2003-2004 Bill 4719: TERI Program, Unused Leave - South Carolina Legislature Online

1 South Carolina General Assembly 2 115th Session, 2003-2004 3 4 H. 4719 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Rep. Cooper 10 Document Path: l:\council\bills\ggs\22435htc04.doc 11 12 Introduced in the House on February 10, 2004 13 Currently residing in the House Committee on Ways and Means 14 15 Summary: TERI program, unused leave 16 17 18 HISTORY OF LEGISLATIVE ACTIONS 19 20 Date Body Action Description with journal page number 21 2/10/2004 House Introduced and read first time HJ-7 22 2/10/2004 House Referred to Committee on Ways and Means HJ-8 23 24 25 VERSIONS OF THIS BILL 26 27 2/10/2004 28 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 8-11-620, AS AMENDED, CODE OF 12 LAWS OF SOUTH CAROLINA, 1976, RELATING TO LUMP 13 SUM PAYMENTS FOR UNUSED ANNUAL LEAVE TO 14 STATE EMPLOYEES ON TERMINATION OR RETIREMENT 15 FROM STATE EMPLOYMENT, SO AS TO POSTPONE THE 16 PAYMENT FOR EMPLOYEES PARTICIPATING IN THE 17 TEACHER AND EMPLOYEE RETENTION INCENTIVE 18 PROGRAM (TERI) UNTIL THE EMPLOYEE LEAVES STATE 19 EMPLOYMENT, AND TO AMEND SECTION 9-1-2210, 20 RELATING TO THE TERI PROGRAM, SO AS TO PROVIDE 21 THAT UNUSED LEAVE IS NOT ADDED IN THE 22 CALCULATION OF THE AVERAGE FINAL 23 COMPENSATION USED IN THE DETERMINATION OF THE 24 RETIREMENT BENEFITS OF AN EMPLOYEE ENTERING 25 INTO THE TERI PROGRAM, TO PROVIDE FOR THE 26 INCLUSION OF THE PAYMENT OF THE ALLOWABLE 27 AMOUNT OF THE UNUSED LEAVE IN A RECALCULATION 28 OF AVERAGE FINAL COMPENSATION AND A 29 REDETERMINATION OF THE BENEFIT AMOUNT WHEN 30 THE TERI PROGRAM PARTICIPANT TERMINATES TERI 31 PROGRAM PARTICIPATION, AND TO PROVIDE FOR A 32 SIMILAR RECALCULATION AND REDETERMINATION 33 FOR A BENEFIT PAID TO THE SURVIVOR OF A DECEASED 34 TERI PARTICIPANT WHEN THAT PARTICIPANT HAD 35 ELECTED A SURVIVOR BENEFIT. 36 37 Be it enacted by the General Assembly of the State of South 38 Carolina: 39 40 SECTION 1. Section 8-11-620(A) of the 1976 Code, as amended 41 by Act 356 of 2002, is further amended to read: 42

1 [4719] 1 1 “(A)(1) Upon termination from state employment, an 2 employee may take both annual leave and a lump-sum payment for 3 unused leave, but in no event shall such this combination may not 4 exceed forty-five days in a calendar year except as provided for in 5 Section 8-11-610. If an employee dies, his the employee’s legal 6 representative shall be is entitled to a lump-sum payment for his 7 the employee’s unused leave, not to exceed forty-five working 8 days, except as provided for in Section 8-11-610. 9 (2) Upon retirement from state employment or upon the 10 death of an employee if the member does not elect to participate in 11 the Teacher and Employee Retention Incentive Program, a 12 lump-sum payment will be made must be paid for unused leave, 13 not to exceed forty-five days, unless a higher maximum is 14 approved under the provisions of pursuant to Section 8-11-610, 15 and without regard to the earned leave taken during the calendar 16 year in which the employee retires. 17 (3) Upon retirement from state employment, if the employee 18 participates in the Teacher and Employee Retention Incentive 19 Program, the employee shall not receive payment for unused 20 annual leave until the employee terminates from state employment 21 and ends participation in the Teacher and Employee Retention 22 Incentive Program. Upon termination of state employment and 23 participation in the Teacher and Employee Retention Incentive 24 Program, a lump - sum must be paid for unused leave, not to exceed 25 forty - five days, unless a higher maximum is approved pursuant to 26 Section 8 - 11 - 610, and without regard to the earned leave taken 27 during the calendar year in which the employee retires.” 28 29 SECTION 2. Section 9-1-2210 of the 1976 Code, as added by Act 30 1 of 2001, is amended to read: 31 32 “Section 9-1-2210. (A) An active contributing member who is 33 eligible for service retirement under this chapter and complies with 34 the requirements of this article may elect to participate in the 35 Teacher and Employee Retention Incentive Program (program). A 36 member electing to participate in the program retires for purposes 37 of the system, and the member’s normal retirement benefit is 38 calculated on the basis of the member’s average final 39 compensation and service credit at the time the program period 40 begins. The program participant shall agree to continue 41 employment with an employer participating in the system for a 42 program period, not to exceed five years. The member shall notify 43 the system before the beginning of the program period.

