BILL NUMBER: SB 1139 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Correa
FEBRUARY 18, 2010
An act to amend Sections 21337, 21337.1, 21670, 21671, 21672,
21674, 21675, 21676, 21677, 21679, 21680, 21681, 21682, 21683, 21685,
and 22814 of, and to add Section 21671.5 to, the Government Code,
relating to state retirement.
LEGISLATIVE COUNSEL'S DIGEST
SB 1139, as introduced, Correa. State retirement: benefit
programs.
The Public Employees' Retirement Law (PERL) provides a
comprehensive set of rights and benefits for various employees of the
state and local agencies. That law also establishes the Public
Employees' Retirement System (PERS) and sets forth the provisions for
the delivery of benefits, including retirement benefits and an
optional tax-deferred compensation program, to its members. Under
that law, the retirement benefits of a retirement system member are
based, in part, on the completed service credit and compensation
received by that member.
This bill would make technical and clarifying changes to those
provisions of law, including amendments that rename the current
"deferred compensation program" as the "tax-preferred retirement
savings program."
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 21337 of the Government Code is amended to
read:
21337. (a) On an annual basis, the board shall transfer funds to
separate supplemental state and school accounts, to fund the
purchasing power protection allowance of retirees, survivors, and
beneficiaries of state or school employers, respectively. The amounts
transferred shall be the lesser of the following:
(1) The amount necessary to increase all monthly allowances paid
by this system to retirees, survivors, and beneficiaries of state or
school employers to 75 percent of the purchasing power of the initial
monthly allowances.
(2) 1.1 percent of the net earnings on state or school member
contributions, as determined by Section 20178.
(b) The funds transferred to the two separate supplemental
accounts shall be utilized to increase all monthly allowances paid by
this system to retirees, survivors, and beneficiaries of state and
school employers, up to a maximum of 75 percent of the purchasing
power, as determined by the board, of the initial monthly allowances,
notwithstanding the benefit provided by Section 21328, that were
received by every retired state or school member or survivor or
beneficiary of a state or school member or retiree who was eligible
to receive any allowance at the end of each fiscal year. Funds
remaining in the state or school account after the payment of
benefits under this section shall be transferred to the respective
state or school employer accounts.
(c) Annual adjustments in the purchasing power protection
allowance shall be effective with the monthly allowance regularly
payable on the first day of May, provided that in the first year
after enactment of the act adding this subdivision, the purchasing
power protection allowance adjustment to the monthly allowance
payable on the first day of May shall also reflect an adjustment for
the period from January 1 through April 30.
SEC. 2. Section 21337.1 of the Government Code is amended to read:
21337.1. (a) As of January 1, 2001, and annually
thereafter, all All monthly allowances paid by
the system to retirees of contracting public agencies, and to
survivors and beneficiaries of members and retirees of those
agencies, shall annually be increased to 80 percent of the
purchasing power of the initial monthly allowance as determined by
the board. Adjustments in the purchasing power protection
allowance shall be effective with the monthly allowance
regularly p ayable on the first day of May, provided that
in the first year after enactment of the act amending this
subdivision, the purchasing power protection allowance adjustment to
the monthly allowance payable on the first day of May shall also
reflect an adjustment for the period from January 1 through April 30.
(b) Notwithstanding subdivision (a), retirees of contracting
public agencies, and survivors and beneficiaries of members and
retirees of those agencies, who receive a monthly allowance payable
by this system shall also receive, on or after January 1, 2001, a
one-time lump-sum payment in an amount equal to the difference, if
any, between the purchasing power protection allowance paid between
January 1, 2000, and December 31, 2000, and the purchasing power
protection allowance that would have been payable if this section had
been operative during that period.
(c) The cost of the increase in allowances paid pursuant to
subdivisions (a) and (b) shall be paid from the same assets of the
employer used in the determination of each employer contribution rate
for each membership classification under which service was credited
that affects the allowance calculation of the retirees, survivors, or
beneficiaries.
SEC. 3. Section 21670 of the Government Code is amended to read:
21670. The board may establish a deferred compensation
program one or more tax-preferred retirement savings
programs for California public employees. The program
These programs shall be made available to all
employees of an a participating
employer under procedures established by the board unless
participation is subject to the terms of any memorandums of
understanding between the employer and the employees.
SEC. 4. Section 21671 of the Government Code is amended to read:
21671. The deferred compensation A
tax-preferred retirement savings program established
pursuant to Section 21670 may grant the maximum
tax-deferred tax-preferred retirement savings
opportunities available under current federal law, and may
provide for employer as well as employee contributions. The program
may include, but is not limited to, one or more of the following
plans:
(a) A deferred compensation plan qualified
described under Section 457 of Title 26 of the United States
Code.
