BILL ANALYSIS Ó AB 1380 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1380 (Public Employees, Retirement, and Social Security Committee) As Amended June 18, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |70-0 |(May 16, 2013) |SENATE: |33-0 |(July 1, 2013) | ----------------------------------------------------------------- Original Committee Reference: P.E.,R.& S.S. SUMMARY : Makes various technical corrections and conforming changes that align the County Employees' Retirement Law of 1937 ('37 Act) with the provisions of the Public Employees' Pension Reform Act of 2013 (PEPRA), as enacted in AB 340 (Furutani), Chapter 296, Statutes of 2012. Specifically, this bill : 1)Clarifies that certain rights, responsibilities, and entitlements imposed by the '37 Act are also subject to the provisions of PEPRA. 2)Specifies that the definitions and general provisions of the '37 Act govern its laws unless the context otherwise requires, or unless any provision of PEPRA supersedes the definitions and general provisions. 3)Clarifies in the '37 Act that a member subject to PEPRA may not be eligible for a 12-month final compensation period, but if the member is eligible to retire after less than three years of service, the final compensation will be calculated on the average compensation earned during the entire length of the member's service. 4)Clarifies various provisions of the '37 Act to ensure that new members subject to PEPRA will be subject to a 36 consecutive month final compensation period. 5)Clarifies that provisions of the '37 Act that allow an elective or appointive county office to receive retirement service credit for that service even though it was not compensated do not apply to such service if it is subject to PEPRA. 6)Clarifies that members subject to PEPRA may not be eligible for supplemental defined benefit plans if prohibited by PEPRA. 7)Specifies that the provisions of the '37 Act governing the purchase of additional retirement credit only apply to an application AB 1380 Page 2 received by the retirement system prior to January 1, 2013, that is subsequently approved. 8)Clarifies in the '37 Act that an employer may not pay member contributions for members subject to PEPRA, nor may a member with 30 years of continuous service discontinue employee contributions. 9)Specifies that the provisions of the '37 Act that allow a member to retire at a specified age, or a specified age with a certain amount of service credit, or once they have attained a certain amount of service credit regardless of age, do not apply to members who are subject to PEPRA. 10)Clarifies that the compensation limit established in PEPRA applies to members who are subject to those limits. 11)Clarifies that any provisions of the '37 Act regarding benefit changes that is in conflict with PEPRA will be superseded by PEPRA. 12)Specifies that any provisions in the '37 Act regarding community property and benefit payable to former spouses, apply to benefit determined under the '37 Act or PEPRA, whichever is applicable. 13)Clarifies that compensation used to calculate a benefit may be pensionable compensation or compensation earnable, whichever is applicable. 14)Clarifies that a county may use a single rate or an age-at-entry rate when calculating the cost of member contributions required for increasing post-retirement cost-of-living adjustments. 15)Clarifies that members subject to PEPRA are not eligible to participate in an Internal Revenue Section 415 benefit replacement plan. The Senate amendments make additional technical corrections and conforming changes to the bill. EXISTING LAW : 1)Establishes comprehensive public employee pension reform through enactment of PEPRA (and related statutory changes) that apply to all public employers and public pension plans on and after January 1, 2013, excluding the University of California and charter cities and counties that do not participate in a retirement system governed by AB 1380 Page 3 state statute. 2)Prohibits, under PEPRA, the purchase of nonqualified service credit unless the application to purchase the credit is received by the retirement system prior to January 1, 2013, and subsequently approved. 3)Authorizes, under the '37 Act, an active member of the retirement system to purchase up to five years of additional retirement credit for "nonqualified service," as specified. 4)Authorizes, under the '37 Act, a safety member who has completed 10 years of continuous service and has reached age 50, or who has completed 20 years of service regardless of age, to retire, as specified. 5)Authorizes, under the '37 Act, a general member who has reached age 70, or has completed 10 years of service and has reached age 55, or who has completed 30 years of service regardless of age, to retire, as specified. FISCAL EFFECT : None. This bill is keyed non-fiscal by the Legislative Counsel. COMMENTS : According to the sponsor of the bill, the State Association of County Retirement Systems, this bill will ensure continued implementation of PEPRA as intended by placing the act's requirements in the '37 Act. Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957 FN: 0001344