POST-RETIREMENT CHANGES IN THE FORM OF RETIREMENT ALLOWANCE OR BENEFICIARY DESIGNATION

RETIREMENT ‑- PENSIONS ‑- PUBLIC EMPLOYEES RETIREMENT SYSTEM ‑- POST-RETIREMENT CHANGES IN THE FORM OF RETIREMENT ALLOWANCE OR BENEFICIARY DESIGNATION

In the event that a member of the public employees retirement system, upon retirement, selects a particular form of retirement allowance as provided for in RCW 41.40.185 or RCW 41.40.190, the member may not thereafter (during his or her retirement) revoke the selection made at the time of retirement and either choose a different form of retirement allowance or change of beneficiary designation.

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                                                                October 17, 1977

Honorable A. L. "Slim" Rasmussen
State Senator
5415 A Street
Tacoma, Washington 98408                                                                                                               Cite as:  AGLO 1977 No. 41

Dear Sir:

            This is written in response to your recent request for an opinion of this office on a question which we paraphrase as follows:

            In the event that a member of the public employees retirement system, upon retirement, selects a particular form of retirement allowance as provided for in RCW 41.40.185 or RCW 41.40.190, may the member thereafter (during his or her retirement) revoke the selection made at the time of retirement and either choose a different form of retirement allowance or change a beneficiary designation?

            We answer the foregoing question in the negative.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            RCW 41.40.185 and RCW 41.40.190 both deal with the service retirement allowances which are payable to members of the public employees retirement system (PERS) who have served for a sufficient period of time to qualify for retirement.  RCW 41.40.185, in general, applies to all such members of the retirement system while RCW 41.40.190 applies to those employed on or before April 25, 1973 who elect, instead, to take their retirement benefits thereunder.  While there are obviously various differences between the two statutes insofar as the basic computation of service retirement allowances is concerned they have, however, one feature in common.  Specifically, both statutes contain a so-called "optional" retirement allowance feature under which retiring members may select between several different forms of allowances.  First to be noted in this regard is RCW 41.40.185(5) which so provides as follows:

            "(5) Upon making application for a service retirement allowance under RCW 41.40.180, a member who is eligible therefor shall make an election as to the manner in which such service retirement shall be paid from among the following designated options, calculated so as to be actuarially equivalent to each other:

            "(a) Standard Allowance.  A member selecting this option shall receive a retirement allowance, which shall be computed as provided in subsections (1), (2) and (3) of this section.  The retirement allowance shall be payable throughout his life.  However, if he dies before the total of the retirement allowance paid to him equals the amount of his accumulated contributions at the time of retirement, then the balance shall be paid to such person or persons having an insurable interest in his life, as he shall have nominated by written designation duly executed and filed with the retirement board, or if there be no such designated person or persons, still living at the time of his death, then to his surviving spouse, or if there be neither such designated person or persons still living at the time of his death nor a surviving spouse, then to his legal representative.

             [[Orig. Op. Page 3]]

            "(b) Option II.  A member who selects this option shall receive a reduced retirement allowance which upon his death shall be continued throughout the life of and paid to such person, having an insurable interest in his life, as he shall have nominated by written designation duly executed and filed with the retirement board at the time of his retirement.

            "(c) Option III.  A member who selects this option shall receive a reduced retirement allowance and upon his death, one‑half of his reduced retirement allowance shall be continued throughout the life of and paid to such person, having an insurable interest in his life, as he shall have nominated by written designation duly executed and filed with the retirement board at the time of his retirement."

            Similarly, RCW 41.40.190(6) provides that:

            "(6) Upon making application for a service retirement allowance under RCW 41.40.180, a member who is eligible therefor shall make an election as to the manner in which such service retirement shall be paid from among the following designated options, calculated so as to be actuarially equivalent to each other:

            "Option IA.  A member electing this option shall receive a retirement allowance payable throughout his life only with termination at death, which shall be computed as provided for in subsections (1) through (4) or (5) of this section.

            "Option I. If he dies before the total of the annuity portions of the retirement allowance paid to him equals the amount of his accumulated contributions at the time of retirement, then the balance shall be paid to such person or persons having an insurable interest in his life, as he shall have nominated by written designation duly executed and filed with the retirement board, or if there be no such designated person or persons, still living at the  [[Orig. Op. Page 4]] time of his death, then to his surviving spouse, or if there be neither such designated person or persons still living at the time of his death nor a surviving spouse, then to his legal representative; or

            "Option II. Upon his death his reduced retirement allowance shall be continued throughout the life of and paid to such person, having an insurable interest in his life, as he shall have nominated by written designation duly executed and filed with the retirement board at the time of his retirement.  Unless payment shall be made under RCW 41.40.270, option II shall automatically be given effect as if selected for the benefit of the surviving spouse upon the death in service, or while on authorized leave of absence for a period not to exceed one hundred and twenty days from the date of payroll separation, of any member who is qualified for a service retirement allowance or has completed ten years of service at the time of death, except that if the member is not then qualified for a service retirement allowance, such option II benefit shall be based upon the actuarial equivalent of the sum necessary to pay the accrued regular retirement allowance commencing when the deceased member would have first qualified for a service retirement allowance; or

            "Option III.  Upon his death, one‑half of his reduced retirement allowance shall be continued throughout the life of and paid to such person, having an insurable interest in his life, as he shall have nominated by written designation duly executed and filed with the retirement board at the time of his retirement."

            In terms of your immediate question the critical language of both statutory subsections is contained in the identical language which will be found in the opening paragraph of each of them.  It is basic, of course, that the only rights of a member of the public employees retirement system are those which are granted by the statutory provisions applicable to those members.  In this instance the right to select an option, and correlatively to designate a beneficiary if the particular optional form of retirement  [[Orig. Op. Page 5]] allowance selected calls for that to be done, is a right to be exercised by a member "upon making application for a service retirement allowance . . ."; in other words, at the time of retirement.  Conversely, neither of the above‑quoted subsections of the retirement law nor any other existing statute may be said to give rise, either expressly or by necessary implication, to the claim by a member of a further "right" to change that selection or designation at some later date ‑ following his or her retirement.  And it is for this reason that we thus must answer your question, as above paraphrased, in the negative.

            Having so concluded we should, perhaps, add one further thought in closing.  Most certainaly this matter (i.e., post-retirement changes in option selection or beneficiary designation) is one upon which the legislature could properly act, through the amendatory process, if it desires to do so.  At the same time, however, it should be noted and understood that there would be significant actuarial issues involved, in terms of the "funding" of retirement benefits if members of the retirement system were to be granted the right, by statute, to make such changes from time to time after retirement.  This would be so primarily because of the fact that life expectancy, both of the retiree himself and of his or her designated beneficiary, is a critical factor in the computation in each of the various optional forms of retirement allowances which are provided for under both RCW 41.40.185(5) and RCW 41.40.190(6),supra.

            We trust that the foregoing will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

PHILIP H. AUSTIN
Deputy Attorney General