Amended in Assembly April 11, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 160

Introduced by Assembly Member Alejo

January 22, 2013

An act to amend begin delete Section end delete begin insert Sections end insert 7522.04 begin insert and 7522.18 end insert of the Government Code, relating to public employees’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

AB 160, as amended, Alejo. California Public Employees’ Pension Reform Act of 2013: exceptions.

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The

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begin insert (1) end insert begin insert   end insert begin insert The end insert 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, as specified. Among other things, PEPRA prohibits a public employer from offering a defined benefit pension plan exceeding specified retirement formulas, requires new members of public retirement systems to contribute at least a specified amount of the normal cost, as defined, for their defined benefit plans, and prohibits an enhancement of a public employee’s retirement formula or benefit adopted after January 1, 2013, from applying to service performed prior to the operative date of the enhancement.

This bill would except from PEPRA, by excepting from the definition of public retirement system, certain multiemployer plans authorized under federal law and retirement plans for public employees whose collective bargaining rights are protected by a specified provision of federal law begin insert if a federal agency determines a conflict with federal law end insert .

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(2) PEPRA prohibits a public employer from offering a supplemental defined benefit plan if the public employer did not do so before January 1, 2013, or, if it did, from offering this plan to an additional employee group after that date.

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This bill would exclude from the definition of a supplemental defined benefit plan for purposes of this prohibition a multiemployer plan, as defined in federal law, pursuant to a collective bargaining or similar agreement.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 7522.04 of the Government Code is
amended to read:

7522.04.  

For the purposes of this article:

(a) “Defined benefit formula” means a formula used by the
retirement system to determine a retirement benefit based on age,
years of service, and pensionable compensation earned by an
employee up to the limit defined in Section 7522.10.

(b) “Employee contributions” means the contributions to a public
retirement system required to be paid by a member of the system,
as fixed by law, regulation, administrative action, contract, contract
amendment, or other written agreement recognized by the
retirement system as establishing an employee contribution.

(c) “Federal system” means the old age, survivors, disability,
and health insurance provisions of the federal Social Security Act
(42 U.S.C. Sec. 301 et seq.).

(d) “Member” means a public employee who is a member of
any type of a public retirement system or plan.

(e) “New employee” means either of the following:

(1) An employee, including one who is elected or appointed, of
a public employer who is employed for the first time by any public
employer on or after January 1, 2013, and who was not employed
by any other public employer prior to that date.

(2) An employee, including one who is elected or appointed, of
a public employer who is employed for the first time by any public
employer on or after January 1, 2013, and who was employed by
another public employer prior to that date, but who was not subject
to reciprocity under subdivision (c) of Section 7522.02.

(f) “New member” means any of the following:

(1) An individual who becomes a member of any public
retirement system for the first time on or after January 1, 2013,
and who was not a member of any other public retirement system
prior to that date.

(2) An individual who becomes a member of a public retirement
system for the first time on or after January 1, 2013, and who was
a member of another public retirement system prior to that date,
but who was not subject to reciprocity under subdivision (c) of
Section 7522.02.

(3) An individual who was an active member in a retirement
system and who, after a break in service of more than six months,
returned to active membership in that system with a new employer.
For purposes of this subdivision, a change in employment between
state entities or from one school employer to another shall not be
considered as service with a new employer.

(g) “Normal cost” means the portion of the present value of
projected benefits under the defined benefit that is attributable to
the current year of service, as determined by the public retirement
system’s actuary according to the most recently completed
valuation.

(h) “Public employee” means an officer, including one who is
elected or appointed, or an employee of a public employer.

(i) “Public employer” means:

(1) The state and every state entity, including, but not limited
to, the Legislature, the judicial branch, including judicial officers,
and the California State University.

(2) Any political subdivision of the state, or agency or
instrumentality of the state or subdivision of the state, including,
but not limited to, a city, county, city and county, a charter city, a
charter county, school district, community college district, joint
powers authority, joint powers agency, and any public agency,
authority, board, commission, or district.

(3) Any charter school that elects or is required to participate
in a public retirement system.

(j) (1) “Public retirement system” means any pension or
retirement system of a public employer, including, but not limited
to, an independent retirement plan offered by a public employer
that the public employer participates in or offers to its employees
for the purpose of providing retirement benefits, or a system of
benefits for public employees that is governed by Section 401(a)
of Title 26 of the United States Code.

(2) “Public retirement system” does not include:

(A) A multiemployer plan authorized by Section 302(c)(5) of
the Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public
employer began participation in that plan prior to January 1, 2013,
and that plan is regulated by the Employee Retirement Income
Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.).

(B) A retirement plan for public employees whose collective
bargaining rights are protected by Section 5333(b) of Title 49 of
the United States Code and the agreements entered begin insert into end insert pursuant
to that provision begin insert if the United States Department of Labor has
issued a written determination that this division is in conflict with
federal law end insert .

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begin insert SEC. 2. end insert   

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begin insert Section 7522.18 of the end insert begin insert Government Code end insert begin insert is amended
to read: end insert

7522.18.  

(a) A public employer that does not offer a
supplemental defined benefit plan before January 1, 2013, shall
not offer a supplemental defined benefit plan for any employee on
or after January 1, 2013.

(b) A public employer that provides a supplemental defined
benefit plan, including a defined benefit plan offered by a private
provider, before January 1, 2013, shall not offer a supplemental
defined benefit plan to any additional employee group to which
the plan was not provided before January 1, 2013.

(c) Except as provided in Chapter 38 (commencing with Section
25000) of Article 1 of Part 13 of Title 1 of the Education Code, a
public employer shall not offer or provide a supplemental defined
benefit plan, including a defined benefit plan offered by a private
provider, to any employee hired on or after January 1, 2013.

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(d) For purposes of this section, a “supplemental defined benefit
plan” does not include a multiemployer plan, as defined in the
federal Employee Retirement Income Security Act (29 U.S.C. Sec.
1002(37)), in which a public employer participates pursuant to a
collective bargaining agreement or similar agreement covering
its employees.

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