Public employees' retirement benefits.

(1) The Public Employees' Retirement Law (PERL) establishes the Public Employees' Retirement System (PERS) and the Teachers' Retirement Law establishes the State Teachers' Retirement System for the purpose of providing pension benefits to specified public employees. Existing law also establishes the Judges' Retirement System II which provides pension benefits to elected judges and the Legislators' Retirement System which provides pension benefits to elective officers of the state other than judges and to legislative statutory officers. The County Employees Retirement Law of 1937 authorizes counties to establish retirement systems pursuant to its provisions in order to provide pension benefits to county, city, and district employees. The California Public Employees' Pension Reform Act of 2013 (PEPRA) , on and after January 1, 2013, requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan, setting the maximum benefit allowable for employees first hired on or after January 1, 2013, as a formula commonly known as 2.5% at age 67 for nonsafety members, one of 3 formulas for safety members, 2% at age 57, 2.5% at age 57, or 2.7% at age 57, and 1.25% at age 67 for new state miscellaneous or industrial members who elect to be in Tier 2. Under PEPRA, the Judges' Retirement System and the Judges' Retirement System II are not required to adopt the defined benefit formula contained in certain other provisions. This bill would correct an erroneous cross-reference in the above provision and would instead specify that the Judges' Retirement System and the Judges' Retirement System II are not required to adopt the defined benefit formula contained in other provisions for nonsafety and safety members. The bill would except from PEPRA certain multiemployer plans authorized under, and regulated by, specified federal law. The bill would also except from PEPRA public employees whose collective bargaining rights are subject to specified provisions of federal law until a specified federal district court decision on certification by the United States Secretary of Labor, or his or her designee, or until January 1, 2015, whichever is sooner. The bill would also provide that if a federal district court upholds the determination of the United States Secretary of Labor, or his or her designee, that application of PEPRA to those public employees precludes certification, those employees are excepted from PEPRA. The bill would clarify the application of PEPRA to employees who were employed prior to January 1, 2013, who have service credit in a different retirement system or who change positions for the same employer without a break in service, as specified. The bill would authorize a public retirement system to adopt regulations and resolutions in order to modify its retirement plan or plans to conform with PEPRA. (2) PEPRA authorizes a public employer offering a retirement benefit plan consisting solely of a defined contribution plan prior to January 1, 2013, to continue to offer that plan instead of the defined benefit plan required pursuant to PEPRA. However, PEPRA requires an employer that adopts a new defined benefit pension plan or defined benefit formula on or after January 1, 2013, to conform the plan or formula to the requirements of PEPRA or be determined and certified by the retirement system's chief actuary and the system's board to have no greater risk and no greater cost to the employer than the defined benefit formula and to be approved by the Legislature. Under that law, new members of the employer's plan may only participate in the defined contribution plan that was in place before January 1, 2013, or a defined contribution plan or defined benefit formula that conforms to the requirements of PEPRA. This bill would specify that the above provisions are not to be construed to prohibit an employer from offering a defined contribution plan on or after January 1, 2013, either with or without a defined benefit plan, if the employer did not offer a defined contribution plan prior to that date. (3) PEPRA defines pensionable compensation for new members and limits payments and compensation that may be used to calculate a defined benefit for new members and provides that this number shall be adjusted based on changes to the Consumer Price Index for All Urban Consumers. PEPRA permits an employer to provide a contribution to a defined contribution plan for compensation that is in excess of that limit subject to other limits described in federal law. PEPRA excludes specified payments from the definition of pensionable compensation. This bill would specify the method by which adjustments to pensionable compensation limits based on the Consumer Price Index are to be made and which consumer price index is to be used for this purpose. The bill would revise how limits on an employer's contributions to a defined contribution plan are to be determined, as specified, and would specifically authorize a retirement system to limit the pensionable compensation used to calculate contributions for new members in this regard. The bill would specify that the exclusions from pensionable compensation apply to new members. The bill would prescribe requirements for exclusions from pensionable compensation that are collectively bargained with represented state employees or imposed on nonrepresented state employees. (4) On and after January 1, 2013, PEPRA requires each retirement system that offers a defined benefit plan for safety members of the system to use one or more of specified defined benefit formulas and requires an employer to offer one or more of those formulas to new employees who are safety employees eligible for membership in the program. This bill would instead require an employer to offer one or more of those formulas to new members who are safety employees. (5) On and after January 1, 2013, PEPRA requires new employees of specified public employers, the California State University, and the judicial branch who participate in a defined benefit plan to have an initial contribution rate of at least 50% of the normal cost rate for that defined benefit plan, rounded to the nearest 14 of 1%, or the current contribution rate of similarly situated employees, whichever is greater. This bill would make that provision applicable to new members employed by those entities and new members employed by the Legislature. The bill would also specify that this contribution rate for new members shall be the greater of the above 2 rates, if the greater, current contribution rate has been agreed to through the collective bargaining process. The bill would specify, with regard to the definition