BILL ANALYSIS �
AB 2472
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Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2472 (Committee on P.E.R. & SS) - As Amended: March 27,
2014
Policy Committee: PERSSVote:6-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill makes various minor policy and technical changes to
the Public Employees' Retirement Law (the PERL) designed to
maintain and ensure effective administration of the California
Public Employees' Retirement System (CalPERS). Specifically,
this bill:
1)Allows the use of the employer contribution rate in effect at
the time the compensation is earned when making prior period
adjustments.
2)Allows a member to make a change to their election of a
survivor benefit option if CalPERS receives their request
within 30 days of the issuance of their first retirement
payment.
3)Corrects an incorrect cross-reference and clarifies that a
retired judge who is subsequently elected or appointed to
judicial office must forfeit his or her retirement allowance
and reinstate to active membership.
4)Eliminates obsolete reporting requirements from the PERL.
FISCAL EFFECT
1)No costs to CalPERS for implementation of the changes;
possible minor administrative savings to CalPERS resulting
from efficiency gains.
2)Unknown, but likely offsetting, costs and savings to employers
as a result of modifications to the employer contribution
AB 2472
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adjustment rate.
COMMENTS
1) Purpose. According to the sponsor, CalPERS, AB 2472 would
make several changes in the PERL necessary for the maintenance
and good governance of CalPERS, and to ensure its statutes are
clear. The following comments are digested from information
provided to the Committee by CalPERS.
2) Employer Contribution Adjustments. Under existing law, if a
correction of the amount of compensation reported by a
contracting agency requires additional employer contributions,
the contributions must be computed using the employer
contribution rate in effect at the time of the adjustment.
The difference between the current employer contribution rate
and the rate in place at the time of the reporting error can
result in the employer paying more or less than is necessary
to cover the actual cost of the benefit.
To more accurately reflect the correct contributions owed and
minimize inequity, this bill allows the use of the employer
contribution rate in effect at the time the compensation is
earned when making prior period adjustments.
3) Optional Settlements. CalPERS members may elect to receive
reduced monthly benefit in exchange for a lump sum or
continuing monthly benefit payable to members' beneficiaries
following their death. These elections are an alternative to
receiving an unmodified allowance and are called Options or
Optional Settlements.
Existing law allows members to change their option election
prior to their first benefit payment on account of any
retirement allowance or, in the event of a change of
retirement status after retirement, prior to the benefit
payment immediately following the change in retirement status.
This bill allows members to make a change to their option
election if CalPERS receives their request within 30 days of
the issuance of their first retirement payment. The change
affords members who may not realize the extent to which the
option they elected, combined with tax and other benefit
deductions, has reduced their monthly retirement allowance, to
make a different election.
AB 2472
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4) Re-appointment of Retired Judges. Under existing law, a
retired judge who participates in the Judges' Retirement
System I (JRS I) cannot be elected or appointed to serve as a
judge while continuing to receive retirement benefits through
the JRS I, except for a retired judge while serving under
assignment by the Chair of the Judicial Council. In those
instances, the retired judge's benefit is reduced by the
amount of that salary or compensation earned during the time
the judge is on assignment, and the judge does not earn
service credit during that assignment.
The Judges' Retirement Law II (JRL II) does not contain a
similar prohibition. This bill adds a similar provision to
the JRL II to make clear that a retired judge that
participates in the Judges' Retirement System II (JRS II)
cannot be elected or appointed to serve as a judge while
continuing to receive retirement benefits through the JRS II,
except for a retired judge while serving under assignment by
the Chair of the Judicial Council.
5) Obsolete Reporting Requirements. This bill eliminates several
old and obsolete reporting requirements, some of which were
judged unnecessary in previous legislation.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081