The proposed Public Employees Pension Reform Act mostly changes benefits for new hires, which it defines as those who have never been a member of any public retirement system before Jan. 1, 2013, or who took more than a six-month break moving between public employers or retirement systems. The plan does not affect independent retirement systems run by charter cities such as San Jose. Here are the proposed changes broken down by category.
Current and new employees: Increased cost sharing: Sets goal for current employees to pay half the "normal cost" of their pension benefit, a figure that does not include extra "unfunded liability" costs built up from retroactive benefit increases and past cost projections falling short of reality. Double-dipping: Limits post-retirement employment allowing retirees to earn both a pension and a paycheck. Pension holidays: Prohibits both current employees and their employers from skipping required contributions to their plan. Retroactive increases: Prohibits future increases in pension benefits from applying to employees' prior years of service. Air time: Prohibits purchase of additional pension service credit on or after Jan. 1. Felons: Prohibits officials from collecting pensions if convicted of felony involving official duties.
New hires: Cost sharing: Requires new employees to pay half "normal cost" of pension. Pensionable pay cap: Limits salary on which pensions are based to $110,100, or $132,120 for those who do not earn Social Security credit, about 36 percent of CalPERS members, mostly public-safety employees. Retirement age: Raises age of retirement eligibility two years or more for all new public employees. Retirement formulas: Reduces the percentage of pay per year worked for new employees, replacing all 3 percent plans for local police and fire employees with 2.7 percent plan. Spiking: Bases new employee pensions on highest regularly recurring pay over three years to eliminate abuses of last-minute salary spikes to boost pension benefits.