Amended in Assembly March 15, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2404


Introduced by Assembly Member Cooley

February 19, 2016


An act to amendbegin delete Section 21455end deletebegin insert Sections 21456, 21457, 21459, and 21463end insert of the Government Code, relating to retirement benefits.

LEGISLATIVE COUNSEL’S DIGEST

AB 2404, as amended, Cooley. begin deleteRetirement benefits: end deletebegin insertPublic Employees’ Retirement System: end insertoptional settlements.

begin deleteUnder existing law, members end deletebegin insertExisting law permits a member end insertof the Public Employees’ Retirement Systembegin delete mayend deletebegin insert toend insert elect from among several optionalbegin delete settlements, including optional settlement 1 that consists of a retirement allowance for life and the balance of accumulated contributions, if any, paid to the member’s beneficiary.end deletebegin insert settlements for the purpose of structuring his or her retirement allowance, which may result in a reduction of the allowance paid to the member in relation to the payments to his or her beneficiary after the member’s death. Existing law includes among these optionsend insertbegin insert optional settlement 2, which provides an allowance for life to the member and thereafter to his or her beneficiary, and optional settlement 3, which provides an allowance for life to the member and thereafter 1/2 of his or her allowance to his or her beneficiary. Existing law entitles a member who elected optional settlement 2 and optional settlement 3 to a recalculated, increased allowance if the beneficiary predeceases the member, subject to a specified, sinking percentage. Existing law provides that a member who waives the right for an increased allowance upon the death of the beneficiary, as specified, is not entitled to an increase in his or her allowance, as described above.end insert

begin insert

This bill would provide that the right of a member to receive a recalculated allowance upon the death of his or her beneficiary, as described above, only applies to a member who retires on or before December 31, 2017.

end insert
begin delete

This bill would make nonsubstantive changes to those provisions.

end delete

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 21456 of the end insertbegin insertGovernment Codeend insertbegin insert is
2amended to read:end insert

3

21456.  

Optional settlement 2 consists of the right to have a
4retirement allowance paid a member until his or her death and
5thereafter to his or her beneficiary for life.

6If the beneficiary predeceases the member and the member
7elected this section to be effective on or after January 1, 1990, the
8member’s allowance shall be adjusted effective the first of the
9month following the death of the beneficiary, to reflect the benefit
10that would have been paid had the member not selected an optional
11settlement.

12If a nonspouse beneficiary waives entitlement to this allowance
13and the member elected this section to be effective on or after
14January 1, 1993, the member’s allowance shall be adjusted effective
15the first of the month following the receipt of the waiver of the
16allowance entitlement from the nonspouse beneficiary to reflect
17the benefit that would have been paid had the member not selected
18an optional settlement.

19If the marriage of a member is dissolved or annulled or there is
20a legal separation between the member and the beneficiary spouse
21and the judgment dividing the community property awards the
22total interest in this system to the member, and the member elects
23this section to be effective on or after January 1, 1994, the
24member’s allowance shall be adjusted effective the first of the
25month following the filing of the judgment with the board to reflect
26the benefit that would have been paid had the member not selected
27an optional settlement.

P3    1If the beneficiary spouse predeceases the member on or after
2January 1, 1990, and the member elected this section to be effective
3prior to January 1, 1990, the member’s allowance shall be adjusted
4effective the first of the month following the death of the
5beneficiary spouse to reflect a new allowance as calculated below.

6If the nonspouse beneficiary waives entitlement to this allowance
7on or after January 1, 1993, and the member elected this section
8to be effective prior to January 1, 1993, the member’s allowance
9shall be adjusted, effective the first of the month following receipt
10by the board of the waiver of entitlement from the nonspouse
11beneficiary, to reflect a new allowance as calculated below.

12If the marriage of a member is dissolved or annulled or there is
13a legal separation between the member and the beneficiary spouse
14and the judgment dividing the community property awards the
15total interest in the retirement system to the member, and the
16member elected this section to be effective prior to January 1,
171994, the member’s allowance shall be adjusted, effective the first
18of the month following the filing of the judgment with the board
19to reflect a new allowance as calculated below. The qualifying
20event shall be the date on which the judgment is filed with the
21board.

22A percentage factor shall be applied to the difference between
23the member’s unmodified allowance and optional settlement 2
24allowance, both of which shall include applicable cost-of-living
25increases. The product of this equation shall then be added to the
26member’s optional settlement 2 allowance and the total amount
27shall become the member’s base allowance. The percentage factor
28applicable to each member shall be determined by the time between
29the member’s retirement effective date and the date of death of
30the beneficiary spouse or by the time between the member’s
31retirement effective date and the date of the receipt of either the
32waiver of the allowance entitlement or the judgment of dissolution,
33annulment, or legal separation according to the following table:


34

 

Period between the member’s retirement
effective date and the date of the qualifying
event

Percentage

Less than 12 months

95%

12 months through 23 months

85%

24 months through 35 months

75%

36 months through 47 months

65%

48 months through 59 months

55%

60 months through 71 months

45%

72 months through 83 months

35%

84 months through 95 months

25%

96 months through 107 months

15%

108 months through 119 months

 5%

120 months or more

 0%

P4    9

 

10Nothing in this section shall result in additional cost to the
11employer.

begin insert

12The right of a member to receive a recalculated allowance upon
13the death of his or her beneficiary granted pursuant to this section
14shall apply only to a member who retires on or before December
1531, 2017.

end insert
16begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 21457 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
17read:end insert

18

21457.  

