AB 2196 — Public employees' retirement: service credit: payments.

Summary

(1) The Public Employees' Retirement Law (PERL) creates the Public Employees' Retirement System (PERS) , which provides a defined benefit to members of the system based on final compensation, credited service, and age at retirement, subject to certain variations. PERL vests management and control of PERS in the Board of Administration. Under that law, members may make certain elections, including elections to purchase service credit for various types of public service, upon payment of additional contributions. Existing law permits a member who retires before paying off the entire amount for service credit to pay the balance due or total amount if no payroll deductions had been made prior to retirement by deductions from his or her retirement allowance equal to those authorized as payroll deductions, as specified. The bill would permit the member, survivor, or beneficiary, as an alternative, on or after January 1, 2020, to elect to receive an allowance that is reduced by the actuarial equivalent of any balance remaining unpaid by the member. The bill would also provide that all elections taking effect on or after January 1, 2020, including elections for normal contributions, arrears contributions, absences, or public service, would become due and payable at the time of member's retirement or preretirement death. The bill would additionally require the member, survivor, or beneficiary to have his or her allowance reduced by the actuarial equivalent of any balance remaining unpaid by the member, except as specified. (2) Existing law permits a member of PERL who has elected to receive credit for service and who retires for disability, including a safety member who retires due to industrial disability, to elect to cancel the installments prospectively, in accordance with certain provisions. This bill would specify that, for an election taking place on or after January 1, 2020, the amount remaining for normal contributions, arrears, contributions, absences, or public service for the election would become due and payable at the time of the member's retirement or preretirement death. The bill would provide that in these circumstances the member, survivor, or beneficiary would have his or her allowance reduced by the actuarial equivalent of any balance remaining unpaid by the member. (3) Existing law specifies that an election by a member to receive credit for service under PERL is effective only if accompanied by a lump-sum payment or an authorization for payments, in accordance with regulations of the board. Existing law authorizes a member paying for credit for service in after-tax installments to suspend these payments for a period not to exceed 12 months, with payments automatically resuming at the end of the period, or earlier, if requested by the member. Under existing law, a member who retires during the suspension period may, prior to retirement, either make a lump-sum payment for the recalculated balance due or cancel installment payments, as specified. This bill would permit a member, on or after January 1, 2020, as an alternative to these 2 options, to reduce his or her allowance by the actuarial equivalent of the recalculated balance remaining unpaid by the member. (4) Under provisions of PERL governing the payment of additional service credit, a member's failure to make the lump-sum payment or the election to cancel installment payments results in the resumption of installment payments as of the member's retirement date. This bill would instead provide that, for elections with an initial effective date on or after January 1, 2020, a member's failure to elect to make a lump-sum payment or cancel his or her installment payments would result in the member's allowance being reduced by the actuarial equivalent of the recalculated balance remaining unpaid. (5) The PERL establishes retirement formulas, known as the Second Tier, modified First Tier, and First Tier, which are applicable to specified members of the retirement system. Under that law, a member who elects to be subject to Second Tier benefits is paid his or her accumulated contributions plus interest, subject to specified conditions. Effective January 1, 2000, a member who received service credit subject to Second Tier benefits may elect to become subject to First Tier benefits and contribution rates. That law requires a member who elects to become subject to First Tier benefits to deposit accumulated contributions the member withdrew while he or she was subject to Second Tier benefits, plus interest, as specified, and this deposit requirement may be satisfied by an actuarial equivalent reduction in the members retirement allowance. This bill would instead specify that, this deposit requirement may be satisfied by an election to reduce the member's allowance by the actuarial equivalent of any balance remaining unpaid by the number at the time of the member's retirement or preretirement death. The bill would also specify that, for a member who elects to receive First Tier credit on or after January 1, 2020, any unpaid balance of that member would become due and payable at the time of the member's retirement or preretirement death, with the member, survivor, or beneficiary's allowance reduced by the actuarial equivalent of any balance remaining unpaid by the member.

Bill Text

• Chaptered 08/20/18 - Chaptered Current pdf August 20, 2018
• Enrolled 08/07/18 - Enrolled pdf August 07, 2018
• Amended 06/13/18 - Amended Senate pdf June 13, 2018
• Introduced 02/12/18 - Introduced pdf February 12, 2018
• AB2196 View text html

Action History

1. August 20, 2018

   Chaptered by Secretary of State - Chapter 168, Statutes of 2018.

2. August 20, 2018

   Approved by the Governor.

3. August 09, 2018

   Enrolled and presented to the Governor at 11:30 a.m.

4. August 06, 2018

   Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0. Page 6137.).

5. July 03, 2018

   In Assembly. Concurrence in Senate amendments pending. May be considered on or after July 5 pursuant to Assembly Rule 77.

6. July 02, 2018

   Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0. Page 5039.).

7. June 26, 2018

   Read second time. Ordered to Consent Calendar.

8. June 25, 2018

   From committee: Be ordered to second reading file pursuant to Senate Rule 28.8 and ordered to Consent Calendar.

9. June 13, 2018

   Read second time and amended. Re-referred to Com. on APPR.

10. June 12, 2018

    From committee: Amend, and do pass as amended and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 5. Noes 0.) (June 11).

11. May 24, 2018

    Referred to Com. on P.E. & R.

12. May 10, 2018

    In Senate. Read first time. To Com. on RLS. for assignment.

13. May 10, 2018

    Read third time. Passed. Ordered to the Senate. (Ayes 73. Noes 0. Page 5130.)

14. May 03, 2018

    Read second time. Ordered to Consent Calendar.

15. May 02, 2018

    From committee: Do pass. To Consent Calendar. (Ayes 17. Noes 0.) (May 2).

16. April 18, 2018

    From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 6. Noes 0.) (April 18). Re-referred to Com. on APPR.

17. February 26, 2018

    Referred to Com. on P.E., R., & S.S.

18. February 13, 2018

    From printer. May be heard in committee March 15.

19. February 12, 2018

    Read first time. To print.

Sponsors

• Cooper · Primary

Votes

Subjects