Court Opinion

ID: 3263855
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:33:51.44507+00
Date Added: 2024-06-11T13:59:52.686343
License: Public Domain

Mr. Bill Shirron, Executive Director Arkansas Teacher Retirement System #3 Capitol Mall Little Rock, AR 72201
Dear Mr. Shirron:
This is in response to your request for an opinion on two questions concerning the reduction of retirement benefits under A.C.A. § 24-7-708. This statute provides that if a retirant (under the Teacher Retirement System) is employed by a public employer whose employees are covered by the Teacher Retirement System, then for each year, his or her annuity is subject to the "limitations equivalent to twice the limitations imposed by the social security retirement test." This provision limits the retirement annuity a retirant can receive if he or she is employed by a public employer and receives salary or compensation over twice the limit established by the federal social security law for the receipt of social security benefits. Specifically, the statute provides in pertinent part as follows:
  (a) If a retirant is an employee of a public employer whose employees are covered by the Teacher Retirement System, then, for each twelve-month period ending June 30, the amount of his system annuity shall be subject to the limitations equivalent to twice the limitations imposed by the social security retirement test.
  (b) For each year ending June 30, the social security retirement test to be considered shall be the test in effect for the calendar year beginning the January 1 immediately preceding June 30. The retirant's earnings shall be his remuneration for such employment for the year ending June 30.
  (c) The board, by appropriate rules and regulations, shall establish equivalent limitations.
You indicate that the current practice enforcing this provision is to stop a retirant's annuity the first of the month following the date the earning limitation is exceeded. For example, a person age 60 earning $2,500 monthly would exceed the current earnings limitation in December. The annuity would be stopped in January and reinstated in July, or the beginning of the new fiscal year.1
You note that some retirants are circumventing this statute and the present enforcement procedure by arranging to receive a small amount of their salary for the months of July through May, and by taking the remainder in a lump sum in June. Because the next month is July, the beginning of a new fiscal year, the annuity is not stopped. The board would like to prevent this method of circumventing the law in new regulations. In this vein, your two questions are as follows:
  1) Does this statute give the Board of Trustees of the Arkansas Teacher Retirement System the authority to adopt the other parts of the social security retirement test? Specifically, can the annuity be reduced $1 for each $2 earned above the limit for those under age 65, and #1 for each $3 earned above the limit for those age 65 to 70?
  2) If yes, can these rules be enforced by applying the reduction in the fiscal year after the earnings limitation is exceeded? In other words, if a retiree exceeds the earnings limitation during the 1992-93 fiscal year, could we apply the $1 for $2, or $1 for $3 reduction in the 1993-94 fiscal year?
It is my opinion that the answer to both of these questions is "yes."
The relevant statute does not address the method of enforcement of the limitation provision. It provides merely that a retirant's annuity shall be subject to "twice the limitations imposed by the social security retirement test."2 The statute does provide that the Board of Trustees of the Teacher Retirement System has the authority to establish "equivalent limitations." Because the statute is silent as to the enforcement of the earnings limitation, or in fact how the annuity is to be reduced or suspended, and because the Board has the authority to establish "equivalent limitations," it is my opinion that the Board of Trustees has authority to adopt rules and regulations to implement the statute in the same fashion as the social security "retirement test" is implemented.
Federal law provides, as to the reduction of social security benefits where the earnings limitation is exceeded, for a one dollar reduction for each two dollars earned over the limit for persons age 62-64, and one dollar for each three dollars for persons age 65-69. See 42 U.S.C. § 403. Additionally, such reduction in benefits may be applied in future years. See42 U.S.C. § 403(h)(2) and 42 U.S.C. § 415(f), and generally20 C.F.R. 404.453.
It is therefore my opinion that the Board of Trustees has the authority to implement the proposed measures. This opinion is premised upon the assumption that the implementation of this procedure will treat all similarly situated retirants equally.
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elana L. Cunningham.
Sincerely,
WINSTON BRYANT Attorney General
WB:cyh
1 You have not asked for my opinion concerning this practice, and I therefore am expressing no view in that regard.
2 The word "twice" was recently added by Act 239 of 1991, an act entitled "AN ACT TO AMEND TITLE 24, CHAPTER 7 OF THE ARKANSAS CODE OF 1987, TO INCREASE THE LIMITATIONS TO WHICH ANNUITIES ARE SUBJECTED UNDER THE TEACHER RETIREMENT LAW; AND FOR OTHER PURPOSES."