by Dawn Morabe
I can honestly say that when I was hired in 2003, I did not even think about my pension contribution, its benefit, or its vulnerability. Maybe you are the same. I am here to encourage you to not only think about it, but also to be actively involved in protecting it.
Our bi-weekly contribution to our pension is representative of the significant investment we make toward our eventual retirement. It is a manifestation of the employment contract we entered for our defined retirement benefit. As with everything in life, though, change is inevitable. For many years, we have been witnessing and experiencing the pressure to enact ever-increasing pension reforms to erode our pension benefits. This erosion has most certainly been accompanied by noteworthy employee contribution increases.
The most significant change we experienced in our pension benefits occurred in January 2013. The Legislature enacted the California Public Employees’ Pension Reform Act (PEPRA). PEPRA changed the way our retirement and health benefits are applied and placed compensation limits on members, as well as established minimum contribution rates for employees. Although some provisions of PEPRA apply to current participants, PEPRA primarily affects new members and new employees. Members hired on or after January 1, 2013 are affected by PEPRA through provisions affecting benefit formulas, the definition of what comprises pensionable earnings, limits on pensionable earnings, and other matters. The law also calls for PEPRA members to pay more towards the cost of benefits and strengthens the rules involving pension forfeiture for public employees who commit job-related felonies.
Is there more change in the future? This is a question without a current definitive answer, but there are a few things you should know. There are a few highly anticipated court cases regarding pension benefits currently moving through our judicial system. These cases have the potential to impact the pension benefits that have been promised to each public employee across the entire state.
One such case is Alameda County Deputy Sheriffs’ Association, et al. v. Alameda County Employees’ Retirement Association, et al. At the heart of this case is a rule which is a set of legal precedents dating back to the 1950s. The rule is a protective legal doctrine referred to as the “California Rule”. The idea behind the California Rule is simple: workers enter a contract with their employer on the day they begin work and the pension benefits they are offered as part of that contract cannot be diminished, unless replaced with similar benefits. Just last month (May 2020), the law firm of Rains Lucia Stern St. Phalle & Silver, PC argued this case in front of the California Supreme Court.
In a previous ruling on a separate challenge of the pension law, a state appellate court concluded that public employees are entitled to a “reasonable” pension, but “not an immutable entitlement to the most optimal formula of calculating the pension.” In effect, the court determined that retirement formulas, like salaries and other benefits, are subject to change. When that case reached the state Supreme Court last year, the justices upheld the pension law, but did not rule on the “California Rule” question.
It is unclear as to how the court will ultimately rule in this case. In the meantime, the DSA is carefully following this case and others as they move through our judicial system. We are confident these cases are being well represented by the attorneys to protect our rights, and we are thankful to these law firms for their work. Remember though, the preservation of our rights is the responsibility of us all. Be safe, be diligent, and know that the DSA and its legal counsel are always here for you!⭑