HOUSE BILL No. 4477
March 12, 1997, Introduced by Reps. DeHart, LaForge, Kelly, Schermesser, Hanley, Brewer, Hale and Parks and referred to the Committee on Public Retirement.
A bill to amend 1943 PA 240, entitled
"State employees' retirement act,"
by amending sections 1a, 1b, 1e, 17j, 19, 20d, 20g, and 31 (MCL
38.1a, 38.1b, 38.1e, 38.17j, 38.19, 38.20d, 38.20g, and 38.31),
section 1a as amended by 1995 PA 176, section 1b as amended by
1996 PA 33, section 1e as amended by 1996 PA 487, section 17j as
amended by 1989 PA 9, section 19 as amended by 1996 PA 521, sec-
tion 20d as amended by 1996 PA 532, section 20g as amended by
1987 PA 241, and section 31 as amended by 1991 PA 48, and by
adding sections 17m and 31a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1a. (1) "Accumulated contributions" means the sum of
2 all amounts deducted from the compensation of a member and
3 credited to the member's individual account in the employees'
4 savings fund, together with regular interest on that account.
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1 (2) "Actuarial cost" means a single percentage that, when
2 multiplied by a member's fiscal year compensation, will result in
3 the average actuarial present value of the additional benefits
4 resulting from the crediting of 1 additional year of service.
5 This single percentage shall be based on the members who utilize
6 those sections of this act that permit the purchase of service.
7 For purchases of service credit made before December 31, 1990,
8 the single percentage shall be 9%. Beginning December 31, 1990
9 and every 3 years thereafter, the single percentage shall be com-
10 puted based upon actual experience. If the computation results
11 in an increase or decrease in the percentage, not less than 6
12 months' notice shall be given to the members. AN AMOUNT THAT
13 SHALL BE PAID, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY THIS
14 ACT, BY A MEMBER TO PURCHASE ADDITIONAL SERVICE CREDIT AS ALLOWED
15 UNDER THIS ACT. ACTUARIAL COST SHALL BE COMPUTED AS PROVIDED IN
16 SECTION 17J.
17 (3) "Annuity" means annual payments for life derived from
18 the accumulated contributions of a member. An annuity shall be
19 paid in equal monthly installments.
20 (4) "Annuity reserve" means the present value, computed upon
21 the basis of mortality and other tables adopted by the retirement
22 board, of all payments to be made on account of an annuity, or
23 benefits in lieu of an annuity, granted to a member under this
24 act.
25 (5) "Appointing authority" means the departmental officer
26 who has the responsibility of making appointments and handling
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1 all other personnel transactions affecting the employees in the
2 agency that the officer represents.
3 Sec. 1b. (1) "Beneficiary" or "disability beneficiary"
4 means a person other than a retirant who receives a retirement
5 allowance, pension, or other benefit provided by this act.
6 (2) "Compensation" means the remuneration paid a member on
7 account of the member's services rendered to this state to the
8 extent that the remuneration does not exceed the compensation
9 limit established in section 401(a)(17) of the internal revenue
10 code. If a member's remuneration is not paid totally in money,
11 the retirement board shall employ the maintenance-compensation
12 schedules established from time to time by the civil service
13 commission. Compensation does not include any of the following:
14 (a) Remuneration paid in lieu of accumulated sick leave.
15 (b) Remuneration for services rendered after October 1,
16 1981, payable at retirement or termination under voluntary or
17 involuntary pay reduction plan B, in excess of the amount the
18 member would have received had the member been compensated for
19 those services at the rate of pay in effect at the time those
20 services were performed.
21 (c) Payment for accrued annual leave at separation in excess
22 of 240 300 hours.
23 (d) Remuneration received by an employee of the department
24 of mental health resulting from severance pay received because of
25 the deinstitutionalization of the department of mental health
26 resident population.
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1 (D) (e) Remuneration received as a bonus by investment
2 managers of the department of treasury under the treasury
3 incentive bonus plan first approved by the civil service commis-
4 sion on February 11, 1988, pursuant to section 5 of article XI of
5 the state constitution of 1963.
6 (E) (f) Remuneration received as a bonus or merit payment
7 by assistant attorneys general in the department of attorney gen-
8 eral under the merit pay plan approved by the civil service com-
9 mission on January 19, 1990, pursuant to section 5 of article XI
10 of the state constitution of 1963.
11 (3) "Conservation officer" means an employee of the depart-
12 ment of natural resources, or its predecessor or successor
13 agency, who has sworn to the prescribed oath of office and who is
14 designated as a peace officer under section 1606 of part 16
15 (enforcement of laws for protection of wild birds, wild animals,
16 and fish) of the natural resources and environmental protection
17 act, Act No. 451 of the Public Acts of 1994, being section 1994
18 PA 451, MCL 324.1606, and section 1 of Act No. 109 of the Public
19 Acts of 1986, being section 300.21 of the Michigan Compiled Laws
20 1986 PA 109, MCL 300.21.
21 (4) "Credited service" means the sum of the prior service
22 and membership service credited to a member's service account.
