BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                   SB 973|
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                                 THIRD READING

          Bill No:  SB 973
          Author:   Kuehl (D), et al
          Amended:  As introduced
          Vote:     21

           SENATE PUBLIC EMP. & RET. COMMITTEE  :  3-2, 5/09/05
          AYES:  Soto, Alarcon, Dunn
          NOES:  Ashburn, Hollingsworth

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SUBJECT  :    Public employees retirement:  domestic partners

           SOURCE  :     Equality California

           DIGEST  :    This bill amends the Public Employees'  
          Retirement System, the State Teachers' Retirement System ,  
          and the County Employees Retirement Act of 1937 to entitle  
          retired members to elect to change optional retirement  
          allowances to provide for their domestic partners.

           ANALYSIS  :    

           Existing Law
          1.Provides that registered domestic partners of public  
            employees have the same retirement survivor rights as the  
            spouses of married public employees.

          2.Provides that domestic partners of public employee  


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            members have a right to an "automatic" survivor benefit  
            even if the member retires with an unmodified benefit  
            (meaning the member retired without choosing an option to  
            make their domestic partner a beneficiary).

          3.Provides that when a member is not married when they  
            retire, but who marries after retirement, is allowed to  
            choose an optional survivor benefit (and experience an  
            actuarial reduction in their monthly benefit  
            prospectively, as long as the member does not die within  
            12 months of the marriage.  Under these circumstances,  
            the new spouse is also eligible for the "automatic"  
            survivor benefit if the member does not choose an  
            optional survivor benefit.

          4.Provides the same rights to public employees, but there  
            are uneven interpretations of the new law as it relates  

             A.    Public employees with registered domestic partners  
                who retire before January 1, 2005.

             B.    Single public employees who retired before January  
                1, 2005, who subsequently enter into domestic  

           Spousal Survivor Benefits  .  The Public Employees'  
          Retirement System (PERS) and the County Employees  
          Retirement Act of 1937 ('37 Act) have an "automatic"  
          spousal survivor benefit with an unmodified benefit.  For  
          example, if a state employee who participates in Social  
          Security dies after retirement, their spouse receives a  
          lifetime monthly benefit of 25 percent of the member's  
          benefit.  If, before retirement, the member chooses to  
          provide more than 25 percent to the spouse upon the  
          member's death, the member can elect to take a permanent  
          actuarial reduction in their monthly benefit (based on the  
          age and sex of the beneficiary) to provide an optional  
          survivor benefit of 50 percent to 100 percent of the  
          member's actuarially reduced benefit.

           Non-spousal Survivor Benefits  .  PERS and '37 Act system  
          members who are not married may also provide survivor  
          benefits to non-spousal beneficiaries.  However, any  


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          election of an option of a beneficiary requires an  
          actuarial reduction of the members benefit based on the age  
          and sex of the beneficiary.

          In addition, the actuarial reduction charged to a  
          non-married member for providing a survivor continuance to  
          a beneficiary is significantly greater than the  
          corresponding reduction experienced by a married member,  
          because the "automatic" spousal survivor continuance is  
          factored into the actuarial reduction calculations made for  
          married members when they choose an optional survivor  
          continuance for their spouses.

           The State Teachers Retirement System (STRS) is the  
          Exception and Does Not Provide "Automatic" Survivor  
          Benefits  .  Existing STRS law does not contain any  
          "automatic" survivor benefit.

          If a married STRS member retires with an "unmodified"  
          benefit, even the spouse would get no survivor benefit.   
          However, because the STRS benefit is community property,  
          the spouse has to sign the member's STRS retirement  
          application, confirming approval that the STRS member is  
          not to providing a survivor benefit).

          In order for the spouse of a STRS member to receive a  
          survivor benefit, the STRS member must choose one of the  
          optional benefits and have the actuarial reduction apply to  
          their monthly benefit.  Optional survivor benefits can be  
          chosen by the STRS member for any person, but if the STRS  
          member is married and wants to provide a survivor benefit  
          to someone other than the spouse, the spouse must sign the  
          election form.

          This bill amends the PERS, STRS and the '37 Act county  
          retirement laws to entitle retired members to elect to  
          change optional retirement allowances to provide for their  
          domestic partners.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  5/25/05)


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          Equality California (soruce)
          California School Employees Association
          American Civil Liberties Union
          American Federation of State, County and Municipal  
          California State Employees Association
          California Federation of Teachers
          California School Employees Association
          Service Employees International Union, Local 1000

          JJA:cm  5/25/05   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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