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1999 SESSION

994195739
HOUSE BILL NO. 189
FLOOR AMENDMENT IN THE NATURE OF A SUBSTITUTE
(Proposed by Senator Stolle
on February 23, 1999)
(Patron Prior to Substitute--Delegate Hamilton)
A BILL to amend and reenact § 51.1-124.3 of the Code of Virginia and to amend the Code of Virginia by adding a section numbered 51.1-142.1 and by adding in Chapter 1 of Title 51.1 an article numbered 10, consisting of sections numbered 51.1-170 through 51.1-176, relating to benefits provided by the Virginia Retirement System.

Be it enacted by the General Assembly of Virginia:

1. That § 51.1-124.3 of the Code of Virginia is amended and reenacted and that the Code of Virginia is amended by adding a section numbered 51.1-142.1 and by adding in Chapter 1 of Title 51.1 an article numbered 10, consisting of sections numbered 51.1-170 through 51.1-176, as follows:

§ 51.1-124.3. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Abolished system" means the Virginia Retirement Act, §§ 51-30 through 51-111, repealed by Chapter 1 of the Acts of Assembly of 1952.

"Accumulated contributions" means the sum of all amounts deducted from the compensation of a member and credited to his individual account in the member's contribution account, all amounts the member may contribute to purchase creditable service, all member contributions contributed by the employer on behalf of the employee, on or after July 1, 1990, except those amounts contributed on behalf of members of the General Assembly who are otherwise retired under the provisions of this chapter, and all interest accruing to these funds. If a member is retired for disability from a cause which is compensable under the Virginia Workers' Compensation Act (§ 65.2-100 et seq.), dies in service prior to retirement, or requests a refund of contributions in accordance with § 51.1-161, "accumulated contributions" shall include all member contributions paid by the employer on behalf of the member on and after July 1, 1980, and all interest which would have accrued to these funds.

"Actuarial equivalent" means a benefit of equal value when computed upon the basis of actuarial tables adopted by the Board.

"Average final compensation" means the average annual creditable compensation of a member during his thirty-six highest consecutive months of creditable service or during the entire period of his creditable service if less than thirty-six months. If a member ceased employment prior to July 1, 1974, "average final compensation" means the average annual creditable compensation during the five highest consecutive years of creditable service.

"Beneficiary" means any person entitled to receive benefits under this chapter.

"Board" means the Board of Trustees of the Virginia Retirement System.

"Creditable compensation" means the full compensation payable annually to an employee working full time in his covered position. In cases where compensation includes maintenance or other perquisites, the Board shall fix the value of that part of the compensation not paid in money. Remuneration received by members of the General Assembly not otherwise retired under the provisions of this chapter pursuant to §§ 30-19.11, 30-19.12 and 30-19.14 shall be deemed creditable compensation. In addition, for any member of the General Assembly, creditable compensation shall include the full amount of salaries payable to such member for working in covered positions, regardless of whether a contractual salary is reduced and not paid to such member because of service in the General Assembly.

"Creditable service" means prior service plus membership service for which credit is allowable. Creditable service may include sick leave credit accumulated as of the employee’s retirement date as certified by the employer to the Board as set forth in § 51.1-142.1.

"Employee" means any teacher, state employee, officer, or employee of a locality participating in the Retirement System.

"Employer" means the Commonwealth in the case of a state employee, the local public school board in the case of a teacher, or the political subdivision participating in the Retirement System.

"Joint Rules Committee" means those members of the House of Delegates and the Senate designated by the Speaker of the House and the Chairman of the Senate Committee on Rules, respectively, to meet with each other and to act jointly on behalf of the Committee on Rules for each house.

"Local officer" means the treasurer, commissioner of the revenue, attorney for the Commonwealth, clerk of a circuit court, or sheriff of any county or city, or deputy or employee of any such officer.

"Medical Board" means the board of physicians as provided by this chapter.

"Member" means any person included in the membership of the Retirement System.

