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AB-1325 State teachers’ retirement.(2017-2018)

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Date Published: 09/26/2017 09:00 PM
AB1325:v93#DOCUMENT

Assembly Bill No. 1325
CHAPTER 298

An act to amend Sections 22303.5, 22306, 22660, 22713, 23801, 23804, 23851, 23854, 23880, 23881, 24106, 24208, 24500, 24503, 24600, 25011, 25011.1, 25018, 25018.1, 25022.5, 26004, 26807, 26807.5, 26906, 26906.5, 27001, 27007, 44922, and 87483 of, and to repeal Section 26215 of, the Education Code, relating to state teachers’ retirement.

[ Approved by Governor  September 26, 2017. Filed with Secretary of State  September 26, 2017. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1325, Committee on Public Employees, Retirement, and Social Security. State teachers’ retirement.
Existing law, the Teachers’ Retirement Law, establishes the State Teachers’ Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers’ Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is administrated by the Teachers’ Retirement Board. Existing law creates the Defined Benefit Supplement Program for the purpose of providing supplemental benefits to members of the Defined Benefit Program. Existing law creates the Cash Balance Benefit Program, which is administered by the board, to provide a retirement plan for the benefit of participating employees who provide creditable service for less than 50% of full time.
(1) Existing law requires the Teacher’s Retirement Board to offer a midcareer retirement information program for the benefit of all members. Existing law authorizes the board, at a public meeting, to assess a fee for participating in the program and prescribes specified requirements related to a notice that the board must provide to members regarding the program, including a possible requirement for a state basic skills assessment, as specified.
This bill would eliminate the authority to charge a fee and the notice requirements, as described above.
(2) Existing law declares confidential the information provided by a member, participant, or beneficiary to STRS in connection with the Teachers’ Retirement Law and by a participant or beneficiary in connection with the Cash Balance Benefit Program, subject to certain exceptions, including to other agencies of the state and as may be necessary to locate potential benefit recipients.
This bill would expand the confidentiality provisions described above to apply to information related to health care benefits. The bill would permit the release of information to individuals and entities as necessary to validate the personal information of members, participants, and beneficiaries.
(3) Existing law authorizes the governing board of a school district or community college district to establish regulations, subject to specified requirements, to permit an employee who is a member of the Defined Benefit Plan to reduced his or her workload from full time to part time and have retirement benefits calculated as if the employee was employed full time. Existing law requires in this regard, among other things, that the member have reached 55 years of age, have 10 years of credited service, as specified, have been employed full time for the 5 school years preceding the year in which the member’s workload is reduced, and that the employee and employer make contributions based on full-time employment.
The bill would revise and restructure these provisions.
(4) Existing law permits a beneficiary of a member of the Defined Benefit Program to waive his or her right to specified benefits, including a family allowance, that arise upon the death of an active member.
This bill would authorize a beneficiary to waive his or her right to specified death benefits that arise upon the death of a retired member. The bill would prescribe requirements for various waivers, including requiring the form to include an acknowledgment that the benefit to be waived is an ongoing benefit and might otherwise exceed specified amounts. The bill would provide that the filing of the waiver constitutes a complete and immediate discharge of the obligations of the board and system, as specified. The bill would revise provisions regarding the waiver of death benefits and family allowances related to members who are not retired to require that the waiver be on a properly executed form and to provide for the discharge of the obligations of the board and system.
(5) Existing law permits a member of STRS to terminate his or her retirement and reinstate in the system subject to certain requirements. Existing law permits a member to cancel the request for reinstatement, provided the system receives the cancellation within a specified time.
This bill would allow a member to change his or her request to reinstate pursuant to the same provisions currently applicable to requests to cancel the reinstatement.
(6) Existing law grants STRS the right of subrogation to amounts paid as disability retirement allowances, disability allowances, family allowances, and survivor benefits allowances resulting from the act of a 3rd party, other than the member’s employer, as specified. Existing law calculates the amounts due based on the actuarial equivalent paid, less any amounts that the system may be obligated to pay without regard to the actions of the 3rd party. Existing law authorizes the State Compensation Insurance Fund or the Attorney General to act as agents for the Teachers’ Retirement Board in compromising claims, as specified.
This bill would prescribe requirements for calculating the actuarial amounts that the system paid or may be obligated to pay without regard to the acts of the 3rd party. The bill would remove references to the State Compensation Insurance Fund and the Attorney General acting as agents for the board in compromising claims.
(7) Existing law permits members of the Defined Benefit Supplement Program and participants in the Cash Balance Benefit Plan to elect certain options for purposes of structuring their retirement allowances and benefits and to designate beneficiaries for these purposes. Existing law permits members, participants, and beneficiaries, in certain instances and subject to certain requirements, to select a period certain annuity as a benefit, which is payable over a period of years up to a maximum of 10. Existing law permits a nonmember spouse who is awarded a separate account in STRS to designate beneficiaries for specified accounts. Under existing law, the Defined Benefit Supplement Program and the Cash Balance Benefit Plan provide disability benefits pursuant to which a period certain annuity may be elected. Existing law permits a trust and other organizations to be beneficiaries of period certain annuities.
This bill would specify that the term of a period certain annuity, as described above, is subject to life expectancy tables established pursuant to federal law. The bill would prescribe rules for calculating the remaining term of a period certain annuity when a nonmember spouse dies while receiving an annuity under the Defined Benefit Supplement Program or when a participant dies while receiving an annuity under the Cash Balance Benefit Program. The bill would authorize a nonmember spouse awarded a separate account in STRS, as described above, to designate a payee to receive payments for a period certain annuity.
(8) This bill would also make various technical changes, including those regarding federal requirements for distributions after death and would prescribe times for commencement and completion regarding specified payments resulting from the death of a member.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 22303.5 of the Education Code is amended to read:

22303.5.
 Notwithstanding any other provision of law, the board shall offer a midcareer retirement information program for the benefit of all members to enhance awareness of the features and benefits of the Defined Benefit Program, services of the system, federal Social Security Act programs and benefits as they apply to members, and personal planning responsibilities. This information shall be provided to assist members in understanding the importance of financial, legal, estate, and personal planning, and how choices and options offered by the system may affect retirement.

SEC. 2.

 Section 22306 of the Education Code is amended to read:

22306.
 (a) Information filed with the system by a member, participant, or beneficiary of the plan is confidential and shall be used by the system for the sole purpose of carrying into effect the provisions of this part, Part 13.5 (commencing with Section 25900), and Part 14 (commencing with Section 26000). No official or employee of the system who has access to the individual records of a member, participant, or beneficiary shall divulge any confidential information concerning those records to any person except in the following instances:
(1) To the member, participant, or beneficiary to whom the information relates.
(2) To the authorized representative of the member, participant, or beneficiary.
(3) To the governing board of the member’s or participant’s current or former employer.
(4) To any department, agency, or political subdivision of this state.
(5) To other individuals or entities as necessary to validate personal information of members, participants, and beneficiaries.
(6) Pursuant to subpoena.
(7) To an agent or a physician authorized by the board in the performance of duties pursuant to Section 24003, 24012, 24103, or 24111.
(8) To a physician or psychologist authorized by the member to receive medical information, if the system determines that the information may be detrimental to the member, as provided under Section 1798.40 of the Civil Code.
(b) Information filed with the system in a beneficiary designation form may be released after the death of the member or participant to those persons who may provide information necessary for the distribution of benefits.
(c) The information is not open to inspection by anyone except the board and its officers and employees of the system, and any person authorized by the Legislature to make inspections.

SEC. 3.

