BILL NUMBER: AB 1856 ENROLLED
BILL TEXT
PASSED THE SENATE JULY 1, 2010
PASSED THE ASSEMBLY AUGUST 9, 2010
AMENDED IN SENATE JUNE 7, 2010
AMENDED IN ASSEMBLY MARCH 25, 2010
INTRODUCED BY Assembly Member Fong
FEBRUARY 12, 2010
An act to amend Section 21050 of the Government Code, relating to
public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 1856, Fong. Public employees' retirement.
The Public Employees' Retirement Law provides a comprehensive set
of rights and benefits based upon age, service credit, and final
compensation. Under the Public Employees' Retirement Law, members may
elect to receive service credit for various types of public service,
and this election is effective only if an appropriate payment, or
authorization for payment, of the contributions and interest required
for the credit is made. That law calculates retirement benefits, in
part, based on years of creditable service and authorizes a member to
receive additional service credits, as specified.
This bill would authorize a member authorized to pay for credit
for service in after-tax installments to elect in writing, including
by verified electronic transaction, at any time prior to retirement,
to suspend after-tax installment payments for a period not to exceed
12 months or to prospectively cancel payment of the remaining unpaid
balance for those installment payments, as specified. The bill would
require that installment payments automatically resume at the end of
the suspension period, or earlier if requested by the member. The
bill would prohibit an additional suspension of those installment
payments for the same service for 3 years following the resumption of
installment payments. The bill would require that the balance due at
the end of a suspension period be recalculated to include interest
accrued during the suspension.
The bill would additionally authorize the board to cancel payment
of the remaining unpaid balance for those installment payments if the
member fails to make after-tax installment payments when due for a
period of 12 months. The bill would authorize a member to elect to
purchase that portion of the service credit not credited to the
member's account as a result of cancellation, as specified.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 21050 of the Government Code is amended to
read:
21050. (a) An election by a member to receive credit for service
under this part, in addition to his or her current and prior service
credit, shall be effective only if accompanied by a lump-sum payment
or an authorization for payments, other than a lump-sum payment, in
accordance with regulations of the board.
(b) If a member electing to receive credit for service under this
part is authorized to pay for that service in installment payments
beginning on or after January 1, 2004, the amount of the installment
payments shall include an actuarial adjustment, as determined by the
chief actuary, as necessary to take into account the provisions of
Section 21037. The amount of the actuarial adjustment may not exceed
one-half of 1 percent of the total installment payment.
(c) (1) A member authorized to pay for credit for service in
after-tax installments may elect in writing, including by verified
electronic transaction, at any time prior to retirement, to suspend
after-tax installment payments for a period not to exceed 12 months.
Installment payments shall automatically resume at the end of the
suspension period, or earlier if requested by the member. A member
may not elect an additional suspension of those installment payments
for the same service for three years following the resumption of
installment payments.
(2) The balance due at the end of a suspension period shall be
recalculated to include interest accrued during the suspension.
(3) (A) A member who retires during the suspension period may,
prior to retirement, do either of the following:
(i) Make a lump-sum payment for the recalculated balance due.
(ii) Cancel installment payments in the manner specified in
subdivision (d).
(B) Failure by a member to make the lump-sum payment or the
election to cancel installment payments, will result in the
resumption of installment payments as of his or her date of
retirement.
(d) A member authorized to pay for credit for service in after-tax
installments may elect in writing, including by verified electronic
transaction, at any time prior to retirement, to prospectively cancel
payment of the remaining unpaid balance for those installment
payments.
(1) An election shall be effective upon the earlier of the member'
s retirement date, or the first day of the month following approval
by the system of the election.
(2) Service credited to the member's account will be reduced in
proportion to the balance of the total amount remaining unpaid on the
effective date of the cancellation. If the member elects to cancel
during or at the end of a suspension period, the balance shall
include any interest accrued and unpaid during the suspension period.
(3) Installment payments shall not be canceled for any of the
following:
(A) Contribution or service credit adjustments required by law or
agreement.
(B) A tier election pursuant to Article 2 (commencing with Section
21070) of Chapter 12 of Part 3 of Division 5 of Title 2.
(C) The purchase of service credit subject to a community property
division by way of court judgment, domestic relations, or other
court order or settlement agreement.
(e) If a member who has not elected to suspend installment
payments pursuant to subdivision (c) fails to make after-tax
installment payments when due for a period of 12 months, the board
may cancel the remaining unpaid balance in the same manner and with
the same effect as if the member had elected to cancel his or her
installment payments pursuant to subdivision (d).
(f) Prior to retirement, a member may elect to purchase that
portion of the service credit not credited to his or her account as a
result of a cancellation executed pursuant to subdivision (d) or
(e). A member shall not make an election for three years following
the effective date of the cancellation unless the member retires
before the conclusion of that period.
(1) A member who elects to purchase that service credit shall
contribute an amount equal to the sum of the following:
(A) The remaining unpaid balance of the canceled installment
payments.
(B) Interest from the effective date of the cancellation until the
date of completion of payment.
(C) If the member elects to contribute in installment payments,
interest on the unpaid balance of the amount payable, beginning on
the date of the election to receive credit through completion of
payments.
(2) Notwithstanding Section 575.1 of Title 2 of the California
Code of Regulations, the interest rate applicable to the amount due
for this election shall be the interest rate applicable to the
canceled installment payments.