|Targeted News Service|
The Public Employees' Pension Reform Act (PEPRA) closed existing benefit formulas and created new benefit formulas for new employees hired after
The new actuarial policies create significant changes to the risk pooling structures by:
* Combining 12 risk pools into two, one for all miscellaneous plans and one for all safety plans
* Changing the mechanisms of how the employer's unfunded liability is determined and collected, and what portion of their contributions will be used first to pay down these unfunded liability obligations
"These changes will prevent an unintended contribution increase while simultaneously addressing funding, equity and rate volatility issues for smaller employers," said <person>Rob Feckner, President of the CalPERS Board. "We are committed to helping employers reduce their unfunded liabilities and to fully funding our risk pools to support the next generation of California's workforce."
While these changes will avoid a general increase in employer contributions to fund the risk pools, the changes will result in contribution increases for some individual employers and a reduction in contributions for other employers. Employers with a high ratio of retirees to active members are expected to see a relatively modest increase, while employers with fewer retirees are expected to see a relatively modest decrease in contributions.
"By taking action now, we can minimize any additional strain on employers' budgets," said
Changes to the risk pools will also allow employers with additional flexibility to pay down their share of the pools' unfunded liability, a request made by many CalPERS employers.
"It is especially gratifying that we have been able to avoid unnecessary increases while also permitting employers to take charge of paying down their unfunded liability," said Slaton.
CalPERS first implemented risk pools in
More than 1,200 contracted employers participate in risk pools that include more than 3,500 pooled plans.
More background is available in the Finance & Administration Committee Agenda Item 5a and 2012 Risk Pooling Review Report.
CalPERS is the largest public pension fund in the U.S., with more than
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