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.)