24 PA Cons Stat § 8346 (2021)
2021 Pennsylvania Consolidated & Unconsolidated Statutes|Title 24 - EDUCATION|Chapter 83 - Membership, Contributions and Benefits|Section 8346 - Termination of annuities

§ 8346. Termination of annuities. (a) General rule.--If an annuitant returns to school service or enters or has entered State service and elects multiple service membership, any annuity payable to him under this part shall cease effective upon the date of his return to school service or entering State service without regard to whether he is a mandatory, optional or prohibited member of the system or participant in the plan or, if a multiple service member, whether he is a mandatory, optional or prohibited member or participant of the State Employees' Retirement System or State Employees' Defined Contribution Plan; and, in the case of an annuity other than a disability annuity the present value of such annuity, adjusted for full coverage in the case of a joint coverage member who makes the appropriate back contributions for full coverage, shall be frozen as of the date such annuity ceases. An annuitant who is credited with an additional 10% of membership service as provided in section 8302(b.2) (relating to credited school service) and who returns to school service, except as provided in subsection (b), shall forfeit such credited service and shall have his frozen present value adjusted as if his 10% retirement incentive had not been applied to his account. In the event that the cost-of-living increase enacted December 18, 1979, occurred during the period of such State or school employment, the frozen present value shall be increased, on or after the member attains superannuation age, by the percent applicable had he not returned to service.  (a.1) Return of benefits.--In the event an annuitant whose annuity from the system ceases pursuant to this section receives any annuity payment, including a lump sum payment pursuant to section 8345 (relating to member's options) on or after the date of his return to school service or entering State service, the annuitant shall return to the board the amount so received from the system plus statutory interest. The amount payable shall be certified in each case by the board in accordance with methods approved by the actuary and shall be paid in a lump sum within 90 days or in the case of an active member or a State employee who is an active member of the State Employees' Retirement System may be amortized with statutory interest through salary deductions to the system in amounts agreed upon by the member and the board. The salary deduction amortization plans agreed to by the member and the board may include a deferral of payment amounts and statutory interest until the termination of school service or State service as the board in its sole discretion decides to allow. The board may limit salary deduction amortization plans to such terms as the board in its sole discretion determines. In the case of a State employee who is an active member of the State Employees' Retirement System, the agreed upon salary deductions shall be remitted to the State Employees' Retirement Board, which shall certify and transfer to the board the amounts paid.  (a.2) Return of benefits paid during USERRA leave.--If a former school employee is reemployed from USERRA leave who had received any payments or annuity from the system during the USERRA leave, the employee shall return to the board the amount received plus statutory interest. The amount payable shall be certified by the board in accordance with methods approved by the actuary and:  (1) shall be paid in a lump sum within 30 days; or (2) in the case of an active member, may be amortized with statutory interest through salary deductions in amounts agreed upon by the member and the board for not longer than a period that starts with the date of reemployment and continuing for up to three times the length of the member's immediate past period of USERRA leave. A repayment period under this paragraph may not exceed five years or a longer time as agreed to between the board and the member.  (b) Return to school service during emergency.--When, in the judgment of the employer, an emergency creates an increase in the work load such that there is serious impairment of service to the public or in the event of a shortage of appropriate subject certified teachers or other personnel, an annuitant or participant receiving distributions may be returned to school service for a period not to extend beyond the school year during which the emergency or shortage occurs, without loss of his annuity or distributions, provided that the annuitant meets the conditions set forth in subsection (b.2). The annuitant or participant receiving distributions shall not be entitled to earn any credited service, and no contributions may be made to the fund or the trust by the annuitant or participant receiving distributions, the employer or the Commonwealth on account of such employment. Such service shall not be subject to member or participant contributions or be eligible for qualification as creditable school service or for participation in the plan, mandatory pickup participant contributions, voluntary contributions or employer defined contributions.  (b.1) Return to school service in an extracurricular position.-- (1) An annuitant or participant receiving distributions may be employed under separate contract by a public school or charter school in an extracurricular position performed primarily outside regular instructional hours and not part of mandated curriculum without loss of annuity, provided that the annuitant meets the conditions set forth in subsection (b.2). The annuitant, the participant receiving distributions and the employer shall not make contributions to the member's savings account, the individual investment account or State accumulation account respectively for such service. Further, such contract shall contain a waiver whereby the annuitant waives any potential retirement benefits that could arise from the contract and releases the employer and the board from any liability for such benefits. Such service shall not be subject to member or participant contributions or be eligible for qualification as creditable school service or for participation in the plan, mandatory pickup participant contributions or employer defined contributions.  (2) Nothing in this subsection shall be construed to abridge or limit any rights provided under a collective bargaining agreement or any rights provided under the act of July 23, 1970 (P.L.563, No.195), known as the Public Employe Relations Act.  (3) For purposes of this subsection, the term "extracurricular position" means a contract position filled by an annuitant that is separate from the established academic course structure, including the position of athletic director.  (b.2) Limitation on return to school service by an annuitant during emergency or in an extracurricular position.-- (1) An annuitant may return to school service under subsection (b) or (b.1), provided the annuitant otherwise meets the requirements of subsection (b) or (b.1) and has attained the age set forth in IRC § 401(a)(36) or the applicable "normal retirement age" in 26 C.F.R. § 1.401(a)-1(b)(2) (relating to post-ERISA qualified plans and qualified trusts; in general).  (2) An annuitant who has not reached the age as set forth in IRC § 401(a)(36), or the applicable "normal retirement age" under 26 C.F.R. § 1.401(a)-1(b)(2), may return to service under subsection (b) or (b.1) provided the annuitant otherwise meets the requirements of subsection (b) or (b.1) and has had a break in service, as set forth in paragraph (3).  (3) For purposes of this subsection, a break in service occurs when a member has a bona fide termination of service. The following factors will be considered in determining whether there had been a bona fide termination of service:  (i) whether the change in the employment relationship is more than a formal or technical change, requiring the severing of the employment connection with the employer;  (ii) whether there has been a reasonable anticipation or prearranged agreement between the member and the employer that a return to school service under this section shall take place;  (iii) the amount of time that has elapsed from the date the member becomes an annuitant and the return to school service;  (iv) whether the services are a continuation of the annuitant's previous service with the same employer; and  (v) such other factors as the board may deem appropriate. (c) Subsequent discontinuance of service.--Upon subsequent discontinuance of service, such member other than a former annuitant who had the effect of his frozen present value eliminated in accordance with subsection (d) or a former disability annuitant shall be entitled to an annuity which is actuarially equivalent to the sum of the present value as determined under subsection (a) and the present value of a maximum single life annuity based on years of service credited subsequent to reentry in the system and his final average salary computed by reference to his compensation during his entire period of school and State service.  (d) Elimination of the effect of frozen present value.-- (1) An annuitant who returns to school service as an active member of the system and earns three eligibility points by performing credited school service or reemployment from USERRA leave following the most recent period of receipt of an annuity under this part, or an annuitant who enters State service and:  (i) is a multiple service member; or (ii) who elects multiple service membership, and earns three eligibility points by performing credited State service, reemployment from USERRA leave or credited school service following the most recent period of receipt of an annuity under this part, and who had the present value of his annuity frozen in accordance with subsection (a), shall qualify to have the effect of the frozen present value resulting from all previous periods of retirement eliminated, provided that all payments under Option 4 and annuity payments payable during previous periods of retirement plus interest as set forth in paragraph (3) shall be returned to the fund in the form of an actuarial adjustment to his subsequent benefits or in such form as the board may otherwise direct.  (2) Upon subsequent discontinuance of service and the filing of an application for an annuity from the system, a former annuitant who qualifies to have the effect of a frozen present value eliminated under this subsection shall be entitled to receive the higher of either:  (i) an annuity (prior to optional modification) calculated as if the freezing of the former annuitant's account pursuant to subsection (a) had not occurred, adjusted by crediting Class T-C school service as Class T-D service as provided for in section 8305(c) (relating to classes of service) and further adjusted according to paragraph (3), provided that a former annuitant of the system or a former annuitant of the State Employees' Retirement System who retired under a provision of law granting additional service credit if termination of school or State service or retirement occurred during a specific period of time shall not be permitted to retain the additional service credit under the prior law when the annuity is computed for his most recent retirement; or  (ii) an annuity (prior to optional modification) calculated as if the former annuitant did not qualify to have the effect on the frozen present value eliminated,  unless the former annuitant notifies the board in writing by the later of the date the application for annuity is filed or the effective date of retirement that the former annuitant wishes to receive the lower annuity.  (3) In addition to any other adjustment to the present value of the maximum single life annuity that a member may be entitled to receive that occurs as a result of any other provision of law, the present value of the maximum single life annuity shall be reduced by all amounts paid or payable to him during all previous periods of retirement plus interest on these amounts until the date of subsequent retirement. The interest for each year shall be calculated based upon the annual interest rate adopted for that school year by the board for the calculation of the normal contribution rate pursuant to section 8328(b) (relating to actuarial cost method).  (July 12, 1981, P.L.261, No.87, eff. imd.; Feb. 18, 1982, P.L.78, No.27, eff. 60 days; Aug. 5, 1991, P.L.183, No.23, eff. imd.; Dec. 22, 1992, P.L.1686, No.186, eff. imd.; Apr. 29, 1994, P.L.159, No.29, eff. July 1, 1994; Dec. 20, 1995, P.L.689, No.77, eff. 60 days; May 17, 2001, P.L.26, No.9, eff. July 1, 2001; Apr. 23, 2002, P.L.272, No.38, eff. imd.; Dec. 30, 2002, P.L.2082, No.234, eff. imd.; July 4, 2004, P.L.504, No.63, eff. imd.; July 1, 2013, P.L.174, No.32, eff. July 1, 2013; Dec. 28, 2015, P.L.529, No.93, eff. imd.; June 12, 2017, P.L.11, No.5, eff. imd.)    2017 Amendment. Act 5 amended subsecs. (a), (a.1), (b), (b.1)(1) and (d)(1) and (2).  2015 Amendment. Act 93 amended subsecs. (b) and (b.1)(1) and added subsec. (b.2). See section 27 of Act 93 in the appendix to this title for special provisions relating to applicability of law.  2013 Amendment. Act 32 amended subsec. (d) and added subsec. (a.2).  2004 Amendment. Act 63 amended subsecs. (b) and (b.1).  2001 Amendment. See section 22(a) of Act 9 in the appendix to this title for special provisions relating to calculation of return to service days.  1995 Amendment. Section 15(3) of Act 77 provided that the amendment of section 8346 shall be retroactive to July 1, 1994, and provided that no annuities or other benefits greater than those payable shall be payable to the beneficiary or survivor annuitant of a deceased member of the Public School Employees' Retirement System if the death of the member is on or before 60 days after the enactment of Act 77. See section 13(c) of Act 77 in the appendix to this title for special provisions relating to applicability of provisions relating to termination of annuities.  1994 Amendment. See section 24 of Act 29 in the appendix to this title for special provisions relating to effective date and funding of accrued liability.  Special Provisions in Appendix. See section 3(1) of Act 96 of 1975 in the appendix to this title for applicability of provisions relating to calculation of annuities for certain annuitants who return to school service and subsequently retire.  Cross References. Section 8346 is referred to in sections 8301, 8305.5, 8502, 8506 of this title.