SB515: relative to benefit options for surviving spouses and designated beneficiaries of deceased members of the retirement system.

SB 515-FN - AS INTRODUCED

2004 SESSION

04-3238

10/01

SENATE BILL 515-FN

AN ACT relative to benefit options for surviving spouses and designated beneficiaries of deceased members of the retirement system.

SPONSORS: Sen. Below, Dist 5; Sen. Odell, Dist 8; Rep. Pepino, Hills 51

COMMITTEE: Insurance

ANALYSIS

This bill provides for survivor benefits and options for spouses and designated beneficiaries of deceased retirement system members.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

04-3238

10/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Four

AN ACT relative to benefit options for surviving spouses and designated beneficiaries of deceased members of the retirement system.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Accidental Death; Group I; Option to Lump Sum Payment. Amend RSA 100-A:8, I(a) to read as follows:

(a) If, upon the receipt by the board of trustees of proper proof of the death of a group I member in service indicating that such death was the natural and proximate result of an accident occurring while in the performance of duty at some definite time and place, the board decides that death was the result of an accident in the performance of duty and not caused by willful negligence on the part of the member, a state annuity shall be paid to his widow, to continue during her widowhood; or if there is no widow, or if the widow dies or remarries before the youngest child of the deceased member has attained age 18, then to his child or children under such age, divided in such manner as the board in its discretion shall determine, to continue as a joint and survivorship state annuity for the benefit of such child or children under said age until every child dies or attains said age; or if there is no widow or child under age 18 living at the death of the member, then to his dependent father or dependent mother as the board shall determine, to continue for life; or if the deceased member is a female, the foregoing benefits shall be payable to her widower, children or dependent parents only in like manner and amount; provided that if none of the aforementioned beneficiaries is living or eligible for benefits under the provisions of this section, there shall be payable to the person or persons nominated by the member, if living, otherwise to the member's estate, a lump sum amount which is equal to the deceased member's base salary plus accrued benefits not paid at the time of death, in addition to the amount payable under RSA 100-A:11. In lieu of such lump sum amount, the designated beneficiary or beneficiaries may elect to receive the applicable ordinary death benefit that, under RSA 100-A:9, would have been payable to the beneficiary or beneficiaries if the member's death had not been the result of an accident occurring while in the performance of duty.

2 Accidental Death; Group II; Option to Lump Sum Payment. Amend RSA 100-A:8, II(a) to read as follows:

(a) If, upon the receipt by the board of trustees of proper proof of the death of a group II member in service indicating that such death was the natural and proximate result of an accident occurring while in the performance of duty at some definite time and place, or as the natural and proximate result of repeated trauma or gradual degeneration occurring while in the actual performance of duty or arising out of and in the course of employment or of any occupational disease arising out of or in the course of employment, as defined by RSA 281-A:2, XI and found to be compensable by the commissioner of labor pursuant to RSA 281-A:43; the board decides that death was the result of an accident in the performance of duty and not caused by willful negligence on the part of the member, a state annuity shall be paid to the member's surviving spouse, to continue until the surviving spouse remarries; or if there is no surviving spouse, or if the surviving spouse dies or remarries before the youngest child of the deceased member has attained age 18, then to the deceased members' child or children under such age, divided in such manner as the board in its discretion shall determine, to continue as a joint and survivorship state annuity for the benefit of such child or children under said age until every child dies or attains said age; or if there is no surviving spouse or child under age 18 living at the death of the member, then to the member's dependent father or dependent mother as the board shall determine, to continue for life; provided that if none of the aforementioned beneficiaries is living or eligible for benefits under the provisions of this section, there shall be payable to the person or persons nominated by the member, if living, otherwise to the member's estate, a lump sum amount which is equal to the deceased member's base salary plus accrued benefits not paid at the time of death, in addition to the amount payable under RSA 100-A:11. In lieu of such lump sum amount, the designated beneficiary or beneficiaries may elect to receive the applicable ordinary death benefit that, under RSA 100-A:9, would have been payable to the beneficiary or beneficiaries if the member's death had not been the result of an accident occurring while in the performance of duty.

