S T A T E   O F   N E W   Y O R K
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                                  10612

                          I N  A S S E M B L Y

                              June 8, 2012
                               ___________

Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Abbate) --
  read once and referred to the Committee on Governmental Employees

AN ACT to amend the retirement and social security law and the education
  law, in relation to permitting certain retired members of the New York
  State Teachers' Retirement System  or  the  New  York  City  Teachers'
  Retirement  System to change their retirement options with the consent
  of the nominated survivor beneficiary

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  514 of the retirement and social security law is
amended by adding a new subdivision e to read as follow:
  E. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, WHERE A RETIRED  MEMBER
OF  THE  NEW  YORK CITY TEACHERS' RETIREMENT SYSTEM HAS NOMINATED HIS OR
HER SPOUSE AS THE SURVIVOR BENEFICIARY UNDER OPTION  ONE,  TWO  OR  FIVE
PROVIDED  FOR IN SUBDIVISION A OF THIS SECTION, AND SUCH PERSON SO NOMI-
NATED CEASES BY CAUSES OTHER THAN DEATH TO BE HIS OR HER  SPOUSE  OR  IS
SEPARATED  FROM  HIM  OR  HER, OR IF SUCH OPTION WAS SELECTED IN CONTEM-
PLATION OF MARRIAGE WHICH HAS NOT TAKEN PLACE, THEN THE BOARD  OF  TRUS-
TEES  OF  SUCH  RETIREMENT SYSTEM SHALL HAVE THE AUTHORITY TO PERMIT THE
CHANGE OF SUCH OPTION TO THE  MAXIMUM  BENEFIT  THAT  IS  THE  ACTUARIAL
EQUIVALENT BY AND WITH THE CONSENT OF ALL PARTIES.
  S  2. Section 610 of the retirement and social security law is amended
by adding a new subdivision g to read as follows:
  G. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, WHERE A RETIRED  MEMBER
OF  THE  NEW  YORK CITY TEACHERS' RETIREMENT SYSTEM HAS NOMINATED HIS OR
HER SPOUSE AS THE SURVIVOR BENEFICIARY UNDER OPTION  ONE,  TWO  OR  FIVE
PROVIDED  FOR IN SUBDIVISION A OF THIS SECTION, AND SUCH PERSON SO NOMI-
NATED CEASES BY CAUSES OTHER THAN DEATH TO BE HIS OR HER  SPOUSE  OR  IS
SEPARATED  FROM  HIM  OR  HER, OR IF SUCH OPTION WAS SELECTED IN CONTEM-
PLATION OF MARRIAGE WHICH HAS NOT TAKEN PLACE, THEN THE BOARD  OF  TRUS-
TEES  OF  SUCH  RETIREMENT SYSTEM SHALL HAVE THE AUTHORITY TO PERMIT THE
CHANGE OF SUCH OPTION TO THE  MAXIMUM  BENEFIT  THAT  IS  THE  ACTUARIAL
EQUIVALENT BY AND WITH THE CONSENT OF ALL PARTIES.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16074-01-2
              

