A BILL TO BE ENTITLED
AN ACT to rewrite the provisions relating to the election of optional retirement allowances and to permit retirees from the teachers' and state employees' retirement system to terminate their optional election under certain circumstances.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 135‑5(g) and (g1) are repealed.
SECTION 2.  Article 1 of Chapter 135 of the General Statutes is amended by adding a new section to read:
"§ 135-5.05. Election of optional allowance.
(a)	Until the member's first retirement check has been cashed, any member may elect to receive the member's benefits in a retirement allowance payable throughout life, or the member may elect to receive the actuarial equivalent of the retirement allowance in a reduced allowance payable throughout life under the provisions of one of the options set forth in subdivisions (1) through (6) of this subsection. The member may revoke the election of an option at any time prior to the date the member's first retirement check has been cashed.
(1)	Option 1. 
a.	In the Case of a Member Who Retires Prior to July 1, 1963. – If he dies before he has received in annuity payments the present value of his annuity as it was at the time of the member's retirement, the balance shall be paid to his legal representatives or to such person as he shall nominate by written designation duly acknowledged and filed with the Board of Trustees.
b.	In the Case of a Member Who Retires on or After July 1, 1963, but Prior to July 1, 1993. – If the member dies within 10 years from his retirement date, an amount equal to his accumulated contributions at retirement, less 1/120 thereof for each month for which he has received a retirement allowance payment, shall be paid to his legal representative or to such person as he shall nominate by written designation duly acknowledged and filed with the Board of Trustees.
(2)	Option 2.
	Upon the member's death, a reduced retirement allowance shall be continued throughout the life of and paid to such person as the member shall nominate by written designation duly acknowledged and filed with the Board of Trustees at the time of the member's retirement, provided that if the person selected is other than the member's spouse the reduced retirement allowance payable to the member shall not be less than one-half of the retirement allowance without optional modification which would otherwise be payable to the member.
(3)	Option 3.
	Upon the member's death, one-half of the member's reduced retirement allowance shall be continued throughout the life of and paid to such person as the member shall nominate by written designation duly acknowledged and filed with the Board of Trustees at the time of the member's retirement.
(4)	Option 4.
	Until the first payment on account of any benefit becomes normally due, any member may elect to convert the member's benefit otherwise payable on the member's account after retirement into a retirement allowance of equivalent actuarial value of such amount that, with the member's benefit under Title II of the Federal Social Security Act, the member will receive, so far as possible, approximately the same amount per year before and after the earliest age at which the member becomes eligible, upon application therefor, to receive a social security benefit.
(5)	Option 5.
	For Members Retiring Prior to July 1, 1993. – The member may elect to receive a reduced retirement allowance under the conditions of Option 2 or Option 3, as provided in subdivisions (2) and (3) of this subsection, with the modification that if both the member and the person nominated die within 10 years from the member's retirement date, an amount equal to the member's accumulated contributions at retirement, less 1/120 thereof for each month for which a retirement allowance has been paid, shall be paid to the member's legal representatives or to such person as the member shall nominate by written designation duly acknowledged and filed with the Board of Trustees.
(6)	Option 6.
	A member may elect either Option 2 or Option 3 with the added provision that in the event the designated beneficiary predeceases the member, the retirement allowance payable to the member after the designated beneficiary's death shall be equal to the retirement allowance which would have been payable had the member not elected the option.
(b)	In the event a member has elected Option 2 or Option 3 and the designated beneficiary dies prior to the date the first retirement check is cashed, the optional election shall be revoked, and the member may either nominate another person to receive the benefit upon the member's death or the member may elect to receive the retirement allowance which would have been payable had the member not elected the option. In the event a member has elected Option 2 or Option 3 and nominated the member's spouse to receive a retirement allowance upon the member's death and the spouse predeceases the member after the first retirement check has been cashed, if the member remarries, the member may nominate a new spouse to receive the retirement allowance under the previously elected option, within 90 days of the remarriage. The new nomination shall be effective on the first day of the month in which it is made and shall provide for a retirement allowance computed to be the actuarial equivalent of the retirement allowance in effect immediately prior to the effective date of the new nomination.
(c)	Any member having elected Option 2, 3, or 6 and having nominated the member's spouse to receive a retirement allowance upon the member's death may, after divorce from the spouse, revoke the nomination and elect a new option, effective on the first day of the month in which the new option is elected, providing for a retirement allowance computed to be the actuarial equivalent of the retirement allowance in effect immediately prior to the effective date of the new option.
(d)	A member who has elected Option 2, 3, or 6, upon retirement, may elect to terminate the option at any time after the first retirement check has been cashed by filing a duly acknowledged form with the Board of Trustees. A member who chooses to terminate an option in accordance with this provision shall not be allowed to rescind the termination or to make any other optional election after the form has been filed. The termination of the option shall be effective on the first day of the month following the month in which the termination is filed with the Board of Trustees. The retirement allowance payable to the member after the termination of the option shall be equal to the retirement allowance which would have been payable had the member not elected the option.
(e)	In the event of the death of a retired member while in receipt of a retirement allowance under the provisions of this Article, there shall be paid to such person or persons as the retiree shall have nominated by written designation duly acknowledged and filed with the Board of Trustees, if such person or persons are living at the time of the retiree's death, otherwise to the retiree's legal representative, a death benefit equal to the excess, if any, of the accumulated contributions of the retiree at the date of retirement over the total of the retirement allowances paid prior to the death of the retiree.
(f)	In the event that a retirement allowance becomes payable to the designated beneficiary of a retired member who has elected an option pursuant to this section and the retirement allowance to the beneficiary shall terminate upon the death of the beneficiary before the total of the retirement allowances paid to the retiree and the designated beneficiary combined equals the amount of the accumulated contributions of the retiree at the date of retirement, the excess, if any, of such accumulated contributions over the total of the retirement allowances paid to the retiree and the beneficiary combined shall be paid in a lump sum to such person or persons as the retiree shall have nominated by written designation duly acknowledged and filed with the Board of Trustees, if such person or persons are living at the time such payment falls due, otherwise to the retiree's legal representative."
SECTION 3.  This act becomes effective July 1, 2003.