Introduced Version






SENATE BILL No. 32

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 5-10.2; IC 5-10.3.

Synopsis: PERF vesting period. Reduces from ten to eight the number of years of creditable service a member of the public employees' retirement fund (PERF) must earn to obtain vested status. (The introduced version of this bill was prepared by the pension management oversight commission.)

Effective: July 1, 2008; January 1, 2009.





Young R Michael




    January 8, 2008, read first time and referred to Committee on Pensions and Labor.







Introduced

Second Regular Session 115th General Assembly (2008)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2007 Regular Session of the General Assembly.

SENATE BILL No. 32



    A BILL FOR AN ACT to amend the Indiana Code concerning pensions.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 5-10.2-1-8; (08)IN0032.1.1. -->     SECTION 1. IC 5-10.2-1-8, AS AMENDED BY P.L.88-2005, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 8. (a) Except as provided in subsection (b), For a member of:
        (1) the Indiana state teachers' retirement fund; or
        (2) the public employees' retirement fund who retires before January 1, 2009;

"vested status" as used in this article means the status of having ten (10) years of creditable service.
     (b) For a member of the public employees' retirement fund who retires after December 31, 2008, "vested status" as used in this article means the status of having at least eight (8) years of creditable service.
    (b) (c) In the case of a person who is an elected county official whose governing body has provided for the county official's participation in the public employees' retirement fund under IC 5-10.3-7-2(1), "vested status" means the status of having:
        (1) at least eight (8) years of creditable service as an elected county official in an office described in IC 5-10.2-4-1.7;
        (2) been elected at least two (2) times if the person would have had at least eight (8) years of creditable service as an elected county official in an office described in IC 5-10.2-4-1.7 had the person's term of office not been shortened under a statute enacted under Article 6, Section 2(b) of the Constitution of the State of Indiana; or
        (3) after December 31, 2008, at least ten (10) eight (8) years of creditable service as a member of the fund based on a combination of service as an elected county official and as a full-time employee in a covered position.
    (c) (d) In the case of a person whose term of office commences after the election on November 5, 2002, as Auditor of State, Secretary of State, or Treasurer of State, and who is prohibited by Article 6, Section 1 of the Constitution of the State of Indiana from serving in that office for more than eight (8) years during any period of twelve (12) years, that person shall be vested with at least eight (8) years of creditable service as a member of the fund.
SOURCE: IC 5-10.2-3-1.2; (08)IN0032.1.2. -->     SECTION 2. IC 5-10.2-3-1.2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 1.2. (a) A member who has earned at least:
         (1) eight (8) years of service in a position covered by PERF; or
        (2)
ten (10) years of service in a position covered by PERF, TRF or a combination of the two (2) funds;
may purchase one (1) year of service credit for each five (5) years of service that the member has completed in a position covered by PERF or TRF.
    (b) Before a member retires, a member who desires to purchase additional service credit under subsection (a) must contribute to the fund as follows:
        (1) Contributions that are equal to the product of the following:
            (A) The member's salary at the time the member actually makes a contribution for the service credit.
            (B) A rate, determined by the actuary for the fund, that is based on the age of the member at the time the member actually makes a contribution for the service credit and computed to result in a contribution amount that approximates the actuarial present value of the benefit attributable to the service credit purchased.
            (C) The number of years of service credit the member intends to purchase.
        (2) Contributions for any accrued interest, at a rate determined by the actuary for the fund, for the period from the member's initial membership in the fund to the date payment is made by the member.
    (c) The following apply to the purchase of service credit under this section:
        (1) The board may allow a member to make periodic payments of the contributions required for the purchase of service credit. The board shall determine the length of the period during which the payments must be made.
        (2) The board may deny an application for the purchase of service credit if the purchase would exceed the limitations under Section 415 of the Internal Revenue Code.
        (3) A member may not claim the service credit for the purpose of computing benefits unless the member has made all payments required for the purchase of the service credit.
        (4) To the extent permitted by the Internal Revenue Code and applicable regulations, a member may purchase service credit under this section by a rollover distribution to the fund from any of the following:
            (A) A qualified plan described in Section 401(a) or Section 403(a) of the Internal Revenue Code.
            (B) An annuity contract or account described in Section 403(b) of the Internal Revenue Code.
            (C) An eligible plan that is maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state under Section 457(b) of the Internal Revenue Code.
            (D) An individual retirement account or annuity described in Section 408(a) or Section 408(b) of the Internal Revenue Code.
    (d) A member who terminates employment before satisfying the eligibility requirements necessary to receive a monthly benefit may withdraw the purchase amount, plus accumulated interest, after submitting a properly completed application for a refund to the fund. However, the member must also apply for a refund of the member's entire annuity savings account under section 6 of this chapter to be eligible for a refund of the member's rollover amount.
    (e) For a member who is a state employee, the employer may pay all or a part of the member contributions required for the purchase of service credit under this section. In that event, the actuary shall determine the amortization, and subsections (c)(1), (c)(3), (c)(4), and

