SB1004 - 452R

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       Senate Engrossed
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  State of Arizona
  Senate
  Forty-fifth
  Legislature
  Second Regular Session
  2002
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    SENATE BILL 1004
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AN ACT

AMENDING SECTIONS 38-755 AND 38-760, ARIZONA REVISED STATUTES; AMENDING TITLE 38, CHAPTER 5, ARTICLE 2, ARIZONA REVISED STATUTES, BY ADDING SECTION 38-775; MAKING AN APPROPRIATION; RELATING TO THE ARIZONA STATE RETIREMENT SYSTEM.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 38-755, Arizona Revised Statutes, is amended to read:

38-755. Information as to member's status; beneficiary changes

A. Subject to rules prescribed by the board, on application of a member, the board shall furnish information concerning the member's status. In addition, the board shall annually furnish to each member an account statement showing the status of the member's account including the name of the member's beneficiary as last listed with the board.

B. The member may change the member's beneficiary at any time pursuant to rules adopted by the board and on forms furnished by the board.

C. PURSUANT TO SECTION 38-775, A MEMBER SHALL OBTAIN THE CONSENT OF THE MEMBER'S CURRENT SPOUSE BEFORE THE MEMBER NAMES A BENEFICIARY OTHER THAN THE MEMBER'S CURRENT SPOUSE OR BEFORE THE MEMBER CHANGES THE MEMBER'S BENEFICIARY IF THE MEMBER'S CURRENT SPOUSE IS THE BENEFICIARY AT THE TIME OF THE CHANGE.

Sec. 2. Section 38-760, Arizona Revised Statutes, is amended to read:

38-760. Payment of accrued benefit; optional forms of retirement benefits

A. A MEMBER WHO IS NOT MARRIED AT THE TIME OF RETIREMENT SHALL RECEIVE A MONTHLY LIFE ANNUITY, UNLESS THE MEMBER ELECTS AN OPTIONAL FORM OF BENEFIT PURSUANT TO SUBSECTION C OF THIS SECTION. A MEMBER WHO IS MARRIED AT THE TIME OF RETIREMENT SHALL RECEIVE A MONTHLY BENEFIT IN THE FORM OF A JOINT AND SURVIVOR ANNUITY PURSUANT TO SUBSECTION C, PARAGRAPH 1 OF THIS SECTION AND THE MEMBER'S SPOUSE SHALL BE THE CONTINGENT ANNUITANT UNLESS THE MEMBER ELECTS A LIFE ANNUITY OR ANOTHER OPTIONAL FORM OF BENEFIT PURSUANT TO SUBSECTION C OF THIS SECTION AND THE MEMBER'S SPOUSE WAIVES THE REQUIREMENT TO CHOOSE THE JOINT AND SURVIVOR ANNUITY WITH THE SPOUSE AS THE CONTINGENT ANNUITANT AND CONSENTS TO THE MEMBER'S ELECTION PURSUANT TO SECTION 38-775. IF THE MARRIED MEMBER DOES NOT MAKE AN ELECTION AS TO THE TYPE OF JOINT AND SURVIVOR ANNUITY FOR THE MEMBER'S SPOUSE, THE SPOUSE'S CONTINGENT AMOUNT IS ONE-HALF OF THE RETIREMENT INCOME.

A. B. On retirement, members may elect an optional form of retirement benefit as provided in this section.

B. C. The optional retirement benefits available under this section include the following:

1. Joint and survivor annuity in a reduced amount payable to the retiring member during life, with the provisions that after the member's death all, two-thirds or one-half of the retirement income, as the member elects, shall be continued during the lifetime of the contingent annuitant designated by the retiring member subject to the restrictions prescribed in section 38-764. The amount of retirement income shall be the actuarial equivalent of the retirement income to which the member would be entitled under normal or early retirement. The election in a manner prescribed by the board shall name the contingent annuitant. The election may be revoked at any time before the member's effective date of retirement. At any time after benefits have commenced, the member may name a different contingent annuitant or rescind the election by written notice to the board as follows:

(a) If a different contingent annuitant is named, the annuity of the member under the same joint and survivor annuity option previously elected shall be adjusted to the actuarial equivalent of the original annuity, based on the age of the new contingent annuitant. The adjustment shall include all ~~post-retirement~~ POSTRETIREMENT increases in retirement income that are authorized by law after the member's date of retirement. Payment of this adjusted annuity shall continue under the provisions of the option previously elected by the member.

(b) If the member rescinds the election, the member shall thereafter receive a straight life annuity equal to what the member would otherwise be entitled to receive if the member had not elected the joint and survivor annuity option, including all ~~post-retirement~~ POSTRETIREMENT increases in retirement income that are authorized by law after the date of retirement. The increased payment shall continue during the remainder of the member's lifetime.

(c) If the member reverts to a straight life annuity pursuant to subdivision (b), the member may name a new contingent annuitant subject to the same restrictions prescribed in subdivision (a).

