AN ACT

 

1Amending Titles 24 (Education) and 71 (State Government) of the
2Pennsylvania Consolidated Statutes, in membership,
3contributions and benefits, further providing for member's
4options, for death benefits and for payment of benefits; in
5administration and miscellaneous provisions, further
6providing for duties of board regarding applications and
7elections of members and for rights and duties of school
8employees and members; in benefits, further providing for
9member's options, for death benefits and for payment of
10benefits; and, in administration, funds, accounts, general
11provisions, further providing for duties of board regarding
12applications and elections of members and for rights and
13duties of State employees and members.

14The General Assembly finds and declares as follows:

15(1) Spouses of State and municipal employees in this
16Commonwealth should be protected from impoverishment as a
17result of the death of their spouses, consistent with the
18Commonwealth's treatment of marital property and the
19protections afforded spouses of private company employees.

20(2) The law in this Commonwealth currently recognizes a
21spouse's marital property interest in a State or public
22school employee's accrued pension benefits upon divorce, but

1does not provide adequate protection to the nonemployee
2spouse in the event of the employee's death.

3(3) Research indicates that women are less likely to
4have a pension than men. To the extent women have a pension,
5they typically receive a lower payout, because women have
6historically earned less than men and, as primary caregivers,
7have less consistent work records than men.

8(4) Older women are more likely than older men to
9experience the loss of a spouse and, with such loss, a severe
10reduction of income and threat of poverty during widowhood.

11(5) To address such disparities, Congress adopted the
12Retirement Equity Act of 1984 (Public Law 98–397, 98 Stat.
131426) to require all privately sponsored pension plans to
14make benefit payments in the form of a preretirement survivor
15annuity in the event of the employee's death during
16employment and a joint and survivor annuity upon retirement,
17each with a minimum 50% annuity payable to the surviving
18spouse upon the death of the employee or pensioner unless the
19surviving spouse consents to another form of benefit payment.

20(6) While the majority of the states have adopted laws
21providing surviving spouses with protections similar to those
22imposed by Federal law, the Commonwealth has not provided
23such protection.

24(7) The purpose of this provision is to provide greater
25economic security to surviving spouses of public employees in
26this Commonwealth while being revenue neutral with regard to
27the State budget.

28The General Assembly of the Commonwealth of Pennsylvania
29hereby enacts as follows:

30Section 1. Section 8345 of Title 24 of the Pennsylvania

1Consolidated Statutes is amended by adding a subsection to read:

2§ 8345. Member's options.

3* * *

4(c) Spouse must consent to election.--Any eligible member's
5election under this section that does not provide for at least
650% survivor annuity to such member's surviving spouse shall not
7take effect unless:

8(1) (i) the spouse of the eligible member consents in
9writing to such election;

10(ii) such election designates a beneficiary or form
11of benefits that may not be changed without spousal
12consent or the consent of such spouse expressly permits
13designations by the member without any requirement of
14further consent by the spouse; and

15(iii) the spouse's consent acknowledges the effect
16of such election and is witnessed by a member of the
17board or a notary public; or

18(2) it is established to the satisfaction of the board
19that the consent required under paragraph (1) may not be
20obtained because there is no spouse or because the spouse
21cannot be located.

22Any consent by a spouse or establishment that the consent of a
23spouse may not be obtained under paragraph (2) shall be
24effective only with respect to such spouse.

25Section 2. Section 8347(a), 8349(c) and 8505(h) of Title 24
26are amended to read:

27§ 8347. Death benefits.

28(a) Members eligible for annuities.--Any member or former 
29member on USERRA leave, other than an annuitant, who dies and
30was eligible for an annuity in accordance with section 8307(a)

1or (b) (relating to eligibility for annuities) shall be
2considered as having applied for an annuity to become effective
3the day before his death; and, in the event he has not elected
4an option, it shall be assumed that he elected Option 1 and
5assigned as beneficiary [that person last designated in writing
6to the board.] his spouse unless a contrary beneficiary 
7designation meeting the requirements of this chapter has been 
8provided in writing to the board. If such member is unmarried 
9and has not designated a beneficiary under this chapter, it 
10shall be assumed that he elected Option 1 and assigned his 
11estate as his beneficiary.

