BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 992|
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                                      CONSENT 


          Bill No:  AB 992
          Author:   Committee on Public Employees, Retirement, and Social  
                    Security
          Introduced:2/26/15  
          Vote:     21  

           SENATE PUBLIC EMP. & RET. COMMITTEE:  4-0, 6/8/15
           AYES:  Pan, Morrell, Beall, Hall
           NO VOTE RECORDED:  Fuller

           ASSEMBLY FLOOR:  78-0, 5/14/15 (Consent) - See last page for  
            vote

           SUBJECT:   County Employees Retirement Law of 1937: disability  
                     retirement: modification of allowance


          SOURCE:    State Association of County Retirement Systems
          
          DIGEST:   This bill clarifies that a member of a 1937 Act county  
          retirement system ('37 Act) may change his or her optional  
          retirement allowance election if the member retires for service  
          while the member's application for a disability retirement is  
          pending and is later granted a disability retirement benefit.

          ANALYSIS:
          
          Existing law: 

          1)Authorizes a '37 Act retirement system member to retire for  
            service, if eligible, while awaiting the final determination  
            of the member's application for a disability retirement  
            allowance.

          2)Provides, when a member retires for service or non-service  








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            related disability, a continuing benefit for the retiree's  
            spouse of 60% (or more if the county so elects, as specified)  
            of the member's unmodified benefit if the member predeceases  
            the spouse.

          3)Allows a member who retires to elect an optional modified  
            allowance that would provide a lesser service retirement  
            allowance for the member and a continuing lifetime allowance  
            for the member's survivor that would exceed the 60%.

          4)Provides, when the member retires for a service-related  
            disability, that the member's unmodified retirement benefit  
            would continue in full to the surviving spouse if the member  
            predeceases the spouse.

          5)Allows the surviving spouse, if the member dies while awaiting  
            the final determination on the service disability retirement,  
            to receive the optional or unmodified allowance at the time  
            the disability retirement is granted, whichever is more  
            beneficial, and to have that benefit applied to the entire  
            period of retirement.

          This bill clarifies that a member who retires for service  
          pending a final determination of an application for a disability  
          retirement benefit may change the election of the optional or  
          unmodified retirement allowance at the time the member is  
          awarded a disability retirement allowance.

          Background

          Normally, the member's right to elect the modified retirement  
          option or change the election exists only until the member  
          receives the first payment of any retirement allowance.   
          However, existing law also states that the optional or  
          unmodified type of allowance selected by the member at the time  
          of retirement for service shall not be binding as to the type of  
          allowance the member receives if he or she dies while awaiting  
          the disability determination and is subsequently awarded a  
          disability retirement.

          Thus, there is some confusion as to whether a member may change  
          the election of the optional retirement allowance upon approval  








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          of the member's disability application when the member has  
          already received a payment of a service retirement allowance.

          The benefit for a surviving spouse is higher when the retirement  
          is for a service-related disability.  A member who is awarded a  
          service disability benefit may be able to receive an unmodified  
          allowance and provide an equivalent or higher continuing benefit  
          to his or her spouse (upon the member's death) than the  
          continuing benefit the member could provide by taking a benefit  
          reduction and choosing one of the optional benefits.


          This bill is intended to clarify that the member may change the  
          type of option or unmodified benefit he or she chose at service  
          retirement if doing so would result in a better benefit, as if  
          the disability had been already determined at the original time  
          of retirement.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified6/9/15)


          State Association of County Retirement Systems (source)
          Los Angeles County Employees Retirement Association


          OPPOSITION:   (Verified6/9/15)


          None received

          ARGUMENTS IN SUPPORT:

          According to the sponsor:

               Under existing law, a '37 Act member who files for  
               disability retirement may, if eligible, retire from service  
               while their disability retirement application is pending.   








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               If the member is later found to be eligible for disability  
               retirement benefits, appropriate adjustments are made to  
               their retirement allowance retroactive to the effective  
               date of his or her disability retirement.

               While most '37 Act retirement systems would allow a retiree  
               under the above scenario to change their retirement option  
               if the retirement board grants a disability benefit, there  
               appears to be a conflict between two sections of existing  
               law.  AB 992 resolves the conflict between these two  
               sections and validates the current practices of most '37  
               Act systems.

          ASSEMBLY FLOOR:  78-0, 5/14/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Linder, Medina


          Prepared by:Glenn Miles / P.E. & R. / (916) 651-1519
          6/10/15 12:34:04


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