HOUSE BILL No. 4375 February 27, 2001, Introduced by Reps. Ehardt, Mead, Van Woerkom, Birkholz, Rich Brown, Bernero, Mortimer and Raczkowski and referred to the Committee on Senior Health, Security and Retirement. A bill to amend 1980 PA 300, entitled "The public school employees retirement act of 1979," by amending section 85 (MCL 38.1385), as amended by 1998 PA 213. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 85. (1) A retiring member or retiring deferred member 2 who meets the requirements of section 81 or 81a or a member whom 3 the retirement board finds to be totally and permanently disabled 4 and eligible to receive a retirement allowance under section 86 5 or 87 shall elect to receive his or her retirement allowance 6 under 1 of the payment options provided in this subsection. The 7 election shall be in writing and filed with the retirement board 8 at least 15 days before the effective date of the retirement 9 allowance except as provided for a disability retirant under 10 section 86 or 87. The amount of retirement allowance under 11 subdivision (b), (c), or (d) shall be the actuarial equivalent of 02201'01 MRM 2 1 the amount of retirement allowance under subdivision (a). The 2 options are as follows: 3 (a) A retirant shall be paid a straight retirement allowance 4 for life computed pursuant to section 84. An additional retire- 5 ment allowance payment shall not be made upon the retirant's 6 death. 7 (b) A retirant shall be paid a reduced retirement allowance 8 for life with the provision that upon the retirant's death, pay- 9 ment of the reduced retirement allowance is continued throughout 10 the lifetime of the retirement allowance beneficiary whom the 11 member or deferred member designates in a writing filed with the 12 retirement board at the time of election of this option. A 13 member or deferred member may elect this option and designate a 14 retirement allowance beneficiary under the conditions set forth 15 in section 82(2) or 89(3). 16 (c) A retirant shall be paid a reduced retirement allowance 17 for life with the provision that upon the retirant's death, pay- 18 ment of 1/2 of the reduced retirement allowance is continued 19 throughout the lifetime of the retirement allowance beneficiary 20 whom the member designated in a writing filed with the retirement 21 board at the time of election of the option. 22 (d) On and after January 1, 2000, a retirant shall be paid a 23 reduced retirement allowance for life with the provision that 24 upon the retirant's death, payment of 75% of the reduced retire- 25 ment allowance is continued throughout the lifetime of the 26 retirement allowance beneficiary whom the member designated in a 02201'01 3 1 writing filed with the retirement board at the time of election 2 of the option. 3 (2) In addition to the election under subsection (1), a 4 retirant, other than a disability retirant who is 60 years of age 5 or less, may elect to coordinate his or her retirement allowance 6 with an estimated primary social security benefit. The retirant 7 shall be paid an increased retirement allowance until 62 years of 8 age and a reduced retirement allowance after 62 years of age. 9 The increased retirement allowance paid until 62 years of age 10 shall approximate the sum of the reduced retirement allowance 11 payable after 62 years of age and the retirant's estimated social 12 security primary insurance amount. The estimated social security 13 primary insurance amount shall be determined by the retirement 14 system. The election under this subsection shall be made at the 15 same time and in the same manner as required under 16 subsection (1). 