`
In an effort to curtail the practice of salary boosting by public employees prior to their imminent retirement, the state Senate last week approved SB 1425 in a 34-0 vote.
Introduced by Sen. Joe Simitian (D-Palo Alto), the bill, now moving to the Assembly – would require pensions to be based on criteria that prevent employees from padding final salaries with one-time bonuses, end-of-career promotions and accrued vacation time.
Pensions are often based on final-year compensation and inflating final-year earnings artificially boosts pension payments.
“For the most part, the process is entirely legal,” Simitian said. “Simply put, the rules now in place encourage employees to game the system.”
A 2007 study by San Francisco’s non-profit Pacific Research Institute found that pension spiking costs California taxpayers approximately $100 million each year.
“Pension spiking does a disservice to the public, who ultimately foots the bill,” Simitian said. “And it does a disservice to other public employees who rely on the resources and solvency of the system for a secure retirement.”
Simitian’s bill specifically affects employees covered by the CalPERS (California Public Employees’ Retirement System) and CalSTRS (California State Teachers’ Retirement System) programs. High-profile abuses undermine the public’s confidence in the entire system. Fewer than 1 percent of CalPERS retirees receive a six-figure pension – the system’s average pension is $25,212 per year.
“Most of the folks I talk to don’t begrudge employees a reasonable pension to provide some security in their later years,” Simitian said. “But they are understandably angry when they hear of these off-the-charts payouts – even as our state and our residents are struggling to make ends meet.”
The bill addresses the issue of revolving-door employees known as double dippers – those who retire with substantial pensions and then resume full-time, paid employment, often at the same agency and in the same capacity, immediately following “retirement.”
Simitian said he understands a public agency’s occasional need to fill a short-term vacancy or provide specific expertise and asking a retiree to return. However, the current system encourages employees to cash out early and become immediate and continuing double dippers, which hurts the public and other retirees in the process, he said.
For more information, visit www.senatorsimitian.com/legislation.