(d) IF THE MEMBER'S CONTINGENT ANNUITANT IS THE MEMBER'S CURRENT SPOUSE, THE MEMBER SHALL OBTAIN THE CONSENT OF THE CONTINGENT ANNUITANT PURSUANT TO SECTION 38-775 BEFORE THE MEMBER NAMES A NEW CONTINGENT ANNUITANT OR BEFORE THE MEMBER RESCINDS THE ELECTION.

2. A period certain and life annuity actuarially reduced with payments for five, ten or fifteen years that are not dependent on the continued lifetime of the member but whose payments continue for the member's lifetime beyond the five, ten or fifteen year period. At any time, a member who retires after ~~the effective date of this amendment to this section~~ AUGUST 9, 2001 may rescind the election of a period certain and life annuity. If the member rescinds the election of a period certain and life annuity, the member shall thereafter receive a straight life annuity equal to what the member would otherwise be entitled to receive if the member had not elected the period certain and life annuity option, including all postretirement increases in retirement income that are authorized by law after the date of retirement. The increased payment shall continue during the remainder of the member's lifetime. If the member reverts to a straight life annuity pursuant to this paragraph, the member may again elect a period certain and life annuity subject to the same provisions of the period certain and life annuity previously elected by the member. IF THE MEMBER'S CONTINGENT ANNUITANT IS THE MEMBER'S CURRENT SPOUSE, THE MEMBER SHALL OBTAIN THE CONSENT OF THE CONTINGENT ANNUITANT PURSUANT TO SECTION 38-775 BEFORE THE MEMBER RESCINDS THE ELECTION OF A PERIOD CERTAIN AND LIFE ANNUITY OR AGAIN ELECTS A PERIOD CERTAIN AND LIFE ANNUITY PURSUANT TO THIS PARAGRAPH.

3. Beginning on July 1, 2002, a lump sum payment equal to not more than thirty-six months of the member's retirement benefits under the benefit option elected by the member. The member's benefit shall be actuarially reduced to provide for the lump sum payment. The lump sum payment shall be made at the time of retirement. Any benefit increase granted to a member who elects a lump sum payment pursuant to this paragraph is subject to the following conditions:

(a) If the benefit increase is a percentage increase of the member's retirement benefit, the increase shall be based on the actuarially reduced retirement benefit of the member.

(b) If the benefit increase is pursuant to section 38-767, the amount of the member's benefit increase shall be calculated without regard to the lump sum payment pursuant to this paragraph.

4. Other forms of actuarially reduced optional benefits prescribed by the board.

Sec. 3. Title 38, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 38-775, to read:

38-775. Spousal waiver and consent

A. A MEMBER'S ENROLLMENT FORM, APPLICATION FOR REFUND FORM, RETIREMENT APPLICATION, CHANGE OF BENEFICIARY FORM OR CHANGE OF CONTINGENT ANNUITANT OR PERIOD CERTAIN FORM SHALL CONTAIN THE SIGNATURE OF THE CURRENT SPOUSE OF THE MEMBER, IF ANY, TO ACKNOWLEDGE THAT THE SPOUSE CONSENTS TO OR WAIVES THE RETIREMENT OPTION ELECTED OR BENEFICIARY DESIGNATION MADE BY THE MEMBER, UNLESS THE MEMBER AFFIRMS IN WRITING UNDER PENALTY OF PERJURY ONE OF THE FOLLOWING REASONS:

1. THE MEMBER IS NOT MARRIED.

2. THE MEMBER'S CURRENT SPOUSE HAS NO IDENTIFIABLE COMMUNITY PROPERTY INTEREST IN THE MEMBER'S BENEFITS.

3. THE MEMBER DOES NOT KNOW, AND HAS TAKEN ALL REASONABLE STEPS TO DETERMINE, THE LOCATION OF THE MEMBER'S CURRENT SPOUSE.

4. THE MEMBER'S CURRENT SPOUSE IS NOT CAPABLE OF EXECUTING THE ACKNOWLEDGEMENT BECAUSE OF AN INCAPACITATING MENTAL OR PHYSICAL CONDITION.

B. THIS SECTION DOES NOT ABROGATE ANY COMMUNITY PROPERTY LAWS OF THIS STATE.

C. PAYMENTS OR DISTRIBUTIONS MADE BY ASRS IN GOOD FAITH RELIANCE ON THE CONSENT OR WAIVER OF A MEMBER'S SPOUSE OR THE AFFIRMATIONS OF A MEMBER CONTAINED IN DOCUMENTS SUBMITTED TO ASRS PURSUANT TO THIS SECTION CONSTITUTE A FULL AND COMPLETE DISCHARGE AND RELEASE OF ALL LIABILITY OF THE BOARD OR ASRS, OR BOTH, RESPECTING THESE PAYMENTS OR DISTRIBUTIONS.

Sec. 4. Applicability

Sections 38-755 and 38-760, Arizona Revised Statutes, as amended by this act, and section 38-775, Arizona Revised Statutes, as added by this act, apply to Arizona state retirement system members who retire or name or change their beneficiary or contingent annuitant on or after July 1, 2003.

Sec. 5. Appropriation; purpose

The sum of $125,558 is appropriated from the Arizona state retirement system administration account in fiscal year 2002-2003 to the Arizona state retirement system for the administrative implementation of this act including 1.5 FTEs and employee related expenditures.