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PERS bill would standardize IAP death payouts, raise small monthly-death threshold
Summary
Senate Bill 852 would change post-retirement death benefit rules in the Individual Account Program (IAP), restrict beneficiary installment payments to lump sums, raise a minimum monthly payment threshold from $30 to $200 for certain additional death benefits and clarify the 'pop-up' option language to align with federal law.
Senate Bill 852, offered by PERS staff, would make several technical changes to post-retirement death-benefit rules administered by the Public Employees Retirement System.
Heather Case, senior policy advisor at PERS, told the committee the bill would restrict IAP post-retirement death benefit distributions to lump sums only. PERS staff said installment payments are rare (on average about one per year of roughly 400 annual IAP post-retirement death benefit distributions) and that recent federal rule changes (Secure Act 2.0) made administering installment distributions more complex.
The bill would also raise the minimum monthly payment threshold for an additional death benefit payable to surviving spouses or children of deceased police officers and firefighters from $30 to $200 in order to align with other PERS statutory minimums. PERS said beneficiaries with small monthly amounts would instead receive an actuarially adjusted lump-sum payout; the change would not affect other types of PERS death benefits.
Another amendment in the draft clarifies the “pop-up” option (allowing a retiree’s benefit to convert back to a single-life payment if a survivor predeceases the retiree). PERS staff said federal tax law allows a pop-up only for legally married spouses; the bill removes language that could be read to permit pop-ups for “other relationships.”
Finally, the bill would correct language that unintentionally limited a surviving spouse’s ability to change options if a member dies within 60 days of retirement.
PERS staff described the package as technical alignment with federal rules and current administrative practice. Committee members asked for clarification on how frequently small monthly payments occur and how beneficiaries would receive lump sums; PERS staff said they would provide additional data if the committee requests it. No formal action was taken during the hearing.