 Section 22660 of the Education Code is amended to read:

22660.
 (a) The nonmember spouse who is awarded a separate account under this part shall have the right to designate, pursuant to Sections 23300 to 23304, inclusive, a beneficiary or beneficiaries to receive the accumulated retirement contributions under the Defined Benefit Program and to designate a payee to receive the remaining balance of payments for a period-certain annuity, or the accumulated Defined Benefit Supplement account balance under the Defined Benefit Supplement Program remaining in the separate account of the nonmember spouse on his or her date of death, and any accrued allowance or accrued benefit under the Defined Benefit Supplement Program that is attributable to the separate account of the nonmember spouse and that is unpaid on the date of the death of the nonmember spouse.
(b) This section shall not be construed to provide the nonmember spouse with any right to elect to modify a retirement allowance under Section 24300 or 24300.1, or to elect a joint and survivor annuity under the Defined Benefit Supplement Program.

SEC. 4.

 Section 22713 of the Education Code is amended to read:

22713.
 (a) Notwithstanding any other provision of this chapter, if the governing board of a school district or a community college district, or a county superintendent of schools establishes regulations pursuant to Sections 44922 and 87483, an employer may enter into a written agreement with an employee who is a member of the Defined Benefit Program to reduce his or her workload in a position from full time to part time, receive the service credit the member would have received if the member had been employed in that position on a full-time basis and have his or her retirement allowance, as well as other benefits that the member is entitled to under this part, based, in part, on the final compensation the member would have been entitled to if the member had been employed on a full-time basis. The option to reduce the member’s workload shall be exercised at the request of the member if all of the following conditions are met:
(1) The member is employed by either of the following:
(A) A school district or county office of education as a prekindergarten through grade 12 certificated employee who does not hold a position with a salary above the maximum salary of a school principal for that employer.
(B) A community college district.
(2) The member has a minimum of 10 years of credited service in the Defined Benefit Program prior to the start of the school term of the first school year of the agreement to reduce the member’s workload.
(3) The member shall have been employed on a full-time basis to perform creditable service under the Defined Benefit Program each year of the five school years immediately preceding the first school year in which the member’s workload is reduced, without having a break in service. For the purposes of this paragraph:
(A) Employer-approved leaves of absence, and unpaid absences from the performance of creditable service for personal reasons from full-time employment do not constitute a break in service.
(B) Creditable service that was performed for a school year in which a member reduced his or her workload pursuant to this section shall be treated as full time, provided that the agreement to reduce the member’s workload was not terminated during that year pursuant to subdivision (e).
(C) The period of time during which a member is retired for service shall constitute a break in service.
(4) The member is 55 years of age or older prior to the start of the school term of the first school year of the agreement for which the member’s workload is reduced.
(b) The employer, in conjunction with the system, shall certify the member’s eligibility for participation in the reduced workload program in accordance with subdivision (a). The employer’s certification shall be submitted in a format prescribed by the system and shall be received in the system’s headquarters office prior to the start of the school term of the first school year of the agreement for which the member’s workload is reduced.
(c) The agreement to reduce the member’s workload shall be in effect prior to the start of the school term of the first school year of the agreement for which the member’s workload is reduced, and shall include the following requirements:
(1) The total amount of time in which a member reduces his or her workload pursuant to this section shall not exceed 10 school years.
(2) The reduced workload shall be equal to at least one-half of the time the employer requires for full-time employment in that position in accordance with Section 22138.5.
(3) The member shall be paid creditable compensation that is the pro rata share of the creditable compensation the member would have been paid for that position had the member not reduced his or her workload.
(4) For each school year the member’s workload is reduced pursuant to this section, the member shall make contributions to the Teachers’ Retirement Fund in the amount that the member would have contributed if the member had performed creditable service for that position on a full-time basis and if that service was subject to coverage under the Defined Benefit Program.
(5) For each school year the member’s workload is reduced pursuant to this section, the employer shall contribute to the Teachers’ Retirement Fund at a rate adopted by the board as a plan amendment with respect to the Defined Benefit Program an amount based upon the creditable compensation that would have been paid to the member if the member had performed creditable service for that position on a full-time basis and if that service was subject to coverage under the Defined Benefit Program.
(d) The employer shall maintain the necessary records to separately identify each member who participates in the reduced workload program pursuant to this section.
(e) The agreement to reduce a member’s workload shall be terminated if one of the following actions is taken:
(1) The member’s employment is terminated prior to the end of the school term.
(2) The member performs less than one-half of the days or hours the employer requires for full time in that position pursuant to Section 22138.5.
(3) The member and the employer mutually agree that the member will perform creditable service without making contributions in accordance with paragraphs (4) and (5) of subdivision (c).
(f) Upon termination of the agreement for any of the reasons described in subdivision (e):
(1) The employer shall notify the system that the agreement to reduce a member’s workload has been terminated within 30 days of the agreement being terminated.
(2) The member’s service credit and contributions for that school year in which the agreement is terminated shall be computed in accordance with Section 22701 and Chapters 15 and 16.
(3) That school year in which the agreement is terminated shall not be included in the total amount of time in which a member is allowed to reduce his or her workload pursuant to paragraph (1) of subdivision (c).
(4) Any subsequent agreement to reduce a member’s workload shall meet all of the conditions set forth in this section.

SEC. 5.

 Section 23801 of the Education Code is amended to read:

23801.
 (a) A death payment of no less than five thousand dollars ($5,000) shall be paid to the beneficiary upon receipt of proof of death of a member who had one or more years of credited service, including service deemed to the member under subparagraph (B) of paragraph (2) of subdivision (a) of Section 22851, at least one of which had been earned subsequent to the most recent refund of accumulated retirement contributions, if the member died during any one of the following periods:
(1) While in employment for which creditable compensation is paid.
(2) While disabled, if the disability had been continuous from the last day for which creditable compensation had been paid.
(3) Within four months after termination of creditable service or termination of employment, whichever occurs first.
(4) Within four months after termination of a disability allowance if no service was performed after the termination.
(5) Within 12 months of the last day for which creditable compensation was paid, if the member was on an approved leave of absence without compensation for reasons other than disability.
(6) While on a leave of absence to perform qualified military service, if the death occurred on or after January 1, 2007.
(b) A death payment pursuant to this section shall not be payable for the death of a member that occurs within one year commencing with the effective date of reinstatement from service retirement pursuant to Section 24208.
(c) The board may adjust the death payment amount following each actuarial valuation based on changes in the All Urban California Consumer Price Index and adopt any adjusted amount as a plan amendment.
(d) A beneficiary may waive his or her right to the death payment in accordance with the requirements established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.

SEC. 6.

 Section 23804 of the Education Code is amended to read:

23804.
 (a) A family allowance is payable upon the death of an active member or a disabled member who was receiving a disability allowance that began to accrue after June 30, 1972.
(b) (1) For the family allowance to be payable upon the death of the member, all of the following conditions shall be met at the time of death:
(A) Death occurred after June 30, 1972.
(B) A preretirement election of an option is not in effect.
(C) The provisions for the death payment under this part have been met.
(2) In addition to the conditions specified in paragraph (1), at least one-half year of credited service had been performed subsequent to the end of the last break, if a break in service of more than one year had occurred.
(3) In addition to the conditions specified in paragraph (1), at least one year of credited service had been performed subsequent to the last reinstatement date, if reinstated from service or disability retirement.
(c) The family allowance shall be paid in lieu of the return of the member’s accumulated retirement contributions.
(d) The family allowance may be terminated, if all eligible beneficiaries formally waive their rights in accordance with the requirements established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. All waiver forms for an ongoing benefit shall include an acknowledgment on the part of the waiving beneficiary that the benefit being waived is an ongoing benefit, which may exceed the total amount of contributions and interest payable from the member’s account as a result of the waiver. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.

SEC. 7.

