RULES AND REGULATIONS
Title 16--COMMUNITY AFFAIRS
MUNICIPAL RETIREMENT BOARD
[16 PA. CODE CHS. 81, 83, 85, 87 AND 91]
Revisions to Rules and Regulations
[30 Pa.B. 3168] The Municipal Retirement Board (Board) amends Chapters 81, 83, 85, 87 and 91 to read as set forth in Annex A.
Purpose of Final-Form Rulemaking
Under Executive Order 1996-1, the Board has undertaken a review of its existing rules and regulations. Based on that review, the Board proposes a number of technical and substantive amendments to its rules and regulations as set forth in Annex A.
General Comments
1. Gender neutral language. The regulations have not been updated since 1976, and generally use the masculine tense. The changes rewrite, where applicable, to gender neutral language.
2. Deletions of language in the Pennsylvania Municipal Retirement Law (53 P. S. §§ 881.101--881.502) (law). Generally, where the regulatory provisions merely repeat or restate language already contained in the law, the language was deleted as unnecessary.
3. Consolidation. Currently the regulations contain one chapter for each of the four articles of the law. Much of Chapters 85 and 87 was repetitive simply referencing the previous chapters. The revisions consolidate the regulations making all the regulations applicable to every article of the law, and deleting the repetitious sections.
Section by Section Analysis
§ 81.1. Definitions.
Active member--Added to clarify plans which use this term.
Actuarially equivalent--Technical correction.
Annuitant--Deleted because language is substantially repetitive of the law.
Beneficiary--Technical correction.
Board--No change.
Contributor--Added to clarify that the term ''contributor'' includes members not required to make member contributions to the Pennsylvania Municipal Retirement System (System).
Date of termination of service--Technical corrections and rewritten for clarity.
Inactive member--Added to clarify plans which use this term.
Intervening military service--Deleted because language is either substantially repetitive of the law or is outdated under the Uniformed Services Employment and Reemployment Rights Act (USERRA).
Law--Technical correction.
Municipal employe--Deleted as unnecessary.
Municipal fireman--Deleted as unnecessary.
Municipal policeman--Deleted as unnecessary.
Municipality--Deleted because language is either substantially repetitive of or inconsistent with the law.
New member--Deleted because it is an unused term.
Optional membership--Technical corrections.
Portability--Definition added because term is commonly used in municipality contracts.
System--Deleted because language is substantially repetitive of the law.
Vestee--Changed to vested member.
§ 81.2. Applicability of regulations--Because regulations are being consolidated to eliminate unnecessary repetition, this section is added to reflect that all regulations are applicable to all articles of the law.
§ 81.3. General powers of the Board--Deleted language substantially repetitive of the law and added clarification that the Board acts as an independent administrative board.
§ 81.4. Actuarial investigation, tables and rates--Deleted outdated language and added language consistent with the Internal Revenue Code.
§ 81.5. Information to municipalities--Deleted because language was substantially repetitive of the law.
§ 81.6. Election by municipalities to join retirement system--Deleted because language was either substantially repetitive of the law or outdated.
§ 81.7. Retirement funds and accounts--Deleted language substantially repetitive of the law and added language clarifying the various accounts maintained by the System, and clarifying a municipality's right upon withdrawal to a portion of the retired members' reserve account based upon Pottstown v. PMRS.
§ 81.9. Management and investment of fund; interest credits--Technical corrections and added language clarifying the Fund as a trust.
§ 81.10. Withdrawal provisions--Deleted municipal guarantee because language was substantially repetitive of the law and consolidated portion of § 83.14 along with additional language clarifying a withdrawing municipality's responsibility to retired members and beneficiaries, and clarifying the use of the term municipal employe for withdrawal purposes only.
§ 81.11. Contract provisions--Added term clarifying how it is determined if a contract contains an increase or decrease of benefits, and limits thereon.
§ 81.12. Existing local retirement systems--Deleted because language is either substantially repetitive of the law or outdated.
§ 81.13. Monthly payments--Deleted because language is either substantially repetitive of the law or outdated.
§ 81.14. Exemption of retirement allowance--Deleted because language is substantially repetitive of the law and conflicting with current Pennsylvania case law regarding domestic relations matters.
