BILL ANALYSIS
AB 1902
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Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Alberto Torrico, Chair
AB 1902 (Portantino) - As Amended: March 9, 2010
SUBJECT : County employees' retirement: Los Angeles County.
SUMMARY : Effects changes to the Los Angeles County Employees
Retirement Association's (LACERA) defined benefit Plan E that
will ensure plan members are treated equitably under plan
provisions for the recording of payroll data, disability
eligibility, and benefit portability. Specifically, this bill :
1)Clarifies that Plan E workers will be credited with service
for payroll periods in which compensation is received.
2)Allows a disabled worker who prospectively transfers to Plan D
and does not meet the requirements to apply for a Plan D
disability retirement benefit the option of transferring back
to Plan E even though fewer than three years may have elapsed
since the member's most recent transfer date.
3)Allows an active member to retain reciprocity rights when Plan
E members forfeit their LACERA retirement benefit to purchase
the retirement benefit through another California public
employer.
FISCAL EFFECT : Unknown.
COMMENTS : LACERA's Plan E is a noncontributory defined benefit
plan available to general members of the retirement system.
Since the plan is unique to LACERA, this bill will not impact
any other retirement systems being operated under the County
Employees' Retirement Law of 1937 ('37 Act).
The following information was provided to the Committee by
LACERA and describes in detail those areas addressed by AB 1902:
Recording Payroll Data
Los Angeles County's payroll system has transitioned from
monthly payroll periods to semi-monthly payroll periods. This
bill clarifies Plan E workers will be credited with service for
AB 1902
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payroll periods in which compensation is received. These
amendments are consistent with LACERA's current practice. The
rewording of these sections is required to accommodate Los
Angles County's new payroll system, and will support any future
payroll system changes.
Disability Eligibility
Disabled workers who change retirement plan tiers may receive
inequitable treatment that limits rehabilitation periods. A Los
Angeles County non-safety worker may choose between two
retirement plan tiers: contributory Plan D and non-contributory
Plan E. Plan D offers disability benefits while Plan E does
not. AB 399 (Havice), Chapter 778, Statutes of 2001, provided
the authority for a worker to prospectively transfer between the
plans no more than once every three years. A worker
participating in Plan E who prospectively transfers to Plan D
must meet one of two waiting period requirements before applying
for Plan D disability retirement benefits: (1) complete two
continuous years of active service, or (2) earn five years of
retirement service credit under Plan D. The intent of the
waiting period requirement is to limit the possibility of a
worker transferring from Plan E (worker does not contribute to
cost and plan has no disability benefit) to Plan D and filing
for disability benefits. Los Angeles County's Long Term
Disability (LTD) program provides 24 months of disability
benefits for workers unable to perform their job functions and
extends benefits to age 65 for those workers disabled under
federal Social Security standards. However, disabled workers in
Plan D are required to leave employment and file for retirement
benefits at the earliest possible age following the 24 month
period (generally age 50 with 10 years of retirement credit).
As such, a worker who prospectively transfers from Plan E to
Plan D and becomes disabled prior to satisfying the waiting
period receives inequitable treatment compared to other disabled
workers who remained in Plan E by being forced to leave
employment and losing the opportunity to participate in the
employer's Return to Work rehabilitation programs. This bill
allows a disabled worker who prospectively transfers to Plan D
and does not meet the requirements to apply for a Plan D
disability retirement benefit the option of transferring back to
Plan E even though fewer than three years may have elapsed since
the member's most recent transfer date.
Benefit Portability
The California Government Code establishes reciprocal benefits
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(Reciprocity) as a tool to encourage career public service and
to protect the retirement benefits earned by a public worker
under two or more California public employers. Reciprocity
provides benefit portability through linking eligibility
requirements, age, and compensation information provided the
worker rehires with a California public employer with in a
specified number of days and becomes a member of their
retirement plan. Former Los Angeles County workers who are
noncontributory Plan E members may voluntarily forfeit their
retirement Plan E benefits and purchase them through their
current California public employer. As Plan E requires no
worker contributions, this allows the worker to contribute more
towards their retirement buy purchasing a retirement benefit
with their current employer. However, this action breaks the
reciprocity rule requiring continuous membership. This bill
re-links retirement plan benefits between California pubic
retirement systems when a Plan E member forfeits their LACERA
retirement benefit, and keeps intact the prohibition of workers
receiving a retirement benefit from multiple California
government employers for the same time period worked. This
section does not apply to those who have already retired from
LACERA.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles County Employees Retirement Association (Sponsor)
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957