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Amending Title 22 of The Philadelphia Code, entitled “Public Employees Retirement Code,” by amending various provisions to prohibit rehiring retirees who had retired out of DROP; and to allow certain transfer payments for purchase of service, to provide certain retroactive effective dates, and otherwise provide language required by the Internal Revenue Code, under certain terms and conditions.
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THE COUNCIL OF THE CITY OF PHILADELPHIA HEREBY ORDAINS:
SECTION 1. Title 22 of The Philadelphia Code, entitled “Public Employees Retirement Code,” is hereby amended as follows:
TITLE 22. PUBLIC EMPLOYEES RETIREMENT CODE
CHAPTER 22-100. GENERAL PROVISIONS
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§22-105. Definitions.
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(9) Compensation
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(d) Notwithstanding any provision of this Title to the contrary, a member’s compensation taken into account for retirement benefit purposes under this Title shall not exceed the limitation under Section 401(a)(17) of the Tax Code. On and after July 1, [1996] 2002, the limitation under Section 401(a)(17) [of the Tax Code means the federal Omnibus Budget Reconciliation Act of 1993 ("OBRA ‘93") (Public Law 103-66, 107 Stat. 312) annual compensation limit. The OBRA ‘93 annual compensation limit is] shall be [$150,000,] $200,000 as adjusted by the Commissioner [of] for Internal Revenue for increases [in the cost of living] in accordance with Section 401(a)(17)(B) of the Tax Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (the "determination period") beginning in such calendar year. If a determination period consists of fewer than 12 months, [the OBRA ‘93] compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. With respect to the period prior to July 1, 2002 and after June 30, 1996, the limitation under Section 401(a)(17) of the Tax Code means the federal Omnibus Budget Reconciliation Act of 1993 ("OBRA ‘93") (Public Law 103-66, 107 Stat. 312) annual compensation limit. The OBRA ‘93 annual compensation limit is $150,000, as adjusted by the Commissioner of Internal Revenue for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Tax Code.
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CHAPTER 22-200. MEMBERSHIP
§22-201. Membership Upon Employment.
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(4) Municipal employees first hired between January 8, 1987 and October 1, 1992.
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(b) The employee must [either] pay to the Retirement System the full amount calculated by the Board under this subsection (4) [or make such arrangements to pay such amount under an installment plan pursuant to § 22-806 (Installment Payments)] in one of the following ways, provided that the time limitations provided in Section 22-803(2) are met:
(i) Lump sum payment;
(ii) Payment may be made by the member directly through an installment plan by payroll deduction pursuant to §22-806 (Installment Payments); (iii) Payment may be made by the member through transfer payment from an eligible deferred compensation plan pursuant to §22-808; or
(iv) Any combination of these methods.
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CHAPTER 22-300. RETIREMENT BENEFITS
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§22-306. Retirement and Survivorship Benefit Options.
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(6) Required minimum distribution. In no event may a member elect (or otherwise be entitled to) a form of benefit which is payable over a period that fails to satisfy the required distribution provisions of Section 401(a)(9) of the Tax Code, including the incidental benefit distribution requirements.
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§22-310. Deferred Retirement Option Plan (DROP).
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(5) Benefit Requirements and Calculation.
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(g) Re-hire. There is no return to regular employment from a DROP. Once entering the DROP, the employee is in the DROP until separation from City service, at which point the member is retired.
(.1) No employee shall be permitted to enroll in DROP without making a commitment not to seek or accept further employment by the City subsequent to separating from the City and receiving the lump sum DROP benefit. The Board of Pensions and Retirement shall create a form to be executed by an employee upon irrevocably electing to enroll in DROP, whereby the member agrees not to accept further employment by the City after separation into retirement, provided further that breach of any such agreement will forfeit the member’s DROP benefit as provided in (.2) below.
