SB 1251, as amended, Huff. California Public Employees’ Pension Reform Act of 2013: joint power authority: employees.
The California Public Employees’ Pension Reform Act of 2013 (PEPRA) requires a public retirement system, as defined, to modify its plan or plans to comply with the act and, among other provisions, establishes new retirement formulas that may not be exceeded by a public employer offering a defined benefit pension plan for employees first hired on or after January 1, 2013. PEPRA authorizes individuals who were employed by any public employer before January 1, 2013, and who became employed by a subsequent public employer for the first time on or after January 1, 2013, to be subject to the retirement plan that would have been available to employees of the subsequent employer who were first employed by the subsequent employer on or before December 31, 2012, if the individual was subject to reciprocity, as specified.
Existing law, the Joint Exercise of Powers Act, generally authorizes 2 or more public agencies, by agreement, to jointly exercise any common power, which may include hiring employees and establishing retirement systems.
This bill wouldbegin delete authorizeend deletebegin insert requireend insert a joint powers authority formed by one or more public employers, on or after January 1, 2013, to provide employees meeting specified criteria with the defined benefit plan or formula that was available to employees of the employer on December 31, 2012. This bill would prohibit the formation of a joint powers authority on or after January 1, 2013, in a manner that would exempt a new employee or a new member from the requirements of PEPRA.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 7522.02 of the Government Code is
2amended to read:
(a) (1) Notwithstanding any other law, except as
4provided in this article, on and after January 1, 2013, this article
5shall apply to all state and local public retirement systems and to
6their participating employers, including the Public Employees’
7Retirement System, the State Teachers’ Retirement System, the
8Legislators’ Retirement System, the Judges’ Retirement System,
9the Judges’ Retirement System II, county and district retirement
10systems created pursuant to the County Employees Retirement
11Law of 1937, independent public retirement systems, and to
12individual retirement plans offered by public employers. However,
13this article shall be subject to the Internal Revenue Code and
14Section 17 of Article XVI of the California
Constitution. The
15administration of the requirements of this article shall comply with
16applicable provisions of the Internal Revenue Code and the
17Revenue and Taxation Code.
18(2) Notwithstanding paragraph (1), this article shall not apply
19to the entities described in Section 9 of Article IX of, and Sections
204 and 5 of Article XI of, the California Constitution, except to the
21extent that these entities continue to be participating employers in
22any retirement system governed by state statute. Accordingly, any
23retirement plan approved before January 1, 2013, by the voters of
24any entity excluded from coverage by this section shall not be
25affected by this article.
P3 1(3) (A) Notwithstanding paragraph (1), this article shall not
2apply to a public employee whose
interests are protected under
3Section 5333(b) of Title 49 of the United States Code until a federal
4district court rules that the United States Secretary of Labor, or
5his or her designee, erred in determining that the application of
6this article precludes certification under that section, or until
7January 1, 2015, whichever is sooner.
8(B) If a federal district court upholds the determination of the
9United States Secretary of Labor, or his or her designee, that
10application of this article precludes him or her from providing a
11certification under Section 5333(b) of Title 49 of the United States
12Code, this article shall not apply to a public employee specified
13in subparagraph (A).
14(4) Notwithstanding paragraph (1), this article shall not apply
15to a multiemployer plan authorized by
Section 302(c)(5) of the
16Taft-Hartley Act (29 U.S.C. Sec. 186(c)(5)) if the public employer
17began participation in that plan prior to January 1, 2013, and the
18plan is regulated by the Employee Retirement Income Security
19Act of 1974.
20(b) The benefit plan required by this article shall apply to public
21employees who are new members as defined in Section 7522.04.
22(c) (1) Individuals who were employed by any public employer
23before January 1, 2013, and who became employed by a subsequent
24public employer for the first time on or after January 1, 2013, shall
25be subject to the retirement plan that would have been available
26to employees of the subsequent employer who were first employed
27by the subsequent employer on or before December 31, 2012, if
28the individual was
subject to concurrent membership for which
29creditable service was performed in the previous six months or
30reciprocity established under any of the following provisions:
31(A) Article 5 (commencing with Section 20350) of Chapter 3
32of Part 3 of Division 5 of Title 2.
33(B) Chapter 3 (commencing with Section 31450) of Part 3 of
34Division 4 of Title 3.
