Colorado Legislative Council Staff
NO FISCAL IMPACT
January 5, 1999
House Local Government
Steve Tammeus (303-866-2756)
TITLE: CONCERNING THE AMOUNT OF BENEFITS PAID TO MEMBERS OF THE STATEWIDE DEATH AND DISABILITY PLAN WHO BECOME TOTALLY DISABLED WHILE A MEMBER OF THE FIRE AND POLICE PENSION ASSOCIATION.
Summary of Assessment
This bill increases the amount of the normal annual disability benefit payable to a new hire member of the Fire and Police Pension Association (FPPA) who becomes totally disabled to 70 percent of the base salary. Under current law, the benefit for total disability is a tiered benefit of 40 percent of the annual base salary, plus an additional 10 percent for a surviving spouse, and an additional 10 percent for any dependent children.
The bill also allows a member qualifying for a retirement benefit for total disability to elect one of the following three pension benefits in lieu of the normal annual disability benefit:
• Option 1. A reduced pension payable to the member, and upon the member’s death, all of such reduced pension to be paid to the member’s designated beneficiary for life, or
• Option 2. A reduced pension payable to the member, and upon the member’s death, one-half of such reduced pension to be paid to the member’s designated beneficiary for life; or
• Option 3. A reduced pension payable to the member, and upon the member’s death, all of such reduced pension to be paid to the member’s surviving spouse or until the youngest child reaches twenty-three years of age, whichever is later.
The bill specifies that a member shall be deemed to have elected Option 3 if the member qualifies for total disability, is survived by a spouse or dependent child, and dies before electing one of the options. Any member receiving a disability benefit as of January 1, 2000 may elect a different option once within 90 days of receiving written notice from the board. The bill authorizes the board to promulgate rules to implement the provisions of the bill.
The bill would take effect January 1, 2000; or upon proclamation of the Governor if a referendum petition is approved by a vote of the people.
The provisions of this bill will not affect state, or local government, revenue or expenditures. The statewide death and disability plan is no longer funded by the State. The plan actuary for the FPPA has determined this benefit enhancement can be fully funded at a cost of $9.5 million of the life of the benefit. This amount is readily available from plan assets which are currently targeted for pre-funding a permanent cost of living adjustment (COLA) for all benefit recipients under the death and disability plan. Funding this benefit enhancement is not anticipated to affect the permanent COLA for total disability recipients, but could affect the discretionary COLA for occupational disability recipients.
The FPPA currently monitors the family status of those who retire with a total disability. The FPPA also monitors continued eligibility for benefits by annually requiring benefit recipients to complete an eligibility form. The provisions of this bill will reduce or eliminate those requirements. Conversely, the board may incur additional costs to promulgate administrative rules. As a result, the FPPA may experience some administrative cost impact, but the amount of that impact is estimated to be relatively insignificant. Therefore, this bill is assessed as having no fiscal impact.
Fire and Police Pension Association