§ 16-17.2-1 - Compact.
SECTION 16-17.2-1
§ 16-17.2-1 Compact. – The interstate compact with respect to pension portability for educators isenacted into law and entered into by this state with all states legally joiningtherein in the form substantially as follows:
Article I. Findings.
The parties to this compact find as follows:
(A) Interstate mobility of professional employees of publicschools, colleges and universities serves the public interest by providing fora more flexible workforce that is better able to match jobs to employees,thereby helping to avoid shortages in particular geographic areas.
(B) Interstate mobility of professional employees of publicschools and colleges and universities is impeded by the fact that, under thepension plans in which most of them participate, such employees who move fromone state to another generally suffer a substantial forfeiture of earnedpension benefits.
(C) An agreement among the states to provide increasedpension portability for the professional employees of public schools; collegesand universities will reduce one of the major barriers to the interstatemobility of such employees.
Article II. Definitions.
As used in this compact, unless the context clearly indicatesotherwise:
(A) A pension plan is "associated" with a state if thepension plan is maintained by the state or a political subdivision thereof;
(B) "Educator" means an individual who is employed as ateacher or in another professional position by a public school, college oruniversity.
(C) "Eligible educator" means an educator who (1) accruespensionable service in a pension plan associated with a state by reason of hisor her employment by a public school, college or university in such state afterthis compact becomes effective; and (2) accrued at least one year ofpensionable services in a pension plan associated with another state by reasonof his or her employment by a public school, college, or university in suchstate;
(D) "Exporting plan" means a pension plan in which aneligible educator previously accrued, but is no longer accruing pensionableservice, and from which the eligible educator has not received any pensionbenefits;
(E) "Importing plan" means the pension plan in which aneligible educator presently is accruing pensionable service;
(F) "Pensionable service" means a period of employment of aneligible education by a public school, college, or university which is includedby a pension plan in calculating the pension benefits to which the eligibleeducator is entitled;
(G) "Pension plan" means a plan, program, system, fund, orother operation that provides pension benefits to educators;
(H) "State" means a state of the United States, the Districtof Columbia, or any territory or possession of the United States that is aparty to this compact;
(I) "Stipulated rate" means:
(1) For an exporting plan, the average annual yield onpension plan assets, net of administrative costs, experienced by the pensionplan during the period from the first day of the fiscal year to which thecontribution in question applies through the end of the fiscal year immediatelypreceding the date on which the money is either transferred from the exportingplan to the importing plan, or paid to the eligible educator, as the case maybe; and
(2) For an importing plan, the average annual yield onpension plan assets experienced by the pension plan during the period from thefirst day of the fiscal year to which the contribution would have appliedthrough the end of the fiscal year immediately preceding the date on which themoney is transferred from the exporting plan to the importing plan.
Article III. Procedures.
Each state that is a party to this compact shall establishand maintain procedures adequate to effectuate the transfer of money andpensionable service from an exporting plan to an importing plan in accordancewith the following provisions:
(A) At the request of an eligible educator who has compliedwith the application procedures of the states with which the exporting plan andimporting plan are associated, the exporting plan shall transfer to theimporting plan an amount of money that is equal to the lesser of the followingtwo (2) sums:
(1) The local contributions made to the exporting plan by oron behalf of the eligible educator, plus interest calculated at the stipulatedrate for the exporting plan; or
(2) The total contributions that would have been made to theimporting plan by or on behalf of the eligible educator if the eligibleeducator had been accruing pensionable service in the importing plan for theentire period during which he or she was accruing pensionable service in theexporting plan, assuming employment at the same salary, plus interestcalculated at the stipulated rate for the importing plan.
