Senate Bill 525 Amends California Public Pension Laws

California Senate Bill 525, concerning public pensions, was signed into law in September and will take effect on January 1, 2018. The bill changes many provisions of the Government Code. Most of these revisions are minor “housekeeping” changes.

One substantial change affecting many public agencies is the amendment to Government Code section 20636, requiring public employers to report special compensation with greater specificity. Under the amended statute, employers must do all of the following:

  • Identify the pay period in which the special compensation was earned.
  • Identify each item of special compensation and the category under which that item is listed. For example, employers would need to report special compensation for employees’ uniforms under the category of Statutory Items.
  • Report each item of special compensation separately from payrate.

Senate Bill 525 also revises the definition of disability as a basis of retirement in Government Code section 20026. Under current law, disability may serve as a basis of retirement if it is permanent or of extended and uncertain duration. The new law requires that the disability be either permanent, expected to last at least 12 consecutive months, or expected to result in death.

The bill adds new Government Code section 20309.7, allowing school employees in the CalPERS system who are qualified for CalSTRS to choose between staying with CalPERS or making a one-time election to transfer to CalSTRS.

In addition, CalPERS will be authorized to conduct forms of retirement education beyond pre-retirement informational seminars, and may do so for the benefit of all members, regardless of age.

The bill also repeals Government Code section 21228, which provided that a person who retires for disability before the mandatory retirement age may take a job in which the employee is not disabled, without reinstatement from retirement, with the employee’s disability retirement pension reduced. This section was rendered obsolete by subsequent laws authorizing when an employee may work without reinstating from retirement.

Please contact us if you have questions about this bill or other upcoming legal changes.


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