S 1261 General Bill, By Ritchie
 A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
 1-11-490 ENACTING THE SOUTH CAROLINA PUBLIC EMPLOYEE SPECIAL PAY PLAN SO AS TO
 DIRECT THE STATE BUDGET AND CONTROL BOARD TO DEVELOP AND IMPLEMENT A SOUTH
 CAROLINA PUBLIC EMPLOYEE SPECIAL PAY PLAN UNDER THE ADMINISTRATION OF THE
 SOUTH CAROLINA RETIREMENT SYSTEMS, AND TO PROVIDE THE MINIMUM REQUIREMENTS FOR
 THE PLAN.

   05/20/04  Senate Introduced and read first time SJ-3
   05/20/04  Senate Referred to Committee on Finance SJ-3

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 1-11-490 ENACTING THE SOUTH CAROLINA PUBLIC EMPLOYEE SPECIAL PAY PLAN SO AS TO DIRECT THE STATE BUDGET AND CONTROL BOARD TO DEVELOP AND IMPLEMENT A SOUTH CAROLINA PUBLIC EMPLOYEE SPECIAL PAY PLAN UNDER THE ADMINISTRATION OF THE SOUTH CAROLINA RETIREMENT SYSTEMS, AND TO PROVIDE THE MINIMUM REQUIREMENTS FOR THE PLAN.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Article 1, Chapter 11, Title 1 of the 1976 Code is amended by adding:

"Section 1-11-490.    (A)(1)    This section may be cited as the South Carolina Public Employee Special Pay Plan.

(2)    It is the intent of the General Assembly in enacting the South Carolina Employee Special Pay Plan to improve retirement security for plan participants and to enhance, not diminish, the existing special pay benefits of plan participants.

(B)    As used in this section:

(1)    'Board' means the State Budget and Control Board;

(2)    'Employees' means all state employees who are active contributing members of a retirement system administered by the SCRS and all state employees participating in the TERI program. 'Employees' also includes employees of political subdivisions of the State, including school districts, that are active contributing members of a retirement system administered by the SCRS and employees of such political subdivisions participating in the TERI program, if the employee's employer has elected to participate in the special pay plan administered by the SCRS.

(3)    'South Carolina Retirement Systems' or 'SCRS' means that subagency of the board that administers the retirement system as defined in Section 9-16-10(8).

(4)    'Special Pay Plan' means a plan qualified under Internal Revenue Code Section 401(a) as defined in Section 12-6-40(A) to receive the accumulated special pay benefits of eligible employees.

(5)    'TERI program' means the Teacher and Employee Retention Program established pursuant to Article 17, Chapter 1 of Title 9.

(C)    The board shall adopt and implement under the administration of the South Carolina Retirement Systems a Special Pay Plan for eligible employees. This Special Pay Plan is a plan that provides solely for employer contributions and meets applicable requirements of the Internal Revenue Code. It is the intent of this section that the plan improve retirement security for those participants and enhance, and not diminish, their existing special pay benefits.

(D)    Participation in the Special Pay Plan is limited to employees age fifty-five or older and for whom, in the absence of this provision, the value of accumulated special pay benefits total at least one thousand dollars. Participation in the Special Pay Plan by employees may be phased in as determined by the board. For purposes of the Special Pay Plan, the board shall contract with a company authorized to conduct business in this State to provide a bundled package of appropriate investment vehicles, trust services, and administrative services. Participation in the Special Pay Plan must have no effect on the benefits payable to the participant under a retirement system administered by the South Carolina Retirement Systems, except that in determining average final compensation the inclusion of accumulated annual leave pay in the average final compensation, which is subject to a maximum of forty-five days of the pay, must instead be based upon the sum of employer contributions to the Special Pay Plan and any amount paid to the participant as a result of its exclusion from the Special Pay Plan. The employer of the participant must be required to make an employer contribution to SCRS, as determined by SCRS consistent with contribution rates otherwise applicable for SCRS benefits, with respect to any additional retirement benefit resulting from the contribution, and is not obligated to pay to the participant or to the Special Pay Plan any amount that the employer is required to pay to SCRS for such a contribution. The board may establish, alter, amend, and modify the Special Pay Plan, to the extent it considers necessary or desirable, for the purpose of facilitating the administration, investment, and maintenance of assets acquired by the investment of Special Pay Plan funds. The board also may exclude any categories of special pay benefits from inclusion in the Special Pay Plan or set floors or ceilings on the amount to be contributed to the Special Pay Plan in order to give effect to the intent of this section. Any benefit so excluded may be paid to the employee as otherwise provided or permitted under applicable laws and regulations.

(E)    Before implementing a Special Pay Plan, the board shall investigate participation options and weigh the advantages and disadvantages to both employers and employees of various participation options available. At a minimum, the Special Pay Plan approved by the board must include the following components:

(1)    qualification as a retirement plan under Internal Revenue Code Section 401(a), with the ability of the board to obtain prompt approval from the Internal Revenue Service of the applicable plan documents used to implement the plan;

(2)    exemption of contributions to the Special Pay Plan from federal payroll taxes pursuant to Internal Revenue Code Sections 3101 and 3111; and

(3)    ability of employees whose employment has terminated to receive distribution from the Special Pay Plan of the entire amount of special pay benefits, plus earnings, and less any mandatory income tax withholding, in no more than seven days from the date payment is made to the Special Pay Plan on behalf of the employee."

SECTION    2.    This act takes effect upon approval by the Governor.