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ACCCA Town Hall Meeting. Pension reform highlights. Does the need for pension reform exist? Myths about pension reform Legislative proposals Working for public agencies after retirement ACCCA position on pension reform. The scope of the issue. Baby boomer impact on the retirement system

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Pension reform highlights

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Accca town hall meeting

ACCCA Town Hall Meeting

Pension reform highlights


The scope of the issue

Does the need for pension reform exist?

Myths about pension reform

Legislative proposals

Working for public agencies after retirement

ACCCA position on pension reform

The scope of the issue


Does the need for pension reform exist

Baby boomer impact on the retirement system

Retirement systems not actuarially sound

Decrease in future working population

Perceived fraud in the system (spiking etc.)

Retirees life expectancy increasing

Who pays what toward retirement systems

Management of retirement systems

Does the need for pension reform exist?


Myths about pension reform

Retirees receive excessive retirements

The system cannot be changed (vesting)

Hybrid pensions are not the answer

All public retirement systems are the same

Everyone who retires double dips

The retirement system never changes

Myths about pension reform


Legislative proposals

Initiative Process (6 proposals out 2 still seeking signatures)

Brown Proposal and Republican support

Exemptions for STRS end July 2012 (AB 758)

SB 450 Independent Contractor status

Legislative Pension Reform Committee

When can changes be expected?

Legislative proposals


Brown 12 point reform initiative

Equal Sharing of Pension Costs: All Employees and Employers *

“Hybrid” Risk-Sharing Pension Plan: New Employees *

Increase Retirement Ages: New Employees *

Require Three-Year Final Compensation to Stop Spiking: New Employees *

Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees *

Brown 12 Point Reform Initiative


Brown 12 point reform initiative1

Limit Post-Retirement Employment: All Employees

Felons Forfeit Pension Benefits: All Employees

Prohibit Retroactive Pension Increases: All Employees

Prohibit Pension Holidays: All Employees and Employers

Brown 12 point reform initiative


Brown 12 point reform initiative2

Prohibit Purchases of Service Credit: All Employees

Increase Pension Board Independence and Expertise *

Reduce Retiree Health Care Costs: State Employees

* Included in Republican Proposal

Brown 12 point reform initiative


Working for public agencies after retirement

Working for public agencies after retirement

  • Cal PERS

  • Basic 960 Hrs per fiscal year in PERS qualified position

  • Exemptions

  • Can work in a STRS position

  • Consultant, independent contractor

  • Cal STRS

  • Earning limit of $31,020 in STRS qualified position

  • Cannot work in a PERS position

  • Exemptions

  • 12 month out rule

  • Waivers

  • Emergency Admin Service

  • (All exemptions end 7/12)


Accca position on pension reform

Employee Shares in Pension Cost

ACCCA can support the employee contribution toward their pension benefits of at least 50% provided other employee contributions such as Social Security payments are factored into the employee share.

Accca position on pension reform


Accca position on pension reform1

  • Hybrid “Risk Sharing Pension”

  • ACCCA can support maintaining a defined benefit program, changes to eliminate spiking, and a three year average computation on Base Salary. ACCCA will consider support of the hybrid plan provided:

  • Social Security payments in the PERS Plan do not change Social Security rights at the federal level; and

  • Any cap on earnings for high income retirees would apply to the defined benefits program only and be based on the earning restriction of IRS 415.

Accca position on pension reform


Accca position on pension reform2

  • Pension Caps (R)

  • ACCCA will consider support of a pension cap if pension computations are:

  • based on Base Salary;

  • if other creditable compensation is removed as part of the calculation;

  • if there is retention credit for unused sick leave;

  • if the cap on earnings for high income retirees is applied to defined benefits program only and based on the earning restriction of IRS 415.

Accca position on pension reform


Accca position on pension reform3

Increase retirement age

ACCCA can support a change in retirement age consistent with changes in the federal social security rules.

Prohibit purchase of service credits

ACCCA can support the elimination of service credit purchase in both STRS and PERS.

ACCCA Position on Pension reform


Accca position on pension reform4

Prohibit Pension Holidays

With clarification of the Governor’s intent, ACCCA can support the prohibition of “Pension Holidays.”

Prohibit retroactive pension increases

ACCCA takes a “Watch” position on this aspect of the Governor’s proposal.

Accca position on pension reform


Accca position on pension reform5

Prohibit pension spiking

ACCCA can support the prevention of spiking and the elimination of Creditable Compensation as currently defined.

Require 3 year final compensation average

ACCCA can support the three year calculation of base pay but opposes a five year computation.

Accca position on pension reform


Accca position on pension reform6

  • Limit post-retirement employment

  • ACCCA will oppose any legislation that prohibits working within STRS after retirement, however ACCCA can support maintaining the current earning limits provided:

  • No earning cap once a retiree has been out of the system for 12 months with no sunset date;

  • They allow retirees to work as part-time faculty and other support positions as part of an early retirement plan; and

  • There is a continuation of emergency waivers to accommodate management needs when a vacancy occurs.

  • A prohibition on any retirement benefits for anyone who serves on public boards and commissions .

Accca position on pension reform


Accca position on pension reform7

Felony convictions

ACCCA can support this position

Prohibit employers from making employee retirement contributions

ACCCA can support this provision within the proposal

All other proposals relate to pension system management

Accca position on pension reform


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