B. TEACHERS DEFINED CONTRIBUTION RETIREMENT SYSTEM.

§18-7B-7. Participation in teachers defined contribution retirement system; limiting participation in existing teachers retirement system.

(a) Beginning the first day of July, one thousand nine hundred ninety-one, and except as provided ~~for~~ in this section, the teachers defined contribution system shall be the single retirement program for all new employees whose employment commences on or after that date and all new employees are required to participate as a condition of employment. No additional new employees except as may be provided ~~for~~ in this section may be admitted to the existing teachers retirement system.
(b) Members of the existing teachers retirement system whose employment continues beyond the first day of July, one thousand nine hundred ninety-one, and those whose employment was terminated after the thirtieth day of June, one thousand nine hundred ninety-one, under a reduction in force are not affected by subsection (a) of this section and shall continue to contribute to and participate in the existing teachers retirement system without a change in plan provisions or benefits.
(c) Any person who was previously a member of the teachers retirement system and who left participating employment before the creation of the defined contribution system on the first day of July, one thousand nine hundred ninety-one, and who later returned to participating employment after the effective date of this section has the right to elect to return to the existing teachers retirement system or to elect to participate in the defined contribution system. The election shall be made at the time of his or her reemployment, is irrevocable and shall be made upon forms approved by and filed with the West Virginia Consolidated Public Retirement Board.
(d) Any person who was, prior to the first day of July, one thousand nine hundred ninety-one, a member of the existing teachers retirement system who left participating employment before the creation of the teachers defined contribution system on the first day of July, one thousand nine hundred ninety-one, and who later returned to participating employment after that date and who was precluded from returning to the existing teachers retirement system as a result of prior provisions of this section, may elect, pursuant to the provisions of this section, readmission to the existing teachers retirement system: Provided, That persons who are eligible to, and who make the election to, terminate their participation in the defined contribution system and to return to participation in the existing teachers retirement system as provided ~~for~~ in this section shall make the election, on a form approved by and filed with the West Virginia Consolidated Public Retirement Board on or before the thirtieth day of June, two thousand two: Provided, however, That as a condition of the right of readmission to the existing teachers retirement system, persons making the election provided ~~for~~ in this section whose defined contribution account had not, prior to such election, been divided by a qualified domestic relations order shall pay an additional contribution to the existing teachers retirement system equal to one and one-half percent of his or her annual gross compensation earned for each year during which he or she participated in the defined contribution system and shall consent and agree to the transfer of his or her total account balance in the defined contribution system as of the most recent plan valuation immediately preceding his or her transfer to the existing teachers retirement system. For persons making the election provided ~~for~~ in this section whose defined contribution account had, prior to such election, previously been divided by a qualified domestic relations order, the cost to such person to transfer to the existing teachers retirement system shall be actuarially determined by the Consolidated Public Retirement Board. Upon verification of that person's eligibility to return to participation in the existing teachers retirement system and the tender and transfer of funds as provided ~~for~~ in this subsection, persons making this election shall receive service credit for the time the member participated in the defined contribution system as if his or her participation had been in the existing teachers retirement system: Provided further, That the right to terminate participation in the defined contribution system and to resume participation in the existing teachers retirement system as provided ~~for~~ in this section is irrevocable and shall not apply to any person who, while ~~members~~ a member of the teachers retirement system, voluntarily elected to terminate his or her membership in the teachers retirement system and to become a participant in the defined contribution system pursuant to section eight of this article.
(e) Any employee whose employment with an employer was suspended or terminated while he or she served as an officer with a statewide professional teaching association is eligible for readmission to the existing retirement system in which he or she was a member.
(f) An employee whose employment with an employer or an existing employer is suspended as a result of an approved leave of absence, approved maternity or paternity break in service or any other approved break in service authorized by the board is eligible for readmission to the existing retirement system in which he or she was a member.
(g) In all cases in which a question exists as to the right of an employee to readmission to membership in the existing teachers retirement system, the Consolidated Public Retirement Board shall decide the question.
(h) Any individual who is not a "member" or "employee" as defined by section two of this article and any individual who is a leased employee is not eligible to participate in the teachers defined contribution system. For purposes of this section, a "leased" employee means any individual who performs services as an independent contractor or pursuant to an agreement with an employee leasing organization or other similar organization. In all cases in which a question exists as to whether an individual is eligible for membership in this system, the Consolidated Public Retirement Board shall decide the question.
§18-7B-9. Members' contributions; annuity account established.
(a) Each employee who is a member of the defined contribution system shall contribute four and one-half percent of his or her gross compensation by salary reduction. Such salary reductions shall be made by the employer at the normal payroll intervals and shall be remitted within five working days to the private pension, insurance, annuity, mutual fund or other qualified company or companies designated by the board to administer the day-to-day operations of the system.
(b) All member contributions shall be immediately deposited to an account or accounts established in the name of the member and held in trust for the benefit of the member. An account agreement shall be issued to each member setting forth the terms and conditions under which contributions are received and the investment and retirement options available to the member. The board shall promulgate by the thirtieth day of June, one thousand nine hundred ninety-one, pursuant to section six of this article, rules defining the minimum requirements for the investment and retirement options to be provided to the members.
The consolidated public employees retirement board shall study the feasibility of employees making personal contributions to the defined contribution system in addition to those required by this section and the impact of the United States Internal Revenue Code of one thousand nine hundred eighty-six, as amended, upon such contributions. The results of said study and recommendations for legislation to authorize such additional payments shall be presented to the committee on pensions and retirement of each house of the Legislature on or before the first day of October, one thousand nine hundred ninety-six. (c) Such rules, to the extent not inconsistent with the applicable provisions of the Internal Revenue Code of the United States, shall provide for varied retirement options including, but not limited to:

