Pension reform highlights

1. ACCCA Town Hall Meeting Pension reform highlights

2. Does the need for pension reform exist? Myths about pension reform Legislative proposals Working for public agencies after retirement ACCCA position on pension reform The scope of the issue

3. Baby boomer impact on the retirement system Retirement systems not actuarially sound Decrease in future working population Perceived fraud in the system (spiking etc.) Retirees life expectancy increasing Who pays what toward retirement systems Management of retirement systems Does the need for pension reform exist?

4. Retirees receive excessive retirements The system cannot be changed (vesting) Hybrid pensions are not the answer All public retirement systems are the same Everyone who retires double dips The retirement system never changes Myths about pension reform

5. Initiative Process (6 proposals out 2 still seeking signatures) Brown Proposal and Republican support Exemptions for STRS end July 2012 (AB 758) SB 450 Independent Contractor status Legislative Pension Reform Committee When can changes be expected? Legislative proposals

6. Equal Sharing of Pension Costs: All Employees and Employers * “Hybrid” Risk-Sharing Pension Plan: New Employees * Increase Retirement Ages: New Employees * Require Three-Year Final Compensation to Stop Spiking: New Employees * Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees * Brown 12 Point Reform Initiative

7. Limit Post-Retirement Employment: All Employees Felons Forfeit Pension Benefits: All Employees Prohibit Retroactive Pension Increases: All Employees Prohibit Pension Holidays: All Employees and Employers Brown 12 point reform initiative

8. Prohibit Purchases of Service Credit: All Employees Increase Pension Board Independence and Expertise * Reduce Retiree Health Care Costs: State Employees * Included in Republican Proposal Brown 12 point reform initiative

9. Working for public agencies after retirement • Cal PERS • Basic 960 Hrs per fiscal year in PERS qualified position • Exemptions • Can work in a STRS position • Consultant, independent contractor • Cal STRS • Earning limit of $31,020 in STRS qualified position • Cannot work in a PERS position • Exemptions • 12 month out rule • Waivers • Emergency Admin Service • (All exemptions end 7/12)

10. Employee Shares in Pension Cost ACCCA can support the employee contribution toward their pension benefits of at least 50% provided other employee contributions such as Social Security payments are factored into the employee share. Accca position on pension reform

11. Hybrid “Risk Sharing Pension” • ACCCA can support maintaining a defined benefit program, changes to eliminate spiking, and a three year average computation on Base Salary. ACCCA will consider support of the hybrid plan provided: • Social Security payments in the PERS Plan do not change Social Security rights at the federal level; and • Any cap on earnings for high income retirees would apply to the defined benefits program only and be based on the earning restriction of IRS 415. Accca position on pension reform

12. Pension Caps (R) • ACCCA will consider support of a pension cap if pension computations are: • based on Base Salary; • if other creditable compensation is removed as part of the calculation; • if there is retention credit for unused sick leave; • if the cap on earnings for high income retirees is applied to defined benefits program only and based on the earning restriction of IRS 415. Accca position on pension reform

13. Increase retirement age ACCCA can support a change in retirement age consistent with changes in the federal social security rules. Prohibit purchase of service credits ACCCA can support the elimination of service credit purchase in both STRS and PERS. ACCCA Position on Pension reform

14. Prohibit Pension Holidays With clarification of the Governor’s intent, ACCCA can support the prohibition of “Pension Holidays.” Prohibit retroactive pension increases ACCCA takes a “Watch” position on this aspect of the Governor’s proposal. Accca position on pension reform

15. Prohibit pension spiking ACCCA can support the prevention of spiking and the elimination of Creditable Compensation as currently defined. Require 3 year final compensation average ACCCA can support the three year calculation of base pay but opposes a five year computation. Accca position on pension reform

16. Limit post-retirement employment • ACCCA will oppose any legislation that prohibits working within STRS after retirement, however ACCCA can support maintaining the current earning limits provided: • No earning cap once a retiree has been out of the system for 12 months with no sunset date; • They allow retirees to work as part-time faculty and other support positions as part of an early retirement plan; and • There is a continuation of emergency waivers to accommodate management needs when a vacancy occurs. • A prohibition on any retirement benefits for anyone who serves on public boards and commissions . Accca position on pension reform

17. Felony convictions ACCCA can support this position Prohibit employers from making employee retirement contributions ACCCA can support this provision within the proposal All other proposals relate to pension system management Accca position on pension reform