Bill Text: CA AB1246 | 2023-2024 | Regular Session | Amended

California Assembly Bill 1246

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Public employees’ retirement: Public Employees’ Retirement System optional settlements.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2024-09-22 - Chaptered by Secretary of State - Chapter 350, Statutes of 2024. [AB1246 Detail]

Download: California-2023-AB1246-Amended.html

Amended IN Senate June 18, 2024

Amended IN Senate September 01, 2023

Amended IN Senate June 15, 2023

Amended IN Assembly March 16, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 1246

Introduced by Assembly Member Stephanie Nguyen

February 16, 2023

An act to amend Sections ~~21462, 21481, and 75523~~ 21462 and 21481 of the Government Code, relating to retirement.

LEGISLATIVE COUNSEL'S DIGEST

AB 1246, as amended, Stephanie Nguyen. Public employees’ retirement: Public Employees’ Retirement System optional ~~settlements: Judges’ Retirement System II monthly allowance adjustments.~~ settlements.

~~The~~
~~(1)The~~

The Public Employees’ Retirement Law (PERL) establishes the Public Employees’ Retirement System (PERS) to provide pension and other benefits to members of PERS. Existing law permits a member of PERS who retires on or before December 31, 2017, to elect from among several optional settlements for the purpose of structuring the member’s retirement allowance. Existing law also permits a member of PERS who retires on or after January 1, 2018, to elect from among several other optional settlements for the purpose of structuring their retirement allowance. Existing law prohibits a member who elects to receive specified optional settlements from changing the member’s optional settlement and designated beneficiary after election of an optional settlement unless a specified event occurs, including the death of a beneficiary who predeceased the member, a dissolution of marriage or a legal separation in which the judgment dividing the community property awards the total interest in the retirement system to the retired member, or in an annulment of marriage in which the court confirms the annulment.

This bill would, commencing January 1, ~~2025,~~ 2026, permit a member who elected to receive a specified optional settlement at retirement, if the member’s former spouse was named as beneficiary and a legal judgment awards only a portion of the interest in the retirement system to the retired member, to elect to add their new spouse as the beneficiary of the member’s interest, subject to meeting certain conditions.

This bill would authorize a member to elect this option only once and would preclude elections that would be in derogation of the former spouse’s interest in the retirement system. The bill would preclude elections that would result in additional costs to the employer.

(2)Existing law establishes the Judges’ Retirement System II, which provides retirement and other benefits to its members and is administered by the Board of Administration of the Public Employees' Retirement System. Under the Judges’ Retirement System II, a judge is eligible to retire upon attaining both 65 years of age and 20 or more years of service, or upon attaining 70 years of age with a minimum of 5 years of service.
Existing law, on and after January 1, 2024, and until January 1, 2029, additionally authorizes a judge who is 60 years of age and has 15 years or more of service or 65 years of age and has 10 years or more of service who is not eligible to retire pursuant to those provision to elect to retire and defer receipt of a monthly allowance, subject to specified formulations.
This bill would require the retirement allowance to be increased for the cost of living in January of each year after the judge receives a retirement allowance under those provisions for more than 6 months, as specified. The bill would make this change operative only if this bill and SB 885 are both enacted, both bills amend Section 75523 of the Government Code, and this bill is enacted last.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 21462 of the Government Code is amended to read:

21462.

(a) (1) Notwithstanding any other provision of this part, a member who elected to receive optional settlement 2, 3, or 4 at retirement, involving a life contingency of the beneficiary, may, if the beneficiary predeceases the member or if the member marries and the former spouse was not named as beneficiary, or, if a former spouse was named, in the event of a dissolution of marriage or a legal separation in which the judgment dividing the community property awards the total interest in the retirement system to the retired member, or in an annulment of marriage in which the court confirms the annulment, elect to have the actuarial equivalent reflecting any selection against the fund resulting from the election as of the date of election of the allowance payable for the remainder of the member’s lifetime under the optional settlement previously chosen applied to a lesser allowance during the member’s remaining lifetime under one of the optional settlements specified in this article and name a different beneficiary.

(2) Notwithstanding paragraph (1), a member who elected to receive optional settlement 2, 3, or 4 at retirement, involving a life contingency of the beneficiary, may, if the member marries and a former spouse was named as beneficiary, in the event of a dissolution of marriage or a legal separation in which the judgment dividing the community property awards only a portion of the interest in the retirement system to the retired member, elect to convert to a multiple life contingency option to add their new spouse and have the actuarial equivalent reflecting any selection against the fund resulting from the election as of the date of election of the allowance payable for the remainder of the member’s lifetime under the optional settlement previously chosen applied to a lesser allowance during the member’s remaining lifetime consisting of the right to have a retirement allowance paid to the member until their death and thereafter to have a monthly allowance paid to their new spouse for life for the remaining interest in the retirement system available to be allocated. Notwithstanding the foregoing, the combined allowance payable to the member’s named beneficiary or beneficiaries and the member’s survivor pursuant to Section 21624, 21629, or 21630, if applicable, shall not exceed the amount of the member’s allowance. The member may elect this option only once. No election shall be made in derogation of the former spouse’s interest in the retirement system. This paragraph shall become operative on January 1, ~~2025.~~ 2026.

(3) Notwithstanding paragraph (1), for an election under this section that occurs on or after January 1, 2014, a member may name the same beneficiary as previously designated, provided that the resulting benefit to the member and the named beneficiary otherwise meets the requirements of this section.

