Public employees' retirement: service credit: payments.

(1) The Public Employees' Retirement Law (PERL) creates 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 vests management and control of PERS in the Board of Administration. Under that law, members may make certain elections, including elections to purchase service credit for various types of public service, upon payment of additional contributions. Existing law permits a member who retires before paying off the entire amount for service credit to pay the balance due by deductions from their retirement allowance equal to those authorized as payroll deductions, as specified. Under existing law, upon the death of that member, a survivor of the member, who is eligible for a monthly allowance, may elect to continue those deductions from the survivor's allowance. Existing law authorizes the member, survivor, or beneficiary, as an alternative, on or after January 1, 2020, to elect to receive an allowance that is reduced by the actuarial equivalent of any balance remaining unpaid by the member. This bill would limit that alternative option to elections made on or after January 1, 2020, with an initial effective date prior to January 1, 2028. (2) Existing law provides that all elections taking effect on or after January 1, 2020, including elections for normal contributions, arrears contributions, absences, or public service become due and payable at the time of the member's retirement or preretirement death. This bill would require, for all elections with an effective date on or after January 1, 2028, except as specified, the member's payment to be received by the system no later than 90 days after the member's retirement effective date, or the survivor or beneficiary's payment to be received by the system no later than 90 days after the date the notification of balance due is mailed. For any balance not paid, the service credit included in the election would be reduced or eliminated, as specified. This bill would also require all contributions or service credit adjustments required by law or agreement with an effective date on or after January 1, 2028, to become due and payable at the time of retirement or preretirement death. The bill would require the member, survivor, or beneficiary to have their allowance reduced by the actuarial equivalent of any balance remaining unpaid by the member. (3) Existing law permits a member of PERS who has elected to receive credit for service and who retires for disability, including a safety member who retires due to industrial disability, to elect to cancel the installments prospectively, in accordance with certain provisions. Existing law specifies that, for an election taking place on or after January 1, 2020, the amount remaining for normal contributions, arrears, contributions, absences, or public service for the election becomes due and payable at the time of the member's retirement or preretirement death and provides that in these circumstances the member, survivor, or beneficiary allowance is reduced by the actuarial equivalent of any balance remaining unpaid by the member. This bill would require, for any election with an effective date on or after January 1, 2028, except as specified, the member's payment to be received by the system no later than 90 days after the member's retirement effective date, or the survivor or beneficiary's payment to be received by the system no later than 90 days after the date the notification of balance due is mailed. For any balance not paid, the service credit included in the election would be reduced or eliminated, as specified. (4) Existing law specifies that an election by a member to receive credit for service under PERL is effective only if accompanied by a lump-sum payment or an authorization for payments, in accordance with regulations of the board. Existing law authorizes a member paying for credit for service in after-tax installments to suspend these payments for a period not to exceed 12 months, with payments automatically resuming at the end of the period, or earlier, if requested by the member. Under existing law, a member who retires during the suspension period may, prior to retirement, either make a lump-sum payment for the recalculated balance due or cancel installment payments, as specified. Existing law also provides a 3rd option, under which a member, on or after January 1, 2020, may elect to reduce their allowance by the actuarial equivalent of the recalculated balance remaining unpaid by the member. Under existing law, a member's failure to make an election results in the resumption of installment payments as of the member's retirement date, or for elections with an initial effective date on or after January 1, 2020, results in the allowance being reduced by the actuarial equivalent of the recalculated balance remaining unpaid by the member. This bill would limit that 3rd option to elections made on or after January 1, 2020, with a initial effective date prior to January 1, 2028. The bill would provide that if a member fails to make an election, any balance remaining unpaid at the time of retirement would become due and payable, as specified. (5) The PERL establishes retirement formulas, known as the Second Tier, modified First Tier, and First Tier, which are applicable to specified members of the retirement system. Effective January 1, 2000, a member who received service credit subject to Second Tier benefits may elect to become subject to First Tier benefits and contribution rates. That law requires a member who elects to become subject to First Tier benefits to deposit accumulated contributions the member withdrew while they were subject to Second Tier benefits, plus interest, as specified, or alternatively, the deposit requirement may be satisfied by an election to reduce the member's allowance by the actuarial equivalent of any balance remaining unpaid by the member at the time of the member's retirement or preretirement death. This bill would make that alternative provision applicable only to elections made prior to January 1, 2028. Existing law specifies that, for a member who elects to receive First Tier credit on or after January 1, 2020, any unpaid balance of that member is due and payable at the time of the member's retirement or preretirement death, with the member, survivor, or beneficiary's allowance reduced by the actuarial equivalent of any balance remaining unpaid by the member. This bill would require for an election on or after January 1, 2028, the member's payment to be received by the system no later than 90 days after the member's retirement effective date, or the survivor or beneficiary's payment to be received by the system no later than 90 days after the date the notification of balance due is mailed. For any balance not paid, the service credit included in the election would be adjusted, as specified. The bill would make other related and clarifying changes.