(1) Lump sum or periodic payment distributions; (2) Joint and survivor annuities; (3) Other annuity forms in the discretion of the board;

(4) Variable annuities which gradually increase monthly retirement payments: Provided, That ~~said~~ the increased payments are funded solely by the existing current value of the member's account at the time the member's retirement payments ~~commencement~~ commenced and not, to any extent, in a manner which would require additional employer or employee contributions to any member's account after retirement or after the cessation of employment; and
(5) The instances in which, if any, distributions or loans can be made to members from their annuity account balances prior to having attained the age of fifty-five.
§18-7B-11. Termination of membership.
(a) Any member whose employment with a participating employer terminates after the completion of six complete years of employment service ~~shall be eligible to~~ may terminate his or her annuity account and receive a distribution from the member's annuity account in an amount equal to the member's contribution plus one third of the employer contributions and any earnings thereon. Any member whose employment with a participating employer terminates after the completion of nine complete years of employment service ~~shall be eligible to~~ may terminate his or her annuity account and receive a distribution from the member's annuity account in an amount equal to the member's contribution plus two thirds of the employer's contributions and any earnings thereon. Any member whose employment with a participating employer terminates after the completion of twelve complete years of employment service ~~shall be eligible to~~ may terminate his or her annuity account and receive a distribution of all funds contributed and accumulated in his or her annuity account. Any member whose employment with a participating employer terminates prior to the completion of six complete years of employment service ~~shall be eligible to~~ may terminate his or her annuity account and receive a distribution from the member's annuity account, in an amount equal to the member's contribution plus any earnings thereon: Provided, That on the death or permanent total disability of any member, that member ~~shall be eligible to~~ may terminate his or her annuity account and receive all funds contributed by any source to or accumulated in his or her annuity account.
(b)(1) Upon termination of employment, regardless of whether the member has taken a distribution of all or of a portion of his or her vested account, the remaining balance, if any, in the member's employer account ~~after the distribution~~ that is not vested shall be remitted and paid into a suspension account, ~~hereby~~ ~~created~~ continued, to be administered by the Board. The Board shall promulgate rules regarding the distribution of any balance in the special account created by this section: Provided, That any funds in the account ~~shall~~ may be used ~~solely~~ for the purpose of reducing employer contributions in future years.
(2) Any account balances remitted to the suspension account ~~herein~~ shall be maintained by the Board in ~~said~~ the suspension account in the name of the terminated employee for a period of five years following ~~initial remittance to the suspension account~~ the member's termination of employment. For each ~~said~~ terminated employee at the culmination of the ~~aforesaid~~ five-year period, the Board shall certify in writing to each contributing employer the amount of the account balances plus earnings thereon attributable to each separate contributing employers previously terminated employees' accounts which have been irrevocably forfeited due to the elapse of a five-year period since termination pursuant to section sixteen of this article.