(d) do not apply.
    (f) For a member who is an employee of a participating political subdivision, the employer may adopt an ordinance to pay all or a part of the member contributions required for the purchase of service credit under this section. In that event, the actuary shall determine the amortization, and subsections (c)(1), (c)(3), (c)(4), and (d) do not apply.

SOURCE: IC 5-10.2-3-7.5; (08)IN0032.1.3. -->     SECTION 3. IC 5-10.2-3-7.5, AS AMENDED BY P.L.99-2007, SECTION 15, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 7.5. (a) A surviving dependent or surviving spouse of a member who dies in service is entitled to a survivor benefit if:
        (1) the member dies after March 31, 1990;
        (2) the member has:
            (A) at least ten (10) eight (8) years of creditable service, if the member died in service as a member of the general assembly;
            (B) at least fifteen (15) years of creditable service, if the member died in service in any other position covered by the retirement fund; or
            (C) at least ten (10) years but not more than fourteen (14) years of creditable service if the member:
                (i) was at least sixty-five (65) years of age; and
                (ii) died in service in a position covered by the teachers' retirement fund; and
        (3) the surviving dependent or surviving spouse qualifies for a survivor benefit under subsection (b) or (c).
    (b) If a member described in subsection (a) dies with a surviving spouse who was married to the member for at least two (2) years, the surviving spouse is entitled to a survivor benefit equal to the monthly benefit that would have been payable to the spouse under the joint and survivor option of IC 5-10.2-4-7 upon the member's death following retirement at:
        (1) fifty (50) years of age; or
        (2) the actual date of death;
whichever is later. However, benefits payable under this subsection are subject to subsections (e) and (g).
    (c) If a member described in subsection (a) dies without a surviving spouse who was married to the member for at least two (2) years, but with a surviving dependent, the surviving dependent is entitled to a survivor benefit in a monthly amount equal to the actuarial equivalent of the monthly benefit that would have been payable to the spouse (assuming the spouse would have had the same birth date as the

member) under the joint and survivor option of IC 5-10.2-4-7 upon the member's death following retirement at:
        (1) fifty (50) years of age; or
        (2) the actual date of death;
whichever is later. If there are two (2) or more surviving dependents, the actuarial equivalent of the benefit described in this subsection shall be calculated and, considering the dependents' attained ages, an equal dollar amount shall be determined as the monthly benefit to be paid to each dependent. Monthly benefits under this subsection are payable until the date the dependent becomes eighteen (18) years of age or dies, whichever is earlier. However, if a dependent has a permanent and total disability (using disability guidelines established by the Social Security Administration) at the date the dependent reaches eighteen (18) years of age, the monthly benefit is payable until the date the dependent no longer has a disability (using disability guidelines established by the Social Security Administration) or dies, whichever is earlier. Benefits payable under this subsection are subject to subsections (e) and (g).
    (d) Except as provided in subsections (e) and (h), the surviving spouse or surviving dependent of a member who is entitled to a survivor benefit under subsection (b) or (c) or section 7.6 of this chapter may elect to receive a lump sum payment of the total amount credited to the member in the member's annuity savings account or an amount equal to the member's federal income tax basis in the member's annuity savings account as of December 31, 1986. A surviving spouse or surviving dependent who makes such an election is not entitled to an annuity as part of the survivor benefit under subsection (b) or (c) or section 7.6 of this chapter to the extent of the lump sum payment.
    (e) If a member described in subsection (a) or section 7.6(a) of this chapter is survived by a designated beneficiary who is not a surviving spouse or surviving dependent entitled to a survivor benefit under subsection (b) or (c) or section 7.6 of this chapter, the following provisions apply:
        (1) If the member is survived by one (1) designated beneficiary, the designated beneficiary is entitled to receive in a lump sum or over a period of up to five (5) years, as elected by the designated beneficiary, the amount credited to the member's annuity savings account, less any disability benefits paid to the member.
        (2) If the member is survived by two (2) or more designated beneficiaries, the designated beneficiaries are entitled to receive in a lump sum or over a period of up to five (5) years, as elected by the designated beneficiary, equal shares of the amount credited to the member's annuity savings account, less any disability

