Transcript PEPRA” California Public Pension Reform Act

“PEPRA”
California Public Pension Reform Act
Public Employees’ Pensions:
Sliced, Diced,
Chopped & Cropped
Bill Sokol Weinberg,Roger,& Rosenfeld
Who Is Covered
• 1. Does NOT include University of California or
Charter City/County Plans
• 2. Does cover CalPERS, CalSTRS, and ‘37 Act
County Pension Plans
• So – most public employees affected
– 1.6 million CalPERS; 850,000 CalSTRS
The Good, the Bad, the Ugly
in No Particular Order
• Compensation used for benefits calculation CAPPED
–
–
–
–
$110,100 if you receive Social Security
120% of this if no Social Security ($132,120)
Adjusted each year by ConsumerPriceIndex(CPI)
But Legislature can override CPI
• So even if you earn more, it will not be used to
determine your pension
• No contributing employer can have Plan w/ higher caps
• This caps public pension totals
• (Judges Retirement Systems I & II excluded from caps!)
“New” Members
• Most changes affect “new” employees only
– 1. never in System before Jan 1, 2013
– 2. moves between Systems w/ 6 mon break in service
– 3. moves between public employers in same system
w/more than 6 mon break
• Lower benefit plans already in existence can be
offered to new employees
• All DC’s already in existence can be offered to
new employees
DB Formulas for New Employees
• Non-Safety, Non-Teachers (so mostly
Miscellaneous Employees, the big category)
– 1% at early retirement age of 52
– 2% at normal retirement age of 62
– 2.5% maximum at retirement age of 67
• CalSTRS
– 2% at 62
– Early retirement at 55
– 2.4% maximum at retirement age of 67
DB Formulas for New Ee’s (cont.)
• Safety Employees (Fire, Police, DA’s, etc.)
– 3 new plans for 2%, or 2.5%, or 2.7% @ 57
Employee Contributions
• Big “Hit”:
• Employees must pay one-half of the normal
cost of the DB Plan each year
• Five years for Union to negotiate; after that, it
locks in
Employer Contributions
• No suspension of contributions because Plan
is full-funded or over-funded
• In other words, No more pension contribution
“holidays”
Benefit Calculation
• Final Compensation to be defined as “highest average
compensation” over a three-year period
• Excluded:
–
–
–
–
–
–
–
–
–
“spiking” to increase pensions
“in kind” comp converted to cash at end of work
One-time payments
Termination Pay
Unused Leave Pay
Pay for Work Outside Normal Hours
Uniform/Housing/Vehicle Allowances
Overtime (except “planned overtime”)
Bonuses
Benefits (cont.)
• Cannot provide better retiree health plan
vesting for exempt than for represented ee’s
• No “retroactive” benefit increases
• No purchases of “air time” after Jan 1, 2013
• Officials elected after Jan 1, 2013 cannot base
elected pension on prior public service
• New employees in misc. Second Tier from
1.25% at 65 to 1.25% at 67
Post-Retirement
• No pension payments if retiree works more
than 960 hours in any 12 consecutive months
• If retiree receives unemployment benefits,
cannot work for 12 months thereafter as
retiree for public employer
• Retiree appointed to salaried public Board
after Jan 1, 2013 gets pension or salary, not
both (exempt – Parole Board)
Post-Retirement
• Pension forfeited if convicted of felony
connected to:
– Carrying out official duties
– Seeking public office
– In connection with obtaining salary or benefits
• (The “Bell, California” Clause)
More on Benefits
• Safety members who get Industrial Disability
Retirement (IDR) under age 50 may get
actuarially reduced benefit (sunsets in 2018)
• Newly elected officials can be in CalPERS, but
not in Legislators’ Retirement System
– (ending the boondoggle “let’s take care of
ourselves” System)