(.2) Except upon an order of a court of competent jurisdiction ordering the reinstatement of a dismissed employee, or a settlement approved by the Law Department of pending or threatened litigation that agrees to such reinstatement, the City shall not further employ any person who has separated from the City after being enrolled in DROP. In the event of a reinstatement ordered or agreed to as provided in the preceding sentence, or any other further employment by the City, the subject employee shall forfeit the lump sum DROP benefit and shall, prior t beginning any period of further employment, repay to the Retirement System any DROP benefit received. [A retiree may be re-hired by the City, subject to the provisions of this Title (see Section 22-204), but no] In no case may a former DROP participant who is rehired by the City [may] be eligible to again participate in the DROP. A rehired retiree who had not been a former DROP participant may be eligible to enter the DROP if the employee otherwise meets the eligibility requirements of subsection 22-310(4). In such a case, the retirement benefit for purposes of credits to the DROP account shall be determined by reference to Section 22-204 of this Title.
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CHAPTER 22-800. PURCHASE OF CREDITED SERVICE
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§22-802. Purchase of Governmental Service.
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(5) Installment and Transfer Payments. Payment for the purchase of governmental service may be made in accordance with Section 22-806 (Installment Payments) or Section 22-808 (Transfer Payments) of this Title, or any combination thereof.
§22-803. Purchase of Prior City Service.
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(2) Limit on time to purchase. If an employee applies to restore credit for previous service, the employee must either pay the full amount calculated under subsection (1) or make arrangements to pay such amount on the installment plan described in § 22-806 (Installment Payments) or through transfer payments described in Section 22-808 within the first year of reemployment. Provided, however, that members of Plan A, Plan B, Plan L, or Plan Y who file beyond the one-year deadline, may make such purchase by paying the additional interest provided in Section 22-807.
§22-804. Pension Credit for Former C.E.T.A. Employees.
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(3) Any payments which may be due from former C.E.T.A. employees under this section may be paid by installment under the provisions of § 22-806 (Installment Payments) or by transfer payment under the provisions of §22-808.
§22-805. Election of Fire Employees and Police Employees Laid Off in 1978 and 1980 and Subsequently Reinstated to Purchase Pension Credit for the Layoff Period.
(1) Any Fire Employee or Police Employee who was laid off in 1978 or 1980 and subsequently reinstated may elect at any time to purchase pension credit in the employee’s current pension plan for the period of time the employee was laid off, provided that any employee making such election shall be required to pay such additional contributions which would have been paid by that employee had the employee been a member of the employee’s current pension plan during the layoff period, plus interest on that amount calculated from the date the employee was reinstated. Interest shall be charged at the current rate determined by the Board’s actuary to compensate the Pension Fund for lost interest, currently 9% compounded annually. The employee may pay such amount [either] in lump sum [or], by the installment plan under the terms set forth in Section 22-806 (Installment Payments) [of this Ordinance], or by transfer payment under the provisions set forth in Section 22-808.
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§ 22-808. Transfer Payments.
(1) General. Any member who is eligible to purchase credited service for prior City Service, for time spent as a disabled member or in allowable other governmental service may pay for any such service through direct transfers from the member’s account under an eligible deferred compensation plan under Tax Code Section 457(b) or an annuity contract under Tax Code Section 403(b). Either such a deferred compensation plan or annuity contract shall be known as “the transferor plan.” Such transfer payment shall be made in compliance with the provisions of Tax Code Section 457(e)(17) and 403(b)(13) respectively.
(2) Authorization. The member shall provide authorization for such transfer as may be required by the transferor plan.
(3) Refund of transfers; partial credit. If transfer payments are not sufficient to pay for the full cost of service to be purchased, and necessary payments are not completed within ninety (90) days of a member’s separation from service, the member or the member’s beneficiary may elect either (i) a refund of the total transfer payments made; or (ii) credit for that portion of service for which payment has been made (expressed in years and specified to the day), provided that in order to receive partial credit for prior City Service, pursuant to §22-803, the member must have made arrangements to pay for all prior City service.
(4) Limitation on amount of transfer payments. A member shall not transfer amounts under this Section 22-808 which exceed the amount necessary to purchase prior City and other governmental service available for purchase. Any portion of the transfer payment which exceeds that amount required to purchase such service shall be refunded to the member.
