The Public Employees’ Retirement Law (PERL) permits members of the California Public Employees’ Retirement System (CalPERS) to elect to purchase service credit for certain types of public service by making additional contributions. Under existing law, CalPERS members who retire before fully paying the amount owed for certain service credit purchases may, depending on the election, have the remaining balance associated with the purchase of the service credit deducted from their retirement allowance or receive an actuarially-reduced allowance. Similar rules apply to survivors and beneficiaries when a member dies before an outstanding balance is paid.
SB 939, eliminates the actuarial reduction methodology. Effective for member elections with an effective date on or after January 1, 2028, changes how unpaid service credit balances are handled. Members generally must ensure that CalPERS receives the outstanding amounts within 90 days of the member’s effective retirement date. Survivors or beneficiaries generally have 90 days to pay any outstanding balance after CalPERS mails notice of the outstanding balance. If the outstanding amount owed is not timely paid, CalPERS may reduce or eliminate the corresponding service credit. The law makes similar changes for disability retirements, suspended installment payments, and elections to convert Second Tier service to First Tier service.
For public employers, the law does not generally create a new contribution obligation.
SB 393 amends Government Code section 20776, 21037, 21039, 21050, and 21073.1 to establish new payment and service-credit adjustment rules for specified CalPERS elections.