23 Sec. 1e. (1) "Final average compensation" means the average
24 of those years of highest annual compensation paid to a member
25 during a period of 5 consecutive years of credited service; or if
26 the member has less than 5 years of credited service, then the
27 average of the annual compensation paid to the member during the
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1 member's total years of credited service. For a person whose
2 retirement allowance effective date is on or after October 1,
3 1987, " final average compensation " means the average of
4 those years of highest annual compensation paid to a member
5 during a period of 3 consecutive years of credited service; or if
6 the member has less than 3 years of credited service, then the
7 average of the annual compensation paid to the member during the
8 member's total years of credited service. A member's final aver-
9 age compensation shall not be diminished because of required
10 1-day layoffs. The compensation used in computing the final
11 average compensation for a period during which a member is in a
12 voluntary or involuntary pay reduction plan A or on a designated
13 temporary layoff shall include the value of the hours not worked
14 calculated at the member's hourly rate or rates of pay in effect
15 immediately before the applicable final average compensation
16 period. A member's final average compensation shall not be
17 increased or decreased by the member's participation in voluntary
18 or involuntary pay reduction plan B. Payment for accrued annual
19 leave at separation in excess of 240 300 hours shall not be
20 included in final average compensation.
21 (2) "Final compensation" means a member's annual rate of
22 compensation at the time the member last terminates employment
23 with this state.
24 (3) "Internal revenue code" means the United States internal
25 revenue code of 1986.
26 Sec. 17j. (1) On and after June 23, 1987, a member who is
27 otherwise entitled to purchase service credit under section 17g,
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1 17h, 17i, or 17k, 17l, OR 17M shall not purchase a combined
2 total of more than 10 years of service credit under those
3 sections.
4 (2) On and after June 23, 1987, a member who under section
5 17c, 17e, 17f, 17g, 17h, 17i, 17k, 17l, 17M, or 18(2) is other-
6 wise entitled to purchase service credit may purchase such THE
7 service credit in separate increments equal to 1 or more full
8 years, or a remaining fraction of a year, if any, or both.
9 Partial purchase of service credit under this section shall
10 DOES not bar future purchases otherwise in compliance with this
11 section and the provisions of this act authorizing the purchase,
12 but computation of the amount of payment due shall be made sepa-
13 rately for each purchase.
14 (3) If a member who made payment under this section dies and
15 a retirement allowance is not payable or if the member leaves
16 service with the THIS state before his or her retirement allow-
17 ance becomes effective, the payment made by the member shall be
18 refunded upon request to the member, to the person designated by
19 the member in writing to the board, or if a person is not desig-
20 nated, then to the member's legal representative or estate.
