According to a press release, at its June 2010 board meeting last week, board members took a sponsor-if-amended position on SB 1425, a proposal that would control the practice of inflating retirement benefits, commonly known as “spiking,” as well as “double-dipping,” in which retired public employees immediately return to work.
SB 1425 would specify which types of compensation are included for the purpose of determining retirement benefits. Remuneration that is paid in addition to salary, such as car or housing allowances, would not be included in final compensation. In addition, the measure would require a 180-day separation from service before a retiree can return to work.
The board asked for amendments to include a 10% hard cap on final year compensation allowed when calculating retirement benefits. CalSTRS projects annual net savings of approximately $15 million to $25 million to the fund by this bill, the press release said.
In February 2010, the board adopted a support position on AB 1743, which provides additional regulation of placement agent fees and activities to prevent “pay-for-play” activities with public pension investments. AB 1743 would amend the definition of lobbyist under the Political Reform Act to include placement agent and add definitions of “placement agent” and “external manager” to the Political Reform Act.
The measure would also enhance current law and CalSTRS policy regarding disclosure of placement agent payments and activities.
CalSTRS, with a portfolio valued at $138 billion, is the second largest public pension fund in the United States.