§ 83.3. Compulsory and optional membership--Technical corrections.
§ 83.4. Service allowance; change of employment; military service--Deleted subsections (a)--(h) because language was either substantially repetitive of the law or outdated. Deleted subsection (i) because language was substantially repetitive of the law and conflicted with USERRA.
§ 83.5. Determination of municipal liability--Deleted because language was substantially repetitive of the law.
§ 83.6. Contributions by members--Deleted subsections (a) and (b) because language was either substantially repetitive of the law or outdated. Changed subsection (c) to comply with the Internal Revenue Code.
§ 83.7. Purchase requirements for previous service--Deleted subsections (a)--(d) because language was either substantially repetitive of the Law or outdated.
§ 83.8. Superannuation retirement--Deleted because language was substantially repetitive of the law.
§ 83.9. Death benefits--Deleted because language was substantially repetitive of the law.
§ 83.10. Early retirement. Deleted because language was substantially repetitive of the law.
§ 83.11. Options on superannuation or early retirement--Deleted language substantially repetitive of the law, and rewrote subsections (b) and (c) to reflect the System's current policy and to note that the municipal portion of the benefit shall be paid in a monthly annuity.
§ 83.12. Disability retirement--Deleted subsections (a), (c) and (d) because the language is substantially repetitive of the law.
§ 83.13. Vesting--Deleted because language was substantially repetitive of the law or outdated.
§ 83.14. Withdrawal provisions--Paragraphs (1)--(9) were deleted because the language was substantially repetitive of the law. Paragraph (10) in substantial part has been moved to § 81.10 for consolidation purposes.
§ 83.15. Procedures for amending contracts--Deleted because language was substantially repetitive of the law.
Chapter 85. Municipal Firemen and Municipal Police--Deleted and consolidated.
Chapter 87. Optional Retirement Plans--Deleted and consolidated.
§ 91.1. Applicability of general rules--Technical corrections.
Statutory Authority
The Board's authority to promulgate rules and regulations for the proper administration of the System is in section 104(10) of the law (53 P. S. § 881.104(10)). The rulemaking consists of technical and substantive amendments to the Board's existing rules and regulations.
The final-form rulemaking is authorized by the Board's authority to promulgate rules and regulations as may be required for the proper administration of the System's Fund, and for the transaction of business of the Board under section 104(10) of the law.
Public Comment
The Board received no comments from the public on the proposed rulemaking.
Comments from the Senate and House Standing Committees
The Board received no comments from the Senate and House Standing Committees on the proposed rulemaking.
Comments from the Independent Regulatory Review Commission
The Board received comments from IRRC. These comments are as follows:
1. IRRC commented that the inclusion of Chapters 85 and 87 in § 81.2 is inappropriate because Chapters 85 and 87 are being deleted.
The change has been made.
2. IRRC commented that the term ''nominee registration process'' found in § 81.9(b) should be either defined or explained for clarification.
The language of § 81.9 has been changed to broadly and more clearly set forth policy to facilitate the purchase, sale and custody of securities for the Fund.
3. IRRC commented that § 81.10 should be clarified by: (1) reference to section 214 of the law (53 P. S. § 881.214); (2) placing subsection (b) before subsection (a); and (3) rewriting subsection (a).
Section 81.10 has been changed to reference section 412 of the law. Subsection (b) has been moved before subsection (a). Subsection (a) has been changed using in large part the language suggested by IRRC.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Board submitted a copy of the notice of proposed rulemaking, published at 28 Pa.B. 5249 (October 17, 1998), to IRRC and the Chairpersons of the House Local Government Committee and the Senate Local Government Committee.
In compliance with section 5(c) of the Regulatory Review Act, the agency also provided IRRC and the Committees with copies of all comments received. In preparing the final-form regulations, the agency has considered all comments from IRRC, the Committees and the public.
Under section 5.1(d) of the Regulatory Review Act (71 P.S. § 745.5a(d)), the final-form regulations were deemed approved by the House and Senate Committees on May 16, 2000. IRRC met on May 25, 2000, and approved the final-form regulations in accordance with section 5.1(e) of the Regulatory Review Act.