3 Ordinary Death Benefit. RSA 100-A:9 is repealed and reenacted to read as follows:

100-A:9 Ordinary Death Benefit; Group I and II Members.

I. Upon receipt by the board of trustees of proper proof of the death of a group I or group II member in service indicating that such death was not the result of an accident occurring while in the performance of duty, there shall be a death benefit payable to either the member's surviving spouse or, if the member has designated a beneficiary other than the member's spouse, the member's designated beneficiary or beneficiaries, if living, otherwise to the member's estate.

II. If the member was eligible for service retirement pursuant to RSA 100-A:5, I(a) or (c), RSA 100-A:5, II(a), or RSA 100-A:19-b at the time of the member's death, there shall be payable to the member's surviving spouse a service retirement allowance, continuing until the spouse's death or remarriage equal to the survivor benefit payable under RSA 100-A:13, III, Option 2 had the member retired immediately prior to death, based on average final compensation and creditable service at the time of death. In lieu of the allowance, the surviving spouse may elect to receive the lump sum benefit set forth in paragraph IV. If the member's spouse predeceases the member, the member's estate shall receive the lump sum benefit set forth in paragraph IV.

III. If the member has at least 10 years combined creditable service or was eligible for service retirement at the time of the member's death, but was not eligible for service retirement and a death benefit pursuant to paragraph II, there shall be payable to the member's surviving spouse an allowance, continuing until the spouse's death or remarriage, equal to 50 percent of the service retirement allowance that would have been payable to the member had the member retired immediately prior to death, based on average final compensation and creditable service at the time of death. In lieu of such allowance, the surviving spouse may elect the lump sum benefit set forth in paragraph IV. If the member has designated a beneficiary or beneficiaries other than the member's spouse, the designated beneficiary or beneficiaries, if living, otherwise the member's estate, shall receive the lump sum benefit set forth in paragraph IV.

IV. If the member did not have at least 10 years combined creditable service and was not eligible for service retirement at the time of death, there shall be payable to the member's surviving spouse or the member's designated beneficiary or beneficiaries, if other than a spouse, if living, otherwise to the member's estate, a lump sum benefit equal to the deceased member's annual earnable compensation at the time of death in addition to the amount payable under RSA 100-A:11.

V. A member may designate multiple beneficiaries, however, only the member's spouse and/or children shall be eligible to receive the survivor benefit set forth in paragraph II. When a survivor benefit is payable to multiple beneficiaries, the unanimous written consent of all multiple beneficiaries is required to authorize the receipt of a lump sum death benefit in lieu of the survivor benefit. If a member designates, as a multiple beneficiary, any person other than the member's spouse and/or children, all of the member's designated multiple beneficiaries shall be limited to receipt of the lump sum benefit in paragraph IV.

VI. Any beneficiary designation properly executed by a member and timely filed with the retirement system shall revoke any beneficiary designation previously filed by the member.

