California Public Employees’ Retirement System www.calpers.ca.gov P.O. Box 942715, Sacramento, CA 94229-2715 888 CalPERS (or 888-225-7377) TTY: (877) 249-7442)
Adding PEPRA Language to Your CalPERS Retirement Contract Public agencies—including cities, counties, and special districts—that contract with CalPERS and have pre-2013 retirement contracts are strongly encouraged to amend their contracts to include updated language reflecting the Public Employees’ Pension Reform Act of 2013 (PEPRA). While CalPERS administratively implemented PEPRA’s mandated benefit formulas for new members in 2013, many agencies’ formal contracts do not yet reference these critical statutory changes. Amending contracts to include PEPRA language is important for several key reasons:
1. Legal Compliance and Clarity:
PEPRA introduced significant pension reforms, including reduced benefit formulas and increased retirement ages for new CalPERS members. Although these provisions have been applied in practice since 2013, contracts that pre-date PEPRA do not explicitly reference these changes. Amending contracts ensures that all legal requirements are clearly documented, reducing the risk of confusion or misinterpretation regarding member benefits and eligibility.
2. Administrative Consistency:
Including PEPRA language in contracts aligns the formal contract terms with current CalPERS administration and practice. This consistency simplifies the administration of benefits for both the agency and CalPERS, ensuring that all parties are operating under the same, up-to-date understanding of member benefits. It also helps avoid discrepancies between contract language and actual benefits provided, which can complicate audits, member inquiries, and personnel decisions.
3. Transparency for Employees and Stakeholders:
Clear contract language benefits both current and future employees, as well as other stakeholders, by explicitly stating the retirement benefit formulas and eligibility requirements that apply to new hires. This transparency supports effective communication, helps manage employee expectations, and can be important during labor negotiations or when responding to public inquiries.
4. Risk Mitigation:
Outdated contract language can expose agencies to legal or financial risks if there is ever a dispute about the applicable benefit formulas. By updating contracts to reflect PEPRA, agencies reduce the likelihood of costly misunderstandings or litigation related to pension benefits.
5. Alignment with Best Practices:
Many public agencies have already amended their contracts to include PEPRA provisions, reflecting best practices in pension administration. Agencies that have not yet done so are encouraged to align with this standard to ensure consistency across the CalPERS system.
Conclusion:
Amending CalPERS contracts to include updated PEPRA language is a proactive step that ensures legal compliance, administrative efficiency, transparency, and risk mitigation. Agencies are encouraged to work with CalPERS to update their contracts, ensuring that all parties are aligned with current law and best practices in public pension administration. For assistance, agencies can contact CalPERS Pension Contract Program staff or visit the CalPERS website for more information.