The California Public Employees’ Retirement System (CalPERS) Board of Administration recently approved new draft regulations concerning what types of compensation will be used to calculate pension benefits. These regulations will apply only to members hired on or after January 1, 2013, under the Public Employees’ Pension Reform Act (PEPRA). The regulations are meant to counter pension spiking (artificially inflating compensation in order to increase pensions).
The proposed regulations eliminate six types of compensation from pension calculations: bonus pay; management incentive pay; value of employer paid member contributions; off-salary-schedule pay; uniform allowances; and temporary pay upgrades.
Pay is included in PEPRA pension compensation only if it meets all four of the following requirements: it is part of the normal monthly rate of pay; it is paid in cash to similarly situated members of the same group or class of employment; it is for services rendered during normal working hours; and it is paid pursuant to a publicly available pay schedule.
These draft regulations have a few hurdles to jump before becoming final. First, they will be submitted to the Office of Administrative Law (OAL) for a 45-day public comment period. Comments will be reviewed and responses provided. Second, the draft regulations will be submitted to the Department of Finance for review and approval. Finally, they will be submitted to the OAL for final review and adoption.
According to the CalPERS Board, there are close to 241,000 PEPRA members, representing close to 28 percent of active public employees.
Jorge Luna has been practicing law since 1996 in a variety of areas, including employment, construction, business litigation, intellectual property and entertainment. For the past 12 years, Mr. Luna has focused his practice ...
Nate Kowalski is Chair of the firm’s Public Entity Labor and Employment Practice Group. He is an accomplished litigator who represents employers in both the private and public sectors. Mr. Kowalski has litigated hundreds of ...
- Senior Counsel
Joshua Morrison represents California public school districts in all aspects of general education law. His areas of specialty practice include public employee discipline/dismissal, administrative hearings, matters before ...
Other AALRR Blogs
- California Supreme Court Hears Cal Fire Oral Argument
- Amortization Period for New Debt Shortened to 20 Years
- New CalPERS Compensation Limits, Effective Immediately
- CalPERS Responds to Its Critics
- Senate Bill 525 Amends California Public Pension Laws
- New Stanford University Study Predicts Public Pensions Costs in California to Consume 14-17.5% of Operating Expenses by the Year 2030
- New Law Penalizes Employers Who Fail to Provide Information About Annuitants Working During Retirement
- Appellate Court Holds That MOU Does Not Provide Vested Interest in Retiree Medical Benefits
- PERB Allows School District to Enforce Longstanding, but Previously Unenforced Limits on the Employer Contribution for Post-Retirement Medical Benefits
- Curtailing Police Pensions: Not As Simple As It May Seem