It is enacted by the General Assembly as follows:

SECTION 1. Section 45-21-43 of the General Laws in Chapter 45-21 entitled "Retirement of Municipal Employees" is hereby amended to read as follows:

45-21-43. Accounts and records -- Reserve accounts. -- (a) An adequate system of accounts and records is established and maintained for the system that fully reflects the requirements of this chapter. All assets of the system are credited according to the purposes for which they are held in the following designated reserve accounts:

(1) Members' contribution reserve.. - (i) The amounts contributed by the members are credited to this reserve. An individual account is maintained for each member. Member contributions made pursuant to section 45-21-41.1 are credited to a separate fund within a member's individual account so that the amounts contributed prior to the effective date for the pickup of member contributions may be distinguished from the amount contributed on or after the date on which the municipality begins to pick up member contributions.

(ii) Upon the granting of a retirement allowance, the total accumulated contributions of the member concerned are transferred from this reserve to the retirement reserve. Refunds and death benefit payments representing members' contributions are charged to this reserve.

(2) Employer's accumulation reserve.. - The amounts contributed by the municipalities for the various purposes of this section, are credited to this reserve. Upon the granting of a retirement allowance, annuity, or benefit, an amount representing the excess of the actuarial value over the total contributions of the member is transferred from this reserve to the retirement reserve. That portion of the death benefit provided from municipality contributions is charged to this reserve.

(3) Retirement reserve.. - Upon the granting of a retirement allowance, the accumulated contributions of the member and an amount representing the excess of the actuarial value of the allowance over the accumulated contributions, are transferred to this reserve from the members' contribution reserve and the employer's accumulation reserve, respectively.

(b) All payments on account of any retirement allowance or any benefit to a beneficiary of a member are charged to this reserve.

(c) Any excess amount in this reserve, over the actuarial liabilities of the reserve, as determined by actuarial valuation, is transferred at the close of each year to the employer's accumulation reserve to be used to reduce the municipality's contribution upon a rate redetermination as established by the periodic actuarial valuation provided in this section. Any deficiency in this reserve is removed by a transfer from the employer's accumulation reserve.

(d) All income from investments, including gains from investment transactions, is credited to this reserve. All losses on investments are charged to this reserve.

SECTION 2. Section 45-21.2-14 of the General Laws in Chapter 45-21.2 entitled "Optional Retirement for Members of Police Force and Fire Fighters" is hereby amended to read as follows:

45-21.2-14. Contributions -- (a) Each member shall contribute an amount equal to seven percent (7%) of the salary or compensation earned or accruing to the member. Special compensation or additional fees shall not be considered as compensation for contribution purposes.

(b) Deductions are made in accordance with section 45-21-14 and credited in accordance with section 45-21-43.

(c) Each municipality shall make contributions to the system to provide the remainder of the obligation for retirement allowances, annuities, and other benefits provided in this section, after applying the accumulated contribution of members, interest income on investments, and other accrued income. The contribution shall be compiled in accordance with sections 45-21-42 -- 45-21-44, except that contributions for the first five (5) years of the system shall likewise be determined by the board.

(d) Provided, that members of the South Kingstown police department, beginning July 1, 1985, contribute an amount equal to eight percent (8%) of salary or compensation or additional fees are not considered as compensation for retirement purposes.

(e) Provided, further, that members of the City of Cranston Fire Department hired after July 1, 1995, beginning July 1, 1995, contribute an amount equal to ten percent (10%) of their weekly salary; and those members of the City of Cranston Fire Department with five (5) years or less of service effective July 1, 1995, have the option to either remain in the City of Cranston Pension Plan to which they belonged prior to the adoption of local ordinance by the Cranston City Council as stated in section 45-21.2-22 or contribute to the State of Rhode Island optional twenty (20) year retirement on service allowance an amount equal to ten percent (10%) of their weekly salary commencing July 1, 1995. The City of Cranston may request and the retirement board may authorize additional members of the City of Cranston Fire Department hired after July 1, 1987 the option to either remain in the City of Cranston Pension Plan to which they belonged prior to the adoption of local ordinance by the Cranston City Council as stated in section 45-21.2-22 or contribute to the State of Rhode Island optional twenty (20) year retirement on service allowance an amount equal to ten percent (10%) of their weekly salary beginning on a date specified by the retirement board.

(f) Further, provided, that members of the City of Cranston Police Department hired after July 1, 1995, beginning July 1, 1995, contribute an amount equal to ten percent (10%) of their weekly salary; and those members of the City of Cranston Police Department with five (5) years or less of service effective July 1, 1995, have the option to either remain in the City of Cranston Pension Plan to which they belonged prior to the adoption of local ordinance by the Cranston City Council as stated in section 45-21.2-22 or contribute to the State of Rhode Island optional twenty (20) year retirement on service allowance an amount equal to ten percent (10%) of their weekly salary commencing July 1, 1995. The City of Cranston may request and the retirement board may authorize additional members of the City of Cranston Police Department hired after July 1, 1987 the option to either remain in the City of Cranston Pension Plan to which they belonged prior to the adoption of local ordinance by the Cranston City Council as stated in section 45-21.2-22 or contribute to the State of Rhode Island optional twenty (20) year retirement on service allowance an amount equal to ten percent (10%) of their weekly salary beginning on a date specified by the retirement board.

SECTION 3. This act shall take effect on January 31, 2001.