21 (4) ACTUARIAL COST SHALL BE EQUAL TO THE PRODUCT OF SUBDIVI-
22 SIONS (A), (B), AND (C):
23 (A) A PERCENTAGE, DETERMINED BY THE RETIREMENT BOARD AND THE
24 DEPARTMENT, THAT WHEN MULTIPLIED BY A MEMBER'S COMPENSATION, AS
25 DETERMINED UNDER SUBDIVISION (B), RESULTS IN THE AVERAGE ACTUAR-
26 IAL PRESENT VALUE OF THE ADDITIONAL BENEFITS RESULTING FROM THE
27 CREDITING OF 1 ADDITIONAL YEAR OF SERVICE. THE PERCENTAGE MAY
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1 VARY BECAUSE OF AGE, CREDITED SERVICE, OR BENEFIT COVERAGE. AN
2 INCREASE OR DECREASE IN THE PERCENTAGE UNDER THIS SUBDIVISION
3 SHALL NOT BECOME EFFECTIVE BEFORE THE EXPIRATION OF 6 MONTHS OR
4 MORE AFTER THE RETIREMENT BOARD NOTIFIES THE MEMBERS OF THE
5 INCREASE OR DECREASE.
6 (B) A MEMBER'S COMPENSATION. THE MEMBER'S COMPENSATION
7 SHALL BE THE MEMBER'S COMPENSATION EARNED IN THE FISCAL YEAR
8 IMMEDIATELY BEFORE THE FISCAL YEAR IN WHICH THE APPLICATION TO
9 PURCHASE AND PAYMENT FOR THE SERVICE ARE MADE. THE COMPENSATION
10 AMOUNT USED SHALL NOT BE LESS THAN THE HIGHEST COMPENSATION PRE-
11 VIOUSLY EARNED BY THE MEMBER.
12 (C) THE NUMBER OF YEARS, INCLUDING ANY FRACTION OF A YEAR,
13 OF CREDITED SERVICE A MEMBER ELECTS TO PURCHASE UP TO THE MAXIMUM
14 ALLOWED.
15 SEC. 17M. (1) A MEMBER MAY ELECT TO PURCHASE NOT MORE THAN
16 5 YEARS OF SERVICE CREDIT UPON REQUEST AND PAYMENT TO THE RETIRE-
17 MENT SYSTEM OF THE ACTUARIAL COST.
18 (2) SERVICE CREDIT PURCHASED UNDER THIS SECTION MAY NOT BE
19 USED TO SATISFY THE MINIMUM NUMBER OF YEARS OF SERVICE CREDIT
20 REQUIRED TO RECEIVE A RETIREMENT ALLOWANCE UNDER THIS ACT.
21 (3) IF A MEMBER WHO MADE PAYMENT UNDER THIS SECTION DIES AND
22 A RETIREMENT ALLOWANCE IS NOT PAYABLE, OR IF THE MEMBER LEAVES
23 SERVICE AND A RETIREMENT ALLOWANCE IS NOT PAYABLE, THE PAYMENT
24 MADE BY THE MEMBER SHALL BE REFUNDED UPON REQUEST TO THE MEMBER,
25 THE MEMBER'S REFUND BENEFICIARY, IF ANY, OR TO THE MEMBER'S LEGAL
26 REPRESENTATIVE OR ESTATE.
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1 Sec. 19. (1) A member who is 60 years of age or older and
2 has 10 or more years of credited service; A MEMBER WHO IS 60
3 YEARS OF AGE OR OLDER AND HAS 5 OR MORE YEARS OF CREDITED SERVICE
4 AS PROVIDED IN SECTION 20(4) OR (5); OR A MEMBER WHO IS 50 YEARS
5 OF AGE OR OLDER AND WHOSE COMBINED AGE AND AMOUNT OF CREDITED
6 SERVICE IS EQUAL TO OR GREATER THAN 80 YEARS may retire upon
7 written application to the retirement board, stating a date, not
8 less than 30 or more than 90 days after the execution and filing
9 of the application, on which he or she desires to retire.
10 Beginning on the retirement allowance effective date, he or she
11 shall receive a retirement allowance computed according to sec-
12 tion 20(1), WITHOUT REGARD TO THE REDUCTION IN SUBSECTION (2).
13 (2) A member who is 55 years of age or older, but less than
14 60 years of age, and has 15 or more years of credited service,
15 may retire upon written application to the retirement board stat-
16 ing a date, not less than 30 or more than 90 days after the exe-
17 cution and filing of the application, on which he or she desires
18 to retire. Upon retirement he or she shall receive a retirement
19 allowance computed according to section 20(1). The EXCEPT AS
20 OTHERWISE PROVIDED IN THIS ACT, THE retirement allowance of a
21 member who has less than 30 years' 25 YEARS OF credited service
22 shall be reduced by an amount which THAT is 0.5% of the retire-
23 ment allowance multiplied by the number of months the person's
24 age at retirement is under 60 years. The reduction of 1/2 of 1%
25 for each month and fraction of a month from the member's retire-
26 ment allowance effective date to the date of the member's
27 sixtieth birthday provided for in this subsection does not apply
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1 to a member who retired before July 1, 1974 and before attainment
2 of age 60, with 30 or more years of credited service. The
3 retirement allowance of a retirant or beneficiary of a retirant
4 who retired before that date shall be recalculated disregarding
5 the reduction, and the person receiving the retirement allowance
6 is eligible to receive an adjusted retirement allowance based on
7 the recalculation beginning October 1, 1987, but is not eligible
8 to receive the adjusted amount attributable to any month begin-
9 ning before October 1, 1987. The recalculated retirement allow-
10 ance provided by this subsection shall be paid by January 1,
11 1988. The retirement allowance of a retirant who dies before
12 January 1, 1988, and who has not nominated a retirement allowance
13 beneficiary pursuant to section 31, shall not be recalculated
14 pursuant to this subsection.
15 (3) Notwithstanding any other provision of this section,
16 effective April 1, 1988, a member may retire with a retirement
17 allowance computed according to section 20(1), without regard to
18 the reduction in subsection (2), if all of the following apply:
19 (a) The member files a written application with the retire-
20 ment board stating a date, not less than 30 or more than 90 days
21 after the execution and filing of the application, on which the
22 member desires to retire, and which is within the early retire-
23 ment effective period.
24 (b) The member was employed by the state for the 6-month
25 period immediately preceding the member's retirement allowance
26 effective date. This subdivision does not apply to a member who
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1 had been restored to active service during that 6-month period
2 pursuant to section 33.
3 (c) On the last day of the month immediately preceding the
4 retirement allowance effective date stated in the application,
5 the member's combined age and length of credited service is equal
6 to or greater than 80 years and the member is 50 years of age or
7 older.
8 (d) For purposes of this subsection, "early retirement
9 effective period" means 1 of the following:
10 (i) Except as provided in subparagraph (ii), the period
11 beginning on April 1, 1988 and ending on April 1, 1989.
12 (ii) For a member employed by a hospital or facility owned
13 or operated by the department formerly known as the department of
14 mental health that is in the process of being closed by the
15 department formerly known as the department of mental health, the
16 period beginning on April 1, 1988 and ending on October 1, 1989.
17 (4) As used in subsections (5) to (9):
18 (a) "Agency of the department" means 1 of the following:
19 (i) Southwest Michigan community living services.
20 (ii) Wayne community living services.
