public employee pension reform act (ab340) what does this really mean for us as public sector...
TRANSCRIPT
Public Employee Pension Reform Act
(AB340)What does this really mean for us
as Public Sector workers?
Defined Benefit (DB) Plans
O A certain benefit is guaranteed upon retirement
e.g., $900 p/monthCalPERS: 3% @ 50 and 2% @ 55
O The benefit is guaranteed no matter what happens in the market
Defined Contribution (DC) Plans
O The amount of contribution is defined, but not the amount of benefit
e.g., 401K (up to $16,500 p/year)
e.g, up to 25% of annual incomee.g., may include employee contribution
O If the market goes down, no guaranteed benefit
Types of Public Pension Funds
o CalPERSo CalSTRSo Act of ‘37 County Fundso City Funds: SF, LA, Fresno, etc.o Special Independent Funds: water
district, Housing Authority
WHO does PEPRA cover & WHEN does PEPRA take
effect?Law becomes in effect January 1, 2013
Affects employees in CalPERS & ’37’ Act Counties
Most changes affect “NEW” members Upon expiration of existing contract or MOU Employee NEVER in public pension system Employee moves between public employers in same
system w/ more than 6 months break
What does PEPRA change for NEW Members?
• Compensation for benefits calculation is CAPPED
$110,100 if SS participant
120% of $132,120 if not a SS participantAdjusted each year by CPI
• Even if you earn more, no longer used to determine pension
• No contributing employer can have a plan with higher caps
• Judges retirement Systems I&II excluded from caps!
What does PEPRA change for NEW Members?
• 1% at early retirement age of 52 (increased from 50)
• 2% @ normal retirement age of 62• 2.5% max @ retirement age of 67
(increased from 63)• New workers will have to wait
until age 67 for max benefits, compared to age 63 for current workers
How does PEPRA affect CURRENT employees?
Union contracts in effect on 1/1/13 will/should remain status quo until its
expiration: Required to pay ½ of normal cost of plan Employer cannot impose full law until 1/1/18 –
Impasse procedures apply No more purchasing of “Air Time” after Eliminates spiking from special compensation Eliminates retro pension increases Prohibits employer from suspending
contributions necessary to fund annual costs
But WHY!?O Erosion of DB pensions in private sector lead
to pension ENVY and a race to the bottomO Our pensions have been scapegoated for
state’s budget crisis - ALECO Corporations race eliminate DB plansO Deliberate policy choice to shift risk of
employer to employeeO Ignore, cover up that median pension is
approx. $25k, average about $18KO Publicizing $100,000+ pensions – which are
not our members – really management!!
Your current Plan in Santa Cruz County
O Contract expires on 9/10/2013O Employees contribute ZEROO 2% @ 55 currentlyO 2nd tier - 2% @60 not implemented yet