17 (3) Except as otherwise provided in this section, the elec- 18 tion of a payment option in subsections (1) and (2) shall not be 19 changed on or after the effective date of the retirement 20 allowance. Except as OTHERWISE provided insubsection (5)THIS 21 SECTION, the retirement allowance beneficiary selected under 22 subsection (1)(b), (c), or (d) shall not be changed on or after 23 the effective date of the retirement allowance and shall be 24 either a spouse, brother, sister, parent, or child, including an 25 adopted child, of the member, deferred member, retiring member, 26 or retiring deferred member entitled to make the election under 27 this act. Another retirement allowance beneficiary shall not be 02201'01 4 1 selected. If a member, deferred member, retiring member, or 2 retiring deferred member is married at the retirement allowance 3 effective date, an election under subsection (1), other than an 4 election under subsection (1)(b), (c), or (d) naming the spouse 5 as retirement allowance beneficiary, shall not be effective 6 unless the election is signed by the spouse, except that this 7 requirement may be waived by the board if the signature of a 8 spouse cannot be obtained because of extenuating circumstances. 9 For purposes of this subsection, "spouse" means the person to 10 whom the member, deferred member, retiring member, or retiring 11 deferred member is married at the retirement allowance effective 12 date. Payment to a retirement allowance beneficiary shall start 13 the first day of the month following the retirant's death. 14 (4)IfEXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (9), IF 15 the retirement allowance beneficiary selected under 16 subsection (1)(b), (c), or (d) predeceases the retirant, the 17 retirant's benefit shall revert to a straight retirement allow- 18 ance including post-retirement adjustments, if any, shall be 19 effective the first of the month following the death, and shall 20 be paid during the remainder of the retirant's life. This sub- 21 section applies to a retirant whose effective date of retirement 22 is after June 28, 1976, but the straight retirement allowance 23 shall not be payable for any month beginning before the later of 24 the retirement allowance beneficiary's death or October 31, 25 1980. This subsection also applies to a retirant whose effective 26 date of retirement was on or before June 28, 1976, but the 27 straight retirement allowance shall not be payable for any month 02201'01 5 1 beginning before the later of the retirement allowance 2 beneficiary's death or January 1, 1986. A retirant who on 3 January 1, 1986 is receiving a reduced retirement allowance 4 because the retirant designated a retirement allowance benefi- 5 ciary and the retirement allowance beneficiary predeceased the 6 retirant is eligible to receive the straight retirement allowance 7 beginning January 1, 1986, but the straight retirement allowance 8 shall not be payable for any month beginning before January 1, 9 1986. 10 (5) A retirant who returns to service pursuant to section 61 11 and whose retirement allowance beneficiary selected under 12 subsection (1)(b), (c), or (d) predeceases the member before he 13 or she again becomes a retirant may again choose a retirement 14 allowance beneficiary pursuant to subsection (1)(b), (c), or 15 (d). 16 (6) If a retirant receiving a reduced retirement allowance 17 under subsection (1)(b), (c), or (d) is divorced from the spouse 18 who had been designated as the retirant's retirement allowance 19 beneficiary under subsection (1)(b), (c), or (d), the election of 20 a reduced retirement allowance payment option shall be considered 21 void by the retirement system if the judgment of divorce or award 22 or order of the court, or an amended judgment of divorce or award 23 or order of the court, described in section 46 and dated after 24 June 27, 1991 provides that the election of a reduced retirement 25 allowance payment option under subsection (1)(b), (c), or (d) is 26 to be considered void by the retirement system and the retirant 27 provides a certified copy of the judgment of divorce or award or 02201'01 6 1 order of the court, or an amended judgment of divorce or award or 2 order of the court, to the retirement system. If the election of 3 a reduced retirement allowance payment option under 4 subsection (1)(b), (c), or (d) is considered void by the retire- 5 ment system under this subsection, the retirant's retirement 6 allowance shall revert to a straight retirement allowance, 7 including postretirement adjustments, if any, subject to an award 8 or order of the court as described in section 46. The retirement 9 allowance shall revert to a straight retirement allowance under 10 this subsection effective the first of the month after the date 11 the retirement system receives a certified copy of the judgment 12 of divorce or award or order of the court. This subsection does 13 not supersede a judgment of divorce or award or order of the 14 court in effect on June 27, 1991. This subsection does not 15 require the retirement system to distribute or pay retirement 16 assets on behalf of a retirant in an amount that exceeds the 17 actuarially determined amount that would otherwise become payable 18 if a judgment of divorce had not been rendered. 