of normal cost, that a retirement system's actuary may use either of 2 rates of contribution, as may be applicable to the retirement system. The bill would require that, for purposes of calculating the normal cost rate, the actuarial valuation of retirement benefits includes any elements that impact the actuarial determination of the normal cost, including, but not limited to, the retirement formula, eligibility and vesting criteria, ancillary benefit provisions, and any automatic cost-of-living adjustments. (6) PEPRA provides, for the purpose of determining a retirement benefit paid to a person who first becomes a member of a public retirement system on or after January 1, 2013, that final compensation means the member's highest average annual pensionable compensation earned, as defined, during a period of at least 36 consecutive months, or at least 3 school years, as specified. This bill would provide for the purpose defining final compensation, as described above, the school years are to be consecutive. (7) PEPRA prohibits a public employer from providing a retirement health benefit vesting schedule to a manager or an employee or officer who is excluded from collective bargaining that is more advantageous than that provided generally to other public employees of the same employer who are in related membership classifications. This bill would clarify that these provisions do not require an employer to change the vesting schedule of any employee who was subject to a specific retiree health benefit vesting schedule prior to January 1, 2013, or who had a contractual agreement prior to January 1, 2013, for a specific retiree health vesting schedule and make technical changes. (8) On and after January 1, 2013, PEPRA prohibits a public employer from offering a plan of replacement benefits for members and any survivors or beneficiaries whose retirement benefits are limited by specified federal law. On and after January 1, 2013, PEPRA makes that prohibition and certain other provisions related to replacement benefits applicable to new employees. This bill would instead make those provisions applicable to new members. (9) PEPRA generally prohibits a retired person who retires from a public employer from serving, being employed by, or being employed through a contract directly by, a public employer in the same retirement system from which the retiree receives a pension benefit without reinstatement, subject to certain exceptions and limitations. The act prohibits reemployment of a retiree pursuant to these provisions for a period of 180 days following the date of retirement unless he or she falls within certain exceptions to the prohibition, of which one is that the retiree is a public safety officer or a firefighter. This bill would clarify that, for a retiree who is a public safety officer or a firefighter, he or she must be hired to perform a function or functions regularly performed by a safety officer or firefighter. (10) PEPRA, until January 1, 2018, authorizes a safety member of a public retirement system who retires for industrial disability to receive a disability retirement equal to the greater of specified benefit amounts. This bill would repeal the above provision. (11) PEPRA requires that a public employee, including one who is elected or appointed to a public office, who is convicted of any state or federal felony for conduct arising out of, or in the performance of, his or her official duties in pursuit of the office or appointment, or in connection with obtaining salary, disability retirement, service retirement, or other benefits, forfeit rights, and benefits earned or accrued from the earliest date of the commission of the felony to the forfeiture date, as specified. This bill would provide that these provisions supplement the application of specified forfeiture provisions with respect to a judge and, if there is a conflict, the provisions that result in the greatest forfeiture or provide the most stringent procedural requirements shall apply. (12) PERL prescribes increases in required employee defined benefit plan contributions, in relation to the normal cost of benefits, for specified bargaining units. PERL requires that contribution rates for employees who are exempted from the definition of state employee and for officers and employees of the executive, legislative, or judicial branches of government who are not members of the civil service be adjusted consistent with those provisions. PERL requires that savings realized from specified employee contribution increases be allocated, upon appropriation by the Legislature, to any unfunded liability. This bill would apply the provisions described above to state employees excluded from collective bargaining. The bill would authorize the California State University, on or after January 1, 2019, to require that its member employees pay up to certain percentages of the normal cost of benefits, depending on employment classification, as specified. The bill would except savings realized by the California State University as a result of increased employee contribution rates from allocation to unfunded liability and would make a statement of intent in this regard. (13) Under PEPRA, a state safety member of PERS who retires on or after January 1, 2013, for industrial disability receives a disability retirement benefit equal to the greater of certain benefits, including, among others, 50% of his or her final compensation, plus an annuity purchased with his or her accumulated contributions, if any. This bill would clarify that the portion of the industrial disability retirement benefit described above refers to an annuity purchased with the member's accumulated additional contributions. (14) The County Employees Retirement Law of 1937 (CERL) establishes an alternative retirement plan that is applicable to Los Angeles, which includes both contributory and noncontributory plans. CERL prescribes specified formulas for computation of the retirement allowance payable for a service retirement, and for the computation of contributions, for certain members, including those to whom the federal Social Security Act applies. This bill would make a technical change in the alternate retirement plan that is applicable to Los Angeles. The bill would specify that certain formulas prescribed by CERL do not apply to a person who becomes a member of a county retirement system under a benefit plan subject to PEPRA, as specified. (15) This bill would make legislative findings and declarations regarding its relation to existing law and intended application. (16) This bill would declare that it is to take effect immediately as an urgency statute.