BILL NUMBER: SB 24 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Walters
DECEMBER 3, 2012
An act to amend Sections 7522.02, 7522.15, 7522.20, and 7522.25
of, and to add Section 7522.03 to, the Government Code, relating to
public employees' retirement.
LEGISLATIVE COUNSEL'S DIGEST
SB 24, as introduced, Walters. Public employees' retirement:
benefit plans.
Existing law regulates state and local public retirement systems
and generally requires public employees who are new members, as
defined, of those systems, on and after January 1, 2013, to
participate in specified benefit plans. Existing law permits a public
employer that, before January 1, 2013, offers a defined benefit
pension plan that provides a defined benefit formula with a lower
benefit factor at normal retirement age, and results in a lower
normal cost, than the defined benefit formula required for new
employees on and after January 1, 2012, to continue to offer that
defined benefit formula and excepts the employer from specified
requirements regarding pensionable compensation. Existing law
requires, in the case of these plans, if a new defined benefit
formula is adopted on or after January 1, 2013, that the formula meet
certain requirements and, among other things, be approved by the
Legislature. Existing law prescribes the same requirements for a
retirement benefit plan that consists solely of a defined
contribution plan if the employer, on or after January 1, 2013,
adopts a new defined benefit pension plan or defined benefit formula,
as specified.
This bill would eliminate the requirement that the Legislature
approve the changes in the instances described above. This bill would
also authorize a local agency public employer or public retirement
system that offers a defined benefit pension plan to offer a benefit
formula with a lower benefit factor at normal retirement age and that
results in a lower normal cost than the benefit formulas that are
currently required, for purposes of addressing a fiscal necessity.
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 7522.02 of the Government Code is amended to
read:
7522.02. (a) (1) Notwithstanding any other law, except as
provided in this article, on and after January 1, 2013, this article
shall apply to all state and local public retirement systems and to
their participating employers, including the Public Employees'
Retirement System, the State Teachers' Retirement System, the
Legislators' Retirement System, the Judges' Retirement System I, the
Judges' Retirement System II, county and district retirement systems
created pursuant to the County Employees Retirement Law of 1937,
independent public retirement systems, and to individual retirement
plans offered by public employers. However, this article shall be
subject to the Internal Revenue Code and Section 17 of Article XVI of
the California Constitution. The administration of the requirements
of this article shall comply with applicable provisions of the
Internal Revenue Code and the Revenue and Taxation Code.
(2) Notwithstanding paragraph (1), this article shall not apply to
the entities described in Section 9 of Article IX of, and Sections 4
and 5 of Article XI of, the California Constitution, except to the
extent that these entities continue to be participating employers in
any retirement system governed by state statute. Accordingly, any
retirement plan approved before January 1, 2013, by the voters of any
entity excluded from coverage by this section shall not be affected
by this article.
(b) The benefit plan required by this article shall apply to
public employees who are new members as defined in Section 7522.04.
(c) Individuals who were employed by any public employer before
January 1, 2013, and who became employed by a subsequent public
employer for the first time on or after January 1, 2013, shall be
subject to the retirement plan that would have been available to
employees of the subsequent employer who were first employed by the
subsequent employer on or before December 31, 2012, if the individual
was subject to reciprocity established under any of the following
provisions:
(1) Article 5 (commencing with Section 20350) of Chapter 3 of Part
3 of Division 5 of Title 2.
(2) Chapter 3 (commencing with Section 31450) of Part 3 of
Division 4 of Title 3.
(3) Any agreement between public retirement systems to provide
reciprocity to members of the systems.
(d) If a public employer, before January 1, 2013, offers a defined
benefit pension plan that provides a defined benefit formula with a
lower benefit factor at normal retirement age and results in a lower
normal cost than the defined benefit formula required by this
article, that employer may continue to offer that defined benefit
formula instead of the defined benefit formula required by this
article, and shall not be subject to the requirements of Section
7522.10 for pensionable compensation subject to that formula.
However, if the employer adopts a new defined benefit formula on or
after January 1, 2013, that formula must conform to the requirements
of this article or must be determined and certified by the retirement
system's chief actuary and the retirement board to have no greater
risk and no greater cost to the employer than the defined benefit
formula required by this article and must be approved by the
Legislature . New members of the defined benefit plan may
only participate in the lower cost defined benefit formula that was
in place before January 1, 2013, or a defined benefit formula that
conforms to the requirements of this article or is approved by the
Legislature as provided in this subdivision.
(e) If a public employer, before January 1, 2013, offers a
retirement benefit plan that consists solely of a defined
contribution plan, that employer may continue to offer that plan
instead of the defined benefit pension plan required by this article.
However, if the employer adopts a new defined benefit pension plan
or defined benefit formula on or after January 1, 2013, that plan or
formula must conform to the requirements of this article or must be
determined and certified by the retirement system's chief actuary and
the system's board to have no greater risk and no greater cost to
the employer than the defined benefit formula required by this
article and must be approved by the Legislature .
