Public employees' retirement systems: reserve funds.

Existing law establishes the Public Employees' Retirement Fund as a trust fund solely for the benefit of its members and retired members and their survivors and beneficiaries. Existing law requires income earned on the Public Employees' Retirement Fund during any fiscal year that exceeds the interest credited to contributions during that year to be retained in the Public Employees' Retirement Fund as a reserve against deficiencies in interest earned in other years, investment losses, and other specified losses. Existing law requires the amount in the reserve that exceeds 0.20% to be annually credited to other accounts. Existing law governing other retirement systems, including the State Teachers' Retirement System, contains provisions requiring the maintenance of reserve funds. This bill would require every public retirement system that does not maintain a reserve fund to create such a fund. The bill would require any excess funds, after payment of unfunded liabilities each fiscal year, to be placed in the reserve fund to be used against deficiencies in other fiscal years, as specified. The bill would prohibit funds in the reserve fund from being used for the payment of benefits.