Global-Regulation

TITLE 16

Education

CHAPTER 16-17.2

Compact for Pension Portability for Educators

SECTION 16-17.2-1



   § 16-17.2-1  Compact. –

The interstate compact with respect to pension portability for educators is

enacted into law and entered into by this state with all states legally joining

therein in the form substantially as follows:



   Article I. Findings.

   The parties to this compact find as follows:



   (A) Interstate mobility of professional employees of public

schools, colleges and universities serves the public interest by providing for

a 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 public

schools and colleges and universities is impeded by the fact that, under the

pension plans in which most of them participate, such employees who move from

one state to another generally suffer a substantial forfeiture of earned

pension benefits.



   (C) An agreement among the states to provide increased

pension portability for the professional employees of public schools; colleges

and universities will reduce one of the major barriers to the interstate

mobility of such employees.



   Article II. Definitions.

   As used in this compact, unless the context clearly indicates

otherwise:



   (A) A pension plan is "associated" with a state if the

pension plan is maintained by the state or a political subdivision thereof;



   (B) "Educator" means an individual who is employed as a

teacher or in another professional position by a public school, college or

university.



   (C) "Eligible educator" means an educator who (1) accrues

pensionable service in a pension plan associated with a state by reason of his

or her employment by a public school, college or university in such state after

this compact becomes effective; and (2) accrued at least one year of

pensionable services in a pension plan associated with another state by reason

of his or her employment by a public school, college, or university in such

state;



   (D) "Exporting plan" means a pension plan in which an

eligible educator previously accrued, but is no longer accruing pensionable

service, and from which the eligible educator has not received any pension

benefits;



   (E) "Importing plan" means the pension plan in which an

eligible educator presently is accruing pensionable service;



   (F) "Pensionable service" means a period of employment of an

eligible education by a public school, college, or university which is included

by a pension plan in calculating the pension benefits to which the eligible

educator is entitled;



   (G) "Pension plan" means a plan, program, system, fund, or

other operation that provides pension benefits to educators;



   (H) "State" means a state of the United States, the District

of Columbia, or any territory or possession of the United States that is a

party to this compact;



   (I) "Stipulated rate" means:



   (1) For an exporting plan, the average annual yield on

pension plan assets, net of administrative costs, experienced by the pension

plan during the period from the first day of the fiscal year to which the

contribution in question applies through the end of the fiscal year immediately

preceding the date on which the money is either transferred from the exporting

plan to the importing plan, or paid to the eligible educator, as the case may

be; and



   (2) For an importing plan, the average annual yield on

pension plan assets experienced by the pension plan during the period from the

first day of the fiscal year to which the contribution would have applied

through the end of the fiscal year immediately preceding the date on which the

money is transferred from the exporting plan to the importing plan.



   Article III. Procedures.

   Each state that is a party to this compact shall establish

and maintain procedures adequate to effectuate the transfer of money and

pensionable service from an exporting plan to an importing plan in accordance

with the following provisions:



   (A) At the request of an eligible educator who has complied

with the application procedures of the states with which the exporting plan and

importing plan are associated, the exporting plan shall transfer to the

importing plan an amount of money that is equal to the lesser of the following

two (2) sums:



   (1) The local contributions made to the exporting plan by or

on behalf of the eligible educator, plus interest calculated at the stipulated

rate for the exporting plan; or



   (2) The total contributions that would have been made to the

importing plan by or on behalf of the eligible educator if the eligible

educator had been accruing pensionable service in the importing plan for the

entire period during which he or she was accruing pensionable service in the

exporting plan, assuming employment at the same salary, plus interest

calculated at the stipulated rate for the importing plan.



