Employee Relations update 1/24/2014
CalPERS Seeking County Feedback Regarding Adoption of New Actuarial Assumptions
The California Public Employees’ Retirement System (CalPERS) Board of Administration (Board) next month plans to adopt new actuarial assumptions that will affect public employer contribution rates.
The new assumptions come after a review of current assumptions (both economic and demographic) through an experience study (a summarization of actual experience over a defined period of time, used as a guide in setting future actuarial assumptions). CalPERS is requesting county feedback on the impacts of impending contribution rate increases from the adoption of the new assumptions.
While CalPERS’ staff is making no recommended changes with respect to economic assumptions, a review of demographic assumptions has resulted in a recommendation of several changes including changes to retirement rates to better reflect the observed trend of significantly earlier retirement ages for public agency members subject to the 3% at 50 benefit formula; increasing the salary scale assumption for public agency safety members; lowering the rates of disability retirements across all safety groups; and, the recommended change that will have the most impact on employer contribution rates, a possible alternative assumption for mortality improvement as a review of those rates have shown that members have a longer post-retirement life expectancy than currently assumed.
The CalPERS staff recommendation is to project future mortality improvements to 2023 or 2028. The first year impact of the cost increase to employers would not occur until the 2016-17 fiscal year. Additionally, CalPERS’ staff provided two alternatives to the Board at its meeting in December to phase in the recommended rate increases (current Board policy is a 20-year amortization with a five-year phase in): a 30-year amortization with a seven-year phase in or a 30-year amortization with a five-year phase in.
A survey was sent to those counties contracting with CalPERS for retirement benefits earlier this week. The due date for its submission is January 28. If your county personnel director or administrative officer has not yet received the survey, please contact Faith Conley at 916.650.8117.
AB 778 Held on Suspense in Assembly Appropriations Committee
Assembly Bill 778, by Assembly Member Raul Bocanegra, would allow either an employer or an employee representative to seek a determination from the Public Employment Relations Board (PERB) as to whether the parties have reached impasse during labor negotiations and would extend the timeline for an employee representative to submit a dispute to factfinding.
CSAC’s opposition centered on the unnecessary creation of a new process for determining whether impasse has been reached, rather than allowing local rules to dictate. Doing so would add another administrative layer to the collective bargaining process that will result in delays and costs to both PERB and counties.