Fiscal Impact and Paperwork Requirements
The final-form regulations do not impose increased costs or increased paperwork requirements on the Commonwealth, local governments, the private sector or the general public.
Persons Affected
The final-form regulations affect members of the System and municipalities with pension plans in the System.
Effective Date
The final-form regulations will be effective upon publication in the Pennsylvania Bulletin.
Sunset Date
A sunset date is not being established for these regulations because they are necessary for the administration of the substantive provisions of the law. The Board will closely monitor these regulations for their effectiveness.
Further Information
Individuals who need information about the final-form regulations may contact James B. Allen, Secretary, Municipal Retirement System, P. O. Box 1165, Harrisburg, PA 17108-1165.
Findings
The Board finds that:
(1) Public notice of the Board's intention to adopt the amendments was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1202 and 1202), and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The final-form regulations are necessary and appropriate for the administration of the Pennsylvania Municipal Retirement Fund.
Order
The Board, acting under it authorizing statute, orders that:
(a) The regulations of the Board, 16 Pa. Code Chapters 81, 83, 85, 87 and 91, are amended by amending §§ 81.1--81.4, 81.7, 81.9--81.11, 83.3, 83.6, 83.7, 83.11, 83.12 and 91.1 and deleting §§ 81.5, 81.6, 81.12--81.14, 83.4, 83.5, 83.8--83.10, 83.13, 83.14, 85.1, 85.3--85.17 and 87.1--87.13 to read as set forth in Annex A.
(b) The Board shall submit this order and Annex A to the Office of Attorney General and Office of General Counsel as required by law.
(c) The Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
JAMES B. ALLEN,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 30 Pa.B. 2688 (June 3, 2000).)
Fiscal Note: Fiscal Note 49-1 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 16. COMMUNITY AFFAIRS
PART III. MUNICIPAL RETIREMENT BOARD
CHAPTER 81. GENERAL PROVISIONS § 81.1. Definitions.
The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:
Accumulated deductions--The total amount deducted from the salary or compensation of the contributor plus regular interest credited thereon, based on a benefit plan selected and as determined by an actuary, and shall also include payments for arrearages for reinstatement or purchase of service, as otherwise permitted by law.
Active member--A municipal employe, municipal firefighter or municipal police officer who is earning credited service in a System pension plan as a result of employment with a municipality that has enrolled in the System.
Actuarially equivalent--Annuities or lump sum amounts of equal present value determined by appropriate actuarial factors based on mortality tables and interest rates currently adopted and used by the Board.
Beneficiary--A person last designated in writing by a contributor or a retired member, or if one is not so designated, the estate of the member or next of kin under 20 Pa.C.S. § 3101 (relating to payments to family and funeral directors), to the extent applicable.
Board--The Pennsylvania Municipal Retirement Board required by the law to administer the System.
Contributor--The term includes a member who has a member's account with the System, regardless of whether the account contains accumulated deductions.
Date of termination of service--
(i) For an active member, the last day of employment in a status covered by the eligibility requirements of the pension plan.
(ii) For an inactive member, the date on which formal action is taken by the employer to separate the member from employment.
Effective date of disability retirement--The date following the last day for which compensation was paid or the date on which the member filed an effective application for disability benefits, whichever is later.
Inactive member--A municipal employe, municipal firefighter or municipal police officer who is enrolled in the System but is no longer earning credited service in a System pension plan as a result of separation from or leave from employment.
Law--The Pennsylvania Municipal Retirement Law (53 P. S. §§ 881.101--881.502).
Optional membership--Shall be available to those categories of employes authorized by law, resolution or ordinance to elect or refrain from electing membership.
(i) If they choose not to join, the declination of membership shall apply for the period of time the employe serves continuously in that optional category.
(ii) If there is a break in service and the employe returns, the member may not be permitted to purchase optional membership time previously declined, but may be a member for future optional service, if the employe so chooses.
(iii) If the employe returns to service when there is mandatory membership, the member shall be required to join the plan, on a prospective basis only.
Portability--The condition by which a member leaves the employ of a System administered plan and within 1 year of the date of termination of service enters into the employ of another System administered plan and the member elects to transfer his previously accrued service credits to the new employer, subject to provision of municipalities' contracts.
