BILL NUMBER: AB 446	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 18, 2009
	AMENDED IN ASSEMBLY  APRIL 23, 2009
	AMENDED IN ASSEMBLY  APRIL 2, 2009

INTRODUCED BY   Assembly Member Niello

                        FEBRUARY 24, 2009

   An act relating to public employees' retirement.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 446, as amended, Niello. Public employees' retirement:
additional retirement service credits.
   The Public Employees' Retirement Law calculates service retirement
allowances, in part, based on years of credited service. Members of
the Public Employees' Retirement System may receive service credit
for public service not otherwise subject to credit, upon payment of
specified additional contributions. Existing law authorizes specified
members of that system, including employees or officers of the
state, the university, a school employer, or a contracting agency and
certain legislative employees, to elect to make additional
contributions and receive up to 5 years of additional retirement
service credit, as defined, subject to specified limitations.
   This bill would require the  administrators  
Board of Administration  of the Public Employees' Retirement
System to prepare a report  on the use of the additional
retirement service credits,   on its   study of
members who have purchased additional retirement service credit,
 as specified,  which was prepared as part of its systemwide
actuarial investigation,  and to file that report with 
specified committees of  the Legislature  , the Director of
Finance, the Director of the Department of Personnel  
Administratio   n, and the Legislative Analyst  by
February 1, 2010.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    (a) The Board of Administration of the
Public Employees' Retirement System shall report to the parties
specified in subdivision (b), consistent with the requirements of
this section, on its demographic study of members who have purchased
additional retirement service credit under Section 20909 of the
Government Code, which was prepared as part of its systemwide
actuarial investigation required under Section 20133 of the
Government Code.  
   (b) The report shall be submitted to the following:  
   (1) The chair and vice chair of the Assembly Committee on Public
Employees, Retirement and Social Security and the Senate Committee on
Public Employment and Retirement and any other committee or
subcommittee of the Legislature that considers retirement policy.
 
   (2) The chair and vice chair of the Assembly Committee on
Appropriations and the Senate Committee on Appropriations.  

   (3) The chair and vice chair of the Assembly Committee on Budget
and the Senate Committee on Budget and Fiscal Review.  
   (4) The chair and vice chair of the Joint Legislative Budget
Committee.  
   (5) The Director of Finance.  
   (6) The Director of the Department of Personnel Administration.
 
   (7) The Legislative Analyst.  
   (c) The report on the demographic study of members who have
purchased additional retirement service shall include, at a minimum,
the following:  
   (1) A list of key assumptions used in the pricing of additional
retirement service credits and any subsequent adjustments of those
key assumptions.  
   (2) A comparison of the retirement experience for state members,
including a separate category for each retirement tier, school
members, and other public agency members who have purchased
additional retirement service credit to that of those members who
have not purchased the service credit.  
   (3) A comparison of the increase in the retirement allowance for
members who have purchased additional retirement service credit to
that of those members who have not purchased the service credit.
 
   (4) A summary of recommendations by the chief actuary based on the
study presented to the board and the status of those
recommendations.  
   (d) If for any reason the board cannot provide the report by the
date required in subdivision (e), it shall instead report to the
Legislature the reason that the information cannot be provided by the
required date, along with an alternate time for submission. 

   (e) The above information shall be filed no later than February 1,
2010, and shall be based on information from the period of January
1, 2004, to June 30, 2007, inclusive.  
  SECTION 1.    The Public Employees' Retirement
System administrators shall prepare and file a report with the
Legislature by February 1, 2010. The report shall provide the
following information regarding the receipt of additional retirement
service credits under Section 20909 of the Government Code from the
program's inception through June 30, 2009:
   (a) The number of members who have purchased additional retirement
service credit, including estimated subtotals of state members
(including in each retirement tier), California State University
members, public agency members, and school members.
   (b) The number of those members who have retired, including
estimated subtotals of state members (including in each retirement
tier), California State University members, public agency members,
and school members.
   (c) The average number of service credit years purchased,
including a breakdown of how many purchases were for one, two, three,
four, and five years of service credit respectively.
   (d) The average purchase price, taking into account the number of
years purchased and the members's age and compensation level.
   (e) An estimate of how many members have paid by lump sum,
installment, rollover, and other methods, and whether there has been
a significant change in the payment methods by members in the last
three years (that is, noticeably more members choosing one method
over another).
   (f) For state miscellaneous, state peace officer/firefighter,
state safety, state industrial, and California Highway Patrol tier
members, respectively, a list of key assumptions currently used in
the pricing of additional retirement service credits and whether any
of those major assumptions changed significantly within the last five
years.
   (g) For state members who have purchased additional retirement
service credits and subsequently retired, an estimate of the
following:
   (1) The percentage of members who have retired earlier than the
effective assumption used in the pricing of their additional
retirement service credits.
   (2) The percentage of members who have retired with final
compensation higher than that effectively assumed in the pricing of
their additional retirement service credits.
   (3) The percentage of members who have retired with a larger
monthly retirement allowance than that effectively assumed in the
pricing of their additional retirement service credits.
   (h) An estimate of the percentage of members purchasing additional
retirement service credits who retire within one year, within two
years, within three years, within four years, and within five years
of their purchase of additional retirement service credits.
   (i) For state members who have purchased additional retirement
service credits, subsequently retired, and have retired earlier than
the effective assumption used in the pricing of their additional
retirement service credits, an estimate of annual state costs for
their retiree health and dental benefits and the amount that the
earlier-than-expected retirement of these individuals contributes to
the state's unfunded other postemployment benefits liability.
   (j) An estimate of the amount of the state's unfunded actuarial
accrued liability for pensions that is attributable to issues
concerning the pricing of additional retirement service credits
purchases.
   (k) An estimate of the amount of present value paid compared to
the present value gained, on average.