 Section 23851 of the Education Code is amended to read:

23851.
 (a) A death payment of not less than twenty thousand dollars ($20,000) shall be paid to the beneficiary, as designated pursuant to Section 23300, upon receipt of proof of death of a member, who had one or more years of credited service, including service deemed to the member under subparagraph (B) of paragraph (2) of subdivision (a) of Section 22851, at least one of which had been earned subsequent to the most recent refund of accumulated retirement contributions, if the member died during any one of the following periods:
(1) While in employment for which creditable compensation is paid.
(2) Within four months after termination of creditable service or termination of employment, whichever occurs first.
(3) Within 12 months of the last day for which creditable compensation was paid, if the member was on an approved leave of absence without creditable compensation for reasons other than disability.
(4) While on a leave of absence to perform qualified military service, if the death occurred on or after January 1, 2007.
(b) A death payment pursuant to this section shall not be payable for the death of a member that occurs within one year commencing with the effective date of termination of the service retirement allowance pursuant to Section 24208 or during the six calendar months commencing with the effective date of termination of the disability retirement allowance pursuant to Section 24117.
(c) The board may adjust the death payment amount following each actuarial valuation based on changes in the All Urban California Consumer Price Index and adopt as a plan amendment with respect to the Defined Benefit Program any adjusted amount.
(d) A designated beneficiary may waive the right to the death payment in accordance with the requirements established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.

SEC. 8.

 Section 23854 of the Education Code is amended to read:

23854.
 (a) A survivor benefit allowance is payable upon receipt of proof of death of a member, as defined in Section 23850, who had one or more years of credited service, including deemed service under subparagraph (B) of paragraph (2) of subdivision (a) of Section 22851, at least one of which had been earned subsequent to the most recent refund of accumulated retirement contributions.
(b) For the survivor benefit allowance to be payable upon the death of a member, all of the following conditions shall be met at the time of death:
(1) Death occurred after October 15, 1992.
(2) A preretirement election of an option is not in effect.
(3) Death occurs during any one of the following periods:
(A) While in employment for which compensation is paid.
(B) Within four months after termination of service or termination of employment, whichever occurs first.
(C) Within four months after reinstatement from disability retirement.
(D) Within 12 months following the last day for which compensation was paid if the member was on an approved leave of absence without compensation for reasons other than disability.
(E) While on a leave of absence to perform qualified military service, if the death occurred on or after January 1, 2007.
(4) At least one-half year of credited service had been performed subsequent to the end of the last break in service, if a break in service of more than one year had occurred.
(5) At least one year of credited service had been performed subsequent to the last reinstatement date, if reinstated from service retirement.
(c) The survivor benefit allowance shall be paid in lieu of the return of the member’s accumulated retirement contributions.
(d) The survivor benefit allowance may be terminated, if all eligible beneficiaries formally waive their rights in accordance with the requirements established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. All waiver forms for an ongoing benefit shall include an acknowledgment on the part of the waiving beneficiary that the benefit being waived is an ongoing benefit, which may exceed the total amount of contributions and interest payable from the member’s account as a result of the waiver. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.

SEC. 9.

 Section 23880 of the Education Code is amended to read:

23880.
 (a) A death payment of not less than five thousand dollars ($5,000) shall be paid to the beneficiary, as designated pursuant to Section 23300, upon receipt of proof of death of either of the following:
(1) A retired member.
(2) A member, if the death payment pursuant to Section 23801 would have otherwise been payable or if the conditions specified pursuant to paragraphs (3) and (5) of subdivision (b) of Section 23854 are met, and if the member’s death occurs during one of the following periods:
(A) Within one year commencing with the effective date of reinstatement from service retirement pursuant to Section 24208.
(B) Within six months commencing with the effective date of reinstatement from disability retirement pursuant to Section 24117.
(b) The board may adjust the death payment amount following each actuarial valuation based on changes in the All Urban California Consumer Price Index and adopt as a plan amendment any adjusted amount.
(c) A designated beneficiary may waive the right to the death payment in accordance with the requirements established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.

SEC. 10.

 Section 23881 of the Education Code is amended to read:

23881.
 (a) If upon receipt of proof of death of a retired member who was receiving an unmodified allowance and who retired under this part after June 30, 1972, there is a remaining balance of the member’s accumulated retirement contributions, the balance shall be paid to the member’s beneficiary.
(b) Upon receipt of proof of death of a retired member’s option beneficiary after the beneficiary begins to receive an allowance, the remaining balance of a member’s accumulated retirement contributions, if any, shall be paid to the beneficiary designated by the option beneficiary to receive that payment.
(c) The remaining balance of a retired member’s accumulated retirement contributions shall be the difference between the balance of the accumulated retirement contributions on the effective date of the member’s retirement and the total retirement allowance paid or payable to the retired member on the date of the member’s death. If the retired member predeceased the option beneficiary, the remaining balance of the retired member’s accumulated retirement contributions shall be the difference between the balance of the accumulated retirement contributions on the effective date of the member’s retirement and the total retirement allowance paid or payable to the retired member and the option beneficiary on the date of the option beneficiary’s death.
(d) Payments pursuant to this section shall include interest on the remaining balance of accumulated retirement contributions calculated from the date the last allowance payment was made to the date the remaining balance of accumulated retirement contributions is paid.
(e) A designated beneficiary may waive the right to the death payment in accordance with the requirements established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.

SEC. 11.

 Section 24106 of the Education Code is amended to read:

24106.
 Upon retirement for disability pursuant to this chapter, a member under this part shall receive a retirement allowance that shall consist of all of the following:
(a) An annual allowance equal to 50 percent of final compensation payable in monthly installments.
(b) An additional 10 percent of final compensation for each dependent child, up to a maximum of 40 percent of final compensation. If there are more than four dependent children, they shall share equally in the maximum allowance of 40 percent. A dependent child may waive his or her right to his or her portion of the allowance in accordance with procedures established by the system. The waiver shall be submitted on a properly executed form prescribed by the system. All waiver forms for an ongoing benefit shall include an acknowledgment on the part of the waiving beneficiary that the benefit being waived is an ongoing benefit, which may exceed the total amount of contributions and interest payable from the member’s account as a result of the waiver. The filing of a waiver by a beneficiary constitutes a complete and immediate discharge of all obligations of the board, the system, or the plan to or on behalf of the beneficiary.
(c) An annuity that shall be the actuarial equivalent of the accumulated annuity deposit contributions standing to the credit of the member’s account on the effective date of the disability retirement.

SEC. 12.

 Section 24208 of the Education Code is amended to read:

24208.
 (a) A member retired for service under this part may terminate the retirement allowance payable under this part and applicable to his or her credited service upon written request to the system effective upon a date designated by the member, subject to the following conditions:
(1) The request for termination of the retirement allowance is filed on a form provided by the system, and the form is executed no earlier than six months before the effective date of the termination.
(2) The effective date of the termination of the retirement allowance is no earlier than the first day of the month in which the request for termination is received in the system’s headquarters office or no earlier than one day after the benefit effective date of the most recent retirement, whichever is later.
(b) A member who files a request for termination of the retirement allowance may cancel or change the termination upon written request to the system. The request for cancellation or change must be on a form provided by the system and shall be received in the system’s headquarters office no later than the last day of the month in which the request for termination to be canceled or changed is effective.
(c) A member whose retirement allowance is terminated pursuant to this section may apply for retirement pursuant to Section 24209 or Section 24209.3, in accordance with Section 24204.
(d) A member whose retirement allowance is terminated pursuant to this section may not file a preretirement election of an option pursuant to Section 24307 within one year of reinstatement that elects either a different option or a different beneficiary or set of beneficiaries, or both, than were in effect at the time the retirement allowance was terminated.
(e) A member whose retirement allowance is terminated pursuant to this section and retires pursuant to Section 24209 with a benefit effective date within one year of reinstatement shall elect the same option and beneficiary or beneficiaries that were in effect at the time the retirement allowance was terminated.

SEC. 13.

 Section 24500 of the Education Code is amended to read:

24500.
 If a disability retirement allowance, disability allowance, family allowance, or survivor benefit allowance is payable under this part due to the injury to or death of a member and the injury or death is the proximate consequence of the act of a third person or entity, other than the member’s employer, the board may recover from that person or entity on behalf of the plan, an amount equal to the actuarial equivalent of benefits the system paid and became obligated to pay under the plan because of the injury to or death of the member less any amounts the system may be obligated to pay under the plan without regard to the actions of the third party. In determining the amount the system may be obligated to pay without regard to the actions of the third party, the system shall base the actuarial equivalent only on creditable compensation and service credit earned by the member prior to the date the disability retirement allowance, disability allowance, family allowance, or survivor benefit allowance becomes payable. This chapter shall be deemed to create a right of subrogation only to amounts the system paid and became obligated to pay as disability retirement allowances, disability allowances, family allowances, or survivor benefit allowances.