benefits paid to the member.
        (3) If the member is also survived by a spouse or dependent who is entitled to a survivor benefit under subsection (b) or (c) or section 7.6 of this chapter, the surviving spouse or dependent is not entitled to an annuity or a lump sum payment as part of the survivor benefit, unless the surviving spouse or dependent is also a designated beneficiary.
    (f) If a member dies:
        (1) without a surviving spouse or surviving dependent who qualifies for survivor benefits under subsection (b) or (c) or section 7.6 of this chapter; and
        (2) without a surviving designated beneficiary who is entitled to receive the member's annuity savings account under subsection (e);
the amount credited to the member's annuity savings account, less any disability benefits paid to the member, shall be paid to the member's estate.
    (g) Survivor benefits payable under this section or section 7.6 of this chapter shall be reduced by any disability benefits paid to the member.
    (h) Additional annuity contributions, if any, shall not be included in determining survivor benefits under subsection (b) or (c) or section 7.6 of this chapter, but are payable in a lump sum payment to:
        (1) the member's surviving designated beneficiary; or
        (2) the member's estate, if there is no surviving designated beneficiary.
    (i) Survivor benefits provided under this section or section 7.6 of this chapter are subject to IC 5-10.2-2-1.5.
    (j) A benefit specified in this section shall be forfeited and credited to the member's retirement fund if no person entitled to the benefit claims it within three (3) years after the member's death. However, the board may honor a claim that is made more than three (3) years after the member's death if the board finds, in the board's discretion, that:
        (1) the delay in making the claim was reasonable or other extenuating circumstances justify the award of the benefit to the claimant; and
        (2) paying the claim would not cause a violation of the applicable Internal Revenue Service rules.

SOURCE: IC 5-10.2-4-1; (08)IN0032.1.4. -->     SECTION 4. IC 5-10.2-4-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 1. (a) This subsection applies to:
        (1) members of the public employees' retirement fund who retire before July 1, 1995; and
        (2) members of the Indiana state teachers' retirement fund who retire before May 2, 1989.
A member who has reached age sixty-five (65) and has at least ten (10) years of creditable service is eligible for normal retirement.
    (b) This subsection applies to members of the Indiana state teachers' retirement fund who retire after May 1, 1989, and to members of the public employees' retirement fund who retire after June 30, 1995, and before January 1, 2009, except as provided in section 1.7 of this chapter. A member is eligible for normal retirement if:
        (1) the member is at least sixty-five (65) years of age and has at least ten (10) years of creditable service;
        (2) the member is at least sixty (60) years of age and has at least fifteen (15) years of creditable service; or
        (3) the member's age in years plus the member's years of service is at least eighty-five (85) and the member is at least fifty-five (55) years of age.
     (c) This subsection applies to a member of the public employees' retirement fund who retires after December 31, 2008. A member is eligible for normal retirement if:
        (1) the member is at least sixty-five (65) years of age and has at least eight (8) years of creditable service;
        (2) the member is at least sixty (60) years of age and has at least fifteen (15) years of creditable service; or
        (3) the member's age in years plus the member's years of service is at least eighty-five (85) and the member is at least fifty-five (55) years of age.

