Allows a change in retirement options for certain retired members with the consent of the nominated survivor beneficiary

BILL NUMBER:S5162C

Purpose

Allows a change in the retirement options for retired members of the New York State Teachers' Retirement System (NYSTRS) or the New York City Teachers' Retirement System (NYCTRS) with the consent of the nominated survivor beneficiary.

Summary of provisions

Part A - affecting members of NYCTRS

§ 1 - amends § 514 of the Retirement and Social Security Law by adding a new subdivision e to provide for the option of post-retirement beneficiary changes with nominated survivors consent for members of NYCTRS.

§ 2 amends § 610 of the Retirement and Social Security Law by adding a new subdivision g to provide for the option of post-retirement beneficiary changes with nominated survivors consent for members of NYCTRS.

Part B - affecting members of NYSTRS

§ 1 - amends § 539 of the Education Law by adding a new subdivision 8 to provide for the option of post-retirement beneficiary changes with nominated survivors consent for members of NYSTRS.

Existing law

Under NYC Administrative Code 13-565 (c) - Tier 1 and Tier II retired members of NYCTRS are provided this option with consent of the nominated beneficiary. This bill would expand this option to retirees in all tiers of NYCTRS and NYSTRS with the same nominated beneficiary consent.

Justification

Since divorce has become fairly commonplace - with nearly 50 percent of all marriages ending in divorce - the concept of an unchangeable option of providing a lifelong benefit to the spouse of a member of a retirement system is no longer suitable.

Current law is punitive in nature for any retiree whose marriages dissolve after retirement options have been chosen. Requiring that a divorced spouse continue to pay toward the maintenance of a spouse that may agree to give up this compensation is an unnecessary drain on resources of the member of the retirement system.

Much the same way both parties are allowed to agree to legally end their marriage, these same adults should be given the option to reverse this retirement decision as their marital situation changes.

For the aforementioned reasons and in light of the fact that this option already being permitted to certain members of the NYCTRS this option should be expanded to all members of NYCTRS and NYSTRS.

Legislative history

New Legislation for the 2012 Session - S.7610 - referred to Civil Service and Pensions with no further action.

Fiscal implications

Part A - NYCTRS - To the extent that the probabilities of survival of the retiree and the beneficiary designated under the optional form of benefit have not changes significantly since such optional form of benefit was instituted, then

the enactment of this proposed legislation is expected to result in little or no change in the Actuarial Present Value of Benefits or in employer costs. It will result in some administrative expenses for NYCTRS.

Part B - NYSTRS - The annual cost to the employers of members of the NYSTRS for this benefit is estimated to be very low, likely less than $200,000 per year.

Effective date

This legislation shall take effect on June 30, 2014.