21 (b) "Department inpatient facility" means 1 of the
22 following:
23 (i) A developmental disability center that is directly oper-
24 ated by the department formerly known as the department of mental
25 health for purposes of providing inpatient care and treatment
26 services to persons with developmental disabilities.
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1 (ii) A psychiatric hospital that is directly operated by the
2 department formerly known as the department of mental health for
3 purposes of providing inpatient diagnostic and therapeutic serv-
4 ices to persons who are mentally ill.
5 (5) Notwithstanding any other provision of this section, a
6 member who is an employee of an agency of the department or a
7 department inpatient facility and is on layoff status because the
8 agency or inpatient facility has been designated by the state
9 officer formerly known as the director of mental health for clo-
10 sure on or after October 1, 1989, may retire as provided in sub-
11 section (7) or (8), as applicable, with a retirement allowance
12 computed according to section 20(1), without regard to the reduc-
13 tion in subsection (2), upon satisfaction of any 1 of the follow-
14 ing conditions:
15 (a) The member is 51 years of age or older and has 25 or
16 more years of credited service, the last 5 of which are as an
17 employee of an agency of the department designated for closure or
18 a department inpatient facility designated for closure.
19 (b) The member is at least 56 years of age and has 10 or
20 more years of credited service, the last 5 of which are as an
21 employee of an agency of the department designated for closure or
22 a department inpatient facility designated for closure.
23 (c) The member has 25 or more years of credited service,
24 regardless of age, as an employee of an agency of the department
25 designated for closure or a department inpatient facility desig-
26 nated for closure.
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1 (6) When a department inpatient facility or agency is
2 designated for closure on or after October 1, 1989, the state
3 officer formerly known as the director of mental health shall
4 certify in writing to the state legislature and the retirement
5 board, not less than 240 days before the designated official date
6 of closure, which facility or agency is to be closed and the des-
7 ignated official date of closure.
8 (7) Except as provided in subsection (8), a member who is
9 eligible to receive a retirement allowance under subsection (5)
10 may retire effective on the date that an agency of the department
11 or a department inpatient facility designated for closure as pro-
12 vided in subsection (5) actually closes, upon written application
13 to the retirement board not less than 30 or more than 180 days
14 before the designated official date of closure. Beginning on the
15 retirement allowance effective date, he or she shall receive a
16 retirement allowance computed according to section 20(1).
17 (8) A member who is on layoff status, is not working for the
18 state, and becomes eligible to receive a retirement allowance
19 under subsection (5) and who was an employee of an agency of the
20 department or a department inpatient facility that has been des-
21 ignated for closure as provided in subsection (5) and that actu-
22 ally closes on or after October 1, 1989, may retire upon written
23 application to the retirement board, stating a date, not less
24 than 180 days after the30 or more than facility actually closes,
25 upon which he or she wishes to retire. Beginning on the retire-
26 ment allowance effective date, he or she shall receive a
27 retirement allowance computed according to section 20(1).
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1 (9) Any additional accrued actuarial cost and costs for
2 health insurance resulting from the implementation of subsection
3 (5) shall be funded from appropriations to the department
4 formerly known as the department of mental health for this
5 purpose.
6 (10) A member who is an employee of the state accident fund
7 on the date of transfer to a permitted transferee as that term is
8 defined by section 701a of the worker's disability compensation
9 act of 1969, Act No. 317 of the Public Acts of 1969, being sec-
10 tion 418.701a of the Michigan Compiled Laws 1969 PA 317, MCL
11 418.701A, may retire if the member's age and his or her length of
12 service is equal to or greater than 70 years on the date of
13 transfer. The member may retire upon written application to the
14 retirement board, stating a date, not less than 30 or more than
15 90 days after the execution and filing of the application, on
16 which he or she desires to retire. Beginning on the retirement
17 allowance effective date, he or she shall receive a retirement
18 allowance computed according to section 20(1) without regard to
19 the reduction required by subsection (2).
20 (11) A member who is an employee of the Michigan biologic
21 products institute on the date the institute is conveyed pursuant
22 to the Michigan biologic products institute transfer act, 1996 PA
23 522, MCL 333.26331 TO 333.26340, may retire if the member's age
24 and his or her length of service is equal to or greater than 70
25 years on the date of the conveyance. The member may retire upon
26 written application to the retirement board, stating a date, not
27 less than 30 or more than 90 days after the execution and filing
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1 of the application, on which he or she desires to retire.
2 Beginning on the retirement allowance effective date, he or she
3 shall receive a retirement allowance computed according to
4 section 20(1) without regard to the reduction required by
5 subsection (2).
6 (12) A member who is an employee of the liquor control com-
7 mission created by section 5 of the Michigan liquor control act,
8 Act No. 8 of the Public Acts of the Extra Session of 1933, being
9 section 436.5 of the Michigan Compiled Laws 1933 (EX SESS) PA 8,
10 MCL 436.5, whose employment is terminated due to the privatiza-
11 tion of the distribution of spirits within this state is effectu-
12 ated pursuant to the resolution and order adopted by the liquor
13 control commission on February 7, 1996, a plan adopted pursuant
14 to statute or court order, or a plan adopted pursuant to both
15 statute and order of the liquor control commission may retire if
16 the member's age and his or her length of service is equal to or
17 greater than 70 years on the date the privatization is
18 effectuated. The member may retire under this subsection upon
19 written application to the retirement board, stating a date, not
20 less than 30 or more than 90 days after the execution and filing
21 of the application, on which he or she desires to retire.