1 [4719] 2 1 Participation in the program does not guarantee employment for 2 the specified program period. 3 (B) After June 30, 2004, and notwithstanding the provisions of 4 Section 9 - 1 - 10(4), a payment for unused annual leave is not 5 included in calculating a member’s deferred program benefit 6 during the program period. The member’s average final 7 compensation for the purpose of calculating the deferred program 8 retirement benefit must be solely the average of the member’s 9 highest twelve consecutive quarters of earnable compensation at 10 the time the member enters the program. During the specified 11 program period, receipt of the member’s normal retirement benefit 12 is deferred. The member’s deferred monthly program benefit must 13 be placed in the system’s trust fund on behalf of the member. No 14 interest is paid on the member’s deferred monthly program benefit 15 placed in the system’s trust fund during the specified program 16 period. 17 (C) During the specified program period, the employer shall 18 pay to the system the employer contribution for active members 19 prescribed by law with respect to any program participant it 20 employs, regardless of whether the program participant is a 21 full-time or part-time employee, or a temporary or permanent 22 employee. If an employer who is obligated to the system pursuant 23 to this subsection fails to pay the amount due, as determined by the 24 system, the amount must be deducted from any funds payable to 25 the employer by the State. 26 (D) A program participant is retired from the retirement system 27 as of the beginning of the program period. A program participant 28 makes no further employee contributions to the system except for 29 contributions on payments for unused annual leave made at the 30 time of termination from the program or upon member’s death, 31 accrues no service credit during the program period, and is not 32 eligible to receive group life insurance benefits or disability 33 retirement benefits. Accrued annual leave and sick leave used in 34 any manner in the calculation of the program participant’s 35 retirement benefit is deducted from the amount of such sick leave 36 accrued by the participant. 37 (E) A program participant is retired for retirement benefit 38 purposes only. For employment purposes, a program participant is 39 considered to be an active employee, retaining all other rights and 40 benefits of an active employee and is not subject to the earnings 41 limitation of Section 9-1-1790 during the program period. 42 (F) Upon termination of employment either during or at the 43 end of the program period, the member must receive the balance in

1 [4719] 3 1 the member’s program account by electing one of the following 2 distribution alternatives: 3 (1) a lump-sum distribution, paying appropriate taxes; or 4 (2) to the extent permitted under law, a tax sheltered rollover 5 into an eligible plan. 6 For members who began participation in the program before 7 July 1, 2004, the member also must receive the previously 8 determined normal retirement benefits based upon the member’s 9 average final compensation and service credit at the time the 10 program period began, plus any applicable cost of living increases 11 declared during the program period. The program participant is 12 thereafter subject to the earnings limitation of Section 9-1-1790. 13 Upon termination of employment of members who began 14 participation in the program after June 30, 2004, the Retirement 15 Systems shall recalculate the average final compensation of the 16 member to determine the benefit the member receives after 17 participation in the program. The average final compensation 18 calculated at the commencement of the program must be increased 19 by: an amount up to and including forty-five days’ termination pay 20 for unused annual leave received by the member at termination of 21 employment, divided by three. The member’s benefit after 22 participation in the program must be calculated in accordance with 23 Section 9-1-1550, utilizing the recalculated average final 24 compensation determined in this subsection, and the member’s 25 service credit, including sick leave, as of the date member began 26 participation in the program, plus any cost of living increases 27 declared during the program period with respect to the amount of 28 the member’s deferred program benefit. The program participant 29 is thereafter subject to the earnings limitation of Section 9-1-1790. 30 (G) If a program participant dies during the specified program 31 period, the member’s designated beneficiary must receive the 32 balance in the member’s program account by electing one of the 33 following distribution alternatives: 34 (1) a lump-sum distribution, paying appropriate taxes; or 35 (2) to the extent permitted under law, a tax sheltered rollover 36 into an eligible plan. 37 In accordance with the form of system benefit selected by the 38 member at the time the program commenced, the member’s 39 designated beneficiary must receive either a survivor benefit or a 40 refund of contributions from the member’s system account. 41 If a program participant who began participation in the program 42 before July 1, 2004, elected either Option B or Option C under 43 Section 9 - 1 - 1620, the average final compensation calculated when

1 [4719] 4 1 the member commenced the program must be used in determining 2 the survivor benefit. 3 If a program participant who began participation in the program 4 after June 30, 2004 elected a survivor option, then the survivor 5 shall receive a survivor benefit based on a recalculated average 6 final compensation. The average final compensation calculated at 7 the commencement of the program must be increased by: an 8 amount up to and including forty-five days’ termination pay for 9 unused annual leave received by the member’s legal representative 10 at the member’s death, divided by three. The survivor benefit 11 must be calculated in accordance with Section 9-1-1550, utilizing 12 the recalculated average final compensation determined in this 13 subsection, and the member’s service credit, including sick leave, 14 as of the date member began participation in the program, plus any 15 cost of living increases declared during the program period with 16 respect to the amount of the member’s deferred program benefit. 17 (H) If a program participant fails to terminate employment with 18 an employer participating in the retirement system within one 19 month after the end of the specified program period, the member 20 must receive the previously determined normal retirement benefits 21 based upon the member’s average final compensation and service 22 credit at the time the program began, plus any applicable cost of 23 living increases declared during the program period. The program 24 participant is thereafter subject to the earnings limitation of 25 Section 9-1-1790. The program participant also must receive the 26 balance in the member’s program account by selecting one of the 27 following alternatives: 28 (1) a lump-sum distribution, paying appropriate taxes; or 29 (2) to the extent permitted under law, a tax sheltered rollover 30 into an eligible plan. A program participant must terminate 31 employment no later than the fifth annual anniversary of the date 32 the member commenced participation in the program. 33 (I) A member is not eligible to participate in the program if the 34 member has participated previously in and received a benefit under 35 this program or any other state retirement system.” 36 37 SECTION 3. This act takes effect upon approval by the 38 Governor. 39 ----XX---- 40

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