(b) A tax-sheltered annuity qualified
program described under Section 403(b) of Title 26 of the
United States Code. Section 770.3 of the Insurance Code shall not
apply to the board for the purposes of contracting for those
annuities.
(c) Any other form of deferred compensation
a tax-preferred savings arrangement authorized by the
provisions of Title 26 of the United States Code and approved by the
board.
SEC. 5. Section 21671.5 is added to the Government Code, to read:
21671.5. The design and administration of a tax-preferred
retirement savings program established pursuant to Section 21670
shall conform with the applicable provisions of Title 26 of the
United States Code.
SEC. 6. Section 21672 of the Government Code is amended to read:
21672. The deferred compensation A
tax-preferred retirement savings program may include
any or all one or more of the following
components:
(a) Investment fund options for participants, as part of the
deferred compensation program administered for state employees by the
Department of Personnel Administration.
(b) Investment fund options for other participants.
(c) Annuity contracts on behalf of all participants.
(d) Asset management, administrative, or related services.
SEC. 7. Section 21674 of the Government Code is amended to read:
21674. (a) Investment fund options under subdivision (a) of
Section 21672 shall be provided through a written interagency
agreement between the board and the Department of Personnel
Administration.
(b) Participating Except for investments
made pursuant to subdivision (a), participating employers
, other than the state, shall enter into a written
contractual agreement with the board.
(c) Employees Participants
shall enter into contractual agreements that are required to
effectuate participation in a tax-preferred retirement savings
program, including employees participating under a program
described in subdivision (a) or (b) of Section 21671, or any other
program that provides for the deferred
deferral of compensation program shall enter into
or written salary reduction agreements with
their employers, for the purpose of making deferrals or for annuity
contracts.
SEC. 8. Section 21675 of the Government Code is amended to read:
21675. All development and administration costs of the
deferred compensation program tax-preferred retirement
savings programs shall be paid by employers and plan
participants.
SEC. 9. Section 21676 of the Government Code is amended to read:
21676. The Public Employees' Deferred Compensation Fund is hereby
established. Notwithstanding any other provision of law, the board
may retain :
(a) Establish one or more accounts, trusts, group trusts, or
similar vehicles within the fund.
(b) Retain a bank or
, trust company , or similar entity
to serve as repository of the fund , or of any account, trust,
group trust, or other similar vehicle within the fund
. The
The board may also retain a bank or trust company to
serve as a custodian for safekeeping, recordkeeping, delivery,
securities valuation, investment performance reporting, or other
services in connection with investment of the fund or of any
account, trust, group trust, or similar vehicle within the fund
. Notwithstanding
Notwithstanding Section 13340, all moneys in the fund
are continuously appropriated, without regard to fiscal years, to the
board to carry out the purposes of this article
chapter .
SEC. 10. Section 21677 of the Government Code is amended to read:
21677. The Public Employees' Deferred Compensation Fund shall
consist of the following sources and receipts and disbursements shall
be accounted for as set forth below:
(a) Premiums Fees determined by the
board and paid by employers and plan participants for the cost of
administering the deferred compensation program
tax-preferred savings programs .
(b) Asset management fees as determined by the board assessed
against investment earnings of investment options or other
investments funds provided by the board to either the state or other
public employers. Asset management fees shall be disclosed to
plan participants.
(c) (1) Deferrals or contributions to be
paid monthly by participating employers or plan
participants for investment by the board pursuant to this article.
The moneys shall be deposited in the investment corpus
account appropriate account, trust, group trust, or
similar vehicle within the Public Employees' Deferred
Compensation Fund, and invested in accordance with the fund option or
fund selected by the plan participants.
(1)
(2) Deferrals or contributions paid by a
contracting agency shall be paid through an electronic funds transfer
method prescribed by the board. This payment requirement is
effective upon declaration by the board.
(2)
(3) A contracting agency that is unable, for
good cause, to comply with paragraph (1) (2)
, may apply to the board for a waiver that allows the agency
to pay in an alternate manner as prescribed by the board, but not by
credit card payment.
(d) Disbursements to plan participants shall be
paid from a disbursement account the
appropriate account, trust, group trust, or similar vehicle
within the Public Employees' Deferred Compensation Fund, in
accordance with the provisions of this chapter, the documents
and instruments governing the tax-preferred retirement savings
program, and current federal law pertaining to
tax-deferred savings plans tax-preferred savings
programs .
(e) The board shall offer a savings account equivalent
plan program among those deferred compensation
accounts made payable to plan participants.
(f) Income, of whatever nature, earned Net
earnings on the Public Employees' Deferred Compensation Fund
shall be credited to the appropriate account , trust, group
trust, or similar vehicle . Participant accounts shall be
individually posted to reflect net asset value for each fund in which
the participant invests.
