BILL ANALYSIS Ó
AB 284
Page 1
Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Bonta, Chair
AB
284 (Brough) - As Introduced February 11, 2015
SUBJECT: City of San Juan Capistrano: public employee pension
benefits
SUMMARY: Approves a specified defined benefit formula (Plan W)
for the employees of the City of San Juan Capistrano in lieu of
the formula required to be provided under the Public Employees'
Pension Reform Act of 2013 (PEPRA). Plan W has been certified
as having no greater risk and no greater cost to the employer
than the PEPRA formula.
EXISTING LAW:
1)Creates 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 state statute.
2)Under PEPRA, changed the retirement benefit plans that may be
offered to new public employees, including:
a) Establishing uniform retirement formulas, including a 2%
AB 284
Page 2
at age 62 formula for non-safety workers;
b) Requiring a three-year final compensation period for
determining a pension;
c) Requiring employee member contributions equal to 50% of
the normal cost of the employee's benefit plan;
d) Capping the amount of compensation that can count toward
a pension; and,
e) Restricting the pay items that may be included in
pensionable compensation.
3)Specifies, with some exceptions, that the PEPRA requirements
are applicable to new retirement plan members who first become
members on and after January 1, 2013.
4)Authorizes an employer, upon approval of the Legislature, to
adopt a new defined benefit formula, on or after January 1,
2013, if that formula is 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 PEPRA formula.
FISCAL EFFECT: Unknown. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS: According to the author, "In 2014, the City of San
Juan Capistrano negotiated a hybrid pension plan with the San
Juan Capistrano Management and Professional Employees
Association and the San Juan Capistrano Classified Employees
AB 284
Page 3
Association for employees new to public service, hired on or
after January 1, 2015."
"This plan provides new, nonsafety hires the option to elect
coverage under a PEPRA alternative defined benefit formula,
'Plan W.' This option consists of a 1.62% at Age 65 benefit
formula combined with a City match of up to a maximum of 1% to a
defined contribution plan. New employees may choose the hybrid
pension plan or the City's existing "Plan U" 2.5% at Age 67
benefit pension plan that satisfies PEPRA."
The author concludes, "The hybrid plan has been certified and
determined by the chief actuary of the retirement system and the
Board of Retirement of the Orange County Employees Retirement
System (OCERS) as representing 'no greater risk' and 'no greater
cost' to the City than the benefit formula otherwise required by
PEPRA."
REGISTERED SUPPORT / OPPOSITION:
Support
City of San Juan Capistrano (Sponsor)
Classified Employees Association of the City of San Juan
Capistrano
Management and Professional Employees Association of the City of
San Juan Capistrano
Opposition
None on file
AB 284
Page 4
Analysis Prepared
by: Karon Green/P.E.,R., & S.S./(916) 319-3957