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Introduced Version Senate Bill 512 History

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Key: Green = existing Code. Red = new code to be enacted
Senate Bill No. 512

(By Senators Browning and Plymale)

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[Introduced March 9, 2009; referred to the Committee on Pensions; and then to the Committee on Finance.]

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A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §5-13A-1, §5-13A-2, §5-13A-3, §5-13A-4, §5-13A-5, §5-13A-6 and §5-13A-7, all relating to transfer from Higher Education Retirement Plan to the Public Employees Retirement System; definitions; voluntary transfers; converting assets from Higher Education Retirement Plan to Public Employees Retirement System; service credit in Public Employees Retirement System following transfer; converting assets; vesting; minimum guarantees; and transferees' eligibility to retire.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §5-13A-1, §5-13A-2, §5-13A-3, §5-13A-4, §5-13A-5, §5-13A-6 and §5-13A-7, all to read as follows:
ARTICLE 13A. TRANSFER FROM HIGHER EDUCATION RETIREMENT PLAN TO WEST VIRGINIA PUBLIC EMPLOYEES RETIREMENT SYSTEM.
§5-13A-1. DEFINITIONS.
As used in this article, unless the context clearly requires a different meaning:
(1) "Actuarial Reserve" means the Actuarial Reserve Lump Sum Value of the additional service credit being purchased by a member so electing in accordance with the provisions of section four of this article.
(2) "Actuarial Reserve Adjusted Salary" means either:
(A) For a member with a full year service credit in the fiscal year ending June 30, 2008, the member's 2008 fiscal year salary increased by seven percent;
(B) For a member with less than a full year service credit in the fiscal year ending June 30, 2008, the member's 2008 fiscal year salary annualized to a full year based on the partial year service credit increased by seven percent; or
(C) For a member without service credit in the fiscal year ending the June 30, 2008, the member's annualized contract salary in effect on December 31, 2008, increased by seven percent, or the member's annual contract salary on the date of rehire if after December 31, 2008.
(3) "Actuarial Reserve Benefit Date" means the first day of the month coincident with or next following the date at which the member attains the age of sixty, or June 30, 2010, whichever is later.
(4) "Actuarial Reserve Benefit Date Factors" mean the actuarial lump sum value factors based on a life only annuity starting on the Actuarial Reserve Benefit Date applying the 1983 Group Annuity Mortality Tables on a seventy-five percent female and a twenty-five percent male blended Unisex basis and interest at seven and one-half percent.
(5) "Actuarial Reserve Discount Factor" means the annual discount factor applied for the period between June 30, 2010 and the Actuarial Reserve Benefit Date, if any. Such factor based on the Public Employees Retirement System actuarial valuation assumptions shall estimate the impact of mortality, disability, and economic factors for such discount period by application of a net four percent discount rate.
(6) "Actuarial Reserve Lump Sum Value" means a single sum amount calculated as: A benefit of two percent multiplied by the Higher Education Retirement Plan service credit being purchased multiplied by the Actuarial Reserve Adjusted Salary; such benefit multiplied by the Actuarial Reserve Benefit Date Factors to determine the lump sum value multiplied by the Actuarial Reserve Discount Factor.
(7) "Affirmatively elect to transfer" means the voluntary execution and delivery to the Consolidated Public Retirement Board, by a member of the Higher Education Retirement Plan of a document in a form prescribed by the board that irrevocably authorizes the board to transfer the member and all the member's assets in the Higher Education Retirement Plan to the Public Employees Retirement System.
(8) "Assets" means all member contributions and employer contributions made on the member's behalf to the Higher Education Retirement Plan and earnings thereon, less any applicable fees: Provided, That if a member has withdrawn or cashed out any amounts, the amounts must have been repaid.
(9) "Board" means the Consolidated Public Retirement Board established in article ten-d of this chapter, and its employees.
(10) "Higher Education Retirement Plan" means the Higher Education Retirement Plan established in section four-a, article twenty-three, chapter eighteen of this code.
(11) "Member" means any person who has an account balance standing to his or her credit in the Higher Education Retirement Plan. The term "member" shall not include any person who has retired under the Higher Education Retirement Plan.
(12) "Public Employees Retirement System" means the Public Employees Retirement System established in article ten of this chapter.
(13) "Salary" means:
(A) For a member contributing to the Higher Education Retirement Plan during the 2008 fiscal year, the actual salary earned for the 2008 fiscal year divided by the employment service earned in the 2008 fiscal year.
(B) For a member not contributing to the Higher Education Retirement Plan during the 2008 fiscal year, the contract salary on the date of rehire.
§5-13A-2. Voluntary transfers.
Notwithstanding the provisions of law governing the Higher Education Retirement Plan, in the event a member leaves a position covered by the Higher Education Retirement Plan and becomes employed in a position covered by the Public Employees Retirement System, and in accordance with the provisions of this article, the board shall effect the voluntary transfer of members of the Higher Education Retirement Plan to the Public Employees Retirement System: Provided, That he or she returns to the Higher Education Retirement Plan the amount of assets he or she might have withdrawn or cashed out: Provided, however, That he or she has not retired under either the Public Employees Retirement System or the Higher Education Retirement Plan: Provided further, That after the effective date of this article the subsequent employment in a position covered by the Public Employees Retirement System must occur within a period of five years from and after the date on which the person left a position covered by the Higher Education Retirement Plan.
§5-13A-3. Conversion of assets from Higher Education Retirement Plan to Public Employees Retirement System; contributions.

