CalPERS Board Adopts Shortened Amortization Schedule
February 15, 2018
After months of review and public hearings, the California Public Employees’ Retirement System (CalPERS) Board of Administration (Board) unanimously acted to adopt changes to the amortization policy which directly impact employer contribution rates. Provided in further detail below, the policy change will be reflected in counties’ June 2019 actuarial reports and take affect Fiscal Year 2021-22 for those that contract with CalPERS.
In sum, the changes condense the amortization period from 30 years to 20 years for all newly accrued unfunded liability balances with a five-year ramp up and no ramp down. The goal is to eliminate negative amortization (which occurs when payments fail to cover the interest due) and bring the Public Employees Retirement Fund (PERF) into alignment with industry best practices and guidelines.
CalPERS grants a hardship exemption (see page 8 of the document) for employer agencies who meet specified criteria and cannot bear the extra burden of a 20-year amortization; however, some agencies have expressed frustration with the Board, asserting that the eligibility criteria are overly rigid and the process is unnavigable. CSAC will be working with CalPERS staff and other public agency associations over the next month to review the policy and bring recommended changes to the Board for adoption.
CSAC staff would like to thank all of the counties who have provided input on these policy changes, particularly those who participate on the CalPERS Feedback Committee. We will continue working on this front and will keep counties apprised of any further developments. Please contact Dorothy Johnson or Tracy Sullivan with questions or comments.