Pension Reform Impacts on CalSTRS
CalSTRS has conducted an assessment of AB 340, the California Public Employees’ Pension Reform Act of 2013, and its impact on CalSTRS members and operations and outlined key changes. Details
Governor Brown’s 2012 Pension Reform Plan
Governor Brown has proposed a Twelve Point Pension Reform proposal. Unlike his spring proposals he did not include any reference to improving CalSTRS funding; however, in response to a question regarding CalSTRS funding, the Governor indicated they were working on it.
Most of the proposals appear to be targeted at CalPERS and local public employee pension plans. There are some points that would affect current and future CalSTRS members; however, the Governor was unclear about those potential effects.
For example, it is clear that “air- time” could no longer be purchased after the effective date of its repeal. However, when the Governor proposed hybrid plans it was unclear if he was including CalSTRS, who already has a hybrid plan, in that proposal. The Governor’s proposal addresses return to work based on the CalPERS model. It is unclear whether he intends to have that same model apply to CalSTRS.
The Conference Committee on Public Employee Pensions is expected to use the Governor’s proposal as a starting point for their deliberations. We have no expectation they will adopt the proposal in totality as introduced by the Governor.
Here are the 12 Points of the Plan and who the change would affect:
1. Equal Sharing of Pension Costs: All Employees and Employers
2. “Hybrid” Risk-Sharing Pension Plan: New Employees
3. Increase Retirement Ages: New Employees
4. Require Three-Year Final Compensation to Stop Spiking: New Employees
5. Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees
6. Limit Post-Retirement Employment: All Employees
7. Felons Forfeit Pension Benefits: All Employees
8. Prohibit Retroactive Pension Increases: All Employees
9. Prohibit Pension Holidays: All Employees and Employers
10. Prohibit Purchases of Service Credit: All Employees
11. Increase Pension Board Independence and Expertise
12. Reduce Retiree Health Care Costs: State Employees
Here is a PDF file of the 12-point plan with more details on each item.