(B) Upon receipt of the money transferred pursuant to ArticleIII (A), the importing plan shall credit the eligible educator with pensionableservice in the importing plan as follows:
(1) When the amount of money transferred is the sumcalculated pursuant to Article III (A)(1), the importing plan shall, forpurposes of vesting and date of eligibility to begin receiving pensionbenefits, credit the eligible educator with the amount of pensionable servicethat he or she accrued in the exporting plan. For purposes of the amount of thepension benefits to be received by the eligible educator, the importing planshall credit the eligible educator with an amount of pensionable servicecalculated as follows:
(a) The amount of pensionable service that the eligibleeducator accrued in the exporting plan multiplied by
(b) A fraction, the numerator of which is the amount of moneycalculated under Article III (A)(1), plus any supplementary payments madepursuant to Article III (B)(2), and the denominator of which is the amount ofmoney calculated under Article III (A)(2);
(2) When the amount of money transferred to the importingplan on behalf of an eligible educator is the sum calculated under Article III(A)(1), the eligible educator may elect to make supplementary payments to theimporting plan up to the amount of the difference between the sum transferredand the sum calculated under Article III (A)(2). Such supplementary paymentsmay be made by the eligible educator in conjunction with the transfer of moneyfrom the exporting plan to the importing plan, or at any time thereafter beforethe eligible educator receives any pension benefits from the importing plan, insuch minimum amounts as may be required by the importing plan, provided thatthe monetary value of any supplementary payments made subsequent to thetransfer of money from the exporting plan to the importing plan shall beadjusted, as determined by the actuary of the importing plan, to reflect theperiod elapsed between the date the money is transferred from the exportingplan and the date the supplementary payment is made;
(C) When the amount of money transferred from the exportingplan to the importing is the sum calculated pursuant to Article III (A)(2), anymoney remaining to the credit of the eligible educator in the exporting planshall be retained in the exporting plan and used as follows:
(1) For transfer to another importing plan at the request ofthe eligible educator in accordance with the terms of this compact;
(2) To pay pension benefits to the eligible educator if he orshe again becomes a participant in the exporting plan; or
(3) If not used for purpose (1) or (2) above, for payment tothe eligible educator, plus interest calculated at the stipulated rate for theexporting plan, when notification has been received from the eligible educatorthat he or she has begun to receive pension benefits from the importing plan.
(D) There shall be no limit on the number of transfers ofmoney and pensionable service that an eligible educator may take from anexporting plan to an importing plan under this compact. In the case of asubsequent transfer, money previously transferred to an importing plan from anexporting plan shall for purposes of such subsequent transfer be considered"contributions made to the exporting plan by or on behalf of the eligibleeducator" within the meaning of Article III (A)(1).
Article IV. Effective Date of Compact; Withdrawal fromCompact.
(A) When two or more states enact statutes adopting thiscompact, it shall become effective in those states on the dates specified insuch statutes. Any other state may thereafter become a party to this compact byenacting a statute adopting it, and the compact shall become effective in thatstate on the date specified in such statute.
(B) A party state may withdraw from this compact by repealingthe statute adopting this compact, provided that no such withdrawal shall beeffective until at least one (1) year after the governor of the withdrawingstate has given written notice of the repeal of the statute adopting thiscompact to the governors of all other party states. The withdrawal of a partystate shall not relieve any pension plan associated with such state of itsobligation to pay to an eligible educator on whose behalf has been transferredunder this compact prior to the effective date of such withdrawal the pensionbenefits to which he or she is entitled under this compact.
Article V. Other Arrangements Unaffected.
Nothing contained in this compact shall be construed toprevent or inhibit states that are parties to this compact from entering intoother arrangements, not inconsistent with the terms of this compact, toeffectuate the purpose set forth in Article I.
Article VI. Construction and Severability.
(A) This compact shall be liberally construed so as toeffectuate the purpose set forth in Article I.
(B) If any provision of this compact, or application thereof,is held by a state or federal court to be invalid with respect to a particularparty state, said holding shall not affect the validity of such provision, orapplication thereof, in any other party state. The provisions of this compactshall be severable, and, as to the party state subject to the court holding,this compact shall in all other respects remain in full force and effect. Ifthe party states that are not subject to the court holding believe that theprovision of this compact, or application thereof, that has been declaredinvalid is not severable, they may, by majority vote, require the party statethat is subject to the court holding to withdraw from this compact, in whichevent the withdrawal shall be effective immediately upon such vote, providedthat the withdrawal shall not relieve any pension plan associated with suchparty state of its obligation to pay to an eligible educator on whose behalfmoney has been or is in the process of being transferred under this compactprior to the effective date of such withdrawal the pension benefits to which heor she is entitled under this compact.