BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1902
Lou Correa, Chair Hearing date: June 23, 2010
AB 1902 (Portantino) as amended 3/09/10 FISCAL: NO
LOS ANGELES COUNTY: RETIREMENT PLANS D AND E
HISTORY :
Sponsor: Los Angeles County Employees Retirement
Association (LACERA)
Prior legislation: AB 399 (Havice),
Chapter 778, Statutes of 2001
ASSEMBLY VOTES :
PER & SS 6-0 5/05/10
Assembly Floor 72-0 5/10/10
SUMMARY :
Would make technical and non-controversial changes to laws
governing the Los Angeles County Employees Retirement
Association (LACERA) regarding employee transfer of
membership between retirement plans D and E, pay periods, and
reciprocity with other public retirement systems for former
Plan E members.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) establishes the 1937 Act County Retirement Laws for
20 independent county retirement systems, of which Los
Angeles County is a participant.
b) provides two retirement plans for LACERA general
members: Plan D (members make contributions in exchange
for higher benefits at younger retirement ages) and Plan
E (members do not make contributions but receive lower
benefits at older ages).
c) allows members to choose which plan to participate
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Date: 6/16/10 Page 1
in, and provides that a member in one plan may elect, no
more than once every three years, to transfer from one
plan to the other.
d) provides disability retirement benefits for Plan D
members but not for Plan E members, and requires that
someone who transfers from Plan E to Plan D must perform
2 continuous years of service, or 5 total years of
service, in Plan D before being eligible for disability
retirement in Plan D.
e) provides reciprocity benefits for an employee who
moves between public employers within specified
timeframes, which include transferability of certain
rights and benefits, and requires that to be eligible
for reciprocity an employee may not receive service
credit in more than one system for the same period of
service.
2) This bill :
a) clarifies that Plan E members may only be credited
for service earned during payroll periods for which they
received compensation.
b) allows a member who transfers to Plan D and becomes
permanently disabled, and who does not have enough
service credited in Plan D to retire for disability, to
transfer back to Plan E even though it has been less
than 3 years, and receive the Long Term Disability
offered to Plan E members until he or she is old enough
to retire for service from Plan E.
c) allows a former Plan E member who changes public
employers to retain certain reciprocity rights and
purchase service with the new employer that was earned
and forfeited under Plan E, as specified.
COMMENTS :
1) Argument in support :
According to the author,
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Disabled workers who change retirement plan tiers may
receive inequitable treatment that limits rehabilitation
periods. Plan D offers disability benefits while Plan E
does not.
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 to Plan D and filing for
disability benefits.
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.
2) Regarding benefit portability :
This bill re-links [reciprocal] retirement plan benefits
between California public 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.
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LACERA the sponsor states,
"Enactment of Assembly Bill 1902 will greatly improve and
update Plan E statutes by allowing for precise crediting of
Plan E service, a needed safety net for former Plan E
members who recently transferred to contributory Plan D and
became disabled, and greater benefit portability under the
reciprocity provisions of Plan E.
3) SUPPORT :
Los Angeles County Employees Retirement Association
(LACERA), Sponsor
4) OPPOSITION :
None to date
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Date: 6/16/10 Page 4