35(C) Any agreement between public retirement systems to provide
36reciprocity to members of the systems.
37(D) Section 22115.2 of the Education Code.
38(2) An individual who was employed before January 1, 2013,
39and who, without a separation from employment, changed
40employment
positions and became subject to a different defined
P4 1benefit plan in a different public retirement system offered by his
2or her employer shall be subject to that defined benefit plan as it
3would have been available to employees who were first employed
4on or before December 31, 2012.
5(d) If a public employer, before January 1, 2013, offers a defined
6benefit pension plan that provides a defined benefit formula with
7a lower benefit factor at normal retirement age and results in a
8lower normal cost than the defined benefit formula required by
9this article, that employer may continue to offer that defined benefit
10formula instead of the defined benefit formula required by this
11article, and shall not be subject to the requirements of Section
127522.10 for pensionable compensation subject to that formula.
13However, if the employer adopts a new defined
benefit formula
14on or after January 1, 2013, that formula must conform to the
15requirements of this article or must be determined and certified by
16the retirement system’s chief actuary and the retirement board to
17have no greater risk and no greater cost to the employer than the
18defined benefit formula required by this article and must be
19approved by the Legislature. New members of the defined benefit
20plan may only participate in the lower cost defined benefit formula
21that was in place before January 1, 2013, or a defined benefit
22formula that conforms to the requirements of this article or is
23approved by the Legislature as provided in this subdivision.
24(e) If a public employer, before January 1, 2013, offers a
25retirement benefit plan that consists solely of a defined contribution
26plan, that employer may continue to offer that plan instead of
the
27defined benefit pension plan required by this article. However, if
28the employer adopts a new defined benefit pension plan or defined
29benefit formula on or after January 1, 2013, that plan or formula
30must conform to the requirements of this article or must be
31determined and certified by the retirement system’s chief actuary
32and the system’s board to have no greater risk and no greater cost
33to the employer than the defined benefit formula required by this
34article and must be approved by the Legislature. New members of
35the employer’s plan may only participate in the defined
36contribution plan that was in place before January 1, 2013, or a
37defined contribution plan or defined benefit formula that conforms
38to the requirements of this article. This subdivision shall not be
39construed to prohibit an employer from offering a defined
40contribution plan on or after January 1, 2013, either with or without
P5 1a
defined benefit plan, whether or not the employer offered a
2defined contribution plan prior to that date.
3(f) (1) If one or more public employers, on or after January 1,
42013, form a joint powers authority pursuant to the provisions of
5the Joint Exercise of Powers Act (Article 1 (commencing with
6Section 6500) of Chapter 5), that joint powers authoritybegin delete mayend deletebegin insert shallend insert
7 provide the following employees with the defined benefit plan or
8formula that would have been available to employees of the
9employer on December 31, 2012:
10(A) An employee of that public employer or employers that was
11hired prior to
January 1, 2013, and was not subject to the provisions
12of this article, and was subsequently employed by the joint powers
13authority without a break in service of more than 180 days.
14(B) An employee of that public employer or employers that was
15hired on or after January 1, 2013, but would otherwise be exempt
16from this article pursuant to subdivision (c), and was subsequently
17employed by the joint powers authority without a break in service
18of more than 180 days.
19(2) If there was more than one retirement plan or formula in
20place on December 31, 2012, due to there being more than one
21employer, then the joint powers authority shall indicate which
22defined benefit plan or formula shall apply to employees of the
23authority who are exempt from this article pursuant to this
24subdivision.
25(3) The formation of a joint powers authority on or after January
261, 2013, shall not act in a manner as to exempt a new employee
27or a new member, as defined by Section 7522.04, from the
28requirements of this article. New members may only participate
29in a defined benefit plan or formula that conforms to the
30requirements of this article.
31(g) The Judges’ Retirement System and the Judges’ Retirement
32System II shall not be required to adopt the defined benefit formula
33required by Section 7522.20 or 7522.25 or the compensation
34limitations defined in Section 7522.10.
35(h) This article shall not be construed to provide membership
36in any public retirement system for an individual who would not
37otherwise be eligible for
membership under that system’s
38applicable rules or laws.
39(i) On and after January 1, 2013, each public retirement system
40shall modify its plan or plans to comply with the requirements of
P6 1this article and may adopt regulations or resolutions for this
2purpose.
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