CHAPTER 592

AN ACT TO AMEND CHAPTER 55, TITLE 29, DELAWADE CODE, ENTITLED "STATE EMPLOYEES' PENSION PLAN," BY REVISING THE ENTIRE SAID CHAPTER 55.

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

Section 1. Chapter 55, Title 29, Delaware Code, is amended by striking all the said Chapter 55, and substituting in lieu thereof a new Chapter 55, to be entitled "State Employees' Pension Plan," to read as follows:

SUBCHAPTER I. GENERAL PROVISIONS

§ 5501. Definitions

As used in this Chapter:

(a) "Employee" shall mean an individual who

(1) is employed by:

(i) the State on a full time or annual basis, including elected or appointed officials, or

(ii) the State Department of Public Instruction, a School District which is part of the State School System, the University of Delaware, Delaware State College, or Delaware Technical and Community College, or

() a State agency that is supported wholly or in part by funds granted to the State by the Federal Government; and

(2) receives compensation wholly or in part directly from the State Treasury or from the Treasury through an agency within the State that is wholly or in part supported by the State; and

(3) is not a member of any other state or municipal retirement system financed in whole or in part by the State; and

(4) did not, after May, 1970, and after attainment of age 60, first enter service which would otherwise be deemed service as an employee.

(b) "Credited service" shall mean, for any individual,

(1) service as an employee;

(2) service before June, 1970, which was deemed to be "covered employment" as defined in section 5501 as in effect on May 31, 1970;

(3) service for which credit was allowed pursuant to section 5522 as in effect on May 31, 1970;

(4) full time active duty, not in excess of 5 years, in the Armed Services of the United States during time of war or national emergency, provided that the individual became an employee within 2 years after completion of his tour of duty or within 2 years after his completion of a course of professional or vocational training, if such course was begun within 2 years after completion of his tour of duty;

(5) service in professional educational employment, not in excess of 4 years, performed for another State, a municipality in another State, the Federal Government, or an accredited private school or college, provided that the individual who rendered such service (i) subsequently becomes an employee as a school teacher, professional administrative or supervisory employee or school nurse employed in a public school, the State Department of Public Instruction, the University of Delaware, Delaware State College, or Delaware Technical and Community College, and (ii) on or before the date of his application for a pension, pays into the Fund an amount equal to 5% of his final average compensation for each month so credited;

(0) If an individual ceases to be an employee before he has acquired 20 years of credited service, his service credits to the date of termination shall be cancelled, but shall be restored if: (I) his cessation of, employment is due to absence on account of military service, disability, or approved leave, under such rules as the Board may adopt, and he again becomes an employee within 4 months after such absence, or (ii) he again becomes an employee within 4 months after such cessation of employment, or

(iii) he subsequently acquires 5 years of credited service, provided that if he has withdrawn his contributions he repays them with interest at a rate determined by the Board.

(c) "Compensation" shall mean, for any individual, all salary, wages, and fees, including overtime payments and special payments for extra duties, payable to him for service credited under paragraph (b) (1), (2), and (3) and the value of any maintenance provided for him as part of such payments, except that any part of such payments which is at an annual rate in excess of $24,000 a year shall be excluded.

(d) "Final average compensation" shall mean, for any individual, the average compensation paid to him per month, up to a maximum of $2,000, during the period of 60 consecutive months in his years of service credited under paragraph (b) (1), (2), and (3) in which his compensation was highest.

(e) "Board" shall mean the Board of Trustees established by section 5542.

§ 5502. Employment of pensioners

(a) An individual shall not receive a pension under this chapter for any month during which he is an employee, unless he is:

(1) An official elected by popular vote at a regular State election, or

(2) An official appointed by the Governor, or

(3) A temporary employee whose earnings from such temporary employment do not exceed $2,000 a year.

(b) Nothing in this section shall prevent the State from employing an individual receiving a pension under this chapter as a registration or election official or as a juror. An individual so employed may receive the compensation provided by law without deduction from his pension.

§ 5503. Attachment and assignment of benefits

The benefits provided by this chapter shall not be subject to attachment or execution and shall be payable only to the beneficiary designated, and shall not be subject to assignment or transfer.

§ 5504. Waiver of benefits

Any individual entitled to any benefits under this chapter may decline to accept all or any part of such benefits by a waiver signed and filed with the Board. Such waiver may be revoked in writing at any time, but no payment of the benefits waived shall be made covering the period during which such waiver was in effect.