(5) Limitation on use of transfer payments. Transfer payments shall be used exclusively for the purpose of purchasing credited service as provided in Section 22-201 (membership in certain plans); Section 22-204 (regarding disabled members); Section 22-802 (purchase of governmental service); and 22-803 (purchase of prior City Service).
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CHAPTER 22-900. CONTRIBUTIONS
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§22-904. Direct Rollover.
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(2) Definitions.
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(b) Eligible Retirement Plan. An eligible retirement plan is an individual retirement account described in Section 408(a) of the Tax Code, an individual retirement annuity described in Section 408(b) of the Tax code, an annuity plan described in Section 403(a) of the Tax Code, an eligible deferred compensation plan as defined under Section 457(b) of the Tax Code, an annuity plan described under Section 403(b) of the Tax Code, or a qualified trust described in Section 401(a) of the Tax Code, that accepts the distributee’s eligible rollover distribution. [However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.]
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§22-1305. Termination of Plan System.
If the several plans of retirement, disability and incidental death benefits which collectively comprise the Retirement System are completely or partially terminated, all members hereunder affected by such complete or partial termination shall be fully vested in their accrued benefits as of the date of termination to the extent the benefits are then funded. If any assets remain after all obligations under this Retirement System have been discharged, such assets shall revert to the City.
SECTION 3. Effective Dates for Section 2 of this ordinance. The amendments provided in Section 2 of this ordinance shall take effect as follows, in order to comply with IRS deadlines:
(a) Section 22-201(4)(b) is effective with regard to trustee-to-trustee transfers after December 31, 2001.
(b) Section 22-306(6) is effective as of January 1, 1963.
(c) The amendments to the following sections, insofar as they relate to Section 22-808, are effective for trustee-to-trustee transfers after December 31, 2001: Sections 22-802(5), 22-803(2), 22-804(3), 22-805(1).
(d) The addition of Section 22-808 is effective with regard to trustee-to-trustee transfers after December 31, 2001.
(e) Section 22-904(b) is amended to define eligible retirement plan for rollover purposes to include 457(b) eligible deferred compensation plans and 403(b) annuity plan and to eliminate a provision limiting a rollover by surviving spouses to an individual retirement account or an individual retirement annuity. Such amendment is effective for distributions after December 31, 2001.
SECTION 4. Retroactive Earlier Effective Dates for other sections of the Retirement Code. In order to comply with IRS regulations, the following provisions of the Retirement Code, which are otherwise not amended, shall be retroactively effective, as follows, notwithstanding the effective date of the ordinance that created the Retirement Code, or otherwise amended or added such sections:
(a) Section 22-105(35) is effective as of January 1, 1963.
(b) Section 22-105(46) is effective as of December 12, 1994.
(c) Section 22-307(6) is effective as of January 1, 1963.
(d) The following sections are effective as of December 12, 1994 insofar as they relate to USERRA: Sections 22-801(2)(b), 22-801(4), and 22-804(5).
(e) Section 22-902(1)(a) is effective for Retirement System Years beginning after 1975 with respect to the limitations of Sections 401(a)(17) and 415 of the Tax Code.
(f) Section 22-305 is effective for Retirement System Years beginning after 1975. Subsection (1) was amended to reflect the an increase in the referenced limitation of Section 415(b) of the Tax Code effective for Retirement System Years beginning on or after July 1, 2002. Subsection (c) was amended to substitute “age 62” for “the member’s Social Security Retirement Age, but on or after the attainment of,” effective for Retirement System Years beginning on or after July 1, 1987, except as otherwise provided in Section 1106(i) of Public Law 99-514. Subsection (d) was amended to substitute “age 65” for all references therein to “the member’s Social Security Retirement Age”, generally effective for Retirement System Years beginning on or after July 1, 1987. Subsections (c) and (d) were also amended in other respects to reflect the foregoing amendments. Subsection (f) thereof was amended to reflect a change in the referenced limitation of Section 415(c)(1)(A) of the Code, effective for Retirement System Years beginning on or after July 1, 2002.
(g) Section 22-1004 is effective as of December 3, 1956.
(h) Section 22-1303 is effective as of December 3, 1956.
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Explanation:
[Brackets] indicate matter deleted.
Underlining indicates new matter added.
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