SEC. 14.

 Section 24503 of the Education Code is amended to read:

24503.
 The board may compromise claims before or after commencement of suit or entry of judgment for an amount as may be approved by a person duly authorized by the board for that purpose.

SEC. 15.

 Section 24600 of the Education Code is amended to read:

24600.
 (a) A retirement allowance under this part begins to accrue on the effective date of the member’s retirement and ceases on the earlier of the day of the member’s death or the day on which the retirement allowance is terminated for a reason other than the member’s death.
(b) A retirement allowance payable to an option beneficiary under this part begins to accrue on the day following the day of the retired member’s death and ceases on the day of the option beneficiary’s death.
(c) A disability allowance under this part begins to accrue on the effective date of the member’s disability allowance and ceases on the earlier of the day of the member’s death or the day on which the disability allowance is terminated for a reason other than the member’s death.
(d) A family allowance under this part begins to accrue on the day following the day of the member’s death and ceases on the day of the event that terminates eligibility for the allowance.
(e) A survivor benefit allowance payable to a surviving spouse under this part pursuant to Chapter 23 (commencing with Section 23850) begins to accrue on the day the member would have attained normal retirement age or on the day following the day of the member’s death, as elected by the surviving spouse, and ceases on the day of the surviving spouse’s death.
(f) (1) Except as provided in paragraph (2), a child’s portion of an allowance under this part begins to accrue on the effective date of that allowance and ceases on the earlier of either the termination of the child’s eligibility or the termination of the allowance.
(2) A child’s portion of a disability retirement allowance under Chapter 26 (commencing with Section 24100) ceases on the earlier of either:
(A) The termination date of the child’s eligibility.
(B) The termination of the allowance for reasons other than death.
(g) Supplemental payments issued under this part pursuant to Sections 24412 and 24415 to retired members, disabled members, and beneficiaries shall begin to accrue pursuant to Sections 24412 and 24415 and shall cease to accrue as of the termination dates specified in subdivisions (a) to (f), inclusive, of this section.
(h) Notwithstanding any other provision of this part or other law, distributions payable under the plan with respect to the Defined Benefit Program and the Defined Benefit Supplement Program shall be made in accordance with Section 401(a)(9) of the Internal Revenue Code of 1986 and related regulations.
(1) In the case of a refund of contributions, as described in Chapter 18 (commencing with Section 23100) of this part and distribution of an amount equal to the balance of credits in a member’s Defined Benefit Supplement account, as described in Chapter 38 (commencing with Section 25000) of this part, payments shall commence not later than April 1 of the calendar year following the later of (A) the calendar year in which the member attains the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or (B) the calendar year in which the member terminates employment within the meaning of subdivision (i).
(2) In the case of a retirement allowance, as defined in Section 22166, payments shall commence not later than April 1 of the calendar year following the later of (A) the calendar year in which the member attains the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or (B) the calendar year in which the member terminates employment within the meaning of subdivision (i), to continue over the life of the member or the lives of the member and the member’s option beneficiary, or over the life expectancy of the member or the life expectancy of the member and the member’s option beneficiary.
(i) For purposes of subdivision (h), the phrase “terminates employment” means the later of:
(1) The date the member ceases to perform creditable service subject to coverage under this plan.
(2) The date the member ceases employment in a position subject to coverage under another public retirement system in this state if the compensation earnable while a member of the other system may be considered in the determination of final compensation pursuant to Section 22134 or 22134.5.
(3) In the case of a monthly allowance resulting from the death of a member:
(A) If the spouse is the sole beneficiary, payments shall commence not later than December 31 of the later of the calendar year in which the member would have attained the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or the calendar year following the calendar year of the member’s death.
(B) If the spouse is not the sole beneficiary, payments shall commence not later than December 31 of the calendar year following the calendar year of the member’s death.
(4) In the case of a distribution of the member’s accumulated retirement contributions resulting from the death of a member or beneficiary or other lump-sum death benefit that represents the member’s entire interest in the plan, including the death payment, payments shall be completed not later than December 31 of the calendar year of the fifth anniversary of the date of the member’s or beneficiary’s death.

SEC. 16.

 Section 25011 of the Education Code is amended to read:

25011.
 (a) A member or nonmember spouse may elect to receive the retirement benefit as an annuity payable in monthly installments, provided the balance of credits in the member’s or nonmember spouse’s respective Defined Benefit Supplement account on the date the retirement benefit becomes payable equals at least three thousand five hundred dollars ($3,500) after any lump-sum payments have been made from the account.
(b) If the member elects to receive the retirement benefit as an annuity, the member shall elect one of the following forms of payment:
(1) A single life annuity without a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the member if the member elected to receive the retirement benefit in a lump-sum payment. Upon the death of the member, no other benefit shall be payable to the member’s beneficiary under the Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the member if the member elected to receive the retirement benefit in a lump-sum payment. Upon the death of the member, an amount equal to the remaining balance, if any, of credits transferred from the member’s Defined Benefit Supplement account to the Annuitant Reserve shall be returned in a lump-sum payment to the member’s beneficiary.
(3) A 100-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary. Upon the death of the member, the same monthly amount that was payable to the member shall be paid monthly to the member’s surviving annuity beneficiary. However, if the annuity beneficiary predeceases the member, the annuity payable to the member shall be the single life annuity with a cash refund feature that would have been payable had the member elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the member and the member designates a new option beneficiary pursuant to Section 24300, the new option beneficiary shall be the new annuity beneficiary. The effective date shall be six months following the date notification, on a properly executed form, is received by the board, provided both the member and the new annuity beneficiary are then living. The new annuity beneficiary under this paragraph is subject to an actuarial modification of the single life annuity with a cash refund feature and may not result in any additional liability to the fund. The new annuity beneficiary may not be an existing annuity beneficiary.
(4) A 50-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary. Upon the death of the member, one-half of the monthly amount that was payable to the member shall be paid monthly to the member’s surviving annuity beneficiary. However, if the annuity beneficiary predeceases the member, the annuity payable to the member shall be the single life annuity with a cash refund feature that would have been payable had the member elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the member and the member designates a new option beneficiary pursuant to Section 24300, the new option beneficiary shall be the new annuity beneficiary. The effective date shall be six months following the date notification, on a properly executed form, is received by the board, provided both the member and the new annuity beneficiary are then living. The new annuity beneficiary under this paragraph is subject to an actuarial modification of the single life annuity with a cash refund feature and may not result in any additional liability to the fund. The new annuity beneficiary may not be an existing annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity equal to the actuarial equivalent of the balance of credits in the member’s Defined Benefit Supplement account on the date the retirement benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the member, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the member’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the member’s beneficiary pursuant to Section 25022.
(c) If a nonmember spouse elects to receive the retirement benefit as an annuity, the nonmember spouse shall elect the form of payment specified in paragraph (1), (2), or (5) of subdivision (b) and, in those paragraphs, references to a “member” shall apply to the nonmember spouse.
(d) On or after January 1, 2007, a member may not make a new election of a joint and survivor annuity described in subdivision (b), except as provided by subdivision (e) of Section 25011.1.
(e) Any member with a retirement effective on or after January 1, 2007, shall elect an annuity from the annuities described in Section 25011.1.

SEC. 17.