22 Beginning on the retirement allowance effective date, he or she
23 shall receive a retirement allowance computed according to
24 section 20(1), without regard to the reduction required by
25 subsection (2). The cost of benefits paid under this section
26 shall be paid out of the revolving fund created under section 10
27 of Act No. 8 of the Public Acts of the Extra Session of 1933,
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1 being section 436.10 of the Michigan Compiled Laws THE MICHIGAN
2 LIQUOR CONTROL ACT, 1933 (EX SESS) PA 8, MCL 436.10.
3 Sec. 20d. (1) On and after July 1, 1974, hospitalization
4 and medical coverage insurance premium payable by any retirant or
5 his or her beneficiary and his or her dependents under any group
6 health plan authorized by the Michigan civil service commission
7 and the department of management and budget shall be paid by the
8 retirement board from the health insurance reserve fund created
9 in section 11. The amount payable shall be in the same propor-
10 tion of premium payable by the state of Michigan for the classi-
11 fied employees occupying positions in the state civil service.
12 The hospitalization and medical insurance premium payable shall
13 be paid from appropriations made for this purpose to the health
14 insurance reserve fund sufficient to cover the premium payment
15 needed to be made.
16 (2) Effective January 1, 1988, 90% of the premium payable by
17 a retirant or the retirant's beneficiary and his or her depen-
18 dents for dental coverage or vision coverage, or both, under any
19 group plan authorized by the Michigan civil service commission
20 and the department of management and budget shall be paid by the
21 retirement board from the health insurance reserve fund created
22 in section 11.
23 (3) On and after March 31, 1997, the retirement system shall
24 also pay health insurance premiums described in this section in
25 the manner prescribed in section 68.
26 (4) For purposes of this section, "retirant" includes a
27 person who retires under section 306 or 410 of the Michigan
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1 military act, Act No. 150 of the Public Acts of 1967, being
2 sections 32.706 and 32.810 of the Michigan Compiled Laws 1967
3 PA 150, MCL 32.706 AND 32.810.
4 (5) THE RETIREMENT BOARD SHALL PAY THE HOSPITALIZATION AND
5 MEDICAL COVERAGE INSURANCE PREMIUMS AND DENTAL COVERAGE OR VISION
6 COVERAGE PREMIUMS, OR BOTH, AS PROVIDED IN THIS SECTION FOR A
7 CHILD OF A DECEASED RETIRANT DURING THE PERIOD THAT CHILD
8 RECEIVES A RETIREMENT ALLOWANCE PURSUANT TO SECTION 31A.
9 COVERAGE UNDER THIS SUBSECTION DOES NOT APPLY TO A SPOUSE OR
10 DEPENDENT OF THE CHILD OF A DECEASED RETIRANT.
11 Sec. 20g. (1) After the end of each state fiscal year, the
12 department of management and budget shall determine the rate of
13 investment return earned on retirement system assets during the
14 fiscal year, based upon methods established by the retirement
15 board.
16 (2) At the end of each state fiscal year, the retirement
17 system's actuary shall determine the present value of retirement
18 allowances to be paid after the end of the fiscal year to retir-
19 ants and retirement allowance beneficiaries in receipt of retire-
20 ment allowances at the end of the fiscal period. The assumed
21 interest rate used in the determination shall be 8% per year,
22 compounded annually.
23 (3) The distribution income at the end of each state fiscal
24 year shall be equal to the product of the present value of
25 retirement allowances determined in subsection (2) at the end of
26 the previous fiscal year times the positive excess, if any, of
27 the rate of investment return determined in subsection (1)
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1 exceeding 8%. The distribution income calculated pursuant to
2 this subsection at the end of the fiscal years 1984-85 and
3 1985-86 shall be reduced by the costs of postretirement adjust-
4 ments paid during the fiscal year pursuant to sections 20b, 20c,
5 20e, and 20f.
6 (4) After the end of each state fiscal year, each retirant
7 and retirement allowance beneficiary in receipt of a retirement
8 allowance at the end of the fiscal year, and whose effective date
9 of retirement allowance preceded the beginning of that fiscal
10 year, shall be credited with 1 distribution unit for each full
11 year between the effective date of retirement and the end of the
12 fiscal year and 1 distribution unit for each full year of service
13 credit in force on the effective date of retirement.
14 Distribution units shall not accumulate from 1 year to the next
15 year.
16 (5) The distribution amount for an individual retirant or
17 retirement allowance beneficiary shall be equal to the product of
18 the distribution income determined in subsection (3) times the
19 individual's number of distribution units determined in subsec-
20 tion (4) divided by the total number of distribution units for
21 all eligible retirants and retirement allowance beneficiaries in
22 receipt of retirement allowances at the end of the fiscal year.
