June 24, 2010, Introduced by Rep. Rick Jones and referred to the Committee on Labor.
A bill to amend 1943 PA 240, entitled
"State employees' retirement act,"
by amending section 31 (MCL 38.31), as amended by 2002 PA 99.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 31. (1) Except as provided in subsection (6), before the
effective date of retirement, but not after the effective date of
retirement, a member or deferred member who is eligible for
retirement, as provided in this act, shall elect to receive his or
her benefit in a retirement allowance payable throughout life,
which shall be called a regular retirement allowance, or to receive
the actuarial equivalent at that time of his or her regular
retirement allowance in a reduced retirement allowance payable
throughout the lives of the retirant and a retirement allowance
beneficiary, pursuant to 1 of the following payment options:
(a) Option A. Upon the retirant's death, his or her reduced
retirement allowance shall be continued throughout the life of and
paid to the retirement allowance beneficiary whom the member
nominated by written designation executed and filed with the
retirement board before the effective date of his or her
retirement.
(b) Option B. Upon the retirant's death, 1/2 of his or her
reduced retirement allowance shall be continued throughout the life
of and paid to the retirement allowance beneficiary whom the member
nominated by written designation executed and filed with the
retirement board before the effective date of his or her
retirement.
(c) Option C. On and after January 1, 2000, upon the
retirant's death, 3/4 of his or her reduced retirement allowance
shall be continued throughout the life of and paid to the
retirement allowance beneficiary whom the member nominated by
written designation executed and filed with the retirement board
before the effective date of his or her retirement.
(2) Except as provided in subsections (3) and (8), the
election of a payment option under subsection (1) shall not be
changed on or after the effective date of the retirement allowance.
A retirement allowance beneficiary designated under this section
shall not be changed on or after the effective date of the
retirement allowance, and shall be either a spouse, brother,
sister, parent, child, including an adopted child, or grandchild of
the person making the designation. Payment to a retirement
allowance beneficiary shall begin on the first day of the month
following the death of the retirant or member.
(3) If the retirement allowance beneficiary named under a
payment option under subsection (1) predeceases the retirant, the
retirant's benefit shall revert to the regular retirement
allowance, effective with the first day of the month following the
retirement allowance beneficiary's death. For a retirant whose
effective date of retirement was on or before June 28, 1976, this
subsection shall apply, but the regular retirement allowance is not
payable for any month beginning before the later of the retirement
allowance beneficiary's death or January 1, 1986. A retirant who on
January 1, 1986 is receiving a reduced retirement allowance because
the retirant designated a retirement allowance beneficiary and the
retirement allowance beneficiary predeceased the retirant is
eligible to receive the regular retirement allowance beginning
January 1, 1986, but the regular retirement allowance is not
payable for any month beginning before January 1, 1986. If a member
selects a reduced retirement allowance and the retirement allowance
beneficiary named under the payment option under subsection (1) is
a spouse of the member and the spouse of the member predeceases the
member after the member becomes a retirant and the retirant
subsequently remarries, the retirant may reselect the identical
reduced retirement allowance option that he or she originally
selected while a member after the remarriage has lasted 3 years.
The retirant shall nominate the spouse by written designation
executed and filed with the retirement board and submit all
information and documentation that the retirement board may
require. Reversion of the retirement allowance received by the
retirant to the reduced retirement allowance previously selected
shall begin on the first day of the first month following the
approval of the new nomination by the retirement board.
(4) A member who continues in the employ of this state on and
after the date he or she acquires 10 years of service credit or
becomes eligible for deferred retirement as provided by section
20(4) or (5), whichever occurs first, may by written declaration
executed and filed with the retirement board elect option A,
provided for in subsection (1)(a), and nominate a retirement
allowance beneficiary in the same manner as if the member were then
retiring from service, notwithstanding that the member may not have
attained 60 years of age. If the beneficiary's death or divorce
from the member occurs before the effective date of the member's
retirement, the member's election of option A and nomination of
retirement allowance beneficiary shall be automatically revoked and
the member may again elect option A and nominate a retirement
allowance beneficiary at any time before the effective date of
retirement. If a member who has made an election and nominated a
retirement allowance beneficiary as provided in this subsection
dies before the effective date of his or her retirement, then the
retirement allowance beneficiary shall immediately receive the
retirement allowance that he or she would have been entitled to
receive under option A if the member had been regularly retired on
the date of the member's death. Except as otherwise provided by
subsection (5), if a member who has made an election under this
subsection subsequently retires under this act, his or her election
of option A shall take effect at the time of retirement. Subject to
the requirements of subsection (5), the member, before the
effective date of retirement, but not after the effective date of
retirement, may revoke his or her previous election of option A and
elect to receive his or her retirement allowance as a regular
retirement allowance or under option B or C as provided for in
subsection (1). A retirement allowance shall not be paid under this
subsection on account of the death of a member if any benefits are
paid under section 27 on account of his or her death. If a deferred
member who has an option A election in effect dies before the
effective date of his or her retirement, the retirement allowance
payable under option A shall be paid to the retirement allowance
beneficiary at the time the deceased deferred member otherwise
would have been eligible to begin receiving benefits.
