County Employees Retirement Law of 1937: federal law compliance.

Federal tax law regulates pension plans generally and regulates public pension plans specifically based on their status as governmental plans, as defined. In this regard, among other things, federal law requires that accrued member retirement benefits be nonforfeitable, as specified, establish conditions for the distribution of funds to members from a retirement system, prescribe requirements for the vesting of benefits, and limit the application of pension funds for medical benefits. The County Employees Retirement Law of 1937 (CERL) permits counties and districts, as defined, to provide retirement benefits to their employees pursuant to its provisions, and vests the management of the retirement system in the board of retirement. CERL generally conditions distribution of benefits upon compliance with federal requirements. CERL requires a county to retain in its retirement fund specified excess earnings to maintain a reserve against possible future deficiencies in earnings, and to transfer certain of those excess earnings into county advance reserves for the sole purpose of paying the cost of retirement benefits, as specified. CERL authorizes the use of these reserves for the payment of health and medical benefits, as specified. In addition, excess earnings, as defined, and the Supplemental Retiree Benefits Reserve, if established by the county, may be used for payment of specified optional benefits. This bill would revise various provisions of CERL to explicitly conform with federal law. In this regard, the bill would provide that a member's accrued retirement benefits are nonforfeitable, in accordance with federal law, once the member attains normal retirement age, as specified, or upon termination of, or discontinuance of contributions under, the retirement system. Upon the withdrawal of a district from a retirement system, the bill also would prohibit a refund, distribution, or transfer of contributions for other funds to an employee or district unless in compliance with prescribed federal law. This bill would authorize a retirement system to apply specified earnings to designated health benefits if federal requirements are met, and would allow the board of retirement to authorize payment of those benefits with county advance reserves. The bill would specify that, if a county establishes a Post-Employment Benefits Trust Account as a part of its retirement fund, that account shall be used exclusively to provide health benefits for retired members, their spouses, and dependents. This bill would revise county procedures applicable to providing service credit to a member of the retirement system for all or part of his or her military service, in accordance with federal law. This bill would require a county that elects to provide optional long-term care or vision benefits, to comply with applicable federal law and regulation, including maintaining separate trust funds for those benefits. The bill also would make various technical, nonsubstantive changes to CERL. The California Public Employees' Pension Reform Act of 2013 (PEPRA) , on and after January 1, 2013, generally requires a public retirement system, as defined, to modify its plan or plans to comply with the act, as specified. Among other things, PEPRA requires a public employee or officer who is convicted of certain enumerated crimes to forfeit specified rights and benefits under, and membership in, any public retirement system of which he or she is a member, effective on the date of his or her final conviction. This bill would revise the provisions of PEPRA relating to forfeiture, to specify that those provisions do not apply after the retirement system is terminated or contributions under the system are completely discontinued.