23 The distribution amount for an individual retirant or retirement
24 allowance beneficiary of a retirant whose retirement allowance
25 effective date is on or after October 1, 1987 is zero.
26 (6) The distribution amount for each retirant or retirement
27 allowance beneficiary shall be payable in the form of a
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1 supplemental payment prior to BEFORE the seventh month after
2 the end of the state fiscal year. Except as provided in subsec-
3 tion (9), a distribution amount shall not be payable after
4 March 31, 1988. If a retirant dies before receipt of the distri-
5 bution amount, the payment shall be made to the retirant's
6 retirement allowance beneficiary, if any. If both the retirant
7 and the retirement allowance beneficiary die before receipt of
8 the distribution amount, no payment shall be made.
9 (7) Each retirement allowance shall be increased each
10 October 1 beginning with the later of October 1, 1988 or the
11 first October 1 which THAT is at least 12 months after the
12 retirement allowance effective date. The amount of the annual
13 increase shall be equal to 3% of the retirement allowance that
14 would be payable as of the date of the increase without applica-
15 tion of this subsection, except that if the member made the elec-
16 tion permitted under section 20(2), the increase shall be based
17 on the amount of retirement allowance that would have been paid
18 without application of section 20(2). The BEGINNING OCTOBER 1,
19 1997, THE annual increase shall not exceed $300.00 $900.00.
20 (8) After the end of each state fiscal year, the cumulative
21 increase amount shall be computed for each retirant or retirement
22 allowance beneficiary. The cumulative increase amount shall be
23 equal to the difference between the total retirement allowance
24 paid during the state fiscal year and the retirement allowance
25 that would have been payable without application of subsection
26 (7) and section 20h. The cumulative increase amount for any
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1 retirant or retirement allowance beneficiary whose retirement
2 allowance effective date is on or after October 1, 1987 is zero.
3 (9) In March of each year, beginning in March, 1989, each
4 retirant or retirement allowance beneficiary shall be paid, in a
5 single supplemental payment, the excess, if any, of the distribu-
6 tion amount over the cumulative increase amount for the previous
7 state fiscal year. If a retirant dies before receipt of a sup-
8 plemental payment, the supplemental payment shall be made to the
9 retirant's retirement allowance beneficiary, if any. If both the
10 retirant and the retirement allowance beneficiary die before
11 receipt of a supplemental payment, no payment shall be made.
12 Sec. 31. (1) Except as provided in subsection (6), before
13 the effective date of retirement, but not after the effective
14 date of retirement, a member or deferred member who is eligible
15 for retirement, as provided in section 19, 19a, 21, 24, 46, or
16 48 THIS ACT, shall elect to receive his or her benefit in a
17 retirement allowance payable throughout life, which shall be
18 called a regular retirement allowance, or to receive the actuar-
19 ial equivalent at that time of his or her regular retirement
20 allowance in a reduced retirement allowance payable throughout
21 the lives of the retirant and a retirement allowance beneficiary,
22 pursuant to 1 of the following PAYMENT options:
23 (a) Option A. Upon the retirant's death his or her reduced
24 retirement allowance shall be continued throughout the life of
25 and paid to the retirement allowance beneficiary whom the member
26 nominated by written designation duly executed and filed with the
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1 retirement board before the effective date of his or her
2 retirement.
3 (b) Option B. Upon the retirant's death, 1/2 of his or her
4 reduced retirement allowance shall be continued throughout the
5 life of and paid to the retirement allowance beneficiary whom the
6 member nominated by written designation duly executed and filed
7 with the retirement board before the effective date of his or her
8 retirement.
9 (C) OPTION C. UPON THE RETIRANT'S DEATH, 3/4 OF HIS OR HER
10 REDUCED RETIREMENT ALLOWANCE SHALL BE CONTINUED THROUGHOUT THE
11 LIFE OF AND PAID TO THE RETIREMENT ALLOWANCE BENEFICIARY WHOM THE
12 MEMBER NOMINATED BY WRITTEN DESIGNATION DULY EXECUTED AND FILED
13 WITH THE RETIREMENT BOARD BEFORE THE EFFECTIVE DATE OF HIS OR HER
14 RETIREMENT.
15 (2) Except as provided in subsections (3) and (8), the elec-
16 tion of an A PAYMENT option UNDER SUBSECTION (1) shall not be
17 changed on or after the effective date of the retirement
18 allowance. A retirement allowance beneficiary designated under
19 this section shall not be changed on or after the effective date
20 of the retirement allowance, and shall be either a spouse, broth-
21 er, sister, parent, child, including an adopted child, or grand-
22 child of the person making the designation. Payment to a retire-
23 ment allowance beneficiary shall begin on the first day of the
24 month following the death of the retirant or member.
