BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2404


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          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