BILL ANALYSIS Ó
SENATE COMMITTEE ON
PUBLIC EMPLOYMENT AND RETIREMENT
Dr. Richard Pan, Chair
2015 - 2016 Regular
Bill No: AB 992 Hearing Date: 6/08/15
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|Author: |Committee on Public Employees, Retirement, and |
| |Social Security |
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|Version: |2/26/15 As introduced |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Glenn Miles |
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Subject: County Employees Retirement Law of 1937: disability
retirement: modification of allowance
SOURCE: State Association of County Retirement Systems
ASSEMBLY VOTES:
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|Assembly Floor: |78 - 0 |
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|Assembly Public Employees, |7 - 0 |
|Retirement/Soc Sec Committee: | |
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DIGEST: This bill clarifies that a member of a 1937 Act county
retirement system ('37 Act) may change his or her optional
retirement allowance election if the member retires for service
while the member's application for a disability retirement is
pending and is later granted a disability retirement benefit.
ANALYSIS:
Existing law:
1)Authorizes a '37 Act retirement system member to retire for
service, if eligible, while awaiting the final determination
of the member's application for a disability retirement
AB 992 (Committee on Public Employees, Retirement, and Social
Security) Page 2 of ?
allowance.
2)Provides, when a member retires for service or non-service
related disability, a continuing benefit for the retiree's
spouse of 60% (or more if the county so elects, as specified)
of the member's unmodified benefit if the member predeceases
the spouse.
3)Allows a member who retires to elect an optional modified
allowance that would provide a lesser service retirement
allowance for the member and a continuing lifetime allowance
for the member's survivor that would exceed the 60%.
4)Provides, when the member retires for a service-related
disability, that the member's unmodified retirement benefit
would continue in full to the surviving spouse if the member
predeceases the spouse.
5)Allows the surviving spouse, if the member dies while awaiting
the final determination on the service disability retirement,
to receive the optional or unmodified allowance at the time
the disability retirement is granted, whichever is more
beneficial, and to have that benefit applied to the entire
period of retirement.
This bill clarifies that a member who retires for service
pending a final determination of an application for a disability
retirement benefit may change the election of the optional or
unmodified retirement allowance at the time the member is
awarded a disability retirement allowance.
Background
Normally, the member's right to elect the modified retirement
option or change the election exists only until the member
receives the first payment of any retirement allowance.
However, existing law also states that the optional or
unmodified type of allowance selected by the member at the time
of retirement for service shall not be binding as to the type of
allowance the member receives if he or she dies while awaiting
the disability determination and is subsequently awarded a
disability retirement.
Thus, there is some confusion as to whether a member may change
AB 992 (Committee on Public Employees, Retirement, and Social
Security) Page 2 of ?
the election of the optional retirement allowance upon approval
of the member's disability application when the member has
already received a payment of a service retirement allowance.
The benefit for a surviving spouse is higher when the retirement
is for service-related disability. A member who is awarded a
service disability benefit may be able to receive an unmodified
allowance and provide an equivalent or higher continuing benefit
to his or her spouse (upon the member's death) than the
continuing benefit the member could provide by taking a benefit
reduction and choosing one of the optional benefits.
This bill is intended to clarify that the member may change the
type of option or unmodified benefit he or she chose at service
retirement if doing so would result in a better benefit, as if
the disability had been already determined at the original time
of retirement.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: No Local: No
SUPPORT:
State Association of County Retirement Systems (source)
Los Angeles County Employees Retirement Association
OPPOSITION:
None received
ARGUMENTS IN SUPPORT:
According to the sponsor:
Under existing law, a '37 Act member who files for
disability retirement may, if eligible, retire from service
while their disability retirement application is pending.
If the member is later found to be eligible for disability
retirement benefits, appropriate adjustments are made to
their retirement allowance retroactive to the effective
date of his or her disability retirement.
While most '37 Act retirement systems would allow a retiree
AB 992 (Committee on Public Employees, Retirement, and Social
Security) Page 2 of ?
under the above scenario to change their retirement option
if the retirement board grants a disability benefit, there
appears to be a conflict between two sections of existing
law. AB 992 resolves the conflict between these two
sections and validates the current practices of most '37
Act systems.