25 (3) If the retirement allowance beneficiary named under A
26 PAYMENT option A or B under subsection (1) predeceases the
27 retirant, the retirant's benefit shall revert to the regular
00773'97
21
1 retirement allowance, effective with the first day of the month
2 following the retirement allowance beneficiary's death. For a
3 retirant whose effective date of retirement was on or before
4 June 28, 1976, this subsection shall apply, but the regular
5 retirement allowance is not payable for any month beginning
6 before the later of the retirement allowance beneficiary's death
7 or January 1, 1986. A retirant who on January 1, 1986 is receiv-
8 ing a reduced retirement allowance because the retirant desig-
9 nated a retirement allowance beneficiary and the retirement
10 allowance beneficiary predeceased the retirant is eligible to
11 receive the regular retirement allowance beginning January 1,
12 1986, but the regular retirement allowance is not payable for any
13 month beginning before January 1, 1986.
14 (4) A member who continues in the employ of this state on
15 and after the date he or she acquires 10 years of service credit
16 or becomes eligible for deferred retirement as provided by sec-
17 tion 20(4) or (5), whichever occurs first, may by written decla-
18 ration duly executed and filed with the retirement board elect
19 option A, provided for in subsection (1)(a), and nominate a
20 retirement allowance beneficiary in the same manner as if the
21 member were then retiring from service, notwithstanding that the
22 member may not have attained 60 years of age. In the case of
23 IF the beneficiary's death or divorce from the member OCCURS
24 before the effective date of the member's retirement, the
25 member's election of option A and nomination of retirement allow-
26 ance beneficiary shall be automatically revoked and the member
27 may again elect option A and nominate a retirement allowance
00773'97
22
1 beneficiary at any time before the effective date of retirement.
2 If a member who has made an election and nominated a retirement
3 allowance beneficiary as provided in this subsection dies before
4 the effective date of his or her retirement, then the retirement
5 allowance beneficiary shall immediately receive the retirement
6 allowance that he or she would have been entitled to receive
7 under option A if the member had been regularly retired on the
8 date of the member's death. Except as otherwise provided by sub-
9 section (5), if a member who has made an election under this sub-
10 section subsequently retires under this act, his or her election
11 of option A shall take effect at the time of retirement. Subject
12 to the requirements of subsection (5), the member, may, before
13 the effective date of retirement, but not after the effective
14 date of retirement, MAY revoke his or her previous election of
15 option A and elect to receive his or her retirement allowance as
16 a regular retirement allowance or under option B OR C as provided
17 for in subsection (1)(b) (1). A retirement allowance shall not
18 be paid under this subsection on account of the death of a member
19 if any benefits are paid under section 27 on account of his or
20 her death. If a deferred member who has an option A election in
21 effect dies before the effective date of his or her retirement,
22 the retirement allowance payable under option A shall be paid to
23 the retirement allowance beneficiary at the time the deceased
24 deferred member otherwise would have been eligible to begin
25 receiving benefits.
26 (5) If a member, deferred member, retiring member, or
27 retiring deferred member is married at the effective date of the
00773'97
23
1 retirement allowance, an election under this section, other than
2 an election of an A PAYMENT option under subsection (1) naming
3 the spouse as retirement allowance beneficiary, shall not be
4 effective unless the election is signed by the spouse. However,
5 this requirement may be waived by the retirement board if the
6 signature of a spouse cannot be obtained because of extenuating
7 circumstances. As used in this subsection, "spouse" means the
8 person to whom the member, deferred member, retiring member, or
9 retiring deferred member is married at the effective date of the
10 retirement allowance.
11 (6) Until July 1, 1991, upon request in a form as determined
12 by the retirement board, a nonduty disability retirant who
13 retired under section 24 may change his or her election to
14 receive a disability retirement allowance computed as a regular
15 retirement allowance and elect to receive the actuarial equiva-
16 lent at the time of the election pursuant to this subsection of
17 his or her disability retirement allowance in a reduced retire-
18 ment allowance payable to the retirant and the retirant's spouse
19 pursuant to the provisions of A PAYMENT option A or B as pro-
20 vided in subsection (1), if the disability retirement allowance
21 effective date was before November 12, 1985 and the retirant had
22 25 or more years of credited service on the disability retirement
23 allowance effective date. The nonduty disability retirant shall
24 begin to receive the reduced retirement allowance under this sub-
25 section effective the first day of the month following the month
26 in which the retirant makes the election pursuant to this
27 subsection. As used in this subsection, "spouse" means the
00773'97
24
1 person to whom the nonduty disability retirant was married on the
2 effective date of his or her disability retirement allowance and
3 on the date the retirant makes the election pursuant to this
4 subsection.
5 (7) If a member who continues in the employ of the THIS
6 state on and after the date he or she acquires 10 years of serv-
7 ice credit, or on and after the date he or she becomes eligible
8 for deferred retirement as provided by section 20(4) or (5),
9 whichever occurs first, and who does not have an election of
10 option A in force as provided in subsection (4), dies before the
11 effective date of retirement and leaves a surviving spouse, the
12 spouse shall receive a retirement allowance computed in the same
13 manner as if the member had retired effective the day before the
14 date of his or her death, elected option A, and nominated the
15 spouse as retirement allowance beneficiary. When the retirement
16 allowance beneficiary dies, his or her retirement allowance shall
17 terminate. If the aggregate amount of retirement allowance pay-
18 ments received by the beneficiary is less than the accumulated
19 contributions credited to the member's account in the employees'
20 savings fund at the time of the member's death, the difference
21 between the accumulated contributions and the aggregate amount of
22 retirement allowance payments received by the beneficiary shall
23 be transferred from the employer's accumulation fund or pension
24 reserve fund to the employees' savings fund and paid pursuant to
25 section 29. A retirement allowance shall not be paid under this
26 subsection on account of the death of a member if benefits are
27 paid under section 27 on account of his or her death.
