Senate Bill No. 1162

Introduced by Senator Berryhill

February 18, 2016

An act to amend Section 20816 of the Government Code, relating to retirement.

LEGISLATIVE COUNSEL’S DIGEST

SB 1162, as introduced, Berryhill. Public employees’ retirement.

The Public Employees’ Retirement Law governs the rate of employer contributions to the Public Employees’ Retirement System. The law requires, among other things, that all assets of an employer be used in determining the employer contribution rate for the membership comprising the basis of the computation, and that those assets held be recognized over the same funding period used to amortize unfunded accrued actuarial obligations, as specified.

This bill would make nonsubstantive changes to that provision.

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

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

SECTION 1.  

Section 20816 of the Government Code is
amended to read:

20816.  

(a) Notwithstanding any other provision of this part,
all assets of an employer shall be used in the determination of the
employer contribution rate for the membership comprising the
basis of the computation. Assets held shall be recognized over the
same funding period used to amortize unfunded accrued actuarial
obligations, begin insert regardless of end insert whether begin insert those assets are end insert in excess of
the accrued actuarial begin delete obligation or not, end delete begin insert obligation, end insert using the entry
age normal funding method.

(b) On and after January 1, 1999, contracting agencies for which
the actuarial value of assets exceeds the present value of benefits
as of the most recently completed valuation, as determined by the
chief actuary, may request that the board transfer employer assets
to member-accumulated contribution accounts to satisfy all or a
portion of the member contributions required by this part. That
transfer shall be over a 12-month period provided the actuarial
value of assets exceeds the present value of benefits. In determining
the present value of benefits and the actuarial value of assets for
purposes of this part, liabilities and assets attributed to the 1959
survivor allowance may not be included. On and after January 1,
2003, a transfer of assets may not be made pursuant to this
subdivision unless all or the same portion of the member
contributions of each member in a membership classification are
satisfied through the transfer. An employer electing a transfer of
assets pursuant to this subdivision shall satisfy the members’
contributions for a period of not less than one month and not more
than one year.

(c) On and after January 1, 2002, any contracting agency for
which the actuarial value of assets exceeds the present value of
benefits as of the most recently completed valuation, as determined
by the chief actuary, may request that the board transfer from the
contracting agency’s employer account excess assets, as determined
by the board subject to the requirements and limitations of Section
420 of the Internal Revenue Code (26 U.S.C. Sec. 420), to a retiree
health account established by the board, in its discretion, in the
contracting agency’s employer account pursuant to Section 401(h)
of the Internal Revenue Code (26 U.S.C. 401(h)) for the purpose
of providing health benefits to the contracting agency’s retirees
and their covered dependents. The board may, in its discretion,
transfer excess assets from the contracting agency’s employer
account to that contracting agency’s retiree health account within
that agency’s employer account, if the transfer meets the conditions
of a qualified transfer pursuant to Section 420 of the Internal
Revenue Code (26 U.S.C. Sec. 420). The transferred assets shall
be used solely for the payment of current retiree health liabilities.
That qualified transfer shall be made only once each year. The
board may adopt regulations necessary to implement this
subdivision. Notwithstanding any other provision of law, the
regulations may provide for the nonforfeiture of accrued pension
benefits of participants and beneficiaries of a plan from which
excess assets are transferred to the extent necessary for the transfer
to meet the conditions of a qualified transfer pursuant to Section
420 of the Internal Revenue Code (26 U.S.C. Sec. 420), and may
include any other provision necessary under Section 420 of the
Internal Revenue Code (26 U.S.C. Sec. 420) or Section 401(h) of
the Internal Revenue Code (26 U.S.C. Sec. 401(h)) to accomplish
the purposes of this subdivision.

(d) For the purpose of this section, “employer” means any
contracting agency, the state, or a school employer.

(e) The actuarial report in the annual financial report shall also
express the effect upon employer contribution rates of this section
and of the recognition of net unrealized gains and losses.