A. 10612                            2

  S  3.  Section  539  of  the  education law is amended by adding a new
subdivision 8 to read as follows:
  8.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, A RETIREE SUBJECT TO
THIS ARTICLE OR ARTICLE FOURTEEN OR FIFTEEN OF THE RETIREMENT AND SOCIAL
SECURITY LAW WHO AT RETIREMENT HAD  DULY  SELECTED  AN  OPTION  FORM  OF
RETIREMENT  PROVIDING  FOR  THE PAYMENT OF A LESSER RETIREMENT ALLOWANCE
OVER THE LIFE OF THE RETIREE WITH THE PROVISION THAT UPON THE  RETIREE'S
DEATH ALL OR A PORTION OF SUCH ALLOWANCE SHALL BE CONTINUED FOR THE LIFE
OF  AND  PAID  TO A BENEFICIARY DULY NOMINATED BY THE RETIREE AT RETIRE-
MENT, SHALL BE PERMITTED TO RESCIND SUCH SELECTION WITHIN ONE YEAR AFTER
SUCH BENEFICIARY HAS CEASED TO BE THE RETIREE'S SPOUSE BY  REASON  OF  A
FINAL  JUDGMENT  OR  DECREE  OF  DIVORCE  ISSUED BY A COURT OF COMPETENT
JURISDICTION. IN ORDER TO RESCIND SUCH SELECTION, THE RETIREE AND  BENE-
FICIARY  MUST EACH FILE A WRITTEN CONSENT TO SUCH CHANGE WITH THE SYSTEM
ON A FORM PRESCRIBED BY THE SYSTEM. UPON SATISFACTORILY  RECEIVING  SUCH
JUDGMENT OR DECREE OF DIVORCE AND SUCH CONSENTS, ANY AND ALL OBLIGATIONS
OF  THE  SYSTEM  TO THE BENEFICIARY UNDER THE RETIREE'S OPTION SELECTION
SHALL BE TOTALLY DISCHARGED AND THE RETIREE SHALL THEREAFTER BE PAID FOR
THE REMAINDER OF SUCH RETIREE'S LIFE THE  MAXIMUM  SINGLE  LIFE  BENEFIT
WHICH  WOULD HAVE BEEN PAYABLE, HAD THE RETIREE MADE NO OPTION SELECTION
AT THE TIME OF RETIREMENT. THE RETIREMENT BOARD IS AUTHORIZED  TO  ADOPT
SUCH  RULES AND REGULATIONS AS MAY BE NECESSARY TO IMPLEMENT THIS SUBDI-
VISION.
  S 4. This act shall take effect on June 30, 2012, except that if  this
act shall have become law on or after June 30, 2012, this act shall take
effect  immediately  and  shall be deemed to have been in full force and
effect on or after June 30, 2012.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  This proposed legislation would amend Retirement and  Social  Security
Law  ("RSSL") Sections 514 and 610 to allow certain Tier III and Tier IV
retirees of the New York City Teachers' Retirement  System  ("TRS")  the
opportunity to change certain optional forms of benefit after retirement
similar  to  the provisions set forth in Administrative Code of the City
of New York ("ACNY") Section 565(c).
  ACNY Section 565(c) covers only Tier I and Tier II members of TRS.
  In addition, for purposes of this Fiscal Note, the  references  herein
to Tier IV include those TRS members whose dates of membership are on or
after April 1, 2012 (a.k.a., Tier VI members).
  Specifically,  this  proposed  legislation  would permit a Tier III or
Tier IV retiree of TRS who has nominated his or her spouse as the survi-
vor beneficiary to change, under certain optional forms of  benefit  and
with the consent of his or her spouse and the TRS Retirement Board, from
the  optional  form  of benefit originally chosen to the maximum benefit
that is the actuarial equivalent, if such person:
  (1) ceases by causes other than death to be his or her spouse, or
  (2) is separated from him or her, or
  (3) if such option was selected in contemplation of marriage which has
not taken place.
  The Effective Date of the proposed legislation would be  the  date  of
enactment.
  FINANCIAL  IMPACT  -  ACTUARIAL PRESENT VALUE OF BENEFITS AND EMPLOYER
CONTRIBUTIONS: To the extent that the probabilities of survival  of  the
retiree  and the beneficiary designated under the optional form of bene-
fit have not changed significantly since such optional form  of  benefit
was  instituted,  then  the  enactment  of  this proposed legislation is

A. 10612                            3

expected to result in little or no change in the Actuarial Present Value
of Benefits ("APVB") or employer contributions to TRS.
  OTHER  COSTS:  The enactment of this proposed legislation would result
in some administrative expenses for TRS.
  This estimate is intended for use only  during  the  2012  Legislative
Session.  It  is Fiscal Note 2012-10, dated May 18, 2012 prepared by the
Chief Actuary of the New York City Teachers' Retirement System.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  This bill would amend Section 539 of the  Education  Law  to  allow  a
retired  member  of  the  New  York  State  Teachers'  Retirement System
(NYSTRS) who  selects  an  optional  form  of  retirement  benefit  that
provides  that upon the retired member's death, all, or a percentage of,
such optional form of retirement benefit shall be continued for the life
of a beneficiary, to rescind the selection of  such  option  within  one
year  after such beneficiary ceases to be the retired member's spouse by
reason of a final judgment or decree of divorce.  In  order  to  rescind
such optional form of retirement benefit, the retired member and benefi-
ciary  must each file a written consent with respect to such change with
NYSTRS.  Upon NYSTRS' receipt of the judgment or decree of  divorce  and
the  written  consents,  the  retired  member  would receive the maximum
single-life retirement benefit for the remainder of his or her lifetime,
as if no option had been selected at retirement. Any and all obligations
of NYSTRS to the beneficiary under the option selection shall be consid-
ered totally discharged. This bill shall apply  to  retirement  benefits
payable on or after June 30, 2012.
  The  annual  cost  to  the  employers of members of the New York State
Teachers' Retirement System for this benefit is  estimated  to  be  very
low,  likely  less  than $200,000 per year.  Allowing retired members to
change the terms of their option after retirement creates the  potential
for anti-selection however.
  The  source of this estimate is Fiscal Note 2012-31 dated May 24, 2012
prepared by the Actuary of  the  New  York  State  Teachers'  Retirement
System and is intended for use only during the 2012 Legislative Session.
I,  Richard  A.   Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American  Academy  of  Actuaries
and  I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.