Prior service--This may not apply to municipal employes or officers who are returning to service in those municipalities which had optional plans in which the member chose not to enroll. The term includes service to the municipality prior to the effective date of the plan unless the municipality elects to limit credit for the service.
Regular interest--The rate fixed by the Board, on the basis of earnings on investments and, as applied to members' contributions, means interest compounded annually to be calculated as follows: The sum of the accumulated deductions at the conclusion of the previous year and the mean balance of the current year's contributions multiplied by the regular interest amount then in existence for the fractional part of a year for which the contributor was a member.
Retired member--A former municipal employe, municipal firefighter or municipal police officer, or the beneficiary or survivor annuitant of a municipal employe, municipal firefighter or municipal police officer who is entitled to a monthly benefit payment from the retired member's reserve account of the System.
System--The Pennsylvania Municipal Retirement System created by the law.
Vested member--A member after a stipulated age or with sufficient years of service, or both, based on the plan in which the member is enrolled, who has terminated municipal service and has elected to leave total accumulated deductions in the Fund and to defer receipt of an annuity representing both the member's and municipal benefits, provided the election is made within 90 days after the effective date of termination of service.
§ 81.2. Applicability of regulations.
This chapter and Chapters 83 and 91 (relating to municipal employes) shall be equally applicable under all articles of the law.
§ 81.3. General powers of the Board.
The Board will act as an independent administrative board with all of the powers specified in section 104 of the law (53 P. S. § 881.104).
§ 81.4. Actuarial investigation, tables and rates.
(a) Board adopted actuarial assumptions and tables shall be a part of and applied consistently to all System administered plans.
(b) In the preparation of actuarial studies intended to be used for the possible enrollment of plans into the System, the same actuarial assumptions and tables shall be used as are applied to existing, enrolled plans.
§ 81.5. [Reserved]
§ 81.6. [Reserved].
§ 81.7. Retirement funds and accounts.
(a) The Board will consolidate for investment purposes the assets of the various plans. The Board will account separately for each plan's assets in a municipal account and each individual active member, inactive member and vested member's assets in a member's account. The Board maintains pooled accounts for retired members (the Retired Members' Reserve Account) and for the funding of disability benefits (the disability reserve).
(b) When a municipality withdraws the administration of its plan from the System, the municipality shall only be entitled to the assets credited to the plan's municipal account and the plan's members' accounts in accordance with the provisions of the law. Assets that are actuarially determined by the Board's actuary to be matched to a withdrawing plan's retired members as of the effective date of withdrawal will also be returned to the plan in accordance with the law provided there are sufficient funds in the retired member's reserve account to meet the actuarially determined liability of all retired members of the System, as of the date of withdrawal; otherwise payment shall be on a prorated basis.
§ 81.9. Management and investment of Fund; interest credits.
(a) The Board will have the exclusive responsibility to manage the Fund with full power to invest the moneys therein, subject to the terms, conditions, limitations and restrictions imposed by law upon fiduciaries. The assets of the Fund shall be held in trust. No part of the assets of the Fund will be used for or diverted to purposes other than for the exclusive benefit of the members, their spouses or the member's beneficiaries prior to the satisfaction of all liabilities of the Fund with respect to them, provided that the Fund shall be used to pay reasonable administrative expenses of the System.
(b) The Board may take action necessary and appropriate to facilitate the purchase, sale and custody of Fund assets.
§ 81.10. Withdrawal provisions.
(a) A plan withdrawal by a municipality shall comply with section 412 of the law (53 P. S. § 881.412).
(b) A plan withdrawing from the System that has retired members shall provide to the Board as a part of the withdrawal application an acknowledgment of the plan sponsor to assume responsibility for the providing of all future benefit payments for the existing retired members and beneficiaries effective with the withdrawal.
(c) Prior to the Board's approval of a withdrawal under section 412 of the law, the Board may require:
(1) The withdrawing municipality to enter into a written agreement with the Board which would terminate its contractual relationship with the Board and fix the respective rights of the parties.
(2) The withdrawing municipality to obtain individual waivers or releases from affected members, who will no longer be eligible for benefits from the System for service rendered to the withdrawing municipality.
