BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1878 (Jones-Sawyer) - Public Employees' Retirement System:
state or school members: postretirement death benefit
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|Version: May 31, 2016 |Policy Vote: P.E. & R. 3 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1878 would authorize the Board of Administration of
the California Public Employees' Retirement System (CalPERS) to
annually adjust the $2,000 lump-sum death benefit for state and
school members, based on changes in the All Urban California
Consumer Price Index, after each actuarial valuation.
Fiscal
Impact: CalPERS would incur a one-time administrative cost of
$50,000 to modify existing information technology systems and
benefit publications. Additionally, because the cost of the
death benefit is factored into the CalPERS' contribution rate
structure, it could potentially lead to higher state department
contribution rates in future years
AB 1878 (Jones-Sawyer) Page 1 of
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Background: The California Public Employees' Retirement Law provides
varying levels of death benefits according to membership
category and status, each providing a "lump-sum" of money to
survivors at the time of the member's death. The original
lump-sum death benefit of $300 for all retired CalPERS members
was enacted in 1945. However, over the years, the Legislature
began to provide different benefit levels to different
categories of members: state, school, local, Judges' Retirement
Systems (JRS and JRS II), Legislators' Retirement System (LRS),
active, and retired.
Currently, state and school members have a retiree death benefit
of $2,000. School employers also have the ability to amend
their individual contracts with CalPERS to provide enhanced
retiree death benefits of $3,000, $4,000 or $5,000. Local
members have a minimum benefit of $500, with an option to
provide up to $5,000 through contract amendment. Members of JRS
have no retiree death benefit, while members of LRS receive
$600.
The California State Teachers' Retirement System currently
provides a lump sum death payment for survivors of retired
members of $6,163. The amount of the death payment may be
adjusted by the Teachers' Retirement Board following each
actuarial valuation based on changes to the All Urban California
Consumer Price Index.
Proposed Law:
This bill would authorize the CalPERS board to adjust the $2,000
lump-sum death benefit for state and school member retirees,
based on changes in the All Urban California Consumer Price
Index, following each annual actuarial valuation.
AB 1878 (Jones-Sawyer) Page 2 of
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Related Legislation:
AB 507 (Garcia, of 2013) would have increased, over a
period of four years, the postretirement death benefit paid
to the beneficiary of a school member of CalPERS from
$2,000 to $6,000. This bill was held under submission on
the Suspense File of the Assembly Appropriations Committee.
AB 2606 (Mendoza, of 2012) would have increased, over a
period of four years, the postretirement death benefit paid
to the beneficiary of a school member of CalPERS from
$2,000 to $6,000. This bill was held under submission on
the Suspense File of the Assembly Appropriations Committee.
Staff
Comments: . CalPERS has yet to complete its actuarial analysis
of the current version of the bill, but costs to state
departments via higher contribution rates could be significant.
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