Thursday, August 04, 2011

Filing an election of a retirement option


Filing an election of a retirement option
Matter of Leisten, 285 AD2d 897, Motion to appeal denied, 97 NY2d 605

If nothing else, the Leisten decision serves as a reminder that it is the responsibility of the member of the retirement system to file the form designating his or her beneficiary and the form required for the selection of the retirement option he or she desires with the retirement system.

Faced with a terminal illness, David Leisten filed a request for an estimate of retirement benefits which would be payable under the joint allowance-full option, naming his wife, Pearl Leisten, as his intended beneficiary. In response to his request, the New York State Employees' Retirement System [ERS] sent Leisten an estimate of amounts payable under the various retirement options together with a blank option election form that was to be completed and filed with ERS within a specified time. The form specifically noted that if an option election is not timely filed, “the law requires that you be retired under the cash refund contributions option”.

The joint allowance-full option Leisten indicated he wished to elect in his request to take early retirement would have entitled his widow to monthly payments of $880 for the remainder of her life. ERS, however, could not find a completed option election form in its files. Accordingly, ERS told Pearl Leisten that it was bound to apply the cash refund-contribution option, entitling her to receive only a full ordinary death benefit: $49,000.

The court said that “while an employee is authorized to elect from several retirement payout options ... such election must be received and filed prior to the retiree's death to be effective.” As the record contained testimony highlighting the difference between the naming of an intended beneficiary in an early retirement request and the designation of a beneficiary in a legally effective option election, the Appellate Division sustained ERS's decision that Pearl Leisten was only entitled to an ordinary death benefit as supported by substantial evidence.

The lesson here: members must make certain that a timely designation of beneficiary and the benefit option the member wishes upon retirement is on file with the retirement system. 

Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

Challenging Adverse Personnel Decisions at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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