"Membership service" means service as an employee rendered while a contributing member of the Retirement System except as provided in this chapter.

"Normal retirement date" means a member's sixty-fifth birthday.

"Political subdivision" means any county, city, or town, any political entity, subdivision, branch, or unit of the Commonwealth, or any commission, public authority, or body corporate created by or under an act of the General Assembly specifying the powers, privileges, or authority capable of exercise by the commission, public authority, or body corporate.

"Primary social security benefit" means, with respect to any member, the primary insurance amount to which the member is entitled, for old age or disability, as the case may be, pursuant to the provisions of the federal Social Security Act as in effect at his date of retirement, under the provisions of this chapter except as otherwise specifically provided.

"Prior service" means service rendered prior to becoming a member of the Retirement System.

"Retirement allowance" means the retirement payments to which a member is entitled.

"Retirement System" means the Virginia Retirement System.

"Service" means service as an employee.

"State employee" means any person who is regularly employed full time on a salaried basis, whose tenure is not restricted as to temporary or provisional appointment, in the service of, and whose compensation is payable, no more often than biweekly, in whole or in part, by the Commonwealth or any department, institution, or agency thereof. "State employee" shall include the Governor, Lieutenant Governor, Attorney General, and members of the General Assembly but shall not include (i) any local officer, (ii) any employee of a political subdivision of the Commonwealth, (iii) individuals employed by the Department for the Visually Handicapped pursuant to § 63.1-73; (iv) any member of the State Police Officers' Retirement System, or (v) any member of the Judicial Retirement System.

"Teacher" means any person who is regularly employed full time on a salaried basis as a professional or clerical employee of a county, city, or other local public school board.

§ 51.1-142.1. Service credit for accumulated sick leave.

A. Any member in service who has been credited with five or more years of membership service may be given credit for accumulated sick leave on his effective date of retirement from such sums as the employer may provide as payment for any unused sick leave balances.

B. Service credit purchased under this section shall be paid at an amount equal to the lesser of (i) the present value of the actuarial liability represented by additional service as determined by the actuary of the Virginia Retirement System or (ii) twenty percent of his present average annual creditable compensation during his thirty-six highest consecutive months of creditable service, whichever is greater.

C. Service purchased under this section shall not be considered in the calculation of any retirement benefit by another retirement system.

Article 10.
Deferred Retirement Option Program.

§ 51.1-170. Definitions.

As used in this article, unless the context requires a different meaning:

"Eligible member" means a member who satisfies the requirements of § 51.1-171 and is a (i) qualified state employee, (ii) state police officer, (iii) teacher, or (iv) qualified local employee.

"Member" means a member of the Retirement System or the State Police Officers' Retirement System.

"Participant" means an eligible member participating in the program.

"Program" means the deferred retirement option program established pursuant to this article.

"Qualified local employee" means an employee of a political subdivision who is regularly employed full time on a salaried basis and whose tenure is not restricted by his having a temporary or provisional appointment.

"Qualified state employee" means an employee as defined in § 51.1-201 or a state employee as defined in § 51.1-124.3, but not the Governor, Lieutenant Governor, Attorney General, members of the General Assembly, or any person described in subdivision 3, 4, or 21 of § 2.1-116.

§ 51.1-171. Participation in program.

A. A member who is eligible to retire and receive an unreduced service annuity may, if he remains an employee, elect to participate in the program.

B. An election to participate in the program shall be on a form prescribed by and filed with the retirement system. An election shall not be made more than once and shall state the period that the eligible member wishes to participate in the program. The period shall be a minimum of twelve months and be in twelve-month increments. The maximum period that an eligible member may participate in the program is sixty consecutive months. An election under this section is irrevocable after filing. The filing of an election under this section shall not be considered for any purpose an application for retirement, and a participant shall not be considered a retiree for any purpose because of filing an election to participate.

