California Legislature—2015–16 Regular Session

Assembly BillNo. 1640


Introduced by Assembly Member Mark Stone

January 7, 2016


An act to amend Section 7522.02 of the Government Code, relating to retirement.

LEGISLATIVE COUNSEL’S DIGEST

AB 1640, as introduced, Mark Stone. Retirement: public employees.

The California Public Employees’ Pension Reform Act of 2013 (PEPRA) requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan for employees first hired on or after January 1, 2013. PEPRA exempts from its provisions certain public employees whose collective bargaining rights are subject to specified provisions of federal law until a specified federal district court decision on a certification by the United States Secretary of Labor, or until January 1, 2016, whichever is sooner.

This bill would extend indefinitely that exemption for those public employees, whose collective bargaining rights are subject to specified provisions of federal law and who became a member of a state or local public retirement system prior to December 30, 2014.

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

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

P2    1

SECTION 1.  

Section 7522.02 of the Government Code is
2amended to read:

3

7522.02.  

(a) (1) Notwithstanding any other law, except as
4provided in this article, on and after January 1, 2013, this article
5shall apply to all state and local public retirement systems and to
6their participating employers, including the Public Employees’
7Retirement System, the State Teachers’ Retirement System, the
8Legislators’ Retirement System, the Judges’ Retirement System,
9the Judges’ Retirement System II, county and district retirement
10systems created pursuant to the County Employees Retirement
11Law of 1937 (Chapter 3 (commencing with Section 31450) of Part
123 of Division 4 of Title 3), independent public retirement systems,
13and to individual retirement plans offered by public employers.
14However, this article shall be subject to the Internal Revenue Code
15and Section 17 of Article XVI of the California Constitution. The
16administration of the requirements of this article shall comply with
17applicable provisions of the Internal Revenue Code and the
18Revenue and Taxation Code.

19(2) Notwithstanding paragraph (1), this article shall not apply
20to the entities described in Section 9 of Article IX of, and Sections
214 and 5 of Article XI of, the California Constitution, except to the
22extent that these entities continue to be participating employers in
23any retirement system governed by state statute. Accordingly, any
24retirement plan approved before January 1, 2013, by the voters of
25any entity excluded from coverage by this section shall not be
26affected by this article.

27(3) begin delete(A)end deletebegin deleteend deleteNotwithstanding paragraph (1), this article shall not
28apply to a public employee whose interests are protected under
29Section 5333(b) of Title 49 of the United States Code begin delete until a federal
30district court rules that the United States Secretary of Labor, or
31his or her designee, erred in determining that the application of
32this article precludes certification under that section, or until
33January 1, 2016, whichever is sooner.end delete
begin insert and who became a member
34of a state or local public retirement system prior to December 30,
352014.end insert

begin delete

36(B) If a federal district court upholds the determination of the
37United States Secretary of Labor, or his or her designee, that
38application of this article precludes him or her from providing a
P3    1certification under Section 5333(b) of Title 49 of the United States
2Code, this article shall not apply to a public employee specified
3in subparagraph (A).

end delete

4(4) Notwithstanding paragraph (1), this article shall not apply
5to a multiemployer plan authorized by Section 302(c)(5) of the
6federal Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public
7employer began participation in that plan prior to January 1, 2013,
8and the plan is regulated by the federal Employee Retirement
9Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.).

10(b) The benefit plan required by this article shall apply to public
11employees who are new members as defined in Section 7522.04.

12(c) (1) Individuals who were employed by any public employer
13before January 1, 2013, and who became employed by a subsequent
14public employer for the first time on or after January 1, 2013, shall
15be subject to the retirement plan that would have been available
16to employees of the subsequent employer who were first employed
17by the subsequent employer on or before December 31, 2012, if
18the individual was subject to concurrent membership for which
19creditable service was performed in the previous six months or
20reciprocity established under any of the following provisions:

21(A) Article 5 (commencing with Section 20350) of Chapter 3
22of Part 3 of Division 5 of Title 2.

23(B) Chapter 3 (commencing with Section 31450) of Part 3 of
24Division 4 of Title 3.