§ 5505. University of Delaware

Any sections of this chapter to the contrary notwithstanding-

(a) The term employee as used in this chapter shall exclude all faculty and designated professional staff of the University of Delaware who are first employed by the University after June 1, 1970.

(b) Faculty and designated professional staff of the University of Delaware, who, as of January 1, 1971, have less than 5 years of credited service under this chapter and are in a position covered by the Teachers Insurance and Annuity Association Retirement Plan shall cease to be employees under this Chapter on January 1, 1971 and shall have their accumulated contributions with interest refunded upon the filing of an application on or after January 1, 1971 in a form prescribed by the Board.

() Faculty and designated professional staff of the University of Delaware who, as of January 1, 1971, have less than 5 years of credited service under this chapter and are in a position covered by the Teachers Insurance and Annuity Association Retirement Plan may, effective January 1, 1971, elect to either:

(1) continue to be an employee under this chapter and continue to make the contributions required under section 5543, or

(2) cease to be an employee under this chapter and leave their accumulated contributions in the State Employees Retirement Fund, or

(3) cease to be an employee under this chapter and have their accumulated contributions with interest refunded upon the filing of an application on or after January 1, 1971 in a form prescribed by the Board.

(d) Faculty and designated professional staff who leave their accumulated contributions in the State Employees Retirement Fund in accordance with paragraph (c) (2) hereof shall become eligible to receive a service pension or acquire a vested right to a service pension in accordance with section 5522 and section 5523, respectively, provided that their age and total years of service with the University of Delaware meet the requirements of section 5522 or section 5523. The amount of the monthly service pension payable to any such faculty or designated professional staff shall be 1/60 of his final average compensation multiplied by the number of years, taken to the nearest twelfth of a year, in his period of credited service under this chapter, subject to a maximum of $1,000.

(e) By October 1 of each year beginning with 1970, the University of Delaware shall submit to the Board a list of the faculty and designated professional staff who are not employees under this chapter and are covered by the Teachers Insurance and Annuity Association Retirement Plan, showing the estimated salaries of such faculty and professional staff for the fiscal year beginning July 1 of the following year. The Board shall apply the normal rate of contribution determined in accordance with section 5544 to the total estimated salaries of such faculty and professional staff and report the resulting amount to the Budget Director of the State by November 1 of each year beginning with 1970. The State shall appropriate such amount from the General Fund to the University of Delaware each fiscal year, payments of which shall be made in equal monthly installments, beginning with the fiscal year beginning July 1, 1971.

SUBCHAPTER II. ELIGIBILITY REQUIREMENTS AND BENEFITS

§ 5551. Mandatory retirement

(a) Except as provided in paragraphs (b) and (c), an employee shall retire on his mandatory retirement date. The mandatory retirement date shall be the last day of the calendar month in which the employee attains his mandatory retirement age, except, that in the case of a teacher or other institutional employee on an annual contract, it shall be the last day of the contract year in which the employee attains his mandatory retirement age.

The mandatory retirement age shall be as follows:

   

Age

Effective January 1,

1971

69

Effective January 1,

1972

68

Effective January 1,

1973

67

Effective January 1,

1974

66

Effective January 1,

1975

65

(b) At the option of and upon the recommendation of the head of the department or agency by which he is employed and subject to the annual approval of the Committee specified herein, an employee's retirement may be postponed to the end of any month within 5 years after the mandatory retirement date. Such Committee shall consist of the Governor or his designee as Chairman, the Budget Director, and the Personnel Director.

(c) The mandatory retirement date specified in paragraph (a) shall not apply to:

(1) An official elected by popular vote at a regular State election, or

(2) An official appointed by the Governor, or

(3) A temporary employee whose earnings from such temporary employment do not exceed $2,000 a year.

§ 5522. Eligibility for service pension

(a) An employee shall become eligible to receive a service pension, beginning with the month after he has terminated employment, if —

(1) he has 5 years of credited service, exclusive of service credited under section 5501 (b) (4) or (5), and has attained age 65, or

(2) he has 15 years of credited service, exclusive of service credited under section 5001 (b) (4) or (5), and has attained age 60, or (3) he has 30 years of credited service.

(b) A former employee with a vested right to a service pension shall become eligible to receive such pension beginning with the first month after his attainment of age 60.

