Request By:
Mr. Billy F. Hunt
Deputy Executive Secretary
Kentucky Teachers' Retirement System
216 West Main Street
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; John F. Zink, Assistant Attorney General
Re: Mr. Maurice Mulloy S.S. #406-14-3462
As the Deputy Executive Secretary of the Kentucky Teachers' Retirement System, you have requested an opinion from this office. You have supplied the following facts: Mr. Maurice Mulloy took disability retirement on November 1, 1972. On November 1, 1977, Mr. Mulloy's entitlement period for disability expired. Mr. Mulloy then selected retirement option IV, pursuant to 102 KAR 1:150. Pursuant to KRS 161.480(1), Mr. Mulloy had, prior to taking disability retirement, designated his wife, Mary Jo Mulloy, as his beneficiary to receive any benefits accruing from his death. Subsequent to November 1, 1977, Mr. Mulloy and his wife have divorced. On December 1, 1978, Mr. Mulloy returned to work in a position requiring participation in the Kentucky Teachers' Retirement System. Mr. Mulloy now wishes to designate his son as the beneficiary under his new employment.
Specifically, you have asked whether Mr. Mulloy may designate his son as his beneficiary to receive a refund of his contributions since December 1, 1978, should he die while still actively employed in his present position. In answering this question, it is first necessary to examine the language of KRS 161.480:
(1) Each person, upon becoming a member of the retirement system shall file a detailed statement as required by the board of trustees and shall designate a beneficiary to receive any benefits accruing from the death of the members. This designation shall remain in full force and effect until changed by the member on forms prescribed by the Kentucky teachers' retirement system except that subsequent marriage or divorce by the member shall void the designation and the spouse of the member at death shall be considered as beneficiary in the event of subsequent marriage and the estate of the member shall be considered as beneficiary in the event of subsequent divorce, unless the member subsequent to marriage or divorce designates another beneficiary. The provisions of this section shall be retroactive as they relate to election of beneficiaries by members still in active status on the effective date of this section.
(2) Each retiree shall, prior to the effective date of retirement, designate a beneficiary who shall be eligible to receive such survivor benefits as may be provided by the retirement option selected by the retiree. A beneficiary designation may not be changed after the effective date of retirement under either of the joint and last survivor options provided by the system. (Emphasis added).
In addition, KRS 161.470(5) provides that membership is terminated by (a) retirement for service, (b) death, or (c) withdrawal of the member's accumulated contributions. As Mr. Mulloy originally took "disability retirement, " it is necessary to examine the provisions of KRS 161.661(5) and (7):
(5) Any member retired by reason of disability and remaining disabled at the expiration of the eligibility period shall have such disability benefits recalculated using the service retirement formula with service credit as set out in subsection (4) above. . .
* * *
(7) Any member retired by reason of disability may voluntarily waive disability benefits and return to teaching . . .
Your letter has informed this office that Mr. Mulloy remained on disability retirement through the time of the expiration of his entitlement period. Pursuant to KRS 161.661(5), his disability benefits were to be recalculated using the service retirement formula as he was still disabled. 102 KAR 1:140 provides in Section 2 that "at the time the retirement allowance is recalculated, the member may choose any option plan authorized under KRS 161.630." You have informed this office that Mr. Mulloy selected option IV pursuant to 102 KAR 1:150, Section 5.
It is important to note that the above statutory sections and regulations clearly differentiate between a person who is on "disability retirement" and one who is on "service retirement. " KRS 161.470(5) evidences the intent of the legislature that "service retirement" be of such significance so as to terminate membership in the system. On the other hand, "disability retirement" is not cast in such terms of finality. KRS 161.661(7) permits the voluntary waiver of benefits and a return to teaching; while section (5) provides only that the disabled member's benefits are to be recalculated "using" the service retirement formula.
In view of the above, it is clear that the restrictive aspect of KRS 161.480(2), wherein it speaks of the inability of a member to change the beneficiary designation after the "effective date of retirement, " applies only in cases where the member has retired for service, rather than in cases of disability retirement. This statutory construction is necessary because to apply this restriction to disability as well as to service retirement would mean that a member taking disability retirement would forever be restricted from changing his or her beneficiary designation. This would work an inequitable result on members who, at an early point in their careers, go on disability retirement and at some later date wish to change the designation of beneficiary. It is well recognized that statutes must be given a practical construction.
Gillis v. Anderson, 76 S.W.2d 279 (Ky. 1935). A statute will not be so construed as to work a hardship when such construction is not mandatorily required by the language employed.
Martin v. Gage, 281 Ky. 95, 134 S.W.2d 966 (Ky. 1940).
As such, it is the opinion of this office that the restrictive language of KRS 161.480(2), when it refers to "retirement, " does not apply to disability retirement, but rather to service retirement. Therefore, it is our opinion that Mr. Mulloy can change his beneficiary, naming his son, to receive a refund of his contributions since his re-employment in December 1, 1978.