Public Employee Pension Reform Act

(AB340)What does this really mean for us

as Public Sector workers?

Defined Benefit (DB) Plans

O A certain benefit is guaranteed upon retirement

e.g., $900 p/monthCalPERS: 3% @ 50 and 2% @ 55

O The benefit is guaranteed no matter what happens in the market

Defined Contribution (DC) Plans

O The amount of contribution is defined, but not the amount of benefit

e.g., 401K (up to $16,500 p/year)

e.g, up to 25% of annual incomee.g., may include employee contribution

O If the market goes down, no guaranteed benefit

Types of Public Pension Funds

o CalPERSo CalSTRSo Act of ‘37 County Fundso City Funds: SF, LA, Fresno, etc.o Special Independent Funds: water

district, Housing Authority

WHO does PEPRA cover & WHEN does PEPRA take

effect?Law becomes in effect January 1, 2013

Affects employees in CalPERS & ’37’ Act Counties

Most changes affect “NEW” members Upon expiration of existing contract or MOU Employee NEVER in public pension system Employee moves between public employers in same

system w/ more than 6 months break

What does PEPRA change for NEW Members?

• Compensation for benefits calculation is CAPPED

$110,100 if SS participant

120% of $132,120 if not a SS participantAdjusted each year by CPI

• Even if you earn more, no longer used to determine pension

• No contributing employer can have a plan with higher caps

• Judges retirement Systems I&II excluded from caps!

What does PEPRA change for NEW Members?

• 1% at early retirement age of 52 (increased from 50)

• 2% @ normal retirement age of 62• 2.5% max @ retirement age of 67

(increased from 63)• New workers will have to wait

until age 67 for max benefits, compared to age 63 for current workers

How does PEPRA affect CURRENT employees?

Union contracts in effect on 1/1/13 will/should remain status quo until its

expiration: Required to pay ½ of normal cost of plan Employer cannot impose full law until 1/1/18 –

Impasse procedures apply No more purchasing of “Air Time” after Eliminates spiking from special compensation Eliminates retro pension increases Prohibits employer from suspending

contributions necessary to fund annual costs

In other words……

O Pay More

O Get Less

O Wait longer to Get Less

But WHY!?O Erosion of DB pensions in private sector lead

to pension ENVY and a race to the bottomO Our pensions have been scapegoated for

state’s budget crisis - ALECO Corporations race eliminate DB plansO Deliberate policy choice to shift risk of

employer to employeeO Ignore, cover up that median pension is

approx. $25k, average about $18KO Publicizing $100,000+ pensions – which are

not our members – really management!!

Your current Plan in Santa Cruz County

O Contract expires on 9/10/2013O Employees contribute ZEROO 2% @ 55 currentlyO 2nd tier - 2% @60 not implemented yet

So What Next?Prepare to FIGHT

BACK!!!Attend worksite

meetings Join the negotiating

team when time comesBecome a Contract

Action Team (CAT) member

Be informed, get involved and talk to your co-workers