August 28, 2012
Governor Brown today released details of his plan to change pensions for ALL California public employees. His proposals will soon be in legislative bill form which he will seek to have enacted prior to the adjournment of the state Legislature this Friday. Governor Brown claims to have reached agreement with legislative leaders to pass this package quickly. While the actual legislative language is not yet available, here are some key details.
- Newly hired employees will be required to pay 50% of normal retirement costs. (The “normal” cost of retirement means the cost of the actual retirement benefit without unfunded liabilities—state scientists already pay this amount). For current employees, the public employer could propose that employees pay any portion of the retirement contribution, subject to collective bargaining.
- The hybrid option is dropped, and instead a reduced formula would be implemented for all new hires.
- The maximum benefit at retirement for new hires in the “Miscellaneous” retirement category (non-safety) would be increased from age 63 to age 67. For new public safety hires (police and fire), the maximum benefit at retirement would be age 57 (currently age 50 or age 55 in most cases).
- Pensionable salary would be capped at $110,000 for those in Social Security; $130,000 for those not in Social Security.
- The retirement calculation would be based on the final three years of compensation, not the single highest year.
- Current rules for state employees restrict public work after retirement to 960 hours annually. This would be applicable statewide to all public employees.
- Also proposed for implementation are Governor Brown’s plans to end pension accumulation after conviction of a felony; to prohibit retroactive pensions; to eliminate pension holidays; and to eliminate purchase of service credit for air time.
- Dropped from the package are Governor Brown’s proposals to change the composition of pension boards and to increase vesting and employee contributions for health care.
“CAPS long ago agreed to changes that help make California’s pension system sustainable for generations to come,” said CAPS President David Miller. “This one-size-fits-all solution is not the best approach. Public employee groups statewide must have the opportunity to collectively bargain changes to their retirement benefits, just as CAPS has done.”