BILL ANALYSIS Ó
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 989
Jim Beall, Chair HEARING DATE: June 10, 2013
AB 989 (Mullin) as amended 5/14 /13 FISCAL: YES
STATE TEACHERS' RETIREMENT: ELECTRONIC COMMUNICATIONS
HISTORY :
Sponsor: California State Teachers' Retirement System
(CalSTRS)
Other legislation: AB 2663 (Assembly PER&SS Committee),
Chapter 864, Statutes of 2012
AB 232 (Hill and Fletcher),
Chapter 90, Statutes of 2009
ASSEMBLY VOTES :
PER & SS 7-0 4/10/13
Appropriations 17-0 4/17/13
Assembly Floor 76-0 4/25/13
SUMMARY :
AB 989 authorizes the Teachers' Retirement Board (TRB) to
provide communications or conduct other action, as specified,
through electronic delivery. The TRB may elect electronic
communication as its default method if it passes a board
resolution to do so. The bill also requires the TRB to
notify affected parties of their right to continue to receive
delivery by mail.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) requires the TRB to issue annually, to each active and
inactive member, a statement of the member's individual
Defined Benefit (DB) Program and Defined Benefit
Supplement (DBS) accounts provided that the employer or
member has informed CalSTRS of the member's current
mailing address. A member or participant may indicate
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that he or she prefers to receive the annual statement
only through CalSTRS' secure member Web site.
b) provides that a nonmember spouse who has been awarded a
separate account arising from a divorce with a CalSTRS
member has a right to a refund of the accumulated
contributions of the separate account and also a return
of the nonmember spouse's DBS account balance. The
refund is effective when CalSTRS deposits a warrant into
the U.S. mail addressed to the nonmember spouse's latest
address on file with CalSTRS.
c) with respect to a direct trustee to trustee transfer as
requested by a nonmember spouse, states that CalSTRS has
refunded a nonmember spouse's DB accumulated
contributions or returned DBS account balances to the
nonmember spouse when CalSTRS deposits a notice in the
U.S. mail confirming transfer of those assets to another
qualified plan.
d) authorizes a nonmember spouse to redeposit into the DB
program the accumulated retirement contributions, as
specified, that were previously refunded to the member.
The nonmember spouse must make the election to redeposit
within 30 days after CalSTRS mails an election form and
billing.
e) permits a nonmember spouse who was awarded a separate
account the option to purchase additional service credit
as specified. The nonmember spouse must make the
election to purchase additional service credit within 30
days after CalSTRS mails an election form and billing.
f) requires a member who wishes to purchase additional
service credit, as specified, to pay all additional
contributions for the additional service prior to the
member's retirement date. If, however, CalSTRS is unable
to inform the member of the amount required to purchase
the additional service before the member's retirement
date, then the member may make the payment within 30
working days after CalSTRS mails the statement informing
the member of the amount required for the purchase or by
the effective date of the appropriate allowance,
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whichever is later.
g) deems CalSTRS to have returned a member's accumulated
retirement contributions when CalSTRS deposits in the
U.S. mail a notice confirming that CalSTRS has made a
direct trustee to trustee transfer of funds to another
qualified plan pursuant to the member's request.
h) allows a member to cancel a distribution of the
member's retirement funds that are not direct trustee to
trustee transfers if the member returns the total gross
distribution to CalSTRS' headquarters within 30 days of
the mailing date of the distribution.
i) allows a member to cancel a distribution of the
member's retirement funds that was done by a direct
trustee to trustee transfer if the member - within 30
days from the warrant's mailing- returns the warrant
that was payable to the other qualified trustee or the
other qualified trustee transfers the appropriate amount
back to CalSTRS.
j) requires the TRB to issue an annual account statement
for each participant in the Cash Balance plan provided
that the employer or employee has provided CalSTRS with
the participant's current U.S. Postal Service mailing
address and permits participants to indicate their
preference to receive the statement via secured web
access.
2) This bill :
a) permits the TRB to elect by resolution to provide
communications or conduct certain actions, as specified,
by electronic delivery. The affected communications or
conduct generally establish dates by which a party must
make an election or submit a document or funds to
CalSTRS. Prior to a decision to adopt electronic
communication in lieu of communication by mail, these
deadline dates are generally measured by a specified
number of days from the date of mailing by CalSTRS of a
specified form or document. After the TRB elects to
adopt electronic delivery, the deadline dates would be
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measured from the date the electronic communication was
delivered. The affected communications or conduct
include:
i. issuing annual member statements of members' DB and
DBS accounts;
ii. confirming refunds of nonmember spouses' DB
accumulated contributions and DBS account balances via
issuing a warrant or confirming a direct trustee to
trustee transfer;
iii. providing a nonmember spouse who has a separate
account, as specified, an election to redeposit funds
previously refunded to the member;
iv. providing a nonmember spouse who has a separate
account, an election to purchase additional service
credit, as specified;
v. providing a member additional time beyond the
member's retirement date to purchase additional
service credit if CalSTRS is unable to provide
specified information regarding the cost of the
purchase prior to the member's retirement date;
vi. providing notice that CalSTRS has completed a
trustee to trustee transfer of funds as requested by
the member and deeming that notice as a return of the
member's accumulated contributions;
vii. canceling, by the member, of the distribution of the
member's accumulated retirement contributions; and
viii. issuing an annual statement to Cash Balance plan
participants.
b) requires the TRB to notify each party affected by
adopting electronic delivery, as specified, of the
party's right to request delivery by mail. TRB's notice
shall be by mail unless the party has indicated that the
party prefers to receive communications in another
manner. The party must make the request for continued
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mail delivery within 60 days of TRB's notice.
c) requires the TRB to continue providing communications
by mail until it makes a resolution to elect electronic
communication. However, where a party has indicated the
party prefers another method, TRB shall use that method
for communicating with the party.
d) provides that the date of electronic delivery shall
substitute for the date of mailing when determining
deadlines by which the party must take action under
specified sections of law governing CalSTRS if the TRB
passes a resolution to adopt electronic communication
instead of mail delivery as CalSTRS's default method of
communicating with its members.
FISCAL:
According to the Assembly Appropriations Committee,
"[i]nitial implementation costs are expected to be
approximately $50,000. Potential and substantial savings in
excess of $500,000 annually [are estimated] due to decreased
costs associated with printing and mailing information to
members."
COMMENTS :
1) Argument in Support :
According to the sponsor, AB 989 "improves the delivery of
benefits and services and provides more effective and
efficient administration of the retirement plan. [?] This
bill would likely significantly decrease the number of
Retirement Progress Reports [i.e., annual statements] that
are printed and mailed annually, which would help to
support CalSTRS' ongoing commitment to sustainability, as
well as create a potential savings to the system."
2) SUPPORT :
California State Teachers' Retirement System (CalSTRS),
Sponsor
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California Federation of Teachers (CFT)
California Teachers' Association (CTA)
3) OPPOSITION :
None to date
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