BILL ANALYSIS Ó
AB 2404
Page 1
Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2404 (Cooley) - As Amended April 12, 2016
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|Policy |Public Employees, |Vote:|7 - 0 |
|Committee: |Retirement/Soc Sec | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
This bill consolidates optional retirement benefit settlements
available to members of the California Public Employees'
Retirement System (CalPERS), the Judges' Retirement System (JRS
I), and the Judges' Retirement System II (JRS II), who retire on
or after January 1, 2018. Specifically, this bill:
1)Limits the availability of current optional settlements to
members of CalPERS, JRS I, and JRS II that retire on or before
December 31, 2017.
AB 2404
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2)Allows members of CalPERS, JRS I, JRS II that retire on or
after January 1, 2018 to elect an unmodified allowance, as
defined, or the following optional settlements:
a) Return of Remaining Contributions Option 1;
b) The 100 Percent Beneficiary Option 2;
c) The 50 Percent Beneficiary Option 4;
d) The Flexible Beneficiary Option 4, which provides a
specified dollar or percentage of the member's unmodified
allowance to one or more beneficiaries; and
e) Option Settlement 5, which provides for a partial
present distribution of the actuarial present value of a
portion of the unmodified monthly allowance of specified
members of the State Peace officer/Firefighter and State
Patrol payment options.
FISCAL EFFECT:
1)Minor and absorbable administrative costs to CalPERS.
2)Any actuarial reduction to a member's benefit is cost-neutral
to CalPERS and is based on his or her age at retirement and
the age of the designated beneficiary or beneficiaries.
COMMENTS:
AB 2404
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1)Purpose. According to the author, this bill will streamline
CalPERS plan design and simplify pension payment options. The
author notes that in 2013, CalPERS participated in a
cost-effectiveness analysis and was found to have the most
complicated set of pension payment options when compared to
other similar retirement systems.
2)Background. Existing law allows a retiring CalPERS member to
receive a lifetime benefit paid to the member alone, or elect
one of twelve optional settlements that reduce his or her
lifetime benefit in order to provide a lump sum payment or
continuing allowance to a designated beneficiary upon their
death.
3)Support. This bill is sponsored by CalPERS.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081