    (c) (d) A member who has reached age fifty (50) and has at least fifteen (15) years of creditable service is eligible for early retirement with a reduced pension.
    (d) (e) A member who is eligible for normal or early retirement is entitled to choose a retirement date on which the member's benefit begins if the following conditions are met:
        (1) The application for retirement benefits and the choice of the date is filed on a form provided by the board.
        (2) The date must be after the cessation of the member's service and be the first day of a month.
        (3) The retirement date is not more than six (6) months before the date the application is received by the board. However, if the board determines that a member is incompetent to file for benefits and choose a retirement date, the retirement date may be any date that is the first of the month after the time the member became incompetent.
SOURCE: IC 5-10.2-4-1.7; (08)IN0032.1.5. -->     SECTION 5. IC 5-10.2-4-1.7, AS AMENDED BY P.L.88-2005, SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 1.7. (a) This section applies only to members of the public employees' retirement fund who retire after June 30, 2002.
    (b) A member is eligible for normal retirement after becoming sixty-five (65) years of age if the member:
        (1) has:
            (A) served as an elected county official in an office described in Article 6, Section 2 of the Constitution of the State of Indiana for at least eight (8) years; or
            (B) been elected at least two (2) times and would have served at least eight (8) years as an elected county official in an office described in Article 6, Section 2 of the Constitution of the State of Indiana had the member's term of office not been shortened under a statute enacted under Article 6, Section 2(b) of the Constitution of the State of Indiana; and
        (2) is prohibited by Article 6, Section 2 of the Constitution of the State of Indiana from serving in that office for more than eight (8) years in any period of twelve (12) years.
    (c) A member who:
        (1) has served as an elected county official; and
        (2) does not meet the requirements of subsection (b);
is eligible for normal retirement if the member has attained vested status (as defined in IC 5-10.2-1-8(b)(3)) IC 5-10.2-1-8(c)(3)) and meets the requirements of section 1 of this chapter.
SOURCE: IC 5-10.3-3-1; (08)IN0032.1.6. -->     SECTION 6. IC 5-10.3-3-1, AS AMENDED BY P.L.62-2005, SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 1. (a) The board is composed of six (6) trustees.
    (b) Five (5) of the trustees shall be appointed by the governor, as follows:
        (1) One (1) must be a member of the fund with at least ten (10) eight (8) years of creditable service.
        (2) Not more than three (3) may be members of the same political party.
        (3) One (1) must be:
            (A) a:
                (i) member of the fund or retired member of the fund; or
                (ii) member of a collective bargaining unit of state employees represented by a labor organization; or
            (B) an individual who is:
                (i) an officer or a member of a local, a national, or an

international labor union that represents state or university employees; and
                (ii) an Indiana resident.
    (c) The director of the budget agency or the director's designee is an ex officio voting member of the board. An individual appointed under this subsection to serve as the director's designee:
        (1) is subject to the provisions of section 3 of this chapter; and
        (2) serves as a permanent designee until replaced by the director.
    (d) The governor shall fill by appointment vacancies on the board in the manner described in subsection (b).
    (e) In making the appointments under subsection (b)(1) or (b)(2), the governor may consider whether at least one (1) trustee is a retired member of the fund under subsection (b)(3)(A)(i).

SOURCE: IC 5-10.3-6-8; (08)IN0032.1.7. -->     SECTION 7. IC 5-10.3-6-8 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 8. (a) As used in this section, "withdrawing political subdivision" means a political subdivision that takes an action described in subsection (b).
    (b) Subject to the provisions of this section, a political subdivision may do the following:
        (1) Stop its participation in the fund and withdraw all of the political subdivision's employees from participation in the fund.
        (2) Withdraw a departmental, an occupational, or other definable classification of employees from participation in the fund.
        (3) Stop the political subdivision's participation in the fund by:
            (A) selling all of the political subdivision's assets; or
            (B) ceasing to exist as a political subdivision.
    (c) The withdrawal of a political subdivision's participation in the fund is effective on a termination date established by the board. The termination date may not occur before all of the following have occurred:
        (1) The withdrawing political subdivision has provided written notice of the following to the board:
            (A) The withdrawing political subdivision's intent to cease participation.
            (B) The names of the withdrawing political subdivision's current employees and former employees as of the date on which the notice is provided.
        (2) The expiration of:
            (A) a ninety (90) day period following the filing of the notice with the board, for a withdrawing political subdivision that sells all of the withdrawing political subdivision's assets or that ceases to exist as a political subdivision; or
            (B) a two (2) year period following the filing of the notice with the board, for all other withdrawing political subdivisions.
        (3) The withdrawing political subdivision takes all actions required in subsections (d) through (h).
    (d) With respect to retired members who have creditable service with the withdrawing political subdivision, the withdrawing political subdivision must contribute to the fund any additional amounts that the board determines are necessary to provide for reserves with sufficient assets to pay all future benefits from the fund to those retired members. The contribution by the withdrawing political subdivision must be made in a lump sum or in a series of payments determined by the board.
    (e) A member who is an employee of the political subdivision as of the date of the notice under subsection (c) is vested in the pension portion of the member's retirement benefit. The withdrawing political subdivision must contribute to the fund the amount the board determines is necessary to fund fully the vested benefit. The contribution by the withdrawing political subdivision must be made in a lump sum or in a series of payments determined by the board.
    (f) A member who is covered by subsection (e) and who is at least sixty-five (65) years of age may elect to retire under IC 5-10.2-4-1 even if the member has fewer than ten (10) eight (8) years of service. The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of service.
    (g) With respect to members of the fund who have creditable service with the withdrawing political subdivision and who are not employees as of the date of the notice under subsection (c), the withdrawing political subdivision must contribute the amount that the board determines is necessary to fund fully the service for those members that is attributable to service with the withdrawing political subdivision. The contribution by the withdrawing political subdivision must be made in a lump sum or in a series of payments determined by the board.
    (h) The board shall evaluate each withdrawal under this section to determine if the withdrawal affects the fund's compliance with Section 401(a)(4) of the Internal Revenue Code of 1954, as in effect on September 1, 1974. The board may deny a political subdivision permission to withdraw if the denial is necessary to achieve compliance with Section 401(a)(4) of the Internal Revenue Code of 1954, as in effect on September 1, 1974.
SOURCE: IC 5-10.3-6-8.5; (08)IN0032.1.8. -->     SECTION 8. IC 5-10.3-6-8.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 8.5. (a) This