(b) The election provided by this section is irrevocable and shall be made within 12 months following the death of the beneficiary who predeceased the member, within 12 months of the date of entry of the annulment of marriage or judgment dividing the community property of the parties, or within 12 months following marriage if the spouse is named as beneficiary. The election shall become effective on the date specified on the election, provided that this date is not earlier than the day following receipt of the election in this system under this section.

(c) A member who has a qualifying event prior to January 1, 1988, and who fails to elect by January 1, 1989, or a member who has a qualifying event on or after January 1, 1988, and who fails to elect within 12 months, shall retain the right to make an election under this section. However, this election shall become effective no earlier than 12 months after the date it is filed with the board, provided that neither the member nor the designated beneficiary die prior to the effective date of the election.

(d) This section shall not be construed to mean that designation of a new beneficiary causes the selection of an optional settlement. An optional settlement shall be selected by a member in a writing filed by the member with the board.

(e) Nothing in this section shall be construed to permit any election that will result in additional costs to the employer.

(f) This section shall apply to any member who retires on or before December 31, 2017.

SEC. 2.

Section 21481 of the Government Code is amended to read:

21481.

(a) (1) Notwithstanding any other provision of this part, a member who elected the optional settlement in Section 21475, 21475.5, 21476, 21476.5, or 21477 at retirement, may, if the beneficiary predeceases the member or if the member marries and the former spouse was not named as beneficiary, or, if a former spouse was named, in the event of a dissolution of marriage or a legal separation in which the judgment dividing the community property awards the total interest in the retirement system to the retired member, or in an annulment of marriage in which the court confirms the annulment, elect to have the actuarial equivalent reflecting any selection against the fund resulting from the election as of the date of election of the allowance payable for the remainder of the member’s lifetime under the optional settlement previously chosen applied to a lesser allowance during the member’s remaining lifetime under one of the optional settlements specified in this article and name a different beneficiary.

(2) Notwithstanding paragraph (1), a member who elected to receive the optional settlement in Section 21475, 21475.5, 21476, 21476.5, or 21477 at retirement, may, if the member marries and a former spouse was named as beneficiary, in the event of a dissolution of marriage or a legal separation in which the judgment dividing the community property awards only a portion of the interest in the retirement system to the retired member, elect to convert to a multiple life contingency option to add their new spouse and have the actuarial equivalent reflecting any selection against the fund resulting from the election as of the date of election of the allowance payable for the remainder of the member’s lifetime under the optional settlement previously chosen applied to a lesser allowance during the member’s remaining lifetime consisting of the right to have a retirement allowance paid to the member until their death and thereafter to have a monthly allowance paid to their new spouse for life for the remaining interest in the retirement system available to be allocated. Notwithstanding the foregoing, the combined allowance payable to the member’s named beneficiary or beneficiaries and the member’s survivor pursuant to Section 21624, 21629, or 21630, if applicable, shall not exceed the amount of the member’s allowance. The member may elect this option only once. No election shall be made in derogation of the former spouse’s interest in the retirement system. This paragraph shall become operative on January 1, ~~2025.~~ 2026.

(b) The election provided by this section is irrevocable and shall be made within 12 months following the death of the beneficiary who predeceased the member or within 12 months of the date of entry of the annulment of marriage or judgment dividing the community property of the parties, or within 12 months following marriage if the spouse is named as beneficiary. The election shall become effective on the date specified on the election, provided that this date is not earlier than the day following receipt of the election in this system under this section.

(c) A member who has a qualifying event and who fails to elect within 12 months, shall retain the right to make an election under this section. However, this election shall become effective no earlier than 12 months after the date it is filed with the board, provided that neither the member nor the designated beneficiary die prior to the effective date of the election.

(e) Nothing in this section shall be construed to permit any election that will result in additional costs to the employer.

(f) This section shall apply to any member who retires on or after January 1, 2018.

SEC. 3.Section 75523 of the Government Code is amended to read:
75523.
(a)The retirement allowance of retired judges who have elected to receive a monthly allowance under subdivision (d) of Section 75522 or who have retired for disability and are receiving an allowance under Section 75560.4 shall be adjusted effective in January of each year after a judge has been retired under this chapter for more than six months, to reflect any increase in the cost of living occurring after January 1 of the immediately preceding fiscal year. The United States city average of the “Consumer Price Index for all Urban Consumers,” as published by the United States Bureau of Statistics, shall be used as the basis for determining changes in the cost of living.
(b)The retirement allowance of a retired judge who has elected to retire under Section 75522.5 shall be adjusted effective in January of each year after a judge has received a retirement allowance under this chapter for more than six months, to reflect any increase in the cost of living occurring after January 1 of the immediately preceding fiscal year. The United States city average of the “Consumer Price Index for all Urban Consumers,” as published by the United States Bureau of Statistics, shall be used as the basis for determining changes in the cost of living.
(c)An adjustment shall not be made unless the cost-of-living increase equals or exceeds 1 percent. The allowance shall not be increased more than 3 percent in a single year. Increases shall be compounded.
~~(d)The allowance shall not be decreased as a result of the cost-of-living adjustment.~~
~~(e)The board shall provide, by rule, any details needed for the implementation of this section.~~
SEC. 4.
Section 3 of this bill shall become operative only if (1) this bill and Senate Bill 885 are both enacted and become effective on or before January 1, 2024, (2) each bill amends Section 75523 of the Government Code, and (3) this bill is enacted after Senate Bill 885.