ARIZONA STATE SENATE
Phoenix, Arizona
REVISED
Purpose
Requires Arizona State Retirement System (ASRS) members to obtain their spouse's consent when naming or changing a beneficiary or contingent annuitant and makes a joint and survivor annuity automatic for married members. Appropriates $125,558 from the ASRS administrative account in FY 2002-2003 to ASRS for 1.5 FTEs and administrative costs.
Background
A beneficiary is a person
designated to receive the income of a member’s benefits upon the member’s
death, although the amount and length of this benefit varies. A contingent annuitant is a type of
beneficiary and refers to a person who will continue to receive the retirement
income of a member even after that member dies.
Prior to 1984, a member of
any pension plan could opt to keep that member=s spouse from receiving
survivor benefits without the affected spouse=s knowledge. Many surviving spouses were surprised to
find that they had no pension benefits.
The federal government legislated two remedies: the Employee Retirement
Income Security Act of 1974 and the Retirement Equity Act of 1984. These two pieces of responsive legislation
affected only private pension plans.
According to ASRS, there is no actuarial fiscal impact associated with S.B. 1004. However, ASRS anticipates there will be an administrative cost of $113,846. The bill appropriates $125,558 from the ASRS administrative account in FY 2002-2003 to ASRS for 1.5 FTEs and administrative costs.
Provisions
Spousal Consent
1. Requires a member whose contingent annuitant is the member's spouse to obtain the spouse's consent before the member names a new contingent annuitant or rescinds a joint survivor annuity.
2. Requires a member, retiring after August 9, 2001, whose contingent annuitant is the member's spouse to obtain the spouse’s consent before the member rescinds the election of a period certain and life annuity or re-elects a period certain and life annuity.
3. Requires a member to 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 beneficiary if the spouse is the current beneficiary.
4. Requires a member's retirement application to contain the signature of a spouse, if any, to acknowledge that spouse=s consent of the retirement option elected by the member, with the following exceptions:
(a) The member is unmarried.
(b) The current spouse has no identifiable community property interest in member=s benefits.
(c) The member does not reasonably know the location of current spouse.
(d) The member=s current spouse is unable to execute acknowledgment because of an incapacitating mental or physical condition.
5. Requires a member to affirm in writing and under penalty of perjury that one of the above exceptions applies to the member.
6. Makes a monthly life annuity for an unmarried member automatic unless the member selects a different benefit option.
Joint and Survivor Annuity
7. Makes a joint and survivor annuity for a married member automatic unless the member selects a different benefit option.
8. Makes the member's spouse the contingent annuitant of a joint and survivor annuity unless the member chooses another benefit option.
9. Requires the member's spouse to waive contingent annuitant rights.
10. Entitles the member's spouse to one-half of retirement income unless the member specifies a different joint and survivor annuity.
11. Specifies that ASRS is not liable for an incorrect or unconsented distribution if the benefit payments are made in reliance on documents submitted by the member.
Miscellaneous
12. Appropriates $125,558 from the ASRS administrative account in FY 2002-2003 to ASRS for 1.5 FTEs and administrative costs.
13. Applies the provisions of this act to those members who name or change their beneficiary or contingent annuitant after July 1, 2003.
14. Makes technical changes.
15. Provides for a general effective date.
Amendments Adopted by Committee of the Whole
1.
Makes
a monthly life annuity for an unmarried member automatic unless the member
selects a different benefit option.
2.
Makes
a joint and survivor annuity for a married member automatic unless the member
selects a different benefit option.
3.
Makes
the member's spouse the contingent annuitant of a joint and survivor annuity
unless the member chooses another benefit option.
4.
Requires
the member's spouse to waive contingent annuitant rights.
5.
Entitles
the member's spouse to one-half of retirement income unless the member
specifies a different joint and survivor annuity.
6.
Specifies
that ASRS is not liable for an incorrect or unconsented distribution if the benefit
payments are made in reliance on documents submitted by the member.
7.
Appropriates
$125,558 from the ASRS administrative account in FY 2002-2003 to ASRS for 1.5
FTEs and administrative costs.
8.
Changes
the applicability date from August 1, 2002 to July 1, 2003.
Senate Action
FIN 1/14/02 DP 8-0-0-0
3rd Read 3/28/02 28-0-2-0
Prepared by Senate Staff
April 4, 2002