   (B) Upon receipt of the money transferred pursuant to Article

III (A), the importing plan shall credit the eligible educator with pensionable

service in the importing plan as follows:



   (1) When the amount of money transferred is the sum

calculated pursuant to Article III (A)(1), the importing plan shall, for

purposes of vesting and date of eligibility to begin receiving pension

benefits, credit the eligible educator with the amount of pensionable service

that he or she accrued in the exporting plan. For purposes of the amount of the

pension benefits to be received by the eligible educator, the importing plan

shall credit the eligible educator with an amount of pensionable service

calculated as follows:



   (a) The amount of pensionable service that the eligible

educator accrued in the exporting plan multiplied by



   (b) A fraction, the numerator of which is the amount of money

calculated under Article III (A)(1), plus any supplementary payments made

pursuant to Article III (B)(2), and the denominator of which is the amount of

money calculated under Article III (A)(2);



   (2) When the amount of money transferred to the importing

plan 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 the

importing plan up to the amount of the difference between the sum transferred

and the sum calculated under Article III (A)(2). Such supplementary payments

may be made by the eligible educator in conjunction with the transfer of money

from the exporting plan to the importing plan, or at any time thereafter before

the eligible educator receives any pension benefits from the importing plan, in

such minimum amounts as may be required by the importing plan, provided that

the monetary value of any supplementary payments made subsequent to the

transfer of money from the exporting plan to the importing plan shall be

adjusted, as determined by the actuary of the importing plan, to reflect the

period elapsed between the date the money is transferred from the exporting

plan and the date the supplementary payment is made;



   (C) When the amount of money transferred from the exporting

plan to the importing is the sum calculated pursuant to Article III (A)(2), any

money remaining to the credit of the eligible educator in the exporting plan

shall be retained in the exporting plan and used as follows:



   (1) For transfer to another importing plan at the request of

the eligible educator in accordance with the terms of this compact;



   (2) To pay pension benefits to the eligible educator if he or

she again becomes a participant in the exporting plan; or



   (3) If not used for purpose (1) or (2) above, for payment to

the eligible educator, plus interest calculated at the stipulated rate for the

exporting plan, when notification has been received from the eligible educator

that he or she has begun to receive pension benefits from the importing plan.



   (D) There shall be no limit on the number of transfers of

money and pensionable service that an eligible educator may take from an

exporting plan to an importing plan under this compact. In the case of a

subsequent transfer, money previously transferred to an importing plan from an

exporting plan shall for purposes of such subsequent transfer be considered

"contributions made to the exporting plan by or on behalf of the eligible

educator" within the meaning of Article III (A)(1).



   Article IV. Effective Date of Compact; Withdrawal from

Compact.

   (A) When two or more states enact statutes adopting this

compact, it shall become effective in those states on the dates specified in

such statutes. Any other state may thereafter become a party to this compact by

enacting a statute adopting it, and the compact shall become effective in that

state on the date specified in such statute.



   (B) A party state may withdraw from this compact by repealing

the statute adopting this compact, provided that no such withdrawal shall be

effective until at least one (1) year after the governor of the withdrawing

state has given written notice of the repeal of the statute adopting this

compact to the governors of all other party states. The withdrawal of a party

state shall not relieve any pension plan associated with such state of its

obligation to pay to an eligible educator on whose behalf has been transferred

under this compact prior to the effective date of such withdrawal the pension

benefits to which he or she is entitled under this compact.



   Article V. Other Arrangements Unaffected.

   Nothing contained in this compact shall be construed to

prevent or inhibit states that are parties to this compact from entering into

other arrangements, not inconsistent with the terms of this compact, to

effectuate the purpose set forth in Article I.



   Article VI. Construction and Severability.

   (A) This compact shall be liberally construed so as to

effectuate 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 particular

party state, said holding shall not affect the validity of such provision, or

application thereof, in any other party state. The provisions of this compact

shall 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. If

the party states that are not subject to the court holding believe that the

provision of this compact, or application thereof, that has been declared

invalid is not severable, they may, by majority vote, require the party state

that is subject to the court holding to withdraw from this compact, in which

event the withdrawal shall be effective immediately upon such vote, provided

that the withdrawal shall not relieve any pension plan associated with such

party state of its obligation to pay to an eligible educator on whose behalf

money has been or is in the process of being transferred under this compact

prior to the effective date of such withdrawal the pension benefits to which he

or she is entitled under this compact.



History of Section.

(P.L. 1989, ch. 546, § 1.)