Opinion No. (1979) ( 1979 )

REQUESTED BY: Kenneth D. Steinmiller, Director Retirement Systems. If a county employee ceases employment before the effective date of LB 416, but retires after that date, may he elect to take a lump sum settlement in lieu of annuity, if the retirement value of his account is between $2,000.00 and $8,000.00?

Yes.

Section 23-2317, R.R.S. 1943, a part of the County Employees Retirement Act, provides, in part:

"The future service retirement benefit shall be an annuity, payable monthly with the first payment made as of the retirement date, which shall be the actuarial equivalent, as determined by the group annuity contract, of the retirement value, except that a retiring employee may elect to receive, in lieu of an annuity, a lump sum settlement equal to the retirement value if the retirement value is less than two thousand dollars."

LB 416, passed without the emergency clause, amends that section by increasing the maximum which can be paid in lump sum settlement to $8,000.00. You ask whether a county employee who has terminated county employment before the effective date of LB 416, which will be three months after the adjournment of the Legislature, but whose retirement will commence after that date, can elect to take a lump sum settlement if his retirement value is between $2,000.00 and $8,000.00.

We assume that the employee would be one who terminated employment before his 60th birthday, and did not withdraw his employee account, but elected to leave it in to get a paid-up deferred annuity, as provided in section 23-2319.

It seems clear to us that the date for determination of the value of the annuity, and for the payment of any lump sum settlement, is the retirement, not the date of termination of employment. The first payment of an annuity is, of course, to be made as of the retirement date. The amount of the payments is determined by the retirement value. Section23-2316 defines retirement value as the sum of the employee account and the employer account ``as of the retirement date.' The amount of the retirement value is therefore not even determinable until the retirement date.

If LB 416 has become effective by the time the retirement value is determined, if that value is less than $8,000.00 the employee may elect to take a lump sum settlement on his retirement date.