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2012 SESSION
Be it enacted by the General Assembly of Virginia:
1. That § 51.1-144 of the Code of Virginia is amended and reenacted as follows:
§ 51.1-144. Member contributions.
A. Each member shall contribute five percent of his creditable compensation for each pay period for which he receives compensation.
The employer shall deduct the contribution payable by the
member. Every employee accepting employment shall be deemed to consent and
agree to any deductions from his compensation required by this chapter. No
deduction shall be taken from the compensation
of a member after his normal retirement
date if the member elects not to
contribute.
B. In determining the creditable compensation of a member in a payroll period, the Board may consider the rate of compensation payable to the member on the date of entry or removal of his name from the payroll as having been received throughout the month if service for the month is creditable. If service for the month is not creditable, the Board may consider any compensation payable during the month as not being creditable compensation.
C. The minimum compensation provided by law for any member shall be reduced by the deduction required by this section. Except for any benefits provided by this chapter, payment of compensation minus the deductions shall be a full and complete discharge of all claims for services rendered by the member during the period covered by the payment.
D. No deduction shall be made from any member's compensation if the employer's contribution is in default.
E. The Board may modify the method of collecting the contributions of members so that the employer may retain the amounts deducted from members' salaries and have a corresponding amount deducted from state funds otherwise payable to the employer.
F. 1. Except as provided in subdivision subdivisions
2 3 and 4, any employer may elect to pay an equivalent amount in
lieu of all member contributions required of its employees. Such payments shall
be credited to the members' contribution account. These contributions shall not
be considered wages for purposes of Chapter 7 (§ 51.1-700 et seq.) of
this title, nor shall they be considered to be salary for
purposes of this chapter.
2. A person who becomes a member on or after July 1, 2010, shall be required to pay member contributions on a salary reduction basis in accordance with § 414(h) of the Internal Revenue Code in the amount of five percent of creditable compensation if the person is (i) a member covered by the defined benefit plan established under this chapter, (ii) a member of the State Police Officers' Retirement System under Chapter 2 (§ 51.1-200 et seq.), (iii) a member of the Virginia Law Officers' Retirement System under Chapter 2.1 (§ 51.1-211 et seq.), (iv) a member of the Judicial Retirement System under Chapter 3 (§ 51.1-300 et seq.), or (v) earning the benefits permitted by § 51.1-138.
Each county, city, town, local
public school board, or other local employer
may elect to pay an equivalent amount
in lieu of the member contributions required
of its employees described in this subdivision.
The county, city, town, local public school
board, or other local employer may pay,
in whole percentages, up to five percent
of the creditable compensation otherwise required
of such employees, provided that the employer
pays the same percentage of creditable
compensation for all such employees, and
is paying all member contributions required
under this section for all of its
other member employees not described in
this subdivision. Any portion of the five
percent of creditable compensation required of
a person who becomes a member on
or after July 1, 2010, that is
not paid by the county, city, town,
local public school board, or other local
employer, shall be paid by such person.
No employer other than a county,
city, town, local public school board,
or other local employer shall be allowed
to elect to pay any amount of the
member contributions required of a person
who becomes a member on or after
July 1, 2010.
3. A member who is an employee of a county, city, town, or other local employer other than a local public school board, regardless of whether the member is a person who becomes a member on or after July 1, 2010, shall be required to pay member contributions on a salary reduction basis in accordance with § 414(h) of the Internal Revenue Code in the amount of five percent of creditable compensation as follows: (i) any member who commences or recommences employment on or after July 1, 2012, shall be required to contribute five percent of his creditable compensation upon commencing or recommencing employment and (ii) members in service on June 30, 2012, shall be required to contribute five percent of their creditable compensation no later than July 1, 2016. Such member described in subdivision (ii) shall contribute a minimum of an additional one percent of his creditable compensation beginning on each July 1 of 2012, 2013, 2014, 2015, and 2016, or until the member's contribution equals five percent of creditable compensation, but the county, city, town, or other local employer other than a local public school board may elect to require members to contribute more than an additional one percent each year, in whole percentages. In no case shall a member be required to contribute more than five percent of his creditable compensation for each pay period for which he receives compensation. No county, city, town, or other local employer other than a local public school board shall be allowed to elect to pay any amount of member contributions except to pay the difference between five percent and the employee contribution during the phase-in period described in this subdivision for a member who was in service on June 30, 2012.
4. A member who is an employee of a local public school board, regardless of whether the member is a person who becomes a member on or after July 1, 2010, shall be required to pay member contributions on a salary reduction basis in accordance with § 414(h) of the Internal Revenue Code in the amount of five percent of creditable compensation as follows: (i) any member who commences or recommences employment on or after July 1, 2012, shall be required to contribute five percent of his creditable compensation upon commencing or recommencing employment and (ii) members in service on June 30, 2012, shall be required to contribute five percent of their creditable compensation no later than July 1, 2016. Such member described in subdivision (ii) shall contribute a minimum of an additional one percent of his creditable compensation beginning on each July 1 of 2012, 2013, 2014, 2015, and 2016, or until the member's contribution equals five percent of creditable compensation, but the local public school board employer may elect to require members to contribute more than an additional one percent each year, in whole percentages. In no case shall a member be required to contribute more than five percent of his creditable compensation for each pay period for which he receives compensation. No local public school board employer shall be allowed to elect to pay any amount of member contributions except to pay the difference between five percent and the employee contribution during the phase-in period described in this subdivision for a member who was in service on June 30, 2012.
3. 5. Notwithstanding any other provision of
this section or other law, only those employers who were paying member
contributions as of February 1, 2010, may pay member contributions. The
provisions of this subdivision shall not apply to a county, city, town, local
public school board, or other local employer.
G. Subject to the provisions of
subsection F, any employer whose employees
are paying member contributions to the
retirement system on a salary reduction
basis in accordance with § 414(h)
of the Internal Revenue Code may phase-in
the payment of the member contributions
on behalf of its employees upon notification
to the Board of the employer's intent
to make such payments. The Board shall
approve the period of time by which
the phase-in shall be completed not to
exceed six years from the commencement
of the phased-in payments.
H. Any employer that, by resolution
of its governing body, elects to provide
retirement coverage for its employees in
accordance with § 51.1-130 on or
after September 1, 1998, shall allow its
employees to pay member contributions to
the retirement system on a salary reduction
basis in accordance with § 414(h)
of the Internal Revenue Code in lieu
of paying the member contribution on behalf
of its employees in accordance with the
provisions of subsection F.
I. The Board may develop procedures to effect the
transfer of member contributions paid by employers on or after July 1, 1980,
and accrued interest on those contributions, to the member contribution account
of the member, if such contributions have been previously deposited into the
retirement allowance account of the employer.
2. That any county, city, town, local public school board, or other local employer that currently pays any portion of member contributions to the Virginia Retirement System that the member will be responsible for paying pursuant to the provisions of this act shall provide an increase in total creditable compensation, effective July 1, 2012, to each affected member who was in service on June 30, 2012, to offset the cost of the member contributions. Such increase in total creditable compensation shall be equal to the difference between five percent of an employee's total creditable compensation and the percentage of the member contribution paid by the local member on January 1, 2012. If a county, city, town, local public school board, or other local employer elects to phase in the member contributions pursuant to subdivision F 3 or F 4 of § 51.1-144 of the Code of Virginia, the increase in total creditable compensation may also be phased in at the same rate.