section only applies if:
        (1) certain employees of a state university in a departmental, occupational, or other definable classification involved in health care are terminated from employment with the state university as a result of:
            (A) a lease or other transfer of university property to a nongovernmental entity; or
            (B) a contractual arrangement with a nongovernmental entity to perform certain state university functions;
        (2) the state university requests coverage under this section from the board; and
        (3) the board approves the request.
    (b) The withdrawal of the employees described in subsection (a) from the fund is effective on a termination date established by the board. The board may not establish a termination date that occurs before all of the following have occurred:
        (1) The state university has requested coverage under this section and provided written notice of the following to the board:
            (A) The intent of the state university to terminate the employees from employment.
            (B) The names of the terminated employees as of the date that the termination is to occur.
        (2) The expiration of a thirty (30) day period following the filing of the notice with the board.
        (3) The state university fully complies with subsection (c).
    (c) A member who is an employee of the state university described in subsection (a) as of the date of the notice under subsection (b) and who is listed in the notice under subsection (b) is vested in the pension portion of the member's retirement benefit. The state university must contribute to the fund the amount the board determines is necessary to completely fund the vested benefit. The contribution by the state university must be made in a lump sum or in a series of payments determined by the board.
    (d) A member who is covered by subsection (c) and who is at least sixty-five (65) years of age may elect to retire under IC 5-10.2-4-1 even if the member has less than ten (10) eight (8) years of service. The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service.
    (e) The board shall evaluate each withdrawal under this section to determine if the withdrawal affects the fund's compliance with Section 401(a) of the Internal Revenue Code of 1954, as in effect on September 1, 1974. The board may deny an employee permission to withdraw if

the denial is necessary to achieve compliance with Section 401(a) of the Internal Revenue Code of 1954, as in effect on September 1, 1974.

