Mr. Kie D. Hall, Executive Director Arkansas Public Employees Retirement System One State Capitol Mall Little Rock, Arkansas 72201
Dear Mr. Hall:
This is in response to your request for an opinion interpreting Section 2 of Act 446 of 1989. Specifically, you want to know whether Section 2 authorizes an increase retroactive to the original date of retirement for one who takes advantage of Act 446, Section (1)(b), (a person who retired under the early retirement acts based upon an inflated benefit estimate).
For the reasons that follow, it is my opinion that a retroactive increase in not authorized in that instance.
Act 446 of 1989, Sections (1)(a) and (b), apply to two different kinds of retirants. Section (1)(a) allows a person who did not retire under the early retirement incentives of Act 187 or 717 of 1987 because of a benefit estimate that was too low, to now retire and take advantage of those incentives. Section (1)(b) allows a person who did retire under the early retirement incentives because of a benefit estimate that was too high, to receive an increase in benefits. Your question involving a retroactive increase relates to the second kind of retirant. Section 2 of Act 446 of 1989 provides:
Any eligible member retiring under the provisions of Act 187 or Act 717 of 1987 pursuant to this act will be entitled to the retirement benefits and retirement incentives they would have been eligible to receive had they retired effective January 1, 1988.
In order to determine what this provision means, an analysis of its application to both kinds of retirants covered by the act is helpful. Does this provision authorize retroactive benefits to persons who retire under Section (1)(a) of the Act? It must be recognized that a person who retires under Act 446, Section (1)(a), will retire in 1989, after the effective date of that act. To say that such a person is entitled to retroactive benefits to January 1, 1988, as Section 2 provides, would be to authorize benefits for a period when the individual was still employed and drawing salary. Certainly the act does not intend this result.
Does Section 2 then authorize retroactive benefits to a person who utilizes Section (1)(b) of the act? Section 2 states that "[a]ny eligible member retiring under the [early retirement incentives] pursuant to this act will be entitled . . . ." A person utilizing Section (1)(b) does not retire "pursuant to" Act 446. He or she has retired prior to the adoption of this act. Thus, this section has no applicability to those persons.
What then does Section 2 mean? It is my opinion that it does not authorize retroactive payment of benefits. The section merely sets a point in time at which the law then existing as regards benefits calculations will apply to persons retiring under Act 446. Those persons will be entitled to receive the benefits and incentives they would have been eligible to receive had they retired on January 1, 1988. The benefits available on that date to retirants will govern the retirement of persons retiring under Act 446 of 1989.
The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Elana L. Cunningham.