TRENTON – Legislation sponsored by Senator Shirley K. Turner requiring spousal consent for certain pension payout options cleared the Senate State Government, Wagering, Tourism & Historic Preservation Committee today.
The bill, S-642 requires written spousal consent whenever a member of the Teachers’ Pension and Annuity Fund (TPAF), the Judicial Retirement System (JRS) or the Public Employees’ Retirement System (PERS) elects a retirement benefit which is payable for the life of the member only or any other payout option.
“Failing to protect spousal rights in public retirement plans threatens the financial security of a surviving spouse at a time when their well-being is at greatest risk,” said Senator Turner. “One member of a married couple should never have the sole authority to surrender the survivor benefits of the other member. This is an issue of particular importance to women who are more financially vulnerable in retirement years and live longer than their husbands.”
Currently, when a member of the PERS, JRS, or TPAF retires, the retiree may choose one of five options for payment of his or her monthly allowance. The “maximum option” provides the highest amount payable each month to the retired member for the remainder of his or her life, but leaves no pension allowance to a surviving spouse upon death of the member. Other options provide 100%, 75%, 50%, or 25% of the monthly retirement allowance to a surviving spouse upon the death of a member.
Once the retiree chooses a retirement option, he or she has 30 days to select a different option, at which time the Division of Pensions and Benefits must notify the retiree’s spouse of the change in writing.
S-642 will require the spouse to consent to any change in the retirement option that reduces the survivor benefits by 50 percent or more.
“This is a bill that helps keep the spouse informed about future financial planning,” said Senator Greenstein. “There is a lot to consider but a husband or wife deserves to know if any changes are made in the pension allowance so that they can plan their financial future responsibly and accordingly.”
“The retirement option selected is often made in consultation with a spouse as part of their joint retirement planning,” said Senator Turner. “Written notification provides no protection to a surviving spouse who may lose a significant source of income if the member dies first. The Division of Pensions and Benefits already requires spousal consent when a PFRS member makes a change to the retirement payout option and the federal government has provided spousal protection on non-governmental retirement plans since 1984. We need to move our public pension funds ahead with the times.”
The bill cleared the committee 4-0 and will now head to the Senate Budget and Appropriations Committee for further consideration.