(a) 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. To receive full credit for the cashed out or withdrawn amounts being repaid to the Public Employees Retirement System, the member also shall pay the actuarial reserve, or the one and one-half percent contribution, as the case may be, pursuant to section four of this article.
(2) 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.
(b) Notwithstanding any provision of subsection (a) to the contrary, if a member has cashed out or withdrawn any of his or her assets after June 30, 2004, and that member chooses to repurchase that service after June 30, 2009, the member shall repay the previously distributed amounts and any applicable interest to the Public Employees Retirement System.
(c) Any service in the Public Employees Retirement System a member has before the date of the transfer is not affected by the provisions of this article.
(d) The board shall take all necessary steps to see that the voluntary transfers of persons and assets authorized by this article do not affect the qualified status with the Internal Revenue Service of either retirement plan.
§5-13A-4. Service credit in Public Employees Retirement System following transfer; conversion of assets; adjustments.

(a) Any member who has affirmatively elected to transfer to the Public Employees Retirement System whose assets have been transferred from the Higher Education Retirement Plan to the Public Employees Retirement System pursuant to the provisions of this article and who has not made any withdrawals or cash outs from his or her assets is, entitled to service credit in the Public Employees Retirement System in accordance with the provisions of subsection (c) of this section.
(b) Any member who has made withdrawals or cash outs will receive service credit based upon the amounts transferred. The board shall make the appropriate adjustment to the service credit the member will receive.
(c) For any former member of the Higher Education Retirement Plan who elects to transfer to the Public Employees Retirement System based on the provisions of this article, his or her service credit in the Public Employees Retirement System is determined as follows:
(1) The member's Public Employees Retirement System credit shall be seventy-five percent of the member's Higher Education Retirement Plan service credit, less any service previously withdrawn by the member;
(2) To receive full credit in the Public Employees Retirement System for service in the Higher Education Retirement Plan for which assets are transferred, members who transfer shall pay into the Public Employees 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, plus interest of four percent per annum accumulated from the date of the member's initial participation in the Higher Education Retirement Plan.
(A) For a member contributing to the Higher Education Retirement Plan at any time during the 2009 fiscal year and commencing membership in the Public Employees Retirement System on July 1, 2009:
(i) The estimated total earnings shall be calculated based on the member's salary and the member's age nearest birthday on June 30, 2009;
(ii) 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 2009 fiscal year.
(B) The calculations in paragraph (A) of this subdivision are based upon the salary scale assumption applied in the West Virginia Public Employees System Actuarial Valuation as of July 1, 2008, prepared for the board. This salary scale shall be applied regardless of breaks in service.
(d) Notwithstanding any provision of this code to the contrary, the retirement of a member who becomes eligible to retire after the member's assets are transferred to the Public Employees Retirement System pursuant to the provisions of this article may not commence prior to September 1, 2009: Provided, That the board may not retire any member who is eligible to retire during the calendar year 2009 during the calendar year 2009 unless the member has provided a written notice to his or her employer by July 1, 2009, of his or her intent to retire.
§5-13A-5. Vesting.