 Section 25011.1 of the Education Code is amended to read:

25011.1.
 (a) A member may elect to receive the retirement benefit as an annuity payable in monthly installments, provided the balance of credits in the member’s Defined Benefit Supplement account on the date the retirement benefit becomes payable equals at least three thousand five hundred dollars ($3,500) after any lump-sum payments have been made from the account. If the member elects to receive the retirement benefit as an annuity, the member shall elect one of the following forms of payments:
(1) Member only annuity. This is a single life annuity with a cash refund feature that is the actuarial equivalent of the amount that would be payable to the retired member if the member elected to receive the retirement benefit in a lump-sum payment. Upon the death of the member, an amount equal to the remaining balance of credits, if any, transferred from the member’s Defined Benefit Supplement account to the annuitant reserve shall be returned in a lump-sum payment to the beneficiary of the member.
(2) One hundred percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary or beneficiaries. Upon the death of the member, 100 percent of the monthly amount that was payable to the member shall be paid monthly to the surviving annuity beneficiary or beneficiaries of the member.
(3) Seventy-five percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary. Pursuant to Section 401(a)(9) of the Internal Revenue Code, the member shall not elect this annuity if a beneficiary is more than exactly 19 years younger than the member, unless the beneficiary is the member’s spouse or former spouse and the election is pursuant to a determination of community property rights. Upon the death of the member, 75 percent of the monthly amount that was payable to the member shall be paid monthly to the surviving annuity beneficiary or beneficiaries of the member.
(4) Fifty percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary or beneficiaries. Upon the death of the member, 50 percent of the monthly amount that was payable to the member shall be paid monthly to the surviving annuity beneficiary or beneficiaries of the member.
(5) A period certain annuity. This form of payment is an annuity equal to the actuarial equivalent of the balance of credits in the member’s Defined Benefit Supplement account on the date the retirement benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the member, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the member’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the member’s beneficiary pursuant to Section 25022.
(b) If an annuity beneficiary designated pursuant to paragraph (2), (3), or (4) of subdivision (a) predeceases the member, the annuity shall be paid to the member as the member only annuity that would have been payable had the member elected that form of payment at the commencement of the benefit. That member only annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the member and the member designates a new option beneficiary pursuant to Section 24300.1, the new option beneficiary shall be the new annuity beneficiary. The effective date shall be six months following the date notification is received by the board, provided both the member and the new annuity beneficiary are then living. Notice to the board of the death of the annuity beneficiary shall be on a properly executed form provided by the system. The new annuity beneficiary under this paragraph is subject to an actuarial modification of the member only annuity and may not result in any additional liability to the fund. The new annuity beneficiary may not be an existing annuity beneficiary.
(c) If a nonmember spouse elects to receive the retirement benefit as an annuity, the nonmember spouse shall elect the form of payment specified in paragraph (1) or (5) of subdivision (a) and, in those paragraphs, references to a “member” shall apply to the nonmember spouse.
(d) Notwithstanding Section 297 or 299.2 of the Family Code, a spouse as described in paragraph (3) or (5) of subdivision (a) does not include the domestic partner of the member, pursuant to Section 7 of Title 1 of the United States Code.
(e) If there is a determination of community property rights as described in Chapter 12 (commencing with Section 22650) of this part on or before December 31, 2006, the member may elect the annuity that is required by the judgment or court order. Nothing in this part shall permit the member to change the annuity to the detriment of the community property interest of the nonmember spouse.

SEC. 18.

 Section 25018 of the Education Code is amended to read:

25018.
 (a) A member may elect to receive the disability benefit as an annuity, payable in monthly installments, provided the balance of credits in the member’s Defined Benefit Supplement account on the date the disability benefit becomes payable equals at least three thousand five hundred dollars ($3,500) after any lump-sum payment has been made from this account.
(b) If the member elects to receive the disability benefit as an annuity, the member shall elect one of the following forms of payment:
(1) A single life annuity without a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the member if the member elected to receive the disability benefit in a lump-sum payment. Upon the death of the member, no other benefit shall be payable to the member’s beneficiary under the Defined Benefit Supplement Program.
(2) A single life annuity with a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the member if the member elected to receive the disability benefit in a lump-sum payment. Upon the death of the member, an amount equal to the remaining balance of credits, if any, transferred from the member’s Defined Benefit Supplement account to the Annuitant Reserve shall be returned in a lump-sum payment to the member’s beneficiary.
(3) For a member receiving an allowance pursuant to Chapter 26 (commencing with Section 24100), a 100-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary. Upon the death of the member, the same monthly amount that was payable to the member shall be paid monthly to the member’s surviving annuity beneficiary. However, if the annuity beneficiary predeceases the member, the annuity payable to the member shall be the single life annuity with a cash refund feature that would have been payable had the member elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the member and the member designates a new option beneficiary pursuant to Section 24300, the new option beneficiary shall be the new annuity beneficiary. The effective date shall be six months following the date notification, on a properly executed form, is received by the board, provided both the member and the new annuity beneficiary are then living. The new annuity beneficiary under this paragraph shall be subject to an actuarial modification of the single life annuity with a cash refund feature and shall not result in any additional liability to the fund. The new annuity beneficiary shall not be an existing annuity beneficiary.
(4) For a member receiving an allowance pursuant to Chapter 26 (commencing with Section 24100), a 50-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary. Upon the death of the member, one-half of the monthly amount that was payable to the member shall be paid monthly to the member’s surviving annuity beneficiary. However, if the annuity beneficiary predeceases the member, the annuity payable to the member shall be the single life annuity with a cash refund feature that would have been payable had the member elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the member and the member designates a new option beneficiary pursuant to Section 24300, the new option beneficiary shall be the new annuity beneficiary. The effective date shall be six months following the date notification, on a properly executed form, is received by the board, provided both the member and the new annuity beneficiary are then living. The new annuity beneficiary under this paragraph shall be subject to an actuarial modification of the single life annuity with a cash refund feature and shall not result in any additional liability to the fund. The new annuity beneficiary shall not be an existing annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity equal to the actuarial equivalent of the balance of credits in the member’s Defined Benefit Supplement account on the date the disability benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the member, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the member’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the member’s beneficiary pursuant to Section 25022.
(c) Except as described in subdivision (d) of Section 25018.1, on or after January 1, 2007, a member may not make a new election for an annuity described in subdivision (b).
(d) On or after January 1, 2007, a member may not make a new election of a joint and survivor annuity described in subdivision (b), except as provided by subdivision (e) of Section 25018.1.
(e) Any member with a disability benefit effective on or after January 1, 2007, shall elect an annuity from the annuities described in Section 25018.1.

SEC. 19.

 Section 25018.1 of the Education Code is amended to read:

25018.1.
 (a) A member may elect to receive the disability benefit as an annuity, payable in monthly installments, provided the balance of credits in the member’s Defined Benefit Supplement account on the date the disability benefit becomes payable equals at least three thousand five hundred dollars ($3,500) after any lump-sum payment has been made from this account. If the member elects to receive the disability benefit as an annuity, the member shall elect one of the following forms of payment:
(1) Member only annuity. This is a single life annuity with a cash refund feature that is the actuarial equivalent of the amount that would be payable to the member if the member elected to receive the disability benefit in a lump-sum payment. Upon the death of the member, an amount equal to the remaining balance of credits, if any, transferred from the member’s Defined Benefit Supplement account to the annuitant reserve shall be returned in a lump-sum payment to the member’s beneficiary.
(2) One hundred percent beneficiary annuity. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary or beneficiaries. Upon the death of the member, 100 percent of the monthly amount that was payable to the member shall be paid monthly to the member’s surviving annuity beneficiary or beneficiaries.
(3) Seventy-five percent beneficiary annuity. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary or beneficiaries. Pursuant to Section 401(a)(9) of the Internal Revenue Code, the member shall not elect this annuity if a beneficiary is more than exactly 19 years younger than the member unless the beneficiary is the member’s spouse or former spouse and the election is pursuant to a determination of community property rights. Upon the death of the member, 75 percent of the monthly amount that was payable to the member shall be paid monthly to the surviving annuity beneficiary or beneficiaries of the member.
(4) Fifty percent beneficiary annuity. This form of payment is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the member and the member’s annuity beneficiary or beneficiaries. Upon the death of the member, one-half of the monthly amount that was payable to the member shall be paid monthly to the member’s surviving annuity beneficiary or beneficiaries.
(5) A period certain annuity. This form of payment is an annuity equal to the actuarial equivalent of the balance of credits in the member’s Defined Benefit Supplement account on the date the disability benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the member, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the member’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the member’s beneficiary pursuant to Section 25022.
(b) If an annuity beneficiary designated pursuant to paragraph (2), (3), or (4) of subdivision (a) predeceases the member, the annuity shall be paid to the member as the member only annuity that would have been payable had the member elected that form of payment at the commencement of the benefit. That member only annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the member and the member designates a new option beneficiary pursuant to Section 24300.1, the new option beneficiary shall be a new annuity beneficiary. The effective date shall be six months following the date notification is received by the board, provided both the member and the new annuity beneficiary are then living. Notice to the board of the death of the annuity beneficiary shall be on a properly executed form provided by the system. The new annuity beneficiary under this paragraph is subject to an actuarial modification of the member only annuity and may not result in any additional liability to the fund. The new annuity beneficiary may not be an existing annuity beneficiary.
(c) Notwithstanding Section 297 or 299.2 of the Family Code, a spouse as described in paragraph (3) or (5) of subdivision (a) does not include the domestic partner of the member, pursuant to Section 7 of Title 1 of the United States Code.
(d) If there is a determination of community property rights as described in Chapter 12 (commencing with Section 22650) of this part on or before December 31, 2006, the member may elect the annuity that is required by the judgment or court order. Nothing in this part shall permit the member to change the annuity to the detriment of the community property interest of the nonmember spouse.