§ 5523. Vested right to service pension

(a) An employee who has 20 years of credited service, including 15 years credited under section 5501 (b) (1), (2) and (3), shall have a vested right to a service pension.

(b) A former employee's vested right shall be forfeited upon his application for a refund of his accumulated contributions.

§ 5524. Eligibility for disability pension

(a) An employee who has 15 years of credited service, exclusive of service credited under section 5501 (b) (4) or (5), and becomes disabled shall become eligible to receive a disability pension beginning with the fourth month following the inception of his disability. He shall cease to be eligible at the end of the month in which he recovers from disability, if such recovery occurs before his attainment of age 60.

(b) Such an employee shall be kept on the active payroll and receive credited service from the inception of his disability to the end of the third month following and shall receive payments at the same rate of compensation he received before he became disabled.

(c) An employee shall be deemed disabled for the purposes of this section if he has a physical or mental disability which prevents him from performing the duties of his position.

§ 5525. Payment of service pension

Service pension payments shall be made to a retired employee or former employee for each month beginning with the month in which he becomes eligible to receive such pension and ending with the month in which he dies.

§ 5526. Payment of disability pension

(a) Disability pension payments shall be made to a retired employee for each month beginning with the month in which he becomes eligible to receive such pension and ending with the month in which he ceases to be eligible or dies.

(b) If a disability pensioner engages in any gainful occupation or business while still disabled and before he has attained age 60, the amount of his pension shall be reduced each month by the excess, if any, of the amount earned in such month from such business or occupation over one-half of the rate of compensation he received before he became disabled.

(c) Termination of a disability pension on account of recovery from disability shall not prejudice the right of the pensioner to qualify subsequently for a service pension or another disability pension.

§ 5527. Amount of service or disability pension

(a) The amount of the monthly service or disability pension payable to an employee or former employee shall, subject to the maximum and minimum limitations specified herein, be 1/60 of his final average compensation multiplied by the number of years, taken to the nearest twelfth of a year, in his period of credited service.

(b) In the case of an employee or former employee whose credited service under section 5501 (b) (1), (2), and (3) includes service before June 1970.

(1) the maximum amount payable shall be $1,000, and

(2) the minimum amount payable shall be (i), if he has 15 years of such credited service, the lesser of $150 or his final average compensation, and (ii), if he does not have 15 years of such credited service, the minimum amount payable under paragraph (c), subject to the limitation specified therein.

(c) In the case of an employee or former employee whose credited service under section 5501 (b) (1), (2), and (3) does not include service before June 1970,

(1) the maximum amount payable shall be $1,000, and

(2) the minimum amount payable shall be $5 multiplied by the number of years, taken to the nearest twelfth of a year, in his period of credited service, but not more than 30 such years. For any month used in the calculation of such minimum amount in which the employee or former employee worked less than 130 hours, the portion of the pension attributable to such month shall be reduced in the ratio of the number of hours worked to 130.

§ 5528. Survivor's pension

(a) Upon the death of an employee who has 15 years of credited service, exclusive of service credited under section 5501 (b) (4) or (5), a monthly survivor's pension shall be payable to his eligible survivor or survivors in an amount equal to one-half of the service pension for which the employee would have been eligible if he had been 60 years of age.

(b) Upon the death of an individual receiving a service or disability pension at the time of his death (other than a pension payable solely under section 5522 (a) (1), a monthly survivor's pension equal to one-half of such service or disability pension shall be payable to his eligible survivor or survivors.

(c) For the purpose of this section, the eligible survivors shall be as follows:

(1) in the case of an employee or former employee whose credited service under section 5501 (b) (1), (2), and (3) includes service before June 1970, the widow or widower, provided such person had been married to the deceased employee or former employee for at least two years before the date of death, or

(2) in the case of an employee or former employee whose credited service under section 5501 (b) (1), (2), and (3) does not include service before June 1970, the widow or dependent widower, provided such person had been married to the deceased employee or former employee for at least two years before the date of death, or

(3) if there is no eligible widow nor eligible widower, a child (or, with the survivor's pension divided among them in equal shares, all such children if there are more than one), provided the child is unmarried and either: (i) has not attained age 18, (ii) has attained age 18 but not age 21 and is attending school on a full-time basis, or (iii) has attained age 18 and is permanently disabled as the result of a disability which began before he attained age 18, or

(4) if there is no eligible widow, eligible widower, or eligible child, a dependent parent (or, with the survivor's pension divided between them in equal shares, both such parents if there are two).