(c) Upon certification to the several contributing employers of the aggregate account balances plus earnings thereon which have been irrevocably forfeited pursuant to this section, the several contributing employers shall be permitted in the next succeeding fiscal year or years to reduce their total aggregate contribution requirements pursuant to section seventeen of this article, for the then current fiscal year by an amount equal to the aggregate amounts irrevocably forfeited and certified as ~~such~~ to each contributing employer: Provided, That should the participating employer no longer be contributing to the defined contribution system, any funds in the account shall be paid directly to the employer.
(d) Upon the ~~utilization~~ use of the amounts irrevocably forfeited to any contributing employer as a reduction in the then current fiscal year contribution obligation and upon notification provided by the several contributing employers to the board of their intention to ~~utilize~~ use irrevocably forfeited amounts, the Board shall direct the distribution of ~~said~~ the irrevocably forfeited amounts from the suspension account to be deposited on behalf of the contributing employer to the member annuity accounts of its then current employees pursuant to section seventeen of this article: Provided, That notwithstanding any provision of this article to the contrary, when a member is or has been elected to serve as a member of the Legislature and the proper discharge of his or her duties of public office ~~require~~ requires that member to be absent from his or her teaching, nonteaching or administrative duties, the time served in discharge of his or her duties of the legislative office are credited as time served for purposes of computing service credit, regardless when this time was served: Provided, however, That the board may not require any additional contributions from that member in order for the board to credit him or her with the contributing service credit earned while discharging official legislative duties: Provided further, That nothing ~~herein~~ in this subsection may be construed to relieve the employer from making the employer contribution at the member's regular salary rate or rate of pay from that employer on the contributing service credit earned while the member is discharging his or her official legislative duties. These employer payments shall commence as of the first day of July, two thousand three: And provided further, That any member to which the provisions of this subsection apply may elect to pay to the board an amount equal to what his or her contribution would have been for those periods of time he or she was serving in the Legislature.
§18-7B-16. Years of employment service.
(a) A member of the defined contribution system who terminates employment with a participating employer and does not remove any funds from his or her ~~annuity~~ vested employee and employer account, or who removes the funds and repays them within five years after termination, and becomes reemployed with a participating employer within five years ~~shall retain his or her previous years of employment service for purposes of the provisions of section eleven of this article.~~ does not forfeit any amounts placed into the suspension account pursuant to section eleven of this article and they shall be returned to his or her employer account.
(b) All years of employment service shall be counted for vesting purposes under section eleven of this article.
§18-7B-20. Prohibition of involuntary cash-outs.
Notwithstanding any provision of this section or any legislative rule contained in series three, involuntary cash-outs to members may not be made after the thirtieth day of June, two thousand four.

NOTE: The purpose of this bill is to clarify membership requirements of members of the teachers defined contribution retirement system. Additionally the bill, all relative to the teachers defined contribution retirement system, contains provisions which: (1) Clarify nonvested employer contributions to the suspension account; (2) prohibit involuntary distributions;(3) clarify service for vesting; (4)clarify forfeiture money when the employer no longer is participating; and (5) allow periodic payment distributions to be made.

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

§18-7B-20 is new; therefore strike-throughs and underlining have been omitted.