AB 399

Bill Subjects

Abstract

(1) The Public Employees' Retirement Law (PERL) permits a member of the Public Employees' Retirement System (PERS) with less than 3 years of service who enters employment as a member of another public retirement system supported, in whole or in part, by state funds, within 6 months of leaving state service to elect to leave accumulated contributions on deposit in the retirement fund. The law provides that failure to make an election to withdraw accumulated contributions shall be deemed an election to leave accumulated contributions on deposit in the retirement fund. This bill would require that a member who is permanently separated from all service covered by PERS, who is not in specified public service, and 70 years of age, be provided with an election to withdraw contributions or, if vested, an election to either apply for service retirement or withdraw contributions. The bill would require that failure to apply for service retirement or to make an election to withdraw contributions within 90 days be deemed an election to withdraw contributions. The bill would specify the method of distribution of contributions for members who cannot be located with reasonable diligence. The bill also would make technical changes. (2) The State Teachers' Retirement System, the Public Employees' Retirement System, and the Judges' Retirement System and the Judges Retirement System II provide pension benefits based in part upon credited service. The Public Employees' Retirement Law provides that credit for service generally is accrued based upon service rendered and compensated in a fiscal year, and that time during which a member is absent without compensation is not allowed for computing service. The State Teachers' Retirement Law provides that a member's creditable service is calculated in relation to his or her creditable compensation. The Judges' Retirement System II Law provides that service means the period of time that a judge received a salary and made contributions to the system by reason of holding office as a judge, as specified. Pursuant to various executive orders, state employees have been furloughed without compensation. Existing law, in effect until July 1, 2010, permits a judge or justice to elect to waive irrevocably a certain percentage of salary, and a judge or justice who does so is not obligated to appear for work on a day a court is closed pursuant to specified authority. That law prohibits this waiver from being deemed a reduction in salary or service for the purpose of providing retirement benefits, among others. This bill would require, for members of the State Teachers' Retirement System, that the calculations of a retirement allowance for a state employee subject to mandatory furloughs include earnings, contributions, and compensation earnable that would have been reported had the employee not been subject to mandatory furloughs, and would require that the employer pay the cost of the increased service credit that results from these inclusions. The bill would also require that, for all retirement purposes, credit for service and compensation earnable for members of the Public Employees' Retirement System employed by the state that are subject to mandatory furloughs be based on the amount that would have been credited had the employee not been subject to mandatory furloughs. The bill would define mandatory furloughs in these regards. The bill would further require, for the Judges' Retirement System and the Judges' Retirement System II, that calculations of retirement benefits and Extended Service Incentive Program benefits for any judge who voluntarily waives salary, as described above, include salary and contributions that would have been paid had the judge not done so, and that the state pay costs that result from the increased benefits and monetary credits.