(d) The amount payable to a widow or widower who has not attained age 50 at the time the survivor's pension begins shall be actuarially reduced, in accordance with actuarial tables approved by the Board, for each month the survivor is under age 50 at such time.

(e) A widower or parent shall be deemed to have been dependent on the deceased employee, former employee, or pensioner if he was receiving at least one-half of his support from such deceased person at the time of death.

(f) A survivor's pension shall begin with the month following the month in which the employee, former employee, or pensioner dies. If payable to a widow or widower, it shall cease with the month in which the survivor dies or marries. If payable to a parent, it shall cease with the month in which the parent dies. If payable to a child, it shall cease with the month in which the child dies or fails to meet the conditions of eligibility in paragraph (c) (3) herein.

§ 5529. Death benefit

Upon the death of an employee, former employee, or pensioner, or, if a survivor's pension is payable upon such death, when such pension ceases to be payable, there shall be paid to the designated beneficiary or, in the absence of a designated beneficiary, to the estate of the employee, former employee, or pensioner, a lump sum equal to the excess, of any, of the accumulated employee contributions with interest over the aggregate of all pension payments made.

§ 5530. Withdrawal benefit

Upon the withdrawal from service of an employee who is not eligible for a service or disability pension, his accumulated contributions with interest shall be paid to him.

§ 5531. Application for benefits

A service pension, disability pension, survivor's pension, death benefit, or withdrawal benefit shall be paid only upon the filing of an application in a form prescribed by the Board. A monthly benefit shall not be payable for any month earlier than the second month preceding the date on which the application for such benefit is filed. In no event shall a withdrawal benefit be paid to an individual whose application for such benefits is filed more than 5 years after the date he first becomes eligible to receive them.

§ 5532. Increases in pensions which become effective before June 1970

(a) A service or disability pension which became effective before January 1970 shall be increased as follows:

(1) the pension shall be increased by 1/6 % for each month from the effective date thereof to May 31, 1970, or, if it produces a greater amount, the pension shall be recomputed in accordance with section 5527 (a) and (b);

(2) if the amount determined in (1) does not exceed $250, the pension shall be increased to such amount;

(3) if the amount determined in (1) exceeds $250, and if the pension paid for the month of May 1970 does not exceed $250, the pension shall be increased to $250 plus one-half the amount in excess of $250, but not to more than $375; and

(4) if the amount determined in (1) exceeds $250, and if the pension paid for the month of May 1970 exceeds $250, the pension shall be increased to such amount, but not to more than $1,000.

(b) A service or disability pension which became effective in the period January 1970 through May 1970 shall be recomputed in accordance with section 5527 (a) and (b).

(c) A pension to a surviving spouse which became effective before June 1970 shall be increased to one-half of the amount of the pension or imputed pension on which it was based after adjusting such pension or imputed pension in accordance with the applicable paragraph (a) or (b) herein.

SUBCHAPTER III. FINANCING AND ADMINISTRATION

§ 5541. Establishment of Fund

There shall be established a State Employees Retirement Fund, hereinafter referred to as "Fund", to which appropriations and contributions shall be deposited and from which benefits and administrative expenses authorized by the Board shall be paid.

§ 5542. Board of Trustees

(a) There shall be established a Board of Trustees which shall consist of 7 members, as follows:

(1) The State Budget Director, and the Director, State Personnel Commission shall serve ex-officio as members.

(2) The other 5 members shall be appointed by the Governor by and with the consent of a majority of the members elected to the Senate.

(3) Four members shall be appointed for terms of four years each, commencing, in each case, from the date of appointment; provided, however, that in the initial appointments, members shall, as designated by the Governor at time of appointment, serve 1, 2, 3 and 4 year terms, respectively. The seventh member shall serve at the pleasure of the Governor and shall be Chairman of the Board. He may be removed by the Governor and shall serve until he is removed by the Governor.

(4) In case of a vacancy on the Board for any reason other than expiration of the term of office, the Governor shall fill such vacancy for the unexpired term by and with the consent of a majority of the members elected to the Senate.

(b) Except for the ex-officio members, each member of the Board shall be paid $25 for each day devoted to Board business, but not more than $600 in any one fiscal year. Members shall be entitled to reimbursement for travel and other expenditures made necessary by their official duties.

