PA 16-91—SB 267

Appropriations Committee

AN ACT MAKING CHANGES TO THE TEACHERS' RETIREMENT SYSTEM CONCERNING RETENTION OF THE PLAN D COPARTICIPANT OPTION AFTER DIVORCE, CREDITING INTEREST ON CERTAIN INACTIVE, NONVESTED MEMBERS, REEMPLOYMENT OF RETIRED TEACHERS AND ELIMINATING CERTAIN OBSOLETE LANGUAGE

SUMMARY: This act makes several changes to the Teachers' Retirement System (TRS) laws. One change allows a retired teacher to keep a divorced spouse as a retirement beneficiary (i. e. , co-participant) and another creates an exception to the limit on how much a retired teacher or administrator can be paid while reemployed by a school district. The act also makes minor and technical changes.

EFFECTIVE DATE: July 1, 2016

1 – POST-DIVORCE RETIREMENT BENEFITS

The act allows a teacher retired under the TRS to choose to continue to keep a divorced spouse as a retirement beneficiary. Under prior law, a divorce automatically ended the co-participant's benefit eligibility. The new law applies after a TRS member retires and requires the retiree to file a qualified domestic relations order with the TRS to maintain the co-participant's status (see BACKGROUND).

2 – INTEREST ON INACTIVE MEMBER CONTRIBUTIONS

The act allows the TRS to stop crediting interest on the contributions of inactive non-vesting members after 10 years of inactivity, rather than after 25 years as under prior law. It also deletes a reference to an obsolete pension reserve account.

3 – REEMPLOYMENT PAY FOR RETIRED TEACHERS AND ADMINISTRATORS

The act creates an exception to the limit on how much a retired teacher or administrator can earn when reemployed by a school district and still receive TRS benefits. The exception applies for a limited time in specific circumstances.

Under the act, the limit of 45% of the position's top salary is eliminated until July 1, 2018 for a teacher or administrator who (1) is receiving retirement benefits based on 34 or more years of service, (2) is reemployed in an alliance district, and (3) was employed in that district on July 1, 2015. The act also prohibits those employed under the 45% rule and those under the new exception from receiving TRS health insurance benefits while being reemployed.

The act also eliminates the 45% limit if a retired teacher chooses not to receive retirement benefits while reemployed. It allows a teacher receiving TRS retirement benefits to be employed as a public school teacher and receive pay, health insurance benefits, and other benefits provided to teachers in that district, provided the retired teacher does not receive any TRS retirement income during the reemployment period. It requires that the teacher's retirement benefit resume on the first day of the month following the termination of school reemployment.

BACKGROUND

Co-participant Retirement Option

The TRS offers a retirement option (co-participant option) that allows a TRS member to choose to provide a benefit to the co-participant in the event the member dies before the co-participant. If the retired member dies first, the co-participant continues to receive the benefit for life. Choosing this option means the member's retirement benefits are reduced to account for the possibility the TRS would be providing benefits for a longer period (CGS 10-183j(c)).

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