SOURCE: IC 5-10.3-6-8.9; (08)IN0032.1.9. -->     SECTION 9. IC 5-10.3-6-8.9, AS ADDED BY P.L.158-2006, SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 8.9. (a) This section applies when certain employees of the state in particular departmental, occupational, or other definable classifications are terminated from employment with the state as a result of:
        (1) a lease or other transfer of state property to a nongovernmental entity; or
        (2) a contractual arrangement with a nongovernmental entity to perform certain state functions.
    (b) The governor shall request coverage under this section from the board whenever an employee of the state is terminated as described in subsection (a).
    (c) The board must approve a request from the governor under subsection (b) unless approval violates subsection (k), federal or state law, or the terms of the fund.
    (d) As used in this section, "early retirement" means a member is eligible to retire with a reduced pension under IC 5-10.2-4-1, because the member:
        (1) is at least fifty (50) years of age; and
        (2) has at least fifteen (15) years of creditable service.
    (e) As used in this section, "normal retirement" means a member is eligible to retire under IC 5-10.2-4-1, because:
        (1) the member is at least sixty-five (65) years of age and has at least ten (10) eight (8) years of creditable service;
        (2) the member is at least sixty (60) years of age and has at least fifteen (15) years of creditable service; or
        (3) the member's age in years plus the member's years of service is at least eighty-five (85) and the member is at least fifty-five (55) years of age.
    (f) The withdrawal of the employees described in subsection (a) from the fund is effective on a termination date established by the board. The board may not establish a termination date that occurs before all of the following have occurred:
        (1) The governor has requested coverage under this section and provided written notice of the following to the board:
            (A) The intent of the state to terminate the employees from employment.
            (B) The names of the terminated employees as of the date that the termination is to occur.
        (2) The expiration of a thirty (30) day period following the filing of the notice with the board.
        (3) The state complies with subsections (g) and (i).
    (g) A member who:
        (1) is an employee of the state described in subsection (a) with at least twenty-four (24) months of creditable service as of the date of the notice under subsection (f); and
        (2) is listed in the notice under subsection (f);
is vested in the pension portion of the member's retirement benefit. The state must contribute to the fund the amount the board determines is necessary to completely fund the vested benefit. The contribution by the state must be made in a lump sum or in a series of payments determined by the board. The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service.
    (h) A member who is covered by subsection (g) and who is at least sixty-five (65) years of age as of the date of the notice under subsection (f) may elect to retire under IC 5-10.2-4-1 even if the member has less than ten (10) eight (8) years of service. The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service.
    (i) A member who is covered by subsection (f) and who, as of the date of the notice under subsection (f), is less than twenty-four (24) months from being eligible for normal or early retirement under IC 5-10.2-4-1 may elect to retire by purchasing the service credit needed for retirement under the following conditions:
        (1) The state shall contribute to the fund an amount determined under IC 5-10.2-3-1.2 and payable from the sources described in subsection (j) sufficient to pay the member's contributions required for the member's purchase of the service credit the member needs to retire.
        (2) The maximum amount of creditable service that the state may purchase for a member under this subsection is twenty-four (24) months.
        (3) The benefit for the member shall be computed under IC 5-10.2-4-4 using the member's actual years of creditable service plus all other service for which the fund gives credit, including the creditable service purchased under this subsection.
    (j) The amounts that the state is required to contribute to the fund under subsection (i) must come from the following sources:
        (1) If the state receives monetary payments under the lease or contractual arrangement described in subsection (a), the proceeds

of the monetary payments received by the state. The state may not require, as a condition of the transaction to transfer state property or have certain state functions performed by a nongovernmental entity, that the nongovernmental entity directly or indirectly pay the amounts that the state is required to contribute under subsection (i).
        (2) If the state does not receive any monetary payments under the lease or contractual arrangement described in subsection (a), any remaining appropriations made to the state department, agency, or other entity terminating the employees described in subsection (a).
        (3) If the sources described in subdivisions (1) and (2) do not fully fund the amounts that the state is required to contribute to the fund under subsection (i), the board shall request that the general assembly appropriate the amount necessary to fully fund the state's required contribution under subsection (i) in the next biennial state budget.
    (k) The board shall evaluate each withdrawal under this section to determine if the withdrawal affects the fund's compliance with Section 401(a) of the Internal Revenue Code of 1954, as in effect on September 1, 1974. The board may deny an employee permission to withdraw if the denial is necessary to achieve compliance with Section 401(a) of the Internal Revenue Code of 1954, as in effect on September 1, 1974.

SOURCE: IC 5-10.3-7-4.5; (08)IN0032.1.10. -->     SECTION 10. IC 5-10.3-7-4.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 4.5. (a) As used in this section, "out-of-state service" means service in another state in a comparable position that would be creditable service if performed in Indiana.
    (b) Subject to subsections (c) through (f), a member may purchase out-of-state service credit if the member meets the following requirements:
        (1) The member has at least one (1) year of creditable service in the fund.
        (2) Before the member retires, the member makes contributions to the fund as follows:
            (A) Contributions that are equal to the product of the following:
                (i) The member's salary at the time the member actually makes a contribution for the service credit.
                (ii) A rate, determined by the actuary of the fund, based on the age of the member at the time the member actually makes a contribution for service credit and computed to

