Public Employees' Retirement System: collective bargaining agreements: disallowed compensation.

Existing law, the Public Employees' Retirement Law (PERL) , establishes the Public Employees' Retirement System (PERS) , which provides a defined benefit to members of the system, based on final compensation, credited service, and age at retirement, subject to certain variations. PERL authorizes a public agency to contract to make its employees members of PERS and prescribes a process for this. PERS is administered by its board of administration, which is responsible for correcting errors and omissions in the administration of the system and the payment of benefits. Existing law requires the board to correct all actions taken as a result of errors or omissions of the state or a contracting agency, in accordance with certain procedures. The California Public Employees' Pension Reform Act of 2013 (PEPRA) generally requires a public retirement system, as defined, to modify its plan or plans to comply with the act. PEPRA, among other things, establishes new defined benefit formulas and caps on pensionable compensation. This bill would establish new procedures under PERL for cases in which a member's benefits are erroneously calculated by the state or a contracting agency. The bill would require the system, upon determining on or after January 1, 2019, or on or after January 1, 2017, if an appeal has been filed and the employee member, survivor, or beneficiary has not exhausted his or her administrative or legal remedies, that compensation for an employee member reported by the state or a contracting agency conflicts with specified law, to discontinue the reporting of the disallowed compensation. The bill would require the contributions made on the disallowed compensation, for active members, to be credited against future contributions on behalf of the state or contracting agency that reported the disallowed compensation and would require that state or contracting agency to return to the member any contributions paid by the member. The bill would require PERS, with respect to retired members, survivors, or beneficiaries whose final compensation at retirement was predicated upon disallowed compensation, to permanently adjust the benefit to reflect the exclusion of the disallowed compensation, and would require the contributions made on the disallowed compensation to be credited against future contributions on behalf of the state or contracting agency that reported the disallowed compensation. If, among other things, the member was unaware the compensation was disallowed when reported, the bill would require the state or contracting agency that reported the disallowed compensation to pay the system the full cost of any overpayment, as specified, and to pay the retired member, survivor, or beneficiary the difference between the monthly allowance that was based on the disallowed compensation and the adjusted monthly allowance calculated without the disallowed compensation, as provided. The bill would also authorize the state or a contracting agency, for any memorandum of understanding entered into on or after January 1, 2019, to submit any compensation proposal intended to form the basis of a pension benefit calculation to the system to determine compliance with specified provisions governing compensation. The bill would make related legislative findings and declarations.