Optional settlement 3 consists of the right to have a
19retirement allowance paid a member until his or her death, and
20thereafter to have one-half of his or her retirement allowance paid
21to his or her beneficiary for life.

22If the beneficiary predeceases the member and the member
23elected this section to be effective on or after January 1, 1990, the
24member’s allowance shall be adjusted effective the first of the
25month following the death of the beneficiary, to reflect the benefit
26that would have been paid had the member not selected an optional
27settlement.

28If the marriage of a member is dissolved or annulled or there is
29a legal separation between the member and the beneficiary spouse
30and the judgment dividing the community property awards the
31total interest in this system to the member, and the member elects
32this section to be effective on or after January 1, 1994, the
33member’s allowance shall be adjusted effective the first of the
34month following the filing of the judgment with the board to reflect
35the benefit that would have been paid had the member not selected
36an optional settlement.

37If a nonspouse beneficiary waives entitlement to this allowance
38and the member elected this section to be effective on or after
39January 1, 1993, the member’s allowance shall be adjusted,
40effective the first of the month following the receipt of the waiver
P5    1of the allowance entitlement from the nonspouse beneficiary, to
2reflect the benefit that would have been paid had the member not
3selected an optional settlement.

4If the beneficiary spouse predeceases the member on or after
5January 1, 1990, and the member elected this section to be effective
6prior to January 1, 1990, the member’s allowance shall be adjusted
7effective the first of the month following the death of the
8beneficiary spouse to reflect a new allowance as calculated below.

9If the marriage of a member is dissolved or annulled or there is
10a legal separation between the member and the beneficiary spouse
11and the judgment dividing the community property awards the
12total interest in the retirement system to the member, and the
13member elected this section to be effective prior to January 1,
141994, the member’s allowance shall be adjusted, effective the first
15of the month following the filing of the judgment with the board
16to reflect a new allowance as calculated below. The qualifying
17event shall be the date on which the judgment is filed with the
18board.

19If the nonspouse beneficiary waives entitlement to this allowance
20on or after January 1, 1993, and the member elected this section
21to be effective prior to January 1, 1993, the member’s allowance
22shall be adjusted, effective the first of the month following receipt
23by the board of the waiver of entitlement from the nonspouse
24beneficiary, to reflect a new allowance as calculated below.

25A percentage factor shall be applied to the difference between
26the member’s unmodified allowance and optional settlement 3
27allowance, both of which shall include applicable cost-of-living
28increases. The product of this equation shall then be added to the
29member’s optional settlement 3 allowance and the total amount
30shall become the member’s base allowance. The percentage factor
31applicable to each member shall be determined by the time between
32the member’s retirement effective date and the date of death of
33the beneficiary spouse or by the time between the member’s
34retirement effective date and the date of the receipt of either the
35waiver of the allowance entitlement or the judgment of dissolution,
36annulment, or legal separation according to the following table:


37

 

Period between the member’s retirement
effective date and the date of the qualifying
event

Percentage

Less than 12 months

95%

12 months through 23 months

85%

24 months through 35 months

75%

36 months through 47 months

65%

48 months through 59 months

55%

60 months through 71 months

45%

72 months through 83 months

35%

84 months through 95 months

25%

96 months through 107 months

15%

108 months through 119 months

 5%

120 months or more

 0%

P6   12

 

13Nothing in this section shall result in additional cost to the
14employer.

begin insert

15The right of a member to receive a recalculated allowance upon
16the death of his or her beneficiary granted pursuant to this section
17shall apply only to a member who retires on or before December
1831, 2017.

end insert
19begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 21459 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
20read:end insert

21

21459.  

begin deleteA end deletebegin insert(a)end insertbegin insertend insertbegin insertA end insertmember who elects to receive optional
22settlement 2 or 3 may concurrently and irrevocably elect to waive
23the provision for an increase to his or her allowance due to the
24death of his or her beneficiary and shall, instead, have his or her
25allowance based upon the waiver of this benefit.

begin insert

26(b) This section shall apply only to a member who retires on or
27before December 31, 2017.

end insert
28begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 21463 of the end insertbegin insertGovernment Codeend insertbegin insert is amended to
29read:end insert

30

21463.  

begin deleteA end deletebegin insert(a)end insertbegin insertend insertbegin insertA end insertmember who elected to receive optional
31settlement 2 or 3 and whose beneficiary predeceases him or her,
32shall be entitled to receive the increased allowance pursuant to
33Section 21456 or Section 21457, as applicable, unless the member
34elected to waive the provision for an increase to his or her
35allowance pursuant to Section 21459.

begin insert

36(b) This section shall apply only to a member who retires on or
37before December 31, 2017.

end insert
begin delete38

SECTION 1.  

Section 21455 of the Government Code is
39amended to read:

P7    1

21455.  

Optional settlement 1 consists of the right to have a
2retirement allowance paid to the member until his or her death and
3if the member dies before he or she receives in annuity payments
4the amount of his or her accumulated contributions at retirement,
5to have the balance at death paid to his or her beneficiary or estate.

end delete


O

    98