California Code of Regulations › Title 2 - Administration › Division 1 - Administrative Personnel › Chapter 2 - Board of Administration of Public Employees' Retirement System › Subchapter 1 - Employees' Retirement System Regulations › Article 6 - 2013 Public Employees' Pension Reform Implementation › Section 579.9 - Significant Increase in Actuarial Liability Due to Increased Compensation Paid to a Non-Represented Employee

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) For purposes of Government Code Section
					 20791, a
					 significant increase in actuarial liability due to increased compensation
					 occurs if the conditions described in both subsections (a)(1) and (a)(2) below
					 are met. Satisfaction of these conditions shall be determined by the Chief
					 Actuary as of the earlier of the date of retirement or death of a member on or
					 after January 1, 2013.
(1) Actuarial
					 Liability Test--A contracting agency's actuarial liability with respect to the
					 member is increased by $25,000 or more per year of service allocated to the
					 contracting agency due to increased compensation, as defined in subsection
					 (a)(2) below, paid by a subsequent employer. The increase in the contracting
					 agency's actuarial liability for purposes of this subsection (a)(1) shall be
					 the difference between the contracting agency's actuarial liability based on
					 the member's final compensation and the contracting agency's hypothetical
					 actuarial liability based on the member's expected final compensation. Expected
					 final compensation shall be calculated by the Chief Actuary by projecting
					 compensation based upon average annual expected pay increases reflecting the
					 actuarial assumptions of the system for the most recently completed actuarial
					 valuation as of the earlier of the date of the member's retirement or
					 death.
(2) Compensation Test--an
					 increase in actuarial liability under subsection (a)(1) is due to increased
					 compensation if:
(i) The highest annual
					 compensation paid to the member by the contracting agency is at least $65,000
					 less than the member's highest annual compensation as of the earlier of the
					 date of retirement or death; and
(ii) The compound average growth rate between
					 the two compensation amounts referenced in condition (i) above was ten percent
					 or greater. This rate shall be calculated over the number of years between the
					 date the member's employment terminated with the contracting agency and the
					 earlier of the date of the member's retirement or death.
(3) The actuarial liability threshold in
					 subsection (a)(1) and the compensation threshold in subsection (a)(2) shall be
					 reviewed annually for purposes of determining whether the actuarial liability
					 threshold and the compensation threshold are subject to adjustment as described
					 below.
For purposes of such review, the actuarial liability
						threshold and compensation threshold shall be recalculated based on an
						adjustment factor, calculated by dividing the
Consumer Price Index for
						All Urban Consumers: U.S. City Average
, for the month of September in
						the calendar year immediately preceding the recalculation by the
Consumer Price Index for All Urban Consumers: U.S. City
						Average
, for the month of September two calendar years preceding the
						recalculation. The recalculated actuarial liability threshold and compensation
						threshold shall be used as a basis to recalculate the actuarial liability
						threshold and compensation threshold, respectively, for the following year. The
						recalculations of the actuarial liability and compensation thresholds shall
						occur annually, beginning January 1, 2020.
Once the recalculated actuarial liability threshold
						exceeds the actuarial liability threshold in subsection (a)(1) by $1,000 or
						more, the actuarial liability threshold in subsection (a)(1) shall be increased
						by the amount of such excess, rounded down to the next lower multiple of
						$1,000. Once the recalculated compensation threshold exceeds the compensation
						threshold in subsection (a)(2) by $5,000 or more, the compensation threshold in
						subsection (a)(2) shall be increased by the amount of such excess, rounded down
						to the next lower multiple of $5,000.