4 Optional Allowances; Survivorship Option. Amend RSA 100-A:13, I to read as follows:

I. [Any member who has reached service retirement age as provided in RSA 100-A:5, I(a), or II(a), or RSA 100-A:19-b] Any eligible member applying for retirement, any retiree within 120 days after the effective date of retirement, or any retiree within 120 days after a decision by the board of trustees granting the retiree disability retirement benefits pursuant to RSA 100-A:6, may elect to receive, instead of the retirement allowance otherwise payable, a retirement allowance of equivalent actuarial value under one of the options named in paragraph III, or to redesignate any such option previously elected. When the member or retiree elects to receive an optional retirement allowance under paragraph III, the beneficiary or beneficiaries whom the member or retiree nominates may include the member's spouse and/or children. The notice of non-election, election, or change of retirement option shall be on a form designated by the board, which, if the member or retiree is married, shall include a spousal acknowledgment. The optional allowance shall be effective upon retirement if the election is made before the effective date of retirement, and on the first day of the month following receipt by the board of the notice of election or change of option if made during a 120-day grace period. When an election or change of option is made during a 120-day grace period, no retroactive adjustments will be made in payments already received by the retiree. When an election or change of option is made within 120 days after a decision by the board of trustees granting the retiree disability retirement benefits, the optional allowance shall be calculated using retiree and beneficiary age factors applicable as of the first day of the month following receipt by the board of the notice of election or change in option. After expiration of the 120-day grace period no change in option selection shall be permitted except as provided in paragraph II. If a retiree dies after filing notice of election or change of option during the 120-day grace period but before the effective date, the election or change shall be effective as of the date of death. If a member dies after filing an election for a survivorship retirement option and before the effective date of retirement, [whether or not the member has filed for retirement,] the beneficiary who was nominated by the member in the election of the option may elect to receive either the optional survivor benefit which the member had elected or the ordinary death benefit provided under RSA 100-A:9, whichever is more advantageous to the beneficiary[; provided that, in the case of the member's death before retirement, if the beneficiary named in the survivorship option election is not the same person as the beneficiary under RSA 100-A:9, then the death benefit under RSA 100-A:9, II, and not the survivorship option shall apply].

5 New Paragraph; Optional Allowances; Beneficiary Designation. Amend RSA 100-A:13 by inserting after paragraph III the following new paragraph:

IV. Any beneficiary designation properly executed by a member and timely filed with the retirement system shall revoke any beneficiary designation previously filed by the member.

6 Application. The death benefits provided in this act shall apply retroactively to any eligible member's death which occurred during the state fiscal year ending June 30, 2004.

7 Effective Date. This act shall take effect 60 days after its passage.

LBAO

04-3238

Revised 1/2/04

SB 515 FISCAL NOTE

AN ACT relative to benefit options for surviving spouses and designated beneficiaries of deceased members of the retirement system.

FISCAL IMPACT:

The New Hampshire Retirement System states this bill will increase state, county, and local expenditures by an indeterminable amount in FY 2004 and each year thereafter. There will be no fiscal impact on state, county, and local revenue.

METHODOLOGY:

The New Hampshire Retirement System states this bill would allow a designated beneficiary to elect to receive in lieu of a lump sum payment under RSA 100-A:8, the applicable ordinary death benefit under RSA 100-A:9 that would have been payable if the member's death had not been the result of an accident occurring while in the performance of duty. In addition, the legislation provides a 100% joint and survivor benefit to the spouses of Group I and II members who die in active service after meeting the eligibility requirements for a service retirement benefit. Currently, spouses of these members receive 50% of the member's service retirement benefit. There will be no fiscal impact on the System for the portion of this legislation that allows the beneficiary to receive an ordinary death benefit in lieu of a lump sum payment, since the proposed benefit is less costly than the benefit used in the System's current actuarial assumptions. The additional annual normal contributions (amount paid by employers) for the 100% joint and survivor benefit to spouses of Group I and II members who die in active service on and after July 1, 2003, and after meeting the requirements for a service retirement benefit are as follows:

Range of Annual Increase

Membership Classification in Normal Contributions

Employees $ 559,000 to $ 718,000

Teachers $ 400,000 to $ 480,000

Policemen $ 98,000 to $ 137,000

Firemen $ 40,000 to $ 63,000

Total $1,097,000 to $1,398,000

The increase in normal contributions would affect state, county, and local employers by an indeterminable amount dependent on the number of their employees affected by this bill, and their membership classification. In addition, the changes proposed in this bill will require the System to revise its computer system for a one-time cost ranging between $50,000 and $100,000.

The Actuary's letter is on file in the bill jacket in the Senate Clerk's Office.