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Teti v. State Employees' Retirement Board

September 11, 2009

DORIS A. TETI, PETITIONER
v.
STATE EMPLOYEES' RETIREMENT BOARD, RESPONDENT



The opinion of the court was delivered by: Judge Simpson

Submitted: July 17, 2009

BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE JOSEPH F. McCLOSKEY, Senior Judge.

OPINION

The issue on appeal is whether the widow of a member of the Pennsylvania State Employees' Retirement System (SERS) may retroactively elect an annuity option that was not available to the member at the time he retired. In particular, Doris A. Teti (Claimant) petitions for review from a decision of the State Employees' Retirement Board (Board) denying a request to change her husband's disability annuity to a withdrawal annuity (commonly known as early retirement) with a survivor benefit. Discerning no error in the Board's order, we affirm.

Richard E. Teti (Decedent), a former Department of Corrections' employee, joined SERS in 1984. After working a little over five years, Decedent retired in 1989 at the age of 44 with a disability annuity. In 1989, the State Employees' Retirement Code (Retirement Code)*fn1 provided two options for members of Decedent's age who applied for a disability annuity and had less than 10 years of credited state service: members could withdraw their contributions or receive a disability annuity. Decedent elected the latter option. A disability annuity did not allow a member to elect a joint and survivor benefit.

After receiving a disability annuity for nearly 16 years, Decedent passed away in February 2005. Claimant later filed a request for a survivor benefit with the Board. The Board's former director of benefits' determination denied Claimant's request on the basis that Decedent accrued only 5.0174 years of credited state service before retirement and, therefore, he was not entitled to elect an annuity option that provided for a survivor benefit.

Claimant's subsequent appeals lead to the appointment of a Board hearing examiner. At hearing, SERS presented the testimony of its administrative assistant in the bureau of benefits administration, who explained the process by which Decedent began receiving a disability annuity and the events leading to the hearing. SERS also presented the testimony of its bureau director of member services. The bureau director reviewed the calculation of Decedent's benefits as well as other standard documentation provided to retiring members. Of particular note, SERS offered into evidence Decedent's application for a disability annuity. Decedent completed the section of the application pertaining to members with less than 10 years of credited service. Certified Record (C.R.) at Hr'g Tr., at SERS' Ex. 6.*fn2 On one form, Decedent acknowledged he was entitled to a disability annuity only. Id. at SERS' Ex. 7.

Claimant testified as to her marital relationship to Decedent and her current income. She also submitted various documents indicating Decedent named her and his stepchildren as beneficiaries of his state pension and state-sponsored life insurance. Id. at Claimant's Exs. 2; 6; 7.

The hearing examiner recommended denial of Claimant's appeal. The hearing examiner first found that at the relevant time the Retirement Code did not permit members of Decedent's age with less than 10 years of credited service to elect an annuity with a survivor benefit. The hearing examiner also rejected Claimant's arguments that the 2001 amendments to the Retirement Code,*fn3 which reduced the number of credited service years required for annuity eligibility, applied retroactively. In addition, the hearing examiner was not persuaded by Claimant's argument that Decedent's annuity is marital property, thus entitling her to continued benefits. Finally, the hearing examiner rejected Claimant's assertions that Decedent's election of the disability annuity was invalid because she did not consent.

Claimant filed exceptions to the hearing examiner's recommendation. The Board overruled and dismissed Claimant's exceptions and further denied her request to elect a survivor benefit option to Decedent's disability annuity. The Board also determined the 2001 amendments to the Retirement Code do not apply retroactively to Decedent's 1989 election.

On appeal,*fn4 Claimant's primary argument reasserts her position that Decedent's disability pension is a marital asset under the Divorce Code*fn5 over which she has control and, thus, she may elect an annuity option allowing for a survivor benefit. She also contends Decedent's annuity election was invalid because she did not consent to it. Neither argument is persuasive.

This case involves application of the relevant statutory language. Section 5308 of the Retirement Code, 71 Pa. C.S. §5308, identifies three types of annuities available to members: superannuation, withdrawal (commonly known as early retirement), and disability. At the time of Decedent's retirement in 1989, a SERS member of superannuation age*fn6 with three years of credited service was eligible for a superannuation annuity pursuant to 71 Pa. C.S. §5308(a). A member who terminated state service after accruing 10 or more years of credited service was eligible for a withdrawal annuity under 71 Pa. C.S. §5308(b). Finally, a member with at least five years of credited service who became physically or mentally incapable of performing his duties qualified for a disability annuity pursuant to 71 Pa. C.S. §5308(c).

At retirement, Decedent was 44-years-old with 5.0174 years of credited service. Decedent was therefore not eligible for an annuity under either Section 5308(a) (superannuation-35 eligibility points or 60 years old) or 5308(b) (withdrawal-10 years credited service). The only available options to Decedent at the time of his retirement were a return of his contributions, 71 Pa. C.S. §5701, or a disability annuity pursuant to Section 5308(c). In this case, Decedent applied for and was granted a disability annuity.

Section 5704(a) of the Retirement Code governs the calculation of disability annuity benefits. This ...


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