(d) The term ''municipal employe'' for the purpose of plan withdrawal shall include active member, inactive member, vested member and retired member.
§ 81.11. Contract provisions.
(a) Plans enrolling or improving plan benefits under Article IV of the law (53 P.S. §§ 81.401--81.413) may not provide benefits in excess of or provide for member contribution rates less than those available to a municipality or a municipality's class of employes under existing law, including laws applicable to the establishment of pension plans.
(b) Plan improvements shall be determined on a total plan basis and not on a benefit-by-benefit comparison nor on an individual-by-individual comparison. An individual's accrued benefit may not be diminished by the implementation of an improved benefit plan contract.
§ 81.12. [Reserved].
§ 81.13. [Reserved].
§ 81.14. [Reserved].
CHAPTER 83. MUNICIPAL EMPLOYES § 83.3. Compulsory and optional membership.
(a) Each municipality shall determine, subject to review and approval by the Board, the eligibility of its employes for membership in the System.
(b) If membership in a plan is optional, the municipality shall advise affected employes of the option and, within 1 year after the optional membership is available to the employe, the employe shall exercise the option or indicate in writing that membership in the plan is not elected. The action is irrevocable during the period of the continuous service of the employe.
(c) Each municipality shall supply the Board with its rules regarding a probationary period for plan membership and the period shall be uniform for all employes. An employe in the probationary status, if subsequently enrolled as a member may not be eligible for service credit for the time served in the probationary period.
§ 83.4. [Reserved].
§ 83.5. [Reserved].
§ 83.6. Contributions by members.
Contributions required to be made by a member may not be paid by the municipality under any circumstances other than the provisions of section 414(h)(2) of the Internal Revenue Code (26 U.S.C.A. § 414(h)(2)). If an employe is simultaneously employed by more than one municipality or in positions that make the individual eligible for membership in more than one plan, the member shall receive credit for concurrent service for each plan and the member's compensation for each plan shall be considered separately for benefit purposes.
§ 83.7. Purchase requirements for previous service.
A former contributor who has withdrawn total accumulated deductions may, upon a subsequent return to service, restore to the Fund those accumulated deductions representing that member's previous service and continue accruing service credits for service rendered subsequent to the return to service, provided the member pays the amount due thereon plus regular interest up to the date of purchase in a lump sum within 30 days after billing, or through salary deductions amortized with regular interest through a repayment period of not more than 5 years, provided that regular interest is charged through the repayment period chosen by the member and approved by the Board.
§ 83.8. [Reserved].
§ 83.9. [Reserved].
§ 83.10. [Reserved].
§ 83.11. Options on superannuation or early retirement.
(a) Once a member has filed an application for a benefit, and the member has received and cashed the first benefit payment check, the selected retirement benefit option of the member shall be irrevocable unless the retired member returns to active service to the plan from which the member retired. Only the member may change a benefit option.
(b) A plan enrolled in the system may not allow for the present value of a living member's benefit to be paid in one lump sum. The municipal portion of the annuity payment shall be paid in a monthly annuity payment option.
§ 83.12. Disability retirement.
(a) Disability applications shall be accompanied by medical documentation on forms supplied by the Board to enable the Board's medical examiners to review and determine whether the applicant is medically disabled and prohibited from engaging in a gainful occupation.
(b) The Board may require the earnings reports as it deems necessary to insure that a disability annuitant is unable to engage in a gainful occupation.
§ 83.13. [Reserved].
§ 83.14. [Reserved].
CHAPTER 85. (Reserved) § 85.1. (Reserved).
§§ 85.3--85.17. (Reserved).
CHAPTER 87. (Reserved) §§ 87.1--87.13. (Reserved).
CHAPTER 91. SPECIAL RULES OF ADMINISTRATIVE PRACTICE AND PROCEDURE § 91.1. Applicability of general rules.
Under 1 Pa. Code § 31.1 (relating to scope of part), 1 Pa. Code Part II (relating to general rules of administrative practice and procedure), applies to the activities of and proceedings before the Board.
[Pa.B. Doc. No. 00-1079. Filed for public inspection June 23, 2000, 9:00 a.m.]
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