Calif. Governor Submits 12-Point Pension Reform Plan

February 3, 2012 ( – California Governor Jerry Brown sent the language for his 12-point pension reform plan to the Legislature’s Conference Committee on Public Employee Pensions. 

According to the Sacramento Bee, the proposals are divided into two groups. The constitutional amendment offered by Brown broadly outlines the pension changes more narrowly defined in the language to change state law.

The changes would take effect on January 1, 2013. The plan can only move forward with at least two-thirds of the Legislature voting to put the constitutional changes on the November 6, 2012 ballot, which then would need approval from the majority of voters.

According to the article, the statutory language in the proposals:

•  Ends additional retirement service credit purchases or “airtime;”

•  Forfeits all or part of pensions for elected officials or civil servants convicted of a felony associated with their offices or jobs;

•  Ends retroactive pension enhancements;

•  Ends “pension holidays” for employers and employees;

•  Mandates that all employees pay “at least one-half” the normal costs for defined benefit plans or the defined portion of a hybrid plan. Employers may not pick up the employee share;

•  Limits the hours and wages for retirees who return to government work;

•  Calculates benefits based on a 36-month average of an employees’ wages;

•  Narrows the definition of wages that can be included for pension calculation purposes;

•  Establishes a hybrid pension system for new hires that would replace 75% of an employee's income after 30 years of service and a "normal" retirement age of 57 for public safety employees or, for all other workers, 35 years of service at age 67;

•  Sets five years and 52 years old as the minimum length of service and age that safety classes can qualify for retirement, 57 years old for all other groups;

•  Eliminates seats on the CalPERS’ Board of Administration now occupied by a member of State Personnel Board and an insurance industry representative;

•  Gives CalPERS’ board membership to the Department of Finance director;

•  Adds an independent health insurance expert and a representative from a contracting agency to the CalPERS’ board both appointed by the governor;

•  Adds three public representatives to the CalPERS’ board, two appointed by the governor and one jointly appointed by the Assembly speaker and the Senate Rules Committee; and

•  Sets 25 years of service as the threshold to receive 100% of the state's retiree health benefit--for new hires only.