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.