How Governor Brown’s Pension Reform Plan Affects Public Safety

It appears that Governor Brown has offered some amnesty to Public Safety in his Pension Reform Plan released today at 11:00am, but public safety will be affected, especially new hires.

1. Equal Sharing of Pension Costs: All Employees and Employers: This does provision does not specifically exclude Public Safety employees and the Governors plan is to move to a contribution level of at least 50%, which will be phased in.

2. “Hybrid” Risk-Sharing Pension Plan: New Employees. New public safety employees can count on a reduced defined benefit component and a defined contribution component that will be managed professionally to reduce the risk of employee investment loss. The hybrid plan will combine those two components with Social Security and envisions payment of an annual retirement benefit that replaces 75 percent of an employee’s salary. This will be based on a full career of 30 years or new public safety employees.

 3.  Increase Retirement Ages: New Employees retirement ages will be set at the Social Security retirement age, which is now 67. The retirement age for new safety employees will be less than 67, but commensurate with the ability of those employees to perform their jobs in a way that protects public safety.

 4. End Pension Spiking: New Employees final compensation be defined, as it is now for new state employees, as the highest average annual compensation over a three-year period.

 5. Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees require that compensation be defined as the normal rate of base pay, excluding special         bonuses, unplanned overtime, payouts for unused vacation or sick leave, and other pay perks.

6. Limit Post-Retirement Employment: All Employees who retire from public service would be limited to working 960 hours or 120 days per year for a public employer. It also will prohibit all retired employees who serve on public boards and commissions from earning any retirement benefits for that service.

7. Felons Forfeit Pension Benefits: All Employees public officials and employees forfeit pension and related benefits if they are convicted of a felony in carrying out official duties, in seeking an elected office or appointment, or in connection with obtaining salary or pension benefits.

8. Prohibit Retroactive Pension Increases: All Employees

9. Prohibit Pension Holidays: All Employees and Employers prohibit all employers from suspending employer and/or employee contributions necessary to fund annual pension costs.

10. Prohibit Purchases of Service Credit: All Employees

Prohibits pension systems from allowing employees to buy “airtime,” or additional retirement service credit for time not actually worked.

11. Increase Pension Board Independence and Expertise: Adding two positions to the Cal PERS Board

12. Reduce Retiree Health Care Costs: New state employees will be required to work for 15 years to become eligible for the state to pay a portion of their retiree health care premiums. They will be required to work for 25 years to become eligible for the maximum state contribution to those premiums.