(g) The board has the exclusive control of the administration and
investment of the Public Employees' Deferred Compensation Fund.
SEC. 11. Section 21679 of the Government Code is amended to read:
21679. The officers and employees of this system shall discharge
their duties with respect to the deferred compensation plan
tax-preferred retirement savings program solely
in the interest of the plan participants in the
following manner:
(a) For the exclusive purpose of providing deferred
compensation to plan tax-preferred retirement savings
to participants and defraying reasonable expenses of
administering the plan program .
(b) In the selection of investment options with the care, skill,
prudence, and diligence under the circumstances then prevailing that
a prudent person acting in a like capacity and familiar with those
matters would use in the conduct of an enterprise of a like character
and with like aims.
(c) By diversifying the investment options available to
participants of the plan so as to minimize the
risk of large losses and by using reasonable diligence to accurately
inform all employees and participants as to all plan
options.
(d) In accordance with the documents and instruments governing the
plan insofar as those documents and instruments are consistent with
this article chapter .
SEC. 12. Section 21680 of the Government Code is amended to read:
21680. Except as otherwise provided by law, the officers and
employees of this system shall not engage in a transaction with
regard to a deferred compensation plan
tax-preferred retirement savings program if they know or should
know that the transaction constitutes, directly or indirectly, any
of the following:
(a) The sale, exchange, or leasing of any property from the
plan program to a participant
in the plan for less than adequate consideration, or from a
participant in the plan to the plan for more than
adequate consideration.
(b) The lending of money or other extension of credit from the
plan to a participant in the plan program
without the receipt of adequate security and a reasonable rate
of interest, or from a participant in the plan to
the plan program with the provision of
excessive security or an unreasonably high rate of interest.
(c) The furnishing of goods, services, or facilities from the
plan program to a participant
in the plan for less than adequate consideration, or from a
participant in the plan to the plan
program for more than adequate consideration.
(d) The transfer to, or use by or for the benefit of, a
participant in the plan of any assets of the
plan program for less than adequate
consideration.
SEC. 13. Section 21681 of the Government Code is amended to read:
21681. The officers and employees of this system shall not do any
of the following:
(a) Deal with the assets of the plan
program in their own interest or for their own account.
(b) In their individual or in any other capacity, act in any
transaction involving the plan program
on behalf of a party, or represent a party, whose interests are
adverse to the interests of the plan program
or the interests of the participants in the plan
.
(c) Receive any consideration for their personal account, or any
gift, from any party dealing with the plan
program in connection with a transaction involving the assets
of the plan program .
SEC. 14. Section 21682 of the Government Code is amended to read:
21682. This chapter shall not be construed to prohibit officers
and employees of this system from participating in the
deferred compensation plan a tax-preferred retirement
savings program , on the same terms as other state employees or
participants.
SEC. 15. Section 21683 of the Government Code is amended to read:
21683. This system may require an investment manager or
recordkeeper contracted under contract
with, or appointed by, this system be subject to the duties set forth
in Section 21679.
SEC. 16. Section 21685 of the Government Code is amended to read:
21685. Notwithstanding any other provision of this part, the
following definitions govern the construction of this chapter:
(a) "Participating employer" means any California public agency,
including, but not limited to, any office of the county
superintendent of schools, school district, community college
district, or public agency defined by Section 20056 that has
elected to contract for a tax-preferred retirement savings program
for any or all of its employees .
(b) "Employer" means any city, county, city and county, district,
school district, community college district, county superintendent of
schools, and other public authority or body within this state.
(c) "Plan participant" "Participant"
means any person enrolled in the deferred compensation
a tax-preferred savings program established by
this chapter.
SEC. 17. Section 22814 of the Government Code is amended to read:
22814. (a) A judge who retires pursuant to Chapter 11 (commencing
with Section 75000) of Title 8, but is not yet receiving a pension,
may continue his or her coverage and the coverage of any family
members for the duration of the leave of absence, upon his or her
application and upon assuming payment of the contributions otherwise
required of the employer.
(b) (1) A judge who retires leaves
judicial office pursuant to subdivision (b) of Section 75521
and has not attained 65 years of age may continue his or her coverage
and the coverage of any family members upon assuming payment of the
contributions otherwise required of the employer. The judge shall
also pay an additional 2 percent of the premium amount to cover
administrative expenses incurred by the system or the Department of
Personnel Administration.
(2) An election to continue coverage under this subdivision shall
be made within 60 days of permanent separation. A retired judge who
cancels that coverage may not reenroll.
(3) Upon attaining 65 years of age, a retired judge who has
continuous and uninterrupted coverage pursuant to this subdivision
shall be entitled to the applicable employer contribution.