‘Pension spiking’ not protected by California regulation, high court docket guidelines

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'Pension spiking' not protected by California law, top court rules

For two decades, it has been a valued benefit for some County employees across California: the ability to increase their pensions by paying for unused vacation or sick days, or extra hours at the end of their careers.

In some cases, workers received more pension payments than they earned on the job.

But given the difficult economic situation of the state and the emerging pension crisis, the government at the time. Jerry Brown supported a major reform in 2013 that prohibited district workers from “increasing pensions”. Unions have sued to repeal the new law.

On Thursday, the California Supreme Court joined the state in one of several closely watched pension cases and unanimously confirmed a provision in the 2013 law that prohibited district workers from increasing their pension.

In a decision by Chief Justice Tani G. Cantil-Sakauye, the court said that the law to end the district employee's pension increase was "constitutionally permitted to fill gaps and prevent abuse of the pension system."

It was the second time in less than two years that judges were debating a pension issue without addressing a broader issue of utmost importance to workers and governments – the fate of the so-called California Rule, a 65-year-old legal system that provides public pensions to everyone Protects government employees with the exception of new hires.

David E. Mastagni, who represented Alameda County's employees in the case, said he was disappointed but happy that the California rule had survived.

Thursday's decision could be seen as a "cessation" of the rule, he said, but it indicated that the court would limit retirement benefits to close "changes to only cover perceived abuses or gaps."

Public pensions are calculated based on an employee's highest income year, and some public pension plans allow peaks.

Unions and public worker groups have argued that the anti-spiking provision contradicts decades of California court rulings. This made California public pension protection one of the strongest in the country.

The rule guarantees workers the pension they would receive under the benefit package applicable on the day they were hired. Pensions are considered to be constitutionally protected contracts.

According to the rule, the formula for calculating retirement income could only be changed in a way that was neutral or advantageous for the employee.

Several groups of companies and others had asked the court to use the legal challenges for Brown's pension package as a means of weakening the California rule that would have affected public servants across the state. The court refused and instead wrote a close decision.

"We have no legal reason to make a fundamental review of the rule," the court said.

In the judgment, the court said that lawmakers "must have the authority, discretion, and flexibility" to address issues such as raising the pension.

The government's request to offer an advantage to offset the elimination of retirement would "significantly undermine legislative efforts to fill gaps," the court said.

The decision to spike applies to 20 counties that manage their pension plans in accordance with the County Employees Retirement Law of 1937, which was amended by the 2013 law. The counties of LA, Orange, San Bernardino and San Diego are among them. The city of Los Angeles has a separate pension system.

Most government employees can continue to use the accumulated sickness to purchase additional service loans, said Michael Jarvis, senior employment advisor at the Mastagni Holstedt law firm. The 2013 Pension Act did nothing to change that. Jarvis said California State University takes 250 days of sick leave to get an additional year of service credit, which increases the employee's pension from 1.5% to 3% per year.

Timothy K. Talbot, who represented employees in the Contra Costa and Merced districts on Thursday, said the verdict was "very disappointing and devastating" for his customers because "they rely on this benefit," which he called "vacation pay." . out."

The benefit was part of legally approved settlements from the late 1990s and was used by counties to lure people to work for them, he said.

Ted Toppin, chairman of Californians for Retirement Security, a 1.6 million-member coalition of government employees and retirees, was relieved to see that the decision "clearly" confirmed California's rule and "retirement savings for California-based workers Officials … protected lines to protect Californians during the pandemic. "

But he said the verdict appeared to "undermine the retirement benefits of Alameda County's sheriff MPs," one of the groups of employees who had filed suit.

"Your employer and pension system have promised them that the court decision will now allow them to break," said Toppin. "It is unfair and unfortunate. When public employers impose a pension obligation on their workers, they should respect it. "

Governor Gavin Newsom, whose office spoke in favor of the 2013 law, did not comment on the verdict.

In another unanimous pension decision last year, the Supreme Court ruled that the government could cut pension benefits without violating California's rule.

In this case, the court upheld the “airtime” benefits for California in 2012 that allowed state employees to buy retirement credits.

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