00773'97
25
1 (8) If a retirant receiving a reduced retirement allowance
2 under A PAYMENT option A or B under subsection (1) is divorced
3 from the spouse who had been designated as the retirant's retire-
4 ment allowance beneficiary under THE option, A or B, the elec-
5 tion of THE PAYMENT option A or B shall be considered void by
6 the retirement system if the judgment of divorce or award or
7 order of the court, or an amended judgment of divorce or award or
8 order of the court, described in section 40 and dated after the
9 effective date of the amendatory act that added this subsection
10 JUNE 27, 1991 provides that the election of THE PAYMENT option A
11 or B under subsection (1) is to be considered void by the
12 retirement system and the retirant provides a certified copy of
13 the judgment of divorce or award or order of the court, or an
14 amended judgment of divorce or award or order of the court, to
15 the retirement system. If the election of A PAYMENT option A or
16 B under subsection (1) is considered void by the retirement
17 system under this subsection, the retirant's retirement allowance
18 shall revert to a regular retirement allowance, including postre-
19 tirement adjustments, if any, subject to an award or order of the
20 court as described in section 40. The retirement allowance shall
21 revert to a regular retirement allowance under this subsection
22 effective the first of the month after the date the retirement
23 system receives a certified copy of the judgment of divorce or
24 award or order of the court. This subsection does not supersede
25 a judgment of divorce or award or order of the court in effect on
26 the effective date of the amendatory act that added this
27 subsection JUNE 27, 1991. This subsection does not require the
00773'97
26
1 retirement system to distribute or pay retirement assets on
2 behalf of a retirant in an amount that exceeds the actuarially
3 determined amount that would otherwise become payable if a judg-
4 ment of divorce had not been rendered.
5 (9) A retirement allowance payable under a payment option
6 provided in this section is subject to an eligible domestic rela-
7 tions order under the eligible domestic relations order act, 1991
8 PA 46, MCL 38.1701 TO 38.1711.
9 SEC. 31A. (1) IF A RETIRANT RECEIVING A RETIREMENT ALLOW-
10 ANCE UNDER THIS ACT DIES AND THERE IS NOT A SURVIVING SPOUSE OR
11 OTHER BENEFICIARY TO WHOM A RETIREMENT ALLOWANCE IS PAYABLE UNDER
12 THIS ACT, A RETIREMENT ALLOWANCE SHALL BE PAID TO THE CHILDREN OF
13 THE DECEASED RETIRANT AS PROVIDED IN THIS SECTION.
14 (2) THE RETIREMENT SYSTEM SHALL PAY TO THE CHILDREN OF THE
15 DECEASED RETIRANT, SHARE AND SHARE ALIKE, 50% OF THE RETIREMENT
16 ALLOWANCE THAT WOULD HAVE BEEN PAYABLE TO THE RETIRANT IF HE OR
17 SHE HAD ELECTED A REGULAR RETIREMENT ALLOWANCE UNDER SECTION 31,
18 UNDER THE FOLLOWING CIRCUMSTANCES:
19 (A) TO A CHILD UNTIL THE CHILD ATTAINS 19 YEARS OF AGE,
20 UNLESS A RETIREMENT ALLOWANCE IS PAYABLE UNDER SUBDIVISION (B)
21 OR (C).
22 (B) TO A CHILD UNTIL THE CHILD ATTAINS 25 YEARS OF AGE, IF
23 THE CHILD IS ENROLLED AS A FULL-TIME STUDENT IN SECONDARY OR
24 POSTSECONDARY EDUCATION.
25 (C) TO A CHILD, REGARDLESS OF AGE, IF THE CHILD IS INCAPABLE
26 OF SELF-SUSTAINING EMPLOYMENT BECAUSE OF A HANDICAP AS DEFINED IN
00773'97
27
1 SECTION 103 OF THE MICHIGAN HANDICAPPERS' CIVIL RIGHTS ACT, 1976
2 PA 220, MCL 37.1103.
3 (3) WHEN A CHILD RECEIVING A RETIREMENT ALLOWANCE UNDER
4 SUBSECTION (2) IS NO LONGER ELIGIBLE TO RECEIVE A RETIREMENT
5 ALLOWANCE UNDER THIS SECTION, PAYMENT TO THE CHILD SHALL CEASE
6 AND HIS OR HER SHARE SHALL BE PRORATED AMONG THE REMAINING CHIL-
7 DREN ELIGIBLE TO RECEIVE A RETIREMENT ALLOWANCE UNDER THIS SEC-
8 TION, IF ANY.
00773'97 Final page. KKR