New members of the employer's plan may only participate in the
defined contribution plan that was in place before January 1, 2013,
or a defined contribution plan or defined benefit formula that
conforms to the requirements of this article.
(f) The Judges' Retirement System I and the Judges' Retirement
System II shall not be required to adopt the defined benefit formula
required by Section 7522.25 or 7522.30
7522.20 or 7522.25 or the compensation limitations defined in
Section 7522.10.
(g) This article shall not be construed to provide membership in
any public retirement system for an individual who would not
otherwise be eligible for membership under that system's applicable
rules or laws.
SEC. 2. Section 7522.03 is added to the Government Code, to read:
7522.03. (a) Notwithstanding Section 7522.15, a local agency
public employer or public retirement system that offers a defined
benefit pension plan may, for purposes of addressing a fiscal
necessity, offer a benefit formula with a lower benefit factor at
normal retirement age and that results in a lower normal cost than
the benefit formula required by Section 7522.20 or 7522.25.
(b) The authority provided by subdivision (a) shall be exercised
upon the direction of the legislative body of the local agency, as
manifest in a duly enacted ordinance or resolution that describes the
fiscal necessity, or upon a vote of the people of the affected
jurisdiction.
(c) For purposes of this section, "local agency" means a city,
county, or district.
SEC. 3. Section 7522.15 of the Government Code is amended to read:
7522.15. Except as provided in subdivisions (d) and (e) of
Section 7522.02 or in Section 7522.03 , each public
employer and each public retirement system that offers a defined
benefit plan shall offer only the defined benefit formulas
established pursuant to Sections 7522.20 and 7522.25 to new members.
SEC. 4. Section 7522.20 of the Government Code is amended to read:
7522.20. (a) Each Except as provided in
Section 7522.03, each retirement system that offers a defined
benefit plan for nonsafety members of the system shall use the
formula prescribed by this section. The defined benefit plan shall
provide a pension at retirement for service equal to the percentage
of the member's final compensation set forth opposite the member's
age at retirement, taken to the preceding quarter year, in the
following table, multiplied by the number of years of service in the
system as a nonsafety member. A member may retire for service under
this section after five years of service and upon reaching 52 years
of age.
Age of Retirement Fraction
52 ..................... 1.00
52 1/4.................. 1.025
52 1/2.................. 1.050
52 3/4 ................. 1.075
53 .................... 1.100
53 1/4.................. 1.125
53 1/2.................. 1.150
53 3/4.................. 1.175
54 ..................... 1.200
54 1/4.................. 1.225
54 1/2.................. 1.250
54 3/4.................. 1.275
55 ..................... 1.300
55 1/4.................. 1.325
55 1/2.................. 1.350
55 3/4.................. 1.375
56 ..................... 1.400
56 1/4.................. 1.425
56 1/2.................. 1.450
56 3/4.................. 1.475
57 ..................... 1.500
57 1/4.................. 1.525
57 1/2.................. 1.550
57 3/4.................. 1.575
58 ..................... 1.600
58 1/4.................. 1.625
58 1/2.................. 1.650
58 3/4.................. 1.675
59 ..................... 1.700
59 1/4.................. 1.725
59 1/2.................. 1.750
59 3/4.................. 1.775
60 ..................... 1.800
60 1/4.................. 1.825
60 1/2.................. 1.850
60 3/4.................. 1.875
61 ..................... 1.900
61 1/4.................. 1.925
61 1/2.................. 1.950
61 3/4.................. 1.975
62 ..................... 2.000
62 1/4.................. 2.025
62 1/2.................. 2.050
62 3/4.................. 2.075
63 ..................... 2.100
63 1/4.................. 2.125
63 1/2.................. 2.150
63 3/4.................. 2.175
64 ..................... 2.200
64 1/4.................. 2.225
64 1/2.................. 2.250
64 3/4.................. 2.275
65 ..................... 2.300
65 1/4.................. 2.325
65 1/2.................. 2.350
65 3/4.................. 2.375
66 ..................... 2.400
66 1/4.................. 2.425
66 1/2.................. 2.450
66 3/4.................. 2.475
67 ..................... 2.500
(b) Pensionable compensation used to calculate the defined benefit
shall be limited as described in Section 7522.10.
(c) A new member of the State Teachers' Retirement System shall be
subject to the formula established pursuant to Section 24202.6 of
the Education Code.
SEC. 5. Section 7522.25 of the Government Code is amended to read:
7522.25. (a) Each Except as provided in
Section 7522.03 each retirement system that offers a defined
benefit plan for safety members of the system shall use one or more
of the defined benefit formulas prescribed by this section. A member
may retire for service under any of the formulas in this section
after five years of service and upon reaching 50 years of age.
