(a) General rule.--A nonparticipating employer is liable to the system for withdrawal liability in the amount determined under subsection (c). A nonparticipating employer is an employer that is determined by the board to have ceased:

(1) covered operations under the system; or

(2) to have an obligation to contribute under the system for all or any of the employer's school employees but continues covered operations.

(b) Determination.--An employer shall, within the time prescribed by the board in a written request, furnish such information as the board deems necessary to administer this section and to determine whether an employer is a nonparticipating employer. If the board determines that an employer is a nonparticipating employer, the board shall:

(1) determine the nonparticipation date;

(2) determine the amount of the employer's withdrawal liability;

(3) notify the employer of the amount of the withdrawal liability; and

(4) collect the amount of the withdrawal liability.

(c) Calculation of withdrawal liability.--A nonparticipating employer's withdrawal liability shall be determined as of the employer's nonparticipation date and shall be calculated as follows:

(1) For a nonparticipating employer under subsection (a)(1), the excess of the actuarial present value of the vested accrued benefits of the system's members over the market value of assets, both as of the date of the last actuarial valuation adopted by the board prior to the employer's nonparticipation date, shall be multiplied by a withdrawal fraction, calculated as follows:

(i) The numerator of the withdrawal fraction shall be the total present value of accrued benefits of all active members of the employer.

(ii) The denominator of the withdrawal fraction shall be the total present value of accrued benefits of all active members of the system.

(2) For a nonparticipating employer under subsection (a)(2), the excess of the actuarial accrued liability of the system's members over the market value of assets, both as of the date of the last actuarial valuation adopted by the board prior to the employer's nonparticipation date, shall be multiplied by a withdrawal fraction, calculated as follows:

(i) The numerator of the withdrawal fraction shall be the total present value of accrued benefits of all active members of the employer.

(ii) The denominator of the withdrawal fraction shall be the total present value of accrued benefits of all active members of the system.

(d) Value of benefits.--The actuarial present value of the vested accrued benefits and total present value of accrued benefits shall be determined based on the unit credit actuarial cost method, applying the system's provisions and actuarial assumptions used in the last actuarial valuation adopted by the board prior to the nonparticipation date. The actuarial accrued liability shall be determined based on the same actuarial cost method used to determine the actuarially required contribution rate in section 8328(i) (relating to actuarial cost method), applying the system's provisions and actuarial assumptions used in the last actuarial valuation adopted by the board prior to the nonparticipating date.

(e) Interest rate assumption.--For purposes of calculating the withdrawal liability in subsection (c)(1):

(1) For a nonparticipating employer under subsection (a)(1), the interest rate assumption shall be reduced by an amount determined by the actuary to reflect the increased investment, mortality and other actuarial risk associated with the accrued benefit of the members of the nonparticipating employer on a basis approved by the board.

(2) For a nonparticipating employer under subsection (a)(2), the interest rate assumption shall be the same annual interest rate used to determine the annual normal contribution rate under section 8328(b) as of the date of the last actuarial valuation adopted by the board prior to the employer's nonparticipation date.

(f) Payment.--A nonparticipating employer shall pay the withdrawal liability as follows:

(1) The withdrawal liability for a nonparticipating employer under subsection (a)(1) shall be paid in a lump sum no later than the time prescribed by the board in the notice of the amount of the withdrawal liability.

(2) The withdrawal liability for a nonparticipating employer under subsection (a)(2) shall be paid based on the schedule and method of payment determined by the board. In addition, the obligations of such nonparticipating employer under this section shall not impair the obligation of the nonparticipating employer to continue to pay the employer contribution rate under section 8328 as adjusted for the withdrawal liability. For purposes of this section, the board may determine whether a member should be treated as being employed by a single employer, regardless of whether the employer is a nonparticipating employer. In making such determination, the board may rely on the provisions of the IRC § 414(b), (c) and (m) and corresponding regulations or may establish other relevant factors the board deems necessary.

(3) The board is authorized to pursue all causes of action and collection remedies as permitted under applicable law to collect the withdrawal liability and to seek relief under section 8327(b) (relating to payments by employers), each without regard to whether the nonparticipating employer has ceased all operations.

(July 2, 2019, P.L.434, No.72, eff. 60 days)

2019 Amendment. Act 72 added section 8327.1. See section 6.2 of Act 72 in the appendix to this title for special provisions relating to severability.

Cross References. Section 8327.1 is referred to in section 8327 of this title.