result in a contribution amount that approximates the actuarial present value of the benefit attributable to the service credit purchased.
                (iii) The number of years of out-of-state service the member intends to purchase.
            (B) Contributions for any accrued interest, at a rate determined by the actuary for the fund, for the period from the member's initial membership in the fund to the date payment is made by the member.
        (3) The member has received verification from the fund that the out-of-state service is, as of that date, valid.
    (c) Out-of-state years that qualify a member for retirement in an out-of-state system or in any federal retirement system may not be granted under this section.
    (d) At least ten (10) eight (8) years of service in Indiana is required before a member may receive a benefit based on out-of-state service credits.
    (e) A member who:
        (1) terminates employment before satisfying the eligibility requirements necessary to receive a monthly allowance; or
        (2) receives a monthly allowance for the same service from another tax supported public employee retirement plan other than under the Social Security Act;
may withdraw the purchase amount plus accumulated interest after submitting a properly completed application for a refund to the fund.
    (f) The following apply to the purchase of service credit under this section:
        (1) The board may allow a member to make periodic payments of the contributions required for the purchase of the service credit. The board shall determine the length of the period during which the payments must be made.
        (2) The board may deny an application for the purchase of service credit if the purchase would exceed the limitations under Section 415 of the Internal Revenue Code.
        (3) A member may not claim the service credit for purposes of determining eligibility or computing benefits unless the member has made all payments required for the purchase of the service credit.

SOURCE: IC 5-10.3-7-4.6; (08)IN0032.1.11. -->     SECTION 11. IC 5-10.3-7-4.6 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 4.6. (a) Subject to the provisions of this section, a member may purchase service credit for the member's prior service in a position covered by the 1925 police

pension fund under IC 36-8-6, the 1937 firefighters' pension fund under IC 36-8-7, or the 1953 police pension fund under IC 36-8-7.5 if the member meets the following requirements:
        (1) The member has at least one (1) year of credited service in the fund.
        (2) The member has not attained vested status in and is not an active member of the 1925 police pension fund, the 1937 firefighters' pension fund, or the 1953 police pension fund.
        (3) Before the member retires, the member makes contributions to the fund as follows:
            (A) Contributions that are equal to the product of the following:
                (i) The member's salary at the time the member actually makes a contribution for the service credit.
                (ii) A rate, determined by the actuary of the fund, based on the age of the member at the time the member actually makes a contribution for service credit and computed to result in a contribution amount that approximates the actuarial present value of the benefit attributable to the service credit purchased.
                (iii) The number of years of service credit the member intends to purchase.
            (B) Contributions for any accrued interest, at a rate determined by the actuary for the fund, for the period from the member's initial membership in the fund to the date payment is made by the member.
        (4) The member has received verification from the fund that the service in the 1925 police pension fund, the 1937 firefighters' pension fund, or the 1953 police pension fund is, as of that date, valid.
    (b) At least ten (10) eight (8) years of service in Indiana is required before a member may receive a benefit based on service credits purchased under this section.
    (c) A member who:
        (1) terminates employment before satisfying the eligibility requirements necessary to receive a monthly allowance; or
        (2) receives a monthly allowance for the same service from another tax supported public employee retirement plan other than under the Social Security Act;
may withdraw the purchase amount plus accumulated interest after submitting a properly completed application for a refund to the fund.
    (d) The following apply to the purchase of service credit under this

section:
        (1) The board may allow a member to make periodic payments of the contributions required for the purchase of the service credit. The board shall determine the length of the period during which the payments must be made.
        (2) The board may deny an application for the purchase of service credit if the purchase would exceed the limitations under Section 415 of the Internal Revenue Code.
        (3) A member may not claim the service credit for purposes of determining eligibility or computing benefits unless the member has made all payments required for the purchase of the service credit.

SOURCE: IC 5-10.3-7-5; (08)IN0032.1.12. -->     SECTION 12. IC 5-10.3-7-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2009]: Sec. 5. (a) A member who:
        (1) enters the United States armed services;
        (2) leaves his the member's contributions in the fund;
        (3) except as provided in subsection (c), resumes service with his the member's employer within one hundred twenty (120) days after his the member's unconditional discharge; and
        (4) would be entitled to service credit for military service under the Uniformed Services Employment and Reemployment Rights Act (38 U.S.C. 4301 et seq.) if the member had resumed service with the member's employer within ninety (90) days after discharge;
is entitled to service credit for the armed service.
    (b) A state employee who left employment before January 1, 1946, or an employee of a political subdivision who left employment before the participation date, to enter the United States armed services is entitled to service credit for the armed service if he: the employee:
        (1) except as provided in subsection (c), resumes service with the employer within one hundred twenty (120) days after his the employee's unconditional discharge; and
        (2) would be entitled to service credit for military service under the applicable requirements of federal law in effect at the time of reemployment if the employee had resumed service with the employee's employer within ninety (90) days after discharge.
    (c) The board shall extend the one hundred twenty (120) day reemployment requirement contained in subsection (a)(3) or (b)(1) if the board determines that an illness, an injury, or a disability related to the member's military service prevented the member from resuming employment within one hundred twenty (120) days after the member's

