SENATE BILL REPORT

                   HB 1295

              As Reported By Senate Committee On:

                  Ways & Means, April 3, 1995

Title:  An act relating to payment of retirement system benefits upon death of a member or retiree.

Brief Description:  Providing retirement system benefits upon death of member or retiree.

Sponsors:  Representatives Carlson, Sommers, Sehlin and Basich; by request of Department of Retirement Systems.

Brief History:

Committee Activity:  Ways & Means:  3/23/95, 4/3/95 [DP].

SENATE COMMITTEE ON WAYS & MEANS

Majority Report:  Do pass.

  Signed by Senators Rinehart, Vice Chair; Loveland, Vice Chair; Bauer, Cantu, Drew, Finkbeiner, Fraser, Gaspard, Hargrove, Hochstatter, Johnson, Long, McDonald, Roach, Snyder, Spanel, Strannigan, Sutherland, West, Winsley and Wojahn.

Staff:  Denise Graham (786-7715)

Background:  The State Department of Retirement Systems (DRS) administers various public retirement plans.  Most of these retirement systems permit members to designate beneficiaries to receive a member's accumulated contributions if the member dies before retirement.  In some systems, members who retire for disability can designate a beneficiary to receive any excess contributions remaining after the member's death.

In these cases, current law requires the beneficiary to be a person.  Members cannot designate trusts, organizations, or their estates as beneficiaries.  Additionally, the designated person must have an "insurable interest" in the member's life.  An "insurable interest" requires a close blood or legal relationship or a lawful and substantial economic interest.

In some systems administered by DRS, retired members may choose to receive an actuarially reduced retirement benefit that continues to be paid to a designated beneficiary upon the member's death.  To receive this benefit, the survivor must have an "insurable interest" in the member's life.

Summary of Bill:  A member may designate a person or persons, a trust, an organization, or the member's estate to receive a refund of the member's contributions.  Beneficiaries designated to receive contribution refunds or survivor's benefits need not have an "insurable interest" in the member's life.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  This bill will allow members to designate a charity as a beneficiary.

Testimony Against:  None.

Testified:  Representative Don Carlson, prime sponsor; Sheryl Wilson, Department of Retirement Systems (pro).