(c) The Board shall be responsible for the general administration of the provisions of this chapter. Such responsibility shall include, but not be limited to:

(1) the adoption of rules and regulations for the administration of this chapter;

(2) the appointment of an executive secretary and other necessary personnel;

(3) the designation of an actuary to perform the actuarial services necessary to effectuate the purposes of this chapter, and

(4) the preparation and publication of an annual report to the Governor and Legislature on its activities, including expenditures for administration.

(d) The Board shall establish, maintain, invest, and certify payments from the Fund.

(e) The Board may enter into a contract or contracts with an agency or agencies of the State, or any outside agency or agencies, to assist in the general administration of this chapter or to invest or advise as to the investment of the Fund.

(f) The Board shall determine the interest rate to be credited to employee contributions and the rate to be charged on repayment of contributions previously withdrawn.

§ 5543. Employee contributions

(a) An employee shall contribute to the Fund 5% of that portion of his monthly compensation which exceeds $500 and does not exceed $2,000, provided that no contributions shall be required after a pension of $1,000 has accrued to him.

(b) An employee whose pension begins in the period June 1970 through June 1971 shall be eligible to receive a pension in excess of $250 only if he makes a payment into the Fund at, or prior to, the time he applies for a pension, which payment shall be equal to 10% of his final average compensation not in excess of $1,000, multiplied by the number of months from the first month for which the pension is payable through June 1971.

§ 5544. Actuarial valuations and appropriations

(a) The actuary shall, by September 30, 1971, prepare an actuarial valuation of the assets and liabilities of the Fund as of December 31, 1970. On the basis of accepted actuarial practices and reasonable actuarial assumptions and tables approved by the Board, he shall determine (1) a normal rate of contribution which the State shall be required to make into the Fund in order to meet the actuarial cost of current service and (2) the unfunded past service cost, namely, the excess of the present value of future benefits over the sum of the amount in the Fund and the present value of future normal costs.

(b) The actuary shall, at least once every three years after the first, prepare a valuation of the assets and liabilities of the Fund as of the preceding December 31. On the basis of each such valuation, he shall determine the appropriate adjustments to be made in the normal rate of contribution and, until it is amortized, in the unfunded past service cost.

(c) The State's appropriation to the Fund for a fiscal year shall be based on the determinations of the normal rate of contribution and the unfunded past service cost made pursuant to the last completed actuarial valuation, as follows:

(1) The appropriation for the fiscal year 1970-71 shall be 50% of the sum of the normal cost for the year and the annual payment that would be required, on a level basis, to amortize the unfunded past service cost over 40 years from July 1, 1970;

(2) The appropriation for the fiscal year 1971-72 shall be 60% of the sum of the normal cost for the year and the annual payment that would be required, on a level basis, to amortize the unfunded past service cost over 40 years from July 1, 1971;

(3) The appropriation for the fiscal year 1972-73 shall be 70% of the sum of the normal cost for the year and the annual payment that would be required, on a level basis, to amortize the unfunded past service cost over 40 years from July 1, 1972;

(4) The appropriation for the fiscal year 1973-74 shall be 80% of the sum of the normal cost for the year and the annual payment that would be required, on a level basis, to amortize the unfunded past service cost over 40 years from July 1, 1973;

(5) The appropriation for the fiscal year 1974-75 shall be 90% of the sum of the normal cost for the year and the annual payment that would be required, on a level basis, to amortize the unfunded past service cost over 40 years from July 1, 1974;

(6) The appropriation for each of the 40 fiscal years beginning with July 1, 1975 shall be the sum of the normal cost for the year and the annual payment that would be required, on a level basis, to amortize the unfunded past service cost over 40 years from July 1, 1975;

(7) The appropriation for each fiscal year thereafter shall be the normal cost for the year.

(d) At least once in each 6-year period beginning July 1, 1970, the actuary shall make an actuarial investigation into the relevant experience with respect to employees and pensioners and the finances of the Fund, on the basis of which he shall recommend to the Board suitable changes in funding procedures and actuarial assumptions and tables.

Section 2. Effective date — This Act shall become effective on June 1, 1970, except that Section 5562 (a), Chapter 55, Title 29, as in effect on May 31, 1970, shall remain in effect until January 1, 1971, at which time Section 5543 (a) of this Act shall supersede the said Section 5562 (a), and provided further that the Board of Trustees provided for in Section 5542 of this Act may be appointed by the Governor and meet as necessary at any time after the enactment of this Act.

Approved June 25, 1970.