BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1824
Norma Torres, Chair HEARING DATE: June 23, 2014
AB 1824 (Rendon) as amended 4/22/14 FISCAL: NO
1937 ACT COUNTY RETIREMENT LAW: OPTIONAL SETTLEMENT
REVISIONS
HISTORY :
Sponsor: California Retired County Employees Association
(CRCEA)
Other legislation: AB 1136 (Fong), 2009
Vetoed by Governor
AB 979 (Negrete McLeod),
Chapter 441, Statutes of 2004
ASSEMBLY VOTES :
PER & SS 4-1 5/07/14
Assembly Floor 51-22 5/23/14
SUMMARY :
AB 1824 permits, upon adoption by a county board of
retirement, a retired member of a county retirement system
being operated under the County Employees' Retirement Law of
1937 ('37 Act) to change a previously elected optional
settlement, as specified.
BACKGROUND AND ANALYSIS :
1)Existing law :
a) establishes the 1937 Act County Employees' Retirement
System, governed by the '37 Act and comprised of 20
independent county retirement systems.
b) permits a member of a '37 Act retirement system,
prior to the first payment of any retirement allowance,
to elect certain optional settlements, which reduce the
allowance payable to the retiree through his or her life
in exchange for providing ongoing payments to the
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beneficiary (which could be a spouse or other
individual) for his or her lifetime in the event of the
retiree's death.
c) provides that, upon the death of a '37 Act member who
died after a service retirement or non-service related
disability and did not elect an optional settlement, an
allowance equaling 60% of his or her retirement
allowance will be continued throughout life to a
surviving spouse to whom he or she was married for at
least one year prior to the effective date of
retirement.
d) allows, upon adoption by a county board of
supervisors, retired '37 Act members, who marry after
retirement, to purchase, at no cost to the retirement
system, an optional survivor benefit in order to
increase the survivor benefit that would be paid to the
new spouse if the member dies first.
1)This bill :
a) allows a '37 Act retiree, in order to provide for his
or her spouse, to revise an optional settlement, as
specified, if all of the following apply:
i) the retiree retired on or before the date the
post-retirement spouse provision was made applicable
in the county from which he or she retired;
ii) the retiree was unmarried or had been married
less than one year at the time of retirement;
iii) the retiree's spouse is at least age 55 and is
older than the originally designated beneficiary; and
iv) the application requirements, including requiring
notification of, and acknowledgement by, beneficiaries
who may be affected by the revision, have been
satisfied.
b) specifies that a person who knowingly provides false
information in the required written declaration is
subject to a civil penalty of not less than one thousand
dollars ($1,000) and not more than twenty-five thousand
dollars ($25,000), in addition to any civil remedies
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available to the board. An action to impose a civil
penalty pursuant to this provision may be brought by any
public prosecutor in the name of the people of the
state.
c) specifies that after revision, the retiree's
allowance will remain the same as provided by the
original optional settlement, adjusted to reflect any
cost-of-living increases that have been added to the
retirement allowance.
d) specifies that the retirement system is under no
obligation to locate or otherwise contact retired
members who may qualify for these provisions.
e) specifies that any action taken pursuant to these
provisions does not excuse the obligation of a member to
provide a continuing benefit to a former spouse pursuant
to a court order.
f) specifies that these provisions will not become
effective in a county until adopted by the county board
of retirement.
COMMENTS :
1)Similarity to AB 1136 (Fong)
This bill is similar to AB 1136 (Fong) of 2009, which was
vetoed by Governor Schwarzenegger due to concerns that the
bill would have created unfunded increases to county
retirement costs. AB 1824 differs from that bill by
stating that after making this election, the retiree's
allowance will remain the same as provided by the original
optional settlement.
2)Arguments in Support :
According to the author:
The Legislature added a provision to the County
Employees' Retirement Law, commonly referred to as the
'Post-retirement spouse" provision, which makes a spouse
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eligible for a survivor's continuance of an unmodified
allowance, if the spouse was married to the retiree at
least two years prior to the retiree's death, and was 55
years old on or before the retirees death. Application
of this provision is optional by county, and a number of
retirement boards have exercised this option at various
times.
A number of retirees who were unmarried or married for
less than one year and who selected an optional
settlement in lieu of the unmodified allowance at the
time they retired might not have done so had the
post-retirement spouse provision been made applicable in
the county from which they retired.
This bill would enable a retiree to change the
beneficiary of an optional settlement in a county in
which the post-retirement spouse provision has been made
applicable provided certain criteria have been met.
As stated by the sponsor:
Frequently, optional settlements are selected because,
when making application for retirement, the employee is
either unmarried or is barred from naming his spouse as
the beneficiary of an unmodified allowance because he or
she had been married less than one year prior to
retirement. By requiring the spouse to be older than
the designated beneficiary, and not changing the amount
of the pension, the change should result in no
additional cost to the retirement system.
3)SUPPORT :
California Retired County Employees Association (CRCEA)
4)OPPOSITION :
None.
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