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AB 340 Pensl* on
,Jim Governor. signed into law Se ternber 12, 2®1
Most provisions effective januaryl, 2013
Effects ALL public employers, incl din CHA TER
cities that contract with CalPERS
co Exception - Charter cities and counties with an independent
pension plan without CalPERS reciprocity
Generally, only "new" employees and/or "new"
embers impacted
Exceptions - applies to "new" and current
• Prohibition against AIRTIME purchase
• New Post-Retirement Employment Restrictions
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AB 'J40 Reform
Additional Provisions:
fa,,o Defines "new" employee as employee hired on/after
of/oiA3 with no prior public sector work history or public
sector employment with no reciprocity to CAPERS
Defines "new" member as employee who was not a member
of CalPERS on 01/01/13 or worked for a system without
reciprocity to CalPERS or has a break in service from active
CalPERS covered employment of greater than 6 months
t Requires 3 Year Final Compensation vs. Single Highest Year
for "new" employees/members
Caps Final Compensation for "new" 'employees/members
at siiok if in Social Security and $132k for others
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AB 34" 0 Pe-nisi' n _'R*'I:,._et'ormS
Limits Post-Retirement Public Employment - applies
to new and current employees
Mandatory Wait Period of 18o days for post-retirement
(exception
ern to ment Police and FireP Y
Emergency approval requires action by governing body
Prohibits Purchase of Air Time "new" and current
employees (current employees. may apply byl2/31/12)
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Eliminates Benefits if Convicted Felon applies to
new and current employees
In Eliminates Pension Spiking
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AB 34" 0 PQ/--%nsi* on Reform
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Safety Industrial Disability Retirement changed to
provide the greater of:
Fifty percent of final compensation
0 A service retirement allowance, if qualified
Jo An actuarially reduced amount, determined by CalPERS
if the service age is less than 50 or not qualified for
service retirement
u Benefit will not be lower than what would have been
received prior to Januaryl, 2013
rp Government Code Section 21400, effective until January i,
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AB 3` 40 ]Pensi" on'
llig%-h, lights
Creates Reduced Benefit Formulas for NEW Employees
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1 iscell neousi Z 0, 5 ° a@670
Safety - Basic 2% a-57�`
1.426/050 50
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Safety- Cep* 1 %@50 .5%@,f,57
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Safety - ®ption 2 2%@50 ` 50 2 7%@57
*New Employee- No prior service in a public agency; or has been separated from prior active service in a public agency for
more than six months. For Public Safety it is mandatory that the Agency Option will be rthe plan that is LOWER than, but
CLOSEST to the current Public Safety plan at age55. For COHB- Option 2. May also opt for2nd tier lower plans through
collective bargaining.
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Ali 340' Penntsi* on 1 tS
Cost Sharing Provisions
Cost sharing for current employees not impacted at this
time (existing M®U language prevails)
Provides for 50/50 sharing of "Normal Cost" for "new"
employees/members (minimum contribution)
Mandates 50/50 cost-sharing of "Normal Cost" in Zol8 for
current employees (minimum contribution)
"Normal Cost" is N®T the required employee contribution
(8% for Miscellaneous/9% for Safety)
"Normal Cost" is actuarially determined by CalPERS
Eliminates EPMC for NEW employees
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Other Ancillary Provisions
. Prohibits new supplemental defined benefit plans for
ALL employees after January1, 201 (PARS)
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Limits "PERSABLE" final compensation eliminates
Bonus pay
o Termination/Severance Payments [GC 31461 (1)(c)(4)]
o Uniform Allowance
o Leave payouts in excess of annual leave accruals [GC 31461
(1)(C)(Z)]
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AB 340 PensionReformHighli,ghts
QUESTIONS ?
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