(b) The Basic Safety Plan shall provide a pension at retirement
for service equal to the percentage of the member's final
compensation set forth opposite the member's age at retirement, taken
to the preceding quarter year, in the following table, multiplied by
the number of years of service in the system as a safety member.
Age at Retirement Fraction
50 ............................. 1.426
50 1/4.......................... 1.447
50 1/2.......................... 1.467
50 3/4.......................... 1.488
51 ............................. 1.508
51 1/4.......................... 1.529
51 1/2.......................... 1.549
51 3/4.......................... 1.570
52 ............................. 1.590
52 1/4.......................... 1.611
52 1/2.......................... 1.631
52 3/4.......................... 1.652
53 ............................. 1.672
53 1/4.......................... 1.693
53 1/2.......................... 1.713
53 3/4.......................... 1.734
54 ............................. 1.754
54 1/4.......................... 1.775
54 1/2.......................... 1.795
54 3/4.......................... 1.816
55 ............................. 1.836
55 1/4.......................... 1.857
55 1/2.......................... 1.877
55 3/4.......................... 1.898
56 ............................. 1.918
56 1/4.......................... 1.939
56 1/2.......................... 1.959
56 3/4.......................... 1.980
57 and over .................... 2.000
(c) The Safety Option Plan One shall provide a pension at
retirement for service equal to the percentage of the member's final
compensation set forth opposite the member's age at retirement, taken
to the preceding quarter year, in the following table, multiplied by
the number of years of service in the system as a safety member.
Age at Retirement Fraction
50 ............................... 2.000
50 1/4............................ 2.018
50 1/2............................ 2.036
50 3/4............................ 2.054
51 ............................... 2.071
51 1/4............................ 2.089
51 1/2............................ 2.107
51 3/4............................ 2.125
52 ............................... 2.143
52 1/4............................ 2.161
52 1/2............................ 2.179
52 3/4............................ 2.196
53 ............................... 2.214
53 1/4............................ 2.232
53 1/2............................ 2.250
53 3/4............................ 2.268
54 ............................... 2.286
54 1/4............................ 2.304
54 1/2............................ 2.321
54 3/4............................ 2.339
55................................ 2.357
55 1/4............................ 2.375
55 1/2............................ 2.393
55 3/4............................ 2.411
56................................ 2.429
56 1/4............................ 2.446
56 1/2............................ 2.464
56 3/4............................ 2.482
57 and over....................... 2.500
(d) The Safety Option Plan Two shall provide a pension at
retirement for service equal to the percentage of the member's final
compensation set forth opposite the member's age at retirement, taken
to the preceding quarter year, in the following table, multiplied by
the number of years of service in the system as a safety member.
Age at Retirement Fraction
50 ............................. 2.000
50 1/4.......................... 2.025
50 1/2.......................... 2.050
50 3/4.......................... 2.075
51 ............................. 2.100
51 1/4.......................... 2.125
51 1/2.......................... 2.150
51 3/4.......................... 2.175
52 ............................. 2.200
52 1/4.......................... 2.225
52 1/2.......................... 2.250
52 3/4.......................... 2.275
53 ............................. 2.300
53 1/4.......................... 2.325
53 1/2.......................... 2.350
53 3/4.......................... 2.375
54 ............................. 2.400
54 1/4.......................... 2.425
54 1/2.......................... 2.450
54 3/4.......................... 2.475
55 ............................. 2.500
55 1/4.......................... 2.525
55 1/2.......................... 2.550
55 3/4.......................... 2.575
56 ............................. 2.600
56 1/4.......................... 2.625
56 1/2.......................... 2.650
56 3/4.......................... 2.675
57 and over .................... 2.700
(e) On and after January 1, 2013, an employer shall offer one or
more of the safety formulas prescribed by this section to new
employees who are safety employees eligible for membership in the
system. The formula offered shall be the formula that is closest to,
and provides a lower benefit at 55 years of age than, the formula
provided to members in the same retirement classification offered by
the employer on December 31, 2012.
(f) On and after January 1, 2013, an employer and its employees
subject to Safety Option Plan One or Safety Option Plan Two may agree
in a memorandum of understanding to be subject to Safety Option Plan
One or the Basic Safety Plan, subject to the following:
(1) The lower plan shall apply to members first employed on or
after the effective date of the lower plan, and shall be agreed to in
a memorandum of understanding that has been collectively bargained
in accordance with applicable laws.
(2) A retirement plan contract amendment with a public retirement
system to alter a retirement formula pursuant to this subdivision
shall not be implemented by the employer in the absence of a
memorandum of understanding that has been collectively bargained in
accordance with applicable laws.
(3) An employer shall not use impasse procedures to impose the
lower plan.
(4) An employer shall not provide a different defined benefit for
nonrepresented, managerial, or supervisory employees than the
employer provides for other public employees, including represented
employees, of the same employer who are in the same membership
classifications.
(g) Pensionable compensation used to calculate the defined benefit
shall be limited as described in Section 7522.10.