Any member who works one hour or more after his or her assets are transferred to the Public Employees Retirement System pursuant to this article is subject to the vesting schedule set forth in article ten of this chapter.
§5-13A-6. Minimum guarantees.
(a) Any former member of the Higher Education Retirement Plan who works one hour or more and who has made a contribution to the Public Employees Retirement System after his or her assets are transferred to the Public Employees Retirement System pursuant to this article, is guaranteed a minimum benefit equal to his or her member contributions plus the vested portion of employer contributions made on his or her behalf to the Higher Education Retirement Plan, plus any earnings thereon, as of June 30, 2009, as stated by the board.
(b) A former member of the Higher Education Retirement Plan who works one hour or more and who has made contributions to the Public Employees Retirement System after his or her assets are transferred to the Public Employees Retirement System, upon eligibility to receive a distribution under article ten of this chapter, shall have at a minimum the following three options:
(1) The right to receive an annuity from the Public Employees Retirement System based upon the provisions of article ten of this chapter;
(2) The right to withdraw from the Public Employees Retirement System and receive his or her member accumulated contributions in the Public Employees Retirement System, plus refund interest thereon, as set forth in article ten of this chapter; or
(3) The right to withdraw and receive his or her member contributions plus the vested portion of employer contributions made on his or her behalf to the Higher Education Retirement Plan, plus any earnings thereon as of the date his or her assets are transferred to the Public Employees Retirement System pursuant to this article, as determined by the board pursuant to the vesting provisions of article ten of this chapter. This amount shall be distributed in a lump sum.
(c) Any former member of the Higher Education Retirement Plan who does not work one hour or more and who makes no contribution to the Public Employees Retirement System after his or her assets are transferred to the Public Employees Retirement System pursuant to this article, is guaranteed the receipt of the amount in his or her total vested account in the Higher Education Retirement Plan on the date of the transfer, plus interest thereon, at four percent accruing from the date of the transfer. This amount shall be distributed in a lump sum: Provided, That no benefits may be obtained under this subsection solely by the reciprocity provisions of sections three, four, and six, article thirteen of this chapter.
§5-13A-7. Transferees' eligibility to retire.
(a) For purposes of determining a transferring member's eligibility for retirement in accordance with section twenty-two, article ten of this chapter, any member who has elected to transfer to the Public Employees Retirement System pursuant to the provisions of this article shall be fully credited for his or her years of service in the Higher Education Retirement Plan: Provided, That the calculation of any transferring member's service credit in the Public Employees Retirement System following the transfer shall be determined in accordance with the provisions of section four of this article.
(b) For purposes of this section, "years of service" shall mean all years as a member of the Higher Education Retirement Plan and, in addition thereto, credits for any prior service, if any: Provided, That service previously withdrawn by a member may not be included in "years of service" unless repaid.



NOTE: The purpose of this bill is provide that any former state higher education employees who become members of the Public Employees Retirement System may transfer credit in their Higher Education Retirement Plan to the Public Employees Retirement System. The bill provides definitions; provisions for conversion of assets; service credit in the Public Employees Retirement System following transfer, vesting and minimum guarantees.

This article is new; therefore, strike-throughs and underscoring have been omitted.
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