12* * *

13§ 8349. Payment of benefits.

14* * *

15(c) Death or absence of beneficiary.--If the beneficiary
16designated by a member should predecease him or die within 30
17days of his death, or if a valid nomination of a beneficiary is
18not in effect at his death, any money payable to a beneficiary
19shall be [paid to the estate of the member] payable first to his 
20surviving spouse and, if there is no spouse, then to his estate.

21§ 8505. Duties of board regarding applications and elections of
22members.

23* * *

24(h) Death benefits.--Upon receipt of notification of the
25death of a member or former member on USERRA leave, the board
26shall notify the designated beneficiary or survivor annuitant of
27the benefits to which he is entitled and shall make the first
28payment to the beneficiary under the plan elected by the
29beneficiary within 60 days of receipt of certification of death
30and other necessary data. If no beneficiary designation is in

1effect at the date of the member's death [or no notice has been
2filed with the board to pay the amount of such benefits to the
3member's estate], the member's designated beneficiary shall be 
4deemed to be his surviving spouse. If such member did not 
5designate a beneficiary and was unmarried at the time of his 
6death, the board is authorized to pay such benefits to the
7executor, administrator[, surviving spouse] or next-of-kin of
8the deceased member, and payment pursuant hereto shall fully
9discharge the fund from any further liability to make payment of
10such benefits to any other person. If the surviving spouse, 
11designated beneficiary or next-of-kin of the deceased member
12cannot be found for the purpose of paying such benefits for a
13period of seven years from the date of death of the member, then
14such benefits shall be escheated to the Commonwealth for the
15benefit of the fund.

16* * *

17Section 3. Section 8507 of Title 24 is amended by adding a
18subsection to read:

19§ 8507. Rights and duties of school employees and members.

20* * *

21(l) Restriction.--Notwithstanding anything to the contrary
22in this chapter, a member who is married at the time of his

23selection of a beneficiary or survivor annuitant, who is married
24at the time of his selection of a form of benefit payment or who
25becomes married following such selection of a beneficiary or
26survivor annuitant but prior to becoming entitled to or
27selecting a form of payment or distribution shall not be
28permitted to select a beneficiary or survivor annuitant other
29than his spouse, if married at the time, unless:

30(1) (i) the spouse of the eligible member consents in

1writing to the election;

2(ii) the election designates a beneficiary that may
3not be changed without spousal consent or the consent of
4the spouse expressly permits designations by the member
5without any requirement of further consent by the spouse;
6and

7(iii) the spouse's consent acknowledges the effect
8of the election and is witnessed by a member of the board
9or a notary public; or

10(2) it is established to the satisfaction of the board
11that the consent required under paragraph (1) may not be
12obtained because there is no spouse or because the spouse
13cannot be located.

14Any consent by a spouse or establishment that the consent of a
15spouse may not be obtained under paragraph (2) shall be
16effective only with respect to the spouse.

17Section 4. Section 5705 of Title 71 is amended by adding a

18subsection to read:

19§ 5705. Member's options.

20* * *

21(c) Spouse must consent to election.--Any eligible member's
22election under this section that does not provide for at least
2350% survivor annuity to such member's surviving spouse shall not
24take effect unless:

25(1) (i) the spouse of the eligible member consents in
26writing to such election;

27(ii) such election designates a beneficiary or form
28of benefits that may not be changed without spousal
29consent or the consent of the spouse expressly permits
30designations by the member without any requirement of

1further consent by the spouse; and

2(iii) the spouse's consent acknowledges the effect
3of such election and is witnessed by a member of the
4board or a notary public; or

5(2) it is established to the satisfaction of the board
6that the consent required under paragraph (1) may not be
7obtained because there is no spouse or because the spouse
8cannot be located.

9Any consent by a spouse or establishment that the consent of a
10spouse may not be obtained under paragraph (2) shall be
11effective only with respect to such spouse.