19 (7) If the retirement allowance payments terminate before an 20 aggregate amount equal to the retirant's accumulated contribu- 21 tions has been paid, the difference between the retirant's accu- 22 mulated contributions and the aggregate amount of retirement 23 allowance payments made shall be paid to the person designated in 24 a writing filed with the retirement board on a form provided by 25 the retirement board. If the designated person does not survive 26 the retirant or retirement allowance beneficiary, the difference 02201'01 7 1 shall be paid to the deceased recipient's estate or to the legal 2 representative of the deceased recipient. 3 (8) A retirement allowance payable under a payment option 4 provided in this section is subject to an eligible domestic rela- 5 tions order under the eligible domestic relations order act, 1991 6 PA 46, MCL 38.1701 to 38.1711. 7 (9) A RETIRANT WHO SELECTED A RETIREMENT ALLOWANCE BENEFI- 8 CIARY UNDER SUBSECTION (1)(B), (C), OR (D) MAY CHANGE HIS OR HER 9 RETIREMENT ALLOWANCE BENEFICIARY IF ALL OF THE FOLLOWING APPLY: 10 (A) THE FIRST RETIREMENT ALLOWANCE BENEFICIARY IS A SPOUSE. 11 (B) THE FIRST RETIREMENT ALLOWANCE BENEFICIARY PREDECEASES 12 THE RETIRANT AFTER THE RETIREMENT ALLOWANCE EFFECTIVE DATE. 13 (C) THE RETIRANT MARRIES ANOTHER SPOUSE AFTER THE RETIREMENT 14 ALLOWANCE EFFECTIVE DATE. 15 (D) THE RETIRANT FILES A WRITTEN REQUEST WITH THE RETIREMENT 16 SYSTEM TO NAME HIS OR HER CURRENT SPOUSE AS A RETIREMENT ALLOW- 17 ANCE BENEFICIARY NOT EARLIER THAN 180 DAYS AND NOT LATER THAN 1 18 YEAR AFTER THE MARRIAGE OF THE RETIRANT AND THE CURRENT SPOUSE 19 EXCEPT THAT A RETIRANT WHOSE FIRST RETIREMENT ALLOWANCE BENEFI- 20 CIARY PREDECEASES THE RETIRANT AFTER THE RETIREMENT ALLOWANCE 21 EFFECTIVE DATE AND BEFORE THE EFFECTIVE DATE OF THE AMENDATORY 22 ACT THAT ADDED THIS SUBSECTION SHALL HAVE 180 DAYS FROM THE 23 EFFECTIVE DATE OF THE AMENDATORY ACT THAT ADDED THIS SUBSECTION 24 TO FILE A WRITTEN REQUEST WITH THE RETIREMENT SYSTEM. 25 (10) A RETIRANT WHO WAS NOT MARRIED ON HIS OR HER RETIREMENT 26 ALLOWANCE EFFECTIVE DATE AND WHO DID NOT SELECT A PAYMENT OPTION 27 PROVIDED IN THIS SECTION MAY SELECT AN OPTIONAL FORM OF BENEFIT 02201'01 8 1 PAYMENT UNDER SUBSECTION (1)(B), (C), OR (D) AND DESIGNATE A 2 RETIREMENT ALLOWANCE BENEFICIARY IF ALL OF THE FOLLOWING APPLY: 3 (A) THE RETIRANT MARRIES AFTER HIS OR HER RETIREMENT ALLOW- 4 ANCE EFFECTIVE DATE. 5 (B) THE RETIREMENT ALLOWANCE BENEFICIARY IS THE RETIRANT'S 6 SPOUSE. 7 (C) THE RETIRANT FILES A WRITTEN REQUEST WITH THE RETIREMENT 8 SYSTEM TO SELECT THE OPTIONAL FORM OF BENEFIT PAYMENT UNDER 9 SUBSECTION (1)(B), (C), OR (D) AND TO DESIGNATE HIS OR HER SPOUSE 10 AS THE RETIREMENT ALLOWANCE BENEFICIARY, NOT EARLIER THAN 180 11 DAYS AND NOT LATER THAN 1 YEAR AFTER THE RETIRANT'S MARRIAGE 12 EXCEPT THAT A RETIRANT WHO MARRIES AFTER THE RETIREMENT ALLOWANCE 13 EFFECTIVE DATE AND BEFORE THE EFFECTIVE DATE OF THE AMENDATORY 14 ACT THAT ADDED THIS SUBSECTION SHALL HAVE 180 DAYS FROM THE 15 EFFECTIVE DATE OF THE AMENDATORY ACT THAT ADDED THIS SUBSECTION 16 TO FILE A WRITTEN REQUEST WITH THE RETIREMENT SYSTEM. 17 (11) THE RETIREMENT ALLOWANCE OF THE RETIRANT WHO MAKES AN 18 ELECTION UNDER SUBSECTION (9) OR (10) SHALL NOT BE GREATER THAN 19 THE ACTUARIAL EQUIVALENT OF THE RETIREMENT ALLOWANCE THAT THE 20 RETIRANT WOULD OTHERWISE BE ENTITLED TO UNDER SUBSECTION (1)(A) 21 AND SHALL BECOME EFFECTIVE THE FIRST DAY OF THE MONTH FOLLOWING 22 THE FILING OF THE WRITTEN REQUEST WITH THE RETIREMENT SYSTEM. 02201'01 Final page. 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