25(C) Any agreement between public retirement systems to provide
26reciprocity to members of the systems.

27(D) Section 22115.2 of the Education Code.

28(2) An individual who was employed before January 1, 2013,
29and who, without a separation from employment, changed
30employment positions and became subject to a different defined
31benefit plan in a different public retirement system offered by his
32or her employer shall be subject to that defined benefit plan as it
33would have been available to employees who were first employed
34on or before December 31, 2012.

35(d) If a public employer, before January 1, 2013, offers a defined
36benefit pension plan that provides a defined benefit formula with
37a lower benefit factor at normal retirement age and results in a
38lower normal cost than the defined benefit formula required by
39this article, that employer may continue to offer that defined benefit
40formula instead of the defined benefit formula required by this
P4    1article, and shall not be subject to the requirements of Section
27522.10 for pensionable compensation subject to that formula.
3However, if the employer adopts a new defined benefit formula
4on or after January 1, 2013, that formula must conform to the
5requirements of this article or must be determined and certified by
6the retirement system’s chief actuary and the retirement board to
7have no greater risk and no greater cost to the employer than the
8defined benefit formula required by this article and must be
9approved by the Legislature. New members of the defined benefit
10plan may only participate in the lower cost defined benefit formula
11that was in place before January 1, 2013, or a defined benefit
12formula that conforms to the requirements of this article or is
13approved by the Legislature as provided in this subdivision.

14(e) If a public employer, before January 1, 2013, offers a
15retirement benefit plan that consists solely of a defined contribution
16plan, that employer may continue to offer that plan instead of the
17defined benefit pension plan required by this article. However, if
18the employer adopts a new defined benefit pension plan or defined
19benefit formula on or after January 1, 2013, that plan or formula
20must conform to the requirements of this article or must be
21determined and certified by the retirement system’s chief actuary
22and the system’s board to have no greater risk and no greater cost
23to the employer than the defined benefit formula required by this
24article and must be approved by the Legislature. New members of
25the employer’s plan may only participate in the defined
26contribution plan that was in place before January 1, 2013, or a
27defined contribution plan or defined benefit formula that conforms
28to the requirements of this article. This subdivision shall not be
29construed to prohibit an employer from offering a defined
30contribution plan on or after January 1, 2013, either with or without
31a defined benefit plan, whether or not the employer offered a
32defined contribution plan prior to that date.

33(f) (1) If, on or after January 1, 2013, the Cities of Brea and
34Fullerton form a joint powers authority pursuant to the provisions
35of the Joint Exercise of Powers Act (Article 1 (commencing with
36Section 6500) of Chapter 5), that joint powers authority may
37provide employees the defined benefit plan or formula that those
38employees received from their respective employers prior to the
39exercise of a common power, to which the employee is associated,
40by the joint powers authority to any employee of the City of Brea,
P5    1the City of Fullerton, or a city described in paragraph (2) who is
2not a new member and subsequently is employed by the joint
3powers authority within 180 days of the city providing for the
4exercise of a common power, to which the employee was
5associated, by the joint powers authority.

6(2) On or before January 1, 2017, a city in Orange County that
7is contiguous to the City of Brea or the City of Fullerton may join
8the joint powers authority described in paragraph (1) but not more
9than three cities shall be permitted to join.

10(3) The formation of a joint powers authority on or after January
111, 2013, shall not act in a manner as to exempt a new employee
12or a new member, as defined by Section 7522.04, from the
13requirements of this article. New members may only participate
14in a defined benefit plan or formula that conforms to the
15requirements of this article.

16(g) The Judges’ Retirement System and the Judges’ Retirement
17System II shall not be required to adopt the defined benefit formula
18required by Section 7522.20 or 7522.25 or the compensation
19limitations defined in Section 7522.10.

20(h) This article shall not be construed to provide membership
21in any public retirement system for an individual who would not
22otherwise be eligible for membership under that system’s
23applicable rules or laws.

24(i) On and after January 1, 2013, each public retirement system
25shall modify its plan or plans to comply with the requirements of
26this article and may adopt regulations or resolutions for this
27purpose.



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