Senate Bill No. 486
(By Senators Hunter and White)
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[Introduced February 7, 2007; referred to the Committee on
Pensions; and then to the Committee on Finance.]
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A BILL to repeal §18-7C-8 of the Code of West Virginia, 1931, as
amended; and to amend and reenact §18-7C-6 of said code,
relating to providing a one-time option to certain members of
the Defined Contribution Retirement System to opt into the
State Teachers Retirement System.
Be it enacted by the Legislature of West Virginia:
That §18-7C-8 of the Code of West Virginia, 1931, as amended,
be repealed; and that §18-7C-6 of said code be amended and
reenacted to read as follows:
ARTICLE 7C. MERGER OF TEACHERS' DEFINED CONTRIBUTION RETIREMENT
SYSTEM WITH STATE TEACHERS' RETIREMENT SYSTEM.
§18-7C-6. Conversion of assets from Defined Contribution
Retirement System to State Teachers' Retirement
System; contributions; loans.
(a) If a majority of members voting elect to merge the Defined Contribution Retirement System into the State Teachers Retirement
System:
(1) The consolidation and merger is governed by the provisions
of this article;
(2) The Defined Contribution Retirement System does not exist
after the thirtieth day of June, two thousand six; and
(3) All members of that system become members of the State
Teachers Retirement System as provided in this article.
(b) Following the election, if the vote is in favor of the
merger, the board shall transfer all properties held in the Defined
Contribution Retirement System's Trust Fund to the State Teachers
Retirement System. On or before the first day of October, two
thousand seven, a member of the Defined Contribution Retirement
System shall have a one-time option to transfer into the State
Teachers' Retirement System. The option must be exercised in
writing, signed by the member and be received by the retirement
board not later than the thirtieth day of September, two thousand
seven. A member failing to exercise the one-time option shall
remain in the Defined Contribution Retirement System permanently.
A member making an election shall remain in the retirement system
elected permanently.
(c) (b) To receive full credit in the State Teachers'
Retirement System for service in the Defined Contribution
Retirement System for which assets are transferred, members shall pay into the State Teachers' Retirement System a one and one-half
percent contribution. This contribution shall be calculated as one
and one-half percent of the member's estimated total earnings for
which assets are transferred. Except as otherwise provided in this
section, each member shall pay the contribution required no later
than the thirtieth day of June, two thousand seven eight.
(1) For a member contributing to the Defined Contribution
Retirement System at any time during the two thousand five fiscal
year and commencing membership in the State Teachers' Retirement
System on or after the first day of July, two thousand six seven:
(A) The estimated total earnings shall be calculated based on
the member's salary and the member's age nearest birthday on the
thirtieth day of June, two thousand five six;
(B) This calculation shall apply both an annual backward
salary scale from that date for prior years' salaries and a forward
salary scale for the salary for the two thousand six seven fiscal
year.
(2) For a member not contributing to the Defined Contribution
Retirement System during the two thousand five six fiscal year:
(A) The estimated total earnings shall be calculated based on
the member's salary and the member's age nearest birthday on the
member's date of rehire.
(B) This calculation shall apply a backward salary scale from
the member's date of rehire for prior years' salaries.
(3) The calculations in subdivisions (1) and (2) of this
subsection are based upon the salary scale assumption applied in
the West Virginia Teachers' Retirement System Actuarial Valuation
as of the first day of July, two thousand four, prepared for the
Consolidated Public Retirement Board. This salary scale shall be
applied regardless of breaks in service.
(d) (c) The board shall make available to each member a loan
for the purpose of paying all or part of the one and one-half
percent contribution required in this section. The loan shall be
offered in accordance with the provisions of section thirty-four,
article seven-a of this chapter.
(1) Notwithstanding any provision of this code, rule or policy
of the board to the contrary, the interest rate on any such loan
may not exceed seven and one-half percent per annum. The amount
total borrowed may not exceed twelve thousand dollars.
(2) In the event a loan made pursuant to this section is used
to pay the one and one-half percent, the board shall make any
necessary adjustments at the time the loan is made.
(3) Subject to the provisions of subdivision (4) of this
section, the board shall make this loan available for members until
the thirtieth day of June, two thousand seven eight.
(4) Upon returning to employment, a member who has left
employment but not withdrawn his or her funds shall pay the one and
one-half percent contribution within one year of being rehired. The member is eligible for one year following the date of rehire to
obtain a loan for paying the contribution.
(e) (d) The board shall develop and institute a payroll
deduction program for repayment of the loan established in this
section.
(f) (e) If the merger and consolidation is duly elected: If a
member elects to move into the State Teachers' Retirement System
prior to the first day of October, two thousand seven:
(1) As of the first day of July, two thousand six seven, the
members' contribution rate becomes six percent of his or her salary
or wages; and
(2) All members who make a contribution into the State
Teachers' Retirement System on or after the first day of July, two
thousand six seven, are governed by the provisions of article
seven-a of this chapter, subject to the provisions of this article.
(g) (f) Subject to the provisions of subdivision (1) of this
subsection, if a member has withdrawn or cashed out part of his or
her assets, that member will not receive credit for those moneys
cashed out or withdrawn. The board shall make a determination as
to the amount of credit a member loses based on the periods of time
and the amounts he or she has withdrawn or cashed out, which shall
be expressed as a loss of service credit.
(1) A member may repay those amounts he or she previously
cashed out or withdrew, along with interest as determined by the board, and receive the same credit as if the withdrawal or cash-out
never occurred. Such a member also shall pay the one and one-half
percent contribution to receive full credit for the cashed-out or
withdrawn amounts being repaid to the State Teachers' Retirement
System.
(2) The loan provided in this section is not available to
members to repay previously cashed out or withdrawn moneys.
(3) If the repayment occurs five or more years following the
cash-out or withdrawal, the member also shall repay any forfeited
employer contribution account balance along with interest
determined by the board.
(h) (g) Notwithstanding any provision of subsection (g) (h) to
the contrary, if a member has cashed out or withdrawn any of his or
her assets after the last day of June, two thousand one, and that
member chooses to repurchase that service after the thirtieth day
of June, two thousand six seven, the member shall repay the
previously distributed amounts and any applicable interest to the
State Teachers' Retirement System.
(i) (h) Any service in the State Teachers' Retirement System
a member has before the date of the merger is not affected by the
provisions of this article.
NOTE: The purpose of this bill is to provide a one-time
option to members of the Defined Contribution Retirement System to
opt into the State Teachers' Retirement System.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.