12Section 5. Sections 5707(a), 5709(c) and 5905(g) of Title 71

13are amended to read:

14§ 5707. Death benefits.

15(a) Members eligible for annuities.--Any active member,
16inactive member on leave without pay, vestee or current or 
17former State employee performing USERRA leave who dies and was
18eligible for an annuity in accordance with section 5308(a) or
19(b) (relating to eligibility for annuities) or special vestee
20who has attained superannuation age and dies before applying for
21a superannuation annuity shall be considered as having applied
22for an annuity to become effective the day before his death and
23in the event he has not elected an option or such election has
24not been approved prior to his death, it shall be assumed that
25he elected Option 1[.] and assigned as beneficiary his spouse, 
26unless a contrary beneficiary designation meeting the 
27requirements of this chapter has been provided in writing to the 
28board. If such member is unmarried and has not designated a 
29beneficiary under this chapter, it shall be assumed that he 
30elected Option 1 and assigned his estate as his beneficiary.

1* * *

2§ 5709. Payment of benefits.

3* * *

4(c) Death or absence of beneficiary.--If the beneficiary
5designated by a member should predecease him or die within 30
6days of his death, or if a valid nomination of a beneficiary is
7not in effect at his death, any money payable to a beneficiary
8shall be payable to the estate of the member first to his 
9surviving spouse and, if there is no spouse, then to his estate.

10§ 5905. Duties of the board regarding applications and
11elections of members.

12* * *

13(g) Death benefits.--Upon receipt of notification from the
14head of a department of the death of an active member, a member 
15performing USERRA leave or a member on leave without pay, the
16board shall [advise] notify the designated beneficiary or 
17survivor annuitant of the benefits to which he is entitled, and
18shall make the first payment to the beneficiary, under the plan 
19elected by the beneficiary, within 60 days of receipt of
20certification of death and other necessary data. If no
21beneficiary designation is in effect at the date of the member's
22death [or no notice has been filed with the board to pay the
23amount of the benefits to the member's estate], the member's 
24designated beneficiary shall be deemed to be his surviving 
25spouse. If such member did not designate a beneficiary and was 
26unmarried at the time of his death, the board is authorized to
27pay [the] such benefits to the executor, administrator[,
28surviving spouse] or next of kin of the deceased member, and
29payment pursuant hereto shall fully discharge the fund from any
30further liability to make payment of such benefits to any other

1person. If the surviving spouse, designated beneficiary or next
2of kin of the deceased member cannot be found for the purpose of
3paying [the] such benefits for a period of seven years from the
4date of death of the member, then [the] such benefits shall be
5escheated to the Commonwealth for the benefit of the fund.

6* * *

7Section 6. Section 5907 of Title 71 is amended by adding a
8subsection to read:

9§ 5907. Rights and duties of State employees and members.

10* * *

11(l) Restriction.--Notwithstanding anything to the contrary
12in this chapter, a member who is married at the time of his
13selection of a beneficiary or survivor annuitant, who is married
14at the time of his selection of a form of benefit payment or who
15becomes married following such selection of a beneficiary or
16survivor annuitant but prior to becoming entitled to or
17selecting a form of payment or distribution shall not be
18permitted to select a beneficiary or survivor annuitant other
19than his spouse, if married at the time, unless:

20(1) (i) the spouse of the eligible member consents in
21writing to such election;

22(ii) such election designates a beneficiary that may
23not be changed without spousal consent or the consent of
24such spouse expressly permits designations by the member
25without any requirement of further consent by the spouse;
26and

27(iii) the spouse's consent acknowledges the effect
28of such election and is witnessed by a member of the
29board or a notary public; or

30(2) it is established to the satisfaction of the board

1that the consent required under paragraph (1) may not be
2obtained because there is no spouse or because the spouse
3cannot be located.

4Any consent by a spouse, or establishment that the consent of a
5spouse may not be obtained under paragraph (2) shall be
6effective only with respect to such spouse.

7Section 7. This act shall take effect in 60 days.