SEC. 20.

 Section 25022.5 of the Education Code is amended to read:

25022.5.
 (a) If the death of a nonmember spouse occurs while the nonmember spouse is receiving an annuity under the Defined Benefit Supplement Program, the final benefit shall be payable in accordance with the terms of the annuity elected by the nonmember spouse.
(b) If the nonmember spouse was receiving a single life annuity without a cash refund feature, a final benefit is not payable.
(c) If the nonmember spouse was receiving a single life annuity with a cash refund feature, the final benefit shall be payable in a lump sum to the nonmember spouse’s beneficiary.
(d) If the nonmember spouse was receiving a period certain annuity, the remaining balance of payments shall be paid to the payee designated by the nonmember spouse pursuant to Section 22660.
(1) If the beneficiary is a person, the remaining period certain annuity payments shall be made over the amount of time remaining in the period originally elected by the deceased member and shall be made in payments equal to the amount of the annuity payments previously received by the deceased member.
(2) If the beneficiary is not a person, the remaining balance of period certain annuity payments shall be made in a lump-sum payment equal to the present value of the balance of payments due over the time remaining in the period originally elected by the deceased member.

SEC. 21.

 Section 26004 of the Education Code is amended to read:

26004.
 Notwithstanding any other provision of law:
(a) The benefits payable to any participant or beneficiary under this part shall be subject to the limitations imposed by Section 415 of Title 26 of the United States Code.
(b) The amount of compensation that is taken into account in computing benefits under this part for a plan year shall not exceed the annual compensation limit applicable to that plan year in accordance with Section 401(a)(17) of Title 26 of the United States Code as that section read on the effective date of this section and as that section may be amended after that date. The determination of compensation for a 12-month period shall be subject to the annual compensation limit in effect for the calendar year in which the 12-month period begins. In a determination of average compensation over more than one 12-month period, the amount of compensation taken into account for each 12-month period shall be subject to the respective annual compensation limit applicable to that period.
(c) Distributions from the plan under this part shall be made in accordance with Section 401(a)(9) of Title 26 of the United States Code, including the incidental death benefit requirements of Section 401(a)(9)(G) and the regulations thereunder. The required beginning date of benefit payments that represent the entire interest of the participant shall be as follows:
(1) In the case of a lump-sum distribution of a retirement benefit, disability benefit, or termination benefit, the lump-sum payment shall be made not later than April 1 of the calendar year following the later of (A) the calendar year in which the participant attains the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or (B) the calendar year in which the participant terminates all employment subject to coverage by the plan.
(2) In the case of a retirement benefit or disability benefit that is to be paid in the form of an annuity, payment of the annuity shall begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the participant attains the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or (B) the calendar year in which the participant terminates employment in all positions subject to coverage by the plan, with the annuity to continue over the life of the participant or the life of the participant and the participant’s option beneficiary, or over a period not to exceed the life expectancy of the participant or the life expectancy of the participant and the participant’s option beneficiary.
(3) In the case of a death benefit, distributions shall commence as follows:
(A) The normal form of the benefit or other lump-sum distribution shall be paid not later than December 31 of the calendar year in which the fifth anniversary of the participant’s or beneficiary’s date of death occurs.
(B) Annuity payments shall commence as follows:
(i) If the spouse is the sole beneficiary, not later than December 31 of the later of the calendar year in which the participant would have attained the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or the calendar year following the calendar year of the participant’s death.
(ii) If the spouse is not the sole beneficiary, not later than December 31 of the calendar year following the calendar year of the participant’s death.
(d) If a person becomes entitled to a distribution from the plan under this part that constitutes an eligible rollover distribution within the meaning of Section 401(a)(31) of Title 26 of the United States Code, the person may elect under terms and conditions established by the board to have the distribution or a portion thereof paid directly to a plan that constitutes an eligible retirement plan within the meaning of Section 401(a)(31), as specified by that person. Upon the exercise of the election by a person with respect to a distribution or a portion thereof, the distribution from the plan of the amount so designated, once distributable under the terms of the plan, shall be made in the form of a direct rollover to the eligible retirement plan so specified.
(e) The amount of any benefit from the plan under this part that is determined on the basis of actuarial assumptions shall be based on actuarial assumptions adopted by the board pursuant to Section 26213 as a plan amendment with respect to the Cash Balance Benefit Program and those assumptions shall preclude employer discretion and comply with Section 401(a)(25) of Title 26 of the United States Code.

SEC. 22.

 Section 26215 of the Education Code is repealed.

SEC. 23.

 Section 26807 of the Education Code is amended to read:

26807.
 (a) Upon application for a retirement benefit under this part, the participant may elect to receive the retirement benefit in the form of an annuity, provided the sum of the employee account and employer account equals or exceeds three thousand five hundred dollars ($3,500).
(b) If the participant elects to receive the retirement benefit as an annuity, the participant shall elect one of the following forms of payment:
(1) A single life annuity without a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the retirement benefit in a lump-sum payment. This benefit shall be payable for the life of the participant. Upon the death of the participant, no other benefit shall be payable to any beneficiary under this part.
(2) A single life annuity with a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the retirement benefit in a lump-sum payment. This benefit shall be payable for the life of the participant and any balance remaining upon the death of the participant shall be payable in a lump sum to the participant’s beneficiary.
(3) A 100-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the retirement benefit in a lump-sum payment, modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, the monthly amount that was payable to the participant shall be paid monthly to the participant’s annuity beneficiary. However, if the annuity beneficiary predeceases the participant, the annuity payable to the participant shall be the single life annuity with a cash refund feature that would have been payable had the participant elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the participant, the participant may designate a new annuity beneficiary. The effective date of the new designation shall be six months following the date notification, on a properly executed form, is received by the board, provided both the participant and the new designated annuity beneficiary are then living. The designation of the new annuity beneficiary under this paragraph shall be subject to an actuarial modification of the single life annuity with a cash refund feature and shall not result in any additional liability to the fund. The new annuity beneficiary shall not be an existing annuity beneficiary.
(4) A 50-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the retirement benefit in a lump-sum payment, modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, one-half of the monthly amount that was payable to the participant shall be paid monthly to the participant’s annuity beneficiary. However, if the annuity beneficiary predeceases the participant, the annuity payable to the participant shall be the single life annuity with a cash refund feature that would have been payable had the participant elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the participant, the participant may designate a new annuity beneficiary. The effective date of the new designation shall be six months following the date notification, on a properly executed form, is received by the board, provided both the participant and the new designated annuity beneficiary are then living. The designation of the new annuity beneficiary under this paragraph shall be subject to an actuarial modification of the single life annuity with a cash refund feature and shall not result in any additional liability to the fund. The new annuity beneficiary shall not be an existing annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity equal to the actuarial equivalent of the sum of the balance of the employee account and the employer account on the date the retirement benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the participant, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the participant’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the participant’s beneficiary pursuant to Section 27007.
(c) Except as described in subdivision (e) of Section 26807.5, on or after January 1, 2007, a participant may not make a new election of an annuity described in subdivision (b).
(d) Any participant with a retirement effective on or after January 1, 2007, shall elect an annuity from the annuities described in Section 26807.5.