C. The effective date of a participant’s participation in the program shall be the first day of the month following the month in which his election is received and approved by the retirement system. The retirement system shall approve the election filed by any eligible member.

§ 51.1-172. Computation of participant's service and annuity.

A. A participant shall remain a member of the retirement system during the period of his participation, unless he terminates his membership under § 51.1-128. A participant shall not, during his period of participation, accrue additional service credit. A participant shall not make employee contributions to the retirement system, but the Commonwealth and the member's employer, if applicable, shall make contributions for the participant's service performed during the period of his participation in the program. The participant and his employer shall retain any obligation to pay group life insurance premiums and contributions to the health insurance credit program during his participation in the program.

B. For purposes of the program, the computation of the service retirement annuity of a participant shall be determined as of the effective date of his participation. A participant shall not be eligible to receive a post-retirement increase, including post-retirement supplements provided for under § 51.1-166, made applicable to annuitants during the period of his participation in the program.

C. A member shall not be eligible to purchase special service credit after the date of the filing of his election to participate in the program.

§ 51.1-173. Benefits under the program.

A. The retirement system shall credit monthly, during the period of the participant's participation in the program, to a deferred retirement option account for the participant an amount equal to a percentage of the amount the participant would have received that month under a standard service retirement annuity if he had retired on the effective date of his participation in the program. The percentage shall be determined as of July 1, 2000, by the retirement system's actuary and approved by the Board. The Board shall approve the greatest percentage that does not cause the program to materially affect employer contribution rates. In no event shall the percentage exceed 100 percent. If the percentage is not initially set at 100 percent, it shall be reviewed periodically and increased, if appropriate, until it is 100 percent. In no event shall a periodic review of the percentage result in a reduction in the percentage.

B. When a participant retires under the retirement system, he shall be entitled to the accumulated amount in his deferred retirement option account, including creditable interest. The accumulated amount shall be payable in a lump sum, in periodic installments, as an additional actuarially equivalent monthly income, or as a direct rollover as provided under regulations promulgated under the Internal Revenue Code, at the option of the participant. The Board shall determine the number and frequency of installment payments.

C. If a participant dies during his participation in the program or after his participation but before his retirement, the decedent's designated beneficiary shall be entitled to the accumulated amount in the decedent's deferred retirement option account, including creditable interest. The designated beneficiary shall also be entitled to a death benefit based on the decedent’s compensation and years of service on the effective date of his participation in the program and on his age at the date of his death.

D. Payment of the benefits provided under the program shall be in addition to any annuity otherwise payable under this title.

§ 51.1-174. Termination of participation in program.

Participation in the program terminates upon the first to occur of (i) a participant's retirement, (ii) his death, or (iii) the expiration of the period for which his participation in the program was approved.

§ 51.1-175. Benefits for service after program participation.

A. Any eligible service credit accrued after termination of a participant's participation in the program and before his retirement shall be credited in the retirement system as provided in this section.

B. At the time a former participant retires, or dies if prior to retirement, the retirement system shall compute the value of the additional service credit accrued after termination of his participation in the program at the rate provided under § 51.1-155, based on the lesser of (i) the three years of service after the former participant's termination of program participation or (ii) the former participant's actual years of service after the termination, in which the member received the highest annual compensation. The retirement system shall add the amount computed under this subsection to the amount determined on the effective date of his program participation, and the sum shall be payable, subject to actuarial reduction if applicable, as the monthly annuity payment.

§ 51.1-176. Interest.

Interest shall be credited to a participant's deferred retirement option account during the period of his participation in the program and until all benefits are distributed or until the account's annuitization into a monthly retirement income pursuant to subsection B of § 51.1-173. Interest shall be based upon an annual, prorated rate equal to the actuarial earnings assumption.

2. That the provisions of this act adding in Chapter 1 of Title 51.1 of the Code of Virginia an article numbered 10, consisting of sections numbered 51.1-170 through 51.1-176, shall become effective on July 1, 2000.