Working After Retirement Enforcement
Senate Bill 411 (Cortese) revises the penalties for violations of the working after retirement laws by removing the requirement to reinstate a retired member and makes other conforming changes to cross-references relating to working after retirement law.
Under current law, any violation, however minor or inadvertent, requires CalPERS to reinstate the retired member, which often has significant financial consequences for the individual. This change to the law will allow CalPERS team members to work with retired members and employers to resolve working after retirement violations more efficiently and expeditiously.
School Employees Serving Their Unions
Senate Bill 294 (Leyva) removes a provision from existing law that limits the amount of service credit a school member may accrue while on an approved leave of absence to serve as an elected officer of an employee organization.
Prior to this bill, the service credit limit was 12 years, and this limitation only applied to school employees. This bill was co-sponsored by the California Teachers Association, the California Federation of Teachers, and the California Labor Federation, and allows both certificated and classified school employees to serve their respective employee organizations with the same potential tenures as all other public employees in California.
Diverse and Emerging Investment Managers
Assembly Bill 890 (Cervantes) requires CalPERS to define the term “emerging and diverse manager,” and to annually report to the Legislature beginning on or before March 1, 2023, on the status of achieving appropriate objectives and initiatives regarding participation of emerging and diverse managers responsible for asset management within CalPERS’ portfolio of investments.
The bill includes a sunset provision of January 1, 2028. The CalPERS Board voted to support this bill at the June 16, 2021, board meeting because this supports the CalPERS investment office’s ongoing Emerging Manager Program.
Disallowed Compensation Recovery
Senate Bill 278 (Leyva) requires employers participating in CalPERS to pay a portion of the money that retirees would lose if a retiree’s monthly pension is reduced because their final compensation included disallowed compensation. The bill requires the employer to pay any overpayment that was paid due to the reporting of disallowed compensation and a penalty equal to 20% of the actuarial equivalent present value of the monthly pension reduction.
The bill applies to disallowed compensation that is special compensation for represented employees, and the special compensation was included in a memorandum of understanding (MOU) between the employee’s union and the employer. In addition, the bill requires CalPERS to review, at the employer’s request, compensation items in draft or approved MOUs for compliance. This MOU review is a service that CalPERS team members have provided to employers and employee groups for many years.
Technical and Clarifying Changes to the Public Employees’ Retirement Law (PERL)
Senate Bill 634 (Senate Labor, Public Employment and Retirement Committee) includes four provisions related to CalPERS. All these changes support existing operations.
- Create a clear statutory timeline for establishing the enrollment date for optional members, providing a 90-day window for the individual to decide and the employer to process a membership election. Optional members generally include legislative employees, certain appointees exempt from civil service, and local elected officials.
- Clarify authority to recover overpayments from any subsequent payment or benefit that is payable by the system.
- Make a conforming change to the election form remitting process related to CalPERS members retaining CalPERS service credit accrual while working in CalSTRS-covered employment. This does not change a member’s eligibility to make this election choice.
- Clarify the notification requirements for providing health benefits to the surviving spouses and dependents of specified safety officers, in order to ensure that CalPERS team members may start an eligibility determination process regardless of whether or not the employer notified CalPERS.
CalPERS monitors legislation at the state and federal levels to protect the best interests of our members and employers. To view summaries and reports about legislation that may affect you, visit the CalPERS Legislation page.