(5) If a member, deferred member, retiring member, or retiring
deferred member is married at the effective date of the retirement
allowance, an election under this section, other than an election
of a payment option under subsection (1) naming the spouse as
retirement allowance beneficiary, shall not be effective unless the
election is signed by the spouse. However, this requirement may be
waived by the retirement board if the signature of a spouse cannot
be obtained because of extenuating circumstances. As used in this
subsection, "spouse" means the person to whom the member, deferred
member, retiring member, or retiring deferred member is married at
the effective date of the retirement allowance.
(6) Until July 1, 1991, upon request in a form as determined
by the retirement board, a nonduty disability retirant who retired
under section 24 may change his or her election to receive a
disability retirement allowance computed as a regular retirement
allowance and elect to receive the actuarial equivalent at the time
of the election pursuant to this subsection of his or her
disability retirement allowance in a reduced retirement allowance
payable to the retirant and the retirant's spouse pursuant to the
provisions of a payment option as provided in subsection (1), if
the disability retirement allowance effective date was before
November 12, 1985 and the retirant had 25 or more years of credited
service on the disability retirement allowance effective date. The
nonduty disability retirant shall begin to receive the reduced
retirement allowance under this subsection effective the first day
of the month following the month in which the retirant makes the
election pursuant to this subsection. As used in this subsection,
"spouse" means the person to whom the nonduty disability retirant
was married on the effective date of his or her disability
retirement allowance and on the date the retirant makes the
election pursuant to this subsection.
(7) If a member who continues in the employ of this state on
and after the date he or she acquires 10 years of service credit,
or on and after the date he or she becomes eligible for deferred
retirement as provided by section 20(4) or (5), whichever occurs
first, and who does not have an election of option A in force as
provided in subsection (4), dies before the effective date of
retirement and leaves a surviving spouse, the spouse shall receive
a retirement allowance computed in the same manner as if the member
had retired effective the day before the date of his or her death,
elected option A, and nominated the spouse as retirement allowance
beneficiary. When the retirement allowance beneficiary dies, his or
her retirement allowance shall terminate. If the aggregate amount
of retirement allowance payments received by the beneficiary is
less than the accumulated contributions credited to the member's
account in the employees' savings fund at the time of the member's
death, the difference between the accumulated contributions and the
aggregate amount of retirement allowance payments received by the
beneficiary shall be transferred from the employer's accumulation
fund or pension reserve fund to the employees' savings fund and
paid pursuant to section 29. A retirement allowance shall not be
paid under this subsection on account of the death of a member if
benefits are paid under section 27 on account of his or her death.
If the other requirements of this subsection are met but a
surviving spouse does not exist, each of the deceased member's
surviving children less than 18 years of age shall receive an
allowance of an equal share of the retirement allowance that would
have been paid to the spouse if living at the time of the deceased
member's death. Payments under this subsection shall cease upon the
surviving child's marriage, adoption, or becoming 18 years of age,
which occurs first.
(8) If a retirant receiving a reduced retirement allowance
under a payment option under subsection (1) is divorced from the
spouse who had been designated as the retirant's retirement
allowance beneficiary under the option, the election of the payment
option shall be considered void by the retirement system if the
judgment of divorce or award or order of the court, or an amended
judgment of divorce or award or order of the court, described in
the public employee retirement benefit protection act, 2002 PA 100,
MCL 38.1361 to 38.1369, and dated after June 27, 1991 provides that
the election of the payment option under subsection (1) is to be
considered void by the retirement system and the retirant provides
a certified copy of the judgment of divorce or award or order of
the court, or an amended judgment of divorce or award or order of
the court, to the retirement system. If the election of a payment
option under subsection (1) is considered void by the retirement
system under this subsection, the retirant's retirement allowance
shall revert to a regular retirement allowance, including
postretirement adjustments, if any, subject to an award or order of
the court as described in the public employee retirement benefit
protection act, 2002 PA 100, MCL 38.1361 to 38.1369. The retirement
allowance shall revert to a regular retirement allowance under this
subsection effective the first of the month after the date the
retirement system receives a certified copy of the judgment of
divorce or award or order of the court. This subsection does not
supersede a judgment of divorce or award or order of the court in
effect on June 27, 1991. This subsection does not require the
retirement system to distribute or pay retirement assets on behalf
of a retirant in an amount that exceeds the actuarially determined
amount that would otherwise become payable if a judgment of divorce
had not been rendered.