SEC. 24.

 Section 26807.5 of the Education Code is amended to read:

26807.5.
 (a) Upon application for a retirement benefit under this part, the participant may elect to receive the retirement benefit as an annuity payable in monthly installments, provided the sum of the employee account and employer account equals or exceeds three thousand five hundred dollars ($3,500). If the participant elects to receive the retirement benefit as an annuity, the participant shall elect one of the following forms of payment:
(1) Participant only annuity. This is a single life annuity with a cash refund feature that is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the retirement benefit in a lump-sum payment. Upon the death of the participant, an amount equal to the remaining balance of the participant’s contributions and interest shall be paid in a lump-sum to the participant’s beneficiary.
(2) One hundred percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, 100 percent of the monthly amount that was payable to the participant shall be paid monthly to the participant’s surviving annuity beneficiary.
(3) Seventy-five percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Pursuant to Section 401(a)(9) of the Internal Revenue Code, unless the annuity beneficiary is the participant’s spouse or former spouse who has been awarded a community property interest in the participant’s benefits under this part, the participant may not designate an annuity beneficiary under this annuity who is more than exactly 19 years younger than the participant. Upon the death of the participant, 75 percent of the monthly amount that was payable to the participant shall be paid monthly to the participant’s surviving annuity beneficiary.
(4) Fifty percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, 50 percent of the monthly amount that was payable to the participant shall be paid monthly to the participant’s surviving annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity that is equal to the actuarial equivalent of the balance of credits in the participant’s Cash Balance Benefit account on the date the retirement benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the participant, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the participant’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the participant’s beneficiary pursuant to Section 27007.
(b) If an annuity beneficiary designated pursuant to paragraph (2), (3), or (4) of subdivision (a) predeceases the participant, the annuity shall be paid to the participant as the participant only annuity described in paragraph (1) of subdivision (a) that would have been payable had the participant elected that form of payment at the commencement of the benefit. That participant only annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the participant, the participant may designate a new annuity beneficiary. The effective date of the new designation shall be six months following the date notification is received by the board, provided both the participant and the new designated annuity beneficiary are then living. Notice to the board of the death of the annuity beneficiary shall be on a properly executed form provided by the system. The designation of the new annuity beneficiary under this paragraph is subject to an actuarial modification of the participant only annuity and may not result in any additional liability to the fund.
(c) If a nonparticipant spouse elects to receive the retirement benefit as an annuity, the nonparticipant spouse shall elect the form of payment specified in paragraph (1) or (5) of subdivision (a) and, in those paragraphs, references to a “participant” shall apply to the nonparticipant spouse.
(d) Notwithstanding Section 297 or 299.2 of the Family Code, a spouse as described in paragraph (3) of subdivision (a) does not include the domestic partner of the participant, pursuant to Section 7 of Title 1 of the United States Code.
(e) If there is a determination of community property rights as described in Chapter 15 (commencing with Section 27400) of this part on or before December 31, 2006, the participant may elect the annuity that is required by the judgment or court order. Nothing in this part shall permit the participant to change the annuity to the detriment of the community property interest of the nonparticipant spouse.

SEC. 25.

 Section 26906 of the Education Code is amended to read:

26906.
 (a) Upon application for a disability benefit under this part, the participant may elect to receive the disability benefit in the form of an annuity provided the sum of the employee account and employer account equals or exceeds three thousand five hundred dollars ($3,500).
(b) If the participant elects to receive the disability benefit as an annuity, the participant shall elect one of the following forms of payment:
(1) A single life annuity without a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the disability benefit in a lump-sum payment. This benefit shall be payable for the life of the participant. Upon the death of the participant, no other benefit shall be payable to any beneficiary under this part.
(2) A single life annuity with a cash refund feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the disability benefit in a lump-sum payment. This benefit shall be payable for the life of the participant and any balance remaining upon the death of the participant shall be payable in a lump sum to the participant’s beneficiary.
(3) A 100-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the disability benefit in a lump-sum payment, modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, the monthly amount that was payable to the participant shall be paid monthly to the participant’s annuity beneficiary. However, if the annuity beneficiary predeceases the participant, the annuity payable to the participant shall be the single life annuity with a cash refund feature that would have been payable had the participant elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the participant, the participant may designate a new annuity beneficiary. The effective date of the new designation shall be six months following the date notification, on a properly executed form, is received by the board, provided both the participant and the new designated annuity beneficiary are then living. The designation of the new annuity beneficiary under this paragraph shall be subject to an actuarial modification of the single life annuity with a cash refund feature and shall not result in any additional liability to the fund. The new annuity beneficiary shall not be an existing annuity beneficiary.
(4) A 50-percent joint and survivor annuity with a “pop-up” feature. This form of payment is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the disability benefit in a lump-sum payment, modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, one-half of the monthly amount that was payable to the participant shall be paid monthly to the participant’s annuity beneficiary. However, if the annuity beneficiary predeceases the participant, the annuity payable to the participant shall be the single life annuity with a cash refund feature that would have been payable had the participant elected that form of payment at the commencement of the benefit. That single life annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the participant, the participant may designate a new annuity beneficiary. The effective date of the new designation shall be six months following the date notification, on a properly executed form, is received by the board, provided both the participant and the new designated annuity beneficiary are then living. The designation of the new annuity beneficiary under this paragraph shall be subject to an actuarial modification of the single life annuity with a cash refund feature and shall not result in any additional liability to the fund. The new annuity beneficiary shall not be an existing annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity equal to the actuarial equivalent of the sum of balance of the employee account and the employer account on the date the disability benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the participant, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the participant’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the participant’s beneficiary pursuant to Section 27007.
(c) Except as described in subdivision (c) of Section 26906.5, on or after January 1, 2007, a participant may not make a new election of an annuity described in subdivision (b).

SEC. 26.

 Section 26906.5 of the Education Code is amended to read:

26906.5.
 (a) Upon application for a disability benefit under this part, the participant may elect to receive the disabled benefit in the form of an annuity provided the sum of the employee account and employer account equals or exceeds three thousand five hundred dollars ($3,500). If the participant elects to receive the disability benefit as an annuity, the participant shall elect one of the following forms of payment:
(1) Participant only annuity. This is a single life annuity with a cash refund feature that is the actuarial equivalent of the amount that would be payable to the participant if the participant elected to receive the disability benefit in a lump-sum payment. Upon the death of the participant, an amount equal to the remaining balance of the participant’s contributions and interest shall be paid in a lump sum to the participant’s beneficiary.
(2) One hundred percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, 100 percent of the monthly amount that was payable to the participant shall be paid monthly to the participant’s surviving annuity beneficiary.
(3) Seventy-five percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Pursuant to Section 401(a)(9) of the Internal Revenue Code, unless the annuity beneficiary is the participant’s spouse or former spouse who has been awarded a community property interest in the participant’s benefits under this part, the participant may not designate an annuity beneficiary under this annuity who is more than exactly 19 years younger than the participant. Upon the death of the participant, 75 percent of the monthly amount that was payable to the participant shall be paid monthly to the participant’s surviving annuity beneficiary.
(4) Fifty percent beneficiary annuity. This is a joint and survivor annuity that is the actuarial equivalent of the lump-sum payment modified to be payable over the combined lives of the participant and the participant’s annuity beneficiary. Upon the death of the participant, 50 percent of the monthly amount that was payable to the participant shall be paid monthly to the participant’s surviving annuity beneficiary.
(5) A period certain annuity. This form of payment is an annuity that is equal to the actuarial equivalent of the balance of credits in the participant’s Cash Balance Benefit account on the date the disability benefit becomes payable. The annuity shall be payable in whole year increments over a period of years specified by the participant, from a minimum of three years to a maximum of 10 years subject to life expectancy tables promulgated pursuant to Section 401(a)(9) of the Internal Revenue Code. If the participant’s death occurs prior to the end of the period certain, the remaining balance of payments shall be paid to the participant’s beneficiary pursuant to Section 27007.
(b) If an annuity beneficiary designated pursuant to paragraph (2), (3), or (4) of subdivision (a) predeceases the participant, the annuity shall be paid to the participant as the participant only annuity described in paragraph (1) of subdivision (a) that would have been payable had the participant elected that form of payment at the commencement of the benefit. That participant only annuity shall be payable as of the day following the date of the annuity beneficiary’s death upon receipt by the system of proof of the annuity beneficiary’s death. If the annuity beneficiary predeceases the participant, the participant may designate a new annuity beneficiary. The effective date of the new designation shall be six months following the date notification is received by the board, provided both the participant and the new designated annuity beneficiary are then living. Notice to the board of the death of the annuity beneficiary shall be on a properly executed form provided by the system. The designation of the new annuity beneficiary under this paragraph is subject to an actuarial modification of the participant only annuity and may not result in any additional liability to the fund.
(c) Notwithstanding Section 297 or 299.2 of the Family Code, a spouse as described in paragraph (3) of subdivision (a) does not include the domestic partner of the participant pursuant to Section 7 of Title 1 of the United States Code.
(d) If there is a determination of community property rights as described in Chapter 15 (commencing with Section 27400) of this part on or before December 31, 2006, the participant may elect the annuity that is required by the judgment or court order. Nothing in this part shall permit the participant to change the annuity to the detriment of the community property interest of the nonparticipant spouse.

SEC. 27.

 Section 27001 of the Education Code is amended to read:

27001.
 Notwithstanding Chapter 3 (commencing with Section 13100) of Part 1 of Division 8 of the Probate Code or any other provision of law to the contrary, the death benefit payable under the Cash Balance Benefit Program may be requested by the beneficiary and paid by the system as soon as practicable after the system receives proof of the participant’s death.

SEC. 28.

 Section 27007 of the Education Code is amended to read:

27007.
 (a) If the participant died while receiving an annuity under this part, the death benefit shall be payable in accordance with the terms of the annuity elected by the participant.
(b) Upon the death of a participant who elected a single life annuity with a cash refund feature under this part, any balance remaining in the participant’s employee account and employer account shall be payable in a lump sum to the beneficiary.
(c) Upon the death of a participant who elected a single life annuity without a cash refund feature under this part, no death benefit shall be payable.
(d) Upon the death of a participant who elected a joint and survivor annuity under this part, the annuity shall continue for life to the surviving beneficiary under the joint and survivor option. If the beneficiary under the joint and survivor option has predeceased the participant, no death benefit shall be payable.
(e) Upon the death of a participant who elected a period certain annuity under this part prior to the completion of annuity payments due the participant, the remaining balance of payments shall be paid to the beneficiary designated by the participant pursuant to Section 27100.
(1) If the beneficiary is a person, the remaining period certain annuity payments shall be made over the amount of time remaining in the period originally elected by the deceased member and shall be made in payments equal to the amount of the annuity payments previously received by the deceased member.
(2) If the beneficiary is not a person, the remaining balance of period certain annuity payments shall be made in a lump-sum payment equal to the present value of the balance of payments due over the time remaining in the period originally elected by the deceased member.

SEC. 29.

 Section 44922 of the Education Code is amended to read:

44922.
 Notwithstanding any other provision, the governing board of a school district or a county superintendent of schools may establish regulations which allow their certificated employees to reduce their workload from full-time to part-time duties.
The regulations shall include, but shall not be limited to, the following, if the employees wish to reduce their workload and maintain retirement benefits pursuant to Section 22713 of this code or Section 20900 of the Government Code:
(a) For employees subject to coverage under the Defined Benefit Program under the State Teachers’ Retirement Plan, the regulations shall include all requirements for participation in the reduced workload program pursuant to Section 22713.
(b) For employees subject to coverage under the Public Employees’ Retirement System:
(1) The employee shall have reached the age of 55 years of age prior to reduction in workload.
(2) The employee shall have been employed full time in a position requiring certification for at least 10 years of which the immediately preceding five years were full-time employment.
(3) During the period immediately preceding a request for a reduction in workload, the employee shall have been employed full time in a position requiring certification for a total of at least five years without a break in service. For purposes of this subdivision, sabbaticals and other approved leaves of absence shall not constitute a break in service.
(4) The option of part-time employment shall be exercised at the request of the employee and can be revoked only with the mutual consent of the employer and the employee.
(5) The minimum part-time employment shall be the equivalent of one-half of the number of days of service required by the employee’s contract of employment during his or her final year of service in a full-time position.
(6) This option is limited in prekindergarten through grade 12 to certificated employees who do not hold positions with salaries above that of a school principal.
(7) The period of this part-time employment shall include a period of time, as specified in the regulations, which shall be up to and include five years.
(8) The period of part-time employment shall not extend beyond the end of the school year during which the employee reaches his or her 70th birthday.
(c) (1) The employee shall be paid a salary that is the pro rata share of the salary he or she would be earning had he or she not elected to exercise the option of part-time employment but shall retain all other rights and benefits for which he or she makes the payments that would be required if he or she remained in full-time employment.
(2) The employee shall receive health benefits as provided in Section 53201 of the Government Code in the same manner as a full-time employee.

SEC. 30.

 Section 87483 of the Education Code is amended to read:

87483.
 Notwithstanding any other provision, the governing board of a community college district may establish regulations that allow academic employees to reduce their workload from full-time to part-time duties. The regulations shall include, but shall not be limited to, the following if the employees wish to reduce their workload and maintain retirement benefits pursuant to Section 22713 of this code or Section 20900 of the Government Code:
(a) For employees subject to coverage under the Defined Benefit Program under the State Teachers’ Retirement Plan, the regulations shall include all requirements for participation in the reduced workload program pursuant to Section 22713.
(b) For employees subject to coverage under the Public Employees’ Retirement System:
(1) The employee shall have reached the age of 55 prior to reduction in workload.
(2) The employee shall have been employed full time in an academic position or a position requiring certification qualifications, or both, for at least 10 years of which the immediately preceding five years were full-time employment.
(3) During the period immediately preceding a request for a reduction in workload, the employee shall have been employed full time in an academic position or a position requiring certification qualifications, or both, for a total of at least five years without a break in service. For purposes of this subdivision, sabbaticals and other approved leaves of absence shall not constitute a break in service. Time spent on a sabbatical or other approved leave of absence shall not be used in computing the five-year full-time service requirement prescribed by this subdivision.
(4) The option of part-time employment shall be exercised at the request of the employee and can be revoked only with the mutual consent of the employer and the employee.
(5) The minimum part-time employment shall be the equivalent of one-half of the number of days of service required by the employee’s contract of employment during his or her final year of service in a full-time position.
(6) The period of this part-time employment shall not exceed five years.
(7) The period of part-time employment shall not extend beyond the end of the college year during which the employee reaches his or her 70th birthday.
(c) (1) The employee shall be paid a salary that is the pro rata share of the salary he or she would be earning had he or she not elected to exercise the option of part-time employment but shall retain all other rights and benefits for which he or she makes the payments that would be required if he or she remained in full-time employment.
(2) The employee shall receive health benefits as provided in Section 53201 of the Government Code in the same manner as a full-time employee.