discharge from military service. However, the board may not extend the deadline beyond thirty (30) months after the member's discharge.
    (d) If a member retires and the board subsequently determines that the member is entitled to additional service credit due to the extension of a deadline under subsection (c), the board shall recompute the member's benefit. However, the additional service credit may be used only in the computation of benefits to be paid after the date of the board's determination, and the member is not entitled to a recomputation of benefits received before the date of the board's determination.
    (e) Notwithstanding any provision of this section, a member is entitled to service credit and benefits in the amount and to the extent required by the Uniformed Services Employment and Reemployment Rights Act (38 U.S.C. 4301 et seq.).
    (f) Subject to the provisions of this section, an active member may purchase not more than two (2) years of service credit for the member's service on active duty in the armed services if the member meets the following conditions:
        (1) The member has at least one (1) year of credited service in the fund.
        (2) The member serves on active duty in the armed services of the United States for at least six (6) months.
        (3) The member receives an honorable discharge from the armed services.
        (4) Before the member retires, the member makes contributions to the fund as follows:
            (A) Contributions that are equal to the product of the following:
                (i) The member's salary at the time the member actually makes a contribution for the service credit.
                (ii) A rate, determined by the actuary of the fund, that is based on the age of the member at the time the member actually makes a contribution for service credit and computed to result in a contribution amount that approximates the actuarial present value of the benefit attributable to the service credit purchased.
                (iii) The number of years of service credit the member intends to purchase.
            (B) Contributions for any accrued interest, at a rate determined by the actuary of the fund, for the period from the member's initial membership in the fund to the date payment is made by the member.


However, a member is entitled to purchase service credit under this subsection only to the extent that service credit is not granted for that time under another provision of this section. At least ten (10) eight (8) years of service in Indiana is required before a member may receive a benefit based on service credits purchased under this section. A member who terminates employment before satisfying the eligibility requirements necessary to receive a monthly allowance or receives a monthly allowance for the same service from another tax supported public employee retirement plan other than under the federal Social Security Act may withdraw the purchase amount plus accumulated interest after submitting a properly completed application for a refund to the fund.
    (g) The following apply to the purchase of service credit under subsection (f):
        (1) The board may allow a member to make periodic payments of the contributions required for the purchase of the service credit. The board shall determine the length of the period during which the payments must be made.
        (2) The board may deny an application for the purchase of service credit if the purchase would exceed the limitations under Section 415 of the Internal Revenue Code.
        (3) A member may not claim the service credit for purposes of determining eligibility or computing benefits unless the member has made all payments required for the purchase of the service credit.
SOURCE: ; (08)IN0032.1.13. -->     SECTION 13. [EFFECTIVE JULY 1, 2008] (a) IC 5-10.2-3-1.2, as amended by this act, applies to a member of the public employees' retirement fund who purchases service credit after December 31, 2008.
    (b) IC 5-10.2-3-7.5, as amended by this act, applies to benefits provided to the surviving dependent or surviving spouse of a member who dies in service as a member of the general assembly after December 31, 2008.
    (c) IC 5-10.3-3-1, as amended by this act, applies to appointments to the board of the public employees' retirement fund that are made after December 31, 2008.
    (d) IC 5-10.3-6-8, IC 5-10.3-6-8.5, and IC 5-10.3-6-8.9, all as amended by this act, apply to members who retire after December 31, 2008.
    (e) IC 5-10.3-7-4.5, as amended by this act, applies to benefits provided after December 31, 2008, based on out-of-state service credit purchased under IC 5-10.3-7-4.5.
    (f) IC 5-10.3-7-4.6 and IC 5-10.3-7-5, both as amended by this act, apply to benefits provided after December 31, 2008, based on service credit for prior service purchased under IC 5-10.3-7-4.6.