Opinion ID: 1918615
Heading Depth: 1
Heading Rank: 3

Heading: parochial employees' retirement system of louisiana

Text: Mr. Bordes applied for disability retirement with the Parochial System on November 17, 1994. A member of the Parochial System is eligible to retire and receive a disability benefit if he has at least five years of creditable service, is not eligible for normal retirement, and suffers disability. La. Rev.Stat. Ann. 11:1943. Mr. Bordes has 20.46575 years of creditable service with Jefferson Parish, he has been disabled by aplastic anemia with avascular necrosis of both hips, and he is not eligible for normal retirement. [1] Having met the conditions for disability retirement benefits, Mr. Bordes is required to undergo a medical examination every year for the first five years of disability and once every three years thereafter until he attains normal retirement age. La. Rev.Stat. Ann. 11:1934(A). If he engages in or is able to engage in gainful occupation, his disability retirement benefits will be terminated. La.Rev.Stat. Ann. 11:1934(B). In order to insure that he is not able to engage in gainful employment, Mr. Bordes is required to submit an annual income statement to the Parochial System. As an employee of the Water Department, Mr. Bordes was eligible to participate in the Jefferson Parish and the Parochial Retirement Systems. Membership in the two retirement systems was a benefit of employment with the Water Department. He made contributions to both retirement systems and the Water Department made contributions as well. Mr. Bordes' contributions went into an annuity savings account and his employer's contributions went into the general fund of the pension plan. According to Mr. A.C. Tynes, Secretary-Manager of the Jefferson System, the annuity savings account accumulates until the employee starts receiving a monthly benefit. The funds in the annuity savings account are exhausted first, then payments are made from the general fund. Mr. Bordes elected to receive the maximum allowance from the Parochial System. This election gives Mr. Bordes the maximum disability retirement allowance payable for life, with no provisions for a survivor benefit. If Mr. Bordes should die before having received in retirement benefits the amount he contributed to the system, the balance will be refunded in a lump-sum payment to his designated beneficiary. The disability payment is determined by multiplying the years of creditable service by three percent and then multiplying that number by the employee's highest total earnings for any 36 successive months. This calculation gave Mr. Bordes a total monthly benefit of $1,813.93, of which $1,310.24 is paid by the Parochial System. The remaining $503.69 is paid by the Employees' Retirement System of Jefferson Parish. The normal retirement age for Mr. Bordes is age sixty. When he reaches this age, his disability retirement benefit will automatically become a normal retirement benefit. Unlike the disability insurance policies reviewed by the Courts of Appeal in Mercer, 671 So.2d 937; Brant, 649 So.2d 111; and Lachney, 529 So.2d 59, the benefits payable under this plan are not really disability benefits. Rather the significance of disability under this retirement plan is that disability triggers the early entitlement to retirement benefits which, but for the disability, would not be payable until normal retirement age. Further, the Parochial System plan does not provide for termination of monthly disability retirement benefits when the employee reaches normal retirement age. To the contrary, when Mr. Bordes reaches normal retirement age the amount of payment does not change, nor does the source of payment. The only changes are the discontinuance of the income statement requirement and the periodic medical examination. However, like the aforementioned plans, Mr. Bordes' monthly disability retirement benefits will be terminated if he is able to return to work. The purpose of paying benefits under a retirement plan is different when the benefits are payable because the employee spouse becomes disabled than when the benefits are payable because the employee spouse reaches normal retirement age. When the divorced employee spouse receives benefits because of disability, the benefits are paid in lieu of income that would otherwise be the employee spouse's separate property. Basing the classification of benefits upon the purpose of the payment of the benefits is fair and equitable, and provides ease of administration. [2] When the employee spouse becomes disabled, the benefits replace the working wages he or she can no longer earn. On the other hand, the non-employee spouse can continue to earn (and keep) one hundred percent of the wages he or she was earning when the employee spouse became disabled. Awarding a share of disability retirement benefits to the non-employee spouse who does not need to replace wages lost because of inability to work, while reducing the amount of benefits payable to the disabled spouse who has such a need, is contrary to the purpose of a disability feature in a retirement plan. While the source of Mr. Bordes' disability retirement benefits is the same as his normal retirement benefits, this alone does not make the payments more representative of retirement income. Other factors support classifying the benefits as compensation for lost earnings. They include the fact that the payments are conditioned on Mr. Bordes' continuing disability, that he is required to undergo periodic medical examinations and submit annual income statements while receiving the benefits, and the benefits automatically convert to a normal retirement benefit upon his reaching retirement age. If the disability retirement benefits were normal retirement benefits, there would be no changes when the employee reaches normal retirement age. It is clear that Mr. Bordes' disability retirement benefits are more akin to compensation for lost earnings due to serious injury or illness. Under La. Civ.Code Ann. art. 2344, damages due to personal injuries, including the portion of the award designed to compensate for loss of earnings, are separate property. Accordingly, Mr. Bordes' disability retirement benefits are his separate property and Ms. Bordes is not entitled to share in these benefits. As previously stated, Mr. Bordes' disability retirement benefits will automatically convert into a normal retirement benefit when he reaches age sixty. A spouse's right to receive benefits payable by a retirement plan is an asset of the community. Sims, 358 So.2d 919, 922 (La.1978). At the time of partition, the non-employee spouse is entitled to a declaration of the interest attributable to the community in retirement benefits, if and when they become due. When they do become due, the non-employee spouse is entitled to receive the proportion of them recognized as attributable to the other spouse's employment during the existence of the community. Sims, 358 So.2d 919, 923-924. The parties entered into a consent judgment which recognized Ms. Bordes' 23% interest in the retirement plan from both the Parochial System and the Jefferson System to be effective May 17, 2012. [3] Therefore, Ms. Bordes is entitled to receive the proportion of Mr. Bordes' retirement benefits attributable to his employment during the community on May 17, 2012. Finally, we address Ms. Bordes' potential claim for reimbursement for a share of the funds contributed to the annuity savings account during the existence of the community. It is uncontested that during the existence of the community Mr. Bordes and his wife paid into the annuity from which his retirement benefits were to one day be drawn. [4] When Mr. Bordes began receiving a monthly disability benefit from the Parochial and Jefferson Systems, funds were first drawn from the annuity savings account. According to Mr. Tynes, upon depletion of an employee's annuity account, benefit payments are made from the general pension fund. Mr. Bordes' personal annuity account has, in fact, now been depleted, and the source of his current disability retirement payment is the general pension fund. [5] If the situation were different, and funds had never been withdrawn from the account, upon his death, the balance of the annuity account would normally be refunded in a lump-sum payment to his designated beneficiary, subject to a claim by his former wife for her portion of the account. However, because this annuity account has been depleted during disability and before regular retirement, and because Mr. Bordes has declined a survivorship benefit, if he dies before reaching normal retirement age, Ms. Bordes will never realize the benefit of her contributions to the annuity during the existence of the community. On the other hand, when Mr. Bordes reaches normal retirement age, his former wife may more than recoup her share of the marital funds paid into the annuity account in the form of a 23% share of her ex-husband's retirement benefits, depending on the length of his survival and the amount of retirement benefits he, and, correspondingly, she, receive after he reaches age sixty. If and when the situation arises where Ms. Bordes is not able to recoup her share of the funds paid into the annuity account from the regular retirement benefits, we reserve her right to a claim for reimbursement. Until that time, she is not entitled to share in her former husband's income replacing disability retirement benefits.