BILL ANALYSIS
AB 1902
Page 1
ASSEMBLY THIRD READING
AB 1902 (Portantino)
As Amended March 9, 2010
Majority vote
PUBLIC EMPLOYEES 6-0
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|Ayes:|Torrico, Harkey, | | |
| |Furutani, Hernandez, Ma, | | |
| |Nestande | | |
| | | | |
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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:
AB 1902
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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 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
AB 1902
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may have elapsed since the member's most recent transfer date.
Benefit Portability : The California Government Code establishes
reciprocal benefits (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.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0004168