Retirement clock.jpgThis guest post was authored by Steve M. Berliner

Governor Brown issued a press release today indicating that an agreement was reached with legislative Democrats on public employee pension reform at the state level to take effect on January 1, 2013.  Details are sketchy at this point but it does appear that most of the reforms in the Governor’s previously proposed 12 point plan are contained in the deal.  Most of the changes appear to only affect future employees and will not address current obligations to existing employees or retirees.  While we do not have actual legislative language to share with you at this time, and full legislative approval may not happen for a few days, if at all, here are some highlights of what will likely be in the final package if passed:

  • No hybrid pension plans;
  • Capping compensation for future hires for pension purposes at $110,000 per year (for those in social security) and $130,000 per year for everyone else;
  • New employees will pay half their normal pension costs, while existing employees can pay more than they do now, but only through the meet and confer process;
  • Retirement age for full benefits will be raised to 67 for miscellaneous employees and 57 for safety employees;
  • 3 year average for final compensation, eliminating the single highest year option for new employees;
  • Service credit purchases eliminated;
  • Felons will lose their benefits; and
  • No retroactive enhancements to pensions.

It is not clear yet whether any of these changes will apply to existing employees. We will put out another Special Bulletin as soon more information is available.  We will also be announcing a webinar to address all these changes as soon as the details of the final reform package are released.